BSB Bancorp, Inc. (Form: S-1, Received: 06/09/2011 16:49:57)

Large accelerated filer

Accelerated filer

Non-accelerated filer

x (Do not check if a smaller reporting company)

Smaller reporting company

As filed with the Securities and Exchange Commission on June 9, 2011

Registration No. 333-

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

BSB Bancorp, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Maryland

6712

Being applied for

(State or Other Jurisdiction of

Incorporation or Organization)

(Primary Standard Industrial

Classification Code Number)

(I.R.S. Employer

Identification Number)

2 Leonard Street

Belmont, Massachusetts 02478

(617) 484-6700

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

Mr. Robert M. Mahoney

President and Chief Executive Officer

2 Leonard Street

Belmont, Massachusetts 02478

(617) 484-6700

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)

Copies to:

John J. Gorman, Esq.

Robert B. Pomerenk, Esq.

Luse Gorman Pomerenk & Schick, P.C.

5335 Wisconsin Avenue, N.W.

Suite 780

Washington, D.C. 20015

(202) 274-2000

Victor L. Cangelosi, Esq.

Lindsay B. Tingley, Esq.

Kilpatrick Townsend & Stockton LLP

607 14 ^th Street, N.W.

Suite 900

Washington, D.C. 20005

(202) 508-5800

Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: x

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: ¨

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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

CALCULATION OF REGISTRATION FEE



Title of each class of securities to be registered	Amount to be registered	Proposed maximum offering price per share	Proposed maximum aggregate offering price	Amount of registration fee
Common Stock, $0.01 par value per share	9,172,860	$10.00	$91,728,600 ⁽¹⁾	$10,650

(1)	Estimated solely for the purpose of calculating the registration fee.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

PROSPECTUS

BSB BANCORP, INC.

(Proposed Holding Company for Belmont Savings Bank)

Up to Maximum 7,820,000 Shares of Common Stock

BSB Bancorp, Inc., a Maryland corporation, is offering shares of common stock for sale in connection with the conversion of BSB Bancorp, MHC from the mutual to the stock form of organization. We expect that our common stock will be listed for trading on the Nasdaq Capital Market under the symbol “BLMT” upon conclusion of the stock offering. There is currently no public market for the shares of our common stock.

We are offering up to 7,820,000 shares of common stock for sale on a best efforts basis. We may sell up to 8,993,000 shares of common stock because of demand for the shares in excess of 7,820,000 shares or changes in market conditions that would increase our pro forma market value in excess of $79.8 million (7,820,000 shares sold multiplied by the $10.00 purchase price per share plus $1.6 million worth of stock that we intend to contribute to a charitable foundation) without resoliciting subscribers. We must sell a minimum of 5,780,000 shares in order to complete the offering. In addition to the shares that we will sell in the offering, we intend to establish a charitable foundation in connection with the conversion and contribute to it shares of our common stock equal to 2.0% of the shares sold in the offering, plus $200,000 in cash.

We are offering the shares of common stock in a “subscription offering.” Depositors of Belmont Savings Bank with aggregate account balances of at least $50 as of the close of business on May 31, 2010 will have first priority rights to buy our shares of common stock. Employees, officers, trustees, directors and corporators of Belmont Savings Bank, BSB Bancorp, Inc. and BSB Bancorp, MHC also have rights to purchase shares in the subscription offering, subject to the priority rights of depositors. Shares of common stock not purchased in the subscription offering may be offered for sale to the general public in a “community offering.” We also may offer for sale shares of common stock not subscribed for in the subscription offering or community offering through a “syndicated community offering” managed by Keefe, Bruyette & Woods, Inc.

The minimum number of shares of common stock that you may order is 25 shares. The maximum number of shares of common stock that can be ordered through a single qualifying account or by any person in the subscription offering is 30,000 shares, and no person by himself or with an associate or group of persons acting in concert may purchase more than 60,000 shares in the offering. The subscription offering is expected to expire at 12:00 noon, Eastern time, on [expiration date]. We may extend the subscription offering and/or community offering without notice to you until [extension date], unless the Massachusetts Commissioner of Banks approves a later date, which may not be beyond June 2, 2013. Once submitted, orders are irrevocable unless the offering is terminated or is extended beyond [extension date], or the number of shares of common stock to be sold is increased to more than 8,993,000 shares or decreased to fewer than 5,780,000 shares. If the offering is extended beyond [extension date], or the number of shares of common stock to be sold is increased to more than 8,993,000 shares or decreased to fewer than 5,780,000 shares, we will resolicit subscribers, and all funds delivered to us to purchase shares of common stock will be returned promptly with interest. Funds received during the offering will be held in a segregated account at Belmont Savings Bank, and will earn interest at our passbook savings rate, which is currently % per annum.

Keefe, Bruyette & Woods, Inc. will assist us in selling our shares of common stock on a best efforts basis. Keefe, Bruyette & Woods, Inc. is not required to purchase any shares of the common stock that are being offered for sale.

This investment involves a degree of risk, including the possible loss of your investment.

Please read “ Risk Factors ” beginning on page 15.

OFFERING SUMMARY

Price: $10.00 per Share


	Minimum		Midpoint		Maximum		Adjusted Maximum
Number of shares		5,780,000		6,800,000		7,820,000		8,993,000
Gross offering proceeds	$	57,800,000	$	68,000,000	$	78,200,000	$	89,930,000
Estimated offering expenses (excluding selling agent fees and expenses)	$	1,108,000	$	1,108,000	$	1,108,000	$	1,108,000
Estimated selling agent fees and expenses (1) (2)	$	550,000	$	550,000	$	550,000	$	550,000
Estimated net proceeds	$	56,142,000	$	66,342,000	$	76,542,000	$	88,272,000
Estimated net proceeds per share	$	9.71	$	9.76	$	9.79	$	9.82

(1)

The amounts shown assume that all shares are sold in the subscription and community offerings. If shares are sold in the syndicated community offering, compensation paid to Keefe, Bruyette & Woods, Inc. will be higher and net proceeds and net proceeds per share will be lower. See “The Conversion; Plan of Distribution—Marketing and Distribution; Compensation” for a discussion of Keefe, Bruyette & Woods, Inc.’s compensation for this offering.

(2)

If all shares of common stock are sold in the syndicated community offering, excluding shares purchased by the employees stock ownership plan and shares purchased by insiders of BSB Bancorp, Inc., for which no selling agent commissions would be paid, the selling agent commissions and expenses would be $ million at the minimum, $ million at the maximum and $ million at the adjusted maximum. See “The Conversion; Plan of Distribution—Marketing and Distribution; Compensation” for a discussion of fees to be paid to Keefe, Bruyette & Woods, Inc. and other FINRA member firms in the event that shares are sold in a syndicated community offering.

These securities are not deposits or accounts and are not insured or guaranteed by the Federal Deposit Insurance Corporation, any other government agency or the Depositors Insurance Fund.

None of the Securities and Exchange Commission, the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System, the Massachusetts Commissioner of Banks or any state securities regulator has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

For assistance, please call the Stock Information Center at [SIC Phone].

K EEFE , B RUYETTE & W OODS

The date of this prospectus is , 2011.

[MAP SHOWING MARKET AREA APPEARS ON INSIDE FRONT COVER]

TABLE OF CONTENTS


	Page
SUMMARY		1

RISK FACTORS		15

SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA		27

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS		30

HOW WE INTEND TO USE THE PROCEEDS FROM THE OFFERING		31

OUR POLICY REGARDING DIVIDENDS		33

MARKET FOR THE COMMON STOCK		34

HISTORICAL AND PRO FORMA REGULATORY CAPITAL COMPLIANCE		35

CAPITALIZATION		36

PRO FORMA DATA		38

COMPARISON OF VALUATION AND PRO FORMA INFORMATION WITH AND WITHOUT THE CHARITABLE FOUNDATION		44

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		45

BUSINESS OF BSB BANCORP, INC.		69

BUSINESS OF BELMONT SAVINGS BANK		69

SUPERVISION AND REGULATION		103

TAXATION		113

MANAGEMENT OF BSB BANCORP, INC.		116

SUBSCRIPTIONS BY DIRECTORS AND EXECUTIVE OFFICERS		141

THE CONVERSION; PLAN OF DISTRIBUTION		142

BELMONT SAVINGS BANK FOUNDATION		163

RESTRICTIONS ON ACQUISITION OF BSB BANCORP, INC.		165

DESCRIPTION OF CAPITAL STOCK		170

TRANSFER AGENT		171

EXPERTS		171

LEGAL MATTERS		172

WHERE YOU CAN FIND ADDITIONAL INFORMATION		172

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS OF BSB BANCORP, MHC		F-1

SUMMARY

The following summary highlights material information in this prospectus. It may not contain all the information that is important to you. For additional information, you should read this entire prospectus carefully, including the Consolidated Financial Statements and the notes to the Consolidated Financial Statements.

In this prospectus, the terms “we, “our,” and “us” refer to BSB Bancorp, Inc. and Belmont Savings Bank unless the context indicates another meaning.

Belmont Savings Bank

Belmont Savings Bank is a Massachusetts chartered savings bank headquartered in Belmont, Massachusetts. We were organized in 1885, and reorganized into the mutual holding company structure in 2009. Belmont Savings Bank is currently the wholly owned subsidiary of BSB Bancorp, Inc., a Massachusetts corporation (“BSB Bancorp – Massachusetts”), which is the wholly owned subsidiary of BSB Bancorp, MHC, a Massachusetts mutual holding company. On a consolidated basis, as of March 31, 2011, BSB Bancorp, MHC had total assets of $529.3 million, total loans of $386.0 million, total deposits of $377.3 million and total equity of $47.2 million. We provide financial services to individuals, families and businesses through our four full-service branch offices located in Belmont and Watertown in Southeast Middlesex County, Massachusetts. Our primary lending market includes Essex, Middlesex, Norfolk and Suffolk Counties, Massachusetts.

Belmont Savings Bank’s business consists primarily of accepting deposits from the general public and investing those deposits, together with funds generated from operations and borrowings, in residential and commercial mortgage loans, home equity lines of credit, consumer loans, primarily consisting of indirect automobile loans, commercial loans and construction loans. We also invest in investment securities, consisting of corporate debt securities, U.S. government and agency obligations, U.S. government sponsored mortgage-backed securities, and to a lesser extent, marketable equity securities. Belmont Savings Bank offers a variety of deposit accounts, including statement savings accounts, certificates of deposit, money market accounts, commercial and regular checking accounts and individual retirement accounts.

Belmont Savings Bank’s executive offices are located at 2 Leonard Street, Belmont Center, Belmont, MA 02478. Our telephone number at this address is 617-484-6700. Our website address is www.belmontsavings.com . Information on our website is not incorporated into this prospectus and should not be considered part of this prospectus.

BSB Bancorp, Inc.

BSB Bancorp, Inc. is a newly formed Maryland corporation that will own all of the outstanding shares of common stock of Belmont Savings Bank upon completion of the mutual-to-stock conversion and the offering. BSB Bancorp, Inc. has not engaged in any business to date.

Our executive offices are located at 2 Leonard Street, Belmont Center, Belmont, MA 02478. Our telephone number at this address is 617-484-6700.

Our Organizational Structure

In 2009, Belmont Savings Bank’s mutual predecessor reorganized into the mutual holding company form of organization by forming BSB Bancorp, MHC, a Massachusetts mutual holding

company. BSB Bancorp, MHC owns 100% of the outstanding shares of common stock of BSB Bancorp – Massachusetts. As a mutual holding company, BSB Bancorp, MHC has no stockholders. BSB Bancorp – Massachusetts owns 100% of the outstanding shares of common stock of Belmont Savings Bank. BSB Bancorp – Massachusetts has not issued shares of stock to the public.

Pursuant to the terms of BSB Bancorp, MHC’s plan of conversion, BSB Bancorp, MHC will convert from a mutual holding company to the stock holding company corporate structure. Upon the completion of the conversion, BSB Bancorp, MHC and BSB Bancorp – Massachusetts will cease to exist, and Belmont Savings Bank will be a wholly owned subsidiary of BSB Bancorp, Inc., a Maryland corporation.

The board of corporators of BSB Bancorp, MHC currently has the right to vote on certain matters such as the election of trustees and the conversion. A special meeting of corporators has been scheduled to vote to approve the plan of conversion and the establishment and funding of a charitable foundation.

Business Strategy

Our principal objective is to build long-term value for our stockholders by operating a profitable community-oriented financial institution dedicated to meeting the banking needs of retail customers and small businesses in the communities that we serve. While we intend to continue our origination of one- to four-family residential mortgage loans, we intend to significantly increase our home equity lines of credit, commercial real estate loans, commercial loans and indirect automobile loans. Our operations and strategy will include:

•

continuing to build our retail customer base through new product and marketing-driven initiatives;

•

continuing to emphasize the origination of commercial and multi-family real estate loans, home equity lines of credit, commercial business loans and indirect automobile loans, while maintaining high asset quality;

•

emphasizing lower-cost core deposits from new customers through our commercial real estate lending and small business initiatives;

•

expanding our branch network;

•

increasing our capital to support our future growth; and

•

continue our community-oriented focus, including the establishment and funding of a new charitable foundation in connection with the conversion.

A full description of our products and services begins on page 69 of this prospectus under the heading “Business of Belmont Savings Bank.”

These strategies are intended to guide our investment of the net proceeds of the offering. We intend to continue to pursue our business strategy after the conversion and the offering, subject to changes necessitated by future market conditions and other factors. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Business Strategy” for a further discussion of our business strategy.

Reasons for the Conversion

Our primary reasons for converting and raising additional capital through the offering are:

•

to support future growth and profitability through, among other things, branch expansion and increased lending;

•

to compete more effectively in the financial services marketplace by diversifying products and services that we offer to customers;

•

to retain and attract qualified directors, management and employees by establishing stock-based benefit plans;

•

to increase our philanthropic endeavors in the communities that we serve through the establishment and funding of a charitable foundation; and

•

to offer our depositors, employees, management, trustees, directors and corporators an opportunity to purchase our stock.

We believe that the additional capital raised in the offering will enable us to take advantage of business opportunities that may not otherwise be available to us. As of March 31, 2011, Belmont Savings Bank was considered “well capitalized” for regulatory purposes and is not subject to any directive or order from the Massachusetts Commissioner of Banks.

For further information about our reasons for the conversion and stock offering, please see “The Conversion; Plan of Distribution—Reasons for the Conversion.”

Terms of the Conversion and the Offering

Under BSB Bancorp, MHC’s plan of conversion, our organization will convert to a fully public stock holding company structure. In connection with the conversion, we are offering between 5,780,000 and 7,820,000 shares of common stock to eligible depositors of Belmont Savings Bank, to our employee stock ownership plan and, to the extent shares remain available, to the general public. The number of shares of common stock to be sold may be increased to up to 8,993,000 as a result of demand for the shares or changes in the market for financial institution stocks. Unless the number of shares of common stock to be offered for sale is increased to more than 8,993,000 or decreased to less than 5,780,000, or the offering is extended beyond [extension date], subscribers will not have the opportunity to change or cancel their stock orders.

The purchase price of each share of common stock to be sold in the offering is $10.00. All investors will pay the same purchase price per share. Investors will not be charged a commission to purchase shares of common stock in the offering. Keefe, Bruyette & Woods, Inc., our marketing advisor in the offering, will use its best efforts to assist us in selling shares of our common stock. Keefe, Bruyette & Woods, Inc. is not obligated to purchase any shares of common stock in the offering.

Persons Who May Order Shares of Common Stock in the Offering

We are offering the shares of common stock in a “subscription offering” in the following descending order of priority:

•

First, to depositors of Belmont Savings Bank with aggregate account balances of at least $50 as of the close of business on May 31, 2010.

•

Second, to Belmont Savings Bank’s tax-qualified employee plans, including its employee stock ownership plan, which will receive, without payment therefor, nontransferable subscription rights to purchase in the aggregate up to 10% of the shares of common stock issued in the offering (including shares contributed to our charitable foundation). We expect our employee stock ownership plan to purchase 5% of the shares of common stock issued in the offering.

•

Third, to employees, officers, directors, trustees and corporators of Belmont Savings Bank, BSB Bancorp – Massachusetts and BSB Bancorp, MHC who do not have a higher priority to purchase stock.

Shares of common stock not purchased in the subscription offering may be offered for sale to the general public in a community offering, with a preference given to natural persons and trusts of natural persons residing in the towns of Arlington, Belmont, Lexington and Watertown, and the cities of Newton and Waltham, in Massachusetts. The community offering may occur concurrently, during or promptly after the subscription offering. If shares remain available for sale following the subscription offering or community offering, we also may offer for sale shares of common stock through a syndicated community offering managed by Keefe, Bruyette & Woods, Inc. We have the right to accept or reject, in our sole discretion, orders received in the community offering or syndicated community offering.

To ensure a proper allocation of stock, each subscriber eligible to purchase stock in the subscription offering must list on his or her stock order and certification form all deposit accounts in which he or she had an ownership interest at May 31, 2010. Failure to list all accounts, or providing incorrect information, could result in the loss of all or part of a subscriber’s stock allocation. Our interpretation of the terms and conditions of the plan of conversion and of the acceptability of the order forms will be final.

If we receive orders for more shares than we are offering, we may not be able to fully or partially fill your order. Shares will be allocated first in the order of priority to subscribers in the subscription offering. For a detailed description of the offering, including share allocation procedures, please see “The Conversion; Plan of Distribution.”

How We Determined the Offering Range

The amount of common stock that we are offering is based on an independent appraisal of the estimated market value of BSB Bancorp, Inc., assuming the conversion and the offering are completed. RP Financial, LC., our independent appraiser, has estimated that, as of May 13, 2011, the market value of the shares to be issued in the offering (including shares to be contributed to the charitable foundation) ranged from $59.0 million to $79.8 million, with a midpoint of $69.4 million. Based on this valuation and a $10.00 per share price, the number of shares of common stock being offered for sale by us will range from 5,780,000 shares to 7,820,000 shares. If market conditions so warrant, the market value of the shares can be increased to a maximum, as adjusted, market value of $91.7 million and the number of shares offered for sale of 8,993,000 shares. The $10.00 per share offering price was selected primarily because it is the price most commonly used in mutual-to-stock conversions of financial institutions.

RP Financial, LC. advised the Board of Directors that the appraisal was prepared in conformance with the regulatory appraisal methodology. That methodology requires a valuation based on an analysis of the trading prices of comparable public companies whose stocks have traded for at least one year prior to the valuation date. RP Financial, LC. selected a group of eleven comparable public companies for this analysis. RP Financial advised the Board of Directors that based on the recent stock market performance and pricing ratios of publicly-traded thrift institutions in general, as well as the appraisal peer group and recent mutual-to-stock conversions, the valuation conclusion took into consideration a slight downward valuation adjustment based on these factors.

RP Financial, LC. also considered that we intend to contribute to a charitable foundation shares of our common stock equal to 2.0% of the shares sold in the offering, plus $200,000 in cash. The intended contribution of shares of common stock to the charitable foundation has the effect of reducing our estimated pro forma valuation. See “Comparison of Valuation and Pro Forma Information With and Without the Charitable Foundation.”

The appraisal peer group consists of the companies listed in the table below. Asset sizes are as of March 31, 2011, except as noted.


Company Name	Ticker Symbol	Exchange	Headquarters	Total Assets
				(in millions)
Beacon Federal Bancorp	(BFED)	NASDAQ	East Syracuse, NY	$	1,094
Cape Bancorp, Inc.	(CBNJ)	NASDAQ	Cape May Court House, NJ		1,062
Central Bancorp, Inc.	(CEBK)	NASDAQ	Somerville, MA		512	(1)
Chicopee Bancorp, Inc.	(CBNK)	NASDAQ	Chicopee, MA		582
ESSA Bancorp, Inc.	(ESSA)	NASDAQ	Stroudsburg, PA		1,094
Elmira Savings Bank	(ESBK)	NASDAQ	Elmira, NY		500	(1)
Hampden Bancorp, Inc.	(HBNK)	NASDAQ	Springfield, MA		575
Newport Bancorp, Inc.	(NFSB)	NASDAQ	Newport, RI		450
OBA Financial Services, Inc.	(OBAF)	NASDAQ	Germantown, MD		356
Ocean Shore Holding Company	(OSHC)	NASDAQ	Ocean City, NJ		861
TF Financial Corporation	(THRD)	NASDAQ	Newton, PA		684

(1)	As of December 31, 2010.

The following table presents a summary of selected pricing ratios for BSB Bancorp, Inc. and the peer group companies identified by RP Financial, LC. Price-to-earnings multiples are shown on a “core” earnings basis, where earnings have been adjusted to omit non-recurring income and expense items. Price-to-book value multiples are shown for both reported book value and tangible book value, omitting intangible assets. All pricing ratios are based on earnings for the twelve months ended March 31, 2011 and book value as of March 31, 2011. Compared to the median pricing of the peer group, our pro forma pricing ratios at the maximum of the offering range indicated a discount of 21.5% on a price-to-book value basis, a discount of 24.7% on a price-to-tangible book value basis and a premium of 536.4% on a price-to-earnings basis. Our Board of Directors, in reviewing and approving the valuation, considered our pro forma earnings and the range of price-to-book value ratios and price-to-tangible book value ratios at the different amounts of shares to be sold in the offering. The appraisal did not consider one valuation approach to be more important than the other.


	Price-to-core earnings multiple (1)		Price-to-book value ratio			Price-to-tangible book value ratio
BSB Bancorp, Inc. (pro forma)
Maximum, as adjusted		128.00x		71.79	%		71.79	%
Maximum		110.80x		68.17	%		68.17	%
Midpoint		95.96x		64.39	%		64.39	%
Minimum		81.24x		59.95	%		59.95	%

Valuation of peer group companies using stock prices as of May 13, 2011
Averages		20.40x		89.33	%		96.12	%
Medians		17.41x		86.81	%		90.51	%

(1)	Based on core, or recurring, earnings calculated by RP Financial, LC. for the twelve months ended March 31, 2011.

Our Board of Directors carefully reviewed the information provided to it by RP Financial, LC. through the appraisal process, but did not make any determination regarding whether prior standard mutual-to-stock conversions have been undervalued, nor did the Board of Directors draw any conclusions regarding how the historical data reflected above may affect BSB Bancorp, Inc.’s appraisal. Instead, we engaged RP Financial, LC. to help us understand the regulatory process as it applies to the appraisal and to advise the Board of Directors as to how much capital BSB Bancorp, Inc. would be required to raise under the regulatory appraisal guidelines.

The independent appraisal does not indicate per share market value. Do not assume or expect that the valuation of BSB Bancorp, Inc. as indicated above means that, after the conversion and the offering, the shares of common stock will trade at or above the $10.00 offering price. Furthermore, the pricing ratios presented above were utilized by RP Financial, LC. to estimate our market value and not to compare the relative value of shares of our common stock with the value of the capital stock of the peer group. The value of the capital stock of a particular company may be affected by a number of factors such as financial performance, asset size and market location.

For a more complete discussion of the amount of common stock we are offering for sale and the independent appraisal, including information with respect to the peer group selected by RP Financial, LC., as well as a comparison of selected pro forma pricing ratios compared to pricing ratios of the peer group, see “The Conversion; Plan of Distribution—Determination of Share Price and Number of Shares to be Issued.”

Limits on How Much Common Stock You May Purchase

The minimum number of shares of common stock that may be purchased is 25. Generally, no individual with one or more qualifying accounts, or individuals exercising subscription rights through a single qualifying account held jointly, may purchase more than 30,000 shares ($300,000) of common stock in the subscription offering. If any of the following persons purchases shares of common stock, their purchases, in all categories of the offering, when combined with your purchases, cannot exceed 60,000 shares ($600,000):

•

your spouse or relatives of you or your spouse living in your house;

•

companies, trusts or other entities in which you are a trustee, have a substantial beneficial interest or hold a senior management position; or

•

other persons who may be your associates or persons acting in concert with you.

See the detailed descriptions of “acting in concert” and “associate” in “The Conversion; Plan of Distribution—Limitations on Common Stock Purchases.”

How You May Purchase Shares of Common Stock

In the subscription offering and community offering, you may pay for your shares only by:

•

personal check, bank check or money order, made payable to BSB Bancorp, Inc.; or

•

authorizing us to withdraw funds from the types of Belmont Savings Bank deposit accounts permitted on the stock order and certification form.

Belmont Savings Bank is not permitted to knowingly lend funds to anyone for the purpose of purchasing shares of common stock in the offering. Additionally, you may not use a check drawn on a Belmont Savings Bank line of credit or a third-party check to pay for shares of common stock.

You can subscribe for shares of common stock in the offering by delivering a signed and completed original stock order and certification form, together with full payment or authorization to withdraw from one or more of your Belmont Savings Bank deposit accounts, so that it is received (not postmarked) before 12:00 noon, Eastern time, on [expiration date], which is the expiration of the subscription offering period. You may submit your stock order and certification form by mail using the order reply envelope provided, by overnight courier to the indicated address on the order form, or by hand delivery to our Stock Information Center, located at [SIC Address]. We will not accept stock order forms at our branch offices.

You may be able to subscribe for shares of common stock using funds in your individual retirement account (IRA). If you wish to use some or all of the funds in your Belmont Savings Bank IRA to purchase our common stock, the applicable funds must be transferred to a self-directed account maintained by an independent trustee, such as a brokerage firm, and the purchase must be made through that account. Because individual circumstances differ and processing of IRA fund orders takes additional time, we recommend that you contact our Stock Information Center promptly, preferably at least two weeks before the [expiration date] expiration of the offering period, for assistance with purchases using funds from your Belmont Savings Bank IRA or any other retirement account that you may have. Whether you may use such funds for the purchase of shares in the stock offering may depend on time constraints and, possibly, limitations imposed by the brokerage firm or institution where your funds are held.

See “The Conversion; Plan of Distribution—Procedure for Purchasing Shares” for a complete description of how to purchase shares in the stock offering.

Deadline for Orders of Common Stock

The deadline for purchasing shares of common stock in the offering is 12:00 noon, Eastern time, on [expiration date]. A postmark prior to [expiration date] will not entitle you to purchase shares of common stock unless we receive the envelope by 12:00 noon, Eastern time on [expiration date].

Although we will make reasonable attempts to provide a prospectus and offering materials to holders of subscription rights, the subscription offering and all subscription rights will expire at 12:00 noon, Eastern time, on [expiration date], whether or not we have been able to locate each person entitled to subscription rights.

See “The Conversion; Plan of Distribution—Procedure for Purchasing Shares” for a complete description of how to purchase shares in the stock offering.

Delivery of Stock Certificates

Certificates representing shares of common stock sold in the offering will be mailed to the certificate registration address noted on the order form. We expect stock certificates to be sent to purchasers by first-class mail on or about the day the stock offering closes, and expect trading in the stock typically to begin the business day following the closing of the stock offering. The stock offering is expected to close as soon as practicable following satisfaction of the conditions described in “The Conversion; Plan of Distribution—Conditions to Completion of the Conversion and the Offering.” It is possible that, until certificates for the common stock are delivered, purchasers might not be able to sell the shares of common stock that they ordered, even though the common stock will have begun trading. Your ability to sell the shares of common stock prior to your receipt of the stock certificate will depend on arrangements you may make with a brokerage firm, as you are generally required to deliver stock certificates within three business days of selling the underlying securities.

After-Market Stock Price Performance Provided by Independent Appraiser

The following table presents stock price appreciation information for all standard mutual-to-stock conversions completed between January 1, 2010 and May 13, 2011. The group of companies for which price information is provided below is not the same peer group of eleven comparable public companies utilized in RP Financial, LC.’s valuation analysis.

Mutual-to-Stock Conversion Offerings with Closing Dates

between January 1, 2010 and May 13, 2011


	Conversion Date		Exchange		Percentage Price Appreciation From Initial Trading Date
Company Name and Ticker Symbol	Conversion Date		Exchange		One Day			One Week			One Month			Through May 13, 2011
Franklin Financial Corporation (FRNK)		04/28/11		NASDAQ		19.7	%		17.7	%		NA	%		18.0	%
Anchor Bancorp (ANCB)		01/26/11		NASDAQ		0.0			0.3			4.5			(4.4	)
Wolverine Bancorp, Inc. (WBKC)		01/20/11		NASDAQ		24.5			22.4			35.0			49.0
SP Bancorp, Inc. (SPBC)		11/01/10		NASDAQ		(6.0	)		(6.6	)		(8.0	)		18.6
Standard Financial Corp. (STND)		10/07/10		NASDAQ		19.0			18.9			29.5			54.0
Peoples Federal Bancshares, Inc. (PEOP)		07/07/10		NASDAQ		4.0			6.9			4.2			42.4
OBA Financial Services, Inc. (OBAF)		01/22/10		NASDAQ		3.9			1.1			3.0			48.0
OmniAmerican Bancorp, Inc. (OABC)		01/21/10		NASDAQ		18.5			13.2			9.9			46.2
Athens Bancshares Corporation (AFCB)		01/07/10		NASDAQ		16.0			13.9			10.6			35.5
Sunshine Financial, Inc. (SSNF)		04/06/11		OTC		12.5			11.0			14.0			14.0
Fraternity Community Bancorp, Inc. (FRTR)		04/01/11		OTC		10.0			11.7			10.0			4.0
Madison Bancorp, Inc. (MDSN)		10/07/10		OTC		25.0			25.0			25.0			5.0
Century Next Financial Corporation (CTUY)		10/01/10		OTC		25.0			15.0			10.0			60.0
United-American Savings Bank (UASB)		08/06/10		OTC		0.0			(5.0	)		5.0			30.5
Fairmount Bancorp, Inc. (FMTB)		06/03/10		OTC		10.0			20.0			10.0			65.0
Harvard Illinois Bancorp, Inc. (HARI)		04/09/10		OTC		0.0			0.0			(1.0	)		(10.0	)
Versailles Financial Corporation (VERF)		01/13/10		OTC		0.0			0.0			0.0			30.0
Average						10.7	%		9.7	%		10.1	%		29.8	%
Median						10.0	%		11.7	%		10.0	%		30.5	%

Stock price appreciation is affected by many factors, including, but not limited to: general market and economic conditions; the interest rate environment; the amount of proceeds a company raises in its offering; and numerous factors relating to the specific company, including the experience and ability of

management, historical and anticipated operating results, the nature and quality of the company’s assets, and the company’s market area. None of the companies listed in the table above are exactly the same as BSB Bancorp, Inc., the pricing ratios for their stock offerings were in some cases different from the pricing ratios for BSB Bancorp, Inc.’s common stock and the market conditions in which these offerings were completed were, in most cases, different from current market conditions. The performance of these stocks may not be indicative of how our stock will perform.

There can be no assurance that our stock price will not trade below $10.00 per share, as has been the case for some mutual-to-stock conversions. Before you make an investment decision, we urge you to carefully read this prospectus, including, but not limited to, the section entitled “Risk Factors” beginning on page 15.

Steps We May Take If We Do Not Receive Orders for the Minimum Number of Shares

If we do not receive orders for at least 5,780,000 shares of common stock (not counting shares to be contributed to our charitable foundation), we may take the following steps to sell the minimum number of shares of common stock in the offering range:

•

increase the maximum purchase limitations; and/or

•

seek the approval of the Massachusetts Commissioner of Banks and the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”) to extend the offering beyond [extension date], provided that any such extension beyond [extension date] will require that we resolicit subscriptions that we have previously received in the offering.

If one or more purchase limitations are increased, subscribers in the subscription offering who ordered the maximum amount will be, and, in our sole discretion, some other large subscribers may be, given the opportunity to increase their subscriptions up to the then-applicable limit.

Possible Change in the Offering Range

RP Financial, LC. will update its appraisal before we complete the offering. If, as a result of demand for the shares, or changes in market conditions, RP Financial, LC. determines that our pro forma market value has increased, we may sell up to 8,993,000 shares in the offering without further notice to you. If our pro forma market value at that time (which is the pro forma market value of the shares to be issued in the offering including the shares to be contributed to the charitable foundation) is either below $59.0 million or above $91.7 million, then, after consulting with the Massachusetts Commissioner of Banks and the Federal Reserve Board, we may:

•

terminate the stock offering and promptly return all funds with interest at our passbook savings rate;

•

set a new offering range; or

•

take such other actions as may be permitted by the Massachusetts Commissioner of Banks, Federal Reserve Board and the Securities and Exchange Commission.

If we set a new offering range, we will be required to resolicit subscribers and we will promptly return your subscription funds, with interest at our passbook savings rate, and cancel any authorization to withdraw funds from your deposit accounts for the purchase of shares of common stock.

Possible Termination of the Offering

We may terminate the offering at any time prior to the special meeting of corporators of BSB Bancorp, MHC that is being called to vote upon the conversion, and at any time after such corporator approval with the approval of the Massachusetts Commissioner of Banks. If we terminate the offering, we will promptly return your funds with interest at our passbook savings rate, which is currently % per annum, and we will cancel any deposit account withdrawal authorizations.

How We Intend to Use the Proceeds from the Offering

We intend to invest 50% of the net proceeds from the offering in Belmont Savings Bank, to use approximately 5.2% of the net proceeds at the maximum of the offering range to fund the loan to our employee stock ownership plan to finance its purchase of our shares of common stock, to use $200,000 of the net proceeds as a cash contribution to the charitable foundation, and retain the remainder of the net proceeds from the offering. Therefore, assuming we sell 7,820,000 shares of common stock in the stock offering, and we have net proceeds of $76.5 million, we intend to invest $38.3 million in Belmont Savings Bank, loan (or have a subsidiary that we capitalize loan) $4.0 million to our employee stock ownership plan to fund its purchase of our shares of common stock, contribute $200,000 in cash to the charitable foundation and retain the remaining $34.1 million of the net proceeds.

We may use the funds we retain to invest in securities permitted under our investment policy, to pay cash dividends, to provide funding to Belmont Savings Bank, to repurchase shares of common stock and for other general corporate purposes. We may also use the net proceeds to expand our banking franchise by establishing new branches or acquiring other financial institutions or their assets although we have no current plans or arrangements regarding such acquisitions. We currently intend to open or acquire at least three branch offices over the next four years with a focus on communities located contiguous to the communities that we currently serve, although we have no specific plans regarding any branch or location.

Belmont Savings Bank may use the net proceeds it receives from us to support increased lending and other products and services, and to repay and/or refinance short-term borrowings, including the prepayment of outstanding Federal Home Loan Bank advances. It is expected that funds received by Belmont Savings Bank will be invested in short-term U.S. Government agency securities until Belmont Savings Bank can redeploy these funds into higher-yielding assets, including loans. See “How We Intend to Use the Proceeds from the Offering” on page 31 of this prospectus.

Our Contribution of Shares of Common Stock and Cash to Belmont Savings Bank Charitable Foundation

To further our commitment to our local community, we intend to establish a charitable foundation as part of the conversion and stock offering. The establishment and funding of the charitable foundation has been approved by the Board of Trustees of BSB Bancorp, MHC, and the Boards of Directors of BSB Bancorp – Massachusetts, BSB Bancorp, Inc. and Belmont Savings Bank. In addition, the establishment and funding of the charitable foundation is subject to the approval of the corporators of BSB Bancorp, MHC. Assuming we receive final approval from the corporators, the Massachusetts Commissioner of Banks and the Federal Reserve Board to establish and fund the charitable foundation, we intend to contribute to the foundation shares of our common stock equal to 2.0% of the shares sold in the offering and $200,000 in cash. At the adjusted maximum of the offering range, the contribution to the charitable foundation will have a total value of $2.0 million based on the $10.00 per share offering price of our common stock. As a result of the contribution, assuming we sell 8,993,000 shares in the offering, we expect to record an after-tax expense of approximately $1.2 million during the quarter in which the stock offering is completed.

The charitable foundation will be dedicated exclusively to supporting charitable causes and community development activities in the communities in which we operate. The contribution of common stock and cash to the charitable foundation will:

•

dilute the voting interests of purchasers of shares of our common stock in the stock offering; and

•

result in an expense, and a reduction in earnings, during the quarter in which the contribution is made, equal to the full amount of the contribution to the charitable foundation, offset in part by a corresponding tax benefit.

The amount of common stock that we would offer for sale would be greater if the offering were to be completed without the establishment and funding of the Belmont Savings Bank Charitable Foundation. For a further discussion of the financial impact of the charitable foundation, including its effect on those who purchase shares in the offering, see “Risk Factors—The contribution to the charitable foundation will dilute your ownership interest and adversely affect net income in 2011,” “Risk Factors—Our contribution to the charitable foundation may not be tax deductible, which could reduce our profits,” “Comparison of Valuation and Pro Forma Information With and Without the Charitable Foundation” and “Belmont Savings Bank Charitable Foundation.”

You May Not Sell or Transfer Your Subscription Rights

Massachusetts banking regulations prohibit you from transferring your subscription rights. If you order shares of common stock in the subscription offering, you will be required to state that you are purchasing the shares of common stock for yourself and that you have no agreement or understanding to sell or transfer your subscription rights. We intend to take legal action, including reporting persons to federal or state regulatory agencies, against anyone who we believe has sold or given away his or her subscription rights. We will not accept your order if we have reason to believe that you have sold or transferred your subscription rights. When completing your stock order and certification form, you should not add the name(s) of persons who do not have subscription rights or who qualify only in a lower subscription priority than you do. In addition, the stock order and certification form requires that you list all deposit or loan accounts, giving all names on each account and the account number at the applicable eligibility record date. Your failure to provide this information, or providing incomplete or incorrect information, may result in a loss of part or all of your share allocation, if there is an oversubscription.

Purchases by Officers and Directors

We expect our trustees, directors and executive officers, together with their associates, to subscribe for shares ($ ) of common stock in the offering, or % of the shares to be sold at the midpoint of the offering range. The purchase price paid by our directors and executive officers for their shares will be the same $10.00 per share price paid by all other persons who purchase shares of common stock in the offering.

See “Subscriptions by Trustees, Directors and Executive Officers” for more information on the proposed purchases of our shares of common stock by our trustees, directors and executive officers.

Benefits to Management and Potential Dilution to Stockholders Following the Conversion

We expect our employee stock ownership plan, which is a tax-qualified retirement plan for the benefit of all of our eligible employees, to purchase 5% of the total number of shares of common stock that we issue in the offering (including shares contributed to our charitable foundation). If we receive orders for more shares of common stock than the maximum of the offering range, the employee stock ownership plan will have first priority to purchase shares over this maximum, up to a total of 5% of the total number of shares of common stock issued in the offering (including shares contributed to our charitable foundation). This would reduce the number of shares available for allocation to eligible account holders. Purchases by the employee stock ownership plan in the offering will be included in determining whether the required minimum number of shares has been sold in the offering. If the employee stock ownership plan is not able to fill its order in the offering, the employee stock ownership plan may purchase shares of common stock in the open market following the completion of the conversion and the offering in order to fund all or a portion of the plan.

We also intend to implement one or more stock-based benefit plans no earlier than six months after completion of the conversion. Stockholder approval of these plans will be required, and the stock-based benefit plans cannot be implemented until at least six months after the completion of the conversion pursuant to applicable banking regulations. If they are adopted within 12 months following the completion of the conversion, the stock-based benefit plans will reserve a number of shares of common stock equal to not more than 4% of the shares issued in the offering (including shares contributed to our charitable foundation), for restricted stock awards to key employees and directors, at no cost to the recipients, and will also reserve a number of stock options equal to not more than 10% of the shares of common stock issued in the offering (including shares contributed to our charitable foundation) for key employees and directors. If the stock-based benefit plans are adopted after one year from the date of the completion of the conversion, the 4% and 10% limitations described above will no longer apply, and we may adopt stock-based benefit plans encompassing more than 14% of the shares of common stock that were issued in the offering. We have not yet determined whether we will present these plans for stockholder approval within 12 months following the completion of the conversion or more than 12 months after the completion of the conversion, and we have not yet determined the number of shares that would be reserved for issuance under these plans.

The following table summarizes the number of shares of common stock and aggregate dollar value of grants (valuing each share granted at the offering price of $10.00) that are available under one or more stock-based benefit plans if such plans reserve a number of shares of common stock equal to not more than 4% and 10% of the shares issued in the offering (including shares contributed to our charitable foundation) for restricted stock awards and stock options, respectively. The table shows the dilution to stockholders if all of these shares are issued from authorized but unissued shares, instead of shares purchased in the open market. The table also sets forth the number of shares of common stock to be acquired by the employee stock ownership plan for allocation to all eligible employees.


	Number of Shares to be Granted or Purchased							Dilution Resulting From Issuance of Shares for Stock Benefit Plans			Value of Grants (1)
	At Minimum of Offering Range		At Adjusted Maximum of Offering Range		As a Percentage of Common Stock to be Issued (2)						At Minimum of Offering Range		At Adjusted Maximum of Offering Range
											(Dollars in thousands)
Employee stock ownership plan		294,780		458,643		5.00	%		0.00	%	$	2,948	$	4,586
Stock awards		235,824		366,914		4.00			3.85	%		2,358		3,669
Stock options		589,560		917,286		10.00			9.09	%		2,111		3,284

Total		1,120,164		1,742,843		19.00	%		12.28	%	$	7,417	$	11,539

(1)

The actual value of restricted stock grants will be determined based on their fair value as of the date grants are made. For purposes of this table, fair value is assumed to be the same as the offering price of $10.00 per share. The fair value of stock options has been estimated at $3.58 per option using the Black-Scholes option pricing model, based upon assumptions described in “Pro Forma Data.” The actual expense of stock options granted under a stock-based benefit plan will be determined by the grant-date fair value of the options, which will depend on a number of factors, including the valuation assumptions used in the option pricing model ultimately adopted, which may or may not be the Black-Scholes model.

(2)	The stock-based benefit plans may award a greater number of options and shares, respectively, if the plans are adopted more than 12 months after the completion of the conversion.

In addition to the stock-based benefit plans that we may adopt, we have entered into severance agreements with our President and Chief Executive Officer and four other executive officers. See “Management of BSB Bancorp, Inc.—Executive Compensation” for a further discussion of these agreements, including their terms and potential costs, as well as a description of other benefits arrangements. In addition, for further information with respect to the expenses related to the stock-based benefit plans, see “Risk Factors—Our stock-based benefit plans will increase our costs, which will reduce our income” and “Management of BSB Bancorp, Inc.—Benefits to be Considered Following Completion of the Stock Offering.”

Market for Common Stock

We expect that our common stock will be listed for trading on the Nasdaq Capital Market under the symbol “BLMT.” Keefe, Bruyette & Woods, Inc. currently intends to make a market in the shares of our common stock, but is under no obligation to do so. See “Market for the Common Stock.”

Our Policy Regarding Dividends

Following completion of the stock offering, our Board of Directors will have the authority to declare dividends on our common stock, subject to statutory and regulatory requirements. However, no decision has been made with respect to the amount, if any, and timing of any dividend payments. The payment and amount of any dividend payments will depend upon a number of factors.

For further information, see “Our Policy Regarding Dividends.”

Tax Consequences

As a general matter, the conversion will not be a taxable transaction for federal or state income tax purposes to BSB Bancorp, MHC, BSB Bancorp - Massachusetts, Belmont Savings Bank, BSB Bancorp, Inc., or persons eligible to subscribe in the subscription offering. See “Taxation” for additional information.

Conditions to Completion of the Conversion and the Offering

The Board of Trustees of BSB Bancorp, MHC and the Boards of Directors of BSB Bancorp, Inc. and Belmont Savings Bank have approved the plan of conversion and the establishment and funding of the charitable foundation. In addition, the Federal Reserve Board has issued the approval required in connection with the conversion. We have filed an application with respect to the conversion with the Massachusetts Commissioner of Banks, and the Massachusetts Commissioner of Banks has issued its preliminary approval. The final approval of the Massachusetts Commissioner of Banks is required before we can consummate the conversion and issue shares of common stock. However, any approval by the Massachusetts Commissioner of Banks and the Federal Reserve Board does not constitute a recommendation or endorsement of the plan of conversion.

To complete the conversion, the corporators of BSB Bancorp, MHC, including a majority of the “independent” corporators, must approve the plan of conversion. We must also receive and accept orders for at least the minimum number of shares of common stock offered for sale.

How You Can Obtain Additional Information

Our branch office personnel may not, by law, assist with investment-related questions about the offering. If you have any questions regarding the conversion or the offering, please call our Stock Information Center at [SIC Phone], Monday through Friday between 10:00 a.m. and 5:00 p.m., Eastern time, or visit the Stock Information Center located at 2 Leonard Street, Belmont Center, Belmont, Massachusetts, Monday between 12:00 p.m. and 5:00 p.m., Tuesday through Thursday between 8:30 a.m. and 5:00 p.m., and Friday between 8:30 a.m. and 12:00 p.m. The Stock Information Center will be closed on weekends and bank holidays.

TO ENSURE THAT EACH PERSON RECEIVES A PROSPECTUS AT LEAST 48 HOURS PRIOR TO THE EXPIRATION DATE OF [Expiration Date] IN ACCORDANCE WITH FEDERAL LAW, NO PROSPECTUS WILL BE MAILED OR HAND-DELIVERED ANY LATER THAN FIVE DAYS OR TWO DAYS, RESPECTIVELY, PRIOR TO [Expiration Date].

RISK FACTORS

You should consider carefully the following risk factors in evaluating an investment in our

shares of common stock.

Risks Related to Our Business

Our business strategy, which includes significant asset and liability growth, was recently adopted and implemented and has not yet had the time to be proven successful. If we fail to grow or fail to manage our growth effectively, our financial condition and results of operations could be negatively affected.

In 2010, the Board of Directors of Belmont Savings Bank approved a strategic plan that contemplates significant growth in assets and liabilities over the next several years. Specifically, we intend to increase our commercial real estate loans, home equity lines of credit, commercial business loans and indirect automobile loans, while attracting favorably priced deposits. Depending on market conditions, we also intend to expand our branch network by at least two de novo or acquired branch offices over the next four years. We have incurred substantial additional expenses due to the implementation of our strategic plan, including salaries and occupancy expense related to new lending officers and related support staff, as well as marketing expenses. Many of these increased expenses are considered fixed expenses. Unless we can successfully implement our strategic plan, our financial condition and results of operations will continue to be negatively affected by these increased costs.

The successful implementation of our strategic plan will require, among other things, that we increase our market share by attracting new customers that currently bank at other financial institutions in our market area. In addition, our ability to successfully grow will depend on several factors, including continued favorable market conditions, the competitive responses from other financial institutions in our market area, and our ability to maintain high asset quality as we increase our commercial real estate loans, home equity lines of credit, commercial business loans and indirect automobile loans. While we believe we have the management resources and internal systems in place to successfully manage our future growth, growth opportunities may not be available and we may not be successful in implementing our business strategy. Further, it will take time to implement our business strategy, especially for our lenders to originate enough loans and for our branches to attract enough favorably priced deposits to generate the revenue needed to offset the associated expenses. In addition, our new strategic plan, even if successfully implemented, may not ultimately produce positive results.

Our branch network expansion strategy may negatively affect our financial performance.

Depending on market conditions, we intend to expand our branch office network by at least two de novo or acquired branch offices over the next four years. This strategy may not generate earnings, or may not generate earnings within a reasonable period of time. Numerous factors contribute to the performance of a new branch, such as a suitable location, qualified personnel, and an effective marketing strategy. Additionally, it takes time for a new branch to originate sufficient loans and generate sufficient deposits to produce enough income to offset expenses, some of which, like salaries and occupancy expense, are considered fixed costs.

Our loan portfolio has greater risk than those of many savings banks due to the substantial number of indirect automobile loans in our portfolio. We intend to continue increasing the amount of indirect automobile loans in our portfolio.

We have a diversified loan portfolio with a substantial number of loans secured by collateral other than owner-occupied one- to four-family residential real estate. Our loan portfolio includes a substantial number of indirect automobile loans, which are automobile loans assigned to us by participating automobile dealerships upon our review and approval of such loans. At March 31, 2011, our indirect automobile loans totaled $30.4 million, or 7.89% of our total loan portfolio, an increase from $3.7 million, or 1.10% of our total loan portfolio, at December 31, 2010. Automobile loans generally have greater risk of loss or default than one- to four-family residential mortgage loans due to the rapid depreciation of automobiles securing the loans. We face the risk that the collateral for a defaulted loan may not provide an adequate source of repayment of the outstanding loan balance. Furthermore, the application of various federal and state laws, including bankruptcy and insolvency laws, may limit our ability to recover on such loans.

Because of our extensive expertise and focus on prime borrowers, we intend to continue to increase the amount of indirect automobile loans in our portfolio. However, it is difficult to assess the future performance of this part of our loan portfolio due to the recent origination of these loans. These loans may have delinquency or charge-off levels above our estimates, which would adversely affect our future performance. In addition, if our losses on these loans increase, it may become necessary to increase our provision for loan losses, which would also adversely impact our future earnings.

See “Business of Belmont Savings Bank—Lending Activities—Indirect Automobile and Other Consumer Loans.”

Because we intend to continue to emphasize our commercial real estate and multi-family loan originations, our credit risk will increase, and continued downturns in the local real estate market or economy could adversely affect our earnings.

We intend to continue originating commercial real estate and multi-family loans. At March 31, 2011, $113.1 million, or 29.4%, of our total loan portfolio consisted of multi-family loans and commercial real estate loans. Commercial real estate and multi-family loans generally have more risk than the one- to four-family residential real estate loans that we originate. Because the repayment of commercial real estate and multi-family loans depends on the successful management and operation of the borrower’s properties or related businesses, repayment of such loans can be affected by adverse conditions in the local real estate market or economy. Commercial real estate and multi-family loans may also involve relatively large loan balances to individual borrowers or groups of related borrowers. A downturn in the real estate market or the local economy could adversely affect the value of properties securing the loan or the revenues from the borrower’s business, thereby increasing the risk of nonperforming loans. As our commercial real estate and multi-family loan portfolios increase, the corresponding risks and potential for losses from these loans may also increase.

A portion of our one-to four-family residential mortgage loans is comprised of non-owner occupied properties, which increases the credit risk on this portion of our loan portfolio.

A significant portion of the housing stock in our primary lending market area is comprised of two-, three- and four-unit properties. At March 31, 2011, of the $174.7 million of one- to four-family residential mortgage loans in our portfolio, $4.7 million, or 2.7% of this amount, were comprised of non-owner occupied properties. There is a greater credit risk inherent in two-, three- and four-unit properties and especially in investor-owner and non-owner occupied properties, than in owner-occupied one-unit

properties since, similar to commercial real estate and multi-family loans, the repayment of these loans may depend, in part, on the successful management of the property and/or the borrower’s ability to lease the units of the property. A downturn in the real estate market or the local economy could adversely affect the value of properties securing these loans or the revenues derived from these properties, which could affect the borrower’s ability to repay the loan.

Our home equity line of credit initiative exposes us to a risk of loss due to a decline in property values.

At March 31, 2011, $33.7 million, or 8.8%, of our total loan portfolio consisted of home equity lines of credit. As part of our strategic business plan, we intend to increase our home equity lines of credit over the next several years. We generally originate home equity lines of credit with loan-to-value ratios of up to 80% when combined with the principal balance of the existing first mortgage loan, although loan-to-value ratios may exceed 80% on a case-by-case basis. Declines in real estate values in our market area could cause some of our home equity loans to be inadequately collateralized, which would expose us to a greater risk of loss in the event that we seek to recover on defaulted loans by selling the real estate collateral.

We make and hold in our portfolio construction loans, including speculative construction loans, which are considered to have greater credit risk than other types of residential loans made by financial institutions.

We originate construction loans for one- to four-family residential properties, multi-family properties and commercial properties, including commercial “mixed-use” buildings and homes built by developers on speculative, undeveloped property. At March 31, 2011, $14.8 million, or 3.8% of our total loan portfolio, consisted of construction loans, $3.0 million of which were secured by one- to four-family owner-occupied residential real estate, $8.8 million of which were secured by one- to four-family residential real estate projects on speculation, $1.8 million of which were secured by multi-family residential real estate projects on speculation, and $1.2 million of which were secured by commercial real estate. Construction loans are considered more risky than other types of residential mortgage loans. The primary credit risks associated with construction lending are underwriting, project risks and market risks. Project risks include cost overruns, borrower credit risk, project completion risk, general contractor credit risk, and environmental and other hazard risks. Market risks are risks associated with the sale of the completed residential units. They include affordability risk, which means the risk of affordability of financing by borrowers, product design risk, and risks posed by competing projects. While we believe we have established adequate allowances in our financial statements to cover the credit risk of our construction loan portfolio, there can be no assurance that losses will not exceed our allowances, which could adversely impact our future earnings.

The Dodd-Frank Wall Street Reform and Consumer Protection Act will, among other things, tighten capital standards, create a new Consumer Financial Protection Bureau and result in new laws and regulations that are expected to increase our costs of operations.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) will significantly change the current bank regulatory structure and affect the lending, deposit, investment, trading and operating activities of financial institutions and their holding companies. The Dodd-Frank Act requires various federal agencies to adopt a broad range of new implementing rules and regulations, and to prepare numerous studies and reports for Congress. The federal agencies are given significant discretion in drafting the implementing rules and regulations, and consequently, many of the details and much of the impact of the Dodd-Frank Act may not be known for many months or years.

A provision of the Dodd-Frank Act eliminated the federal prohibitions on paying interest on demand deposits effective July 21, 2011, thus allowing businesses to have interest-bearing checking accounts. Depending on competitive responses, this significant change to existing law could have an adverse effect on our interest expense.

The Dodd-Frank Act creates a new Consumer Financial Protection Bureau with broad powers to supervise and enforce consumer protection laws. The Consumer Financial Protection Bureau has broad rule-making authority for a wide range of consumer protection laws that apply to all banks and savings institutions, including the authority to prohibit “unfair, deceptive or abusive” acts and practices. The Consumer Financial Protection Bureau has examination and enforcement authority over all banks and savings institutions with more than $10 billion in assets. Banks and savings institutions with $10 billion or less in assets will be examined by their applicable bank regulators. The Dodd-Frank Act also weakens the federal preemption rules that have been applicable for national banks and federal savings associations, and gives state attorneys general the ability to enforce federal consumer protection laws.

It is difficult to predict at this time what specific impact the Dodd-Frank Act and the yet to be written implementing rules and regulations will have on community banks. However, it is expected that at a minimum they will increase our operating and compliance costs and could increase our interest expense.

If our allowance for loan losses is not sufficient to cover actual loan losses, our earnings will decrease.

We make various assumptions and judgments about the collectability of our loan portfolio, including the creditworthiness of our borrowers and the value of the real estate and other assets serving as collateral for the repayment of many of our loans. In determining the amount of the allowance for loan losses, we review our loans and our loss and delinquency experience, and we evaluate economic conditions. If our assumptions are incorrect, our allowance for loan losses may not be sufficient to cover probable incurred losses in our loan portfolio, resulting in additions to our allowance. Material additions to our allowance could materially decrease our net income.

In addition, bank regulators periodically review our allowance for loan losses and may require us to increase our allowance for loan losses or recognize further loan charge-offs. Any increase in our allowance for loan losses or loan charge-offs as required by these regulatory authorities might have a material adverse effect on our financial condition and results of operations.

Future changes in interest rates could reduce our profits.

Our ability to make a profit largely depends on our net interest and dividend income, which could be negatively affected by changes in interest rates. Net interest and dividend income is the difference between:

•

the interest and dividend income we earn on our interest-earning assets, such as loans and securities; and

•

the interest expense we pay on our interest-bearing liabilities, such as deposits and borrowings.

A significant portion of our loans are fixed-rate one- to four-family residential mortgage loans, and like many savings institutions, our focus on deposit accounts as a source of funds, which have no stated maturity date or shorter contractual maturities, results in our liabilities having a shorter duration than our assets. This imbalance can create significant earnings volatility, because market interest rates

change over time. In a period of rising interest rates, the interest income earned on our assets, such as loans and investments, may not increase as rapidly as the interest paid on our liabilities, such as deposits. In a period of declining interest rates, the interest income earned on our assets may decrease more rapidly than the interest paid on our liabilities, as borrowers prepay mortgage loans, and mortgage-backed securities and callable investment securities are called or prepaid, thereby requiring us to reinvest these funds at lower interest rates. At March 31, 2011, our interest rate risk analysis indicated that our net interest income would decrease by 4.2% if there was an instantaneous 300 basis point increase in market interest rates. For additional discussion of how changes in current interest rates could impact our financial condition and results of operations, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Management of Market Risk.”

Changes in interest rates also create reinvestment risk, which is the risk that we may not be able to reinvest prepayments at rates that are comparable to the rates we earned on the prepaid loans or securities in a declining interest rate environment.

Additionally, increases in interest rates may decrease loan demand and/or make it more difficult for borrowers to repay adjustable-rate loans. At December 31, 2010, $134.9 million, or 73.5% of our $183.6 million total one- to four-family residential mortgage loans at such date had adjustable rates of interest. If interest rates increase, the rates on these loans will, in turn, increase, thereby increasing the risk that borrowers will not be able to repay these loans.

Changes in interest rates also affect the current fair value of our interest-earning securities portfolio. Generally, the value of securities moves inversely with changes in interest rates.

Concentration of loans in our primary market area, which has recently experienced an economic downturn, may increase risk.

Our success depends primarily on general economic conditions in our market area in Eastern Massachusetts. Nearly all of our loans are to customers in this market. Accordingly, the local economic conditions in this market have a significant impact on the ability of borrowers to repay loans as well as our ability to originate new loans. As such, a continuation of the weakness in real estate values in this market would also lower the value of the collateral securing loans on properties in our market. In addition, a continued weakening in general economic conditions caused by inflation, recession, unemployment or other factors beyond our control could negatively affect our financial results.

Loss of key personnel could adversely impact results.

Our success has been and will continue to be greatly influenced by our ability to retain the services of our existing senior management. The unexpected loss of the services of any of the key management personnel, or the inability to recruit and retain qualified personnel in the future, could have an adverse impact on our business and financial results.

Our earnings have been negatively affected by the reduction in dividends paid by the Federal Home Loan Bank of Boston. In addition, any restrictions placed on the operations of the Federal Home Loan Bank of Boston could hinder our ability to use it as a liquidity source.

The Federal Home Loan Bank (“FHLB”) of Boston did not pay any dividends during the years 2009 and 2010. Although the FHLB Boston began paying a dividend again in the first quarter of 2011, the dividend paid was equal to an annualized rate of 30 basis points per share, far below the dividend paid by the FHLB of Boston prior to 2009. The failure of the FHLB of Boston to pay full dividends for any quarter will reduce our earnings during that quarter. In addition, the FHLB of Boston is an important source of liquidity for us, and any restrictions on their operations may hinder our ability to use it as a liquidity source. At March 31, 2011, the carrying value of our FHLB of Boston stock, was $8.0 million.

Strong competition for deposits and lending opportunities within our market areas, as well as competition from non-depository investment alternatives, may limit our growth and profitability.

Competition in the banking and financial services industry is intense. In our market areas, we compete with commercial banks, savings institutions, mortgage brokerage firms, credit unions, finance companies, mutual funds, insurance companies, and brokerage and investment banking firms operating locally and elsewhere. Some of our competitors have greater name recognition and market presence that benefit them in attracting business, and offer certain services that we do not or cannot provide. In addition, larger competitors may be able to price loans and deposits more aggressively than we do, which could affect our ability to grow and to be profitable on a long-term basis. Our profitability depends upon our ability to successfully compete in our market areas. If we must raise interest rates paid on deposits or lower interest rates charged on our loans, our net interest margin and profitability could be adversely affected.

In addition, checking and savings account balances and other forms of deposits can decrease when our deposit customers perceive alternative investments, such as the stock market or other non-depository investments, as providing superior expected returns, or if our customers seek to spread their deposits over several banks to maximize FDIC insurance coverage. Furthermore, technology and other changes have made it more convenient for bank customers to transfer funds into alternative investments, including products offered by other financial institutions or non-bank service providers. Additional increases in short-term interest rates could increase transfers of deposits to higher yielding deposits. Efforts and initiatives we undertake to retain and increase deposits, including deposit pricing, can increase our costs. When bank customers move money out of bank deposits in favor of alternative investments or into higher yielding deposits, or spread their accounts over several banks, we can lose a relatively inexpensive source of funds, thus increasing our funding costs and reducing our profitability.

Technological advances impact our business.

The banking industry is undergoing technological changes with frequent introductions of new technology-driven products and services. In addition to improving customer services, the effective use of technology increases efficiency and enables financial institutions to reduce costs. Our future success will depend, in part, on our ability to address the needs of our customers by using technology to provide products and services that will satisfy customer demands for convenience as well as to create additional efficiencies in operations. Many competitors have substantially greater resources to invest in technological improvements. We may not be able to effectively implement new technology-driven products and services or successfully market such products and services to our customers.

Our information systems may experience an interruption or breach in security.

We rely heavily on communications and information systems to conduct our business. Any failure, interruption, or breach in security or operational integrity of these systems could result in failures or disruptions in our customer relationship management, general ledger, deposit, loan, and other systems. While we have policies and procedures designed to prevent or limit the effect of the failure, interruption, or security breach of our information systems, we cannot assure you that any such failures, interruptions, or security breaches will not occur or, if they do occur, that they will be adequately addressed. The occurrence of any failures, interruptions, or security breaches of our information systems could damage our reputation, result in a loss of customer business, subject us to additional regulatory scrutiny, or expose us to civil litigation and possible financial liability, any of which could have a material adverse effect on our financial condition and results of operations.

Risks Related to this Stock Offering

The future price of the shares of common stock may be less than the purchase price in the stock offering.

If you purchase shares of common stock in the stock offering, you may not be able to sell them at or above the purchase price in the stock offering. The aggregate purchase price of the shares of common stock sold in the offering is determined by an independent, third-party appraisal, pursuant to Massachusetts and federal banking regulations. The appraisal is not intended, and should not be construed, as a recommendation of any kind as to the advisability of purchasing shares of common stock. Following the completion of the stock offering, our aggregate pro forma market value will be based on the market trading price of the shares, and not the final, approved independent appraisal, which may result in our stock trading below the initial offering price of $10.00 per share.

Our return on equity will be low following the stock offering. This could negatively affect the trading price of our shares of common stock.

Net income divided by average equity, known as “return on equity,” is a ratio many investors use to compare the performance of a financial institution to its peers. Following the conversion, we expect our consolidated equity to be between $98.4 million at the minimum of the offering range and $127.8 million at the adjusted maximum of the offering range. Based upon our net income for the year ended December 31, 2010, and these pro forma equity levels, our return on equity would be 1.9% and 1.4% at the minimum and adjusted maximum of the offering range, respectively. We expect our return on equity to remain low until we are able to leverage the additional capital we receive from the stock offering. Although we will be able to increase net interest and dividend income using proceeds of the stock offering, our return on equity will be negatively affected by our increased capital resulting from the proceeds from the offering as well as higher expenses from the costs of being a public company and added expenses associated with our employee stock ownership plan and the stock-based benefit plan we intend to adopt. Until we can increase our net interest and dividend income and noninterest income and leverage the capital raised in the stock offering, we expect our return on equity to remain low, which may reduce the value of our shares of common stock.

The contribution to the charitable foundation will dilute your ownership interest and adversely affect net income in 2011.

We intend to establish and fund a charitable foundation in connection with the conversion and stock offering. We will contribute cash and shares of our common stock equal to 2.0% of the shares sold in the offering and $200,000 of cash to the charitable foundation. The contribution of shares of common stock and cash will total $1.4 million at the minimum of the offering range, up to a contribution of $2.0 million at the maximum, as adjusted, of the offering range. The aggregate contribution will have an adverse effect on our net income for the quarter and year in which we make the issuance and contribution to the charitable foundation. The after-tax expense of the contribution will reduce net income in fiscal 2011 by approximately $0.9 million at the midpoint of the offering range. We had net income of $1.8 million for the year ended December 31, 2010. Persons purchasing shares in the stock offering will have their ownership and voting interests in BSB Bancorp, Inc. diluted by up to 1.96% due to the issuance of shares of common stock to the charitable foundation.

Our contribution to the charitable foundation may not be tax deductible, which could reduce our profits.

We may not have sufficient profits to be able to fully use the tax deduction from our contribution to the charitable foundation. Pursuant to the Internal Revenue Code, an entity is permitted to deduct up to 10% of its taxable income (income before federal income taxes and charitable contributions) in any one year for charitable contributions. Any contribution in excess of the 10% limit may be deducted for federal income tax purposes over each of the five years following the year in which the charitable contribution is made. Accordingly, a charitable contribution could, if necessary, be deducted over a six-year period. Based on $1.6 million of normalized taxable income before income tax expense in the year ended December 31, 2010, and assuming that our taxable income before income tax expense remained at that level in future years following our conversion and stock offering, we estimate that we would be able to deduct for federal income tax purposes only $1.0 million of the contribution to the charitable foundation. This would result in after-tax expense of $1.7 million, and not $1.3 million based on full deductibility of the $2.0 million contribution, at the maximum, as adjusted, of the offering range.

We will need to implement additional finance and accounting systems, procedures and controls in order to satisfy our new public company reporting requirements.

Upon completion of the stock offering, we will become a public reporting company. The federal securities laws and regulations of the Securities and Exchange Commission require that we file annual, quarterly and current reports, and that we maintain effective disclosure controls and procedures and internal controls over financial reporting. We expect that the obligations of being a public company, including substantial public reporting obligations, will require significant expenditures and place additional demands on our management team. These obligations will increase our operating expenses and could divert management’s attention from our banking operations.

Compliance with the Sarbanes-Oxley Act of 2002 and the related rules and regulations of the Securities and Exchange Commission will require us to certify the adequacy of our internal controls and procedures, which could require us to upgrade our systems, and/or hire additional staff, which would increase our operating costs.

Our stock-based benefit plans will increase our costs, which will reduce our income.

We anticipate that our employee stock ownership plan will purchase 5% of the total shares of common stock issued in the stock offering (including shares contributed to the charitable foundation) with funds borrowed from BSB Bancorp, Inc. or a subsidiary. We will record annual employee stock ownership plan expense in an amount equal to the fair value of shares of common stock committed to be released to employees. Assuming the employee stock ownership plan purchases 458,643 shares in the offering at the adjusted maximum of the offering range, we will recognize additional pre-tax compensation expense of $4.6 million over a 30-year period, assuming the shares of common stock have a fair market value of $10.00 per share for the full 30-year period. If shares of common stock appreciate in value over time, compensation expense relating to the employee stock ownership plan will increase.

We also intend to adopt a stock-based benefit plan after the stock offering that would award participants shares of our common stock (at no cost to them) and/or options to purchase shares of our common stock. The number of shares of restricted stock or stock options reserved for issuance under any initial stock-based benefit plan may not exceed 4% and 10%, respectively, of our total shares issued in the offering including shares contributed to the charitable foundation, if these plans are adopted within 12 months after the completion of the conversion. We may grant shares of common stock and stock options in excess of these amounts provided the stock-based benefit plan is adopted more than one year following

the stock offering. Assuming a $10.00 per option exercise price and an estimated grant-date fair value of the options utilizing a Black-Scholes option pricing analysis of $3.58 per option granted, with the value amortized over a five-year vesting period, the corresponding annual pre-tax expense associated with the stock options would be $657,000 at the adjusted maximum of the offering range. In addition, assuming that all shares of restricted stock are awarded at a price of $10.00 per share, and that the awards vest over a five-year period, the corresponding annual pre-tax expense associated with restricted stock awarded under the stock-based benefit plan would be $734,000 at the adjusted maximum of the offering range. However, if we grant shares of common stock or options in excess of these amounts, such grants would increase our costs further.

The shares of restricted stock granted under the stock-based benefit plan will be expensed by us over their vesting period at the fair market value of the shares on the date they are awarded. If the shares of restricted stock to be granted under the plan are repurchased in the open market (rather than issued directly from authorized but unissued shares by BSB Bancorp, Inc.) and cost the same as the purchase price in the stock offering, the reduction to stockholders’ equity due to the plan would be between $2.4 million at the minimum of the offering range and $3.7 million at the adjusted maximum of the offering range. To the extent we repurchase shares of common stock in the open market to fund the grants of shares under the plan, and the price of such shares exceeds the offering price of $10.00 per share, the reduction to stockholders’ equity would exceed the range described above. Conversely, to the extent the price of such shares is below the offering price of $10.00 per share, the reduction to stockholders’ equity would be less than the range described above.

The implementation of stock-based benefit plans may dilute your ownership interest.

We intend to adopt one or more stock-based benefit plans, which will allow participants to be awarded shares of common stock (at no cost to them) or options to purchase shares of our common stock, following the stock offering. These stock-based benefit plans will be funded through either open market purchases of shares of common stock or from the issuance of authorized but unissued shares of common stock. Our ability to repurchase shares of common stock to fund these plans will be subject to many factors, including, but not limited to, applicable regulatory restrictions on stock repurchases, the availability of stock in the market, the trading price of the stock, our capital levels, alternative uses for our capital and our financial performance. Although our current intention is to fund these plans with stock repurchases, we may not be able to conduct such repurchases. If we do not repurchase shares of common stock to fund these plans, then stockholders would experience a reduction in their ownership interest, which would total 12.3% in the event newly issued shares are used to fund stock options and awards of shares of common stock under these plans in an amount equal to 10% or 4%, respectively, of the shares issued in the stock offering. We may grant shares of common stock and stock options in excess of these amounts provided the stock-based benefit plan is adopted more than one year following the completion of the stock offering. The implementation of the stock-based benefit plan will be subject to stockholder approval.

We have not determined whether we will adopt stock-based benefit plans more than one year following the stock offering. Stock-based benefit plans adopted more than one year following the stock offering may exceed regulatory restrictions on the size of stock-based benefit plans adopted within one year, which would further increase our costs.

If we adopt stock-based benefit plans more than one year following the completion of the stock offering, then grants of shares of common stock or stock options under our stock-based benefit plans may exceed 4% and 10%, respectively, of the total shares issued in the offering, including shares contributed to our charitable foundation. Stock-based benefit plans that provide for awards in excess of these amounts would increase our costs beyond the amounts estimated in “—Our stock-based benefit plans will

increase our costs, which will reduce our income.” Stock-based benefit plans that provide for awards in excess of these amounts could also result in dilution to stockholders in excess of that described in “—The implementation of stock-based benefit plans may dilute your ownership interest. Historically, stockholders have approved these stock-based benefit plans.” Although the implementation of the stock-based benefit plan will be subject to stockholder approval, the determination as to the timing of the implementation of such a plan will be at the discretion of our Board of Directors.

We have entered into severance agreements with certain of our officers which may increase our compensation costs or increase the cost of acquiring us.

We have entered into severance agreements with our President and Chief Executive Officer, our Senior Vice President and Chief Financial Officer, our Executive Vice President and Chief Operating Officer, our Executive Vice President—Consumer Lending and Auto Finance of Belmont Savings Bank, and our Senior Vice President—Commercial Real Estate of Belmont Savings Bank. In the event of certain types of termination following a change in control, as set forth in the severance agreements, and assuming the agreements were in effect as of December 31, 2010, the severance agreements provide for cash severance benefits that would cost up to approximately $4.9 million in the aggregate based on information as of December 31, 2010. For additional information see “Management of BSB Bancorp, Inc.—Executive Compensation.”

We have broad discretion in using the proceeds of the stock offering. Our failure to effectively use such proceeds could reduce our profits.

We will use a portion of the net proceeds to finance (or to capitalize a subsidiary that will finance) the purchase of shares of common stock in the stock offering by the employee stock ownership plan, and may use the remaining net proceeds to pay dividends to stockholders, repurchase shares of common stock, purchase investment securities, deposit funds in Belmont Savings Bank, acquire other financial services companies or branch offices or for other general corporate purposes. Belmont Savings Bank may use the proceeds it receives to fund new loans, establish or acquire new branches, purchase investment securities, reduce a portion of our borrowings (including prepayment of outstanding Federal Home Loan Bank advances), or for general corporate purposes. We have not identified specific amounts of proceeds for any of these purposes and we will have significant flexibility in determining the amount of net proceeds we apply to different uses and the timing of such applications. Our failure to utilize these funds effectively could reduce our profitability. We have not established a timetable for the effective deployment of the proceeds, and we cannot predict how long we will require to effectively deploy the proceeds.

Our stock value may be negatively affected by Massachusetts and federal regulations that restrict takeovers.

For three years following the stock offering, applicable regulations prohibit any person from acquiring or offering to acquire more than 10% of our common stock without the prior written approval of the Massachusetts Commissioner of Banks and federal regulators. See “Restrictions on Acquisition of BSB Bancorp, Inc.” for a discussion of applicable regulations regarding acquisitions.

The corporate governance provisions in our articles of incorporation and bylaws, Belmont Savings Bank’s articles of organization and the corporate governance provisions under Maryland law, may prevent or impede the holders of our common stock from obtaining representation on our Board of Directors and may impede takeovers of the company.

Provisions in our Articles of Incorporation and bylaws, as well as the articles of organization of Belmont Savings Bank, may prevent or impede holders of our common stock from obtaining representation on our Board of Directors and may make takeovers of BSB Bancorp, Inc. more difficult. For example, our Board of Directors is divided into three staggered classes. A classified board makes it more difficult for stockholders to change a majority of the directors because it generally takes at least two annual elections of directors for this to occur. In addition, our Articles of Incorporation include a provision that no person will be entitled to vote any shares of our common stock in excess of 10% of our outstanding shares of common stock. This limitation does not apply to the purchase of shares by a tax-qualified employee stock benefit plan established by us. Belmont Savings Bank’s articles of organization will contain a provision that for a period of three years from the closing of the conversion, no person other than BSB Bancorp, Inc. may offer directly or indirectly to acquire the beneficial ownership of more than 10% of any class of equity security of Belmont Savings Bank. This limitation does not apply to the purchase of shares by a tax-qualified employee stock benefit plan established by us, as well as other acquisitions specified in the Bank’s charter. In addition, our Articles of Incorporation and bylaws restrict who may call special meetings of stockholders and how directors may be removed from office. Additionally, in certain instances, the Maryland General Corporation Law requires a supermajority vote of our stockholders to approve a merger or other business combination with a large stockholder, if the proposed transaction is not approved by a majority of our directors.

Our stock value may be negatively affected by applicable regulations that restrict stock repurchases.

Applicable regulations restrict us from repurchasing our shares of common stock during the first year following the conversion unless extraordinary circumstances exist. Stock repurchases are a capital management tool that can enhance the value of a company’s stock, and our inability to repurchase our shares of common stock during the first year following the conversion may negatively affect our stock price.

We have never issued common stock and there is no guarantee that a liquid market will develop.

We have never issued capital stock and there is no established market for our common stock. We expect that our common stock will be listed for trading on the Nasdaq Capital Market under the symbol “BLMT,” subject to completion of the offering and compliance with certain conditions, including the presence of at least three registered and active market makers. Keefe, Bruyette & Woods, Inc. has advised us that it intends to make a market in shares of our common stock following the offering, but it is under no obligation to do so or to continue to do so once it begins. While we will attempt before completion of the offering to obtain commitments from at least two other broker-dealers to make a market in shares of our common stock, we may not be able to obtain such commitments. This would result in our common stock not being listed for trading on the Nasdaq Capital Market, which could reduce the liquidity of our common stock.

We may take other actions to meet the minimum required sales of shares if we cannot find enough purchasers in the community. Such actions may reduce the net proceeds from the stock offering or concentrate ownership in fewer stockholders.

If we do not sell enough shares to reach the minimum of the offering range through the subscription and community offerings, shares may be offered for sale to the general public in a syndicated community offering to be managed by Keefe, Bruyette & Woods, Inc., acting as our agent. The fee to be paid in connection with such a syndicated community offering would be higher than the fee paid in the subscription and community offerings, which would increase the expenses associated with the stock offering and reduce the net proceeds. Specifically, Keefe, Bruyette & Woods, Inc. will receive a success fee of $400,000 for common stock sold in the subscription offering and the community offering. If there is a syndicated community offering, Keefe, Bruyette & Woods, Inc. will receive a fee not to exceed 6% of the aggregate dollar amount of the common stock sold in the syndicated community offering, which would be in addition to the fee earned by Keefe, Bruyette & Woods, Inc. in the subscription and community offerings. In addition, we can increase the maximum purchase limitations and allow all maximum purchase subscribers to increase their orders to the new maximum purchase limitations. This could result in a small number of stockholders owning a larger percentage of our stock, which could provide these stockholders with greater influence over management or our Board of Directors in a manner that other stockholders may not agree is in their best interests.

SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA

We changed our fiscal year end from September 30 to December 31, effective December 31, 2009. The following tables set forth selected consolidated historical financial and other data of BSB Bancorp, MHC and its subsidiary for the years and at the dates indicated. The information at December 31, 2010 and 2009, and for the fiscal years ended December 31, 2010, and September 30, 2009 and 2008, and for the three months ended December 31, 2009 is derived in part from, and should be read together with, the audited consolidated financial statements and notes thereto of BSB Bancorp, MHC beginning at page F-1 of this prospectus. The information at September 30, 2007 and 2006 and for the fiscal years ended September 30, 2007 and 2006 is derived in part from audited consolidated financial statements that are not included in this prospectus.

The information at and for the three months ended March 31, 2011 and 2010, for the year ended December 31, 2009 and for the three months ended December 31, 2008 is unaudited. However, in the opinion of management of BSB Bancorp, MHC, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the results of operations for the unaudited periods have been made. The selected operating data presented below for the three months ended March 31, 2011, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2011 or for future periods. The following information is only a summary, and should be read in conjunction with our financial statements and notes beginning on page F-1 of this prospectus.


	At March 31, 2011		At December 31,				At September 30,
	At March 31, 2011		2010		2009		2009		2008		2007		2006
	(unaudited)
Selected Financial Condition Data:
	(In thousands)
Total assets	$	529,274	$	500,287	$	504,944	$	500,254	$	482,847	$	449,885	$	461,341
Cash and cash equivalents		35,898		20,988		16,398		16,390		8,600		14,101		9,293
Investment Securities – trading		—		—		11,455		10,576		12,010		—		—
Investment Securities – available-for-sale		1		14,274		—		—		—		14,675		—
Investment Securities – held-to-maturity		78,996		93,899		91,704		82,470		72,906		74,308		97,915
Loans receivable, net (1)		383,014		336,936		351,753		359,195		358,415		321,039		328,772
Federal Home Loan Bank stock		8,038		8,038		8,038		8,038		7,838		5,333		5,464
Bank-owned life insurance		12,075		11,954		13,621		14,133		13,583		12,901		12,271
Deposits		377,320		346,899		312,694		300,120		270,144		300,889		320,307
Federal Home Loan Bank advances		93,800		92,800		129,700		137,450		151,750		86,750		78,250
Securities sold under agreements to repurchase		3,086		2,654		3,672		4,533		3,481		3,696		5,059
Other borrowed funds		1,590		5,199		5,750		6,025		7,520		8,701		9,548
Total equity capital		47,183		46,927		43,825		42,909		41,492		42,508		41,504


	For the Three Months Ended March 31,				For the Years Ended December 31,				For the Three Months Ended December 31,					For the Years Ended September 30,
	2011		2010		2010		2009		2009		2008			2009		2008			2007		2006
	(unaudited)						(unaudited)				(unaudited)

	(In thousands)
Selected Operating Data:
Interest and dividend income	$	5,094	$	5,571	$	21,201	$	23,094	$	5,641	$	6,088		$	23,539	$	23,032		$	23,090	$	21,707
Interest expense		1,545		2,118		7,568		10,371		2,314		3,092			11,148		13,294			14,006		11,933

Net interest and dividend income		3,549		3,453		13,633		12,723		3,327		2,996			12,391		9,738			9,084		9,774
Provision for loan losses		476		284		438		366		152		383			597		375			100		334

Net interest and dividend income after provision for loan losses		3,073		3,169		13,195		12,357		3,175		2,613			11,794		9,363			8,984		9,440
Noninterest income (charges)		3,086		972		1,721		4,280		1,073		(1,995	)		1,214		(1,204	)		1,164		1,012
Noninterest expense		3,722		2,680		12,869		10,462		2,743		2,448			10,167		9,300			9,261		10,121

Income (loss) before income tax expense (benefit)		2,437		1,461		2,047		6,175		1,505		(1,830	)		2,841		(1,141	)		887		331
Income tax expense (benefit)		908		560		220		2,742		589		(730	)		1,424		(705	)		102		(17	)

Net income (loss)	$	1,529	$	901	$	1,827	$	3,433	$	916	$	(1,100	)	$	1,417	$	(436	)	$	785	$	348

(1)	Excludes loans held for sale.


	At or For the Three Months Ended March 31,						At or For the Years Ended December 31,						At or For the Three Months Ended December 31,						At or For the Years Ended September 30,
	2011			2010			2010			2009			2009			2008			2009			2008			2007			2006
Selected Financial Ratios and Other Data (unaudited):

Performance Ratios:
Return on average assets (1)		1.23	%		0.72	%		0.36	%		0.69	%		0.72	%		(0.90	)%		0.29	%		(0.10	)%		0.18	%		0.08	%
Return on average equity (1)		13.17	%		8.22	%		4.04	%		8.11	%		8.28	%		(10.49	)%		3.39	%		(1.02	)%		1.87	%		0.85	%
Interest rate spread (1)(2)		2.81	%		2.70	%		2.65	%		2.44	%		2.53	%		2.28	%		2.38	%		1.94	%		1.80	%		2.06	%
Net interest margin (1)(3)		2.99	%		2.91	%		2.86	%		2.67	%		2.76	%		2.55	%		2.62	%		2.25	%		2.14	%		2.32	%
Efficiency ratio (4)		56.10	%		60.56	%		83.82	%		61.53	%		62.34	%		244.56	%		74.73	%		108.98	%		90.37	%		93.83	%
Noninterest expense to average total assets (1)		2.99	%		2.15	%		2.57	%		2.10	%		2.17	%		2.00	%		2.06	%		2.04	%		2.08	%		2.28	%
Average interest-earning assets to average interest-bearing liabilities		114.11	%		111.70	%		112.86	%		110.73	%		111.78	%		110.03	%		110.28	%		109.86	%		110.18	%		109.17	%
Average equity to average total assets		9.33	%		8.78	%		9.02	%		8.52	%		8.75	%		8.55	%		8.47	%		9.37	%		9.43	%		9.21	%

Asset Quality Ratios:
Non-performing assets to total assets		0.42	%		0.45	%		0.34	%		0.38	%		0.38	%		0.23	%		0.50	%		0.31	%		0.16	%		0.02	%
Non-performing loans to total loans		0.58	%		0.65	%		0.50	%		0.54	%		0.54	%		0.31	%		0.69	%		0.42	%		0.22	%		0.03	%
Allowance for loan losses to non-performing loans		149.85	%		120.39	%		169.24	%		129.21	%		129.21	%		184.70	%		93.03	%		116.86	%		200.71	%		1,516.09	%
Allowance for loan losses to total loans		0.86	%		0.78	%		0.85	%		0.70	%		0.70	%		0.57	%		0.64	%		0.49	%		0.44	%		0.40	%

Capital Ratios:
Total capital to risk-weighted assets		13.80	%		13.85	%		14.76	%		13.76	%		13.76	%		13.31	%		13.79	%		14.00	%		15.39	%		16.46	%
Tier 1 capital to risk-weighted assets		12.88	%		13.05	%		13.61	%		13.02	%		13.02	%		12.65	%		13.08	%		13.43	%		14.83	%		15.94	%
Tier 1 capital to total average assets		9.35	%		8.83	%		9.25	%		8.73	%		8.73	%		8.38	%		8.58	%		8.80	%		9.59	%		9.11	%

Other Data:
Number of full service offices		4			4			4			4			4			4			4			4			4			4
Full time equivalent employees		83			71			86			73			73			72			75			72			75			82

(1)	Ratios for the three-month periods ended March 31, 2011 and 2010 and December 31, 2009 and 2008 are annualized.

(2)	The interest rate spread represents the difference between the weighted-average yield on interest-earning assets and the weighted-average cost of interest-bearing liabilities for the period.

(3)	The net interest margin represents net interest and dividend income as a percent of average interest-earning assets for the period.

(4)	The efficiency ratio represents noninterest expense divided by the sum of net interest and dividend income and noninterest income.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements, which can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “plan,” “seek,” “expect,” “will,” “may” and words of similar meaning. These forward-looking statements include, but are not limited to:

•

statements of our goals, intentions and expectations;

•

statements regarding our business plans, prospects, growth and operating strategies;

•

statements regarding the asset quality of our loan and investment portfolios; and

•

estimates of our risks and future costs and benefits.

These forward-looking statements are based on our current beliefs and expectations and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. We do not undertake any obligation to update any forward-looking statements after the date of this prospectus, except as required by law.

The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:

•

our ability to successfully implement our new business strategy, which includes significant asset and liability growth;

•

our ability to increase our market share in our market areas and capitalize on growth opportunities;

•

our ability to successfully implement our branch network expansion strategy;

•

general economic conditions, either nationally or in our market areas, that are worse than expected;

•

competition among depository and other financial institutions;

•

inflation and changes in the interest rate environment that reduce our margins or reduce the fair value of financial instruments;

•

adverse changes in the securities markets;

•

changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements;

•

our ability to successfully integrate acquired entities, if any;

•

changes in consumer spending, borrowing and savings habits;

•

changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission and the Public Company Accounting Oversight Board;

•

changes in our organization, compensation and benefit plans;

•

changes in our financial condition or results of operations that reduce capital available to pay dividends; and

•

changes in the financial condition or future prospects of issuers of securities that we own.

Because of these and a wide variety of other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements. Please see “Risk Factors” beginning on page 15.

HOW WE INTEND TO USE THE PROCEEDS FROM THE OFFERING

Although we cannot determine what the actual net proceeds from the sale of the shares of common stock in the offering will be until the offering is completed, we anticipate that the net proceeds will be between $56.1 million and $76.5 million, or $88.3 million if the offering range is increased by 15%.

We intend to distribute the net proceeds from the stock offering as follows:


	Based Upon the Sale at $10.00 Per Share of
	Minimum 5,780,000 Shares					Midpoint 6,800,000 Shares					Maximum 7,820,000 Shares					Maximum as adjusted 8,993,000 Shares (1)
	Amount		Percent of Net Proceeds			Amount		Percent of Net Proceeds			Amount		Percent of Net Proceeds			Amount		Percent of Net Proceeds
	(Dollars in thousands)
Stock offering proceeds	$	57,800				$	68,000				$	78,200				$	89,930
Less offering expenses		1,658					1,658					1,658					1,658

Net offering proceeds (2)	$	56,142		100.0	%	$	66,342		100.0	%	$	76,542		100.0	%	$	88,272		100.0	%


Use of net proceeds:
To Belmont Savings Bank	$	28,071		50.0	%	$	33,171		50.0	%	$	38,271		50.0	%	$	44,136		50.0	%
To fund loan to employee stock ownership plan	$	2,948		5.2		$	3,468		5.2		$	3,988		5.2		$	4,586		5.2
Contributed to Foundation		200		0.4			200		0.3			200		0.3			200		0.2
Retained by BSB Bancorp, Inc.	$	24,923		44.4	%	$	29,503		44.5	%	$	34,083		44.5	%	$	39,350		44.6	%

(1)	As adjusted to give effect to an increase in the number of shares, which could occur due to a 15% increase in the offering range to reflect demand for the shares or changes in market conditions following the commencement of the offering.

(2)	Assumes all shares of common stock are sold in the subscription offering and/or the community offering.

Payments for shares of common stock made through withdrawals from existing deposit accounts will not result in the receipt of new funds for investment but will result in a reduction of Belmont Savings Bank’s deposits. The net proceeds may vary because the total expenses relating to the offering may be more or less than our estimates. For example, our expenses would increase if a syndicated community offering were used to sell shares of common stock not purchased in the subscription and community offerings.

BSB Bancorp, Inc. may use the proceeds it retains from the stock offering:

•

to invest in mortgage-backed securities and debt securities issued by the United States Government and United States Government-sponsored agencies or entities;

•

to finance the acquisition of financial institutions or other financial service companies or the deposits and assets of other institutions (although we currently have no understandings or agreements to acquire other banks, thrifts, branches thereof or other financial services companies); and

•

to pay cash dividends to stockholders;

•

to repurchase shares of our common stock, subject to regulatory restrictions; and

•

for other general corporate purposes, including depositing such funds with, or making additional capital contributions to, Belmont Savings Bank.

With the exception of the funding of the loan to the employee stock ownership plan (or funding a subsidiary which will make this loan), BSB Bancorp, Inc. has not quantified its plans for use of the offering proceeds for each of the foregoing purposes. Initially, we intend to invest a substantial portion of the net proceeds in short-term corporate debt securities, U.S. government and agency obligations, and mortgage-backed securities issued or guaranteed by U.S. government-sponsored enterprises.

Under applicable banking regulations, we may not repurchase shares of our common stock during the first year following the conversion, except to fund equity benefit plans or except when extraordinary circumstances exist and with prior regulatory approval.

Belmont Savings Bank intends to invest the remaining proceeds it receives from the stock offering initially in short-term investments, U.S. Government Agency securities and mortgage-backed securities. Over time, Belmont Savings Bank may use the proceeds that it receives from the stock offering as follows:

•

to fund new loans;

•

to invest in securities permitted by our investment policy;

•

to expand its banking franchise by establishing or acquiring new branches, or by acquiring other financial institutions, or the deposits and assets of other institutions, including in FDIC-assisted transactions of failed institutions, or other financial services companies (although we currently have no understandings or agreements to acquire other banks, thrifts, branches thereof or other financial services companies). Depending on market conditions, we intend to expand our branch office network by at least two de novo or acquired branch offices over the next four years;

•

to prepay outstanding Federal Home Loan Bank advances; and

•

for other general corporate purposes.

Belmont Savings Bank has not quantified its plans or determined specific amounts for use of the offering proceeds for each of the foregoing purposes. The use of proceeds outlined above are based on many factors including but not limited to changes in market interest rates, our relative position in the

financial services industry in our market and the attractiveness of potential acquisition of other financial institutions or their assets. Our short-term and long-term growth plans anticipate that, upon completion of the offering, we will experience growth through increased lending and investment activities and, possibly, acquisitions. We currently have no understandings or agreements to acquire other banks, thrifts, branches thereof or other financial services companies. There can be no assurance that we would be able to consummate any acquisition.

OUR POLICY REGARDING DIVIDENDS

Following completion of the stock offering, our Board of Directors will have the authority to declare dividends on our shares of common stock, subject to statutory and regulatory requirements. However, no decision has been made with respect to the payment of dividends. In determining whether to pay a cash dividend and the amount of such cash dividend, the Board of Directors is expected to take into account a number of factors, including capital requirements, our consolidated financial condition and results of operations, tax considerations, statutory and regulatory limitations and general economic conditions. No assurances can be given that any dividends will be paid or that, if paid, will not be reduced or eliminated in the future. Special cash dividends, stock dividends or returns of capital, to the extent permitted by applicable law, may be paid in addition to, or in lieu of, regular cash dividends. We will file a consolidated tax return with Belmont Savings Bank. Accordingly, it is anticipated that any cash distributions made by us to our stockholders would be treated as cash dividends and not as a non-taxable return of capital for federal and state tax purposes.

Pursuant to our Articles of Incorporation, we are authorized to issue preferred stock. If we issue preferred stock, the holders thereof may have a priority over the holders of our shares of common stock with respect to the payment of dividends. We currently have no plans to issue shares of preferred stock. For a further discussion concerning the payment of dividends on our shares of common stock, see “Description of Capital Stock—Common Stock.” Initially, dividends we can declare and pay will depend upon the proceeds retained from the stock offering and the earnings received from the investment of those proceeds. In the future, dividends will depend in large part upon receipt of dividends from Belmont Savings Bank, because we expect to have limited sources of income other than dividends from Belmont Savings Bank and interest payments received in connection with the loan to the employee stock ownership plan (which we expect will be funded through a subsidiary formed solely for the purpose of making the loan to the employee stock ownership plan).

Massachusetts banking law and Federal Deposit Insurance Corporation regulations impose limitations on capital distributions by savings institutions. See “Supervision and Regulation—Federal Banking Regulation—Capital Distributions.”

Any payment of dividends by Belmont Savings Bank to us that would be deemed to be drawn out of Belmont Savings Bank’s bad debt reserves, if any, would require a payment of taxes at the then-current tax rate by Belmont Savings Bank on the amount of earnings deemed to be removed from the reserves for such distribution. See “Supervision and Regulation—Federal Banking Regulation—Capital Distributions.” Belmont Savings Bank does not intend to make any distribution to us that would create such a federal tax liability. See “Taxation—Federal Taxation” and “—State Taxation.”

MARKET FOR THE COMMON STOCK

We have never issued capital stock and there is no established market for our shares of common stock. We expect that our shares of common stock will be listed for trading on the Nasdaq Capital Market under the symbol “BLMT,” subject to completion of the offering and compliance with certain conditions, including the presence of at least three registered and active market makers. Keefe, Bruyette & Woods, Inc. has advised us that it intends to make a market in shares of our common stock following the offering, but it is under no obligation to do so or to continue to do so once it begins. While we will attempt before completion of the offering to obtain commitments from at least two other broker-dealers to make a market in shares of our common stock, there can be no assurance that we will be successful in obtaining such commitments.

The development and maintenance of a public market, having the desirable characteristics of depth, liquidity and orderliness, depends on the existence of willing buyers and sellers, the presence of which is not within our control or that of any market maker. The number of active buyers and sellers of shares of our common stock at any particular time may be limited, which may have an adverse effect on the price at which shares of our common stock can be sold. There can be no assurance that persons purchasing the shares of common stock will be able to sell their shares at or above the $10.00 offering purchase price per share. You should have a long-term investment intent if you purchase shares of our common stock and you should recognize that there may be a limited trading market in the shares of common stock.

HISTORICAL AND PRO FORMA REGULATORY CAPITAL COMPLIANCE

At March 31, 2011, Belmont Savings Bank exceeded all of the applicable regulatory capital requirements. The table below sets forth the historical equity capital and regulatory capital of Belmont Savings Bank at March 31, 2011, and the pro forma regulatory capital of Belmont Savings Bank, after giving effect to the sale of shares of common stock at a $10.00 per share purchase price. The table assumes the receipt by Belmont Savings Bank of 50% of the net offering proceeds. See “How We Intend to Use the Proceeds from the Offering.”


	Belmont Savings Bank Historical at March 31, 2011					Pro Forma at March 31, 2011, Based Upon the Sale in the Offering of (5)
	Belmont Savings Bank Historical at March 31, 2011					Minimum 5,780,000 Shares						Midpoint 6,800,000 Shares						Maximum 7,820,000 Shares						Maximum as adjusted 8,993,000 Shares (1)
	Amount		Percent of Assets			Amount			Percent of Assets			Amount			Percent of Assets			Amount			Percent of Assets			Amount			Percent of Assets
	(Dollars in thousands)
Equity	$	47,167		8.92	%	$	69,932			12.56	%	$	74,096			13.19	%	$	78,259			13.80	%	$	83,048			14.50	%
Tier 1 leverage (3)(4)	$	47,165		9.35	%	$	69,930			13.13	%	$	74,094			13.78	%	$	78,257			14.42	%	$	83,046			15.14	%
Tier 1 leverage requirement (2)		20,174		4.00			21,296			4.00			21,500			4.00			21,704			4.00			21,939			4.00

Excess	$	26,991		5.35	%	$	48,634			9.13	%	$	52,594			9.78	%	$	56,553			10.42	%	$	61,107			11.14	%


Tier 1 risk-based capital	$	47,165		12.88	%	$	69,930			18.81	%	$	74,094			19.87	%	$	78,257			20.93	%	$	83,046			22.14	%
Risk-based requirement		14,651		4.00			14,874			4.00			14,915			4.00			14,955			4.00			15,002			4.00

Excess	$	32,514		8.88	%	$	55,056			14.81	%	$	59,179			15.87	%	$	63,302			16.93	%	$	68,044			18.14	%


Total risk-based capital (3)	$	50,528		13.80	%	$	73,293			19.71	%	$	77,457			20.77	%	$	81,620			21.83	%	$	86,409			23.04	%
Risk-based requirement		29,301		8.00			29,748			8.00			29,829			8.00			29,911			8.00			30,005			8.00

Excess	$	21,227		5.80	%	$	43,545			11.71	%	$	47,628			12.77	%	$	51,709			13.83	%	$	56,404			15.04	%


Reconciliation of capital infused into Belmont Savings Bank:
Net proceeds						$	28,071					$	33,171					$	38,271					$	44,136
Less: Common stock acquired by employee stock ownership plan							(2,948	)					(3,468	)					(3,988	)					(4,586	)
Less: Common stock awarded under stock-based benefit plans							(2,358	)					(2,774	)					(3,191	)					(3,669	)

Pro forma increase						$	22,765					$	26,929					$	31,092					$	35,881

(1)	As adjusted to give effect to an increase in the number of shares that could occur due to a 15% increase in the offering range to reflect demand for the shares or changes in market conditions following the commencement of the offering.

(2)	The current leverage capital requirement for financial institutions is 3% of total average assets for financial institutions that receive the highest supervisory rating for safety and soundness and a 4% Tier 1 capital ratio requirement for all other financial institutions.

(3)	Tier 1 capital levels are shown as a percentage of average assets. Risk-based capital levels are shown as a percentage of risk-weighted assets.

(4)

Pro forma capital levels assume that the employee stock ownership plan purchases 5% of the shares of common stock to be outstanding immediately following the stock offering (including shares contributed to the charitable foundation) with funds borrowed from BSB Bancorp, Inc. or a subsidiary. Pro forma generally accepted accounting principles (“GAAP”) capital and regulatory capital have been reduced by the amount required to fund this plan. See “Management of BSB Bancorp, Inc.” for a discussion of the employee stock ownership plan.

(5)	Pro forma amounts and percentages assume net proceeds are invested in assets that carry a 20% risk weighting.

CAPITALIZATION

The following table presents the historical consolidated capitalization of BSB Bancorp, MHC at March 31, 2011 and the pro forma consolidated capitalization of BSB Bancorp, Inc., after giving effect to the conversion and the offering, based upon the assumptions set forth in the “Pro Forma Data” section.


	BSB Bancorp, MHC Historical at March 31, 2011			BSB Bancorp, Inc. Pro Forma, Based Upon the Sale in the Offering at $10.00 per Share of
	BSB Bancorp, MHC Historical at March 31, 2011			Minimum 5,780,000 Shares			Midpoint 6,800,000 Shares			Maximum 7,820,000 Shares			Maximum as adjusted 8,993,000 Shares (1)
	(Dollars in thousands)
Deposits (2)	$	377,320		$	377,320		$	377,320		$	377,320		$	377,320
Borrowings		98,476			98,476			98,476			98,476			98,476

Total deposits and borrowed funds	$	475,796		$	475,796		$	475,796		$	475,796		$	475,796

Stockholders’ equity:
Preferred stock $0.01 par value, 50 million shares authorized; none issued or outstanding
Common stock $0.01 par value, 100 million shares authorized; assuming shares outstanding as shown (3)(4)	$	—		$	59		$	69		$	80		$	92
Additional paid-in capital (4)		—			57,239			67,633			78,026			89,979
Retained earnings (5)		47,181			47,181			47,181			47,181			47,181

Plus:
Tax benefit of contribution to the charitable foundation		—			542			624			706			799
Accumulated other comprehensive income		2			2			2			2			2
Less:
Expense of the Foundation		—			(1,356	)		(1,560	)		(1,764	)		(1,999	)
Common stock to be acquired by employee stock ownership plan (6)		—			(2,948	)		(3,468	)		(3,988	)		(4,586	)
Common stock to be acquired by stock-based benefit plans (7)		—			(2,358	)		(2,774	)		(3,191	)		(3,669	)

Total stockholders’ equity	$	47,183		$	98,361		$	107,707		$	117,052		$	127,799


Pro forma shares outstanding:
Shares issued to the Foundation		NA			115,600			136,000			156,400			179,860
Shares offered for sale in offering		NA			5,780,000			6,800,000			7,820,000			8,993,000

Total shares outstanding		NA			5,895,600			6,936,000			7,976,400			9,172,860

Total stockholders’ equity as a percentage of total assets (2)		8.91	%		16.95	%		18.26	%		19.54	%		20.95	%

(1)	As adjusted to give effect to an increase in the number of shares of common stock that could occur due to a 15% increase in the offering range to reflect demand for shares or changes in market conditions following the commencement of the subscription and community offerings.

(2)	Does not reflect withdrawals from deposit accounts for the purchase of shares of common stock in the conversion and offering. These withdrawals would reduce pro forma deposits and assets by the amount of the withdrawals.

(3)

No effect has been given to the issuance of additional shares of BSB Bancorp, Inc. common stock pursuant to one or more stock-based benefit plans. If these plans are implemented within 12 months following the completion of the stock offering, an amount up to 10% and 4% of the shares of BSB Bancorp, Inc. common stock issued in the offering, including shares contributed to the charitable foundation, will be reserved for issuance upon the exercise of stock options and for issuance of restricted stock awards, respectively. See “Management of BSB Bancorp, Inc.”

(4)	Pro forma common stock and additional paid-in capital have been revised to reflect the number of shares of BSB Bancorp, Inc. common stock that will be outstanding after the conversion, including shares issued to the charitable foundation.

(5)	The retained earnings of Belmont Savings Bank will be substantially restricted after the conversion. See “Our Policy Regarding Dividends,” “The Conversion; Plan of Distribution—Liquidation Rights” and “Supervision and Regulation.”

(footnotes continue on following page)

(6)

Assumes that 5% of the shares issued in the offering, including shares contributed to the charitable foundation, will be acquired by the employee stock ownership plan financed by a loan from BSB Bancorp, Inc. or a subsidiary. The loan will be repaid principally from Belmont Savings Bank’s contributions to the employee stock ownership plan. Since BSB Bancorp, Inc. or a subsidiary will finance the employee stock ownership plan debt, this debt will be eliminated through consolidation and no asset or liability will be reflected on BSB Bancorp, Inc.’s consolidated financial statements. Accordingly, the amount of shares of common stock acquired by the employee stock ownership plan is shown in this table as a reduction of total stockholders’ equity.

(7)

Assumes a number of shares of common stock equal to 4% of the shares of common stock to be issued in the offering, including shares contributed to the charitable foundation, will be purchased for grant by one or more stock-based benefit plans in open market purchases. The dollar amount of common stock to be purchased is based on the $10.00 per share subscription price in the offering and represents unearned compensation. This amount does not reflect possible increases or decreases in the value of common stock relative to the subscription price in the offering. As BSB Bancorp, Inc. accrues compensation expense to reflect the vesting of shares pursuant to the stock-based benefit plans, the credit to equity will be offset by a charge to noninterest expense. Implementation of the stock stock-based benefit plans will require stockholder approval. The funds to be used by the stock-based benefit plans will be provided by BSB Bancorp, Inc.

PRO FORMA DATA

The following tables summarize historical data of BSB Bancorp, MHC and pro forma data of BSB Bancorp, Inc. at and for the three months ended March 31, 2011 and at and for the fiscal year ended December 31, 2010. This information is based on assumptions set forth below and in the table, and should not be used as a basis for projections of market value of the shares of common stock following the conversion and offering.

The net proceeds in the tables are based upon the following assumptions:

•

all shares of common stock will be sold in the subscription and/or community offerings;

•

our employee stock ownership plan will purchase 5% of the shares of common stock issued in the stock offering including shares contributed to the charitable foundation with a loan from BSB Bancorp, Inc. (or a subsidiary) that will adjust with the prime interest rate. The loan will be repaid in substantially equal payments of principal and interest over a period of 30 years, and interest income that BSB Bancorp, Inc. will earn on the loan will offset the interest paid on the loan by Belmont Savings Bank;

•

Keefe, Bruyette & Woods, Inc. will receive a success fee equal to $400,000 upon completion of the offering; and

•

expenses of the stock offering, other than fees and expenses to be paid to Keefe, Bruyette & Woods, Inc., will be $1.1 million.

We calculated pro forma consolidated net income for the three months ended March 31, 2011 and for the fiscal year ended December 31, 2010 as if the estimated net proceeds we received had been invested at an assumed interest rate of 2.24% (1.34% on an after-tax basis). This represents the five-year United States Treasury Note as of March 31, 2011, which, in light of current market interest rates, we consider to more accurately reflect the pro forma reinvestment rate than the arithmetic average of the weighted average yield earned on our interest earning assets and the weighted average rate paid on our deposits, which is the reinvestment rate generally required by federal regulations.

We calculated historical and pro forma per share amounts by dividing historical and pro forma amounts of consolidated net income and stockholders’ equity by the indicated number of shares of common stock. We adjusted these figures to give effect to the shares of common stock purchased by the employee stock ownership plan. We computed per share amounts for each period as if the shares of common stock were outstanding at the beginning of each period, but we did not adjust per share historical or pro forma stockholders’ equity to reflect the earnings on the estimated net proceeds.

The pro forma tables give effect to the implementation of stock-based benefit plans. Subject to the receipt of stockholder approval, we have assumed that the stock-based benefit plans will acquire for restricted stock awards a number of shares of common stock equal to 4% of our outstanding shares of common stock upon completion of the stock offering (including shares contributed to the charitable foundation) at the same price for which they were sold in the stock offering. We assume that shares of common stock are granted under the plans in awards that vest over a five-year period.

We have also assumed that the stock-based benefit plans will grant options to acquire shares of common stock equal to 10% of our outstanding shares of common stock upon completion of the stock offering, including shares contributed to the charitable foundation. In preparing the pro forma tables, we assumed that stockholder approval was obtained, that the exercise price of the stock options and the

market price of the stock at the date of grant were $10.00 per share and that the stock options had a term of ten years and vested over five years. We applied the Black-Scholes option pricing model to estimate a grant-date fair value of $3.58 for each option. In addition to the terms of the options described above, the Black-Scholes option pricing model assumed an estimated volatility rate of 16.46% for the shares of common stock, a dividend yield of 0%, an expected option life of 10 years and a risk-free interest rate of 3.47%. Because there is currently no market for our shares of common stock, the assumed expected volatility is based on the SNL Securities index for all publicly-traded thrift institutions and their holding companies.

We may grant options and award shares of common stock under one or more stock-based benefit plans in excess of 10% and 4%, respectively, of our total outstanding shares, including shares contributed to the charitable foundation, if the stock-based benefit plans are adopted more than one year following the stock offering. In addition, we may grant options and award shares that vest sooner than over a five-year period if the stock-based benefit plans are adopted more than one year following the stock offering.

As discussed under “How We Intend to Use the Proceeds from the Offering,” we intend to contribute at least 50% of the net proceeds from the stock offering to Belmont Savings Bank, and we will retain the remainder of the net proceeds from the stock offering. We will use a portion of the proceeds for the purpose of making a loan to the employee stock ownership plan and retain the rest of the proceeds for future use.

The pro forma table does not give effect to:

•

withdrawals from deposit accounts for the purpose of purchasing shares of common stock in the stock offering;

•

our results of operations after the stock offering; or

•

changes in the market price of the shares of common stock after the stock offering.

The following pro forma information may not represent the financial effects of the stock offering at the date on which the stock offering actually occurs and you should not use the table to indicate future results of operations. Pro forma stockholders’ equity represents the difference between the stated amount of our assets and liabilities, computed in accordance with GAAP. We did not increase or decrease stockholders’ equity to reflect the difference between the carrying value of loans and other assets and their market value. Pro forma stockholders’ equity is not intended to represent the fair market value of the shares of common stock and may be different than the amounts that would be available for distribution to stockholders if we liquidated. Pro forma stockholders’ equity does not give effect to the impact of intangible assets, the liquidation account we will establish in the conversion or tax bad debt reserves in the unlikely event we are liquidated.


	At or For the Three Months Ended March 31, 2011 Based Upon the Sale at $10.00 Per Share of
	Minimum 5,780,000 Shares			Midpoint 6,800,000 Shares			Maximum 7,820,000 Shares			Maximum as adjusted 8,993,000 Shares (1)
	(Dollars in thousands, except per share amounts)
Gross Proceeds of Offering	$	57,800		$	68,000		$	78,200		$	89,930
Plus: Market value of shares issued to the Foundation		1,156			1,360			1,564			1,799

Pro form market capitalization		58,956			69,360			79,764			91,729
Gross proceeds of offering		57,800			68,000			78,200			89,930
Less: expenses		1,658			1,658			1,658			1,658

Estimated net proceeds		56,142			66,342			76,542			88,272
Less: Common stock purchased by ESOP (2)		(2,948	)		(3,468	)		(3,988	)		(4,586	)
Less: Cash contributions to charitable foundation		(200	)		(200	)		(200	)		(200	)
Less: Common stock purchased for stock awards (3)		(2,358	)		(2,774	)		(3,191	)		(3,669	)

Estimated net cash proceeds	$	50,636		$	59,900		$	69,163		$	79,817


For the three months ended March 31, 2011
Consolidated net income:
Historical	$	1,529		$	1,529		$	1,529		$	1,529
Pro forma income on net proceeds		170			201			232			267
Pro forma ESOP adjustment (2)		(15	)		(17	)		(20	)		(23	)
Pro forma stock award adjustment (3)		(71	)		(83	)		(96	)		(110	)
Pro forma stock option adjustment (4)		(95	)		(112	)		(129	)		(148	)

Pro forma net income	$	1,518		$	1,518		$	1,516		$	1,515


Per share net income (reflects ASC 718-40):
Historical	$	0.27		$	0.23		$	0.20		$	0.18
Pro forma income on net proceeds		0.03			0.03			0.03			0.03
Pro forma ESOP adjustment (2)		—			—			—			—
Pro forma stock award adjustment (3)		(0.01	)		(0.01	)		(0.01	)		(0.01	)
Pro forma stock option adjustment (4)		(0.02	)		(0.02	)		(0.02	)		(0.02	)

Pro forma net income per share (5)	$	0.27		$	0.23		$	0.20		$	0.18


Offering price as a multiple of pro forma net income per share		9.26			10.87			12.50			13.89
Number of shares outstanding for pro forma net income per share calculations (5)		5,603,276			6,592,090			7,580,903			8,718,039

At March 31, 2011
Stockholders’ equity:
Historical	$	47,183		$	47,183		$	47,183		$	47,183
Estimated net proceeds		56,142			66,342			76,542			88,272
Plus: Shares issued to Foundation		1,156			1,360			1,564			1,799
Less: Expense of the contribution to the Foundation		(1,356	)		(1,560	)		(1,764	)		(1,999	)
Plus: Tax benefit of the contribution to the Foundation		542			624			706			799
Less: Common stock acquired by ESOP (2)		(2,948	)		(3,468	)		(3,988	)		(4,586	)
Less: Common stock awarded under stock-based benefit plans (3)(4)		(2,358	)		(2,774	)		(3,191	)		(3,669	)

Pro forma stockholders’ equity	$	98,361		$	107,707		$	117,052		$	127,799

Stockholders’ equity per share:
Historical	$	8.00		$	6.80		$	5.91		$	5.14
Estimated net proceeds		9.52			9.56			9.59			9.62
Plus: Shares issued to Foundation		0.20			0.20			0.20			0.20
Less: Expense of the contribution to the Foundation		(0.23	)		(0.22	)		(0.22	)		(0.22	)
Plus: Tax benefit of the contribution to the Foundation		0.09			0.09			0.09			0.09
Less: Common stock acquired by ESOP (2)		(0.50	)		(0.50	)		(0.50	)		(0.50	)
Less: Common stock awarded under stock-based benefit plans (3)(4)		(0.40	)		(0.40	)		(0.40	)		(0.40	)

Pro forma stockholders’ equity per share (6)	$	16.68		$	15.53		$	14.67		$	13.93


Offering price as percentage of pro forma stockholders’ equity per share		59.95	%		64.39	%		68.17	%		71.79	%
Number of shares outstanding for pro forma book value per share calculations		5,895,600			6,936,000			7,976,400			9,172,860

(footnotes begin on following page)

(1)	As adjusted to give effect to an increase in the number of shares that could occur due to a 15% increase in the offering range to reflect demand for the shares or changes in market conditions following the commencement of the offering.

(2)

Assumes that 5% of shares of common stock issued in the offering (including shares contributed to the charitable foundation) will be purchased by the employee stock ownership plan. For purposes of this table, the funds used to acquire these shares are assumed to have been borrowed by the employee stock ownership plan from BSB Bancorp, Inc. or a subsidiary. Belmont Savings Bank intends to make annual contributions to the employee stock ownership plan in an amount at least equal to the required principal and interest payments on the debt. Belmont Savings Bank’s total annual payments on the employee stock ownership plan debt are based upon 30 equal annual installments of principal and interest. ASC 718-40, “Compensation—Stock Compensation—Employee Stock Ownership Plans” (“ASC 718-40”), requires that an employer record compensation expense in an amount equal to the fair value of the shares committed to be released to employees. The pro forma adjustments assume that the employee stock ownership plan shares are allocated in equal annual installments based on the number of loan repayment installments assumed to be paid by Belmont Savings Bank, the fair value of the common stock remains equal to the subscription price and the employee stock ownership plan expense reflects an effective combined federal and state tax rate of 40%. The unallocated employee stock ownership plan shares are reflected as a reduction of stockholders’ equity. No reinvestment is assumed on proceeds contributed to fund the employee stock ownership plan. The pro forma net income further assumes that 2,456, 2,890, 3,323 and 3,822 shares were committed to be released during the period at the minimum, midpoint, maximum, and adjusted maximum of the offering range, respectively, and in accordance with ASC 718-40, only the employee stock ownership plan shares committed to be released during the period were considered outstanding for purposes of income per share calculations.

(3)

If approved by BSB Bancorp, Inc.’s stockholders, one or more stock-based benefit plans plan may purchase an aggregate number of shares of common stock equal to 4% of the shares to be issued in the offering (including shares contributed to the charitable foundation) (or possibly a greater number of shares if the plan is implemented more than one year after completion of the conversion). Stockholder approval of the stock-based benefit plans, and purchases by the plan may not occur earlier than six months after the completion of the conversion. The shares may be acquired directly from BSB Bancorp, Inc. or through open market purchases. The funds to be used by the stock-based benefit plans to purchase the shares will be provided by BSB Bancorp, Inc. The table assumes that (i) the stock-based benefit plans acquire the shares through open market purchases at $10.00 per share, (ii) 5% of the amount contributed to the stock-based benefit plans is amortized as an expense during the period and (iii) the stock-based benefit plans expense reflects an effective combined federal and state tax rate of 40%. Assuming stockholder approval of the stock-based benefit plans and that shares of common stock (equal to 4% of the shares issued in the offering (including shares contributed to the charitable foundation)) are awarded through the use of authorized but unissued shares of common stock, stockholders would have their ownership and voting interests diluted by approximately 3.85%.

(4)

If approved by BSB Bancorp, Inc.’s stockholders, one or more stock-based benefit plans may grant options to acquire an aggregate number of shares of common stock equal to 10% of the shares to be issued in the offering (including shares contributed to the charitable foundation) (or possibly a greater number of shares if the plan is implemented more than one year after completion of the conversion). Stockholder approval of the stock-based benefit plans may not occur earlier than six months after the completion of the conversion. In calculating the pro forma effect of the stock options to be granted under stock-based benefit plans, it is assumed that the exercise price of the stock options and the trading price of the common stock at the date of grant were $10.00 per share, the estimated grant-date fair value determined using the Black-Scholes option pricing model was $3.58 for each option, and the aggregate grant-date fair value of the stock options was amortized to expense on a straight-line basis over a five-year vesting period of the options and 25% of the option expense is tax deductible. The actual expense of the stock options to be granted under the stock-based benefit plans will be determined by the grant-date fair value of the options, which will depend on a number of factors, including the valuation assumptions used in the option pricing model ultimately adopted. Under the above assumptions, the adoption of the stock-based benefit plans will result in no additional shares under the treasury stock method for purposes of calculating earnings per share. There can be no assurance that the actual exercise price of the stock options will be equal to the $10.00 price per share. If a portion of the shares to satisfy the exercise of options under the stock-based benefit plans is obtained from the issuance of authorized but unissued shares, our net income per share and stockholders’ equity per share would decrease. Assuming shares of common stock used to fund stock options (equal to 10% of the shares issued in the offering (including shares contributed to the charitable foundation) are awarded through the use of authorized but unissued shares of common stock, stockholders would have their ownership and voting interests diluted by approximately 9.09%.

(5)

Income per share computations are determined by taking the number of shares assumed to be issued in the offering (including shares contributed to the charitable foundation) and, in accordance with ASC 718-40, subtracting the employee stock ownership plan shares that have not been committed for release during the period and subtracting non-vested stock awards granted under one or more stock-based benefit plans. See note 2, above.

(6)

The retained earnings of Belmont Savings Bank will be substantially restricted after the conversion. See “Our Policy Regarding Dividends,” “The Conversion; Plan of Distribution—Liquidation Rights” and “Supervision and Regulation.” The number of shares used to calculate pro forma stockholders’ equity per share is equal to the total number of shares to be outstanding upon completion of the offering.


	At or for the Fiscal Year Ended December 31, 2010 Based Upon the Sale at $10.00 Per Share of
	Minimum 5,780,000 Shares			Midpoint 6,800,000 Shares			Maximum 7,820,000 Shares			Maximum as adjusted 8,993,000 Shares (1)
	(Dollars in thousands, except per share amounts)
Gross Proceeds of Offering	$	57,800		$	68,000		$	78,200		$	89,930
Plus: Market value of shares issued to the Foundation		1,156			1,360			1,564			1,799

Pro form market capitalization		58,956			69,360			79,764			91,729
Gross proceeds of offering		57,800			68,000			78,200			89,930
Less: expenses		1,658			1,658			1,658			1,658

Estimated net proceeds		56,142			66,342			76,542			88,272
Less: Common stock purchased by ESOP (2)		(2,948	)		(3,468	)		(3,988	)		(4,586	)
Less: Cash contributions to charitable foundation		(200	)		(200	)		(200	)		(200	)
Less: Common stock purchased for stock awards (3)		(2,358	)		(2,774	)		(3,191	)		(3,669	)

Estimated net cash proceeds	$	50,636		$	59,900		$	69,163		$	79,817


For the fiscal year ended December 31, 2010
Consolidated net income:
Historical	$	1,827		$	1,827		$	1,827		$	1,827
Pro forma income on net proceeds		679			803			927			1,070
Pro forma ESOP adjustment (2)		(59	)		(69	)		(80	)		(92	)
Pro forma stock award adjustment (3)		(283	)		(333	)		(383	)		(440	)
Pro forma stock option adjustment (4)		(380	)		(447	)		(514	)		(591	)

Pro forma net income	$	1,784		$	1,781		$	1,777		$	1,774


Per share net income (reflects ASC 718-40):
Historical	$	0.33		$	0.28		$	0.24		$	0.21
Pro forma income on net proceeds		0.12			0.12			0.12			0.12
Pro forma ESOP adjustment (2)		(0.01	)		(0.01	)		(0.01	)		(0.01	)
Pro forma stock award adjustment (3)		(0.05	)		(0.05	)		(0.05	)		(0.05	)
Pro forma stock option adjustment (4)		(0.07	)		(0.07	)		(0.07	)		(0.07	)

Pro forma net income per share (5)	$	0.32		$	0.27		$	0.23		$	0.20


Offering price as a multiple of pro forma net income per share		31.25			37.04			43.48			50.00
Number of shares outstanding for pro forma net income per share calculations (5)		5,610,646			6,600,760			7,590,874			8,729,505

At December 31, 2010
Stockholders’ equity:
Historical	$	46,927		$	46,927		$	46,927		$	46,927
Estimated net proceeds		56,142			66,342			76,542			88,272
Plus: Shares issued to Foundation		1,156			1,360			1,564			1,799
Less: Expense of the contribution to the Foundation		(1,356	)		(1,560	)		(1,764	)		(1,999	)
Plus: Tax benefit of the contribution to the Foundation		542			624			706			799
Less: Common stock acquired by ESOP (2)		(2,948	)		(3,468	)		(3,988	)		(4,586	)
Less: Common stock awarded under stock-based benefit plans (3)(4)		(2,358	)		(2,774	)		(3,191	)		(3,669	)

Pro forma stockholders’ equity	$	98,105		$	107,451		$	116,796		$	127,543


Stockholders’ equity per share:
Historical	$	7.96		$	6.77		$	5.88		$	5.12
Estimated net proceeds		9.52			9.56			9.60			9.62
Plus: Shares issued to Foundation		0.20			0.20			0.20			0.20
Less: Expense of the contribution to the Foundation		(0.23	)		(0.22	)		(0.22	)		(0.22	)
Plus: Tax benefit of the contribution to the Foundation		0.09			0.09			0.09			0.09
Less: Common stock acquired by ESOP (2)		(0.50	)		(0.50	)		(0.50	)		(0.50	)
Less: Common stock awarded under stock-based benefit plans (3)(4)		(0.40	)		(0.40	)		(0.40	)		(0.40	)

Pro forma stockholders’ equity per share (6)	$	16.64		$	15.50		$	14.65		$	13.91


Offering price as percentage of pro forma stockholders’ equity per share		60.10	%		64.52	%		68.26	%		71.89	%
Number of shares outstanding for pro forma book value per share calculations		5,895,600			6,936,000			7,976,400			9,172,860

(footnotes begin on following page)

(1)	As adjusted to give effect to an increase in the number of shares that could occur due to a 15% increase in the offering range to reflect demand for the shares or changes in market conditions following the commencement of the offering.

(2)

Assumes that 5% of shares of common stock issued in the offering (including shares contributed to the charitable foundation) will be purchased by the employee stock ownership plan. For purposes of this table, the funds used to acquire these shares are assumed to have been borrowed by the employee stock ownership plan from BSB Bancorp, Inc. or a subsidiary. Belmont Savings Bank intends to make annual contributions to the employee stock ownership plan in an amount at least equal to the required principal and interest payments on the debt. Belmont Savings Bank’s total annual payments on the employee stock ownership plan debt are based upon 30 equal annual installments of principal and interest. ASC 718-40, “Compensation—Stock Compensation—Employee Stock Ownership Plans” (“ASC 718-40”), requires that an employer record compensation expense in an amount equal to the fair value of the shares committed to be released to employees. The pro forma adjustments assume that the employee stock ownership plan shares are allocated in equal annual installments based on the number of loan repayment installments assumed to be paid by Belmont Savings Bank, the fair value of the common stock remains equal to the subscription price and the employee stock ownership plan expense reflects an effective combined federal and state tax rate of 40%. The unallocated employee stock ownership plan shares are reflected as a reduction of stockholders’ equity. No reinvestment is assumed on proceeds contributed to fund the employee stock ownership plan. The pro forma net income further assumes that 9,826, 11,560, 13,294 and 15,288 shares were committed to be released during the period at the minimum, midpoint, maximum, and adjusted maximum of the offering range, respectively, and in accordance with ASC 718-40, only the employee stock ownership plan shares committed to be released during the period were considered outstanding for purposes of income per share calculations.

(3)

If approved by BSB Bancorp, Inc.’s stockholders, one or more stock-based benefit plans plan may purchase an aggregate number of shares of common stock equal to 4% of the shares to be issued in the offering (including shares contributed to the charitable foundation) (or possibly a greater number of shares if the plan is implemented more than one year after completion of the conversion). Stockholder approval of the stock-based benefit plans, and purchases by the plan may not occur earlier than six months after the completion of the conversion. The shares may be acquired directly from BSB Bancorp, Inc. or through open market purchases. The funds to be used by the stock-based benefit plans to purchase the shares will be provided by BSB Bancorp, Inc. The table assumes that (i) the stock-based benefit plans acquire the shares through open market purchases at $10.00 per share, (ii) 20% of the amount contributed to the stock-based benefit plans is amortized as an expense during the period and (iii) the stock-based benefit plans expense reflects an effective combined federal and state tax rate of 40%. Assuming stockholder approval of the stock-based benefit plans and that shares of common stock (equal to 4% of the shares issued sold in the offering (including shares contributed to the charitable foundation)) are awarded through the use of authorized but unissued shares of common stock, stockholders would have their ownership and voting interests diluted by approximately 3.85%.

(4)

If approved by BSB Bancorp, Inc.’s stockholders, one or more stock-based benefit plans may grant options to acquire an aggregate number of shares of common stock equal to 10% of the shares to be issued in the offering (including shares contributed to the charitable foundation) (or possibly a greater number of shares if the plan is implemented more than one year after completion of the conversion). Stockholder approval of the stock-based benefit plans may not occur earlier than six months after the completion of the conversion. In calculating the pro forma effect of the stock options to be granted under stock-based benefit plans, it is assumed that the exercise price of the stock options and the trading price of the common stock at the date of grant were $10.00 per share, the estimated grant-date fair value determined using the Black-Scholes option pricing model was $3.58 for each option, and the aggregate grant-date fair value of the stock options was amortized to expense on a straight-line basis over a five-year vesting period of the options and 25% of the option expense is tax deductible. The actual expense of the stock options to be granted under the stock-based benefit plans will be determined by the grant-date fair value of the options, which will depend on a number of factors, including the valuation assumptions used in the option pricing model ultimately adopted. Under the above assumptions, the adoption of the stock-based benefit plans will result in no additional shares under the treasury stock method for purposes of calculating earnings per share. There can be no assurance that the actual exercise price of the stock options will be equal to the $10.00 price per share. If a portion of the shares to satisfy the exercise of options under the stock-based benefit plans is obtained from the issuance of authorized but unissued shares, our net income per share and stockholders’ equity per share would decrease. Assuming shares of common stock used to fund stock options (equal to 10% of the shares issued in the offering (including shares contributed to the charitable foundation)) are awarded through the use of authorized but unissued shares of common stock, stockholders would have their ownership and voting interests diluted by approximately 9.09%.

(5)

(6)

COMPARISON OF VALUATION AND PRO FORMA INFORMATION

WITH AND WITHOUT THE CHARITABLE FOUNDATION

As reflected in the table below, if the charitable foundation is not established and funded as part of the stock offering, RP Financial, LC. estimates that our pro forma valuation would be greater and, as a result, a greater number of shares of common stock would be issued in the stock offering. At the minimum, midpoint, maximum and adjusted maximum of the valuation range, our pro forma valuation is $59.0 million, $69.4 million, $79.8 million and $91.7 million with the charitable foundation, as compared to $60.4 million, $71.0 million, $81.7 million and $93.9 million, respectively, without the charitable foundation. There is no assurance that in the event the charitable foundation were not formed, the appraisal prepared at that time would conclude that our pro forma market value would be the same as that estimated in the table below. Any appraisal prepared at that time would be based on the facts and circumstances existing at that time, including, among other things, market and economic conditions.

For comparative purposes only, set forth below are certain pricing ratios and financial data and ratios at and for the three months ended March 31, 2011 at the minimum, midpoint, maximum and adjusted maximum of the offering range, assuming the stock offering was completed at the beginning of the three-month period, with and without the charitable foundation.


	Minimum of Offering Range						Midpoint of Offering Range						Maximum of Offering Range						Adjusted Maximum of Offering Range
	With Foundation			Without Foundation			With Foundation			Without Foundation			With Foundation			Without Foundation			With Foundation			Without Foundation
	(Dollars in thousands, except per share amounts)
Estimated stock offering amount	$	57,800		$	60,350		$	68,000		$	71,000		$	78,200		$	81,650		$	89,930		$	93,898
Estimated full value		58,956			60,350			69,360			71,000			79,764			81,650			91,729			93,898
Total assets		580,452			582,535			589,798			592,226			599,143			601,918			609,890			613,063
Total liabilities		482,091			482,091			482,091			482,091			482,091			482,091			482,091			482,091
Pro forma stockholders’ equity		98,361			100,444			107,707			110,135			117,052			119,827			127,799			130,972
Pro forma net income		1,518			1,523			1,518			1,523			1,516			1,523			1,515			1,523
Pro forma stockholders’ equity per share		16.68			16.64			15.53			15.51			14.67			14.68			13.93			13.95
Pro forma net income per share		0.27			0.27			0.23			0.23			0.20			0.20			0.18			0.17
Pro forma pricing ratios:
Offering price as a percentage of pro forma stockholders’ equity per share		59.95	%		60.10	%		64.39	%		64.47	%		68.17	%		68.12	%		71.79	%		71.68	%
Offering price to pro forma net income per share		9.26x			9.26x			10.87x			10.87x			12.50x			12.50x			13.89x			14.71x
Offering price to assets		10.16	%		10.36	%		11.76	%		11.99	%		13.31	%		13.57	%		15.04	%		15.32	%
Pro forma financial ratios:
Return on assets (annualized)		1.05	%		1.05	%		1.03	%		1.03	%		1.01	%		1.01	%		0.99	%		0.99	%
Return on equity (annualized)		6.17	%		6.07	%		5.64	%		5.53	%		5.18	%		5.08	%		4.74	%		4.65	%
Equity to assets		16.95	%		17.24	%		18.26	%		18.60	%		19.54	%		19.91	%		20.95	%		21.36	%

Total shares issued		5,895,600			6,035,000			6,936,000			7,100,000			7,976,400			8,165,000			9,172,860			9,389,750

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

This section is intended to help potential investors understand our financial performance through a discussion of the factors affecting our financial condition and our results of operations. This section should be read in conjunction with the consolidated financial statements and notes to the consolidated financial statements that appear elsewhere in this prospectus. BSB Bancorp, Inc. was incorporated on June 2, 2011, and had not engaged in any activities at March 31, 2011; therefore, the information reflected in this section reflects the financial performance of BSB Bancorp, MHC and its subsidiary.

Overview

Our results of operations depend primarily on our net interest and dividend income. Net interest and dividend income is the difference between the interest and dividend income we earn on our interest-earning assets, consisting primarily of loans, investment securities (including corporate bonds, U.S. government and U.S. government agency bonds, and mortgage-backed securities guaranteed or issued by U.S. government-sponsored enterprises) and other interest-earning assets, primarily interest-earning deposits at other financial institutions, and the interest we pay on our interest-bearing liabilities, consisting primarily of money market accounts, savings accounts, certificates of deposit, and Federal Home Loan Bank of Boston advances. Our results of operations also are affected by our provisions for loan losses, noninterest income and noninterest expense. Noninterest income currently consists primarily of service charges on deposit accounts, income derived from bank owned life insurance, loan servicing fees and other income and gains or losses on the sale of loans and on the sale of available-for-sale securities. Noninterest expense currently consists primarily of salaries and employee benefits, occupancy and equipment expenses, data processing, legal, accounting and exam fees, FDIC insurance premiums, trustee fees and other operating expenses. Our results of operations also may be affected significantly by general and local economic and competitive conditions, changes in market interest rates, governmental policies and actions of regulatory authorities.

We have historically operated as a traditional thrift institution. In the past, a significant majority of our assets have consisted of long-term, fixed-rate and adjustable rate one- to four-family residential mortgage loans, which we have funded primarily with retail deposit accounts and Federal Home Loan Bank of Boston advances. In recent years, in an effort to improve our earnings and to decrease our exposure to interest rate risk, we generally have sold fixed-rate, conforming one- to four-family residential mortgage loans and we have shifted our focus to originating loans that have adjustable rates or higher yields, including commercial real estate loans, home equity lines of credit, commercial business loans and indirect automobile loans. Such loans generally have shorter maturities than one- to four-family residential mortgage loans. See “Management of Market Risk” for a discussion of actions we take to manage interest rate risk.

In 2009, in order to provide the flexibility to make potential acquisitions, among other things, Belmont Savings Bank reorganized into the mutual holding company structure. Further, following a comprehensive strategic review of the bank’s management and operations, the Board of Directors of the bank approved a new strategic plan designed to increase the growth and profitability of the bank. The strategic plan contemplates significant growth in assets and liabilities over the next several years with the intent of making Belmont Savings Bank the leader in market share in Belmont, the “Bank of Choice” for small businesses in its market area, and the trusted lending partner for area real estate developers. The strategic plan includes a small business lending and deposit initiative, a home equity lending initiative, an auto finance initiative, and a commercial real estate lending initiative. We have recently increased the amount of commercial real estate loans, home equity lines of credit, commercial business loans and indirect automobile loans in our loan portfolio, and we intend to continue to increase our origination of such loans.

In conjunction with the new strategic plan, our Board of Directors has made several key additions to Belmont Savings Bank’s senior management team, including the appointment of Robert M. Mahoney as President and Chief Executive Officer in May, 2010. Mr. Mahoney was formerly Executive Vice Chairman of Citizens Financial Group, Inc. until his retirement in 2008. Our Board of Directors believes that the substantial senior management experience of these new executives will position Belmont Savings Bank to successfully execute its strategic plan. For additional discussion of Belmont Savings Bank’s strategic plan, including its new senior management team and four new strategic initiatives, see “Business of Belmont Savings Bank—General.”

Our emphasis on conservative loan underwriting has resulted in relatively low levels of non-performing assets at a time when many financial institutions are experiencing significant asset quality issues. Our non-performing assets totaled $2.2 million, or 0.42% of total assets, at March 31, 2011, compared to $1.7 million, or 0.34% of total assets at December 31, 2010, and $1.9 million, or 0.38% of total assets, at December 31, 2009. Total loan delinquencies of 60 days or more as of March 31, 2011 were $3.9 million. Our provision for loan losses was $476,000, $438,000 and $366,000 for the three months ended March 31, 2011, and for the years ended December 31, 2010 and 2009, respectively.

We do not offer loans that provide for negative amortization of principal, such as “Option ARM” loans, where the borrower can pay less than the interest owed on his or her loan, resulting in an increased principal balance during the life of the loan. We generally do not offer “subprime loans” (loans that are made with low down-payments to borrowers with weakened credit histories typically characterized by payment delinquencies, previous charge-offs, judgments and bankruptcies, or borrowers with questionable repayment capacity as evidenced by low credit scores or high debt-burden ratios) or Alt-A loans (generally defined as loans having less than full documentation).

Business Strategy

Our principal objective is to build long-term value for our stockholders by operating a profitable community-oriented financial institution dedicated to meeting the banking needs of retail customers and small businesses in the communities that we serve. We have sought to accomplish this objective with a strategy designed to increase profitability while maintaining a strong capital position and high asset quality. Highlights of our business strategy are as follows:

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Continuing to build our retail customer base through new product and marketing- driven initiatives. Retail customer and deposit growth is at the core of our strategy. Recognizing we must allow consumers to bank when, where and how they want, we have created customer-centric products and services that promote profitable, multi-product bank relationships. Our PlatinumBlue checking account offers “best in class” services such as free ATM usage worldwide, state-of-the-art online banking, free paper statements and checks for customers who actively use the account. In addition, PlatinumBlue checking is the gateway to the very competitively priced PlatinumBlue family of products (High Yield Savings, Rising Rate CD, Home Equity). These product offerings are then supported by strong marketing investment in advertising, promotion and most importantly, local community event participation.

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Continuing to emphasize the origination of commercial and multi-family real estate loans, home equity lines of credit, commercial business loans and indirect automobile loans, while maintaining high asset quality. Between December 31, 2009 and March 31,

2011, our commercial real estate loans (including multi-family real estate loans), home equity lines of credit, commercial business loans and indirect automobile loans, on a combined basis, increased from 34.0% of total loans to 50.3% of total loans. We intend to continue to increase our origination of such loans, which generally are either higher-yielding or have shorter repricing characteristics than one- to four-family residential mortgage loans. Many of these loans also have adjustable rates of interest, which help in our interest rate risk management. See “Business of Belmont Savings Bank—General,” for a discussion of our strategic initiatives to increase commercial real estate loans, small business loans, home equity lines of credit and indirect automobile loans.

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Emphasizing lower-cost core deposits from new customers through our commercial real estate lending and small business initiatives. Our small business initiative is designed to encourage relationship banking and increase core deposits, including non-interest bearing transaction accounts. In particular, our small business initiative targets deposit-rich industries such as law firms, property management firms, and technology and life sciences enterprises, while our commercial real estate lending initiative is focused on creating full banking relationships with professional commercial real estate investors, developers and managers in Eastern Massachusetts.

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Expanding our branch network. We currently operate from four banking offices. We evaluate branch expansion opportunities as such opportunities arise, and will continue to do so after the conversion. Depending on market conditions, we intend to expand our branch office network by at least two de novo or acquired branch offices over the next four years with a focus on communities located contiguous to the communities that we currently serve.

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Increasing our capital to support our future growth. The capital we raise in the conversion and stock offering will better position us to execute our strategic plan, which contemplates significant growth through increased lending and the expansion of our branch network. The additional capital will also position us to take advantage of acquisition opportunities (although we currently have no understandings or agreements to acquire other banks, thrifts, branches thereof or other financial services companies).

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Continuing our community-oriented focus. As a community banking organization, we intend to play an increasingly significant role in the communities that we serve. We are uniquely positioned to understand the financial needs of our local customers, and we offer a broad range of financial products and services specifically designed to meet those needs. In addition, our newly established charitable foundation will strengthen our commitment to the communities that we serve.

Anticipated Increase in Noninterest Expense

Following the completion of the conversion and offering, we anticipate that our noninterest expense will increase as a result of the increased costs associated with managing a public company, increased compensation expenses associated with the purchases of shares of common stock by our employee stock ownership plan, and the adoption of one or more stock-based benefit plans, if approved by BSB Bancorp, Inc.’s stockholders.

Assuming that the adjusted maximum number of shares are issued in the offering (and shares are contributed to the charitable foundation), 9,172,860 shares will be outstanding and:

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our employee stock ownership plan would acquire 458,643 shares of common stock with a $4.6 million loan that is expected to be repaid over 30 years, resulting in an annual pre-tax expense of approximately $153,000 (assuming that the common stock maintains a value of $10.00 per share);

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our stock-based benefit plans would award a number of shares equal to 4% of the shares issued in the offering (including shares contributed to our charitable foundation), or 366,914 shares at the maximum, as adjusted, of the offering range, to eligible participants, which would be expensed as the awards vest. Assuming that all shares are awarded under the stock-based benefit plans at a price of $10.00 per share, and that the awards vest over a five-year period, the corresponding annual pre-tax expense associated with shares awarded under the stock-based benefit plans would be approximately $734,000; and

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our stock-based benefit plans would grant stock options to purchase shares equal to 10% of the total shares issued in the offering (including shares contributed to our charitable foundation), or 917,286 shares at the maximum, as adjusted, of the offering range, to eligible participants, which would result in compensation expense over the vesting period of the options. Assuming the market price of the common stock is $10.00 per share; all stock options are granted with an exercise price of $10.00 per share and have a term of 10 years; the dividend yield on the stock is 0%; the risk free interest rate is 3.47%; and the volatility rate on the common stock is 16.46%, the estimated grant-date fair value of the stock options utilizing a Black-Scholes option pricing analysis is $3.58 per option granted. Assuming this value is amortized over the five-year vesting period, the corresponding annual pre-tax expense associated with stock options granted under the stock-based benefit plans would be approximately $657,000.

The actual expense that will be recorded for the employee stock ownership plan will be determined by the market value of the shares of common stock as they are allocated to employees over the term of the loan, and whether the loan is repaid faster than its contractual term. Accordingly, increases in the stock price above $10.00 per share will increase the total employee stock ownership plan expense, and any accelerated repayment of the loan would increase the annual employee stock ownership plan expense. Additionally, the actual expense of shares awarded under one or more stock-based benefit plans will be determined by the fair market value of the stock on the grant date, which might be greater than $10.00 per share. Further, the actual expense of stock options granted under one or more stock-based benefit plans would be determined by the grant-date fair value of the options, which would depend on a number of factors, including the valuation assumptions used in the option pricing model ultimately used.

We may award shares of common stock and grant options in excess of 4% and 10%, respectively, of our shares sold in the stock offering (including shares contributed to our charitable foundation) if our stock-based benefit plans are adopted more than one year following the stock offering. This would further increase our expenses associated with stock-based benefit plans.

Critical Accounting Policies

Critical accounting policies are defined as those that involve significant judgments and uncertainties, and could potentially result in materially different results under different assumptions and conditions. We believe that the most critical accounting policies upon which our financial condition and results of operation depend, and which involve the most complex subjective decisions or assessments, are the following:

Allowance for Loan Losses. The allowance for loan losses is the estimated amount considered necessary to cover probable and reasonably estimable credit losses inherent in the loan portfolio at the balance sheet date. The allowance is established through the provision for loan losses that is charged against income. The determination of the allowance for loan losses is considered a critical accounting policy by management because of the high degree of judgment involved, the subjectivity of the assumptions used, and the potential for changes in the economic environment that could result in changes to the amount of the recorded allowance for loan losses.

The allowance for loan losses has been determined in accordance with GAAP. We are responsible for the timely and periodic determination of the amount of the allowance required. We believe that our allowance for loan losses is adequate to cover identifiable losses, as well as estimated losses inherent in our portfolio for which certain losses are probable but not specifically identifiable.

The estimate of our credit losses is applied to two general categories of loans:

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loans that we evaluate individually for impairment under ASC 310-10, “Receivables;” and

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groups of loans with similar risk characteristics that we evaluate collectively for impairment under ASC 450-20, “Loss Contingencies.”

The allowance for loan losses is evaluated on a regular basis by management and reflects consideration of all significant factors that affect the collectability of the loan portfolio. The factors used to evaluate the collectability of the loan portfolio include, but are not limited to, current economic conditions, our historical loss experience, the nature and volume of the loan portfolio, the financial strength of the borrower, and estimated value of any underlying collateral. This evaluation is inherently subjective as it requires estimates that are subject to significant revision as more information becomes available. Actual loan losses may be significantly more than the allowance for loan losses we have established which could have a material negative effect on our financial results. See also “Business of Belmont Savings Bank—Allowance for Loan Losses.”

Securities Valuation and Impairment . Our available-for-sale securities portfolio historically has consisted of corporate bonds, U.S. government and U.S. government agency bonds, and mortgage-backed securities guaranteed or issued by the U.S. government or a U.S. government sponsored enterprise. Our available-for-sale securities portfolio is carried at estimated fair value, with any unrealized gains or losses, net of taxes, reported as accumulated other comprehensive income or loss in equity. Our trading securities portfolio is reported at fair value. Our held-to-maturity securities portfolio, consisting of U.S. government and U.S. government agency bonds, mortgage-backed securities and debt securities for which we have the positive intent and ability to hold to maturity, is carried at amortized cost. We conduct a quarterly review and evaluation of the available-for-sale and held-to-maturity securities portfolios to determine if the fair value of any security has declined below its amortized cost, and whether such decline is other-than-temporary. If the amortized cost basis of an investment exceeds its fair value, we evaluate, among other factors, general market conditions, the duration and extent to which the fair value is less than cost, the probability of a near-term recovery in value and our intent to sell the security and whether it is more likely than not that we will be required to sell the security before full recovery of our investment or maturity. If such a decline is deemed other-than-temporary for equity securities, an impairment charge is recorded through current earnings based upon the estimated fair value of the security at the time of

impairment and a new cost basis in the investment is established. For any debt security with a fair value less than its amortized cost basis, we will determine whether we have the intent to sell the debt security or whether it is more likely than not we will be required to sell the debt security before the recovery of its amortized cost basis. If either condition is met, we will recognize the full impairment charge to earnings. For all other debt securities that are considered other-than-temporarily impaired and do not meet either condition, the credit loss portion of impairment will be recognized in earnings as realized losses. The other-than-temporary impairment related to all other factors will be recorded in other comprehensive income.

Determining if a security’s decline in estimated fair value is other-than-temporary is inherently subjective. In performing our evaluation of securities in an unrealized loss position, we consider among other things, the severity, and duration of time that the security has been in an unrealized loss position and the credit quality of the issuer. This evaluation is inherently subjective as it requires estimates of future events, many of which are difficult to predict. Actual results could be significantly different than our estimates and could have a material effect on our financial results.

Deferred Income Taxes. We use the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. If it is determined that it is more likely than not that the deferred tax assets will not be realized, a valuation allowance is established. We consider the determination of this valuation allowance to be a critical accounting policy because of the need to exercise significant judgment in evaluating the amount and timing of recognition of deferred tax liabilities and assets, including projections of future taxable income. These judgments and estimates are reviewed quarterly as regulatory and business factors change. A valuation allowance for deferred tax assets may be required if the amounts of taxes recoverable through loss carrybacks decline, or if we project lower levels of future taxable income. Such a valuation allowance would be established and any subsequent changes to such allowance would require an adjustment to income tax expense that could adversely affect our operating results.

Comparison of Financial Condition at March 31, 2011 and December 31, 2010

Total Assets. Total assets increased $29.0 million to $529.3 million at March 31, 2011 from $500.3 million at December 31, 2010. The increase was primarily the result of a $46.1 million, or 13.7%, increase in net loans, and a $14.9 million, or 71.0%, increase in cash and cash equivalents, partially offset by a $14.3 million decrease in securities available for sale and a $14.9 million, or 15.9%, decrease in securities held to maturity. The increase in net loans was largely due to the $26.7 million increase in our indirect automobile loan portfolio, which increased to $30.4 million at March 31, 2011 from $3.7 million at December 31, 2010.

Loans. Net loans increased by $46.1 million to $383.0 million at March 31, 2011 from $336.9 million at December 31, 2010. The increase in loans was primarily due to increases of $26.7 million in indirect automobile loans, $21.8 million, or 23.9%, in commercial real estate loans, $2.8 million, or 9.0%, in home equity lines of credit and $2.5 million, or 17.7%, in commercial business loans, partially offset by an $8.9 million, or 4.8%, decrease in one- to four-family residential loans. We intend to continue to expand our indirect automobile lending program, which we initiated during the fourth quarter of 2010. The increase in commercial real estate loans, home equity lines of credit and commercial business loans also reflected our continued emphasis on originating these types of loans according to our strategic plan.

Investment Securities. Total investment securities decreased $29.2 million to $79.0 million at March 31, 2011 from $108.2 million at December 31, 2010, reflecting our funding of higher-yielding loans during the quarter ended March 31, 2011. During the three months ended March 31, 2011, we sold our entire $12.9 million portfolio of marketable equity securities for $15.7 million in proceeds and a net realized gain of $2.8 million. The remainder of the decrease in investment securities resulted from decreases of $5.0 million in corporate debt securities, $7.8 million in U.S. government and federal agency obligations and $2.1 million of U.S. government and agency-sponsored mortgage-backed securities.

Cash and Cash Equivalents. Cash and cash equivalents increased by $14.9 million to $35.9 million at March 31, 2011 from $21.0 million at December 31, 2010. The increase reflected higher liquidity levels in anticipation of funding loan originations.

Bank-Owned Life Insurance. We invest in bank-owned life insurance to provide a funding source for our benefit plan obligations. Bank-owned life insurance also generally provides noninterest income that is nontaxable. At March 31, 2011, our investment in bank-owned life insurance was $12.1 million, an increase of $121,000 from $12.0 million at December 31, 2010, reflecting an increase in cash value. Federal regulations generally limit our investment in bank-owned life insurance to 25% of our Tier 1 capital.

Deposits. Deposits increased $30.4 million to $377.3 million at March 31, 2011 from $346.9 million at December 31, 2010. The increase in deposits was due to an increase of $3.2 million, or 10.5%, in non-interest bearing accounts, reflecting our success in expanding services to small business customers, including business online banking and remote deposit capture. The increase in deposits also was due to an increase of $27.2 million, or 8.6%, in interest bearing accounts, reflecting our promotion of PlatinumBlue high yield savings accounts, which has enabled us to build broader deposit relationships with our borrower customers. The increase also reflected customers seeking the safety of insured deposits given the volatility of alternative investments.

Borrowings. At March 31, 2011, borrowings consisted of advances from the Federal Home Loan Bank of Boston, securities sold to securities dealers under agreements to repurchase, or “repurchase agreements”, and other borrowed funds consisting of the balance of loans that we sold with recourse to another financial institution in March 2006. For additional discussion of other borrowed funds, see Note 8 to the Notes to Consolidated Financial Statements beginning on page F-1.

Total borrowings decreased $2.2 million to $98.5 million at March 31, 2011, from $100.7 million at December 31, 2010. Advances from the Federal Home Loan Bank of Boston increased $1.0 million to $93.8 million at March 31, 2011, from $92.8 million at December 31, 2010, and repurchase agreements increased $432,000 to $3.1 million at March 31, 2011, from $2.7 million at December 31, 2010. Other borrowed funds decreased $3.6 million to $1.6 million at March 31, 2011, from $5.2 million at December 31, 2010.

Equity. Total equity increased $256,000 to $47.2 million at March 31, 2011 from $46.9 million at December 31, 2010. The increase was attributable to $1.5 million of net income, partially offset by a $1.3 million decrease in accumulated other comprehensive income. The decrease in accumulated other comprehensive income resulted primarily from the after-tax effect of changes in unrealized gains on securities available for sale related to the sale during the three months ended March 31, 2011 of our entire portfolio of marketable equity securities.

Comparison of Financial Condition at December 31, 2010 and December 31, 2009

Total Assets. Total assets decreased $4.6 million to $500.3 million at December 31, 2010, from $504.9 million at December 31, 2009. The decrease was primarily due to decreases of $14.8 million, or 4.2%, in net loans, $1.7 million, or 12.2%, in bank-owned life insurance and $1.5 million, or 33.2%, in deferred tax asset, net, partially offset by increases of $5.0 million, or 4.9%, in investment securities, $4.6 million, or 28.0%, in cash and cash equivalents and $3.5 million in loans held-for-sale.

Loans. Net loans decreased by $14.9 million to $336.9 million at December 31, 2010 from $351.8 million at December 31, 2009. The decrease in net loans was primarily due to decreases of $29.2 million in one- to four-family loans and $5.2 million in construction loans, partially offset by increases of $10.4 million in commercial real estate loans, $5.1 million in commercial loans, and $3.7 million in indirect automobile loans. The increase in commercial real estate loans, home equity lines of credit and commercial business loans reflected our continued emphasis on originating these types of loans according to our strategic plan.

Investment Securities. Total investment securities increased $5.0 million to $108.2 million at December 31, 2010, from $103.2 million at December 31, 2009. The increase was primarily due to increases of $6.8 million in U.S. government and federal agency obligations, $4.7 million in corporate debt securities and $2.8 million in fair value of marketable equity securities, partially offset by a decrease of $9.3 million in U.S. government and agency sponsored mortgage-backed securities.

Cash and Cash Equivalents. Cash and equivalents increased by $4.6 million, or 28.0%, to $21.0 million at December 31, 2010 from $16.4 million at December 31, 2009. This increase reflected growth in deposits.

Bank-Owned Life Insurance. During the year ended December 31, 2010, our investment in bank-owned life insurance decreased $1.6 million to $12.0 million at December 31, 2010 from $13.6 million at December 31, 2009. The decrease was primarily due to the distribution of a split-dollar life insurance policy to two retiring executive officers in connection with their supplemental executive retirement plan benefits.

Deposits. Deposits increased $34.2 million to $346.9 million at December 31, 2010 from $312.7 at December 31, 2009. The increase in deposits was primarily due to an increase of $26.0 million, or 8.9%, in interest bearing accounts, reflecting our promotion of PlatinumBlue high yield savings accounts, which has enabled us to build broader deposit relationships with our borrower customers. The increase in deposits also was due to an increase of $8.2 million, or 37.6%, in non-interest bearing accounts, which we attribute to our success in expanding services to small business customers, including business online banking and remote deposit capture. The increase also reflected customers seeking the safety of insured deposits given the volatility of alternative investments.

Borrowings. Total borrowings decreased $38.4 million, or 27.6%, to $100.7 million at December 31, 2010, from $139.1 million at December 31, 2009. Advances from the Federal Home Loan Bank of Boston decreased $36.9 million, or 28.5%, to $92.8 million at December 31, 2010, from $129.7 million at December 31, 2009. The decrease in advances during the year ended December 31, 2010 was primarily due to our success in shifting our funding mix to lower-cost deposits, including non-interest bearing transaction accounts of small business customers. Repurchase agreements decreased $1.0 million, or 27.0%, to $2.7 million at December 31, 2010, from $3.7 million at December 31, 2009, and other borrowed funds decreased $551,000, or 9.6%, to $5.2 million at December 31, 2010, from $5.8 million at December 31, 2009.

Equity. Total equity increased $3.1 million, or 7.1%, to $46.9 million at December 31, 2010 from $43.8 million at December 31, 2009. The increase was attributable to $1.8 million of net income and a $1.3 million increase in accumulated other comprehensive income reflecting unrealized gains in our investment portfolio.

Comparison of Operating Results for the Three Months Ended March 31, 2011 and 2010

General. Net income increased $628,000, or 69.7%, to $1.5 million for the three months ended March 31, 2011 from $901,000 for the three months ended March 31, 2010. The increase was primarily due to a $2.2 million increase in gain on securities, partially offset by a $1.0 million increase in noninterest expense.

Net Interest and Dividend Income. Net interest and dividend income increased by $96,000, or 2.8%, to $3.5 million for the three months ended March 31, 2011 from $3.4 million for the three months ended March 31, 2010. The increase was due to a $573,000 decrease in interest expense, partially offset by a decrease of $477,000 in interest and dividend income. The increase in net interest and dividend income was primarily the result of the cost of our interest-bearing liabilities decreasing faster than the yields on our interest-earning assets in a period of declining market interest rates. As a result, our net interest margin increased 8 basis points to 2.99% for the three months ended March 31, 2011 compared to 2.91% for the three months ended March 31, 2010, and our net interest rate spread increased 11 basis points to 2.81% for the three months ended March 31, 2011 compared to 2.70% for the three months ended March 31, 2010. In addition, our net interest-earning assets increased to $59.4 million for the three months ended March 31, 2011 from $50.3 million for the three months ended March 31, 2010.

Interest and Dividend Income. Interest and dividend income decreased $477,000 to $5.1 million for the three months ended March 31, 2011 from $5.6 million for the three months ended March 31, 2010. The decrease in interest and dividend income was primarily due to a $311,000 decrease in interest income on loans and a $166,000 decrease in interest and dividend income on securities. The decrease in interest income on loans resulted from a 45 basis point decrease in the average yield on loans to 4.98% from 5.43% primarily due to lower market interest rates during the period. The decrease in yield on loans was partially offset by an increase in the average balance of loans of $6.3 million to $358.8 million for the three months ended March 31, 2011 from $352.5 million for the three months ended March 31, 2010. The decrease in interest and dividend income on securities resulted from a 57 basis point decrease in the average yield on securities to 2.75% from 3.32%, and a $3.8 million decrease in the average balance of securities to $100.2 million for the three months ended March 31, 2011. The decrease in the average yield on securities was primarily due to lower market interest rates during the period.

Interest Expense. Interest expense decreased $573,000 to $1.5 million for the three months ended March 31, 2011 from $2.1 million for the three months ended March 31, 2010. The decrease resulted from a 51 basis point decrease in the cost of interest-bearing liabilities and a $9.0 million decrease in the average balance of interest-bearing liabilities during the period.

Interest expense on interest-bearing deposits decreased by $123,000 to $890,000 for the three months ended March 31, 2011 from $1.0 million for the three months ended March 31, 2010. This decrease was primarily due to a 29 basis point decrease in the average cost of interest-bearing deposits to 1.11% for the three months ended March 31, 2011 from 1.40% for the three months ended March 31, 2010. We experienced decreases in the average cost across all categories of interest-bearing deposits for the three months ended March 31, 2011, reflecting lower market interest rates compared to the prior period. The decrease in average cost was partially offset by a $30.9 million increase in the average balance of interest-bearing deposits to $325.0 million for the three months ended March 31, 2011 from $294.1 million for the three months ended March 31, 2010.

Interest expense on borrowings decreased $450,000 to $655,000 for the three months ended March 31, 2011 from $1.1 million for the three months ended March 31, 2010. This decrease was primarily due to a $38.0 million decrease in the average balance of Federal Home Loan Bank advances to $89.1 million for the three months ended March 31, 2011 from $127.1 million for the three months ended March 31, 2010, and a 56 basis point decrease in the average cost of such advances to 2.75% for the three months ended March 31, 2011 from 3.31% for the three months ended March 31, 2010.

Provision for Loan Losses. We establish provisions for loan losses that are charged to operations in order to maintain the allowance for loan losses at a level we consider necessary to absorb probable credit losses inherent in the loan portfolio. Our methodology for establishing our allowance for loan losses and provisions for loan losses is discussed under “—Critical Accounting Policies—Allowance for Loan Losses.” Based on the methodology described therein, we recorded a provision for loan losses of $476,000 for the three months ended March 31, 2011, compared to a provision for loan losses of $284,000 for the three months ended March 31, 2010. The allowance for loan losses was $3.3 million, or 0.9% of total loans, at March 31, 2011, compared to $2.8 million, or 0.8% of total loans, at March 31, 2010. The increase in the provision reflected management’s assessment of the risk in the portfolio resulting from increases in our commercial real estate loans, commercial business loans, home equity lines of credit and consumer loans. These types of loans generally bear higher risk than our one- to-four family mortgage loans. To the best of our knowledge, we have recorded all losses that are both probable and reasonably estimable for the three months ended March 31, 2011 and 2010.

Noninterest Income. Noninterest income increased $2.1 million to $3.1 million for the three months ended March 31, 2011, from $972,000 for the three months ended March 31, 2010. The increase was primarily due to an increase of $2.8 million in net realized gain on sales and calls of securities, partially offset by a decrease of $624,000 in net gain on trading securities. The increase in net realized gain on sales and calls of securities resulted from the sale of our entire portfolio of marketable equity securities during the 2011 period.

Noninterest Expense. Noninterest expense increased $1.0 million, or 37.0%, to $3.7 million for the three months ended March 31, 2011 from $2.7 million for the three months ended March 31, 2010. The largest components of this increase were salaries and employee benefits, which increased $751,000, or 45.7%, marketing (in support of our new business initiatives), which increased $169,000, or 318.9%, and other noninterest expense, which increased $95,000, or 48.5%. Increased staffing, normal salary increases and increases in payroll taxes primarily accounted for the increase in compensation and benefits expense.

Income Tax Expense. We recorded a provision for income taxes of $908,000 for the three months ended March 31, 2011, compared to a provision for income taxes of $560,000 for the three months ended March 31, 2010, reflecting effective tax rates of 37.3% and 38.3%, respectively.

Comparison of Operating Results for the Years Ended December 31, 2010 and 2009

General. Net income decreased $1.6 million to $1.8 million for the year ended December 31, 2010 from $3.4 million for the year ended December 31, 2009. The primary reasons for the decrease were a $2.4 million increase in noninterest expense and a $2.6 million decrease in noninterest income, partially offset by a $910,000 increase in net interest and dividend income and a $2.5 million decrease in tax expense.

Net Interest and Dividend Income. Net interest and dividend income increased by $910,000 to $13.6 million for the year ended December 31, 2010 from $12.7 million for the year ended December 31, 2009. The increase primarily resulted from a decrease of $2.8 million in interest expense partially offset by a decrease of $1.9 million in interest and dividend income. These decreases were primarily driven by declining market interest rates during the year ended December 31, 2010. Our deposit and borrowing rates declined faster than the average yield on our interest-earning assets. In addition, our average balance of interest-bearing liabilities was $6.9 million lower for the 2010 period. As a result, our net interest margin increased 19 basis points to 2.86% for the year ended December 31, 2010 from 2.67% for the year ended December 31, 2009, and our net interest rate spread increased 21 basis points to 2.65% for the year ended December 31, 2010 from 2.44% for the year ended December 31, 2009. In addition, our net interest-earning assets increased to $54.3 million for the year ended December 31, 2010 from $46.1 million for the year ended December 31, 2009.

Interest and Dividend Income. Interest and dividend income decreased $1.9 million to $21.2 million for the year ended December 31, 2010 from $23.1 million for the year ended December 31, 2009. The decrease primarily resulted from a $1.7 million decrease in interest income on loans and a $138,000 decrease in interest and dividend income on securities.

Interest income on loans decreased $1.7 million to $18.0 million for the year ended December 31, 2010 from $19.7 million for the year ended December 31, 2009. This decrease resulted from an 18 basis point decrease in the average yield to 5.23% for the year ended December 31, 2010 from 5.41% for the year ended December 31, 2009, and a $20.7 million decrease in the average balance of loans for the 2010 period. The decrease in the average balance of loans reflected refinancing of our adjustable-rate mortgages into fixed-rate mortgage loans, which were generally sold by us into the secondary mortgage market. The decreased yield reflected the impact of decreases in market interest rates during 2010 on our adjustable-rate loan products, as well as decreased rates on newly originated loans.

Interest and dividend income on securities decreased by $138,000 to $3.2 million for the year ended December 31, 2010 from $3.4 million for the year ended December 31, 2009. The decrease in interest and dividend income on securities was due to a 72 basis point decrease in the average yield to 2.94% for the year ended December 31, 2010 from 3.66% for the year ended December 31, 2009, partially offset by a $17.8 million increase in the average balance of securities to $109.2 million for the year ended December 31, 2010 from $91.4 million for the year ended December 31, 2009. The decrease in the average yield on securities was due to the declining interest rate environment.

Interest Expense. Interest expense decreased $2.8 million to $7.6 million for the year ended December 31, 2010 from $10.4 million for the year ended December 31, 2009.

Interest expense on interest-bearing deposits decreased by $768,000 to $3.8 million for the year ended December 31, 2010 from $4.6 million for the year ended December 31, 2009. The decrease in interest expense on interest-bearing deposits was due to a decrease of 40 basis points in the average rate paid on interest-bearing deposits to 1.27% for the year ended December 31, 2010 from 1.67% for the year ended December 31, 2009. The average rate decreased across all categories of interest-bearing deposits for the year ended December 31, 2010, reflecting lower market interest rates. This was partially offset by a $28.0 million, or 10.2%, increase in the average balance of interest-bearing deposits to $303.4 million for the year ended December 31, 2010 from $275.4 million for the year ended December 31, 2009.

Interest expense on borrowings, including Federal Home Loan Bank advances, securities sold under repurchase agreements and other borrowed funds, decreased $2.1 million to $3.7 million for the year ended December 31, 2010 from $5.8 million for the year ended December 31, 2009, primarily due to a $1.9 million decrease in expense for Federal Home Loan Bank advances. The decrease in expense for Federal Home Loan Bank advances was due to a 62 basis point decrease in the average cost of such advances to 3.14% for the year ended December 31, 2010 from 3.76% for the year ended December 31, 2009, and a $33.3 million decrease in the average balance of advances.

Provision for Loan Losses. We recorded a provision for loan losses of $438,000 for the year ended December 31, 2010 and a provision for loan losses of $366,000 for the year ended December 31, 2009. The allowance for loan losses was $2.9 million, or 0.9% of total loans, at December 31, 2010, compared to $2.5 million, or 0.7% of total loans, at December 31, 2009. The increased provision reflected management’s assessment of the risks inherent in our loan portfolio. During 2010, our commercial real estate loans, commercial business loans, home equity lines of credit and consumer loans, which bear higher risk than our one- to-four family mortgage loans, each increased as a percentage of total loans. Total nonperforming loans were $1.7 million at December 31, 2010 and $1.9 million at December 31, 2009. To the best of our knowledge, we have recorded all losses that are both probable and reasonably estimable for the year ended December 31, 2010 and 2009.

Noninterest Income. Noninterest income decreased $2.6 million to $1.7 million for the year ended December 31, 2010 compared to $4.3 million for the year ended December 31, 2009. The decrease was primarily due to a $2.3 million decrease in net gain on trading securities, a $204,000 increase in writedowns of impaired securities, and a $162,000 decrease in income from bank-owned life insurance, partially offset by an increase of $166,000 in net gain on sales and calls of securities. The decrease in net gain on trading securities was due to the transfer of the trading securities portfolio to available-for-sale in 2010.

Noninterest Expense. Noninterest expense increased $2.4 million to $12.9 million for the year ended December 31, 2010 from $10.5 million for the year ended December 31, 2009. The largest component of this increase was a $1.6 million, or 25.2%, increase in salaries and employee benefits due largely to expenses related to the retirement of our former chief executive officer during 2010. In 2010 we also recorded increases of $337,000, or 60.3%, in data processing fees, $336,000, or 108.7%, in professional fees, $245,000, or 85.1%, in marketing fees and $133,000, or 15.0%, in other expenses, partially offset by a decrease of $255,000, or 33.9%, in FDIC assessments.

Income Tax Expense. We recorded $220,000 and $2.7 million of income tax expense, respectively, for the years ended December 31, 2010 and 2009, reflecting effective tax rates of 10.7% and 44.4%, respectively. The decrease in the effective tax rate for 2010 was due to the elimination of the deferred tax valuation allowance related to the capital loss carry forward pertaining to our investment in equity securities.

Comparison of Operating Results for the Three Months Ended December 31, 2009 and 2008

General. Net income increased $2.0 million to $916,000 for the three months ended December 31, 2009, from a loss of $1.1 million for the three months ended December 31, 2008. The increase was primarily due to an increase of $3.1 million in noninterest income resulting from a $580,000 gain on the sale of securities in 2009, compared to a $2.6 million loss on the sale of securities in 2008.

Net Interest and Dividend Income. Net interest and dividend income increased by $331,000 to $3.3 million for the three months ended December 31, 2009 from $3.0 million for the three months ended December 31, 2008. The increase was due to a $778,000 decrease in interest expense, partially offset by a decrease of $447,000 in interest and dividend income. The increase in net interest and dividend income was primarily the result of the cost of our interest-bearing liabilities decreasing faster than the yields on our interest-earning assets in a period of declining market interest rates. As a result, our net interest margin increased 21 basis points to 2.76% for the three months ended December 31, 2009 compared to 2.55% for the three months ended December 31, 2008, and our net interest rate spread increased 25 basis

points to 2.53% for the three months ended December 31, 2009 compared to 2.28% for the three months ended December 31, 2008. In addition, our net interest-earning assets increased to $50.4 million for the three months ended December 31, 2009 from $42.6 million for the three months ended December 31, 2008.

Interest and Dividend Income. Interest and dividend income decreased $447,000 to $5.6 million for the three months ended December 31, 2009 from $6.1 million for the three months ended December 31, 2008. The decrease in interest and dividend income was primarily due to a $358,000 decrease in interest income on loans and an $87,000 decrease in interest and dividend income on securities. The decrease in interest income on loans resulted from a 27 basis point decrease in the average yield on loans to 5.31% for the three months ended December 31, 2008 from 5.58% for the three months ended December 31, 2009, and an $8.6 million decrease in the average balance of loans to $358.4 million for the three months ended December 31, 2009 from $367.0 million for the three months ended December 31, 2008. The decrease in the average yield on loans was primarily due to lower market interest rates during the period.

The decrease in interest and dividend income on securities resulted from a 79 basis point decrease in the average yield on securities to 3.42% for the three months ended December 31, 2009 from 4.21% for the three months ended December 31, 2008, partially offset by a $14.4 million increase in the average balance of securities to $97.2 million for the three months ended December 31, 2009, from $82.8 million for the three months ended December 31, 2008. The decrease in the average yield on securities was primarily due to lower market interest rates during the period. The increase in the average balance of securities was due largely to the deployment of cash flows from increased deposits that exceeded loan demand for the period.

Interest Expense. Interest expense decreased $778,000 to $2.3 million for the three months ended December 31, 2009 from $3.1 million for the three months ended December 31, 2008. The decrease resulted from a 74 basis point decrease in the cost of interest-bearing liabilities to 2.15% for the three months ended December 31, 2009 from 2.89% for the three months ended December 31, 2008, partially offset by a $3.4 million increase in the average balance of interest-bearing liabilities for the 2009 period.

Interest expense on interest-bearing deposits decreased by $307,000 to $1.1 million for the three months ended December 31, 2009 from $1.4 million for the three months ended December 31, 2008. The decrease was primarily due to a 63 basis point decrease in the average cost of interest-bearing deposits to 1.48% for the three months ended December 31, 2009 from 2.11% for the three months ended December 31, 2008. The average cost decreased across all categories of interest-bearing deposits for the three months ended December 31, 2009, reflecting lower market interest rates as compared to the 2008 period. The decrease in average cost was partially offset by a $26.1 million increase in the average balance of interest-bearing deposits to $284.6 million for the three months ended December 31, 2009 from $258.5 million for the three months ended December 31, 2008.

Interest expense on total borrowings decreased $471,000 to $1.2 million for the three months ended December 31, 2009 from $1.7 million for the three months ended December 31, 2008. This decrease was primarily due to a $21.2 million decrease in the average balance of Federal Home Loan Bank advances to $132.9 million for the three months ended December 31, 2009 from $154.2 million for the three months ended December 31, 2008, and a 61 basis point decrease in the average cost of such advances to 3.51% for the three months ended December 31, 2009 from 4.12% for the three months ended December 31, 2008.

Provision for Loan Losses. We recorded a provision for loan losses of $152,000 for the three months ended December 31, 2009 and a provision for loan losses of $383,000 for the three months ended December 31, 2008. The allowance for loan losses was $2.5 million, or 0.7% of total loans, at December 31, 2009, compared to $2.1 million, or 0.6% of total loans, at December 31, 2008. The increase in the allowance was due to the increased balance of commercial real estate loans and increased specific provisions at December 31, 2009. To the best of our knowledge, we have recorded all losses that are both probable and reasonably estimable for the three months ended December 31, 2009 and 2008.

Noninterest Income. Noninterest income increased $3.1 million to $1.1 million for the three months ended December 31, 2009, compared to a $2.0 million charge for the three months ended December 31, 2008. The increase in noninterest income resulted primarily from a gain of $580,000 on the sale of securities in the 2009 period, compared to a loss of $2.6 million on the sale of securities in the 2008 period. The loss on the sale of securities in the 2008 period resulted from adverse market conditions for equity securities.

Noninterest Expense. Noninterest expense increased $295,000 to $2.7 million for the three months ended December 31, 2009 from $2.4 million for the three months ended December 31, 2008. The largest components of this increase were other noninterest expense, which increased $141,000, or 79.0%, FDIC assessments, which increased $74,000, or 189.8%, and salaries and employee benefits, which increased $52,000, or 3.4%.

Income Tax Expense. We recorded a provision for income taxes of $589,000 for the three months ended December 31, 2009, compared to an income tax benefit of $730,000 for the three months ended December 31, 2008, reflecting effective tax rates of 39.1% and (39.9)%, respectively. The increased rate for 2009 was due to the increase in net income for the 2009 period.

Comparison of Operating Results for the Years Ended September 30, 2009 and 2008

General. Net income increased $1.9 million to $1.4 million for the year ended September 30, 2009 from a loss of $436,000 for the year ended September 30, 2008. The primary reasons for the increase were a $2.7 million increase in net interest and dividend income and a $2.4 million increase in noninterest income, partially offset by increases of $867,000 in noninterest expense and $222,000 in the provision for loan losses.

Net Interest and Dividend Income. Net interest and dividend income increased by $2.7 million to $12.4 million for the year ended September 30, 2009 from $9.7 million for the year ended September 30, 2008. The increase primarily resulted from a decrease of $2.2 million in interest expense to $11.1 million for the year ended September 30, 2009 from $13.3 million for the year ended September 30, 2008, and an increase of $507,000 in interest and dividend income to $23.5 million for the year ended September 30, 2009 from $23.0 million for the year ended September 30, 2008. The increase in net interest and dividend income was primarily due to the cost of our interest-bearing liabilities decreasing faster than the yields on our interest-earning assets in a period of declining market interest rates. As a result, our net interest margin increased 37 basis points to 2.62% for the year ended September 30, 2009 from 2.25% for the year ended September 30, 2008, and our net interest rate spread increased 44 basis points to 2.38% for the year ended September 30, 2009 from 1.94% for the year ended September 30, 2008. In addition, our net interest-earning assets increased to $44.1 million for the year ended September 30, 2009 from $38.9 million for the year ended September 30, 2008.

Interest and Dividend Income. Interest and dividend income increased $507,000 to $23.5 million for the year ended September 30, 2009 from $23.0 million for the year ended September 30, 2008. The increase primarily resulted from a $1.1 million increase in interest income on loans partially offset by a $495,000 decrease in interest and dividend income on securities.

Interest income on loans increased $1.1 million to $20.1 million for the year ended September 30, 2009 from $19.0 million for the year ended September 30, 2008. This increase resulted from a $30.1 million increase in the average balance of loans to $366.6 million for the year ended September 30, 2009 from $336.5 million for the year ended September 30, 2008, partially offset by a 17 basis point decrease in the average yield to 5.48% for the year ended September 30, 2009 from 5.65% for the year ended September 30, 2008, reflecting decreases in market interest rates.

Interest and dividend income on securities decreased by $307,000 to $3.4 million for the year ended September 30, 2009 from $3.9 million for the year ended September 30, 2008. The decrease in interest and dividend income on securities was due to a decrease in the average yield on securities of 44 basis points to 3.86% for the year ended September 30, 2009 from 4.30% for the year ended September 30, 2008, partially offset by a $1.7 million increase in the average balance of securities to $87.8 million for the year ended September 30, 2009 from $86.1 million for the year ended September 30, 2008. The decrease in the average yield on securities was due to the declining interest rate environment.

Interest Expense. Interest expense decreased $2.2 million to $11.1 million for the year ended September 30, 2009 from $13.3 million for the year ended September 30, 2008. Interest expense on interest-bearing deposits decreased by $2.6 million to $4.9 million for the year ended September 30, 2009 from $7.5 million for the year ended September 30, 2008. The decrease in interest expense on interest-bearing deposits was due to a decrease of 96 basis points in the average rate paid on interest-bearing deposits to 1.83% for the year ended September 30, 2009 from 2.79% for the year ended September 30, 2008. We experienced decreases in the average rate across all categories of interest-bearing deposits for the year ended September 30, 2009, reflecting lower market interest rates. The average balance of interest-bearing deposits increased $85,000, or 0.03%, to $268.8 million for the year ended September 30, 2009.

Interest expense on total borrowings increased $434,000 to $6.2 million for the year ended September 30, 2009 from $5.8 million for the year ended September 30, 2008. The increase was primarily due to a $34.5 million increase in the average balance of Federal Home Loan Bank advances to $148.9 million for the year ended September 30, 2009 from $114.4 million for the year ended September 30, 2008, partially offset by a 71 basis point decrease in the average cost of such borrowings to 3.91% for the year ended September 30, 2009 from 4.62% for the year ended September 30, 2008.

Provision for Loan Losses. We recorded a provision for loan losses of $597,000 for the year ended September 30, 2009 and a provision for loan losses of $375,000 for the year ended September 30, 2008. The allowance for loan losses was $2.3 million, or 0.6% of total loans, at September 30, 2009, compared to $1.7 million, or 0.5% of total loans, at September 30, 2008. The increased provision reflected management’s assessment of the risks inherent in the loan portfolio combined with a weakened economy. To the best of our knowledge, we have recorded all losses that are both probable and reasonably estimable for the years ended September 30, 2009 and 2008.

Noninterest Income. Noninterest income increased $2.4 million to $1.2 million for the year ended September 30, 2009, compared to a charge of $1.2 million for the year ended September 30, 2008. The increase in noninterest income resulted largely from a $1.8 million decrease in net loss on trading securities from a loss of $2.3 million for the year ended September 30, 2008 to a loss of $511,000 for the year ended September 30, 2009. Other items contributing to the increase in noninterest income were $193,000 of income from bank-owned life insurance in 2009 compared to no such income in 2008, $323,000 in losses on sales of securities in 2008 compared to no such losses in 2009, and $239,000 in

writedowns of impaired securities in 2008 compared to no such writedowns in 2009, partially offset by a decrease of $343,000 in other income for 2009.

Noninterest Expense. Noninterest expense increased $867,000 to $10.2 million for the year ended September 30, 2009 from $9.3 million for the year ended September 30, 2008. The largest components of this increase were FDIC assessments, which increased $619,000, or 1,031.2%, and salaries and employee benefits, which increased $339,000, or 5.7%. Normal salary increases and increases in payroll taxes primarily accounted for the increase in expense for salaries and employee benefits.

Income Tax Expense. We recorded $1.4 million of income tax expense for the year ended September 30, 2009, compared to a $705,000 income tax benefit for the year ended September 2008, reflecting effective tax rates of 50.1% and (61.8)%, respectively.

Average Balances and Yields

The following tables set forth average balance sheets, average yields and costs, and certain other information for the periods indicated. All average balances are daily average balances. Non-accrual loans were included in the computation of average balances, but have been reflected in the table as loans carrying a zero yield. The yields set forth below include the effect of deferred fees, discounts and premiums that are amortized or accreted to interest income or expense.


	At March 31, 2011			For the Three Months Ended March 31,
	At March 31, 2011			2011								2010
	Yield/Rate			Average Outstanding Balance			Interest		Yield/Rate ⁽¹⁾			Average Outstanding Balance			Interest		Yield/Rate ⁽¹⁾
	(Dollars in thousands)
Interest-earning assets:
Total loans		4.91	%	$	358,826		$	4,407		4.98	%	$	352,501		$	4,718		5.43	%
Securities		4.32			100,158			679		2.75			103,994			851		3.32
FHLB Stock		—			8,038			6		0.30			8,038			—		—
Other		0.25			13,598			2		0.06			15,995			2		0.05

Total interest-earning assets		4.57			480,620			5,094		4.30			480,528			5,571		4.70
Non-interest-earning assets					23,931								25,898

Total assets				$	504,551							$	506,426


Interest-bearing liabilities:
Regular savings accounts		0.74	%	$	162,272		$	280		0.70	%	$	125,104		$	286		0.93	%
Checking accounts		0.17			23,518			7		0.12			28,276			11		0.16
Money market accounts		0.31			13,416			10		0.30			13,374			24		0.73
Certificates of deposit		1.95			125,808			593		1.91			127,303			692		2.20

Total interest-bearing deposits		1.10			325,014			890		1.11			294,057			1,013		1.40
Federal Home Loan Bank advances		2.49			89,094			605		2.75			127,122			1,037		3.31
Securities sold under agreements to repurchase		0.65			2,863			5		0.71			3,345			8		0.97
Other borrowed funds		3.00			4,225			45		4.32			5,662			60		4.30

Total interest-bearing liabilities		1.40			421,196			1,545		1.49			430,186			2,118		2.00
Non-interest-bearing liabilities					36,265								31,776

Total liabilities					457,461								461,962
Equity					47,090								44,464

Total liabilities and equity				$	504,551							$	506,426


Net interest and dividend income							$	3,549							$	3,453

Net interest rate spread ⁽²⁾										2.81	%							2.70	%
Net interest-earning assets ⁽³⁾				$	59,424							$	50,342

Net interest margin ⁽⁴⁾										2.99	%							2.91	%
Average interest-earning assets to interest-bearing liabilities					114.11	%							111.70	%


	For the Years Ended December 31,
	2010								2009
	Average Outstanding Balance			Interest		Yield/ Rate			Average Outstanding Balance			Interest		Yield/ Rate
	(Dollars in thousands)
Interest-earning assets:
Total loans	$	343,774		$	17,980		5.23	%	$	364,509		$	19,728		5.41	%
Securities		109,221			3,212		2.94			91,444			3,350		3.66
FHLB Stock		8,038			—		—			8,038			—		—
Other		15,994			9		0.06			11,710			16		0.14

Total interest-earning assets		477,027			21,201		4.44			475,701			23,094		4.85
Non-interest-earning assets		24,338								21,308

Total assets	$	501,365							$	497,009


Interest-bearing liabilities:
Regular savings accounts	$	135,033		$	1,094		0.81	%	$	105,155		$	1,091		1.04	%
Checking accounts		27,728			41		0.15			30,404			62		0.20
Money market accounts		14,129			82		0.58			12,369			104		0.84
Certificates of deposit		126,474			2,625		2.08			127,439			3,353		2.63

Total interest-bearing deposits		303,364			3,842		1.27			275,367			4,610		1.67
Federal Home Loan Bank advances		110,268			3,457		3.14			143,596			5,402		3.76
Securities sold under agreements to repurchase		3,655			33		0.90			3,954			42		1.06
Other borrowed funds		5,402			236		4.37			6,697			317		4.73

Total interest-bearing liabilities		422,689			7,568		1.79			429,614			10,371		2.41
Non-interest-bearing liabilities		33,475								25,069

Total liabilities		456,164								454,683
Equity		45,201								42,326

Total liabilities and equity	$	501,365							$	497,009


Net interest and dividend income				$	13,633							$	12,723

Net interest rate spread ⁽²⁾							2.65	%							2.44	%
Net interest-earning assets ⁽³⁾	$	54,338							$	46,087

Net interest margin ⁽⁴⁾							2.86	%							2.67	%
Average interest-earning assets to interest-bearing liabilities		112.86	%							110.73	%

(footnotes on following page)


	For the Three Months Ended December 31,																For the Years Ended September 30,
	2009								2008								2009								2008
	Average Outstanding Balance			Interest		Yield/ Rate ⁽ ¹⁾			Average Outstanding Balance			Interest		Yield/ Rate ⁽ ¹⁾			Average Outstanding Balance			Interest		Yield/ Rate			Average Outstanding Balance			Interest		Yield/ Rate
	(Dollars in thousands)
Interest-earning assets:
Total loans	$	358,441		$	4,800		5.31	%	$	367,035		$	5,158		5.58	%	$	366,625		$	20,085		5.48	%	$	336,518		$	19,010		5.65	%
Securities		97,235			837		3.42			82,830			878		4.21			87,813			3,390		3.86			86,058			3,697		4.30
FHLB Stock		8,038			—		—			8,017			46		2.28			8,033			46		0.57			6,237			234		3.75
Other		14,321			4		0.11			8,987			6		0.26			10,365			18		0.17			4,854			91		1.87

Total interest-earning assets		478,035			5,641		4.68			466,869			6,088		5.17			472,836			23,539		4.98			433,667			23,032		5.31
Non-interest-earning assets		23,732								19,353								20,241								23,285

Total assets	$	501,767							$	486,222							$	493,077							$	456,952


Interest-bearing liabilities:
Regular savings accounts	$	116,028		$	291		1.00	%	$	96,016		$	320		1.32	%	$	100,111		$	1,120		1.12	%	$	98,603		$	1,795		1.82	%
Checking accounts		30,320			12		0.16			27,840			38		0.54			29,779			88		0.30			30,302			247		0.82
Money market accounts		12,623			23		0.72			11,767			39		1.31			12,153			120		0.99			12,344			191		1.55
Certificates of deposit		125,614			739		2.33			122,845			975		3.15			126,741			3,588		2.83			127,450			5,263		4.13

Total interest-bearing deposits		284,585			1,065		1.48			258,468			1,372		2.11			268,784			4,916		1.83			268,699			7,496		2.79
Federal Home Loan Bank advances		132,915			1,175		3.51			154,152			1,601		4.12			148,949			5,829		3.91			114,350			5,280		4.62
Securities sold under agreements to repurchase		4,305			11		1.01			4,263			19		1.77			3,943			50		1.27			3,513			73		2.08
Other borrowed funds		5,866			63		4.26			7,420			100		5.35			7,089			353		4.98			8,180			445		5.44

Total interest-bearing liabilities		427,671			2,314		2.15			424,303			3,092		2.89			428,765			11,148		2.60			394,742			13,294		3.37
Non-interest-bearing liabilities		30,205								20,333								22,568								19,406

Total liabilities		457,876								444,636								451,333								414,148
Equity		43,891								41,586								41,744								42,804

Total liabilities and equity	$	501,767							$	486,222							$	493,077							$	456,952


Net interest and dividend income				$	3,327							$	2,996							$	12,391							$	9,738

Net interest rate spread ⁽²⁾							2.53	%							2.28	%							2.38	%							1.94	%
Net interest-earning assets ⁽³⁾	$	50,364							$	42,566							$	44,071							$	38,925

Net interest margin ⁽⁴⁾							2.76	%							2.55	%							2.62	%							2.25	%
Average interest-earning assets to interest-bearing liabilities		111.78	%							110.03	%							110.28	%							109.86	%

(1)	Yields and rates for the three-month periods ended March 31, 2011 and 2010 and December 31, 2009 and 2008 are annualized.

(2)	Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.

(3)	Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.

(4)	Net interest margin represents net interest and dividend income divided by average total interest-earning assets.

Rate/Volume Analysis

The following table presents the effects of changing rates and volumes on our net interest and dividend income for the fiscal years and periods indicated. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately, based on the changes due to rate and the changes due to volume.


	Three Months Ended March 31, 2011 vs. 2010									Years Ended December 31, 2010 vs. 2009									Three Months Ended December 31, 2009 vs. 2008									Years Ended September 30, 2009 vs. 2008
	Increase (Decrease) Due to						Total Increase (Decrease)			Increase (Decrease) Due to						Total Increase (Decrease)			Increase (Decrease) Due to						Total Increase (Decrease)			Increase (Decrease) Due to						Total Increase (Decrease)
	Volume			Rate			Total Increase (Decrease)			Volume			Rate			Total Increase (Decrease)			Volume			Rate			Total Increase (Decrease)			Volume			Rate			Total Increase (Decrease)
	(In thousands)
Interest-earning assets:
Loans	$	78		$	(389	)	$	(311	)	$	(1,077	)	$	(671	)	$	(1,748	)	$	(109	)	$	(249	)	$	(358	)	$	1,672		$	(597	)	$	1,075
Securities		(30	)		(136	)		(166	)		544			(682	)		(138	)		133			(220	)		(87	)		147			(642	)		(495	)
Other		—			—			—			12			(19	)		(7	)		(100	)		98			(2	)		(364	)		291			(73	)

Total interest-earning assets	$	48		$	(525	)	$	(477	)	$	(521	)	$	(1,372	)	$	(1,893	)	$	(76	)	$	(371	)	$	(447	)	$	1,455		$	(948	)	$	507


Interest-bearing liabilities:
Regular savings accounts	$	(34	)	$	28		$	(6	)	$	13		$	(10	)	$	3		$	155		$	(184	)	$	(29	)	$	28		$	(703	)	$	(675	)
Checking accounts		(2	)		(2	)		(4	)		(5	)		(16	)		(21	)		4			(30	)		(26	)		(4	)		(155	)		(159	)
Money market accounts		—			(14	)		(14	)		19			(41	)		(22	)		3			(19	)		(16	)		(3	)		(68	)		(71	)
Certificates of deposit		(8	)		(91	)		(99	)		(25	)		(703	)		(728	)		23			(259	)		(236	)		(29	)		(1,646	)		(1,675	)

Total interest-bearing deposits		(44	)		(79	)		(123	)		2			(770	)		(768	)		185			(492	)		(307	)		(8	)		(2,572	)		(2,580	)
Federal Home Loan Bank advances		(192	)		(240	)		(432	)		(513	)		(1,432	)		(1,945	)		(630	)		204			(426	)		1,436			(887	)		549
Securities sold under agreements to repurchase		(2	)		(1	)		(3	)		(4	)		(5	)		(9	)		—			(8	)		(8	)		8			(31	)		(23	)
Other borrowed funds		(15	)		—			(15	)		(53	)		(28	)		(81	)		120			(157	)		(37	)		(46	)		(46	)		(92	)

Total interest-bearing liabilities		(253	)		(320	)		(573	)		(568	)		(2,235	)		(2,803	)		(325	)		(453	)		(778	)		1,390			(3,536	)		(2,146	)

Change in net interest and dividend income	$	301		$	(205	)	$	96		$	47		$	863		$	910		$	249		$	82		$	331		$	65		$	2,588		$	2,653

Management of Market Risk

General . Our most significant form of market risk is interest rate risk because, as a financial institution, the majority of our assets and liabilities are sensitive to changes in interest rates. Therefore, a principal part of our operations is to manage interest rate risk and limit the exposure of our financial condition and results of operations to changes in market interest rates. Our Asset/Liability Management Committee is responsible for evaluating the interest rate risk inherent in our assets and liabilities, for determining the level of risk that is appropriate, given our business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with the policy and guidelines approved by our Board of Directors.

Historically, we have operated as a traditional thrift institution. A significant portion of our assets consist of longer-term, fixed- and adjustable-rate residential mortgage loans and securities, which we have funded primarily with checking and savings accounts and short-term borrowings. In recent years, in an effort to improve our earnings and to decrease our exposure to interest rate risk, we generally have sold fixed-rate, conforming one- to four-family residential mortgage loans and we have shifted our focus to originating loans that have adjustable rates or higher yields, including commercial real estate loans, home equity lines of credit, commercial business loans and indirect automobile loans. Such loans generally have shorter maturities than one- to four-family residential mortgage loans. To manage our interest rate risk, we also invest in shorter maturity investment securities and mortgage-related securities, and seek to obtain general financing through lower cost deposits and wholesale funding and repurchase agreements. We have not conducted hedging activities, such as engaging in futures, options or swap transactions.

Net Interest Income Analysis. We analyze our sensitivity to changes in interest rates through our net interest income model. Net interest income is the difference between the interest income we earn on our interest-earning assets, such as loans and securities, and the interest we pay on our interest-bearing liabilities, such as deposits and borrowings. We estimate what our net interest income would be for a one-year period based on current interest rates. We then calculate what the net interest income would be for the same period under different interest rate assumptions. We also estimate the impact over a five year time horizon. The following table shows the estimated impact on net interest income (“NII”) for the one-year period beginning March 31, 2011 resulting from potential changes in interest rates. These estimates require us to make certain assumptions including loan and mortgage-related investment prepayment speeds, reinvestment rates, and deposit maturities and decay rates. These assumptions are inherently uncertain and, as a result, we cannot precisely predict the impact of changes in interest rates on our net interest income. Although the net interest income table below provides an indication of our interest rate risk exposure at a particular point in time, such estimates are not intended to, and do not, provide a precise forecast of the effect of changes in market interest rates on our net interest income and will differ from actual results.

(1)	The calculated change for -100 bp and +200bp, assume a gradual parallel shift across the yield curve over a one-year period. The calculated change for “Shock +300” assumes that market rates experience an instantaneous and sustained increase of 300bp.

The table above indicates that at March 31, 2011, in the event of a 200 basis point increase in interest rates over a one year period, assuming a gradual parallel shift across the yield curve over such period, we would experience a 3.6% decrease in net interest income. At the same date, in the event of a 100 basis point decrease in interest rates over a one year period, assuming a gradual parallel shift across the yield curve over such period, we would experience a 0.5% increase in net interest income.

Economic Value of Equity Analysis. We also analyze the sensitivity of our financial condition to changes in interest rates through our economic value of equity model. This analysis measures the difference between predicted changes in the present value of our assets and predicted changes in the present value of our liabilities assuming various changes in current interest rates. Our economic value of equity analysis as of March 31, 2011 estimated that, in the event of an instantaneous 200 basis point increase in interest rates, we would experience a 6.1% decrease in the economic value of our equity. At the same date, our analysis estimated that, in the event of an instantaneous 100 basis point decrease in interest rates, we would experience a 4.9% decrease in the economic value of our equity. The estimates of changes in the economic value of our equity require us to make certain assumptions including loan and mortgage-related investment prepayment speeds, reinvestment rates, and deposit maturities and decay rates. These assumptions are inherently uncertain and, as a result, we cannot precisely predict the impact of changes in interest rates on the economic value of our equity. Although our economic value of equity analysis provides an indication of our interest rate risk exposure at a particular point in time, such estimates are not intended to, and do not, provide a precise forecast of the effect of changes in market interest rates on the economic value of our equity and will differ from actual results.

Liquidity and Capital Resources

Liquidity is the ability to meet current and future financial obligations. Our primary sources of funds consist of deposit inflows, loan repayments, advances from the Federal Home Loan Bank of Boston, principal repayments and loan sales and the sale of securities. While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and mortgage prepayments are greatly influenced by general interest rates, economic conditions and competition. Our Asset/Liability Management Committee is responsible for establishing and monitoring our liquidity targets and strategies in order to ensure that sufficient liquidity exists for meeting the borrowing needs and deposit withdrawals of our customers as well as unanticipated contingencies. We believe that we had enough sources of liquidity at March 31, 2011, to satisfy our short- and long-term liquidity needs as of that date.

We regularly monitor and adjust our investments in liquid assets based on our assessment of:

(i)

expected loan demand;

(ii)

expected deposit flows and borrowing maturities;

(iii)

yields available on interest-earning deposits and securities; and

(iv)

the objectives of our asset/liability management program.

Excess liquid assets are invested generally in interest-earning deposits and short-term securities and may also used to pay off short-term borrowings.

Our most liquid assets are cash and cash equivalents. The level of these assets is dependent on our operating, financing, lending and investing activities during any given period. At March 31, 2011, cash and cash equivalents totaled $35.9 million.

Our cash flows are derived from operating activities, investing activities and financing activities as reported in our Consolidated Statements of Cash Flows included in our Consolidated Financial Statements.

At March 31, 2011, we had $21.8 million in loan commitments outstanding. In addition to commitments to originate loans, we had $52.1 million in unused lines of credit to borrowers. Certificates of deposit due within one year of March 31, 2011 totaled $76.0 million, or 20.1%, of total deposits. If these deposits do not remain with us, we may be required to seek other sources of funds, including loan sales, brokered deposits, repurchase agreements and Federal Home Loan Bank advances. Depending on market conditions, we may be required to pay higher rates on such deposits or other borrowings than we currently pay on the certificates of deposit due on or before March 31, 2012, or on our money market accounts. We believe, however, based on historical experience and current market interest rates, that we will retain upon maturity a large portion of our certificates of deposit with maturities of one year or less as of March 31, 2011.

Our primary investing activity is originating loans. During the quarter ended March 31, 2011 and the years ended December 31, 2010 and 2009, we originated $77.6 million, $118.8 million and $122.8 million of loans, respectively.

Financing activities consist primarily of activity in deposit accounts, Federal Home Loan Bank advances and, to a lesser extent, brokered deposits. We experienced net increases in deposits of $30.4 million and $34.2 million for the three months ended March 31, 2011 and for the year ended December 31, 2010, respectively. At March 31, 2011 and December 31, 2010, the level of brokered deposits were $15.2 million and $2.0 million, respectively. Deposit flows are affected by the overall level of interest rates, the interest rates and products offered by us and our local competitors, and by other factors.

Liquidity management is both a daily and long-term function of business management. If we require funds beyond our ability to generate them internally, borrowing agreements exist with the Federal Home Loan Bank of Boston, which provide an additional source of funds. At March 31, 2011, we had $93.8 million of Federal Home Loan Bank advances. At that date we had the ability to borrow up to an additional $35.2 million from the Federal Home Loan Bank of Boston.

Belmont Savings Bank is subject to various regulatory capital requirements, including a risk-based capital measure. The risk-based capital guidelines include both a definition of capital and a framework for calculating risk-weighted assets by assigning balance sheet assets and off-balance sheet items to broad risk categories. At March 31, 2011, Belmont Savings Bank exceeded all regulatory capital requirements. Belmont Savings Bank is considered “well capitalized” under regulatory guidelines. See “Supervision and Regulation—Federal Banking Regulation—Capital Requirements” and Note 15 of the Notes to our Consolidated Financial Statements.

The net proceeds from the stock offering will significantly increase our liquidity and capital resources. Over time, the initial level of liquidity will be reduced as net proceeds from the stock offering are used for general corporate purposes, including the funding of loans. Our financial condition and results of operations will be enhanced by the net proceeds from the stock offering, resulting in increased net interest-earning assets and net interest and dividend income. However, due to the increase in equity resulting from the net proceeds raised in the stock offering, our return on equity will be adversely affected following the stock offering.

Off-Balance Sheet Arrangements and Contractual Obligations

Commitments. As a financial services provider, we routinely are a party to various financial instruments with off-balance-sheet risks, such as commitments to extend credit and unused lines of credit. While these contractual obligations represent our potential future cash requirements, a significant portion of commitments to extend credit may expire without being drawn upon. Such commitments are subject to the same credit policies and approval process accorded to loans we make. In addition, from time to time we enter into commitments to sell mortgage loans that we originate. For additional information, see Note 12 of the Notes to our Consolidated Financial Statements.

Contractual Obligations. We are obligated to make future payments according to various contracts. The following table presents the expected future payments of the contractual obligations aggregated by obligation type at December 31, 2010.


	Payments Due
*Contractual Obligations*	One year or less		More than one year to three years		More than three years to five years		More than five years		Total
	(In thousands)
Long-term debt	$	56,300	$	35,500	$	1,000	$	—	$	92,800
Operating leases		172		265		186		—		623
Securities sold under agreements to repurchase		2,654		—		—		—		2,654
Certificates of deposit		75,532		35,214		12,771		—		123,517

Total	$	134,658	$	70,979	$	13,957	$	—	$	219,594

Recent Accounting Pronouncements

For a discussion of the impact of recent accounting pronouncements, see Note 2 of the notes to our consolidated financial statements beginning on page F-1 of this prospectus.

Impact of Inflation and Changing Prices

Our consolidated financial statements and related notes have been prepared in accordance with U.S. GAAP. U.S. GAAP generally requires the measurement of financial position and operating results in terms of historical dollars without consideration of changes in the relative purchasing power of money over time due to inflation. The impact of inflation is reflected in the increased cost of our operations. Unlike industrial companies, our assets and liabilities are primarily monetary in nature. As a result, changes in market interest rates have a greater impact on performance than the effects of inflation.

BUSINESS OF BSB BANCORP, INC.

BSB Bancorp, Inc. is incorporated in the State of Maryland. We have not engaged in any business to date. Upon completion of the conversion, we will own all of the issued and outstanding stock of Belmont Savings Bank. We will retain up to 50% of the net proceeds from the offering and initially invest the remaining net proceeds in Belmont Savings Bank as additional capital of Belmont Savings Bank. BSB Bancorp, Inc. will use a portion of the net proceeds to make a loan to the employee stock ownership plan or to capitalize a subsidiary that will make a loan to the employee stock ownership plan. At a later date, we may use the net proceeds to pay dividends to stockholders and may repurchase shares of common stock, subject to regulatory limitations. We will invest our initial capital as discussed in “How We Intend to Use the Proceeds from the Offering.”

In the future, BSB Bancorp, Inc., as the holding company of Belmont Savings Bank, will be authorized to pursue other business activities permitted by applicable laws and regulations, which may include the acquisition of banking and financial services companies. See “Supervision and Regulation—Holding Company Regulation” for a discussion of the activities that are permitted for savings and loan holding companies. We currently have no understandings or agreements to acquire other financial institutions. We may also borrow funds for reinvestment in Belmont Savings Bank.

Following the offering, our cash flow will primarily depend on earnings from the investment of the net proceeds from the offering that we retain and any dividends we receive from Belmont Savings Bank. Initially, BSB Bancorp, Inc. will neither own nor lease any property, but will instead pay a fee to Belmont Savings Bank for the use of its premises, equipment and furniture. At the present time, we intend to employ only persons who are officers of Belmont Savings Bank to serve as officers of BSB Bancorp, Inc. We will, however, use the support staff of Belmont Savings Bank from time to time. We will pay a fee to Belmont Savings Bank for the time devoted to BSB Bancorp, Inc. by employees of Belmont Savings Bank. However, these persons will not be separately compensated by BSB Bancorp, Inc. BSB Bancorp, Inc. may hire additional employees, as appropriate, to the extent it expands its business in the future.

BUSINESS OF BELMONT SAVINGS BANK

General

Belmont Savings Bank’s business consists primarily of accepting deposits from the general public and investing those deposits, together with funds generated from operations and borrowings, in one- to four-family residential mortgage loans, commercial real estate loans, multi-family real estate loans, home equity lines of credit, indirect automobile loans (automobile loans referred to us by automobile dealerships), commercial business loans, construction loans and investment securities. To a much lesser extent, we also make other consumer loans and second mortgage loans. We offer a variety of deposit accounts, including passbook and statement savings accounts, certificates of deposit, money market accounts, commercial and regular checking accounts and IRAs. We offer increased interest rates and reduced fees on our “PlatinumBlue” relationship checking and savings accounts.

We offer convenient hours at all of our branches, and we are dedicated to offering alternative banking delivery systems utilizing state-of-the-art technology. Our most recent investments include online banking and remote deposit capture.

Belmont Savings Bank was chartered in 1885 by the Commonwealth of Massachusetts as a mutual savings bank to serve the financial needs of businesses and individuals in the Belmont community. In 1908, Belmont Savings Bank moved from its original office in the Belmont Town Hall to 10 Leonard Street in Belmont Center. In 1938, Belmont Savings Bank moved to its current main office at 2 Leonard Street.

For its first 40 years, Belmont Savings Bank was a small community bank, providing savings accounts and financing the purchase of residential real estate. In the early 1920s, the bank began to grow more quickly as the town of Belmont entered into a more rapid phase of residential development. The bank opened its first branch office in 1926 and opened its first branch outside of Belmont in 2000.

Throughout its history, Belmont Savings Bank has remained focused on providing a broad range of quality services within its market area as a traditional community bank. However, in 2009, in order to provide the bank with flexibility to make potential acquisitions, Belmont Savings Bank reorganized into the mutual holding company structure. Further, following a comprehensive strategic review of the bank’s management and operations, the board of directors of the bank approved a new strategic plan designed to increase the growth and profitability of the bank. The strategic plan is intended to take advantage of the sound Eastern Massachusetts economy, which has not been as negatively affected by the recent recession as other regions of the United States. The strategic plan contemplates significant growth in assets and liabilities over the next several years with the intent of making Belmont Savings Bank the leader in market share in Belmont, the “Bank of Choice” for small businesses in its market area, and the trusted lending partner for area real estate developers.

The strategic plan includes the following four initiatives:

•

Small business initiative – Belmont Savings Bank seeks to differentiate itself as a community bank dedicated to small business, with a primary focus on new customer acquisition by an experienced, incentive-driven sales force. The initiative targets deposit-rich industries such as law firms, property management firms, and technology and life sciences enterprises. The bank will offer such business customers commercial loans and business checking and cash management products that encourage relationship banking, along with savings products tied to profitable business checking accounts.

•

Home equity initiative – Belmont Savings Bank seeks to build on current customer relationships and acquire new customer relationships through home equity lending. The bank seeks to expand home equity lending through improved turnaround and targeted marketing. A simplified application process and new technology will reduce paper loan processing. The bank will establish a dedicated credit underwriting and processing group to support home equity lending in the branches. The home equity pricing strategy is focused on both generating and enhancing customer deposit relationships.

•

Auto finance initiative –Through its indirect auto lending initiative, Belmont Savings Bank seeks to take advantage of the fragmented automobile finance industry in its market area as well as reduced automobile lending by captive finance companies and banks as a result of the recent recession. The bank has hired a highly experienced management team with an average of over twenty years of experience of doing business in New England. The majority of this team has worked together for many years in the past. The bank seeks to provide state-of-the-art processing and servicing to target high quality customers and dealerships primarily in Eastern Massachusetts. To manage risk and to maximize return on assets, the bank also intends to develop partnerships with selected community and regional banks to sell bank-originated automobile loans.

•

Commercial real estate lending initiative – Belmont Savings Bank seeks to increase its already substantial commercial real estate loan portfolio by targeting professional commercial real estate investors, developers and managers in Eastern Massachusetts. A major focus of this initiative is to obtain full banking relationships with such borrowers to increase low-cost deposits and fee income.

In conjunction with the new strategic plan, our Board of Directors has made several key additions to Belmont Savings Bank’s senior management team. This strategic plan was developed in conjunction with the appointment of Robert M. Mahoney as President and Chief Executive Officer of the bank in May, 2010. Mr. Mahoney was formerly Executive Vice Chairman of Citizens Financial Group, Inc. until his retirement in 2008. In July 2010, Hal R. Tovin was appointed Executive Vice President and Chief Operating Officer for the bank. Like Mr. Mahoney, Mr. Tovin was a senior executive at Citizens Financial Group, Inc., where he served as Group Executive Vice President of the Retail Partnership Delivery Group. Also, in July 2010, Christopher Y. Downs was appointed Executive Vice President—Consumer Lending and Auto Finance at Belmont Savings Bank. Like Messrs. Mahoney and Tovin, Mr. Downs was a senior executive at Citizens Financial Group, Inc., where he served as Group Executive Vice President of the Consumer Finance Division. Finally, in September 2010, Carroll M. Lowenstein, Jr. was appointed Senior Vice President—Commercial Real Estate of Belmont Savings Bank. Mr. Lowenstein, previously served as Senior Vice President (Commercial Real Estate Division) of Citizens Financial Group, Inc. Our Board of Directors believes that the substantial senior management experience of these bank executives at Citizens Financial Group, Inc., one of the ten largest commercial bank holding companies in the United States, positions Belmont Savings Bank to successfully execute its strategic plan.

Market Area

We conduct our operations from our four full-service branch offices located in Belmont and Watertown in Southeast Middlesex County, Massachusetts. Our primary lending market includes Essex, Middlesex, Norfolk and Suffolk Counties, Massachusetts. Due to its proximity to Boston, our primary market area benefits from the presence of numerous institutions of higher learning, medical care and research centers and the corporate headquarters of several significant mutual fund investment companies. Eastern Massachusetts also has many high technology companies employing personnel with specialized skills. These factors affect the demand for residential homes, multi-family apartments, office buildings, shopping centers, industrial warehouses and other commercial properties.

Our lending area is primarily an urban market area with a substantial amount of two-, three- and four-unit properties, some of which are non-owner occupied, as well as apartment buildings, condominiums and office buildings. As a result, compared to many thrift institutions, our loan portfolio contains a significantly greater number of multi-family loans and commercial real estate loans. At March 31, 2011, $113.1 million, or 29.4%, of our total loan portfolio, was comprised of these types of loans.

Our market area is located largely in the Boston-Cambridge-Quincy, Massachusetts/New Hampshire Metropolitan Statistical Area. Based on the 2010 United States census, the Boston metropolitan area is the 10 ^th largest metropolitan area in the United States. Located adjacent to major transportation corridors, the Boston metropolitan area provides a highly diversified economic base, with major employment sectors ranging from services, manufacturing and wholesale/retail trade, to finance, technology and medical care. According to the United States Department of Labor, in March 2011, the Boston-Cambridge-Quincy, Massachusetts/New Hampshire MSA had an unemployment rate of 7.1% compared to the national unemployment rate of 9.2%.

Based on census estimates, from 2000 to 2009, the population of Middlesex County increased 2.7%. This compares to population increases of 3.9% for Massachusetts and 9.1% for the United States for the comparable period. In addition, 2009 median household income was $78,000 for Middlesex County, compared to median household income for Massachusetts of $64,000 and $50,000 for the United States for 2009.

Competition

We face intense competition in our market area both in making loans and attracting deposits. We compete with commercial banks, savings institutions, mortgage brokerage firms, credit unions, finance companies, mutual funds, insurance companies and investment banking firms. Some of our competitors have greater name recognition and market presence that benefit them in attracting business, and offer certain services that we do not or cannot provide.

Our deposit sources are primarily concentrated in the communities surrounding our four full-service branch offices located in Belmont and Watertown, Massachusetts. As of June 30, 2010 (the latest date for which information is publicly available from the Federal Deposit Insurance Corporation), we ranked first of 10 banks and thrift institutions with offices in the town of Belmont, Massachusetts, with a 24.15% market share. As of that same date, we ranked fifth of eight banks and thrift institutions with offices in the city of Watertown, Massachusetts, with a 2.86% market share.

Lending Activities

Our primary lending activity is the origination of one- to four-family residential mortgage loans, multi-family real estate loans, commercial real estate loans, home equity lines of credit, indirect auto loans, commercial business loans and construction loans.

Loan Portfolio Composition. The following table sets forth the composition of our loan portfolio at the dates indicated, excluding loans held for sale of $1.1 million, $3.8 million, $250,000, $0, $0, $0 and $0 at March 31, 2011, December 31, 2010 and 2009, and September 30, 2009, 2008, 2007 and 2006, respectively.


	At March 31, 2011						At December 31,
	At March 31, 2011						2010						2009
	Amount			Percent			Amount			Percent			Amount			Percent
	(Dollars in thousands)
Mortgage loans:
One- to four-family	$	174,693			45.40	%	$	183,584			54.11	%	$	212,776			60.15	%
Commercial real estate loans (1)		113,068			29.38			91,221			26.89			80,783			22.84
Equity lines of credit		33,693			8.75			30,921			9.11			30,676			8.67
Construction loans		14,798			3.84			13,835			4.08			19,057			5.39
Second mortgage loans		510			0.13			503			0.15			557			0.16

Total mortgage loans		336,762			87.50			320,064			94.34			343,849			97.21
Commercial loans		16,487			4.28			14,012			4.13			8,877			2.50
Consumer loans:
Indirect auto loans		30,363			7.89			3,717			1.10			—			—
Other consumer loans (2)		1,276			0.33			1,467			0.43			1,005			0.29

Total loans		384,888			100.0	%		339,260			100.0	%		353,731			100.0	%


Other items:
Unearned costs and premiums, net		1,454						565						495
Allowance for loan losses		(3,328	)					(2,889	)					(2,473	)

Total loans, net	$	383,014					$	336,936					$	351,753


	At September 30,
	2009						2008						2007						2006
	Amount			Percent			Amount			Percent			Amount			Percent			Amount			Percent
	(Dollars in thousands)
Mortgage loans:
One- to four-family	$	221,511			61.37	%	$	249,275			69.30	%	$	231,859			71.99	%	$	257,611			78.14	%
Commercial real estate loans (1)		79,375			21.98			60,437			16.80			52,530			16.31			42,473			12.88
Equity lines of credit		29,934			8.29			23,294			6.48			16,968			5.27			11,450			3.47
Construction loans		20,124			5.58			16,243			4.52			13,671			4.24			8,294			2.52
Second mortgage loans		596			0.17			675			0.19			960			0.30			948			0.29

Total mortgage loans		351,540			97.39			349,924			97.29			315,988			98.11			320,776			97.30
Commercial loans		8,448			2.34			9,023			2.51			5,049			1.57			8,038			2.44
Consumer loans:
Indirect auto loans		—			—			—			—			—			—			—			—
Other consumer loans (2)		980			0.27			732			0.20			1,025			0.32			870			0.26

Total loans		360,968			100.0	%		359,679			100.0	%		322,062			100.0	%		329,684			100.0	%


Other items:
Unearned costs and premiums, net		548						483						384						407
Allowance for loan losses		(2,321	)					(1,747	)					(1,407	)					(1,319	)

Total loans, net	$	359,195					$	358,415					$	321,039					$	328,772

(1)	Includes multi-family real estate loans.

(2)	Other consumer loans consist primarily of passbook loans, consumer lines of credit and overdraft protection, consumer unsecured loans and new auto loans.

Loan Portfolio Maturities and Yields. The following table summarizes the dollar amount of loans maturing in our portfolio based on their contractual terms to maturity at December 31, 2010, but does not include scheduled payments or potential payments. Demand loans, loans having no stated repayment schedule or maturity, and overdraft loans are reported as being due in one year or less.


	One- to Four-Family Loans					Commercial Real Estate Loans					Equity Lines of Credit					Construction Loans
	Amount		Yield			Amount		Yield			Amount		Yield			Amount		Yield
	(Dollars in thousands)
Due During the Twelve Months Ending December 31,
2011	$	195		6.50	%	$	862		6.79	%	$	—		—	%	$	11,459		6.46	%
2012		370		5.30			2,662		6.07			10		7.00			1,452		5.65
2013		1,405		4.97			4,323		5.84			23		7.00			—		—
2014 to 2015		700		5.75			4,655		6.12			62		6.25			—		—
2016 to 2020		24,432		4.93			60,395		6.15			1,270		4.57			—		—
2021 to 2025		6,388		4.58			15,208		5.80			3,631		5.07			—		—
2026 and beyond		150,094		4.66			3,116		6.32			25,925		3.91			924		4.91

Total	$	183,584		4.70	%	$	91,221		6.08	%	$	30,921		4.08	%	$	13,835		6.27	%


	Commercial Loans					Second Mortgage Loans					Indirect Auto Loans					Other Consumer Loans					Total
	Amount		Yield			Amount		Yield			Amount		Yield			Amount		Yield			Amount		Yield
	(Dollars in thousands)
Due During the Twelve Months Ending December 31,
2011	$	88		5.13	%	$	—		—	%	$	20		4.51	%	$	82		15.67	%	$	12,706		6.36	%
2012		31		6.00			—		—			—		—			998		2.89			5,523		3.85
2013		113		6.79			—		—			38		3.13			52		12.01			5,954		5.69
2014 to 2015		342		5.50			8		7.88			884		4.89			169		10.62			6,820		5.90
2016 to 2020		—		—			430		5.84			2,775		4.66			145		7.76			89,447		5.75
2021 to 2025		—		—			65		7.69			—		—			21		8.24			25,313		5.39
2026 and beyond		13,438		3.79			—		—			—		—			—		—			193,497		4.53

Total	$	14,012		3.87	%	$	503		6.11	%	$	3,717		4.48	%	$	1,467		5.38	%	$	339,260		5.05	%

The following table sets forth the scheduled repayments of fixed- and adjustable-rate loans at December 31, 2010 that are contractually due after December 31, 2011.


	Due After December 31, 2011
	Fixed		Adjustable		Total
	(In thousands)
Mortgage Loans:
One- to four-family	$	48,506	$	134,883	$	183,389
Commercial real estate loans		34,536		55,823		90,359
Equity lines of credit		—		30,921		30,921
Construction loans		1,452		924		2,376
Second mortgage loans		503		—		503

Total mortgage loans		84,997		222,551		307,548
Commercial loans		762		13,162		13,924
Consumer loans:
Indirect auto loans		3,697		—		3,697
Other consumer loans		1,385		—		1,385

Total loans	$	90,841	$	235,713	$	326,554

One- to Four-Family Residential Mortgage Loans. At March 31, 2011, $174.7 million, or 45.4%, of our total loan portfolio, consisted of one- to four-family residential mortgage loans. We offer fixed-rate and adjustable-rate residential mortgage loans with maturities up to 30 years.

Much of the housing stock in our primary lending market area is comprised of two-, three- and four-unit properties, all of which are classified as one- to four-family residential mortgage loans. At March 31, 2011, of the $174.7 million of one- to four-family residential mortgage loans in our portfolio, $4.7 million, or 2.7%, were comprised of non-owner occupied properties.

Our one- to four-family residential mortgage loans are generally underwritten according to Fannie Mae and Freddie Mac guidelines, and we refer to loans that conform to such guidelines as “conforming loans.” We generally originate both fixed- and adjustable-rate mortgage loans in amounts up to the maximum conforming loan limits as established by the Federal Housing Finance Agency, which is generally $417,000. We also originate loans above this amount, which are referred to as “jumbo loans.” We generally underwrite jumbo loans in a manner similar to conforming loans. Jumbo loans are common in our market area. During the year ended December 31, 2010, and the three months ended March 31, 2011, we originated $16.6 million and $2.5 million, respectively, of jumbo loans.

We originate our adjustable-rate one- to four-family residential mortgage loans with initial interest rate adjustment periods of one, three and five years, based on changes in a designated market index. These loans are limited to a 500 basis point initial increase in their interest rate, a 200 basis point increase in their interest rate annually after the initial adjustment, and a maximum upward adjustment of 500 basis points over the life of the loan. We determine whether a borrower qualifies for an adjustable-rate mortgage loan based on secondary market guidelines.

We will originate one- to four-family residential mortgage loans with loan-to-value ratios up to 80% without private mortgage insurance. We will originate loans with loan-to-value ratios of up to 95% with private mortgage insurance and where the borrower’s debt does not exceed 45% of the borrower’s monthly cash-flow.

Generally, we sell to the secondary market all of the fixed-rate loans that we originate. We currently sell the majority of such loans to either Bank of America or US Bank, with servicing released. Historically, we have also sold a smaller number of loans to Fannie Mae and Freddie Mac and retain servicing on these loans. For the year ended December 31, 2010, we received servicing fees of $74,000 on loans that we previously sold. At March 31, 2011, the principal balance of loans serviced for others totaled $28.1 million.

We generally do not offer “interest only” mortgage loans on one- to four-family residential properties nor do we offer loans that provide for negative amortization of principal, such as “Option ARM” loans, where the borrower can pay less than the interest owed on his loan, resulting in an increased principal balance during the life of the loan. Additionally, we do not offer “subprime loans” (loans that are made with low down-payments to borrowers with weakened credit histories typically characterized by payment delinquencies, previous charge-offs, judgments, bankruptcies, or borrowers with questionable repayment capacity as evidenced by low credit scores or high debt-burden ratios) or Alt-A loans (defined as loans having less than full documentation).

Commercial Real Estate and Multi-family Real Estate Loans. At March 31, 2011, $113.1 million, or 29.4%, of our loan portfolio consisted of commercial real estate loans and multi-family (which we consider to be five or more units) residential real estate loans. At March 31, 2011, substantially all of our commercial real estate and multi-family real estate loans were secured by properties located in Eastern Massachusetts.

Our commercial real estate mortgage loans are primarily secured by office buildings, owner-occupied businesses, industrial buildings and strip mall centers. At March 31, 2011, loans secured by commercial real estate and multi-family real estate had an average loan balance of $934,000.

We offer both fixed- and adjustable-rate commercial real estate loans and multi-family real estate loans. Our adjustable-rate commercial real estate and multi-family real estate loans generally have terms of ten years with fixed rates for the first five years and adjustable rates thereafter based on changes in a designated market index. These loans generally amortize on a twenty-five to thirty year basis, with a balloon payment due at maturity.

In underwriting commercial real estate and multi-family real estate loans, we consider a number of factors, which include the projected net cash flow to the loan’s debt service requirement (generally requiring a minimum of 125%), the age and condition of the collateral, the financial resources and income level of the borrower and the borrower’s experience in owning or managing similar properties. Commercial real estate and multi-family real estate loans are generally originated in amounts up to 80% of the appraised value or the purchase price of the property securing the loan, whichever is lower. Personal guarantees are typically obtained from commercial real estate and multi-family real estate borrowers. In addition, the borrower’s and guarantor’s, financial information on such loans is monitored on an ongoing basis by requiring periodic financial statement updates.

Commercial real estate and multi-family real estate loans generally carry higher interest rates and have shorter terms than one- to four-family residential mortgage loans. Commercial real estate and multi-family real estate loans, however, entail greater credit risks compared to the one- to four-family residential mortgage loans we originate, as they typically involve larger loan balances concentrated with single borrowers or groups of related borrowers. In addition, the payment of loans secured by income-producing properties typically depends on the successful operation of the property, as repayment of the loan generally is dependent, in large part, on sufficient income from the property to cover operating expenses and debt service. Changes in economic conditions that are not in the control of the borrower or lender could affect the value of the collateral for the loan or the future cash flow of the property. Additionally, any decline in real estate values may be more pronounced for commercial real estate and multi-family real estate than for one- to four-family residential properties.

At March 31, 2011, our largest commercial real estate loan had an outstanding balance of $6.7 million, was secured by retail shopping center and land, and was performing in accordance with its terms. At that date, our largest multi-family real estate loan had a balance of $5.3 million, was secured by a 42 unit apartment building in Boston, and was performing in accordance with its original terms.

Home Equity Loans and Lines of Credit. In addition to traditional one- to four-family residential mortgage loans, we offer home equity lines of credit and, to a lesser extent, home equity loans, that are secured by the borrower’s primary residence, secondary residence or one- to four-family investment properties. Home equity loans and lines of credit are generally underwritten with the same criteria that we use to underwrite one- to four-family residential mortgage loans.

Our home equity lines of credit are revolving lines of credit which generally have a term of 25 years, with draws available for the first ten years. Our twenty five year lines of credit are interest only during the first ten years, and amortize on a fifteen year basis thereafter. We generally originate home equity lines of credit with loan-to-value ratios of up to 80% when combined with the principal balance of the existing first mortgage loan, although loan-to-value ratios may occasionally exceed 80% on a case by case basis. Maximum loan-to-values are determined based on an applicant’s credit score, property value, loan amount and debt-to-income ratio. Lines of credit above $750,000 with loan-to-values greater than

60% require two full appraisals with the valuation being the average of the two. Lines of credit greater than $500,000 generally may not exceed a loan-to-value ratio of 75% and require a credit score (FICO) of greater than 720. Rates are adjusted monthly based on changes in a designated market index. We offer reduced interest rates to customers who have a PlatinumBlue checking account and who maintain a minimum draw on their line of credit. At March 31, 2011, our largest home equity line of credit was a $1.0 million line of credit with an outstanding balance of $25 thousand. At March 31, 2011 this line of credit was performing in accordance with its original terms.

We have historically originated both fixed and adjustable rate home equity loans with terms up to 15 years, although in the current interest rate environment, fixed rate loans with terms greater than five years are not a priority. Our adjustable-rate home equity loans have initial interest rate adjustment periods of one, three and five years, based on changes in a designated market index. These loans are limited to a 500 basis point initial increase in their interest rate, a 200 basis point annual increase after the initial adjustment, and a maximum upward adjustment of 500 basis points over the life of the loan.

Indirect Automobile Loans and Other Consumer Loans. In the fourth quarter of 2010, we began originating indirect automobile loans. These are automobile loans that franchised dealerships originate and assign to us, upon our approval, for a premium based on pre-established rates and terms. We underwrite each of these loans, as further described below. We currently receive auto loans from approximately 100 franchised dealerships located in Eastern Massachusetts and Rhode Island, and may expand our dealership relationships throughout Massachusetts, Connecticut, and New Hampshire in the future as appropriate. During the three months ended March 31, 2011, our portfolio of indirect auto loans increased from $3.7 million loans to approximately $30.4 million, or 7.9%, of our total loan portfolio. Approximately 49% of the aggregate principal balance of our indirect automobile loan portfolio as of March 31, 2011 was for new vehicles, and the remainder was for used vehicles. We only originate used car loans through franchised dealers of new automobiles that also provide us with loans on new vehicles.

At March 31, 2011, the weighted average original term to maturity of our automobile loan portfolio was 65 months, with an estimated average life of 30 months. The average amount financed for each of our automobile loans for the three months ended March 31, 2011 was $20,500 and the weighted average credit score was 769. Approximately 78% of the aggregate principal balance of our automobile loan portfolio at March 31, 2011 consisted of loans to borrowers with mailing addresses in Massachusetts, with an additional 22% of borrowers having mailing addresses in Rhode Island.

Each dealer that originates automobile loans contractually makes representations and warranties to us with respect to our security interest, dealer or consumer fraud and the dealership’s compliance with all state and federal laws for the related financed vehicles. These representations and warranties do not relate to the creditworthiness of the borrowers or the collectability of the loan. Each automobile loan requires the borrower to keep the financed vehicle fully insured against loss or damage by fire, theft and collision. However, as there can be no assurance that each financed vehicle will continue to be covered by physical damage insurance provided by the borrower during the entire term during which the related loan is outstanding, each loan is bound by vendor single interest insurance at the time of loan origination. This coverage insures us against uninsured damage or loss of vehicle in the case of default and is paid for by the customer at the time of purchase.

Each participating dealership submits credit applications to us through industry web portals; Dealertrack and Route One into an online loan originations system provided by Fiserv Solutions, Inc. The borrower’s creditworthiness and the value of the underlying collateral are the most important criteria used in determining whether to originate an automobile loan. Each credit application requires that the borrower provide current, personal information regarding the borrower’s employment history, debts, and other factors that bear on creditworthiness. Our loan origination system provides for automatic declines of lower quality applications. However, all other applications are reviewed by our experienced automobile lending staff prior to being approved.

We generally finance up to 100% of the wholesale value of the vehicle plus sales tax, dealer preparation fees, license fees and title fees, which may in some case result in a loan-to-value ratio of 100% or higher. The vehicle’s value is determined by using NADA Dealer Invoice or wholesale value as updated by NADA on a monthly basis. We regularly review the quality of our indirect auto loans and periodically conduct quality control audits to ensure compliance with our established policies and procedures.

During the month ended March 31, 2011, the month in which we began sales of indirect auto loans, we sold to another financial institution $959,882, or 7%, of the indirect automobile loans that we originated during that month. We expect that in the future we will sell the majority of the indirect automobile loans that we originate. As of March 31, 2011, we maintained a relationship with one financial institution to which we may sell indirect automobile loans with several others in process per our strategic business plan. We sell our indirect automobile loans as non-recourse whole loans with servicing retained, and make standard representations and warranties in connection with the sale and servicing of the loans. We receive a fee from the loan purchaser at the time of sale, as well as servicing fees. Loans sold are generally representative of our indirect automobile portfolio; however, a purchaser may request to purchase a subset of loans based on specific criteria, such as geography.

To a lesser extent we also offer a variety of other consumer loans, primarily loans secured by savings deposits. At March 31, 2011, our portfolio of consumer loans other than indirect automobile loans totaled $1.3 million, or 0.33% of our total loan portfolio.

Indirect automobile loans and other consumer loans generally have shorter terms to maturity, which reduces our exposure to changes in interest rates. In addition, management believes that offering consumer loan products helps to expand and create stronger ties to our existing customer base by increasing the number of customer relationships and providing cross-marketing opportunities.

Consumer loans generally have greater risk compared to longer-term loans secured by improved, owner-occupied real estate, particularly consumer loans that are secured by rapidly depreciable assets, such as automobiles. In these cases, any repossessed collateral for a defaulted loan may not provide an adequate source of repayment of the outstanding loan balance. As a result, consumer loan collections are dependent on the borrower’s continuing financial stability and thus are more likely to be adversely affected by job loss, divorce, illness or personal bankruptcy. Furthermore, our consumer loan portfolio contains a substantial number of indirect automobile loans where we assume the risk that the automobile dealership administering the lending process complies with federal, state and local consumer protection laws.

Commercial Loans . We originate commercial term loans and variable lines of credit to small- and medium-sized businesses in our primary market area. Our commercial loans are generally used for working capital purposes or for acquiring equipment, inventory or furniture. These loans are secured by business assets other than real estate, such as business equipment and inventory or accounts receivable, and real estate, and are generally originated with maximum loan-to-value ratios of up to 80%. The commercial business loans that we offer are generally adjustable-rate loans with terms ranging from three to five years. At March 31, 2011, we had $16.5 million of commercial business loans and lines of credit outstanding, representing 4.28% of our total loan portfolio. At March 31, 2011, the average balance of our commercial loans and lines of credit was $186,000.

When making commercial business loans, we consider the financial statements of the borrower, the lending history of the borrower, the debt service capabilities of the borrower, the projected cash flows of the business and the value of the collateral, if any. Virtually all of our loans are guaranteed by the principals of the borrower.

Commercial business loans generally have a greater credit risk than residential mortgage loans. Unlike residential mortgage loans, which generally are made on the basis of the borrower’s ability to make repayment from his or her employment and other income, and which are secured by real property whose value tends to be more easily ascertainable, commercial business loans are of higher risk and typically are made on the basis of the borrower’s ability to make repayment from the cash flow of the borrower’s business. As a result, the availability of funds for the repayment of commercial business loans may be substantially dependent on the success of the business itself. Further, the collateral securing the loans may depreciate over time, may be difficult to appraise and may fluctuate in value based on the success of the business. We seek to minimize these risks through our underwriting standards and the experience of our independent credit department. The credit department is responsible for the underwriting and documentation of new commercial loans as well as the annual review of credit ratings of existing loans and special credit projects. The credit department has no loan production goals and has annual performance objectives based on credit quality and credit risk management. All commercial loans, regardless of size, are approved by both the manager of the credit department and the President and Chief Executive Officer of the bank.

At March 31, 2011, our largest commercial business loan outstanding was a $2.7 million loan secured by business assets and commercial real estate. At March 31, 2011, this loan was performing in accordance with its original terms.

Construction Loans. We originate loans to builders and individuals to finance the construction of one- to four-family residential properties, multi-family properties and commercial properties. A majority of our construction loans are for commercial development projects, including residential properties. Most of our loans for the construction of one-to four-family residential properties are “on speculation.” At March 31, 2011, $14.8 million, or 3.8%, of our total loan portfolio, consisted of construction loans, $3.0 million of which were secured by one- to four-family owner-occupied residential real estate, $8.8 million of which were secured by one- to four-family residential real estate projects on speculation, $1.8 million of which were secured by multi-family residential real estate projects on speculation, and $1.2 million of which were secured by commercial real estate.

Our construction loans generally provide for the payment of interest only during the construction phase, which is usually 12 months. At the end of the construction phase, the loan generally converts to a permanent mortgage loan. Loans generally can be made with a maximum loan-to-value ratio of 75%. Before making a commitment to fund a residential construction loan, we require an appraisal of the property by an independent licensed appraiser. We also require an inspection of the property before disbursement of funds during the term of the construction loan.

At March 31, 2011, our largest speculative construction loan had a principal balance of $2.7 million and was secured by three high-end single family properties. This loan was performing in accordance with its original terms at March 31, 2011.

Construction financing generally involves greater credit risk than long-term financing on improved, owner-occupied real estate. Risk of loss on a construction loan depends largely upon the accuracy of the initial estimate of the value of the property at completion of construction compared to the estimated cost (including interest) of construction and other assumptions. If the estimate of construction cost is inaccurate, we may be required to advance additional funds beyond the amount originally

committed in order to protect the value of the property. Moreover, if the estimated value of the completed project is inaccurate, the borrower may hold a property with a value that is insufficient to assure full repayment of the construction loan upon the sale of the property. Construction loans also expose us to the risk that improvements will not be completed on time in accordance with specifications and projected costs. In addition, the ultimate sale or rental of the property may not occur as anticipated.

Loan Originations, Purchases, Sales, Participations and Servicing. Loans that we originate are generally underwritten pursuant to our policies and procedures, which incorporate standard underwriting guidelines, including those of Freddie Mac and Fannie Mae, to the extent applicable. We originate both adjustable-rate and fixed-rate loans. Our loan origination and sales activity may be adversely affected by a rising interest rate environment that typically results in decreased loan demand. Most of our one- to four-family residential mortgage loan originations are generated by our loan officers or referred by branch managers and employees located in our banking offices. We also advertise throughout our market area.

In recent years, in an effort to manage interest rate risk in what has been a relatively low interest rate environment, we have sold the great majority of fixed-rate one- to four-family residential mortgage loans that we have originated. We retain the servicing on all such loans that we sell to Fannie Mae or Freddie Mac, and we release the servicing on all such loans that are sold to other mortgage investors, primarily commercial banks. We intend to continue this practice in the future, subject to the pricing of retaining such servicing rights. For the three months ended March 31, 2011 and the year ended December 31, 2010, we received net servicing income of $17,000 and $74,000, respectively, on loans that we sold. At March 31, 2011, the principal balance of loans serviced for others totaled $28.1 million.

We sell our loans without recourse, except for customary representations and warranties provided in sales transactions. Loan servicing includes collecting and remitting loan payments, accounting for principal and interest, contacting delinquent borrowers, supervising foreclosures and property dispositions in the event of unremedied defaults, making certain insurance and tax payments on behalf of the borrowers and generally administering the loans. We retain a portion of the interest paid by the borrower on the loans we service as consideration for our servicing activities.

From time to time, we will participate in loans with other banks, usually as “lead lender.” We may offer other banks participations in our loans due to lending limits. When we are not lead lender, we will generally follow our customary loan underwriting and approval policies. At March 31, 2011, we held $5.4 million of multi-family and commercial real estate loans in our portfolio that were participation loans from other lenders.

From time to time, we have also purchased whole loans from other banks. In these cases, we generally follow our customary loan underwriting and approval policies. During the three months ended March 31, 2011, and the year ended December 31, 2010, we purchased $1.3 million and $3.1 million, respectively, of whole loans from other banks.

The following table shows the loan origination, purchases, sales and repayment activities for the periods indicated.


	For the Three Months Ended March 31,						For the Years Ended December 31,						For the Three Months Ended December 31,						For the Years Ended September 30,
	2011			2010			2010			2009			2009			2008			2009			2008			2007			2006
	(In thousands)
Originations by type :
Mortgage Loans:
One- to four-family	$	5,387		$	5,184		$	20,112		$	34,368		$	7,553		$	5,374		$	25,878		$	38,896		$	17,715		$	45,606
Commercial real estate loans		24,285			6,692			21,315			22,218			4,899			11,111			28,430			24,477			19,767			20,920
Construction loans		1,806			4,547			14,613			16,134			1,941			16,833			31,027			16,203			19,708			9,343
Equity lines of credit		6,911			4,189			17,833			26,500			5,057			7,703			29,146			25,947			24,100			19,063
Second mortgage loans		—			—			—			15			—			48			63			—			1,055			—

Total mortgage loans		38,389			20,612			73,873			99,235			19,450			41,069			114,544			105,523			82,345			94,932
Commercial loans		7,188			6,744			34,459			22,573			3,448			4,245			23,369			19,282			14,151			10,788
Consumer loans:
Indirect auto loans		29,598			—			3,812			—			—			—			—			—			—			—
Other consumer loans		2,375			325			6,633			959			232			125			854			443			908			880

Total loans originated	$	77,550		$	27,681		$	118,777		$	122,767		$	23,130		$	45,439		$	138,767		$	125,248		$	97,404		$	106,600


Purchases :
Mortgage Loans:
One- to four-family	$	1,345		$	417		$	3,121		$	3,693		$	168		$	5,936		$	15,771		$	30,116		$	14,704		$	30,593
Commercial real estate loans		—			—			—			—			—			2,625			2,625			—			—			—
Construction loans		—			—			—			—			—			—			—			—			—			850
Equity lines of credit		—			—			—			—			—			—			—			—			—			—
Second mortgage loans		—			—			—			—			—			—			—			—			—			—

Total mortgage loans		1,345			417			3,121			3,693			168			8,561			18,396			30,116			14,704			31,443
Commercial loans		—			—			—			—			—			—			—			—			—			—
Consumer loans:
Indirect auto loans		—			—			—			—			—			—			—			—			—			—
Other consumer loans		—			—			—			—			—			—			—			—			—			—

Total loans purchased	$	1,345		$	417		$	3,121		$	3,693		$	168		$	8,561		$	18,396		$	30,116		$	14,704		$	31,443


Sales and repayments :
Mortgage Loans:
One- to four-family	$	—		$	—		$	—		$	—		$	—		$	(6,817	)	$	(6,817	)	$	—		$	(1,157	)	$	(18,189	)
Commercial real estate loans		—			—			—			(1,000	)		—			—			(1,000	)		—			(4,500	)		(2,500	)
Construction loans		—			—			—			—			—			—			—			—			—			—
Equity lines of credit		—			—			—			—			—			—			—			—			—			—
Second mortgage loans		—			—			—			—			—			—			—			—			—			—

Total mortgage loans		—			—			—			(1,000	)		—			(6,817	)		(7,817	)		—			(5,657	)		(20,689	)
Commercial loans		—			—			—			—			—			—			—			—			—			—
Consumer loans:
Indirect auto loans		—			—			—			—			—			—			—			—			—			—
Other consumer loans		—			—			—			—			—			—			—			—			—			—

Total loans sold	$	—		$	—		$	—		$	(1,000	)	$	—		$	(6,817	)	$	(7,817	)	$	—		$	(5,657	)	$	(20,689	)

Principal repayments		(35,468	)		(31,567	)		(139,779	)		(146,834	)		(32,509	)		(28,833	)		(143,159	)		(120,549	)		(109,748	)		(73,458	)

Total reductions	$	(35,468	)	$	(31,567	)	$	(139,779	)	$	(147,834	)	$	(32,509	)	$	(35,650	)	$	(150,976	)	$	(120,549	)	$	(115,405	)	$	(94,147	)

Increase (decrease) in other items, net		2,651			(463	)		3,064			4,914			1,768			(8,552	)		(5,407	)		2,560			(4,435	)		(3,262	)

Net increase (decrease)	$	46,078		$	(3,932	)	$	(14,817	)	$	(16,460	)	$	(7,443	)	$	9,798		$	780		$	37,375		$	(7,732	)	$	40,634

Loan Approval Procedures and Authority . Our lending activities follow written, non-discriminatory underwriting standards and loan origination procedures established by our Board of Directors. The loan approval process is intended to assess the borrower’s ability to repay the loan and the value of the property that will secure the loan. To assess the borrower’s ability to repay, we review the borrower’s employment and credit history and information on the historical and projected income and expenses of the borrower. We require “full documentation” on all of our loan applications.

Our policies and loan approval limits are established by our Board of Directors. Aggregate lending relationships in amounts up to $1.0 million can be approved by designated individual officers or officers acting together with specific lending approval authority. Relationships in excess of $1.0 million require the approval of the Executive Committee. In addition, all commercial loans, regardless of size, are approved by both the credit manager of the department and the President and Chief Executive Officer of the bank.

We seek to minimize credit risks through our underwriting standards and the experience of our credit department. The credit department is responsible for the underwriting and documentation of new commercial loans as well as the annual review of credit ratings of existing loans and special credit projects. We consider our credit department to be independent because it has no loan production goals and has annual performance objectives based on credit quality and credit risk management.

We require appraisals based on a comparison with current market sales for all real property securing one- to four-family residential mortgage loans, multi-family loans and commercial real estate loans, unless the Executive Committee approves an alternative means of valuation. All appraisers are independent, state-licensed or state-certified appraisers and are approved by the Board of Directors annually.

Non-Performing and Problem Assets

When a residential mortgage loan or home equity line of credit is 15 days past due, a late payment notice is generated and mailed to the borrower. We will attempt personal, direct contact with the borrower to determine when payment will be made. We will send a letter when a loan is 30 days or more past due and will attempt to contact the borrower by telephone. Thereafter, we will send an additional letter when a loan is 60 days or more past due, and we will attempt to contact the borrower by telephone. By the 90 ^th day of delinquency, unless the borrower has made arrangements to bring the loan current on its payments, we will refer the loan to legal counsel to commence foreclosure proceedings. In addition, a property appraisal is made to determine the condition and market value. The account will be monitored on a regular basis thereafter as a non-accrual loan.

When auto finance loans become 10 to 15 days past due, a late fee is charged according to applicable guidelines. When the loan is 11 days past due, the customer will receive a phone call from our servicer requesting a payment. Letters are generated at 15, 25 and 34 days past due. A letter stating our intent to repossess the automobile goes to the customer 21 days prior to repossession, which is triggered at 45 days past due. Vehicles are assigned for repossession at 65 to 70 days past due; the customer has 21 days for right of redemption until the vehicle is sold. Auto loans are placed on non-accrual status at 90 days past due and charged off at 120 days past due.

Commercial business loans, commercial real estate loans and consumer loans are generally handled in the same manner as residential mortgage loans or home equity lines of credit. All commercial business loans that are 60 days past due are immediately referred to a senior lending officer. Because of the nature of the collateral securing consumer loans, we may commence collection procedures faster for consumer loans than for residential mortgage loans or home equity lines of credit.

Loans are placed on non-accrual status when payment of principal or interest is more than 90 days delinquent. Loans are also placed on non-accrual status if collection of principal or interest in full is in doubt. When loans are placed on a non-accrual status, unpaid accrued interest is fully reversed, and further income is recognized only to the extent received. The loan may be returned to accrual status if both principal and interest payments are brought current and full payment of principal and interest is expected.

Non-Performing Assets. The table below sets forth the amounts and categories of our non-performing assets at the dates indicated.


	At March 31, 2011			At December 31,						At September 30,
	At March 31, 2011			2010			2009			2009			2008			2007			2006
	(Dollars in thousands)
Non-accrual loans:
Mortgage Loans:
One- to four-family	$	1,315		$	1,053		$	1,636		$	1,255		$	1,486		$	696		$	—
Commercial real estate loans		—			—			—			1,161			—			—			—
Construction loans		—			—			—			—			—			—			—
Equity lines of credit		906			617			—			—			—			—			—
Second mortgage loans		—			—			—			—			—			—			—
Commercial loans		—			37			—			—			—			—			—
Consumer loans:
Indirect auto loans		—			—			—			—			—			—			—
Other consumer loans		—			—			—			—			—			5			—


Total non-accrual loans	$	2,221		$	1,707		$	1,636		$	2,416		$	1,486		$	701		$	—


Loans delinquent 90 days or greater and still accruing:
Mortgage Loans:
One- to four-family	$	—		$	—		$	—		$	—		$	—		$	—		$	—
Commercial real estate loans		—			—			—			—			—			—			—
Construction loans		—			—			—			—			—			—			—
Equity lines of credit		—			—			277			77			—			—			69
Second mortgage loans		—			—			—			—			—			—			—
Commercial loans		—			—			—			—			—			—			6
Consumer loans:
Indirect auto loans		—			—			—			—			—			—			—
Other consumer loans		—			—			1			2			9			—			12


Total loans delinquent 90 days or greater and still accruing		—			—			278			79			9			—			87


Total non-performing loans	$	2,221		$	1,707		$	1,914		$	2,495		$	1,495		$	701		$	87

Other real estate owned:
Mortgage Loans:
One- to four-family	$	—		$	—		$	—		$	—		$	—		$	—		$	—
Commercial real estate loans		—			—			—			—			—			—			—
Construction loans		—			—			—			—			—			—			—
Equity lines of credit		—			—			—			—			—			—			—
Second mortgage loans		—			—			—			—			—			—			—
Commercial loans		—			—			—			—			—			—			—
Consumer loans:
Indirect auto loans		—			—			—			—			—			—			—
Other consumer loans		—			—			—			—			—			—			—

Total other real estate owned		—			—			—			—			—			—			—

Total non-performing assets	$	2,221		$	1,707		$	1,914		$	2,495		$	1,495		$	701		$	87

Ratios:
Non-performing loans to total loans		0.58	%		0.50	%		0.54	%		0.69	%		0.42	%		0.22	%		0.03	%
Non-performing assets to total assets		0.42	%		0.34	%		0.38	%		0.50	%		0.31	%		0.16	%		0.02	%

(1)	At March 31, 2011 and December 31, 2010, non-accrual loans included $624,000 and $629,000 of troubled debt restructurings, respectively. We had no troubled debt restructurings at December 31, 2009, and September 30, 2009, 2008, 2007 and 2006. See “—Troubled Debt Restructurings,” below.

For the three months ended March 31, 2011 and for the year ended December 31, 2010, gross interest income that would have been recorded had our non-accruing loans been current in accordance with their original terms was $22,000 and $65,000, respectively. Interest income recognized on such loans for the three months ended March 31, 2011 and for the year ended December 31, 2010, was $2,000 and $41,000, respectively.

Troubled Debt Restructurings. We periodically modify loans to extend the term or make other concessions to help a borrower stay current on their loan and to avoid foreclosure. We generally do not forgive principal or interest on loans or modify the interest rates on loans to rates that are below market rates. At March 31, 2011, we had $624,000 of troubled debt restructurings related to two loans. One of these loans was a one- to four-family residential mortgage loan and the other was a home equity line of credit.

For the three months ended March 31, 2011 and for the year ended December 31, 2010, gross interest income that would have been recorded had our troubled debt restructurings been performing in accordance with their original terms was $6,000 and $21,000, respectively. Interest income recognized on such modified loans for the three months ended March 31, 2011 and for the year ended December 31, 2010 was $2,000 and $40,000, respectively.

The following table sets forth certain information with respect to our loan portfolio delinquencies at the dates indicated.


	Loans Delinquent For								Total
	60-89 Days				90 Days and Over				Total
	Number		Amount		Number		Amount		Number		Amount
	(Dollars in thousands)
At March 31, 2011
Mortgage Loans:
One- to four-family		3	$	1,244		3	$	1,315		6	$	2,559
Commercial real estate loans		—		—		—		—		—		—
Construction loans		—		—		—		—		—		—
Equity lines of credit		2		391		4		906		6		1,297
Second mortgage loans		—		—		—		—		—		—

		5		1,635		7		2,221		12		3,856
Commercial loans		2		49		—		—		2		49
Consumer loans:
Indirect auto loans		—		—		—		—		—		—
Other consumer loans		—		—		—		—		—		—

Total loans		7	$	1,684		7	$	2,221		14	$	3,905


At December 31, 2010
Mortgage Loans:
One- to four-family		1	$	507		3	$	1,053		4	$	1,560
Commercial real estate loans		1		497		—		—		1		497
Construction loans		—		—		—		—		—		—
Equity lines of credit		1		314		2		617		3		931
Second mortgage loans		—		—		—		—		—		—

		3		1,318		5		1,670		8		2,988
Commercial loans		—		—		1		37		1		37
Consumer loans:
Indirect auto loans		—		—		—		—		—		—
Other consumer loans		—		—		—		—		—		—

Total loans		3	$	1,318		6	$	1,707		9	$	3,025


At March 31, 2010
Mortgage Loans:
One- to four-family		1	$	134		5	$	1,636		6	$	1,770
Commercial real estate loans		—		—		—		—		—		—
Construction loans		—		—		—		—		—		—
Equity lines of credit		—		—		2		276		2		276
Second mortgage loans		—		—		—		—		—		—

		1		134		7		1,912		8		2,046

Commercial loans		—		—		—		—		—		—
Consumer loans:
Indirect auto loans		—		—		—		—		—		—
Other consumer loans		1		4		1		2		2		6

Total loans		2	$	138		8	$	1,914		10	$	2,052


At September 30, 2009
Mortgage Loans:
One- to four-family		2	$	1,642		4	$	1,255		6	$	2,897
Commercial real estate loans		—		—		1		1,161		1		1,161
Construction loans		—		—		—		—		—		—
Equity lines of credit		—		—		1		77		1		77
Second mortgage loans		—		—		—		—		—		—

		2		1,642		6		2,493		8		4,135

Commercial loans		—		—		—		—		—		—
Consumer loans:
Indirect auto loans		—		—		—		—		—		—
Other consumer loans		1		4		1		2		2		6

Total loans		3	$	1,646		7	$	2,495		10	$	4,141


At September 30, 2008
Mortgage Loans:
One- to four-family	—	$	—	5	$	1,486	5	$	1,486
Commercial real estate loans	—		—	—		—	—		—
Construction loans	1		770	—		—	1		770
Equity lines of credit	—		—	—		—	—		—
Second mortgage loans	—		—	—		—	—		—

	1		770	5		1,486	6		2,256

Commercial loans	—		—	—		—	—		—
Consumer loans:
Indirect auto loans	—		—	—		—	—		—
Other consumer loans	1		13	3		9	4		22

Total loans	2	$	783	8	$	1,495	10	$	2,278


At September 30, 2007
Mortgage Loans:
One- to four-family	1	$	301	2	$	696	3	$	997
Commercial real estate loans	—		—	—		—	—		—
Construction loans	—		—	—		—	—		—
Equity lines of credit	—		—	—		—	—		—
Second mortgage loans	—		—	—		—	—		—

	1		301	2		696	3		997

Commercial loans	2		11	—		—	2		11
Consumer loans:
Indirect auto loans	—		—	—		—	—		—
Other consumer loans	—		—	1		5	1		5

Total loans	3	$	312	3	$	701	6	$	1,013


At September 30, 2006
Mortgage Loans:
One- to four-family	2	$	530	—	$	—	2	$	530
Commercial real estate loans	—		—	—		—	—		—
Construction loans	—		—	—		—	—		—
Equity lines of credit	—		—	1		69	1		69
Second mortgage loans	—		—	—		—	—		—

	2		530	1		69	3		599

Commercial loans	—		—	1		6	1		6
Consumer loans:
Indirect auto loans	—		—	—		—	—		—
Other consumer loans	—		—	7		12	7		12

Total loans	2	$	530	9	$	87	11	$	617

Other Real Estate Owned . Real estate acquired by us as a result of foreclosure or by deed in lieu of foreclosure is classified as other real estate owned. When property is acquired it is recorded at estimated fair market value at the date of foreclosure less the cost to sell, establishing a new cost basis. Estimated fair value generally represents the sales price a buyer would be willing to pay on the basis of current market conditions, including normal terms from other financial institutions. Holding costs and declines in estimated fair market value result in charges to expense after acquisition. At March 31, 2011, and December 31, 2010 and 2009, we had no other real estate owned.

Classification of Assets. Our policies, consistent with regulatory guidelines, provide for the classification of loans and other assets that are considered to be of lesser quality as substandard, doubtful, or loss assets. An asset is considered substandard if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Substandard assets include those assets characterized by the distinct possibility that we will sustain some loss if the deficiencies are not corrected. Assets classified as doubtful have all of the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.

Assets (or portions of assets) classified as loss are those considered uncollectible and of such little value that their continuance as assets is not warranted. Assets that do not expose us to risk sufficient to warrant classification in one of the aforementioned categories, but which possess potential weaknesses that deserve our close attention, are required to be designated as special mention. As of March 31, 2011, we had $2.6 million of assets designated as special mention.

We maintain an allowance for loan losses at an amount estimated to equal all credit losses incurred in our loan portfolio that are both probable and reasonable to estimate at a balance sheet date. Our determination as to the classification of our assets and the amount of our loss allowances is subject to review by regulatory agencies, which may require that we establish additional loss allowances. We regularly review our asset portfolio to determine whether any assets require classification in accordance with applicable regulations.

The following table sets forth our amounts of classified assets, assets designated as special mention and criticized assets (classified assets and loans designated as special mention) as of the dates indicated. The classified assets total at March 31, 2011 includes $2.2 million of nonperforming loans.


	March 31,		December 31,				September 30,
	2011		2010		2009		2009		2008		2007		2006
							(In thousands)
Classified assets:
Substandard	$	2,879	$	1,190	$	1,394	$	1,011	$	—	$	—	$	—
Doubtful		—		—		—		—		—		—		—
Loss		—		—		—		—		—		—		—

Total classified assets		2,879		1,190		1,394		1,011		—		—		—
Special mention		2,552		4,762		3,457		4,005		2,917		3,497		1,770

Total criticized assets	$	5,431	$	5,952	$	4,851	$	5,016	$	2,917	$	3,497	$	1,770

At March 31, 2011, we had $2.9 million of substandard assets, of which $808,000 were one- to four-family residential mortgage loans; $784,000 were commercial real estate loans; $76,000 were home equity lines of credit, and $1.2 million was a construction loan for an industrial/warehouse project. At March 31, 2011, special mention assets consisted of $506,000 of one- to four-family residential mortgage loans, $1.1 million of commercial real estate loans and $906,000 of home equity lines of credit.

Allowance for Loan Losses

We provide for loan losses based upon the consistent application of our documented allowance for loan loss methodology. All loan losses are charged to the allowance for loan losses and all recoveries are credited to it. Additions to the allowance for loan losses are provided by charges to income based on various factors which, in our judgment, deserve current recognition in estimating probable losses. We regularly review the loan portfolio, including a review of our classified assets, and make provisions for loan losses in order to maintain the allowance for loan losses in accordance with GAAP. The allowance for loan losses consists primarily of two components:

(1)

specific allowances established for impaired loans (as defined by GAAP). The amount of impairment provided for as a specific allowance is represented by the deficiency, if any, between the estimated fair value of the loan, or the loan’s observable market price, if any, or the fair value of the underlying collateral, if the loan is collateral dependent, and the carrying value of the loan. Impaired loans for which the estimated fair value of the loan, or the loan’s observable market price or the fair value of the underlying collateral if the loan is collateral dependent, exceeds the carrying value of the loan are not considered in establishing specific allowances for loan losses; and

(2)

general allowances established for loan losses on a portfolio basis for loans that do not meet the definition of impaired loans. The portfolio is grouped into similar risk characteristics, primarily loan type and regulatory classification. We apply an estimated loss rate to each loan group. The loss rates applied are based upon our loss experience adjusted, as appropriate, for the environmental factors discussed below. This evaluation is inherently subjective, as it requires material estimates that may be susceptible to significant revisions based upon changes in economic and real estate market conditions.

Actual loan losses may be significantly more than the allowance for loan losses we have established, which could have a material negative effect on our financial results.

The adjustments to historical loss experience are based on our evaluation of several qualitative and environmental factors, including:

•

changes in any concentration of credit (including, but not limited to, concentrations by geography, industry or collateral type);

•

changes in the number and amount of non-accrual loans, watch list loans and past due loans;

•

changes in national, state and local economic trends;

•

changes in the types of loans in the loan portfolio;

•

changes in the experience and ability of personnel and management in the loan origination and loan servicing departments;

•

changes in the value of underlying collateral for collateral dependent loans;

•

changes in lending strategies; and

•

changes in lending policies and procedures.

In addition, we may establish an unallocated allowance to provide for probable losses that have been incurred as of the reporting date but are not reflected in the allocated allowance.

Historically, we have experienced limited loan losses and, therefore, have relied on industry data to determine loss factors for calculating our allowance for loan losses. More recently, as we have experienced a modest increase in loan losses, we have utilized our own historical loss experience in determining applicable portions of the allowance for loan losses. See “—Comparison of Operating Results for the Years Ended December 31, 2010 and 2009—Provision for Loan Losses.”

We evaluate the allowance for loan losses based upon the combined total of the specific and general components. Generally when the loan portfolio increases, absent other factors, the allowance for loan loss methodology results in a higher dollar amount of estimated probable losses than would be the case without the increase. Generally when the loan portfolio decreases, absent other factors, the allowance for loan loss methodology results in a lower dollar amount of estimated probable losses than would be the case without the decrease.

We evaluate the loan portfolio on a quarterly basis and the allowance is adjusted accordingly. While we use the best information available to make evaluations, future adjustments to the allowance may

be necessary if conditions differ substantially from the information used in making the evaluations. In addition, various regulatory agencies as an integral part of their examination process, will periodically review the allowance for loan losses. Such agencies may require us to recognize additions to the allowance based on their analysis of information available to them at the time of their examination.

The following table sets forth activity in our allowance for loan losses for the periods indicated.


	At or For the Three Months Ended March 31,						At or For the Years Ended December 31,						At or For the Three Months Ended December 31,						At or For the Years Ended September 30,
	2011			2010			2010			2009			2009			2008			2009			2008			2007			2006
Balance at beginning of period	$	2,889		$	2,473		$	2,473		$	2,124		$	2,321		$	1,747		$	1,747		$	1,407		$	1,319		$	997


Charge-offs:
Mortgage Loans:
One- to four-family	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Commercial real estate loans		—			—			—			—			—			—			—			—			—			—
Construction loans		—			—			—			—			—			—			—			—			—			—
Equity lines of credit		—			—			—			—			—			—			—			—			—			—
Commercial loans		(37	)		—			(6	)		—			—			—			—			(23	)		(2	)		—
Consumer loans:
Indirect auto loans		—			—			—			—			—			—			—			—			—			—
Other consumer loans		(4	)		(10	)		(24	)		(32	)		(1	)		(8	)		(38	)		(17	)		(21	)		(18	)

Total charge-offs		(41	)		(10	)		(30	)		(32	)		(1	)		(8	)		(38	)		(40	)		(23	)		(18	)


Recoveries:
Mortgage Loans:
One- to four-family	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Commercial real estate loans		—			—			—			—			—			—			—			—			—			—
Construction loans		—			—			—			—			—			—			—			—			—			—
Equity lines of credit		—			—			—			—			—			—			—			—			—			—
Commercial loans		—			—			—			—			—			—			—			—			—			—
Consumer loans:
Indirect auto loans		—			—			—			—			—			—			—			—			—			—
Other consumer loans		4			4			8			15			1			2			15			5			11			6

Total recoveries		4			4			8			15			1			2			15			5			11			6

Net (charge-offs) recoveries	$	(37	)	$	(6	)	$	(22	)	$	(17	)	$	—		$	(6	)	$	(23	)	$	(35	)	$	(12	)	$	(12	)
Provision (recovery to allowance) for loan losses		476			284			438			366			152			383			597			375			100			334


Balance at end of period	$	3,328		$	2,751		$	2,889		$	2,473		$	2,473		$	2,124		$	2,321		$	1,747		$	1,407		$	1,319


Ratios:
Net charge-offs to average loans outstanding (annualized)		(0.04	)%		(0.01	)%		(0.01	)%		0.00	%		0.00	%		(0.01	)%		(0.01	)%		(0.01	)%		0.00	%		0.00	%
Allowance for loan losses to non-performing loans at end of period		149.85	%		120.39	%		169.24	%		129.21	%		129.21	%		184.70	%		93.03	%		116.86	%		200.71	%		1,516.09	%
Allowance for loan losses to total loans at end of period		0.86	%		0.78	%		0.85	%		0.70	%		0.70	%		0.57	%		0.64	%		0.49	%		0.44	%		0.40	%

Allocation of Allowance for Loan Losses. The following table sets for the allowance for loan losses allocated by loan category and the percent of loans in each category to total loans at the dates indicated. The allowance for loan losses allocated to each category is not necessarily indicative of future losses in any particular category and does not restrict the use of the allowance to absorb losses in other categories.


	At March 31, 2011					At December 31,
	At March 31, 2011					2010					2009
	Allowance for Loan Losses		Percent of Loans in Each Category to Total Loans			Allowance for Loan Losses		Percent of Loans in Each Category to Total Loans			Allowance for Loan Losses		Percent of Loans in Each Category to Total Loans
	(Dollars in thousands)
Mortgage Loans:
One- to four-family	$	986		45.40	%	$	1,146		54.11	%	$	1,027		60.15	%
Commercial real estate loans		1,414		29.38			1,136		26.89			911		22.84
Construction loans		147		3.84			140		4.08			193		5.39
Equity lines of credit and second mortgage loans		200		8.88			182		9.26			184		8.83
Commercial loans		252		4.28			226		4.13			142		2.50
Consumer loans:
Indirect auto loans		310		7.89			38		1.10			—		—
Other consumer loans		19		0.33			21		0.43			16		0.29

Total allocated allowance		3,328		100.00			2,889		100.00			2,473		100.00
Unallocated		—		—			—		—			—		—

Total	$	3,328		100.00	%	$	2,889		100.00	%	$	2,473		100.00	%


	At September 30,
	2009					2008					2007					2006
	Allowance for Loan Losses		Percent of Loans in Each Category to Total Loans			Allowance for Loan Losses		Percent of Loans in Each Category to Total Loans			Allowance for Loan Losses		Percent of Loans in Each Category to Total Loans			Allowance for Loan Losses		Percent of Loans in Each Category to Total Loans
	(Dollars in thousands)
Mortgage Loans:
One- to four-family	$	889		61.37	%	$	697		69.30	%	$	646		71.99	%	$	613		78.14	%
Commercial real estate loans		896		21.98			639		16.80			499		16.31			422		12.88
Construction loans		206		5.58			138		4.52			103		4.24			97		2.52
Equity lines of credit and second mortgage loans		180		8.46			116		6.67			64		5.57			44		3.76
Commercial loans		135		2.34			140		2.51			76		1.57			124		2.44
Consumer loans:
Indirect auto loans		—		—			—		—			—		—			—		—
Other consumer loans		15		0.27			17		0.20			19		0.32			19		0.26

Total allocated allowance		2,321		100.00			1,747		100.00			1,407		100.00			1,319		100.00
Unallocated		—		—			—		—			—		—			—		—

Total	$	2,321		100.00	%	$	1,747		100.00	%	$	1,407		100.00	%	$	1,319		100.00	%

Investments

The Executive Committee of our Board of Directors has primary responsibility for establishing our investment policy, and it is the responsibility of management to implement specific investment strategies. The Executive Committee has authorized both our President and Chief Executive Officer and our Senior Vice President and Chief Financial Officer, in conjunction with our investment advisor, to execute specific investment actions. The investment policy requires that single day transactions in excess of $10.0 million must contain the signature of two authorized officers, and that single day transactions in excess of $15.0 million must contain the signature of two authorized officers and a member of the Executive Committee other than our President and Chief Executive Officer.

The investment policy is reviewed annually by the Executive Committee, and any changes to the policy are subject to approval by the full Board of Directors. The overall objectives of the investment policy are to: fully and efficiently employ funds not presently required for Belmont Savings Bank’s loan portfolio, cash requirements, or other assets essential to our operations; to provide for the safety of the funds invested while generating maximum income and capital appreciation in accordance with the objectives of liquidity and quality; to meet liquidity requirements projected by management; to meet regulatory and industry standards; to generate earnings which, after the impact of taxes, will provide added growth to surplus; and to employ a percentage of assets in a manner that will balance the market and credit risks of other assets, as well as our liquidity, capital, and reserve structure. All gains and losses on securities transactions are reported to the Executive Committee of the Board of Directors on a monthly basis and to the Board of Directors on a quarterly basis.

Our current investment policy permits investments in securities issued by the U.S. government and U.S. government agencies, municipal bonds, corporate bonds, mortgage-backed securities issued by Fannie Mae, Freddie Mac and Ginnie Mae; asset-backed securities (collateralized by assets other than conforming residential first mortgages), repurchase agreements, federal funds sold, certificates of deposit, money market funds, money market preferred securities, mutual funds, equity securities, daily overnight deposit funds, banker’s acceptances, commercial paper, equity securities, life insurance, structured notes, callable securities and any other investments that are deemed prudent and are approved by the Executive Committee and permitted by statute.

ASC 320, “Investments—Debt and Equity Securities” requires that, at the time of purchase, we designate a security as either held to maturity, available-for-sale, or trading, based upon our intent and ability to hold such security until maturity. Securities available-for-sale and trading securities are reported at market value and securities held to maturity are reported at amortized cost. We currently do not maintain a trading portfolio. A periodic review and evaluation of the available-for-sale and held-to-maturity securities portfolios is conducted to determine if the fair value of any security has declined below its carrying value and whether such decline is other-than-temporary. For securities classified as available-for-sale, unrealized gains and losses are excluded from earnings and are reported as an increase or decrease to earnings through other comprehensive income/(loss). If such decline is deemed to be other-than-temporary, the security is written down to a new cost basis and the resulting loss is charged against earnings.

Generally, mortgage-backed securities are more liquid than individual mortgage loans since there is an active trading market for such securities. In addition, mortgage-backed securities may be used to collateralize our borrowings. Investments in mortgage-backed securities involve a risk that actual payments will be greater or less than the prepayment rate estimated at the time of purchase, which may require adjustments to the amortization of any premium or accretion of any discount relating to such interests, thereby affecting the net yield on our securities. Current prepayment speeds determine whether prepayment estimates require modification that could cause amortization or accretion adjustments.

Securities. At March 31, 2011, our securities portfolio consisted entirely of corporate debt securities, U.S. government and agency obligations, and mortgage-backed securities issued by Fannie Mae, Freddie Mac or Ginnie Mae. At that date our securities portfolio had a fair market value of $80.7 million, or 15.2%, of total assets and an amortized cost of $79.0 million. At March 31, 2011, none of the underlying collateral consisted of subprime or Alt-A (traditionally defined as loans having less than full documentation) loans. We do not own any trust preferred securities or collateralized debt obligations. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Average Balances and Yields” for a discussion of the recent performance of our securities portfolio.

At March 31, 2011, we had no investments in a single company or entity that had an aggregate book value in excess of 10% of our equity, except for U.S. government obligations, U.S. government-sponsored entity securities and securities issued by Sovereign Bank. At March 31, 2011, we held debt securities issued by Sovereign Bank with an aggregate book value and an aggregate fair value of $5.0 million and $5.1 million, respectively.

Investment Securities Portfolio. The following tables set forth the composition of our investment securities portfolio at the dates indicated.


	At March 31, 2011				At December 31,								At September 30,
	At March 31, 2011				2010				2009				2009				2008
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(In thousands)
Securities held to maturity:
U.S. government and federal agency obligations	$	15,611	$	15,815	$	23,419	$	23,668	$	16,606	$	16,937	$	15,605	$	15,993	$	22,943	$	22,903
U.S. government sponsored mortgage-backed securities		16,445		16,972		18,574		19,170		27,916		28,442		25,399		26,116		17,695		17,624
Corporate debt securities		46,940		47,888		51,906		52,923		47,182		47,873		41,466		42,222		32,268		29,495

Total securities held to maturity	$	78,996	$	80,675	$	93,899	$	95,761	$	91,704	$	93,252	$	82,470	$	84,331	$	72,906	$	70,022


	At March 31, 2011				At December 31,								At September 30,
	At March 31, 2011				2010				2009				2009				2008
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(In thousands)
Securities trading:
Marketable equity securities	$	—	$	—	$	—	$	—	$	12,154	$	11,455	$	12,154	$	10,576	$	12,154	$	12,010

Total securities trading	$	—	$	—	$	—	$	—	$	12,154	$	11,455	$	12,154	$	10,576	$	12,154	$	12,010


	At March 31, 2011				At December 31,								At September 30,
	At March 31, 2011				2010				2009				2009				2008
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(In thousands)
Securities available for sale:
Marketable equity securities	$	1	$	1	$	12,154	$	14,274	$	—	$	—	$	—	$	—	$	—	$	—

Total securities available for sale	$	1	$	1	$	12,154	$	14,274	$	—	$	—	$	—	$	—	$	—	$	—

Portfolio Maturities and Yields. The composition and maturities of the investment securities portfolio at March 31, 2011 are summarized in the following table. Maturities are based on the final contractual payment dates, and do not reflect the impact of prepayments or early redemptions that may occur.


	One Year or Less					More than One Year through Five Years					More than Five Years through Ten Years					More than Ten Years					Total Securities
	Amortized Cost		Weighted Average Yield			Amortized Cost		Weighted Average Yield			Amortized Cost		Weighted Average Yield			Amortized Cost		Weighted Average Yield			Amortized Cost		Fair Value		Weighted Average Yield
	(Dollars in thousands)
U.S. government and federal agency obligations	$	11,821		1.09	%	$	3,790		3.55	%	$	—		—	%	$	—		—	%	$	15,611	$	15,815		1.69	%
U.S. government sponsored mortgage-backed securities		—		—			2,912		4.50			2,145		5.02			11,388		5.05			16,445		16,972		4.95
Corporate debt securities		25,418		5.18			21,522		4.75			—		—			—		—			46,940		47,888		4.98

Total	$	37,239		3.88	%	$	28,224		4.56	%	$	2,145		5.02	%	$	11,388		5.05	%	$	78,996	$	80,675		4.32	%

Bank-Owned Life Insurance. We invest in bank-owned life insurance to provide us with a funding source for our benefit plan obligations. Bank-owned life insurance also generally provides us noninterest income that is non-taxable. Applicable regulations generally limit our investment in bank-owned life insurance to 25% of our Tier 1 capital plus our allowance for loan losses. At March 31, 2011, we had invested $12.1 million in bank-owned life insurance at that date.

Sources of Funds

General. Deposits traditionally have been our primary source of funds for our investment and lending activities. We also borrow from the Federal Home Loan Bank of Boston (the “FHLB of Boston”) to supplement cash flow needs, to lengthen the maturities of liabilities for interest rate risk management purposes and to manage our cost of funds. Our additional sources of funds are scheduled payments and prepayments of principal and interest on loans and investment securities and fee income and proceeds from the sales of loans and securities.

Deposits. We accept deposits primarily from customers in the communities in which our offices are located, as well as from small businesses and other customers throughout our lending area. We rely on our competitive pricing and products, convenient locations and quality customer service to attract and retain deposits. We offer a variety of deposit accounts with a range of interest rates and terms. Our deposit accounts consist of passbook and statement savings accounts, certificates of deposit, money market accounts, commercial and regular checking accounts, and IRAs. Deposit rates and terms are based primarily on current business strategies and market interest rates, liquidity requirements and our deposit growth goals. Historically, we have not accepted brokered deposits.

At March 31, 2011, we had a total of $133.9 million in certificates of deposit, of which $76.0 million had remaining maturities of one year or less. Based on historical experience and our current pricing strategy, we believe we will retain a large portion of these accounts upon maturity.

The following tables set forth the distribution of our average total deposit accounts, by account type, for the periods indicated.


	For the Three Months Ended March 31, 2011								For the Years Ended December 31,
	For the Three Months Ended March 31, 2011								2010								2009
	Average Balance		Percent			Weighted Average Rate			Average Balance		Percent			Weighted Average Rate			Average Balance		Percent			Weighted Average Rate
	(Dollars in thousands)
Deposit type:
Demand deposits	$	30,060		8.47	%		—	%	$	26,463		8.02	%		—	%	$	19,984		6.77	%		—	%
Regular savings accounts		162,272		45.70			0.70			135,033		40.94			0.81			105,155		35.60			1.04
Checking accounts		23,518		6.62			0.12			27,728		8.41			0.15			30,404		10.29			0.20
Money market accounts		13,416		3.78			0.30			14,129		4.28			0.58			12,369		4.19			0.84
Certificates of deposit		125,808		35.43			1.91			126,474		38.35			2.08			127,439		43.15			2.63


Total deposits	$	355,074		100.00	%		1.00	%	$	329,827		100.00	%		1.16	%	$	295,351		100.00	%		1.56	%


	For the Years Ended September 30,
	2009								2008
	Average Balance		Percent			Weighted Average Rate			Average Balance		Percent			Weighted Average Rate
	(Dollars in thousands)
Deposit type:
Demand deposits	$	18,867		6.57	%		—	%	$	15,183		5.35	%		—	%
Regular savings accounts		100,111		34.80			1.12			98,603		34.73			1.82
Checking accounts		29,779		10.35			0.30			30,302		10.67			0.82
Money market accounts		12,153		4.22			0.99			12,344		4.35			1.55
Certificates of deposit		126,741		44.06			2.83			127,450		44.90			4.13


Total deposits	$	287,651		100.00	%		1.71	%	$	283,882		100.00	%		2.64	%

The following table sets forth certificates of deposit classified by interest rate as of the dates indicated.


	At March 31, 2011		At December 31,				At September 30,
	At March 31, 2011		2010		2009		2009		2008
	(In thousands)
Interest Rate:
Less than 2.00%	$	70,439	$	64,479	$	56,521	$	47,416	$	110
2.00% to 2.99%		37,178		32,266		34,409		40,907		69,681
3.00% to 3.99%		24,415		24,903		30,963		31,662		21,113
4.00% to 4.99%		1,807		1,802		3,274		4,890		16,660
5.00% to 5.99%		68		67		1,021		1,007		6,524

Total	$	133,907	$	123,517	$	126,188	$	125,882	$	114,088

The following table sets forth, by interest rate ranges, information concerning our certificates of deposit.


	At March 31, 2011
	Period to Maturity
	Less Than or Equal to One Year		More Than One to Two Years		More Than Two to Three Years		More Than Three Years		Total		Percent of Total
	(Dollars in thousands)
Interest Rate Range:
2.99% and below	$	62,136	$	23,623	$	4,437	$	17,421	$	107,617		80.37	%
3.00% to 3.99%		11,171		6,524		4,174		2,546		24,415		18.23
4.00% to 4.99%		1,603		164		40		—		1,807		1.35
5.00% to 5.99%		68		—		—		—		68		0.05


Total	$	74,978	$	30,311	$	8,651	$	19,967	$	133,907		100.00	%

As of March 31, 2011, the aggregate amount of outstanding certificates of deposit in amounts greater than or equal to $100,000 was $74.1 million. The following table sets forth the maturity of those certificates as of March 31, 2011.


	At March 31, 2011
	(In thousands)
Three months or less	$	14,524
Over three months through six months		11,891
Over six months through one year		11,518
Over one year to three years		21,136
Over three years		15,057


Total	$	74,126

Borrowings. Our borrowings consist of advances from the Federal Home Loan Bank of Boston, repurchase agreements and the balance of certain loans sold to another financial institution with recourse.

At March 31, 2011, we had access to additional Federal Home Loan Bank advances of up to $35.2 million. The following table sets forth information concerning balances and interest rates on our Federal Home Loan Bank advances at the dates and for the periods indicated.


	At or For the Three Months Ended March 31,						At or For the Years Ended December 31,						At or For the Years Ended September 30,
	2011			2010			2010			2009			2009			2008
	(Dollars in thousands)
Balance at end of period	$	93,800		$	123,700		$	92,800		$	129,700		$	137,450		$	151,750
Average balance during period	$	89,094		$	127,122		$	110,268		$	143,596		$	148,949		$	114,350
Maximum outstanding at any month end	$	93,800		$	128,700		$	128,700		$	151,750		$	154,750		$	151,750
Weighted average interest rate at end of period		2.49	%		3.18	%		2.82	%		3.38	%		3.52	%		4.17	%
Average interest rate during period		2.75	%		3.31	%		3.14	%		3.76	%		3.91	%		4.62	%

The following table sets forth information concerning balances and interest rates on our repurchase agreements at the dates and for the periods indicated.


	At or For the Three Months Ended March 31,						At or For the Years Ended December 31,						At or For the Years Ended September 30,
	2011			2010			2010			2009			2009			2008
	(Dollars in thousands)
Balance at end of period	$	3,086		$	3,827		$	2,654		$	3,672		$	4,533		$	3,481
Average balance during period	$	2,863		$	3,345		$	3,655		$	3,954		$	3,943		$	3,513
Maximum outstanding at any month end	$	3,086		$	3,827		$	5,249		$	4,816		$	4,816		$	4,673
Weighted average interest rate at end of period		0.65	%		1.00	%		0.65	%		1.00	%		1.00	%		1.98	%
Average interest rate during period		0.71	%		0.97	%		0.90	%		1.06	%		1.27	%		2.08	%

100

Properties

We operate from our four full-service banking offices, including our main office and three branch offices located in Belmont and Watertown, Massachusetts. The net book value of our premises, land and equipment was $1.9 million at March 31, 2011. The following table sets forth information with respect to our full-service banking offices, including the expiration date of leases with respect to leased facilities.


Office Name and Address	Leased or Owned		Year Acquired or Leased

Full Service Banking Offices:

Main Office 2 Leonard Street Belmont, Massachusetts 02478		Owned		1969

Cushing Square 78 Trapelo Road Belmont, Massachusetts 02478		Leased ⁽¹⁾		1994

Trapelo Road 277 Trapelo Road Belmont, Massachusetts 02478		Owned		1992

Watertown Square 53 Mount Auburn Street Watertown, Massachusetts 02472		Leased ⁽²⁾		2001

Administrative Offices:

Leonard Street 2 Leonard Street Belmont, Massachusetts 02478		Owned		1969

Concord Avenue 385 Concord Avenue Belmont, Massachusetts 02478		Leased ⁽³⁾		2010

Fall River 10 N. Main Street Fall River, Massachusetts 02722		Leased ⁽⁴⁾		2010

(1)	Lease expires in March 2014.

(2)	Lease expires in March 2012.

(3)	Lease expires in September 2015.

(4)	Lease expires in October 2015.

Legal Proceedings

We are not involved in any pending legal proceedings as a plaintiff or a defendant other than routine legal proceedings occurring in the ordinary course of business. At March 31, 2011, we were not involved in any legal proceedings the outcome of which we believe would be material to our financial condition or results of operations.

101

Expense and Tax Allocation

Belmont Savings Bank will enter into an agreement with BSB Bancorp, Inc. to provide it with certain administrative support services, whereby Belmont Savings Bank will be compensated at not less than the fair market value of the services provided. In addition, Belmont Savings Bank and BSB Bancorp, Inc. will enter into an agreement to establish a method for allocating and for reimbursing the payment of their consolidated tax liability.

Personnel

As of March 31, 2011, we had 80 full-time employees and six part-time employees. Our employees are not represented by any collective bargaining group. Management believes that we have a good working relationship with our employees.

Subsidiary Activity

Upon completion of the Conversion, Belmont Savings Bank will become the wholly owned subsidiary of BSB Bancorp, Inc. Additionally, it is expected that BSB Bancorp, Inc. will form another subsidiary, the sole purpose of which will be to fund the loan to Belmont Savings Bank’s employee stock ownership plan. Belmont Savings Bank has one subsidiary, BSB Investment Corporation, a Massachusetts corporation, which is engaged in the buying, selling and holding of investment securities.

102

SUPERVISION AND REGULATION

General

Belmont Savings Bank is a Massachusetts-chartered stock savings bank and will be the wholly-owned subsidiary of BSB Bancorp, Inc., a Maryland corporation, which will be a registered bank holding company. Belmont Savings Bank’s deposits are insured up to applicable limits by the Federal Deposit Insurance Corporation, or “FDIC”, and by the Depositors Insurance Fund of Massachusetts for amounts in excess of the FDIC insurance limits. Belmont Savings Bank is subject to extensive regulation by the Massachusetts Commissioner of Banks, as its chartering agency, and by the FDIC, its primary federal regulator and deposit insurer. Belmont Savings Bank is required to file reports with, and is periodically examined by, the FDIC and the Massachusetts Commissioner of Banks concerning its activities and financial condition and must obtain regulatory approvals prior to entering into certain transactions, including, but not limited to, mergers with or acquisitions of other financial institutions. As a registered bank holding company, BSB Bancorp, Inc. will be regulated by the Board of Governors of the Federal Reserve System, or the “Federal Reserve Board.”

The regulatory and supervisory structure establishes a comprehensive framework of activities in which an institution can engage and is intended primarily for the protection of depositors and the deposit insurance funds, rather than for the protection of stockholders and creditors. The regulatory structure also gives the regulatory authorities extensive discretion in connection with their supervisory and enforcement activities and examination policies, including policies concerning the establishment of deposit insurance assessment fees, classification of assets and establishment of adequate loan loss reserves for regulatory purposes. Any change in such regulatory requirements and policies, whether by the Massachusetts legislature, the Massachusetts Commissioner of Banks, the FDIC, the Federal Reserve Board or Congress, could have a material adverse impact on the financial condition and results of operations of BSB Bancorp, Inc. and Belmont Savings Bank. As is further described below, the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), has significantly changed the current bank regulatory structure and may affect the lending, investment and general operating activities of depository institutions and their holding companies.

Set forth below is a summary of certain material statutory and regulatory requirements applicable to BSB Bancorp, Inc. and Belmont Savings Bank. The summary is not intended to be a complete description of such statutes and regulations and their effects on BSB Bancorp, Inc. and Belmont Savings Bank.

The Dodd-Frank Act

The Dodd-Frank Act will significantly change the current bank regulatory structure and affect the lending and investment activities and general operations of depository institutions and their holding companies. The Dodd-Frank Act will eliminate the Office of Thrift Supervision and require that federal savings associations be regulated by the Office of the Comptroller of the Currency (the primary federal regulator for national banks). The Dodd-Frank Act also authorizes the Federal Reserve Board to supervise and regulate all savings and loan holding companies.

103

The Dodd-Frank Act requires the Federal Reserve Board to establish minimum consolidated capital requirements for bank holding companies that are as stringent as those required for insured depository institutions; the components of Tier 1 capital would be restricted to capital instruments that are currently considered to be Tier 1 capital for insured depository institutions. In addition, the proceeds of trust preferred securities are excluded from Tier 1 capital unless such securities were issued prior to May 19, 2010 by bank or savings and loan holding companies with less than $15 billion of assets. The legislation also establishes a floor for capital of insured depository institutions that cannot be lower than the standards in effect today, and directs the federal banking regulators to implement new leverage and capital requirements within 18 months. These new leverage and capital requirements must take into account off-balance sheet activities and other risks, including risks relating to securitized products and derivatives.

The Dodd-Frank Act also creates a new Consumer Financial Protection Bureau with extensive powers to implement and enforce consumer protection laws. The Consumer Financial Protection Bureau has broad rulemaking authority for a wide range of consumer protection laws that apply to all banks and savings associations, among other things, including the authority to prohibit “unfair, deceptive or abusive” acts and practices. The Consumer Financial Protection Bureau has examination and enforcement authority over all banks and savings associations with more than $10 billion in assets. Banks and savings associations with $10 billion or less in assets will continue to be examined for compliance with federal consumer protection and fair lending laws by their applicable primary federal bank regulators. The new legislation also weakens the federal preemption available for national banks and federal savings associations and gives state attorneys general certain authority to enforce applicable federal consumer protection laws.

The Dodd-Frank Act made many other changes in banking regulation. Those include authorizing depository institutions, for the first time, to pay interest on business checking accounts, requiring originators of securitized loans to retain a percentage of the risk for transferred loans, establishing regulatory rate-setting for certain debit card interchange fees and establishing a number of reforms for mortgage originations.

The Dodd Frank Act also broadens the base for FDIC insurance assessments. The FDIC was required to promulgate rules revising its assessment system so that it is based on the average consolidated total assets less tangible equity capital of an insured institution instead of deposits. That rule took effect April 1, 2011. The Dodd-Frank Act also permanently increased the maximum amount of deposit insurance for banks, savings institutions and credit unions to $250,000 per depositor, retroactive to January 1, 2008, provided non-interest bearing transaction accounts with unlimited deposit insurance through December 31, 2012.

The Dodd-Frank Act increased stockholder influence over boards of directors by requiring companies to give stockholders a non-binding vote on executive compensation and so-called “golden parachute” payments, and by authorizing the Securities and Exchange Commission to promulgate rules that would allow stockholders to nominate and solicit votes for their own candidates using a company’s proxy materials. The legislation also directed the Federal Reserve Board to promulgate rules prohibiting excessive compensation paid to bank holding company executives, regardless of whether the company is publicly traded.

Many of the provisions of the Dodd-Frank Act are not yet effective, and the legislation requires various federal agencies to promulgate numerous and extensive implementing regulations over the next several years. It is therefore difficult to predict at this time what impact the new legislation and implementing regulations will have on community banks such as Belmont Savings Bank. Although the substance and scope of many of these regulations cannot be determined at this time, it is expected that the legislation and implementing regulations, particularly those provisions relating to the new Consumer Financial Protection Bureau, may increase our operating and compliance costs.

104

Massachusetts Banking Laws and Supervision

General. As a Massachusetts-chartered stock savings bank, Belmont Savings Bank is subject to supervision, regulation and examination by the Massachusetts Commissioner of Banks and to various Massachusetts statutes and regulations which govern, among other things, investment powers, lending and deposit-taking activities, borrowings, maintenance of surplus and reserve accounts, distribution of earnings and payment of dividends. In addition, Belmont Savings Bank is subject to Massachusetts consumer protection and civil rights laws and regulations. The approval of the Massachusetts Commissioner of Banks or the Massachusetts Board of Bank Incorporation is required for a Massachusetts-chartered bank to establish or close branches, merge with other financial institutions, issue stock and undertake certain other activities.

Massachusetts regulations generally allow Massachusetts banks to, with appropriate regulatory approvals, engage in activities permissible for federally chartered banks or banks chartered by another state. The Commissioner also has adopted procedures reducing regulatory burdens and expense and expediting branching by well-capitalized and well-managed banks.

Dividends. A Massachusetts stock bank may declare cash dividends from net profits not more frequently than quarterly. Non-cash dividends may be declared at any time. No dividends may be declared, credited or paid if the bank’s capital stock is impaired. The approval of the Massachusetts Commissioner of Banks is required if the total of all dividends declared in any calendar year exceeds the total of its net profits for that year combined with its retained net profits of the preceding two years. Dividends from BSB Bancorp, Inc. may depend, in part, upon receipt of dividends from Belmont Savings Bank. The payment of dividends from Belmont Savings Bank would be restricted by federal law if the payment of such dividends resulted in Belmont Savings Bank failing to meet regulatory capital requirements.

Loans to One Borrower Limitations. Massachusetts banking law grants broad lending authority. However, with certain limited exceptions, total obligations to one borrower may not exceed 20 percent of the total of the bank’s capital, surplus and undivided profits.

Loans to a Bank’s Insiders. Massachusetts banking laws prohibit any executive officer or director of a bank from borrowing or guaranteeing extensions of credit by such bank except for any of the following loans or extensions of credit with the approval of a majority of the Board of Directors: (i) loans or extension of credit, secured or unsecured, to an officer of the bank in an amount not exceeding $100,000; (ii) loans or extensions of credit intended or secured for educational purposes to an officer of the bank in an amount not exceeding $200,000; (iii) loans or extensions of credit secured by a mortgage on residential real estate to be occupied in whole or in part by the officer to whom the loan or extension of credit is made, in an amount not exceeding $750,000; and (iv) loans or extensions of credit to a director of the bank who is not also an officer of the bank in an amount permissible under the bank’s loan to one borrower limit. No such loan or extension of credit may be granted with an interest rate or other terms that are preferential in comparison to loans granted to persons not affiliated with the savings bank.

Investment Activities. In general, Massachusetts-chartered savings banks may invest in preferred and common stock of any corporation organized under the laws of the United States or any state provided such investments do not involve control of any corporation and do not, in the aggregate, exceed 4% of the bank’s deposits. Federal law imposes additional restrictions on Belmont Savings Bank’s investment activities. See “—Federal Regulations—Business and Investment Activities”.

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Regulatory Enforcement Authority. Any Massachusetts savings bank that does not operate in accordance with the regulations, policies and directives of the Massachusetts Commissioner of Banks may be subject to sanctions for non-compliance, including revocation of its charter. The Massachusetts Commissioner of Banks may, under certain circumstances, suspend or remove officers or directors who have violated the law, conducted the bank’s business in an unsafe or unsound manner or contrary to the depositors interests or been negligent in the performance of their duties. Upon finding that a bank has engaged in an unfair or deceptive act or practice, the Massachusetts Commissioner of Banks may issue an order to cease and desist and impose a fine on the bank concerned. The Commissioner also has authority to take possession of a bank and appoint a liquidating agent under certain conditions such as an unsafe and unsound condition to transact business, the conduct of business in an unsafe or unauthorized manner of impaired capital. In addition, Massachusetts consumer protection and civil rights statutes applicable to Belmont Savings Bank permit private individual and class action law suits and provide for the rescission of consumer transactions, including loans, and the recovery of statutory and punitive damage and attorney’s fees in the case of certain violations of those statutes.

Depositors Insurance Fund. All Massachusetts-chartered savings banks are required to be members of the Depositors Insurance Fund, a corporation that insures savings bank deposits in excess of federal deposit insurance coverage. The Depositors Insurance Fund is authorized to charge savings banks an annual assessment fee on deposit balances in excess of amounts insured by the FDIC. Assessment rates are based on the institution’s risk category, similar to the method currently used to determine assessments by the FDIC discussed below under “—Federal Regulations—Insurance of Deposit Accounts.”

Protection of Personal Information. Massachusetts has adopted regulatory requirements intended to protect personal information. The requirements, which became effective March 1, 2010, are similar to existing federal laws such as the Gramm-Leach-Bliley Act, discussed below under “ —Federal Regulations—Privacy Regulations” , that require organizations to establish written information security programs to prevent identity theft. The Massachusetts regulation also contains technology system requirements, especially for the encryption of personal information sent over wireless or public networks or stored on portable devices.

Massachusetts has other statutes or regulations that are similar to certain of the federal provisions discussed below.

Federal Regulations

Capital Requirements. Under the FDIC’s regulations, federally insured state-chartered banks that are not members of the Federal Reserve System (“state non-member banks”), such as Belmont Savings Bank, are required to comply with minimum leverage capital requirements. For an institution not anticipating or experiencing significant growth and deemed by the FDIC to be, in general, a strong banking organization rated composite 1 under Uniform Financial Institutions Ranking System, the minimum capital leverage requirement is a ratio of Tier 1 capital to total assets of 3.0%. For all other institutions, the minimum leverage capital ratio is not less than 4.0%. Tier 1 capital is the sum of common stockholder’s equity, noncumulative perpetual preferred stock (including any related surplus) and minority investments in certain subsidiaries, less intangible assets (except for certain servicing rights and credit card relationships) and certain other specified items.

FDIC regulations also require state non-member banks to maintain certain ratios of regulatory capital to regulatory risk-weighted assets, or “risk-based capital ratios.” Risk-based capital ratios are determined by allocating assets and specified off-balance sheet items to four risk-weighted categories ranging from 0.0% to 100.0%. State non-member banks must maintain a minimum ratio of total capital to

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risk-weighted assets of at least 8.0%, of which at least one-half must be Tier 1 capital. Total capital consists of Tier 1 capital plus Tier 2 or supplementary capital items, which include allowances for loan losses in an amount of up to 1.25% of risk-weighted assets, cumulative preferred stock, subordinated debentures and certain other capital instruments, and a portion of the net unrealized gain on equity securities. The includable amount of Tier 2 capital cannot exceed the amount of the institution’s Tier 1 capital.

Standards for Safety and Soundness. As required by statute, the federal banking agencies adopted final regulations and Interagency Guidelines Establishing Standards for Safety and Soundness to implement safety and soundness standards. The guidelines set forth the safety and soundness standards that the federal banking agencies use to identify and address problems at insured depository institutions before capital becomes impaired. The guidelines address internal controls and information systems, internal audit system, credit underwriting, loan documentation, interest rate exposure, asset growth, asset quality, earnings, compensation, fees and benefits and, more recently, safeguarding customer information. If the appropriate federal banking agency determines that an institution fails to meet any standard prescribed by the guidelines, the agency may require the institution to submit to the agency an acceptable plan to achieve compliance with the standard.

Business and Investment Activities. Under federal law, all state-chartered FDIC-insured banks, including savings banks, have been limited in their activities as principal and in their equity investments to the type and the amount authorized for national banks, notwithstanding state law. Federal law permits exceptions to these limitations. For example, certain state-chartered savings banks may, with FDIC approval, continue to exercise state authority to invest in common or preferred stocks listed on a national securities exchange or the Nasdaq Global Market and in the shares of an investment company registered under the Investment Company Act of 1940, as amended. The maximum permissible investment is the lesser of 100.0% of Tier 1 capital or the maximum amount permitted by Massachusetts law. Belmont Savings Bank received approval from the FDIC to retain and acquire such equity instruments up to the specified limits and, at March 31, 2011, held $843 in such investments consisting of Federal National Mortgage Association (Fannie Mae) common stock. Any such grandfathered authority may be terminated upon the FDIC’s determination that such investments pose a safety and soundness risk or upon the occurrence of certain events such as the savings bank’s conversion to a different charter.

The FDIC is also authorized to permit state banks to engage in state authorized activities or investments not permissible for national banks (other than non-subsidiary equity investments) if they meet all applicable capital requirements and it is determined that such activities or investments do not pose a significant risk to the FDIC insurance fund. The FDIC has adopted regulations governing the procedures for institutions seeking approval to engage in such activities or investments. The Gramm-Leach-Bliley Act of 1999 specified that a state bank may control a subsidiary that engages in activities as principal that would only be permitted for a national bank to conduct in a “financial subsidiary,” if a bank meets specified conditions and deducts its investment in the subsidiary for regulatory capital purposes.

Prompt Corrective Regulatory Action. Federal law requires, among other things, that federal bank regulatory authorities take “prompt corrective action” with respect to banks that do not meet minimum capital requirements. For these purposes, the law establishes five capital categories: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized.

The FDIC has adopted regulations to implement the prompt corrective action legislation. An institution is deemed to be “well capitalized” if it has a total risk-based capital ratio of 10.0% or greater, a Tier 1 risk-based capital ratio of 6.0% or greater and a leverage ratio of 5.0% or greater. An institution is “adequately capitalized” if it has a total risk-based capital ratio of 8.0% or greater, a Tier 1 risk-based

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capital ratio of 4.0% or greater, and generally a leverage ratio of 4.0% or greater. An institution is “undercapitalized” if it has a total risk-based capital ratio of less than 8.0%, a Tier 1 risk-based capital ratio of less than 4.0%, or generally a leverage ratio of less than 4.0%. An institution is deemed to be “significantly undercapitalized” if it has a total risk-based capital ratio of less than 6.0%, a Tier 1 risk-based capital ratio of less than 3.0%, or a leverage ratio of less than 3.0%. An institution is considered to be “critically undercapitalized” if it has a ratio of tangible equity (as defined in the regulations) to total assets that is equal to or less than 2.0%.

“Undercapitalized” banks must adhere to growth, capital distribution (including dividend) and other limitations and are required to submit a capital restoration plan. A bank’s compliance with such a plan must be guaranteed by any company that controls the undercapitalized institution in an amount equal to the lesser of 5% of the institution’s total assets when deemed undercapitalized or the amount necessary to achieve the status of adequately capitalized. If an “undercapitalized” bank fails to submit an acceptable plan, it is treated as if it is “significantly undercapitalized.” “Significantly undercapitalized” banks must comply with one or more of a number of additional measures, including, but not limited to, a required sale of sufficient voting stock to become adequately capitalized, a requirement to reduce total assets, cessation of taking deposits from correspondent banks, the dismissal of directors or officers and restrictions on interest rates paid on deposits, compensation of executive officers and capital distributions by the parent holding company. “Critically undercapitalized” institutions are subject to additional measures including, subject to a narrow exception, the appointment of a receiver or conservator within 270 days after it obtains such status.

Transactions with Affiliates. Transactions between a bank (and, generally, its subsidiaries) and its related parties or affiliates are limited by Sections 23A and 23B of the Federal Reserve Act. An affiliate of a bank is any company or entity that controls, is controlled by or is under common control with the bank. In a holding company context, the parent bank holding company and any companies which are controlled by such parent holding company are affiliates of the bank. Generally, Sections 23A and 23B of the Federal Reserve Act limit the extent to which the bank or its subsidiaries may engage in “covered transactions” with any one affiliate to 10% of such institution’s capital stock and surplus and contain an aggregate limit on all such transactions with all affiliates to an amount equal to 20% of such institution’s capital stock and surplus. The term “covered transaction” includes the making of loans, purchase of assets, issuance of a guarantee and similar transactions. In addition, loans or other extensions of credit by the institution to the affiliate are required to be collateralized in accordance with specified requirements. The law also requires that affiliate transactions be on terms and conditions that are substantially the same, or at least as favorable to the institution, as those provided to non-affiliates.

The Sarbanes-Oxley Act of 2002 generally prohibits loans by a company to its executive officers and directors. The law contains a specific exception for loans by a depository institution to its executive officers and directors in compliance with federal banking laws, assuming such loans are also permitted under the law of the institution’s chartering state. Under such laws, a bank’s authority to extend credit to executive officers, directors and 10% shareholders (“insiders”), as well as entities such persons control, is restricted. The law limits both the individual and aggregate amount of loans that may be made to insiders based, in part, on the bank’s capital position and requires certain board approval procedures to be followed. Such loans are required to be made on terms substantially the same as those offered to unaffiliated individuals and not involve more than the normal risk of repayment. There is an exception for loans made pursuant to a benefit or compensation program that is widely available to all employees of the institution and does not give preference to insiders over other employees. Loans to executive officers are further limited to loans of specific types and amounts.

Enforcement. The FDIC has extensive enforcement authority over insured state savings banks, including Belmont Savings Bank. That enforcement authority includes, among other things, the ability to

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assess civil money penalties, issue cease and desist orders and remove directors and officers. In general, enforcement actions may be initiated in response to violations of laws and regulations and unsafe or unsound practices. The FDIC also has authority under federal law to appoint a conservator or receiver for an insured bank under certain circumstances. The FDIC is required, with certain exceptions, to appoint a receiver or conservator for an insured state non-member bank if that bank was “critically undercapitalized” on average during the calendar quarter beginning 270 days after the date on which the institution became “critically undercapitalized.”

Federal Insurance of Deposit Accounts. Deposit accounts in Belmont Savings Bank are insured by the FDIC’s Deposit Insurance Fund, generally up to a maximum of $250,000 per separately insured depositor, pursuant to changes made permanent by the Dodd-Frank Act. The Dodd-Frank Act also extended unlimited deposit insurance on non-interest bearing transaction accounts through December 31, 2012. The FDIC assesses insured depository institutions to maintain the Deposit Insurance Fund. No institution may pay a dividend if in default of its deposit insurance assessment.

Under the FDIC’s risk-based assessment system, insured institutions are assigned to a risk category based on supervisory evaluations, regulatory capital levels and other factors. An institution’s assessment rate depends upon the category to which it is assigned and certain adjustments specified by the FDIC, with less risky institutions paying lower assessments. Until recently, assessment rates ranged from seven to 77.5 basis points of assessable deposits.

On February 7, 2011, as required by the Dodd-Frank Act, the FDIC published a final rule to revise the deposit insurance assessment system. The rule, which took effect April 1, 2011, changes the assessment base used for calculating deposit insurance assessments from deposits to total assets less tangible (Tier 1) capital. Since the new base is larger than the previous base, the FDIC also lowered assessment rates so that the rule would not significantly alter the total amount of revenue collected from the industry. The range of adjusted assessment rates is now 2.5 to 45 basis points of the new assessment base. The rule is expected to benefit smaller financial institutions, which typically rely more on deposits for funding, and shift more of the burden for supporting the insurance fund to larger institutions, which are thought to have greater access to non-deposit funding.

As part of its plan to restore the Deposit Insurance Fund in the wake of a large number of bank failures following the recent financial crisis, the FDIC imposed a special assessment of five basis points for the second quarter of 2009. In addition, the FDIC required all insured institutions to prepay their quarterly assessments for the fourth quarter of 2009, and for all of 2010, 2011 and 2012. In calculating the required prepayment, the FDIC assumed a 5% annual growth in the assessment base and applied a three basis point increase in assessment rates effective January 1, 2011. Belmont Savings Bank’s pre-payment of $1.8 million was recorded as a prepaid expense at December 31, 2009 and is being amortized to expense over three years.

In addition to FDIC assessments, the Financing Corporation (“FICO”) is authorized to impose and collect, through the FDIC, assessments for costs related to bonds issued by the FICO in the 1980s to recapitalize the former Federal Savings and Loan Insurance Corporation. The bonds issued by the FICO are due to mature in 2017 through 2019. During the calendar year ended December 31, 2010, Belmont Savings Bank paid $34,000 in fees related to the FICO.

The Dodd-Frank Act increased the minimum target Deposit Insurance Fund ratio from 1.15% of estimated insured deposits to 1.35% of estimated insured deposits. The FDIC must seek to achieve the 1.35% ratio by September 30, 2020. Insured institutions wit assets of $10 billion or more are supposed to fund the increase. The Dodd-Frank Act eliminated the 1.5% maximum fund ratio, instead leaving it to the discretion of the FDIC. The FDIC has recently exercised that discretion by establishing a long range fund ratio of 2%.

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A material increase in insurance premiums would likely have an adverse effect on the operating expenses and results of operations of Belmont Savings Bank. Management cannot predict what insurance assessment rates will be in the future.

Insurance of deposits may be terminated by the FDIC upon a finding that an institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC. We do not know of any practice, condition or violation that might lead to termination of Belmont Savings Bank’s deposit insurance.

Community Reinvestment Act. Under the Community Reinvestment Act (“CRA”), a bank has a continuing and affirmative obligation, consistent with its safe and sound operation, to help meet the credit needs of its entire community, including low and moderate income neighborhoods. The CRA does not establish specific lending requirements or programs for financial institutions nor does it limit an institution’s discretion to develop the types of products and services that it believes are best suited to its particular community. The CRA does require the FDIC, in connection with its examination of a bank, to assess the institution’s record of meeting the credit needs of its community and to take such record into account in its evaluation of certain applications by such institution, including applications to establish or acquire branches and merger with other depository institutions. The CRA requires the FDIC to provide a written evaluation of an institution’s CRA performance utilizing a four-tiered descriptive rating system. Belmont Savings Bank’s latest FDIC CRA rating, dated October 6, 2008, was “satisfactory.”

Massachusetts has its own statutory counterpart to the CRA which is also applicable to Belmont Savings Bank. The Massachusetts version is generally similar to the CRA but utilizes a five-tiered descriptive rating system. The Massachusetts Commissioner of Banks is required to consider a bank’s record of performance under the Massachusetts law in considering any application by the bank to establish a branch or other deposit-taking facility, relocate an office or to merge or consolidate with or acquire the assets and assume the liabilities of any other banking institution. Belmont Savings Bank’s most recent rating under Massachusetts law, dated October 3, 2007, was “satisfactory.”

Federal Reserve System. The Federal Reserve Board regulations require savings institutions to maintain non-interest earning reserves against their transaction accounts (primarily Negotiable Order of Withdrawal (NOW) and regular checking accounts). The regulations generally provide that reserves be maintained against aggregate transaction accounts as follows: a 3% reserve ratio is assessed on net transaction accounts up to and including $58.8 million; a 10% reserve ratio is applied above $58.8 million. The first $10.7 million of otherwise reservable balances are exempted from the reserve requirements. The amounts are adjusted annually. Belmont Savings Bank complies with the foregoing requirements.

Federal Home Loan Bank System. Belmont Savings Bank is a member of the Federal Home Loan Bank System, which consists of twelve regional Federal Home Loan Banks. The Federal Home Loan Bank System provides a central credit facility primarily for member institutions as well as other entities involved in home mortgage lending. As a member of the Federal Home Loan Bank of Boston, Belmont Savings Bank is required to acquire and hold a specified amount of shares of capital stock in the Federal Home Loan Bank of Boston. As of March 31, 2011, Belmont Savings Bank was in compliance with this requirement.

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The Federal Home Loan Bank of Boston suspended its dividend payment for the first quarter of 2009 and did not pay a dividend through 2010. The Federal Home Loan Bank has paid dividends in 2011 that are considerably less than those paid prior to 2009.

Other Regulations

Some interest and other charges collected or contracted by Belmont Savings Bank are subject to state usury laws and federal laws concerning interest rates and charges. Belmont Savings Bank’s operations also are subject to federal laws applicable to credit transactions, such as the:

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Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers;

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Real Estate Settlement Procedures Act, requiring that borrowers for mortgage loans for one- to four-family residential real estate receive various disclosures, including good faith estimates of settlement costs, lender servicing and escrow account practices, and prohibiting certain practices that increase the cost of settlement services;

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Home Mortgage Disclosure Act, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves;

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Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed, or other prohibited factors in extending credit;

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Fair Credit Reporting Act, governing the use and provision of information to credit reporting agencies; and

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Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies; and

The operations of Belmont Savings Bank also are subject to the:

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Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records;

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Electronic Funds Transfer Act and Regulation E promulgated thereunder, that govern automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services;

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Gramm-Leach-Bliley Act privacy statute which requires each depository institution to disclose its privacy policy, identify parties with whom certain nonpublic customer information is shared and provide customers with certain rights to “opt out” of disclosure to certain third parties; and

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Title III of The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (referred to as the “USA PATRIOT Act”), which significantly expanded the responsibilities of financial institutions, in preventing the use of the United States financial system to fund terrorist activities. Among other things, the USA PATRIOT Act and the related regulations required banks operating in the United States to develop anti-money laundering compliance programs, due diligence policies and controls to facilitate the detection and reporting of money laundering.

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Holding Company Regulation

BSB Bancorp, Inc., as a bank holding company, will be subject to examination, regulation, and periodic reporting under the Bank Holding Company Act of 1956, as amended, as administered by the Federal Reserve Board. BSB Bancorp, Inc. is required to obtain the prior approval of the Federal Reserve Board to acquire all, or substantially all, of the assets of any bank or bank holding company. Prior Federal Reserve Board approval would be required for BSB Bancorp, Inc. to acquire direct or indirect ownership or control of any voting securities of any bank or bank holding company if it would, directly or indirectly, own or control more than 5% of any class of voting shares of the bank or bank holding company.

A bank holding company is generally prohibited from engaging in, or acquiring, direct or indirect control of more than 5% of the voting securities of any company engaged in non-banking activities. One of the principal exceptions to this prohibition is for activities found by the Federal Reserve Board to be so closely related to banking or managing or controlling banks as to be a proper incident thereto. Some of the principal activities that the Federal Reserve Board has determined by regulation to be closely related to banking are: (i) making or servicing loans; (ii) performing certain data processing services; (iii) providing securities brokerage services; (iv) acting as fiduciary, investment or financial advisor; (v) leasing personal or real property under certain conditions; (vi) making investments in corporations or projects designed primarily to promote community welfare; and (vii) acquiring a savings association.

The Gramm-Leach-Bliley Act of 1999 authorizes a bank holding company that meets specified conditions, including depository institutions subsidiaries that are “well capitalized” and “well managed,” to opt to become a “financial holding company.” A “financial holding company” may engage in a broader array of financial activities than permitted a typical bank holding company. Such activities can include insurance underwriting and investment banking. BSB Bancorp, Inc. does not anticipate opting for “financial holding company” status at this time.

BSB Bancorp, Inc. will be subject to the Federal Reserve Board’s consolidated capital adequacy guidelines for bank holding companies. Traditionally, those guidelines have been structured similarly to the regulatory capital requirements for the subsidiary depository institutions, but were somewhat more lenient. For example, the holding company capita requirements allowed inclusion of certain instruments in Tier 1 capital that are not includable at the institution level. As previously noted, the Dodd-Frank Act requires that the guidelines be amended so that they are at least as stringent as those required for the subsidiary depository institutions. See “—General —The Dodd-Frank Act.”

A bank holding company is generally required to give the Federal Reserve Board prior written notice of any purchase or redemption of then outstanding equity securities if the gross consideration for the purchase or redemption, when combined with the net consideration paid for all such purchases or redemptions during the preceding 12 months, is equal to 10% or more of the company’s consolidated net worth. The Federal Reserve Board may disapprove such a purchase or redemption if it determines that the proposal would constitute an unsafe and unsound practice, or would violate any law, regulation, Federal Reserve Board order or directive, or any condition imposed by, or written agreement with, the Federal Reserve Board. The Federal Reserve Board has adopted an exception to that approval requirement for well-capitalized bank holding companies that meet certain other conditions.

The Federal Reserve Board has issued a policy statement regarding the payment of dividends by bank holding companies. In general, the Federal Reserve Board’s policies provide that dividends should be paid only out of current earnings and only if the prospective rate of earnings retention by the bank holding company appears consistent with the organization’s capital needs, asset quality and overall financial condition. The Federal Reserve Board’s policies also require that a bank holding company serve as a source of financial strength to its subsidiary banks by using available resources to provide capital

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funds during periods of financial stress or adversity and by maintaining the financial flexibility and capital-raising capacity to obtain additional resources for assisting its subsidiary banks where necessary. The Dodd-Frank Act codified the source of strength policy and requires the promulgation of implementing regulations. Under the prompt corrective action laws, the ability of a bank holding company to pay dividends may be restricted if a subsidiary bank becomes undercapitalized. These regulatory policies could affect the ability of BSB Bancorp, Inc. to pay dividends or otherwise engage in capital distributions.

The Federal Deposit Insurance Act, makes depository institutions liable to the FDIC for losses suffered or anticipated by the insurance fund in connection with the default of a commonly controlled depository institution or any assistance provided by the FDIC to such an institution in danger of default. That law would have potential applicability if BSB Bancorp, Inc. ever held as a separate subsidiary a depository institution in addition to Belmont Savings Bank.

Massachusetts Holding Company Regulation. Under Massachusetts banking laws, a company owning or controlling two or more banking institutions, including a savings bank, is regulated as a bank holding company. Each Massachusetts bank holding company: (i) must obtain the approval of the Massachusetts Board of Bank Incorporation before engaging in certain transactions, such as the acquisition of more than 5% of the voting stock of another banking institution; (ii) must register, and file reports, with the Massachusetts Division of Banks; and (iii) is subject to examination by the Division of Banks. BSB Bancorp, Inc. would become a Massachusetts bank holding company if it acquires a second banking institution and holds and operates it separately from Belmont Savings Bank.

BSB Bancorp, Inc. and Belmont Savings Bank will be affected by the monetary and fiscal policies of various agencies of the United States Government, including the Federal Reserve System. In view of changing conditions in the national economy and in the money markets, it is impossible for management to accurately predict future changes in monetary policy or the effect of such changes on the business or financial condition of BSB Bancorp, Inc. or Belmont Savings Bank.

The status of BSB Bancorp, Inc. as a registered bank holding company under the Bank Holding Company Act will not exempt it from certain federal and state laws and regulations applicable to corporations generally, including, without limitation, certain provisions of the federal securities laws.

Federal Securities Laws . Our common stock is registered with the Securities and Exchange Commission under Section 12(b) of the Securities Exchange Act of 1934, as amended. We are subject to information, proxy solicitation, insider trading restrictions, and other requirements under the Exchange Act.

TAXATION

Federal Taxation

General. BSB Bancorp, Inc. and Belmont Savings Bank are subject to federal income taxation in the same general manner as other corporations, with some exceptions discussed below. The following discussion of federal taxation is intended only to summarize material federal income tax matters and is not a comprehensive description of the tax rules applicable to BSB Bancorp, Inc. and Belmont Savings Bank.

Method of Accounting. For federal income tax purposes, Belmont Savings Bank will file a consolidated tax return with BSB Bancorp, Inc. and will report its income and expenses on the accrual method of accounting and use a tax year ending December 31st for filing their consolidated federal income tax returns. The Small Business Protection Act of 1996 eliminated the use of the reserve method of accounting for bad debt reserves by savings institutions, effective for taxable years beginning after 1995.

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Minimum Tax. The Internal Revenue Code of 1986, as amended, imposes an alternative minimum tax at a rate of 20% on a base of regular taxable income plus certain tax preferences, referred to as “alternative minimum taxable income.” The alternative minimum tax is payable to the extent alternative minimum taxable income is in excess of an exemption amount. Net operating losses can, in general, offset no more than 90% of alternative minimum taxable income. Certain payments of alternative minimum tax may be used as credits against regular tax liabilities in future years. BSB Bancorp, MHC, BSB Bancorp, Inc. and Belmont Savings Bank have not been subject to the alternative minimum tax and have no such amounts available for credits against regular future tax liabilities.

Net Operating Loss Carryovers. A financial institution may carry back net operating losses to the preceding two taxable years and forward to the succeeding 20 taxable years. At December 31, 2010, BSB Bancorp, MHC, BSB Bancorp, Inc. and Belmont Savings Bank had no net operating loss carryforward for federal income tax purposes.

Corporate Dividends. BSB Bancorp, Inc. will be able to exclude from its income 100% of dividends received from Belmont Savings Bank as a member of the same affiliated group of corporations.

Audit of Tax Returns. BSB Bancorp, MHC, BSB Bancorp, Inc., and Belmont Savings Bank’s federal income tax returns, as applicable, have not been audited in the most recent five-year period.

State Taxation

For tax years beginning on or after January 1, 2009, Massachusetts generally requires corporations engaged in a unitary business to calculate their income on a combined basis with corporations which are under common control. Accordingly, BSB Bancorp, MHC, BSB Bancorp, Inc. and Belmont Savings Bank currently file combined annual income tax returns. Upon consummation of the conversion, BSB Bancorp, Inc. would be required to file a combined annual Massachusetts income tax return with Belmont Savings Bank unless an exemption from such a combined filing applies. A corporation that qualifies, and elects to be treated for purposes of Massachusetts taxation, as a Massachusetts Security Corporation will be excluded from such a combined group.

A financial institution or business corporation is generally entitled to special tax treatment as a “security corporation” under Massachusetts law provided that: (a) its activities are limited to buying, selling, dealing in or holding securities on its own behalf and not as a broker; and (b) it has applied for, and received, classification as a “security corporation” by the Commissioner of the Massachusetts Department of Revenue. A security corporation that is not a bank holding company under the Internal Revenue Code must pay a tax equal to 1.32% of its gross income. An election to be treated as a security corporation would have the effect of reducing BSB Bancorp, Inc.’s Massachusetts tax liability to 0.33% of its net income.

BSB Bancorp, Inc. is considering whether to seek to qualify as a security corporation. To do so, it would need to (a) apply for, and receive, security corporation classification by the Massachusetts Department of Revenue; and (b) not conduct any activities deemed impermissible under the governing statutes and the various regulations, directives, letter rulings and administrative pronouncements issued by the Massachusetts Department of Revenue. In order to qualify as a security corporation, it would need to establish a subsidiary for the purpose of making the loan to the employee stock ownership plan, since making such a loan directly could disqualify it from classification as a security corporation.

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Belmont Savings Bank files Massachusetts financial institution income tax returns and is subject to an annual Massachusetts tax at a rate of 10.5% of its net income, adjusted for certain items. Massachusetts net income is defined as gross income, other than 95% of dividends received in any taxable year beginning on or after January 1, 1999 from or on account of the ownership of any class of stock if the institution owns 15% or more of the voting stock of the institution paying the dividend, less the deductions, but not the credits allowable under the provisions of the Internal Revenue Code, as amended and in effect for the taxable year. The dividends must meet the qualifications under Massachusetts law. Deductions with respect to the following items, however, shall not be allowed except as otherwise provided: (a) dividends received, except as otherwise provided; (b) losses sustained in other taxable years; (c) taxes on or measured by income, franchise taxes measured by net income, franchise taxes for the privilege of doing business and capital stock taxes imposed by any state; or (d) the deduction allowed by section 168(k) of the Code .

None of the state tax returns of Belmont Savings Bank is currently under audit, nor have any of these tax returns been audited during the past five years.

As a Maryland business corporation, BSB Bancorp, Inc. will be required to file annual returns and pay annual fees to the State of Maryland.

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MANAGEMENT OF BSB BANCORP, INC.

Shared Management Structure

The directors of BSB Bancorp, Inc. are the same persons who are the directors of Belmont Savings Bank. In addition, each executive officer of BSB Bancorp, Inc. is also an officer of Belmont Savings Bank. We expect that BSB Bancorp, Inc. and Belmont Savings Bank will continue to have common officers until there is a business reason to establish separate management structures.

Executive Officers of BSB Bancorp, Inc.

The following table sets forth information regarding the executive officers of BSB Bancorp, Inc. as of March 31, 2011. The officers of BSB Bancorp, Inc. and Belmont Savings Bank are elected annually.


Name	Age	Positions Held ⁽¹⁾
Robert M. Mahoney	62	President and Chief Executive Officer of BSB Bancorp, Inc. and Belmont Savings Bank

John A. Citrano	47	Senior Vice President, Chief Financial Officer and Corporate Secretary of BSB Bancorp, Inc. and Belmont Savings Bank

Hal R. Tovin	55	Executive Vice President and Chief Operating Officer of BSB Bancorp, Inc. and Belmont Savings Bank

Christopher Y. Downs	60	Executive Vice President—Consumer Lending and Auto Finance of Belmont Savings Bank

Carroll M. Lowenstein, Jr.	52	Senior Vice President—Commercial Real Estate of Belmont Savings Bank

(1)	Positions held relate to BSB Bancorp, Inc. and Belmont Savings Bank, except as specifically indicated.

Directors of BSB Bancorp, Inc. and Belmont Savings Bank

BSB Bancorp, Inc. has eleven directors. Directors of BSB Bancorp, Inc. serve three-year staggered terms so that approximately one-third of the directors are elected at each annual meeting. Directors of Belmont Savings Bank will be elected by BSB Bancorp, Inc. as its sole stockholder. The following table states our directors’ names, their ages as of December 31, 2010, the years when they began serving as directors of Belmont Savings Bank and when their current term expires:

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Name	Position(s) Held With BSB Bancorp, Inc.	Age	Director Since	Current Term Expires
Robert M. Mahoney	Director, President and Chief Executive Officer	62	2010	2012
Hal R. Tovin	Director, Executive Vice President and Chief Operating Officer	55	2010	2013
John A. Borelli	Director	51	2006	2012
S. Warren Farrell	Director	75	1987	2014
Richard J. Fougere	Director	61	2004	2013
John W. Gahan, III	Director	62	2006	2012
John A. Greene	Director	65	1990	2014
Patricia W. Hawkins	Director	68	1996	2014
Robert J. Morrissey	Director	71	1990	2013
Robert D. Ward	Director	78	2010	2013
John A. Whittemore	Director	66	1998	2012

Director Qualifications

In considering and identifying individual candidates for director, our Nominating Committee and our Board of Directors takes into account several factors which they believe are important to our operations as a community banking institution. With respect to specific candidates, the Board and Nominating Committee assess the specific qualities and experience that such individuals possess, including: 1) overall familiarity and experience with the market area that we serve and the community groups located in such communities; 2) knowledge of the local real estate markets and real estate professionals; 3) contacts with and knowledge of local businesses operating in our market area; 4) professional and educational experience, with particular emphasis on real estate, legal, accounting or financial services; 5) experience with the local governments and agencies and political activities; 6) any adverse regulatory or legal actions involving the individual or entity controlled by the individual; 7) the integrity, honesty and reputation of the individual; 8) experience or involvement with other local financial services companies and potential conflicts that may develop; 9) past service with Belmont Savings Bank and contributions to our operations; and 10) the independence of the individual. While the Board of Directors and the Nominating Committee do not maintain a written policy on diversity which specifies the qualities or factors the Board or Nominating Committee must consider when assessing Board members individually or in connection with assessing the overall composition of the Board, the Board and Nominating Committee take into account: 1) the effectiveness of the existing Board of Directors or additional qualifications that may be required when selecting new Board members; 2) the requisite expertise and sufficiently diverse backgrounds of the Board of Directors’ overall composition; and 3) the number of independent outside directors and other possible conflicts of interest of existing and potential members of the Board of Directors.

Board Independence

The Board of Directors has determined that each of our directors, with the exception of Directors Mahoney and Tovin, is “independent” as defined in the rules of the Nasdaq Stock Market. Messrs. Mahoney and Tovin are not independent because they are executive officers of BSB Bancorp, Inc.

In determining the independence of our directors, the Board of Directors considered relationships between BSB Bancorp, Inc. and our directors that are not required to be reported under “—Transactions With Certain Related Persons,” including deposit accounts that our directors maintain at Belmont Savings Bank.

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The Business Background of Our Directors and Executive Officers

Directors:

The business experience of each of our directors and executive officers is set forth below. With respect to directors, the biographies also contain information regarding the person’s experience, qualifications, attributes or skills that caused the Nominating Committee and Board of Directors to determine that the person should serve as a director. Unless otherwise indicated, directors and executive officers have held their positions for the past five years.

Robert M. Mahoney. Mr. Mahoney is President and Chief Executive Officer of Belmont Savings Bank. Prior to joining Belmont Savings Bank, Mr. Mahoney was Executive Vice Chairman of Citizens Financial Group, Inc. until retiring in 2008. He joined Citizens Financial Group in 1993 as President and CEO of Citizens Bank of Massachusetts after serving 22 years in various domestic and international management positions at Bank of Boston. During his five years as President of Citizens in Massachusetts, Mr. Mahoney led the new bank through significant expansion. Mr. Mahoney has held several community leadership positions in Massachusetts. He currently serves as co-chair of the Town of Belmont’s Economic Advisory Committee. He is a past chairman of the United Way Board of Directors and Executive Committee and serves on the University of Massachusetts Amherst Foundation Board. He is a member of the board of directors of the Sitel Corporation and International Data Group. Mr. Mahoney also sits on the Archdiocese of Boston Finance Council. Mr. Mahoney received his M.B.A. from Columbia Business School and is a graduate of the University of Massachusetts, where he earned a Bachelor of Science degree in Chemistry. He received the 1996 Distinguished Alumnus Award from the University of Massachusetts, the 2006 Columbia University, School of Business Leadership Award and is the recipient of the 2009 Henry L. Shattuck Boston City Champion Award for public service.

Hal R. Tovin. Mr. Tovin is Executive Vice President and Chief Operating Officer for Belmont Savings Bank. He is responsible for the bank’s Retail, Small Business, Deposit Operations, and Technology. In addition, he leads all Marketing and Public Relations initiatives on behalf of the Bank. Prior to joining Belmont Savings, Mr. Tovin was Group Executive Vice President and Managing Director of the Retail Partnership Delivery Group at Citizens Financial Group, Inc. He was a member of Citizens Financial Group’s Executive Leadership Group, the company’s senior leadership team. Citizens Financial Group is one of the 10 largest commercial bank holding companies in the United States ranked by assets and deposits. He was the driving force behind the development of Citizens’ 500 branch in-store program. Mr. Tovin is a graduate of Brown University and has an M.B.A. from the Wharton School of Business. He is a trustee and chairman of the marketing committee and a member of the finance committee at the Boston Museum of Science. He was a former board member of Peace Games and former chairman of the board of the Boston Ad Club.

John A. Borelli. Mr. Borelli is a licensed Insurance Agent & Real Estate Broker. He is President of Borelli Insurance Agency Inc., an independently owned & operated, full service, Property & Casualty Insurance Agency, with 30 years of Service to Belmont and surrounding communities. He holds the Chartered Property Casualty Underwriter (CPCU) designation and is a graduate of Boston University. He is a member of the Insurance Advisory Committee for the Town of Belmont and is also a Town Meeting Member.

S. Warren Farrell. Mr. Farrell is a private investor and Managing Partner of A. W. Farrell Associates, LLP, a real estate holding company. He retired after 26 years of service as a Managing Director for Smith Barney where he was responsible for the firm’s sales efforts in New England in institutional fixed income. Mr. Farrell is a graduate of both Harvard College and Boston University. He is a Member of the Belmont Capital Endowment Fund, Overseer and former Trustee of the Mount

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Auburn Hospital, and sits on the Advisory Board of Lexington Wealth Advisors and the Board of Visitors for the Park Street School. He has been an active member of the Belmont community including Chairman of the Belmont School Committee, Town Meeting Member, Chairman of the Cable Advisory Committee, Founding Board Member of the Foundation for Belmont Education, and Founding Board Member of the Alumni and Friends of Belmont High School.

Richard J. Fougere. Mr. Fougere has been a shareholder and licensed CPA at Fougere & Associates since its incorporation in 1987. He graduated Magna Cum Laude from the School of Management of Boston College in 1971 and became a licensed C.P.A. in 1974. Mr. Fougere has over 30 years of experience in business, financial, tax and retirement planning matters for both businesses and individuals. Mr. Fougere has served as a member of the advisory committee to the New England Division of the PGA and as treasurer and president of the Winchester Country Club. He is currently Treasurer for the Winchester Chamber of Commerce and a member of the Winchester Hospital Foundation Advisory Council. In addition he is a member of the American Institute of Certified Public Accountants and the Massachusetts Society of Certified Public Accountants.

John W. Gahan, III. Mr. Gahan has been a partner in the law firm of Murtha Cullina, and its predecessor Roche, Carens & DeGiacomo, since 1971. He is a graduate of both Yale University and Boston University Law School. For twenty-five years, Mr. Gahan was a member of the Board of Appeals in the Town of Belmont and served as the Board Chairman during most of those years. Currently, Mr. Gahan serves on the Board of Directors of the National Housing & Rehabilitation Association. Mr. Gahan also serves, or has served, on the Boards of a number of local banks, hospitals and other social organizations, including serving as Secretary and President of Winchester Country Club.

John A. Greene. Mr. Greene co-owns the John J. Greene Funeral Home, where he has worked since the age of 18. He holds a degree in Funeral Service from New England Institute and has been a funeral director and embalmer licensed by the State of Massachusetts since 1966. A lifelong resident of Belmont, he is a former Belmont Town Meeting Member, a past Treasurer of the Rotary Club, and former member of the Belmont Town Club. He served on Belmont’s Sesquicentennial Anniversary Planning Committee, lent his expertise to the Belmont Fire Station Reuse Committee, and currently serves on the Belmont Fire Station Building Committee. Mr. Greene has also coached several youth sports teams.

Patricia W. Hawkins. Mrs. Hawkins is a retired Licensed Clinical Social Worker, most recently with the Center for Mental Health in Waltham. She is a graduate of University of Massachusetts and Boston College. She is a past president and current member of the Board of Directors and Voter Service Coordinator with the Belmont League of Women Voters. She is also the Secretary of the Webster Island Beach Association.

Robert J. Morrissey. Mr. Morrissey has been a Partner in the law firm of Morrissey, Hawkins & Lynch since 1990. Prior to that time, Mr. Morrissey was a Partner with Withington, Cross, Park & Groden. He served as Belmont Town Counsel from 1974 to 2004. He is a graduate of Boston College and Harvard Law School. He serves on the Dean’s Board, Harvard Law School; the Boston College Board of Trustees, as a member of the Executive Committee and Chair of the Investment and Endowment Committee; the Society of Jesus, International Investment Advisory Committee, Vatican City; is Chair of the Investment Advisory Board of the New England Province of the Society of Jesus; and is Chair of the Investment Committee of the Finance Council of the Roman Catholic Archdiocese of Boston. He has also served as a Director or Trustee of several public and private funds, trusts and foundations.

Robert D. Ward. Mr. Ward is a seasoned banking executive and international consultant with more than 52 years of global experience, particularly in emerging markets. He retired from the Massachusetts Office of International Trade and Investment in 2006, after a long career with other such

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prestigious firms as Boston Global Partners, Inc., Bank of Boston, and Arthur D. Little. He was also Director of International Banking at BayBanks. Mr. Ward worked and traveled abroad extensively, living in three countries outside of the US and traveling to 50 others. His affiliations in professional societies include Fulbright Commission, American Hospital of Istanbul, African Studies Association, and World Affairs Council, and the Board of the Massachusetts International Trade Council.

John A. Whittemore. Mr. Whittemore has been the President of Partners Financial Insurance Agency, which focuses on employee benefits, insurance and investments, since 1970. He graduated from Colgate University in 1966, and then spent 4 years on active duty with the US Air Force followed by 7 years in the Reserves. He was honorably discharged as a Captain in 1976. His Professional Affiliations include the Boston Estate Planning & Business Council, the Boston Life Underwriters Association (BLUA), the National Association of Life Underwriters (NALU), the Association for Advanced Life Underwriters (AALU), and the National Association of CLU & CPCU. He has also served on the Board of both Winchester Country Club and the Kittansett Club.

Executive Officers Who Are Not Also Directors:

John A. Citrano. Mr. Citrano, Senior Vice President and Chief Financial Officer, has been with Belmont Savings Bank since 1987. He began his career with the Bank as an Internal Auditor. He also serves on many of the Bank’s internal committees. Mr. Citrano is a graduate of both Merrimack College and Bentley College. He is a member of the Executive Committee of the Watertown/Belmont Chamber of commerce, the Treasurer of the A.D. Little Toastmasters Club, and a member of the Financial Managers Society.

Christopher Y. Downs. Mr. Downs is Executive Vice President—Consumer Lending and Auto Finance of Belmont Savings Bank. He is responsible for all of the bank’s consumer lending activities including residential mortgages, home equity loans and lines of credit and indirect automobile loans. Prior to joining Belmont Savings Bank, Mr. Downs was Group Executive Vice President of Citizens Financial Group’s Consumer Finance Division. During his tenure at Citizens Financial Group, he was responsible for lending activities in residential mortgages, home equity loans and lines of credit, indirect automobile and RV loans, marine loans, aircraft loans, credit cards and student loans. He was also a member of Citizens Financial Group’s Executive Policy Committee, the company’s senior management team. Before joining Citizens Financial Group in 1994, Mr. Downs spent 12 years at Chase Manhattan Corporation where he was responsible for the sale of all consumer loan products distributed through Chase Manhattan Corporation’s five regional banking divisions. Mr. Downs graduated with a B.A. from Middlebury College in Vermont, and received his M.B.A. from the University of New Hampshire’s Whittemore School of Business and Economics. He is a recently retired member of the board of directors of Lincoln School of Providence, where he co-chaired the development committee and was a member of the finance committee. He currently serves on the Advisory Board for the International Institute of Rhode Island and has worked in the Rhode Island Mentoring Program for over nine years.

Carroll M. Lowenstein, Jr. Mr. Lowenstein is Senior Vice President—Commercial Real Estate at Belmont Saving Bank. Prior to that, he held similar roles at RBS Citizens and Cambridgeport Bank. He has personally originated in excess of $450 million of Commercial Real Estate Loans over the past 20 years. He is a graduate of Harvard College and is also a licensed Real Estate Broker in the Commonwealth of Massachusetts.

Meetings and Committees of the Board of Directors

We conduct business through meetings of our Board of Directors and its Committees. During the year ended December 31, 2010, the Board of Directors of Belmont Savings Bank met eight times. The Board of Directors of BSB Bancorp, Inc. has established standing Committees, including a Compensation Committee, a Nominating Committee and an Audit Committee. Each of these committees operates under a written Charter, which governs its composition, responsibilities and operations.

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The table below sets forth the directors serving on each of the listed committees, and the number of meetings held by the comparable committee of Belmont Savings Bank. Director Richard Fougere will be designated as an “Audit Committee Financial Expert” for the Audit Committee, as that term is defined by the rules and regulations of the Securities and Exchange Commission. Pursuant to Nasdaq and SEC rules which require certain board committees of listed companies to be comprised entirely of independent directors, Messrs. Mahoney and Tovin will not serve on the Nominating Committee, Compensation Committee or Audit Committee of BSB Bancorp, Inc.


Name	Nominating	Compensation	Audit
John A. Borelli		X
S. Warren Farrell		X
Richard J. Fougere			X*
John W. Gahan, III			X
John A. Greene		X	X
Patricia W. Hawkins	X
Robert J. Morrissey	X*	X*
Robert D. Ward
John A. Whittemore	X	X
Number of Meetings in 2010:	3	3	7

*	Denotes committee Chair.

COMPENSATION DISCUSSION AND ANALYSIS

Compensation Objectives

Our compensation objectives begins with the premise that our success depends, in large part, on the dedication and commitment of the people we place in key management positions, and the incentives we provide such persons to successfully implement our business strategy and other corporate objectives. The overall objectives of our compensation program is to retain, motivate and reward employees and officers (including Named Executive Officers, as defined below) for performance and to provide competitive compensation to attract talent to our organization. We recognize that we operate in a competitive environment for talent. Therefore, our approach to compensation considers the full range of compensation techniques that enable us to compare favorably with our peers as we seek to attract and retain key personnel.

We intend to base our compensation decisions as a public company on four basic principles:

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Meeting the Demands of the Market – Our goal is to compensate our employees at competitive levels that position us as the employer of choice among our peers who provide similar financial services in the markets we serve.

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Aligning with Shareholder Interest – As a public company, we intend to use equity compensation as a key component of our compensation program to develop a culture of ownership among our key personnel and to align their individual financial interests with the interests of our shareholders.

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•

Driving Performance – We will base compensation in part on the attainment of company-wide, business unit and individual targets that contribute to our earnings within risk tolerance.

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Reflecting our Business Philosophy – Our approach to compensation reflects our values and the way we do business in the communities we serve.

Prior to our initial public offering, our compensation program relied on two primary elements: (i) base compensation or salary; and (ii) cash-based incentive compensation. Following our initial public offering, we expect that equity-based, long-term incentive compensation will also become an important element of our executive compensation program. Our ability to introduce equity awards to our compensation program will depend on shareholder approval of an equity-based compensation program and compliance with applicable regulatory guidelines relating to such programs. As a public company, we believe that we can meet the objectives of our compensation philosophy by achieving a balance among these elements of compensation that is competitive with our industry peers and that creates appropriate incentives for our management team. To achieve the necessary balance, we expect that the Compensation Committee of our Board of Directors will work closely with independent compensation advisors to provide us with their expertise on competitive compensation practices and help us evaluate and compare our compensation program and financial performance with that of our peers.

To date, executive officers have been compensated only for services to Belmont Savings Bank. Belmont Savings Bank expects to continue this practice. However, any future equity-based awards made as part of Belmont Savings Bank’s executive compensation will be made in BSB Bancorp, Inc. common stock rather than Belmont Savings Bank common stock.

This discussion is focused specifically on the compensation of BSB Bancorp, Inc.’s executive officers, each of whom is named in the Summary Compensation Table which appears later in this section under the heading “—Executive Compensation.” These five executive officers are referred to in this discussion as “Named Executive Officers.”


		Name		Title
		Robert M. Mahoney		President and Chief Executive Officer
		John A. Citrano		Senior Vice President, Chief Financial Officer and Corporate Secretary
		Hal R. Tovin		Executive Vice President and Chief Operating Officer
		Christopher Y. Downs		Executive Vice President—Consumer Lending and Auto Finance
		Carroll M. Lowenstein, Jr.		Senior Vice President—Commercial Real Estate

Designing Our Compensation Program.

Our compensation program is designed to reward the Named Executive Officers based on their level of assigned management responsibilities, individual experience and performance levels, and knowledge of our organization. The creation of long-term value is highly dependent on the development and effective execution of a sound business strategy by our Named Executive Officers. Other considerations influencing the design of our executive compensation program are:

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experience in the financial services industry that promotes the safe and sound operation of Belmont Savings Bank;

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•

experience in all aspects of risk management;

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executives with sufficient experience in our markets relating to the needs of our customers, products and investments in various phases of the economic cycle;

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disciplined decision-making that respects our business plan but adapts quickly to change;

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the retention and development of incumbent executives who meet or exceed performance objectives, since recruiting executives can be expensive, unpredictable, and may have a disruptive effect on our operations;

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the compensation and employment practices of Belmont Savings Bank’s competitors within the financial services industry and elsewhere in the marketplace; and

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each executive’s individual performance and contribution in helping us achieve our corporate goals, which may be subjective in nature.

Role of the Compensation Committee and Certain Executive Officers . Our Compensation Committee and certain executive officers have a significant role in helping us achieve our compensation objectives and designing our compensation program. The Compensation Committee is responsible for overseeing and making recommendations to the full Board of Directors with respect to our compensation program related to the Named Executive Officers. The Compensation Committee regularly evaluates and approves the elements of total compensation payable to the Named Executive Officers. In making these determinations, the Compensation Committee considers each Named Executive Officer’s level of job responsibility, the compensation paid by peers for similar levels of responsibility, industry survey data regarding executive compensation, the financial condition and performance of Belmont Savings Bank.

The executive officers who serve as a resource to the Compensation Committee are the President and Chief Executive Officer, the Senior Vice President, Chief Financial Officer and Corporate Secretary, and the Senior Vice President and Director of Human Resources. These executives provide the Compensation Committee with input regarding Belmont Savings Bank’s employee compensation philosophy, process and compensation decisions for employees other than themselves. In addition to providing factual information such as company-wide performance on relevant measures, these executives articulate senior management’s views on current compensation programs and processes, recommend relevant performance measures to be used for future evaluations and otherwise supply information to assist the Compensation Committee. The Senior Vice President, Chief Financial Officer and Corporate Secretary may provide information to evaluate the estimated financial impact regarding any proposed changes to the various elements of compensation. The President and Chief Executive Officer also provides information about individual performance assessments for the other Named Executive Officers, and expresses to the Compensation Committee his views on the appropriate levels of compensation for the other Named Executive Officers for the ensuing year.

Three executives participate in Compensation Committee activities purely in an informational and advisory capacity and have no vote in the Compensation Committee’s decision-making process. The President and Chief Executive Officer, Senior Vice President, Chief Financial Officer and Corporate Secretary, and the Senior Vice President and Director of Human Resources do not attend those portions of compensation committee meetings during which their performance is evaluated or their compensation is being determined. No executive officer other than the President and Chief Executive Officer, Senior Vice President, Chief Financial Officer and Corporate Secretary, and Senior Vice President and Director of Human Resources attends those portions of compensation committee meetings during which the performance of the other Named Executive Officers is evaluated or their compensation is being determined.

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Use of Consultants . The Compensation Committee periodically engages independent compensation consultants to assist it in the compensation process for the Named Executive Officers. The consultants, who are retained by and report to the Compensation Committee, work with the President and Chief Executive Officer in performing services for the Compensation Committee. The consultants provide expertise and information about competitive trends in the employment marketplace, including established and emerging compensation practices at other similarly situated companies. The consultants also provide survey data and assist in assembling relevant comparison groups for various purposes and establishing benchmarks for base salary and cash incentives from the survey and comparison group.

Elements of Compensation

Our compensation program with respect to our Named Executive Officers primarily consists of the following:

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base salary, which is designed to provide a reasonable level of predictable income commensurate with the market standards for the executive’s position;

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non-equity incentive compensation which are based on specified goals and benchmarks as designed by senior management and approved by the Compensation Committee;

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severance benefits payable pursuant to severance agreements between certain executive officers and Belmont Savings Bank;

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retirement benefits payable pursuant to our tax-qualified and non-qualified plans; and

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other broad-based benefits.

The Compensation Committee seeks to create what it believes is the best mix of each element of compensation in delivering the Named Executive Officer’s total compensation. For each Named Executive Officer, a significant percentage of total cash compensation is at-risk, meaning that it will generally be earned when BSB Bancorp, Inc. or the Named Executive Officer is successful in ways that are aligned with and support BSB Bancorp, Inc.’s interests. The Compensation Committee reviewed compensation for the year ended December 31, 2010 for the Named Executive Officers relative to the competitive market and relative to results delivered on established objectives and performance criteria, and concluded that each Named Executive Officer’s compensation was consistent with market practice and was based on reasonable performance.

Base Salary . Base salary is the primary source of compensation for services performed during the year for all employees. On an annual basis, the Compensation Committee reviews the base salaries of the Named Executive Officers and primarily considers:

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market data for peer institutions and direct competitors located in Massachusetts and the northeast region;

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internal review of the Named Executive Officer’s compensation, both individually and relative to other officers;

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individual performance of the executive;

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•

qualifications and experience of the executive; and

•

our financial condition and results of operations, including tax and accounting impact of the base salaries.

Base salaries are reviewed annually and adjusted from time-to-time to realign base salaries with market levels after taking into account the considerations above. Details regarding base salary are included in the Summary Compensation Table following this section. The Compensation Committee set the base salaries for Messrs. Mahoney, Citrano, Tovin, Downs and Lowenstein at $450,000, $179,380, $350,000, $268,000, and $200,000, respectively, for 2010, based on the considerations set forth above.

For 2011, the Compensation Committee engaged Arthur Warren Associates to assist the Compensation Committee in determining the appropriate 2011 base salary levels for Messrs. Mahoney, Tovin and Downs. The Compensation Committee also utilized the 2010 Pearl Meyer & Partners Compensation Survey to determine 2011 base salary levels. The survey provided compensation information for a peer group of financial institutions with assets of $1.0 billion in the New England area. The Compensation Committee believed that using compensation data for this peer group was appropriate given the potential to increase our asset size following the completion of our stock offering. Based on the peer group data, the Compensation Committee desired to set base salary levels for the Named Executive Officers at the 75 ^th percentile of the base salary levels paid to officers of the peer group companies with similar responsibilities in 2010.

Since the 2010 base salary levels are consistent with the peer group data, the 2011 base salary levels for the Named Executive Officers did not change, with the exception of Mr. Citrano’s base salary, which was increased to $184,380 for 2011.

Non-Equity Incentive Compensation . We implemented the Incentive Compensation Plan for our executive officers, including the Named Executive Officers, and we implemented the Capital Appreciation Plan in which only the following Named Executive Officers participate: Messrs. Mahoney, Tovin and Downs.

The Incentive Compensation Plan, which was fully adopted in 2011, is an annual cash-based incentive plan that is an integral part the participant’s total compensation package and supports the continued growth and profitability of Belmont Savings Bank. Each year participants are awarded for the achievement of certain performance objectives on a company-wide and individual basis. These objectives are established at the beginning of each plan year and approved by the Compensation Committee. Company-wide performance objectives are focused on growth, expense control and asset quality, which are customary metrics used by similarly-situated financial institutions in measuring performance. Individually-based performance objectives are determined for each individual, based on his or her responsibilities to Belmont Savings Bank. The performance objectives selected by the participant are weighted, based on his or her direct impact and contribution to satisfying the performance objectives. For the President and Chief Executive Officer and Executive Officers, more weight is attributable to the satisfaction of company-wide performance objectives than individual performance objectives. For Senior Vice Presidents, company-wide performance objectives are weighted the same as individual performance objectives. For all other officers, more weight is attributable to the satisfaction of individual performance objectives than company-wide performance objectives. Each participant is entitled to an incentive bonus payment based on a range of his or her base salary if the company-wide and individual performance objectives are met at the end of each plan year. Levels of achievement for each performance objective are set at “target” and “maximum,” such that the executive’s incentive bonus payment amount is determined by the level of achievement of each performance objective related to the executive.

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For the 2010 plan year, due to the fact that four of our Named Executive Officers (Messrs. Mahoney, Tovin, Downs and Lowenstein) were hired during the plan year, with three of these hired in the second half of the calendar year, we did not fully implement the Incentive Compensation Plan. Nonetheless, because we earned $1.7 million (before certain one-time adjustments) in after-tax income for the fiscal year, which exceeded our goal of $1.6 million in after tax-income, and the executives generally satisfied their individual performance goals, we believed it was appropriate to provide a bonus to our Named Executive Officers. In this regard, Messrs Mahoney, Citrano, Tovin and Downs received discretionary bonuses of $85,000, $30,000, $40,000 and $30,000, respectively, in recognition of their performance and efforts. The bonuses were also reflective of the fact that each executive, other than Mr. Citrano, was employed for only a partial year during 2010.

The Capital Appreciation Plan is a long-term cash-based incentive plan that is designed to reward participants for increases in the equity capital of Belmont Savings Bank resulting from the ordinary business of Belmont Savings Bank, from September 30, 2010 through December 31, 2012 (“capital appreciation”). Certain extraordinary items, such as the capital raised in the stock offering, are excluded from consideration. The capital appreciation as of December 31, 2012, determines the pool, which can be up to 20% of the capital appreciation. The bonus pool amount will increase by a dollar amount equal to 4% of the capital appreciation if Belmont Savings Bank’s return on assets (“ROA”) equals or exceeds the ROA targets established by the Compensation Committee for 2011 and 2012. Each participant in the plan is entitled to receive a fixed percentage of the bonus pool, which will be payable on June 30, 2014, provided the participant is employed with Belmont Savings Bank on such date. We have chosen to use both equity capital and ROA to determine the bonus pool amount because we believe the use of these combined measures is appropriate for well-run institutions where the use of increased equity capital alone could result in manipulation of the balance sheet to attain the desired result.

Additionally, the Compensation Committee has the authority to award discretionary bonus payments to the Named Executive Officers. Messrs. Downs and Lowenstein each received a guaranteed bonus of $50,000 as a condition of accepting employment.

Please see “Executive Compensation—Incentive Compensation Arrangements” for a more thorough description of the Incentive Compensation Plan and the Capital Appreciation Plan.

Severance Agreements. We maintain severance agreements with Messrs. Mahoney, Tovin, Citrano, Downs and Lowenstein, which provide severance payments in the event of the executive’s involuntary or constructive termination of employment, including upon a termination following a change in control. The rationale for providing these payments is to provide security for our Named Executive Officers and stability among our senior management team. Please see “Executive Compensation – Severance Agreements” for a more thorough description of these agreements.

Retirement Plans. In addition to the compensation paid to the Named Executive Officers as described above, the Named Executive Officers are eligible to participate in our 401(k) plan on the same terms as other employees. Each eligible employee is permitted to defer his or her salary for retirement (subject to limitations under the Internal Revenue Code). We provide a 100% matching contribution on the first 2% of the participant’s salary deferral and 50% matching contribution on the next 3% of the participant’s salary deferral. We also provide safe harbor matching contribution of 4% of the participant’s salary.

Messrs. Mahoney, Tovin and Downs are participants in our Supplemental Executive Retirement Plan (“SERP”), which we adopted in 2010. We are also a party to an amended supplemental retirement agreement with Mr. Citrano that was entered into in 1994 and has been subsequently updated to comply with changes in the tax laws. The SERP and the supplemental retirement agreement provide

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supplemental retirement benefits for Messrs. Mahoney, Tovin, Downs and Citrano, which will be paid in addition to the benefits they receive under the 401(k) plan. We provide these supplemental retirement benefits in order to remain competitive and to attract and retain our Named Executive Officers. See “Executive Compensation – Pension Benefits” for further description of the terms of our supplemental retirement arrangements.

Other Broad-Based Benefits . We offer various fringe benefits to our employees, including our Named Executive Officers. We provide group health, dental and vision insurance coverage to employees, with the employees being responsible for a portion of the premiums. In addition, we provide our Named Executive Officers with life insurance, long-term disability insurance, parking and cellular phone reimbursement, for which we pay the entire cost. The Compensation Committee believes these benefits are appropriate and assist these officers in fulfilling their employment obligations.

Prospective Benefit Plans

Employee Stock Ownership Plan . In connection with the conversion, we will implement an employee stock ownership plan. The trustee of the employee stock ownership plan intends to fund the plan by using proceeds of a loan from BSB Bancorp, Inc. to purchase BSB Bancorp, Inc. common stock in the conversion pursuant to applicable regulatory guidelines. The employee stock ownership plan will provide our employees, including the Named Executive Officers, with additional retirement savings in the form of our common stock and encourage employee ownership in the new public company. See “Executive Compensation–Tax-Qualified Retirement Plans–Employee Stock Ownership Plan” for further description of the terms of the employee stock ownership plan.

Equity Incentive Plan . Following the conversion, we intend to adopt a new stock-based incentive plan in accordance with applicable regulations. The plan will provide for grants of stock options and restricted stock awards. The Compensation Committee will use awards of stock options and restricted stock under the plan to align the interests of the Named Executive Officers with those of our stockholders. See “Benefits to be Considered Following the Completion of the Stock Offering” for further description of the terms of the equity incentive plan.

Tax and Accounting Implications

In consultation with our advisors, we evaluate the tax and accounting treatment of our compensation program at the time of adoption and on an annual basis to ensure that we understand the financial impact of the program. Our analysis includes a detailed review of recently adopted and pending changes in tax and accounting requirements. As part of our review, we consider modifications and/or alternatives to existing programs to take advantage of favorable changes in the tax or accounting environment or to avoid adverse consequences. To preserve maximum flexibility in the design and implementation of our compensation program, we have not adopted a formal policy that requires all compensation to be tax deductible. However, to the greatest extent possible, we intent to structure our compensation program in a tax efficient manner.

Risk Management

The Compensation Committee believes that any risks arising from our compensation policies and practices for all of our employees, including our Named Executive Officers, are not reasonably likely to have a material adverse effect on BSB Bancorp, Inc. or Belmont Savings Bank. In addition, the Compensation Committee believes that the mix and design of the elements of our compensation program will encourage our senior management to act in a manner that is focused on the long-term valuation of BSB Bancorp, Inc. and Belmont Savings Bank.

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The Compensation Committee regularly reviews our incentive-based plans to ensure that controls are in place so that our employees are not presented with opportunities to take unnecessary and excessive risks that could threaten the value of BSB Bancorp, Inc. and Belmont Savings Bank. With respect to the Incentive Compensation Plan, the Compensation Committee reviews and approves both the company-wide and individual performance objectives that determine the bonus payments to be made thereunder. The performance objectives selected are customary performance metrics for financial institutions in our peer group. In addition, we instituted a clawback policy for our Incentive Compensation Plan, which allows us to recover any bonus payment made to any employee that was based on materially inaccurate financial statements or other materially inaccurate reporting or fraud. With respect to the Capital Appreciation Plan, all payouts thereunder will only occur if we are well-capitalized at the time of the payout on June 30, 2014. Furthermore, any payments payable under the plan are subject to an 18-month holdback period, which will ensure that the payments are determined based on accurate financial information related to our capital position.

Finally, by implementing our employee stock ownership plan and stock-based incentive plan following the completion of the conversion, we will put more of our common stock into the hands of our employees which will align their interests with those of our shareholders, and in turn will contribute to long-term shareholder value and decrease the likelihood that they would take excessive risks that could threaten the value of their common stock received under each plan.

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Executive Compensation

Summary Compensation Table. The table below summarizes the total compensation paid to, or earned by, Robert M. Mahoney, our President and Chief Executive Officer, W. Ronald Rossi, our former President and Chief Executive Officer who retired on May 13, 2010, John A. Citrano, our Senior Vice President, Chief Financial Officer and Corporate Secretary, Hal R. Tovin, our Executive Vice President and Chief Operating Officer, Christopher Y. Downs, our Executive Vice President—Consumer Lending and Auto Finance and Carroll M. Lowenstein, Jr., our Senior Vice President—Commercial Real Estate for the year ended December 31, 2010. We refer to these individuals as “Named Executive Officers.”


Summary Compensation Table for the Year Ended December 31, 2010
Name and Principal Position	Year		Salary ⁽¹⁾ ($)		Bonus ⁽²⁾ ($)		Non-Equity Incentive Plan Compensation ($)		Change in Pension Value and Nonqualified Deferred Compensation Earnings ⁽³⁾ ($)		All Other Compensation ⁽⁴⁾ ($)		Total ($)
Robert M. Mahoney ⁽⁵⁾ President and Chief Executive Officer		2010		290,769		85,000				28,336		10,384		414,489

W. Ronald Rossi ⁽⁶⁾ Former President and Chief Executive Officer		2010		115,092		—		—		—		12,234		127,326

John A. Citrano Senior Vice President, Chief Financial Officer and Corporate Secretary		2010		179,380		30,000				66,464		18,276		294,120

Hal R. Tovin ⁽⁷⁾ Executive Vice President and Chief Operating Officer		2010		169,615		40,000				8,532		4,038		222,185

Christopher Y. Downs ⁽⁸⁾ Executive Vice President— Consumer Lending and Auto Finance		2010		132,969		80,000				6,094		3,092		222,155

Carroll M. Lowenstein, Jr. ⁽⁹⁾ Senior Vice President— Commercial Real Estate		2010		65,384		50,000		—		—		—		115,384

(1)	2010 salary information includes salary deferral contributions to the Belmont Savings Bank 401(k) Plan of $21,634 for Mr. Mahoney, $8,157 for Mr. Rossi, $10,329 for Mr. Citrano, $2,692 for Mr. Tovin and $2,473 for Mr. Downs.

(2)	Represents discretionary bonus payments awarded to the Named Executive Officers.

(3)

The amounts for Messrs. Mahoney, Tovin and Downs represent the change in the actuarial present value of each executive’s accumulated benefit under the Belmont Savings Bank Supplemental Executive Retirement Plan. The amount for Mr. Citrano represents the change in the actuarial present value of his accumulated benefit payable pursuant to his restated supplemental retirement agreement with Belmont Savings Bank.

(4)	The amounts reflect what we have paid for, or reimbursed, the applicable Named Executive Officer for various benefits and perquisites which we provide. A break-down of the various elements of compensation in this column is set forth in the table immediately following.

(5)	Mr. Mahoney joined Belmont Savings Bank on May 13, 2010.

(6)	Mr. Rossi retired as President and Chief Executive Officer on May 13, 2010.

(7)	Mr. Tovin joined Belmont Savings Bank on July 6, 2010.

(8)	Mr. Downs joined Belmont Savings Bank on July 7, 2010 and received a $50,000 signing bonus and a $30,000 discretionary bonus.

(9)	Mr. Lowenstein joined Belmont Savings Bank on September 7, 2010 and received a $50,000 signing bonus.

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All Other Compensation
Name	Year	Perquisites ⁽¹⁾ ($)		Employer Contributions to 401(k) Plan ($)		Life Insurance ⁽²⁾ ($)		Split Dollar Life Insurance ⁽³⁾ ($)		Total ($)
Robert M. Mahoney	2010		—		10,384		—		—		10,384
W. Ronald Rossi	2010		—		12,234		—		—		12,234
John A. Citrano	2010		—		15,493		360		2,423		18,276
Hal R. Tovin	2010		—		4,038		—		—		4,038
Christopher Y. Downs	2010		—		3,092		—		—		3,092
Carroll M. Lowenstein, Jr.	2010		—		—		—		—		—

(1)	For the year ended December 31, 2010, no Named Executive Officer received perquisites or personal benefits which exceeded $10,000.

(2)	Represents cost to Belmont Savings Bank for its life insurance plan.

(3)	This amount represents Mr. Citrano’s imputed income related to split dollar life insurance that is used as an investment vehicle in connection with his restated supplemental retirement agreement with Belmont Savings Bank.

Severance Agreements

Belmont Savings Bank has entered into severance agreements with Messrs. Mahoney, Citrano, Tovin, Downs and Lowenstein.

Each executive will be entitled to severance payments and benefits in the event of his termination of employment under specified circumstances, including (i) involuntary termination of employment for reasons other than cause or (ii) voluntary termination for good reason. “Good Reason” is defined as (A) a material diminution in the executive’s base salary; (B) a material diminution in the executive’s authority, duties or responsibilities; (C) a material diminution in the authority, duties or responsibilities of the position to which the executive is to report; (D) a material diminution in the budget over which the executive retains authority; (E) a material change in the geographic location at which the executive must perform his duties; or (F) a material breach of the severance agreement by Belmont Savings Bank. In the event of the executive’s termination of employment as a result of any of these circumstances, the executive will be entitled to receive a severance payment equal to the sum of: (i) the executive’s average annual base salary rate for the 12-month period ending on the date of termination, and (ii) the average annual bonus awarded to the executive during the prior two years, provided, however, that if such sum is less than the executive’s salary and bonus reported by Belmont Savings Bank in Box 1 of the IRS Form W-2 for the tax year immediately preceding the executive’s date of termination, then the severance payment will equal the executive’s salary and bonus reported in Box 1 of the IRS Form W-2. The severance payment is payable within 90 days following the executive’s date of termination and will be distributed for 12 months in accordance with Belmont Savings Bank’s payroll practice, provided that any undistributed balance on the first anniversary date of the executive’s date of termination will be distributed in a lump sum. Each executive will also be entitled to continued health coverage for 12 months following his termination date. Each severance agreement provides that the executive will be subject to a non-competition and non-solicitation covenant for 12 months following his date of termination.

In the event of a change in control (as defined in the agreements) followed by the executive’s involuntary termination or termination for good reason, the severance agreement will provide a benefit equal to three times the executive’s base salary and highest rate of bonus paid in the prior three years (in the case of Messrs. Mahoney, Tovin and Downs) or two times the executive’s base salary and highest rate of bonus paid during the prior three years (in the case of Messrs. Citrano and Lowenstein). In addition, the executive would be entitled to continued non-taxable health care and life insurance coverage at the

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expense of Belmont Savings Bank (or its acquirer) for three years (in the case of Messrs. Mahoney, Tovin and Downs) or two years (in the case of Messrs. Citrano and Lowenstein). In the event of an executive’s termination following a change in control, the noncompetition and non-solicitation provisions of the severance agreements will be inapplicable.

Incentive Compensation Arrangements


Grants of Plan-Based Awards for the Fiscal Year Ended 2010
Name	Grant date	Estimated future payouts under non-equity incentive plan awards
Name	Grant date	Target ($) ⁽¹⁾		Maximum ($) ⁽¹⁾
Robert M. Mahoney	5/13/2010		112,500		225,000
John A. Citrano	1/1/2010		26,907		53,814
Hal R. Tovin	7/6/2010		70,000		140,000
Christopher Y. Downs	7/7/2010		50,000		100,000

(1)	Represents target and maximum payments achievable under the Incentive Compensation Plan, based upon financial targets to be achieved during the year ended December 31, 2010.

Incentive Compensation Plan . Belmont Savings Bank sponsors the Incentive Compensation Plan, which was fully adopted in 2011, in order to recognize and reward a select group of executive officers for performance and the achievement of specific measurable annual objectives. The Compensation Committee and the President and Chief Executive Officer have the authority to select the employees who will be eligible to participate in the plan. Prior to each plan year, the Compensation Committee establishes objectives on a company-wide and individual basis. Company-wide performance objectives focus on the following performance metrics: (1) deposit growth; (2) loan growth; (3) return on assets; (4) expense control; (5) credit quality and portfolio management; (6) fee income and (7) net interest margin. Individually-based performance objectives are determined based on the participant’s personal goals related to his or her major projects and initiatives. Each performance objective is assigned a percentage weight to reflect its relative importance and the participant’s direct impact in meeting the performance objective. For the President and Chief Executive Officer and Executive Vice Presidents, company-wide performance objectives are weighted at 75% and individual performance objectives are weighted at 25%. For Senior Vice Presidents, company-wide performance objectives are weighted at 50% and individual performance objectives are weighted at 50%. For all other officers, company-wide performance objectives are weighted at 25% and individual performance objectives are weighted at 75%. Each participant is entitled to an incentive bonus payment based on a predetermined percentage of his or her annual base salary if the company-wide and individual performance objectives are met at the end of each plan year. Levels of achievement for each performance objective are set at “target” and “maximum,” such that the participant’s incentive bonus payment amount is determined by the level of achievement of each performance objective related to the participant.

Although the Incentive Compensation Plan was not fully implemented until 2011, Messrs. Mahoney, Citrano, Tovin and Downs were awarded discretionary bonuses of $85,000, $30,000, $40,000 and $30,000, respectively, in 2010 because Belmont Savings Bank achieved its target goal of $1.6 million in after-tax income and each executive generally achieved his individual goals. Mr. Lowenstein, who was hired in September, 2010, did not receive a discretionary bonus. Messrs. Downs and Lowenstein each received $50,000 signing bonuses during 2010.

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Capital Appreciation Plan . In 2010 Belmont Savings Bank adopted the Capital Appreciation Plan that is designed to reward certain executive officers for any increase in the equity capital resulting from the ordinary business of Belmont Savings Bank from September 30, 2010 through December 31, 2012 (“capital appreciation”). Certain extraordinary items, such as the capital raised in the offering, are excluded from consideration. Messrs. Mahoney, Tovin and Downs are the only executive officers eligible to participate in the plan. If there is any capital appreciation as of December 31, 2012, we will establish a pool equal to 20% of the capital appreciation. The bonus pool will increase by a dollar amount equal to 4% of the capital appreciation if Belmont Savings Bank’s return on assets (“ROA”) equals or exceeds the ROA targets established by the Compensation Committee for 2011 and 2012. Each participant in the plan is entitled to receive a fixed percentage of the bonus pool, which will be payable on June 30, 2014 provided the participant is employed with Belmont Savings Bank on such date. If the participant is terminated by Belmont Savings Bank without cause or dies prior to June 30, 2014, the participant will be deemed to have been employed on June 30, 2014. If the participant terminates employment for any other reason prior to June 30, 2014, the participant will forfeit the right to receive any payment under the plan.

Pension Benefits

The following table sets forth information with respect to pension benefits at and for the year ended December 31, 2010 for the Named Executive Officers.


Pension Benefits at and for the Fiscal Year Ended 2010
Name	Plan name	Number of years credited service (#)		Present value of accumulated benefit ($)		Payments during last fiscal year ($)
Robert M. Mahoney	Supplemental Executive Retirement Plan		—		28,336		—
W. Ronald Rossi	Restated Supplemental Retirement Agreement		40		—		2,178,715	⁽¹⁾
John A. Citrano	Restated Supplemental Retirement Agreement		16		762,927		—
Hal R. Tovin	Supplemental Executive Retirement Plan		—		8,532		—
Christopher Y. Downs	Supplemental Executive Retirement Plan		—		6,094		—

(1)	The amount for Mr. Rossi represents the present value of his supplemental retirement benefit at the date of his retirement on May 13, 2011, a portion of which was paid in-kind in the form of life insurance.

Supplemental Executive Retirement Plan . Effective October 1, 2010, Belmont Savings Bank adopted the Supplemental Executive Retirement Plan for a select group of management and highly compensated employees, as designated by the Board of Directors. Messrs. Mahoney, Tovin and Downs currently participate in the plan. Under the plan, each participant is entitled to an annual benefit that will be paid to the participant for 10 years, with the first payment to occur within 60 days following the later of: (i) the participant’s separation from service; or (ii) the date on which the participant attains age 62. The annual benefit is equal to the participant’s “final average compensation” multiplied by his “benefit percentage,” determined as of his date of termination. Final average compensation is defined as the participant’s average annual gross salary paid during the three consecutive calendar year period during which the participant’s base salary was at its highest during the final 60 month period of the participant’s employment with Belmont Savings Bank. Mr. Mahoney’s benefit percentage will be 20% if he has five or more years of service as of his termination date and will be 0% if he has less than five years of service as of his termination date. If Mr. Mahoney’s separation from service is involuntary or due to a

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constructive termination, the benefit percentage of 20% will be reduced by 4% for each year of service less than four. Messrs. Tovin’s and Downs’ benefit percentages will be 20% if they have 10 or more years of service on their termination date; (ii) 10% if they have five to nine years of service on their termination date; or (iii) 0% if they have less than five years of service on their termination date. If Messrs. Tovin’s and Downs’ separation from service is involuntary or due to a constructive termination, the benefit percentage of 20% will be reduced by 2% for each year of service that is less than nine. No benefits will be payable under the plan if the participant’s benefit percentage is less than 10%.

Restated Supplemental Retirement Agreement with Mr. Citrano. On December 23, 2008, Mr. Citrano and Belmont Savings Bank entered into a restated supplemental retirement agreement. This agreement supersedes the prior supplemental retirement agreement between the parties dated December 1, 1994. Pursuant to the agreement, the parties agreed to use bank-owned life insurance (“BOLI”) policies on the life of Mr. Citrano as investment vehicles to provide him with a supplemental retirement benefit and life insurance protection for his family. Under the agreement, Mr. Citrano is entitled to a supplemental retirement benefit in the event of his termination of employment at or after attaining age 55 and completing 10 or more years of service with Belmont Savings Bank. The supplemental retirement benefit is equal to (i) the actuarial present value of Mr. Citrano’s “average annual compensation” multiplied by the “applicable percentage” that would be payable for 20 years following his date of termination, minus (ii) the aggregate cash surrender value of Mr. Citrano’s BOLI that is required to be legally transferred to him following his termination date. The supplemental retirement benefit will be payable within 60 days following his termination date. “Average annual compensation” is determined based on Mr. Citrano’s highest three consecutive years of compensation earned prior to his termination date. The “applicable percentage” will be determined based on Mr. Citrano’s retirement age with the maximum percentage to be 51%, provided that his retirement age is 65. The applicable percentage of 51% will be reduced by a fixed percentage that correlates with Mr. Citrano’s retirement age if it is less than 65.

If Mr. Citrano voluntarily resigns prior to attaining age 55 and completing 10 years of service, he will be entitled to a lump sum payment equal to the cash surrender value of his BOLI minus the aggregate amount of policy premiums paid on the BOLI by Belmont Savings Bank If Mr. Citrano’s termination of employment is involuntary or due to a constructive termination, he will be entitled to a lump sum payment equal to the cash surrender value of his BOLI plus a gross-up payment to cover the federal and state taxes associated with the lump sum payment, provided, however, that the taxable income used to calculate the gross-up payment will not exceed the amount of premiums paid on the BOLI by Belmont Savings Bank. If Mr. Citrano’s termination is due to disability, he will be entitled to receive the supplemental retirement benefit calculated as if he had attained age 55 and completed 10 years of service. In calculating the supplemental retirement benefit, Mr. Citrano’s average annual compensation will be increased by 6% per year, beginning from the year in which Mr. Citrano became disabled and ending the year in which he would have attained age 55.

In the event of Mr. Citrano’s death while employed with Belmont Savings Bank, his beneficiary will be entitled to receive a lump sum payment equal to the total death proceeds of the BOLI minus the greater of: (i) the premiums paid on the BOLI by Belmont Savings Bank or (ii) the cash surrender value of the BOLI.

Restated Supplemental Retirement Agreement with Mr. Rossi . On December 23, 2008, Mr. Rossi and Belmont Savings Bank entered into a restated supplemental retirement agreement. This agreement supersedes the prior supplemental retirement agreement between the parties dated December 1, 1994. Pursuant to the agreement, the parties agreed to use BOLI policies on the life of Mr. Rossi as investment vehicles to provide him with a supplemental retirement benefit and life insurance protection for his family. The terms of the restated supplemental retirement agreement were substantially similar to the terms of Mr. Citrano’s supplemental retirement agreement. As a result of Mr. Rossi retirement at age

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62 with 10 years of service with Belmont Savings Bank, he received a payment of $2,178,715, subject to applicable withholding, which represented the actuarial present value of 48% of his average annual compensation payable for 20 years following his retirement date. The after-tax payment consisted of a lump cash payment from Belmont Savings Bank equal to $173,732, and the aggregate cash surrender value of the transferred BOLI policies equal to $1,117,157.

Tax-Qualified Benefit Plans

401(k) Plan. Belmont Savings Bank maintains the Belmont Savings Bank 401(k) Plan, a tax-qualified defined contribution retirement plan, for all employees who have satisfied the 401(k) Plan’s eligibility requirements. All eligible employees can begin participation in the 401(k) Plan on the first day of the month that coincides with or next follows the date the employee attains age 21 and completes three months of service. A participant may contribute up to 75% of his or her compensation to the 401(k) Plan on a pre-tax basis, subject to the limitations imposed by the Internal Revenue Code. For 2010 and 2011, the salary deferral contribution limit is $16,500, provided, however, that a participant over age 50 may contribute an additional $5,500 to the 401(k) Plan. A participant is always 100% vested in his or her salary deferral contributions. In addition to salary deferral contributions, the 401(k) Plan provides that Belmont Savings Bank will make matching contributions on 100% of the first 2% of a participant’s salary and 50% of the next 3% of a participant’s salary that is contributed to the 401(k) Plan. Belmont Savings Bank will also provide a safe harbor matching contribution of 4% of the participant’s salary for the plan year. A participant will be 100% vested in his or her employer matching contributions. Generally, unless a participant elects otherwise, the participant’s benefit under the 401(k) Plan will be payable in the form of a lump sum payment within 60 days after his or her termination of employment with Belmont Savings Bank.

Each participant has an individual account under the 401(k) Plan and may direct the investment of his or her account among a variety of investment options or vehicles available.

Employee Stock Ownership Plan. Effective January 1, 2011, Belmont Savings Bank adopted an employee stock ownership plan for eligible employees. Eligible employees who have attained age 21 and were employed by us as of January 1, 2011 will begin participation in the employee stock ownership plan on the later of the effective date of the employee stock ownership plan or upon the first entry date commencing on or after the eligible employee’s completion of 1,000 hours of service during a continuous 12-month period.

The employee stock ownership plan trustee is expected to purchase, on behalf of the employee stock ownership plan, 5% of the total number of shares of BSB Bancorp, Inc. common stock issued in the offering. We anticipate that the employee stock ownership plan will fund its stock purchase with a loan from BSB Bancorp, Inc. equal to the aggregate purchase price of the common stock. The loan will be repaid principally through Belmont Savings Bank’s contribution to the employee stock ownership plan and dividends payable on common stock held by the employee stock ownership plan over the anticipated 30-year term of the loan. The interest rate for the employee stock ownership plan loan is expected to be an adjustable-rate equal to the prime rate, as published in The Wall Street Journal , on the closing date of the offering. Thereafter the interest rate will adjust annually and will be the prime rate on the first business day of the calendar year, retroactive to January 1 of such year. See “Pro Forma Data.”

The trustee will hold the shares purchased by the employee stock ownership plan in an unallocated suspense account. Shares will be released from the suspense account on a pro-rata basis as the employee stock ownership plan repays the loan. The trustee will allocate the shares released among participants on the basis of each participant’s proportional share of compensation relative to all participants. Participants will vest in their benefit at a rate of 20% per year, beginning after the

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completion of their first year of service, such that the participants will be 100% vested upon completion of five years of credited service. Participants who were employed by Belmont Savings Bank immediately prior to the offering will receive credit for vesting purposes for years of service prior to adoption of the employee stock ownership plan. Participants also will become fully vested upon normal retirement, death or disability, a change in control, or termination of the employee stock ownership plan. Generally, participants will receive distributions from the employee stock ownership plan upon severance from employment. The employee stock ownership plan reallocates any unvested shares forfeited upon termination of employment among the remaining participants.

The employee stock ownership plan permits participants to direct the trustee as to how to vote the shares of common stock allocated to their accounts. The trustee votes unallocated shares and allocated shares for which participants do not provide instructions on any matter in the same ratio as those shares for which participants provide instructions, subject to fulfillment of the trustee’s fiduciary responsibilities.

Under applicable accounting requirements, Belmont Savings Bank will record a compensation expense for the employee stock ownership plan at the fair market value of the shares as they are committed to be released from the unallocated suspense account to participants’ accounts. The compensation expense resulting from the release of the common stock from the suspense account and allocation to plan participants will result in a corresponding reduction in BSB Bancorp, Inc.’s earnings.

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Potential Payments Upon Termination or Change in Control

The following table sets forth estimates of the amounts that would be payable to the Named Executive Officers upon his voluntary resignation, retirement, involuntary termination or resignation for “good reason,” termination following a change in control, death or disability, if such termination were effective as of January 1, 2011. The table assumes that the provisions of the severance agreements for Messrs. Mahoney, Citrano, Tovin, Downs and Lowenstein that were entered into 2011 were in effect at January 1, 2011. The table does not include vested or accrued benefits under tax-qualified benefit plans that are disclosed elsewhere in the prospectus. The actual amounts to be paid upon any future termination can only be determined at the time of such actual separation.


	Voluntary Resignation ($)			Normal Retirement ($)			Involuntary or Constructive Termination ($)			Involuntary or Constructive Termination after Change in Control ($)			Voluntary Resignation after a Change in Control ($)			Disability ($)			Death ($)
Robert M. Mahoney
Severance Agreement		—			—			549,989	⁽¹⁾		1,649,967	⁽²⁾		—			—			—
Supplemental Executive Retirement Plan (3)		—			—			—			—			—			—			—

John A. Citrano
Severance Agreement		—			—			224,369	⁽¹⁾		448,738	⁽²⁾		—			—			—
Restated Supplemental Retirement Agreement		301,712	⁽⁴⁾		—	⁽⁵⁾		1,294,680	⁽⁶⁾		1,294,680	⁽⁷⁾		301,712	⁽⁸⁾		1,388,702	⁽⁹⁾		1,311,891	⁽¹⁰⁾

Hal R. Tovin
Severance Agreement		—			—			404,989	⁽¹⁾		1,214,967	⁽²⁾		—			—			—
Supplemental Executive Retirement Plan (3)		—			—			—			—			—			—			—

Christopher Y. Downs
Severance Agreement		—			—			312,989	⁽¹⁾		938,967	⁽²⁾		—			—			—
Supplemental Executive Retirement Plan (3)		—			—			—			—			—			—			—

Carroll M. Lowenstein, Jr.
Severance Agreement (1)		—			—			255,250	⁽¹⁾		606,500	⁽²⁾		—			—			—

(1)	Reflects cash severance and the employer cost of continued medical and dental insurance for 12 months following the Named Executive Officer’s date of termination.

(2)	Reflects the cash severance and the employer cost of continued medical and dental insurance for 36 months (for Messrs. Mahoney, Tovin and Downs) or for 24 months (for Messrs. Citrano and Lowenstein) following the Named Executive Officer’s date of termination.

(3)	No benefits are payable under the Supplemental Executive Retirement Plan since the benefit percentage for Messrs. Mahoney, Tovin and Downs is less than 10% as of January 1, 2011.

(4)	Reflects the cash surrender value of Mr. Citrano’s BOLI policies minus the aggregate premiums paid on the BOLI policies by Belmont Savings Bank.

(5)	No retirement benefit is payable under the agreement since Mr. Citrano has not attained age 55 as of January 1, 2011.

(6)

Reflects the cash surrender value of Mr. Citrano’s BOLI policies equal to $888,109, plus a tax gross-up payment equal to $406,571. The taxable income used to calculate the tax gross-up payment cannot exceed the aggregate amount of premiums paid on the BOLI policies by Belmont Savings Bank, which is equal to $586,397 as of January 1, 2011.

(7)	Reflects the same benefit that is payable as a result of Mr. Citrano’s involuntary or constructive termination. There is no enhancement to Mr. Citrano’s benefit as a result of a change in control.

(8)	Reflects the same benefit that is payable as a result of Mr. Citrano’s voluntary resignation. There is no enhancement to Mr. Citrano’s benefit as a result of a change in control.

(9)	Reflects a lump sum cash payment equal to $500,593, plus the aggregate cash surrender value of Mr. Citrano’s transferred BOLI policies equal to $888,109.

(10)	Represents the aggregate face value of Mr. Citrano’s BOLI policies minus their aggregate cash surrender value.

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Director Compensation

Set forth below is a summary of the compensation for each of our non-employee directors for the year ended December 31, 2010. Director compensation paid to directors who are also Named Executive Officers is reflected above in “Executive Compensation – Summary Compensation Table.”


Director Compensation
Name	Fees Earned or Paid in Cash ⁽¹⁾ ($)		Change in Pension Value and Nonqualified Deferred Compensation Earnings ⁽ ²⁾ ($)		All Other Compensation ⁽³⁾ ($)		Total ($)
Robert Morrissey		68,700		5,994		—		74,694
John A. Borelli		16,300		—		—		16,300
S. Warren Farrell		59,500		—		—		59,500
Richard J. Fougere		25,500		—		—		25,500
John W. Gahan, III		19,500		—		—		19,500
John A. Greene		25,100		—		—		25,100
Patricia W. Hawkins		22,200		—		—		22,200
Robert D. Ward		13,900		—		—		13,900
John A. Whittemore		59,500		—		—		59,500

(1)	See table below for breakdown of fees earned in 2010.

(2)	The amount for Mr. Morrissey represents the change in the actuarial present value of his accumulated benefit under the Deferred Compensation Plan for Members of the Board of Investment.

(3)	No director perquisites or benefits exceeded $10,000.

Director Fees

All non-employee fees are paid an annual retainer and receive fees per board and committee meetings attended in 2010. The table below identifies the meetings, by type, for which each non-employee director received compensation from Belmont Savings Bank during the year ended December 31, 2010.


Name	Annual Retainer ($)		Board Meetings ($)		Executive Committee Meetings ($)		Audit Committee Meetings ($)		Compensation Committee Meetings ($)		Nominating Committee Meetings ($)		Other Committee Meetings ⁽¹⁾ ($)
Robert Morrissey		25,500		6,400		22,400		—		2,400		2,400		9,600
John A. Borelli		7,500		6,400		—		—		2,400		—		—
S. Warren Farrell		19,500		6,400		21,600		—		2,400		—		9,600
Richard J. Fougere		13,500		6,400		—		5,600		—		—		—
John W. Gahan, III		7,500		6,400		—		5,600		—		—		—
John A. Greene		7,500		6,400		—		5,600		2,400		—		3,200
Patricia W. Hawkins		15,000		5,600		—		—		—		1,600		—
Robert D. Ward		7,500		6,400		—		—		—		—		—
John A. Whittemore		19,500		6,400		22,400		—		—		2,400		8,800

(1)	Fees payable as a result of meetings of the 401(k) Plan Committee, Investment Committee, Community Reinvestment, and New Chief Executive Officer Search Committee.

Director Plans

Capital Appreciation Plan . In 2010 Belmont Savings Bank adopted the Capital Appreciation Plan that is designed to reward the Board of Directors for any increase in the equity capital of Belmont Savings Bank resulting from the ordinary business of Belmont Savings Bank from September 30, 2010 through December 31, 2012 (“capital appreciation”). Certain extraordinary items, such as the capital raise in the offering, are excluded from consideration. Each member of the Board of Directors is eligible to participate in the plan. If there is any capital appreciation as of December 31, 2012, we will establish a bonus pool equal to 5% of the capital appreciation. The bonus pool will increase by a dollar amount equal to 1% of the capital appreciation if Belmont Savings Bank’s return on assets (“ROA”) equals or exceeds the ROA targets established by the Compensation Committee for 2011 and 2012. Each participant is entitled to receive a fixed percentage of the pool, which will be payable on June 30, 2014. However, if the participant is not serving as a member of the Board of Directors on June 30, 2014 for any reason other than death, the participant will forfeit the right to receive any payments under the plan.

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Deferred Compensation Plan for Members of the Board of Investment . Effective January 1, 2005, Belmont Savings Bank adopted the Deferred Compensation Plan for Members of the Board of Investment. Mr. Morrissey is the only participant in the plan. Upon Mr. Morrissey’s separation from service on the Board for any reason other than death, Mr. Morrissey will be entitled to an annual benefit equal to 41% of his average compensation utilizing the three highest years of compensation paid to Mr. Morrissey. The annual benefit will be paid in quarterly installments for a period equal to Mr. Morrissey’s completed years of service as a member of the Board. In the event of Mr. Morrissey’s death, his beneficiary will receive a lump sum payment equal to the present value of the benefits that would have been paid to Mr. Morrissey under the plan if he had retired on his date of death.

Deferred Compensation Agreements . Belmont Savings Bank entered into deferred compensation agreements with Mr. Morrissey, Mr. Borelli, Mr. Farrell, Mr. Gathan and Ms. Hawkins. Each agreement allows for the director to elect to defer a portion of his or her director fees to an individual deferred compensation account established by Belmont Savings Bank, provided however that the minimum amount of deferrals elected for any plan year is $5,000. Each director’s deferred compensation account balance will be credited with earnings on a monthly basis based on the five year certificate of deposit yield as published by the Wall Street Journal . Each director is always 100% vested in his or her deferred compensation account balance.

The deferred compensation account balance will be payable to the director (or to the director’s beneficiary in the event of death) in monthly installments for 60 months following the director’s date of termination from the Board. Each director will continue to accrue earnings on his or her deferred compensation account balance until it is paid in full.

Benefits to be Considered Following Completion of the Stock Offering

Following the conversion, BSB Bancorp, Inc. intends to adopt a new stock-based incentive plan that will provide for grants of stock options and restricted common stock awards. Applicable regulations require that if we were to adopt such a plan within one year after the conversion, the amount of stock options and a number of shares of restricted stock, may not exceed 10% and 4%, respectively, of the shares issued in the offering, including shares contributed to the charitable foundation. These 10% and 4% limitations will not apply if the plan is implemented more than one year after the conversion.

The stock-based incentive plan will not be established sooner than six months after the conversion. If the stock-based incentive plan were adopted within one year after the conversion, it would require approval by stockholders owning a majority of the outstanding shares of BSB Bancorp, Inc. common stock eligible to be cast. If the plan were established more than one year after the conversion, it would require the approval of a majority of the votes cast by our stockholders.

The following additional restrictions would apply to our stock-based incentive plan only if the plan is adopted within one year after the conversion:

•

non-employee directors in the aggregate may not receive more than 30% of the options and restricted stock awards authorized under the plan;

•

any non-employee director may not receive more than 5% of the options and restricted stock awards authorized under the plan;

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•

any officer or employee may not receive more than 25% of the options and restricted stock awards authorized under the plan;

•

the options and restricted stock awards may not vest more rapidly than 20% per year, beginning on the first anniversary of stockholder approval of the plan; and

•

accelerated vesting is not permitted except for death, disability or upon a change in control of Belmont Savings Bank or BSB Bancorp, Inc.

These restrictions do not apply to plans adopted after one year following the completion of the conversion.

We have not yet determined whether we will present the stock-based incentive plan for stockholder approval within one year following the completion of the conversion or whether we will present this plan for stockholder approval more than one year after the completion of the conversion. In the event of changes in applicable regulations or policies regarding stock-based incentive plans, including any regulations or policies restricting the size of awards and vesting of benefits as described above, the restrictions described above may not be applicable.

We may obtain the shares needed for our stock-based benefit plans by issuing additional shares of common stock from authorized but unissued shares or through stock repurchases.

The actual value of restricted stock grants will be determined based on their fair value (the closing market price of shares of common stock of BSB Bancorp, Inc.) as of the date grants are made. The following table presents the total value of all shares to be available for awards of restricted stock under the stock-based benefit plan, assuming the shares for the plan are purchased or issued in a range of market prices from $8.00 per share to $14.00 per share at the time of the grant.


Share Price	235,824 Shares Awarded at Minimum of Offering Range		277,440 Shares Awarded at Midpoint of Offering Range		319,056 Shares Awarded at Maximum of Offering Range		366,914 Shares Awarded at Maximum of Offering Range, As Adjusted
(In thousands, except share price information)
$ 8.00	$	1,887	$	2,220	$	2,552	$	2,935
10.00		2,358		2,774		3,191		3,669
12.00		2,830		3,329		3,829		4,403
14.00		3,302		3,884		4,467		5,137

The grant-date fair value of the stock options granted under the stock-based benefit plans will be based, in part, on the closing price of shares of common stock of BSB Bancorp, Inc. on the date the options are granted. The fair value will also depend on the various assumptions utilized in the option-pricing model ultimately adopted. The following table presents the total estimated value of the stock options to be available for grant under the stock-based benefit plans, assuming the range of market prices for the shares are $8.00 per share to $14.00 per share at the time of the grant.


Exercise Price	Grant-Date Fair Value Per Option		589,560 Options at Minimum of Range		693,600 Options at Midpoint of Range		797,640 Options at Maximum of Range		917,286 Options at Maximum of Range, As Adjusted
(In thousands, except exercise price and fair value information)
$ 8.00	$	2.86	$	1,686	$	1,984	$	2,281	$	2,623
10.00		3.58		2,111		2,483		2,856		3,284
12.00		4.30		2,535		2,982		3,430		3,944
14.00		5.01		2,954		3,475		3,996		4,596

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The tables presented above are provided for informational purposes only. There can be no assurance that our stock price will not trade below $10.00 per share. Before you make an investment decision, we urge you to carefully read this prospectus, including, but not limited to, the section entitled “Risk Factors” beginning on page 15.

Compensation Committee Interlocks and Insider Participation

Our Compensation Committee determines the salaries to be paid each year to the President and Chief Executive Officer and those executive officers who report directly to the President and Chief Executive Officer. The Compensation Committee consists of Directors Borelli, Farrell, Greene, Morrissey and Whittemore. None of these individuals was an officer or employee of BSB Bancorp, Inc. or Belmont Savings Bank during the year ended December 31, 2010, or is a former officer of BSB Bancorp, Inc. or Belmont Savings Bank.

During the year ended December 31, 2010, (i) no executive officer of Belmont Savings Bank (BSB Bancorp, Inc. was not yet incorporated at that date) served as a member of the compensation committee (or other board committee performing equivalent functions or, in the absence of any such committee, the entire board of directors) of another entity, one of whose executive officers served on the Compensation Committee of Belmont Savings Bank; (ii) no executive officer of Belmont Savings Bank served as a director of another entity, one of whose executive officers served on the Compensation Committee of Belmont Savings Bank; and (iii) no executive officer of Belmont Savings Bank served as a member of the compensation committee (or other board committee performing equivalent functions or, in the absence of any such committee, the entire board of directors) of another entity, one of whose executive officers served as a director of Belmont Savings Bank.

Transactions with Certain Related Persons

The Sarbanes-Oxley Act of 2002 generally prohibits us from making loans to our executive officers and directors, but it contains a specific exemption from such prohibition for loans made by Belmont Savings Bank to our executive officers and directors in compliance with federal banking regulations.

At March 31, 2011, all of our loans to directors and executive officers were made in the ordinary course of business, were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to Belmont Savings Bank, and did not involve more than the normal risk of collectability or present other unfavorable features. These loans were performing according to their original terms at March 31, 2011, and were made in compliance with federal banking regulations.

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SUBSCRIPTIONS BY DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth information regarding intended common stock subscriptions by each of the directors and executive officers of Belmont Savings Bank and their associates, and by all directors and executive officers as a group. However, there can be no assurance that any individual director or executive officer, or the directors and executive officers as a group, will purchase any specific number of shares of our common stock. In the event the individual maximum purchase limitation is increased, persons subscribing for the maximum amount may increase their purchase order. Directors and executive officers will purchase shares of common stock at the same $10.00 purchase price per share and on the same terms as other purchasers in the offering. This table excludes shares of common stock to be purchased by the employee stock ownership plan, as well as any stock awards or stock option grants that may be made no earlier than six months after the completion of the offering. The directors and executive officers have indicated their intention to subscribe in the offering for an aggregate of shares ($ ) of common stock, equal to % of the number of shares of common stock to be sold in the offering at the minimum of the offering range, assuming shares are available. Purchases by directors, executive officers and their associates will be included in determining whether the required minimum number of shares has been subscribed for in the offering. The shares being acquired by the directors, executive officers and their associates are being acquired for investment purposes, and not with a view towards resale.

Name and Title

Number of
Shares

Aggregate
Purchase Price

Percent at
Minimum of
Offering Range

Robert M. Mahoney, President, Chief Executive Officer and Director

Hal R. Tovin, Executive Vice President, Chief Operating Officer and Director

John A. Borelli, Director

S. Warren Farrell, Director

Richard J. Fougere, Director

John W. Gahan, III, Director

John A. Greene, Director

Patricia W. Hawkins, Director

Robert J. Morrissey, Director

Robert D. Ward, Director

John A. Whittemore, Director

John A. Citrano, Senior Vice President, Chief Financial Officer and Corporate Secretary

Christopher Y. Downs, Executive Vice President—Consumer Lending and Auto Finance of Belmont Savings Bank

Carroll M. Lowenstein, Jr., Senior Vice President—Commercial Real Estate of Belmont Savings Bank

All directors and executive officers as a group (14 persons)

*	Less than 1%.

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THE CONVERSION; PLAN OF DISTRIBUTION

General

The Board of Trustees of BSB Bancorp, MHC adopted a plan of conversion on June 2, 2011. The plan of conversion has also been approved by the Boards of Directors of BSB Bancorp, Inc. and Belmont Savings Bank, respectively. The plan of conversion is subject to the approval of the corporators of BSB Bancorp, MHC, including a majority of the “independent” corporators. Pursuant to the plan of conversion, BSB Bancorp, MHC will convert from the mutual form of organization to the fully stock form and we will sell shares of common stock to the public in our offering. In the conversion, we will organize a new Maryland stock holding company named BSB Bancorp, Inc. Specifically, the conversion will be effected as follows: 1) BSB Bancorp – Massachusetts will establish BSB Bancorp, Inc. as a subsidiary; 2) BSB Bancorp, MHC will merge with and into BSB Bancorp – Massachusetts, with BSB Bancorp – Massachusetts being the surviving entity; and 3) BSB Bancorp – Massachusetts will merge with and into BSB Bancorp, Inc., with BSB Bancorp, Inc. being the surviving entity. BSB Bancorp, Inc. will contribute at least 50% of the net proceeds of the offering to Belmont Savings Bank in constructive exchange for additional shares of common stock of Belmont Savings Bank and in exchange for the liquidation account established by Belmont Savings Bank. In connection with the conversion and stock offering, we also intend to establish and fund a charitable foundation, Belmont Savings Bank Foundation. When the conversion is completed, all of the capital stock of Belmont Savings Bank will be owned by BSB Bancorp, Inc., and all of the common stock of BSB Bancorp, Inc. will be owned by public stockholders including our employee stock ownership plan and our new charitable foundation.

We intend to retain between $24.9 million and $34.1 million of the net proceeds of the offering, or $39.4 million if the offering range is increased by 15%, and to contribute the balance of the net proceeds to Belmont Savings Bank. The conversion will be consummated only upon the sale of at least 5,780,000 shares of our common stock offered (not including shares that we will contribute to our charitable foundation) pursuant to the plan of conversion.

The plan of conversion provides that we will offer shares of common stock for sale in the subscription offering to eligible account holders, our tax-qualified employee plans, including our employee stock ownership plan, and to employees, officers, directors, trustees and corporators of Belmont Savings Bank, BSB Bancorp – Massachusetts and BSB Bancorp, MHC who are not eligible account holders. If all shares are not subscribed for in the subscription offering, we may, in our discretion, offer common stock for sale in a community offering to members of the general public, with a preference given to natural persons residing in the towns of Arlington, Belmont, Lexington and Watertown, and the cities of Newton and Waltham, in Massachusetts.

We have the right to accept or reject, in whole or in part, any orders to purchase shares of the common stock received in the community offering. The community offering, if any, may begin at the same time as, during, or after the subscription offering, and must be completed within 45 days after the completion of the subscription offering unless otherwise extended by us with the approval of the Massachusetts Commissioner of Banks. See “—Community Offering.”

We determined the number of shares of common stock to be offered in the offering based upon an independent valuation of the estimated consolidated pro forma market value of BSB Bancorp, Inc. All shares of common stock to be sold in the offering will be sold at $10.00 per share. Investors will not be charged a commission to purchase shares of common stock. The independent valuation will be updated and the final number of the shares of common stock to be issued in the offering will be determined at the completion of the offering. See “—Determination of Share Price and Number of Shares to be Issued” for more information as to the determination of the estimated pro forma market value of the common stock.

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The following is a brief summary of the conversion. We recommend reading the plan of conversion in its entirety for more information. A copy of the plan of conversion is available for inspection at each branch office of Belmont Savings Bank. The plan of conversion is also filed as an exhibit to BSB Bancorp, MHC’s application to convert from mutual to stock form of which this prospectus is a part. BSB Bancorp, MHC’s application for conversion may be inspected, without charge, at the Massachusetts Division of Banks, 1000 Washington Street, 10th Floor, Boston, Massachusetts. The plan of conversion is also filed as an exhibit to the registration statement we have filed with the Securities and Exchange Commission, of which this prospectus is a part, copies of which may be inspected at the public reference facilities of the Securities and Exchange Commission. The registration statement is also available online at the Securities and Exchange Commission’s website. See “Where You Can Find Additional Information.”

Reasons for the Conversion

Our primary reasons for converting and raising additional capital through the offering are:

•

to support future growth and profitability through, among other things, branch expansion and increased lending;

•

to compete more effectively in the financial services marketplace by diversifying products and services that we offer to customers;

•

to retain and attract qualified directors, management and employees by establishing stock-based benefit plans;

•

to increase our philanthropic endeavors in the communities that we serve through the establishment and funding of a charitable foundation; and

•

to offer our depositors, employees, management, trustees, directors and corporators an opportunity to purchase our stock.

In the public stock holding company structure, we will have greater flexibility in structuring mergers and acquisitions. Our current structure prevents us from offering shares of our common stock as consideration for a merger or acquisition. Potential sellers often want stock for at least part of the acquisition consideration. Our new public holding company structure will enable us to offer stock or cash consideration, or a combination thereof, and will therefore enhance our ability to compete with other bidders when acquisition opportunities arise.

We have no current arrangements or agreements to acquire other banks, thrifts, credit unions, financial service companies or branch offices. However, we have considered, and will continue to consider potential acquisitions as opportunities arise.

We believe that the additional capital raised in the offering may enable us to take advantage of business opportunities that may not otherwise be available to us. We are not subject to a directive or a recommendation from the Massachusetts Commissioner of Banks to raise capital.

Approvals Required

The board of trustees of BSB Bancorp, MHC and the boards of directors of BSB Bancorp, Inc. and Belmont Savings Bank have approved the plan of conversion and the establishment and funding of the charitable foundation. The Federal Reserve Board has issued the approval required in connection with the conversion. We have filed an application with respect to the conversion with the Massachusetts Commissioner of Banks, and the Massachusetts Commissioner of Banks has issued its preliminary approval. The final approval of the Massachusetts

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Commissioner of Banks is required before we can consummate the conversion and issue shares of common stock. However, any approval by the Massachusetts Commissioner of Banks or the Federal Reserve Board does not constitute a recommendation or endorsement of the plan of conversion. The plan of conversion and the establishment and funding of the charitable foundation are also subject to the approval of the corporators of BSB Bancorp, MHC, including a majority of the “independent” corporators.

The Corporators

The board of corporators of BSB Bancorp, MHC will cease to exist upon consummation of the mutual-to-stock conversion of BSB Bancorp, MHC.

Effects of Conversion

Continuity . While the conversion is being accomplished, our normal business of accepting deposits and making loans will continue without interruption. We will continue to be subject to regulation by the Massachusetts Commissioner of Banks and the Federal Deposit Insurance Corporation. After the conversion, we will continue to offer existing services to depositors, borrowers and other customers. The directors serving Belmont Savings Bank and BSB Bancorp, MHC at the time of the conversion will be the directors of Belmont Savings Bank and of BSB Bancorp, Inc. after the conversion.

Effect on Deposit Accounts . Pursuant to the plan of conversion, each depositor of Belmont Savings Bank at the time of the conversion will automatically continue as a depositor after the conversion, and the deposit balance, interest rate and other terms of such deposit accounts will not change as a result of the conversion. Each such account will be insured by the Federal Deposit Insurance Corporation to the same extent as before the conversion, and each such account will continue to be insured in full for amounts in excess of Federal Deposit Insurance Corporation limits by the excess insurer of savings bank deposits, the Depositors Insurance Fund. Depositors will continue to hold their existing certificates, passbooks and other evidences of their accounts.

Effect on Loans . No loan outstanding from Belmont Savings Bank will be affected by the conversion, and the amount, interest rate, maturity and security for each loan will remain as it was contractually fixed prior to the conversion.

Tax Effects . We will receive an opinion of counsel or tax advisor with regard to federal and state income tax consequences of the conversion to the effect that the conversion will not be taxable for federal or state income tax purposes to Belmont Savings Bank, BSB Bancorp, Inc., BSB Bancorp, Inc. and BSB Bancorp, MHC or its members. See “—Material Income Tax Consequences.”

Effect on Liquidation Rights. Each depositor in Belmont Savings Bank has both a deposit account in Belmont Savings Bank and a corresponding pro rata ownership interest in the net worth of BSB Bancorp, MHC based upon the deposit balance in his or her account. This ownership interest is tied to the depositor’s account and has no tangible market value separate from the deposit account. This ownership interest may only be realized in the event of a complete liquidation of BSB Bancorp, MHC and Belmont Savings Bank. Any depositor who opens a deposit account at Belmont Savings Bank obtains such pro rata ownership interest in BSB Bancorp, MHC without any additional payment beyond the amount of the deposit. A depositor who reduces or closes his or her deposit account receives deposited funds but nothing for his or her ownership interest in the net worth of BSB Bancorp, MHC, which is lost to the extent that the balance in the account is reduced or closed. Consequently, depositors in a stock subsidiary of a mutual holding company normally have no way of realizing the value of their ownership interest, which is realizable only in the unlikely event that BSB Bancorp, MHC and Belmont Savings Bank are liquidated. If this were to occur, the Belmont Savings Bank depositors of record at that time, as owners, would share pro rata in any residual surplus and reserves of BSB Bancorp, MHC after other claims, including claims of depositors to the amounts of their deposits, are paid.

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Under the plan of conversion, however, the depositors of Belmont Savings Bank will receive rights in a liquidation account established by BSB Bancorp, Inc. (and in a parallel liquidation account established in Belmont Savings Bank) which will represent the amount of BSB Bancorp, MHC’s total equity as of the date of the latest statement of financial condition included in this prospectus. BSB Bancorp, Inc. and Belmont Savings Bank shall hold the liquidation accounts for the benefit of Eligible Account Holders who continue to maintain deposits in Belmont Savings Bank after the conversion. The liquidation account is designed to provide payments to depositors of their liquidation interests, if any, in the event of a liquidation of BSB Bancorp, Inc. and Belmont Savings Bank.

For further information, see “—Liquidation Rights.”

Determination of Share Price and Number of Shares to be Issued

The plan of conversion and Massachusetts regulations require that the aggregate purchase price of the common stock sold in the offering be based on the appraised pro forma market value of the common stock, as determined by an independent valuation. We have retained RP Financial, LC. to prepare an independent valuation appraisal. For its services in preparing the initial valuation and subsequent updates to the appraisal, RP Financial, LC. will receive a fee of $55,000, and will be reimbursed for its expenses up to $3,500. We have agreed to indemnify RP Financial, LC. and its employees and affiliates against specified losses, including any losses in connection with claims under the federal securities laws, arising out of its services as independent appraiser, except where such liability results from its negligence or bad faith.

The independent valuation was prepared by RP Financial, LC. in reliance upon the information contained in this prospectus, including our consolidated financial statements. RP Financial, LC. also considered the following factors, among others:

•

our present and projected results and financial condition;

•

the economic and demographic conditions in our existing market area;

•

certain historical, financial and other information relating to us;

•

a comparative evaluation of our operating and financial characteristics with those of other similarly situated publicly traded savings institutions;

•

the impact of the conversion and the offering on our equity and earnings potential;

•

our potential to pay cash dividends;

•

the trading market for securities of comparable institutions and general conditions in the market for such securities; and

•

the contribution of shares to the charitable foundation.

Included in the independent valuation were certain assumptions as to our pro forma earnings after the conversion that were utilized in determining the appraised value. These assumptions included estimated expenses, an assumed after-tax rate of return on the net offering proceeds and purchases in the open market of 4% of the common stock issued in the offering (including shares contributed to the charitable foundation) by the stock-based benefit plan at the $10.00 purchase price. See “Pro Forma Data” for additional information concerning these assumptions. The use of different assumptions may yield different results.

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The independent valuation states that as of as of May 13, 2011, the market value of the shares to be issued in the offering (including shares to be contributed to the charitable foundation) ranged from $59.0 million to $79.8 million, with a midpoint of $69.4 million. Our Board of Directors decided to offer the shares of common stock for a price of $10.00 per share primarily because it is the price most commonly used in mutual-to-stock conversions of financial institutions. The number of shares offered for sale will be equal to the aggregate offering price of the shares divided by the price per share. Based on this valuation and a $10.00 per share price, the number of shares of common stock being offered for sale by us will range from 5,780,000 shares to 7,820,000 shares. If the market conditions so warrant, the market value of the shares can be increased to a maximum, as adjusted, market value of $91.7 million and the number of shares offered for sale of 8,993,000 shares.

The appraisal is based in part on our financial condition and results of operations, the effect of the additional capital raised by the sale of shares of common stock in the offering and an analysis of a peer group of eleven publicly traded savings bank and thrift holding companies that RP Financial, LC. considered comparable to us.

The appraisal peer group consists of the following companies. Asset sizes are as of March 31, 2011, except as noted.


Company Name	Ticker Symbol	Exchange	Headquarters	Total Assets
				(in millions)
Beacon Federal Bancorp	(BFED)	NASDAQ	East Syracuse, NY	$	1,094
Cape Bancorp, Inc.	(CBNJ)	NASDAQ	Cape May Court House, NJ		1,062
Central Bancorp, Inc.	(CEBK)	NASDAQ	Somerville, MA		512	(1)
Chicopee Bancorp, Inc.	(CBNK)	NASDAQ	Chicopee, MA		582
ESSA Bancorp, Inc.	(ESSA)	NASDAQ	Stroudsburg, PA		1,094
Elmira Savings Bank	(ESBK)	NASDAQ	Elmira, NY		500	(1)
Hampden Bancorp, Inc.	(HBNK)	NASDAQ	Springfield, MA		575
Newport Bancorp, Inc.	(NFSB)	NASDAQ	Newport, RI		450
OBA Financial Services, Inc.	(OBAF)	NASDAQ	Germantown, MD		356
Ocean Shore Holding Company	(OSHC)	NASDAQ	Ocean City, NJ		861
TF Financial Corporation	(THRD)	NASDAQ	Newton, PA		684

(1)	As of December 31, 2010.

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	Price-to-core earnings multiple ⁽¹⁾		Price-to-book value ratio			Price-to-tangible book value ratio
BSB Bancorp, Inc. (pro forma)
Maximum, as adjusted		128.00x		71.79	%		71.79	%
Maximum		110.80x		68.17	%		68.17	%
Midpoint		95.96x		64.39	%		64.39	%
Minimum		81.24x		59.95	%		59.95	%

Valuation of peer group companies using stock prices as of May 13, 2011
Averages		20.40x		89.33	%		96.12	%
Medians		17.41x		86.81	%		90.51	%

(1)	Based on core, or recurring, earnings calculated by RP Financial, LC. for the twelve months ended March 31, 2011.

Our Board of Directors reviewed the independent valuation and, in particular, considered the following:

•

our financial condition and results of operations;

•

comparison of our financial performance ratios to those of other financial institutions of similar size; and

•

market conditions generally and, in particular, for financial institutions.

All of these factors are set forth in the independent valuation. Our Board of Directors also reviewed the methodology and the assumptions used by RP Financial, LC. in preparing the independent valuation and believes that such assumptions were reasonable. The offering range may be amended with the approval of the Massachusetts Commissioner of Banks, if required, as a result of subsequent developments in our financial condition or market conditions generally. In the event the independent valuation is updated to amend our pro forma market value to less than $59.0 million or more than $91.7 million, the appraisal will be filed with the Securities and Exchange Commission by a post-effective amendment to our registration statement.

The independent valuation is not intended, and must not be construed, as a recommendation of any kind as to the advisability of purchasing shares of our common stock. RP Financial, LC. did not independently verify our consolidated financial statements and other information that we provided to them, nor did RP Financial, LC. independently value our assets or liabilities. The independent valuation considers Belmont Savings Bank as a going concern and should not be considered as an indication of the liquidation value of Belmont Savings Bank. Moreover, because the valuation is necessarily based upon estimates and projections of a number of matters, all of which may change from time to time, no assurance can be given that persons purchasing our common stock in the offering will thereafter be able to sell their shares at prices at or above the $10.00 offering price per share.

Following commencement of the subscription offering, the maximum of the valuation range, including shares to be contributed to the charitable foundation, may be increased by up to 15%, or up to $91.7 million, without resoliciting subscribers, which would result in a corresponding increase of up to 15% in the maximum of the offering range of shares to be sold in the offering to up to 8,993,000 shares, to reflect changes in the market and financial conditions or demand for the shares. We will not decrease the minimum of the valuation range and the minimum of the offering range without a resolicitation of subscribers. The subscription price of $10.00 per share will remain fixed. See “—Limitations on Common Stock Purchases” as to the method of distribution and allocation of additional shares that may be issued in the event of an increase in the offering range to fill unfilled orders in the offering.

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If the update to the independent valuation at the conclusion of the offering results in an increase in the maximum of the valuation range to more than $91.7 million and a corresponding increase in the offering of shares to be sold to more than 8,993,000 shares, or a decrease in the minimum of the valuation range to less than $59.0 million and a corresponding decrease in the offering range of shares to be sold to fewer than 5,780,000 shares, in each case not including shares that will be contributed to the charitable foundation, then we will promptly return with interest at our passbook savings rate all funds previously delivered to us to purchase shares of common stock and cancel deposit account withdrawal authorizations, and, after consulting with the Massachusetts Commissioner of Banks, we may terminate the plan of conversion. Alternatively, we may hold a new offering, establish a new offering range, extend the offering period and commence a resolicitation of subscribers or take other actions as permitted by the Massachusetts Commissioner of Banks in order to complete the conversion and the offering. In the event that a resolicitation is commenced, we will notify subscribers of the extension of time and of the rights of subscribers to place a new stock order for a specified period of time. Any resolicitation following the conclusion of the subscription and community offerings would not exceed 45 days unless further extended by the Massachusetts Commissioner of Banks for periods of up to 90 days.

An increase in the number of shares to be issued in the offering would decrease both a subscriber’s ownership interest and our pro forma earnings and stockholders’ equity on a per share basis while increasing pro forma earnings and stockholders’ equity on an aggregate basis. A decrease in the number of shares to be issued in the offering would increase both a subscriber’s ownership interest and our pro forma earnings and stockholders’ equity on a per share basis, while decreasing pro forma earnings and stockholders’ equity on an aggregate basis. For a presentation of the effects of these changes, see “Pro Forma Data.”

Copies of the independent valuation appraisal report of RP Financial, LC. and the detailed memorandum setting forth the method and assumptions used in the appraisal report are available for inspection at our main office and as specified under “Where You Can Find Additional Information.”

Subscription Offering and Subscription Rights

In accordance with the plan of conversion, rights to subscribe for shares of common stock in the subscription offering have been granted in the following descending order of priority. The filling of all subscriptions that we receive will depend on the availability of common stock after satisfaction of all subscriptions of all persons having prior rights in the subscription offering and to the maximum, minimum and overall purchase limitations set forth in the plan of conversion and as described below under “—Limitations on Common Stock Purchases.”

Priority 1: Eligible Account Holders . Each depositor with aggregate deposit account balances of $50.00 or more (a “Qualifying Deposit”) on May 31, 2010 (an “Eligible Account Holder”) will receive, without payment therefor, nontransferable subscription rights to purchase, subject to the overall purchase limitations, up to the greater of 30,000 shares of our common stock, 0.10% of the total number of shares of common stock issued in the offering, or 15 times the number of subscription shares offered multiplied by a fraction of which the numerator is the aggregate Qualifying Deposit account balances of the Eligible Account Holder and the denominator is the aggregate Qualifying Deposit account balances of all Eligible Account Holders ($333.6 million at May 31, 2010), subject to the overall purchase limitations. See “—Limitations on Common Stock Purchases.” If there are not sufficient shares available to satisfy all subscriptions, shares will first be allocated so as to permit each Eligible Account Holder to purchase a number of shares sufficient to make his or her total allocation equal to the lesser of 100 shares or the number of shares for which he or she subscribed. Thereafter, unallocated shares will be allocated to each Eligible Account Holder whose subscription remains unfilled in the proportion that the amount of his or her Qualifying Deposit bears to the total amount of Qualifying Deposits of all subscribing Eligible Account Holders whose subscriptions remain unfilled. If an amount so allocated exceeds the amount subscribed for by any one or more Eligible Account Holders, the excess shall be reallocated (one or more times as necessary) among those Eligible Account Holders whose subscriptions are not fully satisfied until all available shares have been allocated.

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To ensure proper allocation of shares of our common stock, each Eligible Account Holder must list on his or her stock order and certification form all deposit accounts in which he or she has an ownership interest on May 31, 2010. In the event of oversubscription, failure to list an account could result in fewer shares being allocated than if all accounts had been disclosed. In the event of an oversubscription, the subscription rights of Eligible Account Holders who are also our employees, officers, directors, trustees, and corporators, or any of their associates, will be subordinated to the subscription rights of other Eligible Account Holders to the extent attributable to increased deposits during the year preceding May 31, 2010.

Priority 2: Tax-Qualified Plans . Our tax-qualified employee plans, including our employee stock ownership plan, will receive, without payment therefor, nontransferable subscription rights to purchase in the aggregate up to 10% of the shares of common stock issued in the offering, including shares contributed to the charitable foundation. We expect our employee stock ownership plan to purchase 5% of the shares of common stock issued in the offering, including shares contributed to the charitable foundation. If the employee stock ownership plan is not able to fill its order in the offering, the employee stock ownership plan may purchase shares of common stock in the open market following the completion of the conversion and the offering in order to fund all or a portion of the plan.

Priority 3: Employees, Officers, Directors, Trustees and Corporators . Each employee, officer, director, trustee and corporator of Belmont Savings Bank, BSB Bancorp – Massachusetts and BSB Bancorp, MHC at the time of the offering who is not eligible in the first priority category shall receive at no cost non-transferable subscription rights to subscribe for common stock in an amount up to 30,000 shares; provided, however, that the aggregate number of shares of common stock that may be purchased by employees, officers, directors, trustees and corporators in the conversion shall be limited to 30% of the total number of shares of common stock issued in the conversion (including shares purchased by employees, officers, directors, trustees and corporators under this priority and under the preceding priority categories, but not including shares purchased by the employee stock ownership plan). Subscriptions of officers, directors, trustees and corporators are also subject to an additional overall purchase limitation. See “—Limitations on Common Stock Purchases.” In the event that persons in this category subscribe for more shares of stock than are available for purchase by them, shares will be allocated among such subscribing persons on an equitable basis, such as by giving weight to the period of service, compensation, position of the individual subscriber and the amount of the order.

Expiration Date . The Subscription Offering will expire at 12:00 noon, Eastern time, on [expiration date], unless extended by us for up to 45 days or such additional periods with the approval of the Massachusetts Commissioner of Banks, if necessary. Subscription rights will expire whether or not each eligible depositor can be located. We may decide to extend the expiration date of the subscription offering for any reason, whether or not subscriptions have been received for shares at the minimum, midpoint or maximum of the offering range. Subscription rights that have not been exercised prior to the expiration date will become void.

We will not execute orders until we have received orders to purchase at least the minimum number of shares of common stock. If we have not received orders to purchase at least 5,780,000 shares within 45 days after the expiration date and the Massachusetts Commissioner of Banks has not consented to an extension, all funds delivered to us to purchase shares of common stock in the offering will be returned promptly to the subscribers with interest at our passbook savings rate and all deposit account withdrawal authorizations will be canceled. If an extension beyond [extension date] is granted by the Massachusetts Commissioner of Banks, we will resolicit subscribers, giving them an opportunity to change or cancel their orders. We will notify subscribers of the extension of time and of the rights of subscribers to place a new stock order for a specified period of time. If a subscriber does not respond, we will cancel his or her stock order and return his or her subscription funds, with interest, and cancel any authorization to withdraw funds from deposit accounts for the purchase of shares of common stock. Extensions may not go beyond June 2, 2013, which is twenty four months after the Board of Trustees of BSB Bancorp, MHC adopted the plan of conversion.

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Community Offering

To the extent that shares of common stock remain available for purchase after satisfaction of all subscriptions in the subscription offering, we may offer shares pursuant to the plan of conversion to members of the general public in a community offering. Shares may be offered with a preference to natural persons and trusts of natural persons residing in the towns of Arlington, Belmont, Lexington and Watertown, and the cities of Newton and Waltham, in Massachusetts.

Subscribers in the community offering may purchase up to 30,000 shares of common stock, subject to the overall purchase limitations. See “—Limitations on Common Stock Purchases.” The opportunity to purchase shares of common stock in the community offering category is subject to our right, in our sole discretion, to accept or reject any such orders in whole or in part either at the time of receipt of an order or as soon as practicable following the expiration date of the offering. We have not established any set criteria for determining whether to accept or reject a purchase order in the community offering, and, accordingly, any determination to accept or reject purchase orders in the community offering will be based on the facts and circumstances known to us at the time.

If we do not have sufficient shares of common stock available to fill the orders of natural persons and trusts of natural persons residing in the towns of Arlington, Belmont, Lexington and Watertown, and the cities of Newton and Waltham, in Massachusetts, we will allocate the available shares among those persons in a manner that permits each of them, to the extent possible, to purchase the lesser of 100 shares, or the number of shares subscribed for by such person. Thereafter, unallocated shares will be allocated among natural persons and trusts of natural persons residing in the towns of Arlington, Belmont, Lexington and Watertown, and the cities of Newton and Waltham, in Massachusetts, whose orders remain unsatisfied on an equal number of shares basis per order. If, after the allocation of shares to natural persons and trust of natural persons residing in the towns of Arlington, Belmont, Lexington and Watertown, and the cities of Newton and Waltham, in Massachusetts, we do not have sufficient shares of common stock available to fill the orders of other members of the general public, we will allocate the available shares among those persons in a manner that permits each of them, to the extent possible, to purchase the lesser of 100 shares or the number of shares subscribed for by such person, and thereafter, unallocated shares will be allocated among members of the general public whose orders remain unsatisfied on an equal number of shares basis per order.

The term “residing” or “resident” as used in this prospectus means any person who occupies a dwelling within the towns of Arlington, Belmont, Lexington and Watertown, and the cities of Newton and Waltham, in Massachusetts, has a present intent to remain within the community for a period of time and manifests the genuineness of that intent by establishing an ongoing physical presence within the community, together with an indication that this presence within the community is something other than merely transitory in nature. We may utilize deposit or loan records or other evidence provided to us to decide whether a person is a resident. In all cases, however, the determination shall be in our sole discretion.

Expiration Date. The community offering may begin at the same time as, during or after the subscription offering, although it must terminate no more than 45 days following the subscription offering. We may decide to extend the community offering for any reason and are not required to give purchasers notice of any such extension unless such period extends beyond [extension date]. If an extension beyond [extension date] is granted by the Massachusetts Commissioner of Banks, we will cancel stock orders accepted in the community offering and return purchase funds, with interest, and cancel any authorization to withdraw funds from deposit accounts for the purchase of shares of common stock. We will then resolicit persons whose orders we accept in the community offering, giving them an opportunity to place a new order. These extensions may not go beyond June 2, 2013, which is twenty four months after the Board of Trustees of BSB Bancorp, MHC adopted the plan of conversion.

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Syndicated Community Offering

The plan of conversion provides that, if necessary, all shares of common stock not purchased in the subscription offering and community offering may be offered for sale to the general public in a syndicated community offering to be managed by Keefe, Bruyette & Woods, Inc., acting as our agent. In such capacity, Keefe, Bruyette & Woods, Inc. may form a syndicate of other broker-dealers. Neither Keefe, Bruyette & Woods, Inc. nor any registered broker-dealer will have any obligation to take or purchase any shares of the common stock in the syndicated community offering; however, Keefe, Bruyette & Woods, Inc. has agreed to use its best efforts in the sale of shares in any syndicated community offering. The syndicated community offering would terminate no later than [extension date], unless extended by us, with approval of the Massachusetts Commissioner of Banks. See “—Community Offering” above for a discussion of rights of persons who place orders in the syndicated community offering in the event an extension is granted.

The opportunity to order shares of common stock in the syndicated community offering is subject to our right to reject orders, in whole or in part, either at the time of receipt of an order or as soon as practicable following the expiration date of the offering. If your order is rejected in part, you will not have the right to cancel the remainder of your order. We have not established any set criteria for determining whether to accept or reject a purchase order in the syndicated community offering, and, accordingly, any determination to accept or reject purchase orders in the syndicated community offering will be based on the facts and circumstances known to us at the time.

Purchasers in the syndicated community offering are eligible to purchase up to 30,000 shares of common stock, subject to the overall purchase limitations. See “—Limitations on Common Stock Purchases.” We may begin the syndicated community offering at any time following the commencement of the subscription offering.

If we are unable to find purchasers from the general public for all unsubscribed shares, we will make other purchase arrangements, if feasible. Other purchase arrangements must be approved by the Massachusetts Commissioner of Banks and may provide for purchases by directors, officers, their associates and other persons in excess of the limitations provided in the plan of conversion and in excess of the proposed director purchases discussed earlier, although no such purchases are currently intended. If other purchase arrangements cannot be made, we may do any of the following: terminate the offering and promptly return all funds with interest at our passbook savings rate; set a new offering range, notify all subscribers and give them the opportunity to confirm, cancel or change their orders; or take such other actions as may be permitted by the Massachusetts Commissioner of Banks.

Limitations on Common Stock Purchases

The plan of conversion includes the following limitations on the number of shares of common stock that may be purchased in the offering:

•

No individual with one or more qualifying accounts, or individuals exercising subscription rights through a single qualifying account held jointly, may purchase more than 30,000 shares ($300,000) of common stock in the offering;

•

No person or entity together with any associate or group of persons acting in concert may purchase more than 60,000 shares ($600,000) of common stock in the offering, except that our tax-qualified employee benefit plans, including our employee stock ownership plan, may purchase in the aggregate up to 10% of the shares of common stock issued in the offering including shares contributed to the charitable foundation (including shares issued in the event of an increase in the offering range of up to 15%);

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•

The maximum number of shares of common stock that may be purchased in all categories of the offering by the officers, trustees, directors and corporators of BSB Bancorp, Inc. and Belmont Savings Bank and their associates, in the aggregate, may not exceed 30.0% of the shares issued in the offering (including shares contributed to the charitable foundation); and

•

The minimum purchase by each person purchasing shares in the offering is 25 shares, to the extent those shares are available.

Depending upon market or financial conditions, our Board of Directors, with the approval of the Massachusetts Commissioner of Banks and without further approval of our members, may decrease or increase the purchase limitations; provided, provided that the purchase limitations (i) may not be increased to a percentage that is more than 5.0% of the common stock offered for sale and may not be decreased to a percentage that is less than one-tenth of a percent (0.10%) of the common stock offered for sale in the conversion, and (ii), in the case of our tax-qualified employee plans, may not be increased to more than 10% of the shares offered for sale. If a purchase limitation is increased, subscribers in the subscription offering who ordered the maximum amount will be, and, in our sole discretion, some other large subscribers may be, given the opportunity to increase their subscriptions up to the then-applicable limit. The effect of this type of resolicitation would be an increase in the number of shares of common stock owned by subscribers who choose to increase their subscriptions.

In the event of an increase in the offering range of up to 15% of the total number of shares of common stock offered in the offering, shares will be allocated in the following order of priority in accordance with the plan of conversion:

(1)

to fill our tax-qualified employee benefit plans’ subscriptions for up to 10% of the total number of shares of common stock issued in the offering;

(2)

in the event that there is an oversubscription at the Eligible Account Holder level, to fill unfulfilled subscriptions of these subscribers according to their respective priorities;

(3)

in the event that there is an oversubscription by our employees, officers, directors, trustees and corporators in the third priority of the subscription offering, to fill unfulfilled subscriptions of these subscribers on an equitable basis, such as by giving weight to the period of service, compensation, position of the individual subscriber and the amount of the order; and

(4)

to fill unfulfilled subscriptions in the community offering, with preference given first to natural persons and trusts of natural persons residing in the towns of Arlington, Belmont, Lexington and Watertown, and the cities of Newton and Waltham, in Massachusetts.

The term “associate” of a person means:

(1)

any corporation or organization, other than BSB Bancorp, MHC, BSB Bancorp – Massachusetts, Belmont Savings Bank or BSB Bancorp, Inc., or a majority-owned subsidiary of these entities, of which the person is a senior officer, partner or 10% beneficial stockholder;

(2)

any trust or other estate in which the person has a substantial beneficial interest or serves as a trustee or in a fiduciary capacity, excluding any employee stock benefit plan in which the person has a substantial beneficial interest or serves as trustee or in a fiduciary capacity; and

(3)

any relative or spouse of the person, or any relative of the spouse, who either has the same home as the person or who is a trustee, director or officer of BSB Bancorp, MHC, BSB Bancorp – Massachusetts, Belmont Savings Bank or BSB Bancorp, Inc.; and

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(4)

any person “acting in concert” with any of the persons or entities specified above.

The term “acting in concert” means:

(1)

knowing participation in a joint activity or interdependent conscious parallel action towards a common goal whether or not pursuant to an express agreement; or

(2)

persons seeking to combine or pool their voting or other interests (such as subscription rights) in the securities of an issuer for a common purpose, pursuant to any contract, understanding, relationship, agreement or other arrangement, whether written or otherwise.

The determination of whether a group is acting in concert may be based on any evidence upon which we choose to rely, including, without limitation, joint account relationships or the fact that such persons have filed joint Schedules 13D with the Securities and Exchange Commission with respect to other companies. Persons living at the same address, whether or not related, will be deemed to be acting in concert unless otherwise determined by us. A person or company that acts in concert with another person or company (“other party”) shall also be deemed to be acting in concert with any person or company who is also acting in concert with that other party, except that any tax-qualified employee stock benefit plan will not be deemed to be acting in concert with its trustee or a person who serves in a similar capacity solely for the purpose of determining whether common stock held by the trustee and common stock held by the employee stock benefit plan will be aggregated.

Our directors are not treated as associates of each other solely because of their membership on the Board of Directors. We have the right to determine whether prospective purchasers are associates or acting in concert. Shares of common stock purchased in the offering will be freely transferable except for shares purchased by our executive officers and directors and except as described below. Any purchases made by any associate of Belmont Savings Bank or BSB Bancorp, Inc. for the explicit purpose of meeting the minimum number of shares of common stock required to be sold in order to complete the offering shall be made for investment purposes only and not with a view toward redistribution. In addition, under the guidelines of the Financial Industry Regulatory Authority (“FINRA”), members of FINRA and their associates are subject to certain restrictions on transfer of securities purchased in accordance with subscription rights and to certain reporting requirements upon purchase of these securities. For a further discussion of limitations on purchases of shares of our common stock at the time of conversion and thereafter, see “—Restrictions on Purchase or Transfer of Our Shares After Conversion” and “Restrictions on Acquisition of BSB Bancorp, Inc.”

Marketing and Distribution; Compensation

Offering materials have been initially distributed to certain persons by mail, with additional copies made available through our Stock Information Center.

We have engaged Keefe, Bruyette & Woods, Inc., a broker-dealer registered with FINRA, as a financial advisor in connection with the offering of our common stock. In its role as financial advisor, Keefe, Bruyette & Woods, Inc., will:

•

provide advice on the financial and securities market implications of the plan of conversion and related corporate documents, including our business plan;

•

assist in structuring our stock offering, including developing and assisting in implementing a market strategy for the stock offering;

•

review all offering documents, including this prospectus, stock order forms and related offering materials (we are responsible for the preparation and filing of such documents);

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•

assist us in preparing for and scheduling meetings with potential investors and broker-dealers, as necessary;

•

assist us in analyzing proposals from outside vendors retained in connection with the stock offering, including printers, transfer agents and appraisal firms;

•

assist us in the drafting and distribution of press releases as required or appropriate in connection with the stock offering;

•

meet with the Board of Directors and management to discuss any of these services; and

•

provide such other financial advisory and investment banking services in connection with the stock offering as may be agreed upon by Keefe, Bruyette & Woods, Inc. and us.

For these services, Keefe, Bruyette & Woods, Inc. will receive a management fee of $50,000, of which $ has been paid as of the date of this prospectus, and a success fee of $400,000 for the common stock sold in the subscription offering and community offering if the conversion is consummated. The management fee will be credited against the success fee.

The plan of conversion provides that, if necessary, all shares of common stock not purchased in the subscription offering and community offering may be offered for sale to the general public in a syndicated community offering to be managed by Keefe, Bruyette & Woods, Inc. In such capacity, Keefe, Bruyette & Woods, Inc. may form a syndicate of other broker-dealers. Neither Keefe, Bruyette & Woods, Inc. nor any registered broker-dealer will have any obligation to take or purchase any shares of common stock in the syndicated community offering; however, Keefe, Bruyette & Woods, Inc. has agreed to use its best efforts in the sale of shares in any syndicated community offering. If there is a syndicated community offering, the total fees paid to Keefe, Bruyette & Woods, Inc. and other FINRA member firms will not exceed 6.00% of the aggregate dollar amount of the common stock sold in the syndicated community offering. This fee will be in addition to the fee earned by Keefe, Bruyette & Woods, Inc. in connection with the subscription and community offerings set forth above. Of this amount, Keefe, Bruyette & Woods, Inc. will pass on to selected broker-dealers, who assist in the syndicated community offering, an amount competitive with gross underwriting discounts charged at such time for comparable amounts of stock sold at a comparable price per share in a similar market environment.

We also will reimburse Keefe, Bruyette & Woods, Inc. for its reasonable out-of-pocket expenses associated with its marketing efforts, not to exceed $150,000 (including legal fees and expenses to its counsel not to exceed $100,000). If the plan of conversion is terminated or if Keefe, Bruyette & Woods, Inc.’s engagement is terminated in accordance with the provisions of our agency agreement, Keefe, Bruyette & Woods, Inc. will only receive reimbursement of its reasonable out-of-pocket expenses, including legal fees to its counsel. We will indemnify Keefe, Bruyette & Woods, Inc. against liabilities and expenses (including legal fees) related to or arising out of Keefe, Bruyette & Woods, Inc.’s engagement as our financial advisor and performance of services as our financial advisor.

We have also engaged Keefe, Bruyette & Woods, Inc. to act as our conversion agent in connection with the stock offering. In its role as conversion agent, Keefe, Bruyette & Woods, Inc. will, among other things:

•

consolidate accounts and develop a central file;

•

assist us in establishing and managing the Stock Information Center;

•

assist our financial printer with labeling of stock offering materials;

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•

process stock order forms and certification forms and produce daily reports and analysis;

•

assist our transfer agent with the generation and mailing of stock certificates;

•

advise us on interest and refund calculations; and

•

create tax forms for interest reporting.

For these services, Keefe, Bruyette & Woods, Inc. will not receive a fee, but we will reimburse Keefe, Bruyette & Woods, Inc. for its reasonable out-of-pocket expenses associated with its acting as conversion agent, which will not exceed $5,000. If the plan of conversion is terminated or if Keefe, Bruyette & Woods, Inc.’s engagement is terminated in accordance with the provisions of the agreement, for its services as our conversion agent Keefe, Bruyette & Woods, Inc. will be entitled only to its reasonable out-of-pocket expenses, which will not exceed $5,000. We will indemnify Keefe, Bruyette & Woods, Inc. against liabilities and expenses (including legal fees) related to or arising out of Keefe, Bruyette & Woods, Inc.’s engagement as our conversion agent and performance of services as our conversion agent.

Our directors and executive officers may participate in the solicitation of offers to purchase common stock. These persons will be reimbursed for their reasonable out-of-pocket expenses incurred in connection with the solicitation. Other trained employees of Belmont Savings Bank or its affiliates may assist in the offering in ministerial capacities, providing clerical work in effecting a sales transaction or answering questions of a ministerial nature. No offers or sales may be made by tellers or at the teller counters. All sales activity will be conducted in a segregated or separately identifiable area of our main office facility apart from the area accessible to the general public. Other questions of prospective purchasers will be directed to executive officers or registered representatives of Keefe, Bruyette & Woods, Inc. Our other employees have been instructed not to solicit offers to purchase shares of common stock or provide advice regarding the purchase of common stock. We will rely on Rule 3a4-1 under the Securities Exchange Act of 1934, as amended, and sales of common stock will be conducted within the requirements of Rule 3a4-1, so as to permit officers, directors and employees to participate in the sale of common stock. None of our officers, directors or employees will be compensated in connection with their participation in the offering by the payment of commissions or other remuneration based either directly or indirectly on the transactions in the shares of common stock.

The offering will comply with the requirements of Rule 10b-9 under the Securities Exchange Act of 1934.

Procedure for Purchasing Shares

Expiration Date . The subscription offering will expire at 12:00 noon, Eastern time, on [expiration date], unless we extend it for up to 45 days. This extension may be approved by us, in our sole discretion, without further approval or additional notice to purchasers in the offering. Any extension of the subscription and/or community offering beyond [extension date] would require the Massachusetts Commissioner of Bank’s approval. If an extension beyond [extension date] is granted by the Massachusetts Commissioner of Banks, we will cancel all stock orders and return subscription funds, with interest, and cancel any authorization to withdraw funds from deposit accounts for the purchase of shares of common stock. We will then resolicit subscribers (persons who place orders), giving them an opportunity to place new orders. We will notify these persons of the extension of time and of their ability to place a new stock order for a specified period of time. If we have not received orders to purchase the minimum number of shares offered in the offering by the expiration date or any extension thereof, we may terminate the offering and promptly refund all funds received for shares of common stock with interest at our passbook savings rate. If the number of shares offered is reduced below the minimum of the offering range, or increased above the adjusted maximum of the offering range, subscribers may be resolicited with the approval of the Massachusetts Commissioner of Banks.

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To ensure that each purchaser receives a prospectus at least 48 hours before [expiration date], the expiration date of the offering, in accordance with Rule 15c2-8 of the Securities Exchange Act of 1934, as amended, no prospectus will be mailed any later than five days prior to the expiration date or hand delivered any later than two days prior to the expiration date. Execution of an order form will confirm receipt of delivery in accordance with Rule 15c2-8. Order forms will be distributed only with a prospectus. Subscription funds will be maintained in a segregated account at Belmont Savings Bank and will earn interest at our passbook savings rate from the date of receipt.

We reserve the right in our sole discretion to terminate the offering at any time and for any reason, in which case we will cancel any deposit account withdrawal orders and promptly return all funds delivered to us, with interest at our passbook savings rate from the date of receipt.

We have the right to reject any order submitted in the offering by a person who we believe is making false representations or who we otherwise believe, either alone or acting in concert with others, is violating, evading, circumventing, or intends to violate, evade or circumvent the terms and conditions of the plan of conversion.

Use of Order Forms . In order to purchase shares of common stock in the subscription offering and community offering, you must complete an order form and remit full payment. We will not be required to accept incomplete order forms, unsigned order forms or orders submitted on photocopied or facsimiled order forms. We must receive all order forms prior to 12:00 noon, Eastern time, on [expiration date]. We are not required to accept order forms that are not received by that time, are executed defectively or are received without full payment or without appropriate withdrawal instructions. A postmark prior to [expiration date] will not entitle you to purchase shares of common stock unless we receive the envelope by [expiration date]. We are not required to notify subscribers of incomplete or improperly executed order forms. We have the right to permit the correction of incomplete or improperly executed order forms or waive immaterial irregularities. We do not represent, however, that we will do so and we have no affirmative duty to notify any prospective subscriber of any such defects. You may submit your order form and payment by mail using the return envelope provided, by bringing your order form to our Stock Information Center or by overnight delivery to the indicated address on the order form. We will not accept stock order forms at our branch offices. Once tendered, an order form cannot be modified or revoked without our consent. We reserve the absolute right, in our sole discretion, to reject orders received in the community offering, in whole or in part, at the time of receipt or at any time prior to completion of the offering. If you are ordering shares, you must represent that you are purchasing shares for your own account and that you have no agreement or understanding with any person for the sale or transfer of the shares. Our interpretation of the terms and conditions of the plan of conversion and of the acceptability of the order forms will be final, subject to the authority of the Massachusetts Commissioner of Banks.

By signing the order form, you will be acknowledging that the common stock is not a deposit or savings account and is not federally insured or otherwise guaranteed by Belmont Savings Bank, BSB Bancorp, Inc., the Federal Deposit Insurance Corporation or the federal government, and that you received a copy of this prospectus. However, signing the order form will not result in you waiving your rights under the Securities Act of 1933 or the Securities Exchange Act of 1934.

Payment for Shares . Payment for all shares of common stock will be required to accompany all completed order forms for the purchase to be valid. Payment for shares may be made by:

(1)

personal check, bank check or money order, payable to BSB Bancorp, Inc.; or

(2)

authorization of withdrawal from Belmont Savings Bank deposit accounts designated on the order form.

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Appropriate means for designating withdrawals from deposit accounts at Belmont Savings Bank are provided in the order forms. The funds designated for withdrawal from a Belmont Savings Bank deposit account must be available in the account(s) at the time the order form is received. A hold will be placed on these designated deposit account funds, making them unavailable to the depositor. Funds authorized for withdrawal will continue to earn interest within the account at the contract rate until the offering is completed, at which time the designated withdrawal will be made. Interest penalties for early withdrawal applicable to certificate accounts will not apply to withdrawals authorized for the purchase of shares of common stock; however, if a withdrawal results in a certificate account with a balance less than the applicable minimum balance requirement, the certificate will be canceled at the time of withdrawal without penalty and the remaining balance will be transferred to a savings account and earn interest at our passbook savings rate subsequent to the withdrawal. In the case of payments made by check or money order, these funds must be available in the account(s) and will be immediately cashed and placed in a segregated account at Belmont Savings Bank and/or another insured depository institution and will earn interest at our passbook savings rate from the date payment is received until the offering is completed or terminated.

You may not use a check drawn on a Belmont Savings Bank line of credit, and we will not accept third-party checks (a check written by someone other than you) payable to you and endorsed over to BSB Bancorp, Inc. Once we receive your executed order form, it may not be modified, amended or rescinded without our consent, unless the offering is not completed by the expiration date, in which event purchasers may be given the opportunity to increase, decrease or rescind their orders for a specified period of time.

If you are interested in using your individual retirement account funds to purchase shares of common stock, you must do so through a self-directed individual retirement account such as a brokerage firm individual retirement account. By regulation, Belmont Savings Bank’s individual retirement accounts are not self-directed, so they cannot be invested in shares of our common stock. Therefore, if you wish to use your funds that are currently in a Belmont Savings Bank individual retirement account, you may not designate on the order form that you wish funds to be withdrawn from the account for the purchase of common stock. The funds you wish to use for the purchase of common stock will have to be transferred to a brokerage account. It may take several weeks to transfer your Belmont Savings Bank individual retirement account to an independent trustee, so please allow sufficient time to take this action. There will be no early withdrawal or Internal Revenue Service interest penalties for these transfers. Depositors interested in using funds in an individual retirement account or any other retirement account to purchase shares of common stock should contact our Stock Information Center as soon as possible, preferably at least two weeks prior to the end of the offering period, because processing such transactions takes additional time, and whether such funds can be used may depend on limitations imposed by the institutions where such funds are currently held. We cannot guarantee that you will be able to use such funds.

We will have the right, in our sole discretion, to permit institutional investors to submit irrevocable orders together with the legally binding commitment for payment and to thereafter pay for the shares of common stock for which they subscribe in the syndicated community offering at any time prior to the completion of the offering. This payment may be made by wire transfer.

Our employee stock ownership plan will not be required to pay for any shares purchased in the offering until consummation of the offering, provided there is a loan commitment from an unrelated financial institution or BSB Bancorp, Inc. (or a subsidiary of BSB Bancorp, Inc.) to lend to the employee stock ownership plan the necessary amount to fund the purchase.

Regulations prohibit Belmont Savings Bank from knowingly lending funds or extending credit to any persons to purchase shares of common stock in the offering.

Delivery of Stock Certificates . Certificates representing shares of common stock issued in the offering and Belmont Savings Bank checks representing any applicable refund and/or interest paid on subscriptions made by check or money order will be mailed to the persons entitled thereto at the certificate registration address noted on

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the order form, as soon as practicable following consummation of the offering and receipt of all necessary regulatory approvals. Any certificates returned as undeliverable will be held by the transfer agent until claimed by persons legally entitled thereto or otherwise disposed of in accordance with applicable law. Until certificates for the shares of common stock are available and delivered to purchasers, purchasers may not be able to sell the shares of common stock that they ordered, even though the common stock will have begun trading.

Other Restrictions . Notwithstanding any other provision of the plan of conversion, no person is entitled to purchase any shares of common stock to the extent the purchase would be illegal under any federal or state law or regulation, including state “blue sky” regulations, or would violate regulations or policies of FINRA, particularly those regarding free riding and withholding. We may ask for an acceptable legal opinion from any purchaser as to the legality of his or her purchase and we may refuse to honor any purchase order if an opinion is not timely furnished. In addition, we are not required to offer shares of common stock to any person who resides in a foreign country.

Restrictions on Transfer of Subscription Rights and Shares

Massachusetts banking regulations prohibit any person with subscription rights from transferring or entering into any agreement or understanding to transfer the legal or beneficial ownership of the subscription rights issued under the plan of conversion or the shares of common stock to be issued upon their exercise. These rights may be exercised only by the person to whom they are granted and only for his or her account. Each person exercising subscription rights will be required to certify that he or she is purchasing shares solely for his or her own account and that he or she has no agreement or understanding regarding the sale or transfer of such shares. The regulations also prohibit any person from offering or making an announcement of an offer or intent to make an offer to purchase subscription rights or shares of common stock to be issued upon their exercise prior to completion of the offering.

We intend to pursue any and all legal and equitable remedies in the event we become aware of the transfer of subscription rights, and we will not honor orders that we believe involve the transfer of subscription rights.

Stock Information Center

If you have any questions regarding the conversion or the offering, please call our Stock Information Center at [SIC Phone], Monday through Friday between 10:00 a.m. and 5:00 p.m., Eastern time, or visit the Stock Information Center located at 2 Leonard Street, Belmont Center, Belmont, Massachusetts, Monday between 12:00 p.m. and 5:00 p.m., Tuesday through Thursday between 8:30 a.m. and 5:00 p.m., and Friday between 8:30 a.m. and 12:00 p.m. The Stock Information Center will be closed on weekends and bank holidays.

Liquidation Rights

Liquidation prior to the conversion . In the unlikely event that BSB Bancorp, MHC is liquidated prior to the conversion, all claims of creditors of BSB Bancorp, MHC would be paid first. Thereafter, if there were any assets of BSB Bancorp, MHC remaining, these assets would first be distributed to depositors of Belmont Savings Bank under such depositors’ liquidation rights. The amount received by such depositors would be equal to their pro rata interest in the remaining value of BSB Bancorp, MHC, after the claims of creditors, based on the relative size of their deposit accounts.

Liquidation following the conversion . The plan of conversion provides for the establishment, upon the completion of the conversion, of a liquidation account by BSB Bancorp, Inc. for the benefit of Eligible Account Holders in an amount equal to BSB Bancorp, MHC’s total equity as of the date of the latest statement of financial condition included in this prospectus. The plan of conversion also provides for the establishment of a parallel bank liquidation account in Belmont Savings Bank to support the BSB Bancorp, Inc. liquidation account.

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In the unlikely event that BSB Bancorp, Inc. and Belmont Savings Bank were to liquidate after the conversion, all claims of creditors, including those of Belmont Savings Bank depositors, would be paid first. However, except with respect to the liquidation account established by BSB Bancorp, Inc., a depositor’s claim would be solely for the principal amount of his or her deposit accounts plus accrued interest. Depositors generally would not have an interest in the value of the assets of Belmont Savings Bank or BSB Bancorp, Inc. above that amount.

The liquidation account established by BSB Bancorp, Inc. is designed to provide payments to depositors of their liquidation interest (exchanged for the liquidation rights such persons had in BSB Bancorp, MHC) in the event of a liquidation of BSB Bancorp, Inc. and Belmont Savings Bank or of Belmont Savings Bank by itself. Specifically, in the unlikely event that BSB Bancorp, Inc. and Belmont Savings Bank were to completely liquidate after the conversion, all claims of creditors, including those of Belmont Savings Bank depositors, would be paid first, followed by distribution to Eligible Account Holders of their interests in the liquidation account maintained by BSB Bancorp, Inc. In a complete liquidation of both entities, or of Belmont Savings Bank by itself, when BSB Bancorp, Inc. has insufficient assets to fund the distribution owed to Eligible Account Holders and Belmont Savings Bank has positive net worth, Belmont Savings Bank shall make a distribution to fund BSB Bancorp, Inc.’s remaining obligations under the liquidation account. If BSB Bancorp, Inc. is sold or liquidated apart from a sale or liquidation of Belmont Savings Bank, then the BSB Bancorp, Inc. liquidation account will cease to exist and Eligible Account Holders will receive an equivalent interest in the bank liquidation account, subject to the same rights and terms as the liquidation account at BSB Bancorp, Inc.

Pursuant to the plan of conversion, after two years from the date of conversion, BSB Bancorp, Inc. shall transfer the liquidation account (and the depositors’ interests in such account) to Belmont Savings Bank and the liquidation account shall thereupon become the liquidation account of Belmont Savings Bank. Also, under the rules and regulations of the Massachusetts Commissioner of Banks, a post-conversion merger, consolidation, or similar combination or transaction with another depository institution in which BSB Bancorp, Inc. or Belmont Savings Bank is not the surviving institution would not be considered a liquidation. In such a transaction, the liquidation account would be assumed by the surviving institution.

Each Eligible Account Holder would have an initial pro rata interest in the liquidation account for each deposit account, including savings accounts, transaction accounts such as negotiable order of withdrawal accounts, money market deposit accounts, and certificates of deposit, with a balance of $50.00 or more held in Belmont Savings Bank on May 31, 2010 equal to the proportion that the balance of each Eligible Account Holder’s deposit accounts on May 31, 2010 bears to the balance of all Eligible Account Holder deposit accounts in Belmont Savings Bank on such date.

If, however, on any December 31 annual liquidation account closing date commencing after the effective date of the conversion, the amount in any such deposit account is less than the amount in the deposit account on May 31, 2010 or any other December 31 annual liquidation account closing date, then the interest in the liquidation account relating to such deposit account would be reduced from time to time by the proportion of any such reduction, and such interest will cease to exist if such deposit account is closed. In addition, no interest in the liquidation account would ever be increased despite any subsequent increase in the related deposit account. Payment pursuant to liquidation rights of Eligible Account Holders would be separate and apart from the payment of any insured deposit accounts to such depositor. Any assets remaining after the above liquidation rights of Eligible Account Holders are satisfied would be available for distribution to stockholders.

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Material Income Tax Consequences

Completion of the conversion is subject to the prior receipt of an opinion of counsel or tax advisor with respect to federal and Massachusetts tax consequences of the conversion to BSB Bancorp, MHC, BSB Bancorp, Inc., Belmont Savings Bank, BSB Bancorp, Inc. and Eligible Account Holders. We have received an opinion of counsel Luse Gorman Pomerenk & Schick, P.C. as to the federal tax consequences of the conversion and have received an opinion of Shatswell, MacLeod & Company, P.C. as to the income tax consequences under Massachusetts law. Unlike private letter rulings, opinions of counsel or tax advisors are not binding on the Internal Revenue Service or any state taxing authority, and such authorities may disagree with such opinions. In the event of such disagreement, there can be no assurance that BSB Bancorp, Inc. or Belmont Savings Bank would prevail in a judicial proceeding.

Luse Gorman Pomerenk & Schick, P.C., has issued an opinion to BSB Bancorp, MHC, BSB Bancorp, Inc., Belmont Savings Bank and BSB Bancorp, Inc. that for federal income tax purposes:

The merger of BSB Bancorp, MHC with and into BSB Bancorp – Massachusetts will qualify as a tax-free reorganization within the meaning of Section 368(a)(1)(A) of the Internal Revenue Code.

The constructive exchange of Eligible Account Holders’ liquidation interests in BSB Bancorp, MHC for liquidation interests in BSB Bancorp – Massachusetts will satisfy the continuity of interest requirement of Section 1.368-1(b) of the Federal Income Tax Regulations.

None of BSB Bancorp, MHC, Belmont Savings Bank nor Eligible Account Holders will recognize any gain or loss on the transfer of the assets of BSB Bancorp, MHC to BSB Bancorp – Massachusetts in constructive exchange for a liquidation interest established in BSB Bancorp – Massachusetts for the benefit of such persons who remain depositors of Belmont Savings Bank.

The basis of the assets of BSB Bancorp, MHC and the holding period of such assets to be received by BSB Bancorp – Massachusetts will be the same as the basis and holding period of such assets in BSB Bancorp, MHC immediately before the exchange.

The merger of BSB Bancorp – Massachusetts with and into BSB Bancorp, Inc. will constitute a mere change in identity, form or place of organization within the meaning of Section 368(a)(1)(F) of the Code and therefore will qualify as a tax-free reorganization within the meaning of Section 368(a)(1)(F) of the Code. Neither BSB Bancorp – Massachusetts nor BSB Bancorp, Inc. will recognize gain or loss as a result of such merger.

The basis of the assets of BSB Bancorp, Inc. and the holding period of such assets to be received by BSB Bancorp, Inc. will be the same as the basis and holding period of such assets in BSB Bancorp – Massachusetts immediately before the exchange.

Eligible Account Holders will not recognize any gain or loss upon the constructive exchange of their liquidation interests in BSB Bancorp – Massachusetts for interests in the liquidation account in BSB Bancorp, Inc.

The constructive exchange of the Eligible Account Holders’ liquidation interests in BSB Bancorp – Massachusetts for interests in the liquidation account established in BSB Bancorp, Inc. will satisfy the continuity of interest requirement of Section 1.368-1(b) of the Federal Income Tax Regulations.

It is more likely than not that the fair market value of the nontransferable subscription rights to purchase BSB Bancorp, Inc. common stock is zero. Accordingly, no gain or loss will be recognized by Eligible Account Holders and other purchasers in the subscription offering upon distribution to them of nontransferable subscription rights to purchase shares of BSB Bancorp, Inc. common stock. Eligible Account Holders will not realize any taxable income as the result of the exercise by them of the nontransferable subscriptions rights.

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10.

It is more likely than not that the fair market value of the benefit provided by the liquidation account of Belmont Savings Bank supporting the payment of the BSB Bancorp, Inc. liquidation account in the event BSB Bancorp, Inc. lacks sufficient net assets is zero. Accordingly, it is more likely than not that no gain or loss will be recognized by Eligible Account Holders upon the constructive distribution to them of such rights in the Belmont Savings Bank liquidation account as of the effective date of the merger of BSB Bancorp – Massachusetts with and into BSB Bancorp, Inc.

11.

It is more likely than not that the basis of the shares of BSB Bancorp, Inc. common stock purchased in the offering by the exercise of nontransferable subscription rights will be the purchase price. The holding period of the BSB Bancorp, Inc. common stock purchased pursuant to the exercise of nontransferable subscription rights will commence on the date on which the right to acquire such stock was exercised.

12.

No gain or loss will be recognized by BSB Bancorp, Inc. on the receipt of money in exchange for BSB Bancorp, Inc. common stock sold in the offering.

We believe that the tax opinions summarized above address all material federal income tax consequences that are generally applicable to BSB Bancorp, MHC, BSB Bancorp – Massachusetts, Belmont Savings Bank, BSB Bancorp, Inc. and persons receiving subscription rights and shareholders of BSB Bancorp, Inc. The tax opinion as to items 7 and 9 above is based on the position that subscription rights to be received by Eligible Account Holders do not have any economic value at the time of distribution or the time the subscription rights are exercised. In this regard, Luse Gorman Pomerenk & Schick, P.C. noted that the subscription rights will be granted at no cost to the recipients, are legally non-transferable and of short duration, and will provide the recipient with the right only to purchase shares of common stock at the same price to be paid by members of the general public in any community offering. The firm also noted that the Internal Revenue Service has not in the past concluded that subscription rights have value. Based on the foregoing, Luse Gorman Pomerenk & Schick, P.C. believes that it is more likely than not that the nontransferable subscription rights to purchase shares of common stock have no value. However, the issue of whether or not the nontransferable subscription rights have value is based on all the facts and circumstances. If the subscription rights granted to Eligible Account Holders are deemed to have an ascertainable value, receipt of these rights could result in taxable gain to those Eligible Account Holders who exercise the subscription rights in an amount equal to the ascertainable value, and we could recognize gain on a distribution. Eligible Account Holders are encouraged to consult with their own tax advisors as to the tax consequences in the event that subscription rights are deemed to have an ascertainable value.

We also have received a letter from RP Financial, LC., stating its belief that the subscription rights do not have any ascertainable fair market value and that the price at which the subscription rights are exercisable will not be more or less than the fair market value of the shares on the date of the exercise. This position is based on the fact that these rights are acquired by the recipients without cost, are nontransferable and of short duration, and afford the recipients the right only to purchase the common stock at the same price as will be paid by members of the general public in any community offering.

The tax opinion as to item 10 above is based on the position that the benefit provided by the Belmont Savings Bank liquidation account supporting the payment of the liquidation account in the event BSB Bancorp, Inc. lacks sufficient net assets has a fair market value of zero. We understand that: (i) no holder of an interest in a liquidation account has ever received a payment attributable to a liquidation account; (ii) the interests in the liquidation accounts are not transferable; (iii) the amounts due under the liquidation account with respect to each Eligible Account Holder will be reduced as their deposits in Belmont Savings Bank are reduced; and (iv) the Belmont Savings Bank liquidation account payment obligation arises only if BSB Bancorp, Inc. lacks sufficient assets to fund the liquidation account.

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In addition, we have received a letter from RP Financial, LC stating its belief that the benefit provided by the Belmont Savings Bank liquidation account supporting the payment of the liquidation account in the event BSB Bancorp, Inc. lacks sufficient net assets does not have any economic value at the time of the conversion. Based on the foregoing, Luse Gorman Pomerenk & Schick, P.C. believes it is more likely than not that such rights in the Belmont Savings Bank liquidation account have no value. If such rights are subsequently found to have an economic value, income may be recognized by each Eligible Account Holder in the amount of such fair market value as of the date of the conversion.

We do not plan to apply for a private letter ruling from the Internal Revenue Service concerning the transactions described herein. Unlike private letter rulings issued by the Internal Revenue Service, opinions of counsel are not binding on the Internal Revenue Service or any state tax authority, and such authorities may disagree with such opinions. In the event of such disagreement, there can be no assurance that the conclusions reached in an opinion of counsel would be sustained by a court if contested by the Internal Revenue Service.

The federal tax opinion has been filed with the Securities and Exchange Commission as an exhibit to BSB Bancorp, Inc.’s registration statement. An opinion regarding the Massachusetts state income tax consequences consistent with the federal tax opinion has also been filed as an exhibit to BSB Bancorp, Inc.’s registration statement.

Restrictions on Purchase or Transfer of Our Shares after Conversion

The shares being acquired by the directors, executive officers and their associates are being acquired for investment purposes, and not with a view towards resale. All shares of common stock purchased in the offering by a director or an officer of Belmont Savings Bank generally may not be sold for a period of one year following the closing of the conversion, except in the event of the death of the director or officer. Each certificate for restricted shares will bear a legend giving notice of this restriction on transfer, and instructions will be issued to the effect that any transfer within this time period of any certificate or record ownership of the shares other than as provided above is a violation of the restriction. Any shares of common stock issued at a later date as a stock dividend, stock split or otherwise with respect to the restricted stock will be similarly restricted. The directors and executive officers of BSB Bancorp, Inc. also will be restricted by the insider trading rules promulgated pursuant to the Securities Exchange Act of 1934.

Purchases of shares of our common stock by any of our directors, officers and their associates, during the three-year period following the closing of the conversion may be made only through a broker or dealer registered with the Securities and Exchange Commission, except with the prior written approval of the Massachusetts Commissioner of Banks. This restriction does not apply, however, to negotiated transactions involving more than 1% of our outstanding common stock, to purchases of our common stock to fund stock options by one or more stock-based benefit plans or to any of our tax-qualified employee stock benefit plans or nontax-qualified employee stock benefit plans, including any stock-based benefit plans.

Massachusetts banking regulations prohibit BSB Bancorp, Inc. from repurchasing its shares of common stock during the first year following conversion unless compelling business reasons exist for such repurchases. After one year, the Massachusetts Commissioner of Banks does not impose any repurchase restrictions.

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BELMONT SAVINGS BANK FOUNDATION

General

In furtherance of our commitment to the communities in our market area, the plan of conversion provides that we will establish a new charitable foundation, Belmont Savings Bank Foundation, Inc. (the “Foundation”) as a non-stock, nonprofit Delaware corporation in connection with the stock offering. The Foundation will be funded with shares of our common stock and cash, as further described below.

By further enhancing our visibility and reputation in the communities within our market area, we believe that the Foundation will enhance the long-term value of Belmont Savings Bank’s community banking franchise. The stock offering presents us with a unique opportunity to provide a substantial and continuing benefit to our communities through the Foundation.

Purpose of the Charitable Foundation

In connection with the closing of the stock offering, we intend to contribute a number of shares equal to 2% of the shares sold in the offering, plus $200,000 in cash to the Foundation. At the adjusted maximum of the offering range, the contribution would include 179,860 shares of common stock and would have an aggregate value of approximately $2.0 million, based on the $10.00 per share offering price. At the minimum of the offering range, the contribution would include 115,600 shares of common stock, and would have an aggregate value of approximately $1.4 million, based on the $10.00 per share offering price.

The purpose of the Foundation is to provide financial support to charitable organizations in our market area and to enable the communities that we serve to share in our long-term growth. The Foundation will be dedicated completely to community activities and the promotion of charitable causes, and may be able to support such activities in ways that are not presently available to us. The Foundation will also support our ongoing obligations to the community under the Community Reinvestment Act. Belmont Savings Bank received an “satisfactory” rating in its most recent Community Reinvestment Act examination by the Massachusetts Commissioner of Banks.

Funding the Foundation with shares of our common stock is also intended to allow our communities to share in our potential growth and success after the stock offering is completed because the Foundation will benefit directly from any increases in the value of our shares of common stock. In addition, the Foundation will maintain close ties with Belmont Savings Bank, thereby forming a partnership with the communities in our market area.

Structure of the Charitable Foundation

The Foundation will be incorporated under Delaware law as a non-stock, nonprofit corporation. The certificate of incorporation of the Foundation will provide that the corporation is organized exclusively for charitable purposes as set forth in Section 501(c)(3) of the Internal Revenue Code. The Foundation’s certificate of incorporation will further provide that no part of the net earnings of the Foundation will inure to the benefit of, or be distributable to, its members, directors or officers or to private individuals.

The Foundation will be governed by a board of directors, initially consisting of , and one individual who is not affiliated with us. We are required to select one person to serve on the initial board of directors of the Foundation who is not one of our officers or directors and who has experience with local charitable organizations and grant making. We have selected as a director to satisfy these requirements. For five years after the stock offering, one seat on the Foundation’s board of directors will be reserved for a person from our local community who has experience with local community charitable organizations and grant making and who is not one of our officers, directors or employees, and at least one seat on the Foundation’s board of directors will be reserved for one of Belmont Savings Bank’s directors.

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The board of directors of the Foundation will be responsible for establishing its grant and donation policies, consistent with the purposes for which it was established. As directors of a nonprofit corporation, directors of the Foundation will at all times be bound by their fiduciary duty to advance the Foundation’s charitable goals, to protect its assets and to act in a manner consistent with the charitable purposes for which the Foundation is established. The directors of the Foundation also will be responsible for directing the activities of the Foundation, including the management and voting of the shares of our common stock held by the Foundation. However, as generally required by federal bank regulators, all shares of our common stock held by the Foundation will be voted in the same ratio as all other shares of our common stock on all proposals considered by our stockholders.

The Foundation’s initial place of business will be located at our corporate headquarters. The board of directors of the Foundation will appoint such officers and employees as may be necessary to manage its operations. To the extent applicable, we will comply with the affiliates restrictions set forth in Sections 23A and 23B of the Federal Reserve Act and the Massachusetts banking regulations governing transactions between Belmont Savings Bank and the Foundation.

As a private foundation under Section 501(c)(3) of the Internal Revenue Code, the Foundation will be required to distribute annually in grants or donations a minimum of 5% of the average fair market value of its net investment assets. Initial working capital will be provided to the Foundation in the form of $200,000 cash from the offering proceeds. Additional capital for the Foundation will come from:

(1)

any dividends that may be paid on our shares of common stock in the future;

(2)

within the limits of applicable federal and state laws, loans collateralized by the shares of common stock; or

(3)

the proceeds of the sale of any of the shares of common stock in the open market from time to time.

Tax Considerations

We believe that an organization created for the above purposes should qualify as a Section 501(c)(3) exempt organization under the Internal Revenue Code and should be classified as a private foundation. The Foundation will submit a timely request to the Internal Revenue Service to be recognized as a tax exempt organization. As long as the Foundation files its application for tax-exempt status within 27 months after the last day of the month in which it was organized, and provided the Internal Revenue Service approves the application, its effective date as a Section 501(c)(3) tax-exempt organization will be the date of its organization.

BSB Bancorp, Inc. and Belmont Savings Bank are authorized by federal law to make charitable contributions. We believe that the stock offering presents a unique opportunity to establish and fund a Foundation given the substantial amount of additional capital being raised. In making such a determination, we considered the dilutive impact to our stockholders of the contribution of shares of common stock to the Foundation. See “Capitalization,” “Regulatory Capital Compliance,” and “Comparison of Valuation and Pro Forma Information With and Without the Charitable Foundation.”

We believe that our contribution of shares of our common stock to the Foundation should not constitute an act of self-dealing and that we should be entitled to a federal tax deduction in the amount of the fair market value of the stock at the time of the contribution less the nominal amount (par value) that the Foundation is required to pay us for such stock. We are permitted to deduct for charitable purposes only an amount equal to 10% of our annual taxable income in any one year. We are permitted under the Internal Revenue Code to carry the excess contribution over the five-year period following the contribution to the Foundation. We estimate that if stock is sold at the adjusted maximum of the offering range, substantially all of the contribution should be deductible for federal tax purposes over the six-year period ( i.e. , the year in which the contribution is made and the succeeding five-year

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period). However, we do not have any assurance that the Internal Revenue Service will grant tax-exempt status to the Foundation. In such event, our contribution to the Foundation would be expensed without a tax benefit, resulting in a reduction in earnings in the year in which the Internal Revenue Service makes such a determination. Furthermore, even if the contribution is deductible, we may not have sufficient earnings to be able to use the deduction in full. Any such decision to continue to make additional contributions to the Foundation in the future would be based on an assessment of, among other factors, our financial condition at that time, the interests of our stockholders and depositors, and the financial condition and operations of the Foundation.

As a private foundation, earnings and gains, if any, from the sale of common stock or other assets are exempt from federal and state income taxation. However, investment income, such as interest, dividends and capital gains, is generally taxed at a rate of 2%. The Foundation will be required to file an annual return with the Internal Revenue Service within four and one-half months after the close of its fiscal year. The Foundation will be required to make its annual return available for public inspection. The annual return for a private foundation includes, among other things, an itemized list of all grants made or approved, showing the amount of each grant, the recipient, any relationship between a grant recipient and the foundation’s managers and a concise statement of the purpose of each grant.

Regulatory Requirements Imposed on the Charitable Foundation

Bank regulators generally have not objected if a well-capitalized savings bank contributes to a charitable foundation an aggregate amount of 8% or less of the shares or proceeds issued in a stock offering. Belmont Savings Bank qualifies as a well-capitalized savings bank for purposes of this limitation, and the contribution to the Foundation will not exceed this limitation.

Federal bank regulators generally impose the following requirements on the establishment of the Foundation:

•

our primary federal regulator may examine the Foundation at the Foundation’s expense;

•

the Foundation must comply with all supervisory directives imposed by our primary federal regulator;

•

the Foundation must provide annually to our primary federal regulator a copy of the annual report that the Foundation submits to the Internal Revenue Service;

•

the Foundation must operate according to written policies adopted by its board of directors, including a conflict of interest policy;

•

the Foundation may not engage in self-dealing and must comply with all laws necessary to maintain its tax-exempt status under the Internal Revenue Code; and

•

the Foundation must vote its shares of our common stock in the same ratio as all of the other shares voted on each proposal considered by our stockholders.

Within six months of completing the stock offering, the Foundation must submit to our primary federal regulator a three-year operating plan.

RESTRICTIONS ON ACQUISITION OF BSB BANCORP, INC.

Although the Board of Directors of BSB Bancorp, Inc. is not aware of any effort that might be made to obtain control of BSB Bancorp, Inc. after the conversion, the Board of Directors believes that it is appropriate to

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include certain provisions as part of BSB Bancorp, Inc.’s articles of incorporation to protect the interests of BSB Bancorp, Inc. and its stockholders from takeovers which our Board of Directors might conclude are not in the best interests of Belmont Savings Bank, BSB Bancorp, Inc. or BSB Bancorp, Inc.’s stockholders.

The following discussion is a general summary of the material provisions of BSB Bancorp, Inc.’s articles of incorporation and bylaws, Belmont Savings Bank’s amended Massachusetts articles of organization, Massachusetts corporate law and certain other regulatory provisions that may be deemed to have an “anti-takeover” effect. The following description of certain of these provisions is necessarily general and, with respect to provisions contained in BSB Bancorp, Inc.’s articles of incorporation and bylaws and Belmont Savings Bank’s amended articles of organization, reference should be made in each case to the document in question, each of which is part of Belmont Savings Bank’s application for conversion with the Massachusetts Commissioner of Banks and, except for Belmont Savings Bank’s Massachusetts stock charter, BSB Bancorp, Inc.’s registration statement filed with the Securities and Exchange Commission. See “Where You Can Find Additional Information.”

BSB Bancorp, Inc.’s Articles of Incorporation and Bylaws

BSB Bancorp, Inc.’s articles of incorporation and bylaws contain a number of provisions relating to corporate governance and rights of stockholders that might discourage future takeover attempts. As a result, stockholders who might desire to participate in such transactions may not have an opportunity to do so. In addition, these provisions will also render the removal of the Board of Directors or management of BSB Bancorp, Inc. more difficult.

Directors . The Board of Directors will be divided into three classes. The members of each class will be elected for a term of three years and only one class of directors will be elected annually. Thus, it would take at least two annual elections to replace a majority of our directors. The bylaws establish qualifications for board members, including restrictions on affiliations with competitors of Belmont Savings Bank and restrictions based upon prior legal or regulatory violations. Further, the bylaws impose notice and information requirements in connection with the nomination by stockholders of candidates for election to the Board of Directors or the proposal by stockholders of business to be acted upon at an annual meeting of stockholders. Such notice and information requirements are applicable to all stockholder business proposals and nominations, and are in addition to any requirements under the federal securities laws.

Evaluation of Offers. The articles of incorporation of BSB Bancorp, Inc. provide that its Board of Directors, when evaluating a transaction that would or may involve a change in control of BSB Bancorp, Inc. (whether by purchases of its securities, merger, consolidation, share exchange, dissolution, liquidation, sale of all or substantially all of its assets, proxy solicitation or otherwise), may, in connection with the exercise of its business judgment in determining what is in the best interests of BSB Bancorp, Inc. and its stockholders and in making any recommendation to the stockholders, give due consideration to all relevant factors, including, but not limited to:

•

the economic effect, both immediate and long-term, upon BSB Bancorp, Inc.’s stockholders, including stockholders, if any, who do not participate in the transaction;

•

the social and economic effect on the present and future employees, creditors and customers of, and others dealing with, BSB Bancorp, Inc. and its subsidiaries and on the communities in which BSB Bancorp, Inc. and its subsidiaries operate or are located;

•

whether the proposal is acceptable based on the historical, current or projected future operating results or financial condition of BSB Bancorp, Inc.;

•

whether a more favorable price could be obtained for BSB Bancorp, Inc.’s stock or other securities in the future;

166

•

the reputation and business practices of the other entity to be involved in the transaction and its management and affiliates as they would affect the employees of BSB Bancorp, Inc. and its subsidiaries;

•

the future value of the stock or any other securities of BSB Bancorp, Inc. or the other entity to be involved in the proposed transaction;

•

any antitrust or other legal and regulatory issues that are raised by the proposal;

•

the business and historical, current or expected future financial condition or operating results of the other entity to be involved in the transaction, including, but not limited to, debt service and other existing financial obligations, financial obligations to be incurred in connection with the proposed transaction, and other likely financial obligations of the other entity to be involved in the proposed transaction; and

•

the ability of BSB Bancorp, Inc. to fulfill its objectives as a bank holding company and on the ability of its subsidiary financial institution(s) to fulfill the objectives of a federally insured financial institution under applicable statutes and regulations.

If the Board of Directors determines that any proposed transaction should be rejected, it may take any lawful action to defeat such transaction.

Restrictions on Call of Special Meetings . The bylaws provide that special meetings of stockholders can be called by only the President, a majority of the total number of directors that BSB Bancorp, Inc. would have if there were no vacancies on the Board of Directors (the “whole board”), or the Secretary upon the written request of stockholders entitled to cast at least a majority of all votes entitled to vote at the meeting.

Prohibition of Cumulative Voting . The articles of incorporation prohibit cumulative voting for the election of directors.

Limitation of Voting Rights . The articles of incorporation provide that in no event will any person who beneficially owns more than 10% of the then-outstanding shares of common stock, be entitled or permitted to vote any of the shares of common stock held in excess of the 10% limit; provided that such 10% limit shall not apply if a majority of the unaffiliated directors approve the acquisition of shares in excess of the 10% limit prior to such acquisition.

Restrictions on Removing Directors from Office . The articles of incorporation provide that directors may be removed only for cause, and only by the affirmative vote of the holders of a majority of the voting power of all of our then-outstanding capital stock entitled to vote generally in the election of directors (after giving effect to the limitation on voting rights discussed above in “—Limitation of Voting Rights”), voting together as a single class.

Authorized but Unissued Shares . After the conversion, BSB Bancorp, Inc. will have authorized but unissued shares of common and preferred stock. See “Description of Capital Stock.” The articles of incorporation authorize 50 million shares of serial preferred stock. BSB Bancorp, Inc. is authorized to issue preferred stock from time to time in one or more series subject to applicable provisions of law, and the Board of Directors is authorized to fix the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications and terms and conditions of redemption of such shares. In addition, the articles of incorporation provide that a majority of the whole board may, without action by the stockholders, amend the articles of incorporation to increase or decrease the aggregate number of shares of stock of any class or series that BSB Bancorp, Inc. has the authority to issue. In the event of a proposed merger, tender offer or other attempt to gain control of BSB Bancorp, Inc. that our Board of Directors does not approve, it would be possible for the Board of

167

Directors to authorize the issuance of a series of preferred stock with rights and preferences that would impede the completion of the transaction. An effect of the possible issuance of preferred stock therefore may be to deter a future attempt to gain control of BSB Bancorp, Inc. Our Board of Directors has no present plan or understanding to issue any preferred stock.

Amendments to Articles of Incorporation and Bylaws. Except as provided under “— Authorized but Unissued Shares,” above, regarding the amendment of the articles of incorporation by the Board of Directors to increase or decrease the number of shares authorized for issuance, or as otherwise allowed by law, any amendment to the articles of incorporation must be approved by our Board of Directors and also by a majority of the outstanding shares of our voting stock; provided, however, that approval by at least 80% of the outstanding voting stock is generally required to amend the following provisions:

(i)

The limitation on voting rights of persons who directly or indirectly beneficially own more than 10% of the outstanding shares of common stock;

(ii)

The division of the Board of Directors into three staggered classes;

(iii)

The ability of the Board of Directors to fill vacancies on the board;

(iv)

The requirement that at least a majority of the votes eligible to be cast by stockholders must vote to remove directors, and can only remove directors for cause;

(v)

The ability of the Board of Directors to amend and repeal the bylaws;

(vi)

The ability of the Board of Directors to evaluate a variety of factors in evaluating offers to purchase or otherwise acquire BSB Bancorp, Inc.;

(vii)

The authority of the Board of Directors to provide for the issuance of preferred stock;

(viii)

The validity and effectiveness of any action lawfully authorized by the affirmative vote of the holders of a majority of the total number of outstanding shares of common stock;

(ix)

The number of stockholders constituting a quorum or required for stockholder consent;

(x)

The indemnification of current and former directors and officers, as well as employees and other agents, by BSB Bancorp, Inc.;

(xi)

The limitation of liability of officers and directors to BSB Bancorp, Inc. for money damages; and

(xii)

The provision of the articles of incorporation requiring approval of at least 80% of the outstanding voting stock to amend the provisions of the articles of incorporation provided in (i) through (xii) of this list.

The articles of incorporation also provide that the bylaws may be amended by the affirmative vote of a majority of our directors or by the stockholders by the affirmative vote of at least 80% of the total votes eligible to be voted at a duly constituted meeting of stockholders. Any amendment of this supermajority requirement for amendment of the bylaws would also require the approval of 80% of the outstanding voting stock.

Maryland Corporate Law

Under Maryland law, “business combinations” between a Maryland corporation and an interested stockholder or an affiliate of an interested stockholder are prohibited for five years after the most recent date on

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which the interested stockholder becomes an interested stockholder. These business combinations include a merger, consolidation, statutory share exchange or, in circumstances specified in the statute, certain transfers of assets, certain stock issuances and transfers, liquidation plans and reclassifications involving interested stockholders and their affiliates or issuance or reclassification of equity securities. Maryland law defines an interested stockholder as: (i) any person who beneficially owns 10% or more of the voting power of a corporation’s voting stock after the date on which the corporation had 100 or more beneficial owners of its stock; or (ii) an affiliate or associate of the corporation at any time after the date on which the corporation had 100 or more beneficial owners of its stock who, within the two-year period prior to the date in question, was the beneficial owner of 10% or more of the voting power of the then-outstanding voting stock of the corporation. A person is not an interested stockholder under the statute if the board of directors approved in advance the transaction by which the person otherwise would have become an interested stockholder. However, in approving a transaction, the Board of Directors may provide that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by the board.

After the five-year prohibition, any business combination between the Maryland corporation and an interested stockholder generally must be recommended by the Board of Directors of the corporation and approved by the affirmative vote of at least: (i) 80% of the votes entitled to be cast by holders of outstanding shares of voting stock of the corporation and (ii) two-thirds of the votes entitled to be cast by holders of voting stock of the corporation other than shares held by the interested stockholder with whom or with whose affiliate the business combination is to be effected or held by an affiliate or associate of the interested stockholder. These super-majority vote requirements do not apply if the corporation’s common stockholders receive a minimum price, as defined under Maryland law, for their shares in the form of cash or other consideration in the same form as previously paid by the interested stockholder for its shares.

Federal Statutes and Regulations

Federal Change in Bank Control Act. Federal law provides that no person, acting directly or indirectly or through or in concert with one or more other persons, may acquire control of a bank holding company unless the Federal Reserve Board has been given 60 days prior written notice. For this purpose, the term “control” means the acquisition of the ownership, control or holding of the power to vote 25% or more of any class of a bank holding company’s voting stock, and the term “person” includes an individual, corporation, partnership, and various other entities. Additionally, a person is presumed to acquire control if the person acquires the ownership, control or holding of the power to vote of 10% or more of any class of the holding company’s voting stock if specified factors are present, such as having a class of securities registered under Section 12 of the Securities Exchange Act of 1934, which will be the case with BSB Bancorp, Inc. Accordingly, the filing of a notice with the Federal Reserve Board would be required before any person could acquire 10% or more of the common stock of BSB Bancorp, Inc. unless the individual files a rebuttal of control that is accepted by the Federal Reserve Board. The statute and underlying regulations authorize the Federal Reserve Board to disapprove a proposed acquisition on certain specified grounds.

Federal Bank Holding Company Act. Federal law provides that no company may acquire control of a bank directly or indirectly without the prior approval of the Federal Reserve Board. Any company that acquires control of a bank becomes a “bank holding company” subject to registration, examination and regulation by the Federal Reserve Board. Pursuant to federal regulations, the term “company” is defined to include banks, corporations, partnerships, associations, and certain trusts and other entities, and “control” of a bank is deemed to exist if a company has voting control, directly or indirectly, of at least 25% of any class of a bank’s voting stock, and may be found to exist if a company controls in any manner the election of a majority of the directors of the bank or has the power to exercise a controlling influence over the management or policies of the bank. In addition, a bank holding company must obtain Federal Reserve Board approval prior to acquiring voting control of more than 5% of any class of voting stock of a bank or another bank holding company.

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An acquisition of control of a bank that requires the prior approval of the Federal Reserve Board under the Bank Holding Company Act (“BHCA”) is not subject to the notice requirements of the Change in Bank Control Act. Accordingly, the prior approval of the Federal Reserve Board under the BHCA would be required: (i) before any bank holding company could acquire 5% or more of the common stock of BSB Bancorp, Inc. and (ii) before any other company could acquire 25% or more of the common stock of BSB Bancorp, Inc.

Massachusetts Banking Law

Under Massachusetts banking laws, a company owning or controlling two or more banking institutions, including a savings bank, is regulated as a bank holding company. Each Massachusetts bank holding company: (i) must obtain the approval of the Massachusetts Board of Bank Incorporation before engaging in certain transactions, such as the acquisition of more than 5% of the voting stock of another banking institution; (ii) must register, and file reports, with the Massachusetts Division of Banks; and (iii) is subject to examination by the Massachusetts Division of Banks. BSB Bancorp, Inc. would become a Massachusetts bank holding company if it acquires a second banking institution and holds and operates it separately from Belmont Savings Bank. In addition, for a period of three years following completion of a conversion to stock form, no person may directly or indirectly offer to acquire or acquire beneficial ownership of more than 10% of any class of equity security of a converting mutual savings bank without prior written approval of the Massachusetts Commissioner of Banks.

DESCRIPTION OF CAPITAL STOCK

General

Under its Articles of Incorporation, BSB Bancorp, Inc. is authorized to issue 100 million shares of common stock, par value of $0.01 per share, and 50 million shares of preferred stock, par value $0.01 per share. BSB Bancorp, Inc. currently expects to issue in the offering up to 9,172,860 shares of common stock. BSB Bancorp, Inc. will not issue shares of preferred stock in the offering. Each share of BSB Bancorp, Inc. common stock will have the same relative rights as, and will be identical in all respects to, each other share of common stock. Upon payment of the subscription price for the common stock, in accordance with the plan of conversion, all of the shares of common stock will be duly authorized, fully paid and nonassessable.

The shares of common stock of BSB Bancorp, Inc. will represent nonwithdrawable capital, will not be an account of an insurable type, and will not be insured by the Federal Deposit Insurance Corporation or any other government agency.

Common Stock

Dividends . BSB Bancorp, Inc. can pay dividends on its common stock if, after giving effect to such distribution, (i) it would be able to pay its indebtedness as the indebtedness comes due in the usual course of business and (ii) its total assets exceed the sum of its liabilities and the amount needed, if BSB Bancorp, Inc. were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of any holders of capital stock who have a preference in the event of dissolution; provided, however, that even if BSB Bancorp, Inc.’s assets are less than the amount necessary to satisfy the requirement set forth in (ii) above, BSB Bancorp, Inc. may make a distribution from: (A) BSB Bancorp, Inc.’s net earnings for the fiscal year in which the distribution is made; (B) BSB Bancorp, Inc.’s net earnings for the preceding fiscal year; or (C) the sum of BSB Bancorp, Inc.’s net earnings for the preceding eight fiscal quarters. The holders of common stock of BSB Bancorp, Inc. will be entitled to receive and share equally in dividends as may be declared by our Board of Directors out of funds legally available therefor. If BSB Bancorp, Inc. issues shares of preferred stock, the holders thereof may have a priority over the holders of the common stock with respect to dividends.

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Voting Rights . Upon consummation of the conversion, the holders of common stock of BSB Bancorp, Inc. will have exclusive voting rights in BSB Bancorp, Inc. They will elect BSB Bancorp, Inc.’s Board of Directors and act on other matters as are required to be presented to them under Maryland law or as are otherwise presented to them by the Board of Directors. Generally, each holder of common stock will be entitled to one vote per share and will not have any right to cumulate votes in the election of directors. Any person who beneficially owns more than 10% of the then-outstanding shares of BSB Bancorp, Inc.’s common stock, however, will not be entitled or permitted to vote any shares of common stock held in excess of the 10% limit. If BSB Bancorp, Inc. issues shares of preferred stock, holders of the preferred stock may also possess voting rights. Certain matters require an 80% stockholder vote.

As a Massachusetts stock savings bank, corporate powers and control of Belmont Savings Bank are vested in its Board of Directors, who elect the officers of Belmont Savings Bank and who fill any vacancies on the Board of Directors. Voting rights of Belmont Savings Bank are vested exclusively in the owners of the shares of capital stock of Belmont Savings Bank, which will be BSB Bancorp, Inc., and voted at the direction of BSB Bancorp, Inc.’s Board of Directors. Consequently, the holders of the common stock of BSB Bancorp, Inc. will not have direct control of Belmont Savings Bank.

Liquidation . In the event of any liquidation, dissolution or winding up of Belmont Savings Bank, BSB Bancorp, Inc., as the holder of 100% of Belmont Savings Bank’s capital stock, would be entitled to receive all assets of Belmont Savings Bank available for distribution, after payment or provision for payment of all debts and liabilities of Belmont Savings Bank, including all deposit accounts and accrued interest thereon, and after distribution of the balance in the liquidation account to Eligible Account Holders. In the event of liquidation, dissolution or winding up of BSB Bancorp, Inc., the holders of its common stock would be entitled to receive, after payment or provision for payment of all its debts and liabilities, all of the assets of BSB Bancorp, Inc. available for distribution. If preferred stock is issued, the holders thereof may have a priority over the holders of the common stock in the event of liquidation or dissolution.

Preemptive Rights . Holders of the common stock of BSB Bancorp, Inc. will not be entitled to preemptive rights with respect to any shares that may be issued, unless such preemptive rights are approved by the Board of Directors. The common stock is not subject to redemption.

Preferred Stock

None of the shares of BSB Bancorp, Inc.’s authorized preferred stock will be issued as part of the offering or the conversion. Preferred stock may be issued with preferences and designations as our Board of Directors may from time to time determine. Our Board of Directors may, without stockholder approval, issue shares of preferred stock with voting, dividend, liquidation and conversion rights that could dilute the voting strength of the holders of the common stock and may assist management in impeding an unfriendly takeover or attempted change in control.

TRANSFER AGENT

The transfer agent and registrar for BSB Bancorp, Inc.’s common stock is .

EXPERTS

The consolidated financial statements of BSB Bancorp, MHC and subsidiary as of December 31, 2010 and 2009, and the related consolidated statements of income, changes in equity and cash flows for the years ended December 31, 2010, and September 30, 2009 and 2008, and for the three months ended December 31, 2009, included in this Prospectus and in the registration statement have been so included in reliance upon the report of Shatswell, MacLeod & Company, P.C., an independent registered public accounting firm, appearing elsewhere herein and in the registration statement, given on the authority of said firm as experts in auditing and accounting.

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RP Financial, LC. has consented to the publication herein of the summary of its report to BSB Bancorp, Inc. setting forth its opinion as to the estimated pro forma market value of the shares of common stock upon completion of the conversion and offering and its letters with respect to subscription rights and liquidation accounts.

LEGAL MATTERS

Luse Gorman Pomerenk & Schick, P.C., Washington, D.C., counsel to BSB Bancorp, Inc. and Belmont Savings Bank, will issue to BSB Bancorp, Inc. its opinions regarding the legality of the common stock and the federal income tax consequences of the conversion. Luse Gorman Pomerenk & Schick, P.C. has consented to the references in this prospectus to its opinions. Shatswell, MacLeod & Company, P.C. will issue to BSB Bancorp, MHC, BSB Bancorp, Inc., BSB Bancorp, Inc. and Belmont Savings Bank its opinion regarding the Massachusetts income tax consequences of the conversion. Shatswell, MacLeod & Company, P.C. has consented to the reference in this prospectus to its opinion. Certain legal matters will be passed upon for Keefe, Bruyette & Woods, Inc. by Kilpatrick Townsend & Stockton LLP.

WHERE YOU CAN FIND ADDITIONAL INFORMATION

BSB Bancorp, Inc. has filed with the Securities and Exchange Commission a registration statement under the Securities Act of 1933 with respect to the shares of common stock offered hereby. As permitted by the rules and regulations of the Securities and Exchange Commission, this prospectus does not contain all the information set forth in the registration statement. Such information, including the appraisal report which is an exhibit to the registration statement, can be examined without charge at the public reference facilities of the Securities and Exchange Commission located at 100 F Street, N.E., Washington, D.C. 20549, and copies of such material can be obtained from the Securities and Exchange Commission at prescribed rates. The Securities and Exchange Commission telephone number is 1-800-SEC-0330. In addition, the Securities and Exchange Commission maintains a web site (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding registrants that file electronically with the Securities and Exchange Commission, including BSB Bancorp, Inc. The statements contained in this prospectus as to the contents of any contract or other document filed as an exhibit to the registration statement are, of necessity, brief descriptions of the material terms of, and should be read in conjunction with, such contract or document.

BSB Bancorp, MHC has filed an application for approval of the conversion with the Massachusetts Commissioner of Banks, and BSB Bancorp, Inc. has filed a bank holding application with the Federal Reserve Board. The application for conversion filed with the Massachusetts Commissioner of Banks may be inspected, without charge, at the offices of the Massachusetts Division of Banks, 1000 Washington Street, 10th Floor, Boston, Massachusetts. To obtain a copy of the application filed with the Federal Reserve Board, you may contact the Vice President and Community Affairs Officer of the Federal Reserve Bank of Boston, at 617-973-3059.

A copy of the certificate of incorporation and bylaws of BSB Bancorp, Inc. are available without charge from BSB Bancorp, Inc., Attention: Corporate Secretary.

In connection with the offering, BSB Bancorp, Inc. will register its common stock under Section 12(b) of the Securities Exchange Act of 1934 and, upon such registration, BSB Bancorp, Inc. and the holders of its common stock will become subject to the proxy solicitation rules, reporting requirements and restrictions on common stock purchases and sales by directors, officers and greater than 10% stockholders, the annual and periodic reporting and certain other requirements of the Securities Exchange Act of 1934. Under the plan of conversion, BSB Bancorp, Inc. has undertaken that it will not terminate such registration for a period of at least three years following the offering.

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS OF

BSB BANCORP, MHC



Report of Independent Registered Public Accounting Firm			F-2

Consolidated Balance Sheets at March 31, 2011 (unaudited) and December 31, 2010 and 2009			F-3

Consolidated Statements of Income for the three months ended March 31, 2011 and 2010 (unaudited), the fiscal years ended December 31, 2010 and 2009 (unaudited), the three months ended December 31, 2009 and 2008 (unaudited) and the years ended September 30, 2009 and 2008			F-4

Consolidated Statements of Changes in Equity for the three months ended March 31, 2011 (unaudited), the fiscal year ended December 31, 2010, the three months ended December 31, 2009 and the fiscal years ended September 30, 2009, 2008 and 2007			F-5

Consolidated Statements of Cash Flows for the three months ended March 31, 2011 and 2010 (unaudited), the fiscal years ended December 31, 2010 and 2009 (unaudited), the three months ended December 31, 2009 and 2008 (unaudited) and the years ended September 30, 2009 and 2008			F-6

Notes to Consolidated Financial Statements			F-9

***

Separate financial statements for BSB Bancorp, Inc. have not been included in this prospectus because BSB Bancorp, Inc. has not engaged in any significant activities, has no significant assets, and has not contingent liabilities, revenue or expenses.

All financial statement schedules have been omitted as the required information either is not applicable or is included in the financial statements or related notes.

F-1

LOGO

The Board of Trustees

BSB Bancorp, MHC

Belmont, Massachusetts

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have audited the accompanying consolidated balance sheets of BSB Bancorp, MHC and Subsidiary as of December 31, 2010 and 2009 and the related consolidated statements of income, changes in equity and cash flows for the years ended December 31, 2010, September 30, 2009 and 2008, and for the three months ended December 31, 2009. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of BSB Bancorp, MHC and Subsidiary as of December 31, 2010 and 2009, and the consolidated results of their operations and their cash flows for the years ended December 31, 2010, September 30, 2009 and 2008, and for the three months ended December 31, 2009, in conformity with accounting principles generally accepted in the United States of America.

/s/ Shatswell, MacLeod & Company, P.C.

SHATSWELL, MacLEOD & COMPANY, P.C.

West Peabody, Massachusetts

April 12, 2011

83 PINE STREET — WEST PEABODY, MASSACHUSETTS 01960-3635 — TELEPHONE (978) 535-0206 — FACSIMILE (978) 535-9908

smc@shatswell.com www.shatswell.com

F-2

BSB BANCORP, MHC AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(In Thousands)


	March 31,		December 31,
	2011		2010		2009
	(unaudited)
ASSETS
Cash and due from banks	$	1,944	$	3,149	$	2,779
Federal funds sold		3,400		2,525		2,907
Money market mutual funds		17,540		7,762		7,202
Interest-bearing deposits in other banks		13,014		7,552		3,510

Cash and cash equivalents		35,898		20,988		16,398
Interest-bearing time deposits with other banks		119		119		394
Investments in trading securities						11,455
Investments in available-for-sale securities		1		14,274
Investments in held-to-maturity securities (fair value of $80,675 as of March 31, 2011 (unaudited) and $95,761 and $93,252 as of December 31, 2010 and 2009, respectively)		78,996		93,899		91,704
Federal Home Loan Bank stock, at cost		8,038		8,038		8,038
Loans held-for-sale		1,066		3,775		250
Loans, net of allowance for loan losses of $3,328 as of March 31, 2011 (unaudited) and $2,889 and $2,473 as of December 31, 2010 and 2009, respectively		383,014		336,936		351,753
Premises and equipment, net		1,938		1,939		1,630
Accrued interest receivable		1,962		2,121		2,027
Deferred tax asset, net		3,160		2,913		4,364
Income taxes receivable		600		908
Bank owned life insurance		12,075		11,954		13,621
Other assets		2,407		2,423		3,310

Total assets	$	529,274	$	500,287	$	504,944


LIABILITIES AND EQUITY
Deposits:
Noninterest-bearing	$	33,393	$	30,210	$	21,962
Interest-bearing		343,927		316,689		290,732

Total deposits		377,320		346,899		312,694
Federal Home Loan Bank advances		93,800		92,800		129,700
Securities sold under agreements to repurchase		3,086		2,654		3,672
Other borrowed funds		1,590		5,199		5,750
Accrued interest payable		198		223		560
Deferred compensation liability		3,936		3,929		7,113
Income taxes payable						345
Other liabilities		2,161		1,656		1,285

Total liabilities		482,091		453,360		461,119

Equity:
Retained earnings		47,181		45,652		43,825
Accumulated other comprehensive income		2		1,275

Total equity		47,183		46,927		43,825

Total liabilities and equity	$	529,274	$	500,287	$	504,944

The accompanying notes are an integral part of these consolidated financial statements.

F-3

BSB BANCORP, MHC AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

(In Thousands)


	Three Months Ended March 31,				Years Ended December 31,					Three Months Ended December 31,					Years Ended September 30,
	2011		2010		2010			2009		2009		2008			2009			2008
	(unaudited)							(unaudited)				(unaudited)
Interest and dividend income:
Interest and fees on loans	$	4,407	$	4,718	$	17,980		$	19,728	$	4,800	$	5,158		$	20,085		$	19,010
Interest on debt securities:
Taxable		595		794		2,914			3,058		756		783			3,085			3,324
Dividends		90		57		298			292		81		141			351			607
Other interest income		2		2		9			16		4		6			18			91

Total interest and dividend income		5,094		5,571		21,201			23,094		5,641		6,088			23,539			23,032

Interest expense:
Interest on deposits		890		1,013		3,842			4,610		1,065		1,372			4,916			7,496
Interest on Federal Home Loan Bank advances		605		1,037		3,457			5,402		1,175		1,601			5,829			5,280
Interest on securities sold under agreements to repurchase		5		8		33			42		11		19			50			73
Interest on other borrowed funds		45		60		236			317		63		100			353			445

Total interest expense		1,545		2,118		7,568			10,371		2,314		3,092			11,148			13,294

Net interest and dividend income		3,549		3,453		13,633			12,723		3,327		2,996			12,391			9,738
Provision for loan losses		476		284		438			366		152		383			597			375

Net interest and dividend income after provision for loan losses		3,073		3,169		13,195			12,357		3,175		2,613			11,794			9,363

Noninterest income (charges):
Customer service fees		109		127		527			587		139		156			603			582
Increase in bank owned life insurance		108		135		474			636		136		183			534			564
Bank owned life insurance death benefit											150		193			193
Net gain on sales of loans		70		45		340			357		50		26			333			72
Net gain (loss) on sales and calls of securities		2,788				166													(323	)
Net gain (loss) on trading securities				624		322			2,630		580		(2,562	)		(511	)		(2,265	)
Writedown of impaired securities						(204	)												(239	)
Other income		11		41		96			70		18		9			62			405

Total noninterest income (charges)		3,086		972		1,721			4,280		1,073		(1,995	)		1,214			(1,204	)

Noninterest expense:
Salaries and employee benefits		2,393		1,642		7,995			6,384		1,579		1,527			6,334			5,995
Trustee fees		68		88		311			339		94		84			329			305
Occupancy expense		209		177		727			688		182		165			670			693
Equipment expense		78		53		247			258		68		67			256			265
Deposit insurance		139		134		497			752		113		39			679			60
Data processing		195		237		896			559		150		154			563			475
Professional fees		127		100		645			309		151		154			313			326
Marketing		222		53		533			288		86		79			280			349
Other expense		291		196		1,018			885		320		179			743			832

Total noninterest expense		3,722		2,680		12,869			10,462		2,743		2,448			10,167			9,300

Income (loss) before income tax expense (benefit)		2,437		1,461		2,047			6,175		1,505		(1,830	)		2,841			(1,141	)
Income tax expense (benefit)		908		560		220			2,742		589		(730	)		1,424			(705	)

Net income (loss)	$	1,529	$	901	$	1,827		$	3,433	$	916	$	(1,100	)	$	1,417		$	(436	)

The accompanying notes are an integral part of these consolidated financial statements.

F-4

BSB BANCORP, MHC AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In Thousands)


	Retained Earnings			Accumulated Other Comprehensive Income			Total Equity
Balance, September 30, 2007	$	42,289		$	219		$	42,508
Cumulative effect of restatement adjustments (see Note 18)		(361	)					(361	)

Balance, September 30, 2007, as restated		41,928			219			42,147
Net loss		(436	)
Other comprehensive loss, net of tax effect					(219	)
Comprehensive loss								(655	)

Balance, September 30, 2008		41,492						41,492
Net income and comprehensive income		1,417						1,417

Balance, September 30, 2009		42,909						42,909
Net income and comprehensive income		916						916

Balance, December 31, 2009		43,825						43,825
Net income		1,827
Other comprehensive income, net of tax effect					1,275
Comprehensive income								3,102

Balance, December 31, 2010		45,652			1,275			46,927
Net income		1,529
Other comprehensive loss, net of tax effect					(1,273	)
Comprehensive income								256

Balance, March 31, 2011 (unaudited)	$	47,181		$	2		$	47,183


Reclassification disclosure:

	Three Months Ended			Years Ended
	March 31,			December 31,
	2011			2010			2009
	(unaudited)
Net unrealized holding gains (losses) on available-for-sale securities	$	668		$	2,037		$	(3,197	)
Reclassification adjustment for realized (gains) losses in net income		(2,788	)		83			2,827

Other comprehensive (loss) income before income tax effect		(2,120	)		2,120			(370	)
Income tax benefit (expense)		847			(847	)		151

		(1,273	)		1,273			(219	)

Comprehensive income - pension					3
Income tax expense					(1	)

					2

Other comprehensive (loss) income, net of tax	$	(1,273	)	$	1,275		$	(219	)

Accumulated other comprehensive income consists of the following:


	March 31, 2011		December 31, 2010
	(unaudited)
Net unrealized holding gains on available-for-sale securities, net of taxes	$		$	1,273
Unrecognized retirement benefit, net of tax		2		2

Accumulated other comprehensive income	$	2	$	1,275

The accompanying notes are an integral part of these consolidated financial statements.

F-5

BSB BANCORP, MHC AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)


	Three Months Ended March 31,						Years Ended December 31,						Three Months Ended December 31,						Years Ended September 30,
	2011			2010			2010			2009			2009			2008			2009			2008
	(unaudited)									(unaudited)						(unaudited)
Cash flows from operating activities:
Net income (loss)	$	1,529		$	901		$	1,827		$	3,433		$	916		$	(1,100	)	$	1,417		$	(436	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Amortization (accretion) of securities, net		291			189			980			518			159			52			423			(79	)
Net (gain) loss on sales and calls of securities		(2,788	)					(166	)														323
(Increase) decrease in trading securities					(1,126	)		(907	)		(2,162	)		(879	)		2,717			1,434
Loss on trading securities transferred from available-for-sale																							2,265
Writedown of available-for-sale securities								204															239
Decrease (increase) in loans held-for-sale		2,709			250			(3,525	)		(250	)		(250	)
Provision for loan losses		476			284			438			366			152			383			597			375
(Accretion) amortization of mortgage premium		(3	)		10			31			77			14			22			87			(22	)
Change in net deferred loan costs		(886	)		(10	)		(101	)		(14	)		(3	)		(67	)		(78	)		(76	)
Depreciation and amortization		107			83			358			371			96			88			363			363
Decrease (increase) in accrued interest receivable		159			(54	)		(94	)		9			11			(52	)		(55	)		(49	)
Increase in bank owned life insurance		(108	)		(135	)		(474	)		(636	)		(136	)		(183	)		(534	)		(564	)
Bank owned life insurance death benefit income														(150	)		(193	)		(193	)
Deferred income tax expense (benefit)		600			199			603			1,000			122			(837	)		41			(1,440	)
Decrease (increase) in mortgage servicing rights		2			5			12			34			4			(29	)		(14	)		52
Decrease (increase) in prepaid expenses		117			(226	)		209			(1,726	)		(1,765	)		34			72			50
(Increase) decrease in other assets		(103	)		793			666			(804	)		92			66			(38	)		(306	)
Decrease (increase) in income taxes receivable		308						(908	)
(Decrease) increase in income taxes payable					(200	)		(345	)		295			336			(209	)		(250	)		61
(Decrease) increase in accrued interest payable		(25	)		(50	)		(337	)		(210	)		(19	)		45			(146	)		(43	)
Increase (decrease) in deferred compensation liability		7			84			(3,181	)		573			99			142			617			508
(Decrease) increase in accrued expenses		(278	)		(232	)		311			118			(143	)		107			316			(303	)
Increase (decrease) in other liabilities		783			923			60			124			(166	)		(105	)		236			300


Net cash provided by (used in) operating activities		2,897			1,688			(4,339	)		1,116			(1,510	)		881			4,295			1,218

F-6

BSB BANCORP, MHC AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

(continued)


	Three Months Ended March 31,						Years Ended December 31,						Three Months Ended December 31,						Years Ended September 30,
	2011			2010			2010			2009			2009			2008			2009			2008
	(unaudited)									(unaudited)						(unaudited)
Cash flows from investing activities:
Purchases of interest-bearing time deposits with other banks											(119	)		(119	)								(2,073	)
Maturities of interest-bearing time deposits with other banks					275			275			114			114									2,055
Purchases of available-for-sale securities		(709	)					(1,422	)														(8,822	)
Proceeds from sales of available-for-sale securities		15,650						1,547															8,289
Proceeds from maturities of held-to-maturity securities		19,624			4,982			53,043			36,727			3,253			8,491			41,954			69,607
Purchases of held-to-maturity securities		(5,012	)		(8,955	)		(56,173	)		(51,767	)		(12,646	)		(12,820	)		(51,940	)		(68,125	)
Purchases of Federal Home Loan Bank stock																	(222	)		(200	)		(2,504	)
Loan originations and principal collections, net		(44,324	)		4,059			17,562			19,709			7,447			(1,576	)		16,993			(7,541	)
Purchases of loans		(1,345	)		(417	)		(3,121	)		(3,693	)		(168	)		(8,561	)		(18,396	)		(30,116	)
Recoveries of loans previously charged off		4			6			8			15			1			2			15			5
Capital expenditures		(106	)		(40	)		(667	)		(137	)		(33	)		(220	)		(326	)		(229	)
Insurance proceeds received - equipment														4
Premiums paid on bank owned life insurance		(13	)		(4	)		(55	)		(123	)								(123	)		(118	)
Redemption of life insurance policies								2,196			799						300			300


Net cash (used in) provided by investing activities		(16,231	)		(94	)		13,193			1,525			(2,147	)		(14,606	)		(11,723	)		(39,572	)


Cash flows from financing activities:
Net increase (decrease) in demand deposits, NOW and savings accounts		20,031			8,762			36,876			32,458			12,245			(2,047	)		18,165			(4,664	)
Net increase (decrease) in time deposits		10,390			330			(2,671	)		(3,514	)		306			15,614			11,794			(26,087	)
Proceeds from Federal Home Loan Bank advances		14,500			10,000			25,000			15,500			12,000			10,000			24,500			103,800
Principal payments on Federal Home Loan Bank advances		(13,500	)		(16,000	)		(61,900	)		(44,550	)		(19,750	)		(7,000	)		(38,800	)		(38,800	)
Net change in short-term advances											4,000
Net increase (decrease) in securities sold under agreements to repurchase		432			155			(1,018	)		(315	)		(860	)		506			1,052			(215	)
Repayment of principal on other borrowed funds		(3,609	)		(229	)		(551	)		(1,538	)		(275	)		(232	)		(1,494	)		(1,181	)


Net cash provided by (used in) financing activities		28,244			3,018			(4,264	)		2,041			3,666			16,841			15,217			32,853

F-7

BSB BANCORP, MHC AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

(continued)


	Three Months Ended March 31,				Years Ended December 31,				Three Months Ended December 31,				Years Ended September 30,
	2011		2010		2010		2009		2009		2008		2009		2008
	(unaudited)						(unaudited)				(unaudited)
Net increase (decrease) in cash and cash equivalents		14,910		4,612		4,590		4,682		9		3,116		7,789		(5,501	)
Cash and cash equivalents at beginning of period		20,988		16,398		16,398		11,716		16,389		8,600		8,600		14,101

Cash and cash equivalents at end of period	$	35,898	$	21,010	$	20,988	$	16,398	$	16,398	$	11,716	$	16,389	$	8,600


Supplemental disclosures:
Interest paid	$	1,570	$	2,168	$	8,012	$	10,682	$	2,360	$	3,062	$	11,384	$	13,402
Income taxes paid				561		870		1,447		131		316		1,633		674
Transfer of available-for-sale securities to trading securities																12,010
Transfer of comprehensive loss of available-for-sale securities to loss on trading securities																2,265
Transfer of trading securities to available-for-sale securities						12,362
Transfer from bank owned life insurance to other assets (death benefit settlement)										799

The accompanying notes are an integral part of these consolidated financial statements.

F-8

BSB BANCORP, MHC AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands)

NOTE 1 - NATURE OF OPERATIONS

Under a Plan of Reorganization, adopted by the Board of Trustees of Belmont Savings Bank (the “Bank”) on January 7, 2009, the Bank reorganized from a mutual savings bank to a mutual holding company. Following the reorganization, effective October 1, 2009, there are three corporate entities: BSB Bancorp, MHC (a mutual holding company) (the “Company”), BSB Bancorp, Inc. (a stock holding company) that is wholly-owned by the mutual holding company, and Belmont Savings Bank (in stock form) that is wholly-owned by the stock holding company.

Belmont Savings Bank is a state chartered savings bank which was incorporated in 1885 and is headquartered in Belmont, Massachusetts. The Company is engaged principally in the business of attracting deposits from the general public and investing those deposits in residential real estate loans, consumer loans, and commercial loans.

NOTE 2 - ACCOUNTING POLICIES

The accounting and reporting policies of the Company and its subsidiary conform to accounting principles generally accepted in the United States of America and predominant practices within the banking industry. The consolidated financial statements were prepared using the accrual basis of accounting. The significant accounting policies are summarized below to assist the reader in better understanding the consolidated financial statements and other data contained herein.

USE OF ESTIMATES:

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

BASIS OF PRESENTATION:

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, BSB Bancorp, Inc., and its wholly-owned subsidiary, Belmont Savings Bank, and its wholly-owned subsidiary, BSB Investment Corporation. BSB Investment Corporation was established solely for the purpose of buying, selling and holding investment securities. All significant intercompany accounts and transactions have been eliminated in the consolidation.

The information at and for the three months ended March 31, 2011 and 2010 is unaudited. However, in the opinion of management of the Company, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the results of operations for the unaudited periods have been made. The selected operating data presented below for the three months ended March 31, 2011, are not necessarily indicative of the results that may be expected for the year ending December 31, 2011 or for future periods.

CASH AND CASH EQUIVALENTS:

For purposes of reporting cash flows, cash and cash equivalents include cash on hand, cash items, due from banks, federal funds sold, money market mutual funds and interest-bearing deposits in other banks.

Cash and due from banks as of March 31, 2011 (unaudited) and December 31, 2010 and 2009 includes $2,186, $2,226 and $2,527, respectively, which is subject to withdrawals and usage restrictions to satisfy the reserve requirements of the Federal Reserve Bank.

F-9

SECURITIES:

Investments in debt securities are adjusted for amortization of premiums and accretion of discounts computed so as to approximate the interest method. Gains or losses on sales of investment securities are computed on a specific identification basis.

The Company classifies debt and equity securities into one of three categories: held-to-maturity, available-for-sale, or trading. These security classifications may be modified after acquisition only under certain specified conditions. In general, securities may be classified as held-to-maturity only if the Company has the positive intent and ability to hold them to maturity. Trading securities are defined as those bought and held principally for the purpose of selling them in the near term. All other securities must be classified as available-for-sale.

•

Held-to-maturity securities are measured at amortized cost on the consolidated balance sheet. Unrealized holding gains and losses are not included in earnings or in a separate component of capital. They are merely disclosed in the notes to the consolidated financial statements.

•

Available-for-sale securities are carried at fair value on the consolidated balance sheet. Unrealized holding gains and losses are not included in earnings, but are reported as a net amount (less expected tax) in a separate component of equity until realized.

•

Trading securities are carried at fair value on the consolidated balance sheet. Unrealized holding gains and losses for trading securities are included in earnings.

For any debt security with a fair value less than its amortized cost basis, the Company will determine whether it has the intent to sell the debt security or whether it is more likely than not it will be required to sell the debt security before the recovery of its amortized cost basis. If either condition is met, the Company will recognize a full impairment charge to earnings. For all other debt securities that are considered other-than-temporarily impaired and do not meet either condition, the credit loss portion of impairment will be recognized in earnings as realized losses. The other-than-temporary impairment related to all other factors will be recorded in other comprehensive income.

Declines in marketable equity securities below their cost that are deemed other than temporary are reflected in earnings as realized losses.

The Company engages in trading activities for its own account. Securities that are held principally for resale in the near term are recorded in the trading assets account at fair value with changes in fair value recorded in earnings. Interest and dividends are included in net interest income. Quoted market prices are used to determine the fair value of trading instruments.

As a member of the Federal Home Loan Bank (FHLB), the Company is required to invest in $100 par value stock of FHLB. The FHLB capital structure mandates that members must own stock as determined by their Total Stock Investment Requirement which is the sum of a member’s Membership Stock Investment Requirement and Activity-Based Stock Investment Requirement. The Membership Stock Investment Requirement is calculated as 0.35% of member’s Stock Investment Base, subject to a minimum investment of $10,000 and a maximum investment of $25,000,000. The Stock Investment Base is an amount calculated based on certain assets held by a member that are reflected on call reports submitted to applicable regulatory authorities. The Activity-Based Stock Investment Requirement is calculated as 4.5% of a member’s outstanding principal balances of FHLB advances plus a percentage of advance commitments, 4.5% of standby letters of credit issued by the FHLB and 4.5% of the value of intermediated derivative contracts. Management evaluates the Company’s investment in FHLB of Boston stock for other-than-temporary impairment at least on a quarterly basis and more frequently when economic or market conditions warrant such evaluation. Based on its most recent analysis of the FHLB of Boston as of March 31, 2011 (unaudited) and December 31, 2010 management deems its investment in FHLB of Boston stock to be not other-than-temporarily impaired.

F-10

On December 8, 2008, the Federal Home Loan Bank of Boston announced a moratorium on the repurchase of excess stock held by its members. The moratorium will remain in effect indefinitely.

LOANS:

The Company’s loan portfolio includes residential real estate, commercial real estate, construction, commercial and consumer segments. Residential real estate loans include classes for 1-4 family owner occupied, second mortgages and equity lines of credit. Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off generally are reported at their outstanding unpaid principal balances adjusted for charge-offs, the allowance for loan losses, and any deferred fees or costs on originated loans. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the related loan yield using the interest method.

The accrual of interest on all loans is discontinued at the time the loan is 90 days past due unless the credit is well-secured and in process of collection. Past due status is based on contractual terms of the loan. In all cases, loans are placed on nonaccrual if collection of principal or interest is considered doubtful. All interest accrued but not collected for loans that are placed on nonaccrual is reversed against interest income. The interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

ALLOWANCE FOR LOAN LOSSES:

The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to earnings. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is evaluated on a regular basis by management. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. The allowance consists of general, allocated and unallocated components, as further described below.

General Component:

The general component of the allowance for loan losses is based on historical loss experience adjusted for qualitative factors stratified by the following loan segments: residential real estate, commercial real estate, construction, commercial and consumer. Management uses a rolling average of historical losses based on a time frame appropriate to capture relevant loss data for each loan segment. This historical loss factor is adjusted for the following qualitative factors: levels/trends in delinquencies; trends in volume and terms of loans; effects of changes in risk selection and underwriting standards and other changes in lending policies, procedures and practices; experience/ability/depth of lending management and staff; and national and local economic trends and conditions. There were no changes in the Company’s policies or methodology pertaining to the general component of the allowance for loan losses during 2010.

The qualitative factors are determined based on the various risk characteristics of each loan segment. Risk characteristics relevant to each portfolio segment are as follows:

Residential real estate - The Company generally does not originate loans with a loan-to-value ratio greater than 80 percent and does not grant subprime loans. All loans in this segment are collateralized by owner-occupied residential real estate and repayment is dependent on the credit quality of the individual borrower. The overall health of the economy, including unemployment rates and housing prices, will have an effect on the credit quality in this segment.

F-11

Commercial real estate - Loans in this segment are primarily income-producing properties throughout New England. The underlying cash flows generated by the properties are adversely impacted by a downturn in the economy as evidenced by increased vacancy rates, which in turn, will have an effect on the credit quality in this segment. Management obtains rent rolls annually and continually monitors the cash flows of these loans.

Construction loans – Loans in this segment primarily include speculative real estate development loans for which payment is derived from sale of the property. Credit risk is affected by cost overruns, time to sell at an adequate price, and market conditions.

Commercial loans – Loans in this segment are made to businesses and are generally secured by assets of the business. Repayment is expected from the cash flows of the business. A weakened economy, and resultant decreased consumer spending, will have an effect on the credit quality in this segment.

Consumer loans - Loans in this segment include indirect auto loans and other secured and unsecured consumer loans. Repayment is dependent on the credit quality of the individual borrower.

Allocated Component:

The allocated component relates to loans that are classified as impaired. Impairment is measured on a loan by loan basis for commercial, commercial real estate and construction loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral if the loan is collateral dependent. An allowance is established when the discounted cash flows (or collateral value) of the impaired loan is lower than the carrying value of that loan. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Company does not separately identify individual consumer and residential real estate loans for impairment disclosures, unless such loans are subject to a troubled debt restructuring agreement.

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.

The Company periodically may agree to modify the contractual terms of loans. When a loan is modified and a concession is made to a borrower experiencing financial difficulty, the modification is considered a troubled debt restructuring (“TDR”). All TDRs are initially classified as impaired.

Unallocated Component:

An unallocated component is maintained to cover uncertainties that could affect management’s estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating allocated and general reserves in the portfolio.

F-12

SERVICING:

Servicing assets are recognized as separate assets when rights are acquired through purchase or through sale of financial assets. Capitalized servicing rights are reported in other assets and are amortized into noninterest income in proportion to, and over the period of, the estimated future net servicing income of the underlying financial assets. Servicing assets are evaluated for impairment based upon the fair value of the rights as compared to amortized cost. Impairment is determined by stratifying rights by predominant characteristics such as interest rates and terms. Fair value is determined using prices for similar assets with similar characteristics, when available, or based upon discounted cash flows using market-based assumptions. Impairment is recognized through a valuation allowance for an individual stratum, to the extent that fair value is less than the capitalized amount for the stratum.

PREMISES AND EQUIPMENT:

Land is carried at cost. Building and equipment are stated at cost, less accumulated depreciation, computed on the straight-line method over the estimated useful lives of the assets. It is general practice to charge the cost of maintenance and repairs to earnings when incurred; major expenditures for betterments are capitalized and depreciated over their estimated useful lives.

OTHER REAL ESTATE OWNED AND IN-SUBSTANCE FORECLOSURES:

Other real estate owned includes properties acquired through foreclosure and properties classified as in-substance foreclosures in accordance with ASC 310-40, “Receivables - Troubled Debt Restructuring by Creditors.” These properties are carried at the lower of cost or estimated fair value less estimated costs to sell. Any writedown from cost to estimated fair value required at the time of foreclosure or classification as in-substance foreclosure is charged to the allowance for loan losses. Expenses incurred in connection with maintaining these assets, subsequent writedowns and gains or losses recognized upon sale are included in other expense.

In accordance with ASC 310-10-35, “Receivables – Overall - Subsequent Measurements,” the Company classifies loans as in-substance repossessed or foreclosed if the Company receives physical possession of the debtor’s assets regardless of whether formal foreclosure proceedings take place.

ADVERTISING:

The Company directly expenses costs associated with advertising as they are incurred.

INCOME TAXES:

The Company recognizes income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are established for the temporary differences between the accounting basis and the tax basis of the Company’s assets and liabilities at enacted tax rates expected to be in effect when the amounts related to such temporary differences are realized or settled.

FAIR VALUES OF FINANCIAL INSTRUMENTS:

ASC 825, “Financial Instruments,” requires that the Company disclose estimated fair value for its financial instruments. Fair value methods and assumptions used by the Company in estimating its fair value disclosures are as follows:

Cash and cash equivalents: The carrying amounts reported in the balance sheet for cash and cash equivalents approximate those assets’ fair values.

Interest-bearing time deposits with other banks: Fair values of interest-bearing time deposits with other banks are estimated using discounted cash flow analyses based on current rates for similar types of deposits.

F-13

Securities (including mortgage-backed securities): Fair values for securities are based on quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments.

Loans held-for-sale: Fair values of loans held-for-sale are estimated based on outstanding investor commitments or, in the absence of such commitments, are based on current investor yield requirements.

Loans receivable: For variable-rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values. The fair values for other loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality.

Accrued interest receivable: The carrying amounts of accrued interest receivable approximate their fair values.

Deposit liabilities: The fair values disclosed for demand deposits (e.g., interest and non-interest checking, passbook savings and money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts). Fair values for fixed-rate certificate accounts are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on certificate accounts.

Federal Home Loan Bank advances: Fair values for Federal Home Loan Bank advances are estimated using a discounted cash flow technique that applies interest rates currently being offered on advances to a schedule of aggregated expected monthly maturities on Federal Home Loan Bank advances.

Securities sold under agreements to repurchase: The carrying amounts reported on the consolidated balance sheet for securities sold under agreements to repurchase approximate their fair values.

Other borrowed funds: The fair values for other borrowed funds are estimated using a discounted cash flow technique that applies interest rates currently being offered on debt with similar terms to a schedule of aggregated expected monthly maturities on other borrowed funds.

Accrued interest payable: The carrying amounts of accrued interest payable approximate their fair value.

Off-balance sheet instruments: The fair value of commitments to originate loans is estimated using the fees currently charged to enter similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. For fixed-rate loan commitments and the unadvanced portion of loans, fair value also considers the difference between current levels of interest rates and the committed rates. The fair value of letters of credit is based on fees currently charged for similar agreements or on the estimated cost to terminate them or otherwise settle the obligation with the counterparties at the reporting date.

RECENT ACCOUNTING PRONOUNCEMENTS:

In June 2009, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 166, “Accounting for Transfers of Financial Assets,” and SFAS No. 167, “Amendments to FASB Interpretation No. 46(R).” These standards are effective for the first interim reporting period of 2010. SFAS No. 166 amends the guidance in ASC 860 to eliminate the concept of a qualifying special-purpose entity (“QSPE”) and changes some of the requirements for derecognizing financial assets. SFAS No. 167 amends the consolidation guidance in ASC 810-10. Specifically, the amendments will (a) eliminate the exemption for QSPEs from the new guidance, (b) shift the determination of which enterprise should consolidate a variable interest entity (“VIE”) to a current control approach, such that an entity that has both the power to make decisions and right to receive benefits or absorb losses that could potentially be significant, will consolidate a VIE, and (c) change when it is necessary to reassess who should consolidate a VIE. These standards did not have a significant impact on the Company’s financial statements.

F-14

In March 2010, the FASB issued ASU 2010-11, “Scope Exception Related to Embedded Credit Derivatives.” The ASU clarifies that certain embedded derivatives, such as those contained in certain securitizations, CDOs and structured notes, should be considered embedded credit derivatives subject to potential bifurcation and separate fair value accounting. The ASU allows any beneficial interest issued by a securitization vehicle to be accounted for under the fair value option at transition. At transition, the Company may elect to reclassify various debt securities (on an instrument-by-instrument basis) from held-to-maturity (HTM) or available-for-sale (AFS) to trading. The new rules are effective July 1, 2010. This ASU did not have a material impact on the Company’s financial condition and results of operations.

In January 2010, the FASB issued ASU 2010-06, “Improving Disclosures about Fair Value Measurements.” The ASU requires disclosing the amounts of significant transfers in and out of Level 1 and 2 of the fair value hierarchy and describing the reasons for the transfers. The disclosures are effective for reporting periods beginning after December 15, 2009. The Company adopted ASU 2010-06 as of January 1, 2010. The required disclosures are included in Note 11. Additionally, disclosures of the gross purchases, sales, issuances and settlements activity in Level 3 of the fair value measurement hierarchy will be required for fiscal years beginning after December 15, 2010.

In April 2010, the FASB issued ASU 2010-18, “Effect of a Loan Modification When the Loan is Part of a Pool That is Accounted for as a Single Asset.” As a result of this ASU, modifications of loans that are accounted for within a pool under Subtopic 310-30 do not result in the removal of those loans from the pool even if the modification of those loans would otherwise be considered a troubled debt restructuring. An entity will continue to be required to consider whether the pool of assets in which the loan is included is impaired if expected cash flows for the pool change. The amendments in this ASU are effective for modifications of loans accounted for within pools under Subtopic 310-30 occurring in the first interim or annual period ending on or after July 15, 2010. The amendments are to be applied prospectively. Early application is permitted.

In July 2010, the FASB issued ASU 2010-20, “Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses.” This ASU is created to provide financial statement users with greater transparency about an entity’s allowance for credit losses and the credit quality of its financing receivables. This ASU is intended to provide additional information to assist financial statement users in assessing the entity’s credit risk exposures and evaluating the adequacy of its allowance for credit losses. The amendments in this ASU are effective for public entities as of the end of a reporting period for interim and annual reporting periods ending on or after December 15, 2010. The disclosures about activity that occurs during a reporting period are effective for interim and annual reporting periods beginning on or after December 15, 2010. For nonpublic entities, the disclosures are effective for annual reporting periods ending on or after December 15, 2011.

In December 2010, the FASB issued ASU 2010-28, “Intangibles - Goodwill and Other.” This ASU addresses when to perform step 2 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For public entities, the amendments in this ASU are effective for fiscal years and interim periods beginning after December 15, 2010. For nonpublic entities, the amendments are effective for fiscal years and interim periods beginning after December 15, 2011.

In December 2010, the FASB issued ASU 2010-29, “Disclosure of Supplementary Pro Forma Information for Business Combinations.” This ASU addresses diversity in practice about the interpretation of the pro forma revenue and earnings disclosure requirements for business combinations. This ASU is effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010.

F-15

In April 2011, the FASB issued ASU 2011-02, “A Creditor’s Determination of Whether a Restructuring Is a Troubled Debt Restructuring.” This ASU provides additional guidance or clarification to help creditors determine whether a restructuring constitutes a troubled debt restructuring. For public entities, the amendments in this ASU are effective for the first interim or annual period beginning on or after June 15, 2011, and should be applied retrospectively to the beginning of the annual period of adoption. As a result of applying these amendments, an entity may identify receivables that are newly considered impaired, and should measure impairment on those receivables prospectively for the first interim or annual period beginning on or after June 15, 2011. Additional disclosures are also required under this ASU. The Company is currently evaluating the impact of this ASU. The ASU is expected to cause more loan modifications to be classified as troubled debt restructurings and the Company is evaluating its modification programs and practices in light of the new ASU.

In April 2011, the FASB issued ASU 2011-03, “Reconsideration of Effective Control for Repurchase Agreements.” The objective of this ASU is to improve the accounting for repurchase agreements and other agreements that both entitle and obligate a transferor to repurchase or redeem financial assets before their maturity. This ASU prescribes when an entity may or may not recognize a sale upon the transfer of financial assets subject to repurchase agreements. The guidance in this ASU is effective for the first interim or annual period beginning on or after December 15, 2011. Early adoption is not permitted.

NOTE 3 - INVESTMENTS IN SECURITIES

Debt and equity securities have been classified in the consolidated balance sheets according to management’s intent.

Trading securities:


Trading securities, at fair value, consist of the following:
December 31, 2009:
Marketable equity securities	$	11,455

The gain (loss) on trading securities included in net income was $746 for the three months ended March 31, 2010 (unaudited), $322 for the year ended December 31, 2010, $580 for the three months ended December 31, 2009, and $(511) and $(2,265) for the years ended September 30, 2009 and 2008, respectively.

The amortized cost of available-for-sale securities and their approximate fair values are as follows:


	Amortized Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses	Fair Value
Available-for-sale securities:
March 31, 2011 (unaudited):
Marketable equity securities	$	1	$		$	$	1

	$	1	$		$	$	1


December 31, 2010:
Marketable equity securities	$	12,154	$	2,120	$	$	14,274

	$	12,154	$	2,120	$	$	14,274

F-16

The amortized cost of held-to-maturity securities and their approximate fair values are as follows:


	Amortized Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Held-to-maturity securities:
March 31, 2011 (unaudited):
U.S. government and federal agency obligations	$	15,611	$	204	$		$	15,815
Mortgage-backed securities		16,445		574		47		16,972
Corporate debt securities		46,940		949		1		47,888

	$	78,996	$	1,727	$	48	$	80,675


December 31, 2010:
U.S. government and federal agency obligations	$	23,419	$	249	$		$	23,668
Mortgage-backed securities		18,574		634		38		19,170
Corporate debt securities		51,906		1,048		31		52,923

	$	93,899	$	1,931	$	69	$	95,761


December 31, 2009:
U.S. government and federal agency obligations	$	16,606	$	333	$	2	$	16,937
Mortgage-backed securities		27,916		585		59		28,442
Corporate debt securities		47,182		1,011		320		47,873

	$	91,704	$	1,929	$	381	$	93,252

The scheduled maturities of debt securities were as follows:


	March 31, 2011				December 31, 2010
	Held-to-Maturity				Held-to-Maturity
	Amortized Cost Basis		Fair Value		Amortized Cost Basis		Fair Value
	(unaudited)
Due within one year	$	37,239	$	37,591	$	32,778	$	32,888
Due after one year through five years		25,312		26,112		42,547		43,703
Mortgage-backed securities		16,445		16,972		18,574		19,170

	$	78,996	$	80,675	$	93,899	$	95,761

During the three months ended March 31, 2011 (unaudited), proceeds from sales of available-for-sale securities amounted to $15,650. For the three months ended March 31, 2011 (unaudited) gross realized gains and gross realized losses on those sales amounted to $2,844 and $56, respectively. During the three months ended March 31, 2010, there were no security sales. During the year ended December 31, 2010, proceeds from sales of available-for-sale securities amounted to $1,547. Gross realized gains and gross realized losses on those sales amounted to $138 and $17, respectively. There were no sales of available-for-sale securities during the three months ended December 31, 2009 or during the year ended September 30, 2009. During the year ended September 30, 2008, proceeds from sales of available-for-sale securities amounted to $8,289. Gross realized gains and gross realized losses on those sales amounted to $387 and $710, respectively. The tax expense (benefit) applicable to these net realized gains (losses) for the three months ended March 31, 2011 (unaudited) amounted to $1,123, and for the years ended December 31, 2010 and September 30, 2008 amounted to $49 and $(132), respectively.

F-17

Issuers with an amortized cost basis and fair value that exceeded 10% of equity are as follows:


	March 31, 2011				December 31, 2010
Issuer	Amortized Cost Basis		Fair Value		Amortized Cost Basis		Fair Value
	(unaudited)
Sovereign Bank	$	5,020	$	5,098	$	5,026	$	5,114

Securities with total carrying amounts of $6,058, $7,788 and $7,114 were pledged to secure securities sold under agreements to repurchase as of March 31, 2011 (unaudited), December 31, 2010 and 2009, respectively.

The aggregate fair value and unrealized losses of securities that have been in a continuous unrealized loss position for less than twelve months and for twelve months or more, and are not other-than-temporarily impaired, are as follows:


	Less than 12 Months				12 Months or Longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
March 31, 2011 (unaudited):
Mortgage-backed securities	$	8	$		$	1,159	$	47	$	1,167	$	47
Corporate debt securities		2,030		1						2,030		1

Total temporarily impaired securities	$	2,038	$	1	$	1,159	$	47	$	3,197	$	48


December 31, 2010:
Mortgage-backed securities	$		$		$	1,367	$	38	$	1,367	$	38
Corporate debt securities		1,037		1		1,968		30		3,005		31

Total temporarily impaired securities	$	1,037	$	1	$	3,335	$	68	$	4,372	$	69


December 31, 2009:
U.S. government agencies	$	996	$	2	$		$		$	996	$	2
Mortgage-backed securities		4,185		59						4,185		59
Corporate debt securities		7,244		72		1,745		248		8,989		320

Total temporarily impaired securities	$	12,425	$	133	$	1,745	$	248	$	14,170	$	381

Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. At March 31, 2011 (unaudited), unrealized losses related to two mortgage-backed securities with a 3.9% unrealized loss and two corporate debt securities with an unrealized loss of 0.03% were caused primarily by changes in market interest rates. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. Based on the Company’s March 31, 2011 (unaudited) quarterly review of securities in the investment portfolio, management deemed securities with unrealized losses as of March 31, 2011 (unaudited) to be temporarily impaired.

Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. At December 31, 2010, unrealized losses related to one mortgage-backed security with a 2.70% unrealized loss and two corporate debt securities with an unrealized loss of 1.02% were caused primarily by changes in market interest rates. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. Based on the Company’s December 31, 2010 quarterly review of securities in the investment portfolio, management deemed securities with unrealized losses as of December 31, 2010 to be temporarily impaired.

The investment securities portfolio is generally evaluated for other-than-temporary impairment under ASC 320-10, “Investments - Debt and Equity Securities.” However, certain purchased beneficial interests, including non-agency mortgage-backed securities, are evaluated using ASC 325-40, “Investments – Other – Beneficial Interests in Securitized Financial Assets.”

F-18

NOTE 4 - LOANS

Loans consisted of the following:


	March 31,			December 31,
	2011			2010			2009
	(unaudited)
Mortgage loans on real estate:
Residential one-to-four family	$	174,693		$	183,584		$	212,776
Commercial real estate loans		113,068			91,221			80,783
Construction loans		14,798			13,835			19,057
Equity lines of credit		33,693			30,921			30,676
Second mortgage loans		510			503			557

Total real estate loans		336,762			320,064			343,849

Other loans:
Commercial loans		16,487			14,012			8,877
Indirect auto loans		30,363			3,717
Consumer loans		1,276			1,467			1,005

		48,126			19,196			9,882

		384,888			339,260			353,731
Net deferred loan costs		1,448			562			461
Net unamortized mortgage premiums		6			3			34
Allowance for loan losses		(3,328	)		(2,889	)		(2,473	)

Total loans, net	$	383,014		$	336,936		$	351,753

Changes in the allowance for loan losses by portfolio segment for the three months ended March 31, 2011 were as follows:


	Residential Real Estate			Commercial Real Estate		Construction		Commercial			Home Equity			Indirect Auto		Consumer			Total
Amount of allowance for loan losses for loans
Beginning balance	$	1,057		$	1,136	$	140	$	261		$	236		$	38	$	21		$	2,889
Provision for loan losses		(71	)		278		7		28			(36	)		272		(2	)		476
Recoveries of loans previously charged-off																	4			4
Loans charged-off									(37	)							(4	)		(41	)

Ending balance	$	986		$	1,414	$	147	$	252		$	200		$	310	$	19		$	3,328

Changes in the allowance for loan losses were as follows:


	Three Months Ended March 31,						Year Ended December 31,			Three Months Ended December 31,			Years Ended September 30,
	2011			2010			2010			2009			2009			2008
	(unaudited)
Balance at beginning of period	$	2,889		$	2,473		$	2,473		$	2,321		$	1,747		$	1,407
Provision for loan losses		476			284			438			152			597			375
Recoveries of loans previously charged off		4			6			8			1			15			5
Loans charged off		(41	)		(12	)		(30	)		(1	)		(38	)		(40	)

Balance at end of period	$	3,328		$	2,751		$	2,889		$	2,473		$	2,321		$	1,747

F-19

The following table sets forth information regarding the allowance for loan losses by portfolio segment as of March 31, 2011 (unaudited):


	Residential Real Estate		Commercial Real Estate		Construction		Commercial		Home Equity		Indirect Auto		Consumer		Total
Allowance for loan losses:
Ending balance:
Individually evaluated for impairment	$	253	$		$		$		$	33	$		$		$	286
Allowance for loan losses:
Ending balance:
Collectively evaluated for impairment		733		1,414		147		252		167		310		19		3,042

Total allowance for loan losses	$	986	$	1,414	$	147	$	252	$	200	$	310	$	19	$	3,328


Loans:
Ending balance:
Individually evaluated for impairment	$	808	$		$		$		$	617	$		$		$	1,425
Ending Balance:
Collectively evaluated for impairment		173,885		113,068		14,798		16,487		33,586		30,363		1,276		383,463

Total loans	$	174,693	$	113,068	$	14,798	$	16,487	$	34,203	$	30,363	$	1,276	$	384,888

The following table sets forth information regarding the allowance for loan losses by portfolio segment as of December 31, 2010:


	Residential Real Estate		Commercial Real Estate		Construction		Commercial		Home Equity		Indirect Auto		Consumer		Total
Allowance for loan losses:
Ending balance:
Individually evaluated for impairment	$	119	$		$		$	37	$		$		$		$	156
Allowance for loan losses:
Ending balance:
Collectively evaluated for impairment		938		1,136		140		224		236		38		21		2,733

Total allowance for loan losses	$	1,057	$	1,136	$	140	$	261	$	236	$	38	$	21	$	2,889


Loans:
Ending balance:
Individually evaluated for impairment	$	669	$		$		$	37	$	200	$		$		$	906
Ending Balance:
Collectively evaluated for impairment		182,915		91,221		13,835		13,975		31,224		3,717		1,467		338,354

Total loans	$	183,584	$	91,221	$	13,835	$	14,012	$	31,424	$	3,717	$	1,467	$	339,260

F-20

The following is a summary of past due and non-accrual loans at March 31, 2011 (unaudited):


	30-59 Days		60-89 Days		Greater Than 90 Days		Total Past Due		Recorded Investment Loans on Non-accrual
Real estate loans:
Residential one-to-four family	$	3,702	$	1,244	$	1,315	$	6,261	$	1,315
Commercial real estate		500						500
Equity lines of credit				391		906		1,297		906
Other loans:
Commercial loans				49				49
Consumer loans		5						5

Total	$	4,207	$	1,684	$	2,221	$	8,112	$	2,221

The following is a summary of past due and non-accrual loans at December 31, 2010:


	30-59 Days		60-89 Days		Greater Than 90 Days		Total Past Due		Recorded Investment Loans on Non-accrual
Real estate loans:
Residential one-to-four family	$	2,863	$	507	$	1,053	$	4,423	$	1,053
Commercial real estate		495		497				992
Equity lines of credit		308		314		617		1,239		617
Other loans:
Commercial loans						37		37		37
Consumer loans		4						4

Total	$	3,670	$	1,318	$	1,707	$	6,695	$	1,707

The following table sets forth information regarding nonaccrual loans and accruing loans 90 days or more overdue as of December 31, 2009:


Total nonaccrual loans	$	1,636


Accruing loans which are 90 days or more overdue	$	278

Information about loans that meet the definition of an impaired loan in ASC 310-10-35 is as follows as of March 31, 2011 (unaudited):


	Recorded Investment		Unpaid Principal Balance		Related Allowance For Credit Losses		Average Recorded Investment		Interest Income Recognized
Impaired loans without a valuation allowance:
Mortgage loans on real estate:
Equity lines of credit	$	200	$	200	$		$	200	$	2

Total impaired loans without a valuation allowance		200		200				200		2


Impaired loans with a valuation allowance:
Mortgage loans on real estate:
Residential one-to-four family		808		808		253		739
Equity lines of credit		417		417		33		209
Other loans:
Commercial loans								19

Total		1,225		1,225		286		967

Total impaired loans	$	1,425	$	1,425	$	286	$	1,167	$	2

F-21

For the three months ended March 31, 2011 (unaudited), interest income on impaired loans was recognized using a cash basis method of accounting.

Information about loans that meet the definition of an impaired loan in ASC 310-10-35 is as follows as of December 31, 2010:


	Recorded Investment		Unpaid Principal Balance		Related Allowance For Credit Losses
Impaired loans without a valuation allowance:
Mortgage loans on real estate:
Equity lines of credit	$	200	$	200	$

Total impaired loans without a valuation allowance		200		200


Impaired loans with a valuation allowance:
Mortgage loans on real estate:
Residential one-to-four family		669		669		119
Other loans:
Commercial loans		37		37		37

Total		706		706		156

Total impaired loans	$	906	$	906	$	156

Information about loans that meet the definition of an impaired loan in ASC 310-10-35 is as follows as of December 31, 2009:


	Recorded Investment In Impaired Loans		Related Allowance For Credit Losses
Loans for which there is a related allowance for credit losses	$	503	$	67

Loans for which there is no related allowance for credit losses		317


Totals	$	820	$	67

The average recorded investment and the related amount of interest income recognized during the time the loans were impaired, as defined in ASC 310-10-35, is as follows for the year ended December 31, 2010, for the three months ended December 31, 2009, and for the years ended September 30, 2009 and 2008:


	Recorded Investment In Impaired Loans		Recorded Investment In Impaired Loans		Recorded Investment In Impaired Loans		Recorded Investment In Impaired Loans
Average recorded investment in impaired loans during the year ended December 31, 2010, the three months ended December 31, 2009 and the years ended September 30, 2009 and 2008	$	1,049	$	1,401	$	1,096	$	5


Related amount of interest income recognized during the time, in the year ended December 31, 2010, in the three months ended December 31, 2009, and the years ended September 30, 2009 and 2008, that the loans were impaired

Total recognized	$	121	$	48	$	12	$	0


Amount recognized using a cash-basis method of accounting	$	121	$	48	$	12	$	0

F-22

Included in certain loan categories in the impaired loans are troubled debt restructurings that are classified as impaired. At March 31, 2011 (unaudited) and December 31, 2010, the Company had $624 and $629 in troubled debt restructured loans, respectively.

Credit Quality Information

The Company utilizes a seven grade internal loan rating system for commercial, commercial real estate and construction loans, and for certain residential real estate, home equity and consumer loans that are rated if the loans become delinquent.

Loans rated 1 - 3: Loans in these categories are considered “pass” rated loans with low to average risk.

Loans rated 4: Loans in this category are considered “special mention.” These loans are starting to show signs of potential weakness and are being closely monitored by management.

Loans rated 5: Loans in this category are considered “substandard.” Generally, a loan is considered substandard if it is inadequately protected by the current net worth and paying capacity of the obligors and/or the collateral pledged. There is a distinct possibility that the Company will sustain some loss if the weakness is not corrected.

Loans rated 6: Loans in this category are considered “doubtful.” Loans classified as doubtful have all the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, highly questionable and improbable.

Loans rated 7: Loans in this category are considered uncollectible (“loss”) and of such little value that their continuance as loans is not warranted.

On an annual basis, or more often if needed, the Company formally reviews the ratings on all commercial, commercial real estate loans, and construction loans. On an annual basis, the Company engages an independent third party to review a significant portion of loans within these segments. Management uses the results of these reviews as part of its annual review process.

The following table presents the Company’s loans by risk rating at March 31, 2011 (unaudited).


	Residential Real Estate		Commercial Real Estate		Construction		Commercial		Home Equity		Indirect Auto		Consumer Loans		Total
Loans rated 1-3	$		$	111,144	$	13,587	$	16,487	$		$		$		$	141,218
Loans rated 4		506		1,140						906						2,552
Loans rated 5		808		784		1,211				76						2,879
Loans not rated (A)		173,379								33,221		30,363		1,276		238,239

Total	$	174,693	$	113,068	$	14,798	$	16,487	$	34,203	$	30,363	$	1,276	$	384,888

The following table presents the Company’s loans by risk rating at December 31, 2010.


	Residential Real Estate		Commercial Real Estate		Construction		Commercial		Home Equity		Indirect Auto		Consumer Loans		Total
Loans rated 1-3	$		$	90,077	$	12,188	$	14,012	$		$		$		$	116,277
Loans rated 4		554		1,144		1,647				1,417						4,762
Loans rated 5		1,190														1,190
Loans not rated (A)		181,840								30,007		3,717		1,467		217,031

Total	$	183,584	$	91,221	$	13,835	$	14,012	$	31,424	$	3,717	$	1,467	$	339,260

(A)	Residential real estate, home equity, indirect auto loans and consumer loans are not formally risk rated by the Company.

F-23

Certain residential mortgage loans are periodically sold by the Company to the secondary market. Most of these loans are sold without recourse, and the Company generally provides servicing for the loans at a per-loan fee. At March 31, 2011 (unaudited), December 31, 2010 and 2009, loans previously sold and serviced by the Company were $28,053, $33,284 and $44,830, respectively.

As of March 31, 2011 (unaudited), December 31, 2010 and 2009, loans sold with recourse included in total loans above amounted to $1,590, $5,199 and $5,750, respectively. The Company has not incurred, nor expects to incur, any losses related to the loans sold with recourse (see Note 8).

There was no valuation allowance for mortgage servicing rights at March 31, 2011 (unaudited), December 31, 2010 and 2009 and September 30, 2009 and 2008. There were no additions to or writedowns in the valuation allowance during the three months ended March 31, 2011 and 2010 (unaudited), the year ended December 31, 2010, the three months ended December 31, 2009 and the years ended September 30, 2009 and 2008. Changes in mortgage servicing rights, which are included in other assets were as follows:


	Three Months Ended March 31,						Year Ended December 31,			Three Months Ended December 31,			Years Ended September 30,
	2011			2010			2010			2009			2009			2008
	(unaudited)
Balance at beginning of period	$	6		$	18		$	18		$	22		$	8		$	60
Capitalization														32
Amortization		(2	)		(5	)		(12	)		(4	)		(18	)		(52	)

Balance at end of period	$	4		$	13		$	6		$	18		$	22		$	8

NOTE 5 - PREMISES AND EQUIPMENT

The following is a summary of premises and equipment:


	March 31,			December 31,
	2011			2010			2009
	(unaudited)
Land	$	161		$	161		$	161
Buildings		3,083			3,072			3,055
Leasehold improvements		1,139			1,139			1,131
Furniture and equipment		4,224			4,129			3,487

		8,607			8,501			7,834
Accumulated depreciation and amortization		(6,669	)		(6,562	)		(6,204	)

	$	1,938		$	1,939		$	1,630

NOTE 6 - DEPOSITS

The aggregate amount of time deposit accounts in denominations of $100,000 or more as of March 31, 2011 (unaudited), December 31, 2010 and 2009 was $74,126, $61,904 and $58,485, respectively.

For time deposits as of March 31, 2011, the scheduled maturities for each of the years ended March 31 are as follows:


	(unaudited)
2012	$	75,983
2013		29,498
2014		8,554
2015		7,287
2016		12,585

	$	133,907

F-24

For time deposits as of December 31, 2010, the scheduled maturities for each of the years ended December 31 are as follows:


2011	$	75,532
2012		25,625
2013		9,589
2014		7,109
2015		5,662

	$	123,517

NOTE 7 - FEDERAL HOME LOAN BANK ADVANCES

Advances consist of funds borrowed from the Federal Home Loan Bank of Boston (FHLB).

Maturities of advances from the FHLB for the years ending after March 31, 2011 are summarized as follows:


	(unaudited)
2012	$	62,800
2013		22,000
2014		9,000

	$	93,800

Maturities of advances from the FHLB for the years ending after December 31, 2010 are summarized as follows:


2011	$	56,300
2012		27,500
2013		8,000
2014		1,000

	$	92,800

Borrowings from the FHLB are secured by a blanket lien on qualified collateral, consisting primarily of loans with first mortgages secured by one-to-four family properties, certain unencumbered investment securities and other qualified assets.

At March 31, 2011 (unaudited), the interest rates on FHLB advances ranged from 0.36% to 5.10%. At December 31, 2010, the weighted-average interest rate on FHLB advances was 2.49%. At December 31, 2010, the interest rates on FHLB advances ranged from 0.37% to 5.10%. At December 31, 2010, the weighted-average interest rate on FHLB advances was 2.82%.

NOTE 8 - SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE AND OTHER BORROWED FUNDS

The securities sold under agreements to repurchase as of March 31, 2011 (unaudited) and December 31, 2010 are securities sold on a short-term basis by the Company that have been accounted for not as sales but as borrowings. The securities consisted of U.S. government and federal agency obligations. The securities were held in the Company’s safekeeping account at Brown Brothers, Harriman and Company under the control of the Company. The securities are pledged to the purchasers of the securities. The purchasers have agreed to sell to the Company substantially identical securities at the maturity of the agreements.

Other borrowed funds consist of the balance of loans sold with recourse (see Note 4). On March 16, 2006, seventeen loans with an aggregate principal balance of $10,449 were sold to another financial institution (investor). As of March 31, 2011 (unaudited) and December 31, 2010 and 2009, the principal balance of these loans totaled $1,590, $5,199 and $5,750, respectively. The agreement related to this sale contains provisions requiring the Company during the initial 120 months to repurchase any loan that becomes 90 days past due. The Company will repurchase the past due loan for 100 percent of the unpaid principal plus interest to repurchase date.

F-25

NOTE 9 - INCOME TAX EXPENSE (BENEFIT)

The components of income tax expense (benefit) are as follows:


	Three Months Ended March 31,					Year Ended December 31,			Three Months Ended December 31,		Years Ended September 30,
	2011			2010		2010			2009		2009			2008
	(unaudited)
Current:
Federal	$	55		$	303	$	(398	)	$	367	$	1,097		$	600
State		253			58		15			100		286			135

		308			361		(383	)		467		1,383			735

Deferred:
Federal		626			154		1,014			33		(642	)		(1,178	)
State		(26	)		45		297			28		143			(369	)
Valuation allowance							(708	)		61		540			107

		600			199		603			122		41			(1,440	)

Total income tax expense (benefit)	$	908		$	560	$	220		$	589	$	1,424		$	(705	)

The reasons for the differences between the statutory federal income tax rate and the effective tax rates are summarized as follows:


	Three Months Ended March 31,						Year Ended December 31,			Three Months Ended December 31,			Years Ended September 30,
	2011			2010			2010			2009			2009			2008
	% of			% of			% of			% of			% of			% of
	Income			Income			Income			Income			Income			Income
Federal income tax at statutory rate		34.0	%		34.0	%		34.0	%		34.0	%		34.0	%		(34.0	)%
Increase (decrease) in tax resulting from:
State tax expense (benefit), net of federal tax (benefit) expense		6.1			4.6			10.1			5.6			10.0			(13.6	)
Dividend received deduction		(.9	)		(.9	)		(3.3	)		(1.0	)		(2.4	)		(6.2	)
Life insurance policies		(1.5	)		(3.1	)		5.3			(6.5	)		(8.7	)		(16.8	)
Change in valuation allowance								(34.6	)		4.1			19.0			9.4
Other, net		(.4	)		3.7			(.8	)		2.9			(1.8	)		(.6	)

Effective tax rates		37.3	%		38.3	%		10.7	%		39.1	%		50.1	%		(61.8	)%

F-26

The Company had gross deferred tax assets and gross deferred tax liabilities as follows:


	March 31,			December 31,
	2011			2010			2009
	(unaudited)
Deferred tax assets:
Deferred compensation	$	1,800		$	1,746		$	3,009
Allowance for loan losses		1,343			1,154			988
Depreciation		107			74			209
Accrued rent		2			3			12
Interest on non-performing loans		24			24			37
Capital loss carryforward					715			708
Writedown of equity securities					82
Unrealized loss on trading securities, net					81			266
Other		81			109			34

		3,357			3,988			5,263
Valuation allowance								(708	)

Gross deferred tax asset		3,357			3,988			4,555


Deferred tax liabilities:
Mortgage servicing rights		(2	)		(3	)		(7	)
Deferred loan origination costs		(194	)		(224	)		(184	)
Net unrealized holding gain on available-for-sale securities					(847	)
Unrecognized retirement benefit under ASC 715-20		(1	)		(1	)

Gross deferred tax liability		(197	)		(1,075	)		(191	)


Net deferred tax asset	$	3,160		$	2,913		$	4,364

In prior years, the Company was allowed a special tax-basis bad debt deduction under certain provisions of the Internal Revenue Code. As a result, retained earnings of the Company as of March 31, 2011 (unaudited), December 31, 2010 and 2009 includes approximately $3,600 for which federal and state income taxes have not been provided. If the Company no longer qualifies as a bank as defined in certain provisions of the Internal Revenue Code, this amount will be subject to recapture in taxable income ratably over four (4) years, subject to a combined federal and state tax rate of approximately 40%.

It is the Company’s policy to provide for uncertain tax positions and the related interest and penalties based upon management’s assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities. As of March 31, 2011 (unaudited), December 31, 2010 and 2009, there were no material uncertain tax positions related to federal and state income tax matters. The Company is currently open to audit under the statute of limitations by the Internal Revenue Service and state taxing authorities for the years ended December 31, 2010 and September 30, 2009 and 2008, and the three months ended December 31, 2009.

NOTE 10 - EMPLOYEE BENEFITS

Supplemental Retirement Plans

The Company has supplemental retirement plans for eligible executive officers that provide for a lump sum benefit upon termination of employment at or after age 55 and completing 10 or more years of service (certain reduced benefits are available prior to attaining age 55 or fewer than 10 years of service), subject to certain limitations as set forth in the agreements. The present value of these future payments is being accrued over the service period. The estimated liability at March 31, 2011 (unaudited), December 31, 2010 and 2009 relating to these plans was $1,062, $1,028 and $4,347, respectively. The discount rate used to determine the Company’s obligation was 5.50% in 2011 (unaudited), 2010 and 2009. The projected rate of salary increase was 5% in 2011 (unaudited), 2010 and 2009.

F-27

The Company has a supplemental retirement plan for eligible trustees that provides for monthly benefits based upon years of service to the Company, subject to certain limitations as set forth in the agreements. The present value of these future payments is being accrued over the estimated period of service. The estimated liability for the three months ended March 31, 2011 (unaudited) and the years ended December 31, 2010 and 2009 relating to this plan was $574, $580 and $781, respectively. The discount rate used to determine the Company’s obligation was 5.50% in 2011 (unaudited), 2010 and 2009.

Effective October 1, 2010, the Company established the Belmont Savings Bank Supplemental Executive Retirement Plan (Plan). The purpose of the Plan is to permit certain employees of the Company to receive supplemental retirement income from the Company. At March 31, 2011 (unaudited) and December 31, 2010, there were three participants in the Plan, respectively. The plan is unfunded.

The following tables set forth information about the Plan as of March 31 and the three months then ended:


	2011
	(unaudited)
Projected benefit obligation	$	104
Plan assets

Funded status	$	(104	)


Benefits paid	$	0
Employer contributions	$	0

The following tables set forth information about the Plan as of December 31 and the year then ended:


	2010
Projected benefit obligation	$	51
Plan assets

Funded status	$	(51	)


Benefits paid	$	0
Employer contributions	$	0

Amount recognized in accumulated other comprehensive income, before tax effect, consists of an unrecognized net gain of $3 as of March 31, 2011 (unaudited) and $3 as of December 31, 2010.

The accumulated benefit obligation for the Plan was $89 at March 31, 2011 (unaudited) and $43 at December 31, 2010.

Net periodic benefit cost and other comprehensive income consist of the following for the three months ended March 31, 2011:


	(unaudited)
Components of net periodic cost:
Service cost	$	52
Interest cost		1

Net periodic cost		53


Other changes in benefit obligations recognized in other comprehensive income:
Net actuarial gain

Total recognized in other comprehensive income

Total recognized in net periodic benefit cost and other comprehensive income	$	53

F-28

Net periodic benefit cost and other comprehensive income consist of the following for the year ended December 31, 2010:


	2010
Components of net periodic cost:
Service cost	$	54

Net periodic cost		54


Other changes in benefit obligations recognized in other comprehensive income:
Net actuarial gain		(3	)

Total recognized in other comprehensive income		(3	)

Total recognized in net periodic benefit cost and other comprehensive income	$	51

There is no estimated unrecognized gain that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the year ended March 31, 2012 (unaudited) and the year ended December 31, 2011.

The discount rate and estimated pay increases used in determining the projected benefit obligation were 5.25% and 3.00%, respectively, as of March 31, 2011 (unaudited) and December 31, 2010. The discount rate and estimated pay increases used in determining the net periodic pension cost were 4.75% and 3.00%, respectively, for the three months ended March 31, 2011 (unaudited) and 4.75% and 3.00%, respectively, for the year ended December 31, 2010.

Estimated future benefit payments are as follows as of March 31, 2011 (unaudited):


2015	$	51
2016 - 2020		585
2021 and thereafter		1,944

Estimated future benefit payments are as follows as of December 31, 2010:


2015	$	51
2016 - 2020		585
2021 and thereafter		1,944

Total supplemental retirement plan expense amounted to $91 and $72 for the three months ended March 31, 2011 and 2010 (unaudited), $171 and $62 for the year ended December 31, 2010 and for the three months ended December 31, 2009, respectively, and $503 and $447 for the years ended September 30, 2009 and 2008, respectively.

In 1997, the Company entered into an agreement with a former trustee which provides for annual payments of approximately $17 to be paid to the former trustee over the term of the agreement (10 years). The agreement also provides for certain death benefits. At December 31, 2009, the Company had a recorded liability in the amount of $1, which is based on the net present value of future cash flows associated with this agreement. As of December 31, 2010, the Company has fulfilled its obligation to the former trustee.

Profit-Sharing Plan

The Company’s Board of Trustees has authorized a profit-sharing plan whereby officers and employees with at least three months of service are eligible to participate. The profit-sharing plan provides for a cash payment to each eligible participant based upon a predetermined percentage of the Company’s net operating earnings each fiscal year. In 2005, a new Incentive Compensation Plan was created for the management team and they became ineligible to participate in the profit-sharing plan. The profit-sharing plan was terminated during 2010. Profit-sharing plan expense for the three months ended March 31, 2010 (unaudited) and for the year ended December 31, 2010, the three months ended December 31, 2009 and the years ended September 30, 2009 and 2008 amounted to $0, $0, $46, $59 and $36, respectively.

F-29

Incentive Compensation Plan

In 2005, the Board of Trustees approved an incentive compensation plan whereby all members of the management team with at least one full year of service are eligible to participate. This plan was amended in 2008. The incentive compensation plan provides for a cash payment to eligible participants based on the Company’s income benchmarks and a participant’s level of participation as defined in the plan. Compensation expense recognized was $198 and $57, $577, $66, $256 and $244 for the three months ended March 31, 2011 and 2010 (unaudited), the year ended December 31, 2010, the three months ended December 31, 2009 and the years ended September 30, 2009 and 2008, respectively.

Defined Contribution Plan

The Company sponsors a 401(k) plan (the “Plan”) covering substantially all employees meeting certain eligibility requirements. Under the provisions of the Plan, employees are able to contribute up to an annual limit of the lesser of 75% of eligible compensation or the maximum allowed by the Internal Revenue Service. The Company’s contributions for the three months ended March 31, 2011 and 2010 (unaudited), the year ended December 31, 2010, the three months ended December 31, 2009 and the years ended September 30, 2009 and 2008 totaled $144, $100, $352, $76, $317 and $304, respectively.

Salary Deferral Plan

The Company has a salary deferral plan by which selected employees and Trustees (“Participants”) of the Company are entitled to elect, prior to the beginning of each year, to defer the receipt of an amount of their compensation for the forthcoming year. The recorded liability at March 31, 2011 (unaudited), at December 31, 2010 and 2009 relating to this plan was $2,067, $2,070 and $1,984, respectively.

Capital Appreciation Plan

Effective September 30, 2010, the Company established the Capital Appreciation Plan. The purpose of the Plan is to attract, retain, and motivate certain key employees and trustees of the Company. Eligible participants may receive an award based on capital appreciation of the Bank and the Bank’s return on average assets, entitling the employee or trustee to a specific percentage of the Employee or Trustee Capital Appreciation Pool as outlined in the Plan. The value of any award payable to a participant shall be paid in the form of a single lump sum. The vesting period associated with the Plan begins the date a participant is awarded a Capital Appreciation Award and ends on June 30, 2014. The Company recognized no expense in relation to the Plan during the three months ended March 31, 2011 (unaudited) or during the year ended December 31, 2010.

Severance Agreements

The Company entered into severance agreements with two executives effective May 12, 2010. Upon separation of service from the Company, each executive is entitled to a severance benefit as defined in the agreements. The benefit amount shall be distributed in installments in accordance with the Company’s payroll schedule for executive employees, provided that the undistributed balance, if any, as of the first anniversary of the first installment shall be distributed in a lump sum. In addition, for up to one year following separation from service, the executives may continue to participate in the Company’s group health plan. Both executives have terminated employment with the Company during 2010 and have begun receiving severance benefits in accordance with each individual’s agreement. The recorded liability at March 31, 2011 (unaudited) and December 31, 2010 relating to the severance agreements was $132 and $200, respectively.

NOTE 11 - FAIR VALUE MEASUREMENTS

ASC 820-10, “Fair Value Measurements and Disclosures,” provides a framework for measuring fair value under generally accepted accounting principles. The guidance allows an entity the irrevocable option to elect fair value for the initial and subsequent measurement for certain financial assets and liabilities on a contract-by-contract basis.

F-30

In accordance with ASC 820-10, the Company groups its financial assets and financial liabilities measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value.

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

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

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

A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. These valuation methodologies were applied to all of the Company’s financial assets and financial liabilities carried at fair value for March 31, 2011 (unaudited), December 31, 2010 and 2009.

The Company’s cash instruments are generally classified within level 1 or level 2 of the fair value hierarchy because they are valued using quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency. During the three months ended March 31, 2011 (unaudited) and the year ended December 31, 2010, there were no significant transfers between level 1 and 2 of the fair value hierarchy.

The Company’s investment in mortgage-backed securities and other debt securities available-for-sale is generally classified within level 2 of the fair value hierarchy. For these securities, the Company obtains fair value measurements from independent pricing services. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. treasury yield curve, trading levels, market consensus prepayment speeds, credit information and the instrument’s terms and conditions.

Level 3 is for positions that are not traded in active markets or are subject to transfer restrictions, valuations are adjusted to reflect illiquidity and/or non-transferability, and such adjustments are generally based on available market evidence. In the absence of such evidence, management’s best estimate is used. Subsequent to inception, management only changes level 3 inputs and assumptions when corroborated by evidence such as transactions in similar instruments, completed or pending third-party transactions in the underlying investment or comparable entities, subsequent rounds of financing, recapitalization and other transactions across the capital structure, offerings in the equity or debt markets, and changes in financial ratios or cash flows.

The Company’s impaired loans are reported at the fair value of the underlying collateral if repayment is expected solely from the collateral. Collateral values are estimated using level 2 inputs based upon appraisals of similar properties obtained from a third party. For level 3 inputs, fair value is based upon management estimates of the value of the underlying collateral or the present value of the expected cash flows.

F-31

The following summarizes assets measured at fair value as of March 31, 2011 (unaudited), December 31, 2010 and 2009.

ASSETS MEASURED AT FAIR VALUE ON A RECURRING BASIS


	Fair Value Measurements at Reporting Date Using:
	Total		Quoted Prices in Active Markets for Identical Assets Level 1		Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3
March 31, 2011 (unaudited):
Available-for-sale	$	1	$	1	$	0	$	0

Totals	$	1	$	1	$	0	$	0


December 31, 2010:
Available-for-sale	$	14,274	$	14,274	$	0	$	0

Totals	$	14,274	$	14,274	$	0	$	0


December 31, 2009:
Trading securities	$	11,455	$	11,455	$	0	$	0

Totals	$	11,455	$	11,455	$	0	$	0

ASSETS MEASURED AT FAIR VALUE ON A NONRECURRING BASIS

Under certain circumstances the Company makes adjustments to its assets and liabilities although they are not measured at fair value on an ongoing basis. The following table presents the financial instruments carried on the consolidated balance sheet by caption and by level in the fair value hierarchy, at March 31, 2011 (unaudited), December 31, 2010 and 2009, for which a nonrecurring change in fair value has been recorded:


	Fair Value Measurements at Reporting Date Using:
	Total		Quoted Prices in Active Markets for Identical Assets Level 1		Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3
March 31, 2011 (unaudited):
Impaired loans	$	939	$	0	$	0	$	939

Totals	$	939	$	0	$	0	$	939


December 31, 2010:
Impaired loans	$	550	$	0	$	0	$	550

Totals	$	550	$	0	$	0	$	550


December 31, 2009:
Impaired loans	$	436	$	0	$	436	$	0

Totals	$	436	$	0	$	436	$	0


	Fair Value Measurements Using Significant Unobservable Inputs Level 3
	Impaired
	Loans
Beginning balance, December 31, 2009	$	0
Transfers in		550

Ending balance, December 31, 2010		550
Transfers in		561
Principal payments		(172	)

Ending balance, March 31, 2011 (unaudited)	$	939

F-32


	March 31,		December 31,
	2011		2010		2009
	(unaudited)
The amount of total gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets still held at the reporting date	$	0	$	0	$	(666	)

The estimated fair values of the Company’s financial instruments are as follows:


	March 31,				December 31,
	2011				2010				2009
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(unaudited)
Financial assets:
Cash and cash equivalents	$	35,898	$	35,898	$	20,988	$	20,988	$	16,398	$	16,398
Interest-bearing time deposits with other banks		119		123		119		122		394		395
Investments in available-for-sale securities		1		1		14,274		14,274
Trading securities										11,455		11,455
Held-to-maturity securities		78,996		80,675		93,899		95,761		91,704		93,252
Federal Home Loan Bank stock		8,038		8,038		8,038		8,038		8,038		8,038
Loans held-for-sale		1,066		1,080		3,775		3,827		250		258
Loans, net		383,014		388,429		336,936		341,517		351,753		354,573
Accrued interest receivable		1,962		1,962		2,121		2,121		2,027		2,027

Financial liabilities:
Deposits		377,320		378,995		346,899		348,684		312,694		314,303
Federal Home Loan Bank advances		93,800		94,908		92,800		94,266		129,700		132,558
Securities sold under agreements to repurchase		3,086		3,086		2,654		2,654		3,672		3,672
Other borrowed funds		1,590		1,571		5,199		5,160		5,750		5,722
Accrued interest payable		198		198		223		223		560		560

The carrying amounts of financial instruments shown in the above table are included in the consolidated balance sheets under the indicated captions. Accounting policies related to financial instruments are described in Note 2.

NOTE 12 - OFF-BALANCE SHEET ACTIVITIES

The Company is party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to originate loans, standby letters of credit and unadvanced funds on loans. The instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the balance sheet. The contract amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments.

The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit is represented by the contractual amounts of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments.

F-33

Commitments to extend credit are agreements to lend to a customer provided there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the borrower. Collateral held varies, but may include secured interests in mortgages, accounts receivable, inventory, property, plant and equipment and income-producing properties.

Standby letters of credit are conditional commitments issued by the Company to guarantee the performance by a customer to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. As of March 31, 2011 (unaudited), December 31, 2010 and 2009, the maximum potential amount of the Company’s obligation was $308, $308 and $61, respectively, for financial and standby letters of credit. The Company’s outstanding letters of credit generally have a term of less than one year. If a letter of credit is drawn upon, the Company may seek recourse through the customer’s underlying line of credit. If the customer’s line of credit is also in default, the Company may take possession of the collateral, if any, securing the line of credit.

The notional amounts of financial instrument liabilities with off-balance sheet credit risk are as follows:


	March 31,		December 31,
	2011		2010		2009
	(unaudited)
Commitments to originate loans	$	21,803	$	15,658	$	3,019
Standby letters of credit		308		308		61
Unused lines of credit		51,897		38,886		32,525
Unadvanced portion of construction loans		238		724		4,159

There is no material difference between the notional amounts and the estimated fair values of the off-balance sheet liabilities.

NOTE 13 - COMMITMENTS AND CONTINGENT LIABILITIES

As of March 31, 2011 (unaudited), the Company was obligated under noncancelable operating leases for bank premises expiring between March 2012 and September 2015. The total minimum rental due in future periods under those existing agreements is as follows:


	Years ended March 31,
	(unaudited)
2012	$	172
2013		112
2014		143
2015		99
2016		51

Total	$	577

As of December 31, 2010, the Company was obligated under noncancelable operating leases for bank premises expiring between March 2012 and September 2015. The total minimum rental due in future periods under those existing agreements is as follows:


	Years ended December 31,
2011	$	172
2012		123
2013		142
2014		110
2015		76

Total	$	623

F-34

Certain leases contain provisions for escalation of minimum lease payments contingent upon increases in real estate taxes and percentage increases in the consumer price index. Also, certain leases contain options to extend for additional five-year periods. Total rent expense amounted to $58 and $33 for the three months ended March 31, 2011 and 2010 (unaudited), $164 and $36 for the year ended December 31, 2010 and for the three months ended December 31, 2009, respectively. Total rent expense amounted to $133 and $152 for the years ended September 30, 2009 and 2008, respectively.

The Company entered into an agreement with a third party in which the third party is to provide the Company with account and item processing and other miscellaneous services. The agreement ends in February of 2018. The Company may cancel the agreement with a termination fee based on the remaining unused terms of the services. Such fees shall be determined by multiplying the average of monthly invoices for each service actually received by the Company during the six month period preceding the effective date of termination (or if no monthly invoice has been received, the estimated monthly billing for each service to be received hereunder) by the percentage set forth, that is 80% (Year 1-3), 60% (Year 4-5) and 55% (Year 6-8).

NOTE 14 - SIGNIFICANT GROUP CONCENTRATIONS OF CREDIT RISK

Most of the Company’s business activity is with customers located within the Commonwealth of Massachusetts. There are no concentrations of credit to borrowers that have similar economic characteristics. The majority of the Company’s loan portfolio is comprised of loans collateralized by real estate located in the Commonwealth of Massachusetts.

NOTE 15 - REGULATORY MATTERS

The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s and the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The Company’s and the Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the table below) of total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital (as defined) to average assets (as defined). Management believes, as of March 31, 2011 (unaudited) and December 31, 2010, that the Company and the Bank meet all capital adequacy requirements to which they are subject.

As of March 31, 2011 (unaudited) and December 31, 2010, the most recent notification from the Federal Deposit Insurance Corporation categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized the Bank must maintain minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the table. There are no conditions or events since that notification that management believes have changed the institution’s category.

F-35

The Company’s and the Bank’s actual capital amounts and ratios are also presented in the table.


	Actual					For Capital Adequacy Purposes					To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of March 31, 2011 (unaudited):
Total Capital (to Risk Weighted Assets)
Consolidated	$	50,544		13.80	%	$	29,301		³ 8.0	%		N/A		N/A
Belmont Savings Bank		50,528		13.80			29,301		³ 8.0		$	36,633		³ 10.0	%
Tier 1 Capital (to Risk Weighted Assets)
Consolidated		47,181		12.88			14,651		³ 4.0			N/A		N/A
Belmont Savings Bank		47,165		12.88			14,651		³ 4.0			21,980		³ 6.0
Tier 1 Capital (to Average Assets)
Consolidated		47,181		9.35			20,174		³ 4.0			N/A		N/A
Belmont Savings Bank		47,165		9.35			20,174		³ 4.0			25,217		³ 5.0

As of December 31, 2010:
Total Capital (to Risk Weighted Assets)
Consolidated		49,529		14.76			26,841		³ 8.0			N/A		N/A
Belmont Savings Bank		49,513		14.76			26,841		³ 8.0			33,552		³ 10.0
Tier 1 Capital (to Risk Weighted Assets)
Consolidated		45,651		13.61			13,421		³ 4.0			N/A		N/A
Belmont Savings Bank		45,635		13.60			13,421		³ 4.0			20,131		³ 6.0
Tier 1 Capital (to Average Assets)
Consolidated		45,651		9.25			19,742		³ 4.0			N/A		N/A
Belmont Savings Bank		45,635		9.25			19,742		³ 4.0			24,677		³ 5.0

As of December 31, 2009:
Total Capital (to Risk Weighted Assets)
Consolidated		46,295		13.76			26,920		³ 8.0			N/A		N/A
Belmont Savings Bank		46,281		13.75			26,920		³ 8.0			33,650		³ 10.0
Tier 1 Capital (to Risk Weighted Assets)
Consolidated		43,823		13.02			13,460		³ 4.0			N/A		N/A
Belmont Savings Bank		43,808		13.02			13,460		³ 4.0			20,190		³ 6.0
Tier 1 Capital (to Average Assets)
Consolidated		43,823		8.73			20,071		³ 4.0			N/A		N/A
Belmont Savings Bank		43,808		8.73			20,071		³ 4.0			25,088		³ 5.0

NOTE 16 - LEGAL CONTINGENCIES

Various legal claims arise from time to time in the normal course of business which, in the opinion of management, will have no material effect on the Company’s financial position or results of operations.

NOTE 17 - RECLASSIFICATION

Certain amounts in the prior year have been reclassified to be consistent with the current year’s statement presentation.

NOTE 18 - RESTATEMENT

The Company has supplemental retirement plans for executive officers. In prior years the Company’s obligation was being calculated under ASC 715-30-25, “Compensation-Retirement Benefits-Defined Benefit Plans-Pension-Recognition.” In 2009 the Company chose to apply ASC 710-10-25, “Compensation-General-Overall-Recognition” as a change in accounting principle through retrospective application to all prior periods. The new method of accounting for the supplemental retirement plans for executive officers was adopted to more accurately capture the terms of the related agreements.

F-36

Retained earnings at September 30, 2007 has been restated as follows:


Retained earnings as previously reported	$	42,289
Deduct:
Increase in supplemental retirement liability		(601	)
Add:
Increase in deferred tax asset		240

Retained earnings as restated	$	41,928

NOTE 19 - SUBSEQUENT EVENT- PLAN OF CONVERSION

On June 2, 2011, the Board of Trustees of BSB Bancorp, MHC adopted a plan of conversion under which BSB Bancorp, MHC would convert from a mutual holding company to a stock holding company. The conversion to a stock holding company is subject to approval by a majority of the total votes of BSB Bancorp, MHC’s Corporators and a majority of BSB Bancorp, MHC’s Independent Corporators and various regulatory agencies, including the Federal Reserve Board and the Massachusetts Division of Banks, and includes the filing of a registration statement with the U. S. Securities and Exchange Commission. If such approvals are obtained, BSB Bancorp, MHC will merge with and into BSB Bancorp, Inc., a Massachusetts corporation (“BSB Bancorp – Massachusetts”) with BSB Bancorp – Massachusetts as the resulting entity (the “MHC Merger”). Immediately after the MHC Merger, BSB Bancorp – Massachusetts will merge with a newly formed Stock Holding Company, BSB Bancorp, Inc., a Maryland corporation, (“BSB Bancorp – Maryland”), with BSB Bancorp – Maryland as the resulting entity. BSB Bancorp – Maryland (of which the Bank will become a wholly owned subsidiary) will issue and sell shares of capital stock to eligible depositors of the Bank and the public.

The cost of conversion and issuing the capital stock will be deferred and deducted from the proceeds of the offering. In the event the conversion and offering are not completed, any deferred costs will be charged to operations. Through March 31, 2011, the Company had incurred approximately $20,000 (unaudited) in conversion costs, which are included in prepaid expenses and other assets on the consolidated balance sheet.

In connection with the plan of conversion, BSB Bancorp – Maryland plans to establish the Belmont Savings Bank Charitable Foundation (the “Foundation”). The Foundation will be funded with $200,000 in cash and 2.0% of BSB Bancorp – Maryland’s stock that is sold in the offering.

At the time of conversion from a mutual holding company to a stock holding company, BSB Bancorp – Maryland will substantially restrict retained earnings by establishing a liquidation account and the Bank will establish a parallel liquidation account. The liquidation account will be maintained for the benefit of eligible holders who continue to maintain their accounts at the Bank after conversion. The liquidation account will be reduced annually to the extent that eligible account holders have reduced their qualifying deposits. Subsequent increases will not restore an eligible account holder’s interest in the liquidation account. In the event of a complete liquidation of the Bank, and only in such event, each account holder will be entitled to receive a distribution from the liquidation account in an amount proportionate to the adjusted qualifying account balances then held. The Bank may not pay dividends if those dividends would reduce equity capital below the required liquidation account amount.

F-37

You should rely only on the information contained in this document or that to which we have referred you. No person has been authorized to give any information or to make any representation other than as contained in this prospectus and, if given or made, such other information or representation must not be relied upon as having been authorized by BSB Bancorp, Inc. or Belmont Savings Bank. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any of the securities offered hereby to any person in any jurisdiction in which such offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so, or to any person to whom it is unlawful to make such offer or solicitation in such jurisdiction. Neither the delivery of this prospectus nor any sale hereunder shall under any circumstances create any implication that there has been no change in the affairs of BSB Bancorp, Inc. or Belmont Savings Bank since any of the dates as of which information is furnished herein or since the date hereof.

BSB Bancorp, Inc.

(Proposed Holding Company for

Belmont Savings Bank)

Up to Maximum 7,820,000 Shares of

Common Stock

Par value $0.01 per share

(Subject to Increase to up to Maximum as adjusted 8,993,000 Shares)

PROSPECTUS

Keefe, Bruyette & Woods, Inc.

, 2011

Until , 2011, all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

PART II: INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13.

Other Expenses of Issuance and Distribution


		Amount (1)
*	Registrant’s Legal Fees and Expenses	$	475,000
*	Registrant’s Accounting Fees and Expenses		247,000
*	Marketing Agent Fees ⁽¹⁾		400,000
*	Marketing Agent Expenses (Including Legal Fees and Expenses)		150,000
*	Data Processing Fees and Expenses		5,000
*	Appraisal Fees and Expenses		58,500
*	Printing, Postage, Mailing and EDGAR Fees		150,000
*	Filing Fees (Nasdaq, FINRA, Massachusetts Division of Banks and SEC)		75,000
*	Business Plan Fees and Expenses		50,000
*	Transfer Agent Fees and Expenses		15,000
*	Stock Certificate Printer		12,500
*	Other		20,000

*	Total	$	1,658,000

Estimated

(1)	BSB Bancorp, Inc. has retained Keefe, Bruyette & Woods, Inc. to assist in the sale of common stock on a best efforts basis in the offerings. Fee assumes that all shares are sold in the subscription and community offerings, and that no shares are sold in a syndicated community offering.

Item 14.

Indemnification of Directors and Officers

Articles 10 and 11 of the Articles of Incorporation of BSB Bancorp, Inc. (the “Corporation”) set forth circumstances under which directors, officers, employees and agents of the Corporation may be insured or indemnified against liability which they incur in their capacities as such:

ARTICLE 10. Indemnification, etc. of Directors and Officers.

A. Indemnification. The Corporation shall indemnify (1) its current and former directors and officers, whether serving the Corporation or at its request any other entity, to the fullest extent required or permitted by the MGCL now or hereafter in force, including the advancement of expenses under the procedures and to the fullest extent permitted by law, and (2) other employees and agents to such extent as shall be authorized by the Board of Directors and permitted by law; provided, however, that, except as provided in Section B of this Article 10 with respect to proceedings to enforce rights to indemnification, the Corporation shall indemnify any such indemnitee in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized by the Board of Directors of the Corporation.

B. Procedure. If a claim under Section A of this Article 10 is not paid in full by the Corporation within sixty (60) days after a written claim has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be twenty (20) days, the indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim. If successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the indemnitee shall also be entitled to be reimbursed the expense of prosecuting or defending such suit. It shall be a defense to any action for advancement of expenses that the Corporation has not received both (i) an undertaking as required by law to repay such advances in the event it shall ultimately be determined that the standard of conduct has not been met and (ii) a written affirmation by the indemnitee of his good faith belief that the standard of conduct necessary for indemnification by the Corporation has been met. In (i) any suit brought by the indemnitee to enforce a right to indemnification hereunder (but not in a suit brought by the indemnitee to enforce a right to an advancement of expenses) it shall be a defense that, and (ii) any suit by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking the Corporation shall be entitled to recover such expenses upon a final adjudication that, the indemnitee has not met the applicable standard

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for indemnification set forth in the MGCL. Neither the failure of the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such suit that indemnification of the indemnitee is proper in the circumstances because the indemnitee has met the applicable standard of conduct set forth in the MGCL, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) that the indemnitee has not met such applicable standard of conduct, shall create a presumption that the indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the indemnitee, be a defense to such suit. In any suit brought by the indemnitee to enforce a right to indemnification or to an advancement of expenses hereunder, or by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the indemnitee is not entitled to be indemnified, or to such advancement of expenses, under this Article 10 or otherwise shall be on the Corporation.

C. Non-Exclusivity. The rights to indemnification and to the advancement of expenses conferred in this Article 10 shall not be exclusive of any other right that any Person may have or hereafter acquire under any statute, these Articles, the Corporation’s Bylaws, any agreement, any vote of stockholders or the Board of Directors, or otherwise.

D. Insurance. The Corporation may maintain insurance, at its expense, to insure itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such Person against such expense, liability or loss under the MGCL.

E. Miscellaneous. The Corporation shall not be liable for any payment under this Article 10 in connection with a claim made by any indemnitee to the extent such indemnitee has otherwise actually received payment under any insurance policy, agreement, or otherwise, of the amounts otherwise indemnifiable hereunder. The rights to indemnification and to the advancement of expenses conferred in Sections A and B of this Article 10 shall be contract rights and such rights shall continue as to an indemnitee who has ceased to be a director or officer and shall inure to the benefit of the indemnitee’s heirs, executors and administrators.

F. Limitations Imposed by Federal Law. Notwithstanding any other provision set forth in this Article 10, in no event shall any payments made by the Corporation pursuant to this Article 10 exceed the amount permissible under applicable federal law.

Any repeal or modification of this Article 10 shall not in any way diminish any rights to indemnification or advancement of expenses of such director or officer or the obligations of the Corporation arising hereunder with respect to events occurring, or claims made, while this Article 10 is in force.

ARTICLE 11. Limitation of Liability. An officer or director of the Corporation, as such, shall not be liable to the Corporation or its stockholders for money damages, except (A) to the extent that it is proved that the Person actually received an improper benefit or profit in money, property or services, for the amount of the benefit or profit in money, property or services actually received; or (B) to the extent that a judgment or other final adjudication adverse to the Person is entered in a proceeding based on a finding in the proceeding that the Person’s action, or failure to act, was the result of active and deliberate dishonesty and was material to the cause of action adjudicated in the proceeding; or (C) to the extent otherwise provided by the MGCL. If the MGCL is amended to further eliminate or limit the personal liability of officers and directors, then the liability of officers and directors of the Corporation shall be eliminated or limited to the fullest extent permitted by the MGCL, as so amended.

Any repeal or modification of the foregoing paragraph by the stockholders of the Corporation shall not adversely affect any right or protection of a director or officer of the Corporation existing at the time of such repeal or modification.

Item 15.

Recent Sales of Unregistered Securities

Not Applicable.

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Item 16.

Exhibits and Financial Statement Schedules:

The exhibits and financial statement schedules filed as part of this registration statement are as follows:

(a)

List of Exhibits


1.1		Engagement Letter between Keefe, Bruyette & Woods, Inc. and Belmont Savings Bank, BSB Bancorp, Inc. and BSB Bancorp, MHC

1.2		Form of Agency Agreement between Keefe, Bruyette & Woods, Inc. and Belmont Savings Bank, BSB Bancorp, Inc., a Massachusetts corporation, BSB Bancorp, Inc., a Maryland corporation, and BSB Bancorp, MHC*

2		Plan of Conversion of BSB Bancorp, MHC

3.1		Articles of Incorporation of BSB Bancorp, Inc.

3.2		Bylaws of BSB Bancorp, Inc.*

4		Form of Common Stock Certificate of BSB Bancorp, Inc.

5		Opinion of Luse Gorman Pomerenk & Schick, P.C. regarding legality of securities being registered

8.1		Form of Federal Tax Opinion

8.2		Form of State Tax Opinion

10.1		Form of Severance Agreement between Belmont Savings Bank and Robert M. Mahoney

10.2		Form of Severance Agreement between Belmont Savings Bank and John A. Citrano

10.3		Form of Severance Agreement between Belmont Savings Bank and Hal R. Tovin

10.4		Form of Severance Agreement between Belmont Savings Bank and Christopher Y. Downs

10.5		Form of Severance Agreement between Belmont Savings Bank and Carroll M. Lowenstein, Jr.

10.6		Belmont Savings Bank Incentive Compensation Plan

10.7		Belmont Savings Bank Capital Appreciation Plan

10.8		Belmont Savings Bank Supplemental Executive Retirement Plan

10.9		Restated Supplemental Retirement Agreement between Belmont Savings Bank and John A. Citrano

10.10		Deferred Compensation Agreement between Belmont Savings Bank and John A. Borelli

10.11		Deferred Compensation Agreement between Belmont Savings Bank and S. Warren Farrell

10.12		Deferred Compensation Agreement between Belmont Savings Bank and John W. Gahan III

10.13		Deferred Compensation Agreement between Belmont Savings Bank and Patricia W. Hawkins

10.14		Deferred Compensation Agreement between Belmont Savings Bank and Robert J. Morrissey

10.15		Belmont Savings Bank Deferred Compensation Plan for Members of the Board of Investment

21		Subsidiaries of Registrant

23.1		Consent of Luse Gorman Pomerenk & Schick, P.C. (contained in Opinions included as Exhibits 5 and 8.1)

23.2		Consent of Shatswell, MacLeod & Company, P.C.

23.3		Consent of RP Financial, LC.

24		Power of Attorney (set forth on signature page)

99.1		Appraisal Agreement between RP Financial, LC. and Belmont Savings Bank and BSB Bancorp, MHC

99.2		Letter of RP Financial, LC. with respect to Subscription Rights

99.3		Appraisal Report of RP Financial, LC.**

99.4		Marketing Materials*

99.5		Stock Order and Certification Form

99.6		Business Plan Agreement with FinPro, Inc.

99.7		Conversion Agent Agreement between Keefe, Bruyette & Woods, Inc. and Belmont Savings Bank, BSB Bancorp, Inc. and BSB Bancorp, MHC

*	To be filed supplementally or by amendment.

**	Supporting financial schedules filed in paper format only pursuant to Rule 202 of Regulation S-T. Available for inspection during business hours at the principal offices of the SEC in Washington, D.C.

(b)

Financial Statement Schedules

No financial statement schedules are filed because the required information is not applicable or is included in the consolidated financial statements or related notes.

II-3

Item 17.

Undertakings

The undersigned Registrant hereby undertakes:

(1) To file, during any period in which it offers or sales are being made, a post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;

(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(4) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

(5) That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities:

The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424 (§230.424 of this chapter);

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(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

(6) That, for purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

(7) That, for the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(8) The undersigned registrant hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreement, certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Belmont, Commonwealth of Massachusetts on June 9, 2011.


BSB BANCORP, INC.

By:		/s/ Robert M. Mahoney
		Robert M. Mahoney
		President and Chief Executive Officer
		(Duly Authorized Representative)

POWER OF ATTORNEY

We, the undersigned directors and officers of BSB Bancorp, Inc. (the “Company”) hereby severally constitute and appoint Robert M. Mahoney as our true and lawful attorney and agent, to do any and all things in our names in the capacities indicated below which said Robert M. Mahoney may deem necessary or advisable to enable the Company to comply with the Securities Act of 1933, and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with the registration statement on Form S-1 relating to the offering of the Company’s common stock, including specifically, but not limited to, power and authority to sign for us in our names in the capacities indicated below the registration statement and any and all amendments (including post-effective amendments) thereto; and we hereby approve, ratify and confirm all that said Robert M. Mahoney shall do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.


Signatures	Title	Date

/s/ Robert M. Mahoney	President, Chief Executive Officer and Director (Principal Executive Officer)	June 9, 2011
Robert M. Mahoney

/s/ John A. Citrano John A. Citrano	Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)	June 9, 2011

/s/ Hal R. Tovin	Executive Vice President, Chief Operating Officer and Director	June 9, 2011
Hal R. Tovin

/s/ Robert J. Morrissey	Chairman of the Board	June 9, 2011
Robert J. Morrissey

/s/ John A. Borelli	Director	June 9, 2011
John A. Borelli

/s/ S. Warren Farrell	Director	June 9, 2011
S. Warren Farrell

/s/ Richard J. Fougere	Director	June 9, 2011
Richard J. Fougere



/s/ John W. Gahan, III	Director	June 9, 2011
John W. Gahan, III

/s/ John A. Greene	Director	June 9, 2011
John A. Greene

/s/ Patricia W. Hawkins	Director	June 9, 2011
Patricia W. Hawkins

/s/ Robert D. Ward	Director	June 9, 2011
Robert D. Ward

/s/ John A. Whittemore	Director	June 9, 2011
John A. Whittemore

As filed with the Securities and Exchange Commission on June 9, 2011

Registration No. 333-

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

EXHIBITS

REGISTRATION STATEMENT

FORM S-1

BSB Bancorp, Inc.

Belmont, Massachusetts

EXHIBIT INDEX


1.1		Engagement Letter between Keefe, Bruyette & Woods, Inc. and Belmont Savings Bank, BSB Bancorp, Inc. and BSB Bancorp, MHC

1.2		Form of Agency Agreement between Keefe, Bruyette & Woods, Inc. and Belmont Savings Bank, BSB Bancorp, Inc., a Massachusetts corporation, BSB Bancorp, Inc., a Maryland corporation, and BSB Bancorp, MHC*

2		Plan of Conversion of BSB Bancorp, MHC

3.1		Articles of Incorporation of BSB Bancorp, Inc.

3.2		Bylaws of BSB Bancorp, Inc.*

4		Form of Common Stock Certificate of BSB Bancorp, Inc.

5		Opinion of Luse Gorman Pomerenk & Schick, P.C. regarding legality of securities being registered

8.1		Form of Federal Tax Opinion

8.2		Form of State Tax Opinion

10.1		Form of Severance Agreement between Belmont Savings Bank and Robert M. Mahoney

10.2		Form of Severance Agreement between Belmont Savings Bank and John A. Citrano

10.3		Form of Severance Agreement between Belmont Savings Bank and Hal R. Tovin

10.4		Form of Severance Agreement between Belmont Savings Bank and Christopher Y. Downs

10.5		Form of Severance Agreement between Belmont Savings Bank and Carroll M. Lowenstein, Jr.

10.6		Belmont Savings Bank Incentive Compensation Plan

10.7		Belmont Savings Bank Capital Appreciation Plan

10.8		Belmont Savings Bank Supplemental Executive Retirement Plan

10.9		Restated Supplemental Retirement Agreement between Belmont Savings Bank and John A. Citrano

10.10		Deferred Compensation Agreement between Belmont Savings Bank and John A. Borelli

10.11		Deferred Compensation Agreement between Belmont Savings Bank and S. Warren Farrell

10.12		Deferred Compensation Agreement between Belmont Savings Bank and John W. Gahan III

10.13		Deferred Compensation Agreement between Belmont Savings Bank and Patricia W. Hawkins

10.14		Deferred Compensation Agreement between Belmont Savings Bank and Robert J. Morrissey

10.15		Belmont Savings Bank Deferred Compensation Plan for Members of the Board of Investment

21		Subsidiaries of Registrant

23.1		Consent of Luse Gorman Pomerenk & Schick, P.C. (contained in Opinions included as Exhibits 5 and 8.1)

23.2		Consent of Shatswell, MacLeod & Company, P.C.

23.3		Consent of RP Financial, LC.

24		Power of Attorney (set forth on signature page)

99.1		Appraisal Agreement between RP Financial, LC. and Belmont Savings Bank and BSB Bancorp, MHC

99.2		Letter of RP Financial, LC. with respect to Subscription Rights

99.3		Appraisal Report of RP Financial, LC.**

99.4		Marketing Materials*

99.5		Stock Order and Certification Form

99.6		Business Plan Agreement with FinPro, Inc.

99.7		Conversion Agent Agreement between Keefe, Bruyette & Woods, Inc. and Belmont Savings Bank, BSB Bancorp, Inc. and BSB Bancorp, MHC

*	To be filed supplementally or by amendment.

**	Supporting financial schedules filed in paper format only pursuant to Rule 202 of Regulation S-T. Available for inspection during business hours at the principal offices of the SEC in Washington, D.C.

Exhibit 1.1

LOGO

March 23, 2011

BSB Bancorp, MHC

Belmont Center

Two Leonard Street

Belmont, MA 02478

BSB Bancorp Inc.

Belmont Center

Two Leonard Street

Belmont, MA 02478

Belmont Savings Bank

Belmont Center

Two Leonard Street

Belmont, MA 02478


Attention:		Mr. Robert M. Mahoney
		President & CEO

Ladies and Gentlemen:

This letter confirms the engagement of Keefe, Bruyette & Woods, Inc. (“KBW”) to act as the financial advisor to BSB Bancorp, MHC (the “MHC”), BSB Bancorp Inc. (the “Bancshares”), and Belmont Savings Bank (the “Bank”) in connection with the proposed conversion and reorganization from the mutual holding company form of organization to a stock holding company form of organization pursuant to a Plan of Conversion and Reorganization to be adopted by the MHC, the Bancshares, and the Bank (the “Reorganization”). In order to effect the Reorganization, it is contemplated that the MHC will merge into the Bancshares and the Bancshares will merge into a new stock holding company (the “Holding Company”) and that the Holding Company will offer and sell shares of its common stock (the “Common Stock”) to eligible persons in a Subscription Offering, with any remaining shares offered to the general public in a Community Offering and if necessary, through a syndicate of broker-dealers organized by KBW (a “Syndicated Community Offering”) (the Subscription Offering, the direct Community Offering and any Syndicated Community Offering are collectively referred to herein as the “Offerings”). In addition, KBW will act as Conversion Agent in connection with the Offerings pursuant to the terms of a separate agreement between the MHC, the Bancshares, the Bank and KBW. The MHC, the Bancshares, the Bank and the Holding Company are collectively referred to herein as the “Company”. This letter sets forth the terms and conditions of our engagement as financial advisor to the Company.

Keefe, Bruyette & Woods Ÿ 10 S. Wacker Dr., Suite 3400 Ÿ Chicago, IL 60606

312.423.8200 Ÿ Toll Free: 800.929.6113 Ÿ Fax: 312.423.8232

BSB Bancorp, MHC

BSB Bancorp Inc.

Belmont Savings Bank

March 23, 2011

Page 2

1.	Advisory/Offering Services

As the Company’s financial advisor, KBW will provide financial advice to the Company and will assist the Company’s management, legal counsel, accountants and other advisors in connection with the Conversion and related issues. We anticipate our services will include the following, each as may be necessary and as the Company may reasonably request:

Providing advice on the financial and securities market implications of the Plan of Conversion and Reorganization and any related corporate documents, including the Company’s Business Plan;

Assisting in structuring the Offerings, including developing and assisting in implementing a marketing strategy for the Offerings;

Reviewing all offering documents, including the Prospectus, stock order forms, letters, brochures and other related offering materials (it being understood that preparation and filing of such documents will be the responsibility of the Company and its counsel);

Assisting the Company in preparing for and scheduling meetings with potential investors and broker-dealers, as necessary;

Assisting the Company in analyzing proposals from outside vendors retained in connection with the Offerings, including printers, transfer agents and appraisal firms;

Assisting the Company in the drafting and distribution of press releases as required or appropriate in connection with the Offerings;

Meeting with the Board of Directors and/or management of the Company to discuss any of the above services; and

Providing such other financial advisory and investment banking services in connection with the Offerings as may be agreed upon by KBW and the Company.

2.	Due Diligence Review

The Company acknowledges and agrees that KBW’s obligation to perform the services contemplated by this agreement shall be subject to the satisfactory completion of such investigations and inquiries relating to the Company, and its directors, officers, agents and employees, as KBW and their counsel in their reasonable discretion my deem appropriate under the circumstances. The Company agrees it will make available to KBW all relevant information, whether or not publicly available, which KBW reasonably requests, and will permit KBW to discuss with the board of directors and management the operations and prospects of the Company. KBW will treat all material non-public information as confidential. The Company recognizes and confirms that KBW (a) will use and rely on such information in performing the services contemplated by this agreement without having independently verified the same, (b) does not assume responsibility for the accuracy or completeness of the information, and (c) will not conduct any independent verification or any appraisal or physical inspection of properties or assets. KBW will assume that all financial forecasts have been reasonably prepared and reflect the best then currently available estimates and judgments of the Company’s management as to the expected future financial performance of the Company.

BSB Bancorp, MHC

BSB Bancorp Inc.

Belmont Savings Bank

March 23, 2011

Page 3

3.	Regulatory Filings

If the Company proceeds with the Offerings, the Company will cause appropriate Offering documents to be filed with all regulatory agencies including the Securities and Exchange Commission (“SEC”), the Financial Industry Regulatory Authority (“FINRA”), and the appropriate federal and/or state bank regulatory agencies. In addition, the Company and KBW agree that the Company’s counsel shall serve as counsel with respect to blue sky matters in connection with the Offerings, and that the Company shall cause such counsel to prepare a Blue Sky Memorandum related to the Offerings including KBW’s participation therein and shall furnish KBW a copy thereof addressed to KBW or upon which counsel shall state KBW may rely.

Fees

For the services hereunder, the Company shall pay the following fees to KBW at closing unless stated otherwise:

(a)

Management Fee: A Management Fee of $50,000 payable in four consecutive monthly installments of $12,500 commencing with the first month following the execution of this engagement letter. Such fees shall be deemed to have been earned when due. Should the Offering be terminated for any reason not attributable to the action or inaction of KBW, KBW shall have earned and be entitled to be paid fees accruing through the stage at which point the termination occurred.

(b)

Success Fee: A Success Fee of $400,000 shall be paid for KBW’s services in relation to the Subscription Offering and Direct Community Offering. The Management Fee described in 4(a) will be credited against the Success Fee paid pursuant to this paragraph.

(c)

Syndicated Community Offering : If any shares of the Company’s stock remain available after the Subscription Offering and Direct Community Offering, at the request of the Company, KBW will seek to form a syndicate of registered broker-dealers to assist in the sale of such common stock on a best efforts basis, subject to the terms and conditions set forth in a selected dealers agreement to be entered into between the Company and KBW. KBW will endeavor to distribute the common stock among dealers in a fashion which best meets the distribution objectives of the Company and the Plan. KBW will be paid a fee not to exceed 6.0% of the aggregate purchase price of the shares of common stock sold in the Syndicated Community Offering. From this fee, KBW will pass onto selected broker-dealers, who assist in the Syndicated Community Offering, an amount competitive with gross underwriting discounts charged at such time for comparable amounts of stock sold at a comparable price per share in a similar market environment. Fees with respect to purchases affected with the assistance of a broker/dealer other than KBW shall be transmitted by KBW to such broker/dealer.

BSB Bancorp, MHC

BSB Bancorp Inc.

Belmont Savings Bank

March 23, 2011

Page 4

Expenses

The Company will bear those expenses of the proposed Offering customarily borne by issuers, including, without limitation, regulatory filing fees, SEC, “Blue Sky,” and FINRA filing and registration fees; the fees of the Company’s accountants, attorneys, appraiser, transfer agent and registrar, printing, mailing and marketing and syndicate expenses associated with the Offering; the fees set forth in Section 4; and fees for “Blue Sky” legal work. If KBW incurs expenses on behalf of Company, the Company will reimburse KBW for such expenses; provided, however, KBW agrees that it will not incur expenses on behalf of the Company without the Company’s prior written consent.

KBW shall be reimbursed for its reasonable, documented out-of-pocket expenses related to the Offering, including costs of travel, meals and lodging, photocopying, telephone, facsimile, couriers, etc., which will not exceed $50,000. In addition KBW will be reimbursed for reasonable documented fees and expenses of its counsel not to exceed $100,000. These expenses assume no unusual circumstances or delays, or a re-solicitation in connection with the Offerings. KBW and the Company acknowledge that such expense cap may be increased by mutual consent, including in the event of a material delay in the Offering which would require an update of the financial information in tabular form to reflect a period later than that set forth in the original filing of the offering document. The provisions of this paragraph are not intended to apply to or in any way impair or limit the indemnification provisions contained herein.

6.	Limitations

The Company acknowledges that all opinions and advice (written or oral) given by KBW to the Company in connection with KBW’s engagement are intended solely for the benefit and use of the Company for the purposes of its evaluation of the proposed Offerings. Unless otherwise expressly stated in an opinion letter issued by KBW or otherwise expressly agreed, no one other than the Company is authorized to rely upon this engagement of KBW or any statements or conduct by KBW. The Company agrees that no such opinion or advice shall be used, reproduced, disseminated, quoted or referred to at any time, in any manner, or for any purpose, without the prior written consent of KBW.

The Company acknowledges and agrees that KBW has been retained to act solely as financial advisor to the Company and not as an advisor to or agent of any other person, and the Company’s engagement of KBW is not intended to confer rights upon any person not a party to this Agreement (including shareholders, employees or creditors of the Company) as against KBW or its affiliates, or their respective directors, officers, employees or agents. In such capacity, KBW shall act as an independent contractor, and any duties arising out of its engagement shall be owed solely to the Company. It is understood that KBW’s responsibility to the Company is solely contractual in nature and KBW does not owe the Company, or any other party, any fiduciary duty as a result of this Agreement.

BSB Bancorp, MHC

BSB Bancorp Inc.

Belmont Savings Bank

March 23, 2011

Page 5

Benefit

This letter agreement shall inure to the benefit of the parties hereto and their respective successors, and the obligations and liabilities assumed hereunder by the parties hereto shall be binding upon their respective successors; provided, however, that this letter agreement shall not be assignable by KBW.

8.	Confidentiality

KBW acknowledges that the information provided to it by the Company may contain confidential and proprietary business information concerning the Company. KBW agrees that, except as contemplated in connection with the performance of its services under this agreement, as authorized by the Company or as required by law, regulation or legal process, it will treat as confidential all material, non-public information relating to the Company obtained in connection with its engagement hereunder (the “Confidential Information); provided, however, that KBW may disclose such Confidential Information to its agents and advisors who are assisting or advising KBW in performing its services hereunder and who have agreed to be bound by the terms and conditions of this paragraph. As used in this paragraph, the term “Confidential Information” shall not include information which (a) is or becomes generally available to the public other than as a result of a disclosure by KBW, (b) was available to KBW on a non-confidential basis prior to its disclosure to KBW by the Company, or (c) becomes available to KBW on a non-confidential basis from a person other than the Company who is not otherwise known to KBW to be bound not to disclose such information pursuant to a contractual, legal or fiduciary obligation.

The Company hereby acknowledges and agrees that the presentation materials and financial models used by KBW in performing its services hereunder have been developed by and are proprietary to KBW. The Company agrees that it will not reproduce or distribute all or any portion of such models or presentations without the prior written consent of KBW.

9.	Indemnification

As KBW will be acting on behalf of the Company in connection with the Offerings, the Company agrees to indemnify and hold harmless KBW and its affiliates, the respective partners, directors, officers, employees and agents of KBW and its affiliates and each other person, if any, controlling KBW or any of its affiliates and each of their successors and assigns (KBW and each such person being an “Indemnified Party”) to the fullest extent permitted by law, from and against any and all losses, claims, damages and liabilities, joint or several, to which such Indemnified Party may become subject under applicable federal or state law, or otherwise related to or arising out of the Offerings or the engagement of KBW pursuant to, or the performance by KBW of the services contemplated by, this letter, and will reimburse any Indemnified Party for all expenses (including reasonable legal fees and expenses) as they are incurred,

BSB Bancorp, MHC

BSB Bancorp Inc.

Belmont Savings Bank

March 23, 2011

Page 6

including expenses incurred in connection with the investigation, preparing for or defending any such action or claim whether or not in connection with pending or threatened litigation, or any action or proceeding arising therefrom, whether or not KBW is a party; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage, liability or expense (a) arises out of or is based upon any untrue statement of a material fact or the omission of a material fact required to be stated therein or necessary to make not misleading any statements contained in any final prospectus, or any amendment or supplement thereto, made in reliance on and in conformity with written information furnished to the Company by KBW expressly for use therein or (b) to the extent that any loss, claim, damage, liability or expense is found in a final judgment by a court of competent jurisdiction to have resulted primarily from the gross negligence or bad faith of KBW.

If the indemnification provided for in the foregoing paragraph is judicially determined to be unavailable (other than in accordance with the terms hereof) to any person otherwise entitled to indemnity in respect of any losses, claims, damages or liabilities referred to herein, then, in lieu of indemnifying such person hereunder, the Company shall contribute to the amount paid or payable by such person as a result of such losses, claims, damages or liabilities (and expenses relating thereto) (i) in such proportion as is appropriate to reflect the relative benefits to the Company, on the one hand, and KBW, on the other hand, of the engagement provided for in this Agreement or (ii) if the allocation provided for in clause (i) above is not available, in such proportion as is appropriate to reflect not only the relative benefits referred to in such clause (i) but also the relative fault of each of the Company and KBW, as well as any other relevant equitable considerations; provided , however , in no event shall KBW’s aggregate contribution to the amount paid or payable exceed the aggregate amount of fees actually received by KBW under this Agreement. For the purposes of this Agreement, the relative benefits to the Company and to KBW of the engagement under this Agreement shall be deemed to be in the same proportion as (a) the total value paid or contemplated to be paid or received or contemplated to be received by the Company in the Conversion and the Offerings that are the subject of the engagement hereunder, whether or not consummated, bears to (b) the fees paid or to be paid to KBW under this Agreement.

10.	Definitive Agreement

This letter agreement reflects KBW’s present intention of proceeding to work with the Company on its proposed Offerings. No legal and binding obligation is created on the part of the Company or KBW with respect to the subject matter hereof, except as to (i) the agreement to maintain the confidentiality of Confidential Information set forth in Section 8, (ii) the payment of certain fees as set forth in Section 4, (iii) the payment of expenses as set forth in Section 5, (iv) the limitations set forth in Section 6, (v) the indemnification and contribution provisions set forth in Section 9 and (iv) those terms set forth in a mutually agreed upon Agency Agreement between KBW and the Company to be executed prior to commencement of the Offerings, all of which shall constitute the binding obligations of the parties hereto and which shall survive the termination of this letter agreement or the completion of the services furnished hereunder and shall remain operative and in full force and effect.

BSB Bancorp, MHC

BSB Bancorp Inc.

Belmont Savings Bank

March 23, 2011

Page 7

KBW’s execution of such Agency Agreement shall also be subject to (a) KBW’s satisfaction with Due Diligence Review, (b) preparation of offering materials that are satisfactory to KBW, (c) compliance by the Company with all relevant legal and regulatory requirements to the reasonable satisfaction of KBW and its counsel, (d) agreement that the price established by the independent appraiser is reasonable, and (e) market conditions at the time of the proposed Offering.

This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and can be altered only by written consent signed by the parties. This Agreement shall be construed and enforced in accordance with the laws of the State of New York, without regard to the conflicts of laws principles thereof. Any right to trial by jury with respect to any claim or action arising out of this agreement or conduct in connection with the engagement is hereby waived by the parties hereto.

If the foregoing correctly sets forth our mutual understanding, please so indicate by signing and returning the original copy of this letter to the undersigned.


Very truly yours,

KEEFE, BRUYETTE & WOODS, INC.

By:	/s/ Harold T. Hanley III
	Harold T. Hanley III
	Managing Director

BSB BANCORP, MHC
BSB BANCORP INC.
BELMONT SAVINGS BANK

By:	/s/ Robert M. Mahoney	Date: March 30, 2011
	Robert M. Mahoney
	President & CEO

Exhibit 2

BSB BANCORP, MHC

PLAN OF CONVERSION

Adopted by the Board of Trustees

on June 2, 2011

TABLE OF CONTENTS


ARTICLE 1. INTRODUCTION—BUSINESS PURPOSE			1

ARTICLE 2. DEFINITIONS			3
	2.1.	Acting in Concert	3
	2.2.	Affiliate	4
	2.3.	Application	4
	2.4.	Associate	4
	2.5.	Bank	4
	2.6	Bank Liquidation Account	4
	2.7.	BHCA	4
	2.8.	Commissioner	4
	2.9.	Community Offering	5
	2.10.	Conversion	5
	2.11.	Corporator	5
	2.12.	Deposit Account	5
	2.13.	Direct Community Offering	5
	2.14.	Division	5
	2.15.	Eligible Account Holder	5
	2.16.	Eligibility Record Date	5
	2.17.	Employee	5
	2.18.	Employee Plan	5
	2.19.	ESOP	5
	2.20.	Estimated Valuation Range	5
	2.21.	Exchange Act	5
	2.22.	FDIC	6
	2.23.	FRB	6
	2.24.	FRB Application	6
	2.25.	Foundation	6
	2.26.	Group Maximum Purchase Limit	6
	2.27.	Holding Company Common Stock	6
	2.28.	Independent Appraiser	6
	2.29	Independent Corporator	6
	2.30.	Independent Valuation	6
	2.31.	Individual Maximum Purchase Limit	6
	2.32.	Information Statement	6
	2.33.	Local Community	6
	2.34.	Marketing Agent	6
	2.35.	Market Maker	6
	2.36.	MHC	7
	2.37.	Non-Tax-Qualified Employee Benefit Plan	7
	2.38.	Offering	7
	2.39.	Officer	7
	2.40.	Person	7
	2.41.	Plan	7


	2.42.	Qualifying Deposit	7
	2.43.	Range Maximum	7
	2.44.	Range Minimum	7
	2.45.	Regulations	7
	2.46.	SEC	7
	2.47.	Special Meeting	7
	2.48.	Stock Holding Company	8
	2.49.	Stock Holding Company Liquidation Account	8
	2.50.	Subscription Offering	8
	2.51.	Subscription Price	8
	2.52.	Subsidiary	8
	2.53.	Supplemental Eligible Account Holder	8
	2.54.	Supplemental Eligibility Record Date	8
	2.55.	Syndicated Community Offering	8
	2.56.	Tax-Qualified Employee Plan	8

ARTICLE 3. GENERAL PROCEDURE FOR CONVERSION			8
	3.1.	Preconditions to Conversion	8
	3.2.	Submission of Plan to Commissioner and FRB	9
	3.3.	Special Meeting of Corporators to Approve the Plan	9
	3.4.	Stock Holding Company Charter And Bylaws	9
	3.5.	Bank Charter And Bylaws	9
	3.6.	Conversion Procedures	9
	3.7.	Conversion to Stock Holding Company.	10
	3.8.	Offer and Sale of Holding Company Common Stock	10

ARTICLE 4. ESTABLISHMENT AND FUNDING OF CHARITABLE FOUNDATION.			11
	4.1.	Establishment of the Foundation	11
	4.2.	Purposes of the Foundation; Charitable Contributions	11
	4.3.	Board of Directors of the Foundation	12

ARTICLE 5. SHARES TO BE OFFERED			12
	5.1.	Holding Company Common Stock	12
	5.2.	Independent Valuation, Purchase Price and Number of Shares.	12

ARTICLE 6. SUBSCRIPTION RIGHTS AND ORDERS FOR COMMON STOCK			14
	6.1.	Distribution of Prospectus	14
	6.2.	Order Forms	14
	6.3.	Undelivered, Defective or Late Order Form; Insufficient Payment	15
	6.4.	Payment for Stock	16

ARTICLE 7. STOCK PURCHASE PRIORITIES			17
	7.1.	Priorities for Offering	17
	7.2.	Certain Determinations	17
	7.3.	Minimum Purchase; No Fractional Shares	17


	7.4.	Overview of Priorities	17
	7.5.	Priorities For Subscription Offering	17
	7.6.	Priorities for Direct Community Offering	19
	7.7.	Priorities for Syndicated Community Offering	21

ARTICLE 8. ADDITIONAL LIMITATIONS ON PURCHASES			21
	8.1.	General	21
	8.2.	Individual Maximum Purchase Limit	21
	8.3.	Group Maximum Purchase Limit	22
	8.4.	Purchases by Officers, Directors, Trustees and Corporators	22
	8.5.	Special Rule for Tax-Qualified Employee Plans	22
	8.6.	[Reserved]	23
	8.7.	Illegal Purchases	23
	8.8.	Rejection of Orders	23
	8.9.	Subscribers in Non-Qualified States or in Foreign Countries	23
	8.10.	No Offer to Transfer Shares	23
	8.11.	Confirmation by Purchasers	23

ARTICLE 9. POST OFFERING MATTERS			24
	9.1.	Stock Purchases After the Conversion	24
	9.2.	Resales of Stock by Management Persons	24
	9.3.	Stock Certificates	24
	9.4.	Restriction on Financing Stock Purchases	24
	9.5.	Stock Benefit Plans	24
	9.6.	Market for Holding Company Common Stock	25
	9.7.	Liquidation Account	25
	9.8.	Payment of Dividends	29
	9.9.	Repurchase of Stock	29
	9.10.	Conversion Expenses	29
	9.11.	Public Inspection of Conversion Application	29
	9.12.	Enforcement of Terms and Conditions	29
	9.13.	Voting Rights in Converted Stock Holding Company	30

ARTICLE 10. MISCELLANEOUS			30
	10.1.	Interpretation of Plan	30
	10.2.	Amendment or Termination of the Plan	30

Exhibit 7.6—Local Community; Massachusetts Cities and Towns Served by Belmont Savings Bank

iii

BSB BANCORP, MHC

PLAN OF CONVERSION

ARTICLE 1.

Introduction—Business Purpose

This Plan of Conversion (the “Plan”) provides for the conversion and reorganization of BSB Bancorp, MHC, a Massachusetts-chartered mutual holding company (the “MHC”), into the capital stock form of organization (the “Conversion”). The MHC currently owns 100% of the common stock of BSB Bancorp, Inc., a Massachusetts corporation (the “Mid-Tier Holding Company”), which owns 100% of the common stock of Belmont Savings Bank (the “Bank”), a Massachusetts-chartered savings bank, which is headquartered in Belmont, Massachusetts. Capitalized terms used but not defined in this Article 1 shall have the respective meanings set forth in Article 2 hereof.

The Plan, which has been adopted by the Board of Trustees of the MHC, and has been ratified by the Board of Directors of the Mid-Tier Holding Company and the Board of Directors of the Bank, is to be carried out under the laws of The Commonwealth of Massachusetts and the regulations of the Massachusetts Division of Banks, and other applicable laws and regulations. The Board of Trustees of the MHC currently contemplates that, following the Conversion, all of the capital stock of the Bank will be held by a Maryland corporation (the “Stock Holding Company”) and that the Stock Holding Company will issue and sell its capital stock (the “Holding Company Common Stock”) upon the terms and conditions set forth herein to Eligible Account Holders, Supplemental Eligible Account Holders (if any), and the Tax-Qualified Employee Plans established by the Bank or the Stock Holding Company, according to the respective priorities set forth in the Plan. Any shares not subscribed for by the foregoing classes of Persons will be offered for sale to certain members of the public directly by the Stock Holding Company through a Community Offering or a Syndicated Community Offering or through an underwritten firm commitment public offering, or through a combination thereof.

The Plan is subject to the approval of various regulatory agencies, and must be approved by a majority of the total votes of the MHC’s Corporators and a majority of the MHC’s Independent Corporators (who shall constitute not less than 60% of all Corporators) eligible to be cast at the annual meeting or at a special meeting called for such purpose. By approving the Plan, the Corporators will also be approving the charter and bylaws of each of the Stock Holding Company and the Bank and all other steps necessary or incidental to the Conversion.

The Conversion is to be effectuated as follows, or in any other manner that is consistent with the purposes of the Plan and applicable laws and regulations. The Mid-Tier Holding Company will establish the Stock Holding Company as a first-tier stock holding company subsidiary. The MHC will merge with and into the Mid-Tier Holding Company with the Mid-Tier Holding Company as the resulting entity, pursuant to Section 7(3) of Chapter 167H of the Massachusetts General Laws (the “MHC Merger”), in accordance with an agreement and plan of merger, whereby the shares of Mid-Tier Holding Company common stock held by the MHC will

be canceled and all persons holding liquidation rights in the MHC will constructively receive liquidation rights in the Mid-Tier Holding Company in exchange for their liquidation rights in the MHC. Immediately after the MHC Merger, the Mid-Tier Holding Company will merge with the Stock Holding Company, with the Stock Holding Company as the resulting entity (the “Mid-Tier Merger”), pursuant to an agreement and plan of merger, whereby the Bank will become the wholly owned subsidiary of the Stock Holding Company. As part of the Mid-Tier Merger, the liquidation rights held by persons in the Mid-Tier Holding Company pursuant to the MHC Merger will automatically, without further action on the part of such persons, be exchanged for an interest in the liquidation account established in the Conversion. Immediately after the Mid-Tier Merger, the Stock Holding Company will offer for sale the Holding Company Common Stock in the Offering. The Stock Holding Company will contribute at least 50% of the net proceeds of the Offering to the Bank in constructive exchange for additional shares of common stock of the Bank and in exchange for the Bank Liquidation Account.

The foregoing is subject to modification as necessary to address tax considerations. Upon the Conversion, Eligible Account Holders and the Supplemental Eligible Account Holders (if a Supplemental Eligibility Record Date is established) will be granted interests in the liquidation account to be established by the Bank and the Stock Holding Company pursuant to Section 9.7 hereof.

The primary purposes of the Conversion are to (1) support future growth, customer acquisition and profitability through, among other things, branch expansion and increased lending; (2) compete more effectively in the financial services marketplace by diversifying products and services offered to customers; (3) offer depositors, employees, management, trustees and directors an equity ownership interest in the Stock Holding Company; (4) increase philanthropic endeavors to the communities served by the Bank and in which the Bank has banking offices through the formation and funding of a charitable foundation to be dedicated to charitable purposes within the communities in which the Bank has maintained its headquarters and banking branches prior to the Offering; (5) make necessary capital investments in facilities and technology; and (6) attract and retain qualified directors, management and employees through stock-based compensation plans. The Conversion is also intended to provide an additional source of capital not now available to the MHC or the Bank. Under the Plan, the Stock Holding Company may, subject to the purchase priority rights of depositors and tax-qualified employee benefit plans (specifically our employee stock ownership plan), offer the common stock for sale in a direct community offering to members of the general public. The Stock Holding Company will use the capital raised, directly or after investing such capital into the Bank, to further the expansion of the activities of the Stock Holding Company and the Bank. In addition, after the Conversion, the Stock Holding Company would have the ability to issue additional shares of Holding Company Common Stock to raise additional capital or in connection with mergers or acquisitions, although no additional capital issuance and no merger or acquisition is planned or contemplated at the present time. In addition, the Bank and the Stock Holding Company believe that stock ownership by Officers and other Employees of the Stock Holding Company and the Bank will prove to be an effective performance incentive, as well as a means of attracting and retaining qualified personnel. Finally, the Board of Trustees and senior management also believe that the Conversion will be beneficial to the population within the primary market area. The Conversion will provide local customers and other residents with an

opportunity to become equity owners of the Bank, and thereby participate in possible stock price appreciation and cash dividends, which is consistent with the objective of being a locally-owned financial institution serving local financial needs. The Board of Trustees and management believe that, through local stock ownership, current customers and non-customers who purchase Holding Company Common Stock will seek to enhance the financial success of the Bank through consolidation of their banking business and increased referrals to the Bank.

In furtherance of the Bank’s commitment to its community, the MHC and the Bank intend to cause to be formed a charitable foundation (the “Foundation”) as part of the Conversion. The Foundation will be dedicated to charitable purposes within the Bank’s market area. The Foundation is intended to complement the Bank’s community reinvestment activities in a manner that will allow the Bank’s local communities to share in the growth and profitability of the Stock Holding Company and the Bank over the long term. Consistent with the Bank’s goal, the Stock Holding Company intends, immediately following the Conversion, to contribute to the Foundation $200,000 in cash and a number of shares of Holding Company Common Stock equal to 2% of the shares of Holding Company Common Stock issued in the Conversion.

The Bank became a stock-form subsidiary of the Mid-Tier Holding Company when the Bank reorganized into the mutual holding company structure in 2009. Accordingly, the Conversion will not affect the corporate existence of the Bank. The Bank’s business and operations will not be affected or interrupted by the Conversion and the Bank will continue as the same legal entity after the Conversion. The deposit accounts and loan accounts of the Bank’s customers will not be affected by the Conversion. Upon the Conversion, each deposit account holder of the Bank will continue to hold exactly the same deposit account as the holder held immediately before the Conversion, and such deposit account holders shall have all of have the same rights and privileges after the Conversion. All deposit accounts in the Bank following the Conversion will continue to be insured up to the legal maximum by the Deposit Insurance Fund of the FDIC and the Depositors Insurance Fund established by Section 1 of Chapter 44 of the acts of 1932, as amended, of the Massachusetts General Laws for amounts in excess of FDIC coverage limits, in the same manner as such deposit accounts were insured immediately before the Conversion. There will be no change in the Bank’s loans. The Conversion will not result in any reduction of the Bank’s reserves or net worth.

ARTICLE 2.

Definitions

As used in the Plan, the terms set forth below have the following meanings:

2.1. Acting in Concert. The term “Acting in Concert” means (a) knowing participation in a joint activity or conscious parallel action towards a common goal, whether or not pursuant to an express agreement; or (b) Persons seeking to combine or pool their voting or other interests (such as subscription rights) in the securities of an issuer for a common purpose, pursuant to any contract, understanding, relationship, agreement or other arrangement, whether written or otherwise. When Persons act together for such purpose, their group is deemed to have acquired their stock. The determination of whether a group is Acting in Concert shall be made solely by the Board of Trustees of the MHC or Officers delegated by such Board and may be

based on any evidence upon which the Board or such delegate(s) chooses to rely, including, without limitation, joint account relationships or the fact that such Persons have filed joint Schedules 13D with the SEC with respect to other companies. Persons living at the same address, whether or not related, will be deemed to be Acting in Concert unless otherwise determined by the Board or such delegate(s). Trustees of the MHC and directors of the Mid-Tier Holding Company, the Stock Holding Company and the Bank shall not be deemed to be Acting in Concert solely as a result of their membership on any such board or boards.

2.2. Affiliate. An “Affiliate” of, or a Person “Affiliated” with, a specified Person, is a Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with the Person specified.

2.3. Application. The application, including a copy of the Plan, submitted by the MHC to the Commissioner for approval of the Conversion.

2.4. Associate. The term “Associate,” when used to indicate a relationship with any Person, means: (a) any corporation or organization (other than the Bank, the Stock Holding Company, the Mid-Tier Holding Company, the MHC or a majority-owned subsidiary of any thereof) of which such Person is a director, Officer or partner or is, directly or indirectly, the beneficial owner of 10% or more of any class of equity securities; (b) any trust or other estate in which such Person has a substantial beneficial interest or as to which such Person serves as trustee or in a similar fiduciary capacity; (c) any relative or spouse of such Person or any relative of such spouse, who has the same home as such Person or who is a director or trustee or officer of the MHC, the Stock Holding Company, the Mid-Tier Holding Company, or the Bank; and (d) any Person Acting in Concert with any of the Persons or entities specified in clauses (a) through (c) above; provided , however , that any Tax-Qualified or Non-Tax-Qualified Employee Plan shall not be deemed to be an Associate of any director, trustee or Officer of the MHC, the Mid-Tier Holding Company, the Stock Holding Company or the Bank, and provided that, for purposes of aggregating total shares that may be held by Officers and Directors, the term “Associate” does not include any Tax-Qualified Employee Plan. When used to refer to a Person other than an Officer or director of the Bank, the MHC, the Mid-Tier Holding Company or the Stock Holding Company, the MHC in its sole discretion may determine the Persons that are Associates of other Persons. Trustees of the MHC and directors of the Stock Holding Company, the Mid-Tier Holding Company and the Bank shall not be deemed to be Associates solely as a result of their membership on such Board.

2.5. Bank. Belmont Savings Bank.

2.6 Bank Liquidation Account . The account established in the Bank representing the liquidation interests received by Eligible Account Holders and Supplemental Eligible Account Holders (if any) in connection with the Conversion.

2.7. BHCA. The Bank Holding Company Act of 1956, as amended.

2.8. Commissioner. The Commissioner of Banks of the Commonwealth of Massachusetts.

2.9. Community Offering. A Direct Community Offering and/or a Syndicated Community Offering.

2.10. Conversion. The Conversion of the MHC to stock form pursuant to the Plan, and all steps incident or necessary thereto.

2.11. Corporator. A Corporator of the MHC.

2.12. Deposit Account. Any withdrawable deposit account offered by the Bank, including, without limitation, savings accounts, NOW account deposits, certificates of deposit, demand deposits, Keogh Plan, SEPs and Individual Retirement Accounts for which the Bank acts as custodian or trustee, and such other types of deposit accounts as may then have been authorized by Massachusetts or federal law and regulations, but not including repurchase agreements, savings bank life insurance policies, certain escrow accounts, or trust department accounts held separately from deposit accounts in accordance with Section 4 of Chapter 167G of the Massachusetts General Laws.

2.13. Direct Community Offering. The offering for sale directly by the Stock Holding Company of Holding Company Common Stock (a) to the Local Community, as provided in Exhibit 7.6 of the Plan, with preference given to natural persons residing in the Local Community, and then (b) to the public at large. The Direct Community Offering may be conducted simultaneously with the Subscription Offering.

2.14. Division. The Division of Banks of the Commonwealth of Massachusetts.

2.15. Eligible Account Holder. Any Person holding a Qualifying Deposit on the Eligibility Record Date.

2.16. Eligibility Record Date. May 31, 2010, the date for determining who qualifies as an Eligible Account Holder.

2.17. Employee. All Persons who are employed by the Bank, Mid-Tier Holding Company or the MHC. The term “Employee” does not include a trustee, director or Officer.

2.18. Employee Plan. Any Tax-Qualified Employee Plan or Non-Tax-Qualified Employee Benefit Plan.

2.19. ESOP. The employee stock ownership plan established by the Bank.

2.20. Estimated Valuation Range. The dollar range of the proposed Offering, as determined by the Independent Appraiser and as it may be amended from time to time. The Estimated Valuation Range may vary within 15% above or 15% below the midpoint of such range, with a possible adjustment by up to 15% above the Range Maximum.

2.21. Exchange Act. The Securities Exchange Act of 1934, as amended.

2.22. FDIC. The Federal Deposit Insurance Corporation.

2.23. FRB. The Board of Governors of the Federal Reserve System.

2.24. FRB Application. The application to be submitted by the MHC to the FRB seeking the FRB’s prior approval of the MHC’s conversion from mutual to stock form.

2.25. Foundation. A charitable foundation established and funded by the Bank and the Stock Holding Company in connection with the Conversion as contemplated by Article 4 hereof. The Foundation will qualify as an exempt organization under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended.

2.26. Group Maximum Purchase Limit. The limitation on the purchase of shares of Holding Company Common Stock established by Section 8.3 hereof, as such limit may be increased pursuant to said Section 8.3.

2.27. Holding Company Common Stock. The Holding Company Common Stock to be issued by the Stock Holding Company in the Offering.

2.28. Independent Appraiser. The appraiser retained by the MHC to prepare an appraisal of the pro forma market value of the Holding Company Common Stock.

2.29. Independent Corporator. A Corporator who is not an Employee, Officer, or trustee of the MHC or an Employee, Officer, director, or “significant borrower” of the Bank, as determined by the Commissioner.

2.30. Independent Valuation. The estimated pro forma market value of the Holding Company Common Stock as determined by the Independent Appraiser.

2.31. Individual Maximum Purchase Limit. The limitation on the purchase of shares of Holding Company Common Stock established by Section 8.2 hereof, as such limit may be increased pursuant to said Section 8.2.

2.32. Information Statement. The information statement required to be sent to the Corporators in connection with the Special Meeting.

2.33. Local Community. The Massachusetts cities and towns listed on Exhibit 7.6.

2.34. Marketing Agent. The broker-dealer responsible for organizing and managing the sale of the Holding Company Common Stock.

2.35. Market Maker. A dealer ( i.e ., any Person who engages directly or indirectly as agent, broker, or principal in the business of offering, buying, selling or otherwise dealing or trading in securities issued by another Person) who, with respect to a particular security, (i) regularly publishes bona fide competitive bid and offer quotations on request, and (ii) is ready, willing and able to effect transactions in reasonable quantities at the dealer’s quoted prices with other brokers or dealers.

2.36. MHC. BSB Bancorp, MHC, the Massachusetts-chartered mutual holding company for the Bank as it exists in mutual form prior to the Conversion.

2.37. Non-Tax-Qualified Employee Benefit Plan. Any defined benefit plan or defined contribution plan which is not qualified under Section 401 of the Internal Revenue Code.

2.38. Offering. The Subscription Offering, the Direct Community Offering and the Syndicated Community Offering.

2.39. Officer. The Chairman of the Board, the President, any officer of the level of vice president or above, the Clerk and the Treasurer of the Bank, the MHC, the Mid-Tier Holding Company or the Stock Holding Company, as the case may be.

2.40. Person. An individual, corporation, partnership, association, joint-stock company, trust (including Individual Retirement Accounts, SEPs and Keogh Accounts), unincorporated organization, government entity or political subdivision thereof or any other entity.

2.41. Plan. This Plan of Conversion.

2.42. Qualifying Deposit. The aggregate balances of all Deposit Accounts of an Eligible Account Holder as of the close of business on the Eligibility Record Date or of a Supplemental Eligible Account Holder (if any) as of the close of business on the Supplemental Eligibility Record Date (if required), as the case may be, provided that such aggregate balance is not less than $50.

2.43. Range Maximum. The valuation which is 15% above the midpoint of the Estimated Valuation Range, as defined in Section 2.19 hereof.

2.44. Range Minimum. The valuation which is 15% below the midpoint of the Estimated Valuation Range, as defined in Section 2.19 hereof.

2.45. Regulations. The regulations of the Division regarding mutual-to-stock conversions of mutual holding companies and the applicable regulations of the Office of Thrift Supervision (as deemed applicable by the FRB), to the extent that such Office of Thrift Supervision regulations do not conflict with the regulations of the Division.

2.46. SEC. The Securities and Exchange Commission.

2.47. Special Meeting. The Special Meeting of Corporators called for the purpose of voting on the Plan.

2.48. Stock Holding Company. The stock-form holding company that will (a) be a Maryland corporation known as BSB Bancorp, Inc., (b) issue Holding Company Common Stock in the Conversion, and (c) own 100% of the common stock of the Bank upon consummation of the Conversion.

2.49 . Stock Holding Company Liquidation Account. The account established by the Stock Holding Company representing the liquidation interests received by Eligible Account Holders and Supplemental Eligible Account Holders (if any) in connection with the Conversion in exchange for their interests in the MHC immediately prior to the Conversion.

2.50. Subscription Offering. The offering of Holding Company Common Stock for subscription by Persons holding subscription rights pursuant to the Plan.

2.51. Subscription Price. The price per share, determined as provided in Section 5.2 hereof, at which the Holding Company Common Stock will be sold in the Offering.

2.52. Subsidiary. A company that is controlled by another company, either directly or indirectly through one or more subsidiaries.

2.53. Supplemental Eligible Account Holder. Any Person (other than Officers, directors, trustees, or Corporators of the MHC and the Bank and their Associates) holding a Qualifying Deposit on the Supplemental Eligibility Record Date (if established).

2.54. Supplemental Eligibility Record Date. If the Eligibility Record Date is more than 15 months prior to the date of the latest amendment to Application filed prior to approval of the Application by the Commissioner, a Supplemental Eligibility Record Date shall be established for determining who qualifies as a Supplemental Eligible Account Holder. If required, the Supplemental Eligibility Record Date is the last day of the calendar quarter preceding approval of the Plan by the Commissioner.

2.55. Syndicated Community Offering. At the discretion of the Stock Holding Company, the offering of Holding Company Common Stock following or contemporaneously with the Direct Community Offering through a syndicate of broker-dealers.

2.56. Tax-Qualified Employee Plan. Any defined benefit plan or defined contribution plan (including the ESOP, any stock bonus plan, profit-sharing plan, 401(k) plan or other plan) of the Bank, the Stock Holding Company, the MHC or any of their Affiliates, which, with its related trusts, meets the requirements to be qualified under Section 401 of the Internal Revenue Code.

ARTICLE 3.

General Procedure for Conversion

3.1. Preconditions to Conversion. The Conversion is expressly conditioned upon prior occurrence of the following:

3.1.1 Approval of the Plan by the affirmative vote of a majority of the total votes of the MHC’s Corporators and a majority of the MHC’s Independent Corporators (who shall constitute not less than 60% of all Corporators) eligible to be cast at the annual meeting or at a special meeting called for such purpose.

3.1.2 Approval by the Commissioner of the Application, including the Plan.

3.1.3 Approval by the FRB of the FRB Application.

3.2. Submission of Plan to Commissioner and FRB. Upon approval by at least two-thirds of all Trustees of the MHC, the Plan will be submitted to the Commissioner as part of the Application, and to the FRB as part of the FRB Application, together with a copy of the proposed Information Statement and all other material required by the Regulations, for approval by the Commissioner and the FRB. The MHC must also receive either private letter rulings from the Internal Revenue Service and the Massachusetts Department of Revenue or opinions of its counsel as to the federal income tax consequences of the Conversion and of its tax accountants as to the Massachusetts income tax consequences of the Conversion, in either case substantially to the effect that the Conversion will not result in a taxable reorganization of the MHC, the Mid-Tier Holding Company, the Bank, or the Stock Holding Company under the Internal Revenue Code of 1986, as amended. Upon a determination by the Commissioner that the Application is complete, the MHC will publish and post public announcements and notices of the Application as required by the Commissioner and the Regulations.

3.3. Special Meeting of Corporators to Approve the Plan. Following approval of the Plan by the Commissioner, the Special Meeting shall be scheduled in accordance with the MHC’s Bylaws, and the Plan (as it may be revised in response to comments received from the Commissioner and the FRB), and any information required pursuant to the Regulations, will be submitted to the Corporators for their consideration and approval at the Special Meeting. The MHC will mail to each Corporator a copy of the Information Statement not less than seven (7) days before the Special Meeting. Following approval of the Plan by the Corporators, the MHC intends to take such steps as may be appropriate pursuant to applicable laws and regulations to effect the Conversion.

3.4. Stock Holding Company Charter And Bylaws. The Board of Trustees of the MHC, the Board of Directors of the Mid-Tier Holding Company and the Board of Directors of the Bank will take all necessary steps to complete the Conversion and the Offering, including the timely filing of all necessary applications to appropriate regulatory authorities, and the filing of a registration statement to register the sale of the Conversion Stock with the SEC. By their approval of the Plan, the Corporators shall have approved and adopted the Articles of Incorporation and Bylaws of the Stock Holding Company.

3.5. Bank Charter And Bylaws. The current Charter and Bylaws of the Bank is to be amended to add the Bank Liquidation Account.

3.6. Conversion Procedures. The Conversion will be effected in any manner selected by the Board of Trustees of the MHC that is consistent with the purposes of this Plan

and applicable laws and regulations. The choice of which method to use to effect the Conversion will be made by the Board of Trustees of the MHC immediately prior to the consummation of the Conversion. Approval of the Plan by the Board of Trustees and Corporators of the MHC shall also constitute (a) approval of the formation of the Stock Holding Company as set forth herein, (b) approval by the MHC (on its own behalf and as the sole shareholder of the Mid-Tier Holding Company) of a combination, by merger or otherwise, as provided herein of the MHC with and into the Mid-Tier Holding Company with the Mid-Tier Holding Company being the surviving entity and whereby the existing outstanding shares of capital stock of the Mid-Tier Holding Company held by the MHC will be canceled and all persons holding liquidation rights in the MHC will constructively receive liquidation rights in the Mid-Tier Holding Company in exchange for their liquidation rights in the MHC, (c) approval by the Mid-Tier Holding Company of the combination, by merger or otherwise, of the Mid-Tier Holding Company with and into the Stock Holding Company with the Stock Holding Company being the surviving entity and whereby the existing outstanding shares of capital stock of the Stock Holding Company held by the Mid-Tier Holding Company will be canceled and the former holders of liquidation rights in the MHC who constructively received liquidation rights in the Mid-Tier Holding Company will receive an interest in the Liquidation Account in the Stock Holding Company in exchange for their constructive liquidation rights in the Mid-Tier Holding Company, (d) approval by the Bank to constructively issue additional shares of common stock to the Stock Holding Company and to establish the Bank Liquidation Account in exchange for a portion of the net proceeds of the Offering, and (e) approval of any other of the transactions that are necessary to implement the Plan.

3.7. Conversion to Stock Holding Company. Upon the consummation of the Conversion, the Stock Holding Company will be chartered as a Maryland corporation and will be authorized to exercise any and all powers, rights and privileges, and will be subject to all limitations applicable to bank holding companies under applicable laws and regulations. The Officers of the Mid-Tier Holding Company immediately prior to the Conversion shall be the Officers of the Stock Holding Company immediately following the Conversion, in each case to serve until their terms of office expire and until their successors are elected and qualified. The Stock Holding Company will own 100% of the common stock of the Bank upon consummation of the Conversion in exchange for a portion of the net proceeds received from the sale of the Conversion Stock and in exchange for the establishment of the Bank Liquidation Account.

3.8. Offer and Sale of Holding Company Common Stock.

3.8.1 Subject to approval of the Plan by the Corporators, and the receipt of all required regulatory approvals, the Holding Company Common Stock will be offered for sale in a Subscription Offering simultaneously to Eligible Account Holders, Supplemental Eligible Account Holders (if any), and any Tax-Qualified Employee Benefit Plans in the manner set forth in Article 7 hereof. The Subscription Offering period will run for no less than twenty (20) but no more than forty-five (45) days from the date of distribution of the Subscription Offering materials, unless extended by the MHC with the approval of the Commissioner and the FRB, if required. If feasible, any Holding Company Common Stock remaining may then be sold to the general public through a Direct Community Offering as provided in Article 7 hereof, which may be held either subsequent to or concurrently with the Subscription Offering.

3.8.2 If feasible, any shares of Holding Company Common Stock remaining unsold after completion of the Subscription Offering and any Direct Community Offering may, in the sole discretion of the Stock Holding Company, be sold in a Syndicated Community Offering (which may commence following or contemporaneously with the Direct Community Offering). If for any reason a Syndicated Community Offering cannot be effected, the Stock Holding Company will use its best efforts to obtain other purchasers in order to meet the Range Minimum, subject to the approval of the Commissioner and the FRB, if required. The sale of all shares of Holding Company Common Stock to be sold pursuant to the Plan must be completed within forty-five (45) days after expiration of the Subscription Offering; subject to the extension of such forty-five (45) day period by the Stock Holding Company with the approval of the Commissioner and the FRB, if required. The Stock Holding Company may seek one or more extensions of such forty-five (45) day period if necessary to complete the sale of all shares of Holding Company Common Stock. If all available shares of Holding Company Common Stock are sold in the Subscription Offering and any Direct Community Offering, there will be no Syndicated Community Offering and the Conversion will be consummated upon completion of the Subscription Offering or the Direct Community Offering, as the case may be.

ARTICLE 4.

Establishment and Funding of Charitable Foundation.

4.1. Establishment of the Foundation. As part of the Conversion, the Stock Holding Company intends to establish the Foundation which will qualify as an exempt organization under Section 501(c)(3) of the Internal Revenue Code and to contribute to the Foundation $200,000 in cash and a number of shares of Holding Company Common Stock equal to 2% of the shares of Holding Company Common Stock issued in the Conversion.

4.2. Purposes of the Foundation; Charitable Contributions. The Foundation is being formed in connection with the Conversion in order to complement the Bank’s existing community reinvestment activities in the Bank’s market area and to share with the Bank’s community a part of the Bank’s financial success as a locally headquartered, community minded, financial services institution. The funding of the Foundation in part with Holding Company Common Stock accomplishes this goal as it enables the community to share in the growth and profitability of the Stock Holding Company and the Bank over the long term. The Foundation will be dedicated to the promotion of charitable purposes including, without limitation, community development, grants or donations to support housing assistance, not for-profit community groups and other types of organizations or civic minded projects. The Foundation intends to annually distribute total grants to assist charitable organizations or to fund projects within the Stock Holding Company’s and the Bank’s community of not less than five percent (5.0%) of the average fair value of Foundation assets each year, less certain expenses. In order to serve the purposes for which it was formed and maintain its Section 501(c)(3) qualification, the Foundation may sell, from time to time, a portion of the Holding Company Common Stock contributed to it by the Stock Holding Company. The Foundation will operate in accordance with the following conditions imposed by the Commissioner:

•

The Foundation must vote its shares of Holding Company Common Stock in the same ratio as other holders of such shares;

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The Foundation shall be subject to examination by the Division;

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The Foundation shall comply with all supervisory directives or regulatory bulletins imposed by the Division;

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The Foundation shall operate in compliance with written policies adopted by its board of directors, including adopting a business plan and conflict of interest policy;

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The Foundation shall provide annual reports to the Division describing the grants made and the grant recipients;

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The Foundation shall not engage in self-dealing and shall comply with all laws necessary to maintain its tax-exempt status under the Internal Revenue Code; and

•

Such other conditions, if any, as may be imposed by the Commissioner.

4.3. Board of Directors of the Foundation. The board of directors of the Foundation initially will consist of a majority of individuals who are directors of the Stock Holding Company or the Bank. The board of directors of the Foundation will be responsible for establishing the policies of the Foundation with respect to grants or donations, consistent with the stated purposes of the Foundation. For at least five years after the Conversion, and except for temporary periods resulting from death, resignation, removal or disqualification, at least one director on the board of directors of the Foundation will be an independent director who is not an employee, officer, trustee or Corporator of the MHC or the Bank nor a significant borrower of the Bank.

ARTICLE 5.

Shares to be Offered

5.1. Holding Company Common Stock. The Holding Company Common Stock shall be fully paid and nonassessable. The total number of shares of Holding Company Common Stock authorized under the Stock Holding Company’s Articles of Organization will exceed the number of shares of Holding Company Common Stock to be issued to the Stock Holding Company stockholders in the Conversion. HOLDING COMPANY COMMON STOCK WILL NOT BE COVERED BY DEPOSIT INSURANCE.

5.2. Independent Valuation, Purchase Price and Number of Shares.

5.2.1 Independent Valuation. An Independent Appraiser shall be employed by the MHC to provide it with an Independent Valuation as required by the Regulations, which value shall be included in the prospectus (as described in Section 6.1 hereof) filed with the Commissioner and the SEC. The Trustees of the MHC shall review the methodology and reasonableness of the Independent Valuation. The Independent Valuation will be made by a written report to the MHC, contain the factors upon which the Independent Valuation was made and conform to procedures adopted by the

Commissioner and the FRB. The Independent Valuation provided by the Independent Appraiser to the MHC before the commencement of the Subscription Offering will contain an Estimated Valuation Range of aggregate prices for the Holding Company Common Stock, which range shall reflect the anticipated pro forma market value of the Holding Company Common Stock. Such Estimated Valuation Range will establish a midpoint and will vary within 15% above (the “Range Maximum”) to 15% below (the “Range Minimum”) such midpoint. The Independent Appraiser shall also present to the MHC at the close of the Subscription Offering a valuation of the pro forma market value of the Holding Company Common Stock.

5.2.2 Subscription Price. All shares sold in the Conversion will be sold at a uniform price per share (the “Subscription Price”), preliminarily set at $10.00 per share, which price will be definitively determined before the commencement of the Offering. If there is a Syndicated Community Offering, the price per share at which the Holding Company Common Stock is sold in such Syndicated Community Offering shall be equal to the per share purchase price of the shares sold in the Subscription Offering and the Direct Community Offering. The aggregate purchase price for all shares of Holding Company Common Stock will be equal to the estimated consolidated pro forma market value of the Holding Company Common Stock, as determined for such purpose by the Independent Appraiser.

5.2.3 Number of Shares. The total number of shares (and a range thereof) of Holding Company Common Stock to be issued and offered for sale will be determined by the MHC immediately before the commencement of the Subscription Offering based on the Independent Valuation, the Estimated Valuation Range and the Subscription Price. The Independent Valuation, and such number of shares, shall be subject to adjustment thereafter if necessitated by market or financial conditions, with the approval of the Commissioner and the FRB, if necessary. In particular, the total number of shares may be increased by up to 15% above the Range Maximum if the Independent Valuation is increased subsequent to the commencement of the Subscription Offering to reflect changes in market and financial conditions and the resulting aggregate purchase price is not more than 15% above the Range Maximum.

5.2.4 Increase or Decrease in Number of Shares. The number of shares of Holding Company Common Stock may be increased or decreased by the Stock Holding Company, subject to the following provisions. In the event that the aggregate purchase price of the number of shares of Holding Company Common Stock ordered is below the minimum of the Estimated Valuation Range, or materially above the Range Maximum, resolicitation of purchasers may be required, provided, however , that a resolicitation will not be required if the number of shares increases by up to 15% above the Range Maximum. Any such resolicitation shall be effected in such manner and within such time as the Stock Holding Company shall establish, with the approval of the Commissioner and the FRB, if required.

5.2.5 Confirmation of Valuation. Notwithstanding the foregoing, no sale of Holding Company Common Stock may be consummated unless, before such

consummation, the Independent Appraiser confirms to the MHC and to the Commissioner and the FRB that, to the best knowledge of the Independent Appraiser, nothing of a material nature has occurred which, taking into account all relevant factors, would cause the Independent Appraiser to conclude that the aggregate value of all shares of Holding Company Common Stock to be sold, at the Subscription Price, is incompatible with its estimate of the aggregate consolidated pro forma market value of the Holding Company Common Stock. An increase in the aggregate value of the Holding Company Common Stock by up to 15% above the Range Maximum would not be deemed to be material. If such confirmation is not received, the MHC may cancel the Conversion, resolicit and extend the Offering and establish a new Subscription Price and/or Estimated Valuation Range, or hold a new Offering or take such other action as the Commissioner and the FRB may permit. The estimated pro forma market value of the Holding Company Common Stock shall be determined for such purpose by an Independent Appraiser on the basis of such appropriate factors as are not inconsistent with the Regulations and will be confirmed upon completion of the Conversion. In any case, the total number of shares of Holding Company Common Stock to be issued and sold will be determined as follows: (a) the estimated aggregate pro forma market value of the Holding Company Common Stock immediately after Conversion, as determined by the Independent Appraiser, expressed in terms of a specific aggregate dollar amount rather than as a range, shall be divided by (b) the Subscription Price.

ARTICLE 6.

Subscription Rights and Orders for Common Stock

6.1. Distribution of Prospectus. The Offering shall be conducted in compliance with the Regulations and applicable SEC regulations. As soon as practicable after the prospectus prepared by the MHC and the Stock Holding Company has been declared effective by the SEC and the Commissioner declares such prospectus effective and/or approves it for use, copies of the prospectus and order forms will be distributed to all Eligible Account Holders, Supplemental Eligible Account Holders (if any), and any Tax-Qualified Employee Plan at their last known addresses appearing on the records of the Bank for the purpose of subscribing for shares of Holding Company Common Stock in the Subscription Offering and may be made available (if and when a Community Offering is held) for use by those Persons eligible to purchase in the Community Offering. Instead of distributing the prospectus and order forms, the MHC and Stock Holding Company may distribute a notice of availability of the prospectus and the order form, together with a request card and a postage-prepaid return envelope for use in requesting such prospectus and order form. If the latter method is employed by the MHC and the Stock Holding Company, such notices shall be mailed to those eligible to subscribe in the Subscription Offering not less than thirty (30) calendar days before the expiration of the Subscription Offering.

6.2. Order Forms. Each order form will be preceded or accompanied by the prospectus describing the Stock Holding Company, the Bank, the Holding Company Common Stock and the Subscription and Community Offerings. Each order form will contain, among other things, the following:

6.2.1 A specified date by which all order forms must be received by the Stock Holding Company, which date shall be not less than 20 nor more than 45 days following the date on which the order forms are mailed by the Stock Holding Company, and which date will constitute the expiration of the Subscription Offering, unless extended;

6.2.2 The Subscription Price per share for shares of Holding Company Common Stock to be sold in the Offering;

6.2.3 A description of the minimum and maximum number of shares of Holding Company Common Stock that may be subscribed for pursuant to the exercise of subscription rights or otherwise purchased in the Offering;

6.2.4 Instructions as to how the recipient of the order form is to indicate thereon the number of shares of Holding Company Common Stock for which such Person elects to subscribe and the available alternative methods of payment therefor;

6.2.5 An acknowledgment that the recipient of the order form has received a copy of the prospectus before execution of the order form;

6.2.6 A statement indicating the consequences of failing to properly complete and return the order form, including a statement to the effect that all subscription rights are nontransferable, will be void at the end of the Subscription Offering, and can only be exercised by delivering to the Stock Holding Company within the Subscription Offering period such properly completed and executed order form, together with a check or money order in the full amount of the purchase price as specified in the order form for the shares of Holding Company Common Stock for which the recipient elects to subscribe in the Subscription Offering (or by authorizing on the order form that the Bank withdraw said amount from the Deposit Account at the Bank maintained by such Person, but only if the MHC elects to permit such withdrawals from the type of such Deposit Account); and

6.2.7 A statement to the effect that the executed order form, once received by the Stock Holding Company, may not be modified or amended by the subscriber without the consent of the Stock Holding Company.

Notwithstanding the above, the Stock Holding Company reserves the right in its sole discretion to accept or reject orders received on photocopied or faxed order forms.

6.3. Undelivered, Defective or Late Order Form; Insufficient Payment. In the event order forms (a) are not delivered for any reason or are returned undelivered to the MHC by the United States Postal Service, (b) are not received back by the Stock Holding Company or are received by the Stock Holding Company after the expiration date specified thereon, (c) are defectively filled out or executed, (d) are not accompanied by the full required payment for the shares of Holding Company Common Stock subscribed for (including cases in which Deposit Accounts from which withdrawals are authorized are insufficient to cover the amount of the required payment), or (e) are not mailed pursuant to a “no mail” order placed in effect by the account holder, the subscription rights of the Person to whom such rights have been granted will

lapse as though such Person failed to return the completed order form within the time period specified thereon; provided, however , that the Stock Holding Company may, but will not be required to, waive any immaterial irregularity on any order form or require the submission of corrected order forms or the remittance of full payment for subscribed shares by such date as the Stock Holding Company may specify, and all interpretations by the MHC and the Stock Holding Company of terms and conditions of this Plan and of the order forms will be final.

6.4. Payment for Stock.

6.4.1 All payments for Holding Company Common Stock subscribed for or ordered in the Conversion must be delivered in full to the Stock Holding Company, together with a properly completed and executed order form, except in the case of the Syndicated Community Offering, on or before the expiration date specified on the order form, unless such date is extended by the MHC and the Stock Holding Company; provided, further , that if any Employee Plan subscribes for shares during the Subscription Offering, such plans will not be required to pay for the shares at the time they subscribe but rather may pay for such shares of Holding Company Common Stock subscribed for by such plans at the Subscription Price upon consummation of the Conversion. Payment for Holding Company Common Stock may also be made by a participant in an Employee Plan (including the Bank’s 401(k) plan) causing funds held for such participant’s benefit by an Employee Plan to be paid over for such purchase to the extent that such plan allows participants or any related trust established for the benefit of such participants to direct that some or all of their individual accounts or sub-accounts be invested in Holding Company Common Stock.

6.4.2 Payment for Holding Company Common Stock shall be made either by check, bank draft or money order, or if a purchaser has a Deposit Account in the Bank (and if the MHC has elected to permit such withdrawals from the type of Deposit Account maintained by such Person), such purchaser may pay for the shares subscribed for by authorizing the Bank to make a withdrawal from the purchaser’s Deposit Account at the Bank in an amount equal to the aggregate purchase price of such shares. No wire transfers will be accepted. Any authorized withdrawal, whether from a savings, passbook or certificate account, shall be without penalty as to premature withdrawal. If the authorized withdrawal is from a certificate account, and the remaining balance does not meet the applicable minimum balance requirements, the certificate shall be canceled at the time of withdrawal, without penalty, and the remaining balance will earn interest at the passbook rate. Funds for which a withdrawal is authorized will remain in the purchaser’s Deposit Account but may not be used by the purchaser pending consummation of the Conversion or expiration of the 45-day period (or such longer period as may be approved by the Commissioner) following termination of the Subscription Offering, whichever occurs first. After consummation of the Conversion, the withdrawal will be given effect only to the extent necessary to satisfy the subscription (to the extent it can be filled) at the Subscription Price. Interest will continue to be earned on any amounts authorized for withdrawal until such withdrawal is given effect. Interest on checks and money orders will be paid by the Bank at the Bank’s passbook rate. Such interest will be paid from the date payment is received by the Bank until consummation

or termination of the Conversion. If for any reason the Conversion is not consummated, all payments made by subscribers in the Conversion will be refunded to them with interest. In case of amounts authorized for withdrawal from Deposit Accounts, refunds will be made by canceling the authorization for withdrawal.

ARTICLE 7.

Stock Purchase Priorities

7.1. Priorities for Offering. All purchase priorities established by this Article 7 shall be subject to the purchase limitations set forth in, and shall be subject to adjustment as provided in, Article 8 of the Plan. In addition to the priorities set forth in this Article 7, the MHC may establish other priorities for the purchase of Holding Company Common Stock, subject to the approval of the Commissioner and the FRB. The priorities for the purchase of shares in the Conversion are set forth in the following Sections.

7.2. Certain Determinations. All interpretations or determinations of whether prospective purchasers are “residents,” “Associates,” or “Acting in Concert,” and any other interpretations of any and all other provisions of the Plan shall be made by and at the sole discretion of the Stock Holding Company, and may be based on whatever evidence the Stock Holding Company may choose to use in making any such determination.

7.3. Minimum Purchase; No Fractional Shares. The minimum purchase by any Person shall be 25 shares (to the extent that shares of Holding Company Common Stock are available for purchase); provided, however , that the aggregate purchase price for any minimum share purchase shall not exceed $500. No fractional shares will be allocated or issued.

7.4. Overview of Priorities. In descending order of priority, the opportunity to purchase Holding Company Common Stock shall be given in the Subscription Offering to: (a) Eligible Account Holders; (b) Supplemental Eligible Account Holders, if a Supplemental Eligibility Record Date is established; and (c) Tax-Qualified Employee Plans. Any shares of Holding Company Common Stock that are not subscribed for in the Subscription Offering at the discretion of the Stock Holding Company maybe offered for sale in a Direct Community Offering and/or a Syndicated Community Offering on terms and conditions and procedures satisfactory to the Stock Holding Company.

7.5. Priorities For Subscription Offering.

7.5.1 First Priority: Eligible Account Holders. Subject to approval of the Plan by the Corporators and the receipt of approval from the Commissioner, and the FRB if necessary, to offer the Holding Company Common Stock for sale, each Eligible Account Holder shall receive, without payment therefor, nontransferable subscription rights on a first priority basis to subscribe for a number of shares of Holding Company Common Stock equal to the greatest of (a) a number determined by dividing the Individual Maximum Purchase Limit (as such term is defined in Section 8.2 hereof) by the per share Subscription Price, (b) one-tenth of one percent (.10%) of the shares offered in the Conversion, or (c) 15 times the product (rounded down to the nearest whole number)

obtained by multiplying (1) the total number of shares of Holding Company Common Stock to be issued in the Conversion by (2) a fraction, of which the numerator is the Qualifying Deposit of the Eligible Account Holder and the denominator is the total amount of Qualifying Deposits of all Eligible Account Holders. If there are insufficient shares available to satisfy all subscriptions of Eligible Account Holders, shares will be allocated to Eligible Account Holders so as to permit each such subscribing Eligible Account Holder to purchase a number of shares of Holding Company Common Stock sufficient to make his or her total allocation equal to the lesser of 100 shares or the number of shares subscribed for. Thereafter, unallocated shares of Holding Company Common Stock will be allocated pro rata to remaining subscribing Eligible Account Holders whose subscriptions remain unfilled in the same proportion that each such subscriber’s Qualifying Deposit bears to the total amount of Qualifying Deposits of all subscribing Eligible Account Holders whose subscriptions remain unfilled. Subscription rights to purchase Holding Company Common Stock received by Employees, Officers, directors, trustees and Corporators of the MHC and the Bank (and their Associates) based on their increased deposits in the Bank in the one year preceding the Eligibility Record Date shall be subordinated to the subscription rights of other Eligible Account Holders. To ensure proper allocation of stock, each Eligible Account Holder must list on his or her subscription order form all Deposit Accounts in which he had an ownership interest as of the Eligibility Record Date.

7.5.2 Second Priority: Supplemental Eligible Account Holders. To the extent there are shares remaining after satisfaction of subscriptions by Eligible Account Holders, and if a Supplemental Eligibility Record Date is established, each Supplemental Eligible Account Holder shall receive non-transferable subscription rights to subscribe for a number of shares of Holding Company Common Stock equal to the greatest of (a) a number determined by dividing the Individual Maximum Purchase Limit by the per share Subscription Price, (b) one-tenth of one percent (.10%) of the shares offered in the Conversion, or (c) 15 times the product (rounded down to the nearest whole number) obtained by multiplying (1) the total number of shares of Holding Company Common Stock to be issued in the Conversion by (2) a fraction, of which the numerator is the Qualifying Deposit of the Supplemental Eligible Account Holder and the denominator is the total amount of Qualifying Deposits of all Supplemental Eligible Account Holders. In the event Supplemental Eligible Account Holders subscribe for a number of shares of Holding Company Common Stock which, when added to the shares subscribed for by Eligible Account Holders, exceed available shares, the available shares of Holding Company Common Stock will be allocated among subscribing Supplemental Eligible Account Holders so as to permit each subscribing Supplemental Eligible Account Holder to purchase a number of shares of Holding Company Common Stock sufficient to make his or her total allocation equal to the lesser of 100 shares or the number of shares subscribed for. Thereafter, unallocated shares will be allocated to each subscribing Supplemental Eligible Account Holder whose subscription remains unfilled in the same proportion that such subscriber’s Qualifying Deposit on the Supplemental Eligibility Record Date bears to the total amount of Qualifying Deposits of all subscribing Supplemental Eligible Account Holders whose subscriptions remain unfilled.

7.5.3 Third Priority: Tax-Qualified Employee Plans. To the extent there are shares remaining after satisfaction of subscriptions by Eligible Account Holders and Supplemental Eligible Account Holders (if any), the Tax-Qualified Employee Plans shall be given the opportunity to purchase in the aggregate up to 10% of the Holding Company Common Stock issued in the Conversion. In the event that the total number of shares of Holding Company Common Stock offered in the Conversion is increased to an amount greater than the Range Maximum, the Tax-Qualified Employee Plans shall have a priority right to purchase any such shares exceeding the Range Maximum (up to the aggregate of 10% of Holding Company Common Stock to be issued in the Conversion). If the Tax-Qualified Employee Plans are not able to fill their orders in the Offering, then the Tax-Qualified Employee Plans may purchase shares in the open market following consummation of the Conversion.

7.5.4. Fourth Priority: Employees, Officers, Directors, Trustees and Corporators . To the extent there are shares remaining after satisfaction of subscriptions by Eligible Account Holders, Supplemental Eligible Account Holders (if any), and any Tax-Qualified Employee Plans, each Employee, Officer, director, trustee and Corporator of the MHC or the Bank who is not an Eligible Account Holder or Supplemental Eligible Account Holder shall receive non-transferable subscription rights to subscribe for shares of Holding Company Conversion Stock offered in the Conversion in an amount equal to the Individual Maximum Purchase Limit; provided, however , that the aggregate number of shares of Holding Company Conversion Stock that may be purchased by Employees, Officers, directors, trustees and Corporators in the Conversion shall be limited to 30% of the total number of shares of Holding Company Conversion Stock issued in the Conversion (including shares purchased by Employees, Officers, directors, trustees and Corporators under this Section 7.5.4 and under the preceding priority categories, but not including shares purchased by the ESOP). In the event that Employees, Officers, directors, trustees and Corporators subscribe under this Section 7.5.4 for more shares of Holding Company Conversion Stock than are available for purchase by them, the shares of Holding Company Conversion Stock available for purchase will be allocated by the Stock Holding Company among such subscribing Persons on an equitable basis, such as by giving weight to the period of service, compensation, position of the individual subscriber and the amount of the order.

7.6. Priorities for Direct Community Offering.

7.6.1 Any shares of Holding Company Common Stock not subscribed for in the Subscription Offering may be offered for sale in a Direct Community Offering. This will involve an offering of all unsubscribed shares of Holding Company Common Stock directly to the general public. The Direct Community Offering, if any, shall be for a period of not more than 45 days unless extended by the Stock Holding Company, and shall commence concurrently with, during or promptly after the Subscription Offering. The Stock Holding Company may use broker, dealer or an investment banking firm or firms on a best efforts basis to sell the unsubscribed shares in the Subscription and Direct Community Offering. The Stock Holding Company may pay a commission or other fee to such investment banking firm or firms as to the shares sold by such firm or firms in the

Subscription and Direct Community Offering and may also reimburse such firm or firms for reasonable expenses incurred in connection with the sale. The Holding Company Common Stock will be offered and sold in the Direct Community Offering in accordance with the Regulations, so as to achieve the widest distribution of the Holding Company Common Stock. In making the Direct Community Offering, the Bank will give preference to natural persons residing in the Local Community. No Person may subscribe for or purchase more than the Individual Maximum Purchase Limit of Holding Company Common Stock in the Direct Community Offering. The Stock Holding Company, in its sole discretion, may reject subscriptions, in whole or in part, received from any Person under this Section 7.6.

7.6.2 In the event of an oversubscription for shares in the Direct Community Offering, available shares will be allocated (to the extent shares remain available) first to cover orders of natural Persons residing in the Local Community, so that each such Person may receive 100 shares, and thereafter, on a pro rata basis to such Persons based on the amount of their respective subscriptions or on such other reasonable basis as may be determined by the Stock Holding Company. If oversubscription does not occur among natural Persons residing in the Local Community, orders accepted in the Direct Community Offering shall be filled up to a maximum not to exceed 2% of the Holding Company Common Stock, and thereafter remaining shares shall be allocated on an equal number of shares basis per order until all orders have been filled.

7.6.3 The terms “residence, “reside,” or “residing” as used herein with respect to any Person shall mean any Person who occupies a dwelling within the Local Community, has an intent to remain in the Local Community for a period of time, and manifests the genuineness of that intent by establishing an ongoing physical presence within the Local Community together with an indication that such presence within the Local Community is not merely transitory in nature. To the extent the Person is a corporation or other business entity, the principal place of business or headquarters must be in the Local Community. The Bank may use deposit or loan records or such other evidence provided to it to determine whether a Person is a resident. In all cases, however, such a determination shall be in the sole discretion of the Stock Holding Company.

7.6.4 If:

(i) aggregate subscriptions totaling at least the minimum of the Estimated Valuation Range (the “Range Minimum”) are not received in the Subscription Offering and Direct Community Offering, and the Stock Holding Company, in its sole discretion, determines that a Syndicated Community Offering is not in the best interests of the Stock Holding Company; or

(ii) aggregate subscriptions and orders totaling at least the Range Minimum are not received in the Subscription Offering, Direct Community Offering and the Syndicated Community Offering;

then the Stock Holding Company may, in its sole discretion, apply unsubscribed/unordered Holding Company Common Stock in any manner that facilitates the completion of the Conversion.

7.7. Priorities for Syndicated Community Offering.

7.7.1 Any shares of Holding Company Common Stock not sold in the Subscription Offering or in the Direct Community Offering, if any, may be offered for sale to the general public by a selling group of broker-dealers in a Syndicated Community Offering, subject to terms, conditions and procedures as may be determined by the Stock Holding Company in a manner that is intended to achieve the widest distribution of the Holding Company Common Stock subject to the rights of the Stock Holding Company to accept or reject in whole or in part all orders in the Syndicated Community Offering. No Person may purchase in the Syndicated Community Offering more than the Individual Maximum Purchase Limit of Holding Company Common Stock. It is expected that the Syndicated Community Offering will commence as soon as practicable after termination of the Direct Community Offering, if any. The Syndicated Community Offering shall be completed within 45 days after the termination of the Subscription Offering, unless such period is extended as provided herein. The commission in the Syndicated Community Offering shall be determined by a marketing agreement between the Stock Holding Company and the Marketing Agent. Such agreement shall be filed with the FRB (if required), the Division and the SEC.

7.7.2 If for any reason a Syndicated Community Offering of unsubscribed shares of Holding Company Common Stock cannot be effected or is not deemed to be advisable, and any shares remain unsold after the Subscription Offering and the Community Offering, the Stock Holding Company may seek to make other arrangements for the sale of the remaining shares in order to meet the Range Minimum, including an underwritten public offering. Such other arrangements will be subject to the approval of the Commissioner and, if required, the FRB and to compliance with applicable state and federal securities laws.

ARTICLE 8.

Additional Limitations on Purchases

8.1. General. Purchases of Holding Company Common Stock in the Conversion will be subject to the purchase limitations set forth in this Article 8.

8.2. Individual Maximum Purchase Limit. This Section 8.2 sets forth the “Individual Maximum Purchase Limit.” No Person, through one or more qualifying deposit accounts, or Persons exercising subscription rights through a single qualifying deposit account held jointly, may purchase in the Offering (including the Subscription Offering, the Direct Community Offering and the Syndicated Community Offering) more than $300,000 of Holding Company Common Stock, except that: (a) the Stock Holding Company may, in its sole discretion and without further notice to or solicitation of subscribers or other prospective purchasers, (i) increase such Individual Maximum Purchase Limit to up to 5% of the number of

shares of Holding Company Common Stock offered in the Conversion or (ii) decrease such Individual Maximum Purchase Limit to no less than one-tenth of one percent (.10%) of the number of shares of Holding Company Common Stock offered in the Conversion; and (b) Tax-Qualified Employee Plans may purchase up to 10% of the shares issued in the Conversion. If the Stock Holding Company increases the Individual Maximum Purchase Limit (as permitted by this Section 8.2), subscribers in the Subscription Offering who ordered the previously-effective maximum amount will be, and certain other large subscribers in the sole discretion of the Stock Holding Company may be, given the opportunity to increase their subscriptions up to the then applicable limit. Requests to purchase additional shares of Holding Company Common Stock under this provision will be determined by the Stock Holding Company, in its sole discretion.

8.3.

Group Maximum Purchase Limit. This Section 8.3 sets forth the “Group Maximum Purchase Limit.” No Person and his or her Associates or group of Persons Acting in Concert, may purchase in the Offering (including the Subscription Offering, the Direct Community Offering and the Syndicated Community Offering) more than $600,000 of Holding Company Common Stock, except that: (a) the Stock Holding Company may, in its sole discretion and without further notice to or solicitation of subscribers or other prospective purchasers, (i) increase such Group Maximum Purchase Limit to up to 5% of the number of shares of Holding Company Common Stock offered in the Conversion or (ii) decrease such Group Maximum Purchase Limit to no less than one-tenth of one percent (.10%) of the number of shares of Holding Company Common Stock offered in the Conversion; and (b) Tax-Qualified Employee Plans may purchase up to 10% of the shares issued in the Conversion. Notwithstanding the foregoing, in the event that the Stock Holding Company increases the Individual Maximum Purchase Limit (as permitted by Section 8.2) to a number that is in excess of the Group Maximum Purchase Limit established by this Section 8.3, the Group Maximum Purchase Limit shall automatically be increased so as to be equal to the Individual Maximum Purchase Limit, as adjusted.

8.4. Purchases by Officers, Directors, Trustees and Corporators. The aggregate number of shares of Holding Company Common Stock to be purchased in the Offering by Officers, directors, trustees and Corporators of the MHC and the Bank (and their Associates) shall not exceed 30% of the total number of shares of Holding Company Common Stock issued in the Conversion.

8.5. Special Rule for Tax-Qualified Employee Plans. Shares of Holding Company Common Stock purchased by any individual participant (“Plan Participant”) in a Tax-Qualified Employee Plan using funds therein pursuant to the exercise of subscription rights granted to such Participant in his individual capacity as an Eligible Account Holder or Supplemental Eligible Account Holder (if any) shall not be deemed to be purchases by a Tax-Qualified Employee Plan for purposes of calculating the maximum amount of Holding Company Common Stock that Tax-Qualified Employee Plans may purchase pursuant to this Plan, if the individual Plan Participant controls or directs the investment authority with respect to such account or subaccount.

8.6. [Reserved] .

8.7. Illegal Purchases. Notwithstanding any other provision of the Plan, no Person shall be entitled to purchase any Holding Company Common Stock to the extent such purchase would be illegal under any federal law or state law or regulation or would violate regulations or policies of the Financial Industry Regulatory Authority. The Stock Holding Company and/or its agents may ask for an acceptable legal opinion from any purchaser as to the legality of such purchase and may refuse to honor any purchase order if such opinion is not timely furnished.

8.8. Rejection of Orders. The Stock Holding Company has the right in its sole discretion to reject any order submitted by a Person whose representations the Stock Holding Company believes to be false or who it otherwise believes, either alone or Acting in Concert with others, is violating, circumventing, or intends to violate, evade or circumvent the terms and conditions of the Plan.

8.9. Subscribers in Non-Qualified States or in Foreign Countries. The Stock Holding Company, in its sole discretion, may make reasonable efforts to comply with the securities laws of any state in the United States in which its depositors reside, and will only offer and sell the Holding Company Common Stock in states in which the offers and sales comply with such states’ securities laws. However, no Person will be offered or allowed to purchase any Holding Company Common Stock under the Plan if he or she resides (a) in a foreign country or (b) in a state of the United States with respect to which any of the following apply: (i) a small number of Persons otherwise eligible to purchase shares under the Plan reside in such state; (ii) the offer or sale of shares of Holding Company Common Stock to such Persons would require the Stock Holding Company or its Employees to register, under the securities laws of such state, as a broker or dealer or to register or otherwise qualify its securities for sale in such state; or (iii) such registration or qualification would be impracticable for reasons of cost or otherwise.

8.10. No Offer to Transfer Shares. Before the consummation of the Conversion, no Person shall offer to transfer, or enter into any agreement or understanding to transfer the legal or beneficial ownership of any subscription rights or shares of Holding Company Common Stock, except pursuant to the Plan. The following shall not constitute impermissible transfers under this Plan. Any Person having subscription rights in his individual capacity as an Eligible Account Holder or Supplemental Eligible Account Holder (if any) may exercise such subscription rights by causing a tax-qualified plan to make such purchase using funds allocated to such Person in such tax-qualified plan if such individual plan participant controls or directs the investment authority with respect to such account or subaccount. A tax-qualified plan that maintains an Eligible Deposit Account in the Bank as trustee for or for the benefit of a Person who controls or directs the investment authority with respect to such account or subaccount (“Beneficiary”) may, in exercising its subscription rights, direct that the Holding Company Common Stock be issued in the name of such individual Beneficiary in his individual capacity.

8.11. Confirmation by Purchasers. Each Person ordering Holding Company Common Stock in the Conversion will be deemed to confirm that such purchase does not conflict with the purchase limitations in the Plan. All questions concerning whether any Persons are

Associates or a Group Acting in Concert or whether any purchase conflicts with the purchase limitations in the Plan or otherwise violates any provision of the Plan shall be determined by the Stock Holding Company in its sole discretion. Such determination shall be conclusive, final and binding on all Persons and the Stock Holding Company may take any remedial action, including without limitation rejecting the purchase or referring the matter to the Commissioner for action, as in its sole discretion the Stock Holding Company may deem appropriate.

ARTICLE 9.

Post Offering Matters

9.1. Stock Purchases After the Conversion. For a period of three years after the proposed Conversion, no Officer or director of the Stock Holding Company or the Bank, or his or her Associates, may purchase, without the prior written approval of the Commissioner, any Holding Company Common Stock except from a broker-dealer registered with the SEC. Provided that the foregoing shall not apply to (a) negotiated transactions involving more than 1% of the outstanding Holding Company Common Stock, or (b) purchases of stock made by and held by or otherwise made pursuant to any Tax-Qualified or Non-Tax-Qualified Employee Plan of the Bank or the Stock Holding Company even if such stock is attributable to Officers, directors or their Associates.

9.2. Resales of Stock by Management Persons. Holding Company Common Stock purchased in the Conversion by Officers, directors, trustees and Corporators of the Bank, the Mid-Tier Holding Company, the Stock Holding Company and the MHC may not be resold for a period of at least one year following the date of purchase, except in the case of death or substantial disability, as determined by the Commissioner, of such person, or upon the written approval of the Commissioner.

9.3. Stock Certificates. Each stock certificate shall bear a legend giving appropriate notice of the restrictions set forth in Section 9.2 hereof. Appropriate instructions shall be issued to the Stock Holding Company’s transfer agent with respect to applicable restrictions on transfers of such stock. Any shares of stock issued as a stock dividend, stock split or otherwise with respect to such restricted stock shall be subject to the same restrictions as apply to the restricted stock.

9.4. Restriction on Financing Stock Purchases. The Stock Holding Company and the Bank are prohibited from knowingly making any loans or granting any lines of credit for the purpose of purchasing Holding Company Common Stock in the Conversion.

9.5. Stock Benefit Plans. The Board of Directors of the Bank and/or the Stock Holding Company are permitted under the Regulations, and may decide, to adopt one or more stock benefit plans for the benefit of the Employees, Officers and directors of the Bank and Stock Holding Company, including an ESOP, stock award plans and stock option plans, which will be authorized to purchase Holding Company Common Stock and grant options for Holding Company Common Stock. However, only the Tax-Qualified Employee Plans will be permitted to purchase Holding Company Common Stock in the Conversion subject to the purchase priorities set forth in the Plan. Pursuant to the Regulations, the Stock Holding Company may

authorize the ESOP to purchase up to 8% of the Holding Company Common Stock to be issued and any other Tax-Qualified Employee Plans to purchase in the aggregate up to 2% of the Holding Company Common Stock to be issued. The Bank or the Stock Holding Company may make scheduled discretionary contributions to one or more Tax-Qualified Employee Plans to purchase Holding Company Common Stock or to purchase issued and outstanding shares of Holding Company Common Stock or authorized but unissued shares of Holding Company Common Stock subsequent to the completion of the Conversion; provided, however , that such contributions do not cause the Bank to fail to meet any of its regulatory capital requirements. The Plan specifically authorizes the grant and issuance by the Stock Holding Company of (i) awards of Holding Company Common Stock after the Conversion pursuant to one or more stock recognition and award plans (the “Recognition Plans”) in an amount equal to up to 4% of the number of shares of Holding Company Common Stock issued in the Conversion, (ii) options to purchase a number of shares of Holding Company Common Stock in an amount equal to up to 10% of the number of shares of Holding Company Common Stock issued in the Conversion, and shares of Holding Company Common Stock issuable upon exercise of such options, and (iii) at the closing of the Conversion or at any time thereafter, Holding Company Common Stock in an amount equal to 8% of the number of shares of Holding Company Common Stock issued in the Conversion to the ESOP and an amount equal to up to 2% of the number of shares of Holding Company Common Stock issued in the Conversion to the Bank’s 401(k) plan. Shares awarded to the Tax Qualified Employee Plans or pursuant to the Recognition Plans, and shares issued upon exercise of options may be authorized but unissued shares of the Holding Company Common Stock, or shares of Holding Company Common Stock purchased by the Stock Holding Company or such plans in the open market. No Recognition Plans or stock option plans have yet been adopted by the Board of the Stock Holding Company, and no such plans will be submitted for the approval of the Stock Holding Company’s stockholders at a meeting held earlier than six months after completion of the Conversion.

9.6. Market for Holding Company Common Stock. If at the close of the Conversion the Stock Holding Company has more than 300 shareholders of any class of stock, the Stock Holding Company shall use its best efforts to:

9.6.1 Encourage and assist a Market Maker to establish and maintain a market for that class of stock;

9.6.2 List that class of stock on a national or regional securities exchange, including the Nasdaq Stock Market; and

9.6.3 Register the Holding Company Common Stock with the SEC pursuant to the Exchange Act, and undertake not to deregister such Holding Company Common Stock for a period of three years thereafter.

9.7. Liquidation Account.

9.7.1 The Bank shall, at the time of the Conversion, in exchange for at least 50% of the net proceeds of the Offering, establish a Bank Liquidation Account in an amount equal to the MHC’s total equity as set forth in the latest consolidated statement of

financial condition contained in the final Prospectus distributed in connection with the Conversion. The function of the Bank Liquidation Account is to establish a priority on liquidation for Eligible Account Holders and Supplemental Eligible Account Holders (if any). Following the Conversion, the Bank Liquidation Account will be maintained for the benefit of the Eligible Account Holders and Supplemental Eligible Account Holders (if any) who continue to maintain Deposit Accounts with the Bank. Each Eligible Account Holder and Supplemental Eligible Account Holder (if any) shall, with respect to each Deposit Account, hold a related inchoate interest in a portion of the Bank Liquidation Account balance, in relation to each Deposit Account balance at the Eligibility Record Date or Supplemental Eligibility Record Date (if established), as the case may be, or to such balance as it may be subsequently reduced, as hereinafter provided. The initial Bank Liquidation Account balance shall not be increased, and shall be subject to downward adjustment to the extent of any downward adjustment of any subaccount balance of any Eligible Account Holder or Supplemental Eligible Account Holder (if any) in accordance with 209 CMR 33.05(12). In addition, the Stock Holding Company shall, at the time of the merger of the Mid-Tier Holding Company into the Stock Holding Company, also establish a Stock Holding Company Liquidation Account in an amount equal to the MHC’s total equity as set forth in the latest consolidated statement of financial condition contained in the final Prospectus distributed in connection with the Conversion. The Stock Holding Company Liquidation Account also shall be maintained for the benefit of the Eligible Account Holders and Supplemental Eligible Account Holders (if any) who continue to maintain their Deposit Accounts at the Bank. Except as otherwise provided in this Section 9.7, the existence of the Stock Holding Company Liquidation Account shall not operate to restrict the use or application of any of the net worth accounts of the Stock Holding Company.

9.7.2 In the unlikely event of a complete liquidation of (i) the Bank or (ii) the Bank and the Stock Holding Company (and only in such event), following all liquidation payments to creditors (including those to depositors to the extent of their Deposit Accounts) each Eligible Account Holder and Supplemental Eligible Account Holder (if any) shall be entitled to receive a liquidating distribution from the Stock Holding Company Liquidation Account, in the amount of the then-adjusted subaccount balances for his or her deposit accounts then held, before any liquidating distribution may be made to any holders of the Stock Holding Company’s capital stock. No merger, consolidation, reorganization, or purchase of bulk assets with assumption of deposit accounts and other liabilities, or similar transactions with an FDIC-insured institution, in which the Stock Holding Company and/or the Bank is not the surviving institution, shall be deemed to be a complete liquidation for this purpose. In such transactions, the Stock Holding Company Liquidation Account shall be assumed by the surviving holding company or institution.

9.7.3 In the unlikely event of a complete liquidation of (i) the Bank or (ii) the Bank and the Stock Holding Company (and only in such event), following all liquidation payments to creditors of the Bank (including those to Account Holders to the extent of their Deposit Accounts), at a time when the Bank has a positive net worth and the Stock Holding Company does not have sufficient assets (other than the stock of the Bank) at the time of liquidation to fund the obligations under the Stock Holding Company Liquidation

Account, the Bank with respect to the Bank Liquidation Account shall immediately pay directly to each Eligible Account Holder and Supplemental Eligible Account Holder (if any) an amount necessary to fund the Stock Holding Company’s remaining obligation under the Stock Holding Company Liquidation Account, before any liquidation distribution may be made to any holders of the Bank’s capital stock and without making such amount subject to the Stock Holding Company’s creditors. Each Eligible Account Holder and Supplemental Eligible Account Holder (if any) shall be entitled to receive a distribution from the Stock Holding Company Liquidation Account, in the amount of the then adjusted subaccount balance for his Deposit Account then held, before any distribution may be made to any holders of the Stock Holding Company’s capital stock.

9.7.4 In the event of a complete liquidation of the Stock Holding Company where the Bank is not also completely liquidating, or in the event of a sale or other disposition of the Stock Holding Company apart from the Bank, each Eligible Account Holder and Supplemental Eligible Account Holder (if any) shall be treated as surrendering such Person’s rights to the Stock Holding Company Liquidation Account and receiving from the Stock Holding Company an equivalent interest in the Bank Liquidation Account. Each such holder’s interest in the Bank Liquidation Account shall be subject to the same rights and terms as if the Bank Liquidation Account were the Stock Holding Company Liquidation Account (except that the Stock Holding Company shall cease to exist).

9.7.5 The initial subaccount balance for a Deposit Account held by an Eligible Account Holder and/or Supplemental Eligible Account Holder (if any) shall be determined by multiplying the opening balance in the Bank Liquidation Account by a fraction, the numerator of which is the amount of such Eligible Account Holder’s or Supplemental Eligible Account Holder’s Qualifying Deposit and the denominator of which is the total amount of all Qualifying Deposits of all Eligible Account Holders and Supplemental Eligible Account Holders. For Deposit Accounts in existence on both dates, separate subaccounts shall be determined on the basis of the Qualifying Deposits in such Deposit Accounts on such record dates. Such initial subaccount balance shall not be increased by additional Deposits, but shall be subject to downward adjustment as described below. The initial subaccount balance in the Stock Holding Company Liquidation Account for a Deposit Account held by an Eligible Account Holder and/or Supplemental Eligible Account Holder (if any) shall be determined in the same manner as their interest in the Bank Liquidation Account is determined.

9.7.6 If, at the close of business on the last day of any period for which the Stock Holding Company has prepared audited financial statements subsequent to the effective date of the Conversion, the deposit balance in the Deposit Account of an Eligible Account Holder or Supplemental Eligible Account Holder (if any) is less than the lesser of: (a) the balance in the Deposit Account at the close of business on the last day of any period for which the Stock Holding Company has prepared audited financial statements subsequent to the Eligibility Record Date or Supplemental Eligibility Record Date if established), or (b) the amount in such Deposit Account as of the Eligibility Record Date or Supplemental Eligibility Record Date (if established), then the subaccount balance for such Deposit Account shall be adjusted by reducing such subaccount balance, in an

amount proportionate to the reduction in the balance of such Deposit Account. In the event of such downward adjustment, the subaccount balance shall not be subsequently increased, notwithstanding any subsequent increase in the deposit balance of the related Deposit Account. If any such Deposit Account is closed, the related subaccount shall be reduced to zero. For purposes of this Section 9.7, a time account shall be deemed to be closed upon its maturity date regardless of any renewal thereof. A distribution of each subaccount balance in the Stock Holding Company Liquidation Account may be made only in the event of a complete liquidation of the Stock Holding Company subsequent to the Conversion and only out of funds available for such purpose after payment of all creditors.

9.7.7 The creation and maintenance of the Stock Holding Company Liquidation Account shall not operate to restrict the use or application of any of the equity accounts of the Stock Holding Company or the Bank. Neither the Stock Holding Company nor the Bank shall (i) declare or pay a cash dividend on, or repurchase any of, its capital stock if the effect thereof would cause its net worth to be reduced below the amount required for the Stock Holding Company Liquidation Account and the Bank Liquidation Account, as applicable, or (ii) the regulatory capital requirements of the Stock Holding Company (to the extent applicable) or the Bank. Eligible Account Holders and Supplemental Eligible Account Holders (if any) do not retain any voting rights in either the Stock Holding Company or the Bank based on their liquidation subaccounts.

9.7.8 The amount of the Stock Holding Company Liquidation Account shall equal at all times the amount of the Bank Liquidation Account, and in no event will any Eligible Account Holder or Supplemental Eligible Account Holder (if any) be entitled to a distribution exceeding such holder’s subaccount balance in the Stock Holding Company Liquidation Account or Bank Liquidation Account. A distribution to an Eligible Account Holder or Supplemental Eligible Account Holder (if any) from the Stock Holding Company Liquidation Account will extinguish the right of the Eligible Account Holder or Supplemental Eligible Account Holder (if any) to receive a distribution from the Bank Liquidation Account.

9.7.9 For the two-year period following the completion of the Conversion, the Stock Holding Company will not without prior approval of the Commissioner: (i) sell or liquidate the Stock Holding Company, or (ii) cause the Bank to be sold or liquidated. At any time after two years from the completion of the Conversion, the Stock Holding Company shall eliminate or transfer the Stock Holding Company Liquidation Account to the Bank and the Stock Holding Company Liquidation Account shall be assumed by the Bank, at which time the interests of Eligible Account Holders and Supplemental Eligible Account Holders (if any) will be solely and exclusively established in the Bank Liquidation Account. In the event such transfer occurs, the Stock Holding Company shall be deemed to have transferred the Stock Holding Company Liquidation Account to the Bank and such Stock Holding Company Liquidation Account shall become the liquidation account of the Bank and shall not be subject in any manner or amount to the claims of the Stock Holding Company’s creditors. Approval of the Plan by the Corporators shall constitute approval of the transactions described therein.

9.8. Payment of Dividends. Neither the Stock Holding Company nor the Bank may declare or pay a cash dividend on its common stock if the effect thereof would cause its regulatory capital to be reduced below the amount required to maintain the Liquidation Account and under FDIC rules and regulations. Otherwise, the Bank and the Stock Holding Company may declare dividends in accordance with applicable laws and regulations.

9.9. Repurchase of Stock. Based upon facts and circumstances following the Conversion and subject to applicable regulatory and accounting requirements, the Board of Directors of the Stock Holding Company may determine to repurchase stock in the future. Such facts and circumstances may include but not be limited to: (a) market and economic factors such as the price at which the Holding Company Common Stock is trading in the market, the volume of trading, the attractiveness of other investment alternatives in terms of the rate of return and risk involved in the investment, the ability to increase the book value and/or earnings per share of the remaining outstanding shares, and the opportunity to improve the Stock Holding Company’s return on equity; (b) the avoidance of dilution to stockholders by not having to issue additional shares to cover the exercise of stock options or the purchase of shares by the ESOP in the event the ESOP is unable to acquire shares in the Subscription Offering, or to fund any stock plans adopted after the consummation of the Conversion; and (c) any other circumstances in which repurchases would be in the best interests of the Stock Holding Company and its shareholders.

9.10. Conversion Expenses. The Regulations require that the expenses of the Conversion must be reasonable. The MHC will use its best efforts to assure that the expenses incurred by the MHC and the Stock Holding Company in effecting the Conversion will be reasonable.

9.11. Public Inspection of Conversion Application. The MHC and the Stock Holding Company will maintain a copy of the Application in the main banking office of the Bank and such copy will be available for public inspection.

9.12. Enforcement of Terms and Conditions. Each of the MHC and the Stock Holding Company shall have the right to take all such action as they, in its sole discretion, may deem necessary, appropriate or advisable in order to monitor and enforce the terms, conditions, limitations and restrictions contained in the Plan and the terms, conditions and representations contained in the Plan, and the terms, conditions and representations contained in the order forms, including, but not limited to, the right to require any subscriber or purchaser to provide evidence, in a form satisfactory to the MHC and the Stock Holding Company, of such Person’s eligibility to subscribe for or purchase shares of the Holding Company Common Stock under the terms of the Plan and the absolute right (subject only to any necessary regulatory approvals or concurrence) to reject, limit or revoke acceptance of any subscription or order and to delay, terminate or refuse to consummate any sale of Holding Company Common Stock that it believes might violate, or is designed to, or is any part of a plan to, evade or circumvent such terms, conditions, limitations, restrictions and representations. Any such action shall be final, conclusive and binding on all Persons, and the MHC, the Stock Holding Company, the Bank and their Board of Trustees, Board of Directors, Officers, Employees, Corporators and agents shall be free from any liability to any Person on account of any such action.

9.13. Voting Rights in Converted Stock Holding Company. Following the Conversion, the holders of the capital stock of the Stock Holding Company shall have exclusive voting rights in the Stock Holding Company.

ARTICLE 10.

Miscellaneous

10.1. Interpretation of Plan. All interpretations of the plan and application of its provisions to particular circumstances by the MHC and Stock Holding Company shall be final, subject to the authority of the Commissioner. When a reference is made in this Plan to Sections or Exhibits, such reference shall be to a Section of or Exhibit to the Plan unless otherwise indicated. The recitals hereto constitute an integral part of the Plan. References to Sections include subsections, which are part of the related Section ( e.g. , a section numbered “Section 5.5.1” would be part of “Section 5.5” and references to “Section 5.5” would also refer to material contained in the subsection described as “Section 5.5.1”). The table of contents and headings contained in the Plan are for reference purposes only and shall not affect in any way the meaning or interpretation of the Plan. Whenever the words “include”, “includes” or “including” are used in the Plan, they shall be deemed to be followed by the words “without limitation”.

10.2. Amendment or Termination of the Plan. If deemed necessary or desirable, the terms of the Plan may be substantively amended by a majority vote of the members of the Board of Trustees as a result of comments from regulatory authorities at any time prior to approval of the Plan by the Commissioner and at any time thereafter with the concurrence of the Commissioner. If amendments to the Plan are made after the Special Meeting, no further approval of the Corporators will be necessary unless otherwise required by the Commissioner. The Plan may be terminated by the Board of Trustees in its sole discretion, at any time prior to the Special Meeting and at any time thereafter with the concurrence of the Commissioner. The Plan will terminate if the sale of all shares of Holding Company Common Stock is not completed within twenty four months from the date of approval of the Plan by the Board of Trustees.

Dated: June 2, 2011

Exhibit 7.6

Local Community; Massachusetts Cities and Towns Served by Belmont Savings Bank

The Local Community shall mean the Towns of Arlington, Belmont, Lexington and Watertown, Massachusetts, and the Cities of Newton and Waltham, Massachusetts.

Exhibit 3.1

ARTICLES OF INCORPORATION

BSB BANCORP, INC.

The undersigned, Robert B. Pomerenk, whose address is 5335 Wisconsin Avenue, N.W., Suite 780, Washington, DC 20015, being at least eighteen years of age, acting as incorporator, does hereby form a corporation under the general laws of the State of Maryland, having the following Articles of Incorporation (the “Articles”):

ARTICLE 1. Name. The name of the corporation is BSB Bancorp, Inc. (herein the “Corporation”).

ARTICLE 2. Principal Office. The address of the principal office of the Corporation in the State of Maryland is c/o CSC-Lawyers Incorporating Service Company, 7 St. Paul Street, Suite 1660, Baltimore, Maryland 21202.

ARTICLE 3. Purpose. The purpose for which the Corporation is formed is to engage in any lawful act or activity for which corporations may be organized under the general laws of the State of Maryland as now or hereafter in force.

ARTICLE 4. Resident Agent. The name and address of the registered agent of the Corporation in the State of Maryland is CSC-Lawyers Incorporating Service Company, 7 St. Paul Street, Suite 1660, Baltimore, Maryland 21202. Said resident agent is a Maryland corporation.

ARTICLE 5. Capital Stock

A. Authorized Stock. The total number of shares of capital stock of all classes that the Corporation has authority to issue is one-hundred fifty million (150,000,000) shares, consisting of:

1. fifty million (50,000,000) shares of preferred stock, par value one cent ($0.01) per share (the “Preferred Stock”); and

2. one-hundred million (100,000,000) shares of common stock, par value one cent ($0.01) per share (the “Common Stock”).

The aggregate par value of all the authorized shares of capital stock is one million, five-hundred thousand dollars ($1,500,000). Except to the extent required by governing law, rule or regulation, the shares of capital stock may be issued from time to time by the Board of Directors without further approval of the stockholders of the Corporation. The Corporation shall have the authority to purchase its capital stock out of funds lawfully available therefor, which funds shall include, without limitation, the Corporation’s unreserved and unrestricted capital surplus. The Board of Directors, pursuant to a resolution approved by a majority of the Whole Board (rounded up to the nearest whole number), and without action by the stockholders, may amend these Articles to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that the Corporation has authority to issue. For the purposes of these Articles, the term “Whole Board” shall mean the total number of directors that the Corporation would have if there were no vacancies on the Board of Directors at the time any such resolution is presented to the Board of Directors for adoption.

B. Common Stock. Except as provided under the terms of any series of Preferred Stock and as limited by Section D of this Article 5, the exclusive voting power shall be vested in the Common Stock. Except as otherwise provided in these Articles, each holder of the Common Stock shall be entitled to one vote for each share of Common Stock standing in the holder’s name on the books of the Corporation. Subject to any rights and preferences of any series of Preferred Stock, holders of Common Stock shall be entitled to such dividends as may be declared by the Board of Directors out of funds lawfully available therefor. Upon the dissolution, liquidation or winding up of the Corporation, the holders of the Common Stock shall be entitled to receive all the remaining assets of the Corporation available for distribution to its stockholders ratably in proportion to the number of shares held by them, respectively, after: (i) payment or provision for payment of the Corporation’s debts and liabilities; (ii) distributions or provision for distributions in settlement of the Liquidation Account established by the Corporation as described in Section G of this Article 5; and (iii) distributions or provisions for distributions to holders of any class or series of stock having a preference over the Common Stock in the liquidation, dissolution or winding up of the Corporation.

C. Preferred Stock. The Board of Directors is hereby expressly authorized, subject to any limitations prescribed by law, to provide for the issuance of the shares of Preferred Stock in series, to establish from time to time the number of shares to be included in each such series, and to fix the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications and terms and conditions of redemption of the shares of each such series. The number of authorized shares of the Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the Common Stock, without a vote of the holders of the Preferred Stock, or of any series thereof, unless a vote of any such holders is required by law or pursuant to the terms of such Preferred Stock. The power of the stockholders to increase or decrease the authorized shares of the Preferred Stock shall not limit any of the powers of the Board of Directors provided under these Articles.

D. Restrictions on Voting Rights of the Corporation’s Equity Securities.

1. Notwithstanding any other provision of these Articles, in no event shall the record owner (or if more than one record owner, all such record owners taken as a group) of any outstanding Common Stock that is beneficially owned, directly or indirectly, by a Person who, as of any record date for the determination of stockholders entitled to vote on any matter, beneficially owns in excess of 10% of the then-outstanding shares of Common Stock (the “Limit”), be entitled, or permitted to any vote in respect of the shares held in excess of the Limit. The number of votes that may be cast by any particular record owner by virtue of the provisions hereof in respect of Common Stock beneficially owned by such Person owning shares in excess of the Limit (a “Holder in Excess”) shall be a number equal to the total number of votes that a single record owner of all Common Stock owned by such Holder in Excess would be entitled to cast after giving effect to the provisions hereof, multiplied by a fraction, the numerator of which is the number of shares of such class or series that are both (i) beneficially owned by such Holder in Excess and (ii) owned of record by such particular record owner and the denominator of which

is the total number of shares of Common Stock beneficially owned by such Holder in Excess. The provisions of this Section D of this Article 5 shall not be applicable if, before the Holder in Excess acquired beneficial ownership of such shares in excess of the Limit, such acquisition was approved by a majority of the “Unaffiliated Directors.” For this purpose, the term “Unaffiliated Director” means any member of the Board of Directors who is unaffiliated with the Holder in Excess and was a member of the Board of Directors prior to the time that the Holder in Excess became such, and any director who is thereafter chosen to fill any vacancy on the Board of Directors and who is elected and who, in either event, is unaffiliated with the Holder in Excess and in connection with his or her initial assumption of office is recommended for appointment or election by a majority of the Unaffiliated Directors then serving on the Board of Directors.

2. The following definitions shall apply to this Section D of this Article 5.

(a)

An “affiliate” of a specified Person shall mean a Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the Person specified.

(b)

“Beneficial ownership” shall be determined pursuant to Rule 13d-3 of the General Rules and Regulations under the Securities Exchange Act of 1934 (or any successor rule or statutory provision), or, if said Rule 13d-3 shall be rescinded and there shall be no successor rule or statutory provision thereto, pursuant to said Rule 13d-3 as in effect on March 31, 2011; provided, however, that a Person shall, in any event, also be deemed the “beneficial owner” of any Common Stock:

(1)

that such Person or any of its affiliates beneficially owns, directly or indirectly; or

(2)

that such Person or any of its affiliates has (i) the right to acquire (whether such right is exercisable immediately or only after the passage of time), pursuant to any agreement, arrangement or understanding (but shall not be deemed to be the beneficial owner of any voting shares solely by reason of an agreement, contract, or other arrangement with the Corporation to effect any transaction of the type described in clause (i) or (ii) of the first sentence of Article 9 hereof) or upon the exercise of conversion rights, exchange rights, warrants, or options or otherwise, or (ii) sole or shared voting or investment power with respect thereto pursuant to any agreement, arrangement, understanding, relationship or otherwise (but shall not be deemed to be the beneficial owner of any voting shares solely by reason of a revocable proxy granted for a particular meeting of stockholders, pursuant to a public solicitation of proxies for such meeting, with respect to shares of which neither such Person nor any such affiliate is otherwise deemed the beneficial owner); or

(3)

that are beneficially owned, directly or indirectly, by any other Person with which such first mentioned Person or any of its affiliates acts as a

partnership, limited partnership, syndicate or other group pursuant to any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any shares of capital stock of the Corporation; and provided further, however, that (i) no director or officer of the Corporation (or any affiliate of any such director or officer) shall, solely by reason of any or all of such directors or officers acting in their capacities as such, be deemed, for any purposes hereof, to beneficially own any Common Stock beneficially owned by any other such director or officer (or any affiliate thereof), and (ii) neither any employee stock ownership or similar plan of the Corporation or any subsidiary of the Corporation nor any trustee with respect thereto (or any affiliate of such trustee) shall, solely by reason of such capacity of such trustee, be deemed, for any purposes hereof, to beneficially own any Common Stock held under any such plan. For purposes of computing the percentage of beneficial ownership of Common Stock of a Person, the outstanding Common Stock shall include shares deemed owned by such Person through application of this subsection but shall not include any other shares of Common Stock that may be issuable by the Corporation pursuant to any agreement, or upon exercise of conversion rights, warrants or options, or otherwise. For all other purposes, the outstanding Common Stock shall include only Common Stock then outstanding and shall not include any Common Stock that may be issuable by the Corporation pursuant to any agreement, or upon the exercise of conversion rights, warrants or options, or otherwise.

(c)

A “Person” shall mean any individual, firm, corporation, or other entity.

(d)

The Board of Directors shall have the power to construe and apply the provisions of this Section D and to make all determinations necessary or desirable to implement such provisions including, but not limited to, matters with respect to (i) the number of shares of Common Stock beneficially owned by any Person, (ii) whether a Person is an affiliate of another, (iii) whether a Person has an agreement, arrangement, or understanding with another as to the matters referred to in the definition of beneficial ownership, (iv) the application of any other definition or operative provision of this Section D to the given facts, or (v) any other matter relating to the applicability or effect of this Section D.

3. The Board of Directors shall have the right to demand that any Person reasonably believed by the Board of Directors to be a Holder in Excess (or holder of record of Common Stock beneficially owned by any Holder in Excess) supply the Corporation with complete information as to (i) the record owner(s) of all shares beneficially owned by such Holder in Excess, and (ii) any other factual matter relating to the applicability or effect of this section as may reasonably be requested of such Holder in Excess. The Board of Directors shall further have the right to receive from any Holder in Excess reimbursement for all expenses incurred by the Board in connection with its investigation of any matters relating to the applicability or effect

of this section on such Holder in Excess, to the extent such investigation is deemed appropriate by the Board of Directors as a result of the Holder in Excess refusing to supply the Corporation with the information described in the previous sentence.

4. Any constructions, applications, or determinations made by the Board of Directors pursuant to this Section D in good faith and on the basis of such information and assistance as was then reasonably available for such purpose, shall be conclusive and binding upon the Corporation and its stockholders.

5. In the event any provision (or portion thereof) of this Section D shall be found to be invalid, prohibited or unenforceable for any reason, the remaining provisions (or portions thereof) of this Section D shall remain in full force and effect, and shall be construed as if such invalid, prohibited or unenforceable provision had been stricken herefrom or otherwise rendered inapplicable, it being the intent of the Corporation and its stockholders that each such remaining provision (or portion thereof) of this Section D remain, to the fullest extent permitted by law, applicable and enforceable as to all stockholders, including Holders in Excess, notwithstanding any such finding.

E. Majority Vote. Notwithstanding any provision of the Maryland General Corporation Law (“MGCL”) requiring stockholder authorization of an action by a greater proportion than a majority of the total number of shares of all classes of capital stock or of the total number of shares of any class of capital stock, and except as otherwise specified in these Articles, such action shall be valid and effective if authorized by the affirmative vote of the holders of a majority of the total number of shares of all classes outstanding and entitled to vote thereon, except as otherwise provided in these Articles.

F. Quorum. Except as otherwise provided by law or expressly provided in these Articles, the presence, in person or by proxy, of the holders of record of shares of capital stock of the Corporation entitling the holders thereof to cast a majority of the votes (after giving effect, if required, to the provisions of Article 5, Section D) entitled to be cast by the holders of shares of capital stock of the Corporation entitled to vote shall constitute a quorum at all meetings of the stockholders, and every reference in these Articles to a majority or other proportion of capital stock (or the holders thereof) for purposes of determining any quorum requirement or any requirement for stockholder consent or approval shall be deemed to refer to such majority or other proportion of the votes (or the holders thereof) then entitled to be cast in respect of such capital stock.

G. Liquidation Account. Under regulations of the Massachusetts Division of Banks, the Corporation must establish and maintain a liquidation account (the “Liquidation Account”) for the benefit of certain Eligible Account Holders as defined in the Plan of Conversion of BSB Bancorp, MHC (the “Plan of Conversion”). In the event of a complete liquidation involving (i) the Corporation or (ii) Belmont Savings Bank, a Massachusetts chartered savings bank that will be a wholly owned subsidiary of the Corporation, the Corporation must comply with the regulations of the Massachusetts Division of Banks and the provisions of the Plan of Conversion with respect to the amount and priorities of each Eligible Account Holder’s interests in the Liquidation Account. The interest of an Eligible Account Holder in the Liquidation Account does not entitle such account holders to voting rights.

ARTICLE 6. Preemptive Rights and Appraisal Rights.

A. Preemptive Rights. Except for preemptive rights approved by the Board of Directors pursuant to a resolution approved by a majority of the directors then in office, no holder of the capital stock of the Corporation or series of stock or of options, warrants or other rights to purchase shares of any class or series of stock or of other securities of the Corporation shall have any preemptive right to purchase or subscribe for any unissued capital stock of any class or series, or any unissued bonds, certificates of indebtedness, debentures or other securities convertible into or exchangeable for capital stock of any class or series or carrying any right to purchase stock of any class or series.

B. Appraisal Rights. Holders of shares of stock shall not be entitled to exercise any rights of an objecting stockholder provided for under Title 3, Subtitle 2 of the MGCL or any successor statute unless the Board of Directors, pursuant to a resolution approved by a majority of the directors then in office, shall determine that such rights apply with respect to all or any classes or series of stock, to one or more transactions occurring after the date of such determination in connection with which holders of such shares would otherwise be entitled to exercise such rights.

ARTICLE 7. Directors. The following provisions are made a part of these Articles for the management of the business and the conduct of the affairs of the Corporation, and for further definition, limitation and regulation of the powers of the Corporation and of its directors and stockholders:

A. Management of the Corporation. The business and affairs of the Corporation shall be managed under the direction of the Board of Directors. All powers of the Corporation may be exercised by or under the authority of the Board of Directors, except as conferred on or as reserved to the stockholders by law or by these Articles or the Bylaws of the Corporation; provided, however, that any limitations on the Board of Director’s management or direction of the affairs of the Corporation shall reserve the directors’ full power to discharge their fiduciary duties.

B. Number, Class and Terms of Directors; No Cumulative Voting. The number of directors constituting the Board of Directors of the Corporation shall initially be eleven (11), which number may be increased or decreased in the manner provided in the Bylaws of the Corporation; provided, however, that such number shall never be less than the minimum number of directors required by the MGCL now or hereafter in force. The directors, other than those who may be elected by the holders of any series of Preferred Stock, shall be divided into three classes, with the term of office of the first class (“Class I”) to expire at the conclusion of the first annual meeting of stockholders, the term of office of the second class (“Class II”) to expire at the conclusion of the annual meeting of stockholders one year thereafter and the term of office of the third class (“Class III”) to expire at the conclusion of the annual meeting of stockholders two years thereafter, with each director to hold office until his or her successor shall have been duly elected and qualified. At each annual meeting of stockholders, directors elected to succeed those directors whose terms expire shall be elected for a term of office to expire at the third succeeding

annual meeting of stockholders after their election or for such shorter period of time as the Board of Directors may determine, with each director to hold office until his or her successor shall have been duly elected and qualified.

The names of the individuals who will serve as directors of the Corporation until their successors are elected and qualify are as follows:


Class I Directors:		Term to Expire in
Robert M. Mahoney		2012
John A. Borelli		2012
John W. Gahan, III		2012
John A. Whittemore		2012

Class II Directors:		Term to Expire in
Hal R. Tovin		2013
Richard J. Fougere		2013
Robert J. Morrissey		2013
Robert D. Ward		2013

Class III Directors:		Term to Expire in
S. Warren Farrell		2014
John A. Greene		2014
Patricia W. Hawkins		2014

Stockholders shall not be permitted to cumulate their votes in the election of directors.

C. Vacancies. Any vacancies in the Board of Directors may be filled in the manner provided in the Bylaws of the Corporation.

D. Removal. Subject to the rights of the holders of any series of Preferred Stock then outstanding, any director, or the entire Board of Directors, may be removed from office at any time, but only for cause and only by the affirmative vote of the holders of a majority of the voting power of all of the then-outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors (after giving effect to the provisions of Article 5 hereof) voting together as a single class.

E. Stockholder Proposals and Nominations of Directors. Advance notice of stockholder nominations for the election of directors and of business to be brought by stockholders before any meeting of the stockholders of the Corporation shall be given in the manner provided in the Bylaws of the Corporation. Stockholder proposals to be presented in connection with a special meeting of stockholders shall be presented by the Corporation only to the extent required by Section 2-502 of the MGCL and the Bylaws of the Corporation.

ARTICLE 8. Bylaws. The Board of Directors is expressly empowered to adopt, amend or repeal the Bylaws of the Corporation. Any adoption, amendment or repeal of the Bylaws of the Corporation by the Board of Directors shall require the approval of a majority of the Whole Board. The stockholders shall also have power to adopt, amend or repeal the Bylaws of the Corporation. In addition to any vote of the holders of any class or series of stock of the Corporation required by law or by these Articles, the affirmative vote of the holders of at least 80% of the voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors (after giving effect to the provisions of Article 5 hereof), voting together as a single class, shall be required for the adoption, amendment or repeal of any provisions of the Bylaws of the Corporation by the stockholders.

ARTICLE 9. Evaluation of Certain Offers. The Board of Directors, when evaluating (i) any offer of another Person (as defined below) to (A) make a tender or exchange offer for any equity security of the Corporation, (B) merge or consolidate the Corporation with another corporation or entity, or (C) purchase or otherwise acquire all or substantially all of the properties and assets of the Corporation or (ii) any other actual or proposed transaction that would or may involve a change in control of the Corporation (whether by purchases of shares of stock or any other securities of the Corporation in the open market or otherwise, tender offer, merger, consolidation, share exchange, dissolution, liquidation, sale of all or substantially all of the assets of the Corporation, proxy solicitation or otherwise), may, in connection with the exercise of its business judgment in determining what is in the best interests of the Corporation and its stockholders and in making any recommendation to the Corporation’s stockholders, give due consideration to all relevant factors, including, but not limited to: (A) the economic effect, both immediate and long-term, upon the Corporation’s stockholders, including stockholders, if any, who do not participate in the transaction; (B) the social and economic effect on the present and future employees, creditors and customers of, and others dealing with, the Corporation and its subsidiaries and on the communities in which the Corporation and its subsidiaries operate or are located; (C) whether the proposal is acceptable based on the historical, current or projected future operating results or financial condition of the Corporation; (D) whether a more favorable price could be obtained for the Corporation’s stock or other securities in the future; (E) the reputation and business practices of the other entity to be involved in the transaction and its management and affiliates as they would affect the employees of the Corporation and its subsidiaries; (F) the future value of the stock or any other securities of the Corporation or the other entity to be involved in the proposed transaction; (G) any antitrust or other legal and regulatory issues that are raised by the proposal; (H) the business and historical, current or expected future financial condition or operating results of the other entity to be involved in the transaction, including, but not limited to, debt service and other existing financial obligations, financial obligations to be incurred in connection with the proposed transaction, and other likely financial obligations of the other entity to be involved in the proposed transaction; and (I) the ability of the Corporation to fulfill its objectives as a financial institution holding company and on the ability of its subsidiary financial institution(s) to fulfill the objectives of a federally insured financial institution under applicable statutes and regulations. If the Board of Directors determines that any proposed transaction of the type described in clause (i) or (ii) of the immediately preceding sentence should be rejected, it may take any lawful action to defeat such transaction, including, but not limited to, any or all of the following: advising stockholders not to accept the proposal; instituting litigation against the party making the proposal; filing complaints

with governmental and regulatory authorities; acquiring the stock or any of the securities of the Corporation; selling or otherwise issuing authorized but unissued stock or other securities or granting options or rights with respect thereto; and obtaining a more favorable offer from another individual or entity. This Article 9 sets forth certain factors that may be considered by the Board of Directors, but does not create any implication concerning the factors that must be considered, or any other factors that may or may not be considered, by the Board of Directors regarding any proposed transaction of the type described in clause (i) or (ii) of the first sentence of this Article 9.

For purposes of this Article 9, a “Person” shall include an individual, a group acting in concert, a corporation, a partnership, an association, a joint venture, a pool, a joint stock company, a trust, an unincorporated organization or similar company, a syndicate or any other group or entity formed for the purpose of acquiring, holding or disposing of securities.

ARTICLE 10. Indemnification, etc. of Directors and Officers.

A. Indemnification. The Corporation shall indemnify (1) its current and former directors and officers, whether serving the Corporation or at its request any other entity, to the fullest extent required or permitted by the MGCL now or hereafter in force, and (2) other employees and agents to such extent as shall be authorized by the Board of Directors and permitted by law; provided, however, that, except as provided in Section B of this Article 10 with respect to proceedings to enforce rights to indemnification, the Corporation shall indemnify any such indemnitee in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized by the Board of Directors of the Corporation. The right to indemnification conferred herein shall include the right to be paid by the Corporation the expenses incurred in defending any such proceeding in advance of its final disposition, to the fullest extent permitted by law.

B. Procedure. If a claim under Section A of this Article 10 is not paid in full by the Corporation within sixty (60) days after a written claim has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be twenty (20) days, the indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim. If successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the indemnitee shall also be entitled to be reimbursed the expense of prosecuting or defending such suit. It shall be a defense to any action for advancement of expenses that the Corporation has not received both (i) an undertaking as required by law to repay such advances in the event it shall ultimately be determined that the standard of conduct has not been met, and (ii) a written affirmation by the indemnitee of his good faith belief that the standard of conduct necessary for indemnification by the Corporation has been met. In (i) any suit brought by the indemnitee to enforce a right to indemnification hereunder (but not in a suit brought by the indemnitee to enforce a right to an advancement of expenses) it shall be a defense that, and (ii) any suit by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking the Corporation shall be entitled to recover such expenses upon a final adjudication that, the indemnitee has not met the applicable standard for indemnification set forth in the MGCL. Neither the failure of the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) to

have made a determination prior to the commencement of such suit that indemnification of the indemnitee is proper in the circumstances because the indemnitee has met the applicable standard of conduct set forth in the MGCL, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) that the indemnitee has not met such applicable standard of conduct, shall create a presumption that the indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the indemnitee, be a defense to such suit. In any suit brought by the indemnitee to enforce a right to indemnification or to an advancement of expenses hereunder, or by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the indemnitee is not entitled to be indemnified, or to such advancement of expenses, under this Article 10 or otherwise shall be on the Corporation.

cause of action adjudicated in the proceeding; or (C) to the extent otherwise provided by the MGCL. If the MGCL is amended to further eliminate or limit the personal liability of officers and directors, then the liability of officers and directors of the Corporation shall be eliminated or limited to the fullest extent permitted by the MGCL, as so amended.

ARTICLE 12. Amendment of the Articles of Incorporation. The Corporation reserves the right to amend or repeal any provision contained in these Articles in the manner prescribed by the MGCL, including any amendment altering the terms or contract rights, as expressly set forth in these Articles, of any of the Corporation’s outstanding stock by classification, reclassification or otherwise, and no stockholder approval shall be required if the approval of stockholders is not required for the proposed amendment or repeal by the MGCL, and all rights conferred upon stockholders are granted subject to this reservation.

The Board of Directors, pursuant to a resolution approved by a majority of the Whole Board (rounded up to the nearest whole number), and without action by the stockholders, may amend these Articles to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that the Corporation has authority to issue.

No proposed amendment or repeal of any provision of these Articles shall be submitted to a stockholder vote unless the Board of Directors shall have (1) approved the proposed amendment or repeal, (2) determined that it is advisable, and (3) directed that it be submitted for consideration at either an annual or special meeting of the stockholders pursuant to a resolution approved by the Board of Directors. Any proposed amendment or repeal of any provision of these Articles may be abandoned by the Board of Directors at any time before its effective time upon the adoption of a resolution approved by a majority of the Whole Board (rounded up to the nearest whole number).

The amendment or repeal of any provision of these Articles shall be approved by at least two-thirds of all votes entitled to be cast by the holders of shares of capital stock of the Corporation entitled to vote on the matter (after giving due effect to the provisions of Article 5 of these Articles), except that the proposed amendment or repeal of any provision of these Articles need only be approved by the vote of a majority of all the votes entitled to be cast by the holders of shares of capital stock of the Corporation entitled to vote on the matter (after giving due effect to the provisions of Article 5 of these Articles) if the amendment or repeal of such provision is approved by the Board of Directors pursuant to a resolution approved by at least two-thirds of the Whole Board (rounded up to the nearest whole number).

Notwithstanding any other provision of these Articles or any provision of law that might otherwise permit a lesser vote or no vote, but in addition to any vote of the holders of any class or series of the stock of the Corporation required by law or by these Articles, the affirmative vote of the holders of at least 80% of the voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors (after giving effect to the provisions of Article 5), voting together as a single class, shall be required to amend or repeal this Article 12, Section C, D, E or F of Article 5, Article 7 (other than the removal of the list of the original directors), Article 8, Article 9, Article 10 or Article 11.

ARTICLE 13. Name and Address of Incorporator. The name and mailing address of the sole incorporator are as follows:

Robert B. Pomerenk, Esq.

5335 Wisconsin Ave., N.W. Suite 780

Washington, D.C. 20015

[Remainder of Page Intentionally Left Blank]

I, THE UNDERSIGNED, being the incorporator, for the purpose of forming a corporation under the laws of the State of Maryland, do make, file and record this Charter, do certify that the facts herein stated are true, and, accordingly, have hereto set my hand this 1 ^st day of June, 2011.

/s/ Robert B. Pomerenk

Robert B. Pomerenk, Incorporator

Exhibit 4

INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND

No.

BSB B ANCORP , I NC .

FULLY PAID AND NON-ASSESSABLE

PAR VALUE $0.01 PER SHARE


		CUSIP: THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS, SEE REVERSE SIDE

THIS CERTIFIES that		is the owner of

SHARES OF COMMON STOCK

BSB Bancorp, Inc.

a Maryland corporation

The shares evidenced by this certificate are transferable only on the books of BSB Bancorp, Inc. by the holder hereof, in person or by attorney, upon surrender of this certificate properly endorsed. The capital stock evidenced hereby is not an account of an insurable type and is not insured by the Federal Deposit Insurance Corporation or any other Federal or state governmental agency.

IN WITNESS WHEREOF, BSB Bancorp, Inc. has caused this certificate to be executed by the facsimile signatures of its duly authorized officers and has caused a facsimile of its seal to be hereunto affixed.


By		[SEAL]	By
	John A. Citrano			Robert M. Mahoney
	Corporate Secretary			President and Chief Executive Officer

The Board of Directors of BSB Bancorp, Inc. (the “Company”) is authorized by resolution or resolutions, from time to time adopted, to provide for the issuance of more than one class of stock, including preferred stock in series, and to fix and state the voting powers, designations, preferences, limitations and restrictions thereof. The Company will furnish to any stockholder upon request and without charge a full description of each class of stock and any series thereof.

The shares evidenced by this certificate are subject to a limitation contained in the Articles of Incorporation to the effect that in no event shall any record owner of any outstanding common stock which is beneficially owned, directly or indirectly, by a person who beneficially owns in excess of 10% of the outstanding shares of common stock (the “Limit”) be entitled or permitted to any vote in respect of shares held in excess of the Limit.

The shares represented by this certificate may not be cumulatively voted on any matter. The Articles of Incorporation require that, with limited exceptions, no amendment, addition, alteration, change or repeal of the Articles of Incorporation shall be made, unless such is first approved by the Board of Directors of the Company and approved by the stockholders by a majority of the total shares entitled to vote, or in certain circumstances approved by the affirmative vote of up to eighty percent (80%) of the shares entitled to vote.

The following abbreviations when used in the inscription on the face of this certificate shall be construed as though they were written out in full according to applicable laws or regulations.

TEN COM

as tenants in common

UNIF GIFT MIN ACT

Custodian

(Cust)

(Minor)

TEN ENT

as tenants by the entireties

Under Uniform Gifts to Minors Act

JT TEN

as joint tenants with right of survivorship and not as tenants in common

(State)

Additional abbreviations may also be used though not in the above list

For value received, hereby sell, assign and transfer unto

PLEASE INSERT SOCIAL SECURITY NUMBER OR OTHER IDENTIFYING NUMBER

(please print or typewrite name and address including postal zip code of assignee)


		Shares of

the Common Stock represented by the within Certificate, and do hereby irrevocably constitute and appoint Attorney to transfer the said shares on the books of the within named corporation with full power of substitution in the premises.

Dated,


In the presence of				Signature:

NOTE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME OF THE STOCKHOLDER(S) AS WRITTEN UPON THE FACE OF THE CERTIFICATE, IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATSOEVER.

Exhibit 5

LUSE GORMAN POMERENK & SCHICK

A PROFESSIONAL CORPORATION

ATTORNEYS AT LAW

5335 WISCONSIN AVENUE, N.W., SUITE 780

WASHINGTON, D.C. 20015

TELEPHONE (202) 274-2000

FACSIMILE (202) 362-2902

www.luselaw.com

WRITER’S DIRECT DIAL NUMBER

(202) 274-2000

WRITER’S EMAIL

June 9, 2011

The Board of Directors

BSB Bancorp, Inc.

2 Leonard Street

Belmont, MA 02478

Re:

BSB Bancorp, Inc.

Common Stock, Par Value $0.01 Per Share

Gentlemen:

You have requested the opinion of this firm as to certain matters in connection with the offer and sale (the “Offering”) of BSB Bancorp, Inc. (the “Company”) Common Stock, par value $0.01 per share (“Common Stock”). We have reviewed the Company’s Articles of Incorporation, Registration Statement on Form S-1 (the “Form S-1”), as well as applicable statutes and regulations governing the Company and the offer and sale of the Common Stock. The opinion expressed below is limited to the Maryland General Corporation Law (including applicable provisions of the Maryland Constitution and reported judicial decisions interpreting the Maryland General Corporation Law and the Maryland Constitution).

We are of the opinion that upon the declaration of effectiveness of the Form S-1, the Common Stock, when sold pursuant to the Company’s prospectus and the Plan of Conversion of BSB Bancorp, MHC, a Massachusetts mutual holding company, will be legally issued, fully paid and non-assessable.

This Opinion has been prepared in connection with the Form S-1. We hereby consent to our firm being referenced under the caption “Legal Matters,” and for inclusion of this opinion as an exhibit to the Registration Statement on Form S-1.

Very truly yours,

/s/ Luse Gorman Pomerenk & Schick

LUSE GORMAN POMERENK & SCHICK

A PROFESSIONAL CORPORATION

Exhibit 8.1

LUSE GORMAN POMERENK & SCHICK

A PROFESSIONAL CORPORATION

Attorneys at Law

5335 WISCONSIN AVENUE, N.W., SUITE 780

Washington, D.C. 20015

TELEPHONE (202) 274-2000

Facsimile (202) 362-2902

www.luselaw.com

June , 2011

Boards of Directors

BSB Bancorp, MHC

BSB Bancorp, Inc.

Belmont Savings Bank

Ladies and Gentlemen:

You have requested this firm’s opinion regarding the material federal income tax consequences that will result from the conversion of BSB Bancorp, MHC, a Massachusetts-chartered-Mutual Holding Company (the “Mutual Holding Company”) into the capital stock form of organization (the “Conversion”), pursuant to the Plan of Conversion of BSB Bancorp, MHC, dated June 2, 2011 (the “Plan”) and the integrated transactions described below.

In rendering our opinion, we have made such investigations as we have deemed relevant or necessary for the purpose of this opinion. In our examination, we have assumed the authenticity of original documents, the accuracy of copies and the genuineness of signatures. We have further assumed the absence of adverse facts not apparent from the face of the instruments and documents we examined and we have relied upon the accuracy of the factual matters set forth in the Plan and the Registration Statement filed by BSB Bancorp, Inc., a Maryland stock corporation (the “Stock Holding Company”) with the Securities and Exchange Commission (“SEC”) under the Securities Act of 1933, as amended, and the Application for Conversion filed by the Mutual Holding Company with the Massachusetts Division of Banks (the “Division”). In addition, we are relying on a letter from RP Financial, LC. to you, dated May 13, 2011, stating its belief as to certain valuation matters described below. Capitalized terms used but not defined herein shall have the same meaning as set forth in the Plan. Furthermore, we assume that each of the parties to the Conversion will comply with all reporting obligations with respect to the Conversion required under the Internal Revenue Code of 1986, as amended (the “Code”), and the regulations thereunder (the “Treasury Regulations”).

Boards of Directors

BSB Bancorp, MHC

BSB Bancorp, Inc.

Belmont Savings Bank

June , 2011

Page 2

Our opinion is based upon the existing provisions of the Code, and the Treasury Regulations, and upon current Internal Revenue Service (“IRS”) published rulings and existing court decisions, any of which could be changed at any time. Any such changes may be retroactive and could significantly modify the statements and opinions expressed herein. Similarly, any change in the facts and assumptions stated below, upon which this opinion is based, could modify the conclusions herein. This opinion is as of the date hereof, and we disclaim any obligation to advise you of any change in any matter considered herein after the date hereof.

We opine only as to the matters we expressly set forth herein, and no opinions should be inferred as to any other matters or as to the tax treatment of the transactions that we do not specifically address. We express no opinion as to other federal laws and regulations, or as to laws and regulations of other jurisdictions, or as to factual or legal matters other than as set forth herein.

For purposes of this opinion, we are relying on the representations as to factual matters provided to us by the Mutual Holding Company, Belmont Savings Bank, Mid-Tier Holding Company (as defined below) and the Stock Holding Company, as set forth in the certificates for each of those aforementioned entities and signed by authorized officers of each of the aforementioned entities, incorporated herein by reference.

Description of Proposed Transactions

Based upon our review of the documents described above, and in reliance upon such documents, we understand that the relevant facts are as follows. Belmont Savings Bank (the “Bank”) is a Massachusetts-chartered savings bank, which is headquartered in Belmont, Massachusetts. The Bank was originally organized in 1885, and reorganized into the Mutual Holding Company structure in 2009. The Bank is currently the wholly owned subsidiary of BSB Bancorp, Inc., a Massachusetts corporation (the “Mid-Tier Holding Company”), which is the wholly owned subsidiary of the Mutual Holding Company. The Mutual Holding Company is a mutual holding company with no stockholders. The depositors of the Bank are considered to be the “owners” of the Mutual Holding Company and are entitled upon the complete liquidation of the Mutual Holding Company to any liquidation proceeds after the payment of creditors.

The Boards of Directors of the Mutual Holding Company, the Mid-Tier Holding Company, and the Bank adopted the Plan providing for the Conversion of the Mutual Holding Company from a Massachusetts-chartered Mutual Holding Company to the capital stock form of organization. As part of the Conversion, the Stock Holding Company will succeed to all the rights and obligations of the Mutual Holding Company and the Mid-Tier Holding Company, and will offer shares of Stock Holding Company Common Stock to depositors and members of the general public in the Offering.

Boards of Directors

BSB Bancorp, MHC

BSB Bancorp, Inc.

Belmont Savings Bank

June , 2011

Page 3

Pursuant to the Plan, the Conversion will be effected as follows and in such order as is necessary to consummate the Conversion:

(1)

The Mid-Tier Holding Company will organize the Stock Holding Company as a Maryland-chartered first-tier stock holding company subsidiary.

(2)

The Mutual Holding Company will merge with and into the Mid-Tier Holding Company with the Mid-Tier Holding Company as the resulting entity (the “MHC Merger”) whereby the shares of Mid-Tier Holding Company held by the Mutual Holding Company will be cancelled and the depositors of the Bank who hold liquidation interests in the Mutual Holding Company will constructively receive liquidation interests in Mid-Tier Holding Company in exchange for their liquidation interests in the Mutual Holding Company.

(3)

Immediately after the MHC Merger, the Mid-Tier Holding Company will merge with the Stock Holding Company (the “Mid-Tier Merger”), with the Stock Holding Company as the resulting entity. As part of the Mid-Tier Merger, the liquidation interests in Mid-Tier Holding Company constructively received by the persons who held liquidation interests in the Mutual Holding Company will automatically, without further action on the part of the holders thereof be exchanged for an interest in the Stock Holding Company Liquidation Account.

(4)

Immediately after the Mid-Tier Merger, the Stock Holding Company will offer for sale Stock Holding Company Common Stock in the Offering.

(5)

The Stock Holding Company will contribute at least 50% of the net proceeds of the Offering to the Bank in constructive exchange for additional shares of common stock of the Bank and in exchange for the Bank Liquidation Account.

Following the Conversion, a Stock Holding Company Liquidation Account will be maintained by the Stock Holding Company for the benefit of Eligible Account Holders who continue to maintain their deposit accounts with the Bank. Pursuant to Section 9.7 of the Plan, the Stock Holding Company Liquidation Account will be equal to the Mutual Holding Company’s total equity as reflected in the latest statement of financial condition contained in the final Prospectus used in the offering. In turn, the Stock Holding Company will hold the Bank Liquidation Account. The terms of the Stock Holding Company Liquidation Account and Bank Liquidation Account, which supports the payment of the Stock Holding Company Liquidation Account in the event the Stock Holding Company lacks sufficient net assets, are described in Section 9.7 of the Plan.

Boards of Directors

BSB Bancorp, MHC

BSB Bancorp, Inc.

Belmont Savings Bank

June , 2011

Page 4

As a result of the Conversion and Offering, the Stock Holding Company will be a publicly-held corporation, will have registered the Stock Holding Company Common Stock under Section 12(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and will become subject to the rules and regulations thereunder and file periodic reports and proxy statements with the SEC. The Bank will become a wholly-owned subsidiary of the Stock Holding Company and will continue to carry on its business and activities as conducted immediately prior to the Conversion.

The stockholders of the Stock Holding Company will be those persons who purchase shares of Stock Holding Company Common Stock in the Offering. Nontransferable rights to subscribe for the Stock Holding Company Common Stock have been granted, in order of priority, to Eligible Account Holders, the Bank’s tax-qualified employee plans (“Employee Plans”), and each employee, officer, trustee and corporator of the Bank, Mid-Tier Holding Company and the Mutual Holding Company who is not eligible in the preceding priority categories. Subscription rights are nontransferable. The Stock Holding Company will also offer shares of Stock Holding Company Common Stock not subscribed for in the Subscription Offering, if any, for sale in a Community Offering or Syndicated Community Offering to certain members of the general public.

Opinions

Based on the foregoing description of the Conversion, including the MHC Merger, and the Mid-Tier Merger, and subject to the qualifications and limitations set forth in this letter, we are of the opinion that:

1. The MHC Merger will qualify as a tax-free reorganization within the meaning of Section 368(a)(1)(A) of the Code. (Section 368(a)(l)(A) of the Code.)

2. The constructive exchange of the Eligible Account Holders liquidation interests in the Mutual Holding Company for liquidation interests in the Mid-Tier Holding Company in the MHC Merger will satisfy the continuity of interest requirement of Section 1.368-1(b) of the Income Tax Regulations. ( cf. Rev. Rul. 69-3, 1969-1 C.B. 103, and Rev. Rul. 69-646, 1969-2 C.B. 54.)

3. No gain or loss will be recognized by the Mutual Holding Company on the transfer of its assets to the Mid-Tier Holding Company and the Mid-Tier Holding Company’s assumption of its liabilities, if any, in constructive exchange for liquidation interests in the Mid-Tier Holding Company or on the constructive distribution of such liquidation interests to members of the Mutual Holding Company. (Section 361(a), 361(c) and 357(a) of the Code.)

Boards of Directors

BSB Bancorp, MHC

BSB Bancorp, Inc.

Belmont Savings Bank

June , 2011

Page 5

4. No gain or loss will be recognized by the Mid-Tier Holding Company upon the receipt of the assets of the Mutual Holding Company in the MHC Merger in exchange for the constructive transfer of liquidation interests in the Mid-Tier Holding Company to the members of the Mutual Holding Company. (Section 1032(a) of the Code.)

5. Persons who have liquidation interests in the Mutual Holding Company will recognize no gain or loss upon the constructive receipt of liquidation interests in the Mid-Tier Holding Company in exchange for their liquidation interests in the Mutual Holding Company. (Section 354(a) of the Code.)

6. The basis of the assets of Mutual Holding Company (other than stock in the Mid-Tier Holding Company) to be received by the Mid-Tier Holding Company will be the same as the basis of such assets in the Mutual Holding Company immediately prior to the transfer. (Section 362(b) of the Code.)

7. The holding period of the assets of the Mutual Holding Company transferred to the Mid-Tier Holding Company will include the holding period of those assets of the Mutual Holding Company. (Section 1223(2) of the Code.)

8. The Mid-Tier Merger will constitute a mere change in identity, form or place of organization within the meaning of Section 368(a)(1)(F) of the Code and therefore will qualify as a tax-free reorganization within the meaning of Section 368(a)(1)(F) of the Code. (Section 368(a)(1)(F) of the Code.)

9. The Mid-Tier Holding Company will not recognize any gain or loss on the transfer of its assets to the Stock Holding Company and the Stock Holding Company’s assumption of its liabilities in exchange for interests in the Stock Holding Company Liquidation Accounts for the Eligible Account Holders. (Sections 361(a), 361(c) and 357(a) of the Code.)

10. No gain or loss will be recognized by the Stock Holding Company upon the receipt of the assets of Mid-Tier Holding Company in the Mid-Tier Merger. (Section 1032(a) of the Code.)

11. The basis of the assets of the Mid-Tier Holding Company to be received by the Stock Holding Company will be the same as the basis of such assets in the Mid-Tier Holding Company immediately prior to the transfer. (Section 362(b) of the Code.)

12. Eligible Account Holders will not recognize any gain or loss upon their constructive exchange of their liquidation interests in Mid-Tier Holding Company for the Stock Holding Company Liquidation Accounts in the Stock Holding Company. (Section 354 of the Code.)

Boards of Directors

BSB Bancorp, MHC

BSB Bancorp, Inc.

Belmont Savings Bank

June , 2011

Page 6

13. The constructive exchange of the Eligible Account Holders’ liquidation interests in the Mid-Tier Holding Company for interests in a Stock Holding Company Liquidation Account established in the Stock Holding Company will satisfy the continuity of interest requirement of Section 1.368-1(b) of the Income Tax Regulations ( cf. Rev. Rul. 69-3, 1969-1 C.B. 103, and Rev. Rul. 69-646, 1969-2 C.B. 54).

14. It is more likely than not that the fair market value of the nontransferable subscription rights to purchase Stock Holding Company Common Stock is zero. Accordingly, it is more likely than not that no gain or loss will be recognized by Eligible Account Holders and other purchasers in the subscription offering upon distribution to them of nontransferable subscription rights to purchase shares of Stock Holding Company Common Stock. (Section 356(a) of the Code.) Eligible Account Holders and other purchasers in the subscription offering will not realize any taxable income as the result of the exercise by them of the nontransferable subscriptions rights. (Rev. Rul. 56-572, 1956-2 C.B. 182.)

15. It is more likely than not that the fair market value of the benefit provided by the Bank Liquidation Account supporting the payment of the Stock Holding Company Liquidation Account in the event the Stock Holding Company lacks sufficient net assets is zero. Accordingly, it is more likely than not that no gain or loss will be recognized by Eligible Account Holders upon the constructive distribution to them of such rights in the Bank Liquidation Account as of the effective date of the Mid-Tier Merger. (Section 356(a) of the Code.)

16. It is more likely than not that the basis of the Stock Holding Company Common Stock purchased in the Offering by the exercise of the nontransferable subscription rights will be the purchase price thereof. (Section 1012 of the Code.)

17. The holding period of the Stock Holding Company Common Stock purchased pursuant to the exercise of subscriptions rights shall commence on the date on which the right to acquire such stock was exercised. (Section 1223(5) of the Code.)

18. No gain or loss will be recognized by Stock Holding Company on the receipt of money in exchange for Stock Holding Company Common Stock sold in the Offering. (Section 1032 of the Code.)

Our opinions under paragraphs 12 and 14 are based on the position that the subscription rights to purchase shares of Stock Holding Company Common Stock received by Eligible Account Holders and other purchasers in the subscription offering have a fair market value of zero. We understand that the subscription rights will be granted at no cost to the recipients, will be legally nontransferable and of short duration, and will provide the recipient with the right only to purchase shares of Stock Holding Company Common Stock at the same price to be paid by members of the general public in any Community Offering. We also note that the IRS has not in the

Boards of Directors

BSB Bancorp, MHC

BSB Bancorp, Inc.

Belmont Savings Bank

June , 2011

Page 7

past concluded that subscription rights have value. In addition, we are relying on a letter from RP Financial, LC. to you stating its belief that subscription rights do not have any economic value at the time of distribution or at the time the rights are exercised in the subscription offering. Based on the foregoing, we believe it is more likely than not that the nontransferable subscription rights to purchase Stock Holding Company Common Stock have no value.

If the subscription rights are subsequently found to have an economic value, income may be recognized by various recipients of the subscription rights (in certain cases, whether or not the rights are exercised) and the Stock Holding Company and/or the Bank may be taxable on the distribution of the subscription rights.

Our opinion under paragraph 15 above is based on the position that the benefit provided by the Bank Liquidation Account supporting the payment of the Stock Holding Company Liquidation Account in the event the Stock Holding Company lacks sufficient net assets has a fair market value of zero. We understand that: (i) there is no history of any holder of a liquidation account receiving any payment attributable to a liquidation account; (ii) the interests in the Stock Holding Company Liquidation Account and Bank Liquidation Account are not transferable; (iii) the amounts due under the Stock Holding Company Liquidation Account with respect to each Eligible Account Holder be reduced as their deposits in the Bank are reduced as described in the Plan; and (iv) the Bank Liquidation Account payment obligation arises only if the Stock Holding Company lacks sufficient net assets to fund the Stock Holding Company Liquidation Account. We also note that the U.S. Supreme Court in Paulsen v. Commissioner, 469 U.S. 131 (1985) stated the following:

The right to participate in the net proceeds of a solvent liquidation is also not a significant part of the value of the shares. Referring to the possibility of a solvent liquidation of a mutual savings association, this Court observed: “It stretches the imagination very far to attribute any real value to such a remote contingency, and when coupled with the fact that it represents nothing which the depositor can readily transfer, any theoretical value reduces almost to the vanishing point.” Society for the Savings v. Bowers, 349 U.S. 143, 150 (1955).

In addition, we are relying on a letter from RP Financial, LC. to you dated May 13, 2011, stating its belief that the benefit provided by the Bank Liquidation Account supporting the payment of the Stock Holding Company Liquidation Account in the event the Stock Holding Company lacks sufficient net assets does not have any economic value at the time of the Conversion. Based on the foregoing, we believe it is more likely than not that such rights in the Bank Liquidation Account have no value.

Boards of Directors

BSB Bancorp, MHC

BSB Bancorp, Inc.

Belmont Savings Bank

June , 2011

Page 8

If such rights in the Bank Liquidation Account are subsequently found to have an economic value, income may be recognized by each Eligible Account Holder in the amount of the fair market value of their interest in the Bank Liquidation Account as of the effective date of the Conversion.

CONSENT

We hereby consent to the filing of the opinion as an exhibit to the Mutual Holding Company’s Application for Conversion filed with the Division and to the Stock Holding Company’s Registration Statement on Form S-1 as filed with the SEC. We also consent to the references to our firm in the Prospectus contained in the Application for Conversion and Form S-1 under the captions “The Conversion; Plan of Distribution-Material Income Tax Consequences” and “Legal Matters.”

Very truly yours,

Luse Gorman Pomerenk & Schick

Exhibit 8.2

FORM OF

STATE TAX OPINION

, 2011

Board of Directors

BSB Bancorp, MHC

BSB Bancorp, Inc.

Belmont Savings Bank

Ladies and Gentlemen:

This letter constitutes our opinion as to certain Massachusetts Corporation Excise Tax consequences to Belmont Savings Bank, a Massachusetts-chartered savings bank (the “Bank”), BSB Bancorp, MHC, a Massachusetts-chartered mutual holding company (the “Mutual Holding Company”), BSB Bancorp, Inc., a Massachusetts corporation, (the “Mid-Tier Holding Company”) and BSB Bancorp, Inc., a Maryland corporation (the “Stock Holding Company”) resulting from the proposed plan of conversion of the Mutual Holding Company from a Massachusetts chartered mutual holding company to the capital form of organization through a series of transactions collectively referred to herein as the “Conversion” pursuant to that certain Plan of Conversion of BSB Bancorp, Inc. (the “Plan” or “Plan of Conversion”) dated June 2, 2011. Unless otherwise defined, all terms used herein have the meanings given to such terms in the Plan of Conversion. The opinion contained herein is rendered only with respect to the holdings set forth herein under the heading OPINION and we express no opinion with respect to any other legal, federal, state or local tax aspect of these transactions.

In preparing this opinion letter, we have relied, in part, upon certain factual descriptions provided in the PLAN OF CONVERSION OF BSB BANCORP, MHC dated June 2, 2011, as well as the federal income tax opinion related to this transaction of Luse, Gorman, Pomerenk & Schick, a Professional Corporation dated 2011, and the representations as to factual matters made by Belmont Savings Bank, BSB Bancorp, Inc., and BSB Bancorp, MHC, in their filing to the various regulatory agencies regarding this transaction as referenced in federal tax opinion of Luse, Gorman, Pomerenk & Schick, a Professional Corporation. If any fact or representation contained in these documents is not complete or accurate it is important that we be notified immediately in writing as this may cause us to change our opinion.

DESCRIPTION OF PROPOSED TRANSACTIONS

Based upon our review of the documents described above, and in reliance upon such documents, we understand that the relevant facts are as follows. Belmont Savings Bank (the “Bank”) is a Massachusetts-chartered savings bank headquartered in Belmont, Massachusetts. The Bank was originally organized in 1885, and reorganized into the mutual holding company structure in 2009. The Bank is currently the wholly owned subsidiary of BSB Bancorp, Inc., a Massachusetts corporation (the “Mid-Tier Holding Company”), which is the wholly owned subsidiary of the Mutual Holding Company. The Mutual Holding Company is a mutual holding company with no stockholders. The depositors of the Bank are entitled upon the complete liquidation of the Mutual Holding Company to any liquidation proceeds after the payment of creditors.

Boards of Directors

BSB Bancorp, MHC

BSB Bancorp, Inc.

Belmont Savings Bank

, 2011

The Boards of Directors of the Mutual Holding Company, the Mid-Tier Holding Company, and the Bank adopted the Plan providing for the Conversion of the Mutual Holding Company from a Massachusetts chartered mutual holding company to the capital stock form of organization. As part of the Conversion, the Holding Company will succeed to all the rights and obligations of the Mutual Holding Company and the Mid-Tier Holding Company and will offer shares of Holding Company Common Stock to depositors, and members of the general public in the Offering.

Pursuant to the Plan, the Conversion will be effected as follows and in such order as is necessary to consummate the Conversion:

(1)

The Mid-Tier Holding Company will organize the Stock Holding Company as a Maryland-chartered stock holding company subsidiary.

(2)

The Mutual Holding Company will merge with and into the Mid-Tier Holding Company with the Mid-Tier Holding Company as the resulting entity (the “MHC Merger”) whereby the shares of Mid-Tier Holding Company held by the Mutual Holding Company will be cancelled and the depositors of the Bank who hold liquidation rights in the Mutual Holding Company will constructively receive liquidation interests in Mid-Tier Holding Company in exchange for their liquidation interests in the Mutual Holding Company.

(3)

Immediately after the MHC Merger, the Mid-Tier Holding Company will merge with the Stock Holding Company (the “Mid-Tier Merger”), with the Stock Holding Company as the resulting entity. As part of the Mid-Tier Merger, the liquidation interests in Mid-Tier Holding Company constructively received by persons who held liquidation rights in the Mutual Holding Company will automatically, without further action on the part of the holders thereof be exchanged for an interest in the Liquidation Account.

(4)

Immediately after the Mid-Tier Merger, the Stock Holding Company will offer for sale Stock Holding Company Common Stock in the Offering.

(5)

Boards of Directors

BSB Bancorp, MHC

BSB Bancorp, Inc.

Belmont Savings Bank

, 2011

Following the Conversion, a Stock Holding Company Liquidation Account will be maintained by the Stock Holding Company for the benefit of Eligible Account Holders who continue to maintain their deposit accounts with the Bank. Pursuant to Section 9.7 of the Plan, the Liquidation Account will be equal to the Mutual Holding Company’s total equity as reflected in the latest statement of financial condition contained in the final Prospectus used in the offering. In turn, the Stock Holding Company will hold the Bank Liquidation Account. The terms of the Stock Holding Company Liquidation Account and Bank Liquidation Account, which supports the payment of the Stock Holding Company Liquidation Account in the event the Stock Holding Company lacks sufficient net assets, are described in Section 9.7 of the Plan.

As a result of the Conversion and Offering, Stock Holding Company will be a publicly-held corporation, will have registered the Holding Company Common Stock under Section 12(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and will become subject to the rules and regulations thereunder and file periodic reports and proxy statements with the SEC. The Bank will become a wholly-owned subsidiary of the Stock Holding Company and will continue to carry on its business and activities as conducted immediately prior to the Conversion.

The stockholders of the Stock Holding Company will be those persons who purchase shares of Stock Holding Company Common Stock in the Offering. Nontransferable rights to subscribe for the Stock Holding Company Common Stock have been granted, in order of priority, to Eligible Account Holders, the Bank’s tax-qualified employee plans (“Employee Plans”), and each employee, officer, trustee and corporator of the Bank, the Mid-Tier Holding Company and the Mutual Holding Company who is not eligible in the preceding priority categories. Subscription rights are nontransferable. The Stock Holding Company will also offer shares of Stock Holding Company Common Stock not subscribed for in the Subscription Offering, if any, for sale in a Community Offering or Syndicated Community Offering to certain members of the general public.

DISCUSSION OF STATE INCOME TAX LAW

Discussion – MASSACHUSETTS GENERAL LAWS CHAPTER 63

Massachusetts follows the federal treatment of corporate reorganization by reference to the United State Internal Revenue Code (IRC) with certain adjustments otherwise defined in the statutes. Massachusetts has adopted federal treatment of mergers qualifying under IRC Section 368 in which no gain or loss will be recognized by any “party to a reorganization” as defined within the meaning of IRC Section 368(b). also, if the transaction results in no gain or loss to

Boards of Directors

BSB Bancorp, MHC

BSB Bancorp, Inc.

Belmont Savings Bank

, 2011

savings depositors under IRC Section 354(a) then no gain or loss results at the state level. The various IRC sections referenced in federal opinion letter have been similarly adopted by the Commonwealth of Massachusetts.

OPINION

Based solely on the above discussion of state law, the representations and documentation filed by Belmont Savings Bank, BSB Bancorp, Inc., BSB Bancorp, MHC, the PLAN OF CONVERSION OF BSB BANCORP, MHC and the federal tax opinion letter of Luse, Gorman, Pomerenk & Schick, a Professional Corporation, it is our opinion that for Massachusetts excise tax purposes:

1.	No gain or loss will be recognized by any corporate parties to the reorganization for Massachusetts excise tax for any phase of the proposed transaction.

2.	The conversion will not give rise to any positive or negative tax base adjustments for Massachusetts excise tax purposes.

3.	No gain or loss shall be recognized by the depositors of the Bank on the transfer of their rights and privileges in the Mutual Holding Company for their rights and privileges in the liquidation account.

4.	The tax treatment of the reorganization will be the same as it is for federal income tax purposes.

Boards of Directors

BSB Bancorp, MHC

BSB Bancorp, Inc.

Belmont Savings Bank

, 2011

The opinions expressed above are rendered with respect to the specific matters discussed herein and we express no opinion with respect to any other federal or state income tax, or other state and local taxes, or legal aspect of the conversion and reorganization. Our opinions are based on the completeness and accuracy of the above referenced documents. If any of the foregoing are not entirely complete or accurate, it is imperative that we be informed immediately in writing, as the inaccuracy of incompleteness could have a material effect on our conclusions. References to Massachusetts law, regulations and pronouncements are based upon current laws as enacted and pronouncements thereunder as of the date of this memorandum. We are relying upon the relevant provisions of the Internal Revenue Code of 1986, as amended, the regulations thereunder, and judicial and administrative interpretations thereof, and state and local tax authorities which are subject to change or modification by subsequent legislative, regulatory, administrative, or judicial decisions. any such changes could also have an effect on the validity of our opinions. the opinions contained herein are not binding upon the Internal Revenue Service, any other tax authority or any court, and no assurance can be given that a position contrary to that expressed herein will not be asserted by a tax authority and ultimately sustained by a court.

CONSENT

We hereby consent to the filing of the opinion as an exhibit to the Mutual Holding Company’s Application for Conversion filed with the OTS and to the Stock Holding Company’s Registration Statement on Form S-1 as filed with the SEC. We also consent to the references to our firm in the Prospectus contained in the Application for Conversion and Form S-1 under the captions “The Conversion; Plan of Distribution-Material Income Tax Consequences” and “Legal Matters.”

Very truly yours,

Shatswell, MacLeod & Company, P.C.

Exhibit 10.1

SEVERANCE AGREEMENT

by and between

BELMONT SAVINGS BANK

and

ROBERT M. MAHONEY

This Severance Agreement (the “Agreement”) is made and entered into as of , 2011 (the “Execution Date”), by and between Belmont Savings Bank, a Massachusetts-chartered savings bank with its principal administrative office at Two Leonard Street, Belmont, MA 02478 (together with its successors and assigns, the “Bank”) and Robert M. Mahoney (“Executive”).

RECITALS

A. Executive possesses unique and valued experience with, and essential knowledge about, financial institutions and their operation and the Massachusetts banking community;

B. In order to induce Executive to remain employed with the Bank, the Bank and Executive desire to set forth in writing the severance benefits that are payable to Executive as a result of Executive’s termination of employment for the reasons set forth herein; and

C. This Agreement shall supersede and replace the severance agreement between the Bank and Executive dated October 13, 2010.

NOW, THEREFORE, in consideration of the mutual covenants and obligations herein contained, it is mutually agreed between the parties hereto as follows:

1. Term . This Agreement shall continue for a term commencing on the Execution Date and ending on the fourth anniversary of the Execution Date (the “Initial Term”), and shall be automatically renewed from year to year thereafter for successive one-year terms (each, a “Renewal Term”), unless at least thirty (30) days prior to the expiration of the Initial Term or any Renewal Term, either party gives written notice of non-renewal to the other. If such notice of non-renewal is given as permitted hereunder, the Agreement will expire at the conclusion of either the Initial Term or the Renewal Term, whichever is applicable. Notwithstanding any provision of this Agreement to the contrary, Executive’s employment may be terminated at any time prior to the expiration of the Initial Term or a Renewal Term (as applicable), as provided in Section 2 hereof and subject to the provisions of this Agreement, including, without limitation, Sections 4, 5, 6, 9, 10, 11 and 12. Notwithstanding the foregoing, in the event that at any time prior to the Initial Term or the Renewal Term, the Company or the Bank has entered into an agreement to effect a transaction which would be a Change in Control (as defined in Section 3 hereof), then the Initial Term or the Renewal Term of this Agreement shall be extended for an additional twelve (12) months as of the date on which the Change in Control occurs.

2. At-Will Status . Notwithstanding any provision of this Agreement, Executive is employed at-will, such that Executive or the Bank may terminate Executive’s employment at any time, with or without notice, for any or no reason.

3. Definitions . As used in this Agreement, the following terms shall have the meanings set forth herein.

“Cause” shall exist if Executive:

(i)

engages in unethical or unprofessional conduct (including, but not limited to, sexual harassment or illegal discrimination) in the workplace or in connection with Executive’s employment or engages in willful malfeasance or misfeasance toward the Bank or any customer or client of the Bank; or

(ii)

engages in an act or acts of dishonesty intended to result in enrichment or advantage to Executive or third party at the expense of the Bank or through the use of the Bank’s assets (including proprietary or confidential information); or

(iii)

engages in activities or omissions injurious to the good name or reputation of the Bank; or

(iv)

is grossly negligent in the execution of, or willfully fails to carry out, Executive’s duties and responsibilities within the standards of performance which could reasonably be expected of an employee working for a banking institution in a similar position; or

(v)

fails or refuses (A) to comply with any term or provision of this Agreement, (B) to perform any duties or responsibilities as are assigned reasonably to Executive by the Board of Directors of the Bank (the “Board”) if such failure or refusal is willful, (C) to adhere to such employment-related policies or procedures as have been or may be established by the Bank, or (D) to execute and comply with such instruments as may reasonably be requested by the Bank consistent with the foregoing clauses (A), (B) or (C) including, without limitation, the Bank’s rules and policies with respect to conduct and ethics; or

(vi)

is convicted or enters a plea of guilty or nolo contendere to a crime involving moral turpitude or a crime providing for a term of imprisonment; or

(vii)

to the extent not described in the preceding items (i) through (vi), inclusive:

(A)

is suspended or removed from office and/or prohibited from participating in the conduct of the Bank’s affairs by a notice served under Section 8(e) (12 U.S.C. §1818(e)) or 8(g) (12 U.S.C. §1818(g)) of the Federal Deposit Insurance Act, as amended; or

(B)

engages in conduct determined by governmental entities having regulatory authority with respect to the Bank to be subject to sanction under any other provision of Section 8 of the Federal Deposit Insurance Act, as amended, 12 U.S.C. §1818 et seq. ; or

(viii)

Abuses alcohol or any controlled substance in a manner that affects Executive’s performance or abilities at the Bank, whether or not such activity constitutes a crime; or

(ix)

Enters into an arrangement and/or agreement with or becomes a member, shareholder, employee, officer or director of or joint-venturer with any person or entity that provides services substantially similar to those provided by the Bank or in any way breaches or violates this Agreement.

For this purpose, no act, or failure to act, on the part of Executive shall be deemed “willful” unless done, or omitted to be done, by Executive not in good faith and without reasonable belief that Executive’s action or omission was in the best interests of the Bank. Without limiting the foregoing, in no event shall Executive be deemed to be acting in good faith or in the best interests of the Bank for purposes of the preceding sentence with respect to acts of omission or commission taken in contravention of any direction(s), rule(s) or requirement(s) issued, authorized, approved or ratified by the Board.

Notwithstanding the foregoing provisions of this Section 3, in no event shall Cause be deemed to exist unless (i) the Bank shall provide Executive with written notice making reference to this Agreement, stating that the Bank intends to terminate Executive for Cause within the meaning of this Agreement, and setting forth in reasonable detail the facts and circumstances allegedly constituting Cause, and (ii) the Bank affords Executive a period of two (2) weeks after issuance of such notice either to demonstrate, through written rebuttal, that Cause does not exist under this Section 3, or to cure the circumstances constituting such Cause; provided, however, that the determination of whether Cause exists or whether Executive has sufficiently cured any Cause, shall be made in the reasonable discretion of the Board, as evidenced by the affirmative vote of not less than three-fourths of the entire membership of the Board (excluding Executive) at a meeting of the Board (excluding Executive) called and held for such purpose (after reasonable notice is provided to Executive and Executive is given an opportunity, together with counsel, to be heard before the Board). Nothing in this Section 3 shall prevent the Bank from terminating Executive for Cause prior to the issuance of the above-referenced notice or expiration of the above-referenced two (2) week rebuttal/cure period; provided however that if, upon the expiration of such two (2) week period, it is determined that facts or circumstances sufficient to constitute Cause did not (or, if applicable, do not) exist or has/have been cured, then such earlier termination of Executive by the Bank shall be deemed to be without Cause. Without limiting the foregoing, the Bank may suspend Executive, with or without pay, during the above-referenced two (2) week rebuttal/cure period, and such suspension shall not constitute either a termination of employment by the Bank under this Agreement or Good Reason for separation by Executive.

“Change in Control” shall mean (i) a change in the ownership of the Company or Bank, (ii) a change in the effective control of the Company or Bank, or (iii) a change in the ownership of a substantial portion of the assets of the Company or Bank, as described below.

(i)

A change in the ownership of a corporation occurs on the date that any one person, or more than one person acting as a group (as defined in Treasury Regulation 1.409A-3(i)(5)(v)(B)), acquires ownership of stock of the Company or Bank that, together with stock held by such person or group, constitutes more than fifty (50) percent of the total fair market value or total voting power of the stock of such corporation. For these purposes, a change in ownership will not be deemed to have occurred if no stock of the Company or Bank is outstanding.

(ii)

A change in the effective control of the Company or Bank occurs on the date that either (A) any one person, or more than one person acting as a group (as defined in Treasury Regulation 1.409A-3(i)(5)(vi)(D)) acquires (or has acquired during the twelve (12)-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Company or Bank possessing thirty (30) percent or more of the total voting power of the stock of the Company or Bank, or (B) a majority of the members of the Company’s or Bank’s board of directors is replaced during any twelve (12)-month period by directors whose appointment or election is not endorsed by a majority of the members of the Company’s or Bank’s board of directors prior to the date of the appointment or election, provided that this subsection “(B)” is inapplicable where a majority shareholder of the entity that experiences the change in control is another corporation.

(iii)

A change in a substantial portion of the Company’s or Bank’s assets occurs on the date that any one person or more than one person acting as a group (as defined in Treasury Regulation 1.409A-3(i)(5)(vii)(C)) acquires (or has acquired during the twelve (12)-month period ending on the date of the most recent acquisition by such person or persons) assets from the Company or Bank that have a total gross fair market value equal to or more than forty (40) percent of the total gross fair market value of (A) all of the assets of the Company or Bank, or (B) the value of the assets being disposed of, either of which is determined without regard to any liabilities associated with such assets.

For all purposes hereunder, the definition of Change in Control shall be construed to be consistent with the requirements of Treasury Regulation 1.409A-3(i)(5), except to the extent that such regulations are superseded by subsequent guidance. Notwithstanding anything in this Agreement to the contrary, a Change in Control shall not be deemed to have occurred upon the conversion of BSB Bancorp, MHC to a stock holding company, or in connection with any reorganization used to effect such a conversion.

“Company” shall mean (i) BSB Bancorp, MHC, a mutual holding company, with its principal administrative office at Two Leonard Street, Belmont, MA 02478 (“MHC”), and (ii) BSB Bancorp, Inc., with its principal administrative office at Two Leonard Street, Belmont, MA 02478 (“Bancorp”). “Company” shall also include any successor to BSB Bancorp, MHC or BSB Bancorp, Inc.

“Good Reason” shall mean: (i) a material diminution in Executive’s base compensation other than in connection with a reduction in compensation of comparable magnitude, as a percentage matter, affecting all or substantially all executive employees of the Bank; (ii) a material diminution in Executive’s authority, duties, or responsibilities; (iii) a material diminution in the authority, duties or responsibilities of position to which Executive is to report; (iv) a material diminution in the budget over which Executive retains authority; (v) a material change in the geographic location at which Executive must perform his duties; or (vi) any other action or inaction that constitutes a material breach by the Bank or Company of any agreement under which Executive provides services, including this Agreement; provided that for a termination to be deemed for Good Reason, Executive must give, within the ninety (90) day period commencing on the initial existence of the condition(s) constituting (or allegedly constituting) Good Reason, written notice of the intention to terminate for Good Reason, and, upon receipt of such notice, the Bank shall have a thirty (30) day period within which to cure such condition(s); and provided further that the Bank may waive such right to notice and opportunity to cure. In no event may facts or circumstances constituting “Good Reason” arise after the occurrence of facts or circumstances that the Bank relies upon, in whole or in material part, in terminating Executive for Cause. In no event shall the separation from service, replacement or promotion of any employee other than the Executive, per se , constitute “Good Reason.”

4. Effect of Involuntary Termination or Voluntary Termination for Good Reason other than on or after a Change in Control . In the event of Executive’s involuntary termination of employment for reasons other than Cause or a voluntary termination of the employment for Good Reason, in either case, other than on or after a Change in Control, Executive shall be entitled to the following:

lump sum within two and one-half (2.5) months following Executive’s separation from service, and (ii) the portion of the severance benefit that is less than or equal to the Code Section 409A Limit shall commence within ninety (90) days after the Executive’s separation from service, and shall be distributed in installments, each in the same or substantially the same gross amount as the Executive’s periodic base salary installments immediately prior to the Executive’ s separation from service, and payable, after the first such installment, in accordance with the Bank’s payroll schedule for executive employees, provided that the undistributed balance, if any, as of the first anniversary date of the first installment shall be distributed to Executive in its entirety in a lump sum.

The “Code Section 409A Limit” is equal to two (2) times the lesser of: (i) the sum of Executive’s annualized compensation that was payable to Executive during the taxable year preceding the year in which Executive has a separation from service; or (ii) the maximum amount of compensation that may be taken into account under a tax-qualified plan pursuant Section 401(a)(17) of the Internal Revenue Code of 1986, as amended (the “Code”) for the year in which Executive has a separation from service.

(b) Subject to Executive’s payment of a premium portion equal or substantially equal to the premium portion paid by executive employees of the Bank for comparable coverage, for up to one year following separation from service, Executive may continue Executive’s participation (and, if applicable, that of Executive’s beneficiaries) in the Bank’s group health plan in which Executive participated immediately prior to separation from service; provided, however, that the continuation of health benefits under this Section 4(b) shall reduce and count against Executive’s rights under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) and comparable state law; and provided further that nothing herein shall grant Executive rights to continue coverage beyond the maximum COBRA period applicable to Executive. Notwithstanding anything herein to the contrary, if as the result of any change in, or interpretation of, the laws applicable to the continued welfare benefits hereunder, such benefits are deemed illegal or subject to penalties, then the Bank shall, to the extent permitted under such laws, pay to the Executive a cash lump sum payment reasonably estimated to be equal to the amount of welfare benefits (or the remainder of such amount) that the Executive is no longer permitted to receive in-kind. Such lump sum payment shall be required to be made no later than two and one-half (2.5) months following the Executive’s separation from service, or if later, within two and one-half (2.5) months following a determination that such payment would be illegal or subject to penalties.

(c) Unpaid compensation and benefits, and unused vacation, accrued through the date of Executive’s termination of employment. Executive shall also be entitled to be reimbursed by the Bank for final expenses that Executive reasonably and necessarily incurred on behalf of the Bank prior to Executive’s termination of employment, provided that Executive submits expense reports and supporting documentation of such expenses in accordance with the Bank’s expense reimbursement policies in effect at that time. Such reimbursement payment or payments shall be made no later than the time required by applicable law (or, if earlier, by Bank or Company policy, practice or rule), but in no event later than the sixtieth (60 ^th ) day following Executive’s date of the termination.

(d) Notwithstanding the foregoing, in no event shall any compensation payable to the Executive pursuant to the provisions of Section 4(a), (b) and (c) above that is subject to Code Section 409A be paid to the Executive unless and until the Executive has incurred a “separation from service” as defined in Code Section 409A and in regulations and guidance issued thereunder, unless such payment is required by applicable law. For purposes of this Agreement, a “separation from service” shall have occurred if the Bank and Executive reasonably anticipate that either no further services will be performed by Executive after his date of the termination (whether as an employee or as an independent contractor) or the level of further services performed is less than fifty (50) percent of the average level of bona fide services in the thirty-six (36) months immediately preceding the termination. For all purposes hereunder, the definition of separation from service shall be interpreted consistent with Treasury Regulation Section 1.409A-1(h)(ii).

5. Termination in Connection with a Change in Control . In the event of Executive’s involuntary termination of employment for reasons other than Cause or a voluntary termination of employment for Good Reason occurring on or after a Change in Control, Executive shall be entitled to the following:

(a) A lump sum cash payment equal to three (3) times the sum of: (i) Executive’s annual rate of base salary in effect on Executive’s date of termination or, if greater, Executive’s average annual base salary rate for the twelve (12) month period ending on the date of such termination, and (ii) the highest rate bonus paid during the three (3) years prior to Executive’s date of termination. Such amount shall be paid to Executive within thirty (30) days following Executive’s separation from service.

(b) Life insurance coverage and non-taxable medical and dental coverage, at no cost to Executive, that is substantially comparable (and on substantially the same terms and conditions) to the coverage maintained by the Bank for Executive immediately prior to his date of termination. Such life insurance and non-taxable medical and dental coverage shall be provided by the Bank to the Executive for three (3) years following Executive’s separation from service. Notwithstanding anything herein to the contrary, if as the result of any change in, or interpretation of, the laws applicable to the continued welfare benefits hereunder, such benefits are deemed illegal or subject to penalties, then the Bank shall, to the extent permitted under such laws, pay to the Executive a cash lump sum payment reasonably estimated to be equal to the amount of welfare benefits (or the remainder of such amount) that the Executive is no longer permitted to receive in-kind. Such lump sum payment shall be required to be made no later than two and one-half (2.5) months following the Executive’s separation from service, or if later, within two and one-half (2.5) months following a determination that such payment would be illegal or subject to penalties.

(d) Notwithstanding the foregoing, in no event shall any compensation payable to the Executive pursuant to the provisions of Section 5(a), (b) and (c) above that is subject to Code Section 409A be paid to the Executive unless and until the Executive has incurred a “separation from service” as defined in Code Section 409A and in regulations and guidance issued thereunder, unless such payment is required by applicable law. For purposes of this Agreement, a “separation from service” shall have occurred if the Bank and Executive reasonably anticipate that either no further services will be performed by Executive after his date of the termination (whether as an employee or as an independent contractor) or the level of further services performed is less than fifty (50) percent of the average level of bona fide services in the thirty-six (36) months immediately preceding the termination. For all purposes hereunder, the definition of separation from service shall be interpreted consistent with Treasury Regulation Section 1.409A-1(h)(ii).

(e) Notwithstanding the foregoing, no compensation and benefits shall be payable pursuant to both Sections 4 and 5 of this Agreement.

6. Conditions of Severance Benefits; Effect on Executive’s Post-Employment Obligations . Executive shall receive the severance benefits set forth in Section 4(a) and 4(b) hereof only if Executive (a) executes a general release, in a form acceptable to the Bank, within sixty (60) days of the date of the termination of the Executive’s employment in accordance with the provisions of Section 4 hereof; (b) presents satisfactory evidence to the Bank that Executive has returned all Bank property; and (c) provides the Bank with a signed, written resignation of Executive’s status as an officer and/or director of the Bank and/or any holding company, subsidiary or affiliate as applicable. In the event the Bank reasonably believes that Executive has breached, or has threatened to breach, any provision of the Agreement, the Executive shall no longer be entitled to such benefits and further shall be required to reimburse all severance benefits, including payments under Section 4(a), previously made by the Bank. Such termination of benefits shall be in addition to any and all legal and equitable remedies available to the Bank, including injunctive relief without limiting the foregoing, Executive acknowledges and agrees that the provisions of Sections 9, 11, 12, 13, 14, 15, 17, 18, and 19 of this Agreement (i) are supported by adequate consideration in addition to the severance benefits provided under Section 4(a) and 4(b) and all other amounts and things of value to which Executive would be entitled if Executive did not enter into this Agreement, and (ii) shall be enforceable notwithstanding Executive’s failure of refusal to satisfy, in whole or in part, the conditions for the severance benefits set forth under this Section 6. Notwithstanding the foregoing, the conditions set forth in this Section 6 shall not apply in the event that any compensation or benefits are payable pursuant to Section 5 of this Agreement.

7. Taxes . All payments and benefits described in this Agreement shall be subject to any and all applicable federal, state and local income, employment and other taxes, and the Bank will deduct from each payment to be made to Executive under this Agreement such amounts, if any, required to be deducted or withheld under applicable law. Executive hereby acknowledges and agrees that the Bank makes no representations or warranties regarding the tax treatment or tax consequences of any compensation, benefits or other payments under the Agreement, or under any statute, or regulation or guidance thereunder, or under any successor statute, regulation and guidance thereunder.

8. Code Section 409A . If and to the extent this Agreement provides for a deferral of compensation subject to Section 409A of the Code, it is the intent of the parties that this Agreement, and all payments of deferred compensation subject to Code Section 409A made hereunder, shall be in compliance with such requirements and the regulations and other guidance thereunder. Notwithstanding any other provision with respect to the timing of payments under Sections 4(a) or 5(a), if, at the time of Executive’s separation from service, Executive is a “specified employee” (meaning a key employee as defined in Section 416(i) of the Code without regard to paragraph 5 thereof) of the Bank (or a Bank affiliate), then to the extent necessary to comply with the requirements of Code Section 409A, any payments to which Executive is entitled under Sections 4(a) or 5(a) during the six (6) month period commencing on the Executive’s separation from service which are subject to Code Section 409A (and not otherwise exempt from its application, including, without limitation, by operation of Treasury Regulation Section 1.409A-1(n)) will be withheld until the first business day of the seventh (7 ^th ) month following Executive’s separation from service, at which time such withheld amount shall be paid in a lump sum distribution. The Bank and Executive agree that they will negotiate in good faith and jointly execute an amendment to modify this Agreement to the extent necessary to comply with the requirements of Code Section 409A, or any successor statute, regulation and guidance thereunder.

9. Limitation on Benefits .

(a) In no event shall the Bank be obligated to make any payment pursuant to this Agreement that is prohibited by Section 18(k) of the Federal Deposit Insurance Act (codified at 12 U.S.C. §1828(k)), 12 C.F.R. Part 359, or any other applicable law.

(b) In no event shall the Bank be obligated to make any payment pursuant to this Agreement if:

(i) the Bank is in default as defined in Section 3(x) (12 U.S.C. §18l8(x)(1)) of the Federal Deposit Insurance Act, as amended, or

(ii) the Federal Deposit Insurance Corporation enters into an agreement to provide assistance to or on behalf of the Bank under the authority contained in Section 13(c) (12 U.S.C. §1823(c)) of the Federal Deposit Insurance Act, as amended.

10. No Mitigation . The Bank agrees that Executive is not required to use reasonable good faith efforts to seek other employment and to reduce any amounts payable to Executive by the Bank pursuant to this Agreement.

11. Non-Competition; Non-Solicitation; Non-Disclosure .

(a) During Executive’s employment with the Bank and thereafter until the end of the twelve (12) month period commencing on the termination of Executive’s employment with the Bank (other than a termination of employment on or after the occurrence of a Change in Control), Executive shall not, without the express written approval of the Bank:

(i) Directly or indirectly, in one or a series of transactions, own, manage, operate, control, invest or acquire an interest in, or otherwise engage or participate in, whether as a proprietor, partner, stockholder, lender, director, officer, employee, loan originator, loan officer, joint venturer, investor, agent, consultant or representative, in any Competitive Business (as hereafter defined); or

(ii) Solicit or induce, or attempt to solicit or induce, any other employee or independent contractor of the Bank or any other person who shall otherwise be in the service of the Bank, to terminate his or her employment with or otherwise cease his or her relationship with the Bank; or

(iii) Solicit, divert, take away or accept, or attempt to solicit, divert, take away or accept, the business or patronage of any of the clients, customers (whether any such customer has done business with the Bank once or more than once), suppliers or accounts, or prospective clients, customers, suppliers or accounts, of the Bank.

For purposes of this Agreement, (i) the term “Competitive Business” means any business that engages in an activity of a type that competes with the business of the Bank or any of its affiliates (A) within thirty (30) miles of the Bank’s principal administrative office, or (B) outside such thirty (30) mile radius, in any of the communities in which the Bank or any of its affiliates maintains a place of business or engages in any banking activity as of the Executive’s date of termination; and (ii) Executive agrees that Executive will be deemed to have solicited or induced a person to cease such person’s relationship with the Bank if such former service provider to the Bank is subject to supervision by Executive in employment following such person’s separation from service with the Bank.

(b) Executive agrees that Executive shall not at any time or in any manner, directly or indirectly, use or disclose Confidential Information (as hereinafter defined) to any party other than the Bank either during or after Executive’s termination of employment or the termination of this Agreement for any reason, except for purposes consistent with the administration and performance of Executive’s obligations hereunder, or as required by law, provided that written notice of any legally required disclosure shall be given to the Bank promptly prior to any such disclosure and Executive shall reasonably cooperate with the Bank to protect the confidentiality thereof pursuant to applicable law or regulation. For purposes of this Agreement, the term “Confidential Information” includes any confidential or proprietary information furnished or provided by the Bank to Executive after Executive first became employed by the Bank, under this Agreement or otherwise (whether before or after the Execution Date) (and without regard to whether such information is conveyed directly or on the Bank’s behalf), or otherwise acquired by Executive as a consequence of Executive’s employment with the Bank and that is not generally known in the industry in which the Bank is engaged and that in any way relates to the products, services, purchasing, marketing, names of customers, vendors or suppliers, merchandising and selling, plans, data, specifications or any other confidential and proprietary information of the Bank or any affiliate. Any Confidential Information supplied to Executive by the Bank prior to the Execution Date shall be considered in the same manner and be subject to the same treatment as the Confidential Information made available after the execution of this Agreement. The term “Confidential Information” does not include information (i) which was already in the public domain, (ii) which is disclosed as a matter of right by a third

party source after the execution of this Agreement, provided such third party source is not bound by a confidentiality agreement with the Bank or (iii) which passes into the public domain by acts other than the unauthorized acts of Executive, whether acting alone or in concert; provided, however, that any disclosure of Confidential Information may be made by Executive if the Bank expressly consents thereto in writing prior to such disclosure.

12. Exclusive Remedy . Except as expressly set forth herein or otherwise required by law, Executive shall not be entitled to any compensation, benefits, or other payments from the Bank as a result of, or in connection with, Executive’ s separation from service at any time, for any reason. The payments and benefits set forth in Sections 4 or 5 hereof shall constitute Executive’s sole and exclusive remedy for any claims, causes of action or demands arising under or in connection with this Agreement or its alleged breach, or the termination of Executive’s employment relationship with the Bank.

13. Governing Law/Interpretation . Executive and the Bank agree that this Agreement and any claims arising out of or in connection with this Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts, without giving effect to the principles of conflicts of laws thereof.

14. Entire Agreement . This Agreement shall constitute the sole and entire agreement between the parties with respect to the subject matter hereof, and supersedes and cancels all prior, concurrent and/or contemporaneous arrangements, understandings, promises, offers, agreements and/or discussions, including, but not limited to, those concerning employment agreements and/or severance benefits, whether written or oral, by or between the parties, regarding the subject matter hereof; provided , however , that this Agreement is not intended to, and shall not, supersede, affect, limit, modify or terminate any written agreement or arrangement between Executive and the Bank that does not relate to the subject matter hereof.

15. Assignment . Executive acknowledges that the services to be rendered hereunder are unique and personal in nature. Accordingly, Executive may not assign any rights or delegate any duties or obligations under this Agreement. The rights and obligations of the Bank under this Agreement shall automatically be assigned to the successors and assigns of the Bank (including, but not limited to, any successor in the event of a Change in Control, as well as any other entity that controls, is controlled by, or is under common control with, any such successor), and shall inure to the benefit of, and be binding upon, such successors and assigns. This Agreement shall be binding upon Executive, as well as, Executive’s heir, executors and administrators of Executive or Executive’s estate and property.

16. Notices . All notices required hereunder shall be in writing and shall be delivered in person, by facsimile or by certified or registered mail, return receipt requested, and shall be effective upon sending if by facsimile, or upon receipt if by personal delivery, or upon the fourth (4th) business day after being sent by certified or registered mail. All notices shall be addressed as follows or to such other address as the parties may later provide in writing:

if to the Bank:

Belmont Savings Bank

Two Leonard Street

Belmont, MA 02478

ATTN: Chairperson of the Board

and, if to Executive:

at the address set forth on the signature page.

17. Severability/Reformation . If any one or more of the provisions (or any part thereof) of this Agreement shall be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions (or any part thereof) shall not in any way be affected or impaired thereby, and this Agreement shall be construed and reformed to the maximum extent permitted by law. The language of all parts of this Agreement shall in all cases be construed as a whole according to its fair meaning and not strictly for or against either of the parties.

18. Modification . This Agreement and the rights, remedies and obligations contained in any provision hereof, may be modified or waived only in accordance with this Section 18. No waiver by either party of any breach by the other or any provision hereof shall be deemed to be a waiver of any later or other breach thereof or as a waiver of any other provision of this Agreement. This Agreement and its terms may not be waived, changed, discharged or terminated orally or by any course of dealing between the parties, but only by a written instrument signed by the party against whom any waiver, change, discharge or termination is sought. No modification or waiver by the Bank is effective without written consent of the Board.

19. Arbitration . Subject to the mutual agreement of the parties hereto at the time a dispute exists between such parties, any dispute, controversy or claim arising out of, or in connection with, this Agreement shall be exclusively subject to arbitration before the American Arbitration Association (“AAA”). Such arbitration shall take place in Boston, Massachusetts, before a single arbitrator in accordance with AAA’s then current National Rules for the Resolution of Employment Disputes. Judgment upon any arbitration award may be entered in any court of competent jurisdiction. All parties shall cooperate in the process of arbitration for the purpose of expediting discovery and completing the arbitration proceedings. Notwithstanding any provision in this Agreement to the contrary, nothing contained in this Section 19 or elsewhere in this Agreement shall in any way deprive the Bank of its right to obtain injunctive relief, specific performance or other legal or equitable relief in a court of competent jurisdiction for purposes of enforcing the provisions of Section 11 hereof.

20. Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

21. Section Headings . The descriptive section headings herein have been inserted for convenience only and shall not be deemed to define, limit, or otherwise affect the construction of any provision hereof.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement under seal as of the date and year first written above.


BELMONT SAVINGS BANK

By:
		Name:
		Title:

EXECUTIVE

Robert M. Mahoney



Address:

Exhibit 10.2

SEVERANCE AGREEMENT

by and between

BELMONT SAVINGS BANK

and

JOHN A. CITRANO

RECITALS

A. Executive possesses unique and valued experience with, and essential knowledge about, financial institutions and their operation and the Massachusetts banking community;

C. This Agreement shall supersede and replace the severance agreement between the Bank and Executive dated May 12, 2010.

NOW, THEREFORE, in consideration of the mutual covenants and obligations herein contained, it is mutually agreed between the parties hereto as follows:

3. Definitions . As used in this Agreement, the following terms shall have the meanings set forth herein.

“Cause” shall exist if Executive:

(i)

(ii)

(iii)

engages in activities or omissions injurious to the good name or reputation of the Bank; or

(iv)

(v)

(vi)

is convicted or enters a plea of guilty or nolo contendere to a crime involving moral turpitude or a crime providing for a term of imprisonment; or

(vii)

to the extent not described in the preceding items (i) through (vi), inclusive:

(A)

(B)

(viii)

Abuses alcohol or any controlled substance in a manner that affects Executive’s performance or abilities at the Bank, whether or not such activity constitutes a crime; or

(ix)

(i)

(ii)

(iii)

(a) A lump sum cash payment equal to two (2) times the sum of: (i) Executive’s annual rate of base salary in effect on Executive’s date of termination or, if greater, Executive’s average annual base salary rate for the twelve (12) month period ending on the date of such termination, and (ii) the highest rate bonus paid during the three (3) years prior to Executive’s date of termination. Such amount shall be paid to Executive within thirty (30) days following Executive’s separation from service.

(b) Life insurance coverage and non-taxable medical and dental coverage, at no cost to Executive, that is substantially comparable (and on substantially the same terms and conditions) to the coverage maintained by the Bank for Executive immediately prior to his date of termination. Such life insurance and non-taxable medical and dental coverage shall be provided by the Bank to the Executive for two (2) years following Executive’s separation from service. Notwithstanding anything herein to the contrary, if as the result of any change in, or interpretation of, the laws applicable to the continued welfare benefits hereunder, such benefits are deemed illegal or subject to penalties, then the Bank shall, to the extent permitted under such laws, pay to the Executive a cash lump sum payment reasonably estimated to be equal to the amount of welfare benefits (or the remainder of such amount) that the Executive is no longer permitted to receive in-kind. Such lump sum payment shall be required to be made no later than two and one-half (2.5) months following the Executive’s separation from service, or if later, within two and one-half (2.5) months following a determination that such payment would be illegal or subject to penalties.

(e) Notwithstanding the foregoing, no compensation and benefits shall be payable pursuant to both Sections 4 and 5 of this Agreement.

9. Limitation on Benefits .

(b) In no event shall the Bank be obligated to make any payment pursuant to this Agreement if:

(i) the Bank is in default as defined in Section 3(x) (12 U.S.C. §18l8(x)(1)) of the Federal Deposit Insurance Act, as amended, or

11. Non-Competition; Non-Solicitation; Non-Disclosure .

if to the Bank:

Belmont Savings Bank

Two Leonard Street

Belmont, MA 02478

ATTN: Chairperson of the Board

and, if to Executive:

at the address set forth on the signature page.

20. Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement under seal as of the date and year first written above.


BELMONT SAVINGS BANK

By:
		Name:
		Title:

EXECUTIVE

John A. Citrano



Address:

Exhibit 10.3

SEVERANCE AGREEMENT

by and between

BELMONT SAVINGS BANK

and

HAL R. TOVIN

RECITALS

A. Executive possesses unique and valued experience with, and essential knowledge about, financial institutions and their operation and the Massachusetts banking community;

C. This Agreement shall supersede and replace the severance agreement between the Bank and Executive dated October 13, 2010.

NOW, THEREFORE, in consideration of the mutual covenants and obligations herein contained, it is mutually agreed between the parties hereto as follows:

3. Definitions . As used in this Agreement, the following terms shall have the meanings set forth herein.

“Cause” shall exist if Executive:

(i)

(ii)

(iii)

engages in activities or omissions injurious to the good name or reputation of the Bank; or

(iv)

(v)

(vi)

is convicted or enters a plea of guilty or nolo contendere to a crime involving moral turpitude or a crime providing for a term of imprisonment; or

(vii)

to the extent not described in the preceding items (i) through (vi), inclusive:

(A)

(B)

(viii)

Abuses alcohol or any controlled substance in a manner that affects Executive’s performance or abilities at the Bank, whether or not such activity constitutes a crime; or

(ix)

(i)

(ii)

(iii)

(e) Notwithstanding the foregoing, no compensation and benefits shall be payable pursuant to both Sections 4 and 5 of this Agreement.

9. Limitation on Benefits .

(b) In no event shall the Bank be obligated to make any payment pursuant to this Agreement if:

(i) the Bank is in default as defined in Section 3(x) (12 U.S.C. §18l8(x)(1)) of the Federal Deposit Insurance Act, as amended, or

11. Non-Competition; Non-Solicitation; Non-Disclosure .

if to the Bank:

Belmont Savings Bank

Two Leonard Street

Belmont, MA 02478

ATTN: Chairperson of the Board

and, if to Executive:

at the address set forth on the signature page.

20. Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement under seal as of the date and year first written above.


BELMONT SAVINGS BANK

By:
		Name:
		Title:

EXECUTIVE


Hal R. Tovin



Address:

Exhibit 10.4

SEVERANCE AGREEMENT

by and between

BELMONT SAVINGS BANK

and

CHRISTOPHER Y. DOWNS

RECITALS

A. Executive possesses unique and valued experience with, and essential knowledge about, financial institutions and their operation and the Massachusetts banking community;

C. This Agreement shall supersede and replace the severance agreement between the Bank and Executive dated October 13, 2010.

NOW, THEREFORE, in consideration of the mutual covenants and obligations herein contained, it is mutually agreed between the parties hereto as follows:

3. Definitions . As used in this Agreement, the following terms shall have the meanings set forth herein.

“Cause” shall exist if Executive:

(i)

(ii)

(iii)

engages in activities or omissions injurious to the good name or reputation of the Bank; or

(iv)

(v)

(vi)

is convicted or enters a plea of guilty or nolo contendere to a crime involving moral turpitude or a crime providing for a term of imprisonment; or

(vii)

to the extent not described in the preceding items (i) through (vi), inclusive:

(A)

(B)

(viii)

Abuses alcohol or any controlled substance in a manner that affects Executive’s performance or abilities at the Bank, whether or not such activity constitutes a crime; or

(ix)

(i)

(ii)

(iii)

(e) Notwithstanding the foregoing, no compensation and benefits shall be payable pursuant to both Sections 4 and 5 of this Agreement.

9. Limitation on Benefits .

(b) In no event shall the Bank be obligated to make any payment pursuant to this Agreement if:

(i) the Bank is in default as defined in Section 3(x) (12 U.S.C. §18l8(x)(1)) of the Federal Deposit Insurance Act, as amended, or

11. Non-Competition; Non-Solicitation; Non-Disclosure .

if to the Bank:

Belmont Savings Bank

Two Leonard Street

Belmont, MA 02478

ATTN: Chairperson of the Board

and, if to Executive:

at the address set forth on the signature page.

20. Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement under seal as of the date and year first written above.


BELMONT SAVINGS BANK

By:
		Name:
		Title:

EXECUTIVE


Christopher Y. Downs



Address:

Exhibit 10.5

SEVERANCE AGREEMENT

by and between

BELMONT SAVINGS BANK

and

CARROLL M. LOWENSTEIN, JR.

RECITALS

A. Executive possesses unique and valued experience with, and essential knowledge about, financial institutions and their operation and the Massachusetts banking community;

NOW, THEREFORE, in consideration of the mutual covenants and obligations herein contained, it is mutually agreed between the parties hereto as follows:

3. Definitions . As used in this Agreement, the following terms shall have the meanings set forth herein.

“Cause” shall exist if Executive:

(i)

(ii)

(iii)

engages in activities or omissions injurious to the good name or reputation of the Bank; or

(iv)

(v)

(vi)

is convicted or enters a plea of guilty or nolo contendere to a crime involving moral turpitude or a crime providing for a term of imprisonment; or

(vii)

to the extent not described in the preceding items (i) through (vi), inclusive:

(A)

(B)

(viii)

Abuses alcohol or any controlled substance in a manner that affects Executive’s performance or abilities at the Bank, whether or not such activity constitutes a crime; or

(ix)

(i)

(ii)

(iii)

(a) A severance benefit in an amount equal to the sum of (i) Executive’s annual base salary rate in effect on the date of such termination, or, if greater, Executive’s average annual base salary rate for the twelve (12) month period ending on the date of such termination, and (ii) the average annual bonus awarded to Executive (without reduction by reason of any arrangement to defer payment of such bonus), determined based on the two (2) years (or one year if Executive has been employed by the Bank for less than two (2) years) immediately prior to Executive’s date of termination; provided, however, that if such sum is less than the salary and bonus reported by the Bank in Box 1 of the IRS Form W-2 Wage and Tax Statement (“Form W-2”) issued to the Executive for the tax year immediately preceding the Executive’s separation from service, then the gross amount of the severance benefit required under this Section 4(a) shall equal the amount reported by the Bank as salary and bonus in Box 1 of such Form W-2. Any severance benefit to which the Executive is entitled under this Section 4(a) shall be distributed as follows, subject to Section 8 and the satisfaction of the conditions to payment set forth in Section 6: (i) the portion of the severance benefit set forth herein that exceeds the “Code Section 409A Limit” (as defined below), if applicable, shall be payable in a lump sum within two and one-half (2.5) months following Executive’s separation from service, and (ii) the portion of the severance benefit that is less than or equal to the Code Section 409A Limit shall commence within ninety (90) days after the Executive’s separation from service, and shall be distributed in installments, each in the same or substantially the same gross amount as the Executive’s periodic base salary installments immediately prior to the Executive’s separation from service, and payable, after the first such installment, in accordance with the Bank’s payroll schedule for executive employees, provided that the undistributed balance, if any, as of the first anniversary date of the first installment shall be distributed to Executive in its entirety in a lump sum.

of the termination (whether as an employee or as an independent contractor) or the level of further services performed is less than fifty (50) percent of the average level of bona fide services in the thirty-six (36) months immediately preceding the termination. For all purposes hereunder, the definition of separation from service shall be interpreted consistent with Treasury Regulation Section 1.409A-1(h)(ii).

(b) Life insurance coverage and non-taxable medical and dental coverage, at no cost to Executive, that is substantially comparable (and on substantially the same terms and conditions) to the coverage maintained by the Bank for Executive immediately prior to his date of termination. Such life insurance and non-taxable medical and dental coverage shall be provided by the Bank to the Executive for two (2) years following Executive’s separation from service. Notwithstanding anything herein to the contrary, if as the result of any change in, or interpretation of, the laws applicable to the continued welfare benefits hereunder, such benefits are deemed illegal or subject to penalties, then the Bank shall, to the extent permitted under such laws, pay to the Executive a cash lump sum payment reasonably estimated to be equal to the amount of welfare benefits (or the remainder of such amount) that the Executive is no longer permitted to receive in-kind. Such lump sum payment shall be required to be made no later than two and one-half (2.5) months following the Executive’s separation from service, or if later, within two and one-half (2.5) months following a determination that such payment would be illegal or subject to penalties.

guidance issued thereunder, unless such payment is required by applicable law. For purposes of this Agreement, a “separation from service” shall have occurred if the Bank and Executive reasonably anticipate that either no further services will be performed by Executive after his date of the termination (whether as an employee or as an independent contractor) or the level of further services performed is less than fifty (50) percent of the average level of bona fide services in the thirty-six (36) months immediately preceding the termination. For all purposes hereunder, the definition of separation from service shall be interpreted consistent with Treasury Regulation Section 1.409A-1(h)(ii).

(e) Notwithstanding the foregoing, no compensation and benefits shall be payable pursuant to both Sections 4 and 5 of this Agreement.

thereunder. Notwithstanding any other provision with respect to the timing of payments under Sections 4(a) or 5(a), if, at the time of Executive’s separation from service, Executive is a “specified employee” (meaning a key employee as defined in Section 416(i) of the Code without regard to paragraph 5 thereof) of the Bank (or a Bank affiliate), then to the extent necessary to comply with the requirements of Code Section 409A, any payments to which Executive is entitled under Sections 4(a) or 5(a) during the six (6) month period commencing on the Executive’s separation from service which are subject to Code Section 409A (and not otherwise exempt from its application, including, without limitation, by operation of Treasury Regulation Section 1.409A-1(n)) will be withheld until the first business day of the seventh (7 ^th ) month following Executive’s separation from service, at which time such withheld amount shall be paid in a lump sum distribution. The Bank and Executive agree that they will negotiate in good faith and jointly execute an amendment to modify this Agreement to the extent necessary to comply with the requirements of Code Section 409A, or any successor statute, regulation and guidance thereunder.

9. Limitation on Benefits .

(b) In no event shall the Bank be obligated to make any payment pursuant to this Agreement if:

(i) the Bank is in default as defined in Section 3(x) (12 U.S.C. §18l8(x)(1)) of the Federal Deposit Insurance Act, as amended, or

11. Non-Competition; Non-Solicitation; Non-Disclosure .

if to the Bank:

Belmont Savings Bank

Two Leonard Street

Belmont, MA 02478

ATTN: Chairperson of the Board

and, if to Executive:

at the address set forth on the signature page.

20. Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement under seal as of the date and year first written above.


BELMONT SAVINGS BANK

By:
		Name:
		Title:

EXECUTIVE


Carroll M. Lowenstein, Jr.



Address:

Exhibit 10.6

BELMONT SAVINGS BANK

INCENTIVE COMPENSATION PLAN

January 2011

Purpose of the Plan

The purpose of the Belmont Savings Bank’s Incentive Compensation Plan (the “Plan”) is to provide incentives and awards to Officers and colleagues in order to support organizational and financial objectives as defined in the Business Plan. The plan is designed that participants do not take on undue risk to achieve payouts. All parties with responsibility for managing risk have incentives driven by risk metrics with clawbacks in the event losses arise in future periods.

The Plan rewards both teamwork directed toward common goals and individual goals. It is further intended to attract, motivate, and retain high quality colleagues, and support continued growth and profitability of the Bank. Participation and payout in the Plan is dependent upon one’s level within the organization and ability to influence the Bank’s strategic outcomes. Individual incentive payout targets will be shared individually. It is important to note that this Plan is established to reward and recognize colleagues for meeting set objectives. This Incentive Plan is not meant to be a substitute for salary increases.

Performance Objectives:

The Business Plan outlines key strategic initiatives set forth and approved by the Board of Directors. Once approved, each Division Head will review the Business Plan with officers within their group. Individual officers will identify up to six specific and measurable goals to support the Business Plan and Personal Objectives. Goals must be numerically measurable where possible.

Goals should include up to six of the following:

•

Deposit Growth

•

Loan Growth

•

Expense Control

•

Credit Quality / Portfolio Management

•

Fee Income

•

Net Interest Margin

•

Teamwork

•

Compliance

•

Customer Service – externally and to other colleagues

•

Community Involvement

•

Referrals to other business units

•

Personal goals include major projects or initiatives

Administration of the Plan

Individuals will be asked to provide a quarterly status report. After the year end close, participants in the plan will report on the achievement of their annual goals. Division heads will summarize individual achievements and recommend to the Bank President the percentage payout based on the targeted goal achieved. The Director of Human Resources will calculate the payouts and report to the President for Executive Committee approval. Incentive payouts will be calculated on year to date regular earnings (exclusive of commissions or incentive payments).

The Bank President will be responsible for any interpretation of the Plan administration and his decision shall be final and binding on all parties.

Before the beginning of each Plan year, Bank Management will review and recommend to the Board revisions to this Plan. However, it is expected that the Plan will require modification only when significant changes in the organization, goals, participants, or performance occur.

The President has the authority to exclude extraordinary occurrences that could affect the incentive awards, either positively or negatively, but are of their nature outside the significant influence of Plan participants. Extraordinary occurrences impacting on Bank earnings may be excluded when calculating the Percent Award to ensure that the best interests of the Bank are protected and are not brought into conflict with the best interests of Plan participants.

Plan Participants

The Bank President is authorized to name participants in the Plan. Officers hired prior to the third Quarter (October 1), will be included in the plan. A master list of participants will be shared with the Bank President, Executive Committee, and senior management.

At the Beginning of Plan Year

•

Individual participants will identify up to six specific and measurable goals in support of the Business Plan.

•

The Executive Officer of each division will review those goals and approve.

•

A copy will be provided to the participant, the Division Head, and Human Resources for their file.

•

The Plan will be reviewed by the Compensation Committee to ensure it reflects the current objectives for incentive compensation as identified by the Board.

•

Plan participants are notified of approved Performance Categories and Percent Awards for the Plan Year.

During the Plan Year

•

Officers will prepare quarterly updates.

After Close of the Plan Year

•

The Chief Financial Officer will calculate and report the bank financials for the prior year.

•

The Executive Officer for each Division will receive the participant’s report of success. The Executive Officer will recommend the percentage of the target percentage based on successes.

•

The Human Resource Director will calculate the Percent Awards for the total participants and provide to the Bank President.

•

The results are presented to the Executive Committee for approval.

•

Payouts will be made in March of the year following the Plan Year. Participants must be employed at the time of payout to receive payment.

Definitions

Each group of Officers has a target to achieve with a range to include a “Threshold”, “Target”, and “Maximum”.

The definition of “threshold” is meeting some, but not all objectives. The “target” is defined as generally meeting the objectives established. The “maximum” target is met when an individual achieves all objectives and exceeds the important objectives.

The Bank must meet the primary objectives (Revenue Expense, Credit Quality, and ROA), as set forth in the plan, to satisfy meeting “target” objectives.

The target goals for each officer classification will be weighted to include a percentage based on bank goal and a percentage based on the individual goal.

The following table represents the weight structure.

Financial goals will be weighted higher than other goals when considering performance evaluation and incentive recommendations


Title	Weight attributed to Bank Goal			Weight attributed to Individual Goal

President / CEO and Executive Officers		75	%		25	%

Senior Vice Presidents		50	%		50	%

Other Officers		25	%		75	%

Other Considerations

It is not possible to consider all issues that will invariably materialize as plans are developed and implemented. Therefore, the Bank President will act on individual cases as issues are identified.

Withholding for Taxes

The Bank shall deduct from all payments under this plan any federal or state taxes required by law to be withheld with respect to such payments. This payment is subject to 401k deductions and bank match. No other voluntary deductions will be taken from this payment.

Clawback Policy

The Bank reserves the right to recover any bonus or incentive compensation payment to any officer if the payments were based on materially inaccurate financial statements, other materially inaccurate reporting or fraud. The clawback policy will also take affect for material losses in future years. The look back period is one year from the incentive payment.

Appendix lists all participants

Approved: February 10, 2011

Exhibit 10.7

BELMONT SAVINGS BANK

CAPITAL APPRECIATION PLAN

ARTICLE 1

PURPOSES

1.1 The purposes of the Belmont Savings Bank Capital Appreciation Plan (the “Plan”) are to attract, retain and motivate certain key employees and directors of Belmont Savings Bank (the “Bank”), who by their abilities and diligence are able to make important contributions to the success of the Bank’s strategic plan and increase the Bank’s assets and return on assets within the Bank’s risk tolerance in a prudent and profitable way.

ARTICLE 2

DEFINITIONS

As used in the Plan, the following terms shall have the meanings indicated.

2.1 “Beginning Capital of the Bank” means the equity capital of the Bank on September 30, 2010, as reported on the books of the Bank viz . $45,778, 879.

2.2 “Board” means the Board of Directors of the Bank.

2.3 “Capital Appreciation” means the excess, if any, of the Ending Capital of the Bank over the Beginning Capital of the Bank;

2.4 “Capital Appreciation Award” means an award to an employee or director of the Bank entitling the employee or director to a specific percentage of the Employee Capital Appreciation Pool or a Proportional Share of the Director Capital Appreciation Award Pool, as the case may be.

2.5 “Cause” means, in the case of a Participant who is an employee of the Bank, any of the following:

(a) the commission by the Participant of any crime involving deceit, dishonesty or fraud with regard to the Bank or its business, or moral turpitude of such a nature as would adversely affect the reputation of the Bank;

(b) the commission by the Participant of a material act or acts of dishonesty in connection with the performance of the Participant’s duties with the Bank including, without limitation, misappropriation of funds or property;

(d) failure by the Participant to perform to the reasonable satisfaction of the Board a substantial portion of the duties and responsibilities assigned to the Participant, which failure continues for more than fifteen (15) days after notice is given to the Participant by the Board; or

(e) the suspension or termination of the employment of the Participant pursuant to an order by any federal or state regulatory agency having jurisdiction over the Bank.

2.6 “Director Capital Appreciation Award Pool” shall have the meaning assigned to it in Section 5.2 of the Plan.

2.7 “Employee Capital Appreciation Award Pool” shall have the meaning assigned to it in Section 5.1 of the Plan.

2.8 “Ending Capital of the Bank” means the equity capital of the Bank on December 31, 2012, as reported on the Bank’s financial statements prepared by the Bank’s regularly employed certified public accountants, less any portion of such equity capital derived from the proceeds of any offering of shares or other securities of the Bank or attributable to any other entity acquired by the Bank by way of merger, consolidation of other combination. In determining the equity capital of the Bank for this purpose, there shall be disregarded (i) any gains or losses from the Bank’s equity portfolio, and (ii) such other extraordinary items as the Board in good faith deems appropriate.

2.9 “Participant” means any employee or director of the Bank eligible to participate in the Plan, as determined under Article 4 hereof, who is awarded a Capital Appreciation Award hereunder.

2.10 “Proportional Share” means, when referring to an amount payable to a director of the Bank under the Plan, the share of any sum determined by multiplying such sum by a fraction, the numerator of which is the average of all fees paid in calendar years 2010, 2011 and 2012 to the director for service as a director of the Bank and the denominator of which is the average of all fees paid in calendar years 2010, 2011 and 2012 to all directors of the Bank who receive a Capital Appreciation Award from the Bank pursuant to the Plan.

2.11 “ROA” means with respect to any fiscal year of the Bank, the Bank’s return on average assets for such fiscal year.

2.12 “Section 409A” means Section 409A of the Internal Revenue Code of 1986, as amended, and the final regulations and any guidance promulgated thereunder;

2.13 “Vesting Period” means the period beginning on the date a Participant is awarded a Capital Appreciation Award and ending on June 30, 2014.

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ARTICLE 3

ADMINISTRATION OF THE PLAN

The Plan shall be administered by the Board. The Board is authorized, in its sole discretion, to construe and interpret the terms and provisions of the Plan and to adopt such rules and regulations for the administration of the Plan as it may deem advisable. With respect to the Plan, the Board shall act by a majority of its members.

ARTICLE 4

ELIGIBILITY

4.1 Capital Appreciation Awards may be granted only to persons who at the time of the award are full-time employees of the Bank and/or members of the Board. The Board shall (a) select those employees to be awarded Capital Appreciation Awards and (b) prescribe the form, which shall be consistent with the Plan, of the instrument or agreement evidencing any Capital Appreciation Award made under the Plan.

4.2 Subject to the terms and conditions of the Plan, each member of the Board shall be awarded a Capital Appreciation Award under the Plan without further action by the Board.

ARTICLE 5

CAPITAL APPRECIATION AWARDS

5.1 There shall be available for award under the Plan to employees of the Bank Capital Appreciation Awards equivalent in the aggregate to twenty percent (20%) of the Capital Appreciation of the Bank, plus, if the Bank’s ROA for each of its fiscal years ending December 31, 2011 and December 31, 2012 equals or exceeds the ROA target for such fiscal year established by the Board not later than the sixtieth (60 ^th ) day of each such fiscal year, an additional four percent (4%) of the Capital Appreciation (the “Employee Capital Appreciation Award Pool”). Any Capital Appreciation Award awarded by the Bank to an employee of the Bank shall be such portion of the total Employee Capital Appreciation Award Pool as the Board shall determine in its sole discretion at the time of the award.

5.2 There shall be available for award under the Plan to directors of the Bank Capital Appreciation Awards equivalent in the aggregate to five percent (5%) of the Capital Appreciation of the Bank, plus, if the Bank’s ROA for each of its fiscal years ending December 31, 2011 and December 31, 2012 equals or exceeds the ROA target established by the Board for such fiscal year for purposes of determining the amount of the Employee Capital Appreciation Award Pool, an additional one percent (1%) of the Capital Appreciation (the “Director Capital Appreciation Award Pool”). Any Capital Appreciation Award awarded to a director of the Bank shall be such director’s Proportional Share of the total Director Capital Appreciation Award Pool.

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ARTICLE 6

VESTING

6.1 Capital Appreciation Awards awarded to a Participant shall become non-forfeitable (vested) on the last day of the Vesting Period, provided that the Participant has continuously been an employee and/or Board member of the Bank since the date of the award of such Capital Appreciation Award. A leave of absence, unless otherwise determined by the Board, shall not constitute a cessation of employment.

6.2 If a Participant (a) is terminated by the Bank without Cause during the Vesting Period, or (b) dies during the Vesting Period and after December 31, 2012, the Participant shall be deemed solely for purposes of the Plan to have remained in the employ of the Bank until the expiration of the Vesting Period.

6.3 In the event that a Participant (a) if an employee, terminates employment with the Bank before the end of the Vesting Period for any reason other than (i) death after December 31, 2012 or (ii) termination by the Bank without Cause, or (b) if a director, ceases to be a director of the Bank before the end of the Vesting Period for any reason other than death after December 31, 2012, neither the Participant nor his or her spouse or beneficiary shall be entitled to any benefit under the Plan.

ARTICLE 7

FORM OF PAYMENT

The value of any Capital Appreciation Award payable to a Participant shall be paid to the Participant in a single lump sum not later than the fifth (5 ^th ) day following the close of the Vesting Period. In the event of the Participant’s death after the close of the Vesting Period, but prior to such payment, any such amount shall be paid to the Participant’s beneficiary or, if no beneficiary has been designated in writing to the Board, to the executors or administrators of the Participant’s estate. The Bank shall have the right to deduct from all amounts payable under the Plan any federal, state or local taxes required by law to be withheld with respect to such payments.

ARTICLE 8

NO FUNDING

Amounts payable pursuant to the Plan constitute a mere promise by the Bank to make payments in the future, and the rights of the Participant hereunder shall be those of a general unsecured creditor of the Bank. Nothing contained herein shall be construed to create a trust of any kind or to render the Bank a fiduciary with respect to a Participant. The Bank shall not be required to maintain any fund or segregate any amount or in any other way currently fund the future payment of any benefit provided under the Plan, and nothing contained herein shall be construed to give the Participant or any other person any right to any specific assets of the Bank or of any other person. The Plan is intended to be, and shall in all events be construed and treated as, a deferred compensation arrangement for a “select group of management and highly compensated employees,” within the meaning of Title I of ERISA.

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ARTICLE 9

LIMITATION ON BENEFITS

9.1 In no event shall the Bank be obligated to make any payment pursuant to the Plan that is prohibited by Section 18(k) of the Federal Deposit Insurance Act (codified at 12 U.S.C. sec. 1828(k)) or 12 C.F.R. Part 359.

9.2 In no event shall the Bank be obligated to make any payment pursuant to the Plan if (or to the extent that):

(a) the Bank is in default as defined in Section 3(x) (12 U.S.C. sec. 1818(x)(1)) of the Federal Deposit Insurance Act, as amended;

(b) the FDIC enters into an agreement to provide assistance to or on behalf of the Bank under the authority contained in Section 13(c) (12 U.S.C. sec. 1823(c)) of the Federal Deposit Insurance Act, as amended; or

(c) the payment would cause the Bank to be less than well capitalized under any applicable regulatory capital requirement.

9.3 In no event shall the Bank be obligated to make any payment pursuant to the Plan that would result in any Participant receiving total compensation that would be unreasonable, disproportionate or otherwise excessive within the meaning of 12 C.F.R. Part 364, App. A, that would constitute an unsafe or unsound practice, or that would otherwise be in violation of any applicable law or regulation.

ARTICLE 10

MISCELLANEOUS

10.1 Notwithstanding anything to the contrary contained herein, the Ending Capital of the Bank shall be subject to later adjustment in the event that the independent accountants regularly employed by the Bank should determine at any time that an adjustment should be made in the Ending Capital of the Bank by reason of the discovery of any tax, assessment, excise or other obligation or liability or any increase in the amount of any thereof, or the discovery of any asset or any increase or decrease in the value of any asset as of the date that the Ending Capital of the Bank is determined. Any such accountants’ determination, in the absence of bad faith, shall be final and binding on all parties.

10.2 Nothing contained in the Plan or in any Award pursuant to the Plan shall interfere in any way with the right of the Bank to terminate the employment or board membership of a Participant at any time for any reason or for no reason, subject to the Bank’s By-Laws.

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10.3 No amounts payable under the Plan shall be assignable or transferable by a Participant otherwise than by will or by the laws of descent and distribution.

10.4 Any benefits provided under the Plan are special incentive compensation and shall not be taken into account as “wages” or “salary” in determining the amount of any payment under any pension, retirement, deferred profit-sharing, life insurance or other benefit plan or program of the Bank.

10.5 The Board may modify, amend, suspend or terminate the Plan in whole or in part at any time; provided, however, that no modification, amendment, suspension or termination of the Plan shall, without a Participant’s consent, affect adversely the rights of such Participant with respect to any award previously made.

10.6 The Plan shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts and in accordance with any applicable federal laws to which the Bank may be subject.

10.7 The Plan shall become effective September 30, 2010.

ARTICLE 11

CLAIMS PROCEDURE

11.1 In the event a Participant, or his beneficiary in the case of the Participant’s death, or his or their authorized representative (hereinafter, the “Claimant”) asserts a right to a benefit under the Plan which has not been received, in whole or in part, the Claimant must file with the Bank a claim for such benefit on forms provided by the Bank. The Bank shall render its decision on the claim within ninety (90) days after receipt of the claim. If special circumstances apply, the ninety (90) day period may be extended by an additional ninety (90) days, provided written notice of the extension is given to the Claimant during the initial ninety (90) day period and such notice indicates the special circumstances requiring an extension of time and the date by which the Bank expects to render its decision on the claim. If the Bank wholly or partially denies the claim, the Bank shall provide written notice to the Claimant within the time limitations of this Section. Such notice shall set forth:

(a) the specific reasons for the denial of the claim;

(b) specific reference to pertinent provisions of the Plan on which the denial is based;

(c) a description of any additional material or information necessary to perfect the claim and an explanation of why such material or information is necessary;

(d) a description of the Plan’s claims procedures, and the time limitations applicable to such procedures; and

(e) a statement of the Claimant’s right to bring a civil action under Section 502(a) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) if the claim denial is appealed to the Bank and the Bank fully or partially denies the claim pursuant to Section 7(c).

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11.2 A Claimant whose application for benefits is denied in whole or in part may request a full and fair review of the decision denying the claim by filing, in accordance with such procedures as the Bank may reasonably establish, a written appeal which sets forth the documents, records and other information relating to the claim within sixty (60) days after receipt of the notice of the denial by the Bank. In connection with such appeal and upon request by the Claimant, a Claimant may review (or receive free copies of) all documents, records or other information relevant to the Claimant’s claim for benefit, all in accordance with such procedures as the Bank may reasonably establish. If a Claimant fails to file an appeal within such sixty (60) day period, he shall have no further right to appeal.

11.3 A decision on the appeal by the Bank shall include a review by the Bank that takes into account all comments, documents, records and other information submitted by the Claimant relating to the claim, without regard to whether such information was submitted or considered in the initial claim determination. The Bank shall render its decision on the appeal no later than sixty (60) days after the receipt by the Bank of the appeal. If special circumstances apply, the sixty (60) day period may be extended by an additional sixty (60) days, provided written notice of the extension is given to the Claimant during the initial sixty (60) day period and such notice indicates the special circumstances requiring an extension of time and the date by which the Bank expects to render its decision on the claim on appeal. If the Bank wholly or partly denies the claim on appeal, the Bank shall provide written notice to the Claimant within the time limitations of this Section. Such notice shall set forth:

(a) the specific reasons for the denial of the claim;

(b) specific reference to pertinent provisions of the Plan on which the denial is based;

(c) a statement of the Claimant’s right to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the Claimant’s claim for benefits; and

(d) a statement of the Claimant’s right to bring a civil action under Section 502(a) of ERISA,

11.4 The Bank shall be the Plan Administrator with respect to the Plan.

11.5 As Plan Administrator, the Bank shall have complete authority, in its sole and absolute discretion, to interpret the provisions of the Plan and make determinations regarding eligibility. Without limiting the foregoing, it is the Bank’s intent that the Plan be administered in a manner compliant with the provisions of Section 409A of the Internal Revenue Code of 1986, as amended, and regulations and rulings issued thereunder (“Section 409A”) so as not to subject the benefits accruing hereunder to taxation pursuant to said Section 409A(a)(1).

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ARTICLE 12

SECTION 409A

It is the intent of the Bank that the Plan, and all payments of deferred compensation subject to Section 409A made hereunder, shall be in compliance with such requirements and the regulations and other guidance thereunder. Notwithstanding any other provision with respect to the timing of payments under the Plan, if, at the time of a Participant’s separation from service, the Participant is a “specified employee” (meaning a key employee as defined in Section 416(i) of the Code without regard to paragraph 5 thereof) of the Bank (or a Bank affiliate), then to the extent necessary to comply with the requirements of Section 409A, any payments to which the Participant is entitled under the Plan during the six month period commencing on the Participant’s separation from service which are subject to Section 409A (and not otherwise exempt from its application including, without limitation, by operation of Treasury Regulation section 1.409A-1(n)) will be withheld until the first business day of the seventh month following the Participant’s separation from service, at which time such withheld amount shall be paid in a lump-sum distribution. The Bank agrees that it will negotiate in good faith and execute an amendment to modify the Plan to the extent necessary to comply with the requirements of Section 409A, or any successor statute, regulation and guidance thereunder.

September 30, 2010

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Very truly yours,

BELMONT SAVINGS BANK

By:		/s/ Robert Morrissey
		Robert Morrissey
		Chairman of the Board


Accepted and agreed:

/s/ Robert Mahoney

Dated:		11/15/10

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Exhibit 10.8

BELMONT SAVINGS BANK

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

Effective as of October 1, 2010

BELMONT SAVINGS BANK

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

Table of Contents


ARTICLE I Name and Purpose			1

ARTICLE II Definitions			1
	2.1	Annual Benefit Amount	1
	2.2	Applicable Appendix	1
	2.3	Bancorp	1
	2.4	Benefit Percentage	1
	2.5	Board	1
	2.6	Cause	1
	2.7	Code	2
	2.8	Date of Hire	2
	2.9	ERISA	2
	2.10	Final Average Compensation	2
	2.11	Good Reason	2
	2.12	MHC	2
	2.13	Normal Distribution Form	2
	2.14	Normal Retirement Date	3
	2.15	Participant	3
	2.16	Plan	3
	2.17	Plan Year	3
	2.18	Separation from Service	3
	2.19	Year of Service	3

ARTICLE III Participation			3
	3.1	Designation by Board	3
	3.2	Term of Participation	3

ARTICLE IV Eligibility for Benefit			4
	4.1	Separation from Service	4
	4.2	Minimum Required Benefit Percentage; Forfeiture	4

ARTICLE V Payment of Benefit			4
	5.1	Time and Form of Benefit	4
	5.2	Death	4

ARTICLE VI Claims Procedure			4

ARTICLE VII Funding			5
	7.1	General Obligation of the Bank	5
	7.2	Use of Trust, Insurance Policies, Etc	5

ARTICLE VIII Amendment and Termination			6
	8.1	Amendment	6
	8.2	Termination	6

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ARTICLE IX Miscellaneous			6
	9.1	Provision for Incapacity	6
	9.2	Non-assignable Rights	6
	9.3	Independence of Plan	6
	9.4	At-Will Status	6
	9.5	Conditions of Benefits; Effect on the Participant’s Post-Employment Obligations	6
	9.6	Taxes	7
	9.7	Code Section 409A	7
	9.8	Limitation on Benefits	7
	9.9	Assumption of Obligation	7
	9.10	Governing Law	7

Appendix A-1			A-1
Appendix A-2			A-2
Appendix A-3			A-3
Appendix B			B-1

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BELMONT SAVINGS BANK

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

ARTICLE I

Name and Purpose

1.1 This instrument and the supplemental retirement plan embodied herein, as from time to time amended, shall be known as the “Belmont Savings Bank Supplemental Executive Retirement Plan.”

1.2 The Plan is established and maintained for the purpose of providing retirement benefits described in Article III to eligible executive employees of the Bank, MHC and/or Bancorp.

1.3 For purposes of ERISA, the Plan is intended to be unfunded, and maintained by the Company primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA.

ARTICLE II

Definitions

2.1 “Annual Benefit Amount” means a gross amount equal to the product of the Participant’s Final Average Compensation multiplied by the Participant’s Benefit Percentage.

2.2 “Applicable Appendix” means, with respect to each Participant, the appendix to this Plan in which such Participant is identified by name and date of hire. Each such appendix, as amended from time to time, is incorporated in its entirety into this Plan by reference and made a part hereof.

2.3 “Bancorp” means BSB Bancorp., Inc., with its principal administrative office also located at Two Leonard Street, Belmont, MA 02478.

2.4 “Benefit Percentage” means, with respect to each Participant, the percentage determined in accordance with such Participant’s Applicable Appendix.

2.5 “Board” means the Bank’s Board of Directors, provided, however that for purposes of any action required or permitted by the Board of Directors for purposes of this Plan, the Board shall act without participation by the Participant if the Participant is then a member of the Board.

2.6 “Cause” means any one or more of the following: (i) the commission by the Participant of any crime involving deceit, dishonesty or fraud with regard to the Bank or its business, or moral turpitude of such a nature as would adversely affect the reputation of the Bank; (ii) the commission by the Participant of a material act or acts of dishonesty in connection with the performance of the Participant’s duties to the Bank including, without limitation, misappropriation of funds or property; (iii) an act or acts of misconduct (including sexual

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harassment) by the Participant; (iv) failure by the Participant to perform to the reasonable satisfaction of the Board a substantial portion of the duties and responsibilities assigned to the Participant, which failure continues for more than fifteen (15) days after notice is given to the Participant by the Board; or (v) the suspension or termination of the employment of the Participant pursuant to an order by any federal or state regulatory agency having jurisdiction over the Bank.

2.7 “Code” means the Internal Revenue Code of 1986, as amended.

2.8 “Date of Hire” means, with respect to the Participant, the date specified on such Participant’s Applicable Appendix.

2.9 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

2.10 “Final Average Compensation” means the average of the Participant’s annual gross base salary (prior to any elective salary reduction contributions to any pre-tax benefit arrangement, e.g. , a Code Section 401(k), Code Section 125 or Code Section 132 plan) during the three consecutive calendar year period during which the Participant’s compensation from the Bank was highest during the final sixty (60) month period of the Participant’s employment with the Bank.

2.11 “Good Reason” shall mean: (i) a material diminution in the Participant’s base salary other than in connection with a reduction in compensation of comparable magnitude, as a percentage matter, affecting all or substantially all executive employees of the Bank; (ii) a material diminution in the Participant’s authority, duties, or responsibilities; (iii) a material diminution in the authority, duties or responsibilities of position to which the Participant is to report; (iv) a material diminution in the budget over which the Participant retains authority; (v) a material change in the geographic location at which the Participant must perform the Participant’s duties; or (iv) any other action or inaction that constitutes a material breach by the Bank of any agreement under which the Participant provides services, including this Plan; provided that for a termination to be deemed for Good Reason the Participant must give, within the 90-day period commencing on the initial existence of the condition(s) constituting (or allegedly constituting) Good Reason, written notice of the intention to terminate for Good Reason, and, upon receipt of such notice, the Bank shall have a thirty (30) day period within which to cure such condition(s); and provided further that the Bank may waive such right to notice and opportunity to cure. In no event may facts or circumstances constituting “Good Reason” arise after the occurrence of facts or circumstances that the Bank relies upon, in whole or in material part, in terminating the Participant for Cause. In no event shall the separation from service, replacement or promotion of any employee other than the Participant, per se , constitute “Good Reason.”

2.12 “MHC” means BSB Bancorp, MHC, a mutual holding company, with its principal administrative office at Two Leonard Street, Belmont, MA 02478.

2.13 “Normal Distribution Form” means a distribution in ten (10) annual installments, each such installment equal to the Annual Benefit Amount, the initial installment of which is to

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be distributed within sixty (60) days after the later to occur of (i) the date the Participant Separates from Service with the Bank and (ii) the Participant’s Normal Retirement Date, and the subsequent installments shall be distributed on the first through ninth anniversary of such initial installment. For purposes of Code Section 409A, all such installments shall be treated as a single payment.

2.14 “Normal Retirement Date” means the date the Participant attains age sixty-two (62).

2.15 “Participant” means each employee of the Bank, Bancorp or MHC who (i) is designated by the Board as a participant in the Plan in accordance with Article III of the Plan, (ii) is named in an appendix to the Plan, and (iii) executes a participation instrument in accordance with Section 3.2.

2.16 “Plan” means the deferred compensation arrangement set forth in this instrument, as amended from time to time.

2.17 “Plan Year” means the twelve (12) month period ending December 31.

2.18 “Separation from Service” means a change in the Participant’s service relationship with the Bank, whether or not initiated by the Bank, such that the Bank reasonably determines, based on the facts and circumstances available as at such determination date, that no further services will be performed by the Participant for the Bank after a certain date (the “Separation Date”) or that the level of bona fide services the Participant will perform after such Separation Date (whether as an employee, independent contractor or other service provider) will decrease permanently to no more than twenty percent (20%) of the average level of bona fide services performed (whether as an employee, independent contractor or other service provider) over the preceding thirty-six (36) month period immediately preceding such Separation Date. The Participant will be presumed to have separated from service where the level of bona fide services performed continues at a level that is more than twenty percent (20%) but less than fifty percent (50%) of the average level of service performed by the Participant during the thirty-six (36) month period immediately preceding the Separation Date.

2.19 “Year of Service” means each period of twelve (12) consecutive months that (i) commences either on the Participant’s Date of Hire or any anniversary thereof and (ii) ends on or prior to the Participant’s Separation from Service.

ARTICLE III

Participation

3.1 Designation by Board . Participation in the Plan shall be limited to such management or highly compensated employees of the Bank, Bancorp or MHC, as the Board may designate from time to time, in its discretion.

3.2 Term of Participation . An individual designated by the Board to participate in the Plan in accordance with Section 3.1 shall become a Participant upon executing a written instrument of participation in such form as the Bank approves (which may be in the form set forth as Appendix B to the Plan), and the effective date of such participation shall be the date of

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Board action designating such individual as a participant in the Plan unless otherwise provided by the Board. A Participant’s participation in the Plan shall end upon the first to occur of (i) the distribution of 100% of the Participant’s benefit, (ii) the Participant’s Separation from Service with a Benefit Percentage of less than ten percent (10%), (iii) the Participant’s Separation from Service for Cause, (iv) the termination of the Plan and (v) the amendment of the Plan to render the Participant ineligible to participate, subject to Article VIII.

ARTICLE IV

Eligibility for Benefit

4.1 Separation from Service . In no event shall any benefit be payable under the Plan to a Participant prior to such Participant’s Separation from Service, provided, however, that nothing herein shall prevent a distribution required in connection with the Plan’s termination, in whole or in part, or as otherwise required by applicable law.

4.2 Minimum Required Benefit Percentage; Forfeiture . In no event shall any benefit be payable under this Plan if either (i) the Participant’s Benefit Percentage is less than ten percent (10%) at Separation from Service, or (ii) the Participant Separates from Service due to termination for Cause or resignation under circumstances that the Board determines to constitute Cause.

ARTICLE V

Payment of Benefit

5.1 Time and Form of Benefit . A Participant who Separates from Service for reasons other than Cause and whose Benefit Percentage is greater than zero percent (0%) shall be entitled to a benefit to be distributed in the Normal Distribution Form, such distribution to commence within sixty (60) days after the later to occur of (i) the date the Participant separates from service with the Bank and (ii) the Participant’s Normal Retirement Date.

5.2 Death . In the event that the Participant whose Benefit Percentage is greater than zero percent (0%) dies prior to Separation from Service, the Participant’s benefit shall be distributed in the Normal Distribution Form commencing on the date the Participant would have attained age sixty-two (62) if the Participant had survived (or, if later, within thirty (30) days after the Participant’s date of death), such benefit to be distributed to the Participant’s surviving designated beneficiary or, in the absence thereof, to the Participant’s estate. In the event that the Participant dies after Separation from Service but prior to distribution in full of the Participant’s benefit, the undistributed payment(s) shall be paid to the Participant’s designated beneficiary or, in the absence of a surviving designated beneficiary (including due to the death of a designated beneficiary prior to payment of the final payment), to the Participant’s estate.

ARTICLE VI

Claims Procedure.

6.1 In the event the Participant or the Participant’s beneficiary in the case of the Participant’s death or their authorized representative (hereinafter, the “Claimant”) asserts a right to a benefit under this Plan which has not been received, in whole or in part, the Claimant must file with the Bank a claim for such benefit on forms provided by the Bank. The Bank shall

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render its decision on the claim within ninety (90) days after receipt of the claim. If special circumstances apply, the ninety (90) day period may be extended by an additional ninety (90) days, provided written notice of the extension is given to the Claimant during the initial ninety (90) day period and such notice indicates the special circumstances requiring an extension of time and the date by which the Bank expects to render its decision on the claim. If the Bank wholly or partially denies the claim, the Bank shall provide written notice to the Claimant.

6.2 For purposes of ERISA, including ERISA Section 501 et seq. , the Bank, acting through the Board, shall be the Plan administrator with respect to this Plan. As Plan administrator, the Bank shall have complete authority, in its sole and absolute discretion, to interpret the provisions of this Plan and make determinations regarding eligibility. Without limiting the foregoing, it is the Bank’s intent that the Plan be administered in a manner compliant with the provisions of Section 409A of the Code, and regulations and rulings issued thereunder so as not to subject the benefits accruing hereunder to taxation pursuant to said Section 409A(a)(1).

ARTICLE VII

Funding

7.1 General Obligation of the Bank . The benefits provided under the Plan constitute a mere promise by the Bank to make payments in the future, and the rights of the Participant hereunder shall be those of a general unsecured creditor of the Bank. Nothing contained herein shall be construed to create a trust of any kind or to render the Bank a fiduciary with respect to the Participant. The Bank shall not be required to maintain any fund or segregate any amount or in any other way currently fund the future payment of any benefit provided under the Plan, and nothing contained herein shall be construed to give the Participant or any other person any right to any specific assets of the Bank or of any other person. This Plan is intended to be, and shall in all events be construed and treated as, a deferred compensation arrangement for a “select group of management and highly compensated employees,” within the meaning of Title I of ERISA.

7.2 Use of Trust, Insurance Policies, Etc . Notwithstanding the foregoing, the Bank may, in its sole and absolute discretion, establish a trust to which funds earmarked for payment under this Plan may be transferred and from which benefits arising hereunder, and subject to the provisions and limitations hereof, may be paid. Any such trust would contain provisions making it irrevocable by the Bank unless and until all benefits hereunder which are funded through such trust have been paid or provided for, except in the case of bankruptcy or insolvency of the Bank, in which event benefit payments from the trust would cease and assets thereof would revert to the Bank or be paid to its creditors. The Bank may, for its corporate purposes, choose to obtain a policy or policies of life insurance on the Participant. The Participant agrees to fully cooperate in connection with the securing of any such policy or policies or the election of any options thereunder which the Bank may wish and that the Participant will be available for medical examinations if necessary.

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ARTICLE VIII

Amendment and Termination

8.1 Amendment . The Board shall have the right to amend, alter or modify the Plan at any time and from time to time, in whole or in part; provided, however, that to the extent that any amendment, alteration or modification reduces the amount of any benefit to which a Participant would have a vested entitlement if the Participant resigned without Good Reason immediately prior to the effective date of such amendment, or changes the form in which such benefit is to be distributed, such amendment shall become effective without the consent of such affected Participant(s).

8.2 Termination . The Board shall have the right, in its sole discretion, to terminate the Plan, in whole or in part, at any time; provide, however that no such action shall reduce the amount to which a Participant would have a vested entitlement if the Participant resigned without Good Reason immediately prior to the effective date of such amendment.

ARTICLE IX

Miscellaneous

9.1 Provision for Incapacity . If the Board reasonably deems any individual incapable of receiving benefits by reason of illness, infirmity or incapacity of any kind, the Bank may make payment of such benefits to any one or more persons or representatives as provided in a written direction received from the affected individual while competent and, in the absence of any such written direction, to such individual(s) as the Board designates and shall fully discharge the Bank from all obligations liability under this Plan.

9.2 Non-assignable Rights . Except as otherwise provided by the Plan, neither the Participant nor the Participant’s surviving spouse shall have any right to commute, sell, assign, transfer or otherwise convey the right to receive any payments hereunder, which payments and the right thereto are expressly declared to be non-assignable and non-transferable.

9.3 Independence of Plan . The benefits payable under the Plan shall be independent of, and in addition to, any employment agreement that may exist from time to time between the parties hereto, or any compensation payable by the Bank to the Participant other than supplemental retirement benefits, whether as salary, bonus or otherwise.

9.4 At-Will Status . Notwithstanding any provision of this Plan, the Participant is employed at-will, so that the Participant or the Bank may terminate the Participant’s employment at any time, with or without notice, for any or no reason.

9.5 Conditions of Benefits; Effect on the Participant’s Post-Employment Obligations . In the event that the Participant becomes entitled to a benefit distribution in connection with a involuntary termination prior to attainment of the Participant’s maximum Benefit Percentage, then the Participant shall be eligible to receive the benefits provided under this Plan, only if the Participant executes a general release, in a form acceptable to the Bank, within fifty (50) days (or such longer period as may be required by applicable law including, without limitation, the Age Discrimination in Employment Act) of the date of the termination of the Participant’s employment.

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9.6 Taxes . All payments and benefits described in this Plan shall be subject to any and all applicable federal, state and local income, employment and other taxes, and the Bank will deduct from each payment to be made to the Participant under this Plan such amounts, if any, required to be deducted or withheld under applicable law. The Participant hereby acknowledges and agrees that the Bank makes no representations or warranties regarding the tax treatment or tax consequences of any compensation, benefits or other payments under the Plan, or under any statute, or regulation or guidance thereunder, or under any successor statute, regulation and guidance thereunder.

9.7 Code Section 409A . It is the intent of the parties that this Plan, and all payments of deferred compensation subject to Code Section 409A made hereunder, shall be in compliance with such requirements and the regulations and other guidance thereunder. Notwithstanding any other provision with respect to the timing of payments under this Plan, if, at the time of the Participant’s separation from service, the Participant is a “specified employee” (meaning a key employee as defined in Section 416(i) of the Code without regard to paragraph 5 thereof) of the Bank (or a Bank affiliate), then to the extent necessary to comply with the requirements of Code Section 409A, any payments to which the Participant is entitled under this Plan during the six month period commencing on the Participant’s separation from service which are subject to Code Section 409A (and not otherwise exempt from its application including, without limitation, by operation of Treasury Regulation section 1.409A-1(n)) will be withheld until the first business day of the seventh month following the Participant’s separation from service, at which time such withheld amount shall be paid in a lump-sum distribution.

9.8 Limitation on Benefits . In no event shall the Bank be obligated to make any payment pursuant to this Plan that is prohibited by Section 18(k) of the Federal Deposit Insurance Act (codified at 12 U.S.C. sec. 1828(k)), 12 C.F.R. Part 359, or any other applicable law. It is the intention of the Participant and of the Bank that no payments by the Bank to or for the benefit of the Participant under this Plan or any other agreement or plan pursuant to which Participant is entitled to receive payments or benefits shall be non-deductible to the Bank by reason of the operation of Code Section 280G relating to parachute payments. If all, or any portion, of the payments provided under this Plan, either alone or together with other payments and benefits which the Participant receives or is entitled to receive from the Bank, would constitute a “parachute payment” within the meaning of Code Section 280G, the payments and benefits provided under this Plan shall be reduced to the extent necessary so that no portion thereof shall fail to be tax-deductible by operation of Code Section 280G (such reduced amount being referred to hereinafter as the “280G Maximum Amount”). To the extent that payments exceeding the 280G Maximum Amount have been made to or for the benefit of the Participant, such excess payments shall be refunded to the Bank with interest thereon at the applicable federal rate determined under Code Section 1274(d), compounded annually.

9.9 Assumption of Obligation . No sale, merger, consolidation or conversion of the Bank shall take place unless the new or surviving entity expressly acknowledges the obligations under this Plan and agrees to abide by its terms.

9.10 Governing Law . The Plan shall be construed under and governed by the laws of the Commonwealth of Massachusetts except to the extent pre-empted by ERISA.

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EXECUTED under seal as of the day and year first above written, by the Bank’s duly authorized representative.


BELMONT SAVINGS BANK

By:		/s/ Robert Morrissey

(duly authorized)

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BELMONT SAVINGS BANK

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

APPENDIX A-1

Except as otherwise defined in this Appendix, the terms used herein shall have the meaning(s) ascribed to them in the Belmont Savings Bank Supplemental Executive Retirement Plan, to which this Appendix, as amended from time to time, is appended and into which this Appendix is incorporated by reference.


Participant Name	Date of Hire	Years of Service	Benefit Percentage

Robert M. Mahoney		0-4	0%
		5 or more	20%

Notwithstanding the foregoing, if prior to the completion of five (5) Years of Service, the Participant either is terminated by the Bank without Cause or resigns for Good Reason, the term “Benefit Percentage” shall mean, with respect to the Participant, the following:


Years of Service	Benefit Percentage
Less than 1		4	%
1		8	%
2		12	%
3		16	%
4		20	%

A-1

BELMONT SAVINGS BANK

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

APPENDIX A-2


Participant Name	Date of Hire	Years of Service	Benefit Percentage

Hal Tovin		0-4	0%
		5-9	10%
		10 or more	20%

Notwithstanding the foregoing, if prior to the completion of ten (10) Years of Service, the Participant either is terminated by the Bank without Cause or resigns for Good Reason, the term “Benefit Percentage” shall mean, with respect to the Participant, the following:


Years of Service	Benefit Percentage
Less than 1		2	%
1		4	%
2		6	%
3		8	%
4		10	%
5		12	%
6		14	%
7		16	%
8		18	%
9		20	%

A-2

BELMONT SAVINGS BANK

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

APPENDIX A-3


Participant Name	Date of Hire	Years of Service	Benefit Percentage

Christopher Downs		0-4	0%
		5-9	10%
		10 or more	20%


Years of Service	Benefit Percentage
Less than 1		2	%
1		4	%
2		6	%
3		8	%
4		10	%
5		12	%
6		14	%
7		16	%
8		18	%
9		20	%

A-3

BELMONT SAVINGS BANK

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

APPENDIX B

PARTICIPATION ACKNOWLEDGEMENT

AND

DESIGNATION OF BENEFICIARY

Name: (the “ Participant ”)

Date of Hire:

Effective Date of SERP Participation:

The above-named Participant, by execution of this instrument, acknowledges that, as of the Effective Date of Participation noted above, the Participant has been designated by the Board of Directors (the “ Board ”) of the Belmont Savings Bank (the “ Bank ”), to become a participant in the Belmont Savings Bank Supplemental Executive Retirement Plan (the “ SERP ”) subject to the terms of the SERP and such designation. In consideration of the Participant’s participation in the SERP, the undersigned hereby agrees and acknowledges as follows:

1.	That the Participant has no right to elect to receive cash or other compensation currently in lieu of the benefits provided under the SERP;

2.	That the Participant has received a copy of the SERP document, as in effect on the effective date of this instrument;

3.	That the Participant rights under the SERP including, without limitation the right to receive benefits, the amount of such benefits, if any, and the form and time of distribution of any such benefits, are governed by the SERP;

4.	That the Participant hereby directs that, upon the Participant’s death, whether before or after separation from service, any amount payable with respect to the Participant under the SERP shall be paid to the following person(s) as Participant’s Primary beneficiary (beneficiaries):

B-1

Primary Beneficiary/Beneficiaries

of (Relationship: )

is to receive % of any amount payable.

of (Relationship: )

is to receive % of any amount payable.

of (Relationship: )

is to receive % of any amount payable.

If, upon Participant’s death, no primary beneficiary is living or exists, such amount shall be paid to the following person(s) as Participant’s Contingent beneficiary (beneficiaries).

Contingent Beneficiary/Beneficiaries

of (Relationship: )

is to receive % of any amount payable.

of (Relationship: )

is to receive % of any amount payable.

of (Relationship: )

is to receive % of any amount payable.

If the Participant designates more than one beneficiary, the said amount shall be equally divided among the Participant’s beneficiaries who are living at the time of the Participant’s death, unless the Participant specifies otherwise on this form. If, upon the Participant’s death there is no primary beneficiary living or existing and if the Participant has named more than one contingent beneficiary, the said amount shall be equally divided among the Participant’s contingent beneficiaries who are living at the time of the Participant’s death, unless the Participant specifies otherwise on this form. Any distributable benefit amount(s) not payable in accordance with the foregoing shall be paid to the Participant’s estate; and

5.	That the Participant has the right to modify the foregoing beneficiary designation by completing and delivering a replacement beneficiary designation form to the Bank.

IN WITNESS WHEREOF, this instrument has been executed by the Participant this day of , .

Name:

1941934.2

B-2

Exhibit 10.9

RESTATED SUPPLEMENTAL RETIREMENT AGREEMENT

THIS RESTATED SUPPLEMENTAL RETIREMENT AGREEMENT made and entered into as of the 23 ^RD day of December, 2008, by and between Belmont Savings Bank, a Massachusetts savings bank with its principal place of business in Belmont, Massachusetts (hereinafter referred to as the “Bank” or in its capacity as the owner of the life insurance policies referred to herein, the “Owner”), and John A. Citrano, of Bedford, Massachusetts (hereinafter in his capacity as an executive employee of the Bank referred to as the “Executive”):

WITNESSETH THAT:

WHEREAS, the Executive is employed as an executive employee of the Bank; and

WHEREAS, the retirement benefits potentially available to the Executive under the Bank’s qualified retirement plan have been curtailed by federal legislation, including the provisions of section 415 of the Internal Revenue Code, limiting benefits under qualified retirement plans and the provisions of Section 401(a)(17) of the Internal Revenue Code, limiting the amount of compensation that can be considered, in determining such benefits; and

WHEREAS, in order to compensate the Executive for such curtailment of qualified plan benefits, the Bank and the Executive wish to provide a source of supplemental retirement benefits for the Executive following his retirement from the Bank; and

WHEREAS, the Bank and the Executive have determined to use policies of life insurance insuring the Executive’s life issued by the John Hancock Variable Life Insurance Company, policy number FV 3234372, with an initial death benefit of $ 1,250,000 and New York Life Insurance Company, policy number 56022619, with an initial death benefit of $950,000 (hereinafter, referred to as the “Policy” or “Policies”) as an investment vehicle to provide such supplemental retirement benefits and to provide life insurance protection for the Executive’s family in the event of his death while employed by the Bank (such insurance companies hereinafter referred to as the “Insurer” or “Insurers”); and

WHEREAS, the Bank is willing to continue to pay certain premiums with respect to the Policies, as an additional employment benefit for the Executive, on the terms and conditions hereinafter set forth, which Policies shall be owned by the Bank which shall possess all incidents of ownership in and to the Policies except as set forth herein; and

WHEREAS, as a result of certain federal income tax changes and possible regulatory changes emanating therefrom, the Executive has transferred the Policies to the Bank and the Bank and the Executive will take the steps necessary to terminate the Bank’s obligations under a prior Supplement Retirement Agreement between the parties hereto dated December 1, 1994, as thereafter amended;

WHEREAS, the Executive wishes to have the Bank endorse the Policies for the purpose of allowing the Executive to designate a beneficiary or beneficiaries who will receive certain death benefits under the Policies in the event of the death of the Executive while employed by the Bank; and

WHEREAS, the parties hereto entered into a Supplemental Retirement Agreement dated December 23, 2003, which was thereafter amended by the First Amendment thereto dated February 11, 2004 and the Second Amendment thereto dated February 21, 2007; and, as a result of the adoption of Section 409A of the Internal Revenue Code, as amended, was further amended and restated on April 9, 2008; and

WHEREAS, the parties wish to further amend said Supplemental Retirement Agreement by deleting said Agreement in its entirety and substituting therefor this Restated Supplemental Retirement Agreement;

NOW, THEREFORE, in consideration of the premises and of the mutual promises contained herein, said Supplemental Retirement Agreement is hereby amended in its entirety to read as follows:

1. Purchase of Policies . The Owner has acquired the Policies from the Executive. The parties hereto have taken all necessary action to cause the Insurers to issue the Policies, and shall take any further action which may be necessary to cause the Policies to conform to the provisions of this Agreement. The parties hereto agree that the Policies shall be subject to the terms and conditions of this Agreement and of the endorsement agreement executed by the parties hereto relating to the Policies. All capitalized words and phrases not otherwise defined herein shall have the same meaning such words and phrases have in the Policies.

2. Ownership of Policies . The Owner shall be the sole and absolute owner of the Policies, and may exercise all ownership rights granted to the owner thereof by the terms of the Policies, except, that while this Agreement is in effect the Executive shall have the right while the Executive is employed by the Bank to designate a beneficiary or beneficiaries to receive certain death benefits payable under the Policies as provided for in Section 3.a. hereof. It is the intention of the parties to this Agreement that despite the endorsement agreement executed by the Owner to the Executive in connection herewith that the Owner shall retain all rights which the Policies grant to the owner thereof; the sole right of the Executive hereunder being the right to name a beneficiary or beneficiaries as described above in this Section 2. All provisions of this Agreement and of such endorsement agreement shall be construed so as to carry out such intention.

3. Rights on Death or Termination of Employment .

a. Death . If the Executive should die while employed by the Bank and prior to the termination of this Agreement, any death benefit payable under the Policies shall be paid as set forth in the Endorsement Agreement entered into by the Executive and the Bank in the form of Exhibit B hereto. Subject to the provisions of Section 6.b., in no event shall the beneficiary(ies) named by the Executive receive more than the policy proceeds paid by the Insurers as a result of the death of the Executive.

b. Termination of Employment Prior to Age 55 or With Fewer Than Ten (10) Years of Service . If the Executive’s employment with the Bank should terminate for any reason other than his death or disability at a time when the Executive has not both (i) attained age 55 and (ii) completed ten (10) Years of Service with the Bank, the Executive shall be entitled to the following Supplemental Retirement Benefit:

(i) If the Executive voluntarily terminates his employment with the Bank other than for Good Reason as defined below, the Bank shall pay to the Executive in a lump sum not later than sixty (60) days after the date the Executive’s employment so terminates an amount equal to the then cash surrender value of the Policies less the aggregate amount of policy premiums theretofore paid on the Policies by the Bank. Upon such payment, all rights of the Executive hereunder shall cease and be of no further force or effect; provided, however, the Bank may maintain the Policies in full force and effect by paying the premiums therefor for a period the Bank shall determine, and the Executive shall agree to take any and all actions necessary or desirable in connection with the continuance of the effectiveness of said Policies.

(ii) If the Executive’s employment with the Bank is terminated by the Bank without cause (as defined in Section 3.g hereof) or by the Executive for Good Reason as defined below, the Executive shall be entitled to receive an amount equal to the sum of the then total cash surrender value of the Policies, plus an amount equal to such Executive’s aggregate Federal and State income taxes payable by the Executive with respect to such payment (grossed up to reflect the taxes payable on the entire payment) as estimated by the public accountants utilized by the Bank taking into account the tax rates which will be applied to the amount of such payment for the Executive for the year in which such payment is received; provided, however, the amount of taxable income of the Executive to which the initial portion of the grossed-up payment will apply shall not exceed the aggregate amount of premiums paid on the Policies by the Bank. Such Benefit shall be paid to the Executive sixty (60) days following the date his employment with the Bank terminated. Upon the receipt of such payment, this Supplemental Retirement Agreement shall terminate with respect to the Executive.

(iii) For the purposes of this Section 3.b., a voluntary termination of employment by the Executive shall be deemed to have been for Good Reason if the Executive’s action results from a material negative change to his service relationship by the Bank, such as the duties to be performed, the conditions under which such duties are to be performed, or the compensation to be received for performing such services. For the purposes of determining whether a material negative change has been made, such material negative change shall be deemed to have occurred in the event of any one of the following events:

(a) a material diminution in the Executive’s base compensation;

(b) a material diminution in the Executive’s authority, duties, or responsibilities;

(c) a material diminution in the authority, duties, or responsibilities of the supervisor to whom the Executive is required to report;

(d) a material diminution in the budget over which the Executive retains authority;

(e) a change of more than thirty-five (35) miles in the geographic location at which the Executive must perform services for the Bank; or

(f) any other action or inaction of the Bank that constitutes a material breach by the Bank of any agreement under which the Executive provides services to the Bank.

In no event, however, shall a termination of employment for Good Reason occur unless such termination occurs not later than one (1) year from the date the material negative change becomes effective. Further, however, the Executive must provide notice to the Bank of any such material negative change which would permit the Executive to terminate his employment for Good Reason, such notice to be given not later than ninety (90) days of the initial existence of the material negative change. The Bank shall have a period of thirty (30) days following receipt of said notice during which it may remedy the material negative change; and, if it does so remedy said material negative change, the Executive shall not be entitled to terminate his employment for Good Reason.

c. Termination of Employment At or After Age 55 With Ten (10) or More Years of Service . If the Executive’s employment with the Bank should terminate for any reason other than for cause (as defined in Section 3.h hereof) or his death at a time when the Executive (i) has attained age 55 and (ii) has completed ten (10) or more Years of Service with the Bank, the actuarial value of the Supplemental Retirement Benefit computed in the manner set forth on Schedule I hereto shall be determined. The Bank shall then execute such documentation as may be required to transfer the Policies to the Executive and shall so transfer such Policies. Thereafter the Bank shall have no further rights in the Policies. Transfer of the Policies to the Executive shall occur within sixty (60) days of the date the Executive’s employment with the Bank terminated. The Bank shall, within sixty (60) days of the transfer of the Policies to the Executive, pay to the Executive (or apply to tax withholdings due to appropriate tax authorities on the Executive’s behalf) in a lump sum an amount equal to (i) the actuarial value of the Supplemental Retirement Benefit as determined above less (ii) the aggregate cash surrender values of the Policies as of the date the Policies are transferred to the Executive. The Executive shall cooperate as the Bank and the Insurer may reasonably require to complete such transfer, such payment and any other actions contemplated hereby. Within sixty (60) days of the date the Bank transfers the Policies to the Executive, the Bank shall also pay to the Executive (or apply to any tax withholdings due to appropriate tax authorities on the Executive’s behalf) an amount equal to the aggregate federal and state income taxes that would be payable by the Executive if the aggregate amount of premiums paid on the Policies by the Bank were included in gross income for such tax purposes by the Executive for the year in which such payment is received (such payment shall be grossed up to reflect the taxes payable on the entire amount required to be paid to the Executive pursuant to this sentence) as estimated by the public accountants utilized by the Bank taking into account the tax rate(s) which will be applied to the amount of such payment for the Executive for the year in which such payment is received. The amount of

such payment and the tax rate(s) applicable to the Executive shall be determined in good faith. The Executive shall provide such information as such public accountants may request so as to enable such accountants to determine the amount of the payment. In the event that any tax withholding is required by any governmental taxing authority which is in excess of the amount of the payments described above, the Executive agrees to provide sufficient funds to meet any such tax withholding requirements to the Bank and the Bank shall utilize such funds solely for the purpose of making such tax withholdings on behalf of the Executive.

d. Termination by Reason of Disability . If the Executive’s employment with the Bank should terminate by reason of Disability prior to his attaining both age 55 and completing ten (10) Years of Service with the Bank, the Executive shall be deemed for purposes of this Agreement to have retired upon attaining age 55 and with ten (10) Years of Service with his Compensation increased by six percent (6%) per calendar year for the years beginning with the year in which he becomes disabled and ending with the year in which he would attain age 55. The provisions of paragraph (c) of this Section shall apply to the determination of the Executive’s benefit. Upon termination of the Executive’s employment by the Bank as a result of his disability, the Bank shall then execute such documentation as may be required to transfer the Policies to the Executive and shall so transfer such Policies. The transfer of the Policies to the Executive shall occur no later than sixty (60) days following the date of the Executive’s termination of employment. Thereafter, the Bank shall have no further rights in the Policies. The Bank shall, within thirty (30) days of the transfer of the Policies to the Executive, pay to the Executive (or apply to tax withholdings due to appropriate tax authorities on the Executive’s behalf) in a lump sum an amount equal to (i) the actuarial value of the Supplemental Retirement Benefit as determined herein less (ii) the aggregate cash surrender values of the Policies as of the date the Policies are transferred to the Executive. The Executive shall cooperate with the Bank and the Insurer as each may reasonably require to complete such transfer, such payment and any other actions contemplated hereby. Within sixty (60) days of the date the Bank transfers the Policies to the Executive, the Bank shall also pay to the Executive (or apply to any tax withholdings due to appropriate tax authorities on the Executive’s behalf) an amount equal to the aggregate federal and state income taxes that would be payable by the Executive if the aggregate amount of premiums paid on the Policies by the Bank were included in gross income for such tax purposes by the Executive for the year in which such payment is received (such payment shall be grossed up to reflect the taxes payable on the entire amount required to be paid to the Executive pursuant to this sentence), as estimated by the public accountants utilized by the Bank, taking into account the tax rate(s) which will be applied to the amount of such payment for the Executive for the year in which such payment is received. The amount of such payment and the tax rate(s) applicable to the Executive shall be determined in good faith. The Executive shall provide such information as such public accountants may request so as to enable such accountants to determine the amount of the payment. In the event that any tax withholding required by any governmental taxing authority which is in excess of the amount of the payments described above, the Executive agrees to provide sufficient funds to meet any such tax-withholding requirements to the Bank, and the Bank shall utilize such funds solely for the purpose of making such tax withholdings on behalf of the Executive.

Disability is defined as a physical or mental impairment that prevents the Executive from performing all or substantially all of the functions of his position with the Bank.

At the Bank’s request, the Executive agrees to be examined by a physician selected by the Bank for the purpose of determining the existence of a Disability. The Bank shall pay all costs incurred with respect to such examination.

e. Benefits Not Payable While Executive Employed by the Bank or Prior to the Time the Executive Incurs a Separation from Service with the Bank . Notwithstanding anything to the contrary, at no time shall any benefits be provided to the Executive pursuant to this Section 3 unless the Executive’s employment with the Bank has terminated; that is, the Executive shall have no right to receive any benefit under this Section 3 while employed by the Bank. Further, at no time shall any benefits be provided to the Executive or his beneficiary(ies) until such time as the Executive has incurred a separation from service from the Bank which shall have the same meaning as a separation from service under Section 409A of the Internal Revenue Code, as amended, and any regulations or guidance issued thereunder by the Internal Revenue Service.

f. Discount Rate . For the purpose of actuarially converting the Supplemental Retirement Benefit of the Executive to a lump-sum payment, the named fiduciary shall utilize the discount rate then utilized by the Savings Banks Employees Retirement Association in connection with the qualified retirement plans then offered by the Savings Banks Employees Retirement Association to its members.

g. Termination for Cause . For the purposes of Section 3.b.(ii) of this Agreement, termination for cause shall be defined as a termination of the employment of the Executive by the Bank for any one or more of the following reasons:

(i) Willful and intentional violation of any material state or federal laws, or of the by-laws, rules, policies or resolutions of the Bank or the rules or regulations of any regulatory agency or governmental authority having jurisdiction over the Bank, which in the reasonable opinion of the Board of Investment of the Bank has or might have a material adverse effect upon the Bank;

(ii) Conviction of the Executive of a felony involving fraud or dishonesty, or the Executive’s willful and intentional commission of a fraudulent or dishonest act in connection with his duties to the Bank for which the Bank suffers a material loss;

(iii) An intentional failure to carry out material, lawful instructions issued to the Executive by the Board of Investment of the Bank or the President and Chief Executive Officer of the Bank, which failure, in the reasonable opinion of the Board of Investment of the Bank, causes material loss to the Bank, or which failure is not cured within ten (10) days of receipt of a notice of such failure from the Bank prior to the Bank suffering a material loss;

(iv) Gross neglect of the duties of the Executive to the Bank hereunder, (provided such neglect does not arise as the result of the physical or mental disability of the Executive), which gross neglect is not cured by the Executive within fifteen (15) days of receipt of a notice of such neglect from the Bank; and

(v) The Executive’s willful and intentional disclosure, without authority, of any secret or confidential information concerning the Bank or any customer of the Bank, or the taking of any action which the Bank’s Board of Investment determines, in its sole discretion and subject to good faith, fair dealing and reasonableness, constitutes unfair competition with or induces any customer to breach any contract with the Bank.

h. Termination for Cause . For the purposes of Section 3.c. of this Agreement, termination for cause shall be defined as the termination of the employment of the Executive by the Bank as a result of the conviction of the Executive of a felony involving fraud or dishonesty, or the Executive’s willful and intentional commission of a fraudulent or dishonest act in connection with his duties to the Bank for which the Bank suffers a material loss.

4. Payment of Premiums . The Bank has paid to the Insurers the premiums required by the Policies to date. On or before each anniversary date of the Policies, or within any for grace period provided by the Policies, if the Executive is then employed by the Bank, the Bank shall pay to the Insurers additional Policy premiums in such amount as maybe required (if any) with respect to such Policies. Upon request, the Bank shall promptly furnish the Executive evidence of timely payment of such premiums. Except with the written consent of the Executive, the Bank shall not pay less than the Policy premiums as so determined, but may, in its discretion at any time and from time to time, subject to the acceptance of such payment by the Insurer, pay more than such premiums or make other premium payments on the Policies. The Bank shall annually furnish the Executive a statement of the amount of income reportable by the Executive for federal and state income tax purposes, if any, as a result of the insurance protection provided the Executive.

5. Endorsement Agreement . To provide the Executive with the rights to name a beneficiary or beneficiaries for a portion of the death benefits under the Policies as provided for in Section 3.a. hereof, the Bank shall execute an endorsement agreement with the Executive. Said endorsement agreement of the Policies hereunder shall not be terminated, altered or amended by the Bank while this Agreement is in effect. The parties hereto agree to take all actions necessary or desirable to cause such endorsement agreement to conform to the provisions of this Agreement. The Bank agrees to provide to the Executive evidence that such endorsement agreement has been executed and filed with the Insurers at such reasonable times, as the Executive shall request. Said endorsement agreement may be filed with the Insurers.

6. Collection of Death Proceeds .

a. In the event of the death of the Executive while employed the Bank and the payment to the beneficiary(ies) of any amount to which they may be entitled under the provisions of Section 3.a., this Agreement any and all rights of the Executive in and to the Policies shall terminate. The Bank shall cooperate with the beneficiary(ies) of the Policies as reasonably required in order to permit the beneficiary(ies) to collect any death benefit provided to the beneficiary(ies) under the Policies and this Agreement.

b. Notwithstanding any provision hereof to the contrary, in the event that, the cash surrender value of any Policy has been reduced by any withdrawals, failure to pay premiums as required by Section 4 hereof, or borrowings against the Policy by the Bank, the

amount payable to the Executive’s beneficiary(ies) shall be determined as if no such reduction in the cash surrender value of the applicable Policy had occurred. In the event that the cash surrender value of the Policies have been reduced to a level where the amount that otherwise would have been payable to the beneficiary(ies) of the Executive cannot be paid in full to such beneficiary(ies), the Bank shall pay to the beneficiary(ies) the difference between what should have been paid to the beneficiary(ies) as a result of the death of the Executive and the amount actually paid by the Insurers. Such amount shall be due in full within 30 days of the date of the payment of any death benefits by the Insurers to the beneficiary(ies).

7. Termination of the Agreement During the Executive’s Lifetime . This Agreement shall terminate upon the termination of the Executive’s employment; in such event, after compliance with the relevant provisions of Section 3, the Bank shall have no further obligations hereunder.

8. Insurer Not a Party . The Insurer shall be fully discharged from its obligations under the Policy by payment of the Policy death benefit to the beneficiary or beneficiaries named in the, Policy, subject to the terms and conditions of the Policy. In no event shall the Insurer be considered a party to this Agreement, or any modification or amendment hereof. No provision of this Agreement, nor of any modification or amendment hereof, shall in any way be construed as enlarging, changing, varying, or in any other way affecting the obligations of the Insurer as expressly provided in the Policy, except insofar as the provisions hereof are made a part of the Policy by the endorsement agreement executed by the Owner and filed with the Insurer in connection herewith.

9. Named Fiduciary, Determination of Benefits, Claims Procedure and Administration .

a. The Bank is hereby designated as the named fiduciary under this Agreement. The named fiduciary shall have authority to control and manage the operation and administration of this Agreement, and it shall be responsible for establishing and carrying out a funding policy and method consistent with the objectives of this Agreement.

(i) Claim .

A person who believes that he or she is being denied a benefit to which he or she is entitled under this Agreement (hereinafter referred to as a “Claimant”) may file a written request for such benefit with the Bank, setting forth his or her claim. The request must be addressed to the President of the Bank at the Bank’s then principal place of business.

(ii) Claim Decision .

Upon receipt of a claim, the Bank shall advise the Claimant that a reply will be forthcoming within ninety (90) days and shall, in fact, deliver such reply within such period. The Bank may, however, extend the reply period for an additional ninety (90) days for reasonable cause.

If the claim is denied, in whole or in part, the Bank shall adopt a written opinion, using language calculated to be understood by the Claimant, setting forth: (i) the specific reason or

reasons for such denial; (ii) the specific reference to pertinent provisions of this Agreement on which such denial is based; (iii) a description of any additional material or information necessary for the Claimant to perfect his or her claim and an explanation why such material or such information is necessary; (iv) appropriate information as to the steps to be taken if the Claimant wishes to submit the claim for review; and (v) the time limits for requesting a review under subsection (3) and for review under subsection (4) hereof.

(iii) Request for Review .

Within sixty (60) days after the receipt by the Claimant of the written opinion described above, the Claimant may request in writing that the Board of Investment of the Bank review the determination of the Bank. Such request must be addressed to the Board of Investment of the Bank, at the Bank’s principal place of business. The Claimant or his or her duly authorized representative may, but need not, review the pertinent documents and submit issues and comments in writing for consideration by the Board. If the Claimant does not request a review of the Bank’s determination by the Board of Investment of the Bank within such sixty (60) day period, he or she shall be barred and estopped from challenging the Bank’s, determination.

(iv) Review of Decision .

Within sixty (60) days after the Board of Investment’s receipt of a request for review, the Board of Investment of the Bank will review the Bank’s determination. After considering all materials presented by the Claimant, the Board of Investment will render a written opinion, written in a manner calculated to be understood by the Claimant, setting forth the specific reasons for the decision and containing specific references to the pertinent provisions of this Agreement on which the decision is based. If special circumstances require that the sixty (60) day time period be extended, the Board of Investment will so notify the Claimant and will render the decision as soon as possible, but no later than one hundred twenty (120) days after receipt of the request for review.

10. Amendment . This Agreement may not be amended, altered or modified, except by a written instrument signed by the parties: hereto, or their respective successors or assigns, and may not be otherwise terminated except as provided herein.

This Agreement amends the Supplemental Retirement Agreement entered into by and between the Bank and the Executive dated December 1, 1994, as thereafter amended in its entirety by an Agreement dated December 23, 2003, which was thereafter amended on February 11, 2004 and February 21, 2007 and restated April 9, 2008. All provisions of the prior Agreement, as previously amended, shall, except to the extent expressly set forth herein, be of no further force or effect.

11. Binding Effect . This Agreement shall be binding upon and inure to the benefit of the Bank and its successors and assigns, and the Executive, the beneficiary(ies), and their respective successor, assigns, heirs, executors, administrators and beneficiaries.

12. Notice . Any notice, consent or demand required or permitted to be given under the provisions of this Agreement shall be in writing, and shall be signed by the party giving or making the same. If such notice, consent or demand is mailed to a party hereto, it shall be sent by United States certified mail, postage prepaid, addressed to such party’s last known address as shown on the records of the Bank. The date of such mailing shall be deemed the date of notice, consent or demand.

13. Governing Law . This Agreement, and the rights of the parties hereunder, shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts.

14. Successors and Assigns of the Bank; No Claim to Bank Assets; Top-Hat Plan .

a. The Bank shall require any successor to the business and/or assets of the Bank in connection with any merger or other acquisition of the business of the Bank to assume and agree to perform the Bank’s obligations under this Supplemental Retirement Agreement in writing.

b. The Executive shall rely solely on the unsecured promises of the Bank as set forth herein to furnish benefits. Nothing in this Agreement shall give, or be construed to give, the Executive any right, title, interest or claim in or to any specific asset, fund, reserve, account, or property of any kind whatsoever owned by the Bank or in which it may have any right, title, or interest now or in the future; but the Executive shall have the right to enforce such rights to the same extent and to the same manner as any other unsecured creditors of the Bank.

c. The provisions of this Agreement shall be deemed to constitute a separate “top-hat” plan as described in Sections 201(2) and 301(a)(3) of the Employee Retirement Income Security Act of 1974, as amended.

d. Any payment made to the Executive or beneficiary pursuant to this Agreement is subject to and conditioned upon its compliance with 12 U.S.C. Section 1828(k), any regulation promulgated thereunder, or any other applicable banking statute, regulation or order.

15. Payment to Specified Employee . In the event that a payment becomes due hereunder to the Executive who, at the time his employment with the Bank terminates is a Specified Employee (meaning a key employee as defined in Section 416(i) of the Code without regard to paragraph 5 thereof) of the Bank when any stock of the Bank is publicly traded on an established securities market or otherwise, such payment may not be made earlier than six (6) months after the date that his employment terminates. In the event that this Section 15 is applicable to the Executive, any distribution which would otherwise be paid to him within the first six (6) months following the termination of his employment shall be accumulated and paid to the Executive in a lump sum on the first day of the seventh full calendar month following the termination of his employment.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement, in duplicate as of the day and year first above written.


Witness:	BELMONT SAVINGS BANK

/s/ Francine Amana Eckley	By:	/s/ Robert J. Morrissey
		Robert J. Morrissey

/s/ Francine Amana Eckley	By:	/s/ S. Warren Farrell
		S. Warren Farrell

/s/ Francine Amana Eckley	By:	/s/ John P. Driscoll, Jr.
		John P. Driscoll, Jr.

/s/ Francine Amana Eckley	By:	/s/ John A. Whittemore
		John A. Whittemore

/s/ Francine Amana Eckley	/s/ John A. Citrano
	John A. Citrano
	Executive

John A. Citrano

EXHIBIT A

Supplemental Retirement Agreement

By and Between Belmont Savings Bank and John A. Citrano

Schedule I

Retirement Benefit

For the purposes of this Agreement, Applicable Percentage shall be determined based on the Retirement Age (determined as of the last birthday of the Executive prior to his retirement from the Savings Bank) and the Applicable Percentage set forth in the following table:


Retirement Age	Applicable Percentage
55		37	%
56		38	%
57		40	%
58		41	%
59		42	%
60		43	%
61		44	%
62		46	%
63		48	%
64		49	%
65		51	%

In the event that the Executive becomes disabled as defined in Section 3.d. of this Agreement prior to attaining age 55, the Applicable Percentage shall be that set forth above for retirement at age 55 and his Compensation shall be increased as provided for in Section 3.d. of the Supplemental Retirement Agreement.

Average Compensation means the average of the Executive’s highest three consecutive Plan Years of Compensation prior to his termination of employment.

Compensation means the annual rate of salary for the Executive as approved by the Board of Trustees of the Bank, plus any bonuses paid to the Executive for the applicable year (including, without limitation, the Executive’s share of the profit sharing pool for such year), without reducing the aggregate of said amounts by the amount of such salary and/or bonuses which are not paid to the Executive for such year as a result of a salary reduction agreement between the Executive and the Bank pursuant to any benefit plan which the Bank maintains, including its deferred compensation agreement with the Executive, any tax qualified plan maintained under Section 401 (k) of the Internal Revenue Code, any Cafeteria Plan maintained pursuant to Section 125 of the Internal Revenue Code and the like.

Plan Year means the 12-month period ending on any December 31.

Years of Service shall be determined utilizing the 12-month period ending on each December 31 in which the Executive attains at least 1,000 hours of service for the Savings Bank utilizing the definition of an Hour of Service set forth in Section 410(a)(3)(C) of the Internal Revenue Code of 1986, as amended.

Calculation of Retirement Benefit for the purposes of Section 3.c of this Agreement, the Supplemental Retirement Benefit shall be equal to the Actuarial Equivalent of a 20-year certain and continuous annuity, payable monthly commencing on the first business day of the month following the Executive’s termination of employment in an annual amount equal to the Applicable Percentage of the Executive’s Average Compensation as defined above.

EXHIBIT B

BELMONT SAVINGS BANK

ENDORSEMENT AGREEMENT


INSURED:		John A. Citrano

POLICY:		John Hancock Life Insurance Company Policy No. FV 3234372

OWNER:		Belmont Savings Bank

BENEFICIARY:		Part A: Belmont Savings Bank

		There will be paid over to the Belmont Savings Bank, in cash, in a single lump sum, an amount equal to the greater of (a) the premiums paid on the Policy by the Bank or (b) the cash surrender value of the Policy as determined immediately prior to the death of the Insured.

		Part B: Beneficiary(ies) Named By the Insured

		The balance of the total death proceeds will be paid over to the Beneficiary(ies) named by the Insured.

REMARKS:		Subject to Supplemental Retirement Agreement between the Insured and Belmont Savings Bank. This Endorsement Agreement may be filed with the Insurer.

The parties hereto have duly executed this Agreement as a document under seal as of the date and year first written above.


		BANK:

WITNESS		BELMONT SAVINGS BANK

/s/ Francine Amana Eckley	By:	/s/ Robert J. Morrissey
		Robert J. Morrissey

/s/ Francine Amana Eckley	By:	/s/ S. Warren Farrell
		S. Warren Farrell

/s/ Francine Amana Eckley	By:	/s/ John P. Driscoll, Jr.
		John P. Driscoll, Jr.

/s/ Francine Amana Eckley	By:	/s/ John A. Whittemore
		John A. Whittemore

/s/ Francine Amana Eckley		/s/ John A. Citrano
		John A. Citrano Executive

EXHIBIT B

BELMONT SAVINGS BANK

ENDORSEMENT AGREEMENT


INSURED:		John A. Citrano

POLICY:		New York Life Insurance Company Policy No. 56022619

OWNER:		Belmont Savings Bank

BENEFICIARY:		Part A: Belmont Savings Bank There will be paid over to the Belmont Savings Bank, in cash, in a single lump sum, an amount equal to the greater of (a) the premiums paid on the Policy by the Bank or (b) the cash surrender value of the Policy as determined immediately prior to the death of the Insured. Part B: Beneficiary(ies) Named By the Insured

		The balance of the total death proceeds will be paid over to the Beneficiary(ies) named by the Insured.

REMARKS:		Subject to Supplemental Retirement Agreement between the Insured and Belmont Savings Bank. This Endorsement Agreement may be filed with the Insurer.

The parties hereto have duly executed this Agreement as a document under seal as of the date and year first written above.


		BANK:

WITNESS:		BELMONT SAVINGS BANK

/s/ Francine Amana Eckley	By:	/s/ Robert J. Morrissey
		Robert J. Morrissey

/s/ Francine Amana Eckley	By:	/s/ S. Warren Farrell
		S. Warren Farrell

/s/ Francine Amana Eckley	By:	/s/ John P. Driscoll, Jr.
		John P. Driscoll, Jr.

/s/ Francine Amana Eckley	By:	/s/ John A. Whittemore
		John A. Whittemore

/s/ Francine Amana Eckley		/s/ John A. Citrano
		John A. Citrano
		Executive

Exhibit 10.10

BELMONT SAVINGS BANK

Two Leonard Street

Belmont, Massachusetts 02478-2511

DEFERRED COMPENSATION AGREEMENT

AGREEMENT made and entered into as of this 21st day of December, 2006, by and between Belmont Savings Bank, a Massachusetts savings bank corporation organized under Massachusetts General Laws, Chapter 168, with its principal office and place of business at Two Leonard Street, Belmont, Massachusetts (hereinafter referred to as the “Bank”) and John A. Borelli, an individual who is currently serving as a Trustee of the Bank (hereinafter referred to as the “Trustee”).

WITNESSETH THAT:

WHEREAS, the Trustee serves as a Trustee of the Bank and provides services of a unique and valuable nature to the Bank, which services benefit the Bank and its customers; and

WHEREAS, the Bank recognizes the valuable and unique services heretofore performed for it by the Trustee and wishes to encourage his/her continued service as a Trustee; and

WHEREAS, the Trustee has expressed his/her need and desire for deferred compensation from the Bank for the purpose of providing security to him/her and his/her family as a condition to his/her continued service with the Bank; and

WHEREAS, the parties hereto have agreed upon the terms and conditions set forth in this Agreement pursuant to which the Bank shall pay deferred compensation to the Trustee or his/her beneficiary, as applicable, following his/her death or the termination of his/her service as a Trustee, if earlier;

NOW, THEREFORE, in consideration of the promises hereinafter set forth, the parties hereto mutually covenant and agree as follows:

1. The Trustee may elect to defer some or all of his/her Trustee fees which would otherwise be payable to him/her by the Bank; provided, however, the minimum amount of the deferrals elected for any one year shall be $5,000. Such deferral shall be in writing and on forms provided by the Bank or reasonably acceptable to the Bank and shall be delivered to the Plan Administrator (the Plan Administrator shall be the Board of Investment of the Bank). Such deferral election shall be made prior to the beginning of each calendar year. Any such election shall be effective for the calendar year to which it relates and all subsequent calendar years unless revoked or altered by the Trustee prior to

the commencement of such subsequent calendar year. Once a calendar year has commenced, any election to alter or terminate the deferral of base salary shall not be effective until the beginning of the next calendar year.

2. Amounts so deferred pursuant to Section 1 and earnings thereon shall be credited to a deferred compensation account for the Trustee. Thereafter, the deferred compensation account of the Trustee shall be credited with interest monthly utilizing the monthly average yield on United States Treasury Securities adjusted to a constant maturity of five years as most recently published by the Federal Reserve Board prior to December 31st in each year. Interest shall be calculated during the following calendar year based upon the rate determined as of the prior December 31st utilizing the formula set forth in the immediately preceding sentence and shall be calculated on a daily basis, and compounded and credited monthly.

3. In consideration of the Trustee’s agreement to defer Trustee fees and remain in the service of the Bank, the Bank agrees to pay to the Trustee (or his/her beneficiary, if applicable) deferred compensation in the amount determined in Section 6 below for a period of 5 years from and after the date that the Trustee’s service as a Trustee terminates (his/her “termination date”) with such deferred compensation to be payable as set forth in Section 6 hereof commencing on the first day of the calendar month following the month in which the Trustee’s termination date occurs.

4. The Bank further agrees that, in the event of the Trustee’s death prior to the completion of said 5-year period while receiving payments pursuant to Section 3 hereof, the Bank shall continue to make the remainder of said payments to the Trustee’s then living designated beneficiary, if any; if no living designated beneficiary survives the Trustee, then to the Trustee’s surviving spouse, if any; if the Trustee has no spouse at the time of his/her death, then to the issue of the Trustee, if any, by right of representation; and if there are no such living issue, then to the Estate of the Trustee with such payments to continue during the remainder of said 5-year payout period.

5. In further consideration of the Trustee’s deferring Trustee fees and remaining in its service as a Trustee, the Bank also agrees that, in the event of the death of the Trustee while still in the active service of the Bank, the Bank shall pay deferred compensation in the amount determined in Section 6 below to the then living designated beneficiary of the Trustee (if no living designated beneficiary survives the Trustee, then to the Trustee’s surviving spouse, if any; if the Trustee has no spouse at the time of his/her death, then to the issue of the Trustee, if any, by right of representation; and if there are no such living issue, then to the Estate of the Trustee) for a period of 5 years from and after the date of the Trustee’s death, which deferred compensation shall be payable as set forth in Section 6 hereof commencing with the first day of the calendar month following the month in which the Trustee’s death occurs.

6. The aggregate amount of deferred compensation to be payable to the Trustee or his/her beneficiary(ies) as set forth above shall be his/her deferred compensation account balance adjusted as follows:

(a) The aggregate amount in his/her deferred compensation account shall be paid to the Trustee or his/her beneficiary(ies), as applicable, upon the Trustee’s termination date or death in 60 consecutive monthly payments, subject to adjustment as set forth in Section 6(b) and Section 6(c) hereof utilizing the payment schedule set forth in Sections 3, 4 or 5 hereof, whichever is applicable, and subject to the provisions of Section 6(d) hereof.

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(b) The Bank shall pay interest on the balance in the Trustee’s deferred compensation account with such interest to be calculated as set forth in Section 2 hereof. The monthly amount to be paid to the Trustee or his/her beneficiary, as applicable, shall be adjusted on each January 1 on a direct amortization basis utilizing the most recently determined interest rate and the remaining amount to be paid pursuant to Section 6(a) above.

(c) The monthly payments shall be subject to withholding taxes and the like to the extent required by then applicable law.

7. Nothing contained in this Agreement, and no action taken pursuant to its provisions by either party hereto shall create, or be construed to create, a trust of any kind, or a fiduciary relationship between the Bank and the Trustee, his/her designated beneficiary, other beneficiaries of the Trustee, or any other person. The payments to the Trustee or any beneficiary hereunder shall be made from assets which shall continue, for all purposes, to be part of the general assets of the Bank, and no person, other than the Bank, shall have, by virtue of the provisions of this Agreement, any interest in such assets. To the extent that any person acquires a right to receive payments from the Bank under the provisions hereof, such right shall be no greater than the right of any unsecured general creditor of the Bank. In the event that, in its sole discretion, the Bank purchases an insurance policy or policies insuring the life of the Trustee to fund, in whole or in part, its obligations hereunder, the Trustee and any beneficiary of the Trustee shall have no rights whatsoever therein; the Bank shall be the sole owner and beneficiary thereof and shall possess and may exercise all incidents of ownership therein.

8. The Board of Investment of the Bank shall have full power and authority to interpret, construe and administer this Agreement. The interpretation and construction of this Agreement by the Board of Investment of the Bank, and any action taken thereunder, shall be binding and conclusive upon all parties in interest. No member of the Board of Investment shall, in any event, vote upon or take any action in connection with this Agreement if he/she is the Trustee under this or any similar Agreement. No member of the Board of Investment shall, in any event, be liable to any person for any action taken or omitted to be taken in connection with the interpretation, construction or administration of this Agreement, so long as such action or omission to act is made in good faith.

9. Neither the Trustee, his/her spouse, nor any other beneficiary under this Agreement shall have any power or right to transfer, assign, anticipate, hypothecate or otherwise encumber any part or all of the amounts payable hereunder, nor shall such amounts be subject to seizure by any creditor of such Trustee or beneficiary, by a

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proceeding at law or in equity, and no such benefit shall be transferable by operation of law in the event of bankruptcy, insolvency or death of the Trustee, his spouse or any other beneficiary hereunder. Any such attempt at assignment or transfer shall be void and shall terminate this Agreement, and the Bank shall thereupon have no further liability hereunder.

10. The Board of Investment of the Bank is hereby designated as the named fiduciary under this Agreement. The named fiduciary shall have authority to control and manage the operation and administration of this Agreement, and it shall be responsible for establishing and carrying out a funding policy and method consistent with the objectives of this Agreement. The Board of Investment shall make all determinations as to rights to benefits under this Agreement, any decision by the Board of Investment denying a claim by the Trustee or his beneficiary for benefits under this Agreement shall be stated in writing and delivered or mailed to the Trustee or such beneficiary. Such decision shall set forth the specific reasons for the denial, written to the best of the Board’s ability in a manner that may be understood without legal or actuarial counsel. In addition, the Board shall afford a reasonable opportunity to the Trustee or such beneficiary for a full and fair review of the decision denying such claim.

11. Any reference to the Trustee’s beneficiary herein shall mean any beneficiary or beneficiaries entitled to payments hereunder with the singular to be treated as the plural where applicable in the event that there is more than one beneficiary entitled to payments with respect to the Trustee.

12. This Agreement may not be amended, altered, modified or terminated, except by a written instrument signed by the parties hereto, or their respective successors or permitted assigns, and may not be otherwise terminated except as provided herein or as required by an applicable law or order of any regulatory agency having authority over the Bank. Notwithstanding the foregoing, the Bank may, upon giving written notice to the Trustee, terminate the Trustee’s right to defer Trustee fees hereunder at any time.

13. This Agreement shall be binding upon and inure to the benefit of the Bank and its successors and assigns, and the Trustee, his/her successors, permitted assigns, heirs, executors, administrators and beneficiaries.

14. Any notice, consent or demand required or permitted to be given under the provisions of this Agreement shall be in writing, and shall be signed by the party giving or making the same. If such notice, consent or demand is mailed to a party hereto, it shall be sent by United States certified mail, postage prepaid, return receipt requested, addressed to such party’s last known address as shown on the records of the Bank or, in the case of a notice sent to the Bank, to its principal office at Two Leonard Street, Belmont, Massachusetts 02178-2511, c/o Chairman of the Board.

15. This Agreement, and the rights of the parties hereunder, shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts and shall be deemed to be under seal.

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement, in duplicate, as of the day and year first above written.


ATTEST:	BELMONT SAVINGS BANK

/s/ Raymond F. Shea	By:	/s/ John A. Citrano, Senior Vice President
Clerk/Secretary		Title

	/s/ John A. Borelli
	Trustee

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BELMONT SAVINGS BANK

DEFERRED COMPENSATION AGREEMENT DEFERRAL FORM

BENEFICIARY DESIGNATION

I, John A. Borelli , a Trustee of Belmont Savings Bank (“Bank”) who maintains a Deferred Compensation Agreement (“Agreement”) with said Bank hereby make the following election:

Compensation Reduction

Pursuant to the terms of my Deferred Compensation Agreement with the Bank, I hereby elect to defer either 100 percent of $ of my Trustee fees, effective January 1, 2007.

I recognize that my election to defer shall be effective for the calendar year set forth in the immediately preceding paragraph and all calendar years thereafter until I amend of revoke the election. I recognize that any such amendment or revocation can only be effective as of the beginning of the calendar year following my delivery of such amendment or revocation to the Board of Investment of the Bank.

Designation of Beneficiary

I recognize that in the event of my death after deferred compensation payments have begun to be paid to me, that the remainder of said deferred compensation payments shall be made to my beneficiary (ies) as stated below or as determined pursuant to the terms of the Agreement. I further recognize that in the event of my death while actively serving as a Trustee of the Bank, my deferred compensation payments will be made to said beneficiary (ies). I hereby designate as my beneficiary (ies) the following:

Primary Beneficiary(ies) Alison Borelli (spouse)

Contingent Beneficiary if Primary Beneficiary (ies) is not alive on the date that a payment is due under the Agreement: Children Tina, Vincent, John Jr., Nicholas Borelli


		Signed this 21st day of December, in the year 2006.

		/s/ John A. Borelli

/s/ John A. Citrano
Witness

BELMONT SAVINGS BANK

Two Leonard Street

Belmont, Massachusetts 02478-2511

FIRST AMENDMENT TO DEFERRED COMPENSATION AGREEMENT

This FIRST AMENDMENT TO DEFERRED COMPENSATION AGREEMENT is made and entered into as of this 18 day, of December, 2008, by and between Belmont Savings Bank, a Massachusetts savings bank organized under Massachusetts General Laws, Chapter 168, with its principal office and place of business at Two Leonard Street, Belmont, Massachusetts (“Bank”) and John A. Borelli, an individual who serves the Bank as a Trustee (“Trustee”).

WITNESSETH THAT:

WHEREAS, the Bank and the Trustee entered into a Deferred Compensation Agreement dated December 21, 2006, (“Agreement”); and

WHEREAS, the Bank and the Trustee wish to amend the Agreement as hereinafter set forth;

NOW, THEREFORE, in consideration of the promises hereinafter set forth, the parties hereto mutually covenant and agree that the Agreement shall be amended as follows:

1. Section 2 of the Agreement is hereby deleted in its entirety and the following substituted therefor:

“2. Amounts so deferred pursuant to Section 1 and earnings thereon shall be credited to a deferred compensation account for the Trustee. Thereafter, the deferred compensation account of the Trustee shall be credited with interest monthly utilizing the Savings Bank Employee Retirement Association Discount Rate as most recently set by the Savings Bank Employee Retirement Association prior to December 31st in each year; provided that interest that accrues prior to December 31, 2008 shall accrue at a rate equal to the monthly average yield on United States Treasury Securities adjusted to a constant maturity of five years as most recently published by the Federal Reserve Board prior to December 31st in each year. Interest shall be calculated during the following calendar year based upon the rate determined as of the prior December 31st utilizing the formula set forth in the immediately preceding sentence and shall be calculated on a daily basis, and compounded and credited monthly.”

2. All other provisions of the Agreement shall remain in full force and effect.

IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment to Deferred Compensation Agreement, in duplicate, as of the day and year first above written.


ATTEST:	BELMONT SAVINGS BANK

/s/ Patricia W. Hawkins	By:	/s/ John A. Citrano, CFO
Clerk/Secretary	Title

	/s/ John A. Borelli
	Trustee

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BELMONT SAVINGS BANK

Two Leonard Street

Belmont, Massachusetts 02478-2511

SECOND AMENDMENT TO DEFERRED COMPENSATION AGREEMENT

This SECOND AMENDMENT TO DEFERRED COMPENSATION AGREEMENT is made and entered into as of this 16 day of December, 2010, by and between Belmont Savings Bank, a Massachusetts stock savings bank subsidiary of BSB Bancorp MHC, with its principal office and place of business at Two Leonard Street, Belmont, Massachusetts (the “Bank”) and John A. Borelli, an individual who serves the Bank as a Director (the “Director”).

WITNESSETH THAT:

WHEREAS, the Bank and the Director entered into a Deferred Compensation Agreement dated (the “Agreement”); and

WHEREAS, the Bank and the Director wish to amend the Agreement as hereinafter set forth;

NOW, THEREFORE, in consideration of the promises hereinafter set forth, the parties hereto mutually covenant and agree that the Agreement shall be amended as follows:

1. The phrase “a Massachusetts savings bank corporation organized under Massachusetts General Laws, Chapter 168,” in the introductory paragraph is hereby deleted and replaced with the following “a Massachusetts stock savings bank subsidiary of BSB Bancorp MHC”.

2. Section 2 of the Agreement is hereby deleted in its entirety and the following substituted therefor:

“2. Amounts so deferred pursuant to Section 1 and earnings thereon shall be credited to a deferred compensation account for the Director. Thereafter, the deferred compensation account of the Director shall be credited with interest monthly utilizing the Five (5) Year Certificate of Deposit Yield as published in the Wall Street Journal (hereinafter referred to as the “Wall Street Journal Yield”). If the Wall Street Journal Yield is not available, the Board of Directors of the Bank may calculate the rate of interest to be credited to the deferred compensation account of the Director based upon such other average Certificate of Deposit Yield or other method the Board of Directors of the Bank determines in its discretion. Interest shall be calculated during the following calendar year based upon the rate determined as of the prior December 31st utilizing the formula set forth in the immediately preceding sentence and shall be calculated on a daily basis, and compounded and credited monthly.”

3. The term “Trustee” in each place where it appears is hereby replaced with the term “Director”.

4. All other provisions of the Agreement shall remain in full force and effect.

IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment to Deferred Compensation Agreement, in duplicate, as of the day and year first above written.


ATTEST:	BELMONT SAVINGS BANK

/s/ Patricia W. Hawkins	By:	/s/ John A. Borelli
Clerk/Secretary	Title

	John A. Borelli
	Director

	By:	/s/ Robert M. Mahoney
	Title

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Exhibit 10.11

BELMONT SAVINGS BANK

Two Leonard Street

Belmont, Massachusetts 02478-2511

DEFERRED COMPENSATION AGREEMENT

AGREEMENT made and entered into as of this 1st day of December, 1998, by and between Belmont Savings Bank, a Massachusetts savings bank corporation organized under Massachusetts General Laws, Chapter 168, with its principal office and place of business at Two Leonard Street, Belmont, Massachusetts (hereinafter referred to as the “Bank”) and S. Warren Farrell, an individual who is currently serving as a Trustee of the Bank (hereinafter referred to as the (“Trustee”).

WITNESSETH THAT:

WHEREAS, the Trustee serves as a trustee of the Bank and provides services of a unique and valuable nature to the Bank which services benefit the Bank and its customers; and

WHEREAS, the Bank recognizes the valuable and unique services heretofore performed for it by the Trustee and wishes to encourage his/her continued service as a Trustee; and

WHEREAS, the Trustee has expressed his/her need and desire for deferred compensation from the Bank for the purpose of providing security to him/her as a condition to his/her continued service with the Bank; and

NOW, THEREFORE, in consideration of the promises hereinafter set forth, the parties hereto mutually covenant and agree as follows:

1. The Trustee may elect to defer some or all of his/her trustee fees which would otherwise be payable to him/her by the Bank; provided, however, the minimum amount of the deferrals elected for any one year shall be $5,000. Such deferral shall be in writing and on forms provided by the Bank or reasonably acceptable to the Bank and shall be delivered to the Plan Administrator (the Plan Administrator shall be the Board of Investment of the Bank). Such deferral election shall be made prior to the beginning of each calendar year. Any such election shall be effective for the calendar year to which it relates and all subsequent calendar years unless revoked or altered by the Trustee prior to the commencement of such subsequent calendar year. Once a calendar year has

commenced, any election to alter or terminate the deferral of trustee fees shall not be effective until the beginning of the next calendar year. In the event that the Trustee desires to increase the amount of his/her deferrals for any calendar year, the amount of the increased deferral must be approved by the Board of Investment of the Bank.

2. Amounts so deferred pursuant to Section 1 hereof shall be credited to a deferred compensation account for the Trustee and shall be deemed to be invested in one or more Group Flexible Premium Variable Life Insurance Policies issued by Allmerica Financial Life Insurance and Annuity Company of which the Bank shall be the sole owner and beneficiary and which policy or policies shall insure the life of the Trustee. Each such policy shall provide a range of investments which may be selected by the Bank. The Trustee shall be entitled to designate which investment or investments the surrender value of the policy shall be invested in from time to time and the Bank shall be deemed to have made such investments within the policy. Any such designation of investment shall be in writing, on forms furnished by the Plan Administrator or reasonably acceptable to the Plan Administrator with any such designations or changes therein to be effective within a reasonable time after receipt thereof by the Plan Administrator. The Board of Investment may change the investment alternatives within such policy from time to time hereafter and in the event of any such change, shall notify the Trustee of the investment alternatives then available under the policy. Neither the Bank, the Plan Administrator, the Board of Investment, or any member thereof shall be liable for the results of any such investment nor the change of any such investment vehicle and the Trustee and his/her beneficiary agree to assume all risks in connection with the performance of any such investment and agree to the change of any such investment vehicle hereinafter made at the direction of the Board of Investment.

3. In the event that the Trustee elects to defer a portion of his/her trustee fees pursuant to Section 1 hereof and the Board of Investment elects to purchase a policy or policies of life insurance on the Trustee from Allmerica Financial Life Insurance and Annuity Company as described above, the Bank shall match the amount so deferred by the Trustee in each calendar year in such amount that the annual premium(s) paid for such policy or policies shall be sufficient to increase the Surrender Value of the policy or policies by the amount of the trustee fees deferred in such year by the Trustee.

4. In consideration of the Trustee’s agreement to defer trustee fees and remain in the service of the Bank, the Bank agrees to pay to the Trustee (or his/her beneficiary, if applicable) deferred compensation in the amount determined in Section 7 below for a period of 5 years from and after the date that the Trustee’s service as a Trustee terminates (“termination date”) with such deferred compensation to be payable as set forth in Section 7 hereof commencing on the first day of the calendar month following the month in which the Trustee’s termination date occurs.

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time of his/her death, then to the living children of the Trustee, if any, in equal shares; and if there are no such living children, then to the Estate of the Trustee with such payments to continue during the remainder of said 5 year payout period.

6. In further consideration of the Trustee’s deferring trustee fees and remaining in its service as a Trustee, the Bank also agrees that, in the event of the death of the Trustee while still in the active service of the Bank, the Bank shall pay deferred compensation in the amount determined in Section 7 below to the then living designated beneficiary of the Trustee (if no living designated beneficiary survives the Trustee, then to the Trustee’s surviving spouse, if any; if the Trustee has no spouse at the time of his/her death, then to the living children of the Trustee, if any, in equal shares; and if there are no such living children, then to the Estate of the Trustee) for a period of 5 years from and after the date of the Trustee’s death, which deferred compensation shall be payable as set forth in Section 7 hereof commencing with the first day of the calendar month following the month in which the Trustee’s death occurs.

7. The aggregate amount of deferred compensation to be payable to the Trustee or his/her beneficiary as set forth above shall be calculated by the then Board of Investment of the Bank on the following basis:

(a) The Board of Investment shall first determine the Surrender Value of each Group Flexible Premium Variable Life Insurance Policy of Allmerica Financial Life Insurance and Annuity Company (as such Surrender Value is defined in each such Policy) which would have been purchased by the Bank had it acquired such Policy in accordance with the terms of Section 2 hereof and followed the investment directions of the Trustee as provided to the Bank from time to time by the Trustee as set forth in Section 2 hereof. Such calculation shall be made as of the Trustee’s termination date or death, as applicable (with respect to the Trustee’s death, said calculation shall be made as of the day prior to the Trustee’s death). The aggregate amount determined under this Section 7(a) shall then be paid to the Trustee or his/her beneficiary, as applicable, in 60 equal monthly payments subject to the adjustment set forth in Section 7(b) hereinafter set forth.

(b) The Bank shall pay interest on the amount determined under Section 7(a) above utilizing the most recently available monthly average yield on United States Treasury Securities adjusted to a constant maturity of five years as published by the Federal Reserve Board prior to the Trustee’s termination date or date of death, as applicable, with such interest rate to be redetermined annually thereafter on the anniversary of the Trustee’s termination date or date of death, as applicable. The monthly amount to be paid to the Trustee or his/her beneficiary, as applicable, shall be adjusted on each such anniversary date on a direct amortization basis utilizing the most recently determined interest rate and the remaining amount to be paid pursuant to Section 7(a) above.

(c) In addition to the amounts payable pursuant to Sections 7(a) and 7(b) hereof, the Trustee or his beneficiary, as applicable, shall be entitled to receive an additional payment annually which shall be equal to the amount that the federal and state income tax liability of the Bank is reduced as the result of the payment of deferred

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compensation hereunder, including the reduction resulting from the amounts payable under this Section 7(c), computed without regard to any carry back or carry forward resulting from such payments. The calculation of the annual payment due under this Section 7(c) shall be made utilizing the Bank’s tax year (currently a year ending on October 31 in each year). The Board of Investment shall determine the amount payable under this Section 7(c) in good faith at the end of each such tax year and the payment due under this Section 7(c) shall be made to the Trustee or his beneficiary, as applicable, no later than 30 calendar days following the later of the dates on which the (i) federal income tax returns for the Bank were filed with the Internal Revenue Service or the (ii) state income tax returns were filed with the Massachusetts Department of Revenue.

Notwithstanding the foregoing, no payments shall be due to the Trustee hereunder pursuant to the calculation required under Section 7(c) above unless on or prior to his/her termination date he/she has met one of the following:

(i) He/She was actively serving as a Trustee of the Bank on the date of his/her death;

(ii) He/She was totally and permanently disabled in that he/she was unable to perform substantially all of his/her duties as a Trustee of the Bank because of a physical or mental disability;

(iii) He/She had completed 5 full years of participation in the plan evidenced by this Agreement; or

(iv) He/She has attained his/her 55th birthday.

8. Nothing contained in this Agreement, and no action taken pursuant to its provisions by either party hereto shall create, or be construed to create, a trust of any kind, or a fiduciary relationship between the Bank and the Trustee, his/her designated beneficiary, other beneficiaries of the Trustee, or any other person. The payments to the Trustee or any beneficiary hereunder shall be made from assets which shall continue, for all purposes, to be part of the general assets of the Bank, and no person, other than the Bank, shall have, by virtue of the provisions of this Agreement, any interest in such assets. To the extent that any person acquires a right to receive payments from the Bank under the provisions hereof, such right shall be no greater than the right of any unsecured general creditor of the Bank. In the event that, in its sole discretion, the Bank purchases an insurance policy or policies insuring the life of the Trustee to fund, in whole or in part, its obligations hereunder, the Trustee and any beneficiary of the Trustee shall have no rights whatsoever therein; the Bank shall be the sole owner and beneficiary thereof and shall possess and may exercise all incidents of ownership therein.

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the Board of Investment shall, in any event, be liable to any person for any action taken or omitted to be taken in connection with the interpretation, construction or administration of this Agreement, so long as such action or omission to act is made in good faith.

10. Neither the Trustee, his/her spouse, nor any other beneficiary under this Agreement shall have any power or right to transfer, assign, anticipate, hypothecate or otherwise encumber any part or all of the amounts payable hereunder, nor shall such amounts be subject to seizure by any creditor of such Trustee or beneficiary, by a proceeding at law or in equity, and no such benefit shall be transferable by operation of law in the event of bankruptcy, insolvency or death of the Trustee, his/her spouse or any other beneficiary hereunder. Any such attempt at assignment or transfer shall be void and shall terminate this Agreement, and the Bank shall thereupon have no further liability hereunder.

11. The Board of Investment of the Bank is hereby designated as the named fiduciary under this Agreement. The named fiduciary shall have authority to control and manage the operation and administration of this Agreement, and it shall be responsible for establishing and carrying out a funding policy and method consistent with the objectives of this Agreement. The Board of Investment shall make all determinations as to rights to benefits under this Agreement, any decision by the Board of Investment denying a claim by the Trustee or his/her beneficiary for benefits under this Agreement shall be stated in writing and delivered or mailed to the Trustee or such beneficiary. Such decision shall set forth the specific reasons for the denial, written to the best of the Board’s ability in a manner that may be understood without legal or actuarial counsel. In addition, the Board shall afford a reasonable opportunity to the Trustee or such beneficiary for a full and fair review of the decision denying such claim.

12. Any reference to the Trustee’s beneficiary herein shall mean any beneficiary or beneficiaries entitled to payments hereunder with the singular to be treated as the plural where applicable in the event that there is more than one beneficiary entitled to payments with respect to the Trustee.

13. This Agreement may not be amended, altered, modified or terminated, except by a written instrument signed by the parties hereto, or their respective successors or permitted assigns, and may not be otherwise terminated except as provided herein or as required by an applicable law or order of any regulatory agency having authority over the Bank. Notwithstanding the foregoing, the Bank may, upon giving written notice to the Trustee, terminate the Trustee’s right to defer trustee fees hereunder at any time.

14. This Agreement shall be binding upon and inure to the benefit of the Bank and its successors and assigns, and the Trustee, his/her successors, permitted assigns, heirs, executors, administrators and beneficiaries.

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addressed to such party’s last known address as shown on the records of the Bank or, in the case of a notice sent to the Bank, to its principal office at Two Leonard Street, Belmont, Massachusetts 02178-2511, c/o Chairman of the Board.

16. This Agreement, and the rights of the parties hereunder, shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts and shall be deemed to be under seal.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement, in duplicate, as of the day and year first above written.


ATTEST:	BELMONT SAVINGS BANK

/s/ Raymond F. Shea	By:	/s/ W. Ronald Rossi
Clerk/Secretary		Title President & CEO

	/s/ S. Warren Farrell
	Trustee

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BELMONT SAVINGS BANK

DEFERRED COMPENSATION AGREEMENT ELECTION FORM

I, S. Warren Farrell a Trustee of Belmont Savings Bank (“Bank”) who maintains a Deferred Compensation Agreement (“Agreement”) with said Bank hereby make the following elections:

I.	Base Salary Reduction .

Pursuant to the terms of my Deferred Compensation Agreement with the Bank, I hereby elect to defer, pursuant to the terms of Section 1 of the Agreement, $10,000.00 of my trustee fees, effective January 1, 1999.

I recognize that my election to defer shall be effective for the calendar year set forth in the immediately preceding paragraph and all calendar years thereafter until I amend or revoke the election. I recognize that any such amendment or revocation can only be effective as of the beginning of the calendar year following my delivery of such amendment or revocation to the Board of Investment of the Bank.

II.

Designation of Beneficiary .

I recognize that in the event of my death after deferred compensation payments have begun to be paid to me, that the remainder of said deferred compensation payments shall be made to my beneficiary(ies) as stated below or as determined pursuant to the terms of the Agreement. I further recognize that in the event of my death while actively serving as a Trustee of the Bank, my deferred compensation payments will be made to said beneficiary(ies). I hereby designate as my beneficiary(ies) the following:

1. Primary Beneficiary: Lois Farrell

2. Contingent Beneficiary if Primary Beneficiary(ies) is not alive on the date that a payment is due under the Agreement: Theodore Farrell, Stephen Farrell & Richard Farrell (In Equal Shares).

III.

Investment Election .

Pursuant to Section 2 of the Agreement, I hereby express my desire that x the amount of my trustee fees deferrals which are paid to Allmerica Financial Life Insurance and Annuity Company shall be invested as set forth below ¨ that the amounts invested in said policy or policies be changed so as to be invested as set forth below:


Percentage			Description of Investment Vehicle

	50 %		Allmerica Select Growth
	50 %		Allmerica Equity Index
	%
	%
	%
	%
	%
	%
	%
	%

	100%	Total (must be 100%)

I understand that the deemed investment election which I have made pursuant to the Agreement shall remain in effect until such time as I submit a new Investment Election to the Board of Investment and the Board of Investment has a reasonable time to act thereon. I recognize in accordance with Section 2 of the Agreement that the Board of Investment is not required to follow my investment elections and that such Board of Investment and any member thereof shall have no liability to me for the failure to so invest my salary deferrals.

Signed this 1st day of December, 1998

/s/ S. Warren Farrell

(Signature of Trustee)

S. Warren Farrell

(Print or Type Name of Trustee)

2 Leonard Street, Belmont, MA 02478 617-484-6700

78 Trapelo Road, Belmont, MA 02478 617-489-6714

277 Trapelo Road, Belmont, MA 02478 617-489-6722

550 Arsenal Street, Watertown, MA 02472 617-926-1114

53 Mount Auburn Street, Watertown, MA 02472 617-926-1325

First Amendment to Deferred Compensation Agreement

FIRST AMENDMENT TO DEFERRED COMPENSATION AGREEMENT is made and entered into as of this 18th of September 2003, by and between Belmont Savings Bank, a Massachusetts savings bank organized under Massachusetts General Laws, Chapter 168, with its principal office and place of business at Two Leonard Street, Belmont, Massachusetts (“Bank”) and S. Warren Farrell, an individual who is currently serving as a Trustee of the Bank (“Trustee”).

WITNESSETH THAT:

WHEREAS, the Bank and the Trustee entered into a Deferred Compensation Agreement dated Dec. 1, 1998, (“Agreement”); and

WHEREAS, the Bank and the Trustee wish to amend the Agreement as hereinafter set forth;

NOW, THEREFORE, in consideration of the promises hereinafter set forth, the parties hereto mutually covenant and agree that the Agreement shall be amended as follows:

Subsection 7(c) (both paragraphs) is hereby deleted in its entirety.

In all other respects the Agreement shall continue in full force and effect.

IN WITNESS WHEREOF, the parties hereto have executed this First Amendment to Deferred Compensation Agreement, in duplicate, as of the day and year first above written.


ATTEST:	Belmont Savings Bank

/s/ Raymond F. Shea	By:	/s/ W. Ronald Rossi
Clerk/Secretary Raymond F. Shea		Title President & CEO

		/s/ S. Warren Farrell
		Trustee S. Warren Farrell


Member FDIC
Member DIF		www.belmontsavings.com

Second Amendment to Deferred Compensation Agreement

SECOND AMENDMENT TO DEFERRED COMPENSATION AGREEMENT is made and entered into as of this 19 ^th day, of December, 2005, by and between Belmont Savings Bank, a Massachusetts savings bank organized under Massachusetts General Laws, Chapter 168, with its principal office and place of business at Two Leonard Street, Belmont, Massachusetts (“Bank”) and S. Warren Farrell, an individual who serves the Bank as a Trustee (“Trustee”).

WITNESSETH THAT:

WHEREAS, the Bank and the Trustee entered into a Deferred Compensation Agreement dated December 1, 1998, which was amended by the First Amendment to Deferred Compensation Agreement (“Agreement”); and

WHEREAS, the Bank and the Trustee wish to amend the Agreement as hereinafter set forth;

NOW, THEREFORE, in consideration of the promises hereinafter set forth, the parties hereto mutually covenant and agree that the Agreement shall be amended as follows:

The last sentence of Section 1 of the Agreement is hereby deleted in its entirety.

Section 2 of the Agreement is hereby deleted in its entirety and the following section substituted therefor:

“2. Effective December 19, 2005, amounts so deferred pursuant to Section 1 and earnings thereon have been calculated as set forth in Subsection 7(a) hereof and shall be credited to a deferred compensation account for the Trustee. Thereafter, the deferred compensation account of the Trustee shall be credited with interest monthly utilizing the monthly average yield on United States Treasury Securities adjusted to a constant maturity of five years as most recently published by the Federal Reserve Board prior to December 31st in each year. Interest shall be calculated during the following calendar year based upon the rate determined as of the prior December 31st utilizing the formula set forth in the immediately preceding sentence and shall be calculated on a daily basis, and compounded and credited monthly.

Section 3 of the Agreement is hereby deleted in its entirety.

Subsections 7(a) and (b) are hereby deleted in their entirety and the following substituted therefor:

“(a) Prior to December 19, 2005, the accrued benefit of the Trustee was determined by adding to the amount of Trustees fees which were deferred pursuant to Section 1 hereof the gains or losses experienced within a Group Flexible Premium Variable Life Insurance Policy of Allmerica Financial Life Insurance and Annuity Company based upon investment selections made by the Trustee. On December 19, 2005, after notice to the Trustee, the Bank surrendered said Policy and obtained the Surrender Value thereof which, effective as of said December 19, 2005 constitutes the deferred compensation account balance of the Trustee. Subsequent to said December 19, 2005,

said deferred compensation account shall be increased by any Trustee fees deferred pursuant to Section 1 hereof thereafter and earnings calculated in accordance with Section 2 hereof.

“(b) The aggregate amount determined under Section 7(a) shall be paid to the Trustee or his beneficiary(ies), as applicable, upon the Trustee’s termination as a Trustee of the Bank or death in 60 consecutive monthly payments, subject to adjustment as set forth in Section 7(c) hereinafter set forth utilizing the payment schedule set forth in Section 4, 5 or 6 hereof, whichever is applicable.

Section 7 of the Agreement is hereby amended by adding the following Subsection 7(c) thereto:

“(c) The Bank shall pay interest on the amount determined under Section 7(a) above utilizing the most recently available monthly average yield on United States Treasury Securities adjusted to a constant maturity of five years as published by the Federal Reserve Board prior to the Trustee’s termination date or date of death, as applicable, with such interest rate to be re-determined annually thereafter on the anniversary of the Trustee’s termination date or date of death, as applicable. The monthly amount to be paid to the Trustee or his/her beneficiary, as applicable, shall be adjusted on each such anniversary date on a direct amortization basis utilizing the most recently determined interest rate and the remaining amount to be paid pursuant to Section 7(a) above.

IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment to Deferred Compensation Agreement, in duplicate, as of the day and year first above written.


ATTEST:	Belmont Savings Bank

/s/ Raymond F. Shea	By:	/s/ John A. Citrano, CFO
Clerk/Secretary		Title

		/s/ S. Warren Farrell
		Trustee

BELMONT SAVINGS BANK

DEFERRED COMPENSATION AGREEMENT ELECTION FORM

I, S. Warren Farrell a Trustee of Belmont Savings Bank (“Bank”) who maintains a Deferred Compensation Agreement (“Agreement”) with said Bank hereby make the following elections:

I.	Base Salary Reduction .

Pursuant to the terms of my Deferred Compensation Agreement with the Bank, I hereby elect to defer, pursuant to the terms of Section 1 of the Agreement, $ 60,000 of my trustee fees, effective January 1, 2005.

II.

Designation of Beneficiary .

I recognize that in the event of my death after deferred compensation payments have begun to be paid to me, that the remainder of said deferred compensation payments shall be made to my beneficiary(ies) as stated below or as determined pursuant to the terms of the Agreement. I further recognize that in the event of my death while actively serving as a Trustee of the Bank, my deferred compensation payments will be made to said beneficiary(ies). I hereby designate as my beneficiary(ies) the following:

1. Primary Beneficiary: Lois M. Farrell

2. Contingent Beneficiary if Primary Beneficiary(ies) is not alive on the date that a payment is due under the Agreement: Theodore Farrell, Stephen Farrell & Richard Farrell in equal shares.

BELMONT SAVINGS BANK

DEFERRED COMPENSATION AGREEMENT DEFERRAL FORM

BENEFICIARY DESIGNATION

I, S. Warren Farrell, a Trustee of Belmont Savings Bank (“Bank”) who maintains a Deferred Compensation Agreement (“Agreement”) with said Bank hereby make the following election:

Compensation Reduction

Pursuant to the terms of my Deferred Compensation Agreement with the Bank, I hereby elect to defer either 100% percent of $ of my Trustee fees, effective January 1,

Designation of Beneficiary

Primary Beneficiary(ies) Lois M. Farrell

Contingent Beneficiary if Primary Beneficiary(ies) is not alive on the date that a payment is due under the Agreement: Theodore Farrell, Stephen Farrell, Richard Farrell in equal shares


				Signed this 23rd day of December,
				in the year 2007.

				/s/ S. Warren Farrell
/s/ John A. Citrano
Witness

BELMONT SAVINGS BANK

Two Leonard Street

Belmont, Massachusetts 02478-2511

THIRD AMENDMENT TO DEFERRED COMPENSATION AGREEMENT

This THIRD AMENDMENT TO DEFERRED COMPENSATION AGREEMENT is made and entered into as of this 18 day, of December, 2008, by and between Belmont Savings Bank, a Massachusetts savings bank organized under Massachusetts General Laws, Chapter 168, with its principal office and place of business at Two Leonard Street, Belmont, Massachusetts (“Bank”) and S. Warren Farrell, an individual who serves the Bank as a Trustee (“Trustee”).

WITNESSETH THAT:

WHEREAS, the Bank and the Trustee entered into a Deferred Compensation Agreement dated December 1, 1998, (“Agreement”); and

WHEREAS, the Bank and the Trustee wish to amend the Agreement as hereinafter set forth;

NOW, THEREFORE, in consideration of the promises hereinafter set forth, the parties hereto mutually covenant and agree that the Agreement shall be amended as follows:

1. Section 2 of the Agreement is hereby deleted in its entirety and the following substituted therefor:

“2. Amounts so deferred pursuant to Section 1 and earnings thereon shall be credited to a deferred compensation account for the Trustee. Thereafter, the deferred compensation account of the Trustee shall be credited with interest monthly utilizing the Savings Bank Employee Retirement Association Discount Rate as most recently set by the Savings Bank Employee Retirement Association prior to December 31st in each year; provided that interest that accrues prior to December 31, 2008 shall accrue at a rate equal to the monthly average yield on United States Treasury Securities adjusted to a constant maturity of five years as most recently published by the Federal Reserve Board prior to December 31st in each year. Interest shall be calculated during the following calendar year based upon the rate determined as of the prior December 31st utilizing the formula set forth in the immediately preceding sentence and shall be calculated on a daily basis, and compounded and credited monthly.”

2. All other provisions of the Agreement shall remain in full force and effect.

IN WITNESS WHEREOF, the parties hereto have executed this THIRD Amendment to Deferred Compensation Agreement, in duplicate, as of the day and year first above written.


ATTEST:	BELMONT SAVINGS BANK

/s/ Patricia W. Hawkins	By:	/s/ John A. Citrano, CFO
Clerk/Secretary	Title

	/s/ S. Warren Farrell
	Trustee

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BELMONT SAVINGS BANK

Two Leonard Street

Belmont, Massachusetts 02478-2511

FOURTH AMENDMENT TO DEFERRED COMPENSATION AGREEMENT

This FOURTH AMENDMENT TO DEFERRED COMPENSATION AGREEMENT is made and entered into as of this 12 day of January, 2011, by and between Belmont Savings Bank, a Massachusetts stock savings bank subsidiary of BSB Bancorp MHC, with its principal office and place of business at Two Leonard Street, Belmont, Massachusetts (the “Bank”) and S. Warren Farrell, an individual who serves the Bank as a Director (the “Director”).

WITNESSETH THAT:

WHEREAS, the Bank and the Director entered into a Deferred Compensation Agreement dated December 1, 1998 (the “Agreement”); and

WHEREAS, the Bank and the Director wish to amend the Agreement as hereinafter set forth;

NOW, THEREFORE, in consideration of the promises hereinafter set forth, the parties hereto mutually covenant and agree that the Agreement shall be amended as follows:

2. Section 2 of the Agreement is hereby deleted in its entirety and the following substituted therefor:

3. The term “Trustee” in each place where it appears is hereby replaced with the term “Director”.

4. All other provisions of the Agreement shall remain in full force and effect.

IN WITNESS WHEREOF, the parties hereto have executed this Fourth Amendment to Deferred Compensation Agreement, in duplicate, as of the day and year first above written.


ATTEST:	BELMONT SAVINGS BANK

/s/ Patricia W. Hawkins	By:	/s/ Robert M. Mahoney
Clerk/Secretary	Title	President & CEO

	/s/ S. Warren Farrell
	Director

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Exhibit 10.12

BELMONT SAVINGS BANK

Two Leonard Street

Belmont, Massachusetts 02478-2511

DEFERRED COMPENSATION AGREEMENT

AGREEMENT made and entered into as of this 19 day of December, 2006, by and between Belmont Savings Bank, a Massachusetts savings bank corporation organized under Massachusetts General Laws, Chapter 168, with its principal office and place of business at Two Leonard Street, Belmont, Massachusetts (hereinafter referred to as the “Bank”) and JOHN W. GAHAN III, an individual who is currently serving as a Trustee of the Bank (hereinafter referred to as the “Trustee”).

WITNESSETH THAT:

WHEREAS, the Trustee serves as a Trustee of the Bank and provides services of a unique and valuable nature to the Bank, which services benefit the Bank and its customers; and

WHEREAS, the Bank recognizes the valuable and unique services heretofore performed for it by the Trustee and wishes to encourage his/her continued service as a Trustee; and

NOW, THEREFORE, in consideration of the promises hereinafter set forth, the parties hereto mutually covenant and agree as follows:

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(c) The monthly payments shall be subject to withholding taxes and the like to the extent required by then applicable law.

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15. This Agreement, and the rights of the parties hereunder, shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts and shall be deemed to be under seal.

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement, in duplicate, as of the day and year first above written.


ATTEST:	BELMONT SAVINGS BANK

/s/ Raymond F. Shea	By:	/s/ John A. Citrano, Senior Vice President
Clerk/Secretary		Title

	/s/ John W. Gahan III
	Trustee
		John W. Gahan III

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BELMONT SAVINGS BANK

DEFERRED COMPENSATION AGREEMENT DEFERRAL FORM

BENEFICIARY DESIGNATION

I, John W. Gahan III, a Trustee of Belmont Savings Bank (“Bank”) who maintains a Deferred Compensation Agreement (“Agreement”) with said Bank hereby make the following election:

Compensation Reduction

Pursuant to the terms of my Deferred Compensation Agreement with the Bank, I hereby elect to defer either 100% percent of my Trustee fees, effective January 1, 2007.

Designation of Beneficiary

Primary Beneficiary(ies) CATHERINE M. GAHAN

Contingent Beneficiary if Primary Beneficiary (ies) is not alive on the date that a payment is due under the Agreement: Kimberly Gahan


				Signed this 19 day of December,
				in the year 2006.

				/s/ John W. Gahan III
/s/ John A. Citrano
Witness

BELMONT SAVINGS BANK

Two Leonard Street

Belmont, Massachusetts 02478-2511

FIRST AMENDMENT TO DEFERRED COMPENSATION AGREEMENT

This FIRST AMENDMENT TO DEFERRED COMPENSATION AGREEMENT is made and entered into as of this 18 day, of December, 2008, by and between Belmont Savings Bank, a Massachusetts savings bank organized under Massachusetts General Laws, Chapter 168, with its principal office and place of business at Two Leonard Street, Belmont, Massachusetts (“Bank”) and John W. Gahan III, an individual who serves the Bank as a Trustee (“Trustee”).

WITNESSETH THAT:

WHEREAS, the Bank and the Trustee entered into a Deferred Compensation Agreement dated December 19, 2006, (“Agreement”); and

WHEREAS, the Bank and the Trustee wish to amend the Agreement as hereinafter set forth;

NOW, THEREFORE, in consideration of the promises hereinafter set forth, the parties hereto mutually covenant and agree that the Agreement shall be amended as follows:

1. Section 2 of the Agreement is hereby deleted in its entirety and the following substituted therefor:

“2. Amounts so deferred pursuant to Section 1 and earnings thereon shall be credited to a deferred compensation account for the Trustee. Thereafter, the deferred compensation account of the Trustee shall be credited with interest monthly utilizing the Savings Bank Employee Retirement Association Discount Rate as most recently set by the Savings Bank Employee Retirement Association prior to December 31st in each year; provided that interest that accrues prior to December 31, 2008 shall accrue at a rate equal to the monthly average yield on United States Treasury Securities adjusted to a constant maturity of five years as most recently published by the Federal Reserve Board prior to December 31st in each year. Interest shall be calculated during the following calendar year based upon the rate determined as of the prior December 31st utilizing the formula set forth in the immediately preceding sentence and shall be calculated on a daily basis, and compounded and credited monthly.”

2. All other provisions of the Agreement shall remain in full force and effect.

IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment to Deferred Compensation Agreement, in duplicate, as of the day and year first above written.


ATTEST:	BELMONT SAVINGS BANK

/s/ Patricia W. Hawkins	By:	/s/ John A. Citrano, CFO
Clerk/Secretary	Title

	/s/ John W. Gahan III
	Trustee

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BELMONT SAVINGS BANK

Two Leonard Street

Belmont, Massachusetts 02478-2511

SECOND AMENDMENT TO DEFERRED COMPENSATION AGREEMENT

This SECOND AMENDMENT TO DEFERRED COMPENSATION AGREEMENT is made and entered into as of this 16 day of December, 2010, by and between Belmont Savings Bank, a Massachusetts stock savings bank subsidiary of BSB Bancorp MHC, with its principal office and place of business at Two Leonard Street, Belmont, Massachusetts (the “Bank”) and John W. Gahan III, an individual who serves the Bank as a Director (the “Director”).

WITNESSETH THAT:

WHEREAS, the Bank and the Director entered into a Deferred Compensation Agreement dated (the “Agreement”); and

WHEREAS, the Bank and the Director wish to amend the Agreement as hereinafter set forth;

NOW, THEREFORE, in consideration of the promises hereinafter set forth, the parties hereto mutually covenant and agree that the Agreement shall be amended as follows;

2. Section 2 of the Agreement is hereby deleted in its entirety and the following substituted therefor:

3. The term “Trustee” in each place where it appears is hereby replaced with the term “Director”.

4. All other provisions of the Agreement shall remain in full force and effect.

IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment to Deferred Compensation Agreement, in duplicate, as of the day and year first above written.


ATTEST:	BELMONT SAVINGS BANK

/s/ Patricia W. Hawkins	By:	/s/ Robert M. Mahoney
Clerk/Secretary	Title	President & CEO

	/s/ John W. Gahan III
	Director

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Exhibit 10.13

BELMONT SAVINGS BANK

Two Leonard Street

Belmont, Massachusetts 02478-2511

DEFERRED COMPENSATION AGREEMENT

AGREEMENT made and entered into as of this 1st day of December, 1998, by and between Belmont Savings Bank, a Massachusetts savings bank corporation organized under Massachusetts General Laws, Chapter 168, with its principal office and place of business at Two Leonard Street, Belmont, Massachusetts (hereinafter referred to as the “Bank”) and Patricia W. Hawkins, an individual who is currently serving as a Trustee of the Bank (hereinafter referred to as the (“Trustee”).

WITNESSETH THAT:

WHEREAS, the Trustee serves as a trustee of the Bank and provides services of a unique and valuable nature to the Bank which services benefit the Bank and its customers; and

WHEREAS, the Bank recognizes the valuable and unique services heretofore performed for it by the Trustee and wishes to encourage his/her continued service as a Trustee; and

NOW, THEREFORE, in consideration of the promises hereinafter set forth, the parties hereto mutually covenant and agree as follows:

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(i) He/She was actively serving as a Trustee of the Bank on the date of his/her death;

(ii) He/She was totally and permanently disabled in that he/she was unable to perform substantially all of his/her duties as a Trustee of the Bank because of a physical or mental disability;

(iii) He/She had completed 5 full years of participation in the plan evidenced by this Agreement; or

(iv) He/She has attained his/her 55th birthday.

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10. Neither the Trustee, his/her spouse, nor any other beneficiary under this Agreement shall have any power or right to transfer, assign, anticipate, hypothecate or otherwise encumber any part or all of the amounts payable hereunder, nor shall such amounts be subject to seizure by any creditor of such Trustee or beneficiary, by a proceeding at law or in equity, and no such benefit shall be transferable by operation of law in the event of bankruptcy, insolvency or death of the Trustee, his/her spouse or any other beneficiary hereunder. Any such attempt at. assignment or transfer shall be void and shall terminate this Agreement, and the Bank shall thereupon have no further liability hereunder.

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16. This Agreement, and the rights of the parties hereunder, shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts and shall be deemed to be under seal.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement, in duplicate, as of the day and year first above written.


ATTEST:	BELMONT SAVINGS BANK

/s/ Raymond F. Shea	By:	/s/ W. Ronald Rossi
Clerk/Secretary		Title President & CEO

	/s/ Patricia W. Hawkins
	Trustee

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BELMONT SAVINGS BANK

DEFERRED COMPENSATION AGREEMENT ELECTION FORM

I, Patricia W. Hawkins a Trustee of Belmont Savings Bank (“Bank”) who maintains a Deferred Compensation Agreement (“Agreement”) with said Bank hereby make the following elections:

I.	Base Salary Reduction .

Pursuant to the terms of my Deferred Compensation Agreement with the Bank, I hereby elect to defer, pursuant to the terms of Section 1 of the Agreement, $9,000.00 of my trustee fees, effective January 1, 1999.

II.

Designation of Beneficiary .

I recognize that in the event of my death after deferred compensation payments have begun to be paid to me, that the remainder of said deferred compensation payments shall be made to my beneficiary(ies) as stated below or as determined pursuant to the terms of the Agreement. I further recognize that in the event of my death while actively serving as a Trustee of the Bank, my deferred compensation payments will be made to said beneficiary(ies). I hereby designate as my beneficiary(ies) the following:

1. Primary Beneficiary: David C. Hawkins

2. Contingent Beneficiary if Primary Beneficiary(ies) is not alive on the date that a payment is due under the Agreement: Mark L. Hawkins and Owen J. Hawkins (In Equal Shares)

III.

Investment Election .

Pursuant to Section 2 of the Agreement, I hereby express my desire that ¨ the amount of my trustee fees deferrals which are paid to Allmerica Financial Life Insurance and Annuity Company shall be invested as set forth below ¨ that the amounts invested in said policy or policies be changed so as to be invested as set forth below:


Percentage				Description of Investment Vehicle

	100	%		Fidelity High Income
		%
		%
		%
		%
		%
		%
		%
		%
		%

	100	%	Total (must be 100%)

Signed this 30 day of November, 1998.

/s/ Patricia W. Hawkins

(Signature of Trustee)

Patricia W. Hawkins

(Print or Type Name of Trustee)

2 Leonard Street, Belmont, MA 02478 617-484-6700

78 Trapelo Road, Belmont, MA 02478 617-489-6714

277 Trapelo Road, Belmont, MA 02478 617-489-6722

550 Arsenal Street, Watertown, MA 02472 617-926-1114

53 Mount Auburn Street, Watertown, MA 02472 617-926-1325

First Amendment to Deferred Compensation Agreement

FIRST AMENDMENT TO DEFERRED COMPENSATION AGREEMENT is made and entered into as of this 18th, of September 2003, by and between Belmont Savings Bank, a Massachusetts savings bank organized under Massachusetts General Laws, Chapter 168, with its principal office and place of business at Two Leonard Street, Belmont, Massachusetts (“Bank”) and Patricia W. Hawkins, an individual who is currently serving as a Trustee of the Bank (“Trustee”).

WITNESSETH THAT:

WHEREAS, the Bank and the Trustee entered into a Deferred Compensation Agreement dated December 1, 1998, (“Agreement”); and

WHEREAS, the Bank and the Trustee wish to amend the Agreement as hereinafter set forth;

NOW, THEREFORE, in consideration of the promises hereinafter set forth, the parties hereto mutually covenant and agree that the Agreement shall be amended as follows:

Subsection 7(c) (both paragraphs) is hereby deleted in its entirety.

In all other respects the Agreement shall continue in full force and effect.

IN WITNESS WHEREOF, the parties hereto have executed this First Amendment to Deferred Compensation Agreement, in duplicate, as of the day and year first above written.


ATTEST:	Belmont Savings Bank

/s/ Raymond F. Shea	By:	/s/ W. Ronald Rossi
Clerk/Secretary Raymond F. Shea		Title President & CEO

		/s/ Patricia W. Hawkins
		Trustee Patricia W. Hawkins

Member FDIC

Member DIF

www.belmontsavings.com

Second Amendment to Deferred Compensation Agreement

SECOND AMENDMENT TO DEFERRED COMPENSATION AGREEMENT is made and entered into as of this 19 ^th day, of December, 2005, by and between Belmont Savings Bank, a Massachusetts savings bank organized under Massachusetts General Laws, Chapter 168, with its principal office and place of business at Two Leonard Street, Belmont, Massachusetts (“Bank”) and Patricia W. Hawkins, an individual who serves the Bank as a Trustee (“Trustee”).

WITNESSETH THAT:

WHEREAS, the Bank and the Trustee wish to amend the Agreement as hereinafter set forth;

NOW, THEREFORE, in consideration of the promises hereinafter set forth, the parties hereto mutually covenant and agree that the Agreement shall be amended as follows:

The last sentence of Section 1 of the Agreement is hereby deleted in its entirety.

Section 2 of the Agreement is hereby deleted in its entirety and the following section substituted therefor:

“2. Effective December 19, 2005, amounts so deferred pursuant to Section 1 and earnings thereon have been calculated as set forth in Subsection 7(a) hereof and shall be credited to a deferred compensation account for the Trustee. Thereafter, the deferred compensation account of the Trustee shall be credited with interest monthly utilizing the monthly average yield on United States Treasury Securities adjusted to a constant maturity of five years as most recently published by the Federal Reserve Board prior to December 31 ^st in each year. Interest shall be calculated during the following calendar year based upon the rate determined as of the prior December 31 ^st utilizing the formula set forth in the immediately preceding sentence and shall be calculated on a daily basis, and compounded and credited monthly.

Section 3 of the Agreement is hereby deleted in its entirety.

Subsections 7(a) and (b) are hereby deleted in their entirety and the following substituted therefor:

said deferred compensation account shall be increased by any Trustee fees deferred pursuant to Section 1 hereof thereafter and earnings calculated in accordance with Section 2 hereof.

Section 7 of the Agreement is hereby amended by adding the following Subsection 7(c) thereto:

IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment to Deferred Compensation Agreement, in duplicate, as of the day and year first above written.


ATTEST:	Belmont Savings Bank

/s/ Raymond F. Shea	By:	/s/ John A. Citrano, CFO
Clerk/Secretary		Title

		/s/ Patricia W. Hawkins
		Trustee

BELMONT SAVINGS BANK

Two Leonard Street

Belmont, Massachusetts 02478-2511

THIRD AMENDMENT TO DEFERRED COMPENSATION AGREEMENT

This THIRD AMENDMENT TO DEFERRED COMPENSATION AGREEMENT is made and entered into as of this 18 day, of December, 2008, by and between Belmont Savings Bank, a Massachusetts savings bank organized under Massachusetts General Laws, Chapter 168, with its principal office and place of business at Two Leonard Street, Belmont, Massachusetts (“Bank”) and Patricia W. Hawkins, an individual who serves the Bank as a Trustee (“Trustee”).

WITNESSETH THAT:

WHEREAS, the Bank and the Trustee entered into a Deferred Compensation Agreement dated December 1, 1998, (“Agreement”); and

WHEREAS, the Bank and the Trustee wish to amend the Agreement as hereinafter set forth;

NOW, THEREFORE, in consideration of the promises hereinafter set forth, the parties hereto mutually covenant and agree that the Agreement shall be amended as follows:

1. Section 2 of the Agreement is hereby deleted in its entirety and the following substituted therefor:

“2. Amounts so deferred pursuant to Section 1 and earnings thereon shall be credited to a deferred compensation account for the Trustee. Thereafter, the deferred compensation account of the Trustee shall be credited with interest monthly utilizing the Savings Bank Employee Retirement Association Discount Rate as most recently set by the Savings Bank Employee Retirement Association prior to December 31st in each year; provided that interest that accrues prior to December 31, 2008 shall accrue at a rate equal to the monthly average yield on United States Treasury Securities adjusted to a constant maturity of five years as most recently published by the Federal Reserve Board prior to December 31st in each year. Interest shall be calculated during the following calendar year based upon the rate determined as of the prior December 31st utilizing the formula set forth in the immediately preceding sentence and shall be calculated on a daily basis, and compounded and credited monthly.”

2. All other provisions of the Agreement shall remain in full force and effect.

IN WITNESS WHEREOF, the parties hereto have executed this THIRD Amendment to Deferred Compensation Agreement, in duplicate, as of the day and year first above written.


ATTEST:	BELMONT SAVINGS BANK

/s/ Patricia W. Hawkins	By:	/s/ John A. Citrano, CFO
Clerk/Secretary	Title

[ILLEGIBLE], SVP	/s/ Patricia W. Hawkins
Clerk, Board of Investment	Trustee

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BELMONT SAVINGS BANK

Two Leonard Street

Belmont, Massachusetts 02478-2511

FOURTH AMENDMENT TO DEFERRED COMPENSATION AGREEMENT

This FOURTH AMENDMENT TO DEFERRED COMPENSATION AGREEMENT is made and entered into as of this 16 day of December, 2010, by and between Belmont Savings Bank, a Massachusetts stock savings bank subsidiary of BSB Bancorp MHC, with its principal office and place of business at Two Leonard Street, Belmont, Massachusetts (the “Bank”) and Patricia Hawkins, an individual who serves the Bank as a Director (the “Director”).

WITNESSETH THAT:

WHEREAS, the Bank and the Director entered into a Deferred Compensation Agreement dated (the “Agreement”); and

WHEREAS, the Bank and the Director wish to amend the Agreement as hereinafter set forth;

NOW, THEREFORE, in consideration of the promises hereinafter set forth, the parties hereto mutually covenant and agree that the Agreement shall be amended as follows:

2. Section 2 of the Agreement is hereby deleted in its entirety and the following substituted therefor:

“2. Amounts so deferred pursuant to Section 1 and earnings thereon shall be credited to a deferred compensation account for the Director. Thereafter, the. deferred compensation account of the Director shall be credited with interest monthly utilizing the Five (5) Year Certificate of Deposit Yield as published in the Wall Street Journal (hereinafter referred to as the “Wall Street Journal Yield”). If the Wall Street Journal Yield is not available, the Board of Directors of the Bank may calculate the rate of interest to be credited to the deferred compensation account of the Director based upon such other average Certificate of Deposit Yield or other method the Board of Directors of the Bank determines in its discretion. Interest shall be calculated during the following calendar year based upon the rate determined as of the prior December 31 ^st utilizing the formula set forth in the immediately preceding sentence and shall be calculated on a daily basis, and compounded and credited monthly.”

3. The term “Trustee” in each place where it appears is hereby replaced with the term “Director”.

4. All other provisions of the Agreement shall remain in full force and effect.

IN WITNESS WHEREOF, the parties hereto have executed this Fourth Amendment to Deferred Compensation Agreement, in duplicate, as of the day and year first above written.


ATTEST:	BELMONT SAVINGS BANK

/s/ John A. Citrano	By:	/s/ Patricia W. Hawkins
Clerk/Executive Committee	Title

	Patricia Hawkins
	Director

	By:	/s/ Robert M. Mahoney
	Title	President & CEO

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Exhibit 10.14

BELMONT SAVINGS BANK

Two Leonard Street

Belmont, Massachusetts 02478-2511

DEFERRED COMPENSATION AGREEMENT

AGREEMENT made and entered into as of this 30th day of November, 1998, by and between Belmont Savings Bank, a Massachusetts savings bank corporation organized under Massachusetts General Laws, Chapter 168, with its principal office and place of business at Two Leonard Street, Belmont, Massachusetts (hereinafter referred to as the “Bank”) and Robert J. Morrissey, an individual who is currently serving as a Trustee of the Bank (hereinafter referred to as the (“Trustee”).

WITNESSETH THAT:

WHEREAS, the Trustee serves as a trustee of the Bank and provides services of a unique and valuable nature to the Bank which services benefit the Bank and its customers; and

WHEREAS, the Bank recognizes the valuable and unique services heretofore performed for it by the Trustee and wishes to encourage his/her continued service as a Trustee; and

NOW, THEREFORE, in consideration of the promises hereinafter set forth, the parties hereto mutually covenant and agree as follows:

1. The Trustee may elect to defer some or all of his/her trustee fees which would otherwise be payable to him/her by the Bank. Such deferral shall be in writing and on forms provided by the Bank or reasonably acceptable to the Bank and shall be delivered to the Plan Administrator (the Plan Administrator shall be the Board of Investment of the Bank). Such deferral election shall be made prior to the beginning of each calendar year. Any such election shall be effective for the calendar year to which it relates and all subsequent calendar years unless revoked or altered by the Trustee prior to the commencement of such subsequent calendar year. Once a calendar year has commenced, any election to alter or terminate the deferral of trustee fees shall not be effective until the beginning of the next calendar year.

2. Amounts so deferred pursuant to Section 1 hereof shall be credited to a deferred compensation account for the Trustee and shall be invested in one or more Group Flexible Premium Variable Life Insurance Policies issued by Allmerica Financial Life Insurance and Annuity Company of which the Bank shall be the sole owner and beneficiary and which policy or policies shall insure the life of the Trustee. Each such policy shall provide a range of investments which may be selected by the Bank. The Trustee shall be entitled to designate which investment or investments the surrender value of the policy shall be invested in from time to time and the Bank shall be deemed to have made such investments within the policy. Any such designation of investment shall be in writing, on forms furnished by the Plan Administrator or reasonably acceptable to the Plan Administrator with any such designations or changes therein to be effective within a reasonable time after receipt thereof by the Plan Administrator. The Board of Investment may change the investment alternatives within such policy from time to time hereafter and in the event of any such change, shall notify the Trustee of the investment alternatives then available under the policy. Neither the Bank, the Plan Administrator, the Board of Investment, or any member thereof shall be liable for the results of any such investment nor the change of any such investment vehicle and the Trustee and his/her beneficiary agree to assume all risks in connection with the performance of any such investment and agree to the change of any such investment vehicle hereinafter made at the direction of the Board of Investment.

4. In consideration of the Trustee’s agreement to defer trustee fees and remain in the service of the Bank, the Bank agrees to pay to the Trustee (or his/her beneficiary, if applicable) deferred compensation in the amount determined in Section 7 below for a period of 5 years from and after the date that the Trustee’s service as a Trustee terminates (“termination date”) with such deferred compensation to be payable in equal monthly payments commencing on the first day of the calendar month following the month in which the Trustee’s termination date occurs.

5. The Bank further agrees that, in the event of the Trustee’s death prior to the completion of said 5 year period while receiving payments pursuant to Section 4 hereof, the Bank shall continue to make the remainder of said payments to the Trustee’s then living designated beneficiary, if any; if no living designated beneficiary survives the Trustee, then to the Trustee’s surviving spouse, if any; if the Trustee has no spouse at the time of his/her death, then to the living children of the Trustee, if any, in equal shares; and if there are no such living children, then to the next of kin of the Trustee, in equal shares with such monthly payments to continue during the remainder of said 5 year payout period.

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6. In further consideration of the Trustee’s deferring trustee fees and remaining in its service as a Trustee, the Bank also agrees that, in the event of the death of the Trustee while still in the active service of the Bank, the Bank shall pay deferred compensation in the amount determined in Section 7 below to the then living designated beneficiary of the Trustee (if no living designated beneficiary survives the Trustee, then to the Trustee’s surviving spouse, if any; if the Trustee has no spouse at the time of his/her death, then to the living children of the Trustee, if any, in equal shares; and if there are no such living children, then to his/her next of kin) for a period of 5 years from and after the date of the Trustee’s death, which deferred compensation shall be payable in equal monthly payments commencing with the first day of the calendar month following the month in which the Trustee’s death occurs.

(a) The Board of Investment shall first determine the Surrender Value of each Group Flexible Premium Variable Life Insurance Policy issued by Allmerica Financial Life Insurance and Annuity Company of which the Bank shall be the owner and beneficiary and which covers the life of the Trustee. Such calculation shall be made as of the Trustee’s termination date or death, as applicable (with respect to the Trustee’s death, said calculation shall be made as of the day prior to the Trustee’s death). The aggregate amount determined under this Section 7(a) shall then be paid to the Trustee or his/her beneficiary, as applicable, in 60 equal monthly payments subject to the adjustments set forth in Sections 4(b) and 4(c) hereinafter set forth.

(c) The monthly amount payable to the Trustee or his/her beneficiary, as applicable, pursuant to Sections 7(a) and 7(b) hereof shall then be increased by an additional amount (the “tax gross-up amount”) which shall be equal to the amount that the federal and state income tax liability of the Bank during each such year of the payout period shall be reduced as a result of the payment of such deferred compensation to the Trustee or his/her beneficiary, as applicable, including the reduction resulting from the amounts payable under this Section 7(c), computed without regard to any carry back or

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carry forward resulting from such payments. At the beginning of each year in the payout period, the Board of Investment shall determine in good faith the amount payable under this Section 7(c) utilizing for the purposes of such determination the taxable income of the Bank for federal and state income tax purposes and the tax rates in effect for the tax year of the Bank which most recently ended prior to the commencement of payments hereunder and prior to each anniversary of said payment commencement date.

(i) He/She was actively serving as a Trustee of the Bank on the date of his/her death;

(ii) He/She was totally and permanently disabled in that he/she was unable to perform substantially all of his/her duties as a Trustee of the Bank because of a physical or mental disability;

(iii) He/She had completed 5 full years of service as a Trustee of the Bank; or

(iv) He/She has attained his/her 55th birthday.

9. The Board of Investment of the Bank shall have full power and authority to interpret, construe and administer this Agreement. The interpretation and construction of this Agreement by the Board of Investment of the Bank, and any action taken thereunder, shall be binding and conclusive upon all parties in interest. No member of the Board of Investment shall, in any event, vote upon or take any action in connection with this Agreement if he/she is the Trustee under this or any similar Agreement. No member of the Board of Investment shall, in any event, be liable to any person for any action taken or omitted to be taken in connection with the interpretation, construction or administration of this Agreement, so long as such action or omission to act is made in good faith.

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13. This Agreement may not be amended, altered or modified, except by a written instrument signed by the parties hereto, or their respective successors or permitted assigns, and may not be otherwise terminated except as provided herein or as required by an applicable order of any regulatory agency having authority over the Bank. Notwithstanding the foregoing, the Bank may, upon giving written notice to the Trustee, terminate the Trustee’s right to defer trustee fees hereunder at any time.

15. Any notice, consent or demand required or permitted to be given under the provisions of this Agreement shall be in writing, and shall be signed by the party giving or making the same. If such notice, consent or demand is mailed to a party hereto, it shall be sent by United States certified mail, postage prepaid, return receipt requested, addressed to such party’s last known address as shown on the records of the Bank or, in the case of a notice sent to the Bank, to its principal office at Two Leonard Street, Belmont, Massachusetts 02178-2511, c/o President and Chief Trustee Officer.

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16. This Agreement, and the rights of the parties hereunder, shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts and shall be deemed to be under seal.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement, in duplicate, as of the day and year first above written.


ATTEST:	BELMONT SAVINGS BANK

/s/ Raymond F. Shea	By:	/s/ W. Ronald Rossi
Clerk/Secretary		Title	President & CEO

	/s/ Robert J. Morrissey
	Trustee Robert J. Morrissey

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BELMONT SAVINGS BANK

DEFERRED COMPENSATION AGREEMENT ELECTION FORM

I, Robert J. Morrissey a Trustee of Belmont Savings Bank (“Bank”) who maintains a Deferred Compensation Agreement (“Agreement”) with said Bank hereby make the following elections:

I.	Base Salary Reduction .

Pursuant to the terms of my Deferred Compensation Agreement with the Bank, I hereby elect to defer, pursuant to the terms of Section 1 of the Agreement, $48,000.00 of my trustee fees, effective January 1, 1998.

II.

Designation of Beneficiary .

I recognize that in the event of my death after deferred compensation payments have begun to be paid to me, that the remainder of said deferred compensation payments shall be made to my beneficiary(ies) as stated below or as determined pursuant to the terms of the Agreement. I further recognize that in the event of my death while actively serving as a Trustee of the Bank, my deferred compensation payments will be made to said beneficiary(ies). I hereby designate as my beneficiary(ies) the following:

1. Primary Beneficiary: Alyce A. Morrissey

2. Contingent Beneficiary if Primary Beneficiary(ies) is not alive on the date that a payment is due under the Agreement: Robert F. Morrissey and Elise A. Morrissey as tenants in common.

III.

Investment Election .


Percentage			Description of Investment Vehicle

	20	%	Select Value Opportunity Fund
		%
	20	%	Select Emerging Markets Fund
		%
	20	%	Equity Index Fund
		%
	20	%	Select Growth and Income Fund
		%
	20	%	Investment Grade Income Fund
		%

	100	% Total (must be 100%)

Signed this 30th day of November, 1998.

/s/ Robert J. Morrissey

(Signature of Trustee)

Robert J. Morrissey

(Print or Type Name of Trustee)

BELMONT SAVINGS BANK

DEFERRED COMPENSATION AGREEMENT ELECTION FORM

I, Robert J. Morrissey a Trustee of Belmont Savings Bank (“Bank”) who maintains a Deferred Compensation Agreement (“Agreement”) with said Bank hereby make the following elections:

I.	Base Salary Reduction .

Pursuant to the terms of my Deferred Compensation Agreement with the Bank, I hereby elect to defer, pursuant to the terms of Section 1 of the Agreement, $65,000.00 of my trustee fees, effective January 1, 2001.

II.

Designation of Beneficiary .

I recognize that in the event of my death after deferred compensation payments have begun to be paid to me, that the remainder of said deferred compensation payments shall be made to my beneficiary(ies) as stated below or as determined pursuant to the terms of the Agreement. I further recognize that in the event of my death while actively serving as a Trustee of the Bank, my deferred compensation payments will be made to said beneficiary(ies). I hereby designate as my beneficiary(ies) the following:

1. Primary Beneficiary: Alyce A. Morrissey

2. Contingent Beneficiary if Primary Beneficiary(ies) is not alive on the date that a payment is due under the Agreement: Robert F. Morrissey and Elise Morrissey as tenants in common.

III.

Investment Election .


Percentage			Description of Investment Vehicle

	30	%	Select Value Opportunity Fund
		%
	20	%	Select Emerging Markets Fund
		%
		%
		%
	30	%	Select Growth and Income Fund
		%
	20	%	Investment Grade Income Fund
		%

	100	% Total (must be 100%)

Signed this 27th day of December, 2000.

/s/ Robert J. Morrissey

(Signature of Trustee)

Robert J. Morrissey

(Print or Type Name of Trustee)

2 Leonard Street, Belmont, MA 02478 617-484-6700

78 Trapelo Road, Belmont, MA 02478 617-489-6714

277 Trapelo Road, Belmont, MA 02478 617-489-6722

550 Arsenal Street, Watertown, MA 02472 617-926-1114

53 Mount Auburn Street, Watertown, MA 02472 617-926-1325

First Amendment to Deferred Compensation Agreement

FIRST AMENDMENT TO DEFERRED COMPENSATION AGREEMENT is made and entered into as of this 18th, of September 2003, by and between Belmont Savings Bank, a Massachusetts savings bank organized under Massachusetts General Laws, Chapter 168, with its principal office and place of business at Two Leonard Street, Belmont, Massachusetts (“Bank”) and Robert J. Morrissey, an individual who is currently serving as a Trustee of the Bank (“Trustee”).

WITNESSETH THAT:

WHEREAS, the Bank and the Trustee entered into a Deferred Compensation Agreement dated November 30, 1998 (“Agreement”); and

WHEREAS, the Bank and the Trustee wish to amend the Agreement as hereinafter set forth;

NOW, THEREFORE, in consideration of the promises hereinafter set forth, the parties hereto mutually covenant and agree that the Agreement shall be amended as follows:

Subsection 7(c) (both paragraphs) is hereby deleted in its entirety.

In all other respects the Agreement shall continue in full force and effect.

IN WITNESS WHEREOF, the parties hereto have executed this First Amendment to Deferred Compensation Agreement, in duplicate, as of the day and year first above written.


ATTEST:	Belmont Savings Bank

/s/ Raymond F. Shea	By:	/s/ W. Ronald Rossi
Clerk/Secretary Raymond F. Shea		Title President & CEO

		/s/ Robert J. Morrissey
		Trustee Robert J. Morrissey


Member FDIC
Member DIF		www.belmontsavings.com

Second Amendment to Deferred Compensation Agreement

SECOND AMENDMENT TO DEFERRED COMPENSATION AGREEMENT is made and entered into as of this 19 ^th day, of December, 2005, by and between Belmont Savings Bank, a Massachusetts savings bank organized under Massachusetts General Laws, Chapter 168, with its principal office and place of business at Two Leonard Street, Belmont, Massachusetts (“Bank”) and Robert J. Morrissey, an individual who serves the Bank as a Trustee (“Trustee”).

WITNESSETH THAT:

WHEREAS, the Bank and the Trustee entered into a Deferred Compensation Agreement dated November 30, 1998, which was amended by the First Amendment to Deferred Compensation Agreement (“Agreement”); and