New Hampshire Thrift Bancshares (NHTB)

Comparison of Financial Condition at September 30, 2006 and December 31, 2005

During the first nine months ended September 30, 2006, total assets increased by $21,181,290, or 3.26%, from $650,178,681 at December 31, 2005, to $671,359,971. Total net loans increased $30,768,846, or 6.64%, from $463,150,536 at December 31, 2005 to $493,919,382 at September 30, 2006. During the first nine months ended September 30, 2006, the Bank originated $147,526,406 in loans, compared to $186,176,900 for the same period in 2005. The slowdown in the housing market contributed to the decrease in loan originations. Total loans sold into the secondary market amounted to $26,837,552 for the nine months ended September 30, 2006, compared to $41,980,160 for the same period in 2005, reflecting the slow-down in loan re-financings. Selling fixed rate loans into the secondary market helps protect the Bank against interest rate risk and provides the Bank with fee income. At September 30, 2006, the Bank’s mortgage loan servicing portfolio amounted to $298,893,938, compared to $298,125,706 as of September 30, 2005. The Bank expects to continue to sell fixed rate loans into the secondary market in order to manage interest rate risk. Market risk exposure during the production cycle is managed through the use of secondary market forward commitments. At September 30, 2006, adjustable rate mortgages comprised approximately 77% of the Bank’s real estate mortgage loan portfolio, which is consistent with prior years.

For the nine months ended September 30, 2006, securities available-for-sale decreased by $13,228,618, to $100,366,515 as the Bank utilized funds from either maturing or called securities to fund loan demand. The Bank’s net unrealized loss (after-tax) on its investment portfolio amounted to $1,220,133 as of September 30, 2006 compared to a net unrealized loss (after-tax) of $1,276,713 as of December 31, 2005. Management feels that this unrealized loss is temporary.

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Table of Contents

NEW HAMPSHIRE THRIFT BANCSHARES, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Real estate owned and property acquired in settlement of loans (“OREO”) remained unchanged at $0. There was no activity in the OREO account during the first nine months ended September 30, 2006.

During the first nine months of 2006, deposits decreased by $3,480,290, or 0.75%, to $461,156,614 as of September 30, 2006, from $464,636,904 as of December 31, 2005. Noninterest bearing checking accounts decreased $8,419,591, or 18.20%, to $37,843,971 as of September 30, 2006, from $46,263,562 as of December 31, 2006. Savings and interest-bearing checking accounts decreased $35,761,351, or 12.89%, as customers transferred funds into higher yielding time deposits and other higher yielding investments. Time deposits increased $40,700,652, or 28.88%, due to higher yielding time deposit specials.

Securities sold under agreements to repurchase decreased by $1,305,419, or 11.00%, to $10,567,298 during the first nine months ended September 30, 2006, from $11,872,717 as of December 31, 2005. Repurchase agreements are collateralized by some of the Bank’s government and agency investment securities.

The Bank had $120,000,000 in short-term advances from the Federal Home Loan Bank of Boston (FHLB) as of September 30, 2006, an increase of $20,000,000 from December 31, 2005. The Bank used the proceeds from the FHLB advances to fund a portion of the increase in net new loans and to replace a portion of the run-off in deposits.

Comparison of Financial Condition at June 30, 2006 and December 31, 2005

During the first six months ended June 30, 2006, total assets increased by $20,786,877, or 3.20%, from $650,178,681 to $670,965,558. Total net loans increased $28,891,672, or 6.24%, from $463,150,536 at December 31, 2005 to $492,042,208 at June 30, 2006. During the first six months ended June 30, 2006, the Bank originated $103,954,444 in loans, compared to $110,313,435 for the same period in 2005. During the first six months of 2006, interest rates on mortgage loans increased which reduced the demand for re-financing existing mortgage loans with lower interest rates. Total loans sold into the secondary market amounted to $20,719,617 for the six months ended June 30, 2006, compared to $19,599,118 for the same period in 2005. Selling fixed rate loans into the secondary market helps protect the Bank against interest rate risk and provides the Bank with fee income. At June 30, 2006, the Bank’s mortgage loan servicing portfolio amounted to $303,818,570, compared to $290,377,010 as of June 30, 2005. The Bank expects to continue to sell fixed rate loans into the secondary market in order to manage interest rate risk. Market risk exposure during the production cycle is managed through the use of secondary market forward commitments. At June 30, 2006, adjustable rate mortgages comprised approximately 77% of the Bank’s real estate mortgage loan portfolio. This is consistent with prior years.

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NEW HAMPSHIRE THRIFT BANCSHARES, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

For the six months ended June 30, 2006, securities available-for-sale decreased by $14,385,716, to $99,207,417 as the Bank utilized funds from either maturing or called securities to fund loan demand. The Bank’s net unrealized loss (after-tax) on its investment portfolio amounted to $2,570,489 as of June 30, 2006 compared to a net unrealized loss of $1,276,713 as of December 31, 2005. This change was the result of an increase in interest rates, which created a decrease in the value of the Bank’s investment securities. Management feels that this unrealized loss is temporary.

Real estate owned and property acquired in settlement of loans (“OREO”) remained unchanged at $0. There was no activity in the OREO account during the first six months ended June 30, 2006.

During the first six months of 2006, deposits decreased by $13,511,896, or 2.91%, to $451,125,008 as of June 30, 2006, from $464,636,904 as of December 31, 2005. Non-interest bearing checking accounts decreased $5,317,642, or 11.49%, to $40,945,920 as of June 30, 2006, from $46,263,562 as of December 31, 2005. Savings and interest-bearing checking accounts decreased $28,165,846, or 10.15%, as customers transferred funds into higher yielding time deposits and other higher yielding investments. Time deposits increased $19,971,592, or 14.17%, due to higher yielding time deposit specials.

Securities sold under agreements to repurchase decreased by $4,827,534 to $7,045,183 during the first six months ended June 30, 2006, from $11,872,717 as of December 31, 2005. Repurchase agreements are collateralized by some of the Bank’s government and agency investment securities.

The Bank had $140,000,000 in short-term advances from the Federal Home Loan Bank as of June 30, 2006, an increase of $40,000,000 from December 31, 2005. The Bank used the proceeds from the FHLB advances to fund a portion of the increase in net new loans and replace a portion of the run-off in deposits.

Comparison of Financial Condition at March 31, 2006 and December 31, 2005

During the first three months of 2006, total assets decreased by $12,773,842, or 1.96%, from $650,178,681 at December 31, 2005 to $637,404,839 at March 31, 2006. Cash, cash equivalents, and securities available-for-sale decreased $15,293,679 from December 31, 2005, as the Bank used cash and the proceeds from maturing securities to offset a seasonal run-off of deposits and fund loans.

Net loans increased $2,919,041, or 0.63%, from $463,150,536 at December 31, 2005 to $466,069,577 at March 31, 2006. During the first three months of 2006, the Bank originated $40.7 million in loans, compared to $40.6 million in originated loans for the quarter ended March 31, 2005. At March 31, 2006, the Bank had $306,104,988 in its servicing portfolio compared to $290,282,820 at March 31, 2005. The Bank expects to continue to sell fixed rate loans into the secondary market in order to manage interest rate risk. Market risk exposure during the production cycle is managed through the use of secondary market forward commitments. At March 31, 2006, adjustable rate mortgages comprised approximately 77% of the Bank’s real estate mortgage loan portfolio. This is consistent with prior periods.

As of March 31, 2006, securities available-for-sale decreased by $10,638,023 to $102,957,110 compared to $113,595,133 as of December 31, 2005. The Bank’s net unrealized loss (after tax) on its investment portfolio was $1,921,814 at March 31, 2006 compared to an unrealized loss (after tax) of $1,276,713 at December 31, 2005. This change was the result of increasing interest rates, which created a loss of value in the Bank’s investment securities.

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Table of Contents

NEW HAMPSHIRE THRIFT BANCSHARES, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Real estate owned (“OREO”) and property acquired in settlement of loans remained at zero. There was no activity in the OREO account during the first quarter of 2006.

Deposits decreased by $18,278,409, or 3.93%, to $446,358,495 at March 31, 2006, from $464,636,904, at year-end December 31, 2005. This compares to a decrease of 2.11% for the same period in 2005. Non-interest bearing checking accounts decreased $7,655,723, or 16.55%. Savings and interest-bearing checking accounts decreased $13,441,172, or 4.84%, as customers moved funds into higher yielding time deposits. Time deposits increased $2,818,486 or 2.00%. Seasonal activity accounted for a portion of the decrease in deposit accounts. A segment of the Bank’s customer base spends the winter months in warmer climate areas, which typically has a negative impact upon the Bank’s customers’ deposit balances. In addition, the Bank’s municipal and institutional accounts expend funds during the first quarter. These funds generally are replenished during the second and third quarters as municipalities and institutions move into their collection cycles.

Securities sold under agreements to repurchase decreased by $1,151,853, or 9.70%, to $10,720,864 at March 31, 2006 from $11,872,717 at December 31, 2005 due to the seasonal nature of our deposit base. Repurchase agreements are collateralized by the Bank’s government and agency investment securities.

The Bank had $105,000,000 in short-term advances from the Federal Home Loan Bank (“FHLB”) as of March 31, 2006, an increase of $5,000,000 from December 31, 2005. The Bank used the proceeds from the FHLB advances to partially fund the seasonal run-off of deposits.