UPDATE: SI Financial to Buy Newport Bancorp for Either $17.55/Share in Cash or 1.5129 Shares of SI

SI Financial Group, Inc. SIFI, the holding company for Savings Institute Bank and Trust Company, and Newport Bancorp, Inc. NFSB, the holding company for Newport Federal Savings Bank, today announced the execution of a definitive merger agreement pursuant to which SI Financial Group will acquire Newport Bancorp. The acquisition will add to SI Financial Group approximately $449.4 million in assets, $355.0 million in loans and $289.7 million in deposits before acquisition accounting adjustments. The transaction will expand SI Financial Group's presence into Newport and Washington Counties in Rhode Island, where Newport Federal Savings Bank operates five full-service banking offices, and will add one branch in Stonington, Connecticut. Under the terms of the merger agreement, stockholders of Newport Bancorp will have the right to elect to receive either $17.55 in cash or 1.5129 shares of SI Financial Group common stock in exchange for each share of Newport Bancorp held by them, subject to proration procedures so that 50 percent of the outstanding Newport Bancorp common shares is converted into SI Financial Group common stock and the balance is converted into the cash consideration. Based upon SI Financial Group's five-day average closing price of $11.60 on March 4, 2013, the transaction is valued at $17.55 per share, or approximately $61.3 million in the aggregate. The transaction is intended to qualify as a tax-free reorganization for federal income tax purposes. SI Financial Group expects the transaction to be immediately accretive to its earnings per share, excluding one-time transaction expenses. The transaction represents 116% of Newport Bancorp's tangible book value and a core deposit premium of 3.0% at December 31, 2012.