NewAlliance Reports an 18.3% Increase in Linked Quarter Earnings

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Media Contact:
Merrill B. Blanksteen
Executive Vice President
NewAlliance Bank
203-789-2639

New Haven, Connecticut, April 29, 2008 – NewAlliance Bancshares, Inc. (NYSE: NAL), the holding company for NewAlliance Bank today announced net income of $12.9 million or $.13 per diluted share for the first quarter of 2008, compared to $10.9 million or $.11 per diluted share for the fourth quarter 2007 and $9.3 million or $.09 per diluted share for the first quarter of 2007.

Peyton R. Patterson, Chairman, President and Chief Executive Officer, stated, “We are pleased to see a positive trend in earnings, particularly in the net interest margin despite the precipitous decline in housing market conditions and the continued disruption in the capital markets. Credit quality remains strong with net charge-offs to average loans during the quarter of less than one basis point.”

The Company also previously announced that its Board of Directors voted to increase the quarterly dividend to $.07 per share from $.065 per share, payable on May 16, 2008 to shareholders of record on May 6, 2008. The dividend is up 8% from the prior quarter.

First Quarter Highlights (First Quarter 2008 vs. First Quarter 2007):

Linked Quarter Highlights (First Quarter 2008 vs. Fourth Quarter 2007:

NewAlliance’s net interest margin for the quarter ended March 31, 2008 was 2.56%, an increase of 6 basis points for the same period in the prior year and 7 basis points on a linked quarter basis. The drivers of the increase from the prior year period were the increase in the average balances on interest-earning assets and the securities portfolio restructuring undertaken in the second quarter of 2007. The increase on a linked quarter basis is primarily due to aggressively reducing interest expense on deposits. We experienced a 32 basis point decline on the average rate paid on interest-bearing deposits from the fourth quarter 2007 by increasing core deposits and allowing higher priced time deposits to run off. Average core deposits increased $37.6 million while average time deposits decreased $103.6 million.

Non-interest income for the first quarter ended March 31, 2008 experienced improvement over the prior year ($1.4 million) and on a linked quarter basis ($1.4 million). A common theme in both periods is the marked increase in investment management, brokerage and insurance fees which increased $858,000 from the prior year and a $1.2 million enhancement from the fourth quarter of 2007. These increases are due to the sales of fixed annuity products resulting from a favorable yield curve, strong marketing efforts and the favorable impact of the Connecticut Investment Management, Inc. acquisition in March of last year.

Non-interest expense for the quarter ended March 31, 2008 was up 5.2% to $42.2 million from $40.2 million at the quarter end December 31, 2007. Excluding a severance charge in the first quarter of 2008 for an executive, the increase on a linked quarter basis would have been 2.3% or $932,000, half of which is attributable to a seasonal increase in payroll taxes. Compared to the prior year period, non-interest expense, adjusted for severance and merger related charges, increased slightly by approximately $135,000, or less than one percent.

Asset quality remained a strength at NewAlliance with overall positive coverage ratios at quarter end March 31, 2008. Nonperforming loans to total loans were 0.40% as compared to 0.35% in the prior quarter. Nonperforming assets to total assets were 0.24% as compared to 0.21% for the same period. Net charge-offs experienced a significant decline of approximately $1.4 million to $99,000 from the prior quarter while the coverage ratio of the allowance for loan losses to total loans increased 2 basis points to 0.95%. These positive factors resulted in Management’s decision to decrease the loan loss provision $600,000 from the prior quarter.

“We continue to deliver on the priorities that I outlined at the beginning of the year. We successfully brought down the cost of our deposits, increased non-interest income as a percentage of operating revenue, continued diligent expense control and maintained strong risk management and asset quality. We continue to concentrate on the fundamentals and have made significant strides in a very tumultuous environment. That being said, we are cognizant of the ongoing deterioration in the economic landscape and the challenge of producing quality loan and deposit growth in this environment. This has our attention and focus,” said Ms. Patterson.

At March 31, 2008, NewAlliance Bancshares, the parent company of NewAlliance Bank, had $8.18 billion in assets and operated 89 banking offices in Connecticut and Massachusetts.

NewAlliance Bank provides a full range of consumer and commercial banking products and services, trust services and investment and insurance products and services. The Bank’s website is atwww.newalliancebank.com. Shareholders are particularly urged to monitor the Investor Relations section of the Company’s website.

NewAlliance will hold a conference call on first quarter earnings at 10 a.m. Eastern Time on Wednesday, April 30, 2008. The call is being webcast and will be available at the Investor Relations section of the Company’s website atwww.newalliancebank.com. Individuals can dial in to the call at 1-800-860-2442. The international dial-in number is 1-412-858-4600.

A replay of the webcast and call will be available after 12 Noon on April 30 through May 7, 2008. To access the replay, dial 1-877-344-7529. For international access, dial 1-412-317-0088. The passcode for either replay number is 417773.

NewAlliance will also have a podcast available from its website a few hours after the call for those interested in downloading the conference call onto individual listening devices or laptops.

Note: In discussing financial results, management may refer to certain non-GAAP (Generally Accepted Accounting Principles) measures. The Company’s management believes these non-GAAP measurements, which generally exclude the effects of charges and expenses related to the consummation of mergers and acquisitions and costs related to the integration of merged entities, as well as other unusual events, are essential to a proper understanding of the operating results of the Company’s core business largely because the merger and acquisition related items and their impact on the Company’s performance are difficult to predict. These non-GAAP measurements are not a substitute for operating results determined in accordance with GAAP nor do they necessarily conform to non-GAAP performance measures that may be presented by other companies. A reconciliation of GAAP and non-GAAP information is included in this release.

Statements in this news release, if any, concerning future results, performance, expectations or intentions are forward-looking statements. Actual results, performance or developments may differ materially from forward-looking statements as a result of known or unknown risks, uncertainties and other factors, including those identified from time to time in the Company’s filings with the Securities and Exchange Commission, press releases and other communications. Actual results also may differ based on the Company’s ability to successfully maintain and integrate customers from acquisitions.

The Company intends any forward-looking statements to be covered by the Litigation Reform Act of 1995 and is including this statement for purposes of said safe harbor provisions. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this news release. Except as required by applicable law or regulation, the Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances that occur after the date as of which such statements are made.

The Company’s capital strategy includes deployment of excess capital through acquisitions. The Company’s results reported above reflect the impact of acquisitions completed within the periods reported. Past and future acquisitions are expected to continue to impact the Company’s results in future periods.

Complete Financials

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News Source : NewAlliance Reports an 18.3% Increase in Linked Quarter Earnings