March 17, 2008

Dear Stockholder:

We cordially invite you to attend the Annual Meeting of Stockholders of Brookline Bancorp, Inc. (the “Company”).  The Annual Meeting will be held at the Brookline Holiday Inn, 1200 Beacon Street, Brookline, Massachusetts 02446, at 10:00 a.m. on April 17, 2008.

The enclosed Notice of the Annual Meeting and Proxy Statement describe the formal business to be transacted.  During the Annual Meeting we will also report on the operations of the Company.  Directors and officers of the Company will be present to respond to any questions that stockholders may have.  Also enclosed for your review is our Annual Report to Stockholders, which contains detailed information concerning the activities and operating performance of the Company.

The business to be conducted at the Annual Meeting consists of the election of four directors to the Board of Directors of the Company and the ratification of the appointment of KPMG LLP as the independent registered public accounting firm for the Company for the year ending December 31, 2008.  For the reasons set forth in the Proxy Statement, the Board of Directors recommends a vote “FOR” the election of directors and “FOR” the ratification of the appointment of the Company’s independent registered public accounting firm.

On behalf of the Board of Directors, we urge you to sign, date and return the enclosed proxy card as soon as possible, even if you currently plan to attend the Annual Meeting.  This will not prevent you from voting in person, but will assure that your vote is counted if you are unable to attend the meeting.  Your vote is important, regardless of the number of shares that you own.

Sincerely,

Brookline Bancorp, Inc.

160 Washington Street

Brookline, Massachusetts 02445

March 17, 2008

Dear Brookline Bancorp, Inc. Stockholder:

The 2008 Annual Meeting of Stockholders for Brookline Bancorp, Inc. will be held the Brookline Holiday Inn, 1200 Beacon Street, Brookline, Massachusetts 02446, at 10:00 a.m. on April 17, 2008. 

Enclosed is the Notice of the Annual Meeting, which states the matters to be acted upon at the Annual Meeting.

This year, you may access the following proxy materials at: http://www.brooklinebank.com/site/about_investor/2007_annual_report_2008_proxy_statement.html
(i) Notice of the Annual Meeting, (ii) the 2007 Annual Report to Stockholders and (iii) the Annual Meeting Proxy Statement.

Brookline Bancorp, Inc.

160 Washington Street

Brookline, Massachusetts 02445

(617) 730-3500

NOTICE OF

ANNUAL MEETING OF STOCKHOLDERS

To Be Held On April 17, 2008

Notice is hereby given that the Annual Meeting of Brookline Bancorp, Inc. (the “Company”) will be held at the Brookline Holiday Inn, 1200 Beacon Street, Brookline, Massachusetts 02446 at 10:00 a.m. on April 17, 2008.

A Proxy Card and a Proxy Statement for the Annual Meeting are enclosed.

The Annual Meeting is for the purpose of considering and acting upon:

1.               the election of four directors to the Board of Directors;

2.               the ratification of the appointment of KPMG LLP as the independent registered public accounting firm for the Company for the year ending December 31, 2008; and

such other matters as may properly come before the Annual Meeting, or any adjournments thereof.  The Board of Directors is not aware of any other business to come before the Annual Meeting.

Any action may be taken on the foregoing proposals at the Annual Meeting on the date specified above, or on any date or dates to which the Annual Meeting may be adjourned.  Stockholders of record at the close of business on March 11, 2008 are the stockholders entitled to vote at the Annual Meeting and any adjournments thereof.

A list of stockholders entitled to vote at the Annual Meeting will be available at the Company’s Main Office, 160 Washington Street, Brookline, Massachusetts 02445, for the 10 days immediately prior to the Annual Meeting.  It also will be available for inspection at the meeting itself.

EACH STOCKHOLDER, WHETHER HE OR SHE PLANS TO ATTEND THE ANNUAL MEETING, IS REQUESTED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD WITHOUT DELAY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.  ANY PROXY GIVEN BY THE STOCKHOLDER MAY BE REVOKED AT ANY TIME BEFORE IT IS EXERCISED.  A PROXY MAY BE REVOKED BY FILING WITH THE SECRETARY OF THE COMPANY A WRITTEN REVOCATION OR A DULY EXECUTED PROXY BEARING A LATER DATE.  ANY STOCKHOLDER PRESENT AT THE ANNUAL MEETING MAY REVOKE HIS OR HER PROXY AND VOTE PERSONALLY ON EACH MATTER BROUGHT BEFORE THE ANNUAL MEETING.  HOWEVER, IF YOU ARE A STOCKHOLDER WHOSE SHARES ARE NOT REGISTERED IN YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM YOUR RECORD HOLDER IN ORDER FOR YOU TO VOTE PERSONALLY AT THE ANNUAL MEETING.

March 17, 2008

PROXY STATEMENT

Brookline Bancorp, Inc.

160 Washington Street

Brookline, Massachusetts 02445

(617) 730-3500

ANNUAL MEETING OF STOCKHOLDERS

April 17, 2008

This Proxy Statement is furnished in connection with the solicitation of proxies on behalf of the Board of Directors of Brookline Bancorp, Inc. (the “Company”) to be used at the Annual Meeting of Stockholders of the Company (the “Annual Meeting”), which will be held at the Brookline Holiday Inn, 1200 Beacon Street, Brookline, Massachusetts 02446, on April 17, 2008, at 10:00 a.m., and all adjournments of the Annual Meeting.  The accompanying Notice of Annual Meeting of Stockholders and this Proxy Statement are first being mailed to stockholders on or about March 17, 2008.

Stockholders who execute proxies in the form solicited hereby retain the right to revoke them in the manner described below.  Unless so revoked, the shares represented by such proxies will be voted at the Annual Meeting and all adjournments thereof.  Proxies solicited on behalf of the Board of Directors of the Company will be voted in accordance with the directions given thereon.  Where no instructions are indicated, validly executed proxies will be voted “FOR” the proposals set forth in this Proxy Statement for consideration at the Annual Meeting.

The Board of Directors knows of no additional matters that will be presented for consideration at the Annual Meeting.  Execution of a proxy, however, confers on the designated proxy holders discretionary authority to vote the shares in accordance with their best judgment on such other business, if any, that may properly come before the Annual Meeting or any adjournments thereof.

Proxies may be revoked by sending written notice of revocation to the Secretary of the Company at the address shown above, delivering to the Company a duly executed proxy bearing a later date, or attending the Annual Meeting and voting in person. However, if you are a stockholder whose shares are not registered in your own name, you will need appropriate documentation from your record holder to vote personally at the Annual Meeting. The presence at the Annual Meeting of any stockholder who had returned a proxy shall not revoke such proxy unless the stockholder delivers his or her ballot in person at the Annual Meeting or delivers a written revocation to the Secretary of the Company prior to the voting of such proxy.

Holders of record of the Company’s common stock, par value $0.01 per share (the “Common Stock”), as of the close of business on March 11, 2008 (the “Record Date”) are entitled to one vote for each share then held, except as described below.  As of the Record Date, the Company had 63,584,403 shares issued and 58,236,270 shares outstanding.  The presence in person or by proxy of a majority of the outstanding shares of Common Stock entitled to vote is necessary to constitute a quorum at the Annual Meeting.  Broker non-votes and proxies marked ABSTAIN will be counted for purposes of determining that a quorum is present.  In the event there are not sufficient votes for a quorum, or to approve or ratify any matter being presented at the time of the Annual Meeting, the Annual Meeting may be adjourned in order to permit the further solicitation of proxies.

In accordance with the provisions of the Company’s Certificate of Incorporation, recordholders of Common Stock who beneficially own in excess of 10% of the outstanding shares of Common Stock (the “Limit”) are not entitled to any vote with respect to the shares held in excess of the Limit.  The Company’s Certificate of Incorporation authorizes the Board of Directors (i) to make all determinations necessary to implement and apply the Limit, including determining whether persons or entities are acting in concert, and (ii) to demand that any person who is reasonably believed to beneficially own stock in excess of the Limit supply information to the Company to enable the Board of Directors to implement and apply the Limit.

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As to the election of directors, the proxy card being provided by the Board of Directors enables a stockholder to vote FOR the election of the four nominees proposed by the Board of Directors or to WITHHOLD AUTHORITY to vote for the nominees being proposed.  Directors are elected by a plurality of votes cast, without regard to either broker non-votes or proxies as to which the authority to vote for the nominees being proposed is withheld.

As to the ratification of the independent registered public accounting firm, the proxy card being provided by the Board of Directors enables a stockholder to: (i) vote FOR the proposal; (ii) vote AGAINST the proposal; or (iii) ABSTAIN from voting on the proposal.  The ratification of the independent registered public accounting firm must be approved by the affirmative vote of a majority of the votes cast without regard to broker non-votes or proxies marked ABSTAIN.

Proxies solicited hereby will be returned to the Company and will be tabulated by an Inspector of Election designated by the Company’s Board of Directors.

Persons and groups who beneficially own in excess of five percent of the Common Stock are required to file certain reports with the Securities and Exchange Commission (the “SEC”) regarding such ownership.  The following table sets forth, as of the Record Date, the shares of Common Stock beneficially owned by each person who was the beneficial owner of more than five percent of the Company’s outstanding shares of Common Stock, including shares owned by its directors and executive officers.

(1)          A person is deemed to be the beneficial owner, for purposes of this table, of any shares of Common Stock if he has shared voting or investment power with respect to such security, or has a right to acquire beneficial ownership at any time within 60 days from the Record Date.  As used herein, “voting power” is the power to vote or direct the voting of shares and “investment power” is the power to dispose or direct the disposition of shares.  Includes all shares held directly as well as by spouses and minor children, in trust and other indirect ownership, over which shares the named individuals effectively exercise sole or shared voting and investment power.

(2)          Calculated by dividing the number of shares in the second column of this table by the total shares of common stock outstanding at the Record Date (58,236,270 shares).

(3)          Based exclusively on a Schedule 13G filed by Third Avenue Management LLC on February 14, 2008.

(4)          Based exclusively on a Schedule 13G filed by Dimensional Fund Advisors LP on February 6, 2008.

(5)          Based exclusively on a Schedule 13G/A filed by Private Capital Management, L.P. on February 14, 2008.

(6)          Based exclusively on a Schedule 13G/A filed by Barclays Global Investors, N.A. on January 5, 2008.

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The Company’s Board of Directors currently is composed of 14 members.  The Company’s bylaws provide that approximately one-third of the Directors are to be elected annually.  Directors of the Company are generally elected to serve for a three-year period and until their respective successors shall have been elected and shall qualify. The Board of Directors has nominated to serve as directors, George C. Caner, Jr., Richard P. Chapman, Jr., William V. Tripp, III and Peter O. Wilde, each of whom is currently a member of the Board of Directors and each of whom has been nominated to serve for a three-year period and until his successor has been elected and shall qualify.

The table below sets forth certain information regarding the composition of the Company’s Board of Directors, including the terms of office of Board members.  It is intended that the proxies solicited on behalf of the Board of Directors (other than proxies in which the vote is withheld as to one or more nominees) will be voted at the Annual Meeting for the election of the nominees identified below.  If the nominee is unable to serve, the shares represented by all such proxies will be voted for the election of such substitute as the Board of Directors may recommend.  At this time, the Board of Directors knows of no reason why any of the nominees might be unable to serve, if elected.  Except as indicated herein, there are no arrangements or understandings between any nominee and any other person pursuant to which such nominee was selected.

(1)     The mailing address for each person listed is 160 Washington Street, Brookline, Massachusetts 02445.

(2)     Except for Mr. Doyle, Mr. Hackett and Mr. McGlynn, reflects initial appointment to the Board of Trustees of the Company’s mutual predecessor, Brookline Bank (the “Bank”). With the exception of Messrs. Aronowitz, Caner, Plimpton and Ms. Vaule, all directors of the Company serve as directors of the Bank.

(3)     See definition of “beneficial ownership” in the table in “Security Ownership of Certain Beneficial Owners.”  The shares of Common Stock in this column include 1,955,225 shares in total and by individual the following shares which may be acquired by the persons indicated pursuant to the exercise of stock options within 60 days of the Record Date:  Mr. Caner — 69,674; Mr. Chapman — 699,557; Mr. Tripp —

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      99,609; Mr. Wilde — 99,609; Mr. McGlynn — none; Mr. Aronowitz — 36,693; Mr. Doyle — none; Mr. Peck — 339,350; Mr. Slotnik — 127,478; Mr. Chapin — 70,609; Mr. Hackett — none; Mr. Hall — 79,674; Mr. Plimpton — 31,870; Ms. Vaule — 79,674; Mr. Bechet — 181,428; Mr. Fanger — none; and Mr. Pallin — 40,000.

(4)     Includes 84,968 shares of Common Stock allocated to the accounts of executive officers under the ESOP and excludes the remaining 574,974 shares of Common Stock (representing 1.0% of the shares of Common Stock outstanding as of the Record Date) owned by the ESOP for the benefit of the employees of the Company and the Bank.  Under the terms of the ESOP, shares of Common Stock allocated to the account of employees are voted in accordance with the instructions of the respective employees.  Unallocated shares are voted by the ESOP trustee in the manner calculated to most accurately reflect the instructions it has received from the participants regarding the allocated shares, unless its fiduciary duties require otherwise.

(5)     Includes 115,350 shares of Common Stock awarded to directors and executive officers under the 2003 Recognition and Retention Plan that vest on varying dates from April 17, 2008 through October 16, 2009.  Included in that total are the following shares by individual:  Mr. Caner — 3,000; Mr. Chapman — 40,500; Mr. Tripp — 4,500; Mr. Wilde — 3,900; Mr. McGlynn — none; Mr. Aronowitz — 3,000; Mr. Doyle — none; Mr. Peck — 20,250; Mr. Slotnik — 6,000; Mr. Chapin — 3,600; Mr. Hackett — none; Mr. Hall — 3,000; Mr. Plimpton — 1,500; Ms. Vaule — 3,000; Mr. Bechet — 13,500; Mr. Fanger — none; and Mr. Pallin — 9,600.

(6)     Percent of Class is calculated by dividing the number of shares in the sixth column of this table by the total shares of Common Stock outstanding at the Record Date (58,236,270 shares).

(7)     Mr. McGlynn is not standing for election for another term.

(8)     Includes 375,798 shares pledged to secure a margin loan.

*            Less than three-tenths of 1%.

N/A  Not applicable.

The principal occupation during the past five years of each director and executive officer of the Company is set forth below.  All directors and executive officers have held their present positions for five years unless otherwise stated.

Dennis S. Aronowitz, an attorney, retired in 1996 from Boston University where he served on the faculty of the Law School since 1967 and was Director of the Banking Law Center and Graduate Banking Law programs.  He was a trustee of a number of John Hancock mutual funds until his retirement as a trustee at the end of 2004.

George C. Caner, Jr. serves as the Secretary of the Company.  Mr. Caner is an attorney at the law firm of Ropes & Gray, where he was a partner from 1965 through 1996.  Mr. Caner currently is Of Counsel at the firm.

David C. Chapin became a member of the Executive Committee in 2007.  He is a Principal of Chapin Properties Team Ltd., a real estate investment, property appraisal and management company, and has served in that capacity since August 2004.  From 1998 to August 2004, he was a Principal of T. H. Niles Real Estate Group, Inc., a real estate investment, property appraisal and management company.

Richard P. Chapman, Jr. has served as President of the Bank from 1973 through April 2000 and Chairman and Chief Executive Officer since 1975.  He has served as Chairman, President and Chief Executive Officer of the Company since its organization in 1998.  Mr. Chapman was also a trustee of a number of John Hancock mutual funds until his retirement as a trustee in February 2007, and is an honorary Vice Chairman of the Board of Trustees of Northeastern University.

John J. Doyle, Jr. is a bank consultant who has served as President and Chief Executive Officer of three community banks.  Previously, he was a partner at KPMG LLP from 1969 through 1991.

John A. Hackett was the head of J. J. Ruddy Insurance Agency, Inc. for over 40 years.  Mr. Hackett served as a director of Mystic Financial, Inc. (“Mystic”) that was acquired by the Company on January 7, 2005.  He served as the chair of the Loan, Investment, Compensation and Nominating Committees of Mystic’s subsidiary bank, Medford Co-operative Bank (“Medford”).  He served as a director of Medford for 23 years.

John L. Hall, II is President of Hall Properties, Inc., a real estate investment, management and development company, and has served in that capacity since 1989.

John J. McGlynn became a Director on January 7, 2005.  Mr. McGlynn served as Chairman of the Board of Directors of Mystic and was a Director of Medford since 1966.  From 1998 to 2003, he served as the Director of Special Projects for the Middlesex Sheriff’s Department, which involved overseeing the establishment and operation of community counseling centers.

Charles H. Peck became President of the Bank in April 2000 and is an Executive Vice President of the Company.  He has served as the Senior Loan Officer of the Bank since 1970.

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Hollis W. Plimpton, Jr. is a retired priest who serves Sherrill House and is a priest emeritus for Grace Episcopal Church in Norwood, Massachusetts.

Joseph J. Slotnik has served as a member of the Executive Committee since 1974.  He was designated lead independent director by the Board of Directors of the Company in April 2007.  Mr. Slotnik is a private investor and previously was managing partner of the Boston office of a brokerage and investment firm.

William V. Tripp, III is an attorney at Nixon Peabody LLP and has been with that firm since March 2008.  Previously, he was a partner at Choate Hall & Stewart LLP since 2001 and a partner at Holland & Knight, LLP before 2001.

Rosamond B. Vaule is active in volunteer work for various educational and charitable organizations.

Peter O. Wilde became a member of the Executive Committee in 2006.  He has been President of Tuftane Extrusion Technologies, Inc., a manufacturing company, since 1998.  In 1997, he was Managing Director of Beckwith Bemis Incorporated, a coatings and finishing company.  Previously, he was Vice President of Finance and Administration at Ran Demo, Inc., a materials technology company, and served in that position since 1991.

Executive Officers of the Company Who Are Not Directors

Paul R. Bechet became Executive Vice President of the Bank in 2004 and has served as the Chief Financial Officer of the Bank since June 1997.  He also serves as Senior Vice President and Chief Financial Officer of the Company.  He became Treasurer of the Bank and the Company in January 2002.  Prior to joining the Bank, Mr. Bechet was a certified public accountant and partner at KPMG LLP since 1972.  His primary areas of responsibility include financial reporting and risk management.

Michael J. Fanger is President and Chief Executive Officer of Eastern Funding LLC (“Eastern”), a specialty finance company that he founded in June 1997.  The Company acquired a controlling interest in Eastern on April 13, 2006.  Previously, he was Executive Vice President of Medallion Financial Corp. (“Medallion”) from May 1996 through June 1997 and an officer of affiliates of Medallion from 1987 through June 1997.  He was a loan officer at Shawmut Community Bank, NA, Massachusetts from 1981 to 1986.

David J. Pallin is Senior Vice President of the Bank, a position he has held since November 2002.  His primary area of responsibility is indirect automobile lending.  Prior to joining the Bank, Mr. Pallin was the Collection and Liquidation Overseer at Bankvest Capital Corporation since 2001, Vice President-Automotive Lease and Finance Sales and Marketing Manager at Chevy Chase Bank since 2000 and Senior Vice President and Head of Consumer Lending at USTrust since 1994.

Board Independence

The Board of Directors has determined that, except as to Messrs. Chapman and Peck, each member of the Board of Directors is an “independent director” within the meaning of the Nasdaq corporate governance listing standards.  Messrs. Chapman and Peck are not considered independent because they are executive officers of the Company.

Ownership Reports by Officers and Directors

The Common Stock of the Company is registered with the SEC pursuant to Section 12(g) of the Securities Exchange Act of 1934 (the “Exchange Act”).  The officers and directors of the Company and beneficial owners of greater than 10% of the Company’s Common Stock (“10% beneficial owners”) are required to file reports on Forms 3, 4 and 5 with the SEC disclosing beneficial ownership and changes in beneficial ownership of the Common Stock.  SEC rules require disclosure in the Company’s Proxy Statement or Annual Report on Form 10-K of the failure of an officer, director or 10% beneficial owner of the Company’s Common Stock to file a Form 3, 4 or 5 on a timely basis.  All of the Company’s officers and directors filed these reports on a timely basis in 2007 except for the reporting on March 23, 2007 of an exercise of 19,982 stock options by Mr. Aronowitz on March 9, 2007.

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Meetings and Committees of the Board of Directors

The business of the Boards of Directors of the Company and the Bank is conducted through meetings and activities of the Boards and their committees.  The Board of the Company has the following committees:  Audit Committee, CRA Committee, Compensation Committee, Executive Committee and Nominating Committee.  The Board of the Bank has the following committees:  Audit Committee, Compensation Committee, Executive Committee, Loan Committee, Nominating Committee and Watch Committee.

During the year ended December 31, 2007, the Board of Directors of the Company held five meetings and the Board of Directors of the Bank held 13 meetings.  During the year ended December 31, 2007, no director attended fewer than 75% of the total meetings of the Boards of Directors and committees on which such director served.

The CRA Committee consists of directors Aronowitz, McGlynn, Vaule and Wilde.  The Committee met quarterly during the year ended December 31, 2007 to review the status of the Bank’s CRA program and any reports issued by regulators resulting from their examination of the Bank’s compliance with CRA regulations.

The Compensation Committee of the Company and the Bank consists of directors Chapin, Slotnik and Tripp.  The Committee met two times during the year ended December 31, 2007 to review executive compensation, employment contracts and other contractual matters.  It recommends the compensation to be paid to the Company’s three highest paid officers, reviews the parameters that must be met for bonuses to be paid to those officers and approves the actual amounts of bonuses paid. Each member of the Compensation Committee is considered “independent” as defined in the Nasdaq corporate governance listing standards.  The report of the Compensation Committee is included elsewhere in this Proxy Statement.

The Executive Committee consists of directors Chapin, Chapman, Slotnik and Wilde.  The Committee met 14 times during the year ended December 31, 2007 to exercise general control and supervision of all matters pertaining to the interests of the Company and the Bank, subject at all times to the direction of the Board of Directors.

The Loan Committee consists of directors Chapin, Chapman and Wilde.  The Committee generally meets bi-weekly to review and approve all loan requests over $1,000,000.

The Watch Committee consists of directors Chapman and Slotnik.  The Committee met five times during the year ended December 31, 2007 to review the status of the loan portfolio and non-performing assets, the classification of loans, the adequacy of the allowances for loan losses and unfunded loan commitments, and the valuation of non-performing assets.

The Nominating Committee

The Nominating Committee of the Company and the Bank consists of directors Doyle, Hall and Wilde.  Each member of the Nominating Committee is considered “independent” as defined in the Nasdaq corporate governance listing standards.  The Company’s Board of Directors has adopted a written charter for the Committee, which is available at the Company’s website at www.brooklinebank.com. The Committee met two times during the year ended December 31, 2007.

The functions of the Nominating Committee include the following:

·                  to lead the search for individuals qualified to become members of the Board and to select director nominees to be presented for stockholder approval;

·                  to review and monitor compliance with the requirements for board independence; and

·                  to review the committee structure and make recommendations to the Board regarding committee membership.

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The Nominating Committee identifies nominees by first evaluating the current members of the Board of Directors willing to continue in service.  Current members of the Board with skills and experience that are relevant to the Company’s business and who are willing to continue in service are first considered for re-nomination, balancing the value of continuity of service by existing members of the Board with that of obtaining a new perspective.  If any member of the Board does not wish to continue in service, or if the Committee or the Board decides not to re-nominate a member for re-election, or if the size of the Board is increased, the Committee would solicit suggestions for director candidates from all Board members.  In addition, the Committee is authorized by its charter to engage a third party to assist in the identification of director nominees.  The Nominating Committee would seek to identify a candidate who at a minimum satisfies the following criteria:

·                  has personal and professional ethics and integrity and whose values are compatible with the Company’s;

·                  has had experiences and achievements that have given him or her the ability to exercise and develop good business judgment;

·                  is willing to devote the necessary time to the work of the Board and its committees, which includes being available for Board and committee meetings;

·                  is familiar with the communities in which the Company operates and/or is actively engaged in community activities;

·                  is involved in other activities or interests that do not create a conflict with his or her responsibilities to the Company and its stockholders; and

·                  has the capacity and desire to represent the balanced, best interests of the stockholders of the Company as a group, and not primarily a special interest group or constituency.

The Nominating Committee will also take into account whether a candidate satisfies the criteria for “independence” under the Nasdaq corporate governance listing standards and, if a nominee is sought for service on the Audit Committee, the financial and accounting expertise of a candidate, including whether an individual qualifies as an audit committee financial expert.

Procedures for the Nomination of Directors by Stockholders

The Nominating Committee has adopted procedures for the submission of director nominees by stockholders.  If a determination is made that an additional candidate is needed for the Board of Directors, the Nominating Committee will consider candidates submitted by the Company’s stockholders.  Stockholders can submit the names of qualified candidates for Director by writing to our Corporate Secretary, at 160 Washington Street, Brookline, Massachusetts 02445.  The Corporate Secretary must receive a submission not less than ninety (90) days prior to the date of the Company’s proxy materials for the preceding year’s annual meeting. The submission must include the following information:

·                  the name and address of the stockholder as he or she appears on the Company’s books, and number of shares of the Company’s Common Stock that are owned beneficially by such stockholder (if the stockholder is not a holder of record, appropriate evidence of the stockholder’s ownership will be required);

·                  the name, address and contact information for the candidate, and the number of shares of Common Stock of the Company that are owned by the candidate (if the candidate is not a holder of record, appropriate evidence of the stockholder’s ownership should be provided);

·                  a statement of the candidate’s business and educational experience;

·                  such other information regarding the candidate as would be required to be included in the proxy statement pursuant to SEC Regulation 14A;

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·                  a statement detailing any relationship between the candidate and the Company;

·                  a statement detailing any relationship between the candidate and any customer, supplier or competitor of the Company;

·                  detailed information about any relationship or understanding between the proposing stockholder and the candidate; and

·                  a statement that the candidate is willing to be considered and willing to serve as a Director if nominated and elected.

A nomination submitted by a stockholder for presentation by the stockholder at an annual meeting of stockholders must comply with the procedural and informational requirements described in “Other Matters and Advance Notice Procedures.”

Stockholder Communications with the Board

A stockholder of the Company who wishes to communicate with the Board of Directors or with any individual Director can write to the Corporate Secretary of the Company, at 160 Washington Street, Brookline, Massachusetts 02445, Attention:  Board Administration.  The letter should indicate that the author is a stockholder and if shares are not held of record, should include appropriate evidence of stock ownership.  Depending on the subject matter, management will:

·                  forward the communication to the Director or Directors to whom it is addressed;

·                  attempt to handle the inquiry directly, for example where it is a request for information about the Company or it is a stock-related matter; or

·                  not forward the communication if it is primarily commercial in nature, relates to an improper or irrelevant topic, or is unduly hostile, threatening, illegal or otherwise inappropriate.

At each Board meeting, management will present a summary of all communications received since the last meeting that were not forwarded and make those communications available to the Directors.

Code of Ethics

The Company has adopted a Code of Ethics that the Company’s Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer must adhere to.  In addition, the Company has adopted a Code of Business Conduct and Ethics that is applicable to the officers, directors and employees of the Company.  The Code of Ethics is available on the Company’s website at www.brooklinebank.com.  Amendments to and waivers from the Code of Ethics are also disclosed on the Company’s website.

The Audit Committee

The Audit Committee of the Company and the Bank consists of directors Doyle, Hall and Tripp.  Each member of the Audit Committee is considered “independent” as defined in the Nasdaq corporate governance listing standards and under SEC Rule 10A-3.  The Board of Directors has determined that Mr. Doyle qualifies as an “audit committee financial expert” as that term is used in the rules and regulations of the SEC, primarily through:

·                  his experience as a certified public accountant and partner at KPMG LLP for 22 years;

·                  his educational background which includes an MBA from the Amos Tuck School of Business Administration at Dartmouth College; and

·                  his experience as a bank consultant in serving as the President and Chief Executive Officer of three community banks.

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The Committee reviews the contents of and conclusions in audit reports prepared by the internal auditor and the Company’s independent registered public accounting firm, reviews and approves the annual engagement of the Company’s independent registered public accounting firm, the Company’s audit policy, the internal audit function and the plan of audit coverage, and reviews with management and the Company’s independent registered public accounting firm the Company’s financial statements and internal controls.  The Audit Committee of the Company met six times during the year ended December 31, 2007.   The Company’s Board of Directors has adopted a written charter for the Audit Committee of the Company, the current version of which is available at the Company’s website at www.brooklinebank.com.

Audit Committee Report

In accordance with rules established by the SEC, the Audit Committee of the Company has prepared the following report for inclusion in this Proxy Statement:

As part of its ongoing activities, the Audit Committee has:

·                  reviewed and discussed with management and the independent registered public accounting firm the Company’s audited consolidated financial statements for the year ended December 31, 2007 and the audit of the effectiveness of internal control over financial reporting;

·                  discussed with the independent registered public accounting firm of the Company the matters required to be discussed by Statement on Auditing Standards No. 61, Communications with Audit Committees, as amended; and

·                  received the written disclosures and the letter from the independent registered public accounting firm required by Independence Standards Board Standard No. 1, Independence Discussions with Audit Committees, and has discussed with the independent registered public accounting firm their independence.

Based on the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements and management’s report on internal control over financial reporting be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2007.  In addition, the Audit Committee recommended that the Board of Directors appoint KPMG LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2008, subject to the ratification of this appointment by the stockholders.

This report shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts.

This report has been provided by the Audit Committee:

John J. Doyle, Jr.

John L. Hall, II

William V. Tripp, III

Report of the Compensation Committee of the Board of Directors on Executive Compensation

The Compensation Committee has reviewed and discussed the section entitled “Compensation Discussion and Analysis” with management of the Company.  Based on this review and discussion, the Compensation Committee recommended to the Board of Directors that the “Compensation Discussion and Analysis” be included in this Proxy Statement.

This report shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended, or the Securities

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Exchange Act of 1934, as amended, except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts.

This report has been provided by the Compensation Committee:

David C. Chapin

Joseph J. Slotnik

William V. Tripp, III

Compensation Philosophy and Objectives

The Compensation Committee believes that the most effective executive compensation program is one that is designed to accomplish the following objectives:

·                  Make available a range of compensation elements that can be utilized to attract and retain executives with the talent needed to achieve the Company’s performance goals and to remain competitive relative to the compensation paid to executives with similar responsibilities at similarly-sized financial institutions;

·                  Align the interests of executive officers with the interests of the Company’s stockholders; and

·                  Motivate executives by having part of their overall compensation based on pre-determined performance goals.

To accomplish these objectives, the Committee believes that executive compensation programs should include salary, performance-based cash incentives, equity compensation and a menu of benefit programs typically offered in the market place.

The Committee does not have a written charter.

Role of Executive Officers in Compensation Decisions

The Compensation Committee approves the compensation paid to the Chief Executive Officer, the Chief Financial Officer and the Executive Vice President of the Company.  The performance of the Chief Executive Officer is reviewed annually by the Committee. The Chief Executive Officer presents annually to the Committee his assessment of the performance of the Chief Financial Officer and the Executive Vice President of the Company and his recommendations for their salary adjustments and performance awards. The Committee exercises its discretion in determining the levels of compensation to be paid to those executives.

The Compensation Committee approves equity compensation awards to all officers of the Company. The Committee has given the Chief Executive Officer the authority to determine the non-equity compensation of all officers of the Company other than those officers mentioned in the preceding paragraph.

Performance evaluations are generally measured on criteria applicable to the Company as a whole and to specific responsibilities of each executive. Criteria considered include earnings, return on equity, return on assets, asset quality, capital management, risk management, franchise expansion, corporate governance, expertise and general management skills, and each executive’s contribution to the successful operation of the Company. These criteria are evaluated not only on current year performance but also on the trend of performance over the past few years and within the context of the unusual operating and performance issues inherent in the management of a highly capitalized, converted financial institution. Also taken into consideration are factors outside of the control of management such as the state of the economy, the interest rate environment, regulatory mandates and competition.

Strict numerical formulas are not used to determine changes in compensation. Instead, surveys prepared by banking associations and professional firms on compensation paid to executives performing comparable duties at similarly-sized financial institutions in Massachusetts and the New England region are utilized in the decision process.

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Compensation Elements

Compensation paid to or earned by our executive officers in 2007 consisted primarily of salary, performance-based cash incentives, vested stock awarded several years ago, dividends paid on unvested stock, payment of dividend equivalent rights on unexercised stock options and, in the case of the Chief Executive Officer and the Executive Vice President of the Company, the change in value of their supplemental retirement income benefits. Our executive officers are eligible to participate in benefit programs generally available to employees such as the Employee Stock Ownership Plan, the 401(k) plan, the defined contribution plan, medical and dental benefits, group term life insurance and postretirement medical benefits.

A description of each compensation element and how the amount to be paid or awarded is determined is presented below.

Salary

The salary of executive officers and other members of senior management is reviewed annually. Changes in salary are based on an evaluation of each individual’s responsibilities, skills, experience and performance, and on a comparison to salaries paid to individuals performing comparable duties at similarly-sized financial institutions. Performance takes into consideration each individual’s contribution in the achievement of business and profitability goals.

Non-Equity Incentive Compensation

Executive officers and certain other officers are eligible to receive annual cash incentive payments based on achievement of pre-determined quantitative thresholds approved by the Compensation Committee.  A discussion of incentive payments to individuals who are referred to in this Proxy Statement as “Named Executive Officers” is presented after the Plan-Based Awards table which follows.

Stock Awards and Stock Option Grants

In 2007, no shares of Common Stock were awarded or stock options granted to the executives referred to as “Named Executive Officers” in this Proxy Statement, except for reload options granted in connection with the exercise of stock options through the tendering of previously acquired shares of Common Stock. A reload option represents an additional option to acquire the same number of shares of Common Stock as is used to pay for the exercise of the original option. A reload option is subject to all of the same terms and conditions as the original option except that (i) the exercise price of the shares of Common Stock subject to the reload option is determined at the time the original option is exercised and (ii) such reload option conforms to all provisions of the related stock option plan at the time the original option is exercised.

The Chief Executive Officer, the Chief Financial Officer and the Executive Vice President of the Company were awarded shares of Common Stock and granted stock options in 1999 and 2003. In 2007, in connection with the exercise of stock options through the tendering of previously acquired shares of Common Stock, the following reload options were granted: 71,246 to the Chief Executive Officer, 23,861 to the Chief Financial Officer and 60,556 to the Executive Vice President of the Company. Mr. Pallin was awarded shares of Common Stock and granted stock options in 2003. Mr. Fanger, who joined the Company in 2006, has not been awarded any shares of Common Stock or granted any stock options.

The Company converted from a mutual to a stock form of organization and sold 47% of the Company’s shares in an Offering that occurred in 1998. Shares owned by the Company’s mutual holding company parent were sold in an Offering that occurred in 2002. Subsequent to the completion of these Offerings, the stockholders approved in 1999 a recognition and retention plan (“1999 RRP”) and a stock option plan (“1999 Option Plan”) and, in 2003, another recognition and retention plan (“2003 RRP”) and a stock option plan (“2003 Option Plan”).

The purpose of the 1999 and 2003 RRPs was to have a method to recognize prior service and to provide current and prospective directors, officers and employees with an ownership interest in the Company that would encourage the retention and recruitment of those individuals on whom the success of the Company most depends. The purpose of the 1999 and 2003 Option Plans was to enable the granting of long-term incentive awards to

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directors, officers and employees as a means of enhancing and encouraging the retention and recruitment of those individuals.

The RRPs and Option Plans presented to the Company’s stockholders for approval in 1999 and 2003 stated the maximum number of shares of Common Stock and stock options that could be awarded or granted under the Plans. The totals presented for approval were at amounts within the limits allowed by regulators in transactions involving conversion to a stock form of ownership. After approval of the RRPs and Option Plans by the Company’s stockholders, the Compensation Committee awarded Common Stock and granted stock options to directors and certain officers and employees below the approved limits. The awards and grants were based on, among other things, the years of service to the Company and the role and responsibilities of the recipients in executing the Company’s growth objectives.

Supplemental Retirement Income Agreements

In 1991, the Company entered into non-qualified supplemental retirement income agreements for the benefit of the Chief Executive Officer and the Executive Vice President of the Company. As of December 31, 2007, these individuals had over 35 years and 46 years, respectively, of service to the Company. The agreements were amended in 2006 and 2007.  A description of the amendments and a summary of the benefits payable under the agreements is described under “Pension Benefits”.

Other Benefits

The Company provides a range of other benefits to its officers and employees. The benefits include medical, dental, disability and life insurance coverage, a 401(k) plan, a defined contribution plan and an Employee Stock Ownership Plan. The executives referred to as “Named Executive Officers” in this Proxy Statement participate in these benefits.  A description of the features of these benefits is presented below.

Medical, Dental, Life, Disability and Other Similar Employee Benefit Plans.  The Company provides eligible employees with group life, accidental death and dismemberment, and long-term disability coverage.  For its eligible employees, the Company pays 80% of the monthly premiums for group health coverage and 50% of the monthly premiums for individual and family dental coverage.  Prior to 2008, the Company paid 100% of such premiums for the Chief Executive Officer and the Executive Vice President. Effective January 1, 2008, the percent paid for those executives was reduced to 80%.

The Company pays 100% of the monthly premiums for group life insurance coverage for all employees after the employee has completed one year of service.  The Company also sponsors a flexible benefits plan under which employees can pay their ratable share of health insurance premiums on a pre-tax basis, a medical expense reimbursement plan under which employees can defer their salary on a pre-tax basis to cover the costs of certain medical expenses not reimbursed through insurance or otherwise, and a dependent care plan under which employees can defer their salary on a pre-tax basis to cover qualified dependent care expenses.

                                                Postretirement Medical Benefit Plan.  The Company sponsors a plan that enables employees to obtain postretirement medical benefits.  Upon retirement, the Company will pay part of the annual premium for medical coverage up to a maximum limit of 50% for individuals who were employees of the Bank at December 31, 2003 and who had a minimum number of years of service with the Bank at that date.

401(k) Plan.  The Company maintains a 401(k) plan which is a qualified, tax-exempt profit sharing plan with a salary deferral feature under Section 401(k) of the Code (the “401(k) Plan”).  All employees who have attained age 21 are eligible to participate.

Under the 401(k) Plan, participants are permitted to make salary reduction contributions equal to the lesser of 75% of compensation or a maximum limit which is indexed annually ($15,500 in 2007).  Those plan participants who are age 50 or older are permitted to make salary reduction contributions equal to the lesser of 75% of compensation or a maximum limit which is indexed annually ($20,500 in 2007).

Defined Contribution Plan.  The Company has a defined contribution plan under which it provides annual contributions equal to 5% of each participant’s compensation up to a maximum limit which is indexed annually ($225,000 in 2007).  In order to be fully vested in the Company’s annual contribution, a participant must complete

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three years of service with the Company in which he works 1,000 hours or more.  The plan permits employees to direct the investment of their own accounts into various investment options.

Employee Stock Ownership Plan.  The Company has implemented an Employee Stock Ownership Plan (the “ESOP”).  Employees with at least one year of employment in which they work 1,000 hours or more with the Company and who have attained age 21 are eligible to participate.  Shares of the Company’s Common Stock purchased by the ESOP are held in a suspense account for allocation among participants.

Shares of Common Stock released from the suspense account are allocated among ESOP participants on the basis of compensation in the year of allocation.  Benefits generally vest over a seven-year period.  Benefits generally vest at the rate of 20% per year beginning in the third year of service until a participant is 100% vested after seven years or upon normal retirement (as defined in the ESOP), disability or death of the participant or a change in control (as defined in the ESOP).  A participant who terminates employment for reasons other than death, retirement or disability prior to seven years of credited service forfeits the nonvested portion of his benefits under the ESOP.  Benefits are payable in the form of Common Stock of the Company and cash upon death, retirement, early retirement, disability or separation from service.

Any amendments to the ESOP are approved by the Bank’s Board of Directors.  The ESOP is administered by a committee comprised of the Chief Executive Officer, the Chief Financial Officer and another officer of the Bank.  The ESOP committee has appointed an independent financial institution to serve as trustee of the ESOP.  The ESOP committee may instruct the trustee regarding investment of funds contributed to the ESOP.  The ESOP trustee, subject to its fiduciary duty, must vote all allocated shares held in the ESOP in accordance with the instructions of participating employees.  Under the ESOP, nondirected shares and shares held in the suspense account are voted in a manner calculated to most accurately reflect the instructions it has received from participants regarding the allocated stock so long as such vote is in accordance with the provisions of ERISA.

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Executive Compensation

The following table sets forth for the year ended December 31, 2007 certain information as to the total remuneration paid to or earned by the Chief Executive Officer, Mr. Chapman, the Chief Financial Officer, Mr. Bechet, and the three most highly compensated executive officers of the Company other than Messrs. Chapman and Bechet.  We refer to these executive officers in this Proxy Statement as the “Named Executive Officers”.

SUMMARY COMPENSATION TABLE

(1)   All other compensation is comprised of the following elements:

For the year ended December 31, 2007:

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For the year ended December 31, 2006:

(2) For the year ended December 31, 2006, the actuarial present value of Mr. Chapman’s and Mr. Peck’s accumulated benefits under their supplemental retirement income agreements decreased by $56,230 and $104,310,   respectively.

(3) Mr. Fanger joined the Company on April 13, 2006.  On an annualized basis, Mr. Fanger’s salary in 2006 was $261,000.

(4) The value of perquisites received by Messrs. Chapman, Bechet, Peck and Pallin is not presented in the table as the aggregate value of such perquisites in 2007 was less than $10,000 for each officer.

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The salaries paid to Mr. Chapman, Mr. Bechet and Mr. Peck were approved by the Compensation Committee. In 2007, Mr. Chapman’s salary increased $20,000 (3.8%), Mr. Bechet’s salary increased $12,500 (5.8%) and Mr. Peck’s salary increased $7,500 (3.2%). These increases reflected their general leadership of the Company, the operating results and asset quality performance of the Company, the compensation level of other executives with similar responsibilities at peer banks in New England, and their involvement in strategic initiatives considered by the Company. Mr. Chapman set the salaries for Mr. Pallin and Mr. Fanger. Mr. Pallin received an increase of $6,000 (3.9%) in recognition of the growth of the indirect automobile loan business. Mr. Fanger received an increase of $10,100 (3.9%) in recognition of growth and operating performance of Eastern and his involvement in the smooth integration of Eastern into the Company. The amount of salary shown for Mr. Fanger for 2006 in the SUMMARY COMPENSATION TABLE represents the amount earned in the nine month period ended December 31, 2006. On an annualized basis, Mr. Fanger’s salary in 2006 was $261,000.

The amounts shown above in the column “Stock Awards” represents the expense recognized in the Company’s financial statements for the years ended December 31, 2007 and 2006 based on the grant date fair value per share and the shares awarded to each executive that vested in each of these years. See note 12 to the Company’s consolidated financial statements as of and for the year ended December 31, 2007 for additional information about stock awards.

The non-equity incentive compensation shown in the above table represents the amounts earned based on the actual level of achievement of the benchmarks established. The amounts earned for the year ended December 31, 2007 were paid in 2008. The amounts earned expressed as a percent of 2007 salary were as follows: Mr. Chapman — 23.7%; Mr. Bechet — 25.0%; Mr. Peck — 19.7%; Mr. Pallin — 10.7%; and Mr. Fanger — 7.7%.  See the table and narrative under “Plan-Based Awards” for further information about non-equity incentive compensation.

The amounts shown in the eighth column in the above table and in footnote 2 to the above table represent the changes in the actuarial present value of Mr. Chapman’s and Mr. Peck’s accumulated benefits under their supplemental retirement income agreements as measured at December 31, 2005, December 31, 2006 and December 31, 2007. The reductions in value in 2006 resulted primarily from an amendment to the supplemental retirement income agreements and a change in one of the assumptions used for purposes of calculating actuarial present value.

The amendment is described in the narrative presented after the table “Pension Benefits.”  The change in assumption related to the expected retirement dates of Mr. Chapman and Mr. Peck. Both of these executives continue to serve as executive officers of the Company, despite having reached the normal retirement age of 65. Currently, Mr. Chapman is 73 years old and Mr. Peck is 67 years old. In view of their expected continued service as executive officers of the Company, for purposes of calculating the actuarial present value of their accumulated benefits, their projected date of retirement was extended to February 25, 2009, the expiration date of their employment contracts. The extension of their assumed retirement dates reduced the actuarial present value of their accumulated benefits.

Included in other compensation are dividend equivalent rights. The 1999 and 2003 Option Plans provide Plan participants the right to receive for each vested unexercised stock option held an amount equal to any extraordinary dividend per share of Common Stock declared by the Company. Each Plan includes a separate definition of what constitutes an extraordinary dividend. The extra dividends of $0.20 per share paid to stockholders in each of February and August in 2006 and 2007 met in part the terms and conditions stated in the Plan definitions. The amounts paid to the executives noted in the above table were determined by multiplying the number of vested unexercised stock options held by each executive times the dividend equivalent right per option calculated in accordance with the terms and conditions outlined in the Plans.

Also included in other compensation are dividends paid on unvested shares of Common Stock. Under the 1999 and 2003 RRPs, the holders of awarded unvested Common Stock are entitled to receive for each share held an amount equal to the per share amount of dividends paid to stockholders of the Company.

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Plan-Based Awards

The following table sets forth for the year ended December 31, 2007 certain information as to non-equity incentive plan compensation for the Named Executive Officers.  There were no grants of plan-based equity incentive awards to the Named Executive Officers during the year ended December 31, 2007.

(1) Threshold refers to the amount that would be paid if actual performance only met the minimum level set in the plan to be
 eligible for a cash incentive payment.

(2) Target refers to the amount that would be paid if the specified performance targets were achieved.

(3) Maximum refers to the maximum payment possible under the plan.

(4) Represents the effective date of the contractual arrangement with Mr. Fanger approved by the Board of Directors of the
 Bank in connection with the acquisition of a controlling interest in Eastern.

(5) The threshold and maximum are not specified amounts.  The maximum that can be earned by Mr. Fanger is 50% of an
 incentive pool, the total of which is determined by a formula described in the fourth paragraph following this table.

The Company has a short-term incentive plan to provide a cash benefit beyond base salary to certain executive officers and other officers for the attainment of annual profitability and other business goals. The financial and business goals of Mr. Chapman, Mr. Bechet and Mr. Peck are reviewed and approved annually by the Compensation Committee. The financial and business goals of the other officers included in the plan are set by the Chief Executive Officer. All bonus payments under the plan are approved by the Compensation Committee. The Compensation Committee has the right to amend the plan at any time and to increase or deny payments that otherwise would be called for by the plan.

The maximum cash incentive payment that could be earned for the year ended December 31, 2007 was an amount equal to 30% of base salary in the case of Mr. Chapman and 25% of base salary in the case of Mr. Bechet and Mr. Peck. Of the maximum amount of incentive payment, 80% was based on the degree of achievement of a pre-tax income goal and, in the case of Messrs. Chapman, Peck and Bechet, 20% was based on maintaining the average level of the Bank’s non-performing assets below one-half of 1%.  These benchmarks were approved by the Compensation Committee. For each 1% shortfall in the achievement of the 2007 pre-tax income goal, there was a corresponding 2% reduction in the percentage to be applied to calculate the portion of the total cash incentive payment attributable to the profitability benchmark. If the shortfall in achievement of the pre-tax income goal had exceeded 20%, no cash incentive attributable to the profitability benchmark would have been paid. If the average level of the Bank’s non-performing assets increased to 2%, the portion of the total cash incentive payment attributable to non-performing assets would have been reduced to 25% of the total cash incentive payment attributable to non-performing assets.  If the average level of non-performing assets exceeded 2%, no cash incentive attributable to the non-performing assets benchmark would have been paid.  For the year ended December 31, 2007, 73.77% of the profitability benchmark was achieved and 100% of the asset quality benchmark was achieved.  The Compensation Committee approved payment to Mr. Bechet of the maximum cash incentive for which he was eligible in recognition of his role as the Chief Risk Officer of the Company and his analysis of the Company’s loan portfolios and reserve levels.

The target cash incentive payment that could be earned by Mr. Pallin for the year ended December 31, 2007 was an amount equal to 25% of his base salary. The maximum cash incentive payment that could be earned by Mr. Pallin for the year ended December 31, 2007 was 115% of the target, or an amount equal to 28.75% of his base salary. Of the maximum amount of incentive payment, 90% was based on the level of return on assets achieved and 25% was based on asset quality benchmarks. Return on assets was calculated by dividing pre-tax income relating to the Bank’s indirect automobile lending activity by the average of indirect automobile loans outstanding. The asset quality benchmarks related to the average credit scores of indirect automobile loans in the portfolio, the monthly

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level of loans delinquent over 30 days and the annual rate of net charge-offs of indirect automobile loans. To achieve the maximum amount of incentive payment related to the return on assets benchmark, return on assets would have had to exceed 0.50%. The minimum amount of incentive payment related to the return on assets benchmark would have been reduced to 13.125% of base salary if the return on assets declined to 0.15%. If the return on assets fell below 0.15%, no cash incentive attributable to the return on assets benchmark would have been paid. The total asset quality rating of 25% would have been reduced (a) by 1% for each month in which over 15% of loans originated had average credit scores below 660, (b) by 1% for each month in which loans delinquent over 30 days at the end of a month exceeded 1.5% and (c) by 5% if the annual rate of indirect automobile loan net charge-offs as a percent of the annual average of indirect automobile loans outstanding was between 0.50% and 0.75%, by 15% if the annual rate of net charge-offs was between 0.75% and 1.00% and by 25% if the annual rate of net charge-offs exceeded 1.00%. For the year ended December 31, 2007, 90% of the target profitability benchmark was achieved and 72% of the asset quality benchmarks were achieved. The cash incentive payment to Mr. Pallin for the year 2007 reflected in the SUMMARY COMPENSATION TABLE represents a reduction from the amount resulting from application of the percents achieved with respect to the benchmarks described in this paragraph. The reduction took into consideration the rising trend of delinquencies and charge-offs that occurred in the indirect automobile loan portfolio during 2007.

Mr. Fanger and two other officers of Eastern are entitled to receive annual cash incentive payments based on the profitability of Eastern expressed as a return on equity and the average level of Eastern’s loans delinquent over 30 days. The total cash incentive pool available for payment is determined from calculations relating to the layering of pre-tax income. The portion of pre-tax income to be included in the cash incentive pool increases as the rate of return on equity increases. The maximum portion of pre-tax income that could have been included in the cash incentive pool was 15% of the excess of pre-tax income over a pre-determined pre-tax rate of return on equity; no ceiling existed as to how high the resulting amount for inclusion in the investment pool could be. If the pre-tax rate of return on equity fell below a pre-determined rate, no amount would be placed in the incentive pool. The total cash incentive pool was subject to reduction if the current year average of month end percentages of loans delinquent over 30 days exceeded the average of month end percentages of loans delinquent over 30 days during the three years prior to the current year. The rate of reduction increases as the rate of loans delinquent over 30 days increases. According to Mr. Fanger’s employment agreement, no more than 50% of the incentive pool can be awarded to him. The percent awarded to Mr. Fanger was 22.9% of the incentive pool and was approved by the Compensation Committee. The percent awarded to Mr. Fanger took into consideration the higher level of loan delinquencies and charge-offs experienced by Eastern during 2007. Allocation of the remainder of the incentive pool can be to the two other officers and any other employees of Eastern. Such allocations are subject to the approval of a committee comprised of Mr. Fanger, Mr. Chapman and Mr. Bechet.

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Outstanding Equity Awards at Year End

The following table sets forth information as of December 31, 2007 with respect to outstanding equity awards to the Named Executive Officers.

OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2007

(1)  Based on market value per share of $10.16 at December 31, 2007.

(2)  The Named Executive Officers had no unvested stock options at December 31, 2007.  Their unvested shares of Common Stock at December 31, 2007 will vest as follows:

                Mr. Chapman — 40,500 shares each on January 2, 2008 and January 2, 2009

                Mr. Bechet — 13,500 shares each on January 2, 2008 and January 2, 2009

                Mr. Peck — 20,250 shares each on January 2, 2008 and January 2, 2009

                Mr. Pallin — 4,800 shares each on October 16, 2008 and October 16, 2009

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Option Exercises and Stock Vested

The following table sets forth information with respect to stock options exercised and Common Stock that vested during the year ended December 31, 2007 for the Named Executive Officers.

OPTION EXERCISES AND STOCK VESTED FOR THE YEAR ENDED DECEMBER 31, 2007

(1)             Calculated by multiplying the number of shares vested times the market price per share on the date of vesting.

(2)             71,246 shares of Common Stock previously acquired by Mr. Chapman were used to pay for the exercise of 154,958 options. As a result, the net shares acquired after the tendering of previously acquired shares amounted to 83,712 shares of Common Stock and the following reload options were granted: 46,249 options exercisable at $10.69 per option and 24,997 options exercisable at $10.87 per option. All of these reload options vested as of the date of grant and expire on April 19, 2009. The exercise prices equal the market price of the Company’s Common Stock on the date the reload options were granted.

(3)             23,861 shares of Common Stock previously acquired by Mr. Bechet were used to pay for the exercise of 50,000 shares of Common Stock. (Cash was used to pay for the exercise of 25,000 shares of Common Stock). The net shares acquired after the tendering of previously acquired shares amounted to 26,139 shares of Common Stock. Additionally, 23,861 reload options were granted exercisable at $10.59 per option. The reload options vested as of the date of grant and expire on April 19, 2009. The exercise price equals the market price of the Company’s Common Stock on the date the reload options were granted.

(4)             60,556 shares of Common Stock previously acquired by Mr. Peck were used to pay for the exercise of 130,000 options. As a result, the net shares acquired after the tendering of previously acquired shares amounted to 69,444 shares of Common Stock and the following reload options were granted: 31,839 options exercisable at $10.87 per option and 28,717 options exercisable at $10.36 per option. All of these reload options vested as of the date of grant and expire on April 19, 2009. The exercise prices equal the market price of the Company’s Common Stock on the date the reload options were granted.

Pension Benefits

The following table sets forth information with respect to pension benefits at and for the year ended December 31, 2007 for the Named Executive Officers.

PENSION BENEFITS AT AND FOR THE YEAR ENDED DECEMBER 31, 2007

A number of years ago, the Bank entered into non-qualified supplemental income agreements with Mr. Chapman and Mr. Peck (the “Agreements”). The Agreements provide retirement benefits equal to the sum of 70% of each executive’s average compensation reduced by the actuarial equivalent benefit of any distribution the

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executive, his beneficiary or estate is entitled to receive from prior and existing Bank qualified retirement plans and from one-half of his Social Security benefits.

Average compensation is defined as the average of the compensation received by the executive in the three calendar years in the ten calendar year period prior to the executive’s retirement which produces the highest rate of compensation. On December 21, 2006, an amendment was made to the Agreements to clarify that the annual “compensation” on which the retirement benefit is based include the executive’s annual salary plus non-equity incentive bonus, but exclude all except a limited amount of other items that may be considered compensation for purposes of federal income taxes ($20,000 for Mr. Chapman and $10,000 for Mr. Peck). Additionally, other amendments were made to clarify the assumptions used to calculate actuarial equivalent benefits and to eliminate references to early retirement and disability that were no longer necessary. The change in annual expense resulting from the amendments to the Agreements was not material to the Company’s consolidated financial statements as of and for the years ended December 31, 2007 and 2006.