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Web Site: http://www.ionbank.com
- East Side 1336 East Main St., Meriden, CT 06450
Tel: (203) 639-8866 Fax: (203) 317-3859

Ion Bank is an independent community-based bank committed to providing a full line of consumer and business products and services.

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Nutmeg Financial, MHC Reports 2010 Results

March 16, 2011

Chairman Mark C. Yanarella announced that David W. Nurnberger, retired Senior Vice President of Human Resources for Boehringer Ingelheim and Stephen C. Widman, M.D., Cardiologist with Cardiology Associates of Greater Waterbury, P.C. were elected as trustees of Nutmeg Financial, MHC. Also elected at the meeting as a new corporator was George H. Stone, President of The Stone Construction Company, Inc.

Chairman Mark C. Yanarella reported that Nutmeg Financial, MHC's banking subsidiary, Naugatuck Savings Bank, tripled net income to $3.6 million from $1.2 million in 2009. Growth in earnings was primarily driven by a $2.3 million increase in net interest income attributed to declines in interest expense as the bank paid off higher cost borrowings. Also, the Provision for loan losses declined $1.1 million as the bank repositioned the loan portfolio. Additionally, a $1.4 million decline in noninterest expenses was realized primarily due to a decline in the FDIC insurance assessment and elimination of 2009 merger related expenses. These improvements in operating income were offset by higher income taxes and lower noninterest income levels. The loan portfolio grew 5% to $678 million during the year primarily in lower risk Residential Mortgages to individuals and families. Helping to fuel that growth, the bank provided over $5 million to its first time home buyers program which offers discounted rates to qualified first time owners in select markets. Total liabilities declined 3% primarily due to the bank paying off higher costs borrowings and declines in the Certificate of Deposit category as consumers moved funds into other market segments. Savings and Money Market deposits increased $14 million or 4% to $358 million.

Mr. Yanarella commented that "we are very pleased with the 2010 results especially given the economic challenges faced by all community banks in an environment of more stringent and costly regulatory operating standards. It should be noted that the Bank never took TARP money or originated any sub prime residential loans". He also stated that "capital ratios continued to improve during the year; our risk based capital level is approaching 17%, well over the 10% minimum to be considered well capitalized. The bank is a strong, liquid and financially viable banking organization that is poised to grow within the communities we serve. We will enter two new markets in 2011 with the building of new branches in the Mount Carmel section of Hamden and the east end of Waterbury. The Bank will be relocating one of our Meriden branches from Hanover Street to a new location on West Main Street. Additionally, we will be opening an in-school branch at Naugatuck High School similar to the one we opened in 2008 at Nonnewaug High School. These new locations will be staffed with employees who are committed to our customer centric philosophy and high service standards." Nutmeg Financial, MHC is a non-stock mutual holding company formed in 2005. Its banking subsidiary is Naugatuck Savings Bank a state chartered bank formed in 1870. In 2005, John M. Sutherland, Inc., an independent insurance agency operating in Naugatuck since 1915, was acquired by Nutmeg Financial, MHC.

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