NewAlliance Reports 26% Increase Over Prior YearFourth Quarter Earnings

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Media Contact:
Glenn I. MacInnes
E. V. P. & Chief Financial Officer
NewAlliance Bank
203-789-2795

New Haven, Connecticut, January 26, 2010 – NewAlliance Bancshares, Inc. (“NewAlliance” or the “Company”) (NYSE: NAL), the holding company for NewAlliance Bank, today released the results of its operations for the fourth quarter and full year 2009.

Net income for the quarter was $12.1 million, an increase of 25.7% from $9.6 million for the fourth quarter of 2008. Earnings per diluted share for the quarter were $0.12 compared to $0.10 per diluted share for the prior year fourth quarter.

For the year-ended December 31, 2009, net income improved to $46.4 million, or $0.47 per diluted share, compared to the prior year of $45.3 million, or $0.45 per diluted share, representing a 2.5% increase in net income year over year. Revenue grew to $262.5 million in 2009, a 6.7% increase over 2008. For the fourth quarter of 2009, revenue of $66.8 million was up 11.1% over the fourth quarter of 2008 and down by 2.1% from the linked quarter.

The Company also announced that its Board of Directors voted today to pay a quarterly dividend of $0.07 per share on February 18, 2010 to shareholders of record on February 8, 2010. This will be the Company’s 23rd consecutive quarterly dividend paid.

Peyton R. Patterson, Chairman, President and Chief Executive Officer, stated, “The year 2009 was a stand-out for NewAlliance. Despite a challenging economic environment, we maintained excellent credit quality while improving performance in nearly every other key metric, including revenue growth, market share gains and earnings growth.”

Loan and Deposit Growth

Total loan originations were $1.49 billion, an increase of 15.2% from the prior year. This is primarily attributed to NewAlliance originating an all-time high of $1.04 billion in organic residential mortgages, growing 59.9% over 2008. Loan balances declined 4.0% year over year to $4.76 billion.

During 2009, NewAlliance remained committed to supporting consumers and businesses in its communities. In fact, NewAlliance was once again recognized as a top Small Business Administration lender in Connecticut.

In 2009, the Bank achieved another important milestone, growing deposits to a record high of $5.02 billion, up 13.0% from the prior year, as businesses and consumers sought value and strength from their financial institution.

Notably, the Bank was able to accomplish this deposit growth while substantially decreasing its cost of funds, as the weighted average cost of deposits was reduced by 92 basis points from 2.24% in the month of December 2008 to 1.32% in the month of December 2009.

Revenue and Net Interest Income

Revenue momentum continued into the fourth quarter, growing 11.1% compared to fourth quarter 2008 and 6.7% for the full year.

Net interest income remained strong for the fourth quarter at $53.5 million, an increase of 12.0% over $47.8 million for the same period a year ago. For 2009, net interest income increased 6.9% to $203.2 million from $190.1 million in 2008.

Net interest margin continued an upward trend throughout 2009 increasing to 2.82% from 2.71% for the linked quarter, and up from 2.59% at the end of 2008, the highest margin in over three years. The main driver of the margin increase was the significant reduction in deposit and borrowing costs as well as the steady decrease in borrowings each quarter.

Non-Interest Income and Non-Interest Expense

Non-interest income for the fourth quarter of 2009 was $13.2 million, up 7.6% from $12.3 million in the fourth quarter of 2008. For the full year, non-interest income was up $3.4 million, or 6.0%.

Continued Superior Credit Quality

“Credit quality remained superior through 2009. This reflects our longstanding commitment to originate prudent loans in our footprint and our sound underwriting practices,” stated Glenn MacInnes, Chief Financial Officer.

Capital Management

The tangible common equity ratio and Tier 1 risk-based capital ratio were 11.08% and 19.92%, respectively, and total shareholders’ equity was $1.43 billion at December 31, 2009. The Company’s Tier 1 leverage capital ratio was 11.05% and is more than double the 5% regulatory benchmark that is considered ‘well-capitalized’ for banks. The Bank also has $1.48 billion of unused borrowing capacity.

“We have continued to maintain a solid capital position to strengthen the Company, just as we have maintained good asset quality and sound underwriting practices. Through a very difficult economic period, our customers and our investors demonstrated absolute confidence in our strength and stability,” stated Ms. Patterson.

At December 31, 2009 NewAlliance Bancshares, the parent company of NewAlliance Bank, had $8.43 billion in assets and operated 87 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 fourth quarter earnings at 10 a.m. Eastern Time on Wednesday, January 27, 2010. 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 toll free at 1-800-860-2442. The international dial-in number is 1-412-858-4600, or the toll free Canada dial-in is 1-866-605-3852.

A replay of the webcast and call will be available after 12 Noon on January 27 through February 10, 2010. To access the replay, dial 1-877-344-7529 or for international access dial 1-412-317-0088. The passcode for either replay number is 436475.

The Company also announced today that it will hold its Annual Meeting of Shareholders on Tuesday, April 20, 2010 at 10 a.m. at the Crowne Plaza Cromwell, 100 Berlin Road, Cromwell, Connecticut, for shareholders of record as of March 8, 2010. The meeting will also be available through a live webcast. Details on the webcast will be made available on the Company’s website,www.newalliancebank.com, at least two weeks prior to the Annual Meeting.

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 are essential to a proper understanding of the operating results of the Company’s core business. 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. Future acquisitions are expected to impact the Company’s results in future periods.

Complete Financials

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News Source : NewAlliance Reports 26% Increase Over Prior YearFourth Quarter Earnings