Fairfield County

Bank Corp. (MHC)

Conversion

Valuation

Appraisal

March 2, 2010


Conversion Valuation Appraisal Report		Page: 1

Table of Contents

Fairfield County Bank Corp.

Ridgefield, Connecticut


TABLE OF CONTENTS		1

INTRODUCTION		5

1.	OVERVIEW AND FINANCIAL ANALYSIS	8

	GENERAL OVERVIEW	8
	HISTORY AND OVERVIEW	10
	STRATEGIC DIRECTION	11
	BALANCE SHEET TRENDS	12
	LOAN PORTFOLIO	13
	INVESTMENTS	16
	INVESTMENTS AND MORTGAGE-BACKED SECURITIES	17
	ASSET QUALITY	18
	FUNDING COMPOSITION	21
	ASSET/LIABILITY MANAGEMENT	23
	NET WORTH AND CAPITAL	24
	PROFITABILITY TRENDS	25
	LEGAL PROCEEDINGS	31
	SUBSIDIARIES	31

2.	MARKET AREA ANALYSIS	33

3.	COMPARISONS WITH PUBLICLY TRADED THRIFTS	34

	INTRODUCTION	34
	SELECTION CRITERIA	34
	BASIS FOR COMPARISON	36
	OVERVIEW OF THE COMPARABLES	37

4.	MARKET VALUE DETERMINATION	40

	MARKET VALUE ADJUSTMENTS	40
	FINANCIAL CONDITION	40
	BALANCE SHEET GROWTH	45
	EARNINGS QUALITY, PREDICTABILITY AND GROWTH	46
	MARKET AREA	51
	CASH DIVIDENDS	53
	LIQUIDITY OF THE ISSUE	55
	RECENT REGULATORY MATTERS	56


Conversion Valuation Appraisal Report		Page: 2


5.	OTHER FACTORS	57

	MANAGEMENT	57
	SUBSCRIPTION INTEREST	58
	VALUATION ADJUSTMENTS	60

6.	VALUATION	61

	DISCUSSION OF WEIGHT GIVEN TO VALUATION MULTIPLES	61
	FULL OFFERING VALUE IN RELATION TO COMPARABLES	63
	VALUATION CONCLUSION	68


Conversion Valuation Appraisal Report		Page: 3

List of Figures

Fairfield County Bank Corp.

Ridgefield, Connecticut


FIGURE 1 - KEY BALANCE SHEET DATA		8
FIGURE 2 - KEY RATIOS		9
FIGURE 5 - LOAN MIX AS OF DECEMBER 31, 2009		14
FIGURE 6 - LOAN MIX AT DECEMBER 31, 2009		15
FIGURE 7 - SECURITIES CHART		16
FIGURE 9 - ASSET QUALITY CHART		18
FIGURE 10 - NONPERFORMING LOANS		19
FIGURE 11 - ALLOWANCE FOR POSSIBLE LOAN AND LEASE LOSSES CHART		20
FIGURE 12 - DEPOSIT AND BORROWING TREND CHART		21
FIGURE 13 - DEPOSIT MIX		22
FIGURE 15 - CAPITAL ANALYSIS		24
FIGURE 16 - NET INCOME CHART		25
FIGURE 17 - CORE NET INCOME CALCULATION		26
FIGURE 18 - AVERAGE YIELDS AND COSTS		27
FIGURE 19 - SPREAD AND MARGIN CHART		28
FIGURE 20 - INCOME STATEMENT TRENDS		29
FIGURE 21 - PROFITABILITY TREND CHART		30
FIGURE 22 - DEPOSIT AND DEMOGRAPHIC DATA FOR FAIRFIELD COUNTY		33
FIGURE 23 - COMPARABLE GROUP		36
FIGURE 24 - KEY FINANCIAL INDICATORS		39
FIGURE 25 - KEY BALANCE SHEET DATA		41
FIGURE 26 - CAPITAL DATA		42
FIGURE 27 - ASSET QUALITY TABLE		43
FIGURE 28 - BALANCE SHEET GROWTH DATA		45
FIGURE 29 - NET INCOME CHART		47
FIGURE 30 - PROFITABILITY DATA		48
FIGURE 31 - INCOME STATEMENT DATA		49
FIGURE 32 - MARKET AREA DATA		51
FIGURE 33 - DIVIDEND DATA		53
FIGURE 34 - MARKET CAPITALIZATION DATA		55
FIGURE 35 - MHC REORGANIZATIONS (SINCE 1/1/08) PRO FORMA DATA		58
FIGURE 36 - MHC REORGANIZATIONS PRICE APPRECIATION		59
FIGURE 37 - VALUE RANGE - FULL OFFERING		63
FIGURE 38 - AS IF FULLY CONVERTED OFFERING PRICING MULTIPLES		64
FIGURE 39 - COMPARABLE AS IF FULLY CONVERTED PRICING MULTIPLES TO THE BANK’S PRO FORMA MIDPOINT		64
FIGURE 40 - COMPARABLE AS IF FULLY CONVERTED PRICING MULTIPLES TO THE BANK’S PRO FORMA SUPER MAXIMUM		64
FIGURE 41 - COMPARABLE AS IF FULLY CONVERTED PRICING MULTIPLES TO THE BANK’S PRO FORMA MINIMUM		65
FIGURE 42 - VALUE RANGE MHC OFFERING DATA		66
FIGURE 43 - COMPARABLE MHC PRICING MULTIPLES TO THE BANK’S PRO FORMA MIDPOINT		66
FIGURE 44 - COMPARABLE MHC PRICING MULTIPLES TO THE BANK’S PRO FORMA SUPER MAXIMUM		67
FIGURE 45 - COMPARABLE MHC PRICING MULTIPLES TO THE BANK’S PRO FORMA MINIMUM		67


Conversion Valuation Appraisal Report		Page: 4

List of Exhibits

Fairfield County Bank Corp.

Ridgefield, Connecticut


Exhibit

	1.	Profile of FinPro, Inc. and the Author of the Appraisal

	2.	Consolidated Statements of Condition

	3.	Consolidated Statements of Income

	4.	Consolidated Statements of Changes in Equity

	5.	Consolidated Statements of Cash Flows

	6.	Income Reconciliation of CALL Report to Consolidated Statements

	7.	Comparable Group Selection Screens

	8.	Selected Financial Data

	9.	Industry Pricing Multiples

	10.	MHC Conversions 2008 to Year-to-Date

	11.	Appraisal Full Offering No Foundation Pro Forma December 31, 2009 – 12 Months

	12.	Appraisal MHC No Foundation Pro Forma December 31, 2009 – 12 Months


Conversion Valuation Appraisal Report		Page: 5

Introduction

Fairfield County Bank Corp. (the “Mid-tier”), is offering for sale shares of its common stock. The shares being offered represent 47.00% of the shares of common stock of the Mid-tier that will be outstanding following the reorganization. After the stock offering, approximately 53.00% of the Mid-tier’s outstanding shares of common stock will be owned by Fairfield County Bank, MHC (the “MHC”), its mutual holding company parent. This report represents FinPro, Inc.’s (“FinPro”) independent appraisal of the estimated pro forma market value of the common stock (the “Common Stock”) of Fairfield County Bank Corp. (hereafter referred to on a consolidated basis as the “Bank”).

In compiling the pro formas, FinPro relied upon the assumptions provided by the Bank and its agents. The pro forma assumptions are as follows:

•

47.00% of the total shares will be sold to the depositors and public,

•

the stock will be issued at $10.00 per share,

•

the conversion expenses will be $1.8 million at the midpoint,

•

there will be an ESOP equal to 3.92% of the total shares outstanding funded internally, amortized over 10 years straight-line,

•

there will be an MRP equal to 1.96% of the total shares outstanding, amortized over 5 years straight-line,

•

there will be a Stock Option Plan equal to 4.90% of the total shares outstanding, expensed at $2.84 per option over 5 years straight-line,

•

the tax rate is assumed at 34.00%, and

•

the net proceeds will be invested pre-tax at the 3.54%, which represents the arithmetic average of the yield on earning assets and the cost of deposits.

It is our understanding that the Bank will offer its stock in a subscription and community offering to Eligible Account Holders, to the Employee Plans and to Supplemental Eligible Account Holders of the Bank. This appraisal has been prepared in accordance with Regulation 563b.7 and the “Guidelines for Appraisal Reports for the Valuation of Savings and Loan Associations Converting from Mutual to Stock Form of Organization” of the Office of Thrift Supervision (“OTS”) which have been adopted in practice by the Federal Deposit Insurance Corporation (“FDIC”), including the most recent revisions as of October 21, 1994, and applicable regulatory interpretations thereof.


Conversion Valuation Appraisal Report		Page: 6

In the course of preparing our report, we reviewed the Bank’s audited financials for the years ended December 31, 2008 through December 31, 2009. We also reviewed the registration statement on Form S-1 as filed with the Securities and Exchange Commission (“SEC”). We have conducted due diligence analysis of the Bank and held due diligence related discussions with the Bank’s Management, Sandler O’Neill + Partners L.P. (the Bank’s underwriter), and Kilpatrick Stockton LLP. (the Bank’s special counsel). The valuation parameters set forth in the appraisal were predicated on these discussions but all conclusions related to the valuation were reached and made independent of such discussions.

Where appropriate, we considered information based upon other publicly available sources, which we believe to be reliable; however, we cannot guarantee the accuracy or completeness of such information. We visited the Bank’s primary market area and reviewed the market area’s economic condition. We also reviewed the competitive environment in which the Bank operates and its relative strengths and weaknesses. We compared the Bank’s performance with selected publicly traded thrift institutions. We reviewed conditions in the securities markets in general and in the market for savings institutions in particular. Our analysis included a review of the estimated effects of the Conversion of the Bank on the operations and expected financial performance as they related to the Bank’s estimated pro forma value.

In preparing our valuation, we relied upon and assumed the accuracy and completeness of financial and other information provided to us by the Bank and its independent accountants. We did not independently verify the financial statements and other information provided by the Bank and its independent accountants, nor did we independently value any of the Bank’s assets or liabilities. This estimated valuation considers the Bank only as a going concern and should not be considered as an indication of its liquidation value.

Our valuation is not intended, and must not be construed, to be a recommendation of any kind as the advisability of purchasing shares of Common Stock in the stock issuance. Moreover, because such valuation 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 stock issuance will thereafter be able to sell such shares at prices related to the foregoing valuation of the pro forma market value thereof. FinPro is not a seller of securities within the meaning of any federal or state securities laws. Any report prepared by FinPro shall not be used as an offer or solicitation with respect to the purchase or sale of any securities.


Conversion Valuation Appraisal Report		Page: 7

The estimated valuation herein will be updated as appropriate. These updates will consider, among other factors, any developments or changes in the Bank’s financial condition, operating performance, management policies and procedures and current conditions in the securities market for thrift institution common stock. Should any such developments or changes, in our opinion, be material to the estimated pro forma market value of the Bank, appropriate adjustments to the estimated pro forma market value will be made. The reasons for any such adjustments will be explained at that time.


Conversion Valuation Appraisal Report		Page: 8

1. Overview and Financial Analysis

GENERAL OVERVIEW

As of December 31, 2009, the Bank had $1.6 billion in total assets, $1.3 billion in deposits, $1.2 billion in net loans and $138.2 million in equity.

FIGURE 1 - KEY BALANCE SHEET DATA


	December 31,
($000’s)	2009		2008		2007		2006		2005

Selected Financial Data

Total assets	$	1,560,516	$	1,568,164	$	1,443,516	$	1,351,816	$	1,232,452
Cash and cash equivalents		75,257		20,992		26,169		36,249		22,610
Securities available for sale		57,508		11,131		19,987		18,380		25,639
Securities held-to-maturity		36,558		44,865		49,966		51,417		45,807
Loans, net		1,226,576		1,360,902		1,241,051		1,142,725		1,050,567
Deposits		1,251,400		1,200,180		1,123,753		1,053,468		962,472
Federal Home Loan Bank Advances		134,199		201,898		164,278		153,441		137,676
Mortgage escrow		3,269		3,438		3,135		3,146		2,946
Subordinated debt		8,000		8,000		—		—		—
Stockholder’s equity		138,221		135,304		133,441		126,573		114,805

Source: Offering Prospectus


Conversion Valuation Appraisal Report		Page: 9

FIGURE 2 - KEY RATIOS


	December 31,
	2009		2008		2007		2006		2005
Selected Financial Ratios and Other Data:

Performance Ratios:
Return on average assets	0.12	%	0.35	%	0.66	%	0.90	%	0.99	%
Return on average equity	1.42	%	3.93	%	6.84	%	9.57	%	10.76	%
Interest rate spread	3.44	%	3.66	%	3.39	%	3.49	%	3.66	%
Net interest margin	3.68	%	4.03	%	3.91	%	3.98	%	4.03	%
Noninterest expenses to average assets	3.65	%	3.58	%	3.63	%	3.34	%	3.29	%
Efficiency ratio	84.81	%	83.17	%	78.15	%	71.18	%	68.10	%
Average interest-earning assets to average interest-bearing liabilities	113.41	%	116.64	%	116.65	%	116.81	%	118.61	%
Average equity to average assets	8.69	%	9.09	%	9.60	%	9.43	%	9.23	%

Capital Ratios:
Tier I Capital (to average assets)	9.01	%	8.90	%	8.54	%	8.13	%	8.79	%
Tier I Capital (to risk-weighted assets)	10.65	%	9.88	%	9.46	%	9.37	%	10.33	%
Total Risk Based Capital (to risk-weighted assets)	11.69	%	10.81	%	10.32	%	10.25	%	11.25	%

Asset Quality Ratios:
Allowance for loan losses to total loans	1.11	%	0.94	%	0.88	%	0.89	%	0.90	%
Allowance for loan losses to non-performing loans	23.37	%	47.59	%	86.29	%	179.16	%	116.10	%
Net charge-offs to average outstanding loans during the period	0.60	%	0.16	%	0.02	%	-0.01	%	0.00	%
Non-performing loans to total loans	4.75	%	1.99	%	1.02	%	0.50	%	0.77	%
Non-performing assets to total assets	4.55	%	1.81	%	0.89	%	0.43	%	0.67	%

Other Data:
Number of full service offices	24		22		22		18		18
Number of deposit accounts	48,065		48,273		49,274		48,277		46,715
Number of loans	4,909		5,374		5,171		4,772		4,674

Source: Offering Prospectus


Conversion Valuation Appraisal Report		Page: 10

HISTORY AND OVERVIEW

Fairfield County Bank was established to serve the financing needs of the public and has expanded its services over time to offer personal and business checking accounts, residential real estate loans, including home equity loans and lines of credit, residential construction loans, commercial real estate loans and other types of commercial and consumer loans. The Bank also provides insurance services through its wholly owned subsidiary, Fairfield County Bank Insurance Services, LLC and investment services through its wholly owned subsidiary, Fairfield County Investment Services, Corp. The Bank’s retail and lending market areas primarily include all of Fairfield County.

The history of Fairfield County Bank dates back to 1871. In 2004, Fairfield County Savings Bank and Ridgefield Bank merged to form what is now Fairfield County Bank. Later in 2004, Fairfield County Bank expanded further by acquiring Bank of Westport. Fairfield County Savings Bank was primarily a residential lender, while Ridgefield Bank had more of a commercial lending focus. Following the merger, the Bank has continued to emphasize both residential and commercial and construction lending and sought to increase the yields earned on its loan portfolio by capitalizing on its seasoned commercial lenders to increase its commercial real estate and residential construction loans. Since the merger, the Bank has grown steadily, reaching $1.56 billion in assets at December 31, 2009. Effective January 1, 2007, Fairfield County Bank reorganized into the mutual holding company structure, forming Fairfield County Bank, MHC as its holding company


Conversion Valuation Appraisal Report		Page: 11

STRATEGIC DIRECTION

The Bank’s current management team has largely been in place for many years, and the Bank’s Chairman of the Board and Chief Executive Officer have served in their respective roles for over 20 years. During that time, the Bank has focused on building a profitable, community-oriented financial institution offering outstanding service, added convenience and the products and services its customers require to meet their dynamic financial needs. The Bank’s objective is to continue this focus, and its strategies for achieving the objective include the following:

•

continued growth of its diversified lending portfolio;

•

maintaining a strong emphasis on asset quality;

•

capturing its customers’ financial relationship;

•

leveraging its existing operating structure; and

•

managing its balance sheet risk.


Conversion Valuation Appraisal Report		Page: 12

BALANCE SHEET TRENDS

The Bank’s balance sheet increased by $328.1 million, or 26.62%, from December 31, 2005 to December 31, 2009. Total assets declined between December 31, 2008 and December 31, 2009.

Equity increased $23.4 million from $114.8 million at December 31, 2005 to $138.2 million at December 31, 2009. The equity to assets ratio was 8.86% at December 31, 2009.

FIGURE 3 - ASSET AND RETAINED EARNINGS CHART

Source: Offering Prospectus


Conversion Valuation Appraisal Report		Page: 13

LOAN PORTFOLIO

Net loans increased by $310.3 million from December 31, 2005 to December 31, 2008. The Bank’s loan portfolio has decreased by $134.3 million from December 31, 2008 to December 31, 2009, and as a percent of assets, the loan portfolio has decreased from 86.78% to 78.60%, respectively.

FIGURE 4 - NET LOANS RECEIVABLE CHART

Source: Offering Prospectus


Conversion Valuation Appraisal Report		Page: 14

The loan portfolio increased between December 31, 2005 and December 31, 2009. The mix shifted away from construction loans and towards commercial real estate, consumer loans and commercial business loans.

FIGURE 5 - LOAN MIX AS OF DECEMBER 31, 2009


	December 31,
	2009					2008					2007					2006					2005
($000’s)	Amount			Percent		Amount			Percent		Amount			Percent		Amount			Percent		Amount			Percent
Real estate loans:
Residential	$	357,207		28.8	%	$	401,203		29.2	%	$	361,449		28.9	%	$	343,220		29.7	%	$	298,868		28.2	%
Commercial real estate		357,132		28.8	%		343,447		25.0	%		302,228		24.1	%		246,824		21.4	%		220,971		20.8	%
Construction		121,114		9.8	%		221,505		16.1	%		234,640		18.7	%		280,635		24.3	%		253,515		23.9	%

Total real estate loans		835,453		67.4	%		966,155		70.3	%		898,317		71.7	%		870,679		75.4	%		773,354		72.9	%

Commercial business loans		164,450		13.2	%		163,475		11.9	%		150,041		12.0	%		106,811		9.3	%		91,795		8.6	%

Consumer loans:
Home equity lines of credit		211,029		17.0	%		217,983		15.9	%		183,775		14.7	%		155,967		13.5	%		144,707		13.6	%
Consumer loans		24,922		2.0	%		21,713		1.5	%		15,448		1.2	%		14,744		1.3	%		12,828		1.2	%

Total consumer loans		235,951		19.0	%		239,696		17.4	%		199,223		15.9	%		170,711		14.8	%		157,535		14.8	%

U.S. Government Guaranteed		4,631		0.4	%		4,924		0.4	%		5,127		0.4	%		5,806		0.5	%		38,882		3.7	%
Total Loans		1,240,485		100.0	%		1,374,250		100.0	%		1,252,708		100.0	%		1,154,007		100.0	%		1,061,566		100.0	%
Net deferred loan fees		(151	)				(370	)				(585	)				(974	)				(1,467	)
Allowance for losses		(13,758	)				(12,978	)				(11,065	)				(10,308	)				(9,532	)

Loans, net	$	1,226,576		100.0	%	$	1,360,902		100.0	%	$	1,241,058		100.0	%	$	1,142,725		100.0	%	$	1,050,567		100.0	%

Source: Offering Prospectus


Conversion Valuation Appraisal Report		Page: 15

The two largest components of the loan portfolio are commercial real estate loans and one to four family loans, each accounting for 28.8% of total loans, respectively.

FIGURE 6 - LOAN MIX AT DECEMBER 31, 2009

Source: Offering Prospectus


Conversion Valuation Appraisal Report		Page: 16

INVESTMENTS

The investment portfolio trended downward between December 31, 2005 and December 31, 2008. However, between December 31, 2008 and December 31, 2009 the portfolio increased $38.1 million, or 67.99%.

FIGURE 7 - SECURITIES CHART

Note: Securities designated AFS were shown at market value and securities designated HTM were shown at amortized cost.

Source: Offering Prospectus


Conversion Valuation Appraisal Report		Page: 17

INVESTMENTS AND MORTGAGE-BACKED SECURITIES

The following table provides the Bank’s investment portfolio. The Bank’s corporate obligations include trust preferred securities which have a book value of $12.9 million (after an impairment charge of $3.7 million) and an estimated fair value of $4.4 million.

FIGURE 8 - INVESTMENT MIX


	December 31,
	2009				2008				2007
(Dollars in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Securities available for sale:
U.S. Government and agency securities	$	42,039	$	41,469	$	10,864	$	2,605	$	—	$	—
Mortgage-backed securities		10,007		10,046		520		510		775		771
Corporate and other obligations		10,901		3,466		2,000		2,078		14,235		13,079
Equity securities		2,516		2,527		5,935		5,938		6,361		6,137

Total available for sale		65,463		57,508		19,319		11,131		21,371		19,987

Securities held to maturity:
U.S. Government and agency securities		5,829		5,919		8,075		7,985		10,924		10,990
Mortgage-backed securities		7,634		7,735		10,943		10,855		17,596		16,712
Corporate and other obligations		6,916		5,358		7,697		5,452		2,927		2,819
Municipal bonds		16,179		16,496		18,150		18,792		18,519		19,043

Total held to maturity		36,558		35,508		44,865		43,084		49,966		49,564

Total	$	102,021	$	93,016	$	64,184	$	54,215	$	71,337	$	69,551

Source: Offering Prospectus


Conversion Valuation Appraisal Report		Page: 18

ASSET QUALITY

The Bank’s level of nonperforming assets has increased substantially since December 31, 2005. Between December 31, 2008 and December 31, 2009, nonperforming assets (NPAs) increased $42.7 million. At December 31, 2009, NPAs were $71.0 million, or 4.55% of total assets. Additionally, the Bank has $14.6 million of troubled debt restructurings (TDRs). NPAs plus TDR as a percentage of total assets was 5.43% as of December 31, 2009.

FIGURE 9 - ASSET QUALITY CHART

Source: Offering Prospectus


Conversion Valuation Appraisal Report		Page: 19

At December 31, 2009, the Bank’s nonperforming loans to total loan ratio was 4.75% and the nonperforming loans to total assets ratio was 3.77%.

FIGURE 10 - NONPERFORMING LOANS


	December 31,
(Dollars in thousands)	2009			2008			2007			2006			2005
Nonaccrual loans:
Real estate loans:
One- to four-family	$	25,221		$	6,435		$	1,972		$	—		$	810
Commercial real estate		4,678			99			—			—			—
Construction		18,300			18,436			7,525			—			—

Total real estate loans		48,199			24,970			9,497			—			810

Commercial business loans		5,809			1,626			1,748			4,427			6,157

Consumer loans:
Home equity lines of credit		4,714			363			946			719			720
Other consumer loans		152			313			632			608			523

Total consumer loans		4,866			676			1,578			1,327			1,243

Total nonaccrual loans		58,874			27,272			12,823			5,754			8,210

Real estate owned		12,156			1,080			—			—			—

Total non-performing assets		71,030			28,352			12,823			5,754			8,210

Troubled debt restructurings		14,615			—			—			—			—


Troubled debt restructurings and total non-performing assets	$	84,645		$	28,352		$	12,823		$	5,754		$	8,210

Ratios:
Total non-performing loans to total loans		4.75	%		1.98	%		1.02	%		0.50	%		0.77	%
Total non-performing loans to total assets		3.77	%		1.74	%		0.89	%		0.43	%		0.67	%
Total non-performing assets and troubled debt restructurings to total assets		5.43	%		1.81	%		0.89	%		0.43	%		0.67	%

Source: Offering Prospectus


Conversion Valuation Appraisal Report		Page: 20

The ALLL increased $4.2 million from December 31, 2005 to December 31, 2009. The Bank’s ALLL to loans ratio increased from 0.90% at December 31, 2005 to 1.11% at December 31, 2009. ALLL as a percentage of NPLs was 23.37% as of December 31, 2009.

FIGURE 11 - ALLOWANCE FOR POSSIBLE LOAN AND LEASE LOSSES CHART

Source: Offering Prospectus


Conversion Valuation Appraisal Report		Page: 21

FUNDING COMPOSITION

From December 31, 2005 to December 31, 2009, deposits increased $288.9 million. Borrowings increased by $72.7 million between December 31, 2005 to December 31, 2008. Between December 31, 2008 and December 31, 2009 borrowings decreased $67.9 million.

FIGURE 12 - DEPOSIT AND BORROWING TREND CHART

Source: Offering Prospectus


Conversion Valuation Appraisal Report		Page: 22

The following chart illustrates the Bank’s deposit mix as of December 31, 2009. The largest portion of the deposit mix is time deposits which account for 32.9% of the portfolio.

FIGURE 13 - DEPOSIT MIX

Source: Offering Prospectus


Conversion Valuation Appraisal Report		Page: 23

ASSET/LIABILITY MANAGEMENT

The following chart provides the net interest income sensitivity in various interest rate shock scenarios.

FIGURE 14 - INTEREST RATE RISK


	Changes in Net Interest Income ($000’s)
Increase (Decrease) in Market Interest Rates (Rate Shock)	$ Amount	$ Change	% Change
400 bp	53,005	-152	-0.29	%
200	52,996	-161	-0.30	%
0	53,157	0	0
-100	52,367	-790	-1.49	%

Source: Offering Prospectus


Conversion Valuation Appraisal Report		Page: 24

NET WORTH AND CAPITAL

At December 31, 2009 the Bank had capital in excess of the minimum requirements for all capital ratios.

FIGURE 15 - CAPITAL ANALYSIS


Fairfield County Bank Regulatory Capital Position	At December 31, 2009
Fairfield County Bank Regulatory Capital Position	Amount ($000)’s		Percentage of Assets

GAAP Capital	$	146,119	9.38	%

Tangible Capital:
Actual		141,435	9.01	%
Requirement		23,559	1.50	%

Excess		117,876	7.51	%

Core Capital:
Actual		141,435	9.01	%
Requirement		62,824	4.00	%

Excess		78,611	5.01	%

Tier 1 Risk-Based Capital:
Actual		141,435	10.65	%
Requirement		53,105	4.00	%

Excess		88,330	6.65	%

Total Risk-Based Capital:
Total risk-based capital		155,198	11.69	%
Requirement		106,210	8.00	%

Excess		48,988	3.69	%

Source: Offering Prospectus


Conversion Valuation Appraisal Report		Page: 25

PROFITABILITY TRENDS

The Bank’s annual net income has trended downward from the year ended December 31, 2005 through the year ended December 31, 2009. The decrease was primarily attributable to increasing provision expense and noninterest expense, which were only partially offset by higher net interest income and higher noninterest income.

FIGURE 16 - NET INCOME CHART

Source: Offering Prospectus


Conversion Valuation Appraisal Report		Page: 26

The following table provides FinPro’s calculation of the Bank’s core net income for the twelve months ended December 31, 2009.

FIGURE 17 - CORE NET INCOME CALCULATION


($000)’s	For Twelve Months Ended December 31, 2009

Net Income as Reported	$	1,978

Pre-Tax Adjustments:
Less: Gain on Sale of Mortgages		(3,874	)
Plus: Loss on real estate		666
Less: Gain on sale of securities		(258	)
Plus: Other than temporary impairment losses on securities		3,504
Less: Gain on fixed assets		(562	)
Plus: Loss on OREO		588

Total Adjustments		64

Tax Impact (34%)		22

After-Tax Adjustment		42

Core Net Income	$	2,020
Core ROAA		0.13	%
Core ROAE		1.37	%

Source: Offering Prospectus and FinPro


Conversion Valuation Appraisal Report		Page: 27

The Bank’s spread and margin increased during the twelve months ended December 31, 2009 relative to the twelve months ended December 31, 2007. The increase was due to the decrease in the cost of average interest bearing liabilities exceeding the decrease in yield of average earning assets.

FIGURE 18 - AVERAGE YIELDS AND COSTS


	Year Ended December 31,
	2009						2008							2007
	Average Balance		Interest And Dividends		Yield/ Cost		Average Balance			Interest And Dividends		Yield/ Cost		Average Balance		Interest And Dividends		Yield/ Cost
Assets:
Loans, net	$	1,335,683	$	75,751	5.67	%	$	1,314,878		$	85,324	6.49	%	$	1,182,105	$	84,713	7.17	%
Investment securities		50,786		2,357	4.64	%		54,134			3,490	6.45	%		59,556		3,653	6.13	%
Mortgage-backed securities		20,203		731	3.62	%		11,558			561	4.85	%		12,261		593	4.84	%
Other interest-earning assets		54,425		123	0.24	%		13,042			271	2.08	%		8,181		471	5.76	%

Total interest-earning assets		1,461,097		78,962	5.40	%		1,393,612			89,646	6.43	%		1,262,103		89,430	7.09	%
Non-interest-earning assets		143,576						126,777							118,522

Total assets		1,604,673						1,520,389							1,380,625

Liabilities and stockholders’ equity:
Interest earnings checking accounts		194,896		1,225	0.63	%		157,826			1,508	0.95	%		148,996		2,116	1.42	%
Money market accounts		382,141		4,737	1.24	%		402,437			9,569	2.38	%		318,104		12,197	3.83	%
Savings accounts		96,822		377	0.39	%		91,108			818	0.90	%		90,174		1,057	1.17	%
Time of deposits		441,569		12,861	2.91	%		375,803			14,489	3.86	%		386,445		18,305	4.74	%

Total interest-bearing deposits		1,115,428		19,200	1.72	%		1,027,174			26,384	2.57	%		943,719		33,675	3.57	%

Federal Home Loan Bank advances		159,917		5,480	3.42	%		170,778			6,691	3.92	%		129,866		6,016	4.70	%
Federal Home Loan Bank overnight borrowings		202		1	0.40	%		3,115			99	3.18	%		4,375		266	6.06	%
Other Interest Bearing Liabilities		12,740		517	4.07	%		7,624			362	4.75	%		4,015		130	3.26	%
Total interest-bearing liabilities		1,288,287		25,197	1.96	%		1,208,691			33,536	2.77	%		1,081,975		40,087	3.70	%

Non-interest-bearing deposits		159,960						158,459							151,706
Other non-interest-bearing liabilities		16,935						17,478							14,350

Total liabilities		1,465,182						1,384,628							1,248,031

Total stockholders’ equity		139,491						135,761							132,594

Total liabilities and stockholders’ equity	$	1,604,673					$	1,520,389						$	1,380,625
Net interest income			$	53,765						$	56,110					$	49,343
Interest rate spread					3.44	%						3.66	%					3.39	%
Net interest margin					3.68	%						4.03	%					3.91	%
Average interest-earning assets to average interest-bearing liabilities								113.41	%			115.30	%					116.65	%

Source: Offering Prospectus


Conversion Valuation Appraisal Report		Page: 28

Spread and margin declined between the twelve month period ended December 31, 2008 and the twelve month period ended December 31, 2009. The decline was due to the decrease in the yield on average earning assets exceeding the decrease in cost of average interest bearing liabilities.

FIGURE 19 - SPREAD AND MARGIN CHART

Source: Offering Prospectus


Conversion Valuation Appraisal Report		Page: 29

FIGURE 20 - INCOME STATEMENT TRENDS


At and For the Year Ended December 31, (Dollars in thousands)	2009			2008		2007		2006		2005

Interest income	$	78,962		$	89,646	$	89,430	$	82,192	$	66,980
Interest expense		25,197			33,536		40,087		34,717		22,405

Net interest income		53,765			56,110		49,343		47,475		44,575
Provision for loan losses		8,700			4,000		1,000		700		1,275

Net interest income after provision for loan losses		45,065			52,110		48,343		46,775		43,300
Noninterest income		15,036			9,624		15,023		13,557		13,228
Noninterest expense		58,350			54,785		50,299		43,445		39,366

Income before income taxes		1,751			6,948		13,067		16,887		17,162
Income tax (benefit)/expense		(227	)		1,678		3,996		5,154		5,260

Net income	$	1,978		$	5,270	$	9,071	$	11,733	$	11,902

Source: Offering Prospectus


Conversion Valuation Appraisal Report		Page: 30

Between the fiscal years ended 2005 and 2009, ROAA and ROAE decreased.

The Bank’s ROAA and ROAE for the twelve month period ended December 31, 2009 were 0.12% and 1.42%, respectively.

FIGURE 21 - PROFITABILITY TREND CHART

LOGO

Source: Offering Prospectus


Conversion Valuation Appraisal Report		Page: 31

LEGAL PROCEEDINGS

Periodically, there have been various claims and lawsuits against the Bank, such as claims to enforce liens, condemnation proceedings on properties in which the Bank holds security interests, claims involving the making and servicing of real property loans and other issues incident to the Bank’s business. The Bank is not a party to any pending legal proceedings that the Bank believes would have a material adverse effect on the Bank’s financial condition, results of operations or cash flows.

SUBSIDIARIES

Fairfield County Bank owns 100% of the following subsidiary companies:

Ridgefield Bank Mortgage Corp. A wholly owned subsidiary that is a passive investment company. Fairfield County Bank contributes real estate loans to the subsidiary, which allows for certain tax adjustments under Connecticut law.

Fairfield County Investment Services Corp. Wholly owned by Fairfield County Bank and is a shell company. Its sole activity is the investment in 8.05% of the stock of Infinex Financial, a bank-owned provider of investment and insurance products and services for community banks. Infinex is a company that is owned by its participant depository institutions and state banking associations. Fairfield County Bank maintains a dual employee arrangement with Infinex whereby Infinex operates an office at Fairfield County Bank and offers to customers a range of non-deposit investment products, including mutual funds, bonds, equity securities and annuities. It holds the stock because Fairfield County Bank was required to maintain an ownership interest in Infinex to enable it to participate in the investment and insurance brokerage services of Infinex.

Fairfield County Bank Insurance Services, LLC Wholly owned by Fairfield County Bank and engages in full-service insurance agency services.

Affordable Community Housing LLC (“ACH”). Wholly owned subsidiary of Fairfield County Bank. Fairfield County Bank, through ACH, owns 33% interest in a partnership known as Blind Brook Limited Partnership, which it organized with two other banks and the general partner. The partnership purchased federal tax credits for four low income housing units in Danbury, Connecticut.


Conversion Valuation Appraisal Report		Page: 32

Residential Investment Corp. Wholly owned subsidiary solely engaged in the acquisition and development of single family real estate. The Bank has made four loans to Residential Investment Corp. One is a $5.0 million loan secured by a home located in New Canaan that was built on speculation. The home has not been sold, but is currently leased. There is a $707,000 loan to Residential Investment Corp. that is secured by a property located in New Canaan that was to be developed on speculation. Two additional loans totaling $491,500 were originated for the acquisition of a lot that is also located in New Canaan and for the construction of a road for that development.

Fairfield Real Estate Holdings, LLC. Wholly owned subsidiary that was established to hold foreclosed and deed in lieu properties.

In addition, Fairfield County Bank, MHC owns 100% of the following subsidiary company:

Fairfield County Trust I. This is a Delaware statutory trust formed in July 2008 that issued and sold $8.0 million of trust preferred securities in a private placement and issued $248,000 of trust common securities to Fairfield County Bank, MHC. Fairfield County Trust I used the proceeds of these issuances to purchase $8.2 million of Fairfield County Bank, MHC’s floating rate junior subordinated debentures due July 11, 2038. The junior subordinated debentures are the sole assets of Fairfield County Trust I and are subordinate to all of Fairfield County Bank, MHC’s existing and future obligations for borrowed money.


Conversion Valuation Appraisal Report		Page: 33

2. Market Area Analysis

The Bank considers its primary market area to consist of the towns and cities of Bridgeport, Danbury, Darien, Fairfield, Georgetown, Greenwich, Norwalk, Ridgefield, Rowayton, Stamford Trumbull, Weston, Westport and Wilton, Connecticut, all of which are located in Fairfield County, Connecticut. Fairfield County is situated in the southwestern corner of the State of Connecticut and is the most populous and wealthiest county in Connecticut. Fairfield County is located approximately 40 miles outside of New York City and, as a result, its economy is largely tied to that of the greater New York City metropolitan area. Fairfield County is a predominantly residential area consisting of high-end properties occupied by affluent individuals, many of whom commute into New York City. Accordingly, the average home prices in Fairfield County are substantially higher than those in other parts of Connecticut and the United States. In recent years, the economy of Fairfield County has been adversely impacted by the negative effect of the financial industry crisis on New York City’s economy as well as a decline in the local real estate market. As a result, Fairfield County has witnessed a recent decline in real estate values, an increase in nonperforming assets, and a decline in demand by potential homebuyers.

The following table provides deposit and demographic data for Fairfield County.

FIGURE 22 - DEPOSIT AND DEMOGRAPHIC DATA FOR FAIRFIELD COUNTY

Deposits Summary

(Deposit data in $000)


	2005	2006	2007	2008		2009
Total Deposits	23,695,328	24,394,924	25,229,734	25,274,926		29,676,204
Demographic Data

	Base 2000	Current 2009	Projected 2014	% Change 2000 - 2009		% Change 2009 - 2014
Total Population:	882,567	908,106	914,371	2.89		0.69
0-14 Age Group (%)	21.92	21.49	20.73	0.88		(2.92	)
15-34 Age Group (%)	24.04	23.05	24.34	(1.32	)	6.33
35-54 Age Group (%)	31.52	30.56	27.50	(0.23	)	(9.40	)
55+ Age Group (%)	22.52	24.89	27.43	24.69		20.05

Total Households (actual)	324,232	331,823	333,893	2.34		0.62
0-$24K Households (%)	17.98	12.88	11.70	(26.70	)	(8.57	)
$25-49K Households (%)	20.64	15.20	15.55	(24.64	)	2.92
$50K+ Households (%)	61.38	71.92	72.75	39.31		0.74

Average Household Income ($)	103,255	128,398	136,054	24.35		5.96
Median Household Income ($)	64,876	87,897	92,333	35.48		5.05
Per Capita Income ($)	38,350	47,227	50,031	23.15		5.94

Source: SNL Financial


Conversion Valuation Appraisal Report		Page: 34

3. Comparisons with Publicly Traded Thrifts

INTRODUCTION

This section presents an analysis of the Bank’s operations against a selected group (“Comparable Group”) of publicly traded Mutual Holding Companies (“MHCs”). The Comparable Group was selected based upon similarity of characteristics to the Bank. The Comparable Group multiples provide the basis for the valuation of the Bank.

Factors that influence the Bank’s value such as balance sheet structure and size, profitability, income and expense trends, capital levels, credit risk, and recent operating results can be measured against the Comparable Group. The Comparable Group’s current market pricing, coupled with the appropriate aggregate adjustment for differences between the Bank and the Comparable Group, will then be utilized as the basis for the pro forma valuation of the Bank’s to-be-issued common stock.

SELECTION CRITERIA

The goal of the selection criteria process is to find those institutions with characteristics that most closely match those of the Bank. In an ideal world, all of the Comparable Group would contain the exact characteristics of the Bank. However, none of the Comparables selected will be exact clones of the Bank.

Based upon our experience, FinPro has determined that MHCs trade at materially different levels relative to fully converted thrifts due to the unique ownership structure. The primary differences between MHCs and fully converted institutions are that MHCs contain a minority interest and have the potential for a second step. MHCs also have the potential for a remutualization transaction. Due to these differences, MHC trading multiples are substantially different from fully converted trading multiples. FinPro concluded that the appropriate Comparable Group should be comprised of liquidly traded MHCs.


Conversion Valuation Appraisal Report		Page: 35

As of the date of this appraisal, there are a total of 256 thrifts that trade on public exchanges. There are 147 traded on the NYSE, NASDAQ or AMEX. FinPro limited the Comparable Group to institutions whose common stock is listed on a major exchange, (defined as the NYSE, NASDAQ or AMEX) since these companies tend to trade regularly. FinPro believes that thrifts that trade over-the-counter or as pink sheets are inappropriate for the Comparable Group, due to irregular trading activity and wide bid/ask spreads, which may skew the trading value and make trading multiples less reliable as an indicator of value.

109 Institutions that were not structured as Mutual Holding Companies (MHC’s) were eliminated.

12 Institutions outside of the target regions of the Mid-Atlantic and Northeast regions were eliminated.

Of the 26 remaining institutions, 9 institutions were eliminated due to their size. An institution was eliminated if total assets were below $500 million or above $4 billion.

Institutions that have recently announced a second step transaction were eliminated. 5 institutions were eliminated, leaving a group of 12. Two more of these institutions were eliminated because they have less than 27% of their shares outstanding.

FinPro did not include institutions that have recently converted, as the earnings of newly converted institutions do not reflect a full year’s benefit from the reinvestment of proceeds, and thus the price/earnings multiples and return on equity measures for these institutions tend to be skewed upward and downward, respectively.

This results in a total of 10 Comparables. FinPro review the recent performance and news releases of these 10 companies and determined that all 10 were acceptable Comparables.


Conversion Valuation Appraisal Report		Page: 36

FIGURE 23 - COMPARABLE GROUP

Corporate

Ticker

Short Name

Exchange

City

State

Number
of
Offices

IPO
Date

Comparable Thrift Data

BFSB

Brooklyn Federal Bancorp, Inc. (MHC)

NASDAQ

Brooklyn

04/06/2005

CSBK

Clifton Savings Bancorp, Inc. (MHC)

NASDAQ

Clifton

03/04/2004

MGYR

Magyar Bancorp, Inc. (MHC)

NASDAQ

New Brunswick

01/24/2006

MLVF

Malvern Federal Bancorp, Inc. (MHC)

NASDAQ

Paoli

05/20/2008

EBSB

Meridian Interstate Bancorp, Inc. (MHC)

NASDAQ

East Boston

01/23/2008

NECB

Northeast Community Bancorp, Inc. (MHC)

NASDAQ

White Plains

07/06/2006

NFBK

Northfield Bancorp, Inc. (MHC)

NASDAQ

Avenel

11/08/2007

PBIP

Prudential Bancorp, Inc. of Pennsylvania (MHC)

NASDAQ

Philadelphia

03/30/2005

RCKB

Rockville Financial, Inc. (MHC)

NASDAQ

Vernon Rockville

05/23/2005

SIFI

SI Financial Group, Inc. (MHC)

NASDAQ

Willimantic

10/01/2004

Fairfield County Bank

Ridgefield

Source: SNL Financial

BASIS FOR COMPARISON

MHCs have different percentages of minority ownership. In order to adjust for this factor, all of the Comparables’ pricing multiples are represented as if the MHC undertook a second step, based upon standardized assumptions. These multiples will be referred to as “fully converted” pricing multiples.


Conversion Valuation Appraisal Report		Page: 37

OVERVIEW OF THE COMPARABLES

The members of the Comparable Group were reviewed against the Bank to ensure comparability based upon the following criteria:

Asset Size

Profitability

Capital Level

Balance Sheet Mix

Operating Strategy

Date of Conversion

1. Asset Size The Comparable Group should have a similar asset size to the Bank. However, the universe of MHCs is small making the selection of similar size institutions difficult. The Comparable Group ranged in size from $506.2 million to $2.0 billion in total assets with a median of $777.3 million. The Bank’s asset size was $1.6 billion as of December 31, 2009. On a pro forma basis, the Bank’s assets are projected to increase $43.3 million.

2. Profitability The Comparable Group had a median core ROAA of 0.36% and a median core ROAE of 2.61% for the last twelve months. The Comparable Group profitability measures had a dispersion about the mean for the core ROAA measure ranging from a low of negative 0.56% to a high of 0.65%, while the core ROAE measure ranged from a low of negative 7.48% to a high of 6.41%. The Bank had a core ROAA of 0.13% and a core ROAE of 1.37% for the twelve months ended December 31, 2009. On a pro forma basis, the Bank’s core ROAA and core ROAE are 0.13% and 1.13%, respectively.

3. Capital Level The Comparable Group had a median tangible equity to tangible assets ratio of 13.27% with a high of 21.22% and a low of 7.14%. At December 31, 2009, the Bank had a tangible equity to tangible assets ratio of 8.38%. On a pro forma basis, at the midpoint, the Bank would have a tangible equity to tangible assets ratio of 10.87%.

4. Balance Sheet Mix At December 31, 2009, the Bank had a net loan to asset ratio of 78.60%. The median loan to asset ratio for the Comparables was 74.30%, ranging from a


Conversion Valuation Appraisal Report		Page: 38

low of 36.42% to a high of 87.44%. On the liability side, the Bank’s deposit to asset ratio was 80.19% at December 31, 2009 while the Comparable median was 75.76%, ranging from 65.77% to 83.19%. The Bank’s borrowing to asset ratio of 9.32% is below the Comparable median of 12.56%.

5. Operating Strategy An institution’s operating characteristics are important because they determine future performance. Operational strategy also affects expected rates of return and investor’s general perception of the quality, risk and attractiveness of a given company. Specific operating characteristics include profitability, balance sheet growth, asset quality, capitalization and non-financial factors such as management strategies and lines of business.

6. Date of Conversion Recent conversions, those completed on or after March 2, 2009, were excluded since the earnings of a newly converted institution do not reflect the reinvestment of conversion proceeds. Additionally, new issues tend to trade at a discount to the market averages.


Conversion Valuation Appraisal Report		Page: 39

The following table represents key financial indicators for the Bank and the Comparable Group.

FIGURE 24 - KEY FINANCIAL INDICATORS


	The Bank at or for the Twelve Months Ended 12/31/09		Comparable Group Median Last Twelve Months
Balance Sheet Data
Gross Loans to Deposits	99.13		96.36
Total Net Loans to Assets	78.60		74.30
Securities to Assets	6.03		17.46
Deposits to Assets	80.19		75.76
Borrowed Funds to Assets	9.32		12.56
Balance Sheet Growth
Asset Growth Rate	(0.49	)	3.72

Loan Growth Rate	(9.87	)	6.14

Deposit Growth Rate	4.27		15.28
Capital
Equity to Assets	8.86		13.27
Tangible Equity to Tangible Assets	8.38		13.27
Intangible Assets to Equity	5.86		—

Regulatory Core Capital to Assets	9.01		11.14

Equity + Reserves to Assets	9.74		14.17
Asset Quality
Non-Performing Loans to Loans	4.75		1.66
Reserves to Non-Performing Loans	23.37		57.31
Non-Performing Assets to Assets	4.55		1.54
Non-Performing Assets to Equity	51.39		11.55
Reserves to Loans	1.11		1.08

Reserves to Non-Performing Assets + 90 Days Del.	19.37		39.45

Profitability
Return on Average Assets	0.12		0.22
Return on Average Equity	1.42		1.56
Core Return on Average Assets	0.13		0.36
Core Return on Average Equity	1.37		2.61
Income Statement
Yield on Average Earning Assets	5.40		5.23

Cost of Average Interest Bearing Liabilities	1.96		2.19

Net Interest Spread	3.44		2.81
Net Interest Margin	3.68		3.01
Noninterest Income to Average Assets	0.94		0.35
Noninterest Expense to Average Assets	3.65		2.43
Efficiency Ratio	84.81		70.71

Source: The Bank’s Offering Circular, FinPro calculations and SNL Securities


Conversion Valuation Appraisal Report		Page: 40

4. Market Value Determination

MARKET VALUE ADJUSTMENTS

The estimated pro forma market value of the Bank, along with certain adjustments to its value relative to market values for the Comparable Group are delineated in this section. The adjustments are made from potential investors’ viewpoint and are adjustments necessary when comparing the Bank to the Comparable Group. The adjustment factors are subjectively assessed using the appraiser’s knowledge and expertise and an aggregate adjustment is determined. Potential investors include depositors holding subscription rights and unrelated parties who may purchase stock in the community offering and who are assumed to be aware of all relevant and necessary facts as they pertain to the value of the Bank relative to other publicly traded thrift institutions and relative to alternative investment opportunities.

There are numerous criteria on which the market value adjustments are based. The major criteria utilized for purposes of this report include:

Adjustments Relative to the Comparable Group:

•

Financial Condition

•

Balance Sheet Growth

•

Earnings Quality, Predictability and Growth

•

Market Area

•

Cash Dividends

•

Liquidity of the Issue

•

Recent Regulatory Matters

Adjustments for Other Factors:

•

Management

•

Subscription Interest

To ascertain the market value of the Bank, the median trading multiple values for the Comparable Group are utilized as the starting point. The adjustment, up or down, to the Comparable Group median multiple values is made based on the comparison of the Bank to the Comparable Group.


Conversion Valuation Appraisal Report		Page: 41

FINANCIAL CONDITION

The balance sheet strength of an institution is an important market value determinant, as the investment community considers such factors as cash liquidity, capitalization, asset composition, funding mix, intangible levels and interest rate risk in assessing the attractiveness of investing in the common stock of a thrift. The following figures summarize the key financial elements of the Bank measured against the Comparable Groups.

FIGURE 25 - KEY BALANCE SHEET DATA


		*Key Financial Data for the Most Recent Period End*
Ticker	Short Name	Total Assets ($000)	Loans/ Deposits (%)	Loans/ Assets (%)	Securities/ Assets (%)		Deposits/ Assets (%)	Borrowings/ Assets (%)
	*Comparable Thrift Data*
BFSB	Brooklyn Federal Bancorp, Inc. (MHC)	532,365	103.29	82.72	12.91		80.09	2.27
CSBK	Clifton Savings Bancorp, Inc. (MHC)	1,060,167	65.43	45.81	47.95		70.01	12.60
MGYR	Magyar Bancorp, Inc. (MHC)	557,837	99.72	78.99	12.68		79.21	12.52
MLVF	Malvern Federal Bancorp, Inc. (MHC)	682,164	115.05	87.44	5.44		76.00	13.21
EBSB	Meridian Interstate Bancorp, Inc. (MHC)	1,211,386	89.17	67.90	25.51		76.15	6.23
NECB	Northeast Community Bancorp, Inc. (MHC)	509,813	115.02	78.37	0.92		68.14	8.92
NFBK	Northfield Bancorp, Inc. (MHC)	2,002,274	55.38	36.42	57.35		65.77	13.96
PBIP	Prudential Bancorp, Inc. of Pennsylvania (MHC)	506,219	61.47	51.14	42.85		83.19	4.67
RCKB	Rockville Financial, Inc. (MHC)	1,564,405	121.52	87.44	9.27		71.95	16.99
SIFI	SI Financial Group, Inc. (MHC)	872,354	92.99	70.22	22.00		75.52	14.25

	Average	949,898	91.90	68.65	23.69		74.60	10.56
	Median	777,259	96.36	74.30	17.46		75.76	12.56
	Maximum	2,002,274	121.52	87.44	57.35		83.19	16.99
	Minimum	506,219	55.38	36.42	0.92		65.77	2.27

	Fairfield County Bank	1,560,516	99.13	78.60	6.03		80.19	9.32

	Variance to the Comparable Median	783,257	2.77	4.30	(11.43	)	4.43	(3.24	)

Sources: SNL and Offering Circular Data, FinPro Computations

Asset Size - The Bank, at $1.6 billion, is larger than the Comparable Group median of $777.3 million. At the pro forma midpoint of the offering range, the Bank total assets are expected to increase by $43.3 million.

Asset Composition - The Bank’s net loans to assets ratio of 78.60% is above the Comparable Group median of 74.30%. The Bank has a lower level of securities as a percentage of assets.

Funding Mix - The Bank funds itself through deposits, 80.19% of assets and borrowings, 9.32% of assets. The Comparable Group has a deposits to assets ratio of 75.76% and a borrowings to assets ratio of 12.56%.


Conversion Valuation Appraisal Report		Page: 42

Cash Liquidity - The Bank’s loan to asset ratio is above the Comparable Group’s median ratio which would indicate a lower level of liquidity. However, the Bank utilizes a lower level of borrowings.

Interest Rate Risk - The Bank’s interest rate risk position is illustrated on page 23. The Bank’s profile appears to be within acceptable regulatory parameters. No similar data is available for the Comparable Group.

FIGURE 26 - CAPITAL DATA


		*Capital for the Most Recent Period End*
Ticker	Short Name	Equity/ Assets (%)		Tangible Tang Equity/ Tang Assets (%)		Intangible Assets/ Equity (%)	Core Capital/ Tangible Assets (%)		Equity + Reserves/ Assets (%)
	*Comparable Thrift Data*
BFSB	Brooklyn Federal Bancorp, Inc. (MHC)	15.49		15.49		—	13.40		17.71
CSBK	Clifton Savings Bancorp, Inc. (MHC)	16.53		16.53		—	14.48		16.72
MGYR	Magyar Bancorp, Inc. (MHC)	7.14		7.14		—	7.29		8.18
MLVF	Malvern Federal Bancorp, Inc. (MHC)	10.17		10.17		—	9.18		11.08
EBSB	Meridian Interstate Bancorp, Inc. (MHC)	16.54		16.54		—	NA		17.31
NECB	Northeast Community Bancorp, Inc. (MHC)	21.52		21.22		1.74	NA		22.32
NFBK	Northfield Bancorp, Inc. (MHC)	19.55		18.89		4.17	14.35		20.32
PBIP	Prudential Bancorp, Inc. of Pennsylvania (MHC)	11.05		11.05		—	11.14		11.62
RCKB	Rockville Financial, Inc. (MHC)	9.78		9.72		0.70	10.00		10.59
SIFI	SI Financial Group, Inc. (MHC)	8.88		8.44		5.41	NA		9.44

	Average	13.67		13.52		1.20	11.41		14.53
	Median	13.27		13.27		—	11.14		14.17
	Maximum	21.52		21.22		5.41	14.48		22.32
	Minimum	7.14		7.14		—	7.29		8.18

	Fairfield County Bank	8.86		8.38		5.86	9.01		9.74

	Variance to the Comparable Median	(4.41	)	(4.89	)	5.86	(2.13	)	(4.43	)

Sources: SNL and Offering Circular Data, FinPro Computations

Capitalization - The Bank’s tangible equity to tangible assets ratio of 8.38% is below the Comparable Group median ratio of 13.27%. The Bank’s pro forma tangible equity to tangible assets ratio is projected to be 10.87% at the midpoint of the valuation range.

Intangible Levels - An important factor influencing market values is the level of intangibles that an institution carries on its books. The Bank has intangible assets as a result of past acquisitions.


Conversion Valuation Appraisal Report		Page: 43

The asset quality of an institution is an important determinant of market value. The investment community considers levels of nonperforming loans, Real Estate Owned (“REO”) and levels of Allowance for Loan and Lease Losses (“ALLL”) in assessing the attractiveness of investing in the common stock of an institution.

FIGURE 27 - ASSET QUALITY TABLE


		*Asset Quality for the Most Recent Period End*
Ticker	Short Name	NPLs/ Loans (%)	Reserves/ NPLs (%)		NPAs/ Assets (%)	NPAs/ Equity (%)	Reserves/ Loans (%)	Reserves/ NPAs + 90 (%)
	*Comparable Thrift Data*
BFSB	Brooklyn Federal Bancorp, Inc. (MHC)	11.73	22.83		9.71	62.65	2.68	18.85
CSBK	Clifton Savings Bancorp, Inc. (MHC)	0.74	57.31		0.18	1.23	0.42	107.67
MGYR	Magyar Bancorp, Inc. (MHC)	6.97	18.94		7.12	101.94	1.32	13.86
MLVF	Malvern Federal Bancorp, Inc. (MHC)	3.16	33.22		3.42	33.60	1.05	26.88
EBSB	Meridian Interstate Bancorp, Inc. (MHC)	NA	NA		NA	NA	1.12	NA
NECB	Northeast Community Bancorp, Inc. (MHC)	1.66	61.87		1.54	7.18	1.03	52.06
NFBK	Northfield Bancorp, Inc. (MHC)	6.70	31.53		2.54	12.98	2.11	30.22
PBIP	Prudential Bancorp, Inc. of Pennsylvania (MHC)	0.25	448.67		0.93	9.23	1.11	39.45
RCKB	Rockville Financial, Inc. (MHC)	1.13	81.27		1.13	11.55	0.92	71.36
SIFI	SI Financial Group, Inc. (MHC)	0.46	164.73		0.74	8.92	0.75	72.02

	Average	3.64	102.26		3.03	27.70	1.25	48.04
	Median	1.66	57.31		1.54	11.55	1.08	39.45
	Maximum	11.73	448.67		9.71	101.94	2.68	107.67
	Minimum	0.25	18.94		0.18	1.23	0.42	13.86

	Fairfield County Bank	4.75	23.37		4.55	51.39	1.11	19.37

	Variance to the Comparable Median	3.09	(33.94	)	3.01	39.84	0.03	(20.08	)

Sources: SNL and Offering Circular Data, FinPro Computations

The Bank’s level of nonperforming loans (“NPL”) to total loans, of 4.75%, is above the Comparable Group median of 1.66%. The Bank has a nonperforming assets to assets ratio of 4.55%, which is also well above the Comparable median of 1.54%. Additionally, the Bank has $14.6 million in troubled debt restructuring. The Bank’s reserve level, 1.11% of loans, is above the Comparable median of 1.08% of loans. However, the Bank’s ratio of reserves to NPAs is below the Comparable median.


Conversion Valuation Appraisal Report		Page: 44


Positive	Neutral	Negative

Larger Asset Base	Similar ALLL to Loans	Higher NPAs

Higher Deposit Levels		Higher NPLs

Lower Borrowing Levels		Lower ALLL to NPAs

		Lower Tangible Capital

		Lower Pro forma Tangible Capital

The Bank has a higher level of loans relative to the Comparable median. The liability mix is more favorable than the Comparable Group’s mix. The Bank has a lower level of tangible capital, and is projected to have a lower level of tangible capital following the offering. The Bank has a substantially higher level of NPLs and NPAs. The Bank’s reserves as a percentage of loans is above the Comparable median, however as a percentage of NPLs, ALLL is well below the Comparable median. Investors are currently focusing heavily on asset quality. Taken collectively, a downward adjustment is warranted for financial condition.


Conversion Valuation Appraisal Report		Page: 45

BALANCE SHEET GROWTH

The Bank’s assets and loans have decreased, while the Comparable Group experienced growth over the last twelve months. The Bank’s deposit growth rate is positive but below the Comparable medians.

FIGURE 28 - BALANCE SHEET GROWTH DATA


		*Growth*
Ticker	Short Name	Asset Growth LTM (%)		Loan Growth LTM (%)		Deposit Growth LTM (%)
	*Comparable Thrift Data*
BFSB	Brooklyn Federal Bancorp, Inc. (MHC)	3.34		72.35		20.95
CSBK	Clifton Savings Bancorp, Inc. (MHC)	13.53		3.88		22.12
MGYR	Magyar Bancorp, Inc. (MHC)	2.78		3.48		14.80
MLVF	Malvern Federal Bancorp, Inc. (MHC)	2.73		0.33		8.94
EBSB	Meridian Interstate Bancorp, Inc. (MHC)	13.71		15.69		15.76
NECB	Northeast Community Bancorp, Inc. (MHC)	25.28		16.90		35.88
NFBK	Northfield Bancorp, Inc. (MHC)	13.91		23.61		28.55
PBIP	Prudential Bancorp, Inc. of Pennsylvania (MHC)	2.93		1.22		8.67
RCKB	Rockville Financial, Inc. (MHC)	4.09		8.39		13.04
SIFI	SI Financial Group, Inc. (MHC)	2.25		(1.72	)	6.14

	Average	8.46		14.41		17.49
	Median	3.72		6.14		15.28
	Maximum	25.28		72.35		35.88
	Minimum	2.25		(1.72	)	6.14

	Fairfield County Bank	(0.49	)	(9.87	)	4.27

	Variance to the Comparable Median	(4.21	)	(16.01	)	(11.01	)

Sources: SNL and Offering Circular Data, FinPro Computations


Positive	Neutral	Negative

		Lower Asset Growth

		Lower Deposit Growth

		Lower Loan Growth

A moderate downward adjustment is warranted.


Conversion Valuation Appraisal Report		Page: 46

EARNINGS QUALITY, PREDICTABILITY AND GROWTH

The earnings quality, predictability and growth are critical components in the establishment of market values for thrifts. Thrift earnings are primarily a function of:

•

net interest income

•

loan loss provision

•

non-interest income

•

non-interest expense

The quality and predictability of earnings is dependent on both internal and external factors. Some internal factors include the mix of the balance sheet, the interest rate sensitivity of the balance sheet, the asset quality, and the infrastructure in place to deliver the assets and liabilities to the public. External factors include the competitive market for both assets and liabilities, the global interest rate scenario, local economic factors and regulatory issues.

Investors are focusing on earnings sustainability as interest rate volatility has caused a wide variation in income levels. With the intense competition for both assets and deposits, banks cannot easily replace lost spread and margin with balance sheet growth.

Each of these factors can influence the earnings of an institution, and each of these factors is volatile. Investors prefer stability and consistency. As such, solid, consistent earnings are preferred to high but risky earnings. Investors also prefer earnings to be diversified and not entirely dependent on interest income.


Conversion Valuation Appraisal Report		Page: 47

FIGURE 29 - NET INCOME CHART

LOGO

Source: Offering Prospectus


Conversion Valuation Appraisal Report		Page: 48

The Bank’s core ROAA and core ROAE are below the Comparable Group medians. The Bank’s higher capitalization and benefit cost following the offering are expected to reduce return on equity for the near term. On a pro forma basis, the Bank’s core ROAA and core ROAE are 0.13% and 1.13%, respectively.

FIGURE 30 - PROFITABILITY DATA


		*LTM Profitability*
Ticker	Short Name	Return on Avg Assets (%)		Return on Avg Equity (%)		Core Return on Avg Assets (%)		Core Return on Avg Equity (%)
	*Comparable Thrift Data*
BFSB	Brooklyn Federal Bancorp, Inc. (MHC)	0.27		1.67		0.62		3.81
CSBK	Clifton Savings Bancorp, Inc. (MHC)	0.53		3.01		0.56		3.17
MGYR	Magyar Bancorp, Inc. (MHC)	(0.40	)	(5.25	)	(0.56	)	(7.48	)
MLVF	Malvern Federal Bancorp, Inc. (MHC)	0.07		0.73		0.10		1.01
EBSB	Meridian Interstate Bancorp, Inc. (MHC)	0.32		1.94		0.35		2.10
NECB	Northeast Community Bancorp, Inc. (MHC)	0.02		0.10		0.05		0.23
NFBK	Northfield Bancorp, Inc. (MHC)	0.64		3.09		0.65		3.12
PBIP	Prudential Bancorp, Inc. of Pennsylvania (MHC)	0.17		1.44		0.37		3.15
RCKB	Rockville Financial, Inc. (MHC)	0.52		5.38		0.62		6.41
SIFI	SI Financial Group, Inc. (MHC)	0.05		0.58		0.05		0.53

	Average	0.22		1.27		0.28		1.61
	Median	0.22		1.56		0.36		2.61
	Maximum	0.64		5.38		0.65		6.41
	Minimum	(0.40	)	(5.25	)	(0.56	)	(7.48	)

	Fairfield County Bank	0.12		1.42		0.13		1.37

	Variance to the Comparable Median	(0.10	)	(0.14	)	(0.23	)	(1.24	)

Sources: SNL and Offering Circular Data, FinPro Computations


Conversion Valuation Appraisal Report		Page: 49

FIGURE 31 - INCOME STATEMENT DATA


		*LTM Income Statement*
Ticker	Short Name	Yield on Ave Earn Assets (%)	Cost of Funds (%)		Net Interest Spread (%)	Net Interest Margin (%)	Noninterest Income/ Avg Assets (%)	Noninterest Expense/ Avg Assets (%)	Efficiency Ratio (%)	Overhead Ratio (%)
	*Comparable Thrift Data*
BFSB	Brooklyn Federal Bancorp, Inc. (MHC)	6.77	NA		NA	4.92	0.40	2.59	50.23	46.02
CSBK	Clifton Savings Bancorp, Inc. (MHC)	4.83	NA		NA	2.21	0.12	1.30	59.79	57.51
MGYR	Magyar Bancorp, Inc. (MHC)	5.09	NA		NA	2.86	0.30	2.83	95.63	95.13
MLVF	Malvern Federal Bancorp, Inc. (MHC)	5.24	NA		NA	2.54	0.34	2.25	75.39	71.94
EBSB	Meridian Interstate Bancorp, Inc. (MHC)	5.22	2.27		2.95	3.34	0.45	2.67	73.90	70.13
NECB	Northeast Community Bancorp, Inc. (MHC)	5.44	NA		NA	3.21	0.35	2.83	79.87	77.56
NFBK	Northfield Bancorp, Inc. (MHC)	4.77	2.11		2.66	3.16	0.26	1.78	53.93	50.02
PBIP	Prudential Bancorp, Inc. of Pennsylvania (MHC)	5.45	NA		NA	3.00	0.17	2.14	64.35	62.29
RCKB	Rockville Financial, Inc. (MHC)	5.11	NA		NA	3.00	0.41	2.26	67.52	63.04
SIFI	SI Financial Group, Inc. (MHC)	5.31	NA		NA	3.01	1.10	3.57	90.23	86.46

	Average	5.32	2.19		2.81	3.13	0.39	2.42	71.08	68.01
	Median	5.23	2.19		2.81	3.01	0.35	2.43	70.71	66.59
	Maximum	6.77	2.27		2.95	4.92	1.10	3.57	95.63	95.13
	Minimum	4.77	2.11		2.66	2.21	0.12	1.30	50.23	46.02

	Fairfield County Bank	5.40	1.96		3.44	3.68	0.94	3.65	84.81	80.56

	Variance to the Comparable Median	0.17	(0.23	)	0.63	0.67	0.59	1.22	14.10	13.97

Sources: SNL and Offering Circular Data, FinPro Computations

Note: The data for cost of funds and spread are not meaningful due to the lack of Comparable Data

The Bank has a 67 basis point advantage in net margin relative to the Comparable median. The Bank’s noninterest income to average assets ratio is 59 basis points above the Comparable Group median, while noninterest expense is 122 basis points above the Comparable Group median.

The Bank’s efficiency ratio of 84.81% is above the Comparable median of 70.71%.

On a forward looking basis, after the conversion the Bank’s operating expenses are expected to rise as a result of the stock benefit plans and additional costs of being a public company. At the same time, the Bank will have additional capital to deploy and leverage.


Conversion Valuation Appraisal Report		Page: 50


Positive	Neutral	Negative

Higher Net Interest Margin		Downward trend in net income over past five years

Higher Noninterest Income		Lower Core ROAA

		Lower Core ROAE

		Lower Pro Forma Core ROAE

		Higher Noninterest Expense

The Bank is less profitable than the Comparables on a core ROAA and core ROAE basis. The lower earnings levels are predominately due to a higher level of noninterest expense and increased provision expense as asset quality has weakened over the past two years. Relative to the Comparable Group, the Bank’s net interest margin is considerably higher. Taken collectively, a downward adjustment is warranted for this factor.


Conversion Valuation Appraisal Report		Page: 51

MARKET AREA

The market area that an institution serves has a significant impact on value, as future success is interrelated with the economic, demographic and competitive aspects of the market. The location of an institution will have an impact on the trading value of an institution, as many analysts compare the pricing of institutions relative to a state or regional multiples in investor presentations. The following figure compares the demographic and competitive data for the counties serviced by the Bank, to the county data of the Comparable Group members.

FIGURE 32 - MARKET AREA DATA


		Number of	Bank's Deps	Bank's	Total		Population		Median	HH Income
		Branches	in the County	Deposit	Population	Population	Change	Change	HH Income	Change	Change	Unemp. Rate
		6/30/2009	6/30/2009	Mkt Share	2009	Per Branch	2000-2009	2009-2014	2009	2000-2009	2009-2014	Dec-09
Institution Name	County	(actual)	(actual)	(%)	(actual)	(actual)	(%)	(%)	($)	(%)	(%)	(%)

Brooklyn Federal Bancorp, Inc (MHC)	Kings, NY	354	165,483	0.49	2,552,387	7,210	3.53	1.67	43,833	35.32	9.82	11.20
Brooklyn Federal Bancorp, Inc (MHC)	Nassau, NY	490	114,074	0.22	1,321,125	2,696	-1.01	-1.60	101,067	40.61	5.19	6.60
Brooklyn Federal Bancorp, Inc (MHC)	Suffolk, NY	466	59,558	0.16	1,478,510	3,173	4.17	0.20	85,938	32.45	7.01	7.30

Deposit Weighted Market Data				0.28		4,086	2.12	0.31	70,481	26.60	7.77	8.99

Clifton Savings Bancorp, Inc. (MHC)	Passaic, NJ	156	469,076	5.04	500,096	3,206	2.26	-0.15	62,439	26.88	9.60	11.80
Clifton Savings Bancorp, Inc. (MHC)	Bergen, NJ	490	120,390	0.36	910,698	1,859	3.01	1.17	84,586	30.30	4.97	8.10

Deposit Weighted Market Data				1.38		2,184	2.41	0.12	66,962	27.58	8.65	9.41

Magyar Bancorp, Inc. (MHC)	Middlesex, NJ	280	360,457	1.90	795,633	2,842	6.06	2.24	79,468	29.41	5.36	8.80
Magyar Bancorp, Inc. (MHC)	Somerset, NJ	135	13,539	0.14	330,637	2,449	11.14	4.68	102,357	33.72	7.02	7.40

Deposit Weighted Market Data				1.31		2,714	6.24	2.33	80,297	29.57	5.42	8.39

Malvern Federal Bancorp, Inc. (MHC)	Chester, PA	203	441,843	4.97	499,763	2,462	15.29	6.64	87,308	34.66	7.36	6.20

Deposit Weighted Market Data				4.97		2,462	15.29	6.64	87,308	34.66	7.36	6.20

Meridian Interstate Bancorp, Inc. (MHC)	Suffolk, MA	218	827,580	1.09	695,403	3,190	0.81	0.61	53,416	35.68	6.47	8.50
Meridian Interstate Bancorp, Inc. (MHC)	Essex, MA	257	343,414	2.17	744,480	2,897	2.91	0.62	69,858	34.96	6.80	9.70
Meridian Interstate Bancorp, Inc. (MHC)	Middlesex, MA	509	48,451	0.14	1,485,082	2,918	1.34	0.61	84,469	38.90	6.08	7.50
Meridian Interstate Bancorp, Inc. (MHC)	Hillsborough, NH	102	46,016	0.53	407,525	3,995	7.01	2.27	70,703	31.93	5.31	6.90
Meridian Interstate Bancorp, Inc. (MHC)	Rockingham, NH	94	9,501	0.22	302,476	3,218	9.06	3.08	75,903	30.27	5.61	7.10
Meridian Interstate Bancorp, Inc. (MHC)	Cheshire, NH	21	7,373	0.49	78,482	3,737	6.31	1.63	52,656	23.41	3.24	6.10

Deposit Weighted Market Data				0.91		3,092	4.57	1.47	67,834	32.53	5.59	8.00

Northeast Community Bancorp, Inc. (MHC)	New York, NY	677	103,070	0.02	1,637,013	2,418	6.49	2.82	72,119	52.58	7.51	9.00
Northeast Community Bancorp, Inc. (MHC)	Westchester, NY	367	70,769	0.19	956,748	2,607	3.60	1.33	84,333	32.52	5.78	6.90
Northeast Community Bancorp, Inc. (MHC)	Bronx, NY	148	63,372	0.61	1,381,890	9,337	3.69	1.49	37,625	35.45	10.59	13.90
Northeast Community Bancorp, Inc. (MHC)	Kings, NY	354	24,526	0.07	2,552,387	7,210	3.53	1.67	43,833	35.32	9.82	11.20

Deposit Weighted Market Data				0.04		4,223	4.75	1.99	64,419	41.29	8.00	10.59

Northfield Bancorp, Inc. (MHC)	Middlesex, NJ	280	154,225	0.81	795,633	2,842	6.06	2.24	79,468	29.41	5.36	8.80
Northfield Bancorp, Inc. (MHC)	Union, NJ	213	73,545	0.49	532,432	2,500	1.89	-0.07	73,694	33.11	5.33	9.70
Northfield Bancorp, Inc. (MHC)	Richmond, NY	106	685,360	7.61	485,933	4,584	9.51	4.23	72,490	31.57	6.73	9.10
Northfield Bancorp, Inc. (MHC)	Kings, NY	354	17,799	0.05	2,552,387	7,210	3.53	1.67	43,833	35.32	9.82	11.20

Deposit Weighted Market Data				1.18		4,582	5.25	2.02	67,371	32.35	6.81	10.35

Prudential Bancorp, Inc. (MHC)	Philadelphia, PA	335	346,923	0.77	1,452,449	4,336	-4.29	-2.68	41,408	34.52	9.65	10.60
Prudential Bancorp, Inc. (MHC)	Delaware, PA	182	30,823	0.34	558,969	3,071	1.47	0.10	66,300	32.32	5.25	7.90

Deposit Weighted Market Data				0.70		3,891	-3.82	-2.45	43,439	34.34	9.29	9.85

Rockville Financial, Inc. (MHC)	Hartford, CT	286	532,971	1.93	882,247	3,085	2.92	0.99	64,632	27.29	5.58	9.10
Rockville Financial, Inc. (MHC)	Tolland, CT	41	510,941	25.77	150,532	3,672	10.39	3.00	78,395	32.79	5.71	7.10
Rockville Financial, Inc. (MHC)	New London, CT	94	6,342	0.16	269,600	2,868	4.06	0.48	65,136	28.58	5.08	7.90

Deposit Weighted Market Data				3.13		3,094	6.56	1.96	71,331	29.97	5.64	8.62

SI Financial Group, Inc. (MHC)	Windham, CT	36	267,563	20.64	118,233	3,284	8.38	2.99	57,628	27.74	5.56	9.60
SI Financial Group, Inc. (MHC)	New London, CT	94	174,910	4.50	269,600	2,868	4.06	0.48	65,136	28.58	5.08	7.90
SI Financial Group, Inc. (MHC)	Tolland, CT	41	115,166	5.81	150,532	3,672	10.39	3.00	78,395	32.79	5.71	7.10
SI Financial Group, Inc. (MHC)	Hartford, CT	286	57,983	0.21	882,247	3,085	2.92	0.99	64,632	27.29	5.58	9.10
SI Financial Group, Inc. (MHC)	Middlesex, CT	64	4,173	0.13	166,155	2,596	7.15	2.75	77,604	31.14	5.03	6.80

Deposit Weighted Market Data				1.63		3,046	7.02	2.09	64,394	28.90	5.45	8.50


Comparable Median				1.24		3,093	5.00	1.98	67,603	31.16	7.09	8.80


Fairfield County Bank	Fairfield, CT	413	1,292,820	4.55	908,106	2,199	2.89	0.69	87,897	35.48	5.05	7.70

Deposit Weighted Market Data				4.55		2,199	2.89	0.69	87,897	35.48	5.05	7.70


Connecticut		1,295			3,534,235	2,729	3.78	1.14	70,949	31.59	4.99	8.50


National		99,546			309,731,508	3,111	10.06	4.63	54,719	29.78	4.06	10.60

Sources: SNL Securities


Conversion Valuation Appraisal Report		Page: 52


Positive	Neutral	Negative

Higher Household Income		Lower Population Growth

Higher Historical Income Growth		Lower Projected Income Growth

Lower Unemployment		Lower Population Per Branch

The Bank’s market area has grown at a slower rate over the past nine years and is projected to grow at an even slower rate over the next five years relative to the Comparable Group’s markets. Unemployment levels are lower in the Bank’s markets. Household income levels are significantly higher in the Bank’s markets but are projected to grow at a rate below the Comparable median. The Bank’s market area has a lower ratio of population per branch relative to the Comparable Group, which indicates a higher level of competition. The high end real estate market in Fairfield County is at a greater risk of decline relative to many of the comparable’s market areas. Based upon these factors, no adjustment is warranted for market area.


Conversion Valuation Appraisal Report		Page: 53

CASH DIVIDENDS

The last few years have seen a shift away from dividend policies concurrent with conversion. Recent issues have been fully or oversubscribing without the need for the additional enticement of dividends. After the conversion is another issue, however. Pressures on ROAE and on internal rate of returns to investors prompted the industry toward cash dividends. This trend is exacerbated by the lack of growth potential. Typically, when institutions are in a growth mode, they issue stock dividends or do not declare a dividend. When growth is stunted, these institutions shift toward reducing equity levels and thus utilize cash dividends as a tool in managing equity.

FIGURE 33 - DIVIDEND DATA


		*Dividends*
Ticker	Short Name	Current Dividend Yield (%)	LTM Dividend Payout Ratio (%)
	*Comparable Thrift Data*
BFSB	Brooklyn Federal Bancorp, Inc. (MHC)	5.73	381.82
CSBK	Clifton Savings Bancorp, Inc. (MHC)	2.33	100.00
MGYR	Magyar Bancorp, Inc. (MHC)	—	—
MLVF	Malvern Federal Bancorp, Inc. (MHC)	1.27	162.50
EBSB	Meridian Interstate Bancorp, Inc. (MHC)	—	—
NECB	Northeast Community Bancorp, Inc. (MHC)	1.65	NM
NFBK	Northfield Bancorp, Inc. (MHC)	1.13	57.14
PBIP	Prudential Bancorp, Inc. of Pennsylvania (MHC)	2.04	222.22
RCKB	Rockville Financial, Inc. (MHC)	2.18	48.84
SIFI	SI Financial Group, Inc. (MHC)	—	—

	Average	1.63	108.06
	Median	1.46	57.14
	Maximum	5.73	381.82
	Minimum	—	—

	Fairfield County Bank	NA	NA

	Variance to the Comparable Median	NA	NA

Sources: SNL and Offering Circular Data, FinPro Computations


Conversion Valuation Appraisal Report		Page: 54

Seven of the ten Comparable institutions have declared cash dividends. The median dividend payout ratio for the Comparable Group was 57.14%, ranging from a high of 381.82% to a low of 0.00%. The Bank, on a pro forma basis at the midpoint of the value range, is project to have a tangible equity to tangible assets ratio of 10.87%. As such, the Bank will have adequate capital to pay cash dividends.

As such, no adjustment is warranted for this factor.


Conversion Valuation Appraisal Report		Page: 55

LIQUIDITY OF THE ISSUE

The Comparable Group is by definition composed only of companies that trade in the public markets with all of the Comparables trading on NASDAQ. Typically, the number of shares outstanding and the market capitalization provides an indication of how much liquidity there will be in a given stock. The actual liquidity can be measured by volume traded over a given period of time.

FIGURE 34 - MARKET CAPITALIZATION DATA


		*Market Data*
Ticker	Short Name	Market Value ($)	Stock Price ($)	Price High ($)	Price Low ($)	Book Value ($)	Tangible Book Value ($)
	*Comparable Thrift Data*
BFSB	Brooklyn Federal Bancorp, Inc. (MHC)	27.90	7.68	11.40	7.36	6.40	6.40
CSBK	Clifton Savings Bancorp, Inc. (MHC)	83.59	8.60	9.80	8.36	6.61	6.61
MGYR	Magyar Bancorp, Inc. (MHC)	11.04	4.30	4.49	3.08	6.91	6.91
MLVF	Malvern Federal Bancorp, Inc. (MHC)	25.70	9.45	9.60	9.05	11.36	11.36
EBSB	Meridian Interstate Bancorp, Inc. (MHC)	NA	10.03	10.10	8.47	NA	NA
NECB	Northeast Community Bancorp, Inc. (MHC)	43.20	7.26	7.43	5.52	8.29	8.15
NFBK	Northfield Bancorp, Inc. (MHC)	275.46	14.21	14.25	12.29	NA	NA
PBIP	Prudential Bancorp, Inc. of Pennsylvania (MHC)	29.39	9.81	10.25	8.05	5.41	5.41
RCKB	Rockville Financial, Inc. (MHC)	88.29	11.00	11.15	8.82	8.18	8.12
SIFI	SI Financial Group, Inc. (MHC)	25.66	5.70	5.86	4.75	NA	NA

	Average	67.80	8.80	9.43	7.58	7.59	7.57
	Median	29.39	9.03	9.95	8.21	6.91	6.91
	Maximum	275.46	14.21	14.25	12.29	11.36	11.36
	Minimum	11.04	4.30	4.49	3.08	5.41	5.41

	Fairfield County Bank	51.70	NA	NA	NA	NA	NA

	Variance to the Comparable Median	NA	NA	NA	NA	NA	NA

Sources: SNL and Offering Circular Data, FinPro Computations

The market capitalization values of the Comparable Group range from a low of $11.0 million to a high of $275.5 million with a median market capitalization of $29.4 million. The Bank expects to have $51.7 million of market capital at the midpoint on a pro forma basis. It is expected that the Bank will trade on NASDAQ along with all of the Comparables.

No adjustment for this factor appears warranted.


Conversion Valuation Appraisal Report		Page: 56

RECENT REGULATORY MATTERS

Regulatory matters influence the market for thrift conversions. There is currently uncertainty about future regulation as Congress and the President are considering regulatory reform. This reform may adversely impact the MHC structure. However, the Bank will operate in substantially the same regulatory environment as the Comparable Group.

As such, no adjustment for this factor is warranted as both the Bank and the Comparables will operate in the same ownership structure and will be supervised in the same regulatory environment.


Conversion Valuation Appraisal Report		Page: 57

5. Other Factors

MANAGEMENT

The Bank has developed a good management team with considerable banking experience. The Bank’s organizational chart is reasonable for an institution of its size and complexity. The Board is active and oversees and advises on all key strategic and policy decisions and holds the management to high performance standards.

As such, no adjustment appears to be warranted for this factor.


Conversion Valuation Appraisal Report		Page: 58

SUBSCRIPTION INTEREST

There has been a limited amount of MHC offerings in the past two years. The pro forma price to fully converted book multiple of MHC conversions has trended downward since the beginning of 2008.

FIGURE 35 - MHC REORGANIZATIONS (SINCE 1/1/08) PRO FORMA DATA

Ticker

Short Name

IPO
Date

IPO
Price
($)

Percentage
Retained By
MHC (%)

Net
Proceeds
($000)

Price to Pro Forma
Fully Converted
Book Value
(%)

CULL

Cullman Bancorp, Inc. (MHC)

10/09/2009

10.0000

55.00

8,507

53.87

2009

Average

53.87

Median

53.87

ABBB

Auburn Bancorp, Inc. (MHC)

08/18/2008

10.0000

55.00

1,347

59.83

MLVF

Malvern Federal Bancorp, Inc. (MHC)

05/20/2008

10.0000

55.00

21,452

63.69

WMPN

William Penn Bancorp, Inc. (MHC)

04/16/2008

10.0000

70.00

8,054

56.42

EBSB

Meridian Interstate Bancorp, Inc. (MHC)

01/23/2008

10.0000

55.00

86,437

74.04

SNFL

Sound Financial, Inc. (MHC)

01/09/2008

10.0000

55.00

10,439

72.80

2008 YTD

Average

65.36

Median

63.69

1/1/2008

Average

63.44

3/2/2010

Median

61.76

Source: SNL Securities


Conversion Valuation Appraisal Report		Page: 59

Aftermarket performance has been weak with half the offerings trading below their IPO prices.

FIGURE 36 - MHC REORGANIZATIONS PRICE APPRECIATION


		Percent Change from IPO
Ticker	Short Name	After 1 Day (%)	After 1 Week (%)		After 1 Month (%)		After 3 Months (%)		To Date (%)

CULL	Cullman Bancorp, Inc. (MHC)	1.00	1.20		0.20		3.50		1.50

2009	Average	1.00	1.20		0.20		3.50		1.50
	Median	1.00	1.20		0.20		3.50		1.50


ABBB	Auburn Bancorp, Inc. (MHC)	0.00	-5.00		-5.00		-3.00		-15.10
MLVF	Malvern Federal Bancorp, Inc. (MHC)	9.80	10.00		10.00		2.60		-5.50
WMPN	William Penn Bancorp, Inc. (MHC)	17.50	25.00		37.50		40.00		35.00
EBSB	Meridian Interstate Bancorp, Inc. (MHC)	-4.00	-5.20		-4.90		-0.40		0.30
SNFL	Sound Financial, Inc. (MHC)	-10.00	-10.00		-8.50		-8.40		-58.90

2008 YTD	Average	2.66	2.96		5.82		6.16		(8.84	)
	Median	—	(5.00	)	(4.90	)	(0.40	)	(5.50	)


1/1/2008	Average	2.38	2.67		4.88		5.72		(7.12	)
3/2/2010	Median	0.50	(1.90	)	(2.35	)	1.10		(2.60	)

Source: SNL Securities

A slight downward is warranted as investor interest and recent aftermarket performance has been weak.


Conversion Valuation Appraisal Report		Page: 60

VALUATION ADJUSTMENTS

Relative to the Comparables the following adjustments need to be made to the Bank’s pro forma market value.


Valuation Factor		Valuation Adjustment

Financial Condition		Downward

Balance Sheet Growth		Moderate Downward

Earnings Quality, Predictability and Growth		Downward

Market Area		No Adjustment

Dividends		No Adjustment

Liquidity of the Issue		No Adjustment

Recent Regulatory Matters		No Adjustment

Additionally, the following adjustment should be made to the Bank’s market value.


Valuation Factor		Valuation Adjustment

Management		No Adjustment

Subscription Interest		Slight Downward


Conversion Valuation Appraisal Report		Page: 61

6. Valuation

In applying the accepted valuation methodology promulgated by the regulators, i.e., the pro forma market value approach, three key pricing multiples were considered. The four multiples include:

Price to core earnings (“P/E”)

Price to book value (“P/B”) / Price to tangible book value (“P/TB”)

Price to assets (“P/A”)

All of the approaches were calculated on a pro forma basis including the effects of the conversion proceeds. All of the assumptions utilized are presented in Exhibits 11 through 12.

DISCUSSION OF WEIGHT GIVEN TO VALUATION MULTIPLES

To ascertain the pro forma estimated market value of the Bank, the market multiples for the Comparable Group were utilized. As a secondary check, all Connecticut public thrifts, all publicly traded thrifts and the recent (2008 to date) and historical MHC conversions were assessed. The multiples for the Comparable Group, all publicly traded MHC, and Connecticut MHC thrifts are shown in Exhibit 8.

Price to Earnings - According to the Appraisal Guidelines: “When both the converting institution and the comparable companies are recording “normal” earnings. A P/E approach may be the simplest and most direct method of valuation. When earnings are low or negative, however, this approach may not be appropriate and the greater consideration should be given to the P/BV approach.” In this particular case, the Bank’s earnings are “normal”. As a basis for comparison, the price to core earnings was utilized for both the Bank and the Comparable Group to eliminate any nonrecurring items. As such, this approach was considered in this appraisal.

In the pro forma figures for the Bank, FinPro incorporated the impact of SFAS 123, which requires the expensing of stock options. In preparing the fully converted pro forma figures for the Comparable Group, FinPro also incorporated the impact of SFAS 123.


Conversion Valuation Appraisal Report		Page: 62

Price to Book/Price to Tangible Book - According to the Appraisal Guidelines: “The P/BV approach works best when the converting institution and the Comparables have a normal amount of book value. The P/BV approach could seriously understate the value of an institution that has almost no book value but has an outstanding future earnings potential. For converting institutions with high net worth, the appraiser may have difficulty in arriving at a pro forma market value because of pressure placed on the P/E multiple as higher P/BV levels are required to reflect a similar P/BV ratio as the peer group average. The P/BV approach also suffers from the use of historical cost accounting data.”

Since thrift earnings in general have had a high degree of volatility over the past decade, the P/B is utilized frequently as the benchmark for market value. A better approach is the P/TB approach. In general, investors tend to price financial institutions on a tangible book basis, because it incorporates the P/B approach adjusted for intangibles. Initially following conversion, FinPro believes that thrifts often trade on a price to tangible book basis.

Price to Assets - According to the Appraisal Guidelines: “This approach remedies the problems of a small base that can occur with the P/BV approach, but the approach has many of the other limitations of the latter approach (the P/BV approach).” FinPro places little weight on this valuation approach due to the lack of consideration of asset and funding mixes and the resulting earnings impact.


Conversion Valuation Appraisal Report		Page: 63

FULL OFFERING VALUE IN RELATION TO COMPARABLES

Based upon the adjustments defined in the previous section, the Bank is pricing at the midpoint as if fully converted is estimated to be $110,000,000. Based upon a range below and above the midpoint value, the relative values are $93,500,000 at the minimum and $126,500,000 at the maximum, respectively. At the super maximum of the range, the offering value would be $145,975,000.

At the various levels of the estimated value range, the full offering would result in the following offering data:

FIGURE 37 - VALUE RANGE - FULL OFFERING


Conclusion	Total Shares Shares	Price Per Share		Total Value

Appraised Value - Midpoint	11,000,000	$	10.00	$	110,000,000

Range:
- Minimum	9,350,000	$	10.00		93,500,000
- Maximum	12,650,000		10.00		126,500,000
- Super Maximum	14,547,500		10.00		145,475,000

Source: FinPro Inc. Pro forma Model


Conversion Valuation Appraisal Report		Page: 64

FIGURE 38 - AS IF FULLY CONVERTED OFFERING PRICING MULTIPLES


		Bank		Comparables				State				National
				Mean		Median		Mean		Median		Mean		Median

	Min	38.46
Price-Core Earnings Ratio P/E	Mid	43.48		67.58		51.63		61.44		22.80		52.16		40.15
	Max	50.00
	Smax	55.56

	Min	42.83	%
Price-to-Book Ratio P/B	Mid	47.28	%	70.46	%	69.27	%	62.85	%	61.87	%	70.86	%	72.80	%
	Max	51.20	%
	Smax	55.19	%

	Min	44.48	%
Price-to-Tangible Book Ratio P/TB	Mid	49.00	%	71.09	%	69.27	%	65.28	%	63.06	%	72.08	%	72.00	%
	Max	52.94	%
	Smax	56.95	%

	Min	5.70	%
Price-to-Assets Ratio P/A	Mid	6.65	%	14.52	%	16.70	%	8.33	%	7.81	%	14.63	%	12.80	%
	Max	7.58	%
	Smax	8.63	%

Source: FinPro Calculations

FIGURE 39 - COMPARABLE AS IF FULLY CONVERTED PRICING MULTIPLES TO THE

BANK’S PRO FORMA MIDPOINT


	Price Relative to
	Earnings		Core Earnings		Book		Tangible Book		Assets
The Bank (at midpoint) Full Conversion	41.67		43.48		47.28	%	49.00	%	6.65	%
Comparable Group Median	71.20		51.63		69.27	%	69.27	%	16.70	%
(Discount) Premium	-41.47	%	-15.79	%	-31.75	%	-29.26	%	-60.18	%

Source: SNL data, FinPro Calculations

As Figure 39 demonstrates, at the midpoint of the estimated valuation range the Bank is priced at a discount of 15.79% on a fully converted core earnings basis. On a price to fully converted tangible book basis, the Bank is priced at a 29.26% discount to the Comparable Group.

FIGURE 40 - COMPARABLE AS IF FULLY CONVERTED PRICING MULTIPLES TO THE

BANK’S PRO FORMA SUPER MAXIMUM


	Price Relative to
	Earnings		Core Earnings		Book		Tangible Book		Assets
The Bank (at the supermax) Full Conversion	55.56		55.56		55.19	%	56.95	%	8.63	%
Comparable Group Median	71.20		51.63		69.27	%	69.27	%	16.70	%
(Discount) Premium	-21.96	%	7.61	%	-20.33	%	-17.79	%	-48.32	%

Source: SNL data, FinPro Calculations

As Figure 40 demonstrates, at the super maximum of the estimated valuation range the Bank is priced at a premium of 7.61% on a fully converted core earnings basis. On a price to fully converted tangible book basis, the Bank is priced at a 17.79% discount to the Comparable Group.


Conversion Valuation Appraisal Report		Page: 65

FIGURE 41 - COMPARABLE AS IF FULLY CONVERTED PRICING MULTIPLES TO THE

BANK’S PRO FORMA MINIMUM


	Price Relative to
	Earnings		Core Earnings		Book		Tangible Book		Assets
The Bank (at the minimum) Full Conversion	37.04		38.46		42.83	%	44.48	%	5.70	%
Comparable Group Median	71.20		51.63		69.27	%	69.27	%	16.70	%
(Discount) Premium	-47.97	%	-25.51	%	-38.17	%	-35.79	%	-65.87	%

Source: SNL data, FinPro Calculations

As Figure 41 demonstrates, at the minimum of the estimated valuation range the Bank is priced at a discount of 25.51% on a fully converted core earnings basis. On a price to fully converted tangible book basis, the Bank is priced at a 35.79% discount to the Comparable Group.


Conversion Valuation Appraisal Report		Page: 66

MHC VALUATION

The Bank pricing at the midpoint for a MHC conversion assuming an issuance of 47.00%, is $51,700,000. Based upon a range below and above the midpoint value, the relative values are $43,945,000 at the minimum and $59,455,000 at the maximum, respectively. At the super maximum of the range, the offering value would be $68,373,250.

FIGURE 42 - VALUE RANGE MHC OFFERING DATA


Conclusion	Total Shares	Price per Share		Total Value
Appraised Value - $93,500,000 at 47%	4,394,500	$	10.00	$	43,945,000
Appraised Value - $110,000,000 at 47%	5,170,000	$	10.00	$	51,700,000
Appraised Value - $126,500,000 at 47%	5,945,500	$	10.00	$	59,455,000
Appraised Value - $145,475,000 at 47%	6,837,325	$	10.00	$	68,373,250

Source: FinPro Inc. Pro forma Model

FIGURE 43 - COMPARABLE MHC PRICING MULTIPLES TO THE BANK’S PRO FORMA

MIDPOINT


	Price Relative to
	Earnings		Core Earnings		Book		Tangible Book		Assets
The Bank (at midpoint) MHC	50.00		52.63		60.61	%	63.41	%	6.86	%
Unadjusted MHC Trading Median	50.80		52.50		120.00	%	120.00	%	18.60	%
(Discount) Premium	-1.57	%	0.25	%	-49.49	%	-47.16	%	-63.12	%

Source: SNL data, FinPro Calculations

As Figure 43 demonstrates, at the midpoint of the estimated valuation range the Bank is priced at a premium of 0.25% on a MHC core earnings basis. On a price to MHC tangible book basis, the Bank is priced at a 47.16% discount to the Comparable Group.


Conversion Valuation Appraisal Report		Page: 67

FIGURE 44 - COMPARABLE MHC PRICING MULTIPLES TO THE BANK’S PRO FORMA

SUPER MAXIMUM


	Price Relative to
	Earnings		Core Earnings		Book		Tangible Book		Assets
The Bank (at the supermax) MHC	66.67		66.67		74.24	%	77.46	%	8.99	%
Unadjusted MHC Trading Median	50.80		52.50		120.00	%	120.00	%	18.60	%
(Discount) Premium	31.24	%	26.99	%	-38.13	%	-35.45	%	-51.67	%

Source: SNL data, FinPro Calculations

As Figure 44 demonstrates, at the super maximum of the estimated valuation range the Bank is priced at a premium of 26.99% on a MHC core earnings basis. On a price to MHC tangible book basis, the Bank is priced at a 35.45% discount to the Comparable Group.

FIGURE 45 - COMPARABLE MHC PRICING MULTIPLES TO THE BANK’S PRO FORMA

MINIMUM


	Price Relative to
	Earnings		Core Earnings		Book		Tangible Book		Assets
The Bank (at the minimum) MHC	43.48		45.45		53.48	%	56.09	%	5.85	%
Unadjusted MHC Trading Median	50.80		52.50		120.00	%	120.00	%	18.60	%
(Discount) Premium	-14.41	%	-13.43	%	-55.43	%	-53.26	%	-68.55	%

Source: SNL data, FinPro Calculations

As Figure 45 demonstrates, at the minimum of the estimated valuation range the Bank is priced at a discount of 13.43% on a MHC core earnings basis. On a price to MHC tangible book basis, the Bank is priced at a 53.26% discount to the Comparable Group.


Conversion Valuation Appraisal Report		Page: 68

VALUATION CONCLUSION

We believe that the discounts on an earnings and a tangible book basis are appropriate relative to the Comparable Group.

It is, therefore, FinPro’s opinion that as of March 2, 2010, the estimated pro forma market value of the Bank in a full offering was $110,000,000 at the midpoint of a range with a minimum of $93,500,000 to a maximum of $126,500,000 at 15% below and 15% above the midpoint of the range respectively. Assuming an adjusted maximum value of 15% above the maximum value, the adjusted maximum value or super maximum value in a full offering is $145,475,000.

Using the pro forma market values for a full offering, the amount of stock publicly offered as part of the MHC reorganization issuing 47.00% will equal 4,394,500 shares, 5,170,000 shares, 5,945,500 shares and 6,837,325 shares at the minimum, midpoint, maximum and super maximum, respectively.

The document represents an initial valuation for the Bank. Due to the duration of time that passes between the time this document is compiled and the time the offering closes, numerous factors could lead FinPro to update or revise the appraised value of the Bank. Some factors that could lead FinPro to adjust the appraised value include: (1) changes in the Bank’s operations and financial condition; (2) changes in the market valuation or financial condition of the Comparable Group; (3) changes in the broader market; and (4) changes in the market for thrift conversions. Should there be material changes to any of these factors, FinPro will prepare an appraisal update to appropriately adjust the value of the Bank. At the time of closing, FinPro will prepare a final appraisal to determine if the valuation range is still appropriate and determine the exact valuation amount appropriate for the Bank.


Conversion Valuation Appraisal Report		Page: 69

EXHIBITS

1 – 12

Numerical exhibits omitted in accordance with Rule 202 of Regulation S-T. These exhibits are being filed in paper pursuant to a continuing hardship exemption.

Fairfield County Bank Corp. S-1