NewAlliance Reports Fourth Quarter Earnings of $10.9 Million

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

New Haven, Connecticut, January 29, 2008 – NewAlliance Bancshares, Inc. (NYSE: NAL), the holding company for NewAlliance Bank, today announced net income of $10.9 million or $0.11 per diluted share for the fourth quarter of 2007, level with fourth quarter 2006 diluted earnings per share of $0.11. Core earnings, which are exclusive of merger and acquisition charges and a tax reserve adjustment, were $12.0 million, or $0.12 per diluted share, up 6% from the prior year quarter’s earnings of $11.4 million, or $0.11 per diluted share.

Peyton R. Patterson, Chairman, President and Chief Executive Officer, stated, “We are very pleased that our prudent credit practices, strong capital and expense management have positioned us well in this turbulent environment.”

Net income was $23.8 million or $0.23 per diluted share, for the twelve months ended December 31, 2007 compared to $48.8 million or $0.49 per diluted share for the twelve month period ended December 31, 2006. Results for 2007 were adversely impacted by the previously reported loss on a restructuring of the securities portfolio and tax reserve adjustments relating back to the establishment of the NewAlliance Foundation in 2004.

Core earnings for the twelve months ended December 31, 2007, which exclude merger and acquisition charges, a loss on the restructuring of the securities portfolio and tax reserve adjustments, were $47.4 million, or $0.46 per diluted share. Comparative core earnings for the twelve months ended December 31, 2006 were $49.8 million, or $0.50 per diluted share. Results of 2006 were negatively impacted by $3.4 million in merger and acquisition charges and favorably by $1.9 million due to the change in the accounting for certain limited partnerships to the equity method from the cost method of accounting.

The Company also announced that its Board of Directors voted today to pay a quarterly dividend of $0.065 per share for the quarter ended December 31, 2007, level with the dividend paid following the third quarter. The dividend will be paid on February 19, 2008 to shareholders of record on February 8, 2008.

Highlights:

“Earnings from interest income increased substantially over the third quarter. This was due to the positive impact on the margin from our portfolio restructuring in prior quarters and the increase in average loan balances as we continue our expansion in Connecticut and Massachusetts. The strong growth in the quarter was somewhat masked by the slope of the yield curve and intense deposit competition,” said Ms. Patterson.

NewAlliance’s net interest margin for the quarter ended December 31, 2007 was 2.49%, level with the third quarter. On a linked quarter basis, the average yield on loans increased one basis point to 6.14% from 6.13% and the yield on securities increased 20 basis points to 5.34% from 5.14%. The quarterly average rate paid on deposits increased two basis points to 3.47% at year end from 3.45% at the end of the third quarter.

Total loans were $4.73 billion at December 31, 2007 compared to $4.67 billion at September 30, 2007, an increase of $54.5 million. Total deposits were $4.37 billion at year end compared to $4.29 billon at September 30, 2007, an increase of $80.8 million.

Non-interest expense for the fourth quarter ended December 31, 2007 was up 4.1% to $40.2 million from $38.6 million at the quarter end September 30, 2007. The current quarter increase in non-interest expense is mainly driven by salaries and employee benefits attributable to accruals for incentive payouts which had the effect of offsetting the decline experienced in the third quarter. Adjusting for this timing difference, non-interest expenses would have been flat with the third quarter.

Asset quality remained strong during the fourth quarter ended December 31, 2007. Nonperforming loans to total loans were 0.35% as compared to 0.42% in the prior quarter. Nonperforming assets to total assets were 0.21% as compared to 0.24% for the same period. Net charge-offs did increase slightly to $1.5 million and, when combined with the growth in the portfolio, caused the Company to record a $2.3 million provision during the quarter.

“I indicated in prior quarters that we steered a course that has avoided the loan quality problems which have beset much of the industry. I believe our asset quality indicators bear that out. NewAlliance does not originate or invest in sub prime mortgage loans or other securities collateralized by sub prime loans,” said Ms. Patterson.

The Company’s book value per share at December 31, 2007 was $12.93, up from $12.71 at the end of the third quarter. Tangible book value per share was $7.56, an increase from $7.45 at September 30, 2007. Stockholders’ equity at December 31, 2007 was $1.41 billion.

At December 31, 2007 NewAlliance Bancshares, the parent company of NewAlliance Bank, had $8.21 billion in assets and operated 88 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 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.

A replay of the webcast and call will be available after 12 Noon that day through February 13, 2008. To access the replay, dial 1-877-344-7529, passcode 414733#.

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.

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News Source : NewAlliance Reports Fourth Quarter Earnings of $10.9 Million