S-1

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

Registration No. 333-            

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Pilgrim Bancshares, Inc.

(Exact Name of Registrant as Specified in Its Charter)

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

40 South Main Street

Cohasset, Massachusetts 02025

(781) 383-0541

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

Mr. Francis E. Campbell

President and Chief Executive Officer

40 South Main Street

Cohasset, Massachusetts 02025

(781) 383-0541

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

Copies to:

Kent M. Krudys, Esq.

Adam P. Wheeler, Esq.

Luse Gorman Pomerenk & Schick, P.C.

5335 Wisconsin Avenue, N.W., Suite 780

Washington, D.C. 20015

(202) 274-2000

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

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

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

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

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

CALCULATION OF REGISTRATION FEE

Title of each class of securities to be registered	Amount to be registered	Proposed maximum offering price per share	Proposed maximum aggregate offering price	Amount of registration fee
Common Stock, $0.01 par value per share	2,247,589 shares	$10.00	$22,475,890(1)	$2,895

(1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended.

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

PROSPECTUS

Pilgrim Bancshares, Inc.

(Proposed Holding Company for Pilgrim Bank)

Up to 1,897,500 Shares of Common Stock

Pilgrim Bancshares, Inc., a Maryland corporation, is offering shares of common stock for sale in connection with the conversion of Conahasset Bancshares, MHC from the mutual to the stock form of organization. All shares of common stock are being offered for sale at a price of $10.00 per share. We expect that our common stock will be listed on the OTC Bulletin Board upon conclusion of the offering. There is currently no public market for the shares of our common stock. We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012.

We are offering up to 1,897,500 shares of common stock for sale on a best efforts basis. We may sell up to 2,182,125 shares of common stock because of demand for the shares or changes in market conditions without resoliciting subscribers. We must sell a minimum of 1,402,500 shares in order to complete the offering.

We are offering the shares of common stock in a “subscription offering.” Shares of common stock not purchased in the subscription offering may be offered for sale to the general public in a “community offering.” We also may offer for sale shares of common stock not purchased in the subscription offering or community offering through a “syndicated community offering” to be managed by Keefe, Bruyette & Woods, Inc. In addition to the shares that we will sell in the offering, we will also contribute a total of $725,000 to a charitable foundation that we are establishing, such contribution to consist of a number of shares of our common stock equal to 3.0% of the shares sold in the offering (42,075 shares or $420,750 in stock at the minimum offering and 56,925 shares or $569,250 in stock at the maximum offering, or up to 65,464 shares or $654,640 in stock at the adjusted maximum offering) and the remainder in cash ($304,250 at the minimum offering and $155,750 at the maximum offering, or $70,360 at the adjusted maximum).

The minimum number of shares of common stock you may order is 25 shares. The maximum number of shares of common stock that an individual can order by himself in the subscription offering is 20,000 shares, and the maximum number of shares of common stock that an individual with an associate or group of persons acting in concert in all categories of the offering can order is 30,000 shares. Stock orders must be received by us after [member meeting date], 2014, but before at 12:00 noon, Eastern Time, on [expiration date]. Orders received before or on [member meeting date] will be rejected, and orders received after 12:00 noon, Eastern Time, on [expiration date] will be rejected unless we extend this expiration date. We may extend this expiration date without notice to you until [extension date], or such later date as the Federal Reserve Board may approve, to the extent such approval is required, which may not be beyond [2 year extension date], 2016. Once submitted, orders are irrevocable. However, if the offering is extended beyond [extension date], or the number of shares of common stock to be sold is increased to more than 2,182,125 shares or decreased to fewer than 1,402,500 shares, we will resolicit subscribers, giving them an opportunity to change or cancel their orders. Funds received during the offering will be held in a segregated account at Pilgrim Bank, and will earn interest at 0.20% per annum, which is our current statement savings rate.

Keefe, Bruyette & Woods will assist us in selling our shares of common stock on a best efforts basis. Keefe, Bruyette & Woods is not required to purchase any shares of the common stock that are being offered for sale. Purchasers will not pay a commission to purchase shares of common stock in the offering. Keefe, Bruyette & Woods has advised us that it intends to make a market in the common stock, but is under no obligation to do so.

Upon completion of the conversion, Pilgrim Bancshares, Inc. will be a bank holding company registered with the Federal Reserve Board, and will be subject to regulations, inspections, supervision and reporting requirements of the Federal Reserve Board. See “Supervision and Regulation” for more information.

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

Please read “Risk Factors” beginning on page 22.

OFFERING SUMMARY

Price: $10.00 per Share

	Minimum		Midpoint		Maximum		Adjusted Maximum
Number of shares		1,402,500		1,650,000		1,897,500		2,182,125
Gross offering proceeds	$	14,025,000	$	16,500,000	$	18,975,000	$	21,821,250
Estimated offering expenses (excluding selling agent fees)	$	965,000	$	965,000	$	965,000	$	965,000
Estimated selling agent fees(1) (2)	$	335,000	$	335,000	$	335,000	$	335,000
Estimated net proceeds	$	12,725,000	$	15,200,000	$	17,675,000	$	20,521,250
Estimated net proceeds per share	$	9.07	$	9.21	$	9.31	$	9.40

(1) See “The Conversion and Plan of Distribution—Marketing and Distribution; Compensation” for a discussion of Keefe, Bruyette & Woods’ compensation for the offering.

(2) Selling agent commissions shown assume that all shares are sold in the subscription offering. The amounts shown include (i) fees and selling commissions payable by us to Keefe, Bruyette & Woods in connection with the subscription offering equal to 1.0% of the aggregate purchase price of shares sold in the subscription offering (excluding shares purchased by officers, directors, employees, and our employee stock ownership plan, for which no selling agent commissions would be paid), subject to a minimum fee of $225,000; and (ii) other expenses of the offering payable to Keefe, Bruyette & Woods equal to $110,000. If all shares of common stock are sold in the syndicated community offering, selling agent commissions would be 6.0% of the aggregate purchase price of shares sold in the offering (excluding shares purchased by directors, officers, employees and our employee stock ownership plan), and the maximum selling agent commissions and expenses would be $830,440 at the minimum, $966,704 at the midpoint, $1,102,968 at the maximum and $1,259,671 at the maximum, as adjusted. See “The Conversion and Plan of Distribution—Marketing and Distribution; Compensation” for a discussion of fees to be paid to Keefe, Bruyette & Woods and other FINRA member firms in the event that all shares are sold in a syndicated community offering.

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

Neither the Securities and Exchange Commission, the Board of Governors of the Federal Reserve System, the Massachusetts Commissioner of Banks, the Federal Deposit Insurance Corporation, nor any state securities regulator has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

For assistance, please call the Stock Information Center, toll free, at [—].

KEEFE, BRUYETTE & WOODS

                                     A Stifel Company

The date of this prospectus is [—], 2014.

[MAP SHOWING MARKET AREA APPEARS ON INSIDE FRONT COVER]

TABLE OF CONTENTS

	Page
SUMMARY		2
RISK FACTORS		22
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA		42
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS		44
HOW WE INTEND TO USE THE PROCEEDS FROM THE OFFERING		46
OUR POLICY REGARDING DIVIDENDS		47
MARKET FOR THE COMMON STOCK		48
HISTORICAL AND PRO FORMA REGULATORY CAPITAL COMPLIANCE		49
CAPITALIZATION		50
PRO FORMA DATA		52
COMPARISON OF VALUATION AND PRO FORMA INFORMATION WITH AND WITHOUT THE CHARITABLE FOUNDATION		57
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		58
BUSINESS OF PILGRIM BANCSHARES, INC.		76
BUSINESS OF PILGRIM BANK		76
SUPERVISION AND REGULATION		106
TAXATION		120
MANAGEMENT OF PILGRIM BANCSHARES, INC.		122
SUBSCRIPTIONS BY DIRECTORS AND EXECUTIVE OFFICERS		138
THE CONVERSION AND PLAN OF DISTRIBUTION		139
PILGRIM BANK CHARITABLE FOUNDATION		163
RESTRICTIONS ON ACQUISITION OF PILGRIM BANCSHARES, INC.		167
DESCRIPTION OF CAPITAL STOCK		174
TRANSFER AGENT		175
EXPERTS		175
LEGAL AND TAX MATTERS		175
WHERE YOU CAN FIND ADDITIONAL INFORMATION		176
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS OF CONAHASSET BANCSHARES, MHC		F-1

SUMMARY

The following summary explains the significant aspects of the mutual-to-stock conversion of Conahasset Bancshares, MHC and the related offering of Pilgrim Bancshares, Inc. common stock. It may not contain all of the information that is important to you. For additional information before making an investment decision, you should read this entire document carefully, including the financial statements and the notes to the financial statements, and the section entitled “Risk Factors.”

In this prospectus, the terms “we, “our,” and “us” refer to Pilgrim Bancshares, Inc., Pilgrim Bank, Conahasset Bancshares, MHC and Conahasset Bancshares, Inc., unless the context indicates another meaning.

Pilgrim Bancshares, Inc.

The shares being offered will be issued by Pilgrim Bancshares, Inc., a newly formed Maryland corporation that will own all of the outstanding shares of common stock of Pilgrim Bank upon completion of the mutual-to-stock conversion. Pilgrim Bancshares, Inc. was incorporated on February 27, 2014 and has not engaged in any business to date. Upon completion of the conversion, Pilgrim Bancshares, Inc. will register as a bank holding company and will be subject to comprehensive regulation and examination by the Federal Reserve Board.

Pilgrim Bancshares, Inc.’s executive and administrative office is located at 40 South Main Street, Cohasset, Massachusetts 02025, and its telephone number at this address is (781) 383-0541.

Pilgrim Bank

Pilgrim Bank is a Massachusetts stock co-operative bank that was originally organized in 1916 under the name Pilgrim Co-Operative Bank as a Massachusetts mutual co-operative bank. In 2005, the Bank changed its name to Pilgrim Bank. The Bank opened its first branch in Cohasset in 2002 and a second branch in Marion in 2008. As a result of growth in recent years, in 2011 the Bank purchased the most prominent building in the Cohasset Village, a vacant hardware store, renovated it, and in 2012 opened its new headquarters on that site.

We reorganized into the mutual holding company structure in 2010 by forming Conahasset Bancshares, MHC, our Massachusetts chartered mutual holding company, and Conahasset Bancshares, Inc., our Maryland chartered mid-tier holding company, and converting Pilgrim Bank to a Massachusetts chartered stock co-operative bank. Conahasset Bancshares, MHC owns 100% of the outstanding shares of common stock of Conahasset Bancshares, Inc., which in turn owns 100% of the outstanding shares of common stock of Pilgrim Bank.

Pilgrim Bank is subject to comprehensive regulation and examination by the Massachusetts Commissioner of Banks, as well as its primary federal regulator, the Federal Deposit Insurance Corporation (the “FDIC”). In addition, Conahasset Bancshares, MHC and Conahasset Bancshares, Inc. are subject to regulation and examination as bank holding companies by the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”).

Our executive and administrative office is located at 40 South Main Street, Cohasset, Massachusetts 02025, and our telephone number at this address is (781) 383-0541. Our website address is www.bankpilgrim.com. Information on our website is not incorporated into this prospectus and should not be considered part of this prospectus.

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Our Business Operations

We conduct our operations from our main office and an adjacent operations center in Cohasset, Massachusetts and our two additional full-service banking offices located in Cohasset and Marion, Massachusetts. Our primary market area is the South Shore and South Coast areas of Massachusetts, which includes portions of Plymouth, Norfolk and Bristol counties. We serve customers located in a number of small towns in these areas, including Cohasset, Scituate, Hull, Hingham, Norwell, Marshfield, Marion, Mattapoisett, Plymouth, Rochester and Wareham. Although our current operations are not focused in Boston, we are affected by economic conditions in Boston because our loan portfolio includes a significant number of loans that are secured by real estate or that have borrowers located in Boston. In addition, a number of our customers who reside in our market area are employed in Boston and a number of our non-owner occupied residential and multi-family loan customers have properties in Boston as well as in our market area. We intend to continue to make loans, particularly commercial real estate, multi-family, non-owner occupied residential and construction loans, in Boston, so we will continue to be affected by economic conditions in Boston.

Our offices are located in towns with prestigious, recognizable names. The population of our market area tends to be older, affluent and financially stable. The population is also financially sophisticated and desirous of wealth management and other services provided by a trusted community financial institution. The employer base in our market area consists primarily of retail trade, professional and technical services, construction, healthcare and finance and insurance, together with food service and accommodation. The market area is a mature market, and is projected to have minimal population growth. However, we believe that the characteristics of the population in our market area, particularly the market for “jumbo” and non-conforming residential loans, non-owner occupied residential loans and construction and renovation loans, presents potential for significant growth in both loans and retail deposits. In addition, we opened our Marion office in 2008, just prior to the economic downturn, and we believe that the area surrounding this office presents opportunities for growth that we have not yet been able to pursue.

Our business consists primarily of attracting deposits from the general public and investing those deposits, together with funds generated from operations, in one- to four-family residential real estate, commercial real estate, multi-family and construction loans, and, to a lesser extent, commercial and industrial and consumer loans. We have historically conducted our lending operations with a view towards the specific needs of customers in the communities that we serve, measuring our success by customer satisfaction and the extent of our customer relationships, rather than on volume based loan origination. Accordingly because of the demographics of our market area, we have focused, and expect to continue to focus, on loans in excess of amounts approved for sale to Fannie Mae and Freddie Mac (currently $417,000), which are commonly referred to as “jumbo” loans. At December 31, 2013, $41.2 million, or 55.1% of our owner occupied one- to four-family residential loans and 30.9% of our total loans, were jumbo loans, of which $24.6 million were originated by Pilgrim Bank and $16.6 million were purchased loans.

We also invest in securities, which consist primarily of U.S. government agency obligations and U.S. government agency mortgage-backed securities and to a lesser extent, state and municipal securities and U.S. government agency collateralized mortgage obligations. We historically have relied heavily on certificates of deposit for funding, but we offer a variety of deposit accounts, including checking accounts, NOW accounts, savings accounts, money market accounts and certificate of deposit accounts, including IRAs. We utilize advances from the Federal Home Loan Bank of Boston (“FHLB-Boston”) for asset/liability management purposes, to leverage loan purchases, and, to a much lesser extent, for additional funding for our operations.

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Strategic Shift

As a traditional thrift, our focus has been, and will continue to be, one- to four-family residential mortgage lending, particularly “jumbo” mortgage loans and construction loans for owner occupied properties, in our market area. In 2005, we determined that we would be more competitive and profitable if we transitioned a portion of our operations to a commercial bank model. Accordingly, we made a decision to diversify our lending portfolio by expanding commercial real estate and construction lending in order to increase revenues and manage our interest rate and concentration risk. Because we realized that endeavoring to expand commercial real estate and construction lending placed us in a highly competitive space in our market area, we hired additional experienced commercial lenders who had previously worked in the South Shore and Boston markets to support our expanding commercial real estate and construction activities.

Rehabilitation-to-Permanent and Construction Lending

While we were successful in expanding our commercial real estate and construction lending, these lenders also brought knowledge of and experience with a niche of select customers engaged in investing in and renovating residential properties. To satisfy the demands of and enhance our banking relationships with these borrowers, we developed a loan product that consist of a construction loan for the rehabilitation of existing non-owner occupied properties that automatically converts to a fully-amortizing residential mortgage loan following the construction period. We approve the construction / rehabilitation and the permanent portions of the loan at the time the borrower submits an application, which fixes the interest rate for the borrower at the initial extension of credit, and eliminates the need or reapplication for permanent financing and a second closing.

The result of these efforts was an expansion in our non-owner occupied residential portfolio and our portfolio of construction and renovation loans related to non-owner occupied residential properties. The business cycles of these customers naturally led them to engage in larger projects, and we responded by developing multi-family loan products, and related construction and renovation loan products, to offer to these customers. Accordingly, a significant portion of our portfolio consists of high-quality non-owner occupied residential loans and construction loans and, although we have experienced a slight decline in multi-family loans due to payoffs in recent periods, we also have a moderate portfolio of multi-family loans. We historically have had a significant construction lending portfolio, although balances have decreased recently due to payoffs and the transition of construction loans to permanent loans. However, we intend to increase originations of construction loans, particularly non-owner occupied rehabilitation-to-permanent loans.

Entry into Commercial and Industrial Lending

In addition, as we continued to develop relationships with both our residential mortgage customers and our commercial, multi-family and non-owner occupied real estate loan customers, we recognized that, although certain towns within our market area are primarily residential, other towns are home to a diverse variety of small businesses providing services to the residents of our market area, and that there was an opportunity to for us to offer customized business banking products to those small businesses. We determined that we could further diversify our portfolio by increasing our commercial and industrial lending activities, and in 2013 we hired a lender with significant experience in commercial and industrial and Small Business Administration (“SBA”) lending.

Recent Performance and Credit Risk Management

During the nationwide economic downturn that began in 2008, our market area and the Boston area where we had begun expanding our commercial real estate and construction lending activities experienced increased levels of unemployment and decreasing real estate values. In addition, a number of

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industries in our market area and in Boston, where a significant number of our customers are employed and where a number of our customers conduct business, experienced reduced sales revenues or were forced to significantly reduce operations. As a result, we experienced an increase in delinquent, classified and non-performing loans, with the highest levels of delinquent loans reaching $8.3 million, or 7.5% of total loans in April 2011, classified loans reaching $9.5 million, or 8.4% of total loans in December 2012, and non-performing loans reaching $4.6 million, or 4.2% of total loans in September 2012. The significant majority of our classified and non-performing loans during this period consisted of one- to four-family residential mortgage loans.

As our classified, non-performing and delinquent loans increased, we began to focus on managing and improving our asset quality, and on continuing to diversify our loan portfolio. We have implemented enhanced underwriting guidelines, revised our lending policies to impose lending limitations intended to manage our credit risk, developed enhanced internal controls, and implemented enhancements to our credit risk management systems and credit administration procedures. In addition, because the economic downturn had a significant impact on the ability of construction lending borrowers in our market area to repay loans, particularly with respect to land and development loans and speculative construction loans, we identified areas of high risk in our construction portfolio and began to reduce our exposure to credit risk by decreasing originations of land and development and speculative construction loans and letting existing balances in those types of loans run off, while continuing originations of owner occupied and non-owner occupied residential and multi-family construction and renovation loans.

We believe that this strategy allowed us to avoid significant losses and other costs related to asset quality in our construction loan portfolio. At December 31, 2013, we had reduced delinquent loans to $2.1 million, or 1.6% of total loans, classified loans to $6.6 million, or 4.9% of total loans, and non-performing loans to $2.4 million, or 1.8% of total loans, with the majority of delinquent loans being the remaining non-performing loans. The reduction in delinquent loans, classified loans and non-performing loans as a percentage of total assets occurred while we were also maintaining a stable asset level to improve capital ratios. In addition to the classified loans and other real estate owned, we have a portfolio of mortgage-backed securities, obtained as a result of a distribution in kind by a mutual fund in which we had invested, that are classified assets. We have categorized the securities as held-to-maturity, and the remaining classified balance in these securities was $182,000 at December 31, 2013.

Since 2011, we have operated profitably, despite the economic downturn and despite incurring approximately $701,000 in loan charge-offs, $129,000 in write downs of mortgage-backed securities, $221,000 in expenses related to real estate owned, and $164,000 in collection and other expenses related to problem loans in fiscal years 2011, 2012 and 2013 as we focused on reducing classified and non-performing loans. During that same period, we reduced our real estate owned to $0, with net gains of $150,000 on the sale of real estate owned offsetting the expenses we incurred. In addition, during the year ended December 31, 2012 and 2013, we incurred significant increases in expenses related to the construction of our signature main office in Cohasset Village, and recognized a $218,000 loss as a result of the termination of a mutual fund investment managed by Shay Financial.

Business Strategy

Our principal objective is to distinguish ourselves as a strong independent bank in our market are by improving our offering of diverse products and superior customer service to customers, maintaining our commitment to community involvement, develop market niches and explore new lines of business and growth opportunities while adhering to a sound financial plan that provides for strong capital position and profits and asset growth sufficient to allow us to provide for the financial needs of our customers. We believe that our primary competitive advantage is and will continue to be our motivation to create relationships rather than “one product” customers, and that the first step in beginning a banking relationship is exhibiting the flexibility to customize products and services, particularly loan products, to meet the specific needs of the customer. We believe that, in our market area, this can be accomplished by

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working with customers to extend credit, within prudent and conservative guidelines, in situations where characteristics of non-conforming loans may be present, with particular focus on “jumbo” loans. We strive to provide friendly, knowledgeable, courteous and professional services as we invite current and potential customers to “Discover the Pilgrim Difference.”

As we attempted to grow and diversify our loan portfolio in recent years, our lending operations became restricted by legal lending limits, and we found ourselves referring quality customers to other banks or selling participations in loans extended to quality customers. We recognize that, although we have managed to operate profitably throughout a challenging economic period, modest organic growth in our market area and expansion into the customer base in contiguous areas is essential to our continued profitability. Highlights of our current business strategy following the completion of the offering include, subject to regulatory approval where applicable and market conditions:

• prudently and opportunistically growing our earnings base, particularly the size of our loan portfolio, in order to increase profitability, by leveraging the expertise and contacts of our current lending staff and by hiring additional lending personnel with extensive experience in our market area and in the Boston area;

• increasing our focus on commercial real estate, multi-family and owner-occupied residential construction loans, and continuing to expand our niche in non-owner occupied residential and construction lending, both in our market area and in the Boston area, in order to diversify our loan portfolio, reduce concentration risk and increase earnings;

• continuing to expand our traditional originations of conforming one- to four-family residential loans, customize non-conforming and jumbo mortgage loans to suit the needs of our customer base, foster multiple-loan relationships, and market our niche non-owner occupied rehabilitation-to-permanent loan product;

• increasing our focus on generating low-cost core deposits by actively marketing our deposit products, particularly as a business convenience to our expanding commercial real estate and non-owner occupied residential loan customer base, in order to decrease our dependence on certificates of deposit and reduce our interest rate sensitivity;

• continuing to improve our risk profile by managing our credit risk to maintain a low level of non-performing assets and enhancing our policies and procedures as needed; and

• developing a commercial and industrial origination platform, including an SBA loan program, in order to provide additional products and services to, and deepen the banking relationships with, our existing and future commercial customers and their owners and employees.

These strategies are intended to guide our investment of the net proceeds of the offering. We intend to continue to pursue our business strategy after the conversion and the offering, subject to changes necessitated by future market conditions, regulatory restrictions and other factors. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Business Strategy” for a further discussion of our business strategy. We have adopted a strategic plan to leverage the capital raised in the offering to increase our earnings base, especially the size of our loan portfolio, and therefore our profitability. However, the conversion will have a short-term adverse impact on our operating results, due to additional costs related to becoming a public company, increased compensation expenses associated with our employee stock ownership plan and the possible implementation of one or more stock-based benefit plans after the completion of the conversion. In addition, growth of earning assets is essential to our future profitability, and we expect to incur expenses related to the implementation of our growth plan, including hiring initiatives, deposit generation campaigns and the potential opening of loan production offices.

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Description of the Conversion

Pilgrim Bank is a Massachusetts stock co-operative bank. Conahasset Bancshares, Inc., a Maryland corporation, owns 100% of the outstanding capital stock of Pilgrim Bank and 100% of the outstanding capital stock of Pilgrim Bancshares, Inc., a Maryland corporation formed to be the holding company for Pilgrim Bank following the conversion. Conahasset Bancshares, MHC is a Massachusetts chartered mutual holding company that owns 100% of the outstanding stock of Conahasset Bancshares, Inc. Conahasset Bancshares, MHC has no stockholders. Pursuant to the terms of Conahasset Bancshares, MHC’s Plan of Conversion:

• Conahasset Bancshares, MHC will merge with and into Conahasset Bancshares, Inc., with Conahasset Bancshares, Inc. surviving. All shares of Conahasset Bancshares, Inc. common stock held by Conahasset Bancshares, MHC will be canceled and the members of Conahasset Bancshares, MHC will receive liquidation interests in Conahasset Bancshare, Inc.

• Conahasset Bancshares, Inc. will merge with Pilgrim Bancshares, Inc., with Pilgrim Bancshares, Inc. surviving. All shares of Pilgrim Bancshares, Inc. common stock held by Conahasset Bancshares, Inc. will be canceled, and the liquidation interests in Conahasset Bancshares, Inc. will be exchanged for interest in a liquidation account established by Pilgrim Bancshares, Inc. for the benefit of the eligible account holders and supplemental eligible account holders.

As part of the conversion, we are offering for sale in a subscription offering, a community offering and potentially a syndicated community offering, shares of common stock of Pilgrim Bancshares, Inc. Upon completion of the conversion and offering, Pilgrim Bank will be a wholly-owned subsidiary of Pilgrim Bancshares, Inc.

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The following diagram depicts our corporate structure prior to the conversion and offering:

The following diagram depicts our corporate structure after the conversion and offering are completed:

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Reasons for the Conversion

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

• to improve our capital position during a period of economic, regulatory and political uncertainty for the financial services industry and to assure compliance with regulatory capital requirements;

• to support organic loan and core deposit growth beyond levels possible utilizing only retained earnings;

• to improve profitability and earnings through reinvesting and leveraging the proceeds, primarily through traditional funding and lending activities;

• to invest in new technologies that will enable the expansion and enhancement of products and services we offer to our customers;

• to have greater flexibility to access the debt and equity capital markets;

• to attract, retain and incentivize qualified personnel by establishing stock-based benefit plans for management and employees;

• to establish a charitable foundation to support charitable organizations operating in our communities and fund the foundation with cash and shares of our common stock;

• to provide customers and members of our community with the opportunity to acquire an ownership interest in Pilgrim Bank; and

• to have greater flexibility to structure and finance opportunities for expansion into new markets, including through de novo branching, branch acquisitions or acquisitions of other financial institutions, although we have no current arrangements or agreements with respect to any such transactions.

As of December 31, 2013, Pilgrim Bank was considered “well capitalized” for regulatory purposes. The proceeds from the offering will further improve our capital position during a period of significant economic, regulatory and political uncertainty.

Terms of the Conversion and the Offering

We are offering between 1,402,500 and 1,897,500 shares of common stock to eligible depositors of Pilgrim Bank, to our employee benefit plans and, to the extent shares remain available, to the general public. The number of shares of common stock to be sold may be increased to up to 2,182,125 as a result of demand for the shares or changes in the market for financial institution stocks. Unless the number of shares of common stock to be offered is increased to more than 2,182,125 or decreased to less than 1,402,500, or the offering is extended beyond [extension date], subscribers will not have the opportunity to change or cancel their stock orders.

The purchase price of each share of common stock to be issued in the offering (other than shares we are contributing to our charitable foundation) is $10.00. Investors will not be charged a commission to purchase shares of common stock in the offering.

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Persons Who May Order Shares of Common Stock in the Offering

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

• First, to depositors of Pilgrim Bank with aggregate account balances of at least $50 as of the close of business on December 31, 2012.

• Second, to depositors of Pilgrim Bank with aggregate account balances of at least $50 as of the close of business on March 31, 2014.

• Third, to Pilgrim Bank’s tax-qualified employee benefit plans (including the employee stock ownership plan we are establishing in connection with the conversion), which will receive, without payment therefor, nontransferable subscription rights to purchase in the aggregate up to 10% of the shares of common stock issued in the offering (including shares contributed to our charitable foundation). We expect our employee stock ownership plan to purchase 8% of the shares of common stock issued in the conversion (including shares contributed to our charitable foundation).

Shares of common stock not purchased in the subscription offering may be offered for sale to the general public in a “community offering,” with a preference given to natural persons (including trusts of natural persons) residing in the Massachusetts towns of Cohasset, Scituate, Hingham, Norwell, Hull, Weymouth, Quincy, Marshfield, Pembroke, Marion, Rochester, Mattapoisett, West Wareham, Wareham and Fairhaven.

How We Determined the Offering Range

The amount of common stock that we are offering is based on an independent appraisal of the estimated market value of Pilgrim Bancshares, Inc. assuming the conversion and the offering are completed. RP Financial, LC, our independent appraiser, has estimated that, as of February 14, 2014, this market value (including the shares to be contributed to the charitable foundation) ranged from $14.4 million to $19.5 million, with a midpoint of $17.0 million. Based on this valuation and a $10.00 per share price, the number of shares of common stock being offered for sale by us will range from 1,402,500 shares to 1,897,500 shares. The $10.00 per share price was selected primarily because it is the price most commonly used in mutual-to-stock conversions of financial institutions.

RP Financial, LC also considered that we intend to contribute a total of $725,000 to a charitable foundation that we are establishing, such contribution to consist of a number of shares of our common stock equal to 3.0% of the shares sold in the offering (42,075 shares or $420,750 in stock at the minimum offering and 56,925 shares or $569,250 in stock at the maximum offering, or up to 65,464 shares or $654,640 in stock at the adjusted maximum offering) and the remainder in cash ($304,250 at the minimum offering and $155,750 at the maximum offering, or $70,360 at the adjusted maximum). The intended contribution of cash and shares of common stock to the charitable foundation has the effect of reducing our estimated pro forma valuation. See “Comparison of Valuation and Pro Forma Information With and Without the Charitable Foundation.”

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The appraisal is based in part on an analysis of a peer group of ten publicly traded savings institutions that RP Financial, LC considered comparable to us. The peer group consists of the following 10 companies with assets between $247 million and $714 million as of September 30, 2013 (the latest date for which complete financial data is publicly available).

Company Name and Ticker Symbol	Headquarters	Total Assets
		(in millions)
Alliance Bancorp of Penn ALLB	Broomall, PA	$	436
Chicopee Bancorp, Inc. CBNK	Chicopee, MA		605
FedFirst Financial Corp. FFCO	Monessen, PA		323
Georgetown Bancorp, Inc. GTWN	Georgetown, MA		247
Hampden Bancorp, Inc. HBNK	Springfield, MA		696
OBA Financial Services, Inc. OBAF	Germantown, MD		390
Oneida Financial Corp. ONFC	Oneida, NY		714
Peoples Federal Bancshares, Inc. PEOP	Brighton, MA		585
Wellesley Bancorp WEBK	Wellesley, MA		421
WVS Financial Corp. WVFC	Pittsburgh, PA		296

RP Financial, LC sought to provide meaningful comparative data to limit the need to perform subjective valuation adjustments with respect to institutions that did not share common characteristics with Pilgrim Bank. As a result, a comparable institution’s dissimilar asset size may be outweighed by similarities with respect to other characteristics that are more exemplary of an institution’s value than asset size.

The peer group selection process was limited to publicly traded thrifts pursuant to the regulatory conversion guidelines, which limit the number of potential comparable companies for inclusion in the peer group to approximately 106 full stock publicly traded companies. As noted in the appraisal report, the selection process for the peer group involved two geographic screens to the universe of all public thrifts that were eligible for inclusion in the peer group.

• New England Institutions. Given the impact of the regional market on investors’ perception of a financial institution’s value, RP Financial, LC first looked to the New England regional market and applied the following selection criteria to publicly-traded full-stock savings institutions: (i) assets less that $750 million, (ii) tangible equity-to-assets ratios greater than 8%, and (iii) positive core earnings. Six companies met the selection criteria and five were included in the peer group. The one company that was not included in the peer group was excluded on the basis that it had recently completed a mutual-to-stock conversion and, therefore, did not have a seasoned trading history as a publicly-traded institution.

• Mid-Atlantic Institutions. Given the limited number of comparable publicly-traded full stock savings institutions based in New England, RP Financial, LC next looked to the Mid-Atlantic regional market and applied the following selection criteria to publicly-traded full-stock savings institutions: (i) assets less that $750 million, (ii) tangible equity-to-assets ratios greater than 8%, and (iii) positive core earnings. Eight companies met the selection criteria and five were included in the peer group. The three companies not included in the peer group were excluded for the following reasons: (i) one company was excluded as a result of maintaining a very low level of common stock equity that resulted in a not meaningful price-to-book ratio, (ii) one company was excluded as the result of being the target of an announced acquisition, and (iii) one company was excluded because it had recently completed a mutual-to-stock conversion and, therefore, did not have a seasoned trading history as a publicly-traded institution.

The following table presents a summary of selected pricing ratios for Pilgrim Bancshares, Inc. and the peer group companies identified by RP Financial, LC. Ratios are based on financial data for the twelve months ended December 31, 2013 and the twelve months ended September 30, 2013 for Pilgrim Bancshares, Inc. and the peer group, respectively, (or the last twelve months for which data is available) and stock price information as of February 14, 2014. Compared to the median pricing of the peer group,

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our pro forma pricing ratios at the maximum of the offering range indicated a discount of 27.9% on a price-to-book value basis, a discount of 29.9% on a price-to-tangible book value basis and a premium of 102.2% on a price-to-earnings basis.

	Price-to-earnings multiple (1)			Price-to-book value ratio			Price-to-tangible book value ratio
Pilgrim Bancshares, Inc. (pro forma)
Maximum, as adjusted		53.41	%		73.58	%		73.58	%
Maximum		45.44	%		69.88	%		69.88	%
Minimum		32.38	%		61.54	%		61.54	%
Valuation of peer group companies using stock prices as of February 14, 2014
Averages		22.70	%		97.68	%		101.83	%
Medians		22.47	%		96.93	%		99.72	%

(1) Price-to-earnings multiples calculated by RP Financial, LC in the independent appraisal are based on an estimate of “core” or recurring earnings on a trailing 12 month basis for the 12 months ended December 31, 2013 for Pilgrim Bancshares, Inc. and on a trailing 12 month basis for the 12 months ended September 30, 2013 for the peer group companies. Price-to-earnings multiples are based on an estimate of “core” or recurring earnings as calculated by RP Financial, LC in the independent appraisal and are different from those presented in “Pro Forma Data,” which are based on reported earnings for the year ended December 31, 2013.

Compared to the average pricing ratios of the peer group, our pro forma pricing ratios at the maximum of the offering range indicated a discount of 28.5% on a price-to-book basis, a discount of 29.9% on a price-to-tangible book basis and a premium of 100.2% on a price-to-earnings basis. This means that, at the maximum of the offering range, a share of our common stock would be less expensive than the peer group on a price-to-book value and price-to-tangible book value basis and more expense on a price-to-earnings basis.

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

For a more complete discussion of the amount of common stock we are offering for sale and the independent appraisal, see “The Conversion and Plan of Distribution—Determination of Share Price and Number of Shares to be Issued.”

Limits on How Much Common Stock You May Purchase

The minimum number of shares of common stock that may be purchased is 25. Generally, no individual, or individuals exercising subscription rights through a single qualifying account held jointly, may purchase more than 20,000 shares ($200,000) of common stock. Additionally, if any of the following persons purchase shares of common stock, their purchases, in all categories of the offering, will be combined with your purchases and may not exceed 30,000 shares ($300,000):

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

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

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

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

Subject to the approval of the Federal Reserve Board and the Massachusetts Division of Banks, we may increase or decrease the purchase limitations at any time. Please see “The Conversion and Plan of Distribution—Limitations on Common Stock Purchases.”

How You May Purchase Shares of Common Stock in the Subscription Offering and the Community Offering

Payment for all shares of common stock will be required to accompany all completed order forms for the purchase to be valid. Payment for shares may be made by:

(1) personal check, bank check or money order, payable to Pilgrim Bancshares, Inc.; or

(2) authorization of withdrawal from Pilgrim Bank deposit accounts designated on the order form.

Regulations prohibit Pilgrim Bank from knowingly lending funds or extending credit to any persons to purchase shares of common stock in the offering. You may not use cash, wires or a check drawn on a Pilgrim Bank line of credit, and we will not accept third-party checks (a check written by someone other than you) payable to you and endorsed over to Pilgrim Bancshares, Inc. If you request that we place a hold on your checking account for the subscription amount, we reserve the right to interpret that as your authorization to treat those funds as if we had received a check for the designated amount, and we will immediately withdraw the amount from your checking account. Once we receive your executed order form, it may not be modified, amended or rescinded without our consent, unless the offering is not completed by the expiration date, in which event purchasers may be given the opportunity to increase, decrease or rescind their orders for a specified period of time. You may not authorize direct withdrawal from a Pilgrim Bank retirement account. See “—Using Retirement Account Funds to Purchase Shares of Common Stock.”

In order to purchase shares of common stock in the subscription offering and community offering, you must submit a completed order form, together with full payment payable to Pilgrim Bancshares, Inc. or authorization to withdraw funds from one or more of your Pilgrim Bank deposit accounts. We will not be required to accept incomplete order forms, unsigned order forms, or orders submitted on photocopied or facsimiled order forms. We must receive all order forms after [member meeting date], 2014, but before at 12:00 noon, Eastern time, on [expiration date]. Orders received before or on [member meeting date], 2014 will be rejected, and orders received after 12:00 noon, Eastern time, on [expiration date], 2014 will be rejected unless we extend this expiration date. We are not required to accept order forms that are not received by that time, are executed defectively or are received without full payment or without appropriate withdrawal instructions. A postmark prior to [expiration date], 2014 will not entitle you to purchase shares of common stock unless we receive the envelope by [expiration date], 2014. You may submit your order form and payment by overnight delivery to the indicated address on the order form, by bringing your order form to our Stock Information Center or to any branch office or by mail using the return envelope provided. Due to recent reductions in U.S. Postal Service 1st Class Mail delivery standards, we encourage subscribers to consider in-person or overnight delivery to enhance the likelihood that your order is received before the deadline.

Please see “The Conversion and Plan of Distribution—Procedure for Purchasing Shares—Payment for Shares” for a complete description of how to purchase shares in the offering.

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Using Retirement Account Funds to Purchase Shares of Common Stock

You may be able to subscribe for shares of common stock using funds in your individual retirement account (“IRA”). If you wish to use funds that are currently in your IRA or other retirement account held at Pilgrim Bank, the funds you wish to use for the purchase of common stock will have to be transferred to a brokerage account with a broker who is willing and able to facilitate your purchase in the offering. It may take several weeks to transfer the funds in your Pilgrim Bank IRA to an independent trustee, so please allow yourself sufficient time to take this action. Depositors interested in using funds in an individual retirement account or any other retirement account to purchase shares of common stock should contact our Stock Information Center as soon as possible, preferably at least two weeks prior to the end of the offering period, because processing such transactions takes additional time, and whether such funds can be used may depend on limitations imposed by the institutions where such funds are currently held. We cannot guarantee that you will be able to use such funds.

Please see “The Conversion and Plan of Distribution—Procedure for Purchasing Shares—Payment for Shares” and “—Using Retirement Account Funds” for a complete description of how to use IRA funds to purchase shares in the offering.

How We Intend to Use the Proceeds From the Offering

Assuming we sell 2,182,125 shares of common stock in the offering (the adjusted maximum of the offering range), and we have net proceeds of $20.5 million, we intend to distribute the net proceeds as follows:

• $10.3 million (50.0% of the net proceeds) will be invested in Pilgrim Bank;

• $1.8 million (8.8% of the net proceeds) will be loaned to our employee stock ownership plan to fund its purchase of our shares of common stock;

• $70,000 (0.3% of the net proceeds) will be contributed our charitable foundation; and

• $8.4 million (40.9% of the net proceeds) will be retained by Pilgrim Bancshares, Inc.

Pilgrim Bancshares, Inc. may use the funds that it receives for investments, to pay cash dividends, to repurchase shares of common stock and for other general corporate purposes, subject to regulatory approval as applicable. Pilgrim Bank may use the proceeds it receives from Pilgrim Bancshares, Inc. to support increased lending, to increase deposits, to offer other products and services and to increase its capital position. The net proceeds retained by Pilgrim Bancshares, Inc. and Pilgrim Bank also may be used for future business expansion through acquisitions of banks, thrifts and other financial services companies, and opening or acquiring branch offices or loan production offices. We have no current arrangements or agreements with respect to any such acquisitions or branch offices. Initially, a substantial portion of the net proceeds will be invested in short-term investments and other securities consistent with our investment policy.

We do not anticipate the number of shares we sell in the offering will result in significant changes in the respective use of proceeds by Pilgrim Bank and Pilgrim Bancshares, Inc. Please see the section of this prospectus entitled “How We Intend to Use the Proceeds From the Offering” for more information on the proposed use of the proceeds from the offering, including a table showing the distribution of net proceeds at different points in the offering range.

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Our Issuance of Cash and Shares of Our Common Stock to Pilgrim Bank Charitable Foundation

To further our commitment to our local community, we intend to establish a charitable foundation as part of the conversion and offering. Assuming we receive approval from our members to fund the charitable foundation with shares of our common stock and cash, we intend to contribute a total of $725,000 to a charitable foundation that we are establishing, such contribution to consist of a number of shares of our common stock equal to 3.0% of the shares sold in the offering (42,075 shares or $420,750 in stock at the minimum offering and 56,925 shares or $569,250 in stock at the maximum offering, or up to 65,464 shares or $654,640 in stock at the adjusted maximum offering) and the remainder in cash ($304,250 at the minimum offering and $155,750 at the maximum offering, or $70,360 at the adjusted maximum). As a result of the issuance of shares of common stock and the contribution of cash to the charitable foundation, we will record an after-tax expense of approximately $435,000 during the quarter in which the offering is completed.

The charitable foundation will be dedicated exclusively to supporting charitable causes and community development activities in the communities in which we operate. The charitable foundation will be required to distribute annually in grants or donations a minimum of 5% of the average fair market value of its net investment assets, and is expected to make contributions totaling approximately $36,000 in its first year of operation, assuming we complete the offering at the maximum level.

Issuing shares of common stock and contributing cash to the charitable foundation will:

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

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

The establishment and funding of the charitable foundation has been approved by the Board of Trustees of Conahasset Bancshares, MHC and is subject to approval by the members of Conahasset Bancshares, MHC. If the members do not approve the funding of the charitable foundation with shares of our common stock and cash, we may, in our discretion, complete the conversion and offering without the inclusion of the charitable foundation and without resoliciting subscribers. We may also determine, in our discretion, not to complete the conversion and offering if the members do not approve the charitable foundation.

The amount of common stock that we would offer for sale would be greater if the offering were to be completed without the formation and funding of the Pilgrim Bank Charitable Foundation. For a further discussion of the financial impact of the charitable foundation, including its effect on those who purchase shares in the offering, see “Risk Factors—Risks Related to the offering—The contribution to the charitable foundation will dilute your ownership interest and adversely affect net income in the year we complete the offering,” “Comparison of Valuation and Pro Forma Information With and Without the Charitable Foundation” and “Pilgrim Bank Charitable Foundation.”

You May Not Sell or Transfer Your Subscription Rights

Applicable regulations prohibit you from transferring your subscription rights. If you order shares of common stock in the subscription offering, you will be required to state that you are purchasing the shares of common stock for yourself and that you have no agreement or understanding to sell or transfer your subscription rights. We intend to take legal action, including reporting persons to federal or state regulatory agencies, against anyone who we believe has sold or given away his or her subscription rights. We will not accept your order if we have reason to believe that you have sold or transferred your subscription rights.

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Deadline for Orders of Common Stock; Early Orders

If you wish to purchase shares of common stock in the offering, we must receive a properly completed original stock order and certification form, together with full payment for the shares of common stock, after [member meeting date], 2014, but no later than 12:00 noon, Eastern time, on [expiration date], 2014. You may submit your order form and payment by overnight delivery to the indicated address on the order form, by bringing your stock order form to our Stock Information Center or to any of our branch offices, or by mail using the return envelope provided.

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

If we do not receive orders for at least 1,402,500 shares of common stock (not counting shares to be contributed to our charitable foundation), we may take steps to issue the minimum number of shares of common stock in the offering range. Specifically, we may:

• increase the purchase limitations; and/or

• seek the approval, to the extent required, of the Federal Reserve Board and the Massachusetts Commissioner of Banking, to extend the offering beyond [extension date], 2014, so long as we resolicit subscriptions that we have previously received in the offering.

If we extend the offering beyond [extension date], 2014, we will notify subscribers of the extension of time and of the rights of subscribers to place a new stock order for a specified period of time. If a subscriber does not respond, we will cancel his or her stock order and return his or her subscription funds, with interest, and cancel any authorization to withdraw funds from deposit accounts for the purchase of shares of common stock. If a purchase limitation is increased, subscribers in the subscription offering who ordered the maximum amount will be, and, in our sole discretion, some other large subscribers may be, given the opportunity to increase their subscriptions up to the then-applicable limit.

Possible Change in the Offering Range

RP Financial, LC will update its appraisal before we complete the offering. If, as a result of demand for the shares, or changes in market conditions, RP Financial, LC determines that our pro forma market value has increased, we may sell up to 2,182,125 shares in the offering without further notice to you. If our pro forma market value at that time is either below $14.4 million or above $22.5 million, then, after consulting with the Federal Reserve Board and the Massachusetts Commissioner of Banks, we may:

• terminate the offering and promptly return all funds;

• set a new offering range and give all subscribers the opportunity to confirm, modify or rescind their purchase orders for shares of Pilgrim Bancshares, Inc.’s common stock; or

• take such other actions as may be permitted, to the extent such permission is required, by the Federal Reserve Board, the Massachusetts Commissioner of Banks and the Securities and Exchange Commission.

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Possible Termination of the Offering

We may terminate the offering at any time prior to the special meeting of members of Conahasset Bancshares, MHC that is being called to vote upon the conversion and to approve the establishment and funding of the charitable foundation and the special meeting of corporators of Conahasset Bancshares, MHC that is being called to vote upon the merger of Conahasset Bancshares, MHC into Conahasset Bancshares, Inc., and at any time after member and corporator approval, with the approval, to the extent such approval is required, of the Federal Reserve Board or the Massachusetts Commissioner of Banks.

We must sell a minimum of 1,402,500 shares to complete the offering. If we terminate the offering because we fail to sell the minimum number of shares (not counting shares that we will contribute to the charitable foundation) or for any other reason, we will promptly return your funds with interest at our statement savings rate, currently 0.20% per annum, and we will cancel deposit account withdrawal authorizations.

Purchases by Executive Officers and Directors

We expect our directors and executive officers, together with their associates, to subscribe for 86,200 shares of common stock in the offering, or 6.15% of the shares to be sold at the minimum of the offering range (excluding shares issued to our charitable foundation). Our directors and executive officers will pay the same $10.00 per share price for the common stock as all other subscribers in the offering. Purchases of the common stock by our directors and executive officers are for investment purposes for these individuals and not with a view towards resale, and pursuant to applicable conversion regulations, our directors and executive officers, generally, will not be permitted to sell any shares of the common stock that they purchase in the offering for a period of at least one year from the closing of the conversion and offering. See “Subscriptions by Directors and Executive Officers.”

Benefits to Management and Potential Dilution to Stockholders Following the Conversion

We expect our tax-qualified employee stock ownership plan to purchase 8% of the total number of shares of common stock that we issue in the conversion (including shares contributed to our charitable foundation), or 156,354 shares of common stock, assuming we sell the maximum of the shares proposed to be sold.

We also intend to implement one or more stock-based benefit plans. Stockholder approval of these plans will be required, and the stock-based benefit plans cannot be implemented until at least six months after the completion of the conversion pursuant to applicable regulations. We have not yet determined whether we will present these plans for stockholder approval within 12 months following the completion of the conversion or more than 12 months after the completion of the conversion. If presented more than 12 months after the completion of the conversion, these plans would require the approval of our stockholders by a majority of votes cast; otherwise, they would require the approval of our stockholders by a majority of votes eligible to be cast. Further, there are a number of restrictions that would apply to these plans if adopted within one year of the conversion, including limits on awards to non-employee directors and officers and vesting. See “Management of Pilgrim Bancshares, Inc.—Future Stock Benefit Plans.” For example, if adopted within 12 months following the completion of the conversion, the stock-based benefit plans will reserve a number of shares of common stock equal to not more than 4% of the shares issued in the conversion (including shares contributed to our charitable foundation) for restricted stock awards to key employees and directors, at no cost to the recipients, and will also reserve a number of stock options equal to not more than 10% of the shares of common stock issued in the conversion (including shares contributed to our charitable foundation) for key employees and directors.

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If 4% of the shares of common stock issued in the conversion (including shares contributed to our charitable foundation) are awarded under a stock-based benefit plan and come from authorized but unissued shares of common stock, stockholders would experience dilution of up to approximately 3.9% in their ownership interest in Pilgrim Bancshares, Inc. If 10% of the shares of common stock issued in the conversion (including shares contributed to our charitable foundation) are issued upon the exercise of options granted under a stock-based benefit plan and come from authorized but unissued shares of common stock, stockholders would experience dilution of approximately 9.1% in their ownership interest in Pilgrim Bancshares, Inc.

In connection with the conversion, we expect to enter into an employment agreement and change in control agreements with certain of our officers, subject to regulatory approval of these agreements. See “Management of Pilgrim Bancshares, Inc.—Executive Officer Compensation” and “Risk Factors—Risks Related to The Offering—We intend to enter into an employment agreement and change in control agreements with certain of our officers, which may increase our compensation costs upon the occurrence of certain events or increase the costs of acquiring us” for a further discussion of these agreements, including their terms and potential costs, as well as a description of other benefits arrangements.

The following table summarizes the number of shares of common stock and aggregate dollar value of grants (valuing each share granted at the offering price of $10.00) that will be available under our employee stock ownership plan and one or more stock-based benefit plans if such plans are adopted within one year following the completion of the conversion and the offering. The table shows the dilution to stockholders if all these shares are issued from authorized but unissued shares, instead of shares purchased in the open market. The table also sets forth the number of shares of common stock to be acquired by the employee stock ownership plan for allocation to all employees. A portion of the stock award and stock option grants shown in the table below may be made to non-management employees.

	Number of Shares to be Granted or Purchased(3)							Dilution Resulting From Issuance of Shares for Stock Benefit Plans			Value of Grants (1)
	At Minimum of Offering Range		At Adjusted Maximum of Offering Range		As a Percentage of Common Stock to be Issued (2)						At Minimum Offering Range		At Adjusted Maximum Offering Range
											(Dollars in thousands)
Employee stock ownership plan		115,566		179,807		8.00	%		—		$	1,156	$	1,798
Stock awards		57,783		89,904		4.00			3.85	%		578		899
Stock options		144,458		224,759		10.00			9.09	%		481		748
Total		317,807		494,470		22.00	%		12.28	%	$	2,215	$	3,445

(1) The actual value of restricted stock awards will be determined based on their fair value as of the date grants are made. For purposes of this table, fair value is assumed to be the same as the offering price of $10.00 per share. The fair value of stock options has been estimated at $3.33 per option using the Black-Scholes option pricing model with the following assumptions: a grant-date share price and option exercise price of $10.00; dividend yield of 0.00%; an expected option life of 10 years; a risk-free interest rate of 3.04%; and a volatility rate of 15.82% based on an index of publicly traded thrift institutions. The actual expense of stock options granted under a stock-based benefit plan will be determined by the grant-date fair value of the options, which will depend on a number of factors, including the valuation assumptions used in the option pricing model ultimately adopted, which may or may not be the Black-Scholes model.

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

(3) For plans adopted within 12 months of the completion of the conversion, applicable regulations permit stock awards to encompass up to 4.0% and the ESOP and stock awards to encompass in the aggregate up to 12.0% of the shares issued, provided Pilgrim Bank has tangible capital of 10.0% or more following the conversion.

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The actual value of restricted stock awards will be determined based on their fair value (the closing market price of shares of common stock of Pilgrim Bancshares, Inc.) as of the date grants are made. The following table presents the total value of all shares to be available for awards of restricted stock under the stock-based benefit plan, assuming the shares for the plan are purchased or issued in a range of market prices from $8.00 per share to $14.00 per share at the time of the grant.

Share Price		57,783 Shares Awarded at Minimum of Offering Range		67,980 Shares Awarded at Midpoint of Offering Range		78,177 Shares Awarded at Maximum of Offering Range		89,904 Shares Awarded at Maximum of Offering Range, As Adjusted
(In thousands, except share price information)
$	8.00	$	462,264	$	543,840	$	625,416	$	719,232
	10.00		577,830		679,800		781,770		899,040
	12.00		693,396		815,760		938,124		1,078,848
	14.00		808,962		951,720		1,094,478		1,258,656

The grant-date fair value of the stock options granted under the stock-based benefit plans will be based, in part, on the closing price of shares of common stock of Pilgrim Bancshares, Inc. on the date the options are granted. The fair value will also depend on the various assumptions utilized in the option-pricing model ultimately adopted. The following table presents the total estimated value of the stock options to be available for grant under the stock-based benefit plans, assuming the range of market prices for the shares are $8.00 per share to $14.00 per share at the time of the grant.

Exercise Price		Grant-Date Fair Value Per Option		144,458 Options at Minimum of Range		169,950 Options at Midpoint of Range		195,443 Options at Maximum of Range		224,759 Options at Maximum of Range, As Adjusted
(In thousands, except share price information)
$	8.00	$	2.66	$	384,258	$	452,067	$	519,878	$	597,859
	10.00		3.33		481,045		565,934		650,825		748,447
	12.00		4.00		577,832		679,800		781,772		899,036
	14.00		4.66		673,174		791,967		910,764		1,047,377

Market for Common Stock

We anticipate that the common stock sold in the offering will be listed on the OTC Bulletin Board following the completion of the offering. See “Market for the Common Stock.”

Our Policy Regarding Dividends

Our Board of Directors will have the authority to declare dividends on our common stock, subject to statutory and regulatory requirements. We do not intend to pay dividends until such time as we generate sufficient net income to support our planned growth and the payment of such dividends. Growth of earning assets is essential to our future profitability, and we expect to incur expenses related to the implementation of our growth plan. The payment and amount of any dividend payments will depend upon a number of factors, including the following: regulatory capital requirements; our financial condition and results of operations; our other uses of funds for the long-term value of our shares; tax considerations; statutory and regulatory limitations; and general economic conditions. See “Our Policy Regarding Dividends” for additional information regarding our dividend policy. In addition, beginning in 2016, Pilgrim Bank’s ability to pay dividends will be limited if Pilgrim Bank does not have the capital conservation buffer required by the new capital rules, which may limit our ability to pay dividends to stockholders. See “Supervision and Regulation—Federal Banking Regulation—New Capital Rule.”

Conditions to Completion of the Conversion and the Offering

We cannot complete the conversion and the offering unless:

• the plan of conversion is approved by a majority of the members of Conahasset Bancshares, MHC. A special meeting of members to consider and vote upon the plan of conversion and the establishment and funding of the charitable foundation has been set for [member meeting date], 2014;

• the merger of Conahasset Bancshares, MHC with Conahasset Bancshares, Inc. is approved by two-thirds of the corporators of Conahasset Bancshares, MHC in office and entitled to vote. A special meeting of corporators to consider and vote upon the merger has been set for [corporator meeting date], 2014;

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• we have received orders to purchase at least the minimum number of shares of common stock offered; and

• we receive all required final approvals of the Federal Reserve Board and the Massachusetts Commissioner of Banks to complete the conversion and the offering and receive the approval of the Federal Reserve Board and the Massachusetts Commissioner of Banks on the holding company application.

Material Income Tax Consequences

The conversion qualifies as a tax-free reorganization. Neither Pilgrim Bancshares, Inc., Conahasset Bancshares, Inc., Pilgrim Bank, Conahasset Bancshares, MHC nor Eligible Account Holders or Supplemental Eligible Account Holders will recognize any gain or loss as a result of the conversion. See “The Conversion and Plan of Distribution—Material Income Tax Consequences” for a complete discussion of the income tax consequences of the transaction.

Emerging Growth Company Status

The Jumpstart Our Business Startups Act (the “JOBS Act”), which was signed into law on April 5, 2012, has made numerous changes to the federal securities laws to facilitate access to capital markets. Under the JOBS Act, a company with total annual gross revenues of less than $1.0 billion during its most recently completed fiscal year qualifies as an “emerging growth company.” We qualify as an “emerging growth company” and believe that we will continue to qualify as an “emerging growth company” for five years from the completion of the offering.

As an “emerging growth company” we have elected to use the extended transition period to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. Accordingly, our financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards.

Additionally, we are in the process of evaluating the benefits of relying on the reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an “emerging growth company,” we choose to rely on such exemptions we may not be required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Act, (iii) hold non-binding stockholder votes regarding annual executive compensation or executive compensation payable in connection with a merger or similar corporate transaction, (iv) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis), and (v) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the chief executive officer’s compensation to median employee compensation.

We could remain an “emerging growth company” for up to five years, or until the earliest of (a) the last day of the first fiscal year in which our annual gross revenues exceed $1.0 billion, (b) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (c) the date on which we have issued more than $1.0 billion in non-convertible debt during the preceding three-year period.

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How You Can Obtain Additional Information

Our branch office personnel may not, by law, assist with investment-related questions about the offering. If you have any questions regarding the conversion or offering, please call our information hotline at [—] to speak to a representative of Keefe, Bruyette & Woods. Representatives are available by telephone Monday through Friday from 9:00 a.m. to 5:00 p.m., Eastern Time. You may also meet in person with a representative by visiting our stock information center located at our main office at 40 South Main Street, Cohasset, Massachusetts. The stock information center is open weekdays during the offering, except for bank holidays, on Mondays from 12:00 noon to 5:00 p.m., on Tuesdays through Thursdays from 9:00 a.m. to 5:00 p.m., and on Fridays from 9:00 a.m. to 12:00 noon, Eastern time.

TO ENSURE THAT EACH PERSON RECEIVES A PROSPECTUS AT LEAST 48 HOURS PRIOR TO THE EXPIRATION DATE OF [EXPIRATION DATE], 2014 IN ACCORDANCE WITH FEDERAL LAW, NO PROSPECTUS WILL BE MAILED OR HAND-DELIVERED ANY LATER THAN FIVE DAYS OR TWO DAYS, RESPECTIVELY, PRIOR TO [EXPIRATION DATE], 2014.

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RISK FACTORS

You should consider carefully the following risk factors in evaluating an investment in our shares of common stock.

Risks Related to Our Business

A significant portion of our loans are commercial real estate, multi-family, non-owner occupied residential, and construction loans, which carry greater credit risk than loans secured by owner occupied one- to four-family real estate, and we intend to increase our focus on these types of loans.

At December 31, 2013, $50.3 million, or 37.7% of our loan portfolio, consisted of commercial real estate, multi-family, non-owner occupied residential and construction loans. Given their larger balances, the complexity of the underlying collateral, the reliance of the borrower on continued payment by tenants and risks that a completed property will not be occupied or sold, commercial real estate, multi-family, non-owner occupied residential and construction loans generally expose a lender to greater credit risk than loans secured by owner occupied one- to four-family real estate. These loans also have greater credit risk than residential real estate for the following reasons:

• commercial real estate loans – repayment is dependent on income being generated in amounts sufficient to cover operating expenses and debt service.

• multi-family – repayment is dependent on income being generated in amounts sufficient to cover property maintenance and debt service.

• non-owner occupied residential loans – repayment is generally dependent upon the continuing ability of the tenants to pay rent.

• construction loans – repayment is dependent upon completion, the ability of the owner to make payments during the construction process, and the subsequent ability of the owner to either sell the completed project or obtain permanent financing on the completed project.

If loans that are collateralized by real estate or other business assets become troubled and the value of the collateral has been significantly impaired, then we may not be able to recover the full contractual amount of principal and interest that we anticipated at the time we originated the loan, which could cause us to increase our provision for loan losses and adversely affect our operating results and financial condition. In particular, the physical condition of property securing multi-family and non-owner occupied residential loans is often below that of commercial and owner-occupied real estate due to lax property maintenance standards and lower demands of tenants, which has an adverse effect on the value of the properties, and the value of a partially completed construction project is frequently lower than the balance of the credit on the property.

The majority of our commercial real estate and multi-family loans and all of our non-owner occupied residential loans are secured by non-owner-occupied properties. These loans expose us to greater risk of non-payment and loss than loans secured by owner-occupied properties because repayment of such loans depend primarily on the tenant’s continuing ability to pay rent to the property owner, who is our borrower, or, if the property owner is unable to find a tenant, the property owner’s ability to repay the loan without the benefit of a rental income stream. Furthermore, some of our non-owner-occupied borrowers have more than one loan outstanding with us, which may expose us to a greater risk of loss

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compared to residential and commercial borrowers with only one loan. Construction lending exposes us to additional risks related to cost overruns, general contractor credit risk and environmental and other hazard risks, as well as risks related to the affordability of completed projects, availability of permanent financing to purchasers or owners, and supply of similar projects in the market.

Furthermore, a key component of our strategy is to continue to increase our origination of commercial real estate, multi-family, non-owner occupied residential and construction loans to diversify our loan portfolio and increase our yields. The proposed increase in these types of loans significantly increases our exposure to the risks inherent in these types of loans. Finally, we may purchase additional indirect automobile loans, which have a greater risk of loss or default than one- to four-family residential mortgage loans, are secured by collateral that may not provide an adequate source of repayment due to the rapid depreciation of automobiles and which may be subject to various federal and state laws, including bankruptcy and insolvency laws, that may limit our ability to recover on such loans.

We may not be able to increase our profitability by implementing our business strategies.

Our growth is essential to our future profitability, and we expect to incur expenses related to the implementation of our growth plan, including hiring initiatives and the development and marketing of new products and services. In recent years we have begun to focus, and plan to increase our focus on, certain types of lending that may expose us to additional risks, including the risk that we may experience increases in write downs, provisions for loan losses, expenses related to the management and sale of other real estate owned. See “—A significant portion of our loans are commercial real estate, multi-family, non-owner occupied residential, and construction loans, which carry greater credit risk than loans secured by owner occupied one- to four-family real estate, and we intend to increase our focus on these types of loans.” In addition, the conversion will have a short-term adverse impact on our operating results, due to additional costs related to becoming a public company, increased compensation expenses associated with our employee stock ownership plan and the possible implementation of one or more stock-based benefit plans after the completion of the conversion. We may not be able to successfully implement our strategic plan, and therefore may not continue to operate at a profit or increase profitability in the timeframe that we expect or at all.

Our ability to operate profitability depends upon a number of factors, including our ability to manage expenses related to non-performing and classified assets, general economic conditions, competition with other financial institutions, changes to the interest rate environment that may reduce our profit margins or impair our business strategy, adverse changes in the securities markets, changes in laws or government regulations, changes in consumer spending, borrowing, or saving, and changes in accounting policies, as well as other risks and uncertainties described in this “Risk Factors” section. Continued decline in net income, or periods in which we experience net losses, after the completion of our mutual-to-stock conversion could adversely affect our capital levels. If we fail to maintain capital levels in compliance with applicable regulatory requirements, our regulators could subject us to a formal written agreement or cease and desist order, restrict Pilgrim Bank’s or Pilgrim Bancshares, Inc.’s ability to pay dividends, restrict Pilgrim Bank’s or Pilgrim Bancshares, Inc.’s growth or ability to engage in certain types of lending, require Pilgrim Bank or Pilgrim Bancshares, Inc. to take remedial actions with respect to any capital deficiency, require Pilgrim Bank or Pilgrim Bancshares, Inc. to submit a capital plan for approval, or take other adverse regulatory actions, any one of which would negatively impact our stock price.

The successful implementation of our strategic plan will require, among other things, that we increase our market share by attracting new customers that currently bank at other financial institutions in our market area. In addition, our ability to successfully grow will depend on several factors, including continued favorable market conditions, the competitive responses from other financial institutions in our

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market area, and our ability to maintain high asset quality as we increase our commercial real estate, multi-family, non-owner occupied residential and construction loans. While we believe we have the management resources and internal systems in place to successfully manage our future growth, growth opportunities may not be available and we may not be successful in implementing our business strategy. Further, it will take time to implement our business strategy, especially for our lenders to originate enough loans and for our branches to attract enough favorably priced deposits to generate the revenue needed to offset the associated expenses. Our strategic plan, even if successfully implemented, may not ultimately produce positive results.

Our business may be adversely affected by credit risk associated with residential property.

At December 31, 2013, $92.4 million, or 69.2% of our total loan portfolio, was secured by one-to-four family real estate, including $17.6 million, or 13.2% of our total loan portfolio, in non-owner occupied residential real estate loans. One- to four-family residential mortgage lending, whether owner occupied or non-owner occupied, is generally sensitive to regional and local economic conditions that significantly impact the ability of borrowers to meet their loan payment obligations, making loss levels difficult to predict. The decline in residential real estate values as a result of the downturn in the Massachusetts housing market has reduced the value of the real estate collateral securing these types of loans and increased the risk that we would incur losses if borrowers default on their loans reflected in our recent charge-off experience on these loans. Fluctuations in value and levels of bank-owned sales may have a greater effect on our earnings and capital than on the earnings and capital of financial institutions whose loan portfolios are more diversified.

Residential loans with combined higher loan-to-value ratios will be more sensitive to declining property values than those with lower combined loan-to-value ratios and therefore may experience a higher incidence of default and severity of losses. In addition, if the borrowers sell their homes, they may be unable to repay their loans in full from the sale proceeds. Further, a significant amount of our home equity loans and lines of credit consist of second mortgage loans. For those home equity loans and lines of credit secured by a second mortgage, it is unlikely that we will be successful in recovering all or a portion of our loan proceeds in the event of default unless we are prepared to repay the first mortgage loan and such repayment and the costs associated with a foreclosure are justified by the value of the property. For these reasons, we may experience higher rates of delinquencies, default and losses on our residential loans. In addition, because we focus on “jumbo” loans and frequently extend credit in situations where certain characteristics of non-conforming loans, such as high loan-to-value or debt-to-income ratios, are present, we may be exposed to additional credit risks. Because such loans are generally not readily saleable in the secondary market, we are likely to maintain such loans in our portfolio, and, accordingly, expect to be exposed to the credit risk for longer periods of time, including in some cases for the entire term of the loan.

If our allowance for loan losses is not sufficient to cover actual loan losses, we may be required to make additional provisions for loan losses, which would cause our earnings to decrease.

We recorded provisions for loan losses of $0, $156,000, and $200,000, respectively, for the years ended December 31, 2013, 2012 and 2011 that were charged against income for those periods, and incurred net charge-offs of $46,000, $230,000 and $408,000, respectively, during the same periods. As a result, our allowance for loan losses has decreased to $742,000 at December 31, 2013 from $788,000 at December 31, 2012 and $869,000 at December 31, 2011. While our allowance for loan losses was 31.55% of non-performing loans and 0.56% of total loans at December 31, 2013, we may be required to make additional material additions to our allowance for loan losses that would materially decrease our net income. See “—A significant portion of our loans are commercial real estate, multi-family, non-owner occupied residential, and construction loans, which carry greater credit risk than loans secured by owner occupied one- to four-family real estate, and we intend to increase our focus on these types of loans.”

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We make various assumptions and judgments about the collectability of our loan portfolio, including the creditworthiness of our borrowers, our borrowers’ cash flow and the value of the real estate and other assets serving as collateral for the repayment of many of our loans. In determining the amount of the allowance for loan losses, we review our loans and our loss and delinquency experience, and we evaluate economic conditions. If our assumptions are incorrect, our allowance for loan losses may not be sufficient to cover probable incurred losses in our loan portfolio, resulting in additional provisions charged against income to increase our allowance. In addition, bank regulatory agencies periodically review our allowance for loan losses and may require an increase in the provision for possible loan losses or the recognition of further loan charge-offs, based on judgments different than those of management.

Lending money is a substantial part of our business and each loan carries a certain risk that it may not be repaid in accordance with its terms, or that any underlying collateral will not be sufficient to assure repayment. This risk is affected by, among other things, cash flow of the borrower and/or the project being financed, the changes and uncertainties as to the future value of the collateral, in the case of a collateralized loan, the duration of the loan, the character and creditworthiness of a particular borrower, and changes in economic and industry conditions.

The determination of the appropriate level of the allowance for loan losses inherently involves a high degree of subjectivity and requires us to make significant estimates of current credit risks and future trends, all of which may undergo material changes. Continuing deterioration in economic conditions affecting borrowers, new information regarding existing loans, identification of additional problem loans and other factors, both within and outside of our control, may require an increase in the allowance for loan losses. Our strategy to increase loan originations generally, and to focus on higher-risk commercial real estate, multi-family, non-owner occupied residential and construction lending will increase our credit risk, and will likely require us to increase our provisions in future periods. In addition, if charge-offs in future periods exceed the allowance for loan losses we will need additional provisions to replenish the allowance for loan losses. Any additional provisions will result in a decrease in net income and possibly capital, and may have a material adverse effect on our financial condition and results of operations.

If our foreclosed real estate is not properly valued or if our reserves are insufficient, our earnings could be reduced.

We obtain appraisals when a loan has been foreclosed and the property taken in as foreclosed real estate, and write down the foreclosed real estate to the amount of the appraisal. We also obtain appraisals at certain other times during the holding period of the asset. Our net book value (“NBV”) in the loan at the time of foreclosure and thereafter is compared to the updated fair value of the foreclosed property less estimated selling costs (fair value). A charge-off is recorded for any excess in the asset’s NBV over its fair value less estimated selling costs. If our valuation process is incorrect, or if property values decline, the fair value of our foreclosed real estate may not be sufficient to recover our carrying value in such assets, resulting in the need for additional charge-offs. Significant charge-offs to our foreclosed real estate could have a material adverse effect on our financial condition and results of operations. In addition, bank regulators periodically review our foreclosed real estate and may require us to recognize further charge-offs. Any increase in our charge-offs may have a material adverse effect on our financial condition and results of operations.

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If our non-performing assets increase, our earnings will be adversely affected.

At December 31, 2013, our non-performing assets, which consist of non-accruing loans and other real estate owned, were $2.4 million, or 1.4% of total assets. Our non-performing assets adversely affect our net income in various ways:

• we record interest income only on a cash basis for non-accrual loans and any non-performing securities and we do not record interest income for real estate owned;

• we must provide for probable loan losses through a current period provision for loan losses which is a charge to income;

• noninterest expense increases when we write down the value of properties in our real estate owned portfolio to reflect changing market values or recognize other-than-temporary impairment on non-performing securities;

• there are legal fees associated with the resolution of problem assets, as well as carrying costs, such as taxes, insurance, and maintenance fees related to our real estate owned; and

• the resolution of non-performing assets requires the active involvement of management, which can distract them from more profitable activity.

If additional borrowers become delinquent and do not pay their loans and we are unable to successfully manage our non-performing assets, our net income could decrease or we could experience losses and troubled assets could increase significantly, which could have a material adverse effect on our financial condition and results of operations.

Our growth or future losses may require us to raise additional capital in the future, but that capital may not be available when it is needed or the cost of that capital may be very high.

We are required by our regulators to maintain adequate levels of capital to support our operations. We believe the net proceeds of the offering will be sufficient to permit Pilgrim Bank to maintain regulatory capital compliance for the foreseeable future. Nonetheless, we may at some point need to raise additional capital to support continued growth.

Our ability to raise additional capital, if needed, will depend on conditions in the capital markets at that time, which are outside our control, and on our financial condition and performance. Accordingly, we may not be able to raise additional capital if needed on terms that are acceptable to us, or at all. If we cannot raise additional capital when needed, our operations could be materially impaired and our financial condition and liquidity could be materially and adversely affected. In addition, if we are unable to raise additional capital when required by the Massachusetts Commissioner of Banks or the Federal Reserve Board, we may be subject to adverse regulatory action. See “Supervision and Regulation.”

Future changes in interest rates could reduce our profits and asset values.

Future changes in interest rates could impact our financial condition and results of operations.

Net income is the amount by which net interest income and noninterest income exceeds noninterest expense and the provision for loan losses. Net interest income makes up a majority of our income and is based on the difference between:

• interest income earned on interest-earning assets, such as loans and securities; and

• interest expense paid on interest-bearing liabilities, such as deposits and borrowings.

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We are vulnerable to changes in interest rates including the shape of the yield curve because of a mismatch between the terms to repricing of our assets and liabilities. Historically, our assets repriced more quickly than our liabilities, which made us vulnerable to decreases in interest rates. However, on a 12 month horizon, we are currently more vulnerable to increases in interest rates. For the years ended December 31, 2013 and 2012, our net interest margin was 3.05% and 3.07%, respectively. Our asset/liability management committee utilizes a computer simulation model to provide an analysis of estimated changes in net interest income in various interest rate scenarios. At September 30, 2013, in the event of an immediate 100 basis point decrease in interest rates, our model projects a decrease in our net interest income of 1.91%, and in the event of an immediate 100 basis point increase in interest rates, our model projects a decrease in our net interest income of 3.11%.

Changes in interest rates also affect the current market value of our interest-earning securities portfolio. Generally, the value of securities moves inversely with changes in interest rates. At December 31, 2013, the fair value of our securities classified as available-for-sale totaled $13.5 million. Unrealized net losses on available-for-sale securities totaled $341,000 at December 31, 2013, and are reported, net of tax, as a separate component of equity. A rise in interest rates could cause a decrease in the fair value of securities available for sale in future periods which would have an adverse effect on shareholders’ equity. Additionally, increases in interest rates may decrease loan demand and/or make it more difficult for borrowers to repay adjustable-rate loans. Conversely, a reduction in interest rates can result in increased prepayments of loans and mortgage-backed and related securities, as borrowers refinance their debt in order to reduce their borrowing costs. This creates reinvestment risk, which is the risk that we may not be able to reinvest prepayments at rates that are comparable to the rates we earned on the prepaid loans or securities.

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

In recent years it has been the policy of the Federal Reserve Board to maintain interest rates at historically low levels through its targeted federal funds rate and the purchase of mortgage-backed securities. As a result, market rates on the loans we have originated and the yields on securities we have purchased have been at lower levels than available prior to 2008. As a general matter, our interest-bearing assets reprice or mature slightly more quickly than our interest-earning liabilities, which has resulted in decreases in net interest income as interest rates decreased. However, our ability to lower our interest expense is limited at these interest rate levels while the average yield on our interest-earning assets may continue to decrease. The Federal Reserve Board has indicated its intention to maintain low interest rates for the next several years. Accordingly, our net interest income (the difference between interest income earned on assets and interest expense paid on liabilities) may continue to decrease, which will have an adverse effect on our profitability.

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

Deferred tax assets are only recognized to the extent it is more likely than not they will be realized. Should our management determine it is not more likely than not that the deferred tax assets will be realized, a valuation allowance with a charge to earnings would be reflected in the period. At December 31, 2013 and December 31, 2012, our net deferred tax asset was $365,000 and $156,000, respectively, which included a valuation allowance of $1,000 and $381,000, respectively, and all of which was disallowed for regulatory capital purposes. Based on the levels of taxable income in prior years and

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management’s expectation of profitability in the current year and future years, management has determined that no additional valuation allowance was required at December 31, 2013 or December 31, 2012. If we are required in the future to take an additional valuation allowance with respect to our deferred tax asset, our financial condition and results of operations would be negatively affected.

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

The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) has changed the bank regulatory framework. For example, it has created an independent Consumer Financial Protection Bureau that has assumed the consumer protection responsibilities of the various federal banking agencies, established more stringent capital standards for banks and bank holding companies and gives the Federal Reserve Board exclusive authority to regulate bank holding companies. The legislation has also resulted in new regulations affecting the lending, funding, trading and investment activities of banks and bank holding companies. The Consumer Financial Protection Bureau has broad rule-making authority for a wide range of consumer protection laws that apply to all banks and savings institutions such as Pilgrim Bank, including the authority to prohibit “unfair, deceptive or abusive” acts and practices. Banks and savings institutions with $10.0 billion or less in assets will continue to be examined by their applicable bank regulators. The new legislation also weakens the federal preemption available for national banks and federal savings associations, and gives state attorneys general the ability to enforce applicable federal consumer protection laws. The Dodd-Frank Act also requires the federal banking agencies to promulgate rules requiring mortgage lenders to retain a portion of the credit risk related to loans that are securitized and sold to investors. We expect that such rules would make it more difficult for us to sell loans into the secondary market. Bank regulatory agencies also have been responding aggressively to concerns and adverse trends identified in examinations. Ongoing uncertainty and adverse developments in the financial services industry and in the domestic and international credit markets, and the effect of new legislation and regulatory actions in response to these conditions, may adversely affect our operations by restricting our business activities, including our ability to originate or sell loans, modify loan terms, or foreclose on property securing loans.

The full impact of the Dodd-Frank Act on our business will not be known until all of the regulations implementing the statute are adopted and implemented. As a result, we cannot at this time predict the extent to which the Dodd-Frank Act will impact our business, operations or financial condition. However, compliance with these new laws and regulations may require us to make changes to our business and operations and will likely result in additional costs and divert management’s time from other business activities, any of which may adversely impact our results of operations, liquidity or financial condition.

Furthermore, the Federal Reserve Board, in an attempt to help the overall economy, has, among other things, adopted a low interest rate policy through its targeted federal funds rate and the purchase of mortgage-backed securities. If the Federal Reserve Board increases the federal funds rate, market interest rates would likely rise, which may negatively affect the housing markets and the U.S. economic recovery.

Proposed and final regulations could restrict our ability to originate and sell loans.

The Consumer Financial Protection Bureau has issued a rule designed to clarify for lenders how they can avoid legal liability under the Dodd-Frank Act, which would hold lenders accountable for ensuring a borrower’s ability to repay a mortgage. Loans that meet this “qualified mortgage” definition will be presumed to have complied with the new ability-to-repay standard. Under the Consumer Financial Protection Bureau’s rule, a “qualified mortgage” loan must not contain certain specified features, including:

• excessive upfront points and fees (those exceeding 3% of the total loan amount, less “bona fide discount points” for prime loans);

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• interest-only payments;

• negative-amortization; and

• terms longer than 30 years.

Also, to qualify as a “qualified mortgage,” a borrower’s total monthly debt-to-income ratio may not exceed 43%. Lenders must also verify and document the income and financial resources relied upon to qualify the borrower for the loan and underwrite the loan based on a fully amortizing payment schedule and maximum interest rate during the first five years, taking into account all applicable taxes, insurance and assessments. The Consumer Financial Protection Bureau’s rule on qualified mortgages could limit our ability or desire to make certain types of loans or loans to certain borrowers, or could make it more expensive/and or time consuming to make these loans, which could limit our growth or profitability.

In addition, the Dodd-Frank Act requires the regulatory agencies to issue regulations that require securitizers of loans to retain not less than 5% of the credit risk for any asset that is not a “qualified residential mortgage.” The regulatory agencies have issued a proposed rule to implement this requirement. The Dodd-Frank Act provides that the definition of “qualified residential mortgage” can be no broader than the definition of “qualified mortgage” issued by the Consumer Financial Protection Bureau for purposes of its regulations (as described above). Although the final rule with respect to the retention of credit risk has not yet been issued, the final rule could have a significant effect on the secondary market for loans and the types of loans we originate, and restrict our ability to make loans.

The short-term and long-term impact of the changing regulatory capital requirements and new capital rules is uncertain.

On July 9, 2013, the federal bank regulatory agencies issued a final rule that will revise their risk-based capital requirements and the method for calculating risk-weighted assets to make them consistent with agreements that were reached by the Basel Committee on Banking Supervision and certain provisions of the Dodd-Frank Act. The final rule applies to all depository institutions, top-tier bank holding companies with total consolidated assets of $500 million or more and top-tier savings and loan holding companies. Among other things, the rule establishes a new common equity Tier 1 minimum capital requirement (4.5% of risk-weighted assets), increases the minimum Tier 1 capital to risk-based assets requirement (from 4.0% to 6.0% of risk-weighted assets) and assigns a higher risk weight (150%) to exposures that are more than 90 days past due or are on nonaccrual status and to certain commercial real estate facilities that finance the acquisition, development or construction of real property. The final rule also requires unrealized gains and losses on certain “available-for-sale” securities holdings to be included for purposes of calculating regulatory capital requirements unless a one-time opt-in or opt-out is exercised. The rule limits a banking organization’s capital distributions and certain discretionary bonus payments if the banking organization does not hold a “capital conservation buffer” consisting of 2.5% of common equity Tier 1 capital to risk-weighted assets in addition to the amount necessary to meet its minimum risk-based capital requirements. The final rule becomes effective for Pilgrim Bank on January 1, 2015. The capital conservation buffer requirement will be phased in beginning January 1, 2016 and ending January 1, 2019, when the full capital conservation buffer requirement will be effective.

Under the new capital standards, in order to be well-capitalized, Pilgrim Bank would be required to have a common equity to tier 1 capital ratio of 6.5% and a tier 1 risk-based capital ratio of 8.0%. We have conducted a pro forma analysis of the application of these new capital requirements as of December 31, 2013 and have determined that Pilgrim Bank meets all of these new requirements, except for the full 2.5% capital conservation buffer, as if these new requirements had been in effect on that date.

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The application of more stringent capital requirements for Pilgrim Bank could, among other things, result in lower returns on invested capital, require the raising of additional capital, and result in regulatory actions if we were to be unable to comply with such requirements. Furthermore, the imposition of liquidity requirements in connection with the implementation of Basel III could result in our having to lengthen the term of our funding, restructure our business models, and/or increase our holdings of liquid assets. Implementation of changes to asset risk weightings for risk based capital calculations, items included or deducted in calculating regulatory capital and/or additional capital conservation buffers could result in management modifying its business strategy, and could limit our ability to make distributions, including paying out dividends or buying back shares. Specifically, beginning in 2016, Pilgrim Bank’s ability to pay dividends will be limited if Pilgrim Bank does not have the capital conservation buffer required by the new capital rules, which may limit our ability to pay dividends to stockholders. See “Supervision and Regulation—Federal Banking Regulation—New Capital Rule.”

Strong competition within our market areas may limit our growth and profitability, and our small size makes it difficult to compete.

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

Our small asset size makes it more difficult to compete with other financial institutions which are generally larger and can more easily afford to invest in the marketing and technologies needed to attract and retain customers. Because our principal source of income is the net interest income we earn on our loans and investments after deducting interest paid on deposits and other sources of funds, our ability to generate the revenues needed to cover our expenses and finance such investments is limited by the size of our loan and investment portfolios. Accordingly, we are not always able to offer new products and services as quickly as our competitors. Our lower earnings also make it more difficult to offer competitive salaries and benefits. In addition, our smaller customer base makes it difficult to generate meaningful noninterest income from such activities as securities and insurance brokerage or to charge deposit fees. Finally, as a smaller institution, we are disproportionately affected by the continually increasing costs of compliance with new banking and other regulations.

The financial services industry could become even more competitive as a result of new legislative, regulatory and technological changes and continued consolidation. Banks, securities firms and insurance companies can merge under the umbrella of a financial holding company, which can offer virtually any type of financial service, including banking, securities underwriting, insurance (both agency and underwriting) and merchant banking. Also, technology has lowered barriers to entry and made it possible for non-banks to offer products and services traditionally provided by banks, such as automatic transfer and automatic payment systems. Many of our competitors have fewer regulatory constraints and may have lower cost structures. Additionally, due to their size, many competitors may be able to achieve economies of scale and, as a result, may offer a broader range of products and services as well as better pricing for those products and services than we can.

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We are a community bank and our ability to maintain our reputation is critical to the success of our business and the failure to do so may materially adversely affect our performance.

We are a community bank and our reputation is one of the most valuable components of our business. A key component of our business strategy is to rely on our reputation for customer service and knowledge of local markets to expand our presence by capturing new business opportunities from existing and prospective customers in our market area and nearby Boston. As a community bank, we strive to conduct our business in a manner that enhances our reputation. This is done, in part, by recruiting, hiring and retaining employees who share our core values of being an integral part of the communities we serve, delivering superior service to our customers and caring about our customers and associates. If our reputation is negatively affected, by the actions of our employees, by our inability to conduct our operations in a manner that is appealing to current or prospective customers, or by events beyond our control, our business and operating results may be adversely affected.

Liquidity risk could impair our ability to fund operations and jeopardize our financial condition, growth and prospects.

Liquidity is essential to our business. An inability to raise funds through deposits, borrowings, the sale of loans and other sources could have a substantial negative effect on our liquidity. We rely on customer deposits and advances from the FHLB-Boston to fund our operations. At December 31, 2013, we had $5.0 million of FHLB advances outstanding with an additional $35.2 million of available borrowing capacity. In addition, at December 31, 2013, we had $35.8 million in certificates of deposit that are scheduled to mature during the year ending December 31, 2014. We may not be able to retain these funds as core deposits or permanent customer relationships when the certificates of deposit mature. Although we have historically been able to replace maturing deposits and advances if desired, we may not be able to replace such funds in the future if, among other things, our financial condition, the financial condition of the FHLB, or market conditions change. Our access to funding sources in amounts adequate to finance our activities or the terms of which are acceptable could be impaired by factors that affect us specifically or the financial services industry or economy in general. Factors that could detrimentally impact our access to liquidity sources include a decrease in the level of our business activity as a result of a downturn in the markets where our loans are concentrated, or adverse regulatory action against us. Our ability to borrow could also be impaired by factors that are not specific to us, such as a disruption in the financial markets or negative views and expectations about the prospects for the financial services industry in light of the recent turmoil faced by banking organizations and the continued deterioration in credit markets.

Our financial flexibility will be severely constrained if we are unable to maintain our access to funding or if adequate financing is not available to accommodate future growth at acceptable interest rates. Although we consider our sources of funds adequate for our liquidity needs, we may seek additional debt in the future to achieve our long-term business objectives. Additional borrowings, if sought, may not be available to us or, if available, may not be available on reasonable terms. If additional financing sources are unavailable, or are not available on reasonable terms, our financial condition, results of operations, growth and future prospects could be materially adversely affected. Finally, if we are required to rely more heavily on more expensive funding sources to support future growth, our revenues may not increase proportionately to cover our costs. In this case, our operating margins and profitability would be adversely affected.

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Risks associated with system failures, interruptions, or breaches of security could negatively affect our earnings.

Information technology systems are critical to our business. We use various technology systems to manage our customer relationships, general ledger, securities, deposits, and loans. We have established policies and procedures to prevent or limit the impact of system failures, interruptions, and security breaches, but such events may still occur and may not be adequately addressed if they do occur. In addition any compromise of our systems could deter customers from using our products and services. Although we rely on security systems to provide security and authentication necessary to effect the secure transmission of data, these precautions may not protect our systems from compromises or breaches of security. In addition, we outsource a majority of our data processing to certain third-party providers. If these third-party providers encounter difficulties, or if we have difficulty communicating with them, our ability to adequately process and account for transactions could be affected, and our business operations could be adversely affected. Threats to information security also exist in the processing of customer information through various other vendors and their personnel. The occurrence of any system failures, interruption, or breach of security could damage our reputation and result in a loss of customers and business, subject us to additional regulatory scrutiny or expose us to litigation and possible financial liability. Any of these events could have a material adverse effect on our financial condition and results of operations.

We depend on our management team to implement our business strategy and execute successful operations and we could be harmed by the loss of their services.

We are dependent upon the services of the members of our senior management team who direct our strategy and operations. We have benefited from consistency within our senior management team, with our top five executives averaging over seven years of service with Pilgrim Bank and over a combined 150 years of financial institution experience. Members of our senior management team, or commercial lending specialists who possess expertise in our markets and key business relationships, could be difficult to replace. Our loss of these persons, or our inability to hire additional qualified personnel, could impact our ability to implement our business strategy and could have a material adverse effect on our results of operations and our ability to compete in our markets. See “Management of Pilgrim Bancshares, Inc.”

The cost of additional finance and accounting systems, procedures and controls in order to satisfy our new public company reporting requirements will increase our expenses.

As a result of the completion of the offering, we will become a public reporting company. We expect that the obligations of being a public company, including the substantial public reporting obligations, will require significant expenditures and place additional demands on our management team. We have made, and will continue to make, changes to our internal controls and procedures for financial reporting and accounting systems to meet our reporting obligations as a stand-alone public company. However, the measures we take may not be sufficient to satisfy our obligations as a public company. Section 404 of the Sarbanes-Oxley Act requires annual management assessments of the effectiveness of our internal control over financial reporting, starting with the second annual report that we would expect to file with the Securities and Exchange Commission (“SEC”). Any failure to achieve and maintain an effective internal control environment could have a material adverse effect on our business and stock price. In addition, we may need to hire additional compliance, accounting and financial staff with appropriate public company experience and technical knowledge, and we may not be able to do so in a timely fashion. As a result, we may need to rely on outside consultants to provide these services for us until qualified personnel are hired. These obligations will increase our operating expenses and could divert our management’s attention from our core operations.

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We operate in a highly regulated environment and may be adversely affected by changes in laws and regulations.

We are subject to extensive regulation, supervision, and examination by the Massachusetts Commissioner of Banks, the Federal Reserve Board, and the FDIC. Such regulators govern the activities in which we may engage, primarily for the protection of depositors. These regulatory authorities have extensive discretion in connection with their supervisory and enforcement activities, including the imposition of restrictions on the operation of a financial institution, the classification of assets by a financial institution, and the adequacy of a financial institution’s allowance for loan losses. Any change in such regulation and oversight, whether in the form of regulatory policy, regulations, or legislation, could have a material impact on us and our operations. Because our business is highly regulated, the laws, rules and applicable regulations are subject to regular modification and change. Laws, rules and regulations may be adopted in the future that could make compliance more difficult or expensive or otherwise adversely affect our business, financial condition or prospects. See “Supervision and Regulation” for a discussion of the regulations to which we are subject.

Increased FDIC or Central Co-Operative Bank insurance assessments could significantly increase our expenses.

The Dodd-Frank Act eliminated the maximum Deposit Insurance Fund ratio of 1.5% of estimated deposits, and the FDIC has established a long-term ratio of 2.0%. The FDIC has the authority to increase assessments in order to maintain the Deposit Insurance Fund ratio at particular levels. In addition, if our regulators issue downgraded ratings of Pilgrim Bank in connection with their examinations, the FDIC could impose significant additional fees and assessments on us. All Massachusetts-chartered co-operative banks are required to be members of the Co-Operative Central Bank, which maintains the Share Insurance Fund that insures co-operative bank deposits in excess of federal deposit insurance coverage. The Co-Operative Central Bank is authorized to charge co-operative banks an annual assessment fee on deposit balances in excess of amounts insured by the FDIC. Increases in assessments by either the FDIC or the Co-Operative Central Bank could significantly increase our expenses.

Changes in accounting standards could affect reported earnings.

The various bodies responsible for establishing accounting standard, including the Financial Accounting Standards Board, the Securities and Exchange Commission and other regulatory bodies, periodically change the financial accounting and reporting guidance that governs the preparation of our consolidated financial statements. These changes can be hard to predict and can materially impact how we record and report our financial condition and results of operations. In some cases, we could be required to apply new or revised guidance retroactively.

Future legislative or regulatory actions responding to perceived financial and market problems could impair our rights against borrowers.

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

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Risks Related to the offering

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

If you purchase shares of common stock in the offering, you may not be able to sell them at or above the purchase price in the offering. The purchase price in the offering is based upon an independent third-party appraisal of the pro forma market value of Pilgrim Bank, pursuant to banking regulations and subject to review and approval by the Federal Reserve Board and the Massachusetts Commissioner of Banks. The appraisal is not intended, and should not be construed, as a recommendation of any kind as to the advisability of purchasing shares of our common stock. Our aggregate pro forma market value as reflected in the final independent appraisal may exceed the market price of our shares of common stock after the completion of the offering, which may result in our stock trading below the initial offering price of $10.00 per share.

After the shares of our common stock begin trading, the trading price of the common stock will be determined by the marketplace, and will be influenced by many factors outside of our control, including prevailing interest rates, investor perceptions, securities analyst research reports and general industry, geopolitical and economic conditions. Publicly traded stocks, including stocks of financial institutions, often experience substantial market price volatility. These market fluctuations might not be related to the operating performance of particular companies whose shares are traded.

The capital we raise in the offering will reduce our return on equity. This could negatively affect the trading price of our shares of common stock.

Net income divided by average equity, known as “return on equity,” is a ratio many investors use to compare the performance of a financial institution to its peers. For the year ended December 31, 2013, we had a return on average equity of 2.98%, compared to an average return on equity of 4.13% based on trailing 12-month earnings for all publicly traded, full converted savings institutions as of December 31, 2013 or the most recent date for which information is available. Following the offering, we expect our consolidated equity to increase from $12.5 million at December 31, 2013 to between $23.5 million at the minimum of the offering range and $30.5 million at the adjusted maximum of the offering range. Based upon our earnings for the year ended December 31, 2013, and these pro forma equity levels, our projected annualized return on equity will be 1.57% and 1.20% at the minimum and adjusted maximum of the offering range, respectively. We expect our return on equity to remain relatively low until we are able to leverage the additional capital we receive from the offering. Although we anticipate increasing net interest income using proceeds of the offering, our return on equity will be reduced by the capital raised in the offering, higher expenses from the costs of being a public company, and added expenses associated with our employee stock ownership plan and the stock-based benefit plans we intend to adopt. Until we can increase our net interest income and noninterest income, our return on equity may reduce the value of our shares of common stock. See “Pro Forma Data” for an illustration of the financial impact of the offering.

You may not receive dividends on our common stock.

Holders of our common stock are only entitled to receive such dividends as our Board of Directors may declare out of funds legally available for such payments, and we do not expect to pay dividends until our operations are sufficiently profitable to support the payment of dividends. See “—Risks Related to Our Business—We may not be able to increase our profitability by implementing our business strategies.” The declaration and payment of future cash dividends will be subject to, among other things, our then current and projected consolidated operating results, financial condition, tax

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considerations, future growth plans, general economic conditions, and other factors our Board of Directors deems relevant. We may also be limited in the payment of dividends under statutory and regulatory provisions. See “—Risks Related to Our Business—The short-term and long-term impact of the changing regulatory capital requirements and new capital rules is uncertain”; “Supervision and Regulation—Federal Banking Regulation—Capital Requirements”; “—New Capital Rule”; “—Capital Distributions”; “—Massachusetts Banking Laws and Supervision—Dividends”; and “—Holding Company Regulation—Dividends.”

The contribution to the charitable foundation will dilute your ownership interest and adversely affect net income in the year we complete the offering.

We intend to establish and fund a charitable foundation in connection with the conversion and offering. We intend to contribute a total of $725,000 to a charitable foundation that we are establishing, such contribution to consist of a number of shares of our common stock equal to 3.0% of the shares sold in the offering (42,075 shares or $420,750 in stock at the minimum offering and 56,925 shares or $569,250 in stock at the maximum offering, or up to 65,464 shares or $654,640 in stock at the adjusted maximum offering) and the remainder in cash ($304,250 at the minimum offering and $155,750 at the maximum offering, or $70,360 at the adjusted maximum). The amount of our contribution will not be dependent upon the amount of the net proceeds raised in the offering.

The contribution will have an adverse effect on our net income for the quarter and year in which we make the issuance and contribution to the charitable foundation. The after-tax expense of the contribution will reduce net income in the year in which we complete the offering by approximately $435,000. Persons purchasing shares in the offering will have their ownership and voting interests in Pilgrim Bancshares, Inc. diluted by 2.9% due to the issuance of shares of common stock to the charitable foundation.

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

We believe that the contribution to the charitable foundation will be deductible for federal income tax purposes. However, the Internal Revenue Service may disagree with our determination and not grant tax-exempt status to the charitable foundation. If the contribution is not deductible, we would not receive any tax benefit from the contribution. It is expected that the value of the contribution of cash and shares will be $725,000, which would result in after-tax expense of approximately $435,000. In the event that the Internal Revenue Service does not grant tax-exempt status to the charitable foundation or the contribution to the charitable foundation is otherwise not tax deductible, we would recognize as after-tax expense the full value of the entire contribution.

In addition, even if the contribution is tax deductible, we may not have sufficient profits to be able to use the deduction fully. Pursuant to the Internal Revenue Code, an entity is permitted to deduct charitable contributions up to 10% of its taxable income prior to the charitable contribution deduction in any one year. Any contribution in excess of the 10% limit may be deducted for federal and state income tax purposes over each of the five years following the year in which the charitable contribution is made. Accordingly, a charitable contribution could, if necessary, be deducted over a six-year period. Our pre-tax income over this period may not be sufficient to fully use this deduction. With certain exceptions, Massachusetts tax law follows the federal income tax laws and taxable income is recomputed using state taxable income on a combined reporting basis. This would typically result in a lower annual utilization of the charitable contribution for state purposes as income from certain entities (security corporations) would not be included in the combined state return. If Pilgrim Bancshares, Inc. was the deemed contributor to the charitable foundation and elected security corporation status, the charitable contributions would not be available for state tax purposes at all.

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

We anticipate that our employee stock ownership plan will purchase 8% of the total shares of common stock issued in the conversion (including shares contributed to the charitable foundation) with funds borrowed from Pilgrim Bancshares, Inc. We will record annual employee stock ownership plan expense in an amount equal to the fair value of shares of common stock committed to be released to employees. If shares of common stock appreciate in value over time, compensation expense relating to the employee stock ownership plan will increase.

We also intend to adopt a stock-based benefit plan after the offering that would award participants restricted shares of our common stock (at no cost to them) and/or options to purchase shares of our common stock. The number of shares of restricted stock or stock options reserved for issuance under any initial stock-based benefit plan may not exceed 4% and 10% (including shares issued to the charitable foundation), respectively, of our total outstanding shares, if these plans are adopted within 12 months after the completion of the conversion. We may grant shares of common stock and stock options in excess of these amounts provided the stock-based benefit plan is adopted more than one year following the offering. The estimated grant-date fair value of the options utilizing a Black-Scholes option pricing analysis is $3.33 per option granted. Assuming this value is amortized over a five-year vesting period, the corresponding annual pre-tax expense associated with the stock options would be $150,000 at the adjusted maximum. In addition, assuming that all shares of restricted stock are awarded at a price of $10.00 per share, and that the awards vest over a five-year period, the corresponding annual pre-tax expense associated with restricted stock awarded under the stock-based benefit plan would be $180,000 at the adjusted maximum. However, if we grant shares of common stock or options in excess of these amounts, such grants would increase our costs further.

The shares of restricted stock granted under the stock-based benefit plan will be expensed by us over their vesting period at the fair market value of the shares on the date they are awarded. If the shares of restricted stock to be granted under the plan are repurchased in the open market (rather than issued directly from authorized but unissued shares by Pilgrim Bancshares, Inc.) and cost the same as the purchase price in the offering, the reduction to stockholders’ equity due to the plan would be between $578,000 at the minimum of the offering range and $899,000 at the adjusted maximum of the offering range. To the extent we repurchase shares of common stock in the open market to fund the grants of shares under the plan, and the price of such shares exceeds the offering price of $10.00 per share, the reduction to stockholders’ equity would exceed the range described above. Conversely, to the extent the price of such shares is below the offering price of $10.00 per share, the reduction to stockholders’ equity would be less than the range described above.

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

We intend to adopt one or more stock-based benefit plans, which will allow participants to be awarded shares of common stock (at no cost to them) and/or options to purchase shares of our common stock, following the offering. If these stock-based benefit plans are funded from the issuance of authorized but unissued shares of common stock, stockholders would experience a reduction in ownership interest totaling 12.3%. Although the implementation of the stock-based benefit plan will be subject to stockholder approval, historically, the overwhelming majority of stock-based benefit plans adopted by financial institutions and their holding companies following mutual-to-stock conversions have been approved by stockholders.

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

If we adopt stock-based benefit plans within one year following the completion of the offering, then we may grant shares of common stock or stock options under our stock-based benefit plans for up to 4% and 10%, respectively, of our total outstanding shares including shares held by the charitable foundation. The amount of stock awards and stock options available for grant under the stock-based benefit plans may exceed these amounts, provided the stock-based benefit plans are adopted more than one year following the offering. Although the implementation of the stock-based benefit plan will be subject to stockholder approval, the determination as to the timing of the implementation of such a plan will be at the discretion of our Board of Directors. Stock-based benefit plans that provide for awards in excess of these amounts would increase our costs beyond the amounts estimated in “—Our stock-based benefit plans will increase our costs, which will reduce our income.” Stock-based benefit plans that provide for awards in excess of these amounts could also result in dilution to stockholders in excess of that described in “—The implementation of stock-based benefit plans will dilute your ownership interest.”

We intend to enter into an employment agreement and change in control agreements with certain of our officers, which may increase our compensation costs upon the occurrence of certain events or increase the cost of acquiring us.

Following the conversion and subject to the receipt of necessary regulatory approvals, we intend to enter into an employment agreement with our President and Chief Executive Officer and change in control agreements with our Chief Financial Officer and Senior Vice President of Operations. In the event of termination of employment other than for cause, or in the event of certain types of termination following a change in control, as set forth in the employment agreement and change in control agreement, and assuming the agreements were in effect, the agreements will provide for cash severance benefits that would cost us up to $1.2 million in the aggregate based on information as of December 31, 2013. These amounts may be reduced, if necessary, to an amount that would not qualify the payments to be deemed an “excess parachute payment” under Section 280G of the Internal Revenue Code. For additional information see “Management of Pilgrim Bancshares, Inc.—Executive Officer Compensation.”

We have broad discretion in using the proceeds of the offering. Our failure to effectively deploy the net proceeds of the offering may have an adverse effect on our financial performance and the value of our common stock.

We intend to invest between $6.4 million and $8.8 million of the net proceeds of the offering (or $10.3 million at the adjusted maximum of the offering range) in Pilgrim Bank. We may use the remaining net proceeds to invest in short-term investments, repurchase shares of common stock, pay dividends, finance the acquisition of financial institutions, or for other general corporate purposes. We also expect to use a portion of the net proceeds we retain to fund a loan for the purchase of shares of common stock in the offering by the employee stock ownership plan and to repay principal and interest outstanding on two short-term notes. Pilgrim Bank may use the net proceeds it receives to fund new loans, enhance existing products and services, invest in securities, expand its banking franchise by opening de novo branches or loan production offices or acquiring new branches or by acquiring other financial institutions or other financial services companies, or for other general corporate purposes. However, with the exception of the loan to the employee stock ownership plan and contributions to our charitable foundation, we have not allocated specific amounts of the net proceeds for any of these purposes, and we will have significant flexibility in determining the amount of the net proceeds we apply to different uses and the timing of such applications. Also, certain of these uses, such as opening new

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branches or acquiring other financial institutions, paying dividends and repurchasing common stock, may require the approval of the Massachusetts Commissioner of Banks or the Federal Reserve Board. We have not established a timetable for investing the net proceeds, and, accordingly, we may not invest the net proceeds at the time that is most beneficial to Pilgrim Bancshares, Inc., Pilgrim Bank or the shareholders. For additional information see “How We Intend To Use The Proceeds From The Offering.”

Certain provisions of our articles of incorporation and bylaws, and state and federal law could discourage hostile acquisitions of control of Pilgrim Bancshares, Inc., which could negatively affect our stock value.

Certain provisions in our articles of incorporation and bylaws may discourage attempts to acquire Pilgrim Bancshares, Inc., pursue a proxy contest for control of Pilgrim Bancshares, Inc., assume control of Pilgrim Bancshares, Inc. by a holder of a large block of common stock, and remove Pilgrim Bancshares, Inc.’s management, all of which shareholders might think are in their best interests. These provisions include:

• restrictive requirements regarding eligibility for service on the Board of Directors, including age restrictions, residency requirements, a prohibition on service by persons who are or have been the subject of certain legal or regulatory proceedings, a prohibition on service by persons who are party to agreements that may affect their voting discretion, and a prohibition on service by nominees or representatives (as defined in applicable Federal Reserve Board regulations) of another person who would not be eligible for service or of an entity the partners or controlling persons of which would not be eligible for service;

• the election of directors to staggered terms of three years;

• provisions requiring advance notice of shareholder proposals and director nominations;

• a limitation on the right to vote more than 10% of the outstanding shares of common stock;

• a prohibition on cumulative voting;

• a requirement that the calling of a special meeting by shareholders requires the request of a majority of all votes entitled to be cast at the special meeting;

• a requirement that directors may only be removed for cause and by 80% of the votes entitled to be cast;

• the board of directors’ ability to cause Pilgrim Bancshares, Inc. to issue preferred stock; and

• the requirement of the vote of 80% of the votes entitled to be case in order to amend certain provisions of the articles of incorporation, including certain of the provisions set forth above.

For further information, see “Restrictions on Acquisition of Pilgrim Bancshares, Inc.—Pilgrim Bancshares, Inc.’s Articles of Incorporation and Bylaws.”

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Applicable regulations prohibit, for three years following the completion of a mutual-to-stock conversion, the offer to acquire or the acquisition of more than 10% of any class of equity security of Pilgrim Bank or Pilgrim Bancshares, Inc. without the prior approval of the Federal Reserve Board. In addition, the business corporation law of Maryland, the state where Pilgrim Bancshares, Inc. is incorporated, provides for certain restrictions on acquisition of Pilgrim Bancshares, Inc. See “Restrictions on Acquisitions of Pilgrim Bancshares, Inc.—Maryland Corporate Law,” “—Pilgrim Bank’s Charter,” “—Change in Control Regulations” and “—Massachusetts Banking Law.”

A significant percentage of our common stock will be held of controlled by our directors and executive officers and benefit plans.

Our board of directors and executive officers intend to purchase in the aggregate approximately 6.15% and 4.54% of our common stock (excluding shares issued to our charitable foundation) at the minimum and maximum of the offering range, respectively. These purchases, together with the purchase by the employee stock ownership plan of 8.0% of the aggregate shares sold in the offering, as well as the potential acquisition of common stock through the proposed equity incentive plan will result in ownership by insiders of Pilgrim Bancshares, Inc. and Pilgrim Bank of approximately 16.9% of the total shares issued in the offering at the maximum and approximately 18.5% of the total shares issued in the offering at the minimum of the offering range. The ownership by executive officers, directors and our stock plans could result in actions being taken that are not in accordance with other shareholders’ wishes, and could prevent any action requiring a supermajority vote under our articles of incorporation and bylaws (including the amendment of certain protective provisions of our articles and bylaws discussed immediately above).

There may be a limited trading market in our common stock, which would hinder your ability to sell our common stock and may lower the market price of the stock.

We have never issued capital stock and there is no established market for our common stock. We expect that our common stock will be quoted on the OTC Bulletin Board, subject to completion of the offering and compliance with certain conditions. Keefe Bruyette & Woods has advised us that it intends to make a market in our common stock following the offering, but it is under no obligation to do so or to continue to do so once it begins. The development of an active trading market depends on the existence of willing buyers and sellers, the presence of which is not within our control, or that of any market maker. The number of active buyers and sellers of the shares of common stock at any particular time may be limited. Under such circumstances, you could have difficulty selling your shares of common stock on short notice, and, therefore, you should not view the shares of common stock as a short-term investment. In addition, our public “float,” which is the total number of our outstanding shares less the shares held by our employee stock ownership plan and our directors and executive officers, is likely to be quite limited. As a result, it is unlikely that an active trading market for the common stock will develop or that, if it develops, it will continue. If you purchase shares of common stock, you may not be able to sell them at or above $10.00 per share. Purchasers of common stock in the offering should have long-term investment intent and should recognize that there will be a limited trading market in the common stock. This may make it difficult to sell the common stock after the offering and may have an adverse impact on the price at which the common stock can be sold.

You may not be able to sell your shares of common stock until you have received certificates, which will affect your ability to take advantage of changes in the stock price immediately following the offering.

Certificates for the shares of common stock purchased in the offering may not be delivered for several days after the completion of the offering and the commencement of trading in the common stock.

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Your ability to sell the shares of common stock before receiving your stock certificate will depend on arrangements you may make with a brokerage firm, and you may not be able to sell your shares of common stock until you have received certificates. As a result, you may not be able to take advantage of fluctuations in the price of the common stock immediately following the offering.

We are an “emerging growth company” within the meaning of the Securities Act, and if we decide to take advantage of certain exemptions from various reporting requirements applicable to emerging growth companies, our common stock could be less attractive to investors.

We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933 (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012 ( the “JOBS Act”). We are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including, but not limited to, reduced disclosure about our executive compensation and omission of compensation discussion and analysis, and an exemption from the requirement of holding a non-binding advisory vote on executive compensation. In addition, we will not be subject to certain requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes Oxley Act”), including the additional level of review of our internal control over financial reporting as may occur when outside auditors attest as to our internal control over financial reporting. As a result, our stockholders may not have access to certain information they may deem important.

We could remain an “emerging growth company” for up to five years, or until the earliest of (a) the last day of the first fiscal year in which our annual gross revenues exceed $1.0 billion, (b) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (c) the date on which we have issued more than $1.0 billion in non-convertible debt during the preceding three-year period. Taking advantage of any of these exemptions may adversely affect the value and trading price of our common stock.

We have elected to delay the adoption of new and revised accounting pronouncements, which means that our financial statements may not be comparable to those of other public companies.

As an “emerging growth company” we have elected to use the extended transition period to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. Accordingly, our financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards.

Our growth or future losses may require us to raise additional capital in the future, but that capital may not be available when it is needed or the cost of that capital may be very high.

We are required by federal regulatory authorities to maintain adequate levels of capital to support our operations. We believe the net proceeds of the offering will be sufficient to permit Pilgrim Bank and Pilgrim Bancshares, Inc. to maintain regulatory capital compliance for the foreseeable future. Nonetheless, we may at some point need to raise additional capital to support continued growth.

Our ability to raise additional capital, if needed, will depend on conditions in the capital markets at that time, which are outside our control, and on our financial condition and performance. Accordingly, we may not be able to raise additional capital if needed on terms that are acceptable to us, or at all. If we cannot raise additional capital when needed, our operations could be materially impaired and our financial

40

condition and liquidity could be materially and adversely affected. In addition, if we are unable to raise additional capital when required by the Federal Reserve Board or the Massachusetts Commissioner of Banks, we may be subject to adverse regulatory action. See “Supervision and Regulation.”

We may take other actions to meet the minimum required sales of shares if we cannot find enough purchasers in the community.

If we are not able to reach the minimum of the offering range, we may do any of the following: increase the maximum purchase limitations and allow all maximum purchase subscribers to increase their orders to the new maximum purchase limitations; terminate the offering and promptly return all funds; set a new offering range, notifying all subscribers of the opportunity to confirm, cancel or change their orders; or take such other actions as may be permitted, to the extent such permission is required, by the Federal Reserve Board and the Massachusetts Commissioner of Banks.

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SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA

The following tables set forth selected consolidated historical financial and other data of Conahasset Bancshares, MHC and subsidiaries for the periods and at the dates indicated. The information at and for the years ended December 31, 2013 and 2012 is derived in part from, and should be read together with, the audited financial statements and notes thereto of Conahasset Bancshares, MHC and subsidiaries beginning at page F-1 of this prospectus. The information at and for the years ended December 31, 2011 is derived in part from audited financial statements that are not included in this prospectus. The following information is only a summary, and should be read in conjunction with our financial statements and notes thereto beginning on page F-1 of this prospectus.

	At December 31,
	2013		2012		2011
	(In thousands)
Selected Financial Condition Data:
Total assets	$	171,556	$	172,541	$	170,321
Cash and cash equivalents		8,991		21,141		19,869
Time deposits with other banks		4,511		10,730		7,690
Investment securities (1)		13,750		16,114		21,402
Federal Home Loan Bank stock		667		757		872
Loans receivable, net		132,923		112,618		108,753
Investment in real estate		1,662		1,707		1,756
Other real estate owned		—		245		1,463
Bank-owned life insurance		2,181		2,129		2,072
Total liabilities		159,052		160,167		158,656
Deposits		153,732		156,653		154,863
Federal Home Loan Bank advances		5,000		3,307		3,641
Total equity		12,504		12,374		11,665
	For the Years Ended December 31,
	2013		2012		2011
	(In thousands)
Selected Operating Data:
Interest and dividend income	$	5,963	$	6,045	$	6,415
Interest expense		1,175		1,314		1,649
Net interest and dividend income		4,788		4,731		4,766
Provision for loan losses		—		156		200
Net interest and dividend income after provision for loan losses		4,788		4,575		4,566
Service charges on deposit accounts		138		148		147
Gain on sales of mortgages, net		17		379		61
Other noninterest income		196		450		216
Noninterest expense		4,611		4,423		4,184
Income before income taxes		528		1,129		806
Income tax expense		160		387		270
Net income	$	368	$	742	$	536

(footnotes appear on following page)

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	At of For the Years Ended December 31,
	2013			2012			2011
Performance Ratios:
Return on average assets		0.21	%		0.44	%		0.32	%
Return on average equity		2.98	%		6.16	%		4.77	%
Interest rate spread (2)		2.99	%		3.03	%		3.02	%
Net interest margin (3)		3.05	%		3.07	%		3.05	%
Noninterest expense to average assets		2.69	%		2.62	%		2.47	%
Efficiency ratio (4)		89.73	%		77.49	%		80.62	%
Average interest-earning assets to average interest-bearing liabilities		107.73	%		105.55	%		103.67	%
Loans to deposits		86.89	%		72.53	%		70.90	%
Average equity to average assets		7.21	%		7.13	%		6.62	%
Capital Ratios:
Equity to total assets at end of period		7.29	%		7.17	%		6.85	%
Total capital to risk weighted assets		13.49	%		14.02	%		13.42	%
Tier 1 capital to risk weighted assets		12.74	%		13.16	%		12.47	%
Tier 1 capital to average assets		7.49	%		7.21	%		6.77	%
Asset Quality Ratios:
Allowance for loan losses as a percentage of total loans		0.56	%		0.69	%		0.79	%
Allowance for loan losses as a percentage of non-performing loans		31.55	%		16.89	%		40.14	%
Net (charge-offs) recoveries to average outstanding loans during the period		0.04	%		0.21	%		0.37	%
Non-performing loans as a percentage of total loans		1.76	%		4.11	%		1.97	%
Non-performing assets as a percentage of total assets		1.37	%		2.85	%		2.13	%
Total non-performing assets and troubled debt restructurings as a percentage of total assets		4.06	%		5.36	%		5.70	%
Other:
Number of full service banking offices		3			3			3
Full-time equivalent employees		32			33			32

(1) Includes securities available-for-sale and held-to-maturity.

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

(3) Represents net interest income as a percentage of average interest-earning assets.

(4) Represents noninterest expense divided by the sum of net interest income and noninterest income.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

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

• statements of our goals, intentions and expectations;

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

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

• estimates of our risks and future costs and benefits.

These forward-looking statements are based on our current beliefs and expectations and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. We are under no duty to and do not take any obligation to update any forward-looking statements after the date of this prospectus.

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

• our ability to manage our operations under the current adverse economic conditions nationally and in our market area;

• adverse changes in the financial industry, securities, credit and national local real estate markets (including real estate values);

• significant increases in our loan losses, including as a result of our inability to resolve classified and non-performing assets or reduce risks associated with our loans, and management’s assumptions in determining the adequacy of the allowance for loan losses;

• credit risks of lending activities, including changes in the level and trend of loan delinquencies and write-offs and in our allowance for loan losses and provision for loan losses;

• competition among depository and other financial institutions;

• our success in implementing our business strategy, particularly increasing our commercial real estate, multi-family, non-owner occupied residential and construction lending;

• our success in introducing new financial products;

• our ability to attract and maintain deposits; our ability to continue to improve our asset quality even as we increase our non-residential and non-owner occupied residential lending;

• changes in interest rates generally, including changes in the relative differences between short term and long term interest rates and in deposit interest rates, that may affect our net interest margin and funding sources;

• fluctuations in the demand for loans, which may be affected by the number of unsold homes, land and other properties in our market areas and by declines in the value of real estate in our market area;

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• changes in consumer spending, borrowing and saving habits;

• declines in the yield on our assets resulting from the current low interest rate environment;

• risks related to a high concentration of loans secured by real estate located in our market area;

• the results of examinations by our regulators, including the possibility that our regulators may, among other things, require us to increase our reserve for loan losses, write down assets, change our regulatory capital position, limit our ability to borrow funds or maintain or increase deposits, or prohibit us from paying dividends, which could adversely affect our dividends and earnings;

• changes in the level of government support of housing finance;

• our ability to enter new markets successfully and capitalize on growth opportunities;

• changes in laws or government regulations or policies affecting financial institutions, including the Dodd-Frank Act and the JOBS Act, which could result in, among other things, increased deposit insurance premiums and assessments, capital requirements (particularly the new capital regulations), regulatory fees and compliance costs and the resources we have available to address such changes;

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

• changes in our organization, compensation and benefit plans, and our ability to retain key members of our senior management team and to address staffing needs in response to product demand or to implement our strategic plans;

• loan delinquencies and changes in the underlying cash flows of our borrowers;

• our ability to control costs and expenses, particularly those associated with operating as a publicly traded company;

• the failure or security breaches of computer systems on which we depend;

• the ability of key third-party service providers to perform their obligations to us;

• changes in the financial condition or future prospects of issuers of securities that we own; and

• other economic, competitive, governmental, regulatory and operational factors affecting our operations, pricing, products and services described elsewhere in this prospectus.

Because of these and a wide variety of other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements. Please see “Risk Factors” beginning on page 22.

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HOW WE INTEND TO USE THE PROCEEDS FROM THE OFFERING

Although we cannot determine what the actual net proceeds from the sale of the shares of common stock in the offering will be until the offering is completed, we anticipate that the net proceeds will be between $12.7 million and $17.7 million, or $20.5 million if the offering range is increased by 15%. Please see “Pro Forma Data” for additional information.

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

	Based Upon the Sale at $10.00 Per Share of
	1,402,500 Shares						1,650,000 Shares						1,897,500 Shares						2,182,125 Shares (1)
	Amount			Percent of Net Proceeds			Amount			Percent of Net Proceeds			Amount			Percent of Net Proceeds			Amount			Percent of Net Proceeds
	(Dollars in thousands)
Offering proceeds	$	14,025					$	16,500					$	18,975					$	21,821
Less offering expenses		(1,300	)					(1,300	)					(1,300	)					(1,300	)
Net offering proceeds	$	12,725			100.0	%	$	15,200			100.0	%	$	17,675			100.0	%	$	20,521			100.0	%
Use of net proceeds:
To Pilgrim Bank	$	6,363			50.0	%	$	7,600			50.0	%	$	8,838			50.0	%	$	10,261			50.0	%
To fund loan to employee stock ownership plan		1,156			9.1	%		1,360			9.0	%		1,564			8.9	%		1,798			8.8	%
Proceeds contributed to foundation		304			2.4	%		230			1.5	%		156			0.9	%		70			0.3	%
Retained by Pilgrim Bancshares, Inc.	$	4,903			38.5	%	$	6,010			39.5	%	$	7,118			40.2	%	$	8,393			40.9	%

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

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

Pilgrim Bancshares, Inc. intends to fund a loan to the employee stock ownership plan (or fund a subsidiary which will make this loan) to purchase shares of common stock in the offering and contribute cash and shares of common stock to our charitable foundation. Pilgrim Bancshares, Inc. may also use the proceeds it retains from the offering:

• to invest in short-term and other securities consistent with our investment policy;

• to pay cash dividends to stockholders, subject to regulatory approval;

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

• for other general corporate purposes.

With the exception of the funding of the loan to the employee stock ownership plan (or funding a subsidiary which will make this loan) and the contribution to our charitable foundation, Pilgrim Bancshares, Inc. has not quantified its plans for use of the offering proceeds for each of the foregoing purposes. Initially, we intend to invest a substantial portion of the net proceeds in short-term investments, investment-grade debt obligations and mortgage-backed securities.

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

Pilgrim Bank will receive a capital contribution equal to at least 50.0% of the net proceeds of the offering. Pilgrim Bank may use the net proceeds it receives from the Offering:

• to invest in commercial real estate, multifamily, non-owner occupied and one- to four-family residential and construction loans;

• to invest in technological advances to enhance our customer service and the products that we offer;

• to invest in short-term and other securities consistent with our investment policy;

• to expand its banking franchise by establishing or acquiring new loan production officers or branches, or by acquiring other financial institutions or other financial services companies, although no such transactions are contemplated at this time; and

• for other general corporate purposes.

Pilgrim Bank has not quantified its plans for use of the offering proceeds for any of the foregoing purposes. The use of the proceeds outlined above may change based on many factors, including, but not limited to, changes in interest rates, equity markets, laws and regulations affecting the financial services industry, our relative position in the financial services industry, the attractiveness of opportunities to expand our operations through establishing or acquiring new branches, our ability to receive regulatory approval for any such expansion activities, and overall market conditions.

OUR POLICY REGARDING DIVIDENDS

Following completion of the offering, our board of directors will have the authority to declare dividends on our shares of common stock, subject to statutory and regulatory requirements. Specifically, the Federal Reserve Board has issued a policy statement proving that dividends should be paid only out of current earnings and only if our prospective rate of earnings retention is consistent with our capital needs, asset quality and overall financial condition. Regulatory guidance also provides for prior regulatory consultation with respect to capital distributions in certain circumstances such as where the holding company’s net income for the past four quarters, net of dividends previously paid over that period, is insufficient to fully fund the dividend or the holding company’s overall rate or earnings retention is inconsistent with the its capital needs and overall financial condition. We do not intend to pay dividends until such time as we are generating sufficient net income to support our planned growth and the payment of dividends. In determining whether to pay a cash dividend and the amount of such cash dividend, the board of directors is expected to take into account a number of factors, including regulatory capital requirements, our financial condition and results of operations, other uses of funds for the long-term value of stockholders, tax considerations, statutory and regulatory limitations and general economic conditions.

Dividends we can declare and pay will depend, in part, upon receipt of dividends from Pilgrim Bank, because initially we will have no source of income other than dividends from Pilgrim Bank, earnings from the investment of proceeds from the sale of shares of common stock, and interest payments received in connection

47

with the loan to the employee stock ownership plan (which we expect will be funded through a subsidiary formed solely for the purpose of making the loan to the employee stock ownership plan). Massachusetts banking law and FDIC regulations impose significant limitations on “capital distributions” by depository institutions. See “Supervision and Regulation—Federal Banking Regulation—Capital Distributions” and “—Massachusetts Banking Laws and Supervision—Dividends.” In addition, beginning in 2016, Pilgrim Bank’s ability to pay dividends will be limited if Pilgrim Bank does not have the capital conservation buffer required by the new capital rules, which may limit our ability to pay dividends to stockholders. See “Supervision and Regulation—Federal Banking Regulation—New Capital Rule.” No assurances can be given that any dividends will be paid or that, if paid, will not be reduced or eliminated in the future. Special cash dividends, stock dividends or returns of capital, to the extent permitted by regulations and policies of the Federal Reserve Board and the Massachusetts Commissioner of Banks, may be paid in addition to, or in lieu of, regular cash dividends.

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

MARKET FOR THE COMMON STOCK

Pilgrim Bancshares, Inc. is a newly formed company and has never issued capital stock, except for 100 shares issued to Conahasset Bancshares, Inc. in connection with its formation. Conahasset Bancshares, MHC, as a mutual institution, has never issued capital stock. Pilgrim Bancshares, Inc. anticipates that its common stock will be quoted on the OTC Bulletin Board. Keefe, Bruyette & Woods has advised us that it intends to make a market in our common stock following the conversion and offering, but it is under no obligation to do so.

The development of an active trading market depends on the existence of willing buyers and sellers, the presence of which is not within our control, or that of any market maker. The number of active buyers and sellers of the shares of common stock at any particular time may be limited. Under such circumstances, you could have difficulty selling your shares of common stock on short notice, and, therefore, you should not view the shares of common stock as a short-term investment. In addition, our public “float,” which is the total number of our outstanding shares less the shares held by our employee stock ownership plan, our directors and executive officers and the charitable foundation, is likely to be quite limited. As a result, it is unlikely that an active trading market for the common stock will develop or that, if it develops, it will continue. Furthermore, we cannot assure you that, if you purchase shares of common stock, you will be able to sell them at or above $10.00 per share. Purchasers of common stock in the offering should have long-term investment intent and should recognize that there will be a limited trading market in the common stock. This may make it difficult to sell the common stock after the offering and may have an adverse impact on the price at which the common stock can be sold.

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HISTORICAL AND PRO FORMA REGULATORY CAPITAL COMPLIANCE

At December 31, 2013, Pilgrim Bank exceeded all of the applicable regulatory capital requirements. The table below sets forth the historical equity capital and regulatory capital of Pilgrim Bank at December 31, 2013, and the pro forma regulatory capital of Pilgrim Bank, after giving effect to the sale of shares of common stock at a $10.00 per share purchase price. The items captioned “Requirement” reflect amounts necessary to be considered “well capitalized” under applicable federal regulations. The table assumes the receipt by Pilgrim Bank of 50.0% of the net offering proceeds. See “How We Intend to Use the Proceeds from the Offering.”

	Pilgrim Bank Historical at December 31, 2013					Pro Forma at December 31, 2013, Based Upon the Sale in the Offering of
						1,402,500 Shares						1,650,000 Shares						1,897,500 Shares						2,182,125 Shares(1)
	Amount		Percent of Assets(2)			Amount			Percent of Assets(2)			Amount			Percent of Assets(2)			Amount			Percent of Assets(2)			Amount			Percent of Assets(2)
	(Dollars in thousands)
Equity	$	12,436		7.25	%	$	17,065			9.59	%	$	17,976			10.04	%	$	18,928			10.49	%	$	20,000			11.00	%
Tier 1 leverage capital(3)	$	12,650		7.49	%	$	17,279			9.85	%	$	18,211			10.31	%	$	19,142			10.77	%	$	20,214			11.28	%
Requirement(4)		8,449		5.00			8,767			5.00			8,829			5.00			8,890			5.00			8,962			5.00
Excess	$	4,201		2.49	%	$	8,512			4.85	%	$	9,382			5.31	%	$	10,252			5.77	%	$	11,252			6.28	%
Tier 1 risk-based capital	$	12,650		12.74	%	$	17,279			16.86	%	$	18,211			17.66	%	$	19,142			18.46	%	$	20,214			19.36	%
Requirement		5,958		6.00			6,149			6.00			6,186			6.00			6,223			6.00			6,265			6.00
Excess	$	6,692		6.74	%	$	11,130			10.86	%	$	12,025			11.66	%	$	12,919			12.46	%	$	13,949			13.36	%
Total risk-based capital(3)	$	13,399		13.49	%	$	18,028			17.59	%	$	18,960			18.39	%	$	19,891			19.18	%	$	20,963			20.07	%
Requirement(4)		9,929		10.00			10,248			10.00			10,309			10.00			10,371			10.00			10,442			10.00
Excess	$	3,470		3.49	%	$	7,780			7.59	%	$	8,651			8.39	%	$	9,520			9.18	%	$	10,521			10.07	%
Reconciliation:
Net proceeds infused into Pilgrim Bank:						$	6,363					$	7,600					$	8,838					$	10,261
Less: Common stock acquired by employee stock ownership plan							(1,156	)					(1,360	)					(1,564	)					(1,798	)
Less: Common stock acquired by stock-based incentive plan							(578	)					(680	)					(782	)					(899	)
Pro forma increase in Tier 1 and total risk-based capital						$	4,629					$	5,560					$	6,492					$	7,564

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

(2) Leverage capital ratios are shown as a percentage of total adjusted assets. Risk-based capital ratios are shown as a percentage of risk-weighted assets.

(3) Pro forma amounts and percentages assume net proceeds are invested in assets that carry a 50% risk weighting.

(4) Reflects regulatory requirements to be considered “well capitalized.”

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CAPITALIZATION

The following table presents the historical consolidated capitalization of Conahasset Bancshares, MHC at December 31, 2013 and the pro forma consolidated capitalization of Pilgrim Bancshares, Inc., after giving effect to the conversion and the offering, based upon the assumptions set forth in the “Pro Forma Data” section.

	Conahasset Bancshares, MHC Historical at December 31, 2013			Pilgrim Bancshares, Inc. Pro Forma, Based Upon the Sale in the Offering at $10.00 per Share of
				1,402,500 Shares			1,650,000 Shares			1,897,500 Shares			2,182,125 Shares (1)
	(Dollars in thousands)
Deposits (2)	$	153,732		$	153,732		$	153,732		$	153,732		$	153,732
Borrowings		5,000			5,000			5,000			5,000			5,000
Total deposits and borrowed funds	$	158,732		$	158,732		$	158,732		$	158,732		$	158,732
Stockholders’ equity:
Preferred stock $0.01 par value, 2,000,000 shares authorized; none issued or outstanding	$	—		$	—		$	—		$	—		$	—
Common stock $0.01 par value, 10,000,000 shares authorized; assuming shares outstanding as shown (3)		—			14			17			19			22
Additional paid-in capital (4)		—			13,132			15,678			18,225			21,154
Retained earnings (5)		12,718			12,718			12,718			12,718			12,718
Tax benefit of contribution to foundation		—			290			290			290			290
Accumulated other comprehensive loss		(214	)		(214	)		(214	)		(214	)		(214	)
Common stock to be acquired by employee stock ownership plan (6)		—			(1,156	)		(1,360	)		(1,564	)		(1,798	)
Common stock to be acquired by stock-based benefit plans (7)		—			(578	)		(680	)		(782	)		(899	)
Expense of contribution to charitable foundation		—			(725	)		(725	)		(725	)		(725	)
Total stockholders’ equity	$	12,504		$	23,481		$	25,724		$	27,967		$	30,548
Total stockholders’ equity as a percentage of total assets (2)		7.29	%		12.86	%		13.92	%		14.95	%		16.11	%
Tangible equity as a percentage of total assets (2)		7.29	%		12.86	%		13.92	%		14.95	%		16.11	%

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

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

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

(4) The sum of the par value of the total shares outstanding and additional paid-in capital equals the net offering proceeds at the offering price of $10.00 per share.

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

(footnotes continue on following page)

50

(continued from previous page)

(6) Assumes that 8% of the shares issued in the conversion (including shares to be contributed to the charitable foundation) will be acquired by the employee stock ownership plan financed by a loan from Pilgrim Bancshares, Inc. The loan will be repaid principally from Pilgrim Bank’s contributions to the employee stock ownership plan. Since Pilgrim Bancshares, Inc. will finance the employee stock ownership plan debt, this debt will be eliminated through consolidation and no asset or liability will be reflected on Pilgrim Bancshares, Inc.’s consolidated financial statements. Accordingly, the amount of shares of common stock acquired by the employee stock ownership plan is shown in this table as a reduction of total stockholders’ equity.

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

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PRO FORMA DATA

The following tables summarize historical data of Conahasset Bancshares, MHC and pro forma data of Pilgrim Bancshares, Inc. at and for the years ended December 31, 2013 and December 31, 2012. This information is based on assumptions set forth below and in the table, and should not be used as a basis for projections of market value of the shares of common stock following the conversion and offering.

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

• all shares of common stock will be sold in the subscription offering;

• our employee stock ownership plan will purchase 8% of the shares of common stock issued in the conversion (including shares contributed to the charitable foundation) with a loan from Pilgrim Bancshares, Inc. The loan will be repaid in substantially equal payments of principal and interest over a period of 30 years;

• Keefe, Bruyette & Woods will receive a selling agent fee equal to 1.0% of the dollar amount of the shares of common stock sold in the subscription offering, subject to a minimum fee of $225,000. Shares purchased by our employee stock benefit plans or by our officers, directors and employees, and their immediate families and shares contributed to our charitable foundation will not be included in calculating the shares of common stock sold for this purpose; and

• expenses of the offering, other than selling agent fees to be paid to Keefe Bruyette & Woods, will be approximately $1.1 million.

We calculated pro forma consolidated net income for the year ended December 31, 2013 as if the estimated net proceeds had been invested at an assumed interest rate of 1.75% (1.05% on an after-tax basis). This represents the five-year United States Treasury Note as of December 31, 2013, which, in light of current market interests rates, we consider to more accurately reflect the pro forma reinvestment rate than the arithmetic average of the weighted average yield earned on our interest earnings assets and the weighted average rate paid on our deposits.

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

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

We have also assumed that the stock-based benefit plans will grant options to acquire shares of common stock equal to 10% of our outstanding shares of common stock. In preparing the tables below, we assumed that stockholder approval was obtained, that the exercise price of the stock options and the

52

market price of the stock at the date of grant were $10.00 per share and that the stock options had a term of ten years and vested over five years. We applied the Black-Scholes option pricing model to estimate a grant-date fair value of $3.33 for each option. In addition to the terms of the options described above, the Black-Scholes option pricing model assumed an estimated volatility rate of 15.82% for the shares of common stock, a dividend yield of 0.00%, an expected option life of 10 years and a risk-free interest rate of 3.04%.

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

As discussed under “How We Intend to Use the Proceeds from the Offering,” we intend to contribute at least 50.0% of the net proceeds to Pilgrim Bank. We will retain the remainder of the net proceeds from the offering and use a portion of the proceeds we retain for the purpose of making a loan to the employee stock ownership plan (or funding a subsidiary which will make the loan to the employee stock ownership plan) and retain the rest of the proceeds for future use.

The pro forma table does not give effect to:

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

• our results of operations after the offering; or

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

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

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	At or For the Year Ended December 31, 2013 Based Upon the Sale at $10.00 Per Share of
	1,402,500 Shares			1,650,000 Shares			1,897,500 Shares			2,182,125 Shares (1)
	(Dollars in thousands, except per share amounts)
Gross Proceeds of Offering	$	14,025		$	16,500		$	18,975		$	21,821
Plus: market value of shares issued to charitable foundation		421			495			569			655
Pro forma market capitalization	$	14,446		$	16,995		$	19,544		$	22,476
Gross Proceeds of Offering	$	14,025		$	16,500		$	18,975		$	21,821
Less: expenses		1,300			1,300			1,300			1,300
Estimated net proceeds		12,725			15,200			17,675			20,521
Less: Common stock purchased by ESOP (2)		(1,156	)		(1,360	)		(1,564	)		(1,798	)
Less: Cash contribution to charitable foundation		(304	)		(230	)		(156	)		(70	)
Less: Common stock awarded under stock-based benefit plans (3)		(578	)		(680	)		(782	)		(899	)
Estimated net cash proceeds as adjusted	$	10,687		$	12,930		$	15,173		$	17,754
For the Year Ended December 31, 2013
Net Income:
Historical	$	368		$	368		$	368		$	368
Pro forma income on net proceeds		112			136			159			186
Pro forma ESOP adjustment(2)		(23	)		(27	)		(31	)		(36	)
Pro forma stock award adjustment (3)		(69	)		(82	)		(94	)		(108	)
Pro forma stock option adjustment (4)		(87	)		(102	)		(117	)		(135	)
Pro forma net income	$	301		$	293		$	285		$	275
Per share net income:
Historical	$	0.28		$	0.23		$	0.20		$	0.18
Pro forma income on net proceeds		0.08			0.09			0.09			0.09
Pro forma ESOP adjustment (2)		(0.02	)		(0.02	)		(0.02	)		(0.02	)
Pro forma stock award adjustment (3)		(0.05	)		(0.05	)		(0.05	)		(0.05	)
Pro forma stock option adjustment (4)		(0.06	)		(0.06	)		(0.06	)		(0.07	)
Pro forma net income per share (5)	$	0.23		$	0.19		$	0.16		$	0.13
Offering price as a multiple of pro forma net earnings per share		43.48x			52.63x			62.50x			76.92x
Number of shares outstanding for pro forma net Income per share calculations (5)		1,332,861			1,568,072			1,803,283			2,073,775
At December 31, 2013
Stockholders’ equity:
Historical	$	12,504		$	12,504		$	12,504		$	12,504
Estimated net proceeds		12,725			15,200			17,675			20,521
Plus: market value of shares issued to charitable foundation		421			495			569			655
Plus: tax benefit of contribution to charitable foundation		290			290			290			290
Less: Common stock acquired by ESOP (2)		(1,156	)		(1,360	)		(1,564	)		(1,798	)
Less: Common stock awarded under stock-based benefit plans (3) (4)		(578	)		(680	)		(782	)		(899	)
Less: expense of contribution to charitable foundation (6)		(725	)		(725	)		(725	)		(725	)
Pro forma stockholders’ equity	$	23,481		$	25,724		$	27,967		$	30,548
Stockholders’ equity per share:
Historical	$	8.65		$	7.37		$	6.40		$	5.56
Estimated net proceeds		8.81			8.94			9.04			9.13
Plus: market value of shares issued to charitable foundation		0.29			0.29			0.29			0.29
Plus: tax benefit of contribution to charitable foundation		0.20			0.17			0.15			0.13
Less: Common stock acquired by ESOP (2)		(0.80	)		(0.80	)		(0.80	)		(0.80	)
Less: Common stock awarded under stock-based benefit plans (3) (4)		(0.40	)		(0.40	)		(0.40	)		(0.40	)
Less: expense of contribution to charitable foundation		(0.50	)		(0.43	)		(0.37	)		(0.32	)
Pro forma stockholders’ equity per share (7)	$	16.25		$	15.14		$	14.31		$	13.59
Offering price as percentage of pro forma stockholders’ equity per share		61.54	%		66.05	%		69.88	%		73.58	%
Number of shares outstanding for pro forma book value per share calculations		1,444,575			1,699,500			1,954,425			2,247,589

(footnotes begin on following page)

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(Footnotes from previous pages)

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

(2) Assumes that 8% of shares of common stock issued in the conversion (including shares to be contributed to the charitable foundation) will be purchased by the employee stock ownership plan. For purposes of this table, the funds used to acquire these shares are assumed to have been borrowed by the employee stock ownership plan from Pilgrim Bancshares, Inc. at a rate per annum equal to the Prime Rate. Pilgrim Bank intends to make annual contributions to the employee stock ownership plan in an amount at least equal to the required principal and interest payments on the debt. Pilgrim Bank’s total annual payments on the employee stock ownership plan debt are based upon 30 equal annual installments of principal and interest. Accounting Standard Codification 718-40-30 requires that an employer record compensation expense in an amount equal to the fair value of the shares committed to be released to employees. The pro forma adjustments assume that the employee stock ownership plan shares are allocated in equal annual installments based on the number of loan repayment installments assumed to be paid by Pilgrim Bank, the fair value of the common stock remains equal to the subscription price and the employee stock ownership plan expense reflects an effective combined federal and state tax rate of 40.0%. The unallocated employee stock ownership plan shares are reflected as a reduction of stockholders’ equity. No reinvestment is assumed on proceeds contributed to fund the employee stock ownership plan. The pro forma net income further assumes that 3,890, 4,576, 5,262 and 6,052 shares were committed to be released during the year ended December 31, 2013 at the minimum, midpoint, maximum and adjusted maximum of the offering range, respectively. In accordance with Accounting Standard Codification 718-40-30, only the employee stock ownership plan shares committed to be released during the period were considered outstanding for purposes of income per share calculations.

(3) If approved by Pilgrim Bancshares, Inc.’s stockholders, one or more stock-based benefit plans may issue an aggregate number of shares of common stock equal to 4% of the shares to be issued in the conversion including shares contributed to the charitable foundation (or possibly a greater number of shares if the plan is implemented more than one year after completion of the conversion) for award as restricted stock to our officers, employees and directors. Stockholder approval of the stock-based benefit plans, and purchases by the plan may not occur earlier than six months after the completion of the conversion. The shares may be acquired directly from Pilgrim Bancshares, Inc. or through open market purchases. The funds to be used by the stock-based benefit plans to purchase the shares will be provided by Pilgrim Bancshares, Inc. The table assumes that (i) the stock-based benefit plans acquire the shares through open market purchases at $10.00 per share, (ii) 20% of the amount contributed to the stock-based benefit plans is amortized as an expense during the fiscal year and (iii) the stock-based benefit plans expense reflects an effective combined federal and state tax rate of 40.0%. Assuming stockholder approval of the stock-based benefit plans and that shares of common stock (equal to 4% of the shares issued in the conversion, including shares contributed to the charitable foundation) are awarded through the use of authorized but unissued shares of common stock, stockholders would have their ownership and voting interests diluted by approximately 3.9%.

(4) If approved by Pilgrim Bancshares, Inc.’s stockholders, one or more stock-based benefit plans may grant options to acquire an aggregate number of shares of common stock equal to 10% of the shares to be issued in the conversion including shares contributed to the charitable foundation (or possibly a greater number of shares if the plan is implemented more than one year after completion of the conversion). Stockholder approval of the stock-based benefit plans may not occur earlier than six months after the completion of the conversion. In calculating the pro forma effect of the stock options to be granted under stock-based benefit plans, it is assumed that the exercise price of the stock options and the trading price of the common stock at the date of grant were $10.00 per share, the estimated grant-date fair value determined using the Black-Scholes option pricing model was $3.33 for each option, the aggregate grant-date fair value of the stock options was amortized to expense on a straight-line basis over a five-year vesting period of the options. The actual expense of the stock options to be granted under the stock-based benefit plans will be determined by the grant-date fair value of the options, which will depend on a number of factors, including the valuation assumptions used in the option pricing model ultimately adopted. Under the above assumptions, the adoption of the stock-based benefit plans will result in no additional shares under the treasury stock method for purposes of calculating earnings per share. There can be no assurance that the actual exercise price of the stock options will be equal to the $10.00 price per share. If a portion of the shares to satisfy the exercise of options under the stock-based benefit plans is obtained from the issuance of authorized but unissued shares, our net income per share and stockholders’ equity per share would decrease. Assuming stockholder approval of the stock-based benefit plans and that shares of common stock used to fund stock options (equal to 10% of the shares issued in the conversion, including shares contributed to the charitable foundation) are awarded through the use of authorized but unissued shares of common stock, stockholders would have their ownership and voting interests diluted by approximately 9.1%.

(5) Income per share computations are determined by taking the number of shares assumed to be sold in the offering and, in accordance with applicable accounting standards for employee stock ownership plans, subtracting the employee stock ownership plan shares that have not been committed for release during the period. See note 2 above.

(6) Does not give effect to the nonrecurring expense that is expected to be recognized in the year ended December 31, 2014 as a result of the contribution of cash and shares of common stock to the charitable foundation. Assuming the contribution to the foundation was expensed during year ended December 31, 2013, the estimated before tax expense, estimated after-tax expense and pro forma tax benefit associated with the contribution to the foundation, and the pro forma net income (loss) and pro forma net income (loss) per share are set forth in the table below. The pro forma data

55

assume that we will realize 100.0% of the income tax benefit as a result of the contribution to the foundation based on a 40.0% income tax rate. The realization of the tax benefit is limited annually to 10.0% of our annual taxable income. However, for federal and state tax purposes, we can carry forward any unused portion of the deduction for five years following the year in which the contribution is made.

	Minimum of Offering Range			Midpoint of Offering Range			Maximum of Offering Range			Maximum, as adjusted, of Offering Range
	(in thousands, except per share data)
Before tax expense of contribution	$	725		$	725		$	725		$	725
Estimated after tax expense of contribution		435			435			435			435
Pro forma net income (loss)		(134	)		(142	)		(150	)		(159	)
Pro forma net income (loss) per share		(0.10	)		(0.09	)		(0.08	)		(0.08	)
Pro forma tax benefit		290			290			290			290

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

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COMPARISON OF VALUATION AND PRO FORMA INFORMATION

WITH AND WITHOUT THE CHARITABLE FOUNDATION

As reflected in the table below, if the charitable foundation is not established and funded as part of the offering, RP Financial, LC estimates that our pro forma valuation would be greater and, as a result, a greater number of shares of common stock would be issued in the offering. At the minimum, midpoint, maximum and adjusted maximum of the valuation range, our pro forma valuation is $14.4 million, $17.0 million, $19.5 million and $22.5 million with the charitable foundation, as compared to $15.3 million, $18.0 million, $20.7 million and $23.8 million, respectively, without the charitable foundation. There is no assurance that in the event the charitable foundation were not formed, the appraisal prepared at that time would conclude that our pro forma market value would be the same as that estimated in the table below. Any appraisal prepared at that time would be based on the facts and circumstances existing at that time, including, among other things, market and economic conditions.

For comparative purposes only, set forth below are certain pricing ratios and financial data and ratios at and for the year ended December 31, 2013 at the minimum, midpoint, maximum and adjusted maximum of the offering range, assuming the offering was completed at the beginning of the year, with and without the charitable foundation.

	Minimum of Offering Range						Midpoint of Offering Range						Maximum of Offering Range						Adjusted Maximum of Offering Range
	With Foundation			Without Foundation			With Foundation			Without Foundation			With Foundation			Without Foundation			With Foundation			Without Foundation
	(Dollars in thousands, except per share amounts)
Estimated offering amount	$	14,025		$	15,300		$	16,500		$	18,000		$	18,975		$	20,700		$	21,821		$	23,805
Estimated full value		14,446			15,300			16,995			18,000			19,544			20,700			22,476			23,805
Total assets		182,533			183,720			184,777			186,096			187,020			188,472			189,600			191,205
Total liabilities		159,052			159,052			159,052			159,052			159,052			159,052			159,052			159,052
Pro forma stockholders’ equity		23,481			24,668			25,725			27,044			27,968			29,420			30,548			32,153
Pro forma net income		301			306			293			298			285			290			276			279
Pro forma stockholders’ equity per share		16.25			16.12			15.14			15.02			14.31			14.21			13.59			13.51
Pro forma net income per share		0.23			0.22			0.18			0.18			0.16			0.15			0.13			0.13
Pro forma pricing ratios:
Offering price as a percentage of pro forma stockholders’ equity per share		61.54	%		62.03	%		66.05	%		66.58	%		69.88	%		70.37	%		73.58	%		74.02	%
Offering price to pro forma net income per share		43.48x			45.45x			52.63x			55.56x			62.50x			66.67			76.92			76.92
Pro forma financial ratios:
Return on assets (annualized)		0.16	%		0.17	%		0.16	%		0.16	%		0.15	%		0.15	%		0.15	%		0.15	%
Return on equity (annualized)		1.28			1.24			1.14			1.10			1.02			0.99			0.90			0.87
Equity to assets		12.86			13.43			13.92			14.53			14.95			15.61			16.11			16.82
Total shares issued		1,444,575			1,530,000			1,699,500			1,800,000			1,954,400			2,070,000			2,247,600			2,380,500

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

This section is intended to help potential investors understand the financial performance of Conahasset Bancshares, MHC and its subsidiaries through a discussion of the factors affecting our financial condition at December 31, 2013 and December 31, 2012 and our results of operations for the years ended December 31, 2013 and 2012. This section should be read in conjunction with the consolidated financial statements and notes thereto that appear elsewhere in this prospectus. Pilgrim Bancshares, Inc. had not engaged in any activities at December 31, 2013; therefore, the information reflected in this section reflects the consolidated financial performance of Conahasset Bancshares, MHC and subsidiaries.

Overview

We conduct our operations from our main office and an adjacent operations center in Cohasset, Massachusetts and our two additional full-service banking offices located in Cohasset and Marion, Massachusetts. Our primary market area is the South Shore and South Coast areas of Massachusetts, which includes portions of Plymouth, Norfolk and Bristol counties. We serve customers located in a number of small towns in these areas, including Cohasset, Scituate, Hull, Hingham, Norwell, Marshfield, Marion, Mattapoisett, Plymouth, Rochester and Wareham. Although our current operations are not focused in Boston, we are affected by economic conditions in Boston because our loan portfolio includes a significant number of loans that are secured by real estate or that have borrowers located in Boston. In addition, a number of our customers who reside in our market area are employed in Boston and a number of our non-owner occupied residential and multi-family loan customers have properties in Boston as well as in our market area. We intend to continue to make loans, particularly commercial real estate, multi-family, non-owner occupied residential and construction loans, in Boston, so we will continue to be affected by economic conditions in Boston.

Our business consists primarily of attracting deposits from the general public and investing those deposits, together with funds generated from operations, in one- to four-family residential real estate, commercial real estate, multi-family and construction loans, and, to a lesser extent, commercial and industrial and consumer loans. We have historically conducted our lending operations with a view towards the specific needs of customers in the communities that we serve, measuring our success by customer satisfaction and the extent of our customer relationships, rather than on volume based loan origination. Accordingly because of the demographics of our market area, we have focused, and expect to continue to focus, on “jumbo” loans. At December 31, 2013, $92.4 million, or 69.2% of our total loan portfolio, was comprised of one- to four-family residential real estate loans, including non-owner occupied residential real estate loans of $17.6 million, or 13.2% of our loan portfolio, and jumbo loans of $41.2 million, or 55.1% of our owner occupied one- to four-family residential loans and 30.8% of our total loans. Of the jumbo loans, $24.6 million were originated by Pilgrim Bank and $16.6 million were purchased loans. We also invest in securities, which consist primarily of U.S. government agency obligations and U.S. government agency mortgage-backed securities and to a lesser extent, state and municipal securities and U.S. government agency collateralized mortgage obligations. We historically have relied heavily on certificates of deposit for funding, but we offer a variety of deposit accounts, including checking accounts, NOW accounts, savings accounts, money market accounts and certificate of deposit accounts, including IRAs. We utilize advances from the FHLB-Boston for asset/liability management purposes, to leverage loan purchases, and, to a much lesser extent, for additional funding for our operations. At December 31, 2013, we had $5.0 million in advances outstanding with FHLB-Boston.

Our results of operations depend primarily on our net interest income. Net interest income is the difference between the interest income we earn on our interest-earning assets and the interest we pay on

58

our interest-bearing liabilities. Our results of operations also are affected by our provisions for loan losses, noninterest income and noninterest expense. Noninterest income currently consists primarily of service charges on deposit accounts, loan servicing income, gain on sales of securities and loans, debit card income, income from bank-owned life insurance and miscellaneous other income. Noninterest expense currently consists primarily of expenses related to compensation and employee benefits, occupancy and equipment, data processing, federal deposit insurance premiums, ATM charges, professional fees, advertising and other operating expenses.

Our results of operations also may be affected significantly by general and local economic and competitive conditions, changes in market interest rates, governmental policies and actions of regulatory authorities.

Business Strategy

We have historically operated as a traditional thrift headquartered in Cohasset, Massachusetts. As a traditional thrift, our focus has been, and will continue to be, one- to four-family residential mortgage lending, particularly “jumbo” mortgage loans and construction loans for owner occupied properties, in our market area. In 2005, we determined that we would be more competitive and profitable if we transitioned a portion of our operations to a commercial bank model. Accordingly, we made a decision to diversify our lending portfolio by expanding commercial real estate and construction lending in order to increase revenues and manage our interest rate and concentration risk. Because we realized that endeavoring to expand commercial real estate and construction lending placed us in a highly competitive space in our market area, we hired additional experienced commercial lenders who had previously worked in the South Shore and Boston markets to support our expanding commercial real estate and construction activities.

While we were successful in expanding our commercial real estate and construction lending, these lenders also brought knowledge of and experience with a niche of select customers engaged in investing in and renovating residential properties. To satisfy the demands of and enhance our banking relationships with these borrowers, we developed a loan product that consist of a construction loan for the rehabilitation of existing non-owner occupied properties that automatically converts to a fully-amortizing residential mortgage loan following the construction period. We approve the construction / rehabilitation and the permanent portions of the loan at the time the borrower submits an application, which fixes the interest rate for the borrower at the initial extension of credit, and eliminates the need or reapplication for permanent financing and a second closing.

The result of these efforts was an expansion in our non-owner occupied residential portfolio and our portfolio of construction and renovation loans related to non-owner occupied residential properties. The business cycles of these customers naturally led them to engage in larger projects, and we responded by developing multi-family loan products, and related construction and renovation loan products, to offer to these customers. Accordingly, a significant portion of our portfolio consists of high-quality non-owner occupied residential loans and construction loans and, although we have experienced a slight decline in multi-family loans due to payoffs in recent periods, we also have a moderate portfolio of multi-family loans. We historically have had a significant construction lending portfolio, although balances have decreased recently due to payoffs and the transition of construction loans to permanent loans. However, we intend to increase originations of construction loans, particularly non-owner occupied rehabilitation-to-permanent loans.

In addition, as we continued to develop relationships with both our residential mortgage customers and our commercial, multi-family and non-owner occupied real estate loan customers, we recognized that, although certain towns within our market area are primarily residential, other towns are

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home to a diverse variety of small businesses providing services to the residents of our market area, and that there was an opportunity to for us to offer customized business banking products to those small businesses. We determined that we could further diversify our portfolio by increasing our commercial and industrial lending activities, and in 2013 we hired a lender with significant experience in commercial and industrial and Small Business Administration (“SBA”) lending.

Our principal objective is to distinguish ourselves as a strong independent bank in our market are by improving our offering of diverse products and superior customer service to customers, maintaining our commitment to community involvement, develop market niches and explore new lines of business and growth opportunities while adhering to a sound financial plan that provides for strong capital position and profits and asset growth sufficient to allow us to provide for the financial needs of our customers. We believe that our primary competitive advantage is and will continue to be our motivation to create relationships rather than “one product” customers, and that the first step in beginning a banking relationship is exhibiting the flexibility to customize products and services, particularly loan products, to meet the specific needs of the customer. We believe that, in our market area, this can be accomplished by working with customers to extend credit, within prudent and conservative guidelines, in situations where characteristics of non-conforming loans may be present, with particular focus on “jumbo” loans. We strive to provide friendly, knowledgeable, courteous and professional services as we invite current and potential customers to “Discover the Pilgrim Difference.”

We recognize that, although we have managed to operate profitably throughout a challenging economic period, modest organic growth in our market area and continued expansion into the customer base in contiguous areas is essential to our continued profitability. We intend to take advantage of the opportunities presented by our market area to expand our operations. Highlights of our current business strategy following the completion of the offering, subject to regulatory approval where applicable and market conditions, are set forth below.

Prudently and opportunistically grow our earnings base by leveraging the expertise and contacts of our current lending staff and by hiring additional lending personnel with extensive experience in our market area and in the Boston area. We believe that in order to increase our income and profitability, we must focus on continuing to grow our earnings base, particularly our loan portfolio. Our total loan portfolio, before allowance for loan losses, increased $20.0 million, or 17.6%, to $133.6 million at December 31, 2013, from $113.6 million at December 31, 2012, and increased $3.8 million, or 3.5%, to $113.6 million at December 31, 2012, from $109.8 million at December 31, 2011. However, these increases occurred during periods of minimal or no deposit growth, resulting in steadily declining levels of cash, interest-bearing deposits with other financial institutions and securities. Accordingly, our total assets decreased $985,000, or 0.6%, to $171.6 million at December 31, 2013, from $172.5 million at December 31, 2012. This followed an increase of $2.2 million, or 1.3%, to $172.5 million at December 31, 2012 from $170.3 million at December 31, 2011. The planned lack of significant growth in total assets reflects our efforts to improve our capital ratios and reduce our risk profile. We intend to utilize a portion of the proceeds of the offering to grow our balance sheet through increased originations of one-to four family residential real estate, specifically conventional non-conforming and jumbo loans, on which we have historically focused. Specifically, we intend to increase our marketing efforts, inside and outside our current market area, foster deposit relationships as we increase core deposits, and develop mortgage products customized to serve the needs of our customer base, including “jumbo” loans, non-conforming residential loans, non-owner occupied residential loans and rehabilitation-to-permanent loans. We believe that a significant portion of our loan growth over the past several years was the direct result of relationships between experience lending staff that we hired in connection with our decision to enter into commercial real estate and multi-family lending. We intend to continue to leverage the business relationships of these lenders, and also to hire additional lenders with experience in our market area and the greater Boston area to obtain additional relationships in these communities and to complement our

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existing staff. To better serve and expand our customer base we intend to develop and continually review a pricing model that will attract prospective customers, particularly homeowners and investors in non-owner occupied residential and multi-family property and commercial real estate.

Increase our focus on commercial real estate, multi-family, non-owner occupied residential and construction lending and continue to expand our niche in non-owner occupied residential and construction lending. Although one- to four-family residential lending has been and will continue to be a key component of our strategy, we recognize that, with recent downward trends in interest rates on residential loans, a prudent approach to expanding our origination of a diverse variety of loans is essential to our profitability. We intend to increase our focus on commercial real estate, multi-family, non-owner occupied residential and construction loans, both in our market area and in the greater Boston area, and also expand the portfolio of non-owner occupied residential lending that we have developed in the past several years. In particular, we believe that our continued focus on our rehabilitation-to-permanent loan product will serve to initiate commercial lending relationships that will, over time, increase in size and complexity. Because commercial lending is based on relationships, in the past several years we have hired, and expect to continue to hire, commercial lending officers who we believe either already have strong borrower relationships or have the capability and experience to develop those relationships. We believe that fostering these relationships will allow us to increase our multi-family and commercial real estate lending, as well as related construction lending, as customers who began banking with us in the non-owner occupied residential and construction rehabilitation loan space grow their operations and become involved in larger projects. We also believe that these relationships will, despite increased relationship balances, serve to mitigate risk because these relationships tend to consist of more loans with smaller balances and secured by different properties as compared to commercial real estate loans.

As we have gradually increased our commercial real estate, multi-family, non-owner occupied residential and construction lending, we have been able to rely on the experience of our lenders to develop a culture of diligence with respect to adherence to policies and procedures designed to mitigate risk, and to enhance our lending policies and procedures with respect to these types of lending. Accordingly, we believe that we are positioned, with experienced key members of our lending team and policies and procedures developed to mitigate credit risk as we grow, to develop a significant portfolio of high-quality commercial real estate, multi-family, non-owner occupied residential and construction loans. Commercial real estate, multi-family, non-owner occupied residential and particularly construction loans generally have shorter terms and repricing characteristics than fixed-rate, longer-term, one- to four-family residential real estate loans. We expect that a disciplined approach to increasing our commercial real estate, multi-family, non-owner occupied residential and construction lending will diversify and increase the yield on our loan portfolio. In addition, because we will focus on providing excellent customer service and fostering relationship banking with respect to these loans in our market area and nearby Boston, we expect that an increase in lending will result in a corresponding increase in our customer base for deposits and other services.

Continue to expand our traditional originations of one- to four-family residential mortgage loans, customize non-conforming and jumbo mortgage loans to suit the needs of our customer base, foster multiple-loan relationships and market our niche non-owner occupied rehabilitation-to-permanent loans. Although we believe that we must increase non-residential lending in order to grow, increase profitability and diversify our portfolio, we also recognize that we have developed our reputation in our market area based on a tradition of conventional residential real estate mortgage lending. We believe that one- to four-family lending is essential to maintaining customer relations and our status as a community-oriented bank, and also creates invaluable ties to the communities that we serve. While expanding our conventional mortgage activities in our market area and in nearby Boston is important to our growth as well as our asset/liability and interest rate risk management, we recognize that, in order to fully serve the customers in our market area, we must increase our originations of loans of “jumbo” loans,

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loans where one or more characteristics of non-conforming loans, such as high debt-to-income ratios, are present but mitigated by other factors such as low loan-to-value ratios, and our niche rehabilitation-to-permanent loans in order to meet the needs of customers in our market area, subject to prudent credit risk management and underwriting policies. In addition, we expect to hire additional mortgage originators with lending experience in our market area and Boston in order to increase our origination capacity. We also believe that retention and servicing of the loans that we originate, particularly residential mortgage loans, is important to maintaining our status as a community-focused institution and preserving customer relationships. Accordingly, we intend to continue to retain in our portfolio the majority of the loans that we originate. We do not originate one- to four-family residential or other loans specifically for resale or rely on the sale of loans to generate noninterest income, and do not intend to do so in the future. However, we recognize that a policy of selling and purchasing select loans will allow us to supplement our interest income and, more importantly, manage interest rate risk. As we have done in the past, we will evaluate opportunities to sell certain long-term fixed-rate one- to four-family loans and to purchase quality residential real estate loans when such activities fulfill our asset/liability, interest rate risk and credit risk needs. We will also consider opening one or more loan production offices to increase our exposure to customers in portions of our market area without ready access to our branch offices, although we do not currently have specific plans to do so, and positioning a portion of our origination staff to these locations in order to expand our marketing reach to outlying portions of our market area.

Increasing core deposits through aggressive marketing and the offering of new deposit products. Although we have historically depended on certificate of deposits to fund our investment activity and loan originations, as well as supporting our liquidity needs, we also offer checking, NOW, savings and money market deposit accounts, which we refer to as “core” deposits. We recognize that we can obtain greater leverage from our deposits by focusing on relationship banking rather than “one product” customers that typically invest in certificates of deposits. Core deposits, which include all deposit account types except certificates of deposit, comprised 58.1% of our total deposits at December 31, 2013, up from 55.5% of total deposits at December 31, 2012. We market core deposits through the internet, in-branch and local mail, print and radio advertising, as well as programs that link various accounts and services together, minimizing service fees. We intend to pursue increased origination of these low cost deposits, with particular focus on transaction accounts, by implementing pro-active marketing and promotional programs, offering attractive interest rates, and offering competitive products to meet the needs of the demographic groups in our market areas, such as remote deposit capture for business customers, mobile banking, and broadening banking relationships with lending customers, particularly as we expand our commercial real estate, multi-family, non-owner occupied residential and construction lending. We expect to focus on employee training and development with respect to deposit generation, deposit retention and knowledge of our products and services so that our branches become sources of deposit generation. We also believe that the implementation of our strategy to increase relationship-based commercial real estate, multi-family non-owner occupied residential and construction lending and to establish additional product delivery channels and technological services such as electronic and mobile banking applications will serve to increase our core deposits. An increase in transaction deposits and relationship banking will decrease our dependence on certificates of deposit, reduce our interest rate sensitivity, and allow us to continue to utilize FHLB-Boston advances primarily for asset/liability management purposes rather than to fund our operations.

Continuing to improve our risk profile by managing our credit risk to maintain a low level of non-performing assets and enhancing our policies and procedures as needed. We believe that strong asset quality is a key to long-term financial success, and that managing credit risk is an essential part of successfully managing a financial institution. We have sought to grow and diversify the loan portfolio, while maintaining strong asset quality and moderate credit risk, using underwriting standards that we believe are conservative, as well as diligent monitoring of the portfolio and loans in non-accrual status and on-going collection efforts. In order to grow our loan portfolio, we must originate loans that have

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higher risks than conventional one- to four-family residential loans, including commercial real estate, multi-family, non-owner occupied residential and construction loans, as well as residential loans where certain characteristics of non-conforming loans are present. However, we believe that continued adherence to our philosophy of managing large loan exposures through our experienced, risk-based approach to lending will serve to mitigate the risks associated with such loans. We are committed to devoting significant resources to maintaining low levels of delinquencies and non-performing assets as we diversify our loan portfolio, and we remain acutely focused on the credit risks associated with these loans because we intend to retain the majority of these loans in our portfolio for an extended time.

Our strategy for credit risk management focuses on having well-defined credit policies and uniform underwriting criteria and providing prompt attention to potential problem loans. Specifically, we have implemented procedures to perform internal reviews of selected loans based on risk features and dollar volume. We have instituted a risk-rating matrix to appropriately identify potential risks and rate loans based on key risk characteristics. Additionally, we have implemented a policy that requires a third-party independent loan review of at least 25% of our commercial real estate, multi-family, non-owner occupied residential and construction portfolio, with a focus on new relationships, large dollar volume relationships, and identified problem loans. The loan review policy also requires a third-party review of a sample of loans originated by each loan officer. The third party reviewer provides an initial review of risk-rating conclusions and discusses its findings with management. The report is also presented to the board of directors. Final risk-rating conclusions are based on the third party reviewer’s independent research plus information provided by management. During the year ended December 31, 2013, a third party reviewed approximately $18.7 million, or approximately 40% of our commercial real estate, multi-family, non-owner occupied residential and construction loan portfolio. The third party reviewer downgraded one loan to substandard from special mention but otherwise concurred with our internal risk ratings with respect to loans reviewed in its initial findings, based on dollar amount outstanding. Accordingly, management concluded that our improved internal reviews and risk rating procedures are effective in evaluating our credit risk. We believe that policies and procedures are only effective when implemented and monitored by qualified and dedicated personnel. Accordingly, we created the position of Assistant Vice President—Credit Analyst in 2011 and maintain a staff with experience managing commercial loan administration. We expect to hire additional credit administration and collections personnel as needed to support the planned growth of our loan portfolio. We also intend to continually enhance our loan underwriting, credit administration and collection procedures, and to implement improved credit risk management and asset-liability management techniques, such as portfolio stress testing, portfolio credit analysis, and credit decision monitoring matrices. Finally, we believe that focusing on commercial lending relationships with active management teams or owners and on complete banking relationships (instead of loan only relationships) will also mitigate some of the risks associated with commercial and industrial and consumer lending.

Credit risk management also applies to our investment philosophy. We continually monitor the investment portfolio for credit risk, with a quarterly formal review by our executive committee and our asset/liability committee, which is composed of our President and Chief Executive Officer, our Senior Vice President and Chief Financial Officer, our Vice President of Commercial Lending and our Assistant Vice President—Credit Analyst, of any issuers that have heightened credit risk factors such as rating agency and analyst downgrades and declines in market valuation. We intend to replace maturing investments in 2014 as determined to be appropriate in accordance with our risk management policies, asset/liability analysis and our funding needs. We have also invested in money market mutual fund accounts in the past, which we utilize as an alternative to investing excess cash in federal funds, but do not have any positions at this time.

As was the case with many financial institutions, we experienced elevated levels of problem assets following the economic downturn that began in 2008. However, as a result of our credit risk

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management initiatives, we have reduced classified loans to $6.6 million, or 4.9% of total loans, at December 31, 2013 from a high of $8.4 million or 7.2% of total loans in June 2012, non-performing loans to $2.4 million, or 1.8% of total loans, at December 31, 2013 from a high of $4.6 million or 4.2% of total loans in September 2012, and delinquent loans to $2.1 million, or 1.6% of total loans, at December 31, 2013 from a high of $8.3 million or 7.5% of total loans in April 2011. Classified assets other than loans totaled $182,000 at December 31, 2013 and consisted entirely of private mortgage-backed securities we obtained as a distribution in kind of securities in 2009 after the manager of a mutual fund in which we had invested restricted cash redemptions. Accordingly, we believe that our credit risk and asset quality management initiatives have been effective and, as long as we continually review, evaluate and enhance, as necessary, our policies and procedures, will continue to be effective in maintaining low levels of classified, non-performing and delinquent loans.

Develop a commercial and industrial loan origination platform in our market area, including developing an SBA loan program. Our primary immediate strategic focus will be to expand one- to four-family residential lending in our market area and increase commercial real estate, multi-family, non-owner occupied and construction lending. However, we believe that, because our market area is increasingly becoming home to a variety of small businesses in our communities that serve the residential population, it is important to develop a commercial and industrial loan origination platform as a secondary complimentary source of income in the medium term. We have recently hired a lender with significant commercial and industrial lending experience, particularly in SBA lending. We have actively participated as a lender under the SBA Section 504 lending program, and were recently approved as a lender for the Section 7a SBA program. To expand commercial and industrial lending, we intend to target small- to mid-sized commercial clients, including retail businesses and medical and other professional practices, as well as construction firms and traditional commercial businesses, located in our market area; develop loan products that will satisfy the needs of small business borrowers in our market area; and expand SBA offerings in all areas of our market area. We believe that the development of a commercial and industrial lending platform will allow us to provide additional products and services to and deepen our banking relationships with our existing and future commercial customers, including customers engaged in commercial real estate, multi-family and construction industries, and the owners and employees of such businesses.

These strategies are intended to guide our investment of the net proceeds of the offering. We intend to continue to pursue our business strategy after the conversion and the offering, subject to changes necessitated by future market conditions, regulatory restrictions and other factors. We have adopted a strategic plan to leverage the capital raised in the offering to increase our earnings base, especially the size of our loan portfolio, and therefore our profitability. Our strategic plan assumes that, beginning in 2014, we will not incur the same level of charge-offs, provisions for loan losses, write downs on real estate owned and losses on sales of real estate owned or expenses related to problem assets as we have in recent periods, and that we will not incur the non-recurring expenses related to write-downs of securities and the construction of our home office that we incurred in 2012 and 2013. However, the conversion will have a short-term adverse impact on our operating results, due to additional costs related to becoming a public company, increased compensation expenses associated with our employee stock ownership plan and the possible implementation of one or more stock-based benefit plans after the completion of the conversion. In addition, growth of earning assets is essential to our future profitability, and we expect to incur expenses related to the implementation of our growth plan, including hiring initiatives, deposit generation campaigns and the potential opening of loan production offices. We may not be able to successfully implement our strategic plan, and therefore may not operate profitably in the periods following the conversion.

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Critical Accounting Policies

Certain of our accounting policies are important to the portrayal of our financial condition, since they require management to make difficult, complex or subjective judgments, some of which may relate to matters that are inherently uncertain. Estimates associated with these policies are susceptible to material changes as a result of changes in facts and circumstances. Facts and circumstances which could affect these judgments include, but are not limited to, changes in interest rates, changes in the performance of the economy and changes in the financial condition of borrowers. Our significant accounting policies are discussed in detail in Note 2 of the Notes to Consolidated Financial Statements included in this prospectus.

The recently enacted JOBS Act contains provisions that, among other things, reduce certain reporting requirements for qualifying public companies. As an “emerging growth company” we have elected to use the extended transition period to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. Accordingly, our financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards.

Allowance for Loan Losses. The allowance for loan losses is the amount estimated by management as necessary to cover losses inherent in the loan portfolio at the balance sheet date. The allowance is established through the provision for loan losses, which is charged to income. Determining the amount of the allowance for loan losses necessarily involves a high degree of judgment. Among the material estimates required to establish the allowance are: loss exposure at default; the amount and timing of future cash flows on impacted loans; value of collateral; and determination of loss factors to be applied to the various elements of the portfolio. All of these estimates are susceptible to significant change. Management reviews the level of the allowance quarterly and establishes the provision for loan losses based upon an evaluation of the portfolio, past loss experience, current economic conditions and other factors related to the collectability of the loan portfolio. Although we believe that we use the best information available to establish the allowance for loan losses, future adjustments to the allowance may be necessary if economic or other conditions differ substantially from the assumptions used in making the evaluation. In addition, bank regulators, as an integral part of their examination process, periodically review our allowance for loan losses and may require us to recognize adjustments to the allowance based on their judgments about information available to them at the time of their examination. A large loss could deplete the allowance and require increased provisions to replenish the allowance, which would adversely affect earnings.

Deferred Tax Assets. We use the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that some portion of the deferred tax asset will not be realized. We exercise significant judgment in evaluating the amount and timing of recognition of the resulting tax liabilities and assets. These judgments require us to make projections of future taxable income. The judgments and estimates we make in determining our deferred tax assets, which are inherently subjective, are reviewed on a continual basis as regulatory and business factors change. Any reduction in estimated future taxable income may require us to record a valuation allowance against our deferred tax assets.

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Anticipated Increase in Noninterest Expense

Following the completion of the conversion and offering, we anticipate that our noninterest expense will increase as a result of increased compensation expenses associated with the implementation of our employee stock ownership plan and the implementation of a stock-based incentive plan, if that incentive plan is approved by our stockholders. For further information, see “Summary—Benefits to Management and Potential Dilution to Stockholders Following the Conversion,” “Risk Factors—Risks Related to the offering—Our stock-based benefit plans will increase our costs, which will reduce our income,” and “Management of Pilgrim Bancshares, Inc.—Benefit Plans and Agreements” and “—Future Stock Benefit Plans.”

Our noninterest expense will also increase as a result of our contribution of cash and shares of common stock to our charitable foundation, and as a result of our operation as a public company. For further information, please see “Summary—Our Issuance of Cash and Shares of Our Common Stock to Pilgrim Bank Charitable Foundation,” “Risk Factors—Risks Related to Our Business—The cost of additional finance and accounting systems, procedures and controls in order to satisfy our new public company reporting requirements will increase our expenses” and “—Risks Related to the offering—The contribution to the charitable foundation will dilute your ownership interest and adversely affect net income in the year we complete the offering,” and “Pilgrim Bank Charitable Foundation.”

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

Total Assets. Total assets decreased $985,000, or 0.6%, to $171.6 million at December 31, 2013 from $172.5 million at December 31, 2012. The decrease was primarily the result of a decrease in cash and cash equivalents caused by decreases of deposits of $2.9 million as we managed our asset base in order to maintain our Tier 1 capital ratio and reduce our exposure to single product certificate of deposit customers. In addition, we increased borrowings from the Federal Home Loan Bank of Boston by $1.7 million to reduce funding costs.

Cash and Cash Equivalents and Time Deposits. Total cash and cash equivalents decreased $12.1 million, or 57.3%, to $9.0 million at December 31, 2013 from $21.1 million at December 31, 2012. Time deposits decreased $6.2 million, or 57.9%, to $4.5 million at December 31, 2013 from $10.7 million at December 31, 2012. The decrease in total cash and cash equivalents and time deposits reflected the maturation of time deposits, an increase of $20.3 million in net loans and normal year-end cash management.

Net Loans. Net loans increased $20.3 million, or 18.0%, to $132.9 million at December 31, 2013 from $112.6 million at December 31, 2012. During the year ended December 31, 2013, one- to four-family residential real estate loans increased $16.2 million, or 21.3%, to $92.4 million at December 31, 2013 from $76.2 million at December 31, 2012, commercial real estate loans increased $3.7 million, or 19.1%, to $19.4 million at December 31, 2013 from $15.7 million at December 31, 2012 and commercial and industrial loans increased $354,000, or 16.4%, to $2.5 million at December 31, 2013 from $2.2 million at December 31, 2012, while construction loans decreased $1.5 million, or 30.0%, to $3.5 million at December 31, 2013 from $5.0 million at December 31, 2012, home equity loans and lines of credit decreased $772,000, or 16.3%, to $4.0 million at December 31, 2013 from $4.7 million at December 31, 2012 and consumer loans decreased $1.0 million, or 34.5%, to $1.9 million at December 31, 2013 from $2.9 million at December 31, 2012. Increases in loan origination reflect strong growth in demand for loans in our market area in the current low interest rate environment, particularly one- to four-family residential, non-owner occupied residential, commercial real estate and multi-family loans, as well as our decision to grow loans during this time of strong demand. In addition, we continued to purchase high quality loans, particularly jumbo loans, in order to complement our loan originations.

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Investment Securities. Investment securities classified as available-for-sale decreased $2.2 million, or 14.0%, to $13.5 million at December 31, 2013 from $15.7 million at December 31, 2012, as management sold these securities to generate cash to deploy in lending activities. Investment securities classified as held-to-maturity decreased $142,000, or 35.9%, to $254,000 at December 31, 2013 from $396,000 at December 31, 2012 due to maturities in the ordinary course of business and write-downs of impaired securities in the amount of $247,000. At December 31, 2013, investment securities classified as available-for-sale consisted primarily of debt securities issued by the U.S. Treasury and U.S. government corporations and agencies, debt securities issued by states and political subdivisions, and government-sponsored mortgage-backed securities, with a focus on suitable government-sponsored securities to augment risk-based capital.

Bank Owned Life Insurance. Bank-owned life insurance (“BOLI”) increased $52,000, or 2.4%, to $2.2 million at December 31, 2013 from $2.1 million at December 31, 2012 due to normal increases in cash surrender value.

Deposits. Deposits decreased $3.0 million, or 1.9%, to $153.7 million at December 31, 2013 from $156.7 million at December 31, 2012. During the year ended December 31, 2013, demand deposits increased $3.1 million, or 34.1%, to $12.0 million from $9.0 million, NOW account deposits increased $496,000, or 2.5%, to $20.0 million from $19.5 million, savings accounts increased $257,000, or 1.5%, to $17.3 million from $17.0 million, money market accounts decreased $1.5 million, or 3.6%, to $39.9 million from $41.4 million and certificates of deposit decreased $5.3 million, or 7.6%, to $64.5 million from $69.8 million. Our core deposits, which we consider to be our noninterest demand accounts, NOW accounts, savings accounts and money market accounts, increased $2.4 million, or 2.8%, to $89.3 million at December 31, 2013 from $86.9 million at December 31, 2012. The decreases in certificates of deposit resulted primarily from management’s efforts to manage our balance sheet in order to improve capital ratios and reduce expenses, and were offset by increased deposits from commercial real estate, multi-family and non-owner occupied residential real estate borrowers who opened deposit accounts with us in connection with new loan originations.

Other Liabilities. Federal Home Loan Bank advances increased $1.7 million, or 51.5%, to $5.0 million at December 31, 2013 from $3.3 million at December 31, 2012, which reflects management’s efforts to manage our balance sheet and our asset/liability position. Other liabilities, which include interest payable, accruals for employee pension and medical plans and normal accruals for expenses, increased $113,000, or 54.6%, to $320,000 at December 31, 2013 from $207,000 at December 31, 2012, reflecting routine timing fluctuations.

Total Equity. Total equity increased $130,000, or 1.1%, to $12.5 million at December 31, 2013 from $12.4 million at December 31, 2012. The increase resulted primarily from net income of $368,000 during the year ended December 31, 2013, offset by a decrease of $238,000 in accumulated other comprehensive income due to an increase in the net unrealized loss position of our available-for-sale investment securities portfolio.

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

General. Net income for the year ended December 31, 2013 was $368,000, compared to net income of $742,000 for the year ended December 31, 2012. The decrease in net income was primarily due to a write-down of securities of $247,000 in the year ended December 31, 2013 compared to a write-down of securities of $52,000 in the year ended December 31, 2012, a decrease of $362,000, or 95.5%, in gains on sale of mortgages to $17,000 from $379,000, and an increase in expenses of $188,000, or 4.3%, to $4.6 million from $4.4 million, offset by a decrease of $156,000 in provision for loan losses to $0 from $156,000 and an increase of $75,000 in gains from the sale of other real estate owned to $121,000 from $46,000.

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Interest and Dividend Income. On a tax-equivalent basis, total interest and dividend income remained relatively stable at $6.0 million for the year ended December 31, 2013 and the year ended December 31, 2012. The slight decrease in interest income was the result of a $62,000 increase in interest on loans and a $119,000 decrease in interest on investment securities. The average balance of loans during the year ended December 31, 2013 increased $12.8 million to $124.3 million from $111.5 million for the year ended December 31, 2012, while the average yield on loans decreased by 46 basis points to 4.51% for the year ended December 31, 2013 from 4.97% for the year ended December 31, 2012. The decrease in yield reflected the lower market rates for originated loans in 2012 and early 2013. The average balance of investment securities decreased $4.3 million to $14.2 million for the year ended December 31, 2013 from $18.5 million for the year ended December 31, 2012, and the yield on investment securities (on a tax-equivalent basis) decreased by 8 basis points to 2.43% for the year ended December 31, 2013 from 2.51% for the year ended December 31, 2012.

Interest Expense. Total interest expense decreased $139,000, or 10.6%, to $1.2 million for the year ended December 31, 2013 from $1.3 million for the year ended December 31, 2012. Interest expense on interest-bearing deposit accounts decreased $137,000, or 11.0%, to $1.1 million for the year ended December 31, 2013 from $1.2 million for the year ended December 31, 2012. The decrease was primarily due to the impact of maturing certificates of deposit renewing at lower rates, shift in deposit mix toward core deposits and deposit rate reductions in core deposits.

Interest expense on Federal Home Loan Bank of Boston advances decreased $2,000 to $65,000 for the year ended December 31, 2013 from $67,000 for the year ended December 31, 2012. The average balance of advances increased by $640,000 to $4.1 million for the year ended December 31, 2013 from $3.5 million for the year ended December 31, 2012, as we drew advances and used the cash for funding loan production, deposit withdrawals and operating cash management. The cost decreased 36 basis points to 1.58% for the year ended December 31, 2013 from 1.94% for the year ended December 31, 2012.

Net Interest and Dividend Income. On a tax-equivalent basis, net interest and dividend income increased $68,000, or 1.4%, for the year ended December 31, 2013 from the year ended December 31, 2012. The increase resulted primarily from a $139,000 decrease in interest expense, which was offset by a $71,000 decrease in interest income. Our average interest-earning assets increased to $159.0 million for the year ended December 31, 2013 from $155.5 million for the year ended December 31, 2012, and our net interest rate spread decreased 4 basis points to 2.99% for the year ended December 31, 2013 from 3.03% for the year ended December 31, 2012. Our net interest margin decreased slightly to 3.05% for the year ended December 31, 2013 from 3.07% for the year ended December 31, 2012. The stability in our interest rate spread and net interest margin reflected primarily the management of the repricing of our interest-bearing liabilities and our interest-earning assets in a decreasing interest rate environment, including the increase in loan origination. In addition, we benefited from the repricing of long-term certificates of deposit at maturity in the ordinary course.

Provision for Loan Losses. Based on our analysis of the factors described in “Critical Accounting Policies—Allowance for Loan Losses,” we did not record a provision for loan losses for the year ended December 31, 2013, compared to a provision of $156,000 for the year ended December 31, 2012. We analyze our allowance for loan losses on a monthly basis and we expect to resume recording provisions for loan losses when consistent with our loan origination and credit risk. The fact that we did not record a provision for loan losses for the year ended December 31, 2013 reflected net charge-offs of $46,000 for the year compared to net charge-offs of $230,000 for the year ended December 31, 2012. The allowance for loan losses was $742,000 or 0.56% of total loans at December 31, 2013 compared to

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$788,000, or 0.69% of total loans at December 31, 2012. Total non-performing loans were $2.4 million at December 31, 2013 compared to $4.7 million at December 31, 2012. As a percentage of non-performing loans, the allowance for loan losses was 31.6% at December 31, 2013 compared to 16.9% at December 31, 2012. Total classified loans were $6.6 million at December 31, 2013 compared to $9.5 million at December 31, 2012. The allowance for loan losses reflects the estimate we believe to be appropriate to cover incurred probable losses, which were inherent in the loan portfolio at December 31, 2013 and 2012.

Noninterest Income. Noninterest income decreased $626,000, or 64.1%, to $351,000 for the year ended December 31, 2013 from $977,000 for the year ended December 31, 2012. The decrease was primarily related to a decrease in the gain on sale of loans of $362,000 to $17,000 for the year ended December 31, 2013 from $379,000 for the year ended December 31, 2012 as an increase in interest rates caused a decline in refinancing activity and we elected to retain loans in 2013 instead of selling as we did in 2012. We also experienced an increase in the write-down on securities of $195,000 to $247,000 for the year ended December 31, 2013 from $52,000 for the year ended December 31, 2012, which was primarily related to a write-down of $218,000 on mutual fund securities. Additionally, there was a $88,000 decrease in net gain on sales and calls of securities to $5,000 for the year ended December 31, 2013 from $93,000 for the year ended December 31, 2012, resulting from market conditions, and a decrease in rental income of $41,000 to $204,000 for the year ended December 31, 2013 from $245,000 for the year ended December 31, 2012 resulting from the sale of real estate owned and the payment by one tenant in 2012 of a significant amount of past due maintenance expenses from 2011. These decreases in noninterest income were offset by an increase in other income, which consisted primarily of an increase of $75,000 in gains on the sale of real estate owned to $121,000 for the year ended December 31, 2013 from $46,000 for the year ended December 31, 2012.

Noninterest Expense. Noninterest expense increased $188,000 to $4.3 million for the year ended December 31, 2013 from $4.4 million for the year ended December 31, 2012. The increase primarily reflected increases in salaries and employee benefits expense of $159,000, occupancy and equipment expense of $101,000, and $44,000 in data processing expense, offset by slight decreases in professional fees, communications and supplies expenses, and a decrease of $78,000 in other expenses, which consisted primarily of a decrease in real estate owned expenses.

Income Taxes. Income tax expense was $160,000 for the year ended December 31, 2013 compared to $387,000 for the year ended December 31, 2012. The effective tax rate as a percent of pre-tax income was 30.3% and 34.3% for the years ended December 31, 2013 and 2012, respectively. The decrease in the effective tax rate for 2013 was due to a decrease in income before taxes to $528,000 from $1.1 million. We performed an evaluation of our deferred tax assets at December 31, 2013 and December 31, 2012. In making the determination whether a deferred tax asset is more likely than not to be realized, we seek to evaluate all available positive and negative evidence including the possibility of future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial results. A deferred tax asset valuation allowance is established to reduce the net carrying amount of deferred tax assets if it is determined to be more likely than not that all or some portion of the deferred tax asset will not be realized. At each of December 31, 2013 and December 31, 2012, our deferred tax asset valuation allowance was $1,000 and $381,000, respectively, reducing our net deferred tax asset to $365,000 and $156,000, respectively, at those dates. The deferred tax asset valuation allowance relates to uncertainty regarding the utilization of the capital loss carry forwards related to security sales. Approximately $87,000 of our net deferred tax asset at December 31, 2013 related to the $218,000 write-down of our mutual fund investment managed by Shay Financial. As a result of the termination of this mutual fund investment in January 2014, we must generate future capital gains in order to utilize this portion of our deferred tax asset, which expires during the year ending December 31, 2019.

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Average Balances and Yields

The following tables set forth average balance sheets, average yields and costs, and certain other information at December 31, 2013 and for the periods indicated. Tax-equivalent yield adjustments have been made because we had tax-free interest-earning assets during the years. All average balances are daily average balances based upon amortized costs. Non-accrual loans were included in the computation of average balances. The yields set forth below include the effect of deferred fees, discounts, and premiums that are amortized or accreted to interest income or interest expense.

	At December 31, 2013			For the Year Ended December 31,
				2013								2012
				Average Outstanding Balance			Interest		Average Yield/Rate			Average Outstanding Balance			Interest		Average Yield/Rate
	Yield/Rate
	(Dollars in thousands)
Interest-earning assets:
Loans		4.35	%	$	124,298		$	5,600		4.51	%	$	111,492		$	5,538		4.97	%
Interest-earning deposits		0.38	%		19,410			74		0.38			24,284			85		0.35
Investment securities (1)		2.82	%		14,248			346		2.43			18,526			465		2.51
Federal Home Loan Bank stock and The Co-Operative Central Reserve Fund		0.25	%		1,055			3		0.28			1,165			6		0.52
Total interest-earning assets		3.80	%		159,011			6,023		3.79			155,467			6,094		3.92
Noninterest-earning assets					12,276								13,394
Total assets				$	171,287							$	168,861
Interest-bearing liabilities:
Savings accounts		0.20	%	$	17,323		$	34		0.20	%	$	16,609		$	33		0.20	%
NOW accounts		0.10	%		17,390			19		0.11			17,017			18		0.11
Money market accounts		0.40	%		39,799			164		0.41			37,994			197		0.52
Certificates of deposit		1.25	%		68,985			893		1.29			72,215			999		1.38
Total interest-bearing deposits		0.72	%		143,497			1,110		0.77			143,835			1,247		0.87
Federal Home Loan Bank advances		1.27	%		4,101			65		1.58			3,461			67		1.94
Total interest-bearing liabilities		0.74	%		147,598			1,175		0.80			147,296			1,314		0.89
Noninterest-bearing liabilities:
Noninterest-bearing deposits					10,997								9,223
Other noninterest-bearing liabilities					346								297
Total noninterest-bearing liabilities					11,343								9,520
Total liabilities					158,941								156,816
Total equity					12,346								12,045
Total liabilities and total equity				$	171,287							$	168,861
Net interest income							$	4,848							$	4,780
Net interest rate spread (2)										2.99	%							3.03	%
Net interest-earning assets (3)				$	11,413							$	8,171
Net interest margin (4)										3.05	%							3.07	%
Average interest-earning assets to interest-bearing liabilities					107.73	%							105.55	%

(1) Includes securities available-for-sale and held-to-maturity. A tax-equivalent adjustment of $60,000 and $49,000 was applied to tax-exempt income for the years ended December 31, 2013 and December 31, 2012, respectively.

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

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

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

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Rate/Volume Analysis

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

	Year Ended December 31, 2013 vs. 2012
	Increase (Decrease) Due to						Total Increase (Decrease)
	Volume			Rate
	(In thousands)
Interest-earning assets:
Loans	$	326		$	(264	)	$	62
Interest-earning deposits		(20	)		9			(11	)
Investment securities (1)		(104	)		(15	)		(119	)
Federal Home Loan Bank stock and The Cooperative Central Reserve fund		(1	)		(2	)		(3	)
Total interest-earning assets		201			(272	)		(71	)
Interest-bearing liabilities:
Savings accounts		1			—			1
NOW accounts		—			1			1
Money market accounts		10			(43	)		(33	)
Certificates of deposit		(44	)		(62	)		(106	)
Total interest-bearing deposits		(33	)		(104	)		(137	)
Federal Home Loan Bank advances		(101	)		99			(2	)
Total interest-bearing liabilities		(134	)		(5	)		(139	)
Change in net interest income	$	335		$	(267	)	$	68

(1) Includes securities available-for-sale and held-to-maturity. A tax-equivalent adjustment of $60,000 and $49,000 was applied to tax-exempt income for the years ended December 31, 2013 and December 31, 2012, respectively.

Management of Market Risk

General. Our asset/liability management strategy attempts to manage the impact of changes in interest rates on net interest income, our primary source of earnings.

Over the past several years, management has implemented an asset/liability strategy to manage, subject to our profitability goals, our interest rate risk. Among the techniques we use to manage interest rate risk are:

• originating commercial real estate, multi-family and construction loans, all of which tend to have shorter terms and higher interest rates than one- to four-family residential real estate loans, and which generate customer relationships that can result in larger noninterest bearing checking accounts;

• selectively selling the majority of the fixed rate residential mortgage loans that we originate, selectively retaining fixed-rate residential mortgage loans that we originate and retaining all of the adjustable-rate residential real estate loans that we originate;

• lengthening the weighted average maturity of our liabilities through retail deposit pricing strategies and through longer-term wholesale funding sources such as fixed-rate advances from the Federal Home Loan Bank of Boston;

• increasing our generation of core deposits to support lending and investment activity;

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• investing in shorter- to medium-term investment securities; and

• increasing noninterest income as a percentage of total income to decrease our reliance on net interest margin and interest rate spread.

Our board of directors is responsible for the review and oversight of our asset/liability committee. This committee is charged with developing and implementing an asset/liability management plan, and meets at least quarterly to review pricing and liquidity needs and assess our interest rate risk. We currently utilize a third-party modeling program, prepared on a quarterly basis, to evaluate our sensitivity to changing interest rates, given our business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with the guidelines approved by the Board of Directors. In addition, we regularly perform a “gap analysis” of the discrepancy between the repricing of our assets and liabilities.

Net Interest Income Analysis. We analyze our sensitivity to changes in interest rates through our net interest income simulation model which is provided to us by an independent third party. Net interest income is the difference between the interest income we earn on our interest-earning assets, such as loans and securities, and the interest we pay on our interest-bearing liabilities, such as deposits and borrowings. We estimate what our net interest income would be for a one-year period based on current interest rates. We then calculate what the net interest income would be for the same period under different interest rate assumptions. We also estimate the impact over a two year time horizon. The following table shows the estimated impact on net interest income for the one-year period beginning September 30, 2013 resulting from potential changes in interest rates. The model is run at least quarterly showing shocks from +400bp to -400bp, although a decline of greater than -100bp is currently improbable. These estimates require certain assumptions to be made, including loan and mortgage-related investment prepayment speeds, reinvestment rates, and deposit maturities and decay rates. These assumptions are inherently uncertain. As a result, no simulation model can precisely predict the impact of changes in interest rates on our net interest income. Although the net interest income table below provides an indication of our interest rate risk exposure at a particular point in time, such estimates are not intended to, and do not, provide a precise forecast of the effect of changes in market interest rates on our net interest income and will differ from actual results.

Rate Shift (1)	Net Interest Income Year 1 Forecast		Year 1 Change from Level
	(Dollars in thousands)
+400	$	4,704		(12.95	)%
+300		4,864		(9.99	)%
+200		5,095		(5.72	)%
+100		5,236		(3.11	)%
Level		5,404		—
–100		5,301		(1.91	)%
–200		5,205		(3.68	)%
–300		5,143		(4.83	)%
–400		5,105		(5.53	)%

(1) The calculated changes assume an immediate shock of the static yield curve.

Certain shortcomings are inherent in the methodology used in the above interest rate risk measurement. Modeling changes in net portfolio value requires making certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. In this regard, the tables presented assume that the composition of our interest-sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of

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the duration or repricing of specific assets and liabilities. The tables also do not measure the changes in credit and liquidity risk that may occur as a result of changes in general interest rates. Accordingly, although the tables provide an indication of our interest rate risk exposure at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on our economic value of equity and will differ from actual results.

Net Present Value of Equity Analysis. In order to monitor and manage interest rate risk, we also use the net present value of equity at risk (“NPV”) methodology. This methodology calculates the difference between the present value of expected cash flows from assets and liabilities. The comparative scenarios assume an immediate parallel shifts in the yield curve in increments of 100 basis point (bp) rate movements. A basis point equals one-hundredth of one percent, and 100 basis points equals one percent. An increase in interest rates from 3% to 4% would mean, for example, a 100 basis point increase in the “Change in Interest Rates” column below. The model is run at least quarterly showing shocks from +300bp to -100bp, because a decline of greater than -100bp is currently improbable. The board of directors and management review the methodology’s measurements on a quarterly basis.

The interest rate scenarios are used for analytical purposes and do not necessarily represent management’s view of future market movements. Results of the modeling are used to provide a measure of the degree of volatility interest rate movements may influence our earnings. Modeling the sensitivity of earnings to interest rate risk is decidedly reliant on numerous assumptions embedded in the model. These assumptions include, but are not limited to, management’s best assessment of the effect of changing interest rates on the prepayment speeds of certain assets and liabilities, projections for account balances in each of the product lines offered and the historical behavior of deposit rates and balances in relation to changes in interest rates. These assumptions are inherently changeable, and as a result, the model is not expected to precisely measure net interest income or precisely predict the impact of fluctuations in interest rate on net interest income. Actual results will differ from the simulated results due to timing, magnitude, and frequency of interest rate changes as well as changes in market conditions. Assumptions are supported with annual back testing of the model to actual market rate shifts.

The table below sets forth, as of September 30, 2013, the estimated changes in the net present value of equity that would result from the designated changes in the United States Treasury yield curve under an instantaneous parallel shift for Pilgrim Bank. Computations of prospective effects of hypothetical interest rate changes are based on numerous assumptions including relative levels of market interest rates, loan prepayments and deposit decay, and should not be relied upon as indicative of actual results.

At September 30, 2013
	Estimated EVE (2)		Estimated Increase (Decrease) in EVE						EVE as Percentage of Economic Value of Assets (3)
Changes in Interest Rates (basis points) (1)			Amount			Percent			EVE Ratio			Changes in Basis Points
	(Dollars in thousands)
+300	$	13,599	$	(13,191	)		(49.24	)%		8.02	%		(6.42	)%
+200		17,727		(9,063	)		(33.83	)%		10.15	%		(4.29	)%
+100		22,021		(4,769	)		(17.80	)%		12.25	%		(2.19	)%
0		26,790		—			—			14.44	%		—
–100		30,046		3,256			12.15	%		15.88	%		1.44	%

(1) Assumes instantaneous parallel changes in interest rates.

(2) EVE or Economic Value of Equity at Risk measures the Bank’s exposure to equity due to changes in a forecast interest rate environment.

(3) EVE Ratio represents Economic Value of Equity divided by the economic value of assets which should translate into built in stability for future earnings.

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The table above indicates that at September 30, 2013, in the event of an instantaneous parallel 100 basis point decrease in interest rates, we would experience a 12.15% increase in net portfolio value. In the event of an instantaneous 100 basis point increase in interest rates, we would experience a 17.80% decrease in net portfolio value.

Depending on the relationship between long-term and short-term interest rates, market conditions and consumer preference, we may place greater emphasis on maximizing our net interest margin than on strictly matching the interest rate sensitivity of our assets and liabilities. We believe that the increased net income which may result from an acceptable mismatch in the actual maturity or re-pricing of our assets and liabilities can, during periods of declining or stable interest rates, provide sufficient returns to justify an increased exposure to sudden and unexpected increases in interest rates. We believe that our level of interest rate risk is acceptable using this approach.

We do not engage in hedging activities, such as engaging in futures, options or swap transactions, or investing in high-risk mortgage derivatives, such as collateralized mortgage obligation residual interests, real estate mortgage investment conduit residual interests or stripped mortgage backed securities.

Liquidity and Capital Resources

Our primary sources of funds are deposits, principal and interest payments on loans and securities, proceeds from the sale of loans, proceeds from maturities and calls of securities, maturities of certificate of deposit investments and Federal Home Loan Bank advances. While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and mortgage prepayments are greatly influenced by general interest rates, economic conditions, and competition. Our most liquid assets are cash and short-term investments including interest-bearing demand deposits. The levels of these assets are dependent on our operating, financing, lending, and investing activities during any given period.

Our cash flows are comprised of three primary classifications: cash flows from operating activities, investing activities, and financing activities. Net cash provided by operating activities was $1.2 million and $1.5 million for the years ended December 31, 2013 and December 31, 2012, respectively. Net cash used in investing activities, which consists primarily of disbursements for loan originations, the purchase of securities and the purchase of time deposits with other banks, offset by principal collections on loans, proceeds from the sale of securities, proceeds from redemption of time deposits and proceeds from maturing securities and pay downs on mortgage-backed securities, was $12.1 million and $1.7 million for the years ended December 31, 2013 and December 31, 2012, respectively. During the year ended December 31, 2013, we purchased $3.9 million and sold $3.6 million in securities held as available-for-sale, and during the year ended December 31, 2012, we purchased $5.3 million and sold $3.1 million in securities held as available-for-sale. Net cash provided by (used in) financing activities, consisting primarily of the activity in deposit accounts and Federal Home Loan Bank advances, was $(1.2 million) and $1.5 million for the years ended December 31, 2013 and December 31, 2012, respectively, resulting from our strategy of managing growth and cash flows to preserve capital ratios and reduce expenses.

At December 31, 2013, we exceeded all of our regulatory capital requirements with a tier 1 leverage capital level of $12.7 million, or 7.49% of adjusted total assets, which is above the required level of $8.4 million, or 5.00%; and total risk-based capital of $13.4 million, or 13.49% of risk-weighted assets, which is above the required level of $9.9 million, or 10.00%. At December 31, 2012, we exceeded all of our regulatory capital requirements with a tier 1 leverage capital level of $12.2 million, or 7.21% of adjusted total assets, which is above the required level of $8.4 million, or 5.00%; and total risk-based capital of $13.0 million, or 14.02% of risk-weighted assets, which is above the required level of $9.3

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million, or 10.00%. Accordingly, Pilgrim Bank was categorized as well capitalized at December 31, 2013 and December 31, 2012. Management is not aware of any conditions or events since the most recent notification that would change our category.

At December 31, 2013, we had outstanding commitments to originate loans of $4.2 million and unadvanced funds on loans of $7.3 million. We anticipate that we will have sufficient funds available to meet our current loan origination commitments. Certificates of deposit that are scheduled to mature in less than one year from December 31, 2013 totaled $35.8 million. Management expects, based on historical experience, that a substantial portion of the maturing certificates of deposit will be renewed. However, if a substantial portion of these deposits is not retained, we may utilize Federal Home Loan Bank advances or raise interest rates on deposits to attract new accounts, which may result in higher levels of interest expense.

Off-Balance Sheet Arrangements. In the normal course of operations, we engage in a variety of financial transactions that, in accordance with U.S. Generally Accepted Accounting Principles, are not recorded in our financial statements. These transactions involve, to varying degrees, elements of credit, interest rate and liquidity risk. Such transactions are used primarily to manage customers’ requests for funding and take the form of loan commitments, lines of credit and standby letters of credit. For information about our loan commitments, unused lines of credit and standby letters of credit, see Note 11 of the Notes to our Consolidated Financial Statements beginning on page F-1 of this prospectus.

We have not engaged in any other off-balance-sheet transactions in the normal course of our lending activities.

Recent Accounting Pronouncements

For a discussion of the impact of recent accounting pronouncements, see Note 2 of the Notes to our Consolidated Financial Statements beginning on page F-1 of this prospectus.

Impact of Inflation and Changing Prices

The financial statements and related data presented herein have been prepared in accordance with generally accepted accounting principles in the United States of America which require the measurement of financial position and operating results in terms of historical dollars without considering changes in the relative purchasing power of money over time due to inflation. The primary impact of inflation on our operations is reflected in increased operating costs. Unlike most industrial companies, virtually all of the assets and liabilities of a financial institution are monetary in nature. As a result, interest rates, generally, have a more significant impact on a financial institution’s performance than does inflation. Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services.

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BUSINESS OF PILGRIM BANCSHARES, INC.

Pilgrim Bancshares, Inc. is incorporated in the State of Maryland. We have not engaged in any business to date. Upon completion of the conversion, we will own all of the issued and outstanding stock of Pilgrim Bank. We intend to contribute at least 50.0% of the net proceeds from the offering to Pilgrim Bank. Pilgrim Bancshares, Inc. will retain the remainder of the net proceeds from the offering and use a portion of the retained net proceeds to make a loan to the employee stock ownership plan or to capitalize a subsidiary that will make a loan to the employee stock ownership plan and contribute a portion of the retained net proceeds to our charitable foundation. At a later date, we may use the net proceeds to pay dividends to stockholders and repurchase shares of common stock, subject to our capital needs and regulatory limitations. We will invest our initial capital as discussed in “How We Intend to Use the Proceeds from the Offering.”

After the conversion and the offering are complete, Pilgrim Bancshares, Inc., as the holding company of Pilgrim Bank, will be authorized to pursue other business activities permitted by applicable laws and regulations, which may include the acquisition of banking and financial services companies. See “Supervision and Regulation—Holding Company Regulation” for a discussion of the activities that are permitted for bank holding companies. We currently have no understandings or agreements to acquire other financial institutions although we may determine to do so in the future. We may also borrow funds for reinvestment in Pilgrim Bank.

Following the offering, our cash flow will depend on earnings from the investment of the net proceeds from the offering that we retain, and any dividends we receive from Pilgrim Bank. Pilgrim Bank is subject to regulatory limitations on the amount of dividends that it may pay. See “Supervision and Regulation—Federal Banking Regulation—Capital Distributions” and “—Massachusetts Banking Laws and Supervision—Dividends.” Initially, Pilgrim Bancshares, Inc. will neither own nor lease any property, but will instead pay a fee to Pilgrim Bank for the use of its premises, equipment and furniture. At the present time, we intend to employ only persons who are officers of Pilgrim Bank to serve as officers of Pilgrim Bancshares, Inc. We will, however, use the support staff of Pilgrim Bank from time to time. We will pay a fee to Pilgrim Bank for the time devoted to Pilgrim Bancshares, Inc. by employees of Pilgrim Bank; however, these persons will not be separately compensated by Pilgrim Bancshares, Inc. Pilgrim Bancshares, Inc. may hire additional employees, as appropriate, to the extent it expands its business in the future.

BUSINESS OF PILGRIM BANK

General

Pilgrim Bank is a Massachusetts stock co-operative bank that was originally organized in 1916 under the name Pilgrim Co-Operative Bank as a Massachusetts mutual co-operative bank. In 2005, the Bank changed its name to Pilgrim Bank. The Bank opened its first branch in Cohasset in 2002 and a second branch in Marion in 2008. As a result of growth in recent years, in 2011 the Bank purchased the most prominent building in the village of Cohasset, a vacant hardware store, renovated it, and in 2012 opened its new headquarters on that site.

We reorganized into the mutual holding company structure in 2010 by forming Conahasset Bancshares, MHC, our Massachusetts chartered mutual holding company, and Conahasset Bancshares, Inc., our Maryland chartered mid-tier holding company, and converting Pilgrim Bank to a Massachusetts chartered stock co-operative bank. Conahasset Bancshares, MHC owns 100% of the outstanding shares of common stock of Conahasset Bancshares, Inc., which in turn owns 100% of the outstanding shares of common stock of Pilgrim Bank.

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Our business consists primarily of attracting deposits from the general public and investing those deposits, together with funds generated from operations, in one- to four-family residential real estate, commercial real estate, multi-family and construction loans, and, to a lesser extent, commercial and industrial and consumer loans. We have historically conducted our lending operations with a view towards the specific needs of customers in the communities that we serve, measuring our success by customer satisfaction and the extent of our customer relationships, rather than on volume based loan origination. Accordingly because of the demographics of our market area, we have focused, and expect to continue to focus, on “jumbo” loans. At December 31, 2013, $92.4 million, or 69.2% of our total loan portfolio, was comprised of one- to four-family residential real estate loans, including non-owner occupied residential real estate loans of $17.6 million, or 13.2% of our loan portfolio, and jumbo loans of $41.2 million, or 55.1% of our owner occupied one- to four-family residential loans and 30.9% of our total loans. Of the jumbo loans, $24.6 million were originated by Pilgrim Bank and $16.6 million were purchased loans.

We also invest in securities, which consist primarily of U.S. government agency obligations and U.S. government agency mortgage-backed securities and to a lesser extent, state and municipal securities and U.S. government agency collateralized mortgage obligations. We historically have relied heavily on certificates of deposit for funding, but we offer a variety of deposit accounts, including checking accounts, NOW accounts, savings accounts, money market accounts and certificate of deposit accounts, including IRAs. We utilize advances from the FHLB-Boston for asset/liability management purposes, to leverage loan purchases, and, to a much lesser extent, for additional funding for our operations. At December 31, 2013, we had $5.0 million in advances outstanding with FHLB-Boston.

Market Area and Competition

We conduct our operations from our main office and adjacent operations center in Cohasset, Massachusetts and our two additional full-service banking offices located in Cohasset and Marion, Massachusetts. Our primary market area is the South Shore and South Coast areas of Massachusetts, which includes portions of Plymouth, Norfolk and Bristol counties. We serve customers located in a number of small towns in these areas, including Cohasset, Scituate, Hull, Hingham, Norwell, Marshfield, Marion, Mattapoisett, Plymouth, Rochester and Wareham. Although our current operations are not focused in Boston, we are affected by economic conditions in Boston because our loan portfolio includes a significant number of loans that are secured by real estate or that have borrowers located in Boston. In addition, a number of our customers who reside in our market area are employed in Boston, the operations of our commercial and industrial loan customers depend in part on sales of products and services to individuals or other businesses located in Boston, and a number of our non-owner occupied residential and multi-family loan customers have properties in Boston as well as in our market area. We intend to expand our lending operations, particularly commercial real estate, multi-family, non-owner occupied residential and construction lending, in Boston, so we will continue to be affected by economic conditions in Boston.

Our offices are located in towns with prestigious, recognizable names. The population of our market area tends to be older, affluent and financially stable, with a high concentration of white collar professionals who work in the greater Boston area. The population is also financially sophisticated and desirous of wealth management and other services provided by a trusted community financial institution. The employer base in our market area consists primarily of retail trade, professional and technical services, construction, healthcare, real estate and finance and insurance, together with food service and accommodation. Norfolk County also has significant levels of employment in manufacturing, and Plymouth County has significant levels of employment in transportation and utilities, with Plymouth being home to an industrial park and a nuclear power plant. The greater Boston area, which we also serve, is home to a number of colleges and universities, as well as substantial health care, financial and

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technology industries. The market area recently experienced, and is projected to continue to experience, minimal population growth. However, we believe that the characteristics of the population in our market area, particularly the market for “jumbo” and non-conforming residential loans, non-owner occupied residential loans and construction and renovation loans, presents potential for significant growth in both loans and retail deposits. In addition, we opened our Marion office in 2008, just prior to the economic downturn, and we believe that the area surrounding this office presents opportunities for growth that we have not yet been able to pursue.

The population of Norfolk County in 2012 was 678,000, an increase of approximately 1.0% from 2010, and the population of Plymouth County in 2012 was 500,000, an increase of approximately 1.0% from 2010. The November 2013 unemployment rates for Norfolk and Plymouth counties were 5.5% and 6.5%, respectively, as compared to the Massachusetts unemployment rate of 6.6% and the U.S. unemployment rate of 7.0%. The 2013 estimated average household income for Norfolk and Plymouth counties was $113,948 and $93,454, respectively, compared to 2013 average household income for Massachusetts and the United States of $87,849 and $69,637, respectively. The 2013 median household incomes for these counties was $81,363 and $72,825, respectively, compared to 2013 median household income for Massachusetts and the United States of $63,748 and $49,297, respectively. In addition, 41.0% of households in Norfolk County and 34.8% of households in Plymouth County had 2012 incomes in excess of $100,000. We are currently focused on maintaining our asset quality and increasing one- to four-family residential, commercial real estate, multi-family, non-owner occupied residential and construction lending, as well as increasing generation of core deposits, and we believe that we will have significant opportunity to do so. In addition, we believe that our efforts to improve our status as an independent community-focused commercial bank will help to grow our brand awareness with a younger generation of potential customers.

We face competition within our market area both in making loans and attracting deposits. Our market area has a concentration of financial institutions that include large money center and regional and super-regional banks, community banks and credit unions.

Lending Activities

As a traditional thrift, we have historically focused on one- to four-family owner occupied residential lending, including jumbo mortgages and owner occupied construction. In recent years, we have expanded to include non-owner occupied investment residential, commercial real estate, multi-family and construction loans, and, to a lesser extent, commercial and industrial and consumer loans. Subject to market conditions and our asset-liability analysis, we expect to continue to increase our focus on commercial real estate and multi-family, construction and commercial and industrial lending, in an effort to diversify our overall loan portfolio and increase the overall yield earned on our loans. From time to time, for purposes managing interest rate risk, we also sell in the secondary market some of the long-term fixed-rate residential mortgage loans that we originate, generally on a servicing-retained, non-recourse basis. All of our loan sales to date have been to the Federal Home Loan Bank Mortgage Partnership Finance Program, but we are also an approved Freddie Mac lender. In addition, for purposes of managing interest rate risk, generating income and diversifying our portfolio, we regularly purchase owner occupied residential real estate loans and consumer loans, particularly automobile loans. Residential real estate loans are purchased on either a servicing released or servicing retained basis. These loans are high quality loans and are usually purchased from another bank. Automobile loans are purchased at 90% of the outstanding balance and the seller retains 10% ownership as well as the servicing.

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Loan Portfolio Composition. The following table sets forth the composition of our loan portfolio by type of loan at the dates indicated.

	At December 31,
	2013						2012
	Amount			Percent			Amount			Percent
	(Dollars in thousands)
Real estate loans:
One- to four-family residential (1)	$	92,383			69.16	%	$	76,199			67.07	%
Commercial		19,380			14.51			15,726			13.84
Multi-family		9,882			7.40			6,829			6.01
Home equity loans and lines of credit		3,976			2.98			4,748			4.18
Construction (2)		3,513			2.63			5,016			4.41
Commercial and industrial loans (3)		2,506			1.87			2,152			1.90
Consumer loans		1,938			1.45			2,946			2.59
Total loans		133,578			100.00	%		113,616			100.00	%
Less:
Net deferred loan origination fees, costs and discounts		87						(210	)
Allowance for losses		(742	)					(788	)
Total loans, net	$	132,923					$	112,618

(1) Includes non-owner occupied residential loans of $17.6 million and $16.8 million at December 31, 2013 and 2012, respectively.

(2) Does not include unfunded commitments of $1.6 million and $2.3 million at December 31, 2013 and 2012, respectively.

(3) Does not include unfunded commitments of $281,000 and $3,000 at December 31, 2013 and 2012, respectively.

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Loan Portfolio Maturities and Yields. The following table sets forth the contractual maturities of our total loan portfolio at December 31, 2013. Demand loans, loans having no stated repayment schedule or maturity, and overdraft loans are reported as being due in one year or less. The table presents contractual maturities and does not reflect repricing or the effect of prepayments. Actual maturities may differ.

December 31, 2013	One- to Four-Family Residential (1)					Commercial Real Estate					Multi-Family					Home Equity Loans and Lines of Credit
	Amount		Weighted Average Rate			Amount		Weighted Average Rate			Amount		Weighted Average Rate			Amount		Weighted Average Rate
	(Dollars in thousands)
Amounts due in:
One year or less	$	194		5.12	%	$	2,799		4.71	%	$	—		—	%	$	125		5.25	%
More than one to two years		73		5.17			—		—			—		—			1,253		3.06
More than two to three years		161		4.08			1,256		5.00			—		—			338		2.82
More than three to five years		3,505		4.51			1,443		5.02			—		—			981		3.52
More than five to ten years		3,368		4.19			2,751		4.72			4,206		4.20			1,279		4.50
More than ten to fifteen years		4,641		3.54			2,867		4.91			789		4.72			—		—
More than fifteen years		80,441		4.19			8,264		4.65			4,887		6.15			—		—
Total	$	92,383		4.17	%	$	19,380		4.76	%	$	9,882		5.20	%	$	3,976		3.68	%

December 31, 2013	Construction(2)					Commercial and Industrial(3)					Consumer					Total
	Amount		Weighted Average Rate			Amount		Weighted Average Rate			Amount		Weighted Average Rate			Amount		Weighted Average Rate
	(Dollars in thousands)
Amounts due in:
One year or less	$	2,696		5.52	%	$	12		6.00	%	$	22		12.80	%	$	5,848		5.14	%
More than one to two years		120		5.50			—		—			274		5.47			1,720		3.70
More than two to three years		—		—			—		—			361		4.85			2,116		4.56
More than three to five years		97		4.00			125		5.77			1,159		3.42			7,310		4.32
More than five to ten years		—		—			762		4.11			69		5.27			12,435		4.34
More than ten to fifteen years		19		6.00			646		3.47			—		—			8,962		4.08
More than fifteen years		581		4.50			961		4.51			53		2.97			95,187		4.34
Total	$	3,513		5.31	%	$	2,506		4.19	%	$	1,938		4.14	%	$	133,578		4.35	%

(1) Total includes $17.6 million of non-owner occupied residential real estate loans.

(2) Total does not include $1.6 million of unfunded commitments.

(3) Total does not include $281,000 of unfunded commitments.

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The following table sets forth our fixed- and adjustable-rate loans at December 31, 2013 that are due after December 31, 2014.

	Due After December 31, 2014
	Fixed		Adjustable		Total
	(In thousands)
Real estate loans:
One- to four-family residential(1)	$	50,739	$	41,450	$	92,189
Commercial		2,604		13,977		16,581
Multi-family		3,213		6,669		9,882
Home equity loans and lines of credit		—		3,851		3,851
Construction		437		380		817
Total real estate		56,993		66,327		123,320
Commercial and industrial loans		1,370		1,124		2,494
Consumer loans		1,857		59		1,916
Total loans	$	60,220	$	67,510	$	127,730

(1) Includes $3.3 million of fixed-rate and $14.3 million of adjustable-rate non-owner occupied residential real estate loans.

Loan Approval Procedures and Authority. Pursuant to applicable law, the aggregate amount of loans that we are permitted to make to any one borrower or a group of related borrowers is generally limited to 20% of Pilgrim Bank’s unimpaired capital and surplus. Our board of directors has adopted an in-house limit for loans to one borrower or a group of related borrowers equal to $2.0 million. At December 31, 2013, our largest credit relationship totaled $2.6 million and was secured by two properties, one owner occupied one- to four-family residential and one non-owner occupied mixed use property located outside of our market area. At December 31, 2013, both loans in this relationship have been classified as a “trouble debt restructuring” and substandard credits, but were performing in accordance with their modified terms. Our second largest relationship at this date was a $2.4 million loan secured by multi-family real estate located outside of our market area. At December 31, 2013, this loan was performing in accordance with its terms.

Our lending is subject to written underwriting standards and origination procedures. Decisions on loan applications are made on the basis of detailed applications submitted by the prospective borrower. In addition, for one- to four-family residential, non-owner occupied residential, commercial real estate and multi-family loans we generally obtain an appraisal from an independent licensed appraiser and a secondary review by a separate independent licensed appraiser. In certain circumstances where the total loan amount is less than $250,000, we may rely on internal valuations or tax assessments in lieu of an independent appraisal. All appraisers are approved by our board of directors, and the appraisers that we utilize to perform secondary reviews do not perform primary appraisals for us. The loan applications are designed primarily to determine the borrower’s ability to repay the requested loan, and the more significant items on the application are verified through use of credit reports, financial statements and tax returns.

We require title insurance on our mortgage loans as well as fire and extended coverage property and casualty insurance in amounts at least equal to the principal amount of the loan or the value of improvements on the property, depending on the type of loan. We also require flood insurance if the property is determined to be in a flood zone area.

Lending personnel have approval authority commensurate with their experience and loan performance history. Loans in excess of any officer’s individual authority and up to the “in-house limit” established by the board of directors and loans containing any exceptions to our loan policies must be approved by the security committee, which is comprised of our President and Chief Executive Officer and three independent members of our board of directors. Loans in excess of the “in-house limit” must be approved by the board of directors.

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One- to Four-Family Residential Real Estate Lending. The focus of our lending program was historically the origination of one- to four-family residential real estate loans. At December 31, 2013, we had $92.4 million of loans secured by one- to four-family real estate, representing 69.2% of our total loan portfolio, which includes $17.6 million of loans secured by non-owner occupied residential real estate, representing 13.2% of our total loan portfolio. We primarily originate adjustable-rate residential mortgage loans, but we also offer fixed-rate residential mortgage loans and home equity loans. At December 31, 2013, 54.8% of our one- to four-family residential real estate loans were fixed-rate loans, and 45.2% of such loans were adjustable-rate loans. Our largest one- to four-family residential loan at December 31, 2013 was $1.9 million, and this loan was performing in accordance with its terms. At December 31, 2013, we had 5 one- to four-family residential loans with balances in excess of $1.0 million, four of which were located in our market area or the surrounding area of eastern Massachusetts and four of which were performing in accordance with their terms.

Our fixed-rate one- to four-family residential real estate loans are generally underwritten according to FHLB Mortgage Partnership Financing Program and Freddie Mac guidelines, and we refer to loans that conform to such guidelines as “conforming loans.” We generally originate both fixed- and adjustable-rate mortgage loans in amounts up to the maximum conforming loan limits as established by the Federal Housing Finance Agency for Freddie Mac, which as of December 31, 2013, was generally $417,000 for single-family homes in our market area. We also originate owner-occupied residential mortgage loans above the lending limit for conforming loans to borrowers, which are referred to as “jumbo loans,” generally to borrowers in our market area. Our jumbo loans are generally adjustable-rate loans, although we have in the past, subject to market and competitive conditions, originated long-term fixed-rate jumbo loans. At December 31, 2013, we had jumbo loans of $41.2 million, or 55.1% of our owner occupied one- to four-family residential loans and 30.8% of our total loans, of which $24.6 million were originated by Pilgrim Bank and $16.6 million were purchased loans. The original balances on these loans were $45.4 million, of which $27.9 million were originated by Pilgrim Bank and $17.5 million were purchased loans.

We generally limit the loan-to-value ratios of our owner-occupied mortgage loans to 80% of the sales price or appraised value, whichever is lower. Private mortgage insurance is generally required on all loans with loan-to-value ratios above 80%. Our loan committee may waive the private mortgage insurance for owner-occupied one- to four-family residential loans with loan-to-value ratios of up to 89% in circumstances where we have a relationship with the buyer and the debt-to-income ratio of the buyer is low. Private mortgage insurance is required on all loans with loan-to-value ratios of 90% and above. The loan-to-value ratio for loans on second homes is generally limited to 80%. Virtually all of the one- to four-family residential real estate loans that we originate for our portfolio are secured by properties located in our market area.

Our fixed-rate one- to four-family residential real estate loans typically have terms of 10 to 30 years. Historically, we offered a wide variety of initial terms on our adjustable-rate one- to four-family residential real estate loans; however, in recent years we have begun offering initial terms of three or five years on our adjustable-rate loans. In both instances, the interest rate adjusts annually at a margin after the initial term. This margin is generally 2.50% over the Federal Home Loan Bank Boston 1 year Classic Advance rate, although in the past we have also originated loans with interest rates based on the U.S. Treasury Index. The maximum amount by which the interest rate may be increased or decreased is generally 2.0% per adjustment period and the lifetime interest rate cap is generally 6.0% over the initial interest rate of the loan. Our adjustable-rate one- to four-family residential real estate loans carry terms to maturity ranging from 10 to 30 years. Our loans on second homes typically have terms of 10 to 30 years.

Recent changes to residential mortgage lending regulations promulgated by the Consumer Finance Protection Bureau may have an impact on future mortgage business. We intend to underwrite Qualified Mortgages (“QM Loans”) as defined by the regulations. In addition, our board of directors has authorized the origination of mortgage loans that qualify for the small creditor exemption. Based on our market area, many of our future residential mortgages will be covered by this exemption. We have no plans to issue non-QM loans at this time.

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We also offer home equity loans (second mortgages) and lines of credit. At December 31, 2013, we had $4.0 million, or 3.0% of our loan portfolio, in home equity lines of credit. Our home equity lines of credit are secured by residential property, and generally have terms of fifteen years with a 10- year draw period and 5-year repayment period. We do not originate home equity loans, or home equity lines of credit unless the loan-to-value ratio, combined with the first mortgage, is less than 75%, although higher loan-to-value ratios may be permitted upon approval of the loan committee. Our home equity lines of credit are all adjustable-rate, bearing interest rates based upon the prime rate. The second mortgage loans that we currently offer generally are fixed-rate loans with terms of five years, although terms of 10, 15 and 30 years may be available in certain circumstances. Home equity loans and lines of credit generally are originated in accordance with the same standards as one- to four-family residential loans. At December 31, 2013, the average balance of these types of loans outstanding was $66,000. The largest outstanding balance of any such loan was $354,000. This loan was performing in accordance with its original terms at December 31, 2013. Approximately 38.5% of our home equity loans, second mortgages and home equity lines of credit are secured by property where we also hold the first mortgage.

Although adjustable-rate mortgage loans may reduce to an extent our vulnerability to changes in market interest rates because they periodically re-price, as interest rates increase the required payments due from the borrower also increase (subject to rate caps), increasing the potential for default by the borrower. At the same time, the ability of the borrower to repay the loan and the marketability of the underlying collateral may be adversely affected by higher interest rates. Upward adjustments of the contractual interest rate are also limited by the maximum periodic and lifetime rate adjustments permitted by our loan documents. Moreover, the interest rates on most of our adjustable-rate loans do not adjust for up to five years after origination. As a result, the effectiveness of adjustable-rate mortgage loans in compensating for changes in general interest rates may be limited during periods of rapidly rising interest rates.

Home equity loans, second mortgages and home equity lines of credit have greater risk than one- to four-family residential real estate loans secured by first mortgages. We face the risk that the value of the collateral may not be sufficient to compensate us for the amount of the unpaid loan and costs of foreclosure and we may be unsuccessful in recovering the remaining balance from those customers. Particularly with respect to our home equity loans, decreases in real estate values could adversely affect the value of property used as collateral.

We do not offer loans that provide for negative amortization of principal, such as “Option ARM” loans, where the borrower can pay less than the interest owed on the loan, resulting in an increased principal balance during the life of the loan, or “interest only” mortgage loans, where the borrower pays interest for an initial period after which the loan converts to a fully-amortizing loan. We do not offer “subprime loans” on one-to four- family residential real estate loans (i.e., loans that generally target borrowers with weakened credit histories typically characterized by payment delinquencies, previous charge-offs, judgments, bankruptcies, or borrowers with questionable repayment capacity as evidenced by low credit scores or high debt-burden ratios). Due to demand in our market area, we do, however, originate loans with one or more of these characteristics on a case-by-case basis where other factors that offset the risk of such characteristics, such as low loan-to-value or debt-to-income ratios are present. Generally, we only offer these loans to existing customers, and do not engage in targeted marketing or advertising with respect to borrowers with these characteristics. We also do not offer “Alt-A” loans (i.e., loans that generally target borrowers with better credit scores who borrow with alternative documentation such as little or no verification of income).

We may sell a certain amount of the loans we originate into the secondary market. During the years ended December 31, 2013 and December 31, 2012, we sold $0 million and $12.0 million of

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residential mortgage loans, respectively. At December 31, 2013, we were servicing a portfolio of $15.5 million of residential mortgage loans that we had originated and sold. See “—Originations, Purchases and Sales of Loans.”

Commercial Real Estate, Multi-Family and Non-Owner Occupied Residential Lending. Consistent with our strategy to diversify our loan portfolio and increase our yield, we are focused on increasing our origination of commercial real estate loans, with a target loan size of $1.0 million to $1.3 million. At December 31, 2013, we had $19.4 million in commercial real estate loans, representing 14.5% of our total loan portfolio, $9.9 million in multi-family loans, representing 7.4% of our total loan portfolio and $17.6 million in non-owner occupied residential loans, representing 13.2% of our total loan portfolio. Subject to future economic, market and regulatory conditions, we intend to engage in a disciplined increase in commercial real estate, multi-family and non-owner occupied residential lending in our market area.

Our commercial real estate and multi-family loans are all adjustable-rate loans, and historically had terms of 25 years. Recently, as we have endeavored to customize these loans to meet the needs of our customers, they generally have initial terms of up to five years and amortization terms of 20 to 25 years with a balloon payment at the end of the initial term. The maximum loan-to-value ratio of our commercial real estate loans and multi-family loans is generally 70% of the lower of cost or appraised value of the property securing the loan, subject to increase up to 75% upon the approval of the loan committee. Our commercial real estate loans are typically secured by retail, industrial, warehouse, service, medical or other commercial properties, and our multi-family loans are typically secured by five and six unit residential properties or apartment buildings.

We also offer mortgages on non-owner occupied, or “investment,” one- to four-family residential mortgage loans, which we underwrite using the same guidelines and standards applicable to commercial real estate and multi-family loans. These loans have terms of five to ten years, subject to increase up to 30 years upon approval of the loan committee. We generally limit the loan-to-value ratios of non-owner occupied one- to four-family residential loans to 75% of the sales price or appraised value, whichever is lower, subject to an increase to 80% upon approval of the loan committee. These loans are all adjustable-rate loans, and require a minimum debt services ratio of 1.20x.

At December 31, 2013, the average loan balance of our outstanding commercial real estate, multi-family and non-owner occupied residential loans was $381,000, and the largest of such loans was a $2.4 million loan secured by multi-family residential real estate located in Boston. This loan was performing in accordance with its original terms at December 31, 2013.

We consider a number of factors in originating commercial real estate, multi-family and non-owner occupied residential loans. We evaluate the qualifications and financial condition of the borrower, including project-level and global cash flows, credit history, and management expertise, as well as the value and condition of the property securing the loan. When evaluating the qualifications of the borrower, we consider the financial resources of the borrower, the borrower’s experience in owning or managing similar property and the borrower’s payment history with us and other financial institutions. In evaluating the property securing the loan, the factors we consider include the net operating income of the mortgaged property before debt service and depreciation, the ratio of the loan amount to the appraised value of the mortgaged property and the debt service coverage ratio (the ratio of net operating income to debt service). During 2013, we generally approved commercial real estate, multi-family and non-owner occupied residential loans with a debt service ratio of between 1.45x and 1.65x, with a median debt service ratio of 1.5x, although our policies permit debt service ratios of not lower than 1.20x. The loan committee may approve loans with a debt service ratio of less than 1.20x depending on the occupancy of the property, strength of the borrower and other factors to further mitigate the risk. Personal guarantees are obtained from the principals of commercial real estate, multi-family and non-owner occupied loans, except where the loan is in the name of an individual rather than an entity. We require title insurance and property and casualty insurance, as well as flood insurance if the property is determined to be in a flood zone area.

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

We expect to hire additional experienced lenders to increase our pipeline of commercial real estate, multi-family and investment property loans. During 2013, we also began to offer loans with guarantees through the Small Business Administration 504 program. We intend to increase this activity in the future. The Section 504 program effectively splits one loan into two, with Pilgrim Bank taking the first and the SBA taking the second. The reduction in loan to value provided under the Section 504 program reduces our credit risk. In addition to utilizing the SBA 504 program, we were recently approved as an SBA lender. We plan to participate in the 7a program for small business lending. We expect to utilize this relationship to support our efforts to diversify our lending into commercial and industrial lending as well as commercial real estate lending.

Construction and Land Lending. At December 31, 2013, we had an outstanding balance of $3.5 million, or 2.6% of our total loan portfolio, in construction and land loans, and $1.6 million in unfunded commitments. Of these, $19,000 outstanding and $145,000 in unfunded commitments were loans for the construction by individuals of their primary residences, $536,000 outstanding and $0 in unfunded commitments were loans on vacant land held for future development, $581,000 outstanding and $38,000 in unfunded commitments were loans for non-owner occupied renovation loans, $2.4 million outstanding and $1.4 million in unfunded commitments were for non-owner occupied speculative construction loans, and we had no outstanding commercial construction and land development loans or related unfunded commitments. At December 31, 2013, our largest construction and land loan was a $779,000 renovation loan secured by a house and lot in our market area. This loan was performing in accordance with its original terms at December 31, 2013. We intend to increase our focus on construction lending following the completion of the offering, particularly one- to four-family speculative, owner occupied residential and non-owner occupied residential construction and renovation loans.

Our owner-occupied residential construction loans generally have initial terms of 12 to 18 months (subject to extension by the loan committee), during which the borrower pays interest only. Upon completion of construction, these loans convert to conventional amortizing mortgage loans. Our residential construction loans have rates and terms comparable to one- to four-family residential real estate loans that we originate. The maximum loan-to-value ratio of our residential construction loans is generally 80% of the appraised value of the completed property. Residential construction loans are generally underwritten pursuant to the same guidelines used for originating permanent residential mortgage loans, except that all residential construction loans are appraised by independent appraisers and borrowers are generally required to exhibit the ability to absorb unforeseen cost overruns.

Our commercial real estate, multi-family and non-owner occupied residential construction loans generally have initial terms of 12 to 18 months, during which the borrower pays interest only. Upon completion of construction, our non-owner occupied residential construction loans automatically convert to a conventional non-owner occupied loan, and we may elect to extend a commercial real estate loan or conventional multi-family loan to commercial real estate or multi-family construction borrowers based on our underwriting guidelines for those types of loans, but these construction loans do not automatically

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convert to conventional loans. Our non-owner occupied residential, commercial and multi-family construction loans have rates and terms comparable to commercial real estate and multi-family loans that we originate. The maximum loan-to-value of these construction loans is 70% of the appraised value of the completed property. Commercial, multi-family and non-owner occupied residential construction loans are generally underwritten pursuant to the same guidelines used for originating permanent commercial real estate, multi-family and non-owner occupied residential loans, except that all of these construction loans are appraised by independent appraisers and borrowers are generally required to exhibit the ability to absorb unforeseen cost overruns.

To a lesser extent, we make loans for the speculative construction and development of one- to four-family residential lots by well-known established builders in our market area. These loans are originated pursuant to the same standards as, and generally have terms similar to, commercial construction loans. The maximum loan-to-value ratio of speculative construction and land development loans is generally 70%. Land development loans require a 20% minimum down payment, or 40% where the development is not expected to commence immediately.

All construction and land development loans are appraised by independent appraisers. All borrowers are required to obtain title insurance, property and casualty insurance, and, if the property is determined to be located in a flood zone area, flood insurance. Either the Bank or the independent third party on the loans inspects the properties for progress and recommends all draws, consistent with the work performed to date. All draws are approved by the President and Chief Executive Officer.

Construction financing generally involves greater credit risk than long-term financing on improved, owner-occupied real estate. Risk of loss on a construction loan depends largely upon the accuracy of the initial estimate of the value of the property at completion of construction compared to the estimated cost (including interest) of construction and other assumptions. If the estimate of construction cost is inaccurate, we may be required to advance additional funds beyond the amount originally committed in order to protect the value of the property. Moreover, if the estimated value of the completed project is inaccurate, the borrower may hold a property with a value that is insufficient to assure full repayment of the construction loan upon the sale of the property. Construction loans also expose us to the risk that improvements will not be completed on time in accordance with specifications and projected costs. In addition, the ultimate sale or rental of the property may not occur as anticipated.

The table below sets forth, by type of collateral property, the number and amount of our construction and land loans at December 31, 2013, the majority of which are secured by properties located in our market area.

Industry Type	Number of Loans		Outstanding Balance		Unfunded Commitment
	(Dollars in Thousands)
Residential one-to four-family owner occupied		1	$	19	$	145
Residential one-to four-family speculative		5		2,377		1,383
Residential one-to four-family non-owner occupied		2		581		38
Land		3		536		—
Total Construction Loans		11	$	3,513	$	1,566

Commercial and Industrial Lending. At December 31, 2013, we had $2.5 million of commercial and industrial loans, representing 1.9% of our total loan portfolio, outstanding and $281,000 of unfunded commitments. Our commercial and industrial loans are generally annual revolving loans, but we may also offer term loans with terms of five to ten years depending on the needs of the borrower. We make commercial and industrial loans to businesses operating in our market area for purchasing equipment, property improvements, business expansion or working capital. Our commercial and

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industrial term loans are generally secured by equipment, furniture and fixtures, inventory, accounts receivable or other business assets, or, in very limited circumstances, may be unsecured. If a commercial and industrial loan is secured by equipment, we fix the maturity of a term loan at up to seven years, depending on the useful life of equipment purchased, the source of repayment for the loan and the purpose of the loan. Our revolving lines of credit are generally used to finance short-term working capital needs such as accounts payable and inventory. We generally obtain personal guarantees with commercial and industrial loans. We have also purchased approximately $1.7 million of USDA-guaranteed agricultural loans.

We typically originate commercial and industrial loans on the basis of the borrower’s ability to make repayment from the cash flow of the borrower’s business, the experience and stability of the borrower’s management team, earnings projections and the underlying assumptions, and the value and marketability of any collateral securing the loan. As a result, the availability of funds for the repayment of commercial and industrial loans may be substantially dependent on the success of the business itself and the general economic environment in our market area. Therefore, commercial and industrial loans that we originate have greater credit risk than one- to four-family residential real estate loans or, generally, consumer loans.

The table below sets forth information regarding our commercial and industrial loans at December 31, 2013.

Industry Type	Number of Loans		Outstanding Balance		Unfunded Commitments
	(Dollars in Thousands)
USDA Agricultural Loans (1)		5	$	1,684	$	—
Real Estate Services		2		393		170
Medical/Healthcare (2)		1		190		—
Retail		2		101		109
Finance/Insurance/Real Estate		2		75		—
Marine		2		51		—
Manufacturing		1		12		2
Total		15	$	2,506	$	281

(1) All loans were purchased during the years ended December 31, 2011, 2012 and 2013.

(2) Loan was purchased during the year ended December 31, 2013 through a relationship with Bankers’ Health Care Group.

At December 31, 2013, the average loan balance of our outstanding commercial and industrial term loans was $167,000, and the largest outstanding balance of such loans was a purchased loan of $536,000 loan secured by a USDA guarantee. This loan was performing in accordance with its original terms at December 31, 2013.

We believe that commercial and industrial loans will provide growth opportunities for us, and we expect to increase, subject to our conservative underwriting standards and market conditions, this business line in the future.

Consumer Lending. At December 31, 2013, we had $1.9 million, or 1.5% of our loan portfolio, in consumer loans. Of these, $1.7 million were automobile loans that we purchased from a local credit union. We offer consumer loans on a very limited basis, and generally as a convenience to customers with whom we have extensive banking relationships.

Consumer loans have either a variable or fixed-rate of interest for a term of up to 72 months, depending on the type of collateral and the creditworthiness of the borrower. Our consumer loans may be secured by deposits, automobiles, boats, motorcycles or recreational vehicles, and loans of up to $50,000 may be unsecured. Secured consumer loans are generally limited to 80% of the value of the collateral, depending on the age of the collateral, except that loans secured by passbook savings accounts are limited to 95% of the deposit account balance.

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Consumer loans generally have shorter terms to maturity, which reduces our exposure to changes in interest rates. Consumer loans generally have greater risk compared to longer-term loans secured by improved, owner-occupied real estate, particularly unsecured loans and consumer loans that are secured by rapidly depreciable assets, such as automobiles. In these cases, any repossessed collateral for a defaulted loan may not provide an adequate source of repayment of the outstanding loan balance. As a result, consumer loan collections are dependent on the borrower’s continuing financial stability and thus are more likely to be adversely affected by job loss, divorce, illness or personal bankruptcy.

Originations, Purchases and Sales of Loans

We originate real estate and other loans through our loan originators, employee referrals, marketing and advertising efforts, our existing customer base, walk-in customers and referrals from customers, real estate brokers, builders and attorneys. All loans that we originate are underwritten pursuant to our policies and procedures. We expect to hire additional loan officers and originators to increase our residential lending activity.

We may sell a certain amount of the loans we originate into the secondary market based upon our analysis of our interest rate risk and market conditions, choosing the strategy that is most advantageous to us from a profitability and risk management standpoint. In recent years we have sold only fixed-rate long-term residential mortgages, and have sold these loans exclusively to the Federal Home Loan Bank MPF Program, although we are also approved to sell loans to Freddie Mac. For the year ended December 31, 2013, we sold $0 of mortgage loans, and for the year ended December 31, 2012, we sold $12.0 million of mortgage loans on a servicing-retained basis. At December 31, 2013, we serviced $15.5 million of fixed-rate, one- to four-family residential real estate loans that we originated and sold in the secondary market.

In addition, the purchase of loans or participations in which we are not the lead lender, primarily owner-occupied residential real estate loans, automobile loans and, to a lesser extent, commercial real estate loans, is a key element of our strategy of maintaining a high loan-to-asset level on our balance sheets. When we purchase loans or participations, we to follow the loan underwriting and approval policies that apply to the origination of the type of loan being purchased. During the year ended December 31, 2013, we purchased $11.0 million of “jumbo” residential loans and participations, all on a servicing retained basis. At December 31, 2013 we had $2.8 million of participations purchased, all of which were secured by real estate or USDA guarantees. We may also sell participation interest in loans that we originate and retain the servicing and lead position on the credit. This generally occurs when a loan or relationship either exceeds our lending limits or we determine that it would be prudent to reduce our credit risk exposure with respect to the particular relationship. At December 31, 2013, we had $1.3 million of participations sold.

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The following table sets forth our loan originations, purchases and principal repayment activities during the periods indicated. We originated for sale and sold $0 and $12.0 million, respectively, of loans during the years ended December 31, 2013 and December 31, 2012. These loans are not reflected in the table.

	Years Ended December 31,
	2013			2012
	(In thousands)
Total loans at beginning of period	$	113,616		$	109,791
Loans originated:
Real estate loans:
One- to four-family residential(1)	$	21,241		$	25,094
Commercial		4,978			7,735
Multi-family		4,500			838
Home equity loans and lines of credit		703			775
Construction		8,079			7,672
Total real estate		39,501			42,114
Commercial and industrial loans		861			17
Consumer loans		54			167
Total loans		40,416			42,298
Loans purchased:
Real estate loans:
One- to four-family residential(2)		11,037			—
Commercial		—			—
Multi-family		—			—
Home equity loans and lines of credit		—			—
Construction		—			—
Total real estate		11,037			—
Commercial and industrial loans		—			596
Consumer loans		—			958
Total loans		11,037			1,554
Other:
Principal repayments		(28,225	)		(37,593	)
Unadvanced funds on originations		(2,481	)		(2,356	)
Transfers to other real estate owned		(785	)		(78	)
Net loan activity		19,962			3,825
Total loans at end of period	$	133,578		$	113,616

(1) Includes $5.0 million and $7.7 million of non-owner occupied residential real estate loans at December 31, 2013 and 2012, respectively.

(2) There were no non-owner occupied residential real estate loans purchased during the year ended December 31, 2013.

Delinquencies and Non-Performing Assets

Delinquency Procedures. When a borrower fails to make a required monthly payment on a residential real estate loan, we attempt to contact the borrower to determine the reason for nonpayment and to discuss future payments. Our policies provide that a delinquency notice be sent when a loan is 15 days past due. We follow up with a telephone call when a loan is 20 days past due, a reminder notice when a loan is 30 days past due, and a second telephone call and consumer credit counseling notice when the loan is 45 days past due. If the borrower does not respond, we generally initiate foreclosure proceedings when the loan is 60 days past due. If the loan is reinstated, foreclosure proceedings will be discontinued and the borrower will be permitted to continue to make payments. In certain instances, we may modify the loan or grant a limited exemption from loan payments to allow the borrower to reorganize his or her financial affairs. We attempt to work with borrowers to establish a repayment schedule that will cure the delinquency.

We generally place a loan on non-accrual status when it is 90 days past due. When we acquire real estate as a result of foreclosure or by deed in lieu of foreclosure, the real estate is classified as foreclosed real estate until it is sold. The real estate is recorded at estimated fair value at the date of

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acquisition less estimated costs to sell, and any write-down resulting from the acquisition is charged to the allowance for loan losses. Estimated fair value is based on a new appraisal which is obtained as soon as practicable, typically after the foreclosure process is completed. Subsequent decreases in the value of the property are charged to operations. After acquisition, all costs incurred in maintaining the property are expensed. Costs relating to the development and improvement of the property, however, are capitalized to the extent of estimated fair value less estimated costs to sell.

Other types of delinquent loans are handled in a similar fashion. If we cannot reach an acceptable workout of a delinquent commercial and industrial, commercial real estate or multi-family or consumer loan between 30 and 60 days of the due date of the first missed payment, we generally initiate foreclosure or repossession proceedings on any collateral securing the loan. Our procedures for repossession and sale of consumer collateral are subject to various requirements under applicable laws, including consumer protection. In addition, we may determine that foreclosure and sale of such collateral would not be cost-effective for us.

Troubled Debt Restructurings. During the financial crisis, we were aggressive in our efforts to identify borrower weaknesses and to structure modifications to qualified borrowers in order to help them during periods of financial difficulty. These modifications were either temporary or permanent. Borrowers were granted modifications after a detailed analysis of their current financial situation and future expectations. We modified loans to extend the term or make other concessions to help a borrower stay current on his or her loan and to avoid foreclosure. We generally do not forgive principal on loans. We may modify the terms of loans to lower interest rates (which may be at below market rates) or to provide for temporary interest-only terms, or to forgive or defer the payment of interest. These modifications are made only when there is a reasonable and attainable workout plan that has been agreed to by the borrower and that is in our best interests. Since 2009, the Bank has modified approximately 20 loans, primarily owner-occupied residential loans, some of which did not meet the definition of a troubled debt restructuring. At December 31, 2013, we had 11 loans remaining totaling $6.8 million that were classified as troubled debt restructuring. Of these, 3 loans totaling $2.2 million were included in our non-performing loans at such date because they were either not performing in accordance with their modified terms or had been performing in accordance with their modified terms for less than six months since the date of restructuring. These loans were also classified as substandard at that date. In addition, two loans totaling $2.6 million were designated as troubled debt restructurings, contractually performing on December 31, 2013, and classified as substandard. Once the borrower has demonstrated sustained performance with the modified terms, the loan may be upgraded from its classified and / or non performing status. Any loan categorized as troubled debt restructurings will continue to retain that designation through the life of the loan.

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Delinquent Loans. The following table sets forth our loan delinquencies, including non-accrual loans, by type and amount at the dates indicated.

	At December 31,
	2013						2012
	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due
	(In thousands)
Real estate loans:
One- to four-family residential(1)	$	—	$	240	$	2,075	$	388	$	1,488	$	2,688
Commercial		—		—		—		842		—		—
Multi-family		—		—		—		—		—		—
Home equity loans and lines of credit		—		—		—		108		—		—
Construction		—		—		—		—		—		—
Total real estate		—		240		2,075		1,338		1,488		2,688
Commercial and industrial loans		—		—		—		—		—		—
Consumer loans		—		—		—		—		—		—
Total loans	$	—	$	240	$	2,075	$	1,338	$	1,488	$	2,688

(1) There were $0 and $1.5 million of delinquent non-owner occupied residential real estate loans at December 31, 2013 and 2012, respectively.

Classified Assets. Applicable regulations provide for the classification of loans and other assets, such as debt and equity securities considered by the FDIC to be of lesser quality, as “substandard,” “doubtful” or “loss.” An asset is considered “substandard” if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. “Substandard” assets include those characterized by the “distinct possibility” that the insured institution will sustain “some loss” if the deficiencies are not corrected. Assets classified as “doubtful” have all of the weaknesses inherent in those classified “substandard,” with the added characteristic that the weaknesses present make “collection or liquidation in full,” on the basis of currently existing facts, conditions, and values, “highly questionable and improbable.” Assets classified as “loss” are those considered “uncollectible” and of such little value that their continuance as assets without the establishment of a specific loss reserve is not warranted. Assets which do not currently expose the insured institution to sufficient risk to warrant classification in one of the aforementioned categories but possess weaknesses are designated as “special mention” by our management.

When an insured institution classifies problem assets as either substandard or doubtful, it may establish general allowances in an amount deemed prudent by management to cover probable accrued losses. General allowances represent loss allowances which have been established to cover probable accrued losses associated with lending activities, but which, unlike specific allowances, have not been allocated to particular problem assets. When an insured institution classifies problem assets as “loss,” it is required either to establish a specific allowance for losses equal to 100% of that portion of the asset so classified or to charge-off such amount. An institution’s determination as to the classification of its assets and the amount of its valuation allowances is subject to review by the regulatory authorities, which may require the establishment of additional general or specific loss allowances.

In connection with the filing of our periodic reports and in accordance with our classification of assets policy, we regularly review the problem loans in our portfolio to determine whether any loans require classification in accordance with applicable regulations. Loans are listed on the “watch list” initially because of emerging financial weaknesses even though the loan is currently performing as agreed, or delinquency status, or if the loan possesses weaknesses although currently performing. Management reviews the status of each impaired loan on our watch list on a monthly basis with the Board of Directors. If a loan deteriorates in asset quality, the classification is changed to “special mention,” “substandard,” “doubtful” or “loss” depending on the circumstances and the evaluation. Generally, loans 90 days or more past due are placed on nonaccrual status and classified “substandard.” In addition, we retain an independent third party to conduct an annual review or our loan portfolio.

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The following table sets forth our amounts of classified assets an assets designated as special mention as of December 31, 2013 and 2012. The classified assets total includes $2.3 million and $4.7 million of non-performing loans, respectively. The related specific valuation allowance in the allowance for loan losses for such non-performing loans was $82,000 and $104,000 at December 31, 2013 and 2012, respectively.

	At December 31,
	2013		2012
	(In thousands)
Classified assets:
Substandard:
Loans(1)	$	6,604	$	9,451
Securities		182		247
Other real estate owned		—		245
Total substandard		6,786		9,943
Doubtful		—		—
Loss		—		—
Other real estate owned		—		—
Total classified assets	$	6,786	$	9,943
Special mention	$	434	$	539

(1) Includes non-accruing loans that are more than 90 days past due.

The decrease in classified assets from December 31, 2012 to December 31, 2013 was primarily due to payoffs, sustained performance with original or modified terms, and sales of other real estate owned.

The decrease in substandard performing residential real estate loans is the result of the continued performance of $1.9 million of loans previously designated as non-accruals, payoffs of $1.7 million, a transfer to real estate owned of $785,000 and upgrades of $400,000. The decrease in foreclosed real estate is the result of the sale of seven properties in 2012 and 2013.

Non-Performing Assets. Non-performing assets decreased to $2.4 million, or 1.4% of total assets, at December 31, 2013, from $4.9 million, or 2.8% of total assets, at December 31, 2012. These remaining non-performing assets were comprised of seven owner occupied one- to four-family residential loans, of which two borrowers had two loans each, a first and second mortgage on the properties. The decrease in non-performing assets is due to payoffs of $1.1 million, an upgrade as a result of sustained performance of $1.9 million, other real estate owned sales of $245,000, a transfer to other real estate owned and subsequent sale of $785,000 and a write-down of $37,000 on mortgage-backed securities. One new non-performing loan was added during 2013. This $1.4 million loan relates to a purchased owner occupied one- to four-family residential loan that is currently in foreclosure proceedings. At December 31, 2013, four of the Bank’s non-performing loans were current for contractual or modified payments per their agreements. A fifth non-performing loan was paid current in January 2014.

We generally cease accruing interest on our loans when contractual payments of principal or interest have become 90 days past due or management has serious doubts about further collectability of principal or interest, even though the loan is currently performing. A loan may remain on accrual status if it is in the process of collection and is either guaranteed or well secured. When a loan is placed on nonaccrual status, unpaid interest credited to income is reversed. Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time and the ultimate collectability of the total contractual principal and interest is no longer in doubt. Troubled debt restructurings are loans that have renegotiated loan terms to assist borrowers who are unable to meet the original terms of their loans, with modifications to loan terms including temporary or permanent reduction interest rates (which may be at below market rates), temporary interest-only terms, or forgiveness or deferral the payment of interest. Troubled debt restructurings are restored to accrual status when the obligation is brought current, has performed in accordance with the revised contractual terms for six months and the ultimate collectability of the total contractual principal and interest is deemed probable.

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The following table sets forth information regarding our non-performing assets and troubled debt restructurings at the dates indicated. The information reflects net charge-offs but not specific reserves. Troubled debt restructurings include where the borrower is experiencing financial difficulty and loans for which either a portion of interest or principal has been forgiven or an extension of term granted, or for loans modified at interest rates materially less than current market rates.

	At December 31,
	2013			2012
	(Dollars in thousands)
Non-accrual loans:
Real estate loans:
One- to four-family residential(1)	$	2,344		$	4,666
Commercial		—			—
Multi-family		—			—
Home equity loans and lines of credit		8			—
Construction		—			—
Total real estate		2,352			4,666
Commercial and industrial loans		—			—
Consumer loans		—			—
Total non-accrual loans		2,352			4,666
Accruing loans past due 90 days or more:
Real estate loans:
One- to four-family residential		—			—
Commercial		—			—
Multi-family		—			—
Home equity loans and lines of credit		—			—
Construction		—			—
Total real estate		—			—
Commercial and industrial loans		—			—
Consumer loans		—			—
Total accruing loans past due 90 days or more		—			—
Total of nonaccrual loans and accruing loans 90 days or more past due		2,352			4,666
Other real estate owned:
One- to four-family residential		—			245
Commercial		—			—
Multi-family		—			—
Home equity loans and lines of credit		—			—
Construction		—			—
Total other real estate owned		—			245
Other non-performing assets		—			—
Total non-performing assets		2,352			4,911
Performing troubled debt restructurings:
Real estate loans:
One- to four-family residential(2)		3,908			3,628
Commercial		703			709
Multi-family		—			—
Other		—			—
Total real estate		4,611			4,337
Commercial and industrial loans		—			—
Consumer loans		—			—
Total troubled debt restructurings		4,611			4,337
Total non-performing loans and troubled debt restructurings	$	6,963		$	9,248
Non-performing loans to total loans		1.76	%		4.11	%
Non-performing assets to total assets		1.37	%		2.85	%
Non-performing assets and troubled debt restructurings to total assets		4.06	%		5.36	%

(1) There were no non-performing non-owner occupied residential real estate loans at December 31, 2013 or 2012.

(2) There were no troubled debt restructurings related to non-owner occupied residential real estate loans at December 31, 2013 and 2012.

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Interest income that would have been recorded for the years ended December 31, 2013, and December 31, 2012, had non-accruing loans been current according to their original terms amounted to $107,000 and $305,000, respectively. Interest of approximately $57,000 and $181,000 related to these loans was included in interest income for the years ended December 31, 2013, and December 31, 2012, respectively.

Non-performing loans totaled $2.4 million at December 31, 2013, and consisted of seven loans, all owner occupied one- to four- family residential first and second mortgage loans. Our largest non-performing loan was a $1.4 million one- to four-family residential loan secured by property located in Connecticut that was in foreclosure proceedings at December 31, 2013. We had no non-performing commercial real estate and multi-family loans at December 31, 2013. We had no foreclosed real estate at December 31, 2013.

Other Loans of Concern. There were no other loans at December 31, 2013, that are not already disclosed where there is information about possible credit problems of borrowers that caused management to have serious doubts about the ability of the borrowers to comply with present loan repayment terms and that may result in disclosure of such loans in the future.

Allowance for Loan Losses

Analysis and Determination of the Allowance for Loan Losses. Our allowance for loan losses is the amount considered necessary to reflect probable incurred losses in our loan portfolio. We evaluate the need to establish allowances against losses on loans on a quarterly basis. When additional allowances are necessary, a provision for loan losses is charged to earnings.

Our methodology for assessing the appropriateness of the allowance for loan losses consists of two key elements: (1) specific allowances for identified impaired loans; and (2) a general valuation allowance on the remainder of the loan portfolio. Although we determine the amount of each element of the allowance separately, the entire allowance for loan losses is available for the entire portfolio.

We identify loans that may need to be charged off as a loss by reviewing all delinquent loans, classified loans, and other loans about which management may have concerns about collectability. For individually reviewed loans, the borrower’s inability to make payments under the terms of the loan as well as the shortfall in collateral value would result in our charging off the loan or the portion of the loan that was impaired.

Among other factors, we consider current general economic conditions, including current housing price depreciation, in determining the appropriateness of the allowance for loan losses for our residential real estate portfolio. We use evidence obtained from our own loan portfolio as well as published housing data on our local markets from third party sources we believe to be reliable as a basis for assumptions about the impact of housing depreciation. We have increased general and specific allowances for our residential real estate loans over the past several quarters, in part, because the values of residential real estate in our local markets securing our portfolio have declined significantly and may continue to decline.

Substantially all of our loans are secured by collateral. Loans 90 days past due and other classified loans are evaluated for impairment and general or specific allowances are established. Typically for a non-performing real estate loan in the process of collection, the value of the underlying collateral is estimated using the original independent appraisal, adjusted for current economic conditions and other factors, and related general or specific reserves are adjusted on a quarterly basis. If a non-performing real estate loan is in the process of foreclosure and/or there are serious doubts about further collectability of principal or interest, and there is uncertainty about the value of the underlying collateral, we will order a new independent appraisal. Any shortfall would result in immediately charging off the portion of the loan that was impaired.

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Specific Allowances for Identified Problem Loans. We establish a specific allowance when loans are determined to be impaired. Loss is measured by determining the present value of expected future cash flows or, for collateral-dependent loans, the fair value of the collateral less estimated selling expenses. Factors in identifying a specific problem loan include: (1) the strength of the customer’s personal or business cash flows; (2) the availability of other sources of repayment; (3) the amount due or past due; (4) the type and value of collateral; (5) the strength of our collateral position; (6) the estimated cost to sell the collateral; and (7) the borrower’s effort to cure the delinquency. In addition, for loans secured by real estate, we consider the extent of any past due and unpaid property taxes applicable to the property serving as collateral on the mortgage.

General Valuation Allowance on the Remainder of the Loan Portfolio. We establish a general allowance for loans that are not classified as impaired to recognize the inherent losses associated with lending activities, but which, unlike specific allowances, has not been allocated to particular problem assets. This general valuation allowance is determined by segregating the loans by loan category and assigning allowance percentages based on our historical loss experience, delinquency trends and management’s evaluation of the collectability of the loan portfolio. The allowance may be adjusted for significant factors that, in management’s judgment, affect the collectability of the portfolio as of the evaluation date. These significant factors may include changes in lending policies and procedures, changes in existing general economic and business conditions affecting our primary market area, credit quality trends, collateral value, loan volumes and concentrations, seasoning of the loan portfolio, recent loss experience in particular segments of the portfolio, duration of the current business cycle and bank regulatory examination results. The applied loss factors are re-evaluated quarterly to ensure their relevance in the current real estate environment.

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

	Year Ended December 31
	2013			2012
	(Dollars in thousands)
Allowance at beginning of period	$	788		$	869
Charge offs:
Real estate loans:
One- to four-family residential(1)		48			142
Commercial		—			—
Multi-family		—			—
Home equity loans and lines of credit		—			82
Construction		—			—
Total real estate		48			224
Commercial and industrial loans		—			—
Consumer loans		3			6
Total charge-offs		51			230
Recoveries:
Real estate loans:
One- to four-family residential		—			—
Commercial		—			—
Multi-family		—			—
Home equity loans and lines of credit		—			—
Construction		—			—
Total real estate		—			—
Commercial and industrial loans		—			—
Consumer loans		5			—
Total recoveries		5			—
Net (charge-offs) recoveries		(46	)		(230	)
Transfer for off-balance sheet loan commitments		—			(7	)
Provision for loan losses		—			156
Allowance at end of period	$	742		$	788
Allowance to non-performing loans at end of period		31.55	%		16.89	%
Allowance to total loans outstanding at end of period		0.56	%		0.69	%
Net (charge-offs) recoveries to average loans outstanding during the period		0.04	%		0.21	%

(1) There were no charge-offs related to non-owner occupied residential real estate loans during the years ended December 31, 2013 or 2012.

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

	At December 31,
	2013								2012
	Allowance for Loan Losses		Percent of Allowance for Loan Losses by Category			Percent of Loans in Category to Total Loans			Allowance for Loan Losses		Percent of Allowance for Loan Losses by Category			Percent of Loans in Category to Total Loans
	(Dollars in thousands)
Real estate loans:
One- to four-family residential(1)	$	323		43.53	%		69.16	%	$	362		45.94	%		67.07	%
Commercial		195		26.28			14.51			152		19.29			13.84
Multi-family		51		6.88			7.40			35		4.44			6.01
Home equity loans and lines of credit		30		4.04			2.98			46		5.84			4.18
Construction		49		6.60			2.63			50		6.34			4.41
Commercial and industrial loans		16		2.16			1.87			7		0.89			1.90
Consumer loans		21		2.83			1.45			39		4.95			2.59
Total allocated allowance		685		92.32			100.00	%		691		87.69			100.00	%
Unallocated		57		7.68						97		12.31
Total allowance for loan losses	$	742		100.00	%				$	788		100.00	%

(1) Includes $62,000, or 8.36% of the allowance for loan losses, allocated to non-owner occupied residential loans at December 31, 2013 and $67,000, or 8.50% of the allowance for loan losses, allocated to non-owner occupied residential loans at December 31, 2012.

At December 31, 2013, our allowance for loan losses represented 0.56% of total loans and 31.55% of non-performing loans, and at December 31, 2012, our allowance for loan losses represented 0.69% of total loans and 16.89% of non-performing loans. There were $46,000 and $230,000 in net loan charge-offs during the years ended December 31, 2013 and 2012, respectively.

Although we believe that we use the best information available to establish the allowance for loan losses, future adjustments to the allowance for loan losses may be necessary and results of operations could be adversely affected if circumstances differ substantially from the assumptions used in making the determinations. Because future events affecting borrowers and collateral cannot be predicted with certainty, the existing allowance for loan losses may not be adequate and management may determine that increases in the allowance are necessary if the quality of any portion of our loan portfolio deteriorates as a result. Furthermore, as an integral part of its examination process, the Massachusetts Commissioner of Banks and FDIC will periodically review our allowance for loan losses. The regulators may require that we increase our allowance based on its judgments of information available to it at the time of its examination. Any material increase in the allowance for loan losses may adversely affect our financial condition and results of operations.

Investment Activities

General. The goals of our investment policy are to provide and maintain liquidity to meet deposit withdrawal and loan funding needs, to help mitigate interest rate and market risk, to diversify our assets, and to generate a reasonable rate of return on funds within the context of our interest rate and credit risk objectives. In recent years beginning with the recession which began in 2008 and the subsequent challenging economic environment, our strategy has been to manage the maturities of our investment securities portfolio within our interest rate risk strategies. Recently, we have reduced our investment portfolio to $13.8 million at December 31, 2013, from $16.1 million at December 31, 2012, as we redeemed or sold securities, or did not reinvest proceeds from the maturation of securities, in order to fund lending activities. Subject to loan demand and our interest rate risk analysis, we will increase the balance of our investment securities portfolio when we have excess liquidity.

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Our board of directors is responsible for adopting our investment policy. The investment policy is reviewed annually by the board of directors and our security committee and any changes to the policy are recommended to and subject to the approval of the board of directors. Authority to make investments under the approved investment policy guidelines is delegated to our President and Chief Executive Officer and our Chief Financial Officer. All investment transactions are reviewed at regularly scheduled monthly meetings of the board of directors.

Our investment policy provides that permissible investments represent at least 10% and not more than 40% of our total assets, and that holdings of any individual security issue, unless expressly permitted, be limited to $2.0 million. Our investment policy also requires that our investment portfolio meet certain diversification requirements, with U.S. Treasury, U.S. government and agency securities and overnight investments permitted up to 100% of our portfolio, U.S. agency step-up obligations permitted up to 25% of our portfolio, MBSs issued by U.S. government agencies permitted up to 25% of our portfolio, CMOs issued by Ginnie Mae permitted up to 10% of our portfolio, rated general obligation bank-qualified municipal obligations permitted up to 35% of our Tier 1 capital, corporate bonds permitted up to 40% of Tier 1 capital, preferred stock permitted up to 15% of Tier 1 capital, and equities (subject to applicable Massachusetts and FDIC regulations) permitted up to 100% of Tier 1 capital, mutual funds permitted up to 10% of our portfolio. Our policy also establishes limitations on securities issued by any one issuer, industry diversification requirements and limitations on mutual funds managed by any one firm or manager. At December 31, 2013, none of the collateral underlying our securities portfolio was considered subprime or Alt-A, except for $182,000 in mortgage-backed securities that were acquired when our holdings in the Shay Mortgage Fund were redeemed in kind, and we did not hold any common or preferred stock issued by Freddie Mac or Fannie Mae as of that date.

Prior to any investment, certain investment instruments are subject to a price sensitivity test performed by our broker-dealer. These instruments are fixed rate instruments (other than mortgage-related instruments) with maturities greater than 10 years; mortgage-related securities with maturities greater than two years; floating rate instruments with caps or floors; floating rate instruments with coupon rates tied to or inversely related to an index; and securities that are continuously callable or have more than one call date.

Our current investment policy does not permit hedging activities, such as futures, options or swap transactions; coupon stripping; gains trading; short sales; securities lending; “when issued” securities trading; “pair-offs”; corporate or extended settlements other than in the normal course of business; repositioning repurchase agreements; purchasing securities on margin; trading with the intent to capture changes in price over 60 days or less; or other investment activities defined as “unsuitable investment practices” in applicable FDIC policy statements.

U.S. Government and Agency Obligations. At December 31, 2013, we had U.S. government and agency securities with a carrying value of $2.3 million, which constituted 16.7% of our securities portfolio. While these securities generally provide lower yields than other investments in our securities investment portfolio, we maintain these investments, to the extent appropriate, for liquidity purposes, as collateral for borrowings and for prepayment protection.

Mortgage-Backed Securities. At December 31, 2013, we had mortgage-backed securities with a carrying value of $6.0 million, which constituted 43.5% of our securities portfolio. Mortgage-backed securities are securities issued in the secondary market that are collateralized by pools of mortgages. Certain types of mortgage-backed securities are commonly referred to as “pass-through” certificates

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because the principal and interest of the underlying loans is “passed through” to investors, net of certain costs, including servicing and guarantee fees. Mortgage-backed securities typically are collateralized by pools of one- to four-family or multifamily mortgages, although we invest primarily in mortgage-backed securities backed by one- to four-family mortgages. The issuers of such securities pool and resell the participation interests in the form of securities to investors such as Pilgrim Bank. The interest rate of the security is lower than the interest rates of the underlying loans to allow for payment of servicing and guaranty fees. All of our mortgage-backed securities are either backed by Ginnie Mae, a United States Government agency, or government-sponsored enterprises, such as Fannie Mae and Freddie Mac.

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

Municipal Securities. At December 31, 2013, we had municipal securities with a carrying value of $4.4 million, which constituted 31.9% of our securities portfolio. All of our current municipal securities are issued by municipalities in our market area and have maturities not in excess of 17 years. These securities generally provide slightly higher yields than U.S. government and agency securities and mortgage-backed securities, but are not as liquid as such other investments, so we typically maintain investments in municipal securities, to the extent appropriate, for generating returns in our investment portfolio.

Investment Certificates of Deposit With Other Institutions. We invest in certificates of deposit with insured financial institutions in order to increase yields on short-term investments and manage the maturity of our investment portfolio. At December 31, 2013, we had $4.5 million in certificates of deposit with other institutions.

Federal Home Loan Bank Stock. We held common stock of the Federal Home Loan Bank of Boston in connection with our borrowing activities totaling $667,000 at December 31, 2013. The Federal Home Loan Bank common stock is carried at cost and classified as restricted equity securities. We may be required to purchase additional Federal Home Loan Bank stock if we increase borrowings in the future.

Other Securities. At December 31, 2013, we had $782,000 in mutual funds and $384,000 invested in The Co-operative Central Bank reserve fund but did not have any corporate bonds, preferred stock, or equities. These securities they generally provide higher yields than other securities in our portfolio and are generally more liquid than our other investments, so we may from maintain these investments to provide liquidity and to generate returns in our portfolio. The mutual fund position was redeemed in January 2014, after the Bank received a notice from the fund manager, Shay Financial, that the fund would be closed and transferred in mid-January. We opted to redeem rather than transfer the balance to a new fund.

Bank-Owned Life Insurance. We invest in bank-owned life insurance to provide us with a funding source for our benefit plan obligations. Bank-owned life insurance also generally provides us noninterest income that is non-taxable. At December 31, 2013, our balance in bank-owned life insurance totaled $2.2 million and was issued by one insurance company.

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Securities Portfolio Composition. The following table sets forth the amortized cost and fair value of our available-for-sale and held-to-maturity securities portfolio (excluding Federal Home Loan Bank of Boston common stock) at the dates indicated. Securities available-for-sale are carried at fair value.

	At December 31,
	2013				2012
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
	(In thousands)
Securities available-for-sale:
Debt securities:
U.S. government and agency securities	$	2,460	$	2,322	$	550	$	548
State and political subdivisions		4,447		4,372		4,151		4,242
Mortgage-backed securities		6,148		6,020		9,984		10,105
Mutual funds(1)		782		782		1,000		823
Total securities available-for-sale	$	13,837	$	13,496	$	15,685	$	15,718
Securities held-to-maturity:
Debt securities:
U.S. government and agency securities	$	26	$	25	$	51	$	48
State and political subdivisions		—		—		—		—
Mortgage-backed securities		228		259		345		321
Mutual funds		—		—		—		—
Total securities held-to-maturity	$	254	$	284	$	396	$	369
Certificates of deposit with other institutions	$	4,511	$	4,518	$	10,730	$	10,734

(1) We redeemed all of the mutual funds that we held in January 2014.

At December 31, 2013, we had no investments in a single entity (other than United States government or agency sponsored securities) that had an aggregate book value in excess of 10% of our total equity.

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Securities Portfolio Maturities and Yields. The following table sets forth the stated maturities and weighted average yields of our securities at December 31, 2013. Securities available-for-sale are carried at fair value. Mortgage-backed securities, including collateralized mortgage obligations, are anticipated to be repaid in advance of their contractual maturities as a result of projected mortgage loan repayments. In addition, under the structure of some of our CMOs, the short- and intermediate-term tranche interests have repayment priority over the longer term tranche interests of the same underlying mortgage pool. Finally, some of our U.S. Treasury and other securities are callable at the option of the issuer. Certain securities have interest rates that are adjustable and will reprice annually within the various maturity ranges. These repricing schedules have not been reflected in the table below.

	One Year or Less					More than One Year through Five Years					More than Five Years through Ten Years					More than Ten Years					Total
	Amortized Cost		Weighted Average Yield			Amortized Cost		Weighted Average Yield			Amortized Cost		Weighted Average Yield			Amortized Cost		Weighted Average Yield			Amortized Cost		Weighted Average Yield			Fair Value
	(Dollars in thousands)
Securities available-for-sale:
Debt securities:
U.S. government and agency securities	$	—		—	%	$	502		1.24	%	$	981		1.91	%	$	977		2.17	%	$	2,460		1.88	%	$	2,322
State and political subdivisions		655		3.72	%		1,753		2.91	%		879		2.35	%		1,160		3.27	%		4,447		3.01	%		4,372
Mortgage-backed securities		—		—	%		241		3.86	%		285		2.89	%		5,622		2.91	%		6,148		2.94	%		6,020
Mutual funds		782		1.84	%		—		—	%		—		—	%		—		—	%		782		1.84	%		782
Total securities available-for-sale	$	1,437		2.70	%	$	2,496		2.67	%	$	2,145		2.22	%	$	7,759		2.87	%	$	13,837		2.71	%	$	13,496
Securities held-to-maturity:
Debt securities:
U.S. government and agency securities	$	—		—	%	$	26		0.07	%	$	—		—	%	$	—		—	%	$	26		0.07	%	$	25
State and political subdivisions		—		—	%		—		—	%		—		—	%		—		—	%		—		—	%		—
Mortgage-backed securities		—		—	%		12		3.46	%		—		—	%		216		9.84	%		228		9.50	%		259
Mutual funds		—		—	%		—		—	%		—		—	%		—		—	%		—		—	%		—
Total securities held-to-maturity	$	—		—	%	$	38		1.14	%	$	—		—	%	$	216		9.84	%	$	254		8.54	%	$	284
Certificates of deposit with other institutions	$	4,511		0.67	%	$	—		—	%	$	—		—	%	$	—		—	%	$	4,511		0.67	%	$	4,518

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Securities portfolio activity. The following table sets forth the purchase, sale and repayment activity in our securities portfolio during the periods indicated.

	For the years ended December 31,
	2013			2012
	(In thousands)
Total at beginning of period	$	26,844		$	29,092
Purchases of:
U.S. government and agency securities		1,959			1,600
State and political subdivisions		336			1,408
Mortgage-backed securities		1,602			2,327
Mutual funds		—			—
Certificates of deposit at other institutions		—			7,885
Reinvestment of interest on certificates of deposit		19			27
Deduct:
Principal repayments		(1,881	)		(3,543	)
Sales of:
U.S. government and agency securities		—			(1,500	)
State and political subdivisions		—			(566	)
Mortgage-backed securities		(3,564	)		(1,058	)
Mutual funds		—			—
Certificates of deposit at other institutions		—			—
Calls of securities		—			(3,446	)
Maturities of securities		(75	)		(250	)
Maturities of certificates of deposit		(6,238	)		(4,872	)
Write-downs (OTTI)		(247	)		(52	)
Amortization of Discount		(120	)		(128	)
Change in unrealized net gain		(374	)		(80	)
Net activity		(8,583	)		(2,248	)
Total at end of period	$	18,261		$	26,844

Sources of Funds

General. Deposits have traditionally been our primary source of funds for use in lending and investment activities. We also use borrowings, primarily Federal Home Loan Bank of Boston advances, to supplement cash flow needs, lengthen the maturities of liabilities for interest rate risk purposes and to manage the cost of funds. In addition, we receive funds from scheduled loan payments, investment maturities, loan prepayments, retained earnings and income on earning assets. While scheduled loan payments and income on earning assets are relatively stable sources of funds, deposit inflows and outflows can vary widely and are influenced by prevailing interest rates, market conditions and levels of competition. To a lesser extent, we may utilize repurchase agreements or Fed funds sold as funding sources.

Deposits. Our deposits are generated primarily from residents within our primary market area. We offer a selection of deposit accounts, including noninterest-bearing and interest-bearing checking accounts, passbook and statement savings accounts, variable rate money market accounts, and certificates of deposit. Deposit account terms vary, with the principal differences being the minimum balance required, the amount of time the funds must remain on deposit and the interest rate. We have not in the past used, and currently do not hold any, brokered or Internet deposits, and we do not accept deposit accounts opened on-line. We have participated in the Qwickrate program solely to invest in certificates of deposit, but we do not currently participate. We may elect to participate in the Quickrate program in the future. At December 31, 2013, our core deposits, which are deposits other than time deposits and certificates of deposit, were $89.3 million, representing 58.1% of total deposits.

In recent years, we have relied for deposit generation on promotional programs and advertising efforts, our reputation in the community for superior customer service, the variety of deposit accounts that we offer, our competitive rates, customer referrals, and cross-marketing efforts with loan customers. We

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may use promotional rates to meet asset/liability and market segment goals. We intend to continue to focus on increasing our core deposits by providing incentives on new transaction accounts, enhanced online services and remote deposit capture services, and by leveraging commercial lending relationships to increase transaction accounts.

Interest rates, maturity terms, service fees and withdrawal penalties are established on a periodic basis. Deposit rates and terms are based primarily on current operating strategies and market rates, liquidity requirements, rates paid by competitors and growth goals. The flow of deposits is influenced significantly by general economic conditions, changes in interest rates and competition. The variety of deposit accounts that we offer allows us to be competitive in generating deposits and to respond with flexibility to changes in our customers’ demands. Our ability to gather deposits is impacted by the competitive market in which we operate, which includes numerous financial institutions of varying sizes offering a wide range of products. We believe that deposits are a stable source of funds, but our ability to attract and maintain deposits at favorable rates will be affected by market conditions, including competition and prevailing interest rates as consumer become more conscious of interest rates.

The following table sets forth the distribution of total deposits by account type, for the periods indicated.

	For the Years Ended December 31,
	2013								2012
	Average Balance		Percent			Weighted Average Rate			Average Balance		Percent			Weighted Average Rate
	(Dollars in thousands)
Noninterest-bearing demand	$	10,997		7.12	%		—	%	$	9,223		6.03	%		—	%
Money market		39,799		25.76			0.41			37,994		24.82			0.52
Savings		17,323		11.21			0.20			16,609		10.85			0.20
NOW accounts		17,390		11.26			0.11			17,017		11.12			0.11
Certificates of deposit		68,985		44.65			1.29			72,215		47.18			1.38
Total deposits	$	154,494		100.00	%		0.77	%	$	153,058		100.00	%		0.87	%

The following table sets forth our deposit activities for the periods indicated.

	At or For the Years Ended December 31,
	2013			2012
	(In thousands)
Beginning balance	$	156,653		$	154,863
Net deposits (withdrawals) before interest credited		(4,031	)		543
Interest credited		1,110			1,247
Net increase (decrease) in deposits		(2,921	)		1,790
Ending balance	$	153,732		$	156,653

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

	At December 31,
	2013		2012
	(Dollars in thousands)
Interest Rate:
Less than 1.00%	$	30,122	$	31,964
1.00% to 1.99%		25,075		25,127
2.00% to 2.99%		7,755		10,897
3.00% to 3.99%		1,520		1,452
4.00% to 4.99%		—		328
Total	$	64,472	$	69,768

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The following table sets forth the amount and maturities of all our certificates of deposit by interest rate at December 31, 2013.

	At December 31, 2013
	Period to Maturity
	Less Than or Equal to One Year		More Than One to Two Years		More Than Two to Three Years		More Than Three Years		More Than Four Years		Total		Percent of Total
			(Dollars in thousands)
Interest Rate Range:
Less than 1.00%	$	24,293	$	5,271	$	558	$	—	$	—	$	30,122		46.72	%
1.00% to 1.99%		6,164		4,026		3,959		7,666		3,260		25,075		38.89
2.00% to 2.99%		4,060		2,098		1,312		285		—		7,755		12.03
3.00% to 3.99%		1,330		190		—		—		—		1,520		2.36
Total	$	35,847	$	11,585	$	5,829	$	7,951	$	3,260	$	64,472		100.00	%

As of December 31, 2013, the aggregate amount of all our certificates of deposit in amounts greater than or equal to $100,000 was approximately $35.4 million. The following table sets forth the maturity of these certificates as of December 31, 2013.

	At December 31, 2013
	(In thousands)
Maturity Period:
Three months or less	$	5,408
Over three through six months		4,304
Over six through twelve months		9,143
Over twelve months		16,582
Total	$	35,437

Borrowings. We may obtain advances from the Federal Home Loan Bank of Boston upon the security of certain of our mortgage loans and investment securities. Such advances may be made pursuant to several different credit programs, each of which has its own interest rate and range of maturities. To the extent such borrowings have different terms to repricing than our deposits, they can change our interest rate risk profile. At December 31, 2013, we had $5.0 million in outstanding advances from the Federal Home Loan Bank of Boston. At December 31, 2013, based on available collateral and our ownership of FHLB stock, and based upon our internal policy, we had access to additional Federal Home Loan Bank advances of up to $35.2 million. See Note 8 to our Consolidated Financial Statements beginning on page F-1 of this prospectus.

The following table sets forth information concerning balances and interest rates on our borrowings at the date and for the periods indicated.

	At of for the Years Ended December 31,
	2013			2012
	(Dollars in thousands)
Balance outstanding at end of period	$	5,000		$	3,307
Average amount outstanding during the period	$	4,101		$	3,461
Maximum outstanding at any month end	$	7,084		$	3,613
Weighted average interest rate during the period		1.58	%		1.94	%
Weighted average interest rate at end of period		1.27	%		1.96	%

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Properties

The following table sets forth information regarding our office properties as of December 31, 2013. The net book value of our furniture, fixtures and equipment at December 31, 2013, was $579,000. We believe that our current facilities are adequate to meet our present and foreseeable needs.

Location	Leased or Owned			Year Acquired or Leased	Square Footage		Net Book Value of Real Property
							(In thousands)
Main Office:
40 South Main Street Cohasset, MA 02025		Owned		2011		3,465	$	2,672
Full Service Branches:
800 Chief Justice Cushing Highway Cohasset, MA 02025		Owned		2002		4,400		1,243
350-354 Front Street Marion, MA 02738		Owned	(1)	2007		10,778		1,922
Other Properties:
48-50 South Main Street Cohasset, MA 02025		Owned	(2)	1969		6,094		446
8 Brewster Road Cohasset, MA 02025		Owned	(3)	2008		2,064		371

(1) Pilgrim occupies approximately 2,500 square feet, and the remainder is leased to unaffiliated tenants. Net book value represents net book value of the entire property.

(2) Pilgrim occupies approximately 1,900 square feet for our Operations Department, and the remainder is leased to unaffiliated tenants. Net book value represents net book value of the entire property.

(3) The Brewster Road property is currently being leased to an unaffiliated tenant and is on the market for sale.

Subsidiary and Other Activities

Upon completion of the conversion, Pilgrim Bank will become the wholly-owned subsidiary of Pilgrim Bancshares, Inc. Pilgrim Bank has three wholly-owned subsidiaries. 48 South Main Street Corporation is a Massachusetts investment corporation formed to hold certain of our investment securities for tax purposes. 40 South Main Street Realty Trust is a Massachusetts realty trust formed to hold our main office. 800 CJC Realty Corporation is a Massachusetts realty trust formed to hold certain real estate owned, although it did not hold any property at December 31, 2013. Additionally, Pilgrim Bancshares, Inc. may form another subsidiary, the sole purpose of which will be to fund the loan to Pilgrim Bank’s employee stock ownership plan.

Legal Proceedings

We are not involved in any pending legal proceedings as a plaintiff or defendant other than routine legal proceedings occurring in the ordinary course of business, and at December 31, 2013, we were not involved in any legal proceedings, the outcome of which would be material to our financial condition or results of operations.

Expense and Tax Allocation

Pilgrim Bank will enter into an agreement with Pilgrim Bancshares, Inc. to provide it with certain administrative support services for compensation not less than the fair market value of the services provided. In addition, Pilgrim Bank and Pilgrim Bancshares, Inc. will enter into an agreement to establish a method for allocating and for reimbursing the payment of their consolidated tax liability.

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Personnel

As of December 31, 2013, we had 32 full-time equivalent employees. Our employees are not represented by any collective bargaining group. Management believes that we have a good working relationship with our employees.

SUPERVISION AND REGULATION

General

Pilgrim Bank is a Massachusetts stock co-operative bank and will be the wholly-owned subsidiary of Pilgrim Bancshares, Inc., a Maryland corporation, which will be a registered bank holding company. Pilgrim Bank’s deposits are insured up to applicable limits by the FDIC, and by the Share Insurance Fund of the Co-Operative Central Bank of Massachusetts for amounts in excess of the FDIC insurance limits. Pilgrim Bank is subject to extensive regulation by the Massachusetts Commissioner of Banks, as its chartering agency, and by the FDIC, its primary federal regulator and deposit insurer. Pilgrim Bank is required to file reports with, and is periodically examined by, the FDIC and the Massachusetts Commissioner of Banks concerning its activities and financial condition and must obtain regulatory approvals prior to entering into certain transactions, including, but not limited to, mergers with or acquisitions of other financial institutions. Pilgrim Bank must comply with consumer protection regulations issued by the Consumer Financial Protection Bureau. Pilgrim Bank also is a member of and owns stock in the Federal Home Loan Bank of Boston, which is one of the twelve regional banks in the Federal Home Loan Bank System.

As a bank holding company, Pilgrim Bancshares, Inc. will be subject to examination and supervision by, and be required to file certain reports with, the Federal Reserve Board. Pilgrim Bancshares, Inc. will also be subject to the rules and regulations of the Securities and Exchange Commission under the federal securities laws.

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

Set forth below are certain material regulatory requirements that are applicable to Pilgrim Bank and Pilgrim Bancshares, Inc. This description of statutes and regulations is not intended to be a complete description of such statutes and regulations and their effects on Pilgrim Bank and Pilgrim Bancshares, Inc. Any change in these laws or regulations, whether by Congress or the applicable regulatory agencies, could have a material adverse impact on Pilgrim Bancshares, Inc., Pilgrim Bank and their operations.

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Dodd-Frank Act

The Dodd-Frank Act made significant changes to the regulatory structure for depository institutions and their holding companies. However, the Dodd-Frank Act’s changes go well beyond that and affect the lending, investments and other operations of all depository institutions. The Dodd-Frank Act required the Federal Reserve Board to set minimum capital levels for bank holding companies that are as stringent as those required for the insured depository subsidiaries, and the components of Tier 1 capital for holding companies were restricted to capital instruments that were then currently considered to be Tier 1 capital for insured depository institutions. The legislation also established a floor for capital of insured depository institutions that cannot be lower than the standards in effect upon passage and directed the federal banking regulators to implement new leverage and capital requirements that take into account off-balance sheet activities and other risks, including risks relating to securitized products and derivatives.

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

The Dodd-Frank Act broadened the base for FDIC insurance assessments. Assessments are now based on the average consolidated total assets less tangible equity capital of a financial institution, rather than on total deposits. The legislation also permanently increased the maximum amount of deposit insurance for banks, savings institutions and credit unions to $250,000 per depositor, retroactive to January 1, 2008, and noninterest-bearing transaction accounts had unlimited deposit insurance through December 31, 2012. The Dodd-Frank Act increased stockholder influence over boards of directors by requiring companies to give stockholders a non-binding vote on executive compensation and so-called “golden parachute” payments. The legislation also directed the Federal Reserve Board to promulgate rules prohibiting excessive compensation paid to bank holding company executives, regardless of whether the company is publicly traded or not. Further, the legislation mandated regulations requiring that originators of securitized loans retain a percentage of the risk for transferred loans, directed the Federal Reserve Board to regulate pricing of certain debit card interchange fees and contained a number of reforms related to mortgage origination.

The Dodd-Frank Act also required the Consumer Financial Protection Board to issue regulations requiring lenders to make a reasonable good faith determination as to a prospective borrower’s ability to repay a residential mortgage loan. The final “Ability to Repay” rules, which are effective January 4, 2013, establish a “qualified mortgage” safe harbor for loans whose terms and features are deemed to make the loan less risky.

Many provisions of the Dodd-Frank Act involve delayed effective dates and/or require implementing regulations or have not been issued in final form. Their impact on our operations cannot yet fully be assessed. However, there is a significant possibility that the Dodd-Frank Act will result in an increased regulatory burden and compliance, operating and interest expense for Pilgrim Bank and Pilgrim Bancshares, Inc.

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Massachusetts Banking Laws and Supervision

General. As a Massachusetts-chartered co-operative bank, Pilgrim Bank is subject to supervision, regulation and examination by the Massachusetts Commissioner of Banks and to various Massachusetts statutes and regulations which govern, among other things, investment powers, lending and deposit-taking activities, borrowings, maintenance of surplus and reserve accounts, distribution of earnings and payment of dividends. In addition, Pilgrim Bank is subject to Massachusetts consumer protection and civil rights laws and regulations. The approval of the Massachusetts Commissioner of Banks or the Massachusetts Board of Bank Incorporation is required for a Massachusetts-chartered bank to establish or close branches, merge with other financial institutions, issue stock and undertake certain other activities. Any Massachusetts bank that does not operate in accordance with the regulations, policies and directives of the Massachusetts Commissioner of Banks may be sanctioned. The Massachusetts Commissioner of Banks may suspend or remove directors or officers of a bank who have violated the law, conducted a bank’s business in a manner that is unsafe, unsound or contrary to the depositors’ interests, or been negligent in the performance of their duties. In addition, the Massachusetts Commissioner of Banks has the authority to appoint a receiver or conservator if it is determined that the bank is conducting its business in an unsafe or unauthorized manner, and under certain other circumstances.

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

Lending Activities. A Massachusetts-chartered co-operative bank may make a wide variety of mortgage loans including fixed-rate loans, adjustable-rate loans, variable-rate loans, participation loans, graduated payment loans, construction and development loans, condominium and co-operative loans, second mortgage loans and other types of loans that may be made in accordance with applicable regulations. Commercial loans may be made to corporations and other commercial enterprises with or without security. Consumer and personal loans may also be made with or without security.

Insurance Sales. Massachusetts banks may engage in insurance sales activities if the Massachusetts Commissioner of Banks has approved a plan of operation for insurance activities and the bank obtains a license from the Massachusetts Division of Insurance. A bank may be licensed directly or indirectly through an affiliate or a subsidiary corporation established for this purpose. Pilgrim Bank does not sell or refer insurance products, and has not sought approval for insurance sales activities.

Dividends. A Massachusetts co-operative bank may declare cash dividends from net profits not more frequently than quarterly. Non-cash dividends may be declared at any time. No dividends may be declared, credited or paid if the bank’s capital stock is impaired. The approval of the Massachusetts Commissioner of Banks is required if the total of all dividends declared in any calendar year exceeds the total of its net profits for that year combined with its retained net profits of the preceding two years. Net profits for this purpose means the remainder of all earnings from current operations plus actual recoveries on loans and investments and other assets after deducting current operating expenses, actual losses, accrued dividends on preferred stock, if any, and all federal and state taxes. Dividends from Pilgrim Bancshares, Inc. may depend, in part, upon receipt of dividends from Pilgrim Bank. The payment of dividends from Pilgrim Bank would be restricted by federal law if the payment of such dividends resulted in Pilgrim Bank failing to meet regulatory capital requirements.

Parity Regulation. A Massachusetts bank may, in accordance with regulations issued by the Massachusetts Commissioner of Banks, exercise any power and engage in any activity that has been authorized for national banks, federal thrifts or state banks in a state other than Massachusetts, provided that the activity is permissible under applicable federal and not specifically prohibited by Massachusetts law. Such powers and activities must be subject to the same limitations and restrictions imposed on the national bank, federal thrift or out-of-state bank that exercised the power or activity.

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

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

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

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

Co-Operative Central Bank and Share Insurance Fund. All Massachusetts-chartered co-operative banks are required to be members of the Co-Operative Central Bank, which maintains the Share Insurance Fund that insures co-operative bank deposits in excess of federal deposit insurance coverage. The Co-Operative Central Bank is authorized to charge co-operative banks an annual assessment fee on deposit balances in excess of amounts insured by the FDIC. Assessment rates are based on the institution’s risk category, similar to the method currently used to determine assessments by the FDIC discussed below under “—Federal Banking Regulation—Insurance of Deposit Accounts.”

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

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

Federal Banking Regulation

Business Activities. Under federal law, all state-chartered FDIC-insured banks, including co-operative banks, have been limited in their activities as principal and in their equity investments to the type and the amount authorized for national banks, notwithstanding state law. Federal law permits exceptions to these limitations. For example, certain state-chartered co-operative banks may, with FDIC approval, continue to exercise state authority to invest in common or preferred stocks listed on a national securities exchange and in the shares of an investment company registered under the Investment Company Act of 1940. The maximum permissible investment is the lesser of 100.0% of Tier 1 capital or the maximum amount permitted by Massachusetts law. Such grandfathered authority may be terminated under certain circumstances including a change in charter or a determination by the FDIC that such investments pose a safety and soundness risk.

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

Capital Requirements. The FDIC requires federally-insured state-chartered banks that are not members of the Federal Reserve System (“state non-member banks”) to meet minimum capital standards: a 4% core capital to total assets leverage ratio (3% for institutions receiving the highest rating on the CAMELS rating system), a 4% core capital to risk-based assets ratios, and an 8% total capital to risk-based assets ratio.

As noted, the risk-based capital standard requires the maintenance of core capital (also referred to as Tier 1 capital) and total capital (which is defined as core capital and supplementary capital) to risk-weighted assets of at least 4% and 8%, respectively. In determining the amount of risk-weighted assets, all assets, including certain off-balance sheet assets, are multiplied by a risk-weight factor of 0% to 200%, assigned by the regulations, based on the risks believed inherent in the type of asset. Core capital is defined as common stockholders’ equity (including retained earnings), certain noncumulative perpetual preferred stock and related surplus and minority interests in equity accounts of consolidated subsidiaries, less intangibles other than certain mortgage servicing rights and credit card relationships. The components of supplementary capital (also referred to as Tier 2 capital) include cumulative preferred stock, long-term perpetual preferred stock, mandatory convertible securities, subordinated debt and intermediate preferred stock, the allowance for loan and lease losses limited to a maximum of 1.25% of risk-weighted assets and up to 45% of net unrealized gains on available-for-sale equity securities with readily determinable fair market values. Overall, the amount of supplementary capital included as part of total capital cannot exceed 100% of core capital. Additionally, an institution that retains credit risk in connection with an asset sale is required to maintain additional regulatory capital because of the purchaser’s recourse against the institution. In assessing an institution’s capital adequacy, the FDIC takes into consideration not only these numeric factors, but qualitative factors as well and has the authority to establish higher capital requirements for individual associations where necessary.

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At December 31, 2013, Pilgrim Bank’s capital exceeded all applicable requirements. See “Historical and Pro Forma Regulatory Capital Compliance.”

New Capital Rule. On July 9, 2013, the federal bank regulatory agencies issued a final rule that will revise their risk-based capital requirements and the method for calculating risk-weighted assets to make them consistent with agreements that were reached by the international Basel Committee on Banking Supervision and certain provisions of the Dodd-Frank Act. The final rule applies to all depository institutions, top-tier bank holding companies with total consolidated assets of $500 million or more and top-tier savings and loan holding companies.

The rule establishes a new common equity core (Tier 1) minimum capital requirement (4.5% of risk-weighted assets), increases the minimum core capital to risk-based assets requirement (from 4.0% to 6.0% of risk-weighted assets) and assigns a higher risk weight (150%) to exposures that are more than 90 days past due or are on nonaccrual status and to certain commercial real estate facilities that finance the acquisition, development or construction of real property. The minimum leverage ratio will be established at a uniform 4%.

The rule also includes changes in what constitutes regulatory capital. Tier 2 capital will no longer be limited to the amount of Tier 1 capital included in total capital. Mortgage servicing rights, certain deferred tax assets and investments in unconsolidated subsidiaries over designated percentages of common stock are subject to deduction above more stringent limits than the existing regulations. Core capital generally will include accumulated other comprehensive income (which includes all unrealized gains and losses on available for sale debt and equity securities). Pilgrim Bank has the one-time option in the first quarter of 2015 to permanently opt out of the inclusion of accumulated other comprehensive income in its regulatory capital calculation. Pilgrim Bank is considering whether to opt out in order to reduce the impact of market volatility on its regulatory capital levels.

As noted, the new capital requirements also include changes in the risk weights of assets designed to better reflect credit risk and other risk exposures. These include a 150% risk weight (up from 100%) for certain high volatility commercial real estate acquisition, development and construction loans and non-residential mortgage loans that are 90 day past due or otherwise on non-accrual status, a 20% (up from 0%) credit conversion factor for the unused portion of a commitment with an original maturity of one year or less that is not unconditionally cancellable; a 250% risk weight (up from 100%) for mortgage servicing and deferred tax assets that are not deducted from capital; and increased risk-weights (a range of 0% to 600%) for certain equity exposures.

The rule limits an institution’s capital distributions and certain discretionary bonus payments to executives if the banking organization does not hold a “capital conservation buffer” consisting of 2.5% of common equity Tier 1 capital to risk-weighted assets in addition to the amount necessary to meet its minimum risk-based capital requirements.

The final rule becomes effective for Pilgrim Bank on January 1, 2015. More stringent deduction requirements are subject to transition through January 1, 2018. The capital conservation buffer requirement will be phased in beginning January 1, 2016 at 0.625% of risk-weighted assets increasing each year until fully implemented at 2.5% on January 1, 2019.

Pilgrim Bank has conducted a pro forma analysis of the application of these new capital requirements as of December 31, 2013. We have determined that Pilgrim Bank meets all of these new requirements, except for the full 2.5% capital conservation buffer, as if these new requirements had been in effect on that date.

A state non-member bank may not make a capital distribution that would reduce its regulatory capital below the amount required by the FDIC’s regulatory capital regulations or for the liquidation

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account established in connection with its conversion to stock form. In addition, beginning in 2016, Pilgrim Bank’s ability to pay dividends will be limited if Pilgrim Bank does not have the capital conservation buffer required by the new capital rules, which may limit the ability of Pilgrim Bancshares, Inc. to pay dividends to its stockholders. See “—New Capital Rule.”

Community Reinvestment Act and Fair Lending Laws. All institutions have a responsibility under the Community Reinvestment Act (the “CRA”) and related regulations to help meet the credit needs of their communities, including low- and moderate-income borrowers. In connection with its examination of a state non-member bank, the FDIC is required to assess the institution’s record of compliance with the CRA. The CRA does not establish specific lending requirements or programs for financial institutions nor does it limit an institution’s discretion to develop the types of products and services that it believes are best suited to its particular community, consistent with the CRA. The CRA does require the FDIC, in connection with its examination of a non-member bank, to assess the institution’s record of meeting the credit needs of its community and to take such record into account in its evaluation of certain applications by such institution, including applications to acquire branches and other financial institutions. The CRA requires the FDIC to provide a written evaluation of an institution’s CRA performance utilizing a four-tiered descriptive rating system. An institution’s failure to comply with the provisions of the CRA could, at a minimum, result in denial of certain corporate applications such as branches or mergers, or in restrictions on its activities. The CRA requires all institutions insured by the FDIC to publicly disclose their rating. Pilgrim Bank received a “Satisfactory” CRA rating in its most recent federal examination.

Massachusetts has its own statutory counterpart to the CRA that is applicable to Pilgrim Bank. The Massachusetts version is generally similar to the CRA but utilizes a five-tiered descriptive rating system. Massachusetts law requires the Massachusetts Commissioner of Banks to consider, but not be limited to, a bank’s record of performance under Massachusetts law in considering any application by the bank to establish a branch or other deposit-taking facility, to relocate an office or to merge or consolidate with or acquire the assets and assume the liabilities of any other banking institution. Pilgrim Bank’s most recent rating under Massachusetts law was “Satisfactory.”

In addition, the Equal Credit Opportunity Act and the Fair Housing Act prohibit lenders from discriminating in their lending practices on the basis of characteristics specified in those statutes. The failure to comply with the Equal Credit Opportunity Act and the Fair Housing Act could result in enforcement actions by the FDIC, as well as other federal regulatory agencies and the Department of Justice.

Transactions with Related Parties. An institution’s authority to engage in transactions with its affiliates is limited by Sections 23A and 23B of the Federal Reserve Act and federal regulation. An affiliate is generally a company that controls, or is under common control with an insured depository institution such as Pilgrim Bank. Pilgrim Bancshares, Inc. will be an affiliate of Pilgrim Bank because of its control of Pilgrim Bank. In general, transactions between an insured depository institution and its affiliates are subject to certain quantitative limits and collateral requirements. Transactions with affiliates also must be consistent with safe and sound banking practices, generally not involve the purchase of low-quality assets and be on terms that are as favorable to the institution as comparable transactions with non-affiliates.

Pilgrim Bank’s authority to extend credit to its directors, executive officers and 10% stockholders, as well as to entities controlled by such persons, is currently governed by the requirements of Sections 22(g) and 22(h) of the Federal Reserve Act and Regulation O of the Federal Reserve Board. Among other things, these provisions generally require that extensions of credit to insiders:

• be made on terms that are substantially the same as, and follow credit underwriting procedures that are not less stringent than, those prevailing for comparable transactions with unaffiliated persons and that do not involve more than the normal risk of repayment or present other unfavorable features; and

• not exceed certain limitations on the amount of credit extended to such persons, individually and in the aggregate, which limits are based, in part, on the amount of Pilgrim Bank’s capital.

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In addition, extensions of credit in excess of certain limits must be approved by Pilgrim Bank’s loan committee or board of directors. Extensions of credit to executive officers are subject to additional limits based on the type of extension involved.

Enforcement. The FDIC has extensive enforcement responsibility over state non-member banks and has authority to bring enforcement action against all “institution-affiliated parties,” including directors, officers, stockholders, attorneys, appraisers and accountants who knowingly or recklessly participate in wrongful action likely to have an adverse effect on an institution. Formal enforcement action by the FDIC may range from the issuance of a capital directive or cease and desist order to removal of officers and/or directors of the institution and the appointment of a receiver or conservator. Civil penalties cover a wide range of violations and actions, and range up to $25,000 per day, unless a finding of reckless disregard is made, in which case penalties may be as high as $1 million per day. The FDIC is required, with certain exceptions, to appoint a receiver or conservator for an insured state non-member bank if that bank was “critically undercapitalized” on average during the calendar quarter beginning 270 days after the date on which the institution became “critically undercapitalized.” The FDIC may also appoint itself as conservator or receiver for an insured state non-member bank under specified circumstances, including: (1) insolvency; (2) substantial dissipation of assets or earnings through violations of law or unsafe or unsound practices; (3) existence of an unsafe or unsound condition to transact business; (4) insufficient capital; or (5) the incurrence of losses that will deplete substantially all of the institution’s capital with no reasonable prospect of replenishment without federal assistance. The FDIC also has the authority to terminate deposit insurance.

Standards for Safety and Soundness. Federal law requires each federal banking agency to prescribe certain standards for all insured depository institutions. These standards relate to, among other things, internal controls, information systems and audit systems, loan documentation, credit underwriting, interest rate risk exposure, asset growth, compensation and other operational and managerial standards as the agency deems appropriate. Interagency guidelines set forth the safety and soundness standards that the federal banking agencies use to identify and address problems at insured depository institutions before capital becomes impaired. If the appropriate federal banking agency determines that an institution fails to meet any standard prescribed by the guidelines, the agency may require the institution to submit to the agency an acceptable plan to achieve compliance with the standard. If an institution fails to meet these standards, the appropriate federal banking agency may require the institution to implement an acceptable compliance plan. Failure to implement such a plan can result in further enforcement action, including the issuance of a cease and desist order or the imposition of civil money penalties.

Interstate Banking and Branching. Federal law permits well-capitalized and well-managed bank holding companies to acquire banks in any state, subject to Federal Reserve Board approval, certain concentration limits and other specified conditions. Interstate mergers of banks are also authorized, subject to regulatory approval and other specified conditions. In addition, among other things, recent amendments made by the Dodd-Frank Act permit banks to establish de novo branches on an interstate basis provided that branching is authorized by the law of the host state for the banks chartered by that state.

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Prompt Corrective Action Regulations. The FDIC is required by law to take supervisory actions against undercapitalized institutions under its jurisdiction, the severity of which depends upon the institution’s level of capital.

Under FDIC prompt corrective action regulations Pilgrim Bank must have a Tier 1 leverage ratio of at least 5.0%, a Tier 1 risk-based capital ratio of at least 6.0%, and a total risk-based capital ratio of at least 10.0% in order to be classified as “well-capitalized.” An institution that has total risk-based capital of less than 8.0% or a leverage ratio or a Tier 1 risk-based capital ratio that generally is less than 4.0% is considered to be undercapitalized. An institution that has total risk-based capital less than 6.0%, a Tier 1 core risk-based capital ratio of less than 3.0% or a leverage ratio that is less than 3.0% is considered to be “significantly undercapitalized.” An institution that has a tangible capital to assets ratio equal to or less than 2% is deemed to be “critically undercapitalized.”

Generally, a receiver or conservator must be appointed for an institution that is “critically undercapitalized” within specific time frames. The regulations also provide that a capital restoration plan must be filed with the FDIC within 45 days of the date that an institution is deemed to have received notice that it is “undercapitalized,” “significantly undercapitalized” or “critically undercapitalized.” Any holding company of an institution that is required to submit a capital restoration plan must guarantee performance under the plan in an amount of up to the lesser of 5% of the institution’s assets at the time it was deemed to be undercapitalized by the FDIC or the amount necessary to restore the institution to adequately capitalized status. This guarantee remains in place until the FDIC notifies the institution that it has maintained adequately capitalized status for each of four consecutive calendar quarters. Institutions that are undercapitalized become subject to certain mandatory measures such as a restrictions on capital distributions and asset growth. The FDIC may also take any one of a number of discretionary supervisory actions against undercapitalized institutions, including the issuance of a capital directive and the replacement of senior executive officers and directors.

At December 31, 2013, Pilgrim Bank met the criteria for being considered “well capitalized.”

The final capital rule adopted in July 2013 modifies the prompt corrective action categories to incorporate the revised minimum capital requirements of that rule when it becomes effective. Under the new standards, in order to be considered well-capitalized, Pilgrim Bank would have to have a common equity Tier 1 ratio of at least 6.5% (new), a Tier 1 risk-based capital ratio of at least 8.0% more (increased from 6.0%), a total risk-based capital ratio of at least 10.0% (unchanged), and a Tier 1 leverage ratio of 5.0% (unchanged). Pilgrim Bank has conducted a pro forma analysis of the application of these new capital requirements as of December 31, 2013. We have determined that Pilgrim Bank is well-capitalized under these new standards, as if these new requirements had been in effect on Pilgrim Bank at that date. See “—New Capital Rule.”

Insurance of Deposit Accounts. The Deposit Insurance Fund of the FDIC insures deposits at FDIC-insured financial institutions such as Pilgrim Bank. Deposit accounts in Pilgrim Bank are insured by the FDIC generally up to a maximum of $250,000 per separately insured depositor and up to a maximum of $250,000 for self-directed retirement accounts. The FDIC charges insured depository institutions premiums to maintain the Deposit Insurance Fund.

Under the FDIC’s risk-based assessment system, insured institutions are assigned to one of four risk categories based on supervisory evaluations, regulatory capital levels and certain other risk factors. Rates are based on each institution’s risk category and certain specified risk adjustments. Stronger institutions pay lower rates while riskier institutions pay higher rates. Assessments are based on an institution’s average consolidated total assets minus average tangible equity instead of total deposits. Assessment rates (inclusive of possible adjustments) currently range from 2 1/2 to 45 basis points of each institution’s total assets less tangible capital. The FDIC may increase or decrease the scale uniformly, except that no adjustment can deviate more than two basis points from the base scale without notice and comment rulemaking. The FDIC’s current system represents a change, required by the Dodd-Frank Act, from its prior practice of basing the assessment on an institution’s volume of deposits.

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In addition to the FDIC assessments, the Financing Corporation (“FICO”) is authorized to impose and collect, with the approval of the FDIC, assessments for anticipated payments, issuance costs and custodial fees on bonds issued by the FICO in the 1980s to recapitalize the former Federal Savings and Loan Insurance Corporation. The bonds issued by the FICO are due to mature in 2017 through 2019. For the quarter ended December 31, 2013, the annualized FICO assessment was equal to 0.64 basis points of total assets less tangible capital.

The Dodd-Frank Act increased the minimum target Deposit Insurance Fund ratio from 1.15% of estimated insured deposits to 1.35% of estimated insured deposits. The FDIC must seek to achieve the 1.35% ratio by September 30, 2020. Insured institutions with assets of $10 billion or more are supposed to fund the increase. The Dodd-Frank Act eliminated the 1.5% maximum fund ratio, instead leaving it to the discretion of the Federal Deposit Insurance Corporation and the Federal Deposit Insurance Corporation has exercised that discretion by establishing a long range fund of 2.0%.

The FDIC has authority to increase insurance assessments. Any significant increases would have an adverse effect on the operating expenses and results of operations of Pilgrim Bank. Management cannot predict what assessment rates will be in the future.

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

Prohibitions Against Tying Arrangements. State non-member banks are prohibited, subject to some exceptions, from extending credit to or offering any other service, or fixing or varying the consideration for such extension of credit or service, on the condition that the customer obtain some additional service from the institution or its affiliates or not obtain services of a competitor of the institution.

Federal Reserve System. Federal Reserve Board regulations require depository institutions to maintain noninterest-earning reserves against their transaction accounts (primarily NOW and regular checking accounts). The Federal Reserve Board regulations generally require that reserves be maintained against aggregate transaction accounts as follows: for that portion of transaction accounts aggregating $89.0 million or less (which may be adjusted by the Federal Reserve Board) the reserve requirement is 3.0% and the amounts greater than $89.0 million require a 10.0% reserve (which may be adjusted annually by the Federal Reserve Board between 8.0% and 14.0%). The first $13.3 million of otherwise reservable balances (which may be adjusted by the Federal Reserve Board) are exempted from the reserve requirements. Pilgrim Bank is in compliance with these requirements.

Federal Home Loan Bank System. Pilgrim Bank is a member of the Federal Home Loan Bank System, which consists of 12 regional Federal Home Loan Banks. The Federal Home Loan Bank System provides a central credit facility primarily for member institutions as well as other entities involved in home mortgage lending. As a member of the Federal Home Loan Bank of Boston, Pilgrim Bank is required to acquire and hold shares of capital stock in the Federal Home Loan Bank. As of December 31, 2013, Pilgrim Bank was in compliance with this requirement. Based on redemption provisions of the Federal Home Loan Bank of Boston, the stock has no quoted market value and is carried at cost. Pilgrim Bank reviews for impairment based on the ultimate recoverability of the cost basis of the Federal Home Loan Bank of Boston stock. As of December 31, 2013, no impairment has been recognized.

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At its discretion, the Federal Home Loan Bank of Boston may declare dividends on the stock. The Federal Home Loan Banks are required to provide funds for certain purposes including the resolution of insolvent thrifts in the late 1980s and to contributing funds for affordable housing programs. These requirements could reduce the amount of dividends that the Federal Home Loan Banks pay to their members and result in the Federal Home Loan Banks imposing a higher rate of interest on advances to their members. As a result of losses incurred, the Federal Home Loan Bank of Boston suspended and did not pay dividends in 2009 and 2010. However, the Federal Home Loan Bank of Boston resumed payment of quarterly dividends in 2011 equal to an annual yield of 0.30% and continued to pay quarterly dividends in 2012 equal to an annual yield of 0.50% and in 2013 equal to an annual yield of 0.38%. There can be no assurance that such dividends will continue in the future. Further, there can be no assurance that the impact of recent or future legislation on the Federal Home Loan Banks also will not cause a decrease in the value of the Federal Home Loan Bank of Boston stock held Pilgrim Bank.

Other Regulations

Interest and other charges collected or contracted for by Pilgrim Bank are subject to state usury laws and federal laws concerning interest rates. Pilgrim Bank’s operations are also subject to federal laws applicable to credit transactions, such as the:

• Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers;

• Real Estate Settlement Procedures Act, requiring that borrowers for mortgage loans for one- to four-family residential real estate receive various disclosures, including good faith estimates of settlement costs, lender servicing and escrow account practices, and prohibiting certain practices that increase the cost of settlement services;

• Home Mortgage Disclosure Act, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves;

• Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit;

• Fair Credit Reporting Act, governing the use and provision of information to credit reporting agencies;

• Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies;

• Truth in Savings Act;

• the Biggert-Watters Flood Insurance Reform Act of 2012; and

• rules and regulations of the various federal agencies charged with the responsibility of implementing such federal laws.

In addition, the Consumer Financial Protection Bureau issues regulations and standards under these federal consumer protection laws that affect our consumer businesses. These include regulations setting “ability to repay” and “qualified mortgage” standards for residential mortgage loans and mortgage loan servicing and originator compensation standards. Pilgrim Bank is evaluating recent regulations and proposals, and devotes significant compliance, legal and operational resources to compliance with consumer protection regulations and standards.

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The operations of Pilgrim Bank also are subject to the:

• Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records;

• Electronic Funds Transfer Act and Regulation E promulgated thereunder, which govern automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services;

• Check Clearing for the 21^st Century Act (also known as “Check 21”), which gives “substitute checks,” such as digital check images and copies made from that image, the same legal standing as the original paper check;

• The USA PATRIOT Act, which requires depository institution to, among other things, establish broadened anti-money laundering compliance programs, and due diligence policies and controls to ensure the detection and reporting of money laundering. Such required compliance programs are intended to supplement existing compliance requirements that also apply to financial institutions under the Bank Secrecy Act and the Office of Foreign Assets Control regulations; and

• The Gramm-Leach-Bliley Act, which places limitations on the sharing of consumer financial information by financial institutions with unaffiliated third parties. Specifically, the Gramm-Leach-Bliley Act requires all financial institutions offering financial products or services to retail customers to provide such customers with the financial institution’s privacy policy and provide such customers the opportunity to “opt out” of the sharing of certain personal financial information with unaffiliated third parties.

Holding Company Regulation

General. Pilgrim Bancshares, Inc. will be a bank holding company within the meaning of the Bank Holding Company Act of 1956. As such, Pilgrim Bancshares, Inc. will be registered with the Federal Reserve Board and be subject to regulations, examinations, supervision and reporting requirements applicable to bank holding companies. In addition, the Federal Reserve Board has enforcement authority over Pilgrim Bancshares, Inc. and its non-bank subsidiaries. Among other things, this authority permits the Federal Reserve Board to restrict or prohibit activities that are determined to be a serious risk to the subsidiary institution.

Permissible Activities. Pilgrim Bancshares, Inc. will be subject to examination, regulation, and periodic reporting under the Bank Holding Company Act of 1956, as administered by the Federal Reserve Board. Pilgrim Bancshares, Inc. will be required to obtain the prior approval of the Federal Reserve Board to acquire all, or substantially all, of the assets of any bank or bank holding company. Prior Federal Reserve Board approval also would be required for Pilgrim Bancshares, Inc. to acquire direct or indirect ownership or control of any voting securities of any bank or bank holding company if, after such acquisition, it would directly or indirectly own or control more than 5% of any class of voting shares of the bank or bank holding company. In evaluating applications by holding companies to acquire depository institutions, the Federal Reserve Board must consider, among other things, the financial and managerial resources and future prospects of the company and institutions involved, the effect of the acquisition on the risk to the federal deposit insurance fund, the convenience and needs of the community and competitive factors. In addition to the approval of the Federal Reserve Board, prior approval may also be necessary from other agencies having supervisory jurisdiction over the bank to be acquired before any bank acquisition can be completed.

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A bank holding company is generally prohibited from engaging in non-banking activities, or acquiring direct or indirect control of more than 5% of the voting securities of any company engaged in non-banking activities. One of the principal exceptions to this prohibition is for activities found by the Federal Reserve Board to be so closely related to banking or managing or controlling banks as to be a proper incident thereto. Some of the principal activities that the Federal Reserve Board has determined by regulation to be so closely related to banking are: (i) making or servicing loans; (ii) performing certain data processing services; (iii) providing discount brokerage services; (iv) acting as fiduciary, investment or financial advisor; (v) leasing personal or real property; (vi) making investments in corporations or projects designed primarily to promote community welfare; and (vii) acquiring a savings and loan association whose direct and indirect activities are limited to those permitted for bank holding companies. A bank holding company that meets certain criteria, such as being well-capitalized and well-managed within the meaning of applicable regulations, may elect to become a “financial holding company.” Such an election allows a bank holding company to engage in a broader array of financial activities, including insurance and investment banking.

Capital. When it reaches $500 million in total assets, Pilgrim Bancshares, Inc. will be subject to the Federal Reserve Board’s capital adequacy regulations for bank holding companies (on a consolidated basis). These capital standards have historically been similar to, though less stringent than, those of the FDIC for Pilgrim Bank. The Dodd-Frank Act, however, required the Federal Reserve Board to establish, for all bank holding companies with total assets of $500 million or more, minimum consolidated capital requirements that are as stringent as those required for the insured depository subsidiaries. Under regulations recently enacted by the Federal Reserve Board and effective January 1, 2015, all such bank holding companies will be subject to regulatory capital requirements that are the same as the new capital requirements for Pilgrim Bank. These new capital requirements include provisions that, when applicable, might limit the ability of Pilgrim Bancshares, Inc. to pay dividends to its stockholders or repurchase its shares. See “—Federal Banking Regulation—New Capital Rule.” Pilgrim Bancshares, Inc. has conducted a pro forma analysis of the application of these new capital requirements as of December 31, 2013, assuming the conversion and offering are completed, and has determined that it will meet all of these new requirements, including the full 2.5% capital conservation buffer, and will remain well-capitalized, if these new requirements had been in effect on that date.

Source of Strength. The Dodd-Frank Act codified the “source of strength” doctrine. The Federal Reserve Board has issued regulations requiring that all bank holding companies serve as a source of managerial and financial strength to their subsidiary banks by providing capital, liquidity and other support in times of financial stress.

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

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of the end of a quarter, in the amount of such equity instruments outstanding compared with the beginning of the quarter in which the redemption or repurchase occurred. These regulatory policies may affect the ability of Pilgrim Bancshares, Inc. to pay dividends, repurchase shares of common stock or otherwise engage in capital distributions.

Acquisition. Under the Federal Change in Bank Control Act, a notice must be submitted to the Federal Reserve Board if any person (including a company), or group acting in concert, seeks to acquire direct or indirect “control” of a bank holding company. Under certain circumstances, a change of control may occur, and prior notice is required, upon the acquisition of 10% or more of the company’s outstanding voting stock, unless the Federal Reserve Board has found that the acquisition will not result in control of the company. A change in control definitively occurs upon the acquisition of 25% or more of the company’s outstanding voting stock. Under the Change in Bank Control Act, the Federal Reserve Board generally has 60 days from the filing of a complete notice to act, taking into consideration certain factors, including the financial and managerial resources of the acquirer and the competitive effects of the acquisition.

Massachusetts Holding Company Regulation. Under the Massachusetts banking laws, a company owning or controlling two or more banking institutions, including a co-operative bank, is regulated as a bank holding company. The term “company” is defined by the Massachusetts banking laws similarly to the definition of “company” under the Bank Holding Company Act. Each Massachusetts bank holding company: (i) must obtain the approval of the Massachusetts Board of Bank Incorporation before engaging in certain transactions, such as the acquisition of more than 5% of the voting stock of another banking institution; (ii) must register and file reports with the Massachusetts Commissioner of Bank; and (iii) is subject to examination by the Massachusetts Commissioner of Banks.

Federal Securities Laws

Pilgrim Bancshares, Inc.’s common stock will be registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934. Pilgrim Bancshares, Inc. will be subject to the information, proxy solicitation, insider trading restrictions and other requirements under the Securities Exchange Act of 1934.

The registration under the Securities Act of 1933 of shares of common stock to be issued in the offering does not cover the resale of those shares. Shares of common stock purchased by persons who are not our affiliates may be resold without registration. Shares purchased by our affiliates will be subject to the resale restrictions of Rule 144 under the Securities Act of 1933. If we meet the current public information requirements of Rule 144 under the Securities Act of 1933, each affiliate of ours that complies with the other conditions of Rule 144, including those that require the affiliate’s sale to be aggregated with those of other persons, would be able to sell in the public market, without registration, a number of shares not to exceed, in any three-month period, the greater of 1% of our outstanding shares, or the average weekly volume of trading in the shares during the preceding four calendar weeks. In the future, we may permit affiliates to have their shares registered for sale under the Securities Act of 1933.

Emerging Growth Company Status

The Jumpstart Our Business Startups Act (the “JOBS Act”), which was enacted in April 2012, has made numerous changes to the federal securities laws to facilitate access to capital markets. Under the JOBS Act, a company with total annual gross revenues of less than $1.0 billion during its most recently completed fiscal year qualifies as an “emerging growth company.” Pilgrim Bancshares, Inc. qualifies as an emerging growth company under the JOBS Act.

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An “emerging growth company” may choose not to hold stockholder votes to approve annual executive compensation (more frequently referred to as “say-on-pay” votes) or executive compensation payable in connection with a merger (more frequently referred to as “say-on-golden parachute” votes). An emerging growth company also is not subject to the requirement that its auditors attest to the effectiveness of the company’s internal control over financial reporting, and can provide scaled disclosure regarding executive compensation; however, Pilgrim Bancshares, Inc. will also not be subject to the auditor attestation requirement or additional executive compensation disclosure so long as it remains a “smaller reporting company” under Securities and Exchange Commission regulations (generally less than $75 million of voting and non-voting equity held by non-affiliates). Finally, an emerging growth company may elect to comply with new or amended accounting pronouncements in the same manner as a private company, but must make such election when the company is first required to file a registration statement. Such an election is irrevocable during the period a company is an emerging growth company. Pilgrim Bancshares, Inc. has elected to comply with new or amended accounting pronouncements in the same manner as a private company.

A company loses emerging growth company status on the earlier of: (i) the last day of the fiscal year of the company during which it had total annual gross revenues of $1.0 billion or more; (ii) the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the company pursuant to an effective registration statement under the Securities Act of 1933; (iii) the date on which such company has, during the previous three-year period, issued more than $1.0 billion in non-convertible debt; or (iv) the date on which such company is deemed to be a “large accelerated filer” under Securities and Exchange Commission regulations (generally, at least $700 million of voting and non-voting equity held by non-affiliates).

Sarbanes-Oxley Act of 2002

The Sarbanes-Oxley Act of 2002 addresses, among other issues, corporate governance, auditing and accounting, executive compensation, and enhanced and timely disclosure of corporate information. As directed by the Sarbanes-Oxley Act, our Chief Executive Officer and Chief Financial Officer will be required to certify that our quarterly and annual reports do not contain any untrue statement of a material fact. The rules adopted by the Securities and Exchange Commission under the Sarbanes-Oxley Act have several requirements, including having these officers certify that: they are responsible for establishing, maintaining and regularly evaluating the effectiveness of our internal control over financial reporting; they have made certain disclosures to our auditors and the audit committee of the Board of Directors about our internal control over financial reporting; and they have included information in our quarterly and annual reports about their evaluation and whether there have been changes in our internal control over financial reporting or in other factors that could materially affect internal control over financial reporting. We will be subject to further reporting and audit requirements beginning with the year ending December 31, 2013 under the requirements of the Sarbanes-Oxley Act. We will prepare policies, procedures and systems designed to ensure compliance with these regulations.

TAXATION

Federal Taxation

General. Pilgrim Bancshares, Inc. and Pilgrim Bank are subject to federal income taxation in the same general manner as other corporations, with some exceptions discussed below. The following discussion of federal taxation is intended only to summarize material federal income tax matters and is not a comprehensive description of the tax rules applicable to Pilgrim Bancshares, Inc. and Pilgrim Bank.

Method of Accounting. For federal income tax purposes, Pilgrim Bank currently reports its income and expenses on the accrual method of accounting and uses a tax year ending December 31st for filing its consolidated federal income tax returns. The Small Business Protection Act of 1996 eliminated the use of the percentage method of accounting for bad debt reserves by banks and savings institutions, effective for taxable years beginning after 1995.

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Minimum Tax. The Internal Revenue Code of 1986, as amended, imposes an alternative minimum tax at a rate of 20% on a base of regular taxable income plus certain tax preferences, referred to as “alternative minimum taxable income.” The alternative minimum tax is payable to the extent alternative minimum taxable income is in excess of an exemption amount. Net operating losses can, in general, offset no more than 90% of alternative minimum taxable income. Certain payments of alternative minimum tax may be used as credits against regular tax liabilities in future years. At December 31, 2013, Pilgrim Bank had no minimum tax credit carryforward.

Corporate Dividends. We may exclude from our income 100% of dividends received from Pilgrim Bank as a member of the same affiliated group of corporations.

Audit of Tax Returns. Conahasset Bancshares, MHC, Conahasset Bancshares, Inc. and Pilgrim Bank’s federal income tax returns have not been audited in the most recent five-year period.

State Taxation

For tax years beginning on or after January 1, 2009, Massachusetts generally requires corporations engaged in a unitary business to calculate their income on a combined basis with corporations which are under common control. Accordingly, Conahasset Bancshares, MHC, Conahasset Bancshares, Inc. and Pilgrim Bank currently file combined annual income tax returns. Upon consummation of the conversion, Pilgrim Bancshares, Inc. would be required to file a combined annual Massachusetts income tax return with Pilgrim Bank unless an exemption from such a combined filing applies. A corporation that qualifies, and elects to be treated for purposes of Massachusetts taxation, as a Massachusetts Security Corporation will be excluded from such a combined group.

A financial institution or business corporation is generally entitled to special tax treatment as a “security corporation” under Massachusetts law provided that: (a) its activities are limited to buying, selling, dealing in or holding securities on its own behalf and not as a broker; and (b) it has applied for, and received, classification as a “security corporation” by the Commissioner of the Massachusetts Department of Revenue. A security corporation that is not a bank holding company under the Internal Revenue Code must pay a tax equal to 1.32% of its gross income. An election to be treated as a security corporation would have the effect of reducing Pilgrim Bancshares, Inc.’s Massachusetts tax liability to 0.33% of its net income.

Pilgrim Bancshares, Inc. is considering whether to seek to qualify as a security corporation. To do so, it would need to (a) apply for, and receive, security corporation classification by the Massachusetts Department of Revenue; and (b) not conduct any activities deemed impermissible under the governing statutes and the various regulations, directives, letter rulings and administrative pronouncements issued by the Massachusetts Department of Revenue. In order to qualify as a security corporation, it would need to establish a subsidiary for the purpose of making the loan to the employee stock ownership plan, since making such a loan directly could disqualify it from classification as a security corporation.

Pilgrim Bank, under current law, files a Massachusetts combined excise tax return with its affiliates who do not qualify as security corporations. During the 2013 tax year, Pilgrim Bank was subject to an annual Massachusetts tax at a rate of 9.0% of its net income, adjusted for certain items. Massachusetts net income is defined as gross income, other than 95% of dividends received in any taxable year beginning on or after January 1, 1999 from or on account of the ownership of any class of stock if the institution owns 15% or more of the voting stock of the institution paying the dividend, less the deductions, but not the credits allowable under the provisions of the Internal Revenue Code, as amended and in effect for the taxable year. The dividends must meet the qualifications under

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Massachusetts law. Dividends paid to affiliates participating in a combined return will be 100% excluded to the extent paid from earnings and profits of a unitary business included in the Massachusetts combined return. Deductions with respect to the following items, however, shall not be allowed except as otherwise provided: (a) dividends received, except as otherwise provided; (b) losses sustained in other taxable years; (c) taxes on or measured by income, franchise taxes measured by net income, franchise taxes for the privilege of doing business and capital stock taxes imposed by any state; or (d) the deduction allowed by section 168(k) of the Code.

Other applicable state taxes include generally applicable sales and use taxes plus real and personal property taxes. None of the state tax returns of Pilgrim Bank is currently under audit, nor have any of these tax returns been audited during the past five years.

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

MANAGEMENT OF PILGRIM BANCSHARES, INC.

Shared Management Structure

The directors of Pilgrim Bancshares, Inc. are the same persons who are the directors of Pilgrim Bank. In addition, each executive officer of Pilgrim Bancshares, Inc. is also an executive officer of Pilgrim Bank. We expect that Pilgrim Bancshares, Inc. and Pilgrim Bank will continue to have common executive officers until there is a business reason to establish separate management structures.

Executive Officers of Pilgrim Bancshares, Inc. and Pilgrim Bank

The following table sets forth information regarding the executive officers of Pilgrim Bancshares, Inc. and Pilgrim Bank and their ages as of December 31, 2013. The executive officers of Pilgrim Bancshares, Inc. and Pilgrim Bank are elected annually.

Name	Age	Position
Francis E. Campbell	59	President, Chief Executive Officer and Chairman
Christopher G. McCourt	53	Senior Vice President, Chief Financial Officer and Treasurer
Joan A. MacIntyre(1)	57	Senior Vice President of Operations
Nancy J. Joseph(1)	53	Vice President of Residential Lending
Stephen K. Lucitt(1)	51	Vice President of Commercial Lending
Edward T. Mulvey	78	Secretary and Clerk

(1) Not an officer of Pilgrim Bancshares, Inc.

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Directors of Pilgrim Bancshares, Inc. and Pilgrim Bank

Pilgrim Bancshares, Inc. has nine directors. Directors serve three-year staggered terms. Directors of Pilgrim Bank will be elected by Pilgrim Bancshares, Inc. as its sole stockholder.

The following table states our directors’ names, their ages as of December 31, 2013, the years that they began serving as directors of Pilgrim Bank and when their current term as directors of Pilgrim Bancshares, Inc. expires:

Name	Position(s) Held With Pilgrim Bancshares, Inc.	Age	Director Since	Current Term Expires
Francis E. Campbell	President, Chief Executive Officer and Chairman of the Board	59	2002	2016
Melissa J. Browne	Director	58	2007	2017(1)
J. Michael Buckley	Director	51	2005	2017(1)
Steven T. Golden	Director	63	1997	2015
Ronald H. Goodwin	Director	63	1998	2015
Mary E. Granville	Director	62	2007	2015
Charles J. Humphreys	Director	72	1971	2016
Brian W. Noonan	Director	69	1998	2017(1)
Joseph P. Reilly	Director	63	2004	2016

(1) Each of Ms. Browne and Messrs. Buckley and Noonan are currently serving terms that expire at Pilgrim Bancshares, Inc.’s 2014 annual meeting of shareholders. We anticipate that the 2014 annual meeting of shareholders will be held prior to the closing of the offering, and that Conahasset Bancshares, Inc., the sole shareholder of Pilgrim Bancshares, Inc., will elect all three individuals for three-year terms expiring at the 2017 annual meeting of shareholders.

Director Qualifications

In considering and identifying individual candidates for director, our nominating and governance committee and our Board of Directors takes into account several factors which they believe are important to the operations of Pilgrim Bank as a community banking institution. With respect to specific candidates, the Board and the Nominating and Corporate Governance Committee assess the specific qualities and experience that such individuals possess, including: (1) overall familiarity and experience with the market areas served by Pilgrim Bank and the community groups located in such communities; (2) knowledge of the local real estate markets and real estate professionals; (3) contacts with and knowledge of local businesses operating in our market area; (4) professional and educational experience, with particular emphasis on real estate, legal, accounting or financial services; (5) experience with the local governments and agencies and political activities; (6) any adverse regulatory or legal actions involving the individual or entity controlled by the individual; (7) the integrity, honesty and reputation of the individual; (8) experience or involvement with other local financial services companies and potential conflicts that may develop; (9) the past service with Pilgrim Bank or its subsidiaries and contributions to their operations; and (10) the independence of the individual. While the Board of Directors and the Committee do not maintain a written policy on diversity which specifies the qualities or factors the Board or Committee must consider when assessing Board members individually or in connection with assessing the overall composition of the Board, the Board and Committee take into account: (1) the effectiveness of the existing Board of Directors or additional qualifications that may be required when selecting new Board members; (2) the requisite expertise and sufficiently diverse backgrounds of the Board of Directors’ overall membership composition; and (3) the number of independent outside directors and other possible conflicts of interest of existing and potential members of the Board of Directors.

Board Independence

The Board of Directors has determined that each of our directors, with the exception of President and Chief Executive Officer Francis E. Campbell is “independent” as defined in the listing standards of The NASDAQ Stock Market. Mr. Campbell is not independent because he is one of our executive officers.

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In determining the independence of the other directors, the Board of Directors considered the following facts. During the fiscal years ended December 31, 2013 and 2012, C. J. Humphreys Law Offices, a law firm of which Director Humphreys is a partner, received payments of $2,144 and $2,931, respectively, for title insurance agent and attorney closing fees in connection with the closing of certain loans originated by Pilgrim Bank. Although these fees were paid by the borrower, Pilgrim Bank referred the law firm. The Board of Directors determined that the payment of market rates for title insurance agent and closing attorney fees does not interfere with Mr. Humphreys’ exercise of independent judgment in carrying out his responsibilities as a director. In addition, Mr. Humphreys resigned as general counsel and conveyancing attorney for Pilgrim Bank effective January 1, 2014.

The Business Background of Our Directors and Executive Officers

The business experience for the past five years of each of our directors and executive officers is set forth below. With respect to directors, the biographies also contain information regarding the person’s experience, qualifications, attributes or skills that caused the Nominating and Corporate Governance Committee and the Board of Directors to determine that the person should serve as a director. Unless otherwise indicated, directors and executive officers have held their positions for the past five years.

Directors:

Francis E. Campbell is our President and Chief Executive Officer and serves as Chairman of our Board of Directors. He has been employed with Pilgrim Bank since 1999 in a variety of roles, including CFO and Senior Loan Officer. He has served as President and Chief Executive Officer since 2002 and Chairman of the Board since 2007. Mr. Campbell has over 35 years of community banking experience. Mr. Campbell holds a degree in Business Administration from St. Michael’s College and an MBA from Suffolk University. Mr. Campbell has extensive ties to the community that support our business generation, including service with the South Shore Elder Services, Cohasset Chamber of Commerce, South Shore Chamber of Commerce, South Shore Hospital Foundation and Presidents’ Circle, Cohasset Council on Elder Affairs Advisory Board and the Jeffrey Coombs 9/11 Foundation Board of Trustees. He serves on the Board of Trustees and as Chairman of the Finance Committee for the Cooperative Banks Employees Retirement Association and is a member of the Administrative Committee of the American Banking Association America’s Community Bankers Council. He is also a member of the Massachusetts Bankers’ Association Community Bank Committee. Mr. Campbell was selected to serve as a Director because his extensive experience in a variety of roles at Pilgrim Bank and other community banking institutions provides a broad and unique perspective on the challenges facing our organization and on our business strategies and operations.

Melissa J. Browne is a principal of MJB Agency, a marketing, communications and public relations firm, and is a licensed realtor with Coastal Countryside Properties. She has over 25 years experience in the investment advisory, brokerage, mortgage banking and financial services industries. She has served as Chief Operating Officer of NAIOP Massachusetts, a real estate trade organization, Senior Vice President, Director and Partner of Colliers Meredith & Grew, a commercial real estate firm, Managing Director of Holliday Fenoglio Folwer, L.P., a national real estate capital markets intermediary, and in various roles with Lend Lease Real Estate Investments, AEW Capital Management, The Boston Company Real Estate Counsel, Inc. and The Langelier Company. Ms. Browne is also a Director of The Hingham Mutual Fire Insurance Company. She holds a bachelor’s degree in Foreign Service from Georgetown University, a CPM Designation from the Institute of Real Estate Management in Chicago, and is a licensed Massachusetts real estate salesperson. She has served in a number of roles at various community organizations, including the United Way Women’s Leadership Breakfast, the Warren Group Advisory Board, the Scituate Animal Shelter and the Francis Ouimet Scholarship Fund. She is currently

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a member of Cohasset’s Emergency Response Team and chair of the town’s Police Citizens Liaison Board. Ms. Browne was selected to serve as a Director because her experience in commercial real estate brings a unique perspective to our operations, particularly, her experience in marketing and public relations provides insight into our marketing efforts in the community and because her extensive involvement in our community provides insight into the needs of customers in our community, particularly real estate lending needs.

J. Michael Buckley is currently the Town Accountant for the towns of Hull and Pembroke, Massachusetts, and until 2010 served as the Finance Director of the Town of Cohasset, Massachusetts. Prior to that, he was employed by the towns of Hingham and Westport, Massachusetts. Mr. Buckley holds a Bachelor of Science in Accounting Degree from Northeastern University. Mr. Buckley was selected to serve as a Director because his extensive experience in municipal finance provides a unique perspective with respect to the preparation and review of our financial statements, the supervision of our independent auditors and the review and oversight of our financial controls and procedures and our accounting practices. In addition, his service to municipalities in our market area provides insight on the business environment and needs of customers in our market area.

Steven T. Golden is a physician, part of Cohasset Family Practice, a family medical practice that has been operating in Cohasset since 1981. This is part of Healthcare South, P.C., a primary care group practice with 10 sites where he holds the position of President and Medical Director. He holds a degree in Biology from Harvard University and a degree in medicine from the Upstate Medical School, Syracuse, New York. He is an active member of the Massachusetts Medical Society, Massachusetts Academy of Family Physicians, and the American Academy of Family Physicians. He is a diplomate of the American Board of Family Medicine and serves on numerous committees of these organizations which promote quality and cost effective medical care. He has been the school physician in Cohasset, Massachusetts for many years. Dr. Golden was selected to serve as a Director because his experience managing his own business provides insight with respect to general business operations and because his service to the community provides unique perspective on the needs of customers in our market area.

Ronald H. Goodwin is the owner of Goodwin Graphics, Inc., a screen-printing and graphics business that he founded in 1976. Mr. Goodwin studied fine arts at the Maryland Institute College of Art in Baltimore, Maryland and The School of The Museum of Fine Arts in Boston. He is a current member of the Hingham Lions Club and numerous trade associations. He has previously served as commissioner and Chairman of the Cohasset Water Department, as a Paul Harris fellow and president of the Cohasset Rotary Club, a director of the South Shore Art Center, a director of the Cohasset Chamber of Commerce and a director of Cohasset Lightkeepers Corporation. Mr. Goodwin was selected to serve as a Director because his experience founding managing his own business provides insight with respect to general business operations as well as experience reviewing financial statements.

Mary E. Granville is President of The Appraisers Collaborative. Established in 1980, the firm provides valuation and appraisal services to a wide variety of clients with respect to residential, commercial and industrial properties. Prior to that, she worked for Frank D. Pietroski, MAI, Appraisers and Consultants. She holds a degree in Education from The University of Massachusetts and is certified by the Commonwealth of Massachusetts as a Certified General Appraiser and holds both the SRA designation from The Appraisal Institute and the MRA designation from The Massachusetts Board of Real Estate Appraisers. Additionally, she has been awarded The William D. Stewart Award for outstanding contributions to the Massachusetts Board of Real Estate Appraisers. Currently, she serves as Chairman of the Cohasset Board of Assessors and is a Professional member of the Cohasset Community Garden Club. Ms. Granville also has served as a member of Compliance Committee for The Massachusetts State Board of Registration for real estate appraisers. Ms. Granville was selected to serve as Director because of extensive experience in the appraisal and valuation industries and provides a unique perspective with regard to the underwriting risks associated with our lending practices and valuable insight into trends in real estate in our market area.

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Charles J. Humphreys is principal of C. J. Humphreys Law Offices, which provides legal services to businesses and individuals in our market area. Prior to founding the firm in 1978, he was an attorney with Thaxter, Beckwith, Humphreys & Henderson from 1969 to 1978. He holds a Bachelor’s degree in Economics from Boston College, and a Juris Doctor from Boston College Law School. Mr. Humphreys serves as a Director of MASSA Products Corporation, a private company. Mr. Humphreys was selected to serve as a Director because his extensive experience as a business attorney provides a unique perspective on our business and operations, because his client service and his community service provide insight into the needs of members of our community as well as economic and other trends developing in our market area and because his 43 years of service on the Board of Directors of Pilgrim Bank provide a unique insight into the challenges that might face us in a variety of economic environments.

Brian W. Noonan served as the Chief of Police of the Town of Cohasset from March 1993 until his retirement in March 2002, and on the police force of the Town of Cohasset since August 1974. Mr. Noonan is President of the Cohasset Lightkeepers Corporation and a member of the Cohasset Police Relief Association. Mr. Noonan was selected to serve as a Director because his years of service as a law enforcement officer in our community provides extraordinary insight into the economic and business needs of our community, as well as insight into where we can best serve our community in other ways, including charitable donations.

Joseph P. Reilly has been the owner and principal of Joseph P. Reilly Inc., a consulting firm providing tax, accounting and other services to small businesses, for 19 years. He holds a Bachelor of Arts degree from Boston College and an MBA from the University of Rhode Island. Mr. Reilly serves on the Board of Directors of MASSA Products Corporation, a private company. Mr. Reilly was selected to serve as a Director because his experience managing his own business and his experience providing tax and accounting services provides insight with respect to general business operations as well as experience reviewing financial statements.

Executive Officers Who Are Not Directors:

Christopher G. McCourt has been employed by Pilgrim Bank since 2011 and is currently serving as Senior Vice President, Chief Financial Officer and Treasurer. He has over 30 years of experience in the financial services industry, having served in various financial positions at Bank of America from 2004 to 2011 and at Fleet Bank and its predecessors from 1982 to 2004. Mr. McCourt holds a degree in Accounting and Marketing from Boston College, and an MBA from Bentley University. His responsibilities include the management and supervision of Pilgrim Bank’s accounting and financial reporting and retail division and consumer lending. Mr. McCourt oversees the preparation of financial statements and budgets, capital planning initiatives, and the asset/liability and investment management function. Mr. McCourt volunteers for the Friends of the Homeless of the South Shore and the Scituate Community Christmas organization.

Joan A. MacIntyre has been employed by Pilgrim Bank since 2008, and is currently serving as Senior Vice President of Operations. She has previously served as Controller and Vice President of Internal Audit of Pilgrim Bank. Ms. MacIntyre has over 33 years of experience in the financial services industry and community banking. She previously served as Vice President, Director of Risk Management at Finance and Thrift Co., Porterville, California, from 2005 to 2008, and, before that, as a banking consultant from 1996 to 2005. Ms. MacIntyre holds a degree in History and Political Science from Bridgewater University. She is responsible for overseeing Pilgrim Bank’s overall back office deposit and loan operations, as well as information technology and compliance. Ms. MacIntyre is also the BSA Officer. Ms. MacIntyre is a major contributor to the Plymouth, MA, Salvation Army and is a supporter of the Leukemia and Lymphoma Society. In previous years, Ms. MacIntyre was a member of the Bank’s Relay for Life Team, assisting at the annual events and donating items to be raffled.

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Nancy J. Joseph is the Vice President of Residential Lending and has been employed by Pilgrim Bank since 2003, previously serving as Assistant Vice President of Residential Lending. Ms. Joseph has 27 years of experience in community banking. She previously served as Assistant Vice President, Mortgage Servicing Manager at People’s Bank from 1993 to 2002. She is responsible for overseeing the origination, underwriting, processing and collections of our one- to four-family residential mortgage loan portfolio. Ms. Joseph has been involved with a number of charitable organizations throughout her career, including Habitat for Humanity out of Buzzards Bay, Relay for Life in both Cohasset and Marion, A Helping Paw in Wareham, Credit for Life – a High School Program at Massasoit Community College, Labs4Rescue, and Junior Achievement in New Bedford. Ms. Joseph is also a Massachusetts Notary Public.

Stephen K. Lucitt joined Pilgrim Bank as the Vice President of Commercial Lending in 2012. Mr. Lucitt has more than 20 years of experience in community banking. Prior to that, he served as Vice President and Commercial Loan Officer of Mercantile Bank from 2003 to 2012. Mr. Lucitt holds a degree in Business Administration from the University of Southern California, an MBA from Suffolk University, and a post-graduate degree from Stonier Graduate School of Banking. He is responsible for overseeing the origination, underwriting, credit administration and management of our commercial loan portfolio. Mr. Lucitt has been recognized by the U.S. Small Business Administration as the top lender in Massachusetts for his role in implementing the Americas Recovery Capital (ARC) Loan Program and was awarded the Corporate Partner at Work by Interseminarian Project Place of Boston for his work to help end homelessness. He has served on Boards of Non-Profits such as the Dianne DeVanna Center and volunteers for various local community organizations including Habitat for Humanity, the American Red Cross, the Community Re-entry for Women (CREW) Program and the Pine Street Inn. Mr. Lucitt has also developed and presented financial literacy programs to Family Services of Greater Boston and Boston school students. He has served as President of the USC New England Alumni Club and is active in the South Shore Chamber of Commerce and the Cohasset Chamber of Commerce.

Edward T. Mulvey is the Clerk of Pilgrim Bank and the Secretary of Pilgrim Bancshares, Inc. He has served in that role since 2008. He also served in a variety of other roles at Pilgrim Bank, including Chairman, President and Chief Executive Officer, in more than 50 years of service to the organization. Mr. Mulvey retired in 2000 as Chief Executive Officer, retired as Chairman in 2007, and retired as a Director in 2008. Most recently, Mr. Mulvey served as President of South Shore Elder Services and is a member of the Board of Directors of Cohasset Council on Elder Affairs.

Meetings and Committees of the Board of Directors of Pilgrim Bank

We conduct business through meetings of our Board of Directors and its committees. During the year ended December 31, 2013, the Board of Directors of Pilgrim Bank had 12 regular meetings, three special meetings and one annual meeting. Set forth below is a brief description of the standing committees of the Board of Directors of Pilgrim Bank and their current membership.

The audit committee is currently comprised of Directors Reilly (Chairman), Buckley, Goodwin and Humphreys. The audit committee assists the Board of Directors in fulfilling its oversight responsibilities with respect to (i) the integrity of the financial reporting process, the systems of internal control, the audit process, and the financial statements and reports of Pilgrim Bank, (ii) the performance of the internal audit function, and (iii) compliance with laws and regulatory requirements. The audit committee is also directly responsible for the appointment, compensation and oversight of Pilgrim Bank’s independent auditor. The audit committee met 12 times during the year ended December 31, 2013.

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The nominating committee rotates annually, and for the year ended December 31, 2013 was comprised of Directors Campbell (Chairman), Granville and Noonan. For 2014, the committee is comprised of Directors Campbell (Chairman), Golden and Goodwin. The nominating committee is responsible for (i) identifying, screening, recruiting and presenting director and corporator candidates to the Board of Directors, and (ii) recommending directors for membership on the various committees of the Board of Directors. The nominating committee met three times during the year ended December 31, 2013.

The compensation committee is currently comprised of Directors Reilly (Chairman), Browne and Buckley. The compensation committee is responsible for (i) establishing Pilgrim Bank’s general compensation philosophy, (ii) developing and implementing compensation, benefits and perquisite programs, (iii) approving and evaluating compensation plans, policies and programs for the Chief Executive Officer, (iv) recommending levels of compensation for directors, (v) evaluating the performance of the Chief Executive Officer, and (vi) recommending to the Board of Directors the discretionary contribution to be made under Pilgrim Bank’s 401(k) plan. The compensation committee met four times during the year ended December 31, 2013.

The security committee is comprised of at Directors Granville (Chairman), Campbell, Browne and Noonan. The security committee performs the functions of an executive committee and a loan committee of the Pilgrim Bank. The security committee monitors our investment and borrowing activity, personnel issues, capital expenditures, asset/liability strategies, personnel issues and corporate governance; makes policy recommendations; and assists the Board of Directors in maintaining and monitoring the quality of loan portfolio and the supervision of the safe and sound operation of Pilgrim Bank’s lending operations. The security committee is responsible for (i) reviewing and approving credit requests in excess of credit limits authorized for loan officers and senior management, (ii) reviewing and recommending to the Board of Directors loan requests from directors or other insiders, (iii) reviewing all loans in excess of a designated amount that were approved within the credit limits authorized for loan officers and senior management, (iv) implementing and evaluating the overall corporate governance policies for Pilgrim Bank, and (v) reviewing and presenting changes to the bylaws of Pilgrim Bank for the Board of Directors’ consideration and approval. The security committee met 19 times during the year ended December 31, 2013.

Meetings and Committees of the Board of Directors of Pilgrim Bancshares, Inc.

The Board of Directors of Pilgrim Bancshares, Inc. has met one time since the incorporation of Pilgrim Bancshares, Inc. to address certain organizational matters, and has established the following standing committees: the Compensation Committee, the Nominating and Corporate Governance Committee and the Audit Committee. Each of these committees will operate under a written charter, which governs their composition, responsibilities and operations.

The Audit Committee will be responsible for supervising Pilgrim Bancshares, Inc.’s accounting, financial reporting and financial control processes. Generally, the Audit Committee will oversee management’s efforts with respect to the quality and integrity of our financial information and reporting functions and the adequacy and effectiveness of our system of internal accounting and financial controls. The Audit Committee will also review the independent audit process and the qualifications of the independent registered public accounting firm.

The Audit Committee will be comprised of Directors Reilly (Chairman), Buckley, Goodwin and Humphreys. We intend that each member of the Audit Committee will be deemed to be “independent” as defined in the Nasdaq corporate governance listing standards and will satisfy the additional independence requirements of applicable Securities and Exchange Commission rules.

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The Audit Committee will have sole responsibility for engaging our registered public accounting firm. Based on its review of the criteria of an “audit committee financial expert” under the rules adopted by the Securities and Exchange Commission, our board of directors believes that Mr. Buckley qualifies as an “audit committee financial expert” under applicable Securities and Exchange Commission rules.

The Nominating and Corporate Governance Committee will meet at least annually in order to recommend candidates for membership on our board of directors. The Nominating and Corporate Governance Committee will also be responsible for reviewing board and committee composition and establishing corporate governance policies and procedures. The Nominating and Corporate Governance Committee will be comprised of Directors Golden (Chairman), Goodwin and Noonan.

The Compensation Committee will establish Pilgrim Bancshares, Inc.’s compensation policies and will review compensation matters. The Compensation Committee will be comprised of Directors Reilly (Chairman), Browne and Buckley.

Board Structure and Risk Oversight

Our Board of Directors is chaired by Francis E. Campbell, who is also our President and Chief Executive Officer. We believe our governance structure is appropriate given the size, limited market area and relatively non-complex operating philosophy of our organization. In addition, we have never engaged in a transaction with any affiliate of Mr. Campbell. As President and Chief Executive Officer of Pilgrim Bank, and having been employed by Pilgrim Bank in various roles for 15 years, Mr. Campbell is well positioned to understand the challenges faced by our organization. As a result, he can set our strategic direction, provide day-to-day leadership, and also set the agenda of the Board of Directors. We understand the risk that an inside Chairman could theoretically manage the Board of Directors’ agenda to limit the consideration of important issues relating to management.

To minimize the risk involved with having a joint Chairman and Chief Executive Officer, the independent directors will meet in executive sessions periodically to discuss certain matters such as the chief executive officer’s performance and his annual compensation as well as our independent audit and internal controls. In addition, we have appointed Steven T. Golden, who has served as a director of Pilgrim Bank since 1997, as our lead independent director. The lead independent director provides a source of leadership that is complimentary to that provided by the Chairman, but is independent of management. The lead independent director is responsible for providing input with respect to the preparation of agendas for meetings of the Board of Directors and committees, working with the Chairman and the corporate secretary to ensure that the Board of Directors has adequate resources and information to support its activities, serving as chair of Board of Directors meetings in the Chairman’s absence, educating the Board of Directors as to its responsibilities, chairing meetings of the independent directors and serving as a liaison between the Board of Directors and management and among individual directors. We intend to rotate the position of lead independent director every three years.

The Board of Directors is actively involved in oversight of risks that could affect Pilgrim Bancshares, Inc. This oversight is conducted in part through committees of the Board of Directors, but the full Board of Directors has retained responsibility for general oversight of risks. The Board of Directors satisfies this responsibility through full reports by each committee regarding its considerations and actions, regular reports directly from officers responsible for oversight of particular risks within Pilgrim Bancshares, Inc. as well as through internal and external audits. Risks relating to the direct operations of Pilgrim Bank are further overseen by the Board of Directors of Pilgrim Bank, who are the same individuals who serve on the Board of Directors of Pilgrim Bancshares, Inc. The Board of Directors of Pilgrim Bank also has additional committees that conduct risk oversight separate from Pilgrim Bancshares, Inc. Further, the Board of Directors oversees risks through the establishment of policies and procedures that are designed to guide daily operations in a manner consistent with applicable laws, regulations and risks acceptable to the organization.

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Corporate Governance Policies and Procedures

In addition to establishing committees of our board of directors, Pilgrim Bancshares, Inc. will adopt several policies to govern the activities of both Pilgrim Bancshares, Inc. and Pilgrim Bank including corporate governance policies and a code of business conduct and ethics. The corporate governance policies are expected to involve such matters as the following:

• the composition, responsibilities and operation of our Board of Directors;

• the establishment and operation of board committees, including audit, nominating and compensation committees;

• convening executive sessions of independent directors; and

• our Board of Directors’ interaction with management and third parties.

The code of business conduct and ethics, which is expected to apply to all employees and directors, will address conflicts of interest, the treatment of confidential information, general employee conduct and compliance with applicable laws, rules and regulations. In addition, the code of business conduct and ethics will be designed to deter wrongdoing and to promote honest and ethical conduct, the avoidance of conflicts of interest, full and accurate disclosure and compliance with all applicable laws, rules and regulations.

Executive Compensation

Summary Compensation Table. The table below summarizes the total compensation paid to, or earned by, Mr. Campbell, who serves as our Chairman, President and Chief Executive Officer, Mr. McCourt, who serves as our Senior Vice President, Chief Financial Officer and Treasurer and Ms. MacIntyre, who serves as our Senior Vice President of Operations for the year ended December 31, 2013. We refer to these individuals as “Named Executive Officers.”

Summary Compensation Table for the Year Ended December 31, 2013
Name and Principal Position	Year		Salary ($)		Bonus(1) ($)		All Other Compensation(2) ($)		Total ($)
Francis E. Campbell Chairman, President and Chief Executive Officer		2013		230,000		30,000		26,160		286,160
Christopher G. McCourt Senior Vice President, Chief Financial Officer and Treasurer		2013		126,700		9,000		6,751		142,451
Joan A. MacIntyre Senior Vice President of Operations		2013		115,000		9,000		6,142		130,142

(1) Represents a discretionary bonus payment awarded to each Named Executive Officer. Please see “Executive Compensation-Bonus Program” for further details regarding the performance metrics used by the Compensation Committee to determine each Named Executive Officer’s discretionary bonus payment.

(2) The amounts reflect what we have paid to, or reimbursed, the applicable Named Executive Officer for various benefits which we provide. A break-down of the various elements of compensation in this column is set forth in the table immediately below.

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All Other Compensation
Name	Year		Perquisites(1) ($)		Employer Matching Contribution to 401(k) Plan(2) ($)		Total ($)
Francis E. Campbell		2013		13,352		12,808		26,160
Christopher G. McCourt		2013		—		6,751		6,751
Joan A. MacIntyre		2013		—		6,142		6,142

(1) For Mr. Campbell, $9,000 of his total perquisites are attributable to a car allowance provided to him by Pilgrim Bank. For the year ended December 31, 2013, neither Mr. McCourt nor Ms. MacIntyre received perquisites or personal benefits that, in the aggregate, were greater than or equal to $10,000.

(2) Represents the profit sharing contribution made by Pilgrim Bank to the Named Executive Officer’s 401(k) plan account for the plan year.

Employment and Change in Control Agreements

Proposed Employment Agreement with Francis E. Campbell. In connection with the conversion and offering, Pilgrim Bank intends to enter into an employment agreement with Mr. Campbell. The employment agreement has an initial term of three years. At least 60 days prior to the anniversary date of the agreement, the disinterested members of the Board of Directors must conduct a comprehensive performance evaluation and affirmatively approve any extension of the agreement for an additional year or determine not to extend the term of the agreement. If the Board of Directors determines not to extend the term, it must notify Mr. Campbell at least 30 days, but not more than 60 days, prior to such date.

The employment agreement will provide Mr. Campbell with a base salary of $245,000. The base salary may be increased, but not decreased (other than a decrease which is applicable to all senior officers). In addition to base salary, Mr. Campbell will be entitled to participate in any bonus programs and benefit plans that are made available to management employees, and will be reimbursed for all reasonable business expenses incurred.

In the event of Mr. Campbell’s involuntary termination of employment for reasons other than cause, disability or death, or in the event of his resignation for “good reason,” he will receive a severance payment equal two times his highest annual rate of base salary payable during the calendar year of his date of termination or any of the three calendar years immediately preceding his date of termination. Such payment will be payable in a lump sum within 30 days following Mr. Campbell’s date of termination. In addition, Mr. Campbell will be entitled receive from Pilgrim Bank continued life insurance and non-taxable medical and dental insurance coverage under the same cost-sharing arrangements that apply for active employees of Pilgrim Bank. Such coverage will cease upon the earlier of: (i) the date which is two years after Mr. Campbell’s date of termination or (ii) the date on which Mr. Campbell receives substantially similar benefits from another employer. For purposes of the employment agreements, “good reason” is defined as: (i) a material reduction in base salary or benefits (other than reduction by Pilgrim Bank that is part of a good faith, overall reduction of such benefits applicable to all employees); (ii) a material reduction in Mr. Campbell’s duties or responsibilities; (iii) a relocation of Mr. Campbell’s principal place of employment by more than 25 miles from Pilgrim Bank’s main office location; or (iv) a material breach of the employment agreement by Pilgrim Bank.

If Mr. Campbell’s involuntary termination of employment other than for cause, disability or death or voluntary resignation for “good reason” occurs on or after the effective date of a change in control of Pilgrim Bancshares, Inc. or Pilgrim Bank, he would be entitled to (in lieu of the payments and benefits described in the previous paragraph) a severance payment equal to three times the sum of his highest annual rate of base salary payable during the calendar year of his date of termination or either of the three calendar years immediately preceding his date of termination. Such payment will be payable in a lump sum within 30 days following Mr. Campbell’s date of termination. In addition, Mr. Campbell

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would be entitled, at no expense, to the continuation of substantially comparable life insurance and non-taxable medical and dental insurance coverage until the earlier of: (i) the date which is three years after his date of termination or (ii) the date on which he receives substantially similar benefits from another employer.

In addition, should Mr. Campbell become disabled, he will entitled to disability benefits, if any, provided under a long-term disability plan sponsored by Pilgrim Bank. In the event of Mr. Campbell’s death while employed, his beneficiaries will be paid his base salary for one year following death, and his family will continue to receive non-taxable medical and dental coverage for one year thereafter.

Upon any termination of employment that would entitle Mr. Campbell to a severance payment (other than a termination in connection with a change in control), Mr. Campbell will be required to adhere to one-year non-competition and non-solicitation covenants.

Proposed Change in Control Agreements with Christopher G. McCourt and Joan A. MacIntyre. In connection with the conversion and offering, Pilgrim Bank intends to enter into change in control agreements with Mr. McCourt and Ms. MacIntyre. The agreements have an initial term of two years. At least 60 days prior to the anniversary date of the agreements, the disinterested members of the Board of Directors must conduct a comprehensive performance evaluation and affirmatively approve any extension of the agreements for an additional year or determine not to extend the term of the agreement. If the Board of Directors determines not to extend the term, it must notify the executive at least 30 days, but not more than 60 days, prior to such date.

In the event of the executive’s involuntary termination of employment other than for cause, disability or death, or voluntary resignation for “good reason” occurs on or after the effective date of a change in control of Pilgrim Bancshares, Inc. or Pilgrim Bank, the executive would be entitled to a severance payment equal to two times his or her highest annual rate of base salary payable during the calendar year of the executive’s date of termination or either of the two calendar years immediately preceding his or her date of termination. Such payment will be payable in a lump sum within 30 days following the executive’s date of termination. In addition, the executive would be entitled to the continuation of substantially comparable life insurance and non-taxable medical and dental insurance coverage until the earlier of: (i) the date which is two years after his or her date of termination or (ii) the date on which the executive receives substantially similar benefits from another employer.

Notwithstanding the foregoing, the payments required under the agreements will be reduced to the extent necessary to avoid penalties under Code Section 280G. For purposes of the change in control agreements, “good reason” is defined as: (i) a material reduction in the executive’s base salary or benefits (other than reduction by Pilgrim Bank that is part of a good faith, overall reduction of such benefits applicable to all employees); (ii) a material reduction in the executive’s duties or responsibilities; (iii) a relocation of the executive’s principal place of employment by more than 25 miles from Pilgrim Bank’s main office location; or (iv) a material breach of the agreements by Pilgrim Bank.

Bonus Program

Discretionary Bonus. Bonus amounts for Mr. Campbell have historically been determined on a discretionary basis by the Board of Directors following a review of performance of both Pilgrim Bank and Mr. Campbell. In 2013, company-wide performance objectives focused on growth, expense control and asset quality, which are customary metrics used by similarly-situated financial institutions in measuring performance. Mr. Campbell’s individual-based performance objectives were based on his responsibilities and contributions to Pilgrim Bank’s successful operation. Based on the foregoing, for the year ended December 31, 2013, Mr. Campbell received a bonus of $30,000.

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For other executives, including Mr. McCourt and Ms. MacIntyre, each year Pilgrim Bank establishes a bonus pool equal to a percentage of Pilgrim Bank’s earnings during its fiscal year. The percentage amount is determined based on Pilgrim Bank’s return on assets during the same fiscal year of Pilgrim Bank. The allocation of the bonus pool to the executives is determined on a discretionary basis by the President and Chief Executive Officer. Criteria used in determining the allocations include the executive’s responsibilities and contributions to Pilgrim Bank’s successful operation, seniority and base salary. Based on the foregoing, for the ended December 31, 2013, Mr. McCourt and Ms. MacIntyre received a bonus of $9,000 and $9,000, respectively, in recognition of their performance and efforts.

Executive Annual Incentive Plan. In connection with the conversion and offering, Pilgrim Bank intends to adopt an executive annual incentive plan, which will supersede and replace the discretionary bonus arrangement described above and better align the interests of the executives of Pilgrim Bank with the overall performance of Pilgrim Bank and Pilgrim Bancshares, Inc.

Employees selected by the Compensation Committee, which will include the Named Executive Officers, are eligible to participate in the plan. For each plan year (which is the calendar year), each participant will receive an award agreement, which will provide the annual bonus award amount, designated as a percentage of base salary, and the performance objectives that must be satisfied for the participant to receive the annual bonus award. The specific performance objectives will be determined annually by the Compensation Committee, but generally include objective performance targets on financial performance, growth, asset quality and risk management and subjective performance objectives, such as particular qualitative factors for the participant, based on his or her duties to Pilgrim Bank. Each performance objective will specify level of achievements at “threshold,” “target” and “maximum” levels and will be weighted by priority as a percentage of the total annual bonus award payable to the participant.

The annual bonus award will be payable to each participant in a cash lump sum within 2.5 months following the end of each plan year, to the extent the performance objectives are determined to be satisfied by the Compensation Committee.

Benefit Plans

401(k) Plan. Pilgrim Bank currently maintains the Cooperative Banks Employees Retirement Association (CBERA) 401(k) Plan, which is a multiple employer tax-qualified profit sharing plan with a salary deferral feature under Section 401(k) of the Internal Revenue Code (“401(k) Plan”). All employees who have attained age 21 and have completed three months of employment during which they worked at least 250 hours are eligible to participate.

A participant may contribute up to 75% of his or her compensation to the 401(k) Plan on a pre-tax and after-tax basis, subject to the limitations imposed by the Internal Revenue Code. For 2014, the salary the pre-tax deferral contribution limit is $17,500 provided, however, that a participant over age 50 may contribute, on a pre-tax basis, an additional $5,500 to the 401(k) Plan. In addition to salary deferral contributions, the 401(k) Plan provides that Pilgrim Bank will make a matching contribution to each participant’s account equal to 100% of the participant’s contribution, up to 5% of the participant’s pre-tax and after-tax contributions. A participant is always 100% vested in his or her salary deferral contributions. However, a participant will become 100% vested in his or her employer matching contributions after three years of vesting service (which is a three-year cliff vesting schedule). The 401(k) Plan permits a participant to direct the investment of his or her own account into various investment options.

Generally, a participant (or participant’s beneficiary) may receive a distribution from his or her vested account at retirement, age 59 ¹⁄₂ (while employed with Pilgrim Bank), death, disability or termination of employment, and elect for the distribution to be paid in the form of a lump sum, annuity or installment payments.

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Defined Benefit Plan. Pilgrim Bank currently maintains the Cooperative Banks Employees Retirement Association (CBERA) Defined Benefit Plan, which is a multiple employer tax-qualified defined benefit pension plan (the “Defined Benefit Plan”). In connection with the conversion and offering, Pilgrim Bank froze the Defined Benefit Plan such that no benefits will continue to accrue under, and no new participants are eligible to participate in, the Defined Benefit Plan.

The normal retirement benefit formula under the plan provides for a benefit, payable at age 65 as a lifetime annuity, equal to: (i) 0.50% of the participant’s “final average compensation,” multiplied by total years of service, plus (ii) 0.50% of the participant’s “covered compensation,” multiplied by total years of service. “Final average compensation” is the participant’s highest three consecutive calendar years’ compensation while participating in the plan. “Covered compensation” means the average Social Security Wage Base (as published by the Social Security Administration) during the 35 years prior to the participant’s Social Security retirement date. A participant will vest in his or her benefit under the plan at a rate of 20% per year after the completion of two years of credited service, such that the participant will be 100% vested upon completion of six years of credited services. The normal retirement benefit is payable in the form either a single life annuity or a joint and survivor annuity, as elected by the participant. Notwithstanding the foregoing, each participant’s normal retirement benefit will be calculated as of the effective date of the freezing of the Defined Benefit Plan.

A participant may elect to retire early and received a benefit under the plan if he or she attains: (i) age 62; (ii) age 55, with at least five years of service or (iii) age 50, with at least 15 years of service. The normal retirement benefit will be calculated based on the participant’s years of service and final average compensation at termination.

Employee Stock Ownership Plan. Effective January 1, 2014, Pilgrim Bank adopted an employee stock ownership plan for eligible employees. Eligible employees who have attained age 21 and were employed by us as of January 1, 2014 will begin participation in the employee stock ownership plan on the later of the effective date of the employee stock ownership plan or upon the first entry date commencing on or after the eligible employee’s completion of 1,000 hours of service during a continuous 12-month period.

The employee stock ownership plan trustee is expected to purchase, on behalf of the employee stock ownership plan, 8% of the total number of shares of Pilgrim Bancshares, Inc. common stock issued in the offering. We anticipate that the employee stock ownership plan will fund its stock purchase with a loan from Pilgrim Bancshares, Inc. equal to the aggregate purchase price of the common stock. The loan will be repaid principally through Pilgrim Bank’s contribution to the employee stock ownership plan and dividends payable on common stock held by the employee stock ownership plan over the anticipated 30-year term of the loan. The interest rate for the employee stock ownership plan loan is expected to be an adjustable-rate equal to the prime rate, as published in The Wall Street Journal, on the closing date of the offering. Thereafter the interest rate will adjust annually and will be the prime rate on the first business day of the calendar year, retroactive to January 1 of such year. See “Pro Forma Data.”

The trustee will hold the shares purchased by the employee stock ownership plan in an unallocated suspense account. Shares will be released from the suspense account on a pro-rata basis as we repay the loan. The trustee will allocate the shares released among the participants’ accounts on the basis of each participant’s proportional share of compensation relative to all participants. Participants will vest in their benefit at a rate of 20% per year, beginning after the completion of their second year of service, such that the participants will be 100% vested upon completion of six years of credited services. Participants who were employed by Pilgrim Bank immediately prior to the conversion will receive credit

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for vesting purposes for years of service prior to adoption of the employee stock ownership plan. Participants also will become fully vested upon normal retirement, death or disability, a change in control, or termination of the employee stock ownership plan. Generally, participants will receive distributions from the employee stock ownership plan upon severance from employment. The employee stock ownership plan reallocates any unvested shares forfeited upon termination of employment among the remaining participants.

The employee stock ownership plan permits participants to direct the trustee as to how to vote the shares of common stock allocated to their accounts. The trustee votes unallocated shares and allocated shares for which participants do not provide instructions on any matter in the same ratio as those shares for which participants provide instructions, subject to fulfillment of the trustee’s fiduciary responsibilities.

Under applicable accounting requirements, Pilgrim Bank will record a compensation expense for the employee stock ownership plan at the fair market value of the shares as they are committed to be released from the unallocated suspense account to participants’ accounts. The compensation expense resulting from the release of Pilgrim Bancshares, Inc. common stock from the suspense account and allocation to plan participants will result in a corresponding reduction in Pilgrim Bancshares, Inc.’s earnings.

Supplemental Executive Retirement Plan. In connection with the conversion and offering, Pilgrim Bank intends to adopt a supplemental executive retirement plan (the “SERP”). The SERP is a non-qualified retirement plan that provides supplemental retirement benefits to participants who are key employees. Each employee designated by the Compensation Committee is eligible to participate in the SERP, and will begin participation by entering into participation agreement with Pilgrim Bank. It is expected that Mr. Campbell will be the only participant in the SERP.

Under the SERP, Pilgrim Bank will establish a bookkeeping account on behalf of each participant. At the end of each plan year, Pilgrim Bank will contribute a fixed dollar amount to the participant’s account equal to a percentage of the participant’s base salary (the “annual contribution”). Mr. Campbell’s annual contribution is expected to equal 17.5% of his base salary. Pilgrim Bank may also provide a discretionary contribution to a participant’s account. The participant’s account will earn interest each year at the Five Year Treasury Rate in effect on the first business day of each plan year, plus 100 basis points. Each participant will vest in his or her account balance in accordance with the vesting schedule provided in the participation agreement. However, the participant’s account balance will become 100% vested in the event of his or her attainment of the benefit age set forth in the participation agreement, death, disability or involuntary or constructive termination of employment without cause following a change in control of Pilgrim Bank or Pilgrim Bancshares, Inc.

The participant’s vested account balance will be distributed upon the earlier of the participant’s: (i) attainment of the benefit age; (ii) death; (iii) disability or (iv) termination of employment without cause, and will be payable in a cash lump sum. With regards to payment upon attainment of the benefit age or termination of employment, the participant can elect for the benefit to be payable in equal annual installments not to exceed 10 years.

In the event of the participant’s involuntary or constructive termination of employment without cause within two years following a change in control, the participant’s account will be increased by an amount equal to three annual contributions, calculated based on the most recent annual contribution made to the participant’s account.

If a participant receives a benefit under the SERP (other than in connection with a change in control), the participant will be required to adhere to one-year non-competition and non-solicitation covenants.

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Director Compensation

Set forth below is a summary of the compensation for each of our non-employee directors for the year ended December 31, 2013.

Director Compensation
Name	Fees Earned or Paid in Cash ($)		All Other Compensation(1) ($)		Total ($)
Melissa J. Browne		25,900		—		25,900
J. Michael Buckley		22,250		—		22,250
Steven T. Golden		11,200		—		11,200
Ronald H. Goodwin		17,550		—		17,550
Mary E. Granville		23,050		—		23,050
Charles J. Humphrey		16,600		—		16,600
Brian W. Noonan		22,000		—		22,000
Joseph P. Reilly		22,250		—		22,250

(1) No director received any perquisites or benefits, in the aggregate, that was equal to or greater than $10,000.

Director Fees

All directors received fees per board and committee meetings attended for the fiscal year ended December 31, 2013. Each director was paid $800 for each board meeting attended. In addition, members of the Compensation Committee historically have been paid an annual stipend of $1,500. Beginning in December 2013, members of the Compensation Committee meeting began receiving an additional fee of $600 per meeting, and will no long receive the annual stipend. Pilgrim Bancshares, Inc. expects to pay each director an additional annual retainer of $2,500, except that the Lead Independent Director will receive an annual retainer of $7,500.

Benefits to be Considered Following Completion of the Offering

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

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

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

• non-employee directors in the aggregate may not receive more than 30% of the options and restricted stock awards authorized under the plan;

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• any non-employee director may not receive more than 5% of the options and restricted stock awards authorized under the plan;

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

If the stock-based benefit plan is adopted within the first year following the conversion, the rights must vest on an equal installment basis at a rate not to exceed 20% per year. If the stock-based benefit plan is adopted more than one year but less than three years following the conversion offering, the rights must vest on an equal installment basis over a period of not less than three years following establishment of the stock-based benefit plan. In addition, any stock-based benefit plan established or maintained, as applicable, during the three years following the close of the conversion will include provisions that comport with additional requirements, including the following:

• the duration of rights granted under the stock-based benefit plan must be limited, and in no event shall the exercise period exceed ten years;

• the exercise price of stock rights shall not be less than the fair market value of the stock at the time that the rights are granted;

• rights under the plan must be exercised or expire within a reasonable time after termination or separation as an active officer, employee, or director; and

• stock-based benefit plan must contain a provision allowing our primary federal regulator to direct the institution to require plan participants to exercise or forfeit their stock rights.

We have not yet determined whether we will present the stock-based benefit plan for stockholder approval within one year following the completion of the conversion or whether we will present this plan for stockholder approval more than one year after the completion of the conversion. In the event of changes in applicable regulations or policies regarding stock-based benefit plans, including any regulations or policies restricting the size of awards and vesting of benefits as described above, the restrictions described above may not be applicable.

We may obtain the shares needed for our stock-based benefit plans by issuing additional shares of common stock from authorized but unissued shares or through stock repurchases.

Transactions with Certain Related Persons

Loans and Extensions of Credit. The Sarbanes-Oxley Act of 2002 generally prohibits publicly traded companies from making loans to their executive officers and directors, but it contains a specific exemption from such prohibition for loans made by federally insured financial institutions, such as Pilgrim Bank, to their executive officers and directors in compliance with federal banking regulations. Federal regulations generally require that all loans or extensions of credit to executive officers, directors, immediate family members of executive officers and directors, or organizations with which executive officers and directors are affiliated, be made in the ordinary course of business, on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans to persons not related to Pilgrim Bank, and not involve more than the normal risk of collectability or present other unfavorable features. At December 31, 2013, all of our loans to directors and executive officers were in compliance with such federal regulations. In addition, loans made to a director or executive officer must be approved in advance by a majority of the disinterested members of the Board of Directors. The aggregate amount of our loans to our executive officers and directors and their related entities was $751,000 at December 31, 2013. As of December 31, 2013, these loans were performing according to their original terms.

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Other Transactions. Since the beginning of our last fiscal year, there have been no transaction and there are no currently proposed transactions in which we were or are to be a participant and the amount involved exceeds $120,000, and in which any of our executive officers and directors had or will have a direct or indirect material interest.

SUBSCRIPTIONS BY DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth information regarding intended common stock subscriptions by each of the directors and executive officers and their associates, and by all directors, officers and their associates as a group. However, there can be no assurance that any such person or group will purchase any specific number of shares of our common stock. In the event the individual maximum purchase limitation is increased, persons subscribing for the maximum amount may increase their purchase order. Directors and officers will purchase shares of common stock at the same $10.00 purchase price per share and on the same terms as other purchasers in the offering. This table excludes shares of common stock to be purchased by the employee stock ownership plan, as well as any stock awards or stock option grants that may be made no earlier than six months after the completion of the offering. The directors and officers have indicated their intention to subscribe in the offering for an aggregate of 86,200 shares of common stock, equal to 6.15% of the number of shares of common stock to be sold in the offering at the minimum of the offering range (excluding shares issued to our charitable foundation), assuming shares are available. Purchases by directors, officers and their associates will be included in determining whether the required minimum number of shares has been subscribed for in the offering. The shares being acquired by the directors, executive officers and their associates are being acquired for investment purposes, and not with a view towards resale.

Name and Title	Number of Shares(1)		Aggregate Purchase Price(1)		Percent at Minimum of Offering Range
Francis E. Campbell, President, Chief Executive Officer and Chairman of the Board		11,050	$	110,500			*
Melissa J. Browne, Director		5,000		50,000			*
J. Michael Buckley, Director		2,150		21,500			*
Steven T. Golden, Director		10,000		100,000			*
Ronald H. Goodwin, Director		10,000		100,000			*
Mary E. Granville, Director		18,000		180,000		1.28	%
Charles J. Humphreys, Director		1,000		10,000			*
Brian W. Noonan, Director		5,000		50,000			*
Joseph P. Reilly, Director		11,000		110,000			*
Christopher G. McCourt, Senior Vice President, Chief Financial Officer and Treasurer		1,500		15,000			*
Joan A. MacIntyre, Senior Vice President of Operations		1,000		10,000			*
Nancy J. Joseph, Vice President of Residential Lending		4,000		40,000		—
Stephen K. Lucitt, Vice President of Commercial Lending		1,500		15,000			*
Edward T. Mulvey, Clerk		5,000		50,000			*
All directors and officers as a group (15 persons)		86,200	$	862,000		6.15	%

* Less than 1%.

(1) Includes purchases by the named individual’s spouse and other relatives of the named individual living in the same household. Other than as set forth above, the named individuals are not aware of any other purchases by a person who or entity that would be considered an associate of the named individuals under the plan of conversion.

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THE CONVERSION AND PLAN OF DISTRIBUTION

The Board of Trustees of Conahasset Bancshares, MHC has approved the plan of conversion. The plan of conversion must also be approved by Conahasset Bancshares, MHC’s members. A special meeting of members has been called for this purpose. In addition, the merger of Conahasset Bancshares, MHC with and into Conahasset Bancshares, Inc. must be approved by the corporators of Conahasset Bancshares, MHC. A special meeting of the corporators has been called for this purpose. The Federal Reserve Board and the Massachusetts Commissioner of Banks have conditionally approved the plan of conversion; however, such approval does not constitute a recommendation or endorsement of the plan of conversion by the Federal Reserve Board or the Massachusetts Commissioner of Banks.

General

The Board of Trustees of Conahasset Bancshares, MHC adopted the plan of conversion on February 25, 2014. Pursuant to the plan of conversion, Conahasset Bancshares, MHC will convert from the mutual form of organization to the fully stock form and we will sell shares of common stock to the public in our offering. In connection with the conversion, we have organized a new Maryland stock holding company named Pilgrim Bancshares, Inc. When the conversion is completed, all of the capital stock of Pilgrim Bank will be owned by Pilgrim Bancshares, Inc., and all of the common stock of Pilgrim Bancshares, Inc. will be owned by public stockholders.

We intend to retain between $4.9 million and $7.1 million of the net proceeds of the offering, or $8.4 million if the offering range is increased by 15%, and to contribute the balance of the net proceeds to Pilgrim Bank. The conversion will be consummated only upon the issuance of at least 1,402,500 shares of our common stock offered pursuant to the plan of conversion.

The plan of conversion provides that we will offer shares of common stock for sale in the subscription offering to eligible account holders, our tax-qualified employee benefit plans, including our employee stock ownership plan that we are establishing in connection with the conversion and supplemental eligible account holders. If all shares are not subscribed for in the subscription offering, we may, in our discretion, offer common stock for sale in a community offering to members of the general public, with a preference given to natural persons (including trusts of natural persons) residing in the Massachusetts towns of Cohasset, Scituate, Hingham, Norwell, Hull, Weymouth, Quincy, Marshfield, Pembroke, Marion, Rochester, Mattapoisett, West Wareham, Wareham and Fairhaven.

We have the right to accept or reject, in whole or in part, any orders to purchase shares of the common stock received in the community offering. The community offering, if any, may begin at the same time as, during, or after the subscription offering, and must be completed within 45 days after the completion of the subscription offering unless otherwise extended by us with the approval, to the extent such approvals are required, of the Federal Reserve Board. See “—Community Offering.”

We determined the number of shares of common stock to be offered in the offering based upon an independent valuation of the estimated consolidated pro forma market value of Pilgrim Bancshares, Inc. All shares of common stock to be sold in the offering will be sold at $10.00 per share. Investors will not be charged a commission to purchase shares of common stock in the offering. The independent valuation will be updated and the final number of the shares of common stock to be issued in the offering will be determined at the completion of the offering. See “—Determination of Share Price and Number of Shares to be Issued” for more information as to the determination of the estimated pro forma market value of the common stock.

The following is a brief summary of the conversion. We recommend reading the plan of conversion in its entirety for more information. A copy of the plan of conversion is available for inspection at each branch office of Pilgrim Bank and at the Federal Reserve Bank of Boston. See “Where You Can Find Additional Information.”

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Reasons for the Conversion

Beginning in 2008 we were impacted by the steep economic downturn, including significant declines in real estate values in our market area, and experienced higher than normal levels of loan delinquencies and foreclosures. Additionally, the significant changes in the financial services industry that have occurred in recent years as a result of the collapse of the financial markets in 2008 and the severe nationwide economic recession that followed, have severely strained the financial and managerial resources of community banks and will continue to do so in the future. We believe that Pilgrim Bank will be better equipped to address these challenges by raising additional capital and adopting the stock holding company structure.

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

• to improve our capital position during a period of economic, regulatory and political uncertainty for the financial services industry and to assure compliance with regulatory capital requirements;

• to support organic loan and deposit growth beyond levels possible utilizing retained earnings;

• to improve profitability and earnings through reinvesting and leveraging the proceeds, primarily through traditional funding and lending activities;

• to invest in new technologies that will enable the expansion and enhancement of products and services we offer to our customers;

• to have greater flexibility to access the debt and equity capital markets;

• to attract, retain and incentivize qualified personnel by establishing stock-based benefit plans for management and employees;

• establish a charitable foundation to support charitable organizations operating in our communities and fund the foundation with cash and shares of our common stock;

• to provide customers and members of the community with the opportunity to acquire an ownership interest in Pilgrim Bank; and

• to have greater flexibility to structure and finance opportunities for expansion into new markets, including through de novo branching, branch acquisitions or acquisitions of other financial institutions, although we have no current arrangements or agreements with respect to any such transactions.

In the stock holding company structure, we will have greater flexibility in structuring mergers and acquisitions. Our current mutual structure prevents us from offering shares of our common stock as consideration for a merger or acquisition. Potential sellers often want stock for at least part of the acquisition consideration. Our new stock holding company structure will enable us to offer stock or cash consideration, or a combination thereof, and will therefore enhance our ability to compete with other bidders when acquisition opportunities arise. We have no current arrangements or agreements to acquire other banks, thrifts, credit unions, financial services companies or branch offices, and there can be no assurance that we will be able to consummate any acquisitions or establish any new branches.

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We believe that the additional capital raised in the offering will enable us to take advantage of business opportunities that may not otherwise be available to us, while remaining an independent community-oriented institution.

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

Approvals Required

The Board of Trustees of Conahasset Bancshares, MHC has approved the plan of conversion and the establishment and funding of the charitable foundation. The Federal Reserve Board has approved the application that includes the plan of conversion. We have filed an application with respect to the conversion with the Massachusetts Commissioner of Banks, and the Massachusetts Commissioner of Banks has authorized us to commence the offering. However, the final approval of the Massachusetts Commissioner of Banks is required before we can consummate the conversion and issue shares of common stock. Any approval by the Federal Reserve Board or the Massachusetts Commissioner of Banks does not constitute a recommendation or endorsement of the plan of conversion.

The affirmative vote of a majority of the total votes of members of Conahasset Bancshares, MHC eligible to be cast at the special meeting of members is required to approve the plan of conversion. A special meeting of members of Conahasset Bancshares, MHC to consider and vote upon the plan of conversion has been set for [member meeting date], 2014. In addition, the affirmative vote of two-thirds of the total votes of the corporators of Conahasset Bancshares, MHC eligible to be case is required to approve the merger of Conahasset Bancshares, MHC with and into Conahasset Bancshares, Inc. A special meeting of corporators of Conahasset Bancshares, MHC to consider and vote upon the merger of Conahasset Bancshares, MHC with and into Conahasset Bancshares, Inc. has been set for [corporator meeting date], 2014.

Effects of Conversion on Depositors, Borrowers and Members

Continuity. While the conversion is being accomplished, our normal business of accepting deposits and making loans will continue without interruption. We will continue to be a Massachusetts chartered co-operative bank and will continue to be regulated by the Massachusetts Commissioner of Banks and the FDIC after the conversion. After the conversion, we will continue to offer existing services to depositors, borrowers and other customers. The directors serving Pilgrim Bank at the time of the conversion will be the directors of Pilgrim Bank and of Pilgrim Bancshares, Inc. after the conversion.

Effect on Deposit Accounts. Pursuant to the plan of conversion, each depositor of Pilgrim Bank at the time of the conversion will automatically continue as a depositor after the conversion, and the deposit balance, interest rate and other terms of such deposit accounts will not change as a result of the conversion. Each such account will be insured by the FDIC to the same extent as before the conversion, and each such account will continue to be insured in full for amounts in excess of FDIC limits by the excess insurer of co-operative bank deposits, the Share Insurance Fund. Depositors will continue to hold their existing certificates, statement savings and other evidences of their accounts.

Effect on Loans. No loan outstanding from Pilgrim Bank will be affected by the conversion, and the amount, interest rate, maturity and security for each loan will remain as it was contractually fixed prior to the conversion.

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Effect on Voting Rights of Members. At present, all of our depositors have voting rights in Conahasset Bancshares, MHC only in the context of a minority offering or full conversion of Conahasset Bancshares, MHC. Upon completion of the conversion, depositors will no longer have voting rights. Upon completion of the conversion, all voting rights in Pilgrim Bank will be vested in Pilgrim Bancshares, Inc. as the sole stockholder of Pilgrim Bank. The stockholders of Pilgrim Bancshares, Inc. will possess exclusive voting rights with respect to Pilgrim Bancshares, Inc. common stock.

Tax Effects. We will receive an opinion of counsel or tax advisor with regard to federal and state income tax consequences of the conversion to the effect that the conversion will not be taxable for federal or state income tax purposes to Pilgrim Bank or its members. See “—Material Income Tax Consequences.”

Effect on Liquidation Rights. Each depositor in Pilgrim Bank has both a deposit account in Pilgrim Bank and a pro rata ownership interest in the net worth of Conahasset Bancshares, MHC based upon the deposit balance in his or her account. This ownership interest is tied to the depositor’s account and has no tangible market value separate from the deposit account. This interest may only be realized in the event of a complete liquidation of Conahasset Bancshares, MHC and Pilgrim Bank. Any depositor who opens a deposit account obtains a pro rata ownership interest in Conahasset Bancshares, MHC without any additional payment beyond the amount of the deposit. A depositor who reduces or closes his or her account receives a portion or all, respectively, of the balance in the deposit account but nothing for his or her ownership interest in the net worth of Conahasset Bancshares, MHC, which is lost to the extent that the balance in the account is reduced or closed.

Consequently, depositors in a co-operative bank that is a subsidiary of a mutual holding company normally have no way of realizing the value of their ownership interest in the mutual holding company, which has realizable value only in the unlikely event that the co-operative bank is completely liquidated. If this occurs, the depositors of record at that time, as owners, would share pro rata in any residual surplus and reserves of the mutual holding company after other claims, including claims of depositors to the amounts of their deposits, are paid.

Under the plan of conversion, depositors as of December 31, 2012 and March 31, 2014 will receive an interest in liquidation accounts maintained by Pilgrim Bancshares, Inc. and Pilgrim Bank in an aggregate amount equal to Conahasset Bancshares, MHC’s total equity as reflected in the latest statement of financial condition used in this prospectus. Pilgrim Bancshares, Inc. and Pilgrim Bank will hold the liquidation accounts for the benefit of depositors as of December 31, 2012 and March 31, 2014 who continue to maintain deposits in Pilgrim Bank after the conversion. The liquidation accounts would be distributed to depositors as of December 31, 2012 and March 31, 2014 who maintain their deposit accounts in Pilgrim Bank only in the event of a liquidation of (a) Pilgrim Bancshares, Inc. and Pilgrim Bank or (b) Pilgrim Bank. The liquidation account in Pilgrim Bank would be used only in the event that Pilgrim Bancshares, Inc. does not have sufficient assets to fund its obligations under its liquidation account. The total obligation of Pilgrim Bancshares, Inc. and Pilgrim Bank under their respective liquidation accounts will never exceed the dollar amount of Pilgrim Bancshares, Inc.’s liquidation account as adjusted from time to time pursuant to the plan of conversion and applicable regulations. See “—Liquidation Rights.”

Effects of Conversion on Corporators

The board of corporators of Conahasset Bancshares, MHC will cease to exist upon the consummation of the conversion.

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Determination of Share Price and Number of Shares to be Issued

The plan of conversion and federal regulations require that the aggregate purchase price of the common stock sold in the offering be based on the appraised pro forma market value of the common stock, as determined by an independent valuation. We have retained RP Financial, LC to prepare an independent valuation appraisal. For its services in preparing the initial valuation, RP Financial, LC will receive a fee of $40,000, and will be reimbursed for its expenses up to $7,500. We have agreed to indemnify RP Financial, LC and its employees and affiliates against specified losses, including any losses in connection with claims under the federal securities laws, arising out of its services as independent appraiser, except where such liability results from its negligence or bad faith.

RP Financial, LC has estimated that, as of February 14, 2014, the estimated pro forma market value of Pilgrim Bancshares, Inc., assuming the establishment and funding of our new charitable foundation with a total contribution of a total of $725,000, such contribution to consist of a number of shares of our common stock equal to 3.0% of the shares sold in the offering (42,075 shares or $420,750 in stock at the minimum offering and 56,925 shares or $569,250 in stock at the maximum offering, or up to 65,464 shares or $654,640 in stock at the adjusted maximum offering) and the remainder in cash ($304,250 at the minimum offering and $155,750 at the maximum offering, or $70,360 at the adjusted maximum), ranged from $14.4 million to $19.5 million, with a midpoint of $17.0 million, subject to increase up to $22.5 million. Based on this valuation and a $10.00 per share price, the number of shares of common stock being offered for sale by us will range from 1,402,500 shares to 1,897,500 shares. The $10.00 per share price was selected primarily because it is the price most commonly used in mutual-to-stock conversions of financial institutions.

Consistent with applicable appraisal guidelines, the appraisal applied three primary methodologies: the pro forma price-to-book value approach applied to both reported book value and tangible book value; the pro forma price-to-earnings approach applied to reported and core earnings; and the pro forma price-to-assets approach.

RP Financial, LC also considered the following factors, among others:

• our present and projected results and financial condition;

• the economic and demographic conditions in our existing market area;

• certain historical, financial and other information relating to us;

• a comparative evaluation of our operating and financial characteristics with those of other similarly situated publicly traded savings institutions;

• the aggregate size of the offering of common stock;

• the impact of the conversion and the offering on our equity and earnings potential;

• our potential to pay cash dividends; and

• the trading market for securities of comparable institutions and general conditions in the market for such securities.

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The appraisal is based in part on an analysis of a peer group of ten publicly traded savings institutions that RP Financial, LC considered comparable to us. The peer group consists of the following 10 companies with assets between $247 million and $714 million as of September 30, 2013 (the latest date for which complete financial data is publicly available).

Company Name and Ticker Symbol	Headquarters	Total Assets
		(in millions)
Alliance Bancorp of Penn ALLB	Broomall, PA	$	436
Chicopee Bancorp, Inc. CBNK	Chicopee, MA		605
FedFirst Financial Corp. FFCO	Monessen, PA		323
Georgetown Bancorp, Inc. GTWN	Georgetown, MA		247
Hampden Bancorp, Inc. HBNK	Springfield, MA		696
OBA Financial Services, Inc. OBAF	Germantown, MD		390
Oneida Financial Corp. ONFC	Oneida, NY		714
Peoples Federal Bancshares, Inc. PEOP	Brighton, MA		585
Wellesley Bancorp WEBK	Wellesley, MA		421
WVS Financial Corp. WVFC	Pittsburgh, PA		296

The following are various averages for the peer group companies:

• average assets of $478.0 million;

• average non-performing assets of 1.2% of total assets;

• average loans of 67.5% of total assets;

• average equity of 14.4% of total assets; and

• average net income of 0.52% of average assets.

RP Financial, LC sought to provide meaningful comparative data to limit the need to perform subjective valuation adjustments with respect to institutions that did not share common characteristics with Pilgrim Bank. As a result, a comparable institution’s dissimilar asset size may be outweighed by similarities with respect to other characteristics that are more exemplary of an institution’s value than asset size.

The peer group selection process was limited to publicly traded thrifts pursuant to the regulatory conversion guidelines, which limit the number of potential comparable companies for inclusion in the peer group to approximately 106 full stock publicly traded companies. As noted in the appraisal report, the selection process for the peer group involved two geographic screens to the universe of all public thrifts that were eligible for inclusion in the peer group.

• New England Institutions. Given the impact of the regional market on investors’ perception of a financial institution’s value, RP Financial, LC first looked to the New England regional market and applied the following selection criteria to publicly-traded full-stock savings institutions: (i) assets less that $750 million, (ii) tangible equity-to-assets ratios greater than 8%, and (iii) positive core earnings. Six companies met the selection criteria and five were included in the peer group. The one company that was not included in the peer group was excluded on the basis that it had recently completed a mutual-to-stock conversion and, therefore, did not have a seasoned trading history as a publicly-traded institution.

• Mid-Atlantic Institutions. Given the limited number of comparable publicly-traded full stock savings institutions based in New England, RP Financial, LC next looked to the

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Mid-Atlantic regional market and applied the following selection criteria to publicly-traded full-stock savings institutions: (i) assets less that $750 million, (ii) tangible equity-to-assets ratios greater than 8%, and (iii) positive core earnings. Eight companies met the selection criteria and five were included in the peer group. The three companies not included in the peer group were excluded for the following reasons: (i) one company was excluded as a result of maintaining a very low level of common stock equity that resulted in a not meaningful price-to-book ratio, (ii) one company was excluded as the result of being the target of an announced acquisition, and (iii) one company was excluded because it had recently completed a mutual-to-stock conversion and, therefore, did not have a seasoned trading history as a publicly-traded institution.

The following table presents a summary of selected pricing ratios for Pilgrim Bancshares, Inc. and the peer group companies identified by RP Financial, LC. Ratios are based on financial data for the 12 months ended December 31, 2013 for Pilgrim Bancshares, Inc. and the 12 months ended September 30, 2013 for the peer group (or the last 12 months for which data is available) and stock price information as of February 14, 2014. Compared to the median pricing of the peer group, our pro forma pricing ratios at the maximum of the offering range indicated a discount of 27.9% on a price-to-book value basis, a discount of 29.9% on a price-to-tangible book value basis and a premium of 102.2% on a price-to-earnings basis. The price-to-book value and price-to-tangible book value ratios also took into account Conahasset Bancshares, MHC’s earnings history in relation to the peer group. The valuation also considered the after-market pricing characteristics of recently converted savings institutions, both regionally and nationally. Pilgrim Bancshares, Inc’s pro forma pricing ratios also reflected recent volatile market conditions, particularly for the stock of financial institution holding companies, and the effect of such conditions on the trading market for recent mutual-to-stock conversions. Our Board of Directors, in reviewing and approving the valuation, considered the range of price-to-book value ratios and price-to-tangible book value ratios at the different amounts of shares to be sold in the offering.

	Price-to-earnings multiple (1)			Price-to-book value ratio			Price-to-tangible book value ratio
Pilgrim Bancshares, Inc. (pro forma)
Maximum, as adjusted		53.41	%		73.58	%		73.58	%
Maximum		45.44	%		69.88	%		69.88	%
Minimum		32.38	%		61.54	%		61.54	%
Valuation of peer group companies using stock prices as of February 14, 2014
Averages		22.70	%		97.68	%		101.83	%
Medians		22.47	%		96.93	%		99.72	%

(1) Price-to-earnings multiples calculated by RP Financial, LC in the independent appraisal are based on an estimate of “core” or recurring earnings on a trailing 12 month basis for the 12 months ended December 31, 2013 for Pilgrim Bancshares, Inc. and on a trailing 12 month basis for the 12 months ended September 30, 2013 for the peer group companies. Price-to-earnings multiples are based on an estimate of “core” or recurring earnings as calculated by RP Financial, LC in the independent appraisal and are different from those presented in “Pro Forma Data,” which are based on reported earnings for the year ended December 31, 2013.

Compared to the average pricing ratios of the peer group, our pro forma pricing ratios at the maximum of the offering range indicated a discount of 28.5% on a price-to-book basis, a discount of 29.9% on a price-to-tangible book basis and a premium of 100.2% on a price-to-earnings basis. This means that, at the maximum of the offering range, a share of our common stock would be less expensive than the peer group on a price-to-book value and price-to-tangible book value basis and more expense on a price-to-earnings basis.

RP Financial, LC advised the Board of Directors that the appraisal was prepared in conformance with the regulatory appraisal methodology. That methodology requires a valuation based on an analysis of the trading prices of comparable public companies whose stocks have traded for at least one year prior to the valuation date, and as a result of this analysis, RP Financial, LC determined that our pro forma price-to-book and price-to-tangible book ratios were lower than the peer group companies. See “Summary—How We Determined the Offering Range.”

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Our Board of Directors carefully reviewed the information provided to it by RP Financial, LC through the appraisal process. We engaged RP Financial, LC to help us understand the regulatory process as it applies to the appraisal and to advise the Board of Directors as to how much capital Pilgrim Bancshares, Inc. would be required to raise under the regulatory appraisal guidelines.

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

The independent valuation is not intended, and must not be construed, as a recommendation of any kind as to the advisability of purchasing shares of our common stock. RP Financial, LC did not independently verify our consolidated financial statements and other information which we provided to them, nor did RP Financial, LC independently value our assets or liabilities. The independent valuation considers Pilgrim Bank as a going concern and should not be considered as an indication of the liquidation value of Pilgrim Bank. Moreover, because the valuation is necessarily based upon estimates and projections of a number of matters, all of which may change from time to time, no assurance can be given that persons purchasing our common stock in the offering will thereafter be able to sell their shares at prices at or above the $10.00 offering price per share.

Following commencement of the subscription offering, the maximum of the valuation range may be increased by up to 15%, or up to $21.8 million, without resoliciting subscribers, which would result in a corresponding increase of up to 15% in the maximum of the offering range to up to 2,182,125 shares, to reflect changes in the market and financial conditions or demand for the shares. We will not decrease the minimum of the valuation range and the minimum of the offering range without a resolicitation of subscribers. The subscription price of $10.00 per share will remain fixed. See “—Limitations on Common Stock Purchases” as to the method of distribution and allocation of additional shares that may be issued in the event of an increase in the offering range to fill unfilled orders in the offering.

If the update to the independent valuation at the conclusion of the offering results in an increase in the maximum of the valuation range to more than $21.8 million and a corresponding increase in the offering range to more than 2,182,125 shares (excluding shares issued to our charitable foundation), or a decrease in the minimum of the valuation range to less than $14.0 million and a corresponding decrease in the offering range to fewer than 1,402,500 shares (excluding shares issued to our charitable foundation), then we may promptly return with interest at our current statement savings rate of interest all funds previously delivered to us to purchase shares of common stock and cancel deposit account withdrawal authorizations, and, after consulting with the Federal Reserve Board and the Massachusetts Commissioner of Banks, we may terminate the plan of conversion. Alternatively, we may hold a new offering, establish a new offering range, extend the offering period and commence a resolicitation of subscribers or take other actions as permitted, to the extent that permission is required, by the Federal Reserve Board and the Massachusetts Commissioner of Banks in order to complete the conversion and the offering. In the event that a resolicitation is commenced, we will notify subscribers of the extension of time and of the rights of subscribers to place a new stock order for a specified period of time. If a person does not respond, we will cancel his or her stock order and return his or her subscription funds, with interest, and cancel any

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authorization to withdraw funds from deposit accounts for the purchase of shares of common stock. Any resolicitation following the conclusion of the subscription and community offerings would not exceed 45 days unless further extended with the approval, to the extent approval is required, of the Federal Reserve Board and the Massachusetts Commissioner of Banks, for periods of up to 90 days.

An increase in the number of shares to be issued in the offering would decrease both a subscriber’s ownership interest and our pro forma earnings and stockholders’ equity on a per share basis while increasing pro forma earnings and stockholders’ equity on an aggregate basis. A decrease in the number of shares to be issued in the offering would increase both a subscriber’s ownership interest and our pro forma earnings and stockholders’ equity on a per share basis, while decreasing pro forma earnings and stockholders’ equity on an aggregate basis. For a presentation of the effects of these changes, see “Pro Forma Data.”

Copies of the independent valuation appraisal report of RP Financial, LC and the detailed memorandum setting forth the method and assumptions used in the appraisal report are available for inspection at our main office and as specified under “Where You Can Find Additional Information.”

Subscription Offering and Subscription Rights

In accordance with the plan of conversion, rights to subscribe for shares of common stock in the subscription offering have been granted in the following descending order of priority. The filling of all subscriptions that we receive will depend on the availability of common stock after satisfaction of all subscriptions of all persons having prior rights in the subscription offering and to the maximum, minimum and overall purchase limitations set forth in the plan of conversion and as described below under “—Limitations on Common Stock Purchases.”

Priority 1: Eligible Account Holders. Each depositor with aggregate deposit account balances of $50.00 or more (a “Qualifying Deposit”) as of the close of business on December 31, 2012 (an “Eligible Account Holder”) will receive, without payment therefor, nontransferable subscription rights to purchase, subject to the overall purchase limitations, up to the greater of 20,000 shares of our common stock, 0.10% of the total number of shares of common stock issued in the offering, or 15 times the number of subscription shares offered multiplied by a fraction of which the numerator is the aggregate Qualifying Deposit account balances of the Eligible Account Holder and the denominator is the aggregate Qualifying Deposit account balances of all Eligible Account Holders, subject to the overall purchase limitations. See “—Limitations on Common Stock Purchases.” If there are not sufficient shares available to satisfy all subscriptions, shares will first be allocated so as to permit each Eligible Account Holder to purchase a number of shares sufficient to make his or her total allocation equal to the lesser of 100 shares or the number of shares for which he or she subscribed. Thereafter, unallocated shares will be allocated to each Eligible Account Holder whose subscription remains unfilled in the proportion that the amount of his or her Qualifying Deposit bears to the total amount of Qualifying Deposits of all subscribing Eligible Account Holders whose subscriptions remain unfilled. If an amount so allocated exceeds the amount subscribed for by any one or more Eligible Account Holders, the excess shall be reallocated (one or more times as necessary) among those Eligible Account Holders whose subscriptions are not fully satisfied until all available shares have been allocated.

To ensure proper allocation of shares of our common stock, each Eligible Account Holder must list on his or her stock order and certification form all deposit accounts in which he or she had an ownership interest on December 31, 2012. In the event of oversubscription, failure to list an account could result in fewer shares being allocated than if all accounts had been disclosed. In the event of an oversubscription, the subscription rights of Eligible Account Holders who are also our directors or executive officers or their associates will be subordinated to the subscription rights of other Eligible Account Holders to the extent attributable to increased deposits during the year preceding December 31, 2012.

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Priority 2: Supplemental Eligible Account Holders. To the extent that there are sufficient shares of common stock remaining after satisfaction of subscriptions by Eligible Account Holders, each depositor with a Qualifying Deposit as of the close of business on March 31, 2014 who is not an Eligible Account Holder (“Supplemental Eligible Account Holder”) will receive, without payment therefor, nontransferable subscription rights to purchase up to the greater of 20,000 shares of common stock, 0.10% of the total number of shares of common stock issued in the offering, or 15 times the number of subscription shares offered multiplied by a fraction of which the numerator is the aggregate Qualifying Deposit account balances of the Supplemental Eligible Account Holder and the denominator is the aggregate Qualifying Deposit account balances of all Supplemental Eligible Account Holders, subject to the overall purchase limitations. See “—Limitations on Common Stock Purchases.” If there are not sufficient shares available to satisfy all subscriptions, shares will be allocated so as to permit each Supplemental Eligible Account Holder to purchase a number of shares sufficient to make his or her total allocation equal to the lesser of 100 shares of common stock or the number of shares for which he or she subscribed. Thereafter, unallocated shares will be allocated to each Supplemental Eligible Account Holder whose subscription remains unfilled in the proportion that the amount of his or her Qualifying Deposit bears to the total amount of Qualifying Deposits of all Supplemental Eligible Account Holders whose subscriptions remain unfilled. If an amount so allocated exceeds the amount subscribed for by any one or more Supplemental Eligible Account Holders, the excess shall be reallocated (one or more times as necessary) among those Supplemental Eligible Account Holders whose subscriptions are not fully satisfied until all available shares have been allocated.

To ensure proper allocation of common stock, each Supplemental Eligible Account Holder must list on the stock order and certification form all deposit accounts in which he or she had an ownership interest at March 31, 2014. In the event of oversubscription, failure to list an account could result in fewer shares being allocated than if all accounts had been disclosed.

Priority 3: Tax-Qualified Plans. Our tax-qualified employee benefit plans, including our employee stock ownership plan, will receive, without payment therefor, nontransferable subscription rights to purchase in the aggregate up to 10% of the shares of common stock sold in the offering. Our employee stock ownership plan intends to purchase 8% of our outstanding shares (including shares to be contributed to our charitable foundation). In the event the number of shares offered in the offering is increased above the maximum of the valuation range, our tax-qualified employee plans will have a priority right to purchase any shares exceeding that amount up to 10% of the common stock issued in the offering and contributed to our charitable foundation. If market conditions warrant, in the judgment of its trustees, our employee stock ownership plan may instead elect to purchase shares in the open market following the completion of the conversion, subject to the approval of the Federal Reserve Board.

Expiration Date. The Subscription Offering will expire at 12:00 noon, Eastern Time, on [expiration date], 2014 unless extended by us for up to 45 days or such additional periods with the approval of the Federal Reserve Board and the Massachusetts Commissioner of Banks, if necessary. We will not accept orders for common stock in the subscription offering received before [member meeting date], 2014 or after [expiration date], 2014. Subscription rights will expire whether or not each eligible depositor can be located. We may decide to extend the expiration date of the subscription offering for any reason, whether or not subscriptions have been received for shares at the minimum, midpoint or maximum of the offering range. Subscription rights that have not been exercised prior to the expiration date will become void.

We will not execute orders until we have received orders to purchase at least the minimum number of shares of common stock. If we have not received orders to purchase at least 1,402,500 shares within 45 days after the expiration date and the Federal Reserve Board and Massachusetts Commissioner of Banks have not consented, to the extent such consent is required, to an extension, all funds delivered to us to purchase shares of common stock in the offering will be returned promptly to the subscribers with

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interest at our current statement savings rate and all deposit account withdrawal authorizations will be canceled. If an extension beyond [extension date], 2014 is granted by the required regulatory agencies, we will resolicit subscribers, giving them an opportunity to change or cancel their orders. We will notify subscribers of the extension of time and of the rights of subscribers to place a new stock order for a specified period of time. If a subscriber does not respond, we will cancel his or her stock order and return his or her subscription funds, with interest, and cancel any authorization to withdraw funds from deposit accounts for the purchase of shares of common stock. Extensions may not go beyond [2 year extension date], 2016, which is two years after the Board of Trustees of Conahasset Bancshares, MHC adopted the plan of conversion.

Community Offering

To the extent that shares of common stock remain available for purchase after satisfaction of all subscriptions of the Eligible Account Holders, Supplemental Eligible Account Holders and our tax-qualified employee benefit plans, we may offer shares pursuant to the plan of conversion to members of the general public in a community offering. Shares may be offered with a preference to natural persons (including trusts of natural persons) residing in the Massachusetts towns of Cohasset, Scituate, Hingham, Norwell, Hull, Weymouth, Quincy, Marshfield, Pembroke, Marion, Rochester, Mattapoisett, West Wareham, Wareham and Fairhaven.

Subscribers in the community offering may purchase up to 20,000 shares of common stock, subject to the overall purchase limitations. See “—Limitations on Common Stock Purchases.” The opportunity to purchase shares of common stock in the community offering category is subject to our right, in our sole discretion, to accept or reject any such orders in whole or in part either at the time of receipt of an order or as soon as practicable following the expiration date of the offering.

If we do not have sufficient shares of common stock available to fill the orders of natural persons residing in the Massachusetts towns of Cohasset, Scituate, Hingham, Norwell, Hull, Weymouth, Quincy, Marshfield, Pembroke, Marion, Rochester, Mattapoisett, West Wareham, Wareham and Fairhaven, we will allocate the available shares among those persons in a manner that permits each of them, to the extent possible, to purchase the lesser of 100 shares, or the number of shares subscribed for by such person. Thereafter, unallocated shares will be allocated among natural persons residing in the Massachusetts towns of Cohasset, Scituate, Hingham, Norwell, Hull, Weymouth, Quincy, Marshfield, Pembroke, Marion, Rochester, Mattapoisett, West Wareham, Wareham and Fairhaven, whose orders remain unsatisfied on an equal number of shares basis per order. If, after the allocation of shares to natural persons residing in such counties, we do not have sufficient shares of common stock available to fill the orders of other members of the general public, we will allocate the available shares among those persons in a manner that permits each of them, to the extent possible, to purchase the lesser of 100 shares, or the number of shares subscribed for by such person. Thereafter, unallocated shares will be allocated among members of the general public whose orders remain unsatisfied on an equal number of shares basis per order.

The term “residing” or “resident” as used in this prospectus means any person who occupies a dwelling within the community, has a present intent to remain within the community for a period of time and manifests the genuineness of that intent by establishing an ongoing physical presence within the community, together with an indication that this presence within the community is something other than merely transitory in nature. We may utilize deposit or loan records or other evidence provided to us to decide whether a person is a resident. In all cases, however, the determination shall be in our sole discretion.

Expiration Date. The community offering may begin at the same time as, during or after the subscription offering. It is currently expected to terminate at the same time as the subscription offering, although it must terminate no more than 45 days following the subscription offering. We may decide to

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extend the community offering for any reason and are not required to give purchasers notice of any such extension unless such period extends beyond [extension date], 2014. If an extension beyond [extension date], 2014 is granted by the required regulatory agencies, we will resolicit persons whose orders we accept in the community offering, giving them an opportunity to change or cancel their orders. If a person does not respond, we will cancel his or her stock order and return purchase funds, with interest, and cancel any authorization to withdraw funds from deposit accounts for the purchase of shares of common stock. These extensions may not go beyond [2 year extension date], 2016, which is two years after the Board of Trustees of Conahasset Bancshares, MHC adopted the plan of conversion.

Syndicated Community Offering

Our Board of Directors may decide to offer for sale shares of common stock not subscribed for or purchased in the subscription and community offerings in a syndicated community offering, subject to such terms, conditions and procedures as we may determine, in a manner that will achieve a widespread distribution of our shares of common stock. If a syndicated community offering is held, Keefe, Bruyette & Woods will serve as sole manager and will assist us in selling our common stock on a best efforts basis. In such capacity, Keefe, Bruyette & Woods may form a syndicate of other broker-dealers who are Financial Industry Regulatory Authority member firms. Neither Keefe, Bruyette & Woods nor any registered broker-dealer will have any obligation to take or purchase any shares of the common stock in the syndicated community offering.

In the syndicated community offering, any person may purchase up to 20,000 shares ($200,000) of common stock, subject to the overall purchase and ownership limitations. See “—Limitations on Common Stock Purchases.” We retain the right to accept or reject in whole or in part any orders in the syndicated community offering. Unless the Federal Reserve Board and the Massachusetts Commissioner of Banks permit otherwise, accepted orders for Pilgrim Bancshares, Inc. common stock in the syndicated community offering will first be filled up to a maximum of two percent (2.0%) of the shares sold in the offering on a basis that will promote a widespread distribution of our common stock. Thereafter any remaining shares will be allocated on an equal number of shares per order basis until all shares have been allocated or orders have been filled, as the case may be. Unless the syndicated community offering begins during the subscription and/or community offering, the syndicated community offering will begin as soon as possible after the completion of the subscription and community offerings.

Order forms will be used to purchase shares of common stock in the syndicated community offering. Investors in the syndicated community offering will follow the same general procedures applicable to purchasing shares in the community offering except that investors in the syndicated community offering may also wire payment for the subscription director to Pilgrim Bank for deposit to the Pilgrim Bancshares, Inc. stock purchase escrow account. See “—Procedure for Purchasing Shares.”

The closing of the syndicated community offering is subject to conditions set forth in an agency agreement among Conahasset Bancshares, MHC, Conahasset Bancshares, Inc., Pilgrim Bancshares, Inc. and Pilgrim Bank on the one hand and Keefe, Bruyette & Woods on the other hand. If and when all the conditions for the closing are met, funds for common stock sold in the syndicated community offering, less fees and commissions payable, will be delivered promptly to us.

If for any reason we cannot effect a syndicated community offering of shares of common stock not purchased in the subscription and community offerings, or in the event that there are a significant number of shares remaining unsold after such offerings, we will try to make other arrangements for the sale of unsubscribed shares, if possible. The Federal Reserve Board, the Massachusetts Commissioner of Banks and the Financial Industry Regulatory Authority must approve any such arrangements.

The opportunity to order shares of common stock in the syndicated community offering is subject to our right to reject orders, in whole or in part, either at the time of receipt of an order or as soon as practicable following the expiration date of the offering. If your order is rejected in part, you will not have the right to cancel the remainder of your order.

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Limitations on Common Stock Purchases

The plan of conversion includes the following limitations on the number of shares of common stock that may be purchased in the offering:

• No person or entity may purchase more than 20,000 shares of common stock in the subscription offering;

• no person or entity together with any associate or group of persons acting in concert may purchase more than 30,000 shares of common stock in all categories of the offering;

• our tax-qualified employee benefit plans, including the employee stock ownership plan that we are establishing in connection with the conversion, may purchase in the aggregate up to 10% of the shares of common stock issued in the offering and contributed to our charitable foundation (including shares issued in the event of an increase in the offering range of up to 15%);

• The maximum number of shares of common stock that may be purchased in all categories of the offering by the officers, trustees, directors and corporators of Conahasset Bancshares, MHC, Conahasset Bancshares, Inc., Pilgrim Bancshares, Inc. and Pilgrim Bank and their associates, in the aggregate, may not exceed 30% of the shares issued in the offering and contributed to our charitable foundation; and

• The minimum purchase by each person purchasing shares in the offering is 25 shares, to the extent those shares are available.

Depending upon market or financial conditions, our Board of Directors, with any required approvals of the Federal Reserve Board and the Massachusetts Commissioner of Banks, and without further approval of our members, may decrease or increase the purchase limitations. The purchase limitations may not be increased to a percentage that is more than 5.0% of the common stock offered for sale and may not be decreased to a percentage that is less than 0.10% of the common stock offered for sale in the conversion, and, in the case of our tax-qualified employee plans, may not be increased to more than 10% of the shares offered for sale in the conversion. If a purchase limitation is increased, subscribers in the subscription offering who ordered the maximum amount will be, and, in our sole discretion, some other large subscribers may be, given the opportunity to increase their subscriptions up to the then-applicable limit. The effect of this type of resolicitation would be an increase in the number of shares of common stock owned by subscribers who choose to increase their subscriptions. In the event that the maximum purchase limitation is increased to 5% of the shares sold in the offering, such limitation may be further increased to 9.99%, provided that orders for shares of common stock exceeding 5% of the shares sold in the offering shall not exceed in the aggregate 10% of the total shares sold in the offering.

In the event of an increase in the offering range of up to 15% of the total number of shares of common stock offered in the offering, shares will be allocated in the following order of priority in accordance with the plan of conversion:

(1) to fill our tax-qualified employee benefit plans’ subscriptions for up to 10% of the total number of shares of common stock issued in the offering and contributed to our charitable foundation;

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(2) in the event that there is an oversubscription at the Eligible Account Holder or Supplemental Eligible Account Holder levels, to fill unfulfilled subscriptions of these subscribers according to their respective priorities; and

(3) to fill unfulfilled subscriptions in the community offering, with preference given first to natural persons residing in the Massachusetts towns of Cohasset, Scituate, Hingham, Norwell, Hull, Weymouth, Quincy, Marshfield, Pembroke, Marion, Rochester, Mattapoisett, West Wareham, Wareham and Fairhaven.

The term “associate” of a person means:

(1) any corporation or organization, other than Conahasset Bancshares, MHC, Conahasset Bancshares, Inc., Pilgrim Bank, Pilgrim Bancshares, Inc. or a majority-owned subsidiary of these entities, of which the person is a senior officer, partner or beneficial owner of 10% or more of any class of equity securities;

(2) any trust or other estate in which the person has a substantial beneficial interest or serves as a trustee or in a fiduciary capacity, excluding any employee stock benefit plan in which the person has a substantial beneficial interest or serves as trustee or in a fiduciary capacity; and

(3) any relative, by blood or marriage, of the person, who either lives in the same home as the person or who is a director or officer of Conahasset Bancshares, MHC, Conahasset Bancshares, Inc., Pilgrim Bank or Pilgrim Bancshares, Inc.

The term “acting in concert” means:

(1) knowing participation in a joint activity or interdependent conscious parallel action towards a common goal whether or not pursuant to an express agreement; or

(2) a combination or pooling of voting or other interests in the securities of an issuer for a common purpose pursuant to any contract, understanding, relationship, agreement or other arrangement, whether written or otherwise.

A person or company that acts in concert with another person or company (“other party”) shall also be deemed to be acting in concert with any person or company who is also acting in concert with that other party, except that any tax-qualified employee stock benefit plan will not be deemed to be acting in concert with its trustee or a person who serves in a similar capacity solely for the purpose of determining whether common stock held by the trustee and common stock held by the employee stock benefit plan will be aggregated.

Our directors are not treated as associates of each other solely because of their membership on the Board of Directors. We have the right to determine whether prospective purchasers are associates or acting in concert. Shares of common stock purchased in the offering will be freely transferable except for shares purchased by our executive officers and directors and except as described below. Any purchases made by any associate of Pilgrim Bank or Pilgrim Bancshares, Inc. for the explicit purpose of meeting the minimum number of shares of common stock required to be sold in order to complete the offering shall be made for investment purposes only and not with a view toward redistribution. In addition, under the guidelines of the Financial Industry Regulatory Authority, members of the Financial Industry Regulatory Authority and their associates are subject to certain restrictions on transfer of securities purchased in accordance with subscription rights and to certain reporting requirements upon purchase of these securities. For a further discussion of limitations on purchases of shares of our common stock at the time of conversion and thereafter, see “—Restrictions on Purchase or Transfer of Our Shares After Conversion” and “Restrictions on Acquisition of Pilgrim Bancshares, Inc.”

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Marketing and Distribution; Compensation

Offering materials have been initially distributed to certain persons by mail, with additional copies made available through our Stock Information Center.

We have engaged Keefe, Bruyette & Woods, a broker-dealer registered with the Securities and Exchange Commission and a member of the Financial Industry Regulatory Authority, as a financial advisor in connection with the offering of our common stock. In its role as financial advisor, Keefe, Bruyette & Woods, will:

• provide advice on the financial and securities market implications of the plan of conversion and related corporate documents, including our business plan;

• assist in structuring our offering, including developing and assisting in implementing a market strategy for the offering;

• review all offering documents, including this prospectus, stock order forms and related offering materials (we are responsible for the preparation and filing of such documents);

• assist us in preparing for and scheduling meetings with potential investors and broker-dealers, as necessary;

• assist us in analyzing proposals from outside vendors retained in connection with the offering, including printers, transfer agents and appraisal firms;

• assist us in the drafting and distribution of press releases as required or appropriate in connection with the offering;

• meet with the board of directors and management to discuss any of these services; and

• provide such other financial advisory and investment banking services in connection with the offering as may be agreed upon by Keefe, Bruyette & Woods and us.

For these services, Keefe, Bruyette & Woods will receive a management fee of $40,000 payable in four consecutive monthly installments commencing in January 2014, and a success fee of 1.0% of the aggregate dollar amount of the common stock sold in the subscription offering and a 2.0% fee paid on any shares sold in the direct community offering, each if the conversion is consummated, excluding shares purchased by our directors, officers and employees and members of their immediate families (including any individual retirement accounts owned by such persons), our employee stock ownership plan and our tax-qualified or stock-based compensation or similar plans and shares contributed to or purchased by our charitable foundation, and subject to a minimum success fee of $225,000. The management fee will be credited against the success fee payable upon the consummation of the conversion.

The plan of conversion provides that, if necessary, all shares of common stock not purchased in the subscription offering and community offering may be offered for sale to the general public in a syndicated community offering to be managed by Keefe, Bruyette & Woods. In such capacity, Keefe, Bruyette & Woods may form a syndicate of other broker-dealers. Neither Keefe, Bruyette & Woods nor any registered broker-dealer will have any obligation to take or purchase any shares of common stock in the syndicated community offering; however, Keefe, Bruyette & Woods has agreed to use its best efforts

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in the sale of shares in any syndicated community offering. If there is a syndicated community offering, Keefe, Bruyette & Woods will receive a management fee equal to 6.0% of the aggregate dollar amount of the common stock sold in the syndicated community offering. If all shares of common stock were sold in a syndicated community offering (except for shares purchased by our directors, officers, employees and their family members and our employee stock ownership plan), the maximum selling agent commissions would be approximately $720,440, $856,704, $992,968 and $1,149,671 at the minimum, midpoint, maximum, and adjusted maximum levels of the offering, respectively. If all shares of common stock were sold in a syndicated community offering (and our directors, officers, employees and their family members and our employee stock ownership plan did not purchase their indicated shares), the maximum selling agent commissions would be approximately $841,500, $990,000, $1,138,500 and $1,309,275 at the minimum, midpoint, maximum, and adjusted maximum levels of the offering, respectively. Of this amount, Keefe, Bruyette & Woods will pass on to selected broker-dealers, who assist in the syndicated community offering, an amount competitive with gross underwriting discounts charged at such time for comparable amounts of stock sold at a comparable price per share in a similar market environment.

We also will reimburse Keefe, Bruyette & Woods for its reasonable out-of-pocket expenses associated with its marketing effort up to a maximum of $15,000. In addition, we will reimburse Keefe, Bruyette & Woods for fees and expenses of its counsel not to exceed $75,000. In the event of unusual circumstances or delays or a re-solicitation in connection with the offering, the total out-of-pocket expense cap may be increased by an amount not to exceed $5,000 and the cap on the fees and expenses of counsel may be increased by an amount not to exceed $10,000. We will indemnify Keefe, Bruyette & Woods against liabilities and expenses (including legal fees) related to or arising out of Keefe, Bruyette & Woods’ engagement as our financial advisor and performance of services as our financial advisor.

We have also engaged Keefe, Bruyette & Woods to act as our conversion agent in connection with the offering. In its role as conversion agent, Keefe, Bruyette & Woods will, among other things:

• consolidate and develop a central file of account holders;

• assist with the labeling of notice and meeting materials and provide support for any follow-up mailings;

• tabulate votes;

• assist the inspector of election at the special meeting of members;

• assist us in establishing and managing the Stock Information Center;

• assist in establishing record-keeping and reporting procedures;

• assist our financial printer with labeling of offering materials;

• process stock order and certification forms and produce daily reports and analysis;

• assist our transfer agent with the generation and mailing of stock certificates;

• advise us on interest and refund calculations; and

• create tax forms for interest reporting.

For these services, Keefe, Bruyette & Woods will receive a fee of $20,000, and we have made a non-refundable advance payment of $5,000 to Keefe, Bruyette & Woods with respect to this fee. The

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remaining $15,000 will be payable upon completion of the offering. We also will reimburse Keefe, Bruyette & Woods for its reasonable out-of-pocket expenses associated with its acting as conversion agent up to a maximum of $15,000. We will indemnify Keefe, Bruyette & Woods against liabilities and expenses (including legal fees) related to or arising out of Keefe, Bruyette & Woods’ engagement as our conversion agent and performance of services as our conversion agent.

Our directors and executive officers may participate in the solicitation of offers to purchase common stock. These persons will be reimbursed for their reasonable out-of-pocket expenses incurred in connection with the solicitation. Other trained employees of Pilgrim Bank or its affiliates may assist in the offering in ministerial capacities, providing clerical work in effecting a sales transaction or answering questions of a ministerial nature. No offers or sales may be made by tellers or at the teller counters. All sales activity will be conducted in a segregated or separately identifiable area of our main office facility apart from the area accessible to the general public. Other questions of prospective purchasers will be directed to executive officers or registered representatives of Keefe, Bruyette & Woods. Our other employees have been instructed not to solicit offers to purchase shares of common stock or provide advice regarding the purchase of common stock. We will rely on Rule 3a4-1 under the Securities Exchange Act of 1934, and sales of common stock will be conducted within the requirements of Rule 3a4-1, so as to permit officers, directors and employees to participate in the sale of common stock. None of our officers, directors or employees will be compensated in connection with their participation in the offering by the payment of commissions or other remuneration based either directly or indirectly on the transactions in the shares of common stock.

The offering will comply with the requirements of Rule 10b-9 under the Securities Exchange Act of 1934.

Procedure for Purchasing Shares

Expiration Date. The offering will expire at 12:00 noon, Eastern Time, on [expiration date], 2014, unless we extend it for up to 45 days. This extension may be approved by us, in our sole discretion, without further approval or additional notice to purchasers in the offering. Any extension of the subscription and/or community offering beyond [extension date], 2014 would require the Federal Reserve Board’s and Massachusetts Commissioner of Banks’ approval. If an extension beyond [extension date], 2014 is granted by the appropriate regulatory agencies, we will resolicit subscribers/persons who place orders, giving them an opportunity to change or cancel their orders. We will notify these subscribers of the extension of time and of the rights to place a new stock order for a specified period of time. If a subscriber does not respond, we will cancel his or her stock order and return his or her subscription funds, with interest, and cancel any authorization to withdraw funds from deposit accounts for the purchase of shares of common stock. If we have not received orders to purchase the minimum number of shares offered in the offering by the expiration date or any extension thereof, we may terminate the offering and promptly refund all funds received for shares of common stock. If the number of shares offered is reduced below the minimum of the offering range, or increased above the adjusted maximum of the offering range, subscribers may be resolicited with any required approvals of the Federal Reserve Board.

To ensure that each purchaser receives a prospectus at least 48 hours before [expiration date], 2014, the expiration date of the offering, in accordance with Rule 15c2-8 of the Securities Exchange Act of 1934, no prospectus will be mailed any later than five days prior to the expiration date or hand delivered any later than two days prior to the expiration date. Execution of an order form will confirm receipt of delivery in accordance with Rule 15c2-8. Order forms will be distributed only with a prospectus. Subscription funds will be maintained in a segregated account at Pilgrim Bank and will earn interest at our current statement savings rate from the date of receipt.

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We reserve the right in our sole discretion to terminate the offering at any time and for any reason, in which case we will cancel any deposit account withdrawal orders and promptly return all funds delivered to us, with interest at our current statement savings rate from the date of receipt.

We have the right to reject any order submitted in the offering by a person who we believe is making false representations or who we otherwise believe, either alone or acting in concert with others, is violating, evading, circumventing, or intends to violate, evade or circumvent the terms and conditions of the plan of conversion.

Use of Order Forms. In order to purchase shares of common stock in the subscription offering and community offering, you must submit a completed order form and remit full payment. We will not be required to accept incomplete order forms, unsigned order forms, or orders submitted on photocopied or facsimiled order forms. We must receive all order forms prior to 12:00 noon, Eastern Time, on [expiration date], 2014. We are not required to accept order forms that are not received by that time, are executed defectively or are received without full payment or without appropriate withdrawal instructions. A postmark prior to [expiration date], 2014 will not entitle you to purchase shares of common stock unless we receive the envelope by [expiration date], 2014. We are not required to notify subscribers of incomplete or improperly executed order forms. We have the right to permit the correction of incomplete or improperly executed order forms or waive immaterial irregularities. We do not represent, however, that we will do so and we have no affirmative duty to notify any prospective subscriber of any such defects. You may submit your order form and payment by overnight delivery to the indicated address on the order form, by bringing your order form to our Stock Information Center or to any branch office or by mail using the return envelope provided. Once tendered, an order form cannot be modified or revoked without our consent. We reserve the absolute right, in our sole discretion, to reject orders received in the community offering, in whole or in part, at the time of receipt or at any time prior to completion of the offering. If you are ordering shares, you must represent that you are purchasing shares for your own account and that you have no agreement or understanding with any person for the sale or transfer of the shares. Our interpretation of the terms and conditions of the plan of conversion and of the acceptability of the order forms will be final, subject to any required approvals of the Federal Reserve Board and the Massachusetts Commissioner of Banks.

By signing the order form, you will be acknowledging that the common stock is not a deposit or savings account and is not federally insured or otherwise guaranteed by Pilgrim Bank, Pilgrim Bancshares, Inc., the FDIC, the Share Insurance Fund, or any governmental agency, and that you received a copy of this prospectus. However, signing the order form will not result in you waiving your rights under the Securities Act of 1933, or the Securities Exchange Act of 1934.

Payment for Shares. Payment for all shares of common stock will be required to accompany all completed order forms for the purchase to be valid. Payment for shares may be made by:

(1) personal check, bank check or money order, payable to Pilgrim Bancshares, Inc.; or

(2) authorization of withdrawal from Pilgrim Bank deposit accounts designated on the order form.

Appropriate means for designating withdrawals from deposit accounts at Pilgrim Bank are provided in the order forms. The funds designated must be available in the account(s) at the time the order form is received. A hold will be placed on these funds, making them unavailable to the depositor. Funds authorized for withdrawal will continue to earn interest within the account at the contract rate until the offering is completed, at which time the designated withdrawal will be made. Interest penalties for early withdrawal applicable to certificate accounts will not apply to withdrawals authorized for the purchase of shares of common stock; however, if a withdrawal results in a certificate account with a balance less than the applicable minimum balance requirement, the certificate will be canceled at the time

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of withdrawal without penalty and the remaining balance will be transferred to a savings account and earn interest at our current statement savings rate subsequent to the withdrawal. In the case of payments made by check or money order, these funds must be available in the account(s) and will be immediately cashed and placed in a segregated account at Pilgrim Bank and will earn interest at our current statement savings rate from the date payment is received until the offering is completed or terminated.

You may not use cash, wires or a check drawn on a Pilgrim Bank line of credit, and we will not accept third-party checks (a check written by someone other than you) payable to you and endorsed over to Pilgrim Bancshares, Inc. If you request that we place a hold on your checking account for the subscription amount, we reserve the right to interpret that as your authorization to treat those funds as if we had received a check for the designated amount, and we will immediately withdraw the amount from your checking account. Once we receive your executed order form, it may not be modified, amended or rescinded without our consent, unless the offering is not completed by the expiration date, in which event purchasers may be given the opportunity to increase, decrease or rescind their orders for a specified period of time.

We will have the right, in our sole discretion, to permit institutional investors to submit irrevocable orders together with the legally binding commitment for payment and to thereafter pay for the shares of common stock for which they subscribe in the community offering at any time prior to 48 hours before the completion of the offering. This payment may be made by wire transfer.

Our employee stock ownership plan will not be required to pay for any shares purchased in the offering until consummation of the offering, provided there is a loan commitment from an unrelated financial institution or Pilgrim Bancshares, Inc. to lend to the employee stock ownership plan the necessary amount to fund the purchase.

Regulations prohibit Pilgrim Bank from knowingly lending funds or extending credit to any persons to purchase shares of common stock in the offering.

Using Retirement Account Funds. If you are interested in using your individual retirement account funds to purchase shares of common stock, you must do so through a self-directed individual retirement account such as a brokerage firm individual retirement account. By regulation, Pilgrim Bank’s individual retirement accounts are not self-directed, so they cannot be invested in shares of our common stock. Therefore, if you wish to use your funds that are currently in a Pilgrim Bank individual retirement account, you may not designate on the order form that you wish funds to be withdrawn from the account for the purchase of common stock. The funds you wish to use for the purchase of common stock will have to be transferred to a brokerage account. It may take several weeks to transfer your Pilgrim Bank individual retirement account to an independent trustee, so please allow yourself sufficient time to take this action. There will be no early withdrawal or Internal Revenue Service interest penalties for these transfers. Depositors interested in using funds in an individual retirement account or any other retirement account to purchase shares of common stock should contact our Stock Information Center as soon as possible, preferably at least two weeks prior to the end of the offering period, because processing such transactions takes additional time, and whether such funds can be used may depend on limitations imposed by the institutions where such funds are currently held. We cannot guarantee that you will be able to use such funds.

Delivery of Stock Certificates. Certificates representing shares of common stock issued in the offering and Pilgrim Bank checks representing any applicable refund and/or interest paid on subscriptions made by check or money order will be mailed to the persons entitled thereto at the certificate registration address noted on the order form, as soon as practicable following consummation of the offering and receipt of all necessary regulatory approvals. Any certificates returned as undeliverable will be held by the transfer agent until claimed by persons legally entitled thereto or otherwise disposed of in accordance with applicable law. Until certificates for the shares of common stock are available and delivered to purchasers, purchasers may not be able to sell the shares of common stock that they ordered, even though the common stock will have begun trading.

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Other Restrictions. Notwithstanding any other provision of the plan of conversion, no person is entitled to purchase any shares of common stock to the extent the purchase would be illegal under any federal or state law or regulation, including state “blue sky” regulations, or would violate regulations or policies of the Financial Industry Regulatory Authority, particularly those regarding free riding and withholding. We may ask for an acceptable legal opinion from any purchaser as to the legality of his or her purchase and we may refuse to honor any purchase order if an opinion is not timely furnished. In addition, we are not required to offer shares of common stock to any person who resides in a foreign country.

Restrictions on Transfer of Subscription Rights and Shares

Applicable regulations prohibit any person with subscription rights, including the Eligible Account Holders and Supplemental Eligible Account Holders, from transferring or entering into any agreement or understanding to transfer the legal or beneficial ownership of the subscription rights issued under the plan of conversion or the shares of common stock to be issued upon their exercise. These rights may be exercised only by the person to whom they are granted and only for his or her account. Each person exercising subscription rights will be required to certify that he or she is purchasing shares solely for his or her own account and that he or she has no agreement or understanding regarding the sale or transfer of such shares. The regulations also prohibit any person from offering or making an announcement of an offer or intent to make an offer to purchase subscription rights or shares of common stock to be issued upon their exercise prior to completion of the offering.

We intend to pursue any and all legal and equitable remedies in the event we become aware of the transfer of subscription rights, and we will not honor orders that we believe involve the transfer of subscription rights.

Stock Information Center

Our branch office personnel may not, by law, assist with investment-related questions about the offering. If you have any questions regarding the conversion or offering, please call our information hotline at [—] to speak to a representative of Keefe, Bruyette & Woods. Representatives are available by telephone Monday through Friday from 9:00 a.m. to 5:00 p.m., Eastern Time. You may also meet in person with a representative by visiting our stock information center located at main office at 40 South Main Street, Cohasset, Massachusetts 02025. The stock information center is open weekdays during the offering, except for bank holidays, on Mondays from 12:00 noon to 5:00 p.m., on Tuesdays through Thursdays from 9:00 a.m. to 5:00 p.m., and on Fridays from 9:00 a.m. to 12:00 noon, Eastern time.

Liquidation Rights

Liquidation prior to the conversion. In the unlikely event that Conahasset Bancshares, MHC is liquidated prior to the conversion, all claims of creditors of Conahasset Bancshares, MHC would be paid first. Thereafter, if there were any assets of Conahasset Bancshares, MHC remaining, these assets would first be distributed to certain depositors of Pilgrim Bank under such depositors’ liquidation rights. The amount received by such depositors would be equal to their pro rata interest in the remaining value of Conahasset Bancshares, MHC, after the claims of creditors, based on the relative size of their deposit accounts.

Liquidation following the conversion. The plan of conversion provides for the establishment, upon the completion of the conversion, of a liquidation account by Pilgrim Bancshares, Inc. for the

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benefit of Eligible Account Holders and Supplemental Eligible Account Holders in an amount equal to Conahasset Bancshares, MHC’s total equity as of the date of the latest statement of financial condition used in this prospectus. The plan of conversion also provides for the establishment of a parallel bank liquidation account in Pilgrim Bank to support the Pilgrim Bancshares, Inc. liquidation account in the event Pilgrim Bancshares, Inc. does not have sufficient assets to fund its obligations under the Pilgrim Bancshares, Inc. liquidation account.

In the unlikely event that Pilgrim Bank were to liquidate after the conversion, all claims of creditors, including those of Pilgrim Bank depositors, would be paid first. However, except with respect to the liquidation account established by Pilgrim Bancshares, Inc., a depositor’s claim would be solely for the principal amount of his or her deposit accounts plus accrued interest. Depositors generally would not have an interest in the value of the assets of Pilgrim Bank or Pilgrim Bancshares, Inc. above that amount.

The liquidation account established by Pilgrim Bancshares, Inc. is designed to provide payments to qualifying depositors of their liquidation interest (exchanged for the liquidation rights such persons had in Conahasset Bancshares, MHC) in the event of a liquidation of Pilgrim Bancshares, Inc. and Pilgrim Bank or a liquidation solely of Pilgrim Bank. Specifically, in the unlikely event that either (i) Pilgrim Bank or (ii) Pilgrim Bancshares, Inc. and Pilgrim Bank were to completely liquidate after the conversion, all claims of creditors, including those of Pilgrim Bank depositors, would be paid first, followed by a distribution to Eligible Account Holders and Supplemental Eligible Account Holders of their interests in the liquidation account maintained by Pilgrim Bancshares, Inc. In a complete liquidation of both entities, or of Pilgrim Bank only, when Pilgrim Bancshares, Inc. has insufficient assets to fund the distribution due to Eligible Account Holders and Supplemental Eligible Account Holders and Pilgrim Bank has positive net worth, Pilgrim Bank shall immediately make a distribution to fund Pilgrim Bancshares, Inc.’s remaining obligations under the Pilgrim Bancshares, Inc. liquidation account. In no event will any Eligible Account Holder or Supplemental Eligible Account Holder be entitled to a distribution that exceeds such holder’s interest in the liquidation account maintained by Pilgrim Bancshares, Inc. as adjusted from time to time pursuant to the plan of conversion and federal regulations. If Pilgrim Bancshares, Inc. is sold or liquidated apart from a sale or liquidation of Pilgrim Bank, then the Pilgrim Bancshares, Inc. liquidation account will cease to exist and Eligible Account Holders and Supplemental Eligible Account Holders will receive an equivalent interest in the Pilgrim Bank liquidation account, subject to the same rights and terms as the liquidation account maintained by Pilgrim Bancshares, Inc.

Pursuant to the plan of conversion, after two years from the date of conversion, Pilgrim Bancshares, Inc. shall transfer the liquidation account (and the depositors’ interests in such account) to Pilgrim Bank and the liquidation account shall thereupon subsumed into the liquidation account of Pilgrim Bank. Under the rules and regulations of the Massachusetts Commissioner of Banks, a post-conversion merger, consolidation, or similar combination or transaction with another depository institution or depository institution holding company in which Pilgrim Bancshares, Inc. or Pilgrim Bank is not the surviving institution would not be considered a liquidation. In such a transaction, the liquidation account would be assumed by the surviving institution.

Each Eligible Account Holder and Supplemental Eligible Account Holder would have an initial pro rata interest in the liquidation account for each deposit account, including savings accounts, transaction accounts such as negotiable order of withdrawal accounts, money market deposit accounts, and certificates of deposit, with a balance of $50.00 or more held in Pilgrim Bank on December 31, 2012 or March 31, 2014 equal to the proportion that the balance of each Eligible Account Holder and Supplemental Account Holder deposit accounts on December 31, 2012 and March 31, 2014, respectively, bears to the balance of all Eligible Account Holder and Supplemental Account Holder deposit accounts in Pilgrim Bank on such date.

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If, however, on any December 31 annual liquidation account closing date commencing after the effective date of the conversion, the amount in any such deposit account is less than the amount in the deposit account on December 31, 2012 or March 31, 2014, respectively, or any other annual liquidation account closing date, then the interest in the liquidation account relating to such deposit account would be reduced from time to time by the proportion of any such reduction, and such interest will cease to exist if such deposit account is closed. In addition, no interest in the liquidation account would ever be increased despite any subsequent increase in the related deposit account. Payment pursuant to liquidation rights of Eligible Account Holders and Supplemental Eligible Account Holders would be separate and apart from the payment of any insured deposit accounts to such depositor. Any assets remaining after the above liquidation rights of Eligible Account Holders and Supplemental Eligible Account Holders are satisfied would be available for distribution to stockholders.

Material Income Tax Consequences

Consummation of the conversion is subject to the prior receipt of an opinion of counsel or tax advisor with respect to federal and state income taxation that the conversion will not be a taxable transaction to Conahasset Bancshares, MHC, Conahasset Bancshares, Inc., Pilgrim Bank, Pilgrim Bancshares, Inc., Eligible Account Holders and Supplemental Eligible Account Holders. Unlike private letter rulings, opinions of counsel or tax advisors are not binding on the Internal Revenue Service or any state taxing authority, and such authorities may disagree with such opinions. In the event of such disagreement, there can be no assurance that Conahasset Bancshares, MHC, Conahasset Bancshares, Inc., Pilgrim Bank or Pilgrim Bancshares, Inc. would prevail in a judicial proceeding.

Luse Gorman Pomerenk & Schick, P.C. has issued an opinion to Conahasset Bancshares, MHC, Conahasset Bancshares, Inc., Pilgrim Bank and Pilgrim Bancshares, Inc. that for federal income tax purposes:

1. The conversion of Conahasset Bancshares, Inc. from a Maryland corporation to a Delaware corporation will constitute a mere change in identity, form or place of organization within the meaning of Section 368(a)(1)(F) of the Internal Revenue Code and therefore will qualify as a tax-free reorganization within the meaning of Section 368(a)(1)(F) of the Internal Revenue Code.

2. The merger of Conahasset Bancshares, MHC with and into Conahasset Bancshares, Inc. will qualify as a tax-free reorganization within the meaning of Section 368(a)(1)(A) of the Internal Revenue Code.

3. The constructive exchange of Eligible Account Holders’ and Supplemental Eligible Account Holders’ liquidation interests in Conahasset Bancshares, MHC for liquidation interests in Conahasset Bancshares, Inc. will satisfy the continuity of interest requirement of Section 1.368-1(b) of the Federal Income Tax Regulations.

4. Neither Conahasset Bancshares, MHC nor Conahasset Bancshares, Inc. will recognize any gain or loss on the transfer of the assets of Conahasset Bancshares, MHC to Conahasset Bancshares, Inc. and the assumption by Conahasset Bancshares, Inc. of Conahasset Bancshares, MHC’s liabilities and none of Conahasset Bancshares, MHC, Conahasset Bancshares, Inc., the Eligible Account Holders or Supplemental Eligible Account Holders will recognize gain or loss on the constructive exchange of the liquidation interests in Conahasset Bancshares, MHC for liquidation interests in Conahasset Bancshares, Inc.

5. The basis of the assets of Conahasset Bancshares, MHC and the holding period of such assets to be received by Conahasset Bancshares, Inc. will be the same as the basis and holding period of such assets in Conahasset Bancshares, MHC immediately before the exchange.

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6. The merger of Conahasset Bancshares, Inc. with and into Pilgrim Bancshares, Inc. will constitute a mere change in identity, form or place of organization within the meaning of Section 368(a)(1)(F) of the Code and therefore will qualify as a tax-free reorganization within the meaning of Section 368(a)(1)(F) of the Code. Neither Conahasset Bancshares, Inc. nor Pilgrim Bancshares, Inc. will recognize gain or loss as a result of such merger.

7. The basis of the assets of Conahasset Bancshares, Inc. and the holding period of such assets to be received by Pilgrim Bancshares, Inc. will be the same as the basis and holding period of such assets in Conahasset Bancshares, Inc. immediately before the exchange.

8. Eligible Account Holders and Supplemental Eligible Account Holders will not recognize any gain or loss upon the constructive exchange of their liquidation interests in Conahasset Bancshares, Inc. for interests in the liquidation account in Pilgrim Bancshares, Inc.

9. The constructive exchange of the Eligible Account Holders and Supplemental Eligible Account Holders liquidation interests in Conahasset Bancshares, Inc. for interests in the liquidation account established in Pilgrim Bancshares, Inc. will satisfy the continuity of interest requirement of Section 1.368-1(b) of the Federal Income Tax Regulations with respect to the merger of Conahasset Bancshares, MHC with and into Conahasset Bancshares, Inc.

10. It is more likely than not that the fair market value of the nontransferable subscription rights to purchase Pilgrim Bancshares, Inc. common stock is zero. Accordingly, no gain or loss will be recognized by Eligible Account Holder or, Supplemental Eligible Account Holders upon distribution to them of nontransferable subscription rights to purchase shares of Pilgrim Bancshares, Inc. common stock. Eligible Account Holders and Supplemental Eligible Account Holders will not realize any taxable income as the result of the exercise by them of the nontransferable subscriptions rights.

11. It is more likely than not that the fair market value of the benefit provided by the liquidation account of Pilgrim Bank supporting the payment of the Pilgrim Bancshares, Inc. liquidation account in the event Pilgrim Bancshares, Inc. lacks sufficient net assets is zero. Accordingly, it is more likely than not that no gain or loss will be recognized by Eligible Account Holders or Supplemental Eligible Account Holders upon the constructive distribution to them of such rights in the Pilgrim Bank liquidation account as of the effective date of the merger of Conahasset Bancshares, Inc. with and into Pilgrim Bancshares, Inc.

12. It is more likely than not that the basis of the shares of Pilgrim Bancshares, Inc. common stock purchased in the offering by the exercise of nontransferable subscription rights will be the purchase price. The holding period of the Pilgrim Bancshares, Inc. common stock purchased pursuant to the exercise of nontransferable subscription rights will commence on the date on which the right to acquire such stock was exercised.

13. No gain or loss will be recognized by Pilgrim Bancshares, Inc. on the receipt of money in exchange for Pilgrim Bancshares, Inc. common stock sold in the offering.

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We believe that the tax opinions summarized above address all material federal income tax consequences that are generally applicable to Conahasset Bancshares, MHC, Conahasset Bancshares, Inc., Pilgrim Bank, Pilgrim Bancshares, Inc. and persons receiving subscription rights. The tax opinion as to item 10 above is based on the position that subscription rights to be received by Eligible Account Holders and Supplemental Eligible Account Holders do not have any economic value at the time of distribution or the time the subscription rights are exercised. In this regard, Luse Gorman Pomerenk & Schick, P.C. noted that the subscription rights will be granted at no cost to the recipients, are legally non-transferable and of short duration, and will provide the recipient with the right only to purchase shares of common stock at the same price to be paid by members of the general public in any community offering. The firm also noted that the Internal Revenue Service has not in the past concluded that subscription rights have value. Based on the foregoing, Luse Gorman Pomerenk & Schick, P.C. believes that it is more likely than not that the nontransferable subscription rights to purchase shares of common stock have no value. However, the issue of whether or not the nontransferable subscription rights have value is based on all the facts and circumstances. If the subscription rights granted to Eligible Account Holders and Supplemental Eligible Account Holders are deemed to have an ascertainable value, receipt of these rights could result in taxable gain to those Eligible Account Holders and Supplemental Eligible Account Holders who exercise the subscription rights in an amount equal to the ascertainable value, and we could recognize gain on a distribution. Eligible Account Holders and Supplemental Eligible Account Holders are encouraged to consult with their own tax advisors as to the tax consequences in the event that subscription rights are deemed to have an ascertainable value.

We also have received a letter from RP Financial, LC, stating its belief that the subscription rights do not have any ascertainable fair market value and that the price at which the subscription rights are exercisable will not be more or less than the fair market value of the shares on the date of the exercise. This position is based on the fact that these rights are acquired by the recipients without cost, are nontransferable and of short duration, and afford the recipients the right only to purchase the common stock at the same price as will be paid by members of the general public in any community offering.

The tax opinion as to item 11 above is based on the position that the benefit provided by the Pilgrim Bank liquidation account supporting the payment of the liquidation account in the event Pilgrim Bancshares, Inc. lacks sufficient net assets has a fair market value of zero. We understand that: (i) no holder of an interest in a liquidation account has ever received a payment attributable to a liquidation account; (ii) the interests in the liquidation accounts are not transferable; (iii) the amounts due under the liquidation account with respect to each Eligible Account Holder and Supplemental Eligible Account Holder will be reduced as their deposits in Pilgrim Bank are reduced; and (iv) the Pilgrim Bank liquidation account payment obligation arises only if Pilgrim Bancshares, Inc. lacks sufficient assets to fund the liquidation account.

In addition, we have received a letter from RP Financial, LC stating its belief that the benefit provided by the Pilgrim Bank liquidation account supporting the payment of the liquidation account in the event Pilgrim Bancshares, Inc. lacks sufficient net assets does not have any economic value at the time of the conversion. Based on the foregoing, Luse Gorman Pomerenk & Schick, P.C. believes it is more likely than not that such rights in the Pilgrim Bank liquidation account have no value. If such rights are subsequently found to have an economic value, income may be recognized by each Eligible Account Holder and Supplemental Eligible Account Holder in the amount of such fair market value as of the date of the conversion.

We do not plan to apply for a private letter ruling from the Internal Revenue Service concerning the transactions described herein. Unlike private letter rulings issued by the Internal Revenue Service, opinions of counsel are not binding on the Internal Revenue Service or any state tax authority, and such authorities may disagree with such opinions. In the event of such disagreement, there can be no assurance that the conclusions reached in an opinion of counsel would be sustained by a court if contested by the Internal Revenue Service.

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We have also received an opinion from Shatswell, MacLeod & Company, P.C. that the Massachusetts state income tax consequences are consistent with the federal income tax consequences.

The federal tax opinion and the state tax opinion have been filed with the Securities and Exchange Commission as exhibits to Pilgrim Bancshares, Inc.’s registration statement.

Restrictions on Purchase or Transfer of Our Shares after Conversion

The shares being acquired by the directors, executive officers and their associates are being acquired for investment purposes, and not with a view towards resale. All shares of common stock purchased in the offering by a director or an officer of Pilgrim Bank generally may not be sold for a period of one year following the closing of the conversion, except in the event of the death of the director or officer. Each certificate for restricted shares will bear a legend giving notice of this restriction on transfer, and instructions will be issued to the effect that any transfer within this time period of any certificate or record ownership of the shares other than as provided above is a violation of the restriction. Any shares of common stock issued at a later date as a stock dividend, stock split or otherwise with respect to the restricted stock will be similarly restricted. The directors and executive officers of Pilgrim Bancshares, Inc. also will be restricted by the insider trading rules promulgated pursuant to the Securities Exchange Act of 1934.

Purchases of shares of our common stock by any of our directors, officers and their associates, during the three-year period following the closing of the conversion may be made only through a broker or dealer registered with the Securities and Exchange Commission, except with the prior written approval of the Federal Reserve Board. This restriction does not apply, however, to negotiated transactions involving more than 1% of our outstanding common stock, to purchases of our common stock to fund stock options by one or more stock-based benefit plans or to any of our tax-qualified employee stock benefit plans or nontax-qualified employee stock benefit plans, including any stock-based benefit plans.

Applicable regulations and current agreements with our regulators prohibit Pilgrim Bancshares, Inc. from repurchasing its shares of common stock during the first year following conversion unless compelling business reasons exist for such repurchases. After one year, applicable regulations do not impose any repurchase restrictions; however, our agreements with our regulators may prohibit Pilgrim Bancshares, Inc. from repurchasing its shares of common stock for a significantly longer period of time.

PILGRIM BANK CHARITABLE FOUNDATION

General

In furtherance of our commitment to our local community, our plan of conversion provides that we will establish a new charitable foundation, Pilgrim Bank Charitable Foundation as a non-stock, nonprofit Delaware corporation in connection with the offering. The new charitable foundation will be funded with shares of our common stock and cash, as further described below.

By further enhancing our visibility and reputation in our local community, we believe that the charitable foundation will enhance the long-term value of Pilgrim Bank’s community banking franchise. The offering presents us with a unique opportunity to provide a substantial and continuing benefit to our communities through the Pilgrim Bank Charitable Foundation.

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Purpose of the Charitable Foundation

In connection with the closing of the offering, we intend to contribute to Pilgrim Bank Charitable Foundation a total of $725,000, such contribution to consist of a number of shares of our common stock equal to 3.0% of the shares sold in the offering (42,075 shares or $420,750 in stock at the minimum offering and 56,925 shares or $569,250 in stock at the maximum offering, or up to 65,464 shares or $654,640 in stock at the adjusted maximum offering) and the remainder in cash ($304,250 at the minimum offering and $155,750 at the maximum offering, or $70,360 at the adjusted maximum). Our expected aggregate contribution amount is not dependent upon the amount of stock that we sell in the offering. The purpose of the charitable foundation is to provide financial support to charitable organizations in the communities in which we operate and to enable our communities to share in our long-term growth. Pilgrim Bank Charitable Foundation will be dedicated completely to community activities and the promotion of charitable causes, and may be able to support such activities in ways that are not presently available to us. Pilgrim Bank Charitable Foundation will also support our ongoing obligations to the community under the Community Reinvestment Act. Pilgrim Bank received a “satisfactory” rating in its most recent Community Reinvestment Act examination by the FDIC.

Funding Pilgrim Bank Charitable Foundation with shares of our common stock in addition to cash is also intended to allow our communities to share in our potential growth and success after the offering is completed because Pilgrim Bank Charitable Foundation will benefit directly from any increases in the value of our shares of common stock. In addition, Pilgrim Bank Charitable Foundation will maintain close ties with Pilgrim Bank, thereby forming a partnership within the communities in which Pilgrim Bank operates.

Structure of the Charitable Foundation

Pilgrim Bank Charitable Foundation will be incorporated under Delaware law as a non-stock, nonprofit corporation. The certificate of incorporation of Pilgrim Bank Charitable Foundation will provide that the corporation is organized exclusively for charitable purposes as set forth in Section 501(c)(3) of the Internal Revenue Code. Pilgrim Bank Charitable Foundation’s certificate of incorporation will further provide that no part of the net earnings of the charitable foundation will inure to the benefit of, or be distributable to, its members, directors or officers or to private individuals.

The charitable foundation will be governed by a board of directors, initially consisting of Francis E. Campbell, who is a director and the President and Chief Executive Officer of Pilgrim Bancshares, Inc., Edward T. Mulvey, who is the Secretary and Clerk of Pilgrim Bancshares, Inc., and one individual who is not affiliated with us. Applicable regulations require that we select one person to serve on the initial board of directors who is not one of our officers or directors and who has experience with local charitable organizations and grant making, and we have selected Susan Rodgerson as a director to satisfy these requirements. For five years after the offering, one seat on the charitable foundation’s board of directors will be reserved for a person from our local community who has experience with local community charitable organizations and grant making and who is not one of our officers, directors or employees, and at least one seat on the charitable foundation’s board of directors will be reserved for one of Pilgrim Bank’s directors. Except as described below in “—Regulatory Requirements Imposed on the Charitable Foundation,” on an annual basis, directors of the charitable foundation elect the board to serve for one-year terms.

The business experience of our current directors and executive officers who will serve as board members of the charitable foundation is described in “Management of Conahasset Bancshares, Inc.” Susan Rodgerson, who will serve as our outside foundation director, is a founding executive and Artistic Director of Artists for Humanity in Boston. Previously, she was the principal designer and co-owner of Fleuressence Fashion Accessories in Cohasset from 1988 to 1990 and the Chair of the Auction Committee of Harcus Gallery “In Defense of Sacred Lands” exhibit from 1986 to 1987. Ms. Rodgerson

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is currently a member of the Lesley University Leadership Council, and has previously served as a board member of a number of community organizations, including MovemenTech, Riverzedge Arts Project and The Art Connection. Ms. Rodgerson holds a degree in fine arts from the Art Institute of Boston, and has received a number of awards and honors for public service, including an Honorary Doctorate in Public Service from Tufts University in Boston, the Alumni Community Service Award from Lesley University, the Changing People’s Lives Award from the Grand Circle Foundation and the Creative Entrepreneurs Award from the Carlisle Foundation.

The board of directors of Pilgrim Bank Charitable Foundation will be responsible for establishing its grant and donation policies, consistent with the purposes for which it was established. As directors of a nonprofit corporation, directors of Pilgrim Bank Charitable Foundation will at all times be bound by their fiduciary duty to advance the charitable foundation’s charitable goals, to protect its assets and to act in a manner consistent with the charitable purposes for which the charitable foundation is established. The directors of Pilgrim Bank Charitable Foundation also will be responsible for directing the activities of the charitable foundation, including the management and voting of the shares of our common stock held by the charitable foundation. However, as required by applicable regulations, all shares of our common stock held by Pilgrim Bank Charitable Foundation must be voted in the same ratio as all other shares of our common stock on all proposals considered by our stockholders.

Pilgrim Bank Charitable Foundation’s initial place of business will be located at our corporate headquarters. The board of directors of Pilgrim Bank Charitable Foundation will appoint such officers and employees as may be necessary to manage its operations. To the extent applicable, we will comply with the affiliates restrictions set forth in Sections 23A and 23B of the Federal Reserve Act and the regulations of the Federal Reserve governing transactions between Pilgrim Bank and the charitable foundation.

Capital for the charitable foundation will come from:

(1) any dividends that may be paid on our shares of common stock in the future;

(2) within the limits of applicable federal and state laws, loans collateralized by the shares of common stock; or

(3) the proceeds of the sale of any of the shares of common stock in the open market from time to time.

As a private foundation under Section 501(c)(3) of the Internal Revenue Code, Pilgrim Bank Charitable Foundation will be required to distribute annually in grants or donations a minimum of 5% of the average fair market value of its net investment assets.

Tax Considerations

We believe that an organization created for the above purposes should qualify as a Section 501(c)(3) exempt organization under the Internal Revenue Code and should be classified as a private foundation. Pilgrim Bank Charitable Foundation will submit a timely request to the Internal Revenue Service to be recognized as an exempt organization. As long as Pilgrim Bank Charitable Foundation files its application for tax-exempt status within 27 months of the last day of the month in which it was organized, and provided the Internal Revenue Service approves the application, its effective date as a Section 501(c)(3) organization will be the date of its organization.

Pilgrim Bancshares, Inc. and Pilgrim Bank are authorized by federal law to make charitable contributions. We believe that the offering presents a unique opportunity to establish and fund a charitable foundation given the substantial amount of additional capital being raised. In making such a determination, we considered the dilutive impact to our stockholders of the contribution of shares of common stock to Pilgrim Bank Charitable Foundation.

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We believe that our contribution of shares of our common stock to Pilgrim Bank Charitable Foundation should not constitute an act of self-dealing and that we should be entitled to a federal tax deduction in the amount of the fair market value of the stock at the time of the contribution. We are permitted to deduct for charitable purposes only an amount equal to 10% of our annual taxable income in any one year. We are permitted under the Internal Revenue Code to carry the excess contribution over the five-year period following the contribution to Pilgrim Bank Charitable Foundation. We estimate that at all levels of the offering range, the contribution should be deductible for federal tax purposes over the six-year period (i.e., the year in which the contribution is made and the succeeding five-year period). However, we do not have any assurance that the Internal Revenue Service will grant tax-exempt status to the charitable foundation. In such event, our contribution to Pilgrim Bank Charitable Foundation would be expensed without a tax benefit, resulting in a reduction in earnings in the year in which the Internal Revenue Service makes such a determination. Furthermore, even if the contribution is deductible, we may not have sufficient earnings to be able to use the deduction in full. Any such decision to continue to make additional contributions to Pilgrim Bank Charitable Foundation in the future would be based on an assessment of, among other factors, our financial condition at that time, the interests of our stockholders and depositors, and the financial condition and operations of the foundation.

As a private foundation, earnings and gains, if any, from the sale of common stock or other assets are exempt from federal and state income taxation. However, investment income, such as interest, dividends and capital gains, is generally taxed at a rate of 2%, although we expect to qualify for the lower 1% special rate. Pilgrim Bank Charitable Foundation will be required to file an annual return with the Internal Revenue Service within four and one-half months after the close of its fiscal year. Pilgrim Bank Charitable Foundation will be required to make its annual return available for public inspection. The annual return for a private foundation includes, among other things, an itemized list of all grants made or approved, showing the amount of each grant, the recipient, any relationship between a grant recipient and the foundation’s managers and a concise statement of the purpose of each grant.

Regulatory Requirements Imposed on the Pilgrim Bank Charitable Foundation

Applicable regulations require that, before our board of directors adopted the plan of conversion, the board of directors had to identify its members that will serve on the charitable foundation’s board, and these directors could not participate in our board’s discussions concerning contributions to the charitable foundation, and could not vote on the matter. Our board of directors complied with this regulation in adopting the plan of conversion.

These regulations impose the following additional requirements on the establishment of the charitable foundation:

• the Federal Reserve Board and the Massachusetts Commissioner of Banks may examine the charitable foundation at the charitable foundation’s expense;

• the charitable foundation must comply with all supervisory directives imposed by the Federal Reserve Board or the Massachusetts Commissioner of Banks;

• the charitable foundation must provide annually to the Federal Reserve Board and the Massachusetts Commissioner of Banks a copy of the annual report that the charitable foundation submits to the Internal Revenue Service;

• the charitable foundation must operate according to written policies adopted by its board of directors, including a conflict of interest policy;

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• the charitable foundation may not engage in self-dealing and must comply with all laws necessary to maintain its tax-exempt status under the Internal Revenue Code; and

• the charitable foundation must vote its shares of our common stock in the same ratio as all of the other shares voted on each proposal considered by our stockholders.

Within six months of completing the offering, the Pilgrim Bank Charitable Foundation must submit to the Federal Reserve Board a three-year operating plan, conflicts of interest policy, gift instrument, bylaws and certificate of incorporation.

RESTRICTIONS ON ACQUISITION OF PILGRIM BANCSHARES, INC.

Although the Board of Directors of Pilgrim Bancshares, Inc. is not aware of any effort that might be made to obtain control of Pilgrim Bancshares, Inc. after the conversion, the Board of Directors believes that it is appropriate to include certain provisions as part of Pilgrim Bancshares, Inc.’s articles of incorporation to protect the interests of Pilgrim Bancshares, Inc. and its stockholders from takeovers which our Board of Directors might conclude are not in the best interests of Pilgrim Bank, Pilgrim Bancshares, Inc. or Pilgrim Bancshares, Inc.’s stockholders.

The following discussion is a general summary of the material provisions of Pilgrim Bancshares, Inc.’s articles of incorporation and bylaws, Pilgrim Bank’s charter and bylaws, Maryland corporate law and certain other regulatory provisions that may be deemed to have an “anti-takeover” effect. The following description of certain of these provisions is necessarily general and, with respect to provisions contained in Pilgrim Bancshares, Inc.’s articles of incorporation and bylaws and Pilgrim Bank’s charter and bylaws, reference should be made in each case to the document in question, each of which is part of Pilgrim Bank’s applications with the Federal Reserve Board and Pilgrim Bancshares, Inc.’s registration statement filed with the Securities and Exchange Commission. See “Where You Can Find Additional Information.”

Pilgrim Bancshares, Inc.’s Articles of Incorporation and Bylaws

Pilgrim Bancshares, Inc.’s articles of incorporation and bylaws contain a number of provisions relating to corporate governance and rights of stockholders that might discourage future takeover attempts. As a result, stockholders who might desire to participate in such transactions may not have an opportunity to do so. In addition, these provisions will also render the removal of the Board of Directors or management of Pilgrim Bancshares, Inc. more difficult.

Directors. The Board of Directors will be divided into three classes. The members of each class will be elected for a term of three years and only one class of directors will be elected annually. Thus, it would take at least two annual elections to replace a majority of our directors. The bylaws establish qualifications for board members, including:

• a prohibition on service as a director by a person who is a director, officer or a 10% shareholder of a competitor of Pilgrim Bank;

• a prohibition on service as a director by a person (i) who has been convicted of a crime involving dishonesty or breach of trust that is punishable by imprisonment for a term exceeding one year under state or federal law, (ii) who is currently charged in an information, indictment or other complaint with the commission of or participation in such a crime, or (iii) against whom a financial or securities regulatory agency has issued a cease and desist, consent or other formal order, other than a civil money penalty, which order is subject to public disclosure by such agency;

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• a prohibition on service as a director by a person who is party to any agreement or understanding that (i) provides such person with material benefits that are contingent upon Pilgrim Bancshares, Inc. entering into a merger or similar transaction in which Pilgrim Bancshares, Inc. is not the surviving entity, (ii) materially limits such person’s voting discretion with respect to Pilgrim Bancshares, Inc.’s strategic direction, or (iii) materially impairs such person’s ability to discharge his or her fiduciary duties with respect to the fundamental strategic direction of Pilgrim Bancshares, Inc.;

• a prohibition on any person who has attained the age of 72 commencing a new term of service as a director;

• a requirement that any person proposed to serve as director have maintained his or her principal residence within a county in which Pilgrim Bancshares, Inc. or Pilgrim Bank maintains an office, or in any county contiguous to a county in which Pilgrim Bancshares, Inc. or Pilgrim Bank maintains an office, for a period of at least one year immediately before his or her nomination, election or appointment to the Board of Directors; and

• a prohibition on service by nominees or representatives (as defined in applicable Federal Reserve Board regulations) of another person who would not be eligible for service or of an entity the partners or controlling persons of which would not be eligible for service.

Further, the bylaws impose notice and information requirements in connection with the nomination by stockholders of candidates for election to the Board of Directors or the proposal by stockholders of business to be acted upon at an annual meeting of stockholders. Such notice and information requirements are applicable to all stockholder business proposals and nominations, and are in addition to any requirements under the federal securities laws.

Evaluation of Offers. The articles of incorporation of Pilgrim Bancshares, Inc. provide that its Board of Directors, when evaluating a transaction that would or may involve a change in control of Pilgrim Bancshares, Inc. (whether by purchases of its securities, merger, consolidation, tender offer or share exchange, dissolution, liquidation, sale of all or substantially all of its assets, proxy solicitation or otherwise), may, in connection with the exercise of its business judgment in determining what is in the best interests of Pilgrim Bancshares, Inc. and its stockholders and in making any recommendation to the stockholders, give due consideration to all relevant factors, including, but not limited to:

• the economic effect, both immediate and long-term, upon Pilgrim Bancshares, Inc.’s stockholders, including stockholders, if any, who do not participate in the transaction;

• the social and economic effect on the present and future employees, creditors and customers of, and others dealing with, Pilgrim Bancshares, Inc. and its subsidiaries and on the communities in which Pilgrim Bancshares, Inc. and its subsidiaries operate or are located;

• whether the proposal is acceptable based on the historical, current or projected future operating results or financial condition of Pilgrim Bancshares, Inc.;

• whether a more favorable price could be obtained for Pilgrim Bancshares, Inc.’s stock or other securities in the future;

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• the reputation and business practices of the other entity to be involved in the transaction and its management and affiliates as they would affect the employees of Pilgrim Bancshares, Inc. and its subsidiaries;

• the future value of the stock or any other securities of Pilgrim Bancshares, Inc. or the other entity to be involved in the proposed transaction;

• any antitrust or other legal and regulatory issues that are raised by the proposal;

• the business and historical, current or expected future financial condition or operating results of the other entity to be involved in the transaction, including, but not limited to, debt service and other existing financial obligations, financial obligations to be incurred in connection with the proposed transaction, and other likely financial obligations of the other entity to be involved in the proposed transaction; and

• the ability of Pilgrim Bancshares, Inc. to fulfill its objectives as a bank holding company and on the ability of its subsidiary financial institution(s) to fulfill the objectives of a federally insured financial institution under applicable statutes and regulations.

If the Board of Directors determines that any proposed transaction should be rejected, it may take any lawful action to defeat such transaction.

Restrictions on Call of Special Meetings. The bylaws provide that, unless approved by unaffiliated directors, special meetings of stockholders can be called by only the Chairman or Vice Chairman of the Board of Directors or by resolution adopted by a majority of the total number of directors that Pilgrim Bancshares, Inc. would have if there were no vacancies on the Board of Directors (the “whole board”), or the Secretary upon the written request of stockholders entitled to cast at least a majority of all votes entitled to vote at the meeting.

Prohibition of Cumulative Voting. The articles of incorporation prohibit cumulative voting for the election of directors.

Limitation of Voting Rights. The articles of incorporation provide that in no event will any person who beneficially owns more than 10% of the then-outstanding shares of common stock, be entitled or permitted to vote any of the shares of common stock held in excess of the 10% limit. The 10% limit shall not apply if, before the stockholder acquires shares in excess of the 10% limit, the acquisition is approved by a majority of the directors who are not affiliated with the holder and who were members of the Board of Directors prior to the time of the acquisition (or who were chosen to fill any vacancy of an otherwise unaffiliated director by a majority of the unaffiliated directors).

Restrictions on Removing Directors from Office. The articles of incorporation provide that directors may be removed only for cause, and only by the affirmative vote of the holders of 80% of the voting power of all of our then-outstanding capital stock entitled to vote generally in the election of directors (after giving effect to the limitation on voting rights discussed above in “—Limitation of Voting Rights”), voting together as a single class.

Shareholder Nominations and Proposals. The bylaws provide that any shareholder desiring to make a nomination for the election of directors or a proposal for new business at an annual meeting of shareholders must submit written notice to Pilgrim Bancshares, Inc. at least 110 days prior and not earlier than 120 days prior to the anniversary date of the previous year’s annual meeting. However, if less than 90 days’ prior public disclosure of the date of the meeting is given to shareholders and the date of the annual meeting is advanced by more than 30 days, or delayed by more than 30 days, from the

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anniversary date of the preceding year’s annual meeting then shareholders must submit written notice to Pilgrim Bancshares, Inc. no later than 10 days following the day on which public disclosure of the date of the meeting is first made in a press release, in a document filed with the Securities and Exchange Commission or on a website maintained by Pilgrim Bancshares, Inc.

Amendment of Bylaws. The articles of incorporation provide that the board of directors may adopt, amend or repeal the bylaws of Pilgrim Bancshares, Inc. In addition, the articles of incorporation provide that the shareholders may adopt, amend or repeal the bylaws only by the affirmative vote of the holders of 80% of the voting power of all of our then-outstanding capital stock entitled to vote generally in the election of directors (after giving effect to the limitation on voting rights discussed above in “—Limitation of Voting Rights”), voting together as a single class.

Authorized but Unissued Shares. After the conversion, Pilgrim Bancshares, Inc. will have authorized but unissued shares of common and preferred stock. See “Description of Capital Stock.” The articles of incorporation authorize 2,000,000 shares of serial preferred stock. Pilgrim Bancshares, Inc. is authorized to issue preferred stock from time to time in one or more series subject to applicable provisions of law, and the board of directors is authorized to fix the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications and terms and conditions of redemption of such shares. In addition, the articles of incorporation provide that a majority of the whole board may, without action by the stockholders, amend the articles of incorporation to increase or decrease the aggregate number of shares of stock of any class or series that Pilgrim Bancshares, Inc. has the authority to issue. In the event of a proposed merger, tender offer or other attempt to gain control of Pilgrim Bancshares, Inc. that the board of directors does not approve, it would be possible for the board of directors to authorize the issuance of a series of preferred stock with rights and preferences that would impede the completion of the transaction. An effect of the possible issuance of preferred stock therefore may be to deter a future attempt to gain control of Pilgrim Bancshares, Inc. The board of directors has no present plan or understanding to issue any preferred stock.

Amendments to Articles of Incorporation and Bylaws. Except as provided under “—Authorized but Unissued Shares,” above, regarding the amendment of the articles of incorporation by the Board of Directors to increase or decrease the number of shares authorized for issuance, or as otherwise allowed by law, any amendment to the articles of incorporation must be approved by our Board of Directors and also by two-thirds of the votes entitled to be cast (after giving effect to the limitation on voting rights discussed above in “—Limitation of Voting Rights”); provided, however, that an amendment need only be approved by the vote of a majority of the votes entitled to be cast (after giving effect to the limitation on voting rights discussed above in “—Limitation of Voting Rights”) if the amendment is approved by at least two-thirds of the whole board. Approval by at least 80% of the votes entitled to be cast (after giving effect to the limitation on voting rights discussed above in “—Limitation of Voting Rights”) is generally required to amend the following provisions:

(i) the limitation on voting rights of persons who directly or indirectly beneficially own more than 10% of the outstanding shares of common stock;

(ii) the division of the board of directors into three staggered classes;

(iii) the ability of the board of directors to fill vacancies on the board;

(iv) the requirement that 80% of the voting power of stockholders must vote to remove directors, and can only remove directors for cause;

(v) the ability of the board of directors to amend and repeal the bylaws and the requirement that 80% of the voting power of stockholders must vote to amend or repeal the bylaws;

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(vi) the ability of the board of directors to evaluate a variety of factors in evaluating offers to purchase or otherwise acquire Pilgrim Bancshares, Inc.;

(vii) the authority of the board of directors to provide for the issuance of preferred stock;

(viii) the validity and effectiveness of any action lawfully authorized by the affirmative vote of the holders of a majority of the total number of outstanding shares of common stock;

(ix) the number of stockholders constituting a quorum or required for stockholder consent;

(x) the provision regarding stockholder proposals and nominations;

(xi) the indemnification of current and former directors and officers, as well as employees and other agents, by Pilgrim Bancshares, Inc.;

(xii) the limitation of liability of officers and directors to Pilgrim Bancshares, Inc. for money damages; and

(xiii) the provision of the articles of incorporation requiring approval of at least 80% of the outstanding voting stock to amend the provisions of the articles of incorporation provided in (i) through (xii) of this list.

The articles of incorporation also provide that the bylaws may be amended by the affirmative vote of a majority of our directors or by the stockholders by the affirmative vote of at least 80% of the votes entitled to be cast in the election of directors (after giving effect to the limitation on voting rights discussed above in “—Limitation of Voting Rights”).

Pilgrim Bank’s Charter

The charter of Pilgrim Bank provides that no person (including a group acting in concert) may offer directly or indirectly to acquire the beneficial ownership of more than 10% of any class of equity security of Pilgrim Bank. This provision does not apply to any acquisition of shares of capital stock of Pilgrim Bank which has been expressly approved in advance by an affirmative vote of not less than two-thirds of the votes of each class of shares eligible to be cast by stockholders at a duly constituted meeting of stockholders called expressly for such purpose and, if required under applicable law, by the Massachusetts Commissioner of Banks, to any offer to Pilgrim Bank made by the underwriters selected by Pilgrim Bank in connection with a public offering by Pilgrim Bank of its capital stock, or to a transaction in which Pilgrim Bank forms a holding company without change in the respective beneficial ownership interests of its stockholders other than pursuant to the exercise of any dissenters’ appraisal rights. In addition, all shares owned over the 10% limit shall not be counted as shares entitled to vote and shall not be voted by any person or counted as voting shares in connection with any matter submitted to the stockholders for a vote.

Maryland Corporate Law

Under Maryland law, “business combinations” between a Maryland corporation and an interested stockholder or an affiliate of an interested stockholder are prohibited for five years after the most recent date on which the interested stockholder becomes an interested stockholder. These business combinations include a merger, consolidation, statutory share exchange or, in circumstances specified in the statute, certain transfers of assets, certain stock issuances and transfers, liquidation plans and reclassifications involving interested stockholders and their affiliates or issuance or reclassification of equity securities. Maryland law defines an interested stockholder as: (i) any person who beneficially owns 10% or more of the voting power of a corporation’s voting stock after the date on which the corporation had 100 or more

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beneficial owners of its stock; or (ii) an affiliate or associate of the corporation at any time after the date on which the corporation had 100 or more beneficial owners of its stock who, within the two-year period prior to the date in question, was the beneficial owner of 10% or more of the voting power of the then-outstanding voting stock of the corporation. A person is not an interested stockholder under the statute if the board of directors approved in advance the transaction by which the person otherwise would have become an interested stockholder. However, in approving a transaction, the board of directors may provide that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by the board.

After the five-year prohibition, any business combination between the Maryland corporation and an interested stockholder generally must be recommended by the board of directors of the corporation and approved by the affirmative vote of at least: (i) 80% of the votes entitled to be cast by holders of outstanding shares of voting stock of the corporation and (ii) two-thirds of the votes entitled to be cast by holders of voting stock of the corporation other than shares held by the interested stockholder with whom or with whose affiliate the business combination is to be effected or held by an affiliate or associate of the interested stockholder. These super-majority vote requirements do not apply if the corporation’s common stockholders receive a minimum price, as defined under Maryland law, for their shares in the form of cash or other consideration in the same form as previously paid by the interested stockholder for its shares.

Federal Bank Holding Company Act

Federal law provides that no company may acquire control of a bank directly or indirectly without the prior approval of the Federal Reserve Board. Any company that acquires control of a bank becomes a “bank holding company” subject to registration, examination and regulation by the Federal Reserve Board. Pursuant to federal regulations, the term “company” is defined to include banks, corporations, partnerships, associations, and certain trusts and other entities, and “control” of a bank is deemed to exist if a company has voting control, directly or indirectly, of at least 25% of any class of a bank’s voting stock, and may be found to exist if a company controls in any manner the election of a majority of the directors of the bank or has the power to exercise a controlling influence over the management or policies of the bank. In addition, a bank holding company must obtain Federal Reserve Board approval prior to acquiring voting control of more than 5% of any class of voting stock of a bank or another bank holding company.

An acquisition of control of a bank that requires the prior approval of the Federal Reserve Board under the Bank Holding Company Act (“BHCA”) is not subject to the notice requirements of the Change in Bank Control Act. Accordingly, the prior approval of the Federal Reserve Board under the BHCA would be required: (i) before any bank holding company could acquire 5% or more of the common stock of Pilgrim Bancshares, Inc. and (ii) before any other company could acquire 25% or more of the common stock of Pilgrim Bancshares, Inc.

Change in Control Regulations

Under the Change in Bank Control Act, no person may acquire control of a bank holding company unless the Federal Reserve Board has been given 60 days’ prior written notice and has not issued a notice disapproving the proposed acquisition. In addition, Federal Reserve Board regulations provide that no company may acquire control of a bank holding company without the prior approval of the Federal Reserve Board.

Control, as defined under federal law, means ownership, control of or holding irrevocable proxies representing more than 25% of any class of voting stock, control in any manner of the election of a majority of the institution’s directors, or a determination by the Federal Reserve Board that the acquirer has the power to direct, or directly or indirectly to exercise a controlling influence over, the management or policies of the institution.

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Acquisition of more than 10% of any class of a bank holding company’s voting stock, if the acquirer is also subject to any one of eight “control factors,” constitutes a rebuttable determination of control under Federal Reserve Board regulations. Such control factors include the acquirer being one of the two largest stockholders. The determination of control may be rebutted by submission to the Federal Reserve Board, prior to the acquisition of stock or the occurrence of any other circumstances giving rise to such determination, of a statement setting forth facts and circumstances which would support a finding that no control relationship will exist and containing certain undertakings. The regulations provide that persons or companies that acquire beneficial ownership exceeding 10% or more of any class of a bank holding company’s stock who do not intend to participate in or seek to exercise control over a bank holding company’s management or policies may qualify for a safe harbor by filing with the Federal Reserve Board a certification form that states, among other things, that the holder is not in control of such institution, is not subject to a rebuttable determination of control and will take no action which would result in a determination or rebuttable determination of control without prior notice to or approval of the Federal Reserve Board, as applicable. There are also rebuttable presumptions in the regulations concerning whether a group “acting in concert” exists, including presumed action in concert among members of an “immediate family.” Accordingly, the filing of a notice with the Federal Reserve Board would be required before any person could acquire 10% or more of the common stock of Pilgrim Bancshares, Inc., unless the individual files a rebuttal of control that is accepted by the Federal Reserve Board.

The Federal Reserve Board may prohibit a proposed acquisition of control if it finds, among other things, that:

• the acquisition would result in a monopoly or substantially lessen competition;

• the financial condition of the acquiring person might jeopardize the financial stability of the institution;

• the competence, experience or integrity of the acquiring person indicates that it would not be in the interest of the depositors or the public to permit the acquisition of control by such person; or

• the acquisition would have an adverse effect on the FDIC’s Deposit Insurance Fund.

In addition, a bank holding company must obtain the approval of the Federal Reserve Board prior to acquiring voting control of more than 5% of any class of voting stock of another bank or bank holding company.

Massachusetts Banking Law

Under Massachusetts banking laws, a company owning or controlling two or more banking institutions, including a co-operative bank, is regulated as a bank holding company. Each Massachusetts bank holding company: (i) must obtain the approval of the Massachusetts Board of Bank Incorporation before engaging in certain transactions, such as the acquisition of more than 5% of the voting stock of another banking institution; (ii) must register, and file reports, with the Massachusetts Division of Banks; and (iii) is subject to examination by the Massachusetts Division of Banks. Pilgrim Bancshares, Inc. would become a Massachusetts bank holding company if it acquires a second banking institution and holds and operates it separately from Pilgrim Bank. In addition, for a period of three years following completion of a conversion to stock form, no person may directly or indirectly offer to acquire or acquire beneficial ownership of more than 10% of any class of equity security of a converting mutual holding company without prior written approval of the Massachusetts Commissioner of Banks.

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DESCRIPTION OF CAPITAL STOCK

General

At the effective date, Pilgrim Bancshares, Inc. will be authorized to issue 10,000,000 shares of common stock, par value of $0.01 per share, and 2,000,000 shares of preferred stock, par value $0.01 per share. Pilgrim Bancshares, Inc. currently expects to issue in the offering up to 1,897,500 shares of common stock including shares issued to our charitable foundation. Pilgrim Bancshares, Inc. will not issue shares of preferred stock in the conversion. Each share of Pilgrim Bancshares, Inc. common stock will have the same relative rights as, and will be identical in all respects to, each other share of common stock. Upon payment of the subscription price for the common stock, in accordance with the plan of conversion, all of the shares of common stock will be duly authorized, fully paid and non-assessable.

The shares of common stock of Pilgrim Bancshares, Inc. will represent non-withdrawable capital, will not be an account of an insurable type, and will not be insured by the FDIC or any other government agency.

Common Stock

Dividends. Pilgrim Bancshares, Inc. can pay dividends on its common stock if, after giving effect to the distribution, it would be able to pay its indebtedness as the indebtedness comes due in the usual course of business and its total assets exceed the sum of its liabilities and the amount needed, if Pilgrim Bancshares, Inc. were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of any holders of capital stock who have a preference in the event of dissolution. The holders of common stock of Pilgrim Bancshares, Inc. will be entitled to receive and share equally in dividends as may be declared by our Board of Directors out of funds legally available therefor. If Pilgrim Bancshares, Inc. issues shares of preferred stock, the holders thereof may have a priority over the holders of the common stock with respect to dividends.

Voting Rights. Upon consummation of the conversion, the holders of common stock of Pilgrim Bancshares, Inc. will have exclusive voting rights in Pilgrim Bancshares, Inc. They will elect Pilgrim Bancshares, Inc.’s Board of Directors and act on other matters as are required to be presented to them under Maryland law or as are otherwise presented to them by the Board of Directors. Generally, each holder of common stock will be entitled to one vote per share and will not have any right to cumulate votes in the election of directors. Any person who beneficially owns more than 10% of the then-outstanding shares of Pilgrim Bancshares, Inc.’s common stock, however, will not be entitled or permitted to vote any shares of common stock held in excess of the 10% limit. If Pilgrim Bancshares, Inc. issues shares of preferred stock, holders of the preferred stock may also possess voting rights. Amendments to the articles of incorporation require a two-thirds stockholder vote in certain circumstances, and certain matters require an 80% stockholder vote.

As a stock co-operative bank, corporate powers and control of Pilgrim Bank are vested in its board of directors, who elect the officers of Pilgrim Bank and who fill any vacancies on the board of directors. Voting rights of Pilgrim Bank are vested exclusively in the owners of the shares of capital stock of Pilgrim Bank, which will be Pilgrim Bancshares, Inc. Shares of Pilgrim Bank’s stock will be voted at the direction of Pilgrim Bancshares, Inc.’s Board of Directors. Consequently, the holders of the common stock of Pilgrim Bancshares, Inc. will not have direct control of Pilgrim Bank

Liquidation. In the event of any liquidation, dissolution or winding up of Pilgrim Bank, Pilgrim Bancshares, Inc., as the holder of 100% of Pilgrim Bank’s capital stock, would be entitled to receive all assets of Pilgrim Bank available for distribution, after payment or provision for payment of all debts and

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liabilities of Pilgrim Bank, including all deposit accounts and accrued interest thereon, and after distribution of the balance in the liquidation account to Eligible Account Holders and Supplemental Eligible Account Holders. In the event of liquidation, dissolution or winding up of Pilgrim Bancshares, Inc., the holders of its common stock would be entitled to receive, after payment or provision for payment of all its debts and liabilities, all of the assets of Pilgrim Bancshares, Inc. available for distribution, and Eligible Account Holders and Supplemental Eligible Account Holders will be treated as surrendering their rights to the Pilgrim Bancshares, Inc. liquidation account and receiving an equivalent interest in the Pilgrim Bank liquidation account. If preferred stock is issued, the holders thereof may have a priority over the holders of the common stock in the event of liquidation or dissolution.

Preemptive Rights. Holders of the common stock of Pilgrim Bancshares, Inc. will not be entitled to preemptive rights with respect to any shares that may be issued, unless such preemptive rights are approved by the Board of Directors. The common stock is not subject to redemption.

Preferred Stock

None of the shares of Pilgrim Bancshares, Inc.’s authorized preferred stock will be issued as part of the offering or the conversion. Preferred stock may be issued with preferences and designations as our Board of Directors may from time to time determine. Our Board of Directors may, without stockholder approval, issue shares of preferred stock with voting, dividend, liquidation and conversion rights that could dilute the voting strength of the holders of the common stock and that could assist management in impeding an unfriendly takeover or attempted change in control.

TRANSFER AGENT

The transfer agent and registrar for Pilgrim Bancshares, Inc.’s common stock is Registrar and Transfer Company, Cranford, New Jersey.

EXPERTS

The consolidated financial statements of Conahasset Bancshares, MHC and Subsidiary as of and for the years ended December 31, 2013 and 2012 have been included herein and in the registration statement in reliance upon the report of Shatswell, MacLeod & Company, P.C., independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

RP Financial, LC has consented to the publication herein of the summary of its report to Pilgrim Bancshares, Inc. setting forth its opinion as to the estimated pro forma market value of the shares of common stock upon completion of the conversion and offering and its letter with respect to subscription rights.

LEGAL AND TAX MATTERS

Luse Gorman Pomerenk & Schick, P.C., Washington, D.C., counsel to Pilgrim Bancshares, Inc. and Pilgrim Bank, will issue to Pilgrim Bancshares, Inc. its opinions regarding the legality of the common stock and the federal income tax consequences of the conversion. Luse Gorman Pomerenk & Schick, P.C. has consented to the references in this prospectus to its opinions. Shatswell, MacLeod & Company, P.C. will issue to Conahasset Bancshares, MHC, Conahasset Bancshares, Inc., Pilgrim Bank and Pilgrim Bancshares, Inc. its opinion regarding the Wisconsin income tax consequences of the conversion. Shatswell, MacLeod & Company, P.C., has consented to the reference in this prospectus to its opinion. Certain legal matters will be passed upon for Keefe, Bruyette & Woods, Inc. by Hogan Lovells US LLP, Washington, D.C.

175

WHERE YOU CAN FIND ADDITIONAL INFORMATION

Pilgrim Bancshares, Inc. has filed with the Securities and Exchange Commission a registration statement under the Securities Act of 1933 with respect to the shares of common stock offered hereby. As permitted by the rules and regulations of the Securities and Exchange Commission, this prospectus does not contain all the information set forth in the registration statement. Such information, including the appraisal report which is an exhibit to the registration statement, can be examined without charge at the public reference facilities of the Securities and Exchange Commission located at 100 F Street, N.E., Washington, D.C. 20549, and copies of such material can be obtained from the Securities and Exchange Commission at prescribed rates. The Securities and Exchange Commission telephone number is 1-800-SEC-0330. In addition, the Securities and Exchange Commission maintains a web site (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding registrants that file electronically with the Securities and Exchange Commission, including Pilgrim Bancshares, Inc. The statements contained in this prospectus as to the contents of any contract or other document filed as an exhibit to the registration statement are, of necessity, brief descriptions of the material terms of, and should be read in conjunction with, such contract or document.

Conahasset Bancshares, MHC has filed with the Federal Reserve Bank of Boston an application for approval of the conversion with the Massachusetts Commissioner of Banks, and Pilgrim Bancshares, Inc. has filed a bank holding company application with the Federal Reserve Board. This prospectus omits certain information contained in the application. The application for conversion filed with the Massachusetts Commissioner of Banks may be inspected, without charge, at the offices of the Massachusetts Division of Banks, 1000 Washington Street, 10th Floor, Boston, Massachusetts. To obtain a copy of the application filed with the Federal Reserve Board, you may contact the Vice President and Community Affairs Officer of the Federal Reserve Bank of Boston, at 617-973-3059.

Our plan of conversion is available, upon request, at each of our branch offices.

In connection with the offering, Pilgrim Bancshares, Inc. will register its common stock under Section 12(g) of the Securities Exchange Act of 1934 and, upon such registration, Pilgrim Bancshares, Inc. and the holders of its common stock will become subject to the proxy solicitation rules, reporting requirements and restrictions on common stock purchases and sales by directors, officers and greater than 10% stockholders, the annual and periodic reporting and certain other requirements of the Securities Exchange Act of 1934, subject to subsequent deregistration of such shares under the Securities Exchange Act of 1934.

176

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS OF

CONAHASSET BANCSHARES, MHC AND SUBSIDIARY

Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets at December 31, 2013 and 2012	F-3
Consolidated Statements of Income for the years ended December 31, 2013 and 2012	F-4
Consolidated Statements of Comprehensive Income for the years ended December 31, 2013 and 2012	F-5
Consolidated Statements of Changes in Equity for the years ended December 31, 2013 and 2012	F-6
Consolidated Statements of Cash Flows for the years ended December 31, 2013 and 2012	F-7
Notes to Consolidated Financial Statements for the years ended December 31, 2013 and 2012	F-9

***

Separate financial statements for Pilgrim Bancshares, Inc. have not been included in this prospectus because Pilgrim Bancshares, Inc. has not engaged in any significant activities, has no significant assets, and has no contingent liabilities, revenue or expenses.

All financial statement schedules have been omitted as the required information either is not applicable or is included in the financial statements or related notes.

Pursuant to Securities and Exchange Commission regulations, Pilgrim Bancshares, Inc. is a smaller reporting company as it will have a public float of less than $75 million.

F-1

The Board of Directors

Conahasset Bancshares, MHC

Cohasset, Massachusetts

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have audited the accompanying consolidated balance sheets of Conahasset Bancshares, MHC and its Subsidiary as of December 31, 2013 and 2012 and the related consolidated statements of income, comprehensive income, changes in equity and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Conahasset Bancshares, MHC and its Subsidiary as of December 31, 2013 and 2012, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

SHATSWELL, MacLEOD & COMPANY, P.C.

West Peabody, Massachusetts

March 6, 2014

F-2

CONAHASSET BANCSHARES, MHC AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

December 31, 2013 and 2012

(In Thousands)

	2013			2012
ASSETS
Cash and due from banks	$	1,671		$	2,297
Interest-bearing demand deposits with other banks		7,320			18,844
Cash and cash equivalents		8,991			21,141
Interest-bearing time deposits with other banks		4,511			10,730
Investments in available-for-sale securities (at fair value)		13,496			15,718
Investments in held-to-maturity securities (fair value of $284 at December 31, 2013 and $369 at December 31, 2012)		254			396
Federal Home Loan Bank stock, at cost		667			757
Investment in The Co-operative Central Reserve Fund, at cost		384			384
Loans, net of allowance for loan losses of $742 and $788, respectively		132,923			112,618
Premises and equipment		5,571			5,632
Investment in real estate		1,662			1,707
Other real estate owned		—			245
Accrued interest receivable		399			424
Income taxes receivable		52			229
Deferred income tax asset, net		365			156
Bank-owned life insurance		2,181			2,129
Other assets		100			275
Total assets	$	171,556		$	172,541
LIABILITIES AND EQUITY
Deposits:
Noninterest-bearing	$	12,023		$	8,964
Interest-bearing		141,709			147,689
Total deposits		153,732			156,653
Federal Home Loan Bank advances		5,000			3,307
Other liabilities		320			207
Total liabilities		159,052			160,167
Equity:
Retained earnings		12,718			12,350
Accumulated other comprehensive (loss) income		(214	)		24
Total equity		12,504			12,374
Total liabilities and equity	$	171,556		$	172,541

The accompanying notes are an integral part of these consolidated financial statements.

F-3

CONAHASSET BANCSHARES, MHC AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

Years Ended December 31, 2013 and 2012

(In Thousands)

	2013			2012
Interest and dividend income:
Interest and fees on loans	$	5,600		$	5,538
Interest on debt securities:
Taxable		196			342
Tax-exempt		90			74
Other interest and dividends		77			91
Total interest and dividend income		5,963			6,045
Interest expense:
Interest on deposits		1,110			1,247
Interest on Federal Home Loan Bank advances		65			67
Total interest expense		1,175			1,314
Net interest and dividend income		4,788			4,731
Provision for loan losses		—			156
Net interest and dividend income after provision for loan losses		4,788			4,575
Noninterest income:
Service charges on deposit accounts		138			148
Net gain on sales and calls of securities		5			93
Writedown of securities (includes losses of $255 and $57, net of $8 and $5 recognized in other comprehensive income, for the years ended December 31, 2013 and 2012, respectively, before taxes)		(247	)		(52	)
Gain on sales of mortgages, net		17			379
Rental income		204			245
Other income		234			164
Total noninterest income		351			977
Noninterest expense:
Salaries and employee benefits		2,627			2,468
Occupancy expense		459			395
Equipment expense		160			123
Data processing expense		359			315
Professional fees		260			278
FDIC assessment		233			228
Communications expense		95			104
Advertising and public relations expense		75			86
Insurance expense		65			57
Supplies expense		52			65
Other expense		226			304
Total noninterest expense		4,611			4,423
Income before income taxes		528			1,129
Income tax expense		160			387
Net income	$	368		$	742

The accompanying notes are an integral part of these consolidated financial statements.

F-4

CONAHASSET BANCSHARES, MHC AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Years Ended December 31, 2013 and 2012

(In Thousands)

	2013			2012
Net income	$	368		$	742
Other comprehensive loss, net of tax:
Net change in unrealized holding loss on available-for-sale securities		(238	)		(33	)
Other comprehensive loss, net of tax		(238	)		(33	)
Comprehensive income	$	130		$	709

The accompanying notes are an integral part of these consolidated financial statements.

F-5

CONAHASSET BANCSHARES, MHC AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Years Ended December 31, 2013 and 2012

(In Thousands)

	Retained Earnings		Accumulated Other Comprehensive Income (Loss)			Total
Balance, December 31, 2011	$	11,608	$	57		$	11,665
Net income		742					742
Other comprehensive loss, net of tax effect		—		(33	)		(33	)
Balance, December 31, 2012		12,350		24			12,374
Net income		368					368
Other comprehensive loss, net of tax effect				(238	)		(238	)
Balance, December 31, 2013	$	12,718	$	(214	)	$	12,504

The accompanying notes are an integral part of these consolidated financial statements.

F-6

CONAHASSET BANCSHARES, MHC AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended December 31, 2013 and 2012

(In Thousands)

	2013			2012
Cash flows from operating activities:
Net income	$	368		$	742
Adjustments to reconcile net income to net cash provided by operating activities:
Capitalized interest - interest-bearing time deposits		(19	)		(27	)
Amortization of securities, net		120			128
Net gain on sales and calls of securities		(5	)		(93	)
Loans originated for sale		—			(11,999	)
Proceeds from sales of loans originated for sale		—			12,378
Gain on sales of loans		—			(379	)
Writedown of securities		247			52
Provision for loan losses		—			156
Change in deferred origination fees, costs and discounts, excluding purchase discounts		(297	)		(94	)
Gain on sale of other real estate owned		(121	)		(46	)
Writedown of other real estate owned		229			13
Depreciation and amortization		312			250
Decrease in accrued interest receivable		25			46
Increase in other assets		(8	)		(18	)
Decrease in prepaid expenses		183			242
Decrease (increase) in income taxes receivable		177			(24	)
Deferred tax (benefit) expense		(73	)		164
Increase in bank-owned life insurance		(52	)		(57	)
Increase in other liabilities		43			6
Increase in accrued expenses		70			42
Net cash provided by operating activities		1,199			1,482
Cash flows from investing activities:
Purchases of interest-bearing time deposits with other banks		—			(7,885	)
Proceeds from redemption and maturities of interest-bearing time deposits		6,238			4,872
Redemption of Federal Home Loan stock		90			115
Purchases of available-for-sale securities		(3,897	)		(5,335	)
Proceeds from maturities of available-for-sale securities		1,814			6,969
Proceeds from sales of available-for-sale securities		3,569			3,217
Principal payments received on held-to-maturity securities		142			270
Loan principal collections and originations, net		(9,761	)		(2,444	)
Loans purchased		(11,037	)		(1,554	)
Recoveries on loans previously charged off		5			—
Capital expenditures		(206	)		(1,220	)
Proceeds from the sale of other real estate owned		922			1,329
Net cash used in operating activities		(12,121	)		(1,666	)

F-7

CONAHASSET BANCSHARES, MHC AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended December 31, 2013 and 2012

(continued)

	2013			2012
Cash flows from financing activities:
Net increase in demand deposits, NOW and savings accounts		2,375			9,068
Net decrease in time deposits		(5,296	)		(7,278	)
Payments on Federal Home Loan Bank long-term advances		(807	)		(334	)
Net change in short-term Federal Home Loan Bank advances		2,500			—
Net cash (used in) provided by financing activities		(1,228	)		1,456
Net (decrease) increase in cash and cash equivalents		(12,150	)		1,272
Cash and cash equivalents at beginning of year		21,141			19,869
Cash and cash equivalents at end of year	$	8,991		$	21,141
Supplemental disclosures:
Interest paid	$	1,175		$	1,314
Income taxes paid		56			247
Transfer from loans to other real estate owned		785			78
Reclassification to other liabilities for off-balance sheet loan commitments		—			7

The accompanying notes are an integral part of these consolidated financial statements.

F-8

CONAHASSET BANCSHARES, MHC AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2013 and 2012

NOTE 1 - NATURE OF OPERATIONS

Conahasset Bancshares, MHC (the Company) a Massachusetts chartered mutual holding company, and its wholly-owned subsidiary, Conahasset Bancshares, Inc., a Massachusetts chartered mid-tier stock holding company, were formed on January 26, 2011. Pilgrim Bank (the “Bank”) is a wholly-owned subsidiary of Conahasset Bancshares, Inc. The Company is headquartered in Cohasset, Massachusetts.

The Bank is a state-chartered stock bank which was incorporated in 1916 and is headquartered in Cohasset, Massachusetts. The Bank operates its business from three banking offices located in Massachusetts. The Bank is engaged principally in the business of attracting deposits from the general public and investing those deposits in residential and commercial real estate loans, and in commercial, consumer and small business loans.

NOTE 2 - ACCOUNTING POLICIES

The accounting and reporting policies of the Company and its subsidiary conform to accounting principles generally accepted in the United States of America and predominant practices within the banking industry. The consolidated financial statements were prepared using the accrual basis of accounting. The significant accounting policies are summarized below to assist the reader in better understanding the consolidated financial statements and other data contained herein.

USE OF ESTIMATES:

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

BASIS OF PRESENTATION:

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Conahasset Bancshares, Inc. and its wholly owned subsidiary, the Bank , and the Bank’s wholly-owned subsidiaries, 48 South Main Street Corporation, which was formed to hold securities for its own account; and 800 CJC Realty Corporation, which was formed to invest in and develop residential and commercial property. All significant intercompany accounts and transactions have been eliminated in consolidation.

CASH AND CASH EQUIVALENTS:

For purposes of reporting cash flows, cash and cash equivalents include cash on hand, cash items, due from banks and interest-bearing demand deposits with other banks.

SECURITIES:

Investments in debt securities are adjusted for amortization of premiums and accretion of discounts so as to approximate the interest method. Gains or losses on sales of investment securities are computed on a specific identification basis.

F-9

The Company classifies debt and equity securities into one of three categories: held-to-maturity, available-for-sale, or trading. These security classifications may be modified after acquisition only under certain specified conditions. In general, securities may be classified as held-to-maturity only if the Company has the positive intent and ability to hold them to maturity. Trading securities are defined as those bought and held principally for the purpose of selling them in the near term. All other securities must be classified as available-for-sale.

• Held-to-maturity securities are measured at amortized cost in the consolidated balance sheets. Unrealized holding gains and losses are not included in earnings or in a separate component of equity. They are merely disclosed in the notes to the consolidated financial statements.

• Available-for-sale securities are carried at fair value on the consolidated balance sheets. Unrealized holding gains and losses are not included in earnings, but are reported as a net amount (less expected tax) in a separate component of equity until realized.

• Trading securities are carried at fair value on the consolidated balance sheets. Unrealized holding gains and losses for trading securities are included in earnings.

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

Declines in marketable equity securities below their cost that are deemed other than temporary are reflected in earnings as realized losses.

As a member of the Federal Home Loan Bank of Boston (FHLB), the Company is required to invest in $100 par value stock of the FHLB. The FHLB capital structure mandates that members must own stock as determined by their Total Stock Investment Requirement which is the sum of a member’s Membership Stock Investment Requirement and Activity-Based Stock Investment Requirement. The Membership Stock Investment Requirement is calculated as 0.35% of a member’s Stock Investment Base, subject to a minimum investment of $10,000 and a maximum investment of $25,000,000. The Stock Investment Base is an amount calculated based on certain assets held by a member that are reflected on call reports submitted to applicable regulatory authorities. The Activity-Based Stock Investment Requirement is calculated as 3.0% for overnight advances, 4.0% for FHLB advances with original terms to maturity of two days to three months and 4.5% for other advances plus a percentage of advance commitments, 0.5% of standby letters of credit issued by the FHLB and 4.5% of the value of intermediated derivative contracts. Management evaluates the Company’s investment in FHLB stock for other-than-temporary impairment at least on a quarterly basis and more frequently when economic or market conditions warrant such evaluation. Based on its most recent analysis of the FHLB as of December 31, 2013, management deems its investment in FHLB stock to be not other-than-temporarily impaired.

LOANS:

Loans receivable that management has the intent and ability to hold until maturity or payoff are reported at their outstanding principal balances adjusted for amounts due borrowers on unadvanced loans, any charge-offs, the allowance for loan losses and any deferred fees or costs on originated loans, or unamortized premiums or discounts on purchased loans.

F-10

Interest on loans is recognized on a simple interest basis.

Loan origination and commitment fees and certain direct origination costs are deferred, and the net amount amortized as an adjustment of the related loan’s yield. The Company is amortizing these amounts over the contractual lives of the related loans.

Residential real estate loans are generally placed on nonaccrual when reaching 90 days past due or in process of foreclosure. All closed-end consumer loans 90 days or more past due and any equity line in the process of foreclosure are placed on nonaccrual status. Secured consumer loans are written down to realizable value and unsecured consumer loans are charged off upon reaching 120 or 180 days past due depending on the type of loan. Commercial real estate loans and commercial business loans and leases which are 90 days or more past due are generally placed on nonaccrual status, unless secured by sufficient cash or other assets immediately convertible to cash. When a loan has been placed on nonaccrual status, previously accrued and uncollected interest is reversed against interest on loans. A loan can be returned to accrual status when collectibility of principal is reasonably assured and the loan has performed for a period of time, generally six months.

Cash receipts of interest income on impaired loans is credited to principal to the extent necessary to eliminate doubt as to the collectibility of the net carrying amount of the loan. Some or all of the cash receipts of interest income on impaired loans is recognized as interest income if the remaining net carrying amount of the loan is deemed to be fully collectible. When recognition of interest income on an impaired loan on a cash basis is appropriate, the amount of income that is recognized is limited to that which would have been accrued on the net carrying amount of the loan at the contractual interest rate. Any cash interest payments received in excess of the limit and not applied to reduce the net carrying amount of the loan are recorded as recoveries of charge-offs until the charge-offs are fully recovered.

ALLOWANCE FOR LOAN LOSSES:

The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to earnings. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is evaluated on a regular basis by management and is based upon management’s periodic review of the collectibility of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.

General Component:

The general component of the allowance for loan losses is based on historical loss experience adjusted for qualitative factors stratified by the following loan segments: residential real estate, commercial real estate, construction, commercial and consumer. Management uses a rolling average of historical losses based on a time frame appropriate to capture relevant loss data for each loan segment. This historical loss factor is adjusted for the following qualitative factors: levels/trends in delinquencies; trends in volume and terms of loans; effects of changes in risk selection and underwriting standards and other changes in lending policies, procedures and practices; experience/ability/depth of lending management and staff; and national and local economic trends and conditions. There were no changes in the Company’s policies or methodology pertaining to the general component of the allowance for loan losses during 2013.

F-11

The qualitative factors are determined based on the various risk characteristics of each loan segment. Risk characteristics relevant to each portfolio segment are as follows:

Residential real estate: The Company generally does not originate loans with a loan-to-value ratio greater than 80 percent and does not grant subprime loans. All loans in this segment are collateralized by owner-occupied residential real estate and repayment is dependent on the credit quality of the individual borrower. The overall health of the economy, including unemployment rates and housing prices, will have an effect on the credit quality in this segment.

Commercial and multi-family real estate: Loans in this segment are primarily income-producing properties throughout Eastern Massachusetts, specifically the South Shore. The underlying cash flows generated by the properties are adversely impacted by a downturn in the economy as evidenced by increased vacancy rates, which in turn, will have an effect on the credit quality in this segment. Management periodically obtains rent rolls and continually monitors the cash flows of these loans.

Construction loans: Loans in this segment include speculative investment properties, rehab to rental properties and owner occupied residential properties. Payment is derived from sale of the property and long term rental cash flows once converted to permanent financing. Credit risk is affected by cost overruns, time to sell at an adequate price, and market conditions.

Commercial loans: Loans in this segment are made to businesses, are generally secured by assets of the business and are primarily guaranteed by the United States Government. Repayment is expected from the cash flows of the business. A weakened economy, and resultant decreased consumer spending, will have an effect on the credit quality in this segment.

Consumer loans: Loans in this segment are primarily secured by automobiles and repayment is dependent on the credit quality of the individual borrower.

Allocated Component:

The allocated component relates to loans that are classified as impaired. Impairment is measured on a loan by loan basis for commercial, commercial real estate and construction loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral if the loan is collateral dependent. An allowance is established when the discounted cash flows (or collateral value) of the impaired loan are lower than the carrying value of that loan. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Company does not separately identify individual consumer and residential real estate loans for impairment disclosures, unless such loans are subject to a troubled debt restructuring agreement.

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.

The Company periodically may agree to modify the contractual terms of loans. When a loan is modified and a concession is made to a borrower experiencing financial difficulty, the modification is considered a troubled debt restructuring (“TDR”). All TDRs are initially classified as impaired.

Unallocated Component:

An unallocated component is maintained to cover uncertainties that could affect management’s estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating allocated and general reserves in the portfolio.

F-12

PREMISES AND EQUIPMENT:

Premises and equipment are stated at cost, less accumulated depreciation and amortization. Cost and related allowances for depreciation and amortization of premises and equipment retired or otherwise disposed of are removed from the respective accounts with any gain or loss included in income or expense. Depreciation and amortization are calculated principally on a straight-line basis over the estimated useful lives of the assets.

OTHER REAL ESTATE OWNED AND IN-SUBSTANCE FORECLOSURES:

Other real estate owned includes properties acquired through foreclosure and properties classified as in-substance foreclosures in accordance with ASC 310-40, “Receivables - Troubled Debt Restructuring by Creditors.” These properties are carried at the lower of cost or estimated fair value, less estimated selling costs. Any writedown from cost to estimated fair value required at the time of foreclosure or classification as in-substance foreclosure is charged to the allowance for loan losses. Expenses incurred in connection with maintaining these assets, subsequent writedowns and gains or losses recognized upon sale are included in other expense.

In accordance with ASC 310-10-35, “Receivables - Overall - Subsequent Measurements,” the Company classifies loans as in-substance repossessed or foreclosed if the Company receives physical possession of the debtor’s assets regardless of whether formal foreclosure proceedings take place.

ADVERTISING:

The Company directly expenses costs associated with advertising as they are incurred.

INCOME TAXES:

The Company recognizes income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are established for the temporary differences between the accounting basis and the tax basis of the Company’s assets and liabilities at enacted tax rates expected to be in effect when the amounts related to such temporary differences are realized or settled.

FAIR VALUES OF FINANCIAL INSTRUMENTS:

ASC 825, “Financial Instruments,” requires that the Company disclose estimated fair values for its financial instruments. Fair value methods and assumptions used by the Company in estimating its fair value disclosures are as follows:

Cash and cash equivalents: The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents approximate those assets’ fair values.

Interest-bearing time deposits with other banks: The fair value of interest-bearing time deposits with other banks was determined by discounting the cash flows associated with these instruments using current market rates for deposits with similar characteristics.

Securities: Fair values for securities are based on quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments.

Loans receivable: For variable-rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values. The fair values for other loans are estimated by discounting the future cash flows, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality.

F-13

Accrued interest receivable: The carrying amount of accrued interest receivable approximates its fair value.

Deposit liabilities: The fair values disclosed for demand deposits, regular savings, NOW accounts, and money market accounts are equal to the amount payable on demand at the reporting date (i.e., their carrying amounts). Fair values for certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits.

Federal Home Loan Bank advances: Fair values for Federal Home Loan Bank advances are estimated using a discounted cash flow technique that applies interest rates currently being offered on advances to a schedule of aggregated expected monthly maturities on Federal Home Loan Bank advances.

Off-balance sheet instruments: The fair value of commitments to originate loans is estimated using the fees currently charged to enter similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. For fixed-rate loan commitments and the unadvanced portion of loans, fair value also considers the difference between current levels of interest rates and the committed rates.

PENSION PLAN:

The Company provides pension benefits for its employees through participation in the Co-Operative Banks’ Employees Retirement Association and it is the Company’s policy to fund pension plan costs in the year of accrual.

RECENT ACCOUNTING PRONOUNCEMENTS:

In December 2011, the Financial Accounting Standards Board (FASB) issued ASU 2011-11, “Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities.” The objective of this ASU is to enhance current disclosures. Entities are required to disclose both gross information and net information about both instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting arrangement. The amendments in this ASU are effective for annual periods beginning on or after January 1, 2013, and interim periods within those annual periods. An entity should provide the disclosures required by those amendments retrospectively for all comparative periods presented. The Company does not anticipate that the adoption of this guidance will have a material impact on its consolidated financial statements.

In October 2012, the FASB issued ASU 2012-06, “Business Combinations (Topic 805): Subsequent Accounting for an Indemnification Asset Recognized at the Acquisition Date as a Result of a Government-Assisted Acquisition of a Financial Institution.” The amendments in this update clarify the applicable guidance for subsequently measuring an indemnification asset recognized as a result of a government-assisted acquisition of a financial institution. The amendments in this update are effective for fiscal years, and interim periods within those years beginning on or after December 15, 2012. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

F-14

In February 2013, the FASB issued ASU 2013-02, “Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income.” The amendments in this update do not change the current requirements for reporting net income or other comprehensive income in financial statements. However, the amendments require an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under U.S. GAAP that provide additional detail about those amounts. For public entities, the amendments are effective prospectively for reporting periods beginning after December 15, 2012. For nonpublic entities, the amendments are effective prospectively for reporting periods beginning after December 15, 2013. Early adoption is permitted. The Company does not anticipate that the adoption of this guidance will have a material impact on its consolidated financial statements.

In February 2013, the FASB issued ASU 2013-04, “Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date.” The objective of the amendments in this ASU is to provide guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this guidance is fixed at the reporting date, except for obligations addressed within existing guidance in U.S. generally accepted accounting principles (GAAP). Examples of obligations within the scope of this ASU include debt arrangements, other contractual obligations, and settled litigation and judicial rulings. The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, (for nonpublic) 2013 (for public); and should be applied retrospectively to all prior periods presented for those obligations resulting from joint and several liability arrangements within the ASU scope that exist at the beginning of an entity’s fiscal year of adoption. The Company does not anticipate that the adoption of this guidance will have a material impact on its consolidated financial statements.

In April 2013, the FASB issued ASU 2013-07, “Presentation of Financial Statements (Topic 205): Liquidation Basis of Accounting.” The amendments in this ASU are being issued to clarify when an entity should apply the liquidation basis of accounting. The guidance provides principles for the recognition and measurement of assets and liabilities and requirements for financial statements prepared using the liquidation basis of accounting. Additionally, the amendments require disclosures about an entity’s plan for liquidation, the methods and significant assumptions used to measure assets and liabilities, the type and amount of costs and income accrued, and the expected duration of the liquidation process. The amendments are effective for entities that determine liquidation is imminent during annual reporting periods beginning after December 15, 2013, and interim reporting periods therein. Entities should apply the requirements prospectively from the day that liquidation becomes imminent. Early adoption is permitted. The Company does not anticipate that the adoption of this guidance will have a material impact on its consolidated financial statements.

In July 2013, the FASB issued ASU 2013-10, “Derivatives and Hedging (Topic 815) – Inclusion of the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate) as a Benchmark Interest Rate for Hedge Accounting Purposes.” The amendments in this ASU permit the Fed Funds Effective Swap Rate (OIS) to be used as a U.S. benchmark interest rate for hedge accounting purposes under Topic 815, in addition to Treasury Obligations of the U.S. government (UST) and the London Interbank Offered Rate (LIBOR). The amendments also remove the restriction on using different benchmark rates for similar hedges. The amendments apply to all entities that elect to apply hedge accounting of the benchmark interest rate under Topic 815. The amendments are effective prospectively for qualifying new or redesignated hedging relationships entered into on or after July 17, 2013. The Company does not anticipate that the adoption of this guidance will have a material impact on its consolidated financial statements.

F-15

In July 2013, the FASB issued ASU 2013-11, “Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.” The amendments in this ASU provide guidance for the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The amendments in this ASU are expected to reduce diversity in practice by providing guidance on the presentation of unrecognized tax benefits and will better reflect the manner in which an entity would settle at the reporting date any additional income taxes that would result from the disallowance of a tax position when net operating loss carryforwards, similar tax losses, or tax credit carryforwards exist. The amendments apply to all entities that have unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists at the reporting date and are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The Company does not anticipate that the adoption of this guidance will have a material impact on its consolidated financial statements.

In January 2014, the FASB issued ASU 2014-01, “Investments - Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Qualified Affordable Housing Projects.” The amendments in this ASU apply to all reporting entities that invest in qualified affordable housing projects through limited liability entities that are flow-through entities for tax purposes as follows:

1. For reporting entities that meet the conditions for and that elect to use the proportional amortization method to account for investments in qualified affordable housing projects, all amendments in this ASU apply.

2. For reporting entities that do not meet the conditions for or that do not elect the proportional amortization method, only the amendments in this ASU that are related to disclosures apply.

The amendments in this ASU permit reporting entities to make an accounting policy election to account for their investments in qualified affordable housing projects using the proportional amortization method if certain conditions are met. Under the proportional amortization method, an entity amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received and recognizes the net investment performance in the income statement as a component of income tax expense (benefit). For those investments in qualified affordable housing projects not accounted for using the proportional amortization method, the investment should be accounted for as an equity method investment or a cost method investment in accordance with Subtopic 970-323. The amendments in this ASU should be applied retrospectively to all periods presented. A reporting entity that uses the effective yield method to account for its investments in qualified affordable housing projects before the date of adoption may continue to apply the effective yield method for those preexisting investments. The amendments in this ASU are effective for public business entities for annual periods and interim reporting periods within those annual periods, beginning after December 15, 2014. For all entities other than public business entities, the amendments are effective for annual periods beginning after December 15, 2014, and interim periods within annual reporting periods beginning after December 15, 2015. Early adoption is permitted. The Company does not expect that the adoption of this ASU will have an impact on its consolidated financial statements.

F-16

In January 2014, the FASB issued ASU 2014-02, “Intangibles-Goodwill and Other (Topic 350): Accounting for Goodwill.” The amendments in this ASU apply to all entities except for public business entities and not-for-profit entities as defined in the Master Glossary of the Accounting Standards Codification and employee benefit plans within the scope of Topics 960 through 965 on plan accounting. An entity within the scope of the amendments that elects to apply the accounting alternative in this ASU is subject to all of the related subsequent measurement, derecognition, other presentation matters, and disclosure requirements within the accounting alternative. The amendments in this ASU allow an accounting alternative for the subsequent measurement of goodwill. An entity within the scope of the amendments that elects the accounting alternative in this ASU should amortize goodwill on a straight-line basis over 10 years, or less than 10 years if the entity demonstrates that another useful life is more appropriate. An entity that elects the accounting alternative is further required to make an accounting policy election to test goodwill for impairment at either the entity level or the reporting unit level. The accounting alternative, if elected, should be applied prospectively to goodwill existing as of the beginning of the period of adoption and new goodwill recognized in annual periods beginning after December 15, 2014, and interim periods within annual periods beginning after December 15, 2015. Early application is permitted, including application to any period for which the entity’s annual or interim financial statements have not yet been made available for issuance. The Company does not expect that the adoption of this ASU will have an impact on its consolidated financial statements.

In January 2014, the FASB issued ASU 2014-04, “Receivables-Troubled Debt Restructurings by Creditors (Subtopic 310-40): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure.” The objective of the amendments in this ASU is to reduce diversity by clarifying when an in substance repossession or foreclosure occurs, that is, when a creditor should be considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan such that the loan receivable should be derecognized and the real estate property recognized. The amendments in this ASU clarify that an in substance repossession or foreclosure occurs, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. Additionally, the amendments require interim and annual disclosure of both (1) the amount of foreclosed residential real estate property held by the creditor and (2) the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to local requirements of the applicable jurisdiction. The amendments in this ASU are effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. For entities other than public business entities, the amendments in this ASU are effective for annual periods beginning after December 15, 2014, and interim periods within annual periods beginning after December 15, 2015. An entity can elect to adopt the amendments in this ASU using either a modified retrospective transition method or a prospective transition method. The Company is reviewing this ASU to determine if there will be a material impact on its consolidated financial statements.

F-17

NOTE 3 - INVESTMENTS IN SECURITIES

Investments in securities have been classified in the consolidated balance sheets according to management’s intent. The amortized cost of securities and their approximate fair values are as follows as of December 31:

	Amortized Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In Thousands)
Available-for-sale securities:
December 31, 2013:
Debt securities issued by the U.S. Treasury and other U.S. government corporations and agencies	$	2,460	$	—	$	138	$	2,322
Debt securities issued by states of the United States and political subdivisions of the states		4,447		45		120		4,372
Mortgage-backed securities		6,148		27		155		6,020
Mutual funds		782		—		—		782
	$	13,837	$	72	$	413	$	13,496
December 31, 2012:
Debt securities issued by the U.S. Treasury and other U.S. government corporations and agencies	$	550	$	—	$	2	$	548
Debt securities issued by states of the United States and political subdivisions of the states		4,151		104		13		4,242
Mortgage-backed securities		9,984		144		23		10,105
Mutual funds		1,000		—		177		823
	$	15,685	$	248	$	215	$	15,718
Held-to-maturity securities:
December 31, 2013:
Debt securities issued by the U.S. Treasury and other U.S. government corporations and agencies	$	26	$	—	$	1	$	25
Mortgage-backed securities		228		43		12		259
	$	254	$	43	$	13	$	284
December 31, 2012:
Debt securities issued by the U.S. Treasury and other U.S. government corporations and agencies	$	51	$	—	$	3	$	48
Mortgage-backed securities		345		33		57		321
	$	396	$	33	$	60	$	369

F-18

The scheduled maturities of debt securities were as follows as of December 31, 2013:

	Available-For-Sale		Held-To-Maturity
	Fair Value		Amortized Cost Basis		Fair Value
	(In Thousands)
Due in less than one year	$	659	$	—	$	—
Due after one year through five years		2,265		26		25
Due after five years through ten years		1,766		—		—
Due after ten years		2,004		228		259
Mortgage-backed securities		6,020		—		—
	$	12,714	$	254	$	284

During 2013, proceeds from sales of available-for-sale securities amounted to $3,564,000. Gross realized gains on those sales amounted to $34,000 and gross realized losses amounted to $29,000. During 2012, proceeds from sales of available-for-sale securities amounted to $3,217,000. Gross realized gains on those sales amounted to $90,000 and gross realized losses amounted to $0. The tax expense applicable to these net realized gains for the years ended December 31, 2013 and 2012 amounted to $2,000 and $36,000, respectively.

As of December 31, 2013, there were no securities whose aggregate carrying amount exceeded 10% of equity.

The aggregate fair value and unrealized losses of securities that have been in a continuous unrealized loss position for less than twelve months and for twelve months or more, and are not other than temporarily impaired, are as follows:

	Less than 12 Months				12 Months or Longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In Thousands)
December 31, 2013:
Debt securities issued by the U.S. Treasury and other U.S. government corporations and agencies	$	2,322	$	138	$	25	$	1	$	2,347	$	139
Debt securities issued by states of the United States and political subdivisions of the states		686		55		926		65		1,612		120
Mortgage-backed securities		2,701		75		1,058		79		3,759		154
Total temporarily impaired securities		5,709		268		2,009		145		7,718		413
Other-than-temporarily impaired securities:
Mortgage-backed securities		—		—		7		13		7		13
Total temporarily impaired and other-than-temporarily impaired securities	$	5,709	$	268	$	2,016	$	158	$	7,725	$	426
December 31, 2012:
Debt securities issued by the U.S. Treasury and other U.S. government corporations and agencies	$	524	$	2	$	22	$	3	$	546	$	5
Debt securities issued by states of the United States and political subdivisions of the states		987		13		—		—		987		13
Mortgage-backed securities		2,030		13		842		62		2,872		75
Mutual funds		—		—		823		177		823		177
Total temporarily impaired securities		3,541		28		1,687		242		5,228		270
Other-than-temporarily impaired securities:
Mortgage-backed securities		—		—		—		5		—		5
Total temporarily impaired and other-than-temporarily impaired securities	$	3,541	$	28	$	1,687	$	247	$	5,228	$	275

F-19

As of December 31, 2013, investment securities with unrealized losses consist of debt securities issued by the U.S. Treasury and other U.S. government corporations and government-sponsored agencies, debt securities issued by states of the United States and political subdivisions of the states and non-agency mortgage-backed securities. The Company reviews investments for other than temporary impairment using a number of factors including the length of time and the extent to which the market value has been less than cost and by examining any credit deterioration or ratings downgrades. The unrealized losses in the above table are primarily attributable to changes in market interest rates. As Company management has the intent and ability to hold temporarily impaired debt securities until maturity, or for the foreseeable future if classified as available-for-sale, no declines are deemed to be other than temporary. As of December 31, 2013, one non-agency mortgage-backed security was deemed other-than-temporarily impaired. This security was written down during the year ended December 31, 2013.

For those debt securities for which the fair value of the security is less than its amortized cost and the Company does not intend to sell such security and it is more likely than not that it will not be required to sell such security prior to the recovery of its amortized cost basis less any credit losses, ASC 320-10, “Investments - Debt and Equity Securities,” requires that the credit component of the other-than-temporary impairment losses be recognized in earnings while the noncredit component is recognized in other comprehensive income, net of related taxes.

Upon acquisition of a security, the Company decides whether it is within the scope of the accounting guidance for beneficial interests in securitized financial assets or will be evaluated for impairment under the accounting guidance for investments in debt and equity securities.

The accounting guidance for beneficial interests in securitized financial assets provides incremental impairment guidance for a subset of debt securities within the scope of the guidance for investments in debt and equity securities. For securities where the security is a beneficial interest in securitized financial assets, the Company uses the beneficial interests in securitized financial assets impairment model. For securities where the security is not a beneficial interest in securitized financial assets, the Company uses the debt and equity securities impairment model.

The following table summarizes other-than-temporary impairment losses on securities for the years ended December 31:

	2013					2012
			Non-Agency			Non-Agency
	Mutual		Mortgage-Backed			Mortgage-Backed
	Funds		Securities			Securities
			(In Thousands)
Total other-than-temporary impairment losses	$	218	$	37		$	57
Less: unrealized other-than-temporary losses recognized in other comprehensive income (1)		—		(8	)		(5	)
Net impairment losses recognized in earnings (2)	$	218	$	29		$	52

(1) Represents the noncredit component of the other-than-temporary impairment on the securities.

(2) Represents the credit component of the other-than-temporary impairment on securities.

For the year ended December 31, 2013, debt securities with other-than-temporary impairment losses related to credit that were recognized in earnings consisted of a mutual fund and non-agency mortgage-backed securities. The Company estimated the portion of loss attributable to credit for the non-agency mortgage-backed securities using a discounted cash flow model. Significant inputs for the non-agency mortgage-backed securities included estimated cash flows of the underlying collateral based on key assumptions such as default rate, loss severity and prepayment rate. The present value of the expected cash flows were compared to the Company’s holdings to determine the credit-related impairment loss. Based on the expected cash flows derived from the model, the Company expects to recover the remaining unrealized losses on non-agency mortgage-backed securities.

F-20

NOTE 4 - LOANS

Loans consisted of the following as of December 31:

	2013			2012
	(In Thousands)
Real estate loans:
One-to four- family residential	$	92,383		$	76,199
Commercial		19,380			15,726
Multi-family		9,882			6,829
Home equity loans and lines of credit		3,976			4,748
Construction		3,513			5,016
Commercial and industrial loans		2,506			2,152
Consumer loans:
Consumer line of credit		19			29
Other consumer loans		1,919			2,917
		133,578			113,616
Net deferred loan origination fees, costs and discounts		87			(210	)
Allowance for loan losses		(742	)		(788	)
Net loans	$	132,923		$	112,618

The following tables set forth information regarding the allowance for loan losses as of and for the years ended December 31:

	Real Estate:															Consumer
	One- to four-family Residential			Commercial		Multi- family		Home Equity Loans and Lines of Credit			Construction			Commercial and Industrial Loans		Consumer Line of Credit			Other Consumer			Unallocated			Total
	(In Thousands)
December 31, 2013:
Allowance for loan losses:
Beginning balance	$	362		$	152	$	35	$	46		$	50		$	7	$	2		$	37		$	97		$	788
Charge-offs		(48	)		—		—		—			—			—		—			(3	)		—			(51	)
Recoveries		—			—		—		—			—			—		—			5			—			5
Provision (benefit)		9			43		16		(16	)		(1	)		9		(1	)		(19	)		(40	)		—
Ending balance	$	323		$	195	$	51	$	30		$	49		$	16	$	1		$	20		$	57		$	742
Ending balance:
Individually evaluated for impairment	$	80		$	—	$	—	$	—		$	—		$	—	$	—		$	—		$	—		$	80
Ending balance:
Collectively evaluated for impairment		243			195		51		30			49			16		1			20			57			662
Total allowance for loan losses ending balance	$	323		$	195	$	51	$	30		$	49		$	16	$	1		$	20		$	57		$	742
Loans:
Ending balance:
Individually evaluated for impairment	$	6,126		$	703	$	—	$	—		$	—		$	—	$	—		$	—		$	—		$	6,829
Ending balance:
Collectively evaluated for impairment		86,257			18,677		9,882		3,976			3,513			2,506		19			1,919			—			126,749
Total loans ending balance	$	92,383		$	19,380	$	9,882	$	3,976		$	3,513		$	2,506	$	19		$	1,919		$	—		$	133,578

F-21

	Real Estate:																	Consumer
	One- to four-family Residential			Commercial		Multi- family			Home Equity Loans and Lines of Credit			Construction			Commercial and Industrial Loans			Consumer Line of Credit		Other Consumer			Unallocated		Total
	(In Thousands)
December 31, 2012:
Allowance for loan losses:
Beginning balance	$	327		$	137	$	197		$	43		$	49		$	9		$	2	$	40		$	65	$	869
Charge-offs		(142	)		—		—			(82	)		—			—			—		(6	)		—		(230	)
Recoveries		—			—		—			—			—			—			—		—			—		—
Provision (benefit)		177			15		(162	)		90			3			(2	)		—		3			32		156
Transfer for off-balance sheet loan commitments		—			—		—			(5	)		(2	)		—			—		—			—		(7	)
Ending balance	$	362		$	152	$	35		$	46		$	50		$	7		$	2	$	37		$	97	$	788
Ending balance:
Individually evaluated for impairment	$	106		$	—	$	—		$	—		$	—		$	—		$	—	$	—		$	—	$	106
Ending balance:
Collectively evaluated for impairment		256			152		35			46			50			7			2		37			97		682
Total allowance for loan losses ending balance	$	362		$	152	$	35		$	46		$	50		$	7		$	2	$	37		$	97	$	788
Loans:
Ending balance:
Individually evaluated for impairment	$	4,456		$	709	$	—		$	—		$	—		$	—		$	—	$	—		$	—	$	5,165
Ending balance:
Collectively evaluated for impairment		71,743			15,017		6,829			4,748			5,016			2,152			29		2,917			—		108,451
Total loans ending balance	$	76,199		$	15,726	$	6,829		$	4,748		$	5,016		$	2,152		$	29	$	2,917		$	—	$	113,616

Certain directors and executive officers of the Company and companies in which they have significant ownership interest were customers of the Bank during 2013. Total loans to such persons and their companies amounted to $751,000 as of December 31, 2013. During 2013, principal payments were $64,000 and there were no principal advances.

The following tables set forth information regarding nonaccrual loans and past-due loans as of December 31:

	30-59 Days		60-89 Days		90 Days or More Past Due		Total Past Due		Total Current		Total		90 Days or More Past Due and Accruing		Nonaccrual Loans
	(In Thousands)
December 31, 2013:
Real estate loans:
One- to four-family residential	$	—	$	240	$	2,075	$	2,315	$	90,068	$	92,383	$	—	$	2,344
Commercial		—		—		—		—		19,380		19,380		—		—
Multi-family		—		—		—		—		9,882		9,882		—		—
Home equity loans and lines of credit		—		—		—		—		3,976		3,976		—		8
Construction		—		—		—		—		3,513		3,513		—		—
Commercial and industrial loans		—		—		—		—		2,506		2,506		—		—
Consumer loans:
Consumer line of credit		—		—		—		—		19		19		—		—
Other consumer		—		—		—		—		1,919		1,919		—		—
Total	$	—	$	240	$	2,075	$	2,315	$	131,263	$	133,578	$	—	$	2,352
December 31, 2012:
Real estate loans:
One- to four-family residential	$	388	$	1,488	$	2,688	$	4,564	$	71,635	$	76,199	$	—	$	4,666
Commercial		842		—		—		842		14,884		15,726		—		—
Multi-family		—		—		—		—		6,829		6,829		—		—
Home equity loans and lines of credit		108		—		—		108		4,640		4,748		—		—
Construction		—		—		—		—		5,016		5,016		—		—
Commercial and industrial loans		—		—		—		—		2,152		2,152		—		—
Consumer loans:
Consumer line of credit		—		—		—		—		29		29		—		—
Other consumer		—		—		—		—		2,917		2,917		—		—
Total	$	1,338	$	1,488	$	2,688	$	5,514	$	108,102	$	113,616	$	—	$	4,666

F-22

Information about loans that meet the definition of an impaired loan in ASC 310-10-35, “Receivables - Loans and Debt Securities Acquired with Deteriorated Credit Quality – Subsequent Measurement,” is as follows as of December 31:

	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
	(In Thousands)
December 31, 2013:
With no related allowance recorded:
Real estate loans:
One- to four-family residential	$	4,143	$	4,143	$	—	$	4,150	$	168
Commercial		703		703		—		706		58
Total impaired with no related allowance	$	4,846	$	4,846	$	—	$	4,856	$	226
With an allowance recorded:
Real estate loans:
One- to four-family residential	$	1,983	$	1,983	$	80	$	1,997	$	103
Commercial		—		—		—		—		—
Total impaired with an allowance recorded	$	1,983	$	1,983	$	80	$	1,997	$	103
Total
Real estate loans:
One- to four-family residential	$	6,126	$	6,126	$	80	$	6,147	$	271
Commercial		703		703		—		706		58
Total impaired loans	$	6,829	$	6,829	$	80	$	6,853	$	329
December 31, 2012:
With no related allowance recorded:
Real estate loans:
One- to four-family residential	$	2,443	$	2,443	$	—	$	2,544	$	99
Commercial		709		709		—		1,326		75
Total impaired with no related allowance	$	3,152	$	3,152	$	—	$	3,870	$	174
With an allowance recorded:
Real estate loans:
One- to four-family residential	$	2,012	$	2,012	$	106	$	2,022	$	92
Commercial		—		—		—		—		—
Total impaired with an allowance recorded	$	2,012	$	2,012	$	106	$	2,022	$	92
Total
Real estate loans:
One- to four-family residential	$	4,455	$	4,455	$	106	$	4,566	$	191
Commercial		709		709		—		1,326		75
Total impaired loans	$	5,164	$	5,164	$	106	$	5,892	$	266

F-23

The following tables present the Company’s loans by risk rating as of December 31:

	Real Estate:												Consumer
	One- to four-family Residential		Commercial		Multi- family		Home Equity Loans and Lines of Credit		Construction		Commercial and Industrial Loans		Consumer Line of Credit		Other Consumer		Total
December 31, 2013:
Grade:
Pass	$	—	$	17,829	$	8,932	$	—	$	3,513	$	2,506	$	—	$	1,919	$	34,699
Special mention		302		132		—		—		—		—		—		—		434
Substandard		4,227		1,419		950		8		—		—		—		—		6,604
Loans not formally rated		87,854		—		—		3,968		—		—		19		—		91,841
Total	$	92,383	$	19,380	$	9,882	$	3,976	$	3,513	$	2,506	$	19	$	1,919	$	133,578
December 31, 2012:
Grade:
Pass	$	—	$	13,461	$	5,436	$	—	$	5,016	$	2,019	$	—	$	2,917	$	28,849
Special mention		295		244		—		—		—		—		—		—		539
Substandard		5,696		2,021		1,393		208		—		133		—		—		9,451
Loans not formally rated		70,208		—		—		4,540		—		—		29		—		74,777
Total	$	76,199	$	15,726	$	6,829	$	4,748	$	5,016	$	2,152	$	29	$	2,917	$	113,616

Credit Quality Information

The Company utilizes a seven grade internal loan rating system for commercial real estate, construction and commercial loans as follows:

Loans rated 1 - 3: Loans in these categories are considered “pass” rated loans with low to average risk.

Loans rated 4: Loans in this category are considered “special mention.” These loans are starting to show signs of potential weakness and are being closely monitored by management.

Loans rated 5: Loans in this category are considered “substandard.” Generally, a loan is considered substandard if it is inadequately protected by the current net worth and paying capacity of the obligors and/or the collateral pledged. There is a distinct possibility that the Company will sustain some loss if the weakness is not corrected.

Loans rated 6: Loans in this category are considered “doubtful.” Loans classified as doubtful have all the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, highly questionable and improbable.

Loans rated 7: Loans in this category are considered uncollectible (“loss”) and of such little value that their continuance as loans is not warranted.

On an annual basis, or more often if needed, the Company formally reviews the ratings on all commercial real estate, construction and commercial loans. For residential real estate and consumer loans, the Company initially assesses credit quality based upon the borrower’s ability to pay and subsequently monitors these loans based on the borrower’s payment activity.

F-24

The following tables set forth information regarding loans modified as troubled debt restructured loans during the years ended December 31:

	Number of Contracts		Post-Modification Outstanding Recorded Investment		Pre-Modification Outstanding Recorded Investment
	(Dollars In Thousands)
December 31, 2013:
Troubled Debt Restructurings:
Real estate loans:
One- to four- family residential		1	$	1,883	$	1,883
		1	$	1,883	$	1,883
December 31, 2012:
Troubled Debt Restructurings:
Real estate loans:
One- to four- family residential		6	$	3,500	$	3,500
Commercial		1		709		709
		7	$	4,209	$	4,209

As of December 31, 2013, there were no loans modified as a troubled debt restructure during 2013 that subsequently defaulted. As of December 31, 2012, one residential real estate loan with a recorded investment of $236,000 was modified as a troubled debt restructure during 2012 and subsequently defaulted.

As of December 31, 2013 and 2012, there were no commitments to lend additional funds to borrowers whose loans were modified in troubled debt restructurings. As of December 31, 2013, the loan was individually evaluated for impairment and it was determined that a specific allocation was not necessary. As of December 31, 2012, the loans were individually evaluated for impairment and it was determined that specific allocations totaling $77,000 were necessary. As of December 31, 2013, the loan was reported as impaired. As of December 31, 2012, the loans were reported as impaired and two of the loans, totaling $828,000, were on non-accrual status.

The following tables provide information on how loans were modified as troubled debt restructures, during the years ended December 31:

	Rate Reduction		Interest Only Period		Rate Reduction and Interest Only Period
	(In Thousands)
December 31, 2013:
Real estate loans:
One- to four- family residential	$	—	$	1,883	$	—
Total	$	—	$	1,883	$	—
December 31, 2012:
Real estate loans:
One- to four- family residential	$	685	$	2,332	$	483
Commercial		—		709		—
Total	$	685	$	3,041	$	483

F-25

Loans serviced for others are not included in the accompanying consolidated balance sheets. The unpaid principal balances of mortgage and other loans serviced for others were $16,755,000 and $20,378,000 at December 31, 2013 and 2012, respectively.

NOTE 5 - PREMISES AND EQUIPMENT

The following is a summary of premises and equipment as of December 31:

	2013			2012
	(In Thousands)
Land	$	864		$	864
Buildings and improvements		5,356			5,234
Furniture and equipment		2,084			1,985
Construction in process		—			15
		8,304			8,098
Accumulated depreciation and amortization		(2,733	)		(2,466	)
	$	5,571		$	5,632

NOTE 6 - INVESTMENT IN REAL ESTATE

The following is a summary of investment in real estate as of December 31:

	2013			2012
	(In Thousands)
Land	$	453		$	453
Buildings and improvements		1,489			1,489
		1,942			1,942
Accumulated depreciation and amortization		(280	)		(235	)
	$	1,662		$	1,707

The Company’s rental income for 2013 and 2012 amounted to $204,000 and $245,000, respectively.

NOTE 7 - DEPOSITS

The aggregate amount of time deposit accounts in denominations of $100,000 or more as of December 31, 2013 and 2012 was $35,437,000 and $37,885,000, respectively.

At December 31, 2013, the scheduled maturities of time deposits are as follows:

	(In Thousands)
2014	$	35,823
2015		11,609
2016		5,829
2017		7,951
2018		3,260
Total	$	64,472

F-26

NOTE 8 - FEDERAL HOME LOAN BANK ADVANCES

Advances consist of funds borrowed from the Federal Home Loan Bank of Boston (FHLB).

	(In Thousands)
2014	$	4,000
2015		1,000
	$	5,000

Interest rates range from .25% to 2.32% with a weighted-average interest rate of 1.27%.

Amortizing advances are being repaid in equal monthly payments and are being amortized from the date of the advance to the maturity date on a direct reduction basis.

Borrowings from the FHLB are secured by a blanket lien on qualified collateral, consisting primarily of loans with first mortgages secured by one-to-four family properties, certain unencumbered investment securities and other qualified assets.

NOTE 9 - INCOME TAXES

The components of income tax expense are as follows for the years ended December 31:

	2013			2012
	(In Thousands)
Current:
Federal	$	185		$	185
State		48			38
		233			223
Deferred:
Federal		322			153
State		(15	)		38
Change in valuation allowance		(380	)		(27	)
		(73	)		164
Total income tax expense	$	160		$	387

F-27

The reasons for the differences between the statutory federal income tax rate and the effective tax rates are summarized as follows for the years ended December 31:

	2013			2012
	% of			% of
	Income			Income
Statutory federal income tax rate		34.0	%		34.0	%
Increase (decrease) in tax rates resulting from:
Tax-exempt income		(9.2	)		(4.0	)
Expiration of capital loss carryforwards		72.0			—
Other		1.4			2.3
State tax, net of federal tax benefit		4.1			4.4
Change in valuation allowance		(72.0	)		(2.4	)
Effective tax rates		30.3	%		34.3	%

The Company had gross deferred tax assets and gross deferred tax liabilities as follows as of December 31:

	2013			2012
	(In Thousands)
Deferred tax assets:
Allowance for loan losses	$	300		$	318
Securities capital loss carryforwards		4			381
Writedown of equity security		100			—
Writedown of other real estate owned		—			5
Interest on nonaccrual loans		21			40
Net unrealized holding loss on available-for-sale securities		127			—
Gross deferred tax assets		552			744
Valuation allowance		(1	)		(381	)
Gross deferred tax assets after valuation allowance		551			363
Deferred tax liabilities:
Book basis in excess of tax basis of premises and equipment		(186	)		(198	)
Net unrealized holding gain on available-for-sale securities		—			(9	)
Gross deferred tax liabilities		(186	)		(207	)
Net deferred tax asset	$	365		$	156

As of December 31, 2013, the Company had no operating loss and tax credit carryovers for tax purposes. As of December 31, 2013, the Company had capital loss carryovers of $12,000, $2,000 of which are due to expire in 2016 and $10,000 of which are due to expire in 2018. The capital losses can only be utilized against realized capital gains; therefore, a valuation allowance has been provided against the deferred tax benefit to the extent management deems its probable the deferred tax benefits will not be realized.

It is the Company’s policy to provide for uncertain tax positions and the related interest and penalties based upon management’s assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities. As of December 31, 2013 and 2012, there were no material uncertain tax positions related to federal and state income tax matters. The Company is currently open to audit under the statute of limitations by the Internal Revenue Service and state taxing authorities for the years ended December 31, 2010 through December 31, 2013.

F-28

NOTE 10 - EMPLOYEE BENEFITS

As a participating employer in the Co-operative Banks’ Employees Retirement Association (CBERA) multi-employer plan, the Company has in effect a pension plan covering substantially all eligible officers and employees. Under the plan, the Company contributes amounts so that, upon retirement, the officer or employee will receive a percent of their annual compensation as defined by the plan. As of December 31, 2013, there were 43 participating employers in the plan. The required disclosures are contained in the table below.

Name of Plan:	The Defined Benefit Plan (Plan C) of the CBERA Retirement Program
Plan’s Tax ID #:	04-6035593
Plan Number:	334
Plan Year End:	December 31, 2013	December 31, 2012
Actuarial Valuation:	January 1, 2013	January 1, 2012
FTAP Percentage:	117% (Green)	114.3% (Green)
(Funded Target Attainment Percentage)
Employer Plan Year Contributions:	$88,000	$75,000
	Did not exceed 5%	Did not exceed 5%
Funding Improvement:	The Company was not subject to any specific minimum contributions other than amounts, determined by the Trustees of the plan, that maintain the funded status of the plan in accordance with the requirements of the Pension Protection Act (PPA) and the Employee Retirement Income Security Act (ERISA).

In addition to the pension plan, the Company also participates in a 401(k) savings plan through CBERA. Eligible employees may contribute a percentage of their salary, subject to the IRS regulations, which can be matched by the Company up to five percent of the employee’s compensation.

The Company’s pension expense under these plans was $176,000 and $149,000 for the years ended December 31, 2013 and 2012, respectively.

NOTE 11 - OFF-BALANCE SHEET ACTIVITIES

The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amounts recognized in the consolidated balance sheets. The contract or notional amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments.

The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit is represented by the contractual notional amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the borrower. Collateral held varies but usually includes income-producing commercial properties or residential real estate.

F-29

Notional amounts of financial instrument liabilities whose contract amounts represent off-balance sheet credit risk are as follows as of December 31:

	2013		2012
	(In Thousands)
Commitments to originate loans	$	4,180	$	4,149
Unadvanced funds on loans:
Home equity lines of credit		3,848		4,983
Construction loans		1,566		2,340
Commercial lines of credit		1,771		921
Consumer		141		131
	$	11,506	$	12,524

There is no material difference between the notional amounts and the estimated fair values of the off-balance sheet liabilities.

NOTE 12 - COMMITMENTS AND CONTINGENT LIABILITIES

In April 2012, the Company amended its agreement originally dated March 10, 2007 with a third party in which the third party is to provide the Company with data processing and other related services. The effective date of the amendment was May 1, 2012 for a seven-year term and will automatically renew for successive seven-year terms unless either party notifies the other of its intention not to renew. Each month, the Company shall pay certain minimum monthly charges, as defined in the agreement, as well as charges for any additional services provided.

NOTE 13 - FAIR VALUE MEASUREMENTS

ASC 820-10, “Fair Value Measurements and Disclosures,” provides a framework for measuring fair value under generally accepted accounting principles. This guidance also allows an entity the irrevocable option to elect fair value for the initial and subsequent measurement for certain financial assets and liabilities on a contract-by-contract basis.

In accordance with ASC 820-10, the Company groups its financial assets and financial liabilities measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value.

Level 1 - Valuations for assets and liabilities traded in active exchange markets, such as the New York Stock Exchange. Level 1 also includes U.S. Treasury, other U.S. Government and agency mortgage-backed securities that are traded by dealers or brokers in active markets. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.

Level 2 - Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third party pricing services for identical or comparable assets or liabilities.

Level 3 - Valuations for assets and liabilities that are derived from other methodologies, including option pricing models, discounted cash flow models and similar techniques, are not based on market exchange, dealer, or broker traded transactions. Level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets and liabilities.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

F-30

A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. These valuation methodologies were applied to all of the Company’s financial assets and financial liabilities carried at fair value as of December 31, 2013 and 2012. The Company did not have any significant transfers between level 1 and level 2 of the fair value hierarchy during the year ended December 31, 2013.

The Company’s cash instruments are generally classified within level 1 or level 2 of the fair value hierarchy because they are valued using quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency.

The Company’s investment in mortgage-backed securities and other debt securities available-for-sale is generally classified within level 2 of the fair value hierarchy. For these securities, we obtain fair value measurements from independent pricing services. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. treasury yield curve, trading levels, market consensus prepayment speeds, credit information and the instrument’s terms and conditions.

Level 3 is for positions that are not traded in active markets or are subject to transfer restrictions, valuations are adjusted to reflect illiquidity and/or non-transferability, and such adjustments are generally based on available market evidence. In the absence of such evidence, management’s best estimate is used. Subsequent to inception, management only changes level 3 inputs and assumptions when corroborated by evidence such as transactions in similar instruments, completed or pending third-party transactions in the underlying investment or comparable entities, subsequent rounds of financing, recapitalization and other transactions across the capital structure, offerings in the equity or debt markets, and changes in financial ratios or cash flows.

The Company’s impaired loans are reported at the fair value of the underlying collateral if repayment is expected solely from the collateral. Collateral values are estimated using level 2 inputs based upon appraisals of similar properties obtained from a third party. For level 3 inputs, fair value is based upon management estimates of the value of the underlying collateral or the present value of the expected cash flows.

Other real estate owned values are estimated using level 2 inputs based upon appraisals of similar properties obtained from a third party. For level 3 inputs, fair values are based on management estimates.

F-31

The following summarizes assets measured at fair value as of December 31, 2013 and 2012 and the years then ended.

ASSETS MEASURED AT FAIR VALUE ON A RECURRING BASIS

	Fair Value Measurements at Reporting Date Using:
	Total		Quoted Prices in Active Markets for Identical Assets Level 1		Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3
	(In Thousands)
December 31, 2013:
Debt securities issued by the U.S. Treasury and other U.S. government corporations and agencies	$	2,322	$	—	$	2,322	$	—
Debt securities issued by states of the United States and political subdivisions of the states		4,372		—		4,372		—
Mortgage-backed securities		6,020		—		6,020		—
Mutual Funds		782		782		—		—
Totals	$	13,496	$	782	$	12,714	$	—
December 31, 2012:
Debt securities issued by the U.S. Treasury and other U.S. government corporations and agencies	$	548	$	—	$	548	$	—
Debt securities issued by states of the United States and political subdivisions of the states		4,242		—		4,242		—
Mortgage-backed securities		10,105		—		10,105		—
Mutual Funds		823		823		—		—
Totals	$	15,718	$	823	$	14,895	$	—

F-32

ASSETS MEASURED AT FAIR VALUE ON A NONRECURRING BASIS

Under certain circumstances we make adjustments to fair value for our assets and liabilities although they are not measured at fair value on an ongoing basis. The following table presents assets carried on the consolidated balance sheet by caption and by level in the fair value hierarchy at December 31, 2013 and 2012, for which a nonrecurring change in fair value has been recorded:

	Fair Value Measurements at Reporting Date Using:
	Total		Quoted Prices in Active Markets for Identical Assets Level 1		Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3
	(In Thousands)
December 31, 2013:
Impaired loans	$	1,903	$	—	$	—	$	1,903
Totals	$	1,903	$	—	$	—	$	1,903
December 31, 2012:
Impaired loans	$	1,906	$	—	$	—	$	1,906
Other real estate owned		245		—		—		245
Totals	$	2,151	$	—	$	—	$	2,151

The estimated fair values of the Company’s financial instruments, all of which are held or issued for purposes other than trading, are as follows as of December 31:

	December 31, 2013
	Carrying		Fair Value
	Amount		Level 1		Level 2		Level 3		Total
	(In Thousands)
Financial assets:
Cash and cash equivalents	$	8,991	$	8,991	$	—	$	—	$	8,991
Interest-bearing time deposits with other banks 4,511		—		4,518		—		4,518
Available-for-sale securities		13,496		782		12,714		—		13,496
Held-to-maturity securities		254		—		284		—		284
Federal Home Loan Bank stock		667		667		—		—		667
Investment in The Co-operative Central
Reserve Fund		384		384		—		—		384
Loans, net		132,923		—		—		134,272		134,272
Accrued interest receivable		399		399		—		—		399
Financial liabilities:
Deposits		153,732		—		154,278		—		154,278
FHLB advances		5,000		—		5,182		—		5,182

F-33

	December 31, 2012
	Carrying		Fair Value
	Amount		Level 1		Level 2		Level 3		Total
	(In Thousands)
Financial assets:
Cash and cash equivalents	$	21,141	$	21,141	$	—	$	—	$	21,141
Interest-bearing time deposits with other banks 10,730		—		10,734		—		10,734
Available-for-sale securities		15,718		823		14,895		—		15,718
Held-to-maturity securities		396		—		369		—		369
Federal Home Loan Bank stock		757		757		—		—		757
Investment in The Co-operative Central
Reserve Fund		384		384		—		—		384
Loans, net		112,618		—		—		116,168		116,168
Accrued interest receivable		424		424		—		—		424
Financial liabilities:
Deposits		156,653		—		157,245		—		157,245
FHLB advances		3,307		—		3,331		—		3,331

The carrying amounts of financial instruments shown in the above table are included in the consolidated balance sheets as of December 31, 2013 and 2012 under the indicated captions. Accounting policies related to financial instruments are described in Note 2.

NOTE 14 - SIGNIFICANT GROUP CONCENTRATIONS OF CREDIT RISK

Most of the Bank’s business activity is with customers located within the Commonwealth of Massachusetts. There are no concentrations of credit to borrowers that have similar economic characteristics. The majority of the Bank’s loan portfolio is comprised of loans collateralized by real estate located in the Commonwealth of Massachusetts.

NOTE 15 - OTHER COMPREHENSIVE LOSS

Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities are reported as a separate component of the equity section of the consolidated balance sheets, such items, along with net income, are components of comprehensive income.

The components of other comprehensive loss, included in equity are as follows during the years ended December 31:

	2013			2012
	(In Thousands)
Net unrealized holding (loss) gain on available-for-sale securities	$	(593	)	$	13
Reclassification adjustment for net realized losses (gains) in net income		219			(93	)
Other comprehensive loss before income tax effect		(374	)		(80	)
Income tax benefit		136			47
Other comprehensive loss, net of tax	$	(238	)	$	(33	)

Accumulated other comprehensive loss as of December 31, 2013 and 2012 consists of net unrealized holding gains on available-for-sale securities, net of taxes.

F-34

NOTE 16 - REGULATORY MATTERS

The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table below) of total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital (as defined) to average assets (as defined). Management believes, as of December 31, 2013 and 2012, that the Bank meets all capital adequacy requirements to which it is subject.

As of December 31, 2013, the most recent notification from the Federal Deposit Insurance Corporation categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized the Bank must maintain minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the table. There are no conditions or events since that notification that management believes have changed the institution’s category.

The Bank’s actual capital amounts and ratios are also presented in the table.

	Actual					For Capital Adequacy Purposes					To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars In Thousands)
As of December 31, 2013:
Total Capital (to Risk Weighted Assets)	$	13,399		13.5	%	$	7,944	³	8.0	%	$	9,929	³	10.0	%
Tier 1 Capital (to Risk Weighted Assets)		12,650		12.7			3,972	³	4.0			5,958	³	6.0
Tier 1 Capital (to Average Assets)		12,650		7.5			6,759	³	4.0			8,449	³	5.0
As of December 31, 2012:
Total Capital (to Risk Weighted Assets)		12,970		14.0			7,401	³	8.0			9,252	³	10.0
Tier 1 Capital (to Risk Weighted Assets)		12,174		13.2			3,701	³	4.0			5,551	³	6.0
Tier 1 Capital (to Average Assets)		12,174		7.2			6,757	³	4.0			8,446	³	5.0

NOTE 17 - SUBSEQUENT EVENT - PLAN OF CONVERSION

On February 25, 2014, the Board of Trustees of the Company, the Board of Directors of Conahasset Bancshares, Inc. (the “Mid-Tier Holding Company”), and the Board of Directors of the Bank adopted a plan of conversion under which the Company would convert from a mutual holding company to a stock holding company. The conversion to a stock holding company is subject to approval by the majority of the members of the Company (the merger of the Company with and into the Mid-Tier Holding Company is subject to separate approval by two-thirds of the Company’s Corporators entitled to vote), and various regulatory agencies, including the Board of Governors of the Federal Reserve System and The Commissioner of Banks of the Commonwealth of Massachusetts, and includes the filing of a registration statement with the U. S. Securities and Exchange Commission. If such approvals are obtained, the Mid-Tier Holding Company will convert from a Maryland corporation to a Delaware corporation, and the Company will merge with and into the Mid-Tier Holding Company with the Mid-Tier Holding Company as the resulting entity (the “MHC Merger”). Immediately after the MHC Merger, –the Mid-Tier Holding Company will merge with a newly formed Stock Holding Company, Pilgrim Bancshares, Inc., a Maryland corporation, (the “Stock Holding Company”), with the Stock Holding Company as the resulting entity. The Stock Holding Company (of which the Bank will become a wholly-owned subsidiary) will issue and sell shares of capital stock to eligible depositors of the Bank, the Bank’s tax-qualified employee benefit plans (including the employee stock ownership plan being established in connection with the conversion) and the public.

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The cost of conversion and issuing the capital stock will be deferred and deducted from the proceeds of the offering. In the event the conversion and offering are not completed, any deferred costs will be charged to operations. Through December 31, 2013, the Company had incurred approximately $2,000 in conversion costs, which are included in other assets on the consolidated balance sheet.

In connection with the plan of conversion, the Stock Holding Company plans to establish a Charitable Foundation (the “Foundation”). The Foundation will be funded with $725,000, consisting of 3.0% of the stock that is sold in the offering and the remainder in cash.

At the time of conversion from a mutual holding company to a stock holding company, the Stock Holding Company will substantially restrict retained earnings by establishing a liquidation account and the Bank will establish a parallel liquidation account. The liquidation account will be maintained for the benefit of eligible holders who continue to maintain their accounts at the Bank after conversion. The liquidation account will be reduced annually to the extent that eligible account holders have reduced their qualifying deposits. Subsequent increases will not restore an eligible account holder’s interest in the liquidation account. In the event of a complete liquidation of the Bank, and only in such event, each account holder will be entitled to receive a distribution from the liquidation account in an amount proportionate to the adjusted qualifying account balances then held. The Stock Holding Company and the Bank may not pay dividends if those dividends would cause regulatory capital to be reduced below applicable capital requirements or the amount required to maintain its respective liquidation account amount.

NOTE 18 - RECLASSIFICATION

Certain amounts in the prior year have been reclassified to be consistent with the current year’s statement presentation.

F-36

You should rely only on the information contained in this document or that to which we have referred you. No person has been authorized to give any information or to make any representation other than as contained in this prospectus and, if given or made, such other information or representation must not be relied upon as having been authorized by Pilgrim Bancshares, Inc. or Pilgrim Bank This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any of the securities offered hereby to any person in any jurisdiction in which such offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so, or to any person to whom it is unlawful to make such offer or solicitation in such jurisdiction. Neither the delivery of this prospectus nor any sale hereunder shall under any circumstances create any implication that there has been no change in the affairs of Pilgrim Bancshares, Inc. or Pilgrim Bank since any of the dates as of which information is furnished herein or since the date hereof.

PILGRIM BANCSHARES, INC.

(Proposed Holding Company for Pilgrim Bank)

Up to 1,897,500 Shares of

Common Stock

Par value $0.01 per share

(Subject to increase to up to 2,182,125 Shares)

PROSPECTUS

KEEFE, BRUYETTE & WOODS

                                         A Stifel Company

[—], 2014

Until [prospectus date + 35], 2014, all dealers effecting transactions in the registered securities, whether or not participating in this distribution, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver the prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

PART II: INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution

		Amount
*	Registrant’s Legal Fees and Expenses	$	450,000
*	Registrant’s Accounting Fees and Expenses		150,000
*	Marketing Agent Fees and Expenses (1)		300,000
*	Records Management Fees and Expenses		35,000
*	Appraisal Fees and Expenses		40,000
*	Printing, Postage, Mailing and EDGAR Fees		185,000
*	Filing Fees (Blue Sky, FINRA and SEC)		22,700
*	Transfer Agent Fees and Expenses		15,000
*	Business Plan Fees and Expenses		40,000
*	Proxy Solicitor Fees and Expenses		40,000
*	Other		22,300
*	Total	$	1,300,000

* Estimated

(1) Pilgrim Bancshares, Inc. has retained Keefe, Bruyette & Woods, Inc. to assist in the sale of common stock on a best efforts basis. Fees are estimated at the adjusted maximum of the offering range, assuming that all shares are sold in the subscription and community offerings.

Item 14. Indemnification of Directors and Officers

Articles 10 and 11 of the Articles of Incorporation of Conahasset Bancorp, Inc. (the “Corporation”) set forth circumstances under which directors, officers, employees and agents of the Corporation may be insured or indemnified against liability which they incur in their capacities as such:

ARTICLE 10. Indemnification, etc. of Directors and Officers.

A. Indemnification. The Corporation shall indemnify (1) its current and former directors and officers, whether serving the Corporation or at its request any other entity, to the fullest extent required or permitted by the MGCL now or hereafter in force, including the advancement of expenses under the procedures and to the fullest extent permitted by law, and (2) other employees and agents to such extent as shall be authorized by the Board of Directors and permitted by law; provided, however, that, except as provided in Section B of this Article 10 with respect to proceedings to enforce rights to indemnification, the Corporation shall indemnify any such indemnitee in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized by the Board of Directors of the Corporation.

B. Procedure. If a claim under Section A of this Article 10 is not paid in full by the Corporation within sixty (60) days after a written claim has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be twenty (20) days, the indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim. If successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the indemnitee shall also be entitled to be reimbursed the expense of prosecuting or defending such suit. It shall be a defense to any action for advancement of expenses that the Corporation has not received both (i) an undertaking as required by law to repay such advances in the event it shall ultimately be determined that the standard of conduct has not been met and (ii) a written affirmation by the indemnitee of his good faith belief that the standard of conduct necessary for indemnification by the Corporation has been met. In (i) any suit brought by the indemnitee to enforce a right to indemnification hereunder (but not in a suit brought by the indemnitee to enforce a right to an advancement of expenses) it shall be a defense that, and (ii) any suit by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking the Corporation shall be entitled to recover such expenses upon a final adjudication that, the indemnitee has not met the applicable standard for indemnification set forth in the MGCL. Neither the failure of the Corporation (including its Board of Directors,

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independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such suit that indemnification of the indemnitee is proper in the circumstances because the indemnitee has met the applicable standard of conduct set forth in the MGCL, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) that the indemnitee has not met such applicable standard of conduct, shall create a presumption that the indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the indemnitee, be a defense to such suit. In any suit brought by the indemnitee to enforce a right to indemnification or to an advancement of expenses hereunder, or by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the indemnitee is not entitled to be indemnified, or to such advancement of expenses, under this Article 10 or otherwise shall be on the Corporation.

C. Non-Exclusivity. The rights to indemnification and to the advancement of expenses conferred in this Article 10 shall not be exclusive of any other right that any Person may have or hereafter acquire under any statute, these Articles, the Corporation’s Bylaws, any agreement, any vote of stockholders or the Board of Directors, or otherwise.

D. Insurance. The Corporation may maintain insurance, at its expense, to insure itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such Person against such expense, liability or loss under the MGCL.

E. Miscellaneous. The Corporation shall not be liable for any payment under this Article 10 in connection with a claim made by any indemnitee to the extent such indemnitee has otherwise actually received payment under any insurance policy, agreement, or otherwise, of the amounts otherwise indemnifiable hereunder. The rights to indemnification and to the advancement of expenses conferred in Sections A and B of this Article 10 shall be contract rights and such rights shall continue as to an indemnitee who has ceased to be a director or officer and shall inure to the benefit of the indemnitee’s heirs, executors and administrators.

F. Limitations Imposed by Federal Law. Notwithstanding any other provision set forth in this Article 10, in no event shall any payments made by the Corporation pursuant to this Article 10 exceed the amount permissible under applicable federal law, including, without limitation, Section 18(k) of the Federal Deposit Insurance Act and the regulations promulgated thereunder.

Any repeal or modification of this Article 10 shall not in any way diminish any rights to indemnification or advancement of expenses of such director or officer or the obligations of the Corporation arising hereunder with respect to events occurring, or claims made, while this Article 10 is in force.

ARTICLE 11. Limitation of Liability. An officer or director of the Corporation, as such, shall not be liable to the Corporation or its stockholders for money damages, except (A) to the extent that it is proved that the Person actually received an improper benefit or profit in money, property or services, for the amount of the benefit or profit in money, property or services actually received; or (B) to the extent that a judgment or other final adjudication adverse to the Person is entered in a proceeding based on a finding in the proceeding that the Person’s action, or failure to act, was the result of active and deliberate dishonesty and was material to the cause of action adjudicated in the proceeding; or (C) to the extent otherwise provided by the MGCL. If the MGCL is amended to further eliminate or limit the personal liability of officers and directors, then the liability of officers and directors of the Corporation shall be eliminated or limited to the fullest extent permitted by the MGCL, as so amended.

Any repeal or modification of the foregoing paragraph by the stockholders of the Corporation shall not adversely affect any right or protection of a director or officer of the Corporation existing at the time of such repeal or modification.

Item 15. Recent Sales of Unregistered Securities

Not Applicable.

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Item 16. Exhibits and Financial Statement Schedules:

The exhibits and financial statement schedules filed as part of this registration statement are as follows:

(a) List of Exhibits

1.1	Engagement Letter between Conahasset Bancshares, Inc., Conahasset Bancshares, MHC, Pilgrim Bank and Keefe, Bruyette & Woods, Inc.
1.2	Form of Agency Agreement between Pilgrim Bank, Pilgrim Bancshares, Inc., and Keefe, Bruyette & Woods, Inc.*
2	Plan of Conversion
3.1	Articles of Incorporation of Pilgrim Bancshares, Inc.
3.2	Bylaws of Pilgrim Bancshares, Inc.
4	Form of Common Stock Certificate of Pilgrim Bancshares, Inc.
5	Opinion of Luse Gorman Pomerenk & Schick, P.C. regarding legality of securities being registered
8.1	Form of Federal Tax Opinion of Luse Gorman Pomerenk & Schick, P.C.
8.2	Form of State Tax Opinion of Shatswell, MacLeod & Company, P.C.
10.1	Form of Employment Agreement between Pilgrim Bank and Francis E. Campbell+
10.2	Form of Change in Control Agreement between Pilgrim Bank and Christopher G. McCourt+
10.3	Form of Change in Control Agreement between Pilgrim Bank and Joan A. MacIntyre+
10.4	Form of Pilgrim Bank Supplemental Executive Retirement Plan+
10.5	Form of Pilgrim Bank Executive Annual Incentive Plan+
10.6	Form of Pilgrim Bank Employee Stock Ownership Plan+
21	Subsidiaries of Registrant
23.1	Consent of Luse Gorman Pomerenk & Schick, P.C. (contained in Opinions included as Exhibits 5 and 8.1)
23.2	Consent of RP Financial, LC.
23.3	Consent of Shatswell, MacLeod & Company, P.C.
24	Power of Attorney (set forth on signature page)
99.1	Appraisal Agreement between Pilgrim Bank and RP Financial, LC.
99.2	Letter of RP Financial, LC. with respect to Subscription Rights
99.3	Appraisal Report of RP Financial, LC.**
99.4	Marketing Materials
99.5	Stock Order and Certification Form
99.6	Letter of RP Financial, LC. with respect to Liquidation Accounts
99.7	Engagement Letter between Conahasset Bancshares, Inc, Conahasset Bancshares, MHC, Pilgrim Bank and Keefe, Bruyette & Woods, Inc. regarding records processing services

* To be filed by amendment.

** Supporting financial schedules filed in paper format only pursuant to Rule 202 of Regulation S-T. Available for inspection during business hours at the principal offices of the SEC in Washington, D.C.

+ Management contract or compensation plan or arrangement.

(b) Financial Statement Schedules

No financial statement schedules are filed because the required information is not applicable or is included in the consolidated financial statements or related notes.

Item 17. Undertakings

The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

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(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;

(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(4) That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities:

The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424 (§230.424 of this chapter);

(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

(5) That, for purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

(6) That, for the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

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(7) The undersigned registrant hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreement, certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.

(8) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

II-5

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Cohasset, Commonwealth of Massachusetts on March 11, 2014.

PILGRIM BANCSHARES, INC.
By:	/s/ Francis E. Campbell
	Francis E. Campbell
	Chairman of the Board, President and Chief Executive Officer
	(Duly Authorized Representative)

POWER OF ATTORNEY

We, the undersigned directors and officers of Pilgrim Bancshares, Inc. (the “Company”) hereby severally constitute and appoint Francis E. Campbell as our true and lawful attorney and agent, to do any and all things in our names in the capacities indicated below which said Francis E. Campbell may deem necessary or advisable to enable the Company to comply with the Securities Act of 1933, as amended, and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with the registration statement on Form S-1 relating to the offering of the Company’s common stock, including specifically, but not limited to, power and authority to sign for us in our names in the capacities indicated below the registration statement and any and all amendments (including post-effective amendments) thereto; and we hereby approve, ratify and confirm all that said Francis E. Campbell shall do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signatures	Title	Date
/s/ Francis E. Campbell	Chairman of the Board, President and Chief Executive Officer (Principal Executive Officer)	March 11, 2014
Francis E. Campbell
/s/ Christopher G. McCourt	Senior Vice President, Chief Financial Officer and Treasurer (Principal Accounting and Financial Officer)	March 11, 2014
Christopher G. McCourt
/s/ Melissa J. Browne	Director	March 11, 2014
Melissa J. Browne
/s/ J. Michael Buckley	Director	March 11, 2014
J. Michael Buckley
/s/ Steven T. Golden	Director	March 11, 2014
Steven T. Golden
/s/ Ronald H. Goodwin	Director	March 11, 2014
Ronald H. Goodwin
/s/ Mary E. Granville	Director	March 11, 2014
Mary E. Granville
/s/ Charles J. Humphreys	Director	March 11, 2014
Charles J. Humphreys
/s/ Brian W. Noonan	Director	March 11, 2014
Brian W. Noonan
/s/ Joseph P. Reilly	Director	March 11, 2014
Joseph P. Reilly

EXHIBIT INDEX

1.1	Engagement Letter between Conahasset Bancshares, Inc., Conahasset Bancshares, MHC, Pilgrim Bank and Keefe, Bruyette & Woods, Inc.
1.2	Form of Agency Agreement between Pilgrim Bank, Pilgrim Bancshares, Inc., and Keefe, Bruyette & Woods, Inc.*
2	Plan of Conversion
3.1	Articles of Incorporation of Pilgrim Bancshares, Inc.
3.2	Bylaws of Pilgrim Bancshares, Inc.
4	Form of Common Stock Certificate of Pilgrim Bancshares, Inc.
5	Opinion of Luse Gorman Pomerenk & Schick, P.C. regarding legality of securities being registered
8.1	Form of Federal Tax Opinion of Luse Gorman Pomerenk & Schick, P.C.
8.2	Form of State Tax Opinion of Shatswell, MacLeod & Company, P.C.
10.1	Form of Employment Agreement between Pilgrim Bank and Francis E. Campbell+
10.2	Form of Change in Control Agreement between Pilgrim Bank and Christopher G. McCourt+
10.3	Form of Change in Control Agreement between Pilgrim Bank and Joan A. MacIntyre+
10.4	Form of Pilgrim Bank Supplemental Executive Retirement Plan+
10.5	Form of Pilgrim Bank Executive Annual Incentive Plan+
10.6	Form of Pilgrim Bank Employee Stock Ownership Plan+
21	Subsidiaries of Registrant
23.1	Consent of Luse Gorman Pomerenk & Schick, P.C. (contained in Opinions included as Exhibits 5 and 8.1)
23.2	Consent of RP Financial, LC.
23.3	Consent of Shatswell, MacLeod & Company, P.C.
24	Power of Attorney (set forth on signature page)
99.1	Appraisal Agreement between Pilgrim Bank and RP Financial, LC.
99.2	Letter of RP Financial, LC. with respect to Subscription Rights
99.3	Appraisal Report of RP Financial, LC.**
99.4	Marketing Materials
99.5	Stock Order and Certification Form
99.6	Letter of RP Financial, LC. with respect to Liquidation Accounts
99.7	Engagement Letter between Conahasset Bancshares, Inc., Conahasset Bancshares, MHC, Pilgrim Bank and Keefe, Bruyette & Woods, Inc. regarding records processing services

* To be filed by amendment.

** Supporting financial schedules filed in paper format only pursuant to Rule 202 of Regulation S-T. Available for inspection during business hours at the principal offices of the SEC in Washington, D.C.

+ Management contract or compensation plan or arrangement.

EX-1.1

Exhibit 1.1

January 8, 2014

Conahasset Bancshares, MHC

Conahasset Bancshares, Inc.

Pilgrim Bank

40 South Main Street

Cohasset, MA 02025

Attention:	Francis E. Campbell
	Chairman, President & CEO

Ladies and Gentlemen:

This letter confirms the engagement of Keefe, Bruyette & Woods, Inc. (“KBW”) to act as the exclusive financial advisor to Conahasset Bancshares, MHC (the “MHC”), Conahasset Bancshares, Inc. (the “Bancshares”), Pilgrim Bank (the “Bank”) and, upon formation, the Holding Company (as defined below) in connection with the MHC’s proposed conversion and reorganization from the current mutual holding company form of organization to a stock holding company form of organization (such conversion and reorganization together, the “Conversion”) pursuant to the MHC’s Plan of Conversion (the “Plan of Conversion”). In accordance with the Plan of Conversion and in order to effect the Conversion, it is contemplated that (i) the Bancshares will convert from a Maryland corporation to a Delaware corporation, (ii) the MHC will merge into the Bancshares, (iii) the Bancshares will merge into a new stock holding company (the “Holding Company”), (iv) the Holding Company will offer and sell shares of its common stock (the “Common Stock”) initially to eligible persons in a Subscription Offering, with any remaining unsold shares offered (A) to the general public in a direct community offering (the “Community Offering”) and (B) if necessary, through a syndicate of broker-dealers organized by KBW (a “Syndicated Community Offering”) (the Subscription Offering, the Community Offering and any Syndicated Community Offering are collectively referred to herein as the “Offerings”) and (v) the Bank will become a wholly-owned subsidiary of the Holding Company. The MHC, the Bancshares, the Bank and the Holding Company are collectively referred to herein as the “Company”. This letter sets forth the terms and conditions of our engagement.

Conahasset Bancshares, MHC

Conahasset Bancshares, Inc.

Pilgrim Bank

January 8, 2014

Page 2 of 9

In addition, KBW will act as Conversion Agent in connection with the Offerings pursuant to the terms of a separate agreement between the Company and KBW.

1. Advisory/Offering Services

As the Company’s exclusive financial advisor, KBW will provide financial and logistical advice to the Company and will assist the Company’s management, legal counsel, accountants and other advisors in connection with the Conversion and related issues. We anticipate our services will include the following, each as may be necessary and as the Company may reasonably request:

1. Provide advice on the financial and securities market implications of the Conversion and any related corporate documents, including the Company’s Business Plan;

2. Assist in structuring the Offerings, including developing and assisting in implementing a marketing strategy for the Offerings;

3. Reviewing all offering documents related to the Offerings, including the Prospectus, stock order forms, letters, brochures and other related offering materials (it being understood that preparation and filing of such documents will be the responsibility of the Company and its counsel);

4. Assisting the Company in preparing for and scheduling meetings with potential investors and broker-dealers, as necessary;

5. Assist the Company in analyzing proposals from outside vendors retained in connection with the Offerings, including printers, transfer agents and appraisal firms;

6. Assist the Company in the drafting and distribution of press releases as required or appropriate in connection with the Offerings;

7. Meet with the Board of Directors and/or management of the Company to discuss any of the above services; and

8. Such other financial advisory and investment banking services in connection with the Offerings as may be agreed upon by KBW and the Company.

2. Due Diligence Review

The Company acknowledges and agrees that KBW’s obligation to perform the services contemplated by this agreement shall be subject to the satisfactory completion of such investigations and inquiries relating to the Company, and its directors, officers, agents and employees, as KBW and their counsel in their sole discretion my deem appropriate under the circumstances (the “Due Diligence Review”). The Company agrees it will make available to KBW all information, whether or not publicly available, which KBW reasonably requests (the “Information”), and will permit KBW to discuss with the board of directors and management the operations and prospects of the Company. KBW will treat all Confidential Information (as defined herein) as confidential in accordance with the provisions of Section 9 hereof. The Company recognizes and confirms that KBW (a) will use and rely on and assume the accuracy and completeness of the Information in performing the services contemplated by this agreement without having independently verified or analyzed the accuracy or completeness of same, and (b) does not assume responsibility or liability for the accuracy or completeness of the Information or to conduct any independent verification or any appraisal or physical inspection of properties or assets. The Company acknowledges and agrees that KBW will rely upon Company management as to the reasonableness and achievability of any financial and operating forecasts and projections provided to KBW, and that KBW

Conahasset Bancshares, MHC

Conahasset Bancshares, Inc.

Pilgrim Bank

January 8, 2014

Page 3 of 9

will assume, at the Company’s direction, that all financial forecasts and projections have been reasonably prepared by Company management on a basis reflecting the best then currently available estimates and judgments of management as to the expected future financial performance of the Company, and that such forecasts and projections will be realized in the amounts and in the time periods currently estimated by such management.

3. Regulatory Filings

The Company will cause appropriate offering documents to be filed with all regulatory agencies including the Securities and Exchange Commission (“SEC”), the Financial Industry Regulatory Authority (“FINRA”), and the appropriate federal and/or state bank regulatory agencies. In addition, the Company and KBW agree that the Company’s counsel shall serve as counsel with respect to blue sky matters in connection with the Offerings, and that the Company shall cause such counsel to prepare a Blue Sky Memorandum related to the Offerings including KBW’s participation therein and shall furnish KBW a copy thereof addressed to KBW or upon which counsel shall state KBW may rely.

4. Fees

For the services hereunder, the Company shall pay the following fees to KBW at closing unless stated otherwise:

(a) Management Fee: A Management Fee of $40,000 payable in four consecutive monthly installments of $10,000 commencing with the first day of the first month immediately following the execution of this engagement letter. Each such installment of the Management Fee shall be deemed to have been earned in full as of the first day of each such month. Should the Offerings or this agreement be terminated for any reason KBW shall have earned and be entitled to be paid fees accruing through the stage at which point the termination occurred.

(b) Success Fee: A Success Fee shall be paid based on 1.0% of the aggregate purchase price of Common Stock sold in the Subscription Offering and 2.0% of the aggregate purchase price of Common Stock sold in the Community Offering, excluding shares purchased by the Company’s officers, directors, or employees (or members of their immediate family), including any IRAs for the benefit of such persons, any ESOP, tax-qualified or stock based compensation plans or similar plan created by the Company for some or all of its directors or employees, or any charitable foundation established by the Company (or any shares contributed to such a foundation), subject to the payment of a minimum success fee of $225,000. The Management Fee described in 4(a), to the extent then already paid, will be credited against the Success Fee. The obligation to pay to KBW the full Success Fee upon completion of the Subscription Offering and any Community Offering shall survive any termination of this agreement, including any termination occurring prior to the completion of such Offerings.

Conahasset Bancshares, MHC

Conahasset Bancshares, Inc.

Pilgrim Bank

January 8, 2014

Page 4 of 9

(c) Syndicated Community Offering: If any shares of the Common Stock remain unsold after the completion of the Subscription Offering and any Community Offering, at the request of the Company, KBW may seek to form a syndicate of registered broker-dealers to assist in a Syndicated Community Offering, on a best efforts basis, subject to the terms and conditions set forth in a selected dealers agreement to be entered into between the Company and KBW. KBW will endeavor to distribute the Common Stock among dealers in a fashion which best meets the distribution objectives of the Company and the Conversion. In the event of a Syndicated Community Offering, KBW will be paid, in addition to (and not in lieu of) the Success Fee, a fee not to exceed 6.0% of the aggregate purchase price of the shares of common stock sold in the Syndicated Community Offering. From this fee, KBW will pass onto selected broker-dealers (if any), who assist in the Syndicated Community Offering, an amount competitive with gross underwriting discounts charged at such time for comparable amounts of stock sold at a comparable price per share in a similar market environment. Fees with respect to purchases affected with the assistance of a broker/dealer other than KBW shall be transmitted by KBW to such broker/dealer. (The decision to utilize selected broker-dealers will be made by the Company upon consultation with KBW.)

The payment of compensation by the Company to KBW pursuant to this paragraph 4 is subject to FINRA’s review of such compensation, if such review is required under applicable FINRA rules and regulations.

5. Additional Services

KBW further agrees to provide financial advisory assistance to the Company for a period of three years following completion of the Offerings, including general strategic planning, the creation of a capital management strategy designed to enhance the value of the Company, including the formation of a dividend policy and share repurchase program, assistance with shareholder relations matters, general advice on mergers and acquisitions, and other related financial matters, without the payment by the Company of any fees in addition to those set forth in Section 4 hereof. Nothing in this letter agreement shall require the Company to obtain such services from KBW. If KBW acts as a financial advisor to the Company in connection with any specific transactions, the terms of such engagement will be set forth in a separate agreement between the Company and KBW.

Conahasset Bancshares, MHC

Conahasset Bancshares, Inc.

Pilgrim Bank

January 8, 2014

Page 5 of 9

6. Expenses

The Company will bear all expenses of the proposed Offerings customarily borne by issuers, including, without limitation, regulatory filing fees, SEC, “Blue Sky,” and FINRA filing and registration fees; the fees of the Company’s accountants, attorneys, appraiser, business plan consultant, transfer agent and registrar, DTCC eligibility fees, printing, mailing and marketing and syndicate expenses associated with the Offerings; the fees set forth in Section 4; and fees for “Blue Sky” legal work.

KBW will also be reimbursed for its reasonable out-of-pocket expenses, not to exceed $15,000 (subject to the provisions of this paragraph), related to the Offerings, including, but not limited to, costs of travel, meals and lodging, photocopying, telephone, facsimile, and couriers. KBW will also be reimbursed for fees and expenses of its counsel not to exceed $75,000 (subject to the provisions of this paragraph). These expense caps assume no unusual circumstances or delays, and no re-solicitation in connection with the Offerings. The Company acknowledges and agrees that, in the event unusual circumstances arise or a delay or resolicitation occurs (including but not limited a delay in the Offerings which would require an update of the financial information in tabular form to reflect a period later than that set forth in the original filing of the offering documents), such expense caps may be increased by additional amounts, not to exceed an additional $5,000 in the case of additional out-of-pocket expenses of KBW and an additional $10,000 in the case of additional fees and expenses of KBW’s legal counsel. The provisions of this paragraph are not intended to apply to or in any way impair or limit the indemnification or contribution provisions contained herein.

7. Limitations

The Company acknowledges that all opinions and advice (written or oral) given by KBW to the Company in connection with KBW’s engagement are intended solely for the benefit and use of the Company for the purposes of its evaluation of the proposed Offerings. Unless otherwise expressly stated in an opinion letter issued by KBW or otherwise expressly agreed, no one other than the Company is authorized to rely upon this engagement of KBW or any statements or conduct by KBW. The Company agrees that no such opinion or advice shall be used, reproduced, disseminated, quoted or referred to at any time, in any manner, or for any purpose, nor shall any public references to KBW be made by the Company or any of its representatives without the prior written consent of KBW.

The Company acknowledges and agrees that KBW has been retained to act solely as financial advisor to the Company and not as an advisor to or agent of any other person, and the Company’s engagement of KBW is not intended to confer rights upon any person not a party to this Agreement (including shareholders, employees or creditors of the Company) as against KBW or its affiliates, or their respective directors, officers, employees or agents. In such capacity, KBW shall act as an independent contractor, and any duties arising out of its engagement shall be owed solely to the Company. It is understood that KBW’s responsibility to the Company is solely contractual in nature and KBW does not owe the Company, or any other party, any fiduciary duty as a result of this Agreement.

Conahasset Bancshares, MHC

Conahasset Bancshares, Inc.

Pilgrim Bank

January 8, 2014

Page 6 of 9

8. Benefit

This letter agreement shall inure to the benefit of the parties hereto and their respective successors, and the obligations and liabilities assumed hereunder by the parties hereto shall be binding upon their respective successors; provided, however, that this letter agreement shall not be assignable without the mutual consent of KBW and the Company.

9. Confidentiality

KBW acknowledges that a portion of the Information provided to it in connection with its engagement hereunder may contain confidential and proprietary business information concerning the Company (such Information, the “Confidential Information”). KBW agrees that, except as contemplated in connection with the performance of its services under this agreement, as authorized by the Company or as required by law, regulation or legal process, it will treat as confidential all Confidential Information; provided, however, that KBW may disclose such Confidential Information to its agents and advisors who are assisting or advising KBW in performing its services hereunder and who have been instructed to be bound by the terms and conditions of this paragraph. As used herein, the term “Confidential Information” shall not include information which (a) is or becomes generally available to the public other than as a result of a disclosure by KBW in violation of this Agreement, (b) was available to KBW on a non-confidential basis prior to its disclosure to KBW or its representatives by the Company, or (c) becomes available to KBW on a non-confidential basis from a person other than the Company who is not known to KBW to be bound not to disclose such information pursuant to a contractual obligation of confidentiality to the Company.

The Company hereby acknowledges and agrees that the presentation materials and financial models used by KBW in performing its services hereunder have been developed by and are proprietary to KBW. The Company agrees that it will not reproduce or distribute all or any portion of such models or presentations without the prior consent from KBW in writing.

10. Indemnification

As KBW will be acting on behalf of the Company in connection with the Offerings, the Company agrees to indemnify and hold harmless KBW and its affiliates, the respective partners, directors, officers, employees and agents of KBW and its affiliates and each other person, if any, controlling KBW or any of its affiliates and each of their successors and assigns (KBW and each such person being an “Indemnified Party”) to the fullest extent permitted by law, from and against any and all losses, claims, damages and liabilities, joint or several, to which such Indemnified Party may become subject under applicable federal or state law, or otherwise related to or arising out of the Offerings or the engagement of KBW pursuant to, or the performance by KBW of the services contemplated by, this letter, and will reimburse any Indemnified Party for all expenses (including legal fees and expenses) as they are incurred, including expenses incurred in connection with the investigation, preparing for or defending any such action or

Conahasset Bancshares, MHC

Conahasset Bancshares, Inc.

Pilgrim Bank

January 8, 2014

Page 7 of 9

claim whether or not in connection with pending or threatened litigation, or any action or proceeding arising therefrom, whether or not KBW is a party; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage, liability or expense (a) arises out of or is based upon any untrue statement of a material fact or the omission of a material fact required to be stated therein or necessary to make not misleading any statements contained in any final prospectus, or any amendment or supplement thereto, made in reliance on and in conformity with written information furnished to the Company by KBW expressly for use therein or (b) to the extent that any loss, claim, damage, liability or expense is found in a final judgment by a court of competent jurisdiction to have resulted primarily from KBW’s bad faith, willful misconduct or gross negligence. The indemnification obligations set forth herein shall not apply to the Bank, solely to the extent that such indemnification by the Bank would constitute a covered transaction under Section 23A of the Federal Reserve Act, as amended.

If the indemnification provided for in the foregoing paragraph is judicially determined to be unavailable (other than in accordance with the terms hereof) to any person otherwise entitled to indemnity in respect of any losses, claims, damages or liabilities referred to herein, then, in lieu of indemnifying such person hereunder, the Company shall contribute to the amount paid or payable by such person as a result of such losses, claims, damages or liabilities (and expenses relating thereto) (i) in such proportion as is appropriate to reflect the relative benefits to the Company, on the one hand, and KBW, on the other hand, of the engagement provided for in this Agreement or (ii) if the allocation provided for in clause (i) above is not available, in such proportion as is appropriate to reflect not only the relative benefits referred to in such clause (i) but also the relative fault of each of the Company and KBW, as well as any other relevant equitable considerations; provided, however, in no event shall KBW’s aggregate contribution to the amount paid or payable exceed the aggregate amount of fees actually received by KBW under this Agreement. For the purposes of this Agreement, the relative benefits to the Company and to KBW of the engagement under this Agreement shall be deemed to be in the same proportion as (a) the total value paid or contemplated to be paid or received or contemplated to be received by the Company in the Conversion and the Offerings that are the subject of the engagement hereunder, whether or not consummated, bears to (b) the fees paid or to be paid to KBW under this Agreement.

The Company also agrees that neither KBW, nor any of its affiliates nor any officer, director, employee or agent of KBW or any of its affiliates, nor any person controlling KBW or any of its affiliates, shall have any liability to the Company for or in connection with such engagement except for any such liability for losses, claims, damages, liabilities or expenses incurred by the Company which are finally judicially determined to have resulted primarily from KBW’s bad faith, willful misconduct or gross negligence. The foregoing agreement shall be in addition to any rights that KBW, the Company or any Indemnified Party may have at common law or otherwise, including, but not limited to, any right to contribution. For the sole purpose of enforcing and otherwise giving effect to the indemnification and contribution provisions of this agreement, the Company hereby consents to personal jurisdiction and service and venue in any court in which any claim which is subject to this agreement is brought against KBW or any other indemnified party.

Conahasset Bancshares, MHC

Conahasset Bancshares, Inc.

Pilgrim Bank

January 8, 2014

Page 8 of 9

The Company agrees that it will not, without the prior written consent of KBW, settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not KBW is an actual or potential party to such claim, action, suit, or proceeding) unless such settlement, compromise or consent includes an unconditional release of KBW from all liability arising out of such claim, action, suit or proceeding.

11. Definitive Agreement

This letter agreement reflects KBW’s present intention of proceeding to work with the Company on its proposed Offerings. No legal and binding obligation is created on the part of the Company or KBW with respect to the subject matter hereof, except as to (i) the agreement to maintain the confidentiality of Confidential Information set forth in Section 9, (ii) the payment of certain fees as set forth in Section 4, (iii) the payment of fees and expenses as set forth in Section 6, (iv) the limitations set forth in Section 7, (v) the indemnification and contribution and other provisions set forth in Section 10 and (iv) those terms set forth in a mutually agreed upon Agency Agreement between KBW and the Company to be executed prior to commencement of the Offerings, all of which, notwithstanding anything to the contrary that may be contained herein, shall constitute the binding obligations of the parties hereto and which shall survive the termination of this letter agreement or the completion of the services furnished hereunder and shall remain operative and in full force and effect.

KBW’s execution of such Agency Agreement shall also be subject to (a) KBW’s satisfaction with Due Diligence Review, (b) preparation of offering materials that are satisfactory to KBW, (c) compliance with all relevant legal and regulatory requirements to the reasonable satisfaction of KBW and its counsel, (d) agreement that the price established by the independent appraiser is reasonable, and (e) market conditions at the time of the proposed Offerings.

This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and can be altered only by written consent signed by the parties. This Agreement shall be construed and enforced in accordance with the laws of the State of New York, without regard to the conflicts of laws principles thereof. Any right to trial by jury with respect to any claim or action arising out of this agreement or conduct in connection with the engagement is hereby waived by the parties hereto.

If the foregoing correctly sets forth our mutual understanding, please so indicate by signing and returning the original copy of this letter to the undersigned.

Conahasset Bancshares, MHC

Conahasset Bancshares, Inc.

Pilgrim Bank

January 8, 2014

Page 9 of 9

Very truly yours,

KEEFE, BRUYETTE & WOODS, INC.

By:	/s/ Patricia A. McJoynt
	Patricia A. McJoynt
	Managing Director
Conahasset Bancshares, MHC
Conahasset Bancshares, Inc.
Pilgrim Bank

By:	/s/ Francis E. Campbell	Date:	1/9/2014
	Francis E. Campbell
	Chairman, President & CEO

EX-2

Exhibit 2

CONAHASSET BANCSHARES, MHC

PLAN OF CONVERSION

Adopted by the Board of Trustees

on February 25, 2014

TABLE OF CONTENTS

ARTICLE 1. INTRODUCTION—BUSINESS PURPOSE		1
ARTICLE 2. DEFINITIONS		3
ARTICLE 3. GENERAL PROCEDURE FOR CONVERSION		10
3.1.	Preconditions to Conversion	10
3.2.	Submission of Plan to Commissioner and FRB	11
3.3.	Special Meeting of Corporators to Approve the MHC Merger; Special Meeting of Shareholders to Approve the Plan	11
3.4.	Completion of Conversion and Offering; Stock Holding Company Charter and Bylaws	12
3.5.	Bank Charter and Bylaws	12
3.6.	Conversion Procedures	12
3.7.	Conversion to Stock Holding Company.	13
3.8.	Offer and Sale of Holding Company Common Stock	13
ARTICLE 4. ESTABLISHMENT AND FUNDING OF CHARITABLE FOUNDATION		14
4.1.	Establishment of the Foundation	14
4.2.	Purposes of the Foundation; Charitable Contributions	14
4.3.	Board of Directors of the Foundation	15
ARTICLE 5. SHARES TO BE OFFERED		15
5.1.	Holding Company Common Stock	15
5.2.	Independent Valuation, Purchase Price and Number of Shares.	15
ARTICLE 6. SUBSCRIPTION RIGHTS AND ORDERS FOR COMMON STOCK		17
6.1.	Distribution of Prospectus	17
6.2.	Order Forms	17
6.3.	Undelivered, Defective, Early or Late Order Form; Insufficient Payment	18
6.4.	Payment for Stock	18
ARTICLE 7. STOCK PURCHASE PRIORITIES AND OFFERING ALTERNATIVES		19
7.1.	Priorities for Offering	19
7.2.	Certain Determinations	19
7.3.	Minimum Purchase; No Fractional Shares	20
7.4.	Overview of Priorities	20
7.5.	Priorities for Subscription Offering	20
7.6.	Priorities for Direct Community Offering	22
7.7.	Syndicated Community Offering or Firm Commitment Underwritten Offering	23
ARTICLE 8. ADDITIONAL LIMITATIONS ON PURCHASES		23
8.1.	General	23
8.2.	Individual Maximum Purchase Limit	24

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8.3.	Group Maximum Purchase Limit	24
8.4.	Purchases by Officers, Directors, Trustees and Corporators	25
8.5.	Special Rule for Tax-Qualified Employee Plans	25
8.6.	Illegal Purchases	25
8.7.	Rejection of Orders	25
8.8.	Subscribers in Non-Qualified States or in Foreign Countries	25
8.9.	No Offer to Transfer Shares	26
8.10.	Confirmation by Purchasers	26
ARTICLE 9. POST OFFERING MATTERS		26
9.1.	Stock Purchases After the Conversion	26
9.2.	Resales of Stock by Management Persons	26
9.3.	Stock Certificates	26
9.4.	Restriction on Financing Stock Purchases	26
9.5.	Stock Benefit Plans	27
9.6.	Market for Holding Company Common Stock	27
9.7.	Liquidation Account	28
9.8.	Payment of Dividends	31
9.9.	Repurchase of Stock	31
9.10.	Conversion Expenses	31
9.11.	Public Inspection of Conversion Application	31
9.12.	Enforcement of Terms and Conditions	32
9.13.	Voting Rights in Converted Stock Holding Company	32
9.14.	Restrictions on Acquisition of Bank and Stock Holding Company	32
ARTICLE 10. MISCELLANEOUS		33
10.1.	Interpretation of Plan	33
10.2.	Amendment or Termination of the Plan	33

EXHIBITS

Exhibit 1.1	Form of Agreement of Merger between Conahasset Bancshares, MHC and Conahasset Bancshares, Inc.
Exhibit 1.2	Form of Agreement of Merger between Conahasset Bancshares, Inc. and Conahasset Bancorp, Inc., a Maryland corporation
Exhibit 7.6	Local Community; Massachusetts Cities and Towns Served by Pilgrim Bank

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CONAHASSET BANCSHARES, MHC

PLAN OF CONVERSION

ARTICLE 1.

Introduction—Business Purpose

This Plan of Conversion (the “Plan”) provides for the conversion and reorganization of Conahasset Bancshares, MHC, a Massachusetts-chartered mutual holding company (the “MHC”), into the capital stock form of organization and all steps incident or necessary thereto (the “Conversion”). The MHC currently owns 100% of the common stock of Conahasset Bancshares, Inc., a Maryland corporation (together with the Delaware corporation into which it will convert pursuant to the Plan, the “Mid-Tier Holding Company”), which owns 100% of the common stock of Pilgrim Bank (the “Bank”). The Bank is a Massachusetts-chartered co-operative bank headquartered in Cohasset, Massachusetts. Capitalized terms used but not defined in this Article 1 shall have the respective meanings set forth in Article 2 hereof.

The Plan, which has been adopted by the Board of Trustees of the MHC, the Board of Directors of the Mid-Tier Holding Company and the Board of Directors of the Bank, is to be carried out under the laws of the Commonwealth of Massachusetts, applicable Regulations of the Massachusetts Division of Banks (the “Division”) and the Board of Governors of the Federal Reserve System (the “FRB”), and other applicable laws and regulations. The Board of Trustees of the MHC currently contemplates that, following the Conversion, all of the capital stock of the Bank will be held by a Maryland corporation (the “Stock Holding Company”) and that the Stock Holding Company will issue and sell shares of its common stock (the “Holding Company Common Stock”) in a Subscription Offering upon the terms and conditions set forth herein to Eligible Account Holders, Supplemental Eligible Account Holders (if any), Tax-Qualified Employee Plans established by the Bank or the Stock Holding Company, the Mid-Tier Holding Company or the Bank, according to the respective priorities set forth in the Plan. Any shares not subscribed for in the Subscription Offering may be offered for sale to certain members of the public directly by the Stock Holding Company through a Direct Community Offering and/or a Syndicated Community Offering. Alternatively, any shares not subscribed for in the Subscription Offering and any Direct Community Offering may be offered for sale in a Firm Commitment Underwritten Offering, or in any other manner permitted by the Bank Regulators. All sales of Holding Company Common Stock in a Direct Community Offering, in a Syndicated Community Offering, in a Firm Commitment Underwritten Offering, or in any other manner permitted by the Bank Regulators, will be at the sole discretion of the Board of Trustees of the MHC and the Board of Directors of the Stock Holding Company.

The Plan is subject to the approval of various regulatory agencies, and must be approved by a majority of the total votes of the MHC’s Shareholders eligible to be cast at the annual meeting or at a special meeting called for such purpose. In addition, the MHC Merger must be approved by two-thirds of the total votes of the Corporators eligible to be cast at the annual meeting or at a special meeting called for such purpose.

The Conversion is to be effectuated as follows, or in any other manner that is consistent with the purposes of the Plan and applicable laws and regulations. The Mid-Tier Holding Company will convert from a Maryland corporation to a Delaware corporation. The Mid-Tier Holding Company will establish the Stock Holding Company as a first-tier stock holding company subsidiary. The MHC will merge with and into the Mid-Tier Holding Company with the Mid-Tier Holding Company as the resulting entity pursuant to Section 7(3) of Chapter 167H of the Massachusetts General Laws and Section 256 of the Delaware General Corporation Law and the Agreement and Plan of Merger attached hereto as Exhibit 1.1 (the “MHC Merger”). As part of the MHC Merger, shares of Mid-Tier Holding Company common stock held by the MHC will be canceled and all persons holding liquidation rights in the MHC will constructively receive liquidation rights in the Mid-Tier Holding Company in exchange for their liquidation rights in the MHC. Immediately after the MHC Merger, the Mid-Tier Holding Company will merge with the Stock Holding Company, with the Stock Holding Company as the resulting entity (the “Mid-Tier Merger”), pursuant to the Agreement and Plan of Merger attached hereto as Exhibit 1.2, whereby the Bank will become the wholly owned subsidiary of the Stock Holding Company. As part of the Mid-Tier Merger, the liquidation rights held by persons in the Mid-Tier Holding Company pursuant to the MHC Merger will automatically, without further action on the part of such persons, be exchanged for an interest in the Stock Holding Company Liquidation Account. Immediately after the Mid-Tier Merger, the Stock Holding Company will offer for sale shares of Holding Company Common Stock in the Offering (the “Offering Shares”). The Stock Holding Company will contribute at least 50% of the net proceeds of the Offering to the Bank in constructive exchange for additional shares of common stock of the Bank and in exchange for the Bank Liquidation Account.

The foregoing is subject to modification as necessary to address tax or regulatory considerations. Upon the Conversion, Eligible Account Holders and the Supplemental Eligible Account Holders (if a Supplemental Eligibility Record Date is established) will be granted interests in the liquidation account to be established by the Bank and the Stock Holding Company pursuant to Section 9.7 hereof.

The primary purposes of the Conversion are to: (1) to improve our capital position during a period of economic, regulatory and political uncertainty for the financial services industry and to assure compliance with regulatory capital requirements; (2) to support organic loan and core deposit growth beyond levels possible utilizing only retained earnings; (3) to improve profitability and earnings through reinvesting and leveraging the proceeds, primarily through traditional funding and lending activities; (4) to invest in new technologies that will enable the expansion and enhancement of products and services we offer to our customers; (5) to have greater flexibility to access the debt and equity capital markets; (6) to attract, retain and incentivize qualified personnel by establishing stock-based benefit plans for management and employees; (7) to establish a charitable foundation to support charitable organizations operating in our communities and fund the foundation with cash and shares of our common stock; (8) to provide customers and members of our community with the opportunity to acquire an ownership interest in Pilgrim Bank; and (9) to have greater flexibility to structure and finance opportunities for expansion into new markets, including through de novo branching, branch acquisitions or acquisitions of other financial institutions. In addition, the Board of Directors and senior management believe that the Conversion will be beneficial to the population within the Bank’s

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primary market area. The Conversion will provide local customers and other residents with an opportunity to become equity owners of the Bank, and thereby participate in possible stock price appreciation and cash dividends, which is consistent with the objective of being a locally-owned financial institution serving local financial needs. The Board of Directors and management believe that, through local stock ownership, current customers and non-customers who purchase Holding Company Common Stock will seek to enhance the financial success of the Bank through consolidation of their banking business and increased referrals to the Bank.

In furtherance of the Bank’s commitment to its community, the MHC and the Bank intend to cause to be formed a charitable foundation (the “Foundation”) as part of the Conversion. The Foundation will be dedicated to charitable purposes within the communities in which the Bank currently maintains an office. The Foundation is intended to complement the Bank’s community reinvestment activities in a manner that will allow the Bank’s local communities to share in the growth and profitability of the Stock Holding Company and the Bank over the long term. Consistent with the Bank’s goal, the Stock Holding Company intends, immediately following the Conversion, to contribute to the Foundation an amount equal to 4% of the proceeds of the Offering, consisting of $66,000 in cash and the remainder in shares of Holding Company Common Stock (the “Foundation Shares”).

The Bank became a stock-form subsidiary of the Mid-Tier Holding Company when the Bank reorganized into the mutual holding company structure in 2010. Accordingly, the Conversion will not affect the corporate existence of the Bank. The Bank’s business and operations will not be affected or interrupted by the Conversion, and the Bank will continue as the same legal entity after the Conversion. The deposit accounts and loan accounts of the Bank’s customers will not be affected by the Conversion. Upon the Conversion, each deposit account holder of the Bank will continue to hold exactly the same deposit account as the holder held immediately before the Conversion, and such deposit account holder shall have all of the same rights and privileges after the Conversion. All deposit accounts in the Bank following the Conversion will continue to be insured up to the legal maximum by the Deposit Insurance Fund of the FDIC and the Share Insurance Fund established by Massachusetts General Laws for amounts in excess of FDIC coverage limits, in the same manner as such deposit accounts were insured immediately before the Conversion. There will be no change in the Bank’s loans. The Conversion will not result in any reduction of the Bank’s reserves or net worth.

ARTICLE 2.

Definitions

As used in the Plan, the terms set forth below have the following meanings:

Account Holder. Any Person holding a Deposit Account in the Bank.

Acting in Concert. The term “Acting in Concert” means Persons seeking to combine or pool their voting or other interests in the securities of an issuer for a common purpose, pursuant to any contract, understanding, relationship, agreement or other arrangement, whether written or otherwise. When Persons act together for such purpose, their group is deemed to have acquired their stock. The determination of whether a group is Acting in Concert shall be made solely by the Board of Trustees of the MHC or Officers delegated by such Board and may be based on any

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evidence upon which the Board or such delegate(s) chooses to rely, including, without limitation, joint account relationships or the fact that such Persons have filed joint Schedules 13D with the SEC with respect to other companies. Persons living at the same address, whether or not related, will be deemed to be Acting in Concert unless otherwise determined by the Board or such delegate(s). Trustees of the MHC and Directors of the Mid-Tier Holding Company, the Stock Holding Company and the Bank shall not be deemed to be Acting in Concert solely as a result of their membership on any such board or boards.

Affiliate. An “Affiliate” of, or a Person “Affiliated” with, a specified Person, is a Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with the Person specified.

Application. The application, including a copy of the Plan, submitted by the MHC to the Commissioner for approval of the Conversion.

Associate. The term “Associate,” when used to indicate a relationship with any Person, means: (a) any corporation or organization (other than the Bank, the Stock Holding Company, the Mid-Tier Holding Company, the MHC or a majority-owned subsidiary of any thereof) of which such Person is an Officer or partner or is, directly or indirectly, the beneficial owner of 10% or more of any class of equity securities; (b) any trust or other estate in which such Person has a substantial beneficial interest or as to which such Person serves as trustee or in a similar fiduciary capacity; or (c) any relative or spouse of such Person, or any relative of such spouse, who has the same home as such Person or who is a Director or Trustee or Officer of the MHC, the Stock Holding Company, the Mid-Tier Holding Company, or the Bank, or any subsidiary thereof; provided, however, that any Employee Plan shall not be deemed to be an Associate of any Director, Trustee or Officer of the MHC, the Mid-Tier Holding Company, the Stock Holding Company or the Bank, and provided that, for purposes of aggregating total shares that may be held by Officers and Directors, the term “Associate” does not include any Tax-Qualified Employee Plan. When used to refer to a Person other than an Officer, Trustee or Director of the Bank, the MHC, the Mid-Tier Holding Company or the Stock Holding Company, the MHC in its sole discretion may determine the Persons that are Associates of other Persons. Trustees or Directors of the MHC, the Stock Holding Company, the Mid-Tier Holding Company and the Bank shall not be deemed to be Associates solely as a result of their membership on such Board.

Bank. Pilgrim Bank.

Bank Liquidation Account. The account established in the Bank representing the liquidation interests received by Eligible Account Holders and Supplemental Eligible Account Holders (if any) in connection with the Conversion.

Bank Regulators. The Commissioner, the FRB and other bank regulatory agencies, if any, responsible for reviewing and approving the Conversion, including the ownership of the Bank by the Stock Holding Company and the mergers required to effect the Conversion.

BHCA. The Bank Holding Company Act of 1956, as amended.

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Code. The Internal Revenue Code of 1986, as amended.

Commissioner. The Commissioner of Banks of the Commonwealth of Massachusetts.

Community Offering. A Direct Community Offering and/or a Syndicated Community Offering.

Control (including the terms “controlling”, “controlled by”, and “under common control with”). The possession, direct or indirect, of the Power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise.

Conversion. The Conversion of the MHC to stock form pursuant to the Plan, and all steps incident or necessary thereto.

Conversion Shares. The Offering Shares and the Foundation Shares.

Corporator. A corporator, as defined in Title 209, Section 33.02 of the Code of Massachusetts Regulations, of the MHC.

Deposit Account. Any withdrawable deposit account offered by the Bank, including, without limitation, savings accounts, NOW account deposits, certificates of deposit, demand deposits, Keogh Plan, SEPs and Individual Retirement Accounts for which the Bank acts as custodian or trustee, and such other types of deposit accounts as may then have been authorized by Massachusetts or federal law and regulations, but not including repurchase agreements, savings bank life insurance policies, certain escrow accounts, or trust department accounts held separately from deposit accounts in accordance with Section 4 of Chapter 167G of the Massachusetts General Laws.

Direct Community Offering. The offering for sale directly by the Stock Holding Company of Holding Company Common Stock (a) to the Local Community, as provided in Exhibit 7.6 of the Plan, with preference given to natural persons residing in the Local Community, and then (b) to the public at large. The Direct Community Offering may be conducted simultaneously with the Subscription Offering.

Director. A director of the Mid-Tier Holding Company, the Bank or the Stock Holding Company, as the context may dictate.

Division. The Division of Banks of the Commonwealth of Massachusetts.

Eligible Account Holder. Any Person holding a Qualifying Deposit on the Eligibility Record Date.

Eligibility Record Date. December 31, 2012, the date for determining who qualifies as an Eligible Account Holder.

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Employee. All Persons who are employed by the Bank, the Mid-Tier Holding Company or the MHC. The term “Employee” does not include a Trustee, Director or Officer.

Employee Plan. Any Tax-Qualified Employee Plan or Non-Tax-Qualified Employee Benefit Plan.

ESOP. The employee stock ownership plan established by the Bank.

Estimated Valuation Range. The range of the estimated consolidated pro forma market value of the Stock Holding Company, which shall also be equal to the range of the estimated pro forma market value of the aggregate Conversion Shares to be issued in the Conversion. The Estimated Valuation Range shall be based on the Independent Valuation determined by the Independent Appraiser prior to the Subscription Offering, as it may be amended from time to time thereafter. The Independent Valuation of the pro forma market value of the Stock Holding Company established by the Independent Appraiser shall form the midpoint of the Estimated Valuation Range. The maximum of the Estimated Valuation Range may vary as much as 15% above the midpoint of the Estimated Valuation Range (the “Maximum of the Estimated Valuation Range”) and 15% below the midpoint of the Estimated Valuation Range. The Maximum of the Estimated Valuation Range may be increased by up to 15% subsequent to the commencement of the Offering to reflect changes in demand for the Holding Company Common Stock or changes in market conditions.

Exchange Act. The Securities Exchange Act of 1934, as amended.

FDIC. The Federal Deposit Insurance Corporation.

Firm Commitment Underwritten Offering. The offering, at the sole discretion of the Stock Holding Company, of Offering Shares not subscribed for in the Subscription Offering and any Direct Community Offering, to members of the general public through one or more underwriters. A Firm Commitment Underwritten Offering may occur following the Subscription Offering and the Direct Community Offering, if any.

Foundation. A charitable foundation established and funded by the Bank and the Stock Holding Company in connection with the Conversion as contemplated by Article 4 hereof. The Foundation will qualify as an exempt organization under Section 501(c)(3) of the Code.

Foundation Shares. Shares of Common Stock issued to the Foundation in connection with the Conversion.

FRB. The Board of Governors of the Federal Reserve System.

FRB Applications. The FRB Conversion Application to be submitted to the FRB by the MHC and the Holding Company Application to be submitted to the FRB by the Stock Holding Company.

FRB Conversion Application. The FRB Conversion Application seeking the FRB’s prior approval of, or non objection to, the MHC’s conversion from mutual to stock form.

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Group Maximum Purchase Limit. The limitation on the purchase of shares of Holding Company Common Stock established by Section 8.3 hereof, as such limit may be increased pursuant to said Section 8.3.

Holding Company Application. The Holding Company Application on Form FR Y-3 for the FRB’s prior approval of the Stock Holding Company’s acquisition of the Bank.

Holding Company Common Stock. The Holding Company Common Stock to be issued by the Stock Holding Company in the Conversion.

Independent Appraiser. The appraiser retained by the MHC to prepare an independent appraisal of the pro forma market value of the Stock Holding Company.

Independent Valuation. The independent valuation of the pro forma market value of the Stock Holding Company, as determined by the Independent Appraiser.

Individual Maximum Purchase Limit. The limitation on the purchase of shares of Holding Company Common Stock established by Section 8.2 hereof, as such limit may be increased pursuant to said Section 8.2.

Information Statement. The information statement required to be sent to the Corporators in connection with the Special Meeting of Corporators or to the Shareholders in connection with the Special Meeting of Shareholders, as the context may dictate.

Local Community. The Massachusetts cities and towns listed on Exhibit 7.6.

Marketing Agent. The broker-dealer responsible for organizing and managing the sale of the Holding Company Common Stock.

Market Maker. A broker-dealer who, with respect to a particular security: (a)(i) regularly publishes bona fide, competitive bid and offer quotations in a recognized inter-dealer quotation system, or (ii) furnishes bona fide competitive bid and offers quotations on request; and (b) is ready, willing and able to effect transactions in reasonable quantities at his or her quoted prices with other brokers or dealers.

MHC. Conahasset Bancshares, MHC, the Massachusetts-chartered mutual holding company for the Bank.

Mid-Tier Holding Company. Conahasset Bancshares, Inc., the Maryland corporation which owns 100% of the common stock of the Bank. As the context shall dictate, the term “Mid-Tier Holding Company” also refers to Conahasset Bancshares, Inc., the Delaware corporation into which the Maryland corporation will convert pursuant to the Plan.

Non-Tax-Qualified Employee Benefit Plan. Any defined benefit plan or defined contribution plan which is not qualified under Section 401 of the Code.

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Offering. The Subscription Offering, the Direct Community Offering, if any, the Syndicated Community Offering, if any, and the Firm Commitment Underwritten Offering, if any.

Offering Range. The range of the number of shares of Holding Company Common Stock offered for sale in the Offering. The Offering Range will be equal to the Estimated Valuation Range divided by the Subscription Price, adjusted for the Foundation Shares.

Offering Shares. Shares of Holding Company Common Stock offered and sold in the Offering.

Officer. The Chairman of the Board, the President, any officer of the level of vice president or above (but not an assistant vice president, second vice president, or other vice president having authority similar to an assistant or second vice president), the Clerk and the Treasurer of the Bank, the MHC, the Mid-Tier Holding Company or the Stock Holding Company, as the case may be.

Order Form. Any form (together with any cover letter and acknowledgments) sent to any Participant or Person containing among other things a description of the alternatives available to such Person under this Plan and by which any such Person may make elections regarding subscriptions for Offering Shares.

Participant. Any Eligible Account Holder, Supplemental Eligible Account Holder or Tax-Qualified Employee Plan.

Person. An individual, corporation, partnership, association, joint-stock company, trust (including Individual Retirement Accounts, SEPs and Keogh Accounts), unincorporated organization, government entity or political subdivision thereof or any other entity.

Plan. This Plan of Conversion as it may hereafter be amended in accordance with its terms.

Qualifying Deposit. The aggregate balances of all Deposit Accounts of an Eligible Account Holder as of the close of business on the Eligibility Record Date or of a Supplemental Eligible Account Holder (if any) as of the close of business on the Supplemental Eligibility Record Date (if required), as the case may be, provided that, in either case, such aggregate balance is not less than $50.

Range Maximum. The number of Offering Shares that is 15% above the midpoint of the Offering Range.

Range Minimum. The number of Offering Shares that is 15% below the midpoint of the Offering Range.

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Regulations. The regulations of the Division regarding mutual-to-stock conversions of mutual holding companies and the regulations of the FRB (to the extent deemed applicable by the FRB).

Resident. Any Person who occupies a dwelling within the Local Community, has a present intent to remain within the Local Community for a period of time, and manifests the genuineness of that intent by establishing an ongoing physical presence within the Local Community together with an indication that such presence within the Local Community is something other than merely transitory in nature. To the extent the Person is a corporation or other business entity, the principal place of business or headquarters of such Person must be in the Local Community. To the extent a Person is a personal benefit plan, the circumstances of the beneficiary shall apply with respect to this definition. In the case of all other benefit plans, circumstances of the trustee shall be examined for purposes of this definition. The MHC may utilize deposit or loan records or such other evidence provided to it to make a determination as to whether a Person is a resident. In all cases, however, such a determination shall be in the sole discretion of the MHC. A Participant must be a “resident” of the Local Community for purposes of determining whether such Person “resides”, or is “residing”, in the Local Community as such term is used in this Plan.

SEC. The Securities and Exchange Commission.

Shareholders. The shareholders, as defined in Title 209, Section 33.02 of the Code of Massachusetts Regulations, of the MHC resulting from the mutual to stock conversion of Pilgrim Bank in 2010.

Special Meeting of Corporators. The Special Meeting of Corporators called for the purpose of voting on the MHC Merger, which may be the Annual Meeting of Corporators.

Special Meeting of Shareholders. The Special Meeting of Shareholders called for the purpose of voting on the Plan, which may be the Annual Meeting of Shareholders.

Stock Holding Company. The stock-form holding company that will (a) be a Maryland corporation known as Pilgrim Bancshares, Inc., (b) issue Holding Company Common Stock in the Conversion and (c) own 100% of the common stock of the Bank upon consummation of the Conversion.

Stock Holding Company Liquidation Account. The account established by the Stock Holding Company representing the liquidation interests received by Eligible Account Holders and Supplemental Eligible Account Holders (if any) in connection with the Conversion in exchange for their interests in the MHC immediately prior to the Conversion.

Subscription Offering. The offering of Holding Company Common Stock for subscription by Persons holding subscription rights pursuant to the Plan.

Subscription Price. The price per Offering Share to be paid by Participants and others in the Offering. The Subscription Price will be determined by the Board of Trustees of the MHC and the Board of Directors of the Stock Holding Company and fixed prior to the commencement of the Subscription Offering.

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Subsidiary. A company that is controlled by another company, either directly or indirectly through one or more subsidiaries.

Supplemental Eligible Account Holder. Any Person holding a Qualifying Deposit on the Supplemental Eligibility Record Date (if established).

Supplemental Eligibility Record Date. If the Eligibility Record Date is more than 15 months prior to the date of the latest amendment to the Application filed prior to approval of the Application by the Commissioner, a Supplemental Eligibility Record Date shall be established for determining who qualifies as a Supplemental Eligible Account Holder. If required, the Supplemental Eligibility Record Date is the last day of the calendar quarter preceding approval of the Plan by the Commissioner.

Syndicated Community Offering. The offering, at the sole discretion of the Holding Company, of Offering Shares not subscribed for in the Subscription Offering and the Direct Community Offering, to members of the general public through a syndicate of broker-dealers. At the discretion of the Stock Holding Company, the offering of Holding Company Common Stock following or contemporaneously with the Direct Community Offering through a syndicate of broker-dealers.

Tax-Qualified Employee Plan. Any defined benefit plan or defined contribution plan (including the ESOP, any stock bonus plan, profit-sharing plan, 401(k) plan or other plan) of the Bank, the Stock Holding Company, the MHC or any of their Affiliates, which, with its related trusts, meets the requirements to be qualified under Section 401 of the Code.

Trustees. The trustees, as defined as defined in Title 209, Section 33.02 of the Code of Massachusetts Regulations, of the MHC resulting from the mutual to stock conversion of Pilgrim Bank in 2010.

Voting Record Date. The date fixed by the Board of Directors for determining eligibility to vote at the Special Meeting of Shareholders.

ARTICLE 3.

General Procedure for Conversion

3.1. Preconditions to Conversion. The Conversion is expressly conditioned upon prior occurrence of the following:

3.1.1 Approval of the Plan by the affirmative vote of a majority of the Shareholders, present and voting at the annual meeting or at a special meeting called for such purpose.

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3.1.2 Approval of the MHC Merger by the affirmative vote of two-thirds of the Corporators, present and voting at the annual meeting or at a special meeting called for such purpose.

3.1.3 Prior receipt of the private letter rulings or opinions of counsel set forth in Section 3.2 of this Plan.

3.1.4 Approval by the Commissioner of the Application, including the Plan.

3.1.5 Approval by the FRB of the FRB Applications.

3.2. Submission of Plan to Commissioner and FRB. Upon approval by at least two-thirds of all Trustees of the MHC, the Plan will be submitted to the Commissioner as part of the Application, and to the FRB as part of the FRB Applications, together with a copy of the proposed Information Statement and all other material required by the Regulations, for approval by the Commissioner and the FRB. The MHC must also receive either private letter rulings from the Internal Revenue Service and the Massachusetts Department of Revenue or opinions of its counsel as to the federal income tax consequences of the Conversion and of its tax accountants as to the Massachusetts income tax consequences of the Conversion, in either case substantially to the effect that the Conversion will not result in a taxable reorganization of the MHC, the Mid-Tier Holding Company, the Bank, or the Stock Holding Company under the Code. Upon a determination by the Commissioner that the Application is complete, the MHC will publish and post public announcements and notices of the Application as required by the Commissioner and the Regulations. The MHC, the Mid-Tier Holding Company and the Stock Holding Company will also publish any notice required in connection with the Holding Company Application and any other applications required to complete the Conversion.

3.3. Special Meeting of Corporators to Approve the MHC Merger; Special Meeting of Shareholders to Approve the Plan.

3.3.1 Following approval of the Plan by the Commissioner, the Special Meeting of Corporators shall be scheduled in accordance with the MHC’s Bylaws, and the MHC Merger Agreement (as it may be revised in response to comments received from the Commissioner and the FRB), and any information required pursuant to the Regulations, will be submitted to the Corporators for their consideration and approval at the Special Meeting of Corporators. The MHC will mail to each Corporator a copy of the Information Statement not less than seven (7) days before the Special Meeting of Corporators. Following approval of the MHC Merger by the Corporators, and the approval of the Plan by the Shareholders, the MHC intends to take such steps as may be appropriate pursuant to applicable laws and regulations to effect the MHC Merger.

3.3.2 Following approval of the Plan by the Commissioner, the Special Meeting of Shareholders shall be scheduled in accordance with the Bank’s Bylaws, and the Plan (as it may be revised in response to comments received from the Commissioner and the FRB), and any information required pursuant to the Regulations, will be submitted to the Shareholders for their consideration and approval at the Special Meeting. The Bank will

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mail to each Shareholder a copy of the Information Statement not less than seven (7) days before the Special Meeting of Shareholders. Following approval of the Plan by the Shareholders, and the approval of the MHC Merger by the Corporators, the MHC intends to take such steps as may be appropriate pursuant to applicable laws and regulations to effect the Conversion.

3.4. Completion of Conversion and Offering; Stock Holding Company Charter and Bylaws. The Board of Trustees of the MHC, the Board of Directors of the Mid-Tier Holding Company, the Board of Directors of the Stock Holding Company and the Board of Directors of the Bank will take all necessary steps to complete the Conversion and the Offering, including the timely filing of all necessary applications to appropriate regulatory authorities, and the filing with the SEC for review of a registration statement to register the sale and/or issuance of Conversion Shares and preliminary information materials, applications and other information in connection with the solicitation of Shareholder approval of this Plan and Corporator approval of the MHC Merger.

3.5. Bank Charter and Bylaws. The current Charter and Bylaws of the Bank are to be amended to add the Bank Liquidation Account.

3.6. Conversion Procedures.

3.6.1 The Conversion will be effected in any manner selected by the Board of Trustees of the MHC that is consistent with the purposes of this Plan and applicable laws and regulations. The choice of which method to use to effect the Conversion will be made by the Board of Trustees of the MHC immediately prior to the consummation of the Conversion.

3.6.2 Approval of the Plan by the Board of Trustees of the MHC shall also constitute (a) approval of the conversion of the Mid-Tier Holding Company from a Maryland corporation to a Delaware corporation, (b) approval of the formation of the Stock Holding Company as set forth herein, (c) subject to the approval of the Corporators, approval by the MHC (on its own behalf and as the sole shareholder of the Mid-Tier Holding Company) of a combination, by merger or otherwise, as provided herein, of the MHC with and into the Mid-Tier Holding Company with the Mid-Tier Holding Company being the surviving entity and whereby the existing outstanding shares of capital stock of the Mid-Tier Holding Company held by the MHC will be canceled and all persons holding liquidation rights in the MHC will constructively receive liquidation rights in the Mid-Tier Holding Company in exchange for their liquidation rights in the MHC, (d) approval by the Mid-Tier Holding Company of the combination, by merger or otherwise, of the Mid-Tier Holding Company with and into the Stock Holding Company with the Stock Holding Company being the surviving entity and whereby (i) the existing outstanding shares of capital stock of the Stock Holding Company held by the Mid-Tier Holding Company will be canceled and (ii) the former holders of liquidation rights in the MHC who constructively received liquidation rights in the Mid-Tier Holding Company will receive an interest in the Liquidation Account in the Stock Holding Company in exchange for their constructive liquidation rights in the Mid-Tier Holding Company, (e)

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approval by the Bank to constructively issue additional shares of common stock to the Stock Holding Company and to establish the Bank Liquidation Account in exchange for a portion of the net proceeds of the Offering, and (f) approval of any other of the transactions that are necessary to implement the Plan.

3.7. Conversion to Stock Holding Company. Upon the consummation of the Conversion, the Stock Holding Company will be authorized to exercise any and all powers, rights and privileges, and will be subject to all limitations applicable to bank holding companies under applicable laws and regulations. The Officers of the Mid-Tier Holding Company immediately prior to the Conversion shall be the Officers of the Stock Holding Company immediately following the Conversion, in each case to serve until their terms of office expire and until their successors are elected and qualified. The Stock Holding Company will own 100% of the common stock of the Bank upon consummation of the Conversion in exchange for a portion of the net proceeds received from the sale of the Offering Shares and in exchange for the establishment of the Bank Liquidation Account.

3.8. Offer and Sale of Holding Company Common Stock. 

3.8.1 Subject to approval of the Plan by the Shareholders, and the receipt of all required regulatory approvals, the Holding Company Common Stock will be offered for sale in a Subscription Offering simultaneously to Eligible Account Holders, Supplemental Eligible Account Holders (if any), and any Tax-Qualified Employee Benefit Plans in the manner set forth in Article 7 hereof. The Subscription Offering period will run for no less than twenty (20) but no more than forty-five (45) days from the date of distribution of the Subscription Offering materials, unless extended by the MHC with the approval of the Commissioner and the FRB, if required. If feasible, any Offering Shares remaining may then be sold to the general public through a Direct Community Offering as provided in Article 7 hereof, which may be held either subsequent to or concurrently with the Subscription Offering.

3.8.2 If feasible, any Offering Shares remaining unsold after completion of the Subscription Offering and any Direct Community Offering may, in the sole discretion of the Stock Holding Company, be sold in a Syndicated Community Offering or a Firm Commitment Underwritten Offering, or in any manner receiving the required approval of the Bank Regulators and other applicable regulatory agencies that will achieve a widespread distribution of the Holding Company Common Stock. The issuance of Holding Company Common Stock in the Subscription Offering and any Direct Community Offering will be consummated simultaneously on the date the sale of Holding Company Common Stock is consummated in any Syndicated Community Offering or Firm Commitment Underwritten Offering, and only if the required minimum number of shares of Holding Company Common Stock has been issued. The sale of all shares of Holding Company Common Stock to be sold pursuant to the Plan must be completed within forty-five (45) days after expiration of the Subscription Offering; subject to the extension of such forty-five (45) day period by the Stock Holding Company with the approval of the Commissioner and the FRB, if required. The Stock Holding Company may seek one or more extensions of such forty-five (45) day period if

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necessary to complete the sale of all shares of Holding Company Common Stock. If all available shares of Holding Company Common Stock are sold in the Subscription Offering and any Direct Community Offering, there will be no Syndicated Community Offering or Firm Commitment Underwritten Offering and the Conversion will be consummated upon completion of the Subscription Offering or the Direct Community Offering, as the case may be.

ARTICLE 4.

Establishment and Funding of Charitable Foundation.

4.1. Establishment of the Foundation. As part of the Conversion, the Stock Holding Company intends to establish the Foundation which will qualify as an exempt organization under Section 501(c)(3) of the Code and to contribute to the Foundation an amount equal to $725,000, consisting of a number of shares equal to 3% of the shares of Holding Company Common Stock sold in the Offering and the remainder in cash from the proceeds of the Offering.

4.2. Purposes of the Foundation; Charitable Contributions. The Foundation is being formed in connection with the Conversion in order to complement the Bank’s existing community reinvestment activities in the Bank’s market area and to share with the Bank’s community a part of the Bank’s financial success as a locally headquartered, community minded, financial services institution. The funding of the Foundation in part with Holding Company Common Stock accomplishes this goal as it enables the community to share in the growth and profitability of the Stock Holding Company and the Bank over the long term. The Foundation will be dedicated to the promotion of charitable purposes including, without limitation, community development, grants or donations to support housing assistance, not for-profit community groups and other types of organizations or civic minded projects. The Foundation intends to annually distribute total grants to assist charitable organizations or to fund projects within the Stock Holding Company’s and the communities in which the Bank currently maintains an office of not less than five percent (5.0%) of the average fair value of Foundation assets each year, less certain expenses. In order to serve the purposes for which it was formed and maintain its Section 501(c)(3) qualification, the Foundation may sell, from time to time, a portion of the Holding Company Common Stock contributed to it by the Stock Holding Company. The Foundation will operate in accordance with the following conditions, as well as any additional conditions imposed by the Bank Regulators:

• The Foundation must vote its shares of Holding Company Common Stock in the same ratio as other holders of such shares;

• The Foundation shall be subject to examination by the Division;

• The Foundation shall comply with all supervisory directives or regulatory bulletins imposed by the Division;

• The Foundation shall operate in compliance with written policies adopted by its board of directors, including adopting a business plan and conflict of interest policy;

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• The Foundation shall provide annual reports to the Division describing the grants made and the grant recipients;

• The Foundation shall not engage in self-dealing and shall comply with all laws necessary to maintain its tax-exempt status under the Code; and

• Such other conditions, if any, as may be imposed by the Commissioner.

4.3. Board of Directors of the Foundation. The board of directors of the Foundation initially will consist of a majority of individuals who are Directors or Officers of the Stock Holding Company or the Bank. The board of directors of the Foundation will be responsible for establishing the policies of the Foundation with respect to grants or donations, consistent with the stated purposes of the Foundation. For at least five years after the Conversion, and except for temporary periods resulting from death, resignation, removal or disqualification, at least one director on the board of directors of the Foundation will be an independent director who is not an employee, Officer, Director, Trustee or Corporator of the MHC, the Mid-Tier Holding Company, the Stock Holding Company or the Bank nor a significant borrower of the Bank.

ARTICLE 5.

Shares to be Offered

5.1. Holding Company Common Stock. The Conversion Shares, when issued in accordance with this Plan, shall be fully paid and nonassessable. The total number of shares of Holding Company Common Stock authorized under the Stock Holding Company’s Articles of Incorporation will exceed the number of Conversion Shares issued. HOLDING COMPANY COMMON STOCK WILL NOT BE COVERED BY DEPOSIT INSURANCE.

5.2. Independent Valuation, Purchase Price and Number of Shares. 

5.2.1 Independent Valuation. An Independent Appraiser shall be employed by the MHC to provide it with an Independent Valuation of the pro forma market value of the Stock Holding Company as required by the Regulations, which value shall be included in the prospectus (as described in Section 6.1 hereof) filed with the Commissioner, the FRB and the SEC. The Trustees of the MHC shall review the methodology and reasonableness of the Independent Valuation. The Independent Valuation will be made by a written report to the MHC, contain the factors upon which the Independent Valuation was made and conform to procedures adopted by the Commissioner and the FRB. The Independent Valuation of the pro forma market value of the Stock Holding Company established by the Independent Appraiser shall form the midpoint of the Estimated Valuation Range. The maximum of the Estimated Valuation Range may vary as much as 15% above the midpoint of the Estimated Valuation Range (“Range Maximum”) and 15% below the midpoint of the Estimated Valuation Range (“Range Minimum”).

5.2.2 Subscription Price. All shares sold in the Offering will be sold at a uniform price per share (the “Subscription Price”), preliminarily set at $10.00 per share, which price will be definitively determined before the commencement of the Offering. If

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there is a Syndicated Community Offering or Firm Commitment Underwritten Offering, the price per share at which the Holding Company Common Stock is sold in such Syndicated Community Offering or Firm Commitment Underwritten Offering shall be equal to the per share purchase price of the shares sold in the Subscription Offering and the Direct Community Offering. The aggregate purchase price for all Offering Shares will be equal to the estimated consolidated pro forma market value of the Stock Holding Company, as determined for such purpose by the Independent Appraiser, less (ii) the value of the Foundation Shares based on the Subscription Price.

5.2.3 Number of Shares. The Offering Range of Offering Shares to be offered for sale in the Offering will be determined by the Board of Trustees of the MHC and the Board of Directors of the Stock Holding Company immediately before the commencement of the Subscription Offering based on the Independent Valuation, the Estimated Valuation Range, the Subscription Price and the Foundation Shares. The Offering Range will be equal to the Estimated Valuation Range, as may be amended, divided by the Subscription Price, adjusted for the Foundation Shares. The Independent Valuation, and such number of shares, shall be subject to adjustment thereafter if necessitated by market or financial conditions, with the approval of the Commissioner and the FRB, if necessary. In particular, the total number of shares may be increased by up to 15% above the Range Maximum if the Independent Valuation is increased subsequent to the commencement of the Subscription Offering to reflect changes in market and financial conditions or demand for the Holding Company Common Stock, provided that the resulting aggregate purchase price is not more than 15% above the Range Maximum.

5.2.4 Increase or Decrease in Number of Shares. The Offering Range may be increased or decreased by the Stock Holding Company, subject to the following provisions. In the event that the number of Offering Shares ordered is below the Range Minimum, or materially above the Range Maximum, resolicitation of purchasers may be required, provided, however, that a resolicitation will not be required if the number of shares increases by up to 15% above the Range Maximum. Any such resolicitation shall be effected in such manner and within such time as the Stock Holding Company shall establish, with the approval of the Commissioner and the FRB, if required.

5.2.5 Confirmation of Valuation. Notwithstanding the foregoing, no shares of Holding Company Common Stock will be issued unless, prior to the consummation of the Offering, the Independent Appraiser confirms to the MHC, the Stock Holding Company, the Commissioner and the FRB (if required), that, to the best knowledge of the Independent Appraiser, nothing of a material nature has occurred which, taking into account all relevant factors, would cause the Independent Appraiser to conclude that the aggregate number of Conversion Shares sold in the Offering and contributed to the Foundation multiplied by the Subscription Price is incompatible with its estimate of the aggregate consolidated pro forma market value of the Stock Holding Company. If such confirmation is not received, the Stock Holding Company may cancel the Offering, extend the Offering and establish a new Subscription Price and/or Estimated Valuation Range, extend, reopen or hold a new Offering, or take such other action as the Commissioner and the FRB may permit.

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ARTICLE 6.

Subscription Rights and Orders for Common Stock

6.1. Distribution of Prospectus. The Offering shall be conducted in compliance with the Regulations and applicable SEC regulations. As soon as practicable after the Stock Holding Company’s registration statement and the prospectus therein have been declared effective and/or approved for use by the SEC and the Commissioner (and the FRB if required), copies of the prospectus and order forms will be distributed to all eligible Participants in the Subscription Offering at their last known addresses appearing on the records of the Bank and the MHC for the purpose of subscribing for shares of Holding Company Common Stock in the Subscription Offering. Prospectuses and order forms will also be made available (if and when a Direct Community Offering is held) for use by Persons to whom shares of Holding Company Common Stock are offered in the Direct Community Offering.

6.2. Order Forms. Each order form will be preceded or accompanied by the prospectus describing the Stock Holding Company, the Bank, the Holding Company Common Stock and the Subscription and Community Offerings. Each order form will contain, among other things, the following:

6.2.1 A specified date by which all order forms must be received by the Stock Holding Company, which date shall be not less than 20 nor more than 45 days following the date on which the order forms are mailed by the Stock Holding Company, and which date will constitute the expiration of the Subscription Offering, unless extended;

6.2.2 The Subscription Price per share for shares of Holding Company Common Stock to be sold in the Offering;

6.2.3 A description of the minimum and maximum number of shares of Holding Company Common Stock that may be subscribed for pursuant to the exercise of subscription rights or otherwise purchased in the Offering;

6.2.4 Instructions as to how the recipient of the order form is to indicate thereon the number of shares of Holding Company Common Stock for which such Person elects to subscribe and the available alternative methods of payment therefor;

6.2.5 An acknowledgment that the recipient of the order form has received a copy of the prospectus before execution of the order form;

6.2.6 A statement indicating the consequences of failing to properly complete and return the order form, including a statement to the effect that all subscription rights are nontransferable, will be void at the end of the Subscription Offering, and can only be exercised by delivering to the Stock Holding Company within the Subscription Offering period such properly completed and executed order form, together with a personal check,

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money order or bank draft in the full amount of the purchase price as specified in the order form for the shares of Holding Company Common Stock for which the recipient elects to subscribe in the Subscription Offering (or by authorizing on the order form that the Bank withdraw said amount from the Deposit Account at the Bank maintained by such Person, but only if the MHC elects to permit such withdrawals from the type of such Deposit Account); and

6.2.7 A statement to the effect that the executed order form, once received by the Stock Holding Company, may not be modified or amended by the subscriber without the consent of the Stock Holding Company.

Notwithstanding the above, the Stock Holding Company reserves the right in its sole discretion to accept or reject orders received on photocopied or faxed order forms.

6.3. Undelivered, Defective, Early or Late Order Form; Insufficient Payment. In the event order forms (a) are not delivered for any reason or are returned undelivered to the MHC by the United States Postal Service, (b) are received by the Stock Holding Company prior to or on the date of the Special Meeting of Shareholders, (c) are not received by the Stock Holding Company or are received by the Stock Holding Company after the expiration date specified thereon, (d) are defectively filled out or executed, (e) are not accompanied by the full required payment for the shares of Holding Company Common Stock subscribed for (including cases in which Deposit Accounts from which withdrawals are authorized are insufficient to cover the amount of the required payment), or (f) are not mailed pursuant to a “no mail” order placed in effect by the account holder, the subscription rights of the Person to whom such rights have been granted will lapse as though such Person failed to return the completed order form within the time period specified thereon; provided, however, that the Stock Holding Company may, but will not be required to, waive any immaterial irregularity on any order form or require the submission of corrected order forms or the remittance of full payment for subscribed shares by such date as the Stock Holding Company may specify, and all interpretations by the MHC and the Stock Holding Company of terms and conditions of this Plan and of the order forms will be final.

6.4. Payment for Stock. 

6.4.1 All payments for Holding Company Common Stock subscribed for or ordered in the Subscription Offering and the Community Offering must be delivered in full to the Stock Holding Company, together with a properly completed and executed order form (except in the case of the Syndicated Community Offering in which case an order form may or may not be required in connection with subscriptions), on or before the expiration date specified on the order form, unless such date is extended by the MHC and the Stock Holding Company; provided, further, that if any Employee Plan subscribes for shares during the Subscription Offering, such plans will not be required to pay for the shares at the time they subscribe but rather may pay for such shares of Holding Company Common Stock subscribed for by such plans at the Subscription Price upon consummation of the Conversion. Payment for Holding Company Common Stock may also be made by a participant in an Employee Plan causing funds held for such

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participant’s benefit by an Employee Plan to be paid over for such purchase to the extent that such plan allows participants or any related trust established for the benefit of such participants to direct that some or all of their individual accounts or sub-accounts be invested in Holding Company Common Stock.

6.4.2 Payment for Holding Company Common Stock shall be made either by personal check, bank draft or money order, or if a purchaser has a Deposit Account in the Bank (and if the MHC has elected to permit such withdrawals from the type of Deposit Account maintained by such Person), such purchaser may pay for the shares subscribed for by authorizing the Bank to make a withdrawal from the purchaser’s Deposit Account at the Bank in an amount equal to the aggregate purchase price of such shares. No wire transfers will be accepted without prior approval from the MHC. Any authorized withdrawal, whether from a savings, passbook or certificate account, shall be without penalty as to premature withdrawal. If the authorized withdrawal is from a certificate account, and the remaining balance does not meet the applicable minimum balance requirements, the certificate shall be canceled at the time of withdrawal, without penalty, and the remaining balance will earn interest at the passbook rate. Funds for which a withdrawal is authorized will remain in the purchaser’s Deposit Account but may not be used by the purchaser pending consummation of the Conversion or expiration of the 45-day period (or such longer period as may be approved by the Commissioner) following termination of the Subscription Offering, whichever occurs first. After consummation of the Conversion, the withdrawal will be given effect only to the extent necessary to satisfy the subscription (to the extent it can be filled) at the Subscription Price. Interest will continue to be earned on any amounts authorized for withdrawal until such withdrawal is given effect. Interest on checks, money orders and bank drafts will be paid by the Bank at the Bank’s passbook rate. Such interest will be paid from the date payment is received by the Bank until consummation or termination of the Conversion. If for any reason the Conversion is not consummated, all payments made by subscribers in the Conversion will be refunded to them with interest. In case of amounts authorized for withdrawal from Deposit Accounts, refunds will be made by canceling the authorization for withdrawal.

ARTICLE 7.

Stock Purchase Priorities and Offering Alternatives

7.1. Priorities for Offering. All purchase priorities established by this Article 7 shall be subject to the purchase limitations set forth in, and shall be subject to adjustment as provided in, Article 8 of the Plan. In addition to the priorities set forth in this Article 7, the MHC may establish other priorities for the purchase of Holding Company Common Stock, subject to the approval of the Commissioner and of the FRB, if required. The priorities for the purchase of shares in the Conversion are set forth in the following Sections.

7.2. Certain Determinations. All interpretations or determinations of whether prospective purchasers are “residents,” “Associates,” or “Acting in Concert,” or whether and purchase conflicts with the purchase limitations in the Plan or otherwise violates any provision of the Plan, and any other interpretations of any and all other provisions of the Plan shall be made by and at the sole discretion of the Stock Holding Company, and may be based on whatever

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evidence the Stock Holding Company may choose to use in making any such determination. Such determination shall be conclusive, final binding on all Persons and the Stock Holding Company may take any remedial action, including without limitation rejecting the purchase or referring the matter to the Commissioner for action, as in its sole discretion the Stock Holding Company may deem appropriate.

7.3. Minimum Purchase; No Fractional Shares. The minimum purchase by any Person shall be 25 shares (to the extent that shares of Holding Company Common Stock are available for purchase); provided, however, that the aggregate purchase price for any minimum share purchase shall not exceed $500. No fractional shares will be allocated or issued.

7.4. Overview of Priorities. In descending order of priority, the opportunity to purchase Holding Company Common Stock shall be given in the Subscription Offering to: (a) Eligible Account Holders; (b) Supplemental Eligible Account Holders, if a Supplemental Eligibility Record Date is established; and (c) Tax-Qualified Employee Plans. Any shares of Holding Company Common Stock that are not subscribed for in the Subscription Offering at the discretion of the Stock Holding Company may be offered for sale in a Direct Community Offering and/or a Syndicated Community Offering on terms and conditions and procedures satisfactory to the Stock Holding Company. Alternatively, if feasible, any shares of Holding Company Common Stock not sold in the Subscription Offering or in the Direct Community Offering, if any, may be offered for sale in a Firm Commitment Underwritten Offering subject to such terms, conditions and procedures as may be determined by the MHC and the Stock Holding Company.

7.5. Priorities For Subscription Offering. 

7.5.1 First Priority: Eligible Account Holders. Subject to approval of the Plan by the Corporators and the receipt of approval from the Commissioner, and the FRB if necessary, to offer the Holding Company Common Stock for sale, each Eligible Account Holder shall receive, without payment therefor, nontransferable subscription rights on a first priority basis to subscribe for a number of shares of Holding Company Common Stock equal to the greater of (a) the quotient obtained by dividing the Individual Maximum Purchase Limit (as such term is defined in Section 8.2 hereof) by the per share Subscription Price, (b) one-tenth of one percent (0.10%) of the shares offered in the Conversion, or (c) 15 times the product (rounded down to the nearest whole number) obtained by multiplying (1) the total number of shares of Holding Company Common Stock to be sold in the Offering by (2) a fraction, of which the numerator is the Qualifying Deposit of the Eligible Account Holder and the denominator is the total amount of Qualifying Deposits of all Eligible Account Holders. If there are insufficient shares available to satisfy all subscriptions of Eligible Account Holders, shares will be allocated to Eligible Account Holders so as to permit each such subscribing Eligible Account Holder to purchase a number of shares of Holding Company Common Stock sufficient to make his or her total allocation equal to the lesser of 100 shares or the number of shares subscribed for. Thereafter, unallocated shares of Holding Company Common Stock will be allocated to remaining subscribing Eligible Account Holders whose subscriptions remain unfilled in the same proportion that each such subscriber’s

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Qualifying Deposit bears to the total amount of Qualifying Deposits of all subscribing Eligible Account Holders whose subscriptions remain unfilled. Unless the Bank Regulators permit otherwise, subscription rights to purchase Holding Company Common Stock received by Officers, Directors, Trustees and Corporators of the MHC and the Bank and the Associates of such persons that are based on their increased deposits in the Bank in the one year preceding the Eligibility Record Date shall be subordinated to the subscription rights of other Eligible Account Holders. To ensure proper allocation of stock, each Eligible Account Holder must list on his or her subscription order form all Deposit Accounts in which he had an ownership interest as of the Eligibility Record Date.

7.5.2 Second Priority: Supplemental Eligible Account Holders. To the extent there are shares remaining after satisfaction of subscriptions by Eligible Account Holders, and if a Supplemental Eligibility Record Date is established, each Supplemental Eligible Account Holder shall receive non-transferable subscription rights to subscribe for a number of shares of Holding Company Common Stock equal to the greater of (a) the quotient obtained by dividing the Individual Maximum Purchase Limit by the per share Subscription Price, (b) one-tenth of one percent (0.10%) of the shares offered in the Conversion, or (c) 15 times the product (rounded down to the nearest whole number) obtained by multiplying (1) the total number of shares of Holding Company Common Stock to be sold in the Offering by (2) a fraction, of which the numerator is the Qualifying Deposit of the Supplemental Eligible Account Holder and the denominator is the total amount of Qualifying Deposits of all Supplemental Eligible Account Holders. In the event Supplemental Eligible Account Holders subscribe for a number of shares of Holding Company Common Stock which, when added to the shares subscribed for by Eligible Account Holders, exceed available shares, the available shares of Holding Company Common Stock will be allocated among subscribing Supplemental Eligible Account Holders so as to permit each subscribing Supplemental Eligible Account Holder to purchase a number of shares of Holding Company Common Stock sufficient to make his or her total allocation equal to the lesser of 100 shares or the number of shares subscribed for. Thereafter, unallocated shares will be allocated to each subscribing Supplemental Eligible Account Holder whose subscription remains unfilled in the same proportion that such subscriber’s Qualifying Deposit on the Supplemental Eligibility Record Date bears to the total amount of Qualifying Deposits of all subscribing Supplemental Eligible Account Holders whose subscriptions remain unfilled.

7.5.3 Third Priority: Tax-Qualified Employee Plans. To the extent there are shares remaining after satisfaction of subscriptions by Eligible Account Holders and Supplemental Eligible Account Holders, if any, the Tax-Qualified Employee Plans shall be given the opportunity to purchase in the aggregate up to 10% of the Holding Company Common Stock issued in the Conversion. In the event that the total number of shares of Holding Company Common Stock offered in the Conversion is increased to an amount greater than the Range Maximum, the Tax-Qualified Employee Plans shall have a priority right to purchase any such shares exceeding the Range Maximum (up to the aggregate of 10% of Holding Company Common Stock to be issued in the Conversion). The Employee Plans shall not be deemed to be Associates or Affiliates of or Persons

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Acting in Concert with any Director, Trustee, Officer or Corporator of the MHC, the Stock Holding Company or the Bank. Alternatively, if permitted by the Bank Regulators, the Tax-Qualified Employee Plans may purchase all or a portion of such shares in the open market after the completion of the Conversion.

7.6. Priorities for Direct Community Offering. 

7.6.1 Any shares of Holding Company Common Stock not subscribed for in the Subscription Offering may be offered for sale in a Direct Community Offering. This will involve an offering of all unsubscribed shares of Holding Company Common Stock directly to the general public. The Direct Community Offering, if any, shall commence concurrently with, during or promptly after the Subscription Offering. The Stock Holding Company may use broker, dealer or an investment banking firm or firms on a best efforts basis to sell the unsubscribed shares in the Subscription and Direct Community Offering. The Stock Holding Company may pay a commission or other fee to such investment banking firm or firms as to the shares sold by such firm or firms in the Subscription and Direct Community Offering and may also reimburse such firm or firms for reasonable expenses incurred in connection with the sale. The Holding Company Common Stock will be offered and sold in the Direct Community Offering in accordance with the Regulations, so as to achieve the widest distribution of the Holding Company Common Stock. In making the Direct Community Offering, the Bank will give preference to natural persons (including trusts of natural persons) residing in the Local Community. No Person may subscribe for or purchase more than the Individual Maximum Purchase Limit of Holding Company Common Stock in the Direct Community Offering. The Stock Holding Company, in its sole discretion, may reject subscriptions, in whole or in part, received from any Person under this Section 7.6.

7.6.2 In the event of an oversubscription for shares in the Direct Community Offering, available shares will be allocated (to the extent shares remain available) first to cover orders of natural Persons residing in the Local Community, and second to the general public, so that each such Person may receive 100 shares, and thereafter, on a pro rata basis to such Persons based on the amount of their respective subscriptions or on such other reasonable basis as may be determined by the Stock Holding Company. If oversubscription does not occur among natural Persons residing in the Local Community, orders accepted in the Direct Community Offering shall be filled up to a maximum not to exceed 2% of the Holding Company Common Stock, and thereafter remaining shares shall be allocated on an equal number of shares basis per order until all orders have been filled. The Bank may use deposit or loan records or such other evidence provided to it to determine whether a Person is a Resident of the Local Community. In all cases, however, such a determination shall be in the sole discretion of the Stock Holding Company.

7.6.3 If:

(i) aggregate subscriptions for shares totaling at least the Range Minimum are not received in the Subscription Offering and Direct Community Offering, and the Stock Holding Company, in its sole discretion, determines that neither a Syndicated Community Offering nor a Firm Commitment Underwritten Offering is in the best interests of the Stock Holding Company; or

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(ii) aggregate subscriptions and orders totaling at least the Range Minimum are not received in the Subscription Offering, Direct Community Offering and the Syndicated Community Offering or Firm Commitment Underwritten Offering;

then the Stock Holding Company may, in its sole discretion, apply unsubscribed / unordered Holding Company Common Stock in any manner that facilitates the completion of the Conversion.

7.7. Syndicated Community Offering or Firm Commitment Underwritten Offering.

7.7.1 Any shares of Holding Company Common Stock not sold in the Subscription Offering or in the Direct Community Offering, if any, may be offered for sale to the general public by a selling group of broker-dealers in a Syndicated Community Offering, subject to terms, conditions and procedures as may be determined by the Stock Holding Company in a manner that is intended to achieve the widest distribution of the Holding Company Common Stock subject to the rights of the Stock Holding Company to accept or reject in whole or in part all orders in the Syndicated Community Offering. No Person may purchase in the Syndicated Community Offering more than the Individual Maximum Purchase Limit of Holding Company Common Stock. It is expected that the Syndicated Community Offering will commence as soon as practicable after termination of the Direct Community Offering, if any. The Syndicated Community Offering shall be completed within 45 days after the termination of the Subscription Offering, unless such period is extended as provided herein. The commission in the Syndicated Community Offering shall be determined by a marketing agreement between the Stock Holding Company and the Marketing Agent. Such agreement shall be filed with the FRB (if required), the Division and the SEC.

7.7.2 Alternatively, if feasible, any shares of Holding Company Common Stock not sold in the Subscription Offering or in the Direct Community Offering, if any, may be offered for sale in a Firm Commitment Underwritten Offering subject to such terms, conditions and procedures as may be determined by the MHC and the Stock Holding Company, subject to the right of the Stock Holding Company to accept or reject in whole or in part any orders in the Firm Commitment Underwritten Offering. Provided the Subscription Offering has begun, the Holding Company may begin the Firm Commitment Underwritten Offering at any time.

ARTICLE 8.

Additional Limitations on Purchases

8.1. General. Purchases of Holding Company Common Stock in the Conversion will be subject to the purchase limitations set forth in this Article 8.

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8.2. Individual Maximum Purchase Limit. This Section 8.2 sets forth the “Individual Maximum Purchase Limit.” No Person, through one or more qualifying deposit accounts, or Persons exercising subscription rights through a single qualifying deposit account held jointly, may purchase in the Offering (including the Subscription Offering, the Direct Community Offering and the Syndicated Community Offering or Firm Commitment Underwritten Offering) more than $200,000 of Holding Company Common Stock, except that: (a) the Stock Holding Company may, in its sole discretion and without further notice to or solicitation of subscribers or other prospective purchasers, (i) increase such Individual Maximum Purchase Limit to up to 5% of the number of shares of Holding Company Common Stock offered in the Offering or (ii) decrease such Individual Maximum Purchase Limit to no less than one-tenth of one percent (0.10%) of the number of shares of Holding Company Common Stock offered in the Conversion; and (b) Tax-Qualified Employee Plans may purchase up to 10% of the Conversion shares issued in the Conversion (including shares issued in the event of an increase in the Range Maximum of 15%). If the Stock Holding Company increases the Individual Maximum Purchase Limit (as permitted by this Section 8.2), subscribers in the Subscription Offering who ordered the previously-effective maximum amount will be, and certain other large subscribers in the sole discretion of the Stock Holding Company may be, given the opportunity to increase their subscriptions up to the then applicable limit. Requests to purchase additional shares of Holding Company Common Stock under this provision will be determined by the Stock Holding Company, in its sole discretion. In the event that the Individual Maximum Purchase Limit is increased to 5% of the number of Offering Shares, such limitation may be further increased to 9.99% of the Conversion Shares; provided, that orders for Holding Company Common Stock exceeding 5% of the Offering Shares shall not exceed in the aggregate 10% of the Offering Shares. Requests to purchase additional shares of the Holding Company Common Stock in the event that the purchase limitation is so increased will be determined by the Board of Directors of the Stock Holding Company in its sole discretion.

8.3. Group Maximum Purchase Limit. This Section 8.3 sets forth the “Group Maximum Purchase Limit.” No Person and his or her Associates or group of Persons Acting in Concert, may purchase in the Offering (including the Subscription Offering, the Direct Community Offering and the Syndicated Community Offering or Firm Commitment Underwritten Offering) more than $300,000 of Holding Company Common Stock, except that: (a) the Stock Holding Company may, in its sole discretion and without further notice to or solicitation of subscribers or other prospective purchasers, (i) increase such Group Maximum Purchase Limit to up to 5% of the number of shares of Holding Company Common Stock offered in the Offering or (ii) decrease such Group Maximum Purchase Limit to no less than one-tenth of one percent (0.10%) of the number of shares of Holding Company Common Stock offered in the Conversion; and (b) Tax-Qualified Employee Plans may purchase up to 10% of the Conversion Shares issued in the Conversion. Notwithstanding the foregoing, in the event that the Stock Holding Company increases the Individual Maximum Purchase Limit (as permitted by Section 8.2) to a number that is in excess of the Group Maximum Purchase Limit established by this Section 8.3, the Group Maximum Purchase Limit shall automatically be increased so as to be equal to the Individual Maximum Purchase Limit, as adjusted. The maximum number of shares of Holding Company Common Stock that may be subscribed for or purchased in all categories of the Offering by any Person or Participant together with any Associate or group or Persons Acting in Concert shall not exceed 9.9% of the shares of Conversion Shares; provided, that this limitation shall not apply to the Employee Plans.

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8.4. Purchases by Officers, Directors, Trustees and Corporators. The aggregate number of shares of Holding Company Common Stock to be purchased in the Offering by Officers, Directors, Trustees and Corporators of the MHC, the Mid-Tier Holding Company and the Bank (and their Associates) shall not exceed 30% of the total number of the Conversion Shares.

8.5. Special Rule for Tax-Qualified Employee Plans. Shares of Holding Company Common Stock purchased by any individual participant (“Plan Participant”) in a Tax-Qualified Employee Plan using funds therein pursuant to the exercise of subscription rights granted to such Participant in his individual capacity as an Eligible Account Holder or Supplemental Eligible Account Holder (if any) shall not be deemed to be purchases by a Tax-Qualified Employee Plan for purposes of calculating the maximum amount of Holding Company Common Stock that Tax-Qualified Employee Plans may purchase pursuant to this Plan, if the individual Plan Participant controls or directs the investment authority with respect to such account or subaccount.

8.6. Illegal Purchases. Notwithstanding any other provision of the Plan, no Person shall be entitled to purchase any Holding Company Common Stock to the extent such purchase would be illegal under any federal law or state law or regulation or would violate regulations or policies of the Financial Industry Regulatory Authority. The Stock Holding Company and/or its agents may ask for an acceptable legal opinion from any purchaser as to the legality of such purchase and may refuse to honor any purchase order if such opinion is not timely furnished.

8.7. Rejection of Orders. The Stock Holding Company has the right in its sole discretion to reject any order submitted by a Person whose representations the Stock Holding Company believes to be false or who it otherwise believes, either alone or Acting in Concert with others, is violating, circumventing, or intends to violate, evade or circumvent the terms and conditions of the Plan.

8.8 Subscribers in Non-Qualified States or in Foreign Countries. The Stock Holding Company, in its sole discretion, may make reasonable efforts to comply with the securities laws of any state in the United States in which its depositors reside, and will only offer and sell the Holding Company Common Stock in states in which the offers and sales comply with such states’ securities laws. However, no Person will be offered or allowed to purchase any Holding Company Common Stock under the Plan if he or she resides (a) in a foreign country or (b) in a state of the United States with respect to which any of the following apply: (i) a small number of Persons otherwise eligible to purchase shares under the Plan reside in such state; (ii) the offer or sale of shares of Holding Company Common Stock to such Persons would require the Stock Holding Company or its Employees to register, under the securities laws of such state, as a broker or dealer or to register or otherwise qualify its securities for sale in such state; or (iii) such registration or qualification would be impracticable for reasons of cost or otherwise.

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8.9. No Offer to Transfer Shares. Before the consummation of the Conversion, no Person shall offer to transfer, or enter into any agreement or understanding to transfer the legal or beneficial ownership of any subscription rights or shares of Holding Company Common Stock, except pursuant to the Plan. The following shall not constitute impermissible transfers under this Plan. Any Person having subscription rights in his individual capacity as an Eligible Account Holder or Supplemental Eligible Account Holder (if any) may exercise such subscription rights by causing a tax-qualified plan to make such purchase using funds allocated to such Person in such tax-qualified plan if such individual plan participant controls or directs the investment authority with respect to such account or subaccount. A tax-qualified plan that maintains an Eligible Deposit Account in the Bank as trustee for or for the benefit of a Person who controls or directs the investment authority with respect to such account or subaccount (“Beneficiary”) may, in exercising its subscription rights, direct that the Holding Company Common Stock be issued in the name of such individual Beneficiary in his individual capacity.

8.10. Confirmation by Purchasers. Each Person ordering Holding Company Common Stock in the Conversion will be deemed to confirm that such purchase does not conflict with the purchase limitations in the Plan.

ARTICLE 9.

Post Offering Matters

9.1. Stock Purchases After the Conversion. For a period of three years after the proposed Conversion, no Officer or Director of the Stock Holding Company or the Bank, or his or her Associates, may purchase, without the prior written approval of the Commissioner, any Holding Company Common Stock except from a broker-dealer registered with the SEC. Provided that the foregoing shall not apply to (a) negotiated transactions involving more than 1% of the outstanding Holding Company Common Stock, or (b) purchases of stock made by and held by or otherwise made pursuant to any Employee Plan of the Bank or the Stock Holding Company even if such stock is attributable to Officers, Directors or their Associates.

9.2. Resales of Stock by Management Persons. Holding Company Common Stock purchased in the Conversion by Officers, Directors, Trustees and Corporators of the Bank, the Mid-Tier Holding Company, the Stock Holding Company or the MHC may not be resold for a period of at least one year following the date of purchase, except in the case of death or substantial disability, as determined by the Commissioner, of such person, or upon the written approval of the Commissioner.

9.3. Stock Certificates. Each stock certificate shall bear a legend giving appropriate notice of the restrictions set forth in Section 9.2 hereof. Appropriate instructions shall be issued to the Stock Holding Company’s transfer agent with respect to applicable restrictions on transfers of such stock. Any shares of stock issued as a stock dividend, stock split or otherwise with respect to such restricted stock shall be subject to the same restrictions as apply to the restricted stock.

9.4. Restriction on Financing Stock Purchases. The Stock Holding Company and the Bank are prohibited from knowingly making any loans or granting any lines of credit for the

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purpose of purchasing Holding Company Common Stock in the Conversion; provided, however, that the Stock Holding Company, or a subsidiary thereof, may loan funds to the ESOP for the purchase of up to 10% of the Conversion Shares issued in the Conversion.

9.5. Stock Benefit Plans. The Board of Directors of the Bank and/or the Stock Holding Company are permitted under the Regulations, and may decide, to adopt one or more stock benefit plans for the benefit of the Employees, Officers and Directors of the Bank and Stock Holding Company, including an ESOP, stock award plans and stock option plans, which will be authorized to purchase Holding Company Common Stock and grant options for Holding Company Common Stock. However, only the Tax-Qualified Employee Plans will be permitted to purchase Holding Company Common Stock in the Conversion subject to the purchase priorities set forth in the Plan. Pursuant to the Regulations, the Stock Holding Company may authorize the Tax-Qualified Employee Plans, including the ESOP, to purchase up to 10% of the Holding Company Common Stock to be issued in the Conversion. The Bank or the Stock Holding Company may make scheduled discretionary contributions to one or more Tax-Qualified Employee Plans to purchase Holding Company Common Stock or to purchase issued and outstanding shares of Holding Company Common Stock or authorized but unissued shares of Holding Company Common Stock subsequent to the completion of the Conversion; provided, however, that such contributions do not cause the Bank to fail to meet any of its regulatory capital requirements. The Plan specifically authorizes the grant and issuance by the Stock Holding Company of (i) awards of Holding Company Common Stock after the Conversion pursuant to one or more stock recognition and award plans (the “Recognition Plans”) in an amount equal to up to 4% of the number of shares of Holding Company Common Stock issued in the Conversion, (ii) options to purchase a number of shares of Holding Company Common Stock in an amount equal to up to 10% of the number of shares of Holding Company Common Stock issued in the Conversion, and shares of Holding Company Common Stock issuable upon exercise of such options, and (iii) at the closing of the Conversion or at any time thereafter, Holding Company Common Stock in an amount equal to 8% of the number of shares of Holding Company Common Stock issued in the Conversion to the ESOP and an amount equal to up to 2% of the number of shares of Holding Company Common Stock issued in the Conversion to the Bank’s 401(k) plan, if applicable. Shares awarded to the Tax Qualified Employee Plans or pursuant to the Recognition Plans, and shares issued upon exercise of options may be authorized but unissued shares of the Holding Company Common Stock, or shares of Holding Company Common Stock purchased by the Stock Holding Company or such plans in the open market. No Recognition Plans or stock option plans have yet been adopted by the Board of the Stock Holding Company, and no such plans will be submitted for the approval of the Stock Holding Company’s stockholders at a meeting held earlier than six months after completion of the Conversion.

9.6. Market for Holding Company Common Stock. If at the close of the Conversion the Stock Holding Company has more than 300 shareholders of any class of stock, the Stock Holding Company shall use its best efforts to:

9.6.1 Encourage and assist a Market Maker to establish and maintain a market for that class of stock;

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9.6.2 List that class of stock on a national or regional securities exchange, including the Nasdaq Stock Market; and

9.6.3 Register the Holding Company Common Stock with the SEC pursuant to the Exchange Act, and undertake not to deregister such Holding Company Common Stock for a period of three years thereafter.

9.7. Liquidation Account. 

9.7.1 The Bank shall, at the time of the Conversion, in exchange for at least 50% of the net proceeds of the Offering, establish a Bank Liquidation Account in an amount equal to the MHC’s total equity as set forth in the latest consolidated statement of financial condition contained in the final Prospectus distributed in connection with the Conversion. The function of the Bank Liquidation Account is to establish a priority on liquidation for Eligible Account Holders and Supplemental Eligible Account Holders (if any). Following the Conversion, the Bank Liquidation Account will be maintained for the benefit of the Eligible Account Holders and Supplemental Eligible Account Holders (if any) who continue to maintain Deposit Accounts with the Bank. Each Eligible Account Holder and Supplemental Eligible Account Holder (if any) shall, with respect to each Deposit Account, hold a related inchoate interest in a portion of the Bank Liquidation Account balance, in relation to each Deposit Account balance at the Eligibility Record Date or Supplemental Eligibility Record Date (if established), as the case may be, or to such balance as it may be subsequently reduced, as hereinafter provided. The initial Bank Liquidation Account balance shall not be increased, and shall be subject to downward adjustment to the extent of any downward adjustment of any subaccount balance of any Eligible Account Holder or Supplemental Eligible Account Holder (if any) in accordance with 209 CMR 33.05(12). In addition, the Stock Holding Company shall, at the time of the merger of the Mid-Tier Holding Company into the Stock Holding Company, also establish a Stock Holding Company Liquidation Account in an amount equal to the MHC’s total equity as set forth in the latest consolidated statement of financial condition contained in the final Prospectus distributed in connection with the Conversion. The Stock Holding Company Liquidation Account also shall be maintained for the benefit of the Eligible Account Holders and Supplemental Eligible Account Holders (if any) who continue to maintain their Deposit Accounts at the Bank. Except as otherwise provided in this Section 9.7, the existence of the Stock Holding Company Liquidation Account shall not operate to restrict the use or application of any of the net worth accounts of the Stock Holding Company.

9.7.2 In the unlikely event of a complete liquidation of (i) the Bank or (ii) the Bank and the Stock Holding Company (and only in such event), following all liquidation payments to creditors (including those to depositors to the extent of their Deposit Accounts) each Eligible Account Holder and Supplemental Eligible Account Holder (if any) shall be entitled to receive a liquidating distribution from the Stock Holding Company Liquidation Account, in the amount of the then-adjusted subaccount balances for his or her deposit accounts then held, before any liquidating distribution may be made to any holders of the Stock Holding Company’s capital stock. No merger, consolidation,

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reorganization, or purchase of bulk assets with assumption of deposit accounts and other liabilities, or similar transactions with an FDIC-insured institution, in which the Stock Holding Company and/or the Bank is not the surviving institution, shall be deemed to be a complete liquidation for this purpose. In such transactions, the Stock Holding Company Liquidation Account shall be assumed by the surviving holding company or institution.

9.7.3 In the unlikely event of a complete liquidation of (i) the Bank or (ii) the Bank and the Stock Holding Company (and only in such event), following all liquidation payments to creditors of the Bank (including those to Account Holders to the extent of their Deposit Accounts), at a time when the Bank has a positive net worth and the Stock Holding Company does not have sufficient assets (other than the stock of the Bank) at the time of liquidation to fund the obligations under the Stock Holding Company Liquidation Account, the Bank with respect to the Bank Liquidation Account shall immediately pay directly to each Eligible Account Holder and Supplemental Eligible Account Holder (if any) an amount necessary to fund the Stock Holding Company’s remaining obligation under the Stock Holding Company Liquidation Account, before any liquidation distribution may be made to any holders of the Bank’s capital stock and without making such amount subject to the Stock Holding Company’s creditors. Each Eligible Account Holder and Supplemental Eligible Account Holder (if any) shall be entitled to receive a distribution from the Stock Holding Company Liquidation Account, in the amount of the then adjusted subaccount balance for his Deposit Account then held, before any distribution may be made to any holders of the Stock Holding Company’s capital stock.

9.7.4 In the event of a complete liquidation of the Stock Holding Company where the Bank is not also completely liquidating, or in the event of a sale or other disposition of the Stock Holding Company apart from the Bank, each Eligible Account Holder and Supplemental Eligible Account Holder (if any) shall be treated as surrendering such Person’s rights to the Stock Holding Company Liquidation Account and receiving from the Stock Holding Company an equivalent interest in the Bank Liquidation Account. Each such holder’s interest in the Bank Liquidation Account shall be subject to the same rights and terms as if the Bank Liquidation Account were the Stock Holding Company Liquidation Account (except that the Stock Holding Company shall cease to exist).

9.7.5 The initial subaccount balance for a Deposit Account held by an Eligible Account Holder and/or Supplemental Eligible Account Holder (if any) shall be determined by multiplying the opening balance in the Bank Liquidation Account by a fraction, the numerator of which is the amount of such Eligible Account Holder’s or Supplemental Eligible Account Holder’s Qualifying Deposit and the denominator of which is the total amount of all Qualifying Deposits of all Eligible Account Holders and Supplemental Eligible Account Holders. For Deposit Accounts in existence on both dates, separate subaccounts shall be determined on the basis of the Qualifying Deposits in such Deposit Accounts on such record dates. Such initial subaccount balance shall not be increased by additional Deposits, but shall be subject to downward adjustment as described below. The initial subaccount balance in the Stock Holding Company Liquidation Account for a Deposit Account held by an Eligible Account Holder and/or Supplemental Eligible Account Holder (if any) shall be determined in the same manner as their interest in the Bank Liquidation Account is determined.

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9.7.6 If, at the close of business on the last day of any period for which the Stock Holding Company has prepared audited financial statements subsequent to the effective date of the Conversion, the deposit balance in the Deposit Account of an Eligible Account Holder or Supplemental Eligible Account Holder (if any) is less than the lesser of: (a) the balance in the Deposit Account at the close of business on the last day of any period for which the Stock Holding Company has prepared audited financial statements subsequent to the Eligibility Record Date or Supplemental Eligibility Record Date (if established), or (b) the amount in such Deposit Account as of the Eligibility Record Date or Supplemental Eligibility Record Date (if established), then the subaccount balance for such Deposit Account shall be adjusted by reducing such subaccount balance, in an amount proportionate to the reduction in the balance of such Deposit Account. In the event of such downward adjustment, the subaccount balance shall not be subsequently increased, notwithstanding any subsequent increase in the deposit balance of the related Deposit Account. If any such Deposit Account is closed, the related subaccount shall be reduced to zero. For purposes of this Section 9.7, a time account shall be deemed to be closed upon its maturity date regardless of any renewal thereof. A distribution of each subaccount balance in the Stock Holding Company Liquidation Account may be made only in the event of a complete liquidation of the Stock Holding Company subsequent to the Conversion and only out of funds available for such purpose after payment of all creditors.

9.7.7 The creation and maintenance of the Stock Holding Company Liquidation Account shall not operate to restrict the use or application of any of the equity accounts of the Stock Holding Company or the Bank, except that neither the Stock Holding Company nor the Bank shall (i) declare or pay a cash dividend on, or repurchase any of, its capital stock if the effect thereof would cause its net worth to be reduced below the amount required for the Stock Holding Company Liquidation Account and the Bank Liquidation Account, as applicable, or (ii) the regulatory capital requirements of the Stock Holding Company (to the extent applicable) or the Bank. Neither the Stock Holding Company nor the Bank shall be required to set aside funds in connection with its obligations hereunder relating to the Liquidation Account and the Bank Liquidation Account, respectively. Eligible Account Holders and Supplemental Eligible Account Holders (if any) do not retain any voting rights in either the Stock Holding Company or the Bank based on their liquidation subaccounts.

9.7.8 The amount of the Stock Holding Company Liquidation Account shall equal at all times the amount of the Bank Liquidation Account, and in no event will any Eligible Account Holder or Supplemental Eligible Account Holder (if any) be entitled to a distribution exceeding such holder’s subaccount balance in the Stock Holding Company Liquidation Account or Bank Liquidation Account. A distribution to an Eligible Account Holder or Supplemental Eligible Account Holder (if any) from the Stock Holding Company Liquidation Account will extinguish the right of the Eligible Account Holder or Supplemental Eligible Account Holder (if any) to receive a distribution from the Bank Liquidation Account.

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9.7.9 For the three-year period following the completion of the Conversion, the Stock Holding Company will not without prior approval of the Commissioner and the FRB: (i) sell or liquidate the Stock Holding Company, or (ii) cause the Bank to be sold or liquidated. At any time after two years from the completion of the Conversion, the Stock Holding Company shall eliminate or transfer the Stock Holding Company Liquidation Account to the Bank and the Stock Holding Company Liquidation Account shall be assumed by the Bank, at which time the interests of Eligible Account Holders and Supplemental Eligible Account Holders (if any) will be solely and exclusively established in the Bank Liquidation Account. In the event such transfer occurs, the Stock Holding Company Liquidation Account shall become the liquidation account of the Bank and shall not be subject in any manner or amount to the claims of the Stock Holding Company’s creditors. Approval of the Plan by the Corporators shall constitute approval of the transactions described therein.

9.8. Payment of Dividends. Neither the Stock Holding Company nor the Bank may declare or pay a cash dividend on its common stock if such dividend would cause its regulatory capital to be reduced below applicable capital requirements or the amount required to maintain its respective liquidation account. Otherwise, the Bank and the Stock Holding Company may declare dividends in accordance with applicable laws and regulations.

9.9. Repurchase of Stock. Based upon facts and circumstances following the Conversion and subject to applicable regulatory and accounting requirements, the Board of Directors of the Stock Holding Company may determine to repurchase stock in the future. Such facts and circumstances may include but not be limited to: (a) market and economic factors such as the price at which the Holding Company Common Stock is trading in the market, the volume of trading, the attractiveness of other investment alternatives in terms of the rate of return and risk involved in the investment, the ability to increase the book value and/or earnings per share of the remaining outstanding shares, and the opportunity to improve the Stock Holding Company’s return on equity; (b) the avoidance of dilution to stockholders by not having to issue additional shares to cover the exercise of stock options or the purchase of shares by the ESOP in the event the ESOP is unable to acquire shares in the Subscription Offering, or to fund any stock plans adopted after the consummation of the Conversion; and (c) any other circumstances in which repurchases would be in the best interests of the Stock Holding Company and its shareholders.

9.10. Conversion Expenses. The Regulations require that the expenses of the Conversion must be reasonable. The MHC will use its best efforts to assure that the expenses incurred by the MHC and the Stock Holding Company in effecting the Conversion will be reasonable.

9.11. Public Inspection of Conversion Application. The MHC and the Bank will maintain a copy of the non-confidential portion of the Application in the main banking office of the Bank and such copy will be available for public inspection.

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9.12. Enforcement of Terms and Conditions. Each of the MHC and the Stock Holding Company shall have the right to take all such action as they, in its sole discretion, may deem necessary, appropriate or advisable in order to monitor and enforce the terms, conditions, limitations and restrictions contained in the Plan and the terms, conditions and representations contained in the Plan, and the terms, conditions and representations contained in the order forms, including, but not limited to, the right to require any subscriber or purchaser to provide evidence, in a form satisfactory to the MHC and the Stock Holding Company, of such Person’s eligibility to subscribe for or purchase shares of the Holding Company Common Stock under the terms of the Plan and the absolute right (subject only to any necessary regulatory approvals or concurrence) to reject, limit or revoke acceptance of any subscription or order and to delay, terminate or refuse to consummate any sale of Holding Company Common Stock that it believes might violate, or is designed to, or is any part of a plan to, evade or circumvent such terms, conditions, limitations, restrictions and representations. Any such action shall be final, conclusive and binding on all Persons, and the MHC, the Stock Holding Company, the Bank and their Board of Trustees, Board of Directors, Officers, Employees, Corporators and agents shall be free from any liability to any Person on account of any such action.

9.13. Voting Rights in Converted Stock Holding Company. Following the Conversion, the holders of the capital stock of the Stock Holding Company shall have exclusive voting rights in the Stock Holding Company.

9.14. Restrictions on Acquisition of Bank and Stock Holding Company. 

9.14.1 The charter of the Bank may contain a provision stipulating that no person, except the Stock Holding Company, for a period of three years following the closing date of the Conversion, may directly or indirectly acquire or offer to acquire the beneficial ownership of more than 10% of any class of equity security of the Bank, without the prior written approval of the FRB. In addition, such charter may also provide that for a period of five years following the closing date of the Conversion, shares beneficially owned in violation of the above-described charter provision shall not be entitled to vote and shall not be voted by any person or counted as voting stock in connection with any matter submitted to stockholders for a vote. In addition, special meetings of the stockholders relating to changes in control or amendment of the charter may only be called by the Board of Directors, and stockholders shall not be permitted to cumulate their votes for the election of Directors.

9.14.2 For a period of three years from the date of consummation of the Conversion, no person, other than the Stock Holding Company, shall directly or indirectly offer to acquire or acquire the beneficial ownership of more than 10% of any class of equity security of the Bank without the prior written consent of the FRB. Nothing in this Plan shall prohibit the Stock Holding Company from taking actions permitted under 12 C.F.R. 239.63(f).

9.14.3 The Articles of Incorporation of the Stock Holding Company may contain a provision stipulating that in no event shall any record owner of any outstanding shares of Holding Company Common Stock who beneficially owns in excess of 10% of such

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outstanding shares be entitled or permitted to any vote with respect to any shares held in excess of 10%. In addition, the Articles of Incorporation and Bylaws of the Stock Holding Company may contain provisions which provide for, or prohibit, as the case may be, staggered terms of the Directors, noncumulative voting for Directors, limitations on the calling of special meetings, a fair price provision for certain business combinations and certain notice requirements.

9.14.4 For the purposes of this Section 9.14:

(1) the term “person” includes an individual, a firm, a corporation or other entity;

(2) the term “offer” includes every offer to buy or acquire, solicitation of an offer to sell, tender offer for, or request or invitation for tenders of, a security or interest in a security for value;

(3) the term “acquire” includes every type of acquisition, whether effected by purchase, exchange, operation of law or otherwise; and

(4) the term “security” includes non-transferable subscription rights issued pursuant to a plan of conversion as well as a “security” as defined in 15 U.S.C. § 77b(a)(1).

ARTICLE 10.

Miscellaneous

10.1. Interpretation of Plan. All interpretations of the Plan and application of its provisions to particular circumstances by the MHC and Stock Holding Company shall be final, subject to the authority of the Commissioner and the FRB. When a reference is made in this Plan to Sections or Exhibits, such reference shall be to a Section of or Exhibit to the Plan unless otherwise indicated. The recitals hereto constitute an integral part of the Plan. References to Sections include subsections, which are part of the related Section (e.g., a section numbered “Section 5.5.1” would be part of “Section 5.5” and references to “Section 5.5” would also refer to material contained in the subsection described as “Section 5.5.1”). The table of contents and headings contained in the Plan are for reference purposes only and shall not affect in any way the meaning or interpretation of the Plan. Whenever the words “include”, “includes” or “including” are used in the Plan, they shall be deemed to be followed by the words “without limitation”.

10.2. Amendment or Termination of the Plan. If deemed necessary or desirable, the terms of the Plan may be substantively amended by a majority vote of the members of the Board of Trustees as a result of comments from regulatory authorities at any time prior to approval of the Plan by the Commissioner and the FRB and at any time thereafter with the concurrence of the Commissioner and the FRB. If amendments to the Plan are made after the Special Meeting of Shareholders, no further approval of the Shareholders will be necessary unless otherwise required by the Commissioner or the FRB. If amendments to the plan of merger for the MHC Merger are made after the Special Meeting of Corporators or the Special Meeting of

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Shareholders, no further approval of the Corporators or the Shareholders will be necessary unless otherwise required by the Commissioner or the FRB. The Plan may be terminated by the Board of Trustees in its sole discretion, at any time prior to the Special Meeting of Shareholders and at any time thereafter with the concurrence of the Commissioner and the FRB. The Plan will terminate if the sale of all shares of Holding Company Common Stock is not completed within twenty four months from the date of approval of the Plan by the Board of Trustees.

Dated: February 25, 2014

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AGREEMENT OF MERGER BETWEEN

CONAHASSET BANCSHARES, MHC

AND CONAHASSET BANCSHARES, INC.

THIS AGREEMENT OF MERGER (the “MHC Merger Agreement”) dated as of [—], 2014, is made by and between Conahasset Bancshares, MHC, a Massachusetts mutual holding company (the “MHC”), and Conahasset Bancshares, Inc., a Delaware corporation (the “Mid-Tier Holding Company”). Capitalized terms have the respective meanings given them in the Plan of Conversion (the “Plan”) of the MHC, unless otherwise defined herein.

R E C I T A L S:

1. The MHC is a Massachusetts mutual holding company that owns 100% of the common stock of the Mid-Tier Holding Company.

2. The Mid-Tier Holding Company is a Delaware corporation that owns 100% of the common stock of Pilgrim Bank, a Massachusetts-chartered co-operative bank.

3. The Board of Directors of the Mid-Tier Holding Company, the Board of Trustees of the MHC and the Corporators of the MHC have approved this MHC Merger Agreement whereby the MHC shall merge with and into the Mid-Tier Holding Company with the Mid-Tier Holding Company as the resulting corporation (the “MHC Merger”), and have authorized the execution and delivery of this MHC Merger Agreement.

NOW, THEREFORE, in consideration of the premises and mutual agreements contained herein, the parties hereto have agreed as follows:

1. Merger. At and on the Effective Date of the MHC Merger, the MHC will merge with and into the Mid-Tier Holding Company with the Mid-Tier Holding Company as the resulting entity (“Resulting Corporation”) whereby the shares of Mid-Tier Holding Company common stock held by the MHC will be canceled and persons having liquidation interests in the MHC will constructively receive liquidation interests in the Mid-Tier Holding Company in exchange for their liquidation interests in the MHC.

2. Effective Date. The MHC Merger shall not be effective until and unless: (i) the Plan is approved by the Division of Banks of the Commonwealth of Massachusetts and the Board of Governors of the Federal Reserve System; (ii) the Plan is approved by a majority of the total votes of the MHC’s Shareholders; (iii) this MHC Merger Agreement is approved by two-thirds of the total votes of the MHC’s Corporators; (iv) the Plan and this MHC Merger Agreement are approved by the MHC as the sole stockholder of the Mid-Tier Holding Company; and (v) the Articles of Merger shall have been filed with the Secretary of the Commonwealth of Massachusetts and the Secretary of State of the State of Delaware with respect to the MHC Merger.

3. Name. The name of the Resulting Corporation shall be Conahasset Bancorp, Inc.

4. Offices. The main office of the Resulting Corporation shall be 40 South Main Street, Cohasset, Massachusetts 02025.

5. Directors and Officers. The directors and officers of the Mid-Tier Holding Company immediately prior to the Effective Date shall be the directors and officers of the Resulting Corporation after the Effective Date.

6. Rights and Duties of the Resulting Corporation. At the Effective Date, the MHC shall be merged with and into the Mid-Tier Holding Company with the Mid-Tier Holding Company as the Resulting Corporation. The business of the Resulting Corporation shall be that of a Delaware corporation as provided in its Certificate of Incorporation. All assets, rights, interests, privileges, powers, franchises and property (real, personal and mixed) of the Mid-Tier Holding Company and the MHC shall be transferred automatically to and vested in the Resulting Corporation by virtue of the MHC Merger without any deed or other document of transfer. The Resulting Corporation, without any order or action on the part of any court or otherwise and without any documents of assumption or assignment, shall hold and enjoy all of the properties, franchises and interests, including appointments, powers, designations, nominations and all other rights and interests as the agent or other fiduciary in the same manner and to the same extent as such rights, franchises, and interests and powers were held or enjoyed by the Mid-Tier Holding Company and the MHC. The Resulting Corporation shall be responsible for all of the liabilities, restrictions and duties of every kind and description of the Mid-Tier Holding Company and the MHC immediately prior to the MHC Merger, including liabilities for all debts, obligations and contracts of the Mid-Tier Holding Company and the MHC, matured or unmatured, whether accrued, absolute, contingent or otherwise and whether or not reflected or reserved against on balance sheets, books of accounts or records of the Mid-Tier Holding Company or the MHC. All rights of creditors and other obligees and all liens on property of the Mid-Tier Holding Company and the MHC shall be preserved and shall not be released or impaired.

7. Rights of Stockholders. At the Effective Date, the shares of Mid-Tier Holding Company common stock held by the MHC will be canceled and persons having liquidation interests in the MHC will constructively receive liquidation interests in the Mid-Tier Holding Company in exchange for their liquidation interests in the MHC.

8. Other Terms. The Plan is incorporated herein by this reference and made a part hereof to the extent necessary or appropriate to effect and consummate the terms of this MHC Merger Agreement and the Conversion.

[Signature page follows]

2

IN WITNESS WHEREOF, the Mid-Tier Holding Company and the MHC have caused this MHC Merger Agreement to be executed as of the date first above written.

	Conahasset Bancshares, MHC (a Massachusetts mutual holding company)
ATTEST:
	By:
Edward T. Mulvey, Secretary		Francis E. Campbell
		President and Chief Executive Officer
	Conahasset Bancshares, Inc. (a Delaware corporation)
ATTEST:
	By:
Edward T. Mulvey, Clerk		Francis E. Campbell
		President and Chief Executive Officer

3

AGREEMENT OF MERGER BETWEEN

CONAHASSET BANCSHARES, INC. (DELAWARE) AND

CONAHASSET BANCORP, INC. (MARYLAND)

THIS AGREEMENT OF MERGER (the “Mid-Tier Merger Agreement”), dated as of [—], 2014, is made by and between Conahasset Bancshares, Inc., a Delaware corporation (the “Mid-Tier Holding Company”), and Conahasset Bancorp, Inc., a Maryland corporation (the “Holding Company”). Capitalized terms have the respective meanings given them in the Plan of Conversion of Conahasset Bancshares, MHC (the “Plan”) unless otherwise defined herein.

R E C I T A L S:

1. The Mid-Tier Holding Company is a Delaware corporation that owns 100% of the common stock of Pilgrim Bank, a Massachusetts-chartered co-operative bank (the “Bank”).

2. The Holding Company has been organized as a first-tier stock subsidiary of the Mid-Tier Holding Company.

3. The Boards of Directors of the Mid-Tier Holding Company and the Holding Company have approved this Mid-Tier Merger Agreement whereby the Mid-Tier Holding Company will be merged with and into the Holding Company with the Holding Company as the resulting corporation (the “Mid-Tier Merger”), and have authorized the execution and delivery of this Mid-Tier Merger Agreement.

4. Immediately prior to the Mid-Tier Merger, Conahasset Bancshares, MHC, a Massachusetts mutual holding company (the “MHC”) and the owner of 100% of the capital stock of the Mid-Tier Holding Company, merged with and into the Mid-Tier Holding Company with the Mid-Tier Holding Company as the resulting entity (the “MHC Merger”), whereby the shares of Mid-Tier Holding Company held by the MHC were cancelled and persons having liquidation interests in the MHC constructively received liquidation interests in the Mid-Tier Holding Company in exchange for their liquidation interests in the MHC.

5. As a result of the Mid-Tier Merger, the Bank will become a wholly-owned subsidiary of the Holding Company.

NOW, THEREFORE, in consideration of the premises and mutual agreements contained herein, the parties hereto have agreed as follows:

1. Merger. At and on the Effective Date of the Mid-Tier Merger, the Mid-Tier Holding Company will merge with and into the Holding Company with the Holding Company as the resulting corporation (the “Resulting Corporation”), whereby the Bank will become the wholly-owned subsidiary of the Holding Company. As part of the Mid-Tier Merger, persons who had liquidation interests in the MHC who constructively received liquidation interests in the Mid-Tier Holding Company as part of the MHC Merger will exchange the liquidation interests in the Mid-Tier Holding Company that they constructively received for interests in the Liquidation Account.

2. Effective Date. The Mid-Tier Merger shall not be effective until and unless: (i) the Plan is approved by the Division of Banks of the Commonwealth of Massachusetts and the Board of Governors of the Federal Reserve System; (ii) the Plan and this Mid-Tier Merger Agreement are approved by the MHC as the sole stockholder of the Mid-Tier Holding Company; (iii) the Plan and this Mid-Tier Merger Agreement are approved by the Mid-Tier Holding Company as the sole stockholder of the Holding Company; and (iv) Articles of Merger shall have been filed with the Maryland State Department of Assessments and Taxation and a Certificate of Merger shall have been filed the Secretary of State of the State of Delaware with respect to the Mid-Tier Merger.

3. Name. The name of the Resulting Corporation shall be Conahasset Bancorp, Inc.

4. Offices. The main office of the Resulting Corporation shall be 40 South Main Street, Cohasset, Massachusetts 02025.

5. Directors and Officers. The directors and officers of the Holding Company immediately prior to the Effective Date shall be the directors and officers of the Resulting Corporation after the Effective Date.

6. Rights and Duties of the Resulting Corporation. At the Effective Date, the Mid-Tier Holding Company shall merge with the Holding Company, with the Holding Company as the Resulting Corporation. The business of the Resulting Corporation shall be that of a Maryland corporation as provided in its Articles of Incorporation. All assets, rights, interests, privileges, powers, franchises and property (real, personal and mixed) of the Mid-Tier Holding Company and the Holding Company shall be transferred automatically to and vested in the Resulting Corporation by virtue of the Mid-Tier Merger without any deed or other document of transfer. The Resulting Corporation, without any order or action on the part of any court or otherwise and without any documents of assumption or assignment, shall hold and enjoy all of the properties, franchises and interests, including appointments, powers, designations, nominations and all other rights and interests as the agent or other fiduciary in the same manner and to the same extent as such rights, franchises, and interests and powers were held or enjoyed by the Mid-Tier Holding Company and the Holding Company. The Resulting Corporation shall be responsible for all of the liabilities, restrictions and duties of every kind and description of the Mid-Tier Holding Company and the Holding Company immediately prior to the Mid-Tier Merger, including liabilities for all debts, obligations and contracts of the Mid-Tier Holding Company and the Holding Company, matured or unmatured, whether accrued, absolute, contingent or otherwise and whether or not reflected or reserved against on balance sheets, books of accounts or records of the Mid-Tier Holding Company or the Holding Company. The stockholders of the Holding Company shall possess all voting rights with respect to the shares of stock of the Resulting Corporation. All rights of creditors and other obligees and all liens on property of the Mid-Tier Holding Company and the Holding Company shall be preserved and shall not be released or impaired.

7. Rights of Stockholders. At the Effective Date, persons who had liquidation interests in the MHC who constructively received liquidation interests in the Mid-Tier Holding Company in exchange for their liquidation interests in the MHC as part of the MHC Merger, will exchange their liquidation interests in the Mid-Tier Holding Company for interests in the Stock Holding Company Liquidation Account.

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8. Other Terms. The Plan is incorporated herein by this reference and made a part hereof to the extent necessary or appropriate to effect and consummate the terms of this Mid-Tier Merger Agreement and the Conversion.

[Signature page follows]

3

IN WITNESS WHEREOF, the Mid-Tier Holding Company and the Holding Company have caused this Mid-Tier Merger Agreement to be executed as of the date first above written.

	Conahasset Bancshares, Inc. (a Delaware corporation)
ATTEST:
	By:
Edward T. Mulvey, Secretary		Francis E. Campbell
		President and Chief Executive Officer
	Conahasset Bancorp, Inc. (a Maryland corporation)
ATTEST:
	By:
Edward T. Mulvey, Secretary		Francis E. Campbell
		President and Chief Executive Officer

4

Exhibit 7.6

Local Community; Massachusetts Cities and Towns Served by Pilgrim Bank

The Local Community shall include the Massachusetts cities and towns of Cohasset, Scituate, Hingham, Norwell, Hull, Weymouth, Quincy, Marshfield, Pembroke, Marion, Rochester, Mattapoisett, West Wareham, Wareham and Fairhaven.

EX-3.1

Exhibit 3.1

ARTICLES OF INCORPORATION

PILGRIM BANCSHARES, INC.

The undersigned, Adam P. Wheeler, whose address is 5335 Wisconsin Avenue, N.W., Suite 780, Washington, DC 20015, being at least eighteen years of age, acting as incorporator, does hereby form a corporation under the general laws of the State of Maryland, having the following Articles of Incorporation (the “Articles”):

ARTICLE 1. Name. The name of the corporation is Pilgrim Bancshares, Inc. (herein the “Corporation”).

ARTICLE 2. Principal Office. The address of the principal office of the Corporation in the State of Maryland is c/o CSC-Lawyers Incorporating Service Company, 7 St. Paul Street, Suite 1660, Baltimore, Maryland 21202.

ARTICLE 3. Purpose. The purpose for which the Corporation is formed is to engage in any lawful act or activity for which corporations may be organized under the general laws of the State of Maryland as now or hereafter in force.

ARTICLE 4. Resident Agent. The name and address of the registered agent of the Corporation in the State of Maryland is CSC-Lawyers Incorporating Service Company, 7 St. Paul Street, Suite 1660, Baltimore, Maryland 21202. Said resident agent is a Maryland corporation.

ARTICLE 5. Capital Stock

A. Authorized Stock. The total number of shares of capital stock of all classes that the Corporation has authority to issue is twelve million (12,000,000) shares, consisting of:

1. Two million (2,000,000) shares of preferred stock, par value one cent ($0.01) per share (the “Preferred Stock”); and

2. Ten million (10,000,000) shares of common stock, par value one cent ($0.01) per share (the “Common Stock”).

The aggregate par value of all the authorized shares of capital stock is one hundred twenty thousand dollars ($120,000). Except to the extent required by governing law, rule or regulation, the shares of capital stock may be issued from time to time by the Board of Directors without further approval of the stockholders of the Corporation. The Corporation shall have the authority to purchase its capital stock out of funds lawfully available therefor, which funds shall include, without limitation, the Corporation’s unreserved and unrestricted capital surplus. The Board of Directors, pursuant to a resolution approved by a majority of the Whole Board (rounded up to the nearest whole number), and without action by the stockholders, may amend these Articles to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that the Corporation has authority to issue. For the purposes of these Articles, the term “Whole Board” shall mean the total number of directors that the Corporation would have if there were no vacancies on the Board of Directors at the time any such resolution is presented to the Board of Directors for adoption.

B. Common Stock. Except as provided under the terms of any series of Preferred Stock and as limited by Section D of this Article 5, the exclusive voting power shall be vested in the Common Stock. Except as otherwise provided in these Articles, each holder of the Common Stock shall be entitled to one vote for each share of Common Stock standing in the holder’s name on the books of the Corporation. Subject to any rights and preferences of any series of Preferred Stock, holders of Common Stock shall be entitled to such dividends as may be declared by the Board of Directors out of funds lawfully available therefor. Upon the liquidation, dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary, holders of Common Stock shall be entitled to receive all the remaining assets of the Corporation available for distribution to its stockholders ratably in proportion to the number of shares held by them, respectively, after: (i) payment or provision for payment of the Corporation’s debts and liabilities; and (ii) distributions or provisions for distributions to holders of any class or series of stock having a preference over the Common Stock in the liquidation, dissolution or winding up of the Corporation.

C. Preferred Stock. The Board of Directors is hereby expressly authorized, subject to any limitations prescribed by law, to provide for the issuance of the shares of Preferred Stock in series, to establish from time to time the number of shares to be included in each such series, and to fix the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications and terms and conditions of redemption of the shares of each such series. The number of authorized shares of the Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the Common Stock, without a vote of the holders of the Preferred Stock, or of any series thereof, unless a vote of any such holders is required by law or pursuant to the terms of such Preferred Stock. The power of the stockholders to increase or decrease the authorized shares of the Preferred Stock shall not limit any of the powers of the Board of Directors provided under these Articles.

D. Restrictions on Voting Rights of the Corporation’s Equity Securities.

1. Notwithstanding any other provision of these Articles, in no event shall the record owner (or if more than one record owner, all such record owners taken as a group) of any outstanding Common Stock that is beneficially owned, directly or indirectly, by a Person who, as of any record date for the determination of stockholders entitled to vote on any matter, beneficially owns in excess of 10% of the then-outstanding shares of Common Stock (the “Limit”), be entitled, or permitted to any vote in respect of the shares held in excess of the Limit. The number of votes that may be cast by any particular record owner by virtue of the provisions hereof in respect of Common Stock beneficially owned by such Person owning shares in excess of the Limit (a “Holder in Excess”) shall be a number equal to the total number of votes that a single record owner of all Common Stock owned by such Holder in Excess would be entitled to cast after giving effect to the provisions hereof, multiplied by a fraction, the numerator of which is the number of shares of such class or series that are both (i) beneficially owned by such Holder in Excess and (ii) owned of record by such particular record owner and the denominator of which is the total number of shares of Common Stock beneficially owned by such Holder in Excess.

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The provisions of this Section D of this Article 5 shall not be applicable if, before the Holder in Excess acquired beneficial ownership of such shares in excess of the Limit, such acquisition was approved by a majority of the “Unaffiliated Directors.” For this purpose, the term “Unaffiliated Director” means any member of the Board of Directors who is unaffiliated with the Holder in Excess and was a member of the Board of Directors prior to the time that the Holder in Excess became such, and any director who is thereafter chosen to fill any vacancy on the Board of Directors and who is elected and who, in either event, is unaffiliated with the Holder in Excess and in connection with his or her initial assumption of office is recommended for appointment or election by a majority of the Unaffiliated Directors then serving on the Board of Directors.

2. The following definitions shall apply to this Section D of this Article 5.

(a) An “affiliate” of a specified Person shall mean a Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the Person specified.

(b) “Beneficial ownership” shall be determined pursuant to Rule 13d-3 of the General Rules and Regulations under the Securities Exchange Act of 1934 (or any successor rule or statutory provision), or, if said Rule 13d-3 shall be rescinded and there shall be no successor rule or statutory provision thereto, pursuant to said Rule 13d-3 as in effect on December 31, 2013; provided, however, that a Person shall, in any event, also be deemed the “beneficial owner” of any Common Stock:

(1) that such Person or any of its affiliates beneficially owns, directly or indirectly; or

(2) that such Person or any of its affiliates has (i) the right to acquire (whether such right is exercisable immediately or only after the passage of time), pursuant to any agreement, arrangement or understanding (but shall not be deemed to be the beneficial owner of any voting shares solely by reason of an agreement, contract, or other arrangement with the Corporation to effect any transaction of the type described in clause (i) or (ii) of the first sentence of Article 9 hereof) or upon the exercise of conversion rights, exchange rights, warrants, or options or otherwise, or (ii) sole or shared voting or investment power with respect thereto pursuant to any agreement, arrangement, understanding, relationship or otherwise (but shall not be deemed to be the beneficial owner of any voting shares solely by reason of a revocable proxy granted for a particular meeting of stockholders, pursuant to a public solicitation of proxies for such meeting, with respect to shares of which neither such Person nor any such affiliate is otherwise deemed the beneficial owner); or

(3) that are beneficially owned, directly or indirectly, by any other Person with which such first mentioned Person or any of its affiliates acts as a partnership, limited partnership, syndicate or other group pursuant to

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any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any shares of capital stock of the Corporation; and provided further, however, that (i) no director or officer of the Corporation (or any affiliate of any such director or officer) shall, solely by reason of any or all of such directors or officers acting in their capacities as such, be deemed, for any purposes hereof, to beneficially own any Common Stock beneficially owned by any other such director or officer (or any affiliate thereof), and (ii) neither any employee stock ownership or similar plan of the Corporation or any subsidiary of the Corporation nor any trustee with respect thereto (or any affiliate of such trustee) shall, solely by reason of such capacity of such trustee, be deemed, for any purposes hereof, to beneficially own any Common Stock held under any such plan. For purposes of computing the percentage of beneficial ownership of Common Stock of a Person, the outstanding Common Stock shall include shares deemed owned by such Person through application of this subsection but shall not include any other shares of Common Stock that may be issuable by the Corporation pursuant to any agreement, or upon exercise of conversion rights, warrants or options, or otherwise. For all other purposes, the outstanding Common Stock shall include only Common Stock then outstanding and shall not include any Common Stock that may be issuable by the Corporation pursuant to any agreement, or upon the exercise of conversion rights, warrants or options, or otherwise.

(c) A “Person” shall mean any individual, firm, corporation, or other entity.

(d) The Board of Directors shall have the power to construe and apply the provisions of this Section D and to make all determinations necessary or desirable to implement such provisions including, but not limited to, matters with respect to (i) the number of shares of Common Stock beneficially owned by any Person, (ii) whether a Person is an affiliate of another, (iii) whether a Person has an agreement, arrangement, or understanding with another as to the matters referred to in the definition of beneficial ownership, (iv) the application of any other definition or operative provision of this Section D to the given facts, or (v) any other matter relating to the applicability or effect of this Section D.

3. The Board of Directors shall have the right to demand that any Person reasonably believed by the Board of Directors to be a Holder in Excess (or holder of record of Common Stock beneficially owned by any Holder in Excess) supply the Corporation with complete information as to (i) the record owner(s) of all shares beneficially owned by such Holder in Excess, and (ii) any other factual matter relating to the applicability or effect of this section as may reasonably be requested of such Holder in Excess. The Board of Directors shall further have the right to receive from any Holder in Excess reimbursement for all expenses incurred by the Board in connection with its investigation of any matters relating to the applicability or effect of this section on such Holder in Excess, to the extent such investigation is deemed appropriate by the Board of Directors as a result of the Holder in Excess refusing to supply the Corporation with the information described in the previous sentence.

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4. Any constructions, applications, or determinations made by the Board of Directors pursuant to this Section D in good faith and on the basis of such information and assistance as was then reasonably available for such purpose, shall be conclusive and binding upon the Corporation and its stockholders.

5. In the event any provision (or portion thereof) of this Section D shall be found to be invalid, prohibited or unenforceable for any reason, the remaining provisions (or portions thereof) of this Section D shall remain in full force and effect, and shall be construed as if such invalid, prohibited or unenforceable provision had been stricken herefrom or otherwise rendered inapplicable, it being the intent of the Corporation and its stockholders that each such remaining provision (or portion thereof) of this Section D remain, to the fullest extent permitted by law, applicable and enforceable as to all stockholders, including Holders in Excess, notwithstanding any such finding.

E. Majority Vote For Certain Actions. With respect to those actions as to which any provision of the MGCL requires stockholder authorization by a greater proportion than a majority of the total number of shares of all classes of capital stock or of the total number of shares of any class of capital stock, any such action shall be valid and effective if authorized by the affirmative vote of the holders of a majority of the total number of shares of all classes outstanding and entitled to vote thereon, except as otherwise provided in these Articles.

F. Quorum. Except as otherwise provided by law or expressly provided in these Articles, the presence, in person or by proxy, of the holders of record of a majority of the shares of capital stock of the Corporation entitled to vote (after giving effect, if required, to the provisions of Article 5, Section D) shall constitute a quorum at all meetings of the stockholders, and every reference in these Articles to a majority or other proportion of capital stock (or the holders thereof) for purposes of determining any quorum requirement or any requirement for stockholder consent or approval shall be deemed to refer to such majority or other proportion of the votes (or the holders thereof) then entitled to be cast in respect of such capital stock.

ARTICLE 6. Preemptive Rights and Appraisal Rights.

A. Preemptive Rights. Except for preemptive rights approved by the Board of Directors pursuant to a resolution approved by a majority of the directors then in office, no holder of the capital stock of the Corporation or series of stock or of options, warrants or other rights to purchase shares of any class or series of stock or of other securities of the Corporation shall have any preemptive right to purchase or subscribe for any unissued capital stock of any class or series, or any unissued bonds, certificates of indebtedness, debentures or other securities convertible into or exchangeable for capital stock of any class or series or carrying any right to purchase stock of any class or series.

B. Appraisal Rights. Holders of shares of stock shall not be entitled to exercise any rights of an objecting stockholder provided for under Title 3, Subtitle 2 of the MGCL or any successor statute unless the Board of Directors, pursuant to a resolution approved by a majority

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of the directors then in office, shall determine that such rights apply with respect to all or any classes or series of stock, to one or more transactions occurring after the date of such determination in connection with which holders of such shares would otherwise be entitled to exercise such rights.

ARTICLE 7. Directors. The following provisions are made a part of these Articles for the management of the business and the conduct of the affairs of the Corporation, and for further definition, limitation and regulation of the powers of the Corporation and of its directors and stockholders:

A. Management of the Corporation. The business and affairs of the Corporation shall be managed under the direction of the Board of Directors. All powers of the Corporation may be exercised by or under the authority of the Board of Directors, except as conferred on or as reserved to the stockholders by law or by these Articles or the Bylaws of the Corporation; provided, however, that any limitations on the Board of Director’s management or direction of the affairs of the Corporation shall reserve the directors’ full power to discharge their fiduciary duties.

B. Number, Class and Terms of Directors; No Cumulative Voting. The number of directors constituting the Board of Directors of the Corporation shall initially be nine (9), which number may be increased or decreased in the manner provided in the Bylaws of the Corporation; provided, however, that such number shall never be less than the minimum number of directors required by the MGCL now or hereafter in force. The directors, other than those who may be elected by the holders of any series of Preferred Stock, shall be divided into three classes, with the term of office of the first class (“Class I”) to expire at the conclusion of the first annual meeting of stockholders, the term of office of the second class (“Class II”) to expire at the conclusion of the annual meeting of stockholders one year thereafter and the term of office of the third class (“Class III”) to expire at the conclusion of the annual meeting of stockholders two years thereafter, with each director to hold office until his or her successor shall have been duly elected and qualified. At each annual meeting of stockholders, directors elected to succeed those directors whose terms expire shall be elected for a term of office to expire at the third succeeding annual meeting of stockholders after their election or for such shorter period of time as the Board of Directors may determine, with each director to hold office until his or her term has expired and his or her successor shall have been duly elected and qualified.

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The names of the individuals who will serve as directors of the Corporation until their successors are elected and qualify are as follows:

Class I Directors:	Term to Expire in
Stephen T. Golden	2015
Ronald H. Goodwin	2015
Mary E. Granville	2015
Class II Directors:	Term to Expire in
Francis E. Campbell	2016
Charles J. Humphreys	2016
Joseph P. Reilly	2016
Class III Directors:	Term to Expire in
Melissa J. Browne	2017
J. Michael Buckley	2017
Brain W. Noonan	2017

Stockholders shall not be permitted to cumulate their votes in the election of directors. A plurality of all the votes cast at a meeting at which a quorum is present shall be sufficient to elect a director.

C. Vacancies. Any vacancies in the Board of Directors may be filled in the manner provided in the Bylaws of the Corporation.

D. Removal. Subject to the rights of the holders of any series of Preferred Stock then outstanding, any director, or the entire Board of Directors, may be removed from office at any time, but only for cause and only by the affirmative vote of the holders of 80% of the voting power of all of the then-outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors (after giving effect to the provisions of Article 5 hereof) voting together as a single class.

E. Stockholder Proposals and Nominations of Directors. Advance notice of stockholder nominations for the election of directors and of business to be brought by stockholders before any meeting of the stockholders of the Corporation shall be given in the manner provided in the Bylaws of the Corporation. Stockholder proposals to be presented in connection with a special meeting of stockholders shall be presented by the Corporation only to the extent required by Section 2-502 of the MGCL and the Bylaws of the Corporation.

ARTICLE 8. Bylaws. The Board of Directors is expressly empowered to adopt, amend or repeal the Bylaws of the Corporation. Any adoption, amendment or repeal of the Bylaws of the Corporation by the Board of Directors shall require the approval of a majority of the Whole

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Board. The stockholders shall also have power to adopt, amend or repeal the Bylaws of the Corporation. In addition to any vote of the holders of any class or series of stock of the Corporation required by law or by these Articles, the affirmative vote of the holders of at least 80% of the voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors (after giving effect to the provisions of Article 5 hereof), voting together as a single class, shall be required for the adoption, amendment or repeal of any provisions of the Bylaws of the Corporation by the stockholders.

ARTICLE 9. Evaluation of Certain Offers. The Board of Directors, when evaluating (i) any offer of another Person (as defined below) to (A) make a tender or exchange offer for any equity security of the Corporation, (B) merge or consolidate the Corporation with another corporation or entity, or (C) purchase or otherwise acquire all or substantially all of the properties and assets of the Corporation or (ii) any other actual or proposed transaction that would or may involve a change in control of the Corporation (whether by purchases of shares of stock or any other securities of the Corporation in the open market or otherwise, tender offer, merger, consolidation, share exchange, dissolution, liquidation, sale of all or substantially all of the assets of the Corporation, proxy solicitation or otherwise), may, in connection with the exercise of its business judgment in determining what is in the best interests of the Corporation and its stockholders and in making any recommendation to the Corporation’s stockholders, give due consideration to all relevant factors, including, but not limited to: (A) the economic effect, both immediate and long-term, upon the Corporation’s stockholders, including stockholders, if any, who do not participate in the transaction; (B) the social and economic effect on the present and future employees, creditors and customers of, and others dealing with, the Corporation and its subsidiaries and on the communities in which the Corporation and its subsidiaries operate or are located; (C) whether the proposal is acceptable based on the historical, current or projected future operating results or financial condition of the Corporation; (D) whether a more favorable price could be obtained for the Corporation’s stock or other securities in the future; (E) the reputation and business practices of the other entity to be involved in the transaction and its management and affiliates as they would affect the employees of the Corporation and its subsidiaries; (F) the future value of the stock or any other securities of the Corporation or the other entity to be involved in the proposed transaction; (G) any antitrust or other legal and regulatory issues that are raised by the proposal; (H) the business and historical, current or expected future financial condition or operating results of the other entity to be involved in the transaction, including, but not limited to, debt service and other existing financial obligations, financial obligations to be incurred in connection with the proposed transaction, and other likely financial obligations of the other entity to be involved in the proposed transaction; and (I) the ability of the Corporation to fulfill its objectives as a financial institution holding company and on the ability of its subsidiary financial institution(s) to fulfill the objectives of a federally insured financial institution under applicable statutes and regulations. If the Board of Directors determines that any proposed transaction of the type described in clause (i) or (ii) of the immediately preceding sentence should be rejected, it may take any lawful action to defeat such transaction, including, but not limited to, any or all of the following: advising stockholders not to accept the proposal; instituting litigation against the party making the proposal; filing complaints with governmental and regulatory authorities; acquiring the stock or any of the securities of the Corporation; selling or otherwise issuing authorized but unissued stock or other securities or granting options or rights with respect thereto; and obtaining a more favorable offer from another

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individual or entity. This Article 9 sets forth certain factors that may be considered by the Board of Directors, but does not create any implication concerning the factors that must be considered, or any other factors not set forth herein that may or may not be considered, by the Board of Directors regarding any proposed transaction of the type described in clause (i) or (ii) of the first sentence of this Article 9.

For purposes of this Article 9, a “Person” shall include an individual, a group acting in concert, a corporation, a partnership, an association, a joint venture, a pool, a joint stock company, a trust, an unincorporated organization or similar company, a syndicate or any other group or entity formed for the purpose of acquiring, holding or disposing of securities.

ARTICLE 10. Indemnification, etc. of Directors and Officers.

A. Indemnification. The Corporation shall indemnify (1) its current and former directors and officers, whether serving the Corporation or at its request any other entity, to the fullest extent required or permitted by the MGCL now or hereafter in force, including the advancement of expenses under the procedures and to the fullest extent permitted by law, and (2) other employees and agents to such extent as shall be authorized by the Board of Directors and permitted by law; provided, however, that, except as provided in Section B of this Article 10 with respect to proceedings to enforce rights to indemnification, the Corporation shall indemnify any such indemnitee in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized by the Board of Directors of the Corporation.

B. Procedure. If a claim under Section A of this Article 10 is not paid in full by the Corporation within sixty (60) days after a written claim has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be twenty (20) days, the indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim. If successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the indemnitee shall also be entitled to be reimbursed the expense of prosecuting or defending such suit. It shall be a defense to any action for advancement of expenses that the Corporation has not received both (i) an undertaking as required by law to repay such advances in the event it shall ultimately be determined that the standard of conduct has not been met and (ii) a written affirmation by the indemnitee of his good faith belief that the standard of conduct necessary for indemnification by the Corporation has been met. In (i) any suit brought by the indemnitee to enforce a right to indemnification hereunder (but not in a suit brought by the indemnitee to enforce a right to an advancement of expenses) it shall be a defense that, and (ii) any suit by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking the Corporation shall be entitled to recover such expenses upon a final adjudication that, the indemnitee has not met the applicable standard for indemnification set forth in the MGCL. Neither the failure of the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such suit that indemnification of the indemnitee is proper in the circumstances because the indemnitee has met the applicable standard of conduct set forth in the MGCL, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) that the

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indemnitee has not met such applicable standard of conduct, shall create a presumption that the indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the indemnitee, be a defense to such suit. In any suit brought by the indemnitee to enforce a right to indemnification or to an advancement of expenses hereunder, or by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the indemnitee is not entitled to be indemnified, or to such advancement of expenses, under this Article 10 or otherwise shall be on the Corporation.

C. Non-Exclusivity. The rights to indemnification and to the advancement of expenses conferred in this Article 10 shall not be exclusive of any other right that any Person may have or hereafter acquire under any statute, these Articles, the Corporation’s Bylaws, any agreement, any vote of stockholders or the Board of Directors, or otherwise.

D. Insurance. The Corporation may maintain insurance, at its expense, to insure itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such Person against such expense, liability or loss under the MGCL.

E. Miscellaneous. The Corporation shall not be liable for any payment under this Article 10 in connection with a claim made by any indemnitee to the extent such indemnitee has otherwise actually received payment under any insurance policy, agreement, or otherwise, of the amounts otherwise indemnifiable hereunder. The rights to indemnification and to the advancement of expenses conferred in Sections A and B of this Article 10 shall be contract rights and such rights shall continue as to an indemnitee who has ceased to be a director or officer and shall inure to the benefit of the indemnitee’s heirs, executors and administrators.

F. Limitations Imposed by Federal Law. Notwithstanding any other provision set forth in this Article 10, in no event shall any payments made by the Corporation pursuant to this Article 10 exceed the amount permissible under applicable federal law, including, without limitation, Section 18(k) of the Federal Deposit Insurance Act and the regulations promulgated thereunder.

Any repeal or modification of this Article 10 shall not in any way diminish any rights to indemnification or advancement of expenses of such director or officer or the obligations of the Corporation arising hereunder with respect to events occurring, or claims made, while this Article 10 is in force.

ARTICLE 11. Limitation of Liability. An officer or director of the Corporation, as such, shall not be liable to the Corporation or its stockholders for money damages, except (A) to the extent that it is proved that the Person actually received an improper benefit or profit in money, property or services, for the amount of the benefit or profit in money, property or services actually received; or (B) to the extent that a judgment or other final adjudication adverse to the Person is entered in a proceeding based on a finding in the proceeding that the Person’s action, or failure to act, was the result of active and deliberate dishonesty and was material to the cause of action adjudicated in the proceeding; or (C) to the extent otherwise provided by the MGCL. If the MGCL is amended to further eliminate or limit the personal liability of officers and directors, then the liability of officers and directors of the Corporation shall be eliminated or limited to the fullest extent permitted by the MGCL, as so amended.

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Any repeal or modification of the foregoing paragraph by the stockholders of the Corporation shall not adversely affect any right or protection of a director or officer of the Corporation existing at the time of such repeal or modification.

ARTICLE 12. Amendment of the Articles of Incorporation. The Corporation reserves the right to amend or repeal any provision contained in these Articles in the manner prescribed by the MGCL, including any amendment altering the terms or contract rights, as expressly set forth in these Articles, of any of the Corporation’s outstanding stock by classification, reclassification or otherwise, and no stockholder approval shall be required if the approval of stockholders is not required for the proposed amendment or repeal by the MGCL, and all rights conferred upon stockholders are granted subject to this reservation.

The Board of Directors, pursuant to a resolution approved by a majority of the Whole Board (rounded up to the nearest whole number), and without action by the stockholders, may amend these Articles to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that the Corporation has authority to issue.

No proposed amendment or repeal of any provision of these Articles shall be submitted to a stockholder vote unless the Board of Directors shall have (1) approved the proposed amendment or repeal, (2) determined that it is advisable, and (3) directed that it be submitted for consideration at either an annual or special meeting of the stockholders pursuant to a resolution approved by the Board of Directors. Any proposed amendment or repeal of any provision of these Articles may be abandoned by the Board of Directors at any time before its effective time upon the adoption of a resolution approved by a majority of the Whole Board (rounded up to the nearest whole number).

The amendment or repeal of any provision of these Articles shall be approved by at least two-thirds of all votes entitled to be cast by the holders of shares of capital stock of the Corporation entitled to vote on the matter (after giving due effect to the provisions of Article 5 of these Articles), except that the proposed amendment or repeal of any provision of these Articles need only be approved by the vote of a majority of all the votes entitled to be cast by the holders of shares of capital stock of the Corporation entitled to vote on the matter (after giving due effect to the provisions of Article 5 of these Articles) if the amendment or repeal of such provision is approved by the Board of Directors pursuant to a resolution approved by at least two-thirds of the Whole Board (rounded up to the nearest whole number).

Notwithstanding any other provision of these Articles or any provision of law that might otherwise permit a lesser vote or no vote, but in addition to any vote of the holders of any class or series of the stock of the Corporation required by law or by these Articles, the affirmative vote of the holders of at least 80% of the voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors (after giving effect to the provisions of Article 5), voting together as a single class, shall be required to amend or repeal this Article 12, Section C, D, E or F of Article 5, Article 7 (other than the removal of the list of original directors), Article 8, Article 9, Article 10 or Article 11.

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ARTICLE 13. Name and Address of Incorporator. The name and mailing address of the sole incorporator are as follows:

Adam P. Wheeler

5335 Wisconsin Ave., N.W., Suite 780

Washington, D.C. 20015

[Remainder of Page Intentionally Left Blank]

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I, THE UNDERSIGNED, being the incorporator, for the purpose of forming a corporation under the laws of the State of Maryland, do make, file and record these Articles of Incorporation, do certify that the facts herein stated are true, and, accordingly, have hereto set my hand this 27^th day of February, 2014.

/s/ Adam P. Wheeler

Adam P. Wheeler, Incorporator

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EX-3.2

Exhibit 3.2

PILGRIM BANCSHARES, INC.

BYLAWS

ARTICLE I

STOCKHOLDERS

Section 1. Annual Meeting.

Pilgrim Bancshares, Inc. (the “Corporation”) shall hold an annual meeting of its stockholders to elect directors and to transact any other business within its powers, at such place, on such date and at such time as the Board of Directors shall fix. Failure to hold an annual meeting does not invalidate the Corporation’s existence or affect any otherwise valid corporate act.

Section 2. Special Meetings.

Special meetings of stockholders of the Corporation may be called by the Chairperson of the Board, the Chief Executive Officer or by the Board of Directors pursuant to a resolution adopted by a majority of the total number of directors that the Corporation would have if there were no vacancies on the Board of Directors (hereinafter the “Whole Board”). Special meetings of the stockholders shall be called by the Secretary at the request of stockholders only on the written request of stockholders entitled to cast at least a majority of all the votes entitled to be cast at the meeting. Such written request shall state the purpose or purposes of the meeting and the matters proposed to be acted upon at the meeting, and shall be delivered at the principal office of the Corporation addressed to the President or the Secretary. The Secretary shall inform the stockholders who make the request of the reasonably estimated cost of preparing and mailing a notice of the meeting and, upon payment of these costs to the Corporation, notify each stockholder entitled to notice of the meeting. The Board of Directors shall have the sole power to fix (i) the record date for determining stockholders entitled to request a special meeting of stockholders and the record date for determining stockholders entitled to notice of and to vote at the special meeting and (ii) the date, time and place of the special meeting and the means of remote communication, if any, by which stockholders and proxy holders may be considered present in person and may vote at the special meeting.

Section 3. Notice of Meetings; Adjournment or Postponement.

Not less than 10 nor more than 90 days before each stockholders’ meeting, the Secretary shall give notice of the meeting in writing or by electronic transmission to each stockholder entitled to vote at the meeting and to each other stockholder entitled to notice of the meeting. The notice shall state the time and place of the meeting, the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and may vote at the meeting, and, if the meeting is a special meeting or notice of the purpose is required by statute, the purpose of the meeting. Notice is given to a stockholder when it is personally delivered to the stockholder, left at the stockholder’s residence or usual place of business, mailed to the stockholder at his or her address as it appears on the records of the Corporation, or transmitted to the stockholder by an electronic transmission to any address or number of the

stockholder at which the stockholder receives electronic transmissions. If the Corporation has received a request from a stockholder that notice not be sent by electronic transmission, the Corporation may not provide notice to the stockholder by electronic transmission. Notwithstanding the foregoing provisions, each person who is entitled to notice waives notice if such person, before or after the meeting, delivers a written waiver or waiver by electronic transmission which is filed with the records of the stockholders’ meetings, or if such person is present at the meeting in person or by proxy.

A meeting of stockholders convened on the date for which it was called may be adjourned from time to time without further notice to a date not more than 120 days after the original record date. A meeting may be adjourned by a resolution adopted by a majority of the Whole Board or by the vote of a majority of the stockholders present at the meeting, whether or not a quorum is present at such meeting. At any adjourned meeting, any business may be transacted that might have been transacted at the original meeting.

A meeting of stockholders may be postponed to a date not more than 120 days after the original record date. A meeting may be postponed by a resolution adopted by a majority of the Whole Board. Notice of the date, time and place to which the meeting is postponed shall be given not less than ten days prior to such date and otherwise in the manner set forth in this Section 3. At any postponed meeting, any business may be transacted that might have been transacted at the meeting as originally scheduled.

If a meeting shall be adjourned or postponed to a date not more than 120 days after the original record date, a new record date need not be established, and the original record date may be used for the purpose of determining which stockholders are entitled to notice of, and to vote at, the adjourned or postponed meeting. Any writing authorizing another person to act as proxy at a meeting of stockholders shall remain valid for use at any adjournment or postponement of such meeting unless such proxy is revoked or a later dated proxy is provided by such stockholder.

As used in these Bylaws, the term “electronic transmission” shall have the meaning given to such term by Section 1-101 of the Maryland General Corporation Law (the “MGCL”) or any successor provision.

Section 4. Quorum.

Unless the Articles of the Corporation provide otherwise, where a separate vote by a class or classes is required, a majority of the shares of such class or classes, present in person or represented by proxy, shall constitute a quorum entitled to take action with respect to that vote on that matter.

If a quorum shall fail to attend any meeting, the chairperson of the meeting or the holders of a majority of the shares of stock who are present at the meeting, in person or by proxy, may, in accordance with Section 3 of this Article I, adjourn the meeting to another place, date or time.

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Section 5. Organization and Conduct of Business.

The Chairperson of the Board of Directors of the Corporation, or in his or her absence, the Chief Executive Officer, or in his or her absence, such other person as may be designated by a majority of the Whole Board, shall call to order any meeting of the stockholders and act as chairperson of the meeting. In the absence of the Secretary, the secretary of the meeting shall be such person as the chairperson appoints. The chairperson of any meeting of stockholders shall determine the order of business and the procedure at the meeting, including such regulation of the manner of voting and the conduct of discussion as seem to him or her to be in order.

Section 6. Advance Notice Provisions for Business to be Transacted at Annual Meetings and Elections of Directors.

(a) At any annual meeting of the stockholders, unless otherwise required by law, only such business shall be conducted as shall have been brought before the meeting: (i) as specified in the Corporation’s notice of the meeting; (ii) by or at the direction of the Board of Directors; or (iii) by any stockholder of the Corporation who (1) is a stockholder of record on the date such stockholder gives the notice provided for in this Section 6(a) and on the record date for the determination of stockholders entitled to vote at such annual meeting, and (2) complies with the notice procedures set forth in this Section 6(a). For business to be properly brought before an annual meeting by a stockholder pursuant to clause (iii) of the immediately preceding sentence, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation and such business must otherwise be a proper matter for action by stockholders.

To be timely, a stockholder’s notice must be delivered or mailed to and received by the Secretary at the principal executive office of the Corporation not less than 110 days nor more than 120 days prior to the anniversary of the prior year’s annual meeting of stockholders; provided, that if (A) less than 90 days’ prior public disclosure of the date of the meeting is given to stockholders and (B) the date of the annual meeting is advanced more than 30 days prior to or delayed more than 30 days after the anniversary of the preceding year’s annual meeting, such written notice also shall be timely if delivered or mailed to and received by the Secretary of the Corporation at the principal executive office of the Corporation not later than the tenth day following the day on which public disclosure of the date of such meeting is first made. The advance notice periods provided in this paragraph, once established by the initial notice or public disclosure of a date for the annual meeting of stockholders, shall remain in effect regardless of whether a subsequent notice or public disclosure shall provide that the meeting shall have been adjourned or that t the date of the meeting shall have been postponed or otherwise changed from the date provided in the initial notice or public disclosure. With respect to the first annual meeting of stockholders of the Corporation following the Corporation becoming the sole stockholder of Pilgrim Bank, notice by the stockholder shall be timely if delivered or mailed to and received by the Secretary of the Corporation not later than the close of business on the later of (i) the 120^th day prior to the date of the annual meeting and (ii) the 10^th day following the day on which public disclosure of the date of the annual meeting is first made. No adjournment or postponement of a meeting of stockholders shall commence a new period for the giving of notice hereunder.

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A stockholder’s notice to the Secretary must set forth as to each matter such stockholder proposes to bring before the annual meeting: (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting; (ii) the name and address of such stockholder as they appear on the Corporation’s books and of the beneficial owner, if any, on whose behalf the proposal is made; (iii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by such stockholder and such beneficial owner; (iv) a description of all arrangements or understandings between any such stockholder or beneficial owner and any other person or persons (including their names) in connection with the proposal of such business by such stockholder and any material interest of such stockholder in such business; and (v) a representation that such stockholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting.

Notwithstanding anything in these Bylaws to the contrary, no business shall be brought before or conducted at an annual meeting except in accordance with the provisions of this Section 6(a). The chairperson of the annual meeting shall, if the facts so warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Section 6(a) and, if he or she should so determine, he or she shall so declare to the meeting and any such business so determined to be not properly brought before the meeting shall not be transacted.

At any special meeting of the stockholders, only such business shall be conducted as shall have been brought before the meeting pursuant to the Corporation’s notice of the meeting.

(b) Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the Corporation. Nominations of persons for election to the Board of Directors of the Corporation may be made at a meeting of stockholders at which directors are to be elected only: (i) by or at the direction of the Board of Directors; or (ii) by any stockholder of the Corporation who (1) is a stockholder of record on the date such stockholder gives the notice provided for in this Section 6(b) and on the record date for the determination of stockholders entitled to vote at such meeting, and (2) complies with the notice procedures set forth in this Section 6(b). Such nominations, other than those made by or at the direction of the Board of Directors, shall be made by timely notice in writing to the Secretary of the Corporation. To be timely, a stockholder’s notice must be delivered or mailed to and received by the Secretary at the principal executive office of the Corporation not less than 110 days nor more than 120 days prior to prior to the anniversary of the prior year’s annual meeting of stockholders; provided, that if (A) less than 90 days’ prior public disclosure of the date of the meeting is given to stockholders and (B) the date of the annual meeting is advanced more than 30 days prior to or delayed more than 30 days after the anniversary of the preceding year’s annual meeting, such written notice also shall be timely if delivered or mailed to and received by the Secretary of the Corporation at the principal executive office of the Corporation not later than the tenth day following the day on which public disclosure of the date of such meeting is first made. The advance notice periods provided in this paragraph, once established by the initial notice or public disclosure of a date for the annual meeting of stockholders, shall remain in effect regardless of whether a subsequent notice or public disclosure shall provide that the meeting shall have been adjourned or that the date of the meeting shall have been postponed or otherwise changed from the date provided in the initial notice or public disclosure. With respect to the first annual

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meeting of stockholders of the Corporation following the Corporation becoming the sole stockholder of Pilgrim Bank, notice by the stockholder shall be timely if delivered or mailed to and received by the Secretary of the Corporation not later than the close of business on the later of (i) the 120^th day prior to the date of the annual meeting and (ii) the 10^th day following the day on which public disclosure of the date of the annual meeting is first made. No adjournment or postponement of a meeting of stockholders shall commence a new period for the giving of notice hereunder.

A stockholder’s notice must be in writing and set forth (a) as to each person whom the stockholder proposes to nominate for election as a director, (i) all information relating to such person that would indicate such person’s qualification to serve on the Board of Directors of the Corporation; (ii) an affidavit that such person would not be disqualified under the provisions of Article II, Section 12 of these Bylaws; (iii) such information relating to such person that is required to be disclosed in connection with solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or any successor rule or regulation and (iv) a written consent of each proposed nominee to be named as a nominee and to serve as a director if elected; and (b) as to the stockholder giving the notice: (i) the name and address of such stockholder as they appear on the Corporation’s books and of the beneficial owner, if any, on whose behalf the nomination is made; (ii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by such stockholder and such beneficial owner; (iii) a description of all arrangements or understandings between such stockholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such stockholder; (iv) a representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice; and (v) any other information relating to such stockholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Regulation 14A under the Exchange Act or any successor rule or regulation. No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the provisions of this Section 6(b). The chairperson of the meeting shall, if the facts so warrant, determine that a nomination was not made in accordance with such provisions and, if he or she should so determine, he or she shall so declare to the meeting and the defective nomination shall be disregarded.

(c) For purposes of subsections (a) and (b) of this Section 6, the term “public disclosure” shall mean disclosure (i) in a press release issued through a nationally recognized news service, (ii) in a document publicly filed or furnished by the Corporation with the U.S. Securities and Exchange Commission or (iii) on a website maintained by the Corporation. The timely notice requirements provided in subsections (a) and (b) of this Section 6 shall apply to all stockholder nominations for election as a director and all stockholder proposals for business to be conducted at an annual meeting regardless of whether such proposal is submitted for inclusion in the Corporation’s proxy materials pursuant to Rule 14a-8 of Regulation 14A under the Exchange Act.

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Section 7. Proxies and Voting.

Unless the Articles of the Corporation provide for a greater or lesser number of votes per share or limits or denies voting rights, each outstanding share of stock, regardless of class, is entitled to one vote on each matter submitted to a vote at a meeting of stockholders; however, a share is not entitled to be voted if any installment payable on it is overdue and unpaid. In all elections for directors, directors shall be determined by a plurality of the votes cast, and except as otherwise required by law or as provided in the Articles of the Corporation, all other matters voted on by stockholders shall be determined by a majority of the votes cast on the matter.

A stockholder may vote the stock the stockholder owns of record either in person or by proxy. A stockholder may sign a writing authorizing another person to act as proxy. Signing may be accomplished by the stockholder or the stockholder’s authorized agent signing the writing or causing the stockholder’s signature to be affixed to the writing by any reasonable means, including facsimile signature. A stockholder may authorize another person to act as proxy by transmitting, or authorizing the transmission of, an authorization for the person to act as the proxy to the person authorized to act as proxy or to any other person authorized to receive the proxy authorization on behalf of the person authorized to act as the proxy, including a proxy solicitation firm or proxy support service organization. The authorization may be transmitted by a telegram, cablegram, datagram, electronic mail or any other electronic or telephonic means. Unless a proxy provides otherwise, it is not valid more than 11 months after its date. A proxy is revocable by a stockholder at any time without condition or qualification unless the proxy states that it is irrevocable and the proxy is coupled with an interest. A proxy may be made irrevocable for as long as it is coupled with an interest. The interest with which a proxy may be coupled includes an interest in the stock to be voted under the proxy or another general interest in the Corporation or its assets or liabilities.

Section 8. Conduct of Voting

The Board of Directors shall, in advance of any meeting of stockholders, appoint one or more persons as inspectors of election, to act at the meeting or any adjournment thereof and make a written report thereof, in accordance with applicable law. If one or more inspectors are not so elected, the Chairperson of the Board, or in his or her absence, the Chief Executive Officer, or in his or her absence, such other person as may be designated by a majority of the Whole Board to serve as chair of the meeting, shall make such appointment at the meeting of stockholders. At all meetings of stockholders, the proxies and ballots shall be received, and all questions relating to the qualification of voters and the validity of proxies and the acceptance or rejection of votes shall be decided or determined by the inspector of election. All voting, including on the election of directors but excepting where otherwise required by law, may be by a voice vote; provided, however, that upon demand therefor by a stockholder entitled to vote or his or her proxy or the chairperson of the meeting, a written vote shall be taken. Every written vote shall be taken by ballot, each of which shall state the name of the stockholder or proxy voting and such other information as may be required under the procedure established for the meeting. No candidate for election as a director at a meeting shall serve as an inspector at such meeting.

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Section 9. Control Share Acquisition Act.

Notwithstanding any other provision of the Articles of the Corporation or these Bylaws, Title 3, Subtitle 7 of the MGCL (or any successor statute) shall not apply to any acquisition by any person of shares of stock of the Corporation. This Section 9 may be repealed by a majority of the Whole Board, in whole or in part, at any time, whether before or after an acquisition of Control Shares (as defined in Section 3-701(d) of the MGCL, or any successor provision) and, upon such repeal, may, to the extent provided by any successor bylaw, apply to any prior or subsequent Control Share Acquisition (as defined in Section 3-701(d) of the MGCL, or any successor provision).

ARTICLE II

BOARD OF DIRECTORS

Section 1. General Powers, Number and Term of Office.

The business and affairs of the Corporation shall be managed under the direction of the Board of Directors. The number of directors of the Corporation shall, by virtue of the Corporation’s election made hereby to be governed by Section 3-804(b) of the MGCL, be fixed from time to time exclusively by vote of the Board of Directors; provided, however, that such number shall never be less than the minimum number of directors required by the MGCL now or hereafter in force. The Board of Directors shall annually elect a Chairperson of the Board from among its members and shall designate the Chairperson of the Board or his or her designee to preside at its meetings. The Board of Directors may also annually elect a Vice Chairperson. In the absence of the Chairperson of the Board, the Vice Chairperson of the Board, if any shall be elected, and in his or her absence the Chief Executive Officer, and in her or her absence such other person as may be designated by a majority of the Whole Board shall preside at the meetings of the Board of Directors.

The directors, other than those who may be elected by the holders of any series of preferred stock, shall be divided into three classes, as nearly equal in number as reasonably possible, with the term of office of the first class to expire at the first annual meeting of stockholders, the term of office of the second class to expire at the annual meeting of stockholders one year thereafter and the term of office of the third class to expire at the annual meeting of stockholders two years thereafter, with each director to hold office until his or her successor shall have been duly elected and qualified. At each annual meeting of stockholders, commencing with the first annual meeting, directors elected to succeed those directors whose terms expire shall be elected for a term of office to expire at the third succeeding annual meeting of stockholders after their election or for such shorter period of time as the Board of Directors may determine, with each director to hold office until his or her successor shall have been duly elected and qualified.

Section 2. Vacancies and Newly Created Directorships.

By virtue of the Corporation’s election made hereby to be subject to Section 3-804(c) of the MGCL, any vacancies in the Board of Directors resulting from an increase in the size of the Board of Directors or the death, resignation or removal of a director may be filled only by the

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affirmative vote of two-thirds of the remaining directors in office, even if the remaining directors do not constitute a quorum, and any director elected to fill a vacancy shall hold office for the remainder of the full term of the class of directors in which the vacancy occurred and until a successor is elected and qualifies. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director.

Section 3. Regular Meetings.

Regular meetings of the Board of Directors shall be held at such place or places or by means of remote communication, on such date or dates, and at such time or times as shall have been established by the Board of Directors and publicized among all directors. A notice of each regular meeting shall not be required. Any regular meeting of the Board of Directors may adjourn from time to time to reconvene at the same or some other place, and no notice need be given of any such adjourned meeting other than by announcement.

Section 4. Special Meetings.

Special meetings of the Board of Directors may be called by one-third (1/3) of the directors then in office (rounded up to the nearest whole number), the Chairperson of the Board, or by the Chief Executive Officer, and shall be held at such place or by means of remote communication, on such date, and at such time as they or he or she shall fix. Notice of the place, date, and time of each such special meeting shall be given to each director who has not waived notice by mailing and post-marking written notice not less than five days before the meeting, or by facsimile or other electronic transmission of the same not less than 24 hours before the meeting. Any director may waive notice of any special meeting, either before or after such meeting, by delivering a written waiver or a waiver by electronic transmission that is filed with the records of the meeting. Attendance of a director at a special meeting shall constitute a waiver of notice of such meeting, except where the director attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted nor the purpose of any special meeting of the Board of Directors need be specified in the notice of such meeting. Any special meeting of the Board of Directors may adjourn from time to time to reconvene at the same or some other place, and no notice need be given of any such adjourned meeting other than by announcement.

Section 5. Quorum.

At any meeting of the Board of Directors, a majority of the Whole Board shall constitute a quorum for all purposes. If a quorum shall fail to attend any meeting, a majority of those present may adjourn the meeting to another place, date, or time, without further notice or waiver thereof.

Section 6. Participation in Meetings By Conference Telephone.

Members of the Board of Directors, or of any committee thereof, may participate in a meeting of such Board or committee by means of a conference telephone or other communications equipment if all persons participating in the meeting can hear each other at the same time. Such participation shall constitute presence in person at such meeting.

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Section 7. Conduct of Business.

At any meeting of the Board of Directors, business shall be transacted in such order and manner as the Board may from time to time determine, and all matters shall be determined by the vote of a majority of the directors present, except as otherwise provided in these Bylaws or the Corporation’s Articles or required by law. Action may be taken by the Board of Directors without a meeting if a unanimous consent which sets forth the action is given in writing or by electronic transmission by each member of the Board of Directors and filed in paper or electronic form with the minutes of proceedings of the Board of Directors.

Section 8. Powers.

All powers of the Corporation may be exercised by or under the authority of the Board of Directors except as provided by the Articles of the Corporation. Consistent with the foregoing, the Board of Directors shall have, among other powers, the unqualified power:

(i) To declare dividends from time to time in accordance with law;

(ii) To purchase or otherwise acquire any property, rights or privileges on such terms as it shall determine;

(iii) To authorize the creation, making and issuance, in such form as it may determine, of written obligations of every kind, negotiable or non-negotiable, secured or unsecured, and to do all things necessary in connection therewith;

(iv) To remove any officer of the Corporation with or without cause, and from time to time to devolve the powers and duties of any officer upon any other person for the time being;

(v) To confer upon any officer of the Corporation the power to appoint, remove and suspend subordinate officers, employees and agents;

(vi) To adopt from time to time such stock, option, stock purchase, bonus or other compensation plans for directors, officers, employees and agents of the Corporation and its subsidiaries as it may determine;

(vii) To adopt from time to time such insurance, retirement, and other benefit plans for directors, officers, employees and agents of the Corporation and its subsidiaries as it may determine; and

(viii) To adopt from time to time regulations, not inconsistent with these Bylaws, for the management of the Corporation’s business and affairs.

Section 9. Compensation of Directors.

Directors, as such, may receive, pursuant to resolution of the Board of Directors, fixed fees and other compensation for their services as directors, including, without limitation, their services as members of committees of the Board of Directors.

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Section 10. Resignation.

Any director may resign at any time by giving written notice of such resignation to the President or the Secretary at the principal office of the Corporation. Unless otherwise specified therein, such resignation shall take effect upon receipt thereof.

Section 11. Presumption of Assent.

A director of the Corporation who is present at a meeting of the Board of Directors at which action on any corporate matter is taken shall be presumed to have assented to such action unless such director announces his or her dissent at the meeting and (a) such director’s dissent is entered in the minutes of the meeting, (b) such director files his or her written dissent to such action with the secretary of the meeting before the adjournment thereof, or (c) such director forwards his or her written dissent within 24 hours after the meeting is adjourned, by certified mail, return receipt requested, bearing a postmark from the United States Postal Service, to the secretary of the meeting or the Secretary of the Corporation. Such right to dissent shall not apply to a director who voted in favor of such action or failed to make his or her dissent known at the meeting.

Section 12. Director Qualifications

(a) No person shall be eligible for election or appointment to the Board of Directors: (i) if a financial or securities regulatory agency has issued a cease and desist, consent or other formal order, other than a civil money penalty, against such person, which order is subject to public disclosure by such agency; (ii) if such person has been convicted of a crime involving dishonesty or breach of trust which is punishable by imprisonment for a term exceeding one year under state or federal law; (iii) if such person is currently charged in any information, indictment, or other complaint with the commission of or participation in such a crime; or (iv) if such person did not, at the time of his or her first election or appointment to the Board of Directors of the Corporation or Pilgrim Bank, maintain his or her principal residence (as determined by reference to such person’s most recent tax returns, copies of which shall be provided to the Corporation for the sole purpose of determining compliance with this clause (iv)) within a county in which the Corporation or any subsidiary thereof maintains an office, or in any county contiguous to a county in which the Corporation or any subsidiary thereof maintains an office for a period of at least one year prior to the date of his or her purported nomination, election or appointment to the Board of Directors. No person may serve on the Board of Directors if such person: (w) is at the same time, a director, officer, employee or 10% or more stockholder of a bank, savings institution, credit union, mortgage banking company, consumer loan company or similar organization, other than a subsidiary of the Corporation, that engages in business activities or solicits customers, whether through a physical presence or electronically, in the same market area as the Corporation or any of its subsidiaries; (x) does not agree in writing to comply with all of the Corporation’s policies applicable to directors including but not limited to its confidentiality policy, and confirm in writing his or her qualifications hereunder; (y) is a party to any agreement or arrangement with a party other than the Corporation or a subsidiary that (1) provides him with material benefits which are tied to or contingent on the Corporation entering into a merger, sale of control or similar transaction in which it is not the surviving institution, (2) materially limits his or her voting discretion as a member of the Board of Directors of the

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Corporation, or (3) materially impairs his or her ability to discharge his or her fiduciary duties with respect to the fundamental strategic direction of the Corporation; or (z) is the nominee or representative, as those terms are defined in the regulations of the Board of Governors of the Federal Reserve System, 12 C.F.R §212.2(n), of a company or other entity of which any of the directors, partners, trustees or 10% stockholders would not be eligible for election or appointment to the Board of Directors under this Section 12(a).

(b) No person shall be eligible for election, reelection, appointment or reappointment to the Board of Directors if, at the time of such election, reelection, appointment or reappointment, such person shall have attained the age of 72. Nothing in this provision shall prohibit a director from serving the entirety of any term to which he was elected, regardless of whether such director attains the age of 72 during that term.

(c) The Board of Directors shall have the power to construe and apply the provisions of this Section 12 and to make all determinations necessary or desirable to implement such provisions.

Section 13. Attendance at Board Meetings.

The Board of Directors shall have the right to remove any director from the board upon a director’s unexcused absence from (i) three consecutive regularly scheduled meetings of the Board of Directors or (ii) five regularly scheduled meetings of the Board of Directors in any fiscal year of the Corporation.

ARTICLE III

COMMITTEES

Section 1. Committees of the Board of Directors.

(a) General Provisions. The Board of Directors may appoint from among its members an Audit Committee, a Compensation Committee, a Nominating and Corporate Governance Committee, and such other committees as the Board of Directors deems necessary or desirable. The Board of Directors may delegate to any committee so appointed any of the powers and authorities of the Board of Directors to the fullest extent permitted by the MGCL and any other applicable law.

(b) Composition. Each committee shall be composed of one or more directors or any other number of members specified in these Bylaws or required by applicable regulations or stock exchange rules. The Chairperson of the Board may recommend committees, committee memberships, and committee chairs to the Board of Directors. The Board of Directors shall have the power at any time to appoint the chairperson and the members of any committee, change the membership of any committee, to fill all vacancies on committees, to designate alternate members to replace or act in the place of any absent or disqualified member of a committee, or to dissolve any committee. A member of a committee may resign from that committee at any time by giving written notice of such resignation to the Chairperson of the Board. Unless otherwise specified therein, such resignation from the committee shall take effect upon receipt thereof.

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(c) Issuance of Stock. If the Board of Directors has given general authorization for the issuance of stock providing for or establishing a method or procedure for determining the maximum number of shares to be issued, a committee of the Board of Directors, in accordance with that general authorization or any stock option or other plan or program adopted by the Board of Directors, may authorize or fix the terms of stock subject to classification or reclassification and the terms on which any stock may be issued, including all terms and conditions required or permitted to be established or authorized by the Board of Directors. Any committee so designated may exercise the power and authority of the Board of Directors if the resolution that designated the committee or a supplemental resolution of the Board of Directors shall so provide.

Section 2. Conduct of Business.

Each committee may determine the procedural rules for meeting and conducting its business and shall act in accordance therewith, except as otherwise provided herein or required by law. Adequate provision shall be made for notice to members of all meetings; one-third of the members shall constitute a quorum unless the committee shall consist of one or two members, in which event one member shall constitute a quorum; and all matters shall be determined by a majority vote of the members present. Action may be taken by any committee without a meeting if a unanimous consent which sets forth the action is given in writing or by electronic transmission by each member of the committee and filed in paper or electronic form with the minutes of the proceedings of such committee. The members of any committee may conduct any meeting thereof by conference telephone or other communications equipment in accordance with the provisions of Section 6 of Article II.

ARTICLE IV

OFFICERS

Section 1. Generally.

(a) The Board of Directors as soon as may be practicable after the annual meeting of stockholders shall choose a Chairperson of the Board, Chief Executive Officer, President, one or more Vice Presidents, a Secretary and a Chief Financial Officer/Treasurer and from time to time may choose such other officers as it may deem proper. Any number of offices may be held by the same person, except that no person may concurrently serve as both President and Vice President of the Corporation.

(b) The term of office of all officers shall be until the next annual election of officers and until their respective successors are chosen, but any officer may be removed from office at any time by the affirmative vote of a majority of the Whole Board.

(c) All officers chosen by the Board of Directors shall each have such powers and duties as generally pertain to their respective offices, subject to the specific provisions of this Article IV. Such officers shall also have such powers and duties as from time to time may be conferred by the Board of Directors or by any committee thereof.

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Section 2. Chairperson of the Board of Directors.

The Chairperson of the Board of Directors of the Corporation shall perform all duties and have all powers which are commonly incident to the office of Chairperson of the Board or which are delegated to him or her by the Board of Directors. He or she shall have power to sign all stock certificates, contracts and other instruments of the Corporation that are authorized.

Section 3. Vice Chairperson of the Board of Directors.

If appointed, the Vice Chairperson of the Board of Directors of the Corporation shall perform all duties and have all powers which are commonly incident to the office of Chairperson of the Board, with such duties to be performed and powers to be held in the absence of the Chairperson of the Board, or which are delegated to him or her by the Board of Directors.

Section 4. Chief Executive Officer.

The Chief Executive Officer, subject to the control of the Board of Directors, shall serve in general executive capacity and have general power over the management and oversight of the administration and operation of the Corporation’s business and general supervisory power and authority over its policies and affairs. The Chief Executive Officer shall see that all orders and resolutions of the Board of Directors and of any committee thereof are carried into effect.

Section 5. President.

The President shall perform the duties of the Chief Executive Officer in the Chief Executive Officer’s absence or during his or her disability to act. In addition, the President shall perform the duties and exercise the powers usually incident to their respective office and/or such other duties and powers as may be properly assigned to the President from time to time by the Board of Directors or the Chief Executive Officer.

Section 6. Vice President.

The Vice President or Vice Presidents (including Executive Vice Presidents or other levels of Vice President designated by the Board of Directors), if any, shall perform the duties of the Chief Executive Officer in the absence of both the Chief Executive Officer and the President, or during their disability to act. In addition, the Vice Presidents shall perform the duties and exercise the powers usually incident to their respective office and/or such other duties and powers as may be properly assigned to the Vice Presidents from time to time by the Board of Directors or the Chief Executive Officer.

Section 7. Secretary.

The Secretary or an Assistant Secretary shall issue notices of meetings, shall keep the minutes of meetings, shall have charge of the seal and the corporate books, shall perform such other duties and exercise such other powers as are usually incident to such offices and/or such other duties and powers as are properly assigned thereto by the Board of Directors, the Chairperson of the Board or the Chief Executive Officer.

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Section 8. Chief Financial Officer/Treasurer.

The Chief Financial Officer/Treasurer shall have charge of all monies and securities of the Corporation, other than monies and securities of any division of the Corporation that has a treasurer or financial officer appointed by the Board of Directors, and shall keep regular books of account. The funds of the Corporation shall be deposited in the name of the Corporation by the Chief Financial Officer/Treasurer with such banks or trust companies or other entities as the Board of Directors from time to time shall designate. The Chief Financial Officer/Treasurer shall sign or countersign such instruments as require his or her signature, shall perform all such duties and have all such powers as are usually incident to such office and/or such other duties and powers as are properly assigned to him or her by the Board of Directors or the Chief Executive Officer, and may be required to give bond for the faithful performance of his or her duties in such sum and with such surety as may be required by the Board of Directors.

Section 9. Other Officers.

The Board of Directors may designate and fill such other offices in its discretion and the persons holding such other offices shall have such powers and shall perform such duties as the Board of Directors or Chief Executive Officer may from time to time assign.

Section 10. Action with Respect to Securities of Other Corporations

Stock of other corporations or associations, registered in the name of the Corporation, may be voted by the Chief Executive Officer, the President, a Vice President, or a proxy appointed by either of them. The Board of Directors, however, may by resolution appoint some other person to vote such shares, in which case such person shall be entitled to vote such shares upon the production of a certified copy of such resolution.

ARTICLE V

STOCK

Section 1. Certificates of Stock.

The Board of Directors may determine to issue certificated or uncertificated shares of capital stock and other securities of the Corporation. For certificated stock, each stockholder is entitled to certificates which represent and certify the shares of stock he or she holds in the Corporation. Each stock certificate shall include on its face the name of the Corporation, the name of the stockholder or other person to whom it is issued, and the class of stock and number of shares it represents. It shall also include on its face or back (a) a statement of any restrictions on transferability and a statement of the designations and any preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications, and terms and conditions of redemption of the stock of each class which the Corporation is authorized to issue, of the differences in the relative rights and preferences between the shares of each series of preferred stock which the Corporation is authorized to issue, to the extent they have been set, and of the authority of the Board of Directors to set the relative rights and preferences of subsequent series of preferred stock or (b) a statement which provides in substance that the Corporation will furnish a full statement of such information to any stockholder on request and without charge. Such request may be made to the Secretary or to the Corporation’s transfer agent. Upon the

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issuance of uncertificated shares of capital stock, the Corporation shall send the stockholder a written statement of the same information required above with respect to stock certificates. Each stock certificate shall be in such form, not inconsistent with law or with the Corporation’s Articles, as shall be approved by the Board of Directors or any officer or officers designated for such purpose by resolution of the Board of Directors. Each stock certificate shall be signed by the Chairperson of the Board, the President, or a Vice President, and countersigned by the Secretary, an Assistant Secretary, the Treasurer, or an Assistant Treasurer. Each certificate may be sealed with the actual corporate seal or a facsimile of it or in any other form and the signatures may be either manual or facsimile signatures. A certificate is valid and may be issued whether or not an officer who signed it is still an officer when it is issued. A certificate may not be issued until the stock represented by it is fully paid.

Section 2. Transfers of Stock.

Transfers of stock shall be made only upon the transfer books of the Corporation kept at an office of the Corporation or by transfer agents designated to transfer shares of the stock of the Corporation. Except where a certificate is issued in accordance with Section 4 of Article V of these Bylaws, an outstanding certificate for the number of shares involved shall be surrendered for cancellation before a new certificate is issued therefor.

Section 3. Record Dates or Closing of Transfer Books.

The Board of Directors may, and shall have the power to, set a record date or direct that the stock transfer books be closed for a stated period for the purpose of making any proper determination with respect to stockholders, including which stockholders are entitled to notice of a meeting, vote at a meeting, receive a dividend, or be allotted other rights. The record date may not be prior to the close of business on the day the record date is fixed nor, subject to Section 3 of Article I of these Bylaws, more than 90 days before the date on which the action requiring the determination will be taken; the transfer books may not be closed for a period longer than 20 days; and, in the case of a meeting of stockholders, the record date or the closing of the transfer books shall be at least ten days before the date of the meeting. Any shares of the Corporation’s own stock acquired by the Corporation between the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders and the time of the meeting may be voted at the meeting by the holder of record as of the record date and shall be counted in determining the total number of outstanding shares entitled to be voted at the meeting.

Section 4. Lost, Stolen or Destroyed Certificates.

The Board of Directors of the Corporation may determine the conditions for issuing a new stock certificate in place of one which is alleged to have been lost, stolen, or destroyed, or the Board of Directors may delegate such power to any officer or officers of the Corporation or to the transfer agent designated to transfer shares of the stock of the Corporation. In their discretion, the Board of Directors or such officer or officers may require the owner of the certificate to give a bond, with sufficient surety, to indemnify the Corporation against any loss or claim arising as a result of the issuance of a new certificate. In their discretion, the Board of Directors or such officer or officers may refuse to issue such new certificate without the order of a court having jurisdiction over the matter.

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Section 5. Stock Ledger.

The Corporation shall maintain a stock ledger which contains the name and address of each stockholder and the number of shares of stock of each class which the stockholder holds. The stock ledger may be in written form or in any other form which can be converted within a reasonable time into written form for visual inspection. The original or a duplicate of the stock ledger shall be kept at the offices of a transfer agent for the particular class of stock or, if none, at the principal executive office of the Corporation.

Section 6. Regulations.

The issue, transfer, conversion and registration of certificates of stock shall be governed by such other regulations as the Board of Directors may establish.

ARTICLE VI

MISCELLANEOUS

Section 1. Facsimile Signatures.

In addition to the provisions for use of facsimile signatures elsewhere specifically authorized in these Bylaws, facsimile signatures of any officer or officers of the Corporation may be used whenever and as authorized by the Board of Directors or a committee thereof.

Section 2. Corporate Seal.

The Board of Directors may provide a suitable seal, bearing the name of the Corporation, which shall be in the charge of the Secretary. The Board of Directors may authorize one or more duplicate seals and provide for the custody thereof. If the Corporation is required to place its corporate seal to a document, it is sufficient to meet the requirement of any law, rule, or regulation relating to a corporate seal to place the word “(seal)” adjacent to the signature of the person authorized to sign the document on behalf of the Corporation.

Section 3. Books and Records.

The Corporation shall keep correct and complete books and records of its accounts and transactions and minutes of the proceedings of its stockholders and Board of Directors and of any committee when exercising any of the powers of the Board of Directors. The books and records of the Corporation may be in written form or in any other form which can be converted within a reasonable time into written form for visual inspection. Minutes shall be recorded in written form but may be maintained in the form of a reproduction. The original or a certified copy of these Bylaws shall be kept at the principal office of the Corporation.

Section 4. Reliance upon Books, Reports and Records.

Each director, each member of any committee designated by the Board of Directors, and each officer and agent of the Corporation shall, in the performance of his or her duties, in addition to any protections conferred upon him or her by law, be fully protected in relying in good faith upon the books of account or other records of the Corporation and upon such

16

information, opinions, reports or statements presented to the Corporation by any of its officers or employees, or committees of the Board of Directors so designated, or by any other person as to matters which such director, committee member, officer or agent reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation.

Section 5. Fiscal Year.

The fiscal year of the Corporation shall commence on the first day of January and end on the last day of December in each year.

Section 6. Time Periods.

In applying any provision of these Bylaws that requires that an act be done or not be done a specified number of days prior to an event or that an act be done during a period of a specified number of days prior to an event, calendar days shall be used, the day of the doing of the act shall be excluded and the day of the event shall be included.

Section 7. Checks, Drafts, Etc.

All checks, drafts and orders for the payment of money, notes and other evidences of indebtedness, issued in the name of the Corporation, shall be signed by any officer, employee or agent of the Corporation that is authorized by the Board of Directors.

Section 8. Mail.

Any notice or other document that is required by these Bylaws to be mailed shall be deposited in the United States mail, postage prepaid.

Section 9. Contracts and Agreements.

To the extent permitted by applicable law, and except as otherwise prescribed by the Articles or these Bylaws, the Board of Directors may authorize any officer, employee or agent of the Corporation to enter into any contract or execute and deliver any instrument in the name of and on behalf of the Corporation. Such authority may be general or confined to specific instances. A person who holds more than one office in the Corporation may not act in more than one capacity to execute, acknowledge, or verify an instrument required by law to be executed, acknowledged, or verified by more than one officer.

ARTICLE VII

AMENDMENTS

These Bylaws may be adopted, amended or repealed as provided in the Articles of the Corporation.

17

EX-4

Exhibit 4

INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND

No. PILGRIM BANCSHARES, INC. Shares

FULLY PAID AND NON-ASSESSABLE

PAR VALUE $0.01 PER SHARE

	CUSIP:
	THE SHARES REPRESENTED BY THIS
	CERTIFICATE ARE SUBJECT TO
	RESTRICTIONS, SEE REVERSE SIDE
THIS CERTIFIES that	is the owner of

SHARES OF COMMON STOCK

of

Pilgrim Bancshares, Inc.

a Maryland corporation

The shares evidenced by this certificate are transferable only on the books of Pilgrim Bancshares, Inc. by the holder hereof, in person or by attorney, upon surrender of this certificate properly endorsed. The capital stock evidenced hereby is not an account of an insurable type and is not insured by the Federal Deposit Insurance Corporation or any other Federal or state governmental agency.

IN WITNESS WHEREOF, Pilgrim Bancshares, Inc. has caused this certificate to be executed by the facsimile signatures of its duly authorized officers and has caused a facsimile of its seal to be hereunto affixed.

By		[SEAL]	By
	Edward T. Mulvey			Francis E. Campbell
	Secretary			President and Chief Executive Officer

The Board of Directors of Pilgrim Bancshares, Inc. (the “Company”) is authorized by resolution or resolutions, from time to time adopted, to provide for the issuance of more than one class of stock, including preferred stock in series, and to fix and state the voting powers, designations, preferences, limitations and restrictions thereof. The Company will furnish to any stockholder upon request and without charge a full description of each class of stock and any series thereof.

The shares evidenced by this certificate are subject to a limitation contained in the Articles of Incorporation to the effect that in no event shall any record owner of any outstanding common stock which is beneficially owned, directly or indirectly, by a person who beneficially owns in excess of 10% of the outstanding shares of common stock (the “Limit”) be entitled or permitted to any vote in respect of shares held in excess of the Limit.

The shares represented by this certificate may not be cumulatively voted on any matter. The Articles of Incorporation require that, with limited exceptions, no amendment, addition, alteration, change or repeal of the Articles of Incorporation shall be made, unless such is first approved by the Board of Directors of the Company and approved by the stockholders by a majority of the total shares entitled to vote, or in certain circumstances approved by the affirmative vote of up to eighty percent (80%) of the shares entitled to vote.

The following abbreviations when used in the inscription on the face of this certificate shall be construed as though they were written out in full according to applicable laws or regulations.

TEN COM	-	as tenants in common	UNIF GIFT MIN ACT	-		Custodian
					(Cust)		(Minor)
TEN ENT	-	as tenants by the entireties
					Under Uniform Gifts to Minors Act
JT TEN	-	as joint tenants with right of survivorship and not as tenants in common
					(State)

Additional abbreviations may also be used though not in the above list

For value received,                                          hereby sell, assign and transfer unto

PLEASE INSERT SOCIAL SECURITY NUMBER OR OTHER IDENTIFYING NUMBER

(please print or typewrite name and address including postal zip code of assignee)

Shares of

the Common Stock represented by the within Certificate, and do hereby irrevocably constitute and appoint                                          Attorney to transfer the said shares on the books of the within named corporation with full power of substitution in the premises.

Dated,

In the presence of Signature:

NOTE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME OF THE STOCKHOLDER(S) AS WRITTEN UPON THE FACE OF THE CERTIFICATE, IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATSOEVER.

EX-5

Exhibit 5

LUSE GORMAN POMERENK & SCHICK

A PROFESSIONAL CORPORATION

ATTORNEYS AT LAW

5335 Wisconsin Avenue, NW, Suite 780

Washington, D.C. 20015

Telephone (202) 274-2000

Facsimile (202) 362-2902

www.luselaw.com

WRITER’S DIRECT DIAL NUMBER

(202) 274-2000

March 11, 2014

The Board of Directors

Pilgrim Bancshares, Inc.

40 South Main Street

Cohasset, Massachusetts 02025

Re: Pilgrim Bancshares, Inc.

Common Stock, Par Value $0.01 Per Share

Ladies and Gentlemen:

You have requested the opinion of this firm as to certain matters in connection with the offer and sale (the “Offering”) of the shares of common stock, par value $0.01 per share (“Common Stock”) of Pilgrim Bancshares, Inc. (the “Company”). We have reviewed the Company’s Articles of Incorporation, Registration Statement on Form S-1 (the “Form S-1”), as well as applicable statutes and regulations governing the Company and the offer and sale of the Common Stock. The opinion expressed below is limited to the laws of the State of Maryland (which includes applicable provisions of the Maryland General Corporation Law, the Maryland Constitution and reported judicial decisions interpreting the Maryland General Corporation Law and the Maryland Constitution).

We are of the opinion that upon the declaration of effectiveness of the Form S-1, the Common Stock, when sold, will be legally issued, fully paid and non-assessable.

We hereby consent to our firm being referenced under the caption “Legal Matters” and to the filing of this opinion as an exhibit to the Form S-1.

Very truly yours,

/s/ Luse Gorman Pomerenk & Schick

LUSE GORMAN POMERENK & SCHICK

    A PROFESSIONAL CORPORATION

EX-8.1

Exhibit 8.1

LUSE GORMAN POMERENK & SCHICK

A PROFESSIONAL CORPORATION

Attorneys at Law

5335 WISCONSIN AVENUE, N.W., SUITE 780

Washington, D.C. 20015

TELEPHONE (202) 274-2000

Facsimile (202) 362-2902

www.luselaw.com

writer’s direct dial number

(202) 274-2000

            , 2014

Board of Trustees

Conahasset Bancshares, MHC

Boards of Directors

Conahasset Bancshares, Inc.

Pilgrim Bancshares, Inc.

Pilgrim Bank

40 South Main Street

Cohasset, MA 02025

RE: Federal Income Tax Opinion Relating to the Conversion of Conahasset

Bancshares, MHC from the Mutual to Capital Stock Form of Organization

Ladies and Gentlemen:

You have requested this firm’s opinion regarding the material federal income tax consequences that will result from the conversion of Conahasset Bancshares, MHC, a Massachusetts-chartered mutual holding company (the “MHC”) into the capital stock form of organization (the “Conversion”), pursuant to the Plan of Conversion and Reorganization of Conahasset Bancshares, MHC, dated February 25, 2014 (the “Plan”) and the integrated transactions described below.

In rendering our opinion, we have made such investigations as we have deemed relevant or necessary for the purpose of this opinion. In our examination, we have assumed the authenticity of original documents, the accuracy of copies and the genuineness of signatures. We have further assumed the absence of adverse facts not apparent from the face of the instruments and documents we examined and we have relied upon the accuracy of the factual matters set forth in the Plan, the Registration Statement on Form S-1 filed by Pilgrim Bancshares, Inc., a Maryland stock corporation (the “Stock Holding Company”) with the Securities and Exchange Commission (“SEC”) under the Securities Act of 1933, as amended, and the applications filed with the Board of Governors of the Federal Reserve System and the Massachusetts Commissioner of Banks related to the Conversion (the “Applications”). In addition, we are relying on a letter from RP Financial, LC. to you, dated March 11, 2014, stating its belief as to certain valuation matters

Boards of Trustees

Conahasset Bancshares, MHC

Board of Directors

Conahasset Bancshares, Inc.

Pilgrim Bancshares, Inc.

Pilgrim Bank

            , 2014

Page 2

described below. Capitalized terms used but not defined herein shall have the same meaning as set forth in the Plan. Furthermore, we assume that each of the parties to the Conversion will comply with all reporting obligations with respect to the Conversion required under the Internal Revenue Code of 1986, as amended (the “Code”), and the regulations thereunder (the “Treasury Regulations”).

Our opinion is based upon the existing provisions of the Code, and the Treasury Regulations, and upon current Internal Revenue Service (“IRS”) published rulings and existing court decisions (collectively, the “Current Tax Law”), any of which could be changed at any time. Any such changes may be retroactive and could significantly modify the statements and opinions expressed herein. Similarly, any change in the facts and assumptions stated below, upon which this opinion is based, could modify the conclusions herein. This opinion is as of the date hereof, and as of the effective date of the Registration Statement filed by the Stock Holding Company with the SEC, assuming there is no change in the Current Tax Law or in any of the facts and assumptions set forth in this opinion. We assume no obligation to advise you of any change in any matter considered herein after the date hereof.

We opine only as to the matters we expressly set forth herein, and no opinions should be inferred as to any other matters or as to the tax treatment of the transactions that we do not specifically address. We express no opinion as to other federal laws and regulations, or as to laws and regulations of other jurisdictions, or as to factual or legal matters other than as set forth herein.

For purposes of this opinion, we are relying on the representations as to factual matters provided to us by the MHC, Pilgrim Bank, the Mid-Tier Holding Company (as defined below) and the Stock Holding Company, as set forth in the certificates for each of those aforementioned entities and signed by authorized officers of each of the aforementioned entities, incorporated herein by reference.

Description of Proposed Transactions

Based upon our review of the documents described above, and in reliance upon such documents, we understand that the relevant facts are as follows. Pilgrim Bank (the “Bank”) is a Massachusetts co-operative bank headquartered in Cohasset, Massachusetts. The Bank was originally organized in 1916 under the name Pilgrim Co-Operative Bank as a Massachusetts mutual co-operative bank. In 2005, the Bank changed its name to Pilgrim Bank. The Bank organized into the mutual holding company structure in 2010 by forming the MHC and

Boards of Trustees

Conahasset Bancshares, MHC

Board of Directors

Conahasset Bancshares, Inc.

Pilgrim Bancshares, Inc.

Pilgrim Bank

            , 2014

Page 3

Conahasset Bancshares, Inc., a Maryland chartered mid-tier holding company (the “Mid-Tier Holding Company”), and converted to a Massachusetts chartered stock co-operative bank. As a result, the Bank is currently the wholly-owned subsidiary of the Mid-Tier Holding Company, which is the wholly-owned subsidiary of the MHC. The MHC is a mutual holding company with no stockholders. The depositors of the Bank are considered to be the “owners” of the MHC and are entitled upon the complete liquidation of the MHC to any liquidation proceeds after the payment of creditors.

The Board of Trustees of the MHC and the Boards of Directors of the Mid-Tier Holding Company and the Bank adopted the Plan providing for the Conversion of the MHC from a Massachusetts-chartered mutual holding company to the capital stock form of organization. As part of the Conversion, the Stock Holding Company will succeed to all the rights and obligations of the MHC and the Mid-Tier Holding Company and will offer shares of Stock Holding Company Common Stock to depositors and members of the general public in the Offering.

Pursuant to the Plan, the Conversion will be effected as follows and in such order as is necessary to consummate the Conversion:

(1) The Mid-Tier Holding Company will convert from a Maryland corporation to a Delaware Corporation.

(2) The Mid-Tier Holding Company will organize the Stock Holding Company as a Maryland-chartered stock holding company subsidiary.

(3) The MHC will merge with and into the Mid-Tier Holding Company with the Mid-Tier Holding Company as the resulting entity (the “MHC Merger”) whereby the shares of Mid-Tier Holding Company held by the MHC will be cancelled and the depositors of the Bank who hold liquidation rights in the MHC will constructively receive liquidation rights in the Mid-Tier Holding Company in exchange for their liquidation rights in the MHC.

(4) Immediately after the MHC Merger, the Mid-Tier Holding Company will merge with the Stock Holding Company (the “Mid-Tier Merger”), with the Stock Holding Company as the resulting entity. As part of the Mid-Tier Merger, the liquidation rights in Mid-Tier Holding Company constructively received by persons who held liquidation rights in the MHC will automatically, without further action on the part of the holders thereof be exchanged for an interest in the Stock Holding Company Liquidation Account.

Boards of Trustees

Conahasset Bancshares, MHC

Board of Directors

Conahasset Bancshares, Inc.

Pilgrim Bancshares, Inc.

Pilgrim Bank

            , 2014

Page 4

(5) Immediately after the Mid-Tier Merger, the Stock Holding Company will offer for sale Stock Holding Company Common Stock in the Offering.

(6) The Stock Holding Company will contribute at least 50% of the net proceeds of the Offering to the Bank in constructive exchange for additional shares of common stock of the Bank and in exchange for the Bank Liquidation Account.

Following the Conversion, a Stock Holding Company Liquidation Account will be maintained by the Stock Holding Company for the benefit of Eligible Account Holders and Supplemental Eligible Account Holders who continue to maintain their deposit accounts with the Bank. Pursuant to Section 9.7 of the Plan, the Stock Holding Company Liquidation Account will be equal to the MHC’s total equity as reflected in the latest consolidated statement of financial condition contained in the final Prospectus used in the Offering. In turn, the Bank will establish the Bank Liquidation Account. The terms of the Stock Holding Company Liquidation Account and Bank Liquidation Account, which supports the payment of the Stock Holding Company Liquidation Account in the event the Stock Holding Company lacks sufficient net assets, are described in Section 9.7 of the Plan.

As a result of the Conversion and Offering, the Stock Holding Company will be a publicly held corporation, will have registered the Stock Holding Company Common Stock under Section 12(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and will become subject to the rules and regulations thereunder and file periodic reports and proxy statements with the SEC. The Bank will become a wholly owned subsidiary of the Stock Holding Company and will continue to carry on its business and activities as conducted immediately prior to the Conversion.

The stockholders of the Stock Holding Company will be those persons who purchase shares of Stock Holding Company Common Stock in the Offering. Nontransferable rights to subscribe for the Stock Holding Company Common Stock have been granted, in order of priority, to Eligible Account Holders, Supplemental Eligible Account Holders (if any) and the Bank’s tax-qualified employee plans. Subscription rights are nontransferable. The Stock Holding Company will also offer shares of Stock Holding Company Common Stock not subscribed for in the Subscription Offering, if any, for sale in a Community Offering or Syndicated Community Offering to certain members of the general public.

Boards of Trustees

Conahasset Bancshares, MHC

Board of Directors

Conahasset Bancshares, Inc.

Pilgrim Bancshares, Inc.

Pilgrim Bank

            , 2014

Page 5

Opinions

Based on the foregoing description of the Conversion, including the MHC Merger, and the Mid-Tier Merger, and subject to the qualifications and limitations set forth in this letter, we are of the opinion that:

1. The conversion of the Mid-Tier Holding Company from a Maryland corporation to a Delaware Corporation will constitute a mere change in identity, form or place of organization within the meaning of Section 368(a)(1)(F) of the Code and therefore will qualify as a tax-free reorganization within the meaning of Section 368(a)(1)(F) of the Code. (Section 368(a)(1)(F) of the Code.)

2. The MHC Merger will qualify as a tax-free reorganization within the meaning of Section 368(a)(1)(A) of the Code. (Section 368(a)(l)(A) of the Code.)

3. The constructive exchange of the Eligible Account Holders’ and Supplemental Eligible Account Holders’ liquidation rights in the MHC for liquidation rights in the Mid-Tier Holding Company in the MHC Merger will satisfy the continuity of interest requirement of Section 1.368-1(b) of the Income Tax Regulations. (cf. Rev. Rul. 69-3, 1969-1 C.B. 103, and Rev. Rul. 69-646, 1969-2 C.B. 54.)

4. No gain or loss will be recognized by the MHC on the transfer of its assets to the Mid-Tier Holding Company and the Mid-Tier Holding Company’s assumption of its liabilities, if any, in constructive exchange for liquidation rights in the Mid-Tier Holding Company or on the constructive distribution of such liquidation rights to the depositors of the Bank. (Section 361(a), 361(c) and 357(a) of the Code.)

5. No gain or loss will be recognized by the Mid-Tier Holding Company upon the receipt of the assets of the MHC in the MHC Merger in exchange for the constructive transfer of liquidation rights in the Mid-Tier Holding Company to the depositors of the Bank. (Section 1032(a) of the Code.)

6. Persons who have liquidation rights in the MHC will recognize no gain or loss upon the constructive receipt of liquidation rights in the Mid-Tier Holding Company in exchange for their liquidation rights in the MHC. (Section 354(a) of the Code.)

Boards of Trustees

Conahasset Bancshares, MHC

Board of Directors

Conahasset Bancshares, Inc.

Pilgrim Bancshares, Inc.

Pilgrim Bank

            , 2014

Page 6

7. The basis of the assets of MHC (other than stock in the Mid-Tier Holding Company) to be received by the Mid-Tier Holding Company will be the same as the basis of such assets in the MHC immediately prior to the transfer. (Section 362(b) of the Code.)

8. The holding period of the assets of the MHC transferred to the Mid-Tier Holding Company will include the holding period of those assets of the MHC. (Section 1223(2) of the Code.)

9. The Mid-Tier Merger will constitute a mere change in identity, form or place of organization within the meaning of Section 368(a)(1)(F) of the Code and therefore will qualify as a tax-free reorganization within the meaning of Section 368(a)(1)(F) of the Code. (Section 368(a)(1)(F) of the Code.)

10. The Mid-Tier Holding Company will not recognize any gain or loss on the transfer of its assets to the Stock Holding Company and the Stock Holding Company’s assumption of its liabilities in exchange for interests in the Stock Holding Company Liquidation Account for the Eligible Account Holders and Supplemental Eligible Account Holders. (Sections 361(a), 361(c) and 357(a) of the Code.)

11. No gain or loss will be recognized by the Stock Holding Company upon the receipt of the assets of the Mid-Tier Holding Company in the Mid-Tier Merger. (Section 1032(a) of the Code.)

12. The basis of the assets of the Mid-Tier Holding Company to be received by the Stock Holding Company will be the same as the basis of such assets in the Mid-Tier Holding Company immediately prior to the transfer. (Section 362(b) of the Code.)

13. Eligible Account Holders and Supplemental Eligible Account Holders will not recognize any gain or loss upon their constructive exchange of their liquidation rights in the Mid-Tier Holding Company for their interests in the Stock Holding Company Liquidation Account. (Section 354 of the Code.)

14. The constructive exchange of the Eligible Account Holders’ and Supplemental Eligible Account Holders’ liquidation rights in the Mid-Tier Holding Company for interests in the Stock Holding Company Liquidation Account will satisfy the continuity of interest requirement of Section 1.368-1(b) of the Income Tax Regulations with respect to the MHC Merger. (cf. Rev. Rul. 69-3, 1969-1 C.B. 103, and Rev. Rul. 69-646, 1969-2 C.B. 54.)

Boards of Trustees

Conahasset Bancshares, MHC

Board of Directors

Conahasset Bancshares, Inc.

Pilgrim Bancshares, Inc.

Pilgrim Bank

            , 2014

Page 7

15. It is more likely than not that the fair market value of the nontransferable subscription rights to purchase Stock Holding Company Common Stock is zero. Accordingly, it is more likely than not that no gain or loss will be recognized by Eligible Account Holders and Supplemental Eligible Account Holders upon distribution to them of nontransferable subscription rights to purchase shares of Stock Holding Company Common Stock. (Section 356(a) of the Code.) Eligible Account Holders and Supplemental Eligible Account Holders in the subscription offering will not realize any taxable income as the result of the exercise by them of the nontransferable subscriptions rights. (Rev. Rul. 56-572, 1956-2 C.B. 182.)

16. It is more likely than not that the fair market value of the benefit provided by the Bank Liquidation Account supporting the payment of the Stock Holding Company Liquidation Account in the event the Stock Holding Company lacks sufficient net assets is zero. Accordingly, it is more likely than not that no gain or loss will be recognized by Eligible Account Holders and Supplemental Eligible Account Holders upon the constructive distribution to them of such rights in the Bank Liquidation Account as of the effective date of the Mid-Tier Merger. (Section 356(a) of the Code.)

17. It is more likely than not that the basis of the Stock Holding Company Common Stock purchased in the Offering by the exercise of the nontransferable subscription rights will be the purchase price thereof. (Section 1012 of the Code.)

18. The holding period of the Stock Holding Company Common Stock purchased pursuant to the exercise of subscriptions rights shall commence on the date on which the right to acquire such stock was exercised. (Section 1223(5) of the Code.)

19. No gain or loss will be recognized by the Stock Holding Company on the receipt of money in exchange for Stock Holding Company Common Stock sold in the Offering. (Section 1032 of the Code.)

20. Our opinions under paragraphs 13 and 15 are based on the position that the subscription rights to purchase shares of Stock Holding Company Common Stock received by Eligible Account Holders and Supplemental Eligible Account Holders in the subscription offering have a fair market value of zero. We understand that the subscription rights will be granted at no cost to the recipients, will be legally nontransferable and of short duration, and will provide the recipient with the right only to purchase shares of Stock Holding Company Common Stock at the same price to be paid by members of the general public in any Community Offering. We also note that the IRS has not in the past concluded that subscription rights have value. In addition, we are relying on a letter from RP Financial, LC. to you stating its belief that subscription

Boards of Trustees

Conahasset Bancshares, MHC

Board of Directors

Conahasset Bancshares, Inc.

Pilgrim Bancshares, Inc.

Pilgrim Bank

            , 2014

Page 8

rights do not have any economic value at the time of distribution or at the time the rights are exercised in the subscription offering. Based on the foregoing, we believe it is more likely than not that the nontransferable subscription rights to purchase Stock Holding Company Common Stock have no value.

If the subscription rights are subsequently found to have an economic value, income may be recognized by various recipients of the subscription rights (in certain cases, whether or not the rights are exercised) and the Stock Holding Company and/or the Bank may be taxable on the distribution of the subscription rights.

Our opinion under paragraph 16 above is based on the position that the benefit provided by the Bank Liquidation Account supporting the payment of the Stock Holding Company Liquidation Account in the event the Stock Holding Company lacks sufficient net assets has a fair market value of zero. We understand that: (i) there is no history of any holder of a liquidation account receiving any payment attributable to a liquidation account; (ii) the interests in the Stock Holding Company Liquidation Account and Bank Liquidation Account are not transferable; (iii) the amounts due under the Stock Holding Company Liquidation Account with respect to each Eligible Account Holder and Supplemental Eligible Account Holder will be reduced as their deposits in the Bank are reduced as described in the Plan; and (iv) the Bank Liquidation Account payment obligation arises only if the Stock Holding Company lacks sufficient net assets to fund the Stock Holding Company Liquidation Account. We also note that the U.S. Supreme Court in Paulsen v. Commissioner, 469 U.S. 131 (1985) stated the following:

The right to participate in the net proceeds of a solvent liquidation is also not a significant part of the value of the shares. Referring to the possibility of a solvent liquidation of a mutual savings association, this Court observed: “It stretches the imagination very far to attribute any real value to such a remote contingency, and when coupled with the fact that it represents nothing which the depositor can readily transfer, any theoretical value reduces almost to the vanishing point.” Society for the Savings v. Bowers, 349 U.S. 143, 150 (1955).

In addition, we are relying on a letter from RP Financial, LC. to you dated March 11, 2014, stating its belief that the benefit provided by the Bank Liquidation Account supporting the payment of the Stock Holding Company Liquidation Account in the event the Stock Holding Company lacks sufficient net assets does not have any economic value at the time of the Conversion. Based on the foregoing, we believe it is more likely than not that such rights in the Bank Liquidation Account have no value.

Boards of Trustees

Conahasset Bancshares, MHC

Board of Directors

Conahasset Bancshares, Inc.

Pilgrim Bancshares, Inc.

Pilgrim Bank

            , 2014

Page 9

If such rights in the Bank Liquidation Account are subsequently found to have an economic value, income may be recognized by each Eligible Account Holder and Supplemental Eligible Account Holder in the amount of the fair market value of their interest in the Bank Liquidation Account as of the effective date of the Conversion.

CONSENT

We hereby consent to the filing of the opinion as an exhibit to the MHC’s Application for Conversion filed with the FRB and Massachusetts Commissioner of Banks and to the Stock Holding Company’s Registration Statement on Form S-1 as filed with the SEC. We also consent to the references to our firm in the Prospectus contained in the Applications (as applicable) and Form S-1 under the captions “The Conversion and Plan of Distribution–Material Income Tax Consequences” and “Legal and Tax Matters.”

Very truly yours,

Luse Gorman Pomerenk & Schick, P.C.

A Professional Corporation

EX-8.2

Exhibit 8.2

                    2014

Board of Trustees

Conahasset Bancshares, MHC

Boards of Directors

Conahasset Bancshares, Inc.

Pilgrim Bancshares, Inc.

Pilgrim Bank

40 South Main Street

Cohasset, MA 02025

Ladies and Gentlemen:

This letter constitutes our opinion as to certain Massachusetts Corporation Excise Tax consequences to Pilgrim Bank, a Massachusetts-chartered co-operative bank (the “Bank”), Conahasset Bancshares, MHC, a Massachusetts-chartered mutual holding company (the “MHC”), Conahasset Bancshares, Inc., a Maryland corporation, (the “Mid-Tier Holding Company”) and Pilgrim Bancshares, Inc., a Delaware corporation (the “Stock Holding Company”) resulting from the proposed plan of conversion of the Mutual Holding Company from a Massachusetts chartered mutual holding company to the capital form of organization through a series of transactions collectively referred to herein as the “Conversion” pursuant to that certain Conahasset Bancshares, MHC Plan of Conversion (the “Plan” or “Plan of Conversion”) dated February 25, 2014. Unless otherwise defined, all terms used herein have the meanings given to such terms in the Plan of Conversion. The opinion contained herein is rendered only with respect to the holdings set forth herein under the heading OPINION and we express no opinion with respect to any other legal, federal, state or local tax aspect of these transactions.

In preparing this opinion letter, we have relied, in part, upon certain factual descriptions provided in the CONAHASSET BANCSHARES, MHC PLAN OF CONVERSION dated February 25, 2014, as well as the federal income tax opinion related to this transaction of Luse, Gorman, Pomerenk & Schick, a Professional Corporation dated                     , 2014, and the representations as to factual matters made by Pilgrim Bank, Conahasset Bancshares, Inc., and Conahasset Bancshares, MHC, in their filing to the various regulatory agencies regarding this transaction as referenced in federal tax opinion of Luse, Gorman, Pomerenk & Schick, a Professional Corporation. If any fact or representation contained in these documents is not complete or accurate it is important that we be notified immediately in writing as this may cause us to change our opinion.

Board of Trustees

Conahasset Bancshares, MHC

Board of Directors

Conahasset Bancshares, Inc.

Pilgrim Bancshares, Inc.

Pilgrim Bank

                    , 2014

DESCRIPTION OF PROPOSED TRANSACTIONS

Based upon our review of the documents described above, and in reliance upon such documents, we understand that the relevant facts are as follows. Pilgrim Bank (the “Bank”) is a Massachusetts-chartered co-operative bank headquartered in Cohasset, Massachusetts. The Bank was originally organized in 1916, and reorganized into the mutual holding company structure in 2010. The Bank is currently the wholly owned subsidiary of Conahasset Bancshares, Inc., a Maryland corporation (the “Mid-Tier Holding Company”), which is the wholly owned subsidiary of the MHC. The MHC is a mutual holding company with no stockholders. The depositors of the Bank are considered to be the “owners” of the MHC and are entitled upon the complete liquidation of the MHC to any liquidation proceeds after the payment of creditors.

The Boards of Trustees of the MHC and the Board of Directors of the Mid-Tier Holding Company, and the Bank adopted the Plan providing for the Conversion of the MHC from a Massachusetts chartered mutual holding company to the capital stock form of organization. As part of the Conversion, the Stock Holding Company will succeed to all the rights and obligations of the MHC and the Mid-Tier Holding Company and will offer shares of Stock Holding Company Common Stock to depositors and members of the general public in the Offering.

Pursuant to the Plan, the Conversion will be effected as follows and in such order as is necessary to consummate the Conversion:

(1) The Mid-Tier Holding Company will convert from a Maryland corporation to a Delaware corporation.

(2) The Mid-Tier Holding Company will organize the Stock Holding Company as a Maryland-chartered stock holding company subsidiary.

(3) The MHC will merge with and into the Mid-Tier Holding Company with the Mid-Tier Holding Company as the resulting entity (the “MHC Merger”) whereby the shares of Mid-Tier Holding Company held by the MHC will be cancelled and the depositors of the Bank who hold liquidation rights in the MHC will constructively receive liquidation interests in Mid-Tier Holding Company in exchange for their liquidation interests in the Mutual Holding Company.

Board of Trustees

Conahasset Bancshares, MHC

Board of Directors

Conahasset Bancshares, Inc.

Pilgrim Bancshares, Inc.

Pilgrim Bank

                    , 2014

(4) Immediately after the MHC Merger, the Mid-Tier Holding Company will merge with the Stock Holding Company (the “Mid-Tier Merger”), with the Stock Holding Company as the resulting entity. As part of the Mid-Tier Merger, the liquidation interests in Mid-Tier Holding Company constructively received by persons who held liquidation rights in the Mutual Holding Company will automatically, without further action on the part of the holders thereof be exchanged for an interest in the Liquidation Account.

(5) Immediately after the Mid-Tier Merger, the Stock Holding Company will offer for sale Stock Holding Company Common Stock in the Offering.

(6) The Stock Holding Company will contribute at least 50% of the net proceeds of the Offering to the Bank in constructive exchange for additional shares of common stock of the Bank and the Bank Liquidation Account.

Following the Conversion, a Stock Holding Company Liquidation Account will be maintained by the Stock Holding Company for the benefit of Eligible Account Holders who continue to maintain their deposit accounts with the Bank. Pursuant to Section 9.7 of the Plan, the Liquidation Account will be equal to the Mutual Holding Company’s total equity as reflected in the latest statement of financial condition contained in the final Prospectus used in the offering. In turn, the Stock Holding Company will hold the Bank Liquidation Account. The terms of the Stock Holding Company Liquidation Account and Bank Liquidation Account, which supports the payment of the Stock Holding Company Liquidation Account in the event the Stock Holding Company lacks sufficient net assets, are described in Section 9.7 of the Plan.

As a result of the Conversion and Offering, Stock Holding Company will be a publicly-held corporation, will have registered the Holding Company Common Stock under Section 12(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and will become subject to the rules and regulations thereunder and file periodic reports and proxy statements with the SEC. The Bank will become a wholly-owned subsidiary of the Stock Holding Company and will continue to carry on its business and activities as conducted immediately prior to the Conversion.

Board of Trustees

Conahasset Bancshares, MHC

Board of Directors

Conahasset Bancshares, Inc.

Pilgrim Bancshares, Inc.

Pilgrim Bank

                    , 2014

The stockholders of the Stock Holding Company will be those persons who purchase shares of Stock Holding Company Common Stock in the Offering. Nontransferable rights to subscribe for the Stock Holding Company Common Stock have been granted, in order of priority, to Eligible Account Holders, the Bank’s tax-qualified employee plans (“Employee Plans”), and each employee, officer, trustee and corporator of the Bank, the Mid-Tier Holding Company and the MHC who is not eligible in the preceding priority categories. Subscription rights are nontransferable. The Stock Holding Company will also offer shares of Stock Holding Company Common Stock not subscribed for in the Subscription Offering, if any, for sale in a Community Offering or Syndicated Community Offering to certain members of the general public.

DISCUSSION OF STATE INCOME TAX LAW

Discussion – MASSACHUSETTS GENERAL LAWS CHAPTER 63

Massachusetts follows the federal treatment of corporate reorganization by reference to the United State Internal Revenue Code (IRC) with certain adjustments otherwise defined in the statutes. Massachusetts has adopted federal treatment of mergers qualifying under IRC Section 368 in which no gain or loss will be recognized by any “party to a reorganization” as defined within the meaning of IRC Section 368(b). also, if the transaction results in no gain or loss to savings depositors under IRC Section 354(a) then no gain or loss results at the state level. The various IRC sections referenced in federal opinion letter have been similarly adopted by the Commonwealth of Massachusetts.

OPINION

Based solely on the above discussion of state law, the representations and documentation filed by Pilgrim Bank, Conahasset Bancshares, Inc., Conahasset Bancshares, MHC, the CONAHASSET BANCSHARES, MHC PLAN OF CONVERSION and the federal tax opinion letter of Luse, Gorman, Pomerenk & Schick, a Professional Corporation, it is our opinion that for Massachusetts excise tax purposes:

1. No gain or loss will be recognized by any corporate parties to the reorganization for Massachusetts excise tax for any phase of the proposed transaction.

2. The conversion will not give rise to any positive or negative tax base adjustments for Massachusetts excise tax purposes.

Board of Trustees

Conahasset Bancshares, MHC

Board of Directors

Conahasset Bancshares, Inc.

Pilgrim Bancshares, Inc.

Pilgrim Bank

                    , 2014

3. No gain or loss shall be recognized by the depositors of the Bank on the transfer of their rights and privileges in the Mutual Holding Company for their rights and privileges in the liquidation account.

4. The tax treatment of the reorganization will be the same as it is for federal income tax purposes.

The opinions expressed above are rendered with respect to the specific matters discussed herein and we express no opinion with respect to any other federal or state income tax, or other state and local taxes, or legal aspect of the conversion and reorganization. Our opinions are based on the completeness and accuracy of the above referenced documents. If any of the foregoing are not entirely complete or accurate, it is imperative that we be informed immediately in writing, as the inaccuracy of incompleteness could have a material effect on our conclusions. References to Massachusetts law, regulations and pronouncements are based upon current laws as enacted and pronouncements thereunder as of the date of this memorandum. We are relying upon the relevant provisions of the Internal Revenue Code of 1986, as amended, the regulations thereunder, and judicial and administrative interpretations thereof, and state and local tax authorities which are subject to change or modification by subsequent legislative, regulatory, administrative, or judicial decisions. any such changes could also have an effect on the validity of our opinions. the opinions contained herein are not binding upon the Internal Revenue Service, any other tax authority or any court, and no assurance can be given that a position contrary to that expressed herein will not be asserted by a tax authority and ultimately sustained by a court.

CONSENT

We hereby consent to the filing of the opinion as an exhibit to the MHC’s Application for Conversion filed with the FRB and Massachusetts Commissioner of Banks and to the Stock Holding Company’s Registration Statement on Form S-1 as filed with the SEC. We also consent to the references to our firm in the Prospectus contained in the Application for Conversion and Form S-1 under the captions “The Conversion; Plan of Distribution-Material Income Tax Consequences” and “Legal Matters.”

Very truly yours,

Shatswell, MacLeod & Company, P.C.

EX-10.1

Exhibit 10.1

EMPLOYMENT AGREEMENT

This Employment Agreement (the “Agreement”) is made effective as of                 , 2014 (the “Effective Date”), by and between Pilgrim Bank (the “Bank”) and Francis E. Campbell (“Executive”). Any reference to the “Company” shall mean Pilgrim Bancshares, Inc. the stock holding company of the Bank.

WHEREAS, the Bank wishes to assure itself of the continued services of Executive for the period provided in this Agreement; and

WHEREAS, in order to induce Executive to remain in the employ of the Bank and to provide further incentive for Executive to achieve the financial and performance objectives of the Bank, the parties desire to enter into this Agreement; and

WHEREAS, the Bank desires to set forth the rights and responsibilities of Executive and the compensation payable to Executive, as modified from time to time.

NOW, THEREFORE, in consideration of the mutual covenants herein contained, and upon the other terms and conditions hereinafter provided, the parties hereby agree as follows:

1. POSITION AND RESPONSIBILITIES.

During the term of this Agreement, Executive agrees to serve as President and Chief Executive Officer of the Bank (the “Executive Position”), and will perform the duties and will have all powers associated with such position as set forth in any job description provided to Executive by the Bank, and as may be set forth in the bylaws of the Bank. During the period provided in this Agreement, Executive also agrees to serve, if elected, as an officer of any subsidiary or affiliate of the Bank and in such capacity carry out such duties and responsibilities reasonably appropriate to that office.

2. TERM AND DUTIES.

(a) The term of this Agreement and the period of Executive’s employment hereunder shall begin as of the Effective Date and shall continue for thirty-six (36) full calendar months thereafter. Commencing on the first anniversary date following the Effective Date and continuing on each anniversary date thereafter (the “Anniversary Date”), this Agreement shall renew for an additional year such that the remaining term shall be thirty-six (36) months, provided, however, that in order for this Agreement to renew, the disinterested members of the Board of Directors of the Bank (the “Board”) must take the following actions within the time frames set forth below prior to each Anniversary Date: (i) at least sixty (60) days prior to the Anniversary Date, conduct a comprehensive performance evaluation and review of Executive for purposes of determining whether to extend this Agreement; and (ii) affirmatively approve the renewal or non-renewal of this Agreement, which such decision shall be included in the minutes of the Board’s meeting. If the decision of such disinterested members of the Board is not to renew this Agreement, then the Board shall provide Executive with a written notice of non-renewal (“Non-Renewal Notice”) at least thirty (30) days and not more than sixty (60) days prior to any Anniversary Date, such that this Agreement shall terminate at the end of thirty-six (36)

months following such Anniversary Date. The failure of the disinterested members of the Board to take the actions set forth herein before any Anniversary Date will result in the automatic non-renewal of this Agreement, even if the Board fails to affirmatively issue the Non-Renewal Notice to Executive. If the Board fails to inform Executive of its determination regarding the renewal or non-renewal of this Agreement, the Executive may request, in writing, the results of the Board’s action (or non-action) and the Board shall, within thirty (30) days of the receipt of such request, provide a written response to Executive. Reference herein to the term of this Agreement shall refer to both such initial term and such extended terms.

(b) Notwithstanding the foregoing, in the event that the Bank or the Company has entered into an agreement to effect a transaction which would be considered a Change in Control as defined under Section 5 hereof, then the term of this Agreement shall automatically be extended for thirty-six (36) months following the date on which the Change in Control occurs.

(c) During the period of his employment hereunder, except for periods of absence occasioned by illness, reasonable vacation periods, and reasonable leaves of absence, Executive will devote all of his business time, attention, skill and efforts to the faithful performance of his duties under this Agreement, including activities and duties related to the Executive Position. Notwithstanding the preceding sentence, subject to the approval of the Board, Executive may serve as a member of the board of directors of business, community and charitable organizations, provided that in each case such service shall not materially interfere with the performance of his duties under this Agreement, adversely affect the reputation of the Bank or any other affiliates of the Bank, or present any conflict of interest.

(d) Nothing in this Agreement shall mandate or prohibit a continuation of Executive’s employment following the expiration of the term of this Agreement.

3. COMPENSATION, BENEFITS AND REIMBURSEMENT.

(a) Base Salary. In consideration of Executive’s performance of the responsibilities and duties set forth in this Agreement, the Bank will provide Executive the compensation specified in this Agreement. The Bank will pay Executive a salary of $                 per year (“Base Salary”). Such Base Salary will be payable in accordance with the customary payroll practices of the Bank. During the term of this Agreement, the Board may consider increasing, but not decreasing (other than a decrease which is applicable to all senior officers of the Bank and in a percentage not in excess of the percentage decrease for other senior officers), Executive’s Base Salary as the Board deems appropriate. Any change in Base Salary will become the “Base Salary” for purposes of this Agreement.

(b) Bonus. Executive shall be entitled to participate in any bonus plan or arrangements of the Bank in which the Executive is eligible to participate. Nothing paid to Executive under any such plan or arrangement will be deemed to be in lieu of the other compensation to which Executive is entitled under this Agreement.

(c) Benefit Plans. Executive will be entitled to participate in all employee benefit plans, arrangements and perquisites offered to employees and officers of the Bank. Without limiting the generality of the foregoing provisions of this Section 3(c), Executive also will be

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entitled to participate in any employee benefit plans including but not limited to retirement plans, pension plans, profit-sharing plans, health-and-accident plans, or any other employee benefit plan or arrangement made available by the Bank in the future to management employees, subject to and on a basis consistent with the terms, conditions and overall administration of such plans and arrangements.

(d) Vacation. Executive will be entitled to paid vacation time each year during the term of this Agreement measured on a calendar year basis, in accordance with the Bank’s customary practices, as well as sick leave, holidays and other paid absences in accordance with the Bank’s policies and procedures for officers. Any unused paid time off during an annual period will be treated in accordance with the Bank’s personnel policies as in effect from time to time.

(e) Expense Reimbursements. The Bank will reimburse Executive for all reasonable travel, entertainment and other reasonable expenses incurred by Executive during the course of performing his obligations under this Agreement, including, without limitation, fees for memberships in such organizations as Executive and the Board mutually agree are necessary and appropriate in connection with the performance of his duties under this Agreement, upon substantiation of such expenses in accordance with applicable policies and procedures of the Bank. All reimbursements pursuant to this Section 3(e) shall be paid promptly by the Bank and in any event no later than thirty (30) days following the date on which the expense was incurred.

(f) To the extent not specifically set forth in this Section 3, any compensation payable or provided under this Section 3 shall be paid or provided no later than two and one-half (2.5) months after the calendar year in which such compensation is no longer subject to a substantial risk of forfeiture within the meaning of Treasury Regulation Section 1.409A-1(d).

4. TERMINATION AND TERMINATION PAY.

Subject to Section 5 of this Agreement which governs the occurrence of a Change in Control, Executive’s employment under this Agreement may be terminated in the following circumstances:

(a) Death. Executive’s employment under this Agreement will terminate upon his death during the term of this Agreement, in which event Executive’s estate or beneficiary shall be paid Executive’s Base Salary at the rate in effect at the time of Executive’s death for a period of one (1) year following Executive’s death (payable in accordance with the regular payroll practices of the Bank). In addition, for the later of: (i) the remaining term of this Agreement or (ii) one (1) year following Executive’s death, the Bank will continue to provide non-taxable medical and dental coverage substantially comparable to the coverage maintained by the Bank for Executive and his family immediately prior to Executive’s death. Such continued benefits will be fully paid for by the Bank.

(b) Disability. Termination of Executive’s employment based on “Disability” shall mean termination because of any permanent and totally physical or mental impairment that restricts Executive from performing all the essential functions of normal employment. In the event of Executive’s termination due to Disability, Executive will be entitled to disability benefits, if any, provided under a long term disability plan sponsored by the Bank, if applicable.

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(c) Termination for Cause. The Board may immediately terminate his employment at any time for “Cause.” Executive shall have no right to receive compensation or other benefits for any period after termination for Cause, except for already vested benefits. Termination for “Cause” shall mean termination because of, in the good faith determination of the Board, Executive’s:

(i) material act of dishonesty or fraud in performing Executive’s duties on behalf of the Bank;

(ii) willful misconduct that in the judgment of the Board will likely cause economic damage to the Bank or injury to the business reputation of the Bank;

(iii) incompetence (in determining incompetence, the acts or omissions shall be measured against standards generally prevailing in the savings institutions industry);

(iv) breach of fiduciary duty involving personal profit;

(v) intentional failure to perform stated duties under this Agreement after written notice thereof from the Board;

(vi) willful violation of any law, rule or regulation (other than traffic violations or similar offenses which results only in a fine or other non-custodial penalty) that reflect adversely on the reputation of the Bank, any felony conviction, any violation of law involving moral turpitude, or any violation of a final cease-and-desist order; any violation of the policies and procedures of the Bank as outlined in the Bank’s employee handbook, which would result in termination of the Bank employees, as from time to time amended and incorporated herein by reference, or

(vii) material breach by Executive of any provision of this Agreement.

Notwithstanding the foregoing, Executive shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to Executive a notice of termination which shall include a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the disinterested members of the Board that Executive was guilty of the conduct described above and specifying the particulars of such conduct.

(d) Voluntary Termination by Executive. In addition to his other rights to terminate his employment under this Agreement, Executive may voluntarily terminate employment during the term of this Agreement (other than “With Good Reason” as defined below) upon at least thirty (30) days prior written notice to the Board. Upon Executive’s voluntary termination, Executive will receive only his compensation and vested rights and benefits as of the date of his termination.

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(e) Termination Without Cause or With Good Reason.

(i) The Board may immediately terminate his employment at any time for a reason other than Cause (a termination “Without Cause”), and Executive may, by written notice to the Board, terminate this Agreement at any time within ninety (90) days following an event constituting “Good Reason,” as defined below (a termination “With Good Reason”); provided, however, that the Bank shall have thirty (30) days to cure the “Good Reason” condition, but the Bank may waive its right to cure. Any termination of Executive’s employment, other than Termination for Cause shall have no effect on or prejudice the vested rights of Executive under the Bank’s qualified or non-qualified retirement, pension, savings, thrift, profit-sharing or bonus plans, group life, health (including hospitalization, medical and major medical), dental, accident and long term disability insurance plans or other employee benefit plans or programs, or compensation plans or programs in which Executive was a participant.

(ii) In the event of termination as described under Section 4(e)(i) and subject to the requirements of Section 4(e)(v), the Bank shall pay Executive, or in the event of Executive’s subsequent death, Executive’s beneficiary or estate, as the case may be, as severance pay, a cash lump sum payment equal to two (2) times his highest annual rate of Base Salary earned by Executive during the calendar year of Executive’s date of termination or either of the three (3) calendar years immediately preceding Executive’s date of termination. Such payment shall be made to Executive within thirty (30) days following Executive’s date of termination.

(iii) In addition, the Bank will continue to provide to Executive life insurance coverage and non-taxable medical and dental insurance coverage substantially comparable (and on substantially the same terms and conditions) to the coverage maintained by the Bank for Executive immediately prior to his termination under the same cost-sharing arrangements that apply for active employees of the Bank as of Executive’s date of termination. Such continued coverage shall cease upon the earlier of: (A) the date which is two (2) years from Executive’s date of termination or (B) the date on which Executive becomes a full-time employee of another employer, provided Executive is entitled to the benefits that are substantially similar to the health and welfare benefits provided by the Bank. The period of continued health coverage required by Section 4980B(f) of the Internal Revenue Code of 1986, as amended (the “Code”), shall run concurrently with the coverage period provided herein. If the Bank cannot provide one or more of the benefits set forth in this paragraph because Executive is no longer an employee, applicable rules and regulations prohibit such benefits or the payment of such benefits in the manner contemplated, or it would subject the Bank to penalties, then the Bank shall pay Executive a cash lump sum payment reasonably estimated to be equal to the value of such benefits or the value

5

of the remaining benefits at the time of such determination. Such cash payment shall be made in a lump sum within thirty (30) days after the later of Executive’s date of termination or the effective date of the rules or regulations prohibiting such benefits or subjecting the Bank to penalties.

(iv) “Good Reason” exists if, without Executive’s express written consent, any of the following occurs:

(A) a material reduction in Executive’s Base Salary or benefits provided in this Agreement (other than a reduction or elimination of Executive’s benefits under one or more benefit plans maintained by the Bank as part of a good faith, overall reduction or elimination of such plans or benefits applicable to all participants in a manner that does not discriminate against Executive (except as such discrimination may be necessary to comply with applicable law));

(B) a material reduction in Executive’s authority, duties or responsibilities from the position and attributes associated with the Executive Position;

(C) a relocation of Executive’s principal place of employment by more than twenty-five (25) miles from the Bank’s main office location as of the date of this Agreement; or

(D) a material breach of this Agreement by the Bank.

(v) Notwithstanding the foregoing, Executive shall not be entitled to any payments or benefits under this Section 4(e) unless and until Executive executes a release of his claims against the Bank, the Company and any affiliate, and their officers, directors, successors and assigns, releasing said persons from any and all claims, rights, demands, causes of action, suits, arbitrations or grievances relating to the employment relationship, including claims under the Age Discrimination in Employment Act (“ADEA”), but not including claims for benefits under tax-qualified plans or other benefit plans in which Executive is vested, claims for benefits required by applicable law or claims with respect to obligations set forth in this Agreement that survive the termination of this Agreement. In order to comply with the requirements of Code Section 409A and the ADEA, the release shall be provided to Executive no later than the date of his Separation from Service and Executive shall have no fewer than twenty-one (21) days to consider the release, and following Executive’s execution of the release, Executive shall have seven (7) days to revoke said release.

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5. CHANGE IN CONTROL.

(a) Change in Control Defined. For purposes of this Agreement, the term “Change in Control” shall mean the occurrence of any of the following events:

(i) Merger: The Company or the Bank merges into or consolidates with another entity, or merges another bank or corporation into the Bank or the Company, and as a result, less than a majority of the combined voting power of the resulting corporation immediately after the merger or consolidation is held by persons who were stockholders of the Company or the Bank immediately before the merger or consolidation;

(ii) Acquisition of Significant Share Ownership: There is filed, or is required to be filed, a report on Schedule 13D or another form or schedule (other than Schedule 13G) required under Sections 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended, if the schedule discloses that the filing person or persons acting in concert has or have become the beneficial owner of 25% or more of a class of the Company’s or the Bank’s voting securities; provided, however, this clause (ii) shall not apply to beneficial ownership of the Company’s or the Bank’s voting shares held in a fiduciary capacity by an entity of which the Company directly or indirectly beneficially owns 50% or more of its outstanding voting securities;

(iii) Change in Board Composition: During any period of two consecutive years, individuals who constitute the Company’s or the Bank’s Board of Directors at the beginning of the two-year period cease for any reason to constitute at least a majority of the Company’s or the Bank’s Board of Directors; provided, however, that for purposes of this clause (iii), each director who is first elected by the board (or first nominated by the board for election by the stockholders or corporators) by a vote of at least two-thirds (2/3) of the directors who were directors at the beginning of the two-year period or who is appointed to the Board as the result of a directive, supervisory agreement or order issued by the primary federal regulator of the Company or the Bank or by the Federal Deposit Insurance Corporation (“FDIC”) shall be deemed to have also been a director at the beginning of such period; or

(iv) Sale of Assets: The Company or the Bank sells to a third party all or substantially all of its assets.

(b) Change in Control Benefits. Upon the occurrence of Executive’s termination Without Cause or With Good Reason on or after the effective time of a Change in Control, the Bank (or any successor) shall pay Executive, or in the event of Executive’s subsequent death, Executive’s beneficiary or estate, as severance pay, an amount equal to three (3) times his highest annual rate of Base Salary earned by Executive during the calendar year of Executive’s date of termination or either of the three (3) calendar years immediately preceding Executive’s date of termination. Such payment shall be made in a lump sum within thirty (30) days following Executive’s date of termination. In addition, the Bank will continue to provide Executive with life insurance coverage and non-taxable medical and dental insurance coverage substantially comparable to the coverage maintained by the Bank for Executive immediately prior to his date of termination at no cost to Executive. Such continued coverage shall cease

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upon the earlier of: (i) the date which is three (3) years from Executive’s date of termination or (ii) the date on which Executive becomes a full-time employee of another employer, provided Executive is entitled to the benefits that are substantially similar to the health and welfare benefits provided by the Bank. If the Bank cannot provide one or more of the benefits set forth in this paragraph because Executive is no longer an employee, applicable rules and regulations prohibit such benefits or the payment of such benefits in the manner contemplated, or it would subject the Bank to penalties, then the Bank shall pay Executive a cash lump sum payment reasonably estimated to be equal to the value of such benefits or the value of the remaining benefits at the time of such determination. Such cash payment shall be made in a lump sum within thirty (30) days after the later of Executive’s date of termination or the effective date of the rules or regulations prohibiting such benefits or subjecting the Bank to penalties. Notwithstanding the foregoing, the payments and benefits provided in this Section 5(b) shall be payable to Executive in lieu of any payments or benefits that are payable under Section 4(e).

6. COVENANTS OF EXECUTIVE.

(a) Non-Solicitation/Non-Compete. Executive hereby covenants and agrees that, for a period of one (1) year following his termination of employment with the Bank (other than a termination of employment following a Change in Control), Executive shall not, without the written consent of the Bank, either directly or indirectly:

(i) solicit, offer employment to, or take any other action intended (or that a reasonable person acting in like circumstances would expect) to have the effect of causing any officer or employee of the Bank, or any of its respective subsidiaries or affiliates, to terminate his employment and accept employment or become affiliated with, or provide services for compensation in any capacity whatsoever to, any business whatsoever that competes with the business of the Bank, or any of their direct or indirect subsidiaries or affiliates, that has headquarters or offices within twenty-five (25) miles of any location(s) in which the Bank has business operations or has filed an application for regulatory approval to establish an office (the “Restricted Territory”);

(ii) become an officer, employee, consultant, director, independent contractor, agent, joint venturer, partner or trustee of any savings bank, savings and loan association, savings and loan holding company, credit union, bank or bank holding company, insurance company or agency, any mortgage or loan broker or any other entity that competes with the business of the Bank or any of their direct or indirect subsidiaries or affiliates, that: (i) has a headquarters within the Restricted Territory or (ii) has one or more offices, but is not headquartered, within the Restricted Territory, but in the latter case, only if Executive would be employed, conduct business or have other responsibilities or duties within the Restricted Territory; or

(iii) solicit, provide any information, advice or recommendation or take any other action intended (or that a reasonable person acting in like circumstances would expect) to have the effect of causing any customer of the Bank to terminate an existing business or commercial relationship with the Bank.

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(b) Confidentiality. Executive recognizes and acknowledges that the knowledge of the business activities, plans for business activities, and all other proprietary information of the Bank, as it may exist from time to time, are valuable, special and unique assets of the business of the Bank. Executive will not, during or after the term of his employment, disclose any knowledge of the past, present, planned or considered business activities or any other similar proprietary information of the Bank to any person, firm, corporation, or other entity for any reason or purpose whatsoever unless expressly authorized by the Board or required by law. Notwithstanding the foregoing, Executive may disclose any knowledge of banking, financial and/or economic principles, concepts or ideas which are not solely and exclusively derived from the business plans and activities of the Bank. Further, Executive may disclose information regarding the business activities of the Bank to any bank regulator having regulatory jurisdiction over the activities of the Bank pursuant to a formal regulatory request. In the event of a breach or threatened breach by Executive of the provisions of this Section, the Bank will be entitled to an injunction restraining Executive from disclosing, in whole or in part, the knowledge of the past, present, planned or considered business activities of the Bank or any other similar proprietary information, or from rendering any services to any person, firm, corporation, or other entity to whom such knowledge, in whole or in part, has been disclosed or is threatened to be disclosed. Nothing herein will be construed as prohibiting the Bank from pursuing any other remedies available to the Bank for such breach or threatened breach, including the recovery of damages from Executive.

(c) Information/Cooperation. Executive shall, upon reasonable notice, furnish such information and assistance to the Bank as may be reasonably required by the Bank, in connection with any litigation in which it or any of its subsidiaries or affiliates is, or may become, a party; provided, however, that Executive shall not be required to provide information or assistance with respect to any litigation between Executive and the Bank or any other subsidiaries or affiliates.

(d) Reliance. Except as otherwise provided, all payments and benefits to Executive under this Agreement shall be subject to Executive’s compliance with this Section 6, to the extent applicable. The parties hereto, recognizing that irreparable injury will result to the Bank, its business and property in the event of Executive’s breach of this Section 6, agree that, in the event of any such breach by Executive, the Bank will be entitled, in addition to any other remedies and damages available, to an injunction to restrain the violation hereof by Executive and all persons acting for or with Executive. Executive represents and admits that Executive’s experience and capabilities are such that Executive can obtain employment in a business engaged in other lines of business than the Bank, and that the enforcement of a remedy by way of injunction will not prevent Executive from earning a livelihood. Nothing herein will be construed as prohibiting the Bank from pursuing any other remedies available to them for such breach or threatened breach, including the recovery of damages from Executive.

7. SOURCE OF PAYMENTS.

All payments provided in this Agreement shall be timely paid by check or direct deposit from the general funds of the Bank (or any successor of the Bank).

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8. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.

This Agreement contains the entire understanding between the parties hereto and supersedes any prior employment agreement between the Bank or any predecessor of the Bank and Executive, except that this Agreement shall not affect or operate to reduce any benefit or compensation inuring to Executive of a kind expressly provided elsewhere.

9. NO ATTACHMENT; BINDING ON SUCCESSORS.

(a) Except as required by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation, or to execution, attachment, levy, or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to affect any such action shall be null, void, and of no effect.

(b) The Bank shall require any successor or assignee, whether direct or indirect, by purchase, merger, consolidation or otherwise, to all or substantially all the business or assets of the Bank, expressly and unconditionally to assume and agree to perform the Bank’s obligations under this Agreement, in the same manner and to the same extent that the Bank would be required to perform if no such succession or assignment had taken place.

10. MODIFICATION AND WAIVER.

(a) This Agreement may not be modified or amended except by an instrument in writing signed by the parties hereto.

(b) No term or condition of this Agreement shall be deemed to have been waived, nor shall there be any estoppel against the enforcement of any provision of this Agreement, except by written instrument of the party charged with such waiver or estoppel. No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future as to any act other than that specifically waived.

11. REQUIRED PROVISIONS.

Notwithstanding anything herein contained to the contrary, the following provisions shall apply:

(a) The Board may terminate Executive’s employment at any time, but any termination by the Bank’s Board other than termination for Cause shall not prejudice Executive’s right to compensation or other benefits under this Agreement. Executive shall have no right to receive compensation or other benefits for any period after his termination for Cause.

(b) Notwithstanding anything herein contained to the contrary, any payments to Executive by the Company, whether pursuant to this Agreement or otherwise, are subject to and conditioned upon their compliance with Section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C. Section 1828(k), and the regulations promulgated thereunder in 12 C.F.R. Part 359.

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(c) Notwithstanding anything else in this Agreement to the contrary (with the exception of Section 4(c)(i)), Executive’s employment shall not be deemed to have been terminated unless and until Executive has a Separation from Service within the meaning of Code Section 409A. For purposes of this Agreement, a “Separation from Service” shall have occurred if the Bank and Executive reasonably anticipate that either no further services will be performed by Executive after the date of termination (whether as an employee or as an independent contractor) or the level of further services performed is less than fifty (50) percent of the average level of bona fide services in the thirty-six (36) months immediately preceding the termination. For all purposes hereunder, the definition of Separation from Service shall be interpreted consistent with Treasury Regulation Section 1.409A-1(h)(ii). Notwithstanding the foregoing, this Section 11(b) is not applicable in the event of the Executive’s termination for Cause.

(d) Notwithstanding the foregoing, if Executive is a “specified employee” (i.e., a “key employee” of a publicly traded company within the meaning of Section 409A of the Code and the final regulations issued thereunder) and any payment under this Agreement is triggered due to Executive’s Separation from Service (other than due to Disability or death), then solely to the extent necessary to avoid penalties under Section 409A of the Code, no payment shall be made during the first six (6) months following Executive’s Separation from Service. Rather, any payment which would otherwise be paid to Executive during such period shall be accumulated and paid to Executive in a lump sum on the first day of the seventh month following such Separation from Service. All subsequent payments shall be paid in the manner specified in this Agreement.

12. SEVERABILITY.

If, for any reason, any provision of this Agreement, or any part of any provision, is held invalid, such invalidity shall not affect any other provision of this Agreement or any part of such provision not held so invalid, and each such other provision and part thereof shall to the full extent consistent with law continue in full force and effect.

13. GOVERNING LAW.

This Agreement shall be governed by the laws of the Commonwealth of Massachusetts but only to the extent not superseded by federal law.

14. ARBITRATION.

Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by binding arbitration, as an alternative to civil litigation and without any trial by jury to resolve such claims, conducted by a single arbitrator mutually acceptable to the Bank and Executive, sitting in a location selected by the Bank within fifty (50) miles from the main office of the Bank, in accordance with the rules of the American Arbitration Association’s National Rules for the Resolution of Employment Disputes then in effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction.

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15. PAYMENT OF LEGAL FEES.

To the extent that such payment(s) may be made without triggering penalty under Code Section 409A, all reasonable legal fees paid or incurred by Executive pursuant to any dispute relating to this Agreement shall be paid or reimbursed by the Bank, provided that the dispute is resolved in Executive’s favor, and such reimbursement shall occur no later than sixty (60) days after the end of the year in which the dispute is settled or resolved in Executive’s favor.

16. INDEMNIFICATION.

The Bank shall provide Executive (including his heirs, executors and administrators) with coverage under a standard directors’ and officers’ liability insurance policy at its expense, and shall indemnify Executive (and his heirs, executors and administrators) for the term of the Agreement and for a period of six (6) years thereafter to the fullest extent permitted under applicable law against all expenses and liabilities reasonably incurred by him in connection with or arising out of any action, suit or proceeding in which he may be involved by reason of his having been a director or officer of the Bank or the Company or any subsidiary or affiliate of the Bank or the Company (whether or not he continues to be a director or officer at the time of incurring such expenses or liabilities), such expenses and liabilities to include, but not be limited to, judgments, court costs and attorneys’ fees and the cost of reasonable settlements (such settlements must be approved by the Board or the board of directors of the Company, as appropriate); provided, however, neither the Bank nor Company shall be required to indemnify or reimburse Executive for legal expenses or liabilities incurred in connection with an action, suit or proceeding arising from any illegal or fraudulent act committed by Executive.

17. NOTICE.

For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by certified or registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below:

To the Bank	Pilgrim Bank 40 South Main Street Cohasset, MA 02025
To Executive:	Most recent address on file with the Bank

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

PILGRIM BANK

By:

Name:

Title:

EXECUTIVE

Francis E. Campbell

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EX-10.2

Exhibit 10.2

CHANGE IN CONTROL AGREEMENT

This Change in Control Agreement (this “Agreement”) is made effective as of             , 2014 (the “Effective Date”), by and between Pilgrim Bank (the “Bank”) and Christopher G. McCourt (“Executive”). Any reference to the “Company” shall mean Pilgrim Bancshares, Inc., the stock holding company of the Bank.

WHEREAS, the Bank wishes to assure itself of the continued services of Executive as Senior Vice President, Chief Financial Officer and Treasurer of the Bank (the “Executive Position”) for the period provided in this Agreement; and

WHEREAS, in order to induce Executive to continue employment with the Bank and to provide further incentive to achieve the financial and performance objectives of the Bank, the parties desire to specify the benefits which shall be due to Executive in the event of a Change in Control (as defined below).

NOW THEREFORE, in consideration of the mutual agreements herein contained, and upon the other terms and conditions hereinafter provided, the parties hereby agree as follows:

1. Term of Agreement. The term of this Agreement shall commence as of the Effective Date and shall continue thereafter for a period of two (2) years. Commencing on the first anniversary date of this Agreement (the “Anniversary Date”) and continuing on each Anniversary Date thereafter, the term of this Agreement shall renew for an additional year such that the remaining term of this Agreement is always two (2) years provided, however, that in order for this Agreement to renew, the disinterested members of the Board of Directors of the Bank (the “Board”) must take the following actions within the time frames set forth below prior to each Anniversary Date: (i) at least sixty (60) days prior to the Anniversary Date, conduct a comprehensive performance evaluation and review of Executive for purposes of determining whether to extend this Agreement; and (ii) affirmatively approve the renewal or non-renewal of this Agreement, which decision shall be included in the minutes of the Board’s meeting. If the decision of such disinterested members of the Board is not to renew this Agreement, then the Board shall provide Executive with a written notice of non-renewal (“Non-Renewal Notice”) at least thirty (30) days and not more than sixty (60) days prior to any Anniversary Date, such that this Agreement shall terminate at the end of twenty-four (24) months following such Anniversary Date. Notwithstanding the foregoing, in the event that the Company or the Bank has entered into an agreement to effect a transaction which would be considered a Change in Control as defined below, then the term of this Agreement shall be extended and shall terminate twenty-four (24) months following the date on which the Change in Control occurs.

2. Definitions. The following words and terms shall have the meanings set forth below for purposes of this Agreement.

(a) Base Salary. Executive’s “Base Salary” for purposes of this Agreement shall mean the annual rate of base salary paid to Executive by the Bank.

(b) Change in Control. For purposes of this Agreement, the term “Change in Control” shall mean the occurrence of any of the following events:

(i) Merger: The Company or the Bank merges into or consolidates with another entity, or merges another bank or corporation into the Bank or the Company, and as a result, less than a majority of the combined voting power of the resulting corporation immediately after the merger or consolidation is held by persons who were stockholders of the Company or the Bank immediately before the merger or consolidation;

(ii) Acquisition of Significant Share Ownership: There is filed, or is required to be filed, a report on Schedule 13D or another form or schedule (other than Schedule 13G) required under Sections 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended, if the schedule discloses that the filing person or persons acting in concert has or have become the beneficial owner of 25% or more of a class of the Company’s or the Bank’s voting securities; provided, however, this clause (ii) shall not apply to beneficial ownership of the Company’s or the Bank’s voting shares held in a fiduciary capacity by an entity of which the Company directly or indirectly beneficially owns 50% or more of its outstanding voting securities;

(iii) Change in Board Composition: During any period of two consecutive years, individuals who constitute the Company’s or the Bank’s Board of Directors at the beginning of the two-year period cease for any reason to constitute at least a majority of the Company’s or the Bank’s Board of Directors; provided, however, that for purposes of this clause (iii), each director who is first elected by the board (or first nominated by the board for election by the stockholders or corporators) by a vote of at least two-thirds (2/3) of the directors who were directors at the beginning of the two-year period or who is appointed to the board as the result of a directive, supervisory agreement or order issued by the primary federal regulator of the Company or the Bank or by the Federal Deposit Insurance Corporation (“FDIC”) shall be deemed to have also been a director at the beginning of such period; or

(iv) Sale of Assets: The Company or the Bank sells to a third party all or substantially all of its assets.

(c) Good Reason. For purposes of this Agreement, “Good Reason” shall mean a termination by Executive, without Executive’s express written consent, any of the following occurs:

(i) a material reduction in Executive’s Base Salary or benefits provided to Executive (other than a reduction or elimination of Executive’s benefits under one or more benefit plans maintained by the Bank as part of a good faith, overall reduction or elimination of such plans or benefits applicable to all participants in a manner that does not discriminate against Executive (except as such discrimination may be necessary to comply with applicable law));

(ii) a material reduction in Executive’s authority, duties or responsibilities from the position and attributes associated with the Executive Position;

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(iii) a relocation of Executive’s principal place of employment by more than twenty-five (25) miles from the Bank’s main office location as of the date of this Agreement; or

(iv) a material breach of this Agreement by the Bank.

Notwithstanding the foregoing, prior to any termination of employment for Good Reason, Executive must first provide written notice to the Board within ninety (90) days following the initial existence of the condition, describing the existence of such condition, and the Bank shall thereafter have the right to remedy the condition within thirty (30) days of the date the Board received the written notice from Executive, but the Bank may waive its right to cure. If the Bank remedies the condition within such thirty (30) day cure period, then no Good Reason shall be deemed to exist with respect to such condition. If the Bank does not remedy the condition within such thirty (30) day cure period, then Executive may deliver a notice of termination for Good Reason at any time within sixty (60) days following the expiration of such cure period.

(d) Termination for Cause. Termination for Cause shall mean termination because of, in the good faith determination of the Board, Executive’s:

(i) material act of dishonesty or fraud in performing Executive’s duties on behalf of the Bank;

(ii) willful misconduct that in the judgment of the Board will likely cause economic damage to the Bank or injury to the business reputation of the Bank;

(iii) incompetence (in determining incompetence, the acts or omissions shall be measured against standards generally prevailing in the savings institutions industry);

(iv) breach of fiduciary duty involving personal profit;

(v) intentional failure to perform stated duties under this Agreement after written notice thereof from the Board;

(vi) willful violation of any law, rule or regulation (other than traffic violations or similar offenses which results only in a fine or other non-custodial penalty) that reflect adversely on the reputation of the Bank, any felony conviction, any violation of law involving moral turpitude, or any violation of a final cease-and-desist order; any violation of the policies and procedures of the Bank as outlined in the Bank’s employee handbook, which would result in termination of the Bank employees, as from time to time amended and incorporated herein by reference, or

(vii) material breach by Executive of any provision of this Agreement.

Notwithstanding the foregoing, Executive shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to Executive a notice of termination which shall include a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the disinterested members of the Board that Executive was guilty of the conduct described above and specifying the particulars of such conduct.

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3. Benefits upon Termination in Connection with a Change in Control. In the event of Executive’s involuntary termination of employment by the Bank for reasons other than Termination for Cause, or a voluntary termination of employment by Executive for Good Reason occurring on or after a Change in Control, the Bank shall pay Executive, or in the event of Executive’s subsequent death, Executive’s beneficiary or estate, as the case may be, as severance pay, a cash lump sum payment equal to two (2) times Executive’s highest rate of Base Salary paid to Executive during the current calendar year of Executive’s date of termination or either of the two (2) calendar years immediately preceding Executive’s date of termination. Such payment shall be payable within thirty (30) days following Executive’s date of termination, and will be subject to applicable withholding taxes.

In addition, the Bank will continue to provide to Executive with life insurance coverage and non-taxable medical and dental insurance coverage substantially comparable (and on substantially the same terms and conditions) to the coverage maintained by the Bank for Executive immediately prior to Executive’s termination under the same cost-sharing arrangements that apply for active employees of the Bank as of Executive’s date of termination. Such continued coverage shall cease upon the earlier of: (i) the date which is two (2) years from Executive’s date of termination or (ii) the date on which Executive becomes a full-time employee of another employer, provided Executive is entitled to the benefits that are substantially similar to the health and welfare benefits provided by the Bank. If the Bank cannot provide one or more of the benefits set forth in this paragraph because Executive is no longer an employee, applicable rules and regulations prohibit such benefits or the payment of such benefits in the manner contemplated, or it would subject the Bank to penalties, then the Bank shall pay Executive a cash lump sum payment reasonably estimated to be equal to the value of such benefits or the value of the remaining benefits at the time of such determination. Such cash payment shall be made in a lump sum within thirty (30) days after the later of Executive’s date of termination or the effective date of the rules or regulations prohibiting such benefits or subjecting the Bank to penalties.

4. 280G Cutback. Notwithstanding anything in this Agreement to the contrary, in no event shall the aggregate payments or benefits to be made or afforded to Executive under this Agreement , either as a stand-alone benefit or when aggregated with other payments to, or for the benefit of, Executive (collectively referred to as the “Change in Control Benefits”) that are contingent on a change in control (as defined under Code Section 280G), constitute an “excess parachute payment” under Code Section 280G or any successor thereto, and in order to avoid such a result, Executive’s benefits payable under this Agreement shall be reduced by the minimum amount necessary so that the Change in Control Benefits that are payable to Executive are not subject to penalties under Code Sections 280G and 4999.

5. Source of Payments. All payments provided in this Agreement shall be timely paid by check or direct deposit from the general funds of the Bank (or any successor to the Bank).

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6. Entire Agreement. This Agreement embodies the entire agreement between the Bank and Executive with respect to the matters agreed to herein. All prior agreements between the Bank and Executive with respect to the matters agreed to herein are hereby superseded and shall have no force or effect, except that this Agreement shall not affect or operate to reduce any benefit or compensation inuring to Executive of a kind elsewhere provided. No provision of this Agreement shall be interpreted to mean that Executive is subject to receiving fewer benefits than those available to Executive without reference to this Agreement.

7. No Attachment. Except as required by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation, or to execution, attachment, levy, or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to affect any such action shall be null, void, and of no effect.

8. Binding on Successors. The Bank shall require any successor or assignee, whether direct or indirect, by purchase, merger, consolidation or otherwise, to all or substantially all the business or assets of the Bank, expressly and unconditionally to assume and agree to perform the Bank’s obligations under this Agreement, in the same manner and to the same extent that the Bank would be required to perform if no such succession or assignment had taken place.

9. Modification and Waiver.

(a) This Agreement may not be modified or amended except by an instrument in writing signed by the parties hereto.

(b) No term or condition of this Agreement shall be deemed to have been waived, nor shall there be any estoppel against the enforcement of any provision of this Agreement, except by written instrument of the party charged with such waiver or estoppel. No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived.

10. Required Provisions.

(a) The Board may terminate Executive’s employment at any time, but any termination by the Bank’s Board other than termination for Cause shall not prejudice Executive’s right to compensation or other benefits under this Agreement. Executive shall have no right to receive compensation or other benefits for any period after Executive’s termination for Cause.

(b) Notwithstanding anything herein contained to the contrary, any payments to Executive by the Bank or the Company, whether pursuant to this Agreement or otherwise, are subject to and conditioned upon their compliance with Section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C. § 1828(k), and the regulations promulgated thereunder in 12 C.F.R. Part 359.

(c) Notwithstanding anything else in this Agreement to the contrary, Executive’s employment shall not be deemed to have been terminated unless and until Executive has a Separation from Service within the meaning of Code Section 409A. For purposes of this

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Agreement, a “Separation from Service” shall have occurred if the Bank and Executive reasonably anticipate that either no further services will be performed by Executive after the date of termination (whether as an employee or as an independent contractor) or the level of further services performed is less than fifty (50) percent of the average level of bona fide services in the thirty-six (36) months immediately preceding the termination. For all purposes hereunder, the definition of Separation from Service shall be interpreted consistent with Treasury Regulation Section 1.409A-1(h)(ii).

(d) Notwithstanding the foregoing, in the event Executive is a Specified Employee (as defined herein), then, solely, to the extent required to avoid penalties under Code Section 409A, Executive’s payments shall be delayed until the first day of the seventh month following Executive’s Separation from Service. A “Specified Employee” shall be interpreted to comply with Code Section 409A and shall mean a key employee within the meaning of Code Section 416(i) (without regard to paragraph 5 thereof), but an individual shall be a “Specified Employee” only if the Bank or Company is or becomes a publicly traded company.

11. Governing Law. This Agreement shall be governed by the laws of the Commonwealth of Massachusetts but only to the extent not superseded by federal law.

12. Arbitration. Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by binding arbitration, as an alternative to civil litigation and without any trial by jury to resolve such claims, conducted by a single arbitrator mutually acceptable to the Bank and Executive, sitting in a location selected by the Bank within fifty (50) miles from the main office of the Bank, in accordance with the rules of the American Arbitration Association’s National Rules for the Resolution of Employment Disputes then in effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction.

13. Notice. For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by certified or registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below:

To the Bank	Pilgrim Bank 40 South Main Street Cohasset, MA 02025
To Executive:	Most recent address on file with the Bank

[Signature Page to Follow]

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IN WITNESS WHEREOF, this Agreement is entered into as of the date first above written.

PILGRIM BANK

By:

Name:

Title:

EXECUTIVE

Christopher G. McCourt

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EX-10.3

Exhibit 10.3

CHANGE IN CONTROL AGREEMENT

This Change in Control Agreement (this “Agreement”) is made effective as of             , 2014 (the “Effective Date”), by and between Pilgrim Bank (the “Bank”) and Joan A. MacIntyre (“Executive”). Any reference to the “Company” shall mean Pilgrim Bancshares, Inc., the stock holding company of the Bank.

WHEREAS, the Bank wishes to assure itself of the continued services of Executive as Senior Vice President of Operations of the Bank (the “Executive Position”) for the period provided in this Agreement; and

WHEREAS, in order to induce Executive to continue employment with the Bank and to provide further incentive to achieve the financial and performance objectives of the Bank, the parties desire to specify the benefits which shall be due to Executive in the event of a Change in Control (as defined below).

NOW THEREFORE, in consideration of the mutual agreements herein contained, and upon the other terms and conditions hereinafter provided, the parties hereby agree as follows:

1. Term of Agreement. The term of this Agreement shall commence as of the Effective Date and shall continue thereafter for a period of two (2) years. Commencing on the first anniversary date of this Agreement (the “Anniversary Date”) and continuing on each Anniversary Date thereafter, the term of this Agreement shall renew for an additional year such that the remaining term of this Agreement is always two (2) years provided, however, that in order for this Agreement to renew, the disinterested members of the Board of Directors of the Bank (the “Board”) must take the following actions within the time frames set forth below prior to each Anniversary Date: (i) at least sixty (60) days prior to the Anniversary Date, conduct a comprehensive performance evaluation and review of Executive for purposes of determining whether to extend this Agreement; and (ii) affirmatively approve the renewal or non-renewal of this Agreement, which decision shall be included in the minutes of the Board’s meeting. If the decision of such disinterested members of the Board is not to renew this Agreement, then the Board shall provide Executive with a written notice of non-renewal (“Non-Renewal Notice”) at least thirty (30) days and not more than sixty (60) days prior to any Anniversary Date, such that this Agreement shall terminate at the end of twenty-four (24) months following such Anniversary Date. Notwithstanding the foregoing, in the event that the Company or the Bank has entered into an agreement to effect a transaction which would be considered a Change in Control as defined below, then the term of this Agreement shall be extended and shall terminate twenty-four (24) months following the date on which the Change in Control occurs.

2. Definitions. The following words and terms shall have the meanings set forth below for purposes of this Agreement.

(a) Base Salary. Executive’s “Base Salary” for purposes of this Agreement shall mean the annual rate of base salary paid to Executive by the Bank.

(b) Change in Control. For purposes of this Agreement, the term “Change in Control” shall mean the occurrence of any of the following events:

(i) Merger: The Company or the Bank merges into or consolidates with another entity, or merges another bank or corporation into the Bank or the Company, and as a result, less than a majority of the combined voting power of the resulting corporation immediately after the merger or consolidation is held by persons who were stockholders of the Company or the Bank immediately before the merger or consolidation;

(ii) Acquisition of Significant Share Ownership: There is filed, or is required to be filed, a report on Schedule 13D or another form or schedule (other than Schedule 13G) required under Sections 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended, if the schedule discloses that the filing person or persons acting in concert has or have become the beneficial owner of 25% or more of a class of the Company’s or the Bank’s voting securities; provided, however, this clause (ii) shall not apply to beneficial ownership of the Company’s or the Bank’s voting shares held in a fiduciary capacity by an entity of which the Company directly or indirectly beneficially owns 50% or more of its outstanding voting securities;

(iii) Change in Board Composition: During any period of two consecutive years, individuals who constitute the Company’s or the Bank’s Board of Directors at the beginning of the two-year period cease for any reason to constitute at least a majority of the Company’s or the Bank’s Board of Directors; provided, however, that for purposes of this clause (iii), each director who is first elected by the board (or first nominated by the board for election by the stockholders or corporators) by a vote of at least two-thirds (2/3) of the directors who were directors at the beginning of the two-year period or who is appointed to the board as the result of a directive, supervisory agreement or order issued by the primary federal regulator of the Company or the Bank or by the Federal Deposit Insurance Corporation (“FDIC”) shall be deemed to have also been a director at the beginning of such period; or

(iv) Sale of Assets: The Company or the Bank sells to a third party all or substantially all of its assets.

(c) Good Reason. For purposes of this Agreement, “Good Reason” shall mean a termination by Executive, without Executive’s express written consent, any of the following occurs:

(i) a material reduction in Executive’s Base Salary or benefits provided to Executive (other than a reduction or elimination of Executive’s benefits under one or more benefit plans maintained by the Bank as part of a good faith, overall reduction or elimination of such plans or benefits applicable to all participants in a manner that does not discriminate against Executive (except as such discrimination may be necessary to comply with applicable law));

(ii) a material reduction in Executive’s authority, duties or responsibilities from the position and attributes associated with the Executive Position;

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(iii) a relocation of Executive’s principal place of employment by more than twenty-five (25) miles from the Bank’s main office location as of the date of this Agreement; or

(iv) a material breach of this Agreement by the Bank.

Notwithstanding the foregoing, prior to any termination of employment for Good Reason, Executive must first provide written notice to the Board within ninety (90) days following the initial existence of the condition, describing the existence of such condition, and the Bank shall thereafter have the right to remedy the condition within thirty (30) days of the date the Board received the written notice from Executive, but the Bank may waive its right to cure. If the Bank remedies the condition within such thirty (30) day cure period, then no Good Reason shall be deemed to exist with respect to such condition. If the Bank does not remedy the condition within such thirty (30) day cure period, then Executive may deliver a notice of termination for Good Reason at any time within sixty (60) days following the expiration of such cure period.

(d) Termination for Cause. Termination for Cause shall mean termination because of, in the good faith determination of the Board, Executive’s:

(i) material act of dishonesty or fraud in performing Executive’s duties on behalf of the Bank;

(ii) willful misconduct that in the judgment of the Board will likely cause economic damage to the Bank or injury to the business reputation of the Bank;

(iii) incompetence (in determining incompetence, the acts or omissions shall be measured against standards generally prevailing in the savings institutions industry);

(iv) breach of fiduciary duty involving personal profit;

(v) intentional failure to perform stated duties under this Agreement after written notice thereof from the Board;

(vi) willful violation of any law, rule or regulation (other than traffic violations or similar offenses which results only in a fine or other non-custodial penalty) that reflect adversely on the reputation of the Bank, any felony conviction, any violation of law involving moral turpitude, or any violation of a final cease-and-desist order; any violation of the policies and procedures of the Bank as outlined in the Bank’s employee handbook, which would result in termination of the Bank employees, as from time to time amended and incorporated herein by reference, or

(vii) material breach by Executive of any provision of this Agreement.

Notwithstanding the foregoing, Executive shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to Executive a notice of termination which shall include a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the disinterested members of the Board that Executive was guilty of the conduct described above and specifying the particulars of such conduct.

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3. Benefits upon Termination in Connection with a Change in Control. In the event of Executive’s involuntary termination of employment by the Bank for reasons other than Termination for Cause, or a voluntary termination of employment by Executive for Good Reason occurring on or after a Change in Control, the Bank shall pay Executive, or in the event of Executive’s subsequent death, Executive’s beneficiary or estate, as the case may be, as severance pay, a cash lump sum payment equal to two (2) times Executive’s highest rate of Base Salary paid to Executive during the current calendar year of Executive’s date of termination or either of the two (2) calendar years immediately preceding Executive’s date of termination. Such payment shall be payable within thirty (30) days following Executive’s date of termination, and will be subject to applicable withholding taxes.

In addition, the Bank will continue to provide to Executive with life insurance coverage and non-taxable medical and dental insurance coverage substantially comparable (and on substantially the same terms and conditions) to the coverage maintained by the Bank for Executive immediately prior to Executive’s termination under the same cost-sharing arrangements that apply for active employees of the Bank as of Executive’s date of termination. Such continued coverage shall cease upon the earlier of: (i) the date which is two (2) years from Executive’s date of termination or (ii) the date on which Executive becomes a full-time employee of another employer, provided Executive is entitled to the benefits that are substantially similar to the health and welfare benefits provided by the Bank. If the Bank cannot provide one or more of the benefits set forth in this paragraph because Executive is no longer an employee, applicable rules and regulations prohibit such benefits or the payment of such benefits in the manner contemplated, or it would subject the Bank to penalties, then the Bank shall pay Executive a cash lump sum payment reasonably estimated to be equal to the value of such benefits or the value of the remaining benefits at the time of such determination. Such cash payment shall be made in a lump sum within thirty (30) days after the later of Executive’s date of termination or the effective date of the rules or regulations prohibiting such benefits or subjecting the Bank to penalties.

4. 280G Cutback. Notwithstanding anything in this Agreement to the contrary, in no event shall the aggregate payments or benefits to be made or afforded to Executive under this Agreement , either as a stand-alone benefit or when aggregated with other payments to, or for the benefit of, Executive (collectively referred to as the “Change in Control Benefits”) that are contingent on a change in control (as defined under Code Section 280G), constitute an “excess parachute payment” under Code Section 280G or any successor thereto, and in order to avoid such a result, Executive’s benefits payable under this Agreement shall be reduced by the minimum amount necessary so that the Change in Control Benefits that are payable to Executive are not subject to penalties under Code Sections 280G and 4999.

5. Source of Payments. All payments provided in this Agreement shall be timely paid by check or direct deposit from the general funds of the Bank (or any successor to the Bank).

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6. Entire Agreement. This Agreement embodies the entire agreement between the Bank and Executive with respect to the matters agreed to herein. All prior agreements between the Bank and Executive with respect to the matters agreed to herein are hereby superseded and shall have no force or effect, except that this Agreement shall not affect or operate to reduce any benefit or compensation inuring to Executive of a kind elsewhere provided. No provision of this Agreement shall be interpreted to mean that Executive is subject to receiving fewer benefits than those available to Executive without reference to this Agreement.

7. No Attachment. Except as required by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation, or to execution, attachment, levy, or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to affect any such action shall be null, void, and of no effect.

8. Binding on Successors. The Bank shall require any successor or assignee, whether direct or indirect, by purchase, merger, consolidation or otherwise, to all or substantially all the business or assets of the Bank, expressly and unconditionally to assume and agree to perform the Bank’s obligations under this Agreement, in the same manner and to the same extent that the Bank would be required to perform if no such succession or assignment had taken place.

9. Modification and Waiver.

(a) This Agreement may not be modified or amended except by an instrument in writing signed by the parties hereto.

(b) No term or condition of this Agreement shall be deemed to have been waived, nor shall there be any estoppel against the enforcement of any provision of this Agreement, except by written instrument of the party charged with such waiver or estoppel. No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived.

10. Required Provisions.

(a) The Board may terminate Executive’s employment at any time, but any termination by the Bank’s Board other than termination for Cause shall not prejudice Executive’s right to compensation or other benefits under this Agreement. Executive shall have no right to receive compensation or other benefits for any period after Executive’s termination for Cause.

(b) Notwithstanding anything herein contained to the contrary, any payments to Executive by the Bank or the Company, whether pursuant to this Agreement or otherwise, are subject to and conditioned upon their compliance with Section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C. § 1828(k), and the regulations promulgated thereunder in 12 C.F.R. Part 359.

(c) Notwithstanding anything else in this Agreement to the contrary, Executive’s employment shall not be deemed to have been terminated unless and until Executive has a Separation from Service within the meaning of Code Section 409A. For purposes of this

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Agreement, a “Separation from Service” shall have occurred if the Bank and Executive reasonably anticipate that either no further services will be performed by Executive after the date of termination (whether as an employee or as an independent contractor) or the level of further services performed is less than fifty (50) percent of the average level of bona fide services in the thirty-six (36) months immediately preceding the termination. For all purposes hereunder, the definition of Separation from Service shall be interpreted consistent with Treasury Regulation Section 1.409A-1(h)(ii).

(d) Notwithstanding the foregoing, in the event Executive is a Specified Employee (as defined herein), then, solely, to the extent required to avoid penalties under Code Section 409A, Executive’s payments shall be delayed until the first day of the seventh month following Executive’s Separation from Service. A “Specified Employee” shall be interpreted to comply with Code Section 409A and shall mean a key employee within the meaning of Code Section 416(i) (without regard to paragraph 5 thereof), but an individual shall be a “Specified Employee” only if the Bank or Company is or becomes a publicly traded company.

11. Governing Law. This Agreement shall be governed by the laws of the Commonwealth of Massachusetts but only to the extent not superseded by federal law.

12. Arbitration. Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by binding arbitration, as an alternative to civil litigation and without any trial by jury to resolve such claims, conducted by a single arbitrator mutually acceptable to the Bank and Executive, sitting in a location selected by the Bank within fifty (50) miles from the main office of the Bank, in accordance with the rules of the American Arbitration Association’s National Rules for the Resolution of Employment Disputes then in effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction.

13. Notice. For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by certified or registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below:

To the Bank	Pilgrim Bank 40 South Main Street Cohasset, MA 02025
To Executive:	Most recent address on file with the Bank

[Signature Page to Follow]

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IN WITNESS WHEREOF, this Agreement is entered into as of the date first above written.

PILGRIM BANK

By:

Name:

Title:

EXECUTIVE

Joan A. MacIntyre

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EX-10.4

Exhibit 10.4

PILGRIM BANK

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

ARTICLE I

PURPOSE

The purpose of this Supplemental Executive Retirement Plan (the “Plan”) is for Pilgrim Bank (the “Bank”) to provide current tax planning opportunities as well as supplemental funds for retirement for certain key members of its management with deferred compensation. The Plan shall be effective January 1, 2014. The Plan is intended to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and the regulations promulgated thereunder. The Plan is also intended to qualify as a “top hat” plan for purposes of the Employee Retirement Income Security Act of 1974, as amended.

ARTICLE II

DEFINITIONS

For the purposes of this Plan, the following terms may have the meanings indicated, unless the context clearly indicates otherwise:

2.1 Annual Contribution. “Annual Contribution” means the amount required to be credited to the Participant’s SERP Account pursuant to Section 5.1 below.

2.2 Bank. “Bank” means Pilgrim Bank or any successor to the business thereof, and any affiliated or subsidiary corporations designated by the Board.

2.3 Beneficiary. “Beneficiary” means the person or persons (and their heirs) designated as Beneficiary by the Participant to whom the deceased Participant’s benefits are payable. If no Beneficiary is so designated, then the Participant’s spouse, if living, will be deemed the Beneficiary. If the Participant’s spouse is not living, then the children of the Participant will be deemed the Beneficiaries and will take on a per stirpes basis. If there are no living children, then the estate of the Participant will be deemed the Beneficiary.

2.4 Benefit Age. “Benefit Age” means the date set forth in the Participant’s Participation Agreement.

2.5 Board. “Board” means the Board of Directors of the Bank.

2.6 Cause. “Cause” shall have the same meaning as set forth in any employment agreement or change in control agreement between the Bank or the Company and the Participant. If the Participant is not a party to an employment agreement or change in control agreement with the Bank or the Company, then Cause means a good faith determination of the Board of the Participant’s: (i) personal dishonesty; (ii) incompetence; (iii) willful misconduct; (iv) breach of fiduciary duty involving personal profit; (v) intentional failure to perform stated duties; or (vi) willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or final cease and desist order.

2.7 Change in Control. “Change in Control” shall mean: (a) a change in the ownership of the Bank; (b) a change in the effective control of the Bank; or (c) a change in the ownership of a substantial portion of the assets of the Bank as defined in accordance with Code Section 409A. For purposes of this Section 2.7, the term “Bank” shall be defined to include the Company or any successor thereto.

(a) A change in the ownership of a corporation occurs on the date that any one person, or more than one person acting as a group (as defined in Treasury Regulation 1.409A-3(i)(5)(v)(B)), acquires ownership of stock of the Bank that, together with stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of such corporation.

(b) A change in the effective control of the Bank occurs on the date that either (i) any one person, or more than one person acting as a group (as defined in Treasury Regulation 1.409A-3(i)(5)(vi)(D)) acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Bank possessing 30 percent or more of the total voting power of the stock of the Bank, or (ii) a majority of the members of the Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election, provided that this subsection “(ii)” is inapplicable where a majority shareholder of the Bank is another corporation.

(c) A change in a substantial portion of the Bank’s assets occurs on the date that any one person or more than one person acting as a group (as defined in Treasury Regulation 1.409A-3(i)(5)(vii)(C)) acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Bank that have a total gross fair market value equal to or more than 40 percent of the total gross fair market value of (i) all of the assets of the Bank, or (ii) the value of the assets being disposed of, either of which is determined without regard to any liabilities associated with such assets. For all purposes hereunder, the definition of Change in Control shall be construed to be consistent with the requirements of Treasury Regulation 1.409A-3(i)(5), except to the extent that such regulations are superseded by subsequent guidance.

2.8 Code. “Code” means the Internal Revenue Code of 1986, as amended.

2.9 Committee. “Committee” means the Committee appointed to administer the Plan pursuant to Section 7.1 below.

2.10 Company. “Company” means Conahasset Bancorp, Inc., the stock holding company of the Bank.

2.11 Disability. “Disability” means the Participant:

(a) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death, or last for a continuous period of not less than 12 months; or

(b) by reason of any medically determinable physical or mental impairment which can be expected to result in death, or last for a continuous period of not less than 12 months, is receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Participant’s employer.

(c) is determined to be disabled by the Social Security Administration.

2.12 Discretionary Contribution. “Discretionary Contribution” means discretionary contributions made by the Bank that are credited to the Participant’s SERP Account pursuant to Section 5.2 below.

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2.13 Good Reason. “Good Reason” shall have the same meaning as set forth in any employment agreement or change in control agreement between the Bank or the Company and the Participant. If the Participant is not a party to an employment agreement or change in control agreement with the Bank or the Company, then Good Reason shall constitute any of the following circumstances if they occur without the Participant’s express written consent: (i) a material reduction in the Participant’s base salary and/or benefits not warranted by general across the board reductions due to economic necessity; (ii) a material reduction in the Participant’s authority, duties or responsibilities such that the Participant no longer holds a position with executive level responsibilities consistent with the Participant’s training and experience; or (iii) the permanent relocation of the Participant’s principal place of business to a location that is more than 30 miles from the Participant’s workplace at his initial participation in this Plan; provided that for a termination to be deemed for Good Reason, the Participant must give, within the 90 day period commencing on the initial existence of the condition(s) constituting Good Reason, written notice of the intention to terminate for Good Reason, and, upon receipt of such notice, the Bank shall have a 30 day period within which to cure such condition(s); and provided further that the Bank may waive such right to notice and opportunity to cure. In no event may facts or circumstances constituting “Good Reason” arise after the occurrence of facts or circumstances that the Bank relies upon, in whole or in material part, in terminating the Participant for Cause.

2.14 Participant. “Participant” means an executive officer who is designated by the Board to participate in the Plan pursuant to Section 3.1 below.

2.15 Participation Agreement. “Participation Agreement” means a written agreement between the Bank and the Participant, pursuant to which the Bank agrees to provide the Participant with benefits described in the Plan and the Participation Agreement. Each Participation Agreement shall contain such information, terms and conditions as the Committee in its discretion may specify, including without limitation the following: (i) the effective date of the Participant’s participation in the Plan; (ii) the benefits in which the Participant is entitled to under the Plan and the form in which such benefits are to be paid; and (iii) any other provisions which supplement the terms and conditions contained in the Plan and which are not inconsistent with the terms and conditions of the Plan. Each Participant shall be required to enter into a Participation Agreement within 30 days of becoming eligible to participate. The Participation Agreement is attached to the Plan as Exhibit A.

2.16 Plan Year. “Plan Year” means the period from January 1 to December 31.

2.17 Separation from Service. “Separation from Service” or “Separates from Service” means the Participant’s retirement or other termination of employment with the Bank within the meaning of Code Section 409A. No Separation from Service shall be deemed to occur due to military leave, sick leave or other bona fide leave of absence if the period of such leave does not exceed six (6) months or, if longer, so long as the Participant’s right to reemployment is provided by law or contract. If the leave exceeds six (6) months and the Participant’s right to reemployment is not provided by law or by contract, then the Participant shall have a Separation from Service on the first date immediately following such six-month period.

Whether a Separation from Service has occurred is determined based on whether the facts and circumstances indicate that the Bank and the Participant reasonably anticipated that no further services would be performed after a certain date or that the level of bona fide services the employee would perform after such date (whether as an employee or as an independent contractor) would permanently decrease to an amount less than 50% of the average level of bona fide services performed over the immediately preceding 36 months (or such lesser period of time in which the Participant performed services for the Bank). The determination of whether a Participant has had a Separation from Service shall be made by applying the presumptions set forth in the Treasury Regulations under Code Section 409A.

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2.18 SERP Account. “SERP Account” means an account to which the Bank shall credit all contributions allocated thereto. Each Participant’s SERP Account shall be utilized solely as a device for the determination and measurement of the amounts to be paid to the Participant pursuant to the Plan. A Participant’s SERP Account shall not constitute or be treated as a trust fund of any kind.

2.19 SERP Account Balance. “SERP Account Balance” means the balance of the Participant’s SERP Account as of the applicable distribution date.

2.20 Specified Employee. “Specified Employee” means, in the event the Bank or any corporate parent is or becomes publicly traded, a “Key Employee” as such term is defined in Code Section 416(i) without regard to paragraph 5 thereof.

ARTICLE III

ELIGIBILITY AND VESTING

3.1 Eligibility. The Plan is available to a select group of management and/or highly compensated employees of the Bank, determined from time to time by the Committee. Each employee who is eligible to participate in the Plan shall enroll in the Plan by entering into a Participation Agreement and completing all election forms and other forms as the Committee may request. An eligible employee’s participation in the Plan shall commence as of the date specified in the Participation Agreement.

3.2 Vesting. The Participant’s SERP Account Balance shall be subject to the vesting schedule set forth in his or her Participation Agreement. Notwithstanding the vesting schedule, the Participant’s SERP Account Balance shall automatically become 100% vested upon the Participant’s (i) attainment of the Benefit Age, (ii) involuntary termination without Cause, (iii) death; (iv) Disability; or (v) involuntary termination without Cause or voluntary resignation for Good Reason within two years of a Change in Control.

ARTICLE IV

ACCOUNT

4.1 SERP Account. The Bank shall maintain for each Participant a SERP Account to which it shall credit all amounts allocated thereto in accordance with Article V of the Plan. Each Participant’s SERP Account shall be adjusted no less often than annually to reflect the credits made to the SERP Account and the earnings thereon pursuant to Section 5.3 of the Plan. Such adjustments shall be made as long any amount remains credited to the Participant’s SERP Account. The amounts allocated and adjustments made shall comprise of the SERP Account at any time.

4.2 Unsecured Creditor. The Participant’s interest in his or her SERP Account is limited to the right to receive payments under the Plan, and the Participant’s position is that of a general unsecured creditor of the Bank. Notwithstanding the foregoing, the Committee, in its discretion, may elect to establish a fund containing assets equal to the amounts credited to the Participant’s SERP Account, and may elect in its discretion to designate a trustee and/or custodian to hold the fund in trust, provided, however that the fund shall remain a general asset of the Bank, subject to the rights of creditors of the Bank.

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ARTICLE V

CONTRIBUTIONS

5.1 Annual Contributions. On the last day of each Plan Year, the Bank shall credit the Participant’s SERP Account with the Annual Contribution that is specified in the Participant’s Participation Agreement. Such Annual Contribution shall only be made if the Participant is employed with the Bank as of the last day of the Plan Year.

5.2 Discretionary Contributions. The Bank may, but is not obligated to, make Discretionary Contributions to the Participant’s SERP Account from time to time. Discretionary Contributions shall be credited at such times and in such amounts as recommended by the Committee and approved by the Board in its sole discretion.

5.3 Earnings or Investment. As of the last day of each Plan Year, the Bank shall credit each Participant’s SERP Account (and shall credit the SERP Account of any Participant with interest equal to a rate established by the Committee on the first day of the calendar year, compounded annually. The interest rate for the initial Plan Year shall be based on the Five Year Treasury Note (as reported by the U.S. Department of the Treasury), plus 100 basis points, and shall adjust annually as of the first business day of each Plan Year thereafter. In lieu of the foregoing, the Participant shall have the right to elect in his or her Participation Agreement for the SERP Account Balance to be invested in an alternative investment option made available by the Compensation Committee.

ARTICLE VI

DISTRIBUTION OF BENEFITS

6.1 Attainment of Benefit Age. When the Participant attains the Benefit Age set forth in the Participant’s Participation Agreement, the Participant shall be entitled to receive his or her entire SERP Account Balance. The Participant’s SERP Account Balance, determined as of the date of the Participant’s Benefit Age, shall be paid to the Participant in a cash lump sum unless the Participant has elected another form of benefit in the Participation Agreement. Such payment shall commence no later than 30 days after the Participant attains his or her Benefit Age.

6.2 Separation of Service Prior to Attaining the Benefit Age. If the Participant has a Separation from Service other than due to: (i) death; (ii) Disability; (iii) Cause; or (iv) a Change in Control pursuant to Section 6.5 below prior to attaining the Participant’s Benefit Age, the Participant shall be entitled to a benefit equal to his or her vested SERP Account Balance. Such amount shall be paid no later than 30 days after the Participant’s Separation from Service date, subject to Section 6.7 below. The vested SERP Account Balance shall be determined as of the Participant’s Separation from Service date and shall be payable in a cash lump sum unless the Participant elects another form of payment in his Participation Agreement.

6.3 Death. Upon the death of a Participant, the Bank shall pay to the Participant’s Beneficiary an amount determined as follows:

(a) If the Participant dies while employed with the Bank, the Participant’s Beneficiary shall be entitled to his or her entire SERP Account Balance. The SERP Account Balance shall be determined as of the Participant’s date of death and shall be paid in a cash lump sum to the Participant’s Beneficiary no later than 30 days after the Participant’s date of death.

(b) If the Participant dies following his or her Separation from Service, but prior to receiving his or her entire SERP Account Balance, the Participant’s Beneficiary shall be paid the outstanding SERP Account Balance in a cash lump sum within 30 days after the Participant’s date of death.

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6.4 Disability. In the event of the Participant’s Separation from Service with the Bank due to Disability, the Bank shall pay the Participant his or her entire SERP Account Balance. The vested SERP Account Balance shall be determined at the time of the Disability determination and shall be payable in a cash lump sum within 30 days after the Participant’s Separation from Service due to Disability.

6.5 Change in Control. In the event the Participant has an involuntary termination without Cause or resigns for Good Reason (provided such event constitutes a Separation from Service) within 24 months following a Change in Control, the Participant shall be entitled to a payment of his or her vested SERP Account Balance, which shall become fully vested (if not already fully vested). In addition, the Participant’s SERP Account Balance shall be increased by three (3) additional Annual Contributions (or the number of additional Annual Contributions that would have been made prior to the attainment of the Participant’s Benefit Age, if less). Any payment under this Section 6.5 will be paid in a cash lump sum no later than 30 days after the Participant’s Separation from Service date, subject to Section 6.7 below.

6.6 Termination for Cause. If the Participant is terminated for Cause, all benefits under the Plan shall be forfeited (even if vested) and the Participant’s participation in this Plan shall become null and void.

6.7 Delayed Distributions for Specified Employees. Notwithstanding the foregoing, if a Participant is a Specified Employee and payment of his or her SERP Account Balance is triggered due to Separation from Service (other than due to Disability or death), then solely to the extent necessary to avoid penalties under Code Section 409A, no payment shall be made during the first six (6) months following the Participant’s Separation from Service. Rather, any payment which would otherwise be paid to the Participant during such period shall be accumulated and paid to the Participant in a lump sum on the first day of the seventh month following such Separation from Service. All subsequent payments of the Participant’s SERP Account Balance shall be paid in the manner specified in the Plan.

6.8 Modification of Time and Form of Payment. In the event a Participant desires to modify the time or form of payment of his or her SERP Account Balance, the Participant may do so on a written form provided by the Bank, provided that:

(a) the subsequent election shall not be effective for at least 12 months after the date on which the subsequent election is made;

(b) except for payments upon the Participant’s death, Disability, the first of a stream of payments for which the subsequent election is made shall be deferred for a period of not less than five (5) years from the date on which such payment would otherwise have been made; and

(c) for payments scheduled to be made on a specified date or to commence under a fixed schedule, the subsequent election must be made at least 12 months before the date of the first scheduled payment.

6.9 Code Section 409A. The Plan shall be interpreted to comply with or be exempt from Code Section 409A, and all provisions of the Plan shall be construed in a manner consistent with the requirements for avoiding taxes or penalties under Code Section 409A. Each payment that is payable pursuant to this Plan is intended to constitute a “separate payment” for purposes of Treasury Regulation Section 1.409A-2(b)(ii).

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ARTICLE VII

ADMINISTRATION

7.1 Committee; Duties. This Plan shall be administered by the Committee. The Committee shall have the authority to make, amend, interpret, and enforce all appropriate rules and regulations for the administration of this Plan and decide or resolve any and all questions, including interpretations of this Plan, as may arise in connection with the Plan. A majority vote of the Committee members shall control any decision.

7.2 Agents. The Committee may, from time to time, employ other agents and delegate to them such administrative duties as it sees fit, and may from time to time consult with counsel who may be counsel to the Bank.

7.3 Binding Effect of Decisions. The decision or action of the Committee in respect to any question arising out of or in connection with the administration, interpretation and application of the Plan and the rules of regulations promulgated hereunder shall be final, conclusive and binding upon all persons having any interest in the Plan.

7.4 Indemnity of Committee. The Bank shall indemnify and hold harmless the members of the Committee against any and all claims, loss, damage, expense or liability arising from any action or failure to act with respect to this Plan, except in the case of gross negligence or willful misconduct.

ARTICLE VIII

CLAIMS PROCEDURE

8.1 Claim. Any person claiming a benefit, requesting an interpretation or ruling under the Plan, or requesting information under the Plan shall present the request in writing to the Committee, which shall respond in writing within 30 days.

8.2 Denial of Claim. If the claim or request is denied, the written notice of denial shall state:

(a) The reasons for denial, with specific reference to the Plan provisions on which the denial is based.

(b) A description of any additional material or information required and an explanation of why it is necessary.

(c) An explanation of the Plan’s claim review procedure.

8.3 Review of Claim. Any person whose claim or request is denied or who has not received a response within 30 days may request review by notice given in writing to the Committee. The claim or request shall be reviewed by the Committee who may, but shall not be required to, grant the claimant a hearing. On review, the claimant may have representation, examine pertinent documents, and submit issues and comments in writing.

8.4 Final Decision. The decision on review shall normally be made within 60 days. If an extension of time is required for a hearing or other special circumstances, the claimant shall be notified and the time limit shall be 120 days. The decision shall be in writing and shall state the reasons and the relevant Plan provisions.

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8.5 Arbitration. If a claimant continues to dispute the benefit denial based upon completed performance of this Plan and the Participation Agreement or the meaning and effect of the terms and conditions thereof, then the claimant may submit the dispute to mediation, administered by the American Arbitration Association (“AAA”) (or a mediator selected by the parties) in accordance with the AAA’s Commercial Mediation Rules. If mediation is not successful in resolving the dispute, it shall be settled by arbitration administered by the AAA under its Commercial Arbitration Rules, and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.

ARTICLE IX

AMENDMENT AND TERMINATION OF PLAN

9.1 Amendment. Notwithstanding anything herein contained to the contrary, the Board reserves the exclusive right to freeze or to amend the Plan at any time, provided that no amendment to the Plan shall be effective to decrease or to restrict the amount accrued to the date of such amendment.

9.2 Complete Termination. Subject to the requirements of Code Section 409A, in the event of complete termination of the Plan, the Plan shall cease to operate and the Bank shall pay out to the Participant his or her entire SERP Account Balance (including the unvested portion) as of the date of termination of the Plan. Such complete termination of the Plan shall occur only under the following circumstances and conditions:

(a) The Board may terminate the Plan within 12 months of a corporate dissolution taxed under Code Section 331, or with approval of a bankruptcy court pursuant to 11 U.S.C. §503(b)(1)(A), provided that the amounts deferred under the Plan are included in the Participant’s gross income in the latest of: (i) the calendar year in which the Plan terminates; (ii) the calendar year in which the amount is no longer subject to a substantial risk of forfeiture; or (iii) the first calendar year in which the payment is administratively practicable.

(b) The Board may terminate the Plan by irrevocable action within the 30 days preceding, or 12 months following, a Change in Control, provided that the Plan shall only be treated as terminated if all substantially similar arrangements sponsored by the Bank are terminated so that the Participant and all participants under substantially similar arrangements are required to receive all amounts of compensation deferred under the terminated arrangements within 12 months of the date of the irrevocable termination of the arrangements. For these purposes, “Change in Control” shall be defined in accordance with the Treasury Regulations under Code Section 409A.

(c) The Board may terminate the Plan provided that: (i) the termination and liquidation does not occur proximate to a downturn in the financial health of the Bank; (ii) all arrangements sponsored by the Bank that would be aggregated with this Plan under Treasury Regulations Section 1.409A-1(c) if the Participant covered by this Plan was also covered by any of those other arrangements are also terminated; (iii) no payments other than payments that would be payable under the terms of the arrangement if the termination had not occurred are made within 12 months of the termination of the arrangement; (iv) all payments are made within 24 months of the termination of the arrangements; and (v) the Bank does not adopt a new arrangement that would be aggregated with any terminated arrangement under Treasury Regulations Section 1.409A-1(c) if the Participant participated in both arrangements, at any time within three years following the date of termination of the arrangement.

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ARTICLE X

MISCELLANEOUS

10.1 Unfunded Plan. This Plan is intended to be an unfunded plan maintained primarily to provide deferred compensation benefits for a select group of management or highly compensated employees. This Plan is not intended to create an investment contract, but to provide tax planning opportunities and retirement benefits to eligible individuals who have elected to participate in the Plan. Participants are select members of management who, by virtue of their position with the Bank, are uniquely informed as to the Bank’s operations and have the ability to materially affect the Bank’s profitability and operations.

10.2 Trust Fund. The Bank shall be responsible for the payment of all benefits provided under the Plan. At its discretion, the Bank may establish one or more rabbi trusts, with such trustees as the Board may approve, for the purpose of providing for the payment of such benefits. Such rabbi trust or trusts may be irrevocable, but the assets thereof shall be subject to the claims of the Bank’s creditors. To the extent any benefits provided under the Plan are actually paid from any such trust, the Bank shall have no further obligation with respect thereto, but to the extent not so paid, such benefits shall remain the obligation of, and shall be paid by, the Bank.

10.3 Payment to Participant, Legal Representative or Beneficiary. Any payment to any Participant or the legal representative, Beneficiary, or to any guardian or committee appointed for such Participant or Beneficiary in accordance with the provisions hereof, shall, to the extent thereof, be in full satisfaction of all claims hereunder against the Bank, which may require the Participant, legal representative, Beneficiary, guardian or committee, as a condition precedent to such payment, to execute a receipt and release thereof in such form as shall be determined by the Bank.

10.4 Nonassignability. Neither a Participant nor any other person shall have any right to commute, sell, assign, transfer, hypothecate or convey in advance of actual receipt the amounts, if any, payable hereunder, or any part thereof, which are, and all rights to which are, expressly declared to be unassignable and nontransferable. No part of the amounts payable shall, prior to actual payment, be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, nor be transferable by operation of law in the event of a Participant’s or any other person’s bankruptcy or insolvency.

10.5 Validity. In case any provision of this Plan shall be held illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Plan shall be construed and enforced as if such illegal and invalid provision had never been inserted herein.

10.6 Notice. Any notice or filing required or permitted to be given to the Committee under the Plan shall be sufficient if in writing and hand delivered, or sent by registered or certified mail, to any member of the Committee or the Secretary of the Bank. Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification.

10.7 Successors. The provisions of this Plan shall bind and inure to the benefit of the Bank and its successors and assigns. The term “successors” as used herein shall include any corporate or other business entity which shall, whether by merger, consolidation, purchase or otherwise acquire all or substantially all of the business and assets of the Bank, and successors of any such corporation or other business entity.

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10.8 Payment of Employment and Code Section 409A Taxes. Any distribution under this Plan shall be reduced by the amount of any taxes required to be withheld from such distribution. This Plan shall permit the acceleration of the time or schedule of a payment to pay employment related taxes as permitted under Treasury Regulation Section 1.409A-3(j) or to pay any taxes that may become due at any time that the arrangement fails to meet the requirements of Code Section 409A and the regulations and other guidance promulgated thereunder. In the latter case, such payments shall not exceed the amount required to be included in income as the result of the failure to comply with the requirements of Code Section 409A.

10.9 Acceleration of Payments. Except as specifically permitted herein or in other sections of this Plan, no acceleration of the time or schedule of any payment may be made hereunder. Notwithstanding the foregoing, payments may be accelerated hereunder by the Bank, in accordance with the provisions of Treasury Regulation Section 1.409A-3(j)(4) and any subsequent guidance issued by the United States Department of the Treasury. Accordingly, payments may be accelerated, in accordance with requirements and conditions of the Treasury Regulations (or subsequent guidance) in the following circumstances: (i) as a result of certain domestic relations orders; (ii) in compliance with ethics agreements with the federal government; (iii) in compliance with ethics laws or conflicts of interest laws; (iv) in limited cash-outs (but not in excess of the limit under Code Section 402(g)(1)(B)); (v) to apply certain offsets in satisfaction of a debt of the Participant to the Bank; (vi) in satisfaction of certain bona fide disputes between the Participant and the Bank; or (vii) for any other purpose set forth in the Treasury Regulations and subsequent guidance.

10.10 12 U.S.C. § 1828(k). Any payments made to the Participant pursuant to this Plan or otherwise are subject to and conditioned upon compliance with 12 U.S.C. § 1828(k) and 12 C.F.R. Part 359 Golden Parachute and Indemnification Payments or any other rules and regulations promulgated thereunder.

10.11 Governing Law. The Plan is established under, and will be construed according to, the laws of the Commonwealth of Massachusetts, to the extent such laws are not preempted by the ERISA or the Code and regulations published thereunder.

10.12 Non-Competition and Non-Solicitation. In the event the Participant has a vested SERP Account Balance under this Plan, the benefits provided to the Participant under this Plan are specifically conditioned on the Participant’s covenant that, for a period of one (1) year following the Participant’s Separation from Service with the Bank, the Participant will not, without the written consent of the Bank, either directly or indirectly:

(a) solicit, offer employment to, or take any other action intended (or that a reasonable person acting in like circumstances would expect) to have the effect of causing any officer or employee of the Bank, or any of its respective subsidiaries or affiliates, to terminate his employment and accept employment or become affiliated with, or provide services for compensation in any capacity whatsoever to, any business whatsoever that competes with the business of the Bank, or any of their direct or indirect subsidiaries or affiliates, that has headquarters or offices within 25 miles of any location(s) in which the Bank has business operations or has filed an application for regulatory approval to establish an office (the “Restricted Territory”);

(b) become an officer, employee, consultant, director, independent contractor, agent, joint venturer, partner or trustee of any savings bank, savings and loan association, savings and loan holding company, credit union, bank or bank holding company, insurance company or agency, any mortgage or loan broker or any other entity that competes with the business of the Bank or any of

10

their direct or indirect subsidiaries or affiliates, that: (i) has headquarters within the Restricted Territory or (ii) has one or more offices, but is not headquartered, within the Restricted Territory, but in the latter case, only if Participant would be employed, conduct business or have other responsibilities or duties within the Restricted Territory; or

(c) solicit, provide any information, advice or recommendation or take any other action intended (or that a reasonable person acting in like circumstances would expect) to have the effect of causing any customer of the Bank to terminate an existing business or commercial relationship with the Bank.

In the event that the Participant violates any provision of this Section 10.12, all benefits payable to the Participant hereunder shall cease and any benefits previously paid shall be reimbursed to the Bank within 30 days of Bank’s notification to the Participant that this provision has been violated. Notwithstanding anything in this Section 10.12 to the contrary, in the event of the Participant’s termination of employment following a Change in Control, the Participant shall not be subject to the requirements of Sections 10.12(a), (b) or (c) above.

ARTICLE XI

EXECUTION

This Plan sets forth the entire understanding of the parties hereto with respect to the supplemental executive retirement benefits to be provided by the Bank, and any previous agreements or understandings between the parties hereto regarding the subject matter hereof are superseded by this Plan.

[Signature Page to Follow]

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IN WITNESS WHEREOF, the Bank, acting through its authorized officer, has adopted this Plan.

	PILGRIM BANK
	By:
Date

12

Exhibit A

Supplemental Executive Retirement Plan

Participation Agreement

            , 2014

I,                     , and Pilgrim Bank hereby agree, for good and valuable consideration, the value of which is hereby acknowledged, that I shall participate in the Supplemental Executive Retirement Plan (“Plan”) established as of January 1, 2014, by Pilgrim Bank, as such Plan may now exist or hereafter be modified, and do further agree to the terms and conditions thereof.

I understand that I must execute this Supplemental Executive Retirement Plan Participation Agreement (“Participation Agreement”) as well as notify the Committee of such execution in order to participate in the Plan. The provisions of the Plan are incorporated herein by reference. In the event of an inconsistency between the terms of this Participation Agreement and the Plan, the terms of the Plan shall control. Any elections that I may make in this Participation Agreement must be made on my initial entry into the Plan.

The following provisions relate to a determination of my Account Balance under the Plan.

Benefit Age. My Benefit Age is age     .

Annual Contribution. A fixed      percent of my annual rate Base Salary (in effect as of the last day of the Plan Year) will be contributed by the Bank to my SERP Account.

Discretionary Contribution. In the sole discretion of the Board, a Discretionary Contribution may be allocated to my SERP Account from time to time.

Vesting Rate. At the completion of      Years of Service from the beginning of the Plan Year in which I am eligible to participate, I will be 100% vested in my SERP Account Balance.

Distribution Upon Attainment of Benefit Age. I understand that within 30 days after attainment of my Benefit Age, I shall be entitled to my SERP Account Balance, calculated in accordance with all relevant provisions of the Plan. My SERP Account Balance will be paid in a cash lump sum payment unless I elect otherwise by checking the box below.

¨ In lieu of a lump sum payment, I elect Annual Installments for     Years (not to exceed 10 years)

Separation from Service Prior to Benefit Age. If I have a vested SERP Account Balance at the time of my voluntary or involuntary Separation from Service without Cause (as defined in the Plan) prior to attainment of my Benefit Age (other than due to Death or Disability or a Change in Control pursuant to Section 6.5 of the Plan), I shall be entitled to the vested portion of my SERP Account Balance, calculated in accordance with all relevant provisions of the Plan. My SERP Account Balance will be paid within 30 days after my Separation from Service in a cash lump sum payment unless I elect otherwise by checking the box below.

¨ In lieu of a lump sum payment, I elect Annual Installments for     Years (not to exceed 10 years)

Termination for Cause. I understand that if I have a Termination for Cause, my entire SERP Account Balance under this Plan shall be forfeited.

Death Benefit. In the event of my death prior to Separation from Service with the Bank, my Beneficiary shall be entitled to my entire SERP Account Balance, calculated in accordance with the Plan and payable in a lump sum payment within 30 days after my death.

Change in Control Occurs Before Separation from Service. I understand that if there is a Change in Control and within 24 months thereafter I have an involuntary Separation from Service or resign for Good Reason, I will be entitled to my entire SERP Account Balance. In addition, my SERP Account Balance will be increased by three (3) additional Annual Contributions (or the number of additional Annual Contributions that would have been made prior to the attainment of my Benefit Age, if less). My SERP Account Balance shall be paid within 30 days after my Separation from Service) in a cash lump sum payment. I understand that if there is a Change in Control and I voluntarily terminate employment (other than for Good Reason), I will be entitled only to the vested portion of my SERP Account Balance, calculated without regard to the Change in Control.

Disability While Employed. I understand that in the event of my Disability while employed with the Bank, I will be entitled my entire SERP Account Balance calculated as set forth in the Plan. My Disability Benefit will be paid in a cash lump sum payment within 30 days after my Separation from Service due to Disability.

Notwithstanding anything in this Participation Agreement to the contrary, if I am a “Specified Employee” (as defined in the Plan) at the time of my Separation from Service (for reasons other than death or Disability), my SERP Account Balance hereunder shall be held by the Bank and distributed to me commencing on the first day of the seventh month following my Separation from Service pursuant to Section 6.7 of the Plan.

This Participation Agreement shall become effective upon execution below by me as the Participant and by a duly authorized officer of the Bank

Dated this      day of                     , 2014.

EXECUTIVE	PILGRIM BANK
	By:
		Duly Authorized Officer of the Bank

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PART II: BENEFICIARY DESIGNATION

In accordance with the terms of the Plan, I hereby designate the following Beneficiary(ies) to receive any death benefits under the Agreement:

PRIMARY BENEFICIARY:

Name:	% of Benefit:
Name:	% of Benefit:
Name:	% of Benefit:
SECONDARY BENEFICIARY (if all Primary Beneficiaries pre-decease the Participant):
Name:	% of Benefit:
Name:	% of Benefit:
Name:	% of Benefit:

This Beneficiary Designation hereby revokes any prior Beneficiary Designation which may have been in effect and this Beneficiary Designation is revocable.

Date Participant’s Signature

3

EX-10.5

Exhibit 10.5

PILGRIM BANK

EXECUTIVE ANNUAL INCENTIVE PLAN

ARTICLE I

Establishment, Purpose and Duration

1.1 Establishment. This Executive Annual Incentive Plan (the “Plan”) is adopted by Pilgrim Bank (the “Bank”), effective as of              , 2014.

1.2 Purpose. The objectives of the Plan are to optimize the profitability and growth of the Bank (including its affiliates) through incentives consistent with the Bank’s goals in order to link and align the personal interests of the Participants with the incentive for individual and overall Bank performance. This Plan is further intended to provide flexibility to the Bank in its ability to motivate, attract and retain the services of Participants who make significant contributions to the Bank’s success and to allow Participants to share in the success of the Bank.

1.3 Duration of this Plan. This Plan shall commence on the Effective Date, and shall remain in effect until terminated, modified or amended in accordance with Section 3.1 of the Plan.

ARTICLE II

Definitions

Definitions. Whenever used in this Plan, the following words and phrases shall have the meanings specified:

1.1 “Base Salary” means the Participant’s annual rate of base salary paid during each calendar year, excluding bonuses and other forms of variable income, fringe benefits, reimbursements, etc.

1.2 “Bonus Award” means an annual bonus paid as a cash lump sum under the Plan.

1.3 “Committee” means the Compensation Committee of the Bank’s Board of Directors.

1.4 “Eligible Employee” means employees of the Bank who are selected by the Committee, in its sole discretion, to participate in this Plan. Being selected to participate in this Plan for one Plan Year does not guarantee selection for participation in the Plan for any other Plan Year.

1.5 “Plan Year” means the Bank’s fiscal year, which is the calendar year.

1.6 “Participant” means an Eligible Employee who has been notified by the Committee that he or she has been selected to participate in this Plan for the current Plan Year.

ARTICLE II

Annual Cash Bonuses

2.1 Bonus Award

(a) No later than 90 days after the commencement of each Plan Year, the Committee shall set performance objectives pursuant to Section 2.2 for each Participant in writing in an Award Agreement, which shall be provided to each Participant and included as an exhibit to the Plan. If the performance objectives for the Participant are accomplished, the Participant shall receive a Bonus Award under the Plan equal to a designated percentage of the Participant’s Base Salary, as determined by the Committee in its sole discretion and set forth in the Participant’s Award Agreement.

(b) In addition to the attainment of the performance objectives set forth by the Committee for the Participant in the Award Agreement, payment of the Bonus Award is also contingent on the Participant’s overall performance level being “at expectation” as determined by the Committee. The Committee shall have the final authority to determine whether any Participant has satisfied these requirements.

(c) If an Eligible Employee becomes a Participant at any time after the beginning of a Plan Year, the Bonus Award payable to that Participant shall be pro-rated, such that, the percentage of Base Salary that constitutes the Bonus Award for that Plan Year shall be multiplied by a fraction, where the numerator is the number of full calendar months that the individual was a Participant during the Plan Year and the denominator is 12.

2.2 Performance Objectives.

(a) Payment of Bonus Awards in any Plan Year is contingent upon the performance objectives specified by the Committee for any Participant being met by the Bank and/or Participant. The specific performance objectives are determined annually by the Committee and are subject to change by the Committee, but generally include objective performance targets focused on financial performance, growth, asset quality, and risk management, including, but not limited to, return on average assets, net income margin, return on equity, loan production, asset quality and subjective, discretionary performance targets, such as particular qualitative factors for each Participant, based on his or her duties for the Bank.

(b) Each performance objective shall specify levels of achievement of goals ranging as follows:

(i) Threshold Level: The level for minimum performance deemed worthy of a Bonus Award.

(ii) Target Level: The level for typical, expected performance.

(iii) Maximum Level. The level for outstanding performance.

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(c) Each objective will be weighted based on priority as a percentage of the total Bonus Award payable to the Participant. The weight of each performance objective attributable to a Participant shall be set forth in his or her Award Agreement.

2.3 Termination of Employment. Unless otherwise determined by the Committee, a Participant who is not employed as of the payout date for his or her Bonus Award shall forfeit the Bonus Award.

2.4 Time of Payout. No later than two and one half (2  ¹/₂) months after the close of the Plan Year (i.e., by the March 15 that immediately follows the end of the Plan Year for which the performance is measured), the Bonus Award will be paid to the Participant in a cash lump sum, through regular payroll practices, including all applicable withholdings. Bonus Awards under the Plan are intended to be exempt from Section 409A of the Internal Revenue Code under the “short term deferral rule” set forth in Treasury Regulations Section 1.409A-1(b)(4).

ARTICLE III

Amendments and Termination

3.1 Right to Amend or Terminate. The Committee may amend or terminate this Plan at any time without the consent of any Participants, provided, however, that the Committee may not reduce the amount of the Bonus Award already earned by any Participant in any Plan Year without the Participant’s consent.

ARTICLE IV

Miscellaneous

4.1 No Guarantee of Employment. This Plan is not an employment policy or contract. It does not give any Participant the right to remain an employee of the Bank, nor does it interfere with the Bank’s right to discharge the Participant. It also does not interfere with the Participant’s right to terminate employment at any time.

4.2 Non-Transferability. Bonus Awards under this Plan cannot be sold, transferred, assigned, pledged, attached, or encumbered in any manner.

4.3 Applicable Law. The Plan and all rights hereunder will be governed by the laws of the Commonwealth of Massachusetts, except to the extent preempted by the laws of the United States of America.

4.4 Entire Agreement. This Plan constitutes the entire agreement between the Bank and each Participant as to the subject matter hereof. No rights are granted to the Participant by virtue of this Plan other than those specifically set forth herein.

4.5 Administration. The Committee shall have powers which are necessary to administer this Plan, including but not limited to:

(a) Interpreting the provisions of the Plan;

(b) Determine the persons eligible to participate in the Plan;

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(c) Maintaining a record of benefit payments; and

(d) Establishing rules and prescribing any forms necessary or desirable to administer the Plan.

[Signature Page to Follow]

4

IN WITNESS WHEREOF, the Bank has executed this Plan on the date set forth below.

		PILGRIM BANK
	By:
Date

5

PILGRIM BANK

EXECUTIVE ANNUAL INCENTIVE PLAN

AWARD AGREEMENT

Name:

Plan Year:

Plan Year Base Salary:

				Award as a % Base Salary
Performance Objective	Weight			Below Threshold			Threshold	Target	Maximum & Above
					0	%
					0	%
					0	%
					0	%
					0	%
Totals		100	%		0	%

EX-10.6

Exhibit 10.6

PILGRIM BANK

EMPLOYEE STOCK OWNERSHIP PLAN

(adopted effective January 1, 2014)

PILGRIM BANK

EMPLOYEE STOCK OWNERSHIP PLAN

This Employee Stock Ownership Plan (the “Plan”) has been executed, effective as of the 1^st day of January, 2014, by Pilgrim Bank.

WITNESSETH THAT

WHEREAS, the board of directors of the Bank has resolved to adopt an employee stock ownership plan for eligible employees of the Bank and subsidiaries of the Bank, if any, in accordance with the terms and conditions set forth herein;

NOW, THEREFORE, the Bank hereby adopts the following Plan setting forth the terms and conditions pertaining to contributions by the Employer and the payment of benefits to Participants and Beneficiaries.

IN WITNESS WHEREOF, the Bank has adopted this Plan and caused this instrument to be executed by its duly authorized officers as of the above date.

ATTEST:	PILGRIM BANK
	By:
Secretary		President and Chief Executive Officer

CONTENTS

		Page No.
Section 1.	Plan Identity.		1
1.1	Name		1
1.2	Purpose		1
1.3	Effective Date		1
1.4	Fiscal Period		1
1.5	Single Plan for All Employers		1
1.6	Interpretation of Provisions		1
Section 2.	Definitions.		1
Section 3.	Eligibility for Participation.		10
3.1	Initial Eligibility		10
3.2	Definition of Eligibility Year		11
3.3	Terminated Employees		11
3.4	Certain Employees Ineligible		11
3.5	Participation and Reparticipation		11
3.6	Omission of Eligible Employee		12
3.7	Inclusion of Ineligible Employee		12
Section 4.	Contributions and Credits.		12
4.1	Discretionary Contributions		12
4.2	Contributions for Exempt Loans		12
4.3	Conditions as to Contributions		13
4.4	Rollover Contributions		13
Section 5.	Limitations on Contributions and Allocations.		13
5.1	Limitation on Annual Additions		13
5.2	Effect of Limitations		15
5.3	Limitations as to Certain Participants		16
5.4	Erroneous Allocations		16
Section 6.	Trust Fund and Its Investment.		16
6.1	Creation of Trust Fund		16
6.2	Stock Fund and Investment Fund		17
6.3	Acquisition of Stock		17
6.4	Participants’ Option to Diversify		18
Section 7.	Voting Rights and Dividends on Stock.		19
7.1	Voting and Tendering of Stock		19
7.2	Application of Dividends		19

Section 8.	Adjustments to Accounts.	21
8.1	ESOP Allocations	21
8.2	Charges to Accounts	22
8.3	Stock Fund Account	22
8.4	Investment Fund Account	22
8.5	Adjustment to Value of Trust Fund	22
8.6	Participant Statements	23
Section 9.	Vesting of Participants’ Interests.	23
9.1	Vesting in Accounts	23
9.2	Computation of Vesting Years	23
9.3	Full Vesting Upon Certain Events	24
9.4	Full Vesting Upon Plan Termination	25
9.5	Forfeiture, Repayment, and Restoral	25
9.6	Accounting for Forfeitures	26
9.7	Vesting and Nonforfeitability	26
Section 10.	Payment of Benefits.	26
10.1	Benefits for Participants	26
10.2	Time for Distribution	27
10.3	Marital Status	29
10.4	Delay in Benefit Determination	29
10.5	Accounting for Benefit Payments	29
10.6	Options to Receive Stock	29
10.7	Restrictions on Disposition of Stock	30
10.8	Continuing Loan Provisions; Creations of Protections and Rights	30
10.9	Direct Rollover of Eligible Distribution	30
10.10	Waiver of 30-Day Period After Notice of Distribution	31
Section 11.	Rules Governing Benefit Claims and Review of Appeals	32
11.1	Claim for Benefits	32
11.2	Notification by Committee	32
11.3	Claims Review Procedure	32
Section 12.	The Committee and its Functions.	33
12.1	Authority of Committee	33
12.2	Identity of Committee	33
12.3	Duties of Committee	33
12.4	Valuation of Stock	33
12.5	Compliance with ERISA	34
12.6	Action by Committee	34
12.7	Execution of Documents	34
12.8	Adoption of Rules	34
12.9	Responsibilities to Participants	34
12.10	Alternative Payees in Event of Incapacity	34
12.11	Indemnification by Employers	34
12.12	Nonparticipation by Interested Member	35

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Section 13.	Adoption, Amendment, or Termination of the Plan.	35
13.1	Adoption of Plan by Other Employers	35
13.2	Plan Adoption Subject to Qualification	35
13.3	Right to Amend or Terminate	35
Section 14.	Miscellaneous Provisions.	36
14.1	Plan Creates No Employment Rights	36
14.2	Nonassignability of Benefits	36
14.3	Limit of Employer Liability	36
14.4	Treatment of Expenses	36
14.5	Number and Gender	36
14.6	Nondiversion of Assets	36
14.7	Separability of Provisions	37
14.8	Service of Process	37
14.9	Governing State Law	37
14.10	Employer Contributions Conditioned on Deductibility	37
14.11	Unclaimed Accounts	37
14.12	Qualified Domestic Relations Order	38
14.13	Use of Electronic Media to Provide Notices and Make Participant Elections	38
14.14	Acquisition of Securities	38
Section 15.	Top-Heavy Provisions.	39
15.1	Top-Heavy Plan	39
15.2	Definitions	39
15.3	Top-Heavy Rules of Application	40
15.4	Minimum Contributions	41
15.5	Top-Heavy Provisions Control in Top-Heavy Plan	41

iii

PILGRIM BANK

EMPLOYEE STOCK OWNERSHIP PLAN

Section 1. Plan Identity.

1.1 Name. The name of this Plan is “Pilgrim Bank Employee Stock Ownership Plan.”

1.2 Purpose. The purpose of this Plan is to describe the terms and conditions under which contributions made pursuant to the Plan will be credited and paid to the Participants and their Beneficiaries.

1.3 Effective Date. The Effective Date of this Plan is January 1, 2014.

1.4 Fiscal Period. This Plan shall be operated on the basis of a January 1 to December 31 fiscal year for the purpose of keeping the Plan’s books and records and distributing or filing any reports or returns required by law.

1.5 Single Plan for All Employers. This Plan shall be treated as a single plan with respect to all participating Employers for the purpose of crediting contributions and forfeitures and distributing benefits, determining whether there has been any termination of Service, and applying the limitations set forth in Section 5.

1.6 Interpretation of Provisions. The Employers intend this Plan and the Trust Agreement to be a qualified stock bonus plan under Section 401(a) of the Code and an employee stock ownership plan within the meaning of Section 407(d)(6) of ERISA and Section 4975(e)(7) of the Code. The Plan is intended to have its assets invested primarily in qualifying employer securities of one or more Employers within the meaning of Section 407(d)(3) of ERISA, and to satisfy any requirement under ERISA or the Code applicable to such a plan.

Accordingly, the Plan and Trust Agreement shall be interpreted and applied in a manner consistent with this intent and shall be administered at all times and in all respects in a nondiscriminatory manner.

Section 2. Definitions.

The following capitalized words and phrases shall have the meanings specified when used in this Plan and in the Trust Agreement, unless the context clearly indicates otherwise:

“Account” means a Participant’s interest in the assets accumulated under this Plan as expressed in terms of a separate account balance which is periodically adjusted to reflect his Employer’s contributions, the Plan’s investment experience, and distributions and forfeitures.

“Active Participant” means a Participant who has satisfied the eligibility requirements under Section 3 and who has at least 1,000 Hours of Service during the current Plan Year. However, a Participant shall not qualify as an Active Participant unless (i) he is in active Service with an Employer as of the last day of the Plan Year, or (ii) he is on a Recognized Absence as of that date, or (iii) his Service terminated during the Plan Year by reason of Disability, death, or Normal Retirement.

“Bank” means Pilgrim Bank and any entity which succeeds to the business of Pilgrim Bank and adopts this Plan as its own pursuant to Section 13.1 of the Plan.

“Beneficiary” means the person or persons who are designated by a Participant to receive benefits payable under the Plan on the Participant’s death. In the absence of any designation or if all the designated Beneficiaries shall die before the Participant dies or shall die before all benefits have been paid, the Participant’s Beneficiary shall be his surviving Spouse, if any, or his estate if he is not survived by a Spouse. The Committee may rely upon the advice of the Participant’s executor or administrator as to the identity of the Participant’s Spouse.

“Break in Service” means any Plan Year, or, for the initial eligibility computation period under Section 3.2, the 12-consecutive month period beginning on the first day of which an Employee has an Hour of Service, in which an Employee has 500 or fewer Hours of Service. Solely for this purpose, an Employee shall be considered employed for his normal hours of paid employment during a Recognized Absence (said Employee shall not be credited with more than 501 Hours of Service to avoid a Break in Service), unless he does not resume his Service at the end of the Recognized Absence. Further, if an Employee is absent for any period (i) by reason of the Employee’s pregnancy, (ii) by reason of the birth of the Employee’s child, (iii) by reason of the placement of a child with the Employee in connection with the Employee’s adoption of the child, or (iv) for purposes of caring for such child for a period beginning immediately after such birth or placement, the Employee shall be credited with the Hours of Service which would normally have been credited but for such absence, up to a maximum of 501 Hours of Service. Hours of Service shall be credited only in the year in which the absence from work begins, if a Participant would be prevented from incurring a one-year Break in Service in such year solely because the period of absence is treated as Hours of Service, or in any other case, in the immediately following year.

“Closing Date” means the closing date of the stock offering of the Company.

“Code” means the Internal Revenue Code of 1986, as amended.

“Committee” means the committee responsible for the administration of this Plan in accordance with Section 12.

“Company” means Pilgrim Bancshares, Inc., the holding company of the Bank, and any successor entity which succeeds to the business of the Company.

“Compensation” shall mean:

(a) 415 Compensation.

(b) If a determination period consists of fewer than 12 months, the annual compensation limit is an amount equal to the otherwise applicable compensation limit set forth under Section 5.1-2 multiplied by a fraction. The numerator of the fraction is the number of months in the short determination period, and the denominator of the fraction is 12.

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(c) A Participant’s Compensation shall exclude any portion of the Plan Year in which the Participant had not yet entered the Plan (e.g., the period before the Participant’s Entry Date).

“Disability” means the inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. An individual shall not be considered to be permanently and totally disabled unless he furnishes proof of the existence thereof in such form and manner, and at such times, as the Committee may require.

“Eligible Employee” means an Employee, other than an Employee identified in Section 3.4, who has performed 1,000 Hours of Service in the applicable Eligibility Year in accordance with Section 3.2 and who has attained age 21.

“Employee” means any individual who is or has been employed or self-employed by an Employer. “Employee” also means an individual employed by a leasing organization who, pursuant to an agreement between an Employer and the leasing organization, has performed services for the Employer and any related persons (within the meaning of Section 414(n)(6) of the Code) on a substantially full-time basis for more than one year, if such services are performed under the primary direction or control of the Employer. However, such a “leased employee” shall not be considered an Employee if (i) he participates in a money purchase pension plan sponsored by the leasing organization which provides for immediate participation, immediate full vesting, and an annual contribution of at least 10 percent of the Employee’s 415 Compensation, and (ii) leased employees do not constitute more than 20 percent of the Employer’s total work force (including leased employees, but excluding Highly Compensated Employees and any other Employees who have not performed services for the Employer on a substantially full-time basis for at least one year).

“Employer” means the Bank, any subsidiary of the Bank and any other corporation, partnership, or proprietorship which adopts this Plan with the Bank’s consent pursuant to Section 13.1, and also any entity which succeeds to the business of any Employer and adopts the Plan pursuant to Section 13.

“Entry Date” means the Effective Date and each July 1 and January 1 of each Plan Year after such date.

“ERISA” means the Employee Retirement Income Security Act of 1974 (P.L. 93-406, as amended).

3

“Exempt Loan” means an indebtedness arising from any extension of credit to the Plan or the Trust which satisfies the requirements set forth in Section 6.3 and which was obtained for any or all of the following purposes:

(i) to acquire qualifying Employer securities as defined in Treasury Regulations Section 54.4975-12;

(ii) to repay such Exempt Loan; or

(iii) to repay a prior exempt loan.

“415 Compensation” shall mean:

(a) Wages (including overtime pay, bonuses and commissions), as defined in Code Section 3401(a) for purposes of income tax withholding at the source.

(b) Any elective deferral as defined in Code Section 402(g)(3) (any Employer contributions made on behalf of a Participant to the extent not includible in gross income and any Employer contributions to purchase an annuity contract under Code Section 403(b) under a salary reduction agreement), and any amount which is contributed or deferred by the Employer at the election of the Participant and which is not includible in gross income of the Participant by reason of Code Section 125 (including any “deemed” Code Section 125 compensation) (Cafeteria Plan), Code Section 457, 132(f)(4) or because such amount was deferred in accordance with an Employer-provided deferred compensation plan, shall also be included in the definition of 415 Compensation.

(c) 415 Compensation shall also include the following types of compensation paid after a Participant’s severance from employment with the Employer, provided that amounts described in paragraphs (i) or (ii) below shall only be included in 415 Compensation to the extent such amounts are paid by the later of 2 ¹/₂ months after severance from employment, or by the end of the limitation year that includes the date of such severance from employment.

(i) Regular Pay. 415 Compensation shall include regular pay after severance from employment if (a) the payment is for regular compensation for services during the Participant’s regular working hours, or compensation for services outside of the Participant’s regular working hours (such as overtime or shift differential), commissions, bonuses, or other similar payments, and (b) the payment would have been paid to the Participant prior to severance from employment if the Participant had continued in employment with the Employer.

(ii) Leave Cashouts. Leave cashouts shall be included in 415 Compensation if those amounts would have been included in the definition of 415 Compensation if they were paid prior to the Participant’s severance from employment, and the amounts are payment for unused accrued bona fide sick, vacation or other leave, but only if the Participant would have been able to use the leave if his employment had continued.

(d) 415 Compensation includes differential wage payments (as defined in Code Section 3401(h)) paid by the Employer to a former Employee who is performing qualified military services (as defined in Code Section 414(u)(1)) but only to the extent that those differential wage payments do not exceed the amounts the individual would have received if the individual had continued to perform services for the Employer rather than entering qualified military service.

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(e) 415 Compensation in excess of $260,000 (as indexed) shall be disregarded for all Participants. For purposes of this sub-section, the $260,000 limit shall be referred to as the “applicable limit” for the Plan Year in question. The $260,000 limit shall be adjusted for increases in the cost of living in accordance with Section 401(a)(17)(B) of the Code, effective for the Plan Year which begins within the applicable calendar year. For purposes of the applicable limit, 415 Compensation shall be prorated over short Plan Years and only compensation for the portion of the Plan Year during which the individual was a Participant shall be taken into account.

“Highly Compensated Employee” for any Plan Year means an Employee who, during either that or the immediately preceding Plan Year was at any time a five percent owner of the Employer (as defined in Code Section 416(i)(1)) or, during the immediately preceding Plan Year, had 415 Compensation exceeding $115,000 (as adjusted). For these purposes, “the most highly compensated one-fifth of all Employees” shall be determined by taking into account all individuals working for all related Employer entities described in the definition of “Service,” but excluding any individual who has not completed six months of Service, who normally works fewer than 17 ¹/₂ hours per week or in fewer than six months per year, who has not reached age 21, whose employment is covered by a collective bargaining agreement, or who is a nonresident alien who receives no earned income from United States sources. The applicable year for which a determination is being made is called a “determination year” and the preceding 12-month period is called a look-back year.

“Hours of Service” means hours to be credited to an Employee under the following rules:

(a) Each hour for which an Employee is paid or is entitled to be paid for services to an Employer is an Hour of Service.

(b) Each hour for which an Employee is directly or indirectly paid or is entitled to be paid for a period of vacation, holidays, illness, disability, lay-off, jury duty, temporary military duty, or leave of absence is an Hour of Service. However, except as otherwise specifically provided, no more than 501 Hours of Service shall be credited for any single continuous period which an Employee performs no duties. No more than 501 Hours of Service will be credited under this paragraph for any single continuous period (whether or not such period occurs in a single computation period). Further, no Hours of Service shall be credited on account of payments made solely under a plan maintained to comply with worker’s compensation, unemployment compensation, or disability insurance laws, or to reimburse an Employee for medical expenses.

(c) Each hour for which back pay (ignoring any mitigation of damages) is either awarded or agreed to by an Employer is an Hour of Service. However, no more than 501 Hours of Service shall be credited for any single continuous period during which an Employee would not have performed any duties. The same Hours of Service will not be credited both under paragraph (a) or (b) as the case may be, and under this

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paragraph (c). These hours will be credited to the employee for the computation period or periods to which the award or agreement pertains rather than the computation period in which the award agreement or payment is made.

(d) Hours of Service shall be credited in any one period only under one of the foregoing paragraphs (a), (b) and (c); an Employee may not get double credit for the same period.

(e) If an Employer finds it impractical to count the actual Hours of Service for any class or group of non-hourly Employees, each Employee in that class or group shall be credited with 90 Hours of Service for each bi-weekly pay period in which he has at least one Hour of Service. However, an Employee shall be credited only for his normal working hours during a paid absence.

(f) Hours of Service to be credited on account of a payment to an Employee (including back pay) shall be recorded in the period of Service for which the payment was made. If the period overlaps two or more Plan Years, the Hours of Service credit shall be allocated in proportion to the respective portions of the period included in the several Plan Years. However, in the case of periods of 31 days or less, the Committee may apply a uniform policy of crediting the Hours of Service to either the first Plan Year or the second.

(g) In all respects an Employee’s Hours of Service shall be counted as required by Section 2530.200b-2(b) and (c) of the Department of Labor’s regulations under Title I of ERISA.

“Investment Fund” means that portion of the Trust Fund consisting of assets other than Stock. Notwithstanding the above, assets from the Investment Fund may be used to purchase Stock in the open market or otherwise, or used to pay on the Exempt Loan, and shares so purchased will be allocated to a Participant’s Stock Fund.

“Normal Retirement” means retirement on or after the Participant’s Normal Retirement Date.

“Normal Retirement Date” means the Participant’s 65^th birthday.

“Participant” means any Eligible Employee who is an Active Participant participating in the Plan, or Eligible Employee or former Employee who was previously an Active Participant and still has a balance credited to his Account.

“Period of Uniformed Service” means the length of time that an Employee serves in the Uniformed Services.

“Plan Year” means the twelve-month period commencing January 1 and ending December 31 and each period of 12 consecutive months beginning on January 1 of each succeeding year.

“Recognized Absence” means a period for which —

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(a) an Employer grants an Employee a leave of absence for a limited period, but only if an Employer grants such leave on a nondiscriminatory basis; or

(b) an Employee is temporarily laid off by an Employer because of a change in business conditions; or

(c) an Employee is on active military duty, but only to the extent that his employment rights are protected by the Military Selective Service Act of 1967 (38 U.S.C. Sec. 2021).

“Reemployment After a Period of Uniformed Service”

(a) “Reemployment (or Reemployed) After a Period of Uniformed Service” means that an Employee returned to employment with a Participating Employer, within the time frame set forth in subparagraph (b) below, after a Period of Uniformed Service in the Uniformed Services and the following rules corresponding to provisions of the Uniformed Services Employment and Reemployment Rights Act of 1994 (“USERRA”) apply: (i) he or she gives sufficient notice of leave to the Participating Employer prior to commencing a Period of Uniformed Service, or is excused from providing such notice; (ii) his or her employment with the Participating Employer prior to a Period of Uniformed Service was not of a brief, nonrecurrent nature that would preclude a reasonable expectation that such employment would continue indefinitely or for a significant period; (iii) the Participating Employer’s circumstances have not changed so that reemployment is unreasonable or an undue hardship to the Participating Employer; and (iv) the applicable cumulative Periods of Uniformed Service under USERRA equals five years or less, unless service in the Uniformed Services:

(1) in excess of five years is required to complete an initial Period of Uniformed Service;

(2) prevents the Participant from obtaining orders releasing him or her from such Period of Uniformed Service prior to the expiration of a five-year period (through no fault of the Participant);

(3) is required in the National Guard for drill and instruction, field exercises or active duty training, or to fulfill necessary additional training, or to fulfill necessary additional training requirements certified in writing by the Secretary of the branch of Uniformed Services concerned; or

(4) for a Participant is

(A) required other than for training under any provisions of law during a war or national agency declared by the President or Congress;

(B) required (other than for training) in support of an operational mission for which personnel have been ordered to active duty other than during war or national emergency;

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(C) required in support of a critical mission or requirement of the Uniformed Services; or

(D) the result of being called into service as a member of the National Guard by the President in the case of rebellion or danger of rebellion against the authority of the United States Government or if the President is unable to execute the laws of the United States with the regular forces.

(b) The applicable statutory time frames within which an Employee must report to a Participating Employer after a Period of Uniformed Service are as follows:

(1) If the Period of Uniformed Service was less than 31 days,

(A) not later than the beginning of the first full regularly scheduled work period on the first full calendar day following the completion of the Period of Uniformed Service and the expiration of eight hours after a period of time allowing for the safe transportation of the Employee from the place of service in the Uniformed Services to the Employee’s residence; or

(B) as soon as possible after the expiration of the eight-hour period of time referred to in Clause (A), if reporting within the period referred to in such clause is impossible or unreasonable through no fault of the Employee.

(2) In the case of an Employee whose Period of Uniformed Service was for more than 30 days but less than 181 days, by submitting an application for reemployment with a Participating Employer not later than 14 days after the completion of the Period of Uniformed Service or, if submitting such application within such period is impossible or unreasonable through no fault of the Employee, the next first full calendar day when submission of such application becomes reasonable.

(3) In the case of an Employee whose Period of Uniformed Service was for more than 180 days, by submitting an application for reemployment with a Participating Employer not later than 90 days after the completion of the Period of Uniformed Service.

(4) In the case of an Employee who is hospitalized for, or convalescing from, an illness or injury related to the Period of Uniformed Service the Employee shall apply for reemployment with a Participating Employer at the end of the period that is necessary for the Employee to recover. Such period of recovery shall not exceed two years, unless circumstances beyond the Employee’s control make reporting as above unreasonable or impossible.

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(c) Notwithstanding subparagraph (a), Reemployment After a Period of Uniformed Service terminates upon the occurrence of any of the following:

(1) a dishonorable or bad conduct discharge from the Uniformed Services;

(2) any other discharge from the Uniformed Services under circumstances other than an honorable condition;

(3) a discharge of a commissioned officer from the Uniformed Services by court martial, by commutation of sentence by court martial, or, in time of war, by the President; or

(4) a demotion of a commissioned officer in the Uniformed Services for absence without authorized leave of at least 3 months confinement under a sentence by court martial, or confinement in a federal or state penitentiary after being found guilty of a crime under a final sentence.

“Service” means an Employee’s period(s) of employment or self-employment with an Employer, excluding for initial eligibility purposes any period in which the individual was a nonresident alien and did not receive from an Employer any earned income which constituted income from sources within the United States. An Employee’s Service shall include any Service which constitutes Service with a predecessor Employer within the meaning of Section 414(a) of the Code, provided, however, that Service with an acquired entity shall not be considered Service under the Plan unless required by applicable law or agreed to by the parties to such transaction. An Employee’s Service shall also include any Service with an entity which is not an Employer, but only either (i) in which the other entity is a member of a controlled group of corporations or is under common control with other trades and businesses within the meaning of Section 414(b) or 414(c) of the Code, and a member of the controlled group or one of the trades and businesses is an Employer, (ii) in which the other entity is a member of an affiliated service group within the meaning of Section 414(m) of the Code, and a member of the affiliated service group is an Employer, or (iii) all Employers aggregated with the Employer under Section 414(o) of the Code (but not until the Proposed Regulations under Section 414(o) become effective). Notwithstanding any provision of this Plan to the contrary, contributions, benefits and service credit with respect to qualified military service will be provided in accordance with Section 414(u) of the Code.

“Spouse” means the individual, if any, to whom a Participant is lawfully married on the date benefit payments to the Participant are to begin, or on the date of the Participant’s death, if earlier. A former Spouse shall be treated as the Spouse or surviving Spouse to the extent provided under a qualified domestic relations order as described in section 414(p) of the Code.

“Stock” means common stock issued by the Employer (or by a corporation which is a member of the same controlled group) which is readily tradable on an established securities market. In the event there is no common stock which meets the requirements of the preceding sentence, then “Stock” means common stock issued by the Employer (or by a corporation which is a member of the same controlled group) having a combined voting power and dividend rights equal to or in excess of (A) that class of common stock of the Employer (or of any other such corporation) having the greatest voting power; and (B) that class of common stock of the Employer (or of any other such corporation) having the greatest dividend rights.

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“Stock Fund” means that portion of the Trust Fund consisting of Stock. The Stock Fund is merely a recordkeeping mechanism used by the Trustee to track the Stock held by the Plan. The Stock Fund is neither a mutual fund nor a diversified or managed investment option.

“Trust” or “Trust Fund” means the trust fund created under this Plan.

“Trust Agreement” means the agreement between the Bank and the Trustee concerning the Trust Fund. If any assets of the Trust Fund are held in a co-mingled trust fund with assets of other qualified retirement plans, “Trust Agreement” shall be deemed to include the trust agreement governing that co-mingled trust fund. With respect to the allocation of investment responsibility for the assets of the Trust Fund, the provisions of Article II of the Trust Agreement are incorporated herein by reference.

“Trustee” means one or more corporate persons or individuals selected from time to time by the Bank to serve as trustee or co-trustees of the Trust Fund.

“Unallocated Stock Fund” means that portion of the Stock Fund consisting of the Plan’s holding of Stock which have been acquired in exchange for one or more Exempt Loans and which have not yet been allocated to the Participant’s Accounts in accordance with Section 4.2.

“Uniformed Service” means the performance of duty on a voluntary or involuntary basis in the uniformed service of the United States, including the U.S. Public Health Services, under competent authority and includes active duty, active duty for training, initial activity duty for training, inactive duty training, full-time National Guard duty, and the period for which a person is absent from a position of employment for purposes of an examination to determine the fitness of the person to perform any such duty.

“Valuation Date” means for so long as there is a generally recognized market for the Stock each business day. If at any time there shall be no generally recognized market for the Stock, then “Valuation Date” shall mean the last day of the Plan Year and each other date as of which the Committee shall determine the investment experience of the Investment Fund and adjust the Participants’ Accounts accordingly.

“Valuation Period” means the period following a Valuation Date and ending with the next Valuation Date.

“Vesting Year” means a unit of Service credited to a Participant pursuant to Section 9.2 for purposes of determining his vested interest in his Account.

Section 3. Eligibility for Participation.

3.1 Initial Eligibility. An Eligible Employee shall enter the Plan as of the Entry Date coincident with or next following the last day of the Eligible Employee’s first Eligibility Year and attainment of age 21. Notwithstanding the foregoing, an Employee who is an Eligible Employee on or prior to the Closing Date shall enter the Plan, retroactively, on the Effective Date.

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3.2 Definition of Eligibility Year. “Eligibility Year” means an applicable eligibility period (as defined below) in which the Eligible Employee has completed 1,000 Hours of Service for the Employer. For this purpose:

(i) an Eligible Employee’s first “eligibility period” is the 12-consecutive month period beginning on the first day on which he has an Hour of Service, including any years before the Effective Date of the Plan, and

(ii) his subsequent eligibility periods will be 12-consecutive month periods beginning on each January 1 after that first day of Service.

3.3 Terminated Employees. No Employee shall have any interest or rights under this Plan if he is never in active Service with an Employer on or after the Effective Date.

3.4 Certain Employees Ineligible.

3.4-1. No Employee shall participate in the Plan while his Service is covered by a collective bargaining agreement between an Employer and the Employee’s collective bargaining representative if (i) retirement benefits have been the subject of good faith bargaining between the Employer and the representative and (ii) the collective bargaining agreement does not provide for the Employee’s participation in the Plan.

3.4-2. Leased Employees are not eligible to participate in the Plan.

3.4-3. Employees who are nonresident aliens with no earned income (within the meaning of Code Section 911(d)(2)) from the Employer which constitutes income from sources within the United States (within the meaning of Code Section 861(a)(3)).

3.4-4. An Eligible Employee may elect not to participate in the Plan, provided, however, such election is made solely to meet the requirements of Code Section 409(n). For an election to be effective for a particular Plan Year, the Eligible Employee or Participant must file the election in writing with the Committee no later than the last day of the Plan Year for which the election is to be effective. The Employer may not make a contribution under the Plan for the Eligible Employee or for the Participant for the Plan Year for which the election is effective, nor for any succeeding Plan Year, unless the Eligible Employee or Participant re-elects to participate in the Plan. The Eligible Employee or Participant may elect again not to participate, but not earlier than the first Plan Year following the Plan Year in which the re-election was first effective.

3.5 Participation and Reparticipation. Subject to the satisfaction of the foregoing requirements, an Eligible Employee shall participate in the Plan during each period of his Service from the date on which he first becomes eligible until his termination. For this purpose, an Eligible Employee who returns before five (5) consecutive one year Breaks in Service who previously satisfied the initial eligibility requirements or who returns after five (5) consecutive one year Breaks in Service with a vested Account balance in the Plan shall re-enter the Plan as of the date of his return to Service with an Employer.

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3.6 Omission of Eligible Employee. If, in any Plan Year, any Eligible Employee who should be included as a Participant in the Plan is erroneously omitted and discovery of such omission is not made until after a contribution by his Employer for the year has been made, the Employer shall make a subsequent contribution with respect to the omitted Eligible Employee in the amount which the said Employer would have contributed regardless of whether or not it is deductible in whole or in part in any taxable year under applicable provisions of the Code.

3.7 Inclusion of Ineligible Employee. If, in any Plan Year, any person who should not have been included as a Participant in the Plan is erroneously included and discovery of such incorrect inclusion is not made until after a contribution for the year has been made, the Employer shall not be entitled to recover the contribution made with respect to the ineligible person regardless of whether or not a deduction is allowable with respect to such contribution. In such event, the amount contributed with respect to the ineligible person shall constitute a forfeiture for the fiscal year in which the discovery is made. Any person who, after the close of a Plan Year, is retroactively treated by the Company, an affiliated company or any other party as an Employee for such prior Plan Year shall not, for purposes of the Plan, be considered an Employee for such prior Plan Year unless expressly so treated as such by the Company.

Section 4. Contributions and Credits.

4.1 Discretionary Contributions.

4.1-1. The Employer shall from time to time contribute, with respect to a Plan Year, such amounts as it may determine from time to time. The Employer shall have no obligation to contribute any amount under this Plan except as so determined in its sole discretion. The Employer’s contributions and available forfeitures for a Plan Year shall be credited as of the last day of the year to the Accounts of the Active Participants in the manner set forth in Section 8.1-2.

4.1-2. Upon a Participant’s Reemployment After a Period of Uniformed Service, the Employer shall make an additional contribution on behalf of such Participant that would have been made on his or her behalf during the Plan Year or Years corresponding to the Participant’s Period of Uniformed Service.

4.2 Contributions for Exempt Loans. If the Trustee, upon instructions from the Committee, incurs any Exempt Loan upon the purchase of Stock, the Employer may contribute for each Plan Year an amount sufficient to cover all payments of principal and interest as they come due under the terms of the Exempt Loan. If there is more than one Exempt Loan, the Employer shall designate the one to which any contribution is to be applied. Investment earnings realized on Employer contributions and any dividends paid by the Employer on Stock held in the Unallocated Stock Account, shall be applied to the Exempt Loan related to that Stock, subject to Section 7.2.

In each Plan Year in which Employer contributions, earnings on contributions, or dividends on Stock in the Unallocated Stock Fund are used as payments under an Exempt Loan, a certain number of shares of the Stock acquired with that Exempt Loan which is then held in the Unallocated Stock Fund shall be released for allocation among the Participants. The number of

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shares released shall bear the same ratio to the total number of those shares then held in the Unallocated Stock Fund (prior to the release) as (i) the principal and interest payments made on the Exempt Loan in the current Plan Year bears to (ii) the sum of (i) above, and the remaining principal and interest payments required (or projected to be required on the basis of the interest rate in effect at the end of the Plan Year) to satisfy the Exempt Loan.

At the direction of the Committee, the current and projected payments of interest under an Exempt Loan may be ignored in calculating the number of shares to be released in each year if (i) the Exempt Loan provides for annual payments of principal and interest at a cumulative rate that is not less rapid at any time than level annual payments of such amounts for 10 years, (ii) the interest included in any payment is ignored only to the extent that it would be determined to be interest under standard loan amortization tables, and (iii) the term of the Exempt Loan, by reason of renewal, extension, or refinancing, has not exceeded 10 years from the original acquisition of the Stock.

4.3 Conditions as to Contributions. Employers’ contributions shall in all events be subject to the limitations set forth in Section 5. Contributions may be made in the form of cash, or securities and other property to the extent permissible under ERISA, including Stock, and shall be held by the Trustee in accordance with the Trust Agreement. In addition to the provisions of Section 13.2 for the return of an Employer’s contributions in connection with a failure of the Plan to qualify initially under the Code, any amount contributed by an Employer due to a good faith mistake of fact, or based upon a good faith but erroneous determination of its deductibility under Section 404 of the Code, shall be returned to the Employer within one year after the date on which the contribution was originally made, or within one year after its nondeductibility has been finally determined. However, the amount to be returned shall be reduced to take account of any adverse investment experience within the Trust Fund in order that the balance credited to each Participant’s Account is not less that it would have been if the contribution had never been made.

4.4 Rollover Contributions. This Plan shall not accept a direct rollover or rollover contribution of an “eligible rollover distribution” as such term is defined in Section 10.9-1 of the Plan.

Section 5. Limitations on Contributions and Allocations.

5.1 Limitation on Annual Additions. Notwithstanding anything herein to the contrary, allocation of Employer contributions for any Plan Year shall be subject to the following:

5.1-1 If allocation of Employer contributions in accordance with Section 4.1 will result in an allocation of more than one-third the total contributions for a Plan Year to the accounts of Highly Compensated Employees, and such allocation would cause any Highly Compensated Employee to exceed the limitations under Code Section 415(c) or the Employer to exceed the deduction limits under Code Section 404, then no more than one-third of the Employer contributions used for repayment of any Exempt Loan in accordance with Section 4.2 shall be allocated to the accounts of Highly Compensated Employees (within the meaning of Code Section 414(q)), with the remaining Employer contributions to be made to non-Highly Compensated Employees in the manner specified under Section 8.1. Such adjustments shall be made before any allocations occur.

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5.1-2 After adjustment, if any, required by the preceding paragraph, the annual additions during any Plan Year to any Participant’s Account under this and any other defined contribution plans maintained by the Employer or an affiliate (within the purview of Section 414(b), (c) and (m) and Section 415(h) of the Code, which affiliate shall be deemed the Employer for this purpose) shall not exceed the lesser of $50,000 (for 2012, or such other dollar amount which results from cost-of-living adjustments under Section 415(d) of the Code) (the “dollar limitation”) or 100 percent of the Participant’s 415 Compensation for such limitation year (the “percentage limitation”). In the event Stock is released from the Unallocated Stock Fund and allocated to a Participant’s Account for a particular Plan Year, the Employer may determine for such year that an annual addition shall be calculated on the basis of the fair market value of the Stock so released and allocated (such fair market value to be based on the valuation as of the Valuation Date immediately preceding the Plan Year in respect of which the release and allocation are made) if the annual addition, as so calculated, is lower than the annual addition calculated on the basis of Employer contributions. The percentage limitation shall not apply to any contribution for medical benefits after severance from employment (within the meaning of Section 401(h) or Section 419A(f)(2) of the Code) which is otherwise treated as an annual addition. If, as a result of the allocation of forfeitures, a reasonable error in estimating a Participant’s annual compensation, a reasonable error in determining the amount of elective deferrals (within the meaning of Code Section 402(g)(3)) that may be made with respect to any individual under the limits of Code Section 415, or under other limited facts and circumstances that the Commissioner of the Internal Revenue Service finds justify the availability of the rules set forth in this paragraph, the annual additions under the terms of the Plan for a particular Participant would cause the limitations of Code Section 415 applicable to that Participant for the limitation year to be exceeded, the Plan may only correct such excess in accordance with the Employee Plans Compliance Resolution System (EPCRS) as set forth in Revenue Procedure 2013-12 or any subsequent guidance.

5.1-3 For purposes of this Section 5.1, the “annual addition” to a Participant’s Accounts means the sum of (i) Employer contributions, (ii) Employee contributions, if any, and (iii) forfeitures. For these purposes, annual additions to a defined contribution plan shall not include the allocation of the excess amounts remaining in the Unallocated Stock Fund subsequent to a sale of stock from such fund in accordance with a transaction described in Section 8.1 of the Plan. Notwithstanding the foregoing, “annual additions” shall not include a restorative payment in accordance with Treasury Regulation Section 1.415(c)-1(b)(2)(C) that is made to restore losses to the Plan resulting from actions by a fiduciary for which there is a reasonable risk of liability for breach of fiduciary duty under ERISA or other applicable federal and state law.

In the event Stock is released from the Unallocated Stock Fund and allocated to a Participant’s Account for a particular Plan Year, the Employer may determine for such year that an annual addition shall be calculated on the basis of the fair market value of the Stock so released and allocated (such fair market value to be based on the valuation as of

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the Valuation Date immediately preceding the Plan Year in respect of which the release and allocation are made) if the annual addition, as so calculated, is lower than the annual addition calculated on the basis of Employer contributions.

5.1-4 Notwithstanding the foregoing, if no more than one-third of the Employer contributions to the Plan for a year which are deductible under Section 404(a)(9) of the Code are allocated to Highly Compensated Employees (within the meaning of Section 414(q) of the Internal Revenue Code), the limitations imposed herein shall not apply to:

(i) forfeitures of Employer securities (within the meaning of Section 409 of the Code) under the Plan if such securities were acquired with the proceeds of a loan described in Section 404(a)(9)(A) of the Code), or

(ii) Employer contributions to the Plan which are deductible under Section 404(a)(9)(B) and charged against a Participant’s Account.

5.1-5 If the Employer contributes amounts, on behalf of Eligible Employees covered by this Plan, to other “defined contribution plans” as defined in Section 3(34) of ERISA, the limitation on annual additions provided in this Section shall be applied to annual additions in the aggregate to this Plan and to such other plans. Reduction of annual additions, where required, shall be accomplished first by reductions under such other plan pursuant to the directions of the named fiduciary for administration of such other plans or under priorities, if any, established under the terms of such other plans and then by allocating any remaining excess for this Plan in the manner and priority set out above with respect to this Plan.

5.1-6 A limitation year shall mean each 12 consecutive month period ending on December 31.

5.2 Effect of Limitations. The Committee shall take whatever action may be necessary from time to time to assure compliance with the limitations set forth in Section 5.1. Specifically, the Committee shall see that each Employer restrict its contributions for any Plan Year to an amount which, taking into account the amount of available forfeitures, may be completely allocated to the Participants consistent with those limitations. Where the limitations would otherwise be exceeded by any Participant, further allocations to the Participant shall be curtailed to the extent necessary to satisfy the limitations. Where an excessive amount is contributed on account of a mistake as to one or more Participants’ compensation, or there is an amount of forfeitures which may not be credited in the Plan Year in which it becomes available, the amount shall be corrected in accordance with Section 5.1-2 of the Plan. If it is determined at any time that the Committee and/or Trustee has erred in accepting and allocating any contributions or forfeitures under this Plan, or in allocating net gain or loss pursuant to Sections 8.2 and 8.3, then the Committee, in a uniform and nondiscriminatory manner, shall determine the manner in which such error shall be corrected and shall promptly advise the Trustee in writing of such error and of the method for correcting such error. The Accounts of any or all Participants may be revised, if necessary, in order to correct such error.

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5.3 Limitations as to Certain Participants. Aside from the limitations set forth in Section 5.1, if the Plan acquires any Stock in a transaction as to which a selling shareholder or the estate of a deceased shareholder is claiming the benefit of Section 1042 of the Code, the Committee shall see that none of such Stock, and no other assets in lieu of such Stock, are allocated to the Accounts of certain Participants in order to comply with Section 409(n) of the Code.

This restriction shall apply at all times to a Participant who owns (taking into account the attribution rules under Section 318(a) of the Code, without regard to the exception for employee plan trusts in Section 318(a)(2)(B)(i) more than 25 percent of any class of stock of a corporation which issued the Stock acquired by the Plan, or another corporation within the same controlled group, as defined in Section 409(l)(4) of the Code (any such class of stock hereafter called a “Related Class”). For this purpose, a Participant who owns more than 25 percent of any Related Class at any time within the one year preceding the Plan’s purchase of the Stock shall be subject to the restriction as to all allocations of the Stock, but any other Participant shall be subject to the restriction only as to allocations which occur at a time when he owns more than 25 percent of any Related Class.

Further, this restriction shall apply to the selling shareholder claiming the benefit of Section 1042 and any other Participant who is related to such a shareholder within the meaning of Section 267(b) of the Code, during the period beginning on the date of sale and ending on the later of (1) the date that is ten years after the date of sale, or (2) the date of the Plan allocation attributable to the final payment of acquisition indebtedness incurred in connection with the sale.

This restriction shall not apply to any Participant who is a lineal descendant of a selling shareholder if the aggregate amounts allocated under the Plan for the benefit of all such descendants do not exceed five percent of the Stock acquired from the shareholder.

5.4 Erroneous Allocations. No Participant shall be entitled to any annual additions or other allocations to his Account in excess of those permitted under Section 5. If it is determined at any time that the administrator and/or Trustee have erred in accepting and allocating any contributions or forfeitures under this Plan, or in allocating investment adjustments, or in excluding or including any person as a Participant, then the administrator, in a uniform and nondiscriminatory manner, shall determine the manner in which such error shall be corrected, after taking into consideration Sections 3.6 and 3.7 and any revenue procedure or other notice published by the Internal Revenue Service regarding permissible correction methods, if applicable, and shall promptly advise the Trustee in writing of such error and of the method for correcting such error. The Accounts of any or all Participants may be revised, if necessary, in order to correct such error.

Section 6. Trust Fund and Its Investment.

6.1 Creation of Trust Fund. All amounts received under the Plan from Employers and investments shall be held as the Trust Fund pursuant to the terms of this Plan and of the Trust Agreement between the Bank and the Trustee. The benefits described in this Plan shall be payable only from the assets of the Trust Fund, and none of the Bank, any other Employer, its board of directors or trustees, its stockholders, its officers, its employees, the Committee, and the Trustee shall be liable for payment of any benefit under this Plan except from the Trust Fund.

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6.2 Stock Fund and Investment Fund. The Trust Fund held by the Trustee shall be divided into the Stock Fund, consisting entirely of Stock, and the Investment Fund, consisting of all assets of the Trust other than Stock. The Trustee shall have no investment responsibility for the Stock Fund, but shall accept any Employer contributions made in the form of Stock, and shall acquire, sell, exchange, distribute, and otherwise deal with and dispose of Stock in accordance with the instructions of the Committee. As a directed Trustee, the Trustee shall have such responsibility for the investment of the Investment Fund as set forth in Section .05 of the Trust Agreement.

6.3 Acquisition of Stock. From time to time the Committee may, in its sole discretion, direct the Trustee to acquire Stock from the issuing Employer or from shareholders, including shareholders who are or have been Employees, Participants, or fiduciaries with respect to the Plan. The Trustee shall pay for such Stock no more than its fair market value, which shall be determined conclusively by the Committee pursuant to Section 12.4. The Committee may direct the Trustee to finance the acquisition of Stock by incurring or assuming indebtedness to the seller or another party which indebtedness shall be called an “Exempt Loan.” The term “Exempt Loan” shall refer to a loan made to the Plan by a disqualified person within the meaning of Section 4975(e)(2) of the Code, or a loan to the Plan which is guaranteed by a disqualified person. An Exempt Loan includes a direct loan of cash, a purchase-money transaction, and an assumption of an obligation of a tax-qualified employee stock ownership plan under Section 4975(e)(7) of the Code (“ESOP”). For these purposes, the term “guarantee” shall include an unsecured guarantee and the use of assets of a disqualified person as collateral for a loan, even though the use of assets may not be a guarantee under applicable state law. An amendment of an Exempt Loan in order to qualify as an “exempt loan” is not a refinancing of the Exempt Loan or the making of another Exempt Loan. The term “exempt loan” refers to a loan that is primarily for the benefit of the Plan participants and their beneficiaries and that satisfies the provisions of this paragraph. A “non-exempt loan” fails to satisfy this paragraph. Any Exempt Loan shall be subject to the following conditions and limitations:

6.3-1 All Exempt Loans incurred by the Plan must be primarily for the benefit of Plan Participants and Beneficiaries, and an Exempt Loan shall be for a specific term, shall not be payable on demand except in the event of default, and shall bear a reasonable rate of interest, such that the interest rate and the price of the securities to be acquired with the Exempt Loan will not cause the Plan’s assets to be inappropriately impaired in violation of Treasury Regulation Section 54.4975-7(b)(3).

6.3-2 An Exempt Loan may, but need not, be secured by a collateral pledge of either the Stock acquired in exchange for the Exempt Loan, or the Stock previously pledged in connection with a prior Exempt Loan which is being repaid with the proceeds of the current Exempt Loan. No other assets of the Plan and Trust may be used as collateral for an Exempt Loan, and no creditor under an Exempt Loan shall have any right or recourse to any Plan and Trust assets other than Stock remaining subject to a collateral pledge.

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6.3-3 Any pledge of Stock to secure an Exempt Loan must provide for the release of pledged Stock in connection with payments on the Exempt Loans in the ratio prescribed in Section 4.2.

6.3-4 Repayments of principal and interest on any Exempt Loan shall be made by the Trustee only from Employer cash contributions designated for such payments, from earnings on such contributions, and from cash dividends received on Stock, in the last case, however, subject to the further requirements of Section 7.2. The payment on the Exempt Loan during the Plan Year must not exceed an amount equal to the sum of contributions and earnings received during such year or prior to such year, less such payments in prior years. Such contributions and earnings must be accounted for separately in the books and accounts of the Plan until the Exempt Loan is fully repaid.

6.3-5 In the event of default of an Exempt Loan, the value of Plan assets transferred in satisfaction of the Exempt Loan must not exceed the amount of the default. If the lender is a disqualified person within the meaning of Section 4975 of the Code, an Exempt Loan must provide for a transfer of Plan assets upon default only upon and to the extent of the failure of the Plan to meet the payment schedule of said Exempt Loan. For purposes of this paragraph, the making of a guarantee does not make a person a lender.

6.4 Participants’ Option to Diversify. The Committee shall provide for a procedure under which each Participant may, during the qualified election period, elect to “diversify” a portion of the Employer Stock allocated to his Account, as provided in Section 401(a)(28)(B) of the Code. An election to diversify must be made on the prescribed form and filed with the Committee within the period specified herein. For each of the first five (5) Plan years in the qualified election period, the Participant may elect to diversify an amount which does not exceed 25 percent of the number of shares allocated to his Account since the inception of the Plan, less all shares with respect to which an election under this Section has already been made. For the last year of the qualified election period, the Participant may elect to have up to 50 percent of the value of his Account committed to other investments, less all shares with respect to which an election under this Section has already been made. The term “qualified election period” shall mean the six (6) Plan Year period beginning with the first Plan Year in which a Participant has both attained age 55 and completed 10 years of participation in the Plan. A Participant’s election to diversify his Account may be made within each year of the qualified election period and shall continue for the 90-day period immediately following the last day of each year in the qualified election period. Once a Participant makes such election, the Plan must complete diversification in accordance with such election within 90 days after the end of the period during which the election could be made for the Plan Year. In the discretion of the Committee, the Plan may satisfy the diversification requirement by any of the following methods:

6.4-1 The Plan may distribute all or part of the amount subject to the diversification election.

6.4-2 The Plan may offer the Participant at least three other distinct investment options, if available under the Plan. The other investment options shall satisfy the requirements of Regulations under Section 404(c) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).

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6.4-3 The Plan may transfer the portion of the Participant’s Account subject to the diversification election to another qualified defined contribution plan of the Employer that offers at least three investment options satisfying the requirements of the Regulations under Section 404(c) of ERISA.

Section 7. Voting Rights and Dividends on Stock.

7.1 Voting and Tendering of Stock.

7.1-1 The Trustee generally shall vote all shares of Stock held under the Plan in accordance with the written instructions of the Committee. However, if any Employer has a registration-type class of securities within the meaning of Section 409(e)(4) of the Code, or if a matter submitted to the holders of the Stock involves a merger, consolidation, recapitalization, reclassification, liquidation, dissolution, or sale of substantially all assets of an entity, then (i) the shares of Stock which have been allocated to Participants’ Accounts shall be voted by the Trustee in accordance with the Participants’ written instructions, and (ii) the Trustee shall vote any unallocated Stock, allocated Stock for which it has received no voting instructions, and Stock for which Participants vote to “abstain,” in the same proportions as it votes the allocated Stock for which it has received instructions from Participants. In the event no shares of Stock have been allocated to Participants’ Accounts at the time Stock is to be voted and any exempt loan which may be outstanding is not in default, each Participant shall be deemed to have one share of Stock allocated to his or her Account for the sole purpose of providing the Trustee with voting instructions.

Notwithstanding any provision hereunder to the contrary, all unallocated shares of Stock must be voted by the Trustee in a manner determined by the Trustee to be for the exclusive benefit of the Participants and Beneficiaries. Whenever such voting rights are to be exercised, the Employers shall provide the Trustee, in a timely manner, with the same notices and other materials as are provided to other holders of the Stock, which the Trustee shall distribute to the Participants. The Participants shall be provided with adequate opportunity to deliver their instructions to the Trustee regarding the voting of Stock allocated to their Accounts. The instructions of the Participants’ with respect to the voting of allocated shares hereunder shall be confidential.

7.1-2 In the event of a tender offer, Stock shall be tendered by the Trustee in the same manner as set forth above with respect to the voting of Stock. Notwithstanding any provision hereunder to the contrary, Stock must be tendered by the Trustee in a manner determined by the Trustee to be for the exclusive benefit of the Participants and Beneficiaries.

7.2 Application of Dividends.

7.2-1 Stock Dividends. Dividends on Stock which are received by the Trustee in the form of additional Stock shall be retained in the Stock Fund, and shall be allocated among the Participants’ Accounts and the Unallocated Stock Fund in accordance with their holdings of the Stock on which the dividends are paid.

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7.2-2 Cash Dividends. The treatment of dividends paid in cash shall be determined after consideration to whether the cash dividends are paid on Stock held in Participants’ Accounts or the Unallocated Stock Fund.

(i) On Stock in Participants’ Accounts.

(A) Employer Exercises Discretion. Dividends on Stock credited to Participants’ Accounts which are received by the Trustee in the form of cash shall, at the direction of the Employer paying the dividends, either (I) be credited to the Accounts in accordance with Section 8.4(iii) and invested as part of the Investment Fund, (II) be distributed immediately to the Participants in proportion with the Participants’ Stock Fund Account balance (III) be distributed to the Participants within 90 days of the close of the Plan Year in which paid in proportion with the Participants’ Stock Fund Account balance or (IV) be used to make payments on the Exempt Loan. If dividends on Stock allocated to a Participant’s Account are used to repay the Exempt Loan, Stock with a fair market value equal to the dividends so used must be allocated to such Participant’s Account in lieu of the dividends.

(B) Participant Exercises Discretion over Dividend. In addition, in the sole discretion of the Employer, the Employer may grant Participants the right to elect: (I) to have cash dividends paid on shares of Stock credited to such Participants’ Stock Fund Accounts distributed to the Participant, or (II) to leave the cash dividends allocated to the Participant’s Account in the Plan, to be credited to the Stock Fund Account and invested in shares of Stock. Dividends on which such election may be made will be fully vested in the Participant (even if not otherwise vested, absent the ability to make such election). Accordingly, the Employer may choose to offer this election only to Participants who are fully vested in their Account. In the event the Employer elects to give Participants the right to determine the treatment of such dividends, the Participant’s election shall be made by filing with the Committee the appropriate written direction as provided by the Committee at such time and in accordance with such procedures and limitations which the Committee may from time to time establish; provided, however, that the procedures established by the Committee shall provide a reasonable opportunity to change the election at least annually, may establish a default election if a Participant fails to make an affirmative election within the time established for making elections, may provide that the election is applicable for the Plan Year and cannot be revoked with respect to such Plan Year, shall otherwise be implemented in a manner such that the dividends paid or reinvested will constitute “applicable dividends” which may be deducted under Code Section 404(k), and are in accordance with applicable guidance issued or to be issued by the Secretary of the Treasury. If the Employer elects to give Participants the right to exercise the discretion in this Paragraph 7.2-2(i)(B), the ability to make such election shall be available to the Participant with respect to dividends paid for the entire Plan Year.

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(ii) On Stock in the Unallocated Stock Fund. Dividends received on shares of Stock held in the Unallocated Stock Fund shall be applied to the repayment of principal and interest then due on the Exempt Loan used to acquire such shares. If the amount of dividends exceeds the amount needed to repay such principal and interest (including any prepayments of principal and interest deemed advisable by the Employer), then in the sole discretion of the Committee, the excess shall: (A) be allocated to Active Participants, pro rata, in proportion to the Compensation of each such person that was earned during that portion of the Plan Year that such person participated in the Plan compared to total Compensation of each Active Participant for such year, or (B) be deemed to be general earnings of the Trust Fund and used for paying appropriate Plan or Trust related expenditures for the Plan Year. Notwithstanding the foregoing, dividends paid on a share of Stock may not be used to make payments on a particular Exempt Loan unless the share was acquired with the proceeds of such loan or a refinancing of such loan.

Section 8. Adjustments to Accounts.

8.1 ESOP Allocations. Amounts available for allocation for a particular Plan Year will be divided into two categories. The first category relates to shares of Stock released from the Unallocated Stock Fund attributable to using cash dividends to make Exempt Loan payments. The second category relates to contributions made by the Employer, shares of Stock released from the Unallocated Stock Fund on the basis of Employer contributions (or on the basis of the complete repayment of the Exempt Loan through the sale or other disposition of Stock in the Unallocated Stock Fund) and amounts forfeited from Stock Fund Accounts pursuant to Section 9.5.

8.1-1 Shares of Stock attributable to the first category will be allocated to the Stock Fund Accounts of eligible Participants as follows:

(i) first, if dividends paid on shares of Stock held in Participants’ Stock Fund Accounts are used to make payments on an Exempt Loan, there shall be allocated to each such account a number of shares of Stock released from the Unallocated Stock Fund with a fair market value (determined as of the Valuation Date coincident with or immediately preceding the loan payment date) that at least equals the amount of dividends so used,

(ii) second, if necessary, any remaining shares of Stock shall be applied to reinstate amounts forfeited from Stock Fund Accounts of former employees who are entitled to a reinstatement under Section 9.5, and

(iii) finally, any remaining shares of Stock shall be allocated as of the last Valuation Date of the Plan Year for which they are allocated in the same manner as described in Section 8.1-2.

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8.1-2 Shares of Stock or cash attributable to the second category (i.e., Employer contributions, Stock released from the Unallocated Stock Fund on the basis of Employer contributions, amounts forfeited, and, to the extent applicable, shares of Stock released in accordance with Section 8.1-1(iii)) will be allocated to the Stock Fund Accounts or Investment Fund Accounts, as the case may be, pro rata, in proportion to the Compensation of each Active Participant that was earned by such Participant during the period of the Plan Year in which such person participated in the Plan compared to total Compensation for all Active Participants.

8.1-3 Shares of Stock or cash attributable to contributions made under Section 4.1-2 shall be allocated specifically to the Participants on whose behalf such contributions were made.

8.2 Charges to Accounts. When a Valuation Date occurs, any distributions made to or on behalf of any Participant or Beneficiary since the last preceding Valuation Date shall be charged to the proper Accounts maintained for that Participant or Beneficiary.

8.3 Stock Fund Account. Subject to the provisions of Sections 5 and 8.1, as of the last day of each Plan Year, the Trustee shall credit to each Participant’s Stock Fund Account: (a) the Participant’s allocable share of Stock purchased by the Trustee or contributed by the Employer to the Trust Fund for that year; (b) the Participant’s allocable share of the Stock that is released from the Unallocated Stock Fund for that year; (c) the Participant’s allocable share of any forfeitures of Stock arising under the Plan during that year; and (d) any stock dividends declared and paid during that year on Stock credited to the Participant’s Stock Fund Account.

If, in any Plan Year during which an outstanding Exempt Loan exists, the Employer directs the Trustee to sell or otherwise dispose of a number of shares of Stock in the Unallocated Stock Fund sufficient to repay, in its entirety, the Exempt Loans, and following such repayment, there remains Stock or other assets in the Unallocated Stock Fund, such Stock or other assets shall be allocated as of the last day of the Plan Year in which the repayment occurred as earnings of the Plan to Active Participants, in proportion to the number of shares held in Active Participants’ Stock Fund Accounts.

8.4 Investment Fund Account. Subject to the provisions of Sections 5 and 8.1 as of the last day of each Plan Year, the Trustee shall credit to each Participant’s Investment Fund Account: (i) the Participant’s allocable share of any contribution for that year made by the Employer in cash or in property other than Stock that is not used by the Trustee to purchase Employer Stock or to make payments due under an Exempt Loan; (ii) the Participant’s allocable share of any forfeitures from the Investment Fund Accounts of other Participants arising under the Plan during that year; (iii) any cash dividends paid during that year on Stock credited to the Participant’s Stock Fund Account, other than dividends which are paid directly to the Participant and other than dividends which are used to repay Exempt Loan; and (iv) the share of the net income or loss of the Trust Fund properly allocable to that Participant’s Investment Fund Account, as provided in Section 8.5.

8.5 Adjustment to Value of Trust Fund. As of the last day of each Plan Year, the Trustee shall determine: (i) the net worth of that portion of the Trust Fund which consists of

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properties other than Stock (the “Investment Fund”); and (ii) the increase or decrease in the net worth of the Investment Fund since the last day of the preceding Plan Year. The net worth of the Investment Fund shall be the fair market value of all properties held by the Trustee under the Trust Agreement other than Stock, net of liabilities other than liabilities to Participants and their beneficiaries. The Trustee shall allocate to the Investment Fund Account of each Participant that percentage of the increase or decrease in the net worth of the Investment Fund equal to the ratio which the balances credited to the Participant’s Investment Fund Account bear to the total amount credited to all Participants’ Investments Fund Accounts. This allocation shall be made after application of Section 7.2, but before application of Sections 8.1, 8.4 and 5.1.

8.6 Participant Statements. Each Plan Year, the Committee shall provide or shall cause to be provided to each Participant a statement of his or her Account balances, and the vested percentage thereof, as of the last day of the Plan Year.

Section 9. Vesting of Participants’ Interests.

9.1 Vesting in Accounts. A Participant’s vested interest in his Account shall be based on his Vesting Years in accordance with the following table, subject to the balance of this Section 9:

Vesting Years	Percentage  of Interest Vested
Fewer than 2		0	%
2		20	%
3		40	%
4		60	%
5		80	%
6 or more		100	%

9.2 Computation of Vesting Years. For purposes of this Plan, a “Vesting Year” means generally a Plan Year in which an Eligible Employee has performed at least 1,000 Hours of Service, beginning with the first Plan Year in which the Eligible Employee has completed an Hour of Service with the Employer, and including Service with other Employers as provided in the definition of “Service.” Notwithstanding the above, an Eligible Employee who was employed with the Bank shall receive credit for vesting purposes for each calendar year of continuous employment with the Bank, prior to the adoption of the Plan, in which such Eligible Employee completed 1,000 Hours of Service (such years shall also be referred to as “Vesting Years”). However, a Participant’s Vesting Years shall be computed subject to the following conditions and qualifications:

9.2-1 A Participant’s Vesting Years shall not include any Service prior to the date on which an Employee attains age 18.

9.2-2 To the extent applicable, a Participant’s vested interest in his Account accumulated before five (5) consecutive one year Breaks in Service shall be determined without regard to any Service after such five consecutive Breaks in Service. Further, if a Participant has five (5) consecutive one year Breaks in Service before his interest in his

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Account has become vested to some extent, pre-Break in Service years of Service shall not be required to be taken into account for purposes of determining his post-Break in Service vested percentage.

9.2-3 To the extent applicable, in the case of a Participant who has five (5) or more consecutive one year Breaks in Service, the Participant’s pre-Break in Service will count in vesting of the Employer-derived post-Break in Service accrued benefit only if either:

(i) such Participant has any nonforfeitable interest in the accrued benefit attributable to Employer contributions at the time of severance from employment, or

(ii) upon returning to Service the number of consecutive one year Breaks in Service is less than the number of years of Service.

9.2-4 Notwithstanding any provision of the Plan to the contrary, calculation of service for determining Vesting Years with respect to qualified military service will be provided in accordance with Section 414(u) of the Code.

9.2-5 To the extent applicable, if any amendment changes the vesting schedule, including an automatic change to or from a top-heavy vesting schedule, any Participant with three (3) or more Vesting Years may, by filing a written request with the Employer, elect to have his vested percentage computed under the vesting schedule in effect prior to the amendment. The election period must begin not later than the later of sixty (60) days after the amendment is adopted, the amendment becomes effective, or the Participant is issued written notice of the amendment by the Employer or the Committee.

9.3 Full Vesting Upon Certain Events.

9.3-1 Notwithstanding Section 9.1, a Participant’s interest in his Account shall fully vest on the Participant’s Normal Retirement Date. The Participant’s interest shall also fully vest in the event that his Service is terminated by Disability or by death. For purposes of this Section 9.3-1, benefits payable in the event of a Participant’s death or Disability while performing qualified military service shall fully vest in accordance with Section 414(u)(9) of the Code.

9.3-2 The Participant’s interest in his Account shall also fully vest in the event of a “Change in Control” of the Bank, or the Company. For these purposes “Change in Control” means a change in control of a nature that: (i) would be required to be reported in response to Item 5.01 of the current report on Form 8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”); or (ii) results in a Change in Control of the Bank or the Company within the meaning of the Bank Holding Company Act of 1956, as amended (“BHCA”); or (iii) without limitation such a Change in Control shall be deemed to have occurred at such time as (a) any “person” (as the term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 25% or more of the

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combined voting power of the Company’s outstanding securities, except for any securities purchased by the Bank’s employee stock ownership plan or trust; or (b) individuals who constitute the Board of the Directors on the date hereof (the “Incumbent Board”) cease for any reason to constitute at least a majority thereof, provided that any person becoming a director subsequent to the date hereof whose election was approved by a vote of at least three-quarters of the directors comprising the Incumbent Board, or whose nomination for election by the Company’s stockholders was approved by the same Nominating Committee serving under an Incumbent Board, shall be, for purposes of this clause (b), considered as though he were a member of the Incumbent Board; or (c) a plan of reorganization, merger, consolidation, sale of all or substantially all the assets of the Bank or the Company or similar transaction in which the Bank or Company is not the surviving institution occurs or is effected; or (d) a proxy statement soliciting proxies from stockholders of the Company is distributed, by someone other than the current management of the Company, seeking stockholder approval of a plan of reorganization, merger or consolidation of the Company or similar transaction with one or more business organizations as a result of which the outstanding shares of the class of securities then subject to the plan are to be exchanged for or converted into cash or property or securities not issued by the Company; or (e) a tender offer is made for 25% or more of the voting securities of the Company and the shareholders owning beneficially or of record 25% or more of the outstanding securities of the Company have tendered or offered to sell their shares pursuant to such tender offer and such tendered shares have been accepted by the tender offeror.

9.4 Full Vesting Upon Plan Termination. Notwithstanding Section 9.1, a Participant’s interest in his Account shall fully vest upon termination of this Plan or upon the permanent and complete discontinuance of contributions by his Employer. In the event of a partial termination, the interest of each affected Participant shall fully vest with respect to that part of the Plan which is terminated. A partial termination of the Plan shall be determined by the Internal Revenue Service Commissioner based on the facts and circumstances of the particular case in accordance with Code Section 411(d)(3) and the corresponding Treasury Regulations issued thereunder.

9.5 Forfeiture, Repayment, and Restoral. If a Participant’s Service terminates before his interest in his Account is fully vested, that portion which has not vested shall be forfeited after a one-year break in service. If a Participant’s Service terminates prior to having any portion of his Account become vested, such Participant shall be deemed to have received a distribution of his vested interest immediately upon his termination of Service.

If a Participant who has suffered a forfeiture of the nonvested portion of his Account returns to Service before he has five (5) consecutive one-year Breaks in Service, the nonvested portion shall be restored, provided that, if the Participant had received a distribution of his vested Account balance, the amount distributed shall be repaid prior to such restoral. The Participant may repay such amount at any time within five years after he has returned to Service. The amount repaid shall be credited to his Account at the time it is repaid; an additional amount equal to that portion of his Account which was previously forfeited shall be restored to his Account at the same time from other Employees’ forfeitures and, if such forfeitures are insufficient, then from amounts allocated in accordance with Section 8.1-1(ii), and if insufficient, then from a

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special contribution by his Employer for that year. A Participant who was deemed to have received a distribution of his vested interest in the Plan shall have his Account restored as of the first day on which he performs an Hour of Service after his return.

In addition, if a Participant did not receive a distribution of his vested Account balance but his non-vested Account balance was forfeited after a one-year Break in Service, such nonvested Account balance shall be restored if the Plan terminates before the Participant has a five-year Break in Service. If the Participant did not receive a distribution of his vested Account balance, any forfeiture restored shall include earnings that would have been credited to the Account but for the forfeiture.

For purposes of this Section and Section 5.1 of the Plan, if a portion of a Participant’s Account is forfeited, Stock allocated from an Exempt Loan will be forfeited only after other assets. If interests in more than one class of Stock have been allocated to a Participant’s Account, the Participant must be treated as forfeiting the same proportion of each such class.

9.6 Accounting for Forfeitures. If a portion of a Participant’s Account is forfeited, Stock allocated to said Participant’s Account shall be forfeited only after other assets are forfeited. If interests in more than one class of Stock have been allocated to a Participant’s Account, the Participant must be treated as forfeiting the same proportion of each class of Stock. A forfeiture shall be charged to the Participant’s Account as of the first day of the first Valuation Period in which the forfeiture becomes certain pursuant to Section 9.5. Except as otherwise provided in that Section, a forfeiture shall be added to the contributions of the terminated Participant’s Employer which are to be credited to other Participants pursuant to Section 4.1 as of the last day of the Plan Year in which the forfeiture becomes certain.

9.7 Vesting and Nonforfeitability. A Participant’s interest in his Account which has become vested shall be nonforfeitable for any reason.

Section 10. Payment of Benefits.

10.1 Benefits for Participants. For a Participant whose Service ends for any reason, distribution will be made to or for the benefit of the Participant or, in the case of the Participant’s death, his Beneficiary, by payment in a lump sum, in accordance with Section 10.2. Prior to any such distribution, any Participant entitled to a distribution will receive a form upon which the Participant can elect the manner of such distribution (e.g., whether to receive the distribution directly or transfer such distribution to an individual retirement account or other tax-qualified plan), a special tax notice regarding the consequences of such distribution, and, if applicable, that the Participant has the right not to consent to a distribution at such time.

If a Participant so desires, he may direct how his benefits are to be paid to his Beneficiary. Notice to the Participant with regard to having the right to elect the manner in which his vested Account balance will be distributed to him may be given up to 180 days before the first day of the first period for which an amount is payable. If a deceased Participant did not file a direction with the Committee, the Participant’s benefits shall be distributed to his Beneficiary in a lump sum. Notwithstanding any provision to the contrary, if the value of a Participant’s vested Account balance at the time of any distribution does not exceed $1,000, then

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such Participant’s vested Account shall be distributed, without regard to whether the Participant consents, in a lump sum within 60 days after the end of the Plan Year in which employment terminates. If the value of a Participant’s vested Account balance is in excess of $5,000, then his benefits shall not be paid prior to his Normal Retirement Date unless he elects an early payment date in a written election filed with the Committee. A Participant may modify such an election at any time, provided any new benefit payment date is at least 30 days after a modified election is delivered to the Committee. The Committee shall provide the Participant with written notice designed to comply with the requirements of Code Section 411(a)(11), and shall provide the Participant with a general description of the material features of the optional forms of benefits under the Plan and the right to defer receipt of any distribution under the Plan. Such notice shall be provided no less than 30 days and no more than 180 days before the date a distribution under the Plan commences. Notwithstanding the foregoing, failure of a Participant to consent to a distribution prior his Normal Retirement Date shall be deemed to be an election to defer commencement of payment of any benefit under this section. Notwithstanding the foregoing, unless a Participant elects to receive a distribution, the Committee shall transfer accounts of $1,000 or more, but not exceeding $5,000, in a direct rollover to an individual retirement plan designated by the Committee in accordance with Code Section 401(a)(31)(B) and the regulations promulgated thereunder. All distributions of $5,000 or less that are made pursuant to this Section without the Participant’s consent shall be made in cash.

Notwithstanding anything to the contrary, in the event the Participant dies while performing qualified military service (as defined Section 414(u) of the Code), the Participant’s Beneficiary shall be entitled to any additional benefit provided under the Plan had the Participant resumed and then severed from employment on account of death.

10.2 Time for Distribution.

10.2-1 If the Participant and, if applicable, with the consent of the Participant’s spouse, elects the distribution of the Participant’s Account balance in the Plan, distribution shall commence as soon as practicable following his termination of Service, but no later than one year after the close of the Plan Year in which the Participant severs employment by reason of attainment of Normal Retirement Age under the Plan, Disability, or death, or which is the fifth Plan Year following the Plan Year in which the Participant otherwise severs employment, except that this clause shall not apply if the Participant is reemployed by the Employer before distribution is required to begin.

10.2-2 Unless the Participant elects otherwise, the distribution of the balance of a Participant’s Account shall commence not later than the 60th day after the latest of the close of the Plan Year in which -

(i) the Participant attains the age of 65;

(ii) occurs the tenth anniversary of the year in which the Participant commenced participation in the Plan; or

(iii) the Participant terminates his Service with the Employer.

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10.2-3 Notwithstanding anything to the contrary, (1) with respect to a 5-percent owner (as defined in Code Section 416), distribution of a Participant’s Account shall commence (whether or not he remains in the employ of the Employer) not later than the April 1 of the calendar year next following the calendar year in which the Participant attains age 70 ¹/₂, and (2) with respect to all other Participants, payment of a Participant’s benefit will commence not later than April 1 of the calendar year following the calendar year in which the Participant attains age 70 ¹/₂, or, if later, the year in which the Participant retires. A Participant’s benefit from that portion of his Account committed to the Investment Fund shall be calculated on the basis of the most recent Valuation Date before the date of payment.

10.2-4 Distribution of a Participant’s Account balance after his death shall comply with the following requirements:

(i) If a Participant dies before his distributions have commenced, distribution of his Account to his Beneficiary shall commence not later than one year after the end of the Plan Year in which the Participant died; however, if the Participant’s Beneficiary is his surviving Spouse, distributions may commence on the date on which the Participant would have attained age 70 ¹/₂. In either case, distributions shall be completed within five years after they commence.

(ii) If the Participant dies after distribution has commenced pursuant to Section 10.1 but before his entire interest in the Plan has been distributed to him, then the remaining portion of that interest shall, in accordance with Section 401(a)(9) of the Code, be distributed at least as rapidly as under the method of distribution being used under Section 10.1 at the date of his death.

(iii) If a married Participant dies before his benefit payments begin, then the Committee shall cause the balance in his Account to be paid to his Beneficiary, provided, however, that no election by a married Participant of a different Beneficiary than his surviving Spouse shall be valid unless the election is accompanied by the Spouse’s written consent, which (A) must acknowledge the effect of the election, (B) must explicitly provide either that the designated Beneficiary may not subsequently be changed by the Participant without the Spouse’s further consent, or that it may be changed without such consent, and (C) must be witnessed by the Committee, its representative, or a notary public. This requirement shall not apply if the Participant establishes to the Committee’s satisfaction that the Spouse may not be located.

10.2-5 If a Participant or any other distributee’s distribution is rolled over to another eligible retirement plan following the Participant’s required beginning date (as determined in accordance with Section 10.2-3), only the amount that exceeds the required minimum distribution amount for the Plan Year (as determined in accordance with Code Section 401(a)(9)) in which the rollover is completed is treated as an eligible rollover distribution for purposes of Section 10.9.

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10.2-6 All distributions under this section shall be determined and made in accordance with Code Section 401(a)(9) and final Treasury Regulations Sections 1.401(a)(9)-1 through 1.401(a)(9)-9, including the minimum distribution incidental benefit requirements of Code Section 401(a)(9)(G). These provisions override any distribution options in the Plan inconsistent with Code Section 401(a)(9).

10.3 Marital Status. The Committee, the Plan, the Trustee, and the Employers shall be fully protected and discharged from any liability to the extent of any benefit payments made as a result of the Committee’s good faith and reasonable reliance upon information obtained from a Participant and his Employer as to his marital status.

10.4 Delay in Benefit Determination. If the Committee is unable to determine the benefits payable to a Participant or Beneficiary on or before the latest date prescribed for payment pursuant to Section 10.1 or 10.2, the benefits shall in any event be paid within 60 days after they can first be determined, with whatever makeup payments may be appropriate in view of the delay.

10.5 Accounting for Benefit Payments. Any benefit payment shall be charged to the Participant’s Account as of the first day of the Valuation Period in which the payment is made.

10.6 Options to Receive Stock. Unless ownership of virtually all Stock is restricted to active Employees and qualified retirement plans for the benefit of Employees pursuant to the certificates of incorporation or by-laws of the Employers issuing Stock, a terminated Participant or the Beneficiary of a deceased Participant may instruct the Committee to distribute the Participant’s entire vested interest in his Account in the form of Stock. In that event, the Committee shall apply the Participant’s vested interest in the Investment Fund to purchase sufficient Stock from the Stock Fund or from any owner of Stock to make the required distribution. In all other cases, other than as specifically set forth in Section 10.1, the Participant’s vested interest in the Stock Fund shall be distributed in shares of Stock, and his vested interest in the Investment Fund shall be distributed in cash. If Stock acquired with the proceeds of an Exempt Loan available for distribution consist of more than one class of Stock, the Participant (or Beneficiary, if applicable) must receive substantially the same proportion of each such class.

Any Participant who receives Stock pursuant to Section 10.1, and any person who has received Stock from the Plan or from such a Participant by reason of the Participant’s death or incompetence, by reason of divorce or separation from the Participant, or by reason of a rollover contribution described in Section 402(a)(5) of the Code, shall have the right to require the Employer which issued the Stock to purchase the Stock for its current fair market value (hereinafter referred to as the “put right”). The put right shall be exercisable by written notice to the Committee during the first 60 days after the Stock is distributed by the Plan, and, if not exercised in that period, during the first 60 days in the following Plan Year after the Committee has communicated to the Participant its determination as to the Stock’s current fair market value. However, the put right shall not apply to the extent that the Stock, at the time the put right would otherwise be exercisable, may be sold on an established market in accordance with federal and state securities laws and regulations. Similarly, the put option shall not apply with respect to the portion of a Participant’s Account which the Employee elected to have reinvested under Code

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Section 401(a)(28)(B). If the put right is exercised, the Trustee may, if so directed by the Committee in its sole discretion, assume the Employer’s rights and obligations with respect to purchasing the Stock. Notwithstanding anything herein to the contrary, in the case of a plan established by a bank (as defined in Code Section 581), the put option shall not apply if prohibited by a federal or state law and Participants are entitled to elect their benefits be distributed in cash.

The Employer or the Trustee, as the case may be, may elect to pay for the Stock in equal periodic installments, not less frequently than annually, over a period beginning not later than 30 days after the exercise of the put right and not exceeding five years, with adequate security and interest at a reasonable rate on the unpaid balance, all such terms to be set forth in a promissory note delivered to the seller with normal terms as to acceleration upon any uncured default.

Nothing contained herein shall be deemed to obligate any Employer to register any Stock under any federal or state securities law or to create or maintain a public market to facilitate the transfer or disposition of any Stock. The put right described herein may only be exercised by a person described in the second preceding paragraph, and may not be transferred with any Stock to any other person. As to all Stock purchased by the Plan in exchange for any Exempt Loan, the put right shall be nonterminable. The put right for Stock acquired through an Exempt Loan shall continue with respect to such Stock after the Exempt Loan is repaid or the Plan ceases to be an employee stock ownership plan. Notwithstanding anything in the Plan to the contrary, if securities acquired with the proceeds of an Exempt Loan available for distribution consist of more than one class, a distributee must receive substantially the same proportion of each such class, in accordance with Treasury Regulations Section 54.4975-11(f)(2).

10.7 Restrictions on Disposition of Stock. Except in the case of Stock which is traded on an established market, a Participant who receives Stock pursuant to Section 10.1, and any person who has received Stock from the Plan or from such a Participant by reason of the Participant’s death or incompetence, by reason of divorce or separation from the Participant, or by reason of a rollover contribution described in Section 402(a)(5) of the Code, shall, prior to any sale or other transfer of the Stock to any other person, first offer the Stock to the issuing Employer and to the Plan at the greater of (i) its current fair market value, or (ii) the purchase price offered in good faith by an independent third party purchaser. This restriction shall apply to any transfer, whether voluntary, involuntary, or by operation of law, and whether for consideration or gratuitous. Either the Employer or the Trustee may accept the offer within 14 days after it is delivered. Any Stock distributed by the Plan shall bear a conspicuous legend describing the right of first refusal under this Section 10.7, as well as any other restrictions upon the transfer of the Stock imposed by federal and state securities laws and regulations.

10.8 Continuing Loan Provisions; Creations of Protections and Rights. Except as otherwise provided in Sections 10.6 and 10.7 and this Section, no shares of Employer Stock held or distributed by the Trustee may be subject to a put, call or other option, or buy-sell arrangement. The provisions of this Section shall continue to be applicable to such Stock even if the Plan ceases to be an employee stock ownership plan under Section 4975(e)(7) of the Code.

10.9 Direct Rollover of Eligible Distribution. A Participant or distributee may elect, at the time and in the manner prescribed by the Trustee or the Committee, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the Participant or distributee in a direct rollover.

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10.9-1 An “eligible rollover” is any distribution that does not include: any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the Participant and the Participant’s Beneficiary, or for a specified period of ten years or more; any distribution to the extent such distribution is required under Code Section 401(a)(9); any hardship distribution described in Section 401(k)(2)(B)(i)(IV) of the Code; and the portion of any distribution that is not included in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities). Notwithstanding the foregoing, an “eligible rollover” shall include a distribution that is made to a “distributee” as defined under Section 10.9-4.

10.9-2 An “eligible retirement plan” is an individual retirement account described in Code Section 408(a), an individual retirement annuity described in Code Section 408(b), a deemed individual retirement account described in Code Section 408(q), an annuity plan described in Code Section 403(a), a Roth individual retirement account in accordance with Code Section 408A(e), or a qualified trust described in Code Section 401(a), that accepts the distributee’s eligible rollover distribution. An eligible retirement plan shall also include an annuity contract described in Section 403(b) of the Code and an eligible plan under Section 457(b) of the Code which is maintained by a state, or any agency or instrumentality of a state or political subdivision of a state and which agrees to separately account for amounts transferred into such plan from this Plan.

10.9-3 A “direct rollover” is a payment by the Plan to the eligible retirement plan specified by the distributee.

10.9-4 The term “distributee” shall refer to a deceased Participant’s Spouse or a Participant’s former Spouse who is the alternate payee under a qualified domestic relations order, as defined in Code Section 414(p), and shall include non-Spouse Beneficiaries pursuant to Code Section 402(c)(11).

10.9-5 The Committee shall provide Participants or other distributes of eligible rollover distributions with a written notice designed to comply with the requirements of Code Section 402(f). Such notice shall be provided within a reasonable period of time before making an eligible rollover distribution. Such notice may be provided up to 180 days before the first day of the first period for which an amount is payable.

10.10 Waiver of 30-Day Period After Notice of Distribution. If a distribution is one to which Sections 402(f) and 411(a)(11) of the Code apply, such distribution may commence less than 30 days after the notice required under Section 1.402(f)-1 or 1.411(a)-11(c) of the Treasury Regulations is given, provided that:

(i) the Trustee or Committee, as applicable, clearly informs the Participant that the Participant has a right to a period of at least 30 days after receiving the notice to consider the decision of whether or not to elect to make a tax-free rollover or receive a taxable distribution (and, if applicable, a particular form of distribution), and

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(ii) the Participant, after receiving the notice, affirmatively elects to make a tax-free rollover or receive a taxable distribution.

Section 11. Rules Governing Benefit Claims and Review of Appeals.

11.1 Claim for Benefits. Any Participant or Beneficiary who qualifies for the payment of benefits shall file a claim for his benefits with the Committee on a form provided by the Committee. The claim, including any election of an alternative benefit form, shall be filed at least 30 days before the date on which the benefits are to begin. If a Participant or Beneficiary fails to file a claim by the day before the date on which benefits become payable, he shall be presumed to have filed a claim for payment for the Participant’s benefits in the standard form prescribed by Sections 10.1 or 10.2.

11.2 Notification by Committee. Within 90 days after receiving a claim for benefits (or within 180 days, if special circumstances require an extension of time and written notice of the extension is given to the Participant or Beneficiary within 90 days after receiving the claim for benefits), the Committee shall notify the Participant or Beneficiary whether the claim has been approved or denied. If the Committee denies a claim in any respect, the Committee shall set forth in a written notice to the Participant or Beneficiary:

(i) each specific reason for the denial;

(ii) specific references to the pertinent Plan provisions on which the denial is based;

(iii) a description of any additional material or information which could be submitted by the Participant or Beneficiary to support his claim, with an explanation of the relevance of such information; and

(iv) an explanation of the claims review procedures set forth in Section 11.3.

11.3 Claims Review Procedure. Within 60 days after a Participant or Beneficiary receives notice from the Committee that his claim for benefits has been denied in any respect, he may file with the Committee a written notice of appeal setting forth his reasons for disputing the Committee’s determination. In connection with his appeal the Participant or Beneficiary or his representative may inspect or purchase copies of pertinent documents and records to the extent not inconsistent with other Participants’ and Beneficiaries’ rights of privacy. Within 60 days after receiving a notice of appeal from a prior determination (or within 120 days, if special circumstances require an extension of time and written notice of the extension is given to the Participant or Beneficiary and his representative within 60 days after receiving the notice of appeal), the Committee shall furnish to the Participant or Beneficiary and his representative, if any, a written statement of the Committee’s final decision with respect to his claim, including the reasons for such decision and the particular Plan provisions upon which it is based.

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Section 12. The Committee and its Functions.

12.1 Authority of Committee. The Committee shall be the “plan administrator” within the meaning of ERISA and shall have exclusive responsibility and authority to control and manage the operation and administration of the Plan, including the interpretation and application of its provisions, except to the extent such responsibility and authority are otherwise specifically (i) allocated to the Bank, the Employers, or the Trustee under the Plan and Trust Agreement, (ii) delegated in writing to other persons by the Bank, the Employers, the Committee, or the Trustee, or (iii) allocated to other parties by operation of law. The Committee shall have exclusive responsibility regarding decisions concerning the payment of benefits under the Plan. The Committee shall have no investment responsibility with respect to the Investment Fund except to the extent, if any, specifically provided in the Trust Agreement. In the discharge of its duties, the Committee may employ accountants, actuaries, legal counsel, and other agents (who also may be employed by an Employer or the Trustee in the same or some other capacity) and may pay their reasonable expenses and compensation.

12.2 Identity of Committee. The Committee shall consist of three or more individuals selected by the Bank. Any individual, including a director, trustee, shareholder, officer, or Employee of an Employer, shall be eligible to serve as a member of the Committee. The Bank shall have the power to remove any individual serving on the Committee at any time without cause upon 10 days written notice, and any individual may resign from the Committee at any time upon 10 days written notice to the Bank. The Bank shall notify the Trustee of any change in membership of the Committee.

12.3 Duties of Committee. The Committee shall keep whatever records may be necessary to implement the Plan and shall furnish whatever reports may be required from time to time by the Bank. The Committee shall furnish to the Trustee whatever information may be necessary to properly administer the Trust. The Committee shall see to the filing with the appropriate government agencies of all reports and returns required of the Plan under ERISA and other laws.

Further, the Committee shall have exclusive responsibility and authority with respect to the Plan’s holdings of Stock and shall direct the Trustee in all respects regarding the purchase, retention, sale, exchange, and pledge of Stock and the creation and satisfaction of Exempt Loans. The Committee shall at all times act consistently with the Bank’s long-term intention that the Plan, as an employee stock ownership plan, be invested primarily in Stock. In determining the proper extent of the Trust’s investment in Stock, the Committee shall be authorized to employ investment counsel, legal counsel, appraisers, and other agents and to pay their reasonable expenses and compensation.

12.4 Valuation of Stock. If the valuation of any Stock is not readily tradable on an established securities market, the valuation of such Stock shall be determined by an independent appraiser. For purposes of the preceding sentence, the term “independent appraiser” means any appraiser meeting requirements similar to the requirements of the regulations prescribed under Section 170(a)(1) of the Code. The Valuation Date for all Plan transactions, including transactions between the Plan and a disqualified person, shall be the date of the transaction, in accordance with Treasury Regulations Section 54.4975-11(d)(5).

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12.5 Compliance with ERISA. The Committee shall perform all acts necessary to comply with ERISA. Each individual member or employee of the Committee shall discharge his duties in good faith and in accordance with the applicable requirements of ERISA.

12.6 Action by Committee. All actions of the Committee shall be governed by the affirmative vote of a number of members which is a majority of the total number of members currently appointed, including vacancies.

12.7 Execution of Documents. Any instrument executed by the Committee shall be signed by any member or employee of the Committee.

12.8 Adoption of Rules. The Committee shall adopt such rules and regulations of uniform applicability as it deems necessary or appropriate for the proper administration and interpretation of the Plan.

12.9 Responsibilities to Participants. The Committee shall determine which Employees qualify to enter the Plan. The Committee shall furnish to each Eligible Employee whatever summary plan descriptions, summary annual reports, and other notices and information may be required under ERISA. The Committee also shall determine when a Participant or his Beneficiary qualifies for the payment of benefits under the Plan. The Committee shall furnish to each such Participant or Beneficiary whatever information is required under ERISA (or is otherwise appropriate) to enable the Participant or Beneficiary to make whatever elections may be available pursuant to Sections 6 and 10, and the Committee shall provide for the payment of benefits in the proper form and amount from the assets of the Trust Fund. The Committee may decide in its sole discretion to permit modifications of elections and to defer or accelerate benefits to the extent such decision is consistent with applicable law and made in a non-discriminatory manner and in the best interests of all Participants and Beneficiaries.

12.10 Alternative Payees in Event of Incapacity. If the Committee finds at any time that an individual qualifying for benefits under this Plan is a minor or is incompetent, the Committee may direct the benefits to be paid, in the case of a minor, to his parents, his legal guardian, or a custodian for him under the Uniform Gifts to Minors Act, or, in the case of an incompetent, to his spouse, or his legal guardian, the payments to be used for the individual’s benefit. The Committee and the Trustee shall not be obligated to inquire as to the actual use of the funds by the person receiving them under this Section 12.10, and any such payment shall completely discharge the obligations of the Plan, the Trustee, the Committee, and the Employers to the extent of the payment.

12.11 Indemnification by Employers. Except as separately agreed in writing, the Committee, and any member or employee of the Committee, shall be indemnified and held harmless by the Employer, jointly and severally, to the fullest extent permitted by ERISA, and subject to and conditioned upon compliance with 12 C.F.R. Section 545.121, to the extent applicable, against any and all costs, damages, expenses, and liabilities reasonably incurred by or imposed upon it or him in connection with any claim made against it or him or in which it or he may be involved by reason of its or his being, or having been, the Committee, or a member or employee of the Committee, to the extent such amounts are not paid by insurance.

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12.12 Nonparticipation by Interested Member. Any member of the Committee who also is a Participant in the Plan shall take no part in any determination specifically relating to his own participation or benefits, unless his abstention would leave the Committee incapable of acting on the matter.

Section 13. Adoption, Amendment, or Termination of the Plan.

13.1 Adoption of Plan by Other Employers. With the consent of the Bank, any entity may become a participating Employer under the Plan by (i) taking such action as shall be necessary to adopt the Plan, (ii) becoming a party to the Trust Agreement establishing the Trust Fund, and (iii) executing and delivering such instruments and taking such other action as may be necessary or desirable to put the Plan into effect with respect to the entity’s Employees.

13.2 Plan Adoption Subject to Qualification. Notwithstanding any other provision of the Plan, the adoption of the Plan and the execution of the Trust Agreement are conditioned upon their being determined initially by the Internal Revenue Service to meet the qualification requirements of Section 401(a) of the Code, so that the Employers may deduct currently for federal income tax purposes their contributions to the Trust and so that the Participants may exclude the contributions from their gross income and recognize income only when they receive benefits. In the event that this Plan is held by the Internal Revenue Service not to qualify initially under Section 401(a), the Plan may be amended retroactively to the earliest date permitted by U.S. Treasury Regulations in order to secure qualification under Section 401(a). If this Plan is held by the Internal Revenue Service not to qualify initially under Section 401(a) either as originally adopted or as amended, each Employer’s contributions to the Trust under this Plan (including any earnings thereon) shall be returned to it and this Plan shall be terminated. In the event that this Plan is amended after its initial qualification and the Plan as amended is held by the Internal Revenue Service not to qualify under Section 401(a), the amendment may be modified retroactively to the earliest date permitted by U.S. Treasury Regulations in order to secure approval of the amendment under Section 401(a). In addition, reversions of Employer contributions (including earnings or losses attributable thereto) are permitted within one year after the applicable determination date, if the reversion is due to a good faith mistake of fact.

13.3 Right to Amend or Terminate. The Bank intends to continue this Plan as a permanent program. However, each participating Employer separately reserves the right to suspend, supersede, or terminate the Plan at any time and for any reason, as it applies to that Employer’s Employees, and the Bank reserves the right to amend, suspend, supersede, merge, consolidate, or terminate the Plan at any time and for any reason, as it applies to the Employees of each Employer. No amendment, suspension, supersession, merger, consolidation, or termination of the Plan shall (i) reduce any Participant’s or Beneficiary’s proportionate interest in the Trust Fund, (ii) reduce or restrict, either directly or indirectly, the benefit provided any Participant prior to the amendment, or (iii) divert any portion of the Trust Fund to purposes other than the exclusive benefit of the Participants and their Beneficiaries prior to the satisfaction of all liabilities under the Plan. Moreover, there shall not be any transfer of assets to a successor plan or merger or consolidation with another plan unless, in the event of the termination of the successor plan or the surviving plan immediately following such transfer, merger, or consolidation, each participant or beneficiary would be entitled to a benefit equal to or greater than the benefit he would have been entitled to if the plan in which he was previously a

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participant or beneficiary had terminated immediately prior to such transfer, merger, or consolidation. Following a termination of this Plan by the Bank, the Trustee shall continue to administer the Trust and pay benefits in accordance with the Plan as amended from time to time and the Committee’s instructions.

Section 14. Miscellaneous Provisions.

14.1 Plan Creates No Employment Rights. Nothing in this Plan shall be interpreted as giving any Employee the right to be retained as an Employee by an Employer, or as limiting or affecting the rights of an Employer to control its Employees or to terminate the Service of any Employee at any time and for any reason, subject to any applicable employment or collective bargaining agreements.

14.2 Nonassignability of Benefits. No assignment, pledge, or other anticipation of benefits from the Plan will be permitted or recognized by the Employer, the Committee, or the Trustee. Moreover, benefits from the Plan shall not be subject to attachment, garnishment, or other legal process for debts or liabilities of any Participant or Beneficiary, to the extent permitted by law. This prohibition on assignment or alienation shall apply to any judgment, decree, or order (including approval of a property settlement agreement) which relates to the provision of child support, alimony, or property rights to a present or former spouse, child or other dependent of a Participant pursuant to a state domestic relations or community property law, unless the judgment, decree, or order is determined by the Committee to be a qualified domestic relations order within the meaning of Section 414(p) of the Code, as more fully set forth in Section 14.12 hereof.

14.3 Limit of Employer Liability. The liability of the Employer with respect to Participants under this Plan shall be limited to making contributions to the Trust from time to time, in accordance with Section 4.

14.4 Treatment of Expenses. All expenses incurred by the Committee and the Trustee in connection with administering this Plan and Trust Fund shall be paid by the Trustee from the Trust Fund to the extent the expenses have not been paid or assumed by the Employer or by the Trustee. The Committee may determine that, and shall inform the Trustee when, reasonable expenses may be charged directly to the Account or Accounts of a Participant or group of Participants to whom or for whose benefit such expenses are allocable, subject to the guidelines set forth in Field Assistance Bulletin 2003-03, to the extent not superseded, or any successor directive issued by the Department of Labor.

14.5 Number and Gender. Any use of the singular shall be interpreted to include the plural, and the plural the singular. Any use of the masculine, feminine, or neuter shall be interpreted to include the masculine, feminine, or neuter, as the context shall require.

14.6 Nondiversion of Assets. Except as provided in Sections 5.2 and 14.12, under no circumstances shall any portion of the Trust Fund be diverted to or used for any purpose other than the exclusive benefit of the Participants and their Beneficiaries prior to the satisfaction of all liabilities under the Plan.

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14.7 Separability of Provisions. If any provision of this Plan is held to be invalid or unenforceable, the other provisions of the Plan shall not be affected but shall be applied as if the invalid or unenforceable provision had not been included in the Plan.

14.8 Service of Process. The agent for the service of process upon the Plan shall be the president of the Bank, or such other person as may be designated from time to time by the Bank.

14.9 Governing State Law. This Plan shall be interpreted in accordance with the laws of the Commonwealth of Massachusetts to the extent those laws are applicable under the provisions of ERISA.

14.10 Employer Contributions Conditioned on Deductibility. Employer Contributions to the Plan are conditioned on deductibility under Code Section 404. In the event that the Internal Revenue Service shall determine that all or any portion of an Employer Contribution is not deductible under that Section, the nondeductible portion shall be returned to the Employer within one year of the disallowance of the deduction. In addition, reversions of Employer contributions (including earnings or losses attributable thereto) are permitted within one year after the applicable determination date, if the reversion is due to a good faith mistake of fact. The maximum amount that may be returned to the Employer in the case of a mistake of fact or the disallowance of a deduction is the excess of (1) the amount contributed, over, as relevant, (2) (A) the amount that would have been contributed had no mistake of fact occurred, or (B) the amount that would have been contributed had the contribution been limited to the amount that is deductible after any disallowance by the Internal Revenue Service.

14.11 Unclaimed Accounts. Neither the Employer nor the Trustees shall be under any obligation to search for, or ascertain the whereabouts of, any Participant or Beneficiary. The Employer or the Trustees, by certified or registered mail addressed to his last known address of record with the Employer, shall notify any Participant or Beneficiary that he is entitled to a distribution under this Plan, and the notice shall quote the provisions of this Section. If the Participant or Beneficiary fails to claim his benefits or make his whereabouts known in writing to the Employer or the Trustees within seven (7) calendar years after the date of notification, the benefits of the Participant or Beneficiary under the Plan will be disposed of as follows:

(i) If the whereabouts of the Participant is unknown but the whereabouts of the Participant’s Beneficiary is known to the Trustees, distribution will be made to the Beneficiary.

(ii) If the whereabouts of the Participant and his Beneficiary are unknown to the Trustees, the Plan will forfeit the benefit, provided that the benefit is subject to a claim for reinstatement if the Participant or Beneficiary make a claim for the forfeited benefit.

Any payment made pursuant to the power herein conferred upon the Trustees shall operate as a complete discharge of all obligations of the Trustees, to the extent of the distributions so made.

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14.12 Qualified Domestic Relations Order. Section 14.2 shall not apply to a “qualified domestic relations order” defined in Code Section 414(p), and such other domestic relations orders permitted to be so treated under the provisions of the Retirement Equity Act of 1984. Further, to the extent provided under a “qualified domestic relations order,” a former Spouse of a Participant shall be treated as the Spouse or surviving Spouse for all purposes under the Plan.

In the case of any domestic relations order received by the Plan:

(i) The Employer or the Committee shall promptly notify the Participant and any other alternate payee of the receipt of such order and the Plan’s procedures for determining the qualified status of domestic relations orders, and

(ii) Within a reasonable period after receipt of such order, the Employer or the Committee shall determine whether such order is a qualified domestic relations order and notify the Participant and each alternate payee of such determination. The Employer or the Committee shall establish reasonable procedures to determine the qualified status of domestic relations orders and to administer distributions under such qualified orders.

During any period in which the issue of whether a domestic relations order is a qualified domestic relations order is being determined (by the Employer or Committee, by a court of competent jurisdiction, or otherwise), the Employer or the Committee shall segregate in a separate account in the Plan or in an escrow account the amounts which would have been payable to the alternate payee during such period if the order had been determined to be a qualified domestic relations order. If within eighteen (18) months the order (or modification thereof) is determined to be a qualified domestic relations order, the Employer or the Committee shall pay the segregated amounts (plus any interest thereon) to the person or persons entitled thereto. If within eighteen (18) months it is determined that the order is not a qualified domestic relations order, or the issue as to whether such order is a qualified domestic relations order is not resolved, then the Employer or the Committee shall pay the segregated amounts (plus any interest thereon) to the person or persons who would have been entitled to such amounts if there had been no order. Any determination that an order is a qualified domestic relations order which is made after the close of the eighteen (18) month period shall be applied prospectively only. The term “alternate payee” means any Spouse, former Spouse, child or other dependent of a Participant who is recognized by a domestic relations order as having a right to receive all, or a portion of, the benefit payable under a Plan with respect to such Participant.

14.13 Use of Electronic Media to Provide Notices and Make Participant Elections. Pursuant to Treasury Regulations Section 1.401(a)-21, the Plan may elect to use electronic media to provide notices required to be provided to Participants under the Plan and will accept elections from Participants communicated to the Plan using such electronic media.

14.14 Acquisition of Securities. Notwithstanding any other provision of the Plan to the contrary, at no time shall the Plan be obligated to acquire securities from a particular security holder at an indefinite time determined upon the happening of an event such as the death of the security holder, pursuant to Treasury Regulations Section 54.4975-11(a)(7)(i).

38

Section 15. Top-Heavy Provisions.

15.1 Top-Heavy Plan. This Plan is top-heavy if any of the following conditions exist:

(i) If the top-heavy ratio for this Plan exceeds sixty percent (60%) and this Plan is not part of any required aggregation group or permissive aggregation group;

(ii) If this Plan is a part of a required aggregation group (but is not part of a permissive aggregation group) and the aggregate top-heavy ratio for the group of Plans exceeds sixty percent (60%); or

(iii) If this Plan is a part of a required aggregation group and part of a permissive aggregation group and the aggregate top-heavy ratio for the permissive aggregation group exceeds sixty percent (60%).

15.2 Definitions. In making this determination, the Committee shall use the following definitions and principles:

15.2-1 The “Determination Date,” with respect to the first Plan Year of any plan, means the last day of that Plan Year, and with respect to each subsequent Plan Year, means the last day of the preceding Plan Year. If any other plan has a Determination Date which differs from this Plan’s Determination Date, the top-heaviness of this Plan shall be determined on the basis of the other plan’s Determination Date falling within the same calendar years as this Plan’s Determination Date.

15.2-2 A “Key Employee” means any employee or former employee (including any deceased employee) who at any time during the plan year that includes the determination date was an officer of the employer having annual compensation greater than $160,000 (as adjusted under section 416(i)(1) of the Code), a 5-percent owner of the employer, or a 1-percent owner of the employer having annual compensation of more than $150,000. For this purpose, annual compensation means compensation within the meaning of section 415(c)(3) of the Code. The determination of who is a key employee will be made in accordance with section 416(i)(1) of the Code and the applicable regulations and other guidance of general applicability issued thereunder.

15.2-3 A “Non-key Employee” means an Employee who at any time during the five years ending on the top-heavy Determination Date for the Plan Year has received compensation from an Employer and who has never been a Key Employee, and the Beneficiary of any such Employee.

15.2-4 A “required aggregation group” includes (a) each qualified Plan of the Employer in which at least one Key Employee participates in the Plan Year containing the Determination Date and (b) any other qualified Plan of the Employer which enables a Plan described in (a) to meet the requirements of Code Sections 401(a)(4) or 410. For purposes of the preceding sentence, a qualified Plan of the Employer includes a terminated Plan maintained by the Employer within the period ending on the Determination Date. In the case of a required aggregation group, each Plan in the group will be considered a top-heavy Plan if the required aggregation group is a top-heavy

39

group. No Plan in the required aggregation group will be considered a top-heavy Plan if the required aggregation group is not a top-heavy group. All Employers aggregated under Code Sections 414(b), (c) or (m) or (o) (but only after the Code Section 414(o) regulations become effective) are considered a single Employer.

15.2-5 A “permissive aggregation group” includes the required aggregation group of Plans plus any other qualified Plan(s) of the Employer that are not required to be aggregated but which, when considered as a group with the required aggregation group, satisfy the requirements of Code Sections 401(a)(4) and 410 and are comparable to the Plans in the required aggregation group. No Plan in the permissive aggregation group will be considered a top-heavy Plan if the permissive aggregation group is not a top-heavy group. Only a Plan that is part of the required aggregation group will be considered a top-heavy Plan if the permissive aggregation group is top-heavy.

15.3 Top-Heavy Rules of Application. For purposes of determining the value of Account balances and the present value of accrued benefits the following provisions shall apply:

15.3-1 The value of Account balances and the present value of accrued benefits will be determined as of the most recent Valuation Date that falls within or ends with the twelve (12) month period ending on the Determination Date.

15.3-2 For purposes of testing whether this Plan is top-heavy, the present value of an individual’s accrued benefits and an individual’s Account balances is counted only once each year.

15.3-3 The Account balances and accrued benefits of a Participant who is not presently a Key Employee but who was a Key Employee in a Plan Year beginning on or after January 1, 1984 will be disregarded.

15.3-4 Employer contributions attributable to a salary reduction or similar arrangement will be taken into account. Employer matching contributions also shall be taken into account for purposes of satisfying the minimum contribution requirements of Section 416(c)(2) of the Code and the Plan.

15.3-5 When aggregating Plans, the value of Account balances and accrued benefits will be calculated with reference to the Determination Dates that fall within the same calendar year.

15.3-6 The present values of accrued benefits and the amounts of account balances of an employee as of the determination date shall be increased by the distributions made with respect to the employee under the plan and any plan aggregated with the plan under Section 416(g)(2) of the Code during the 1-year period ending on the determination date. The preceding sentence shall also apply to distributions under a terminated plan which, had it not been terminated, would have been aggregated with the plan under Section 416(g)(2)(A)(i) of the Code. In the case of a distribution made for a reason other than severance from employment, death, or disability, this provision shall be applied by substituting “five (5) year period” for “one (1) year period.”

40

15.3-7 Accrued benefits and Account balances of an individual shall not be taken into account for purposes of determining the top-heavy ratios if the individual has performed no services for the Employer during the one (1) year period ending on the applicable Determination Date. Compensation for purposes of this subparagraph shall not include any payments made to an individual by the Employer pursuant to a qualified or non-qualified deferred compensation plan.

15.3-8 The present value of the accrued benefits or the amount of the Account balances of any Employee participating in this Plan shall not include any rollover contributions or other transfers voluntarily initiated by the Employee except as described below. If this Plan transfers or rolls over funds to another Plan in a transaction voluntarily initiated by the Employee, then this Plan shall count the distribution for purposes of determining Account balances or the present value of accrued benefits. A transfer incident to a merger or consolidation of two or more Plans of the Employer (including Plans of related Employers treated as a single Employer under Code Section 414), or a transfer or rollover between Plans of the Employer, shall not be considered as voluntarily initiated by the Employee.

15.4 Minimum Contributions. For any Top-Heavy Year, each Employer shall make a special contribution on behalf of each Participant to the extent that the total allocations to his Account pursuant to Section 4 is less than the lesser of:

(i) three percent of his 415 Compensation for that year, or

(ii) the highest ratio of such allocation to 415 Compensation received by any Key Employee for that year. For purposes of the special contribution of this Section 15.2, a Key Employee’s 415 Compensation shall include amounts the Key Employee elected to defer under a qualified 401(k) arrangement. Such a special contribution shall be made on behalf of each Participant who is employed by an Employer on the last day of the Plan Year, regardless of the number of his Hours of Service, and shall be allocated to his Account.

If the Employer maintains a qualified plan in addition to this Plan and more than one such plan is determined to be Top-Heavy, a minimum contribution or a minimum benefit shall be provided in this Plan rather than in such other plan or plans.

15.5 Top-Heavy Provisions Control in Top-Heavy Plan. In the event this Plan becomes top-heavy and a conflict arises between the top-heavy provisions herein set forth and the remaining provisions set forth in this Plan, the top-heavy provisions shall control.

41

EX-21

Exhibit 21

Subsidiaries of the Registrant

Name	Percent Ownership			State of Incorporation
Pilgrim Bank		100	%		Massachusetts
48 South Main Street Corporation*		100	%		Massachusetts
40 South Main Street Realty Trust*		100	%		Massachusetts
800 CJC Realty Corporation*		100	%		Massachusetts

* Subsidiary of Pilgrim Bank

EX-23.2

Exhibit 23.2

RP^® FINANCIAL, LC.                                

Advisory | Planning | Valuation

    March 11, 2014

Board of Trustees

Conahasset Bancshares, MHC

Boards of Directors

Conahasset Bancshares, Inc.

Pilgrim Bancshares, Inc.

Pilgrim Bank

40 South Main Street

Cohasset, Massachusetts 02025

Members of the Board of Trustees and the Boards of Directors:

We hereby consent to the use of our firm’s name in the Form FR Y-3, and any amendments thereto, to be filed with the Federal Reserve Board, in the Application for Conversion, and any amendments thereto, to be filed with the Massachusetts Commissioner of Banks, and in the Registration Statement on Form S-1, and any amendments thereto, to be filed with the Securities and Exchange Commission. We also hereby consent to the inclusion of, summary of and references to our Valuation Appraisal Report and any Valuation Appraisal Report Updates and our statement concerning subscription rights in such filings including the prospectus of Pilgrim Bancshares, Inc. We also consent to the reference to our firm under the heading “Experts” in the prospectus.

Sincerely,

RP^® FINANCIAL, LC.

Washington Headquarters
Three Ballston Plaza	Telephone: (703) 528-1700
1100 North Glebe Road, Suite 600	Fax No.: (703) 528-1788
Arlington, VA 22201	Toll-Free No.: (866) 723-0594
www.rpfinancial.com	E-Mail: mail@rpfinancial.com

EX-23.3

Exhibit 23.3

Consent of Independent Registered Public Accounting Firm

We consent to the inclusion in the Registration Statement on Form S-1 of Pilgrim Bancshares, Inc., the Form FR Y-3 filed with the Board of Governors of the Federal Reserve System by Pilgrim Bancshares, Inc., and the letter applications filed by Conahasset Bancshares, MHC (the “Company”) with the Massachusetts Commissioner of Banks and the Board of Governors of the Federal Reserve System in connection with the Company’s proposed mutual to stock conversion (collectively, the “Regulatory Applications”), of our report dated March 6, 2014, on our audits of the consolidated financial statements of Conahasset Bancshares, MHC and Subsidiary as of December 31, 2013 and 2012, and for the years then ended, appearing in the Prospectus, which is a part of this Registration Statement on Form S-l and the Regulatory Applications. We further consent to the reference to us under the heading “Experts” in such Prospectus.

SHATSWELL, MacLEOD & COMPANY, P.C.

West Peabody, Massachusetts

March 11, 2014

EX-99.1

Exhibit 99.1

RP^® FINANCIAL, LC.                                

Advisory | Planning | Valuation

January 10, 2014

Mr. Francis E. Campbell

Chairman, President and Chief Executive Officer

Pilgrim Bank

A Subsidiary of Conahasset Bancshares, Inc.

40 South Main Street

Cohasset, MA 02136

Dear Mr. Campbell:

This letter sets forth the agreement between Pilgrim Bank, Cohasset, Massachusetts (the “Bank”), the wholly-owned subsidiary of Conahasset Bancshares, Inc. (collectively, the “Company”), which in turn is the subsidiary of Conahasset Bancshares, MHC (the “MHC”), and RP^® Financial, LC. (“RP Financial”), whereby RP Financial will provide the independent conversion appraisal services in conjunction with the mutual-to-stock conversion transaction by the Company. The scope, timing and fee structure for these appraisal services are described below.

These appraisal services will be directed by the undersigned, with the assistance of a Director, Consulting Associate and a Research Associate.

Description of Appraisal Services

In conjunction with these appraisal services, RP Financial will conduct a financial due diligence, including on-site interviews of senior management and reviews of historical and pro forma financial information and other documents and records, to gain insight into the operations, financial condition, profitability, market area, risks and various internal and external factors of the Company, all of which will be considered in estimating the pro forma market value of the Company in accordance with the applicable regulatory appraisal guidelines. RP Financial will prepare a detailed written valuation report of the Company that will be fully consistent with applicable regulatory appraisal guidelines and standard pro forma valuation practices. The appraisal report will include an analysis of the Company’s financial condition and operating results, as well as an assessment of the Company’s interest rate risk, credit risk and liquidity risk. The appraisal report will incorporate an evaluation of the Company’s business strategies, market area, prospects for the future and the intended use of proceeds. A peer group analysis relative to certain relatively comparable publicly-traded banking companies will be conducted for the purpose of determining appropriate valuation adjustments for the Company relative to the peer group’s pricing ratios.

We will review pertinent sections of the Company’s prospectus and conduct discussions with representatives of the Company to obtain necessary data and information for the appraisal report, including key deal elements such as dividend policy, use of proceeds, reinvestment rate, tax rate, offering expenses, and characteristics of stock plans.

Washington Headquarters
Three Ballston Plaza	Direct: (703) 647-6543
1100 North Glebe Road, Suite 600	Telephone: (703) 528-1700
Arlington, VA 22201	Fax No.: (703) 528-1788
E-Mail: rriggins@rpfinancial.com	Toll-Free No.: (866) 723-0594

Mr. Francis E. Campbell

January 10, 2014

Page 2

The original appraisal report will establish a midpoint pro forma market value in accordance with the applicable regulatory requirements. The appraisal report may be periodically updated throughout the conversion process, and there will be at least one updated appraisal that would be prepared at the time of the closing of the stock offering to determine the number of shares to be issued in accordance with the conversion regulations. In the event of a syndicated community offering, it will be necessary to file an update in conjunction with the close of the subscription offering and prior to the pricing phase in the syndicated community offering.

RP Financial agrees to deliver the original appraisal report and subsequent updates, in writing, to the Company at the above address in conjunction with the filing of the regulatory conversion applications and amendments thereto. Subsequent updates will be filed promptly as certain events occur which would warrant the preparation and filing of such appraisal updates pursuant to regulatory guidelines. Further, RP Financial agrees to perform such other services as are necessary or required in connection with the regulatory review of the appraisal and respond to the regulatory comments, if any, regarding the valuation original appraisal and subsequent updates.

In the event of a syndicated community offering phase, RP Financial will participate in the various all hands calls regarding the offering results, pricing discussions and timing.

RP Financial expects to formally present the appraisal report, including the appraisal methodology, peer group selection and assumptions, to the Board of Directors for review and consideration. If appropriate, RP Financial will present subsequent updates to the Board. It is understood that this appraisal may be presented either in person or telephonically.

Fee Structure and Payment Schedule

The Company agrees to pay RP Financial fees for preparation and delivery of the original appraisal report and subsequent appraisal updates as shown in the detail below, plus reimbursable expenses. Payment of these fees shall be made according to the following schedule:

• $5,000 upon execution of this letter of agreement engaging RP Financial’s appraisal services;

• $30,000 upon delivery of the completed original appraisal report; and

• $5,000 upon delivery of each subsequent appraisal update report required in conjunction with the regulatory application and stock offering. It is anticipated that there will be at least one appraisal update report, specifically the update to be prepared in conjunction with the completion of the stock offering.

The Company will reimburse RP Financial for reasonable out-of-pocket expenses incurred in preparation of the original appraisal and subsequent updates. Such out-of-pocket expenses will likely include travel, printing, telephone, facsimile, shipping, reasonable counsel fees, computer and data services, and will not exceed $7,500 in the aggregate, without the Company’s authorization to exceed this level.

Mr. Francis E. Campbell

January 10, 2014

Page 3

In the event the Company shall, for any reason, discontinue the proposed transaction prior to delivery of the completed original appraisal report or subsequent updates and payment of the corresponding fees, the Company agrees to compensate RP Financial according to RP Financial’s standard billing rates for consulting services based on accumulated and verifiable time expenses, not to exceed the respective fee caps noted above, after applying full credit to the initial retainer fee towards such payment, together with reasonable out-of-pocket expenses, subject to the cap on such expenses as set forth above. RP Financial’s standard billing rates range from $75 per hour for research associates to $450 per hour for managing directors.

If during the course of the proposed transaction, unforeseen events occur so as to materially change the nature or the work content of the services described in this contract, the terms of said contract shall be subject to renegotiation by the Company and RP Financial. Such unforeseen events shall include, but not be limited to, material changes to the structure of the transaction such as inclusion of a simultaneous business combination transaction, material changes in the conversion regulations, appraisal guidelines or processing procedures as they relate to conversion appraisals, material changes in management or procedures, operating policies or philosophies, and excessive delays or suspension of processing of conversion applications by the regulators such that completion of the conversion transaction requires the preparation by RP Financial of a new appraisal.

Covenants, Representations and Warranties

The Company and RP Financial agree to the following:

1. The Company agrees to make available or to supply to RP Financial such information with respect to its business and financial condition as RP Financial may reasonably request in order to provide the aforesaid valuation. Such information heretofore or hereafter supplied or made available to RP Financial shall include: annual financial statements, periodic regulatory filings and material agreements, debt instruments, off balance sheet assets or liabilities, commitments and contingencies, unrealized gains or losses and corporate books and records. All information provided by the Company to RP Financial shall remain strictly confidential (unless such information is otherwise made available to the public), and if the conversion is not consummated or the services of RP Financial are terminated hereunder, RP Financial shall promptly return to the Company the original and any copies of such information.

2. The Company represents and warrants to RP Financial that any information provided to RP Financial does not and will not, to the best of the Company’s knowledge, at the times it is provided to RP Financial, contain any untrue statement of a material fact or in response to informational requests by RP Financial fail to state a material fact necessary to make the statements therein not false or misleading in light of the circumstances under which they were made.

Mr. Francis E. Campbell

January 10, 2014

Page 4

3. (a) The Company agrees that it will indemnify and hold harmless RP Financial, any affiliates of RP Financial, the respective members, officers, agents and employees of RP Financial or their successors and assigns who act for or on behalf of RP Financial in connection with the services called for under this agreement (hereinafter referred to as “RP Financial”), from and against any and all losses, claims, damages and liabilities (including, but not limited to, reasonable attorneys fees, and all losses and expenses in connection with claims under the federal securities laws) attributable to (i) any untrue statement or alleged untrue statement of a material fact contained in the financial statements or other information furnished or otherwise provided by the Company to RP Financial, either orally or in writing; (ii) the omission or alleged omission of a material fact from the financial statements or other information furnished or otherwise made available by the Company to RP Financial; or (iii) any action or omission to act by the Company, or the Company’s respective officers, directors, employees or agents, which action or omission is undertaken in bad faith or is negligent. The Company will be under no obligation to indemnify RP Financial hereunder if a court determines that RP Financial was negligent or acted in bad faith with respect to any actions or omissions of RP Financial related to a matter for which indemnification is sought hereunder. Reasonable time devoted by RP Financial to situations for which RP Financial is deemed entitled to indemnification hereunder, shall be an indemnifiable cost payable by the Company at the normal hourly professional rate chargeable by such employee.

(b) RP Financial shall give written notice to the Company of such claim or facts within thirty days of the assertion of any claim or discovery of material facts upon which RP Financial intends to base a claim for indemnification hereunder, including the name of counsel that RP Financial intends to engage in connection with any indemnification related matter. In the event the Company elects, within seven days of the receipt of the original notice thereof, to contest such claim by written notice to RP Financial, the Company shall not be obligated to make payments under Section 3(c), but RP Financial will be entitled to be paid any amounts payable by the Company hereunder within five days after the final non-appealable determination of such contest either by written acknowledgement of the Company or a decision of a court of competent jurisdiction or alternative adjudication forum, unless it is determined in accordance with Section 3(c) hereof that RP Financial is not entitled to indemnity hereunder. If the Company does not so elect to contest a claim for indemnification by RP Financial hereunder, RP Financial shall (subject to the Company’s receipt of the written statement and undertaking under Section 3(c) hereof) be paid promptly and in any event within thirty days after receipt by the Company of detailed billing statements or invoices for which RP Financial is entitled to reimbursement under Section 3(c) hereof.

(c) Subject to the Company’s right to contest under Section 3(b) hereof, the Company shall pay for or reimburse the reasonable expenses, including reasonable attorneys’ fees, incurred by RP Financial in advance of the final disposition of any proceeding within thirty days of the receipt of such request if RP Financial furnishes the Company: (1) a written statement of RP Financial’s good faith belief that it is entitled to indemnification hereunder; (2) a written undertaking to repay the advance if it ultimately is determined in a final, non-appealable adjudication of such proceeding that it or he is not entitled to such indemnification; and (3) a detailed invoice of the expenses for which reimbursement is sought.

(d) In the event the Company does not pay any indemnified loss or make advance reimbursements of expenses in accordance with the terms of this agreement, RP Financial shall have all remedies available at law or in equity to enforce such obligation.

Mr. Francis E. Campbell

January 10, 2014

Page 5

This agreement constitutes the entire understanding of the Company and RP Financial concerning the subject matter addressed herein, and such contract shall be governed and construed in accordance with the Commonwealth of Massachusetts. This agreement may not be modified, supplemented or amended except by written agreement executed by both parties.

The Company and RP Financial are not affiliated, and neither the Company nor RP Financial has an economic interest in, or is held in common with, the other and has not derived a significant portion of its gross revenues, receipts or net income for any period from transactions with the other. RP Financial represents and warrants that it is not aware of any fact or circumstance that would cause it not to be “independent” within the meaning of the conversion regulations of the federal banking agencies or otherwise prohibit or restrict in anyway RP Financial from serving in the role of independent appraiser for the Company.

*  *  *  *  *  *  *  *  *  *  *

Please acknowledge your agreement to the foregoing by signing as indicated below and returning to RP Financial a signed copy of this letter, together with the initial retainer fee of $5,000.

Sincerely,

Ronald S. Riggins

President and Managing Director

Agreed To and Accepted By:	Francis E. Campbell	/s/ Francis E. Campbell
	Chairman, President and Chief Executive Officer

Upon Authorization by the Board of Directors For:	Pilgrim Bank
	A subsidiary of Conahasset Bancshares, Inc.
	Cohasset, Massachusetts

Date Executed: 1/10/2014

EX-99.2

Exhibit 99.2

RP^® FINANCIAL, LC.                                

Advisory | Planning | Valuation

    March 11, 2014

Board of Trustees

Conahasset Bancshares, MHC

Boards of Directors

Conahasset Bancshares, Inc.

Pilgrim Bancshares, Inc.

Pilgrim Bank

40 South Main Street

Cohasset, Massachusetts 02025

Re: Plan of Conversion

Conahasset Bancshares, MHC

Members of the Board of Trustees and the Boards of Directors:

All capitalized terms not otherwise defined in this letter have the meanings given such terms in the Plan of Conversion (the “Plan”) adopted by the Board of Trustees of Conahasset Bancshares, MHC (the “MHC”). The Plan provides for the conversion of the MHC into the capital stock form of organization. Pursuant to the Plan, a new Maryland stock holding company named Pilgrim Bancshares, Inc. (the “Company”) will be organized and will sell shares of common stock in a public offering. When the conversion is completed, all of the capital stock of Pilgrim Bank will be owned by the Company and all of the common stock of the Company will be owned by public stockholders.

We understand that in accordance with the Plan, subscription rights to purchase shares of common stock in the Company are to be issued to: (1) Eligible Account Holders; (2) Supplemental Eligible Account Holders; and (3) Tax-Qualified Plans including Pilgrim Bank’s employee stock ownership plan (the “ESOP”). Based solely upon our observation that the subscription rights will be available to such parties without cost, will be legally non-transferable and of short duration, and will afford such parties the right only to purchase shares of common stock at the same price as will be paid by members of the general public in the community and syndicated community offerings but without undertaking any independent investigation of state or federal law or the position of the Internal Revenue Service with respect to this issue, we are of the belief that, as a factual matter:

(1) the subscription rights will have no ascertainable market value; and,

(2) the price at which the subscription rights are exercisable will not be more or less than the pro forma market value of the shares upon issuance.

Changes in the local and national economy, the legislative and regulatory environment, the stock market, interest rates, and other external forces (such as natural disasters or significant world events) may occur from time to time, often with great unpredictability and may materially impact the value of thrift stocks as a whole or the Company’s value alone. Accordingly, no assurance can be given that persons who subscribe to shares of common stock in the subscription offering will thereafter be able to buy or sell such shares at the same price paid in the subscription offering.

Sincerely,

RP Financial, LC.

Washington Headquarters
Three Ballston Plaza	Telephone: (703) 528-1700
1100 North Glebe Road, Suite 600	Fax No.: (703) 528-1788
Arlington, VA 22201	Toll-Free No.: (866) 723-0594
www.rpfinancial.com	E-Mail: mail@rpfinancial.com

EX-99.3

Exhibit 99.3

PRO FORMA VALUATION REPORT

STANDARD CONVERSION

Pilgrim Bancshares, Inc.   |  Cohasset, Massachusetts

PROPOSED HOLDING COMPANY FOR:

Pilgrim Bank   |   Cohasset, Massachusetts

Dated as of February 14, 2014

1100 North Glebe Road Suite 600

Arlington, Virginia 22201

703.528.1700

rpfinancial.com

February 14, 2014

Board of Trustees

Conahasset Bancshares, MHC

Boards of Directors

Conahasset Bancshares, Inc.

Pilgrim Bancshares, Inc. Pilgrim Bank

40 South Main Street

Cohasset, Massachusetts 02025

Members of the Boards of Trustees and Directors:

At your request, we have completed and hereby provide an independent appraisal (“Appraisal”) of the estimated pro forma market value of the common stock which is to be issued in connection with the mutual-to-stock conversion transaction described below.

This Appraisal is furnished pursuant to the requirements stipulated in the Code of Federal Regulations and has been prepared in accordance with the “Guidelines for Appraisal Reports for the Valuation of Savings and Loan Associations Converting from Mutual to Stock Form of Organization” (the “Valuation Guidelines”) of the Office of Thrift Supervision (“OTS”) and accepted by the Federal Reserve Board (“FRB”), the Office of the Comptroller of the Currency (“OCC”), the Federal Deposit Insurance Corporation (“FDIC”) and the Massachusetts Commissioner of Banks (the “Commissioner”), and applicable regulatory interpretations thereof.

Description of Plan of Conversion

On March 4, 2014, the Board of Trustees of Conahasset Bancshares, MHC, (the “MHC”), a mutual holding company that owns all of the outstanding shares of common stock of Conahasset Bancshares, Inc., a Maryland corporation (“Bancshares”), adopted the plan of conversion whereby the MHC will convert to stock form. As a result of the conversion, Bancshares, which currently owns all of the issued and outstanding common stock of Pilgrim Bank, Cohasset, Massachusetts (“Pilgrim Bank” or the “Bank”) will be succeeded by a Maryland corporation with the name of Pilgrim Bancshares, Inc. (“Pilgrim Bancshares” or the “Company”). Following the conversion, the MHC will no longer exist. For purposes of this document, the existing consolidated entity will hereinafter be referred to as Pilgrim Bancshares or the Company.

Pilgrim Bancshares will offer its common stock in a subscription offering to Eligible Account Holders, Supplemental Eligible Account Holders and Tax-Qualified Employee Stock Benefit Plans including Pilgrim Bank’s employee stock ownership plan (the “ESOP”), as such terms are defined in the Company’s prospectus for purposes of applicable federal regulatory

Washington Headquarters Three Ballston Plaza 1100 North Glebe Road, Suite 600 Arlington, VA 22201 www.rpfinancial.com   Telephone: (703) 528-1700 Fax No.: (703) 528-1788 Toll-Free No.: (866) 723-0594 E-Mail: mail@rpfinancial.com

Board of Trustees

Boards of Directors

February 14, 2014

Page 2

guidelines governing mutual-to-stock conversions. To the extent that shares remain available for purchase after satisfaction of all subscriptions received in the subscription offering, the shares may be offered for sale to members of the general public in a community offering and/or a syndicated community offering. A portion of the net proceeds received from the sale of the common stock will be used to purchase all of the then to be issued and outstanding capital stock of Pilgrim Bank and the balance of the net proceeds will be retained by the Company.

At this time, no other activities are contemplated for the Company other than the ownership of the Bank, a loan to the newly-formed ESOP and reinvestment of the proceeds that are retained by the Company. In the future, Pilgrim Bancshares may acquire or organize other operating subsidiaries, diversify into other banking-related activities, pay dividends or repurchase its stock, although there are no specific plans to undertake such activities at the present time.

The plan of conversion provides for the establishment of a new charitable foundation (the “Foundation”). The Foundation contribution will total $725,000 and will be funded with Pilgrim Bancshares common stock contributed by the Company in an amount equal to 3.0% of the shares of common stock sold in the offering and the remainder in cash. The purpose of the Foundation is to provide financial support to charitable organizations in the communities in which Pilgrim Bank operates and to enable those communities to share in the Bank’s long-term growth. The Foundation will be dedicated completely to community activities and the promotion of charitable causes.

RP^® Financial, LC.

RP^® Financial, LC. (“RP Financial”) is a financial consulting firm serving the financial services industry nationwide that, among other things, specializes in financial valuations and analyses of business enterprises and securities, including the pro forma valuation for savings institutions converting from mutual-to-stock form. The background and experience of RP Financial is detailed in Exhibit V-1. We believe that, except for the fee we will receive for the Appraisal, we are independent of the Company, the Bank, the MHC and the other parties engaged by the Bank or the Company to assist in the stock conversion process.

Valuation Methodology

In preparing our Appraisal, we have reviewed the regulatory applications of the Company, the Bank and the MHC, including the prospectus as filed with the FRB, the FDIC, the Commissioner and the Securities and Exchange Commission (“SEC”). We have conducted a financial analysis of the Company, the Bank and the MHC that has included a review of audited financial information for the years ended December 31, 2009 through December 31, 2013 and a review of various unaudited information and internal financial reports through December 31, 2013, and due diligence related discussions with the Company’s management; Shatswell, MacLeod & Company, PC, the Company’s independent auditor; Luse Gorman Pomerenk & Schick, P.C. the Company’s conversion counsel and Keefe Bruyette & Woods, Inc., the Company’s marketing advisor in connection with the stock offering. All assumptions and conclusions set forth in the Appraisal were reached independently from such discussions. In

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Boards of Directors

February 14, 2014

Page 3

addition, where appropriate, we have considered information based on other available published sources that we believe are reliable. While we believe the information and data gathered from all these sources are reliable, we cannot guarantee the accuracy and completeness of such information.

We have investigated the competitive environment within which Pilgrim Bancshares operates and have assessed Pilgrim Bancshares’ relative strengths and weaknesses. We have kept abreast of the changing regulatory and legislative environment for financial institutions and analyzed the potential impact on Pilgrim Bancshares and the industry as a whole. We have analyzed the potential effects of the stock conversion on Pilgrim Bancshares’ operating characteristics and financial performance as they relate to the pro forma market value of Pilgrim Bancshares. We have reviewed the economic and demographic characteristics of the Company’s primary market area. We have compared Pilgrim Bancshares’ financial performance and condition with selected publicly-traded thrifts in accordance with the Valuation Guidelines, as well as all publicly-traded thrifts and thrift holding companies. We have reviewed the current conditions in the securities markets in general and the market for thrift stocks in particular, including the market for existing thrift issues and initial public offerings by thrifts and thrift holding companies. We have excluded from such analyses thrifts subject to announced or rumored acquisition, and/or institutions that exhibit other unusual characteristics.

The Appraisal is based on Pilgrim Bancshares’ representation that the information contained in the regulatory applications and additional information furnished to us by Pilgrim Bancshares and its independent auditor, legal counsel and other authorized agents are truthful, accurate and complete. We did not independently verify the financial statements and other information provided by Pilgrim Bancshares, or its independent auditor, legal counsel and other authorized agents nor did we independently value the assets or liabilities of Pilgrim Bancshares. The valuation considers Pilgrim Bancshares only as a going concern and should not be considered as an indication of Pilgrim Bancshares’ liquidation value.

Our appraised value is predicated on a continuation of the current operating environment for Pilgrim Bancshares and for all thrifts and their holding companies. Changes in the local, state and national economy, the legislative and regulatory environment for financial institutions and mutual holding companies, the stock market, interest rates, and other external forces (such as natural disasters or significant world events) may occur from time to time, often with great unpredictability and may materially impact the value of thrift stocks as a whole or the value of Pilgrim Bancshares’ stock alone. It is our understanding that there are no current plans for selling control of Pilgrim Bancshares following completion of the conversion. To the extent that such factors can be foreseen, they have been factored into our analysis.

The estimated pro forma market value is defined as the price at which Pilgrim Bancshares’ common stock, immediately upon completion of the stock offering, would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts.

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Boards of Directors

February 14, 2014

Page 4

Valuation Conclusion

It is our opinion that, as of February 14, 2014, the estimated aggregate pro forma market value of the shares to be issued immediately following the conversion, including shares to be issued to the Foundation, equaled $16,995,000 at the midpoint, equal to 1,699,500 shares offered at a per share value of $10.00. Pursuant to conversion guidelines, the 15% valuation range indicates a minimum value of $14,445,750 and a maximum value of $19,544,250. Based on the $10.00 per share offering price determined by the Board, this valuation range equates to total shares outstanding of 1,444,575 at the minimum and 1,954,425 at the maximum. In the event the appraised value is subject to an increase, the aggregate pro forma market value may be increased up to a super maximum value of $22,475,890 without a resolicitation. Based on the $10.00 per share offering price, the super maximum value would result in total shares outstanding of 2,247,589. Based on this valuation range, the offering range is as follows: $14,025,000 at the minimum, $16,500,000 at the midpoint, $18,975,000 at the maximum and $21,821,250 at the super maximum. Based on the $10.00 per share offering price, the number of offering shares is as follows: 1,402,500 at the minimum, 1,650,000 at the midpoint, 1,897,500 at the maximum and 2,182,125 at the super maximum.

Limiting Factors and Considerations

The valuation is not intended, and must not be construed, as a recommendation of any kind as to the advisability of purchasing shares of the common stock. Moreover, because such valuation is determined in accordance with applicable regulatory guidelines and is necessarily based upon estimates and projections of a number of matters, all of which are subject to change from time to time, no assurance can be given that persons who purchase shares of common stock in the conversion offering will thereafter be able to buy or sell such shares at prices related to the foregoing valuation of the estimated pro forma market value thereof. The appraisal reflects only a valuation range as of this date for the pro forma market value of Pilgrim Bancshares immediately upon issuance of the stock and does not take into account any trading activity with respect to the purchase and sale of common stock in the secondary market on the date of issuance of such securities or at anytime thereafter following the completion of the stock offering.

RP Financial’s valuation was based on the financial condition, operations and shares outstanding of Pilgrim Bancshares as of December 31, 2013, the date of the financial data included in the prospectus.

RP Financial is not a seller of securities within the meaning of any federal and state securities laws and any report prepared by RP Financial shall not be used as an offer or solicitation with respect to the purchase or sale of any securities. RP Financial maintains a policy which prohibits RP Financial, its principals or employees from purchasing stock of its client institutions.

This valuation will be updated as provided for in the conversion regulations and guidelines. These updates will consider, among other things, any developments or changes in the financial performance and condition of Pilgrim Bancshares, management policies, and current conditions in the equity markets for thrift shares, both existing issues and new issues. These updates may also consider changes in other external factors which impact value including, but not limited to: various changes in the legislative and regulatory environment for

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Boards of Directors

February 14, 2014

Page 5

financial institutions, the stock market and the market for thrift stocks, and interest rates. Should any such new developments or changes be material, in our opinion, to the valuation of the shares, appropriate adjustments to the estimated pro forma market value will be made. The reasons for any such adjustments will be explained in the update at the date of the release of the update. The valuation will also be updated at the completion of Pilgrim Bancshares’ stock offering.

Respectfully submitted,

RP^® FINANCIAL, LC.

President and Managing Director

Gregory E. Dunn

Director

RP® Financial, LC.	TABLE OF CONTENTS
	i

TABLE OF CONTENTS

PILGRIM BANCSHARES, INC.

PILGRIM BANK

Cohasset, Massachusetts

DESCRIPTION		PAGE NUMBER
CHAPTER ONE	OVERVIEW AND FINANCIAL ANALYSIS
Introduction			I.1
Plan of Conversion			I.1
Strategic Overview			I.2
Balance Sheet Trends			I.4
Income and Expense Trends			I.8
Interest Rate Risk Management			I.11
Lending Activities and Strategy			I.12
Asset Quality			I.14
Funding Composition and Strategy			I.15
Subsidiary Activity			1.16
Legal Proceedings			I.16
CHAPTER TWO	MARKET AREA
Introduction			II.1
National Economic Factors			II.1
Market Area Demographics			II.4
Regional Economy			II.6
Unemployment Trends			II.8
Market Area Deposit Characteristics and Competition			II.9
CHAPTER THREE	PEER GROUP ANALYSIS
Peer Group Selection			III.1
Financial Condition			III.5
Income and Expense Components			III.8
Loan Composition			III.11
Interest Rate Risk			III.13
Credit Risk			III.15
Summary			III.15

RP® Financial, LC.	TABLE OF CONTENTS
	ii

TABLE OF CONTENTS

PILGRIM BANCSHARES, INC.

PILGRIM BANK

Cohasset, Massachusetts

(continued)

DESCRIPTION				PAGE NUMBER
CHAPTER FOUR			VALUATION ANALYSIS
Introduction					IV.1
Appraisal Guidelines					IV.1
RP Financial Approach to the Valuation					IV.1
Valuation Analysis					IV.2
	1.	Financial Condition			IV.3
	2.	Profitability, Growth and Viability of Earnings			IV.4
	3.	Asset Growth			IV.6
	4.	Primary Market Area			IV.6
	5.	Dividends			IV.7
	6.	Liquidity of the Shares			IV.8
	7.	Marketing of the Issue			IV.8
		A.	The Public Market		IV.9
		B.	The New Issue Market		IV.13
		C.	The Acquisition Market		IV.13
	8.	Management			IV.16
	9.	Effect of Government Regulation and Regulatory Reform			IV.17
Summary of Adjustments					IV.17
Valuation Approaches:					IV.17
	1.	Price-to-Earnings (“P/E”)			IV.19
	2.	Price-to-Book (“P/B”)			IV.19
	3.	Price-to-Assets (“P/A”)			IV.21
Comparison to Recent Offerings					IV.21
Valuation Conclusion					IV.22

RP® Financial, LC.	LIST OF TABLES
	iii

LIST OF TABLES

PILGRIM BANCSHARES, INC.

PILGRIM BANK

Cohasset, Massachusetts

TABLE NUMBER	DESCRIPTION	PAGE
1.1	Historical Balance Sheet Data		I.5
1.2	Historical Income Statements		I.9
2.1	Summary Demographic Data		II.5
2.2	Primary Market Area Employment Sectors		II.7
2.3	Market Area Largest Employers in Boston MSA		II.8
2.4	Unemployment Trends		II.9
2.5	Deposit Summary		II.10
2.6	Market Area Deposit Competitors		II.11
3.1	Peer Group of Publicly-Traded Thrifts		III.3
3.2	Balance Sheet Composition and Growth Rates		III.6
3.3	Income as a Pct. of Avg. Assets and Yields, Costs, Spreads		III.9
3.4	Loan Portfolio Composition and Related Information		III.12
3.5	Interest Rate Risk Measures and Net Interest Income Volatility		III.14
3.6	Credit Risk Measures and Related Information		III.16
4.1	Market Area Unemployment Rates		IV.7
4.2	Pricing Characteristics and After-Market Trends		IV.14
4.3	Market Pricing Comparatives		IV.15
4.4	Public Market Pricing		IV.20

RP® Financial, LC.	OVERVIEW AND FINANCIAL ANALYSIS
	I.1

I. OVERVIEW AND FINANCIAL ANALYSIS

Introduction

Pilgrim Bank or the “Bank”, chartered in 1916, is a Massachusetts chartered stock savings bank headquartered in Cohasset, Massachusetts. In 2010, Pilgrim Bank reorganized into the mutual holding company structure, forming Conahasset Bancshares, MHC, a Massachusetts mutual holding company (the “MHC”). The MHC owns 100% of the outstanding common stock of Conahasset Bancshares, Inc., a Maryland corporation (“Bancshares”). Pilgrim Bank is the wholly owned subsidiary of Bancshares. Pilgrim Bank serves the Boston metropolitan area through the main office and two full service branch offices. The main office and one branch are located in Cohasset (Norfolk County) and the other branch is located in Marion (Plymouth County). A map of Pilgrim Bank’s office locations is provided in Exhibit I-1. Pilgrim Bank is a member of the Federal Home Loan Bank (“FHLB”) system and its deposits are insured up to the maximum allowable amount by the Federal Deposit Insurance Corporation (“FDIC”). As of December 31, 2013, the MHC had consolidated total assets of $171.6 million, total deposits of $153.7 million and total equity of $12.5 million equal to 7.3% of total assets. The MHC’s audited financial statements are included by reference as Exhibit I-2.

Plan of Conversion

On March 4, 2014, the Board of Trustees of the MHC adopted the plan of conversion, whereby the MHC will convert to stock form. As a result of the conversion, Bancshares, which currently owns all of the issued and outstanding common stock of Pilgrim Bank will be succeeded by a Maryland corporation with the name of Pilgrim Bancshares, Inc., a newly formed Maryland stock holding company (“Pilgrim Bancshares” or the “Company”). Following the conversion, the MHC will no longer exist. For purposes of this document, the existing consolidated entity will hereinafter be referred to as Pilgrim Bancshares or the Company.

Pilgrim Bancshares will offer its common stock in a subscription offering to Eligible Account Holders, Supplemental Eligible Account Holders and Tax-Qualified Employee Stock Benefit Plans including Pilgrim Bank’s employee stock ownership plan (the “ESOP”), as such terms are defined in the Company’s prospectus for purposes applicable federal regulatory guidelines governing mutual-to-stock conversions. To the extent that shares remain

RP® Financial, LC.	OVERVIEW AND FINANCIAL ANALYSIS
	I.2

available for purchase after satisfaction of all subscriptions received in the subscription offering, the shares may be offered for sale to members of the general public in a community offering and/or a syndicated community offering. A portion of the net proceeds received from the sale of the common stock will be used to purchase all of the then to be issued and outstanding capital stock of Pilgrim Bank and the balance of the net proceeds will be retained by the Company.

At this time, no other activities are contemplated for the Company other than the ownership of the Bank, funding a loan to the newly-formed ESOP and reinvestment of the proceeds that are retained by the Company. In the future, Pilgrim Bancshares may acquire or organize other operating subsidiaries, diversify into other banking-related activities, pay dividends or repurchase its stock, although there are no specific plans to undertake such activities at the present time.

The plan of conversion provides for the establishment of a new charitable foundation (the “Foundation”). The Foundation contribution will total $725,000 and will be funded with Pilgrim Bancshares common stock contributed by the Company in an amount equal to 3.0% of the shares of common stock sold in the offering and the remainder in cash. The purpose of the Foundation is to provide financial support to charitable organizations in the communities in which Pilgrim Bank operates and to enable those communities to share in the Bank’s long-term growth. The Foundation will be dedicated completely to community activities and the promotion of charitable causes.

Strategic Overview

Pilgrim Bancshares maintains a local community banking emphasis, with a primary strategic objective of meeting the borrowing and savings needs of its local customer base. Pilgrim Bancshares’ operating strategy has been fairly reflective of a traditional thrift operating strategy, in which lending has emphasized originations of 1-4 family residential mortgage loans and funding has been largely generated through retail deposits. The Company is pursuing a strategy of strengthening its community bank franchise dedicated to meeting the banking needs of retail customers and businesses in the communities that are served by the Company. Growth strategies are emphasizing increased lending diversification that targets growth of commercial real estate, multi-family and commercial business loans.

RP® Financial, LC.	OVERVIEW AND FINANCIAL ANALYSIS
	I.3

Investments serve as a supplement to the Company’s lending activities and the investment portfolio is considered to be indicative of a low risk investment philosophy. Mortgage-backed securities guaranteed by government sponsored enterprises (“GSEs”) constitute the major portion of the Company’s investment portfolio, with other investments consisting of U.S. Government and agency obligations, municipal bonds and a small balance of mutual funds.

Deposits have consistently served as the primary interest-bearing funding source for the Company, as the Company’s utilization of borrowings has typically been limited. Core deposits, consisting of transaction and savings account deposits, constitute the largest portion of the Company’s deposit base, with the concentration of core comprising total deposits increasing in recent years. The Company utilizes borrowings as a supplemental funding source to facilitate management of funding costs and interest rate risk. Borrowings utilized the Company consist of FHLB advances.

Pilgrim Bancshares’ earnings base is largely dependent upon net interest income and operating expense levels. The Company has maintained a relatively stable net interest margin during the past three years. Redeployment of lower yielding cash and investments into loan growth has helped to preserve the Company’s net interest margin in the prevailing interest rate environment, where financial institutions in general have experienced interest rate spread compression due to interest-earning asset yields declining more significantly relative to interest-bearing funding costs. Operating expense ratios have also trended higher over the past few years, which have been mostly related to normal cost increases and higher occupancy expenses resulting from the renovation and build out of the main office. Historically, non-interest operating income has been a limited contributor to earnings, reflecting the Company’s traditional thrift operating strategy that has provided for only a modest earnings contribution from fee-based products and services. Growth of non-operating income is a strategic initiative for the Company, pursuant to which the Company is seeking to build full service banking relationships with its retail and commercial customers that will generate increased revenues derived from fee-based products and services.

The post-offering business plan of the Company is expected to continue to focus on operating and growing a profitable institution. Accordingly, Pilgrim Bancshares will continue to be an independent full service community bank, with a commitment to meeting the retail and commercial banking needs of individuals and businesses in the Boston metropolitan area.

RP® Financial, LC.	OVERVIEW AND FINANCIAL ANALYSIS
	I.4

The Company’s Board of Directors has elected to complete a public stock offering to sustain recent growth strategies and facilitate implementation of its strategic plan. The capital realized from the stock offering will increase the Company’s operating flexibility and allow for continued growth of the balance sheet. The additional funds realized from the stock offering will provide an alternative funding source to deposits and borrowings in meeting the Company’s future funding needs, which may facilitate a reduction in Pilgrim Bancshares’ funding costs. Additionally, Pilgrim Bancshares’ higher equity-to-assets ratio will also better position the Company to implement growth strategies, which will emphasize loan growth funded by retail deposits. The projected uses of proceeds are highlighted below.

• Pilgrim Bancshares, Inc. The Company is expected to retain up to 50% of the net offering proceeds. At present, funds at the Company level, net of the loan to the ESOP and the cash contribution to fund the Foundation, are expected to be primarily invested into liquid funds held as a deposit at the Bank. Over time, the funds may be utilized for various corporate purposes, possibly including acquisitions, infusing additional equity into the Bank, repurchases of common stock and the payment of cash dividends.

• Pilgrim Bank. Approximately 50% of the net stock proceeds will be infused into the Bank in exchange for all of the Bank’s stock. Cash proceeds (i.e., net proceeds less deposits withdrawn to fund stock purchases) infused into the Bank are anticipated to become part of general operating funds and are expected to be primarily utilized to fund loan growth over time.

Overall, it is the Company’s objective to pursue growth that will serve to increase returns, while, at the same time, growth will not be pursued that could potentially compromise the overall risk associated with Pilgrim Bancshares’ operations.

Balance Sheet Trends

Table 1.1 shows the Company’s historical balance sheet data for the past five years. From yearend 2009 through yearend 2013, Pilgrim Bancshares’ assets increased at a 1.8% annual rate. During the period covered in Table 1.1, the Company was not in a position to pursue a strategy of more aggressive asset growth due to its relatively low capital position. Asset growth was largely driven by loan growth, which was partially funded with redeployment of cash and investments. Asset growth was funded by deposit growth and a slight increase in borrowings. A summary of Pilgrim Bancshares’ key operating ratios for the past three years is presented in Exhibit I-3.

RP® Financial, LC.	OVERVIEW AND FINANCIAL ANALYSIS
	I.5

Table 1.1

Pilgrim Bancshares, Inc.

Historical Balance Sheet Data

	At December 31,																									12/31/09- 12/31/13 Annual. Growth Rate
	2009					2010					2011					2012					2013
	Amount		Pct(1)			Amount		Pct(1)			Amount		Pct(1)			Amount		Pct(1)			Amount		Pct(1)			Pct
	($000)		(%)			($000)		(%)			($000)		(%)			($000)		(%)			($000)		(%)			(%)
Total Amount of:
Assets	$	159,939		100.00	%	$	163,380		100.00	%	$	170,321		100.00	%	$	172,541		100.00	%	$	171,556		100.00	%		1.77	%
Cash and cash equivalents		10,114		6.32	%		18,357		11.24	%		19,869		11.67	%		21,141		12.25	%		8,991		5.24	%		-2.90	%
Investment securities/CDs		22,714		14.20	%		21,572		13.20	%		29,092		17.08	%		26,484		15.35	%		18,261		10.64	%		-5.31	%
Loans receivable, net		114,545		71.62	%		112,141		68.64	%		108,753		63.85	%		112,618		65.27	%		132,923		77.48	%		3.79	%
FHLB stock /Co-op Central Reserve Fund		1,256		0.79	%		1,256		0.77	%		1,266		0.74	%		1,141		0.66	%		1,051		0.61	%		-4.36	%
Bank-owned life insurance		1,945		1.22	%		2,011		1.23	%		2,072		1.22	%		2,129		1.23	%		2,181		1.27	%		2.90	%
Deposits	$	147,070		91.95	%	$	149,150		91.29	%	$	154,683		90.82	%	$	156,653		90.79	%	$	153,732		89.61	%		1.11	%
Borrowings		2,292		1.43	%		2,972		1.82	%		3,641		2.14	%		3,307		1.92	%		5,000		2.91	%		21.53	%
														0.00	%
Equity	$	10,362		6.48	%	$	11,030		6.75	%	$	11,665		6.85	%	$	12,374		7.17	%	$	12,504		7.29	%		4.81	%
Loans/Deposits				77.88	%				75.19	%				70.31	%				71.89	%				86.46	%
Number of offices		3					3					3					3					3

(1) Ratios are as a percent of ending assets.

Sources: Pilgrim Bancshares’ prospectus, audited and unaudited financial statements and RP Financial calculations.

RP® Financial, LC.	OVERVIEW AND FINANCIAL ANALYSIS
	I.6

Pilgrim Bancshares’ loans receivable portfolio increased at a 3.8% annual rate from yearend 2009 through yearend 2013, with the loan portfolio declining during 2010 and 2011 followed by growth in 2012 and 2013. The most significant loan growth was realized during 2013, which was primarily attributable to growth of 1-4 family loans supplemented with growth of commercial real estate loans, multi-family loans and commercial business loans. Growth of the 1-4 family loan portfolio was due in part to the retention of more originations of conforming 30-year fixed rate for investment, instead of selling those loans to the secondary market. The Company’s stronger loan growth rate compared to its asset growth rate served to increase the loans-to-assets ratio from 71.6% at yearend 2009 to 77.5% at yearend 2013.

Trends in the Company’s loan portfolio composition over the past two years show that the concentration of 1-4 family residential mortgage loans comprising total loans has increased from 67.1% of total loans at yearend 2012 to 69.2% of total loans at yearend 2013. Commercial real estate and multi-family loans constitute the primary areas of loan portfolio diversification for the Company. At yearend 2013 commercial real estate and multi-family loans comprised 14.5% and 7.4% of total loans, respectively, versus 13.8% and 6.0% of total loans at yearend 2012. Other areas of lending diversification for the Company include home equity loans and lines of credit, construction loans, commercial business loans and consumer loans, with each of those loan types comprising 3.0% or less of total loans at yearend 2013.

The intent of the Company’s investment policy is to provide adequate liquidity and to generate a favorable return within the context of supporting Pilgrim Bancshares’ overall credit and interest rate risk objectives. It is anticipated that proceeds retained at the holding company level will primarily be invested into liquid funds held as a deposit at the Bank. Since yearend 2009, the Company’s level of cash and investment securities (inclusive of FHLB stock and investment in The Co-operative Central Reserve Fund) ranged from a low of 16.5% of assets at yearend 2013 to a high of 29.5% of assets at yearend 2011. The decrease in the balance of cash and investments during 2013 was largely related to redeployment of those funds for purposes of funding loan growth. Mortgage-backed securities totaling $6.2 million comprised the most significant component of the Company’s investment portfolio at December 31, 2013. Other investments held by the Company at December 31, 2013 consisted of municipal bonds ($4.4 million), U.S. Government and federal agency obligations ($2.3 million) and mutual funds ($782,000). The Company sold its mutual investment in January 2014. As of December 31, 2013, the Company maintained $13.5 million of investment securities as available-for-sale and

RP® Financial, LC.	OVERVIEW AND FINANCIAL ANALYSIS
	I.7

$254,000 of investment securities as held-to-maturity. The available-for-sale portfolio had a net unrealized loss of $341,000 at December 31, 2013. Exhibit I-4 provides historical detail of the Company’s investment portfolio. The Company also held $4.5 million of interest-bearing time deposits with other banks, $9.0 million of cash and cash equivalents and $1.1 million of FHLB stock and investment in The Co-operative Central Reserve Fund.

The Company also maintains an investment in bank-owned life insurance (“BOLI”) policies, which cover the lives of one of the Company’s current employees and three former employees of the Company. The purpose of the investment is to provide funding for the benefit plans of the covered individuals. The life insurance policies earn tax-exempt income through cash value accumulation and death proceeds. As of December 31, 2013, the cash surrender value of the Company’s BOLI equaled $2.2 million.

Since yearend 2009, Pilgrim Bancshares’ funding needs have been addressed through a combination of deposits, borrowings and internal cash flows. From yearend 2009 through yearend 2013, the Company’s deposits increased at a 1.1% annual rate. Deposits trended higher from yearend 2009 through yearend 2012, which was followed by a decline in deposits during 2013. Deposit growth trends reflect that deposit growth has consisted of transaction and savings account deposits, which has been offset by a decline in certificates of deposit (“CDs”). Core deposits comprised 55.3% of average total deposits for the year ended December 2013, versus 52.8% of average total deposits for the year ended December 31, 2012.

Borrowings serve as an alternative funding source for the Company to address funding needs for growth and to support management of deposit costs and interest rate risk. From yearend 2009 through yearend 2013, borrowings increased from $2.3 million or 1.4% of assets at yearend 2009 to $5.0 million or 2.9% of assets at yearend 2013. The Company’s utilization of borrowings has been limited to FHLB advances.

The Company’s equity increased at a 4.8% annual rate from yearend 2009 through yearend 2013, which was largely related to retention of earnings. All of the Company’s capital is tangible capital and Pilgrim Bank maintained capital surpluses relative to all of its regulatory capital requirements at December 31, 2013. The addition of stock proceeds will serve to strengthen the Company’s capital position, as well as support growth opportunities. At the same time, Pilgrim Bancshares’ ROE will initially be depressed following its stock conversion as the Company’s pro forma capital position will be significantly higher following the infusion of net stock proceeds into capital.

RP® Financial, LC.	OVERVIEW AND FINANCIAL ANALYSIS
	I.8

Income and Expense Trends

Table 1.2 shows the Company’s historical income statements for the past five years. The Company’s reported earnings ranged from $368,000 or 0.22% of average assets during 2013 to $742,000 or 0.44% of average assets during 2012. The lower earnings reported for 2013 was largely due to a write-down of investment securities. Net interest income and operating expenses represent the primary components of the Company’s earnings. Non-interest operating income has generally been somewhat of limited source of earnings for the Company. Loan loss provisions and non-operating gains and losses typically have not had a significant impact on earnings.

During the period covered in Table 1.2, the Company’s net interest income to average assets ratio ranged from a low of 2.50% during 2009 to a high of 3.08% during 2010. For 2013, the Company’s net interest income to average assets ratio equaled 2.80%. The decline in the Company’s net interest income ratio was largely attributable to interest rate spread compression that has resulted from a more significant decrease in the yield earned on interest-earnings assets relative to the cost of interest-bearing liabilities. As the result of the prolonged low interest rate environment, the decline in yield earned on less rate sensitive interest-earning assets has become more significant relative to the decline in rate paid on more rate sensitive liabilities which had more significant downward repricing earlier in the prevailing interest rate environment. The decrease in average yields earned on interest-earning assets for 2011 and 2012 was also related to the increase in the concentration of lower yielding cash and investments that comprised interest-earning assets. Comparatively, for 2013, the decline in yield earned on interest-earning assets was somewhat offset by the increase in comparatively higher yielding loans that comprised interest-earning assets. Overall, during the past three years, the Company’s interest rate spread decreased slightly from 2.99% during 2011 to 2.96% during 2013. The Company’s net interest rate spreads and yields and costs for the past three years are set forth in Exhibits I-3 and I-5.

Non-interest operating income has been a fairly stable, but somewhat limited, contributor to the Company’s earnings, reflecting the Company’s limited diversification into products and services that generate non-interest operating income. Throughout the period shown in Table 1.2, sources of non-interest operating income ranged from $462,000 or 0.28% of average assets during 2011 to $936,000 or 0.55% of average assets during 2012. For 2013, non-interest operating income amounted to $593,000 or 0.35% of average assets. The relatively

RP® Financial, LC.	OVERVIEW AND FINANCIAL ANALYSIS
	I.9

Table 1.2

Pilgrim Bancshares, Inc.

Historical Income Statements

	For the Year Ended December 31,
	2009						2010						2011						2012						2013
	Amount			Pct(1)			Amount			Pct(1)			Amount			Pct(1)			Amount			Pct(1)			Amount			Pct(1)
	($000)			(%)			($000)			(%)			($000)			(%)			($000)			(%)			($000)			(%)
Interest income	$	7,325			4.65	%	$	7,040			4.35	%	$	6,415			3.84	%	$	6,045			3.59	%	$	5,963			3.49	%
Interest expense		(3,381	)		-2.15	%		(2,054	)		-1.27	%		(1,649	)		-0.99	%		(1,314	)		-0.78	%		(1,175	)		-0.69	%
Net interest income	$	3,944			2.50	%	$	4,986			3.08	%	$	4,766			2.86	%	$	4,731			2.81	%	$	4,788			2.80	%
Provision for loan losses		(135	)		-0.09	%		(269	)		-0.17	%		(200	)		-0.12	%		(156	)		-0.09	%		—			0.00	%
Net interest income after provisions	$	3,809			2.42	%	$	4,717			2.92	%	$	4,566			2.74	%	$	4,575			2.72	%	$	4,788			2.80	%
Non-interest operating income	$	526			0.33	%	$	544			0.34	%	$	462			0.28	%	$	936			0.56	%	$	593			0.35	%
Operating expense		(3,905	)		-2.48	%		(3,805	)		-2.35	%		(4,184	)		-2.51	%		(4,423	)		-2.63	%		(4,611	)		-2.70	%
Net operating income	$	430			0.27	%	$	1,456			0.90	%	$	844			0.51	%	$	1,088			0.65	%	$	770			0.45	%
Non-Operating Income/(Losses)
Gain (loss) on sales and calls of securities, net	$	170			0.11	%	$	3			0.00	%	$	4			0.00	%	$	93			0.06	%	$	5			0.00	%
Writedown of securities		—			0.00	%		(335	)		-0.21	%		(42	)		-0.03	%		(52	)		-0.03	%		(247	)		-0.14	%
Net non-operating income(loss)	$	170			0.11	%	($	332	)		-0.21	%	($	38	)		-0.02	%	$	41			0.02	%	($	242	)		-0.14	%
Net income before tax	$	600			0.38	%	$	1,124			0.70	%	$	806			0.48	%	$	1,129			0.67	%	$	528			0.31	%
Income tax provision		(189	)		-0.12	%		(414	)		-0.26	%		(270	)		-0.16	%		(387	)		-0.23	%		(160	)		-0.09	%
Net income (loss)	$	411			0.26	%	$	710			0.44	%	$	536			0.32	%	$	742			0.44	%	$	368			0.22	%
Adjusted Earnings
Net income	$	411			0.26	%	$	710			0.44	%	$	536			0.32	%	$	742			0.44	%	$	368			0.22	%
Add(Deduct): Non-operating income		(170	)		-0.11	%		332			0.21	%		38			0.02	%		(41	)		-0.02	%		242			0.14	%
Tax effect (2)		68			0.04	%		(133	)		-0.08	%		(15	)		-0.01	%		16			0.01	%		(97	)		-0.06	%
Adjusted earnings	$	309			0.20	%	$	909			0.56	%	$	559			0.33	%	$	717			0.43	%	$	513			0.30	%
Expense Coverage Ratio (3)		1.01	x					1.31	x					1.14	x					1.07	x					1.04	x
Efficiency Ratio (4)		87.63	%					68.81	%					80.03	%					78.05	%					85.71	%

(1) Ratios are as a percent of average assets.

(2) Assumes a 40.0% effective tax rate.

(3) Expense coverage ratio calculated as net interest income before provisions for loan losses divided by operating expenses.

(4) Efficiency ratio calculated as operating expenses divided by the sum of net interest income before provisions for loan losses plus non-interest operating income.

Sources: Pilgrim Bancshares’ prospectus, audited & unaudited financial statements and RP Financial calculations.

RP® Financial, LC.	OVERVIEW AND FINANCIAL ANALYSIS
	I.10

high non-interest operating income reported for 2012 was primarily attributable to an increase in gains on the sale of loans. Customer service fees and rental income were the largest sources of non-interest operating income for the Company during 2013. Comparatively, gains on the sale of loans accounted for the largest source of non-interest operating income during 2012.

Operating expenses represent the other major component of the Company’s earnings, ranging from a low of $3.8 million or 2.35% of average assets during 2010 to a high of $4.6 million or 2.70% of average assets during 2013. In addition to higher operating expenses, the increase in the Company’s operating expense to average assets ratio has been the result of very limited assets growth since 2011. Upward pressure will be placed on the Company’s operating expense ratio following the stock offering, due to expenses associated with operating as a publicly-traded company, including expenses related to the stock benefit plans. At the same time, the increase in capital realized from the stock offering will increase the Company’s capacity to leverage operating expenses through pursuing a more aggressive growth strategy.

Overall, during the past five years, the Company’s expense coverage ratios (net interest income divided by operating expenses) ranged from 1.01x during 2009 to 1.31x during 2010 and equaled 1.04x during 2013. Similar trends were reflected in the Company’s efficiency ratio (operating expenses as a percent of the sum of net interest income and other operating income) over the past five years, with the Company’s efficiency ranging from 87.63% during 2009 to 68.81% during 2010 and equaled 85.71% during 2013.

During the period covered in Table 1.2, the amount of loan loss provisions ranged from zero during 2013 to $269,000 or 0.17% of average assets during 2010. The Company was in a position of not having to increase its loan loss allowance in 2013, due to a significant decrease in non-performing loans. As of December 31, 2013, the Company maintained loan loss allowances of $742,000, equal to 0.56% of total loans and 31.55% of non-performing loans. Exhibit I-6 sets forth the Company’s loan loss allowance activity for the past three years.

Non-operating gains and losses have had a varied impact on the Company’s earnings during the period covered in Table 1.2, ranging from a non-operating loss of $332,000 or 0.21% of average assets during 2010 to non-operating gains of $170,000 or 0.11% of average assets during 2009. For 2013, the Company reported a non-operating loss of $242,000 or 0.14% of average assets. The non-operating loss in 2013 consisted of a $247,000 write-down of investment securities netted against a $5,000 gain on sale of investment securities. The Company’s non-operating income is viewed as non-recurring income.

RP® Financial, LC.	OVERVIEW AND FINANCIAL ANALYSIS
	I.11

The Company’s effective tax rate ranged from 30.30% during 2013 to 36.83% during 2010. As set forth in the prospectus, the Company’s marginal effective tax rate is 40.0%.

Interest Rate Risk Management

The Company’s balance sheet is liability-sensitive in the short-term (less than one year) and, thus, the net interest margin will typically be adversely affected during periods of rising and higher interest rates. Comparatively, the Company’s net interest margin has benefited from the declining and low interest rate environment that has prevailed in recent years. However, as interest rates have remained at historically low levels for an extended period of time, the Company has experienced some modest interest spread compression as the average yield earned on interest-earning assets has started to decline more relative to the average rate paid on interest-bearing liabilities. The Company’s interest rate risk analysis as of September 30, 2013 indicates that in the event of a 200 basis point increase in interest rates over a one year period, net interest income would decrease by 5.72% and Economic Value of Equity would decrease by 33.83%, which were within policy limits (see Exhibit I-7).

The Company pursues a number of strategies to manage interest rate risk, particularly with respect to seeking to limit the repricing mismatch between interest rate sensitive assets and liabilities. The Company manages interest rate risk from the asset side of the balance sheet through selling some originations of conforming fixed rate 1-4 family loans with terms of 30 years, investing in debt securities with maturities of less than five years, maintaining most of the investment portfolio as available for sale and diversifying into other types of lending beyond 1-4 family permanent mortgage loans which consists primarily of shorter term fixed rate loans, adjustable rate loans or balloon loans. As of December 31, 2013, of the Company’s total loans due after December 31, 2014, ARM loans comprised 52.7% of those loans (see Exhibit I-8). On the liability side of the balance sheet, management of interest rate risk has been pursued through utilizing FHLB advances with terms of more than one year and emphasizing growth of lower costing and less interest rate sensitive transaction and savings accounts. Transaction and savings accounts comprised 55.3% of the Company’s average total deposits during the year ended December 31, 2013.

The infusion of stock proceeds will serve to further limit the Company’s interest rate risk exposure, as most of the net proceeds will be redeployed into interest-earning assets and the increase in the Company’s capital position will lessen the proportion of interest rate sensitive liabilities funding assets.

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	I.12

Lending Activities and Strategy

Pilgrim Bancshares’ lending activities have traditionally emphasized 1-4 family permanent mortgage loans and such loans continue to comprise the largest component of the Company’s loan portfolio. Pursuant to the Company’s strategic plan, the Company is pursuing a diversified lending strategy emphasizing commercial real estate loans, multi-family loans and commercial business loans as the primary areas of targeted loan growth. Other areas of lending diversification for the Company include construction loans, home equity loans and lines of credit and consumer loans. The origination of 1-4 family permanent mortgage loans is expected to remain an active area of lending for the Company, although growth of the 1-4 family loan portfolio will be partially constrained by the sale of some conforming fixed rate loan originations with terms of 30 years. Exhibit I-9 provides historical detail of Pilgrim Bancshares’ loan portfolio composition for the past two years and Exhibit I-10 provides the contractual maturity of the Company’s loan portfolio by loan type as of December 31, 2013.

1-4 Family Residential Loans. Pilgrim Bancshares offers both fixed rate and adjustable rate 1-4 family permanent mortgage loans. Loans are generally underwritten to secondary market guidelines, as the Company’s current philosophy is to periodically sell originations of conforming 30-year fixed rate loans. Loans are generally sold on a servicing retained basis. ARM loans offered by the Company have initial repricing terms of three or five years and then reprice annually for the balance of the loan term. ARM loans are indexed to the 1-year FHLB advance rate. Fixed rate loans are offered for terms of seven through 30 years. Jumbo loans comprise approximately half of the Company’s 1-4 family loan portfolio, as home prices in the Company’s market area are relatively high in general particularly with respect to Norfolk County. As of December 31, 2013, the Company’s outstanding balance of 1-4 family loans equaled $92.4 million or 69.2% of total loans outstanding.

Home Equity Loans and Lines of Credit. The Company’s 1-4 family lending activities include home equity loans and lines of credit. Home equity loans are originated as fixed rate loans with amortization terms up 15 years. Home equity lines of credit are tied to the prime rate as published in The Wall Street Journal and are offered for terms of up to a ten year draw period followed by a five year repayment period. The Company will originate home equity loans and

RP® Financial, LC.	OVERVIEW AND FINANCIAL ANALYSIS
	I.13

lines of credit up to a maximum loan-to value (“LTV”) ratio of 75.0%, inclusive of other liens on the property. As of December 31, 2013, the Company’s outstanding balance of home equity loans and lines of credit totaled $4.0 million or 3.0% of total loans outstanding.

Construction Loans. Construction loans originated by the Company consist of loans to finance the construction of 1-4 family residences and commercial/multi-family properties. The Company’s 1-4 family construction lending activities consist of construction loans, which convert to a permanent loan at the end of the construction period. Commercial real estate/multi-family construction loans are mostly extended for renovation of existing properties. Residential and commercial construction loans are interest only loans during the construction period and are generally offered up to a maximum LTV ratio of 80.0% of the appraised value of the completed property. As of December 31, 2013, Pilgrim Bancshares’ outstanding balance of construction loans equaled $3.5 million or 2.6% of total loans outstanding

Commercial Real Estate and Multi-family Loans. The balance of the mortgage loan portfolio consists of commercial real estate and multi-family loans, which are collateralized by properties in the Company’s regional lending area. Pilgrim Bancshares originates commercial real estate and multi-family loans up to a maximum LTV ratio of 75.0% and requires a minimum debt-coverage ratio of 1.2 times. Commercial real estate/multi-family loans are originated as fixed rate loans for terms of up to 25 years, with a five year balloon provision. Commercial real estate and multi-family loans are priced off of the 5-year FHLB advance rate. Properties securing the commercial real estate loan portfolio include investor loans for 1-4 family properties, office buildings, owner-occupied businesses, strip mall centers, mixed-use properties and apartments. As of December 31, 2013, the Company’s outstanding balance of commercial real estate loans totaled $19.4 million equal to 14.5% of total loans outstanding and the balance of multi-family loans outstanding totaled $9.9 million equal to 7.4% of total loans outstanding.

Commercial Business Loans. The commercial business loan portfolio is generated through extending loans to businesses operating in the local market area. Commercial business loans offered by the Company consist of fixed rate term loans and floating rate lines of credit indexed to the prime rate as reported in The Wall Street Journal and generally have terms ranging from three to five years or less. The commercial business loan portfolio primarily consists of purchased USDA guaranteed agricultural loans and, to a lesser extent, loans secured by business assets such as accounts receivable, inventory and equipment. The Company also originates working capital lines credit to finance the short-term cash flow needs

RP® Financial, LC.	OVERVIEW AND FINANCIAL ANALYSIS
	I.14

of businesses. Expansion of commercial business and commercial real estate lending activities are areas of lending emphasis for the Company, pursuant to which the Company is seeking to become a full service community bank to its commercial loan customers through offering a full range of commercial loan products that can be packaged with lower cost commercial deposit products. To facilitate growth of commercial business loans, the Company was recently approved as a Small Business Administration lender. As of December 31, 2013, Pilgrim Bancshares’ outstanding balance of commercial business loans equaled $2.5 million or 1.9% of total loans outstanding.

Consumer Loans. The Company’s consumer lending activities have been somewhat limited, with the largest portion of the portfolio consisting of auto loans purchased from another financial institution. The balance of the consumer loan portfolio consists largely of auto loans originated by the Company, loans secured by deposit, and personal lines of credit. As of December 31, 2013, the consumer loan portfolio totaled $1.9 million or 1.5% of total loans outstanding.

Exhibit I-11 provides a summary of the Company’s lending activities over the past two years. Total loans originated decreased from $54.3 million in 2012 to $40.4 million in 2013. The decrease in loans originated during 2013 was related to a decrease in 1-4 family loan originations, as 1-4 family lenders in general experienced a decline in refinancing volume during 2013. Originations of 1-4 family loans decreased from $37.1 million in 2012 to $21.2 million in 2013. Beyond 1-4 family loan originations, commercial real estate/multi-family loans and construction loans constituted the most active lending areas for the Company during the past two years. The Company’s self-generated loan production was supplemented with $10.9 million of purchased 1-4 family loans during 2013. In 2012 the Company sold $12.0 million of 1-4 family loans and did not sell any loans during 2013. Loan originations and purchases exceeded principal repayments during 2013. Overall, net loans receivable increased from $112.6 million at yearend 2012 to $132.9 million at yearend 2013.

Asset Quality

The Company’s historical 1-4 family lending emphasis and emphasis on lending in local and familiar markets have generally supported the maintenance of relatively favorable credit quality measures. However, with the onset of the national recession and financial crisis, the Company experienced some credit quality deterioration in its loan portfolio as well as

RP® Financial, LC.	OVERVIEW AND FINANCIAL ANALYSIS
	I.15

impairment of investment securities. Most of the losses on investments securities were recorded prior to 2009. Pilgrim Bancshares’ balance of non-performing assets totaled $2.4 million or 1.37% of assets at yearend 2013, versus total non-performing assets of $4.9 million or 2.85% of assets at yearend 2012. As shown in Exhibit I-12, non-performing assets at December 31, 2013 consisted entirely of non-accruing loans. Non-accruing loans held by the Company at December 31, 2013 were highly concentrated in 1-4 family loans ($2.3 million) with the remaining non-accruing loan balance consisting of $8,000 of home equity loans and lines of credit.

To track the Company’s asset quality and the adequacy of valuation allowances, Pilgrim Bancshares has established detailed asset classification policies and procedures which are consistent with regulatory guidelines. Classified assets are reviewed monthly by senior management and the Board. Pursuant to these procedures, when needed, the Company establishes additional valuation allowances to cover anticipated losses in classified or non-classified assets. As of December 31, 2013, the Company maintained loan loss allowances of $742,000, equal to 0.56% of total loans outstanding and 31.55% of non-performing loans.

Funding Composition and Strategy

Deposits have consistently served as the Company’s primary funding source and at December 31, 2013 deposits accounted for 96.9% of Pilgrim Bancshares’ interest-bearing funding composition. Exhibit I-13 sets forth the Company’s deposit composition for the past three years. Transaction and savings account deposits constituted 55.3% of average total deposits for the year ended December 31, 2013, as compared to 52.8% of average total deposits for the year ended December 31, 2012. The increase in the concentration of core deposits comprising total deposits during 2013 was realized through a decrease in CDs and growth of core deposits. Most of the growth of core deposits has consisted of checking account deposits, although money market account deposits comprise the largest concentration of the Company’s core deposits. Money market account deposits comprised 46.6% of the Company’s average total core deposits for the year ended December 31, 2013.

The balance of the Company’s deposits consists of CDs, which equaled 44.7% of average total deposits for the year ended December 31, 2013 compared to 47.2% of average total deposits for the year ended December 31, 2012. Pilgrim Bancshares’ current CD composition reflects a higher concentration of short-term CDs (maturities of one year or less).

RP® Financial, LC.	OVERVIEW AND FINANCIAL ANALYSIS
	I.16

The CD portfolio totaled $64.5 million at December 31, 2013 and $35.8 million or 55.6% of the CDs were scheduled to mature in one year or less. Exhibit I-14 sets forth the maturity schedule of the Company’s CDs as of December 31, 2013. As of December 31, 2013, jumbo CDs (CD accounts with balances of $100,000 or more) amounted to $35.4 million or 55.0% of total CDs. The Company did not hold any brokered CDs at December 31, 2013.

Borrowings serve as an alternative funding source for the Company to facilitate management of funding costs and interest rate risk. The Company maintained $5.0 million of FHLB advances at December 31, 2013 with a weighted average rate of 1.27%. FHLB advances held by the Company at December 31, 2013 consisted of $4.0 million of advances maturing in 2014 and $1.0 million of advances maturing in 2015. Exhibit I-15 provides further detail of the Company’s borrowings activities during the past two years.

Subsidiary Activity

Upon completion of the conversion, the Bank will become a wholly owned subsidiary of Pilgrim Bancshares. The Bank has three wholly-owned subsidiaries. 48 South Main Street Corporation is a Massachusetts investment corporation formed to hold certain of the Company’s investments for tax purposes. 40 South Main Street Realty Trust is a Massachusetts realty trust formed to hold the Company’s main office. 800 CJC Realty Corporation is a Massachusetts realty trust formed to hold certain real estate owned, although it did not hold any property at December 31, 2013. Additionally, it is contemplated that the Company will form another subsidiary for the sole purpose of funding the loan to the Bank’s ESOP.

Legal Proceedings

The Company is not currently party to any pending legal proceedings that the Company’s management believes would have a material adverse effect on the Company’s financial condition, results of operations or cash flows.

RP® Financial, LC.	MARKET AREA
	II.1

II. MARKET AREA

Introduction

Pilgrim Bancshares serves the Boston Metropolitan Statistical Area (“MSA”) through the main office in Cohasset, Massachusetts and two branch offices. One of the branches is located in Cohasset, and the other branch office is located in Marion. Cohasset is located in Norfolk County, and Marion is located in Plymouth County. Exhibit II-1 provides information on the Company’s office properties.

With operations in a major metropolitan area, the Company’s competitive environment includes a significant number of thrifts, commercial banks and other financial services companies, some of which have a regional or national presence, and many of which are larger than the Company in terms of deposits, loans, scope of operations, and number of branches. These institutions also have greater resources at their disposal than the Company. The Boston MSA has a highly developed economy, with a relatively high concentration of highly skilled workers who are employed in a number of different industry clusters, including healthcare, financial services and technology.

Future growth opportunities for Pilgrim Bancshares depend on the future growth and stability of the local and regional economy, demographic growth trends, and the nature and intensity of the competitive environment. These factors have been briefly examined to help determine the growth potential that exists for the Company, the relative economic health of the Company’s market area, and the resultant impact on value.

National Economic Factors

The future success of the Company’s operations is partially dependent upon various national and local economic trends. In assessing national economic trends over the past few quarters, manufacturing and non-manufacturing activity continued to expand in July 2013. Job growth for the U.S. slowed during July, as the U.S. economy added 162,000 jobs during July, which was below forecasted job growth of 184,000 jobs, and the July unemployment rate nudged down to 7.4%. Housing starts and existing home sales rose in July compared to June, while new home sales declined from June to July. Durable-goods orders showed a sharp decline in July, as aircraft demand and business spending weakened. However, exclusive of

RP® Financial, LC.	MARKET AREA
	II.2

the transportation category, July durable-goods orders still showed a slight decline. Expansion in the manufacturing and non-manufacturing sectors continued in August, while the August jobs report showed the pace of hiring remained sluggish. The U.S. economy added 169,000 jobs in August and the unemployment rate edged down to 7.3%. Notably, the number of jobs added during July was revised down from 162,000 to 104,000. The positive trends in housing starts and existing home sales were sustained during August, with existing home sales rising to their highest level in six and one-half years. New homes sales were also up solidly in August compared to July. The delayed release of employment data for September showed 148,000 jobs were added in September, which was less than forecasted, and the unemployment rate edged down slightly to 7.2%. Pending home sales declined for the fourth consecutive month in September, as higher mortgage interest rates and home prices curbed buying power. Retail sales were down slightly in September, but core September retail sales which excludes autos were up slightly. Third quarter GDP increased at a 2.8% annual rate (subsequently revised to 4.1%), which marked the fastest growth in a year. Median home prices in U.S. metropolitan areas increased 12.5% during the third quarter compared to the year ago quarter.

Manufacturing activity grew for a fifth consecutive month in October 2013, with the PMI index rising to its highest level in more than two years. Service sector activity also continued to expand in October. The employment report for October showed that 204,000 jobs were added, while the October unemployment rate edged up to 7.3%. Despite the partial government shutdown in early-October, retail sales increased in October. Existing home sales declined in October, which was viewed as a potential sign that rising interest rates were starting to weigh on the housing recovery. The pace of manufacturing activity accelerated further in November, while service sector activity grew at a slightly lower rate in November. Employment growth remained steady in November, with 203,000 jobs being added and the November unemployment rate hitting a five year low of 7.0%. New and existing home sales were down slightly in November compared to October, as home buyers faced higher interest rates and an increase in home prices. Bolstered by a rebound in consumer confidence, retail sales for November showed a healthy increase from October, While manufacturing activity expanded at a slightly lower rate in December, the PMI readings for November and December were the highest and second highest for 2013. Similarly, December service sector activity also grew at a slightly lower rate compared to November. December job growth was the lowest in almost three years, as only 74,000 jobs were added in December. However, the December unemployment rate dropped to 6.7%, which was mostly attributable to people leaving the labor force.

RP® Financial, LC.	MARKET AREA
	II.3

The pace of manufacturing activity slowed considerably in January 2014, with the PMI reading declining to 5.2 points to 51.3. Comparatively, January service sector activity expanded at a slight faster pace, with PMI reading of 56.7 compared to 55.7 in December. January was the second straight month of weak job growth, with a tepid gain of 113,000 jobs. The January unemployment rate dipped to 6.6% in January.

In terms of interest rates trends over the past few quarters, interest rates edged higher at the start of the third quarter of 2013 as job growth for June came in stronger-than-expected. Assurances from the Federal Reserve Chairman that it would not raise short-term rates for some time after the unemployment rate hit 6.5%, along with a decline in consumer sentiment and weaker-than-expected June retail sales, translated into a slight decline in interest rates going into mid-July. Stable interest rates prevailed during the second half of July and the first half of August, as the Federal Reserve concluded its late-July meeting with keeping easy monetary policies in place. Interest rates climbed higher in mid-August, as news that weekly unemployment claims were the lowest since 2007 raised expectations that the Federal Reserve would start to reduce its $85 billion in monthly bond purchases. Despite economic data that generally reflected sluggish economic growth, the 10-year Treasury yield edged closer to 3.0% in the first week of September. Long-term Treasury yields eased lower during the second half of September, as the Federal Reserve concluded its two day meeting in mid-September by staying the course on its bond buying program in light of the prevailing uneven economic climate and potential for fiscal discord in Washington.

Treasury yields dipped lower at the beginning of October 2013, as hiring in the private sector increased less than expected during September. Stalled negotiations in Washington to avert the first ever default on the U.S. debt pushed Treasury yields higher going into mid-October, which was followed by a rally in Treasury bonds on news of an agreement in Washington that raised the debt ceiling and avoided an imminent default by the U.S. Government. A weaker than expected jobs report for September furthered the downward trend in interest rates, as investors became more confident that the Federal Reserve would leave its bond buying program unchanged. A sharp decline in October consumer confidence and an October employment report that continued to reflect a relatively slow pace of job growth provided for a stable interest rate environment at the end of October and into early-November. Long term Treasury yields edged higher in mid-November and then stabilized for the balance of November, as investors reacted to generally favorable October economic data and Congressional testimony by the Federal Reserve Chairman nominee Janet Yellen, in which she

RP® Financial, LC.	MARKET AREA
	II.4

stated for a continuation of the Federal Reserve’s stimulus efforts. Signs of the economic recovery gaining momentum and the Federal Reserve’s mid-December announcement that it would begin to taper its stimulus program provided for a general upward trend in interest rates throughout December, with the 10-year Treasury yield edging above 3.0% in late-December.

Interest rates eased lower at the start of 2014, with the 10-year Treasury yield dipping below 3.0%. The weaker-than-expected jobs report for December furthered the downward trend in long-term Treasury yields heading into mid-January. The downward trend in long-term Treasury yields continued through the balance of January, as investors sought the safe haven of Treasury bonds amid turmoil in emerging markets and soft jobs data. The Federal Reserve concluded its late-January meeting by voting to scale back its bond buying program by another $10 billion. Soft economic data provided for a stable interest rate environment during the first half of February. As of February 14, 2014, the bond equivalent yields for U.S. Treasury bonds with terms of one and ten years equaled 0.11% and 2.75%, respectively, versus comparable year ago yields of 0.16% and 2.00%. Exhibit II-2 provides historical interest rate trends.

Based on the consensus outlook of economists surveyed by The Wall Street Journal in January 2014 economic growth forecasts were largely unchanged, as annual GDP growth was not expected to top 3% through at least 2015. The unemployment rate was forecasted to stall, falling just 0.1% to 6.6% in June 2014 and 200,000 jobs were expected to be added per month over the next year. On average, the economists did not expect the Federal Reserve to begin raising its target rate until mid-2015 at the earliest and the 10-year Treasury yield would increase to 3.5% at the end of 2014. The surveyed economists also forecasted home prices would rise by 5.0% in 2014 . Housing starts were forecasted to continue to trend slightly higher in 2014.

Market Area Demographics

Demographic and economic growth trends, measured by changes in population, number of households, age distribution and median household income, provide key insight into the health of the market area served by Pilgrim Bancshares. Demographic data for Norfolk and Plymouth Counties, as well as for Massachusetts and the U.S., is provided in Table 2.1.

Population and household data indicate that the market area served by the Company’s branches is largely suburban in nature. Norfolk and Plymouth Counties are two of the largest counties in Massachusetts, with populations of 0.7 million and 0.5 million respectively. Norfolk

RP® Financial, LC.	MARKET AREA
	II.5

Table 2.1

Pilgrim Bancshares, Inc.

Summary Demographic Data

	Year						Growth Rate
	2010		2012		2017		2010-2012			2012-2017
							(%)			(%)
Population (000)
USA		308,746		313,129		323,986		0.7	%		0.7	%
Massachusetts		6,548		6,607		6,757		0.5	%		0.5	%
Norfolk, MA		671		678		696		0.5	%		0.5	%
Plymouth, MA		495		500		511		0.5	%		0.4	%
Households (000)
USA		116,716		118,209		122,665		0.6	%		0.7	%
Massachusetts		2,547		2,567		2,637		0.4	%		0.5	%
Norfolk, MA		258		261		268		0.6	%		0.5	%
Plymouth, MA		181		182		188		0.3	%		0.6	%
Median Household Income ($)
USA		NA		50,157		56,895		NA			2.6	%
Massachusetts		NA		62,403		73,930		NA			3.4	%
Norfolk, MA		NA		80,955		90,098		NA			2.2	%
Plymouth, MA		NA		72,330		81,310		NA			2.4	%
Per Capita Income ($)
USA		NA		26,409		29,882		NA			2.5	%
Massachusetts		NA		33,741		38,312		NA			2.6	%
Norfolk, MA		NA		40,822		46,796		NA			2.8	%
Plymouth, MA		NA		33,566		37,877		NA			2.4	%
2012 Age Distribution (%)	0-14 Yrs.		15-34 Yrs.		35-54 Yrs.		55-69 Yrs.			70+ Yrs.
USA		19.6		27.4		27.1		16.6			9.2
Massachusetts		17.5		27.2		28.2		17.1			10.0
Norfolk, MA		18.4		23.9		29.4		17.5			10.7
Plymouth, MA		19.5		22.3		29.8		18.9			9.5
2012 HH Income Dist. (%)	Less Than 25,000		$25,000 to 50,000		$50,000 to 100,000		$100,000+
USA		24.7		25.1		29.9		20.3
Massachusetts		20.0		19.7		29.9		30.4
Norfolk, MA		14.2		16.2		28.6		41.0
Plymouth, MA		14.7		18.1		32.5		34.8

Source: SNL Financial

RP® Financial, LC.	MARKET AREA
	II.6

County, which has a larger commuter population that works in Boston, experienced moderate population growth from 2010 to 2012, at 0.5% annually. Plymouth County, which is a more distant market from Boston, also recorded an annual population growth rate of 0.5% over the past two years. Massachusetts’ 2010 to 2012 population growth rate matched the growth rate for the primary market area counties, which was slightly less than the comparable national annual population growth rate of 0.7%. Household growth rates show a comparatively stronger pace of household growth in Norfolk County, while Plymouth County’s rate of household growth was slightly less than the household growth rate for Massachusetts. Population and household growth trends are generally expected to continue over the next five years, although the rate of household growth in Plymouth County is projected to pick-up over the next five years.

Income measures show that Norfolk County is a relatively affluent market. Norfolk County is the wealthiest county in the state of Massachusetts and is characterized by a high concentration of white collar professionals who work in the Boston MSA. Plymouth County is the oldest municipality in New England and serves as a historical landmark with touristic attractions, commercial and industrial development, as well as prosperous residential neighborhoods. Median household income for Norfolk and Plymouth Counties are both well above the comparable U.S. and Massachusetts income measures. Per capita income for Norfolk County also significantly exceeds the national and state measures, while per capita income for Plymouth County approximates Massachusetts’ per capita income. Projected income growth measures were generally in line with the comparable projected growth rates for Massachusetts and the U.S.

Household income distribution measures provide another indication of the relative affluence of the Company’s primary market area counties. Norfolk and Plymouth Counties maintain relatively high percentages of households with income above $100,000, at 41.0% and 34.8%, respectively, as compared to 30.4% for Massachusetts and 20.3% for the U.S. Age distribution measures reflect that the market area counties have slightly older populations relative to Massachusetts and the U.S.

Regional Economy

Comparative employment data shown in Table 2.2 shows that employment in services constituted the major source of jobs in Norfolk and Plymouth Counties, as well as Massachusetts. Wholesale/retail employment represented the second largest employment

RP® Financial, LC.	MARKET AREA
	II.7

sector in Norfolk and Plymouth Counties, followed by finance/insurance/real estate employment in Norfolk County and healthcare employment in Plymouth County. Compared to Plymouth County and Massachusetts, Norfolk County maintains higher levels of employment in finance/insurance/real estate, manufacturing, information and agriculture. Wholesale/retail trade, construction and transportation/utility constitute higher concentrations of employment in Plymouth County in comparison to Norfolk County and Massachusetts.

Table 2.2

Pilgrim Bancshares, Inc.

Primary Market Area Employment Sectors

(Percent of Labor Force)

				Norfolk			Plymouth
Employment Sector	Massachusetts			County			County
	(% of Total Employment)
Services		33.3	%		30.1	%		30.6	%
Healthcare		10.7	%		9.3	%		10.4	%
Government		4.7	%		2.9	%		4.7	%
Wholesale/Retail Trade		24.4	%		27.8	%		29.9	%
Finance/Insurance/Real Estate		8.2	%		10.0	%		5.6	%
Manufacturing		8.5	%		9.0	%		6.7	%
Construction		4.2	%		4.9	%		5.3	%
Information		0.9	%		1.0	%		0.4	%
Transportation/Utility		3.3	%		2.8	%		4.1	%
Agriculture		0.9	%		1.3	%		1.2	%
Other		0.8	%		0.8	%		1.1	%
		100.0	%		100.0	%		100.0	%

Source: SNL Financial

The market area served by the Company, characterized primarily as the Boston MSA, has a highly developed and diverse economy, with the regions’ many colleges and universities serving to attract industries in need of a highly skilled and educated workforce. Health care, high-tech and financial services companies constitute major sources of employment in the Company’s regional market area, as well as the colleges and universities that populate the Boston MSA. Tourism also is a prominent component of market area’s economy, as Boston and Plymouth rank as the nation’s top tourist destinations. Table 2.3 lists in detail the major employers in the Company’s market area. In addition, Plymouth County has also experienced

RP® Financial, LC.	MARKET AREA
	II.8

commercial and industrial success in recent years, with downtown Plymouth and North Plymouth each becoming commercial centers, including a large industrial park, large retail developments, and a nuclear power plant.

Table 2.3

Pilgrim Bancshares, Inc.

Market Area Largest Employers in Boston MSA

Company/Institution	Industry	Employees
Massachusetts General Hospital	Health Care	14,752
Brigham and Women’s Hospital	Health Care	11,229
Boston University	Higher Education	9,783
Children’s Hospital, Boston	Health Care	7,903
State Street Bank & Trust Co	Finance and Insurance	7,800
Beth Israel Deaconess Med. Center	Health Care	6,695
Fidelity	Finance and Insurance	5,500
Harvard University	Higher Education	5,132
Northeastern University	Higher Education	4,484
Boston Medical Center	Health Care	4,217
Boston College	Higher Education	4,122
Tufts Medical Center	Health Care	3,692
Dana-Farber Cancer Institute	Health Care	3,607
John Hancock	Finance and Insurance	3,430

Source: Boston Redevelopment Authority, 2013.

Unemployment Trends

Comparative unemployment rates for Norfolk and Plymouth Counties, as well as for the U.S. and Massachusetts, are shown in Table 2.4. The November 2013 unemployment rates for Norfolk and Plymouth Counties, at 5.5% and 6.5% respectively, were both below the comparable unemployment rates for the U.S. and Massachusetts equal to 7.0% and 6.6%, respectively. However, in contrast to the U.S., Norfolk and Plymouth Counties, along with the state of Massachusetts, reported higher unemployment rates for November 2013 compared to a year ago.

RP® Financial, LC.	MARKET AREA
	II.9

Table 2.4

Pilgrim Bancshares, Inc.

Unemployment Trends

Region	November 2012 Unemployment			November 2013 Unemployment
USA		7.8	%		7.0	%
Massachusetts		6.1	%		6.6	%
Norfolk, MA		5.1	%		5.5	%
Plymouth, MA		6.1	%		6.5	%

Source: U.S. Bureau of Labor Statistics.

Market Area Deposit Characteristics and Competition

The Company’s deposit base is closely tied to the economic fortunes of Norfolk and Plymouth Counties and, in particular, the areas that are nearby to Pilgrim Bancshares’ three branches. Table 2.5 displays deposit market trends from June 30, 2009 through June 30, 2013 for Pilgrim Bancshares, as well as for all commercial bank and savings institution branches located in the market area counties and the state of Massachusetts. Consistent with the state of Massachusetts, commercial banks maintained a larger market share of deposits than savings institutions in Norfolk and Plymouth Counties. For the four year period covered in Table 2.5, savings institutions experienced a decrease in deposit market share in the market counties as well as in the state of Massachusetts. Overall, for the past four years, bank and thrift deposits increased at annual rates of 3.9% for both Norfolk and Plymouth Counties, which fell well below the state deposit growth rate of 11.0% annually.

The Company maintains its largest balance of deposits and largest deposit market share in Norfolk County, where the Company maintains its main office and one other branch location. As of June 30, 2013, Pilgrim Bancshares held small deposit market shares in Norfolk and Plymouth Counties, at 0.7% and 0.2% respectively. Since June 30, 2009, the Company’s deposits increased at a 0.4% annual rate in Norfolk County and at a 15.7% annual rate in Plymouth County. However the Company’s deposit market share decreased slightly by 0.1% in Norfolk County, while growing slightly by 0.1% in Plymouth County.

RP® Financial, LC.	MARKET AREA
	II.10

Table 2.5

Pilgrim Bancshares, Inc.

Deposit Summary

	As of June 30,
	2009							2013							Deposit Growth Rate 2009-2013
	Deposits		Market Share			No. of Branches		Deposits		Market Share			No. of Branches
	(Dollars in Thousands)														(%)
Massachusetts	$	189,870,183		100.0	%		2,245	$	288,381,314		100.0	%		2,218		11.0	%
Commercial Banks		115,811,378		61.0	%		1,046		225,589,069		78.2	%		1,320		18.1	%
Savings Institutions		74,058,805		39.0	%		1,199		62,792,245		21.8	%		898		-4.0	%
Norfolk County	$	17,347,122		100.0	%		247	$	20,221,583		100.0	%		245		3.9	%
Commercial Banks		8,953,209		51.6	%		116		14,691,337		72.7	%		169		13.2	%
Savings Institutions		8,393,913		48.4	%		131		5,530,246		27.3	%		76		-9.9	%
Pilgrim Bank		134,943		0.8	%		2		136,908		0.7	%		2		0.4	%
Plymouth County	$	6,955,727		100.0	%		162	$	8,102,005		100.0	%		152		3.9	%
Commercial Banks		3,429,971		49.3	%		72		5,446,466		67.2	%		98		12.3	%
Savings Institutions		3,525,756		50.7	%		90		2,655,539		32.8	%		54		-6.8	%
Pilgrim Bank		9,913		0.1	%		1		17,777		0.2	%		1		15.7	%

Source: FDIC.

As implied by the Company’s low market shares of deposits in Norfolk and Plymouth Counties, competition among financial institutions in the Company’s market area is significant. Among the Company’s competitors are much larger and more diversified institutions, which have greater resources than maintained by Pilgrim Bancshares. Financial institution competitors in the Company’s primary market area include other locally based thrifts and banks, as well as regional, super regional and money center banks. From a competitive standpoint, Pilgrim Bancshares has sought to emphasize its community orientation in the markets served by its branches. In Norfolk County, there are a total of 47 banking institutions, with Pilgrim Bancshares holding the 26^th largest market share of deposits. In Plymouth County there are 22 banking institutions and Pilgrim Bancshares holds the smallest deposit market share.

Table 2.6 lists the Company’s largest competitors in the market area counties, based on deposit market share as noted parenthetically.

RP® Financial, LC.	MARKET AREA
	II.11

Table 2.6

Pilgrim Bancshares, Inc.

Market Area Deposit Competitors

Location	Name	Market Share			Rank
Norfolk County	Bank of America Corp		19.71	%
	RBS		16.78	%
	Santander		6.34	%
	Pilgrim Bancshares, Inc.		0.67	%	26 out of 47
Plymouth County	Independent Bank Corp.		23.24	%
	HarborOne Bank		14.18	%
	RBS		12.12	%
	Pilgrim Bancshares, Inc.		0.19	%	22 out of 22

Source: SNL Financial.

RP® Financial, LC.	PEER GROUP ANALYSIS
	III.1

III. PEER GROUP ANALYSIS

This chapter presents an analysis of Pilgrim Bancshares’ operations versus a group of comparable savings institutions (the “Peer Group”) selected from the universe of all publicly-traded savings institutions in a manner consistent with the regulatory valuation guidelines. The basis of the pro forma market valuation of Pilgrim Bancshares is derived from the pricing ratios of the Peer Group institutions, incorporating valuation adjustments for key differences in relation to the Peer Group. Since no Peer Group can be exactly comparable to Pilgrim Bancshares, key areas examined for differences are: financial condition; profitability, growth and viability of earnings; asset growth; primary market area; dividends; liquidity of the shares; marketing of the issue; management; and effect of government regulations and regulatory reform.

Peer Group Selection

The Peer Group selection process is governed by the general parameters set forth in the regulatory valuation guidelines. Accordingly, the Peer Group is comprised of only those publicly-traded savings institutions whose common stock is either listed on a national exchange (NYSE) or is NASDAQ listed, since their stock trading activity is regularly reported and generally more frequent than non-publicly traded and closely-held institutions. Institutions that are not listed on a national exchange or NASDAQ are inappropriate, since the trading activity for thinly-traded or closely-held stocks is typically highly irregular in terms of frequency and price and thus may not be a reliable indicator of market value. We have also excluded from the Peer Group those companies under acquisition or subject to rumored acquisition, mutual holding companies and recent conversions, since their pricing ratios are subject to unusual distortion and/or have limited trading history. A recent listing of the universe of all publicly-traded savings institutions is included as Exhibit III-1.

Ideally, the Peer Group, which must have at least 10 members to comply with the regulatory valuation guidelines, should be comprised of locally- or regionally-based institutions with comparable resources, strategies and financial characteristics. There are approximately 103 fully-converted, publicly-traded institutions nationally and, thus, it is typically the case that the Peer Group will be comprised of institutions with relatively comparable characteristics. To the extent that differences exist between the converting institution and the Peer Group, valuation adjustments will be applied to account for the differences. Since Pilgrim Bancshares

RP® Financial, LC.	PEER GROUP ANALYSIS
	III.2

will be a fully-converted public company upon completion of the offering, we considered only fully-converted public companies to be viable candidates for inclusion in the Peer Group. From the universe of publicly-traded thrifts, we selected ten institutions with characteristics similar to those of Pilgrim Bancshares. In the selection process, we applied two “screens” to the universe of all public companies that were eligible for consideration:

• Screen #1 New England institutions with assets less than $750 million, tangible equity-to-assets ratios of greater than 8.0% and positive core earnings. Six companies met the criteria for Screen #1 and five were included in the Peer Group: Chicopee Bancorp, Inc. of Massachusetts, Georgetown Bancorp, Inc. of Massachusetts, Hampden Bancorp, Inc. of Massachusetts, Peoples Federal Bancshares, Inc. of Massachusetts and Wellesley Bancorp, Inc. of Massachusetts. Coastway Bancorp, Inc. of Rhode Island met the selection criteria, but was excluded from the Peer Group due to its recent conversion status (conversion completed January 2014). Exhibit III-2 provides financial and public market pricing characteristics of all publicly-traded New England thrifts.

• Screen #2 Mid-Atlantic institutions with assets less than $750 million, tangible equity-to-assets ratios of greater than 8.0% and positive core earnings. Eight companies met the criteria for Screen #2 and five were included in the Peer Group: Alliance Bancorp, Inc. of Pennsylvania, FedFirst Financial Corp. of Pennsylvania, OBA Financial Services, Inc. of Maryland, Oneida Financial Corp. of New York and WVS Financial Corp. of Pennsylvania. The three companies which met the selection criteria, but were excluded from the Peer Group were CMS Bancorp, Inc. of New York, Carver Bancorp, Inc. of New York, and Prudential Bancorp, Inc. of Pennsylvania. CMS Bancorp was excluded as the result of being the target of an announced acquisition, Carver Bancorp was excluded as the result of its low level of common equity and resulting not meaningful price-to-book ratio and Prudential Bancorp was excluded due to its recent conversion status (conversions completed October 2013). Exhibit III-3 provides financial and public market pricing characteristics of all publicly-traded Mid-Atlantic thrifts.

Table 3.1 shows the general characteristics of each of the ten Peer Group companies and Exhibit III-4 provides summary demographic and deposit market share data for the primary market areas served by each of the Peer Group companies. While there are expectedly some differences between the Peer Group companies and Pilgrim Bancshares, we believe that the Peer Group companies, on average, provide a good basis for valuation subject to valuation adjustments. The following sections present a comparison of Pilgrim Bancshares’ financial condition, income and expense trends, loan composition, interest rate risk and credit risk versus the Peer Group as of the most recent publicly available date.

RP® Financial, LC.	PEER GROUP ANALYSIS
	III.3

Table 3.1

Peer Group of Publicly-Traded Thrifts

As of February 14, 2014

Ticker

Financial Institution

Exchange

City

State

Total Assets (1)

Offices

Fiscal Mth End

Conv. Date

Stock Price

Market Value

($Mil)

($)

($Mil)

ALLB

Alliance Bancorp of Penn

NASDAQ

Broomall

PA

436

8

Dec

1/18/11

15.30

68

CBNK

Chicopee Bancorp Inc.

NASDAQ

Chicopee

MA

605

9

Dec

7/20/06

17.37

94

FFCO

FedFirst Financial Corp.

NASDAQ

Monessen

PA

323

7

Dec

9/21/10

20.06

47

GTWN

Georgetown Bancorp Inc.

NASDAQ

Georgetown

MA

247

3

Dec

7/12/12

14.75

27

HBNK

Hampden Bancorp Inc.

NASDAQ

Springfield

MA

696

10

Jun

1/17/07

15.96

90

OBAF

OBA Financial Services Inc

NASDAQ

Germantown

MD

390

7

Jun

1/22/10

19.00

77

ONFC

Oneida Financial Corp.

NASDAQ

Oneida

NY

714

13

Dec

7/7/10

12.34

87

PEOP

Peoples Federal Bancshares Inc

NASDAQ

Brighton

MA

585

8

Sep

7/7/10

18.08

116

WEBK

Wellesley Bancorp

NASDAQ

Wellesley

MA

421

4

Dec

1/26/12

18.50

45

WVFC

WVS Financial Corp.

NASDAQ

Pittsburgh

PA

296

6

Jun

11/29/93

12.00

25

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

Source: SNL Financial, LC.

RP® Financial, LC.	PEER GROUP ANALYSIS
	III.4

In addition to the selection criteria used to identify the Peer Group companies, a summary description of the key comparable characteristics of each of the Peer Group companies relative to Pilgrim Bancshares’ characteristics is detailed below.

• Alliance Bancorp, Inc. of Pennsylvania. Selected due to relatively high equity-to-assets ratio, limited earnings contribution from sources of non-interest operating income, similar ratio of operating expenses as a percent of average assets and lending diversification emphasis on commercial real estate loans.

• Chicopee Bancorp, Inc. of Massachusetts. Selected due to relatively high equity-to-assets ratio, similar interest-earning asset composition and lending diversification emphasis on commercial real estate loans.

• FedFirst Financial Corp. of Pennsylvania. Selected due to relatively high equity-to-assets ratio and lending diversification emphasis on commercial real estate loans.

• Georgetown Bancorp, Inc. of Massachusetts. Selected due to Boston market area, similar asset size, same size of branch network, similar interest-earning asset composition, similar concentration of 1-4 family loans and mortgage-backed securities comprising assets and lending diversification emphasis on commercial real estate loans.

• Hampden Bancorp, Inc. of Massachusetts. Selected due to similar net interest income to average assets ratio, similar ratio of operating expenses as a percent of average assets and lending diversification emphasis on commercial real estate loans.

• OBA Financial Services, Inc. of Maryland. Selected due to relatively high equity-to-assets ratio, similar interest-earning asset composition, similar return on average assets, limited earnings contribution from sources of non-interest operating income and lending diversification emphasis on commercial real estate loans.

• Oneida Financial Corp. of New York. Selected due to similar interest-bearing funding composition, similar net interest income to average assets ratio and lending diversification emphasis on commercial real estate loans.

• Peoples Federal Bancshares, Inc. of Massachusetts. Selected due to Boston market area, relatively high equity-to-assets ratio, similar interest-earning asset composition, similar net interest income to average assets ratio, minimal impact of loan loss provisions on earnings, limited earnings contribution from sources of non-interest operating income and similar concentration of mortgage-backed securities and 1-4 family loans comprising assets.

• WCF Financial Corp. of Pennsylvania. Selected due to similar return on average assets, minimal impact of loan loss provisions on earnings and limited earnings contribution from sources of non-interest operating income.

• Wellesley Bancorp of Massachusetts. Selected due to Boston market area, similar size of branch network, limited earnings contribution from sources of non-interest operating income, similar ratio of operating expenses as a percent of average assets and lending diversification emphasis on commercial real estate loans.

In aggregate, the Peer Group companies maintained a higher level of tangible equity than the industry average (14.0% of assets versus 12.5% for all public companies), generated

RP® Financial, LC.	PEER GROUP ANALYSIS
	III.5

similar core earnings as a percent of average assets (0.48% core ROAA versus 0.51% for all public companies), and earned a slightly lower core ROE (3.44% core ROE versus 04.01% for all public companies). Overall, the Peer Group’s average P/TB ratio and average core P/E multiple were below and above the respective averages for all publicly-traded thrifts.

	All Publicly-Traded			Peer Group
Financial Characteristics (Averages)
Assets ($Mil)	$	2,478		$	478
Market capitalization ($Mil)	$	344		$	68
Tangible equity/assets (%)		14.00	%		12.52	%
Core return on average assets (%)		0.51			0.48
Core return on average equity (%)		4.01			3.44
Pricing Ratios (Averages)(1)
Core price/earnings (x)		18.14	x		22.70	x
Price/tangible book (%)		113.87	%		101.83	%
Price/assets (%)		13.36			13.91

(1) Based on stock market prices as of February 14, 2014.

Ideally, the Peer Group companies would be comparable to Pilgrim Bancshares in terms of all of the selection criteria, but the universe of publicly-traded thrifts does not provide for an appropriate number of such companies. However, in general, the companies selected for the Peer Group were fairly comparable to Pilgrim Bancshares, as will be highlighted in the following comparative analysis.

Financial Condition

Table 3.2 shows comparative balance sheet measures for Pilgrim Bancshares and the Peer Group, reflecting the expected similarities and some differences given the selection procedures outlined above. The Company’s and the Peer Group’s ratios reflect balances as of December 31, 2013 and September 30, 2013, respectively.

Pilgrim Bancshares’ equity-to-assets ratio of 7.3% was below the Peer Group’s average net worth ratio of 14.4%. However, the Company’s pro forma capital position will increase with the addition of stock proceeds, providing the Company with an equity-to-assets ratio that will be similar to the Peer Group’s ratio. Tangible equity-to-assets ratios for the Company and the Peer Group equaled 7.3% and 14.0%, respectively. The increase in Pilgrim Bancshares’ pro forma capital position will be favorable from a risk perspective and in terms of future earnings potential

RP® Financial, LC.	PEER GROUP ANALYSIS
	III.6

Table 3.2

Balance Sheet Composition and Growth Rates

Comparable Institution Analysis

As of September 30, 2013

			Balance Sheet as a Percent of Assets
			Cash & Equivalents			MBS & Invest			BOLI			Net Loans (1)			Deposits			Borrowed Funds			Sub. Debt			Total Equity			Goodwill & Intang			Tangible Equity
Pilgrim Bancshares, Inc.
December 31, 2013		MA		5.24	%		11.26	%		1.27	%		77.48	%		89.61	%		2.91	%		0.00	%		7.29	%		0.00	%		7.29	%
All Public Companies
Averages				6.03	%		20.83	%		1.86	%		66.92	%		74.39	%		10.71	%		0.38	%		13.23	%		0.71	%		12.52	%
Medians				3.76	%		16.71	%		1.94	%		69.25	%		75.80	%		8.54	%		0.00	%		12.35	%		0.02	%		11.33	%
State of MA
Averages				6.13	%		19.49	%		1.78	%		69.88	%		69.09	%		17.21	%		0.24	%		12.57	%		0.49	%		12.08	%
Medians				5.12	%		9.89	%		1.42	%		77.74	%		70.26	%		17.29	%		0.00	%		12.06	%		0.00	%		11.93	%
Comparable Recent Conversions(2)
CWAY Coastway Bancorp, Inc.		RI		2.60	%		0.00	%		0.00	%		87.40	%		87.80	%		3.70	%		0.00	%		7.30	%		0.10	%		7.20	%
Comparable Group
Averages				6.08	%		21.17	%		2.26	%		67.52	%		72.37	%		12.28	%		0.00	%		14.41	%		0.41	%		14.00	%
Medians				4.96	%		9.79	%		2.41	%		76.30	%		73.47	%		9.16	%		0.00	%		13.82	%		0.00	%		13.58	%
Comparable Group
ALLB	Alliance Bancorp	PA		14.45	%		13.57	%		2.84	%		65.79	%		80.06	%		0.81	%		0.00	%		17.58	%		0.00	%		17.58	%
CBNK	Chicopee Bancorp Inc.	MA		8.86	%		9.89	%		2.33	%		76.29	%		80.10	%		4.65	%		0.00	%		15.09	%		0.00	%		15.09	%
FFCO	FedFirst Financial Corp.	PA		4.37	%		9.68	%		2.64	%		81.16	%		69.72	%		13.18	%		0.00	%		16.52	%		0.35	%		16.16	%
GTWN	Georgetown Bancorp Inc.	MA		3.36	%		9.24	%		1.16	%		83.71	%		65.54	%		21.31	%		0.00	%		11.93	%		0.00	%		11.93	%
HBNK	Hampden Bancorp Inc.	MA		5.12	%		20.95	%		2.45	%		69.25	%		69.76	%		17.29	%		0.00	%		12.06	%		0.00	%		12.06	%
OBAF	OBA Financial Services Inc	MD		9.37	%		9.51	%		2.37	%		76.32	%		74.30	%		6.71	%		0.00	%		18.39	%		0.00	%		18.39	%
ONFC	Oneida Financial Corp.	NY		4.80	%		36.06	%		2.52	%		46.82	%		85.29	%		0.14	%		0.00	%		12.55	%		3.74	%		8.81	%
PEOP	Peoples Federal Bancshares Inc	MA		6.35	%		8.73	%		3.42	%		79.63	%		72.63	%		7.52	%		0.00	%		18.17	%		0.00	%		18.17	%
WVFC	WVS Financial Corp.	PA		1.04	%		85.02	%		1.36	%		11.59	%		48.47	%		40.40	%		0.00	%		10.84	%		0.00	%		10.84	%
WEBK	Wellesley Bancorp	MA		3.07	%		9.03	%		1.55	%		84.60	%		77.76	%		10.81	%		0.00	%		11.01	%		0.00	%		11.01	%

			Balance Sheet Annual Growth Rates																					Regulatory Capital
			Assets			MBS, Cash & Investments			Loans (1)			Deposits			Borrows. &Subdebt			Total Equity			Tangible Equity			Tangible			Tier 1 Risk Based			Risk Based Capital
Pilgrim Bancshares, Inc.
December 31, 2013		MA		-0.57	%		-42.39	%		18.03	%		-1.86	%		51.19	%		1.05	%		1.05	%		7.49	%		12.74	%		13.49	%
All Public Companies
Averages				3.34	%		4.23	%		5.06	%		3.80	%		1.67	%		4.67	%		3.78	%		12.61	%		19.43	%		20.53	%
Medians				1.01	%		-0.58	%		3.31	%		1.18	%		-2.00	%		-0.76	%		-0.59	%		12.30	%		18.11	%		19.32	%
State of MA
Averages				9.09	%		7.80	%		10.84	%		9.03	%		25.05	%		-0.94	%		-1.09	%		14.55	%		17.68	%		18.69	%
Medians				7.74	%		-0.64	%		10.50	%		7.23	%		20.86	%		-2.04	%		-2.04	%		13.84	%		16.90	%		18.00	%
Comparable Recent Conversions(2)
CWAY Coastway Bancorp, Inc.		RI		5.96	%		40.50	%		5.86	%		7.21	%		-14.34	%		1.10	%		1.14	%		7.69	%		9.70	%		10.19	%
Comparable Group
Averages				4.40	%		-10.06	%		8.39	%		4.46	%		8.55	%		-2.14	%		-2.50	%		13.34	%		19.07	%		20.09	%
Medians				1.48	%		-4.00	%		6.09	%		4.08	%		12.83	%		-2.77	%		-3.65	%		13.66	%		19.62	%		20.69	%
Comparable Group
ALLB	Alliance Bancorp	PA		-6.17	%		-22.81	%		3.83	%		-6.52	%		13.33	%		-6.07	%		-6.07	%		13.96	%		20.87	%		22.12	%
CBNK	Chicopee Bancorp Inc.	MA		-0.51	%		4.20	%		-1.50	%		1.98	%		-34.32	%		2.22	%		2.22	%		13.36	%		18.36	%		19.26	%
FFCO	FedFirst Financial Corp.	PA		0.28	%		-28.58	%		8.34	%		2.20	%		12.34	%		-9.51	%		-9.69	%		14.53	%		22.15	%		23.40	%
GTWN	Georgetown Bancorp Inc.	MA		16.72	%		-18.47	%		25.74	%		5.96	%		114.13	%		-2.04	%		-2.04	%		10.16	%		14.37	%		15.57	%
HBNK	Hampden Bancorp Inc.	MA		7.74	%		-6.07	%		14.49	%		7.23	%		20.86	%		-3.50	%		-3.50	%		12.07	%		16.90	%		18.00	%
OBAF	OBA Financial Services Inc	MD		0.43	%		-1.94	%		1.06	%		6.78	%		-32.57	%		-5.16	%		-5.16	%		18.38	%		24.63	%		25.83	%
ONFC	Oneida Financial Corp.	NY		5.46	%		-0.84	%		10.96	%		6.77	%		-83.33	%		-1.06	%		-4.49	%		9.14	%		15.58	%		16.30	%
PEOP	Peoples Federal Bancshares Inc	MA		2.53	%		-0.64	%		3.33	%		2.00	%		33.33	%		-3.79	%		-3.79	%		15.08	%		23.74	%		24.83	%
WVFC	WVS Financial Corp.	PA		-0.30	%		0.18	%		-11.39	%		1.25	%		-2.74	%		3.09	%		3.09	%		NA			22.70	%		22.90	%
WEBK	Wellesley Bancorp	MA		17.85	%		-25.65	%		29.02	%		16.93	%		44.44	%		4.41	%		4.41	%		NA			11.42	%		12.64	%

(1) Includes loans held for sale.

(2) Ratios are based on the date of the most recent financial statements disclosed in the offering prospectus.

Source: SNL Financial, LC. and RP^® Financial, LC. calculations. The information provided in this table has been obtained from sources we believe are reliable, but we cannot guarantee the accuracy or completeness of such information.

Copyright (c) 2014 by RP^® Financial, LC.

RP® Financial, LC.	PEER GROUP ANALYSIS
	III.7

that could be realized through leverage and lower funding costs. At the same time, the Company’s higher pro forma capitalization will initially depress return on equity. Both Pilgrim Bancshares’ and the Peer Group’s capital ratios reflected capital surpluses with respect to the regulatory capital requirements.

The interest-earning asset compositions for the Company and the Peer Group were somewhat similar, with loans constituting the bulk of interest-earning assets for both Pilgrim Bancshares and the Peer Group. The Company’s loans-to-assets ratio of 77.5% exceeded the comparable Peer Group ratio of 67.5%. Comparatively, the Company’s cash and investments-to-assets ratio of 16.5% was lower than the comparable ratio for the Peer Group of 27.3%. Overall, Pilgrim Bancshares’ interest-earning assets amounted to 94.0% of assets, which was slightly below the comparable Peer Group ratio of 94.8%. The Peer Group’s non-interest earning assets included bank-owned life insurance (“BOLI”) equal to 2.3% of assets and goodwill/intangibles equal to 0.4% of assets, while the Company maintained BOLI equal to 1.3% of assets and a zero balance of goodwill and intangibles.

Pilgrim Bancshares’ funding liabilities reflected a funding strategy that was somewhat similar to that of the Peer Group’s funding composition. The Company’s deposits equaled 89.6% of assets, which was above the Peer Group’s ratio of 72.4%. Comparatively, borrowings were utilized less by the Company, as indicated by borrowings-to-assets ratios of 2.9% and 12.3% for Pilgrim Bancshares and the Peer Group, respectively. Total interest-bearing liabilities maintained by the Company and the Peer Group, as a percent of assets, equaled 92.5% and 84.7%, respectively, with the Peer Group’s lower ratio supported by maintenance of a higher capital position.

A key measure of balance sheet strength for a thrift institution is its IEA/IBL ratio. Presently, the Company’s IEA/IBL ratio is lower than the Peer Group’s ratio, based on IEA/IBL ratios of 101.6% and 111.9%, respectively. The additional capital realized from stock proceeds should serve to provide Pilgrim Bancshares with an IEA/IBL ratio that is more comparable to the Peer Group’s ratio, as the increase in capital provided by the infusion of stock proceeds will serve to lower the level of interest-bearing liabilities funding assets and will be primarily deployed into interest-earning assets.

The growth rate section of Table 3.2 shows annual growth rates for key balance sheet items. Pilgrim Bancshares’ and the Peer Group’s growth rates are based on annual growth rates for the twelve months ended December 31, 2013 and September 30, 2013, respectively.

RP® Financial, LC.	PEER GROUP ANALYSIS
	III.8

Pilgrim Bancshares recorded a 0.6% decrease in assets, versus a 4.4% increase in assets recorded by the Peer Group. Asset shrinkage by the Company was due to a 42.4% decrease in cash investments, which funded an 18.0% increase in loans. Asset growth for the Peer Group was realized through an 8.4% increase in loans, with a 10.1% decrease in cash and investments partially funding the Peer Group’s loan growth.

Pilgrim Bancshares’ deposits declined by 1.9%, which was funded by asset shrinkage and a 51.2% increase in borrowings. The relatively high percentage increase in the Company’s borrowings was due to adding a limited amount of borrowings to a modest balance of borrowings maintained at yearend 2102. Comparatively, asset growth for the Peer Group was funded by deposit growth of 4.5% and an 8.6% increase in borrowings. Retention of earnings supported a 1.1% increase in the Company’s capital, while the Peer Group’s capital declined by 2.1% during the twelve month period. The reduction in the Peer Group’s capital reflects retention of earnings being more than offset by capital management strategies such as dividend payments and stock repurchases. The Company’s post-conversion capital growth rate will initially be constrained by maintenance of a higher pro forma capital position. Dividend payments and stock repurchases, pursuant to regulatory limitations and guidelines, could also potentially slow the Company’s capital growth rate in the longer term following the stock offering.

Income and Expense Components

Table 3.3 displays statements of operations for the Company and the Peer Group. The Company’s and the Peer Group’s ratios are based on earnings for the twelve months ended December 31, 2013 and September 30, 2013, unless otherwise indicated for the Peer Group companies. Pilgrim Bancshares and the Peer Group reported net income average assets ratios of 0.22% and 0.52%, respectively. Lower ratios for loan loss provisions and operating expenses represented earnings advantages for the Company, which were more than offset by the Peer Group’s higher ratios for net interest income, non-interest operating income and net gains.

The Peer Group’s higher net interest income to average assets ratio was realized primarily through maintenance of a higher interest income ratio and, to a lesser extent, maintenance of a lower interest expense ratio. The Peer Group’s higher interest income ratio was supported by maintaining a higher overall yield earned on interest-earning assets (3.92%

RP® Financial, LC.	PEER GROUP ANALYSIS
	III.9

Table 3.3

Income as Percent of Average Assets and Yields, Costs, Spreads

Comparable Institution Analysis

For the 12 Months Ended September 30, 2013

						Net Interest Income															Non-Interest Income
			Net Income			Income			Expense			NII			Loss Provis. on IEA			NII After Provis.			Gain on Sale of Loans			Other Non-Int Income			Total Non-Int Expense
			(%)
Pilgrim Bancshares, Inc.		MA
December 31, 2013				0.22	%		3.49	%		0.69	%		2.80	%		0.00	%		2.80	%		0.01	%		0.34	%		2.70	%
All Public Companies
Averages				0.52	%		3.75	%		0.75	%		3.01	%		0.22	%		2.80	%		0.45	%		0.57	%		3.04	%
Medians				0.60	%		3.75	%		0.70	%		3.06	%		0.15	%		2.88	%		0.10	%		0.44	%		2.84	%
State of MA
Averages				0.56	%		3.78	%		0.71	%		3.07	%		0.13	%		2.94	%		0.12	%		0.36	%		2.61	%
Medians				0.51	%		3.90	%		0.74	%		3.08	%		0.12	%		2.96	%		0.05	%		0.30	%		2.63	%
Comparable Recent Conversions(2)
CWAY	Coastway Bancorp, Inc.	RI		0.35	%		4.88	%		0.96	%		3.91	%		0.27	%		3.65	%		1.53	%		1.03	%		5.60	%
Comparable Group
Averages				0.52	%		3.67	%		0.62	%		3.04	%		0.10	%		2.93	%		0.10	%		0.80	%		3.07	%
Medians				0.46	%		3.83	%		0.57	%		3.14	%		0.11	%		3.02	%		0.04	%		0.30	%		2.85	%
Comparable Group
ALLB	Alliance Bancorp	PA		0.40	%		3.68	%		0.58	%		3.10	%		0.11	%		2.96	%		0.00	%		0.17	%		2.67	%
CBNK	Chicopee Bancorp Inc.	MA		0.49	%		3.96	%		0.78	%		3.18	%		0.08	%		3.10	%		0.04	%		0.56	%		3.03	%
FFCO	FedFirst Financial Corp.	PA		0.78	%		4.10	%		0.89	%		3.22	%		0.11	%		3.07	%		0.00	%		1.35	%		3.28	%
GTWN	Georgetown Bancorp Inc.	MA		0.43	%		4.24	%		0.56	%		3.67	%		0.20	%		3.46	%		0.64	%		0.31	%		3.73	%
HBNK	Hampden Bancorp Inc.	MA		0.52	%		3.70	%		0.81	%		2.89	%		0.11	%		2.78	%		0.12	%		0.52	%		2.62	%
OBAF	OBA Financial Services Inc	MD		0.31	%		4.16	%		0.55	%		3.61	%		0.10	%		3.47	%		0.02	%		0.19	%		3.22	%
ONFC	Oneida Financial Corp.	NY		0.91	%		3.22	%		0.39	%		2.83	%		0.09	%		2.73	%		0.06	%		4.31	%		5.93	%
PEOP	Peoples Federal Bancshares Inc	MA		0.40	%		3.37	%		0.48	%		2.90	%		0.03	%		2.86	%		0.03	%		0.29	%		2.50	%
WVFC	WVS Financial Corp.	PA		0.33	%		2.07	%		0.50	%		1.58	%		-0.01	%		1.59	%		0.00	%		0.16	%		1.23	%
WEBK	Wellesley Bancorp	MA		0.64	%		4.15	%		0.70	%		3.44	%		0.13	%		3.29	%		0.06	%		0.18	%		2.56	%

			Non-Op. Items									Yields, Costs, and Spreads
			Net Gains/ Losses (1)			Extrao. Items			Provision for Taxes			Yield On Assets			Cost Of Funds			Yld-Cost Spread			MEMO: Assets/ FTE Emp.		MEMO: Effective Tax Rate
Pilgrim Bancshares, Inc.		MA
December 31, 2013				-0.14	%		0.00	%		0.09	%		3.75	%		0.79	%		2.96	%	$	5,361		30.30	%
All Public Companies
Averages				0.12	%		0.00	%		0.04	%		4.04	%		0.96	%		3.10	%	$	5,542		29.28	%
Medians				0.04	%		0.00	%		0.00	%		4.08	%		0.93	%		3.12	%	$	4,989		31.73	%
State of MA
Averages				0.13	%		0.00	%		0.04	%		4.02	%		0.94	%		3.08	%	$	6,880		33.86	%
Medians				0.03	%		0.00	%		0.00	%		4.12	%		0.97	%		3.09	%	$	6,523		36.77	%
Comparable Recent Conversions(2)
CWAY	Coastway Bancorp, Inc.	RI		0.00	%		0.00	%		0.26	%		4.33	%		0.82	%		3.51	%	$	2,619		41.98	%
Comparable Group
Averages				0.03	%		0.00	%		0.25	%		3.92	%		0.84	%		3.07	%	$	5,531		33.11	%
Medians				0.00	%		0.00	%		0.25	%		4.11	%		0.78	%		3.17	%	$	5,437		36.94	%
Comparable Group
ALLB	Alliance Bancorp	PA		0.00	%		0.00	%		0.08	%		3.86	%		0.73	%		3.13	%	$	5,004		16.77	%
CBNK	Chicopee Bancorp Inc.	MA		0.05	%		0.00	%		0.13	%		4.30	%		1.09	%		3.21	%	$	4,513		20.86	%
FFCO	FedFirst Financial Corp.	PA		0.00	%		0.00	%		0.39	%		4.36	%		1.23	%		3.13	%	$	3,881		34.02	%
GTWN	Georgetown Bancorp Inc.	MA		0.00	%		0.00	%		0.23	%		4.43	%		0.75	%		3.68	%	$	5,047		37.41	%
HBNK	Hampden Bancorp Inc.	MA		0.02	%		0.00	%		0.28	%		3.95	%		1.13	%		2.82	%	$	6,267		36.47	%
OBAF	OBA Financial Services Inc	MD		0.00	%		0.00	%		0.20	%		4.54	%		0.81	%		3.73	%	$	5,827		39.41	%
ONFC	Oneida Financial Corp.	NY		0.15	%		0.00	%		0.32	%		3.74	%		0.48	%		3.26	%	$	2,069		26.65	%
PEOP	Peoples Federal Bancshares Inc	MA		0.00	%		0.00	%		0.29	%		3.60	%		0.68	%		2.92	%	$	7,137		42.24	%
WVFC	WVS Financial Corp.	PA		0.01	%		0.00	%		0.19	%		2.11	%		0.60	%		1.51	%	$	7,786		38.85	%
WEBK	Wellesley Bancorp	MA		0.04	%		0.00	%		0.37	%		4.27	%		0.91	%		3.36	%	$	7,774		38.46	%

(1) Net gains/losses includes gain/loss on sale of securities and nonrecurring income and expense.

(2) Ratios are based on the date of the most recent financial statements disclosed in the offering prospectus.

Source: SNL Financial, LC. and RP^® Financial, LC. calculations. The information provided in this table has been obtained from sources we believe are reliable, but we cannot guarantee the accuracy or completeness of such information.

Copyright (c) 2014 by RP^® Financial, LC.

RP® Financial, LC.	PEER GROUP ANALYSIS
	III.10

versus 3.75% for the Company), as well as maintaining a slightly higher concentration of assets in interest-earning assets. The Peer Group’s lower interest expense ratio was supported by a lower concentration of interest-bearing liabilities as a percent of assets, as the Company maintained a slightly lower cost of funds (0.79% versus 0.84% for the Peer Group). Overall, Pilgrim Bancshares and the Peer Group reported net interest income to average assets ratios of 2.80% and 3.04%, respectively.

In another key area of core earnings strength, the Company maintained a lower level of operating expenses than the Peer Group. For the period covered in Table 3.3, the Company and the Peer Group reported operating expenses to average assets ratios of 2.70% and 3.07%, respectively. The Company’s lower operating expense ratio reflects the Company’s less diversified operations with respect to generating sources of non-interest operating income and was achieved despite maintaining a comparatively lower ratio of assets per full time equivalent employees. Assets per full time equivalent employee equaled $5.361 million for Pilgrim Bancshares versus $5.531 million for the Peer Group. On a post-offering basis, the Company’s operating expenses can be expected to increase with the addition of stock benefit plans and certain expenses that result from being a publicly-traded company, with such expenses already impacting the Peer Group’s operating expenses. At the same time, Pilgrim Bancshares’ capacity to leverage operating expenses will be more comparable to the Peer Group’s leverage capacity following the increase in capital realized from the infusion of net stock proceeds.

When viewed together, net interest income and operating expenses provide considerable insight into a thrift’s earnings strength, since those sources of income and expenses are typically the most prominent components of earnings and are generally more predictable than losses and gains realized from the sale of assets or other non-recurring activities. In this regard, as measured by their expense coverage ratios (net interest income divided by operating expenses), the Company’s earnings were slightly more favorable than the Company’s. Expense coverage ratios for Pilgrim Bancshares and the Peer Group equaled 1.04x and 0.99x, respectively.

Sources of non-interest operating income provided a larger contribution to the Peer Group’s earnings, with such income amounting to 0.35% and 0.90% of Pilgrim Bancshares’ and the Peer Group’s average assets, respectively. The Company’s relatively low earnings contribution realized from non-interest operating income is indicative of its limited diversification into areas that generate revenues from non-interest sources. Taking non-interest operating

RP® Financial, LC.	PEER GROUP ANALYSIS
	III.11

income into account in comparing the Company’s and the Peer Group’s earnings, Pilgrim Bancshares’ efficiency ratio (operating expenses as a percent of the sum of non-interest operating income and net interest income) of 85.71% was less favorable than the Peer Group’s efficiency ratio of 77.92%.

Loan loss provisions had a larger impact on the Peer Group’s earnings, as the Company did not establish any loan loss provisions during the twelve month period. Comparatively, loan loss provisions established by the Peer Group equaled 0.10% of average assets.

Net gains and losses realized from the sale of assets other than loans had a larger impact on the Company’s earnings, as the Company reported a net non-operating loss equal to 0.14% of average assets compared to net non-operating gains equal to 0.03% of average assets for the Peer Group. Typically, gains and losses generated from the sale of assets are viewed as earnings with a relatively high degree of volatility, particularly to the extent that such gains and losses result from the sale of investments or other assets that are not considered to be part of an institution’s core operations. Extraordinary items were not a factor in either the Company’s or the Peer Group’s earnings.

Taxes had a similar impact on the Company’s and the Peer Group’s earnings, as the Company and the Peer Group posted effective tax rates of 30.30% and 33.11%, respectively. As indicated in the prospectus, the Company’s effective marginal tax rate is equal to 40.0%.

Loan Composition

Table 3.4 presents data related to the Company’s and the Peer Group’s loan portfolio compositions (including the investment in mortgage-backed securities). The Company’s loan portfolio composition reflected a higher concentration of 1-4 family permanent mortgage loans and mortgage-backed securities in total than maintained by the Peer Group (57.5% of assets versus 46.1% for the Peer Group). The Company maintained a higher concentration of 1-4 family loans and a lower concentration of mortgage-backed securities loans relative to the Peer Group’s ratios. Loans serviced for others equaled 9.0% and 8.8% of the Company’s and the Peer Group’s assets, respectively, thereby indicating a slightly greater influence of loan servicing income on the Peer Group’s earnings. The Peer Group maintained a relatively modest balance of loan servicing intangibles, versus a zero balance for the Company.

Diversification into higher risk and higher yielding types of lending was more significant for the Peer Group, which was mostly attributable to the Peer Group’s higher concentration of

RP® Financial, LC.	PEER GROUP ANALYSIS
	III.12

Table 3.4

Loan Portfolio Composition and Related Information

Comparable Institution Analysis

As of September 30, 2013

			Portfolio Composition as a Percent of Assets
Institution			MBS			1-4 Family			Constr. & Land			Multi- Family			Comm RE			Commerc. Business			Consumer			RWA/ Assets			Serviced For Others		Servicing Assets
			(%)			(%)			(%)			(%)			(%)			(%)			(%)			(%)			($000)		($000)
Pilgrim Bancshares, Inc.		MA		3.64	%		53.85	%		2.05	%		5.76	%		11.30	%		1.46	%		3.45	%		57.88	%	$	15,475	$	0
December 31, 2013
All Public Companies
Averages				12.38	%		33.17	%		2.92	%		7.27	%		17.31	%		4.13	%		1.86	%		64.55	%	$	1,583,919	$	15,855
Medians				10.41	%		32.22	%		2.00	%		2.48	%		17.76	%		2.87	%		0.32	%		65.28	%	$	30,304	$	275
State of MA
Averages				8.73	%		35.80	%		5.72	%		5.24	%		21.02	%		5.57	%		2.18	%		71.42	%	$	117,830	$	699
Medians				6.44	%		34.70	%		4.60	%		2.35	%		18.85	%		4.06	%		0.33	%		71.56	%	$	66,178	$	258
Comparable Recent Conversions(1)
CWAY	Coastway Bancorp, Inc.	RI		0.00	%		34.74	%		1.66	%		1.40	%		28.15	%		4.99	%		0.50	%		76.33	%	$	2,810	$	0
Comparable Group
Averages				11.93	%		34.14	%		5.51	%		2.87	%		18.65	%		5.58	%		1.24	%		68.00	%	$	41,844	$	205
Medians				6.44	%		28.06	%		4.12	%		1.61	%		18.62	%		4.22	%		0.46	%		70.84	%	$	13,743	$	14
Comparable Group
ALLB	Alliance Bancorp	PA		1.20	%		28.51	%		3.09	%		5.33	%		26.55	%		2.43	%		1.08	%		NA		$	0	$	0
CBNK	Chicopee Bancorp Inc.	MA		0.12	%		27.61	%		7.45	%		1.32	%		25.48	%		14.76	%		0.40	%		81.38	%	$	98,168	$	422
FFCO	FedFirst Financial Corp.	PA		5.40	%		51.97	%		3.74	%		1.33	%		17.85	%		3.83	%		0.51	%		65.28	%	$	0	$	0
GTWN	Georgetown Bancorp Inc.	MA		7.20	%		50.03	%		8.05	%		2.32	%		19.38	%		4.62	%		0.17	%		70.84	%	$	114,410	$	1,033
HBNK	Hampden Bancorp Inc.	MA		18.89	%		26.92	%		4.51	%		1.71	%		25.14	%		6.59	%		5.16	%		71.56	%	$	69,056	$	0
OBAF	OBA Financial Services Inc	MD		9.19	%		26.90	%		5.24	%		1.72	%		32.65	%		10.71	%		0.00	%		NA		$	0	$	27
ONFC	Oneida Financial Corp.	NY		12.87	%		23.44	%		1.52	%		1.51	%		9.64	%		7.11	%		4.04	%		NA		$	109,321	$	426
PEOP	Peoples Federal Bancshares Inc	MA		5.69	%		52.91	%		2.93	%		11.62	%		10.33	%		1.61	%		0.92	%		63.42	%	$	27,435	$	137
WVFC	WVS Financial Corp.	PA		54.24	%		6.52	%		1.65	%		0.91	%		1.75	%		0.62	%		0.08	%		48.76	%	$	0	$	0
WEBK	Wellesley Bancorp	MA		4.46	%		46.55	%		16.88	%		0.95	%		17.69	%		3.51	%		0.07	%		74.75	%	$	51	$	0

(1) Ratios are based on the date of the most recent financial statements disclosed in the offering prospectus.

Source: SNL Financial LC. and RP^® Financial, LC. calculations. The information provided in this table has been obtained from sources we believe are reliable, but we cannot guarantee the accuracy or completeness of such information.

Copyright (c) 2014 by RP^® Financial, LC.

RP® Financial, LC.	PEER GROUP ANALYSIS
	III.13

commercial real estate loans (18.7% of assets versus 11.3% for the Company), which constituted the most significant type of lending diversification for the Peer Group and the Company. The Peer Group also maintained higher concentrations of construction/land loans and commercial business loans, while multi-family loans and consumer loans constituted more significant areas of lending diversification for the Company. In total, construction/land, commercial real estate, multi-family, commercial business and consumer loans comprised 24.0% and 33.9% of the Company’s and the Peer Group’s assets, respectively. Overall, the Company’s asset composition provided for a lower risk weighted assets-to-assets ratio of 57.9% compared to 68.0% for the Peer Group.

Interest Rate Risk

Table 3.5 reflects various key ratios highlighting the relative interest rate risk exposure of the Company versus the Peer Group. In terms of balance sheet composition, Pilgrim Bancshares’ interest rate risk characteristics were considered to be less favorable relative to the comparable measures for the Peer Group. Most notably, the Company’s tangible equity-to-assets ratio and average IEA/average IBL ratio were below the comparable Peer Group ratios. Comparatively, the Company’s level of average non-interest earning assets was slightly lower than the Peer Group’s ratio. On a pro forma basis, the infusion of stock proceeds should serve to provide the Company with more comparable balance sheet interest rate risk characteristics as maintained by the Peer Group, with respect to the increases that will be realized in Company’s equity-to-assets and average IEA/average IBL ratios.

To analyze interest rate risk associated with the net interest margin, we reviewed quarterly changes in net interest income as a percent of average assets for Pilgrim Bancshares and the Peer Group. In general, the more significant fluctuations in the Company’s ratios implied that the interest rate risk associated with the Company’s net interest income was greater compared to the interest rate risk associated with the Peer Group’s net interest income, based on the interest rate environment that prevailed during the period covered in Table 3.5. The stability of the Company’s net interest margin should be enhanced by the infusion of stock proceeds, as the increase in capital will reduce the level of interest rate sensitive liabilities funding Pilgrim Bancshares’ assets.

RP® Financial, LC.	PEER GROUP ANALYSIS
	III.14

Table 3.5

Interest Rate Risk Measures and Net Interest Income Volatility

Comparable Institution Analysis

As of September 30, 2013

			Balance Sheet Measures
			Tangible			Avg			Non-Earn.			Quarterly Change in Net Interest Income
			Equity/			IEA/			Assets/
Institution			Assets			Avg IBL			Assets			9/30/2013		6/30/2013		3/31/2013		12/31/2012		9/30/2012		6/30/2012
			(%)			(%)			(%)			(change in net interest income is annualized in basis points)
Pilgrim Bancshares, Inc.		MA		7.3	%		105.1	%		7.0	%		4		27		-17		6		-27		8
December 31, 2013
All Public Companies				12.6	%		121.2	%		7.6	%		2		-2		-7		-2		-1		-1
State of MA				11.7	%		125.4	%		7.7	%		5		-1		-2		-2		-3		-5
Comparable Recent Conversions(1)
CWAY	Coastway Bancorp, Inc.	RI		7.2	%		121.5	%		9.2	%		-2		17		-33		-1		-4		-19
Comparable Group
Average				14.0	%		127.0	%		7.6	%		-3		3		-2		0		2		-6
Median				13.6	%		125.4	%		7.1	%		-1		3		0		-2		4		-6
Comparable Group
ALLB	Alliance Bancorp	PA		17.6	%		122.7	%		4.1	%		15		5		3		-6		18		-13
CBNK	Chicopee Bancorp Inc.	MA		15.1	%		136.7	%		4.9	%		-1		-7		3		2		11		3
FFCO	FedFirst Financial Corp.	PA		16.2	%		130.0	%		6.7	%		-11		7		-2		4		19		-3
GTWN	Georgetown Bancorp Inc.	MA		11.9	%		125.4	%		8.0	%		-2		2		3		20		-12		-6
HBNK	Hampden Bancorp Inc.	MA		12.1	%		124.0	%		9.4	%		1		6		-9		-20		-5		-16
OBAF	OBA Financial Services Inc	MD		18.4	%		129.3	%		10.2	%		-37		24		9		17		11		-1
ONFC	Oneida Financial Corp.	NY		9.2	%		116.8	%		15.5	%		6		-6		-7		-2		6		-5
PEOP	Peoples Federal Bancshares Inc	MA		18.2	%		133.8	%		7.5	%		-2		8		-16		-6		3		-8
WVFC	WVS Financial Corp.	PA		10.8	%		NA			3.3	%		-10		-4		-14		-2		-20		0
WEBK	Wellesley Bancorp	MA		11.0	%		124.3	%		6.3	%		12		-7		10		-9		-9		-10

NA=Change is greater than 100 basis points during the quarter.

(1) Ratios are based on the date of the most recent financial statements disclosed in the offering prospectus.

Source: SNL Financial LC. and RP^® Financial, LC. calculations. The information provided in this table has been obtained from sources we believe are reliable, but we cannot guarantee the accuracy or completeness of such information.

Copyright (c) 2014 by RP^® Financial, LC.

RP® Financial, LC.	PEER GROUP ANALYSIS
	III.15

Credit Risk

Overall, based on a comparison of credit quality measures, the Company’s implied credit risk exposure was considered to be more significant than the Peer Group’s. As shown in Table 3.6, the Company’s non-performing assets/assets and non-performing loans/loans ratios equaled 4.06% and 5.21%, respectively, versus comparable measures of 1.21% and 1.73% for the Peer Group. It should be noted that the measures for non-performing assets and non-performing loans include performing loans that are classified as troubled debt restructurings. The Company’s and Peer Group’s loss reserves as a percent of non-performing loans equaled 10.66% and 84.89%, respectively. Loss reserves maintained as percent of loans receivable equaled 0.56% for the Company, versus 1.08% for the Peer Group. Net loan charge-offs were slightly lower for the Company, as net loan charge-offs for the Company equaled 0.03% of loans versus 0.06% of loans for the Peer Group.

Summary

Based on the above analysis, RP Financial concluded that the Peer Group forms a reasonable basis for determining the pro forma market value of the Company. Such general characteristics as asset size, capital position, interest-earning asset composition, funding composition, core earnings measures, loan composition, credit quality and exposure to interest rate risk all tend to support the reasonability of the Peer Group from a financial standpoint. Those areas where differences exist will be addressed in the form of valuation adjustments to the extent necessary.

RP® Financial, LC.	PEER GROUP ANALYSIS
	III.16

Table 3.6

Credit Risk Measures and Related Information

Comparable Institution Analysis

As of September 30, 2013

Institution			REO/ Assets			NPAs & 90+Del/ Assets (1)			NPLs/ Loans (1)			Rsrves/ Loans HFI			Rsrves/ NPLs (1)			Rsrves/ NPAs & 90+Del (1)			Net Loan Chargeoffs (2)		NLCs/ Loans
			(%)			(%)			(%)			(%)			(%)			(%)			($000)		(%)
Pilgrim Bancshares, Inc.		MA		0.00	%		4.06	%		5.21	%		0.56	%		10.66	%		10.66	%	$	46		0.03	%
December 31, 2013
All Public Companies
Averages				0.41	%		2.67	%		3.29	%		1.43	%		68.48	%		55.00	%	$	6,321		0.43	%
Medians				0.16	%		1.74	%		2.32	%		1.25	%		52.57	%		44.95	%	$	1,219		0.23	%
State of MA
Averages				0.05	%		1.15	%		1.53	%		0.99	%		82.61	%		77.06	%	$	1,498		0.08	%
Medians				0.04	%		1.22	%		1.51	%		0.98	%		61.57	%		59.56	%	$	318		0.07	%
Comparable Recent Conversions(3)
CWAY	Coastway Bancorp, Inc.	RI		0.44	%		3.06	%		1.56	%		0.42	%		13.93	%		11.92	%	$	385		0.13	%
Comparable Group
Averages				0.13	%		1.21	%		1.73	%		1.08	%		84.89	%		75.06	%	$	203		0.06	%
Medians				0.05	%		1.22	%		1.59	%		1.07	%		70.36	%		66.82	%	$	155		0.06	%
Comparable Group
ALLB	Alliance Bancorp	PA		0.69	%		2.80	%		2.80	%		1.55	%		55.15	%		40.25	%	$	449		0.16	%
CBNK	Chicopee Bancorp Inc.	MA		0.08	%		1.27	%		1.54	%		0.95	%		61.76	%		57.74	%	$	433		0.09	%
FFCO	FedFirst Financial Corp.	PA		0.16	%		1.56	%		1.71	%		1.21	%		70.50	%		63.43	%	$	263		0.10	%
GTWN	Georgetown Bancorp Inc.	MA		0.01	%		1.16	%		1.37	%		1.01	%		73.39	%		72.88	%	$	100		0.05	%
HBNK	Hampden Bancorp Inc.	MA		0.17	%		1.63	%		2.08	%		1.13	%		54.09	%		48.34	%	$	420		0.09	%
OBAF	OBA Financial Services Inc	MD		0.00	%		1.05	%		1.36	%		1.15	%		85.10	%		85.10	%	$	57		0.02	%
ONFC	Oneida Financial Corp.	NY		0.17	%		0.43	%		0.55	%		0.91	%		166.76	%		100.75	%	$	210		0.07	%
PEOP	Peoples Federal Bancshares Inc	MA		0.00	%		0.37	%		0.46	%		0.86	%		187.85	%		187.85	%	$	54		0.01	%
WVFC	WVS Financial Corp.	PA		0.00	%		0.45	%		3.83	%		0.92	%		24.04	%		24.04	%	$	10		0.03	%
WEBK	Wellesley Bancorp	MA		0.00	%		1.41	%		1.64	%		1.15	%		70.21	%		70.21	%	$	36		0.01	%

(1) Includes TDRs for the Company and the Peer Group.

(2) Net loan chargeoffs are shown on a last twelve month basis.

(3) Ratios are based on the date of the most recent financial statements disclosed in the offering prospectus.

Source: SNL Financial LC. and RP^® Financial, LC. calculations. The information provided in this table has been obtained from sources we believe are reliable, but we cannot guarantee the accuracy or completeness of such information.

Copyright (c) 2014 by RP^® Financial, LC.

RP® Financial, LC.	VALUATION ANALYSIS
	IV.1

IV. VALUATION ANALYSIS

Introduction

This chapter presents the valuation analysis and methodology prepared pursuant to the regulatory valuation guidelines, and valuation adjustments and assumptions used to determine the estimated pro forma market value of the common stock to be issued in conjunction with the Company’s conversion transaction.

Appraisal Guidelines

The federal regulatory appraisal guidelines required by the FRB, the FDIC and state banking agencies specify the pro forma market value methodology for estimating the pro forma market value of a converting thrift. Pursuant to this methodology: (1) a peer group of comparable publicly-traded institutions is selected; (2) a financial and operational comparison of the subject company to the peer group is conducted to discern key differences; and (3) a valuation analysis in which the pro forma market value of the subject company is determined based on the market pricing of the peer group as of the date of valuation, incorporating valuation adjustments for key differences. In addition, the pricing characteristics of recent conversions, both at conversion and in the aftermarket, must be considered.

RP Financial Approach to the Valuation

The valuation analysis herein complies with such regulatory approval guidelines. Accordingly, the valuation incorporates a detailed analysis based on the Peer Group, discussed in Chapter III, which constitutes “fundamental analysis” techniques. Additionally, the valuation incorporates a “technical analysis” of recently completed stock conversions, including closing pricing and aftermarket trading of such offerings. It should be noted that these valuation analyses cannot possibly fully account for all the market forces which impact trading activity and pricing characteristics of a particular stock on a given day.

The pro forma market value determined herein is a preliminary value for the Company’s to-be-issued stock. Throughout the conversion process, RP Financial will: (1) review changes in Pilgrim Bancshares’ operations and financial condition; (2) monitor Pilgrim Bancshares’ operations and financial condition relative to the Peer Group to identify any fundamental

RP® Financial, LC.	VALUATION ANALYSIS
	IV.2

changes; (3) monitor the external factors affecting value including, but not limited to, local and national economic conditions, interest rates, and the stock market environment, including the market for thrift stocks; and (4) monitor pending conversion offerings (including those in the offering phase), both regionally and nationally. If material changes should occur during the conversion process, RP Financial will evaluate if updated valuation reports should be prepared reflecting such changes and their related impact on value, if any. RP Financial will also prepare a final valuation update at the closing of the offering to determine if the prepared valuation analysis and resulting range of value continues to be appropriate.

The appraised value determined herein is based on the current market and operating environment for the Company and for all thrifts. Subsequent changes in the local and national economy, the legislative and regulatory environment, the stock market, interest rates, and other external forces (such as natural disasters or major world events), which may occur from time to time (often with great unpredictability) may materially impact the market value of all thrift stocks, including Pilgrim Bancshares’ value, or Pilgrim Bancshares’ value alone. To the extent a change in factors impacting the Company’s value can be reasonably anticipated and/or quantified, RP Financial has incorporated the estimated impact into the analysis.

Valuation Analysis

A fundamental analysis discussing similarities and differences relative to the Peer Group was presented in Chapter III. The following sections summarize the key differences between the Company and the Peer Group and how those differences affect the pro forma valuation. Emphasis is placed on the specific strengths and weaknesses of the Company relative to the Peer Group in such key areas as financial condition, profitability, growth and viability of earnings, asset growth, primary market area, dividends, liquidity of the shares, marketing of the issue, management, and the effect of government regulations and/or regulatory reform. We have also considered the market for thrift stocks, in particular new issues, to assess the impact on value of the Company coming to market at this time.

RP® Financial, LC.	VALUATION ANALYSIS
	IV.3

1. Financial Condition

The financial condition of an institution is an important determinant in pro forma market value because investors typically look to such factors as liquidity, capital, asset composition and quality, and funding sources in assessing investment attractiveness. The similarities and differences in the Company’s and the Peer Group’s financial strengths are noted as follows:

• Overall A/L Composition. In comparison to the Peer Group, the Company’s interest-earning asset composition showed a higher concentration of loans and a lower concentration of investments. The Peer Group’s loan portfolio composition reflected a greater degree of diversification into higher risk and higher yielding types of loans. Overall, in comparison to the Peer Group, the Company’s interest-earning asset composition provided for a slightly lower yield earned on interest-earning assets and a lower risk weighted assets-to-assets ratio. Pilgrim Bancshares’ funding composition reflected a higher level of deposits and a lower level of borrowings relative to the comparable Peer Group ratios, which translated into a slightly lower cost of funds for the Company. Overall, as a percent of assets, the Company maintained a slightly lower level of interest-earning assets and a higher level of interest-bearing liabilities compared to the Peer Group’s ratios, which resulted in a lower IEA/IBL ratio for the Company. After factoring in the impact of the net stock proceeds, the Company’s IEA/IBL ratio should be more comparable to the Peer Group’s ratio. On balance, RP Financial concluded that asset/liability composition was a neutral factor in our adjustment for financial condition.

• Credit Quality. The Company’s ratios for non-performing assets and non-performing loans were less favorable than the comparable Peer Group ratios. Loss reserves as a percent of non-performing loans and as a percent of loans were lower for the Company. Net loan charge-offs as a percent of loans were fairly similar for the Company and the Peer Group. As noted above, the Company’s risk weighted assets-to-assets ratio was lower than the Peer Group’s ratio. Overall, RP Financial concluded that credit quality was a slightly negative factor in our adjustment for financial condition.

• Balance Sheet Liquidity. The Company operated with a lower level of cash and investment securities relative to the Peer Group (16.5% of assets versus 27.3% for the Peer Group). Following the infusion of stock proceeds, the Company’s cash and investments ratio is expected to increase as the proceeds retained at the holding company level will be initially deployed into investments. The Company was viewed as having slightly greater future borrowing capacity relative to the Peer Group, based on the lower level of borrowings currently funding the Company’s assets. Overall, RP Financial concluded that balance sheet liquidity was a neutral factor in our adjustment for financial condition.

• Funding Liabilities. The Company’s interest-bearing funding composition reflected a higher concentration of deposits and a lower level of borrowings relative to the comparable Peer Group ratios, which translated into a slightly lower cost of funds for the Company. Total interest-bearing liabilities as a percent of assets were higher for the Company. Following the stock offering, the increase in the Company’s capital position will reduce the level of interest-bearing liabilities funding the Company’s assets to a level that is more comparable to the Peer Group’s ratio of interest-bearing liabilities as a percent of assets. Overall, RP Financial concluded that funding liabilities were a neutral factor in our adjustment for financial condition.

• Capital. The Company currently operates with a lower equity-to-assets ratio than the Peer Group. However, following the stock offering, Pilgrim Bancshares’ pro forma capital position is expected to be similar to the Peer Group’s equity-to-assets ratio.

RP® Financial, LC.	VALUATION ANALYSIS
	IV.4

The increase in the Company’s pro forma capital position will result in greater leverage potential and reduce the level of interest-bearing liabilities utilized to fund assets. At the same time, the Company’s more significant capital surplus will likely result in a lower ROE. On balance, RP Financial concluded that capital strength was a neutral factor in our adjustment for financial condition.

On balance, Pilgrim Bancshares’ balance sheet strength was considered to be slightly less favorable than the Peer Group’s and, thus, a slight downward adjustment was applied for the Company’s financial condition.

2. Profitability, Growth and Viability of Earnings

Earnings are a key factor in determining pro forma market value, as the level and risk characteristics of an institution’s earnings stream and the prospects and ability to generate future earnings heavily influence the multiple that the investment community will pay for earnings. The major factors considered in the valuation are described below.

• Reported Earnings. The Company’s reported earnings were lower than the Peer Group’s on a ROAA basis (0.22% of average assets versus 0.52% for the Peer Group). The Company maintained more favorable ratios for loan loss provisions, operating expenses and effective tax rate, which were offset by the Peer Group’s more favorable ratios for net interest income, non-interest operating income and non-operating gains and losses. Reinvestment of stock proceeds into interest-earning assets will serve to increase the Company’s earnings, with the benefit of reinvesting proceeds expected to be somewhat offset by higher operating expenses associated with operating as a publicly-traded company and the implementation of stock benefit plans. Overall, the Company’s pro forma reported earnings were viewed as not as strong as the Peer Group’s earnings and, thus, RP Financial concluded that reported earnings were a slightly negative factor in our adjustment for profitability, growth and viability of earnings.

• Core Earnings. Net interest income, operating expenses, non-interest operating income and loan loss provisions were reviewed in assessing the relative strengths and weaknesses of the Company’s and the Peer Group’s core earnings. In these measures, the Company operated with a lower net interest income ratio, a lower operating expense ratio, a lower level of non-interest operating income and lower loan loss provisions. The Company’s lower ratios for net interest income and operating expenses translated into a slightly higher expense coverage ratio in comparison to the Peer Group’s ratio (equal to 1.04x versus 0.99x for the Peer Group). Comparatively, the Company’s efficiency ratio of 85.71 was less favorable than the Peer Group’s efficiency ratio of 77.92%. Loan loss provisions had a more significant impact on the Peer Group’s earnings. After excluding non-operating gains and losses, the Peer Group’s ROAA remained above the Company’s ROAA. Overall, these measures, as well as the expected earnings benefits the Company should realize from the redeployment of stock proceeds into interest-earning assets and leveraging of post-conversion capital, which will be somewhat negated by expenses associated with the stock benefit plans and operating as a publicly-traded

RP® Financial, LC.	VALUATION ANALYSIS
	IV.5

company, indicate that the Company’s pro forma core earnings will be less favorable than the Peer Group’s core earnings. Therefore, RP Financial concluded that this was a slightly negative factor in our adjustment for profitability, growth and viability of earnings.

• Interest Rate Risk. Quarterly changes in the Company’s and the Peer Group’s net interest income to average assets ratios indicated a greater degree of volatility was associated with the Company’s net interest margin. Other measures of interest rate risk, such as capital and average IEA/IBL ratios were more favorable for the Peer Group and were partially offset by the Company’s slightly lower level of average non-interest earning assets. On a pro forma basis, the infusion of stock proceeds can be expected to provide the Company with equity-to-assets and IEA/ILB ratios that will be similar to the Peer Group ratios, as well as enhance the stability of the Company’s net interest margin through the reinvestment of stock proceeds into interest-earning assets. On balance, RP Financial concluded that interest rate risk was a neutral factor in our adjustment for profitability, growth and viability of earnings.

• Credit Risk. Loan loss provisions were a slightly larger factor in the Peer Group’s earnings (0.10% of average assets versus no loan loss provisions for the Company). In terms of future exposure to credit quality related losses, the Company maintained a higher concentration of assets in loans, while lending diversification into higher risk types of loans was more significant for the Peer Group. Credit quality measures for non-performing assets and loss reserves as a percent of non-performing loans and loans were more favorable for the Peer Group. Overall, RP Financial concluded that credit risk was a slightly negative factor in our adjustment for profitability, growth and viability of earnings.

• Earnings Growth Potential. Several factors were considered in assessing earnings growth potential. First, the Peer Group maintained a more favorable interest rate spread than the Company, which would tend to support a stronger net interest margin going forward for the Peer Group. Second, the infusion of stock proceeds will provide the Company with similar growth potential through leverage as currently maintained by the Peer Group. Third, the Peer Group’s higher ratio of non-interest operating income and the Company’s lower operating expense ratio were viewed as respective advantages for the Peer Group and the Company to sustain earnings growth during periods when net interest margins come under pressure as the result of adverse changes in interest rates. Overall, earnings growth potential was considered to be a neutral factor in our adjustment for profitability, growth and viability of earnings.

• Return on Equity. Currently, the Company’s core ROE is similar to the Peer Group’s ROE. Accordingly, as the result of the significant increase in capital that will be realized from the infusion of net stock proceeds into the Company’s equity, the Company’s pro forma return on equity on a core earnings basis will initially be less than the Peer Group’s return on equity ratio. Accordingly, this was a slightly negative factor in the adjustment for profitability, growth and viability of earnings.

On balance, Pilgrim Bancshares’ pro forma earnings strength was considered to be less favorable than the Peer Group’s and, thus, a slight downward adjustment was applied for profitability, growth and viability of earnings.

RP® Financial, LC.	VALUATION ANALYSIS
	IV.6

3. Asset Growth

The Company recorded a 0.6% decrease in assets, versus a 4.4% increase in assets recorded by the Peer Group. A decrease in cash and investments accounted for the Company’s asset shrinkage, which was largely offset by loan growth. Asset growth for the Peer Group consisted of loans as well, which was partially offset by a decrease in cash and investments. On a pro forma basis, the Company’s tangible equity-to-assets ratio is expected to comparable to the Peer Group’s tangible equity-to-assets ratio, indicating similar leverage capacity for the Company. On balance, given that the increase in capital realized from the conversion will address current limitations on the Company’s ability to grow assets, no adjustment was applied for asset growth.

4. Primary Market Area

The general condition of an institution’s market area has an impact on value, as future success is in part dependent upon opportunities for profitable activities in the local market served. Pilgrim Bancshares serves the Boston metropolitan area through the main office and two additional branch locations. Norfolk County, where the Company maintains its main office and one branch location, is a growing and affluent suburb of Boston and, therefore, provides the Company with growth opportunities. However, such growth must be achieved in a highly competitive market environment. The Company competes against significantly larger institutions that provide a larger array of services and have significantly larger branch networks than maintained by Pilgrim Bancshares’. The competitiveness of the market area is highlighted by the Company’s relatively low market share of deposits in Norfolk County.

The Peer Group companies generally operate in markets with similar population densities compared to Norfolk County. Population growth for the primary market area counties served by the Peer Group companies reflected a wide range of growth rates, but overall population growth rates in the markets served by the Peer Group companies were not as strong as Norfolk County’s recent historical and projected population growth rates. Norfolk County has a higher per capita income compared to the Peer Group’s average per capita income and the Peer Group’s primary market area counties were relatively less affluent markets within their respective states compared to Norfolk County which had a comparatively higher per capita income compared to Massachusetts’ per capita income. The average and median deposit market shares maintained by the Peer Group companies were above the Company’s market share of deposits in Norfolk County. Overall, the degree of competition faced by the Peer

RP® Financial, LC.	VALUATION ANALYSIS
	IV.7

Group companies was viewed as less than faced by the Company, while the growth potential in the markets served by the Peer Group companies was for the most part viewed to be not quite as strong as the Company’s primary market area. Summary demographic and deposit market share data for the Company and the Peer Group companies is provided in Exhibit III-4. As shown in Table 4.1, the average unemployment rate for the primary market area counties served by the Peer Group companies was above the unemployment rate reflected for Norfolk County. On balance, we concluded that a slight upward adjustment was appropriate for the Company’s market area.

Table 4.1

Market Area Unemployment Rates

Pilgrim Bancshares, Inc. and the Peer Group Companies(1)

	County	November 2013 Unemployment
Pilgrim Bancshares, Inc.—MA	Norfolk		5.5	%
Peer Group Average			6.6	%
Alliance Bancorp, Inc. – PA	Delaware		6.8	%
Chicopee Bancorp, Inc. – MA	Hampden		8.5
FedFirst Financial Corp. – PA	Westmoreland		6.2
Georgetown Bancorp, Inc. – MA	Essex		6.9
Hampden Bancorp, Inc. – MA	Hampden		8.5
OBA Financial Services, Inc. – MD	Montgomery		4.5
Oneida Financial Corp. – NY	Oneida		6.8
Peoples Federal Bancshares. – MA	Suffolk		6.4
WVS Financial Corp. – PA	Allegheny		5.9
Wellesley Bancorp, Inc – MA	Norfolk		5.5

(1) Unemployment rates are not seasonally adjusted.

Source: U.S. Bureau of Labor Statistics.

5. Dividends

At this time the Company has not established a dividend policy. Future declarations of dividends by the Board of Directors will depend upon a number of factors, including investment opportunities, growth objectives, financial condition, profitability, tax considerations, minimum capital requirements, regulatory limitations, stock market characteristics and general economic conditions.

RP® Financial, LC.	VALUATION ANALYSIS
	IV.8

Eight out of the ten Peer Group companies pay regular cash dividends, with implied dividend yields ranging from 0.88% to 3.89%. The average dividend yield on the stocks of the Peer Group institutions equaled 1.28% as of February 14, 2014. Comparatively, as of February 14, 2014, the average dividend yield on the stocks of all fully-converted publicly-traded thrifts equaled 1.72%.

While the Company has not established a definitive dividend policy prior to converting, the Company will have the capacity to pay a dividend comparable to the Peer Group’s average dividend yield based on pro forma earnings and capitalization. On balance, we concluded that no adjustment was warranted for this factor.

6. Liquidity of the Shares

The Peer Group is by definition composed of companies that are traded in the public markets. All ten of the Peer Group members trade on the NASDAQ. Typically, the number of shares outstanding and market capitalization provides an indication of how much liquidity there will be in a particular stock. The market capitalization of the Peer Group companies ranged from $24.7 million to $115.8 million as of February 14, 2014, with average and median market values of $67.7 million and $72.5 million, respectively. The shares issued and outstanding of the Peer Group companies ranged from 1.8 million to 7.0 million, with average and median shares outstanding of 4.2 million and 4.3 million, respectively. The Company’s stock offering is expected to have a pro forma market value and shares outstanding that will be well below the comparable Peer Group averages and medians. Depending on where the offering is closed in the current range, the Company’s may or may not qualify to be traded on NASDAQ. Overall, we anticipate that the Company’s public stock will have a less liquid trading market compared to the stocks of the Peer Group companies and, therefore, concluded a slight downward adjustment was necessary for this factor.

7. Marketing of the Issue

We believe that three separate markets exist for thrift stocks, including those coming to market such as Pilgrim Bancshares: (1) the after-market for public companies, in which trading activity is regular and investment decisions are made based upon financial condition, earnings, capital, ROE, dividends and future prospects; (2) the new issue market in which converting thrifts are evaluated on the basis of the same factors, but on a pro forma basis without the benefit of prior operations as a fully-converted publicly-held company and stock trading history; and (3) the acquisition market for thrift franchises in Massachusetts. All three of these markets were considered in the valuation of the Company’s to-be-issued stock.

RP® Financial, LC.	VALUATION ANALYSIS
	IV.9

A. The Public Market

The value of publicly-traded thrift stocks is easily measurable, and is tracked by most investment houses and related organizations. Exhibit IV-1 provides pricing and financial data on all publicly-traded thrifts. In general, thrift stock values react to market stimuli such as interest rates, inflation, perceived industry health, projected rates of economic growth, regulatory issues and stock market conditions in general. Exhibit IV-2 displays historical stock market trends for various indices and includes historical stock price index values for thrifts and commercial banks. Exhibit IV-3 displays historical stock price indices for thrifts only.

In terms of assessing general stock market conditions, the overall stock market has generally trended higher in recent quarters, although there has been some pullback in the market year-to-date. The rally in the broader stock market that started at the end of the second quarter of 2013 continued during the first half of July 2013, as the Dow Jones Industrial Average (“DJIA”) closed at multiple new highs in mid-July. Some favorable economic data and assurances from the Federal Reserve that it would continue its easy monetary policies were noteworthy factors that fueled the gains in the broader stock market. The broader stock market traded in a narrow range during the second half of July, as investors digested some mixed second quarter earnings reports and awaited fresh data on the economy. Economic data showing a pick-up in manufacturing activity and new unemployment claims hitting a five-year low propelled the DJIA to a new record high at the beginning of August. Following sluggish job growth reflected in the July employment report and lowered sales forecast by some retailers, stocks retreated heading into mid-August. The downward trend in stocks continued through the second half of August, with the DJIA hitting a two-month low in late-August. Ongoing worries about the tapering of economic stimulus by the Federal Reserve and the prospect of a military strike on Syria were noteworthy factors that contributed to the downturn. Some favorable economic reports, as well as subsiding investor concerns about Syria and the Federal Reserve scaling back its easy monetary policies, helped stocks to regain some upward momentum during the first half of September. Stocks reversed course and traded down to close out the third quarter, which was attributed to renewed fears over the Federal Reserve scaling back its financial stimulus program and mounting concerns over the budget standoff in Washington.

RP® Financial, LC.	VALUATION ANALYSIS
	IV.10

Stocks fell broadly at the beginning of the fourth quarter of 2013, as investors weighed the consequences of the budget impasse in Washington and the possibility of an extended shutdown of the U.S. Government. Indications that lawmakers were nearing a deal to raise the federal debt ceiling and end the shutdown of the U.S. Government fueled a stock market rally heading into mid-October. A last minute comprise to raise the debt ceiling, which averted a default on the national debt and allowed for the re-opening of the U.S. Government sustained the positive trend in stocks through late-October. The DJIA closed at a record high in late-October, as weaker-than-expected job growth reflected in the September employment data and subdued inflation readings raised expectations that the Federal Reserve would stay the course on its easy money policies at its end of October meeting. An overall strong month for stocks closed with consecutive losses at the end of October, as investors who were expecting the Federal Reserve to downgrade its economic outlook were surprised that the Federal Reserve’s assessment of the economy was unchanged and, thereby, raised expectations that it could taper its stimulus efforts as early as its next policy meeting in December. Favorable reports on manufacturing and nonmanufacturing activity in October, along with comments from a Federal Reserve President suggesting that the Federal Reserve should wait for stronger evidence of economic momentum before tapering its bond-buying program, contributed to a rebound in stocks at the start of November. The DJIA closed at multiple record highs through mid-November, with a better-than-expected employment report for October and comments made by Federal Reserve Chairman nominee Janet Yellen during confirmation hearings that the Federal Reserve’s economic stimulus efforts would continue under her leadership contributed to the rally that included the DJIA closing above 16000 for the first time. Stocks edged higher in the final week of November, as positive macroeconomic news contributed to the gains. Stocks traded lower at the start of December 2013, as a number of favorable economic reports stoked concerns that the Federal Reserve would start to wind down its stimulus efforts in the near future. After five consecutive losses in the DJIA, the stock market rebounded on news of the strong employment report for November. The rebound was temporary, as stocks eased lower ahead of the Federal Reserve’s mid-December meeting. Stocks surged at the conclusion of the Federal Reserve’s meeting, as investors approved of the Federal Reserve’s action to begin measured paring of its $85 billion a-month bond buying program. The DJIA moved to record highs in late-December, as more favorable economic reports helped to sustain the stock market rally through the end of 2013. Overall, the DJIA was up 30% during 2013, which was its strongest performance in 18 years.

RP® Financial, LC.	VALUATION ANALYSIS
	IV.11

Stocks retreated at the start of 2014, as profit taking and a disappointing employment report for December weighed on the broader stock market. Mixed fourth quarter earnings reports translated into an up and down stock market in mid-January. Concerns about weakening economies in emerging market countries precipitated a global stock market selloff heading into the second half of January, as the DJIA posted five consecutive losses. News that the Federal Reserve voted again to scale back its monthly bond buying program by another $10 billion, despite recent turmoil in emerging markets and soft jobs data, added to the selloff to close out January. A significant decline in January manufacturing activity drove stocks sharply lower at the start of February. Stocks rebounded heading into mid-February, as disappointing job growth reflected in the January employment report and congressional testimony by the new Federal Reserve Chairwoman eased investor concerns that the Federal Reserve would not continue on its current course of easy monetary policies. On February 14, 2014, the DJIA closed at 16154.39, an increase of 15.5% from one year ago and a decrease of 2.5% year-to-date, and the NASDAQ closed at 4244.03, an increase of 33.0% from one year ago and an increase of 1.6% year-to-date. The Standard & Poor’s 500 Index closed at 1838.63 on February 14, 2014, an increase of 21.0% from one year ago and a decrease of 0.5% year-to-date.

The market for thrift stocks has also generally shown a positive trend in recent quarters, while pulling back in January 2014. The rally in thrift stocks started at the end of the second quarter of 2013 gained momentum early in the third quarter of 2013, as June employment data showed job growth beating expectations. Financial shares led the broader stock market higher heading into the second half of July, as some large banks beat second quarter earnings estimates. Thrift stocks edged lower at the end of July, as investors took some profits following the extended run-up in thrift prices. Some favorable economic data boosted thrift shares at the beginning of August, which was followed by a downturn amid indications from the Federal Reserve that tapering of quantitative easing was becoming more likely. After trading in a narrow range through mid-August, financial shares sold-off in late-August on the threat of a military strike on Syria and a weak report on consumer spending. Thrift stocks rebounded along with the broader stock market during the first half of September, which was followed by a slight downturn on expectations that the Federal Reserve could begin tapering its monthly asset purchases at its next meeting and the looming threat of the budget impasse shutting down the U.S. government.

RP® Financial, LC.	VALUATION ANALYSIS
	IV.12

Thrift issues stabilized at the start of the fourth quarter of 2013 and then traded lower as the budget impasse in Washington continued into a second week. A deal to raise the federal debt ceiling and re-open the U.S. Government lifted thrift stocks and the broader stock market to healthy gains in mid-October. Third quarter earnings reports and signs of merger activity picking in the thrift sector boosted thrift shares in late-October, which was followed by a slight downturn at the end of October and into early-November as the Federal Reserve concluded its two day meeting by staying the course on quantitative easing and the benchmark interest rate. Thrift shares followed the broader stock market higher through mid-November, as the financial sector benefited from the better-than-expected employment report for October and a continuation of low interest rates. A larger-than-expected increase in a November consumer sentiment index and a decline in weekly jobless claims supported a modest gain for the thrift sector in late-November. Thrift issues generally followed trends in the broader stock market throughout December 2013, declining in early-December on the uncertain outlook for the Federal Reserve’s stimulus efforts and then rallying higher on the stronger-than-expected job growth reflected in the November employment data. After trading in a narrow range into mid-December, the rally in thrift issues resumed following the Federal Reserve’s mid-December meeting and announcement that it will begin to taper its bond buying. Thrift stocks participated in the broader stock market rally to close out 2013, with the SNL Index for all publicly-traded thrifts posting a gain of 25% for all of 2013.

Shares of thrift issues traded down at the start of 2014, as the 10-year Treasury yield approached 3.0% in early-January. Thrift stocks were also hurt by the disappointing employment report for December and then traded in a narrow range in mid-January, as investors reacted to mixed fourth quarter earnings reports coming out the banking sector at the start of the fourth quarter earnings season. Financial shares participated in the selloff experienced in the broader stock market during the second half of January and the first trading day of February. Janet Yellen’s debut congressional testimony as Federal Reserve Chairwoman helped to spark a rally in thrift stocks heading into mid-February, as she indicated that there no plans to change course from the Federal Reserve’s current monetary policies. On February 14, 2014, the SNL Index for all publicly-traded thrifts closed at 685.1, an increase of 16.1% from one year ago and a decrease of 3.0% year-to-date.

RP® Financial, LC.	VALUATION ANALYSIS
	IV.13

B. The New Issue Market

In addition to thrift stock market conditions in general, the new issue market for converting thrifts is also an important consideration in determining the Company’s pro forma market value. The new issue market is separate and distinct from the market for seasoned thrift stocks in that the pricing ratios for converting issues are computed on a pro forma basis, specifically: (1) the numerator and denominator are both impacted by the conversion offering amount, unlike existing stock issues in which price change affects only the numerator; and (2) the pro forma pricing ratio incorporates assumptions regarding source and use of proceeds, effective tax rates, stock plan purchases, etc. which impact pro forma financials, whereas pricing for existing issues are based on reported financials. The distinction between pricing of converting and existing issues is perhaps no clearer than in the case of the price/book (“P/B”) ratio in that the P/B ratio of a converting thrift will typically result in a discount to book value whereas in the current market for existing thrifts the P/B ratio may reflect a premium to book value. Therefore, it is appropriate to also consider the market for new issues, both at the time of the conversion and in the aftermarket.

As shown in Table 4.2, two standard conversions and one second-step conversion have been completed during the past three months. The standard conversion offerings are considered to be more relevant for Pilgrim Bancshares’ pro forma pricing. The average closing pro forma price/tangible book ratio of the two recent standard conversion offerings equaled 63.6%. On average, the two standard conversion offerings reflected price appreciation of 5.0% after the first week of trading. As of February 14, 2014, the two recent standard conversion offerings reflected a 2.2% increase in price on average.

Shown in Table 4.3 are the current pricing ratios for the two fully-converted offerings completed during the past three months that trade on NASDAQ, one of which was a second-step offering. The current P/TB ratio of the fully-converted recent conversions equaled 79.51%, based on closing stock prices as of February 14, 2014.

C. The Acquisition Market

Also considered in the valuation was the potential impact on Pilgrim Bancshares’ stock price of recently completed and pending acquisitions of other thrift institutions operating in Massachusetts. As shown in Exhibit IV-4, there were 10 Massachusetts thrift acquisitions completed from the beginning of 2010 through February 14, 2014 and there were three acquisitions pending for Massachusetts savings institutions. The recent acquisition

RP® Financial, LC.	VALUATION ANALYSIS
	IV.14

Table 4.2

Pricing Characteristics and After-Market Trends

Conversions Completed in the Last Three Months

Institutional Information				Pre-Conversion Data											Offering Information											Contribution to Char. Found.					Insider Purchases
				Financial Info.					Asset Quality																						% Off Incl. Fdn.+Merger Shares
															Excluding Foundation													% of			Benefit Plans												Initial Div. Yield
Institution	Conversion Date		Ticker	Assets		Equity/ Assets			NPAs/ Assets			Res. Cov.			Gross Proc.		% Offer			% of Mid.			Exp./ Proc.			Form		Public Off. Excl. Fdn.			ESOP			Recog. Plans			Stk Option			Mgmt.& Dirs.
				($Mil)		(%)			(%)			(%)			($Mil.)		(%)			(%)			(%)					(%)			(%)			(%)			(%)			(%)(1)			(%)
Standard Conversions
Edgewater Bancorp, Inc. - MI		1/17/14	EGDW-OTCBB	$	200		8.15	%		3.84	%		33	%	$	6.7		100	%		86	%		19.5	%		N.A		N.A.			8.0	%		4.0	%		10.0	%		13.5	%		0.00	%
Coastway Bancorp, Inc. - RI*		1/15/14	CWAY-NASDAQ	$	381		7.24	%		2.16	%		25	%	$	49.5		100	%		132	%		3.2	%		C/S	$	300K/2.5	%		8.0	%		4.0	%		10.0	%		1.8	%		0.00	%
Averages - Standard Conversions:				$	290		7.70	%		3.00	%		29	%	$	28.1		100	%		109	%		11.3	%		N.A.		N.A.			8.0	%		4.0	%		10.0	%		7.6	%		0.00	%
Medians - Standard Conversions:				$	290		7.70	%		3.00	%		29	%	$	28.1		100	%		109	%		11.3	%		N.A.		N.A.			8.0	%		4.0	%		10.0	%		7.6	%		0.00	%
Second Step Conversions
Waterstone Financial, Inc. - WI*		1/23/14	WSBF-NASDAQ	$	1,598		13.32	%		5.04	%		43	%	$	344.1		74	%		115	%		3.4	%		N.A.		N.A.			8.0	%		4.0	%		10.0	%		0.8	%		0.00	%
Averages - Second Step Conversions:				$	1,598		13.32	%		5.04	%		43	%	$	344.1		74	%		115	%		3.4	%		N.A.		N.A.			8.0	%		4.0	%		10.0	%		0.8	%		0.00	%
Medians - Second Step Conversions:				$	1,598		13.32	%		5.04	%		43	%	$	344.1		74	%		115	%		3.4	%		N.A.		N.A.			8.0	%		4.0	%		10.0	%		0.8	%		0.00	%
Averages - All Conversions:				$	726		9.57	%		3.68	%		34	%	$	133.4		91	%		111	%		8.7	%		N.A.		N.A.			8.0	%		4.0	%		10.0	%		5.4	%		0.00	%
Medians - All Conversions:				$	381		8.15	%		3.84	%		33	%	$	49.5		100	%		115	%		3.4	%		N.A.		N.A.			8.0	%		4.0	%		10.0	%		1.8	%		0.00	%

Institutional Information				Pro Forma Data																				Post-IPO Pricing Trends
				Pricing Ratios(2)(5)									Financial Charac.											Closing Price:
																								First					After					After
Institution	Conversion Date		Ticker	P/TB			Core P/E			P/A			Core ROA			TE/A			Core ROE			IPO Price		Trading Day		% Chge			First Week(3)		% Chge			First Month(4)		% Chge			Thru 2/14/14		% Chge
				(%)			(x)			(%)			(%)			(%)			(%)			($)		($)		(%)			($)		(%)			($)		(%)			($)		(%)
Standard Conversions
Edgewater Bancorp, Inc. - MI		1/17/14	EGDW-OTCBB		55.0	%		NM			5.5	%		-1.4	%		10.0	%		-13.1	%	$	10.00	$	10.00		0.0	%	$	10.25		2.5	%	$	10.25		2.5	%	$	10.25		2.5	%
Coastway Bancorp, Inc. - RI*		1/15/14	CWAY-NASDAQ		72.1	%		114.2	x		11.7	%		0.1	%		16.3	%		0.6	%	$	10.00	$	10.92		9.2	%	$	10.75		7.5	%	$	10.19		1.9	%	$	10.19		1.9	%
Averages - Standard Conversions:					63.6	%		114.2	x		8.6	%		-0.6	%		13.1	%		-6.2	%	$	10.00	$	10.46		4.6	%	$	10.50		5.0	%	$	10.22		2.2	%	$	10.22		2.2	%
Medians - Standard Conversions:					63.6	%		114.2	x		8.6	%		-0.6	%		13.1	%		-6.2	%	$	10.00	$	10.46		4.6	%	$	10.50		5.0	%	$	10.22		2.2	%	$	10.22		2.2	%
Second Step Conversions
Waterstone Financial, Inc. - WI*		1/23/14	WSBF-NASDAQ		80.7	%		23.05			19.0	%		0.8	%		23.5	%		3.5	%	$	10.00	$	10.66		6.6	%	$	10.58		5.8	%	$	10.60		6.0	%	$	10.60		6.0	%
Averages - Second Step Conversions:					80.7	%		23.1	x		19.0	%		0.8	%		23.5	%		3.5	%	$	10.00	$	10.66		6.6	%	$	10.58		5.8	%	$	10.60		6.0	%	$	10.60		6.0	%
Medians - Second Step Conversions:					80.7	%		23.1	x		19.0	%		0.8	%		23.5	%		3.5	%	$	10.00	$	10.66		6.6	%	$	10.58		5.8	%	$	10.60		6.0	%	$	10.60		6.0	%
Averages - All Conversions:					69.3	%		68.6	x		12.1	%		-0.1	%		16.6	%		-3.0	%	$	10.00	$	10.53		5.3	%	$	10.53		5.3	%	$	10.35		3.5	%	$	10.35		3.5	%
Medians - All Conversions:					72.1	%		68.6	x		11.7	%		0.1	%		16.3	%		0.6	%	$	10.00	$	10.66		6.6	%	$	10.58		5.8	%	$	10.25		2.5	%	$	10.25		2.5	%

Note: * - Appraisal performed by RP Financial; BOLD = RP Fin. Did the business plan, “NT” - Not Traded; “NA” - Not Applicable, Not Available; C/S-Cash/Stock.

(1)	As a percent of MHC offering for MHC transactions.	(5)	Mutual holding company pro forma data on full conversion basis.
(2)	Does not take into account the adoption of SOP 93-6.	(6)	Simultaneously completed acquisition of another financial institution.
(3)	Latest price if offering is less than one week old.	(7)	Simultaneously converted to a commercial bank charter.
(4)	Latest price if offering is more than one week but less than one month old.	(8)	Former credit union.	February 14, 2014

RP® Financial, LC.	VALUATION ANALYSIS
	IV.15

Table 4.3

Market Pricing Comparatives

As of February 14, 2014

			Market				Per Share Data
			Capitalization				Core		Book		Pricing Ratios(2)
			Price/ Share		Market Value		12 Month EPS(1)		Value/ Share		P/E		P/B		P/A		P/TB		P/Core
			($)		($Mil)		($)		($)		(x)		(%)		(%)		(%)		(x)
All Non-MHC Public Companies				16.31		334.56		0.35		14.68		19.88		108.21		14.36		117.16		21.53
Converted Last 3 Months (No MHC)				10.40		207.54		0.26		13.14		12.05		79.44		16.05		79.51		24.65
Converted Last 3 Months (No MHC)
CWAY	Coastway Bncp, Inc.	RI		10.19		50.43		0.09		13.87		NM		73.47		11.96		73.47		NM
WSBF	Waterstone Financial Inc.	WI		10.60		364.64		0.43		12.41		12.05		85.41		20.13		85.55		24.65

			Dividends(3)						Financial Characteristics(5)
			Amount/				Payout		Total		Equity/		Tang. Eq./		NPAs/		Reported				Core
			Share		Yield		Ratio(4)		Assets		Assets		T. Assets		Assets		ROAA		ROAE		ROAA		ROAE
			($)		(%)		(%)		($Mil)		(%)		(%)		(%)		(%)		(%)		(%)		(%)
All Non-MHC Public Companies				0.23		1.52		25.36		2,530		13.29		12.64		2.59		0.49		3.78		0.24		1.68
Converted Last 3 Months (No MHC)				0.00		0.00		0.00		1,117		19.93		19.91		6.63		0.85		12.96		0.46		6.33
Converted Last 3 Months (No MHC)
CWAY	Coastway Bncp, Inc.	RI		0.00		0.00		0.00		422		16.28		16.28		NA		0.04		NM		0.11		NM
WSBF	Waterstone Financial Inc.	WI		0.00		0.00		0.00		1,812		23.57		23.53		6.63		1.67		12.96		0.82		6.33

(1) Core income, on a diluted per-share basis. Core income is net income after taxes and before extraordinary items, less net income attributable to noncontrolling interest, gain on the sale of securities, amortization of intangibles, goodwill and nonrecurring items. Assumed tax rate is 35%.

(2) P/E = Price to earnings; P/B = Price to book; P/A = Price to assets; P/TB = Price to tangible book value; and P/Core = Price to core earnings. P/E and P/Core =NM if the ratio is negative or above 35x.

(3) Indicated 12 month dividend, based on last quarterly dividend declared.

(4) Indicated 12 month dividend as a percent of trailing 12 month earnings.

(5) ROAA (return on average assets) and ROAE (return on average equity) are indicated ratios based on trailing 12 month earnings and average equity and assets balances.

(6) Excludes from averages and medians those companies the subject of actual or rumored acquisition activities or unusual operating characteristics.

Source: SNL Financial, LC. and RP Financial, LC. calculations. The information provided in this report has been obtained from sources we believe are reliable, but we cannot guarantee the accuracy or completeness of such information.

Copyright (c) 2014 by RP^® Financial, LC.

RP® Financial, LC.	VALUATION ANALYSIS
	IV.16

activity involving Massachusetts savings institutions may imply a certain degree of acquisition speculation for the Company’s stock. To the extent that acquisition speculation may impact the Company’s offering, we have largely taken this into account in selecting companies for the Peer Group which operate in markets that have experienced a comparable level of acquisition activity as the Company’s market and, thus, are subject to the same type of acquisition speculation that may influence Pilgrim Bancshares’ stock. However, since converting thrifts are subject to a three-year regulatory moratorium from being acquired, acquisition speculation in Pilgrim Bancshares’ stock would tend to be less compared to the stocks of the Peer Group companies.

* * * * * * * * * * *

In determining our valuation adjustment for marketing of the issue, we considered trends in both the overall thrift market, the new issue market including the new issue market for thrift conversions and the local acquisition market for thrift stocks. Taking these factors and trends into account, RP Financial concluded that no adjustment was appropriate in the valuation analysis for purposes of marketing of the issue.

8. Management

The Company’s management team appears to have experience and expertise in all of the key areas of the Company’s operations. Exhibit IV-5 provides summary resumes of the Company’s Board of Directors and senior management. While the Company does not have the resources to develop a great deal of management depth, given its asset size and the impact it would have on operating expenses, management and the Board have been effective in implementing an operating strategy that can be well managed by the Company’s present organizational structure. The Company currently does not have any senior management positions that are vacant.

Similarly, the returns, equity positions and other operating measures of the Peer Group companies are indicative of well-managed financial institutions, which have Boards and management teams that have been effective in implementing competitive operating strategies. Therefore, on balance, we concluded no valuation adjustment relative to the Peer Group was appropriate for this factor.

RP® Financial, LC.	VALUATION ANALYSIS
	IV.17

9. Effect of Government Regulation and Regulatory Reform

In summary, as a fully-converted, FDIC insured institution, Pilgrim Bancshares will operate in substantially the same regulatory environment as the Peer Group members — all of whom are adequately capitalized institutions and are operating with no apparent restrictions. Exhibit IV-6 reflects Pilgrim Bancshares’ pro forma regulatory capital ratios. On balance, no adjustment has been applied for the effect of government regulation and regulatory reform.

Summary of Adjustments

Overall, based on the factors discussed above, we concluded that the Company’s pro forma market value should reflect the following valuation adjustments relative to the Peer Group:

Key Valuation Parameters:	Valuation Adjustment
Financial Condition	Slight Downward
Profitability, Growth and Viability of Earnings	Slight Downward
Asset Growth	No Adjustment
Primary Market Area	Slight Upward
Dividends	No Adjustment
Liquidity of the Shares	Slight Downward
Marketing of the Issue	No Adjustment
Management	No Adjustment
Effect of Govt. Regulations and Regulatory Reform	No Adjustment

Valuation Approaches

In applying the accepted valuation methodology promulgated by the FRB and the Commissioner, i.e., the pro forma market value approach, we considered the three key pricing ratios in valuing the Company’s to-be-issued stock – price/earnings (“P/E”), price/book (“P/B”), and price/assets (“P/A”) approaches – all performed on a pro forma basis including the effects of the stock proceeds. In computing the pro forma impact of the conversion and the related pricing ratios, we have incorporated the valuation parameters disclosed in the Company’s prospectus for reinvestment rate, effective tax rate, stock benefit plan assumptions and expenses (summarized in Exhibits IV-7 and IV-8).

In our estimate of value, we assessed the relationship of the pro forma pricing ratios relative to the Peer Group and recent conversion offerings.

RP® Financial, LC.	VALUATION ANALYSIS
	IV.18

RP Financial’s valuation placed an emphasis on the following:

• P/E Approach. The P/E approach is generally the best indicator of long-term value for a stock. Given the similarities between the Company’s and the Peer Group’s operating strategies, earnings composition and overall financial condition, the P/E approach was carefully considered in this valuation. At the same time, since reported earnings for both the Company and the Peer Group included certain non-recurring items, we also made adjustments to earnings to arrive at core earnings estimates for the Company and the Peer Group and resulting price/core earnings ratios.

• P/B Approach. P/B ratios have generally served as a useful benchmark in the valuation of thrift stocks, particularly in the context of an initial public offering, as the earnings approach involves assumptions regarding the use of proceeds. RP Financial considered the P/B approach to be a useful indicator of pro forma value, taking into account the pricing ratios under the P/E and P/A approaches. We have also modified the P/B approach to exclude the impact of intangible assets (i.e., price/tangible book value or “P/TB”), in that the investment community frequently makes this adjustment in its evaluation of this pricing approach.

• P/A Approach. P/A ratios are generally a less reliable indicator of market value, as investors typically assign less weight to assets and attribute greater weight to book value and earnings. Furthermore, this approach as set forth in the regulatory valuation guidelines does not take into account the amount of stock purchases funded by deposit withdrawals, thus understating the pro forma P/A ratio. At the same time, the P/A ratio is an indicator of franchise value, and, in the case of highly capitalized institutions, high P/A ratios may limit the investment community’s willingness to pay market multiples for earnings or book value when ROE is expected to be low.

The Company will adopt “Employers’ Accounting for Employee Stock Ownership Plans” (“ASC 718-40”), which will cause earnings per share computations to be based on shares issued and outstanding excluding unreleased ESOP shares. For purposes of preparing the pro forma pricing analyses, we have reflected all shares issued in the offering, including all ESOP shares, to capture the full dilutive impact, particularly since the ESOP shares are economically dilutive, receive dividends and can be voted. However, we did consider the impact of the adoption of ASC 718-40 in the valuation.

Based on the application of the three valuation approaches, taking into consideration the valuation adjustments discussed above and the dilutive impact of the stock contribution to the Foundation, RP Financial concluded that, as of February 14, 2014, the pro forma market value of Pilgrim Bancshares’ conversion stock was $16,995,000 at the midpoint, equal to 1,699,500 shares at $10.00 per share.

RP® Financial, LC.	VALUATION ANALYSIS
	IV.19

1. Price-to-Earnings (“P/E”). The application of the P/E valuation method requires calculating the Company’s pro forma market value by applying a valuation P/E multiple to the pro forma earnings base. In applying this technique, we considered both reported earnings and a recurring earnings base, that is, earnings adjusted to exclude any one-time non-operating items, plus the estimated after-tax earnings benefit of the reinvestment of the net proceeds. The Company’s reported earnings equaled $368,000 for the twelve months ended December 31, 2013. In deriving Pilgrim Bancshares’ core earnings, the adjustments made to reported earnings were to eliminate gains on sales of securities equal to $5,000 and the writedown of securities equal to $247,000. As shown below, on a tax effected basis, assuming an effective marginal tax rate of 40.0% for the earnings adjustments, the Company’s core earnings were determined to equal $513,000 for the twelve months ended December 31, 2013.

	Amount
	($000)
Net income(loss)	$	368
Deduct: Gain on sales of securities(1)		(3	)
Add: Writedown of securities(1)		148
Core earnings estimate	$	513

(1) Tax effected at 40.0%.

Based on the Company’s reported and estimated core earnings and incorporating the impact of the pro forma assumptions discussed previously, the Company’s pro forma reported and core P/E multiples at the $17.0 million midpoint value equaled 57.98 times and 38.79 times, respectively, which provided for premiums of 139.19% and 70.88% relative to the Peer Group’s average reported and core P/E multiples of 24.24 times and 22.70 times, respectively (see Table 4.4). In comparison to the Peer Group’s median reported and core earnings multiples which equaled 22.93 times and 22.47 times, respectively, the Company’s pro forma reported and core P/E multiples at the midpoint value indicated premiums of 152.86% and 72.63%, respectively. The Company’s pro forma P/E ratios based on reported earnings at the minimum and the super maximum equaled 47.96x and 81.48x, respectively, and based on core earnings at the minimum and the super maximum equaled 32.38x and 53.41x, respectively.

2. Price-to-Book (“P/B”). The application of the P/B valuation method requires calculating the Company’s pro forma market value by applying a valuation P/B ratio, as derived from the Peer Group’s P/B ratio, to the Company’s pro forma book value. Based on the $17.0 million midpoint valuation, the Company’s pro forma P/B and P/TB ratios both equaled 66.05%.

RP® Financial, LC.	VALUATION ANALYSIS
	IV.20

Table 4.4

Public Market Pricing Versus Peer Group

Pilgrim Bancshares, Inc. and the Comparables

As of February 14, 2014

			Market				Per Share Data
			Capitalization				Core		Book																	Dividends(3)
			Price/		Market		12 Month		Value/		Pricing Ratios(2)															Amount/					Payout
			Share		Value		EPS(1)		Share		P/E			P/B			P/A			P/TB			P/Core			Share		Yield			Ratio(4)
			($)		($Mil)		($)		($)		(x)			(%)			(%)			(%)			(x)			($)		(%)			(%)
Pilgrim Bancshares, Inc.		MA
Super Maximum			$	10.00	$	22.48	$	0.19	$	13.59		81.48	x		73.58	%		11.85	%		73.58	%		53.41	x	$	0.00		0.00	%		0.00	%
Maximum			$	10.00	$	19.54	$	0.22	$	14.31		68.55	x		69.88	%		10.45	%		69.88	%		45.44	x	$	0.00		0.00	%		0.00	%
Midpoint			$	10.00	$	17.00	$	0.26	$	15.14		57.98	x		66.05	%		9.20	%		66.05	%		38.79	x	$	0.00		0.00	%		0.00	%
Minimum			$	10.00	$	14.45	$	0.31	$	16.25		47.96	x		61.54	%		7.91	%		61.54	%		32.38	x	$	0.00		0.00	%		0.00	%
All Non-MHC Public Companies(6)
Averages			$	16.51	$	344.10	$	0.82	$	15.47		17.42	x		104.92	%		13.36	%		113.87	%		18.14	x	$	0.29		1.72	%		47.73	%
Median			$	15.05	$	94.66	$	0.67	$	14.91		16.28	x		96.11	%		12.34	%		102.39	%		17.20	x	$	0.24		1.48	%		42.53	%
All Non-MHC State of MA(6)
Averages			$	23.35	$	162.21	$	1.29	$	20.09		21.21	x		107.74	%		13.07	%		114.57	%		22.77	x	$	0.36		1.57	%		54.97	%
Medians			$	17.37	$	115.83	$	0.52	$	16.35		20.61	x		102.38	%		12.09	%		106.55	%		21.98	x	$	0.24		1.45	%		43.64	%
State of MA (7)
BHLB	Berkshire Hills Bancorp Inc.	MA	$	25.09	$	628.15	$	2.03	$	27.08		15.21	x		92.64	%		11.07	%		154.19	%		12.36	x	$	0.72		2.87	%		43.64	%
BLMT	BSB Bancorp Inc.	MA	$	15.82	$	143.26	$	0.22	$	14.40		NM			109.85	%		13.58	%		109.85	%		NM		$	0.00		0.00	%		NM
CBNK	Chicopee Bancorp Inc.	MA	$	17.37	$	94.42	$	0.52	$	16.97		34.74	x		102.38	%		16.07	%		102.38	%		33.70	x	$	0.28		1.61	%		44.00	%
GTWN	Georgetown Bancorp Inc.	MA	$	14.75	$	27.01	$	0.41	$	15.80		NM			93.34	%		10.27	%		93.34	%		NM		$	0.16		1.08	%		39.02	%
HBNK	Hampden Bancorp Inc.	MA	$	15.96	$	90.18	$	0.66	$	14.98		23.82	x		106.55	%		12.98	%		106.55	%		24.31	x	$	0.24		1.50	%		34.33	%
HIFS	Hingham Instit. for Savings	MA	$	77.01	$	163.94	$	6.28	$	48.49		12.26	x		158.83	%		12.09	%		158.83	%		12.26	x	$	1.08		1.40	%		21.34	%
PEOP	Peoples Federal Bancshares Inc	MA	$	18.08	$	115.83	$	0.35	$	16.35		NM			110.55	%		19.76	%		110.55	%		NM		$	0.16		0.88	%		117.14	%
WEBK	Wellesley Bancorp	MA	$	18.50	$	45.41	$	0.94	$	19.06		19.07	x		97.06	%		9.90	%		97.06	%		19.66	x		NA		NA			NM
WFD	Westfield Financial Inc.	MA	$	7.53	$	151.73	$	0.22	$	7.65		22.15	x		98.43	%		11.88	%		98.43	%		34.33	x	$	0.24		3.19	%		85.29	%
Comparable Group
Averages			$	16.34	$	67.66	$	0.57	$	16.73		24.24	x		97.68	%		13.91	%		101.83	%		22.70	x	$	0.19		1.28	%		54.51	%
Medians			$	16.67	$	72.53	$	0.46	$	16.08		22.93	x		96.93	%		13.90	%		99.72	%		22.47	x	$	0.18		1.25	%		47.82	%
Comparable Group
ALLB	Alliance Bancorp	PA	$	15.30	$	68.35	$	0.38	$	15.81		NM			96.79	%		16.07	%		96.79	%		NM		$	0.20		1.31	%		52.63	%
CBNK	Chicopee Bancorp Inc.	MA	$	17.37	$	94.42	$	0.52	$	16.97		34.74	x		102.38	%		16.07	%		102.38	%		33.70	x	$	0.28		1.61	%		44.00	%
FFCO	FedFirst Financial Corp.	PA	$	20.06	$	47.29	$	0.89	$	22.00		22.04	x		91.18	%		14.82	%		92.90	%		22.47	x	$	0.24		1.20	%		51.65	%
GTWN	Georgetown Bancorp Inc.	MA	$	14.75	$	27.01	$	0.41	$	15.80		NM			93.34	%		10.27	%		93.34	%		NM		$	0.16		1.08	%		39.02	%
HBNK	Hampden Bancorp Inc.	MA	$	15.96	$	90.18	$	0.66	$	14.98		23.82	x		106.55	%		12.98	%		106.55	%		24.31	x	$	0.24		1.50	%		34.33	%
OBAF	OBA Financial Services Inc	MD	$	19.00	$	76.72	$	0.30	$	17.78		NM			106.84	%		19.65	%		106.84	%		NM		$	0.00		0.00	%		NM
ONFC	Oneida Financial Corp.	NY	$	12.34	$	86.70	$	0.92	$	12.90		14.18	x		95.67	%		11.68	%		135.36	%		13.38	x	$	0.48		3.89	%		55.17	%
PEOP	Peoples Federal Bancshares Inc	MA	$	18.08	$	115.83	$	0.35	$	16.35		NM			110.55	%		19.76	%		110.55	%		NM		$	0.16		0.88	%		117.14	%
WVFC	WVS Financial Corp.	PA	$	12.00	$	24.70	$	0.37	$	15.69		31.58	x		76.48	%		7.86	%		76.48	%		NM		$	0.16		1.33	%		42.11	%
WEBK	Wellesley Bancorp	MA	$	18.50	$	45.41	$	0.94	$	19.06		19.07	x		97.06	%		9.90	%		97.06	%		19.66	x	$	0.00		0.00	%		NM

			Financial Characteristics(5)
			Total		Equity/			Tang. Eq./			NPAs/			Reported						Core						Offering
			Assets		Assets			T. Assets			Assets			ROAA			ROAE			ROAA			ROAE			Range
			($Mil)		(%)			(%)			(%)			(%)			(%)			(%)			(%)			($Mil)
Pilgrim Bancshares, Inc.		MA
Super Maximum			$	190		16.11	%		16.11	%		1.24	%		0.15	%		0.90	%		0.22	%		1.38	%	$	21.82
Maximum			$	187		14.95	%		14.95	%		1.26	%		0.15	%		1.02	%		0.23	%		1.54	%	$	18.98
Midpoint			$	185		13.92	%		13.92	%		1.27	%		0.16	%		1.14	%		0.24	%		1.70	%	$	16.50
Minimum			$	183		12.86	%		12.86	%		1.29	%		0.16	%		1.28	%		0.24	%		1.90	%	$	14.03
All Non-MHC Public Companies(6)
Averages			$	2,478		13.23	%		12.34	%		3.00	%		0.55	%		4.13	%		0.51	%		4.01	%
Median			$	771		12.29	%		11.57	%		2.26	%		0.63	%		4.68	%		0.60	%		4.34	%
All Non-MHC State of MA(6)
Averages			$	1,328		12.33	%		11.84	%		1.13	%		0.53	%		4.65	%		0.53	%		4.63	%
Medians			$	694		12.07	%		12.07	%		1.22	%		0.53	%		4.04	%		0.45	%		2.88	%
State of MA (7)
BHLB	Berkshire Hills Bancorp Inc.	MA	$	5,673		11.95	%		7.54	%		NA			0.78	%		6.10	%		0.95	%		7.50	%
BLMT	BSB Bancorp Inc.	MA	$	1,055		12.37	%		12.37	%		1.17	%		0.21	%		1.51	%		0.21	%		1.49	%
CBNK	Chicopee Bancorp Inc.	MA	$	588		15.69	%		15.69	%		1.27	%		0.43	%		2.79	%		0.45	%		2.88	%
GTWN	Georgetown Bancorp Inc.	MA	$	263		11.00	%		11.00	%		1.16	%		0.32	%		2.47	%		0.32	%		2.47	%
HBNK	Hampden Bancorp Inc.	MA	$	694		12.19	%		12.19	%		1.32	%		0.55	%		4.31	%		0.54	%		4.23	%
HIFS	Hingham Instit. for Savings	MA	$	1,356		7.61	%		7.61	%		NA			1.07	%		13.52	%		1.07	%		13.52	%
PEOP	Peoples Federal Bancshares Inc	MA	$	588		17.88	%		17.88	%		0.47	%		0.37	%		2.01	%		0.37	%		2.01	%
WEBK	Wellesley Bancorp	MA	$	459		10.20	%		10.20	%		1.41	%		0.55	%		5.09	%		0.54	%		4.94	%
WFD	Westfield Financial Inc.	MA	$	1,277		12.07	%		12.07	%		NA			0.53	%		4.04	%		0.34	%		2.60	%
Comparable Group
Averages			$	478		14.07	%		13.72	%		1.19	%		0.48	%		3.41	%		0.48	%		3.44	%
Medians			$	442		13.95	%		13.94	%		1.22	%		0.42	%		2.67	%		0.43	%		2.69	%
Comparable Group
ALLB	Alliance Bancorp	PA	$	425		16.60	%		16.60	%		2.80	%		0.42	%		2.37	%		0.42	%		2.37	%
CBNK	Chicopee Bancorp Inc.	MA	$	588		15.69	%		15.69	%		1.27	%		0.43	%		2.79	%		0.45	%		2.88	%
FFCO	FedFirst Financial Corp.	PA	$	319		16.25	%		15.96	%		1.56	%		0.73	%		4.29	%		0.71	%		4.40	%
GTWN	Georgetown Bancorp Inc.	MA	$	263		11.00	%		11.00	%		1.16	%		0.32	%		2.47	%		0.32	%		2.47	%
HBNK	Hampden Bancorp Inc.	MA	$	694		12.19	%		12.19	%		1.32	%		0.55	%		4.31	%		0.54	%		4.23	%
OBAF	OBA Financial Services Inc	MD	$	390		18.39	%		18.39	%		1.05	%		0.31	%		1.58	%		0.31	%		1.58	%
ONFC	Oneida Financial Corp.	NY	$	742		12.22	%		8.96	%		0.43	%		0.86	%		6.59	%		0.91	%		7.05	%
PEOP	Peoples Federal Bancshares Inc	MA	$	588		17.88	%		17.88	%		0.47	%		0.37	%		2.01	%		0.37	%		2.01	%
WVFC	WVS Financial Corp.	PA	$	314		10.28	%		10.28	%		0.45	%		0.29	%		2.55	%		0.28	%		2.50	%
WEBK	Wellesley Bancorp	MA	$	459		10.20	%		10.20	%		1.41	%		0.55	%		5.09	%		0.54	%		4.94	%

(1) Core income, on a diluted per-share basis. Core income is net income after taxes and before extraordinary items, less net income attributable to noncontrolling interest, gain on the sale of securities, amortization of intangibles, goodwill and nonrecurring items. Assumed tax rate is 35%.

(2) P/E = Price to earnings; P/B = Price to book; P/A = Price to assets; P/TB = Price to tangible book value; and P/Core = Price to core earnings. P/E and P/Core =NM if the ratio is negative or above 35x.

(3) Indicated 12 month dividend, based on last quarterly dividend declared.

(4) Indicated 12 month dividend as a percent of trailing 12 month earnings.

(5) ROAA (return on average assets) and ROAE (return on average equity) are indicated ratios based on trailing 12 month earnings and average equity and assets balances.

(6) Excludes from averages and medians those companies the subject of actual or rumored acquisition activities or unusual operating characteristics.

Source: SNL Financial, LC. and RP Financial, LC. calculations. The information provided in this report has been obtained from sources we believe are reliable, but we cannot guarantee the accuracy or completeness of such information.

Copyright (c) 2014 by RP^® Financial, LC.

RP® Financial, LC.	VALUATION ANALYSIS
	IV.21

In comparison to the average P/B and P/TB ratios for the Peer Group of 97.68% and 101.83%, the Company’s ratios reflected a discount of 32.38% on a P/B basis and a discount of 35.14% on a P/TB basis. In comparison to the Peer Group’s median P/B and P/TB ratios of 96.93% and 99.72%, respectively, the Company’s pro forma P/B and P/TB ratios at the midpoint value reflected discounts of 31.86% and 33.76%, respectively. At the top of the super range, the Company’s P/B and P/TB ratios both equaled 73.58%. In comparison to the Peer Group’s average P/B and P/TB ratios, the Company’s P/B and P/TB ratios at the top of the super range reflected discounts of 24.67% and 27.74%, respectively. In comparison to the Peer Group’s median P/B and P/TB ratios, the Company’s P/B and P/TB ratios at the top of the super range reflected discounts of 24.09% and of 26.21%, respectively. RP Financial considered the discounts under the P/B approach to be reasonable, given the nature of the calculation of the P/B ratio which mathematically results in a ratio discounted to book value. The discounts reflected under the P/B approach were also supported by the premiums reflected in the Company’s P/E multiples.

3. Price-to-Assets (“P/A”). The P/A valuation methodology determines market value by applying a valuation P/A ratio to the Company’s pro forma asset base, conservatively assuming no deposit withdrawals are made to fund stock purchases. In all likelihood there will be deposit withdrawals, which results in understating the pro forma P/A ratio which is computed herein. At the $17.0 million midpoint of the valuation range, the Company’s value equaled 9.20% of pro forma assets. Comparatively, the Peer Group companies exhibited an average P/A ratio of 13.91%, which implies a discount of 33.86% has been applied to the Company’s pro forma P/A ratio. In comparison to the Peer Group’s median P/A ratio of 13.90%, the Company’s pro forma P/A ratio at the midpoint value reflects a premium of 33.81%.

Comparison to Recent Offerings

As indicated at the beginning of this chapter, RP Financial’s analysis of recent conversion offering pricing characteristics at closing and in the aftermarket has been limited to a “technical” analysis and, thus, the pricing characteristics of recent conversion offerings cannot be a primary determinate of value. Particular focus was placed on the P/TB approach in this analysis, since the P/E multiples do not reflect the actual impact of reinvestment and the source of the stock proceeds (i.e., external funds vs. deposit withdrawals). As discussed previously, two standard conversion offerings were completed during the past three months. In comparison

RP® Financial, LC.	VALUATION ANALYSIS
	IV.22

to the 63.60% average closing forma P/TB ratio of the two recent standard conversions, the Company’s P/TB ratio of 66.05% at the midpoint value reflects an implied premium of 3.85%. At the top of the super range, the Company’s P/TB ratio of 73.58% reflects an implied premium of 15.69% relative to the recent standard conversions average P/TB ratio at closing. The current P/TB ratio of the only recent standard conversion that is publicly-traded (Coastway Bancorp) equaled 73.47%, based on closing stock prices as of February 14, 2014. In comparison to the current P/TB ratio of Coastway Bancorp, the Company’s P/TB ratio at the midpoint value reflects an implied discount of 10.10% and at the top of the super range reflects an implied premium of 0.15%. Comparative pre-conversion financial data for Coastway Bancorp has been included in the Chapter III tables and show that, in comparison to Pilgrim Bancshares, Coastway Bancorp maintained a similar tangible equity-to-assets ratio (7.20% versus 7.29% for Pilgrim Bancshares), a slightly higher return on average assets (0.35% versus 0.22% for Pilgrim Bancshares and a lower ratio of non-performing assets as a percent of assets (3.06% versus 4.06% for Pilgrim Bancshares).

Valuation Conclusion

Based on the foregoing, it is our opinion that, as of February 14, 2014, the estimated aggregate pro forma market value of the shares to be issued immediately following the conversion, including shares to be issued to the Foundation, equaled $16,995,000 at the midpoint, equal to 1,699,500 shares offered at a per share value of $10.00. Pursuant to conversion guidelines, the 15% valuation range indicates a minimum value of $14,445,750 and a maximum value of $19,544,250. Based on the $10.00 per share offering price determined by the Board, this valuation range equates to total shares outstanding of 1,444,575 at the minimum and 1,954,425 at the maximum. In the event the appraised value is subject to an increase, the aggregate pro forma market value may be increased up to a super maximum value of $22,475,890 without a resolicitation. Based on the $10.00 per share offering price, the super maximum value would result in total shares outstanding of 2,247,589. Based on this valuation range, the offering range is as follows: $14,025,000 at the minimum, $16,500,000 at the midpoint, $18,975,000 at the maximum and $21,821,250 at the super maximum. Based on the $10.00 per share offering price, the number of offering shares is as follows: 1,402,500 at the minimum, 1,650,000 at the midpoint, 1,897,500 at the maximum and 2,182,125 at the super maximum. The pro forma valuation calculations relative to the Peer Group are shown in Table 4.4 and are detailed in Exhibit IV-7 and Exhibit IV-8.

EX-99.4

Exhibit 99.4

PILGRIM BANK LOGO

Dear Depositor:

We are pleased to announce that the mutual holding company of Pilgrim Bank, Conhasset Bancshares, MHC, is converting from the mutual to stock form of organization, subject to approval by the depositors of Pilgrim Bank at a Special Meeting of Depositors. Pilgrim Bank will be the wholly-owned subsidiary of a newly formed stock holding company named Pilgrim Bancshares, Inc. In connection with the conversion, Pilgrim Bancshares, Inc. is offering shares of its common stock in a subscription and community offering pursuant to a Plan of Conversion.

Unfortunately, Pilgrim Bancshares, Inc. is unable to either offer or sell its common stock to you for one or more of the following reasons: the small number of eligible subscribers in your jurisdiction makes registration or qualification of the common stock under the securities or other laws of your jurisdiction impractical for reasons of cost or otherwise, or you were not a depositor on the eligibility record date of                      or supplemental eligibility record date of                     . Accordingly, this letter and the enclosures should not be considered an offer to sell or a solicitation of an offer to buy the common stock of Pilgrim Bancshares, Inc.

However, as a depositor of Pilgrim Bank as of             , 2014 you are invited to the Special Meeting of Depositors to vote on the approval of Pilgrim Bank’s Plan of Conversion. The meeting will be held at                     , MA at         a.m./p.m. We urge you to attend.

If you have any questions regarding the Plan of Conversion, please call our information hotline at (    ) - to speak to a representative of Keefe, Bruyette & Woods, Inc. Representatives are available by telephone Monday through Friday, 10:00 a.m. 4:00 p.m., Eastern time. The information center will be closed on bank holidays.

Sincerely,

Francis E. Campbell

Chairman, President and Chief Executive Officer

The shares of common stock being offered are not deposits or savings accounts and are not insured by the Federal Deposit Insurance Corporation, the Share Insurance Fund or any other governmental agency. An investment in the shares of common stock is subject to investment risks, including possible loss of the principal invested.

This is not an offer to sell or a solicitation of an offer to buy common stock. The offer is made only by the prospectus.

PILGRIM BANK LOGO

Dear Depositor:

We are pleased to announce that the mutual holding company of Pilgrim Bank, Conhasset Bancshares, MHC, is converting from the mutual to stock form of organization pursuant to a Plan of Conversion, subject to approval by the depositors of Pilgrim Bank at a Special Meeting of Depositors. Pilgrim Bank will be the wholly-owned subsidiary of a newly formed stock holding company named Pilgrim Bancshares, Inc. In connection with the conversion, Pilgrim Bancshares, Inc. is offering shares of its common stock in a subscription and community offering.

The Board of Directors believes the conversion will offer a number of advantages, including the opportunity for depositors of Pilgrim Bank to become stockholders of Pilgrim Bancshares, Inc.

Please remember:

• Your deposit accounts will continue to be insured up to the maximum legal limit by the Federal Deposit Insurance Corporation (“FDIC”) and by the Share Insurance Fund.

• There will be no change in the balance, interest rate or maturity of any deposit account or loan because of the conversion.

• Members have a right, but not an obligation, to buy Pilgrim Bancshares, Inc. common stock and may do so without the payment of a commission or fee before it is offered to the general public.

• Like all stock, shares of Pilgrim Bancshares, Inc.’s common stock issued in this offering will not be insured by the FDIC or by the Share Insurance Fund.

The enclosed prospectus contains a detailed discussion of the conversion and stock offering. We urge you to read this document carefully. If you are interested in purchasing the common stock of Pilgrim Bancshares, Inc., your Stock Order and Certification Form and payment must be received by us AFTER              but before 12:00 Noon, Eastern time, on             .

As a depositor of Pilgrim Bank as of             , 2014 you are invited to the Special Meeting of Depositors to vote on the approval of the Conhasset Bancshares, MHC Plan of Conversion and the establishment and funding of a charitable foundation in connection with the mutual-to-stock conversion. The meeting will be held at             , MA at         a.m./p.m. We urge you to attend.

If you have any questions regarding the offering, please call our information hotline at ( ) - to speak to a representative of Keefe, Bruyette & Woods, Inc. Representatives are available by telephone Monday through Friday, 10:00 a.m. to 4:00 p.m., Eastern time. The stock information center will be closed on bank holidays.

Sincerely,

Francis E. Campbell

Chairman, President and Chief Executive Officer

The shares of common stock being offered are not deposits or savings accounts and are not insured by the Federal Deposit Insurance Corporation, the Share Insurance Fund or any other governmental agency. An investment in the shares of common stock is subject to investment risks, including possible loss of the principal invested.

This is not an offer to sell or a solicitation of an offer to buy common stock. The offer is made only by the prospectus.

Pilgrim Bancshares Logo

Proposed Holding Company for

Pilgrim Bank

Q&A GRAPHIC

QUESTIONS AND ANSWERS

ABOUT OUR CONVERSION

AND STOCK OFFERING

The shares of common stock being offered are not deposits or savings accounts and are not insured by the Federal Deposit Insurance Corporation, the Share Insurance Fund or any other governmental agency.

This is not an offer to sell or a solicitation of an offer to buy common stock. The offer is made only by the prospectus.

This pamphlet answers questions about the conversion of Conhasset Bancshares, MHC, the parent mutual holding company of Pilgrim Bank, and the Pilgrim Bancshares, Inc. stock offering. Investing in shares of common stock involves certain risks. For a discussion of these risks and other factors, including a detailed description of the offering, investors are urged to read the accompanying prospectus, especially the discussion under the heading “Risk Factors.”

GENERAL – THE CONVERSION

The Board of Trustees of Conhasset Banshares, MHC and the Board of Directors of Pilgrim Bank have determined that the conversion is in the best interests of Pilgrim Bank, our customers and the communities we serve.

WHAT IS THE CONVERSION?

Under the Plan of Conversion (the “plan”) Conhasset Bancshares, MHC, the parent mutual holding company of Pilgrim Bank, is converting from the mutual to stock form of organization. As a result of the conversion, Pilgrim Bank will be the wholly owned subsidiary of a newly formed stock holding company named Pilgrim Bancshares, Inc.

After the conversion is completed, 100% of the common stock of Pilgrim Bancshares, Inc. will be owned by public stockholders.

WHY IS CONHASSET BANCSHARES, MHC CONVERTING TO THE STOCK FORM OF ORGANIZATION?

The conversion to the stock holding company form of organization will enable Pilgrim Bank to improve its capital position during a period of economic, regulatory and political uncertainty for the financial services industry and to assure compliance with regulatory capital requirements. This additional capital will provide us with the flexibility to support organic loan and core deposit growth, to improve profitability and earnings through reinvesting and leveraging the proceeds, to invest in new technologies that will enable the expansion and enhancement of products and services, to have greater flexibility to access the debt and equity capital markets, to attract, retain and incentivize qualified personnel by establishing stock-based benefit plans for management and employees, to establish a charitable foundation to support charitable organizations operating in our communities, to provide customers and members of our community with the opportunity to acquire an ownership interest in Pilgrim Bank through investment in Pilgrim Bancshares, Inc., and to have greater flexibility to structure and finance opportunities for expansion into new markets.

WHAT EFFECT WILL THE CONVERSION HAVE ON EXISTING DEPOSIT AND LOAN ACCOUNTS AND CUSTOMER RELATIONSHIPS?

The conversion will have no effect on existing deposit or loan accounts and customer relationships. Deposits will continue to be federally insured by the Federal Deposit Insurance Corporation to the maximum legal limit and by the Share Insurance Fund. Interest rates and existing terms and conditions on deposit accounts will remain the same upon completion of the conversion. Contractual obligations of borrowers of Pilgrim Bank will not change and there will be no change in the amount, interest rate, maturity, security or any other condition relating to the respective loans of customers.

WILL CUSTOMERS NOTICE ANY CHANGE IN PILGRIM BANK’S DAY-TO-DAY ACTIVITIES AS A RESULT OF THE CONVERSION AND THE OFFERING?

No. It will be business as usual. The conversion is an internal change in our corporate structure. There are no planned changes to our Board of Directors, management, staff or branches at this time.

THE STOCK OFFERING AND PURCHASING SHARES

ARE PILGRIM BANK’S DEPOSITORS REQUIRED TO PURCHASE STOCK IN THE CONVERSION?

No depositor or other person is required to purchase stock. However, depositors and other eligible persons will be provided the opportunity to purchase stock consistent with the established priority of subscription rights, should they so desire. The decision to purchase stock will be exclusively that of each person. Whether an individual decides to purchase stock or not will have no positive or negative impact on his or her standing as a customer of Pilgrim Bank. The conversion will allow customers of Pilgrim Bank an opportunity to buy common stock and become stockholders of Pilgrim Bancshares, Inc.

HOW MANY COMMON SHARES ARE BEING OFFERED AND AT WHAT PRICE?

Pilgrim Bancshares, Inc. is offering up to 1,897,500 shares of common stock, subject to adjustment as described in the prospectus, at a price of $10.00 per share.

WHO IS ELIGIBLE TO PURCHASE COMMON SHARES IN THE SUBSCRIPTION AND COMMUNITY OFFERINGS?

Pursuant to the Plan, non-transferable rights to subscribe for shares of Pilgrim Bancshares, Inc. common stock in the Subscription Offering have been granted in the following descending order of priority.

Priority 1 - Persons with $50 or more on deposit at Pilgrim Bank as of the close of business on December 31, 2012.

Priority 2 - Persons with $50 or more on deposit at Pilgrim Bank as of the close of business on March 31, 2014.

Priority 3 - Our tax qualified employee benefit plans, including the employee stock ownership plan we are establishing in connection with the conversion.

Shares of common stock not purchased in the subscription offering may be offered for sale to the general public in a direct Community Offering, with a preference given to natural persons (including trusts of natural persons) residing in the Massachusetts towns of Cohasset, Scituate, Hingham, Norwell, Hull, Weymouth, Quincy, Marshfield, Pembroke, Marion, Rochester, Mattapoisett, West Wareham, Wareham and Fairhaven.

IF I SUBSCRIBE, WILL I RECEIVE STOCK?

Not necessarily. Your order does not guarantee that you will receive stock. This will depend on several factors such as the total number of shares ordered in the offering, your level of subscription priority, and possibly your account balance at the applicable record date. If we receive orders for more shares than we are offering, we may not be able to fully or partially fill your order. Shares will be allocated first to subscribers in the subscription offering in the order of priority set forth above.

HOW MANY SHARES MAY I BUY?

The minimum number of shares of common stock you may order is 25 shares. The maximum number of shares of common stock that can be ordered by an individual or through a single qualifying account is 20,000 shares ($200,000), and no person together with an associate or group of persons acting in concert may purchase more than 30,000 shares ($300,000), as further discussed in the prospectus.

I HAVE CUSTODIAL ACCOUNTS WITH THE BANK FOR MY MINOR CHILDREN. MAY I USE THESE TO PURCHASE STOCK?

Yes. However, the stock must be purchased in the name of the minor child. A custodial account does not entitle the custodian to purchase stock in his or her own name.

I HAVE BUSINESS ACCOUNTS WITH THE BANK. MAY I USE THESE TO PURCHASE STOCK?

Yes. However, the stock must be purchased in the name of the business. A business account does not entitle the signor or other officer of the business to purchase stock in his or her own name. Funds used to purchase stock must also come from the business.

WILL THE COMMON STOCK BE INSURED?

NO. Like any common stock, the common stock of Pilgrim Bancshares, Inc. will NOT be insured.

HOW DO I ORDER THE COMMON STOCK?

You must complete and return the enclosed Stock Order and Certification Form, along with full payment. Instructions for completing your Stock Order and Certification Form are included with the order form. Your order must be received by us (not postmarked) AFTER             , 2014 but before the order deadline of 12:00 noon, Eastern Time, on             . Delivery of an original stock order form (we reserve the right to reject copies or facsimiles) and full payment may be made by overnight courier to the address listed on the top of the stock order form, by hand-delivery to any of our banking locations, or by mail, using the Stock Order Reply Envelope provided. Please do not mail stock order forms to Pilgrim Bank.

* Due to recently announced reductions in U.S. Postal Service first class mail delivery standards, we encourage you to consider in-person or overnight delivery of your stock order form to ensure your order is received before the deadline.

HOW MAY I PAY FOR MY COMMON STOCK?

First, you may pay for common stock by check or money order made payable to Pilgrim Bancshares, Inc. These funds will be cashed upon receipt. We cannot accept wires or third party checks. Pilgrim Bank line of credit checks may not be used. Please do not mail cash!

Second, you may authorize us to withdraw funds from YOUR SAVINGS ACCOUNT or CERTIFICATE OF DEPOSIT at Pilgrim Bank. There is no penalty for early withdrawal from a certificate of deposit for the purposes of purchasing stock in the offering. You will not have access to these funds from the day we receive your order until completion or termination of the conversion. You may not designate withdrawal from Pilgrim Bank accounts with check-writing privileges. Please submit a check instead. Also, IRA or other retirement accounts held at Pilgrim Bank may not be listed for direct withdrawal. See information on IRAs below.

WILL I EARN INTEREST ON MY FUNDS?

Funds received during the offering will be held in a segregated account at Pilgrim Bank and will earn interest at Pilgrim Bank’s statement savings rate from the day the funds are received until the completion or termination of the offering. At that time, you will be issued a check for interest earned on these funds. If paid by authorizing a direct withdrawal from your Pilgrim Bank deposit account(s), your funds will continue earning interest within the account, at the applicable deposit account rate, until they are withdrawn.

CAN I PURCHASE STOCK USING FUNDS IN MY PILGRIM BANK IRA?

Yes, but not directly. To do so, however, you must first establish a self-directed IRA at a brokerage firm and transfer the necessary funds from your IRA at Pilgrim Bank. Please contact your broker or self-directed IRA provider as soon as possible if you want to explore this option, as these transactions take time.

If you have a self-directed IRA and wish to use those funds, contact your broker as soon as possible. Whether you may use such funds for the purchase of shares in the stock offering may depend on time constraints and, possibly, limitations imposed by the brokerage firm or institution where your funds are held.

WILL DIVIDENDS BE PAID ON THE COMMON STOCK?

The Board of Directors of Pilgrim Bancshares, Inc. will have the authority to declare dividends on the common stock, subject to statutory and regulatory requirements. We do not intend to pay dividends until such time as we are generating sufficient net income to support our planned growth and the payment of such dividends.

HOW WILL THE COMMON STOCK BE TRADED?

We expect that the common stock of Pilgrim Bancshares, Inc. will be quoted on the OTC Bulletin Board (OTCBB) upon conclusion of the offering. However, no assurance can be given that an active and liquid market will develop.

ARE EXECUTIVE OFFICERS AND DIRECTORS OF PILGRIM BANK PLANNING TO PURCHASE STOCK?

Yes! The executive officers and directors of Pilgrim Bank plan to purchase, in the aggregate, $862,000 worth of stock or approximately 6.15% of the common stock offered at the minimum of the offering range.

MUST I PAY A COMMISSION?

No. You will not be charged a commission on the purchase of common stock in the conversion. However, if you are purchasing through a brokerage account (including through a self-directed IRA), your broker may charge fees associated with your account.

MAY I CHANGE MY MIND AFTER I PLACE AN ORDER TO SUBSCRIBE FOR STOCK?

No. After receipt your executed stock order form may not be modified, amended or rescinded without our consent, unless the offering is not completed by             , 2014, in which event subscribers may be given the opportunity to increase, decrease or rescind their orders for a specified period of time.

IF I PURCHASE SHARES IN THE OFFERING, WHEN WILL I RECEIVE MY STOCK CERTIFICATE?

Our transfer agent will send stock certificates by first class mail as soon as possible after completion of the stock offering. Although the shares of Pilgrim Bancshares, Inc. common stock will have begun trading, brokerage firms may require that you have received your stock certificate(s) prior to selling your shares. Your ability to sell the shares of common stock prior to your receipt of the stock certificate will depend on the arrangements you may make with your brokerage firm.

WHERE TO GET MORE INFORMATION

For additional information please refer to the enclosed prospectus, or call our information hotline at (    )         -        to speak to a representative of Keefe, Bruyette & Woods, Inc. Representatives are available by telephone Monday through Friday, 10:00 a.m. to 4:00 p.m., Eastern Time. The stock information center will be closed on bank holidays.

PILGRIM BANCSHARES LOGO

Dear Friend:

We are pleased to announce that the mutual holding company of Pilgrim Bank, Conhasset Bancshares, MHC, is converting from the mutual to stock form of organization, pursuant to a Plan of Conversion, subject to approval by the depositors of Pilgrim Bank at a Special Meeting of Depositors. Pilgrim Bank will be the wholly-owned subsidiary of a newly formed stock holding company named Pilgrim Bancshares, Inc. In connection with the conversion, Pilgrim Bancshares, Inc. is offering shares of its common stock in a subscription and community offering.

Because we believe you may be interested in learning more about an investment in the common stock of Pilgrim Bancshares, Inc., we are sending you the following materials which describe the conversion and stock offering.

PROSPECTUS: This document provides detailed information about Pilgrim Bank’s operations and the proposed conversion and offering of Pilgrim Bancshares, Inc. common stock.

STOCK ORDER AND CERTIFICATION FORM: This form may be used to purchase stock by returning it with your payment AFTER             , 2014 but before the order deadline of 12:00 noon, Eastern Time, on         . Delivery of an original stock order form (we reserve the right to reject copies or facsimiles) and full payment may be made by overnight courier to the address listed on the top of the stock order form, by hand-delivery to any Pilgrim Bank branch or by mail, using the Stock Order Reply Envelope provided. Please do not mail stock order forms to Pilgrim Bank.

As a friend of Pilgrim Bank, you will have the opportunity to buy common stock directly from Pilgrim Bancshares, Inc. without paying a commission.

If you have any questions regarding the offering, please call our information hotline at (    ) - to speak to a representative of Keefe, Bruyette & Woods, Inc. Representatives are available by telephone Monday through Friday, 10:00 a.m. to 4:00 p.m., Eastern time. The stock information center will be closed on bank holidays.

Sincerely,

Francis E. Campbell

Chairman, President and Chief Executive Officer

The shares of common stock being offered are not deposits or savings accounts and are not insured by the Federal Deposit Insurance Corporation, the Share Insurance Fund or any other governmental agency. An investment in the shares of common stock is subject to investment risks, including possible loss of the principal invested.

This is not an offer to sell or a solicitation of an offer to buy common stock. The offer is made only by the prospectus.

MEETING REMINDER - ATTACHED TO STOCK ORDER FORM

PILGRIM BANK LOGO

Please mark your calendar and plan to attend the Pilgrim Bank Special Meeting of Depositors to be held at             ,             

MA on             ,             , 2014 at         am/ pm.

We urge you to attend.

NOTE: If you are interested in investing in the common stock offering of Pilgrim Bancshares, Inc., all stock orders must be received between             , 2014 and             , 2014.

We are not able to accept orders prior to             , 2014, and all orders must be received by (not postmarked)             , 2014.

Postage paid envelope enclosed.

PILGRIM BANK LOGO

We invite you to attend the Pilgrim Bank Special Meeting of Depositors to be held on             , 2014, at Time, Location Address, City, Massachusetts.

At the meeting you will have the opportunity to vote on approval of the Plan of Conversion whereby Conahasset Bancshares, MHC, the mutual holding company of Pilgrim Bank, will convert from the mutual to the stock form of ownership and of the establishment and funding of a charitable foundation in connection with the conversion.

Your Board of Directors Unanimously

Recommends a Vote ‘‘FOR’’ the Plan of Conversion and “FOR” the establishment and funding of the charitable foundation.

Please mark your calendar and plan to attend the Pilgrim Bank Special Meeting of Depositors on             , 2014.

We urge you to attend.

Thank you,

Francis E. Campbell

Chairman, President and Chief Executive Officer

For further information please call our Information Center at (    )         -        .

Subscription and Community Offering Stock Order Acknowledgment Letter

[PILGRIM BANCSHARES, INC Letterhead]

TEST - FULNAME1

TEST - FULNAME2

TEST - ADDRESS LINE 1

TEST - ADDRESS LINE 2

TEST-CITY, XX 12345

Receipt of Order

This letter is to acknowledge receipt of your order form to purchase common stock offered by Pilgrim Bancshares, Inc. Please check the following information carefully to ensure that we have entered your order correctly. Each order is assigned an order priority described below. Acceptance of your order does not guarantee that you will receive the shares you have ordered. If we receive orders for more shares than we are authorized to sell you may receive all, part, or none of the shares you have ordered. In that event, the shares of common stock you will receive is subject to the allocation provisions of the Plan of Conversion, as well as other conditions and limitations described in the Pilgrim Bancshares, Inc. Prospectus dated             , 2014. Refer to pages     of the Pilgrim Bancshares, Inc. Prospectus for further information regarding subscription priorities. Shares will be allocated first to subscribers in the subscription offering in the order of priority set forth below.

Following completion of the offering, allocation information, when available, will be released as soon as practicable on the following website: https://allocations.kbw.com/

Our records indicate the following: Order Number: Batch Number: Number of Shares Ordered: Purchase Price per Share: Total Order Amount: Order Priority: Stock Registration (please review carefully) TEST - FULNAME1 TEST - FULNAME2 TEST - ADDRESS LINE 1 TEST - ADDRESS LINE 2 TEST-CITY, XX 12345 Ownership: Social Security / Tax ID # XXXXX0123

Subscription Priorities:

• Priority 1: Eligible Account Holders – Depositors with accounts at Pilgrim Bank with aggregate balances of at least $50 as of the close of business on December 31, 2012.

• Priority 2: Supplemental Eligible Account Holders – Depositors with accounts at Pilgrim Bank with aggregate balances of at least $50 as of the close of business on March 31, 2014.

• Priority 3: Pilgrim Bank’s Tax-Qualified Employee Benefit Plans

If this does not agree with your records, or if you have any questions, please call our Stock Information Center at (    )     .

Thank you for your order.

Sincerely,

Pilgrim Bancshares, Inc. - Stock Information Center

NEW SHAREHOLDER WELCOME LETTER

[Pilgrim Bancshares Letterhead – letter accompanies all certificates mailed]

Dear Shareholder:

I would like to welcome you as a shareholder of Pilgrim Bancshares, Inc. A total of                 shares were purchased by investors at $10.00 per share. Thank you for your investment and your confidence in our Company.

Your stock certificate is enclosed. Carefully review the certificate to make sure the registration name and address are correct. If you find an error or have questions about your certificate, please contact Registrar and Transfer Company, our Transfer Agent:

on the web:

www.rtco.com

by mail:

Registrar and Transfer Company

10 Commerce Drive

Cranford, New Jersey 07016

by phone:

1-(800) 368-5948

by email:

info@rtco.com

If the enclosed stock certificate must be forwarded to the Transfer Agent, we recommend that you deliver it using insured, registered mail. If you change your address, please notify the Transfer Agent immediately, so that you will continue to receive all shareholder communications.

If you submitted a check or money order in full or partial payment for your stock order, you have received, or soon will receive, a check. It reflects interest earned at Pilgrim Bank’s statement savings rate, calculated from the date your payment was received until             , 2014.

If your stock order was paid in full or in part by authorizing a withdrawal from a Pilgrim Bank savings or certificate of deposit account(s), the withdrawal was made on             , 2014. Until such date, interest was earned at your account’s applicable contractual deposit account rate, and the interest earned remains in your account.

We expect that Pilgrim Bancshare’s common stock will be quoted on the OTC Bulletin Board. Should you wish to buy or sell Pilgrim Bancshares, Inc. shares in the future, please contact a brokerage firm or other firm offering investment services.

Thank you for sharing in our Company’s future.

Sincerely,

Francis E. Campbell

Chairman, President and Chief Executive Officer

EARLY ORDER RETURN LETTER

(Will accompany any orders received before the allowed order receipt period begins)

PILGRIM BANCSHARES LOGO

Dear:

Thank you for your interest in the common stock offering of Pilgrim Bancshares, Inc. We received the Stock Order and Certification Form you submitted for the purchase of shares in the offering. Unfortunately, we are not able to accept stock orders prior to the Special Meeting of Depositors to be held on             , 2014.

We will begin accepting orders for purchase of shares in the Pilgrim Bancshares, Inc. stock offering beginning on             , 2014, and all stock orders must be received by us prior to the close of the subscription offering at 12:00 noon, Eastern time,             , 2014.

Enclosed with this letter are your Stock Order and Certification Form and any other materials you submitted with your order. We have also provided a pre-addressed, postage pre-paid envelope for your use to submit your order to us once again during the allowed order receipt period,             , 2014 through             , 2014.

If you have any questions regarding the offering, please call our information hotline at (    )             -            to speak to a representative of Keefe, Bruyette & Woods, Inc. Representatives are available by telephone Monday through Friday, 10:00 a.m. to 4:00 p.m., Eastern Time. The stock information center will be closed on bank holidays.

Sincerely,

Francis E. Campbell

Chairman, President and Chief Executive Officer

This notice is neither an offer to sell nor a solicitation of an offer to buy shares of common stock. The offer is made only by the Prospectus. These securities are not deposits or savings accounts and are not insured or guaranteed by the Federal Deposit Insurance Corporation, the Share Insurance Fund, or any other government agency.

BRANCH LOBBY POSTER – BUY (Optional)

******************************

OUR STOCK OFFERING EXPIRES

            , 2014.

We are conducting an offering of shares of our common stock.

UP TO 1,897,500 SHARES

COMMON STOCK

(subject to increase to 2,182,125 shares)

$10.00 Per Share

THIS OFFERING EXPIRES AT 12:00 NOON, EASTERN TIME,

ON             , 2014.

******************************

If you have questions about the stock offering,

call our Stock Information Center, toll-free, at 1-(    )         -        ,

from 10:00 a.m. to 4:00 p.m., Monday through Friday.

Our Stock Information Center is closed on weekends and bank holidays.

PILGRIM BANCSHARES LOGO

This notice is neither an offer to sell nor a solicitation of an offer to buy shares of common stock. The offer is made only by the Prospectus. These securities are not deposits or savings accounts and are not insured or guaranteed by the Federal Deposit Insurance Corporation, the Share Insurance Fund, or any other government agency.

BANK WEBSITE MEETING REMINDER NOTICE – (Optional)

We invite you to attend the Pilgrim Bank

Special Meeting of Depositors to be held on                     .

Our depositors as of             , 2014 will have the opportunity to vote on approval of the Plan of Conversion whereby Pilgrim Bank will convert from the mutual to the stock form of ownership and the establishment and funding of a charitable foundation.

We hope that you will vote “FOR” the Plan of Conversion and “FOR” the establishment and funding of our charitable foundation. If you have questions about voting, please call our Information Center, toll-free, at 1-(    )         -        , Monday through Friday, 10:00 a.m. to 4:00 p.m., Eastern Time.

This notice is neither an offer to sell nor a solicitation of an offer to buy shares of common stock. The offer is made only by the Prospectus. These securities are not deposits or savings accounts and are not insured or guaranteed by the Federal Deposit Insurance Corporation, the Share Insurance Fund, or any other government agency.

Stock Order Reminder Postcard (optional)

The subscription offering ends at 12:00 Noon Eastern Time, on             , 2014.

To purchase shares of Pilgrim Bancshares, Inc. common stock, please return your completed stock order and certification form with payment by the             deadline, but no earlier than             , 2014.

We are not allowed to accept stock orders prior to             , 2014, and all orders must be received between             , 2014 and             , 2014.

For questions, please call (    )         -        .

Thank you in advance for your order.

This notice is neither an offer to sell nor a solicitation of an offer to buy shares of common stock. The offer is made only by the Prospectus. These securities are not deposits or savings accounts and are not insured or guaranteed by the Federal Deposit Insurance Corporation, the Share Insurance Fund, or any other government agency.

TOMBSTONE NEWSPAPER ADVERTISEMENT- (Optional)

[Newspaper ads may be appropriate for some, not all, market areas]

Pilgrim Bancshares LOGO

Proposed Holding Company for Pilgrim Bank

UP TO 1,897,500 SHARES

COMMON STOCK

(subject to increase to 2,182,125 shares)

$10.00 Per Share

Purchase Price

Pilgrim Bancshares, Inc. is conducting an offering of its common stock. Shares may be purchased directly from Pilgrim Bancshares, Inc. without sales commission, during the offering period.

This offering expires at 12:00 noon, Eastern Time, on             , 2014.

To receive a copy of the Prospectus and Stock Order Form,

call our Stock Information Center, toll-free, at 1-(    )         -        ,

from 10:00 a.m. to 4:00 p.m., Eastern Time, Monday through Friday.

Our Stock Information Center is closed on weekends and bank holidays.

This advertisement is neither an offer to sell nor a solicitation of an offer to buy shares of common stock. The offer is made only by the Prospectus. These securities are not deposits or savings accounts and are not insured or guaranteed by the Federal Deposit Insurance Corporation, the Share Insurance Fund, or any other government agency.

PILGRIM BANCSHARES LOGO

Dear Prospective Investor:

We are pleased to announce that the mutual holding company of Pilgrim Bank, Conhasset Bancshares MHC, is converting from the mutual to stock form of organization, pursuant to a Plan of Conversion, subject to approval by the depositors of Pilgrim Bank at a Special Meeting of Depositors. Pilgrim Bank will be the wholly-owned subsidiary of a newly formed stock holding company named Pilgrim Bancshares, Inc. In connection with the conversion, Pilgrim Bancshares, Inc. is offering shares of its common stock in a subscription and community offering.

We have enclosed the following materials to help you learn more about an investment in the common stock of Pilgrim Bancshares, Inc. Please read and review the materials carefully.

PROSPECTUS: This document provides detailed information about Pilgrim Bank’s operations and the proposed conversion and offering of Pilgrim Bancshares, Inc. common stock.

STOCK ORDER AND CERTIFICATION FORM: This form may be used to purchase stock by returning it with your payment AFTER             , 2014 but before the order deadline of 12:00 noon, Eastern Time, on         . Delivery of an original stock order form (we reserve the right to reject copies or facsimiles) and full payment may be made by overnight courier to the address listed on the top of the stock order form, by hand-delivery to any Pilgrim Bank branch, or by mail, using the Stock Order Reply Envelope provided. Please do not mail stock order forms to Pilgrim Bank.

We invite you and other community members to become stockholders of Pilgrim Bancshares, Inc. Through this offering, you have the opportunity to buy stock directly from Pilgrim Bancshares, Inc. without paying a commission.

If you have any questions regarding the offering, please call our information hotline at (    ) - to speak to a representative of Keefe, Bruyette & Woods, Inc. Representatives are available by telephone Monday through Friday, 10:00 a.m. to 4:00 p.m., Eastern time. The stock information center will be closed on bank holidays.

Sincerely,

Francis E. Campbell

Chairman, President and Chief Executive Officer

The shares of common stock being offered are not deposits or savings accounts and are not insured by the Federal Deposit Insurance Corporation, the Share Insurance Fund or any other governmental agency. An investment in the shares of common stock is subject to investment risks, including possible loss of the principal invested.

This is not an offer to sell or a solicitation of an offer to buy common stock. The offer is made only by the prospectus.

Dear Sir/Madam:

Keefe, Bruyette & Woods, a Stifel Company has been retained by Pilgrim Bancshares, Inc. as selling agent in connection with the offering of Pilgrim Bancshares, Inc. common stock.

At the request of Pilgrim Bancshares, Inc., we are enclosing materials regarding the offering of shares of Pilgrim Bancshares, Inc. common stock. Included in this package is a Prospectus describing the stock offering. We encourage you to read the enclosed information carefully, including the “Risk Factors” section of the Prospectus.

Sincerely,

This letter is neither an offer to sell nor a solicitation of an offer to buy shares of common stock. The offer is made only by the Prospectus. These securities are not deposits or savings accounts and are not insured or guaranteed by the Federal Deposit Insurance Corporation, the Share Insurance Fund, or any other government agency.

EX-99.5

STOCK ORDER FORM	For Internal Use Only
	BATCH #                              ORDER #                           CATEGORY #
	REC’D                                                                      O                              C
SEND OVERNIGHT PACKAGES TO: Pilgrim Bancshares, Inc. Stock Information Center c/o Keefe, Bruyette & Woods 10 S Wacker Dr, Suite 3400 Chicago, IL 60606 Call us toll-free, at
	ORDER DEADLINE & DELIVERY: The Subscription Offering will expire at         , Eastern Time, on         . Your original Stock Order and Certification Form, properly executed and with the correct payment, must be received by us (not postmarked) after              but before             , Eastern Time, on             , or it will be considered void. Stock Order Forms can be delivered by using the enclosed Stock Order Reply Envelope, by overnight delivery to the Stock Information Center address on this form, or by hand delivery to any Pilgrim Bank branches. Do not mail Stock Order Forms to Pilgrim Bank. Faxes or copies of this form are not required to be accepted.

PLEASE PRINT CLEARLY AND COMPLETE ALL APPLICABLE SHADED AREAS. READ THE ENCLOSED STOCK ORDER FORM INSTRUCTIONS (BLUE SHEET) AS YOU COMPLETE THIS FORM.
(1) NUMBER OF SHARES	SUBSCRIPTION PRICE PER SHARE	(2) TOTAL PAYMENT DUE	(4) METHOD OF PAYMENT – DEPOSIT ACCOUNT WITHDRAWAL The undersigned authorizes withdrawal from the Pilgrim Bank deposit account(s) listed below. There will be no early withdrawal penalty applicable for funds authorized on this form. Funds designated for withdrawal must be in the listed account(s) at the time this form is received. IRA and other retirement accounts held at Pilgrim Bank and accounts with check-writing privileges may NOT be listed for direct withdrawal below.
	x $10.00=
Minimum Number of Shares: 25 ($250). Maximum Number of Shares: 20,000 ($200,000). See Stock Order Form Instructions for more information regarding maximum number of shares.
			For Internal Use Only	Pilgrim Bank Deposit Account Number	Withdrawal Amount(s)
(3) METHOD OF PAYMENT – CHECK OR MONEY ORDER
					$
Enclosed is a personal check, bank check or money order made payable to Pilgrim Bancshares, Inc. in the amount of:		$			$
Cash, wire transfers and third party checks will not be accepted for this purchase. Checks and money orders will be cashed upon receipt. Pilgrim Bank line of credit checks may not be remitted as payment.				Total Withdrawal Amount	$
			ATTACH A SEPARATE PAGE IF ADDITIONAL SPACE IS NEEDED.

(5) PURCHASER INFORMATION		ACCOUNT INFORMATION – SUBSCRIPTION OFFERING
Check the one box that applies, as of the earliest eligibility date, to the purchaser(s) listed in Section 9: a.    Depositors of Pilgrim Bank with aggregate balances of $50 or more on deposit as of the close of business on December 31, 2012. b.    Depositors of Pilgrim Bank with aggregate balances of $50 or more on deposit as of the close of business on March 31, 2014. c.    You do not qualify as an eligible depositor under (a) or (b) above, and you are a resident in the Massachusetts towns of Cohasset, Scituate, Hingham, Norwell, Hull, Weymouth, Quincy, Marshfield, Pembroke, Marion, Rochester, Mattapoisett, West Wareham, Wareham or Fairhaven. d.    You are placing an order in the Community Offering and you are not a resident of one of the towns listed in (c) above.	If you checked box (a) or (b) under ‘‘Purchaser Information,’’ please provide the following information as of the eligibility date under which purchaser(s) listed in Section 9 below qualify in the Subscription Offering:
		Deposit Account Title (Name(s) on Account)	Pilgrim Bank Account Number
		NOTE: NOT LISTING ALL ELIGIBLE ACCOUNTS, OR PROVIDING INCORRECT OR INCOMPLETE INFORMATION, COULD RESULT IN THE LOSS OF ALL OR PART OF ANY SHARE ALLOCATION. ATTACH A SEPARATE PAGE IF ADDITIONAL SPACE IS NEEDED.
(6) MANAGEMENT Check if you are a Pilgrim Bank or Conahasset Bancshares, MHC
Director         Officer         Employee         Immediate family member, as defined in the Stock Order Form Instructions

(7) MAXIMUM PURCHASER IDENTIFICATION
Check here if you, individually or together with others (see Section 8), are subscribing in the Subscription Offering for the maximum purchase allowed and are interested in purchasing more shares if the maximum purchase limitation(s) is/are increased. If you do not check the box, you will not be contacted and resolicited in the event the maximum purchase limitations are increased.
(8) ASSOCIATES/ACTING IN CONCERT
Check here if you, or any associate or persons acting in concert with you, have submitted other orders for shares in the Subscription Offering. If you check the box, list below all other orders submitted by you or your associates or by persons acting in concert with you. (continued on reverse side of this form)
Name(s) listed in Section 9 on other Stock Order Forms	Number of shares ordered	Name(s) listed in Section 9 on other Stock Order Forms	Number of shares ordered

(9) STOCK REGISTRATION The name(s) and address that you provide below will be reflected in your stock ownership records, and will be used for other communications related to this order. Please PRINT clearly and use full first and last name(s), not initials. If purchasing in the Subscription Offering, you may not add the name(s) of persons/entities who do not have subscription rights or who qualify only in a lower purchase priority than yours. See Stock Order Form Instructions for further guidance.

Individual	Tenants in Common	Uniform Transfers to Minors Act  (for reporting SSN, use minor’s)			FOR TRUSTEE/BROKER USE ONLY:
Joint Tenants	Corporation	Partnership	Trust – Under Agreement Dated	Other	IRA (SSN of Beneficial Owner)             -            -

First Name, Middle Initial, Last Name				Reporting SSN/Tax ID No.
First Name, Middle Initial, Last Name				SSN/Tax ID No.
Street				Daytime Phone #
City	State	Zip	County (Important)	Evening Phone #

(10) ACKNOWLEDGMENT AND SIGNATURE(S)
I understand that, to be effective, this form, properly completed, together with full payment, must be received not earlier than                  and no later than                  Eastern Time, on                         , otherwise this form and all subscription rights will be void. (continued on reverse side of this form)
ORDER NOT VALID UNLESS SIGNED
ONE SIGNATURE REQUIRED, UNLESS SECTION 4 OF THIS FORM INCLUDES ACCOUNTS REQUIRING MORE THAN ONE SIGNATURE TO AUTHORIZE WITHDRAWAL. IF SIGNING AS A CUSTODIAN, TRUSTEE, CORPORATE OFFICER, ETC., PLEASE INCLUDE YOUR FULL TITLE.
Signature (title, if applicable)	Date	Signature (title, if applicable)	Date

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STOCK ORDER FORM – SIDE 2

(8) ASSOCIATES/ACTING IN CONCERT (continued from front of Stock Order Form)

Associate – The term “associate” of a person means:

(1) any corporation or organization, other than Conahasset Bancshares, MHC, Conahasset Bancshares, Inc. Pilgrim Bank, Pilgrim Bancshares, Inc. or a majority-owned subsidiary of these entities, of which the person is a senior officer, partner or beneficial owner of 10% or more of any class of equity securities;

(2) any trust or other estate in which the person has a substantial beneficial interest or serves as a trustee or in a fiduciary capacity, excluding any employee stock benefit plan in which the person has a substantial beneficial interest or serves as trustee or in a fiduciary capacity; and

(3) any relative, by blood or marriage, of the person, who either lives in the same home as the person or who is a trustee, director or officer of Conahasset Bancshares, MHC, Conahasset Bancshares, Inc., Pilgrim Bank or Pilgrim Bancshares, Inc.

Acting in concert – The term “acting in concert” means:

(1) knowing participation in a joint activity or interdependent conscious parallel action towards a common goal whether or not pursuant to an express agreement; or

(2) a combination or pooling of voting or other interests in the securities of an issuer for a common purpose pursuant to any contract, understanding, relationship, agreement or other arrangement, whether written or otherwise.

A person or company that acts in concert with another person or company (“other party”) shall also be deemed to be acting in concert with any person or company who is also acting in concert with that other party, except that any tax-qualified employee stock benefit plan will not be deemed to be acting in concert with its trustee or a person who serves in a similar capacity solely for the purpose of determining whether common stock held by the trustee and common stock held by the employee stock benefit plan will be aggregated. Our directors are not treated as associates of each other solely because of their membership on the Board of Directors.

For purposes of the plan of conversion, our directors are not deemed to be acting in concert solely by reason of their board membership.

(10) ACKNOWLEDGMENT AND SIGNATURE(S) (continued from front of Stock Order Form)

I agree that, after receipt by Pilgrim Bancshares, Inc., this Stock Order Form may not be modified or canceled without Pilgrim Bancshares, Inc. consent, and that if withdrawal from a deposit account has been authorized, the authorized amount will not otherwise be available for withdrawal. Under penalty of perjury, I certify that (1) the Social Security or Tax ID information and all other information provided hereon are true, correct and complete, (2) I am purchasing shares solely for my own account and that there is no agreement or understanding regarding the sale or transfer of such shares, or my right to subscribe for shares, and (3) I am not subject to backup withholding tax [cross out (3) if you have been notified by the IRS that you are subject to backup withholding]. I acknowledge that my order does not conflict with the overall purchase limitation of $200,000 in all categories of the offering combined, for any person or entity, or $300,000 for any person or entity, together with any associate or group of persons acting in concert, as set forth in the Plan of Conversion and the Prospectus dated                     .

Subscription rights pertain to those eligible to subscribe in the Subscription Offering. Subscription rights are only exercisable by completing and submitting a Stock Order Form, with full payment for the shares subscribed for. Federal regulations prohibit any person from transferring or entering into any agreement directly or indirectly to transfer the legal or beneficial ownership of conversion subscription rights, or the underlying securities, to the account of another.

I ACKNOWLEDGE THAT THE SHARES OF COMMON STOCK ARE NOT DEPOSITS OR SAVINGS ACCOUNTS AND ARE NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE SHARE INSURANCE FUND, OR ANY OTHER GOVERNMENT AGENCY.

If anyone asserts that the shares of common stock are federally insured or guaranteed, or are as safe as an insured deposit, I should call the Federal Reserve Bank of Boston.

I further certify that, before subscribing for shares of the common stock of Pilgrim Bancshares, Inc., I received the Prospectus dated, and I have read the terms and conditions described in the Prospectus, including disclosure concerning the nature of the security being offered and the risks involved in the investment, described by Pilgrim Bancshares, Inc. in the “Risk Factors” section, beginning on page     . Risks include, but are not limited to the following:

Risk factors to be inserted from the final prospectus.

By executing this form, the investor is not waiving any rights under federal or state securities laws, including the Securities Act of 1933 and the Securities Exchange Act of 1934.

See Front of Stock Order Form è

PILGRIM BANCSHARES, INC.

STOCK INFORMATION CENTER:                         

STOCK ORDER FORM INSTRUCTIONS – SIDE 1

Sections (1) and (2) – Number of Shares and Total Payment Due. Indicate the Number of Shares that you wish to subscribe for and the Total Payment Due. Calculate the Total Payment Due by multiplying the Number of Shares by the $10.00 price per share. The minimum purchase is 25 shares ($250). The maximum allowable purchase by a person or entity (or individuals exercising subscription rights through a single qualifying account held jointly) is 20,000 shares ($200,000). Further, no person or entity, together with any associate or group of persons acting in concert, may purchase more than 30,000 shares ($300,000) in all categories of the offering combined. Please see the Prospectus section entitled “The Conversion and Offering – Limitations on Purchases of Shares” for more specific information. By signing this form, you are certifying that your order does not conflict with these purchase limitations.

Section (3) – Method of Payment – Check or Money Order. Payment may be made by including with this form a personal check, bank check or money order made payable directly to Pilgrim Bancshares, Inc. These will be deposited upon receipt. The funds remitted by personal check must be available within the account(s) when your Stock Order Form is received. Indicate the amount remitted. Interest will be calculated at Pilgrim Bank’s statement savings rate from the date payment is received until the offering is completed, at which time a subscriber will be issued a check for interest earned. Please do not remit cash, a Pilgrim Bank line of credit check, wire transfers or third party checks for this purchase.

Section (4) – Method of Payment – Deposit Account Withdrawal. Payment may be made by authorizing a direct withdrawal from your Pilgrim Bank deposit account(s). Indicate the account number(s) and the amount(s) you wish withdrawn. Attach a separate page, if necessary. Funds designated for withdrawal must be available within the account(s) at the time this Stock Order Form is received. Upon receipt of this order, we will place a hold on the amount(s) designated by you – the funds will be unavailable to you for withdrawal thereafter. The funds will continue to earn interest within the account(s) at the applicable contractual deposit account rate. The interest will remain in the accounts when the designated withdrawal is made, at the completion of the offering. There will be no early withdrawal penalty for withdrawal from a Pilgrim Bank certificate of deposit (CD) account. Note that you may NOT designate accounts with check-writing privileges. Please submit a check instead. If you request direct withdrawal from such accounts, we reserve the right to interpret that as your authorization to treat those funds as if we had received a check for the designated amount, and we will immediately withdraw the amount from your checking account(s). Additionally, you may not designate direct withdrawal from Pilgrim Bank IRA or other retirement accounts. For guidance on using retirement funds, whether held at Pilgrim Bank or elsewhere, please contact the Stock Information Center as soon as possible – preferably at least two weeks before the                      offering deadline. See the Prospectus section entitled “The Conversion and Offering – Procedure for Purchasing Shares – Using Retirement Account Funds.” Your ability to use retirement account funds to purchase shares cannot be guaranteed and depends on various factors, including timing constraints and the institution where those funds are currently held.

Section (5) – Purchaser Information. Please check the one box that applies to the purchaser(s) listed in Section 9 of this form. Purchase priorities in the Subscription Offering are based on eligibility dates. Boxes (a) and (b) refer to the Subscription Offering. List all Pilgrim Bank account numbers that the purchaser(s) had ownership in as of the applicable eligibility date. Include all forms of account ownership (e.g. individual, joint, IRA, etc.). If purchasing shares for a minor, list only the minor’s eligible accounts. If purchasing shares for a corporation or partnership, list only that entity’s eligible accounts. Attach a separate page, if necessary. Failure to complete this section, or providing incorrect or incomplete information, could result in a loss of part or all of your share allocation in the event of an oversubscription. Boxes (c) and (d) refer to the Community Offering. Orders placed in the Subscription Offering will take priority over orders placed in the Community Offering. See the Prospectus section entitled “The Conversion and Offering—Subscription Offering and Subscription Rights” and “—Community Offering” for further details about the Subscription and Community Offerings.

Section (6) – Management. Check the box if you are a Pilgrim Bank or Conahasset Bancshares, MHC trustee, director, officer or employee, or a member of their immediate family. Immediate family includes spouse, parents, siblings and children who live in the same house as the trustee, director, officer or employee.

Section (7) – Maximum Purchaser Identification. Check the box, if applicable. Failure to check the box will result in you not receiving notification in the event the maximum purchase limit(s) is/are increased. If you checked the box but have not subscribed for the maximum amount in the Subscription Offering, you will not receive this notification.

Section (8) – Associates/Acting in Concert. Check the box, if applicable, and provide the requested information. Attach a separate page if necessary.

Section (9) – Stock Registration. Clearly PRINT the name(s) in which you want the shares registered and the mailing address for all correspondence related to your order. IMPORTANT: Subscription rights are non-transferable. If placing an order in the Subscription Offering, you may not add the names of persons/entities who do not have subscription rights or who qualify only in a lower purchase priority than yours. A Social Security or Tax ID Number must be provided. The first number listed will be identified with the stock certificate for tax reporting purposes. Listing at least one phone number is important in the event we need to contact you about this form. NOTE FOR FINRA MEMBERS: If you are a member of the Financial Industry Regulatory Authority (“FINRA”), a person affiliated or associated with a FINRA member, you may have additional reporting requirements. Please report this subscription in writing to the applicable department of the FINRA member firm within one day of payment thereof.

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PILGRIM BANCSHARES, INC.

STOCK INFORMATION CENTER:                     

STOCK ORDER FORM INSTRUCTIONS – SIDE 2

Form of Stock Ownership. For reasons of clarity and standardization, the stock transfer industry has developed uniform stockholder registrations for issuance of stock. Beneficiaries may not be named on stock registrations. If you have any questions on wills, estates, beneficiaries, etc., please consult your legal advisor. When registering stock, do not use two initials – use the full first name, middle initial and last name. Omit words that do not affect ownership such as “Dr.” or “Mrs.” Check the one box that applies.

Buying Stock Individually – Used when shares are registered in the name of only one owner. To qualify in the Subscription Offering, the individual named in Section 9 of the Stock Order Form must have had an eligible deposit account at Pilgrim Bank as of the close of business on                     .

Buying Stock Jointly – To qualify in the Subscription Offering, the persons named in Section 9 of the Stock Order Form must have had an eligible deposit account at Pilgrim Bank as of the close of business on                     .

Joint Tenants – Joint Tenancy (with Right of Survivorship) may be specified to identify two or more owners where ownership is intended to pass automatically to the surviving tenant(s). All owners must agree to the sale of shares.

Tenants in Common – May be specified to identify two or more owners where, upon the death of one co-tenant, ownership of the stock will be held by the surviving co-tenant(s) and by the heirs of the deceased co-tenant. All owners must agree to the sale of shares.

Buying Stock for a Minor – Shares may be held in the name of a custodian for a minor under the Uniform Transfer to Minors Act. To qualify in the Subscription Offering, the minor (not the custodian) named in Section 9 of the Stock Order Form must have had an eligible deposit account at Pilgrim Bank as of the close of business on                     .

The standard abbreviation for custodian is “CUST.” The Uniform Transfer to Minors Act is “UTMA.” Include the state abbreviation. For example, stock held by John Smith as custodian for Susan Smith under the MA Uniform Transfer to Minors Act, should be registered as John Smith CUST Susan Smith UTMA-MA (list only the minor’s social security number).

Buying Stock for a Corporation/Partnership – On the first name line, indicate the name of the corporation or partnership and indicate the entity’s Tax ID Number for reporting purposes. To qualify in the Subscription Offering, the corporation or partnership named in Section 9 of the Stock Order Form must have had an eligible deposit account at Pilgrim Bank as of the close of business on                     .

Buying Stock in a Trust/Fiduciary Capacity – Indicate the name of the fiduciary and the capacity under which the fiduciary is acting (for example, “Executor”), or name of the trust, the trustees and the date of the trust. Indicate the Tax ID Number to be used for reporting purposes. To qualify in the Subscription Offering, the entity named in Section 9 of the Stock Order Form must have had an eligible deposit account at Pilgrim Bank as of the close of business on                     .

Buying Stock in a Self-Directed IRA (for trustee/broker use only) – Registration should reflect the custodian or trustee firm’s registration requirements. For example, on the first name line, indicate the name of the brokerage firm, followed by CUST or TRUSTEE. On the second name line, indicate the name of the beneficial owner (for example, “FBO John SMITH IRA”). You can indicate an account number or other underlying information and the custodian or trustee firm’s address and department to which all correspondence should be mailed related to this order, including a stock certificate. Indicate the TAX ID Number under which the IRA account should be reported for tax purposes. To purchase shares in the Subscription Offering, the beneficial owner named in Section 9 of this form must have had an eligible deposit account at Pilgrim Bank as of the close of business on                     .

Section (10) – Acknowledgment and Signature(s). Sign and date the Stock Order Form where indicated. Before you sign, please carefully review the information you provided and read the acknowledgment. Verify that you have printed clearly and completed all applicable shaded areas on the Stock Order Form. Only one signature is required, unless any account listed in Section 4 requires more than one signature to authorize a withdrawal.

Please review the Prospectus carefully before making an investment decision. Deliver your completed Stock Order Form, with full payment or deposit account withdrawal authorization, so that it is received (not postmarked) after             , but before             , Eastern Time, on                     . Stock Order Forms can be delivered by using the enclosed postage paid Stock Order Reply Envelope, by overnight delivery to the Stock Information Center address on the front of the Stock Order Form, or by hand-delivery to any Pilgrim Bank branches. Please do not mail Stock Order Forms to Pilgrim Bank. We are not required to accept Stock Order Forms that are found to be deficient or incorrect, or that do not include proper payment or the required signature. Faxes or copies of this form are not required to be accepted.

OVERNIGHT DELIVERY can be made to the Stock Information Center address provided on the front of the Stock Order Form.

QUESTIONS? Call our Stock Information Center, toll-free, at                     , from 10:00 a.m. to 4:00 p.m., Eastern Time, Monday through Friday. The Stock Information Center is not open on weekends or bank holidays.

EX-99.6

Exhibit 99.6

March 11, 2014

Board of Trustees

Conahasset Bancshares, MHC

Boards of Directors

Conahasset Bancshares, Inc.

Pilgrim Bancshares, Inc.

Pilgrim Bank

40 South Main Street

Cohasset, Massachusetts 02025

Re: Plan of Conversion

Conahasset Bancshares, MHC.

Members of the Boards:

All capitalized terms not otherwise defined in this letter have the meanings given such terms in the Plan of Conversion the (“Plan”) adopted by the Board of Trustees of Conahasset Bancshares, MHC (the “MHC”). The Plan provides for the conversion of the MHC into the stock form of organization. Pursuant to the Plan, the MHC will be merged into Conahasset Bancshares, Inc. (the “Mid-Tier”) and the Mid-Tier will merge with Pilgrim Bancshares, inc., a newly-formed Maryland corporation (the “Company”) with the Company as the resulting entity, and the MHC will no longer exist. As part of the Plan, the Company will sell shares of common stock in an offering that will represent the ownership interest in the Mid-Tier now owned by the MHC.

We understand that in accordance with the Plan, depositors will receive rights in a liquidation account maintained by the Company representing the amount of (i) the MHC’s ownership interest in the Mid-Tier’s total stockholders’ equity as of the date of the latest statement of financial condition used in the prospectus plus (ii) the value of the net assets of the MHC as of the date of the latest statement of financial condition of the MHC prior to the consummation of the conversion (excluding its ownership of the Mid-Tier). The Company shall continue to hold the liquidation account for the benefit of Eligible Account Holders and Supplemental Eligible Account Holders who continue to maintain deposits in Pilgrim Bank. The liquidation accounts are designed to provide payments to depositors of their liquidation interests in the event of liquidation of Pilgrim Bank (or the Company and Pilgrim Bank).

In the unlikely event that either Pilgrim Bank (or the Company and Pilgrim Bank) were to liquidate after the conversion, all claims of creditors, including those of depositors, would be paid first, followed by distribution to depositors as of December 31, 2012 and depositors as of the last day of the calendar quarter immediately preceding the date on which the Federal Reserve Board (“FRB”) approves the MHC’s application for conversion, of the liquidation account maintained by the Company. Also, in a complete liquidation of both entities, or of Pilgrim Bank, when the Company has insufficient assets (other than the stock of Pilgrim Bank), to fund the liquidation account distribution due to Eligible Account Holders and Supplemental Eligible Account Holders and Pilgrim Bank has positive net worth, Pilgrim Bank shall immediately make a distribution to fund the Company’s remaining obligations under the liquidation account. The Plan further provides that if the Company is completely liquidated or sold apart from a sale or liquidation of Pilgrim Bank, then the rights of Eligible Account Holders and Supplemental Eligible Account Holders in the liquidation account maintained by the Company shall be surrendered and treated as a liquidation account in Pilgrim Bank, the bank liquidation account and depositors shall have an equivalent interest in such bank liquidation account, subject to the same rights and terms as the liquidation account.

Washington Headquarters Three Ballston Plaza 1100 North Glebe Road, Suite 600 Arlington, VA 22201 www.rpfinancial.com   Telephone: (703) 528-1700 Fax No.: (703) 528-1788 Toll-Free No.: (866) 723-0594 E-Mail: mail@rpfinancial.com

RP^® Financial, LC.

Board of Trustees

Boards of Directors

March 11, 2014

Page 2

Based upon our review of the Plan and our observations that the liquidation rights become payable only upon the unlikely event of the liquidation of Pilgrim Bank (or the Company and Pilgrim Bank), that liquidation rights in the Company automatically transfer to Pilgrim Bank in the event the Company is completely liquidated or sold apart from a sale or liquidation of Pilgrim Bank, and that after two years from the date of conversion and upon written request of the FRB, the Company will transfer the liquidation account and depositors’ interest in such account to Pilgrim Bank and the liquidation account shall thereupon become the liquidation account of Pilgrim Bank no longer subject to the Company’s creditors, we are of the belief that: the benefit provided by the Pilgrim Bank liquidation account supporting the payment of the liquidation account in the event the Company lacks sufficient net assets does not have any economic value at the time of the transactions contemplated in the first and second paragraphs above. We note that we have not undertaken any independent investigation of state or federal law or the position of the Internal Revenue Service with respect to this issue.

Sincerely,

RP^® Financial, LC.

EX-99.7

Exhibit 99.7

January 8, 2014

Conahasset Bancshares, MHC

Conahasset Bancshares, Inc.

Pilgrim Bank

40 South Main Street

Cohasset, MA 02025

Attention:	Francis E. Campbell
	Chairman, President & CEO

Ladies and Gentlemen:

This letter confirms the engagement of Keefe, Bruyette & Woods, Inc. (“KBW”) to act as conversion agent to Conahasset Bancshares, MHC (the “MHC”), Conahasset Bancshares, Inc. (the “Bancshares”), Pilgrim Bank (the “Bank”) and, upon formation, the Holding Company (as defined below) in connection with the MHC’s proposed conversion and reorganization from the current mutual holding company form of organization to a stock holding company form of organization (such conversion and reorganization together, the “Conversion”) pursuant to the MHC’s Plan of Conversion (the “Plan of Conversion”). In accordance with the Plan of Conversion and in order to effect the Conversion, it is contemplated that (i) the Bancshares will convert from a Maryland corporation to a Delaware corporation, (ii) the MHC will merge into the Bancshares, (iii) the Bancshares will merge into a new stock holding company (the “Holding Company”), (iv) the Holding Company will offer and sell shares of its common stock (the “Common Stock”) initially to eligible persons in a Subscription Offering, with any remaining unsold shares offered (A) to the general public in a direct community offering (the “Community Offering”) and (B) if necessary, through a syndicate of broker-dealers organized by KBW (a “Syndicated Community Offering”) (the Subscription Offering, the Community Offering and any Syndicated Community Offering are collectively referred to herein as the “Offerings”) and (v) the Bank will become a wholly-owned subsidiary of the Holding Company. The MHC, the Bancshares, the Bank and the Holding Company are collectively referred to herein as the “Company”. This letter sets forth the terms and conditions of our engagement.

1. Conversion Agent Services

As Conversion Agent, KBW will provide the following services, as the Company may reasonably request.

Conahasset Bancshares, MHC

Conahasset Bancshares, Inc.

Pilgrim Bank

January 8, 2014

Page 2 of 6

1. Consolidation of Accounts and Development of a Central File, including, but not limited to the following:

• Consolidate accounts having the same ownership and separate the consolidated file information into necessary groupings to satisfy mailing requirements;

• Create the master file of account holders as of key record dates; and

• Provide software for the operation of the Company’s Stock Information Center, including subscription management and vote solicitation efforts.

2. Preparation of Vote Solicitation plans and procedures and Special Meeting Services with respect to a Special Meeting of Members to approve the Plan of Conversion and a Special Meeting of Corporators to approve the MHC Merger, including, but not limited to the following:

• Identify all members eligible to vote at the Special Meeting of Members in accordance with the Company’s Articles of Organization;

• Assist the Company’s financial printer with labeling of information statements, materials for voting and subscribing for stock;

• Provide support for any follow-up mailings to members, as needed, including reminders and additional solicitation materials;

• Vote tabulation; and

• Assist the Inspector of Election for the Company’s Special Meeting of Members and Special Meeting of Corporators, if requested and the matters presented thereat are not contested.

3. Subscription and Community Offering Services and Stock Information Center Management, including, but not limited to the following:

• Provide experienced KBW representatives registered with the Financial Industry Regulatory Authority (“FINRA”) to manage and supervise the Stock Information Center (the “Center”);

• Administer the Center, pursuant to which all substantive investor-related matters will be handled by employees of KBW;

• Train and supervise Center staff assisting with order processing;

• Assist in educating Company personnel about the Offerings, their roles and relevant securities laws pertaining to the Offerings;

• Assist in establishing recordkeeping and reporting procedures;

• Assist the Company’s financial printer with labeling of stock offering materials for delivery to eligible subscribers;

• Provide support for any follow-up mailings to members and corporators, as needed, including additional solicitation materials;

• Perform stock order form processing and production of daily reports and analysis;

• Provide supporting account information to the Company’s legal counsel for ‘blue sky’ research and applicable registration;

Conahasset Bancshares, MHC

Conahasset Bancshares, Inc.

Pilgrim Bank

January 8, 2014

Page 3 of 6

• Assist the Company’s transfer agent with the generation and mailing of stock certificates or statements of ownership; and

• Perform interest and refund calculations and provide a file to enable the Company or its transfer agent to generate interest and refund checks and 1099-INT reporting as appropriate.

2. Fees

For the Conversion Agent services outlined above, the Company agrees to pay KBW a fee of $20,000. This fee is based upon the requirements of current banking regulations, the Conversion as currently contemplated, and the expectation that member data will be processed as of three key record dates. All fees under this agreement shall be payable as follows: (a) $5,000 payable upon execution of this agreement, which shall be non-refundable; and (b) the balance upon the completion of the Offerings.

3. Expenses

In addition to any fees that may be payable to KBW hereunder, the Company agrees to reimburse KBW, upon request made from time to time, for its reasonable out-of-pocket expenses incurred in connection with its engagement hereunder, regardless of whether the Offerings are consummated, including, all costs of operating the Stock Information Center, including hiring temporary personnel, if necessary, travel, lodging, food, telephone, postage, forms and supplies, and other similar expenses, which will not exceed $15,000 without the Company’s consent (which consent shall not be unreasonably withheld, conditioned or delayed); provided however that the Company acknowledges and agrees that such expense cap may be increased by an additional amount, not to exceed $5,000, for additional out-of-pocket expenses in the event a resolicitation of the Offerings should occur. The provisions of this paragraph are not intended to apply to or in any way impair the indemnification provisions of this letter.

4. Reliance on Information Provided

The Company agrees to provide KBW with such information (the “Information”) as KBW may reasonably require in performance of its services under this agreement. The Company recognizes and confirms that KBW (a) will use and rely on and assume the accuracy and completeness of the Information in performing the services contemplated by this agreement without having independently verified or analyzed the accuracy or completeness of same, and (b) does not assume responsibility or liability for the accuracy or completeness of the Information or to conduct any independent verification or any appraisal or physical inspection of properties or assets.

Conahasset Bancshares, MHC

Conahasset Bancshares, Inc.

Pilgrim Bank

January 8, 2014

Page 4 of 6

5. Limitations

The Company acknowledges and agrees that KBW, as Conversion Agent hereunder, (a) shall have no duties or obligations other than the contractual obligations to the Company specifically set forth herein; (b) will be regarded as making no representations and having no responsibilities as to the validity, sufficiency, value or genuineness of any order form or any stock certificates or the shares represented thereby, and will not be required to and will make no representations as to the validity, value or genuineness of the offer; (c) shall not be obliged to take any legal action hereunder which might in its judgment involve any expense or liability, unless it shall have been furnished with an indemnity satisfactory to it; and (d) may rely on and shall be protected in acting in reliance upon any certificate, instrument, opinion, notice, letter, telex, telegram, or other document or security delivered to it and in good faith believed by it to be genuine and to have been signed by the proper party or parties.

The Company also agrees neither KBW, nor any of its affiliates nor any officer, director, employee or agent of KBW or any of its affiliates, nor any person controlling KBW or any of its affiliates, shall be liable to any person or entity, including the Company and any purchaser or potential purchaser of Common Stock in the Offerings, by reason of any error of judgment, or for any act done by it in good faith, or for any mistake of law or fact in connection with this agreement and the performance hereof, unless caused by or arising primarily out of KBW’s bad faith or gross negligence. The foregoing agreement shall be in addition to any rights that KBW, the Company or any Indemnified Party (as defined herein) may have at common law or otherwise, including, but not limited to, any right to contribution.

Anything in this agreement to the contrary notwithstanding, in no event shall KBW be liable for special, indirect or consequential loss or damage of any kind whatsoever (including but not limited to lost profits), even if KBW has been advised of the likelihood of such loss or damage and regardless of the form of action.

6. Indemnification

The Company agrees to indemnify and hold harmless KBW and its affiliates, the respective partners, directors, officers, employees, and agents of KBW and its affiliates and each other person, if any, controlling KBW or any of its affiliates and each of their successors and assigns (KBW and each such person being an “Indemnified Party”) to the fullest extent permitted by law, from and against any and all losses, claims, damages and liabilities, joint or several, to which such Indemnified Party may become subject under applicable federal or state law, or otherwise, related to or arising out of the engagement of KBW pursuant to, and the performance by KBW of the services contemplated by, this letter, and will reimburse any Indemnified Party for all expenses (including counsel fees and expenses) as they are incurred, including expenses incurred in connection with investigation, preparing for or defending any such action or claim whether or not in connection with pending or threatened

Conahasset Bancshares, MHC

Conahasset Bancshares, Inc.

Pilgrim Bank

January 8, 2014

Page 5 of 6

litigation, or any action or proceeding arising therefrom, whether or not KBW is a Party. The Company will not be liable under the foregoing indemnification provision to the extent that any loss, claim, damage, liability or expense is found in a final judgment by a court of competent jurisdiction to have resulted primarily from KBW’s bad faith, willful misconduct or gross negligence. The indemnification obligations set forth herein shall not apply to the Bank, solely to the extent that such indemnification by the Bank would constitute a covered transaction under Section 23A of the Federal Reserve Act, as amended.

If the indemnification provided for in the foregoing paragraph is judicially determined to be unavailable (other than in accordance with the terms hereof) to any person otherwise entitled to indemnity in respect of any losses, claims, damages or liabilities referred to herein, then, in lieu of indemnifying such person hereunder, the Company shall contribute to the amount paid or payable by such person as a result of such losses, claims, damages or liabilities (and expenses relating thereto) (i) in such proportion as is appropriate to reflect the relative benefits to the Company, on the one hand, and KBW, on the other hand, of the engagement provided for in this Agreement or (ii) if the allocation provided for in clause (i) above is not available, in such proportion as is appropriate to reflect not only the relative benefits referred to in such clause (i) but also the relative fault of each of the Company and KBW, as well as any other relevant equitable considerations; provided, however, in no event shall KBW’s aggregate contribution to the amount paid or payable exceed the aggregate amount of fees actually received by KBW under this Agreement. For the purposes of this Agreement, the relative benefits to the Company and to KBW of the engagement under this Agreement shall be deemed to be in the same proportion as (a) the total value paid or contemplated to be paid or received or contemplated to be received by the Company in the Conversion and the Offerings that are the subject of the engagement hereunder, whether or not consummated, bears to (b) the fees paid or to be paid to KBW under this Agreement. For the sole purpose of enforcing and otherwise giving effect to the indemnification and contribution provisions of this agreement, the Company hereby consents to personal jurisdiction and service and venue in any court in which any claim which is subject to this agreement is brought against KBW or any other indemnified party.

The Company agrees that it will not, without the prior written consent of KBW, settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not KBW is an actual or potential party to such claim, action, suit, or proceeding) unless such settlement, compromise or consent includes an unconditional release of KBW from all liability arising out of such claim, action, suit or proceeding.

7. Definitive Agreement

This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and can be altered only by written consent signed by the parties. This Agreement

Conahasset Bancshares, MHC

Conahasset Bancshares, Inc.

Pilgrim Bank

January 8, 2014

Page 6 of 6

shall be construed and enforced in accordance with the laws of the State of New York, without regard to the conflicts of laws principles thereof. Any right to trial by jury with respect to any claim or action arising out of this agreement or conduct in connection with the engagement is hereby waived by the parties hereto.

If the foregoing correctly sets forth our mutual understanding, please so indicate by signing and returning the original copy of this letter to the undersigned.

Very truly yours,
KEEFE, BRUYETTE & WOODS, INC.
By:	/s/ Patricia A. McJoynt
	Patricia A. McJoynt
	Managing Director

Conahasset Bancshares, MHC

Conahasset Bancshares, Inc.

Pilgrim Bank

By:	/s/ Francis E. Campbell	Date:	1/9/2014
	Francis E. Campbell
	Chairman, President & CEO