Blue Hills Bancorp, Inc. (Form: S-1, Received: 03/11/2014 17:10:58)

ATTEST:

BLUE HILLS BANK

President and Chief Executive Officer

As filed with the Securities and Exchange Commission on March 11, 2014

Registration No. 333-

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Blue Hills Bancorp, Inc.

Blue Hills Bank 401(k) Plan

(Exact Name of Registrant as Specified in Its Charter)


Maryland	6712	To be Applied For
(State or Other Jurisdiction of	(Primary Standard Industrial	(I.R.S. Employer
Incorporation or Organization)	Classification Code Number)	Identification Number)

320 Norwood Park South

Norwood, Massachusetts 02062

(617) 360-6520

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

Mr. William M. Parent

President and Chief Executive Officer

320 Norwood Park South

Norwood, Massachusetts 02062

(617) 360-6520

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

Copies to:

Lawrence M.F. Spaccasi, Esq.

Michael J. Brown, Esq.

Luse Gorman Pomerenk & Schick, P.C.

5335 Wisconsin Avenue, N.W., Suite 780

Washington, D.C. 20015

(202) 274-2000

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):


Large accelerated filer	¨		Accelerated filer	¨

Non-accelerated filer	x	(Do not check if a smaller reporting company)	Smaller reporting company	¨

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	28,466,813 shares	$10.00	$284,668,130 (1)	$36,666
Participation interests	590,998 interests (2)			(2)

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

(2)	The securities of Blue Hills Bancorp, Inc. to be purchased by the Blue Hills Bank 401(k) Plan are included in the amount shown for the common stock. Accordingly, in accordance with Rule 457(h)(2), no separate fee is required for the participation interests.

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 statement 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 Supplement

Interests in

SBERA 401(k) PLAN AS ADOPTED BY

BLUE HILLS BANK

Offering of Participation Interests in up to 590,998 Shares of

BLUE HILLS BANCORP, INC.

Common Stock

In connection with the conversion of Hyde Park Bancorp, MHC from the mutual to the stock form of organization, Blue Hills Bancorp, Inc., a newly formed Maryland corporation (“Blue Hills Bancorp”), is offering shares of common stock for sale at $10.00 per share in an initial public stock offering. In connection with the conversion and stock offering, Blue Hills Bancorp is allowing employees and former employees of Blue Hills Bank and employees of Nantucket Bank, a division of Blue Hills Bank, who are participants in the Savings Bank Employees Retirement Association 401(k) Plan (the “401(k) Plan”) to invest all or a portion of their accounts in stock units representing an ownership interest in Blue Hills Bancorp (“Blue Hills Bancorp Common Stock”). Participants in the 401(k) Plan have the opportunity to invest all or a portion of their accounts in stock units representing an ownership interest in common stock of Blue Hills Bancorp. Based upon the value of the 401(k) Plan assets at December 31, 2013, the trustee of the 401(k) Plan could acquire up to 590,998 shares of Blue Hills Bancorp Common Stock, at the purchase price of $10.00 per stock unit. This prospectus supplement relates to the initial election of 401(k) Plan participants to direct the trustee of the 401(k) Plan to invest all or a portion of their 401(k) Plan accounts in stock units representing an ownership interest in Blue Hills Bancorp Common Stock at the time of the stock offering.

The prospectus of Blue Hills Bancorp dated , 2014, is provided with this prospectus supplement. It contains detailed information regarding the conversion and stock offering of Blue Hills Bancorp and the financial condition, results of operations and business of Blue Hills Bank. This prospectus supplement provides information regarding the 401(k) Plan. You should read this prospectus supplement together with the prospectus and keep both for future reference.

For a discussion of risks that you should consider, see “Risk Factors” beginning on page of the prospectus.

The interests in the 401(k) Plan and the offering of the shares of Blue Hills Bancorp Common Stock have not been approved or disapproved by the Board of Governors of the Federal Reserve System, the Massachusetts Commissioner of Banks, the Securities and Exchange Commission or any other federal or state agency. Any representation to the contrary is a criminal offense.

The securities offered in this prospectus supplement are not deposits or accounts and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

This prospectus supplement may be used only in connection with offers and sales by Blue Hills Bancorp in the stock offering of Blue Hills Bancorp Common Stock acquired by the 401(k) Plan. No one may use this prospectus supplement to reoffer or resell interests in shares of Common Stock acquired through the 401(k) Plan.

You should rely only on the information contained in this prospectus supplement and the prospectus. Blue Hills Bancorp, Blue Hills Bank and the 401(k) Plan have not authorized anyone to provide you with information that is different.

This prospectus supplement does not constitute an offer to sell or solicitation of an offer to buy any securities in any jurisdiction to any person to whom it is unlawful to make an offer or solicitation in that jurisdiction. Neither the delivery of this prospectus supplement and the prospectus nor any sale of Blue Hills Bancorp Common Stock shall under any circumstances imply that there has been no change in the affairs of Blue Hills Bancorp, Blue Hills Bank, or the 401(k) Plan since the date of this prospectus supplement, or that the information contained in this prospectus supplement or incorporated by reference is correct as of any time after the date of this prospectus supplement.

The date of this prospectus supplement is , 2014.

TABLE OF CONTENTS


THE OFFERING			1

Securities Offered			1
Election to Purchase Common Stock			1
Purchase Priorities			2
Purchase in the Stock Offering and Oversubscriptions			3
Composition of the Blue Hills Bancorp Stock Account			4
Election to Purchase Common Stock in the Stock Offering through the 401(k) Plan			5
Value of 401(k) Plan Assets			5
How to Order Common Stock in the Stock Offering Through the 401(k) Plan			5
Special Investment Election Form Delivery Deadline			6
Irrevocability of Transfer Direction			7
Future Direction to Purchase and Sell Common Stock			7
Voting Rights of Common Stock			7

DESCRIPTION OF THE PLAN			8

Introduction			8
Eligibility and Participation			9
Contributions under the 401(k) Plan			9
Limitations on Contributions			10
Benefits under the 401(k) Plan			10
Withdrawals and Distributions from the 401(k) Plan			10
Investment of Contributions and Account Balances			11
Performance History and Description of Funds			12
All Asset Account.			12
Bond Account.			13
The SBERA Account.			13
Money Market Account.			13
Index 500 Account.			13
Equity Account.			13
Large Cap Value Account.			13
Small Cap Value Account.			14
Large Cap Growth Account.			14
Small Cap Growth Account.			14
International Equity Account.			14
LifePath 2020			14
LifePath 2030			14
LifePath 2040			14
LifePath 2050			14
LifePath Retirement.			14
Blue Hills Bancorp, Inc. Stock Account			15
Administration of the 401(k) Plan			16
Amendment and Termination			16
Merger, Consolidation or Transfer			16
Federal Income Tax Consequences			17
Notice of Your Rights Concerning Employer Securities			18
Additional Employee Retirement Income Security Act (“ERISA”) Considerations			19
Securities and Exchange Commission Reporting and Short-Swing Profit Liability			19
Financial Information Regarding 401(k) Plan Assets			20

LEGAL OPINION			20

THE OFFERING


Securities Offered		Blue Hills Bancorp is offering participants of the 401(k) Plan the opportunity to purchase stock units representing an indirect ownership interest (also referred to as a “participation interest”) in Blue Hills Bancorp Common Stock acquired by the 401(k) Plan. Based on the fair market value of the 401(k) Plan’s assets as of December 31, 2013, at the purchase price of $10.00 per share, the 401(k) Plan may acquire up to 590,998 shares of Blue Hills Bancorp Common Stock in the stock offering. Only employees of Blue Hills Bank, including Nantucket Bank, a division of Blue Hills Bank, may become participants in the 401(k) Plan and only participants, including former employees of with an account balance in the 401(k) Plan, may purchase stock units representing an interest in shares of Blue Hills Bancorp Common Stock in the 401(k) Plan. Your investment in stock units in connection with the stock offering through an investment in the Blue Hills Bancorp Stock Account (described below) is subject to the purchase priorities listed below under “Purchase Priorities.” Information with regard to the 401(k) Plan and you opportunity to invest in stock units through an investment in the Blue Hills Bancorp Stock Account is contained in this prospectus supplement and information with regard to the financial condition, results of operations and business of Blue Hills Bancorp and Blue Hills Bank is contained in the accompanying prospectus. The address of the principal executive office of Blue Hills Bancorp and Blue Hills Bank is 1196 River Street, Hyde Park, MA 02136. Blue Hills Bank’s telephone number at this address is (617) 361-6900. All questions about this prospectus supplement and completing the Special Investment Election Form should be addressed to Michelle Lee (Abde) at Blue Hills Bank; telephone #: (617) 360-6536; email: mlee@bluehillsbank.com . Questions about the stock offering, the prospectus, or purchasing Blue Hills Bancorp Common Stock in the stock offering outside the 401(k) Plan may be directed to the Stock Information Center toll-free, at ( ) - , Monday through Friday, a.m. through p.m., Eastern Time.

Election to Purchase Common Stock		You may elect to transfer all or a part of your 401(k) Plan account (subject to the limitations described below) to the Blue Hills Bancorp Stock Account to be used to purchase stock units representing an interest in shares of Blue Hills Bancorp Common


		Stock in the stock offering at $10.00 per share. The trustee of the 401(k) Plan will purchase Blue Hills Bancorp Common Stock at $10.00 per share, in accordance with your directions. However, such directions are subject to purchase priorities and purchase limitations, as described below. Following the stock offering, the shares of Blue Hills Bancorp common stock acquired by the trustee in the stock offering will held in an account in the 401(k) Plan titled the “Blue Hills Bancorp Stock Account.”

Purchase Priorities		All 401(k) Plan participants are eligible to subscribe for stock units representing an indirect ownership interest in Blue Hills Bancorp Common Stock in the stock offering. However, such directions are subject to the purchase priorities in the Hyde Park Bancorp, MHC Plan of Conversion and Reorganization, which provides for a subscription offering and a direct community offering. In the offering, purchase priorities, in descending order, are as follows and apply in case more shares of Blue Hills Bancorp Common Stock are ordered than are available for sale (an “oversubscription”): Subscription Offering: (1) Depositors of Blue Hills Bank, including depositors of Nantucket Bank, a division of Blue Hills Bank, with aggregate account balances of at least $50 as of the close of business on February 28, 2013, have first priority. (2) Blue Hills Bank’s tax-qualified plans, including the employee stock ownership plan and the 401(k) Plan, have second priority. (3) Employees, officers, directors, trustees and corporators of Blue Hills Bank, Hyde Park Bancorp, Inc. and Hyde Park Bancorp, MHC, who do not have a higher priority to purchase, will have third priority, to the extent there are shares remaining after satisfaction of subscriptions by persons in the priority categories above. Community Offering, if held: (4) Shares of Common Stock not purchased in the subscription offering may be offered for sale to the public in a “direct community offering,” with the following preferences: (i) natural persons (including trusts of natural persons) residing in the Massachusetts counties of Suffolk, Norfolk and Nantucket and (iv) members of the general public.


		If you fall into subscription offering categories (1) or (3), you have subscription rights to purchase Blue Hills Bancorp Common Stock in the subscription offering. If you are not eligible in the subscription offering, you may be eligible to purchase in the direct community offering, if shares remain available for sale in the direct community offering. You may use funds in the 401(k) Plan to pay for stock units representing an indirect interest in shares of Blue Hills Bancorp Common Stock. However, if you elect to purchase stock units through the 401(k) Plan and fall into subscription offering category (3) or are eligible in the direct community offering, your purchase order may be filled through priority category (2) reserved for Blue Hills Bank’s tax-qualified plans, if the offering is oversubscribed and Blue Hills Bancorp elects to allow the 401(k) Plan to purchase through this priority category. You may place an order for the purchase of stock units representing an interest in Blue Hills Bancorp Common Stock through the 401(k) Plan by using the enclosed Special Investment Election Form, to be completed and submitted in the manner described below under “How to Order Common Stock in the Stock Offering through the 401(k) Plan.” The above-listed purchase priorities will also apply to any purchases of Blue Hills Bancorp Common Stock outside of the 401(k) Plan. If you are eligible in the subscription offering, as listed above, you will separately receive an offering materials package in the mail, including a stock order form. You may use the stock order form to subscribe for shares outside of the 401(k) Plan. Please refer to the offering prospectus for information on how to make such purchases. If you wish to subscribe for shares of Blue Hills Bancorp Common Stock outside the 401(k) Plan and you are not eligible to participate in the subscription offering, you may request offering materials by calling our Stock Information Center, toll-free, at [( ) - ]. Your order would be placed in the community offering, if held. Orders received in the subscription offering take precedence over the community offering orders in the event the stock offering is over-subscribed.

Purchase in the Stock Offering and Oversubscriptions		The trustee of the 401(k) Plan will purchase shares of Blue Hills Bancorp Common Stock in the stock offering in accordance with your investment direction set forth on the Special Investment Election Form. At the conclusion of the “401(k) Offering Period” (as defined below in the Section on “How to Order Common Stock in the Stock Offering Through the 401(k) Plan”), the amount that you designate to be used to purchase stock units will be sold from your existing investment funds held in the 401(k) Plan and the proceeds transferred to a separate account maintained by the 401(k) Plan (the “Blue Hills Bancorp Stock Account”). The proceeds transferred to the Blue Hills Bancorp Stock Account will be held separately from all other 401(k) Plan assets pending the formal


		completion of the stock offering several weeks later. Prior to the completion of the stock offering, we will determine whether all, or any portion of, your order will be filled (if the offering is oversubscribed, you may not receive any, or all of, your order, depending on your purchase priority, as described above). The amount that can be used toward your order of stock units will be applied to the purchase of shares of Blue Hills Bancorp Common Stock. In the event the offering is oversubscribed, i.e. , there are more orders for Blue Hills Bancorp Common Stock than shares available for sale in the stock offering, and the trustee is unable to use the full amount allocated by you to purchase Blue Hills Bancorp Common Stock in the offering, the amount that cannot be invested in Blue Hills Bancorp Common Stock, and any interest earned on such amount, will be transferred out of the Blue Hills Bancorp Stock Account and reinvested in the existing investment funds of the 401(k) Plan, in accordance with your then existing investment elections (in proportion to your investment direction for future contributions). If you choose not to direct the investment of your 401(k) Plan account balance towards the purchase of Blue Hills Bancorp Common Stock in the stock offering, your account balances will remain in the investment funds of the 401(k) Plan as previously directed by you.

Composition of the Blue Hills Bancorp Stock Account		Shares purchased by the 401(k) Plan in the stock offering will be held by the Blue Hills Bancorp Stock Account. The Blue Hills Bancorp Stock Account is neither a mutual fund nor a diversified or managed investment option. Rather, it is merely a recordkeeping mechanism established by Savings Bank Employees Retirement Association (“SBERA”), the 401(k) Plan custodian and recordkeeper, to track the shares purchased by the participants in the stock offering through the 401(k) Plan. The Blue Hills Bancorp Stock Account will initially invest 100% of the amounts allocated to the fund (other than amounts returned to the other investment accounts due to an oversubscription) in Blue Hills Bancorp Common Stock and a stock unit will be initially valued at $10, the offering price of the Common Stock. After the closing of the stock offering, as 401(k) Plan participants begin to trade their stock units or acquire new stock units, the Blue Hills Bancorp Stock Account will maintain a cash component for liquidity purposes. Liquidity is required in order to facilitate daily transactions such as investment transfers or distributions from the Blue Hills Bancorp Stock Account. Following the stock offering,


		each day, the stock unit value of the Blue Hills Bancorp Stock Account will be determined by dividing the total market value of the Blue Hills Bancorp Stock Account at the end of the day by the total number of units held in the Blue Hills Bancorp Stock Account by all participants as of the previous day’s end. The change in stock unit value reflects the day’s change in stock price, any cash dividends accrued and the interest earned on the cash component of the Blue Hills Bancorp Stock Account, less any investment management fees. The market value and unit holdings of your account in the Blue Hills Bancorp Stock Account will be reported to you on your regular participant statements. Investment in the Blue Hills Bancorp Stock Account involves special risks common to investments in shares of Blue Hills Bancorp Common Stock. For a discussion of material risks you should consider, see the “Risk Factors” section of the accompanying prospectus and the section of the prospectus supplement called “Notice of Your Rights Concerning Employer Securities” (see below).

Election to Purchase Common Stock in the Stock Offering through the 401(k) Plan		In connection with the stock offering, the 401(k) Plan will permit you to direct the trustee to transfer all or a part of your 401(k) Plan account balance to the Blue Hills Bancorp Stock Account for the purchase of stock units representing an ownership interest in Blue Hills Bancorp Common Stock. The trustee of the 401(k) Plan will subscribe for shares of the Blue Hills Bancorp Common Stock offered for sale in the stock offering, in accordance with each participant’s direction. The trustee will pay $10.00 per share, which will be the same price paid by all other persons who purchase shares in the subscription and community offerings. In order to purchase Blue Hills Bancorp Common Stock through the 401(k) Plan, the minimum investment is $250, which will purchase 25 shares. The prospectus describes further the maximum purchase limits for investors in the stock offering.

Value of 401(k) Plan Assets		As of December 31, 2013, the market value of the assets of the 401(k) Plan was approximately $5,909,982, all of which is eligible to purchase or acquire Blue Hills Bancorp Common Stock in the offering. SBERA informed each participant of the value of his or her account balance under the 401(k) Plan as of December 31, 2013.

How to Order Common Stock in the Stock Offering Through the 401(k) Plan		Enclosed is a Special Investment Election Form on which you can elect to purchase Blue Hills Bancorp Common Stock in the stock offering. This is done by following the procedures described below. Please note the following stipulations concerning this election: • You can elect to transfer all or a portion of your account in the 401(k) Plan to the Blue Hills Bancorp Stock Account.


		• Your election is subject to a minimum purchase of 25 shares, which equals $250. • Your election, plus any stock order you placed outside the 401(k) Plan, are together subject to a maximum purchase of 60,000 shares, which equals $600,000. • The election period for the 401(k) Plan purchases begins on , 2014 and ends at p.m., Eastern Time, on , 2014 (the “401(k) Plan Offering Period”). • During the 401(k) Plan Offering Period, you will continue to have the ability to make intra-plan transfers among the various investment funds in the 401(k) Plan. However, you will not be permitted to change the investment amounts that you designated to be transferred to the Blue Hills Bancorp Stock Account to purchase stock in the stock offering. • The amount you elect to transfer to the Blue Hills Bancorp Stock Account will be held separately by the 401(k) Plan until the formal closing of the stock offering occurs, which will be several weeks after the completion of the 401(k) Plan Offering Period. Once transferred to the Blue Hills Bancorp Stock Account, you will not have access to this money and this money will not be available for distributions, loans or withdrawals until it is used to purchase Blue Hills Bancorp Common Stock. If you wish to purchase Blue Hills Bancorp Common Stock in the stock offering through the 401(k) Plan, you should indicate that decision on your Special Investment Election Form. If you do not wish to make an election, you should check box E on the Special Investment Election Form. You may return the form in one of several ways: (1) using the enclosed self-addressed envelope, (2) by faxing it to (617) - or (3) by delivering it in person or by email at to Michelle Lee (Abde) at Blue Hills Bank, 1196 River Street, Hyde Park, MA 02136, to be received no later than p.m., Eastern Time, on , 2014.

Special Investment Election Form Delivery Deadline		If you wish to purchase stock units representing an ownership interest in Blue Hills Bancorp Common Stock through the 401(k) Plan, you must return your Special Investment Election Form to Michelle Lee (Abde) at Blue Hills Bank, 1196 River Street, Hyde


		Park, MA 01236, to be received no later than p.m., Eastern Time, on , , 2014. You may return your Special Investment Election Form by hand delivery, mail (using the self-addressed envelope), email (sending it to mlee@bluehillsbank.com) or by faxing it to (617) - so long as it is received by the time specified.

Irrevocability of Transfer Direction		Once you make an election to purchase shares of Blue Hills Bancorp Common Stock in the stock offering through the 401(k) Plan, you may not change your election . Your election is irrevocable .

Future Direction to Purchase and Sell Common Stock		You will be able to purchase or sell shares of Blue Hills Bancorp Common Stock through the 401(k) Plan after the stock offering. In accordance with 401(k) Plan procedures, you may direct that your future contributions or your account balance in the 401(k) Plan be transferred to Blue Hills Bancorp Stock Account to be used to purchase shares of Blue Hills Bancorp Common Stock. After the stock offering, to the extent that shares are available, the trustee of the 401(k) Plan will acquire shares of Blue Hills Bancorp Common Stock at your election in open market transactions at the prevailing price, which may be less than or more than $10.00 per share. You may change your investment allocation on a daily basis. Special restrictions may apply to purchasing shares of Blue Hills Bancorp Common Stock by the participants who are subject to the provisions of Section 16(b) of the Securities Exchange Act of 1934, as amended, relating to the purchase and sale of securities by officers, directors and principal stockholders of Blue Hills Bancorp. Please note that if you are an officer of Blue Hills Bank who is restricted by the regulations of the Board of Governors of the Federal Reserve System from selling shares of Blue Hills Bancorp Common Stock acquired in the stock offering for one year, the Blue Hills Bancorp Common Stock that you purchased in the stock offering will not be tradable until the one-year trading restriction has lapsed.

Voting Rights of Common Stock		The Blue Hills Bancorp Stock Account is included in the SBERA Trust. The Plan Administrator, Thomas Forese, Jr., President of SBERA, will vote all shares of Blue Hills Bancorp Common Stock in the Blue Hills Bancorp Stock Account, except for votes involving a change in control, in which case the participants and beneficiaries will vote using a pass-through arrangement. The Plan Administrator has a fiduciary obligation to vote the shares of Blue Hills Bancorp Common Stock, including the interests credited to your account, solely in the best interests of the Plan’s participants and beneficiaries.

DESCRIPTION OF THE PLAN

Introduction

Blue Hills Bank originally adopted the 401(k) Plan effective as of July 1, 1994 and has been restated, effective as of January 1, 2014. The 401(k) Plan is a tax-qualified plan with a cash or deferred compensation feature established in accordance with the requirements under Section 401(a) and Section 401(k) of the Internal Revenue Code of 1986, as amended (the “Code”).

Blue Hills Bank intends that the 401(k) Plan, in operation, will comply with the requirements under Section 401(a) and Section 401(k) of the Code. Blue Hills Bank will adopt any amendments to the 401(k) Plan that may be necessary to ensure the continuing qualified status of the 401(k) Plan under the Code and applicable Treasury Regulations.

Employee Retirement Income Security Act (“ERISA”). The 401(k) Plan is an “individual account plan” other than a “money purchase pension plan” within the meaning of ERISA. As such, the 401(k) Plan is subject to all of the provisions of Title I (Protection of Employee Benefit Rights) and Title II (Amendments to the Code Relating to Retirement Plans) of ERISA, except for the funding requirements contained in Part 3 of Title I of ERISA which by their terms do not apply to an individual account plan (other than a money purchase plan). The 401(k) Plan is not subject to Title IV (Plan Termination Insurance) of ERISA. The funding requirements contained in Title IV of ERISA are not applicable to participants or beneficiaries under the 401(k) Plan.

Reference to Full Text of 401(k) Plan. The following portions of this prospectus supplement summarize certain provisions of the 401(k) Plan. They are not complete and are qualified in their entirety by the full text of the 401(k) Plan. Copies of the 401(k) Plan are available to employees for review by filing a request with the Michelle Lee, Senior Vice President – Human Resources, at Blue Hills Bank, 1196 River Street, Hyde Park, MA 01236. Alternatively, you may also receive a copy of the Summary Plan Description to the 401(k) Plan by either going on to your account at www.sbera.com and downloading a copy or by filing a request with Ms. Lee. You are urged to read carefully the full text of the 401(k) Plan.

Eligibility and Participation

Employees of Blue Hills Bank and Nantucket Bank, a division of Blue Hills Bank, are eligible to participate in elective deferrals, matching contributions, and safe harbor non-elective contributions, in the 401(k) Plan without regard to having attained a specific age or period of service. However, an employee is only eligible to receive an employer discretionary contribution after completing one (1) year of service with Blue Hills Bank in which the employee has 1,000 hours of service. Employees who satisfy the eligibility requirements are eligible to enter the 401(k) Plan on the first day of month after satisfying the eligibility requirements. The plan year (“Plan Year”) is January 1 to December 31.

As of December 31, 2013, there were approximately 128 active employee participants and 47 former employee participants with account balances in the 401(k) Plan.

Contributions under the 401(k) Plan

Elective deferrals . You are permitted to defer, on a pre-tax basis, from 1% to 75% of your compensation, subject to certain restrictions imposed by the Code, and to have that amount contributed to the 401(k) Plan on your behalf. For purposes of the 401(k) Plan, “compensation” means your W-2 compensation received from Blue Hills Bank and subject to income tax withholding at the source, with all pre-tax contributions included. In 2014, the annual compensation of each participant taken into account under the 401(k) Plan is limited to $260,000. (Limits established by the Internal Revenue Service are subject to increase pursuant to an annual cost-of-living adjustment, as permitted by the Code). You may elect to modify the amount contributed to the 401(k) Plan on the first day of the beginning of the next payroll period. You may stop making contributions to the Plan at any time. You may not make a separate deferral election on any bonus payment. Your deferral election for salary deferral contributions will also apply to any bonus received by you for the plan year.

Employer Matching Contributions . In its discretion, Blue Hills Bank may make matching contributions to the 401(k) Plan equal to a uniform percentage of your elective deferrals. Blue Hills Bank will advise you of the percentage of matching contribution that will be made for a given year.

Employer Discretionary Contributions . In its discretion, Blue Hills Bank may make contributions to the 401(k) Plan equal to up to 2% of your salary. Blue Hills Bank will advise you of the percentage that will be made for a given year. You need to be employed at the end of the plan year in order to receive an allocation of the employer discretionary contribution, if made.

Safe Harbor Non-Elective Contributions. Commencing with the 2014 plan year, Blue Hills Bank will make a safe harbor non-elective contribution to employees who satisfy the eligibility requirements for the 401(k) Plan. The share harbor non-elective contribution is equal to 3% of each participant’s eligible compensation. The safe harbor non-elective contribution will be contributed by Blue Hills Bank at the end of the plan year, however, you do not have to be employed on the last day of the plan year in order to share in the safe harbor non-elective contribution. Each year, Blue Hills Bank will advise participants of its intention to make the safe-harbor non-elective contribution and the amount of such contribution. The

safe harbor non-elective contribution will be contributed by Blue Hills Bank to the SBERA Account, however, you may elect to move the contribution to another investment vehicle once it has been contributed to the 401(k) Plan.

Rollover Contributions . You are permitted to make rollover contributions to the 401(k) Plan.

Limitations on Contributions

Limitations on Employee Elective deferrals . For the Plan Year beginning January 1, 2014, the amount of your before-tax contributions may not exceed $17,500 per calendar year. In addition, if you are at least 50 years old in 2014, you will be able to make a “catch-up” contribution of up to $5,500 in addition to the $17,500 limit. The “catch-up” contribution limit may be adjusted periodically by law, based on changes in the cost of living. Contributions in excess of these limits, as applicable to you, are known as excess deferrals. If you defer amounts in excess of these limitations, as applicable to you, your gross income for federal income tax purposes will include the excess in the year of the deferral. In addition, unless the excess deferral is distributed before April 15 of the following year, it will be taxed again in the year distributed. Income on the excess deferral distributed by April 15 of the immediately succeeding year will be treated, for federal income tax purposes, as earned and received by you in the tax year in which the contribution is made.

Contribution Limit . Generally, the law imposes a maximum limit on the amount of contributions you may receive under the 401(k) Plan. This limit applies to all contributions to the 401(k) Plan, including your elective deferrals and all other employer contributions made on your behalf during the year, excluding catch-up contributions, earnings and any transfers/rollovers. For the Plan Year beginning January 1, 2014, this total cannot exceed the lesser of $52,000 or 100% of your annual base compensation or, if applicable, $57,500 or 100% of your annual base compensation, including catch-up contributions.

Benefits under the 401(k) Plan

Vesting . At all times, you have a fully vested, non forfeitable interest in the salary deferral contributions you have made to the 401(k) Plan. Employer safe harbor non-elective contributions and matching contributions, if made, are also 100% vested. Employer discretionary contributions, if made, are subject to a three-year cliff vesting schedule in which such amounts vest at the rate of 0% during the first two years of service and then become 100% vested upon the completion of three years of service. In the event of your death, disability, attainment of the normal retirement date (date of your 65 ^th birthday) or attainment of the early retirement date (date you attain age 55 and complete at least 10 years of service), your employer contributions would immediately become fully vested.

Withdrawals and Distributions from the 401(k) Plan

Applicable federal law requires the 401(k) Plan to impose substantial restrictions on the right of a 401(k) Plan participant to withdraw amounts held for his or her benefit under the 401(k) Plan prior to the participant’s termination of employment with the employer.

Withdrawals upon Termination . You may request a distribution from your account following your termination of employment. Following your termination, you may elect to leave your account balance in the 401(k) Plan and defer commencement of receipt of your vested balance until no later than April 1 of the calendar year following the calendar year in which you attain age 70 ¹ ⁄ ₂ .

Withdrawal upon Disability . If you are disabled in accordance with the definition of disability under the 401(k) Plan, you will be entitled to the same withdrawal rights as if you had terminated your employment.

Withdrawal upon Death . If you die while you are a participant in the 401(k) Plan, the value of your entire account will be payable to your beneficiary in accordance with the 401(k) Plan.

In-Service Distribution . While employed, you are eligible to receive an in-service distribution of your elective deferrals from your account after your attainment of age 59 ¹ ⁄ ₂ . However, you may not receive an in-service withdrawal of the following contributions: safe-harbor non-elective contributions, vested matching contributions or vested employer discretionary contributions. You may receive an in-service withdrawal of your rollover contributions, if any, at any time.

Hardship . In the event you incur a financial hardship, you may request an in-service withdrawal of a portion of your 401(k) Plan account, in accordance with the procedures set forth in the 401(k) Plan.

Loans . You are eligible to obtain a loan from the Plan, in accordance with Blue Hills Bank’s established loan procedures.

Form of Distribution . The normal form of benefit under the 401(k) Plan is a lump-sum distribution. Alternatively, when you are eligible for a distribution, you can request distributions in installment payments (not to exceed the life expectancy of you and your designated beneficiary). You can also receive a partial payment from the 401(k) Plan, in an amount not less than $1,000.

Investment of Contributions and Account Balances

All amounts credited to your accounts under the 401(k) Plan are held in the Savings Bank Employees Retirement Association Trust (the “Trust”) which is administered by SBERA. Prior to the effective date of the offering, you were provided the opportunity to direct the investment of your account into one of the following investment options:

All Asset Account

Bond Account

The SBERA Account

Money Market Account

Index 500 Account

Equity Account

Large Cap Value Account

Small Cap Value Account

Large Cap Growth Account

Small Cap Growth Account

International Equity Account

LifePath 2020

LifePath 2030

LifePath 2040

LifePath 2050

LifePath Retirement

Performance History and Description of Funds

The following provides performance data with respect to the investment options available under the 401(k) Plan:


Fund	Expense Ratio* (%)		Performance as of December 31, 2013
Fund	Expense Ratio* (%)		Total Return YTD (%)		Total Return 1 Yr (%)		Total Return Annualized 3 Yrs (%)		Total Return Annualized 5 Yrs (%)		Total Return Annualized 10 Yrs (%)
All Asset Account		0.87		-1.46		-1.46		5.23		10.25		5.85
Bond Account		0.31		-2.02		-2.02		3.98		5.41		5.03
The SBERA Account		0.64		18.47		18.47		10.90		13.21		6.76
Money Market Account		0.19		0.00		0.00		0.05		0.17		1.71
Index 500 Account		0.06		32.32		32.32		16.09		17.98		7.43
Equity Account		0.52		29.35		29.35		14.14		17.18		8.11
Large Cap Value Account		0.63		30.53		30.53		14.96		16.74		7.36
Small Cap Value Account		1.03		36.64		36.64		17.54		17.75		7.72
Large Cap Growth Account		0.61		33.07		33.07		15.99		18.34		8.15
Small Cap Growth Account		1.06		47.63		47.63		20.30		25.35		12.28
International Equity Account		0.48		13.56		13.56		3.84		9.14		5.66
Life Path 2020		0.40		10.44		10.44		7.64		11.61		5.93
Life Path 2030		0.40		14.61		14.61		8.92		13.18		6.16
Life Path 2040		0.40		18.07		18.07		9.90		14.40		6.26
Life Path 2050		0.40		21.09		21.09		10.72		11.61		n/a
Life Path Retirement		0.40		6.63		6.63		6.58		9.82		5.67

*	Includes Annual Investment Management Fees and Annual Custody Fees where applicable.

For more information about the available underlying investment options, including all charges and expenses, please consult a fund prospectus. Fund prospectuses and additional information relating to your retirement plan can be obtained by contacting your plan administrator. Before investing, carefully consider the fund’s investment objectives, risks, charges and expenses. The fund prospectus contains this and other important information. Read the prospectus carefully before investing.

The following is a description of each of the 401(k) Plan’s investment funds and other investments:

All Asset Account.

This account seeks to produce returns which are 500 basis points above the Consumer Price Index (CPI) which measures inflation experienced by consumers in their day-to-day living

expenses. The account employs an active, multi-market strategy that fundamentally seeks to provide necessary long-term real inflation-adjusted returns, along with significant asset class diversification. The strategy is designed as a fund-of-funds that allocates among a full range of strategies.

Bond Account.

This account seeks to match the performance of the Barclays Capital Aggregate Bond Index. This account utilizes a fund-of-funds approach to achieve its returns. The account utilizes a passive asset allocation approach which maintains a set relative percentage across the three underlying managers. The underlying managers utilize a combination of passive and active management to active their return objectives. This account is administered by the Savings Bank Employees Retirement Association.

The SBERA Account.

This account seeks to produce the results that parallel the performance of the SBERA Defined Benefit Plan Assets which is to provide investors with long-term growth of capital and income. This account is a passively managed “full replication” fund-of-funds approach of holding the investments of the SBERA Defined Benefit Assets. The account is rebalanced monthly. This account is administered by the Savings Bank Employees Retirement Association.

Money Market Account.

This account seeks the maximum current income that is consistent with the preservation of capital and liquidity. The account intends to maintain a consistent net cash value of $1.00 per unit. Assets are invested in short-term securities issued by the U.S. Government and agencies of the U.S. Government, with maturities of six months or less. This account is managed by State Street.

Index 500 Account.

This account seeks to provide long-term growth of capital and income investment results that parallel the performance of the Standard & Poor’s 500 Composite Stock Price Index. This is a passively managed low-cost index account which uses a “full replication” approach where the portfolio holds all of the 500 underlying securities in proportion to their weighting in the index thus minimizing the potential return variance from the index. This account is administered by State Street Global Advisors.

Equity Account.

This account seeks long-term growth of capital and income by investing in common stocks of domestic and foreign companies. This is a fund-of-funds account managed by eight underlying investment managers. The investment managers are selected by SBERA’s Board of Trustees and are subject to change periodically. Each investment manager’s allocation is rebalanced monthly with their strategic asset allocation determined by the Board.

Large Cap Value Account.

This account seeks a superior total return with only a moderate degree of risk. The account seeks to achieve its investment objective by investing primarily in U.S. Dollar-denominated equity securities of companies with market capitalizations of at least $2 Billion. The account seeks to achieve a total return greater than the S&P 500 over a full market cycle and indices comprised of value-oriented stocks over shorter periods. The account may invest in cash and cash equivalents.

Small Cap Value Account.

This account seeks to outperform the Russell 2000 Value Index. This account uses a disciplined, team-oriented approach which aims to generate consistent above-average risk-adjusted performance, focusing on valuation, fundamentals, and catalyst identification as a cornerstone to successful value investing, while maintaining the integrity of its specific investment mandates. The portfolio manager emphasizes free cash flow, balance sheets and long-term market potential.

Large Cap Growth Account.

This account seeks long-term returns in excess of the target benchmark by offering investors a highly disciplined, mathematical investment strategy while reducing the risk of significant under performance. The account’s strategies are based on a rigorous mathematical theory that seeks to demonstrate by combining securities with high relative volatility, but low covariance, a portfolio could be constructed that would outperform a benchmark over the long term.

Small Cap Growth Account.

This account seeks to outperform the Russell 2000 Growth Index. This account uses bottoms-up, research-intensive approach to identify small cap growth stocks with the greatest potential to achieve superior price appreciation over a 12 to 18 month time horizon. In general, the portfolio manager constructs a 100-120 stock portfolio consisting of companies with market capitalizations between $50 Million and 1.5 Billion that have demonstrated the ability to grow earnings and sales at least 10% per year.

International Equity Account.

This account seeks to match the performance of the MSCI EAFE index and thus provide long-term capital and income appreciate. This account utilizes a fund-of-funds approach to achieve its returns. The account utilizes a passive asset allocation approach which maintains a set relative percentage across the three underlying managers. The account utilizes a combination of passive and active underlying managers to achieve its returns. This account is administered by the Savings Bank Employees Retirement Association.

LifePath 2020

LifePath 2030

LifePath 2040

LifePath 2050

This account is designed to be complete investment solutions for individuals who would rather leave their 401k account asset allocation decisions to a professional investment manager. Each account utilizes a predetermined mix of specific asset classes with frequent re-balancing to the funds target allocation. The number is the approximate year when an individual plans to start withdrawing money. As the reference year in the fund nears, the asset allocation automatically becomes more conservative.

LifePath Retirement.

This account is designed to be complete investment solutions for individuals who would rater leave their 401k account asset allocation decisions to a professional investment manager. Each account utilizes a predetermined mix of specific asset classes with frequent re-balancing to the

funds target allocation. As the reference year in the fund nears, the asset allocation automatically becomes more conservative. This account is intended for individuals already in their retirement and are currently withdrawing money.

Blue Hills Bancorp, Inc. Stock Account

In connection with the stock offering, the Plan now offers the Blue Hills Bancorp, Inc. Stock Account as an additional choice to the investment options described above. Blue Hills Bancorp, Inc. Stock Account invests primarily in the shares of common stock of Blue Hills Bancorp, Inc. In connection with the stock offering, you may, in the manner described earlier, direct the trustee to invest up to 100% of your Plan account in Blue Hills Bancorp, Inc. Stock Account as a one-time special election. Subsequent to the stock offering, you may elect to invest all or a portion of your elective deferral contributions or matching contributions in Blue Hills Bancorp, Inc. Stock Account; you may also elect to transfer into Blue Hills Bancorp, Inc. Stock Account all or a portion of your accounts currently invested in other funds under the Plan.

Blue Hills Bancorp, Inc. Stock Account consists primarily of investments in the shares of common stock of Blue Hills Bancorp, Inc. After the stock offering, the trustee of the Plan will use all amounts held by it in Blue Hills Bancorp, Inc. Stock Account to purchase additional shares of common stock of Blue Hills Bancorp, Inc.

As of the date of this prospectus supplement, there is no established market for Blue Hills Bancorp, Inc. common stock. Accordingly, there is no record of the historical performance of Blue Hills Bancorp, Inc. Stock Account. Performance of Blue Hills Bancorp, Inc. Stock Account depends on a number of factors, including the financial condition and profitability of Blue Hills Bancorp, Inc. and Sunshine State Federal Savings and Loan Association and market conditions for shares of Blue Hills Bancorp, Inc. common stock generally.

Investments in Blue Hills Bancorp, Inc. Stock Account involve special risks common to investments in the shares of common stock of Blue Hills Bancorp, Inc. In making a decision to invest all or a part of your account balance in the Blue Hills Bancorp, Inc. Stock Account, you should carefully consider the information set forth on page [18] of this prospectus supplement under “The Importance of Diversifying Your Retirement Savings.”

For a discussion of material risks you should consider, see the “Risk Factors” section of the accompanying prospectus and the section of the prospectus supplement called “Notice of Your Rights Concerning Employer Securities” (see below).

An investment in any of the investment options listed above is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. As with any investment option, there is always a risk that you may lose money on your investment in any of the investment options listed above.

Administration of the 401(k) Plan

The Trustee and Custodian . The trustee of the 401(k) Plan is the Savings Bank Employees Retirement Association (“SBERA”). SBERA serves as trustee for all the investment funds under the Plan, including during the offering period for Blue Hills Bancorp Common Stock. Following the offering period, SBERA will also serve as the trustee of the Blue Hills Bancorp Stock Account.

Plan Administrator . Pursuant to the terms of the Plan, the Plan is administered by the Plan administrator, SBERA. The address of the Plan Administrator is 12 Gill Street, Suite 2600, Woburn, Massachusetts 01801-1721, telephone number (781) 938-6559. The Plan Administrator is responsible for the administration of the Plan, interpretation of the provisions of the Plan, prescribing procedures for filing applications for benefits, preparation and distribution of information explaining the Plan, maintenance of Plan records, books of account and all other data necessary for the proper administration of the Plan, preparation and filing of all returns and reports relating to the Plan which are required to be filed with the U.S. Department of Labor and the Internal Revenue Service, and for all disclosures required to be made to participants, beneficiaries and others under Sections 104 and 105 of ERISA.

Reports to 401(k) Plan Participants . The 401(k) Plan administrator will furnish you a statement at least quarterly showing the balance in your account as of the end of that period, the amount of contributions allocated to your account for that period, and any adjustments to your account to reflect earnings or losses (if any).

Amendment and Termination

It is the intention of Blue Hills Bank to continue the 401(k) Plan indefinitely. Nevertheless, Blue Hills Bank may terminate the 401(k) Plan at any time. If the 401(k) Plan is terminated in whole or in part, then regardless of other provisions in the 401(k) Plan, you will have a fully vested interest in your accounts. Blue Hills Bank reserves the right to make any amendment or amendments to the 401(k) Plan which do not cause any part of the trust to be used for, or diverted to, any purpose other than the exclusive benefit of participants or their beneficiaries; provided, however, that Blue Hills Bank may make any amendment it determines necessary or desirable, with or without retroactive effect, to comply with ERISA.

Merger, Consolidation or Transfer

In the event of the merger or consolidation of the 401(k) Plan with another plan, or the transfer of the trust assets to another plan, the 401(k) Plan requires that you would, if either the 401(k) Plan or the other plan terminates, receive a benefit immediately after the merger, consolidation or transfer which is equal to or greater than the benefit you would have been entitled to receive immediately before the merger, consolidation or transfer, if the 401(k) Plan had then terminated.

Federal Income Tax Consequences

The following is a brief summary of the material federal income tax aspects of the 401(k) Plan. You should not rely on this summary as a complete or definitive description of the material federal income tax consequences relating to the 401(k) Plan. Statutory provisions change, as do their interpretations, and their application may vary in individual circumstances. Finally, the consequences under applicable state and local income tax laws may not be the same as under the federal income tax laws. Please consult your tax advisor with respect to any distribution from the 401(k) Plan and transactions involving the 401(k) Plan.

As a “tax-qualified retirement plan,” the Code affords the 401(k) Plan special tax treatment, including:

(1)

the sponsoring employer is allowed an immediate tax deduction for the amount contributed to the 401(k) Plan each year;

(2)

participants pay no current income tax on amounts contributed by the employer on their behalf; and

(3)

earnings of the 401(k) Plan are tax-deferred, thereby permitting the tax-free accumulation of income and gains on investments.

Blue Hills Bank will administer the 401(k) Plan to comply with the requirements of the Code as of the applicable effective date of any change in the law.

Lump-Sum Distribution . A distribution from the 401(k) Plan to a participant or the beneficiary of a participant will qualify as a lump-sum distribution if it is made within one taxable year, on account of the participant’s death, disability or separation from service, or after the participant attains age 59 ¹ ⁄ ₂ , and consists of the balance credited to participants under the 401(k) Plan and all other profit sharing plans, if any, maintained by Blue Hills Bank. The portion of any lump-sum distribution required to be included in your taxable income for federal income tax purposes consists of the entire amount of the lump-sum distribution, less the amount of after-tax contributions, if any, you have made to this 401(k) Plan and any other profit sharing plans maintained by Blue Hills Bank, which is included in the distribution.

Blue Hills Bancorp Common Stock Included in Lump-Sum Distribution . If a lump-sum distribution includes Blue Hills Bancorp Common Stock, the distribution generally will be taxed in the manner described above, except that the total taxable amount may be reduced by the amount of any net unrealized appreciation with respect to Blue Hills Bancorp Common Stock; that is, the excess of the value of Blue Hills Bancorp at the time of the distribution over its cost or other basis of the securities to the trust. The tax basis of Blue Hills Bancorp Common Stock, for purposes of computing gain or loss on its subsequent sale, equals the value of Blue Hills Bancorp Common Stock at the time of distribution, less the amount of net unrealized appreciation. Any gain on a subsequent sale or other taxable disposition of Blue Hills Bancorp Common Stock, to the extent of the amount of net unrealized appreciation at the time of distribution, will constitute long-term capital gain, regardless of the holding period of Blue Hills Bancorp Common Stock. Any gain on a subsequent sale or other taxable disposition of Blue

Hills Bancorp Common Stock, in excess of the amount of net unrealized appreciation at the time of distribution, will be considered long-term capital gain. The recipient of a distribution may elect to include the amount of any net unrealized appreciation in the total taxable amount of the distribution, to the extent allowed by regulations to be issued by the Internal Revenue Service.

Distributions: Rollovers and Direct Transfers to Another Qualified Plan or to an IRA . You may roll over virtually all distributions from the 401(k) Plan to another qualified plan or to an individual retirement account in accordance with the terms of the other plan or account.

Notice of Your Rights Concerning Employer Securities

Federal law provides specific rights concerning investments in employer securities. Because you may in the future have investments in Blue Hills Bancorp Common Stock under the 401(k) Plan, you should take the time to read the following information carefully.

Your Rights Concerning Employer Securities . The 401(k) Plan must allow you to elect to move any portion of your account that is invested in Blue Hills Bancorp Common Stock from that investment into other investment alternatives under the 401(k) Plan. You may contact the 401(k) Plan administrator shown above for specific information regarding this right, including how to make this election. In deciding whether to exercise this right, you will want to give careful consideration to the information below that describes the importance of diversification. All of the investment options under the 401(k) Plan are available to you if you decide to diversify out of your investment in Blue Hills Bancorp Common Stock.

The Importance of Diversifying Your Retirement Savings . To help achieve long-term retirement security, you should give careful consideration to the benefits of a well-balanced and diversified investment portfolio. Spreading your assets among different types of investments can help you achieve a favorable rate of return, while minimizing your overall risk of losing money. This is because market or other economic conditions that cause one category of assets, or one particular security, to perform very well often cause another asset category, or another particular security, to perform poorly. If you invest more than 20% of your retirement savings in any one company or industry, your savings may not be properly diversified. Although diversification is not a guarantee against loss, it is an effective strategy to help you manage investment risk.

In deciding how to invest your retirement savings, you should take into account all of your assets, including any retirement savings outside of the 401(k) Plan. No single approach is right for everyone because, among other factors, individuals have different financial goals, different time horizons for meeting their goals, and different tolerance for risk. Therefore, you should carefully consider the rights described here and how these rights affect the amount of money that you invest in employer common stock through the 401(k) Plan.

It is also important to periodically review your investment portfolio, your investment objectives, and the investment options under the 401(k) Plan to help ensure that your retirement savings will meet your retirement goals.

Additional Employee Retirement Income Security Act (“ERISA”) Considerations

As noted above, the 401(k) Plan is subject to certain provisions of ERISA, including special provisions relating to control over the 401(k) Plan’s assets by participants and beneficiaries. The 401(k) Plan’s feature that allows you to direct the investment of your account balances is intended to satisfy the requirements of Section 404(c) of ERISA relating to control over plan assets by a participant or beneficiary. The effect of this is two-fold. First, you will not be deemed a “fiduciary” because of your exercise of investment discretion. Second, no person who otherwise is a fiduciary, such as Blue Hills Bank, the 401(k) Plan administrator, or the 401(k) Plan’s trustee is liable under the fiduciary responsibility provision of ERISA for any loss which results from your exercise of control over the assets in your 401(k) Plan account.

Because you will be entitled to invest a portion of your account balance in the 401(k) Plan in Blue Hills Bancorp Common Stock, the regulations under Section 404(c) of the ERISA require that the 401(k) Plan establish procedures that ensure the confidentiality of your decision to purchase, hold, or sell employer securities, except to the extent that disclosure of such information is necessary to comply with federal or state laws not preempted by ERISA. These regulations also require that your exercise of voting and similar rights with respect to Blue Hills Bancorp Common Stock be conducted in a way that ensures the confidentiality of your exercise of these rights.

Securities and Exchange Commission Reporting and Short-Swing Profit Liability

Section 16 of the Securities Exchange Act of 1934 imposes reporting and liability requirements on officers, directors, and persons beneficially owning more than 10% of public companies such as Blue Hills Bancorp. Section 16(a) of the Securities Exchange Act of 1934 requires the filing of reports of beneficial ownership. Within 10 days of becoming an officer, director or person beneficially owning more than 10% of the shares of Blue Hills Bancorp, a Form 3 reporting initial beneficial ownership must be filed with the Securities and Exchange Commission. Changes in beneficial ownership, such as purchases, sales and gifts generally must be reported periodically, either on a Form 4 within two business days after the change occurs, or annually on a Form 5 within 45 days after the close of Blue Hills Bancorp’s fiscal year. Discretionary transactions in and beneficial ownership of Blue Hills Bancorp Common Stock by officers, directors and persons beneficially owning more than 10% of Blue Hills Bancorp Common Stock generally must be reported to the Securities and Exchange Commission by such individuals.

In addition to the reporting requirements described above, Section 16(b) of the Securities Exchange Act of 1934 provides for the recovery by Blue Hills Bancorp of profits realized by an officer, director or any person beneficially owning more than 10% of Blue Hills Bancorp Common Stock resulting from non-exempt purchases and sales of Blue Hills Bancorp Common Stock within any six-month period.

The Securities and Exchange Commission has adopted rules that provide exemptions from the profit recovery provisions of Section 16(b) for all transactions in employer securities within an employee benefit plan, provided certain requirements are met. These requirements generally involve restrictions upon the timing of elections to acquire or dispose of employer securities for the accounts of Section 16(b) persons.

Except for distributions of Blue Hills Bancorp Common Stock due to death, disability, retirement, termination of employment or under a qualified domestic relations order, persons affected by Section 16(b) are required to hold shares of Blue Hills Bancorp Common Stock distributed from the 401(k) Plan for six months following such distribution and are prohibited from directing additional purchases of Blue Hills Bancorp Common Stock for six months after receiving such a distribution.

Financial Information Regarding 401(k) Plan Assets

Financial information representing the net assets available for 401(k) Plan benefits and the change in net assets available for 401(k) Plan benefits at December 31, 2013, is available upon written request to the 401(k) Plan administrator at the address shown above.

LEGAL OPINION

The validity of the issuance of Blue Hills Bancorp Common Stock has been passed upon by Luse Gorman Pomerenk & Schick, P.C., Washington, D.C., which the firm acted as special counsel in connection with Blue Hills Bancorp’s stock offering.

PROSPECTUS

BLUE HILLS BANCORP, INC.

(Proposed Holding Company for Blue Hills Bank)

Up to 24,150,000 Shares of Common Stock

Blue Hills Bancorp, Inc., a Maryland corporation, is offering shares of common stock for sale in connection with the conversion of Hyde Park 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 Global Market under the symbol “BHBK” upon conclusion of the stock offering. There is currently no public market for the shares of our common stock.

We are offering up to 24,150,000 shares of common stock for sale on a best efforts basis. We may sell up to 27,772,500 shares of common stock because of demand for the shares or changes in market conditions, without resoliciting subscribers. We must sell a minimum of 17,850,000 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 2.5% of the shares sold in the offering and an amount of cash such that the total contribution will equal $7.0 million.

We are offering the shares of common stock in a “subscription offering.” Depositors of Blue Hills Bank and Nantucket Bank, a division of Blue Hills Bank, with aggregate account balances of at least $50 as of the close of business on February 28, 2013 will have first priority rights to buy our shares of common stock. Employees, officers, trustees, directors and corporators of Blue Hills Bank, Hyde Park Bancorp, Inc. and Hyde Park Bancorp, MHC also have rights to purchase shares in the subscription offering, subject to the priority rights of depositors and Blue Hills Bank’s employee stock ownership plan. Shares of common stock not purchased in the subscription offering may be offered for sale to the general public in a “community offering.” Any shares of common stock not purchased in the subscription or community offerings may be offered to the public through a syndicate of broker-dealers, referred to in this prospectus as the “syndicated community offering”, or, in a separate firm commitment underwritten public offering.

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 600,000 shares, and no person by himself or with an associate or group of persons acting in concert may purchase more than 1,000,000 shares in the offering. The subscription offering is expected to expire at 12:00 noon, Eastern time, on [expiration date]. Orders received before or on [corporator meeting date] will be rejected, and orders received after 12:00 noon, Eastern Time, on [expiration date] will be rejected unless we extend this expiration date. We may extend the subscription offering and/or community offering without notice to you until [extension date], unless we receive regulatory approval to extend the offering to a later date, which may not be beyond [final extension date]. 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 27,772,500 shares or decreased to fewer than 17,850,000 shares. If the offering is extended past [extension date], we will resolicit subscribers. You will have the opportunity to confirm, change or cancel your order within a specified period of time. If you do not respond during that period, we will promptly return your funds with interest at [interest rate]% per annum or cancel your deposit account withdrawal authorization. If the number of shares to be sold is increased to more than 27,772,500 shares or decreased to less than 17,850,000 shares, we will promptly return your funds with interest at [interest rate]% per annum or cancel your deposit account withdrawal authorization. We may then resolicit all subscribers, giving them an opportunity to place a new order within a specified period of time. Funds received during the offering will be held in a segregated account at Blue Hills Bank, and will earn interest at our passbook savings rate, which is currently [interest rate]% per annum.

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

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

Please read the section of this prospectus entitled “ Risk Factors ” beginning on page 15.

OFFERING SUMMARY

Price: $10.00 per Share


	Minimum		Midpoint		Maximum		Adjusted Maximum
Number of shares		17,850,000		21,000,000		24,150,000		27,772,500
Gross offering proceeds	$	178,500,000	$	210,000,000	$	241,500,000	$	277,725,000
Estimated offering expenses (excluding selling agent fees and expenses)	$	1,580,200	$	1,580,200	$	1,580,200	$	1,580,200
Estimated selling agent fees and expenses (1)	$	1,476,643	$	1,713,438	$	1,959,232	$	2,241,896
Estimated net proceeds	$	175,452,157	$	206,706,363	$	237,960,568	$	273,902,904
Estimated net proceeds per share	$	9.83	$	9.84	$	9.85	$	9.86

(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 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’ compensation for this offering. If all shares of common stock are sold in the syndicated community offering, the selling agent commissions and expenses would be $9.5 million at the minimum, $12.8 million at the maximum and $14.7 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 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 ( ) - .

K EEFE , B RUYETTE & W OODS

A Stifel Company

The date of this prospectus is , 2014.

[MAP SHOWING MARKET AREA APPEARS ON INSIDE FRONT COVER]

TABLE OF CONTENTS


	Page
SUMMARY		1
RISK FACTORS		15
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA		30
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS		32
HOW WE INTEND TO USE THE PROCEEDS FROM THE OFFERING		34
OUR POLICY REGARDING DIVIDENDS		36
MARKET FOR THE COMMON STOCK		37
HISTORICAL AND PRO FORMA REGULATORY CAPITAL COMPLIANCE		38
CAPITALIZATION		40
PRO FORMA DATA		42
COMPARISON OF VALUATION AND PRO FORMA INFORMATION WITH AND WITHOUT THE CHARITABLE FOUNDATION		47
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		49
BUSINESS OF BLUE HILLS BANCORP		70
BUSINESS OF BLUE HILLS BANK		70
SUPERVISION AND REGULATION		103
TAXATION		115
MANAGEMENT OF BLUE HILLS BANCORP, INC.		117
THE CONVERSION; PLAN OF DISTRIBUTION		136
BLUE HILLS BANK FOUNDATION		159
RESTRICTIONS ON ACQUISITION OF BLUE HILLS BANCORP, INC.		163
DESCRIPTION OF CAPITAL STOCK		167
TRANSFER AGENT		169
EXPERTS		169
LEGAL MATTERS		169
WHERE YOU CAN FIND ADDITIONAL INFORMATION		169
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS OF HYDE PARK 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 Blue Hills Bancorp, Inc. and Blue Hills Bank unless the context indicates another meaning. In addition, we sometimes refer to Blue Hills Bancorp, Inc. as “Blue Hills Bancorp,” and to Blue Hills Bank as the “Bank.”

Blue Hills Bank

Blue Hills Bank is a Massachusetts-chartered savings bank headquartered in Hyde Park, Massachusetts. We were organized in 1871, and reorganized into the mutual holding company structure in 2008. Blue Hills Bank is currently the wholly owned subsidiary of Hyde Park Bancorp, Inc., a Massachusetts corporation, which is the wholly owned subsidiary of Hyde Park Bancorp, MHC, a Massachusetts mutual holding company. On a consolidated basis, as of December 31, 2013, Hyde Park Bancorp, MHC had total assets of $1.3 billion, total loans of $773.0 million, total deposits of $915.2 million and total equity of $171.5 million. We provide financial services to individuals, families and small to mid-size businesses through our nine full-service branch offices located in Brookline, Dedham, Hyde Park, Nantucket, Norwood and West Roxbury, Massachusetts. Our three branches in Nantucket were acquired in January 2014 (“Nantucket Branch Acquisition”), and operate under the name Nantucket Bank, a division of Blue Hills Bank. Our primary deposit-taking market includes Norfolk, Suffolk and Nantucket Counties in Massachusetts, and our primary lending market is more broadly based in eastern Massachusetts.

Blue Hills Bank’s business consists primarily of accepting deposits from the general public and investing those deposits, together with funds generated from operations and borrowing, in one- to four- family residential mortgage loans, commercial real estate loans, commercial business loans and investment securities. To a much lesser extent we have home equity loans and lines of credit and consumer loans. We offer a full range of deposit accounts, including passbook and statement savings accounts, certificates of deposit, money market accounts, commercial and regular checking accounts and IRAs. Through our bundled products, we offer reduced fees and higher interest rates on relationship checking and savings accounts and certificates of deposit.

In 2010, Blue Hills Bank created the Blue Hills Bank Charitable Foundation, whose mission is to strengthen the Bank’s communities by providing funding to eligible non-profit organizations in those communities. As part of the conversion, the Bank intends to establish and fund a new charitable foundation, Blue Hills Bank Foundation (the “Foundation”), to further our philanthropic endeavors.

Since 2010, the Bank has significantly revised its strategic direction and operating strategy, its executive management team and its board of directors. The Bank appointed William M. Parent as its Chief Executive Officer and President in mid-2010 and developed a strategic plan to transform the Bank into a full service community bank serving the needs of retail and business customers residing and operating in eastern Massachusetts. The Bank has appointed seven new directors since 2010, many of whom have direct experience with larger financial institutions or the local communities served by the Bank. In addition, the Bank has hired a new executive management team, with eight of its executive officers joining the Bank since 2011. All of the Bank’s new executive officers have experience with larger financial institutions and commercial lending organizations.

Blue Hills Bank’s main banking office is located at 1196 River Street, Hyde Park, Massachusetts 02136. Our telephone number at this address is (617) 361-6900. Our website addresses are www.bluehillsbank.com and www.nantucketbank.com. Information on our websites is not incorporated into this prospectus and should not be considered part of this prospectus.

Blue Hills Bancorp, Inc.

Blue Hills Bancorp is a newly formed Maryland corporation that will own all of the outstanding shares of common stock of Blue Hills Bank upon completion of the mutual-to-stock conversion of Hyde Park Bancorp, MHC and the offering. Blue Hills Bancorp has not engaged in any business to date.

The executive and administrative office of Blue Hills Bancorp is located at 320 Norwood Park South, Norwood, Massachusetts 02062. Our telephone number at this address is (617) 361-6900.

Our Organizational Structure

Blue Hills Bank was chartered in 1871 as a Massachusetts mutual savings bank named Hyde Park Savings Bank to serve the financial needs of businesses and individuals in the local community. In 2008, the Bank reorganized into a two-tier mutual holding company structure resulting in the creation of Hyde Park Bancorp, MHC, and in 2011, Hyde Park Bancorp, Inc., the Bank’s mid-tier holding company, was formed. In 2011, the Bank was rebranded “Blue Hills Bank.”

Hyde Park Bancorp, MHC currently owns 100% of the outstanding shares of common stock of Hyde Park Bancorp, Inc., and Hyde Park Bancorp, Inc. owns 100% of the outstanding shares of common stock of Blue Hills Bank. As a mutual holding company, Hyde Park Bancorp, MHC has no stockholders. Hyde Park Bancorp has not issued any shares of common stock to the public, although in September 2011 Hyde Park Bancorp issued 18,724 shares of senior non-cumulative perpetual preferred stock, series A, to the U.S. Treasury as part of the Small Business Lending Fund Program for an aggregate price of $18,724,000.

Pursuant to the terms of Hyde Park Bancorp, MHC’s plan of conversion, Hyde Park Bancorp, MHC will convert from a mutual holding company to the stock holding company form of organization. Upon the completion of the conversion, Hyde Park Bancorp, MHC and Hyde Park Bancorp, Inc. will cease to exist, and Blue Hills Bank will be a wholly owned subsidiary of Blue Hills Bancorp, Inc., a Maryland corporation.

The board of corporators of Hyde Park 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 new charitable foundation.

Business Strategy

Our business strategy is to create a diversified community bank that builds long-term value for our shareholders while offering an array of products and services that our communities and the small to mid-sized businesses operating in those communities require. In order to achieve this strategy, we have built our lending infrastructure during the past few years by adding approximately 34 employees involved in loan origination, underwriting and servicing. We intend to continue to build and leverage that infrastructure to allow us to offer highly competitive products in a customer-centric manner—where and when most convenient to the customer. We intend to continue to grow our lending platforms by offering conforming and non-conforming residential loans, commercial business loans and commercial real estate loans with an emphasis on the small to mid-size market. The key elements of our strategy are as follows:

•

Expanding our loan portfolio, including one- to four-family residential, commercial business and commercial real estate loans and additional related lending groups. We intend to support loan growth by expanding our geographic coverage through the addition of lenders or lending teams operating in our market area and adjacent markets that have experience in the small to mid-sized commercial business and commercial real estate markets, and to the extent necessary, establishing loan production offices;

•

Increasing and repositioning our core funding capabilities through expansion of individual consumer banking relationships and increased deployment of cash management products to small and mid-sized businesses to capture multi-faceted relationships with our customers;

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Utilizing online and mobile banking products and services to reach targeted consumer and business customers outside of our current branch network;

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Expanding our branch network through select de novo branching and opportunistic acquisitions of other financial institutions and branches thereof (although we currently have no understandings or agreements for acquisitions);

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Maintaining our investment securities portfolio. Although we have diminished the proportion of assets invested in our securities portfolio in recent years, we expect to maintain a portion of our current investment securities portfolio as a means of net income generation unless additional liquidity is needed to fund loan growth;

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Implementing our fee income initiative which includes adjusting our product-related fees relative to market competitors where appropriate, identifying additional fee income opportunities from our deposit services and products and increasing fee income from business customers through our expanded cash management capabilities. We also believe opportunities exist to expand our fee income through the introduction of non-deposit investment and insurance products or selective acquisitions of businesses that generate non-interest income; and

•

Maintaining an integrated risk management capability that appropriately manages the total risks of our organization.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Business Strategy” for a more complete 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 through the implementation of our business strategy outlined above;

•

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

•

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

•

Build our capital base to allow us to take advantage of acquisition opportunities which may arise in our market area and adjacent markets; and

•

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

As of December 31, 2013, Blue Hills Bank was considered “well capitalized” for regulatory purposes.

Terms of the Conversion and the Offering

Under Hyde Park Bancorp, MHC’s plan of conversion, our organization will convert to a fully public stock holding company form of organization. In connection with the conversion, we are offering between 17,850,000 and 24,150,000 shares of common stock to eligible depositors of Blue Hills Bank and Nantucket Bank, a division of Blue Hills Bank, to our employee stock ownership plan, to employees, officers, trustees, directors and corporators of Blue Hills Bank, Hyde Park Bancorp, Inc. and Hyde Park Bancorp, MHC, 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 27,722,500 as a result of demand for the shares or changes in market conditions, without resoliciting subscribers. Unless the number of shares of common stock to be offered for sale is increased to more than 27,722,500 or decreased to less than 17,850,000, 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, our marketing advisor in the offering, will use its best efforts to assist us in selling shares of our common stock. Keefe, Bruyette & Woods is not obligated to purchase any shares of common stock being offered for sale in the subscription and community offerings.

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 Blue Hills Bank and Nantucket Bank, a division of Blue Hills Bank, with aggregate account balances of at least $50 as of the close of business on February 28, 2013.

•

Second, to Blue Hills 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 8.0% of the shares of common stock issued in the offering (including shares contributed to our charitable foundation).

•

Third, to employees, officers, directors, trustees and corporators of Blue Hills Bank, Hyde Park Bancorp, Inc. and Hyde Park 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 our local community. The community offering, if any, may occur concurrently with, during or promptly after the subscription offering. We also may offer for sale shares of common stock not purchased in the subscription offering or the community offering through a syndicated or firm commitment underwritten offering. Keefe, Bruyette & Woods will act as sole book-running manager for the syndicated or firm commitment underwritten offering. We have the right to accept or reject, in our sole discretion, orders received in the community offering or syndicated or firm commitment underwritten offering, and our interpretation of the terms and conditions of the plan of conversion will be final.

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 February 28, 2013. 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 and certification 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 Blue Hills Bancorp, assuming the conversion and the offering are completed. RP Financial, LC., our independent appraiser, has estimated that, as of February 14, 2014, the market value of the shares to be issued in the offering (including shares to be contributed to the Foundation) ranged from $183.0 million to $247.5 million, with a midpoint of $215.3 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 17,850,000 shares to 24,150,000 shares. If market conditions so warrant, the market value of the shares can be increased to a maximum, as adjusted, market value of $284.7 million and the number of shares offered for sale increased to a maximum, as adjusted, of 27,772,500 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 10 comparable public companies for this analysis.

RP Financial, LC. considered adjustments to the pro forma market value based on a comparison of Blue Hills Bancorp with the peer group. RP Financial, LC. advised the board of directors that the valuation conclusion took into consideration that relative to the peer group a slight upward adjustment was applied for financial condition, a slight upward adjustment was applied for asset growth, a slight upward adjustment was applied for primary market area and a moderate downward adjustment was

applied for profitability growth and viability of earnings. RP Financial LC. made no adjustments for dividends, liquidity of the shares, marketing of the stock issuance, management, or the effect of government regulations and regulatory reform. The slight upward adjustment applied for financial condition was due to Blue Hills Bancorp’s more favorable credit quality measures, more favorable balance sheet liquidity and stronger pro forma capital position. The slight upward adjustment applied for asset growth was due to Blue Hills Bancorp’s stronger historical loan growth relative to the peer group’s comparable loan growth rate, and Blue Hills Bancorp’s greater pro forma leverage capacity compared to the peer group. The slight upward adjustment applied for primary market area took into consideration Suffolk County’s relatively strong population growth and relatively low unemployment rate compared to the peer group’s primary market area counties. The moderate downward adjustment applied for profitability, growth and viability of earnings took into consideration Blue Hills Bancorp’s less favorable efficiency ratio, higher ratio of loan loss provisions as a percent of average assets and lower core return on equity on a pro forma basis relative to the comparable peer group measures.

The appraisal peer group consists of the companies listed in the table below, all of which are traded on the Nasdaq Stock Market. Asset sizes are as of September 30, 2013, except as noted.


Company Name	Ticker Symbol		Headquarters	Total Assets (1)
OceanFirst Financial Corp.		OCFC	Toms River, NJ	$	2,286
First Connecticut Bancorp, Inc.		FBNK	Farmington, CT		1,992
ESSA Bancorp, Inc.		ESSA	Stroudsburg, PA		1,372
SI Financial Group, Inc.		SIFI	Willimantic, CT		1,369
Westfield Financial Inc.		WFD	Westfield, MA		1,271
Fox Chase Bancorp Inc.		FXCB	Hatboro, PA		1,107
Cape Bancorp, Inc.		CBNJ	Cape May Court House, NJ		1,074
Ocean Shore Holding Co.		OSHC	Ocean City, NJ		1,043
BSB Bancorp, Inc.		BLMT	Belmont, MA		1,023
TF Financial Corp.		THRD	Newtown, PA		833

(1)	As of September 30, 2013, or the most recent quarter end available.

The following table presents a summary of selected pricing ratios for Blue Hills Bancorp 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. Blue Hills Bancorp’s pro forma pricing ratios are based on earnings for the twelve months ended December 31, 2013 and book value as of December 31, 2013 and the peer group’s pricing ratios are based on earnings for the twelve months ended September 30, 2013 and book value as of September 30, 2013. 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 31.6% on a price-to-book value basis, and a discount of 34.9% on a price-to-tangible book value basis. Blue Hills Bancorp’s price-to-core earnings multiples were not meaningful (NM), as the result of negative pro forma core earnings throughout the valuation range. 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
Blue Hills Bancorp, Inc. (pro forma)
Maximum, as adjusted		NM		71.99	%		74.79	%
Maximum		NM		68.21	%		71.12	%
Midpoint		NM		64.31	%		67.29	%
Minimum		NM		59.67	%		62.74	%
Valuation of peer group companies using stock prices as of February 14, 2014
Averages		19.84		103.80	%		108.65	%
Medians		15.28		99.68	%		109.18	%

(1)

Price-to-earnings multiples calculated by RP Financial, LC. in the independent appraisal are based on an estimate of “core” or recurring earnings on a trailing twelve month basis for the twelve months ended December 31, 2013 for Blue Hills Bancorp, Inc. and on a trailing twelve month basis for the twelve months ended September 30, 2013 for the peer group companies.

NM = Not meaningful

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 Blue Hills Bancorp’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 Blue Hills Bancorp 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 Blue Hills Bancorp 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. 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.

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, 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, may purchase more than 600,000 shares ($6,000,000) 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 1,000,000 shares ($10,000,000):

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

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companies, trusts or other entities in which you are a trustee, director, 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—Additional 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:

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

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

Blue Hills 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 Blue Hills Bank line of credit or a third-party check to pay for shares of common stock. Please do not submit cash.

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 Blue Hills Bank deposit accounts, provided that the stock order form is received after [corporator meeting date] but before 12:00 noon, Eastern time, on [expiration date], which is the end of the subscription offering period. Orders received before or on [corporator meeting date] will be rejected, and orders received after 12:00 p.m., Eastern time, on [expiration date] will be rejected unless we extend this expiration date. 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 , Massachusetts. We will not accept stock order and certification 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 Blue Hills 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 Blue Hills 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. We must 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 stock order and certification form. We expect stock certificates to be sent to purchasers by first-class mail on or about the day the stock offering closes. Trading in the stock typically begins 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—Approvals Required.” 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 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.

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 17,850,000 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 regulatory approval to extend the offering beyond [extension date].

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. If the offering is extended past [extension date], we will resolicit subscribers. You will have the opportunity to confirm, change or cancel your order within a specified period of time. If you do not respond during that period, we will promptly return your funds with interest at [interest rate]% per annum or cancel your deposit account withdrawal authorization.

Possible Change in the Offering Range

RP Financial, LC. will update its appraisal before we complete the offering. If RP Financial, LC. determines that our pro forma market value has increased, we may sell up to 27,772,500 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 Foundation) is either below $178,500,000 or above $277,725,000, 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, the 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 Hyde Park 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 [interest rate]% 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 Blue Hills Bank, to use approximately 8.3% 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 approximately 7.9% of the proceeds to fund the redemption of $18.7 million of preferred stock, to use approximately 0.4% of the proceeds to fund the cash contribution to the Foundation and to retain the remainder of the net proceeds from the offering. Therefore, assuming we sell 24,150,000 shares of common stock in the stock offering, and we have net proceeds of $238.0 million, we intend to invest $119.0 million in Blue Hills Bank, loan $19.8 million to our employee stock ownership plan through a subsidiary to fund its purchase of our shares of common stock, contribute $963,000 in cash to the Foundation, repurchase $18.7 million in preferred stock and retain the remaining $79.5 million of the net proceeds.

Prior to the completion of the conversion, we intend to redeem the $18,724,000 of preferred stock that Hyde Park Bancorp, Inc. issued to the U.S. Treasury as part of the Small Business Lending Fund Program. While we expect to redeem the preferred stock shortly prior to the completion of the conversion, our decision to redeem the shares is, in part, based on the expected receipt of the proceeds of the offering. There is no premium or penalty associated with the redemption of the preferred stock.

We may also use the funds we retain to invest in securities, to pay cash dividends to stockholders, to repurchase shares of common stock, to build our capital base to allow us to take advantage of acquisition opportunities in our market area and adjacent markets, and for other general corporate purposes, including depositing funds with, or making additional capital contributions to, Blue Hills Bank. Blue Hills Bank may use the net proceeds it receives from us to increase its loan portfolio through the origination of residential loans, commercial business loans and commercial real estate loans, add new products and services including expanded cash management products for small and mid-sized companies, expand our branch network through select de novo and acquisition opportunities, acquire fee income businesses that complement our current product capabilities, invest in investment securities permitted by our investment policy, or for other general corporate purposes. Blue Hills Bank currently has no understandings or agreements to acquire any new fee income businesses or branches.

See “How We Intend to Use the Proceeds from the Offering” on page 34 of this prospectus.

Our Contribution of Shares of Common Stock to the Foundation

To further our commitment to our local community, we intend to establish and fund a new charitable foundation as part of the conversion and stock offering. The new charitable foundation, Blue Hills Bank Foundation, will complement our existing charitable organization. The establishment and funding of the Foundation has been approved by the Board of Trustees of Hyde Park Bancorp, MHC, and the Boards of Directors of Hyde Park Bancorp, Inc., Blue Hills Bancorp and Blue Hills Bank. In addition, the establishment and funding of the Foundation is subject to the approval of the corporators of Hyde Park 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 Foundation, we intend to contribute to the Foundation shares of our common stock equal to 2.5% of the shares sold in the offering and an amount of cash such that the total contribution will equal $7.0 million. At the minimum, midpoint, maximum and maximum, as adjusted, of the offering range, we would contribute to the Foundation 446,250, 525,000, 603,750 and 694,313 shares of common stock and approximately $2.5 million, $1.8 million, $963,000 and $57,000 in cash, respectively. As a result of the contribution, we expect to record an after-tax expense of approximately $4.2 million during the quarter in which the stock offering is completed.

The 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 Foundation will:

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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 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 Foundation. For a further discussion of the financial impact of the Foundation, including its effect on those who purchase shares in the offering, see “Risk Factors—The contribution to the Foundation will dilute your ownership interest and adversely affect net income in 2014”, “Risk Factors—Our contribution to the Foundation may not be tax deductible, which could reduce our profits”, “Comparison of Valuation and Pro Forma Information With and Without the Foundation” and “Blue Hills Bank 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 directors and officers, together with their associates, to subscribe for 590,500 shares ($5.9 million) of common stock in the offering, or 3.3% of the shares to be sold at the minimum of the offering range. The purchase price paid by our directors and 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 Directors and Officers” for more information on the proposed purchases of our shares of common stock by our directors and 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 8.0% 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 8.0% 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			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)			Issuance of Shares for Stock Benefit Plans			At Minimum of Offering Range		At Adjusted Maximum of Offering Range
											(Dollars in thousands)
Employee stock ownership plan		1,463,700		2,277,345		8.00	%		N/A		$	14,637	$	22,773
Stock awards		731,850		1,138,673		4.00			3.85	%		7,319		11,387
Stock options		1,829,625		2,846,681		10.00			9.09	%		6,093		9,479

Total		4,025,175		6,262,699		22.00	%		12.28	%	$	28,048	$	43,640

(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 $3.33 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.

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 Blue Hills 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 Global Market under the symbol “BHBK”. Keefe, Bruyette & Woods 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 Hyde Park Bancorp, MHC, Hyde Park Bancorp, Inc., Blue Hills Bank, Blue Hills Bancorp, 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 Hyde Park Bancorp, MHC and the Boards of Directors of Blue Hills Bancorp and Blue Hills Bank have approved the plan of conversion and the establishment and funding of the Foundation. We have filed applications with respect to the conversion with the Massachusetts Commissioner of Banks and the Federal Reserve Board, and the Massachusetts Commissioner of Banks and the Federal Reserve Board have each authorized us to commence the offering. However, the final approval of the Massachusetts Commissioner of Banks and the Federal Reserve Board is required before we can consummate the conversion and issue shares of common stock. 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 Hyde Park 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 ( ) - , Monday through Friday between :00 a.m. and :00 p.m., Eastern time, or visit the Stock Information Center located at , Massachusetts, Monday through Friday between :00 a.m. and :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 JUNE , 2014, IN ACCORDANCE WITH FEDERAL LAW, NO PROSPECTUS WILL BE MAILED OR HAND-DELIVERED ANY LATER THAN FIVE DAYS OR TWO DAYS, RESPECTIVELY, PRIOR TO JUNE , 2014.

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, our board of directors approved a change in our strategic direction that contemplated growth in assets and liabilities over the next several years. Specifically, the plan provided for growth by: building a lending origination and servicing platform that could increase our residential, commercial business and commercial real estate loans; adding additional related lending groups operating in our market area and adjacent market areas; expanding our branch network through select de novo and acquisition opportunities; and increasing fee income, including through the opportunistic acquisition of fee income businesses that complement our current product capabilities while improving the revenue contribution of fee income from existing customers. We have added employees and incurred substantial additional expenses due to the implementation of our strategic plan, including salaries and operating expenses related to updated branches, a new senior management team, new lending officers and related support staff, new third-party managers for our investment portfolio, acquisition-related expenses, as well as significant investments to improve our online and mobile capabilities for consumer and business banking, and marketing costs relating to rebranding. Many of these increased expenses are considered fixed expenses. Unless we can successfully implement our strategic plan and grow our interest-earning asset base, our financial condition and results of operations will be negatively affected by these increased costs.

The successful implementation of our strategic plan will require, among other things, that we leverage our operating costs through increased loan and deposit market share within our current markets and expand into new adjacent markets, continue to increase our core funding and decrease our reliance on higher priced certificates of deposit, and increase our fee income through increased deposit services and cash management services. Our ability to grow successfully will depend on several other factors that may not be within our control, including continued favorable market conditions in the communities we serve, 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 and commercial business loan portfolios. While we believe we have the management resources, marketing platform and internal systems in place to successfully manage our future growth, growth opportunities and lower cost deposit sources 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. Furthermore, we are a regulated entity and our regulators periodically review and oversee the pace and quality of our growth in assets and liabilities, offering of new products and services and geographic expansion. Regulatory authorities may encourage or require faster growing banks to slow the pace of growth and expansion if regulatory concerns develop.

Our loan portfolio contains a significant portion of loans that are unseasoned. It is difficult to judge the future performance of unseasoned loans.

Our net loan portfolio has grown to $765.3 million at December 31, 2013, from $201.6 million at December 31, 2010. A portion of this increase is due to increases in commercial real estate and commercial business loans through our own originations and from purchases of and participations in loans originated by other financial institutions. It is difficult to assess the future performance of these loans recently added to our portfolio because our relatively limited experience with such loans does not provide us with a significant payment history from which to judge future collectability. These loans may experience higher delinquency or charge-off levels than our historical loan portfolio experience, which could adversely affect our future performance.

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

We intend to continue to grow our commercial real estate and commercial business loan portfolio. At December 31, 2013, $356.4 million, or 46.1% of our total loan portfolio consisted of commercial real estate loans (including commercial construction loans) and commercial business loans, compared to $8.6 million, or 4.2% of our total loan portfolio at December 31, 2010. Commercial real estate and commercial business 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 commercial business loans depends on the successful management and operation of the borrower’s properties or businesses, repayment of such loans can be affected by adverse conditions in the local real estate market or economy. Commercial real estate and commercial business 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 commercial business loan portfolios increase, the corresponding risks and potential for losses from these loans may also increase.

Further, if we foreclose on a commercial real estate or construction loan, our holding period for the collateral may be longer than for one- to four-family residential mortgage loans because there are fewer potential purchasers of the collateral. Accordingly, if we make any errors in judgment in the collectability of our commercial real estate loans, any resulting charge-offs may be larger on a per loan basis than those incurred with our residential or consumer loan portfolios.

Our performance depends on key personnel.

Our performance depends largely on the efforts and abilities of our senior officers and the members of our board of directors. Our business model depends on the experience and expertise of our senior management team, directors and lending staff. Several of these individuals have been involved in the commercial banking business for much of their professional careers. Our performance will also depend upon our ability to attract and retain additional qualified management and banking personnel. There can be no assurances that our management team will be able to manage our operations or our expected growth or that we will be able to attract and retain additional qualified personnel as needed in the future. The loss of any directors and/or officers could adversely affect us. We do not currently maintain “key man” life insurance on any of our directors or officers.

Reduced residential mortgage activity in our market would slow our growth and negatively impact our net income.

We have experienced residential mortgage loan growth during each of the past three years and we have increased our residential mortgage loan infrastructure, including hiring lending officers and underwriting and support personnel. Our residential mortgage operations provide a material portion of our income and are significantly affected by market interest rates. Additionally, our mortgage lending activity is affected by refinance activity. During 2011 and 2012, mortgage loan refinance activity was generally higher than during 2013, and mortgage refinance activity is expected to be lower during 2014. A continued reduction in mortgage refinance activity and a rising or higher interest rate environment may result in a decrease in residential mortgage loan originations, resulting in slower growth of our residential lending activity and, possibly, a decrease in our residential loan portfolio. This could result in a decrease in interest income and a decrease in revenues from loan sales. In addition, our results of operations are affected by the amount of non-interest expenses associated with our expanded residential lending platform, such as salaries and employee benefits, occupancy, equipment, data processing and other operating costs. During periods of reduced residential mortgage loan demand, our results of operations would be adversely affected to the extent that we are unable to reduce expenses commensurate with the decline in mortgage loan origination activity.

We have been and expect to be less profitable than our peers as we implement our business strategy.

During the past three years we have incurred a substantial increase in operating expenses and personnel costs due primarily to our change in strategic direction to become a full service community banking organization and in order to build an expanded lending platform. We have hired experienced executive officers and other staff which has significantly increased our employee base and personnel costs over the past three years. Additionally, in order to build our commercial real estate and commercial business lending experience and portfolios, we have focused on high quality, variable-rate loans, as well as purchased loans and loan participations which has resulted in tight spreads and a lower overall yield on our loan portfolio compared to peer institutions that may have more fixed-rate, higher-margin loans. We also have relied upon soliciting higher cost deposits as a funding source which, in combination with a lower yielding loan portfolio, has resulted in our having a lower interest rate spread and margin compared to peer institutions. Accordingly, until we increase our interest earning assets through increased loan origination activity, transition our deposit base toward lower cost deposits and increase our overall scale, our net profits and level of operating efficiencies will continue to lag those of peer institutions.

A significant portion of our assets consists of investment securities, which generally have lower yields than loans, and we classify all of our investment securities as available for sale which creates potential volatility in our net income and equity.

As of December 31, 2013, our available for sale securities portfolio, which includes U.S. government obligations, mortgage backed securities, corporate debt securities, and mutual funds, totaled $441.3 million, or 33.6% of our total assets. Investment securities typically have lower yields than loans. For fiscal 2013, the weighted average yield of our investment securities portfolio was 2.97% as compared to 3.35% for our loan portfolio. Accordingly, our net interest margin is lower than it would have been if a higher proportion of our interest-earning assets had been invested in loans. Additionally, substantially all of our investment securities are classified as available for sale and reported at fair value with unrealized gains or losses excluded from earnings and reported in other comprehensive income which affects our reported equity. Accordingly, given the significant size of the investment securities portfolio and due to possible mark-to-market adjustments of that portfolio resulting from market conditions, we may experience greater volatility in the value of reported equity. Moreover, given that we actively manage our investment securities portfolio, we may sell securities which could result in a realized loss, thereby reducing our net income.

Changes in the valuation of our securities portfolio could adversely affect us.

Our securities portfolio represents a significant portion of our total assets, and most of the securities in our portfolio are classified as available for sale. Accordingly, a decline in the fair value of our securities could cause a material decline in our reported equity and/or net income. At least quarterly, and more frequently when warranted by economic or market conditions, management evaluates all securities classified as available for sale with a decline in fair value below the amortized cost of the investment to determine whether or not the impairment is deemed to be other-than-temporary (“OTTI”). Marketable equity securities are evaluated for OTTI based on the severity and duration of the impairment and, if deemed to be other than temporary, the declines in fair value are reflected in earnings as realized losses. For impaired debt securities that are intended to be sold, or more likely than not will be required to be sold, the full amount of market decline is recognized as OTTI through earnings. Credit-related OTTI for all other impaired debt securities is recognized through earnings. Non-credit related OTTI for such debt securities is recognized in other comprehensive income, net of applicable taxes. A decline in the market for the securities portfolio could result in impairment charges on some investment securities.

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

Depending on market conditions, we intend to expand our branch office network through selective de novo or acquired branch offices over the next several years. On January 18, 2014, we completed the acquisition of three branches in Nantucket, which we operate under the name Nantucket Bank, a division of Blue Hills Bank. In addition, we plan to open two de novo branch offices in Milton and University Station in Westwood, Massachusetts in the next two 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 or acquired branch, such as a suitable location, qualified personnel, and an effective marketing strategy. Additionally, it takes time for a new branch to generate sufficient favorably priced deposits to produce enough income, including funding loan growth generated by our organization, to offset expenses related to the branch, some of which, like salaries and occupancy expense, are considered fixed costs.

Changing interest rates may have a negative effect on our results of operations.

Our earnings and cash flows are dependent on our net interest income and income from our mortgage banking operations. Interest rates are highly sensitive to many factors that are beyond our control, including general economic conditions and policies of various governmental and regulatory agencies and, in particular, the Federal Reserve Board. Changes in market interest rates could have an adverse effect on our financial condition and results of operations. The interest-bearing liabilities of financial institutions generally reprice or mature more quickly than their interest-earning assets. If rates increase rapidly, we may have to increase the rates we pay on our deposits, particularly our higher cost savings and short-term time deposits and borrowed funds, more quickly than any changes in interest rates earned on our loans and investments, resulting in a negative effect on interest spreads and net interest income. Furthermore, our mortgage banking income varies directly with movements in interest rates, and increases in interest rates could negatively affect our ability to originate loans in the same volumes, and sell loans with attractive pricing, as we have in recent years. Increases in interest rates may also make it more difficult for borrowers to repay adjustable rate loans.

Conversely, should market interest rates fall below current levels, our net interest margin could also be negatively affected if competitive pressures keep us from further reducing rates on our deposits, while the yields on our assets decrease more rapidly through loan prepayments and interest rate adjustments. Decreases in interest rates often result in increased prepayments of loans and mortgage-related securities, as borrowers refinance their loans to reduce borrowings costs. Under these circumstances, we are subject to reinvestment risk to the extent we are unable to reinvest the cash received from such prepayments in loans or other investments that have interest rates that are comparable to the interest rates on existing loans and securities.

Changes in interest rates may also decrease fee income generated from our commercial lending operations. We enter into interest rate swap agreements with some of our commercial borrowers (and mirror swap agreements with a third party) that allow the borrower to pay a fixed interest rate on loans that are originated and carried in our loan portfolio as adjustable rate loans. We receive fee income from borrowers for providing this service. Under certain interest rate scenarios, borrowers may choose not to use this service, and our related fee income will decrease.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Management of Market Risk.”

Historically low interest rates may adversely affect our net interest income and profitability.

During the past several years it has been the policy of the Federal Reserve Board to maintain interest rates at historically low levels through its targeted federal funds rate and the purchase of mortgage-backed securities. As a result, market rates on the loans we have originated and the yields on securities we have purchased have been at lower levels than available prior to 2008. As a general matter, the interest-bearing liabilities of financial institutions reprice or mature more quickly than the interest-earning assets. However, our ability to lower our interest expense may be limited at these interest rate levels while the average yield on our interest-earning assets may continue to decrease. The Federal Reserve Board has recently indicated its intention to maintain low interest rates. Accordingly, our net interest income may be adversely affected and may even decrease, which may have an adverse effect on our profitability.

We have been negatively affected by current market and economic conditions. A worsening of these conditions could adversely affect our operations, financial condition and earnings.

Recent economic conditions have resulted in continued uncertainty in the financial markets and continued expectations of slow improvement in general economic conditions. Unemployment remains at high levels with improvement at a slow rate beginning in late 2011. Our lending business is tied, in large part, to the housing market and real estate markets in general. The slowly improving market has resulted in limited demand for the construction of new housing, weakness in home pricing, and could ultimately result in increased delinquencies on our residential real estate loans, commercial real estate loans, commercial business loans, home equity loans and lines of credit and consumer loans. Further, concerns over the financial markets and new regulations have caused many lenders to reduce or cease providing funding to borrowers. These conditions may also cause a further reduction in loan demand, and increases in our non-performing assets, net charge-offs and provisions for loan losses, as well as adversely affect our liquidity and the willingness of certain counterparties and customers to do business with us. Continued negative developments in the financial services industry and the domestic and international credit markets may significantly affect the markets in which we do business, the market for and value of our loans and investments, and our ongoing operations, costs and profitability. Moreover, declines in the stock market in general, or stock values of financial institutions and their holding companies specifically, could adversely affect our stock performance.

Financial reform legislation recently enacted will, among other things, tighten capital standards 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 was enacted in 2010. This new law is significantly changing the current bank regulatory structure and affects 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 impacts of the Dodd-Frank Act may not be known for many months or years.

The Dodd-Frank Act created 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 with more than $10 billion in assets. Banks with $10 billion or less in assets will continue to be examined for compliance with the consumer laws by their primary bank regulators.

The Dodd-Frank Act required minimum leverage (Tier 1) and risk based capital requirements for bank and savings and loan holding companies that are no less than those applicable to banks, which will exclude certain instruments that previously have been eligible for inclusion by bank holding companies as Tier 1 capital, such as trust preferred securities and certain collateralized debt obligations.

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

The Dodd-Frank Act also broadened the base for Federal Deposit Insurance Corporation deposit insurance assessments. Assessments are now based on the average consolidated total assets less tangible equity capital of a financial institution, rather than deposits. 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, 2009. The legislation also increased the required minimum reserve ratio for the Deposit Insurance Fund, from 1.15% to 1.35% of insured deposits, and directs the Federal Deposit Insurance Corporation to offset the effects of increased assessments on depository institutions with less than $10 billion in assets.

The Dodd-Frank Act requires publicly traded companies to give stockholders a non-binding vote on executive compensation and so-called “golden parachute” payments. It also provides that the listing standards of the national securities exchanges shall require listed companies to implement and disclose “clawback” policies mandating the recovery of incentive compensation paid to executive officers in connection with accounting restatements. The legislation also directs the Federal Reserve Board to promulgate rules prohibiting excessive compensation paid to bank holding company executives.

We expect that current and future rules and regulations promulgated pursuant to the Dodd-Frank Act will increase our operating and compliance costs and could increase our interest expense.

Government responses to economic conditions may adversely affect our operations, financial condition and earnings.

We are subject to extensive regulation, supervision and examination by the Massachusetts Commissioner of Banks, the Federal Deposit Insurance Corporation and the Federal Reserve Board. Such regulation and supervision governs the activities in which an institution and its holding company may engage and are intended primarily for the protection of the insurance fund and the depositors and borrowers of Blue Hills Bank rather than for holders of our common stock. Regulatory authorities have extensive discretion in their supervisory and enforcement activities, including the imposition of restrictions on our operations, the classification of our assets and determination of the level of our allowance for loan losses. Any change in such regulation and oversight, whether in the form of regulatory policy, regulations, legislation or supervisory action, may have a material impact on our operations.

Financial reform legislation has changed the bank regulatory framework, created an independent consumer protection bureau that has assumed the consumer protection responsibilities of the various federal banking agencies, and established more stringent capital standards for banks and bank holding companies. The legislation has also resulted in new regulations affecting the lending, funding, trading and investment activities of banks and bank holding companies. Bank regulatory agencies also have been responding aggressively to concerns and adverse trends identified in examinations. Ongoing uncertainty regarding the effect of new legislation and regulatory actions may adversely affect our operations by restricting our business activities, including our ability to originate or sell loans, modify loan terms, or foreclose on property securing loans. These measures are likely to increase our costs of doing business and may have a significant adverse effect on our lending activities, financial performance and operating flexibility. In addition, these risks could affect the performance and value of our loan and investment securities portfolios, which also would negatively affect our financial performance.

Furthermore, the Federal Reserve Board, in an attempt to help the overall economy, has, among other things, kept interest rates low through its targeted federal funds rate and the purchase of mortgage-backed securities. If the Federal Reserve Board increases the federal funds rate, overall interest rates will likely rise, which may negatively impact the housing markets and the U.S. economic recovery. In addition, deflationary pressures, while possibly lowering our operating costs, could have a significant negative effect on our borrowers, especially our business borrowers, and the values of underlying collateral securing loans, which could negatively affect our financial performance.

In addition, there have been proposals made by members of Congress and others that would reduce the amount distressed borrowers are otherwise contractually obligated to pay under their mortgage loans and limit an institution’s ability to foreclose on mortgage collateral. Were proposals such as these, or other proposals limiting our rights as a creditor, to be implemented, we could experience increased credit losses or increased expense in pursuing our remedies as a creditor.

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. Furthermore, our strategic plan envisages significant growth in lending which will require additional provisions for loan losses and reduce our earnings in the short term.

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.

Concentration of loans in our primary market area may increase risk.

Our success depends primarily on general economic conditions in our market area in eastern Massachusetts. Most 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 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 weakening in general economic conditions caused by inflation, recession, unemployment or other factors beyond our control could negatively affect our financial results.

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 compete successfully 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.

Changes in the structure of Fannie Mae and Freddie Mac (“GSEs”) and the relationship among the GSEs, the federal government and the private markets, or the conversion of the current conservatorship of the GSEs into receivership, could result in significant changes to our securities portfolio.

The GSEs are currently in conservatorship with their primary regulator, the Federal Housing Finance Agency, acting as conservator. We cannot predict if, when or how the conservatorships will end, or any associated changes to the GSEs’ business structure that could result. We also cannot predict whether the conservatorships will end in receivership. There are several proposed approaches to reform the GSEs which, if enacted, could change the structure of the GSEs and the relationship among the GSEs, the government and the private markets, including the trading markets for agency conforming mortgage loans and markets for mortgage-related securities in which we invest through securities. We cannot predict the prospects for the enactment, timing or content of legislative or rulemaking proposals regarding the future status of the GSEs. Accordingly, there continues to be uncertainty regarding the future of the GSEs, including whether they will continue to exist in their current form. GSE reform, if enacted, could result in a significant change and adversely impact our securities portfolio.

Our risk management framework may not be effective in mitigating risk and reducing the potential for significant losses.

Our risk management framework is designed to minimize risk and loss to us. We seek to identify, measure, monitor, report and control our exposure to risk, including strategic, credit, market, liquidity, compliance and operational risks. While we use a broad and diversified set of risk monitoring and mitigation techniques, these techniques are inherently limited because they cannot anticipate the existence or future development of currently unanticipated or unknown risks. Recent economic conditions and heightened legislative and regulatory scrutiny of the financial services industry, among other developments, have increased our level of risk. Accordingly, we could suffer losses as a result of our failure to properly anticipate and manage these risks.

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 provided that they produce economies of scale and deploy technology in a safe and sound manner. 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 a large enough number of customers to cover the up-front costs of implementation.

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

We rely heavily on communications and information systems to conduct our business including systems operated by third party vendors. For example, we rely almost exclusively on Fiserv, Inc. for our informational management systems. 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 rectified. 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.

Impairment of goodwill could require charges to earnings, which could result in a negative impact on our results of operations.

Goodwill arises when a business is purchased for an amount greater than the fair market value of its net assets. We recognized goodwill as an asset on our balance sheet in connection with our acquisition of three branches in Nantucket in January 2014 that we operate under the name Nantucket Bank, a division of Blue Hills Bank. We evaluate goodwill for impairment at least annually. A significant decline in our expected future cash flows, a significant adverse change in the business climate, slower growth rates or other factors could result in impairment of goodwill. If we were to conclude that a future write-down of goodwill was necessary, then we would record the appropriate charge to earnings, which could be materially adverse to our results of operations and financial position.

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 $306.6 million at the minimum of the offering range and $395.3 million at the adjusted maximum of the offering range. Based upon our net income for the year ended December 31, 2013, and these pro forma equity levels, our return on equity would be 0.87% and 0.67% 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 profitably deploy 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 2014.

We intend to establish and fund a new charitable foundation (the “Foundation”) in connection with the conversion and stock offering. We will contribute shares of our common stock equal to 2.5% of the shares sold in the offering and an amount of cash such that the total contribution will equal $7.0 million. At the minimum, midpoint, maximum and maximum, as adjusted, of the offering range, we will

contribute to the Foundation 446,250, 525,000, 603,750 and 694,313 shares of common stock and approximately $2.5 million, $1.8 million, $963,000 and $57,000 in cash, respectively. The 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 Foundation. The after-tax expense of the contribution will reduce net income in fiscal 2014 by approximately $4.2 million. We had net income of $2.7 million for the year ended December 31, 2013. In addition, persons purchasing shares in the stock offering will have their ownership and voting interests in Blue Hills Bancorp diluted by up to 2.4% due to the issuance of shares of common stock to the Foundation.

Our contribution to the 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 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 $3.5 million of normalized taxable income before income tax expense in the year ended December 31, 2013, 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 $2.1 million of the contribution to the Foundation. This would result in after-tax expense of $6.2 million, and not $4.2 million based on full deductibility of the $7.0 million contribution.

We are an emerging growth company, and any decision on our part to comply only with certain reduced reporting and disclosure requirements applicable to emerging growth companies could make our common stock less attractive to investors.

We are an emerging growth company, and, for as long as we continue to be an emerging growth company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to “emerging growth companies,” including, but not limited to, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We could be an emerging growth company for up to five years following the completion of this offering. We will cease to be an emerging growth company upon the earliest of: (i) the end of the fiscal year following the fifth anniversary of this offering, (ii) the first fiscal year after our annual gross revenues are $1.0 billion or more, (iii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt securities or (iv) the end of any fiscal year in which the market value of our common stock held by non-affiliates exceeded $700 million as of the end of the second quarter of that fiscal year. We cannot predict if investors will find our common stock less attractive if we choose to rely on these exemptions. If some investors find our common stock less attractive as a result of any choices to reduce future disclosure, there may be a less active trading market for our common stock and the price of our common stock may be more volatile.

We will need to implement additional financial 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 8% of the total shares of common stock issued in the stock offering (including shares contributed to the Foundation) with funds borrowed from Blue Hills Bancorp through 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 2,277,345 shares in the offering at the adjusted maximum of the offering range, we will recognize additional pre-tax compensation expense of $22.8 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 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 $3.33 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 $1.9 million 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 $2.3 million 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 Blue Hills Bancorp) and cost the same as the purchase price in the stock offering, the reduction to stockholders’ equity due to the plan would be between $7.3 million at the minimum of the offering range and $11.4 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.

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% and 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 and dilute your ownership interest.

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 the 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.” 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 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 (through a subsidiary) the purchase of shares of common stock in the stock offering by the employee stock ownership plan, contribute cash to the Foundation, and redeem preferred stock issued to the U.S. Treasury as part of the SBLF Program, and we may use the remaining net proceeds to pay dividends to stockholders, repurchase shares of common stock, purchase investment securities, deposit funds in Blue Hills Bank, acquire other financial services companies or branch offices or for other general corporate purposes.

Prior to the completion of the conversion, we also intend to redeem the $18,724,000 of preferred stock that Hyde Park Bancorp, Inc. issued to the U.S. Treasury as part of the Small Business Lending Fund Program. While we expect to redeem the preferred stock shortly prior to the completion of the conversion, our decision to redeem the stock is, in part, based on the expected receipt of the proceeds of the offering.

Blue Hills 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 payment 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.

You may not revoke your decision to purchase Blue Hills Bancorp common stock in the subscription or community offerings after you send us your order.

Funds submitted or automatic withdrawals authorized in connection with the purchase of shares of common stock in the subscription and community offerings will be held by us until the completion or termination of the conversion and offering, including any extension of the expiration date and consummation of a syndicated or firm commitment underwritten offering. Because completion of the conversion and offering will be subject to regulatory approvals and an update of the independent appraisal prepared by RP Financial, LC., among other factors, there may be one or more delays in completing the conversion and offering. Orders submitted in the subscription and community offerings are irrevocable, and purchasers will have no access to their funds unless the offering is terminated, or extended beyond [extension date], or the number of shares of common stock to be sold is increased to more than 27,772,500 shares or decreased to fewer than 17,850,000 shares.

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 Blue Hills Bancorp, Inc.” for a discussion of applicable regulations regarding acquisitions.

Corporate governance provisions in Blue Hills Bancorp, Inc.’s articles of incorporation and bylaws and Blue Hills Bank’s articles of organization, as well as certain 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 Blue Hills Bank, may prevent or impede holders of our common stock from obtaining representation on our board of directors and may make takeovers of Blue Hills Bancorp 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. Blue Hills 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 Blue Hills Bancorp may offer directly or indirectly to acquire the beneficial ownership of more than 10% of any class of equity security of Blue Hills 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 articles of organization. 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 Global Market under the symbol “BHBK”, 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 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 Global 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, 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 will receive a success fee equal to 0.85% on the aggregate purchase price of Common Stock sold in the Subscription Offering and the Community Offering (net of insider purchases and shares purchased by our employee stock ownership plan). If there is a syndicated community offering, Keefe, Bruyette & Woods will receive a fee not to exceed 5.25% 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 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

The following tables set forth selected consolidated historical financial and other data of Hyde Park Bancorp, MHC and its subsidiaries for the years and at the dates indicated. The information at December 31, 2013 and 2012 and for the fiscal years ended December 31, 2013, 2012 and 2011 is derived in part from, and should be read together with, the audited consolidated financial statements and notes thereto of Hyde Park Bancorp, MHC beginning at page F-1 of this prospectus. The information at December 31, 2011, 2010 and 2009 and for the fiscal years ended December 31, 2010 and 2009 is derived in part from audited consolidated financial statements that are not included in this prospectus. The data presented below does not reflect the effect of the Nantucket Branch Acquisition, which occurred in January 2014. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Nantucket Branch Acquisition.” No tax equivalent adjustments have been made.


	At December 31,
	2013		2012		2011		2010		2009
Selected Financial Condition Data:	(In thousands)
Total assets	$	1,314,287	$	1,228,636	$	970,674	$	910,689	$	905,382
Cash and cash equivalents		40,316		73,819		87,331		111,759		180,624
Loans receivable, net		765,347		488,207		276,528		202,016		210,858
Securities available for sale		441,306		533,785		547,475		543,890		457,887
Federal Home Loan Bank stock		10,766		9,669		3,846		3,293		3,293
Bank-owned life insurance		29,831		33,344		32,220		31,178		30,167
Deposits		915,223		817,877		756,481		754,228		760,692
Borrowings		215,000		154,424		40,000		—		—
Total equity		171,534		176,938		163,832		144,784		127,145


	Years Ended December 31,
	2013			2012		2011		2010		2009
Selected Operating Data:	(In thousands)
Interest and dividend income	$	33,092		$	31,816	$	31,995	$	34,186	$	40,087
Interest expense		7,971			8,372		8,938		12,083		17,849

Net interest income		25,121			23,444		23,057		22,103		22,238
Provision for loan losses		4,094			2,361		1,126		502		1,250

Net interest income, after provision for loan losses		21,027			21,083		21,931		21,601		20,988

Gain (loss) on sale of securities available for sale		4,999			11,931		5,557		25,677		(2,244	)
Other non interest income		8,012			4,235		3,644		3,236		3,395

Total noninterest income		13,011			16,166		9,201		28,913		1,151
Noninterest expenses		31,659			26,283		21,041		17,362		13,313

Income before income taxes		2,379			10,966		10,091		33,152		8,826
Income tax expense (benefit)		(284	)		3,112		2,530		3,542		3,456

Net income	$	2,663		$	7,854	$	7,561	$	29,610	$	5,370


	At or For the Years Ended December 31,
	2013			2012			2011			2010			2009
	(unaudited)
Selected Financial Ratios and Other Data:
Performance Ratios:
Return on average assets (ratio of net income to average total assets)		0.22	%		0.74	%		0.82	%		3.21	%		0.47	%
Return on average equity (ratio of net income to average equity)		1.52	%		4.57	%		5.01	%		18.48	%		1.54	%
Interest rate spread ⁽¹⁾		2.09	%		2.18	%		2.51	%		2.39	%		2.41	%
Net interest margin ⁽²⁾		2.21	%		2.33	%		2.68	%		2.57	%		2.59	%
Efficiency ratio ⁽³⁾		83.02	%		66.35	%		65.23	%		34.03	%		56.92	%
Noninterest expense to average total assets		2.65	%		2.46	%		2.29	%		1.88	%		1.16	%
Average interest-earning assets to average interest-bearing liabilities		117.24	%		117.88	%		116.51	%		112.38	%		108.94	%
Average equity to average total assets		14.68	%		16.11	%		16.43	%		17.39	%		30.39	%
Asset Quality Ratios:
Non-performing assets to total assets		0.13	%		0.18	%		0.28	%		0.18	%		0.21	%
Non-performing loans to total loans		0.22	%		0.45	%		0.98	%		0.78	%		0.87	%
Allowance for loan losses to non-performing loans		555	%		251	%		128	%		155	%		166	%
Allowance for loan losses to total loans		1.25	%		1.13	%		1.25	%		1.21	%		1.44	%
Consolidated Capital Ratios:
Total capital to risk-weighted assets		19.82	%		21.70	%		30.50	%		N/A			N/A
Tier 1 capital to risk-weighted assets		18.50	%		20.80	%		29.80	%		N/A			N/A
Tier 1 capital to average assets		13.20	%		14.40	%		16.20	%		N/A			N/A
Capital Ratios for the Bank:
Total capital to risk-weighted assets		16.60	%		18.60	%		28.60	%		35.60	%		25.20	%
Tier 1 capital to risk-weighted assets		15.30	%		17.70	%		27.90	%		34.80	%		22.40	%
Tier 1 capital to average assets		11.10	%		12.20	%		15.10	%		15.20	%		12.10	%
Other Data:
Number of full service offices		6			6			6			6			6
Number of full time equivalent employees		147			141			122			103			96

(1)	The average 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.

(2)	The net interest margin represents net interest income as a percent of average interest-earning assets for the period on a non tax equivalent basis.

(3)	The efficiency ratio represents noninterest expense divided by the sum of net interest income and noninterest income, including gains on securities available for sale, net.

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 implement successfully 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 implement successfully 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 which, given the significant size of our investment securities portfolio, could cause a material decline in our reported equity and/or our net income if we must record impairment charges or a decline in the fair value of our securities, which are all available for sale;

•

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

•

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 $179.5 million and $238.0 million, or $273.9 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 17,850,000 Shares					Midpoint 21,000,000 Shares					Maximum 24,150,000 Shares					Maximum as adjusted 27,772,500 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	$	178,500				$	210,000				$	241,500				$	277,725
Less offering expenses		3,048					3,294					3,539					3,822

Net offering proceeds (2)	$	175,452		100.0	%	$	206,706		100.0	%	$	237,961		100.0	%	$	273,903		100.0	%

Use of net proceeds:
To Blue Hills Bank	$	87,726		50.0	%	$	103,353		50.0	%	$	118,980		50.0	%	$	136,951		50.0	%
To fund loan to employee stock ownership plan	$	14,637		8.3	%	$	17,220		8.3	%	$	19,803		8.3	%	$	22,774		8.3	%
Contributed to the Foundation	$	2,538		1.4	%	$	1,750		0.8	%	$	963		0.4	%	$	57		0.0	%
To redeem SBLF preferred stock (3)	$	18,724		10.7	%	$	18,724		9.1	%	$	18,724		7.9	%	$	18,724		6.8	%
Retained by Blue Hills Bancorp, Inc.	$	51,827		29.5	%	$	65,659		31.8	%	$	79,491		33.4	%	$	95,397		34.8	%

(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.

(3)

Prior to the completion of the conversion, we intend to redeem the $18,724,000 of preferred stock that Hyde Park Bancorp, Inc. issued to the U.S. Treasury as part of the Small Business Lending Fund (“SBLF”) Program. While we expect to redeem the preferred stock shortly prior to the completion of the conversion, our decision to redeem the stock is, in part, based on the expected receipt of the proceeds of the 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 Blue Hills 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.

Blue Hills Bancorp may use the proceeds it retains from the stock offering:

•

to invest in investment securities;

•

to pay cash dividends to stockholders;

•

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

•

to build our capital base to allow us to take advantage of acquisition opportunities in our market area and adjacent markets; and

•

for other general corporate purposes, including depositing such funds with, or making additional capital contributions to, Blue Hills Bank to help finance our business strategy.

Prior to the completion of the conversion, we intend to redeem the $18,724,000 of preferred stock that Hyde Park Bancorp, Inc. issued to the U.S. Treasury as part of the Small Business Lending Fund Program. While we expect to redeem the preferred stock shortly prior to the completion of the conversion, our decision to redeem the stock is, in part, based on the expected receipt of the proceeds of the offering.

With the exception of the funding of the loan to the employee stock ownership plan (through a subsidiary), the contribution of cash to the Foundation and the redemption of the preferred stock issued to the U.S. Treasury, Blue Hills Bancorp 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 corporate debt securities, U.S. government and agency debt securities, 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.

Blue Hills Bank may use the proceeds it receives from the stock offering to:

•

expand our loan portfolio through the origination or purchase of residential, commercial business and commercial real estate loans;

•

to support the addition of infrastructure, including the hiring of additional commercial and residential lending teams operating in our market area and adjacent markets;

•

offer new products and services, including online and mobile banking products and services to reach targeted consumer and business customers outside of our current branch network;

•

acquire fee income businesses that complement our current product capabilities while improving the revenue contribution of fee income from existing customers;

•

expand our branch network through select de novo and acquisition opportunities;

•

to invest in securities permitted by our investment policy; and

•

for other general corporate purposes.

Blue Hills Bank has not quantified its plans or determined specific amounts for use of the offering proceeds for each of the foregoing purposes, and currently has no understandings or agreements to acquire any new branches or fee income businesses.

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 branch acquisitions and acquisitions of fee income businesses. 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, expansion through branch acquisitions. We currently have no understandings or agreements to acquire other banks, thrifts, branches thereof, 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. Blue Hills Bancorp will file a consolidated tax return with Blue Hills 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 additional 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 Blue Hills Bank, because we expect to have limited sources of income other than dividends from Blue Hills Bank, net income earned on the net proceeds of the offering 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—Massachusetts Banking Laws and Supervision—Dividends.”

Any payment of dividends by Blue Hills Bank to us that would be deemed to be drawn out of Blue Hills Bank’s bad debt reserves, if any, would require a payment of taxes at the then-current tax rate by Blue Hills Bank on the amount of earnings deemed to be removed from the reserves for such distribution. See “Supervision and Regulation—Federal Regulation—Capital Distributions.” Blue Hills 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 Global Market under the symbol “BHBK”, 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 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 December 31, 2013, Blue Hills Bank exceeded all of the applicable regulatory capital requirements. The table below sets forth the historical equity capital and regulatory capital of Blue Hills Bank at December 31, 2013, and the pro forma regulatory capital of Blue Hills 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 Blue Hills Bank of 50% of the net offering proceeds. See “How We Intend to Use the Proceeds from the Offering.” The pro forma capital information in the table below also assumes that the Nantucket Branch Acquisition was completed as of December 31, 2013.


	Blue Hills Bank Historical at December 31, 2013					Pro Forma with Nantucket Bank December 31, 2013					Pro Forma at December 31, 2013, Based Upon the Sale in the Offering of (1)
	Blue Hills Bank Historical at December 31, 2013					Pro Forma with Nantucket Bank December 31, 2013					Minimum 17,850,000 Shares						Midpoint 21,000,000 Shares						Maximum 24,150,000 Shares						Maximum as adjusted 27,772,500 Shares (2)
	Amount		Percent of Assets (3)			Amount		Percent of Assets (2)			Amount			Percent of Assets			Amount			Percent of Assets			Amount			Percent of Assets			Amount			Percent of Assets
	(Dollars in thousands)
Equity	$	142,319		10.91	%	$	142,319		9.97	%	$	208,089			13.73	%	$	219,842			14.36	%	$	231,594			14.97	%	$	245,109			15.66	%
Tier 1 leverage (4)(5)		137,099		11.11			122,182		9.10			187,952			13.14			199,705			13.81			211,457			14.47		$	224,972			15.20
Tier 1 leverage requirement		49,370		4.00			53,712		4.00			57,221			4.00			57,846			4.00			58,471			4.00			59,190			4.00

Excess	$	87,729		7.11	%	$	68,470		5.10	%	$	130,731			9.14	%	$	141,859			9.81	%	$	152,986			10.47	%	$	165,782			11.20	%

Tier 1 risk-based capital (6)	$	137,099		15.26	%	$	122,182		12.14	%	$	187,952			18.35	%	$	199,705			19.44	%	$	211,457			20.52	%	$	224,972			21.75	%
Risk-based requirement		35,932		4.00			40,274		4.00	%		40,976			4.00			41,101			4.00			41,226			4.00			41,370			4.00

Excess	$	101,167		11.26	%	$	81,908		8.14	%	$	146,976			14.35	%	$	158,604			15.44	%	$	170,231			16.52	%	$	183,602			17.75	%

Total risk-based capital (4)(6)	$	148,872		16.57	%	$	133,955		13.30	%	$	199,725			19.50	%	$	211,478			20.58	%	$	223,230			21.66	%	$	236,745			22.89	%
Risk-based requirement		71,864		8.00			80,548		8.00	%		81,952			8.00			82,202			8.00			82,452			8.00			82,740			8.00

Excess	$	77,008		8.57	%		53,407		5.30	%	$	117,773			11.50	%	$	129,276			12.58	%	$	140,778			13.66	%	$	154,005			14.89	%

Reconciliation of capital infused into Blue Hills Bank:
Net proceeds											$	87,726					$	103,353					$	118,980					$	136,951
Less: Common stock acquired by employee stock ownership plan												(14,637	)					(17,220	)					(19,803	)					(22,774	)
Less: Common stock awarded under stock-based benefit plans												(7,319	)					(8,610	)					(9,902	)					(11,387	)

Pro forma increase											$	65,770					$	77,523					$	89,275					$	102,790

(footnotes on following page)

(1)

Pro forma capital levels assume that the employee stock ownership plan purchases 8% of the shares of common stock to be outstanding immediately following the stock offering (including shares contributed to the Foundation) with funds borrowed from Blue Hills Bancorp (through a subsidiary). Pro forma capital pursuant to generally accepted accounting principles capital and regulatory capital have been reduced by the amount required to fund this plan. See “Management of Blue Hills Bancorp, Inc.” for a discussion of the employee stock ownership plan.

(2)	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.

(3)

Assets used in calculating percentages reflect the estimated pro forma impact of the Nantucket Branch Acquisition as shown in the table provided in the section of this prospectus entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Nantucket Branch Acquisition.”

(4)	Tier 1 capital is shown as a percentage of adjusted average assets of $1.3 billion. Risk-based capital is shown as a percentage of risk-based weighted assets of $1.0 billion which includes the pro forma impact of the acquisition of Nantucket Bank.

(5)	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.

(6)	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 Hyde Park Bancorp, MHC at December 31, 2013 and the pro forma consolidated capitalization of Blue Hills Bancorp, after giving effect to the conversion and the offering, based upon the assumptions set forth in the “Pro Forma Data” section. The pro form capitalization information provided in the table below also assumes that the redemption of the $18,724,000 of preferred stock that Hyde Park Bancorp, Inc. issued to the U.S. Treasury as part of the Small Business Lending Fund (“SBLF”) Program was completed as of December 31, 2013.


	Hyde Park Bancorp, MHC Historical at December 31, 2013			Blue Hills Bancorp, Inc. Pro Forma, Based Upon the Sale in the Offering at $10.00 per Share of
	Hyde Park Bancorp, MHC Historical at December 31, 2013			Minimum 17,850,000 Shares			Midpoint 21,000,000 Shares			Maximum 24,150,000 Shares			Maximum as adjusted 27,772,500 Shares (1)
	(Dollars in thousands)
Deposits (2)	$	915,223		$	915,223		$	915,223		$	915,223		$	915,223
Borrowings		215,000			215,000			215,000			215,000			215,000

Total deposits and borrowed funds	$	1,130,223		$	1,130,223		$	1,130,223		$	1,130,223		$	1,130,223

Stockholders’ equity:
Preferred stock $0.01 par value, 50 million shares authorized; 18,724 issued or outstanding		18,724			—			—			—			—
Common stock $0.01 par value, 100 million shares authorized; assuming shares outstanding as shown (3)(4)	$	—		$	183		$	215		$	248		$	285
Additional paid-in capital (4)		—			179,732			211,741			243,751			280,561
Tax benefit of contribution to the Foundation		—			2,800			2,800			2,800			2,800
Retained earnings (5)		150,345			150,345			150,345			150,345			150,345
Plus:
Accumulated other comprehensive income		2,465			2,465			2,465			2,465			2,465
Less:
Expense of the Foundation		—			(7,000	)		(7,000	)		(7,000	)		(7,000	)
Common stock to be acquired by employee stock ownership plan (6)		—			(14,637	)		(17,220	)		(19,803	)		(22,774	)
Common stock to be acquired by stock-based benefit plans (7)		—			(7,319	)		(8,610	)		(9,902	)		(11,387	)

Total stockholders’ equity	$	171,534		$	306,569		$	334,736		$	362,904		$	395,295

Pro forma shares outstanding:
Shares issued to the Foundation		—			446,250			525,000			603,750			694,313
Shares offered for sale in offering		NA			17,850,000			21,000,000			24,150,000			27,772,500

Total shares outstanding		NA			18,296,250			21,525,000			24,753,750			28,466,813

Total stockholders’ equity as a percentage of total assets (2)(8)		12.03	%		19.41	%		20.82	%		22.18	%		23.69	%

(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 Blue Hills Bancorp 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 Blue Hills Bancorp common stock issued in the offering, including shares contributed to the Foundation, will be reserved for issuance upon the exercise of stock options and for issuance of restricted stock awards, respectively. See “Management of Blue Hills Bancorp, Inc.”

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

(footnotes continue on following page)

(5)	The retained earnings of Blue Hills Bank will be substantially restricted after the conversion. See “The Conversion; Plan of Distribution—Liquidation Rights” and “Supervision and Regulation—Massachusetts Banking Laws and Supervision—Dividends.”

(6)

Assumes that 8% of the shares issued in the offering, including shares contributed to the Foundation, will be acquired by the employee stock ownership plan financed by a loan from Blue Hills Bancorp (through a subsidiary). The loan will be repaid principally from Blue Hills Bank’s contributions to the employee stock ownership plan. Since Blue Hills Bancorp will finance the employee stock ownership plan debt through a subsidiary, this debt will be eliminated through consolidation and no asset or liability will be reflected on Blue Hills Bancorp’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 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 Blue Hills Bancorp 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-based benefit plans will require stockholder approval. The funds to be used by the stock-based benefit plans will be provided by Blue Hills Bancorp. Assuming stockholder approval of the stock-based benefit plans, and that shares of common stock equal to 4% of the shares to be issued in the offering (including shares contributed to the 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 3.9%.

(8)	Assets used in calculating percentages reflect the estimated pro forma impact of the Nantucket Branch Acquisition and that Hyde Park Bancorp, MHC had assets of $1.4 billion. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Nantucket Branch Acquisition.”

PRO FORMA DATA

The following tables summarize historical data of Hyde Park Bancorp, MHC and pro forma data of Blue Hills Bancorp at and for the year ended December 31, 2013. 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.

We are offering up to a maximum, as adjusted, of 27,772,500 shares of common stock for sale on a best efforts basis. We must sell a minimum of 17,850,000 shares in order to complete the 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 executive officers and directors, and their associates, will purchase 610,500 shares of common stock;

•

our employee stock ownership plan will purchase 8% of the shares of common stock issued in the stock offering including shares contributed to the Foundation with a loan from Blue Hills Bancorp (through 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 Blue Hills Bancorp will earn on the loan will offset the interest contributed to the employee stock ownership plan by Blue Hills Bank;

•

Keefe, Bruyette & Woods will receive a success fee equal to 0.85% of the aggregate purchase price of Common Stock sold in the Subscription Offering and the Community Offering (net of insider purchases and shares purchased by our employee stock ownership plan);

•

expenses of the stock offering, other than fees and expenses to be paid to Keefe, Bruyette & Woods, will be $1.6 million; and

•

the Nantucket Branch Acquisition had been completed as of December 31, 2013. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Nantucket Branch Acquisition”.

We calculated pro forma consolidated net income for the year ended December 31, 2013 as if the offering had been completed at the beginning of the period, and the net proceeds we received had been invested at an assumed interest rate of 2.35% (1.41% on an after-tax basis) during the period. This assumed interest rate represents a blended rate based on the assumption that $18.7 million of net proceeds are used to redeem the 18,724 shares of preferred stock issued to the U.S. Treasury, with a pre-tax dividend yield of 7.47%, and the remaining net proceeds are invested in a five-year United States Treasury Note as of December 31, 2013 equal to 1.75%, 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. Pro forma stockholders’ equity amounts for December 31, 2013 have been calculated as if the conversion and offering had been completed on December 31, 2013.

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. The stock-based benefit plans will require stockholder approval, which may or may not be received. Subject to the receipt of stockholder approval, we have assumed that the stock-based benefit plans will acquire for restricted stock awards, either directly from Blue Hills Bancorp or through open market purchases, 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 Foundation) at the same price for which they were sold in the stock offering. It is possible that the purchase price of shares acquired for restricted stock awards will be higher or lower than the price of shares sold in the offering, or that restricted stock awards granted under the stock-based benefit plans will be awarded through the use of authorized but unissued shares of common stock. 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 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 $3.33 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 15.82% for the shares of common stock, a dividend yield of 0.0%, an expected option life of 10 years and a risk-free interest rate of 3.04%. 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. It is possible that the exercise price of stock options issued under the stock-based benefit plans will be higher or lower than $10.00 per share, or that the Black-Scholes option pricing model assumptions used at the time options are granted will be different than those relied upon in preparing the pro forma tables.

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 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 Blue Hills 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 (by funding a subsidiary which will make this loan) and funding the cash portion of the contribution to the Foundation and retain the rest of the proceeds we retain for future use. Prior to the completion of the conversion, we intend to redeem the $18,724,000 of preferred stock that Hyde Park Bancorp, Inc. issued to the U.S. Treasury as part of the Small Business Lending Fund Program. While we expect to redeem the preferred stock shortly prior to the completion of the conversion, our decision to redeem the shares is, in part, based on the expected receipt of the proceeds of the offering.

The pro forma tables do not give effect to withdrawals from deposit accounts for the purpose of purchasing shares of common stock in the stock offering. Funds withdrawn to purchase common stock in the offering will not result in the receipt of new funds for investment. The pro forma tables also do not give effect to 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 tables 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 generally accepted accounting principles in the United States of America (“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 Fiscal Year Ended December 31, 2013 Based Upon the Sale at $10.00 Per Share of
	Minimum 17,850,000 Shares			Midpoint 21,000,000 Shares			Maximum 24,150,000 Shares			Maximum as adjusted 27,772,500 Shares (1)
	(Dollars in thousands, except per share amounts)
Gross proceeds of offering	$	178,500		$	210,000		$	241,500		$	277,725
Plus: Market value of shares issued to the Foundation		4,463			5,250			6,038			6,943

Pro form market capitalization	$	182,963		$	215,250		$	247,538		$	284,668

Gross proceeds of offering		178,500			210,000			241,500			277,725
Less: expenses		3,048			3,294			3,539			3,822

Estimated net proceeds		175,452			206,706			237,961			273,903
Less: Common stock purchased by ESOP (2)		(14,637	)		(17,220	)		(19,803	)		(22,774	)
Less: Cash contribution to the Foundation		(2,538	)		(1,750	)		(963	)		(57	)
Less: Common stock purchased for stock awards (3)		(7,319	)		(8,610	)		(9,902	)		(11,387	)

Estimated net cash proceeds, as adjusted	$	150,958		$	179,126		$	207,293		$	239,685

For the fiscal year ended December 31, 2013
Consolidated net income:
Historical		2,663			2,663			2,663			2,663
Pro forma income on net proceeds		2,129			2,526			2,923			3,380
Pro forma ESOP adjustment (2)		(293	)		(344	)		(396	)		(456	)
Pro forma stock award adjustment (3)		(878	)		(1,033	)		(1,188	)		(1,366	)
Pro forma stock option adjustment (4)		(1,097	)		(1,290	)		(1,484	)		(1,706	)

Pro forma net income	$	2,524		$	2,522		$	2,518		$	2,515

Per share net income (reflects ASC 718-40):
Historical	$	0.15		$	0.13		$	0.11		$	0.10
Pro forma income on net proceeds		0.13			0.13			0.13			0.13
Pro forma ESOP adjustment (2)		(0.02	)		(0.02	)		(0.02	)		(0.02	)
Pro forma stock award adjustment (3)		(0.05	)		(0.05	)		(0.05	)		(0.05	)
Pro forma stock option adjustment (4)		(0.06	)		(0.06	)		(0.06	)		(0.06	)

Pro forma net income per share (5)	$	0.15		$	0.13		$	0.11		$	0.10

Offering price as a multiple of pro forma net income per share		66.67			76.92			90.91			100.00
Number of shares outstanding for pro forma net income per share calculations (5)		16,881,340			19,860,400			22,839,460			26,265,379
At December 31, 2013
Common stockholders’ equity:
Historical	$	152,810		$	152,810		$	152,810		$	152,810
Estimated net proceeds		175,452			206,706			237,961			273,903
Plus: Shares issued to the Foundation		4,463			5,250			6,038			6,943
Plus: Tax benefit of the contribution to the Foundation		2,800			2,800			2,800			2,800
Less: Common stock acquired by ESOP (2)		(14,637	)		(17,220	)		(19,803	)		(22,774	)
Less: Common stock awarded under stock-based benefit plans (3)(4)		(7,319	)		(8,610	)		(9,902	)		(11,387	)
Less: Expense of the contribution to the Foundation		(7,000	)		(7,000	)		(7,000	)		(7,000	)

Pro forma stockholders’ equity	$	306,569		$	334,736		$	362,904		$	395,296

Intangible assets		(14,917	)		(14,917	)		(14,917	)		(14,917	)

Pro forma tangible stockholders equity	$	291,652		$	319,819		$	347,987		$	380,379

Common stockholders’ equity per share:
Historical	$	8.36		$	7.11		$	6.18		$	5.38
Estimated net proceeds		9.59			9.60			9.61			9.62
Plus: Shares issued to the Foundation		0.24			0.24			0.24			0.24
Plus: Tax benefit of the contribution to the Foundation		0.15			0.13			0.11			0.10
Less: Common stock acquired by ESOP (2)		(0.80	)		(0.80	)		(0.80	)		(0.80	)
Less: Common stock awarded under stock-based benefit plans (3)(4)		(0.40	)		(0.40	)		(0.40	)		(0.40	)
Less: Expense of the contribution to the Foundation		(0.38	)		(0.33	)		(0.28	)		(0.25	)

Pro forma stockholders’ equity per share (6)	$	16.76		$	15.55		$	14.66		$	13.89

Pro forma tangible stockholders’ equity per share (6)	$	15.94		$	14.86		$	14.06		$	13.37

Offering price as percentage of pro forma stockholders’ equity per share		59.67	%		64.31	%		68.21	%		71.99	%
Offering price as a percentage of tangible equity per share		62.74	%		67.29	%		71.12	%		74.79	%
Number of shares outstanding for pro forma book value and tangible book value per share calculations		18,296,250			21,525,000			24,753,750			28,466,813

(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 8% of shares of common stock issued in the offering (including shares contributed to the 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 Blue Hills Bancorp (through a subsidiary). 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. Blue Hills 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. Blue Hills 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 Blue Hills 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 48,790, 57,400, 66,010 and 75,912 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 Blue Hills Bancorp’s stockholders, one or more stock-based benefit plans 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 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 plans may not occur earlier than six months after the completion of the conversion. The shares may be acquired directly from Blue Hills Bancorp or through open market purchases. The funds to be used by the stock-based benefit plans to purchase the shares will be provided by Blue Hills Bancorp. 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 in the offering (including shares contributed to the 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 3.9%.

(4)

If approved by Blue Hills Bancorp’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 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 $3.33 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 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 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 notes 2 and 3, above.

(6)

The retained earnings of Blue Hills Bank will be substantially restricted after the conversion. See “The Conversion; Plan of Distribution—Liquidation Rights” and “Supervision and Regulation—Massachusetts Banking Laws and Supervision—Dividends.” 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.

COMPARISON OF VALUATION AND PRO FORMA INFORMATION

WITH AND WITHOUT THE FOUNDATION

As reflected in the table below, if the 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 $183.0 million, $215.3 million, $247.5 million and $284.7 million with the Foundation, as compared to $191.3 million, $225.0 million, $258.8 million and $297.6 million, respectively, without the Foundation. There is no assurance that in the event the 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 year ended December 31, 2013 at the minimum, midpoint, maximum and adjusted maximum of the offering range, assuming the stock offering was completed at the beginning of the one year period, with and without the 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	$	178,500		$	191,250		$	210,000		$	225,000		$	241,500		$	258,750		$	277,725		$	297,563
Estimated full value		182,963			191,250			215,250			225,000			247,538			258,750			284,668			297,563
Total assets (1)		1,591,513			1,602,903			1,619,680			1,632,340			1,647,848			1,661,776			1,680,240			1,695,627
Total liabilities		1,266,220			1,266,220			1,266,220			1,266,220			1,266,220			1,266,220			1,266,220			1,266,220
Pro forma stockholders’ equity		306,569			317,959			334,736			347,396			362,904			376,832			395,296			410,683
Pro forma net income (2)		2,524			2,621			2,521			2,618			2,518			2,615			2,514			2,611
Pro forma stockholders’ equity per share		16.76			16.63			15.55			15.44			14.66			14.56			13.89			13.80
Pro forma net income per share		0.15			0.15			0.13			0.13			0.11			0.11			0.10			0.10
Pro forma pricing ratios:
Offering price as a percentage of pro forma stockholders’ equity per share		59.67	%		60.13	%		64.31	%		64.77	%		68.21	%		68.68	%		71.99	%		72.46	%
Offering price to pro forma net income per share		66.67	x		66.67	x		76.92	x		76.92	x		90.91	x		90.91	x		100.00	x		100.00	x
Pro forma financial ratios:
Return on assets (annualized)		0.16	%		0.16	%		0.16	%		0.16	%		0.15	%		0.16	%		0.15	%		0.16	%
Return on equity (annualized)		0.82	%		0.82	%		0.75	%		0.75	%		0.69	%		0.69	%		0.64	%		0.64	%
Equity to assets		19.26	%		19.84	%		20.67	%		21.28	%		22.02	%		22.68	%		23.53	%		24.22	%
Total shares issued		18,296,250			19,125,000			21,525,000			22,500,000			24,753,750			25,875,000			28,466,813			29,756,250

(footnote on following page)

(1)	Includes the pro forma impact of the Nantucket Branch Acquisition of $123.5 million.

(2)

The following table shows the estimated after-tax expense associated with the contribution to the Foundation, as well as pro forma net income, pro forma net income per share, pro forma return on assets and pro forma return on stockholders’ equity assuming the contribution to the Foundation was expensed during the year ended December 31, 2013.


	Minimum of Offering Range			Midpoint of Offering Range			Maximum of Offering Range			Adjusted Maximum of Offering Range
	(Dollars in thousands, except per share amounts)
After-tax expense of contribution to foundation	$	4,200		$	4,200		$	4,200		$	4,200
Pro forma net income	$	(1,676	)	$	(1,678	)	$	(1,682	)	$	(1,685	)
Pro forma net income per share	$	(0.10	)	$	(0.08	)	$	(0.07	)	$	(0.06	)
Offering price to pro forma net income per share		N/M			N/M			N/M			N/M
Pro forma return on assets (annualized)		(0.11	)%		(0.10	)%		(0.10	)%		(0.10	)%
Pro forma return on equity (annualized)		(0.55	)%		(0.50	)%		(0.46	)%		(0.43	)%

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 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. Blue Hills Bancorp, Inc. was incorporated on February 27, 2014 and had not engaged in any activities as of December 31, 2013; therefore, the information contained in this section reflects the financial performance of Hyde Park Bancorp, MHC and its subsidiary. Except as provided below under “—Nantucket Branch Acquisition,” the information provided in this section regarding our financial condition and results of operations does not include the effects of the Nantucket Branch Acquisition, which occurred subsequent to December 31, 2013.

Overview

Our results of operations depend primarily on net interest and dividend income from our investments in loans and investment securities. Net interest and dividend income is the difference between (1) the interest and dividend income we earn on our interest-earning assets, consisting primarily of loans, investment securities (including debt securities and marketable equity securities) and other interest-earning assets, and (2) the interest we pay on our interest-bearing liabilities, consisting primarily of deposits (including NOW accounts, regular savings accounts, money market accounts, and certificates of deposit), Federal Home Loan Bank of Boston advances, and other borrowings.

Our results of operations also are affected by the provision for loan losses, noninterest income and noninterest expense. Noninterest income currently consists primarily of gains or losses on the sale of investment securities and loans, income derived from bank-owned life insurance, customer service fees, fee income on loans, and other income sources. Noninterest expense currently consists primarily of salaries and employee benefits, occupancy and equipment expenses, data processing, professional fees, advertising expenses, FDIC insurance premiums, 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.

Historically, a significant majority of our assets consisted of an internally managed investment securities portfolio and fixed-rate and adjustable-rate one- to four-family residential loans, which were funded primarily by certificates of deposits derived from retail customers in the communities surrounding our branches. A significant part of our revenue was derived from the management of our investment securities portfolio and cash and cash equivalents which, as of December 31, 2011, totaled $634.8 million or 65.4% of our assets, while our net loans totaled $276.5 million or 28.5% of our assets at such date. Our lending business was historically limited to one- to four-family residential loans and, to a lesser extent, consumer loans to our customers, with a substantial portion of the loan portfolio being secured by one-to four-family properties located in communities immediately surrounding our banking offices. We did not offer commercial real estate or commercial business loans nor did we offer deposit products or services aimed at attracting business customers.

In mid-2010, our board of directors hired William M. Parent as the new Chief Executive Officer and President and approved a change in our strategic direction designed to transform our Bank into a full service community bank with a full complement of retail and commercial loan and deposit products. The primary goal of this change in strategic direction was to diversify our operations, assets, and funding base. The change in strategic direction emphasized increasing our residential lending capabilities while building commercial real estate and commercial business lending platforms and offering deposit products and

services that would attract and retain commercial customers. The new strategic direction also emphasized improving our technology infrastructure and developing competitive retail and commercial customer delivery channels, including remote deposit capture and internet and mobile banking. As a result, we have significantly increased our loan and deposit product lines, the overall size of our operations and the diversification of our asset base, including a significant increase in residential, commercial real estate and commercial business lending activity. From December 31, 2011 to December 31, 2013, our assets have grown $343.6 million, or 35.4%; our loan portfolio has grown $488.8 million, or 176.8%, including a $347.1 million, or 3,727%, increase in commercial real estate, commercial business and construction loans; our deposits have grown $158.7 million, or 21.0%, including a $157.8 million, or 42.8%, increase in core deposits (consisting of savings, money market, NOW and demand deposit accounts, excluding any certificates of deposit). During this same period, we reduced our portfolio of investment securities and cash and cash equivalents from $634.8 million to $482.4 million, or 24.0%. The investment securities portfolio and cash and cash equivalents represented 36.7% of our assets at December 31, 2013 as compared to 65.4% at December 31, 2011.

In addition to hiring William M. Parent as Chief Executive Officer, the implementation of our change in strategic direction also involved the hiring of a new senior management team with experience in the areas of operations which the Bank planned to expand, including officers and personnel with commercial real estate and commercial business lending and underwriting experience, as well as marketing and risk management personnel. Since 2011, eight executive officers have been hired, including the Senior Commercial Officer, Chief Risk Officer, Chief Retail Officer, Chief Information Officer, Chief Marketing Officer and Chief Financial Officer. Many members of the new management team have significant employment and advisory experience with larger commercial banking institutions. This new management team has been instrumental in the recent growth and diversification of the Bank’s lending activities and loan portfolio, the development of banking products and services for commercial and small business customers, and the introduction of other delivery channels, including online and mobile platforms. In addition to the new executive management team, other personnel have been hired to effect the change in strategic direction which has increased the size of our operations and infrastructure. Our employee base has grown from 103 at December 31, 2010 to 147 as of December 31, 2013. The hiring of a new management team and growth of our operations has also significantly increased the cost of our operations with our noninterest expense increasing from $17.4 million in 2010 to $31.7 million in 2013.

As part of the change in strategic direction, in 2012, we also rebranded the Bank to “Blue Hills Bank,” refurbished and updated the look and feel of our branches, implemented a long range marketing program and significantly increased our marketing budget and resources. For additional discussion of our new strategic focus and recent initiatives see “—Business Strategy” below.

As part of our growth and diversification strategy, on January 18, 2014, we completed the acquisition of three branches located in Nantucket, Massachusetts which we operate under the name Nantucket Bank, a division of Blue Hills Bank. In connection with this acquisition, we acquired the “Nantucket Bank” brand, $274.5 million of deposits and $102.2 million of loans, primarily consisting of local commercial loans and home equity loans and lines of credit selected by the Bank. See “—Nantucket Branch Acquisition” below for a description of the branch acquisition.

Business Strategy

Our current business strategy is designed to continue to transform the Bank into a diversified community bank that builds long-term value for our shareholders by offering an array of loan and deposit products and services to the retail customers and small to mid-size businesses that reside or operate in our market areas. In order to achieve this strategy, we have built our lending infrastructure during the past

few years by adding approximately 34 employees involved in loan origination, underwriting and servicing. We intend to continue to build and leverage that infrastructure to allow us to offer highly competitive products in the most customer centric manner—where and when most convenient to the customer. We intend to continue to grow our lending platforms by offering conforming and non-conforming residential loans, commercial business loans and commercial real estate loans with an emphasis on the small to mid-size business market.

Our business strategy contemplates continued growth in lending and deposit gathering capabilities over the next few years to make the Bank the “Community Bank of Choice” in the markets it serves and in adjacent markets. Our business strategy includes the following key elements:

Expanding Residential Lending – We plan to continue to grow our one-to four-family residential lending operations. We will continue to emphasize increasing our one-to-four family lending capabilities and geographic coverage through the addition of lenders or lending teams that operate in our market area and adjacent markets. If necessary to support such new lending teams, we may establish loan production offices located in the north and south shore communities of eastern Massachusetts which would provide new market coverage to the Bank’s existing profile.

Expanding Commercial Real Estate and Commercial Business Lending – We plan to continue to emphasize and grow our commercial business and commercial real estate lending platforms and loan portfolios. Our focus will be on the small to mid-sized commercial businesses operating or headquartered in eastern Massachusetts and adjacent markets and commercial real estate properties located in eastern Massachusetts and adjacent markets. We will continue to emphasize growth in commercial business lending and deposit products and services and increasing our market coverage through the addition of lenders or lending teams operating in our current market areas and adjacent markets. If necessary to support such new lending teams, we may establish loan production offices located in the north and south shore communities of eastern Massachusetts.

Increasing Core Funding – Over the past three years, the Bank has been repositioning its deposit composition to diminish the reliance on higher priced certificates of deposit and has emphasized attracting and retaining core deposit relationships. Investments in retail branch sales and service training, cross sell initiatives with targeted incentive plans, along with improved product bundling has allowed the Bank to broaden its customer relationships and improve its core deposit retention and reduce its overall cost of funding. The addition of Nantucket Bank offers the continued growth of these programs across an expanded geographic footprint. In addition, our offering of cash management services for the small-to-mid-sized business segment will increase our ability to access commercial business deposit relationships which provide fee income and low cost funding.

Improving Alternative Delivery Channels and Online Banking Penetration – A significant investment has been made to improve and increase the channels by which our customers may conduct transactions and business with the Bank. We have made improvements to our online and mobile capabilities for consumer and business banking. These enhancements include the addition of mobile banking and remote deposit capture capabilities. We continue to make targeted investments to improve online account opening and provide users additional capabilities such as “Pop Money” and peer-to-peer transfers which we believe will increase our ability to convert existing customers to online products that expand and deepen our relationship with customers. Additionally, we look to attract customers outside of our branch footprint through expanded brand recognition, targeted marketing and differentiated pricing.

financial institutions or branches thereof and through the establishment of lower cost loan production offices to support lending teams in markets where we do not have a physical presence. We recently acquired three branches in Nantucket, Massachusetts and have plans to open two de novo branch offices located in Milton and Westwood, Massachusetts, which we expect will open in 2014 and 2015, respectively.

Implementing Our Fee Income Initiative –We have begun to execute a new initiative to analyze our product related fees compared to market competitors and make adjustments where appropriate. This initiative is designed to identify fee income opportunities from our deposit services and products. In addition, our on-going expansion of our cash management capabilities will improve our ability to increase fee income from business customers who manage their banking relationships with the Bank. We also believe opportunities exist to expand our fee income through the introduction of non-deposit investment and insurance products or selective acquisitions of businesses that generate non-interest income.

Maintaining Our Investment Securities Portfolio – Although we have reduced the proportion of securities in our asset base, we expect to maintain a portion of our current investment securities portfolio as a means of net income generation until additional liquidity is needed to fund loan growth. We currently utilize professional third party securities portfolio managers to oversee and manage a portion of our investment securities portfolio and have established an asset allocation model with well-defined investment parameters to guide such managers.

Maintaining Our Integrated Risk Management Program – We will continue to focus on maintaining a well-integrated risk management capability, which we believe is a key component of long-term financial performance. Managing interest rate, credit, market and operational risk through periods of growth and volatile economic environments requires constant focus, assessment and investment in human capital and systems and technology. We intend to maintain this focus through board-level attention combined with prudent underwriting standards and well implemented operating policies and procedures.

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

Nantucket Branch Acquisition

On January 18, 2014, the Bank completed the acquisition of three branches in Nantucket that operate under the name Nantucket Bank, a division of Blue Hills Bank. The assets acquired and liabilities assumed in the transaction included all of the deposits and selected local commercial loans and home equity loans and lines of credit associated with the acquired branches. The following table shows fair value adjustments of the assets acquired and liabilities assumed and other acquisition accounting adjustments and the resulting pro forma impact on Hyde Park Bancorp, MHC as of December 31, 2013, assuming that the acquisition had been completed on that date.


	Hyde Park Bancorp, MHC at December 31, 2013		Nantucket Branch Assets Acquired and Liabilities Assumed (1)		Pro Forma Acquisition Adjustments			Hyde Park Bancorp, MHC Pro Forma
Assets
Cash and cash equivalents	$	40,316	$	161,576	$	(161,576	)(2)	$	40,316
Securities available for sale, at fair value		441,306		—		—			441,306
Loans, net		765,347		102,239		(4,773	)(3)		862,813
Premises and equipment, net		7,478		10,780		(19	)(5)		18,239
Accrued interest receivable		4,290		304		—			4,594
Core deposit intangible		—		—		6,041	(4)		6,041
Goodwill		—		—		8,876	(5)		8,876
Bank-owned life insurance		29,831		—		—			29,831
Other assets		25,719		—		—			25,719

Total assets	$	1,314,287	$	274,899	$	(151,451	)	$	1,437,735

Liabilities and Equity
Deposits	$	823,600	$	274,464	$	137	(6)	$	1,098,201
Brokered Deposits		91,623		—		(40,918	)(2)		50,705
Borrowings		215,000		—		(110,670	)(2)		104,330
Accrued expenses and other liabilities		12,530		435		—			12,965

Total liabilities		1,142,753		274,899		(151,451	)		1,266,201
Total equity		171,534		—		—			171,534

Total liabilities and equity	$	1,314,287	$	274,899	$	(151,451	)	$	1,437,735

(1)	Represents the assets acquired and liabilities assumed in the Nantucket Branch Acquisition. Historical financial statements are not required because the assets acquired and liabilities assumed do not constitute a business which has continuity both before and after the transaction.

(2)	Represents the use of cash to repay brokered deposits and short-term borrowings.

(3)	The purchase accounting adjustment on loans relates to the estimated fair value adjustment, which includes both an interest rate component and a credit adjustment for estimated lifetime losses.

(4)	Represents the estimated fair value of the core deposit intangible assets associated with the deposit liabilities assumed.

(5)	The pro forma adjustment results from recording the acquired assets and liabilities assumed at fair value. This adjustment is preliminary and subject to change.

(6)	The purchase accounting adjustment on deposits relates to the estimated fair value adjustment of the certificate of deposit liability.

The Nantucket Branch Acquisition assisted in the implementation of our business strategy as it added a strong local market share of core deposits and reduced our dependence on wholesale funding and brokered deposits to fund loan growth. The acquisition provided $161.6 million in cash, all of which has been used to pay down Federal Home Loan Bank advances and brokered deposits.

The transaction also changed the interest rate sensitivity of the Bank through the addition of core deposits and the use of cash to reduce short-term wholesale funding and brokered deposits.

Anticipated Increase in Noninterest Expense Due to the Mutual-to-Stock Conversion

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 Blue Hills Bancorp, Inc.’s stockholders.

Assuming that the adjusted maximum number of shares are issued in the offering (and shares are contributed to the Foundation), 28,466,812 shares will be outstanding and:

•

our employee stock ownership plan would acquire 2,277,346 shares of common stock at the maximum of the offering range with a $22.8 million loan that is expected to be repaid over 30 years, resulting in an annual pre-tax expense of approximately $759,000 (assuming that the common stock maintains a value of $10.00 per share);

•

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 1,138,673 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 $2.3 million; and

•

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 2,846,681 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 0.0%; the risk free interest rate is 3.04%; and the volatility rate on the common stock is 15.82%, the estimated grant-date fair value of the stock options utilizing a Black-Scholes option pricing analysis is $3.33 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 $1.9 million.

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:

Securities available for sale. Securities classified as available for sale are reported at fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income. Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Gains and losses on the sale of securities are recorded on the trade date and are determined using the specific identification method. At least quarterly, and more frequently when warranted by economic or market conditions, management evaluates all securities classified as available for sale with a decline in fair value below the amortized cost of the investment to determine whether or not the impairment is deemed to be other-than-temporary (“OTTI”). Marketable equity securities are evaluated for OTTI based on the severity and duration of the impairment and, if deemed to be other than temporary, the declines in fair value are reflected in earnings as realized losses. OTTI is required to be recognized if: (1) we intend to sell the security; (2) it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis; or (3) for debt securities, the present value of expected cash flows is not sufficient to recover the entire amortized cost basis. For all impaired debt securities that we intend to sell, or more likely than not will be required to sell, the full amount of the depreciation is recognized as OTTI through earnings. Credit-related OTTI for all other impaired debt securities is recognized through earnings. Non-credit related OTTI for such debt securities is recognized in other comprehensive income, net of applicable taxes.

Loans. 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 the allowance for loan losses, charge-offs and any deferred fees and costs on originated and purchased loans. Interest income is accrued on the unpaid principal balance. Loan origination costs and discounts on purchased loans, net of certain direct origination fees, are deferred and recognized as an adjustment of the related loan yield using the interest method. It is our policy to discontinue the accrual of interest on loans past due in excess of 90 days, unless the loan is well-secured and in the process of collection, or when in the judgment of management, the ultimate collectability of the principal or interest becomes doubtful and to reverse all interest previously accrued against interest income. Past due status is based on contractual terms of the loan. The interest on non-accrual loans is accounted for on the cash-basis until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due have been current for six consecutive months and future payments are reasonably assured.

Allowance for loan losses . The allowance for loan losses is based on the size and the composition of the loan portfolio, delinquency levels, loss experience, economic conditions and other factors related to the collectability of the loan portfolio. Loan losses are charged against the allowance for loan losses when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. The allowance for loan losses is evaluated regularly by management. The evaluation is inherently subjective as it requires estimates that are susceptible to

significant revision as more information becomes available; however, because of the increase of new exposure in portfolios new to us, it is the intention of management to maintain an allowance that is prudently commensurate with the growth in the loan portfolio. 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 either actual or extrapolated historical loss experience for periods ranging from three to five years adjusted for qualitative and environmental factors, including levels and trends in delinquencies; trends in volumes and terms of loans; effects of changes in risk selection and underwriting standards and other changes in lending policies, procedures and practices; the experience, ability, and depth of lending management and staff; and national and local economic trends and conditions. In 2012, we revised our methodology pertaining to the general component of the allowance for loan losses. This revision included increased segmentation of the loan portfolio, which in previous years had been primarily comprised of conforming residential mortgage loans. Qualitative factors are determined based on the various risk characteristics of each loan segment.

Allocated component. The allocated component relates to loans that are on the watch list (non-accruing loans, partially charged off non-accruing loans and accruing adversely-rated loans) and considered impaired. Impairment is measured 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 are lower than the carrying value of that loan. A loan is considered impaired when, based on current information and events, it is probable that we 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. We 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.

Income taxes. Deferred tax assets and liabilities are reflected at currently enacted income tax rates applicable to the period in which the deferred tax assets or liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted accordingly through the provision for income taxes. A valuation allowance related to deferred tax assets is established when, in the judgment of management, it is more likely than not that all or a portion of such deferred tax assets will not be realized. We record interest and penalties as part of income tax expense.

Comparison of Financial Condition at December 31, 2013 and December 31, 2012

Total Assets. Total assets increased $85.7 million to $1.3 billion at December 31, 2013 from $1.2 billion at December 31, 2012. The increase was primarily due to a $277.1 million, or 56.8%, increase in net loans, partially offset by a $92.5 million, or 17.3%, decline in securities available for sale, a $33.0 million, or 50.7%, decline in short-term investments and a $31.4 million decrease in trading assets. The decrease in trading assets reflects our decision in 2013 to discontinue investing in “to be announced” mortgage backed securities. We elected the fair value option of recording these securities and have thus classified them as trading account assets. There was a related $33.9 million reduction in broker receivables that were a component of our trading strategy.

Loans. Net loans increased by $277.1 million to $765.3 million at December 31, 2013 from $488.2 million at December 31, 2012, primarily due to originations, purchases and participations. Commercial real estate loans increased $127.8 million, or 126.6%, commercial business loans increased $77.4 million, or 229.2%, and one- to four-family residential loans increased $54.0 million, or 17.3%. The increase in commercial real estate and commercial business loans is part of our strategy to diversify our balance sheet, and we intend to continue to emphasize the expansion of these portfolios in the future.

Securities Available for Sale. Total securities available for sale declined by $92.5 million to $441.3 million at December 31, 2013 from $533.8 million at December 31, 2012. The decline was driven by a $47.1 million, or 37.0%, decrease in marketable equity securities, mainly mutual funds, and a $46.7 million, or 40.9%, decrease in government sponsored residential mortgage backed securities and collateralized mortgage obligations. These decreases were partially offset by a $19.4 million, or 17.8%, increase in U.S. Treasury securities. The overall decline in investment securities was driven by our strategy to change the composition of the balance sheet by increasing our loan portfolio, funded by the sale of securities, maturing securities and securities prepayments.

Cash and Cash Equivalents. Cash and cash equivalents declined by $33.5 million, or 45.4%, to $40.3 million at December 31, 2013 from $73.8 million at December 31, 2012. The decrease reflected the repositioning of the balance sheet away from low yielding short-term investments and into higher yielding loans.

Bank-Owned Life Insurance. At December 31, 2013, our investment in bank-owned life insurance was $29.8 million, down from $33.3 million at December 31, 2012. The decrease was primarily due to the receipt of death benefits, partially offset by an increase in the cash surrender value.

Deposits. Deposits increased by $97.3 million, or 11.9%, to $915.2 million at December 31, 2013 from $817.9 million at December 31, 2012. The increase in total deposits was driven by a $56.8 million, or 17.1%, increase in certificates of deposit, a $31.3 million, or 35.8%, increase in NOW and demand deposits, and a $19.1 million, or 6.1%, increase in regular savings accounts, partially offset by a $9.8 million, or 11.5%, decrease in money market deposits. The growth in certificates of deposit was mainly related to a $79.6 million increase in brokered deposits which ended 2013 at $91.6 million compared to $12.0 million at December 31, 2012. The increase in brokered deposits reflects a transitional need for funding of loan growth. During the course of 2013, we sought to administer deposit pricing strategies that would lower the overall cost of deposits while preserving profitable customer relationships. Our average deposit cost declined to 0.81% in 2013 from 0.97% in 2012 and all individual deposit categories had a lower cost in 2013 than in 2012. See “—Nantucket Branch Acquisition” above for a discussion of deposits assumed in January 2014 as part of the acquisition.

Borrowings. Total borrowings increased from $154.4 million at December 31, 2012 to $215.0 million at December 31, 2013, primarily to fund loan growth. At December 31, 2013, short-term borrowings were $170.0 million, increasing by $60.6 million as compared to the prior year, and consisted of advances from the Federal Home Loan Bank of Boston maturing during 2014. This increase was used, in part, to fund the expansion of the loan portfolio. Long-term borrowings remained unchanged during the year, consisting of fixed rate advances from the Federal Home Loan Bank of Boston with maturities ranging from 2014 through 2018.

Equity. Total equity declined $5.4 million, or 3.1%, to $171.5 million at December 31, 2013 from $176.9 million at December 31, 2012. The decline was attributable to a $7.5 million decrease in accumulated other comprehensive income, mainly reflecting a decline in net unrealized gains on securities available for sale due to rising long-term interest rates and the sale of securities during 2013. Offsetting this decline was a $2.1 million, or 1.4%, increase in retained earnings to $150.3 million at December 31, 2013 from $148.2 million at December 31, 2012. The increase in retained earnings mainly reflects net income of $2.7 million for fiscal 2013, partially offset by dividends paid on preferred stock issued in connection with the U.S. Treasury’s Small Business Lending Fund Program.

Comparison of Operating Results for the Years Ended December 31, 2013 and 2012

General. Net income decreased by $5.2 million to $2.7 million for the year ended December 31, 2013 from $7.9 million for the year ended December 31, 2012, with pre-tax income declining by $8.6 million to $2.4 million in 2013 from $11.0 million in 2012. The declines in pretax and net income were primarily driven by a $5.4 million increase in noninterest expense, a $3.2 million decline in noninterest income, and a $1.7 million increase in the provision for loan losses. These items were partially offset by a $1.7 million increase in net interest and dividend income. Net income was positively affected by the recognition of a $284,000 tax benefit in 2013 compared to an income tax expense of $3.1 million in 2012. We recorded a tax benefit for fiscal 2013 despite having pre-tax income of $2.4 million, primarily due to our tax preference items in relation to pre-tax income, most notably due to death benefit income associated with bank-owned life insurance.

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. No tax equivalent yield adjustments have been made as the effect of such adjustments would not be material.


	At December 31, 2013			For the Year Ended December 31, 2013
	Yield/Rate			Average Outstanding Balance			Interest		Yield/ Rate
	(Dollars in thousands)
Interest-earning assets:
Total loans		3.58	%	$	591,990		$	21,876		3.70	%
Securities		2.19			500,499			11,150		2.23
Other interest earning assets ⁽¹⁾		0.15			45,828			66		0.14

Total interest-earning assets		2.97			1,138,317			33,092		2.91
Non-interest-earning assets					55,958

Total assets				$	1,194,275
Interest-bearing liabilities:
NOW accounts		0.06	%	$	66,580		$	68		0.10	%
Regular savings accounts		0.47			344,783			2,420		0.70
Money market accounts		0.39			81,225			531		0.65
Certificates of deposit		0.90			350,861			3,784		1.08

Total interest-bearing deposits		0.62			843,449			6,803		0.81
Borrowings		0.61			127,501			1,168		0.92

Total interest-bearing liabilities		0.61			970,950			7,971		0.82

Non-interest-bearing deposits					29,716
Other non-interest-bearing liabilities					18,279

Total liabilities					1,018,945
Equity					175,330

Total liabilities and equity				$	1,194,275
Net interest and dividend income							$	25,121
Net interest rate spread ⁽²⁾										2.09	%
Net interest-earning assets ⁽³⁾				$	167,367
Net interest margin ⁽⁴⁾										2.21	%
Average interest-earning assets to interest-bearing liabilities					117.24	%

(footnotes on following page)


	For the Year Ended December 31,
	2012								2011
	Average Outstanding Balance			Interest		Yield/Rate			Average Outstanding Balance			Interest		Yield/ Rate
	(Dollars in thousands)
Interest-earning assets:
Total loans	$	384,432		$	16,545		4.30	%	$	244,561		$	12,666		5.18	%
Securities		565,584			15,151		2.68			518,143			19,147		3.70
Other interest earning assets ⁽¹⁾		55,768			120		0.22			97,385			182		0.19

Total interest-earning assets		1,005,784			31,816		3.16			860,089			31,995		3.72
Non-interest-earning assets		60,862								58,797

Total assets	$	1,066,646							$	918,886

Interest-bearing liabilities:
NOW accounts	$	60,241		$	80		0.13	%	$	60,013		$	125		0.21	%
Regular savings accounts		243,507			1,756		0.72			179,677			888		0.49
Money market accounts		105,783			893		0.84			46,097			430		0.93
Certificates of deposit		341,453			4,530		1.33			432,561			7,034		1.63

Total interest-bearing deposits		750,984			7,259		0.97			718,348			8,477		1.18
Borrowings		102,266			1,113		1.09			19,836			461		2.32

Total interest-bearing liabilities		853,250			8,372		0.98			738,184			8,938		1.21

Non-interest-bearing deposits		19,681								17,796
Other non-interest bearing liabilities		21,921								11,954

Total liabilities		894,852								767,934
Equity		171,794								150,952

Total liabilities and equity	$	1,066,646							$	918,886
Net interest and dividend income				$	23,444							$	23,057
Net interest rate spread ⁽²⁾							2.18	%							2.51	%
Net interest-earning assets ⁽³⁾	$	152,534							$	121,905
Net interest margin ⁽⁴⁾							2.33	%							2.68	%
Average interest-earning assets to interest-bearing liabilities		117.88	%							116.51	%

(1)	Includes Federal Home Loan Bank common stock and short-term investments.

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

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

(4)	Net interest margin represents net interest income as a percentage of average 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 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). The total column represents the sum of the prior columns. 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.


	Years Ended December 31, 2013 vs. 2012									Years Ended December 31, 2012 vs. 2011
	Increase (Decrease) Due to						Total Increase (Decrease)			Increase (Decrease) Due to						Total Increase (Decrease)
	Volume			Rate			Total Increase (Decrease)			Volume			Rate			Total Increase (Decrease)
	(In thousands)
Interest-earning assets:
Loans	$	7,222		$	(1,891	)	$	5,331		$	5,506		$	(1,627	)	$	3,879
Securities		(1,624	)		(2,377	)		(4,001	)		1,988			(5,984	)		(3,996	)
Other		(19	)		(35	)		(54	)		(86	)		24			(62	)

Total interest-earning assets	$	5,579		$	(4,303	)	$	1,276		$	7,408		$	(7,587	)	$	(179	)

Interest-bearing liabilities:
NOW accounts	$	10		$	(22	)	$	(12	)	$	—		$	(45	)	$	(45	)
Savings accounts		710			(46	)		664			379			489			868
Money market accounts		(184	)		(178	)		(362	)		500			(37	)		463
Certificates of Deposit		129			(875	)		(746	)		(1,336	)		(1,168	)		(2,504	)

Total interest-bearing deposits		665			(1,121	)		(456	)		(457	)		(761	)		(1,218	)
Borrowings		153			(98	)		55			748			(96	)		652

Total interest-bearing liabilities		818			(1,219	)		(401	)		291			(857	)		(566	)

Change in net interest and dividend income	$	4,761		$	(3,084	)	$	1,677		$	7,117		$	(6,730	)	$	387

Net Interest and Dividend Income. Net interest and dividend income increased $1.7 million to $25.1 million for the year ended December 31, 2013 from $23.4 million for the year ended December 31, 2012. Net interest-earning assets increased by $14.8 million to $167.4 million for the year ended December 31, 2013 compared to $152.5 million for the year ended December 31, 2012, while the net interest rate spread decreased 9 basis points to 2.09% for the year ended December 31, 2013, compared to 2.18% for the year ended December 31, 2012. Our net interest margin decreased 12 basis points to 2.21% for the year ended December 31, 2013, compared to 2.33% for 2012.

Interest and Dividend Income. Interest and dividend income increased $1.3 million, or 4.0%, to $33.1 million for the year ended December 31, 2013, compared to $31.8 million for the year ended December 31, 2012. The increase was primarily due to a $5.3 million, or 32.2%, increase in interest on loans to $21.9 million for the year ended December 31, 2013, partially offset by a $4.0 million, or 26.0%, decrease in interest and dividend income on securities to $11.2 million for the year ended December 31, 2013.

The $5.3 million increase in interest on loans was primarily due to a $207.6 million increase in the average balance of loans to $592.0 million for the year ended December 31, 2013, partially offset by a 60 basis point decrease in the average yield on loans to 3.70% for the year ended December 31, 2013. The

increase in the average balance of loans reflected our strategy to grow our loan portfolio and deemphasize our reliance on income from investment securities. The yield on loans decreased because the loans that we added in 2013 had lower yields than our average loans in 2012 due to the lower interest rate environment, the higher contribution of short-term LIBOR based commercial loans and competitive pricing pressures.

The decrease in interest and dividends on securities was primarily due to a 45 basis point decrease in the average yield to 2.23% for the year ended December 31, 2013 and a $65.1 million decrease in the average balance of securities to $500.5 million for the year ended December 31, 2013. The yield on securities decreased because the securities we sold had higher yields than our remaining securities, because the securities purchased to replace maturing securities had lower yields than those prevailing in 2011 and because of our strategy to not materially extend the duration of the portfolio. The decrease in the average balance of securities was due to sales of securities.

Interest Expense. Interest expense decreased $401,000, or 4.8%, to $8.0 million for the year ended December 31, 2013 from $8.4 million for the year ended December 31, 2012. The decrease resulted from a $456,000 decrease in interest expense on interest-bearing deposits offset by a $55,000 increase in interest expense on borrowings.

Interest expense on interest-bearing deposits decreased by $456,000 to $6.8 million for the year ended December 31, 2013 from $7.3 million for the year ended December 31, 2012. The decrease was due to a 16 basis point decrease in the average rate paid on interest-bearing deposits to 0.81% for the year ended December 31, 2013, partially offset by a $92.5 million increase in the average balance of interest-bearing deposits to $843.4 million for the year ended December 31, 2013. The average balances of savings deposits, certificates of deposit and NOW accounts increased by $101.3 million, $9.4 million and $6.3 million, respectively, while the average balance of money market accounts decreased by $24.6 million. The decrease in the cost of deposits was in line with our strategic goal of changing the composition of our deposits to reduce the overall composite rate paid on deposits.

Interest expense on borrowings increased $55,000, or 4.9%, to $1.2 million for the year ended December 31, 2013. The increase was due to a $25.2 million increase in the average balance of borrowings in fiscal 2013, partially offset by a 17 basis point decrease in the average cost of borrowings.

Provision for Loan Losses. We recorded provisions for loan losses of $4.1 million for the year ended December 31, 2013 and $2.4 million for the year ended December 31, 2012. The growth in the provision reflected management’s assessment of the risks inherent in our loan portfolio and was necessary so that the allowance for loan losses could keep pace with growth in the loan portfolio during 2013. Net loans grew $277.1 million, or 56.8%, to $765.3 million at December 31, 2013 from $488.2 million at the end of 2012 and the allowance stood at 1.25% of total loans at December 31, 2013 compared to 1.13% at December 31, 2012. The increase also reflected the shift in the composition of our loan portfolio to a higher percentage of commercial business and commercial real estate loans. Credit quality remained strong as loans on nonaccrual represented 0.23% of total loans at December 31, 2013 compared to 0.45% at the end of 2012 and we had net loan recoveries of $27,000 in 2013 compared to net loan chargeoffs of $312,000 in 2012.

Noninterest Income. Noninterest income decreased $3.2 million, or 19.5%, to $13.0 million for the year ended December 31, 2013 compared to $16.2 million for the year ended December 31, 2012. The decline was driven by a $6.8 million decrease in gains on sales of securities (excluding other than temporary impairment) compared to such gains experienced in 2012. The decline in securities gains was partially offset by growth in other categories of noninterest income, the largest of which were bank-owned life insurance income, which increased by $1.8 million, and commercial loan fee income from commercial loan swap activity, which increased by $1.0 million.

Noninterest Expense. Noninterest expense increased $5.4 million, or 20.5%, to $31.7 million for the year ended December 31, 2013 from $26.3 million for the year ended December 31, 2012. Of the $5.4 million increase in noninterest expense, $1.7 million was related to the restructuring of incentive and benefit plans, $584,000 was related to the Nantucket Branch Acquisition, and $184,000 related to the mutual-to-stock conversion of Hyde Park Bancorp, MHC. Excluding these items, noninterest expense would have increased $2.9 million, or 11%, in 2013 compared to 2012. This remaining $2.9 million increase in noninterest expense resulted from the higher cost associated with the Bank becoming a diversified community bank in accordance with the Bank’s strategic plan discussed under “—Business Strategy” above. These costs related to a continued expansion of the management team and other infrastructure to meet the needs of the business plan. On a full time equivalent basis, total employees were 147 at December 31, 2013 compared to 141 at December 31, 2012 and 122 at December 31, 2011. In addition to the increase in the number of employees, the profile of our employee population has evolved over the past two years towards a higher proportion of employees with significant industry experience and this contributed to the growth in salaries and benefits expense. Partially offsetting the overall growth in noninterest expense was a $658,000, or 48.9%, decline in directors’ fees due mainly to a reduction in the size of the Board of Directors to 11 from 17 members and the absence in 2013 of costs incurred in 2012 related to directors who accepted an early retirement compensation package in connection with the downsizing of the Board.

Income Tax Provision. Despite earning $2.4 million in pre-tax income during 2013, we recorded a tax benefit of $284,000 compared to a $3.1 million tax provision in 2012. The tax benefit in 2013 was due to our tax preference items in relation to pre-tax income most notably due to death benefit income associated with bank-owned life insurance.

Comparison of Operating Results for the Years Ended December 31, 2012 and 2011

General. Net income increased $293,000 to $7.9 million for the year ended December 31, 2012 from $7.6 million for the year ended December 31, 2011. The increase was primarily due to a $7.0 million increase in noninterest income and a $387,000 increase in net interest income, partially offset by $5.2 million increase in noninterest expense and a $1.2 million increase in the provision for loan losses.

Net Interest and Dividend Income. Net interest and dividend income increased $387,000 to $23.4 million for the year ended December 31, 2012 from $23.1 million for the year ended December 31, 2011. Net interest-earning assets increased $30.6 million to $152.5 million for the year ended December 31, 2012 compared to $121.9 million for the year ended December 31, 2011, while the net interest rate spread decreased 33 basis points to 2.18% for the year ended December 31, 2012, compared to 2.51% for the year ended December 31, 2011. Our net interest margin decreased 35 basis points to 2.33% for the year ended December 31, 2012, compared to 2.68% for 2011.

Interest and Dividend Income. Interest and dividend income decreased by $179,000 to $31.8 million for the year ended December 31, 2012, compared to $32.0 million for the year ended December 31, 2011. The decrease was primarily due to a $4.0 million, or 20.9%, decrease in interest and dividends on securities to $15.2 million for the year ended December 31, 2012, partially offset by a $3.9 million, or 30.6%, increase in interest income on loans to $16.5 million for the year ended December 31, 2012.

The $3.9 million increase in interest on loans was primarily due to a $139.9 million increase in the average balance of loans to $384.4 million for the year ended December 31, 2012, partially offset by an 88 basis point decrease in the average yield on loans to 4.30% for the year ended December 31, 2012.

The increase in the average balance of loans reflected our strategy to grow our loan portfolio and deemphasize our reliance on income from investment securities. The yield on loans decreased because the loans that we added in 2012 had lower yields than our average loans in 2011 due to the lower interest rate environment and competitive pricing pressures.

The decrease in interest and dividends on securities was primarily due to a 102 basis point decrease in the average yield to 2.68% for the year ended December 31, 2012, partially offset by a $47.4 million increase in the average balance of securities to $565.6 million for the year ended December 31, 2012. The yield on securities decreased because the securities we purchased in 2012 to replace maturing and sold securities had lower yields than our average securities in 2011 due to the lower interest rate environment.

Interest Expense. Interest expense decreased $566,000, or 6.3%, to $8.4 million for the year ended December 31, 2012 from $8.9 million for the year ended December 31, 2011. The decrease resulted from a $1.2 million decrease in interest expense on interest-bearing deposits, partially offset by a $652,000 increase in interest expense on borrowings.

Interest expense on interest-bearing deposits decreased by $1.2 million to $7.3 million for the year ended December 31, 2012 from $8.5 million for the year ended December 31, 2011. The decrease in interest expense on interest-bearing deposits was due to a 21 basis point decrease in the average rate paid on interest-bearing deposits to 0.97% for the year ended December 31, 2012, partially offset by a $32.6 million, or 4.5%, increase in the average balance of interest-bearing deposits to $751.0 million for the year ended December 31, 2012. The average balances of savings deposits and money market accounts increased by $63.8 million and $59.7 million, respectively, while the average balance of certificates of deposit decreased by $91.1 million. Total deposits increased to fund the growth of our loan portfolio, while the decrease in certificates of deposit was in line with our strategic goal of increasing core deposits.

Interest expense on borrowings increased $652,000 to $1.1 million for the year ended December 31, 2012 from $461,000 for fiscal 2011. The increase was due to a $82.4 million increase in the average balance of borrowings in 2012, partially offset by a 123 basis point decrease in the average cost of borrowings. The average balance of borrowings increased to fund the growth of our loan portfolio, while the cost of borrowing decreased as a result of the prevailing low interest rate environment.

Provision for Loan Losses. We recorded a provision for loan losses of $2.4 million for the year ended December 31, 2012 and a provision for loan losses of $1.1 million for the year ended December 31, 2011. The growth in the provision reflected management’s assessment of the risks inherent in our loan portfolio and was necessary so that the allowance for loan losses could keep pace with growth in the loan portfolio during 2012. The allowance for loan losses stood at 1.13% of total loans at December 31, 2012 compared to 1.25% at December 31, 2011. Nonaccrual loans represented 0.45% of total loans at December 31, 2012 compared to 0.98% at the end of 2011 and we had net loan chargeoffs of $312,000 in 2012 compared to $103,000 in 2011.

Noninterest Income. Noninterest income increased $7.0 million to $16.2 million for the year ended December 31, 2012 compared to $9.2 million for the year ended December 31, 2011. The growth was driven by a $6.4 million increase in gains from securities sales as the declining interest rate environment in 2012 resulted in appreciation in the value of debt securities which we sold. In addition, net gains on loan sales increased to $997,000 in 2012 from $40,000 in 2011 and we benefited from $456,000 of commercial loan fee income from commercial loan swap activity in 2012 compared to none in 2011.

Noninterest Expense. Noninterest expense increased $5.2 million, or 24.9%, to $26.3 million for the year ended December 31, 2012 from $21.0 million for the year ended December 31, 2011. The increase in noninterest expense was mainly due to salaries and benefits expense which increased $3.2 million, or 34.2%, to $12.4 million in 2012 from $9.3 million in 2011. On a full time equivalent basis, total employees increased 15.6% to 141 at December 31, 2012 compared to 122 at December 31, 2011. In addition, the proportion of employees with significant industry experience was greater in 2012 than in 2011 and this contributed to the growth in salaries and benefits expense. Directors’ fees also increased $703,000 to $1.3 million in 2012. In mid-year 2011 we implemented a new compensation program that increased director compensation and 2012 reflects the full year impact of that program. Fees related to director compensation also increased in 2012 due to six directors accepting an early retirement package as part of a plan to reduce the number of directors from 17 to 11. Most other categories of noninterest expense also experienced growth in 2012 reflecting our transition to a diversified community bank, in accordance with the strategic plan discussed under “—Business Strategy” above. This included a significant expansion of the management team and investment in branches and other infrastructure to meet the needs of the business plan.

Income Tax Provision. We recorded a provision for income taxes of $3.1 million in 2012 and $2.5 million in 2011. The effective income tax rate was 28.4% in 2012 and 25.1% in 2011. The lower effective tax rate in 2011 was due, in part, to a higher proportion of non-taxable income from bank-owned life insurance.

Management of Market Risk

General .

Market risk is the risk that the market value or estimated fair value of our assets, liabilities, and derivative financial instruments will decline as a result of changes in interest rates or financial market volatility, or that our net income will be significantly reduced by interest-rate changes.

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.

Net Interest Income Analysis.

Income simulation is the primary tool for measuring the interest-rate risk inherent in our balance sheet at a given point in time by showing the effect on net interest income, over specified time horizons, under a range of interest rate ramp and shock scenarios. These simulations take into account repricing, maturity and prepayment characteristics of individual products. 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. The ALCO

reviews the methodology utilized for calculating interest-rate risk exposure and may periodically adopt modifications to this methodology. Simulation results are reviewed by the ALCO to determine whether the exposure resulting from changes in market interest rates remains within established tolerance levels and develops appropriate strategies to manage this exposure.

As of December 31, 2013, net interest income simulation indicated that our exposure to changing interest rates was within our internal and regulatory guidelines. The following table presents the estimated impact of interest-rate ramps on our estimated net interest income over the period indicated:


Change in Interest Rates (basis points) (1)	Change in Net Interest Income Year One (% Change From Year One Base)
+ 200		-5.01	%
- 100		1.24	%

(1)	The calculated change in net interest income assumes a gradual parallel shift across the yield curve over a one-year period.

The table above indicates that at December 31, 2013, 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 5.01% 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 1.24% increase in net interest income. The Nantucket Branch Acquisition, as discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Nantucket Branch Acquisition,” impacts our net interest income sensitivity due to the addition of core deposits which reduces liability sensitivity. The pro forma for this transaction as of December 31, 2013, the estimated negative impact 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, is reduced to a 2.03% decrease in net interest income, while the estimated positive impact 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, is reduced to a 0.51% 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 December 31, 2013 indicated that, in the event of an instantaneous 200 basis point increase in interest rates, we would experience an estimated 17.4% decrease in the economic value of our equity. At the same date, our analysis indicated that, in the event of an instantaneous 100 basis point decrease in interest rates, we would experience an estimated 1.9% increase in the economic value of our equity. The Nantucket Branch Acquisition, as discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Nantucket Branch Acquisition,” impacts the economic value of equity analysis in both a rising and declining rate environment primarily due to the addition of non-rate sensitive core deposits. Adjusting for this transaction as of December 31, 2013, we estimated that an instantaneous 200 basis point increase in interest rates would result in a 12.1% decrease in the economic value of our equity while the impact of an instantaneous 100 basis point decline in interest rates would result in a 1.4% decrease in the economic value of our equity. The impact on our economic value of equity under all scenarios discussed above are within policy guidelines. 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 a financial institution’s capacity to readily meet its current and future financial obligations. It is further defined as the ability to respond to the needs of depositors and borrowers, as well as to opportunities for earnings enhancements. The company’s primary source of liquidity is deposits which funded approximately three-quarters of total assets in 2013. Other sources of liquidity include cash flows from loan repayments and the securities portfolios and discretionary use of wholesale funds, including Federal Home Loan Bank of Boston (“FHLBB”) borrowings and brokered deposits. Wholesale funds are used to diversify our funding mix and to support asset growth when profitable lending and investment opportunities exist. Securities designated as available for sale may also be sold in response to short-term or long-term liquidity needs.

We have a detailed liquidity funding policy and a contingency funding plan that outlines a comprehensive management response to unexpected demands for liquidity. Management employs stress testing methodology to estimate needs for contingent funding that could result from unexpected outflows of funds in excess of ordinary course of business. To supplement its liquidity, Blue Hills Bank has established collateralized borrowing capacity with the Federal Reserve Bank of Boston and also maintains additional collateralized borrowing capacity with the FHLBB. At December 31, 2013, we had $215 million of FHLBB advances outstanding. At that date we had the ability to borrow up to an additional $50 million from the FHLBB. At December 31, 2013 and 2012, we had $33.0 million in available unsecured federal funds lines with correspondent banks, which could be drawn upon as needed. There were no amounts outstanding under these lines of credit at December 31, 2013 or 2012.

Liquidity management is monitored by the ALCO committee which is responsible for establishing and monitoring liquidity targets as well as strategies to meet these targets. Liquidity remained well within target ranges established by the ALCO committee during 2013. Management believes our sources of funding will meet anticipated funding needs.

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 December 31, 2013 cash and cash equivalents totaled $40.3 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.

Our primary investing activities are originating loans and purchasing securities. During the years ended December 31, 2013 and December 31, 2012, we had net loan originations of $63.7 million and $30.1 million, respectively. We also bought $218.1 million and $184.4 million of loans in 2013 and 2012, respectively. We are also active in buying and selling securities. During the year ended December 31, 2013 we purchased $335.9 million of securities and received proceeds from the sale of securities totaling $314.9 million. During the year ended December 31, 2012 those amounts were $493.3 million and $343.8 million, respectively.

Financing activities consist primarily of activity in deposit accounts and borrowings. We experienced net increases in deposits of $97.3 million and $61.4 million for the years ended December 31, 2013 and December 31, 2012, respectively. Included in the net deposit increases are $79.6 million and $12.0 million, respectively, of brokered deposits. At December 31, 2013, brokered deposits totaled $91.6 million but these were reduced by approximately one-half in January 2014 following the Nantucket Branch Acquisition. 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. We also experienced net increases in borrowings of $60.6 million and $114.4 million for the years ended December 31, 2013 and December 31, 2012, respectively.

At December 31, 2013, we had $28.1 million in loan commitments outstanding. In addition to commitments to originate loans, we had $81.5 million in unused lines of credit to borrowers and letters of credit and $21.7 million in undisbursed construction loans. Certificates of deposit due within one year of December 31, 2013 totaled $265.1 million, or 29.0%, of total deposits. Excluding brokered deposits, certificates of deposit due within one year of December 31, 2013 totaled $184.2 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 and securities sales, brokered deposits, and Federal Home Loan Bank advances. While management believes that we have adequate liquidity to meet our commitments and to fund the Bank’s lending and investment activities, the availability of these funding sources are subject to broad economic conditions and could be restricted in the future. Such restrictions would impact our immediate liquidity and/or additional liquidity needs.

We are 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 December 31, 2013, we exceeded all regulatory capital requirements and are considered “well capitalized” under regulatory guidelines (see Note 11 of the Notes to Consolidated Financial Statements).

On January 18, 2014, the Bank completed the acquisition of three branches in Nantucket that operate under the name Nantucket Bank, a division of Blue Hills Bank. The assets acquired and liabilities assumed in the transaction included all of the deposits and selected local commercial loans and home equity loans and lines of credit associated with the acquired branches. As part of the Nantucket Branch Acquisition, we also received $161.6 million in cash, all of which has been used to pay down Federal Home Loan Bank advances and replace brokered deposits. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Nantucket Branch Acquisition.”

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. We are a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of our customers. These financial instruments include commitments to extend credit, which involve elements of credit and interest rate risk in excess of the amount recognized in the accompanying consolidated balance sheets. The contract amount of these instruments reflects the extent of involvement we have in these particular classes of financial instruments. We use the same credit policies in making commitments as we do for on-balance sheet instruments. Our exposure to credit loss is represented by the contractual amount of the instruments. Commitments to

extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments and unadvanced funds on lines-of-credit generally have fixed expiration dates and may expire without being drawn upon. Therefore, the total commitment amount does not necessarily represent future cash requirements. We evaluate each customer’s creditworthiness on a case-by-case basis. In addition, from time to time we enter into commitments to sell mortgage loans that we originate. For additional information, see Note 13 of the Notes to Consolidated Financial Statements beginning on Page F-1 of this prospectus.

Recent Accounting Pronouncements

For a discussion of the impact of recent accounting pronouncements, see Note 1 of the Notes to 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 BLUE HILLS BANCORP

Blue Hills Bancorp 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 Blue Hills Bank. We will retain up to 50% of the net proceeds from the offering and initially invest the remaining net proceeds in Blue Hills Bank as additional capital of Blue Hills Bank. Blue Hills Bancorp will use a portion of the net proceeds to make a loan to the employee stock ownership plan through a subsidiary that it will capitalize for this purpose. 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, Blue Hills Bancorp, as the holding company of Blue Hills Bank, will be authorized to pursue other business activities permitted by applicable laws and regulations, which may include the opportunistic acquisition of banking and financial services companies. See “Supervision and Regulation—Holding Company Regulation” for a discussion of the activities that are permitted for bank holding companies. We currently have no understandings or agreements to acquire other financial institutions.

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 Blue Hills Bank. Initially, Blue Hills Bancorp will neither own nor lease any property, but will instead pay a fee to Blue Hills Bank for the use of its premises, equipment and furniture. At the present time, we intend to employ only persons who are officers of Blue Hills Bank to serve as officers of Blue Hills Bancorp. We will, however, use the support staff of Blue Hills Bank from time to time. We will pay a fee to Blue Hills Bank for the time devoted to Blue Hills Bancorp by employees of Blue Hills Bank. However, these persons will not be separately compensated by Blue Hills Bancorp. Blue Hills Bancorp may hire additional employees, as appropriate, to the extent it expands its business in the future.

BUSINESS OF BLUE HILLS BANK

General

Under its original name of Hyde Park Savings Bank, Blue Hills Bank was chartered in 1871 by the Commonwealth of Massachusetts as a mutual savings bank to serve the financial needs of businesses and individuals in the local community. In 2008, the Bank reorganized into a two-tier mutual holding company structure resulting in the creation of Hyde Park Bancorp, MHC; and in 2011, Hyde Park Bancorp, Inc., the Bank’s mid-tier holding company, was formed. In 2011, the Bank was rebranded “Blue Hills Bank.”

We provide financial services to individuals, families and businesses through our nine full-service branch offices located in Brookline, Dedham, Hyde Park (two branches), Nantucket (three branches), Norwood and West Roxbury, Massachusetts. Our deposits are insured by the Federal Deposit Insurance Corporation (“FDIC”) to the maximum extent permitted by law, and amounts in excess of FDIC deposit insurance limits are insured by the Depositors Insurance Fund. We also offer alternative banking delivery channels, including online banking, online bill payments, mobile banking, mobile person-to-person payments and mobile check deposits, supported by a dedicated call center. We offer cash management, merchant services and remote deposit capture to our business customers. We offer our loan and deposit products to retail and commercial customers throughout eastern Massachusetts.

Prior to 2010, the Bank was focused primarily on soliciting deposits from retail customers residing in the communities in which our branches were located and investing those deposits primarily in investment securities and, to a lesser extent, one- to four-family mortgages secured by properties located in the communities surrounding our branch offices. Accordingly, we generally did not offer commercial real estate or commercial business loans or deposit products and services aimed at attracting business customers. Prior to 2010, we relied more heavily on the management of our investment securities portfolio and cash and cash equivalents as a source of net income. At December 31, 2010, investment securities totaled $543.9 million, or 59.7% of total assets, net loans totaled $202.0 million, or 22.2% of assets (91.6% of our loan portfolio was one- to four-family residential mortgage loans) and cash and cash equivalents totaled $111.8 million or 12.3% of total assets.

In mid-2010, following a comprehensive strategic review of our business, management and operations, the board of directors appointed a new President and Chief Executive Officer, William M. Parent, and subsequently approved a change in the overall business strategy of the Bank. The new strategic direction was designed to transform the Bank into a diversified, full-service community bank with new and expanded lending and deposit platforms and increased capabilities to serve retail customers and the small and mid-size business market. Additionally, the new strategic direction called for the Bank to update its branding and marketing efforts in the markets it served. This new strategy intended to leverage the Bank’s capital strength, liquidity and strong asset quality and build the infrastructure necessary to support its increased lending activity. In particular, it emphasized building a robust residential, commercial real estate and commercial business oriented banking platform by broadening its product offerings, improving its technology and delivery channels and hiring additional experienced lenders and underwriting staff. The new strategic direction also sought to take advantage of the sound economy of eastern Massachusetts, which had not been as negatively affected by the recession that began in 2008 as other regions of the United States.

In 2011, additional members of the senior management team were hired, notably the Senior Commercial Officer, Chief Risk Officer, Chief Retail Officer, Chief Information Officer and Chief Marketing Officer and, in 2013, a new Chief Financial Officer was hired. The new management team has continued to implement the Bank’s change in its strategic direction, which has resulted in growth and diversification of lending activities and the loan portfolio, the development of banking products and services for commercial and small business customers, and the introduction of other delivery channels, including online and mobile platforms.

Additionally, the Bank decided to update its market image, increase its name recognition and market presence and rebrand its operations by changing its name to “Blue Hills Bank” in 2011. The Bank believes that its rebranding efforts will better position the Bank as a regional alternative for its commercial and retail customers.

Recently Completed Strategic Initiatives

From 2010 to 2013, we made progress in changing our strategic direction, including completion of the following initiatives:

•

Commercial lending platform – The Bank established a commercial real estate and commercial business lending platform targeting the financial needs of professional commercial real estate investors, developers and middle-market businesses located and operating in eastern Massachusetts. In order to gain relevant commercial lending experience, build its commercial loan portfolio and assess the infrastructure the Bank had built to handle such activity, the Bank initially purchased and participated in loans with larger commercial banks during 2011 through 2013. We now offer a full range of commercial lending products. Since 2010, we have added 13 commercial lending staff including six commercial underwriting, servicing and support staff, some of whom also support our small business banking activities.

•

Small business banking – The Bank now offers commercial banking products tailored to mid- to small-size businesses, with a primary focus on new customer acquisition in areas served by the Bank’s branches. The Bank offers commercial deposit products, business checking and cash management products that encourage relationship banking, along with savings products tied to profitable business checking accounts. In addition, the Bank obtained the necessary qualifications to participate in lending programs of the U.S. Small Business Administration, increasing its ability to attract small businesses by providing guarantees on loans. Since 2010, the Bank has added 13 small business banking lending and support personnel.

•

Residential mortgage lending – The Bank increased its residential lending capabilities by expanding its staff in origination, underwriting and servicing, introducing correspondent lending programs and moving to paperless systems. Since 2010, the Bank has added six residential mortgage lending staff and support personnel. To manage risk and to maximize return on assets, the Bank also developed its secondary market capabilities in order to be able to originate, package and sell mortgage loans in the secondary market.

•

Rebranding, retail branches and administration – The Bank upgraded its retail branch office network through renovation and construction to incorporate an updated look and feel. Additionally, in 2011, the Bank rebranded its operations and adopted a more robust marketing budget and strategy, to extend its market offering beyond the five core communities the Bank had historically serviced. This effort included securing the naming rights of an outdoor entertainment facility in Boston’s Seaport district, a popular and growing community, to continue efforts to build greater brand recognition for the Bank.

•

Ecommerce – The Bank upgraded its online banking system to provide for a better user experience and introduced new capabilities such as mobile banking, mobile person-to-person payments, remote deposit capture and mobile check deposits.

•

Back office infrastructure – The Bank upgraded its core operating system to enable tellers and customer service representatives to improve their service of customers. In addition, back office functions were centralized in a new operations center that included a training facility. The Bank also augmented staffing in compliance, risk management and credit administration areas to handle significant growth in lending, new delivery channels and overall operating activities.

•

Community reinvestment – The Bank created a charitable foundation to support local not-for-profit organizations that work to expand affordable housing and community development; or whose mission involves human services, education, or the arts.

•

Securities portfolio management – The Bank professionalized the management of the sizeable investment securities portfolio by engaging third-party investment managers to assist in selecting appropriate securities for the portfolio with the aim of diversifying risk and maximizing risk-adjusted investment returns, while oversight of the portfolio remains with the Bank.

The implementation of the strategic plan since 2010 has resulted in growth and diversification of our assets and liabilities. As of December 31, 2013, we had total assets of $1.3 billion, of which $773.0 million, or 58.8%, consisted of loans, and $441.3 million, or 33.6%, consisted of securities available for sale. At that same date, our loan portfolio was more diversified, as 47.3% of our loans consisted of one- to four-family residential real estate loans, 29.6% of loans consisted of commercial real estate loans (including multi-family residential loans), and 14.4% consisted of commercial business loans, with the balance of loans in home equity, consumer and construction loans. At December 31, 2013, 36.3% of our deposits were savings deposits, 13.0% were NOW and demand accounts, 8.3% were money market accounts, and 42.4% were certificates of deposit. By comparison, at December 31, 2010, a full 64.8% of deposits consisted of certificates of deposit. At December 31, 2013, our funding also included $215.0 million in advances from the Federal Home Loan Bank of Boston.

Our growth was supplemented in January 2014 with the Nantucket Branch Acquisition, involving a franchise of three branches which operates under the local trade-name “Nantucket Bank, a division of Blue Hills Bank,” including $274.5 million in deposits and $102.2 million in select local commercial loans and home equity loans and lines of credit. This acquisition has further increased and diversified our loans and deposits. For additional information regarding the effects of the Nantucket Branch Acquisition, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Nantucket Branch Acquisition.”

In light of the progress made in the change in strategic direction initiated in mid-2010, we updated our strategic plan and business strategy in the autumn of 2013. The main elements of that plan and strategy include the following:

Expanding Residential Lending – We plan to continue to grow our one- to four-family residential lending operations. We will continue to emphasize increasing our one-to-four family lending capabilities and geographic coverage through the addition of lenders or lending teams that operate in our market area and adjacent markets. If necessary to support such new lending teams, we would establish loan production offices located in the north and south shore communities of eastern Massachusetts which will provide new market coverage to the Bank’s existing profile.

Expanding Commercial Real Estate and Commercial Business Lending – We plan to continue to emphasize and grow our commercial business and commercial real estate lending platforms and loan portfolios. Our focus will be on the small to mid-sized commercial businesses operating or headquartered in eastern Massachusetts and adjacent markets and commercial real estate properties located in eastern Massachusetts and adjacent markets. We will continue to emphasize growth in commercial business lending and deposit products and services and increasing our market coverage through the addition of lenders or lending teams operating in our current market areas and adjacent markets. If necessary to support such new lending teams, we would establish loan production offices located in the north and south shore communities of eastern Massachusetts.

Increasing Core Funding – Over the past three years, the Bank has been repositioning its deposit composition to diminish the reliance on higher priced certificates of deposit and has emphasized attracting and retaining core deposit relationships. Investments in retail branch sales and service training, cross sell initiatives with targeted incentive plans, along with improved product bundling has allowed the Bank to broaden its customer relationships and improve its core deposit retention and reduce its overall cost of funding. The addition of the Nantucket branches offers the continued growth of these programs across an expanded geographic footprint. In addition, our offering of cash management services for the small-to-mid-sized business segment will increase our ability to access commercial business deposit relationships which provide fee income and low cost funding.

Improving Alternative Delivery Channels and Online Banking Penetration – A significant investment has been made to improve and increase the channels by which our customers may conduct transactions and business with the Bank. We have made improvements to our online and mobile capabilities for consumer and business banking. These enhancements include the addition of mobile banking and remote deposit capture. We plan to continue to make targeted investments to improve online account opening and provide users additional capabilities such as “Pop Money” and peer-to-peer transfers which we believe will increase our ability to convert existing customers to online products that expand and deepen our relationship with customers. Additionally, we look to attract customers outside of our branch footprint through expanded brand recognition, targeted marketing and differentiated pricing.

Expanding our Network of Branch and Loan Production Offices – We believe opportunity exists to expand our core deposit base further, partially through greater penetration with commercial customers, but more significantly through targeted de novo branching and acquisitions of either other financial institutions or branches thereof and through the establishment of lower cost loan production offices to support lending teams in markets where we do not have a physical presence. We recently acquired three branches in Nantucket, Massachusetts and have plans to open two de novo branch offices located in Milton and Westwood, Massachusetts, which we expect will open in 2014 and 2015, respectively.

Implementing Our Fee Income Initiative – The Bank has begun a new initiative to analyze our product related fees compared to market competitors and make adjustments where appropriate. This initiative is designed to identify fee income opportunities from our deposit services and products. In addition, the recent expansion of our cash management capabilities will improve our ability to increase fee income from business customers who manage their banking relationships with the Bank. We also believe opportunities exist to expand our fee income through the introduction of non-deposit investment and insurance products or selective acquisitions of businesses that generate non-interest income.

Maintaining Our Investment Securities Portfolio – Although we have de-emphasized the reliance upon our investment securities in recent years and will continue to de-emphasize such portfolio as a percentage of our overall asset base, we expect to maintain a portion of our investment securities portfolio as a means of net income generation for the Bank unless additional liquidity is needed to fund loan growth. We currently utilize professional third party securities portfolio managers to oversee and manage our investment securities portfolio and have established an asset allocation model with investment parameters to guide such managers.

Maintaining Our Highly Integrated Risk Management Program – We will continue to focus on maintaining a well-integrated risk management capability, which we believe is a key component of long-term financial performance. Managing interest rate, credit, market and operational risk through periods of growth and volatile economic environments requires constant focus, assessment and investment in human capital and systems and technology. We intend to maintain this focus through board level attention combined with prudent underwriting standards, moderate duration for interest rate sensitive assets and well implemented operating policies and procedures.

A full description of our products and services begins on page 70 of this prospectus under the heading “Business of Blue Hills Bank”.

Market Area

We provide financial services to individuals, families and small to mid-size businesses through our nine full-service branch offices located in Brookline, Dedham, Hyde Park, Nantucket, Norwood and West Roxbury, Massachusetts. Our primary deposit taking market includes Norfolk, Suffolk and Nantucket Counties in Massachusetts. Our primary lending market encompasses a broader region of eastern Massachusetts. In addition, we also make loans secured by properties and the assets of businesses located outside of our primary lending market area. These loans are typically made to businesses headquartered or operating in eastern Massachusetts.

Due to our proximity to Boston, our market area benefits from the presence of numerous institutions of higher learning, medical care and research centers and the corporate headquarters of several financial investment companies. Eastern Massachusetts also has many high technology companies employing personnel with specialized skills. As a result, healthcare, high-tech and financial services companies constitute major sources of employment in our regional market area, as well as the colleges and universities that populate the Boston Metropolitan Statistical Area (“MSA”). These factors affect the demand for residential homes, apartments, office buildings, shopping centers, industrial warehouses and other commercial properties. Tourism also is a prominent component of our market area’s economy, as Boston annually ranks as one of the nation’s top tourist destinations.

Population and household data indicate that the market surrounding our branches is a mix of urban and suburban markets. Suffolk County, where the city of Boston is located, and Norfolk County are two of the largest counties in Massachusetts, each with a total population of approximately 700,000. Suffolk County experienced relatively strong demographic growth from 2010 to 2012, at 1.0% annually, which exceeded both the national and state growth rates. Norfolk County, which is a suburban market with a larger commuter population, experienced moderate population growth from 2010 to 2012, at 0.5% annually. Nantucket County is a popular tourist destination and summer colony and, thus has seasonal fluctuations in population. Nantucket County has 10,000 full time residents, which expands to a population approximating 100,000 during the peak of the summer vacation season. From 2010 to 2012, Nantucket County experienced a 0.4% decline in population. Household growth rates paralleled population growth trends in all three market counties, with Suffolk County displaying the fastest household growth and Nantucket County exhibiting a decline in households. Recent population and household growth trends are generally projected to continue over the next five years, although Nantucket County is projected to record a slight increase in population over the next five years.

Income measures show that Suffolk County is a relatively low-income market, characterized by its urban demographic in the city of Boston. Median household income for Suffolk County fell below both national and state measures, while per capita income exceeded the national measure but was below the state measure. Comparatively, income measures show that Norfolk and Nantucket counties are relatively affluent markets. Norfolk County is the wealthiest county in the state of Massachusetts and is characterized by a high concentration of white collar professionals who work in the Boston MSA. Nantucket County is a prestigious vacation destination targeted towards high-income visitors, with home values among the highest in the country. Median household and per capita income measures for Norfolk and Nantucket Counties are both well above the comparable U.S. and Massachusetts income measures. Projected income growth measures were generally in line with the comparable projected growth rates for the U.S. and Massachusetts, although Nantucket County’s projected income growth rates were at the low end of the range of projected growth rates for the primary market area counties as well as the U.S and Massachusetts.

The November 2013 unemployment rates for Norfolk and Suffolk Counties, at 5.6% and 6.3% respectively, were below the comparable unemployment rates for the U.S. and Massachusetts. Comparatively, the November 2013 unemployment rate for Nantucket County was 7.8%, which was above the comparable unemployment rates for Massachusetts and the U.S. In contrast to the U.S., Nantucket, Norfolk and Suffolk Counties, along with the state of Massachusetts, reported higher unemployment rates for November 2013 compared to a year ago.

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 nine full-service branch offices located in Brookline, Dedham, Hyde Park, Nantucket, Norwood and West Roxbury, Massachusetts. As of June 30, 2013 (the latest date for which information is publicly available from the Federal Deposit Insurance Corporation), we ranked fourteenth of 48 banks and thrift institutions with offices in Norfolk County, Massachusetts, with a 1.65% market share. As of that same date, we ranked fourteenth of 43 banks and thrift institutions with offices in the County of Suffolk, Massachusetts, with a 0.37% market share. Based on pro forma information for the Nantucket Branch Acquisition in January 2014, we ranked first of three banks and thrift institutions with offices in the County of Nantucket, Massachusetts, with a 54.5% market share.

Lending Activities

Our primary lending activity is the origination of one- to four-family residential mortgage loans, commercial real estate loans, commercial business loans, home equity loans and lines of credit, other consumer loans and construction loans. To diversify risk, we also hold portfolios of loans which were originated outside of our core market in eastern Massachusetts, comprising a portfolio of first-lien home equity lines of credit, loans to franchisees with a global restaurant chain, and a portfolio of classic and collector automobile loans located throughout the continental United States.

Loan Portfolio Composition. The following table sets forth the composition of our loan portfolio at the dates indicated. Loans held for sale amounted to $765,000, $0, $0, $582,000 and $853,000 at December 31, 2013, 2012, 2011, 2010 and 2009, respectively, and are included in one- to four- family residential loans below.


	At December 31,
	2013						2012						2011						2010						2009
	Amount			Percent			Amount			Percent			Amount			Percent			Amount			Percent			Amount			Percent
	(Dollars in thousands)
Real estate loans and lines:
One- to four-family residential	$	365,707			47.31	%	$	311,713			63.27	%	$	264,167			94.64	%	$	192,173			94.05	%	$	201,441			94.19	%
Home equity		25,535			3.30			25,062			5.09			2,925			1.05			3,044			1.49			4,018			1.88
Commercial		228,688			29.59			100,904			20.48			7,656			2.74			6,327			3.10			5,705			2.66
Construction		16,559			2.14			5,753			1.17			656			0.24			1,236			0.60			1,172			0.55

Total real estate loans and lines		636,489			82.34			443,432			90.01			275,404			98.67			202,780			99.24			212,336			99.28
Commercial business loans		111,154			14.38			33,762			6.85			1,000			0.36			1,000			0.49			1,000			0.47
Consumer loans		25,372			3.28			15,473			3.14			2,710			0.97			549			0.27			530			0.25

Total loans		773,015			100.0	%		492,667			100.0	%		279,114			100.0	%		204,329			100.0	%		213,866			100.0	%

Other items:
Allowance for loan losses		(9,671	)					(5,550	)					(3,501	)					(2,478	)					(3,081	)
Deferred loan costs and discounts		2,003						1,090						915						165						73

Total loans, net	$	765,347					$	488,207					$	276,528					$	202,016					$	210,858

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, 2013, 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 Residential Loans					Home Equity Loans and Lines of Credit					Commercial Real Estate Loans					Construction
	Amount		Yield			Amount		Yield			Amount		Yield			Amount		Yield
	(Dollars in thousands)
Due During the Years Ending December 31,
2014	$	128		5.81	%	$	6		6.27	%	$	1,336		4.43	%	$	916		5.00	%
2015		128		4.70			—		—			14,598		2.67			15,245		2.49
2016		168		6.17			62		5.08			6,633		3.56			—		—
2017 to 2018		3,658		5.31			181		6.26			50,473		2.94			—		—
2019 to 2023		17,199		3.86			938		6.27			155,062		2.78			—		—
2024 to 2028		31,224		3.89			197		5.85			362		6.00			—		—
2029 and beyond		313,202		4.07			24,151		2.85			224		6.00			398		5.25

Total	$	365,707		4.06	%	$	25,535		3.03	%	$	228,688		2.85	%	$	16,559		2.70	%


	Commercial Business Loans					Consumer Loans					Total Loans
	Amount		Yield			Amount		Yield			Amount		Yield
	(Dollars in thousands)
Due During the Years Ending December 31,
2014	$	30,550		2.91	%	$	98		15.43	%	$	33,034		3.08	%
2015		706		2.33			98		6.26			30,775		2.59
2016		5,962		2.33			53		5.16			12,878		3.04
2017 to 2018		32,626		3.05			1,000		6.58			87,938		3.13
2019 to 2023		37,344		3.57			11,852		6.89			222,395		3.23
2024 to 2028		2,501		2.82			12,271		5.86			46,555		4.38
2029 and beyond		1,465		0.82			—		—			339,440		3.97

Total	$	111,154		3.11	%	$	25,372		6.40	%	$	773,015		3.58	%

The following table sets forth the scheduled repayments of fixed- and adjustable-rate loans at December 31, 2013 that are contractually due after December 31, 2014.


	Due After December 31, 2014
	Fixed		Adjustable		Total
	(In thousands)
Real estate loans and lines:
One- to four-family residential	$	227,409	$	138,170	$	365,579
Home equity		1,291		24,238		25,529
Commercial real estate		44,711		182,641		227,352
Construction		398		15,245		15,643

Total real estate loans and lines		273,809		360,294		634,103
Commercial business loans		27,255		53,349		80,604
Consumer loans		25,274		—		25,274

Total loans	$	326,338	$	413,643	$	739,981

One- to Four-Family Residential Mortgage Loans. At December 31, 2013, $365.7 million, or 47.3%, of our loan portfolio, consisted of one- to four-family residential mortgage loans. We offer fixed-rate and adjustable-rate residential mortgage loans with maturities of generally up to 30 years.

Some of the housing stock in our primary lending market area comprises two-, three- and four-unit properties, all of which are classified as one- to four-family residential mortgage loans. At December 31, 2013, of $365.7 million of one- to four-family residential mortgage loans in our portfolio, $21.9 million comprised non-owner occupied properties.

Our one- to four-family residential mortgage loans that we originate or purchase 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. We also originate loans above the conforming limits, which are referred to as “jumbo loans.” We generally underwrite jumbo loans, whether originated or purchased, in a manner similar to conforming loans. Jumbo loans are common in our market area. During the year ended December 31, 2013, we originated $73.8 million of one- to four-family residential loans and purchased $102.4 million of one- to four-family residential loans through correspondents. We currently have relationships with several correspondents consisting of mortgage brokers and community banks. See “Business of Blue Hills Bank—Lending Activities—Loan Originations, Purchases, Sales, Participations and Servicing.”

We originate our adjustable-rate one- to four-family residential mortgage loans with initial interest rate adjustment periods of one, three, five, seven and ten years, based on changes in a designated market index. These loans are limited to a 200 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 400 to 600 basis points over the life of the loan. We determine whether a borrower qualifies for an adjustable-rate mortgage loan based on regulatory and 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. To encourage lending to low- and moderate-income home buyers, we participate in several publicly-sponsored loan programs including the Massachusetts Housing Finance Agency program which provides competitive terms for loans with higher loan-to-value ratios than are available with conventional financing; the Federal Home Loan Banks Equity Builder Program which provides closing cost and down payment assistance to income-eligible home buyers; and the Mass Housing Partnership’s Soft Second program that contains a number of attractive features for low- and moderate-income home buyers.

Generally, we sell into the secondary market the majority of the conforming fixed-rate one- to four-family residential mortgage loans we originate. We base the amount of fixed-rate loans that we sell into the secondary market on our liquidity needs, asset/liability mix, loan volume, portfolio size and other factors. We currently sell the majority of loans that we sell to the secondary market to the Federal Home Loan Bank of Boston, with servicing retained. Historically, we have also sold loans to Freddie Mac and retain servicing on these loans. For the year ended December 31, 2013, we received servicing fees, including credit enhancement fees, of $118,000 on mortgage loans that we serviced for third parties. At December 31, 2013, the unpaid principal balance of loans serviced for others totaled $47.6 million. In 2013, we sold a $30 million portfolio of non-conforming loans to another savings bank with servicing released.

We generally do not offer “interest only” mortgage loans on one- to four-family residential properties. 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 the loan, resulting in an increased principal balance during the life of the loan. Additionally, outside of the publicly-sponsored loan programs mentioned previously, 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. At December 31, 2013, $228.7 million, or 29.6%, of our loan portfolio consisted of commercial real estate loans. At December 31, 2013, substantially all of our commercial real estate was secured by properties located in eastern Massachusetts. In addition, the vast majority of the commercial real estate loans in our portfolio were originated by us as lead lender, rather than loans that we have purchased or obtained through participations.

Our commercial real estate mortgage loans are primarily secured by office buildings, multi-family apartment buildings, owner-occupied businesses and industrial buildings. As of December 31, 2013, our largest commercial real estate loan relationship totaled $14.9 million, which financed a multi-tenanted office property and public garage. At that date we had eight other commercial real estate loan relationships with outstanding principal balances exceeding $10.0 million.

Our commercial real estate loans generally have terms of three to ten years with adjustable, LIBOR-based rates of interest. These loans generally amortize on a twenty-five to thirty year basis, with a balloon payment due at maturity.

To facilitate qualified commercial customers’ access to fixed-rate financing, we enter into loan-level interest rate swaps. These swap agreements enable the Bank to write LIBOR-based, adjustable-rate loans, whereas customers ultimately pay a fixed interest rate. Interest rate risk associated with these loans is controlled by entering into offsetting positions with third parties. Credit risk is minimized by limiting transactions to highly rated counterparties and through collateral agreements. Collateral is required to be delivered when the credit risk exceeds acceptable thresholds, for certain counterparties. We generally receive fees for acting as an intermediary in these interest rate swap agreements. As of December 31, 2013, the notional value of interest rate swaps on loans with commercial loan customers amounted to $171.7 million, and we earned fee income of $1.5 million from customer swaps in 2013. As a rule we do not arrange swap agreements for unqualified customers, such as those which would be classified as Small Enterprises with assets of less than $10 million.

In underwriting commercial 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 sponsor and the sponsor’s experience in owning or managing similar properties. Commercial real estate and multi-family real estate loans are generally originated in amounts up to 75% of the appraised value or the purchase price of the property securing the loan, whichever is lower. When circumstances warrant, guarantees are obtained from commercial real estate and multi-family real estate sponsors. In addition, the sponsor’s and guarantor’s financial information on such loans is monitored on an ongoing basis by requiring periodic financial statement updates.

Commercial real estate loans generally 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.

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. We offer these products primarily through our branch office network.

In an effort to increase our exposure to floating-rate assets and diversify our credit portfolio, we purchased a portfolio of first-lien home equity lines of credit in 2012 at a discount to the outstanding principal balance of $22.3 million at closing. This portfolio consisted of seasoned, first-lien home equity lines with strong credit characteristics and geographic dispersion in the United States. These loans are serviced by a third party. At December 31, 2013, we had $25.5 million in home equity lines and loans outstanding, of which 99.9% were performing in accordance with original terms, and of which $19.3 million relate to the portfolio of first-lien home equity lines acquired in 2012.

The home equity lines of credit that we originate are revolving lines of credit which generally have a term of 25 years, with draws available for the first ten years. Our 25-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-value ratios are determined based on an applicant’s credit score, property value, loan amount and debt-to-income ratio. Lines of credit above $500,000 require two full appraisals with the valuation being the lesser of the two. Lines of credit generally may not exceed a loan-to-value ratio of 75% unless the customer’s credit score (FICO) exceeds 700. Rates are adjusted monthly based on changes in a designated market index. We also originate fixed-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.

Commercial Business Loans . We originate commercial term loans and variable lines of credit to businesses in our primary market area. Our commercial loans are generally used for working capital purposes or for acquiring machinery and equipment. These loans are secured by all business assets including business equipment, inventory, accounts receivable, trademarks, other intangible assets 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 December 31, 2013, we had $111.2 million of commercial business loans, representing 14.4% of our total loan portfolio outstanding.

The commercial business loans that we offer are generally adjustable-rate loans with terms ranging from three to five years. After we invested in the appropriate staff and systems as well as established our policies and procedures for commercial business lending, and in order to accelerate the growth of our commercial business loan portfolio, we initially focused on participating in large loans originated by other banks with customers and in sectors where our commercial lenders previously had substantial experience. As a result, we have three significant commercial business loan relationships in our portfolio, two of which are with customers operating in the energy sector, and one with an equipment leasing finance company, that were participation loans originated by other banks. As of December 31, 2013, our loan commitments to these three borrowers, all of which have headquarters in New England, amounted to $17.5 million, $15.0 million and $15.0 million, and the loan amounts outstanding were $8.2 million, $6.7 million and $6.5 million. As of December 31, 2013, these three relationships constituted the largest potential exposures in our portfolio of commercial business loans. At that same date, our largest single commercial business loan relationship by outstanding principal balance was an owner-occupied commercial loan with a balance of $12.3 million. This loan was originated by us.

As part of a strategy to diversify risk, in 2013 we purchased a portfolio of $46.3 million of loans to franchisees with a global restaurant chain. These loans, secured by all business assets, consisted of seasoned business loans with strong credit characteristics spread across the United States. At December 31, 2013, $30.0 million of such purchased portfolio remained outstanding.

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

Commercial and 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 lenders and credit department. The commercial lending units are 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.

Construction Loans. We originate loans to established local developers to finance the construction of commercial and multi-family properties. To a lesser extent we originate loans to local builders and individuals to finance the construction of one- to four-family residential properties. At December 31, 2013, $16.6 million, or 2.1% of our loan portfolio consisted of construction loans, $15.2 million of which were secured by two different apartment complex development projects located in our primary lending market area. As of December 31, 2013, our commitment to fund these two construction projects, together with a hotel construction project which had no outstanding loan balance, totaled $36.9 million.

Our commercial construction loans generally call for the payment of interest only with interest rates that are tied to Libor. Construction loans for commercial real estate are originated with principal balances of up to $20 million with a maximum loan-to-completed value ratio of 65% to 80%, depending on the type of property. Advances on construction loans are made in accordance with a schedule reflecting the cost of construction. Repayment of construction loans for income-producing properties usually is expected from permanent financing upon completion of construction. In the case of construction loans for one- to four-family residential properties, repayment normally is expected from the sale of units to individual purchasers, or in the case of individuals building their own, with a permanent mortgage.

Before making a commitment to fund a construction loan, we require an appraisal of the property by a licensed appraiser. The amount of fund disbursement per construction requisition during the term of the construction loan is justified by a Bank-appointed construction engineer.

Construction financing generally involves greater credit risk than long-term financing on improved, tenanted investment 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.

Consumer Loans. We offer consumer loans on a limited and selective basis. At December 31, 2013, $25.4 million, or 3.3%, of our loan portfolio, consisted of consumer loans, of which $25.0 million related to classic and collector automobile loans, and only $370,000 related to other consumer loans.

Our portfolio of classic and collector automobile loans is the result of an initiative to increase our exposure to higher-yielding loan assets and diversify our credit portfolio, resulting in an agreement, initiated in late 2011, to purchase loans from a third-party originator. Pursuant to the terms of this agreement, we elect to purchase loans secured by classic and collector automobiles according to a defined price schedule which varies according to the terms of the loans and the credit quality of the borrower. Our primary considerations when originating these loans are the borrower’s ability to repay the loan and the value of the underlying collateral. The average FICO score of borrowers for these loans is 746 at origination. We may finance up to the full sales price of the vehicle. In order to mitigate our risk of loss, we have a 50% loss sharing arrangement with the third-party originator of these loans. Since the commencement of the program through December 31, 2013, we have purchased approximately $37.6 million in classic and collector automobile loans and recorded $20,000 of write downs.

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 in the case of residential mortgages, 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 and lower pricing in secondary markets.

In 2013, 42% of our one- to four-family residential mortgage loan originations were generated by our loan officers or referred by branch managers and employees located in our banking offices. We also source one- to four-family residential mortgages from correspondents that adhere to the Bank’s underwriting practices and are in compliance with federal, state and local laws and regulations governing fair lending practices and mortgage origination. In 2013, we purchased a total of $102.4 million of loans from correspondents.

In recent years, in an effort to manage interest rate risk in a relatively low interest rate environment, we sold a portion of fixed-rate one- to four-family residential mortgage loans that we originated. In 2013, we sold a total of $51.3 million of residential mortgage loans, of which $21.6 million was sold to the Federal Home Loan Bank of Boston, which offered the most attractive conforming mortgage loan pricing given the volumes we generated. We have retained the servicing on all loans sold to the Federal Home Loan Bank of Boston, and we have released the servicing on loans sold to other mortgage investors, such as the Massachusetts Housing Finance Agency and banks seeking exposure to non-conforming loans. In 2013, we sold a $30.0 million portfolio of non-conforming loans to another savings bank. We intend to continue this practice in the future, subject to our interest rate risk appetite, mortgage loan pricing in the secondary market and the pricing of servicing rights.

We have sold mortgage loans to the Federal Home Loan Bank of Boston through the Mortgage Partnership Finance (“MPF”) program, which generally has required us to retain approximately 5% of credit risk, for which we were paid a credit enhancement fee. We have also sold loans to the Federal Home Loan Bank of Boston through a different program without retaining any credit risk. In 2013 we sold a total of $21.6 million of mortgage loans to the Federal Home Loan Bank of Boston, of which $5.4

million was through the MPF program with credit risk retention requirements, and the remaining $16.2 million was through a program that does not require credit risk retention. To date, we have sold at total of $24.9 million of loans to the Federal Home Loan Bank of Boston through the MPF program with credit risk retention. At December 31, 2013, the credit risk retained by us on loans sold through the MPF program amounted to $1.2 million, or 4.7% of the volume of loans sold through the MPF program.

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. For the year ended December 31, 2013, we received servicing fees, including credit enhancement fees, of $118,000 on mortgage loans that we serviced for third parties. At December 31, 2013, the unpaid principal balance of loans serviced for others totaled $47.6 million.

In order to have access to larger customers and diversify risk, from time to time we will participate in portions of commercial loans with other banks within our market area. Pursuant to these loan participations, the Bank and participating lenders share ratably in cash flows and any gains or losses that may result from a borrower’s lack of compliance with contractual terms of the loan. When we are not lead lender, we always follow our customary loan underwriting and approval policies. In cases where the Bank has transferred a portion of its originated commercial loan to participating lenders, the Bank continues to service the loan as agent of the participating lenders and, as such, collects cash payments from the borrowers, remits payments (net of servicing fees, if applicable) to participating lenders and disburses required escrow funds to relevant parties. At December 31, 2013, we held $59.0 million of commercial loans in our portfolio that were participation loans obtained from other lenders, and we serviced $23.3 million in loans for other lenders participating in loans originated by us.

From time to time, we have also purchased and sold whole loans from and to other banks. In these cases, we generally follow our customary loan underwriting and approval policies. During the year ended December 31, 2013, we purchased $72.7 million of commercial loans originated by other banks. We also sold $7.7 million of commercial loans to other banks.

The following table shows the loan origination, purchase, sale and repayment activities for the periods indicated.


	For the Years Ended December 31,
	2013			2012			2011			2010			2009
	(In thousands)
Originations by type :
Real Estate Loans:
One- to four-family	$	73,754		$	75,988		$	45,606		$	55,733		$	55,857
Commercial real estate		138,604			96,558			2,138			—			—
Construction		8,049			3,705			—			—			—
Home equity		5,371			2,096			325			793			318
Total real estate loans		225,778			178,347			48,069			56,526			56,175
Commercial business loans		55,293			10,928			210			—			—
Consumer loans		458			605			699			826			733

Total loans originated	$	281,529		$	189,880		$	48,978		$	57,352		$	56,908

Purchases (1):
Real Estate Loans:
One- to four-family	$	102,433		$	89,136		$	88,006		$	14,805		$	1,573
Commercial real estate		14,683			19,055			—			240			—
Construction		10,508			494			—			—			—
Home equity		—			22,304			—			—			—

Total real estate loans		127,624			130,989			88,006			15,045			1,573
Commercial business loans		72,735			36,469						—			—
Consumer loans		17,737			16,906			2,909			—			—

Total loans purchased	$	218,096		$	184,364		$	90,915		$	15,045		$	1,573

Sales (2):
Real Estate Loans:
One- to four-family	$	(51,289	)	$	(24,957	)	$	(1,623	)	$	(28,225	)	$	(26,146	)
Commercial real estate		(1,050	)		(15,806	)		—			—			—

Total real estate loans	$	(52,339	)	$	(40,763	)	$	(1,623	)	$	(28,225	)	$	(26,146	)
Commercial business loans		(7,659	)		—			—			—			—

Total loans sold	$	(59,998	)	$	(40,763	)	$	(1,623	)	$	(28,225	)	$	(26,146	)

Principal repayments :
Total principal repayments	$	(160,892	)	$	(120,541	)	$	(62,593	)	$	(54,909	)	$	(61,074	)

Net increase (decrease)	$	278,735		$	212,940		$	75,677		$	(10,737	)	$	(28,739	)

(1)	Includes loan purchases and participations by the Bank in loans originated by other financial institutions.

(2)	Includes loan sales and participations by other financial institutions in loans originated by the Bank.

Loan Approval Procedures and Authority . Our lending activities follow written underwriting standards and loan origination procedures approved 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 collateral, if any, 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. We do not discriminate in our lending decisions based on a borrower’s race, religion, national origin, gender, marital status or age.

Our policies and loan approval limits are approved by our board of directors. Aggregate lending relationships in amounts up to $5 million can be approved by designated individual officers or officers acting together with specific lending approval authority. Relationships between $5 million and $20 million require the approval of the Management Credit Committee. Relationships above $20 million require the approval of the board of directors. Our Chief Risk Officer generally must approve loans in excess of $500,000.

Each of the commercial lending units is responsible for the underwriting and documentation of new commercial loans as well as the ongoing review of credit ratings of existing loans and special credit projects. Our Chief Risk Officer reviews the servicing and risk rating of all criticized loans and loans rated “bank with care” no less frequently than quarterly, all commercial business and construction loans quarterly, and commercial real estate investment loans no less frequently than annually. We consider our Chief Risk Officer to be independent because he has no loan production goals and has annual performance objectives based on credit quality and credit risk management.

We require appraisals by a third party appraiser 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, although home equity loans and lines of credit may be approved based on an online appraisal. 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. By the 36 ^th day of delinquency, we will attempt to establish live contact with borrowers and inform them of loss mitigation options that may be available, providing the borrowers with written notice containing information about those loss mitigation options by the 45 ^th day of delinquency. By the 150 ^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. In attempting to resolve a default on a residential mortgage loan, Blue Hills Bank complies with all applicable Massachusetts laws regarding a borrower’s right to cure.

When automobile 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. Automobile loans are placed on non-accrual status at 90 days past due and charged off at 120 days past due.

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 December 31,
	2013			2012			2011			2010			2009
	(Dollars in thousands)
Non-accrual loans:
One- to four-family	$	1,706		$	2,209		$	1,437		$	1,596		$	1,861
Home equity loans and lines		36			—			—			—			—

Total non-accrual loans		1,742			2,209			1,437			1,596			1,861

Loans delinquent 90 days or greater and still accruing:
One- to four-family		—			—			193			—			—
Construction		—			—			1,098			—			—

Total loans delinquent 90 days or greater and still accruing		—			—			1,291			—			—

Total non-performing loans and nonperforming assets		1,742			2,209			2,728			1,596			1,861

Performing troubled debt restructurings		279			568			—			30			—

Total non-performing assets and performing troubled debt restructurings	$	2,021		$	2,777		$	2,728		$	1,626		$	1,861

Ratios:
Non-performing loans to total loans		0.23	%		0.45	%		0.98	%		0.78	%		0.87	%
Non-performing assets to total assets		0.13	%		0.18	%		0.28	%		0.18	%		0.21	%

For the year ended December 31, 2013 gross interest income that would have been recorded had our non-accruing loans been current in accordance with their original terms was $73,000. Interest income recognized on such loans for the year ended December 31, 2013 was $24,000.

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 December 31, 2013, we had $539,000 of troubled debt restructurings related to residential mortgage loans, of which $279,000 were performing in accordance with their restructured terms.

For the year ended December 31, 2013, gross interest income that would have been recorded had our troubled debt restructurings been performing in accordance with their original terms was $51,000. Interest income recognized on such modified loans for the year ended December 31, 2013 was $37,000.

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 December 31, 2013
Real estate:
One- to four-family		2	$	196		6	$	828		8	$	1,024
Home equity		—		—		1		36		1		36

Total loans		2	$	196		7	$	864		9	$	1,060

At December 31, 2012
Real estate:
One- to four-family		1	$	232		5	$	978		6	$	1,210

At December 31, 2011
Real estate:
One- to four-family		1	$	156		7	$	1,630		8	$	1,786
Construction		—		—		1		1,098		1		1,098
Consumer loans		1		1		—		—		1		1

Total loans		2	$	157		8	$	2,728		10	$	2,885

At December 31, 2010
Real estate:
One- to four-family		1	$	298		7	$	2,049		8	$	2,347
Consumer loans		2		4		—		—		2		4

Total loans		3	$	302		7	$	2,049		10	$	2,351

At December 31, 2009
Real estate:
One- to four-family		1	$	224		11	$	3,067		12	$	3,291

Total loans

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 December 31, 2013, 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 December 31, 2013, we had $2.8 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 loans, loans designated as special mention and criticized loans (classified loans and loans designated as special mention) as of the dates indicated.


	At December 31,
	2013		2012		2011
	(In thousands)
Classified loans:
Substandard	$	1,707	$	1,286	$	2,591
Doubtful		693		646		905
Loss		—		—		—

Total classified loans		2,400		1,932		3,496
Special mention		2,819		1,932		747

Total criticized loans	$	5,219	$	3,864	$	4,243

At December 31, 2013, we had $1.7 million of substandard assets, of which $1.6 million were residential mortgage loans. At December 31, 2013, special mention assets consisted of $2.8 million of which $468,000 were one- to four-family residential mortgage loans and $2.3 million were commercial real estate loans.

Potential problem loans are loans that are currently performing and are not included in non-accrual loans above, but may be delinquent. These loans require an increased level of management attention, because we have serious doubts as to the ability of the borrower to comply with the present loan repayment terms and as a result such loans may be included at a later date in non-accrual loans. At December 31, 2013, we had no potential problem loans that are not discussed above under “—Classification of Assets.”

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 U.S. GAAP.

The allowance for loan losses is based on the size and the composition of the loan portfolio, delinquency levels, loss experience, economic conditions and other factors related to the collectability of the loan portfolio. Because 2013 and 2012 saw the growth in number and size of portfolios for which the we had no prior loss experience, the loss experience extrapolated for all portfolios was derived from available national and state peer group losses for relevant portfolios generally over the years 2008 through 2013. Loan losses are charged against the allowance when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is evaluated regularly by management and reflects consideration of all significant factors that effect the collectability of the loan portfolio. The evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available; however, because of the increase in exposure in our new portfolios, it is the intention of management to maintain an allowance that is prudently commensurate with the growth in the loan portfolio.

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 either actual or extrapolated historical loss experience adjusted for qualitative and environmental factors, including levels/trends in delinquencies; trends in volumes 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.

In 2012, we revised our methodology pertaining to the general component of the allowance of loan losses. This revision included increased segmentation of the loan portfolio, which in previous years had been primarily comprised of conforming residential mortgage loans.

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 – We do not generally originate loans with a loan-to-value ratio greater than 80 percent and do not generally grant loans that would be classified as subprime upon origination. When we do extend credit either on a first- or second-lien basis at a loan-to-value ratio greater than 80 percent, such loans are supported by either mortgage insurance or state guarantee programs. All loans in this segment are collateralized by owner-occupied one- to four-family residential real estate and repayment is dependent on the credit quality of the individual borrower. The health of the regional economy, including unemployment rates and housing prices, will have an effect on the credit quality of loans in this segment.

At December 31, 2013 and 2012, this segment includes $7.6 million and $8.8 million, respectively, of residential mortgage loans purchased in 2006 and 2007 from Countrywide, Wells Fargo, and Taylor Bean on a servicing-retained basis. These loans were subject to the more lenient underwriting standards and higher residential property values prevalent at that time, and when these loans become delinquent, they are subject to significant time lags between delinquency and modification or collection and relatively high degradation from the underwritten collateral value.

Commercial real estate – Loans in this segment include investment real estate and are generally secured by assignments of leases, real estate collateral and guarantees from sponsors or owners. In cases where there is a concentration of exposure to a single large tenant, underwriting standards include analysis of the tenant’s ability to support lease payments over the duration of the loan. 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 credit quality in this segment. Payments on loans secured by income-producing properties often depend on the successful operation and management of properties. Management continually monitors cash on these loans.

Construction – 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.

Home equity – Loans in this segment are generally secured by 1st or 2nd liens on residential real estate. Repayment is dependent on the credit quality of the individual borrower. We evaluate each loan application based on factors including the borrower’s credit score, income, length of employment, and other factors to establish the creditworthiness of the borrower. We purchased a geographically diverse

portfolio of seasoned home equity lines of credit (HELOC) which are serviced by a third party. The rate of provision for this portfolio is slightly lower than that for the organically originated HELOC portfolio due to its seasoning, low loan-to-values, high credit scores, and first-lien collateral position.

Commercial business – Loans in this segment are generally secured by business assets, including accounts receivable, inventory, real estate and intangible assets. Strict underwriting standards include considerations of the borrower’s ability to support the debt service requirements from the underlying historical and projected cash flows of the business, collateral values, the borrower’s credit history and the ultimate collectability of the debt. Economic conditions, real estate values, commodity prices, unemployment trends and other factors will affect the credit quality of loans in these segments.

Consumer – Loans in this segment primarily include used auto loans. The used auto loan portfolio is primarily comprised of geographically diverse loans originated by and purchased from a third party, who also provides collection services. While this portfolio generated minimal charge-offs during 2013 and no charge-offs in 2012, the provisions during the year are based on management’s estimate of inherent losses based on a review of regional and national historical losses of other institutions with similar portfolios.

A loan is considered impaired when, based on current information and events, it is probable that we 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.

We 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.

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 Years Ended December 31,
	2013			2012			2011			2010			2009
	(In thousands)
Balance at beginning of period	$	5,550		$	3,501		$	2,478		$	3,081		$	1,997

Charge-offs:
Real estate:
One- to four-family		(165	)		(714	)		(328	)		(1,141	)		(166	)
Consumer loans		(44	)		—			(13	)		—			—

Total charge-offs		(209	)		(714	)		(341	)		(1,141	)		(166	)

Recoveries:
Real estate:
One- to four-family		236			402			232			36			—
Consumer loans		—			—			6			—			—

Total recoveries		236			402			238			36			—
Net (charge-offs) recoveries		27			(312	)		(103	)		(1,105	)		(166	)
Provision for loan losses		4,094			2,361			1,126			502			1,250

Balance at end of period		9,671			5,550			3,501			2,478			3,081

Ratios:
Net charge-offs to average loans outstanding		0.00	%		(0.08	)%		(0.04	)%		(0.54	)%		(0.08	)%
Allowance for loan losses to non-performing loans at end of period		555	%		251	%		128	%		155	%		166	%
Allowance for loan losses to total loans at end of period ⁽¹⁾		1.25	%		1.13	%		1.25	%		1.21	%		1.44	%

(1)	Total loans do not include deferred costs.

Allocation of Allowance for Loan Losses. The following table sets forth 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 December 31,
	2013					2012					2011
	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)
Real Estate:
One- to four-family residential	$	2,835		47.31	%	$	2,725		63.27	%	$	3,267		94.64	%
Home equity		247		3.30			316		5.09			—		1.05
Commercial		2,608		29.59			1,343		20.48			160		2.74
Construction		303		2.14			106		1.17			—		0.24
Commercial business loans		2,416		14.38			565		6.85			—		0.36
Consumer loans		574		3.28			313		3.14			24		0.97

Total allocated allowance		8,983		100.00	%		5,368		100.00	%		3,451		100.00	%

Unallocated		688					182					50

Total	$	9,671				$	5,550				$	3,501


	At December 31,
	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
	(Dollars in thousands)
Real Estate:
One- to four-family residential	$	2,207		94.05	%	$	3,068		94.19	%
Home equity		—		1.49			—		1.88
Commercial		221		3.10			—		2.66
Construction		—		0.60			—		0.55
Commercial business loans		—		0.49			—		0.47
Consumer loans		5		0.27			13		0.25

Total allocated allowance		2,433		100.00	%		3,081		100.00	%

Unallocated		45					—

Total	$	2,478				$	3,081

Investments

Management has primary responsibility for establishing our investment policy, which the Board reviews and approves at least annually. The overall objectives of the investment policy are to employ funds not currently required for the Bank’s loan portfolio, cash requirements or other assets essential to our operations; to provide for capital preservation of the funds invested while generating maximum income and capital appreciation in accordance with the objectives of liquidity, quality and diversification; and to employ a percentage of assets in a manner that will balance the market, credit and duration risks of other assets.

The Bank utilizes professional third party investment advisors to manage a significant portion of its investment securities portfolio. The Bank currently utilizes professional investment advisors with each advisor being selected to manage a specified dollar amount of investment securities pursuant to particular investment objectives established by the Bank. The board of directors and the Investment Advisory Committee of the board of directors oversee the qualification and selection of all third party investment advisors used by the Bank. The board of directors and management have established internal investment guidelines, parameters and limits that any selected third party investment advisor must commit to in writing. The Bank’s management level Investment Committee, consisting of the Chief Executive Officer, Chief Financial Officer and Treasurer, meets on a weekly basis to review all transaction activity of the third party investment advisors and assess changes in the various portfolios they manage. Day to day oversight of the overall investment securities portfolio and review of daily transactional activity is monitored by the Treasurer. Management, through internal review processes and in consultation with the board’s Investment Advisory Committee, also reviews the compliance of each third party investment advisor with the established investment guidelines and parameters on a periodic basis and reports to the Risk Committee of the board of directors on such matters. The investment performance of all third party investment advisors is also subject to continuous review and testing by management and the Investment Advisory Committee against performance benchmarks established by the board of directors and to ensure that such advisors are adhering to the investment style for which they were engaged, adhering to the established asset allocation strategy and providing best execution on transactions. Management and the Investment Advisory Committee also periodically assess qualitative changes in the investment advisors corporate organization. Management has, on a periodic basis, engaged an independent investment consultant to assess the Bank’s investment securities activity, its related risk practices, the procedural due diligence in selecting and maintaining its investment advisors and the monitoring, reporting and evaluation of third party investment advisors.

Our investment portfolio is segmented into three distinct pools, as follows:

•

Liquidity pool – The liquidity pool is managed internally. The primary objective of this pool is to place the highest priority on the safety of principal and liquidity. A secondary objective is to maximize income while maintaining acceptable levels of risk and market value volatility as well as to provide adequate short-term liquidity to meet any cash flow demands. Permissible investments in this pool include, among other investments, U.S. Treasury bills, notes and bonds, mortgage-backed pass-through securities, Government Agency and Government-Sponsored Enterprise debt and certain money market portfolios.

•

Income pool – The income pool is managed externally by professional managers in separate accounts with continuous management oversight. The primary objective of this pool is to maximize return while maintaining acceptable levels of risk and market value volatility. Permissible investments in this pool include the investments permitted in the liquidity pool as well as selected other fixed-income investments such as mortgage- and asset-backed securities, corporate debt and municipal bonds. Credit quality of the issuers is carefully monitored by the professional managers and the Bank, and purchases of securities are limited to securities that would be characterized as investment grade at the time of purchase.

•

Total return pool – The total return pool is managed externally by mutual fund managers selected by the Bank with the guidance of an external institutional investment adviser. The primary objective of this pool is to maximize income and total return via capital appreciation, while conferring benefits of diversification and providing exposure to asset classes that are less correlated with fixed income securities, within the parameters established by the Bank with regard to risk exposure and market value volatility. As of December 31, 2013, the Bank had investments in four different mutual funds, including two asset allocation funds, a specialty bond fund and a world stock market index fund.

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 were reported at market value. At December 31, 2013, substantially all of the Bank’s securities are classified as available for sale. A periodic review and evaluation of the available-for-sale 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 through other comprehensive income/(loss).

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.

At December 31, 2013, our securities portfolio consisted of U.S. government and agency obligations, U.S. government sponsored mortgage-backed securities, other mortgage- and asset-backed securities, corporate debt securities, other bonds and marketable equity securities. At that date our securities portfolio had a fair market value of $441.3 million, or 33.6%, of total assets and an amortized cost of $438.5 million. We do not own any trust preferred securities. At December 31, 2013, we owned a total of $5.6 million of collateralized debt obligations which are considered non-exempt covered funds, which we intend to sell before March 31, 2014 to comply with the Volcker Rule contained in the Dodd-Frank regulations. These securities have been written down to fair value resulting in $58,000 of other-than-temporary impairment. 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 December 31, 2013, 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 and U.S. government-sponsored agency and enterprise securities.

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


	At December 31,
	2013				2012				2011
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(In thousands)
Securities available for sale:
Debt securities:
U.S. Treasury	$	131,781	$	128,202	$	108,087	$	108,789	$	67,849	$	68,256
U.S. government and government-sponsored enterprise obligations		13,985		13,957		14,278		14,786		75,462		77,801
U.S. government-sponsored residential mortgage-backed and collateralized mortgage obligations		67,787		67,493		109,802		114,158		133,515		138,836
Other mortgage and asset-backed securities		46,610		46,473		50,698		52,088		26,798		26,896
Other bonds and obligations:
State and political subdivisions		15,628		15,739		17,845		18,588		12,610		12,949
Financial services		42,193		43,671		30,213		32,865		40,524		42,549
Other corporate		44,920		45,536		61,732		65,187		61,038		67,574

Total debt securities		362,904		361,071		392,655		406,461		417,796		434,861
Marketable equity securities:
Mutual funds:
International		5,000		5,540		27,590		27,182		31,800		26,777
Domestic		466		453		20,024		21,634		19,130		18,184
Global asset allocation		32,956		37,124		40,210		40,940		35,134		32,893
Diversified bonds		34,392		34,350		33,460		34,626		32,687		32,091
Other		2,750		2,768		2,753		2,942		2,500		2,669

Total marketable equity securities		75,564		80,235		124,037		127,324		121,251		112,614

Total securities available for sale	$	438,468	$	441,306	$	516,692	$	533,785	$	539,047	$	547,475

Portfolio Maturities and Yields. The composition and maturities of the investment securities portfolio at December 31, 2013 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)
Securities available for sale:
Debt securities:
U.S. Treasury	$	—		—	%	$	79,801		1.42	%	$	51,980		2.21	%	$	—		—	%	$	131,781	$	128,202		1.73	%
U.S. government and government-sponsored enterprise obligations		3,600		0.61			7,900		0.86			2,485		2.58			—		—			13,985		13,957		1.10
U.S. government-sponsored residential mortgage-backed and collateralized mortgage obligations		1		0.00			6,313		1.67			5,107		2.74			56,366		2.38			67,787		67,493		2.34
Other mortgage-backed securities		—		—			8,448		0.54			2,085		0.00			36,077		2.66			46,610		46,473		2.16
Other bonds and obligations:
State and political subdivisions		—		—			4,607		1.10			9,179		2.59			1,842		1.94			15,628		15,739		2.07
Financial services		3,580		0.87			22,143		1.57			16,470		3.75			—		—			42,193		43,671		2.36
Other corporate		101		0.90			24,673		1.48			12,892		3.48			7,254		4.71			44,920		45,536		2.57

Total	$	7,282		0.74	%	$	153,885		1.38	%	$	100,198		2.65	%	$	101,539		2.64	%	$	362,904	$	361,071		2.07	%

Bank-Owned Life Insurance. Bank-owned life insurance 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 December 31, 2013, we had invested $29.8 million in bank-owned life insurance. We have not purchased a new policy since 2010.

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 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, 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. From time to time we have utilized brokered deposits and other listed deposit products as part of our funding sources to fund loan growth. Our core deposits increased significantly in January 2014 as a result of the Nantucket Branch Acquisition. These increases in deposits are not reflected in the tables provided below. For additional information on how the Nantucket Branch Acquisition affected our deposits, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Nantucket Branch Acquisition.”

At December 31, 2013, we had a total of $388.3 million in certificates of deposit, of which $265.1 million had remaining maturities of one year or less.

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


	For the Years Ended December 31,
	2013								2012								2011
	Average Balance		Percent			Weighted Average Rate			Average Balance		Percent			Weighted Average Rate			Average Balance		Percent			Weighted Average Rate
	(Dollars in thousands)
Deposit type:
Non-interest bearing deposits	$	29,716		3.40	%		0.00	%	$	19,681		2.55	%		0.00	%	$	17,796		2.42	%		0.00	%
Interest bearing deposits:
Now and demand		66,580		7.63			0.06			60,241		7.82			0.11			60,013		8.15			0.15
Savings accounts		344,783		39.49			0.47			243,507		31.60			0.81			179,677		24.41			0.50
Money market accounts		81,225		9.30			0.39			105,783		13.73			0.79			46,097		6.26			0.99
Certificates of deposit		312,596		35.80			1.10			339,122		44.00			1.20			432,561		58.76			1.53
Brokered certificates of deposit		38,265		4.38			0.28			2,331		0.30			0.67			—		—			—

Total interest bearing deposits	$	843,449		96.60	%		0.62	%	$	750,984		97.45	%		0.91	%	$	718,348		97.58	%		1.09	%
Total deposits	$	873,165		100.00	%		0.59	%	$	770,665		100.00	%		0.88	%	$	736,144		100.00	%		1.06	%


	For the Years Ended December 31,
	2013								2012								2011
	Average Balance		Percent			Weighted Average Rate			Average Balance		Percent			Weighted Average Rate			Average Balance		Percent			Weighted Average Rate
	(Dollars in thousands)
Deposit type:
Now and demand:
Interest bearing	$	66,580		7.63	%		0.06	%	$	60,241		7.82	%		0.11	%	$	60,013		8.15	%		0.15	%
Non-interest bearing		29,716		3.40			0.00			19,681		2.55			0.00			17,796		2.42			0.00
Savings accounts		344,783		39.49			0.47			243,507		31.60			0.81			179,677		24.41			0.50
Money market accounts		81,225		9.30			0.39			105,783		13.73			0.79			46,097		6.26			0.99
Certificates of deposit		312,596		35.80			1.10			339,122		44.00			1.20			432,561		58.76			1.53
Brokered certificates of deposit		38,265		4.38			0.28			2,331		0.30			0.67			—		—			—

Total deposits	$	873,165		100.00	%		0.59	%	$	770,665		100.00	%		0.88	%	$	736,144		100.00	%		1.06	%

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


	At December 31,
	2013		2012		2011
	(In thousands)
Interest rate range:
Less than 0.50%	$	118,590	$	24,166	$	24,700
0.50% to 0.99%		56,516		45,579		57,812
1.00% to 1.49%		174,895		208,041		84,496
1.50% to 1.99%		23,322		32,743		135,509
2.00% to 2.99%		15,019		21,054		84,208
3.00% and greater		—		—		663

Total	$	388,342	$	331,583	$	387,388

The following table sets forth, by interest rate ranges, the maturities of our certificates of deposit, including brokered deposits.


	At December 31, 2013
	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:
Less than 0.50%	$	117,231	$	1,358	$	—	$	—	$	118,589		31	%
0.50% to 0.99%		18,282		29,108		5,420		3,706		56,516		15	%
1.00% to 1.49%		118,753		30,670		3,931		21,542		174,896		44	%
1.50% to 1.99%		8,368		763		2,955		11,236		23,322		6	%
2.00% to 2.99%		—		147		14,872		—		15,019		4	%
3.00% and greater		—		—		—		—		—		—

Total	$	262,634	$	62,046	$	27,178	$	36,484	$	388,342		100	%

As of December 31, 2013, the aggregate amount of outstanding certificates of deposit in amounts greater than or equal to $100,000, excluding brokered deposits, was $129.0 million. The following table sets forth the maturity of those certificates as of December 31, 2013.


	At December 31, 2013
	(In thousands)
Maturing in:
Three months or less	$	27,133
Over three months through six months		20,269
Over six months through one year		31,201
Over one year to three years		36,570
Over three years		13,817

Total	$	128,990

Borrowings. Our borrowings consist of advances from the Federal Home Loan Bank of Boston and repurchase agreements. At December 31, 2013, we had access to additional Federal Home Loan Bank advances of up to $51.0 million. Our borrowings have primarily been used to fund commercial loans products with LIBOR-based interest rate terms. 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 Years Ended December 31,
	2013			2012			2011
	(Dollars in thousands)
Balance at end of period	$	215,000		$	152,000		$	40,000
Average balance during period	$	127,501		$	102,266		$	19,836
Maximum outstanding at any month end	$	215,000		$	160,000		$	40,000
Weighted average interest rate at end of period		0.61	%		0.81	%		2.35	%
Average interest rate during period		0.92	%		1.09	%		2.32	%

Properties

We operate from our nine full-service banking offices, including our main office and eight branch offices located in Brookline, Dedham, Hyde Park, Nantucket, Norwood and West Roxbury, Massachusetts. The net book value of our premises, land and equipment was $7.5 million at December 31, 2013, which excludes the book value of branches acquired in the Nantucket Branch Acquisition that are included in the table below. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Nantucket Branch Acquisition.

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The following table sets forth information with respect to our offices, including the expiration date of leases with respect to leased facilities.


Office Name and Address	Leased or Owned	Year Acquired or Leased	Month of lease expiration
Full Service Banking Offices:

Main Office
Blue Hills Bank – River Street 1196 River Street Hyde Park, MA 02136	Owned ¹	1871

Blue Hills Bank – Truman 1065 Truman Parkway Hyde Park, MA 02136	Owned/Leased ²	1977	March 2021

Blue Hills Bank – Brookline 1337 Beacon Street Brookline, MA 02446	Leased	2007	February 2017

Blue Hills Bank – Dedham 749 Providence Highway Dedham, MA 02026	Leased	1988	May 2016

Blue Hills Bank – Norwood 111 Lenox Street Norwood, MA 02062	Leased	1998	October 2016

Blue Hills Bank – West Roxbury 1920 Centre Street West Roxbury, MA 02132	Leased	2004	February 2019

Nantucket Bank – Pleasant Street 104 Pleasant Street Nantucket, MA 02554	Owned	2014

Nantucket Bank – Orange Street 2 Orange Street Nantucket, MA 02554	Owned	2014

Nantucket Bank – Amelia Drive 1 Amelia Drive Nantucket, MA 02554	Owned	2014

Administrative and Other Facilities:

Blue Hills Bank ³ 81 Newbury St., 2 ^nd Floor Boston, MA 02115	Leased	2014	February 2015

320 Norwood Park South Norwood, MA 02062	Leased	2011	November 2016

9 Bayberry Court Nantucket, MA 02554	Owned	2014

3 Madison Court Nantucket, MA 02554	Owned	2014

(1)	We lease 1,500 square feet of additional office space adjacent to this location at 1202 River Street. This lease expires in March 2015.

(2)	This office building is owned and located on land that is leased.

(3)	This property is used as a loan production office.

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We have signed leases for two de novo branches, one to be located in Milton, Massachusetts with a ten-year lease commencing at or near the branch opening date and options for the Bank to extend the lease an additional 25 years; and another to be located at University Station in Westwood, Massachusetts, with a fifteen-year lease commencing at or near the branch opening date and options for three five-year extensions of the lease by the Bank.

The administrative offices located at Norwood Park South, Norwood house several of our back-office functions. The administrative offices located at 9 Bayberry Court, Nantucket house our customer contact center. In addition, the premises include four condominium units that are used for employee housing. The property located at 3 Madison Court, Nantucket consists of a two-unit building used for employee housing. We rent units to certain employees in Nantucket at below-market rates in order to help attract and retain banking staff.

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 December 31, 2013, 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.

Expense and Tax Allocation

Blue Hills Bank will enter into an agreement with Blue Hills Bancorp, Inc. to provide it with certain administrative support services, whereby Blue Hills Bank will be compensated at not less than the fair market value of the services provided. In addition, Blue Hills Bank and Blue Hills 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 December 31, 2013, we had 136 full-time employees and 18 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, Blue Hills Bank will become the wholly-owned subsidiary of Blue Hills Bancorp, Inc. Additionally, it is expected that Blue Hills Bancorp, Inc. will form another subsidiary, the sole purpose of which will be to fund the loan to Blue Hills Bank’s employee stock ownership plan.

Blue Hills Bank has two subsidiaries, HP Security Corporation (“HP Security”) and 1196 Corporation (“1196 Corporation”). HP Security buys, sells and holds securities on its own behalf as a wholly-owned subsidy of Blue Hills Bank, which results in tax advantages in Massachusetts. At December 31, 2013, HP Security had total assets of $253.5 million. 1196 Corporation owns shares in Northeast Retirement Services, Inc., a company that administers pension and 401(k) plans for a number of savings banks, including Blue Hills Bank, and other entities.

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SUPERVISION AND REGULATION

General

Blue Hills Bank is a Massachusetts-chartered stock savings bank and will be the wholly-owned subsidiary of Blue Hills Bancorp, Inc., a Maryland corporation, which will be a registered bank holding company.

Blue Hills 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. Blue Hills 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. Blue Hills 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 registered bank holding companies, Blue Hills Bancorp, Inc. will be, and Hyde Park Bancorp, MHC and Hyde Park Bancorp, Inc. are, 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 Blue Hills Bancorp, Inc. and Blue Hills Bank. As is further described below, the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), has significantly changed the 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 Blue Hills Bancorp, Inc. and Blue Hills Bank. The summary is not intended to be a complete description of such statutes and regulations and their effects on Blue Hills Bancorp, Inc. and Blue Hills Bank.

The Dodd-Frank Act

The Dodd-Frank Act has significantly changed the bank regulatory structure and is affecting the lending and investment activities and general operations of depository institutions and their holding companies. The Dodd-Frank Act eliminated the Office of Thrift Supervision and required 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 authorized the Federal Reserve Board to supervise and regulate all savings and loan holding companies. These changes were effective July 21, 2011.

The Dodd-Frank Act required 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

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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 established a floor for capital of insured depository institutions that cannot be lower than the standards in effect on July 21, 2010, and directed the federal banking regulators to implement new leverage and capital requirements within 18 months of that date. The revised capital regulations are effective January 1, 2015.

The Dodd-Frank Act also created 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 also broadened 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, and provided non-interest bearing transaction accounts with unlimited deposit insurance through December 31, 2012.

The Dodd-Frank Act requires companies to give stockholders a non-binding vote on executive compensation and so-called “golden parachute” payments. 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.

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

The Dodd-Frank Act contained the so-called “Volcker Rule,” which generally prohibits banking organizations from engaging in proprietary trading and, with certain exceptions, from investing in, sponsoring or having certain relationships with certain hedge or private equity funds (“covered funds”). On December 13, 2013, federal agencies issued a final rule implementing the Volcker Rule which, among other things, requires banking organizations to restructure and limit certain of their investments in and relationships with covered funds. The final rule unexpectedly included within the interests subject to its restrictions collateralized debt obligations backed by trust-preferred securities (“TRUPs CDOs”). Many banking organizations had purchased such instruments because of their favorable tax, accounting and regulatory treatment and would have been subject to unexpected write-downs. In response to concerns expressed by community banking organizations, the federal agencies subsequently issued an interim final rule which grandfathers TRUPS CDOs issued before May 19, 2010 if (i) acquired by a banking organization on or before December 10, 2013 and (ii) the organization reasonably believed the proceeds from the TRUPS CDOs were invested primarily in any trust preferred security or subordinated debt instrument issued by a depository institution holding company with less than $15 billion in assets or by a mutual holding company.

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In addition, the Consumer Financial Protection Bureau has finalized the rule implementing the “Ability to Repay” requirements of the Dodd-Frank Act. The regulations generally require lenders to make a reasonable, good faith determination as to a potential borrower’s ability to repay a residential mortgage loan. The final rule establishes a safe harbor for certain “Qualified Mortgages,” which contain certain features and terms deemed to make the loan less risky. The Ability to Repay final rules were effective January 10, 2014.

Many of the provisions of the Dodd-Frank Act were subject to delayed effective dates and the legislation required various federal agencies to promulgate numerous and extensive implementing regulations over a period over years. It is therefore difficult to predict at this time what the full impact the new legislation and implementing regulations will have on community banks such as Blue Hills 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 operating and compliance costs.

Massachusetts Banking Laws and Supervision

General. As a Massachusetts-chartered stock savings bank, Blue Hills 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, Blue Hills 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 Blue Hills Bancorp, Inc. may depend, in part, upon receipt of dividends from Blue Hills Bank. The payment of dividends from Blue Hills Bank would be restricted by federal law if the payment of such dividends resulted in Blue Hills 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.

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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 extensions 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 Blue Hills Bank’s investment activities. See “—Federal Regulations—Business and Investment Activities”.

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 Blue Hills 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.

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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 Blue Hills 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 stockholders’ 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% to 100%. State non-member banks must maintain a minimum ratio of total capital to 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.

In July 2013, the FDIC and the other federal bank regulatory agencies issued a final rule that will revise their leverage and risk-based capital requirements and the method for calculating risk-weighted assets to make them consistent with agreements that were reached by the Basel Committee on Banking Supervision and certain provisions of the Dodd-Frank Act. Among other things, the rule establishes a uniform leverage ratio requirement of 4% of total assets, provides for a new common equity Tier 1 minimum capital requirement (4.5% of risk-weighted assets), increases the minimum Tier 1 capital to risk-based assets requirement (from 4% to 6% of risk-weighted assets) and assigns a higher risk weight (150%) to exposures that are more than 90 days past due or are on nonaccrual status and to certain commercial real estate facilities that finance the acquisition, development or construction of real property. The final rule also requires unrealized gains and losses on certain “available-for-sale” securities holdings to be included for purposes of calculating regulatory capital requirements unless a one-time opt-out is exercised. The rule limits a banking organization’s capital distributions and certain discretionary bonus payments to executive officers if the banking organization does not hold a “capital conservation buffer” consisting of 2.5% of common equity Tier 1 capital to risk-weighted assets in addition to the amount necessary to meet its minimum risk-based capital requirements. The final rule also implements the Dodd-Frank Act’s directive to apply to savings and loan holding companies consolidated capital requirements that are not less stringent than those applicable to their subsidiary institutions. The final rule is effective January 1, 2015. The “capital conservation buffer” will be phased in from January 1, 2016 to January 1, 2019, when the full capital conservation buffer will be effective.

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.

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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 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% of Tier 1 capital or the maximum amount permitted by Massachusetts law. Blue Hills Bank received approval from the FDIC to retain and acquire such equity instruments up to the specified limits and, at December 31, 2013, held approximately $85.5 million in such investments. 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 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

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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.

In connection with the final capital rule described earlier, the federal banking agencies have adopted revisions to the prompt corrective action framework, effective January 1, 2015. Under the revised prompt corrective action requirements, insured depository institutions would be required to meet the following in order to qualify as “well capitalized:” (1) a common equity Tier 1 risk-based capital ratio of at least 6.5%; (2) a Tier 1 risk-based capital ratio of at least 8% (increased from 6%); (3) a total risk-based capital ratio of at least 10% (unchanged from current rules) and (4) a Tier 1 leverage ratio of 5% or greater (unchanged from the current rules).

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 Blue Hills Bank. That enforcement authority includes, among other things, the ability to 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. With certain exceptions, a receiver or conservator must be appointed 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.”

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Federal Insurance of Deposit Accounts. Deposit accounts in Blue Hills 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 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 risk-based 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. 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.

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, 2013, Blue Hills Bank paid $64,000 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 with 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 exercised that discretion by establishing a long range fund ratio of 2%.

A material increase in insurance premiums would likely have an adverse effect on the operating expenses and results of operations of Blue Hills 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 Blue Hills Bank’s deposit insurance.

As a Massachusetts-chartered savings bank, Blue Hills Bank is also required to be a member of the Depositors Insurance Fund, a corporation that insures savings bank deposits in excess of federal deposit insurance coverage. See “—Massachusetts Banking Laws and Supervision—Depositors Insurance Fund,” above.

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

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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. Blue Hills Bank’s latest FDIC CRA rating, dated May 29, 2012, was “Satisfactory.”

Massachusetts has its own statutory counterpart to the CRA which is also applicable to Blue Hills 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. Blue Hills Bank’s most recent rating under Massachusetts law, dated May 29, 2012, 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 currently 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 $89.0 million; a 10% reserve ratio is applied above $89.0 million. The first $13.3 million of otherwise reservable balances are exempted from the reserve requirements. The amounts are adjusted annually. Blue Hills Bank complies with the foregoing requirements.

Federal Home Loan Bank System. Blue Hills 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, Blue Hills 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 December 31, 2013, Blue Hills Bank was in compliance with this requirement.

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 since then that are considerably less than those paid prior to 2009.

Other Regulations

Some interest and other charges collected or contracted by Blue Hills Bank are subject to state usury laws and federal laws concerning interest rates and charges. Blue Hills Bank’s operations also are subject to state and federal laws applicable to credit transactions and other operations, including, but not limited to, 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.

The operations of Blue Hills 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.

Holding Company Regulation

Blue Hills 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. Blue Hills 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 Blue Hills 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;

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(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. Blue Hills Bancorp, Inc. does not anticipate opting for “financial holding company” status at this time.

Blue Hills 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 capital 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 directs the Federal Reserve Board to issue consolidated capital requirements for depository institution holding companies that are not less stringent, both quantitatively and in terms of components of capital, than those applicable to institutions themselves. The previously discussed final rule regarding regulatory capital requirements implements the Dodd-Frank Act as to bank holding company capital standards. Consolidated regulatory capital requirements identical to those applicable to the subsidiary banks will apply to bank holding companies (with greater than $500 million of assets) as of January 1, 2015. As is the case with institutions themselves, the capital conservation buffer will be phased in between 2016 and 2019.

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 Dodd-Frank Act codified the “source of strength” doctrine. That longstanding policy of the Federal Reserve Board requires bank holding companies to serve as a source of strength to their subsidiary depository institutions by providing capital, liquidity and other support in times of financial stress.

The Federal Reserve Board has issued a policy statement regarding the payment of dividends and the repurchase of shares of common stock by bank holding companies. In general, the policy provides that dividends should be paid only out of current earnings and only if the prospective rate of earnings retention by the holding company appears consistent with the organization’s capital needs, asset quality and overall financial condition. Regulatory guidance provides for prior regulatory consultation with respect to dividends in certain circumstances such as where the company’s net income for the past four quarters, net of dividends’ previously paid over that period, is insufficient to fully fund the dividend or the company’s overall rate of earnings retention is inconsistent with the company’s capital needs and overall financial condition. The ability of a holding company to pay dividends may be restricted if a subsidiary bank becomes undercapitalized. The policy statement also provides for regulatory consultation prior to a holding company redeeming or repurchasing regulatory capital instruments when the holding company is

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experiencing financial weaknesses or redeeming or repurchasing common stock or perpetual preferred stock that would result in a net reduction as of the end of a quarter in the amount of such equity instruments outstanding compared with the beginning of the quarter in which the redemption or repurchase occurred. These regulatory policies could affect the ability of the Blue Hills Bancorp, Inc. to pay dividends, repurchase shares of its stock 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 Blue Hills Bancorp, Inc. ever held as a separate subsidiary a depository institution in addition to Blue Hills Bank.

Blue Hills Bancorp, Inc. and Blue Hills 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 Blue Hills Bancorp, Inc. or Blue Hills Bank.

The status of Blue Hills 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.

Change in Control Regulations. Under the Change in Bank Control Act, no person may acquire control of a bank holding company such as Blue Hills Bancorp, Inc. unless the Federal Reserve Board has been given 60 days’ prior written notice and has not issued a notice disapproving the proposed acquisition, taking into consideration certain factors, including the financial and managerial resources of the acquirer and the competitive effects of the acquisition. Control, as defined under federal law, means ownership, control of or holding irrevocable proxies representing more than 25% of any class of voting stock, control in any manner of the election of a majority of the institution’s directors, or a determination by the regulator that the acquiror has the power to direct, or directly or indirectly to exercise a controlling influence over, the management or policies of the institution. Acquisition of more than 10% of any class of a savings and loan holding company’s voting stock constitutes a rebuttable determination of control under the regulations under certain circumstances including where, as will be the case with Blue Hills Bancorp, Inc., the issuer has registered securities under Section 12 of the Securities Exchange Act of 1934.

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. Blue Hills Bancorp, Inc. would become a Massachusetts bank holding company if it acquires a second banking institution and holds and operates it separately from Blue Hills Bank.

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.

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TAXATION

Federal Taxation

General. Hyde Park Bancorp, MHC, Hyde Park Bancorp, Inc. and Blue Hills Bank are, and Blue Hills Bancorp, Inc. will be, subject to federal and state 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 Hyde Park Bancorp, MHC, Hyde Park Bancorp, Inc., Blue Hills Bancorp, Inc. and Blue Hills Bank.

Method of Accounting. For federal income tax purposes, Blue Hills Bank will file a consolidated tax return with Blue Hills 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.

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.” Alternative minimum tax is payable to the extent 20 percent of alternative minimum taxable income is in excess of the regular corporate tax. 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. Hyde Park Bancorp, MHC, Hyde Park Bancorp, Inc. and Blue Hills 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, 2013, Hyde Park Bancorp, MHC, Hyde Park Bancorp, Inc. and Blue Hills Bank had no net operating loss carryforward for federal income tax purposes.

Corporate Dividends. Blue Hills Bancorp, Inc. will be able to exclude from its income 100% of dividends received from Blue Hills Bank as a member of the same affiliated group of corporations.

Audit of Tax Returns. Hyde Park Bancorp, MHC, Hyde Park Bancorp, Inc., and Blue Hills Bank’s federal income tax returns, as applicable, have not been audited in the most recent four-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, Hyde Park Bancorp, MHC, Hyde Park Bancorp, Inc. and Blue Hills Bank currently file combined annual income tax returns. Upon consummation of the conversion, Blue Hills Bancorp, Inc. would be required to file a combined annual Massachusetts income tax return with Blue Hills 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.

Blue Hills Bank, under current law, files a Massachusetts combined excise tax return with its affiliates who do not qualify as security corporations. During the 2013 tax year, Blue Hills Bank was subject to an annual Massachusetts tax at a rate of 9.0% of its net income, adjusted for certain items. Massachusetts net income is defined as gross income, other than 95% of dividends received in any

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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. Dividends paid to affiliates participating in a combined return will be 100% excluded to the extent paid from earnings and profits of a unitary business included in the Massachusetts combined return. 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.

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 also a bank holding company under the Internal Revenue Code must pay a tax equal to 0.33% of its gross income. 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. HP Security Corporation, a wholly owned subsidiary of Blue Hills Bank, is qualified as a security corporation. As such, it has received security corporation classification by the Massachusetts Department of Revenue; and does 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.

None of the state tax returns of Blue Hills Bank is currently under audit, nor have any of these tax returns been audited during the past five years.

As a Maryland business corporation, Blue Hills Bancorp, Inc. will be required to file annual returns and pay annual fees to the State of Maryland.

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MANAGEMENT OF BLUE HILLS BANCORP, INC.

Shared Board

The trustees of Hyde Park Bancorp, MHC are the same persons who are the directors of Blue Hills Bank. We expect that Blue Hills Bancorp, Inc. and Blue Hills Bank will also continue to have the same directors until there is a business reason to establish separate boards.

Executive Officers of Hyde Park Bancorp, Inc.

The following table sets forth information regarding the executive officers of Blue Hills Bancorp, Inc. The officers of Blue Hills Bancorp, Inc. and Blue Hills Bank are elected annually.


Name	Age	Positions Held ⁽¹⁾
William M. Parent	52	President and Chief Executive Officer of Blue Hills Bank and Blue Hills Bancorp
Jim Kivlehan	53	Executive Vice President, Chief Financial Officer of Blue Hills Bank and Blue Hills Bancorp
Thomas E. O’Leary	61	Executive Vice President, Commercial Banking
Scott Thimann	56	Executive Vice President, Chief Retail Officer
Robert Driscoll	39	Senior Vice President, Residential Lending
Carol J. Dubé	59	Senior Vice President, Chief Information Officer
Karen Marryat	51	Senior Vice President, Chief Marketing Officer
Lauren Messmore	43	Senior Vice President, Corporate Strategy
Thomas R. Sommerfield	58	Senior Vice President, Chief Risk Officer

(1)	Positions held relate to Blue Hills Bank, except as indicated.

Directors of Hyde Park Bancorp, Inc. and Blue Hills Bank

Blue Hills Bancorp has twelve directors. Directors of Blue Hills Bancorp serve three-year staggered terms so that approximately one-third of the directors are elected at each annual meeting. Directors of Blue Hills Bank will be elected by Blue Hills Bancorp as its sole stockholder. The following table states our directors’ names, their ages as of December 31, 2013, the years when they began serving as directors of Blue Hills Bank and when their current term expires:


Name	Position(s) Held With Blue Hills Bancorp	Age		Director Since		Current Term Expires
David J. Houston, Jr.	Chairman of the Board		67		1977		2017
George E. Clancy	Director		55		1996		2016
Ken D’Amato	Director		53		2010		2015
Brian G. Leary	Director		58		2012		2015
Peter J. Manning	Director		74		2010		2017
Thomas M. Menino	Director		71		2014		2017
Karen B. O’Connell	Director		50		2003		2015
William M. Parent	President, Chief Executive Officer and Director		52		2010		2016
Ronald K. Perry	Director		55		2012		2015
David A. Powers	Director		65		1998		2016
Janice L. Shields	Director		66		2010		2017
Scott Smith	Director		48		1998		2016

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Board Independence

The Board of Directors has affirmatively determined that each of our directors, with the exception of Mr. Parent, is “independent” as defined in the rules of the Nasdaq Stock Market. Mr. Parent is not independent because he is an executive officer of Blue Hills Bank.

In determining the independence of our directors, the Board of Directors considered relationships between Blue Hills 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 Blue Hills Bank.

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 led to the determination that the person should serve as a director. Unless otherwise indicated, directors and executive officers have held their positions for the past five years.

David J. Houston, Jr. is a senior member of J.J. Houston & Co., LLP, an independent insurance agency. He has served on the Blue Hills Bank Board of Directors since 1977 and currently serves as Chairman of the Board of Directors and a member of the Risk Management Committee. Mr. Houston is a graduate of Boston College and a member of the Society of Certified Insurance Counselors, the National Association of Corporate Directors, and the Massachusetts and South Shore Associations of Independent Insurance Agents. Mr. Houston’s long affiliation with Blue Hills Bank and his experience operating a local business provide a valuable connection between the Bank and the local community. In addition, his knowledge of risk and the insurance market brings the Board insight into the Bank’s business and strategies.

George E. Clancy, Esquire is a partner at Fuller, Rosenberg, Palmer & Beliveau of Worcester, Massachusetts. Mr. Clancy has been a member of the Blue Hills Bank Board of Directors since 1996 and is currently Chairman of the Corporate Governance Committee and a member of the Audit Committee. Mr. Clancy is a member of the Massachusetts Bar Association, the Massachusetts Defense Lawyers Association and the Worcester County Bar Association. Mr. Clancy is a member of the CAP Team and serves as a CCD teacher for St. Anne Parish. Mr. Clancy is a graduate of Bridgewater State College and received his J.D. from the Suffolk University Law School. Mr. Clancy has over 25 years of business experience as a practicing lawyer. Mr. Clancy provides the Board with extensive insight on legal matters, especially issues related to employment; he is a former resident of Hyde Park and founding Director of Hyde Park Main Streets.

Ken D’Amato is managing director of global equity and fixed income, and head of equity trading at Manulife Asset Management of Boston, Massachusetts. Prior to joining Manulife Asset Management in 2010, Mr. D’Amato was chief operating officer at Evergreen Investment Management Company. Mr. D’Amato is a member of the Risk Management Committee. Mr. D’Amato was a volunteer for HESSCO Elder Services of Sharon, Massachusetts and a member of the finance and building committee of The Sage School in Foxboro, Massachusetts. Mr. D’Amato is a graduate of Boston College and earned his MBA from Boston University. Mr. D’Amato provides the Board with extensive financial and business experience as well as valuable insight into managing and overseeing a business.

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Brian G. Leary, Esquire is a partner at the law firm of Holland & Knight and is a member of the firm’s Business Section. He acts as outside general counsel to several New England companies. He specializes in the defense of government enforcement actions and has also represented several Fortune 500 companies in general commercial litigation matters in Massachusetts and elsewhere in the country. Prior to joining Holland & Knight in 2013, Mr. Leary was a partner at McCarter & English, LLP where he oversaw the firm’s strategic planning and was the founder and chief executive officer of Mogall, Inc., an early pioneer of social networking . He also was a nationally recognized reporter and anchor for WCVB-TV, and received the George Foster Peabody Award for investigative reporting in 1997. Mr. Leary has been a member of the Blue Hills Bank Board of Directors since 2012 and is a member of the Audit and Governance Committees. Mr. Leary is an active volunteer and serves on the Board of Directors of the New England Legal Foundation and Catholic Memorial School. He is a graduate of the College of the Holy Cross and received his J.D. from Harvard Law School. Mr. Leary provides the Board with valuable perspective on general business oversight, as well as potential strategic initiatives.

Peter J. Manning is the former Vice Chairman of FleetBoston Financial Corporation, and has been a member of the Blue Hills Bank Board of Directors since 2010. Mr. Manning serves as Chairman of the Audit Committee and also serves on the Risk Management Committee. Mr. Manning began his career at the accounting firm Coopers & Lybrand and later joined BankBoston where he held a number of executive management responsibilities which included Executive Vice President and Chief Financial Officer. In October of 1999, Mr. Manning was named to the Vice Chairman post at FleetBoston Financial. Mr. Manning is a graduate of Boston College and earned his MBA from Babson College. He is currently a board member of Safety Insurance Group, Inc. and Campaign for Catholic Schools. Mr. Manning was previously a board member of Thermo Fisher Scientific Inc., and served 13 years on the Bedford school committee. Mr. Manning’s extensive experience with financial institutions and accounting brings the Board valuable insight into the business of the Bank, its strategies and accounting matters.

Thomas M. Menino served as Mayor of Boston for five terms from 1993 to 2014. As Mayor, Mr. Menino focused on improving education, public health and the environment. Mayor Menino, as co-chair of Mayors Against Illegal Guns, also led a national effort for gun reforms and spearheaded a reduction of crime in Boston. Prior to becoming Mayor, Mr. Menino served five terms as a City Counselor. Following his final term, Mr. Menino joined Boston University where he serves as co-director for the newly-founded Initiatives on Cities (IoC). At the IoC, Mr. Menino leads an effort to investigate the dynamic nature of our world’s cities and bridge the gap between academic research on urban affairs and practical implementation. Mr. Menino is a graduate of the University of Massachusetts Boston with a degree in community planning. Mr. Menino’s service as the mayor of Boston provides the board of directors with a unique view of the community that the Bank serves.

Karen O’Connell, Esquire is Director of Economic Development for the Town of Dedham, Massachusetts. Ms. O’Connell has served on the Blue Hills Bank Board of Directors since 2009 and currently serves on the Corporate Governance Committee. Ms. O’Connell is a Member of the Massachusetts Bar Association, and a voting member of the Boston Athletic Association (Boston Marathon). She is currently a Board Member of Massachusetts Economic Development Council and the New England Advisory Board of ACCION East. She has also served on various local boards in the community. Ms. O’Connell is a regularly featured speaker at conferences and seminars on economic development issues with a focus on sustainable development. Ms. O’Connell is a graduate of Ohio Wesleyan University and received her J.D. from the Boston University School of Law. Ms. O’Connell’s in-depth knowledge of economic development and the law provide the Board with a unique and valuable perspective into economic development and legal issues.

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William M. Parent is President and Chief Executive Officer of Blue Hills Bank and Hyde Park Bancorp, MHC since 2010. Prior to that, Mr. Parent served as a partner and chief investment officer at Grail Partners, a boutique merchant bank. Mr. Parent has 27 years of experience in the financial services industry, including 16 years at Bank of Boston and its successor companies, FleetBoston and Bank of America, where he held senior executive roles in Finance, Mergers & Acquisitions, Bank Management and Private Equity Investing. Mr. Parent is a non-practicing CPA and holds a BS from Bentley University. He has served as a member of the board of directors for over a dozen middle market companies covering the financial services, retail, distribution and manufacturing sectors. Today, he serves on the board of directors for the YMCA of Greater Boston, Wediko Children Services, Thayer Academy and the Savings Banks Employees Retirement Association. He is also a member of the Honor Roll Development Committee for the Campaign for Catholic Schools. Mr. Parent’s extensive experience in the financial services industry and his responsibilities for the strategic direction and management of Blue Hills Bank offer the Board an invaluable perspective of the Bank’s business and strategic direction.

Ronald K. Perry is the president and head of brokerage at Colliers International. Mr. Perry began his career at Meredith & Grew, which became part of Colliers in 2008, and became the head of the brokerage group in 2007. He was appointed president of the firm in March 2010. Mr. Perry is a licensed real estate broker and a member of the Greater Boston Real Estate Board and Commercial Brokers Association. Mr. Perry has been a member of the Blue Hills Bank Board of Directors since 2012 and is Chairman of the Risk Management committee and serves on the Compensation Committee. A graduate of the College of Holy Cross, he previously served on the board of directors at Catholic Memorial School for 12 years and was a Big East Color Analyst for over 30 years. Mr. Perry’s extensive real estate experience and knowledge of the local real estate market as well as his valuable insight into managing and overseeing a business brings valuable expertise to the Board.

David A. Powers is a partner at Charles A. Powers & Sons, LLP of Boston, Massachusetts, an insurance agency, a position he has held for the past 24 years. A graduate of the University of New Hampshire, Mr. Powers is affiliated with the Massachusetts Association of Independent Insurance Agents and the Rotary Club of Hingham and Hull. He has been a member of the Blue Hills Bank Board of Directors since 1998 and currently serves on the Corporate Governance Committee. Mr. Powers’ management experience and business knowledge provides a valuable resource and perspective to the Board.

Janice L. Shields is co-founder and president of Shields & Company, Inc. located in Waltham, Massachusetts. For over 35 years, Ms. Shields has provided a wide range of corporate advisory services to clients, including in the areas of mergers and acquisitions, valuations and fairness opinions. Ms. Shields has been a member of the Blue Hills Bank Board of Directors since 2010 and is a member of the Compensation and Risk Management Committees. She serves as a director on a number of other local boards and over the years has been active in fundraising activities for local organizations. Ms. Shields is a graduate of Albertus Magnus College and has an MA from Harvard University and an MBA from the Stern School at New York University. With her extensive business and entrepreneurial experience, Ms. Shields brings to the Board a valuable insight on financial analysis and evaluating potential strategic transactions.

Scott Smith is the retired chief executive officer of Family to Family Foundation located in Boston, Massachusetts and serves on the board of directors for the Thomas M. Menino YMCA of Hyde Park, Lt. Governor’s Inter-agency Council Advisory and the Mayor’s Commission on Homelessness. Mr. Smith has 26 years of experience in the non-profit sector. He has served on the Blue Hills Bank Board of Directors since 1998 and currently serves as Chairman of the Compensation Committee and is a member of the Audit Committee. Mr. Smith is a graduate of Salisbury University. Mr. Smith provides the Board with a unique insight into the non-profit sector and has substantial ties to the communities served by Blue Hills Bank.

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Executive Officers Who Are Not Also Directors:

Carol J. Dubé is Senior Vice President, Chief Information Officer for Blue Hills Bank. Ms. Dubé joined Blue Hills Bank in 2011, and has over 25 years of experience in all aspects of banking operations and technology services. Prior to her most recent position with FIS (Metavante) Corporation, she served as Chief Information Officer for both Cape Cod Five Cents Savings Bank and Plymouth Savings Bank. These positions followed ten years of service with Hudson River Bank & Trust Co. in Albany, New York, where Ms. Dubé held top positions in banking operations and information technology. Ms. Dubé attended Albany Business College.

Robert Driscoll is Senior Vice President of Residential Lending. Mr. Driscoll has been with Blue Hills Bank since 1996 and oversees all residential lending department functions including originations, sales and servicing activities at the Bank. He serves on the Board of Directors for the Massachusetts Community & Banking Council and is a member of the MBA Real Estate Finance Committee. Mr. Driscoll is a graduate of Northeastern University.

Jim Kivlehan is Executive Vice President and Chief Financial Officer for Blue Hills Bank since joining the bank in September of 2013. Prior to that, Mr. Kivlehan was an Executive Vice President, with more than a decade of service, at Citizens Bank, a subsidiary of RBS Citizens Financial Group, Inc. At Citizens he held multiple executive leadership roles spanning Strategy, Business Analytics, M&A and Finance. Mr. Kivlehan is an experienced banking executive with an extensive background in all areas of finance. A graduate of Babson College, he is a non-practicing CPA, a member of Financial Executives International, and a trustee and past president of the Treasurer’s Club of Boston.

Karen Marryat is Senior Vice President, Chief Marketing Officer at Blue Hills Bank since 2010. She is responsible for branding, marketing, and ecommerce and oversees the Bank’s charitable foundation. Ms. Marryat has 25 years of bank marketing experience and was most recently Senior Vice President, Chief Marketing Officer at Cambridge Savings Bank. She is a graduate of the Simmons Graduate School of Management and the University of Rhode Island. She serves on the board of advisors at the Thomas M. Menino YMCA and is a Trustee of Pilgrim Hall Museum.

Lauren Messmore is Senior Vice President, Corporate Strategy for Blue Hills Bank. Ms. Messmore has extensive experience in investment banking, including work at a top-tier global investment bank, Citigroup, as well as co-founding and managing an investment banking boutique. She has a proven track record in strategy development and transaction execution across a wide range of industries. A graduate of Harvard College, Ms. Messmore joined Blue Hills Bank in 2012. She sits on the Advisory Board of the Wellesley Free Library Foundation.

Thomas E. O’Leary has been Executive Vice President of Commercial Banking at Blue Hills Bank since 2011. Mr. O’Leary is responsible for the commercial banking functional departments and their operations. He has 39 years of banking experience split between credit and lending functions. Prior to joining Blue Hills Bank, Mr. O’Leary was Executive Vice President and Group Executive, Specialized Banking from 2002 to 2011 with Citizens Bank, a subsidiary of RBS Citizens Financial Group, Inc. Mr. O’Leary serves on the Board of Trustees of Catholic Charities of the Archdiocese of Boston. Mr. O’Leary is a graduate of Boston College and attended the Stonier Graduate School of Banking at Rutgers University.

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Thomas R. Sommerfield is Senior Vice President, Chief Risk Officer at Blue Hills Bank since 2011. Mr. Sommerfield is responsible for the overall risk management of the bank, including credit, compliance, enterprise risk and administratively internal audit. Mr. Sommerfield has more than 35 years of experience in the financial services industry, was previously a Director at Spring Street Capital and has held numerous senior lending, credit and risk management roles at CIT, GE Capital, FleetBoston and predecessors, and HSBC. Mr. Sommerfield is a graduate of Columbia College. He is the leader of the Bank’s Pan-Mass Challenge team and has served on advisory boards of educational institutions and outreach programs and is currently on the board of VETRN, a charity that funds education and provides mentoring for military veterans who are starting new local businesses.

Scott Thimann is the Executive Vice President, Chief Retail Officer at Blue Hills Bank since 2011. He is responsible for overseeing all consumer and business banking. Mr. Thimann brings more than 30 years of experience in the banking industry. Prior to joining the Bank, Mr. Thimann worked for Sovereign/Santander Bank from 2000 to 2011, including service as Senior District Executive for branch banking, and Regional and Market Executive for business banking. Mr. Thimann has served as a board trustee of the Arthritis Foundation, Massachusetts Chapter, and as a board director for the Boys & Girls Club of Brockton, Massachusetts. Mr. Thimann is a graduate of San Jose State University.

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 Blue Hills Bank to our executive officers and directors in compliance with federal banking regulations. At December 31, 2013, none of the directors or executive officers of the Bank or Blue Hills Bancorp had a loan outstanding with the Bank.

Executive Compensation

The Board of Directors’ philosophy is to align executive compensation with the interests of its stockholders and to determine appropriate compensation levels that will enable it to meet the following objectives:

•

To attract, retain and motivate an experienced, competent executive management team;

•

To reward the executive management team for the enhancement of shareholder value based on annual earnings performance and the market price of Blue Hills Bancorp’s stock;

•

To provide compensation rewards that are adequately balanced between short-term and long-term performance goals;

•

To encourage ownership of Blue Hills Bancorp’s common stock through stock-based compensation; and

•

To maintain compensation levels that are competitive with other financial institutions and particularly those in Blue Hills Bancorp’s peer group based on asset size and market area.

The Board of Directors considers a number of factors in its decisions regarding executive compensation and benefits including, but not limited to, the level of responsibility and performance of the individual executive officer, the overall performance of Blue Hills Bancorp, and consideration of industry, community bank peers and local market conditions. Base salary levels of Blue Hills Bancorp’s

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and Blue Hills Bank’s executive officers are set to reflect the duties and responsibilities inherent in the position and to reflect competitive conditions in the banking business in Blue Hills Bancorp’s market area. In setting base salaries, the Board of Directors also considers a number of factors relating to each executive officer, including individual performance, job responsibilities, experience level, ability and the knowledge of the position, and overall performance of Blue Hills Bancorp and the Blue Hills Bank. These factors are considered subjectively, and where possible quantitatively, and are weighted partially by those aspects deemed more significant than others. Such a weighting of these evaluation factors will vary from year to year in response to the strategic plan and current market conditions. The Board of Directors also considers the recommendations of the Chief Executive Officer with respect to the compensation of the other executive officers. The Board of Directors and the Chief Executive Officer review the same information in connection with these performance evaluations and related recommendations of these executives.

The Board of Directors increased Mr. Parent’s rate of base salary by 3% to $472,313 for the year ended December 31, 2013 (from $458,556 for the year ended December 31, 2012) and further increased his rate of base salary by 5.75% to $500,000 for the year ended December 31, 2014. Mr. O’Leary’s rate of base salary was increased by 9.2% to $225,000 for the year ended December 31, 2013 (from $206,000 for the year ended December 31, 2012). Mr. O’Leary’s base salary was further increased by 11.11% to $250,000 for the year ended December 31, 2014. Mr. Kivlehan’s base salary was initially set at $250,000 for the year ended December 31, 2013 and was increased by 1.5% to $253,750 for the year ended December 31, 2014.

The compensation committee did not use a compensation consultant in determining director or executive officer compensation for the year ended December 31, 2013.

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Summary Compensation Table

The following table sets forth for the year ended December 31, 2013, certain information as to the total remuneration paid by Blue Hills Bank to Mr. William M. Parent, who serves as President and Chief Executive Officer, Mr. Thomas O’Leary, Blue Hills Bank’s Executive Vice President, Commercial Banking and Mr. Jim Kivlehan, Blue Hills Bank’s Executive Vice President and Chief Financial Officer (referred to as our “Named Executive Officers”).


	Executive Compensation Table for the Year Ended December 31, 2013
Name and principal position (1)	Salary ($)			Bonus ($)			Non-equity incentive plan compensation ($) (2)		Nonqualified deferred compensation earnings ($) (3)		All other compensation ($) (6)		Total ($)
William M. Parent, President and Chief Executive Officer		472,313			—			267,346		1,612		141,700		882,971
Thomas E. O’Leary, Executive Vice President, Commercial Banking		225,000			10,000			175,000		496		40,000		450,496
Jim Kivlehan, Executive Vice President and Chief Financial Officer		78,847	(4)		56,200	(5)		37,500		—		50,000		222,547

(1)

Mr. Stephen McNulty, the former Chief Financial Officer of Blue Hills Bank, retired as of December 31, 2013. Mr. McNulty received the following compensation in the 2013 calendar year: $218,545 in base salary; $40,000 in short term incentive compensation, $20,000 in long-term incentive compensation for calendar year 2013; $90,658 in long-term incentive compensation for the 2011 and 2012 calendar years paid in 2013; $301,554 paid from his Supplemental Retirement Plan upon termination of employment.

(2)

Consists of amounts earned under the short-term and long term incentive plans for the calendar year 2013. For Messrs. Parent, O’Leary and Kivlehan, the amounts earned under the short-term incentive plan were $133,673, $95,000 and $25,000, respectively. Similarly, Messrs. Parent, O’Leary and Kivlehan, earned $133,673, $80,000 and $12,500, respectively, under the long-term incentive plan (i.e., the Blue Hills Bank Phantom Stock Plan).

(3)

Reflects above-market interest earned in the Blue Hills Bank Amended and Restated Supplemental Executive Retirement Plan. The interest rate earned for the year ended December 31, 2013 was earned at the rate of 3.42% per annum. The applicable federal rate for determining whether the interest earned is above market is 2.78% and is based on 120% of the applicable long-term federal rate for January 2013.

(4)	Jim Kivlehan was hired September 9, 2013 as Executive Vice President and Chief Financial Officer. Mr. Kivlehan’s annual rate of base salary was $250,000 in 2013.

(5)	Represents a sign-on bonus paid to Mr. Kivlehan during 2013.

(6)	Consists of the following payments:


Officer	Year Ended		Automobile ($)		Supplemental Retirement Plan ($)		Total ($)
William M. Parent		December 31, 2013		11,700		130,000		141,700
Thomas O’Leary		December 31, 2013		—		40,000		40,000
Jim Kivlehan		December 31, 2013		—		50,000		50,000

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Benefit Plans

Employment Agreement . Hyde Park Bancorp, MHC, Hyde Park Bancorp, Inc. and Blue Hills Bank (the “employers”) have entered into an employment agreement with Mr. William M. Parent, which agreement was amended and restated, effective March , 2014. The agreement has a term of 36 months and will extend automatically for one additional year on each one year anniversary of the effective date unless either the employers or Mr. Parent gives notice no later than 90 days prior to such anniversary date that the agreement will not be renewed. Under the agreement, the base salary for Mr. Parent for 2014 is $500,000. In addition to the base salary, the agreement provides that the executive shall be entitled to participate in any employee benefit plans in effect for executive officers of the employers and shall be eligible for participation in short-term and long-term incentive compensation and other benefits as provided to other full time employees of Blue Hills Bank. Mr. Parent shall also be entitled to continue participation in any fringe benefit arrangements in which he was participating on the effective date of the restated employment agreement. In addition, the agreement provides for reimbursement of reasonable travel and other business expenses, incurred in connection with the performance of his duties.

In the event the executive’s employment is terminated by Blue Hills Bank without cause, including a resignation for good reason (as defined in the employment agreement) during the term of the agreement, but excluding termination for cause or due to death, disability, retirement or following a change in control, the executive would be entitled to a payment equal to two times the sum of the his then current base salary and his average annual short-term incentive cash compensation awarded during the two most recent fiscal years ending before the termination. The severance payment shall be paid in substantially equal installments over a 24 month period commencing within 60 days after the date of termination, subject to the receipt of a signed release, a form of which has been appended to the employment agreement. In addition, executive will be entitled to continued group medical and life insurance coverage, at the employer’s sole expense, for the period for which he is receiving severance benefits, provided that the payment of such life or health benefit would not result in excise taxes or penalties to the employers. If the payment of such benefits would result in excise taxes or benefits to the employers under applicable tax laws, then the employers would provide such benefits on an after-tax basis or, in lieu thereof, would provide a cash lump sum payment to the executive reasonably estimated to be equal to the value of such benefits. In addition, Mr. Parent would be entitled to professional outplacement services up to a maximum cost of $30,000 from a nationally recognized outplacement consulting or coaching organization of his choice and would fully vest in any nonqualified deferred compensation plans in which he is participating.

In the event Mr. Parent is terminated without cause or terminates for good reason following a change in control, Mr. Parent would be entitled to the payment of a cash severance payment equal to three times the sum of his current base salary and his average annual short-term incentive cash compensation awarded to him over the three most recent fiscal years ending before or simultaneously with the change in control. Such payment would be made in a lump sum, provided that the change in control also satisfies the definition under Code Section 409A, and if it not, then such payments shall be made to Mr. Parent over a period of 24 months. Mr. Parent would also be entitled to continued group life and health coverage for a period of 36 months at the employers’ sole expense or if providing either such coverage on a pre-tax basis would result in an excise tax or penalties to the employers, the employer would provide such benefits on an after-tax basis or, in lieu thereof, would provide a cash lump sum payment to the executive reasonably estimated to be equal to the value of such benefits. In addition, Mr. Parent would be entitled to professional outplacement services up to a maximum cost of $30,000 from a nationally recognized outplacement consulting or coaching organization of his choice and would fully vest in any nonqualified deferred compensation plans in which he is participating.

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For purposes of the executive’s ability to resign and receive a payment under the agreement, “good reason” would include the occurrence of any of the following events: (i) a failure of the employers to continue the executive in the executive position or the issuance by the employers of a notice to the executive that the term of the employment agreement will not be extended; (ii) a material adverse change in the nature or scope of executive’s responsibilities, title, authorities, powers, functions or duties or the duties normally exercised by someone in his executive position, without his consent, (iii) an involuntary reduction in his base salary, except in connection with an across-the-board salary reduction affecting substantially all management employees and based on the employer’s financial performance, (iv) an involuntary relocation of executive’s principal place of employment by more than 35 miles driving distance from such office as determined at the date of the agreement, or (v) a material breach by the employers of the compensation provisions of the agreement which continues for more than 10 days following notice given by the executive. If an event constituting “good reason” occurs, the executive is required to give Blue Hills Bank notice within 60 days and Blue Hills Bank will have 30 days to correct the good reason, however, the 30 day period may be waived by Blue Hills Bank.

If the payments to Mr. Parent under the employment agreement made in connection with a change in control would result in an excise tax under Sections 280G and 4999 of the Internal Revenue Code, Mr. Parent would be entitled to the severance amount which would result in the greater net after-tax benefit: (i) assuming he received all payments to which he is entitled under the employment agreement and all other compensation received that is contingent on the change in control and paid all taxes, including excise taxes on such benefits, or (ii) assuming that his benefits are reduced to avoid an excess parachute payment. In addition, if necessary to avoid excise taxes under Section 409A of the Internal Revenue Code, and only to such extent, a cash severance payment may be delayed and paid on the earlier of (a) six months and one day after the executive’s termination or (b) executive’s death. In such event, the first payment shall include a catch-up payment covering amounts that would have been paid during the delay and shall earn interest at an annual rate equal to the applicable federal short-term rate published by the Internal Revenue Service.

In the event that his employment was terminated for a reason entitling him to a severance payment under the employment agreement, Mr. Parent would receive an aggregate cash severance payment of approximately $1,133,673, if the event of termination occurred in 2014 prior to a change in control and $1,633,673, if the termination occurred following a change in control in 2014, based upon current levels of compensation, without regard to the possible reduction to avoid an excess parachute payment, if such reduction resulted in the net best benefit to Mr. Parent.

Under the employment agreement, if Mr. Parent is terminated due to disability (as defined in his employment agreement), he will be entitled to receive his full salary and benefits under the employment agreement until he becomes eligible for and receives long-term disability insurance coverage then in effect. In the event of Mr. Parent’s death while employed, the employers will continue to provide his base salary to his designated beneficiary for three months following his death.

Upon retirement at age 65 or in accordance with any retirement policy established by the Board of Directors, Mr. Parent will be entitled to benefits under any retirement plans to which he is a party but shall not be entitled to any amount or benefits under the employment agreement, provided, that Mr. Parent cannot be involuntarily terminated due to “retirement” within 24 months following a change in control.

The employment agreement requires the executive not to compete with Blue Hills Bank for a period of one year following a termination of employment for which the executive receives severance payments as the result of an involuntary termination or resignation for good reason (other than a termination of employment following a change in control). The employment agreement further requires that Mr. Parent not solicit business, customers or employees of the Bank for a 12 month period following termination (other than a termination of employment following a change in control) and requires him to maintain confidential information.

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Change in Control Agreements . Hyde Park Bancorp, Inc. and Blue Hills Bank (collectively, the “employers”) have entered into two-year change in control agreements with Messrs. Thomas O’Leary and Jim Kivlehan and one other executive officer and have entered into one-year change in control agreements with six other senior officers. Commencing on the first anniversary of the effective date of the agreements for Messrs. O’Leary and Kivlehan, the agreements may be renewed by the boards of directors of the employers for an additional 12 months, such that the continuing terms shall be for 24 months. If the boards of directors determine not to renew a change in control agreement, the employers must give the covered executive notice at least 30 days before such anniversary date that the agreement will not be renewed. In such event, the change in control agreement will terminate at the end of the then term. Notwithstanding the foregoing, if the change in control agreement is in effect on the effective date of a change in control, the agreement will automatically renew on such date and will expire 24 months following the change in control.

In the event of a change in control (as defined in the agreement) followed by Messrs. O’Leary’s or Kivlehan’s involuntary termination of employment (other than for cause, death or disability) or his resignation for good reason (each a “terminating event”), the executive will receive a cash severance payment equal to (i) two times the sum of his annual base salary and average annual short-term incentive cash compensation paid over the prior two year most recent fiscal years ended before or simultaneously with the change in control, payable in equal monthly installments over the 24 month period following the terminating event, plus (ii) any accrued but unpaid compensation and accrued but unpaid paid time off (PTO), payable in a lump sum no later than 10 days following the executive’s date of termination. In addition, the employers will maintain the executive’s group medical and life insurance coverage in effect for 24 months following the date of termination, at their sole expense, or if providing either of such coverages on a pre-tax basis would result in an excise tax or penalties to the employers, the employer would provide such benefits on an after-tax basis or, in lieu thereof, would provide a cash lump sum payment to the executive reasonably estimated to be equal to the value of such benefits. For purposes of the change in control agreement, “good reason” would include any of the following events: (i) a material diminution, not consented to by the executive, in the executive’s responsibilities, authorities or duties from those in effect immediately prior to a change in control; (ii) a material reduction in the executive’s base salary as in effect on the date of the agreement, or as may be increased from time to time (except to the extent of an across-the-board reduction similarly affecting all or substantially all management employees); (iii) the relocation of the office in which executive is principally employed by more than 35 miles from its location immediately prior to the change in control or the requirement that the executive be based at a location more than 35 miles from his then current office except for required business travel to an extent substantially consistent with obligations immediately prior to the change in control, or (vi) a material breach of the change in control agreement by the employers. In the event the executive has good reason to terminate, he must give notice of his resignation for good reason within 90 days of the initial event that giving rise to the right to terminate and Blue Hills Bank, or its successor, and Blue Hills Bank, or its successor, will have 30 days to cure the good reason, provided that such 30-day period may be waived by Blue Hills Bank, or its successor.

In the event Mr. O’Leary’s or Mr. Kivlehan’s termination occurs following a change in control under circumstances that would entitle either executive to a benefit under the change in control agreement, such executive would be entitled to a cash severance payment of approximately $657,500 for Mr. O’Leary or $676,800 for Mr. Kivlehan if such termination were to occur in 2014 (Mr. Kivlehan’s incentive compensation received for 2013 was annualized for purposes of this calculation). Notwithstanding anything to the contrary, the change in control agreement provides that the employers

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will not be required to pay a payment or benefit under the change in control agreement or otherwise, that, in the reasonable estimation of the an independent certified public account would not be deductible, in whole or in part, as a result of Section 280G of the Internal Revenue Code. In such event, the payment or benefits under the change in control agreement would be reduced, to the extent necessary to avoid this result. In addition, if necessary to avoid excise taxes under Section 409A of the Internal Revenue Code, and only to such extent, a cash severance payment may be delayed and paid on the earlier of (a) six months and one day after the executive’s separation from service or (b) executive’s death. In such event, the first payment shall include a catch-up payment covering amounts that would have been paid during the delay and shall earn interest at an annual rate equal to the applicable federal short-term rate published by the Internal Revenue Service.

Short-Term Incentive Plan. Blue Hills Bank maintains an annual incentive compensation plan for the benefit of its officers and employees, including its named executive officers. Under the incentive compensation plan, the named executive officers can achieve a bonus based on a percentage of salary, depending on whether the performance goals are achieved at a threshold, target or maximum level. In addition, an employee is expected to achieve goals that are weighted between bank-level goals and individual goals. For the plan to be funded, a minimum level of profitability is required. For 2013, the potential bonus and weighting of goals is set forth in the following chart:


	Bonus as a % of Salary									Goal Weighting
Position	Threshold			Target			Maximum			Bank			Dept./Individual
President/CEO		20	%		40	%		60	%		100	%		—
EVPs		15	%		30	%		45	%		75	%		25	%

For the 2013 calendar year, the bank-level performance goals included return on average assets, loan and deposit growth and non-performing assets. Individual goals, to the extent required, varied by individual. For the 2013 calendar year, the named executive officers achieved their goals and received short term incentive compensation ranging between 27% and 42% of base salary.

Long-Term Incentive Plan. Until its termination in December 2013, Blue Hills Bank maintained the Blue Hills Bank Phantom Stock Plan, which was a long-term incentive compensation plan intended to provide incentive awards to employees in order to support Blue Hills Bank’s organizational objectives and financial goals. The plan was intended to award a select group of management employees for their contributions to the continued success of Blue Hills Bank. Eligible employees were determined by the Chief Executive Officer (CEO) and the Compensation Committee of Blue Hills Bank. The awards were calculated based on the achievement of bank-wide, department and individual goals, as set forth in the award documents entered into with the participating executives. Threshold, target and maximum awards were set by the CEO for the participants other than the CEO, and the targets for the CEO were set by the Board. Upon the achievement of the applicable goals, Blue Hills Bank divided the applicable aggregate incentive amount by the “book value” per share and allocated a number of shares to each participating executive’s phantom stock account. For these purposes, “book value” was determined by dividing (i) the total Tier 1 capital of the Bank most recently reported on line 11 of the Call Report Schedule RC-R Regulatory Capital, adjusted (A) adding thereto any net unrealized losses on available-for-sale equity securities as shown on Line 3 of the Call Report Schedule RC-R, (B) adding thereto any gains or subtracting therefrom any losses on cash flow hedges as shown on Line 4 of Schedule RC-R, (C) subtracting therefrom any amount derived from the proceeds of any offering of shares or securities or any other contribution of capital of Blue Hills Bank or attributable to any other entity acquired by Blue Hills Bank by way of merger, consolidation or other combination occurring after the date of the award and (D) disregarding any dividends paid by the Bank after the date of such award and such other extraordinary items as the Board in good faith deems appropriate, by (ii) the total number of shares of common stock of

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Blue Hills Bank outstanding as of the date of such determination, less any shares attributable to any amount of capital excluded under clause (i)(C) above (for purposes of the Phantom Stock Plan, and based on this formula, the number of shares was deemed to be 1,000,000). Once an award was granted, the award would vest in the participant on the third anniversary of the date of the award, provided that vesting would be accelerated in the event of normal or early retirement, death, disability, termination without cause or upon a change in control. Upon vesting, the award would be paid in cash within a reasonable time period but no later than the 15th day of the third month following the vesting of the award. In connection with the stock offering, and in anticipation of the adoption of equity incentive plans providing for the grant of actual stock and stock options, the board of directors of Blue Hills Bank determined to terminate the Phantom Stock Plan and to distribute the awards credited under the plan. The distribution of the accrued awards was made by December 31, 2013 and the award for 2013 was distributed within the first two and one-half months of the end of 2013, after the award amount per participant was determined. The final payout calculation is based on the product determined by multiplying the number of shares of phantom stock attributed to each participant’s account by the book value of each share (as previously defined) as of the last day of the calendar quarter immediately preceding the date of payment of such benefit. The amounts distributed to Messrs. Parent, O’Leary and Kivlehan under the Blue Hills Phantom Stock Plan in connection with the termination were $410,858, $195,612 and $12,500, respectively.

Supplemental Executive Retirement Plan. Blue Hills Bank previously adopted a Supplemental Executive Retirement Plan for certain officers, including Messrs. Parent, O’Leary, Kivlehan and the former Chief Financial Officer, Stephen McNulty.

Under the Supplemental Executive Retirement Plan, Blue Hills Bank contributed a fixed dollar amount each year to a participant’s account. A participant’s account earned interest each year at the highest published Blue Hills Bank CD rate in effect on the first business day of each plan year, plus 200 basis points. Upon the participant’s separation from service (other than for cause), including a separation due to disability, the participant was entitled to his or her vested account balance, distributable within 60 days, provided that the participant executed a release of claims in favor of Blue Hills Bank and any member of its affiliated group of corporations. In the event of the participant’s death, the participant’s vested account balance would be distributed to his or her surviving beneficiary or estate, within 60 days after the participant’s date of death. In the event a participant’s employment is terminated within 24 months following a change in control (for reasons other than cause, death or disability) but including a resignation by the participant for good reason (as defined in the plan), the participant would be 100% vested and would receive his or her entire account balance within 60 days of termination. The plan administrator has the authority under the plan to claw-back any benefit, including a benefit previously distributed from the plan that is based on materially inaccurate financial statements, reviews, gains, or any other materially inaccurate criteria used in determining or setting such benefit.

In connection with Blue Hills Bancorp’s initial stock offering, the Supplemental Executive Retirement Plan was terminated in a manner that complies with Section 409A of the Internal Revenue Code, which means that the benefits under the Supplemental Executive Retirement Plan cannot be distributed for 12 months following the plan’s termination but must be distributed in full no later than 24 months following the plan’s termination. To allow participants the opportunity to use their account balances within the plan to purchase Blue Hills Bancorp common stock in the stock offering prior to the date the account is distributed, the Supplemental Executive Retirement Plan was amended prior to the plan’s termination, to permit participants to invest their account balance in additional investment alternatives selected by the plan administrator. The plan administrator intends to allow participants to invest in Blue Hills Bancorp common stock in the stock offering. If a participant elects to invest in employer stock, such an election is irrevocable until the participant’s account balance is distributed. The portion of the participant’s account that is invested in employer stock shall be distributed in Blue Hills Bancorp common stock.

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Tax-Qualified Plans

401(k) Plan. Blue Hills Bank maintains the Savings Bank Employee Retirement Association (SBERA) 401(k) Plan, which is a qualified, tax-exempt profit sharing plan with a salary deferral feature under Section 401(k) of the Code (the “401(k) Plan”). All employees are eligible to participate in the plan with respect to making elective salary deferrals or employer safe harbor non-elective contributions without regard to having attained any specific age or period of service. However, an employee is only eligible to receive an employer profit sharing contribution, if one is made, after completing one year of service with Blue Hills Bank in which the employee has 1,000 hours of service. An employee may also contribute rollover contributions to the plan from another eligible retirement plan. Employees are permitted to make elective salary deferrals up to the lesser of 100% of compensation (as defined by the 401(k) Plan) or $17,500 (as indexed annually). A salary deferral election will also apply to any bonus received by the employee. All employee elective salary deferrals and employer matching contributions, if any, and safe harbor non-elective contributions and earnings on such contributions are fully and immediately vested. A participant may withdraw elective salary deferrals in the event the participant suffers a financial hardship. A participant may also receive an in-service distribution of the participant’s elective salary deferrals and rollover contributions. In addition, the 401(k) Plan permits loans to participants within the limits set forth in the Internal Revenue Code and in accordance with any loan procedures established by Blue Hills Bank. Participants are entitled to benefit payments upon termination of employment due to normal retirement at or after age 65, early retirement at or after age 59 ¹ ⁄ ₂ , disability or death. Benefits will be distributed in the form of lump sum, which is the normal form of distribution, or installment payments at the election of the participant. Blue Hills Bank has established an employer stock fund in the 401(k) Plan so that participants can acquire an interest in the common stock of Blue Hills Bancorp through their accounts in the 401(k) Plan.

Pension Plan. Blue Hills Bank maintains the Savings Banks Employees Retirement Association (“SBERA”) Pension Plan, a qualified noncontributory defined benefit plan (the “pension plan”) for employees. Employees who have completed one year of service and have attained age 21 are eligible to accrue benefits under the pension plan, provided, however, that employees hired or rehired after December 15, 2013 will not be eligible to participate in the pension plan. Annual contributions to the Plan are made in order to satisfy the actuarially determined minimum funding requirements in accordance with the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). A participant will become 100% vested in his or her accrued benefit under the plan after three years of service with Blue Hills Bank.

Upon attainment of normal retirement age (age 65) or upon termination after early retirement age (age 62), a participant who is not married and has accrued benefits in excess of $5,000 will receive a life annuity for the participant’s life, unless the participant elects another form of payment. If the participant is married and the present lump sum value of his accrued benefit exceeds $5,000, the normal form of payment will be a joint and survivor annuity, with a percentage of the participant’s benefit continuing to the participant’s spouse upon the participant’s death. In the even the participant’s vested account balance is $1,000 or less, the participant will receive a cash distribution as soon as practicable. A participant’s accrued benefit will become fully vested upon the participant’s death. In the event of a participant’s death while the participant is still employed by Blue Hills Bank or dies after he retires or terminates employment but before benefit payments start, the surviving spouse will be entitled to a life annuity based on the value of the participant’s vested accrued benefit.

The basic normal retirement benefit is calculated by multiplying the participant’s average of his highest three consecutive years of service by 1.25% for each year of credited service, up to a maximum of 25 years. Additionally, the participant’s compensation in excess of the covered compensation level (as defined in the Plan) will be multiplied by 0.6% and accrued for a period of 25 years. Participants will

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become vested in their accrued benefit upon completion of three years of service. A reduced benefit is payable upon early retirement at or after age 62. In the event of late retirement, the late retirement benefit will be the actuarial equivalent of the basic normal retirement benefit plus credit for accruals after attainment of normal retirement age.

Employee Stock Ownership Plan. Blue Hills Bank expects to adopt an employee stock ownership plan for eligible employees, effective as of January 1, 2014, in connection with the stock offering. Eligible employees who have attained age 21 and were employed by us as of January 1, 2014 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, 8% of the total number of shares of Blue Hills Bancorp common stock issued in the offering (including shares contributed to the Foundation). We anticipate that the employee stock ownership plan will fund its stock purchase with a loan from Blue Hills Bancorp equal to the aggregate purchase price of the common stock. The loan will be repaid principally through Blue Hills 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.

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 become 100% vested in their benefit after three years of credited service. Participants who were employed by Blue Hills 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, Blue Hills 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 Blue Hills Bancorp’s earnings.

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Directors’ Compensation

The following table sets forth for the year ended December 31, 2013 certain information as to the total remuneration paid to directors other than Mr. Parent, who receives no compensation for being a director.


Director Compensation Table for the Year Ended December 31, 2013
Name	Fees earned or paid in cash ($)		Nonqualified deferred compensation earnings ($) (1)		All Other Compensation ($)(2)		Total ($)
David Houston		77,425		—		10,000		87,425
George Clancy		55,000		—		10,000		65,000
Ken D’Amato		58,000		—		10,000		68,000
Brian Leary		48,000		—		10,000		58,000
Peter Manning		62,100		93		10,000		72,193
Karen O’Connell		35,550		—		10,000		45,550
Ron Perry		49,500		—		10,000		59,500
David Powers		49,100		—		10,000		59,100
Jan Shields		58,000		—		10,000		68,000
Scott Smith		46,675		93		10,000		56,768

(1)

Reflects above-market interest earned in the Blue Hills Bank Amended and Restated Supplemental Director Retirement Plan by Directors Manning and Smith. The interest rate earned for the year ended December 31, 2013 was earned at the rate of 3.42% per annum. The applicable federal rate for determining whether the interest earned is above market is 2.78% and is based on 120% of the applicable long-term federal rate for January 2013. The remaining directors in the plan elected to reflect earnings in their account based on the percentage increase or decrease for such year in the book value per share under the Blue Hills Bank Phantom Stock Plan. The rate of earnings under the Blue Hills Bank Phantom Stock Plan did not exceed the applicable federal long term rate.

(2)	Reflects the annual contribution to the Supplemental Director Retirement Plan on behalf of each director.

Each of the individuals who serves as a director of Blue Hills Bancorp serves as a director of Blue Hills Bank and earns director fees in that capacity, with the exception of Mr. Parent, who receives no compensation for being a director. The Chairman of the Board receives a $30,000 annual retainer, paid quarterly and $1,000 per meeting attended. All other directors of Blue Hills Bank receive a $15,000 annual retainer, paid quarterly and $1,000 per meeting attended. Each director serving on a Board of Directors’ committee is paid a fee of $1,000 per meeting attended. The Chairman of each committee receives an additional $5,000 annual retainer paid quarterly. For the year ended December 31, 2013, Blue Hills Bank paid a total of $539,350 in director fees.

Supplemental Director Retirement Plan. Blue Hills Bank previously adopted a Supplemental Director Retirement Plan for all non-employee directors of Blue Hills Bank who join the plan by executing a participation agreement.

Under the Supplemental Director Retirement Plan, Blue Hills Bank contributes $10,000 each year to a participant’s account. A participant’s account is increased or decreased annually between the date allocated and the participant’s separation from service date by an amount equal to (a) the equivalent of interest at Blue Hills Bank’s highest published CD rate in effect on the first business day of each plan year, plus 200 basis points, or (b) the percentage increase or decrease for such plan year in the “book value per share” as defined in Blue Hills Bank’s Phantom Stock Plan, whichever is elected by the participant. Upon the participant’s separation from service (other than for cause), including a separation due to disability, the participant is entitled to his or her vested account balance, distributable within 60 days, provided that the participant executes a release of claims in favor of Blue Hills Bank and any member of its affiliated group of corporations. In the event of the participant’s death, the participant’s

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vested account balance would be distributed to his or her surviving beneficiary or estate, within 60 days after the participant’s date of death. In the event a participant’s employment is terminated within 24 months following a change in control (for reasons other than cause, death or disability) but including the failure of the participant to be reelected to the board of directors of Blue Hills Bank, Hyde Park Bancorp, Inc., Hyde Park Bancorp, MHC or, after the conversion and stock offering, Blue Hills Bancorp, Inc., the participant will be 100% vested and will receive his or her entire account balance within 60 days of termination. The plan administrator has the authority under the plan to clawback any benefit, including a benefit previously distributed from the plan that is based on materially inaccurate financial statements, reviews, gains, or any other materially inaccurate criteria used in determining or setting such benefit.

In connection with Blue Hills Bancorp’s initial stock offering, the Supplemental Director Retirement Plan was terminated in a manner that complies with Section 409A of the Internal Revenue Code, which means that the benefits under the Supplemental Director Retirement Plan cannot be distributed for 12 months following the plan’s termination but must be distributed in full no later than 24 months following the plan’s termination. To allow participants the opportunity to use their account balances within the plan to purchase Blue Hills Bancorp common stock in the stock offering prior to the date the account is distributed, the Supplemental Director Retirement Plan was amended prior to the plan’s termination, to permit participants to invest their account balance in additional investment alternatives selected by the plan administrator. The plan administrator intends to allow participants to invest in Blue Hills Bancorp common stock in the stock offering. If a participant elects to invest in employer stock, such an election is irrevocable until the participant’s account balance is distributed. The portion of the participant’s account that is invested in employer stock shall be distributed in Blue Hills Bancorp common stock.

Benefits to be Considered Following Completion of the Stock Offering

Following the stock offering, we intend to adopt a stock-based benefit plan that will provide for grants of stock options and restricted common stock awards. In accordance with applicable regulations, if adopted within the first year after the offering, we anticipate that the plan will authorize a number of stock options and a number of shares of restricted stock, not to exceed 10% and 4%, respectively, of the shares issued in the offering, including shares contributed to the Foundation. These limitations will not apply if the plan is implemented more than one year after the consummation date of the conversion.

The stock-based benefit plan will not be established sooner than six months after the conversion is completed and, if adopted within one year after the conversion, would require the approval by stockholders owning a majority of the outstanding shares of common stock of Blue Hills Bancorp. If the stock-based benefit plan is established after one year after the conversion, it would require the approval of our stockholders by a majority of votes cast.

The following additional restrictions would apply to our stock-based benefit plan only if the plan is adopted within one year after the completion of the conversion:

•

equity awards must vest at a rate not to exceed 20% per year, except in the case of death, disability or a change in control;

•

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;

•

any officer or employee may not receive more than 25% of the options and restricted stock awards authorized under the plan;

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These restrictions do not apply to plans adopted after one year following the completion of the stock offering.

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 Blue Hills Bancorp) 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.


Exercise Price	731,850 Shares at Minimum of Range		861,000 Shares at Midpoint of Range		990,150 Shares at Maximum of Range		1,138,670 Shares at Maximum of Range, As Adjusted
(In thousands, except exercise price and fair value per option information)
$8.00	$	5,854,800	$	6,888,000	$	7,921,200	$	9,109,360
10.00		7,318,500		8,610,000		9,901,500		11,386,700
12.00		8,782,200		10,332,000		11,881,800		13,664,040
14.00		10,245,900		12,054,000		13,862,100		15,941,380

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 Blue Hills Bancorp 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 is $8.00 per share to $14.00 per share at the time of the grant.


Share Price	Grant-Date Fair Value Per Option		1,829,625 Options Awarded at Minimum of Offering Range		2,152,500 Options Awarded at Midpoint of Offering Range		2,475,375 Options Awarded at Maximum of Offering Range		2,846,681 Options Awarded at Maximum of Offering Range, As Adjusted
(In thousands, except share price information)
$8.00	$	2.66	$	4,866,803	$	5,725,650	$	6,584,498	$	7,572,171
10.00		3.33		6,092,651		7,167,825		8,242,999		9,479,448
12.00		4.00		7,318,500		8,610,000		9,901,500		11,386,724
14.00		4.66		8,526,053		10,030,650		11,535,248		13,265,533

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.

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SUBSCRIPTIONS BY DIRECTORS AND OFFICERS

The following table sets forth information regarding intended common stock subscriptions by each of the directors and named executive officers of Blue Hills Bank and their associates, and by all directors and 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 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 590,500 shares ($5,9.05,000) of common stock, equal to 3.3% 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, 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
*Directors:*
David J. Houston, Jr.		50,000	$	500,000		*
George E. Clancy		10,000		100,000		*
Ken D’Amato (1)		—		—		—
Brian G. Leary		60,000		600,000		*
Peter J. Manning		27,500		275,000		*
Karen B. O’Connell		15,000		150,000		*
William M. Parent		60,000		600,000		*
Ronald K. Perry		40,000		400,000		*
David Powers		30,000		300,000		*
Janice L. Shields		10,000		100,000		*
Scott Smith		5,000		50,000		*
*Named Executive Officers:*
Jim Kivlehan		40,000		400,000		*
Thomas E. O’Leary		40,000		400,000		*
*Other Officers:*		203,000		2,030,000		1.0	%
All directors and officers as a group (20 persons)		590,500	$	5,905,000		3.3	%

*	Less than 1%.

(1)	Mr. D’Amato is restricted from participating in the subscription offering due to an employer policy that prohibits him from participating in any initial public offering.

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THE CONVERSION; PLAN OF DISTRIBUTION

General

The Board of Trustees of Hyde Park Bancorp, MHC adopted a plan of conversion on March 6, 2014. The plan of conversion has also been approved by the Boards of Directors of Blue Hills Bancorp and Blue Hills Bank, respectively. The plan of conversion is subject to the approval of the corporators of Hyde Park Bancorp, MHC, including a majority of the independent corporators. Pursuant to the plan of conversion, Hyde Park 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 Blue Hills Bancorp. Specifically, the conversion will be effected as follows: 1) Hyde Park Bancorp, Inc. will establish Blue Hills Bancorp as a subsidiary; 2) Hyde Park Bancorp, MHC will merge with and into Hyde Park Bancorp, Inc., with Hyde Park Bancorp, Inc. being the surviving entity; and 3) Hyde Park Bancorp, Inc. will merge with and into Blue Hills Bancorp, with Blue Hills Bancorp being the surviving entity. Blue Hills Bancorp will contribute at least 50% of the net proceeds of the offering to Blue Hills Bank in constructive exchange for additional shares of common stock of Blue Hills Bank and in exchange for the liquidation account established by Blue Hills Bank. In connection with the conversion and stock offering, we also intend to establish and fund a new charitable foundation, Blue Hills Bank Foundation. When the conversion is completed, all of the capital stock of Blue Hills Bank will be owned by Blue Hills Bancorp, and all of the common stock of Blue Hills Bancorp will be owned by public stockholders including our employee stock ownership plan and our new charitable foundation.

After funding a loan to the employee stock ownership plan, redeeming the preferred shares issued to the U.S. Treasury in connection with the SBLF Program and funding the cash component of the contribution to the Foundation, we intend to retain between $51.8 million and $79.5 million of the net proceeds of the offering, or $95.4 million if the offering range is increased by 15%, and to contribute the balance of the net proceeds to Blue Hills Bank. The conversion will be consummated only upon the sale of at least 17,850,000 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 Blue Hills Bank, Hyde Park Bancorp, Inc. and Hyde Park 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, and trusts of natural persons, residing in the Massachusetts counties of Norfolk, Suffolk and Nantucket. Any shares of common stock not purchased in the subscription or community offerings may be offered to the public in a syndicated community offering, or, in a separate firm commitment underwritten public offering. See “—Syndicated Community Offering or Firm Commitment Underwritten Offering” herein.

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.”

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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 Blue Hills Bancorp. 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.

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 Blue Hills Bank and Nantucket Bank, a division of Blue Hills Bank. The plan of conversion is also filed as an exhibit to Hyde Park Bancorp, MHC’s application to convert from mutual to stock form of which this prospectus is a part. Hyde Park 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 the implementation of our business strategy outlined above;

•

Retain and attract qualified directors, officers and employees by establishing stock-based benefit plans;

•

Increase our philanthropic endeavors in the communities that we serve through the establishment and funding of a new charitable foundation to complement our existing charitable foundation;

•

Build our capital base to allow us to take advantage of acquisition opportunities which may arise in our market area and adjacent markets; and

•

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.

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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.

Approvals Required

The board of trustees of Hyde Park Bancorp, MHC and the boards of directors of Blue Hills Bancorp and Blue Hills Bank have approved the plan of conversion and the establishment and funding of the 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 authorized us to commence the offering. However, the final approval of the Massachusetts Commissioner of Banks is required before we can consummate the conversion and issue shares of common stock. 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 Foundation are also subject to the approval of the corporators of Hyde Park Bancorp, MHC, including a majority of the “independent” corporators.

The Corporators

The board of corporators of Hyde Park Bancorp, MHC will cease to exist upon consummation of the mutual-to-stock conversion of Hyde Park 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, the Federal Deposit Insurance Corporation and the Federal Reserve Board. After the conversion, we will continue to offer existing services to depositors, borrowers and other customers. The directors serving Blue Hills Bank and Hyde Park Bancorp, MHC at the time of the conversion will be the directors of Blue Hills Bank and of Blue Hills Bancorp after the conversion.

Effect on Deposit Accounts . Pursuant to the plan of conversion, each depositor of Blue Hills 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 Blue Hills 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 Blue Hills Bank, Blue Hills Bancorp, Hyde Park Bancorp, Inc. and Hyde Park Bancorp, MHC or its members. See “—Material Income Tax Consequences.”

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Effect on Liquidation Rights. Each depositor in Blue Hills Bank has both a deposit account in Blue Hills Bank and a corresponding pro rata ownership interest in the net worth of Hyde Park 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 Hyde Park Bancorp, MHC and Blue Hills Bank. Any depositor who opens a deposit account at Blue Hills Bank obtains such pro rata ownership interest in Hyde Park 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 Hyde Park 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 Hyde Park Bancorp, MHC and Blue Hills Bank are liquidated. If this were to occur, the Blue Hills Bank depositors of record at that time, as owners, would share pro rata in any residual surplus and reserves of Hyde Park Bancorp, MHC after other claims, including claims of depositors to the amounts of their deposits, are paid.

Under the plan of conversion, however, the depositors of Blue Hills Bank will receive rights in a liquidation account established by Blue Hills Bancorp (and in a parallel liquidation account established in Blue Hills Bank) which will represent the amount of Hyde Park Bancorp, MHC’s total equity as of the date of the latest statement of financial condition included in this prospectus. Blue Hills Bancorp and Blue Hills Bank shall hold the liquidation accounts for the benefit of Eligible Account Holders who continue to maintain deposits in Blue Hills 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 Blue Hills Bancorp and Blue Hills 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 $125,000, and will be reimbursed for its expenses up to $10,000. 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;

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•

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 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 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.

The independent valuation states that as of as of February 14, 2014, the market value of the shares to be issued in the offering (including shares to be contributed to the Foundation) ranged from $183.0 million to $247.5 million, with a midpoint of $215.3 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 17,850,000 shares to 24,150,000 shares. If the market conditions so warrant, the market value of the shares can be increased to a maximum, as adjusted, market value of $284.7 million and the number of shares offered for sale increased to a maximum, as adjusted, of 27,772,500 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 ten publicly traded savings bank and thrift holding companies that RP Financial, LC. considered comparable to us.

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The appraisal peer group consists of the companies listed in the table below, all of which are traded on the Nasdaq Stock Market. Asset sizes are as of December 31, 2013, except as noted.


Company Name	Ticker Symbol	Headquarters	Total Assets (1)
			(in millions)
OceanFirst Financial Corp.	OCFC	Toms River, NJ	$	2,286
First Connecticut Bancorp, Inc.	FBNK	Farmington, CT		1,992
ESSA Bancorp, Inc.	ESSA	Stroudsburg, PA		1,372
SI Financial Group, Inc.	SIFI	Willimantic, CT		1,369
Westfield Financial Inc.	WFD	Westfield, MA		1,271
Fox Chase Bancorp Inc.	FXCB	Hatboro, PA		1,107
Cape Bancorp, Inc.	CBNJ	Cape May Court House, NJ		1,074
Ocean Shore Holding Co.	OSHC	Ocean City, NJ		1,043
BSB Bancorp, Inc.	BLMT	Belmont, MA		1,023
TF Financial Corp.	THRD	Newtown, PA		833

(1)	As of September 20, 2013, or the most recent quarter end available.

The following table presents a summary of selected pricing ratios for Blue Hills Bancorp 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. Blue Hills Bancorp’s all pricing ratios are based on earnings for the twelve months ended December 31, 2013, book value as of December 31, 2013 and tangible book value as of December 31, 2013 as adjusted for the Nantucket Branch Acquisition and the peer group’s pricing ratios are based on earnings for the twelve months ended September 30, 2013 and book value as of September 30, 2013. 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 31.6% on a price-to-book value basis, a discount of 34.9% on a price-to-tangible book value basis. Blue Hills Bancorp’s price-to-core earnings multiples were not meaningful (NM), as the result of negative pro forma core earnings throughout the valuation range. 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
Blue Hills Bancorp, Inc. (pro forma)
Maximum, as adjusted		NM		71.99	%		74.79	%
Maximum		NM		68.21	%		71.12	%
Midpoint		NM		64.31	%		67.29	%
Minimum		NM		59.67	%		62.74	%
Valuation of peer group companies using stock prices as of February 14, 2014
Averages		19.84		103.80	%		108.65	%
Medians		15.28		99.68	%		109.18	%

(footnotes on following page)

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(1)

NM	= Not meaningful

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 Blue Hills Bank as a going concern and should not be considered as an indication of the liquidation value of Blue Hills 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 Foundation, may be increased by up to 15%, or up to $284.7 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 27,772,500 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 “—Additional 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.

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 $284.7 million and a corresponding increase in the offering of shares to be sold to more than 27,772,500 shares, or a decrease in the minimum of the valuation range to less than $183.0 million and a corresponding decrease in the offering range of shares to be sold to fewer than 17,850,000 shares, in each case not including shares that will be contributed to the 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.

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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 “—Additional Limitations on Common Stock Purchases.”

Priority 1: Eligible Account Holders . Each depositor of Blue Hills Bank and Nantucket Bank, a division of Blue Hills Bank, with aggregate deposit account balances of $50.00 or more (a “Qualifying Deposit”) on February 28, 2013 (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 600,000 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 (approximately $1.1 million at February 28, 2013), subject to the overall purchase limitations. See “—Additional 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.

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 February 28, 2013. 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 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 February 28, 2013.

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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 Foundation. We expect our employee stock ownership plan to purchase 8% of the shares of common stock issued in the offering, including shares contributed to the 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 Blue Hills Bank, Hyde Park Bancorp, Inc. and Hyde Park 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 600,000 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 “—Additional 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 17,850,000 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 [final extension date], which is twenty four months after the Board of Trustees of Hyde Park Bancorp, MHC adopted the plan of conversion.

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 our local community (“Local Community”), consisting of the Massachusetts counties of Norfolk, Suffolk and Nantucket .

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Subscribers in the community offering may purchase up to 600,000 shares of common stock, subject to the overall purchase limitations. See “—Additional 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, 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 Local Community, whose orders remain unsatisfied on an equal number of shares basis per order. If, after the allocation of shares to natural persons, and trusts of natural persons, residing in the Local Community, 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 Local Community, 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 [final extension date], which is twenty four months after the Board of Trustees of Hyde Park Bancorp, MHC adopted the plan of conversion.

Syndicated Community Offering or Firm Commitment Underwritten Offering

If feasible, our board of directors may decide to offer for sale shares of common stock not subscribed for or purchased in the subscription and community offerings in a syndicated community offering or firm commitment underwritten offering, subject to such terms, conditions and procedures as we may determine, in a manner that will achieve a wide distribution of our shares of common stock.

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If a syndicated community offering or firm commitment underwritten offering is held, Keefe, Bruyette & Woods will serve as sole book-running manager. In the event that shares of common stock are sold in a syndicated or firm commitment underwritten offering, we will pay fees of 5.25% of the aggregate amount of common stock sold in the syndicated or firm commitment underwritten offering to Keefe, Bruyette & Woods and any other broker-dealers included in the syndicated or firm commitment underwritten offering. The shares of common stock will be sold at the same price per share ($10.00 per share) that the shares are sold in the subscription offering and the community offering. No shares purchased in the subscription offering, the community offering or the syndicated community offering will be issued until the completion of a firm commitment underwritten offering, if any.

In the event of a syndicated community offering, it is currently expected that investors would follow the same general procedures applicable to purchasing shares in the subscription and community offerings (the use of order forms and the submission of funds directly to Blue Hills Bancorp for the payment of the purchase price of the shares ordered) except that payment must be in immediately available funds (bank checks, money orders, deposit account withdrawals from accounts at Blue Hills Bank or wire transfers). See “The Conversion; Plan of Distribution—Procedure for Purchasing Shares.” “Sweep” arrangements and delivery versus payment settlement will only be used in a syndicated offering to the extent consistent with Rules 10b-9 and 15c2-4 and then-existing guidance and interpretations thereof of the Securities and Exchange Commission regarding the conduct of “min/max” offerings.

In the event of a firm commitment underwritten offering, the proposed underwriting agreement will not be entered into with Keefe, Bruyette & Woods and Hyde Park Bancorp, MHC, Hyde Park Bancorp, Inc., Blue Hills Bank and Blue Hills Bancorp until immediately prior to the completion of the firm commitment underwritten offering. At that time, Keefe, Bruyette & Woods and any other broker-dealers included in the firm commitment underwritten offering will represent that they have received sufficient indications of interest to complete the offering. Pursuant to the terms of the underwriting agreement, and subject to certain customary provisions and conditions to closing, upon execution of the underwriting agreement, Keefe, Bruyette & Woods and any other underwriters will be obligated to purchase all the shares subject to the firm commitment underwritten offering.

If for any reason we cannot effect a syndicated community offering or firm commitment underwritten offering of shares of common stock not purchased in the subscription and community offerings, or in the event that there are an insignificant number of shares remaining unsold after such offerings, we will try to make other arrangements for the sale of unsubscribed shares. The Federal Reserve Board and the Financial Industry Regulatory Authority must approve any such arrangements.

Additional 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 600,000 shares ($6,000,000) 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 1,000,000 shares ($10,000,000) 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 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 Blue Hills Bancorp and Blue Hills Bank and their associates, in the aggregate, may not exceed 35% of the shares issued in the offering (including shares contributed to the 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 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 Local Community.

The term “associate” of a person means:

(1)

any corporation or organization, other than Hyde Park Bancorp, MHC, Hyde Park Bancorp, Inc., Blue Hills Bank or Blue Hills Bancorp, or a majority-owned subsidiary of these entities, of which the person is a senior officer, partner or 10% beneficial stockholder;

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(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 Hyde Park Bancorp, MHC, Hyde Park Bancorp, Inc., Blue Hills Bank or Blue Hills Bancorp; and

(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 Blue Hills Bank or Blue Hills Bancorp 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 Blue Hills 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.

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We have engaged Keefe, Bruyette & Woods, 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, 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);

•

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 and us.

For these services, Keefe, Bruyette & Woods will receive a management fee of $50,000, none of which has been paid as of the date of this prospectus, and a success fee equal to 0.85% of the aggregate purchase price of Common Stock sold in the Subscription Offering and the Community Offering (net of insider purchases and shares purchased by our employee stock ownership plan). 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 or firm commitment offering. In the event that shares of common stock are sold in a syndicated community offering, we will pay fees of 5.25% of the aggregate amount of common stock sold in the syndicated community offering to Keefe, Bruyette & Woods and any other broker-dealers included in the syndicated community offering. Keefe, Bruyette & Woods also will be reimbursed for reasonable expenses, including legal fees, in an amount not to exceed $125,000. If the plan of conversion is terminated or if Keefe, Bruyette & Woods’ engagement is terminated in accordance with the provisions of the agency agreement, Keefe, Bruyette & Woods will only receive reimbursement of its reasonable out-of-pocket expenses and will return any amounts paid or advanced by us in excess of these amounts. In the event that Keefe, Bruyette & Woods sells shares of common stock through a group of broker-dealers in a firm commitment underwritten offering, the underwriting discount will not exceed 5.25% of the aggregate amount of common stock sold in the firm commitment underwritten offering to the sole book-running manager, and any other broker-dealers included in the firm commitment underwritten offering. All fees payable with respect to a firm commitment underwritten offering will be in addition to fees payable with respect to the subscription offering and community offering.

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We have also engaged Keefe, Bruyette & Woods to act as our conversion agent in connection with the stock offering. In its role as conversion agent, Keefe, Bruyette & Woods 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;

•

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 will receive a fee of $50,000 and we will also reimburse Keefe, Bruyette & Woods for its reasonable out-of-pocket expenses associated with its acting as conversion agent, which will not exceed $25,000. If the plan of conversion is terminated or if Keefe, Bruyette & Woods’ engagement is terminated in accordance with the provisions of the agreement, for its services as our conversion agent Keefe, Bruyette & Woods will be entitled only to its reasonable out-of-pocket expenses, which will not exceed $25,000. We will indemnify Keefe, Bruyette & Woods against liabilities and expenses (including legal fees) related to or arising out of Keefe, Bruyette & Woods’ 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 Blue Hills 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 facilities 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. 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.

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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.

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 Blue Hills 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 original order form and remit full payment. We are not required to accept orders submitted on photocopied or facsimiled order forms. All order forms must be received (not postmarked) prior to 2:00 p.m., 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 deposit account withdrawal instructions. 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. 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. 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 and reorganization. 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.

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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 Blue Hills Bank, Blue Hills Bancorp, the Federal Deposit Insurance Corporation, the federal government or the Depositors Insurance Fund, 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 Blue Hills Bancorp, Inc.; or

(2)

authorization of withdrawal from Blue Hills Bank deposit accounts designated on the order form.

Appropriate means for designating withdrawals from deposit accounts at Blue Hills Bank are provided on the order form. The funds designated for withdrawal from a Blue Hills 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 contractual 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 Blue Hills 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 remit cash, wire transfers, Blue Hills Bank line of credit checks or any type of third-party checks (including those payable to you and endorsed over to Blue Hills Bancorp, Inc.). Additionally, you may not designate a direct withdrawal from Blue Hills Bank accounts with check-writing privileges. Please provide a check instead. If you request that we directly withdraw the funds, we reserve the right to interpret that as your authorization to treat those funds as if we had received a check for the designated amount, and we will immediately withdraw the amount from your account. In the event we resolicit large subscribers, as described above in “—Additional Limitations on Common Stock Purchases,” those purchasers who wish to increase their purchases will not be able to use personal checks to pay for the additional shares, but instead must pay for the additional shares using immediately available funds. Wire transfers may be allowed.

Once your executed stock order form is received, it may not be modified, amended or rescinded without our consent, unless the offering is not completed by [extension date]. In such event, unless an extension is approved by Massachusetts Commissioner of Bank, stock orders will be cancelled and funds delivered to us to purchase shares of common stock in the subscription offering will be returned promptly, with interest at [interest rate]% per annum. Additionally, all deposit account withdrawal authorizations will be cancelled. If an extension is granted, we will resolicit subscribers for a specified period of time, as described under “—Subscription Offering and Subscription Rights.”

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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, Blue Hills 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 Blue Hills 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 Blue Hills 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 Blue Hills Bancorp (or a subsidiary of Blue Hills Bancorp) to lend to the employee stock ownership plan the necessary amount to fund the purchase.

Regulations prohibit Blue Hills 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 Blue Hills 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 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.

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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 (877) , Monday through Friday between :00 a.m. and :00 p.m., Eastern time, or visit the Stock Information Center located at , Massachusetts, Monday through Friday between :00 a.m. and :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 Hyde Park Bancorp, MHC is liquidated prior to the conversion, all claims of creditors of Hyde Park Bancorp, MHC would be paid first. Thereafter, if there were any assets of Hyde Park Bancorp, MHC remaining, these assets would first be distributed to depositors of Blue Hills 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 Hyde Park 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 Blue Hills Bancorp for the benefit of Eligible Account Holders in an amount equal to Hyde Park 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 Blue Hills Bank to support the Blue Hills Bancorp liquidation account.

In the unlikely event that Blue Hills Bancorp and Blue Hills Bank were to liquidate after the conversion, all claims of creditors, including those of Blue Hills Bank depositors, would be paid first. However, except with respect to the liquidation account established by Blue Hills Bancorp, 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 Blue Hills Bank or Blue Hills Bancorp above that amount.

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The liquidation account established by Blue Hills Bancorp is designed to provide payments to depositors of their liquidation interest (exchanged for the liquidation rights such persons had in Hyde Park Bancorp, MHC) in the event of a liquidation of Blue Hills Bancorp and Blue Hills Bank or of Blue Hills Bank by itself. Specifically, in the unlikely event that Blue Hills Bancorp and Blue Hills Bank were to completely liquidate after the conversion, all claims of creditors, including those of Blue Hills Bank depositors, would be paid first, followed by distribution to Eligible Account Holders of their interests in the liquidation account maintained by Blue Hills Bancorp. In a complete liquidation of both entities, or of Blue Hills Bank by itself, when Blue Hills Bancorp has insufficient assets to fund the distribution owed to Eligible Account Holders and Blue Hills Bank has positive net worth, Blue Hills Bank shall make a distribution to fund Blue Hills Bancorp’s remaining obligations under the liquidation account. If Blue Hills Bancorp is sold or liquidated apart from a sale or liquidation of Blue Hills Bank, then the Blue Hills Bancorp 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 Blue Hills Bancorp.

Pursuant to the plan of conversion, upon the written request of the applicable bank regulators Blue Hills Bancorp shall, or upon the prior written approval of the applicable bank regulars, if necessary, Blue Hills Bancorp may, at any time after two years from the completion of the conversion, transfer the Blue Hills Bancorp liquidation account to Blue Hills Bank, at which time the Blue Hills Bancorp liquidation account shall be assumed by Blue Hills 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 Blue Hills Bancorp or Blue Hills 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 Blue Hills Bank on February 28, 2013 equal to the proportion that the balance of each Eligible Account Holder’s deposit accounts on February 28, 2013 bears to the balance of all Eligible Account Holder deposit accounts in Blue Hills 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 February 28, 2013 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.

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 Hyde Park Bancorp, MHC, Hyde Park Bancorp, Inc., Blue Hills Bank, Blue Hills Bancorp 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 Wolf & 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 Blue Hills Bancorp, Inc. or Blue Hills Bank would prevail in a judicial proceeding.

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Luse Gorman Pomerenk & Schick, P.C., has issued an opinion to Hyde Park Bancorp, MHC, Blue Hills Bancorp, Inc., Blue Hills Bank and Hyde Park Bancorp, Inc. that for federal income tax purposes:

The merger of Hyde Park Bancorp, MHC with and into Hyde Park Bancorp, Inc. 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 Hyde Park Bancorp, MHC for liquidation interests in Hyde Park Bancorp, Inc. will satisfy the continuity of interest requirement of Section 1.368-1(b) of the Federal Income Tax Regulations.

None of Hyde Park Bancorp, MHC, Blue Hills Bank nor Eligible Account Holders will recognize any gain or loss on the transfer of the assets of Hyde Park Bancorp, MHC to Hyde Park Bancorp, Inc. in constructive exchange for a liquidation interest established in Hyde Park Bancorp, Inc. for the benefit of such persons who remain depositors of Blue Hills Bank.

The basis of the assets of Hyde Park Bancorp, MHC and the holding period of such assets to be received by Hyde Park Bancorp, Inc. will be the same as the basis and holding period of such assets in Hyde Park Bancorp, MHC immediately before the exchange.

The merger of Hyde Park Bancorp, Inc. with and into Blue Hills 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 Hyde Park Bancorp, Inc. nor Blue Hills Bancorp, Inc. will recognize gain or loss as a result of such merger.

The basis of the assets of Blue Hills Bancorp, Inc. and the holding period of such assets to be received by Blue Hills Bancorp, Inc. will be the same as the basis and holding period of such assets in Hyde Park Bancorp, Inc. immediately before the exchange.

Eligible Account Holders will not recognize any gain or loss upon the constructive exchange of their liquidation interests in Hyde Park Bancorp, Inc. for interests in the liquidation account in Blue Hills Bancorp, Inc.

The constructive exchange of the Eligible Account Holders’ liquidation interests in Hyde Park Bancorp, Inc. for interests in the liquidation account established in Blue Hills 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 Blue Hills 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 Blue Hills 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.

10.

It is more likely than not that the fair market value of the benefit provided by the liquidation account of Blue Hills Bank supporting the payment of the Blue Hills Bancorp, Inc. liquidation account in the event Blue Hills 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 Blue Hills Bank liquidation account as of the effective date of the merger of Hyde Park Bancorp, Inc. with and into Blue Hills Bancorp, Inc.

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11.

It is more likely than not that the basis of the shares of Blue Hills 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 Blue Hills 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 Blue Hills Bancorp, Inc. on the receipt of money in exchange for Blue Hills 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 Hyde Park Bancorp, MHC, Hyde Park Bancorp, Inc., Blue Hills Bank, Blue Hills Bancorp and persons receiving subscription rights and stockholders of Blue Hills Bancorp. 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 Blue Hills Bank liquidation account supporting the payment of the liquidation account in the event Blue Hills Bancorp 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 Blue Hills Bank are reduced; and (iv) the Blue Hills Bank liquidation account payment obligation arises only if Blue Hills Bancorp lacks sufficient assets to fund the liquidation account.

In addition, we have received a letter from RP Financial, LC. stating its belief that the benefit provided by the Blue Hills Bank liquidation account supporting the payment of the liquidation account in the event Blue Hills Bancorp lacks sufficient net assets does not have any economic value at the time of the

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conversion. Based on the foregoing, Luse Gorman Pomerenk & Schick, P.C. believes it is more likely than not that such rights in the Blue Hills 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 Blue Hills Bancorp’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 Blue Hills Bancorp’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 Blue Hills 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 Blue Hills Bancorp 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 Blue Hills Bancorp 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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BLUE HILLS 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, Blue Hills Bank Foundation (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 Blue Hills 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 Foundation

In connection with the closing of the stock offering, we intend to contribute a number of shares of our common stock equal to 2.5% of the shares sold in the offering and an amount of cash such that the total contribution will equal $7.0 million. At the minimum, midpoint, maximum and maximum, as adjusted, of the offering range, we would contribute to the Foundation 446,250, 525,000, 603,750 and 694,313 shares of common stock and approximately $2.5 million, $1.8 million, $963,000 and $57,000 in cash, respectively.

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. Blue Hills Bank received a “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 Blue Hills Bank, thereby forming a partnership with the communities in our market area.

Structure of the 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

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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 Blue Hills Bank’s directors.

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 Blue Hills 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. 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

Blue Hills Bancorp and Blue Hills 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 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. 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 period). However, we do not have any assurance that the Internal Revenue Service will grant tax-exempt

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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 1%. 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 Foundation

Federal Reserve Board regulations required that the directors who serve on the Foundation’s board could not participate in our board’s discussions concerning contributions to the Foundation, and could not vote on the matter.

Federal Reserve Board regulations provide that the Federal Reserve Board will generally not object 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. Blue Hills 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 Reserve Board regulations impose the following requirements on the Foundation:

•

the Foundation’s primary purpose must be to serve and make grants in our local community;

•

the Federal Reserve Board may examine the Foundation at the Foundation’s expense;

•

the Foundation must comply with all supervisory directives imposed by the Federal Reserve Board;

•

the Foundation must provide annually to the Federal Reserve Board 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;

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•

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; and

•

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.

Within six months of completing the stock offering, the Foundation intends to submit to the Federal Reserve Board a three-year operating plan, conflict of interest policy, gift instrument, certificate of incorporation and bylaws.

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RESTRICTIONS ON ACQUISITION OF BLUE HILLS BANCORP, INC.

Although the board of directors of Blue Hills Bancorp is not aware of any effort that might be made to obtain control of Blue Hills Bancorp after the conversion, the board of directors believes that it is appropriate to include certain provisions as part of Blue Hills Bancorp’s articles of incorporation to protect the interests of Blue Hills Bancorp and its stockholders from takeovers which our board of directors might conclude are not in the best interests of Blue Hills Bank, Blue Hills Bancorp or Blue Hills Bancorp’s stockholders.

The following discussion is a general summary of the material provisions of Blue Hills Bancorp’s articles of incorporation and bylaws, Blue Hills Bank’s amended Massachusetts articles of organization, Massachusetts banking law, Maryland 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 Blue Hills Bancorp’s articles of incorporation and bylaws and Blue Hills Bank’s amended articles of organization, reference should be made in each case to the document in question, each of which is part of Blue Hills Bank’s application for conversion with the Massachusetts Commissioner of Banks and, except for Blue Hills Bank’s amended articles of organization, Blue Hills Bancorp’s registration statement filed with the Securities and Exchange Commission. See “Where You Can Find Additional Information.”

Blue Hills Bancorp, Inc.’s Articles of Incorporation and Bylaws

Blue Hills Bancorp’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 Blue Hills Bancorp 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 Blue Hills Bank, restrictions based upon age 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 Blue Hills Bancorp provide that its board of directors, when evaluating a transaction that would or may involve a change in control of Blue Hills Bancorp (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 Blue Hills Bancorp 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 Blue Hills Bancorp’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, Blue Hills Bancorp and its subsidiaries and on the communities in which Blue Hills Bancorp and its subsidiaries operate or are located;

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•

whether the proposal is acceptable based on the historical, current or projected future operating results or financial condition of Blue Hills Bancorp;

•

whether a more favorable price could be obtained for Blue Hills Bancorp’s stock or other securities in the future;

•

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 Blue Hills Bancorp and its subsidiaries;

•

the future value of the stock or any other securities of Blue Hills Bancorp 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 Blue Hills Bancorp 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 Chairman of the Board, a majority of the directors of Blue Hills Bancorp then in office, 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 80% 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.

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Authorized but Unissued Shares . After the conversion, Blue Hills Bancorp 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. Blue Hills Bancorp 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 Blue Hills Bancorp has the authority to issue. In the event of a proposed merger, tender offer or other attempt to gain control of Blue Hills Bancorp that our board of directors does not approve, it would be possible for the board of 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 Blue Hills Bancorp. 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 80% of the votes eligible to be cast by stockholders must vote to remove directors, and that stockholders 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 Blue Hills Bancorp;

(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 Blue Hills Bancorp;

(xi)

The limitation of liability of officers and directors to Blue Hills Bancorp 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.

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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 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 Blue Hills Bancorp. Accordingly, the filing of a notice with the Federal Reserve Board would

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be required before any person could acquire 10% or more of the common stock of Blue Hills Bancorp 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.

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 Blue Hills Bancorp and (ii) before any other company could acquire 25% or more of the common stock of Blue Hills Bancorp.

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. Blue Hills Bancorp would become a Massachusetts bank holding company if it acquires a second banking institution and holds and operates it separately from Blue Hills 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, Blue Hills Bancorp 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. Blue Hills Bancorp currently expects to issue in the offering up to 24,150,000 shares of common stock. Blue Hills Bancorp will not issue shares of preferred stock in the offering. Each share of Blue Hills Bancorp 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, or the issuance of shares to be contributed to the Foundation, in each case in accordance with the plan of conversion, all of the shares of common stock will be duly authorized, fully paid and nonassessable.

167

The shares of common stock of Blue Hills Bancorp 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 . Blue Hills Bancorp 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 Blue Hills Bancorp 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 Blue Hills Bancorp’s assets are less than the amount necessary to satisfy the requirement set forth in (ii) above, Blue Hills Bancorp may make a distribution from: (A) Blue Hills Bancorp’s net earnings for the fiscal year in which the distribution is made; (B) Blue Hills Bancorp’s net earnings for the preceding fiscal year; or (C) the sum of Blue Hills Bancorp’s net earnings for the preceding eight fiscal quarters. The holders of common stock of Blue Hills Bancorp 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 Blue Hills Bancorp issues shares of preferred stock, the holders thereof may have a priority over the holders of the common stock with respect to dividends.

Voting Rights . Upon consummation of the conversion, the holders of common stock of Blue Hills Bancorp will have exclusive voting rights in Blue Hills Bancorp. They will elect Blue Hills Bancorp’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 Blue Hills Bancorp’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 Blue Hills Bancorp 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 Blue Hills Bank are vested in its board of directors, who elect the officers of Blue Hills Bank and who fill any vacancies on the board of directors. Voting rights of Blue Hills Bank are vested exclusively in the owners of the shares of capital stock of Blue Hills Bank, which will be Blue Hills Bancorp, and voted at the direction of Blue Hills Bancorp’s board of directors. Consequently, the holders of the common stock of Blue Hills Bancorp will not have direct control of Blue Hills Bank.

Liquidation . In the event of any liquidation, dissolution or winding up of Blue Hills Bank, Blue Hills Bancorp, as the holder of 100% of Blue Hills Bank’s capital stock, would be entitled to receive all assets of Blue Hills Bank available for distribution, after payment or provision for payment of all debts and liabilities of Blue Hills 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 Blue Hills Bancorp, 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 Blue Hills Bancorp 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 Blue Hills Bancorp 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.

168

Preferred Stock

None of the shares of Blue Hills Bancorp’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 Blue Hills Bancorp’s common stock is Registrar and Transfer Company, Cranford, New Jersey.

EXPERTS

The consolidated financial statements of Hyde Park Bancorp, MHC and subsidiary as of December 31, 2013 and 2012, and the related consolidated statements of net income, comprehensive income (loss), changes in equity and cash flows for the years ended December 31, 2013, 2012 and 2011, included in this Prospectus and in the registration statement have been so included in reliance upon the report of Wolf & 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.

RP Financial, LC. has consented to the publication herein of the summary of its report to Blue Hills Bancorp 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 Blue Hills Bancorp and Blue Hills Bank, will issue to Blue Hills Bancorp 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. Wolf & Company, P.C. will issue to Hyde Park Bancorp, MHC, Blue Hills Bancorp, Hyde Park Bancorp, Inc. and Blue Hills Bank its opinion regarding the Massachusetts income tax consequences of the conversion. Wolf & 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 by Nutter McClennen & Fish LLP.

WHERE YOU CAN FIND ADDITIONAL INFORMATION

Blue Hills Bancorp 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

169

(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 Blue Hills Bancorp. 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.

Hyde Park Bancorp, MHC has filed an application for approval of the conversion with the Massachusetts Commissioner of Banks, and Blue Hills Bancorp has filed a bank holding company 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 Blue Hills Bancorp are available without charge from Blue Hills Bancorp, Attention: Corporate Secretary.

In connection with the offering, Blue Hills Bancorp, Inc. will register its common stock under Section 12(b) of the Securities Exchange Act of 1934 and, upon such registration, Blue Hills 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, Blue Hills Bancorp, Inc. has undertaken that it will not terminate such registration for a period of at least three years following the offering.

170

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS OF

HYDE PARK BANCORP, MHC


Report of Independent Registered Public Accounting Firm			F-2

Consolidated Balance Sheets at December 31, 2013 and 2012			F-3

Consolidated Statements of Net Income for the years ended December 31, 2013, 2012, and 2011			F-4

Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2013, 2012 and 2011			F-5

Consolidated Statements of Changes in Equity for the years ended December 31, 2013, 2012 and 2011			F-6

Consolidated Statements of Cash Flows for the years ended December 31, 2013, 2012 and 2011			F-7

Notes to Consolidated Financial Statements			F-9

***

Separate financial statements for Blue Hills Bancorp, Inc. have not been included in this prospectus because Blue Hills Bancorp, Inc. has not engaged in any significant activities, has no significant assets, and has no 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

Report of Independent Registered Public Accounting Firm

LOGO

To the Audit Committee of Hyde Park Bancorp, MHC:
We have audited the accompanying consolidated balance sheets of Hyde Park Bancorp, MHC and Subsidiary (the “Company”) as of December 31, 2013 and 2012, and the related consolidated statements of net income, comprehensive income (loss), changes in equity and cash flows for each of the years in the three-year period ended December 31, 2013. 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 financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall 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 financial position of Hyde Park Bancorp, MHC and Subsidiary as of December 31, 2013 and 2012, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2013, in conformity with accounting principles generally accepted in the United States of America.
Boston, Massachusetts
March 10, 2014

F-2

Hyde Park Bancorp, MHC and Subsidiary

Consolidated Balance Sheets

December 31, 2013 and 2012


	2013		2012
	(In thousands)
Assets
Cash and due from banks	$	8,151	$	8,629
Short-term investments		32,165		65,190

Total cash and cash equivalents		40,316		73,819

Trading assets		750		32,125
Securities available for sale, at fair value		441,306		533,785
Federal Home Loan Bank stock, at cost		10,766		9,669
Loans, net of allowance for loan losses of $9,671 in 2013 and $5,550 in 2012		765,347		488,207
Premises and equipment, net		7,478		7,877
Due from broker		353		34,243
Accrued interest receivable		4,290		5,421
Net deferred tax asset		2,831		—
Bank-owned life insurance		29,831		33,344
Other assets		11,019		10,146


	$	1,314,287	$	1,228,636

Liabilities and Equity
Deposits:
Non-interest bearing	$	43,471	$	22,335
Interest bearing		871,752		795,542

Total deposits		915,223		817,877

Short-term borrowings		170,000		109,424
Long-term debt		45,000		45,000
Securities sold short		—		16,723
Mortgagors’ escrow accounts		1,760		1,629
Net deferred tax liability		—		3,165
Due to broker		1,040		49,578
Accrued expenses and other liabilities		9,730		8,302

Total liabilities		1,142,753		1,051,698


Commitments and contingencies (Note 13)

Equity:
Preferred stock, Series A, $1.00 par value, $1,000 liquidation value (50,000 shares authorized; 18,724 issued and outstanding in 2013 and 2012)		18,724		18,724
Retained earnings		150,345		148,211
Accumulated other comprehensive income		2,465		10,003

Total equity		171,534		176,938


	$	1,314,287	$	1,228,636

See accompanying notes to consolidated financial statements.

F-3

Hyde Park Bancorp, MHC and Subsidiary

Consolidated Statements of Net Income

Years Ended December 31, 2013, 2012 and 2011


	2013			2012		2011
	(In thousands)
Interest and dividend income:
Interest and fees on loans	$	21,876		$	16,545	$	12,666
Interest on securities		8,821			12,280		16,484
Dividends		2,329			2,871		2,663
Other		66			120		182

Total interest and dividend income		33,092			31,816		31,995


Interest expense:
Interest on deposits		6,803			7,259		8,477
Interest on borrowings		1,168			1,113		461

Total interest expense		7,971			8,372		8,938


Net interest and dividend income		25,121			23,444		23,057
Provision for loan losses		4,094			2,361		1,126

Net interest income, after provision for loan losses		21,027			21,083		21,931


Noninterest income:
Total other than temporary impairment losses		(92	)		—		—
Portion of impairment losses on debt securities recognized in other comprehensive income		—			—		—

Net impairment losses recognized in earnings		(92	)		—		—
Customer service fees		1,453			1,293		1,295
Gains on sales of loans, net		1,246			997		40
Gains on sales of securities available for sale, net		5,091			11,931		5,557
Gains on trading assets, net		505			148		—
Loan level derivative income		1,485			456		—
Bank-owned life insurance		2,895			1,124		1,720
Miscellaneous		428			217		589

Total noninterest income		13,011			16,166		9,201


Noninterest expense:
Salaries and employee benefits		16,903			12,439		9,267
Occupancy and equipment		3,996			3,410		3,004
Data processing		1,934			1,774		1,564
Professional fees		3,348			2,370		2,260
Advertising		1,823			1,660		1,585
FDIC deposit insurance		520			506		679
Contributions and community relations		505			814		573
Directors’ fees		688			1,346		643
Other general and administrative		1,942			1,964		1,466

Total noninterest expense		31,659			26,283		21,041


Income before income taxes		2,379			10,966		10,091

Provision (benefit) for income taxes		(284	)		3,112		2,530


Net income	$	2,663		$	7,854	$	7,561

See accompanying notes to consolidated financial statements.

F-4

Hyde Park Bancorp, MHC and Subsidiary

Consolidated Statements of Comprehensive Income (Loss)

Years Ended December 31, 2013, 2012 and 2011


	2013			2012			2011
	(In thousands)

Net income	$	2,663		$	7,854		$	7,561


Other comprehensive (loss) income:
Securities available for sale:
Unrealized holding (losses) gains		(19,254	)		20,596			(4,885	)
Reclassification adjustment for net gains and impairment losses realized in net income		(4,999	)		(11,931	)		(5,557	)

Net unrealized (losses) gains		(14,255	)		8,665			(10,442	)
Tax effect		5,433			(2,997	)		3,590

Net-of-tax amount		(8,822	)		5,668			(6,852	)


Defined benefit pension plan:
Reclassification adjustments for losses recognized in net periodic benefit cost		104			117			91
Actuarial gains (losses) arising during the period		2,033			731			(362	)

Net actuarial gains (losses)		2,137			848			(271	)
Tax effect		(853	)		(339	)		109

Net-of-tax amount		1,284			509			(162	)


Other comprehensive (loss) income		(7,538	)		6,177			(7,014	)


Comprehensive (loss) income	$	(4,875	)	$	14,031		$	547

See accompanying notes to consolidated financial statements.

F-5

Hyde Park Bancorp, MHC and Subsidiary

Consolidated Statements of Changes in Equity

Years Ended December 31, 2013, 2012 and 2011


	Preferred Stock		Retained Earnings			Accumulated Other Comprehensive Income			Total
	(In thousands)

Balance at December 31, 2010	$	—	$	133,944		$	10,840		$	144,784

Comprehensive income (loss)		—		7,561			(7,014	)		547
Issuance of preferred stock		18,724		—			—			18,724
Preferred stock dividends declared		—		(223	)		—			(223	)


Balance at December 31, 2011		18,724		141,282			3,826			163,832

Comprehensive income		—		7,854			6,177			14,031
Preferred stock dividends declared		—		(925	)		—			(925	)


Balance at December 31, 2012		18,724		148,211			10,003			176,938

Comprehensive income (loss)		—		2,663			(7,538	)		(4,875	)
Preferred stock dividends declared		—		(529	)		—			(529	)


Balance at December 31, 2013	$	18,724	$	150,345		$	2,465		$	171,534

See accompanying notes to consolidated financial statements.

F-6

Hyde Park Bancorp, MHC and Subsidiary

Consolidated Statements of Cash Flows

Years Ended December 31, 2013, 2012 and 2011


	2013			2012			2011
	(In thousands)
Cash flows from operating activities:
Net income	$	2,663		$	7,854		$	7,561
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		4,094			2,361			1,126
Net amortization of securities available for sale		14,112			2,167			601
Gains on sales of securities available for sale, net		(5,091	)		(11,931	)		(5,557	)
Impairment losses on securities		92			—			—
Net amortization of deferred loan origination costs and discounts		595			505			65
Depreciation and amortization		1,449			1,231			1,072
Bank-owned life insurance income		(2,895	)		(1,124	)		(1,720	)
Deferred tax (benefit) provision		(1,416	)		(689	)		50
Net change in:
Trading assets		(266	)		(67	)		—
Accrued interest receivable		1,131			470			(1,236	)
Other assets and prepaid FDIC assessment		(824	)		(937	)		1,141
Accrued expenses and other liabilities		3,835			984			1,479

Net cash provided by operating activities		17,479			824			4,582


Cash flows from investing activities:
Activity in securities available for sale:
Purchases		(335,943	)		(493,272	)		(520,254	)
Sales		314,947			343,825			160,667
Maturities/calls		11,616			133,340			312,850
Principal paydowns		78,442			48,226			37,666
Loan (originations), net of principal payments		(63,735	)		(30,181	)		15,212
Purchases of loans		(218,094	)		(184,364	)		(90,915	)
Net purchases of premises and equipment		(1,050	)		(934	)		(5,698	)
Purchases of FHLBB stock		(1,481	)		(5,823	)		(553	)
Redemption of FHLBB stock		384			—			—
Proceeds from bank-owned life insurance		6,408			—			678

Net cash used by investing activities		(208,506	)		(189,183	)		(90,347	)

(continued)

See accompanying notes to consolidated financial statements.

F-7

Hyde Park Bancorp, MHC and Subsidiary

Consolidated Statements of Cash Flows (Concluded)

Years Ended December 31, 2013, 2012 and 2011


	2013			2012			2011
	(In thousands)
Cash flows from financing activities:
Net increase in deposits		97,346			61,396			2,253
Net change in short-term borrowings		60,576			109,424			—
Proceeds from issuance of long-term debt		—			5,000			40,000
Net increase in mortgagors’ escrow accounts		131			175			360
Proceeds from issuance of preferred stock		—			—			18,724
Preferred stock dividends paid		(529	)		(1,148	)		—

Net cash provided by financing activities		157,524			174,847			61,337


Net change in cash and cash equivalents		(33,503	)		(13,512	)		(24,428	)

Cash and cash equivalents at beginning of year		73,819			87,331			111,759


Cash and cash equivalents at end of year	$	40,316		$	73,819		$	87,331


Supplementary information:
Interest paid	$	7,923		$	8,335		$	8,861
Income taxes paid, net of refunds		3,292			4,275			1,016
Preferred stock dividends declared		529			925			223
Due from broker		353			34,243			—
Due to broker		1,040			49,578			—

See accompanying notes to consolidated financial statements.

F-8

Hyde Park Bancorp, MHC and Subsidiary

Notes to Consolidated Financial Statements

Years Ended December 31, 2013, 2012 and 2011

1.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation and consolidation

The consolidated financial statements include the accounts of Hyde Park Bancorp, MHC (the “Company”) and its wholly-owned subsidiary Hyde Park Bancorp, Inc. (the mid-tier “Subsidiary”). The Subsidiary owns 100% of Blue Hills Bank (the “Bank”). The Bank has two wholly-owned subsidiaries, HP Security Corporation and 1196 Corporation. HP Security Corporation is a Massachusetts security corporation and 1196 Corporation holds a restricted stock. All significant intercompany balances and transactions have been eliminated in consolidation.

The Company established Blue Hills Bank Charitable Foundation, Inc. (the “Foundation”), a not-for-profit organization, to provide charitable contributions within the Company’s surrounding communities. The Company contributed $565,000 and $444,000 of cash to the Foundation in 2013 and 2012, respectively. Assets of the Foundation are not included in the Company’s consolidated financial statements.

Business

The Company provides a variety of financial services to individuals and businesses through its offices in Hyde Park, Dedham, Norwood, West Roxbury and Brookline, Massachusetts. Its primary deposit products are checking, savings and term certificate accounts and its primary lending products are residential mortgage loans, commercial real estate loans, commercial loans and consumer loans.

Use of estimates

In preparing consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated balance sheet and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The determination of the allowance for loan losses, deferred tax assets and other-than-temporary impairment of securities are material estimates that are particularly susceptible to significant change in the near term.

F-9

Hyde Park Bancorp, MHC and Subsidiary

Notes to Consolidated Financial Statements (Continued)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Cash and cash equivalents

For purposes of the consolidated statements of cash flows, cash and cash equivalents include cash on hand, balances due from banks, and short-term investments comprised of federal funds sold, money-market mutual funds, and interest-bearing deposits, all of which mature within ninety days. The Company normally maintains balances on deposit with other financial institutions in excess of the federally insured limit.

Fair value hierarchy

The Company groups its assets and liabilities generally 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 - Valuation is based on quoted prices in active markets for identical assets or liabilities. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities

Level 2 - Valuation is based on observable inputs other than Level 1 prices, such as quoted prices for similar assets and liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets and liabilities.

Level 3 - Valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include those whose value is determined using unobservable inputs to pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

Trading assets

The Company has elected the fair value option of recording certain securities which are recorded as trading assets and recorded at fair value with changes in fair value recorded in earnings. Interest and dividends on these securities are included in net interest income.

Securities available for sale

Securities classified as available for sale are reported at fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income. Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Gains and losses on the sale of securities are recorded on the trade date and are determined using the specific identification method.

F-10

Hyde Park Bancorp, MHC and Subsidiary

Notes to Consolidated Financial Statements (Continued)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Securities available for sale (concluded)

At least quarterly, and more frequently when warranted by economic or market conditions, management evaluates all securities classified as available for sale with a decline in fair value below the amortized cost of the investment to determine whether or not the impairment is deemed to be other-than-temporary (“OTTI”). Marketable equity securities are evaluated for OTTI based on the severity and duration of the impairment and, if deemed to be other than temporary, the declines in fair value are reflected in earnings as realized losses. OTTI is required to be recognized if: (1) the Company intends to sell the security; (2) it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis; or (3) for debt securities, the present value of expected cash flows is not sufficient to recover the entire amortized cost basis.

For all impaired debt securities that the Company intends to sell, or more likely than not will be required to sell, the full amount of the depreciation is recognized as OTTI through earnings. Credit-related OTTI for all other impaired debt securities is recognized through earnings. Non-credit related OTTI for such debt securities is recognized in other comprehensive income, net of applicable taxes.

Federal Home Loan Bank stock

The Company, as a member of the Federal Home Loan Bank of Boston (“FHLBB”) system, is required to maintain an investment in capital stock of the FHLBB. Based on the redemption provisions of the FHLBB, the stock has no quoted market value and is carried at cost. At its discretion, the FHLBB may declare dividends on the stock. The Company reviews its investment for impairment based on the ultimate recoverability of the cost basis in the FHLBB stock. As of December 31, 2013, no impairment has been recognized.

Loans held for sale

Loans originated and intended for sale in the secondary market are carried at the lower of cost or estimated fair value in the aggregate. Net unrealized losses, if any, are recognized through a valuation allowance by charges to income. Loans held for sale amounted to $765,000 at December 31, 2013 and are included in loans, net. There were no loans held for sale at December 31, 2012.

F-11

Hyde Park Bancorp, MHC and Subsidiary

Notes to Consolidated Financial Statements (Continued)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Loans

The Company has historically granted mortgage and consumer loans to its customers and a substantial portion of the loan portfolio consists of mortgage loans in communities including and near the locations of its banking. The ability of the Company’s debtors to honor their contracts is dependent upon the real estate and general economic conditions in this area.

F-12

Hyde Park Bancorp, MHC and Subsidiary

Notes to Consolidated Financial Statements (Continued)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Loans (concluded)

During 2011 and continuing into 2012 and 2013, the Company began to diversify its loan products in order to better serve communities over a broader market area and reduce its reliance on securities. As a result, the risk characteristics of the portfolio include both commercial and consumer loans across a broader array of products than prior to 2011.

The Company’s loan portfolio includes 1-4 family residential real estate, commercial real estate, construction, commercial business, home equity, and consumer segments.

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 the allowance for loan losses, charge-offs and any deferred fees and costs on originated and purchased loans. Interest income is accrued on the unpaid principal balance. Deferred loan origination fees/costs and discounts on purchased loans are recognized as an adjustment of the related loan yield using the interest method.

It is the policy of the Company to discontinue the accrual of interest on loans past due in excess of 90 days, unless the loan is well-secured and in the process of collection, or when in the judgment of management, the ultimate collectability of the principal or interest becomes doubtful and to reverse all interest previously accrued against interest income. Past due status is based on contractual terms of the loan. The interest on non-accrual loans is accounted for on the cash-basis until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due have been current for six consecutive months and future payments are reasonably assured.

Allowance for loan losses

The allowance for loan losses is based on the size and the composition of the loan portfolio, delinquency levels, loss experience, economic conditions and other factors related to the collectability of the loan portfolio. Because 2013 and 2012 saw the growth in number and size of portfolios for which the Company had no prior loss experience, the loss experience extrapolated for all portfolios was derived from available national and state peer group losses for relevant portfolios generally over the years 2008-2013. Loan losses are charged against the allowance when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

F-13

Hyde Park Bancorp, MHC and Subsidiary

Notes to Consolidated Financial Statements (Continued)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Allowance for loan losses (continued)

The allowance for loan losses is evaluated regularly by management and reflects consideration of all significant factors that effect the collectability of the loan portfolio. The evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available; however, because of the increase in risk exposures new to the Company, it is the intention of management to maintain an allowance that is prudently commensurate with the growth in the loan portfolio.

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 either actual or extrapolated historical loss experience for periods ranging from three to five years, adjusted for qualitative and environmental factors including levels/trends in delinquencies; trends in volumes 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.

In 2012, the Company revised its methodology pertaining to the general component of the allowance for loan losses. This revision included increased segmentation of the loan portfolio, which in previous years had been primarily comprised of conforming residential mortgage loans.

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 does not generally originate loans with a loan-to-value ratio greater than 80 percent and does not generally grant loans that would be classified as subprime upon origination. When the Company does extend credit either on a first- or second-lien basis at a loan-to-value ratio greater than 80 percent, such loans are supported by either mortgage insurance or state guarantee programs. All loans in this segment are collateralized by owner-occupied 1-4 family residential real estate and repayment is dependent on the credit quality of the individual borrower. The health of the regional economy, including unemployment rates and housing prices, will have an effect on the credit quality of loans in this segment.

F-14

Hyde Park Bancorp, MHC and Subsidiary

Notes to Consolidated Financial Statements (Continued)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Allowance for loan losses (continued)

General component (continued)

At December 31, 2013 and 2012, this segment includes $7,588,000 and $8,824,000, respectively, of residential mortgage loans purchased in 2006 and 2007 from Countrywide, Wells Fargo, and Taylor Bean on a servicing-retained basis. These loans were subject to the more lenient underwriting standards and higher residential property values prevalent at that time, and when these loans become delinquent, they are subject to significant time lags between delinquency and modification or collection and relatively high degradation from the underwritten collateral value.

Commercial real estate – Loans in this segment include investment real estate and are generally secured by assignments of leases, real estate collateral and guarantees from sponsors or owners. In cases where there is a concentration of exposure to a single large tenant, underwriting standards include analysis of the tenant’s ability to support lease payments over the duration of the loan. 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. Payments on loans secured by income-producing properties often depend on the successful operation and management of the properties. Management continually monitors the cash flows of these loans.

Home equity – Loans in this segment are generally secured by 1 ^st or 2 ^nd liens on residential real estate. Repayment is dependent on the credit quality of the individual borrower. The Company evaluates each loan application based on factors including the borrower’s credit score, income, length of employment, and other factors to establish the creditworthiness of the borrower. The Company purchased a geographically diverse portfolio of seasoned home equity lines of credit (HELOC) which are serviced by a third party. The rate of provision for this portfolio is slightly lower than that for the organically originated HELOC portfolio due to its seasoning, low loan-to-values, high credit scores, and first-lien collateral position.

F-15

Hyde Park Bancorp, MHC and Subsidiary

Notes to Consolidated Financial Statements (Continued)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Allowance for loan losses (continued)

General component (continued)

F-16

Hyde Park Bancorp, MHC and Subsidiary

Notes to Consolidated Financial Statements (Continued)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Allowance for loan losses (continued)

General component (concluded)

Consumer – Loans in this segment primarily include used auto loans. A significant portion of the used auto loan portfolio is comprised of geographically diverse loans originated by and purchased from a third party, who also provides collection services. While this portfolio generated minimal charge-offs in 2013 and no charge-offs in 2012, the provisions for loan losses reflect management’s estimate of inherent losses based on a review of regional and national historical losses of other institutions with similar portfolios.

Allocated component

The allocated component relates to loans that are on the watch list (non-accruing loans, partially charged-off non-accruing loans and accruing adversely-rated loans) and considered impaired. Impairment is measured 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.

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. Management reviews all loan types for individual impairment. 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 and generally remain impaired for the remaining life of the

F-17

Hyde Park Bancorp, MHC and Subsidiary

Notes to Consolidated Financial Statements (Continued)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Allowance for loan losses (concluded)

Allocated component (concluded)

loan. Impaired classification may be removed if the borrower demonstrates compliance with the modified terms and the restructuring agreement specifies an interest rate equal to that which would be provided to a borrower with similar credit at the time of restructuring.

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.

Premises and equipment

Land is carried at cost. Buildings, leasehold improvements and equipment are stated at cost, less accumulated depreciation and amortization, computed on the straight-line method over the estimated useful lives of the assets or the expected terms of the leases, if shorter. Expected terms include lease option periods to the extent that the exercise of such options is reasonably assured.

Bank-owned life insurance

Bank-owned life insurance policies are reflected on the consolidated balance sheets at cash surrender value. Changes in cash surrender value are reflected in noninterest income on the consolidated statements of net income.

Cost method investments

The aggregate carrying amount of all cost method investments included in other assets at December 31, 2013 and 2012 is $4,872,000 and $4,269,000, respectively. The fair values of these investments are not readily available and are not evaluated for impairment unless there are identified events or changes in circumstances that may have a significant adverse effect on the fair value of the investments.

F-18

Hyde Park Bancorp, MHC and Subsidiary

Notes to Consolidated Financial Statements (Continued)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Interest rate swap agreements

For asset/liability management purposes, the Company periodically uses interest rate swap agreements to hedge various exposures or to modify interest rate characteristics of various balance sheet accounts. Depending upon the intended use for the interest rate swap at inception, the Company designates the derivative as either an economic hedge of an asset or liability or a hedging instrument subject to the hedge accounting provisions. If the interest rate swap is not designated in a hedge relationship, gains or losses reflecting changes in fair value are recorded in earnings.

Certain interest rate swap contracts are utilized to help commercial loan borrowers manage their interest rate risk. The interest rate swap contracts with commercial loan borrowers allow the borrowers to convert floating rate loan payments to fixed rate payments. When the Company enters into an interest rate swap contract with a commercial loan borrower, the Company concurrently enters into a matching interest rate swap with a correspondent bank counterparty in order to minimize interest rate risk to the Company. These interest rate derivative instruments are recorded on the consolidated balance sheets as either an asset or liability measured at fair value. These derivatives do not qualify for hedge accounting. As such, all changes in fair value of these derivative instruments are included in other income. The Company pays and receives fees for entering into these contracts. The net fees are recognized in loan level derivative income when received.

Transfers of financial assets

Transfers of an entire financial asset, a group of entire financial assets, or a participating interest in an entire financial asset are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

During the normal course of business, the Company may transfer a portion of a financial asset, for example, a participation loan or the government guaranteed portion of a loan. In order to be eligible for sales treatment, the transfer of the portion of the loan must meet the criteria of a participating interest. If it does not meet the criteria of a participating interest, the transfer must be accounted for as a secured borrowing. In order to meet the criteria for a participating interest, all cash flows from the loan must be divided proportionately, the rights of each loan holder must have the same priority, the loan holders must have no recourse to the transferor other than standard representations and warranties and no loan holder has the right to pledge or exchange the entire loan.

F-19

Hyde Park Bancorp, MHC and Subsidiary

Notes to Consolidated Financial Statements (Continued)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Securities sold short

Securities sold short represent transactions in which the Company sells a security it does not own and is obligated to deliver such security at a future date. The short sale is recorded as a liability and subsequently an unrealized gain or loss is recorded for the difference between the contract amount and the value of the open short position. The Company records a realized gain or loss when the short position is closed. By entering into short sales, the Company bears the market risk of an unfavorable increase in the price of the security sold short in excess of the contract price. Unrealized and realized gains and losses on these securities are recorded as gains on trading assets, net in the consolidated statements of net income. The Company no longer sells securities short at December 31, 2013.

Retirement plan

The Company accounts for its defined benefit pension plan using an actuarial model that allocates pension costs over the service period of employees in the plan. The Company accounts for the over-funded or under-funded status of its defined benefit plan as an asset or liability on its consolidated balance sheets and recognized changes in the funded status in the year in which the changes occur as other comprehensive income or loss. The Company amended its defined benefit pension plan in 2013 freezing the plan to new participants.

Advertising costs

Advertising costs are expensed as incurred.

Income taxes

Deferred tax assets and liabilities are reflected at currently enacted income tax rates applicable to the period in which the deferred tax assets or liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted accordingly through the provision for income taxes. The Company exercises significant judgment in evaluating the amount and timing of recognition of the resulting tax assets and liabilities. These judgments require the Company to make projections of future taxable income. These judgments and estimates, which are inherently subjective, are reviewed periodically as regulatory and business factors change. A valuation allowance related to deferred tax assets is established when, in the judgment of management, it is more likely than not that all or a portion of such deferred tax assets will not be realized. The Company records interest and penalties as part of income tax expense. No interest or penalties were recorded for the years ended December 31, 2013, 2012 and 2011.

F-20

Hyde Park Bancorp, MHC and Subsidiary

Notes to Consolidated Financial Statements (Continued)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Comprehensive income

Accounting principles generally require that recognized revenues, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities are reported as a separate component of equity on the consolidated balance sheets, such items, along with net income, are components of comprehensive income.

The components of accumulated other comprehensive income, included in equity, are as follows:


	December 31,
	2013			2012
	(In thousands)
Securities available for sale:
Net unrealized gain	$	2,838		$	17,093
Tax effect		(855	)		(6,288	)

Net-of-tax amount		1,983			10,805


Defined benefit pension plan:
Unrecognized net actuarial gain (loss)		803			(1,334	)
Tax effect		(321	)		532

Net-of-tax amount		482			(802	)

	$	2,465		$	10,003

Actuarial gains of $65,000, included in accumulated other comprehensive income at December 31, 2013, are expected to be recognized as a component of net periodic pension cost during the year ending December 31, 2014.

The following amounts were reclassified out of accumulated other comprehensive income during the year ended December 31, 2013:


Category	Reclassification Amount			Affected Line Item on Consolidated Statements of Net Income
	(In thousands)

Securities available for sale	$	(5,091	)	Gains on sale of securities available for sale, net
Securities available for sale		92		Net impairment losses recognized in earnings
Defined benefit pension plan		104		Salaries and employee benefits

Total before tax		(4,895	)

Tax effect		1,723		Provision (benefit) for income taxes


Total reclassification, net of tax	$	(3,172	)

F-21

Hyde Park Bancorp, MHC and Subsidiary

Notes to Consolidated Financial Statements (Continued)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (concluded)

Recent accounting pronouncements

In February 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2013-02, Comprehensive Income (Topic 220), Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income , which requires an entity to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income. For public entities, the amendments were effective prospectively for reporting periods beginning after December 15, 2012. See Note 1 to the consolidated financial statements for the related disclosure.

2.	RESTRICTIONS ON CASH AND DUE FROM BANKS

The Company is required to maintain average balances on hand or with the Federal Reserve Bank (“FRB”). At December 31, 2013 and 2012, these reserve balances amounted to $6,020,000 and $2,591,000, respectively.

3.	TRADING ASSETS

Trading assets, at fair value, consist of the following:


	December 31,
	2013		2012
	(In thousands)

U. S. Government and agency securities	$	750	$	1,016
To be announced mortgage-backed securities		—		31,109


	$	750	$	32,125

At December 31, 2013 and 2012, net unrealized (losses) gains on trading assets held were ($73,000) and $10,000, respectively. There were no trading assets at December 31, 2011.

F-22

Hyde Park Bancorp, MHC and Subsidiary

Notes to Consolidated Financial Statements (Continued)

4.	SECURITIES AVAILABLE FOR SALE

The amortized cost and estimated fair value of securities available for sale, with gross unrealized gains and losses, follows:


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
December 31, 2013

Debt securities:
U.S. Treasury	$	131,781	$	145	$	(3,724	)	$	128,202
Government-sponsored enterprises		13,985		81		(109	)		13,957
Government-sponsored residential mortgage-backed and collateralized mortgage obligations		67,787		778		(1,072	)		67,493
Other mortgage- and asset-backed		46,610		546		(683	)		46,473
State and political		15,628		218		(107	)		15,739
Financial services		42,193		1,696		(218	)		43,671
Other corporate		44,920		1,128		(512	)		45,536

Total debt securities		362,904		4,592		(6,425	)		361,071


Marketable equity securities:
Mutual funds:
International		5,000		540		—			5,540
Domestic		466		—		(13	)		453
Global asset allocation		32,956		4,168		—			37,124
Diversified bonds		34,392		71		(113	)		34,350
Other		2,750		48		(30	)		2,768

Total marketable equity securities		75,564		4,827		(156	)		80,235


Total securities available for sale	$	438,468	$	9,419	$	(6,581	)	$	441,306

F-23

Hyde Park Bancorp, MHC and Subsidiary

Notes to Consolidated Financial Statements (Continued)

SECURITIES AVAILABLE FOR SALE (continued)


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
December 31, 2012

Debt securities:
U.S. Treasury	$	108,087	$	836	$	(134	)	$	108,789
Government-sponsored enterprises		14,278		508		—			14,786
Government-sponsored residential mortgage-backed and collateralized mortgage obligations		109,802		4,467		(111	)		114,158
Other mortgage- and asset-backed		50,698		1,479		(89	)		52,088
State and political		17,845		764		(21	)		18,588
Financial services		30,213		2,656		(4	)		32,865
Other corporate		61,732		3,457		(2	)		65,187

Total debt securities		392,655		14,167		(361	)		406,461


Marketable equity securities:
Mutual funds:
International		27,590		971		(1,379	)		27,182
Domestic		20,024		1,612		(2	)		21,634
Global asset allocation		40,210		1,090		(360	)		40,940
Diversified bonds		33,460		1,166		—			34,626
Other		2,753		189		—			2,942

Total marketable equity securities		124,037		5,028		(1,741	)		127,324


Total securities available for sale	$	516,692	$	19,195	$	(2,102	)	$	533,785

F-24

Hyde Park Bancorp, MHC and Subsidiary

Notes to Consolidated Financial Statements (Continued)

SECURITIES AVAILABLE FOR SALE (continued)

The amortized cost and estimated fair value of debt securities by contractual maturity at December 31, 2013 follow. Expected maturities will differ from contractual maturities because the issuers may have the right to call or prepay obligations with or without call or prepayment penalties.


	Amortized Cost		Fair Value
	(In thousands)

Within 1 year	$	7,282	$	7,299
After 1 year through 5 years		139,124		140,305
After 5 years through 10 years		93,004		90,514
After 10 years		9,097		8,987

		248,507		247,105

Mortgage- and asset-backed securities and collateralized mortgage obligations		114,397		113,966


	$	362,904	$	361,071

For the years ended December 31, 2013, 2012 and 2011, proceeds from sales of securities available for sale amounted to $314,947,000, $343,825,000 and $160,667,000, respectively. Gross realized gains amounted to $8,733,000, $12,968,000 and $5,858,000, respectively, and gross realized losses amounted to $3,642,000, $1,037,000 and $301,000, respectively.

At December 31, 2103 and 2012, U.S. Treasury and government-sponsored enterprises with an amortized cost of $34,406,000 and $33,760,000, respectively, and a fair value of $33,724,000 and $34,483,000, respectively, were pledged to secure borrowings and repurchase agreements.

F-25

Hyde Park Bancorp, MHC and Subsidiary

Notes to Consolidated Financial Statements (Continued)

SECURITIES AVAILABLE FOR SALE (continued)

Information pertaining to securities available for sale with gross unrealized losses aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows:


	Less Than Twelve Months				More Than Twelve Months
	Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value
	(In thousands)
December 31, 2013

Debt securities:
U.S. Treasury	$	3,724	$	117,043	$	—	$	—
Government-sponsored enterprises		109		3,920		—		—
Government-sponsored residential mortgage-backed and collateralized mortgage obligations		973		37,265		99		3,341
Other mortgage- and asset-backed		532		27,234		151		4,153
State and political		107		5,904		—		—
Financial services		218		8,619		—		—
Other corporate		512		23,618		—		—

Total debt securities		6,175		223,603		250		7,494


Marketable equity securities:
Mutual funds:
Domestic		—		—		13		453
Diversified bonds		109		21,450		4		71
Other		30		2,767		—		—

Total marketable equity securities		139		24,217		17		524


Total temporarily impaired securities	$	6,314	$	247,820	$	267	$	8,018

F-26

Hyde Park Bancorp, MHC and Subsidiary

Notes to Consolidated Financial Statements (Continued)

SECURITIES AVAILABLE FOR SALE (continued)


	Less Than Twelve Months
	Gross Unrealized Losses		Fair Value
	(In thousands)
December 31, 2012

Debt securities:
U.S. Treasury	$	134	$	52,267
Government-sponsored residential mortgage-backed and collateralized mortgage obligations		111		11,046
Other mortgage- and asset-backed		89		15,412
State and political		21		921
Financial services		4		1,486
Other corporate		2		4,752

Total debt securities		361		85,884


Marketable equity securities:
Mutual funds:
International		1,379		17,561
Domestic		2		103
Global asset allocation		360		14,774

Total marketable equity securities		1,741		32,438


Total temporarily impaired securities	$	2,102	$	118,322

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, 2013, one hundred twenty-five debt securities have unrealized losses with aggregate depreciation of less than 3% from the Company’s amortized cost basis. The unrealized losses were primarily caused by interest rate fluctuations. A significant portion of these investments are guaranteed by the U.S. Government or an agency thereof. It is expected that none of these securities would be settled at a price less than the par value of the investment. Because the decline in market value is attributable to changes in interest rates and not to credit quality, and because the Company does not intend to sell the securities and it is more likely than not that the Company will not be required to sell the securities before recovery of their amortized cost bases, which may be maturity, the Company does not consider these securities to be other-than-temporarily impaired at December 31, 2013.

F-27

Hyde Park Bancorp, MHC and Subsidiary

Notes to Consolidated Financial Statements (Continued)

SECURITIES AVAILABLE FOR SALE (concluded)

At December 31, 2013, the Company recorded OTTI on nine government-sponsored residential collateralized mortgage obligations and other mortgage- and asset-backed securities which qualify as covered funds under the Volcker Rule. As the Company is now required to sell these securities, the aggregate unrealized losses of $58,000 were recorded as OTTI.

At December 31, 2013, the Company had six marketable equity securities with unrealized losses of $156,000, or less than 1% depreciation from the Company’s cost basis. Although some of the underlying issuers have shown declines in earnings as a result of the weakened economy, no credit issues have been identified that cause management to believe the declines in market value are other than temporary and the Company has the ability and intent to hold these investments until a recovery of fair value. In analyzing the issuers’ financial condition, management considers industry analysts’ reports, financial performance and projected target prices of investment analysts. During 2013, one mutual fund investment was written down by $34,000 due to management’s assertion that the book value was other than temporarily impaired.

LOANS

A summary of the balances of loans follows:


	December 31,
	2013			2012
	(In thousands)
Real estate:
1-4 family residential	$	365,707		$	311,713
Home equity		25,535			25,062
Commercial real estate		228,688			100,904
Construction		16,559			5,753

		636,489			443,432


Commercial business		111,154			33,762
Consumer		25,372			15,473


Total loans		773,015			492,667

Allowance for loan losses		(9,671	)		(5,550	)
Deferred loan costs and discounts, net		2,003			1,090


Loans, net	$	765,347		$	488,207

F-28

Hyde Park Bancorp, MHC and Subsidiary

Notes to Consolidated Financial Statements (Continued)

LOANS (continued)

The Company has sold residential mortgage loans in the secondary mortgage market, some of which are sold with limited recourse. The Company has retained the servicing responsibility and receives fees for the services provided. The unpaid principal balances of mortgage loans serviced for others was $47,600,000, $33,082,000 and $21,658,000 at December 31, 2013, 2012 and 2011, respectively. The maximum contingent liability associated with loans sold with recourse is $1,177,000 at December 31, 2013. Neither mortgage loans serviced for others nor the contingent liability associated with sold loans is recorded on the consolidated balance sheets.

In 2013 and 2012, the Company transferred a portion of its originated commercial real estate loans to participating lenders. The amounts transferred have been accounted for as sales and are therefore not included on the consolidated balance sheets. The Company and participating lenders share ratably in cash flows and any gains or losses that may result from a borrower’s lack of compliance with contractual terms of the loan. The Company continues to service the loans on behalf of the participating lenders and, as such, collects cash payments from the borrowers, remits payments (net of servicing fees) to participating lenders and disburses required escrow funds to relevant parties. At December 31, 2013 and 2012, the Company was servicing loans for participants aggregating $23,260,000 and $15,716,000, respectively.

Activity in the allowance for loan losses for the years ended December 31, 2013, 2012 and 2011 and allocation of the allowance to loan segments as of December 31, 2013 and 2012 follows:


	1-4 Family Residential			Home Equity			Commercial Real Estate		Construction		Commercial Business		Consumer			Unallocated		Total
	(In thousands)
2013
Allowance for loan losses:
Beginning balance	$	2,725		$	316		$	1,343	$	106	$	565	$	313		$	182	$	5,550
Provision (credit) for loan losses		39			(69	)		1,265		197		1,851		305			506		4,094
Loans charged-off		(165	)		—			—		—		—		(44	)		—		(209	)
Recoveries		236			—			—		—		—		—			—		236


Ending balance	$	2,835		$	247		$	2,608	$	303	$	2,416	$	574		$	688	$	9,671


Allowance related to impaired loans	$	—		$	—		$	—	$	—	$	—	$	—		$	—	$	—
Allowance related to non-impaired loans		2,835			247			2,608		303		2,416		574			688		9,671


Total allowance for loan losses	$	2,835		$	247		$	2,608	$	303	$	2,416	$	574		$	688	$	9,671

Impaired loans	$	3,118		$	36		$	—	$	—	$	—	$	—		$	—	$	3,154
Non-impaired loans		362,589			25,499			228,688		16,559		111,154		25,372			—		769,861


Total loans	$	365,707		$	25,535		$	228,688	$	16,559	$	111,154	$	25,372		$	—	$	773,015

F-29

Hyde Park Bancorp, MHC and Subsidiary

Notes to Consolidated Financial Statements (Continued)

LOANS (continued)


	1-4 Family Residential			Home Equity		Commercial Real Estate			Construction		Commercial Business		Consumer			Unallocated		Total
	(In thousands)
2012
Allowance for loan losses:
Beginning balance	$	3,267		$	—	$	160		$	—	$	—	$	24		$	50	$	3,501
Provision (credit) for loan losses		(230	)		316		1,183			106		565		289			132		2,361
Loans charged-off		(714	)		—		—			—		—		—			—		(714	)
Recoveries		402			—		—			—		—		—			—		402


Ending balance	$	2,725		$	316	$	1,343		$	106	$	565	$	313		$	182	$	5,550


Allowance related to impaired loans	$	—		$	—	$	—		$	—	$	—	$	—		$	—	$	—
Allowance related to non-impaired loans		2,725			316		1,343			106		565		313			182		5,550


Total allowance for loan losses	$	2,725		$	316	$	1,343		$	106	$	565	$	313		$	182	$	5,550


Impaired loans	$	1,868		$	—	$	—		$	—	$	—	$	18		$	—	$	1,886
Non-impaired loans		309,845			25,062		100,904			5,753		33,762		15,455			—		490,781


Total loans	$	311,713		$	25,062	$	100,904		$	5,753	$	33,762	$	15,473		$	—	$	492,667


2011
Allowance for loan losses:
Beginning balance	$	2,207		$	—	$	221		$	—	$	—	$	5		$	45	$	2,478
Provision (credit) for loan losses		1,156			—		(61	)		—		—		26			5		1,126
Loans charged-off		(328	)		—		—			—		—		(13	)		—		(341	)
Recoveries		232			—		—			—		—		6			—		238


Ending balance	$	3,267		$	—	$	160		$	—	$	—	$	24		$	50	$	3,501


Allowance related to impaired loans	$	160		$	—	$	115		$	—	$	—	$	—		$	—	$	275
Allowance related to non-impaired loans		3,107			—		45			—		—		24			50		3,226


Total allowance for loan losses	$	3,267		$	—	$	160		$	—	$	—	$	24		$	50	$	3,501


Impaired loans	$	1,437		$	—	$	1,098		$	—	$	—	$	—		$	—	$	2,535
Non-impaired loans		262,730			2,925		6,558			656		1,000		2,710			—		276,579


Total loans	$	264,167		$	2,925	$	7,656		$	656	$	1,000	$	2,710		$	—	$	279,114

The following is a summary of past due and non-accrual loans, by loan class, at December 31, 2013 and 2012:


	30-59 Days Past Due		60-89 Days Past Due		Past Due 90 Days or More		Total Past Due		Loans on Non-accrual
	(In thousands)
2013

Real estate:
1-4 family residential	$	1,426	$	196	$	828	$	2,450	$	1,706
Home equity		—		—		36		36		36


Total	$	1,426	$	196	$	864	$	2,486	$	1,742

F-30

Hyde Park Bancorp, MHC and Subsidiary

Notes to Consolidated Financial Statements (Continued)

LOANS (continued)


	30-59 Days Past Due		60-89 Days Past Due		Past Due 90 Days or More		Total Past Due		Loans on Non-accrual
	(In thousands)
2012

Real estate:
1-4 family residential	$	473	$	232	$	978	$	1,683	$	2,209
Home equity		17		—		—		17		—


Total	$	490	$	232	$	978	$	1,700	$	2,209

There were no loans past due 90 days or more and still accruing at December 31, 2013 and 2012.

The following is a summary of information pertaining to impaired loans:


	December 31, 2013
	Recorded Investment		Unpaid Principal Balance		Related Allowance
			(In thousands)
Impaired loans without a valuation allowance:
Real estate:
1-4 family residential	$	3,118	$	3,893	$	—
Home equity		36		36		—


Total	$	3,154	$	3,929	$	—


	Year Ended December 31, 2013
	Average Recorded Investment		Interest Income Recognized		Interest Income Recognized on Cash Basis
			(In thousands)
Real estate:
1-4 family residential	$	2,586	$	61	$	61
Home equity		32		—		—


Total	$	2,618	$	61	$	61

F-31

Hyde Park Bancorp, MHC and Subsidiary

Notes to Consolidated Financial Statements (Continued)

LOANS (continued)


	December 31, 2012
	Recorded Investment		Unpaid Principal Balance		Related Allowance
	(In thousands)

Impaired loans without a valuation allowance:
Real estate:
1-4 family residential	$	1,868	$	2,442	$	—
Consumer loans:
Purchased auto		18		18		—


Total	$	1,886	$	2,460	$	—


	Year Ended December 31, 2012
	Average Recorded Investment		Interest Income Recognized		Interest Income Recognized on Cash Basis
	(In thousands)

Real estate:
1-4 family residential	$	1,725	$	84	$	84
Construction		220		220		48
Consumer loans:
Purchased auto		3		—		—


Total	$	1,948	$	304	$	132


	Year Ended December 31, 2011
	Average Recorded Investment		Interest Income Recognized		Interest Income Recognized on Cash Basis
	(In thousands)

Real estate:
1-4 family residential	$	1,666	$	72	$	72
Construction		220		—		—


Total	$	1,886	$	72	$	72

No additional funds are committed to be advanced in connection with impaired loans.

F-32

Hyde Park Bancorp, MHC and Subsidiary

Notes to Consolidated Financial Statements (Continued)

LOANS (continued)

There were no troubled debt restructurings during the year ended December 31, 2013. The following is a summary of troubled debt restructurings entered into during the year ended December 31, 2012:


	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	(Dollars in thousands)
2012

Real estate:
1-4 family residential		3	$	560	$	568

In 2012, the residential real estate loans were modified to capitalize past due interest.

Management performs a discounted cash flow calculation to determine the amount of impairment reserve required on each of the troubled debt restructurings. Any reserve required is recorded through the provision for loan losses. There was one default of a TDR in the first twelve months after restructure during the year ended December 31, 2013 in the amount of $261,000. There were no defaults of TDR’s during the year ended December 31, 2012.

Credit Quality Information

The Company utilizes a ten-grade internal loan rating system for all loans as follows.

Loans rated 1 – 6 are considered “acceptable” rated loans that are performing as agreed, meet minimum underwriting standards, and require only routine supervision.

Loans rated 7 are considered “special mention.” These loans are starting to show signs of potential weakness and are being closely monitored by management.

Loans rated 8 – 9 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. Generally, all loans 90 days delinquent are rated 8.

Loans rated 10 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.

F-33

Hyde Park Bancorp, MHC and Subsidiary

Notes to Consolidated Financial Statements (Continued)

LOANS (concluded)

Credit Quality Information (continued)

The Company does not assign risk ratings to residential or consumer loans, unless they have a well-defined weakness that may jeopardize the collection of the contractual principal and interest, are contractually past due 90 days or more or legal action has commenced against the borrower.

On an annual basis, or more often if needed, the Company formally reviews the ratings on all commercial and construction loans. At least annually, 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. In addition, management utilizes delinquency reports, the watch list and other loan reports to monitor credit quality of other loan segments.

The following tables present the Company’s loans by risk rating at December 31, 2013 and 2012:


	1-4 Family Residential		Home Equity		Commercial Real Estate		Construction		Commercial Business		Consumer		Total Loans
	(In thousands)
2013
Loans rated 1 - 6	$	1,701	$	4,610	$	223,144	$	15,246	$	110,142	$	—	$	354,843
Loans rated 7		468		—		2,339		—		12		—		2,819
Loans rated 8 - 9		1,647		36		—		—		—		24		1,707
Loans rated 10		693		—		—		—		—		—		693
Loans not rated		361,198		20,889		3,205		1,313		1,000		25,348		412,953


	$	365,707	$	25,535	$	228,688	$	16,559	$	111,154	$	25,372	$	773,015


2012
Loans rated 1 - 6	$	2,143	$	557	$	99,974	$	5,061	$	32,762	$	—	$	140,497
Loans rated 7		1,932		—		—		—		—		—		1,932
Loans rated 8 - 6		1,272		—		—		—		—		14		1,286
Loans rated 10		646		—		—		—		—		—		646
Loans not rated		305,720		24,505		930		692		1,000		15,459		348,306


	$	311,713	$	25,062	$	100,904	$	5,753	$	33,762	$	15,473	$	492,.667

F-34

Hyde Park Bancorp, MHC and Subsidiary

Notes to Consolidated Financial Statements (Continued)

6.	PREMISES AND EQUIPMENT

A summary of the cost and accumulated depreciation and amortization of premises and equipment follows:


	December 31,						Estimated Useful Lives
	2013			2012			Estimated Useful Lives
	(In thousands)

Land	$	75		$	75
Buildings		3,575			3,571		5 to 40 years
Leasehold improvements		5,265			5,234		5 to 10 years
Furniture and fixtures		1,751			1,532		3 to 5 years
Technology equipment		3,027			2,796		1 to 3 years
Construction in progress		366			46

		14,059			13,254
Less accumulated depreciation and amortization		(6,581	)		(5,377	)


	$	7,478		$	7,877

Depreciation and amortization expense for the years ended December 31, 2013, 2012 and 2011 amounted to $1,449,000, $1,231,000 and $1,072,000, respectively.

Construction in progress at December 31, 2013 relates to the Nantucket Bank branch acquisition. See Note 16. Construction in progress at December 31, 2012 relates to branch improvements and renovations.

7.	DEPOSITS

A summary of deposit balances, by type, is as follows:


	December 31,
	2013		2012
	(In thousands)

NOW and demand	$	118,648	$	87,376
Regular savings		332,518		313,394
Money market deposits		75,716		85,525

Total non-certificate accounts		526,882		486,295


Term certificates of $100,000 or more		128,990		137,363
Term certificates less than $100,000		167,728		182,219
Brokered deposits		91,623		12,000

Total certificate accounts		388,341		331,582


Total deposits	$	915,223	$	817,877

F-35

Hyde Park Bancorp, MHC and Subsidiary

Notes to Consolidated Financial Statements (Continued)

DEPOSITS (concluded)

At December 31, 2013, the scheduled maturities of term certificate accounts, including brokered deposits, are as follows:


	Amount		Weighted Average Rate
	(Dollars in thousands)

2014	$	265,142		0.72	%
2015		59,832		0.94
2016		26,884		1.90
2017		25,883		1.46
2018		10,600		1.19


	$	388,341		0.90	%

8.	SHORT-TERM BORROWINGS

Federal Home Loan Bank of Boston advances

FHLBB advances with an original maturity of less than one year amounted to $170,000,000 and $107,000,000 at December 31, 2013 and 2012, respectively, with a weighted average rate of 0.20% and 0.23%, respectively. The Company also has a $7.7 million line of credit with the FHLBB with an interest rate that adjusts daily. No advances were outstanding on this line at December 31, 2013 and 2012. All borrowings from the FHLBB are secured by a blanket security agreement on qualified collateral, principally residential mortgage loans and U.S. Government and government-sponsored securities.

Securities sold under agreements to repurchase

Securities sold under agreements to repurchase amounted to $2,424,000 at December 31, 2012 with a weighted average rate of 0.29%, and matured on January 9, 2013. There were no amounts outstanding at December 31, 2013. The obligations to repurchase the securities sold were reflected as a liability on the consolidated balance sheet. The dollar amounts of the securities underlying the agreements remained an asset of the Company.

Other lines-of-credit

December 31, 2013 and 2012, the Company had $33 million in available unsecured federal funds lines with correspondent banks, which could be drawn upon, as needed. There were no amounts outstanding at December 31, 2013 or 2012.

F-36

Hyde Park Bancorp, MHC and Subsidiary

Notes to Consolidated Financial Statements (Continued)

9.	LONG-TERM DEBT

Long-term debt consist of the following FHLBB advances:


	December 31, 2013
			Weighted Average Rate

	Amount
	(Dollars in thousands)
Fixed-rate advances maturing:
2014	$	10,000		1.40	%
2016		10,000		2.30
2017		15,000		2.00
2018		10,000		3.20


	$	45,000		2.20	%

See Note 8 - “Federal Home Loan Bank of Boston advances” for collateral requirements.

10.

INCOME TAXES

Allocation of federal and state income taxes between current and deferred portions is as follows:


	Years Ended December 31,
	2013			2012			2011
				(In thousands)
Current tax provision:
Federal	$	960		$	3,552		$	2,248
State		172			249			232

		1,132			3,801			2,480

Deferred tax (benefit) provision:
Federal		(1,609	)		(405	)		(7	)
State		(502	)		(241	)		57

		(2,111	)		(646	)		50
Change in valuation reserve		695			(43	)		—

		(1,416	)		(689	)		50


(Benefit) provision for income taxes	$	(284	)	$	3,112		$	2,530

F-37

Hyde Park Bancorp, MHC and Subsidiary

Notes to Consolidated Financial Statements (Continued)

INCOME TAXES (continued)

The reasons for the differences between the statutory federal income tax provision and the actual tax (benefit) provision are summarized as follows:


	Years Ended December 31,
	2013			2012			2011
	(Dollars in thousands)

Statutory federal tax provision at 34%	$	809		$	3,728		$	3,431
Increase (decrease) resulting from:
State taxes, net of federal tax benefit		(218	)		5			191
Dividends received deduction		(134	)		(116	)		(162	)
Tax-exempt bank-owned life insurance		(984	)		(382	)		(584	)
Tax-exempt interest		(224	)		(12	)		(36	)
Change in valuation reserve		695			(43	)		—
Utilization of contribution carryover		—			(140	)		(116	)
Other, net		(228	)		72			(194	)


Tax provision	$	(284	)	$	3,112		$	2,530


Effective tax rates		(11.9	)%		28.4	%		25.1	%

The components of the net deferred tax asset (liability) are as follows:


	December 31,
	2013			2012
	(In thousands)
Deferred tax liabilities:
Federal	$	(1,429	)	$	(5,690	)
State		(138	)		(757	)

		(1,567	)		(6,447	)

Deferred tax assets:
Federal		4,400			3,088
State		1,370			871

		5,770			3,959
Valuation reserve		(1,372	)		(677	)

		4,398			3,282


Net deferred tax asset (liability)	$	2,831		$	(3,165	)

F-38

Hyde Park Bancorp, MHC and Subsidiary

Notes to Consolidated Financial Statements (Continued)

INCOME TAXES (continued)

The tax effects of each item that give rise to deferred tax assets (liabilities) are as follows:


	December 31,
	2013			2012
	(In thousands)
Deferred tax assets:
Depreciation and amortization	$	110		$	224
Employee benefit plans		891			300
Allowance for loan losses		3,863			2,217
Contribution carryover		677			547
Net unrealized losses on defined benefit pension plan		—			532
Other		81			69
Valuation reserve		(1,372	)		(677	)
Deferred tax liabilities:
Net unrealized gains on defined benefit pension plan		(321	)		—
Deferred loan origination costs		(243	)		(89	)
Net unrealized gain on securities available for sale		(855	)		(6,288	)


Net deferred tax asset (liability)	$	2,831		$	(3,165	)

A summary of the change in the net deferred tax asset (liability) is as follows:


	Years Ended December 31,
	2013			2012			2011
	(In thousands)
Balance at beginning of year	$	(3,165	)	$	(518	)	$	(4,167	)
Deferred tax benefit (provision)		1,416			689			(50	)
Tax effect of changes in accumulated other comprehensive income		4,580			(3,336	)		3,699


Balance at end of year	$	2,831		$	(3,165	)	$	(518	)

At December 31, 2013, management maintained a valuation reserve in the amount of $1,372,000 compared with $677,000 and $720,000 at December 31, 2012 and 2011, respectively, due to the uncertainty regarding the realization of deferred tax assets relating to the charitable contribution carryover and state income taxes.

F-39

Hyde Park Bancorp, MHC and Subsidiary

Notes to Consolidated Financial Statements (Continued)

INCOME TAXES (concluded)

The federal income tax reserve for loan losses at the Company’s base year amounted to $1,259,000. If any portion of the reserve is used for purposes other than to absorb loan losses, approximately 150% of the amount actually used (limited to the amount of the reserve) would be subject to taxation in the year in which used. As the Company intends to use the reserve to only absorb loan losses, a deferred income tax liability of $503,000 has not been provided.

The Company’s income tax returns are subject to review and examination by federal and state taxing authorities. The Company is currently open to audit under the applicable statutes of limitations by the Internal Revenue Service and state taxing authorities for the years ended December 31, 2010 through 2013.

11.

EQUITY

Minimum regulatory capital requirements

The Company (on a consolidated basis) 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 consolidated 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 the their assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Prompt corrective action provisions are not applicable to bank holding companies.

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios of total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital to average assets (as defined). Management believes, as of December 31, 2013 and 2012, that the Company and the Bank met all capital adequacy requirements to which they are subject.

As of December 31, 2013, 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 an institution must maintain minimum total risk-based, Tier 1 risk-based, and Tier 1 leverage ratios as set forth in the following table. There are no conditions or events since that notification that management believes have changed the Bank’s category.

F-40

Hyde Park Bancorp, MHC and Subsidiary

Notes to Consolidated Financial Statements (Continued)

EQUITY (continued)

Minimum regulatory capital requirements (concluded)

The Bank’s and the Company’s actual and minimum required capital amounts and ratios as of December 31, 2013 and 2012 are presented below.


	Actual					Minimum Capital Requirement					Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in thousands)
Hyde Park Bancorp, MHC:

December 31, 2013
Total capital (to risk weighted assets)	$	178,090		19.8	%	$	71,870		8.0	%		N/A		N/A
Tier 1 capital (to risk weighted assets)		166,316		18.5			35,935		4.0			N/A		N/A
Tier 1 capital (to average assets)		166,316		13.2			50,541		4.0			N/A		N/A

December 31, 2012
Total capital (to risk weighted assets)	$	173,991		21.7	%	$	64,067		8.0	%		N/A		N/A
Tier 1 capital (to risk weighted assets)		166,933		20.8			32,034		4.0			N/A		N/A
Tier 1 capital (to average assets)		166,933		14.4			46,417		4.0			N/A		N/A

Blue Hills Bank:

December 31, 2013
Total capital (to risk weighted assets)	$	148,872		16.6	%	$	71,864		8.0	%	$	89,831		10.0	%
Tier 1 capital (to risk weighted assets)		137,099		15.3			35,932		4.0			53,898		6.0
Tier 1 capital (to average assets)		137,099		11.1			49,370		4.0			61,712		5.0

December 31, 2012
Total capital (to risk weighted assets)	$	144,218		18.6	%	$	62,050		8.0	%	$	77,562		10.0	%
Tier 1 capital (to risk weighted assets)		137,160		17.7			31,025		4.0			46,537		6.0
Tier 1 capital (to average assets)		137,160		12.2			44,959		4.0			56,199		5.0

F-41

Hyde Park Bancorp, MHC and Subsidiary

Notes to Consolidated Financial Statements (Continued)

EQUITY (concluded)

Preferred stock

On September 22, 2011, the Subsidiary issued and sold 18,724 shares of senior non-cumulative perpetual preferred stock, Series A (“Series A Preferred”), with a liquidation value of $1,000 per share. The Subsidiary sold the Series A Preferred to the U.S. Treasury as part of the Small Business Lending Fund Program (“SBLF”) for an aggregate purchase price of $18,724,000.

The Series A Preferred has no maturity date and is ranked senior to the Subsidiary’s common stock with respect to the payment of dividends, distributions and amounts payable upon liquidation, dissolution and winding up of the affairs of the Subsidiary. Non-cumulative dividends on the Series A Preferred accrue at an annual rate of between 1% and 5% per year for the first four and one-half years and at an annual rate of 9% thereafter. The variable rate is determined based upon changes in the amount of the Subsidiary’s “Qualified Small Business Lending” as compared to a baseline level. At December 31, 2013 and 2012, as a result of the Subsidiary’s small business lending activity, the dividend rate was 4.48% and 4.88%, respectively. The dividend rate of 4.48% was locked in as of September 30, 2013 and will not change going forward. Dividends are payable quarterly in arrears on January 1, April 1, July 1 and October 1 of each year. Under the terms of the Subsidiary’s SBLF agreement with the U.S. Treasury, the Subsidiary may redeem the Series A Preferred in whole or in part at any time, subject to the approval of the FDIC.

The Series A Preferred is non-voting. However, if dividends on the Series A Preferred are not paid in full for five (5) dividend periods, whether or not consecutive, the Series A Preferred will have the right to invite a non-voting observer to attend all meetings of the Subsidiary’s Board of Directors. The right will end when full dividends have been paid for four (4) consecutive periods.

F-42

Hyde Park Bancorp, MHC and Subsidiary

Notes to Consolidated Financial Statements (Continued)

12.

EMPLOYEE BENEFIT PLANS

Pension plan

The Company has historically provided basic and supplemental pension benefits for eligible employees through the Savings Banks Employees Retirement Association’s (“SBERA”) Pension Plan (the “Plan”). Each employee reaching the age of 21 and having completed at least 1,000 hours of service in any one twelve-month period, beginning with such employee’s date of employment were automatically enrolled in the Plan. The Plan was frozen to new participants on December 15, 2013. All participants are fully vested after three years of employment. Information pertaining to the activity in the Plan is as follows:


	Years Ended December 31,
	2013			2012			2011
	(In thousands)
Change in plan assets:
Fair value of plan assets at beginning of year	$	9,331		$	7,419		$	6,337
Actual return on plan assets		1,513			847			10
Employer contribution		—			1,200			1,500
Benefits paid		(1,309	)		(135	)		(428	)

		9,535			9,331			7,419


Change in benefit obligation:
Benefit obligation at beginning of year		10,818			10,491			9,976
Service cost		708			453			531
Interest cost		423			453			549
Actuarial gain		(1,353	)		(444	)		(137	)
Benefits paid		(1,309	)		(135	)		(428	)

Benefit obligation at end of year		9,287			10,818			10,491


Funded status and prepaid expense (accrued liability) at end of year	$	248		$	(1,487	)	$	(3,072	)


Accumulated benefit obligation at end of year	$	7,507		$	8,679		$	7,907

The assumptions used to determine the benefit obligation are as follows:


	December 31,
	2013			2012

Discount rate		5.00	%		4.00	%
Rate of compensation increase		3.00			3.00

F-43

Hyde Park Bancorp, MHC and Subsidiary

Notes to Consolidated Financial Statements (Continued)

EMPLOYEE BENEFIT PLANS (continued)

Pension plan (continued)

The components of net periodic pension cost are as follows:


	Years Ended December 31,
	2013			2012			2011
	(In thousands)

Service cost	$	708		$	453		$	531
Interest cost		423			453			549
Expected return on plan assets		(728	)		(560	)		(507	)
Amortization of net actuarial loss		104			117			91
Settlement gain		(107	)		—			—


Net periodic pension cost	$	400		$	463		$	664

The assumptions used to determine net periodic pension cost are as follows:


	Years Ended December 31,
	2013			2012			2011

Discount rate		4.00	%		4.50	%		5.50	%
Expected long-term rate of return on plan assets		8.00			8.00			8.00
Rate of compensation increase		3.00			3.00			5.50

The Company has selected its assumption with respect to the expected long-term rate of return based on prevailing yields on high quality fixed income investments increased by a premium for equity return expectations.

In 2012, the Company, with the guidance of its consulting actuaries, changed the assumptions for termination and retirement rates based on historical analysis of SBERA plan participants. The termination rate assumption was increased to reflect a higher level of terminations. The assumption that all participants retire at age 65 was changed to reflect varying retirement dates between age bands 55 to 70. The revision to these assumptions is a change in estimate that decreased the pension benefit obligation and resulted in an actuarial gain in 2012 in the amount of $1,694,000, which was substantially offset by the decline in the discount rate.

SBERA offers a common and collective trust as the underlying investment structure for pension plans participating in SBERA. The target allocation mix for the common and collective trust portfolio calls for an equity-based investment range from 40% to 64% of total portfolio assets. The remainder of the portfolio is allocated to fixed income from

F-44

Hyde Park Bancorp, MHC and Subsidiary

Notes to Consolidated Financial Statements (Continued)

EMPLOYEE BENEFIT PLANS (continued)

Pension plan (continued)

15% to 25% and other investments including global asset allocation and hedge funds from 20% to 36%. The Trustees of SBERA, through the Investment Committee, select investment managers for the common and collective trust portfolio. A professional investment advisory firm is retained by the Investment Committee to provide allocation analysis, performance measurement and to assist with manager searches. The overall investment objective is to diversify equity investments across a spectrum of investment types and styles.

The fair value of major categories of the Company’s pension plan assets are summarized below:


	Level 1		Level 2		Level 3		Total Fair Value
	(In thousands)
December 31, 2013

Collective funds	$	252	$	4,790	$	—	$	5,042
Equity securities		2,465		—		—		2,465
Mutual funds		1,130		123		—		1,253
Hedge funds		—		—		666		666
Short-term investments		73		36		—		109


	$	3,920	$	4,949	$	666	$	9,535


December 31, 2012

Collective funds	$	298	$	4,602	$	—	$	4,900
Equity securities		2,293		—		—		2,293
Mutual funds		1,201		110		—		1,311
Hedge funds		—		—		658		658
Short-term investments		24		145		—		169


	$	3,816	$	4,857	$	658	$	9,331

The fair value hierarchy above was received from SBERA, the plan administrator. The Plan assets measured at fair value in Level 1 are based on quoted market prices in an active exchange market. Plan assets measured at fair value in Level 2 are based on pricing models that consider standard input factors such as observable market data, benchmark yields, interest rate volatilities, broker/dealer quotes, credit spreads and new issue data. Plan assets measured at fair value in Level 3 are based on unobservable inputs, which include the SBERA’s assumptions and the best information available under the circumstance.

F-45

Hyde Park Bancorp, MHC and Subsidiary

Notes to Consolidated Financial Statements (Continued)

EMPLOYEE BENEFIT PLANS (continued)

Pension plan (concluded)

The table below presents, for the years ended December 31, 2013 and 2012, the changes in Plan assets that are measured in Level 3 at fair value on a recurring basis:


	Hedge Funds
	(In thousands)

Balance as of December 31, 2011	$	551
Purchases		85
Total unrealized gains		22

Balance as of December 31, 2012		658
Purchases		1
Total unrealized gains		7


Balance as of December 31, 2013	$	666

The Company expects to contribute $349,000 to its pension plan during the year ending December 31, 2014.

Estimated future benefit payments, which reflect expected future service, as appropriate, assuming employees retire at age 65 and take normal distribution payments, are as follows:


Year Ending December 31,	Amount
	(In thousands)

2014	$	904
2015		400
2016		471
2017		460
2018		515
2019-2023		2,673

F-46

Hyde Park Bancorp, MHC and Subsidiary

Notes to Consolidated Financial Statements (Continued)

EMPLOYEE BENEFIT PLANS (continued)

401(k) plan

The Company has a 401(k) Plan whereby each employee having completed at least three months of service beginning with their date of employment, automatically becomes a participant in the 401(k) Plan. Employees may contribute a portion of their compensation subject to certain limits based on Federal tax laws. Effective December 15, 2013, the Company enhanced its 401(k) Plan to include a 3% guaranteed non-elective contribution and a 2% elective contribution based on the financial performance of the Company beginning in 2014.

F-47

Hyde Park Bancorp, MHC and Subsidiary

Notes to Consolidated Financial Statements (Continued)

EMPLOYEE BENEFIT PLANS (continued)

Bank-owned life insurance

Bank-owned life insurance policies are reflected on the consolidated balance sheets at cash surrender value. Changes in the net cash surrender value of the policies, as well as insurance proceeds received in excess of cash surrender value, are reflected in noninterest income on the consolidated statements of net income and are generally not subject to income taxes. The Company reviews the financial strength of the insurance carriers prior to the purchase of life insurance policies and no less than annually thereafter. A life insurance policy with any individual carrier is limited to 15% of tier one capital and the total cash surrender value of life insurance policies is limited to 25% of tier one capital.

Supplemental executive retirement plans

The Company has entered into agreements with various executives and Board members which provide for a fixed dollar amount to be contributed each year to the participant’s account. All benefits under these agreements become fully vested after five years of service, however during 2013 these agreements were terminated and all vesting was accelerated. No further awards will be granted under these agreements. At December 31, 2013 and 2012, the Company’s expected benefit obligation included in accrued expenses and other liabilities in the consolidated balance sheets under these agreements amounted to $989,000 and $627,000, respectively. Expenses associated with these plans amounted to $873,000, $380,000 and $277,000 for the years ended December 31, 2013, 2012 and 2011, respectively.

Phantom stock plan

The Company has entered into Phantom Stock Plan agreements with certain management and other employees to reward such participants for their contributions to the continued success of the Company and to encourage them to remain employees. Under the agreements, participants are entitled to receive a lump sum payment on the third anniversary date of the award grant, or upon 100% vesting which could occur earlier in the event of a change in control or upon the participant’s retirement, death or disability or certain other limited circumstances.

The benefit payable to participants is based on the number of phantom stock shares the participant has been awarded multiplied by the book value per share, as defined, on the third anniversary date of the award, or such other date as 100% vesting has occurred. During 2013 this plan was terminated and all vesting was accelerated. Expense related to the plan during the year ended December 31, 2013 and 2012 amounted to $1,598,000 and $173,000, respectively. No awards were granted prior to December 31, 2011.

F-48

Hyde Park Bancorp, MHC and Subsidiary

Notes to Consolidated Financial Statements (Continued)

EMPLOYEE BENEFIT PLANS (concluded)

Short-term incentive compensation

All employees meeting specified service requirements are eligible to participate in the discretionary Short-term Incentive Compensation Plan. The purpose of the plan is to motivate and reward employees for achieving strategic objectives through a goals program. It is essential that the achievement of goals is done so in a manner that is consistent with the Company’s principles and values. The Company expensed $1,553,000, $1,275,000 and $850,000 for achievement of the 2013, 2012 and 2011 goals, respectively.

13.

COMMITMENTS AND CONTINGENCIES

In the normal course of business, there are outstanding commitments and contingencies which are not reflected in the accompanying consolidated financial statements.

Loan commitments

The Company is a 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 extend credit, which involve elements of credit and interest rate risk in excess of the amount recognized in the accompanying consolidated balance sheets. The contract amount of these instruments reflects the extent of involvement the Company has in these particular classes of financial instruments. The Company’s exposure to credit loss is represented by the contractual amount of the instruments. The Company uses the same credit policies in making commitments as it does for on-balance sheet instruments.

Financial instruments whose contract amounts represent credit risk consist of:


	December 31,
	2013		2012
	(In thousands)

Commitments to originate loans	$	28,073	$	23,934
Letters of credit		7,147		14,196
Unused lines-of-credit:
Commercial		50,046		14,196
Home equity		13,178		9,585
Consumer		11,136		10,758
Undisbursed construction loans		21,655		34,102

F-49

Hyde Park Bancorp, MHC and Subsidiary

Notes to Consolidated Financial Statements (Continued)

COMMITMENTS AND CONTINGENCIES (continued)

Loan commitments (concluded)

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments and unadvanced funds on lines-of-credit generally have fixed expiration dates and may expire without being drawn upon. Therefore, the total commitment amount does not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. These financial instruments are primarily secured by mortgage liens on real estate.

Operating lease commitments

Pursuant to the terms of noncancelable lease agreements in effect at December 31, 2013, pertaining to premises, future minimum rent commitments are as follows:


Year Ending December 31,	Amount
	(In thousands)

2014	$	1,062
2015		1,051
2016		956
2017		373
2018		355
Thereafter		649


	$	4,446

Rent expense for years ended December 31, 2013, 2012 and 2011 amounted to $966,000, $919,000 and $830,000, respectively. Certain leases contain renewal options for up to 30 years. The cost of such options is not included above.

The Company also has lease agreements in place for two new branch locations where rental payments do not commence until construction has started. Annual rent expense on these leases will approximate $325,000 and $72,000, respectively, and the leases have terms of ten and five years, respectively. These amounts are not included in the table above.

Effective January 1, 2014, the Bank entered into an agreement for the naming rights of a Boston waterfront music venue. The agreement spans a ten-year period where the Bank will pay $390,000 during the first year with 5% annual increases in subsequent years.

F-50

Hyde Park Bancorp, MHC and Subsidiary

Notes to Consolidated Financial Statements (Continued)

OTHER COMMITMENTS AND CONTINGENCIES (concluded)

Employment and change in control agreements

The Company has entered into an employment agreement with its President and Chief Executive Officer that generally provides for a specified minimum annual compensation and the continuation of certain benefits currently received. However, such employment may be terminated for cause, as defined, without incurring any continuing obligations. The agreement has an initial term of three years, with automatic one-year extensions on the anniversary date of the agreement. The Company has also entered into agreements with certain members of management which provide for the continuation of base salaries for specified periods of time in the event of involuntary termination without cause and/or termination in the event of a change in control.

Contingencies

The Company is involved in various litigation and other legal claims that arise in the normal course of business. In the opinion of management, these matters will have no material effect on the Company’s consolidated financial statements.

14.

INTEREST RATE SWAP AGREEMENTS

The Company is party to derivative financial instruments in the normal course of business to manage exposure to fluctuations in interest rates and to meet the needs of commercial customers. These financial instruments have been generally limited to loan level interest rate swap agreements, which are entered into with counterparties that meet established credit standards. These transactions involve both credit and market risk. The notional amounts are amounts on which calculations, payments, and the value of the derivatives are based. Notional amounts do not represent direct credit exposures. The fair value of the derivative instruments is reflected on the Company’s balance sheet as other assets and accrued expenses and other liabilities. Changes in the fair value of these agreements are recorded in loan level derivative income in the consolidated statements of net income.

F-51

Hyde Park Bancorp, MHC and Subsidiary

Notes to Consolidated Financial Statements (Continued)

INTEREST RATE SWAP AGREEMENTS (continued)

The Company did not have derivative fair value hedges or derivative cash flow hedges at December 31, 2013 and 2012. The table below presents information about derivative financial instruments not designated as hedging instruments at December 31, 2013 and 2012.


	Derivative Gains				Derivative Losses
	Notional Amount		Value		Notional Amount		Fair Value
	(In thousands)
December 31, 2013

Economic hedge:
Commercial loan level interest rate swap agreements	$	171,747	$	2,482	$	171,747	$	2,379
Other contracts		8,932		5		7,988		14


Total derivatives	$	180,679	$	2,487	$	179,735	$	2,393


December 31, 2012

Economic hedge:
Commercial loan level interest rate swap agreements	$	28,263	$	634	$	28,263	$	624
Other contracts		9,247		23		—		—
Other interest rate swap agreement		10,900		48		—		—


Total derivatives	$	48,410	$	705	$	28,263	$	624

The Company is exposed to credit-related losses in the event of nonperformance by the counterparties to these agreements. The Company controls the credit risk of its financial contracts through credit approvals, limits and monitoring procedures, and does not expect any counterparties to fail their obligations. The Company has minimum collateral posting thresholds with certain of its interest rate swap derivative counterparties.

F-52

Hyde Park Bancorp, MHC and Subsidiary

Notes to Consolidated Financial Statements (Continued)

INTEREST RATE SWAP AGREEMENTS (concluded)

Other contracts represent risk participation agreements on commercial loans related to the economic hedges that have been participated out by the Company. To reduce exposure relating to an early termination event on these interest rate swap agreements, the Company has entered into risk participation agreements with the correspondent institutions to share in any interest rate swap gains or losses incurred as a result of the commercial loan customers’ termination of a loan prior to maturity. The Company records these risk participation agreements at fair value. The other interest rate swap agreement at December 31, 2012 represents one outstanding interest rate swap agreement, which provides for the Company to receive payments at a variable rate, in exchange for making payments at a fixed rate. This agreement was sold during the year ended December 31, 2013.

F-53

Hyde Park Bancorp, MHC and Subsidiary

Notes to Consolidated Financial Statements (Continued)

15.

FAIR VALUE MEASUREMENTS

Determination of fair value

The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument.

Fair value hierarchy

The following methods and assumptions were used by the Company in estimating fair value disclosures for financial instruments:

Cash and cash equivalents : The carrying amounts of cash and due from banks and short-term investments approximate fair value.

Trading assets and securities available for sale : All fair value measurements are obtained from a third-party pricing service and are not adjusted by management. The securities measured at fair value in Level 1 are based on quoted market prices in an active exchange market. These securities include U.S. Treasuries and marketable equity securities. All other securities are measured at fair value in Level 2 based on pricing models that consider standard input factors such as observable market data, benchmark yields, interest rate volatilities, broker/dealer quotes, credit spreads and new issue data.

Federal Home Loan Bank stock : The carrying value of Federal Home Loan Bank stock approximates fair value based on the redemption provisions of the Federal Home Loan Bank.

F-54

Hyde Park Bancorp, MHC and Subsidiary

Notes to Consolidated Financial Statements (Continued)

FAIR VALUE MEASUREMENTS (continued)

Fair value hierarchy (concluded)

Loans : For variable-rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values. Fair values for other types of loans are estimated using discounted cash flow analyses, using market interest rates currently being offered for loans with similar terms to borrowers of similar credit quality. Fair values for non-performing loans are estimated using discounted cash flow analyses or underlying collateral values, where applicable.

Accrued interest receivable : The carrying amount of accrued interest receivable approximates fair value.

Deposits and mortgagors’ escrow accounts : The fair values for non-certificate accounts and mortgagors’ escrow accounts are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts). Fair values for certificate accounts are estimated using a discounted cash flow calculation that applies market interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits.

Borrowings : The fair value of short-term borrowings approximates fair value based on the short-term nature of the instruments. The fair values of long-term debt are estimated using discounted cash flow analyses based on the current incremental borrowing rates in the market for similar types of borrowing arrangements.

Securities sold short : The fair value of the liability for securities sold short is based on pricing models that consider standard input factors, such as observable market data, benchmark yields, interest rate volatilities, broker/dealer quotes, credit spreads and new issue data. The liability is categorized as Level 2 in the fair value hierarchy.

Derivative instruments : The fair values of interest rate swap agreements are based on a valuation model that uses primarily observable inputs, such as benchmark yield curves and interest rates and also include the value associated with counterparty credit risk.

Off-balance sheet instruments : Fair values for off-balance sheet lending commitments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing. The estimated fair value of off-balance sheet financial instruments at December 31, 2013 and 2012, was immaterial since fees charged are not material.

F-55

Hyde Park Bancorp, MHC and Subsidiary

Notes to Consolidated Financial Statements (Continued)

FAIR VALUE MEASUREMENTS (continued)

Assets and liabilities measured at fair value on a recurring basis

Assets and liabilities measured at fair value on a recurring basis are summarized below:


	Level 1		Level 2		Level 3		Total Fair Value
	(In thousands)
December 31, 2013

Assets
Trading assets	$	—	$	750	$	—	$	750
Securities available for sale:
Debt securities		128,202		232,869		—		361,071
Marketable equity securities		80,235		—		—		80,235
Derivative assets		—		2,487		—		2,487


Total assets	$	208,437	$	236,106	$	—	$	444,543


Liabilities
Derivative liabilities	$	—	$	2,393	$	—	$	2,393


December 31, 2012

Assets
Trading assets	$	—	$	32,125	$	—	$	32,125
Securities available for sale:
Debt securities		108,789		297,672		—		406,461
Marketable equity securities		127,324		—		—		127,324
Derivative assets		—		705		—		705


Total assets	$	236,113	$	330,502	$	—	$	566,615


Liabilities
Securities sold short	$	—	$	16,723	$	—	$	16,723
Derivative liabilities		—		624		—		624


Total liabilities	$	—	$	17,347	$	—	$	17,347

F-56

Hyde Park Bancorp, MHC and Subsidiary

Notes to Consolidated Financial Statements (Continued)

FAIR VALUE MEASUREMENTS (continued)

Assets measured at fair value on a non-recurring basis

The Company may also be required, from time to time, to measure certain assets at fair value on a nonrecurring basis in accordance with generally accepted accounting principles. These adjustments to fair value usually result from application of lower-of-cost-or-market accounting or write-downs of individual assets. There were no assets measured at fair value on a non-recurring basis at December 31, 2013. There are no liabilities measured at fair value on a non-recurring basis. The following tables summarize the fair value hierarchy used to determine each adjustment and the carrying value of the related individual assets:


	December 31, 2012						Year Ended December 31, 2012
	Level 1		Level 2		Level 3		Total Losses
	(In thousands)

Impaired loans	$	—	$	—	$	2,015	$	766

Losses applicable to impaired loans are based on the appraised value of the underlying collateral, discounted as necessary due to management’s estimates of changes in market conditions. The losses applicable to impaired loans are not recorded as a direct adjustment to current earnings or comprehensive income, but rather as a component in determining the overall adequacy of the allowance for loan losses. Adjustments to the estimated fair value of impaired loans may result in increases or decreases to the provision for loan losses.

F-57

Hyde Park Bancorp, MHC and Subsidiary

Notes to Consolidated Financial Statements (Continued)

FAIR VALUE MEASUREMENTS (concluded)

Summary of fair values of financial instruments

The estimated fair values, and related carrying amounts, of the Company’s financial instruments are as follows. Certain financial instruments and all nonfinancial instruments are exempt from disclosure requirements. Accordingly, the aggregate fair value amounts presented herein do not represent the underlying fair value of the Company.


	December 31,
	2013										2012
	Carrying Amount		Fair Value								Carrying Amount		Fair Value
	Carrying Amount		Level 1		Level 2		Level 3		Total		Carrying Amount		Fair Value
	(In thousands)
Financial assets:
Cash and cash equivalents	$	40,316	$	40,316	$	—	$	—	$	40,316	$	73,819	$	73,819
Trading assets		750		750		—		—		750		32,125		32,125
Securities available for sale		441,306		208,437		232,869		—		441,306		533,785		533,785
Federal Home Loan Bank stock		10,766		—		—		10,766		10,766		9,669		9,669
Loans, net		765,347		—		—		769,578		769,578		488,207		504,889
Accrued interest receivable		4,290		—		—		4,290		4,290		5,421		5,421

Financial liabilities:
Deposits		915,223		—		—		917,121		917,121		817,877		822,014
Borrowings		215,000		—		216,332		—		216,332		154,424		156,201
Securities sold short		—		—		—		—		—		16,723		16,723
Mortgagors’ escrow accounts		1,760		—		—		1,760		1,760		1,629		1,629

On-balance sheet derivative financial instruments:
Interest rate swap agreements:
Assets		2,482		—		2,482		—		2,482		705		705
Liabilities		2,379		—		2,379		—		2,379		624		624

F-58

Hyde Park Bancorp, MHC and Subsidiary

Notes to Consolidated Financial Statements (Concluded)

16.

SUBSEQUENT EVENT

On January 18, 2014, the Company completed the acquisition of Nantucket Bank, previously a division of Sovereign Bank, N.A. (“Sovereign”). Nantucket Bank will continue to operate under its own name as a division of Blue Hills Bank. The purpose of this acquisition is to assist in the implementation of the Company’s business strategy as it added a strong local market share of deposits and reduced the Company’s dependence on wholesale funding and brokered deposits to fund loan growth. The deposit premium paid to Sovereign was $10.3 million. The goodwill acquired is expected to be fully deductible for tax purposes.

The following is a summary of the estimated fair value of assets acquired and liabilities assumed as of the date of the acquisition:


	Amount
	(In thousands)

Cash and cash equivalents	$	151,587
Loans, net		97,466
Premises and equipment, net		10,762
Goodwill and core deposit intangible		14,917
Other assets		304


Total assets acquired	$	275,036


Deposits	$	274,601
Accrued expense and other liabilities		435


Total liabilities assumed	$	275,036

F-59

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 Blue Hills Bancorp, Inc. or Blue Hills 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 Blue Hills Bancorp, Inc. or Blue Hills Bank since any of the dates as of which information is furnished herein or since the date hereof.

Blue Hills Bancorp, Inc.

(Proposed Holding Company for

Blue Hills Bank)

Up to 24,150,000 Shares of

Common Stock

Par value $0.01 per share

(Subject to Increase to up to 27,772,500 Shares)

PROSPECTUS

K EEFE , B RUYETTE & W OODS

A Stifel Company

, 2014

Until , 2014, 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
*	Registrant’s Legal Fees and Expenses	$	600,000
*	Registrant’s Accounting Fees and Expenses		150,000
*	Marketing Agent Fees (1)		1,592,007
*	Records Management Fees and Expenses		125,000
*	Appraisal Fees and Expenses		135,000
*	Printing, Postage, Mailing and EDGAR Fees		275,000
*	Filing Fees (Nasdaq, FINRA and SEC)		175,266
*	Transfer Agent Fees and Expenses		15,000
*	Business Plan Fees and Expenses		95,500
*	Data Processing Fees and Expenses		75,000
*	Other		55,864

*	Total	$	3,293,637

Estimated

(1)

Blue Hills Bancorp, Inc. has retained Keefe, Bruyette & Woods, A Stifel Company, to assist in the sale of common stock on a best efforts basis in the subscription, community and syndicated offerings. Fees are estimated at the midpoint of the offering range, assuming that all shares are sold in the subscription and community offerings.

Item 14.

Indemnification of Directors and Officers

Articles 10 and 11 of the Articles of Incorporation of Blue Hills 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, including, without limitation, Section 18(k) of the Federal Deposit Insurance Act and the regulations promulgated thereunder.

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 Hyde Park Bancorp, Inc., Hyde Park Bancorp, MHC, Blue Hills Bank and Keefe, Bruyette & Woods, Inc.

1.2		Form of Agency Agreement between Blue Hills Bank, Blue Hills Bancorp, Inc., and Keefe, Bruyette & Woods, Inc.

2		Plan of Conversion

3.1		Articles of Incorporation of Blue Hills Bancorp, Inc.

3.2		Bylaws of Blue Hills Bancorp, Inc.

4		Form of Common Stock Certificate of Blue Hills Bancorp, Inc.

5		Opinion of Luse Gorman Pomerenk & Schick, P.C. regarding legality of securities being registered

8.1		Form of Federal Tax Opinion of Luse Gorman Pomerenk & Schick, P.C.

8.2		Form of State Tax Opinion of Wolf & Company, P.C.

10.1		Amended and Restated Employment Agreement between Hyde Park Bancorp, Inc., Hyde Park Bancorp, MHC, Blue Hills Bank and William M. Parent ⁺

10.2		Form of Two-Year Change in Control Agreement between Hyde Park Bancorp, Inc., Hyde Park Bancorp, MHC, Blue Hills and certain executive officers ⁺

10.3		Amended and Restated Blue Hills Bank Supplemental Executive Retirement Plan ⁺

10.4		Amended and Restated Blue Hills Bank Director Supplemental Executive Retirement Plan ⁺

10.5		Blue Hills Bank Phantom Stock Plan ⁺

10.6		Blue Hills Bank Amendment One to the Phantom Stock Plan ⁺

10.7		Form of Blue Hills Bank Employee Stock Ownership Plan ⁺

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 RP Financial, LC.

23.3		Consent of Wolf & Company, P.C.

24		Power of Attorney (set forth on signature page)

99.1		Appraisal Agreement between Blue Hills Bank and RP Financial, LC.

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		Letter of RP Financial, LC. with respect to Liquidation Accounts

99.7		Engagement Letter between Hyde Park Bancorp, Inc., Hyde Park Bancorp, MHC, Blue Hills Bank and Keefe, Bruyette & Woods, Inc. regarding records processing services

*	To be filed 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.

+	Management compensation plan or arrangement.

(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.

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Item 17.

Undertakings

The undersigned Registrant hereby undertakes:

(1) To file, during any period in which 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) 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);

(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.

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(5) 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.

(6) 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.

(7) 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.

(8) 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.

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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 Boston, Commonwealth of Massachusetts on March 11, 2014.


BLUE HILLS BANCORP, INC.

By:		/s/ William W. Parent
		William W. Parent
		President and Chief Executive Officer
		(Duly Authorized Representative)

POWER OF ATTORNEY

We, the undersigned directors and officers of Blue Hills Bancorp, Inc. (the “Company”) hereby severally constitute and appoint William W. Parent as our true and lawful attorney and agent, to do any and all things in our names in the capacities indicated below which said William W. Parent 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 William W. Parent 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/ William W. Parent William W. Parent	President, Chief Executive Officer and Director (Principal Executive Officer)	March 11, 2014

/s/ Jim Kivlehan Jim Kivlehan	Executive Vice President and Chief Financial Officer (Principal Accounting and Financial Officer)	March 11, 2014

David J. Houston, Jr.	Chairman of the Board

/s/ Ken D’Amato Ken D’Amato	Director	March 11, 2014

/s/ George E. Clancy George E. Clancy	Director	March 11, 2014

/s/ Brian G. Leary Brian G. Leary	Director	March 11, 2014

Peter J. Manning	Director

Thomas M. Menino	Director



/s/ Karen B. O’Connell Karen B. O’Connell	Director	March 11, 2014

Ronald K. Perry	Director

/s/ David Powers David Powers	Director	March 11, 2014

/s/ Janice L. Shields Janice L. Shields	Director	March 11, 2014

/s/ Scott Smith Scott Smith	Director	March 11, 2014

As filed with the Securities and Exchange Commission on March 11, 2014

Registration No. 333-

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

EXHIBITS

REGISTRATION STATEMENT

FORM S-1

Blue Hills Bancorp, Inc.

Hyde Park, Massachusetts

EXHIBIT INDEX


1.1		Engagement Letter between Hyde Park Bancorp, Inc., Hyde Park Bancorp, MHC, Blue Hills Bank and Keefe, Bruyette & Woods, Inc.

1.2		Form of Agency Agreement between Blue Hills Bank, Blue Hills Bancorp, Inc., and Keefe, Bruyette & Woods, Inc.

2		Plan of Conversion

3.1		Articles of Incorporation of Blue Hills Bancorp, Inc.

3.2		Bylaws of Blue Hills Bancorp, Inc.

4		Form of Common Stock Certificate of Blue Hills Bancorp, Inc.

5		Opinion of Luse Gorman Pomerenk & Schick, P.C. regarding legality of securities being registered

8.1		Form of Federal Tax Opinion of Luse Gorman Pomerenk & Schick, P.C.

8.2		Form of State Tax Opinion of Wolf & Company, P.C.

10.1		Amended and Restated Employment Agreement between Hyde Park Bancorp, Inc., Hyde Park Bancorp, MHC, Blue Hills Bank and William M. Parent ⁺

10.2		Form of Two-Year Change in Control Agreement between Hyde Park Bancorp, Inc., Hyde Park Bancorp, MHC, Blue Hills and certain executive officers ⁺

10.3		Amended and Restated Blue Hills Bank Supplemental Executive Retirement Plan ⁺

10.4		Amended and Restated Blue Hills Bank Director Supplemental Executive Retirement Plan ⁺

10.5		Blue Hills Bank Phantom Stock Plan ⁺

10.6		Blue Hills Bank Amendment One to the Phantom Stock Plan ⁺

10.7		Form of Blue Hills Bank Employee Stock Ownership Plan ⁺

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 RP Financial, LC.

23.3		Consent of Wolf & Company, P.C.

24		Power of Attorney (set forth on signature page)

99.1		Appraisal Agreement between Blue Hills Bank and RP Financial, LC.

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		Letter of RP Financial, LC. with respect to Liquidation Accounts

99.7		Engagement Letter between Hyde Park Bancorp, Inc., Hyde Park Bancorp, MHC, Blue Hills Bank and Keefe, Bruyette & Woods, Inc. regarding records processing services

*	To be filed 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.

+	Management compensation plan or arrangement.

Exhibit 1.1

LOGO

October 7, 2013

Hyde Park Bancorp, MHC

Hyde Park Bancorp, Inc.

Blue Hills Bank

1196 River Street

Hyde Park, MA 02136


Attention:		William M. Parent
		President and Chief Executive Officer

Ladies and Gentlemen:

This letter confirms the engagement of Keefe, Bruyette & Woods, Inc. (“KBW”) to act as the exclusive financial advisor to Hyde Park Bancorp, MHC (the “MHC”), Hyde Park Bancorp, Inc. (the “Bancorp”), Blue Hills Bank (the “Bank”) and, upon formation, the Holding Company (as defined below) in connection with the MHC’s proposed conversion and reorganization from the current mutual holding company form of organization to a stock holding company form of organization (such conversion and reorganization together, the “Reorganization”) pursuant to the MHC’s Plan of Conversion and Reorganization (the “Plan of Reorganization”). In accordance with the Plan of Reorganization and in order to effect the Reorganization, it is contemplated that (i) the MHC will merge into the Bancorp, (ii) the Bancorp will merge into a new stock holding company (the “Holding Company”), (iii) the Holding Company will offer and sell shares of its common stock (the “Common Stock”) initially to eligible persons in a Subscription Offering, with any remaining unsold shares offered (A) to the general public in a direct community offering (the “Community Offering”) and (B) if necessary, through a syndicate of broker-dealers organized by KBW (a “Syndicated Community Offering”) (the Subscription Offering, the Community Offering and any Syndicated Community Offering are collectively referred to herein as the “Offerings”) and (iv) the Bank will become a wholly-owned subsidiary of the Holding Company. The MHC, the Bancorp, 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.

In addition, KBW will act as Conversion Agent in connection with the Offerings pursuant to the terms of a separate agreement between the Company and KBW.

Keefe, Bruyette & Woods, Inc., 787 7 ^th Avenue, 4 ^th Floor, New York, NY 10019, (212) 887-7777

Hyde Park Bancorp, MHC

Hyde Park Bancorp, Inc.

Blue Hills Bank

October 7, 2013

Page 2 of 8

1.	Advisory/Offering Services

As the Company’s exclusive financial advisor , KBW will provide financial and logistical advice to the Company and will assist the Company’s management, legal counsel, accountants and other advisors in connection with the Reorganization and related issues. We anticipate our services will include the following, each as may be necessary and as the Company may reasonably request:

Provide advice on the financial and securities market implications of the Reorganization and any related corporate documents, including the Company’s Business Plan;

Assist in structuring the Offerings, including developing and assisting in implementing a marketing strategy for the Offerings;

Reviewing all offering documents related to the Offerings, 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;

Assist the Company in analyzing proposals from outside vendors retained in connection with the Offerings, including printers, transfer agents and appraisal firms;

Assist the Company in the drafting and distribution of press releases as required or appropriate in connection with the Offerings;

Meet with the Board of Directors and/or management of the Company to discuss any of the above services; and

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 sole discretion my deem appropriate under the circumstances (the “Due Diligence Review”). The Company agrees it will make available to KBW all information, whether or not publicly available, which KBW reasonably requests (the “Information”), and will permit KBW to discuss with the board of directors and management the operations and prospects of the Company. KBW will treat all Confidential Information (as defined herein) as confidential in accordance with the provisions of Section 9 hereof. The Company recognizes and confirms that KBW (a) will use and rely on and assume the accuracy and completeness of the Information in performing the services contemplated by this agreement without having independently verified or analyzed the accuracy or completeness of same, and (b) does not assume responsibility or liability for the accuracy or completeness of the Information or to conduct any independent verification or any appraisal or physical inspection of properties or assets. The Company acknowledges and agrees that KBW will rely upon Company management as to the reasonableness and achievability of any financial and operating forecasts and projections provided to KBW, and that KBW will assume, at the Company’s direction, that all financial forecasts and projections have been reasonably prepared by Company management on a basis reflecting the best then currently available estimates and judgments of management as to the expected future financial performance of the Company, and that such forecasts and projections will be realized in the amounts and in the time periods currently estimated by such management.

Hyde Park Bancorp, MHC

Hyde Park Bancorp, Inc.

Blue Hills Bank

October 7, 2013

Page 3 of 8

3.	Regulatory Filings

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 installments of $12,500 on the first day of October, December, March and June. Each such installment of the Management Fee shall be deemed to have been earned in full as of the first day of each such month. Should the Offerings or this agreement be terminated for any reason 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 0.85% shall be paid based on the aggregate purchase price of Common Stock sold in the Subscription Offering and the Community Offering excluding shares purchased by the Company’s officers, directors, or employees (or members of their immediate family) plus any ESOP, tax-qualified or stock based compensation plans (except IRA’s) or similar plan created by the Company for some or all of its directors or employees, or any charitable foundation established by the Company (or any shares contributed to such a foundation). The Management Fee described in 4(a), to the extent then already paid, will be credited against the Success Fee. The obligation to pay to KBW the full Success Fee upon completion of the Subscription Offering and any Community Offering shall survive any termination of this agreement, including any termination occurring prior to the completion of such Offerings.

(c)

Syndicated Community Offering : If any shares of the Common Stock remain unsold after the completion of the Subscription Offering and any Community Offering, at the request of the Company, KBW will seek to form a syndicate of registered broker-dealers to assist in a Syndicated Community Offering, 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 Reorganization. In the event of a Syndicated Community Offering, KBW will

Hyde Park Bancorp, MHC

Hyde Park Bancorp, Inc.

Blue Hills Bank

October 7, 2013

Page 4 of 8

be paid, in addition to (and not in lieu of) the Success Fee, a fee not to exceed 5.25% 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 (if any), 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. (The decision to utilize selected broker-dealers will be made by the Company upon consultation with KBW.)

(d)

If, as a result of any resolicitation of subscribers undertaken by the Company, KBW reasonably determines that it is required or requested to provide significant services, KBW will be entitled to additional compensation for such services, which additional compensation will not exceed $50,000.

The payment of compensation by the Company to KBW pursuant to this paragraph 4 is subject to FINRA’s review of such compensation, if such review is required under applicable FINRA rules and regulations.

Expenses

The Company will bear all expenses of the proposed Offerings 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, business plan consultant, transfer agent and registrar, printing, mailing and marketing and syndicate expenses associated with the Offerings; 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.

KBW will also be reimbursed for its reasonable out-of-pocket expenses, not to exceed $25,000 (subject to the provisions of this paragraph), related to the Offerings, including, but not limited to, costs of travel, meals and lodging, photocopying, telephone, facsimile, and couriers. KBW will also be reimbursed for fees and expenses of its counsel not to exceed $100,000 (subject to the provisions of this paragraph). These expense caps assume no unusual circumstances or delays, and no re-solicitation in connection with the Offerings. The Company acknowledges and agrees that, in the event unusual circumstances arise or a delay or resolicitation occurs (including but not limited a delay in the Offerings 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 documents), such expense caps may be increased by additional amounts, not to exceed an additional $10,000 in the case of additional out-of-pocket expenses of KBW and an additional $25,000 in the case of additional fees and expenses of KBW’s legal counsel. The provisions of this paragraph are not intended to apply to or in any way impair or limit the indemnification or contribution provisions contained herein.

Hyde Park Bancorp, MHC

Hyde Park Bancorp, Inc.

Blue Hills Bank

October 7, 2013

Page 5 of 8

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, nor shall any public references to KBW be made by the Company or any of its representatives 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.

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 without the mutual consent of KBW and the Company.

8.	Confidentiality

KBW acknowledges that a portion of the Information provided to it in connection with its engagement hereunder may contain confidential and proprietary business information concerning the Company (such Information, the “Confidential Information”). 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 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 been instructed to be bound by the terms and conditions of this paragraph. As used herein, 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 in violation of this Agreement, (b) was available to KBW on a non-confidential basis prior to its disclosure to KBW or its representatives by the Company, or (c) becomes available to KBW on a non-confidential basis from a person other than the Company who is not known to KBW to be bound not to disclose such information pursuant to a contractual obligation of confidentiality to the Company.

Hyde Park Bancorp, MHC

Hyde Park Bancorp, Inc.

Blue Hills Bank

October 7, 2013

Page 6 of 8

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 consent from KBW in writing.

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 legal fees and expenses) as they are incurred, 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 KBW’s gross negligence, willful misconduct or bad faith of KBW.

Hyde Park Bancorp, MHC

Hyde Park Bancorp, Inc.

Blue Hills Bank

October 7, 2013

Page 7 of 8

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 Reorganization 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 and the Conversion Agent Agreement dated October 7, 2013.

The Company also agrees that neither KBW, nor any of its affiliates nor any officer, director, employee or agent of KBW or any of its affiliates, nor any person controlling KBW or any of its affiliates, shall have any liability to the Company for or in connection with such engagement except for any such liability for losses, claims, damages, liabilities or expenses incurred by the Company which are finally judicially determined to have resulted primarily from KBW’s bad faith, willful misconduct or gross negligence. The foregoing agreement shall be in addition to any rights that KBW, the Company or any Indemnified Party may have at common law or otherwise, including, but not limited to, any right to contribution. For the sole purpose of enforcing and otherwise giving effect to the indemnification and contribution provisions of this agreement, the Company hereby consents to personal jurisdiction and service and venue in any court in which any claim which is subject to this agreement is brought against KBW or any other indemnified party.

The Company agrees that it will not, without the prior written consent of KBW, settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not KBW is an actual or potential party to such claim, action, suit, or proceeding) unless such settlement, compromise or consent includes an unconditional release of KBW from all liability arising out of such claim, action, suit or proceeding.

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 fees and expenses as set forth in Section 5, (iv) the limitations set forth in Section 6, (v) the indemnification and contribution and other provisions set forth in Section 9 and (vi) 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, notwithstanding anything to the contrary that may be contained herein, 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.

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 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 Offerings.

Hyde Park Bancorp, MHC

Hyde Park Bancorp, Inc.

Blue Hills Bank

October 7, 2013

Page 8 of 8

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/ Benjamin Saunders
	Benjamin Saunders Managing Director

HYDE PARK BANCORP, MHC
HYDE PARK BANCORP, INC.
BLUE HILLS BANK

By:	/s/ William M. Parent	Date:	10/7/2013
	William M. Parent
	President and Chief Executive Officer

Exhibit 1.2

Blue Hills Bancorp, Inc.

up to 24,150,000 Shares

(subject to increase up to 27,772,500 shares)

SHARES

($0.01 Par Value)

Subscription Price $10.00 Per Share

AGENCY AGREEMENT

[ ], 2014

Keefe, Bruyette & Woods, Inc.

10 South Wacker Drive

Investment Banking, Suite 3400

Chicago, Illinois 60606

Ladies and Gentlemen:

Blue Hills Bancorp, Inc. (the “Holding Company”), a newly formed Maryland corporation, Hyde Park Bancorp, MHC, a Massachusetts-chartered mutual holding company (the “MHC”), Hyde Park Bancorp, Inc., a Massachusetts corporation (the “Mid-Tier”), and Blue Hills Bank, a Massachusetts-chartered stock savings bank (the “Bank” and together with the Holding Company, the MHC and the Mid-Tier, the “Blue Hills Parties”), hereby confirm their agreement with Keefe, Bruyette & Woods, Inc. (the “Agent”) as follows:

Section 1. The Offering . The MHC, in accordance with the plan of conversion and reorganization as adopted by the Boards of Directors of each of the Blue Hills Parties (the “Plan”), intends to convert from the current mutual holding company form of organization to a stock holding company form of organization (the “Conversion”). Pursuant to the Plan, the Holding Company will offer and sell up to 24,150,000 shares (subject to increase up to 27,772,500 shares) of its common stock, $0.01 par value per share (the “Shares”), in a subscription offering (the “Subscription Offering”) to (1) depositors of the Bank with Qualifying Deposits (as defined in the Plan) as of February 28, 2013 (“Eligible Account Holders”), (2) the Bank’s tax-qualified employee benefit plans, including the employee stock ownership plan established by the Bank (the “ESOP”), and (3) employees, officers, directors, trustees and corporators of the Bank, the Mid-Tier and the MHC who do not have a higher priority to purchase stock. Subject to the prior subscription rights of the above-listed parties, the Holding Company may offer for sale in a direct community offering (the “Community Offering” and when referred to together with or subsequent to the Subscription Offering, the “Subscription and Community Offering”) the Shares not subscribed for or ordered in the Subscription Offering to members of the general public to whom a copy of the Prospectus (as hereinafter defined) is delivered with a preference given first to natural persons and trusts of natural persons residing in the Massachusetts counties of Norfolk, Suffolk and Nantucket, and thereafter to cover orders of other members of the general public. It is anticipated that Shares not subscribed for in the Subscription and Community Offering may be offered to certain members of the general public on a best efforts basis through a selected dealers agreement (the “Syndicated Community Offering”) or to certain members of the general public in a firm commitment underwritten offering (the “Underwritten Offering”) with the Agent acting as sole book-running manager (the Underwritten Offering, Subscription Offering, Community Offering and Syndicated Community Offering are collectively referred to as the “Offering”). It is acknowledged that the purchase of Shares in the Offering is subject to the maximum and minimum purchase limitations as described in the Plan and that the Holding Company may reject, in whole or in part, any order received in the Community Offering or Syndicated Community Offering.

The Holding Company has filed with the Securities and Exchange Commission (the “Commission”) a registration statement on Form S-1 (File No. 333-[ ]) (the “Registration Statement”), containing a prospectus relating to the Subscription and Community Offering, for the registration of the Shares under the Securities Act of 1933 (the “1933 Act”), and has filed such amendments thereof and such amended prospectuses as may have been required to the date hereof. The term “Registration Statement” shall include all financial schedules and exhibits thereto, as amended, including post-effective amendments. The prospectus, as amended, on file with the Commission at the time the Registration Statement initially became effective is hereinafter called the “Prospectus,” except that if any prospectus is filed by the Holding Company pursuant to Rule 424(b) or (c) of the rules and regulations of the Commission under the 1933 Act (the “1933 Act Regulations”) differing from the prospectus on file at the time the Registration Statement initially became effective, the term “Prospectus” shall refer to the prospectus filed pursuant to Rule 424(b) or (c) from and after the time said prospectus is filed with the Commission.

In accordance with the Massachusetts General Laws and the rules and regulations governing the conversion of Massachusetts mutual holding companies to stock holding companies (including, without limitation, Chapter 167H of the Massachusetts General Laws and Chapter 33, Subpart D of the Code of Massachusetts Regulations), as from time to time amended or supplemented (the “Massachusetts Regulations”), the MHC has filed the Plan with the Massachusetts Division of Banks (the “Division”) and has filed such amendments thereto and supplementary materials as may have been required to the date hereof (such application, as amended to date, if applicable, and as subsequently amended, if applicable, is hereinafter referred to as the “Massachusetts Conversion Application”), including copies of the MHC’s Notice and Information Statement for a Special Meeting of its Corporators relating to the Conversion (the “Information Statement”), the Appraisal, and the Prospectus.

In addition, the Holding Company has filed with the Board of Governors of the Federal Reserve System (the “FRB”) an Application to Become a Bank Holding Company and/or Acquire an Additional Bank or Bank Holding Company on Form FR Y-3 (the “Holding Company Application”) to become a bank holding company under Section 3 of the Bank Holding Company Act of 1956, as amended (the “BHCA”), as in effect at the time and the FRB has approved the Holding Company Application. The Massachusetts Conversion Application and the Holding Company Application are collectively referred to herein as the “Applications”.

Section 2. Retention of Agent; Compensation; Sale and Delivery of the Shares . Subject to the terms and conditions herein set forth, the Blue Hills Parties hereby appoint the Agent as their exclusive financial advisor and conversion agent (i) to utilize its best efforts to solicit subscriptions for Shares and to advise and assist the Holding Company and the Bank with respect to the sale of the Shares in the Offering and (ii) to participate in the Offering in the areas of market making and in syndicate formation or to act as sole book-running manager in the Underwritten Offering (if necessary).

On the basis of the representations, warranties, and agreements herein contained, but subject to the terms and conditions herein set forth, the Agent accepts such appointment and agrees to consult with and advise the Blue Hills Parties as to the matters set forth in the letter agreements, dated October 7, 2013, among the MHC, the Mid-Tier, the Bank and the Agent (a copy of each of which is attached hereto as Exhibit A and Exhibit B ). It is acknowledged by the Blue Hills Parties that the Agent shall not be required to purchase any Shares in the Subscription Offering, Community Offering, and Syndicated Offering or be obligated to take any action which is inconsistent with all applicable laws, regulations, decisions or orders.

The obligations of the Agent pursuant to this Agreement shall terminate upon termination of the Offering, but in no event later than 45 days after the completion of the Subscription Offering, unless extended (the “End Date”). All fees or expenses due to the Agent but unpaid will be payable to the Agent in next day funds at the earlier of the Closing Date (as hereinafter defined) or the End Date. In the event the Offering is extended beyond the End Date, the Blue Hills Parties and the Agent may agree to renew this Agreement under mutually acceptable terms.

In the event the Holding Company is unable to sell a minimum of 17,850,000 Shares within the period herein provided, this Agreement shall terminate and the Holding Company shall refund to any persons who have subscribed for any of the Shares the full amount which it may have received from them plus accrued interest, as set forth in the Prospectus; and none of the parties to this Agreement shall have any obligation to the other parties hereunder, except as set forth in this Section 2 and in Sections 7, 9 and 10 hereof. In the event the Offering is terminated for any reason not attributable to the action or inaction of the Agent, the Agent shall be paid the fees due to the date of such termination pursuant to subparagraphs (a) and (e) below.

The Agent shall receive the following compensation for its services hereunder:

(a) A management fee of $50,000 payable in four installments of $12,500 on the first day of October 2013, December 2013, March 2014 and June 2014. 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 Agent, Agent shall have earned and be entitled to be paid fees accruing through the stage at which point the termination occurred.

(b) A Success Fee of 0.85% shall be paid based on the aggregate purchase price of the Shares sold in the Subscription Offering excluding shares purchased by the Blue Hills Parties’ officers, directors, or employees (or members of their immediate family) plus any ESOP, tax-qualified or stock based compensation plans or similar plan created by the Blue Hills Parties for some or all of their directors or employees or by the foundation (or any shares contributed to the foundation). In addition, a Success Fee of 0.85% shall be paid on the aggregate purchase price of Shares sold in the Community Offering. The Management Fee described in Section 2(a) above will be credited against the Success Fee paid pursuant to this paragraph.

(c) If any of the Shares remain available after the Subscription Offering and Community Offering, at the request of the Holding Company, Agent will seek to form a syndicate of registered broker-dealers to assist in the sale of Shares on a best efforts basis, subject to the terms and conditions set forth in a selected dealers agreement to be entered into between the Holding Company and Agent. Agent will endeavor to distribute the Shares among dealers in a fashion which best meets the distribution objectives of the Holding Company and the Plan. Agent will be paid a fee not to exceed 5.25% of the aggregate Purchase Price of the Shares sold in the Syndicated Community Offering. From this fee, Agent 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 Agent shall be transmitted by Agent to such broker/dealer. The decision to utilize selected broker-dealers will be made by Agent upon consultation with the Holding Company.

(d) The Holding Company may engage Agent to offer the Shares to certain members of the general public in the Underwritten Offering with Agent acting as sole book-running manager. In the event that Agent sells Shares in the Underwritten Offering, the underwriting discount will equal 5.25% of the aggregate Purchase Price of the Shares sold in the Underwritten Offering to Agent and to any other broker-dealer participating as an underwriter in the Underwritten Offering.

(e) If, as a result of any resolicitation of subscribers undertaken by the Holding Company, the Agent reasonably determines that it is required or requested to provide significant services, the Agent will be entitled to additional compensation for such services, which additional compensation will not exceed $50,000.

(f) The Holding Company shall reimburse the Agent for its reasonable out-of-pocket expenses, including costs of travel, meals and lodging, photocopying, telephone, facsimile and couriers, etc. not to exceed $25,000. In addition, the Holding Company will reimburse the Agent for fees and expenses of its counsel not to exceed $100,000. In the event of unusual circumstances or delays or a re-solicitation in connection with the Offering, including in the event of a material delay in the Offering that 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 Registration Statement, the Agent shall be reimbursed for its additional expenses up to a maximum of $10,000 in the case of additional out-of-pocket expenses of the Agent, and up to an additional $25,000 in the case of additional fees and expenses of the Agent’s counsel. The Holding Company will bear the expenses of the Offering customarily borne by issuers including, without limitation, regulatory filing fees, SEC, Blue Sky and Financial Institution Regulatory Authority (“FINRA”) filing and registration fees; the fees of the Holding Company’s accountants, attorneys, appraiser, transfer agent and registrar, printing, mailing and marketing and syndicate expenses associated with the Conversion and Offering; and the fees set forth under this Section 2.

Conversion Agent Services . The Agent shall also receive a fee of $50,000 for certain conversion agent services set forth in the letter agreement, dated October 7, 2013, among the MHC, the Mid-Tier, the Bank and the Agent (a copy of which is attached hereto as Exhibit B ), $10,000 of which has already been paid to the Agent and is nonrefundable and the balance of which shall be payable to the Agent upon completion of the Offering. The Holding Company will reimburse the Agent, upon request made from time to time, for its reasonable out-of-pocket expenses incurred in connection with its conversion agent services not to exceed $25,000 without the consent of the Blue Hills Parties. However, in the event of unusual circumstances, delays or a re-solicitation in connection with the offering, the total fees paid to the Agent may be increased by an additional amount not to exceed $10,000.

Section 3. Sale and Delivery of Shares . If all conditions precedent to the consummation of the Conversion, including without limitation, the sale of all Shares required by the Plan to be sold, are satisfied, the Holding Company agrees to issue, or have issued, the Shares sold in the Offering and to release for delivery certificates for such Shares on the Closing Date against payment to the Holding Company by any means authorized by the Plan; provided, however, that no funds shall be released to the Holding Company until the conditions specified in Section 8 hereof shall have been complied with to the reasonable satisfaction of the Agent or its counsel. The release of Shares against payment therefor shall be made on a date and at a place acceptable to the Blue Hills Parties and the Agent as set forth in Section 14. Certificates for shares shall be delivered directly to the purchasers in accordance with their directions as provided by the Holding Company to the Holding Company’s registrar and transfer agent. The date upon which the Holding Company shall release or deliver the Shares sold in the Offering, in accordance with the terms herein, is called the “Closing Date.”

Section 4. Representations and Warranties of the Blue Hills Parties . The Blue Hills Parties, jointly and severally, represent and warrant to and agree with the Agent as follows:

(a) The Registration Statement, which was prepared by the Blue Hills Parties and filed with the Commission, has been declared effective by the Commission, no stop order has been issued

with respect thereto and no proceedings therefor have been initiated or, to the knowledge of the Blue Hills Parties, threatened by the Commission. At the time the Registration Statement, including the Prospectus contained therein (including any amendment or supplement), became effective, at the Applicable Time (as defined in Section 4(c) hereof) and at the Closing Date, the Registration Statement complied and will comply in all material respects with the requirements of the 1933 Act and the 1933 Act Regulations and the Registration Statement, including the Prospectus contained therein (including any amendment or supplement thereto), and any information regarding the Blue Hills Parties contained in Sales Information (as such term is defined in Section 9 hereof) authorized by the Blue Hills Parties for use in connection with the Offering, did not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and at the time any Rule 424(b) or (c) Prospectus is filed with the Commission and at the Closing Date referred to in Section 3 hereof, the Prospectus (including any amendment or supplement thereto) and any information regarding the Holding Company contained in Sales Information (as such term is defined in Section 9 hereof) authorized by the Holding Company for use in connection with the Offering contains all statements that are required to be stated therein in accordance with the 1933 Act and the 1933 Act Regulations and does not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that the representations and warranties in this Section 4(a) shall not apply to statements or omissions made in reliance upon and in conformity with written information furnished to the Holding Company by the Agent or its counsel expressly regarding the Agent for use in the Prospectus (the “Agent Information,” which the Blue Hills Parties acknowledge appears only in the first sentence of the second paragraph under the caption “The Conversion; Plan of Distribution – Marketing and Distribution; Compensation” in the Prospectus).

(b) None of the Blue Hills Parties has directly or indirectly distributed or otherwise used and will not directly or indirectly distribute or otherwise use any prospectus, any “free writing prospectus” (as defined in Rule 405 of the 1933 Act Regulations) or other offering material (including, without limitation, content on the Holding Company’s website that may be deemed to be a prospectus, free writing prospectus or other offering material) in connection with the offering and sale of the Shares other than any Permitted Free Writing Prospectus or the Prospectus or other materials permitted by the 1933 Act and the 1933 Act Regulations distributed by the Holding Company and reviewed and approved in advance for distribution by the Agent. The Holding Company has not, directly or indirectly, prepared or used and will not directly or indirectly, prepare or use, any Permitted Free Writing Prospectus except in compliance with the filing and other requirements of Rules 164 and 433 of the 1933 Act Regulations; assuming that such Permitted Free Writing Prospectus is so sent or given after the Registration Statement was filed with the Commission (and after such Permitted Free Writing Prospectus was, if required pursuant to Rule 433(d) under the Act, filed with the Commission), the sending or giving, by the Agent, of any Permitted Free Writing Prospectus will satisfy the provisions of Rules 164 and 433 (without reliance on subsections (b), (c) and (d) for Rule 164); and the Holding Company is not an “ineligible issuer” (as defined in Rule 405 of the 1933 Act Regulations) as of the eligibility determination date for purposes of Rules 164 and 433 of the 1933 Act Regulations with respect to the offering of the Shares or otherwise precluded under Rule 164 from using free writing prospectuses in connection with the offering of the Shares.

(c) As of the Applicable Time (as defined below), neither (i) the Issuer-Represented General Free Writing Prospectus(es) issued at or prior to the Applicable Time and the Statutory Prospectus, all considered together (collectively, the “General Disclosure Package”), nor (ii) any individual Issuer-Represented Limited-Use Free Writing Prospectus, when considered together with the General Disclosure Package, included any untrue statement of a material fact or omitted to state any material fact necessary in order to make the statements therein, in the light of the circumstances under

which they were made, not misleading. The preceding sentence does not apply to statements in or omissions from any Prospectus included in the Registration Statement relating to the offered Shares or any Issuer-Represented Free Writing Prospectus based upon and in conformity with written information furnished to the Holding Company by the Agent specifically for use therein. As used in this paragraph and elsewhere in this Agreement:

1. “Applicable Time” means each and every date when a potential purchaser submitted a subscription or otherwise committed to purchase Shares.

2. “Statutory Prospectus,” as of any time, means the Prospectus relating to the offered Shares that is included in the Registration Statement relating to the offered Shares immediately prior to the Applicable Time, including any document incorporated by reference therein.

3. “Issuer-Represented Free Writing Prospectus” means any “issuer free writing prospectus,” as defined in Rule 433(h) of the 1933 Act Regulations, relating to the offered Shares in the form filed or required to be filed or, if not required to be filed, in the form retained in the Holding Company’s records pursuant to Rule 433(g) under the 1933 Act Regulations. The term does not include any writing exempted from the definition of prospectus pursuant to clause (a) of Section 2(a)(10) of the 1933 Act, without regard to Rule 172 or Rule 173 of the 1933 Act Regulations.

4. “Issuer-Represented General Free Writing Prospectus” means any Issuer-Represented Free Writing Prospectus that is intended for general distribution to prospective investors.

5. “Issuer-Represented Limited-Use Free Writing Prospectus” means any Issuer-Represented Free Writing Prospectus that is not an Issuer-Represented General Free Writing Prospectus. The term Issuer-Represented Limited-Use Free Writing Prospectus also includes any “bona fide electronic road show,” as defined in Rule 433 of the 1933 Act Regulations, that is made available without restriction pursuant to Rule 433(d)(8)(ii) of the 1933 Act Regulations or otherwise, even though not required to be filed with the Commission.

6. “Permitted Free Writing Prospectus” means any free writing prospectus as defined in Rule 405 of the 1933 Act Regulations that is consented to by the Holding Company, the Bank and the Agent.

(d) Each Issuer-Represented Free Writing Prospectus, as of its date of first use and at all subsequent times through the completion of the Offering and sale of the offered Shares or until any earlier date that the Holding Company notified or notifies the Agent (as described in the next sentence), did not, does not and will not include any information that conflicted, conflicts or will conflict with the information contained in the Registration Statement. If at any time following the date of first use of an Issuer-Represented Free Writing Prospectus there occurred or occurs an event or development as a result of which such Issuer-Represented Free Writing Prospectus conflicted or would conflict with the information contained in the Registration Statement relating to the offered Shares or included or would include an untrue statement of a material fact or omitted or would omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances prevailing at that subsequent time, not misleading, the Holding Company has notified or will notify promptly the Agent so that any use of such Issuer-

Represented Free-Writing Prospectus may cease until it is amended or supplemented and the Holding Company has promptly amended or will promptly amend or supplement such Issuer-Represented Free Writing Prospectus to eliminate or correct such conflict, untrue statement or omission. The foregoing two sentences do not apply to statements in or omissions from any Issuer-Represented Free Writing Prospectus based upon and in conformity with written information furnished to the Holding Company by the Agent specifically for use therein.

(e) The Holding Company has filed the Holding Company Application with the FRB and has published notice of such filing and the Holding Company Application is accurate and complete in all material respects. The Holding Company has received written notice from the FRB of its approval of the acquisition of the Bank, such approval remains in full force and effect and no order has been issued by the FRB suspending or revoking such approval and no proceedings therefor have been initiated or, to the knowledge of the Blue Hills Parties, threatened by the FRB or any other applicable regulator. At the date of such approval, the Holding Company Application complied in all material respects with the applicable provisions of the BHCA and the regulations promulgated thereunder, except as the FRB or any other applicable regulator has expressly waived such regulations in writing.

(f) The MHC has filed the Massachusetts Conversion Application with the Division and the Massachusetts Conversion Application is accurate and complete in all material respects. The MHC has received written notice from the Division of its approval of the Conversion, such approval remains in full force and effect and no order has been issued by the Division suspending or revoking such approval and no proceedings therefor have been initiated or, to the knowledge of the Blue Hills Parties, threatened by the Division. At the date of such approval, the Massachusetts Conversion Application complied in all material respects with the applicable provisions of the Massachusetts Regulations, except as the Division or any other applicable regulator has expressly waived such Massachusetts Regulations in writing.

(g) The Blue Hills Parties have filed the Prospectus, the Information Statement and any supplemental sales literature with the Commission, the FRB, the Division and any other applicable regulator. The Prospectus, the Information Statement and all supplemental sales literature, as of the date the Registration Statement became effective and on the Closing Date referred to in Section 3, complied and will comply in all material respects with the applicable requirements of the 1933 Act Regulations, the Massachusetts Regulations and, at or prior to the time of their first use, will have received all required authorizations of the Division and the Commission and any other applicable regulator for use in final form. No approval of any other regulatory or supervisory or other public authority is required in connection with the distribution of the Prospectus, the Information Statement and any supplemental sales literature that has not been obtained and a copy of which has been delivered to the Agent. The Holding Company and the Bank have not distributed any offering material in connection with the Offering except for the Prospectus, the Information Statement and any supplemental sales material that has been filed with the Registration Statement and the Applications and authorized for use by the Commission, the FRB and the Division, or any other applicable regulator. The information contained in the supplemental sales material filed as an exhibit to both the Registration Statement and the Applications does not conflict in any material respects with information contained in the Registration Statement and the Prospectus.

(h) The Plan has been adopted by the Boards of Directors of the Blue Hills Parties, and the offer and sale of the Shares will have been conducted in all material respects in accordance with the Plan, the Massachusetts Regulations (except to the extent waived or otherwise approved by the Division) and all other applicable laws, regulations, decisions and orders, including all terms, conditions, requirements and provisions precedent to the Offering imposed upon the Blue Hills Parties by the Division, the Commission, or any other regulatory authority and in the manner described in the Prospectus. To the best knowledge of the Blue Hills Parties, no person has sought to obtain review of the final action of the Division or any other applicable regulator in approving the Conversion.

(i) The Bank has been duly organized and validly existing as a Massachusetts-chartered stock savings bank and upon completion of the Conversion will continue to be a duly organized and validly existing Massachusetts-chartered savings bank in stock form, in both instances duly authorized to conduct its business and own its property as described in the Registration Statement and the Prospectus; the Bank has obtained all licenses, permits and other governmental authorizations currently required for the conduct of its business, except those that individually or in the aggregate would not have a material adverse effect on the conduct of the business, financial condition, results of operations, affairs or prospects of the Blue Hills Parties, taken as a whole (a “Material Adverse Effect”); all such licenses, permits and governmental authorizations are in full force and effect, and the Bank is in compliance with all laws, rules, regulations and orders applicable to the operation of its business, except where failure to be in compliance would not have a Material Adverse Effect; the Bank is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which its ownership of property or leasing of property or the conduct of its business requires such qualification, unless the failure to be so qualified in one or more of such jurisdictions would not have a Material Adverse Effect. The Bank does not own equity securities or any equity interest in any other business enterprise except as described in the Prospectus or as would not be material to the operations of the Blue Hills Parties, taken as a whole. Following completion of the Conversion and the Offering, the authorized capital stock of the Bank will consist of [ ] shares of common stock, par value $[0.01] per share (the “Bank Common Stock”), of which [ ] shares of Bank Common Stock are issued and outstanding as of the date hereof; the issued and outstanding shares of Bank Common Stock have been duly authorized and validly issued and are fully paid and non-assessable and following completion of the Conversion, will be owned directly by the Holding Company free and clear of any security interest, mortgage, pledge, lien, encumbrances or legal or equitable claim; the terms and provisions of the Bank Common Stock conform to all statements thereto contained in the Prospectus. The Conversion will be effected in all material respects in accordance with all applicable statutes, regulations, decisions and orders; and, except with respect to the filing of certain post-sale, post-Conversion reports, and documents in compliance with the 1933 Act, the Massachusetts Regulations or letters of approval, at the Closing Date, all terms, conditions, requirements and provisions with respect to the Conversion imposed by the Commission, the FRB and the Division or any other applicable regulator, if any, will have been complied with by the Blue Hills Parties in all material respects or appropriate waivers will have been obtained and all applicable notice and waiting periods will have been satisfied, waived or elapsed.

(j) The Holding Company is duly organized, validly existing and in good standing as a corporation under the laws of the State of Maryland with full corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Registration Statement and the Prospectus, and the Holding Company is, and at the Closing Date will be, qualified to do business as a foreign corporation in each jurisdiction in which the conduct of its business requires such qualification, except where the failure to so qualify would not have a Material Adverse Effect. The Holding Company has obtained all licenses, permits and other governmental authorizations currently required for the conduct of its business except those that individually or in the aggregate would not have a Material Adverse Effect; all such licenses, permits and governmental authorizations are in full force and effect, and the Holding Company is in all material respects complying therewith and with all laws, rules, regulations and orders applicable to the operation of its business. There are no outstanding warrants or options to purchase any securities of the Holding Company.

(k) The MHC is duly organized, validly existing and in good standing as a mutual holding company organized under the laws of the Commonwealth of Massachusetts with full corporate power and authority to own and operate its properties and to conduct its business as described in the Registration Statement and the Prospectus and, at the Closing Date, the corporate existence of the MHC will cease to exist. The MHC has obtained all licenses, permits and other governmental authorizations currently required for the conduct of its business except those that individually or in the aggregate would

not have a Material Adverse Effect; all such licenses, permits and governmental authorizations are in full force and effect, and the MHC is in all material respects complying therewith and with all laws, rules, regulations and orders applicable to the operations of its business.

(l) The MHC has no capital stock.

(m) The Mid-Tier is duly organized, validly existing and in good standing as a corporation organized under the laws of the Commonwealth of Massachusetts with full corporate power and authority to own and operate its properties and to conduct its business as described in the Registration Statement and the Prospectus and, at the Closing Date, the corporate existence of the Mid-Tier will cease to exist. The Mid-Tier has obtained all licenses, permits and other governmental authorizations currently required for the conduct of its business except those that individually or in the aggregate would not have a Material Adverse Effect; all such licenses, permits and governmental authorizations are in full force and effect, and the Mid-Tier is in all material respects complying therewith and with all laws, rules, regulations and orders applicable to the operations of its business. Immediately prior to the completion of the Conversion and the Offerings, the authorized capital stock of the Mid-Tier will consist solely of 275,000 shares of common stock, no par value, of which [ ] shares will be issued and outstanding and held by the MHC, and 50,000 shares of preferred stock, no par value, none of which will be issued and outstanding.

(n) Except as described in the Prospectus there are no contractual encumbrances or restrictions or requirements or legal restrictions or requirements required to be described therein, on the ability of any of the Blue Hills Parties, (A) to pay dividends or make any other distributions on its capital stock or to pay any indebtedness owed to another party, (B) to make any loans or advances to, or investments in, another party or (C) to transfer any of its property or assets to another party. Except as described in the Prospectus, there are no restrictions, encumbrances or requirements affecting the payment of dividends or the making of any other distributions on any of the capital stock of the Holding Company.

(o) The Bank has properly administered all accounts for which it acts as a fiduciary, including but not limited to accounts for which it serves as a trustee, agent, custodian, personal representative, guardian, conservator or investment advisor, in accordance with the terms of the governing documents and applicable state and federal law and regulation, except where the failure to do so would not have a Material Adverse Effect. Neither the Bank, nor any of its respective directors, officers or employees has committed any material breach of trust with respect to any such fiduciary account, and the accountings for each such fiduciary account are true and correct in all material respects and accurately reflect the assets of such fiduciary account in all material respects.

(p) The Bank is a member in good standing of the Federal Home Loan Bank of Boston (“FHLBB”). The deposit accounts of the Bank are insured by the FDIC up to the applicable limits, and upon consummation of the Conversion, the liquidation accounts for the benefit of Eligible Account Holders will be duly established in accordance with the requirements of the Massachusetts Regulations. No proceedings for the termination or revocation of such insurance are pending or, to the best knowledge of the Blue Hills Parties, threatened.

(q) The Blue Hills Parties have good and marketable title to all real property and good title to all other assets material to the business of the Blue Hills Parties, taken as a whole, and to those properties and assets described in the Registration Statement and Prospectus as owned by them, free and clear of all liens, charges, encumbrances or restrictions, except such as are described in the Registration Statement and Prospectus or as are not material to the business of the Blue Hills Parties, taken as a whole; and all of the leases and subleases material to the business of the Blue Hills Parties, taken as a whole, under which the Blue Hills Parties hold properties, including those described in the Registration Statement and Prospectus, are in full force and effect.

(r) The Holding Company has received an opinion of its special counsel, Luse Gorman Pomerenk & Schick, P.C. (“Luse Gorman”), with respect to the legality of the Shares to be issued and the federal income tax consequences of the Conversion and the opinion of Wolf & Co., P.C., with respect to the Massachusetts state income tax consequences of the Conversion, copies of which are filed as exhibits to the Registration Statement; all material aspects of such opinions are accurately summarized in the Registration Statement and the Prospectus. The facts upon which such opinions are based are truthful, accurate and complete in all material respects. None of Blue Hills Parties has taken or will take any action inconsistent therewith.

(s) Each of the Blue Hills Parties has all such power, authority, authorizations, approvals and orders as may be required to enter into this Agreement, to carry out the provisions and conditions hereof and to issue and sell the Shares to be sold by the Holding Company as provided herein and as described in the Prospectus, subject to approval or confirmation by the Division or any other applicable regulator of the final Appraisal. The execution, delivery and performance of this Agreement and the consummation of the transactions herein contemplated have been duly and validly authorized by all necessary corporate action on the part of each of the Blue Hills Parties. This Agreement has been validly executed and delivered by each of the Blue Hills Parties and, assuming due execution and delivery by the Agent, is the valid, legal and binding agreement of each of the Blue Hills Parties enforceable in accordance with its terms (except as the enforceability thereof may be limited by bankruptcy, insolvency, moratorium, reorganization or similar laws relating to or affecting the enforcement of creditors’ rights generally or the rights of creditors of bank holding companies, the accounts of whose subsidiaries are insured by the FDIC, or by general equity principles, regardless of whether such enforceability is considered in a proceeding in equity or at law, and except to the extent, if any, that the provisions of Sections 9 and 10 hereof may be unenforceable as against public policy or pursuant to applicable Federal law and the rules and regulations of the FRB).

(t) None of the Blue Hills Parties is in violation of any directive received from the FRB, the Division or the FDIC to make any material change in the method of conducting its business so as to comply in all material respects with all applicable statutes and regulations (including, without limitation, regulations, decisions, directives and orders of the FRB, the Division or the FDIC) and, except as may be set forth in the Registration Statement, the General Disclosure Package and the Prospectus, there is no suit or proceeding or charge or action before or by any court, regulatory authority or governmental agency or body, pending or, to the knowledge of any of the Blue Hills Parties, threatened, which might materially and adversely affect the Offering, or which might result in any Material Adverse Effect.

(u) The consolidated financial statements, schedules and notes related thereto which are included in the General Disclosure Package and the Prospectus fairly present the balance sheet, income statement, statement of changes in equity capital and statement of cash flows of the MHC on a consolidated basis at the respective dates indicated and for the respective periods covered thereby and comply as to form in all material respects with the applicable accounting requirements of the 1933 Act Regulations and Title 12 of the Code of Federal Regulations. Such consolidated financial statements, schedules and notes related thereto have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) consistently applied through the periods involved, present fairly in all material respects the information required to be stated therein and are consistent with the most recent financial statements and other reports filed by the Blue Hills Parties with the Division, the FDIC and the FRB, except that accounting principles employed in such regulatory filings conform to the requirements of the Division, the FDIC and the FRB and not necessarily to GAAP.

The other financial, statistical and pro forma information and related notes included in the Prospectus present fairly the information shown therein on a basis consistent with the audited and unaudited consolidated financial statements of the Blue Hills Parties included in the Prospectus, and as to the pro forma adjustments, the adjustments made therein have been properly applied on the basis described therein.

(v) The Blue Hills Parties carry, or are covered by, insurance in such amounts and covering such risks as is adequate for the conduct of their respective businesses and the value of their respective properties as is customary for companies engaged in a similar industry.

(w) Since the respective dates as of which information is given in the Registration Statement including the Prospectus and except as disclosed in the General Disclosure Package and the Prospectus: (i) there has not been any material adverse change, financial or otherwise, in the condition of the Blue Hills Parties and their subsidiaries, considered as one enterprise, or in the earnings, capital, properties, business or prospects of the Blue Hills Parties and their subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business; (ii) there has not been any material increase in the long-term debt of any of the Blue Hills Parties or in the principal amount of the Blue Hills Parties’ consolidated assets which are classified by any of such entities as impaired, substandard, doubtful or loss or in loans past due 90 days or more or real estate acquired by foreclosure, by deed-in-lieu of foreclosure or deemed in-substance foreclosure or any material decrease in equity capital or total assets of any of the Blue Hills Parties; nor has any of the Blue Hills Parties issued any securities (other than in connection with the incorporation of the Holding Company) or incurred any liability or obligation for borrowing other than in the ordinary course of business; (iii) there have not been any material transactions entered into by the Blue Hills Parties; (iv) there has been no material adverse change in any of the Blue Hills Parties’ relationship with its insurance carriers, including, without limitation, cancellation or other termination of any of the Blue Hills Parties’ fidelity bond or any other type of insurance coverage; (v) there has been no material change in management of any of the Blue Hills Parties; (vi) none of the Blue Hills Parties has sustained any material loss or interference with its respective business or properties from fire, flood, windstorm, earthquake, accident or other calamity, whether or not covered by insurance; (vii) none of the Blue Hills Parties has defaulted in the payment of principal or interest on any outstanding debt obligations; (viii) the capitalization, liabilities, assets, properties and business of the Blue Hills Parties conform in all material respects to the descriptions thereof contained in the General Disclosure Package and the Prospectus; and (ix) none of the Blue Hills Parties has any material liabilities, contingent or otherwise, except as set forth in the Prospectus.

(x) None of the Blue Hills Parties is (i) in violation of their respective articles, charters, certificates of incorporation, organizational certificates or bylaws (and none of the Blue Hills Parties will be in violation of its articles of incorporation, charters, certificates of incorporation, organizational certificates or bylaws upon completion of the Conversion), or (ii) in default (nor has any event occurred which, with notice or lapse of time or both, would constitute a defect) in the performance or observance of any obligation, agreement, covenant, or condition contained in any contract, lease, loan agreement, indenture, mortgage, or other instrument to which it is a party or by which it or any of its property may be bound, or to which any of the property or assets of the Blue Hills Parties is subject, except for defaults that would not, individually or in the aggregate, have a Material Adverse Effect, and there are no contracts or documents of the Blue Hills Parties that are required to be filed as exhibits to the Registration Statement or the Applications that have not been so filed. The execution and delivery of this Agreement and the consummation of the transactions herein contemplated will not: (i) conflict with or constitute a breach of, or default under, or result in the creation of any lien, charge or encumbrance upon any of the assets of any of the Blue Hills Parties pursuant to the respective articles of incorporation, charters or bylaws of the Blue Hills Parties or any contract, lease or other instrument in which the Blue Hills Parties has a beneficial interest, or any applicable law, rule, regulation or order; (ii) violate any

authorization, approval, judgment, decree, order, statute, rule or regulation applicable to any of the Blue Hills Parties; or (iii) result in the creation of any material lien, charge or encumbrance upon any property of the Blue Hills Parties.

(y) All documents made available or delivered by, or to be made available to or delivered by the Blue Hills Parties or their representatives in connection with the issuance and sale of the Shares, including records of account holders and depositors of the Bank, or in connection with the Agent’s exercise of due diligence, except for those documents which were prepared by parties other than the Blue Hills Parties or their representatives, were on the dates on which they were delivered, or will be on the dates on which they are to be delivered, true, complete and correct in all material respects.

(z) Upon consummation of the Conversion, the authorized, issued and outstanding equity capital of the Holding Company will be within the range set forth in the General Disclosure Package and the Prospectus under the caption “Capitalization,” and no Shares have been or will be issued and outstanding prior to the Closing Date; the Shares will have been duly and validly authorized for issuance and, when issued and delivered by the Holding Company pursuant to the Plan against payment of the consideration calculated as set forth in the Plan and in the Prospectus, will be duly and validly issued, fully paid and non-assessable, except for shares purchased by the ESOP with funds borrowed from the Holding Company to the extent payment therefor in cash has not been received by the Holding Company; except to the extent that subscription rights and priorities pursuant thereto exist pursuant to the Plan, no preemptive rights exist with respect to the Shares; and the terms and provisions of the Shares will conform in all material respects to the description thereof contained in the Registration Statement and the Prospectus. The Shares have been approved for listing on the Nasdaq Global Stock Market, subject to issuance. Upon the issuance of the Shares, good title to the Shares will be transferred from the Holding Company to the purchasers thereof against payment therefor, subject to such claims as may be asserted against the purchasers thereof by third-party claimants.

(aa) No default exists, and no event has occurred which, with notice or lapse of time or both, would constitute a default on the part of any of the Blue Hills Parties in the due performance and observance of any term, covenant, agreement, obligation, representation, warranty or condition of any indenture, mortgage, deed of trust, note, bank loan or credit agreement, lease, license, permit or any other instrument or agreement to which the Blue Hills Parties is a party or by which any of them or any of their respective property is bound or affected which, in any such case, could have, individually or in the aggregate with other breaches, violations or defaults, a Material Adverse Effect; each of such agreements is in full force and effect and is the legal, valid and binding agreement of the applicable party and the other parties thereto, enforceable in accordance with its terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization or similar laws affecting the rights of creditors generally and subject to general principles of equity and no other party to any such agreement has instituted or, to the knowledge of the Blue Hills Parties, threatened any action or proceeding wherein any of the Blue Hills Parties or any subsidiary thereof would or might be alleged to be in default thereunder where such action or proceeding, if determined adversely to the Blue Hills Parties, would have a Material Adverse Effect. There are no contracts or documents that are required to be filed as exhibits to the Registration Statement or described in the Registration Statement, the Prospectus, or any Permitted Free Writing Prospectus which are not so filed or described as required, and such contracts and documents as are summarized in the Registration Statement, the Prospectus, and any Permitted Free Writing Prospectus are fairly summarized in all material respects. No party has sent or received any notice indicating the termination of or intention to terminate any of the contracts or agreements referred to or described in the Registration Statement, the Prospectus, or any Permitted Free Writing Prospectus, or filed as an exhibit to the Registration Statement, and, to the knowledge of the Blue Hills Parties, no such termination has been threatened by any party to any such contract or agreement.

(bb) Subsequent to the date the Registration Statement is declared effective by the Commission and prior to the Closing Date, except as otherwise may be indicated or contemplated in the Registration Statement, none of the Blue Hills Parties has or will have issued any securities or incurred any liability or obligation, direct or contingent, for borrowed money, except borrowings from the same or similar sources indicated in the Prospectus in the ordinary course of its business.

(cc) Except for the Savings Banks Employees Retirement Association Pension Plan, none of the Blue Hills Parties maintains any “pension plan,” as defined in the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). In addition, (A) the employee benefit plans, including employee welfare benefit plans, of the Blue Hills Parties (the “Employee Plans”) have been operated in compliance with the applicable provisions of ERISA, the Internal Revenue Code of 1986, as amended (the “Code”), all regulations, rulings and announcements promulgated or issued thereunder and all other applicable laws and governmental regulations, (B) no reportable event under Section 4043(c) of ERISA has occurred with respect to any Employee Plan of the Blue Hills Parties for which the reporting requirements have not been waived by the Pension Benefit Guaranty Corporation, (C) no prohibited transaction under Section 406 of ERISA, for which an exemption does not apply, has occurred with respect to any Employee Plan of the Blue Hills Parties and (D) all Employee Plans that are group health plans have been operated in compliance with the group health plan continuation coverage requirements of Section 4980B of the Code, except to the extent such noncompliance, reportable event or prohibited transaction would not have, individually or in the aggregate, a Material Adverse Effect. There are no pending or, to the knowledge of the Blue Hills Parties, threatened, claims by or on behalf of any Employee Plan, by any employee or beneficiary covered under any such Employee Plan or by any governmental authority, or otherwise involving such Employee Plans or any of their respective fiduciaries (other than for routine claims for benefits).

(dd) No approval of any regulatory or supervisory or other public authority is required in connection with the execution and delivery of this Agreement or the issuance of the Shares, except for action by the Commission declaring the Registration Statement effective, and approval by the FRB, the Division and any necessary qualification, notification, registration or exemption under the securities or blue sky laws of the various states in which the Shares are to be offered, and except as may be required under the rules and regulations of the FINRA.

(ee) Wolf & Co., P.C., which has certified the audited consolidated financial statements of the MHC included in the Prospectus, has advised the Blue Hills Parties in writing that they are, with respect to the Blue Hills Parties, independent registered public accountants within the applicable rules of the Public Company Accounting Oversight Board (United States).

(ff) RP Financial LC, which has prepared the Appraisal, has advised the Blue Hills Parties in writing that it is independent of the Blue Hills Parties within the meaning of the Massachusetts Regulations and is believed by the Blue Hills Parties to be experienced and expert in the valuation and the appraisal of business entities, including savings banks, and the Blue Hills Parties believe that RP Financial LC has prepared the pricing information set forth in the Prospectus in accordance with the requirements of the Massachusetts Regulations.

(gg) The Blue Hills Parties have timely filed or extended all required federal, state and local income and franchise tax returns required to be filed; the Blue Hills Parties have timely paid all taxes that have become due and payable in respect of such returns and no deficiency has been asserted with respect thereto by any taxing authority. The Blue Hills Parties have no knowledge of any tax deficiency which has been or might be assessed against them which, if subject to an unfavorable decision, ruling or finding, could have, individually or in the aggregate with other tax deficiencies, a Material Adverse Effect. All material tax liabilities have been adequately provided for in the financial statements

of the Blue Hills Parties in accordance with GAAP. There are no transfer taxes or other similar fees or charges under Federal law or the laws of any state, or any political subdivision thereof, required to be paid in connection with the execution and delivery of this Agreement by the Holding Company or with the issuance or sale by the Holding Company of the Shares.

(hh) Each of the Blue Hills Parties is in compliance in all material respects with the applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, and the regulations and rules thereunder. The Bank has established compliance programs and is in compliance in all material respects with the requirements of the USA PATRIOT Act and all applicable regulations promulgated thereunder, and, except as disclosed in the Prospectus, there is no charge, investigation, action, suit or proceeding before any court, regulatory authority or governmental entity or body pending or, to the knowledge of the Blue Hills Parties, threatened regarding the Bank’s compliance with the USA PATRIOT Act or any regulations promulgated thereunder.

(ii) All Sales Information (as defined in Section 9(a)) used by the Holding Company in connection with the Conversion that is required by the Division to be filed has been filed with and approved by the Division or any other applicable regulator.

(jj) To the knowledge of the Blue Hills Parties, none of the Blue Hills Parties or the employees of the Blue Hills Parties has made any payment of funds as a loan for the purchase of the Shares or made any other payment of funds prohibited by law, and no funds have been set aside to be used for any payment prohibited by law.

(kk) None of the Blue Hills Parties has: (i) issued any securities within the last 18 months (except for notes to evidence bank loans and reverse repurchase agreements or other liabilities in the ordinary course of business or as described in the Prospectus); (ii) had any material dealings within the 12 months prior to the date hereof with any member of the FINRA, or any person related to or associated with such member, other than discussions and meetings relating to the proposed Offering and routine purchases and sales of United States government and agency and other securities in the ordinary course of business; (iii) entered into a financial or management consulting agreement except as contemplated hereunder; and (iv) engaged any intermediary between the Agent and the Holding Company or the Bank in connection with the offering of the Shares, and no person is being compensated in any manner for such service.

(ll) The Blue Hills Parties have not relied upon the Agent or its legal counsel for any legal, tax or accounting advice in connection with the Conversion.

(mm) The records used by the Blue Hills Parties to determine the identities of Eligible Account Holders and employees, officers, directors, trustees and corporators of the Bank, the Mid-Tier and the MHC are accurate and complete in all material respects.

(nn) None of the Blue Hills Parties is or intends to conduct business in a manner which would cause it to become an “investment company,” an entity “controlled” by an “investment company” or an “investment adviser” within the meaning of the Investment Company Act of 1940, as amended, or the Investment Advisers Act of 1940, as amended.

(oo) None of the Blue Hills Parties or any properties owned or operated by any of the Blue Hills Parties, is in violation of or liable under any Environmental Law (as defined below), except for such violations or liabilities that, individually or in the aggregate, would not have a Material Adverse Effect. There are no actions, suits or proceedings, or demands, claims, notices or investigations

(including, without limitation, notices, demand letters or requests for information from any environmental agency) instituted or pending or, to the knowledge of the Blue Hills Parties, threatened relating to the liability of any property owned or operated by the Blue Hills Parties under any Environmental Law. To the knowledge of the Blue Hills Parties, there are no events or circumstances that could form the basis of an order for clean-up or remediation, or an action, suit or proceeding by any private party or governmental body or agency, against or affecting the Blue Hills Parties relating to any Environmental Law. For purposes of this subsection, the term “Environmental Law” means any federal, state, local or foreign law, statute, ordinance, rule, regulation, code, license, permit, authorization, approval, consent, order, judgment, decree, injunction or agreement with any regulatory authority relating to (i) the protection, preservation or restoration of the environment (including, without limitation, air, water, vapor, surface water, groundwater, drinking water supply, surface soil, subsurface soil, plant and animal life or any other natural resource), and/or (ii) the use, storage, recycling, treatment, generation, transportation, processing, handling, labeling, production, release or disposal of any substance presently listed, defined, designated or classified as hazardous, toxic, radioactive or dangerous, or otherwise regulated, whether by type or by quantity, including any material containing any such substance as a component.

(pp) The Blue Hills Parties maintain a system of internal accounting controls sufficient to provide reasonable assurance that (A) transactions are executed in accordance with management’s general or specific authorizations, (B) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain accountability for assets, (C) access to assets is permitted only in accordance with management’s general or specific authorization, and (D) the recorded accounts or assets are compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any difference. The books, records and accounts and systems of internal accounting control of the Blue Hills Parties and its subsidiaries comply in all material respects with the requirements of Section 13(b)(2) of the Securities Exchange Act of 1934, as amended (the “1934 Act”). The Blue Hills Parties have established and maintain “disclosure controls and procedures” (as defined in Rule 13a-15(e) under the 1934 Act) that are effective in ensuring that the information the Holding Company will be required to disclose in the reports it files or submits under the 1934 Act is accumulated and communicated to the Holding Company’s management (including its chief executive officer and chief financial officer) in a timely manner and recorded, processed, summarized and reported within the periods specified in the Commission’s rules and forms. To the knowledge of the Blue Hills Parties, Wolf & Co., P.C. and the Audit Committee of the Board of Directors have been advised of: (A) any significant deficiency or material weakness in the design or operation of internal control over financial reporting which could adversely affect the Blue Hills Parties’ ability to record, process, summarize, and report financial data; and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in the Blue Hills Parties’ internal accounting controls.

(qq) All of the loans represented as assets of the Bank in the Prospectus meet or are exempt from all requirements of federal, state and local law pertaining to lending, including, without limitation, truth in lending (including the requirements of Regulation Z and 12 C.F.R. Part 226), real estate settlement procedures, consumer credit protection, equal credit opportunity and all disclosure laws applicable to such loans, except for violations which, if asserted, would not have a Material Adverse Effect.

(rr) To the knowledge of the Blue Hills Parties, there are not and have not been any affiliations or associations (as such terms are defined by the FINRA) between any member of the FINRA and any of the Blue Hills Parties’ officers, directors or 5% or greater security holders, except as set forth in the Registration Statement, filings with FINRA or the Prospectus.

(ss) The Holding Company has taken all actions necessary to obtain at the Closing Date a blue sky memorandum from Luse Gorman.

(tt) Any certificates signed by an officer of any of the Blue Hills Parties pursuant to the conditions of this Agreement and delivered to the Agent or their counsel that refers to this Agreement shall be deemed to be a representation and warranty by such Blue Hills Party to the Agent as to the matters covered thereby with the same effect as if such representation and warranty were set forth herein.

(uu) The statistical and market related data contained in any Permitted Free Writing Prospectus, the Prospectus and the Registration Statement are based on or derived from sources which the Blue Hills Parties believe were reliable and accurate at the time they were filed with the Commission. No forward-looking statement (within the meaning of Section 27A of the 1933 Act and Section 21E of the 1934 Act) contained in the Registration Statement, the Prospectus, or any Permitted Free Writing Prospectus has been made or reaffirmed without a reasonable basis or has been disclosed other than in good faith.

(vv) At or prior to the Closing, the Holding Company will have filed a Form 8-A with the Commission registering the Shares under Section 12(b) of the Exchange Act.

Section 5. Representations and Warranties of the Agent . The Agent represents and warrants to the Blue Hills Parties as follows:

(a) The Agent is a corporation and is validly existing in good standing under the laws of the State of New York with full power and authority to provide the services to be furnished to the Blue Hills Parties hereunder.

(b) The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by all necessary action on the part of the Agent, and this Agreement has been duly and validly executed and delivered by the Agent and is a legal, valid and binding agreement of the Agent, enforceable in accordance with its terms, except as the legality, validity, binding nature and enforceability thereof may be limited by (i) bankruptcy, insolvency, moratorium, reorganization, conservatorship, receivership or other similar laws relating to or affecting the enforcement of creditors’ rights generally, and (ii) general equity principles regardless of whether such enforceability is considered in a proceeding in equity or at law.

(c) Each of the Agent and its employees, agents and representatives who shall perform any of the services hereunder shall be duly authorized and empowered, and shall have all licenses, approvals and permits necessary to perform such services; and the Agent is a registered selling agent in each of the jurisdictions in which the Shares are to be offered by the Holding Company in reliance upon the Agent as a registered selling agent as set forth in the blue sky memorandum prepared with respect to the Offering.

(d) The execution and delivery of this Agreement by the Agent, the consummation of the transactions contemplated hereby and compliance with the terms and provisions hereof will not conflict with, or result in a breach of, any of the terms, provisions or conditions of, or constitute a default (or an event which with notice or lapse of time or both would constitute a default) under, the articles of incorporation or bylaws of the Agent or any material agreement, indenture or other instrument to which the Agent is a party or by which it or its property is bound.

(e) No approval of any regulatory or supervisory or other public authority is required in connection with the Agent’s execution and delivery of this Agreement, except as may have been received.

(f) There is no suit or proceeding or charge or action before or by any court, regulatory authority or government agency or body or, to the knowledge of the Agent, pending or threatened, which might materially adversely affect the Agent’s performance under this Agreement.

Section 6. Covenants of the Blue Hills Parties . The Blue Hills Parties hereby jointly and severally covenant and agree with the Agent as follows:

(a) The Holding Company will not, at any time prior to or after the date the Registration Statement is declared effective, file any amendment or supplement to the Registration Statement without providing the Agent and its counsel an opportunity to review such amendment or supplement or file any amendment or supplement to which amendment or supplement the Agent and its counsel shall reasonably object.

(b) If at any time following issuance of an Issuer-Represented Free Writing Prospectus there occurred or occurs an event or development as a result of which such Issuer Represented Free Writing Prospectus conflicted or would conflict with the information contained in the Registration Statement or included or would include an untrue statement of a material fact or omitted or would omit to state a material fact necessary in order to make the statements therein, in light of the circumstances prevailing at the subsequent time, not misleading, the Holding Company has notified or will notify promptly the Agent so that any use of such Issuer-Represented Free Writing Prospectus may cease until it is amended or supplemented and the Holding Company has promptly amended or will promptly amend or supplement such Issuer-Represented Free Writing Prospectus to eliminate or correct such conflict, untrue statement or omission; provided, however, that this covenant shall not apply to any statement or omission made in reliance upon and in conformity with information furnished in writing to the Holding Company by the Agent expressly for use therein.

(c) Each of the Blue Hills Parties represents and agrees that, unless it obtains the prior consent of the Agent, and the Agent represents and agrees that, unless it obtains the prior consent of the Blue Hills Parties, it has not made and will not make any offer relating to the offered Shares that would constitute an “issuer free writing prospectus” as defined in Rule 433 of the 1933 Act Regulations, or that would constitute a “free writing prospectus,” as defined in Rule 405 of the 1933 Act Regulations, required to be filed with the Commission. Any such free writing prospectus consented to by the Blue Hills Parties and the Agent is hereinafter referred to as a “Permitted Free Writing Prospectus.” The Blue Hills Parties represent that it has treated or agrees that it will treat each Permitted Free Writing Prospectus as an “issuer free writing prospectus,” as defined in Rule 433 of the 1933 Act Regulations, and has complied and will comply in all material respects with the requirements of Rule 433 of the 1933 Act Regulations applicable to any Permitted Free Writing Prospectus, including timely Commission filing where required, legending and record keeping. The Blue Hills Parties need not treat any communication as a free writing prospectus if it is exempt from the definition of prospectus pursuant to clause (a) of Section 2(a)(10) of the 1933 Act without regard to Rule 172 or 173 of the 1933 Act Regulations.

(d) The Holding Company will not, at any time prior to or after the Holding Company Application is approved by the FRB and any other applicable regulator, file any amendment or supplement to such Holding Company Application without providing the Agent and its counsel an opportunity to review such amendment or supplement or file any amendment or supplement to which amendment or supplement the Agent and its counsel shall reasonably object.

(e) The Blue Hills Parties will not, at any time prior to or after the Massachusetts Conversion Application is approved by the Division, file any amendment or supplement to such Massachusetts Conversion Application without providing the Agent and its counsel an opportunity to review such amendment or supplement or file any amendment or supplement to which amendment or supplement the Agent and its counsel shall reasonably object.

(f) The Blue Hills Parties will use their best efforts to cause any post-effective amendment to the Registration Statement to be declared effective by the Commission and any post-approval amendment to the Applications to be approved by the FRB, the Division or any other applicable regulator and will immediately upon receipt of any information concerning the events listed below notify the Agent: (i) when the Registration Statement, as amended, has become effective; (ii) when the Applications, as amended, have been approved by the FRB or the Division; (iii) of any comments from the Commission, the FRB, the Division or any other governmental entity with respect to the Conversion contemplated by this Agreement; (iv) of the request by the Commission, the FRB, the Division or any other governmental entity for any amendment or supplement to the Registration Statement, the Applications or for additional information; (v) of the issuance by the Commission, the FRB, the Division or any other governmental entity of any order or other action suspending the Conversion or the use of the Registration Statement or the Prospectus or any other filing of the Holding Company or the Bank under the BHCA, the Massachusetts Regulations or other applicable law, or the threat of any such action; (vi) of the issuance by the Commission, the FRB, the Division or any authority of any stop order suspending the effectiveness of the Registration Statement or of the initiation or threat of initiation or threat of any proceedings for that purpose; or (vii) of the occurrence of any event mentioned in paragraph (j) below. The Blue Hills Parties will make every reasonable effort (i) to prevent the issuance by the Commission, the FRB, the Division or any other federal or state authority of any such order and, (ii) if any such order shall at any time be issued, to obtain the lifting thereof at the earliest possible time.

(g) The Blue Hills Parties will deliver to the Agent and to its counsel as many conformed copies of the Registration Statement or the Applications, as originally filed and of each amendment or supplement thereto, including all exhibits, as the Agent may reasonably request.

(h) The Blue Hills Parties will furnish to the Agent, from time to time during the period when the Prospectus (or any later prospectus related to this offering) is required to be delivered under the 1933 Act or the 1934 Act, such number of copies of such Prospectus (as amended or supplemented) as the Agent may reasonably request for the purposes contemplated by the 1933 Act, the 1933 Act Regulations, the 1934 Act or the rules and regulations promulgated under the 1934 Act (the “1934 Act Regulations”). The Holding Company authorizes the Agent to use the Prospectus (as amended or supplemented, if amended or supplemented) in any lawful manner contemplated by the Plan in connection with the sale of the Shares by the Agent.

(i) The Blue Hills Parties will comply with any and all terms, conditions, requirements and provisions with respect to the Offering imposed by the Commission, the Division or any other applicable regulator or the Massachusetts Regulations and by the 1933 Act, the 1933 Act Regulations, the 1934 Act and the 1934 Act Regulations to be complied with prior to or subsequent to the Closing Date and when the Prospectus is required to be delivered, and during such time period the Blue Hills Parties will comply, at their own expense, with all requirements imposed upon them by the Commission, the Division or any other applicable regulator or the Massachusetts Regulations, and by the 1933 Act, the 1933 Act Regulations, the 1934 Act and the 1934 Act Regulations, including, without limitation, Rule 10b-5 under the 1934 Act, in each case as from time to time in force, so far as necessary to permit the continuance of sales or dealing in the Shares during such period in accordance with the provisions hereof and the Prospectus. The Holding Company will comply with all undertakings contained in the Registration Statement.

(j) If, at any time during the period when the Prospectus is required to be delivered, any event relating to or affecting any of the Blue Hills Parties shall occur, as a result of which it is necessary or appropriate, in the opinion of counsel for the Holding Company and in the reasonable opinion of the Agent’s counsel, to amend or supplement the Registration Statement or Prospectus in order to make the Registration Statement or Prospectus not misleading in light of the circumstances existing at the time the Prospectus is delivered to a purchaser, the Holding Company will immediately so inform the Agent and prepare and file, at its own expense, with the Commission, the FRB and the Division or any other applicable regulator, and furnish to the Agent a reasonable number of copies, of an amendment or amendments of, or a supplement or supplements to, the Registration Statement or Prospectus (in form and substance reasonably satisfactory to the Agent and its counsel after a reasonable time for review) which will amend or supplement the Registration Statement or Prospectus so that as amended or supplemented it will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances existing at the time the Prospectus is delivered to a purchaser, not misleading. For the purpose of this Agreement, the Holding Company will timely furnish to the Agent such information with respect to the Blue Hills Parties as the Agent may from time to time reasonably request.

(k) The Blue Hills Parties will take all necessary actions in cooperating with the Agent and furnish to whomever the Agent may direct such information as may be required to qualify or register the Shares for offering and sale by the Holding Company or to exempt such Shares from registration, or to exempt the Holding Company as a broker-dealer and its officers, directors and employees as broker-dealers or agents under the applicable securities or blue sky laws of such jurisdictions in which the Shares are required under the Massachusetts Regulations to be sold or as the Agent and the Holding Company may reasonably agree upon; provided, however, that the Holding Company shall not be obligated to file any general consent to service of process, to qualify to do business in any jurisdiction in which it is not so qualified, or to register its directors or officers as brokers, dealers, salesmen or agents in any jurisdiction. In each jurisdiction where any of the Shares shall have been qualified or registered as above provided, the Holding Company will make and file such statements and reports in each fiscal period as are or may be required by the laws of such jurisdiction.

(l) The liquidation account for the benefit of Eligible Account Holders will be duly established and maintained in accordance with the requirements of the Plan, the Massachusetts Regulations, and such Eligible Account Holders who continue to maintain their savings accounts in the Bank will have an inchoate interest in their pro rata portion of the liquidation account, which shall have a priority superior to that of the holders of the Common Stock in the event of a complete liquidation of the Bank.

(m) The Holding Company will not sell or issue, contract to sell or otherwise dispose of, for a period of 90 days after the Closing Date, without the Agent’s prior written consent, any of its shares of common stock, other than the Shares or other than in connection with any plan or arrangement described in the Prospectus.

(n) The Holding Company will register its common stock under Section 12(b) of the 1934 Act. The Holding Company shall maintain the effectiveness of such registration for not less than three years from the time of effectiveness or such shorter period as may be required by the Division or any other applicable regulator.

(o) During the period during which the Shares are registered under the 1934 Act or for three years from the date hereof, whichever period is greater, the Holding Company will furnish to its shareholders as soon as practicable after the end of each fiscal year an annual report of the Holding Company (including a consolidated balance sheet and statements of consolidated income, shareholders’

equity and cash flows of the Holding Company and its subsidiaries as at the end of and for such year, certified by independent registered public accountants in accordance with Regulation S-X under the 1933 Act and the 1934 Act) and make available as soon as practicable after the end of each of the first three quarters of each fiscal year (beginning with the first fiscal quarter ending after the effective time of the Registration Statement) financial information of the Holding Company and its subsidiaries for such quarter in reasonable detail.

(p) During the period of three years from the date hereof, the Holding Company will furnish to the Agent: (i) as soon as practicable after such information is publicly available, a copy of each report of the Holding Company furnished to or filed with the Commission under the 1934 Act or any national securities exchange or system on which any class of securities of the Holding Company is listed or quoted (including, but not limited to, reports on Forms 10-K, 10-Q and 8-K and all proxy statements and annual reports to stockholders); (ii) a copy of each other non-confidential report of the Holding Company mailed to its shareholders or filed with the Commission, the FRB, the Division or any other supervisory or regulatory authority or any national securities exchange or system on which any class of securities of the Holding Company is listed or quoted, each press release and material news items and additional documents and information with respect to the Holding Company or the Bank as the Agent may reasonably request; and (iii) from time to time, such other nonconfidential information concerning the Holding Company or the Bank as the Agent may reasonably request.

(q) The Holding Company and the Bank will use the net proceeds from the sale of the Shares in the manner set forth in the Prospectus under the caption “How We Intend to Use the Proceeds From the Offering.”

(r) The Holding Company will make generally available to its security holders as soon as practicable, but not later than 60 days after the close of the period covered thereby, an earnings statement (in form complying with the provisions of Rule 158 of the 1933 Act Regulations) covering a twelve-month period beginning not later than the first day of the Holding Company’s fiscal quarter next following the effective date (as defined in such Rule 158) of the Registration Statement.

(s) The Holding Company will use its best efforts to cooperate with the Agent to affect the trading of the Shares on the Nasdaq Global Capital Market on or prior to the Closing Date.

(t) The Holding Company will maintain appropriate arrangements for depositing all funds received from persons mailing or delivering subscriptions for or orders to purchase Shares in the Offering with the Bank, on an interest-bearing basis at the rate described in the Prospectus until the Closing Date and satisfaction of all conditions precedent to the release of Shares in the Offering in accordance with the Plan and as described in the Prospectus or until refunds of such funds have been made to the persons entitled thereto or withdrawal authorizations canceled in accordance with the Plan and as described in the Prospectus. The Holding Company will maintain such records of all funds received to permit the funds of each subscriber to be separately insured by the FDIC (to the maximum extent allowable) and to enable the Holding Company to make the appropriate refunds of such funds in the event that such refunds are required to be made in accordance with the Plan and as described in the Prospectus.

(u) The Holding Company will report the use of proceeds of the Offering on its first periodic report filed pursuant to Sections 13(a) and 15(d) of the Exchange Act and on any subsequent periodic report as may be required pursuant to Rule 463 of the Securities Act Regulations.

(v) The Holding Company will promptly take all necessary action to register as a bank holding company under Section 3 of the BHCA.

(w) The Holding Company and the Bank will take such actions and furnish such information as are reasonably requested by the Agent in order for the Agent to ensure compliance with FINRA Rule 5130.

(x) None of the Blue Hills Parties will amend the Plan without the consent of the Agent, which consent shall not be unreasonably withheld.

(y) The Holding Company shall assist the Agent, if necessary, in connection with the allocation of the Shares in the event of an oversubscription and shall provide the Agent with any information necessary to assist the Holding Company in allocating the Shares in such event and such information shall be accurate and reliable in all material respects.

(z) Prior to the Closing Date, the Holding Company will inform the Agent of any event or circumstances of which it is aware as a result of which the Registration Statement and/or Prospectus, as then amended or supplemented, would contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading.

(aa) The Holding Company will not deliver the Shares until the Blue Hills Parties have satisfied or caused to be satisfied each condition set forth in Section 8 hereof, unless such condition is waived in writing by the Agent.

(bb) Subsequent to the date the Registration Statement is declared effective by the Commission and prior to the Closing Date, except as otherwise may be indicated or contemplated therein or set forth in an amendment or supplement thereto, none of the Blue Hills Parties will have: (i) issued any securities or incurred any liability or obligation, direct or contingent, for borrowed money, except borrowings from the same or similar sources indicated in the Prospectus in the ordinary course of its business, or (ii) entered into any transaction which is material in light of the business and properties of the Blue Hills Parties, taken as a whole.

(cc) Until the Closing Date, the Blue Hills Parties will conduct their businesses in compliance in all material respects with all applicable federal and state laws, rules, regulations, decisions, directives and orders, including all decisions, directives and orders of the Commission, the FDIC, the FRB and the Division.

(dd) The facts and representations provided to Luse Gorman and Nutter, McClennen & Fish, LLP (“Nutter”) by the Blue Hills Parties and upon which each of Luse Gorman and Nutter will base their opinions under Sections 8(c) and (d), respectively, are and will be truthful, accurate and complete.

(ee) The Blue Hills Parties will not distribute any offering material in connection with the Offering except for the Prospectus and any supplemental sales material that has been filed with the Registration Statement and the Applications and authorized for use by the Commission, the FRB and the Division or any other applicable regulator. The information contained in any supplemental sales material (in addition to the supplemental sales material filed as an exhibit to the Registration Statement and the Applications) shall not conflict with the information contained in the Registration Statement and the Prospectus.

(ff) The Holding Company will comply with all applicable provisions of the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Wall Street Reform and Consumer Protection Act and all applicable rules, regulations, guidelines and interpretations promulgated thereunder by the Commission.

(gg) The Blue Hills Parties will not, prior to the Closing Time, incur any liability or obligation, direct or contingent, or enter into any material transaction, other than in the ordinary course of business consistent with past practice, except as contemplated by the Prospectus.

(hh) The Blue Hills Parties will use all reasonable efforts to comply with, or cause to be complied with, the conditions precedent to the several obligations of the Agent specified in Section 8.

Section 7. Payment of Expenses . Whether or not the Conversion is completed or the sale of the Shares by the Holding Company is consummated, the Blue Hills Parties jointly and severally agree to pay or reimburse the Agent for: (a) all filing fees in connection with all filings related to the Conversion with the FINRA; (b) any stock issue or transfer taxes which may be payable with respect to the sale of the Shares; (c) subject to Section 2(f), all expenses of the Conversion, including but not limited to the Agent’s attorneys’ fees and expenses, blue sky fees, transfer agent, registrar and other agent charges, fees relating to auditing and accounting or other advisors and costs of printing all documents necessary in connection with the Offering. In the event the Holding Company is unable to sell the minimum number of shares necessary to complete the Conversion or the Conversion is terminated or otherwise abandoned, the Blue Hills Parties shall promptly reimburse the Agent in accordance with Section 2(f) hereof.

Section 8. Conditions to the Agent’s Obligations . The obligations of the Agent hereunder, as to the Shares to be delivered at the Closing Date, are subject, to the extent not waived in writing by the Agent, to the condition that all representations and warranties of the Blue Hills Parties herein are, at and as of the commencement of the Offering and at and as of the Closing Date, true and correct in all material respects, the condition that the Blue Hills Parties shall have performed all of its obligations hereunder to be performed on or before such dates, and to the following further conditions:

(a) At the Closing Date, the Blue Hills Parties shall have conducted the Conversion in all material respects in accordance with the Plan, the BHCA, the Massachusetts Regulations (except to the extent waived or otherwise approved by the FRB, the Division and any other applicable regulator), and all other applicable laws, regulations, decisions and orders, including all terms, conditions, requirements and provisions precedent to the Conversion imposed upon them by the FRB, the Division or any other applicable regulator.

(b) The Registration Statement shall have been declared effective by the Commission and the Applications shall have been approved by the FRB and the Division not later than 5:30 p.m. on the date of this Agreement, or with the Agent’s consent at a later time and date; and at the Closing Date, no stop order suspending the effectiveness of the Registration Statement shall have been issued under the 1933 Act or proceedings therefore initiated or, to the knowledge of the Blue Hills Parties, threatened by the Commission or any state authority, and no order or other action suspending the authorization of the Prospectus or the consummation of the Conversion shall have been issued or proceedings therefore initiated or, to the Blue Hills Parties’ knowledge, threatened by the Commission, the FRB, the Division, or any other regulatory authority.

(c) At the Closing Date, the Agent shall have received the favorable opinion, dated as of the Closing Date and addressed to the Agent and for its benefit, of Luse Gorman, special counsel for the Blue Hills Parties, in form and substance as attached hereto as Exhibit C .

(d) At the Closing Date, the Agent shall have received the favorable opinion, dated as of the Closing Date and addressed to the Agent and for its benefit, of Nutter, special counsel for the Agent, in form and substance as attached hereto as Exhibit D .

(e) Prior to the mailing of the Prospectus, a blue sky memorandum from Luse Gorman relating to the Offering, including Agent’s participation therein, shall have been furnished to the Holding Company with a copy thereof addressed to Agent or upon which Luse Gorman shall state the Agent may rely. The blue sky memorandum will relate to the necessity of obtaining or confirming exemptions, qualifications or the registration of the Shares under applicable state securities law.

(f) At the Closing Date, the Agent shall receive a certificate of the Chief Executive Officer and the Chief Financial Officer of each of the Blue Hills Parties in form and substance reasonably satisfactory to the Agent’s Counsel, dated as of such Closing Date, to the effect that: (i) they have carefully examined the Prospectus and, in their opinion, at the time the Prospectus became authorized for final use, the Prospectus did not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; (ii) since the date the Prospectus became authorized for final use, no event has occurred which should have been set forth in an amendment or supplement to the Prospectus which has not been so set forth, including specifically, but without limitation, any material adverse change in the condition, financial or otherwise, or in the earnings, capital, properties or business of the Blue Hills Parties and the conditions set forth in this Section 8 have been satisfied; (iii) since the respective dates as of which information is given in the Registration Statement, the General Disclosure Package and the Prospectus, there has been no material adverse change in the condition, financial or otherwise, or in the earnings, capital, properties or business of the Blue Hills Parties independently, or of the Blue Hills Parties considered as one enterprise, whether or not arising in the ordinary course of business; (iv) the representations and warranties in Section 4 are true and correct with the same force and effect as though expressly made at and as of the Closing Date; (v) the Blue Hills Parties complied in all material respects with all agreements and satisfied all conditions on their part to be performed or satisfied at or prior to the Closing Date and will comply in all material respects with all obligations to be satisfied by them after the Closing Date; (vi) no stop order suspending the effectiveness of the Registration Statement has been initiated or, to the knowledge of the Blue Hills Parties, threatened by the Commission or any state authority; (vii) no order suspending the Conversion, the Offering or the use of the Prospectus has been issued and no proceedings for that purpose are pending or, to the knowledge of the Blue Hills Parties, threatened by the FRB, the Division, or any other regulatory authority; and (viii) to the best knowledge of the Blue Hills Parties, no person has sought to obtain review of the final action of the FRB, the Division or any other applicable regulator approving the Conversion.

(g) None of the Blue Hills Parties shall have sustained, since the date of the latest financial statements included in the Registration Statement, the General Disclosure Package and Prospectus, any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth in the Registration Statement and the Prospectus, and since the respective dates as of which information is given in the Registration Statement and the Prospectus, there shall not have been any Material Adverse Effect that is in the Agent’s reasonable judgment sufficiently material and adverse as to make it impracticable or inadvisable to proceed with the Offering or the delivery of the Shares on the terms and in the manner contemplated in the Prospectus.

(h) Prior to and at the Closing Date: (i) in the reasonable opinion of the Agent, there shall have been no material adverse change in the financial condition, results of operations or business of the Blue Hills Parties considered as one enterprise, from that as of the latest dates as of which such condition is set forth in the Prospectus, other than transactions referred to or contemplated therein; (ii) none of the Blue Hills Parties shall have received from the FRB, the Division or the FDIC any direction (oral or written) to make any material change in the method of conducting their business with which it has not complied (which direction, if any, shall have been disclosed to the Agent) or which materially and adversely would affect the financial condition, results of operations or business of the Blue

Hills Parties taken as a whole; (iii) none of the Blue Hills Parties shall have been in default (nor shall an event have occurred which, with notice or lapse of time or both, would constitute a default) under any provision of any agreement or instrument relating to any outstanding indebtedness; (iv) no action, suit or proceeding, at law or in equity or before or by any federal or state commission, board or other administrative agency, not disclosed in the Prospectus, shall be pending or, to the knowledge of the Blue Hills Parties, threatened against the any of the Blue Hills Parties or affecting any of their properties wherein an unfavorable decision, ruling or finding would materially and adversely affect the financial condition, results of operations or business of the Blue Hills Parties taken as a whole; and (v) the Shares shall have been qualified or registered for offering and sale or exempted therefrom under the securities or blue sky laws of the jurisdictions as the Agent shall have reasonably requested and as agreed to by the Blue Hills Parties.

(i) Concurrently with the execution of this Agreement, the Agent shall receive a letter from Wolf & Co., P.C., dated as of the date hereof and addressed to the Agent: (i) confirming that Wolf & Co., P.C. is a firm of independent registered public accountants within the applicable rules of the Public Company Accounting Oversight Board (United States) and stating in effect that in its opinion the consolidated financial statements and related notes of the MHC as of December 31, 2013 and 2012, and covered by their opinion included in the Prospectus, and any other more recent unaudited financial statements included in the Prospectus, comply as to form in all material respects with the applicable accounting requirements and related published rules and regulations of the FRB and any other applicable regulator and the 1933 Act; (ii) stating in effect that, on the basis of certain agreed upon procedures (but not an audit in accordance with standards of the Public Company Accounting Oversight Board (United States)) consisting of a reading of the latest available consolidated financial statements of the MHC prepared by the MHC, a reading of the minutes of the meetings of the Boards of Directors of each of the Blue Hills Parties and consultations with officers of the MHC responsible for financial and accounting matters, nothing came to their attention which caused them to believe that: (A) the audited consolidated financial statements and any unaudited interim financial statements included in the Prospectus are not in conformity with the 1933 Act, applicable accounting requirements of the FRB, the Division and the FDIC and GAAP applied on a basis substantially consistent with that of the audited consolidated financial statements included in the Prospectus; or (B) during the period from the date of the latest consolidated financial statements included in the Prospectus to a specified date not more than three business days prior to the date of the Prospectus, except as has been described in the Prospectus, there was any increase in long-term debt of the MHC, other than normal deposit fluctuations for the Bank; or (C) there was any decrease in the total consolidated assets, total loans, the allowance for loan losses, total deposits or total equity of the MHC at the date of such letter as compared with amounts shown in the latest balance sheet included in the Prospectus; and (iii) stating that, in addition to the audit referred to in their opinion included in the Prospectus and the performance of the procedures referred to in clause (ii) of this subsection (i), they have compared with the general accounting records of the MHC, which are subject to the internal controls of the MHC, the accounting system and other data prepared by the MHC, directly from such accounting records, to the extent specified in such letter, such amounts and/or percentages set forth in the Prospectus as the Agent may reasonably request; and they have found such amounts and percentages to be in agreement therewith (subject to rounding).

(j) At the Closing Date, the Agent shall receive a letter dated the Closing Date, addressed to the Agent, confirming the statements made by Wolf & Co., P.C. in the letter delivered by it pursuant to subsection (i) of this Section 8, the “specified date” referred to in clause (ii) of subsection (i) to be a date specified in the letter required by this subsection (j) which for purposes of such letter shall not be more than three business days prior to the Closing Date.

(k) At the Closing Date, the Holding Company shall receive a letter from RP Financial LC., dated the Closing Date (i) confirming that said firm is independent of the Blue Hills Parties

and is experienced and expert in the area of corporate appraisals within the meaning of the Massachusetts Conversion Regulations, (ii) stating in effect that the Appraisal prepared by such firm complies in all material respects with 209 CMR 33.08(3)(a), and (iii) further stating that its opinion of the aggregate pro forma market value of the Holding Company including the Bank, as most recently updated, remains in effect.

(l) At or prior to the Closing Date, the Agent shall receive: (i) a copy of the letter from the FRB approving the Holding Company Application; (ii) a copy of a letter from the Division approving the Massachusetts Conversion Application; (iii) confirmation that the Commission declared the Registration Statement effective; (iv) certificates from the Secretary of State of the Commonwealth of Massachusetts evidencing the valid existence and good standing of the MHC and the Mid-Tier; (v) a certificate from the Division evidencing the good standing of the Bank; (vi) a certificate from the FDIC evidencing the Bank’s insurance of accounts; (vii) a certificate from the FHLBB evidencing the Bank’s membership therein; (viii) a certificate from the Maryland Department of Assessments & Taxation evidencing the good standing of the Holding Company and (ix) such other documents and certificates as the Agent may reasonably request.

(m) Subsequent to the date hereof, there shall not have occurred any of the following; (i) a suspension or limitation in trading in securities generally on the New York Stock Exchange (the “NYSE”) or in the over-the-counter market, or quotations halted generally on the Nasdaq Stock Market, or minimum or maximum prices for trading have been fixed, or maximum ranges for prices for securities have been required by either of such exchanges or the Nasdaq Stock Market or by order of the Commission or any other governmental authority; (ii) a general moratorium on the operations of federal or state chartered depository institutions or a general moratorium on the withdrawal of deposits from federal or state chartered depository institutions declared by federal or state authorities; (iii) the engagement by the United States in hostilities which have resulted in the declaration, on or after the date hereof, of a national emergency or war or a material decline in the price of equity or debt securities, if the effect of such declaration or decline, in the Agent’s reasonable judgment, makes it impracticable or inadvisable to proceed with the Offering or the delivery of the Shares on the terms and in the manner contemplated in the Registration Statement and the Prospectus.

(n) At or prior to the Closing Date, counsel to the Agent shall have been furnished with such documents and opinions as they may reasonably require for the purpose of enabling them to pass upon the sale of the Shares as herein contemplated and related proceedings or in order to evidence the occurrence or completeness of any of the representations or warranties, or the fulfillment of any of the conditions, herein contained; and all proceedings taken by the Blue Hills Parties in connection with the sale of the Shares as herein contemplated shall be satisfactory in form and substance to the Agent or its counsel.

(o) All such opinions, certificates, letters and documents will be in compliance with the provisions hereof only if they are reasonably satisfactory in form and substance to the Agent or to counsel for the Agent. Any certificate signed by an officer of any of the Blue Hills Parties and delivered to the Agent or to counsel for the Agent shall be deemed a representation and warranty by such Blue Hills Party to the Agent as to the statements made therein.

Section 9. Indemnification .

(a) Each of the Blue Hills Parties jointly and severally agrees to indemnify and hold harmless the Agent, its officers and directors, employees and agents, and each person, if any, who controls the Agent within the meaning of Section 15 of the 1933 Act or Section 20(a) of the 1934 Act, against any and all loss, liability, claim, damage or expense whatsoever (including, but not limited to,

settlement expenses), joint or several, that the Agent or any of them may suffer or to which the Agent and any such persons may become subject under all applicable federal or state laws or otherwise, and to promptly reimburse the Agent and any such persons upon written demand for any reasonable expense (including all reasonable fees and disbursements of counsel) incurred by the Agent or any of them in connection with investigating, preparing or defending any actions, proceedings or claims (whether commenced or threatened) to the extent such losses, claims, damages, liabilities or actions: (i) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (or any amendment or supplement thereto), the General Disclosure Package, any Issuer-Represented Limited-Use Free Writing Prospectus, any Issuer Represented General Free Writing Prospectus, preliminary or final Prospectus (or any amendment or supplement thereto), the Applications (or any amendment or supplement thereto), or any instrument or document executed by the Blue Hills Parties or based upon written information supplied by the Holding Company filed in any state or jurisdiction to register or qualify any or all of the Shares or to claim an exemption therefrom or provided to any state or jurisdiction to exempt the Blue Hills Parties as a broker-dealer or its officers, directors and employees as broker-dealers or agents, under the securities laws thereof (collectively, the “Blue Sky Application”), or any document, advertisement, oral statement or communication (“Sales Information”) prepared, made or executed by or on behalf of the Blue Hills Parties with its consent and based upon written or oral information furnished by or on behalf of the Blue Hills Parties, whether or not filed in any jurisdiction, in order to qualify or register the Shares or to claim an exemption therefrom under the securities laws thereof; (ii) arise out of or are based upon the omission or alleged omission to state in any of the foregoing documents or information a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; or (iii) arise from any theory of liability whatsoever relating to or arising from or based upon the Registration Statement (or any amendment or supplement thereto), preliminary or final Prospectus (or any amendment or supplement thereto), the General Disclosure Package, any Issuer-Represented Limited-Use Free Writing Prospectus, any Issuer–Represented General Free Writing Prospectus, the Applications (or any amendment or supplement thereto), any Blue Sky Application or Sales Information or other documentation distributed in connection with the Conversion; provided, however, that no indemnification is required under this paragraph (a) to the extent such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue material statement or alleged untrue material statement in, or material omission or alleged material omission from, the Registration Statement (or any amendment or supplement thereto), preliminary or final Prospectus (or any amendment or supplement thereto), the General Disclosure Package, any Issuer-Represented Limited-Use Free Writing Prospectus, any Issuer-Represented General Free Writing Prospectus, the Applications, any Blue Sky Application or Sales Information made in reliance upon and in conformity with information furnished in writing to the Holding Company, by the Agent or its counsel regarding the Agent, and provided, that it is agreed and understood that the only information furnished in writing to the Holding Company, by the Agent regarding the Agent is set forth in the Prospectus in the first sentence of the second paragraph under the caption “The Conversion; Plan of Distribution—Marketing and Distribution; Compensation”; and, provided further, that such indemnification shall be limited to the extent prohibited by the Commission, the FDIC and the FRB.

(b) The Agent agrees to indemnify and hold harmless the Blue Hills Parties, their directors and officers and each person, if any, who controls the Holding Company or the Bank within the meaning of Section 15 of the 1933 Act or Section 20(a) of the 1934 Act against any and all loss, liability, claim, damage or expense whatsoever (including but not limited to settlement expenses), joint or several, which they, or any of them, may suffer or to which they, or any of them may become subject under all applicable federal and state laws or otherwise, and to promptly reimburse the Blue Hills Parties, and any such persons upon written demand for any expenses (including reasonable fees and disbursements of counsel) incurred by them, or any of them, in connection with investigating, preparing or defending any actions, proceedings or claims (whether commenced or threatened) to the extent such losses, claims,

damages, liabilities or actions: (i) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (or any amendment or supplement thereto), the Applications (or any amendment or supplement thereto), the preliminary or final Prospectus (or any amendment or supplement thereto), any Blue Sky Application or Sales Information, (ii) are based upon the omission or alleged omission to state in any of the foregoing documents a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or (iii) arise from any theory of liability whatsoever relating to or arising from or based upon the Registration Statement (or any amendment or supplement thereto), preliminary or final Prospectus (or any amendment or supplement thereto), the Applications (or any amendment or supplement thereto), or any Blue Sky Application or Sales Information or other documentation distributed in connection with the Offering; provided, however, that the Agent’s obligations under this Section 9(b) shall exist only if and only to the extent that such untrue statement or alleged untrue statement was made in, or such material fact or alleged material fact was omitted from, the Registration Statement (or any amendment or supplement thereto), the preliminary or final Prospectus (or any amendment or supplement thereto), the Applications (or any amendment or supplement thereto), any Blue Sky Application or Sales Information in reliance upon and in conformity with information furnished in writing to the Holding Company or the Bank, by the Agent or its counsel regarding the Agent, and provided, that it is agreed and understood that the only information furnished in writing to the Holding Company or the Bank, by the Agent regarding the Agent is set forth in the Prospectus in the first sentence of the second paragraph under the caption “The Conversion; Plan of Distribution-Marketing and Distribution; Compensation.”

(c) Each indemnified party shall give prompt written notice to each indemnifying party of any action, proceeding, claim (whether commenced or threatened), or suit instituted against it in respect of which indemnity may be sought hereunder, but failure to so notify an indemnifying party shall not relieve it from any liability which it may have on account of this Section 9 or otherwise. An indemnifying party may participate at its own expense in the defense of such action. In addition, if it so elects within a reasonable time after receipt of such notice, an indemnifying party, jointly with any other indemnifying parties receiving such notice, may assume defense of such action with counsel chosen by it and approved by the indemnified parties that are defendants in such action, unless such indemnified parties reasonably object to such assumption on the ground that there may be legal defenses available to them that are different from or in addition to those available to such indemnifying party. If an indemnifying party assumes the defense of such action, the indemnifying parties shall not be liable for any fees and expenses of counsel for the indemnified parties incurred thereafter in connection with such action, proceeding or claim, other than reasonable costs of investigation. In no event shall the indemnifying parties be liable for the fees and expenses of more than one separate firm of attorneys (and any local counsel that said firm may retain) for each indemnified party in connection with any one action, proceeding or claim or separate but similar or related actions, proceedings or claims in the same jurisdiction arising out of the same general allegations or circumstances.

Section 10. Contribution . In order to provide for just and equitable contribution in circumstances in which the indemnification provided for in Section 9 is due in accordance with its terms but is for any reason held by a court to be unavailable from the Blue Hills Parties or the Agent, the Blue Hills Parties and the Agent shall contribute to the aggregate losses, claims, damages and liabilities (including any investigation, legal and other expenses incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding, but after deducting any contribution received by the Blue Hills Parties or the Agent from persons other than the other parties thereto, who may also be liable for contribution) in such proportion so that the Agent is responsible for that portion represented by the percentage that the fees paid to the Agent pursuant to Section 2 of this Agreement (not including expenses) bears to the gross proceeds received by the Holding Company from the sale of the Shares in the Offering, and the Blue Hills Parties shall be responsible for the balance. If, however, the allocation

provided above is not permitted by applicable law, then each indemnifying party shall contribute to such amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative fault of the Blue Hills Parties on the one hand and the Agent on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions, proceedings or claims in respect thereto), but also the relative benefits received by the Blue Hills Parties on the one hand and the Agent on the other from the Offering (before deducting expenses). The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Blue Hills Parties on the one hand or the Agent on the other and the parties’ relative intent, good faith, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Blue Hills Parties and the Agent agree that it would not be just and equitable if contribution pursuant to this Section 10 were determined by pro-rata allocation or by any other method of allocation which does not take into account the equitable considerations referred to above in this Section 10. The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions, proceedings or claims in respect thereof) referred to above in this Section 10 shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action, proceeding or claim. It is expressly agreed that the Agent shall not be liable for any loss, liability, claim, damage or expense or be required to contribute any amount pursuant to Section 9(b) or this Section 10 which in the aggregate exceeds the amount paid (excluding reimbursable expenses) to the Agent under this Agreement. It is understood that the above stated limitation on the Agent’s liability is essential to the Agent and that the Agent would not have entered into this Agreement if such limitation had not been agreed to by the parties to this Agreement. No person found guilty of any fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any person who was not found guilty of such fraudulent misrepresentation. The obligations of the Blue Hills Parties under this Section 10 and under Section 9 shall be in addition to any liability which the Holding Company and the Agent may otherwise have. For purposes of this Section 10, each of the Agent’s and the Blue Hills Parties’ officers and directors and each person, if any, who controls the Agent or any of the Blue Hills Parties within the meaning of the 1933 Act and the 1934 Act shall have the same rights to contribution as the Agent on the one hand, or, the Blue Hills Parties on the other hand. Any party entitled to contribution, promptly after receipt of notice of commencement of any action, suit, claim or proceeding against such party in respect of which a claim for contribution may be made against another party under this Section 10, will notify such party from whom contribution may be sought, but the omission to so notify such party shall not relieve the party from whom contribution may be sought from any other obligation it may have hereunder or otherwise than under this Section 10 unless and to the extent the party has been materially prejudiced through the forfeiture by the other party of substantial rights and defenses.

Section 11. Termination . The Agent may terminate this Agreement by giving the notice indicated below in Section 12 at any time after this Agreement becomes effective as follows:

(a) If any domestic or international event or act or occurrence has materially disrupted the United States securities markets such as to make it, in the Agent’s reasonable opinion, impracticable to proceed with the offering of the Shares; or if trading on the NYSE shall have suspended (except that this shall not apply to the imposition of NYSE trading collars imposed on program trading); or if the United States shall have become involved in a war or major hostilities or escalation thereof; or if a general banking moratorium has been declared by a state or federal authority which has a material effect on the Blue Hills Parties on a consolidated basis; or if a moratorium in foreign exchange trading by major international banks or persons has been declared; or if there shall have been a material adverse change in the financial condition, results of operations or business of any of the Blue Hills Parties, or if any of the Blue Hills Parties shall have sustained a material or substantial loss by fire, flood, accident, hurricane, earthquake, theft, sabotage or other calamity or malicious act, whether or not said loss shall have been insured; or, if there shall have been a material adverse change in the financial condition, results of operations or business of the Blue Hills Parties taken as a whole.

(b) In the event the Holding Company fails to sell the required minimum number of the Shares by the date when such sales must be completed, in accordance with the provisions of the Plan or as required by the Massachusetts Regulations and applicable law, this Agreement shall terminate upon refund by the Holding Company to each person who has subscribed for or ordered any of the Shares the full amount which it may have received from such person, together with interest as provided in the Prospectus, and no party to this Agreement shall have any obligation to the other hereunder, except as set forth in Sections 2(a), 2(e), 7, 9 and 10 hereof.

(c) If any of the conditions specified in Section 8 shall not have been fulfilled when and as required by this Agreement, unless waived in writing, or by the Closing Date, this Agreement and all of the Agent’s obligations hereunder may be cancelled by the Agent by notifying the Holding Company of such cancellation in writing or by electronic mail at any time at or prior to the Closing Date, and any such cancellation shall be without liability of any party to any other party except as otherwise provided in Sections 2(a), 2(e), 7, 9 and 10 hereof.

(d) If the Agent elects to terminate this Agreement as provided in this Section, the Blue Hills Parties shall be notified promptly by telephone or electronic mail, confirmed by letter.

Any of the Blue Hills Parties may terminate this Agreement in the event the Agent is in material breach of the representations and warranties or covenants contained in Section 5 and such breach has not been cured within a reasonable time period after the Blue Hills Party has provided the Agent with notice of such breach.

This Agreement may also be terminated by mutual written consent of the parties hereto.

Section 12. Notices . All communications hereunder, except as herein otherwise specifically provided, shall be mailed in writing and if sent to the Agent shall be mailed, delivered or telegraphed and confirmed to Keefe, Bruyette & Woods, Inc., 10 South Wacker Drive, Investment Banking Suite 3400, Chicago, Illinois 60606, Attention: Pat McJoynt (with a copy to Nutter, McClennen & Fish LLP, Attention: Michael Krebs) and, if sent to the Blue Hills Parties, shall be mailed, delivered or telegraphed and confirmed to the Bank at Blue Hills Bank, 320 Norwood Park South, Norwood, MA 02062, Attention: William Parent (with a copy to Luse Gorman Pomerenk & Schick, P.C., Attention: Larry Spaccasi).

Section 13. Parties . The Blue Hills Parties shall be entitled to act and rely on any request, notice, consent, waiver or agreement purportedly given on behalf of the Agent when the same shall have been given by the undersigned. The Agent shall be entitled to act and rely on any request, notice, consent, waiver or agreement purportedly given on behalf of the Blue Hills Parties, when the same shall have been given by the undersigned or any other officer of any of the Blue Hills Parties. This Agreement shall inure solely to the benefit of, and shall be binding upon, the Agent, the Blue Hills Parties and their respective successors and assigns, and no other person shall have or be construed to have any legal or equitable right, remedy or claim under or in respect of or by virtue of this Agreement or any provision herein contained.

Section 14. Closing . The closing for the sale of the Shares (the “Closing”) shall take place on the Closing Date at such location as mutually agreed upon by the Agent and the Holding Company and the Bank. At the Closing, the Blue Hills Parties shall deliver to the Agent in next day funds the commissions, fees and expenses due and owing to the Agent as set forth in Sections 2 and 7 hereof and

the opinions and certificates required hereby and other documents deemed reasonably necessary by the Agent shall be executed and delivered to effect the sale of the Shares as contemplated hereby and pursuant to the terms of the Prospectus.

Section 15. Partial Invalidity . In the event that any term, provision or covenant herein or the application thereof to any circumstance or situation shall be invalid or unenforceable, in whole or in part, the remainder hereof and the application of said term, provision or covenant to any other circumstances or situation shall not be affected thereby, and each term, provision or covenant herein shall be valid and enforceable to the full extent permitted by law.

Section 16. Governing Law and Construction . This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to principles of conflicts of law.

Section 17. Counterparts; Facsimile Delivery . This Agreement may be executed in separate counterparts and by facsimile or electronic signatures, each of which so executed and delivered shall be an original, but all of which together shall constitute but one and the same instrument. The exchange of copies of this Agreement and of signature pages by facsimile transmission or in pdf format shall constitute effective execution and delivery of this Agreement as to the parties and may be used in lieu of the original Agreement for all purposes. Signatures of the parties transmitted by facsimile or in pdf format shall be deemed to be their original signatures for all purposes.

Section 18. Entire Agreement . This Agreement, including schedules and exhibits hereto, which are integral parts hereof and incorporated as though set forth in full, constitutes the entire agreement between the parties pertaining to the subject matter hereof superseding any and all prior or contemporaneous oral or prior written agreements, proposals, letters of intent and understandings, and cannot be modified, changed, waived or terminated except by a writing which expressly states that it is an amendment, modification or waiver, refers to this Agreement and is signed by the party to be charged. No course of conduct or dealing shall be construed to modify, amend or otherwise affect any of the provisions hereof.

Section 19. Survival . The respective indemnities, agreements, representations, warranties and other statements of the Blue Hills Parties and the Agent, as set forth in this Agreement, shall remain in full force and effect, regardless of any termination or cancellation of this Agreement or any investigation (or any statement as to the results thereof) made by or on behalf of the Agent or any of the Agent’s officers or directors or any person controlling the Agent, or the Blue Hills Parties, or any of their respective officers or directors or any person controlling the Blue Hills Parties, and shall survive termination of this Agreement and receipt or delivery of any payment for the Shares.

Section 20. Waiver of Trial by Jury . Each of the Agent and the Blue Hills Parties waives all right to trial by jury in any action, proceeding, claim or counterclaim (whether based on contract, tort or otherwise) related to or arising out of this Agreement.

This agreement is made solely for the benefit of and will be binding upon the parties hereto and their respective successors and the directors, officer and controlling persons and no other person will have any right or obligation hereunder.

[Remainder of page intentionally blank]

If the foregoing correctly sets forth the arrangement among the Blue Hills Parties and the Agent, please indicate acceptance thereof in the space provided below for that purpose, whereupon this letter and the Agent’s acceptance shall constitute a binding agreement.


Very truly yours,

Blue Hills Bank				Blue Hills Bancorp, Inc.

By Its Authorized Representative:				By Its Authorized Representative:


William M. Parent				William M. Parent
President and Chief Executive Officer				President and Chief Executive Officer

Hyde Park Bancorp, MHC				Hyde Park Bancorp, Inc.

By Its Authorized Representative:				By Its Authorized Representative:


William M. Parent				William M. Parent
President and Chief Executive Officer				President and Chief Executive Officer

Accepted as of the date first above written

KEEFE, BRUYETTE & WOODS, INC.

By its Authorized Representative


Pat McJoynt
Managing Director

Exhibit A to Agency Agreement – Engagement Letter with the Agent- Financial Advisor

A-1

Exhibit B to Agency Agreement – Engagement Letter with Agent- Conversion Agent

A-1

Exhibit 2

HYDE PARK BANCORP, MHC

PLAN OF CONVERSION

Adopted by the Board of Trustees

on March 6, 2014

TABLE OF CONTENTS


ARTICLE 1. INTRODUCTION—BUSINESS PURPOSE		1

ARTICLE 2. DEFINITIONS		3

ARTICLE 3. GENERAL PROCEDURE FOR CONVERSION		10
3.1.	Preconditions to Conversion	10
3.2.	Submission of Plan to Commissioner and FRB	10
3.3.	Special Meeting of Corporators to Approve the Plan	11
3.4.	Completion of Conversion and Offering	11
3.5.	Bank Charter And Bylaws	11
3.6.	Conversion Procedures	11
3.7.	Conversion to Stock Holding Company	12
3.8.	Offer and Sale of Holding Company Common Stock	12

ARTICLE 4. ESTABLISHMENT AND FUNDING OF CHARITABLE FOUNDATION		13
4.1.	Establishment of the Foundation	13
4.2.	Purposes of the Foundation; Charitable Contributions	13
4.3.	Board of Directors of the Foundation	14

ARTICLE 5. SHARES TO BE OFFERED		14
5.1.	Holding Company Common Stock	14
5.2.	Independent Valuation, Purchase Price and Number of Shares.	14

ARTICLE 6. SUBSCRIPTION RIGHTS AND ORDERS FOR COMMON STOCK		16
6.1.	Distribution of Prospectus	16
6.2.	Order Forms	16
6.3.	Undelivered, Defective or Late Order Form; Insufficient Payment	17
6.4.	Payment for Stock	17

ARTICLE 7. STOCK PURCHASE PRIORITIES AND OFFERING ALTERNATIVES		18
7.1.	Priorities for Offering	18
7.2.	Certain Determinations	18
7.3.	Minimum Purchase; No Fractional Shares	19
7.4.	Overview of Priorities	19
7.5.	Priorities For Subscription Offering	19
7.6.	Priorities for Direct Community Offering	21
7.7.	Syndicated Community Offering or Firm Commitment Underwritten Offering	22

ARTICLE 8. ADDITIONAL LIMITATIONS ON PURCHASES		23
8.1.	General	23
8.2.	Individual Maximum Purchase Limit	23
8.3.	Group Maximum Purchase Limit	24
8.4.	Special Rule for Tax-Qualified Employee Plans	24


8.5.	Illegal Purchases	24
8.6.	Rejection of Orders	24
8.7.	Subscribers in Non-Qualified States or in Foreign Countries	25
8.8.	No Offer to Transfer Shares	25
8.9.	Confirmation by Purchasers	25

ARTICLE 9. POST OFFERING MATTERS		25
9.1.	Stock Purchases After the Conversion	25
9.2.	Resales of Stock by Management Persons	26
9.3.	Stock Certificates	26
9.4.	Restriction on Financing Stock Purchases	26
9.5.	Stock Benefit Plans	26
9.6.	Market for Holding Company Common Stock	27
9.7.	Liquidation Account	27
9.8.	Payment of Dividends	30
9.9.	Repurchase of Stock	30
9.10.	Conversion Expenses	31
9.11.	Public Inspection of Conversion Application	31
9.12.	Enforcement of Terms and Conditions	31
9.13.	Voting Rights in Converted Stock Holding Company	31

ARTICLE 10. MISCELLANEOUS		33
10.1.	Interpretation of Plan	33
10.2.	Amendment or Termination of the Plan	33

EXHIBITS



Exhibit 1.1		Form of Agreement of Merger between Hyde Park Bancorp, MHC and Hyde Park Bancorp, Inc.

Exhibit 1.2		Form of Agreement of Merger between Hyde Park Bancorp, Inc. (a Massachusetts corporation and Blue Hills Bancorp, Inc., a Maryland corporation

HYDE PARK BANCORP, MHC

PLAN OF CONVERSION

ARTICLE 1.

Introduction—Business Purpose

This Plan of Conversion (the “Plan”) provides for the conversion and reorganization of Hyde Park Bancorp, MHC, a Massachusetts-chartered mutual holding company (the “MHC”), into the capital stock form of organization and all steps incident or necessary thereto (the “Conversion”). The MHC currently owns 100% of the common stock of Hyde Park Bancorp, Inc., a Massachusetts corporation (the “Mid-Tier Holding Company”), which owns 100% of the common stock of Blue Hills Bank (the “Bank”). The Bank is a Massachusetts-chartered savings bank headquartered in Hyde Park, 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, 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, applicable Regulations of the Massachusetts Division of Banks (the “Division”) and the Board of Governors of the Federal Reserve System (the “FRB”), 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 shares of its common stock (the “Holding Company Common Stock”) in a Subscription Offering upon the terms and conditions set forth herein to Eligible Account Holders, Supplemental Eligible Account Holders (if any), Tax-Qualified Employee Plans established by the Bank or the Stock Holding Company, and Employees, Officers, directors, trustees or Corporators of the MHC, the Mid-Tier Holding Company or the Bank, according to the respective priorities set forth in the Plan. Any shares not subscribed for in the Subscription Offering may be offered for sale to certain members of the public directly by the Stock Holding Company through a Direct Community Offering and/or a Syndicated Community Offering. Alternatively, any shares not subscribed for in the Subscription Offering and any Direct Community Offering may be offered for sale in a Firm Commitment Underwritten Offering, or in any other manner permitted by the Bank Regulators. All sales of Holding Company Common Stock in a Direct Community Offering, in a Syndicated Community Offering, in a Firm Commitment Underwritten Offering, or in any other manner permitted by the Bank Regulators, will be at the sole discretion of the Board of Trustees of the MHC and the Board of Directors of the Stock Holding Company.

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 all 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 and the Agreement and Plan of Merger attached hereto as Exhibit 1.1 (the “MHC Merger”). As part of the MHC Merger, 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 the Agreement and Plan of Merger attached hereto as Exhibit 1.2, 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 Stock Holding Company Liquidation Account. Immediately after the Mid-Tier Merger, the Stock Holding Company will offer for sale shares of Holding Company Common Stock in the Offering (the “Offering Shares”). 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 or regulatory 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 through the implementation of our business strategy; (2) retain and attract qualified Directors, management and employees by establishing stock-based benefit plans; (3) increase our philanthropic endeavors in the communities that we serve through the establishment and funding of the Foundation to complement our existing charitable foundation; (4) build our capital base to allow us to take advantage of acquisition opportunities that may arise in our market area and adjacent markets; and (5) and to offer our depositors, employees, Officers, Trustees, Directors and Corporators an opportunity to purchase our stock. In addition, the Board of Trustees and senior management believe that the Conversion will be beneficial to the population within the Bank’s 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 local community. 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, simultaneously with the Conversion, to contribute to the Foundation a number of shares of Holding Company Common Stock (the “Foundation Shares”) equal to 2.5% of the shares of Holding Company Common Stock sold in the Conversion plus an amount of cash such that the total contribution to the Foundation will equal $7.0 million (based on a price of $10.00 per share of Holding Company Common Stock).

The Bank converted to the stock form of organization when the Bank reorganized into the mutual holding company structure in 2008 (prior to the formation of the Mid-Tier Holding Company in 2011). 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 holder shall have all of 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 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:

Account Holder. Any Person holding a Deposit Account in the Bank.

Acting in Concert. The term “Acting in Concert” means Persons seeking to combine or pool their voting or other interests 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.

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.

Application. The application, including a copy of the Plan, submitted by the MHC to the Commissioner for approval of the Conversion.

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 an 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; or (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, or any subsidiary thereof; provided , however , that any 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, trustee 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.

Bank. Blue Hills Bank.

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.

Bank Regulators. The Commissioner, the FRB and other bank regulatory agencies, if any, responsible for reviewing and approving the Conversion, including the ownership of the Bank by the Stock Holding Company and the mergers required to effect the Conversion.

BHCA. The Bank Holding Company Act of 1956, as amended.

Code. The Internal Revenue Code of 1986, as amended.

Commissioner. The Commissioner of Banks of the Commonwealth of Massachusetts.

Community Offering. A Direct Community Offering and/or a Syndicated Community Offering.

Control (including the terms “controlling”, “controlled by”, and “under common control with”). The possession, direct or indirect, of the Power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise.

Conversion. The Conversion of the MHC to stock form pursuant to the Plan, and all steps incident or necessary thereto.

Conversion Shares. The Offering Shares and the Foundation Shares.

Corporator. A corporator of the MHC.

Deposit Account. Any withdrawable deposit account, including, without limitation, savings accounts, NOW account deposits, certificates of deposit, demand deposits, Keogh Plan, SEPs and Individual Retirement Accounts, 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.

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.

Director. A director of the Mid-Tier Holding Company, the Bank or the Stock Holding Company, as the context may dictate.

Division. The Division of Banks of the Commonwealth of Massachusetts.

Eligible Account Holder. Any Person holding a Qualifying Deposit on the Eligibility Record Date.

Eligibility Record Date. February 28, 2013, the date for determining who qualifies as an Eligible Account Holder.

Employee. All Persons who are employed by the Bank, the Mid-Tier Holding Company or the MHC. The term “Employee” does not include a trustee, director or Officer.

Employee Plan. Any Tax-Qualified Employee Plan or Non-Tax-Qualified Employee Benefit Plan.

ESOP. The Bank’s employee stock ownership plan.

Estimated Valuation Range. The range of the estimated consolidated pro forma market value of the Stock Holding Company, which shall also be equal to the range of the estimated pro forma market value of the aggregate Conversion Shares to be issued in the Conversion. The Estimated Valuation Range shall be based on the Independent Valuation determined by the Independent Appraiser prior to the Subscription Offering, as it may be amended from time to time thereafter. The Independent Valuation of the pro forma market value of the Conversion Shares established by the Independent Appraiser shall form the midpoint of the Estimated Valuation Range. The maximum of the Estimated Valuation Range may vary as much as 15% above the midpoint of the Estimated Valuation Range (the “Maximum of the Estimated Valuation Range”) and 15% below the midpoint of the Estimated Valuation Range. The Maximum of the Estimated Valuation Range may be increased by up to 15% subsequent to the commencement of the Offering to reflect changes in demand for the Holding Company Common Stock or changes in market conditions.

Exchange Act. The Securities Exchange Act of 1934, as amended.

FDIC. The Federal Deposit Insurance Corporation.

Firm Commitment Underwritten Offering. The offering, at the sole discretion of the Stock Holding Company, of Offering Shares not subscribed for in the Subscription Offering and any Direct Community Offering, to members of the general public through one or more underwriters. A Firm Commitment Underwritten Offering may occur following the Subscription Offering and the Direct Community Offering, if any.

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 the Code.

Foundation Shares. Shares of Common Stock issued to the Foundation in connection with the Conversion.

FRB. The Board of Governors of the Federal Reserve System.

FRB Applications. The FRB Conversion Application to be submitted to the FRB by the MHC and the Holding Company Application to be submitted to the FRB by the Stock Holding Company.

FRB Conversion Application. The FRB Conversion Application seeking the FRB’s prior approval of, or non objection to, the MHC’s conversion from mutual to stock form.

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.

Holding Company Application. The Holding Company Application on Form FR Y-3 for the FRB’s prior approval of the Stock Holding Company’s acquisition of the Bank.

Holding Company Common Stock. The Holding Company Common Stock to be issued by the Stock Holding Company in the Conversion.

Independent Appraiser. The appraiser retained by the MHC to prepare an independent appraisal of the pro forma market value of the Conversion Shares.

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.

Independent Valuation. The independent valuation of the pro forma market value of the Conversion Shares, as determined by the Independent Appraiser.

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.

Information Statement. The information statement required to be sent to the Corporators in connection with the Special Meeting.

Local Community. The Massachusetts counties of Norfolk, Suffolk and Nantucket.

Marketing Agent. The broker-dealer responsible for organizing and managing the sale of the Holding Company Common Stock.

Market Maker. A broker-dealer who, with respect to a particular security: (a)(i) regularly publishes bona fide, competitive bid and offer quotations in a recognized inter-dealer quotation system, or (ii) furnishes bona fide competitive bid and offers quotations on request; and (b) is ready, willing and able to effect transactions in reasonable quantities at his or her quoted prices with other brokers or dealers.

MHC. Hyde Park Bancorp, MHC, the Massachusetts-chartered mutual holding company for the Bank.

Mid-Tier Holding Company. Hyde Park Bancorp, Inc., the Massachusetts corporation which owns 100% of the common stock of the Bank.

Nantucket Bank. When referred to in this Plan means the assets acquired and liabilities assumed by the Bank pursuant to the Purchase and Assumption Agreement dated as of August 4, 2013, among Sovereign Bank, N.A., a national banking association, the Bank and the MHC.

Non-Tax-Qualified Employee Benefit Plan. Any defined benefit plan or defined contribution plan which is not qualified under the Code.

Offering. The Subscription Offering, the Direct Community Offering, if any, the Syndicated Community Offering, if any, and the Firm Commitment Underwritten Offering, if any.

Offering Range. The range of the number of shares of Holding Company Common Stock offered for sale in the Offering. The Offering Range will be equal to the Estimated Valuation Range divided by the Subscription Price, adjusted for the Foundation Shares.

Offering Shares. Shares of Holding Company Common Stock offered and sold in the Offering.

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.

Order Form. Any form (together with any cover letter and acknowledgments) sent to any Participant or Person containing among other things a description of the alternatives available to such Person under this Plan and by which any such Person may make elections regarding subscriptions for Offering Shares.

Participant. Any Eligible Account Holder, Supplemental Eligible Account Holder, Tax-Qualified Employee Plan, or any Employee, Officer, Director, Trustee or Corporator of the MHC, the Mid-Tier Holding Company or the Bank.

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.

Plan. This Plan of Conversion, as it may be amended.

Qualifying Deposit. Means: (A) the aggregate balance of all Deposit Accounts in the Bank of (i) an Eligible Account Holder at the close of business on the Eligibility Record Date, provided such aggregate balance is not less than $50, and (ii) a Supplemental Eligible Account Holder at the close of business on the Supplemental Eligibility Record Date provided such aggregate balance is not less than $50; and (B) the aggregate balance of all Deposit Accounts in Nantucket Bank of an Eligible Account Holder at the close of business on the Eligibility Record Date, provided such aggregate balance is not less than $50 and provided further that such deposit account in Nantucket Bank was assumed by the Bank pursuant to the Purchase and Assumption Agreement dated as of August 4, 2013, among Sovereign Bank, N.A., a national banking association, the Bank and the MHC.

Range Maximum. The number of Offering Shares that is 15% above the midpoint of the Offering Range.

Range Minimum. The number of Offering Shares that is 15% below the midpoint of the Offering Range.

Regulations. The regulations of the Division regarding mutual-to-stock conversions of mutual holding companies and the regulations of the FRB (to the extent deemed applicable by the FRB).

Resident. Any Person who occupies a dwelling within the Local Community, has a present intent to remain within 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 something other than merely transitory in nature. To the extent the Person is a corporation or other business entity, the principal place of business or headquarters of such Person must be in the Local Community. To the extent a Person is a personal benefit plan, the circumstances of the beneficiary shall apply with respect to this definition. In the case of all other benefit plans, circumstances of the trustee shall be examined for purposes of this definition. The MHC may utilize deposit or loan records or such other evidence provided to it to make a determination as to whether a Person is a resident. In all cases, however, such a determination shall be in the sole discretion of the MHC. A Participant must be a “resident” of the Local Community for purposes of determining whether such Person “resides”, or is “residing”, in the Local Community as such term is used in this Plan.

SEC. The Securities and Exchange Commission.

Special Meeting. The Special Meeting of Corporators called for the purpose of voting on the Plan, which may be the Annual Meeting of Corporators.

Stock Holding Company. The stock-form holding company that will (a) be a Maryland corporation known as Blue Hills 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.

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.

Subscription Offering. The offering of Holding Company Common Stock for subscription by Persons holding subscription rights pursuant to the Plan.

Subscription Price. The price per Offering Share to be paid by Participants and others in the Offering. The Subscription Price will be determined by the Board of Trustees of the MHC and the Board of Directors of the Stock Holding Company and fixed prior to the commencement of the Subscription Offering.

Subsidiary. A company that is controlled by another company, either directly or indirectly through one or more subsidiaries.

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).

Supplemental Eligibility Record Date. If the Eligibility Record Date is more than 15 months prior to the date of the latest amendment to the 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.

Syndicated Community Offering. The offering, at the sole discretion of the Stock Holding Company, of Offering Shares not subscribed for in the Subscription Offering and the Direct Community Offering, to members of the general public through a syndicate of broker-dealers.

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 the Code.

Trustees. The trustees of the MHC.

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 Special Meeting.

3.1.2 Approval by the Commissioner of the Application, including the Plan.

3.1.3 Approval by the FRB of the FRB Applications.

3.1.4 Prior receipt of the private letter rulings or opinions of counsel set forth in Section 3.2 of this Plan.

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 Applications, 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 Code. 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. The MHC, the Mid-Tier Holding Company and the Stock Holding Company will also publish any notice required in connection with the Holding Company Application and any other applications required to complete the Conversion.

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. Completion of Conversion and Offering. The Board of Trustees of the MHC, the Board of Directors of the Mid-Tier Holding Company, the Board of Directors of the Stock 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 with the SEC of a registration statement to register the sale and/or issuance of Conversion Shares.

3.5. Bank Articles of Organization and Bylaws. The current Articles of Organization and Bylaws of the Bank are to be amended to add or amend the Bank Liquidation Account, if required.

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 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 Offering Shares 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 Offering Shares 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 Offering Shares 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 or a Firm Commitment Underwritten Offering, or in any manner receiving the required approval of the Bank Regulators and other applicable regulatory agencies that will achieve a widespread distribution of the Holding Company Common Stock. The issuance of Holding Company Common Stock in the Subscription Offering and any Direct Community Offering will be consummated simultaneously on the date the sale of Holding Company Common Stock is consummated in any Syndicated Community Offering or Firm Commitment Underwritten Offering, and only if the required minimum

number of shares of Holding Company Common Stock has been issued. 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 or Firm Commitment Underwritten 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 a number of shares of Holding Company Common Stock equal to 2.5% of the shares of Holding Company Common Stock sold in the Conversion plus an amount of cash such that the total contribution to the Foundation will equal $7.0 million (based on a price of $10.00 per share of Holding Company Common Stock).

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 local 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 local 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, as well as any additional conditions imposed by the Bank Regulators:

•

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 will, for at least five years after its organization, consist of at least one member that is also a Director of 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, the Stock Holding Company, the Mid-Tier Holding Company or the Bank nor a significant borrower of the Bank.

ARTICLE 5.

Shares to be Offered

5.1. Holding Company Common Stock. The Conversion Shares, when issued in accordance with this Plan, 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 Incorporation will exceed the number of Conversion Shares issued. HOLDING COMPANY COMMON STOCK WILL NOT BE COVERED BY DEPOSIT INSURANCE.

5.2. Independent Valuation, Purchase Price and Number o f Shares.

5.2.1 Independent Valuation. An Independent Appraiser shall be employed by the MHC to provide it with an Independent Valuation of the pro forma market value of the Conversion Shares as required by the Regulations, which value shall be included in the prospectus (as described in Section 6.1 hereof) filed with the Commissioner, the FRB 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 of the pro forma market value of the Conversion Shares established by the Independent Appraiser shall form the midpoint of the Estimated Valuation Range. The maximum of the Estimated Valuation Range may vary as much as 15% above the midpoint of the Estimated Valuation Range (“Range Maximum”) and 15% below the midpoint of the Estimated Valuation Range (“Range Minimum”).

5.2.2 Subscription Price. All shares sold in the Offering 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 or Firm Commitment Underwritten Offering, the price per share at which the Holding Company Common Stock is sold in such Syndicated Community Offering or Firm Commitment Underwritten 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 Offering Shares will be equal to the estimated consolidated pro forma market value of the Conversion Shares, as determined for such purpose by the Independent Appraiser, less the value of the Foundation Shares based on the Subscription Price.

5.2.3 Number of Shares. The Offering Range of Offering Shares to be offered for sale in the Offering will be determined by the Board of Trustees of the MHC and the Board of Directors of the Stock Holding Company immediately before the commencement of the Subscription Offering based on the Independent Valuation, the Estimated Valuation Range, the Subscription Price and the Foundation Shares. 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 or demand for the Holding Company Common Stock, provided that 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 Offering Range may be increased or decreased by the Stock Holding Company, subject to the following provisions. In the event that the number of Offering Shares ordered is below the Range Minimum, 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 shares of Holding Company Common Stock will be issued unless, prior to the consummation of the Offering, the Independent Appraiser confirms to the MHC, the Stock Holding Company, the Commissioner and the FRB (if required), 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 number of Conversion Shares sold in the Offering and contributed to the Foundation multiplied by the Subscription Price is incompatible with its estimate of the

aggregate consolidated pro forma market value of the Stock Holding Company. If such confirmation is not received, the Stock Holding Company may cancel the Offering, extend the Offering and establish a new Subscription Price and/or Estimated Valuation Range, extend, reopen or hold a new Offering, or take such other action as the Commissioner and the FRB may permit.

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 Stock Holding Company’s registration statement and the prospectus therein have been declared effective and/or approved for use by the SEC and the Commissioner (and the FRB if required), copies of the prospectus and Order Forms will be distributed to all eligible Participants in the Subscription Offering at their last known addresses appearing on the records of the Bank and the MHC for the purpose of subscribing for shares of Holding Company Common Stock in the Subscription Offering. Prospectuses and Order Forms will also be made available (if and when a Direct Community Offering is held) for use by Persons to whom shares of Holding Company Common Stock are offered in the Direct Community 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 personal check, money order or bank draft 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, Early 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 received by the Stock Holding Company prior to the Special Meeting of Corporators, (c) are not received back by the Stock Holding Company or are received by the Stock Holding Company after the expiration date specified thereon, (d) are defectively filled out or executed, (e) 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 (f) 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 Subscription Offering and the Community Offering 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 in which case an Order Form may or may not be required in connection with subscriptions), 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 personal 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 without prior approval from the MHC. 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, money orders and bank drafts 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 and Offering Alternatives

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 of the FRB, if required. 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,” or whether any purchase conflicts with the purchase limitations in the Plan or otherwise violates any provision of

the Plan, 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. 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.

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; (c) Tax-Qualified Employee Plans; and (d) Employees, Officers, directors, trustees and Corporators of the MHC, the Mid-Tier Holding Company or the Bank. Any shares of Holding Company Common Stock that are not subscribed for in the Subscription Offering at the discretion of the Stock Holding Company may be 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. Alternatively, if feasible, 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 in a Firm Commitment Underwritten Offering subject to such terms, conditions and procedures as may be determined by the MHC and 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 greater of (a) the quotient obtained 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 (0.10%) 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 sold in the Offering 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 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. Unless the Bank Regulators permit otherwise, subscription rights to purchase Holding Company Common Stock received by Officers, directors, trustees and Corporators of the MHC and the Bank and the Associates of such persons that are 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 greater of (a) the quotient obtained by dividing the Individual Maximum Purchase Limit by the per share Subscription Price, (b) one-tenth of one percent (0.10%) 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 sold in the Offering 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). The Employee Plans shall not be deemed to be Associates or Affiliates of or Persons Acting in Concert with any director, trustee, Officer or Corporator of the MHC, the Stock Holding Company or the Bank. Alternatively, if permitted by the Bank Regulators, the Tax-Qualified Employee Plans may purchase all or a portion of such shares in the open market after the completion 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 shall receive non-transferable subscription rights to subscribe for Offering Shares offered in the Conversion in an amount equal to the Individual Maximum Purchase Limit; provided, however , that shares purchased under this Section 7.5.4 shall be aggregated with shares purchased under the preceding priority categories for purposes of the Individual Maximum Purchase Limit. The aggregate number of Offering Shares that may be purchased by Employees, Officers, Directors, Trustees and Corporators in the Conversion shall be limited to 30% of the total number of Offering Shares offered in the Offering (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 Offering Shares than are available for purchase by them, the Offering Shares 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 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 (including trusts of 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, and trusts of natural Persons, residing in the Local Community and second to the general public, 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. The Bank may use deposit or loan records or such other evidence provided to it to determine whether a Person is a Resident of the Local Community. In all cases, however, such a determination shall be in the sole discretion of the Stock Holding Company.

7.6.3 If:

(i) aggregate subscriptions for shares totaling at least 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 neither a Syndicated Community Offering nor a Firm Commitment Underwritten Offering is 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 or Firm Commitment Underwritten 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. Syndicated Community Offering or Firm Commitment Underwritten 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 Alternatively, if feasible, 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 in a Firm Commitment Underwritten Offering subject to such terms, conditions and procedures as may be determined by the MHC and the Stock Holding Company, subject to the right of the Stock Holding Company to accept or reject in whole or in part any orders in the Firm Commitment Underwritten Offering. Provided the Subscription Offering has begun, the Holding Company may begin the Firm Commitment Underwritten Offering at any time.

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 or Firm Commitment Underwritten 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 Individual Maximum Purchase Limit to up to 5% of the number of shares of Holding Company Common Stock offered in the Offering or (ii) decrease such Individual Maximum Purchase Limit to no less than one-tenth of one percent (0.10%) 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 Conversion shares issued in the Conversion (including shares issued in the event of an increase in Range Maximum of 15%). 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. In the event that the Individual Maximum Purchase Limit is increased to 5.0% of the shares offered in the Offering, such limitation may be further increased

to 9.99%, provided that orders for Holding Company Common Stock exceeding 5.0% of the shares of Holding Company Common Stock offered in the Offering shall not exceed in the aggregate 10.0% of the total shares of Holding Company Common Stock offered in the Offering. Requests to purchase additional shares of Holding Company Common Stock in the event that the purchase limitation is so increased will be determined by the Board of Directors of 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 or Firm Commitment Underwritten Offering) more than $1,000,000 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 Offering 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 Conversion 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. The maximum number of shares of Holding Company Common Stock that may be subscribed for or purchased in all categories of the Offering by any Person or Participant together with any Associate or group or Persons Acting in Concert shall not exceed 9.9% of shares offered in the Offering; provided, that this limitation shall not apply to the Employee Plans.

8.4. 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.

8.5. 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.

8.6. 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.

8.7 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.

8.8. 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.

8.9. 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.

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 and the FRB, 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 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 or 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; provided, however, that the Stock Holding Company, or a subsidiary thereof, may loan funds to the ESOP for the purchase of up to 10% of the Conversion Shares issued 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 Tax-Qualified Employee Plans, including the ESOP, to purchase up to 10% of the Holding Company Common Stock to be issued in the Conversion. 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, if applicable. 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. Such limitations shall only apply if the Recognition Plans or stock option plans are adopted one year or less following the completion of the Offering. 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, except that 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. Neither the Stock Holding Company nor the Bank shall be required to set aside funds in connection with its obligations hereunder relating to the Liquidation Account and the Bank Liquidation Account, respectively. 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 three-year period following the completion of the Conversion, the Stock Holding Company will not without prior approval of the Commissioner and the FRB: (i) sell or liquidate the Stock Holding Company, or (ii) cause the Bank to be sold or liquidated. Upon the written request of the FRB and, if necessary, the Commissioner, the Stock Holding Company shall, or upon the prior written approval of the FRB and, if necessary, the Commissioner, the Stock Holding Company may, at any time after two years from the completion of the Conversion, transfer the Stock Holding Company Liquidation Account to the Bank, at which time the Stock Holding Company Liquidation Account shall be assumed by the Bank and 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 Liquidation Account shall be subsumed into the Bank Liquidation Account 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 herein.

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 such dividend would cause its regulatory capital to be reduced below applicable capital requirements or the amount required to maintain its respective liquidation account. 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 Bank will maintain a copy of the non-confidential portion 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.

9.14. Restrictions on Acquisition of Bank and Stock Holding Company.

9.14.1 The Articles of Organization of the Bank may contain a provision stipulating that no person, except the Stock Holding Company, for a period of three years following the closing date of the Conversion, may directly or indirectly acquire or offer to acquire the beneficial ownership of more than 10% of any class of equity security of the Bank, without the prior written approval of the FRB. In addition, such charter may also provide that for a period of five years following the closing date of the Conversion, shares beneficially owned in violation of the above-described charter provision shall not be entitled to vote and shall not be voted by any person or counted as voting stock in connection with any matter submitted to stockholders for a vote. In addition, special meetings of the stockholders relating to changes in control or amendment of the charter may only be called by the Board of Directors, and stockholders shall not be permitted to cumulate their votes for the election of Directors.

9.14.2 For a period of three years from the date of consummation of the Conversion, no person, other than the Stock Holding Company, shall directly or indirectly offer to acquire or acquire the beneficial ownership of more than 10% of any class of equity security of the Bank without the prior written consent of the FRB. Nothing in this Plan shall prohibit the Stock Holding Company from taking actions permitted under 12 C.F.R. 239.63(f).

9.14.3 The Articles of Incorporation of the Stock Holding Company may contain a provision stipulating that in no event shall any record owner of any outstanding shares of Holding Company Common Stock who beneficially owns in excess of 10% of such outstanding shares be entitled or permitted to any vote with respect to any shares held in excess of 10%. In addition, the Articles of Incorporation and Bylaws of the Stock Holding Company may contain, in addition to any other permissible provisions, provisions which provide for, or prohibit, as the case may be, staggered terms of the Directors, noncumulative voting for Directors, limitations on the calling of special meetings, a fair price provision for certain business combinations and certain notice requirements.

9.14.4 For the purposes of this Section 9.15:

(1)

the term “person” includes an individual, a firm, a corporation or other entity;

(2)

the term “offer” includes every offer to buy or acquire, solicitation of an offer to sell, tender offer for, or request or invitation for tenders of, a security or interest in a security for value;

(3)

the term “acquire” includes every type of acquisition, whether effected by purchase, exchange, operation of law or otherwise; and

(4)

the term “security” includes non-transferable subscription rights issued pursuant to a plan of conversion as well as a “security” as defined in 15 U.S.C. § 77b(a)(1).

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 and the FRB. 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 the FRB and at any time thereafter with the concurrence of the Commissioner and the FRB. 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 or the FRB. 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 and the FRB. 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: March 6, 2014

EXHIBIT 1.1

AGREEMENT OF MERGER BETWEEN

HYDE PARK BANCORP, MHC

AND HYDE PARK BANCORP, INC.

THIS AGREEMENT OF MERGER (the “MHC Merger Agreement”) dated as of , 2014, is made by and between Hyde Park Bancorp, MHC, a Massachusetts mutual holding company (the “MHC”), and Hyde Park Bancorp, Inc., a Massachusetts corporation (the “Mid-Tier Holding Company”). Capitalized terms have the respective meanings given them in the Plan of Conversion (the “Plan”) of the MHC, unless otherwise defined herein.

R E C I T A L S:

1. The MHC is a Massachusetts mutual holding company that owns 100% of the common stock of the Mid-Tier Holding Company.

2. The Mid-Tier Holding Company is a Massachusetts corporation that owns 100% of the common stock of Blue Hills Bank, a Massachusetts-chartered savings bank.

3. The Board of Directors of the Mid-Tier Holding Company and the board of trustees of the MHC have approved this MHC Merger Agreement whereby the MHC shall merge with and into the Mid-Tier Holding Company with the Mid-Tier Holding Company as the resulting corporation (the “MHC Merger”), and have authorized the execution and delivery of this MHC Merger Agreement.

NOW, THEREFORE, in consideration of the premises and mutual agreements contained herein, the parties hereto have agreed as follows:

1. Merger . At and on the Effective Date of the MHC Merger, the MHC will merge with and into the Mid-Tier Holding Company with the Mid-Tier Holding Company as the resulting entity (“Resulting Corporation”) whereby the shares of Mid-Tier Holding Company common stock held by the MHC will be canceled and persons having liquidation interests in the MHC will constructively receive liquidation interests in the Mid-Tier Holding Company in exchange for their liquidation interests in the MHC.

2. Effective Date . The MHC Merger shall not be effective until and unless: (i) the Plan is approved by the Division of Banks of the Commonwealth of Massachusetts and the Board of Governors of the Federal Reserve System; (ii) the Plan is 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 special meeting called for such purpose; (iii) the Plan and this MHC Merger Agreement are approved by the MHC as the sole stockholder of the Mid-Tier Holding Company; and (iv) the Articles of Merger shall have been filed with the Secretary of the Commonwealth of Massachusetts with respect to the MHC Merger. Approval of the Plan by the MHC’s Corporators shall constitute approval of this MHC Merger Agreement by the MHC’s Corporators.

3. Name . The name of the Resulting Corporation shall be Blue Hills Bancorp, Inc.

4. Offices . The main office of the Resulting Corporation shall be 1196 River Street, Hyde Park, Massachusetts.

5. Directors and Officers . The directors and officers of the Mid-Tier Holding Company immediately prior to the Effective Date shall be the directors and officers of the Resulting Corporation after the Effective Date.

6. Rights and Duties of the Resulting Corporation . At the Effective Date, the MHC shall be merged with and into the Mid-Tier Holding Company with the Mid-Tier Holding Company as the Resulting Corporation. The business of the Resulting Corporation shall be that of a Massachusetts corporation as provided in its Articles of Organization. All assets, rights, interests, privileges, powers, franchises and property (real, personal and mixed) of the Mid-Tier Holding Company and the MHC shall be transferred automatically to and vested in the Resulting Corporation by virtue of the MHC Merger without any deed or other document of transfer. The Resulting Corporation, without any order or action on the part of any court or otherwise and without any documents of assumption or assignment, shall hold and enjoy all of the properties, franchises and interests, including appointments, powers, designations, nominations and all other rights and interests as the agent or other fiduciary in the same manner and to the same extent as such rights, franchises, and interests and powers were held or enjoyed by the Mid-Tier Holding Company and the MHC. The Resulting Corporation shall be responsible for all of the liabilities, restrictions and duties of every kind and description of the Mid-Tier Holding Company and the MHC immediately prior to the MHC Merger, including liabilities for all debts, obligations and contracts of the Mid-Tier Holding Company and the MHC, matured or unmatured, whether accrued, absolute, contingent or otherwise and whether or not reflected or reserved against on balance sheets, books of accounts or records of the Mid-Tier Holding Company or the MHC. All rights of creditors and other obligees and all liens on property of the Mid-Tier Holding Company and the MHC shall be preserved and shall not be released or impaired.

7. Rights of Stockholders . At the Effective Date, the shares of Mid-Tier Holding Company common stock held by the MHC will be canceled and persons having liquidation interests in the MHC will constructively receive liquidation interests in the Mid-Tier Holding Company in exchange for their liquidation interests in the MHC.

8. Other Terms . The Plan is incorporated herein by this reference and made a part hereof to the extent necessary or appropriate to effect and consummate the terms of this MHC Merger Agreement and the Conversion.

[Signature page follows]

IN WITNESS WHEREOF , the Mid-Tier Holding Company and the MHC have caused this MHC Merger Agreement to be executed as of the date first above written.


	Hyde Park Bancorp, Inc.
	(a Massachusetts corporation)

ATTEST:

	By:
, Secretary		William M. Parent
		President and Chief Executive Officer

	Hyde Park Bancorp, MHC
	(a Massachusetts mutual holding company)

ATTEST:

	By:
George Clancy, Clerk		William M. Parent
		President and Chief Executive Officer

EXHIBIT 1.2

AGREEMENT OF MERGER BETWEEN

HYDE PARK BANCORP, INC. AND

BLUE HILLS BANCORP, INC.

THIS AGREEMENT OF MERGER (the “Mid-Tier Merger Agreement”), dated as of October , 2011, is made by and between Hyde Park Bancorp, Inc., a Massachusetts corporation (the “Mid-Tier Holding Company”), and Blue Hills Bancorp, Inc., a Maryland corporation (the “Holding Company”). Capitalized terms have the respective meanings given them in the Plan of Conversion of Hyde Park Bancorp, MHC (the “Plan”) unless otherwise defined herein.

R E C I T A L S:

1. The Mid-Tier Holding Company is a Massachusetts corporation that owns 100% of the common stock of Blue Hills Bank, a Massachusetts-chartered savings bank (the “Bank”).

2. The Holding Company has been organized as a first-tier stock subsidiary of the Mid-Tier Holding Company.

3. The boards of directors of the Mid-Tier Holding Company and the Holding Company have approved this Mid-Tier Merger Agreement whereby the Mid-Tier Holding Company will be merged with and into the Holding Company with the Holding Company as the resulting corporation (the “Mid-Tier Merger”), and have authorized the execution and delivery of this Mid-Tier Merger Agreement.

4. Immediately prior to the Mid-Tier Merger, Hyde Park Bancorp, MHC, a Massachusetts mutual holding company (the “MHC”) and the owner of 100% of the capital stock of the Mid-Tier Holding Company, merged 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 MHC were cancelled and persons having liquidation interests in the MHC constructively received liquidation interests in the Mid-Tier Holding Company in exchange for their liquidation interests in the MHC.

5. As a result of the Mid-Tier Merger, the Bank will become a wholly-owned subsidiary of the Holding Company.

NOW, THEREFORE , in consideration of the premises and mutual agreements contained herein, the parties hereto have agreed as follows:

1. Merger . At and on the Effective Date of the Mid-Tier Merger, the Mid-Tier Holding Company will merge with and into the Holding Company with the Holding Company as the resulting corporation (the “Resulting Corporation”), whereby the Bank will become the wholly-owned subsidiary of the Holding Company. As part of the Mid-Tier Merger, persons who had liquidation interests in the MHC who constructively received liquidation interests in the Mid-Tier Holding Company as part of the MHC Merger will exchange the liquidation interests in the Mid-Tier Holding Company that they constructively received for interests in the Liquidation Account.

2. Effective Date . The Mid-Tier Merger shall not be effective until and unless: (i) the Plan is approved by the Division of Banks of the Commonwealth of Massachusetts and the Board of Governors of the Federal Reserve System; (ii) the Plan and this Mid-Tier Merger Agreement are approved by the MHC as the sole stockholder of the Mid-Tier Holding Company; (iii) the Plan and this Mid-Tier Merger Agreement are approved by the Mid-Tier Holding Company as the sole stockholder of the Holding Company; and (iv) Articles of Merger shall have been filed with the Secretary of the Commonwealth of Massachusetts and the Maryland State Department of Assessments and Taxation with respect to the Mid-Tier Merger.

3. Name . The name of the Resulting Corporation shall be Blue Hills Bancorp, Inc.

4. Offices . The main office of the Resulting Corporation shall be 1196 River Street, Hyde Park, Massachusetts.

5. Directors and Officers . The directors and officers of the Holding Company immediately prior to the Effective Date shall be the directors and officers of the Resulting Corporation after the Effective Date.

6. Rights and Duties of the Resulting Corporation . At the Effective Date, the Mid-Tier Holding Company shall merge with the Holding Company, with the Holding Company as the Resulting Corporation. The business of the Resulting Corporation shall be that of a Maryland corporation as provided in its Articles of Incorporation. All assets, rights, interests, privileges, powers, franchises and property (real, personal and mixed) of the Mid-Tier Holding Company and the Holding Company shall be transferred automatically to and vested in the Resulting Corporation by virtue of the Mid-Tier Merger without any deed or other document of transfer. The Resulting Corporation, without any order or action on the part of any court or otherwise and without any documents of assumption or assignment, shall hold and enjoy all of the properties, franchises and interests, including appointments, powers, designations, nominations and all other rights and interests as the agent or other fiduciary in the same manner and to the same extent as such rights, franchises, and interests and powers were held or enjoyed by the Mid-Tier Holding Company and the Holding Company. The Resulting Corporation shall be responsible for all of the liabilities, restrictions and duties of every kind and description of the Mid-Tier Holding Company and the Holding Company immediately prior to the Mid-Tier Merger, including liabilities for all debts, obligations and contracts of the Mid-Tier Holding Company and the Holding Company, matured or unmatured, whether accrued, absolute, contingent or otherwise and whether or not reflected or reserved against on balance sheets, books of accounts or records of the Mid-Tier Holding Company or the Holding Company. The stockholders of the Holding Company shall possess all voting rights with respect to the shares of stock of the Resulting Corporation. All rights of creditors and other obligees and all liens on property of the Mid-Tier Holding Company and the Holding Company shall be preserved and shall not be released or impaired.

7. Rights of Stockholders . At the Effective Date, persons who had liquidation interests in the MHC who constructively received liquidation interests in the Mid-Tier Holding

Company in exchange for their liquidation interests in the MHC as part of the MHC Merger, will exchange their liquidation interests in the Mid-Tier Holding Company for interests in the Stock Holding Company Liquidation Account.

8. Other Terms . The Plan is incorporated herein by this reference and made a part hereof to the extent necessary or appropriate to effect and consummate the terms of this Mid-Tier Merger Agreement and the Conversion.

[Signature page follows]

IN WITNESS WHEREOF , the Mid-Tier Holding Company and the Holding Company have caused this Mid-Tier Merger Agreement to be executed as of the date first above written.


	Hyde Park Bancorp, Inc.

ATTEST:

	By:
, Secretary		William M. Parent
		President and Chief Executive Officer

	Blue Hills Bancorp, Inc.

ATTEST:

	By:
, Secretary		William M. Parent
		President and Chief Executive Officer

Exhibit 3.1

ARTICLES OF INCORPORATION

BLUE HILLS BANCORP, INC.

The undersigned, Lawrence M.F. Spaccasi, 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 Blue Hills 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, no par value (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 liquidation, dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary, holders of 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; and (ii) 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 December 31, 2013; 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 For Certain Actions. With respect those actions as to which any provision of the MGCL requires stockholder authorization 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, any 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.

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 twelve (12), 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 term expires and 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:

Ken D’Amato

Brian G. Leary, Esq.

Karen O’Connell, Esq.

Ronald K. Perry

Class II Directors:

George E. Clancy, Esq.

William M. Parent

David Powers

Scott Smith

Class III Directors:

David J. Houston, Jr.

Peter J. Manning

Thomas M. Menino

Janice L. Shields

Stockholders shall not be permitted to cumulate their votes in the election of directors. A plurality of all the votes cast at a meeting at which a quorum is present is sufficient to elect a director.

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 80% 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, 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 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.

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.

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 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:

Lawrence M.F. Spaccasi

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 these Articles of Incorporation, do certify that the facts herein stated are true, and, accordingly, have hereto set my hand this 27 ^th day of February, 2014.

/s/ Lawrence M.F. Spaccasi

Lawrence M.F. Spaccasi,

Incorporator

Exhibit 3.2

BLUE HILLS BANCORP, INC.

BYLAWS

ARTICLE I

STOCKHOLDERS

Section 1.

Annual Meeting.

Blue Hills Bancorp, Inc. (the “Corporation”) shall hold an annual meeting of its stockholders to elect directors and to transact any other business within its powers, at such place, on such date and at such time as the Board of Directors shall fix. Failure to hold an annual meeting does not invalidate the Corporation’s existence or affect any otherwise valid corporate act.

Section 2.

Special Meetings.

Special meetings of stockholders of the Corporation may be called by the President, the Chairperson of the Board, or by the Board of Directors pursuant to a resolution adopted by a majority of the total number of directors that the Corporation would have if there were no vacancies on the Board of Directors (hereinafter the “Whole Board”). Special meetings of the stockholders shall be called by the Secretary at the request of stockholders only on the written request of stockholders entitled to cast at least a majority of all the votes entitled to be cast at the meeting. Such written request shall state the purpose or purposes of the meeting and the matters proposed to be acted upon at the meeting, and shall be delivered at the principal office of the Corporation addressed to the President or the Secretary. The Secretary shall inform the stockholders who make the request of the reasonably estimated cost of preparing and mailing a notice of the meeting and, upon payment of these costs to the Corporation, notify each stockholder entitled to notice of the meeting. The Board of Directors shall have the sole power to fix (i) the record date for determining stockholders entitled to request a special meeting of stockholders and the record date for determining stockholders entitled to notice of and to vote at the special meeting and (ii) the date, time and place of the special meeting and the means of remote communication, if any, by which stockholders and proxy holders may be considered present in person and may vote at the special meeting.

Section 3.

Notice of Meetings; Adjournment or Postponement.

Not less than 10 nor more than 90 days before each stockholders’ meeting, the Secretary shall give notice of the meeting in writing or by electronic transmission to each stockholder entitled to vote at the meeting and to each other stockholder entitled to notice of the meeting. The notice shall state the time and place of the meeting, the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and may vote at the meeting, and, if the meeting is a special meeting or notice of the purpose is required by statute, the purpose of the meeting. Notice is given to a stockholder when it is personally delivered to the stockholder, left at the stockholder’s residence or usual place of business, mailed to the stockholder at his or her address as it appears on the records of the Corporation, or transmitted to the stockholder by an electronic transmission to any address or number of the

stockholder at which the stockholder receives electronic transmissions. If the Corporation has received a request from a stockholder that notice not be sent by electronic transmission, the Corporation may not provide notice to the stockholder by electronic transmission. Notwithstanding the foregoing provisions, each person who is entitled to notice waives notice if such person, before or after the meeting, delivers a written waiver or waiver by electronic transmission which is filed with the records of the stockholders’ meetings, or if such person is present at the meeting in person or by proxy.

A meeting of stockholders convened on the date for which it was called may be adjourned from time to time without further notice to a date not more than 120 days after the original record date. A meeting may be adjourned by a resolution adopted by a majority of the Whole Board or by the vote of a majority of the stockholders present at the meeting, whether or not a quorum is present at such meeting. At any adjourned meeting, any business may be transacted that might have been transacted at the original meeting.

A meeting of stockholders may be postponed to a date not more than 120 days after the original record date. A meeting may be postponed by a resolution adopted by a majority of the Whole Board. Notice of the date, time and place to which the meeting is postponed shall be given not less than ten days prior to such date and otherwise in the manner set forth in this Section 3. At any postponed meeting, any business may be transacted that might have been transacted at the meeting as originally scheduled.

If a meeting shall be adjourned or postponed to a date not more than 120 days after the original record date, a new record date need not be established, and the original record date may be used for the purpose of determining which stockholders are entitled to notice of, and to vote at, the adjourned or postponed meeting. Any writing authorizing another person to act as proxy at a meeting of stockholders shall remain valid for use at any adjournment or postponement of such meeting unless such proxy is revoked or a later dated proxy is provided by such stockholder.

As used in these Bylaws, the term “electronic transmission” shall have the meaning given to such term by Section 1-101 of the Maryland General Corporation Law (the “MGCL”) or any successor provision.

Section 4.

Quorum.

Unless the Articles of the Corporation provide otherwise, where a separate vote by a class or classes is required, a majority of the shares of such class or classes, present in person or represented by proxy, shall constitute a quorum entitled to take action with respect to that vote on that matter.

If a quorum shall fail to attend any meeting, the chairperson of the meeting or the holders of a majority of the shares of stock who are present at the meeting, in person or by proxy, may, in accordance with Section 3 of this Article I, adjourn the meeting to another place, date or time.

Section 5.

Organization and Conduct of Business.

The Chairperson of the Board of Directors of the Corporation, or in his or her absence, the Vice Chairperson of the Board, or in his or her absence, the Chief Executive Officer, or in his or her absence, such other person as may be designated by a majority of the Whole Board, shall call to order any meeting of the stockholders and act as chairperson of the meeting. In the absence of the Secretary, the secretary of the meeting shall be such person as the chairperson of the meeting appoints. The chairperson of any meeting of stockholders shall determine the order of business and the procedure at the meeting, including such regulation of the manner of voting and the conduct of discussion as seem to him or her to be in order.

Section 6.

Advance Notice Provisions for Business to be Transacted at Annual Meetings and Elections of Directors.

(a) At any annual meeting of the stockholders, unless otherwise required by law, only such business shall be conducted as shall have been brought before the meeting: (i) as specified in the Corporation’s notice of the meeting; (ii) by or at the direction of the Board of Directors; or (iii) by any stockholder of the Corporation who (1) is a stockholder of record on the date such stockholder gives the notice provided for in this Section 6(a) and on the record date for the determination of stockholders entitled to vote at such annual meeting, and (2) complies with the notice procedures set forth in this Section 6(a). For business to be properly brought before an annual meeting by a stockholder pursuant to clause (iii) of the immediately preceding sentence, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation and such business must otherwise be a proper matter for action by stockholders.

To be timely, a stockholder’s notice must be delivered or mailed to and received by the Secretary at the principal executive office of the Corporation not less than 110 days nor more than 120 days prior to the anniversary of the prior year’s annual meeting of stockholders; provided , however , that if the date of the annual meeting is advanced more than 30 days prior to the anniversary of the preceding year’s annual meeting, a stockholder’s written notice shall be timely only if delivered or mailed to and received by the Secretary of the Corporation at the principal executive office of the Corporation no earlier than the day on which public disclosure of the date of such annual meeting is first made and no later than the tenth day following the day on which public disclosure of the date of such annual meeting is first made.

The advance notice periods provided in this paragraph, once established by the initial notice or public disclosure of a date for the annual meeting of stockholders, shall remain in effect regardless of whether a subsequent notice or public disclosure shall provide that the meeting shall have been adjourned or that the date of the meeting shall have been postponed or otherwise changed from the date provided in the initial notice or public disclosure. With respect to the first annual meeting of stockholders of the Corporation following the Corporation becoming the sole stockholder of Blue Hills Bank, notice by the stockholder shall be timely if delivered or mailed to and received by the Secretary of the Corporation not later than the close of business on the later of (i) the 120th day prior to the date of the annual meeting and (ii) the 10th day following the day on which public disclosure of the date of the annual meeting is first made. No adjournment or postponement of a meeting of stockholders shall commence a new period for the giving of notice hereunder.

A stockholder’s notice to the Secretary must set forth as to each matter such stockholder proposes to bring before the annual meeting: (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting; (ii) the name and address of such stockholder as they appear on the Corporation’s books and of the beneficial owner, if any, on whose behalf the proposal is made; (iii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by such stockholder and any such beneficial owner; (iv) a description of all arrangements or understandings between such stockholder or beneficial owner and any other person or persons (including their names) in connection with the proposal of such business by such stockholder and any material interest of such stockholder in such business; and (v) a representation that such stockholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting.

Notwithstanding anything in these Bylaws to the contrary, no business shall be brought before or conducted at an annual meeting except in accordance with the provisions of this Section 6(a). The chairperson of the annual meeting shall, if the facts so warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Section 6(a) and, if he or she should so determine, he or she shall so declare to the meeting and any such business so determined to be not properly brought before the meeting shall not be transacted.

At any special meeting of the stockholders, only such business shall be conducted as shall have been brought before the meeting pursuant to the Corporation’s notice of the meeting.

(b) Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the Corporation. Nominations of persons for election to the Board of Directors of the Corporation may be made at a meeting of stockholders at which directors are to be elected only: (i) by or at the direction of the Board of Directors or; (ii) by any stockholder of the Corporation who (1) is a stockholder of record on the date such stockholder gives the notice provided for in this Section 6(b) and on the record date for the determination of stockholders entitled to vote at such meeting, and (2) complies with the notice procedures set forth in this Section 6(b). Such nominations, other than those made by or at the direction of the Board of Directors, shall be made by timely notice in writing to the Secretary of the Corporation.

shall have been adjourned or that the date of the meeting shall have been postponed or otherwise changed from the date provided in the initial notice or public disclosure. With respect to the first annual meeting of stockholders of the Corporation following the Corporation becoming the sole stockholder of Blue Hills Bank, notice by the stockholder shall be timely if delivered or mailed to and received by the Secretary of the Corporation not later than the close of business on the later of (i) the 120th day prior to the date of the annual meeting and (ii) the 10th day following the day on which public disclosure of the date of the annual meeting is first made. No adjournment or postponement of a meeting of stockholders shall commence a new period for the giving of notice hereunder.

A stockholder’s notice must be in writing and set forth (a) as to each person whom the stockholder proposes to nominate for election as a director, (i) all information relating to such person that would indicate such person’s qualification to serve on the Board of Directors of the Corporation; (ii) an affidavit that such person would not be disqualified under the provisions of Article II, Section 12 of these Bylaws; (iii) such information relating to such person that is required to be disclosed in connection with solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or any successor rule or regulation; and (iv) a written consent of each proposed nominee to be named as a nominee and to serve as a director if elected; and (b) as to the stockholder giving the notice: (i) the name and address of such stockholder as they appear on the Corporation’s books and of the beneficial owner, if any, on whose behalf the nomination is made; (ii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by such stockholder and such beneficial owner; (iii) a description of all arrangements or understandings between such stockholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such stockholder; (iv) a representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice; and (v) any other information relating to such stockholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Regulation 14A under the Exchange Act or any successor rule or regulation. No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the provisions of this Section 6(b). The chairperson of the meeting shall, if the facts so warrant, determine that a nomination was not made in accordance with such provisions and, if he or she should so determine, he or she shall so declare to the meeting and the defective nomination shall be disregarded.

(c) For purposes of subsections (a) and (b) of this Section 6, the term “public disclosure” shall mean disclosure (i) in a press release issued by a nationally recognized news service, (ii) in a document publicly filed or furnished by the Corporation with the U.S. Securities and Exchange Commission or (iii) on a website maintained by the Corporation. The timely notice requirements provided in subsections (a) and (b) of this Section 6 shall apply to all stockholder nominations for election as a director and all stockholder proposals for business to be conducted at an annual meeting regardless of whether such proposal is submitted for inclusion in the Corporation’s proxy materials pursuant to Rule 14a-8 of Regulation 14A under the Exchange Act.

Section 7.

Proxies and Voting.

Unless the Articles of the Corporation provide for a greater or lesser number of votes per share or limits or denies voting rights, each outstanding share of stock, regardless of class, is entitled to one vote on each matter submitted to a vote at a meeting of stockholders; however, a share is not entitled to be voted if any installment payable on it is overdue and unpaid. In all elections for directors, directors shall be determined by a plurality of the votes cast, and except as otherwise required by law or as provided in the Articles of the Corporation, all other matters voted on by stockholders shall be determined by a majority of the votes cast on the matter.

A stockholder may vote the stock the stockholder owns of record either in person or by proxy. A stockholder may sign a writing authorizing another person to act as proxy. Signing may be accomplished by the stockholder or the stockholder’s authorized agent signing the writing or causing the stockholder’s signature to be affixed to the writing by any reasonable means, including facsimile signature. A stockholder may authorize another person to act as proxy by transmitting, or authorizing the transmission of, an authorization for the person to act as the proxy to the person authorized to act as proxy or to any other person authorized to receive the proxy authorization on behalf of the person authorized to act as the proxy, including a proxy solicitation firm or proxy support service organization. The authorization may be transmitted by a telegram, cablegram, datagram, electronic mail or any other electronic or telephonic means. Unless a proxy provides otherwise, it is not valid more than 11 months after its date. A proxy is revocable by a stockholder at any time without condition or qualification unless the proxy states that it is irrevocable and the proxy is coupled with an interest. A proxy may be made irrevocable for as long as it is coupled with an interest. The interest with which a proxy may be coupled includes an interest in the stock to be voted under the proxy or another general interest in the Corporation or its assets or liabilities.

Section 8.

Conduct of Voting

The Board of Directors shall, in advance of any meeting of stockholders, appoint one or more persons as inspectors of election, to act at the meeting or any adjournment thereof and make a written report thereof, in accordance with applicable law. If one or more inspectors are not so elected, the chairperson of the meeting shall make such appointment at the meeting of stockholders. At all meetings of stockholders, the proxies and ballots shall be received, and all questions relating to the qualification of voters and the validity of proxies and the acceptance or rejection of votes shall be decided or determined by the inspector of election. All voting, including on the election of directors but excepting where otherwise required by law, may be by a voice vote; provided, however, that upon demand therefor by a stockholder entitled to vote or his or her proxy or the chairperson of the meeting, a written vote shall be taken. Every written vote shall be taken by ballot, each of which shall state the name of the stockholder or proxy voting and such other information as may be required under the procedure established for the meeting. No candidate for election as a director at a meeting shall serve as an inspector at such meeting.

Section 9.

Control Share Acquisition Act.

Notwithstanding any other provision of the Articles of the Corporation or these Bylaws, Title 3, Subtitle 7 of the MGCL (or any successor statute) shall not apply to any acquisition by any person of shares of stock of the Corporation. This Section 9 may be repealed by a majority of the Whole Board, in whole or in part, at any time, whether before or after an acquisition of Control Shares (as defined in Section 3-701(d) of the MGCL, or any successor provision) and, upon such repeal, may, to the extent provided by any successor bylaw, apply to any prior or subsequent Control Share Acquisition (as defined in Section 3-701(d) of the MGCL, or any successor provision).

ARTICLE II

BOARD OF DIRECTORS

Section 1.

General Powers, Number and Term of Office.

The business and affairs of the Corporation shall be managed under the direction of the Board of Directors. The number of directors of the Corporation shall, by virtue of the Corporation’s election made hereby to be governed by Section 3-804(b) of the MGCL, be fixed from time to time exclusively by vote of the Board of Directors; 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 Board of Directors shall annually elect a Chairperson of the Board from among its members and shall designate the Chairperson of the Board or his or her designee to preside at its meetings. The Board of Directors may also annually elect a Vice Chairperson. In the absence of the Chairperson of the Board, the Vice Chairperson of the Board shall preside at the meetings of the Board of Directors, and in his or her absence such other person as may be designated by a majority of the Whole Board shall preside at the meetings of the Board of Directors.

The directors, other than those who may be elected by the holders of any series of preferred stock, shall be divided into three classes, as nearly equal in number as reasonably possible, with the term of office of the first class to expire at the first annual meeting of stockholders, the term of office of the second class to expire at the annual meeting of stockholders one year thereafter and the term of office of the third class to expire at 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, commencing with the first annual meeting, 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.

Section 2.

Vacancies and Newly Created Directorships.

By virtue of the Corporation’s election made hereby to be subject to Section 3-804(c) of the MGCL, any vacancies in the Board of Directors resulting from an increase in the size of the Board of Directors or the death, resignation or removal of a director may be filled only by the

affirmative vote of two-thirds of the remaining directors in office, even if the remaining directors do not constitute a quorum, and any director elected to fill a vacancy shall hold office for the remainder of the full term of the class of directors in which the vacancy occurred and until a successor is elected and qualifies. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director.

Section 3.

Regular Meetings.

Regular meetings of the Board of Directors shall be held at such place or places or by means of remote communication, on such date or dates, and at such time or times as shall have been established by the Board of Directors and publicized among all directors. A notice of each regular meeting shall not be required. Any regular meeting of the Board of Directors may adjourn from time to time to reconvene at the same or some other place, and no notice need be given of any such adjourned meeting other than by announcement.

Section 4.

Special Meetings.

Special meetings of the Board of Directors may be called by one-third (1/3) of the directors then in office (rounded up to the nearest whole number), the Chairperson of the Board, the Vice Chairperson of the Board or by the President, and shall be held at such place or by means of remote communication, on such date, and at such time as they or he or she shall fix. Notice of the place, date, and time of each such special meeting shall be given to each director who has not waived notice by mailing and post-marking written notice not less than five days before the meeting, or by facsimile or other electronic transmission of the same not less than 24 hours before the meeting. Any director may waive notice of any special meeting, either before or after such meeting, by delivering a written waiver or a waiver by electronic transmission that is filed with the records of the meeting. Attendance of a director at a special meeting shall constitute a waiver of notice of such meeting, except where the director attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted nor the purpose of any special meeting of the Board of Directors need be specified in the notice of such meeting. Any special meeting of the Board of Directors may adjourn from time to time to reconvene at the same or some other place, and no notice need be given of any such adjourned meeting other than by announcement.

Section 5.

Quorum.

At any meeting of the Board of Directors, a majority of the Whole Board shall constitute a quorum for all purposes. If a quorum shall fail to attend any meeting, a majority of those present may adjourn the meeting to another place, date, or time, without further notice or waiver thereof.

Section 6.

Participation in Meetings By Conference Telephone.

Members of the Board of Directors, or of any committee thereof, may participate in a meeting of such Board or committee by means of a conference telephone or other communications equipment if all persons participating in the meeting can hear each other at the same time. Such participation shall constitute presence in person at such meeting.

Section 7.

Conduct of Business.

At any meeting of the Board of Directors, business shall be transacted in such order and manner as the Board may from time to time determine, and all matters shall be determined by the vote of a majority of the directors present, except as otherwise provided in these Bylaws or the Corporation’s Articles or required by law. Action may be taken by the Board of Directors without a meeting if a unanimous consent which sets forth the action is given in writing or by electronic transmission by each member of the Board of Directors and filed in paper or electronic form with the minutes of proceedings of the Board of Directors.

Section 8.

Powers.

All powers of the Corporation may be exercised by or under the authority of the Board of Directors except as provided by the Corporation’s Articles. Consistent with the foregoing, the Board of Directors shall have, among other powers, the unqualified power:

(i)

To declare dividends from time to time in accordance with law;

(ii)

To purchase or otherwise acquire any property, rights or privileges on such terms as it shall determine;

(iii)

To authorize the creation, making and issuance, in such form as it may determine, of written obligations of every kind, negotiable or non-negotiable, secured or unsecured, and to do all things necessary in connection therewith;

(iv)

To remove any officer of the Corporation with or without cause, and from time to time to devolve the powers and duties of any officer upon any other person for the time being;

(v)

To confer upon any officer of the Corporation the power to appoint, remove and suspend subordinate officers, employees and agents;

(vi)

To adopt from time to time such stock, option, stock purchase, bonus or other compensation plans for directors, officers, employees and agents of the Corporation and its subsidiaries as it may determine;

(vii)

To adopt from time to time such insurance, retirement, and other benefit plans for directors, officers, employees and agents of the Corporation and its subsidiaries as it may determine; and

(viii)

To adopt from time to time regulations, not inconsistent with these Bylaws, for the management of the Corporation’s business and affairs.

Section 9.

Compensation of Directors.

Directors, as such, may receive, pursuant to resolution of the Board of Directors, fixed fees and other compensation for their services as directors, including, without limitation, their services as members of committees of the Board of Directors.

Section 10.

Resignation.

Any director may resign at any time by giving written notice of such resignation to the President or the Secretary at the principal office of the Corporation. Unless otherwise specified therein, such resignation shall take effect upon receipt thereof.

Section 11.

Presumption of Assent.

A director of the Corporation who is present at a meeting of the Board of Directors at which action on any corporate matter is taken shall be presumed to have assented to such action unless such director announces his or her dissent at the meeting and (a) such director’s dissent is entered in the minutes of the meeting, (b) such director files his or her written dissent to such action with the secretary of the meeting before the adjournment thereof, or (c) such director forwards his or her written dissent within 24 hours after the meeting is adjourned, by certified mail, return receipt requested, bearing a postmark from the United States Postal Service, to the secretary of the meeting or the Secretary of the Corporation. Such right to dissent shall not apply to a director who voted in favor of such action or failed to make his or her dissent known at the meeting.

Section 12.

Director Qualifications

(a) No person shall be eligible for election or appointment to the Board of Directors: (i) if a financial or securities regulatory agency has issued a cease and desist, consent or other formal order, other than a civil money penalty, against such person, which order is subject to public disclosure by such agency; (ii) if such person has been convicted of a crime involving dishonesty or breach of trust which is punishable by imprisonment for a term exceeding one year under state or federal law; (iii) if such person is currently charged in any information, indictment, or other complaint with the commission of or participation in such a crime; or (iv) if such person did not, at the time of his or her first election or appointment to the Board of Directors of the Corporation or Blue Hills Bank, maintain his or her principal residence (as determined by reference to such person’s most recent tax returns, copies of which shall be provided to the Corporation for the sole purpose of determining compliance with this clause (iv)) within a county in which the Corporation or any subsidiary thereof maintains an office, or in any county contiguous to a county in which the Corporation or any subsidiary thereof maintains an office for a period of at least one year prior to the date of his or her purported nomination, election or appointment to the Board of Directors. No person may serve on the Board of Directors if such person: (i) is at the same time, a director, officer, employee or 10% or more stockholder of a bank, savings institution, credit union, mortgage banking company, consumer loan company or similar organization, other than a subsidiary of the Corporation, that engages in business activities or solicits customers, whether through a physical presence or electronically, in the same market area as the Corporation or any of its subsidiaries; (ii) does not agree in writing to comply with all of the Corporation’s policies applicable to directors including but not limited to its confidentiality policy, and confirm in writing his or her qualifications hereunder; (iii) is a party to any agreement or arrangement with a party other than the Corporation or a subsidiary that (x) provides him with material benefits which are tied to or contingent on the Corporation entering into a merger, sale of control or similar transaction in which it is not the surviving institution, (y) materially limits his or her voting discretion as a member of the Board of

Directors of the Corporation, or (z) materially impairs his or her ability to discharge his or her fiduciary duties with respect to the fundamental strategic direction of the Corporation; or (iv) is the nominee or representative, as those terms are defined in the regulations of the Board of Governors of the Federal Reserve System, 12 C.F.R §212.2(n), of a company or other entity of which any of the directors, partners, trustees or 10% stockholders would not be eligible for election or appointment to the Board of Directors under this Section 12(a).

(b) No person shall be elected to serve as a director after reaching the age of seventy-five years unless the board determines, by a vote of at least two-thirds of its disinterested members, that such director possesses skills and experience that (1) materially benefit the Board of Directors in the exercise of its powers and duties, (2) are not possessed to any comparable degree by any other member of the Board of Directors, and (3) are not reasonably replaceable. Except as otherwise provided by the Executive Committee of the Board of Directors, the term of office of any director that is an employee of the Corporation or any subsidiary of the Corporation shall expire on the date on which his or her employment with the Corporation or such subsidiary of the Corporation terminates for any reason other than retirement.

The Board of Directors shall have the power to construe and apply the provisions of this Section 12 and to make all determinations necessary or desirable to implement such provisions.

Section 13.

Attendance at Board Meetings.

The Board of Directors shall have the right to remove any director from the board upon a director’s unexcused absence from (i) three consecutive regularly scheduled meetings of the Board of Directors, or (ii) five regularly scheduled meetings of the Board of Directors in any fiscal year of the Corporation.

ARTICLE III

COMMITTEES

Section 1.

Committees of the Board of Directors.

(a) General Provisions. The Board of Directors may appoint from among its members an Executive Committee, an Audit Committee, a Compensation Committee, a Nominating and Corporate Governance Committee, and such other committees as the Board of Directors deems necessary or desirable. The Board of Directors may delegate to any committee so appointed any of the powers and authorities of the Board of Directors to the fullest extent permitted by the MGCL and any other applicable law.

(b) Composition. Each committee shall be composed of one or more directors or any other number of members specified in these Bylaws or required by applicable regulations or stock exchange rules. The Chairperson of the Board may recommend committees, committee memberships, and committee chairs to the Board of Directors. The Board of Directors shall have the power at any time to appoint the chairperson and the members of any committee, change the membership of any committee, to fill all vacancies on committees, to designate alternate members to replace or act in the place of any absent or disqualified member of a committee, or to dissolve any committee. A member of a committee may resign from that committee at any time by giving written notice of such resignation to the Chairperson of the Board. Unless otherwise specified therein, such resignation from the committee shall take effect upon receipt thereof.

(c) Issuance of Stock . If the Board of Directors has given general authorization for the issuance of stock providing for or establishing a method or procedure for determining the maximum number of shares to be issued, a committee of the Board of Directors, in accordance with that general authorization or any stock option or other plan or program adopted by the Board of Directors, may authorize or fix the terms of stock subject to classification or reclassification and the terms on which any stock may be issued, including all terms and conditions required or permitted to be established or authorized by the Board of Directors. Any committee so designated may exercise the power and authority of the Board of Directors if the resolution that designated the committee or a supplemental resolution of the Board of Directors shall so provide.

Section 2.

Conduct of Business.

Each committee may determine the procedural rules for meeting and conducting its business and shall act in accordance therewith, except as otherwise provided herein or required by law. Adequate provision shall be made for notice to members of all meetings; one-third of the members shall constitute a quorum unless the committee shall consist of one or two members, in which event one member shall constitute a quorum; and all matters shall be determined by a majority vote of the members present. Action may be taken by any committee without a meeting if a unanimous consent which sets forth the action is given in writing or by electronic transmission by each member of the committee and filed in paper or electronic form with the minutes of the proceedings of such committee. The members of any committee may conduct any meeting thereof by conference telephone or other communications equipment in accordance with the provisions of Section 6 of Article II.

ARTICLE IV

OFFICERS

Section 1.

Generally.

(a) The Board of Directors as soon as may be practicable after the annual meeting of stockholders shall choose a Chairperson of the Board, Chief Executive Officer, President, one or more Vice Presidents, a Secretary and a Chief Financial Officer/Treasurer and from time to time may choose such other officers as it may deem proper. Any number of offices may be held by the same person, except that no person may concurrently serve as both President and Vice President of the Corporation.

(b) The term of office of all officers shall be until the next annual election of officers and until their respective successors are chosen, but any officer may be removed from office at any time by the affirmative vote of a majority of the Whole Board.

(c) All officers chosen by the Board of Directors shall each have such powers and duties as generally pertain to their respective offices, subject to the specific provisions of this Article IV. Such officers shall also have such powers and duties as from time to time may be conferred by the Board of Directors or by any committee thereof.

Section 2.

Chairperson of the Board of Directors.

The Chairperson of the Board of Directors of the Corporation shall perform all duties and have all powers which are commonly incident to the office of Chairperson of the Board or which are delegated to him or her by the Board of Directors. He or she shall have power to sign all stock certificates, contracts and other instruments of the Corporation that are authorized.

Section 3.

Vice Chairperson of the Board of Directors.

If appointed, the Vice Chairperson of the Board of Directors of the Corporation shall perform all duties and have all powers which are commonly incident to the office of Chairperson of the Board, with such duties to be performed and powers to be held in the absence of the Chairperson of the Board, or which are delegated to him or her by the Board of Directors.

Section 4.

Chief Executive Officer.

The Chief Executive Officer, subject to the control of the Board of Directors, shall serve in general executive capacity and have general power over the management and oversight of the administration and operation of the Corporation’s business and general supervisory power and authority over its policies and affairs. The Chief Executive Officer shall see that all orders and resolutions of the Board of Directors and of any committee thereof are carried into effect.

Section 5.

President.

The President shall perform the duties of the Chief Executive Officer in the Chief Executive Officer’s absence or during his or her disability to act. In addition, the President shall perform the duties and exercise the powers usually incident to their respective office and/or such other duties and powers as may be properly assigned to the President from time to time by the Board of Directors or the Chief Executive Officer.

Section 6.

Vice President.

The Vice President or Vice Presidents (including Executive Vice Presidents or other levels of Vice President designated by the Board of Directors), if any, shall perform the duties of the Chief Executive Officer in the absence of both the Chief Executive Officer and the President, or during their disability to act. In addition, the Vice Presidents shall perform the duties and exercise the powers usually incident to their respective office and/or such other duties and powers as may be properly assigned to the Vice Presidents from time to time by the Board of Directors or the Chief Executive Officer.

Section 7.

Secretary.

The Secretary or an Assistant Secretary shall issue notices of meetings, shall keep the minutes of meetings, shall have charge of the seal and the corporate books, shall perform such other duties and exercise such other powers as are usually incident to such offices and/or such other duties and powers as are properly assigned thereto by the Board of Directors or the Chief Executive Officer.

Section 8.

Chief Financial Officer/Treasurer.

The Chief Financial Officer/Treasurer shall have charge of all monies and securities of the Corporation, other than monies and securities of any division of the Corporation that has a treasurer or financial officer appointed by the Board of Directors, and shall keep regular books of account. The funds of the Corporation shall be deposited in the name of the Corporation by the Chief Financial Officer/Treasurer with such banks or trust companies or other entities as the Board of Directors from time to time shall designate. The Chief Financial Officer/Treasurer shall sign or countersign such instruments as require his or her signature, shall perform all such duties and have all such powers as are usually incident to such office and/or such other duties and powers as are properly assigned to him or her by the Board of Directors or the Chief Executive Officer, and may be required to give bond for the faithful performance of his or her duties in such sum and with such surety as may be required by the Board of Directors.

Section 9.

Other Officers.

The Board of Directors may designate and fill such other offices in its discretion and the persons holding such other offices shall have such powers and shall perform such duties as the Board of Directors or Chief Executive Officer may from time to time assign.

Section 10.

Action with Respect to Securities of Other Corporations

Stock of other corporations or associations, registered in the name of the Corporation, may be voted by the Chief Executive Officer, the President, a Vice President, or a proxy appointed by either of them. The Board of Directors, however, may by resolution appoint some other person to vote such shares, in which case such person shall be entitled to vote such shares upon the production of a certified copy of such resolution.

ARTICLE V

STOCK

Section 1.

Certificates of Stock.

The Board of Directors may determine to issue certificated or uncertificated shares of capital stock and other securities of the Corporation. For certificated stock, each stockholder is entitled to certificates which represent and certify the shares of stock he or she holds in the Corporation. Each stock certificate shall include on its face the name of the Corporation, the name of the stockholder or other person to whom it is issued, and the class of stock and number of shares it represents. It shall also include on its face or back (a) a statement of any restrictions on transferability and a statement of the designations and any preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications, and terms and conditions of redemption of the stock of each class which the Corporation is authorized to issue, of the differences in the relative rights and preferences between the shares of each series of preferred stock which the Corporation is authorized to issue, to the extent they have been set, and of the authority of the Board of Directors to set the relative rights and preferences of subsequent series of preferred stock or (b) a statement which provides in substance that the Corporation will furnish a full statement of such information to any stockholder on request and without charge. Such request may be made to the Secretary or to the Corporation’s transfer agent. Upon the

issuance of uncertificated shares of capital stock, the Corporation shall send the stockholder a written statement of the same information required above with respect to stock certificates. Each stock certificate shall be in such form, not inconsistent with law or with the Corporation’s Articles, as shall be approved by the Board of Directors or any officer or officers designated for such purpose by resolution of the Board of Directors. Each stock certificate shall be signed by the Chairperson of the Board, the President, or a Vice-President, and countersigned by the Secretary, an Assistant Secretary, the Treasurer, or an Assistant Treasurer. Each certificate may be sealed with the actual corporate seal or a facsimile of it or in any other form and the signatures may be either manual or facsimile signatures. A certificate is valid and may be issued whether or not an officer who signed it is still an officer when it is issued. A certificate may not be issued until the stock represented by it is fully paid.

Section 2.

Transfers of Stock.

Transfers of stock shall be made only upon the transfer books of the Corporation kept at an office of the Corporation or by transfer agents designated to transfer shares of the stock of the Corporation. Except where a certificate is issued in accordance with Section 4 of Article V of these Bylaws, an outstanding certificate for the number of shares involved shall be surrendered for cancellation before a new certificate is issued therefor.

Section 3.

Record Dates or Closing of Transfer Books.

The Board of Directors may, and shall have the power to, set a record date or direct that the stock transfer books be closed for a stated period for the purpose of making any proper determination with respect to stockholders, including which stockholders are entitled to notice of a meeting, vote at a meeting, receive a dividend, or be allotted other rights. The record date may not be prior to the close of business on the day the record date is fixed nor, subject to Section 3 of Article I of these Bylaws, more than 90 days before the date on which the action requiring the determination will be taken; the transfer books may not be closed for a period longer than 20 days; and, in the case of a meeting of stockholders, the record date or the closing of the transfer books shall be at least ten days before the date of the meeting. Any shares of the Corporation’s own stock acquired by the Corporation between the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders and the time of the meeting may be voted at the meeting by the holder of record as of the record date and shall be counted in determining the total number of outstanding shares entitled to be voted at the meeting.

Section 4.

Lost, Stolen or Destroyed Certificates.

The Board of Directors of the Corporation may determine the conditions for issuing a new stock certificate in place of one which is alleged to have been lost, stolen, or destroyed, or the Board of Directors may delegate such power to any officer or officers of the Corporation or to the transfer agent designated to transfer shares of the stock of the Corporation. In their discretion, the Board of Directors or such officer or officers may require the owner of the certificate to give a bond, with sufficient surety, to indemnify the Corporation against any loss or claim arising as a result of the issuance of a new certificate. In their discretion, the Board of Directors or such officer or officers may refuse to issue such new certificate without the order of a court having jurisdiction over the matter.

Section 5.

Stock Ledger.

The Corporation shall maintain a stock ledger which contains the name and address of each stockholder and the number of shares of stock of each class which the stockholder holds. The stock ledger may be in written form or in any other form which can be converted within a reasonable time into written form for visual inspection. The original or a duplicate of the stock ledger shall be kept at the offices of a transfer agent for the particular class of stock or, if none, at the principal executive office of the Corporation.

Section 6.

Regulations.

The issue, transfer, conversion and registration of certificates of stock shall be governed by such other regulations as the Board of Directors may establish.

ARTICLE VI

MISCELLANEOUS

Section 1.

Facsimile Signatures.

In addition to the provisions for use of facsimile signatures elsewhere specifically authorized in these Bylaws, facsimile signatures of any officer or officers of the Corporation may be used whenever and as authorized by the Board of Directors or a committee thereof.

Section 2.

Corporate Seal.

The Board of Directors may provide a suitable seal, bearing the name of the Corporation, which shall be in the charge of the Secretary. The Board of Directors may authorize one or more duplicate seals and provide for the custody thereof. If the Corporation is required to place its corporate seal to a document, it is sufficient to meet the requirement of any law, rule, or regulation relating to a corporate seal to place the word “(seal)” adjacent to the signature of the person authorized to sign the document on behalf of the Corporation.

Section 3.

Books and Records.

The Corporation shall keep correct and complete books and records of its accounts and transactions and minutes of the proceedings of its stockholders and Board of Directors and of any committee when exercising any of the powers of the Board of Directors. The books and records of the Corporation may be in written form or in any other form which can be converted within a reasonable time into written form for visual inspection. Minutes shall be recorded in written form but may be maintained in the form of a reproduction. The original or a certified copy of these Bylaws shall be kept at the principal office of the Corporation.

Section 4.

Reliance upon Books, Reports and Records.

Each director, each member of any committee designated by the Board of Directors, and each officer and agent of the Corporation shall, in the performance of his or her duties, in addition to any protections conferred upon him or her by law, be fully protected in relying in good faith upon the books of account or other records of the Corporation and upon such

information, opinions, reports or statements presented to the Corporation by any of its officers or employees, or committees of the Board of Directors so designated, or by any other person as to matters which such director, committee member, officer or agent reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation.

Section 5.

Fiscal Year.

The fiscal year of the Corporation shall commence on the first day of January and end on the last day of December in each year.

Section 6.

Time Periods.

In applying any provision of these Bylaws that requires that an act be done or not be done a specified number of days prior to an event or that an act be done during a period of a specified number of days prior to an event, calendar days shall be used, the day of the doing of the act shall be excluded and the day of the event shall be included.

Section 7.

Checks, Drafts, Etc.

All checks, drafts and orders for the payment of money, notes and other evidences of indebtedness, issued in the name of the Corporation, shall be signed by any officer, employee or agent of the Corporation that is authorized by the Board of Directors.

Section 8.

Mail.

Any notice or other document that is required by these Bylaws to be mailed shall be deposited in the United States mail, postage prepaid.

Section 9.

Contracts and Agreements.

To the extent permitted by applicable law, and except as otherwise prescribed by the Articles or these Bylaws, the Board of Directors may authorize any officer, employee or agent of the Corporation to enter into any contract or execute and deliver any instrument in the name of and on behalf of the Corporation. Such authority may be general or confined to specific instances. A person who holds more than one office in the Corporation may not act in more than one capacity to execute, acknowledge, or verify an instrument required by law to be executed, acknowledged, or verified by more than one officer.

ARTICLE VII

AMENDMENTS

These Bylaws may be adopted, amended or repealed as provided in the Articles of the Corporation.

Exhibit 4

INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND

No.

B LUE H ILLS 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

Blue Hills Bancorp, Inc.

a Maryland corporation

The shares evidenced by this certificate are transferable only on the books of Blue Hills 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, Blue Hills 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
	Lauren Messmore			William M. Parent
	Corporate Secretary			President and Chief Executive Officer

The Board of Directors of Blue Hills 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, NW, 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

March 11, 2014

The Board of Directors

Blue Hills Bancorp, Inc.

1196 River Street

Hyde Park, Massachusetts 02136

Re:

Blue Hills Bancorp, Inc.

Common Stock, Par Value $0.01 Per Share

Ladies and Gentlemen:

You have requested the opinion of this firm as to certain matters in connection with the offer and sale (the “Offering”) of the shares of common stock, par value $0.01 per share (“Common Stock”) of Blue Hills Bancorp, Inc. (the “Company”). 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 laws of the State of Maryland (which includes applicable provisions of the Maryland General Corporation Law, 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, will be legally issued, fully paid and non-assessable.

We hereby consent to our firm being referenced under the caption “Legal Matters” and to the filing of this opinion as an exhibit to the Form S-1.

Very truly yours,

/s/ Luse Gorman Pomerenk & Schick

L USE G ORMAN P OMERENK & S CHICK

A P ROFESSIONAL C ORPORATION

Exhibit 8.1

FORM OF FEDERAL TAX OPINION

, 2014

Boards of Trustees and Directors

Hyde Park Bancorp, MHC

Hyde Park Bancorp, Inc.

Blue Hills 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 Hyde Park 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 Hyde Park Bancorp, MHC, dated March 6, 2014 (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 Blue Hills 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 , 2014, 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”).

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.

Boards of Trustees and Directors

Hyde Park Bancorp, MHC

Hyde Park Bancorp, Inc.

Blue Hills Bank

, 2014

Page 2

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, Blue Hills 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. Blue Hills Bank (the “Bank”) is a Massachusetts-chartered savings bank, which is headquartered in Hyde Park, Massachusetts. The Bank was originally organized in 1871 as Hyde Park Savings Bank, and reorganized into the Mutual Holding Company structure in 2008. In 2011, Hyde Park Bancorp, Inc., the Bank’s mid-tier holding company (the “Mid-Tier Holding Company”) was formed. In 2011, the Bank was rebranded under its current name. The Mutual Holding Company currently owns 100% of the outstanding shares of common stock of the Mid-Tier Holding Company, which owns 100% of the outstanding common stock of the Bank. The Mutual Holding Company is a mutual holding company with no shares of stock outstanding. The Mid-Tier Holding Company has not issued any shares of common stock to the public, although in September 2011, the Mid-Tier Holding Company issued 18,724 shares of senior non-cumulative perpetual preferred stock, series A, to the U.S. Treasury as part of the Small Business Lending Fund (“SBLF”) Program. Prior to the Conversion, the Mid-Tier Holding Company intends to repay all monies acquired through the SBLF Program whereupon the shares of senior non-cumulative perpetual preferred stock, series A, will be redeemed.

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 Trustees of the Mutual Holding Company and the Boards of Directors of 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

Boards of Trustees and Directors

Hyde Park Bancorp, MHC

Hyde Park Bancorp, Inc.

Blue Hills Bank

, 2014

Page 3

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.

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.

Boards of Trustees and Directors

Hyde Park Bancorp, MHC

Hyde Park Bancorp, Inc.

Blue Hills Bank

, 2014

Page 4

final Prospectus distributed in connection with the Offering. 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, 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 shall have been granted, in order of priority, to Eligible Account Holders, Supplemental Eligible Account Holders (if any), 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 Direct Community Offering or Syndicated Community Offering to certain members of the general public (collectively, the Direct Community Offering and Syndicated Community Offering shall be referred to as the “Community Offering”).

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 and Supplemental Eligible Account Holders (if any) liquidation rights 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.)

Boards of Trustees and Directors

Hyde Park Bancorp, MHC

Hyde Park Bancorp, Inc.

Blue Hills Bank

, 2014

Page 5

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.)

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 rights 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 rights 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 benefit of Eligible Account Holders and Supplemental Eligible Account Holders (if any). (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.)

Boards of Trustees and Directors

Hyde Park Bancorp, MHC

Hyde Park Bancorp, Inc.

Blue Hills Bank

, 2014

Page 6

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 and Supplemental Eligible Account Holders (if any) 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.)

13. The constructive exchange of the Eligible Account Holders’ and Supplemental Eligible Account Holders’ (if any) 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, Supplemental Eligible Account Holders (if any) 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, Supplemental Eligible Account Holders (if any) 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 and Supplemental Eligible Account Holders (if any) 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.)

Boards of Trustees and Directors

Hyde Park Bancorp, MHC

Hyde Park Bancorp, Inc.

Blue Hills Bank

, 2014

Page 7

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, Supplemental Eligible Account Holders (if any) 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 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 and Supplemental Eligible Account Holders (if any) will 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:

Boards of Trustees and Directors

Hyde Park Bancorp, MHC

Hyde Park Bancorp, Inc.

Blue Hills Bank

, 2014

Page 8

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 , 2014, 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.

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 MASSACHUSETTS TAX OPINION]

, 2014

Boards of Trustees and Directors

Hyde Park Bancorp, MHC

Hyde Park Bancorp, Inc.

Blue Hills Bank

1196 River Street

Hyde Park, MA 02136

Ladies and Gentlemen:

You have requested our opinion regarding certain material Massachusetts income and excise tax consequences of the proposed conversion of Hyde Park 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 Hyde Park Bancorp, MHC, dated March 6, 2014 (the “Plan of Conversion”).

In connection therewith, we have examined the Plan of Conversion, the Registration Statement filed by Blue Hills Bancorp, Inc. (the “Stock Holding Company”) with the Securities and Exchange Commission (the “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). Unless otherwise defined, all terms used herein have the meanings given to such terms in the Plan of Conversion. In our review, we have assumed the genuineness of all signatures where due execution and delivery are requirements to the effectiveness thereof, the legal capacity of all natural persons, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified, conformed, electronic files or photostatic copies and the authenticity of the originals of such copies. In rendering the opinion set forth below, we have relied on the opinion of Luse Gorman Pomerenk & Schick, A Professional Corporation ( “Counsel”) related to the material Federal income tax consequences of the proposed Conversion (the “Federal Tax Opinion”), without undertaking to verify the same by independent investigation. We have also relied upon the representations as to factual matters provided to Counsel by the Mutual Holding Company, Blue Hills Bank (the “Bank”), the 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.

In rendering our opinion, we have considered the applicable provisions of the Internal Revenue Code of 1986, as amended (the “Code”), Treasury Regulations, pertinent judicial authorities, interpretative rulings of the Internal Revenue Service and such other authorities as we have considered relevant.

Boards of Trustees and Directors

Hyde Park Bancorp, MHC

Hyde Park Bancorp, Inc.

Blue Hills Bank

, 2014

Page 2

Additionally, the discussions and conclusions set forth below are based on Massachusetts General Law (the “MGL”), the regulations promulgated thereunder and existing administrative and judicial interpretations thereof as of the date of this letter, all of which are subject to change.

Our opinions are not binding on the Massachusetts Department of Revenue (the “Department”) and there can be no assurance that the Department will not take a position contrary to any of the opinions expressed herein. Because the opinions expressed herein are based upon current tax law, future changes in Massachusetts tax laws, regulations, rulings or case law may affect the tax consequences relating to the Plan of Conversion. However, we have no responsibility to update this opinion for events, transactions or circumstances occurring after the date of this letter.

STATEMENT OF FACTS/DESCRIPTION OF THE PROPOSED TRANSACTIONS

The Bank is a Massachusetts-chartered savings bank, which is headquartered in Hyde Park, Massachusetts. The Bank was originally organized in 1871 as Hyde Park Savings Bank, and reorganized into the Mutual Holding Company structure in 2008. In 2011, Hyde Park Bancorp, Inc., the Bank’s mid-tier holding company (the “Mid-Tier Holding Company”) was formed. In 2011, the Bank was rebranded under its current name. The Mutual Holding Company currently owns 100 percent of the outstanding shares of common stock of the Mid-Tier Holding Company, which owns 100 percent of the outstanding common stock of the Bank. The Mutual Holding Company is a mutual holding company with no shares of stock outstanding. The Mid-Tier Holding Company has not issued any shares of common stock to the public, although in September 2011, the Mid-Tier Holding Company issued 18,724 shares of senior non-cumulative perpetual preferred stock, series A, to the U.S. Treasury as part of the Small Business Lending Fund (“SBLF”) Program. Prior to the Conversion, the Mid-Tier Holding Company intends to repay all monies acquired through the SBLF Program whereupon the shares of senior non-cumulative perpetual preferred stock, series A, will be redeemed.

Boards of Trustees and Directors

Hyde Park Bancorp, MHC

Hyde Park Bancorp, Inc.

Blue Hills Bank

, 2014

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On March, 6, 2014, the Board of Trustees of the Mutual Holding Company and Boards of Directors of the Mid-Tier Holding Company and the Bank adopted the Plan of Conversion 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.

Pursuant to the Plan, the Conversion will be effected in the following steps, in such order as is necessary to consummate the Conversion:

(i)

The Mid-Tier Holding Company will establish the Stock Holding Company as a first–tier Maryland-chartered stock holding company subsidiary.

(ii)

(iii)

(iv)

Immediately after the Mid-Tier Merger, the Stock Holding Company will offer for sale shares of Stock Holding Company Common Stock in the Offering.

(v)

The Stock Holding Company will contribute at least 50 percent 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.

Boards of Trustees and Directors

Hyde Park Bancorp, MHC

Hyde Park Bancorp, Inc.

Blue Hills Bank

, 2014

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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 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. 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 the Plan.

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, Supplemental Eligible Account Holders (if any), tax-qualified employee plans established by the Bank, and employees, officers, directors, trustees or corporators of the Bank, Mid-Tier Holding Company and the Mutual Holding Company who are not eligible in the preceding categories, according to the subscription priorities set forth in the Plan. 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 Direct Community Offering or Syndicated Community Offering to certain members of the general public (collectively, the Direct Community Offering and Syndicated Community Offering shall be referred to as the “Community Offering”).

LUSE GORMAN POMERENK & SCHICK, A PROFESSIONAL CORPORATION FEDERAL OPINION

Luse Gorman Pomerenk & Schick, PC has provided an opinion that addresses the material Federal income tax consequences of the Conversion. The opinion concluded, as follows:

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.)

Boards of Trustees and Directors

Hyde Park Bancorp, MHC

Hyde Park Bancorp, Inc.

Blue Hills Bank

, 2014

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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

Boards of Trustees and Directors

Hyde Park Bancorp, MHC

Hyde Park Bancorp, Inc.

Blue Hills Bank

, 2014

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assumption of its liabilities in exchange for interests in the Stock Holding Company Liquidation Accounts for the benefit of Eligible Account Holders and Supplemental Eligible Account Holders (if any). (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.)

Boards of Trustees and Directors

Hyde Park Bancorp, MHC

Hyde Park Bancorp, Inc.

Blue Hills Bank

, 2014

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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.)

Counsel’s 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, Supplemental Eligible Account Holders (if any) and other purchasers in the subscription offering have a fair market value of zero. Counsel understands 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. Counsel also notes that the IRS has not in the past concluded that subscription rights have value. In addition, Counsel is 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, Counsel believes it is more likely than not that the nontransferable subscription rights to purchase Stock Holding Company Common Stock have no value.

Counsel’s 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. Counsel understands 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 and Supplemental Eligible Account Holders (if any) will be reduced as their deposits in the Bank are reduced as described in the Plan; and (iv) the

Boards of Trustees and Directors

Hyde Park Bancorp, MHC

Hyde Park Bancorp, Inc.

Blue Hills Bank

, 2014

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Bank Liquidation Account payment obligation arises only if the Stock Holding Company lacks sufficient net assets to fund the Stock Holding Company Liquidation Account. Counsel also notes 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, Counsel is relying on a letter from RP Financial, LC. to you dated , 2014, 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, Counsel believes it is more likely than not that such rights in the Bank Liquidation Account have no value.

DISCUSSION RELATED TO MASSACHUSETTS INCOME AND EXCISE TAX CONSEQUENCES

Mutual Holding Company, Mid-Tier Holding Company and Bank are subject to the Massachusetts financial institution excise tax under MGL Chapter 63, Sections 1, 2, 2A and 7. At the effective time of the Conversion, Stock Holding Company and Bank will be subject to same.

Net income is defined in MGL Chapter 63 Section 1 as gross income less deductions allowed by the Internal Revenue Code, as amended and in effect for the taxable year, with enumerated modifications. Such modifications are not relevant to this Opinion. By adopting the Federal Internal Revenue Code, Massachusetts has conformed its treatment of corporate reorganizations to the Federal treatment.

With respect to individual income taxation, MGL Chapter 62 Section 2 generally provides that Massachusetts gross income means gross income as determined for Federal tax purposes with enumerated modifications. Such modifications are not relevant to this Opinion.

Boards of Trustees and Directors

Hyde Park Bancorp, MHC

Hyde Park Bancorp, Inc.

Blue Hills Bank

, 2014

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Accordingly, based upon the facts and representations stated herein and the existing law, it is the opinion of Wolf & Company, P.C. regarding the Massachusetts income and excise tax effects of the Plan of Conversion that:

1. For purposes of Massachusetts General Laws, chapter 63, sections 1, 2 and 2A, no gross income, gain or loss will be recognized by Mutual Holding Company, Mid-Tier Holding Company, Stock Holding Company or Bank as a result of the transactions contemplated by the Plan.

2. No gross income, gain or loss will be recognized by the Eligible Account Holders, persons who have liquidation interests in the Mutual Holding Company, persons who have liquidation interests in the Mid-Tier Holding Company, and other purchasers in the Subscription Offering as a result of the transactions contemplated by the Plan.

CONCLUSION

The opinions contained herein are rendered only with respect to the specific matters discussed herein and we express no opinion with respect to any other legal, Federal, state, or local tax aspect of these transactions. This opinion is not binding upon any tax authority including the Massachusetts Department of Revenue 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.

In rendering our opinions we are relying upon the relevant provisions of the Internal Revenue Code of 1986, as amended, Massachusetts General Laws and the regulations, judicial and administrative interpretations thereof, all as of the date of this letter.

However, all of the foregoing authorities are subject to change or modification which can be retroactive in effect and, therefore, could also affect our opinions. We undertake no responsibility to update our opinions for any subsequent change or modification.

This opinion is given solely for the benefit of Mutual Holding Company, Mid-Tier Holding Company, Stock Holding Company, Bank, Eligible Account Holders, Supplemental Eligible Account Holders, and other persons described in the Plan of Conversion who will receive Subscription Rights, and may not be relied upon by any other party or entity or otherwise referred to in any document without our express written consent.

Boards of Trustees and Directors

Hyde Park Bancorp, MHC

Hyde Park Bancorp, Inc.

Blue Hills Bank

, 2014

Page 10

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 reference to our firm in the Prospectus contained in the Application for Conversion and S-1 under the caption “The Conversion; Plan of Distribution-Material Income Tax Consequences.”

Very truly yours,

Wolf & Company, P.C.

Exhibit 10.1

EMPLOYMENT AGREEMENT

This Employment Agreement (the “Agreement”) is made and entered into, effective as of the 6 ^th day of March, 2014 (the “Effective Date”), by and among Hyde Park Bancorp, MHC, a mutual holding company organized under the laws of the Commonwealth of Massachusetts (the “MHC”), Hyde Park Bancorp, Inc., a mid-tier holding company organized under the laws of the Commonwealth of Massachusetts and the wholly-owned subsidiary of the MHC (the “Company”), its subsidiary, Blue Hills Bank, a stock savings bank having its principal place of business in Hyde Park, Massachusetts (the “Bank”) (the MHC, the Company and the Bank hereinafter shall be collectively referred to as the “Employers”), and William M. Parent, of Walpole, Massachusetts (the “Executive”).

WITNESSETH THAT:

WHEREAS the Employers desire to continue to employ the Executive in an executive capacity in the conduct of their respective businesses, and the Executive desires to be so employed on the terms contained herein;

NOW, THEREFORE, in consideration of the mutual promises and covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. Employment and Employment Period . The Employers hereby employ the Executive and the Executive agrees to be employed by the Employers, on the terms and conditions set forth in this Agreement, for a period commencing on the date hereof and continuing thereafter until December 31, 2016 (the “Term”). On January 1, 2015, and on each January 1 thereafter (each, an “Anniversary Date”), the Term shall extend automatically for one additional year beyond the initial Term or the extended Term, as the case may be, so that the Term shall continue to be a three-years from the date of such extension, unless either the Employers or the Executive by written notice to the other given at least ninety (90) days prior to such Anniversary Date notifies the other of its intent not to extend the same. In the event that notice not to extend is given by either the Employers or the Executive, this Agreement shall terminate as of the last day of such extended Term. In the event a Change in Control occurs during the initial Term or the extended Term, the Term shall be extended automatically so that it is scheduled to expire no less than twenty-four (24) months beyond the Change in Control, subject to extension as set forth above.

2. Capacity and Extent of Service .

(a) At all times during the Term of this Agreement, each Employer, respectively, shall employ the Executive as President and Chief Executive Officer of each such Employer, subject to his election by the Boards of Directors of each such Employer (sometimes referred to hereinafter as the “Boards of the Employers”), as applicable.

(b) The Executive shall be employed on a full-time basis as President and Chief Executive Officer of the Employers and shall be assigned only such duties and tasks as are appropriate for a person in such positions. It is the intention of the Employers and the Executive that, subject to the direction and supervision of the Boards of the Employers, the Executive shall

have full discretionary authority to control the day-to-day operations of the Employers and to incur such obligations on behalf of the Employers as may be necessary or appropriate in the ordinary course of its business.

(c) During his employment hereunder, the Executive shall devote his full business time and his best efforts, business judgment, skill and knowledge to the performance of his duties and responsibilities hereunder. Except as otherwise permitted in Section 2(d), the Executive shall not engage in any other business activity during the Term of this Agreement, other than an activity approved in writing by the Boards of the Employers. For the avoidance of doubt, the Executive may engage in service for civic, charitable or religious purposes or services in connection with any trade association (together “Community Activities”) during business hours without the need for notice to the Boards of the Employers; provided that such service does not involve a material time commitment. The Executive shall disclose any such Community Activities if so requested by either of the Boards of the Employers and shall cease any such Community Activities as soon as is practicable if directed in writing by either of such Boards; provided that such Board determines in good faith that continuation of such Community Activity is contrary to the legitimate business interests of the Employers.

(d) With the prior written approval of the Boards of the Employers, the Executive may serve on boards of both for-profit and not-for-profit entities or engage in Community Activities that involve a material time commitment. Notwithstanding the foregoing, Executive may continue to serve on any board of directors on which he was serving at the Effective Date. A list of such boards of directors has been supplied to the Board.

3. Compensation and Benefits .

(a) Base Compensation . As compensation for the services to be performed by the Executive during the Term, the Employers shall pay to the Executive, in regular periodic installments, a base salary at the rate of Five Hundred Thousand Dollars ($500,000.00) per year, which may be increased, but not decreased (except for across-the-board reductions of not more than 10% similarly affecting all or substantially all management Executives), in the sole discretion of the Boards of the Employers from time to time (the “Base Salary”). At least annually, the Board of at least one of the Employers shall consider increasing the Base Salary.

(b) Short-Term Incentive Compensation . In addition to the foregoing Base Salary, the Executive shall be eligible during the Term to receive cash short-term incentive compensation, determined and payable in the discretion of the Boards of the Employers. At least annually, the Board of at least one of the Employers shall consider awarding short-term incentive compensation to the Executive.

(c) Long-Term Incentive Compensation . In addition to the foregoing Base Salary, the Executive shall be eligible during the Term to receive long-term incentive compensation determined and payable in the discretion of the Boards of the Employers. At least annually, the Board of at least one of the Employers shall consider awarding long-term incentive compensation to the Executive.

(d) Fringe Benefits . During the Term, the Bank shall provide the Executive with the fringe benefits in which Executive was participating on the Effective Date. The Executive shall also be entitled to participate in any employee benefit plans from time to time in effect for executive officers of the Employers.

(e) Attorney’s Fees . The Employers shall reimburse the Executive for his reasonable attorney’s fees incurred in the review and negotiation of this Agreement.

(f) Timing of Certain Payments . Any compensation payable or provided under this Section 3 shall be paid or provided not later than two and one-half months after the calendar year in which such compensation is no longer subject to a substantial risk of forfeiture, within the meaning of Treasury Regulations Section 1.409A-l(d). To the extent that this Section 3 provides for the deferral of compensation subject to Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), such compensation shall be paid or provided not later than two and one-half months after the calendar year in which such compensation is no longer subject to a substantial risk of forfeiture, within the meaning of Treasury Regulations Section 1.409A-l(d).

4. Business Expenses . The Employers shall reimburse the Executive for all reasonable travel and other business expenses incurred by him in the performance of his duties and responsibilities, subject to such reasonable requirements with respect to substantiation and documentation as may be specified by the Employers or their auditors. Reimbursements of expenses and in-kind benefits subject to this Section 4 or otherwise provided to the Executive shall be subject to the following rules: (i) the amount of such expenses eligible for reimbursement or in-kind benefits provided in any taxable year shall not affect the expenses eligible for reimbursement or in-kind benefits provided in any other taxable year, except as otherwise allowed by Section 409A of the Code; (ii) any reimbursement shall be made on or before the last day of the calendar year following the calendar year in which the expenses to be reimbursed were incurred; and (iii) no right to reimbursement or in-kind benefits may be liquidated or exchanged for another benefit.

5. Termination . Notwithstanding the provisions of Section 1, the Executive’s employment hereunder shall terminate under the following circumstances:

(a) Death . In the event of the Executive’s death during his employment under this Agreement, the Executive’s employment shall terminate on the date of his death; provided, however, that, for a period of three (3) months following the Executive’s death, the Employers shall pay to the Executive’s designated beneficiary (or to his estate, if he fails to make such designation) an amount equal to the Executive’s salary at the rate of his Base Salary in effect at the time of his death (unless an increased Base Salary shall previously have been authorized to take effect as of a later date, in which case such increase shall apply as of that later date), such payments to be made on the same periodic dates as salary payments would have been made to the Executive had he not died.

(b) Disability . In the event that the Executive becomes disabled during his employment under this Agreement, the Executive’s employment hereunder shall terminate. For purposes of this Agreement, disability means any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous

period of not less than twelve (12) months and that renders the Executive unable to engage in any substantial gainful activity. In the event of such termination, the Executive shall continue to receive his full salary and benefits under Section 3 of this Agreement until he becomes eligible for and receives disability income under the long-term disability insurance coverage then in effect for the Executive.

(c) Termination by the Executive Without Good Reason . Notwithstanding the provisions of Section 1, the Executive may resign from the Employers at any time upon thirty (30) days’ prior written notice to the Employers. In the event of resignation by the Executive under this Section 5(c), the Boards of the Employers may elect to waive the period of notice, or any portion thereof.

(d) Termination by the Employers Without Cause . The Executive’s employment under this Agreement may be terminated by the Employers without Cause upon thirty (30) days’ prior written notice to the Executive.

(e) Termination by the Executive for Good Reason . The Executive may terminate his employment hereunder for Good Reason. For purposes of this Agreement, “Good Reason” shall mean that the Executive has complied with the “Good Reason Process” (hereinafter defined) following the occurrence of any of the following events:

(i) Failure of the Employers to continue the Executive in the position of President and Chief Executive Officer during the Term or the issuance by the Employers of a notice to Executive that the Term of this Agreement will not be extended;

(ii) Material adverse change by the Employers, not consented to by the Executive, in the nature or scope of the Executive’s responsibilities, title, authorities, powers, functions or duties from the responsibilities, title, authorities, powers, functions or duties normally exercised by an executive in the position of President and Chief Executive Officer of the Employers;

(iii) An involuntary reduction in the Executive’s Base Salary except across-the-board salary reductions based on the Employer’s financial performance similarly affecting substantially all management employees;

(iv) The involuntary relocation of the office at which the Executive is principally employed to a location more than thirty-five (35) miles of driving distance from such offices as of the date hereof; or

(v) Material breach by the Employers of Section 3 hereof or of any other provision of this Agreement, which breach continues for more than ten (10) days following written notice given by the Executive to the Employers, such written notice to set forth in reasonable detail the nature of such breach.

efforts, for a period not less than thirty (30) days following such notice (the “Cure Period”), to remedy the condition; (iv) notwithstanding such efforts, the Good Reason condition continues to exist; and (v) the Executive terminates his employment within sixty (60) days after the end of the Cure Period. If the Employers cure the Good Reason condition during the Cure Period, Good Reason shall be deemed not to have occurred. Notwithstanding the foregoing, the Employers may elect to waive the Cure Period, in which case, the Executive’s termination may occur within such 30-day period.

(f) Termination by the Employers for Cause . At any time during the Term, the Employers may terminate the Executive’s employment hereunder for Cause if at a meeting of the Boards of the Employers called and held for such purpose (after reasonable notice to the Executive and an opportunity for him, together with counsel, to be heard before the Boards, which notice shall specify in reasonable detail the basis for a proposal to terminate the Executive’s employment for “Cause”) a majority of each Board determines in good faith that the Executive is guilty of conduct that constitutes “Cause” as defined herein. Only the following shall constitute “Cause” for such termination:

(i) Conviction of the Executive by a court of competent jurisdiction of, or entry of a plea of guilty or nolo contendere for, any criminal offense involving dishonesty or breach of trust or any felony or crime of moral turpitude;

(ii) Commission by the Executive of an act of fraud upon the Employers;

(iii) Willful refusal by the Executive to perform the duties reasonably assigned to him by the Boards of the Employers (which duties are consistent with the Executive’s status as President and Chief Executive Officer of the Employers), which failure or breach continues for more than thirty (30) days after written notice given to the Executive by the Employers setting forth in reasonable detail the nature of such refusal; or

(iv) Willful breach of fiduciary duty or willful misconduct by the Executive that materially and adversely affects the Employers.

For purposes of this Section 5(f), no act, or failure to act, on the Executive’s part shall be deemed willful unless done, or omitted to be done, by the Executive without the reasonable belief that the Executive’s act, or failure to act, was in the best interest of the Employers. For the avoidance of doubt, the Board’s determination concerning whether “Cause” exists shall not be entitled to deference in the event of any proceeding concerning such determination.

(g) Termination due to Retirement . Upon termination of Executive based on Retirement, no amounts or benefits shall be due Executive under this Agreement, and Executive shall be entitled to all benefits under any retirement plan of the Bank and other plans to which Executive is a party. Termination of Executive’s employment based on “Retirement” shall mean termination of Executive’s employment on or after age 65 and in accordance with a retirement policy established by the Boards. Notwithstanding the foregoing, Executive’s involuntary termination without Cause or resignation for Good Reason within twenty-four (24) months following a Change in Control shall not be considered termination due to Retirement.

6. Compensation Upon Termination .

(a) Termination Generally . If the Executive’s employment with the Employers is terminated for any reason, the Employers shall pay or provide to the Executive (or to his authorized representative or estate) (i) on or before the time required by law but in no event more than thirty (30) days after the Executive’s date of termination, the sum of (A) any Base Salary earned through the date of termination, (B) unpaid expense reimbursements (subject to, and in accordance with, Section 4 of this Agreement), (C) unused vacation that accrued through the date of termination on or before the time required by law but in no event more than thirty (30) days after the Executive’s date of termination, (D) any earned but unpaid short-term and long-term incentive compensation for the year immediately preceding the year of termination and (E) except in the case of a termination under Section 5(c) or Section 5(f), a prorated portion of the Executive’s target short-term and long-term incentive compensation for the year of termination; and (ii) any vested benefits the Executive may have under any employee benefit plan of the Employers through the date of termination, which vested benefits shall be paid and/or provided in accordance with the terms of such employee benefit plans (collectively, the “Accrued Benefits”).

(b) Termination by the Employers Without Cause or by the Executive with Good Reason . During the Term, if the Executive’s employment is terminated by the Employers without Cause as provided in Section 5(c), or the Executive terminates his employment for Good Reason as provided in Section 5(e), the Employers shall pay to the Executive his Accrued Benefits. In addition, subject to the last paragraph of this Section 6(b), the Employers shall provide (i) to (iv) below (the “Severance Benefits”) to the Executive:

(i) the Employers shall pay the Executive an amount equal to two (2) times the sum of (A) the Executive’s then current Base Salary plus (B) the average annual incentive cash compensation awarded to Executive pursuant to Section 3(b) with respect to the applicable Employer’s two (2) most recent fiscal years ending before or simultaneously with the termination (the “Severance Amount”). The Severance Amount shall be paid out in substantially equal installments in accordance with the Bank’s payroll practice over twenty-four (24) months (the “Severance Period”) commencing within sixty (60) days after the date of termination, subject to the receipt of the signed release within such sixty (60) day period; and further subject to the delay specified in Section 8(a) hereof in the event Executive is a specified employee (as defined therein); provided, however, that if the 60-day period begins in one calendar year and ends in a second calendar year, the payment of the Severance Amount shall commence in the second calendar year. Solely for purposes of Section 409A of the Code, each installment payment shall be considered a separate payment;

(ii) subject to the Executive’s continued compliance in all material respects with the covenants contained in Section 9(a) and Section 9(b) hereof during any period for which he is receiving such benefits, the Employers shall maintain in effect for the Executive during the Severance Period, at their sole expense and on terms of participation substantially the same as those in effect for the Executive at any time during the six (6) months preceding such termination, all group medical and life insurance coverage. If the Executive’s continued participation in such programs would result in tax liability or

penalties to the Employer for other employees of the Employers, the Executive may continue such participation by paying, on an after-tax basis, the monthly premiums and any administrative fees required for such participation, and the Employers will increase the Executive’s payments under paragraph (i) of this Section 6(b) by an amount equal to such monthly premiums and administrative fees; provided, however, that any payment or benefit provided for under this clause (ii) shall be reduced by any comparable benefits provided to the Executive during the Severance Period as a result of employment by another employer. If providing such group medical benefits on an after-tax basis would not eliminate the potential tax liability or penalties of the Employer, then the Employer shall provide the Executive a cash lump sum payment reasonably estimated to be equal to the value of such benefits (or the value of any remaining benefits) within thirty (30) days after the date on which a determination is made that such penalties or tax liabilities would arise;

(iii) the Executive shall be entitled to receive professional outplacement services up to a maximum cost of $30,000 from a nationally or industry-recognized outplacement consulting or coaching organization of his choosing; and

(iv) the Employers shall fully vest the Executive in the Employers’ non-qualified deferred compensation plan(s) in which the Executive participates.

The Employers may condition the provision of the Severance Benefits on the Executive signing a Release Agreement in the form of Exhibit A (the “Release Agreement”) within twenty-one (21) days after it is tendered and not revoking the Release Agreement within the seven (7) day revocation period set forth in the Release Agreement; provided that the Employers tender the Release Agreement to the Executive no later than seven (7) days after the date of termination of employment. Notwithstanding the foregoing, the Release Agreement may be modified to the extent necessary based on changes in applicable law from and after the date of this Agreement.

7. Change in Control Payment . The provisions of this Section 7 set forth certain terms of an agreement reached between the Executive and the Employers regarding the Executive’s rights and obligations upon the occurrence of a Change in Control of the Employers. These provisions are intended to assure and encourage in advance the Executive’s continued attention and dedication to his assigned duties and his objectivity during the pendency and after the occurrence of any such event. These provisions shall apply in lieu of, and expressly supersede, the provisions of Section 6(b) regarding severance pay and benefits upon a termination of employment, if such termination of employment occurs within twenty-four (24) months after the occurrence of the first event constituting a Change in Control. These provisions shall terminate and be of no further force or effect beginning twenty-four (24) months after the occurrence of a Change in Control.

(a) Change in Control . During the Term, if within twenty-four (24) months after a Change in Control, the Executive’s employment is terminated by the Employers without Cause as provided in Section 5(c) or the Executive terminates his employment for Good Reason as provided in Section 5(e), the Employers shall pay the Executive his Accrued Benefits. In addition, Executive shall be entitled to the following:

(i) the Employers shall pay to the Executive a severance payment in an amount equal to three (3) times the sum of (A) the Executive’s current Base Salary (or the Executive’s Base Salary in effect immediately prior to the Change in Control, if higher), plus (B) the average annual incentive cash compensation earned by the Executive pursuant to Section 3(b) with respect to the applicable Employer’s three (3) most recent fiscal years ending before or simultaneously with the Change in Control. The severance payment shall be paid out in a lump sum payment no later than five (5) business days after the date of termination, subject to Section 8(a) hereof;

(ii) the Employers shall maintain in effect for the Executive for thirty-six (36) months, at its sole expense and on terms of participation substantially the same as those in effect for the Executive at any time during the six (6) months preceding such termination, all group medical and life insurance coverage. If the Executive’s continued participation in such programs would result in tax liability or penalties to the Employer for other employees of the Employers, the Executive may continue such participation, on an after-tax basis, by paying the monthly premiums and any administrative fees required for such participation, and the Employers will increase the Executive’s payments under paragraph (i) of this Section 7(a) by an amount equal to such monthly premiums and administrative fees; provided, however, that any payment or benefit provided for under this clause (ii) shall be reduced by any comparable benefits provided to the Executive during the benefits continuation as a result of employment by another employer. If providing such group medical benefits on an after-tax basis would not eliminate the potential tax liability or penalties of the Employers or their successors, or if the successors cannot provide such coverage under a group health policy beyond the end of the applicable health care continuation period provided under federal or state law (whichever is longer), then the Employers shall provide the Executive a cash lump sum payment reasonably estimated to be equal to the value of such benefits (or the value of any remaining benefits) within thirty (30) days after the date on which a determination is made that such penalties or tax liabilities would arise;

(iv) the Employers shall fully vest the Executive in the Employers’ non-qualified deferred compensation plan(s) in which the Executive participates.

Notwithstanding the foregoing, in the event the Change in Control is not a “change in ownership or effective control” of the Employers within the meaning of Section 409A of the Code and the regulations promulgated thereunder, the payments under paragraph (i) of this Section 7(a) shall be paid over the same timeframe as payments under Section 6(b)(i), i.e. , over a twenty-four (24) month period. In the event that Executive becomes (or may become) entitled to a severance benefit that would be paid over 24 months following the Change in Control, the Employers shall establish a rabbi trust within the meaning of Revenue Procedure 92-64 and shall appoint an independent corporate trustee of such rabbi trust. The Employers shall contribute an amount to such rabbi trust that is reasonably estimated to be sufficient to pay the severance payments required by this Section to the Executive.

(b) Payment Limitation .

(i) Anything in this Agreement to the contrary notwithstanding, in the event that the amount of any compensation, payment or distribution by the Employers to or for the benefit of the Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, calculated in a manner consistent with Section 280G of the Code and the applicable regulations thereunder (the “Severance Payments”), would be subject to the excise tax imposed by Section 4999 of the Code, the following provisions shall apply:

(A) Executive shall be entitled to the greater of the amount to which he would be entitled by this Agreement (and other benefit plans and arrangements that provide a payment that is treated as a “Contingent Payment”) under either item (i) or (ii) below:

(i) the “net” after-tax benefit to which Executive would be entitled after taking into consideration any all taxes that Executive would owe on such Contingent Payments, including any Federal, state and local income and employment taxes, as well as any excise tax, penalties or interest; and

(ii) the “net” after-tax benefit to which Executive would be entitled after reducing the Contingent Payments so that such payments do not exceed the Threshold Amount, after taking into consideration any all taxes that Executive would owe on such reduced Contingent Payments, including any Federal, state and local income and employment taxes.

(ii) For the purposes of this Section 7(b), “Threshold Amount” shall mean three times the Executive’s “base amount” within the meaning of Section 280G(b)(3) of the Code and the regulations promulgated thereunder less one dollar ($1.00); and “Excise Tax” shall mean the excise tax imposed by Section 4999 of the Code, and any interest or penalties incurred by the Executive with respect to such excise tax. The term “Contingent Payment” shall mean a payment in the nature of compensation that is contingent on a change in (i) the ownership or effective control of any of the Employers or (ii) a change in the ownership of a substantial portion of the assets of any of the Employers, however, a Contingent Payment shall not include any payment under a qualified plan listed in Code Section 280G(b)(6).

(iii) The determination as to which of the alternative provisions of Section 7(b)(i) shall apply to the Executive shall be made by a nationally recognized accounting firm selected by the Employers (the “Accounting Firm”), which shall provide detailed supporting calculations both to the Employers and the Executive within fifteen (15) business days of the date of termination, if applicable, or at such earlier time as is reasonably requested by the Employers or the Executive. For purposes of determining which of the alternative provisions of Section 7(b)(i) shall apply, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation applicable to individuals for the calendar year in which the determination is to be made, and state and local income taxes at the highest marginal rates of individual taxation

in the state and locality of the Executive’s residence on the date of termination, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes. Any determination by the Accounting Firm shall be binding upon the Employers and the Executive.

(c) Change in Control . For purposes of this Agreement, the term “Change in Control” shall mean the consummation by any of the Employers, in a single transaction or series of related transactions, of any of the following:

(i) the sale of all or a substantial portion of the assets of any of the Employers to any person, group or entity;

(ii) the merger, consolidation or other business combination of any of the Employers with another entity, in which any of the Employers, as the case may be, is not the survivor of such merger, consolidation or other business combination or a majority of the board of directors or trustees or other governing body of the entity surviving or resulting from such merger consolidation or other business combination is not composed of individuals who were serving on the Board of Directors of any of the Employers, as the case may be, immediately prior to the consummation of such merger consolidation or other business combination; or

(iii) a change in control of the Company within the meaning of the Change in Bank Control Act and the Rules and Regulations promulgated by the Federal Deposit Insurance Corporation at 12 C.F.R. Section 303.82(b) with respect to the Bank and the Board of Governors of the Federal Reserve System (“FRB”) at 12 C.F.R. Section 225.41(b) with respect to the Company, as in effect on the date hereof.

In addition to the foregoing, and not in limitation thereof, a Change in Control shall also be deemed to have occurred if, during any period of two (2) consecutive years, individuals who constitute the Board of Trustees of the MHC or the board of directors of any stock holding company that results from the conversion of the MHC to stock form at the beginning of such two-year period cease for any reason to constitute at least a majority of the Board of Trustees of the MHC or the board of directors of such stock holding company, as the case may be; provided, however, that for purposes of this sentence, an individual shall be deemed to have been a trustee or director at the beginning of such period if such individual was elected, or nominated for election, by the Board of Trustees of the MHC or the board of directors of such new stock holding company, as the case may be, by a vote of at least two-thirds of the trustees or directors who were either trustees or directors at the beginning of the two-year period or were so elected or nominated by such trustees or directors.

Notwithstanding anything to the contrary herein, a Change in Control shall not be deemed to have occurred upon: (i) the conversion of the MHC from a mutual holding company to stock form, or in connection with any reorganization used to effect such a conversion; or (ii) upon a public stock offering of the shares of Mid-Tier or of the stock holding company resulting from the conversion described in item “(i)” herein.

8. Section 409A .

(a) Anything in this Agreement to the contrary notwithstanding, if at the time of the Executive’s separation from service within the meaning of Section 409A of the Code, the Employers determine that the Executive is a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code, then to the extent any payment or benefit that the Executive becomes entitled to under this Agreement on account of the Executive’s separation from service would be considered deferred compensation subject to the 20 percent additional tax imposed pursuant to Section 409A(a) of the Code as a result of the application of Section 409A(a)(2)(B)(i) of the Code, such payment shall not be payable and such benefit shall not be provided until the date that is the earlier of (A) six months and one day after the Executive’s separation from service, or (B) the Executive’s death. If any such delayed cash payment is otherwise payable on an installment basis, the first payment shall include a catch-up payment covering amounts that would otherwise have been paid during the six-month period but for the application of this provision, and the balance of the installments shall be payable in accordance with their original schedule. Any such delayed cash payment shall earn interest at an annual rate equal to the applicable federal short-term rate published by the Internal Revenue Service for the month in which the date of separation from service occurs, from such date of separation from service until the payment.

(b) To the extent that any payment or benefit described in this Agreement constitutes “non-qualified deferred compensation” under Section 409A of the Code, and to the extent that such payment or benefit is payable upon the Executive’s termination of employment, then such payments or benefits shall be payable only upon the Executive’s “separation from service.” The determination of whether and when a separation from service has occurred shall be made in accordance with the presumptions set forth in Treasury Regulation Section 1.409A-1(h).

(c) The parties intend that this Agreement will be administered in accordance with Section 409A of the Code. To the extent that any provision of this Agreement is ambiguous as to its compliance with Section 409A of the Code, the provision shall be read in such a manner so that all payments hereunder comply with Section 409A of the Code. The parties agree that this Agreement may be amended, as reasonably requested by either party, and as may be necessary to fully comply with Section 409A of the Code and all related rules and regulations in order to preserve the payments and benefits provided hereunder without additional cost to either party.

9. Non-Competition, Non-Solicitation and Confidential Information .

(a) Non-Competition . Upon any termination of Executive’s employment for which Executive receives a severance payment pursuant to Section 6(b) of this Agreement, Executive agrees not to compete with the Employers for a period of twelve (12) months following such termination in any city, town or county in which Executive’s normal business office is located and the Employers have an office or have filed an application for regulatory approval to establish an office, determined as of the effective date of such termination, except as agreed to pursuant to a resolution duly adopted by the Boards of the Employers. Executive agrees that during such period and within said cities, towns and counties, Executive shall not work for or advise, consult or otherwise serve with, directly or indirectly, any entity whose business materially competes with the depository, lending or other business activities of the Employers or their affiliates. The

parties hereto, recognizing that irreparable injury will result to the Employers, business and property in the event of Executive’s breach of this Section 9(a), agree that in the event of any such breach by Executive, the Employers will be entitled, in addition to any other remedies and damages available, to an injunction to restrain the violation hereof by Executive, Executive’s partners, agents, servants, employees and all persons acting for or under the direction of Executive. Executive represents and admits that, in the event of the termination of his employment pursuant to Section 6(b) of this Agreement, Executive’s experience and capabilities are such that Executive can obtain employment in a business engaged in other lines and/or of a different nature than the Employers, and that the enforcement of a remedy by way of injunction will not prevent Executive from earning a livelihood. Nothing herein will be construed as prohibiting the Employers from pursuing any other remedies available to the Employers for such breach or threatened breach, including the recovery of damages from Executive.

(b) Non-Solicitation . During the term of the Executive’s employment under this Agreement and the twelve (12) months following the date of termination of the Executive’s employment hereunder (other than a termination under Section 7 hereof), the Executive shall not, directly or indirectly (i) hire or attempt to hire any employee of the Employers, assist in such hiring by any other person, or encourage any such employee to terminate his or her relationship with the Employers, or (ii) solicit business from any customer of the Employers or their subsidiaries, divert or attempt to divert any business from the Employers or their subsidiaries, or induce, attempt to induce, or assist others in inducing or attempting to induce any agent, customer or supplier of the Employers or any other person or entity associated or doing business with the Employers (or proposing to become associated or to do business with the Employers) to terminate such person’s or entity’s relationship with the Employers (or to refrain from becoming associated with or doing business with the Employers) or in any other manner to interfere with the relationship between the Employers and any such person or entity. The Employee understands that the restrictions set forth in this Section 9(b) and the following Section 9(c) are intended to protect the Employers’ interests in its Confidential Information and established employee, customer and supplier relationships and goodwill, and the Executive agrees that such restrictions are reasonable and appropriate for this purpose. For the avoidance of doubt, the Executive’s involvement in general advertising or general personnel recruiting efforts that are not targeted at customers or employees of any of the Employers shall not be considered to violate this Section 9(b).

(c) Confidential Information . The Executive shall not at any time divulge, use, furnish, disclose or make accessible to anyone, other than to an employee or director of the Employers with a reasonable need to know, any knowledge or information with respect to confidential or secret data, procedures or techniques of the Employers, provided, however, that nothing in this Section 9 shall prevent the disclosure by the Executive of any such information which at any time comes into the public domain other than as a result of the violation of the terms of this Section 9 by the Executive or which is otherwise lawfully acquired by the Executive.

(d) Documents, Records, etc . All documents, records, data, apparatus, equipment and other physical property, whether or not pertaining to Confidential Information, which are furnished to the Executive by the Employers or are produced by the Executive in connection with the Executive’s employment will be and remain the sole property of the Employers. The

Executive will return to the Employers all such materials and property as and when requested by the Employers. In any event, the Executive will return all such materials and property immediately upon termination of the Executive’s employment for any reason. The Executive will not retain any such material or property or any copies thereof after such termination.

(e) Third-Party Agreements and Rights . The Executive hereby confirms that the Executive is not bound by the terms of any agreement with any previous employer or other party which restricts in any way the Executive’s use or disclosure of information or the Executive’s engagement in any business. The Executive represents to the Employers that the Executive’s execution of this Agreement, the Executive’s employment with the Employers and the performance of the Executive’s proposed duties for the Employers will not violate any obligations the Executive may have to any such previous employer or other party. In the Executive’s work for the Employers, the Executive will not disclose or make use of any information in violation of any agreements with or rights of any such previous employer or other party, and the Executive will not bring to the premises of the Employers any copies or other tangible embodiments of non-public information belonging to or obtained from any such previous employment or other party.

(f) Litigation and Regulatory Cooperation . During and after the Executive’s employment with the Employers, the Executive shall cooperate fully with the Employers in the defense or prosecution of any claims or any actions now in existence or that may be brought in the future against or on behalf of the Employers that relate to events or occurrences that transpired while the Executive was employed by the Employers; provided that after the end of the Executive’s employment, the Executive shall not be required to perform more than one hundred hours of services pursuant to this Section 9(f) above and beyond services that could be compelled by issuance of a subpoena. The Executive’s full cooperation in connection with such claims or actions shall include, but not be limited to, being available to meet with counsel to prepare for discovery or trial and to act as a witness on behalf of the Employers at mutually convenient times. During and after the Executive’s employment, the Executive also shall cooperate fully with the Employers in connection with any investigation or review by any federal, state or local regulatory authority as such investigation or review relates to events or occurrences that transpired while the Executive was employed by the Employers. The Employers shall reimburse the Executive for any reasonable out-of-pocket expenses incurred in connection with the Executive’s performance of his obligations pursuant to this Section 9(f). Unless the Executive is then employed or the Employers are paying the Severance Amount pursuant to this Section 9(f), the Employers shall pay the Executive for any services pursuant to this Section 9(f) at the hourly rate of Executive’s final annual Base Salary divided by 2,080; provided that no payment obligation shall apply to services that could be compelled pursuant to a subpoena.

(g) Injunction . The Executive agrees that it would be difficult to measure any damages caused to the Employers that might result from any breach by the Executive of the promises set forth in this Section 9, and that in any event money damages would be an inadequate remedy for any such breach. Accordingly, the Executive agrees that if the Executive breaches or proposes to breach, any portion of this Section 9, the Employer shall be entitled, in addition to all other remedies that it may have, to an injunction or other appropriate equitable relief to restrain any such breach without showing or proving any actual damages to the Employer.

10. Withholding . All payments made by the Employers under this Agreement shall be net of any tax or other amounts required to be withheld by the Employers under applicable law.

11. Indemnification . During the period of his employment hereunder, the Employers agrees to indemnify the Executive in his capacity as an officer of the Employers, all to the maximum extent permitted under the laws of the Commonwealth of Massachusetts and applicable banking rules and regulations. The provisions of this Section 11 shall survive expiration or termination of this Agreement for any reason whatsoever.

12. Notices . Any notices, requests, demands and other communications provided for by this Agreement shall be sufficient if in writing and delivered in person or sent by registered or certified mail, postage paid, to the Executive at the last address the Executive has filed in writing with the Employers or, in the case of the Employers, at its main office, attention of the Chairman of the Board.

13. Entire Agreement . This Agreement constitutes the entire agreement between the parties with respect to its subject matter and may not be changed except by a writing duly executed and delivered by the Employers and the Executive in the same manner as this Agreement.

14. Binding Effect, Non-assignability . This Agreement shall be binding upon and inure to the benefit of the Employers and its successors. Neither this Agreement nor any rights arising hereunder may be assigned or pledged by the Executive during his lifetime. This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.

15. Amendment . This Agreement may be amended or modified only by a written instrument signed by the Executive and by a duly authorized representative of each of the Employers.

16. Enforceability . If any portion or provision of this Agreement shall to any extent be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of this Agreement, or the application of such portion or provision in circumstances other than those as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each portion and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.

17. Forfeiture of Payments . The Executive agrees that the receipt of severance compensation under Section 6(b) is conditioned upon the Executive’s compliance in all material respects with the covenants set forth in Section 9. The foregoing shall be in addition to any other remedies or rights the Bank may have at law or in equity as a result of the Executive’s failure to observe such provisions.

18. Applicable Law . This Agreement shall be construed and enforced in all respects in accordance with the laws of the Commonwealth of Massachusetts, without regard to its principles of conflicts of laws, and in accordance with and subject to any applicable federal laws to which the Bank may be subject as an FDIC insured institution. In addition to the foregoing:

(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. sec. 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. sec. 1813(x)(1)) of the Federal Deposit Insurance Act, as amended; or

(ii) 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.

19. Dispute Resolution .

(a) If a dispute arises out of or relates to this Agreement, or the breach hereof, and if such dispute is not settled within a commercially reasonably time (not to exceed sixty (60) days, through negotiations), the parties shall attempt in good faith to settle the dispute by mediation under the Employment Arbitration Rules and Mediation Procedures of the American Arbitration Association as then in effect (the “Rules”) before resorting to litigation. No resolution or attempted resolution of any dispute or disagreement pursuant to this Section 19 shall be deemed to be a waiver of any term or provision of this Agreement or a consent to any breach or default, unless such waiver or consent shall be in writing and signed by the party claimed to have waived or consented.

(b) Any dispute or controversy not settled in accordance with the foregoing provisions of this Section 19 shall be settled exclusively by binding arbitration to be conducted before three arbitrators in Boston, Massachusetts in accordance with the Rules. Each party shall select one such arbitrator and the two arbitrators so selected shall choose a third.

(c) The parties covenant and agree that they will participate in such mediation and/or arbitration in good faith and that the Employers will bear the fees and expenses of such proceeding charged by the American Arbitration Association (including the fees of the arbitrators). In an arbitration, the arbitrator shall not have the power to award damages in excess of actual compensatory damages and shall not multiply actual damages or award punitive damages or any other damages, and each party hereby irrevocably waives any claim to such damages.

(d) Any payment required under this Section 19 shall be made after the final resolution referenced herein, but not later than the later of (i) December 31 of the calendar year in which such resolution is achieved, and (ii) two and one-half months after the date on which such final resolution is achieved.

(e) The prevailing party in any arbitration proceeding or any other legal proceeding between the Executive and any or all of the Employers (any or all of the Employers being deemed one party for these purposes), shall be entitled to reimbursement from the other party for all reasonable attorneys’ fees, costs and expenses that such prevailing party incurs in connection with any such proceeding.

20. Counterparts . This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be taken to be an original; but such counterparts shall together constitute one and the same document.

21. Successors to the Employers . The Employers shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Employers expressly to assume and agree to perform this Agreement to the same extent that the Employers would be required to perform it if no succession had taken place. Failure of the Employers to obtain an assumption of this Agreement at or prior to the effectiveness of any succession shall be a material breach of this Agreement.

22. Indemnification . The Employers agree to indemnify the Executive in his capacity as an officer of the Employer. In addition, to the extent that the Executive serves at the request of any of the Employers as a representative, an officer or a Board member of any community organization or financial services industry association or similar entity, he shall be entitled to indemnification by one or both of the Employers, as applicable. Indemnification pursuant to this Section 22 shall be subject to and administered in accordance with the charter or By-laws of each of the Employers, as amended from time to time; provided , however, that the terms of such indemnification shall be no less favorable to the Executive than those set forth in the charter or By-laws of each of the Employers as of the date of this Agreement. Any indemnification with respect to service to a third party shall be provided only to the extent that no indemnification or insurance is available from such third party or that any such indemnification or insurance has been exhausted.

23. No Mitigation . The Executive shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise. No payment provided for in this Agreement shall be reduced by any compensation earned by the Executive as the result of employment by another employer, or the Executive’s receipt of income from any other sources, after termination of his employment with the Employers.

IN WITNESS WHEREOF, this Agreement has been executed as a sealed instrument by the Employers, by their duly authorized officers, and by the Executive, this 6 ^th day of March, 2014.


ATTEST:	HYDE PARK BANCORP, MHC

/s/ George E. Clancy	By:	/s/ David J. Houston, Jr.
Secretary		Chairman of the Board

ATTEST:	HYDE PARK BANCORP, INC.

/s/ George E. Clancy	By:	/s/ David J. Houston, Jr.
Secretary		Chairman of the Board

ATTEST:	BLUE HILLS BANK

/s/ George E. Clancy	By:	/s/ David J. Houston, Jr.
Secretary		Chairman of the Board

	/s/ William M. Parent
	Executive

EXHIBIT A

RELEASE AGREEMENT

I enter into this Release Agreement (the “Release”) pursuant to Section 6(b) of the Employment Agreement between each of Hyde Park Bancorp, MHC (the “MHC”), Hyde Park Bancorp, Inc. (the “Company”) and Blue Hills Bank (the “Bank” and, together with the MHC and the Company, the “Employers”) and me dated March , 2014 (the “Employment Agreement”). I acknowledge that my timely execution and return and my non-revocation of this Release are conditions to the provision of the “Severance Benefits” pursuant to Section 6(b) of the Employment Agreement. I therefore agree to the following terms:

1. Release of Claims . I voluntarily release and forever discharge the Employers, their affiliated and related entities, their predecessors, successors and assigns, their employee benefit plans and fiduciaries of such plans, and the current and former officers, trustees, directors, shareholders, employees, attorneys, accountants and agents of any and all of the foregoing in their official and personal capacities (collectively referred to as the “Releasees”) generally from all claims, demands, debts, damages and liabilities of every name and nature, known or unknown (“Claims”) that, as of the date when I sign this Release, I have, ever had, now claim to have or ever claimed to have had against any or all of the Releasees. This includes, without limitation, the release of all Claims:

•

relating to my employment by the Employers and the termination of my employment;

•

of wrongful discharge;

•

of breach of contract;

•

of retaliation or discrimination under federal, state or local law (including, without limitation, Claims of age discrimination or retaliation under the Age Discrimination in Employment Act, Claims of disability discrimination or retaliation under the Americans with Disabilities Act, Claims of discrimination or retaliation under Title VII of the Civil Rights Act of 1964 and Claims of any form of discrimination or retaliation that is prohibited by the Massachusetts General Laws Chapter 151B);

•

under any other federal or state statute;

•

of defamation or other torts;

•

of violation of public policy;

•

for wages, bonuses, incentive compensation, vacation pay or any other compensation or benefits, either under the Massachusetts Wage Act, M.G.L. c. 149, §§ 148-150C, or otherwise; and

•

for damages or other remedies of any sort, including, without limitation, compensatory damages, punitive damages, injunctive relief and attorney’s fees;

provided , however, that this release shall not affect my rights (i) under any tax-qualified plan of any of the Employers in which I participate, (ii) for other vested benefits, (iii) to indemnification and/or directors and officers insurance coverage or (iv) under the Employment Agreement.

I agree that I shall not seek or accept damages of any nature, other equitable or legal remedies for my own benefit, attorney’s fees, or costs from any of the Releasees with respect to any Claim released by this Agreement. I represent that I have not assigned to any third party and I have not filed with any agency or court any Claim released by this Agreement.

2. Ongoing Obligations . I reaffirm my ongoing obligations under the Employment Agreement, including without limitation my obligations under Section 9 (“Non-Competition, Non-Solicitation and Confidential Information”).

3. No Assignment . I represent that I have not assigned to any other person or entity any Claims against any Releasee.

4. Right to Consider and Revoke Release . I acknowledge that I have been given the opportunity to consider this Release for a period ending twenty-one (21) days after the date when it was proposed to me. In the event that I executed this Release within less than twenty-one (21) days after such date, I acknowledge that such decision was entirely voluntary and that I had the opportunity to consider this Release until the end of the twenty-one (21) day period. To accept this Release, I shall deliver a signed Release to the Bank within such twenty-one (21) day period; provided that I acknowledge that any of the Employers may change the designated recipient by written notice to me. For a period of seven (7) days from the date when the I execute this Release (the “ Revocation Period ”), I shall retain the right to revoke this Release by written notice that is received by the Bank (or other recipient designated by any of the Employers by written notice) on or before the last day of the Revocation Period. This Release shall take effect only if it is executed within the twenty-one (21) day period as set forth above and if it is not revoked pursuant to the preceding sentence. If those conditions are satisfied, this Release shall become effective and enforceable on the date immediately following the last day of the Revocation Period (the “ Effective Date ”).

5. Other Terms .

(a) Legal Representation; Review of Release . I acknowledge that I have been advised to discuss all aspects of this Release with my attorney, that I have carefully read and fully understand all of the provisions of this Release and that I am voluntarily entering into this Release .

(b) Binding Nature of Release . This Release shall be binding upon me and upon my heirs, administrators, representatives and executors.

(d) Severability . In the event that at any future time it is determined by an arbitrator or court of competent jurisdiction that any covenant, clause, provision or term of this Release is illegal, invalid or unenforceable, the remaining provisions and terms of this Release shall not be affected thereby and the illegal, invalid or unenforceable term or provision shall be severed from the remainder of this Release. In the event of such severance, the remaining covenants shall be binding and enforceable.

(e) Governing Law and Interpretation . This Release shall be deemed to be made and entered into in the Commonwealth of Massachusetts, and shall in all respects be interpreted, enforced and governed under the laws of the Commonwealth of Massachusetts, without giving effect to the conflict of laws provisions of Massachusetts law. The language of all parts of this Release shall in all cases be construed as a whole, according to its fair meaning, and not strictly for or against the Employers or me.

(f) Entire Agreement; Absence of Reliance . I acknowledge that I am not relying on any promises or representations by any of the Employers or any of their agents, representatives or attorneys regarding any subject matter addressed in this Release.

So agreed.



William M. Parent				Date

Exhibit 10.2

FORM OF

TWO YEAR CHANGE IN CONTROL AGREEMENT

FOR

Jim Kivlehan and Thomas E. O’Leary

AGREEMENT made as of the 4 ^th day of March, 2014 (the “Effective Date”) by and among Hyde Park Bancorp, Inc., a mid-tier holding company organized under the laws of the Commonwealth of Massachusetts (the “Company”), and its subsidiary, Blue Hills Bank, a Massachusetts savings bank with its main office in Hyde Park, Massachusetts (the “Bank”) (the Company and the Bank hereinafter shall be collectively referred to as the “Employers”), and (the “Executive”). The Company is the wholly-owned subsidiary of Hyde Park, MHC (the “MHC”).

1. Purpose . The Board of Directors of the Company (the “Board”) recognizes that the possibility of a Change in Control (as defined in Section 2 hereof) and the uncertainty and questions that it may raise among management may result in the departure or distraction of key management personnel to the detriment of the Company. Therefore, the Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Employers’ key management, including the Executive, to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a Change in Control.

2. Change in Control . For purposes of this Agreement, the term “Change in Control” shall mean the consummation by the Company or the Bank, in a single transaction or series of related transactions, of any of the following:

(i) the sale of all or a substantial portion of the assets of the Company or the Bank to any person, group or entity;

(ii) the merger, consolidation or other business combination of the Company or the Bank with another entity, in which the Company or the Bank, as the case may be, is not the survivor of such merger, consolidation or other business combination or a majority of the board of directors or trustees or other governing body of the entity surviving or resulting from such merger, consolidation or other business combination is not composed of individuals who were serving on the board of directors of the Company or the Bank, as the case may be, immediately prior to the consummation of such merger, consolidation or other business combination; or

In addition to the foregoing, and not in limitation thereof, a Change in Control shall also be deemed to have occurred if, during any period of two consecutive years, individuals who

constitute the board of directors of the MHC or the board of directors of any stock holding company that results from the conversion of the MHC to stock form at the beginning of such two-year period cease for any reason to constitute at least a majority of the board of directors of the MHC or stock holding company, as the case may be; provided, however, that for purposes of this sentence, an individual shall be deemed to have been a director at the beginning of such period if such individual was elected, or nominated for election, by the board of directors of the MHC or the stock holding company, as the case may be, by a vote of at least two-thirds of the directors who were either directors at the beginning of the two-year period or were so elected or nominated by such directors.

Notwithstanding anything to the contrary herein, a Change in Control shall not be deemed to have occurred upon: (i) the conversion of the MHC from a mutual holding company to stock form, or in connection with any reorganization used to effect such a conversion; or (ii) upon a public stock offering of the shares of the Company or of the stock holding company resulting from the conversion described in item “(i)” herein.

3. Terminating Event . For purposes of this Agreement, a “Terminating Event” shall mean any of the events provided in this Section 3, provided that such event also constitutes a “separation from service” with the Employers within the meaning of Section 409A(a)(2)(A)(i) of the Internal Revenue Code of 1986, as amended (the “Code”), and guidance issued thereunder, including Treasury Regulations Sections 1.409A-1(h)(1)(ii) and 1.409A-1(h)(3).

(a) Termination by the Employers . Termination by the Employers of the employment of the Executive with the Employers for any reason other than for Cause, death or Disability. For purposes of this Agreement, “Cause” shall mean:

(i) conduct by the Executive constituting a material act of willful misconduct in connection with the performance of the Executive’s duties, including, without limitation, misappropriation of funds or property of the Employers other than the occasional, customary and de minimis use of Employers’ property for personal purposes; or

(ii) the commission by the Executive of any felony or a misdemeanor involving moral turpitude, deceit, dishonesty or fraud, or any conduct by the Executive that would reasonably be expected to result in material injury to the Employers if the Executivewere retained in the Executive’s position; or

(iii) continued, willful and deliberate non-performance by the Executive of the Executive’s duties to the Employers (other than by reason of the Executive’s physical or mental illness, incapacity or disability) which has continued for more than 30 days following written notice of such non-performance from the Chief Executive Officer; or

(iv) a violation by the Executive of the Employers’ employment policies that has continued following written notice of such violation from the Chief Executive Officer; or

(v) willful failure to cooperate with a bona fide internal investigation or an investigation by regulatory or law enforcement authorities, after being instructed by

the Employers to cooperate, or the willful destruction or failure to preserve documents or other materials known to be relevant to such investigation or the willful inducement of others to fail to cooperate or to produce documents or other materials; or

(vi) removal or prohibition of the Executive from participating in the conduct of the Employers’ affairs by order issued under applicable law and regulations by a federal or state banking agency having authority over the Employers.

A Terminating Event shall not be deemed to have occurred pursuant to this Section 3(a) solely as a result of the Executive being an employee of any direct or indirect successor to the business or assets of the Company, rather than continuing as an employee of the Company following a Change in Control. For purposes of clauses (i), (iii) and (v) hereof, no act, or failure to act, on the Executive’s part shall be deemed “willful” unless done, or omitted to be done, by the Executive without reasonable belief that the Executive’s act, or failure to act, was in the best interests of the Employers.

(b) Termination by the Executive for Good Reason . In the event of termination by the Executive of the Executive’s employment with the Employers for Good Reason, this Section 3(b) shall apply. For purposes of this Agreement, “Good Reason” shall mean that the Executive has complied with the “Good Reason Process” (hereinafter defined) following the occurrence of any of the following events:

(i) a material diminution, not consented to by the Executive, in the Executive’s responsibilities, authorities or duties, from the responsibilities, authorities or duties exercised by the Executive immediately prior to the Change in Control; or

(ii) a material reduction in the Executive’s annual base salary as in effect on the date hereof or as the same may be increased from time to time hereafter except for across-the-board reductions similarly affecting all or substantially all management employees; or

(iii) the relocation of the Employers’ offices at which the Executive is principally employed immediately prior to the date of a Change in Control (the “Current Offices”) to any other location more than 35 miles from the Current Offices, or the requirement by the Employers for the Executive to be based at a location more than 35 miles from the Current Offices, except for required travel on the Employers’ business to an extent substantially consistent with the Executive’s business travel obligations immediately prior to the Change in Control; or

(iv) the material breach of this Agreement by the Employers.

“Good Reason Process” shall mean that (i) the Executive reasonably determines in good faith that a “Good Reason” condition has occurred; (ii) the Executive notifies the Employers in writing of the first occurrence of the Good Reason condition within 60 days of the first occurrence of such condition; (iii) the Executive cooperates in good faith with the Employers’ efforts, for a period not less than 30 days following such notice (the “Cure Period”), to remedy the condition; (iv) notwithstanding such efforts, the Good Reason condition continues to exist; and (v) the Executive terminates the Executive’s employment within 60 days after the end of the

Cure Period. If the Employers cure the Good Reason condition during the Cure Period, Good Reason shall be deemed not to have occurred. Notwithstanding the foregoing, the Employer may elect to waive the Cure Period, in which case, the Executive’s termination may occur within such 30-day period.

(c) For purposes of this Agreement, “Disability” shall mean any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months that (i) renders the Employee unable to engage in any substantial gainful activity, or (ii) causes the Employee to receive income replacement benefits for a period of not less than three (3) months under an accident and health plan of the Bank covering the Employee.

4. Change in Control Payment . In the event a Terminating Event occurs within 24 months after a Change in Control:

(a) Severance . The Employers shall pay to the Executive an amount equal to two times the sum of (A) the Executive’s annual base salary in effect immediately prior to the Terminating Event (or the Executive’s annual base salary in effect immediately prior to the Change in Control, if higher), plus (B) the average annual short-term incentive cash compensation earned by the Executive with respect to the Employers two (2) most recent fiscal years ending before or simultaneously with the Change in Control, payable in equal monthly installments over the twenty-four (24) months following the Terminating Event commencing on the first payroll date following the Terminating Event. The Executive shall also be entitled to any accrued but unpaid compensation and accrued but unpaid paid time off (PTO), payable in a lump sum no later than 10 days following the Date of Termination (as hereinafter defined). In addition, the Employers shall maintain in effect for the Executive for the twenty-four (24) months following the Date of Termination, at its sole expense and on terms of participation substantially the same as those in effect for the Executive at any time during the six months preceding such termination, all group medical and life insurance coverage. Notwithstanding anything herein to the contrary, if the Employer cannot provide group medical coverage at its sole expense on a pre-tax basis because Executive is no longer an employee, applicable rules and regulations prohibit such benefits or the payment of such benefits in the manner contemplated would subject the Employer to penalties or taxes, then the Employer shall pay or provide such benefit on an after-tax basis, at the same time and in the same manner as the Employer would have provided such pre-tax benefits, if doing so would eliminate the prohibition, penalties or taxes. If providing such benefits on an after-tax basis would not eliminate such prohibition, penalties or taxes, then the Employer shall provide the Executive a cash lump sum payment reasonably estimated to be equal to the value of such benefits (or the value of any remaining benefits) within thirty (30) days after the date on which such determination is made.

(b) Limitation . Anything in this Agreement or in any other agreement, contract, understanding, plan or program entered into or maintained by the Employers to the contrary notwithstanding, in the event it shall be determined that any payment, distribution or benefit to or for the benefit of the Executive, whether paid or payable, distributed or distributable or provided or to be provided pursuant to the terms of this Agreement or otherwise (collectively, the “Payments”) would, in the reasonable determination of the independent certified public accounting firm then retained by the Employers (the “Tax Advisor”), not be deductible (in whole

or in part) by the Employers, an affiliate of the Employers or other person making such payment or distribution or providing such benefit as a result of Section 280G of the Code, and/or any successor provision or section thereto, then the cash and non-cash payments, distributions and/or benefits payable or to be provided to the Executive under this Agreement shall be reduced to the extent necessary, but no more than necessary, so that no portion of the Payments would be non-deductible as a result of Section 280G of the Code. For purposes of this Section 4(b), (i) no portion of the Payments, the receipt or enjoyment of which the Executive shall have effectively waived in writing prior to the Date of Termination, shall be taken into account, (ii) no portion of the Payments shall be taken into account that, in the opinion of the Tax Advisor, does not constitute a “parachute payment” within the meaning of Section 280G(b)(2) of the Code, including without limitation by reason of Section 280G(b)(4)(A) of the Code, (iii) any payments, distributions and/or benefits under this Agreement or otherwise for services to be rendered on or after the effective date of a Change in Control shall be reduced only to the extent necessary so that such payments, distributions and/or benefits in their entirety constitute reasonable compensation for services actually rendered within the meaning of Section 280G(b)(4)(B) of the Code or are otherwise not subject to disallowance as deductions, in the opinion of the Tax Advisor, and (iv) the value of any non-cash payment or benefit or any deferred payment or benefit included in the Payments shall be determined by the Tax Advisor in accordance with the principles of Sections 280G(d)(3) and 280G(d)(4) of the Code and the applicable regulations or proposed regulations under the Code. All of the foregoing calculations, determinations and opinions shall be made or otherwise rendered in good faith by the Employers and the Tax Advisor, as applicable, and shall be conclusive and binding upon the parties. The Employers shall pay all costs and expenses incurred in connection with any such calculations, determinations and opinions.

(c) Additional Limitation . Anything in this Agreement to the contrary notwithstanding, if at the time of the Executive’s separation from service within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), the Executive is considered a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code, and if any payment or benefit that the Executive becomes entitled to under this Agreement is considered deferred compensation subject to interest, penalties and additional tax imposed pursuant to Section 409A(a) of the Code as a result of the application of Section 409A(a)(2)(B)(i) of the Code, and such payment or benefit is not subject to an exception to Section 409A of the Code as the result of one of the exceptions set forth therein (i.e., the “short term deferral” exception set forth in Treasury Regulation Section 1.409A-1(b)(4) or the “two times two year” exception for payments on an involuntary termination of employment set forth in Treasury Regulation Section 1.409A-1(b)(9)), then no such payment shall be payable or benefit shall be provided prior to the date that is the earlier of (i) six months and one day after the Executive’s separation from service, or (ii) the Executive’s death. In the event of such six month delay, the first payment shall include a catch-up payment covering amounts that would otherwise have been paid during the six-month period but for the application of this provision, and the balance of the instalments shall be payable in accordance with the original schedule. Any such delayed cash payment shall earn interest at an annual rate equal to the applicable federal short-term rate published by the Internal Revenue Service for the month in which the date of separation from service occurs, from such date of separation from service until such payment. The parties intend that this Agreement will be administered in accordance with Section 409A of the Code. The parties agree that this Agreement may be amended, as reasonably requested by

either party, and as may be necessary to fully comply with Section 409A of the Code and all related rules and regulations in order to preserve the payments and benefits provided hereunder without additional cost to either party. Notwithstanding anything in this Agreement to the contrary, to the extent that any payment or benefit described in this Agreement constitutes “non-qualified deferred compensation” under Section 409A of the Code, and to the extent that such payment or benefit is payable upon the Executive’s termination of employment, then such payments or benefits shall only be payable upon the Executive’s “separation from service.” The term “separation from service” shall mean the Executive’s “separation from service” from the Bank or the Company, an affiliate of the Bank or the Company or a successor entity within the meaning set forth in Section 409A of the Code, determined in accordance with the presumptions set forth in Treasury Regulation Section 1.409A-1(h). The Employers make no representation or warranty and shall have no liability to the Executive or any other person if any provisions of this Agreement are determined to constitute deferred compensation subject to Section 409A of the Code but do not satisfy an exemption from, or the conditions of, such Section.

5. Term . This Agreement shall take effect on the Effective Date and shall continue in effect until the second anniversary of the Effective Date. On the first anniversary of the Effective Date and on each annual anniversary thereafter (each an “Anniversary Date”) this Agreement shall automatically renew for an additional year, such that this Agreement shall terminate twenty-four (24) months thereafter (each renewal term shall constitute a “Term”) unless at least (30) days prior to such Anniversary Date the Boards of Directors of the Company and the Bank issue a non-renewal notice to the Executive that this Agreement shall expire at the end of the Term. Notwithstanding the foregoing, in the event that the Company enters into an agreement to effect a transaction which would be considered a Change in Control hereunder, this Agreement shall continue and shall terminate on the second annual Anniversary Date following the effective date of the Change in Control, unless earlier terminated in accordance with the next sentence. Notwithstanding anything to the contrary herein, this Agreement shall also terminate upon the earliest of (a) the termination by the Employers of the employment of the Executive for Cause or the failure by the Executive to perform the Executive’s full-time duties with the Employers by reason of the Executive’s death or Disability, (b) the resignation or termination of the Executive’s employment for any reason prior to a Change in Control, or (c) the termination of the Executive’s employment with the Employers after a Change in Control for any reason other than the occurrence of a Terminating Event. In the event of the termination of this Agreement prior to the completion by the Employers of all payments due to the Executive hereunder, the Employers shall continue such payments to the Executive until paid in full.

6. Withholding . All payments made by the Employers under this Agreement shall be net of any tax or other amounts required to be withheld by the Employers under applicable law.

7. Notice and Date of Termination .

(a) Notice of Termination . After a Change in Control and during the term of this Agreement, any purported termination of the Executive’s employment (other than by reason of death) shall be communicated by written Notice of Termination from one party hereto to the other party hereto in accordance with this Section 7. For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and the Date of Termination.

(b) Date of Termination . “Date of Termination,” with respect to any purported termination of the Executive’s employment after a Change in Control and during the term of this Agreement, shall mean the date specified in the Notice of Termination. In the case of a termination by the Employers other than a termination for Cause (which may be effective immediately), the Date of Termination shall not be less than 30 days after the Notice of Termination is given. In the case of a termination by the Executive, the Date of Termination shall not be less than 30 days from the date such Notice of Termination is given. Notwithstanding the foregoing, in the event that the Executive gives a Notice of Termination to the Employers, the Employers may unilaterally accelerate the Date of Termination and such acceleration shall not result in a termination by the Employers for purposes of this Agreement.

8. No Mitigation . The Employers agree that, if the Executive’s employment by the Employers is terminated during the term of this Agreement, the Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive by the Employers pursuant to Section 4 hereof. Further, the amount of any payment provided for in this Agreement shall not be reduced by any compensation earned by the Executive as the result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by the Executive to the Employers or otherwise.

9. Arbitration of Disputes . Any controversy or claim arising out of or relating to this Agreement or the breach thereof or otherwise arising out of the Executive’s employment or the termination of that employment (including, without limitation, any claims of unlawful employment discrimination, whether based on age or otherwise) shall, to the fullest extent permitted by law, be settled by arbitration in any forum and form agreed upon by the parties or, in the absence of such an agreement, under the auspices of the American Arbitration Association (“AAA”) in Boston, Massachusetts, in accordance with the Employment Dispute Resolution Rules of the AAA, including, but not limited to, the rules and procedures applicable to the selection of arbitrators. In the event that any person or entity other than the Executive or the Employers may be a party with regard to any such controversy or claim, such controversy or claim shall be submitted to arbitration, subject to such other person or entity’s agreement. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. This Section 9 shall be specifically enforceable. Notwithstanding the foregoing, this Section 9 shall not preclude either party from pursuing a court action for the sole purpose of obtaining a temporary restraining order or a preliminary injunction in circumstances in which such relief is appropriate; provided that any other relief shall be pursued through an arbitration proceeding pursuant to this Section 9.

10. Consent to Jurisdiction . To the extent that any court action is permitted consistent with or to enforce Section 10 of this Agreement, the parties hereby consent to the jurisdiction of the Superior Court of the Commonwealth of Massachusetts and the United States District Court for the District of Massachusetts. Accordingly, with respect to any such court action, the Executive (a) submits to the personal jurisdiction of such courts; (b) consents to service of process; and (c) waives any other requirement (whether imposed by statute, rule of court, or otherwise) with respect to personal jurisdiction or service of process.

11. Integration . This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes in all respects all prior agreements between the parties concerning such subject matter.

12. Successor to the Executive . This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal representatives, executors, administrators, heirs, distributees, devisees and legatees. In the event of the Executive’s death after a Terminating Event but prior to the completion by the Employers of all payments due the Executiveunder Section 4 of this Agreement, the Employers shall continue such payments to the Executive’s beneficiary designated in writing to the Employers prior to the Executive’s death (or to the Executive’s estate, if the Executive fails to make such designation).

13. Enforceability . If any portion or provision of this Agreement shall to any extent be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of this Agreement, or the application of such portion or provision in circumstances other than those as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each portion and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.

14. Waiver . No waiver of any provision hereof shall be effective unless made in writing and signed by the waiving party. The failure of any party to require the performance of any term or obligation of this Agreement, or the waiver by any party of any breach of this Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a waiver of any subsequent breach.

15. Notices . Any notices, requests, demands and other communications provided for by this Agreement shall be sufficient if in writing and delivered in person or sent by registered or certified mail, postage prepaid, to the Executive at the last address the Executive has filed in writing with the Employers, or to the Employers at its main office, attention of the Board of Trustees.

16. Amendment . This Agreement may be amended or modified only by a written instrument signed by the Executive and by duly authorized representatives of the Employers.

17. Employment Status . Nothing in this Agreement shall be construed as creating an express or implied contract of employment and, except as otherwise agreed in writing between the Executive and the Employers, the Executive shall not have any right to be retained in the employ of the Employers.

18. Effect on Other Plans . An election by the Executive to resign after a Change in Control under the provisions of this Agreement shall not be deemed a voluntary termination of employment by the Executive for the purpose of interpreting the provisions of any of the Employers’ benefit plans, programs or policies. Nothing in this Agreement shall be construed to limit the rights of the Executive under the Employers’ benefit plans, programs or policies except as otherwise provided in Section 4 hereof, and except that the Executive shall have no rights to any severance benefits under any Company or Bank severance pay plan. In the event that the Executive is party to an employment agreement with the Employers providing for change in

control payments or benefits, the Executive shall receive the benefits under only one agreement, which shall be the agreement pursuant to which the Executive would receive the greatest aggregate amount (calculated on an after-tax basis).

19. Governing Law . This is a Massachusetts contract and shall be construed under and be governed in all respects by the laws of the Commonwealth of Massachusetts, without giving effect to the conflict of laws principles of such Commonwealth, and in accordance with and subject to any applicable federal laws to which the Bank may be subject as an FDIC insured institution. With respect to any disputes concerning federal law, such disputes shall be determined in accordance with the law as it would be interpreted and applied by the United States Court of Appeals for the First Circuit. In addition to the foregoing:

(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. sec. 1813(x)(1)) of the Federal Deposit Insurance Act, as amended; or

20. Successors to Company . The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place. Failure of the Company to obtain an assumption of this Agreement at or prior to the effectiveness of any succession shall be a breach of this Agreement and shall constitute Good Reason if the Executive elects to terminate employment.

21. Gender Neutral . Wherever used herein, a pronoun in the masculine gender shall be considered as including the feminine gender unless the context clearly indicates otherwise.

22. Allocation of Obligations Between Employers . The obligations of the Employers under this Agreement are intended to be the joint and several obligations of the Bank and the Company, and the Employers shall, as between themselves, allocate these obligations in a manner agreed upon by them.

IN WITNESS WHEREOF, this Agreement has been executed as a sealed instrument by the Company by its duly authorized officer, and by the Executive, as of the date first above written.


HYDE PARK BANCORP, INC.

By:
		Name:
		Title:

BLUE HILLS BANK

By:
		Name:
		Title:

EXECUTIVE


Executive

Exhibit 10.3

BLUE HILLS BANK

AMENDED AND RESTATED

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

Effective as of December 31, 2013

BLUE HILLS BANK

AMENDED AND RESTATED

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

Table of Contents


ARTICLE I Name and Purpose		1

ARTICLE II Definitions		1
2.1	“Account Balance”	1
2.2	“Annual Benefit Amount”	1
2.3	“Bank”	2
2.4	“Benefit Age”	2
2.5	“Board”	2
2.6	“Cause”	2
2.7	“Change in Control”	3
2.8	“Code”	3
2.9	“Company”	4
2.10	“Date of Hire”	4
2.11	“Disability”	4
2.12	“Employer Common Stock”	4
2.13	“Employers”	4
2.14	“ERISA”	4
2.15	“Good Reason”	4
2.16	“Good Reason Process”	5
2.17	“MHC”	5
2.18	“Mid-Tier”	5
2.19	“Normal Distribution Form”	5
2.20	“Participant”	5
2.21	“Participation Agreement”	5
2.22	“Plan”	5
2.23	“Plan Administrator”	5
2.24	“Plan Year”	5
2.25	“Separation from Service”	6
2.26	“Terminating Event”	6
2.27	“Vested Account Balance”	6
2.28	“Vesting Schedule”	6
2.29	“Year of Service”	6

ARTICLE III Participation		6
3.1	Designation by Board	6
3.2	Term of Participation	6

ARTICLE IV Eligibility for Benefit		7
4.1	Separation from Service	7
4.2	Forfeiture	7

ARTICLE V Payment of Benefit		7
5.1	Time and Form of Benefit	7
5.2	Disability	8
5.3	Death	8
5.4	Change in Control	8
5.5	Clawback	8

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ARTICLE VI Claims and Review Procedures		9
6.1	Claims Procedure	9
6.2	Review Procedure	9

ARTICLE VII Funding		10
7.1	General Obligation of the Employers	10
7.2	Use of Trust, Insurance Policies, Etc.	11

ARTICLE VIII Amendment and Termination		11
8.1	Amendment	11
8.2	Termination	11

ARTICLE IX Miscellaneous		12
9.1	Provision for Incapacity	12
9.2	Non-assignable Rights	12
9.3	Independence of Plan	12
9.4	At-Will Status	13
9.5	Taxes	13
9.6	Limitation on Benefits	13
9.7	Governing Law; Regulatory Restrictions	14
9.8	Arbitration of Disputes	14

- ii -

BLUE HILLS BANK

AMENDED AND RESTATED

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 “Blue Hills Bank Supplemental Executive Retirement Plan.” The Plan was originally established effective July 1, 2011 and has been amended and restated effective as of December 31, 2013.

1.2 The Plan is established and maintained for the purpose of providing the retirement benefits described in Article V to eligible Participant employees of the Bank, Mid-Tier and MHC.

1.3 For purposes of ERISA, the Plan is intended to be unfunded, and maintained by the Bank 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

As used in the Plan and the Participation Agreement:

2.1 “Account Balance” means, with respect to each Participant, an amount equal to the sum of the aggregate Annual Benefit Amounts allocated to the Participant, increased annually between the date allocated and the Participant’s Separation from Service by an amount equal to the equivalent of interest at the Bank’s highest published CD rate in effect on the first business day of each Plan Year, plus 200 basis points. Effective January 1, 2014, Participants may elect to invest their Annual Benefit Amounts allocated to their Account and any earnings thereon among investment options offered by the Plan Administrator from time to time, pursuant to procedures adopted by the Plan Administrator. In the event Mid-Tier issues stock to the public or MHC converts to a fully converted stock holding company, as the Company, the Plan Administrator, in its sole discretion, may offer shares of Employer Common Stock as an investment option in the Plan, subject to such terms and conditions as specified by the Plan Administrator. Notwithstanding anything to the contrary herein, once an amount has been invested in Employer Common Stock, it must remain invested in Employer Common Stock (i.e., the investment election is irrevocable) and that the portion of the Participant’s Account that is invested in Employer Common Stock shall be distributed to the Participant in the form of Employer Common Stock (not in cash).

2.2 “Annual Benefit Amount” means a fixed dollar amount set forth as to each Participant in a Participation Agreement between the Bank and the Participant.

2.3 “Bank” means Blue Hills Bank, with its principal administrative offices located at 1196 River Street, Hyde Park, MA 02136.

2.4 “Benefit Age” means the age designated as such in a Participant’s Participation Agreement.

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 the 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) conduct by the Participant constituting a material act of willful misconduct in connection with the performance of his duties, including, without limitation, misappropriation of funds or property of the Employers other than the occasional, customary and de minimis use of Employers’ property for personal purposes; or

(ii) the commission by the Participant of any felony or a misdemeanor involving moral turpitude, deceit, dishonesty or fraud, or any conduct by the Participant that would reasonably be expected to result in material injury to the Employers if he were retained in his position; or

(iii) continued, willful and deliberate non-performance by the Participant of his duties to the Employers (other than by reason of the Participant’s physical or mental illness, incapacity or disability) which has continued for more than 30 days following written notice of such non-performance from the Chief Executive Officer of the Bank; or

(iv) a violation by the Participant of the Employers’ employment policies that has continued following written notice of such violation from the Chief Executive Officer; or

(v) willful failure to cooperate with a bona fide internal investigation or an investigation by regulatory or law enforcement authorities, after being instructed by the Employers to cooperate, or the willful destruction or failure to preserve documents or other materials known to be relevant to such investigation or the willful inducement of others to fail to cooperate or to produce documents or other materials; or

(vi) removal or prohibition of the Participant from participating in the conduct of the Employers’ affairs by order issued under applicable law and regulations by a federal or state banking agency having authority over the Employers.

2.7 “Change in Control” means the consummation by MHC, Mid-Tier, Bank or the Company, as applicable, in a single transaction or series of related transactions, of any of the following:

(i) the sale of all or a substantial portion of the assets of MHC, Mid-Tier, Bank or Company to any person, group or entity;

(ii) the merger, consolidation or other business combination of MHC, Mid-Tier, the Bank or the Company with another entity, in which MHC, Mid-Tier, Bank or the Company, as the case may be, is not the survivor of such merger, consolidation or other business combination, or a majority of the board of trustees or directors or other governing body of the entity surviving or resulting from such merger, consolidation or other business combination is not composed of individuals who were serving on the board of trustees of MHC or the board of directors of the Mid-Tier, Bank or the Company, as the case may be, immediately prior to the consummation of such merger, consolidation or other business combination; or

(iii) a change in control of MHC, Mid-Tier, Bank or the Company within the meaning of the Change in Bank Control Act and/or the Rules and Regulations promulgated by the Federal Deposit Insurance Corporation at 12 C.F.R. Section 303.82(b) with respect to the Bank and/or the Board of Governors of the Federal Reserve System (“FRB”) at 12 C.F.R. Section 225.41(b) with respect to the Company, as in effect on the date hereof.

In addition to the foregoing, and not in limitation thereof, a Change in Control shall also be deemed to have occurred if, during any period of two consecutive years, individuals who constitute the board of trustees of MHC or the board of directors of the Company, if applicable, at the beginning of such two-year period cease for any reason to constitute at least a majority of the board of trustees or directors, as the case may be; provided, however, that for purposes of this sentence, an individual shall be deemed to have been a trustee or director at the beginning of such period if such individual was elected, or nominated for election, by the board of trustees of MHC or the board of directors of the Company, as the case may be, by a vote of at least two-thirds of the trustees or directors who were either trustees or directors at the beginning of the two-year period or were so elected or nominated by such trustees or directors.

Notwithstanding anything in this subsection to the contrary, a Change in Control shall not be deemed to have occurred upon (i) the conversion of the MHC from a mutual holding company to stock form as the Company, or in connection with any reorganization used to effect such a conversion; or (ii) upon a public stock offering of shares of Mid-Tier or the Company.

2.8 “Code” means the Internal Revenue Code of 1986, as amended.

2.9 “Company” means, if the MHC converts to a stock holding company, the fully converted stock holding company of the Bank.

2.10 “Date of Hire” means, with respect to a Participant, the date specified in such Participant’s Participation Agreement.

2.11 “Disability” means the first to occur of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months that (i) renders the Participant unable to engage in any substantial gainful activity, or (ii) causes the Participant to receive income replacement benefits for a period of not less than 3 months under an accident and health plan of the Employers covering the Participant.

2.12 “Employer Common Stock” means common stock of Mid-Tier or Company, as applicable.

2.13 “Employers” means the Bank and any corporate members of its affiliated group of corporations.

2.14 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

2.15 “Good Reason” means that a Participant has complied with the “Good Reason Process” following the occurrence of any of the following events:

(i) a material diminution, not consented to by the Participant, in the Participant’s responsibilities, authorities or duties, from the responsibilities, authorities or duties exercised by the Participant on the date the Participant becomes a Participant in the Plan; or

(ii) a material reduction in the Participant’s annual base salary as in effect on the date the Participant becomes a Participant in the Plan or as the same may be increased from time to time thereafter, except for across-the-board reductions similarly affecting all or substantially all management employees; or

(iii) the relocation of the Employers’ offices at which the Participant is principally employed on the date the Participant becomes a participant in the Plan (the “Current Offices”) to any other location more than 35 miles from the Current Offices, or the requirement by the Employers for the Participant to be based at a location more than 35 miles from the Current Offices, except for required travel on the Employers’ business to an extent substantially consistent with the Participant’s business travel obligations; or

(iv) the material breach of this Plan by the Employers.

2.16 “Good Reason Process” means that (i) the Participant reasonably determines in good faith that a Good Reason condition has occurred; (ii) the Participant notifies the Employers in writing of the first occurrence of the Good Reason condition within 60 days of the first occurrence of such condition; (iii) the Participant cooperates in good faith with the Employers’ efforts, for a period not less than 30 days following such notice (the “Cure Period”), to remedy the condition; (iv) notwithstanding such efforts, the Good Reason condition continues to exist; and (v) the Participant terminates his employment within 60 days after the end of the Cure Period. If the Employers cure the Good Reason condition during the Cure Period, Good Reason shall be deemed not to have occurred.

2.17 “MHC” means Hyde Park Bancorp, MHC, with its principal administrative offices located at 1196 River Street, Hyde Park, MA 02136.

2.18 “Mid-Tier” means Hyde Park Bancorp, Inc., the wholly-owned subsidiary of MHC.

2.19 “Normal Distribution Form” means a lump-sum payment in cash or Employer Common Stock, or both, as applicable.

2.20 “Participant” means each employee of the Employers who (i) is designated by the Board as a Participant in the Plan in accordance with Article III, and (ii) executes a Participation Agreement in accordance with Section 3.2.

2.21 “Participation Agreement” means a written agreement between MHC, the Bank or Company and a Participant pursuant to which the Participant agrees to participate in the Plan.

2.22 “Plan” means the deferred compensation arrangement set forth in this instrument, as amended from time to time.

2.23 “Plan Administrator” means the Compensation Committee of the Board or such person as the Board may appoint.

2.24 “Plan Year” means the 12-month period ending December 31.

2.25 “Separation from Service” means a change in a Participant’s service relationship with the Employers, whether or not initiated by the Employers, such that the Employers reasonably determine, based on the facts and circumstances available at such determination date, that no further services will be performed by the Participant for the Employers after a certain date (the “Separation Date”) or that the level of bona fide services the Participant will perform after the Separation Date (whether as an employee, independent contractor or other service provider) will decrease permanently to no more than 20% of the average level of bona fide services performed (whether as an employee, independent contractor or other service provider) over the preceding 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 20% but less than 50% of the average level of service performed by the Participant during the 36 month period immediately preceding the Separation Date.

2.26 “Terminating Event” means a Participant’s termination by the Employers for any reason other than Cause, death or Disability, or termination by a Participant of the Participant’s employment with the Employers for Good Reason.

2.27 “Vested Account Balance” means the portion, if any, of a Participant’s Account Balance that is vested in accordance with the Vesting Schedule set forth in the Participant’s Participation Agreement.

2.28 “Vesting Schedule” means a schedule pursuant to which, subject to the terms of the Plan, a Participant earns a non-forfeitable entitlement to the Participant’s Account Balance, as set forth on the Participant’s Participation Agreement.

2.29 “Year of Service” means each period of 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 Employers 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 Participation Agreement in such form as the Employers approve (which may be in the form set forth as Appendix A to the Plan). The effective date of such participation shall be the date of 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 Vested Account Balance, (ii) the Participant’s Separation from Service for any reason, (iii) the termination of the Plan, and (iv) 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 to a Participant under the Plan prior to the 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 Forfeiture .

In no event shall any benefit be payable to a Participant under the Plan if the Participant (i) has a Separation from Service due to termination for Cause or resigns under circumstances that the Board determines to constitute Cause, or (ii) violates the restrictive covenants set forth in the Participation Agreement.

ARTICLE V

Payment of Benefit

5.1 Time and Form of Benefit .

Subject to the Participant signing a general release of claims in favor of the Employers and related persons and entities in a form and manner satisfactory to the Employers and the expiration of the seven-day revocation period for such release, a Participant who has a Separation from Service for reasons other than Cause, death or Disability shall be entitled to a benefit, to be distributed in the Normal Distribution Form, equal to the Participant’s Vested Account Balance as of the date of the Participant’s Separation from Service. Such distribution shall be made within 60 days after the date of the Participant’s Separation from Service with the Employers, provided however, if such 60 day period spans two calendar years, the payment shall commence in the second calendar year. Notwithstanding the foregoing, a Participant may elect to defer the date of payment, without interest, provided, however, that such election and deferral conforms with the provisions of the Plan and with any applicable requirements of Section 409A of the Code (and any other applicable tax law regarding deferral of income or avoidance of constructive receipt), including without limitation the requirements pursuant to Treasury Regulation Section 1.409A-2(b)(1) that any such election (x) must be made at least 12 months before the date the payment is scheduled to be paid, (y) may not take effect until at least 12 months after the date on which it is made, and (z) must extend the payment date for an additional period of at least five years.

5.2 Disability .

5.3 Death .

In the event that a Participant dies prior to Separation from Service, the Participant’s Vested Account Balance as of the date of the Participant’s death shall be distributed to the Participant’s designated beneficiary or, in the absence of a surviving beneficiary, to the Participant’s estate, in the Normal Distribution Form within 60 days after the Participant’s date of death. In the event that the Participant dies after Separation from Service but prior to distribution in full of the Participant’s Vested Account Balance, 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.

5.4 Change in Control .

Notwithstanding anything to the contrary in Section 5.1, in the event a Terminating Event occurs with respect to a Participant within 24 months after a Change in Control, the Participant’s Account Balance shall be 100% vested, and the Participant shall be entitled to a benefit, to be distributed in the Normal Distribution Form, equal to the Participant’s Vested Account Balance as of the date of the Terminating Event, increased by an amount equal to two times the Participant’s highest Annual Benefit Amount in effect at any time within the six months immediately preceding the Change in Control. Such distribution shall be made within 60 days after the Terminating Event.

5.5 Clawback .

Notwithstanding anything to the contrary contained in the Plan, if the Plan Administrator determines, in its sole and absolute discretion, that a Participant has received a benefit under the Plan that is based on materially inaccurate financial statements, reviews, gains, or any other materially inaccurate criteria used in determining or setting such benefit, the Plan Administrator shall cancel such benefit to the extent attributable to such materially inaccurate financial statements, reviews, gains, or other materially inaccurate criteria. In the event that any amount has been paid to the Participant with respect to such cancelled benefit (the “Overpayment Amount”), the Plan Administrator, promptly after making such determination, shall send the Participant a notice of recovery (“Recovery Notice”), specifying the Overpayment Amount. The Participant shall be obligated to repay the Overpayment Amount to the Employers promptly following receipt of such Recovery Notice, in accordance with the terms specified therein. The Employers, in their sole discretion, may recover all or a part of any Overpayment Amount by setoff of any amount owed to the Participant by the Employers under the Plan or otherwise.

ARTICLE VI

Claims and Review Procedures

6.1 Claims Procedure .

A Participant or beneficiary of a Participant (a “claimant”) who has not received benefits under the Plan that he or she believes should be distributed shall make a claim for such benefits as follows:

(a) The claimant shall initiate a claim by submitting to the Plan Administrator a written claim for the benefits. If such a claim relates to the contents of a notice received by the claimant, the claim must be made within 60 days after such notice was received by the claimant. All other claims must be made within 180 days of the date on which the event that caused the claim to arise occurred. The claim must state with particularity the determination desired by the claimant.

(b) The Plan Administrator shall respond to such claimant within 90 days after receiving the claim. If the Plan Administrator determines that special circumstances require additional time for processing the claim, the Plan Administrator can extend the response period by an additional 90 days by notifying the claimant in writing, prior to the end of the initial 90-day period that an additional period is required. The notice of extension must set forth the special circumstances and the date by which the Plan Administrator expects to render its decision.

(c) If the Plan Administrator denies part or the entire claim, the Plan Administrator shall notify the claimant in writing of such denial. The Plan Administrator shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth:

(i) The specific reasons for the denial;

(ii) A reference to the specific provisions of the Plan on which the denial is based;

(iii) A description of any additional information or material necessary for the claimant to perfect the claim and an explanation of why it is needed; and

(iv) An explanation of this Plan’s review procedures and the time limits applicable to such procedures.

6.2 Review Procedure .

If the Plan Administrator denies part or all of the claim, the claimant shall have the opportunity for a full and fair review by the Plan Administrator of the denial as follows:

(a) To initiate the review, the claimant, within 60 days after receiving the Plan Administrator’s notice of denial, must file with the Plan Administrator a written request for review.

(b) The claimant shall then have the opportunity to submit written comments, documents, records and other information relating to the claim. The Plan Administrator shall also provide the claimant, upon request, reasonable access to, and copies of, all documents, records and other information relevant to the claimant’s claim for benefits.

(c) In considering the review, the Plan Administrator shall take into account all materials and information the claimant submits relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.

(d) The Plan Administrator shall respond in writing to such claimant within 60 days after receiving the request for review. If the Plan Administrator determines that special circumstances require additional time for processing the claim, the Plan Administrator can extend the response period by an additional 60 days by notifying the claimant in writing, prior to the end of the initial 60-day period, that an additional period is required. The notice of extension must set forth the special circumstances and the date by which the Plan Administrator expects to render its decision.

(e) The Plan Administrator shall notify the claimant in writing of its decision on review. The Plan Administrator shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth:

(i) The specific reasons for the denial;

(ii) A reference to the specific provisions of this Plan on which the denial is based; and

(iii) A statement that the claimant is entitled to receive, upon request, reasonable access to, and copies of, all documents, records and other information relevant to the claimant’s claim for benefits.

ARTICLE VII

Funding

7.1 General Obligation of the Employers .

The benefits provided under the Plan constitute a mere promise by the Employers to make payments in the future, and the rights of the Participant hereunder shall be those of a general unsecured creditor of the Employers. Nothing contained herein shall be construed to create a trust of any kind or to render the Employers a fiduciary with respect to the Participant. The Employers 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 Employers or of any other person. Notwithstanding the foregoing, in the

event that the Plan Administrator offers Employer Common Stock as an investment option in the Plan, the Plan Administrator shall segregate such Employer Common Stock and shall hold such Employer Common Stock in a rabbi trust established for such purpose. 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 Employers may, in their sole and absolute discretion, establish a trust to which funds earmarked for payment under the Plan may be transferred and from which benefits arising hereunder, and subject to the provisions and limitations hereof, may be paid. Notwithstanding the foregoing, in the event that the Plan Administrator offers Employer Common Stock as an investment option in the Plan, the Plan Administrator shall segregate such Employer Common Stock and shall hold such Employer Common Stock in a rabbi trust established for such purpose. Any such trust would contain provisions making it irrevocable by the Employers 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 Employers, in which event benefit payments from the trust would cease and assets thereof would revert to the Employers or be paid to its creditors. The Employers may, for their 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 Employers may wish and that the Participant will be available for medical examinations if necessary.

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 a Participant’s Account Balance, the Participant’s right to vest in such Account Balance in accordance with the provisions of the Plan or the amount of any benefit to which the Participant would have a vested entitlement if the Participant terminated employment with the Employers immediately prior to the effective date of such amendment, or changes the form in which such benefit is to be distributed, such amendment shall not 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; provided, however, that no such action shall reduce the amount of a Participant’s Account Balance, the Participant’s right to vest in such Account Balance thereafter in accordance with the provisions of the Plan, or the amount of any benefit to which the Participant would have a vested entitlement if the Participant terminated employment with the Employers immediately prior to the effective date of such termination.

Any acceleration of the payment of such benefits due to Plan termination shall comply with the following and no payment shall be made if the decision to terminate the Plan or the acceleration of any payment under the Plan is undertaken proximate to a downturn in the financial health of the Employers, in accordance with Treasury Regulations Section 1.409A-3(j)(ix):

(a) all arrangements sponsored by the Employers that would be aggregated with this Plan under Treasury Regulations Section 1.409A-1(c)(2) if any Participant covered by this Plan was also covered by any of those other arrangements are also terminated;

(b) no payments other than payments that would be payable under the terms of the arrangement if the termination had not occurred are made within 12 months of the termination of the arrangement;

(d) the Employers does not adopt a new arrangement that would be aggregated with any terminated arrangement under Treasury Regulations Section 1.409A-1(c)(2) if the same Participant participated in both arrangements, at any time within three years following the date of termination of the arrangement.

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 Employers 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 Employers from all obligations or 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 Employers and a Participant, or any compensation payable by the Employers to a Participant other than supplemental retirement benefits, whether as salary, bonus or otherwise.

9.4 At-Will Status .

Notwithstanding any provision of the Plan, but subject to any employment agreement that may exist from time to time between the Employers and a Participant, each Participant is employed at-will, so that the Participant or the Employers may terminate the Participant’s employment at any time, with or without notice, for any or no reason.

9.5 Taxes .

All payments and benefits described in the Plan shall be subject to any and all applicable federal, state and local income, employment and other taxes, and the Employers will deduct from each payment to be made to a Participant under the Plan such amounts, if any, required to be deducted or withheld under applicable law.

9.6 Limitation on Benefits .

(a) Limitation on Payments . Anything in the Plan or in any other agreement, contract, understanding, plan or program entered into or maintained by the Employers to the contrary notwithstanding, in the event it shall be determined that any payment, distribution or benefit to or for the benefit of the a Participant, whether paid or payable, distributed or distributable or provided or to be provided pursuant to the terms of the Plan or otherwise (collectively, the “Payments”), would, in the reasonable determination of the independent certified public accounting firm then retained by the Employers (the “Tax Advisor”), not be deductible (in whole or in part) by the Employers, an affiliate of the Employers or other person making such payment or distribution or providing such benefit as a result of Section 280G of the Code, and/or any successor provision or section thereto, then the cash and non-cash payments, distributions and/or benefits payable or to be provided to the Participant under the Plan shall be reduced to the extent necessary, but no more than necessary, that no portion of the Payments not be deductible as a result of Section 280G of the Code. For purposes of this Section 9.6(a), (i) no portion of the Payments, the receipt or enjoyment of which the Participant shall have effectively waived in writing prior to his or her termination of employment, shall be taken into account, (ii) no portion of the Payments shall be taken into account that, in the opinion of the Tax Advisor, does not constitute a “parachute payment” within the meaning of Section 280G(b)(2) of the Code, including without limitation by reason of Section 280G(b)(4)(A) of the Code, (iii) any payments, distributions and/or benefits under the Plan or otherwise for services to be rendered on or after the effective date of a “change in control” shall be reduced only to the extent necessary so that such payments, distributions and/or benefits in their entirety constitute reasonable compensation for services actually rendered within the meaning of Section 280G(b)(4)(B) of the Code or are otherwise not subject to disallowance as deductions, in the opinion of the Tax Advisor, and (iv) the value of any non-cash payment or benefit or any deferred payment or benefit included in the Payments shall be determined by the Tax Advisor in accordance with the principles of Sections 280G(d)(3) and 280G(d)(4) of the Code and the applicable regulations or proposed regulations under the Code. All of the foregoing calculations, determinations and opinions shall be made or otherwise rendered in good faith by the Employers and the Tax Advisor, as applicable, and shall be conclusive and binding upon the parties. The Employers shall pay all costs and expenses incurred in connection with any such calculations, determinations and opinions.

(b) Delay in Distribution . Notwithstanding anything to the contrary contained in the Plan, if at the time of a Participant’s Separation from Service, the Participant is considered a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code, and if any payment or benefit that the Participant becomes entitled to under this Agreement is considered deferred compensation subject to interest, penalties and additional tax imposed pursuant to Section 409A(a) of the Code as a result of the application of Section 409A(a)(2)(B)(i) of the Code, then such payment shall be payable or benefit shall be provided on the date that is the earlier of (i) six months and one day after the Participant’s Separation from Service, or (ii) within thirty (30) days following the Participant’s death.

9.7 Governing Law; Regulatory Restrictions .

The Plan shall be construed under and governed by the laws of the Commonwealth of Massachusetts except to the extent pre-empted by ERISA, and with and subject to any federal laws to which the Employers may be subject as an FDIC insured institution. In addition to the foregoing:

(a) In no event shall the Employers 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)), 12 C.F.R. Part 359, or any other applicable law.

(b) In no event shall the Employers be obligated to make any payment pursuant to the Plan if:

(i) MHC or the Bank is in default as defined in Section 3(x) (12 U.S.C. sec. 1813(x)(1)) of the Federal Deposit Insurance Act, as amended; or

(ii) the FDIC enters into an agreement to provide assistance to or on behalf of the Employers under the authority contained in Section 13(c) (12 U.S.C. sec. 1823(c)) of the Federal Deposit Insurance Act, as amended.

9.8 Arbitration of Disputes .

Any controversy or claim arising out of or relating to the Plan or arising out of the Participant’s employment or the termination of that employment (including, without limitation, any claims of unlawful employment discrimination whether based on age or otherwise) shall, to the fullest extent permitted by law, be settled by arbitration in any forum and form agreed upon by the parties or, in the absence of such an agreement, under the auspices of the American Arbitration Association (“AAA”) in Boston, Massachusetts, in accordance with the Employment Dispute Resolution Rules of the AAA, including, but not limited to, the rules and procedures applicable to the selection of arbitrators. In the event that any person or entity other than the Participant or the Employers may be a party with regard to any such controversy or claim, such controversy or claim shall be submitted to arbitration, subject to such other person or entity’s agreement. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. This Section 9.8 shall be specifically enforceable. Notwithstanding the foregoing, this Section 9.8 shall not preclude either party from pursuing a court action for the sole purpose of obtaining a temporary restraining order or a preliminary injunction in circumstances in which such relief is appropriate; provided that any other relief shall be pursued through an arbitration proceeding pursuant to this Section 9.8.

EXECUTED under seal as of the day and year first above written, by the Employers’ duly authorized representatives.


	BLUE HILLS BANK
ATTEST:

/s/ George E. Clancy	By:	/s/ William M. Parent
Secretary		Its: President and Chief Executive Officer

ATTEST:	HYDE PARK BANCORP, MHC

/s/ George E. Clancy	By:	/s/ William M. Parent
Secretary		Its: President and Chief Executive Officer

ATTEST:	HYDE PARK BANCORP, MHC

/s/ George E. Clancy	By:	/s/ William M. Parent
Secretary		Its: President and Chief Executive Officer

Exhibit 10.4

BLUE HILLS BANK

AMENDED AND RESTATED

DIRECTOR SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

Effective as of December 31, 2013

BLUE HILLS BANK

AMENDED AND RESTATED

DIRECTOR SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

Table of Contents


ARTICLE I Name and Purpose			1

ARTICLE II Definitions			1
	2.1	“Account Balance”	1
	2.2	“Annual Benefit Amount”	1
	2.3	“Bank”	1
	2.4	“Benefit Age”	2
	2.5	“Board”	2
	2.6	“Cause”	2
	2.7	“Change in Control”	2
	2.8	“Code”	3
	2.9	“Company”	3
	2.10	“Date of Joining”	3
	2.11	“Disability”	3
	2.12	“Employer Common Stock”	4
	2.13	“Employers”	4
	2.14	“ERISA”	4
	2.15	“MHC”	4
	2.16	“Mid-Tier”	4
	2.17	“Normal Distribution Form”	4
	2.18	“Participant”	4
	2.19	“Participation Agreement”	4
	2.20	“Plan”	4
	2.21	“Plan Administrator”	4
	2.22	“Plan Year”	4
	2.23	“Separation from Service”	4
	2.24	“Terminating Event”	5
	2.25	“Vested Account Balance”	5
	2.26	“Vesting Schedule”	5
	2.27	“Year of Service”	5

ARTICLE III Participation			5
	3.1	Board Members	5
	3.2	Term of Participation	5

ARTICLE IV Eligibility for Benefit			6
	4.1	Separation from Service	6
	4.2	Forfeiture	6

ARTICLE V Payment of Benefit			6
	5.1	Time and Form of Benefit	6
	5.2	Disability	6
	5.3	Death	7
	5.4	Change in Control	7
	5.5	Clawback	7

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ARTICLE VI Claims and Review Procedures			8
	6.1	Claims Procedure	8
	6.2	Review Procedure	8

ARTICLE VII Funding			9
	7.1	General Obligation of the Employers	9
	7.2	Use of Trust, Insurance Policies, Etc .	10

ARTICLE VIII Amendment and Termination			10
	8.1	Amendment	10
	8.2	Termination	10

ARTICLE IX Miscellaneous			11
	9.1	Provision for Incapacity	11
	9.2	Non-assignable Rights	11
	9.3	Independence of Plan	11
	9.4	At-Will Status	11
	9.5	Taxes	12
	9.6	Limitation on Benefits	12
	9.7	Governing Law; Regulatory Restrictions	13
	9.8	Arbitration of Disputes	13

- ii -

BLUE HILLS BANK

AMENDED AND RESTATED

DIRECTOR 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 “Blue Hills Bank Director Supplemental Executive Retirement Plan.” The Plan was originally established effective July 1, 2011 and has been amended and restated effective as of December 31, 2013.

1.2 The Plan is established and maintained for the purpose of providing the retirement benefits described in Article V to eligible Participant directors of the Bank and the Mid-Tier and trustees of MHC.

ARTICLE II

Definitions

As used in the Plan and the Participation Agreement:

2.1 “Account Balance” means, with respect to each Participant, an amount equal to the sum of the aggregate Annual Benefit Amounts allocated to the Participant, increased or decreased annually between the date allocated to the Participant and the Participant’s Separation from Service by an amount equal to (a) the equivalent of interest at the Bank’s highest published CD rate in effect on the first business day of each Plan Year, plus 200 basis points, or (b) the percentage increase or decrease for such Plan Year in the “Book Value Per Share,” as defined in the Bank’s Phantom Stock Plan, whichever of (a) or (b) is elected by the Participant in the Participant’s Participation Agreement. Effective January 1, 2014, Participants may elect to invest their Annual Benefit Amounts allocated to their Account and any earnings thereon among investment options offered by the Plan Administrator from time to time, pursuant to procedures adopted by the Plan Administrator. In the event Mid-Tier issues stock to the public or MHC converts to a fullly converted stock holding company, as the Company, the Plan Administrator, in its sole discretion, may offer shares of Employer Common Stock as an investment option in the Plan, subject to such terms and conditions as specified by the Plan Administrator. Notwithstanding anything to the contrary herein, once an amount has been invested in Employer Common Stock, it must remain invested in Employer Common Stock (i.e., the investment election is irrevocable) and that the portion of the Participant’s Account that is invested in Employer Common Stock shall be distributed to the Participant in the form of Employer Common Stock (not in cash).

2.2 “Annual Benefit Amount” means $10,000.

2.3 “Bank” means Blue Hills Bank, with its principal administrative offices located at 1196 River Street, Hyde Park, MA 02136.

2.4 “Benefit Age” means age seventy-five (75).

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 with respect to (a) whether there exists Cause for the termination of a Participant, or (b) any claim by a Participant or a Participant’s beneficiary under Article VI, the Participant shall not be entitled to vote and the Participant’s membership on the Board (or a committee of the Board) shall not be counted.

2.6 “Cause” means any one or more of the following:

(iv) a violation by the Participant of the Employers’ policies that has continued following written notice of such violation from the Chief Executive Officer; or

2.7 “Change in Control” means the consummation by MHC, Mid-Tier, Bank or the Company, as applicable, in a single transaction or series of related transactions, of any of the following:

(i) the sale of all or a substantial portion of the assets of MHC, Mid-Tier, Bank or the Company to any person, group or entity;

(ii) the merger, consolidation or other business combination of MHC, Mid-Tier, Bank or the Company with another entity, in which MHC, Mid-Tier, Bank or the Company, as the case may be, is not the survivor of such merger, consolidation or other business combination, or a majority of the board of trustees or directors or other governing body of the entity surviving or resulting from such merger, consolidation or other business combination is not composed of individuals who were serving on the board of trustees of MHC or the board of directors of the Mid-Tier, Bank or the Company, as the case may be, immediately prior to the consummation of such merger, consolidation or other business combination; or

In addition to the foregoing, and not in limitation thereof, a Change in Control shall also be deemed to have occurred if, during any period of two consecutive years, individuals who constitute the board of trustees of MHC or the board of directors of the Company, as applicable, at the beginning of such two-year period cease for any reason to constitute at least a majority of the board of trustees or directors, as the case may be; provided, however, that for purposes of this sentence, an individual shall be deemed to have been a trustee or director at the beginning of such period if such individual was elected, or nominated for election, by the board of trustees of MHC or the board of directors of the Company, as the case may be, by a vote of at least two-thirds of the trustees or directors who were either trustees or directors at the beginning of the two-year period or were so elected or nominated by such trustees or directors.

Notwithstanding anything in this subsection to the contrary, a Change in Control shall not be deemed to have occurred upon (i) the conversion of the MHC from a mutual holding company to stock form, or in connection with any reorganization used to effect such a conversion; or (ii) upon a public stock offering of shares of the Mid-Tier or the Company.

2.8 “Code” means the Internal Revenue Code of 1986, as amended.

2.9 “Company” means, if the MHC converts to a stock holding company, the fully converted stock holding company of the Bank.

2.10 “Date of Joining” means, with respect to a Participant, the date specified in such Participant’s Participation Agreement.

2.12 “Employer Common Stock” means common stock of Mid-Tier or Company, as applicable.

2.13 “Employers” means the Bank and any corporate members of its affiliated group of corporations.

2.14 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

2.15 “MHC” means Hyde Park Bancorp, MHC, with its principal administrative offices located at 1196 River Street, Hyde Park, MA 02136.

2.16 “Mid-Tier” means Hyde Park Bancorp, Inc., the wholly-owned subsidiary of MHC.

2.17 “Normal Distribution Form“means a lump-sum payment, in cash or Employer Common Stock, or both, as applicable.

2.18 “Participant” means each member of the Board of Directors of the Bank or Company or Board of Trustees of MHC who is not also an employee of the Bank or MHC and who executes a Participation Agreement in accordance with Section 3.2.

2.19 “Participation Agreement” means a written agreement between MHC or the Bank or the Company and a Participant pursuant to which the Participant agrees to participate in the Plan.

2.20 “Plan” means the deferred compensation arrangement set forth in this instrument, as amended from time to time.

2.21 “Plan Administrator” means the Compensation Committee of the Board or such person as the Board may appoint.

2.22 “Plan Year” means the 12-month period ending December 31.

2.23 “Separation from Service” means a change in a Participant’s service relationship with the Employers, whether or not initiated by the Employers, such that the Employers reasonably determine, based on the facts and circumstances available at such determination

date, that no further services will be performed by the Participant for the Employers after a certain date (the “Separation Date”) or that the level of bona fide services the Participant will perform after the Separation Date (whether as an employee, independent contractor or other service provider) will decrease permanently to no more than 20% of the average level of bona fide services performed (whether as an employee, independent contractor or other service provider) over the preceding 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 20% but less than 50% of the average level of service performed by the Participant during the 36 month period immediately preceding the Separation Date.

2.24 “Terminating Event” means a Participant’s termination by the Employers for any reason other than Cause (which shall be deemed to include the failure of the Participant to be re-elected to the Board of Directors of the Bank or Company or Board of Trustees of MHC, as the case may be), death or Disability.

2.25 “Vested Account Balance” means the portion, if any, of a Participant’s Account Balance that is vested in accordance with the Vesting Schedule set forth in the Participant’s Participation Agreement.

2.26 “Vesting Schedule” means a schedule pursuant to which, subject to the terms of the Plan, a Participant earns a non-forfeitable entitlement to the Participant’s Account Balance, as set forth on the Participant’s Participation Agreement.

2.27 “Year of Service” means each period of 12 consecutive months that (i) commences either on the Participant’s Date of Joining or any anniversary thereof and (ii) ends on or prior to the Participant’s Separation from Service.

ARTICLE III

Participation

3.1 Board Members .

Participation in the Plan shall be limited to members of the Board of Directors of the Bank and the Company and the Board of Trustees of MHC.

3.2 Term of Participation .

An individual director or trustee shall become a Participant upon executing a written Participation Agreement in such form as the Employers approve (which may be in the form set forth as Appendix A to the Plan). The effective date of such participation shall be the date the individual becomes a director or trustee, as the case may be. A Participant’s participation in the Plan shall end upon the first to occur of (i) the distribution of 100% of the Participant’s Vested Account Balance, (ii) the Participant’s Separation from Service for any reason, (iii) the termination of the Plan, and (iv) 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 .

4.2 Forfeiture .

ARTICLE V

Payment of Benefit

5.1 Time and Form of Benefit.

5.2 Disability .

Separation from Service occurs on account of the Participant’s Disability, the Participant’s shall be entitled to a benefit, to be distributed to the Participant in the Normal Distribution Form, equal to the Participant’s Vested Account Balance as of the date of the Participant’s Disability. Such distribution shall be made within 60 days after the date of the Participant’s Disability.

5.3 Death .

5.4 Change in Control .

5.5 Clawback .

ARTICLE VI

Claims and Review Procedures

6.1 Claims Procedure .

(b) The Plan Administrator shall respond to such claimant within 90 days after receiving the claim. If the Plan Administrator determines that special circumstances require additional time for processing the claim, the Plan Administrator can extend the response period by an additional 90 days by notifying the claimant in writing, prior to the end of the initial 90-day period, that an additional period is required. The notice of extension must set forth the special circumstances and the date by which the Plan Administrator expects to render its decision.

(i) The specific reasons for the denial;

(ii) A reference to the specific provisions of the Plan on which the denial is based;

(iii) A description of any additional information or material necessary for the claimant to perfect the claim and an explanation of why it is needed; and

(iv) An explanation of this Plan’s review procedures and the time limits applicable to such procedures.

6.2 Review Procedure .

If the Plan Administrator denies part or all of the claim, the claimant shall have the opportunity for a full and fair review by the Plan Administrator of the denial as follows:

(a) To initiate the review, the claimant, within 60 days after receiving the Plan Administrator’s notice of denial, must file with the Plan Administrator a written request for review.

(i) The specific reasons for the denial;

(ii) A reference to the specific provisions of this Plan on which the denial is based; and

ARTICLE VII

Funding

7.1 General Obligation of the Employers .

7.2 Use of Trust, Insurance Policies, Etc .

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 terminated employment with the Employers immediately prior to the effective date of such amendment, or changes the form in which such benefit is to be distributed, such amendment shall not 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; provided, however, that no such action shall reduce the amount to which a Participant would have a vested entitlement if the Participant terminated employment with the Employers immediately prior to the effective date of such termination.

(b) no payments other than payments that would be payable under the terms of the arrangement if the termination had not occurred are made within 12 months of the termination of the arrangement;

ARTICLE IX

Miscellaneous

9.1 Provision for Incapacity .

9.2 Non-assignable Rights .

9.3 Independence of Plan .

9.4 At-Will Status .

Notwithstanding any provision of the Plan, but subject to any agreement that may exist from time to time between the Employers and a Participant, each Participant is retained at-will, so that the Participant or the Employers may terminate the Participant’s retention at any time, with or without notice, for any or no reason.

9.5 Taxes .

9.6 Limitation on Benefits .

(b) Delay in Distribution. Notwithstanding anything to the contrary contained in the Plan, if at the time of a Participant’s Separation from Service, the Participant is considered a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code, and if any payment or benefit that the Participant becomes entitled to under this Agreement is considered deferred compensation subject to interest, penalties and additional tax imposed pursuant to Section 409A(a) of the Code as a result of the application of Section 409A(a)(2)(B)(i) of the Code, then such payment shall be payable or benefit shall be provided on the date that is the earlier of (i) six months and one day after the Participant’s Separation from Service, or (ii) within thirty (30) days following the Participant’s death.

9.7 Governing Law; Regulatory Restrictions .

The Plan shall be construed under and governed by the laws of the Commonwealth of Massachusetts except to the extent pre-empted by ERISA, and with and subject to any federal laws to which the Employees may be subject as an FDIC insured institution. In addition to the foregoing:

(b) In no event shall the Employers be obligated to make any payment pursuant to the Plan if:

(i) MHC or the Bank is in default as defined in Section 3(x) (12 U.S.C. sec. 1813(x)(1)) of the Federal Deposit Insurance Act, as amended; or

9.8 Arbitration of Disputes .

sole purpose of obtaining a temporary restraining order or a preliminary injunction in circumstances in which such relief is appropriate; provided that any other relief shall be pursued through an arbitration proceeding pursuant to this Section 9.8.

EXECUTED under seal as of the day and year first above written, by the Employers’ duly authorized representatives.


	BLUE HILLS BANK
ATTEST:

/s/ George E. Clancy	By:	/s/ William M. Parent
Secretary		Its:	President and Chief Executive Officer

	HYDE PARK BANCORP, INC.
ATTEST:

/s/ George E. Clancy	By:	/s/ William M. Parent
Secretary		Its:	President and Chief Executive Officer

	HYDE PARK BANCORP, MHC
ATTEST:

/s/ George E. Clancy	By:	/s/ William M. Parent
Secretary		Its:	President and Chief Executive Officer

Exhibit 10.5

B LUE H ILLS B ANK

P HANTOM S TOCK P LAN

The purposes of the Blue Hills Bank Phantom Stock Plan (the “Plan”) are to encourage participating employees, who are members of a select group of management and other identified employees of Blue Hills Bank (the “Bank”), to remain employees of the Bank, and to reward such participating employees for their contributions to the continued success of the Bank.

A RTICLE 1

D EFINITIONS

Whenever used in the Plan, the following words and phrases shall have the meanings specified:

Section 1.1 “Award” means an award of shares of Phantom Stock that are the basis for benefits under the Plan.

Section 1.2 “ Award Document” means a written document that provides the performance criteria that must be met for a Participant to receive an Award.

Section 1.3 “Award Value Per Share” means the quotient determined by dividing (i) the Total Tier 1 capital of the Bank most recently reported on line 11 of the Call Report Schedule RC-R Regulatory Capital by (ii) the total number of shares of common stock of the Bank outstanding as of the date of such determination.

Section 1.4 “ Beneficiary ” means each person or entity designated as such, as provided in Article 6.

Section 1.5 “ Beneficiary Designation Form” means a form established from time to time by the Plan Administrator that a Participant completes, signs and returns to the Plan Administrator as provided in Section 6.2.

Section 1.6 “ Board” means elected or appointed members of the Board of Directors of the Bank.

Section 1.7 “Book Value Per Share” means with respect to each Award the quotient determined by dividing (i) the Total Tier 1 capital of the Bank most recently reported on line 11 of the Call Report Schedule RC-R Regulatory Capital, adjusted by: (A) adding thereto any net unrealized losses on available-for-sale equity securities as shown on Line 3 of Schedule RC-R, (B) adding thereto any gains or subtracting therefrom any losses, as the case may be, on cash flow hedges as shown on Line 4 of Schedule RC-R, (C) subtracting therefrom any amount derived from the proceeds of any offering of shares or other securities of the Bank or any other contribution to the capital of the Bank or attributable to any other entity acquired by the Bank by way of merger, consolidation or other combination occurring after the date of such Award, and (D) disregarding any dividends paid by the Bank after the date of such Award and such other extraordinary items as the Board in good faith deems appropriate, by (ii) the total number of shares of common stock of the Bank outstanding as of the date of such determination, less any shares attributable to any amount of capital excluded under clause (i)(C) above.

Section 1.8 “Cause” means termination of a Participant’s employment for:

(a) Gross negligence or gross neglect of duties;

(b) Commission of a felony or of a misdemeanor involving moral turpitude;

(c) Actions inimical to the interests of the Bank, including but not limited to fraud, disloyalty, dishonesty or willful violation of any law or significant Bank policy committed in connection with the Participant’s employment; or

(d) An order for removal of the Participant by the Bank’s banking regulators.

Section 1.9 “Change in Control” means a change in the ownership or effective control of the Bank, or the ownership of a substantial portion of the assets of the Bank, as defined in Section 409A of the Code and the regulations thereunder (“Section 409A”).

Section 1.10 “Code” means the Internal Revenue Code of 1986, as amended.

Section 1.11 “Disability” means (i) the inability of a Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) the Participant is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident and health plan covering employees of the Bank.

Section 1.12 “Early Retirement Date” means the date on which a Participant has attained age sixty-two (62) and completed at least five (5) Years of Service with the Bank.

Section 1.13 “ Early Termination ” means a Termination of Employment by a Participant for any reason other than Cause before the Participant’s Early Retirement Date or Normal Retirement Date.

Section 1.14 “Effective Date” means January 1, 2011.

Section 1.15 “Normal Retirement Date” means the date a Participant attains age sixty-five (65).

Section 1.16 “Participant” means an employee of the Bank who has been selected to participate in the Plan and who has completed any forms required by the Bank for participation.

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Section 1.17 “Phantom Stock” means a contractual right to receive an amount in cash, as provided in Article 5.

Section 1.18 “ Phantom Stock Account ” means an account established on the books of the Bank reflecting to the total number of shares of Phantom Stock awarded to a Participant in accordance with Section 4.1 of the Plan.

Section 1.19 “Phantom Stock Account Value ” means the product determined by multiplying (i) the number of shares of Phantom Stock awarded to a Participant and credited to the Participant’s Phantom Stock Account, by (ii) (A) if there has not occurred a Change in Control, the Book Value Per Share of each share of the common stock of the Bank as of the last day of the calendar quarter immediately preceding the date of payment of any benefits to the Participant or his Beneficiary pursuant to Article 5 (or, if the Participant elects to defer the date of payment pursuant to Section 5.1, the date provided for payment absent such election, i.e. , disregarding the election) and (B) if there has occurred a Change in Control, the greater of the Book Value Per Share and the fair market value of each share of common stock of the Bank as of the date of such Change in Control, as such fair market value is determined by the CEO and the Plan Administrator. Without intending to limit their discretion in determining such fair market value, the CEO and the Plan Administrator shall consider, among other things, (a) in the event such Change in Control was the result of an acquisition of shares of the Bank, the consideration paid by the acquirer for such shares, and (b) in the event such Change in Control was the result of a sale of assets of the Bank, the imputed value of the Bank based upon the consideration paid for such assets. Attached as Exhibit A for purposes of illustration only is an example of how a Participant’s Phantom Stock Account Value is determined for purposes of the Plan. In the event of any conflict between Exhibit A and the terms of the Plan, the terms of the Plan shall prevail.

Section 1.20 “ Plan Administrator ” means the Compensation Committee of the Board or such person as the Board may appoint.

Section 1.21 “Plan Year” means the year beginning January 1 and ending on December 31. The initial Plan Year shall commence on the Effective Date and shall end on the following December 31.

Section 1.22 “Termination of Employment” means a separation from service by a Participant, for reasons other than death, that also constitutes a “separation from service” within the meaning of Section 409A based on the facts and circumstances surrounding the termination of the Participant’s employment and whether the Bank and the Participant intend for the Participant to provide significant services for the Bank following such termination. A Participant’s employment relationship will be treated as continuing intact while the Participant is on military leave, sick leave or other bona fide leave of absence if the period of such leave of absence does not exceed six (6) months or, if longer, so long as the Participant’s right to reemployment with the Bank is provided either by statute or by contract. If the period of leave exceeds six (6) months and there is no right to reemployment, a Termination of Employment will be deemed to have occurred as of the first day immediately following such six (6) month period.

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A RTICLE 2

E LIGIBILITY AND P ARTICIPATION

Section 2.1 Selection by CEO and Plan Administrator. Participation in the Plan shall be limited to a select group of management and other employees of the Bank, as determined by the CEO and the Plan Administrator in their sole discretion. Each employee so selected will be notified in writing that he has been selected as a Participant in the Plan.

Section 2.2 Enrollment Requirements . As a condition to participation, each Participant shall complete, execute and return to the Plan Administrator within thirty (30) days of receipt of the notification described in Section 2.1 an Award Document and a Beneficiary Designation Form. In addition, the CEO and the Plan Administrator, with the review and approval of the Board (or a committee acting on behalf of the Board), may establish from time to time such other enrollment and eligibility requirements as they determine in their sole discretion to be necessary.

Section 2.3 Termination of Participation and/or Eligibility. If the CEO and the Plan Administrator (i) determine that a Participant no longer qualifies as a member of a select group of management or other selected employees, or (ii) decide that a Participant should no longer be eligible to participate in the Plan, the CEO and the Plan Administrator shall have the right, in their sole discretion, to terminate the Participant’s participation in the Plan thereafter. Such termination shall not affect Awards previously made to the Participant and shall not cause a distribution of benefits under the Plan. Distributions in these circumstances shall be made solely in accordance with Article 5.

A RTICLE 3

A WARDS

Section 3.1 Awards. Awards, if any, are provided in the sole discretion of the CEO and the Plan Administrator and are based on performance criteria that have been pre-established and communicated to Participants via the Award Document. The CEO and the Plan Administrator, in their discretion, may revise performance measures and goals according to the following Section 3.2 with respect to any Awards to be granted thereafter. If a Participant achieves the performance goals specified in his Award Document, as determined in the CEO’s and the Plan Administrator’s discretion, the Bank shall grant an Award to that Participant. The Award Document may be updated with respect to any Plan Year within the first ninety (90) days of such Plan Year.

Section 3.2 Performance-Based Awards. Threshold, target, and maximum Awards of Phantom Stock will be set by the CEO for each Participant other than the CEO and by the Board for the CEO. Awards will be calculated as a proportion of threshold, target and maximum criteria levels, as determined (i) by the CEO for each Participant other than the CEO, and (ii) by the Board for the CEO, and set forth in the Award Document. If a Participant achieves the performance goals specified in his Award Document, as determined in the CEO’s and the Plan Administrator’s discretion, the Bank shall grant an Award to that Participant.

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Section 3.3 Vesting in Awards. Provided that a Participant remains continuously employed by the Bank from the date of an Award through the third anniversary of the date of the Award, the Participant shall become one hundred per cent (100%) vested in the shares of Phantom Stock granted pursuant to such Award. Notwithstanding the foregoing, provided that a Participant remains continuously employed by the Bank from the date of an Award through the date of such event, a Participant shall become one hundred percent (100%) vested in the shares of Phantom Stock granted pursuant to such Award upon the Participant’s Normal Retirement Date or Early Retirement Date, upon termination by the Bank without Cause, upon a Change in Control or upon the Participant’s death or Disability.

Section 3.4 Clawback. Notwithstanding anything to the contrary contained in the Plan, if the Plan Administrator determines, in its sole and absolute discretion, that a Participant has received an Award that is based on materially inaccurate financial statements, reviews, gains, or any other materially inaccurate criteria used in determining or setting such Award, the Plan Administrator shall cancel such Award to the extent attributable to such materially inaccurate financial statements, reviews, gains, or other materially inaccurate criteria. In the event that any amount has been paid to the Participant with respect to such cancelled Award (the “Overpayment Amount”), the Plan Administrator, promptly after making such determination, shall send the Participant a notice of recovery (“Recovery Notice”), specifying the Overpayment Amount. The Participant shall be obligated to repay the Overpayment Amount to the Bank promptly following receipt of such Recovery Notice, in accordance with the terms specified therein. The Bank in it sole discretion may recover all or a part of any Overpayment Amount by setoff of any amount owed to the Participant by the Bank under the Plan or otherwise.

A RTICLE 4

P HANTOM S TOCK A CCOUNT

Section 4.1 Establishing and Crediting . The Bank shall establish a Phantom Stock Account on its books for each Participant, and shall credit to such Phantom Stock Account the number of shares of Phantom Stock awarded to such Participant pursuant to Article 3

Section 4.2 Statement of Accounts . The Bank shall provide to each Participant, within 90 days after the end of each Plan Year, a statement setting forth the balance in the Participant’s Phantom Stock Account, stating the number of shares of Phantom Stock in such Account and the value thereof.

Section 4.3 Accounting Device Only . The Phantom Stock Account is solely a device for measuring amounts to be paid under the Plan and is not a trust fund of any kind. The rights of the Participant shall be those of a general unsecured creditor of the Bank. The benefits represent the mere promise of the Bank to pay such benefits. 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 in all events shall 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. A Participant’s benefits under the Plan are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by the Participant’s creditors.

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A RTICLE 5

B ENEFITS

Section 5.1 Normal Benefit . Subject to the provisions of this Article 5, and provided that the Participant is one hundred percent (100%) vested in the shares of Phantom Stock granted pursuant to an Award as provided in Section 3.3, the Bank shall pay to the Participant, in a lump sum in cash, within a reasonable time period following the third anniversary of the date of such Award (but in no event later than the 15 ^th day of the third month following the Plan Year in which such anniversary occurs), the Phantom Stock Account Value of the Participant’s Phantom Stock Account attributable to the shares of Phantom Stock comprising such Award. Notwithstanding the foregoing, a Participant may elect to defer the date of payment, without interest, provided, however, that such election and deferral conforms with the provisions of the Plan and with any applicable requirements of Section 409A (and any other applicable tax law regarding deferral of income or avoidance of constructive receipt), including without limitation the requirements pursuant to Treasury Regulation Section 1.409A-2(b)(1) that any such election (i) must be made at least 12 months before the date the payment is scheduled to be paid, (ii) may not take effect until at least 12 months after the date on which it is made, and (iii) must extend the payment date for an additional period of at least five years.

Section 5.2 Termination On or After Normal Retirement Date or Early Retirement Date. If a Participant’s Termination of Employment occurs on or after the Participant’s Normal Retirement Date or Early Retirement Date, the Bank shall pay to the Participant, in a lump sum in cash, within a reasonable period of time following his Termination of Employment (but in no event later than the 15 ^th day of the third month following the close of the Plan Year in which the Participant’s Termination of Employment occurs), the entire Phantom Stock Value in his Phantom Stock Account.

Section 5.3 Early Termination . If a Participant’s Termination of Employment is an Early Termination, the Bank shall pay to the Participant, in a lump sum in cash, within a reasonable time following the Participant’s Termination of Employment (but in no event later than the later to occur of the last day of the calendar year in which such Early Termination occurs and the 15 ^th day of the third month following such Early Termination), the Phantom Stock Account Value of the vested portion, if any, of his Phantom Stock Account, determined in accordance with Section 3.3. All unvested shares of Phantom Stock in the Participant’s Phantom Stock Account shall be forfeited, and the Bank shall have no further obligation to the Participant with respect thereto.

Section 5.4 Disability Benefit . If a Participant’s Termination of Employment occurs on account of the Participant’s Disability, the Bank shall pay to the Participant, in a lump sum in cash, within a reasonable period of time following his Termination of Employment (but in no event later than the 15 ^th day of the third month following the close of the Plan Year in which the Participant’s Termination of Employment occurs), the entire Phantom Stock Value in his Phantom Stock Account.

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Section 5.5 Death Benefit. Upon the death of a Participant, the Bank shall pay the entire Phantom Stock Account Value of the Participant’s Phantom Stock Account to the Participant’s Beneficiary, in a lump sum in cash, within a reasonable time following receipt by the Bank of the Participant’s death certificate (or, if no Beneficiary is specified or surviving, to the Participant’s estate promptly following the appointment of the personal representative of the Participant’s estate).

Section 5.6 Change in Control. In the event there occurs Change in Control while any portion of a Participant’s Phantom Stock Account remains undistributed, the Bank shall pay to the Participant, in a lump sum in cash, within a reasonable time following the Change in Control (but in no event later than the 15 ^th day of the third month following the close of the Plan Year in which the Change in Control occurs), the entire Phantom Stock Value in his Phantom Stock Account.

Section 5.7 Restriction on Commencement of Distributions . Notwithstanding any provision of the Plan to the contrary, if the Participant is considered a “specified employee” within the meaning of Section 409A at Termination of Employment, the provisions of this Section 5.5 shall govern all distributions hereunder. Benefit distributions that are made due to a Termination of Employment occurring while the Participant is a specified employee shall not be made during the first six (6) months following Termination of Employment. Rather, any distribution which would otherwise be paid to the Participant during such period shall be accumulated and paid to the Participant in a lump sum on the first day of the seventh month following the Termination of Employment. All subsequent distributions shall be paid in the manner originally specified.

A RTICLE 6

B ENEFICIARIES

Section 6.1 In General . Each Participant shall have the right, at any time, to designate a Beneficiary to receive any benefit distributions under the Plan upon the death of the Participant. The Beneficiary designated under the Plan may be the same as or different from the beneficiary designated under any other plan of the Bank in which the Participant participates.

Section 6.2 Designation . Each Participant shall designate a Beneficiary by completing and signing the Beneficiary Designation Form and delivering it to the Plan Administrator or its designated agent. If the Participant names someone other than the Participant’s spouse as a Beneficiary, the Plan Administrator may, in its sole discretion, determine that spousal consent is required to be provided in a form designated by the Plan Administrator, executed by the Participant’s spouse and returned to the Plan Administrator. The Participant’s Beneficiary Designation shall be deemed automatically revoked if the Beneficiary predeceases the Participant or if the Participant names a spouse as Beneficiary and the marriage is subsequently dissolved. The Participant shall have the right to change a Beneficiary by completing, signing and otherwise complying with the terms of the Beneficiary Designation Form and the Plan Administrator’s rules and procedures. Upon the acceptance by the Plan Administrator of a new Beneficiary Designation Form, all Beneficiary designations previously filed shall be cancelled. The Plan Administrator shall be entitled to rely on the last Beneficiary Designation Form filed by the Participant and accepted by the Plan Administrator prior to the Participant’s death.

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Section 6.3 Acknowledgment . No designation or change in designation of a Beneficiary shall be effective until received, accepted and acknowledged in writing by the Plan Administrator or its designated agent.

Section 6.4 No Beneficiary Designation . If the Participant dies without a valid Beneficiary designation, or if all designated Beneficiaries predecease the Participant, then the Participant’s spouse shall be the designated Beneficiary. If the Participant has no surviving spouse, any benefit shall be paid to the personal representative of the Participant’s estate.

A RTICLE 7

G ENERAL L IMITATIONS

Section 7.1 Termination for Cause . Notwithstanding any provision of the Plan to the contrary, if a Participant’s employment is terminated for Cause, any unvested shares of Phantom Stock in the Participant’s Phantom Stock Account shall be forfeited immediately, and the Participant shall not be entitled to any benefits under the Plan with respect to such forfeited shares of Phantom Stock.

Section 7.2 Regulatory Limitations . 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. Moreover, 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.

(d) The payment would result in a 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.

A RTICLE 8

Claims and Review Procedures

Section 8.1 Claims Procedure . A Participant or Beneficiary (“claimant”) who has not received benefits under the Plan that he or she believes should be distributed shall make a claim for such benefits as follows:

(a) The claimant shall initiate a claim by submitting to the Plan Administrator a written claim for the benefits. If such a claim relates to the contents of a notice received by the claimant, the claim must be made within sixty (60) days after such notice was received by the claimant. All other claims must be made within one hundred eighty (180) days of the date on which the event that caused the claim to arise occurred. The claim must state with particularity the determination desired by the claimant.

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(b) The Plan Administrator shall respond to such claimant within ninety (90) days after receiving the claim. If the Plan Administrator determines that special circumstances require additional time for processing the claim, the Plan Administrator can extend the response period by an additional ninety (90) days by notifying the claimant in writing, prior to the end of the initial ninety (90) day period that an additional period is required. The notice of extension must set forth the special circumstances and the date by which the Plan Administrator expects to render its decision.

(i)

The specific reasons for the denial;

(ii)

A reference to the specific provisions of this Plan on which the denial is based;

(iii)

A description of any additional information or material necessary for the claimant to perfect the claim and an explanation of why it is needed; and

(iv)

An explanation of this Plan’s review procedures and the time limits applicable to such procedures.

Section 8.2 Review Procedure . If the Plan Administrator denies part or all of the claim, the claimant shall have the opportunity for a full and fair review by the Plan Administrator of the denial as follows:

(a) To initiate the review, the claimant, within sixty (60) days after receiving the Plan Administrator’s notice of denial, must file with the Plan Administrator a written request for review.

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(d) The Plan Administrator shall respond in writing to such claimant within sixty (60) days after receiving the request for review. If the Plan Administrator determines that special circumstances require additional time for processing the claim, the Plan Administrator can extend the response period by an additional sixty (60) days by notifying the claimant in writing, prior to the end of the initial sixty (60) day period that an additional period is required. The notice of extension must set forth the special circumstances and the date by which the Plan Administrator expects to render its decision.

(i)

The specific reasons for the denial;

(ii)

A reference to the specific provisions of this Plan on which the denial is based; and

(iii)

A statement that the claimant is entitled to receive, upon request, reasonable access to, and copies of, all documents, records and other information relevant to the claimant’s claim for benefits.

A RTICLE 9

Amendments and Termination

Section 9.1 Amendments . The Bank may modify or amend the Plan at any time with respect to any or all Participants, by action of its Board, provided, however, that no such modification or amendment shall be made without a Participant’s consent if it would affect adversely the rights of such Participant with respect to any Award previously made.

Section 9.2 Plan Termination Generally . The Bank reserves the right to terminate the Plan at any time by action of the Board with respect to any or all Participants, provided however, that no such termination shall affect adversely the rights of any Participant with respect to any Award previously made to such Participant. Except as provided in Section 9.3, the termination of the Plan shall not cause a distribution of benefits under the Plan. Rather, upon such termination, benefit distributions shall be made to Participants in accordance with the provisions of Article 5, including without limitation any elections previously in effect under Section 5.1.

Section 9.3 Plan Terminations Under Section 409A . Notwithstanding anything to the contrary contained in Section 9.2, if the Bank terminates the Plan in the following circumstances:

(a) Within thirty (30) days before, or twelve (12) months after a Change in Control, provided that all distributions are made no later than twelve (12) months following the termination of the Plan and provided further that all of the Bank’s arrangements which are substantially similar to the Plan are terminated so that the Participants and all participants in the similar arrangements are required to receive all amounts of compensation deferred under the terminated arrangements within twelve (12) months of the termination of the arrangements;

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(b) Upon the Bank’s dissolution or with the approval of a bankruptcy court, provided that the amounts deferred under the Plan are included in the Participants’ gross income in the latest of (i) the calendar year in which the Plan terminates; (ii) the calendar year in which the Participants’ benefits are no longer subject to a substantial risk of forfeiture; or (iii) the first calendar year in which the distribution is administratively practical; or

(c) Upon the Bank’s termination of the Plan and all other account balance plans (as referenced in Section 409A), provided that all distributions are made no earlier than twelve (12) months and no later than twenty-four (24) months following such termination, and the Bank does not adopt any new account balance plans for a minimum of five (5) years following the date of such termination;

the Bank may distribute all Phantom Stock Account Values, determined as of the date of the termination of the Plan, to the Participants in lump sums, subject to the terms of this Section 9.3.

A RTICLE 10

M ISCELLANEOUS

Section 10.1 Binding Effect . The Plan shall bind the Participants and the Bank, and their respective beneficiaries, survivors, executors, successors, administrators and permitted transferees.

Section 10.2 No Guarantee of Employment or Other Rights . The Plan is not an employment policy or contract. It does not give any Participant the right to remain an employee of the Bank, or interfere with the Bank’s right to discharge any Participant. It also does not require any Participant to remain an employee or interfere with a Participant’s right to terminate employment at any time. No amount payable under the Plan shall be treated as compensation for purposes of any other benefit plan or program of the Bank.

Section 10.3 Non-Transferability . Benefits under the Plan cannot be sold, transferred, assigned, pledged, attached or encumbered in any manner.

Section 10.4 Reorganization . All obligations of the Bank under the Plan with respect to Awards granted hereunder shall be binding on any successor to the Bank, whether the existence of such successor is the result of merger or consolidation into or with another Bank, reorganization, or sale of all or substantially all of its assets to another Bank, firm, or person. Upon the occurrence of such event, the term “Bank” as used in the Plan shall be deemed to refer to the successor or survivor Bank.

Section 10.5 Tax Withholding . The Bank shall withhold any taxes that are required to be withheld, including but not limited to taxes owed under Section 409A from benefits provided under the Plan. The Bank’s sole liability regarding taxes is to forward any amounts withheld to the appropriate taxing authorities. The Bank shall satisfy all applicable reporting requirements, including those under Section 409A.

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Section 10.6 Applicable Law . The Plan and all rights hereunder shall be governed by the laws of the Commonwealth of Massachusetts, without regard to principles of conflicts of loss, except to the extent preempted by the laws of the United States of America.

Section 10.7 Entire Agreement . The Plan and a Participant’s Award Document constitute the entire agreement between the Bank and the Participant as to the subject matter hereof. No rights are granted to the Participant by virtue of the Plan and the Award Document other than those specifically set forth therein.

Section 10.8 Alternative Action . In the event it shall become impossible for the Bank or the Plan Administrator to perform any act required by this Plan due to regulatory or other constraints, the Bank or the Plan Administrator may perform such alternative act as most nearly carries out the intent and purpose of this Plan and as is in the best interests of the Bank, provided that such alternative act does not violate Section 409A.

Section 10.9 Gender and Number . Except where otherwise indicated by the context, any masculine term used herein shall include the feminine, the plural shall include the singular and the singular shall include the plural.

Section 10.10 Severability . If any part of the Plan is declared in any suit or by any governmental authority to be unlawful or invalid, such unlawfulness or invalidity shall not invalidate any other part of the Plan. Any Section or part of a Section so declared to be unlawful or invalid shall, if possible, be construed in a manner which will give effect to the terms of such Section or part of a Section to the fullest extent possible while remaining lawful and valid.

Section 10.11 Board’s Discretion . All decisions of the Board under the Plan, whether to act or not to act, shall be in the Board’s sole discretion.

Section 10.12 Deduction Limitation on Benefit Payments . If the Bank reasonably anticipates that the Bank’s deduction with respect to any distribution under the Plan would be limited or eliminated by application of Section 162(m) of the Code, then to the extent deemed necessary by the Bank to ensure that the entire amount of any distribution from the Plan is deductible, the Bank may delay payment of any amount that would otherwise be distributed under the Plan. The delayed amounts shall be distributed to the Participant (or his Beneficiary in the event of the Participant’s death) at the earliest date the Bank reasonably anticipates that the deduction of the payment of the amount will not be limited or eliminated by application of Section 162(m) of the Code.

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Section 10.13 Compliance with Section 409A . It is the intent of the parties that the Plan, and all payments of deferred compensation hereunder, shall be in compliance with Section 409A and the requirements, regulations and guidance thereunder, and the Plan shall be interpreted and administered consistently with such intent.


B LUE H ILLS B ANK

By:		William M. Parent
Title:		President and Chief Executive Officer

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Exhibit 10.6

Blue Hills Bank

Phantom Stock Plan

Amendment One

WHEREAS , Blue Hills Bank (the “Bank”) adopted the Blue Hills Bank Phantom Stock Plan (the “Phantom Plan”) in 2011 pursuant to which the Bank has made long term incentive awards (“Awards”) to a select group of management and other identified employees; and

WHEREAS , the Awards are credited to a Phantom Stock Account under the Plan and vest at the end of a three year period based on the continuous employment of the employee until the end of the three year period; and

WHEREAS , upon the vesting of such Awards, the Awards are distributed to the Participants no later than the 15 ^th day of the third month following the Plan year in which the Awards vest; and

WHEREAS , the Bank has determined that it desires to terminate the Plan in December 2013, to fully vest the Awards credited to employees Phantom Stock Accounts in 2011 and 2012 and to distribute such Awards to employees no later than December 31, 2013; and

WHEREAS , the Bank further desires that any Awards that would be credited under the Plan for 2013 shall be distributed directly to employees, as bonuses, no later than March 15, 2014; and

WHEREAS , Article 9 of the Plan permits termination of the Plan and Section 9.3 requires such termination to conform to the requirements of Section 409A of the Internal Revenue Code (“Code”); and

WHEREAS , the Awards under the Plan qualify for the “short-term deferral” exception to Code Section 409A such that the Bank desires to amend Section 9.3 to clarify that Awards that are not subject to Code Section 409A can be immediately distributed upon termination of the Plan.

NOW THEREFORE , in consideration of the above, the Bank hereby amends the Plan as follows:

1. Section 9.2 of the Plan shall be amended to read as follows:

“Section 9.2 Plan Termination Generally. The Bank reserves the right to terminate the Plan at any time by action of the Board with respect to any or all Participants, provided however, that no such termination shall affect adversely the rights of any Participant with respect to any Award previously made to such Participant. Except as provided in Section 9.3, upon Plan termination, Awards accrued in a Participant’s Phantom Stock Account shall be distributed as soon as administratively possible, but in no event later than the 15 ^th day of the third month following the end of the Plan Year in which the Plan is terminated.”

2. Section 9.3 of the Plan shall be amended to read as follows:

“Section 9.3 Plan Terminations Under Section 409A . Notwithstanding anything to the contrary contained in Section 9.2, to the extent Awards under the Plan are subject to Code Section 409A, the Bank shall terminate the Plan only under the following circumstances:

“(a) Within thirty (30) days before, or twelve (12) months after a Change in Control, provided that all distributions are made no later than twelve (12) months following the termination of the Plan and provided further that all of the Bank’s arrangements which are substantially similar to the Plan are terminated so that the Participants and all participants in the similar arrangements are required to receive all amounts of compensation deferred under the terminated arrangements within twelve (12) months of the termination of the arrangements;

“(b) Upon the Bank’s dissolution or with the approval of a bankruptcy court, provided that the amounts deferred under the Plan are included in the Participants’ gross income in the latest of (i) the calendar year in which the Plan terminates; (ii) the calendar year in which the Participants’ benefits are no longer subject to a substantial risk of forfeiture; or (iii) the first calendar year in which the distribution is administratively practical; or

“(c) Upon the Bank’s termination of the Plan and all other account balance plans (as referenced in Section 409A), provided that all distributions are made no earlier than twelve (12) months and no later than twenty-four (24) months following such termination, and the Bank does not adopt any new account balance plans for a minimum of three (3) years following the date of such termination;

the Bank shall distribute all Phantom Stock Account Values, determined as of the date of the termination of the Plan, to the Participants in lump sums, subject to the terms of this Section 9.3.”

3. In all other respects, the Plan shall remain in full force and effect until the Awards under the 2011 and 2012 Awards under the Plan are fully distributed.

IN WITNESS WHEREOF , the Bank, through its duly authorized representative, has signed this Amendment, effective as of the 18 ^th day of December, 2013.

BLUE HILLS BANK

/s/ William M. Parent

Exhibit 10.7

BLUE HILLS BANK

EMPLOYEE STOCK OWNERSHIP PLAN

(adopted effective January 1, 2014)

BLUE HILLS BANK

EMPLOYEE STOCK OWNERSHIP PLAN

This Employee Stock Ownership Plan (the “Plan”) has been executed, effective as of the day of , 2014, by Blue Hills Bank.

W I T N E S S E T H T H A T

WHEREAS, the board of directors of the Bank has resolved to adopt an employee stock ownership plan for eligible employees of the Bank and subsidiaries of the Bank, if any, in accordance with the terms and conditions set forth herein;

NOW, THEREFORE, the Bank hereby adopts the following Plan setting forth the terms and conditions pertaining to contributions by the Employer and the payment of benefits to Participants and Beneficiaries.

IN WITNESS WHEREOF, the Bank has adopted this Plan and caused this instrument to be executed by its duly authorized officers as of the above date.

C O N T E N T S


		Page No.

Section 1.	Plan Identity.		1

1.1	Name		1
1.2	Purpose		1
1.3	Effective Date		1
1.4	Fiscal Period		1
1.5	Single Plan for All Employers		1
1.6	Interpretation of Provisions		1

Section 2.	Definitions.		1

Section 3.	Eligibility for Participation.		10

3.1	Initial Eligibility		10
3.2	Definition of Eligibility Year		11
3.3	Terminated Employees		11
3.4	Certain Employees Ineligible		11
3.5	Participation and Reparticipation		11
3.6	Omission of Eligible Employee		12
3.7	Inclusion of Ineligible Employee		12

Section 4.	Contributions and Credits.		12

4.1	Discretionary Contributions		12
4.2	Contributions for Exempt Loans		12
4.3	Conditions as to Contributions		13
4.4	Rollover Contributions		13

Section 5.	Limitations on Contributions and Allocations.		13

5.1	Limitation on Annual Additions		13
5.2	Effect of Limitations		15
5.3	Limitations as to Certain Participants		16
5.4	Erroneous Allocations		16

Section 6.	Trust Fund and Its Investment.		16

6.1	Creation of Trust Fund		16
6.2	Stock Fund and Investment Fund		17
6.3	Acquisition of Stock		17
6.4	Participants’ Option to Diversify		18

Section 7.	Voting Rights and Dividends on Stock.		19

7.1	Voting and Tendering of Stock		19
7.2	Application of Dividends		19


Section 8.	Adjustments to Accounts.	21

8.1	ESOP Allocations	21
8.2	Charges to Accounts	22
8.3	Stock Fund Account	22
8.4	Investment Fund Account	22
8.5	Adjustment to Value of Trust Fund	22
8.6	Participant Statements	23

Section 9.	Vesting of Participants’ Interests.	23

9.1	Vesting in Accounts	23
9.2	Computation of Vesting Years	23
9.3	Full Vesting Upon Certain Events	24
9.4	Full Vesting Upon Plan Termination	25
9.5	Forfeiture, Repayment, and Restoral	25
9.6	Accounting for Forfeitures	26
9.7	Vesting and Nonforfeitability	26

Section 10.	Payment of Benefits.	26

10.1	Benefits for Participants	26
10.2	Time for Distribution	27
10.3	Marital Status	29
10.4	Delay in Benefit Determination	29
10.5	Accounting for Benefit Payments	29
10.6	Options to Receive Stock	29
10.7	Restrictions on Disposition of Stock	30
10.8	Continuing Loan Provisions; Creations of Protections and Rights	30
10.9	Direct Rollover of Eligible Distribution	30
10.10	Waiver of 30-Day Period After Notice of Distribution	31
Section 11.	Rules Governing Benefit Claims and Review of Appeals	32
11.1	Claim for Benefits	32
11.2	Notification by Committee	32
11.3	Claims Review Procedure	32

Section 12.	The Committee and its Functions.	32

12.1	Authority of Committee	32
12.2	Identity of Committee	33
12.3	Duties of Committee	33
12.4	Valuation of Stock	33
12.5	Compliance with ERISA	33
12.6	Action by Committee	33
12.7	Execution of Documents	34
12.8	Adoption of Rules	34
12.9	Responsibilities to Participants	34
12.10	Alternative Payees in Event of Incapacity	34
12.11	Indemnification by Employers	34
12.12	Nonparticipation by Interested Member	34


Section 13.	Adoption, Amendment, or Termination of the Plan.	35

13.1	Adoption of Plan by Other Employers	35
13.2	Plan Adoption Subject to Qualification	35
13.3	Right to Amend or Terminate	35

Section 14.	Miscellaneous Provisions.	36

14.1	Plan Creates No Employment Rights	36
14.2	Nonassignability of Benefits	36
14.3	Limit of Employer Liability	36
14.4	Treatment of Expenses	36
14.5	Number and Gender	36
14.6	Nondiversion of Assets	36
14.7	Separability of Provisions	36
14.8	Service of Process	36
14.9	Governing State Law	37
14.10	Employer Contributions Conditioned on Deductibility	37
14.11	Unclaimed Accounts	37
14.12	Qualified Domestic Relations Order	37
14.13	Use of Electronic Media to Provide Notices and Make Participant Elections	38
14.14	Acquisition of Securities	38

Section 15.	Top-Heavy Provisions.	38

15.1	Top-Heavy Plan	38
15.2	Definitions	39
15.3	Top-Heavy Rules of Application	40
15.4	Minimum Contributions	41
15.5	Top-Heavy Provisions Control in Top-Heavy Plan	41

iii

Exhibit 10.7

BLUE HILLS BANK

EMPLOYEE STOCK OWNERSHIP PLAN

Section 1.

Plan Identity .

1.1 Name . The name of this Plan is “Blue Hills Bank Employee Stock Ownership Plan.”

1.2 Purpose . The purpose of this Plan is to describe the terms and conditions under which contributions made pursuant to the Plan will be credited and paid to the Participants and their Beneficiaries.

1.3 Effective Date . The Effective Date of this Plan is January 1, 2014.

1.4 Fiscal Period . This Plan shall be operated on the basis of a January 1 to December 31 fiscal year for the purpose of keeping the Plan’s books and records and distributing or filing any reports or returns required by law.

1.5 Single Plan for All Employers . This Plan shall be treated as a single plan with respect to all participating Employers for the purpose of crediting contributions and forfeitures and distributing benefits, determining whether there has been any termination of Service, and applying the limitations set forth in Section 5.

1.6 Interpretation of Provisions . The Employers intend this Plan and the Trust Agreement to be a qualified stock bonus plan under Section 401(a) of the Code and an employee stock ownership plan within the meaning of Section 407(d)(6) of ERISA and Section 4975(e)(7) of the Code. The Plan is intended to have its assets invested primarily in qualifying employer securities of one or more Employers within the meaning of Section 407(d)(3) of ERISA, and to satisfy any requirement under ERISA or the Code applicable to such a plan.

Accordingly, the Plan and Trust Agreement shall be interpreted and applied in a manner consistent with this intent and shall be administered at all times and in all respects in a nondiscriminatory manner.

Section 2.

Definitions .

The following capitalized words and phrases shall have the meanings specified when used in this Plan and in the Trust Agreement, unless the context clearly indicates otherwise:

“Account” means a Participant’s interest in the assets accumulated under this Plan as expressed in terms of a separate account balance which is periodically adjusted to reflect his Employer’s contributions, the Plan’s investment experience, and distributions and forfeitures.

“Active Participant” means a Participant who has satisfied the eligibility requirements under Section 3 and who has at least 1,000 Hours of Service during the current Plan Year. However, a Participant shall not qualify as an Active Participant unless (i) he is in active Service with an Employer as of the last day of the Plan Year, or (ii) he is on a Recognized Absence as of that date, or (iii) his Service terminated during the Plan Year by reason of Disability, death, or Normal Retirement.

“Bank” means Blue Hills Bank and any entity which succeeds to the business of Blue Hills Bank and adopts this Plan as its own pursuant to Section 13.1 of the Plan.

“Beneficiary” means the person or persons who are designated by a Participant to receive benefits payable under the Plan on the Participant’s death. In the absence of any designation or if all the designated Beneficiaries shall die before the Participant dies or shall die before all benefits have been paid, the Participant’s Beneficiary shall be his surviving Spouse, if any, or his estate if he is not survived by a Spouse. The Committee may rely upon the advice of the Participant’s executor or administrator as to the identity of the Participant’s Spouse.

“Break in Service” means any Plan Year, or, for the initial eligibility computation period under Section 3.2, the 12-consecutive month period beginning on the first day of which an Employee has an Hour of Service, in which an Employee has 500 or fewer Hours of Service. Solely for this purpose, an Employee shall be considered employed for his normal hours of paid employment during a Recognized Absence (said Employee shall not be credited with more than 501 Hours of Service to avoid a Break in Service), unless he does not resume his Service at the end of the Recognized Absence. Further, if an Employee is absent for any period (i) by reason of the Employee’s pregnancy, (ii) by reason of the birth of the Employee’s child, (iii) by reason of the placement of a child with the Employee in connection with the Employee’s adoption of the child, or (iv) for purposes of caring for such child for a period beginning immediately after such birth or placement, the Employee shall be credited with the Hours of Service which would normally have been credited but for such absence, up to a maximum of 501 Hours of Service. Hours of Service shall be credited only in the year in which the absence from work begins, if a Participant would be prevented from incurring a one-year Break in Service in such year solely because the period of absence is treated as Hours of Service, or in any other case, in the immediately following year.

“ Closing Date ” means the closing date of the stock offering of the Company.

“Code” means the Internal Revenue Code of 1986, as amended.

“Committee” means the committee responsible for the administration of this Plan in accordance with Section 12.

“Company” means Blue Hills Bancorp, Inc., the holding company of the Bank, and any successor entity which succeeds to the business of the Company.

“ Compensation ” shall mean:

(a) Code Section 3401(a) – W-2 Compensation subject to income tax withholding at the source, with all pre-tax contributions included.

(b) If a determination period consists of fewer than 12 months, the annual compensation limit is an amount equal to the otherwise applicable compensation limit set forth under Section 5.1-2 multiplied by a fraction. The numerator of the fraction is the number of months in the short determination period, and the denominator of the fraction is 12.

(c) A Participant’s Compensation shall exclude any portion of the Plan Year in which the Participant had not yet entered the Plan (e.g., the period before the Participant’s Entry Date).

“Disability” means the inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. An individual shall not be considered to be permanently and totally disabled unless he furnishes proof of the existence thereof in such form and manner, and at such times, as the Committee may require.

“Eligible Employee ” means an Employee, other than an Employee identified in Section 3.4, who has performed 1,000 Hours of Service in the applicable Eligibility Year in accordance with Section 3.2 and who has attained age 21.

“Employee” means any individual who is or has been employed or self-employed by an Employer. “Employee” also means an individual employed by a leasing organization who, pursuant to an agreement between an Employer and the leasing organization, has performed services for the Employer and any related persons (within the meaning of Section 414(n)(6) of the Code) on a substantially full-time basis for more than one year, if such services are performed under the primary direction or control of the Employer. However, such a “leased employee” shall not be considered an Employee if (i) he participates in a money purchase pension plan sponsored by the leasing organization which provides for immediate participation, immediate full vesting, and an annual contribution of at least 10 percent of the Employee’s 415 Compensation, and (ii) leased employees do not constitute more than 20 percent of the Employer’s total work force (including leased employees, but excluding Highly Compensated Employees and any other Employees who have not performed services for the Employer on a substantially full-time basis for at least one year).

“Employer” means the Bank, any subsidiary of the Bank, and any other corporation, partnership, or proprietorship which adopts this Plan with the Bank’s consent pursuant to Section 13.1, and any entity which succeeds to the business of any Employer and adopts the Plan pursuant to Section 13. Notwithstanding anything else herein, employees of the Company shall not participate in the

“Entry Date” means the Effective Date and thereafter, the first day of the month coinciding with or next following the date on which an employee meets the eligibility requirements set forth in Section 3.

“ERISA” means the Employee Retirement Income Security Act of 1974 (P.L. 93-406, as amended).

“Exempt Loan” means an indebtedness arising from any extension of credit to the Plan or the Trust which satisfies the requirements set forth in Section 6.3 and which was obtained for any or all of the following purposes:

(i) to acquire qualifying Employer securities as defined in Treasury Regulations Section 54.4975-12;

(ii) to repay such Exempt Loan; or

(iii) to repay a prior exempt loan.

“ 415 Compensation ” shall mean:

(a) Code Section 3401(a) – W-2 Compensation subject to income tax withholding at the source, with all pre-tax contributions included.

(b) Any elective deferral as defined in Code Section 402(g)(3) (any Employer contributions made on behalf of a Participant to the extent not includible in gross income and any Employer contributions to purchase an annuity contract under Code Section 403(b) under a salary reduction agreement), and any amount which is contributed or deferred by the Employer at the election of the Participant and which is not includible in gross income of the Participant by reason of Code Section 125 (including any “deemed” Code Section 125 compensation) (Cafeteria Plan), Code Section 457, 132(f)(4) or because such amount was deferred in accordance with an Employer-provided deferred compensation plan, shall also be included in the definition of 415 Compensation.

(c) 415 Compensation shall also include the following types of compensation paid after a Participant’s severance from employment with the Employer, provided that amounts described in paragraphs (i) or (ii) below shall only be included in 415 Compensation to the extent such amounts are paid by the later of 2 ¹ ⁄ ₂ months after severance from employment, or by the end of the limitation year that includes the date of such severance from employment.

(i) Regular Pay. 415 Compensation shall include regular pay after severance from employment if (a) the payment is for regular compensation for services during the Participant’s regular working hours, or compensation for services outside of the Participant’s regular working hours (such as overtime or shift differential), commissions, bonuses, or other similar payments, and (b) the payment would have been paid to the Participant prior to severance from employment if the Participant had continued in employment with the Employer.

(ii) Leave Cashouts. Leave cashouts shall be included in 415 Compensation if those amounts would have been included in the definition of 415 Compensation if they were paid prior to the Participant’s severance from employment, and the amounts are payment for unused accrued bona fide sick, vacation or other leave, but only if the Participant would have been able to use the leave if his employment had continued.

(d) 415 Compensation includes differential wage payments (as defined in Code Section 3401(h)) paid by the Employer to a former Employee who is performing qualified military services (as defined in Code Section 414(u)(1)) but only to the extent that those differential wage payments do not exceed the amounts the individual would have received if the individual had continued to perform services for the Employer rather than entering qualified military service.

(e) 415 Compensation in excess of $260,000 (as indexed) shall be disregarded for all Participants. For purposes of this sub-section, the $260,000 limit shall be referred to as the “applicable limit” for the Plan Year in question. The $260,000 limit shall be adjusted for increases in the cost of living in accordance with Section 401(a)(17)(B) of the Code, effective for the Plan Year which begins within the applicable calendar year. For purposes of the applicable limit, 415 Compensation shall be prorated over short Plan Years and only compensation for the portion of the Plan Year during which the individual was a Participant shall be taken into account.

“Highly Compensated Employee” for any Plan Year means an Employee who, during either that or the immediately preceding Plan Year was at any time a five percent owner of the Employer (as defined in Code Section 416(i)(1)) or, during the immediately preceding Plan Year, had 415 Compensation exceeding $115,000 (as adjusted). For these purposes, “the most highly compensated one-fifth of all Employees” shall be determined by taking into account all individuals working for all related Employer entities described in the definition of “Service,” but excluding any individual who has not completed six months of Service, who normally works fewer than 17 ¹ ⁄ ₂ hours per week or in fewer than six months per year, who has not reached age 21, whose employment is covered by a collective bargaining agreement, or who is a nonresident alien who receives no earned income from United States sources. The applicable year for which a determination is being made is called a “determination year” and the preceding 12-month period is called a look-back year.

“Hours of Service” means hours to be credited to an Employee under the following rules:

(a) Each hour for which an Employee is paid or is entitled to be paid for services to an Employer is an Hour of Service.

(b) Each hour for which an Employee is directly or indirectly paid or is entitled to be paid for a period of vacation, holidays, illness, disability, lay-off, jury duty, temporary military duty, or leave of absence is an Hour of Service. However, except as otherwise specifically provided, no more than 501 Hours of Service shall be credited for any single continuous period which an Employee performs no duties. No more than 501 Hours of Service will be credited under this paragraph for any single continuous period (whether or not such period occurs in a single computation period). Further, no Hours of Service shall be credited on account of payments made solely under a plan maintained to comply with worker’s compensation, unemployment compensation, or disability insurance laws, or to reimburse an Employee for medical expenses.

(c) Each hour for which back pay (ignoring any mitigation of damages) is either awarded or agreed to by an Employer is an Hour of Service. However, no more than 501 Hours of Service shall be credited for any single continuous period during which an Employee would not have performed any duties. The same Hours of Service will not be credited both under paragraph (a) or (b) as the case may be, and under this

paragraph (c). These hours will be credited to the employee for the computation period or periods to which the award or agreement pertains rather than the computation period in which the award agreement or payment is made.

(d) Hours of Service shall be credited in any one period only under one of the foregoing paragraphs (a), (b) and (c); an Employee may not get double credit for the same period.

(e) If an Employer finds it impractical to count the actual Hours of Service for any class or group of non-hourly Employees, each Employee in that class or group shall be credited with 90 Hours of Service for each bi-weekly pay period in which he has at least one Hour of Service. However, an Employee shall be credited only for his normal working hours during a paid absence.

(f) Hours of Service to be credited on account of a payment to an Employee (including back pay) shall be recorded in the period of Service for which the payment was made. If the period overlaps two or more Plan Years, the Hours of Service credit shall be allocated in proportion to the respective portions of the period included in the several Plan Years. However, in the case of periods of 31 days or less, the Committee may apply a uniform policy of crediting the Hours of Service to either the first Plan Year or the second.

(g) In all respects an Employee’s Hours of Service shall be counted as required by Section 2530.200b-2(b) and (c) of the Department of Labor’s regulations under Title I of ERISA.

“Investment Fund” means that portion of the Trust Fund consisting of assets other than Stock. Notwithstanding the above, assets from the Investment Fund may be used to purchase Stock in the open market or otherwise, or used to pay on the Exempt Loan, and shares so purchased will be allocated to a Participant’s Stock Fund.

“Normal Retirement” means retirement on or after the Participant’s Normal Retirement Date.

“Normal Retirement Date” means the Participant’s 65 ^th birthday.

“Participant” means any Eligible Employee who is an Active Participant participating in the Plan, or Eligible Employee or former Employee who was previously an Active Participant and still has a balance credited to his Account.

“Period of Uniformed Service” means the length of time that an Employee serves in the Uniformed Services.

“Plan Year” means the twelve-month period commencing January 1 and ending December 31 and each period of 12 consecutive months beginning on January 1 of each succeeding year.

“Recognized Absence” means a period for which —

(a) an Employer grants an Employee a leave of absence for a limited period, but only if an Employer grants such leave on a nondiscriminatory basis; or

(b) an Employee is temporarily laid off by an Employer because of a change in business conditions; or

(c) an Employee is on active military duty, but only to the extent that his employment rights are protected by the Military Selective Service Act of 1967 (38 U.S.C. Sec. 2021).

“ Reemployment After a Period of Uniformed Service ”

(a) “Reemployment (or Reemployed) After a Period of Uniformed Service” means that an Employee returned to employment with a Participating Employer, within the time frame set forth in subparagraph (b) below, after a Period of Uniformed Service in the Uniformed Services and the following rules corresponding to provisions of the Uniformed Services Employment and Reemployment Rights Act of 1994 (“USERRA”) apply: (i) he or she gives sufficient notice of leave to the Participating Employer prior to commencing a Period of Uniformed Service, or is excused from providing such notice; (ii) his or her employment with the Participating Employer prior to a Period of Uniformed Service was not of a brief, nonrecurrent nature that would preclude a reasonable expectation that such employment would continue indefinitely or for a significant period; (iii) the Participating Employer’s circumstances have not changed so that reemployment is unreasonable or an undue hardship to the Participating Employer; and (iv) the applicable cumulative Periods of Uniformed Service under USERRA equals five years or less, unless service in the Uniformed Services:

(1) in excess of five years is required to complete an initial Period of Uniformed Service;

(2) prevents the Participant from obtaining orders releasing him or her from such Period of Uniformed Service prior to the expiration of a five-year period (through no fault of the Participant);

(3) is required in the National Guard for drill and instruction, field exercises or active duty training, or to fulfill necessary additional training, or to fulfill necessary additional training requirements certified in writing by the Secretary of the branch of Uniformed Services concerned; or

(4) for a Participant is

(A) required other than for training under any provisions of law during a war or national agency declared by the President or Congress;

(B) required (other than for training) in support of an operational mission for which personnel have been ordered to active duty other than during war or national emergency;

(D) the result of being called into service as a member of the National Guard by the President in the case of rebellion or danger of rebellion against the authority of the United States Government or if the President is unable to execute the laws of the United States with the regular forces.

(b) The applicable statutory time frames within which an Employee must report to a Participating Employer after a Period of Uniformed Service are as follows:

(1) If the Period of Uniformed Service was less than 31 days,

(A) not later than the beginning of the first full regularly scheduled work period on the first full calendar day following the completion of the Period of Uniformed Service and the expiration of eight hours after a period of time allowing for the safe transportation of the Employee from the place of service in the Uniformed Services to the Employee’s residence; or

(B) as soon as possible after the expiration of the eight-hour period of time referred to in Clause (A), if reporting within the period referred to in such clause is impossible or unreasonable through no fault of the Employee.

(2) In the case of an Employee whose Period of Uniformed Service was for more than 30 days but less than 181 days, by submitting an application for reemployment with a Participating Employer not later than 14 days after the completion of the Period of Uniformed Service or, if submitting such application within such period is impossible or unreasonable through no fault of the Employee, the next first full calendar day when submission of such application becomes reasonable.

(3) In the case of an Employee whose Period of Uniformed Service was for more than 180 days, by submitting an application for reemployment with a Participating Employer not later than 90 days after the completion of the Period of Uniformed Service.

(4) In the case of an Employee who is hospitalized for, or convalescing from, an illness or injury related to the Period of Uniformed Service the Employee shall apply for reemployment with a Participating Employer at the end of the period that is necessary for the Employee to recover. Such period of recovery shall not exceed two years, unless circumstances beyond the Employee’s control make reporting as above unreasonable or impossible.

(c) Notwithstanding subparagraph (a), Reemployment After a Period of Uniformed Service terminates upon the occurrence of any of the following:

(1) a dishonorable or bad conduct discharge from the Uniformed Services;

(2) any other discharge from the Uniformed Services under circumstances other than an honorable condition;

(3) a discharge of a commissioned officer from the Uniformed Services by court martial, by commutation of sentence by court martial, or, in time of war, by the President; or

(4) a demotion of a commissioned officer in the Uniformed Services for absence without authorized leave of at least 3 months confinement under a sentence by court martial, or confinement in a federal or state penitentiary after being found guilty of a crime under a final sentence.

“Service” means an Employee’s period(s) of employment or self-employment with an Employer, excluding for initial eligibility purposes any period in which the individual was a nonresident alien and did not receive from an Employer any earned income which constituted income from sources within the United States. An Employee’s Service shall include any Service which constitutes Service with a predecessor Employer within the meaning of Section 414(a) of the Code, provided, however, that Service with an acquired entity shall not be considered Service under the Plan unless required by applicable law or agreed to by the parties to such transaction. An Employee’s Service shall also include any Service with an entity which is not an Employer, but only either (i) in which the other entity is a member of a controlled group of corporations or is under common control with other trades and businesses within the meaning of Section 414(b) or 414(c) of the Code, and a member of the controlled group or one of the trades and businesses is an Employer, (ii) in which the other entity is a member of an affiliated service group within the meaning of Section 414(m) of the Code, and a member of the affiliated service group is an Employer, or (iii) all Employers aggregated with the Employer under Section 414(o) of the Code (but not until the Proposed Regulations under Section 414(o) become effective). Notwithstanding any provision of this Plan to the contrary, contributions, benefits and service credit with respect to qualified military service will be provided in accordance with Section 414(u) of the Code.

“Spouse” means the individual, if any, to whom a Participant is lawfully married on the date benefit payments to the Participant are to begin, or on the date of the Participant’s death, if earlier. A former Spouse shall be treated as the Spouse or surviving Spouse to the extent provided under a qualified domestic relations order as described in section 414(p) of the Code.

“Stock” means common stock issued by the Employer (or by a corporation which is a member of the same controlled group) which is readily tradable on an established securities market. In the event there is no common stock which meets the requirements of the preceding sentence, then “Stock” means common stock issued by the Employer (or by a corporation which is a member of the same controlled group) having a combined voting power and dividend rights equal to or in excess of (A) that class of common stock of the Employer (or of any other such corporation) having the greatest voting power; and (B) that class of common stock of the Employer (or of any other such corporation) having the greatest dividend rights.

“Stock Fund” means that portion of the Trust Fund consisting of Stock.

“Trust” or “Trust Fund” means the trust fund created under this Plan.

“Trust Agreement” means the agreement between the Bank and the Trustee concerning the Trust Fund. If any assets of the Trust Fund are held in a co-mingled trust fund with assets of other qualified retirement plans, “Trust Agreement” shall be deemed to include the trust agreement governing that co-mingled trust fund. With respect to the allocation of investment responsibility for the assets of the Trust Fund, the provisions of Article II of the Trust Agreement are incorporated herein by reference.

“Trustee” means one or more corporate persons or individuals selected from time to time by the Bank to serve as trustee or co-trustees of the Trust Fund.

“Unallocated Stock Fund” means that portion of the Stock Fund consisting of the Plan’s holding of Stock which have been acquired in exchange for one or more Exempt Loans and which have not yet been allocated to the Participant’s Accounts in accordance with Section 4.2.

“Uniformed Service” means the performance of duty on a voluntary or involuntary basis in the uniformed service of the United States, including the U.S. Public Health Services, under competent authority and includes active duty, active duty for training, initial activity duty for training, inactive duty training, full-time National Guard duty, and the period for which a person is absent from a position of employment for purposes of an examination to determine the fitness of the person to perform any such duty.

“Valuation Date” means for so long as there is a generally recognized market for the Stock each business day. If at any time there shall be no generally recognized market for the Stock, then “Valuation Date” shall mean the last day of the Plan Year and each other date as of which the Committee shall determine the investment experience of the Investment Fund and adjust the Participants’ Accounts accordingly.

“Valuation Period” means the period following a Valuation Date and ending with the next Valuation Date.

“Vesting Year” means a unit of Service credited to a Participant pursuant to Section 9.2 for purposes of determining his vested interest in his Account.

Section 3.

Eligibility for Participation .

3.1 Initial Eligibility . An Eligible Employee shall enter the Plan as of the Entry Date coincident with or next following the date on which the Eligible Employee satisfies both the age and Service requirements. An Employee will be an Eligible Employee on or after the date that the Employee has both attained age 27 and completed an Eligibility Year. Notwithstanding the foregoing, an Employee who is an Eligible Employee on or prior to the Closing Date shall enter the Plan, retroactively, on the Effective Date.

3.2 Definition of Eligibility Year . “Eligibility Year” means an applicable eligibility period (as defined below) in which the Eligible Employee has completed 1,000 Hours of Service for the Employer. For this purpose:

(i) an Eligible Employee’s first “eligibility period” is the 12-consecutive month period beginning on the first day on which he has an Hour of Service, including any years before the Effective Date of the Plan, and

(ii) his subsequent eligibility periods will be 12-consecutive month periods beginning on each January 1 after that first day of Service.

3.3 Terminated Employees . No Employee shall have any interest or rights under this Plan if he is never in active Service with an Employer on or after the Effective Date.

3.4 Certain Employees Ineligible .

3.4-1. No Employee shall participate in the Plan while his Service is covered by a collective bargaining agreement between an Employer and the Employee’s collective bargaining representative if (i) retirement benefits have been the subject of good faith bargaining between the Employer and the representative and (ii) the collective bargaining agreement does not provide for the Employee’s participation in the Plan.

3.4-2. Leased Employees are not eligible to participate in the Plan.

3.4-3. Employees who are nonresident aliens with no earned income (within the meaning of Code Section 911(d)(2)) from the Employer which constitutes income from sources within the United States (within the meaning of Code Section 861(a)(3)).

3.4-4. An Eligible Employee may elect not to participate in the Plan, provided, however, such election is made solely to meet the requirements of Code Section 409(n). For an election to be effective for a particular Plan Year, the Eligible Employee or Participant must file the election in writing with the Committee no later than the last day of the Plan Year for which the election is to be effective. The Employer may not make a contribution under the Plan for the Eligible Employee or for the Participant for the Plan Year for which the election is effective, nor for any succeeding Plan Year, unless the Eligible Employee or Participant re-elects to participate in the Plan. The Eligible Employee or Participant may elect again not to participate, but not earlier than the first Plan Year following the Plan Year in which the re-election was first effective.

3.5 Participation and Reparticipation . Subject to the satisfaction of the foregoing requirements, an Eligible Employee shall participate in the Plan during each period of his Service from the date on which he first becomes eligible until his termination. For this purpose, an Eligible Employee who returns before five (5) consecutive one year Breaks in Service who previously satisfied the initial eligibility requirements or who returns after five (5) consecutive one year Breaks in Service with a vested Account balance in the Plan shall re-enter the Plan as of the date of his return to Service with an Employer.

3.6 Omission of Eligible Employee . If, in any Plan Year, any Eligible Employee who should be included as a Participant in the Plan is erroneously omitted and discovery of such omission is not made until after a contribution by his Employer for the year has been made, the Employer shall make a subsequent contribution with respect to the omitted Eligible Employee in the amount which the said Employer would have contributed regardless of whether or not it is deductible in whole or in part in any taxable year under applicable provisions of the Code.

3.7 Inclusion of Ineligible Employee . If, in any Plan Year, any person who should not have been included as a Participant in the Plan is erroneously included and discovery of such incorrect inclusion is not made until after a contribution for the year has been made, the Employer shall not be entitled to recover the contribution made with respect to the ineligible person regardless of whether or not a deduction is allowable with respect to such contribution. In such event, the amount contributed with respect to the ineligible person shall constitute a forfeiture for the fiscal year in which the discovery is made. Any person who, after the close of a Plan Year, is retroactively treated by the Company, an affiliated company or any other party as an Employee for such prior Plan Year shall not, for purposes of the Plan, be considered an Employee for such prior Plan Year unless expressly so treated as such by the Company.

Section 4.

Contributions and Credits .

4.1 Discretionary Contributions .

4.1-1. The Employer shall from time to time contribute, with respect to a Plan Year, such amounts as it may determine from time to time. The Employer shall have no obligation to contribute any amount under this Plan except as so determined in its sole discretion. The Employer’s contributions and available forfeitures for a Plan Year shall be credited as of the last day of the year to the Accounts of the Active Participants in the manner set forth in Section 8.1-2.

4.1-2. Upon a Participant’s Reemployment After a Period of Uniformed Service, the Employer shall make an additional contribution on behalf of such Participant that would have been made on his or her behalf during the Plan Year or Years corresponding to the Participant’s Period of Uniformed Service.

4.2 Contributions for Exempt Loans . If the Trustee, upon instructions from the Committee, incurs any Exempt Loan upon the purchase of Stock, the Employer may contribute for each Plan Year an amount sufficient to cover all payments of principal and interest as they come due under the terms of the Exempt Loan. If there is more than one Exempt Loan, the Employer shall designate the one to which any contribution is to be applied. Investment earnings realized on Employer contributions and any dividends paid by the Employer on Stock held in the Unallocated Stock Account, shall be applied to the Exempt Loan related to that Stock, subject to Section 7.2.

In each Plan Year in which Employer contributions, earnings on contributions, or dividends on Stock in the Unallocated Stock Fund are used as payments under an Exempt Loan, a certain number of shares of the Stock acquired with that Exempt Loan which is then held in the Unallocated Stock Fund shall be released for allocation among the Participants. The number of

shares released shall bear the same ratio to the total number of those shares then held in the Unallocated Stock Fund (prior to the release) as (i) the principal and interest payments made on the Exempt Loan in the current Plan Year bears to (ii) the sum of (i) above, and the remaining principal and interest payments required (or projected to be required on the basis of the interest rate in effect at the end of the Plan Year) to satisfy the Exempt Loan.

At the direction of the Committee, the current and projected payments of interest under an Exempt Loan may be ignored in calculating the number of shares to be released in each year if (i) the Exempt Loan provides for annual payments of principal and interest at a cumulative rate that is not less rapid at any time than level annual payments of such amounts for 10 years, (ii) the interest included in any payment is ignored only to the extent that it would be determined to be interest under standard loan amortization tables, and (iii) the term of the Exempt Loan, by reason of renewal, extension, or refinancing, has not exceeded 10 years from the original acquisition of the Stock.

4.3 Conditions as to Contributions . Employers’ contributions shall in all events be subject to the limitations set forth in Section 5. Contributions may be made in the form of cash, or securities and other property to the extent permissible under ERISA, including Stock, and shall be held by the Trustee in accordance with the Trust Agreement. In addition to the provisions of Section 13.2 for the return of an Employer’s contributions in connection with a failure of the Plan to qualify initially under the Code, any amount contributed by an Employer due to a good faith mistake of fact, or based upon a good faith but erroneous determination of its deductibility under Section 404 of the Code, shall be returned to the Employer within one year after the date on which the contribution was originally made, or within one year after its nondeductibility has been finally determined. However, the amount to be returned shall be reduced to take account of any adverse investment experience within the Trust Fund in order that the balance credited to each Participant’s Account is not less that it would have been if the contribution had never been made.

4.4 Rollover Contributions . This Plan shall not accept a direct rollover or rollover contribution of an “eligible rollover distribution” as such term is defined in Section 10.9-1 of the Plan.

Section 5.

Limitations on Contributions and Allocations .

5.1 Limitation on Annual Additions . Notwithstanding anything herein to the contrary, allocation of Employer contributions for any Plan Year shall be subject to the following:

5.1-1 If allocation of Employer contributions in accordance with Section 4.1 will result in an allocation of more than one-third the total contributions for a Plan Year to the accounts of Highly Compensated Employees, and such allocation would cause any Highly Compensated Employee to exceed the limitations under Code Section 415(c) or the Employer to exceed the deduction limits under Code Section 404, then no more than one-third of the Employer contributions used for repayment of any Exempt Loan in accordance with Section 4.2 shall be allocated to the accounts of Highly Compensated Employees (within the meaning of Code Section 414(q)), with the remaining Employer contributions to be made to non-Highly Compensated Employees in the manner specified under Section 8.1. Such adjustments shall be made before any allocations occur.

5.1-2 After adjustment, if any, required by the preceding paragraph, the annual additions during any Plan Year to any Participant’s Account under this and any other defined contribution plans maintained by the Employer or an affiliate (within the purview of Section 414(b), (c) and (m) and Section 415(h) of the Code, which affiliate shall be deemed the Employer for this purpose) shall not exceed the lesser of $52,000 (for 2014, or such other dollar amount which results from cost-of-living adjustments under Section 415(d) of the Code) (the “dollar limitation”) or 100 percent of the Participant’s 415 Compensation for such limitation year (the “percentage limitation”). In the event Stock is released from the Unallocated Stock Fund and allocated to a Participant’s Account for a particular Plan Year, the Employer may determine for such year that an annual addition shall be calculated on the basis of the fair market value of the Stock so released and allocated (such fair market value to be based on the valuation as of the Valuation Date immediately preceding the Plan Year in respect of which the release and allocation are made) if the annual addition, as so calculated, is lower than the annual addition calculated on the basis of Employer contributions. The percentage limitation shall not apply to any contribution for medical benefits after severance from employment (within the meaning of Section 401(h) or Section 419A(f)(2) of the Code) which is otherwise treated as an annual addition. If, as a result of the allocation of forfeitures, a reasonable error in estimating a Participant’s annual compensation, a reasonable error in determining the amount of elective deferrals (within the meaning of Code Section 402(g)(3)) that may be made with respect to any individual under the limits of Code Section 415, or under other limited facts and circumstances that the Commissioner of the Internal Revenue Service finds justify the availability of the rules set forth in this paragraph, the annual additions under the terms of the Plan for a particular Participant would cause the limitations of Code Section 415 applicable to that Participant for the limitation year to be exceeded, the Plan may only correct such excess in accordance with the Employee Plans Compliance Resolution System (EPCRS) as set forth in Revenue Procedure 2008-50 or any subsequent guidance.

5.1-3 For purposes of this Section 5.1, the “annual addition” to a Participant’s Accounts means the sum of (i) Employer contributions, (ii) Employee contributions, if any, and (iii) forfeitures. For these purposes, annual additions to a defined contribution plan shall not include the allocation of the excess amounts remaining in the Unallocated Stock Fund subsequent to a sale of stock from such fund in accordance with a transaction described in Section 8.1 of the Plan. Notwithstanding the foregoing, “annual additions” shall not include a restorative payment in accordance with Treasury Regulation Section 1.415(c)-1(b)(2)(C) that is made to restore losses to the Plan resulting from actions by a fiduciary for which there is a reasonable risk of liability for breach of fiduciary duty under ERISA or other applicable federal and state law.

In the event Stock is released from the Unallocated Stock Fund and allocated to a Participant’s Account for a particular Plan Year, the Employer may determine for such year that an annual addition shall be calculated on the basis of the fair market value of the Stock so released and allocated (such fair market value to be based on the valuation as of

the Valuation Date immediately preceding the Plan Year in respect of which the release and allocation are made) if the annual addition, as so calculated, is lower than the annual addition calculated on the basis of Employer contributions.

5.1-4 Notwithstanding the foregoing, if no more than one-third of the Employer contributions to the Plan for a year which are deductible under Section 404(a)(9) of the Code are allocated to Highly Compensated Employees (within the meaning of Section 414(q) of the Internal Revenue Code), the limitations imposed herein shall not apply to:

(i) forfeitures of Employer securities (within the meaning of Section 409 of the Code) under the Plan if such securities were acquired with the proceeds of a loan described in Section 404(a)(9)(A) of the Code), or

(ii) Employer contributions to the Plan which are deductible under Section 404(a)(9)(B) and charged against a Participant’s Account.

5.1-5 If the Employer contributes amounts, on behalf of Eligible Employees covered by this Plan, to other “defined contribution plans” as defined in Section 3(34) of ERISA, the limitation on annual additions provided in this Section shall be applied to annual additions in the aggregate to this Plan and to such other plans. Reduction of annual additions, where required, shall be accomplished first by reductions under such other plan pursuant to the directions of the named fiduciary for administration of such other plans or under priorities, if any, established under the terms of such other plans and then by allocating any remaining excess for this Plan in the manner and priority set out above with respect to this Plan.

5.1-6 A limitation year shall mean each 12 consecutive month period ending on December 31.

5.2 Effect of Limitations . The Committee shall take whatever action may be necessary from time to time to assure compliance with the limitations set forth in Section 5.1. Specifically, the Committee shall see that each Employer restrict its contributions for any Plan Year to an amount which, taking into account the amount of available forfeitures, may be completely allocated to the Participants consistent with those limitations. Where the limitations would otherwise be exceeded by any Participant, further allocations to the Participant shall be curtailed to the extent necessary to satisfy the limitations. Where an excessive amount is contributed on account of a mistake as to one or more Participants’ compensation, or there is an amount of forfeitures which may not be credited in the Plan Year in which it becomes available, the amount shall be corrected in accordance with Section 5.1-2 of the Plan. If it is determined at any time that the Committee and/or Trustee has erred in accepting and allocating any contributions or forfeitures under this Plan, or in allocating net gain or loss pursuant to Sections 8.2 and 8.3, then the Committee, in a uniform and nondiscriminatory manner, shall determine the manner in which such error shall be corrected and shall promptly advise the Trustee in writing of such error and of the method for correcting such error. The Accounts of any or all Participants may be revised, if necessary, in order to correct such error.

5.3 Limitations as to Certain Participants . Aside from the limitations set forth in Section 5.1, if the Plan acquires any Stock in a transaction as to which a selling shareholder or the estate of a deceased shareholder is claiming the benefit of Section 1042 of the Code, the Committee shall see that none of such Stock, and no other assets in lieu of such Stock, are allocated to the Accounts of certain Participants in order to comply with Section 409(n) of the Code.

This restriction shall apply at all times to a Participant who owns (taking into account the attribution rules under Section 318(a) of the Code, without regard to the exception for employee plan trusts in Section 318(a)(2)(B)(i) more than 25 percent of any class of stock of a corporation which issued the Stock acquired by the Plan, or another corporation within the same controlled group, as defined in Section 409(l)(4) of the Code (any such class of stock hereafter called a “Related Class”). For this purpose, a Participant who owns more than 25 percent of any Related Class at any time within the one year preceding the Plan’s purchase of the Stock shall be subject to the restriction as to all allocations of the Stock, but any other Participant shall be subject to the restriction only as to allocations which occur at a time when he owns more than 25 percent of any Related Class.

Further, this restriction shall apply to the selling shareholder claiming the benefit of Section 1042 and any other Participant who is related to such a shareholder within the meaning of Section 267(b) of the Code, during the period beginning on the date of sale and ending on the later of (1) the date that is ten years after the date of sale, or (2) the date of the Plan allocation attributable to the final payment of acquisition indebtedness incurred in connection with the sale.

This restriction shall not apply to any Participant who is a lineal descendant of a selling shareholder if the aggregate amounts allocated under the Plan for the benefit of all such descendants do not exceed five percent of the Stock acquired from the shareholder.

5.4 Erroneous Allocations . No Participant shall be entitled to any annual additions or other allocations to his Account in excess of those permitted under Section 5. If it is determined at any time that the administrator and/or Trustee have erred in accepting and allocating any contributions or forfeitures under this Plan, or in allocating investment adjustments, or in excluding or including any person as a Participant, then the administrator, in a uniform and nondiscriminatory manner, shall determine the manner in which such error shall be corrected, after taking into consideration Sections 3.6 and 3.7 and any revenue procedure or other notice published by the Internal Revenue Service regarding permissible correction methods, if applicable, and shall promptly advise the Trustee in writing of such error and of the method for correcting such error. The Accounts of any or all Participants may be revised, if necessary, in order to correct such error.

Section 6.

Trust Fund and Its Investment .

6.1 Creation of Trust Fund . All amounts received under the Plan from Employers and investments shall be held as the Trust Fund pursuant to the terms of this Plan and of the Trust Agreement between the Bank and the Trustee. The benefits described in this Plan shall be payable only from the assets of the Trust Fund, and none of the Bank, any other Employer, its board of directors or trustees, its stockholders, its officers, its employees, the Committee, and the Trustee shall be liable for payment of any benefit under this Plan except from the Trust Fund.

6.2 Stock Fund and Investment Fund . The Trust Fund held by the Trustee shall be divided into the Stock Fund, consisting entirely of Stock, and the Investment Fund, consisting of all assets of the Trust other than Stock. The Trustee shall have no investment responsibility for the Stock Fund, but shall accept any Employer contributions made in the form of Stock, and shall acquire, sell, exchange, distribute, and otherwise deal with and dispose of Stock in accordance with the instructions of the Committee. As a directed Trustee, the Trustee shall have such responsibility for the investment of the Investment Fund as set forth in Section .05 of the Trust Agreement.

6.3 Acquisition of Stock . From time to time the Committee may, in its sole discretion, direct the Trustee to acquire Stock from the issuing Employer or from shareholders, including shareholders who are or have been Employees, Participants, or fiduciaries with respect to the Plan. The Trustee shall pay for such Stock no more than its fair market value, which shall be determined conclusively by the Committee pursuant to Section 12.4. The Committee may direct the Trustee to finance the acquisition of Stock by incurring or assuming indebtedness to the seller or another party which indebtedness shall be called an “Exempt Loan.” The term “Exempt Loan” shall refer to a loan made to the Plan by a disqualified person within the meaning of Section 4975(e)(2) of the Code, or a loan to the Plan which is guaranteed by a disqualified person. An Exempt Loan includes a direct loan of cash, a purchase-money transaction, and an assumption of an obligation of a tax-qualified employee stock ownership plan under Section 4975(e)(7) of the Code (“ESOP”). For these purposes, the term “guarantee” shall include an unsecured guarantee and the use of assets of a disqualified person as collateral for a loan, even though the use of assets may not be a guarantee under applicable state law. An amendment of an Exempt Loan in order to qualify as an “exempt loan” is not a refinancing of the Exempt Loan or the making of another Exempt Loan. The term “exempt loan” refers to a loan that is primarily for the benefit of the Plan participants and their beneficiaries and that satisfies the provisions of this paragraph. A “non-exempt loan” fails to satisfy this paragraph. Any Exempt Loan shall be subject to the following conditions and limitations:

6.3-1 All Exempt Loans incurred by the Plan must be primarily for the benefit of Plan Participants and Beneficiaries, and an Exempt Loan shall be for a specific term, shall not be payable on demand except in the event of default, and shall bear a reasonable rate of interest, such that the interest rate and the price of the securities to be acquired with the Exempt Loan will not cause the Plan’s assets to be inappropriately impaired in violation of Treasury Regulation Section 54.4975-7(b)(3).

6.3-2 An Exempt Loan may, but need not, be secured by a collateral pledge of either the Stock acquired in exchange for the Exempt Loan, or the Stock previously pledged in connection with a prior Exempt Loan which is being repaid with the proceeds of the current Exempt Loan. No other assets of the Plan and Trust may be used as collateral for an Exempt Loan, and no creditor under an Exempt Loan shall have any right or recourse to any Plan and Trust assets other than Stock remaining subject to a collateral pledge.

6.3-3 Any pledge of Stock to secure an Exempt Loan must provide for the release of pledged Stock in connection with payments on the Exempt Loans in the ratio prescribed in Section 4.2.

6.3-4 Repayments of principal and interest on any Exempt Loan shall be made by the Trustee only from Employer cash contributions designated for such payments, from earnings on such contributions, and from cash dividends received on Stock, in the last case, however, subject to the further requirements of Section 7.2. The payment on the Exempt Loan during the Plan Year must not exceed an amount equal to the sum of contributions and earnings received during such year or prior to such year, less such payments in prior years. Such contributions and earnings must be accounted for separately in the books and accounts of the Plan until the Exempt Loan is fully repaid.

6.3-5 In the event of default of an Exempt Loan, the value of Plan assets transferred in satisfaction of the Exempt Loan must not exceed the amount of the default. If the lender is a disqualified person within the meaning of Section 4975 of the Code, an Exempt Loan must provide for a transfer of Plan assets upon default only upon and to the extent of the failure of the Plan to meet the payment schedule of said Exempt Loan. For purposes of this paragraph, the making of a guarantee does not make a person a lender.

6.4 Participants’ Option to Diversify . The Committee shall provide for a procedure under which each Participant may, during the qualified election period, elect to “diversify” a portion of the Employer Stock allocated to his Account, as provided in Section 401(a)(28)(B) of the Code. An election to diversify must be made on the prescribed form and filed with the Committee within the period specified herein. For each of the first five (5) Plan years in the qualified election period, the Participant may elect to diversify an amount which does not exceed 25 percent of the number of shares allocated to his Account since the inception of the Plan, less all shares with respect to which an election under this Section has already been made. For the last year of the qualified election period, the Participant may elect to have up to 50 percent of the value of his Account committed to other investments, less all shares with respect to which an election under this Section has already been made. The term “qualified election period” shall mean the six (6) Plan Year period beginning with the first Plan Year in which a Participant has both attained age 55 and completed 10 years of participation in the Plan. A Participant’s election to diversify his Account may be made within each year of the qualified election period and shall continue for the 90-day period immediately following the last day of each year in the qualified election period. Once a Participant makes such election, the Plan must complete diversification in accordance with such election within 90 days after the end of the period during which the election could be made for the Plan Year. In the discretion of the Committee, the Plan may satisfy the diversification requirement by any of the following methods:

6.4-1 The Plan may distribute all or part of the amount subject to the diversification election.

6.4-2 The Plan may offer the Participant at least three other distinct investment options, if available under the Plan. The other investment options shall satisfy the requirements of Regulations under Section 404(c) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).

6.4-3 The Plan may transfer the portion of the Participant’s Account subject to the diversification election to another qualified defined contribution plan of the Employer that offers at least three investment options satisfying the requirements of the Regulations under Section 404(c) of ERISA.

Section 7.

Voting Rights and Dividends on Stock .

7.1 Voting and Tendering of Stock .

7.1-1 The Trustee generally shall vote all shares of Stock held under the Plan in accordance with the written instructions of the Committee. However, if any Employer has a registration-type class of securities within the meaning of Section 409(e)(4) of the Code, or if a matter submitted to the holders of the Stock involves a merger, consolidation, recapitalization, reclassification, liquidation, dissolution, or sale of substantially all assets of an entity, then (i) the shares of Stock which have been allocated to Participants’ Accounts shall be voted by the Trustee in accordance with the Participants’ written instructions, and (ii) the Trustee shall vote any unallocated Stock, allocated Stock for which it has received no voting instructions, and Stock for which Participants vote to “abstain,” in the same proportions as it votes the allocated Stock for which it has received instructions from Participants. In the event no shares of Stock have been allocated to Participants’ Accounts at the time Stock is to be voted and any exempt loan which may be outstanding is not in default, each Participant shall be deemed to have one share of Stock allocated to his or her Account for the sole purpose of providing the Trustee with voting instructions.

Notwithstanding any provision hereunder to the contrary, all unallocated shares of Stock must be voted by the Trustee in a manner determined by the Trustee to be for the exclusive benefit of the Participants and Beneficiaries. Whenever such voting rights are to be exercised, the Employers shall provide the Trustee, in a timely manner, with the same notices and other materials as are provided to other holders of the Stock, which the Trustee shall distribute to the Participants. The Participants shall be provided with adequate opportunity to deliver their instructions to the Trustee regarding the voting of Stock allocated to their Accounts. The instructions of the Participants’ with respect to the voting of allocated shares hereunder shall be confidential.

7.1-2 In the event of a tender offer, Stock shall be tendered by the Trustee in the same manner as set forth above with respect to the voting of Stock. Notwithstanding any provision hereunder to the contrary, Stock must be tendered by the Trustee in a manner determined by the Trustee to be for the exclusive benefit of the Participants and Beneficiaries.

7.2 Application of Dividends .

7.2-1 Stock Dividends . Dividends on Stock which are received by the Trustee in the form of additional Stock shall be retained in the Stock Fund, and shall be allocated among the Participants’ Accounts and the Unallocated Stock Fund in accordance with their holdings of the Stock on which the dividends are paid.

7.2-2 Cash Dividends . The treatment of dividends paid in cash shall be determined after consideration to whether the cash dividends are paid on Stock held in Participants’ Accounts or the Unallocated Stock Fund.

(i) On Stock in Participants’ Accounts .

(A) Employer Exercises Discretion . Dividends on Stock credited to Participants’ Accounts which are received by the Trustee in the form of cash shall, at the direction of the Employer paying the dividends, either (I) be credited to the Accounts in accordance with Section 8.4(iii) and invested as part of the Investment Fund, (II) be distributed immediately to the Participants in proportion with the Participants’ Stock Fund Account balance (III) be distributed to the Participants within 90 days of the close of the Plan Year in which paid in proportion with the Participants’ Stock Fund Account balance or (IV) be used to make payments on the Exempt Loan. If dividends on Stock allocated to a Participant’s Account are used to repay the Exempt Loan, Stock with a fair market value equal to the dividends so used must be allocated to such Participant’s Account in lieu of the dividends.

(B) Participant Exercises Discretion over Dividend . In addition, in the sole discretion of the Employer, the Employer may grant Participants the right to elect: (I) to have cash dividends paid on shares of Stock credited to such Participants’ Stock Fund Accounts distributed to the Participant, or (II) to leave the cash dividends allocated to the Participant’s Account in the Plan, to be credited to the Stock Fund Account and invested in shares of Stock. Dividends on which such election may be made will be fully vested in the Participant (even if not otherwise vested, absent the ability to make such election). Accordingly, the Employer may choose to offer this election only to Participants who are fully vested in their Account. In the event the Employer elects to give Participants the right to determine the treatment of such dividends, the Participant’s election shall be made by filing with the Committee the appropriate written direction as provided by the Committee at such time and in accordance with such procedures and limitations which the Committee may from time to time establish; provided, however, that the procedures established by the Committee shall provide a reasonable opportunity to change the election at least annually, may establish a default election if a Participant fails to make an affirmative election within the time established for making elections, may provide that the election is applicable for the Plan Year and cannot be revoked with respect to such Plan Year, shall otherwise be implemented in a manner such that the dividends paid or reinvested will constitute “applicable dividends” which may be deducted under Code Section 404(k), and are in accordance with applicable guidance issued or to be issued by the Secretary of the Treasury. If the Employer elects to give Participants the right to exercise the discretion in this Paragraph 7.2-2(i)(B), the ability to make such election shall be available to the Participant with respect to dividends paid for the entire Plan Year.

(ii) On Stock in the Unallocated Stock Fund . Dividends received on shares of Stock held in the Unallocated Stock Fund shall be applied to the repayment of principal and interest then due on the Exempt Loan used to acquire such shares. If the amount of dividends exceeds the amount needed to repay such principal and interest (including any prepayments of principal and interest deemed advisable by the Employer), then in the sole discretion of the Committee, the excess shall: (A) be allocated to Active Participants, pro rata, in proportion to the Compensation of each such person that was earned during that portion of the Plan Year that such person participated in the Plan compared to total Compensation of each Active Participant for such year, or (B) be deemed to be general earnings of the Trust Fund and used for paying appropriate Plan or Trust related expenditures for the Plan Year. Notwithstanding the foregoing, dividends paid on a share of Stock may not be used to make payments on a particular Exempt Loan unless the share was acquired with the proceeds of such loan or a refinancing of such loan.

Section 8.

Adjustments to Accounts .

8.1 ESOP Allocations . Amounts available for allocation for a particular Plan Year will be divided into two categories. The first category relates to shares of Stock released from the Unallocated Stock Fund attributable to using cash dividends to make Exempt Loan payments. The second category relates to contributions made by the Employer, shares of Stock released from the Unallocated Stock Fund on the basis of Employer contributions (or on the basis of the complete repayment of the Exempt Loan through the sale or other disposition of Stock in the Unallocated Stock Fund) and amounts forfeited from Stock Fund Accounts pursuant to Section 9.5.

8.1-1 Shares of Stock attributable to the first category will be allocated to the Stock Fund Accounts of eligible Participants as follows:

(i) first, if dividends paid on shares of Stock held in Participants’ Stock Fund Accounts are used to make payments on an Exempt Loan, there shall be allocated to each such account a number of shares of Stock released from the Unallocated Stock Fund with a fair market value (determined as of the Valuation Date coincident with or immediately preceding the loan payment date) that at least equals the amount of dividends so used,

(ii) second, if necessary, any remaining shares of Stock shall be applied to reinstate amounts forfeited from Stock Fund Accounts of former employees who are entitled to a reinstatement under Section 9.5, and

(iii) finally, any remaining shares of Stock shall be allocated as of the last Valuation Date of the Plan Year for which they are allocated in the same manner as described in Section 8.1-2.

8.1-2 Shares of Stock or cash attributable to the second category (i.e., Employer contributions, Stock released from the Unallocated Stock Fund on the basis of Employer contributions, amounts forfeited, and, to the extent applicable, shares of Stock released in accordance with Section 8.1-1(iii)) will be allocated to the Stock Fund Accounts or Investment Fund Accounts, as the case may be, pro rata, in proportion to the Compensation of each Active Participant that was earned by such Participant during the period of the Plan Year in which such person participated in the Plan compared to total Compensation for all Active Participants.

8.1-3 Shares of Stock or cash attributable to contributions made under Section 4.1-2 shall be allocated specifically to the Participants on whose behalf such contributions were made.

8.2 Charges to Accounts . When a Valuation Date occurs, any distributions made to or on behalf of any Participant or Beneficiary since the last preceding Valuation Date shall be charged to the proper Accounts maintained for that Participant or Beneficiary.

8.3 Stock Fund Account . Subject to the provisions of Sections 5 and 8.1, as of the last day of each Plan Year, the Trustee shall credit to each Participant’s Stock Fund Account: (a) the Participant’s allocable share of Stock purchased by the Trustee or contributed by the Employer to the Trust Fund for that year; (b) the Participant’s allocable share of the Stock that is released from the Unallocated Stock Fund for that year; (c) the Participant’s allocable share of any forfeitures of Stock arising under the Plan during that year; and (d) any stock dividends declared and paid during that year on Stock credited to the Participant’s Stock Fund Account.

If, in any Plan Year during which an outstanding Exempt Loan exists, the Employer directs the Trustee to sell or otherwise dispose of a number of shares of Stock in the Unallocated Stock Fund sufficient to repay, in its entirety, the Exempt Loans, and following such repayment, there remains Stock or other assets in the Unallocated Stock Fund, such Stock or other assets shall be allocated as of the last day of the Plan Year in which the repayment occurred as earnings of the Plan to Active Participants, in proportion to the number of shares held in Active Participants’ Stock Fund Accounts.

8.4 Investment Fund Account . Subject to the provisions of Sections 5 and 8.1 as of the last day of each Plan Year, the Trustee shall credit to each Participant’s Investment Fund Account: (i) the Participant’s allocable share of any contribution for that year made by the Employer in cash or in property other than Stock that is not used by the Trustee to purchase Employer Stock or to make payments due under an Exempt Loan; (ii) the Participant’s allocable share of any forfeitures from the Investment Fund Accounts of other Participants arising under the Plan during that year; (iii) any cash dividends paid during that year on Stock credited to the Participant’s Stock Fund Account, other than dividends which are paid directly to the Participant and other than dividends which are used to repay Exempt Loan; and (iv) the share of the net income or loss of the Trust Fund properly allocable to that Participant’s Investment Fund Account, as provided in Section 8.5.

8.5 Adjustment to Value of Trust Fund . As of the last day of each Plan Year, the Trustee shall determine: (i) the net worth of that portion of the Trust Fund which consists of

properties other than Stock (the “Investment Fund”); and (ii) the increase or decrease in the net worth of the Investment Fund since the last day of the preceding Plan Year. The net worth of the Investment Fund shall be the fair market value of all properties held by the Trustee under the Trust Agreement other than Stock, net of liabilities other than liabilities to Participants and their beneficiaries. The Trustee shall allocate to the Investment Fund Account of each Participant that percentage of the increase or decrease in the net worth of the Investment Fund equal to the ratio which the balances credited to the Participant’s Investment Fund Account bear to the total amount credited to all Participants’ Investments Fund Accounts. This allocation shall be made after application of Section 7.2, but before application of Sections 8.1, 8.4 and 5.1.

8.6 Participant Statements . Each Plan Year, the Committee shall provide or shall cause to be provided to each Participant a statement of his or her Account balances, and the vested percentage thereof, as of the last day of the Plan Year.

Section 9.

Vesting of Participants’ Interests .

9.1 Vesting in Accounts . A Participant’s vested interest in his Account shall be based on his Vesting Years in accordance with the following table, subject to the balance of this Section 9:


Vesting Years	Percentage of Interest Vested
[Fewer than 2		0	%
2		0	%
3 or more		100	%]

9.2 Computation of Vesting Years . For purposes of this Plan, a “Vesting Year” means generally a Plan Year in which an Eligible Employee has performed at least 1,000 Hours of Service, beginning with the first Plan Year in which the Eligible Employee has completed an Hour of Service with the Employer, and including Service with other Employers as provided in the definition of “Service.” Notwithstanding the above, an Eligible Employee who was employed with the Bank shall receive credit for vesting purposes for each calendar year of continuous employment with the Bank, prior to the adoption of the Plan, in which such Eligible Employee completed 1,000 Hours of Service (such years shall also be referred to as “Vesting Years”). However, a Participant’s Vesting Years shall be computed subject to the following conditions and qualifications:

9.2-1 A Participant’s Vesting Years shall not include any Service prior to the date on which an Employee attains age 18.

9.2-2 To the extent applicable, a Participant’s vested interest in his Account accumulated before five (5) consecutive one year Breaks in Service shall be determined without regard to any Service after such five consecutive Breaks in Service. Further, if a Participant has five (5) consecutive one year Breaks in Service before his interest in his Account has become vested to some extent, pre-Break in Service years of Service shall not be required to be taken into account for purposes of determining his post-Break in Service vested percentage.

9.2-3 To the extent applicable, in the case of a Participant who has five (5) or more consecutive one year Breaks in Service, the Participant’s pre-Break in Service will count in vesting of the Employer-derived post-Break in Service accrued benefit only if either:

(i) such Participant has any nonforfeitable interest in the accrued benefit attributable to Employer contributions at the time of severance from employment, or

(ii) upon returning to Service the number of consecutive one year Breaks in Service is less than the number of years of Service.

9.2-4 Notwithstanding any provision of the Plan to the contrary, calculation of service for determining Vesting Years with respect to qualified military service will be provided in accordance with Section 414(u) of the Code.

9.2-5 To the extent applicable, if any amendment changes the vesting schedule, including an automatic change to or from a top-heavy vesting schedule, any Participant with three (3) or more Vesting Years may, by filing a written request with the Employer, elect to have his vested percentage computed under the vesting schedule in effect prior to the amendment. The election period must begin not later than the later of sixty (60) days after the amendment is adopted, the amendment becomes effective, or the Participant is issued written notice of the amendment by the Employer or the Committee.

9.3 Full Vesting Upon Certain Events .

9.3-1 Notwithstanding Section 9.1, a Participant’s interest in his Account shall fully vest on the Participant’s Normal Retirement Date. The Participant’s interest shall also fully vest in the event that his Service is terminated by Disability or by death. For purposes of this Section 9.3-1, benefits payable in the event of a Participant’s death or Disability while performing qualified military service shall fully vest in accordance with Section 414(u)(9) of the Code.

9.3-2 The Participant’s interest in his Account shall also fully vest in the event of a “Change in Control” of the Bank, or the Company. For these purposes “Change in Control” means a change in control of a nature that: (i) would be required to be reported in response to Item 5.01 of the current report on Form 8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”); or (ii) results in a Change in Control of the Bank or the Company within the meaning of the Bank Holding Company Act of 1956, as amended (“BHCA”); or (iii) without limitation such a Change in Control shall be deemed to have occurred at such time as (a) any “person” (as the term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the Company’s outstanding securities, except for any securities purchased by the Bank’s employee stock ownership plan or trust; or (b) individuals who constitute the Board of the Directors on the date hereof (the “Incumbent

Board”) cease for any reason to constitute at least a majority thereof, provided that any person becoming a director subsequent to the date hereof whose election was approved by a vote of at least three-quarters of the directors comprising the Incumbent Board, or whose nomination for election by the Company’s stockholders was approved by the same Nominating Committee serving under an Incumbent Board, shall be, for purposes of this clause (b), considered as though he were a member of the Incumbent Board; or (c) a plan of reorganization, merger, consolidation, sale of all or substantially all the assets of the Bank or the Company or similar transaction in which the Bank or Company is not the surviving institution occurs or is effected; or (d) a proxy statement soliciting proxies from stockholders of the Company is distributed, by someone other than the current management of the Company, seeking stockholder approval of a plan of reorganization, merger or consolidation of the Company or similar transaction with one or more business organizations as a result of which the outstanding shares of the class of securities then subject to the plan are to be exchanged for or converted into cash or property or securities not issued by the Company; or (e) a tender offer is made for 25% or more of the voting securities of the Company and the shareholders owning beneficially or of record 25% or more of the outstanding securities of the Company have tendered or offered to sell their shares pursuant to such tender offer and such tendered shares have been accepted by the tender offeror.

9.4 Full Vesting Upon Plan Termination . Notwithstanding Section 9.1, a Participant’s interest in his Account shall fully vest upon termination of this Plan or upon the permanent and complete discontinuance of contributions by his Employer. In the event of a partial termination, the interest of each affected Participant shall fully vest with respect to that part of the Plan which is terminated. A partial termination of the Plan shall be determined by the Internal Revenue Service Commissioner based on the facts and circumstances of the particular case in accordance with Code Section 411(d)(3) and the corresponding Treasury Regulations issued thereunder.

9.5 Forfeiture, Repayment, and Restoral . If a Participant’s Service terminates before his interest in his Account is fully vested, that portion which has not vested shall be forfeited after a one-year break in service. If a Participant’s Service terminates prior to having any portion of his Account become vested, such Participant shall be deemed to have received a distribution of his vested interest immediately upon his termination of Service.

If a Participant who has suffered a forfeiture of the nonvested portion of his Account returns to Service before he has five (5) consecutive one-year Breaks in Service, the nonvested portion shall be restored, provided that, if the Participant had received a distribution of his vested Account balance, the amount distributed shall be repaid prior to such restoral. The Participant may repay such amount at any time within five years after he has returned to Service. The amount repaid shall be credited to his Account at the time it is repaid; an additional amount equal to that portion of his Account which was previously forfeited shall be restored to his Account at the same time from other Employees’ forfeitures and, if such forfeitures are insufficient, then from amounts allocated in accordance with Section 8.1-1(ii), and if insufficient, then from a special contribution by his Employer for that year. A Participant who was deemed to have received a distribution of his vested interest in the Plan shall have his Account restored as of the first day on which he performs an Hour of Service after his return.

In addition, if a Participant did not receive a distribution of his vested Account balance but his non-vested Account balance was forfeited after a one-year Break in Service, such nonvested Account balance shall be restored if the Plan terminates before the Participant has a five-year Break in Service. If the Participant did not receive a distribution of his vested Account balance, any forfeiture restored shall include earnings that would have been credited to the Account but for the forfeiture.

For purposes of this Section and Section 5.1 of the Plan, if a portion of a Participant’s Account is forfeited, Stock allocated from an Exempt Loan will be forfeited only after other assets. If interests in more than one class of Stock have been allocated to a Participant’s Account, the Participant must be treated as forfeiting the same proportion of each such class.

9.6 Accounting for Forfeitures . If a portion of a Participant’s Account is forfeited, Stock allocated to said Participant’s Account shall be forfeited only after other assets are forfeited. If interests in more than one class of Stock have been allocated to a Participant’s Account, the Participant must be treated as forfeiting the same proportion of each class of Stock. A forfeiture shall be charged to the Participant’s Account as of the first day of the first Valuation Period in which the forfeiture becomes certain pursuant to Section 9.5. Except as otherwise provided in that Section, a forfeiture shall be added to the contributions of the terminated Participant’s Employer which are to be credited to other Participants pursuant to Section 4.1 as of the last day of the Plan Year in which the forfeiture becomes certain.

9.7 Vesting and Nonforfeitability . A Participant’s interest in his Account which has become vested shall be nonforfeitable for any reason.

Section 10.

Payment of Benefits .

10.1 Benefits for Participants . For a Participant whose Service ends for any reason, distribution will be made to or for the benefit of the Participant or, in the case of the Participant’s death, his Beneficiary, by payment in a lump sum, in accordance with Section 10.2. Prior to any such distribution, any Participant entitled to a distribution will receive a form upon which the Participant can elect the manner of such distribution (e.g., whether to receive the distribution directly or transfer such distribution to an individual retirement account or other tax-qualified plan), a special tax notice regarding the consequences of such distribution, and, if applicable, that the Participant has the right not to consent to a distribution at such time.

If a Participant so desires, he may direct how his benefits are to be paid to his Beneficiary. Notice to the Participant with regard to having the right to elect the manner in which his vested Account balance will be distributed to him may be given up to 180 days before the first day of the first period for which an amount is payable. If a deceased Participant did not file a direction with the Committee, the Participant’s benefits shall be distributed to his Beneficiary in a lump sum. Notwithstanding any provision to the contrary, if the value of a Participant’s vested Account balance at the time of any distribution does not exceed $1,000, then such Participant’s vested Account shall be distributed, without regard to whether the Participant consents, in a lump sum within 60 days after the end of the Plan Year in which employment terminates. If the value of a Participant’s vested Account balance is in excess of $5,000, then his benefits shall not be paid prior to his Normal Retirement Date unless he elects an early payment

date in a written election filed with the Committee. A Participant may modify such an election at any time, provided any new benefit payment date is at least 30 days after a modified election is delivered to the Committee. The Committee shall provide the Participant with written notice designed to comply with the requirements of Code Section 411(a)(11), and shall provide the Participant with a general description of the material features of the optional forms of benefits under the Plan and the right to defer receipt of any distribution under the Plan. Such notice shall be provided no less than 30 days and no more than 180 days before the date a distribution under the Plan commences. Notwithstanding the foregoing, failure of a Participant to consent to a distribution prior his Normal Retirement Date shall be deemed to be an election to defer commencement of payment of any benefit under this section. Notwithstanding the foregoing, unless a Participant elects to receive a distribution, the Committee shall transfer accounts of $1,000 or more, but not exceeding $5,000, in a direct rollover to an individual retirement plan designated by the Committee in accordance with Code Section 401(a)(31)(B) and the regulations promulgated thereunder. All distributions of $5,000 or less that are made pursuant to this Section without the Participant’s consent shall be made in cash.

Notwithstanding anything to the contrary, in the event the Participant dies while performing qualified military service (as defined Section 414(u) of the Code), the Participant’s Beneficiary shall be entitled to any additional benefit provided under the Plan had the Participant resumed and then severed from employment on account of death.

10.2 Time for Distribution .

10.2-1 If the Participant and, if applicable, with the consent of the Participant’s spouse, elects the distribution of the Participant’s Account balance in the Plan, distribution shall commence as soon as practicable following his termination of Service, but no later than one year after the close of the Plan Year in which the Participant severs employment by reason of attainment of Normal Retirement Age under the Plan, Disability, or death, or which is the fifth Plan Year following the Plan Year in which the Participant otherwise severs employment, except that this clause shall not apply if the Participant is reemployed by the Employer before distribution is required to begin.

10.2-2 Unless the Participant elects otherwise, the distribution of the balance of a Participant’s Account shall commence not later than the 60th day after the latest of the close of the Plan Year in which -

(i) the Participant attains the age of 65;

(ii) occurs the tenth anniversary of the year in which the Participant commenced participation in the Plan; or

(iii) the Participant terminates his Service with the Employer.

10.2-3 Notwithstanding anything to the contrary, (1) with respect to a 5-percent owner (as defined in Code Section 416), distribution of a Participant’s Account shall commence (whether or not he remains in the employ of the Employer) not later than the April 1 of the calendar year next following the calendar year in which the Participant attains age 70 ¹ ⁄ ₂ , and (2) with respect to all other Participants, payment of a Participant’s

benefit will commence not later than April 1 of the calendar year following the calendar year in which the Participant attains age 70 ¹ ⁄ ₂ , or, if later, the year in which the Participant retires. A Participant’s benefit from that portion of his Account committed to the Investment Fund shall be calculated on the basis of the most recent Valuation Date before the date of payment.

10.2-4 Distribution of a Participant’s Account balance after his death shall comply with the following requirements:

(i) If a Participant dies before his distributions have commenced, distribution of his Account to his Beneficiary shall commence not later than one year after the end of the Plan Year in which the Participant died; however, if the Participant’s Beneficiary is his surviving Spouse, distributions may commence on the date on which the Participant would have attained age 70 ¹ ⁄ ₂ . In either case, distributions shall be completed within five years after they commence.

(ii) If the Participant dies after distribution has commenced pursuant to Section 10.1 but before his entire interest in the Plan has been distributed to him, then the remaining portion of that interest shall, in accordance with Section 401(a)(9) of the Code, be distributed at least as rapidly as under the method of distribution being used under Section 10.1 at the date of his death.

(iii) If a married Participant dies before his benefit payments begin, then the Committee shall cause the balance in his Account to be paid to his Beneficiary, provided, however, that no election by a married Participant of a different Beneficiary than his surviving Spouse shall be valid unless the election is accompanied by the Spouse’s written consent, which (A) must acknowledge the effect of the election, (B) must explicitly provide either that the designated Beneficiary may not subsequently be changed by the Participant without the Spouse’s further consent, or that it may be changed without such consent, and (C) must be witnessed by the Committee, its representative, or a notary public. This requirement shall not apply if the Participant establishes to the Committee’s satisfaction that the Spouse may not be located.

10.2-5 If a Participant or any other distributee’s distribution is rolled over to another eligible retirement plan following the Participant’s required beginning date (as determined in accordance with Section 10.2-3), only the amount that exceeds the required minimum distribution amount for the Plan Year (as determined in accordance with Code Section 401(a)(9)) in which the rollover is completed is treated as an eligible rollover distribution for purposes of Section 10.9.

10.2-6 All distributions under this section shall be determined and made in accordance with Code Section 401(a)(9) and final Treasury Regulations Sections 1.401(a)(9)-1 through 1.401(a)(9)-9, including the minimum distribution incidental benefit requirements of Code Section 401(a)(9)(G). These provisions override any distribution options in the Plan inconsistent with Code Section 401(a)(9).

10.3 Marital Status . The Committee, the Plan, the Trustee, and the Employers shall be fully protected and discharged from any liability to the extent of any benefit payments made as a result of the Committee’s good faith and reasonable reliance upon information obtained from a Participant and his Employer as to his marital status.

10.4 Delay in Benefit Determination . If the Committee is unable to determine the benefits payable to a Participant or Beneficiary on or before the latest date prescribed for payment pursuant to Section 10.1 or 10.2, the benefits shall in any event be paid within 60 days after they can first be determined, with whatever makeup payments may be appropriate in view of the delay.

10.5 Accounting for Benefit Payments . Any benefit payment shall be charged to the Participant’s Account as of the first day of the Valuation Period in which the payment is made.

10.6 Options to Receive Stock . Unless ownership of virtually all Stock is restricted to active Employees and qualified retirement plans for the benefit of Employees pursuant to the certificates of incorporation or by-laws of the Employers issuing Stock, a terminated Participant or the Beneficiary of a deceased Participant may instruct the Committee to distribute the Participant’s entire vested interest in his Account in the form of Stock. In that event, the Committee shall apply the Participant’s vested interest in the Investment Fund to purchase sufficient Stock from the Stock Fund or from any owner of Stock to make the required distribution. In all other cases, other than as specifically set forth in Section 10.1, the Participant’s vested interest in the Stock Fund shall be distributed in shares of Stock, and his vested interest in the Investment Fund shall be distributed in cash. If Stock acquired with the proceeds of an Exempt Loan available for distribution consist of more than one class of Stock, the Participant (or Beneficiary, if applicable) must receive substantially the same proportion of each such class. No fractional shares of stock shall be distributed.

Any Participant who receives Stock pursuant to Section 10.1, and any person who has received Stock from the Plan or from such a Participant by reason of the Participant’s death or incompetence, by reason of divorce or separation from the Participant, or by reason of a rollover contribution described in Section 402(a)(5) of the Code, shall have the right to require the Employer which issued the Stock to purchase the Stock for its current fair market value (hereinafter referred to as the “put right”). The put right shall be exercisable by written notice to the Committee during the first 60 days after the Stock is distributed by the Plan, and, if not exercised in that period, during the first 60 days in the following Plan Year after the Committee has communicated to the Participant its determination as to the Stock’s current fair market value. However, the put right shall not apply to the extent that the Stock, at the time the put right would otherwise be exercisable, may be sold on an established market in accordance with federal and state securities laws and regulations. Similarly, the put option shall not apply with respect to the portion of a Participant’s Account which the Employee elected to have reinvested under Code Section 401(a)(28)(B). If the put right is exercised, the Trustee may, if so directed by the Committee in its sole discretion, assume the Employer’s rights and obligations with respect to purchasing the Stock. Notwithstanding anything herein to the contrary, in the case of a plan established by a bank (as defined in Code Section 581), the put option shall not apply if prohibited by a federal or state law and Participants are entitled to elect their benefits be distributed in cash.

The Employer or the Trustee, as the case may be, may elect to pay for the Stock in equal periodic installments, not less frequently than annually, over a period beginning not later than 30 days after the exercise of the put right and not exceeding five years, with adequate security and interest at a reasonable rate on the unpaid balance, all such terms to be set forth in a promissory note delivered to the seller with normal terms as to acceleration upon any uncured default.

Nothing contained herein shall be deemed to obligate any Employer to register any Stock under any federal or state securities law or to create or maintain a public market to facilitate the transfer or disposition of any Stock. The put right described herein may only be exercised by a person described in the second preceding paragraph, and may not be transferred with any Stock to any other person. As to all Stock purchased by the Plan in exchange for any Exempt Loan, the put right shall be nonterminable. The put right for Stock acquired through an Exempt Loan shall continue with respect to such Stock after the Exempt Loan is repaid or the Plan ceases to be an employee stock ownership plan. Notwithstanding anything in the Plan to the contrary, if securities acquired with the proceeds of an Exempt Loan available for distribution consist of more than one class, a distributee must receive substantially the same proportion of each such class, in accordance with Treasury Regulations Section 54.4975-11(f)(2).

10.7 Restrictions on Disposition of Stock . Except in the case of Stock which is traded on an established market, a Participant who receives Stock pursuant to Section 10.1, and any person who has received Stock from the Plan or from such a Participant by reason of the Participant’s death or incompetence, by reason of divorce or separation from the Participant, or by reason of a rollover contribution described in Section 402(a)(5) of the Code, shall, prior to any sale or other transfer of the Stock to any other person, first offer the Stock to the issuing Employer and to the Plan at the greater of (i) its current fair market value, or (ii) the purchase price offered in good faith by an independent third party purchaser. This restriction shall apply to any transfer, whether voluntary, involuntary, or by operation of law, and whether for consideration or gratuitous. Either the Employer or the Trustee may accept the offer within 14 days after it is delivered. Any Stock distributed by the Plan shall bear a conspicuous legend describing the right of first refusal under this Section 10.7, as well as any other restrictions upon the transfer of the Stock imposed by federal and state securities laws and regulations.

10.8 Continuing Loan Provisions; Creations of Protections and Rights . Except as otherwise provided in Sections 10.6 and 10.7 and this Section, no shares of Employer Stock held or distributed by the Trustee may be subject to a put, call or other option, or buy-sell arrangement. The provisions of this Section shall continue to be applicable to such Stock even if the Plan ceases to be an employee stock ownership plan under Section 4975(e)(7) of the Code.

10.9 Direct Rollover of Eligible Distribution . A Participant or distributee may elect, at the time and in the manner prescribed by the Trustee or the Committee, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the Participant or distributee in a direct rollover.

10.9-1 An “eligible rollover” is any distribution that does not include: any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the Participant and the Participant’s Beneficiary,

or for a specified period of ten years or more; any distribution to the extent such distribution is required under Code Section 401(a)(9); any hardship distribution described in Section 401(k)(2)(B)(i)(IV) of the Code; and the portion of any distribution that is not included in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities). Notwithstanding the foregoing, an “eligible rollover” shall include a distribution that is made to a “distributee” as defined under Section 10.9-4.

10.9-2 An “eligible retirement plan” is an individual retirement account described in Code Section 408(a), an individual retirement annuity described in Code Section 408(b), a deemed individual retirement account described in Code Section 408(q), an annuity plan described in Code Section 403(a), a Roth individual retirement account in accordance with Code Section 408A(e), or a qualified trust described in Code Section 401(a), that accepts the distributee’s eligible rollover distribution. An eligible retirement plan shall also include an annuity contract described in Section 403(b) of the Code and an eligible plan under Section 457(b) of the Code which is maintained by a state, or any agency or instrumentality of a state or political subdivision of a state and which agrees to separately account for amounts transferred into such plan from this Plan.

10.9-3 A “direct rollover” is a payment by the Plan to the eligible retirement plan specified by the distributee.

10.9-4 The term “distributee” shall refer to a deceased Participant’s Spouse or a Participant’s former Spouse who is the alternate payee under a qualified domestic relations order, as defined in Code Section 414(p), and shall include non-Spouse Beneficiaries pursuant to Code Section 402(c)(11).

10.9-5 The Committee shall provide Participants or other distributes of eligible rollover distributions with a written notice designed to comply with the requirements of Code Section 402(f). Such notice shall be provided within a reasonable period of time before making an eligible rollover distribution. Such notice may be provided up to 180 days before the first day of the first period for which an amount is payable.

10.10 Waiver of 30-Day Period After Notice of Distribution . If a distribution is one to which Sections 402(f) and 411(a)(11) of the Code apply, such distribution may commence less than 30 days after the notice required under Section 1.402(f)-1 or 1.411(a)-11(c) of the Treasury Regulations is given, provided that:

(i) the Trustee or Committee, as applicable, clearly informs the Participant that the Participant has a right to a period of at least 30 days after receiving the notice to consider the decision of whether or not to elect to make a tax-free rollover or receive a taxable distribution (and, if applicable, a particular form of distribution), and

(ii) the Participant, after receiving the notice, affirmatively elects to make a tax-free rollover or receive a taxable distribution.

Section 11. Rules Governing Benefit Claims and Review of Appeals .

11.1 Claim for Benefits . Any Participant or Beneficiary who qualifies for the payment of benefits shall file a claim for his benefits with the Committee on a form provided by the Committee. The claim, including any election of an alternative benefit form, shall be filed at least 30 days before the date on which the benefits are to begin. If a Participant or Beneficiary fails to file a claim by the day before the date on which benefits become payable, he shall be presumed to have filed a claim for payment for the Participant’s benefits in the standard form prescribed by Sections 10.1 or 10.2.

11.2 Notification by Committee . Within 90 days after receiving a claim for benefits (or within 180 days, if special circumstances require an extension of time and written notice of the extension is given to the Participant or Beneficiary within 90 days after receiving the claim for benefits), the Committee shall notify the Participant or Beneficiary whether the claim has been approved or denied. If the Committee denies a claim in any respect, the Committee shall set forth in a written notice to the Participant or Beneficiary:

(i) each specific reason for the denial;

(ii) specific references to the pertinent Plan provisions on which the denial is based;

(iii) a description of any additional material or information which could be submitted by the Participant or Beneficiary to support his claim, with an explanation of the relevance of such information; and

(iv) an explanation of the claims review procedures set forth in Section 11.3.

11.3 Claims Review Procedure . Within 60 days after a Participant or Beneficiary receives notice from the Committee that his claim for benefits has been denied in any respect, he may file with the Committee a written notice of appeal setting forth his reasons for disputing the Committee’s determination. In connection with his appeal the Participant or Beneficiary or his representative may inspect or purchase copies of pertinent documents and records to the extent not inconsistent with other Participants’ and Beneficiaries’ rights of privacy. Within 60 days after receiving a notice of appeal from a prior determination (or within 120 days, if special circumstances require an extension of time and written notice of the extension is given to the Participant or Beneficiary and his representative within 60 days after receiving the notice of appeal), the Committee shall furnish to the Participant or Beneficiary and his representative, if any, a written statement of the Committee’s final decision with respect to his claim, including the reasons for such decision and the particular Plan provisions upon which it is based.

Section 12.

The Committee and its Functions .

12.1 Authority of Committee . The Committee shall be the “plan administrator” within the meaning of ERISA and shall have exclusive responsibility and authority to control and manage the operation and administration of the Plan, including the interpretation and application of its provisions, except to the extent such responsibility and authority are otherwise specifically (i) allocated to the Bank, the Employers, or the Trustee under the Plan and Trust Agreement, (ii) delegated in writing to other persons by the Bank, the Employers, the Committee, or the Trustee, or (iii) allocated to other parties by operation of law. The Committee shall have exclusive

responsibility regarding decisions concerning the payment of benefits under the Plan. The Committee shall have no investment responsibility with respect to the Investment Fund except to the extent, if any, specifically provided in the Trust Agreement. In the discharge of its duties, the Committee may employ accountants, actuaries, legal counsel, and other agents (who also may be employed by an Employer or the Trustee in the same or some other capacity) and may pay their reasonable expenses and compensation.

12.2 Identity of Committee . The Committee shall consist of three or more individuals selected by the Bank. Any individual, including a director, trustee, shareholder, officer, or Employee of an Employer, shall be eligible to serve as a member of the Committee. The Bank shall have the power to remove any individual serving on the Committee at any time without cause upon 10 days written notice, and any individual may resign from the Committee at any time upon 10 days written notice to the Bank. The Bank shall notify the Trustee of any change in membership of the Committee.

12.3 Duties of Committee . The Committee shall keep whatever records may be necessary to implement the Plan and shall furnish whatever reports may be required from time to time by the Bank. The Committee shall furnish to the Trustee whatever information may be necessary to properly administer the Trust. The Committee shall see to the filing with the appropriate government agencies of all reports and returns required of the Plan under ERISA and other laws.

Further, the Committee shall have exclusive responsibility and authority with respect to the Plan’s holdings of Stock and shall direct the Trustee in all respects regarding the purchase, retention, sale, exchange, and pledge of Stock and the creation and satisfaction of Exempt Loans. The Committee shall at all times act consistently with the Bank’s long-term intention that the Plan, as an employee stock ownership plan, be invested primarily in Stock. In determining the proper extent of the Trust’s investment in Stock, the Committee shall be authorized to employ investment counsel, legal counsel, appraisers, and other agents and to pay their reasonable expenses and compensation.

12.4 Valuation of Stock . If the valuation of any Stock is not readily tradable on an established securities market, the valuation of such Stock shall be determined by an independent appraiser. For purposes of the preceding sentence, the term “independent appraiser” means any appraiser meeting requirements similar to the requirements of the regulations prescribed under Section 170(a)(1) of the Code. The Valuation Date for all Plan transactions, including transactions between the Plan and a disqualified person, shall be the date of the transaction, in accordance with Treasury Regulations Section 54.4975-11(d)(5).

12.5 Compliance with ERISA . The Committee shall perform all acts necessary to comply with ERISA. Each individual member or employee of the Committee shall discharge his duties in good faith and in accordance with the applicable requirements of ERISA.

12.6 Action by Committee . All actions of the Committee shall be governed by the affirmative vote of a number of members which is a majority of the total number of members currently appointed, including vacancies.

12.7 Execution of Documents . Any instrument executed by the Committee shall be signed by any member or employee of the Committee.

12.8 Adoption of Rules . The Committee shall adopt such rules and regulations of uniform applicability as it deems necessary or appropriate for the proper administration and interpretation of the Plan.

12.9 Responsibilities to Participants . The Committee shall determine which Employees qualify to enter the Plan. The Committee shall furnish to each Eligible Employee whatever summary plan descriptions, summary annual reports, and other notices and information may be required under ERISA. The Committee also shall determine when a Participant or his Beneficiary qualifies for the payment of benefits under the Plan. The Committee shall furnish to each such Participant or Beneficiary whatever information is required under ERISA (or is otherwise appropriate) to enable the Participant or Beneficiary to make whatever elections may be available pursuant to Sections 6 and 10, and the Committee shall provide for the payment of benefits in the proper form and amount from the assets of the Trust Fund. The Committee may decide in its sole discretion to permit modifications of elections and to defer or accelerate benefits to the extent such decision is consistent with applicable law and made in a non-discriminatory manner and in the best interests of all Participants and Beneficiaries.

12.10 Alternative Payees in Event of Incapacity . If the Committee finds at any time that an individual qualifying for benefits under this Plan is a minor or is incompetent, the Committee may direct the benefits to be paid, in the case of a minor, to his parents, his legal guardian, or a custodian for him under the Uniform Gifts to Minors Act, or, in the case of an incompetent, to his spouse, or his legal guardian, the payments to be used for the individual’s benefit. The Committee and the Trustee shall not be obligated to inquire as to the actual use of the funds by the person receiving them under this Section 12.10, and any such payment shall completely discharge the obligations of the Plan, the Trustee, the Committee, and the Employers to the extent of the payment.

12.11 Indemnification by Employers . Except as separately agreed in writing, the Committee, and any member or employee of the Committee, shall be indemnified and held harmless by the Employer, jointly and severally, to the fullest extent permitted by ERISA, and subject to and conditioned upon compliance with 12 C.F.R. Section 545.121, to the extent applicable, against any and all costs, damages, expenses, and liabilities reasonably incurred by or imposed upon it or him in connection with any claim made against it or him or in which it or he may be involved by reason of its or his being, or having been, the Committee, or a member or employee of the Committee, to the extent such amounts are not paid by insurance.

12.12 Nonparticipation by Interested Member . Any member of the Committee who also is a Participant in the Plan shall take no part in any determination specifically relating to his own participation or benefits, unless his abstention would leave the Committee incapable of acting on the matter.

Section 13.

Adoption, Amendment, or Termination of the Plan .

13.1 Adoption of Plan by Other Employers . With the consent of the Bank, any entity may become a participating Employer under the Plan by (i) taking such action as shall be necessary to adopt the Plan, (ii) becoming a party to the Trust Agreement establishing the Trust Fund, and (iii) executing and delivering such instruments and taking such other action as may be necessary or desirable to put the Plan into effect with respect to the entity’s Employees.

13.2 Plan Adoption Subject to Qualification . Notwithstanding any other provision of the Plan, the adoption of the Plan and the execution of the Trust Agreement are conditioned upon their being determined initially by the Internal Revenue Service to meet the qualification requirements of Section 401(a) of the Code, so that the Employers may deduct currently for federal income tax purposes their contributions to the Trust and so that the Participants may exclude the contributions from their gross income and recognize income only when they receive benefits. In the event that this Plan is held by the Internal Revenue Service not to qualify initially under Section 401(a), the Plan may be amended retroactively to the earliest date permitted by U.S. Treasury Regulations in order to secure qualification under Section 401(a). If this Plan is held by the Internal Revenue Service not to qualify initially under Section 401(a) either as originally adopted or as amended, each Employer’s contributions to the Trust under this Plan (including any earnings thereon) shall be returned to it and this Plan shall be terminated. In the event that this Plan is amended after its initial qualification and the Plan as amended is held by the Internal Revenue Service not to qualify under Section 401(a), the amendment may be modified retroactively to the earliest date permitted by U.S. Treasury Regulations in order to secure approval of the amendment under Section 401(a). In addition, reversions of Employer contributions (including earnings or losses attributable thereto) are permitted within one year after the applicable determination date, if the reversion is due to a good faith mistake of fact.

13.3 Right to Amend or Terminate . The Bank intends to continue this Plan as a permanent program. However, each participating Employer separately reserves the right to suspend, supersede, or terminate the Plan at any time and for any reason, as it applies to that Employer’s Employees, and the Bank reserves the right to amend, suspend, supersede, merge, consolidate, or terminate the Plan at any time and for any reason, as it applies to the Employees of each Employer. No amendment, suspension, supersession, merger, consolidation, or termination of the Plan shall (i) reduce any Participant’s or Beneficiary’s proportionate interest in the Trust Fund, (ii) reduce or restrict, either directly or indirectly, the benefit provided any Participant prior to the amendment, or (iii) divert any portion of the Trust Fund to purposes other than the exclusive benefit of the Participants and their Beneficiaries prior to the satisfaction of all liabilities under the Plan. Moreover, there shall not be any transfer of assets to a successor plan or merger or consolidation with another plan unless, in the event of the termination of the successor plan or the surviving plan immediately following such transfer, merger, or consolidation, each participant or beneficiary would be entitled to a benefit equal to or greater than the benefit he would have been entitled to if the plan in which he was previously a participant or beneficiary had terminated immediately prior to such transfer, merger, or consolidation. Following a termination of this Plan by the Bank, the Trustee shall continue to administer the Trust and pay benefits in accordance with the Plan as amended from time to time and the Committee’s instructions.

Section 14.

Miscellaneous Provisions .

14.1 Plan Creates No Employment Rights . Nothing in this Plan shall be interpreted as giving any Employee the right to be retained as an Employee by an Employer, or as limiting or affecting the rights of an Employer to control its Employees or to terminate the Service of any Employee at any time and for any reason, subject to any applicable employment or collective bargaining agreements.

14.2 Nonassignability of Benefits . No assignment, pledge, or other anticipation of benefits from the Plan will be permitted or recognized by the Employer, the Committee, or the Trustee. Moreover, benefits from the Plan shall not be subject to attachment, garnishment, or other legal process for debts or liabilities of any Participant or Beneficiary, to the extent permitted by law. This prohibition on assignment or alienation shall apply to any judgment, decree, or order (including approval of a property settlement agreement) which relates to the provision of child support, alimony, or property rights to a present or former spouse, child or other dependent of a Participant pursuant to a state domestic relations or community property law, unless the judgment, decree, or order is determined by the Committee to be a qualified domestic relations order within the meaning of Section 414(p) of the Code, as more fully set forth in Section 14.12 hereof.

14.3 Limit of Employer Liability . The liability of the Employer with respect to Participants under this Plan shall be limited to making contributions to the Trust from time to time, in accordance with Section 4.

14.4 Treatment of Expenses . All expenses incurred by the Committee and the Trustee in connection with administering this Plan and Trust Fund shall be paid by the Trustee from the Trust Fund to the extent the expenses have not been paid or assumed by the Employer or by the Trustee. The Committee may determine that, and shall inform the Trustee when, reasonable expenses may be charged directly to the Account or Accounts of a Participant or group of Participants to whom or for whose benefit such expenses are allocable, subject to the guidelines set forth in Field Assistance Bulletin 2003-03, to the extent not superseded, or any successor directive issued by the Department of Labor.

14.5 Number and Gender . Any use of the singular shall be interpreted to include the plural, and the plural the singular. Any use of the masculine, feminine, or neuter shall be interpreted to include the masculine, feminine, or neuter, as the context shall require.

14.6 Nondiversion of Assets . Except as provided in Sections 5.2 and 14.12, under no circumstances shall any portion of the Trust Fund be diverted to or used for any purpose other than the exclusive benefit of the Participants and their Beneficiaries prior to the satisfaction of all liabilities under the Plan.

14.7 Separability of Provisions . If any provision of this Plan is held to be invalid or unenforceable, the other provisions of the Plan shall not be affected but shall be applied as if the invalid or unenforceable provision had not been included in the Plan.

14.8 Service of Process . The agent for the service of process upon the Plan shall be the president of the Bank, or such other person as may be designated from time to time by the Bank.

14.9 Governing State Law . This Plan shall be interpreted in accordance with the laws of the Commonwealth of Massachusetts to the extent those laws are applicable under the provisions of ERISA.

14.10 Employer Contributions Conditioned on Deductibility . Employer Contributions to the Plan are conditioned on deductibility under Code Section 404. In the event that the Internal Revenue Service shall determine that all or any portion of an Employer Contribution is not deductible under that Section, the nondeductible portion shall be returned to the Employer within one year of the disallowance of the deduction. In addition, reversions of Employer contributions (including earnings or losses attributable thereto) are permitted within one year after the applicable determination date, if the reversion is due to a good faith mistake of fact. The maximum amount that may be returned to the Employer in the case of a mistake of fact or the disallowance of a deduction is the excess of (1) the amount contributed, over, as relevant, (2) (A) the amount that would have been contributed had no mistake of fact occurred, or (B) the amount that would have been contributed had the contribution been limited to the amount that is deductible after any disallowance by the Internal Revenue Service.

14.11 Unclaimed Accounts . Neither the Employer nor the Trustees shall be under any obligation to search for, or ascertain the whereabouts of, any Participant or Beneficiary. The Employer or the Trustees, by certified or registered mail addressed to his last known address of record with the Employer, shall notify any Participant or Beneficiary that he is entitled to a distribution under this Plan, and the notice shall quote the provisions of this Section. If the Participant or Beneficiary fails to claim his benefits or make his whereabouts known in writing to the Employer or the Trustees within seven (7) calendar years after the date of notification, the benefits of the Participant or Beneficiary under the Plan will be disposed of as follows:

(i) If the whereabouts of the Participant is unknown but the whereabouts of the Participant’s Beneficiary is known to the Trustees, distribution will be made to the Beneficiary.

(ii) If the whereabouts of the Participant and his Beneficiary are unknown to the Trustees, the Plan will forfeit the benefit, provided that the benefit is subject to a claim for reinstatement if the Participant or Beneficiary make a claim for the forfeited benefit.

Any payment made pursuant to the power herein conferred upon the Trustees shall operate as a complete discharge of all obligations of the Trustees, to the extent of the distributions so made.

14.12 Qualified Domestic Relations Order . Section 14.2 shall not apply to a “qualified domestic relations order” defined in Code Section 414(p), and such other domestic relations orders permitted to be so treated under the provisions of the Retirement Equity Act of 1984. Further, to the extent provided under a “qualified domestic relations order,” a former Spouse of a Participant shall be treated as the Spouse or surviving Spouse for all purposes under the Plan.

In the case of any domestic relations order received by the Plan:

(i) The Employer or the Committee shall promptly notify the Participant and any other alternate payee of the receipt of such order and the Plan’s procedures for determining the qualified status of domestic relations orders, and

(ii) Within a reasonable period after receipt of such order, the Employer or the Committee shall determine whether such order is a qualified domestic relations order and notify the Participant and each alternate payee of such determination. The Employer or the Committee shall establish reasonable procedures to determine the qualified status of domestic relations orders and to administer distributions under such qualified orders.

During any period in which the issue of whether a domestic relations order is a qualified domestic relations order is being determined (by the Employer or Committee, by a court of competent jurisdiction, or otherwise), the Employer or the Committee shall segregate in a separate account in the Plan or in an escrow account the amounts which would have been payable to the alternate payee during such period if the order had been determined to be a qualified domestic relations order. If within eighteen (18) months the order (or modification thereof) is determined to be a qualified domestic relations order, the Employer or the Committee shall pay the segregated amounts (plus any interest thereon) to the person or persons entitled thereto. If within eighteen (18) months it is determined that the order is not a qualified domestic relations order, or the issue as to whether such order is a qualified domestic relations order is not resolved, then the Employer or the Committee shall pay the segregated amounts (plus any interest thereon) to the person or persons who would have been entitled to such amounts if there had been no order. Any determination that an order is a qualified domestic relations order which is made after the close of the eighteen (18) month period shall be applied prospectively only. The term “alternate payee” means any Spouse, former Spouse, child or other dependent of a Participant who is recognized by a domestic relations order as having a right to receive all, or a portion of, the benefit payable under a Plan with respect to such Participant.

14.13 Use of Electronic Media to Provide Notices and Make Participant Elections . Pursuant to Treasury Regulations Section 1.401(a)-21, the Plan may elect to use electronic media to provide notices required to be provided to Participants under the Plan and will accept elections from Participants communicated to the Plan using such electronic media.

14.14 Acquisition of Securities . Notwithstanding any other provision of the Plan to the contrary, at no time shall the Plan be obligated to acquire securities from a particular security holder at an indefinite time determined upon the happening of an event such as the death of the security holder, pursuant to Treasury Regulations Section 54.4975-11(a)(7)(i).

Section 15.

Top-Heavy Provisions .

15.1 Top-Heavy Plan . This Plan is top-heavy if any of the following conditions exist:

(i) If the top-heavy ratio for this Plan exceeds sixty percent (60%) and this Plan is not part of any required aggregation group or permissive aggregation group;

(ii) If this Plan is a part of a required aggregation group (but is not part of a permissive aggregation group) and the aggregate top-heavy ratio for the group of Plans exceeds sixty percent (60%); or

(iii) If this Plan is a part of a required aggregation group and part of a permissive aggregation group and the aggregate top-heavy ratio for the permissive aggregation group exceeds sixty percent (60%).

15.2 Definitions . In making this determination, the Committee shall use the following definitions and principles:

15.2-1 The “Determination Date,” with respect to the first Plan Year of any plan, means the last day of that Plan Year, and with respect to each subsequent Plan Year, means the last day of the preceding Plan Year. If any other plan has a Determination Date which differs from this Plan’s Determination Date, the top-heaviness of this Plan shall be determined on the basis of the other plan’s Determination Date falling within the same calendar years as this Plan’s Determination Date.

15.2-2 A “Key Employee” means any employee or former employee (including any deceased employee) who at any time during the plan year that includes the determination date was an officer of the employer having annual compensation greater than $170,000 (as adjusted under section 416(i)(1) of the Code), a 5-percent owner of the employer, or a 1-percent owner of the employer having annual compensation of more than $150,000. For this purpose, annual compensation means compensation within the meaning of section 415(c)(3) of the Code. The determination of who is a key employee will be made in accordance with section 416(i)(1) of the Code and the applicable regulations and other guidance of general applicability issued thereunder.

15.2-3 A “Non-key Employee” means an Employee who at any time during the five years ending on the top-heavy Determination Date for the Plan Year has received compensation from an Employer and who has never been a Key Employee, and the Beneficiary of any such Employee.

15.2-4 A “required aggregation group” includes (a) each qualified Plan of the Employer in which at least one Key Employee participates in the Plan Year containing the Determination Date and (b) any other qualified Plan of the Employer which enables a Plan described in (a) to meet the requirements of Code Sections 401(a)(4) or 410. For purposes of the preceding sentence, a qualified Plan of the Employer includes a terminated Plan maintained by the Employer within the period ending on the Determination Date. In the case of a required aggregation group, each Plan in the group will be considered a top-heavy Plan if the required aggregation group is a top-heavy group. No Plan in the required aggregation group will be considered a top-heavy Plan if the required aggregation group is not a top-heavy group. All Employers aggregated under Code Sections 414(b), (c) or (m) or (o) (but only after the Code Section 414(o) regulations become effective) are considered a single Employer.

15.2-5 A “permissive aggregation group” includes the required aggregation group of Plans plus any other qualified Plan(s) of the Employer that are not required to be aggregated but which, when considered as a group with the required aggregation group, satisfy the requirements of Code Sections 401(a)(4) and 410 and are comparable to the Plans in the required aggregation group. No Plan in the permissive aggregation group

will be considered a top-heavy Plan if the permissive aggregation group is not a top-heavy group. Only a Plan that is part of the required aggregation group will be considered a top-heavy Plan if the permissive aggregation group is top-heavy.

15.3 Top-Heavy Rules of Application . For purposes of determining the value of Account balances and the present value of accrued benefits the following provisions shall apply:

15.3-1 The value of Account balances and the present value of accrued benefits will be determined as of the most recent Valuation Date that falls within or ends with the twelve (12) month period ending on the Determination Date.

15.3-2 For purposes of testing whether this Plan is top-heavy, the present value of an individual’s accrued benefits and an individual’s Account balances is counted only once each year.

15.3-3 The Account balances and accrued benefits of a Participant who is not presently a Key Employee but who was a Key Employee in a Plan Year beginning on or after January 1, 1984 will be disregarded.

15.3-4 Employer contributions attributable to a salary reduction or similar arrangement will be taken into account. Employer matching contributions also shall be taken into account for purposes of satisfying the minimum contribution requirements of Section 416(c)(2) of the Code and the Plan.

15.3-5 When aggregating Plans, the value of Account balances and accrued benefits will be calculated with reference to the Determination Dates that fall within the same calendar year.

15.3-6 The present values of accrued benefits and the amounts of account balances of an employee as of the determination date shall be increased by the distributions made with respect to the employee under the plan and any plan aggregated with the plan under Section 416(g)(2) of the Code during the 1-year period ending on the determination date. The preceding sentence shall also apply to distributions under a terminated plan which, had it not been terminated, would have been aggregated with the plan under Section 416(g)(2)(A)(i) of the Code. In the case of a distribution made for a reason other than severance from employment, death, or disability, this provision shall be applied by substituting “five (5) year period” for “one (1) year period.”

15.3-7 Accrued benefits and Account balances of an individual shall not be taken into account for purposes of determining the top-heavy ratios if the individual has performed no services for the Employer during the one (1) year period ending on the applicable Determination Date. Compensation for purposes of this subparagraph shall not include any payments made to an individual by the Employer pursuant to a qualified or non-qualified deferred compensation plan.

15.3-8 The present value of the accrued benefits or the amount of the Account balances of any Employee participating in this Plan shall not include any rollover contributions or other transfers voluntarily initiated by the Employee except as described

below. If this Plan transfers or rolls over funds to another Plan in a transaction voluntarily initiated by the Employee, then this Plan shall count the distribution for purposes of determining Account balances or the present value of accrued benefits. A transfer incident to a merger or consolidation of two or more Plans of the Employer (including Plans of related Employers treated as a single Employer under Code Section 414), or a transfer or rollover between Plans of the Employer, shall not be considered as voluntarily initiated by the Employee.

15.4 Minimum Contributions . For any Top-Heavy Year, each Employer shall make a special contribution on behalf of each Participant to the extent that the total allocations to his Account pursuant to Section 4 is less than the lesser of:

(i) three percent of his 415 Compensation for that year, or

(ii) the highest ratio of such allocation to 415 Compensation received by any Key Employee for that year. For purposes of the special contribution of this Section 15.2, a Key Employee’s 415 Compensation shall include amounts the Key Employee elected to defer under a qualified 401(k) arrangement. Such a special contribution shall be made on behalf of each Participant who is employed by an Employer on the last day of the Plan Year, regardless of the number of his Hours of Service, and shall be allocated to his Account.

If the Employer maintains a qualified plan in addition to this Plan and more than one such plan is determined to be Top-Heavy, a minimum contribution or a minimum benefit shall be provided in this Plan rather than in such other plan or plans.

15.5 Top-Heavy Provisions Control in Top-Heavy Plan . In the event this Plan becomes top-heavy and a conflict arises between the top-heavy provisions herein set forth and the remaining provisions set forth in this Plan, the top-heavy provisions shall control.

Exhibit 21

Subsidiaries of the Registrant


Name	Percent Ownership	State of Incorporation
Blue Hills Bank	100%	Massachusetts
HP Security Corporation*	100%	Massachusetts
1196 Corporation*	100%	Massachusetts

*	Subsidiary of Blue Hills Bank

Exhibit 23.2

LOGO

March 11, 2014

Board of Trustees

Hyde Park Bancorp, MHC

Boards of Directors

Hyde Park Bancorp, Inc.

Blue Hills Bancorp, Inc.

Blue Hills Bank

1196 River Street

Hyde Park, Massachusetts 02136

Members of the Board of Trustees and the Boards of Directors:

We hereby consent to the use of our firm’s name in the Form FR Y-3, and any amendments thereto, to be filed with the Federal Reserve Board, in the Application for Conversion, and any amendments thereto, to be filed with the Massachusetts Commissioner of Banks, and in the Registration Statement on Form S-1, and any amendments thereto, to be filed with the Securities and Exchange Commission. We also hereby consent to the inclusion of, summary of and references to our Valuation Appraisal Report and any Valuation Appraisal Report Updates and our statement concerning subscription rights in such filings including the prospectus of Blue Hills Bancorp, Inc. We also consent to the reference to our firm under the heading “Experts” in the prospectus.

Sincerely,

RP ^® FINANCIAL, LC.

LOGO


Washington Headquarters
Three Ballston Plaza				Telephone: (703) 528-1700
1100 North Glebe Road, Suite 600				Fax No.: (703) 528-1788
Arlington, VA 22201				Toll-Free No.: (866) 723-0594
www.rpfinancial.com				E-Mail: mail@rpfinancial.com

Exhibit 23.3

Consent of Independent Registered Public Accounting Firm

We consent to the use in this Registration Statement on Form S-1 (“Registration Statement”) filed with the Securities and Exchange Commission, of our report dated March 10, 2014 on the consolidated balance sheets of Hyde Park Bancorp, MHC as of December 31, 2013 and 2012, and the related consolidated statements of net income, comprehensive income, changes in equity, and cash flows for the years ended December 31, 2013, 2012 and 2011.

We also consent to the reference to our firm under the heading “Experts” in the Prospectus that is part of the Registration Statement.

/s/ Wolf & Company, P.C.

Boston, Massachusetts

March 10, 2014

Exhibit 99.1

LOGO

October 21, 2013

Mr. William M. Parent

President and Chief Executive Officer

Blue Hills Bank

A Subsidiary of Hyde Park Bancorp

1196 River Street

Hyde Park, MA 02136

Dear Mr. Parent:

This letter sets forth the agreement between Blue Hills Bank, Hyde Park, Massachusetts (the “Bank”), the wholly-owned subsidiary of Hyde Park Bancorp (the “Company”), which in turn is the subsidiary of Hyde Park Bancorp, MHC (the “MHC”), and RP ^® Financial, LC. (“RP Financial”), whereby RP Financial will provide the independent conversion appraisal services in conjunction with the conversion transaction by the Company. The scope, timing and fee structure for these appraisal services are described below.

These appraisal services will be directed by William E. Pommerening, Managing Director, along with the undersigned, with the assistance of a Director and a research associate.

Description of Appraisal Services

In conjunction with these appraisal services, RP Financial will conduct a financial due diligence, including on-site interviews of senior management and reviews of historical and pro forma financial information and other documents and records, to gain insight into the operations, financial condition, profitability, market area, risks and various internal and external factors of the Company, all of which will be considered in estimating the pro forma market value of the Company in accordance with the applicable regulatory appraisal guidelines. RP Financial will prepare a detailed written valuation report of the Company that will be fully consistent with applicable regulatory appraisal guidelines and standard pro forma valuation practices. The appraisal report will include an analysis of the Company’s financial condition and operating results, as well as an assessment of the Company’s interest rate risk, credit risk and liquidity risk. The appraisal report will incorporate an evaluation of the Company’s business strategies, market area, prospects for the future and the intended use of proceeds. A peer group analysis relative to certain relatively comparable publicly-traded banking companies will be conducted for the purpose of determining appropriate valuation adjustments for the Company relative to the peer group’s pricing ratios.

We will review pertinent sections of the Company’s prospectus and conduct discussions with representatives of the Company to obtain necessary data and information for the appraisal report, including key deal elements such as dividend policy, use of proceeds, reinvestment rate, tax rate, offering expenses, and characteristics of stock plans.


Washington Headquarters
Three Ballston Plaza				Direct: (703) 647-6546
1100 North Glebe Road, Suite 600				Telephone: (703) 528-1700
Arlington, VA 22201				Fax No.: (703) 528-1788
E-Mail: wpommerening@rpfinancial.com				Toll-Free No.: (866) 723-0594

Mr. William H. Parent

October 21, 2013

Page 2

The original appraisal report will establish a midpoint pro forma market value in accordance with the applicable regulatory requirements. The appraisal report may be periodically updated throughout the conversion process, and there will be at least one updated appraisal that would be prepared at the time of the closing of the stock offering to determine the number of shares to be issued in accordance with the conversion regulations. In the event of a syndicated community offering, it will be necessary to file an update in conjunction with the close of the subscription offering and prior to the pricing phase in the syndicated community offering.

RP Financial agrees to deliver the original appraisal report and subsequent updates, in writing, to the Company at the above address in conjunction with the filing of the regulatory conversion applications and amendments thereto. Subsequent updates will be filed promptly as certain events occur which would warrant the preparation and filing of such appraisal updates pursuant to regulatory guidelines. Further, RP Financial agrees to perform such other services as are necessary or required in connection with the regulatory review of the appraisal and respond to the regulatory comments, if any, regarding the valuation original appraisal and subsequent updates.

In the event of a syndicated community offering phase, RP Financial will participate in the various all hands calls regarding the offering results, pricing discussions and timing.

RP Financial expects to formally present the appraisal report, including the appraisal methodology, peer group selection and assumptions, to the Board of Directors for review and consideration. If appropriate, RP Financial will present subsequent updates to the Board. It is understood that this appraisal may be presented either in person or telephonically.

Fee Structure and Payment Schedule

The Company agrees to pay RP Financial fees for preparation and delivery of the original appraisal report and subsequent appraisal updates as shown in the detail below, plus reimbursable expenses. Payment of these fees shall be made according to the following schedule:

•

$15,000 upon execution of this letter of agreement engaging RP Financial’s appraisal services;

•

$100,000 upon delivery of the completed original appraisal report; and

•

$10,000 upon delivery of each subsequent appraisal update report required in conjunction with the regulatory application and stock offering. It is anticipated that there will be at least one appraisal update report, specifically the update to be prepared in conjunction with the completion of the stock offering.

The Company will reimburse RP Financial for reasonable out-of-pocket expenses incurred in preparation of the original appraisal and subsequent updates. Such out-of-pocket expenses will likely include travel, printing, telephone, facsimile, shipping, reasonable counsel fees, computer and data services, and will not exceed $10,000 in the aggregate, without the Company’s authorization to exceed this level.

Mr. William H. Parent

October 21, 2013

Page 3

In the event the Company shall, for any reason, discontinue the proposed transaction prior to delivery of the completed original appraisal report or subsequent updates and payment of the corresponding fees, the Company agrees to compensate RP Financial according to RP Financial’s standard billing rates for consulting services based on accumulated and verifiable time expenses, not to exceed the respective fee caps noted above, after applying full credit to the initial retainer fee towards such payment, together with reasonable out-of-pocket expenses, subject to the cap on such expenses as set forth above. RP Financial’s standard billing rates range from $75 per hour for research associates to $450 per hour for managing directors.

If during the course of the proposed transaction, unforeseen events occur so as to materially change the nature or the work content of the services described in this contract, the terms of said contract shall be subject to renegotiation by the Company and RP Financial. Such unforeseen events shall include, but not be limited to, material changes to the structure of the transaction such as inclusion of a simultaneous business combination transaction, material changes in the conversion regulations, appraisal guidelines or processing procedures as they relate to conversion appraisals, material changes in management or procedures, operating policies or philosophies, and excessive delays or suspension of processing of conversion applications by the regulators such that completion of the conversion transaction requires the preparation by RP Financial of a new appraisal.

Covenants, Representations and Warranties

The Company and RP Financial agree to the following:

1. The Company agrees to make available or to supply to RP Financial such information with respect to its business and financial condition as RP Financial may reasonably request in order to provide the aforesaid valuation. Such information heretofore or hereafter supplied or made available to RP Financial shall include: annual financial statements, periodic regulatory filings and material agreements, debt instruments, off balance sheet assets or liabilities, commitments and contingencies, unrealized gains or losses and corporate books and records. All information provided by the Company to RP Financial shall remain strictly confidential (unless such information is otherwise made available to the public), and if the conversion is not consummated or the services of RP Financial are terminated hereunder, RP Financial shall promptly return to the Company the original and any copies of such information.

2. The Company represents and warrants to RP Financial that any information provided to RP Financial does not and will not, to the best of the Company’s knowledge, at the times it is provided to RP Financial, contain any untrue statement of a material fact or in response to informational requests by RP Financial fail to state a material fact necessary to make the statements therein not false or misleading in light of the circumstances under which they were made.

3. (a) The Company agrees that it will indemnify and hold harmless RP Financial, any affiliates of RP Financial, the respective members, officers, agents and employees of RP

Mr. William H. Parent

October 21, 2013

Page 4

Financial or their successors and assigns who act for or on behalf of RP Financial in connection with the services called for under this agreement (hereinafter referred to as “RP Financial”), from and against any and all losses, claims, damages and liabilities (including, but not limited to, reasonable attorneys fees, and all losses and expenses in connection with claims under the federal securities laws) attributable to (i) any untrue statement or alleged untrue statement of a material fact contained in the financial statements or other information furnished or otherwise provided by the Company to RP Financial, either orally or in writing; (ii) the omission or alleged omission of a material fact from the financial statements or other information furnished or otherwise made available by the Company to RP Financial; or (iii) any action or omission to act by the Company, or the Company’s respective officers, directors, employees or agents, which action or omission is undertaken in bad faith or is negligent. The Company will be under no obligation to indemnify RP Financial hereunder if a court determines that RP Financial was negligent or acted in bad faith with respect to any actions or omissions of RP Financial related to a matter for which indemnification is sought hereunder. Reasonable time devoted by RP Financial to situations for which RP Financial is deemed entitled to indemnification hereunder, shall be an indemnifiable cost payable by the Company at the normal hourly professional rate chargeable by such employee.

(b) RP Financial shall give written notice to the Company of such claim or facts within thirty days of the assertion of any claim or discovery of material facts upon which RP Financial intends to base a claim for indemnification hereunder, including the name of counsel that RP Financial intends to engage in connection with any indemnification related matter. In the event the Company elects, within seven days of the receipt of the original notice thereof, to contest such claim by written notice to RP Financial, the Company shall not be obligated to make payments under Section 3(c), but RP Financial will be entitled to be paid any amounts payable by the Company hereunder within five days after the final non-appealable determination of such contest either by written acknowledgement of the Company or a decision of a court of competent jurisdiction or alternative adjudication forum, unless it is determined in accordance with Section 3(c) hereof that RP Financial is not entitled to indemnity hereunder. If the Company does not so elect to contest a claim for indemnification by RP Financial hereunder, RP Financial shall (subject to the Company’s receipt of the written statement and undertaking under Section 3(c) hereof) be paid promptly and in any event within thirty days after receipt by the Company of detailed billing statements or invoices for which RP Financial is entitled to reimbursement under Section 3(c) hereof.

(c) Subject to the Company’s right to contest under Section 3(b) hereof, the Company shall pay for or reimburse the reasonable expenses, including reasonable attorneys’ fees, incurred by RP Financial in advance of the final disposition of any proceeding within thirty days of the receipt of such request if RP Financial furnishes the Company: (1) a written statement of RP Financial’s good faith belief that it is entitled to indemnification hereunder; (2) a written undertaking to repay the advance if it ultimately is determined in a final, non-appealable adjudication of such proceeding that it or he is not entitled to such indemnification; and (3) a detailed invoice of the expenses for which reimbursement is sought.

(d) In the event the Company does not pay any indemnified loss or make advance reimbursements of expenses in accordance with the terms of this agreement, RP Financial shall have all remedies available at law or in equity to enforce such obligation.

Mr. William H. Parent

October 21, 2013

Page 5

This agreement constitutes the entire understanding of the Company and RP Financial concerning the subject matter addressed herein, and such contract shall be governed and construed in accordance with the Commonwealth of Massachusetts. This agreement may not be modified, supplemented or amended except by written agreement executed by both parties.

The Company and RP Financial are not affiliated, and neither the Company nor RP Financial has an economic interest in, or is held in common with, the other and has not derived a significant portion of its gross revenues, receipts or net income for any period from transactions with the other. RP Financial represents and warrants that it is not aware of any fact or circumstance that would cause it not to be “independent” within the meaning of the conversion regulations of the federal banking agencies or otherwise prohibit or restrict in anyway RP Financial from serving in the role of independent appraiser for the Company.

* * * * * * * * * * *

Please acknowledge your agreement to the foregoing by signing as indicated below and returning to RP Financial a signed copy of this letter, together with the initial retainer fee of $15,000.

Sincerely,

LOGO

William E. Pommerening

Chief Executive Officer and Managing Director


Agreed To and Accepted By:		/s/ William M. Parent
		President and Chief Executive Officer


Upon Authorization by the Board of Directors For:		Blue Hills Bank
		A subsidiary of Hyde Park Bancorp
		Hyde Park, Massachusetts


Date Executed:		10/24/13

Exhibit 99.2

LOGO

March 11, 2014

Board of Trustees

Hyde Park Bancorp, MHC

Boards of Directors

Hyde Park Bancorp, Inc.

Blue Hills Bancorp, Inc.

Blue Hills Bank

1196 River Street

Hyde Park, Massachusetts 02136

Re:	Plan of Conversion

Hyde

Park Bancorp, MHC

Members of the Board of Trustees and the Boards of Directors:

All capitalized terms not otherwise defined in this letter have the meanings given such terms in the Plan of Conversion (the “Plan”) adopted by the Board of Trustees of Hyde Park Bancorp, MHC (the “MHC”). The Plan provides for the conversion of the MHC into the capital stock form of organization. Pursuant to the Plan, a new Maryland stock holding company named Blue Hills Bancorp, Inc. (the “Company”) will be organized and will sell shares of common stock in a public offering. When the conversion is completed, all of the capital stock of Blue Hills Bank will be owned by the Company and all of the common stock of the Company will be owned by public stockholders.

We understand that in accordance with the Plan, subscription rights to purchase shares of common stock in the Company are to be issued to: (1) Eligible Account Holders; (2) Tax-Qualified Plans including Blue Hills Bank’s employee stock ownership plan (the “ESOP”); and (3) Employees, Officers, Directors, Trustees and Corporators. Based solely upon our observation that the subscription rights will be available to such parties without cost, will be legally non-transferable and of short duration, and will afford such parties the right only to purchase shares of common stock at the same price as will be paid by members of the general public in the community offering, syndicated community offering or firm commitment underwritten offering but without undertaking any independent investigation of state or federal law or the position of the Internal Revenue Service with respect to this issue, we are of the belief that, as a factual matter:

(1)

the subscription rights will have no ascertainable market value; and,

(2)

the price at which the subscription rights are exercisable will not be more or less than the pro forma market value of the shares upon issuance.

Changes in the local and national economy, the legislative and regulatory environment, the stock market, interest rates, and other external forces (such as natural disasters or significant world events) may occur from time to time, often with great unpredictability and may materially impact the value of thrift stocks as a whole or the Company’s value alone. Accordingly, no assurance can be given that persons who subscribe to shares of common stock in the subscription offering will thereafter be able to buy or sell such shares at the same price paid in the subscription offering.

Sincerely,

RP Financial, LC.


Washington Headquarters
Three Ballston Plaza				Telephone: (703) 528-1700
1100 North Glebe Road, Suite 600				Fax No.: (703) 528-1788
Arlington, VA 22201				Toll-Free No.: (866) 723-0594
www.rpfinancial.com				E-Mail: mail@rpfinancial.com

PRO FORMA VALUATION REPORT

STANDARD CONVERSION

Blue Hills Bancorp, Inc. | Hyde Park, Massachusetts

PROPOSED HOLDING COMPANY FOR:

Blue Hills Bank | Hyde Park, Massachusetts

Dated as of February 14, 2014

LOGO

1100 North Glebe Road Suite 600

Arlington, Virginia 22201

703.528.1700

rpfinancial.com

Exhibit 99.3

LOGO

February 14, 2014

Board of Trustees

Hyde Park Bancorp, MHC

Boards of Directors

Hyde Park Bancorp, Inc.

Blue Hills Bancorp, Inc.

Blue Hills Bank

1196 River Street

Hyde Park, Massachusetts 02136

Members of the Boards of Trustees and Directors:

At your request, we have completed and hereby provide an independent appraisal (“Appraisal”) of the estimated pro forma market value of the common stock which is to be issued in connection with the mutual-to-stock conversion transaction described below.

This Appraisal is furnished pursuant to the requirements stipulated in the Code of Federal Regulations and has been prepared in accordance with the “Guidelines for Appraisal Reports for the Valuation of Savings and Loan Associations Converting from Mutual to Stock Form of Organization” (the “Valuation Guidelines”) of the Office of Thrift Supervision (“OTS”) and accepted by the Federal Reserve Board (“FRB”), the Office of the Comptroller of the Currency (“OCC”), the Federal Deposit Insurance Corporation (“FDIC”) and the Massachusetts Commissioner of Banks (the “Commissioner”), and applicable regulatory interpretations thereof.

Description of Plan of Conversion

On March 6, 2014, the Board of Trustees of Hyde Park Bancorp, MHC, (the “MHC”), a mutual holding company that owns all of the outstanding shares of common stock of Hyde Park Bancorp, Inc., a Massachusetts corporation (“Hyde Park”), adopted the plan of conversion whereby the MHC will convert to stock form. As a result of the conversion, Hyde Park, which currently owns all of the issued and outstanding common stock of Blue Hills Bank, Hyde Park, Massachusetts (“Blues Hills Bank” or the “Bank”) will be succeeded by a Maryland corporation with the name of Blue Hills Bancorp, Inc. (“Blue Hills Bancorp” or the “Company”). Following the conversion, the MHC will no longer exist. For purposes of this document, the existing consolidated entity will hereinafter be referred to as Blue Hills Bancorp or the Company.

Blue Hills Bancorp will offer its common stock in a subscription offering to Eligible Account Holders, Tax-Qualified Employee Stock Benefit Plans including Blue Hills Bank’s employee stock ownership plan (the “ESOP”) and Employees, Officers Directors, Trustees and Corporators, as such terms are defined in the Company’s prospectus for purposes of applicable federal regulatory guidelines governing mutual-to-stock conversions. To the extent shares remain available for purchase after satisfaction of all subscriptions received in the


Washington Headquarters
Three Ballston Plaza		Telephone: (703) 528-1700
1100 North Glebe Road, Suite 600		Fax No.: (703) 528-1788
Arlington, VA 22201		Toll-Free No.: (866) 723-0594
www.rpfinancial.com		E-Mail: mail@rpfinancial.com

Board of Trustees

Boards of Directors

February 14, 2014

Page 2

in the subscription offering, the shares may be offered for sale to members of the general public in a community offering and/or a syndicated or firm commitment underwritten offering. A portion of the net proceeds received from the sale of the common stock will be used to purchase all of the then to be issued and outstanding capital stock of Blue Hills Bank and the balance of the net proceeds will be retained by the Company.

At this time, no other activities are contemplated for the Company other than the ownership of the Bank, a loan to the newly-formed ESOP and reinvestment of the proceeds that are retained by the Company. In the future, Blue Hills Bancorp may acquire or organize other operating subsidiaries, diversify into other banking-related activities, pay dividends or repurchase its stock, although there are no specific plans to undertake such activities at the present time.

The plan of conversion provides for the establishment of a new charitable foundation (the “Foundation”). The Foundation contribution will total $7.0 million and will be funded with Blue Hills Bancorp common stock contributed by the Company in an amount equal to 2.5% of the shares of common stock sold in the offering and the remainder in cash. The purpose of the Foundation is to provide financial support to charitable organizations in the communities in which Blue Hills Bank operates and to enable those communities to share in the Bank’s long-term growth. The Foundation will be dedicated completely to community activities and the promotion of charitable causes.

RP ^® Financial, LC.

RP ^® Financial, LC. (“RP Financial”) is a financial consulting firm serving the financial services industry nationwide that, among other things, specializes in financial valuations and analyses of business enterprises and securities, including the pro forma valuation for savings institutions converting from mutual-to-stock form. The background and experience of RP Financial is detailed in Exhibit V-1. We believe that, except for the fee we will receive for the Appraisal, we are independent of the Company, the Bank, the MHC and the other parties engaged by the Bank or the Company to assist in the stock conversion process.

Valuation Methodology

In preparing our Appraisal, we have reviewed the regulatory applications of the Company, the Bank and the MHC, including the prospectus as filed with the FRB, the FDIC, the Commissioner and the Securities and Exchange Commission (“SEC”). We have conducted a financial analysis of the Company, the Bank and the MHC that has included a review of audited financial information for the years ended December 31, 2009 through December 31, 2013 and a review of various unaudited information and internal financial reports through December 31, 2013, and due diligence related discussions with the Company’s management; Wolf & Company, P.C., the Company’s independent auditor; Luse Gorman Pomerenk & Schick, P.C. the Company’s conversion counsel and Keefe Bruyette & Woods, Inc., the Company’s marketing advisor in connection with the stock offering. All assumptions and conclusions set forth in the Appraisal were reached independently from such discussions. In addition, where appropriate, we have considered information based on other available published sources that we believe are reliable. While we believe the information and data gathered from all these sources are reliable, we cannot guarantee the accuracy and completeness of such information.

Board of Trustees

Boards of Directors

February 14, 2014

Page 3

We have investigated the competitive environment within which Blue Hills Bancorp operates and have assessed Blue Hills Bancorp’s relative strengths and weaknesses. We have kept abreast of the changing regulatory and legislative environment for financial institutions and analyzed the potential impact on Blue Hills Bancorp and the industry as a whole. We have analyzed the potential effects of the stock conversion on Blue Hills Bancorp’s operating characteristics and financial performance as they relate to the pro forma market value of Blue Hills Bancorp. We have reviewed the economic and demographic characteristics of the Company’s primary market area. We have compared Blue Hills Bancorp’s financial performance and condition with selected publicly-traded thrifts in accordance with the Valuation Guidelines, as well as all publicly-traded thrifts and thrift holding companies. We have reviewed the current conditions in the securities markets in general and the market for thrift stocks in particular, including the market for existing thrift issues and initial public offerings by thrifts and thrift holding companies. We have excluded from such analyses thrifts subject to announced or rumored acquisition, and/or institutions that exhibit other unusual characteristics.

The Appraisal is based on Blue Hills Bancorp’s representation that the information contained in the regulatory applications and additional information furnished to us by Blue Bancorp and its independent auditor, legal counsel and other authorized agents are truthful, accurate and complete. We did not independently verify the financial statements and other information provided by Blue Hills Bancorp, or its independent auditor, legal counsel and other authorized agents nor did we independently value the assets or liabilities of Blue Hills Bancorp. The valuation considers Blue Hills Bancorp only as a going concern and should not be considered as an indication of Blue Hills Bancorp’s liquidation value.

Our appraised value is predicated on a continuation of the current operating environment for Blue Hills Bancorp and for all thrifts and their holding companies. Changes in the local, state and national economy, the legislative and regulatory environment for financial institutions and mutual holding companies, the stock market, interest rates, and other external forces (such as natural disasters or significant world events) may occur from time to time, often with great unpredictability and may materially impact the value of thrift stocks as a whole or the value of Blue Hills Bancorp’s stock alone. It is our understanding that there are no current plans for selling control of Blue Hills Bancorp following completion of the conversion. To the extent that such factors can be foreseen, they have been factored into our analysis.

The estimated pro forma market value is defined as the price at which Blue Hills Bancorp’s common stock, immediately upon completion of the stock offering, would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts.

Board of Trustees

Boards of Directors

February 14, 2014

Page 4

Valuation Conclusion

It is our opinion that, as of February 14, 2014, the estimated aggregate pro forma market value of the shares to be issued immediately following the conversion, including shares to be issued to the Foundation, equaled $215,250,000 at the midpoint, equal to 21,525,000 shares offered at a per share value of $10.00. Pursuant to conversion guidelines, the 15% valuation range indicates a minimum value of $182,962,500 and a maximum value of $247,537,500. Based on the $10.00 per share offering price determined by the Board, this valuation range equates to total shares outstanding of 18,296,250 at the minimum and 24,753,750 at the maximum. In the event the appraised value is subject to an increase, the aggregate pro forma market value may be increased up to a super maximum value of $284,668,130 without a resolicitation. Based on the $10.00 per share offering price, the super maximum value would result in total shares outstanding of 28,466,813. Based on this valuation range, the offering range is as follows: $178,500,000 at the minimum, $210,000,000 at the midpoint, $241,500,000 at the maximum and $277,725,000 at the super maximum. Based on the $10.00 per share offering price, the number of offering shares is as follows: 17,850,000 at the minimum, 21,000,000 at the midpoint, 24,150,500 at the maximum and 27,722,500 at the super maximum.

Limiting Factors and Considerations

The valuation is not intended, and must not be construed, as a recommendation of any kind as to the advisability of purchasing shares of the common stock. Moreover, because such valuation is determined in accordance with applicable regulatory guidelines and is necessarily based upon estimates and projections of a number of matters, all of which are subject to change from time to time, no assurance can be given that persons who purchase shares of common stock in the conversion offering will thereafter be able to buy or sell such shares at prices related to the foregoing valuation of the estimated pro forma market value thereof. The appraisal reflects only a valuation range as of this date for the pro forma market value of Blue Hills Bancorp immediately upon issuance of the stock and does not take into account any trading activity with respect to the purchase and sale of common stock in the secondary market on the date of issuance of such securities or at anytime thereafter following the completion of the stock offering.

RP Financial’s valuation was based on the financial condition, operations and shares outstanding of Blue Hills Bancorp as of December 31, 2013, the date of the financial data included in the prospectus.

RP Financial is not a seller of securities within the meaning of any federal and state securities laws and any report prepared by RP Financial shall not be used as an offer or solicitation with respect to the purchase or sale of any securities. RP Financial maintains a policy which prohibits RP Financial, its principals or employees from purchasing stock of its client institutions.

This valuation will be updated as provided for in the conversion regulations and guidelines. These updates will consider, among other things, any developments or changes in the financial performance and condition of Blue Hills Bancorp, management policies, and current conditions in the equity markets for thrift shares, both existing issues and new issues. These updates may also consider changes in other external factors which impact value including, but not limited to: various changes in the legislative and regulatory environment for

Board of Trustees

Boards of Directors

February 14, 2014

Page 5

financial institutions, the stock market and the market for thrift stocks, and interest rates. Should any such new developments or changes be material, in our opinion, to the valuation of the shares, appropriate adjustments to the estimated pro forma market value will be made. The reasons for any such adjustments will be explained in the update at the date of the release of the update. The valuation will also be updated at the completion of Blue Hills Bancorp’s stock offering.

Respectfully submitted,

RP ^® FINANCIAL, LC.

President and Managing Director

Gregory E. Dunn

Director


*RP ^® Financial, LC.*		*TABLE OF CONTENTS*
		i

TABLE OF CONTENTS

BLUE HILLS BANCORP, INC.

BLUE HILLS SAVINGS BANK

Hyde Park, Massachusetts


DESCRIPTION		PAGE NUMBER

CHAPTER ONE	OVERVIEW AND FINANCIAL ANALYSIS

Introduction			I.1
Plan of Conversion			I.1
Strategic Overview			I.2
Balance Sheet Trends			I.7
Pro Forma Balance Sheet Impact of Nantucket Bank Acquisition			1.9
Income and Expense Trends			I.10
Interest Rate Risk Management			I.13
Lending Activities and Strategy			I.14
Asset Quality			I.17
Funding Composition and Strategy			I.18
Subsidiary Activity			1.19
Legal Proceedings			I.19

CHAPTER TWO	MARKET AREA

Introduction			II.1
National Economic Factors			II.1
Market Area Demographics			II.4
Regional Economy			II.7
Unemployment Trends			II.8
Market Area Deposit Characteristics and Competition			II.9

CHAPTER THREE	PEER GROUP ANALYSIS

Peer Group Selection			III.1
Financial Condition			III.5
Income and Expense Components			III.8
Loan Composition			III.11
Interest Rate Risk			III.13
Credit Risk			III.13
Summary			III.16


*RP ^® Financial, LC.*		*TABLE OF CONTENTS*
		ii

TABLE OF CONTENTS

BLUE HILLS BANCORP, INC.

BLUE HILLS SAVINGS BANK

Hyde Park, Massachusetts

(continued)


DESCRIPTION		PAGE NUMBER

CHAPTER FOUR	VALUATION ANALYSIS

Introduction			IV.1
Appraisal Guidelines			IV.1
RP Financial Approach to the Valuation			IV.1
Valuation Analysis			IV.2
1. Financial Condition			IV.2
2. Profitability, Growth and Viability of Earnings			IV.4
3. Asset Growth			IV.6
4. Primary Market Area			IV.6
5. Dividends			IV.8
6. Liquidity of the Shares			IV.8
7. Marketing of the Issue			IV.9
A. The Public Market			IV.9
B. The New Issue Market			IV.13
C. The Acquisition Market			IV.13
8. Management			IV.16
9. Effect of Government Regulation and Regulatory Reform			IV.17
Summary of Adjustments			IV.17
Valuation Approaches:			IV.17
1. Price-to-Earnings (“P/E”)			IV.19
2. Price-to-Book (“P/B”)			IV.21
3. Price-to-Assets (“P/A”)			IV.21
Comparison to Recent Offerings			IV.22
Valuation Conclusion			IV.22


*RP ^® Financial, LC.*		*LIST OF TABLES*
		*iii*

LIST OF TABLES

BLUE HILLS BANCORP, INC.

BLUE HILLS SAVINGS BANK

Hyde Park, Massachusetts


TABLE NUMBER	DESCRIPTION	PAGE

1.1	Historical Balance Sheet Data		I.6
1.2	Historical Income Statements		I.11

2.1	Summary Demographic Data		II.6
2.2	Primary Market Area Employment Sectors		II.7
2.3	Market Area Largest Employers		II.8
2.4	Unemployment Trends		II.9
2.5	Deposit Summary		II.10
2.6	Market Area Deposit Competitors		II.11

3.1	Peer Group of Publicly-Traded Thrifts		III.3
3.2	Balance Sheet Composition and Growth Rates		III.6
3.3	Income as a Pct. of Avg. Assets and Yields, Costs, Spreads		III.9
3.4	Loan Portfolio Composition and Related Information		III.12
3.5	Interest Rate Risk Measures and Net Interest Income Volatility		III.14
3.6	Credit Risk Measures and Related Information		III.15

4.1	Market Area Unemployment Rates		IV.7
4.2	Pricing Characteristics and After-Market Trends		IV.14
4.3	Market Pricing Comparatives		IV.15
4.4	Public Market Pricing		IV.20


*RP ^® Financial, LC.*		*OVERVIEW AND FINANCIAL ANALYSIS*
		*I.1*

I. OVERVIEW AND FINANCIAL ANALYSIS

Introduction

Blue Hills Bank (“Blue Hills” or the “Bank”), chartered in 1871, is a Massachusetts chartered stock savings bank headquartered in Hyde Park, Massachusetts. In 2008, Blue Hills reorganized into the mutual holding company structure, forming Hyde Park Bancorp, MHC, a Massachusetts mutual holding company (the “MHC”). The MHC owns 100% of the outstanding common stock of Hyde Park Bancorp, Inc., a Massachusetts corporation (“Hyde Park”). Blue Hills is the wholly owned subsidiary of Bancorp. Blue Hills serves the Boston metropolitan area and Nantucket Island through the main office, eight full service branch offices and an operations center. A map of Blue Hills’ office locations is provided in Exhibit I-1. Blue Hills is a member of the Federal Home Loan Bank (“FHLB”) system and its deposits are insured up to the maximum allowable amount by the Federal Deposit Insurance Corporation (“FDIC”). As of December 31, 2013, the MHC had consolidated total assets of $1.314 billion, total deposits of $915.2 million and total equity of $171.5 million equal to 13.1% of total assets. The MHC’s audited financial statements are included by reference as Exhibit I-2.

Plan of Conversion

On March 6, 2014, the Board of Trustees of the MHC adopted the plan of conversion, whereby the MHC will convert to stock form. As a result of the conversion, Hyde Park, which currently owns all of the issued and outstanding common stock of Blue Hills will be succeeded by a Maryland corporation with the name of Blue Hills Bancorp, Inc., a newly formed Maryland stock holding company (“Blue Hills Bancorp” or the “Company”). Following the conversion, the MHC will no longer exist. For purposes of this document, the existing consolidated entity will hereinafter also be referred to as Blue Hills Bancorp or the Company.

Blue Hills Bancorp will offer its common stock in a subscription offering to Eligible Account Holders, Tax-Qualified Plans including Blue Hills’ employee stock ownership plan (the “ESOP”) and Employees, Officers, Directors, Trustees and Corporators, as such terms are defined in the Company’s prospectus for purposes of applicable federal regulatory guidelines governing mutual-to-stock conversions. To the extent that shares remain available for purchase after satisfaction of all subscriptions received in the subscription offering, the shares may be


*RP ^® Financial, LC.*		*OVERVIEW AND FINANCIAL ANALYSIS*
		*I.2*

offered for sale to members of the general public in a community offering and/or a syndicated or firm commitment underwritten offering. A portion of the net proceeds received from the sale of the common stock will be used to purchase all of the then to be issued and outstanding capital stock of Blue Hills Bank and the balance of the net proceeds will be retained by the Company.

As of December 31, 2013, the Company held unconsolidated cash and cash equivalents of $30.0 million and preferred stock equity of $18.7 million. At this time, following the conversion no other activities are contemplated for the Company other than the ownership of the Bank, funding a loan to the newly-formed ESOP and reinvestment of the proceeds that are retained by the Company. In the future, Blue Hills Bancorp may acquire or organize other operating subsidiaries, diversify into other banking-related activities, pay dividends or repurchase its stock, although there are no specific plans to undertake such activities at the present time.

Strategic Overview

Blue Hills Park Bancorp maintains a local community banking emphasis, with a primary strategic objective of meeting the borrowing and savings needs of its local customer base. Historically, Blue Hills Bancorp’s operating strategy was to maintain a relatively high concentration of assets in low risk investments, such as government-sponsored obligations and mortgage-backed securities issued by government-sponsored enterprises (“GSEs”) and emphasize origination of 1-4 family permanent mortgage loans. Funding has been largely generated through retail deposits. In 2011, the Company embarked on a new strategic direction designed to build a full service community banking franchise. To facilitate implementation of new strategic initiatives, the Company added senior management infrastructure including the appointment of a new President and Chief Executive Officer in July 2010. In connection with


*RP ^® Financial, LC.*		*OVERVIEW AND FINANCIAL ANALYSIS*
		*I.3*

the implementation of a full service community banking strategy, the Company introduced its new banking brand with the name change of the Bank from Hyde Park Savings Bank to Blue Hills Bank. Pursuant to implementation of new strategic initiatives, the Company invested in infrastructure, personnel and platforms. These investments included adding a team of commercial lenders experienced in building full service commercial banking relationships in the local market, completing the renovation of all branch offices and signage to reflect the new Blue Hills Bank brand, enhancing consumer online platform and technology infrastructure and introduction of new deposit products. In 2012 and 2013, the Company started to realize some leveraging of its strategic investments as evidenced by acceleration of loan and deposit growth over the past two years. Growth strategies are emphasizing increased lending diversification that is primarily targeting growth of commercial real estate and commercial business loans and, to a lesser extent, growth of residential and consumer loans. The Company’s objective is to fund asset growth primarily through deposit growth, emphasizing growth of lower cost core deposits. Core deposit growth is expected to be in part facilitated by growth of commercial lending relationships, pursuant to which the Company is seeking to establish a full service banking relationship with its commercial loan customers through offering a full range of commercial loan products that can be packaged with lower cost commercial deposit products.

In January 2014, the Company supplemented organic growth with the acquisition of Nantucket Bank, which operated as a division of Sovereign Bank, N.A. With the acquisition of Nantucket Bank, the Company added three branches on the island of Nantucket and approximately $275 million in assets and deposits. Nantucket Bank will continue to operate under its own name as a division of Blue Hills Bank. Further expansion of the Company’s branch network is planned over the next two years, with the addition of de novo branches in East Milton Square in 2014 and in University Station in Westwood, Massachusetts in 2015.

Investments serve as a supplement to the Company’s lending activities and the investment portfolio is considered to be largely indicative of a low risk investment philosophy. U.S. Treasuries, GSE obligations and mortgage-backed securities issued by GSEs constitute more than half of the investment portfolio, with the balance of investment consisting of private label mortgage- and asset-backed securities, municipal bonds, corporate bonds, marketable equity securities and FHLB stock. In 2012, the Company also maintained a portfolio of trading securities consisting of U.S. Government and agency securities and to be announced mortgage-backed securities. At December 31, 2013, the Company held a nominal balance of U.S. Government and agency securities as trading securities. In connection with the Company’s


*RP ^® Financial, LC.*		*OVERVIEW AND FINANCIAL ANALYSIS*
		*I.4*

investment in to be announced mortgage-backed securities, the Company maintained a related due to broker asset balance and related securities sold short and due to broker liability positions. The Company’s current investment philosophy is to no longer invest in to be announced mortgage-backed securities.

Deposits have consistently served as the primary interest-bearing funding source for the Company and have funded the Company’s recent asset growth along with increased utilization of borrowings, as well as the pay down of borrowings in recent years. Core deposits, consisting of transaction and savings account deposits, constitute the largest portion of the Company’s deposit base. The Company utilizes borrowings as a supplemental funding source to facilitate management of funding costs and interest rate risk. Borrowings utilized the Company consist primarily of short- and long-term FHLB advances.

Blue Hills Bancorp’s earnings base is largely dependent upon net interest income and operating expense levels. In recent years, the Company’s net interest margin has trended lower as interest rate spreads have narrowed in which the prolonged low interest rate environment has resulted in yields earned on interest-earnings assets declining more relative to funding costs paid on interest-bearing liabilities. Operating expense ratios have trended higher over the past few years, which have been mostly related to investments made in infrastructure that has been put into place to facilitate implementation of the Company’s strategic plan. Historically, non-interest operating income has been a limited contributor to earnings, reflecting the Company’s traditional thrift operating strategy that has provided for only a modest earnings contribution from fee-based products and services and the high concentration of assets maintained in investments. Growth of non-operating income is a strategic initiative for the Company, pursuant to which the Company is seeking to build full service banking relationships with its retail and commercial customers that will generate increased revenues derived from fee-based products and services. Gains on sales of securities have been a fairly significant contributor to the Company’s earnings in recent years.

The post-offering business plan of the Company is expected to continue to focus on implementing strategic initiatives to develop and grow a full service community banking franchise. Accordingly, Blue Hills Bancorp will continue to be an independent full service community bank, with a commitment to meeting the retail and commercial banking needs of individuals and businesses in the Boston metropolitan area and nearby regional markets in eastern Massachusetts, including the island of Nantucket.


*RP ^® Financial, LC.*		*OVERVIEW AND FINANCIAL ANALYSIS*
		*I.5*

The Company’s Board of Directors has elected to complete a public stock offering to sustain recent growth strategies and facilitate implementation of its strategic plan. The capital realized from the stock offering will increase the Company’s operating flexibility and allow for continued growth of the balance sheet. The additional funds realized from the stock offering will provide an alternative funding source to deposits and borrowings in meeting the Company’s future funding needs, which may facilitate a reduction in Blue Hills Bancorp’s funding costs. Additionally, Blue Hills Bancorp’s higher equity-to-assets ratio will enable to the Company to redeem higher costing preferred stock and to pursue expansion opportunities. Such expansion would most likely occur through the establishment or acquisition of additional banking offices or customer facilities that would increase market penetration in the markets currently served by the Company or to gain a market presence into nearby complementary markets. The Company will also be bettered position to pursue growth through acquisition of other financial service providers following the stock offering, given its strengthened capital position and ability to offer stock as consideration. At this time, other than the planned opening of two de novo branches over the next two years, the Company has no specific plans for expansion, but will continue to evaluate branch expansion as such opportunities arise. The projected uses of proceeds are highlighted below.

•

Blue Hills Bancorp, Inc. The Company is expected to retain up to 50% of the net offering proceeds. At present, funds at the Company level, net of the loan to the ESOP and the cash contribution to the Foundation, are expected to be used to fund the redemption of the preferred stock and invested into short-term liquid funds. Over time, the funds may be utilized for various corporate purposes, possibly including acquisitions, infusing additional equity into the Bank, repurchases of common stock and the payment of cash dividends.

•

Blue Hills Bank. Approximately 50% of the net stock proceeds will be infused into the Bank in exchange for all of the Bank’s stock. Cash proceeds (i.e., net proceeds less deposits withdrawn to fund stock purchases) infused into the Bank are anticipated to become part of general operating funds and are expected to be primarily utilized to fund loan growth over time.

Overall, it is the Company’s objective to pursue growth that will serve to increase returns, while, at the same time, growth will not be pursued that could potentially compromise the overall risk associated with Blue Hills Bancorp’s operations.


*RP ^® Financial, LC.*		*OVERVIEW AND FINANCIAL ANALYSIS*
		*I.6*

Table 1.1

Blue Hills Bancorp, Inc.

Historical Balance Sheet Data


																										12/31/09-
	At December 31,																									12/31/13 Annual.			Pro Forma Combined At December 31,(2)
	2009					2010					2011					2012					2013					Growth Rate			2013
	Amount		Pct(1)			Amount		Pct(1)			Amount		Pct(1)			Amount		Pct(1)			Amount		Pct(1)			Pct			Amount		Pct(1)
	($000)		(%)			($000)		(%)			($000)		(%)			($000)		(%)			($000)		(%)			(%)			($000)		(%)
Total Amount of:
Assets	$	905,382		100.00	%	$	910,289		100.00	%	$	970,674		100.00	%	$	1,228,636		100.00	%	$	1,314,287		100.00	%		9.77	%	$	1,437,754		100.00	%
Cash and cash equivalents		180,264		19.91	%		111,759		12.28	%		87,331		9.00	%		73,819		6.01	%		40,316		3.07	%		-31.23	%		40,316		2.80	%
Trading assets		—		0.00	%		—		0.00	%		—		0.00	%		32,125		2.61	%		750		0.06	%		NM			750		0.05	%
Investment securities		457,887		50.57	%		543,890		59.75	%		547,475		56.40	%		533,785		43.45	%		441,306		33.58	%		-0.92	%		441,306		30.69	%
Loans receivable, net		210,858		23.29	%		202,016		22.19	%		276,528		28.49	%		488,207		39.74	%		765,347		58.23	%		38.03	%		862,813		60.01	%
Bank owned life insurance		30,167		3.33	%		31,178		3.43	%		32,220		3.32	%		33,344		2.71	%		29,831		2.27	%		-0.28	%		29,831		2.07	%
FHLB stock		3,293		0.36	%		3,293		0.36	%		3,846		0.40	%		9,669		0.79	%		10,766		0.82	%		34.47	%		10,766		0.75	%
Intangible assets		—		0.00	%		—		0.00	%		—		0.00	%		—		0.00	%		—		0.00	%		NM			14,917		1.04	%
Deposits		760,692		84.02	%		754,228		82.86	%		756,481		77.93	%		817,877		66.57	%		915,223		69.64	%		4.73	%		1,148,769		79.90	%
Borrowings		—		0.00	%		—		0.00	%		40,000		4.12	%		154,424		12.57	%		215,000		16.36	%		NM			63,652		4.43	%
Equity		127,145		14.04	%		144,384		15.86	%		163,832		16.88	%		176,938		14.40	%		171,534		13.05	%		7.77	%		171,534		11.93	%
Tangible equity		127,145		14.04	%		144,384		15.86	%		163,832		16.88	%		176,938		14.40	%		171,534		13.05	%		7.77	%		156,617		10.89	%
Loans/Deposits				27.72	%				26.78	%				36.55	%				59.69	%				83.62	%							75.11	%
Full Service Banking Offices Open		6					6					6					6					6								9

(1)	Ratios are as a percent of ending assets.

(2)	Reflects estimated pro forma impact of the acquistion of Nantucket Bank.

Sources: Blue Hills Bancorp’s prospectus, audited and unaudited financial statements and RP Financial calculations.


*RP ^® Financial, LC.*		*OVERVIEW AND FINANCIAL ANALYSIS*
		*I.7*

Balance Sheet Trends

Table 1.1 shows the Company’s historical balance sheet data from yearend 2009 through yearend 2013. From yearend 2009 through yearend 2013, Blue Hills Bancorp’s assets increased at a 9.8% annual rate. Most of the growth has occurred during the past two years, pursuant to the Company’s implementation of new strategic initiatives to build a full service community banking franchise. Asset growth was largely driven by loan growth, which was in part funded by redeployment of cash and investments into loans. Asset growth was funded by deposit growth and increased utilization of borrowings. A summary of Blue Hills Bancorp’s key operating ratios from yearend 2009 through yearend 2013 is presented in Exhibit I-3.

Blue Hills Bancorp’s loans receivable portfolio increased at a 38.0% annual rate from yearend 2009 through yearend 2013, with the loan portfolio exhibiting the most significant growth during 2012 and 2013. The relatively strong loan growth during the past two years reflects implementation of lending initiatives set forth in the Company’s strategic plan, including adding a commercial lending team to facilitate significantly increasing diversification into commercial real estate and commercial business types of lending. The Company’s stronger loan growth rate compared to its asset growth rate served to increase the loans-to-assets ratio from 23.3% at yearend 2009 to 58.2% at yearend 2013.

While residential mortgage loans represent the largest concentration in the Company’s loan portfolio, Blue Hills Bancorp’s emphasis on growing a more diversified loan portfolio is evidenced by recent trends in its loan portfolio composition. Trends in the Company’s loan portfolio composition since yearend 2009 show that the concentration of 1-4 family permanent mortgage loans comprising total loans decreased from 94.2% of total loans at yearend 2009 to 47.3% of total loans at yearend 2013. Comparatively, from yearend 2009 through yearend 2013, commercial real estate loans increased from 2.7% to 29.6% of total loans, commercial business loans increased from 0.5% to 14.4% of total loans, consumer loans (including home equity loans) increased from 2.1% of total loans to 6.6% of total loans and construction loans increased from 0.6% to 2.1% of total loans. The decrease in the concentration of 1-4 family loans comprising the loan portfolio was attributable to comparatively slower growth of 1-4 family loans, which was in part related to the Company’s general philosophy of selling most originations of conforming, fixed rate 1-4 family fixed loans into the secondary market. Additionally, the Company completed a bulk sale of 1-4 family loans held in the loans receivable portfolio during 2013.


*RP ^® Financial, LC.*		*OVERVIEW AND FINANCIAL ANALYSIS*
		*I.8*

The intent of the Company’s investment policy is to provide adequate liquidity and to generate a favorable return within the context of supporting Blue Hills Bancorp’s overall credit and interest rate risk objectives. It is anticipated that proceeds retained at the holding company level will primarily be invested into short-term liquid funds. Since yearend 2009, the Company’s level of cash and investment securities (inclusive of FHLB stock) ranged from a low of 37.5% of assets at yearend 2013 to a high of 72.4% of assets at yearend 2010. The decrease in the concentration of cash and investments comprising assets reflects implementation of the Company’s strategic plan, in which the Company has been downsizing its investment portfolio and emphasizing loan growth. U.S. Government and GSE obligations totaling $142.2 million comprised the most significant component of the Company’s investment portfolio at December 31, 2013. Other investments held by the Company at December 31, 2013 consisted of mortgage- and asset-backed securities ($114.0 million), municipal bonds ($15.7 million), corporate bonds ($89.2 million) and marketable equity securities ($80.2 million). As of December 31, 2013, the Company also held $40.3 million of cash and cash equivalents, $10.8 million of FHLB stock and trading assets of $750,000. Trading assets held by the Company at December 31, 2013 consisted of U.S. Government and agency securities. All investments are maintained as available for sale and, as of December 31, 2013, the investment portfolio had a net unrealized gain of $2.8 million. Exhibit I-4 provides historical detail of the Company’s investment portfolio.

The Company also maintains an investment in bank-owned life insurance (“BOLI”) policies, which cover the lives of some of the Company’s employees. The purpose of the investment is to provide funding for the benefit plans of the covered individuals. The life insurance policies earn tax-exempt income through cash value accumulation and death proceeds. As of December 31, 2013, the cash surrender value of the Company’s BOLI equaled $29.8 million.

Blue Hills Bancorp’s funding needs have been addressed through a combination of deposits, borrowings and internal cash flows. From yearend 2009 through yearend 2013, the Company’s deposits increased at a 4.7% annual rate. Since yearend 2009, the major portion of the Company’s deposit growth was realized during the past two years. Recent deposit growth trends reflect that deposit growth has been primarily driven by growth of core deposits, with savings account deposits accounting for the largest portion of the core deposit growth. Core deposits comprised 59.8% of average total deposits during the year ended December 31, 2013, versus 41.2% of average total deposits during the year ended December 31, 2011.


*RP ^® Financial, LC.*		*OVERVIEW AND FINANCIAL ANALYSIS*
		*I.9*

Borrowings serve as an alternative funding source for the Company to address funding needs for growth and to support management of deposit costs and interest rate risk. From year end 2009 to yearend 2013, borrowings increased from a zero balance to $215.0 million equal to 16.4% of assets. The Company’s utilization of borrowings has primarily consisted of FHLB advances, but has also included a limited amount of repurchase agreement.

The Company’s equity increased at a 7.8% annual rate from yearend 2009 through yearend 2013, which was largely related to retention of earnings. Capital growth was supplemented with the issuance of $18.7 million of preferred stock in 2011. On September 22, 2011, the Company issued and sold 18,724 shares of senior non-cumulative perpetual preferred stock, Series A (“Series A Preferred”), with a liquidation value of $1,000 per share. The Company sold the Series A Preferred to the U.S. Treasury as part of the Small Business Lending Fund Program (“SBLF”) for an aggregate purchase price of $18,724,000. Non-cumulative dividends on the Series A Preferred accrue at an annual rate of between 1% and 5% for the first four and one-half years and at an annual rate of 9% thereafter. The variable rate is determined based upon changes in the amount of the Company’s “Qualified Small Business Lending” as compared to a baseline level. At December 31, 2013, as a result of the Company’s small business lending activity, the dividend rate was 4.48%. A portion of the net proceeds from the offering will fund the redemption of the Company’s preferred stock. As of December 31, 2013, all of the Company’s capital was tangible capital and Blue Hills Bank maintained capital surpluses relative to all of its regulatory capital requirements at December 31, 2013. The addition of stock proceeds will serve to strengthen the Company’s capital position, as well as support growth opportunities. At the same time, Blue Hills Bancorp’s ROE will initially be depressed following its stock conversion as the Company’s pro forma capital position will be significantly higher following the infusion of net stock proceeds into capital.

Pro Forma Balance Sheet Impact of Nantucket Bank Acquisition

The Company’s pro forma balance sheet as of December 31, 2013, which accounts for the acquisition of Nantucket Bank, is also included in Table 1.1. After accounting for the Nantucket Bank acquisition, the Company’s assets increase from $1.314 billion to $1.438 billion. The major balance sheet entries resulting from the acquisition include loans increasing from $765.3 million or 58.2% assets to $862.8 million or 60.0% of assets, deposits increasing from $915.2 million or 69.6% of asset to $1.149 billion or 79.9% of assets and borrowings decreasing from $215.0 million or 16.4% of assets to $63.7 million or 4.4% of assets. The Company will


*RP ^® Financial, LC.*		*OVERVIEW AND FINANCIAL ANALYSIS*
		*I.10*

use most of the $161.6 million of cash obtained in the acquisition to fund the pay down of borrowings and replace brokered deposits. Goodwill and intangibles increase from a zero balance to $14.9 million or 1.0% of assets. Accordingly, the Company’s tangible equity-to-assets ratio declines from 13.1% to 10.9%. Loan acquired in the acquisition consist of a mix of small business, home equity and consumer loans.

Income and Expense Trends

Table 1.2 shows the Company’s historical income statements for the past five years through the year ended December 31, 2013. The Company’s reported earnings ranged from $2.6 million or 0.22% of average assets in 2013 to $29.6 million or 3.21% of average assets in 2010. The relatively high level of net income reported for 2010 was supported by gains on the sale of investment securities. Net interest income and operating expenses represent the primary components of the Company’s earnings. Non-interest operating income has been somewhat of limited source of earnings for the Company. Loan loss provisions typically have not had a significant impact on earnings, while non-operating gains and losses have had a varied impact on the Company’s earnings during the period covered in Table 1.1.

During the period covered in Table 1.1, the Company’s net interest income to average assets ratio reached a peak of 2.51% during 2011 and then trended lower over the past two years to equal 2.10% during 2013. The recent decline in the Company’s net interest income ratio was largely attributable to interest rate spread compression that has resulted from a more significant decrease in the yield earned on interest-earnings assets relative to the cost of interest-bearing liabilities. As the result of the prolonged low interest rate environment, the decline in yield earned on less rate sensitive interest-earning assets has become more significant relative to the decline in rate paid on more rate sensitive liabilities which had more significant downward repricing earlier in the prevailing interest rate environment. The decline in yield earned on interest-earning assets has been partially offset by the increase in comparatively higher yielding loans that comprise interest-earning assets; however, a significant portion of the loan growth has consisted of relatively low yielding loans indexed to the 3-month LIBOR. Overall, during the past five years, the Company’s interest rate spread decreased from a peak of 2.52% during 2011 to 2.09% during 2013. The Company’s net interest rate spreads and yields and costs for the past five years are set forth in Exhibit I-3 and Exhibit I-5.


*RP ^® Financial, LC.*		*OVERVIEW AND FINANCIAL ANALYSIS*
		*I.11*

Table 1.2

Blue Hills Bancorp, Inc.

Historical Income Statements


	Fiscal Year Ended December 31,
	2009						2010						2011						2012						2013
	Amount			Pct(1)			Amount			Pct(1)			Amount			Pct(1)			Amount			Pct(1)			Amount			Pct(1)
	($000)			(%)			($000)			(%)			($000)			(%)			($000)			(%)			($000)			(%)
Interest income	$	40,087			3.51	%	$	34,186			3.71	%	$	31,995			3.48	%	$	31,703			2.97	%	$	33,092			2.77	%
Interest expense		(17,849	)		-1.56	%		(12,083	)		-1.31	%		(8,938	)		-0.97	%		(8,372	)		-0.78	%	($	7,971	)		-0.67	%

Net interest income	$	22,238			1.95	%	$	22,103			2.40	%	$	23,057			2.51	%	$	23,331			2.18	%	$	25,121			2.10	%
Provision for loan losses		(1,250	)		-0.11	%		(502	)		-0.05	%		(1,126	)		-0.12	%		(2,361	)		-0.22	%	($	4,094	)		-0.34	%

Net interest income after provisions	$	20,988			1.84	%	$	21,601			2.34	%	$	21,931			2.39	%	$	20,970			1.97	%	$	21,027			1.76	%
Non-interest operating income	$	3,395			0.30	%	$	3,236			0.35	%	$	3,644			0.40	%	$	4,044			0.38	%	$	7,507			0.63	%
Non-interest operating expense		(13,313	)		-1.17	%		(17,362	)		-1.88	%		(21,041	)		-2.29	%		(26,283	)		-2.46	%		(31,659	)		-2.65	%

Net operating income	$	11,070			0.97	%	$	7,475			0.81	%	$	4,534			0.49	%	($	1,269	)		-0.12	%	($	3,125	)		-0.26	%
Non-Operating Income(Loss)
Gain on sales of securities	$	1,974			0.17	%	$	25,677			2.79	%	$	5,557			0.60	%	$	11,931			1.12	%	$	5,091			0.43	%
Net impairment losses on securities		(4,218	)		-0.37	%		—			0.00	%		—			0.00	%		—			0.00	%		(92	)		-0.01	%
Gain on trading assets and derivatives, net		—			0.00	%		—			0.00	%		—			0.00	%		604			0.06	%		505			0.04	%

Net non-operating income	($	2,244	)		-0.20	%	$	25,677			2.79	%	$	5,557			0.60	%		12,535			1.18	%	$	5,504			0.46	%
Net income before tax	$	8,826			0.77	%	$	33,152			3.60	%	$	10,091			1.10	%	$	11,266			1.06	%	$	2,379			0.20	%
Income tax provision		(3,456	)		-0.30	%		(3,542	)		-0.38	%		(2,530	)		-0.28	%		(3,412	)		-0.32	%	$	284			0.02	%

Net income (loss)	$	5,370			0.47	%	$	29,610			3.21	%	$	7,561			0.82	%	$	7,854			0.74	%	$	2,663			0.22	%
Adjusted Earnings
Net income	$	5,370			0.47	%	$	29,610			3.21	%	$	7,561			0.82	%	$	7,854			0.74	%	$	2,663			0.22	%
Add(Deduct): Net gain/(loss) on sale		2,244			0.20	%		(25,677	)		-2.79	%		(5,557	)		-0.60	%		(12,535	)		-1.18	%		(5,504	)		-0.46	%
Tax effect (2)		(898	)		-0.08	%		10,271			1.11	%		2,223			0.24	%		5,014			0.47	%		2,202			0.18	%

Adjusted earnings	$	6,716			0.59	%	$	14,204			1.54	%	$	4,227			0.46	%	$	333			0.03	%	($	639	)		-0.05	%
Expense Coverage Ratio (3)		1.67x						1.27x						1.10x						0.89x						0.79x
Efficiency Ratio (4)		52.00	%					68.52	%					78.80	%					96.01	%					97.07	%

(1)	Ratios are as a percent of average assets.

(2)	Assumes a 40.0% effective tax rate.

(3)	Expense coverage ratio calculated as net interest income before provisions for loan losses divided by operating expenses.

(4)	Efficiency ratio calculated as operating expenses, divided by the sum of net interest income before provisions for loan losses plus other income (excluding non-operating income/loss.

Sources: Blue Hills Bancorp’s prospectus, audited & unaudited financial statements and RP Financial calculations.


*RP ^® Financial, LC.*		*OVERVIEW AND FINANCIAL ANALYSIS*
		*I.12*

Non-interest operating income has been a fairly stable, but somewhat limited, contributor to the Company’s earnings, reflecting the Company’s limited diversification into products and services that generate non-interest operating income. Throughout the period shown in Table 1.2, sources of non-interest operating income ranged from a low of $3.2 million or 0.35% of average assets during 2010 to a high of $7.5 million or 0.61% of average assets during 2013. The relatively high level of non-interest operating income for 2013 was supported by a $1.9 million death benefit realized from the Company’s BOLI investment, as well as increases in customer services fees, gains on sales of loans and loan level derivative income generated from interest rate swaps written on floating rate commercial real estate loans that provide the borrower with a fixed rate of interest.

Operating expenses represent the other major component of the Company’s earnings, ranging from a low of $13.3 million or 1.17% of average assets during 2009 to a high of $31.7 million or 2.65% of average assets during 2013. The increase in the Company’s operating expense ratio since 2009 reflects infrastructure that has been put into place to facilitate implementation of the Company’s strategic plan, pursuant to which the Company is seeking to build a profitable full service community bank franchise. The higher operating expenses reported during 2013 also include $1.7 million of expenses related to certain employee benefit plans that were terminated in 2013. Upward pressure will be placed on the Company’s operating expense ratio following the stock offering, due to expenses associated with operating as a publicly-traded company, including expenses related to the stock benefit plans. At the same time, the increase in capital realized from the stock offering will increase the Company’s capacity to leverage operating expenses through implementation of current growth strategies.

Overall, the general trends in the Company’s net interest margin and operating expense ratio since 2009 reflect a negative trend in core earnings, as indicated by the Company’s expense coverage ratios (net interest income divided by operating expenses). Blue Hills Bancorp’s expense coverage ratio equaled 1.67 times during 2009, versus a ratio of 0.79 times during 2013. The decrease in the expense coverage ratio since 2009 was the result of a decrease in the net interest income ratio and an increase in the operating expense ratio. Similarly, Blue Hills Bancorp’s efficiency ratio (operating expenses as a percent of the sum of net interest income and other operating income) of 52.00% during 2009 was lower or more favorable compared to its 2013 efficiency ratio of 97.07%.


*RP ^® Financial, LC.*		*OVERVIEW AND FINANCIAL ANALYSIS*
		*I.13*

During the period covered in Table 1.2, maintenance of generally favorable credit quality measures served to limit the impact of loan loss provisions on the Company’s earnings. Loan loss provisions ranged from a low of $502,000 or 0.05% of average assets during 2010 to a high of $4.1 million or 0.34% of average assets during 2013. Loan growth, including growth of higher risk types of loans, largely accounted for higher loan loss provisions established during the past two years. As of December 31, 2013, the Company maintained loan loss allowances of $9.7 million, equal to 1.25% of total loans and 555.17% of non-accruing loans. Exhibit I-6 sets forth the Company’s loan loss allowance activity during the past five years.

Non-operating income and losses have had a varied impact on the Company’s earnings during the period covered in Table 1.2, ranging from a non-operating loss of $2.2 million or 0.20% of average assets during 2009 to non-operating income equal to $25.7 million or 2.79% of average assets during 2010. For 2013, the Company reported non-operating income of $5.5 million or 0.46% of average assets. The non-operating loss recorded in 2009 was due to net impairment losses on securities, which was partially offset by gains on sales of securities. Gains on sales of securities accounted for all of the non-operating income reported for 2010. Non-operating income reported for 2013 consisted of $5.1 million of gains on sales of securities, $505,000 of gains on trading assets and derivatives and $92,000 of net impairment losses on securities. The other components of the Company’s non-operating income are viewed as non-recurring income items.

The Company’s effective tax rate ranged from 10.68% during 2010 to 39.16% during 2009. As set forth in the prospectus, the Company’s marginal effective tax rate is 40.0%.

Interest Rate Risk Management

The Company’s balance sheet is liability-sensitive in the short-term (less than one year) and, thus, the net interest margin will typically be adversely affected during periods of rising and higher interest rates. Comparatively, the Company’s net interest margin has benefited from the declining and low interest rate environment that has prevailed in recent years. However, as interest rates have remained at historically low levels for an extended period of time, the Company has experienced interest spread compression as the average yield earned on interest-earning assets has started to decline more relative to the average rate paid on interest-bearing liabilities. The Company’s interest rate risk analysis as of December 31, 2013 indicates that 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, net interest income would decrease by 5.01% and Economic Value of Equity would decrease by 17.4%, which were within policy limits (see Exhibit I-7).


*RP ^® Financial, LC.*		*OVERVIEW AND FINANCIAL ANALYSIS*
		*I.14*

The Company pursues a number of strategies to manage interest rate risk, particularly with respect to seeking to limit the repricing mismatch between interest rate sensitive assets and liabilities. The Company manages interest rate risk from the asset side of the balance sheet through selling originations of conforming fixed rate 1-4 family loans with terms of 15 years or more, investing in debt securities with maturities of less than five years, maintaining the entire investment portfolio as available for sale, diversifying into other types of lending beyond 1-4 family permanent mortgage loans which consists primarily of shorter term fixed rate loans, adjustable rate loans or balloon loans and using interest rate swaps on certain larger commercial real estate loans. As of December 31, 2013, of the Company’s total loans due after December 31, 2014, ARM loans comprised 55.9% of those loans (see Exhibit I-8). The notional amount of interest rate swap agreements maintained by the Company at December 31, 2013 equaled $171.7 million for which the Company had offsetting positions in an equal amount. On the liability side of the balance sheet, management of interest rate risk has been pursued through utilizing fixed rate FHLB advances with maturities out to 2018 and emphasizing growth of lower costing and less interest rate sensitive transaction and savings accounts. Transaction and savings accounts comprised 59.8% of the Company’s average total deposits during the year ended December 31, 2013.

The infusion of stock proceeds will serve to further limit the Company’s interest rate risk exposure, as most of the net proceeds will be redeployed into interest-earning assets and the increase in the Company’s capital position will lessen the proportion of interest rate sensitive liabilities funding assets.

Lending Activities and Strategy

Blue Hills Bancorp’s lending activities have traditionally emphasized 1-4 family permanent mortgage loans and such loans continue to comprise the largest component of the Company’s loan portfolio. Pursuant to the Company’s strategic plan, the Company is pursuing a diversified lending strategy emphasizing commercial real estate loans and commercial business loans as the primary areas of targeted loan growth. Other areas of lending diversification for the Company include construction loans, home equity loans and other


*RP ^® Financial, LC.*		*OVERVIEW AND FINANCIAL ANALYSIS*
		*I.15*

consumer loans. The origination of 1-4 family permanent mortgage loans is expected to remain an active area of lending for the Company, although growth of the 1-4 family loan portfolio will be constrained by the sale of most fixed rate originations of conforming 1-4 family loans. Exhibit I-9 provides historical detail of Blue Hills Bancorp’s loan portfolio composition for the past five years and Exhibit I-10 provides the contractual maturity of the Company’s loan portfolio by loan type as of December 31, 2013.

1-4 Family Residential Loans. Blue Hills Bancorp offers both fixed rate and adjustable rate 1-4 family permanent mortgage loans. Loans are underwritten to secondary market guidelines, as the Company’s current philosophy has been to sell most originations of conforming 1-4 family fixed rate loans. Loans are generally sold on a servicing retained basis. ARM loans offered by the Company have initial repricing terms of three, five, seven or ten years and then reprice annually for the balance of the loan term. ARM loans are indexed to the 1-year Treasury rate. Fixed rate loans are offered for terms of 15 through 30 years. As of December 31, 2013, the Company’s outstanding balance of 1-4 family loans equaled $365.7 million or 47.3% of total loans outstanding.

Home Equity Loans and Lines of Credit. The Company’s 1-4 family lending activities include home equity loans and lines of credit. Home equity loans are originated as fixed rate loans with amortization terms up 15 years. Home equity lines of credit are tied to the prime rate as published in The Wall Street Journal and are offered for terms of up to a ten year draw period followed by a 15 year repayment period. The Company will originate home equity loans and lines of credit up to a maximum loan-to value (“LTV”) ratio of 80.0%, inclusive of other liens on the property. The Company has also made one purchase of home equity loans, which were underwritten consistent with the Company’s internal underwriting guidelines and are secured by local properties. As of December 31, 2013, the Company’s outstanding balance of home equity loans and lines of credit totaled $25.5 million or 3.3% of total loans outstanding.

Construction Loans. Construction loans originated by the Company consist of loans to finance the construction of 1-4 family residences and commercial/multi-family properties. The Company’s 1-4 family construction lending activities consist of construction loans, which convert to a permanent loan at the end of the construction period. Commercial real estate/multi-family construction loans are mostly secured by apartment development projects. Residential and commercial construction loans are interest only loans during the construction period and are generally offered up to a maximum LTV ratio of 80.0% of the appraised value of the completed property. As of December 31, 2013, the Company’s outstanding balance of construction loans equaled $16.6 million or 2.1% of total loans outstanding


*RP ^® Financial, LC.*		*OVERVIEW AND FINANCIAL ANALYSIS*
		*I.16*

Commercial Real Estate and Multi-family Loans. The balance of the mortgage loan portfolio consists of commercial real estate and multi-family loans, which are collateralized by properties in the Company’s regional lending area. Blue Hills Bancorp originates commercial real estate and multi-family loans up to a maximum LTV ratio of 80.0% and requires a minimum debt-coverage ratio of 1.25 times. The Company supplements originations of commercial real and multi-family loans with purchases of loan participations, which are secured by commercial real estate and multi-family properties in the Company’s regional lending area and are subject to the Company’s underwriting standards for commercial real estate and multi-family loans. Commercial real estate and multi-family loans are originated as adjustable rate loans for terms of up to 25 years and may have a shorter term balloon provision. Commercial real estate and multi-family loans are indexed to the 3-month LIBOR and reprice monthly or quarterly. Properties securing the commercial real estate loan portfolio include office buildings, owner-occupied businesses, industrial buildings, strip mall centers, mixed-use properties, hotels and apartments. As of December 31, 2013, the Company’s outstanding balance of commercial real estate and multi-family loans totaled $228.7 million equal to 29.6% of total loans outstanding.

Commercial Business Loans. The commercial business loan portfolio is generated through extending loans to businesses operating in the local market area. Additionally, in 2013 the Company purchased a $56.0 million participation in a portfolio of seasoned franchise loans with a leading restaurant chain. At December 31, 2013, $47.0 million of such participations remained outstanding. Expansion of commercial business lending activities is a desired area of loan growth for the Company, pursuant to which the Company is seeking to become a full service community bank to its commercial loan customers through offering a full range of commercial loan products that can be packaged with lower cost commercial deposit products. In this regard, the Company has put in place a team of commercial lender, with significant lending experience in the Boston metropolitan area. Commercial business loans offered by the Company consist of floating lines of credit indexed to The Wall Street Journal prime rate and fixed rate term loans based on a corresponding FHLB rate, plus a margin. The commercial business loan portfolio consists substantially of loans secured by business assets such as accounts receivable, inventory, equipment and real estate. As of December 31, 2013, the Company’s outstanding balance of commercial business loans equaled $111.2 million or 14.4% of total loans outstanding.


*RP ^® Financial, LC.*		*OVERVIEW AND FINANCIAL ANALYSIS*
		*I.17*

Consumer Loans. The Company’s consumer lending activities have been concentrated in indirect auto loans, which are secured by classic and luxury vehicles. The indirect auto loans are re-underwritten by the Company. The balance of the consumer loan portfolio consists of small balances of loans secured by deposit, personal lines of credit and miscellaneous installment loans. As of December 31, 2013, the consumer loan portfolio totaled $25.4 million or 3.3% of total loans outstanding.

Exhibit I-11 provides a summary of the Company’s lending activities over the past five years. Total loans originated ranged from a low of $49.0 million during 2011 to a high of $281.5 million during 2013. The increase in loans originated during 2012 and 2013 was primarily due to increased originations of commercial real estate loans, commercial business loans and 1-4 family loans. During 2013, the Company originated $55.3 million of commercial business loans, $138.6 million of commercial real estate loans and $73.8 million of 1-4 family loans. The Company’s self-generated loan production was supplemented with loan purchases, which ranged from a low of $1.6 million during 2009 to a high of $218.1 million during 2013. Loan purchases have largely consisted of 1-4 family loans, while to a lesser extent the Company has purchased commercial real estate, construction and home equity loans. Loans sold consisting of 1-4 family loans and loans participated out by the Company consisting of commercial real estate loans, ranged from a low of $1.6 million during 2011 to a high of $52.3 million during 2013. Total principal repayments ranged from a low of $54.9 million during 2010 to a high of $160.9 million during 2013. Net loan growth was recorded during each of the past three years following two years of loan shrinkage during 2009 and 2010. Overall, net loans receivable increased from $210.9 million at yearend 2009 to $765.3 million at yearend 2013.

Asset Quality

The Company’s historical balance sheet concentration in investment securities, 1-4 family lending emphasis and emphasis on lending in local and familiar markets have generally supported the maintenance of relatively favorable credit quality measures. With the onset of the recession in the Company’s lending markets, the Company experienced some modest credit quality deterioration in its loan portfolio; although, the Company’s ratios for non-performing loans and non-performing assets have remained at relatively low levels. Blue Hills Bancorp’s balance of non-performing assets ranged from a low of $1.6 million or 0.18% of assets at yearend 2010 to a high of $2.7 million or 0.28% of assets at yearend 2011. As shown in Exhibit I-12, non-performing assets at December 31, 2013 totaled $1.7 million or 0.13% of assets and consisted entirely of non-accruing loans. Non-accruing loans held by the Company at December 31, 2013 consisted of $1.706 million or 1-4 family loans and $36,000 of consumer loans.


*RP ^® Financial, LC.*		*OVERVIEW AND FINANCIAL ANALYSIS*
		*I.18*

To track the Company’s asset quality and the adequacy of valuation allowances, Blue Hills Bancorp has established detailed asset classification policies and procedures which are consistent with regulatory guidelines. Classified assets are reviewed monthly by senior management and the Board. The loan portfolio is also reviewed by an independent third party. Pursuant to these procedures, when needed, the Company establishes additional valuation allowances to cover anticipated losses in classified or non-classified assets. As of December 31 2013, the Company maintained loan loss allowances of $9.7 million, equal to 1.25% of total loans receivable and 555.17% of non-performing loans.

Funding Composition and Strategy

Deposits have consistently served as the Company’s primary funding source and at December 31, 2013 deposits accounted for 81.0% of Blue Hills Bancorp’s interest-bearing funding composition. Exhibit I-13 sets forth the Company’s deposit composition for the past three years. Transaction and savings account deposits constituted 59.8% of average total deposits for the year ended December 31, 2013. Comparatively, transaction and savings account deposits constituted 41.2% of average total deposits for the year ended December 31, 2011. The increase in the concentration of core deposits comprising total deposits since 2011 was realized through a decrease in the balance of CDs and an increase in the balance of core deposits. Most of the core deposit growth has consisted of savings account deposits, which was facilitated by marketing relatively attractive rates on certain savings account products. Savings account deposits comprised 66.0% of the Company’s average total core deposits for the year ended December 31, 2013.

The balance of the Company’s deposits consists of CDs, which equaled 40.2% of average total deposits for the year ended December 31, 2013 compared to 58.8% of average total deposits for the year ended December 31, 2011. Blue Hills Bancorp’s current CD composition reflects a higher concentration of short-term CDs (maturities of one year or less). The CD portfolio totaled $388.3 million at December 31, 2013 and $262.6 million or 67.6% of the CDs were scheduled to mature in one year or less. Exhibit I-14 sets forth the maturity schedule of the Company’s CDs as of December 31, 2013. As of December 31, 2013, jumbo


*RP ^® Financial, LC.*		*OVERVIEW AND FINANCIAL ANALYSIS*
		*I.19*

CDs (CD accounts with balances of $100,000 or more excluding brokered CDs) amounted to $129.0 million or 33.2% of total CDs. Brokered CDs averaged $38.3 million or 4.4% of average total deposits during the year ended December 31, 2013.

Borrowings serve as an alternative funding source for the Company to facilitate management of funding costs and interest rate risk. The Company maintained $215.0 million of FHLB advances at December 31, 2013 with a weighted average rate of 0.61%. FHLB advances held by the Company at December 31, 2013 consisted of $170,000 million with an original maturity of three months or less and $45,000 million of fixed rate advances with laddered maturities through 2018. Exhibit I-15 provides further detail of the Company’s borrowings activities for the past three years.

Subsidiary Activity

Upon completion of the conversion, the Bank will become a wholly owned subsidiary of Blue Hills Bancorp. Additionally, it is expected that Blue Hills Bancorp will form another subsidiary for the sole purpose of funding the loan to the Bank’s ESOP.

Blue Hills Bank has two subsidiaries, HP Security Corporation (“HP Security”) and 1196 Corporation. HP Security buys, sell and holds securities on its own behalf as a wholly-owned subsidiary of the Bank, which results in tax advantages in Massachusetts. At December 31, 2013, HP Security had total assets of $253.5 million. 1196 Corporation owns shares in Northeast Retirement Services, Inc., a company that administers pension and 401(k) plans for a number of savings banks, including Blue Hills Bank, and other entities.

Legal Proceedings

The Company is not currently party to any pending legal proceedings that the Company’s management believes would have a material adverse effect on the Company’s financial condition, results of operations or cash flows.


*RP ^® Financial, LC.*		*MARKET AREA*
		*II.1*

II. MARKET AREA

Introduction

Blue Hills Bancorp serves the Boston metropolitan area and the island of Nantucket through the main office in Hyde Park, Massachusetts and eight additional branch offices. One of the branches is also located in the Hyde Park and the remaining seven branches are located in the Brookline, Dedham, Norwood, West Roxbury and Nantucket. The Blue Hills and West Roxbury offices are in Suffolk County and the Brookline, Dedham and Norwood offices are in Norfolk County. All three of the branches acquired from Nantucket Bank are located on the island of Nantucket, Massachusetts, which is also Nantucket County. Exhibit II-1 provides information on the Company’s office properties.

With operations in a major metropolitan area, the Company’s competitive environment includes a significant number of thrifts, commercial banks and other financial services companies, some of which have a regional or national presence and are larger than the Company in terms of deposits, loans, scope of operations, and number of branches. These institutions also have greater resources at their disposal than the Company. The Boston metropolitan area has a highly developed economy, with a relatively high concentration of highly skilled workers who are employed in a number of different industry clusters including healthcare, financial services and technology.

Future growth opportunities for Blue Hills Bancorp depend on the future growth and stability of the local and regional economy, demographic growth trends and the nature and intensity of the competitive environment. These factors have been examined to help determine the growth potential that exists for the Company, the relative economic health of the Company’s market area, and the resultant impact on value.

National Economic Factors

The future success of the Company’s operations is partially dependent upon various national and local economic trends. In assessing national economic trends over the past few quarters, manufacturing and non-manufacturing activity continued to expand in July 2013. Job growth for the U.S. slowed during July, as the U.S. economy added 162,000 jobs during July, which was below forecasted job growth of 184,000 jobs, and the July unemployment rate nudged down to 7.4%. Housing starts and existing home sales rose in July compared to June,


*RP ^® Financial, LC.*		*MARKET AREA*
		*II.2*

while new home sales declined from June to July. Durable-goods orders showed a sharp decline in July, as aircraft demand and business spending weakened. However, exclusive of the transportation category, July durable-goods orders still showed a slight decline. Expansion in the manufacturing and non-manufacturing sectors continued in August, while the August jobs report showed the pace of hiring remained sluggish. The U.S. economy added 169,000 jobs in August and the unemployment rate edged down to 7.3%. Notably, the number of jobs added during July was revised down from 162,000 to 104,000. The positive trends in housing starts and existing home sales were sustained during August, with existing home sales rising to their highest level in six and one-half years. New homes sales were also up solidly in August compared to July. The delayed release of employment data for September showed 148,000 jobs were added in September, which was less than forecasted, and the unemployment rate edged down slightly to 7.2%. Pending home sales declined for the fourth consecutive month in September, as higher mortgage interest rates and home prices curbed buying power. Retail sales were down slightly in September, but core September retail sales which excludes autos were up slightly. Third quarter GDP increased at a 2.8% annual rate (subsequently revised to 4.1%), which marked the fastest growth in a year. Median home prices in U.S. metropolitan areas increased 12.5% during the third quarter compared to the year ago quarter.

Manufacturing activity grew for a fifth consecutive month in October 2013, with the PMI index rising to its highest level in more than two years. Service sector activity also continued to expand in October. The employment report for October showed that 204,000 jobs were added, while the October unemployment rate edged up to 7.3%. Despite the partial government shutdown in early-October, retail sales increased in October. Existing home sales declined in October, which was viewed as a potential sign that rising interest rates were starting to weigh on the housing recovery. The pace of manufacturing activity accelerated further in November, while service sector activity grew at a slightly lower rate in November. Employment growth remained steady in November, with 203,000 jobs being added and the November unemployment rate hitting a five year low of 7.0%. New and existing home sales were down slightly in November compared to October, as home buyers faced higher interest rates and an increase in home prices. Bolstered by a rebound in consumer confidence, retail sales for November showed a healthy increase from October, While manufacturing activity expanded at a slightly lower rate in December, the PMI readings for November and December were the highest and second highest for 2013. Similarly, December service sector activity also grew at a slightly lower rate compared to November. December job growth was the lowest in almost three years, as only 74,000 jobs were added in December. However, the December unemployment rate dropped to 6.7%, which was mostly attributable to people leaving the labor force.


*RP ^® Financial, LC.*		*MARKET AREA*
		*II.3*

The pace of manufacturing activity slowed considerably in January 2014, with the PMI reading declining to 5.2 points to 51.3. Comparatively, January service sector activity expanded at a slight faster pace, with PMI reading of 56.7 compared to 55.7 in December. January was the second straight month of weak job growth, with a tepid gain of 113,000 jobs. The January unemployment rate dipped to 6.6% in January.

In terms of interest rates trends over the past few quarters, interest rates edged higher at the start of the third quarter of 2013 as job growth for June came in stronger-than-expected. Assurances from the Federal Reserve Chairman that it would not raise short-term rates for some time after the unemployment rate hit 6.5%, along with a decline in consumer sentiment and weaker-than-expected June retail sales, translated into a slight decline in interest rates going into mid-July. Stable interest rates prevailed during the second half of July and the first half of August, as the Federal Reserve concluded its late-July meeting with keeping easy monetary policies in place. Interest rates climbed higher in mid-August, as news that weekly unemployment claims were the lowest since 2007 raised expectations that the Federal Reserve would start to reduce its $85 billion in monthly bond purchases. Despite economic data that generally reflected sluggish economic growth, the 10-year Treasury yield edged closer to 3.0% in the first week of September. Long-term Treasury yields eased lower during the second half of September, as the Federal Reserve concluded its two day meeting in mid-September by staying the course on its bond buying program in light of the prevailing uneven economic climate and potential for fiscal discord in Washington.

Treasury yields dipped lower at the beginning of October 2013, as hiring in the private sector increased less than expected during September. Stalled negotiations in Washington to avert the first ever default on the U.S. debt pushed Treasury yields higher going into mid-October, which was followed by a rally in Treasury bonds on news of an agreement in Washington that raised the debt ceiling and avoided an imminent default by the U.S. Government. A weaker than expected jobs report for September furthered the downward trend in interest rates, as investors became more confident that the Federal Reserve would leave its bond buying program unchanged. A sharp decline in October consumer confidence and an October employment report that continued to reflect a relatively slow pace of job growth provided for a stable interest rate environment at the end of October and into early-November. Long term Treasury yields edged higher in mid-November and then stabilized for the balance of


*RP ^® Financial, LC.*		*MARKET AREA*
		*II.4*

November, as investors reacted to generally favorable October economic data and Congressional testimony by the Federal Reserve Chairman nominee Janet Yellen, in which she stated for a continuation of the Federal Reserve’s stimulus efforts. Signs of the economic recovery gaining momentum and the Federal Reserve’s mid-December announcement that it would begin to taper its stimulus program provided for a general upward trend in interest rates throughout December, with the 10-year Treasury yield edging above 3.0% in late-December.

Interest rates eased lower at the start of 2014, with the 10-year Treasury yield dipping below 3.0%. The weaker-than-expected jobs report for December furthered the downward trend in long-term Treasury yields heading into mid-January. The downward trend in long-term Treasury yields continued through the balance of January, as investors sought the safe haven of Treasury bonds amid turmoil in emerging markets and soft jobs data. The Federal Reserve concluded its late-January meeting by voting to scale back its bond buying program by another $10 billion. Soft economic data provided for a stable interest rate environment during the first half of February. As of February 14, 2014, the bond equivalent yields for U.S. Treasury bonds with terms of one and ten years equaled 0.11% and 2.75%, respectively, versus comparable year ago yields of 0.16% and 2.00%. Exhibit II-2 provides historical interest rate trends.

Based on the consensus outlook of economists surveyed by The Wall Street Journal in January 2014 economic growth forecasts were largely unchanged, as annual GDP growth was not expected to top 3% through at least 2015. The unemployment rate was forecasted to stall, falling just 0.1% to 6.6% in June 2014 and 200,000 jobs were expected to be added per month over the next year. On average, the economists did not expect the Federal Reserve to begin raising its target rate until mid-2015 at the earliest and the 10-year Treasury yield would increase to 3.5% at the end of 2014. The surveyed economists also forecasted home prices would rise by 5.0% in 2014 . Housing starts were forecasted to continue to trend slightly higher in 2014.

Market Area Demographics

Demographic and economic growth trends, measured by changes in population, number of households, age distribution and median household income, provide key insight into the health of the market area served by Blue Hills Bancorp. Demographic data for Suffolk, Norfolk and Nantucket Counties, as well as for Massachusetts and the U.S., is provided in Table 2.1.


*RP ^® Financial, LC.*		*MARKET AREA*
		*II.5*

Population and household data indicate that the market area served by the Company’s branches is a mix of urban and suburban markets. Suffolk County, where the city of Boston is located, and the adjacent Norfolk County, are two of the largest counties in Massachusetts, each with a total population of 0.7 million. Suffolk County experienced relatively strong demographic growth from 2010 to 2012, at 1.0% annually, which exceeded both the national and state growth rates. Norfolk County, which is a suburban market with a larger commuter population, experienced moderate population growth from 2010 to 2012, at 0.5% annually. Nantucket County is a popular tourist destination and summer colony and, thus, has seasonal fluctuations in population. Nantucket County has 10,000 full time residents, which expands to a population approximating 100,000 during the peak of the summer vacation season. From 2010 to 2012, Nantucket County experienced a 0.4% decline in population.

Household growth rates paralleled population growth trends in all three market counties, with Suffolk County displaying the fastest household growth and Nantucket County exhibiting a decline in households. Recent population and household growth trends are generally projected to continue over the next five years, although Nantucket County is projected to record a slight increase in population over the next five years.


*RP ^® Financial, LC.*		*MARKET AREA*
		*II.6*

Table 2.1

Blue Hills Bancorp, Inc.

Summary Demographic Data


	Year						Growth Rate
	2010		2012		2017		2010-2012			2012-2017
							(%)			(%)
Population (000)
USA		308,746		313,129		323,986		0.7	%		0.7	%
Massachusetts		6,548		6,607		6,757		0.5	%		0.5	%
Nantucket, MA		10		10		10		-0.4	%		0.1	%
Norfolk, MA		671		678		696		0.5	%		0.5	%
Suffolk, MA		722		736		777		1.0	%		1.1	%
Households (000)
USA		116,716		118,209		122,665		0.6	%		0.7	%
Massachusetts		2,547		2,567		2,637		0.4	%		0.5	%
Nantucket, MA		4		4		4		-0.2	%		0.0	%
Norfolk, MA		258		261		268		0.6	%		0.5	%
Suffolk, MA		293		298		318		0.9	%		1.3	%
Median Household Income ($)
USA		NA		50,157		56,895		NA			2.6	%
Massachusetts		NA		62,403		73,930		NA			3.4	%
Nantucket, MA		NA		76,164		84,195		NA			2.0	%
Norfolk, MA		NA		80,955		90,098		NA			2.2	%
Suffolk, MA		NA		48,847		55,703		NA			2.7	%
Per Capita Income ($)
USA		NA		26,409		29,882		NA			2.5	%
Massachusetts		NA		33,741		38,312		NA			2.6	%
Nantucket, MA		NA		38,685		43,170		NA			2.2	%
Norfolk, MA		NA		40,822		46,796		NA			2.8	%
Suffolk, MA		NA		30,253		34,724		NA			2.8	%

	0-14 Yrs.		15-34 Yrs.		35-54 Yrs.		55-69Yrs.			70+ Yrs.
2012 Age Distribution (%)
USA		19.6		27.4		27.1		16.6			9.2
Massachusetts		17.5		27.2		28.2		17.1			10.0
Nantucket, MA		17.6		25.0		31.7		17.1			8.7
Norfolk, MA		18.4		23.9		29.4		17.5			10.7
Suffolk, MA		14.4		41.2		23.9		13.0			7.5

	Less Than 25,000		$25,000 to 50,000		$50,000 to 100,000		$100,000+
2012 HH Income Dist. (%)
USA		24.7		25.1		29.9		20.3
Massachusetts		20.0		19.7		29.9		30.4
Nantucket, MA		9.6		20.3		32.1		38.0
Norfolk, MA		14.2		16.2		28.6		41.0
Suffolk, MA		29.2		21.5		26.5		22.8

Source: SNL Financial


*RP ^® Financial, LC.*		*MARKET AREA*
		*II.7*

Household income distribution measures provide another indication of the relative affluence of the Company’s primary market area counties. Suffolk County maintains a relatively high percent of households with incomes below $50,000, at 50.7% of total households, while Norfolk and Nantucket Counties maintain relatively high percentages of households with incomes above $100,000, at 41.0% and 38.0% of total households, respectively. Age distribution measures show that Suffolk County is home to a younger population based compared to Norfolk and Nantucket Counties, which has supported Suffolk County’s more robust population growth.

Regional Economy

Comparative employment data shown in Table 2.2 shows that employment in services constituted the major source of jobs in Suffolk and Norfolk Counties, as well as Massachusetts. Wholesale/retail employment followed by finance/insurance/real estate employment represented the second and third largest employment sectors in Suffolk and Norfolk Counties. Wholesale/retail trade jobs followed by service jobs comprised the largest employment sectors in Nantucket County, which is supported by tourists and vacationers. Compared to the other market area counties and the state, Suffolk County maintains the highest levels of employment in services, healthcare, government and finance/insurance/real estate, Norfolk County maintains the highest level of employment in manufacturing and Nantucket County maintains the highest level of wholesale/retail jobs. Nantucket County also holds the highest levels of employment in construction and transportation/utility.

Table 2.2

Blue Hills Bancorp, Inc.

Primary Market Area Employment Sectors

(Percent of Labor Force)


				Nantucket			Norfolk			Suffolk
Employment Sector	Massachusetts			County			County			County
	(% of Total Employment)
Services		33.3	%		30.4	%		30.1	%		34.5	%
Healthcare		10.7	%		5.0	%		9.3	%		13.9	%
Government		4.7	%		4.0	%		2.9	%		7.4	%
Wholesale/Retail Trade		24.4	%		34.4	%		27.8	%		15.9	%
Finance/Insurance/Real Estate		8.2	%		5.8	%		10.0	%		15.7	%
Manufacturing		8.5	%		3.8	%		9.0	%		4.2	%
Construction		4.2	%		5.4	%		4.9	%		2.4	%
Information		0.9	%		0.7	%		1.0	%		1.3	%
Transportation/Utility		3.3	%		5.7	%		2.8	%		3.3	%
Agriculture		0.9	%		3.9	%		1.3	%		0.3	%
Other		0.8	%		1.0	%		0.8	%		1.0	%

		100.0	%		100.0	%		100.0	%		100.0	%

Source: SNL Financial


*RP ^® Financial, LC.*		*MARKET AREA*
		*II.8*

The market area served by the Company, characterized primarily as the Boston MSA, has a highly developed and diverse economy, with the regions’ many colleges and universities serving to attract industries in need of a highly skilled and educated workforce. Healthcare, high-tech and financial services companies constitute major sources of employment in the Company’s regional market area, as well as the colleges and universities that populate the Boston MSA. Tourism also is a prominent component of market area’s economy, as Boston annually ranks as one of the nation’s top tourist destinations. Table 2.3 lists in detail the major employers in the Company’s market area.

Table 2.3

Blue Hills Bancorp, Inc.

Market Area Largest Employers


Company/Institution	Industry	Employees
Massachusetts General Hospital	Health Care		14,752
Brigham and Women’s Hospital	Health Care		11,229
Boston University	Higher Education		9,783
Children’s Hospital, Boston	Health Care		7,903
State Street Bank & Trust Co	Finance and Insurance		7,800
Beth Israel Deaconess Med. Center	Health Care		6,695
Fidelity	Finance and Insurance		5,500
Harvard University	Higher Education		5,132
Northeastern University	Higher Education		4,484
Boston Medical Center	Health Care		4,217
Boston College	Higher Education		4,122
Tufts Medical Center	Health Care		3,692
Dana-Farber Cancer Institute	Health Care		3,607
John Hancock	Finance and Insurance		3,430

Source: Boston Redevelopment Authority, 2013.

Unemployment Trends

Comparative unemployment rates for Suffolk, Norfolk and Nantucket Counties, as well as for the U.S. and Massachusetts, are shown in Table 2.4. The November 2013 unemployment rates for Norfolk and Suffolk Counties, at 5.6% and 6.3% respectively, were below the comparable unemployment rates for the U.S. and Massachusetts. Comparatively, the November 2013 unemployment rate for Nantucket County was 7.8%, which was above the comparable unemployment rates for Massachusetts and the U.S. In contrast to the U.S., Nantucket, Norfolk and Suffolk Counties, along with the state of Massachusetts, reported higher unemployment rates for November 2013 compared to a year ago.


*RP ^® Financial, LC.*		*MARKET AREA*
		*II.9*

Table 2.4

Blue Hills Bancorp, Inc.

Unemployment Trends


	November 2012			November 2013
Region	Unemployment			Unemployment
USA		7.8	%		6.7	%
Massachusetts		6.1	%		6.7	%
Nantucket, MA		6.8	%		7.8	%
Norfolk, MA		5.1	%		5.6	%
Suffolk, MA		6.1	%		6.3	%

Source: U.S. Bureau of Labor Statistics.

Market Area Deposit Characteristics and Competition

The Company’s deposit base is closely tied to the economic fortunes of Suffolk, Norfolk and Nantucket Counties and, in particular, the areas that are nearby to the Company’s branches. Table 2.5 displays deposit market trends from June 30, 2009 through June 30, 2013 for Blue Hills Bancorp and the Nantucket Bank branches that were acquired subsequent to June 30, 2013, as well as for all commercial bank and savings institution branches located in the market area counties and the state of Massachusetts. Consistent with the state of Massachusetts, commercial banks maintained a larger market share of deposits than savings institutions in Suffolk, Norfolk and Nantucket Counties. For the four year period covered in Table 2.5, savings institutions experienced a decrease in deposit market share in the market area counties as well as in the state of Massachusetts. Overall, for the past four years, bank and thrift deposits increased at a comparatively higher annual rate of 20.8% in Suffolk County, versus annual deposit growth rates of 3.9% for Norfolk County and 5.3% for Nantucket County. Comparatively, deposits increased at an 11.0% annual rate in the state of Massachusetts during the four year period.

As of June 30, 2013, Blue Hills Bancorp maintained relatively low deposit market shares in Suffolk and Norfolk Counties of 0.4% and 1.6% respectively. The Company’s deposits increased at annual rates of 2.6% and 4.9% in Suffolk and Norfolk Counties, respectively, which translated into a slight decrease in deposit market share in Suffolk County and no change in deposit market share in Norfolk County. Nantucket Bank maintains the largest market share of Nantucket County bank and thrift deposits, with a deposit market share of 54.4% as of June 30, 2013. Nantucket Bank experienced declines in both deposit balance and deposit market share during the four year period.


*RP ^® Financial, LC.*		*MARKET AREA*
		*II.10*

Table 2.5

Blue Hills Bancorp, Inc.

Deposit Summary


	As of June 30,
	2009							2013							Deposit
			Market			No. of				Market			No. of		Growth Rate
	Deposits		Share			Branches		Deposits		Share			Branches		2009-2013
	(Dollars in Thousands)														(%)
Massachusetts	$	189,870,183		100.0	%		2,245	$	288,381,314		100.0	%		2,218		11.0	%
Commercial Banks		115,811,378		61.0	%		1,046		225,589,069		78.2	%		1,320		18.1	%
Savings Institutions		74,058,805		39.0	%		1,199		62,792,245		21.8	%		898		-4.0	%
Nantucket County	$	426,905		100.0	%		5	$	525,284		100.0	%		7		5.3	%
Commercial Banks		98,851		23.2	%		2		395,405		75.3	%		5		41.4	%
Savings Institutions		328,054		76.8	%		3		129,879		24.7	%		2		-20.7	%
Nantucket Bank		328,054		76.8	%		3		285,999		54.4	%		3		-3.4	%
Norfolk County	$	17,347,122		100.0	%		247	$	20,221,583		100.0	%		245		3.9	%
Commercial Banks		8,953,209		51.6	%		116		14,691,337		72.7	%		169		13.2	%
Savings Institutions		8,393,913		48.4	%		131		5,530,246		27.3	%		76		-9.9	%
Blue Hills Bank		275,241		1.6	%		3		333,294		1.6	%		3		4.9	%
Suffolk County	$	69,777,255		100.0	%		224	$	148,646,631		100.0	%		237		20.8	%
Commercial Banks		61,835,622		88.6	%		144		142,921,562		96.1	%		183		23.3	%
Savings Institutions		7,941,633		11.4	%		80		5,725,069		3.9	%		54		-7.9	%
Blue Hills Bank		502,923		0.7	%		3		556,564		0.4	%		3		2.6	%

Source: FDIC.

As implied by the Company’s low market shares of deposits in Suffolk and Norfolk Counties, competition among financial institutions in the Company’s market area is significant. Among the Company’s competitors are much larger and more diversified institutions, which have greater resources than maintained by Blue Hills Bancorp. Financial institution competitors in the Company’s primary market area include other locally based thrifts and banks, as well as regional, super regional and money center banks. From a competitive standpoint, Blue Hills Bancorp has sought to emphasize its community orientation in the markets served by its branches. There are a total of 32 banking institutions operating in Suffolk County, with Blue Hills Bancorp holding the 12th largest market share of deposits. In Norfolk County, there are a total of 47 banking institutions, with Blue Hills Bancorp holding the 14th largest market share of deposits. As previously noted, Nantucket Bank holds the largest deposit market share in Nantucket County.


*RP ^® Financial, LC.*		*MARKET AREA*
		*II.11*

Table 2.6 lists the Company’s largest competitors in the market area counties, based on deposit market share as noted parenthetically.

Table 2.6

Blue Hills Bancorp, Inc.

Market Area Deposit Competitors


Location	Name	Market Share			Rank
Nantucket County	Nantucket Bank		54.45	%	1 out of 3
	Cape Cod Five Mutual Co.		24.73	%
	Bank of America Corp		20.83	%
Norfolk County	Bank of America Corp		19.71	%
	RBS		16.78	%
	Santander		6.34	%
	Blue Hills Bancorp		1.64	%	14 out of 47
Suffolk County	Bank of America Corp		24.43	%
	RBS		9.80	%
	Bank of New York Mellon Corp.		9.35	%
	Blue Hills Bancorp		0.37	%	12 out of 32

Source: SNL Financial.


*RP ^® Financial, LC.*		*PEER GROUP ANALYSIS*
		*III.1*

III. PEER GROUP ANALYSIS

This chapter presents an analysis of Blue Hills Bancorp’s operations versus a group of comparable savings institutions (the “Peer Group”) selected from the universe of all publicly-traded savings institutions in a manner consistent with the regulatory valuation guidelines. The basis of the pro forma market valuation of Blue Hills Bancorp is derived from the pricing ratios of the Peer Group institutions, incorporating valuation adjustments for key differences in relation to the Peer Group. Since no Peer Group can be exactly comparable to Blue Hills Bancorp, key areas examined for differences are: financial condition; profitability, growth and viability of earnings; asset growth; primary market area; dividends; liquidity of the shares; marketing of the issue; management; and effect of government regulations and regulatory reform.

Peer Group Selection

The Peer Group selection process is governed by the general parameters set forth in the regulatory valuation guidelines. Accordingly, the Peer Group is comprised of only those publicly-traded savings institutions whose common stock is either listed on the NYSE or NASDAQ, since their stock trading activity is regularly reported and generally more frequent than non-publicly traded and closely-held institutions. Institutions that are not listed on the NYSE or NASDAQ are inappropriate, since the trading activity for thinly-traded or closely-held stocks is typically highly irregular in terms of frequency and price and thus may not be a reliable indicator of market value. We have also excluded from the Peer Group those companies under acquisition or subject to rumored acquisition, mutual holding companies and recent conversions, since their pricing ratios are subject to unusual distortion and/or have limited trading history. A recent listing of the universe of all publicly-traded savings institutions is included as Exhibit III-1.

Ideally, the Peer Group, which must have at least 10 members to comply with the regulatory valuation guidelines, should be comprised of locally- or regionally-based institutions with comparable resources, strategies and financial characteristics. There are approximately 103 fully-converted publicly-traded institutions nationally and, thus, it is typically the case that the Peer Group will be comprised of institutions with relatively comparable characteristics. To the extent that differences exist between the converting institution and the Peer Group, valuation adjustments will be applied to account for the differences. Since Blue Hills Bancorp will be a fully-converted public company upon completion of the offering, we considered only


*RP ^® Financial, LC.*		*PEER GROUP ANALYSIS*
		*III.2*

fully-converted public companies to be viable candidates for inclusion in the Peer Group. From the universe of publicly-traded thrifts, we selected ten institutions with characteristics similar to those of Blue Hills Bancorp. In the selection process, we applied two “screens” to the universe of all public companies that were eligible for consideration:

•

Screen #1 New England institutions with assets between $750 million and $2.5 billion, tangible equity-to-assets ratios of greater than 8.0% and positive core earnings. Six companies met the criteria for Screen #1 and four were included in the Peer Group: BSB Bancorp, Inc. of Massachusetts, First Connecticut Bancorp, Inc. of Connecticut, SI Financial Group, Inc. of Connecticut and Westfield Financial, Inc of Massachusetts. Rockville Financial, Inc. of Connecticut and United Financial Bancorp, Inc. of Massachusetts were excluded from the Peer Group, as the result of their announced merger agreement. Exhibit III-2 provides financial and public market pricing characteristics of all publicly-traded New England thrifts.

•

Screen #2 Mid-Atlantic institutions with assets between $750 million and $2.5 billion, tangible equity-to-assets ratios of greater than 8.0% and positive core earnings. Six companies met the criteria for Screen #2 and all six were included in the Peer Group: Cape Bancorp, Inc. of New Jersey, ESSA Bancorp, Inc. of Pennsylvania, Fox Chase Bancorp, Inc. of Pennsylvania, Ocean Shore Holding Company of New Jersey, OceanFirst Financial Corp. of New Jersey and TF Financial Corp. of Pennsylvania. Exhibit III-3 provides financial and public market pricing characteristics of all publicly-traded Mid-Atlantic thrifts.

Table 3.1 shows the general characteristics of each of the ten Peer Group companies and Exhibit III-4 provides summary demographic and deposit market share data for the primary market areas served by each of the Peer Group companies. While there are expectedly some differences between the Peer Group companies and Blue Hills Bancorp, we believe that the Peer Group companies, on average, provide a good basis for valuation subject to valuation adjustments. The following sections present a comparison of Blue Hills Bancorp’s financial condition, income and expense trends, loan composition, interest rate risk and credit risk versus the Peer Group as of the most recent publicly available date. Comparative data for all publicly-traded thrifts, publicly-traded Massachusetts thrifts and publicly-traded institutions comparable to Blue Hills Bancorp that have recently completed a standard conversion offering have been included in the Chapter III tables as well.


*RP ^® Financial, LC.*		*PEER GROUP ANALYSIS*
		*III.3*

In addition to the selection criteria used to identify the Peer Group companies, a summary description of the key comparable characteristics of each of the Peer Group companies relative to Blue Hills Bancorp’s characteristics is detailed below.

Table 3.1

Peer Group of Publicly-Traded Thrifts

As of

February 14, 2014

Ticker

Financial Institution

Exchange

City

State

Total
Assets (1)

Offices

Fiscal
Mth End

Conv.
Date

Stock
Price

Market
Value

($Mil)

($)

($Mil)

OCFC

OceanFirst Financial Corp.

NASDAQ

Toms River

2,286

Dec

7/3/96

17.39

302

FBNK

First Connecticut Bancorp, Inc

NASDAQ

Farmington

1,992

Dec

6/30/11

15.60

257

ESSA

ESSA Bancorp Inc.

NASDAQ

Stroudsburg

1,372

Sep

4/4/07

10.85

129

SIFI

SI Financial Group Inc.

NASDAQ

Willimantic

1,369

Dec

1/13/11

11.73

150

WFD

Westfield Financial Inc.

NASDAQ

Westfield

1,271

Dec

1/4/07

7.53

152

FXCB

Fox Chase Bancorp Inc.

NASDAQ

Hatboro

1,107

Dec

6/29/10

17.06

207

CBNJ

Cape Bancorp Inc.

NASDAQ

Cape May Court House

1,074

Dec

2/1/08

10.58

128

OSHC

Ocean Shore Holding Co.

NASDAQ

Ocean City

1,043

Dec

12/21/09

13.95

BLMT

BSB Bancorp Inc.

NASDAQ

Belmont

1,023

Dec

10/5/11

15.82

143

THRD

TF Financial Corp.

NASDAQ

Newtown

833

Dec

7/13/94

29.99

(1)	As of September 30, 2013 or the most recent quarter end available.

Source: SNL Financial, LC.


*RP ^® Financial, LC.*		*PEER GROUP ANALYSIS*
		*III.4*

•

BSB Bancorp, Inc. of Massachusetts. Selected due to Boston market area, similar interest-bearing funding composition, similar return on average assets, similar ratio of operating expenses as a percent of average assets, lending diversification emphasis on commercial real estate loans and relatively favorable credit quality measures.

•

Cape Bancorp, Inc. of New Jersey. Selected due to similar contribution from sources of non-interest operating income, similar impact of loan loss provisions on earnings, similar concentration of 1-4 family loans and mortgage-backed securities comprising assets and lending diversification emphasis on commercial real estate loans.

•

ESSA Bancorp, Inc. of Pennsylvania. Selected due to similar asset size, similar earnings contribution from sources of non-interest income, similar impact of loan loss provisions on earnings and lending diversification emphasis on commercial real estate loans.

•

First Connecticut Bancorp, Inc. of Connecticut. Selected due to similar return on average assets, similar earnings contribution from sources of non-interest operating income and lending diversification emphasis on commercial real estate loans.

•

Fox Chase Bancorp, Inc. of Pennsylvania. Selected due to relatively high equity-to-assets ratio, similar interest-earning asset composition, similar ratio of operating expenses as a percent of average assets and lending diversification emphasis on commercial real estate loans.

•

Ocean Shore Holding Co. of New Jersey. Selected due to relatively low net interest income to average assets ratio, lending diversification emphasis on commercial real estate loans and relatively favorable credit quality measures.

•

OceanFirst Financial Corp. of New Jersey. Selected due to similar earnings contribution from sources of non-interest operating income, similar impact of loan loss provisions on earnings and lending diversification emphasis on commercial real estate loans.

•

SI Financial Group, Inc. of Connecticut. Selected due to similar asset size, similar interest-bearing funding composition, lending diversification emphasis on commercial real estate loans and relatively favorable credit quality measures.

•

TF Financial Corp. of Pennsylvania. Selected due to similar earnings contribution from sources of non-interest operating income, similar ratio of operating expenses as a percent of average assets and lending diversification emphasis on commercial real estate loans.

•

Westfield Financial Inc. of Massachusetts. Selected due to similar asset size, relatively low net interest income to average assets ratio, lending diversification emphasis on commercial real estate loans and relatively favorable credit quality measures.

In aggregate, the Peer Group companies maintained a slightly lower level of tangible equity than the industry average (11.4% of assets versus 12.5% for all public companies), generated similar core earnings as a percent of average assets (0.47% core ROAA versus 0.51% for all public companies), and earned a similar core ROE (3.94% core ROE versus 4.01% for all public companies). Overall, the Peer Group’s average P/TB ratio and average core P/E multiple were slightly below and slightly above the respective averages for all publicly-traded thrifts.


*RP ^® Financial, LC.*		*PEER GROUP ANALYSIS*
		*III.5*


	All
	Publicly-Traded			Peer Group
Financial Characteristics (Averages)
Assets ($Mil)	$	2,478		$	1,348
Market capitalization ($Mil)	$	344		$	166
Tangible equity/assets (%)		12.52	%		11.36	%
Core return on average assets (%)		0.51			0.47
Core return on average equity (%)		4.01			3.94
Pricing Ratios (Averages)(1)
Core price/earnings (x)		18.14	x		19.84	x
Price/tangible book (%)		113.87	%		108.65	%
Price/assets (%)		13.36			12.26

(1)	Based on market prices as of February 14, 2013.

Ideally, the Peer Group companies would be comparable to Blue Hills Bancorp in terms of all of the selection criteria, but the universe of publicly-traded thrifts does not provide for an appropriate number of such companies. However, in general, the companies selected for the Peer Group were fairly comparable to Blue Hills Bancorp, as will be highlighted in the following comparative analysis.

Financial Condition

Table 3.2 shows comparative balance sheet measures for Blue Hills Bancorp and the Peer Group, reflecting the expected similarities and some differences given the selection procedures outlined above. The Company’s and the Peer Group’s ratios reflect balances as of December 31, 2013 and September 30, 2013, respectively. Blue Hills Bancorp’s equity-to-assets ratio of 13.1% exceeded the Peer Group’s average net worth ratio of 11.9%. With the infusion of the net conversion proceeds, the Company’s pro forma equity-to-assets ratio should further exceed the Peer Group’s equity-to-assets ratio. Tangible equity-to-assets ratios for the Company and the Peer Group equaled 13.1% and 11.4%, respectively. The increase in Blue Hills Bancorp’s pro forma capital position will be favorable from a risk perspective and in terms of future earnings potential that could be realized through leverage and lower funding costs. At the same time, the Company’s higher pro forma capitalization will initially depress return on equity. Both Blue Hills Bancorp’s and the Peer Group’s capital ratios reflected capital surpluses with respect to the regulatory capital requirements.


*RP ^® Financial, LC.*		*PEER GROUP ANALYSIS*
		*III.6*

Table 3.2

Balance Sheet Composition and Growth Rates

Comparable Institution Analysis

As of September 30, 2013


			Balance Sheet as a Percent of Assets																														Balance Sheet Annual Growth Rates																					Regulatory Capital
			Cash & Equivalents			MBS & Invest			BOLI			Net Loans (1)			Deposits			Borrowed Funds			Sub. Debt			Total Equity			Goodwill & Intang			Tangible Equity			Assets			MBS, Cash & Investments			Loans (1)			Deposits			Borrows. & Subdebt			Total Equity			Tangible Equity			Tangible			Tier 1 Risk-Based			Risk-Based Capital
Blue Hills Bancorp, Inc.
December 31, 2013		MA		3.07	%		34.45	%		2.27	%		58.23	%		69.64	%		16.36	%		0.00	%		13.05	%		0.00	%		13.05	%		6.97	%		-24.06	%		56.77	%		11.90	%		39.23	%		-3.05	%		-3.05	%		11.12	%		15.27	%		16.58	%
All Public Companies
Averages				6.03	%		20.83	%		1.86	%		66.92	%		74.39	%		10.71	%		0.38	%		13.23	%		0.71	%		12.52	%		3.34	%		4.23	%		5.06	%		3.80	%		1.67	%		4.67	%		3.78	%		12.61	%		19.43	%		20.53	%
Medians				3.76	%		16.71	%		1.94	%		69.25	%		75.80	%		8.54	%		0.00	%		12.35	%		0.02	%		11.33	%		1.01	%		-0.58	%		3.31	%		1.18	%		-2.00	%		-0.76	%		-0.59	%		12.30	%		18.11	%		19.32	%
State of MA
Averages				6.13	%		19.49	%		1.78	%		69.88	%		69.09	%		17.21	%		0.24	%		12.57	%		0.49	%		12.08	%		9.09	%		7.80	%		10.84	%		9.03	%		25.05	%		-0.94	%		-1.09	%		14.55	%		17.68	%		18.69	%
Medians				5.12	%		9.89	%		1.42	%		77.74	%		70.26	%		17.29	%		0.00	%		12.06	%		0.00	%		11.93	%		7.74	%		-0.64	%		10.50	%		7.23	%		20.86	%		-2.04	%		-2.04	%		13.84	%		16.90	%		18.00	%
Comparable Recent Conversions(2)
CWAY Coastway Bancorp, Inc.		RI		2.60	%		0.00	%		0.00	%		87.40	%		87.80	%		3.70	%		0.00	%		7.30	%		0.10	%		7.20	%		5.96	%		40.50	%		5.86	%		7.21	%		-14.34	%		1.10	%		1.14	%		7.69	%		9.70	%		10.19	%
Comparable Group
Averages				3.67	%		20.64	%		2.15	%		70.11	%		73.54	%		13.19	%		0.28	%		11.92	%		0.55	%		11.36	%		9.85	%		6.60	%		12.24	%		13.49	%		4.52	%		-1.97	%		-3.37	%		10.41	%		16.87	%		17.91	%
Medians				2.76	%		16.07	%		2.15	%		70.52	%		76.46	%		11.21	%		0.00	%		11.78	%		0.25	%		11.13	%		3.16	%		0.66	%		5.93	%		7.55	%		-10.10	%		-3.90	%		-3.87	%		9.86	%		16.28	%		17.37	%
Comparable Group
BLMT	BSB Bancorp Inc.	MA		4.78	%		14.75	%		1.29	%		77.76	%		71.06	%		15.08	%		0.00	%		12.62	%		0.00	%		12.62	%		24.41	%		47.38	%		20.27	%		25.64	%		50.87	%		-2.67	%		-2.67	%		10.63	%		16.16	%		17.10	%
CBNJ	Cape Bancorp Inc.	NJ		3.00	%		16.06	%		2.88	%		71.30	%		77.10	%		9.30	%		0.00	%		13.08	%		2.12	%		10.96	%		2.98	%		-0.45	%		5.09	%		9.92	%		-23.18	%		-6.93	%		-8.12	%		9.50	%		12.88	%		14.13	%
ESSA	ESSA Bancorp Inc.	PA		2.07	%		23.69	%		2.10	%		67.64	%		75.86	%		11.10	%		0.00	%		12.13	%		0.82	%		11.31	%		-3.28	%		-4.04	%		-2.33	%		4.56	%		-35.14	%		-5.11	%		-5.05	%		11.19	%		19.42	%		20.35	%
FBNK	First Connecticut Bancorp, Inc	CT		2.53	%		6.61	%		1.92	%		86.23	%		77.83	%		8.81	%		0.00	%		11.42	%		0.00	%		11.42	%		13.44	%		7.30	%		15.30	%		23.26	%		-17.36	%		-6.05	%		-6.05	%		9.20	%		14.96	%		16.12	%
FXCB	Fox Chase Bancorp Inc.	PA		0.58	%		31.61	%		1.30	%		63.29	%		61.71	%		21.83	%		0.00	%		15.74	%		0.00	%		15.74	%		3.33	%		1.10	%		3.98	%		-2.86	%		37.04	%		-5.11	%		-5.11	%		13.10	%		18.98	%		20.02	%
OSHC	Ocean Shore Holding Co.	NJ		12.03	%		13.11	%		2.21	%		69.73	%		77.05	%		10.54	%		0.99	%		10.17	%		0.51	%		9.66	%		-1.70	%		-16.84	%		5.20	%		-1.87	%		-4.11	%		1.90	%		2.04	%		9.46	%		19.27	%		20.01	%
OCFC	OceanFirst Financial Corp.	NJ		1.93	%		26.20	%		2.37	%		66.70	%		77.37	%		11.33	%		1.20	%		9.35	%		0.00	%		9.35	%		-0.79	%		0.21	%		-1.69	%		1.66	%		-11.77	%		-2.69	%		-2.69	%		9.38	%		15.02	%		16.27	%
SIFI	SI Financial Group Inc.	CT		3.82	%		14.46	%		1.50	%		75.50	%		73.18	%		13.42	%		0.60	%		11.16	%		1.49	%		9.67	%		44.02	%		5.93	%		53.43	%		41.56	%		89.44	%		19.63	%		6.59	%		8.84	%		14.34	%		15.19	%
THRD	TF Financial Corp.	PA		3.72	%		16.09	%		2.21	%		74.76	%		81.82	%		6.12	%		0.00	%		11.14	%		0.58	%		10.56	%		19.55	%		38.69	%		16.49	%		27.86	%		-32.15	%		13.23	%		13.29	%		10.21	%		16.39	%		17.64	%
WFD	Westfield Financial Inc.	MA		2.24	%		43.86	%		3.68	%		48.20	%		62.42	%		24.38	%		0.00	%		12.34	%		0.00	%		12.34	%		-3.47	%		-13.33	%		6.66	%		5.18	%		-8.43	%		-25.87	%		-25.87	%		12.60	%		21.26	%		22.24	%

(1)	Includes loans held for sale.

(2)	Ratios are based on the date of the most recent financial statements disclosed in the offering prospectus.

Source: SNL Financial, LC. and RP ^® Financial, LC. calculations. The information provided in this table has been obtained from sources we believe are reliable, but we cannot guarantee the accuracy or completeness of such information.


*RP ^® Financial, LC.*		*PEER GROUP ANALYSIS*
		*III.7*

The interest-earning asset compositions for the Company and the Peer Group were somewhat similar, with loans constituting the bulk of interest-earning assets for both Blue Hills Bancorp and the Peer Group. The Company’s loans-to-assets ratio of 58.2% was lower than the comparable Peer Group ratio of 70.1%. Comparatively, the Company’s cash and investments-to-assets ratio of 37.5% exceeded the comparable ratio for the Peer Group of 24.3%. Overall, Blue Hills Bancorp’s interest-earning assets amounted to 95.8% of assets, which was slightly above the comparable Peer Group ratio of 94.4%. The Peer Group’s non-interest earning assets included bank-owned life insurance (“BOLI”) equal to 2.2% of assets and goodwill/intangibles equal to 0.6% of assets, while the Company maintained BOLI equal to 2.3% of assets and a zero balance of goodwill and intangibles.

Blue Hills Bancorp’s funding liabilities reflected a funding strategy that was somewhat similar to that of the Peer Group’s funding composition. The Company’s deposits equaled 69.7% of assets, which was slightly below the comparable Peer Group’s ratio of 73.5%. Comparatively, the Company maintained a slightly higher level of borrowings than the Peer Group, as indicated by borrowings-to-assets ratios of 16.4% and 13.5% for Blue Hills Bancorp and the Peer Group, respectively. Total interest-bearing liabilities maintained by the Company and the Peer Group, as a percent of assets, equaled 86.0% and 87.0%, respectively, with the Company’s slightly lower ratio supported by maintenance of a higher capital position.

A key measure of balance sheet strength for a thrift institution is its IEA/IBL ratio. Presently, the Company’s IEA/IBL ratio is slightly higher than the Peer Group’s ratio, based on IEA/IBL ratios of 111.4% and 108.5%, respectively. The additional capital realized from stock proceeds should serve to provide Blue Hills Bancorp with an IEA/IBL ratio that further exceeds the Peer Group’s ratio, as the increase in capital provided by the infusion of stock proceeds will serve to lower the level of interest-bearing liabilities funding assets and will be primarily deployed into interest-earning assets.

The growth rate section of Table 3.2 shows annual growth rates for key balance sheet items. Blue Hills Bancorp’s and the Peer Group’s growth rates are based on annual growth rates for the twelve months ended December 31, 2013 and September 30, 2013, respectively. Blue Hills Bancorp recorded a 7.0% increase in assets, versus a 9.9% increase in assets recorded by the Peer Group. Asset growth for the Peer Group was in part supported by an


*RP ^® Financial, LC.*		*PEER GROUP ANALYSIS*
		*III.8*

acquisition completed by SI Financial Group. Asset growth by the Company was sustained by a 56.8% increase in loans, which was in part funded by a 24.1% reduction in cash and investments. Comparatively, the Peer Group recorded increases in both loans and cash and investments of 12.2% and 6.6%, respectively.

Blue Hills Bancorp’s asset growth was funded by an 11.9% increase in deposits and a 39.2% increase in borrowings. Comparatively, asset growth for the Peer Group was funded through deposit growth of 13.5% and a 4.5% increase in borrowings. The Company’s and the Peer Group’s capital declined by 3.1% and 2.0%, respectively. The reduction in the Company’s capital was due to a decrease in accumulated other comprehensive income, which was a factor in the Peer Group’s negative capital growth rate as well. Additionally, the decline in the Peer Group’s reflects implementation of capital management strategies such as dividend payments and stock repurchases. The Company’s post-conversion capital growth rate will initially be constrained by maintenance of a higher pro forma capital position. Dividend payments and stock repurchases, pursuant to regulatory limitations and guidelines, could also potentially slow the Company’s capital growth rate in the longer term following the stock offering.

Income and Expense Components

Table 3.3 displays statements of operations for the Company and the Peer Group. The Company’s and the Peer Group’s ratios are based on earnings for the twelve months ended December 31, 2013 and September 30, 2013, respectively. Blue Hills Bancorp and the Peer Group reported net income to average assets ratios of 0.22% and 0.48%, respectively. Higher levels of non-interest operating income and net gains represented earnings advantages for the Company, which were more than offset by earnings advantages maintained by the Peer Group with respect to a higher level of net interest income and lower levels of loan loss provisions and operating expenses.

The Peer Group’s stronger net interest margin was realized through maintenance of a higher interest income ratio, as the Company and the Peer Group maintained similar interest expense ratios. The Peer Group’s higher interest income ratio was supported by maintaining a higher overall yield earned on interest-earning assets (3.86% versus 2.91% for the Company), which was partially offset by the Company’s higher concentration of assets maintained in interest-earning assets. The Company’s and the Peer Group’s interest expense ratios were indicative of their similar cost of funds (0.82% versus 0.85% for the Peer Group). Overall, Blue Hills Bancorp and the Peer Group reported net interest income to average assets ratios of 2.10% and 2.88%, respectively.


*RP ^® Financial, LC.*		*PEER GROUP ANALYSIS*
		*III.9*

Table 3.3

Income as Percent of Average Assets and Yields, Costs, Spreads

Comparable Institution Analysis

For the 12 Months Ended September 30, 2013


						Net Interest Income															Non-Interest Income									Non-Op. Items									Yields, Costs, and Spreads
			Net Income			Income			Expense			NII			Loss Provis. on IEA			NII After Provis.			Gain on Sale of Loans			Other Non-Int Income			Total Non-Int Expense			Net Gains/ Losses (1)			Extrao. Items			Provision for Taxes			Yield On Assets			Cost Of Funds			Yld-Cost Spread			MEMO: Assets/ FTE Emp.		MEMO: Effective Tax Rate
			(%)
Blue Hills Bancorp, Inc.		MA
December 31, 2013				0.22	%		2.77	%		0.67	%		2.10	%		0.34	%		1.76	%		0.10	%		0.53	%		2.65	%		0.46	%		0.00	%		-0.02	%		2.91	%		0.82	%		2.09	%	$	8,941		11.94	%
All Public Companies
Averages				0.52	%		3.75	%		0.75	%		3.01	%		0.22	%		2.80	%		0.45	%		0.57	%		3.04	%		0.12	%		0.00	%		0.04	%		4.04	%		0.96	%		3.10	%	$	5,542		29.28	%
Medians				0.60	%		3.75	%		0.70	%		3.06	%		0.15	%		2.88	%		0.10	%		0.44	%		2.84	%		0.04	%		0.00	%		0.00	%		4.08	%		0.93	%		3.12	%	$	4,989		31.73	%
State of MA
Averages				0.56	%		3.78	%		0.71	%		3.07	%		0.13	%		2.94	%		0.12	%		0.36	%		2.61	%		0.13	%		0.00	%		0.04	%		4.02	%		0.94	%		3.08	%	$	6,880		33.86	%
Medians				0.51	%		3.90	%		0.74	%		3.08	%		0.12	%		2.96	%		0.05	%		0.30	%		2.63	%		0.03	%		0.00	%		0.00	%		4.12	%		0.97	%		3.09	%	$	6,523		36.77	%
Comparable Recent Conversions(2)
CWAY	Coastway Bancorp, Inc.	RI		0.35	%		4.88	%		0.96	%		3.91	%		0.27	%		3.65	%		1.53	%		1.03	%		5.60	%		0.00	%		0.00	%		0.26	%		4.33	%		0.82	%		3.51	%	$	2,619		41.98	%
Comparable Group
Averages				0.48	%		3.56	%		0.68	%		2.88	%		0.15	%		2.74	%		0.11	%		0.41	%		2.59	%		0.16	%		0.00	%		0.21	%		3.86	%		0.85	%		3.01	%	$	6,055		30.84	%
Medians				0.51	%		3.55	%		0.65	%		2.88	%		0.15	%		2.72	%		0.08	%		0.41	%		2.57	%		0.10	%		0.00	%		0.21	%		3.80	%		0.90	%		2.99	%	$	5,956		29.87	%
Comparable Group
BLMT	BSB Bancorp Inc.	MA		0.21	%		3.36	%		0.57	%		2.79	%		0.18	%		2.61	%		0.23	%		0.26	%		2.78	%		0.01	%		0.00	%		0.10	%		3.46	%		0.82	%		2.64	%	$	8,456		37.06	%
CBNJ	Cape Bancorp Inc.	NJ		0.53	%		3.95	%		0.55	%		3.40	%		0.29	%		3.15	%		0.09	%		0.48	%		2.89	%		0.14	%		0.00	%		0.40	%		4.38	%		0.69	%		3.69	%	$	5,399		44.24	%
ESSA	ESSA Bancorp Inc.	PA		0.64	%		3.68	%		0.81	%		2.87	%		0.27	%		2.62	%		0.03	%		0.49	%		2.34	%		0.05	%		0.00	%		0.21	%		3.96	%		0.98	%		2.98	%	$	5,424		24.31	%
FBNK	First Connecticut Bancorp, Inc	CT		0.31	%		3.42	%		0.53	%		2.89	%		0.06	%		2.83	%		0.34	%		0.32	%		3.10	%		0.04	%		0.00	%		0.10	%		3.67	%		0.66	%		3.01	%	$	5,983		26.68	%
FXCB	Fox Chase Bancorp Inc.	PA		0.55	%		3.69	%		0.74	%		2.96	%		0.09	%		2.87	%		0.00	%		0.28	%		2.50	%		0.14	%		0.00	%		0.23	%		3.82	%		1.03	%		2.79	%	$	7,815		29.87	%
OSHC	Ocean Shore Holding Co.	NJ		0.48	%		3.31	%		0.84	%		2.47	%		0.09	%		2.36	%		0.00	%		0.42	%		2.06	%		0.01	%		0.00	%		0.27	%		4.20	%		1.08	%		3.12	%	$	5,928		36.01	%
OCFC	OceanFirst Financial Corp.	NJ		0.80	%		3.53	%		0.48	%		3.05	%		0.25	%		2.85	%		0.07	%		0.66	%		2.30	%		0.01	%		0.00	%		0.44	%		3.69	%		0.60	%		3.09	%	$	6,128		35.06	%
SIFI	SI Financial Group Inc.	CT		-0.12	%		3.56	%		0.89	%		2.67	%		0.13	%		2.54	%		0.16	%		0.75	%		3.23	%		0.21	%		0.00	%		-0.02	%		3.77	%		1.05	%		2.72	%	$	4,632		NM
THRD	TF Financial Corp.	PA		0.88	%		3.88	%		0.54	%		3.34	%		0.20	%		3.18	%		0.14	%		0.39	%		2.63	%		0.65	%		0.00	%		0.21	%		4.25	%		0.62	%		3.63	%	$	4,063		20.95	%
WFD	Westfield Financial Inc.	MA		0.50	%		3.20	%		0.84	%		2.37	%		-0.03	%		2.40	%		0.00	%		-0.01	%		2.07	%		0.34	%		0.00	%		0.16	%		3.44	%		1.01	%		2.43	%	$	6,726		23.40	%

(1)	Net gains/losses includes gain/loss on sale of securities and nonrecurring income and expense.

(2)	Ratios are based on the date of the most recent financial statements disclosed in the offering prospectus.


*RP ^® Financial, LC.*		*PEER GROUP ANALYSIS*
		*III.10*

In another key area of core earnings strength, the Peer Group maintained a slightly lower level of operating expenses than the Company. For the period covered in Table 3.3, the Company and the Peer Group reported operating expenses to average assets ratios of 2.65% and 2.59%, respectively. The Peer Group’s lower operating expense ratio was achieved despite maintaining a comparatively lower ratio of assets per full time equivalent employees. Assets per full time equivalent employee equaled $8.9 million for Blue Hills Bancorp versus $6.1 million for the Peer Group. On a post-offering basis, the Company’s operating expenses can be expected to increase with the addition of stock benefit plans and certain expenses that result from being a publicly-traded company, with such expenses already impacting the Peer Group’s operating expenses. At the same time, Blue Hills Bancorp’s capacity to leverage operating expenses will become even more significant than the Peer Group’s leverage capacity following the increase in capital realized from the infusion of net stock proceeds.

When viewed together, net interest income and operating expenses provide considerable insight into a thrift’s earnings strength, since those sources of income and expenses are typically the most prominent components of earnings and are generally more predictable than losses and gains realized from the sale of assets or other non-recurring activities. In this regard, as measured by their expense coverage ratios (net interest income divided by operating expenses), the Peer Group’s earnings were more favorable than the Company’s. Expense coverage ratios for Blue Hills Bancorp and the Peer Group equaled 0.79x and 1.11x, respectively.

Sources of non-interest operating income provided a larger contribution to the Company’s earnings, with such income amounting to 0.63% and 0.52% of Blue Hills Bancorp’s and the Peer Group’s average assets, respectively. Taking non-interest operating income into account in comparing the Company’s and the Peer Group’s earnings, Blue Hills Bancorp’s efficiency ratio (operating expenses as a percent of the sum of non-interest operating income and net interest income) of 97.07% was less favorable than the Peer Group’s efficiency ratio of 76.18%.

Loan loss provisions had a larger impact on the Company’s earnings, with loan loss provisions established by the Company and the Peer Group equaling 0.34% and 0.15% of average assets, respectively. The higher level of loan loss provisions established by the Company was related to it more significant loan growth compared to the Peer Group, as opposed to addressing deterioration in credit quality.


*RP ^® Financial, LC.*		*PEER GROUP ANALYSIS*
		*III.11*

Net gains and losses realized from the sale of assets other than loans had a larger impact on the Company’s earnings, as the Company and the Peer Group reported net non-operating gains equal to 0.46% and 0.16%of average assets, respectively. Typically, gains and losses generated from the sale of assets are viewed as earnings with a relatively high degree of volatility, particularly to the extent that such gains and losses result from the sale of investments or other assets that are not considered to be part of an institution’s core operations. Extraordinary items were not a factor in either the Company’s or the Peer Group’s earnings.

Taxes had a less significant impact on the Company’s earnings, as the Company and the Peer Group posted effective tax rates of 11.94% and 30.84%, respectively. As indicated in the prospectus, the Company’s effective marginal tax rate is equal to 40.0%.

Loan Composition

Table 3.4 presents data related to the Company’s and the Peer Group’s loan portfolio compositions (including the investment in mortgage-backed securities). The Company’s loan portfolio composition reflected a lower concentration of 1-4 family permanent mortgage loans and mortgage-backed securities than maintained by the Peer Group (36.5% of assets versus 52.7% for the Peer Group). The Company maintained lower concentrations of both mortgage-backed securities and 1-4 family permanent mortgage loans relative to the Peer Group’s ratios. Loans serviced for others equaled 3.6% and 11.5% of the Company’s and the Peer Group’s assets, respectively, thereby indicating a greater influence of loan servicing income on the Peer Group’s earnings. Both the Company and the Peer Group maintained relatively modest balances of loan servicing intangibles.

Diversification into higher risk and higher yielding types of lending was similar for the Company and the Peer Group. Commercial real estate loans represented the most significant area of lending diversification for the Company and the Peer Group, equaling 13.4% and 19.2% of their respective assets. The Peer Group also maintained a slightly higher concentration of construction/land loans, while multi-family loans, commercial business loans and consumer loans constituted more significant areas of lending diversification for the Company. In total, construction/land, commercial real estate, multi-family, commercial business and consumer loans comprised 31.0% and 30.6% of the Company’s and the Peer Group’s assets, respectively. Overall, the compositions of the Company’s and the Peer Group’s assets translated into similar risk weighted assets-to-assets ratios of 68.85% and 67.97%, respectively.


*RP ^® Financial, LC.*		*PEER GROUP ANALYSIS*
		*III.12*

Table 3.4

Loan Portfolio Composition and Related Information

Comparable Institution Analysis

As of September 30, 2013


			Portfolio Composition as a Percent of Assets
Institution			MBS			1-4 Family			Constr. & Land			Multi- Family			Comm RE			Commerc. Business			Consumer			RWA/ Assets			Serviced For Others		Servicing Assets
			(%)			(%)			(%)			(%)			(%)			(%)			(%)			(%)			($000)		($000)
Blue Hills Bancorp, Inc.		MA		8.67	%		27.83	%		1.26	%		4.05	%		13.35	%		8.46	%		3.87	%		68.85	%	$	47,599	$	257
December 31, 2013
All Public Companies
Averages				12.38	%		33.17	%		2.92	%		7.27	%		17.31	%		4.13	%		1.86	%		64.55	%	$	1,583,919	$	15,855
Medians				10.41	%		32.22	%		2.00	%		2.48	%		17.76	%		2.87	%		0.32	%		65.28	%	$	30,304	$	275
State of MA
Averages				8.73	%		35.80	%		5.72	%		5.24	%		21.02	%		5.57	%		2.18	%		71.42	%	$	117,830	$	699
Medians				6.44	%		34.70	%		4.60	%		2.35	%		18.85	%		4.06	%		0.33	%		71.56	%	$	66,178	$	258
Comparable Recent Conversions(1)
CWAY	Coastway Bancorp, Inc.	RI		0.00	%		34.74	%		1.66	%		1.40	%		28.15	%		4.99	%		0.50	%		76.33	%	$	2,810	$	0
Comparable Group
Averages				13.07	%		39.62	%		1.70	%		3.06	%		19.24	%		5.52	%		1.07	%		67.97	%	$	155,594	$	1,097
Medians				8.73	%		39.79	%		1.24	%		2.29	%		18.62	%		4.58	%		0.12	%		69.37	%	$	45,920	$	380
Comparable Group
BLMT	BSB Bancorp Inc.	MA		9.69	%		37.39	%		2.04	%		11.17	%		18.33	%		0.28	%		9.26	%		77.36	%	$	63,299	$	378
CBNJ	Cape Bancorp Inc.	NJ		7.78	%		29.99	%		1.21	%		3.72	%		30.34	%		6.85	%		0.07	%		71.32	%	$	2,024	$	3
ESSA	ESSA Bancorp Inc.	PA		15.63	%		54.53	%		1.27	%		1.50	%		7.68	%		0.64	%		0.16	%		57.02	%	$	0	$	382
FBNK	First Connecticut Bancorp, Inc	CT		0.55	%		41.91	%		4.58	%		4.31	%		25.09	%		11.13	%		0.10	%		78.30	%	$	283,093	$	2,888
FXCB	Fox Chase Bancorp Inc.	PA		29.75	%		17.15	%		0.70	%		1.57	%		28.77	%		12.96	%		0.02	%		69.37	%	$	28,540	$	157
OSHC	Ocean Shore Holding Co.	NJ		7.69	%		58.12	%		2.43	%		0.41	%		8.15	%		0.91	%		0.08	%		NA		$	0	$	4
OCFC	OceanFirst Financial Corp.	NJ		15.92	%		44.02	%		1.59	%		0.55	%		18.92	%		2.31	%		0.01	%		NA		$	813,481	$	4,314
SIFI	SI Financial Group Inc.	CT		6.53	%		37.67	%		1.19	%		2.77	%		23.51	%		9.79	%		0.69	%		NA		$	213,731	$	1,368
THRD	TF Financial Corp.	PA		5.85	%		56.66	%		1.07	%		2.20	%		14.72	%		0.70	%		0.22	%		62.95	%	$	150,298	$	1,471
WFD	Westfield Financial Inc.	MA		31.33	%		18.78	%		0.96	%		2.38	%		16.85	%		9.67	%		0.14	%		59.46	%	$	1,476	$	0

(1)	Ratios are based on the date of the most recent financial statements disclosed in the offering prospectus.

Source:

SNL Financial LC. and RP ^® Financial, LC. calculations. The information provided in this table has been obtained from sources we believe are reliable, but we cannot guarantee the accuracy or completeness of such information.


*RP ^® Financial, LC.*		*PEER GROUP ANALYSIS*
		*III.13*

Interest Rate Risk

Table 3.5 reflects various key ratios highlighting the relative interest rate risk exposure of the Company versus the Peer Group. In terms of balance sheet composition, Blue Hills Bancorp’s interest rate risk characteristics were considered to be somewhat similar relative to the comparable measures for the Peer Group. Most notably, the Company’s higher tangible equity-to-assets ratio and lower ratio of average non-interest earning assets were viewed to be somewhat offset by the Peer Group’s higher ratio for average IEA/average IBL. On a pro forma basis, the infusion of stock proceeds should serve to provide the Company with more favorable balance sheet interest rate risk characteristics, with respect to the increases that will be realized in Company’s equity-to-assets and average IEA/average IBL ratios.

To analyze interest rate risk associated with the net interest margin, we reviewed quarterly changes in net interest income as a percent of average assets for Blue Hills Bancorp and the Peer Group. In general, the relative fluctuations in the Company’s and the Peer Group’s net interest income to average assets ratios were considered to be fairly comparable. Accordingly, based on the interest rate environment that prevailed during the period analyzed in Table 3.5, Blue Hills Bancorp and the Peer Group were viewed as maintaining a similar degree of interest rate risk exposure in their respective net interest margins. The stability of the Company’s net interest margin should be enhanced by the infusion of stock proceeds, as the increase in capital will reduce the level of interest rate sensitive liabilities funding Blue Hills Bancorp’s assets.

Credit Risk

Overall, based on a comparison of credit quality measures, the Company’s credit risk exposure was considered to be less than Peer Group’s. As shown in Table 3.6, the Company’s non-performing assets/assets and non-performing loans/loans ratios equaled 0.15% and 0.26%, respectively, versus comparable measures of 1.73% and 2.12% for the Peer Group. It should be noted that the measures for non-performing assets and non-performing loans include performing loans that are classified as troubled debt restructurings. The Company’s and Peer Group’s loss reserves as a percent of non-performing loans equaled 478.53% and 54.78%,


*RP ^® Financial, LC.*		*PEER GROUP ANALYSIS*
		*III.14*

Table 3.5

Interest Rate Risk Measures and Net Interest Income Volatility

Comparable Institution Analysis

As of September 30, 2013


			Balance Sheet Measures									Quarterly Change in Net Interest Income
Institution			Tangible Equity/ Assets			Avg IEA/ Avg IBL			Non-Earn. Assets/ Assets			9/30/2013		6/30/2013		3/31/2013		12/31/2012		9/30/2012		6/30/2012
			(%)			(%)			(%)			(change in net interest income is annualized in basis points)
Blue Hillls Bancorp, Inc.		MA		13.1	%		117.3	%		4.7	%		-3		12		-44		0		16		7
December 31, 2013
All Public Companies				12.6	%		121.2	%		7.6	%		2		-2		-7		-2		-1		-1
State of MA				11.7	%		125.4	%		7.7	%		5		-1		-2		-2		-3		-5
Comparable Recent Conversions(1)
CWAY	Coastway Bancorp, Inc.	RI		7.2	%		121.5	%		9.2	%		-2		17		-33		-1		-4		-19
Comparable Group
Average				11.4	%		122.1	%		9.9	%		2		-2		-11		1		5		-7
Median				11.3	%		121.6	%		8.1	%		3		-2		-8		-3		4		-7
Comparable Group
BLMT	BSB Bancorp Inc.			12.6	%		135.8	%		9.0	%		11		-7		-3		-10		23		-36
CBNJ	Cape Bancorp Inc.			11.2	%		118.4	%		11.2	%		5		1		-6		-5		17		-3
ESSA	ESSA Bancorp Inc.			11.4	%		113.2	%		7.1	%		-10		1		-23		42		21		-3
FBNK	First Connecticut Bancorp, Inc			11.4	%		130.8	%		10.0	%		-3		-2		-34		8		1		-9
FXCB	Fox Chase Bancorp Inc.			15.7	%		133.5	%		3.4	%		7		-5		-7		-17		11		-8
OSHC	Ocean Shore Holding Co.			9.7	%		103.7	%		18.1	%		2		5		0		-2		-18		-11
OCFC	OceanFirst Financial Corp.			9.4	%		119.3	%		3.0	%		-1		5		-13		1		-11		-13
SIFI	SI Financial Group Inc.			9.8	%		122.6	%		27.9	%		5		-4		-8		1		2		-6
THRD	TF Financial Corp.			10.6	%		NA			4.6	%		0		-8		-23		-5		6		17
WFD	Westfield Financial Inc.			12.3	%		121.6	%		4.8	%		8		-2		6		-4		-3		3

NA=Change is greater than 100 basis points during the quarter.

(1)	Ratios are based on the date of the most recent financial statements disclosed in the offering prospectus.

Source:


*RP ^® Financial, LC.*		*PEER GROUP ANALYSIS*
		*III.15*

Table 3.6

Credit Risk Measures and Related Information

Comparable Institution Analysis

As of September 30, 2013


Institution			REO/ Assets			NPAs & 90+Del/ Assets (1)			NPLs/ Loans (1)			Rsrves/ Loans HFI			Rsrves/ NPLs (1)			Rsrves/ NPAs & 90+Del (1)			Net Loan Chargeoffs (2)		NLCs/ Loans
			(%)			(%)			(%)			(%)			(%)			(%)			($000)		(%)
Blue Hills Bancorp, Inc.		MA		0.00	%		0.15	%		0.26	%		1.25	%		478.53	%		478.53	%	-$	27		0.00	%
December 31, 2013
All Public Companies
Averages				0.41	%		2.67	%		3.29	%		1.43	%		68.48	%		55.00	%	$	6,321		0.43	%
Medians				0.16	%		1.74	%		2.32	%		1.25	%		52.57	%		44.95	%	$	1,219		0.23	%
State of MA
Averages				0.05	%		1.15	%		1.53	%		0.99	%		82.61	%		77.06	%	$	1,498		0.08	%
Medians				0.04	%		1.22	%		1.51	%		0.98	%		61.57	%		59.56	%	$	318		0.07	%
Comparable Recent Conversions(3)
CWAY	Coastway Bancorp, Inc.	RI		0.44	%		3.06	%		1.56	%		0.42	%		13.93	%		11.92	%	$	385		0.13	%
Comparable Group
Averages				0.25	%		1.73	%		2.12	%		1.04	%		54.78	%		44.50	%	$	1,747		0.21	%
Medians				0.13	%		1.65	%		1.82	%		1.04	%		55.11	%		45.87	%	$	1,247		0.13	%
Comparable Group
BLMT	BSB Bancorp Inc.			0.00	%		1.17	%		1.49	%		0.91	%		61.37	%		61.37	%	$	215		0.03	%
CBNJ	Cape Bancorp Inc.			0.69	%		2.01	%		1.73	%		1.29	%		74.42	%		46.41	%	$	5,445		0.74	%
ESSA	ESSA Bancorp Inc.			0.15	%		2.42	%		3.32	%		0.86	%		25.93	%		24.28	%	$	2,988		0.32	%
FBNK	First Connecticut Bancorp, Inc			0.01	%		1.67	%		1.90	%		1.02	%		53.67	%		53.21	%	$	1,427		0.09	%
FXCB	Fox Chase Bancorp Inc.			0.60	%		2.22	%		2.29	%		1.56	%		68.18	%		45.33	%	$	1,066		0.15	%
OSHC	Ocean Shore Holding Co.			0.09	%		0.80	%		1.02	%		0.58	%		56.55	%		50.40	%	$	384		0.05	%
OCFC	OceanFirst Financial Corp.			0.19	%		2.95	%		4.08	%		1.35	%		33.11	%		31.01	%	$	3,104		0.20	%
SIFI	SI Financial Group Inc.			0.11	%		1.11	%		1.31	%		0.61	%		46.40	%		41.74	%	$	783		0.11	%
THRD	TF Financial Corp.			0.69	%		1.62	%		1.23	%		1.06	%		86.30	%		49.42	%	$	1,570		0.29	%
WFD	Westfield Financial Inc.			0.00	%		1.37	%		2.82	%		1.18	%		41.83	%		41.83	%	$	489		0.08	%

(1)	Includes TDRs for the Company and the Peer Group.

(2)	Net loan chargeoffs are shown on a last twelve month basis.

(3)	Ratios are based on the date of the most recent financial statements disclosed in the offering prospectus.

Source:


*RP ^® Financial, LC.*		*PEER GROUP ANALYSIS*
		*III.16*

respectively. Loss reserves maintained as percent of net loans receivable equaled 1.25% for the Company, versus 1.04% for the Peer Group. Net loan charge-offs were lower for the Company, as net loan charge-offs for the Company equaled a nominal recovery versus 0.21% of loans for the Peer Group.

Summary

Based on the above analysis, RP Financial concluded that the Peer Group forms a reasonable basis for determining the pro forma market value of the Company. Such general characteristics as asset size, capital position, interest-earning asset composition, funding composition, core earnings measures, loan composition, credit quality and exposure to interest rate risk all tend to support the reasonability of the Peer Group from a financial standpoint. Those areas where differences exist will be addressed in the form of valuation adjustments to the extent necessary.


*RP ^® Financial, LC.*		*VALUATION ANALYSIS*
		*IV.1*

IV. VALUATION ANALYSIS

Introduction

This chapter presents the valuation analysis and methodology prepared pursuant to the regulatory valuation guidelines, and valuation adjustments and assumptions used to determine the estimated pro forma market value of the common stock to be issued in conjunction with the Company’s conversion transaction.

Appraisal Guidelines

The federal regulatory appraisal guidelines required by the FRB, the FDIC and the Commissioner specify the pro forma market value methodology for estimating the pro forma market value of a converting thrift. Pursuant to this methodology: (1) a peer group of comparable publicly-traded institutions is selected; (2) a financial and operational comparison of the subject company to the peer group is conducted to discern key differences; and (3) a valuation analysis in which the pro forma market value of the subject company is determined based on the market pricing of the peer group as of the date of valuation, incorporating valuation adjustments for key differences. In addition, the pricing characteristics of recent conversions, both at conversion and in the aftermarket, must be considered.

RP Financial Approach to the Valuation

The valuation analysis herein complies with such regulatory approval guidelines. Accordingly, the valuation incorporates a detailed analysis based on the Peer Group, discussed in Chapter III, which constitutes “fundamental analysis” techniques. Additionally, the valuation incorporates a “technical analysis” of recently completed stock conversions, including closing pricing and aftermarket trading of such offerings. It should be noted that these valuation analyses cannot possibly fully account for all the market forces which impact trading activity and pricing characteristics of a particular stock on a given day.

The pro forma market value determined herein is a preliminary value for the Company’s to-be-issued stock. Throughout the conversion process, RP Financial will: (1) review changes in Blue Hills Bancorp’s operations and financial condition; (2) monitor Blue Hills Bancorp’s operations and financial condition relative to the Peer Group to identify any fundamental


*RP ^® Financial, LC.*		*VALUATION ANALYSIS*
		*IV.2*

changes; (3) monitor the external factors affecting value including, but not limited to, local and national economic conditions, interest rates, and the stock market environment, including the market for thrift stocks; and (4) monitor pending conversion offerings (including those in the offering phase), both regionally and nationally. If material changes should occur during the conversion process, RP Financial will evaluate if updated valuation reports should be prepared reflecting such changes and their related impact on value, if any. RP Financial will also prepare a final valuation update at the closing of the offering to determine if the prepared valuation analysis and resulting range of value continues to be appropriate.

The appraised value determined herein is based on the current market and operating environment for the Company and for all thrifts. Subsequent changes in the local and national economy, the legislative and regulatory environment, the stock market, interest rates, and other external forces (such as natural disasters or major world events), which may occur from time to time (often with great unpredictability) may materially impact the market value of all thrift stocks, including Blue Hills Bancorp’s value, or Blue Hills Bancorp’s value alone. To the extent a change in factors impacting the Company’s value can be reasonably anticipated and/or quantified, RP Financial has incorporated the estimated impact into the analysis.

Valuation Analysis

A fundamental analysis discussing similarities and differences relative to the Peer Group was presented in Chapter III. The following sections summarize the key differences between the Company and the Peer Group and how those differences affect the pro forma valuation. Emphasis is placed on the specific strengths and weaknesses of the Company relative to the Peer Group in such key areas as financial condition, profitability, growth and viability of earnings, asset growth, primary market area, dividends, liquidity of the shares, marketing of the issue, management, and the effect of government regulations and/or regulatory reform. We have also considered the market for thrift stocks, in particular new issues, to assess the impact on value of the Company coming to market at this time.

1.	Financial Condition

The financial condition of an institution is an important determinant in pro forma market value because investors typically look to such factors as liquidity, capital, asset composition and quality, and funding sources in assessing investment attractiveness. The similarities and differences in the Company’s and the Peer Group’s financial strengths are noted as follows:


*RP ^® Financial, LC.*		*VALUATION ANALYSIS*
		*IV.3*

•

Overall A/L Composition . In comparison to the Peer Group, the Company’s interest-earning asset composition showed a lower concentration of loans and a higher concentration of investments. The Company’s and the Peer Group’s loan portfolio compositions as a percent of assets reflected similar degrees of diversification into higher risk and higher yielding types of loans. Overall, in comparison to the Peer Group, the Company’s interest-earning asset composition provided for a lower yield earned on interest-earning assets and a similar risk weighted assets-to-assets ratio. Blue Hills Bancorp’s funding composition reflected a slightly lower level of deposits and a slightly higher level of borrowings relative to the comparable Peer Group ratios, which translated into similar cost of funds for the Company and the Peer Group. Overall, as a percent of assets, the Company maintained a slightly higher level of interest-earning assets and a slightly lower level of interest-bearing liabilities compared to the Peer Group’s ratios, which resulted in a higher IEA/IBL ratio for the Company. After factoring in the impact of the net stock proceeds, the Company’s IEA/IBL ratio should further exceed the Peer Group’s ratio. On balance, RP Financial concluded that asset/liability composition was a neutral factor in our adjustment for financial condition.

•

Credit Quality. The Company’s ratios for non-performing assets and non-performing loans were more favorable than the comparable Peer Group ratios. Loss reserves as a percent of non-performing loans and as a percent of loans were higher for the Company. Net loan charge-offs were a larger factor for the Peer Group. As noted above, the Company’s risk weighted assets-to-assets ratio was similar to the Peer Group’s ratio. Overall, RP Financial concluded that credit quality was a moderately positive factor in our adjustment for financial condition.

•

Balance Sheet Liquidity . The Company operated with a higher level of cash and investment securities relative to the Peer Group (37.5% of assets versus 24.3% for the Peer Group). Following the infusion of stock proceeds, the Company’s cash and investments ratio is expected to increase as the proceeds retained at the holding company level will be initially deployed into investments. The Company’s future borrowing capacity was considered to be comparable to the Peer Group’s borrowing capacity. Overall, RP Financial concluded that balance sheet liquidity was a slightly positive factor in our adjustment for financial condition.

•

Funding Liabilities . The Company’s interest-bearing funding composition reflected a slightly lower concentration of deposits and a slightly higher level of borrowings relative to the comparable Peer Group ratios, which translated into similar cost of funds for the Company and the Peer Group. Total interest-bearing liabilities as a percent of assets were slightly lower for the Company compared to the Peer Group’s ratio, which was attributable to Blue Hills Bancorp’s higher capital position. Following the stock offering, the increase in the Company’s capital position will reduce the level of interest-bearing liabilities funding the Company’s assets. Overall, RP Financial concluded that funding liabilities were a slightly positive factor in our adjustment for financial condition.

•

Capital . The Company currently operates with a slightly higher equity-to-assets ratio than the Peer Group. Accordingly, following the stock offering, Blue Hills Bancorp’s pro forma capital position will further exceed the Peer Group’s equity-to-assets ratio.


*RP ^® Financial, LC.*		*VALUATION ANALYSIS*
		*IV.4*

The increase in the Company’s pro forma capital position will result in greater leverage potential and reduce the level of interest-bearing liabilities utilized to fund assets. At the same time, the Company’s more significant capital surplus will likely result in a lower ROE. On balance, RP Financial concluded that capital strength was a slightly positive factor in our adjustment for financial condition.

On balance, Blue Hills Bancorp’s balance sheet strength was considered to be more favorable than the Peer Group’s and, thus, a slight upward adjustment was applied for the Company’s financial condition.

2.	Profitability, Growth and Viability of Earnings

Earnings are a key factor in determining pro forma market value, as the level and risk characteristics of an institution’s earnings stream and the prospects and ability to generate future earnings heavily influence the multiple that the investment community will pay for earnings. The major factors considered in the valuation are described below.

•

Reported Earnings . The Company’s reported earnings were lower than the Peer Group’s on a ROAA basis (0.22% of average assets versus 0.48% for the Peer Group). The Company maintained more favorable ratios for non-interest operating income, non-operating gains and effective tax rate, which were more than offset by the Peer Group’s more favorable ratios for net interest income, loan loss provisions and operating expense. Reinvestment of stock proceeds into interest-earning assets will serve to increase the Company’s earnings, with the benefit of reinvesting proceeds expected to be somewhat offset by higher operating expenses associated with operating as a publicly-traded company and the implementation of stock benefit plans. Overall, given the Company’s lower reported earnings and that non-operating gains were a larger contributor to the Company’s reported earnings, the Company’s pro forma reported earnings were viewed as not as strong as the Peer Group’s earnings and, thus, RP Financial concluded that reported earnings were a moderately negative factor in our adjustment for profitability, growth and viability of earnings.

•

Core Earnings . Net interest income, operating expenses, non-interest operating income and loan loss provisions were reviewed in assessing the relative strengths and weaknesses of the Company’s and the Peer Group’s core earnings. In these measures, the Company operated with a lower net interest margin, a higher operating expense ratio, a higher level of non-interest operating income and a lower level of loan loss provisions. The Company’s lower ratio for net interest income and high ratio for operating expenses translated into a lower expense coverage ratio in comparison to the Peer Group’s ratio (equal to 0.79x versus 1.11X for the Peer Group). Likewise, the Company’s efficiency ratio of 97.07% was less favorable than the Peer Group’s efficiency ratio of 76.18%. Loan loss provisions had a more significant impact on the Company’s earnings. Overall, these measures, as well as the expected earnings benefits the Company should realize from the redeployment of stock proceeds into interest-earning assets and leveraging of post-conversion capital, which will be somewhat negated by expenses associated with the stock


*RP ^® Financial, LC.*		*VALUATION ANALYSIS*
		*IV.5*

benefit plans and operating as a publicly-traded company, indicate that the Company’s pro forma core earnings will be less favorable than the Peer Group’s core earnings. Therefore, RP Financial concluded that this was a moderately negative factor in our adjustment for profitability, growth and viability of earnings.

•

Interest Rate Risk . Quarterly changes in the Company’s and the Peer Group’s net interest income to average assets ratios indicated a similar degree of volatility was associated with the Company’s and the Peer Group’s net interest margins. Other measures of interest rate risk, such as capital and average IEA/IBL ratios and average ratio of non-interest earning assets/average assets were more favorable for the Company except for the Peer Group’s slightly higher average IEA/IBL ratio. On a pro forma basis, the infusion of stock proceeds can be expected to provide the Company with equity-to-assets and average IEA/ILB ratios that will be above the Peer Group ratios, as well as enhance the stability of the Company’s net interest margin through the reinvestment of stock proceeds into interest-earning assets. On balance, RP Financial concluded that interest rate risk was a slightly positive factor in our adjustment for profitability, growth and viability of earnings.

•

Credit Risk . Loan loss provisions were a larger factor in the Company’s earnings (0.34% of average assets versus 0.15% of average assets for the Peer Group). In terms of future exposure to credit quality related losses, the Peer Group maintained a higher concentration of assets in loans, while lending diversification into higher risk types of loans was similar for the Company and the Peer Group. Credit quality measures for non-performing assets and loss reserves as a percent of non-performing loans and as a percent of loans were more favorable for the Company. Overall, RP Financial concluded that credit risk was a moderately positive factor in our adjustment for profitability, growth and viability of earnings.

•

Earnings Growth Potential . Several factors were considered in assessing earnings growth potential. First, the Peer Group maintained a more favorable interest rate spread than the Company, which would tend to support a stronger net interest margin going forward for the Peer Group. Second, the infusion of stock proceeds will provide the Company with more significant growth potential through leverage than currently maintained by the Peer Group. Third, the Company’s higher ratio of non-interest operating income and the Peer Group’s lower operating expense ratio were viewed as respective advantages for the Company and Peer Group to sustain earnings growth during periods when net interest margins come under pressure as the result of adverse changes in interest rates. Overall, earnings growth potential was considered to be a neutral factor in our adjustment for profitability, growth and viability of earnings.

•

Return on Equity . Currently, the Company’s core ROE is lower than the Peer Group’s core ROE. Accordingly, as the result of the significant increase in capital that will be realized from the infusion of net stock proceeds into the Company’s equity, the Company’s pro forma return on equity on a core earnings basis will continue to be less than the Peer Group’s return on equity ratio. Accordingly, this was a moderately negative factor in the adjustment for profitability, growth and viability of earnings.

On balance, Blue Hills Bancorp’s pro forma earnings strength was considered to be less favorable than the Peer Group’s and, thus, a moderate downward adjustment was applied for profitability, growth and viability of earnings.


*RP ^® Financial, LC.*		*VALUATION ANALYSIS*
		*IV.6*

3.	Asset Growth

The Company recorded a 7.0% increase in assets, versus a 9.9% increase in assets recorded by the Peer Group. Asset growth for the Peer Group included acquisition related growth by one of the Peer Group companies. Asset growth for the Company was driven by a significant increase in loans, which was partially funded with cash and investments. Likewise, the Peer Group’s asset growth was primarily sustained by loan growth and supplemented with growth of cash and investments. Overall, as compared to the Peer Group, the Company’s recent asset growth trends, as well as the growth that will be provided by the Nantucket Bank acquisition, would tend to be viewed more favorably in terms of supporting future earnings growth. At the same time, there is more implied credit risk exposures associated with the Company’s relatively high rate of loan growth. On a pro forma basis, the Company’s tangible equity-to-assets ratio will exceed the Peer Group’s tangible equity-to-assets ratio, indicating greater leverage capacity for the Company. On balance, a slight upward adjustment was applied for asset growth.

4.	Primary Market Area

The general condition of an institution’s market area has an impact on value, as future success is in part dependent upon opportunities for profitable activities in the local market served. Blue Hills Bancorp serves the Boston metropolitan area and the island of Nantucket through the main office and eight additional branch locations. Operating in a densely populated market area provides the Company with growth opportunities, but such growth must be achieved in a highly competitive market environment. The Company competes against significantly larger institutions that provide a larger array of services and have significantly larger branch networks than maintained by Blue Hills Bancorp. The competitiveness of the market area is highlighted by the Company’s relatively low market share of deposits in Suffolk County.

On average, the Peer Group companies generally operate in markets with lower population densities compared to Suffolk County. Population growth for the primary market area counties served by the Peer Group companies reflect a range of growth rates, but overall population growth rates in the markets served by the Peer Group companies were lower


*RP ^® Financial, LC.*		*VALUATION ANALYSIS*
		*IV.7*

compared to Suffolk County’s population growth rate in recent years. Suffolk County has a lower per capita income compared to the Peer Group’s average per capita income and the Peer Group’s primary market area counties were relatively more affluent markets within their respective states compared to Suffolk County which had a comparatively lower per capita income compared to Massachusetts’ per capita income. The average and median deposit market shares maintained by the Peer Group companies were well above the Company’s market share of deposits in Suffolk County. Overall, the degree of competition faced by the Peer Group companies was viewed as less than faced by the Company, while the growth potential in the markets served by the Peer Group companies was for the most part viewed to be not quite as strong as the Company’s primary market area. Summary demographic and deposit market share data for the Company and the Peer Group companies is provided in Exhibit III-4. As shown in Table 4.1, the average unemployment rate for the primary market area counties served by the Peer Group companies was above the unemployment rate reflected for Suffolk County. On balance, we concluded that a slight upward adjustment was appropriate for the Company’s market area.

Table 4.1

Market Area Unemployment Rates

Blue Hills Bancorp, Inc. and the Peer Group Companies(1)


	County	November 2013 Unemployment
Blue Hills Bancorp, Inc. – MA	Suffolk		6.4	%
Peer Group Average			8.1	%
BSB Bancorp, Inc. – MA	Middlesex		5.2	%
Cape Bancorp, Inc. – NJ	Cape May		12.3
ESSA Bancorp, Inc. – PA	Monroe		8.7
First Connecticut Bancorp – CT	Hartford		7.1
Fox Chase Bancorp, Inc. – PA	Montgomery		5.7
Ocean Shore Holding Co. – NJ	Cape May		12.3
OceanFirst Financial Corp. – NJ	Ocean		7.2
SI Financial Group, Inc. – CT	Windham		7.6
TF Financial Corp. – PA	Montgomery		6.2
Westfield Financial Inc. – MA	Hampden		8.5

(1)	Unemployment rates are not seasonally adjusted.

Source: U.S. Bureau of Labor Statistics.


*RP ^® Financial, LC.*		*VALUATION ANALYSIS*
		*IV.8*

Dividends

At this time the Company has not established a dividend policy. Future declarations of dividends by the Board of Directors will depend upon a number of factors, including investment opportunities, growth objectives, financial condition, profitability, tax considerations, minimum capital requirements, regulatory limitations, stock market characteristics and general economic conditions.

Nine out of the ten Peer Group companies pay regular cash dividends, with implied dividend yields ranging from 0.77% to 3.19%. The average dividend yield on the stocks of the Peer Group institutions equaled 1.75% as of February 14, 2011. Comparatively, as of February 14, 2014, the average dividend yield on the stocks of all fully-converted publicly-traded thrifts equaled 1.72%.

While the Company has not established a definitive dividend policy prior to converting, the Company will have the capacity to pay a dividend comparable to the Peer Group’s average dividend yield based on its higher pro forma capitalization. On balance, we concluded that no adjustment was warranted for this factor.

6.	Liquidity of the Shares

The Peer Group is by definition composed of companies that are traded in the public markets. All ten of the Peer Group members trade on the NASDAQ. Typically, the number of shares outstanding and market capitalization provides an indication of how much liquidity there will be in a particular stock. The market capitalization of the Peer Group companies ranged from $94.4 million to $302.4 million as of February 14, 2014, with average and median market values of $165.9 million and $146.6 million, respectively. The shares issued and outstanding of the Peer Group companies ranged from 3.1 million to 20.2 million, with average and median shares outstanding of 12.2 million and 12.1 million, respectively. The Company’s stock offering is expected to have a pro forma market value and shares outstanding that will be in the upper end of the comparable Peer Group ranges or in the case of shares outstanding may exceed the top end of the Peer Group’s range. Like all of the Peer Group companies, the Company’s stock will be quoted on the NASDAQ following the stock offering. Overall, we anticipate that the Company’s public stock will have a comparable trading market as the Peer Group companies on average and, therefore, concluded no adjustment was necessary for this factor.


*RP ^® Financial, LC.*		*VALUATION ANALYSIS*
		*IV.9*

7.	Marketing of the Issue

We believe that three separate markets exist for thrift stocks, including those coming to market such as Blue Hills Bancorp: (1) the after-market for public companies, in which trading activity is regular and investment decisions are made based upon financial condition, earnings, capital, ROE, dividends and future prospects; (2) the new issue market in which converting thrifts are evaluated on the basis of the same factors, but on a pro forma basis without the benefit of prior operations as a fully-converted publicly-held company and stock trading history; and (3) the acquisition market for thrift franchises in Massachusetts. All three of these markets were considered in the valuation of the Company’s to-be-issued stock.

The Public Market

The value of publicly-traded thrift stocks is easily measurable, and is tracked by most investment houses and related organizations. Exhibit IV-1 provides pricing and financial data on all publicly-traded thrifts. In general, thrift stock values react to market stimuli such as interest rates, inflation, perceived industry health, projected rates of economic growth, regulatory issues and stock market conditions in general. Exhibit IV-2 displays historical stock market trends for various indices and includes historical stock price index values for thrifts and commercial banks. Exhibit IV-3 displays historical stock price indices for thrifts only.

In terms of assessing general stock market conditions, the overall stock market has generally trended higher in recent quarters, although there has been some pullback in the market year-to-date. The rally in the broader stock market that started at the end of the second quarter of 2013 continued during the first half of July 2013, as the Dow Jones Industrial Average (“DJIA”) closed at multiple new highs in mid-July. Some favorable economic data and assurances from the Federal Reserve that it would continue its easy monetary policies were noteworthy factors that fueled the gains in the broader stock market. The broader stock market traded in a narrow range during the second half of July, as investors digested some mixed second quarter earnings reports and awaited fresh data on the economy. Economic data showing a pick-up in manufacturing activity and new unemployment claims hitting a five-year low propelled the DJIA to a new record high at the beginning of August. Following sluggish job growth reflected in the July employment report and lowered sales forecast by some retailers, stocks retreated heading into mid-August. The downward trend in stocks continued through the second half of August, with the DJIA hitting a two-month low in late-August. Ongoing worries about the tapering of economic stimulus by the Federal Reserve and the prospect of a military


*RP ^® Financial, LC.*		*VALUATION ANALYSIS*
		*IV.10*

strike on Syria were noteworthy factors that contributed to the downturn. Some favorable economic reports, as well as subsiding investor concerns about Syria and the Federal Reserve scaling back its easy monetary policies, helped stocks to regain some upward momentum during the first half of September. Stocks reversed course and traded down to close out the third quarter, which was attributed to renewed fears over the Federal Reserve scaling back its financial stimulus program and mounting concerns over the budget standoff in Washington.

Stocks fell broadly at the beginning of the fourth quarter of 2013, as investors weighed the consequences of the budget impasse in Washington and the possibility of an extended shutdown of the U.S. Government. Indications that lawmakers were nearing a deal to raise the federal debt ceiling and end the shutdown of the U.S. Government fueled a stock market rally heading into mid-October. A last minute comprise to raise the debt ceiling, which averted a default on the national debt and allowed for the re-opening of the U.S. Government sustained the positive trend in stocks through late-October. The DJIA closed at a record high in late-October, as weaker-than-expected job growth reflected in the September employment data and subdued inflation readings raised expectations that the Federal Reserve would stay the course on its easy money policies at its end of October meeting. An overall strong month for stocks closed with consecutive losses at the end of October, as investors who were expecting the Federal Reserve to downgrade its economic outlook were surprised that the Federal Reserve’s assessment of the economy was unchanged and, thereby, raised expectations that it could taper its stimulus efforts as early as its next policy meeting in December. Favorable reports on manufacturing and nonmanufacturing activity in October, along with comments from a Federal Reserve President suggesting that the Federal Reserve should wait for stronger evidence of economic momentum before tapering its bond-buying program, contributed to a rebound in stocks at the start of November. The DJIA closed at multiple record highs through mid-November, with a better-than-expected employment report for October and comments made by Federal Reserve Chairman nominee Janet Yellen during confirmation hearings that the Federal Reserve’s economic stimulus efforts would continue under her leadership contributed to the rally that included the DJIA closing above 16000 for the first time. Stocks edged higher in the final week of November, as positive macroeconomic news contributed to the gains. Stocks traded lower at the start of December 2013, as a number of favorable economic reports stoked concerns that the Federal Reserve would start to wind down its stimulus efforts in the near future. After five consecutive losses in the DJIA, the stock market rebounded on news of the strong employment report for November. The rebound was temporary, as stocks eased lower


*RP ^® Financial, LC.*		*VALUATION ANALYSIS*
		*IV.11*

ahead of the Federal Reserve’s mid-December meeting. Stocks surged at the conclusion of the Federal Reserve’s meeting, as investors approved of the Federal Reserve’s action to begin measured paring of its $85 billion a-month bond buying program. The DJIA moved to record highs in late-December, as more favorable economic reports helped to sustain the stock market rally through the end of 2013. Overall, the DJIA was up 30% during 2013, which was its strongest performance in 18 years.

Stocks retreated at the start of 2014, as profit taking and a disappointing employment report for December weighed on the broader stock market. Mixed fourth quarter earnings reports translated into an up and down stock market in mid-January. Concerns about weakening economies in emerging market countries precipitated a global stock market selloff heading into the second half of January, as the DJIA posted five consecutive losses. News that the Federal Reserve voted again to scale back its monthly bond buying program by another $10 billion, despite recent turmoil in emerging markets and soft jobs data, added to the selloff to close out January. A significant decline in January manufacturing activity drove stocks sharply lower at the start of February. Stocks rebounded heading into mid-February, as disappointing job growth reflected in the January employment report and congressional testimony by the new Federal Reserve Chairwoman eased investor concerns that the Federal Reserve would not continue on its current course of easy monetary policies. On February 14, 2014, the DJIA closed at 16154.39, an increase of 15.5% from one year ago and a decrease of 2.5% year-to-date, and the NASDAQ closed at 4244.03, an increase of 33.0% from one year ago and an increase of 1.6% year-to-date. The Standard & Poor’s 500 Index closed at 1838.63 on February 14, 2014, an increase of 21.0% from one year ago and a decrease of 0.5% year-to-date.

The market for thrift stocks has also generally shown a positive trend in recent quarters, while pulling back in January 2014. The rally in thrift stocks started at the end of the second quarter of 2013 gained momentum early in the third quarter of 2013, as June employment data showed job growth beating expectations. Financial shares led the broader stock market higher heading into the second half of July, as some large banks beat second quarter earnings estimates. Thrift stocks edged lower at the end of July, as investors took some profits following the extended run-up in thrift prices. Some favorable economic data boosted thrift shares at the beginning of August, which was followed by a downturn amid indications from the Federal Reserve that tapering of quantitative easing was becoming more likely. After trading in a narrow range through mid-August, financial shares sold-off in late-August on the


*RP ^® Financial, LC.*		*VALUATION ANALYSIS*
		*IV.12*

threat of a military strike on Syria and a weak report on consumer spending. Thrift stocks rebounded along with the broader stock market during the first half of September, which was followed by a slight downturn on expectations that the Federal Reserve could begin tapering its monthly asset purchases at its next meeting and the looming threat of the budget impasse shutting down the U.S. government.

Thrift issues stabilized at the start of the fourth quarter of 2013 and then traded lower as the budget impasse in Washington continued into a second week. A deal to raise the federal debt ceiling and re-open the U.S. Government lifted thrift stocks and the broader stock market to healthy gains in mid-October. Third quarter earnings reports and signs of merger activity picking in the thrift sector boosted thrift shares in late-October, which was followed by a slight downturn at the end of October and into early-November as the Federal Reserve concluded its two day meeting by staying the course on quantitative easing and the benchmark interest rate. Thrift shares followed the broader stock market higher through mid-November, as the financial sector benefited from the better-than-expected employment report for October and a continuation of low interest rates. A larger-than-expected increase in a November consumer sentiment index and a decline in weekly jobless claims supported a modest gain for the thrift sector in late-November. Thrift issues generally followed trends in the broader stock market throughout December 2013, declining in early-December on the uncertain outlook for the Federal Reserve’s stimulus efforts and then rallying higher on the stronger-than-expected job growth reflected in the November employment data. After trading in a narrow range into mid-December, the rally in thrift issues resumed following the Federal Reserve’s mid-December meeting and announcement that it will begin to taper its bond buying. Thrift stocks participated in the broader stock market rally to close out 2013, with the SNL Index for all publicly-traded thrifts posting a gain of 25% for all of 2013.

Shares of thrift issues traded down at the start of 2014, as the 10-year Treasury yield approached 3.0% in early-January. Thrift stocks were also hurt by the disappointing employment report for December and then traded in a narrow range in mid-January, as investors reacted to mixed fourth quarter earnings reports coming out the banking sector at the start of the fourth quarter earnings season. Financial shares participated in the selloff experienced in the broader stock market during the second half of January and the first trading day of February. Janet Yellen’s debut congressional testimony as Federal Reserve Chairwoman helped to spark a rally in thrift stocks heading into mid-February, as she indicated that there no plans to change course from the Federal Reserve’s current monetary policies. On February 14, 2014, the SNL Index for all publicly-traded thrifts closed at 685.1, an increase of 16.1% from one year ago and a decrease of 3.0% year-to-date.


*RP ^® Financial, LC.*		*VALUATION ANALYSIS*
		*IV.13*

The New Issue Market

In addition to thrift stock market conditions in general, the new issue market for converting thrifts is also an important consideration in determining the Company’s pro forma market value. The new issue market is separate and distinct from the market for seasoned thrift stocks in that the pricing ratios for converting issues are computed on a pro forma basis, specifically: (1) the numerator and denominator are both impacted by the conversion offering amount, unlike existing stock issues in which price change affects only the numerator; and (2) the pro forma pricing ratio incorporates assumptions regarding source and use of proceeds, effective tax rates, stock plan purchases, etc. which impact pro forma financials, whereas pricing for existing issues are based on reported financials. The distinction between pricing of converting and existing issues is perhaps no clearer than in the case of the price/book (“P/B”) ratio in that the P/B ratio of a converting thrift will typically result in a discount to book value whereas in the current market for existing thrifts the P/B ratio may reflect a premium to book value. Therefore, it is appropriate to also consider the market for new issues, both at the time of the conversion and in the aftermarket.

As shown in Table 4.2, two standard conversions and one second-step conversion have been completed during the past three months. The standard conversion offerings are considered to be more relevant for Blue Hills Bancorp’s pro forma pricing. The average closing pro forma price/tangible book ratio of the two recent standard conversion offerings equaled 63.6%. On average, the two standard conversion offerings reflected price appreciation of 5.0% after the first week of trading. As of February 14, 2014, the two recent standard conversion offerings reflected a 2.2% increase in price on average.

Shown in Table 4.3 are the current pricing ratios for the two fully-converted offerings completed during the past three months that trade on NASDAQ, one of which was a second-step offering. The current P/TB ratio of the fully-converted recent conversions equaled 79.51%, based on closing stock prices as of February 14, 2014.

The Acquisition Market

Also considered in the valuation was the potential impact on Blue Hills Bancorp’s stock price of recently completed and pending acquisitions of other thrift institutions operating in


*RP ^® Financial, LC.*		*VALUATION ANALYSIS*
		*IV.14*

Table 4.2

Pricing Characteristics and After-Market Trends

Conversions Completed in the Last Three Months


Institutional Information			Pre-Conversion Data											Offering Information											Contribution to					Insider Purchases															Pro Forma Data																			Post-IPO Pricing Trends
			Financial Info.					Asset Quality																	Char. Found.					% Off Incl. Fdn.+ Merger Shares															Pricing Ratios(2)(5)								Financial Charac.											Closing Price:
														Excluding Foundation													% of Public Off. Excl. Fdn.			Benefit Plans												Initial Div. Yield																						First Trading Day					After First Week(3)					After First Month(4)
Institution	Conversion Date	Ticker	Assets		Equity/ Assets			NPAs/ Assets			Res. Cov.			Gross Proc.		% Offer			% of Mid.			Exp./ Proc.			Form		% of Public Off. Excl. Fdn.			ESOP			Recog. Plans			Stk Option			Mgmt. & Dirs.			Initial Div. Yield			P/TB			Core P/E		P/A			Core ROA			TE/A			Core ROE			IPO Price		First Trading Day		% Chge			After First Week(3)		% Chge			After First Month(4)		% Chge			Thru 2/14/14		% Chge
			($Mil)		(%)			(%)			(%)			($Mil.)		(%)			(%)			(%)					(%)			(%)			(%)			(%)			(%)(1)			(%)			(%)			(x)		(%)			(%)			(%)			(%)			($)		($)		(%)			($)		(%)			($)		(%)			($)		(%)
*Standard Conversions*
Edgewater Bancorp, Inc. - MI	1/17/14	EGDW-OTCBB	$	200		8.15	%		3.84	%		33	%	$	6.7		100	%		86	%		19.5	%		N.A		N.A.			8.0	%		4.0	%		10.0	%		13.5	%		0.00	%		55.0	%		NM		5.5	%		-1.4	%		10.0	%		-13.1	%	$	10.00	$	10.00		0.0	%	$	10.25		2.5	%	$	10.25		2.5	%	$	10.25		2.5	%
Coastway Bancorp, Inc. - RI*	1/15/14	CWAY-NASDAQ	$	381		7.24	%		2.16	%		25	%	$	49.5		100	%		132	%		3.2	%		C/S	$	300K/2.5	%		8.0	%		4.0	%		10.0	%		1.8	%		0.00	%		72.1	%		114.2x		11.7	%		0.1	%		16.3	%		0.6	%	$	10.00	$	10.92		9.2	%	$	10.75		7.5	%	$	10.19		1.9	%	$	10.19		1.9	%
Averages - Standard Conversions:			$	290		7.70	%		3.00	%		29	%	$	28.1		100	%		109	%		11.3	%		N.A.		N.A.			8.0	%		4.0	%		10.0	%		7.6	%		0.00	%		63.6	%		114.2x		8.6	%		-0.6	%		13.1	%		-6.2	%	$	10.00	$	10.46		4.6	%	$	10.50		5.0	%	$	10.22		2.2	%	$	10.22		2.2	%
Medians - Standard Conversions:			$	290		7.70	%		3.00	%		29	%	$	28.1		100	%		109	%		11.3	%		N.A.		N.A.			8.0	%		4.0	%		10.0	%		7.6	%		0.00	%		63.6	%		114.2x		8.6	%		-0.6	%		13.1	%		-6.2	%	$	10.00	$	10.46		4.6	%	$	10.50		5.0	%	$	10.22		2.2	%	$	10.22		2.2	%
*Second Step Conversions*
Waterstone Financial, Inc. - WI*	1/23/14	WSBF-NASDAQ	$	1,598		13.32	%		5.04	%		43	%	$	344.1		74	%		115	%		3.4	%		N.A.		N.A.			8.0	%		4.0	%		10.0	%		0.8	%		0.00	%		80.7	%		23.05		19.0	%		0.8	%		23.5	%		3.5	%	$	10.00	$	10.66		6.6	%	$	10.58		5.8	%	$	10.60		6.0	%	$	10.60		6.0	%
Averages - Second Step Conversions:			$	1,598		13.32	%		5.04	%		43	%	$	344.1		74	%		115	%		3.4	%		N.A.		N.A.			8.0	%		4.0	%		10.0	%		0.8	%		0.00	%		80.7	%		23.1x		19.0	%		0.8	%		23.5	%		3.5	%	$	10.00	$	10.66		6.6	%	$	10.58		5.8	%	$	10.60		6.0	%	$	10.60		6.0	%
Medians - Second Step Conversions:			$	1,598		13.32	%		5.04	%		43	%	$	344.1		74	%		115	%		3.4	%		N.A.		N.A.			8.0	%		4.0	%		10.0	%		0.8	%		0.00	%		80.7	%		23.1x		19.0	%		0.8	%		23.5	%		3.5	%	$	10.00	$	10.66		6.6	%	$	10.58		5.8	%	$	10.60		6.0	%	$	10.60		6.0	%
Averages - All Conversions:			$	726		9.57	%		3.68	%		34	%	$	133.4		91	%		111	%		8.7	%		N.A.		N.A.			8.0	%		4.0	%		10.0	%		5.4	%		0.00	%		69.3	%		68.6x		12.1	%		-0.1	%		16.6	%		-3.0	%	$	10.00	$	10.53		5.3	%	$	10.53		5.3	%	$	10.35		3.5	%	$	10.35		3.5	%
Medians - All Conversions:			$	381		8.15	%		3.84	%		33	%	$	49.5		100	%		115	%		3.4	%		N.A.		N.A.			8.0	%		4.0	%		10.0	%		1.8	%		0.00	%		72.1	%		68.6x		11.7	%		0.1	%		16.3	%		0.6	%	$	10.00	$	10.66		6.6	%	$	10.58		5.8	%	$	10.25		2.5	%	$	10.25		2.5	%


Note: * - Appraisal performed by RP Financial; BOLD = RP Fin. Did the business plan, “NT” - Not Traded; “NA” - Not Applicable, Not Available; C/S-Cash/Stock.

(1) As a percent of MHC offering for MHC transactions.		(5) Mutual holding company pro forma data on full conversion basis.
(2) Does not take into account the adoption of SOP 93-6.		(6) Simultaneously completed acquisition of another financial institution.
(3) Latest price if offering is less than one week old.		(7) Simultaneously converted to a commercial bank charter.
(4) Latest price if offering is more than one week but less than one month old.		(8) Former credit union.

February 14, 2014


*RP ^® Financial, LC.*		*VALUATION ANALYSIS*
		*IV.15*

Table 4.3

Market Pricing Comparatives

As of February 14, 2014


		Market				Per Share Data
		Capitalization				Core		Book												Dividends(3)						Financial Characteristics(5)
		Price/		Market		12 Month		Value/		Pricing Ratios(2)										Amount/				Payout		Total		Equity/		Tang. Eq./		NPAs/		Reported				Core
		Share		Value		EPS(1)		Share		P/E		P/B		P/A		P/TB		P/Core		Share		Yield		Ratio(4)		Assets		Assets		T. Assets		Assets		ROAA		ROAE		ROAA		ROAE
		($)		($Mil)		($)		($)		(x)		(%)		(%)		(%)		(x)		($)		(%)		(%)		($Mil)		(%)		(%)		(%)		(%)		(%)		(%)		(%)
All Non-MHC Public Companies			16.31		334.56		0.35		14.68		19.88		108.21		14.36		117.16		21.53		0.23		1.52		25.36		2,530		13.29		12.64		2.59		0.49		3.78		0.24		1.68
Converted Last 3 Months (No MHC)			10.40		207.54		0.26		13.14		12.05		79.44		16.05		79.51		24.65		0.00		0.00		0.00		1,117		19.93		19.91		6.63		0.85		12.96		0.46		6.33
Converted Last 3 Months (No MHC)
CWAY Coastway Bncp, Inc.	RI		10.19		50.43		0.09		13.87		NM		73.47		11.96		73.47		NM		0.00		0.00		0.00		422		16.28		16.28		NA		0.04		NM		0.11		NM
WSBF Waterstone Financial Inc.	WI		10.60		364.64		0.43		12.41		12.05		85.41		20.13		85.55		24.65		0.00		0.00		0.00		1,812		23.57		23.53		6.63		1.67		12.96		0.82		6.33

(1)	Core income, on a diluted per-share basis. Core income is net income after taxes and before extraordinary items, less net income attributable to noncontrolling interest, gain on the sale of securities, amortization of intangibles, goodwill and nonrecurring items. Assumed tax rate is 35%.

(2)	P/E = Price to earnings; P/B = Price to book; P/A = Price to assets; P/TB = Price to tangible book value; and P/Core = Price to core earnings. P/E and P/Core =NM if the ratio is negative or above 35x.

(3)	Indicated 12 month dividend, based on last quarterly dividend declared.

(4)	Indicated 12 month dividend as a percent of trailing 12 month earnings.

(5)	ROAA (return on average assets) and ROAE (return on average equity) are indicated ratios based on trailing 12 month earnings and average equity and assets balances.

(6)	Excludes from averages and medians those companies the subject of actual or rumored acquisition activities or unusual operating characteristics.

Source:

SNL Financial, LC. and RP Financial, LC. calculations. The information provided in this report has been obtained from sources we believe are reliable, but we cannot guarantee the accuracy or completeness of such information.


*RP ^® Financial, LC.*		*VALUATION ANALYSIS*
		*IV.16*

Massachusetts. As shown in Exhibit IV-4, there were 10 Massachusetts thrift acquisitions completed from the beginning of 2010 through February 14, 2014 and there were three acquisitions pending for Massachusetts savings institutions. The recent acquisition activity involving Massachusetts savings institutions may imply a certain degree of acquisition speculation for the Company’s stock. To the extent that acquisition speculation may impact the Company’s offering, we have largely taken this into account in selecting companies for the Peer Group which operate in markets that have experienced a comparable level of acquisition activity as the Company’s market and, thus, are subject to the same type of acquisition speculation that may influence Blue Hills Bancorp’s stock. However, since converting thrifts are subject to a three-year regulatory moratorium from being acquired, acquisition speculation in Blue Hills Bancorp’s stock would tend to be less compared to the stocks of the Peer Group companies.

* * * * * * * * * * *

In determining our valuation adjustment for marketing of the issue, we considered trends in both the overall thrift market, the new issue market including the new issue market for thrift conversions and the local acquisition market for thrift stocks. Taking these factors and trends into account, RP Financial concluded that no adjustment was appropriate in the valuation analysis for purposes of marketing of the issue.

8.	Management

The Company’s management team appears to have experience and expertise in all of the key areas of the Company’s operations. Exhibit IV-5 provides summary resumes of the Company’s Board of Directors and senior management. The financial characteristics of the Company suggest that the Board and senior management have been effective in implementing an operating strategy that can be well managed by the Company’s present organizational structure. The Company currently does not have any senior management positions that are vacant.

Similarly, the returns, equity positions and other operating measures of the Peer Group companies are indicative of well-managed financial institutions, which have Boards and management teams that have been effective in implementing competitive operating strategies. Therefore, on balance, we concluded no valuation adjustment relative to the Peer Group was appropriate for this factor.


*RP ^® Financial, LC.*		*VALUATION ANALYSIS*
		*IV.17*

9.	Effect of Government Regulation and Regulatory Reform

In summary, as a fully-converted, FDIC insured institution, Blue Hills Bancorp will operate in substantially the same regulatory environment as the Peer Group members — all of whom are adequately capitalized institutions and are operating with no apparent restrictions. Exhibit IV-6 reflects Blue Hills Bancorp’s pro forma regulatory capital ratios. On balance, no adjustment has been applied for the effect of government regulation and regulatory reform.

Summary of Adjustments

Overall, based on the factors discussed above, we concluded that the Company’s pro forma market value should reflect the following valuation adjustments relative to the Peer Group:


Key Valuation Parameters:		Valuation Adjustment
Financial Condition		Slight Upward
Profitability, Growth and Viability of Earnings		Moderate Downward
Asset Growth		Slight Upward
Primary Market Area		Slight Upward
Dividends		No Adjustment
Liquidity of the Shares		No Adjustment
Marketing of the Issue		No Adjustment
Management		No Adjustment
Effect of Govt. Regulations and Regulatory Reform		No Adjustment

Valuation Approaches

In applying the accepted valuation methodology promulgated by the FRB and the Commissioner i.e., the pro forma market value approach, we considered the three key pricing ratios in valuing the Company’s to-be-issued stock – price/earnings (“P/E”), price/book (“P/B”), and price/assets (“P/A”) approaches – all performed on a pro forma basis including the effects of the stock proceeds. In computing the pro forma impact of the conversion and the related pricing ratios, we have incorporated the valuation parameters disclosed in the Company’s prospectus for reinvestment rate, effective tax rate, stock benefit plan assumptions and expenses (summarized in Exhibits IV-7 and IV-8).

In our estimate of value, we assessed the relationship of the pro forma pricing ratios relative to the Peer Group and recent conversion offerings.


*RP ^® Financial, LC.*		*VALUATION ANALYSIS*
		*IV.18*

RP Financial’s valuation placed an emphasis on the following:

•

P/E Approach . The P/E approach is generally the best indicator of long-term value for a stock. Given the similarities between the Company’s and the Peer Group’s operating strategies, earnings composition and overall financial condition, the P/E approach was carefully considered in this valuation. At the same time, since reported earnings for both the Company and the Peer Group included certain non-recurring items, we also made adjustments to earnings to arrive at core earnings estimates for the Company and the Peer Group and resulting price/core earnings ratios.

•

P/B Approach . P/B ratios have generally served as a useful benchmark in the valuation of thrift stocks, particularly in the context of an initial public offering, as the earnings approach involves assumptions regarding the use of proceeds. RP Financial considered the P/B approach to be a useful indicator of pro forma value, taking into account the pricing ratios under the P/E and P/A approaches. We have also modified the P/B approach to exclude the impact of intangible assets (i.e., price/tangible book value or “P/TB”), in that the investment community frequently makes this adjustment in its evaluation of this pricing approach.

•

P/A Approach . P/A ratios are generally a less reliable indicator of market value, as investors typically assign less weight to assets and attribute greater weight to book value and earnings. Furthermore, this approach as set forth in the regulatory valuation guidelines does not take into account the amount of stock purchases funded by deposit withdrawals, thus understating the pro forma P/A ratio. At the same time, the P/A ratio is an indicator of franchise value, and, in the case of highly capitalized institutions, high P/A ratios may limit the investment community’s willingness to pay market multiples for earnings or book value when ROE is expected to be low.

The Company will adopt “Employers’ Accounting for Employee Stock Ownership Plans” (“ASC 718-40”), which will cause earnings per share computations to be based on shares issued and outstanding excluding unreleased ESOP shares. For purposes of preparing the pro forma pricing analyses, we have reflected all shares issued in the offering, including all ESOP shares, to capture the full dilutive impact, particularly since the ESOP shares are economically dilutive, receive dividends and can be voted. However, we did consider the impact of the adoption of ASC 718-40 in the valuation.

Based on the application of the three valuation approaches, taking into consideration the valuation adjustments discussed above and the dilutive impact of the stock contribution to the Foundation, RP Financial concluded that, as of February 14, 2014, the pro forma market value of Blue Hills Bancorp’s conversion stock was $215,250,000 at the midpoint, equal to 21,525,000 shares at $10.00 per share.


*RP ^® Financial, LC.*		*VALUATION ANALYSIS*
		*IV.19*

1. Price-to-Earnings (“P/E”) . The application of the P/E valuation method requires calculating the Company’s pro forma market value by applying a valuation P/E multiple to the pro forma earnings base. In applying this technique, we considered both reported earnings and a recurring earnings base, that is, earnings adjusted to exclude any one-time non-operating items, plus the estimated after-tax earnings benefit of the reinvestment of the net proceeds. The Company’s reported earnings equaled $2.663 million for the twelve months ended December 31, 2013. In deriving Blue Hills Bancorp’s core earnings, the adjustments made to reported earnings were to eliminate gains on sale of securities of $5.091 million, gains on trading assets of $505,000 and net impairment losses of $92,000. As shown below, on a tax effected basis, assuming an effective marginal tax rate of 40.0% for the earnings adjustments, the Company’s core earnings were determined to equal a net loss of $639,000 for the twelve months ended December 31, 2013.


	Amount
	($	000	)
Net income(loss)	$	2,663
Deduct: Gains on sale of securities(1)		(3,054	)
Deduct: Gains on trading assets(1)		(303	)
Add: Net impairment losses(1)		55
Core earnings estimate	($	639	)

(1) Tax effected at 40.0%.

Based on the Company’s reported earnings and incorporating the impact of the pro forma assumptions discussed previously, the Company’s pro forma reported P/E multiple at the $215.3 million midpoint value equaled 85.39 times, which provided for a premium of 368.40% relative to the Peer Group’s average reported P/E multiple of 18.23 times (see Table 4.4). In comparison to the Peer Group’s median reported earnings multiple which equaled 17.76 times, the Company’s pro forma reported P/E multiple at the midpoint value indicated a premium of 380.80%. The Company’s pro forma P/E ratios based on reported earnings at the minimum and the super maximum equaled 72.49 times and 113.21 times, respectively. As the result of the Company’s net loss on a core earnings basis, the Company’s core P/E multiples were not meaningful (NM). Comparatively, the Peer Group’s average and core P/E multiples equaled 19.84 times and 15.28 times, respectively.


*RP ^® Financial, LC.*		*VALUATION ANALYSIS*
		*IV.20*

Table 4.4

Public Market Pricing Versus Peer Group

Blue Hills Bancorp, Inc. and the Comparables

As of February 14, 2014


			Market				Per Share Data
			Capitalization				Core			Book																	Dividends(3)								Financial Characteristics(5)
			Price/		Market		12 Month			Value/		Pricing Ratios(2)															Amount/					Payout			Total		Equity/			Tang. Eq./			NPAs/			Reported						Core						Offering
			Share		Value		EPS(1)			Share		P/E			P/B			P/A			P/TB			P/Core			Share		Yield			Ratio(4)			Assets		Assets			T. Assets			Assets			ROAA			ROAE			ROAA			ROAE			Range
			($)		($Mil)		($)			($)		(x)			(%)			(%)			(%)			(x)			($)		(%)			(%)			($Mil)		(%)			(%)			(%)			(%)			(%)			(%)			(%)			($Mil)
Blue Hills Bancorp, Inc.		MA
Super Maximum			$	10.00	$	284.67	($	0.03	)	$	13.89		113.21	x		71.99	%		16.94	%		74.79	%		NM		$	0.00		0.00	%		0.00	%	$	1,680		23.53	%		22.64	%		0.08	%		0.15	%		0.64	%		-0.05	%		-0.21	%	$	277.73
Maximum			$	10.00	$	247.54	($	0.03	)	$	14.66		98.31	x		68.21	%		15.02	%		71.12	%		NM		$	0.00		0.00	%		0.00	%	$	1,648		22.02	%		21.12	%		0.08	%		0.15	%		0.69	%		-0.05	%		-0.23	%	$	241.50
Midpoint			$	10.00	$	215.25	($	0.04	)	$	15.55		85.39	x		64.31	%		13.29	%		67.29	%		NM		$	0.00		0.00	%		0.00	%	$	1,620		20.67	%		19.75	%		0.08	%		0.16	%		0.75	%		-0.05	%		-0.25	%	$	210.00
Minimum			$	10.00	$	182.96	($	0.05	)	$	16.76		72.49	x		59.67	%		11.50	%		62.74	%		NM		$	0.00		0.00	%		0.00	%	$	1,592		19.26	%		18.33	%		0.08	%		0.16	%		0.82	%		-0.05	%		-0.27	%	$	178.50
All Non-MHC Public Companies(6)
Averages			$	16.51	$	344.10	$	0.82		$	15.47		17.42	x		104.92	%		13.36	%		113.87	%		18.14	x	$	0.29		1.72	%		47.73	%	$	2,478		13.23	%		12.34	%		3.00	%		0.55	%		4.13	%		0.51	%		4.01	%
Median			$	15.05	$	94.66	$	0.67		$	14.91		16.28	x		96.11	%		12.34	%		102.39	%		17.20	x	$	0.24		1.48	%		42.53	%	$	771		12.29	%		11.57	%		2.26	%		0.63	%		4.68	%		0.60	%		4.34	%
All Non-MHC State of MA(6)
Averages			$	23.35	$	162.21	$	1.29		$	20.09		21.21	x		107.74	%		13.07	%		114.57	%		22.77	x	$	0.36		1.57	%		54.97	%	$	1,328		12.33	%		11.84	%		1.17	%		0.53	%		4.65	%		0.53	%		4.63	%
Medians			$	17.37	$	115.83	$	0.52		$	16.35		20.61	x		102.38	%		12.09	%		106.55	%		21.98	x	$	0.24		1.45	%		43.64	%	$	694		12.07	%		12.07	%		1.27	%		0.53	%		4.04	%		0.45	%		2.88	%
State of MA (7)
BHLB	Berkshire Hills Bancorp Inc.	MA	$	25.09	$	628.15	$	2.03		$	27.08		15.21	x		92.64	%		11.07	%		154.19	%		12.36	x	$	0.72		2.87	%		43.64	%	$	5,673		11.95	%		7.54	%		NA			0.78	%		6.10	%		0.95	%		7.50	%
BLMT	BSB Bancorp Inc.	MA	$	15.82	$	143.26	$	0.22		$	14.40		NM			109.85	%		13.58	%		109.85	%		NM		$	0.00		0.00	%		NM		$	1,055		12.37	%		12.37	%		1.17	%		0.21	%		1.51	%		0.21	%		1.49	%
CBNK	Chicopee Bancorp Inc.	MA	$	17.37	$	94.42	$	0.52		$	16.97		34.74	x		102.38	%		16.07	%		102.38	%		33.70	x	$	0.28		1.61	%		44.00	%	$	588		15.69	%		15.69	%		1.27	%		0.43	%		2.79	%		0.45	%		2.88	%
GTWN	Georgetown Bancorp Inc.	MA	$	14.75	$	27.01	$	0.41		$	15.80		NM			93.34	%		10.27	%		93.34	%		NM		$	0.16		1.08	%		39.02	%	$	263		11.00	%		11.00	%		1.16	%		0.32	%		2.47	%		0.32	%		2.47	%
HBNK	Hampden Bancorp Inc.	MA	$	15.96	$	90.18	$	0.66		$	14.98		23.82	x		106.55	%		12.98	%		106.55	%		24.31	x	$	0.24		1.50	%		34.33	%	$	694		12.19	%		12.19	%		1.32	%		0.55	%		4.31	%		0.54	%		4.23	%
HIFS	Hingham Instit. for Savings	MA	$	77.01	$	163.94	$	6.28		$	48.49		12.26	x		158.83	%		12.09	%		158.83	%		12.26	x	$	1.08		1.40	%		21.34	%	$	1,356		7.61	%		7.61	%		NA			1.07	%		13.52	%		1.07	%		13.52	%
PEOP	Peoples Federal Bancshares Inc	MA	$	18.08	$	115.83	$	0.35		$	16.35		NM			110.55	%		19.76	%		110.55	%		NM		$	0.16		0.88	%		117.14	%	$	588		17.88	%		17.88	%		0.47	%		0.37	%		2.01	%		0.37	%		2.01	%
WEBK	Wellesley Bancorp	MA	$	18.50	$	45.41	$	0.94		$	19.06		19.07	x		97.06	%		9.90	%		97.06	%		19.66	x		NA		NA			NM		$	459		10.20	%		10.20	%		1.41	%		0.55	%		5.09	%		0.54	%		4.94	%
WFD	Westfield Financial Inc.	MA	$	7.53	$	151.73	$	0.22		$	7.65		22.15	x		98.43	%		11.88	%		98.43	%		34.33	x	$	0.24		3.19	%		85.29	%	$	1,277		12.07	%		12.07	%		1.37	%		0.53	%		4.04	%		0.34	%		2.60	%
Comparable Group
Averages			$	15.05	$	165.87	$	0.60		$	14.54		18.23	x		103.80	%		12.26	%		108.65	%		19.84	x	$	0.25		1.75	%		52.65	%	$	1,348		11.84	%		11.32	%		1.71	%		0.45	%		3.77	%		0.47	%		3.94	%
Medians			$	14.78	$	146.64	$	0.33		$	14.02		17.76	x		99.68	%		11.78	%		109.18	%		15.28	x	$	0.24		1.78	%		51.35	%	$	1,197		11.65	%		10.87	%		1.65	%		0.52	%		3.92	%		0.48	%		3.55	%
Comparable Group
BLMT	BSB Bancorp Inc.	MA	$	15.82	$	143.26	$	0.22		$	14.40		NM			109.85	%		13.58	%		109.85	%		NM		$	0.00		0.00	%		NM		$	1,055		12.37	%		12.37	%		1.17	%		0.21	%		1.51	%		0.21	%		1.49	%
CBNJ	Cape Bancorp Inc.	NJ	$	10.58	$	127.59	$	0.51		$	11.64		23.00	x		90.86	%		11.67	%		108.51	%		20.93	x	$	0.24		2.27	%		58.70	%	$	1,093		12.85	%		10.76	%		1.94	%		0.53	%		3.80	%		0.58	%		4.18	%
ESSA	ESSA Bancorp Inc.	PA	$	10.85	$	129.04	$	0.73		$	13.96		15.50	x		77.71	%		9.55	%		83.23	%		14.82	x	$	0.20		1.84	%		28.57	%	$	1,355		12.29	%		11.57	%		2.30	%		0.58	%		4.68	%		0.60	%		4.87	%
FBNK	First Connecticut Bancorp, Inc	CT	$	15.60	$	256.74	$	0.21		$	14.08		NM			110.76	%		12.17	%		110.76	%		NM		$	0.12		0.77	%		52.17	%	$	2,110		10.99	%		10.99	%		1.67	%		0.19	%		1.52	%		0.18	%		1.42	%
FXCB	Fox Chase Bancorp Inc.	PA	$	17.06	$	207.24	$	0.45		$	14.28		NM			119.47	%		18.56	%		119.47	%		NM		$	0.40		2.34	%		100.00	%	$	1,117		15.53	%		15.53	%		1.95	%		0.51	%		3.13	%		0.48	%		2.93	%
OSHC	Ocean Shore Holding Co.	NJ	$	13.95	$	96.30	$	0.22		$	15.39		17.22	x		90.66	%		9.44	%		95.39	%		NM		$	0.24		1.72	%		29.63	%	$	1,020		10.41	%		9.95	%		0.80	%		0.51	%		5.04	%		0.48	%		4.81	%
OCFC	OceanFirst Financial Corp.	NJ	$	17.39	$	302.36	$	1.14		$	12.33		18.31	x		141.06	%		13.44	%		141.06	%		15.28	x	$	0.48		2.76	%		50.53	%	$	2,250		9.53	%		9.53	%		3.16	%		0.71	%		7.51	%		0.85	%		8.99	%
SIFI	SI Financial Group Inc.	CT	$	11.73	$	150.02	$	0.15		$	11.94		NM			98.28	%		10.97	%		113.38	%		NM		$	0.12		1.02	%		NM		$	1,369		11.16	%		9.82	%		1.11	%		-0.12	%		-0.87	%		0.13	%		0.99	%
THRD	TF Financial Corp.	PA	$	29.99	$	94.44	$	2.17		$	29.71		13.21	x		100.93	%		11.33	%		106.42	%		13.82	x	$	0.48		1.60	%		16.30	%	$	834		11.22	%		10.64	%		1.62	%		0.85	%		7.40	%		0.81	%		7.07	%
WFD	Westfield Financial Inc.	MA	$	7.53	$	151.73	$	0.22		$	7.65		22.15	x		98.43	%		11.88	%		98.43	%		34.33	x	$	0.24		3.19	%		85.29	%	$	1,277		12.07	%		12.07	%		1.37	%		0.53	%		4.04	%		0.34	%		2.60	%

(1)	Core income, on a diluted per-share basis. Core income is net income after taxes and before extraordinary items, less net income attributable to noncontrolling interest, gain on the sale of securities, amortization of intangibles, goodwill and nonrecurring items. Assumed tax rate is 35%.

(2)	P/E = Price to earnings; P/B = Price to book; P/A = Price to assets; P/TB = Price to tangible book value; and P/Core = Price to core earnings. P/E and P/Core =NM if the ratio is negative or above 35x.

(3)	Indicated 12 month dividend, based on last quarterly dividend declared.

(4)	Indicated 12 month dividend as a percent of trailing 12 month earnings.

(5)	ROAA (return on average assets) and ROAE (return on average equity) are indicated ratios based on trailing 12 month earnings and average equity and assets balances.

(6)	Excludes from averages and medians those companies the subject of actual or rumored acquisition activities or unusual operating characteristics.

Source: SNL Financial, LC. and RP Financial, LC. calculations. The information provided in this report has been obtained from sources we believe are reliable, but we cannot guarantee the accuracy or completeness of such information.


*RP ^® Financial, LC.*		*VALUATION ANALYSIS*
		*IV.21*

2. Price-to-Book (“P/B”) . The application of the P/B valuation method requires calculating the Company’s pro forma market value by applying a valuation P/B ratio, as derived from the Peer Group’s P/B ratio, to the Company’s pro forma book value. Based on the $215.3 million midpoint valuation, the Company’s pro forma P/B and P/TB ratios equaled 64.31% and 67.29%, respectively. In comparison to the average P/B and P/TB ratios for the Peer Group of 103.80% and 108.65%, the Company’s ratios reflected a discount of 38.04% on a P/B basis and a discount of 38.07% on a P/TB basis. In comparison to the Peer Group’s median P/B and P/TB ratios of 99.68% and 109.18%, respectively, the Company’s pro forma P/B and P/TB ratios at the midpoint value reflected discounts of 35.48% and 38.37%, respectively. At the top of the super maximum, the Company’s P/B and P/TB ratios equaled 71.99% and 74.79%, respectively. In comparison to the Peer Group’s average P/B and P/TB ratios, the Company’s P/B and P/TB ratios at the top of the super maximum reflected discounts of 30.65% and 31.16%, respectively. In comparison to the Peer Group’s median P/B and P/TB ratios, the Company’s P/B and P/TB ratios at the top of the super maximum reflected discounts of 27.78% and 31.50%, respectively. RP Financial considered the discounts under the P/B approach to be reasonable, given the nature of the calculation of the P/B ratio which mathematically results in a ratio discounted to book value. The discounts reflected under the P/B approach were also supported by the significant premiums reflected in the Company’s reported P/E multiples and the Company’s net loss on a core earnings basis.

3. Price-to-Assets (“P/A”) . The P/A valuation methodology determines market value by applying a valuation P/A ratio to the Company’s pro forma asset base, conservatively assuming no deposit withdrawals are made to fund stock purchases. In all likelihood there will be deposit withdrawals, which results in understating the pro forma P/A ratio which is computed herein. At the $215.3 million midpoint of the valuation range, the Company’s value equaled 13.29% of pro forma assets. Comparatively, the Peer Group companies exhibited an average P/A ratio of 12.26%, which implies a premium of 8.40% has been applied to the Company’s pro forma P/A ratio. In comparison to the Peer Group’s median P/A ratio of 11.78%, the Company’s pro forma P/A ratio at the midpoint value reflects a premium of 12.82%.


*RP ^® Financial, LC.*		*VALUATION ANALYSIS*
		*IV.22*

Comparison to Recent Offerings

As indicated at the beginning of this chapter, RP Financial’s analysis of recent conversion offering pricing characteristics at closing and in the aftermarket has been limited to a “technical” analysis and, thus, the pricing characteristics of recent conversion offerings cannot be a primary determinate of value. Particular focus was placed on the P/TB approach in this analysis, since the P/E multiples do not reflect the actual impact of reinvestment and the source of the stock proceeds (i.e., external funds vs. deposit withdrawals). As discussed previously, two standard conversion offerings were completed during the past three months. In comparison to the 63.60% average closing forma P/TB ratio of the two recent standard conversions, the Company’s P/TB ratio of 67.29% at the midpoint value reflects an implied premium of 5.80%. At the top of the super maximum, the Company’s P/TB ratio of 74.79% reflects an implied premium of 17.59% relative to the recent standard conversions average P/TB ratio at closing. The current P/TB ratio of the only recent standard conversion that is publicly-traded (Coastway Bancorp) equaled 73.47%, based on closing stock prices as of February 14, 2014. In comparison to the current P/TB ratio of Coastway Bancorp, the Company’s P/TB ratio at the midpoint value reflects an implied discount of 8.41% and at the top of the super maximum reflects an implied premium of 1.80%. Comparative pre-conversion financial data for Coastway Bancorp has been included in the Chapter III tables and show that, in comparison to Blue Hills Bancorp, Coastway Bancorp maintained a lower tangible equity-to-assets ratio (7.20% versus 13.05% for Blue Hills Bancorp), a slightly higher return on average assets (0.35% versus 0.22% for Blue Hills Bancorp) and a higher ratio of non-performing assets as a percent of assets (3.06% versus 0.15% for Blue Hills Bancorp).

Valuation Conclusion

Based on the foregoing, it is our opinion that, as of February 14, 2014, the estimated aggregate pro forma market value of the shares to be issued immediately following the conversion, including shares to be issued to the Foundation, equaled $215,250,000 at the midpoint, equal to 21,525,000 shares offered at a per share value of $10.00. Pursuant to conversion guidelines, the 15% valuation range indicates a minimum value of $182,962,500 and a maximum value of $247,537,500. Based on the $10.00 per share offering price determined by the Board, this valuation range equates to total shares outstanding of 18,296,250 at the minimum and 24,753,750 at the maximum. In the event the appraised value is subject to an increase, the aggregate pro forma market value may be increased up to a super maximum


*RP ^® Financial, LC.*		*VALUATION ANALYSIS*
		*IV.23*

value of $284,668,130 without a resolicitation. Based on the $10.00 per share offering price, the super maximum value would result in total shares outstanding of 28,466,813. Based on this valuation range, the offering range is as follows: $178,500,000 at the minimum, $210,000,000 at the midpoint, $241,500,000 at the maximum and $277,725,000 at the super maximum. Based on the $10.00 per share offering price, the number of offering shares is as follows: 17,850,000 at the minimum, 21,000,000 at the midpoint, 24,150,000 at the maximum and 27,772,500 at the super maximum. The pro forma valuation calculations relative to the Peer Group are shown in Table 4.4 and are detailed in Exhibit IV-7 and Exhibit IV-8.


		STOCK ORDER FORM				For Internal Use Only
		STOCK ORDER FORM
		[TO COME LOGO] [ ]				BATCH # ORDER # CATEGORY #

						REC’D O C
		SEND OVERNIGHT PACKAGES TO: Blue Hills Bancorp, Inc. Stock Information Center c/o Keefe, Bruyette & Woods 18 Columbia Turnpike Florham Park, NJ 07932 Call us toll-free, at ( ) -
						The Subscription Offering will expire at , Eastern Time, on . Your original Stock Order and Certification Form, properly executed and with the correct payment, must be received by us (not postmarked) on or after but no later than , Eastern time, on , or it will be considered void. Stock Order Forms can be delivered by using the enclosed Stock Order Reply Envelope, by overnight delivery to the Stock Information Center address on this form, or by hand delivery to Stock Information Center located at Blue Hills. Do not mail Stock Order Forms to Blue Hills Bank. Faxes or copies of this form are not required to be accepted.

PLEASE PRINT CLEARLY AND COMPLETE ALL APPLICABLE SHADED AREAS. READ THE ENCLOSED STOCK ORDER FORM INSTRUCTIONS (BLUE SHEET) AS YOU COMPLETE THIS FORM.

(1) NUMBER OF SHARES

SUBSCRIPTION

PRICE PER SHARE

(2) TOTAL PAYMENT DUE

(4) METHOD OF PAYMENT – DEPOSIT ACCOUNT WITHDRAWAL

The undersigned authorizes withdrawal from the Blue Hills Bank deposit account(s) listed below. There will be no early withdrawal penalty applicable for funds authorized on this form. Funds designated for withdrawal must be in the listed account(s) at the time this form is received. IRA and other retirement accounts held at Blue Hills Bank and accounts with check-writing privileges may NOT be listed for direct withdrawal below.

x $10.00=

Minimum Number of Shares: 25 ($250). Maximum Number of Shares: ($ ).

See Stock Order Form Instructions for more information regarding maximum number of shares.

For Internal Use Only

Blue Hills Bank

Deposit Account Number

Withdrawal

Amount(s)

(3) METHOD OF PAYMENT – CHECK OR MONEY ORDER

Enclosed is a personal check, bank check or money order made payable to Blue Hills Bancorp, Inc. in the amount of:

Cash, wire transfers and third party checks will not be accepted for this purchase. Checks and money orders will be cashed upon receipt. Blue Hills Bank line of credit checks may not be remitted as payment.

Total Withdrawal Amount

ATTACH A SEPARATE PAGE IF ADDITIONAL SPACE IS NEEDED.


(5) PURCHASER INFORMATION		ACCOUNT INFORMATION – SUBSCRIPTION OFFERING
Check the first box that applies, to the purchaser(s) listed in Section 9: a. Depositors of Sunnyside Federal with aggregate balances of at least $50 at the close of business on January 31, 2012. a. Depositors of Blue Hills Bank and Nantucket Bank, a division of Blue Hills Bank, with aggregate balances of at least $50 or more as of the close of business on February 28, 2013. b. Depositors of Sunnyside Federal with aggregate balances of at least $50 at the close of business on March 31, 2013. b. Employees, officers, directors, trustees and corporators of Blue Hills Bank, Hyde Park Bancorp, Inc. and Hyde Park Bancorp, MHC who do not have a higher priority to purchase stock. c. You are a resident of Norfolk, Suffolk or Nantucket Counties, Massachusetts. d. You are placing an order in the Community Offering, but (c) above does not apply.	If you checked box (a) under ‘‘Purchaser Information,’’ please provide the following information as of February 28, 2013 for the purchaser(s) listed in Section 9 below:
		Deposit and Loan Account Title (Name(s) on Account)	Blue Hills Bank Account Number


		NOTE: NOT LISTING ALL ELIGIBLE ACCOUNTS, OR PROVIDING INCORRECT OR INCOMPLETE INFORMATION, COULD RESULT IN THE LOSS OF ALL OR PART OF ANY SHARE ALLOCATION. ATTACH A SEPARATE PAGE IF ADDITIONAL SPACE IS NEEDED.
(6) MANAGEMENT Check if you are a Blue Hills Bank, Hyde Park Bancorp, Inc. or Hyde Park Bancorp, MHC
Director Trustee Officer Employee Immediate family member, as defined in the Stock Order Form Instructions

(7) MAXIMUM PURCHASER IDENTIFICATION

LOGO Check here if you, individually or together with others (see Section 8), are subscribing in the Subscription Offering for the maximum purchase allowed and are interested in purchasing more shares if the maximum purchase limitation(s) is/are increased. If you do not check the box, you will not be contacted and resolicited in the event the maximum purchase limitations are increased.

(8) ASSOCIATES/ACTING IN CONCERT

LOGO Check here if you, or any associate or persons acting in concert with you, have submitted other orders for shares in the Subscription Offering. If you check the box, list below all other orders submitted by you or your associates or by persons acting in concert with you. (continued on reverse side of this form)

Name(s) listed in Section 9 on other Stock Order Forms

Number of shares ordered

Name(s) listed in Section 9 on other Stock Order Forms

Number of shares ordered

(9) STOCK REGISTRATION The name(s) and address that you provide below will be reflected in your stock ownership records, and will be used for other communications related to this order. Please PRINT clearly and use full first and last name(s), not initials. If purchasing in the Subscription Offering, you may not add the name(s) of persons/entities who do not have subscription rights or who qualify only in a lower purchase priority than yours. See Stock Order Form Instructions for further guidance.

Individual

Tenants in Common

LOGO Uniform Transfers to Minors Act (for reporting SSN, use minor’s)

FOR TRUSTEE/BROKER USE ONLY:

Joint Tenants

Corporation

Partnership

Trust – Under Agreement Dated

Other

IRA (SSN of Beneficial Owner) - -

First Name, Middle Initial, Last Name

Reporting SSN/Tax ID No.

First Name, Middle Initial, Last Name

SSN/Tax ID No.

Street

Daytime Phone #

City

State

Zip

County (Important)

Evening Phone #

(10) ACKNOWLEDGMENT AND SIGNATURE(S)

I understand that, to be effective, this form, properly completed, together with full payment, must be received (not postmarked) on or after , but no later than , Eastern time, on , 2014, otherwise this form and all subscription rights will be void. (continued on reverse side of this form)

ORDER NOT VALID UNLESS SIGNED

LOGO LOGO

ONE SIGNATURE REQUIRED, UNLESS SECTION 4 OF THIS FORM INCLUDES ACCOUNTS REQUIRING MORE THAN ONE SIGNATURE TO AUTHORIZE

WITHDRAWAL. IF SIGNING AS A CUSTODIAN, TRUSTEE, CORPORATE OFFICER, ETC., PLEASE INCLUDE YOUR FULL TITLE.

Signature (title, if applicable)

Date

Signature (title, if applicable)

Date

(over)

STOCK ORDER FORM – SIDE 2

(8) ASSOCIATES/ACTING IN CONCERT (continued from front of Stock Order Form)

Associates/Acting in Concert:

Associate – The term “associate” of a person means:

(1)

any corporation or organization, other than Hyde Park Bancorp, MHC, Hyde Park Bancorp, Inc., Blue Hills Bank or Blue Hills Bancorp, Inc. or a majority-owned subsidiary of these entities, of which the person is a senior officer, partner or 10% beneficial stockholder;

(2)

(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 Hyde Park Bancorp, MHC, Hyde Park Bancorp, Inc., Blue Hills Bank or Blue Hills Bancorp, Inc.; and

(4)

any person “acting in concert” with any of the persons or entities specified above.

Acting in Concert – 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)

Our directors are not treated as associates of each other solely because of their membership on the Board of Directors

(10) ACKNOWLEDGMENT AND SIGNATURE(S) (continued from front of Stock Order Form)

I agree that, after receipt by Blue Hills Bancorp, Inc., this Stock Order Form may not be modified or canceled without Blue Hills Bancorp, Inc.’s consent, and that if withdrawal from a deposit account has been authorized, the authorized amount will not otherwise be available for withdrawal. Under penalty of perjury, I certify that (1) the Social Security or Tax ID information and all other information provided hereon are true, correct and complete, (2) I am purchasing shares solely for my own account and that there is no agreement or understanding regarding the sale or transfer of such shares, or my right to subscribe for shares, and (3) I am not subject to backup withholding tax [cross out (3) if you have been notified by the IRS that you are subject to backup withholding]. I acknowledge that my order does not conflict with the overall purchase limitation of [ $ ] in all categories of the offering combined, for any person or entity, together with any associate or group of persons acting in concert, as set forth in the Conversion; Plan of Distribution dated , 2014.

Subscription rights pertain to those eligible to subscribe in the Subscription Offering. Subscription rights are only exercisable by completing and submitting a Stock Order Form, with full payment for the shares subscribed for. Federal regulations prohibit any person from transferring or entering into any agreement directly or indirectly to transfer the legal or beneficial ownership of conversion subscription rights, or the underlying securities, to the account of another.

I ACKNOWLEDGE THAT THE SHARES OF COMMON STOCK ARE NOT DEPOSITS OR SAVINGS ACCOUNTS AND ARE NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE DEPOSITOR’S INSURANCE FUND OR ANY OTHER GOVERNMENT AGENCY.

If anyone asserts that the shares of common stock are federally insured or guaranteed, or are as safe as an insured deposit, I should call the Federal Reserve Bank of Boston.

I further certify that, before subscribing for shares of the common stock of Blue Hills Bancorp, Inc. I received the Prospectus dated , 2014, and I have read the terms and conditions described in the Prospectus, including disclosure concerning the nature of the security being offered and the risks involved in the investment, described in the “Risk Factors” section beginning on page [ ]. Risks include, but are not limited to the following:

Risk factors will be inserted from the final prospectus.

By executing this form, the investor is not waiving any rights under federal or state securities laws, including the Securities Act of 1933 and the Securities Exchange Act of 1934.

See Front of Stock Order Form è

BLUE HILLS BANCORP, INC.

STOCK INFORMATION CENTER: ( ) -

STOCK ORDER FORM INSTRUCTIONS – SIDE 1

Sections (1) and (2) – Number of Shares and Total Payment Due. Indicate the Number of Shares that you wish to subscribe for and the Total Payment Due. Calculate the Total Payment Due by multiplying the Number of Shares by the $10.00 price per share. The minimum purchase is 25 shares ($250). The maximum allowable purchase by a person or entity (or individuals exercising subscription rights through a single qualifying account held jointly) is shares ($ ) . Further, no person or entity, together with any associate or group of persons acting in concert, may purchase more than shares ($ ) in all categories of the offering combined. Please see the Prospectus section entitled “The Conversion; Plan of Distribution – Limitations on Common Stock Purchases” for more specific information. By signing this form, you are certifying that your order does not conflict with these purchase limitations.

Section (3) – Method of Payment – Check or Money Order. Payment may be made by including with this form a personal check, bank check or money order made payable directly to Blue Hills Bancorp, Inc. These will be deposited upon receipt. The funds remitted by personal check must be available within the account(s) when your Stock Order Form is received. Indicate the amount remitted. Interest will be calculated at Blue Hills Bank’s passbook savings rate from the date payment is received until the offering is completed, at which time a subscriber will be issued a check for interest earned. Please do not remit cash, a Blue Hills Bank line of credit check, wire transfers or third party checks for this purchase.

Section (4) – Method of Payment – Deposit Account Withdrawal. Payment may be made by authorizing a direct withdrawal from your Blue Hills Bank deposit account(s). Indicate the account number(s) and the amount(s) you wish withdrawn. Attach a separate page, if necessary. Funds designated for withdrawal must be available within the account(s) at the time this Stock Order Form is received. Upon receipt of this order, we will place a hold on the amount(s) designated by you – the funds will be unavailable to you for withdrawal thereafter. The funds will continue to earn interest within the account(s) at the applicable contractual deposit account rate. The interest will remain in the accounts when the designated withdrawal is made, at the completion of the offering. There will be no early withdrawal penalty for withdrawal from a Blue Hills Bank certificate of deposit (CD) account. Note that you may NOT designate accounts with check-writing privileges. Please submit a check instead. If you request direct withdrawal from such accounts, we reserve the right to interpret that as your authorization to treat those funds as if we had received a check for the designated amount, and we will immediately withdraw the amount from your checking account(s). Additionally, you may not designate direct withdrawal from Blue Hills Bank IRA or other retirement accounts. For guidance on using retirement funds, whether held at Blue Hills Bank or elsewhere , please contact the Stock Information Center as soon as possible – preferably at least two weeks before the offering deadline. See the Prospectus section entitled “The Conversion; Plan of Distribution – Procedure for Purchasing Shares .” Your ability to use retirement account funds to purchase shares cannot be guaranteed and depends on various factors, including timing constraints and the institution where those funds are currently held.

Section (5) – Purchaser Information. Please check the first box that applies to the purchaser(s) listed in Section 9 of this form. Purchase priorities in the Subscription Offering are based on eligibility dates. Box (a) refers to the Subscription Offering. If you checked box (a) list all Blue Hills Bank account numbers that the purchaser(s) had ownership in as of February 28, 2013. Include all forms of account ownership (e.g. individual, joint, IRA, etc.). If purchasing shares for a minor, list only the minor’s eligible accounts. If purchasing shares for a corporation or partnership, list only that entity’s eligible accounts. Attach a separate page, if necessary. Failure to complete this section, or providing incorrect or incomplete information, could result in a loss of part or all of your share allocation in the event of an oversubscription. Boxes (c) and (d) refer to the Community Offering. Orders placed in the Subscription Offering will take priority over orders placed in the Community Offering. See the Prospectus section entitled “The Conversion; Plan of Distribution—Subscription Offering and Subscription Rights” for further details about the Subscription and Community Offerings.

Section (6) – Management. Check the box if you are a Hyde Park Bancorp, MHC, Hyde Park Bancorp, Inc., Blue Hills Bank or Blue Hills Bancorp, Inc. director, trustee, officer or employee, or a member of their immediate family. Immediate family includes spouse, parents, siblings and children who live in the same house as the director, trustee, officer or employee.

Section (7) – Maximum Purchaser Identification. Check the box, if applicable. Failure to check the box will result in you not receiving notification in the event the maximum purchase limit(s) is/are increased. If you checked the box but have not subscribed for the maximum amount in the Subscription Offering, you will not receive this notification.

Section (8) – Associates/Acting in Concert. Check the box, if applicable, and provide the requested information. Attach a separate page if necessary.

Section (9) – Stock Registration. Clearly PRINT the name(s) in which you want the shares registered and the mailing address for all correspondence related to your order. IMPORTANT: Subscription rights are non-transferable. If placing an order in the Subscription Offering, you may not add the names of persons/entities who do not have subscription rights or who qualify only in a lower purchase priority than yours. A Social Security or Tax ID Number must be provided. The first number listed will be identified with the stock certificate for tax reporting purposes. Listing at least one phone number is important in the event we need to contact you about this form. NOTE FOR FINRA MEMBERS: If you are a member of the Financial Industry Regulatory Authority (“FINRA”), a person affiliated or associated with a FINRA member, you may have additional reporting requirements. Please report this subscription in writing to the applicable department of the FINRA member firm within one day of payment thereof.

(over)

BLUE HILLS BANCORP, INC.

STOCK INFORMATION CENTER: ( ) -

STOCK ORDER FORM INSTRUCTIONS – SIDE 2

Form of Stock Ownership. For reasons of clarity and standardization, the stock transfer industry has developed uniform stockholder registrations for issuance of stock. Beneficiaries may not be named on stock registrations. If you have any questions on wills, estates, beneficiaries, etc., please consult your legal advisor. When registering stock, do not use two initials – use the full first name, middle initial and last name. Omit words that do not affect ownership such as “Dr.” or “Mrs.” Check the one box that applies.

Buying Stock Individually – Used when shares are registered in the name of only one owner. To qualify in the Subscription Offering, the individual named in Section 9 of the Stock Order Form must have had an eligible deposit account at Blue Hills Bank or Nantucket Bank, a division of Blue Hills Bank, as of the close of business on February 28, 2013.

Buying Stock Jointly – To qualify in the first priority of the Subscription Offering, the persons named in Section 9 of the Stock Order Form must have had an eligible deposit account at Blue Hills Bank or Nantucket Bank, a division of Blue Hills Bank, as of the close of business on February 28, 2013.

Joint Tenants – Joint Tenancy (with Right of Survivorship) may be specified to identify two or more owners where ownership is intended to pass automatically to the surviving tenant(s). All owners must agree to the sale of shares.

Tenants in Common – May be specified to identify two or more owners where, upon the death of one co-tenant, ownership of the stock will be held by the surviving co-tenant(s) and by the heirs of the deceased co-tenant. All owners must agree to the sale of shares.

Buying Stock for a Minor – Shares may be held in the name of a custodian for a minor under the Uniform Transfer to Minors Act. To qualify in the first priority of the Subscription Offering, the minor (not the custodian) named in Section 9 of the Stock Order Form must have had an eligible deposit account at Blue Hills Bank or Nantucket Bank, a division of Blue Hills Bank, as of the close of business on February 28, 2013.

The standard abbreviation for custodian is “CUST.” The Uniform Transfer to Minors Act is “UTMA.” Include the state abbreviation. For example, stock held by John Smith as custodian for Susan Smith under the MA Uniform Transfer to Minors Act, should be registered as John Smith CUST Susan Smith UTMA-MA (list only the minor’s social security number).

Buying Stock for a Corporation/Partnership – On the first name line, indicate the name of the corporation or partnership and indicate the entity’s Tax ID Number for reporting purposes. To qualify in the first priority of the Subscription Offering, the corporation or partnership named in Section 9 of the Stock Order Form must have had an eligible deposit account at Blue Hills Bank or Nantucket Bank, a division of Blue Hills Bank, as of the close of business on February 28, 2013.

Buying Stock in a Trust/Fiduciary Capacity – Indicate the name of the fiduciary and the capacity under which the fiduciary is acting (for example, “Executor”), or name of the trust, the trustees and the date of the trust. Indicate the Tax ID Number to be used for reporting purposes. To qualify in the first priority of the Subscription Offering, the entity named in Section 9 of the Stock Order Form must have had an eligible deposit account at Blue Hills Bank or Nantucket Bank, a division of Blue Hills Bank, as of the close of business on February 28, 2013.

Buying Stock in a Self-Directed IRA (for trustee/broker use only) – Registration should reflect the custodian or trustee firm’s registration requirements. For example, on the first name line, indicate the name of the brokerage firm, followed by CUST or TRUSTEE. On the second name line, indicate the name of the beneficial owner (for example, “FBO John SMITH IRA”). You can indicate an account number or other underlying information and the custodian or trustee firm’s address and department to which all correspondence should be mailed related to this order, including a stock certificate. Indicate the TAX ID Number under which the IRA account should be reported for tax purposes. To qualify in the first priority in the Subscription Offering, the beneficial owner named in Section 9 of this form must have had an eligible deposit account at Blue Hills Bank or Nantucket Bank, a division of Blue Hills Bank, as of the close of business on February 28, 2013.

Section (10) – Acknowledgment and Signature(s). Sign and date the Stock Order Form where indicated. Before you sign, please carefully review the information you provided and read the acknowledgment. Verify that you have printed clearly and completed all applicable shaded areas on the Stock Order Form. Only one signature is required, unless any account listed in Section 4 requires more than one signature to authorize a withdrawal.

Please review the Prospectus carefully before making an investment decision. Deliver your completed Stock Order Form, with full payment or deposit account withdrawal authorization, so that it is received (not postmarked) on or after , but no later than , Eastern time, on , 2014. Stock Order Forms can be delivered by using the enclosed postage paid Stock Order Reply Envelope, by overnight delivery to the Stock Information Center address on the front of the Stock Order Form, or by hand-delivery to our Stock Information Center, located at , MA. Please do not mail Stock Order Forms to Blue Hills Bank. We are not required to accept Stock Order Forms that are found to be deficient or incorrect, or that do not include proper payment or the required signature. Faxes or copies of this form are not required to be accepted.

OVERNIGHT DELIVERY can be made to the Stock Information Center address provided on the front of the Stock Order Form.

QUESTIONS? Call our Stock Information Center, toll-free, at , from 10:00 a.m. to 4:00 p.m., Eastern time, Monday through Friday. The Stock Information Center is not open on weekends or bank holidays.

Exhibit 99.6

LOGO

March 11, 2014

Board of Trustees

Hyde Park Bancorp, MHC

Boards of Directors

Hyde Park Bancorp, Inc.

Blue Hills Bancorp, Inc.

Blue Hills Bank

1196 River Street

Hyde Park, Massachusetts 02136

Re:	Plan of Conversion

Hyde Park Bancorp, MHC

Members of the Board of Trustees and the Boards of Directors:

All capitalized terms not otherwise defined in this letter have the meanings given such terms in the Plan of Conversion (the “Plan”) adopted by the Board of Trustees of Hyde Park Bancorp, MHC (the “MHC”). The Plan provides for the conversion of the MHC into the full stock form of organization. Pursuant to the Plan, the MHC will be merged into Hyde Park Bancorp, Inc. (the “Mid-Tier”) and the Mid-Tier will merge with Blue Hills Bancorp, Inc., a newly-formed Maryland corporation (the “Company”) with the Company as the resulting entity, and the MHC will no longer exist. As part of the Plan, the Company will sell shares of common stock in an offering that will represent the ownership interest in the Mid-Tier now owned by the MHC.

We understand that in accordance with the Plan, depositors will receive rights in a liquidation account maintained by the Company representing the amount of (i) the MHC’s ownership interest in the Mid-Tier’s total stockholders’ equity as of the date of the latest statement of financial condition used in the prospectus plus (ii) the value of the net assets of the MHC as of the date of the latest statement of financial condition of the MHC prior to the consummation of the conversion (excluding its ownership of the Mid-Tier). The Company shall continue to hold the liquidation account for the benefit of Eligible Account Holders who continue to maintain deposits in Blue Hills Bank. The liquidation accounts are designed to provide payments to depositors of their liquidation interests in the event of liquidation of Blue Hills Bank (or the Company and Blue Hills Bank).

In the unlikely event that either Blue Hills Bank (or the Company and Blue Hills Bank) were to liquidate after the conversion, all claims of creditors, including those of depositors, would be paid first, followed by distribution to depositors as of February 28, 2013. Also, in a complete liquidation of both entities, or of Blue Hills Bank, when the Company has insufficient assets (other than the stock of Blue Hills Bank), to fund the liquidation account distribution due to Eligible Account Holders and Blue Hills Bank has positive net worth, Blue Hills Bank shall immediately make a distribution to fund the Company’s remaining obligations under the liquidation account. The Plan further provides that if the Company is completely liquidated or sold apart from a sale or liquidation of Blue Hills Bank, then the rights of Eligible Account Holders in the liquidation account maintained by the Company shall be surrendered and treated as a liquidation account in Blue Hills Bank, the bank liquidation account and depositors shall have an equivalent interest in such bank liquidation account, subject to the same rights and terms as the liquidation account.


Washington Headquarters
Three Ballston Plaza				Telephone: (703) 528-1700
1100 North Glebe Road, Suite 600				Fax No.: (703) 528-1788
Arlington, VA 22201				Toll-Free No.: (866) 723-0594
www.rpfinancial.com				E-Mail: mail@rpfinancial.com

RP ^® Financial, LC.

Board of Trustees

Boards of Directors

March 11, 2014

Page 2

Based upon our review of the Plan and our observations that the liquidation rights become payable only upon the unlikely event of the liquidation of Blue Hills Bank (or the Company and Blue Hills Bank), that liquidation rights in the Company automatically transfer to Blue Hills Bank in the event the Company is completely liquidated or sold apart from a sale or liquidation of Blue Hills Bank, and that after two years from the date of conversion and upon written request of the FRB, the Company will transfer the liquidation account and depositors’ interest in such account to Blue Hills Bank and the liquidation account shall thereupon become the liquidation account of Blue Hills Bank no longer subject to the Company’s creditors, we are of the belief that: the benefit provided by the Blue Hills Bank liquidation account supporting the payment of the liquidation account in the event the Company lacks sufficient net assets does not have any economic value at the time of the transactions contemplated in the first and second paragraphs above. We note that we have not undertaken any independent investigation of state or federal law or the position of the Internal Revenue Service with respect to this issue.

Sincerely,

RP ^® Financial, LC.

Exhibit 99.7

LOGO

September 27, 2013

Hyde Park Bancorp, MHC

Hyde Park Bancorp, Inc.

Blue Hills Bank

1196 River Street

Hyde Park, MA 02136


Attention:		William M. Parent
		President and Chief Executive Officer

Ladies and Gentlemen:

This letter confirms the engagement of Keefe, Bruyette & Woods, Inc. (“KBW”) to act as the conversion agent to Hyde Park Bancorp, MHC (the “MHC”), Hyde Park Bancorp, Inc. (the “Bancorp”), Blue Hills Bank (the “Bank”) and, upon formation, the Holding Company (as defined below) in connection with the MHC’s proposed conversion and reorganization from the current mutual holding company form of organization to a stock holding company form of organization (such conversion and reorganization together, the “Reorganization”) pursuant to the MHC’s Plan of Conversion and Reorganization (the “Plan of Reorganization”). In accordance with the Plan of Reorganization and in order to effect the Reorganization, it is contemplated that (i) the MHC will merge into the Bancorp, (ii) the Bancorp will merge into a new stock holding company (the “Holding Company”), (iii) the Holding Company will offer and sell shares of its common stock (the “Common Stock”) initially to eligible persons in a Subscription Offering, with any remaining unsold shares offered (A) to the general public in a direct community offering (the “Community Offering”) and (B) if necessary, through a syndicate of broker-dealers organized by KBW (a “Syndicated Community Offering”) (the Subscription Offering, the Community Offering and any Syndicated Community Offering are collectively referred to herein as the “Offerings”) and (iv) the Bank will become a wholly-owned subsidiary of the Holding Company. The MHC, the Bancorp, 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.

1.	Conversion Agent Services

As Conversion Agent, KBW will provide the following services, as the Company may reasonably request.

Consolidation of Accounts and Development of a Central File, including, but not limited to the following:

•

Consolidate accounts having the same ownership and separate the consolidated file information into necessary groupings to satisfy mailing requirements;

•

Create the master file of account holders as of key record dates; and

•

Provide software for the operation of the Company’s Stock Information Center, including subscription management and proxy solicitation efforts.

Keefe, Bruyette & Woods, Inc., 787 7 ^th Avenue, 4 ^th Floor, New York, NY 10019, (212) 887-7777

Hyde Park Bancorp, MHC

Hyde Park Bancorp, Inc.

Blue Hills Bank

October 7, 2013

Page 2 of 5

Preparation of Proxy Forms, Proxy Solicitation and Special Meeting Services, including, but not limited to the following:

•

Assist the Company’s financial printer with labeling of proxy materials for voting and subscribing for stock;

•

Provide support for any follow-up mailings to members, as needed, including proxy reminders and additional solicitation materials;

•

Proxy and ballot tabulation; and

•

Assist the Inspector of Election for the Company’s special meeting of members, if requested and the election is not contested.

Subscription and Community Offering Services and Stock Information Center Management, including, but not limited to the following:

•

Provide experienced KBW representatives registered with the Financial Industry Regulatory Authority (“FINRA”) to manage and supervise the Stock Information Center (the “Center”);

•

Administer the Center, pursuant to which all substantive investor-related matters will be handled by employees of KBW;

•

Train and supervise Center staff assisting with order processing;

•

Assist in educating Company personnel about the Offerings, their roles and relevant securities laws pertaining to the Offerings;

•

Assist in establishing recordkeeping and reporting procedures;

•

Assist the Company’s financial printer with labeling of stock offering materials for delivery to eligible subscribers;

•

Provide support for any follow-up mailings to members, as needed, including additional solicitation materials;

•

Perform stock order form processing and production of daily reports and analysis;

•

Provide supporting account information to the Company’s legal counsel for ‘blue sky’ research and applicable registration;

•

Assist the Company’s transfer agent with the generation and mailing of stock certificates or statements of ownership; and

•

Perform interest and refund calculations and provide a file to enable the Company or its transfer agent to generate interest and refund checks and 1099-INT reporting as appropriate.

Fees

For the Conversion Agent services outlined above, the Company agrees to pay KBW a fee of $50,000 . This fee is based upon the requirements of current banking regulations, the Reorganization as currently contemplated, and the expectation that member data will be processed as of three key record dates. All fees under this agreement shall be payable as follows: (a) $10,000 payable upon execution of this agreement, which shall be non-refundable; and (b) the balance upon the completion of the Offerings.

Hyde Park Bancorp, MHC

Hyde Park Bancorp, Inc.

Blue Hills Bank

October 7, 2013

Page 3 of 5

Expenses

In addition to any fees that may be payable to KBW hereunder, the Company agrees to reimburse KBW, upon request made from time to time, for its reasonable out-of-pocket expenses incurred in connection with its engagement hereunder, regardless of whether the Offerings are consummated, including, all costs of operating the Stock Information Center, including hiring temporary personnel, if necessary, travel, lodging, food, telephone, postage, forms and supplies, and other similar expenses, which will not exceed $25,000 without the Company’s consent (which consent shall not be unreasonably withheld, conditioned or delayed); provided however that the Company acknowledges and agrees that such expense cap may be increased by an additional amount, not to exceed $10,000, for additional out-of-pocket expenses in the event a resolicitation of the Offerings should occur. The provisions of this paragraph are not intended to apply to or in any way impair the indemnification provisions of this letter.

4.	Reliance on Information Provided

The Company agrees to provide KBW with such information (the “Information”) as KBW may reasonably require in performance of its services under this agreement. The Company recognizes and confirms that KBW (a) will use and rely on and assume the accuracy and completeness of the Information in performing the services contemplated by this agreement without having independently verified or analyzed the accuracy or completeness of same, and (b) does not assume responsibility or liability for the accuracy or completeness of the Information or to conduct any independent verification or any appraisal or physical inspection of properties or assets.

5.	Limitations

The Company acknowledges and agrees that KBW, as Conversion Agent hereunder, (a) shall have no duties or obligations other than the contractual obligations to the Company specifically set forth herein; (b) will be regarded as making no representations and having no responsibilities as to the validity, sufficiency, value or genuineness of any order form or any stock certificates or the shares represented thereby, and will not be required to and will make no representations as to the validity, value or genuineness of the offer; (c) shall not be obliged to take any legal action hereunder which might in its judgment involve any expense or liability, unless it shall have been furnished with an indemnity satisfactory to it; and (d) may rely on and shall be protected in acting in reliance upon any certificate, instrument, opinion, notice, letter, telex, telegram, or other document or security delivered to it and in good faith believed by it to be genuine and to have been signed by the proper party or parties.

The Company also agrees neither KBW, nor any of its affiliates nor any officer, director, employee or agent of KBW or any of its affiliates, nor any person controlling KBW or any of its affiliates, shall be liable to any person or entity, including the Company and any purchaser or potential purchaser of Common Stock in the Offerings, by reason of any error of judgment, or for any act done by it in good faith, or for any mistake of law or fact in connection with this agreement and the performance hereof, unless caused by or arising primarily out of KBW’s bad faith, willful misconduct or gross negligence. The foregoing agreement shall be in addition to any rights that KBW, the Company or any Indemnified Party (as defined herein) may have at common law or otherwise, including, but not limited to, any right to contribution.

Hyde Park Bancorp, MHC

Hyde Park Bancorp, Inc.

Blue Hills Bank

October 7, 2013

Page 4 of 5

Anything in this agreement to the contrary notwithstanding, in no event shall KBW be liable for special, indirect or consequential loss or damage of any kind whatsoever (including but not limited to lost profits), even if KBW has been advised of the likelihood of such loss or damage and regardless of the form of action.

6.	Indemnification

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 engagement of KBW pursuant to, and the performance by KBW of the services contemplated by, this letter, and will reimburse any Indemnified Party for all expenses (including counsel fees and expenses) as they are incurred, including expenses incurred in connection with 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. The Company will not be liable under the foregoing indemnification provision 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 KBW’s bad faith, willful misconduct or gross negligence.

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 and the Advisory Agreement dated October 7, 2013. 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 Reorganization 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. For the sole purpose of enforcing and otherwise giving effect to the indemnification and contribution provisions of this agreement, the Company hereby consents to personal jurisdiction and service and venue in any court in which any claim which is subject to this agreement is brought against KBW or any other indemnified party.

Hyde Park Bancorp, MHC

Hyde Park Bancorp, Inc.

Blue Hills Bank

October 7, 2013

Page 5 of 5

7.	Definitive Agreement

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/ Benjamin Saunders
		Benjamin Saunders
		Managing Director

HYDE PARK BANCORP, MHC

HYDE PARK BANCORP, INC.

BLUE HILLS BANK


By:	/s/ William M. Parent	Date:	10/7/2013
	William M. Parent
	President and Chief Executive Officer