NewAlliance Reports Second Quarter Earnings of $11.8 Million

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

New Haven, Connecticut, July 29, 2008 – NewAlliance Bancshares, Inc. (NYSE: NAL), the holding company for NewAlliance Bank today announced net income of $11.8 million or $.12 per diluted share for the second quarter of 2008, compared to $12.9 million or $.13 per diluted share for the first quarter of 2008 and ($3.9) million or ($.04) per diluted share for the second quarter of 2007. The difference over the prior year quarter was due primarily to the $22.6 million write-down related to the restructuring of the investment securities portfolio in June 2007. Exclusive of the restructuring of the securities portfolio and merger related charges, net income in the prior year period was $11.1 million, or $.11 per diluted share.

Commenting on NewAlliance’s results for the recent quarter, Peyton R. Patterson, Chairman, President and Chief Executive Officer, stated, “The growth in our net interest margin, loan originations and core deposits, combined with controlled expense levels were the highlights of our second quarter results. Additionally, sound credit quality and a strong capital position continue to illustrate the strength of our institution in an uncertain economy.”

The Company also announced that its Board of Directors voted today to pay a quarterly dividend of $.07 per share for the quarter ended June 30, 2008, level with the dividend paid following the first quarter. The dividend will be paid on August 19, 2008 to shareholders of record on August 8, 2008.

Second Quarter Highlights (2nd QTR 2008 vs. 2nd QTR 2007):

Linked Quarter Highlights (2nd QTR 2008 vs. 1st QTR 2008):

NewAlliance experienced a significant increase in its net interest margin for the quarter ended June 30, 2008 compared to the same period in the prior year and on a linked quarter basis. The margin increased 23 basis points from the prior year and 11 basis points on a linked quarter basis due primarily to an increase in the average balances on interest-earning assets and an emphasis on reducing the average rate paid on interest-bearing deposits. The margin increase from the prior year period also benefited from the securities portfolio restructuring undertaken in June 2007 to reduce the Company’s exposure to fixed rate assets and to increase the yield on the portfolio.

The Company began aggressively reducing deposit costs in the first quarter and was able to realize the full impact of this strategy in the second quarter. NewAlliance experienced a 51 basis point decline on the average rate paid on interest-bearing deposits from the first quarter 2008 mainly due to time deposits which decreased 68 basis points from the prior quarter. Additionally, the Company increased average core deposits $236.6 million during this time period as depositors shifted to core deposits from time deposits. Average time deposits decreased $275.7 million.

The combination of improved net interest margin, growth in loans and growth in core deposits enabled net interest income to grow by $2.2 million from the first quarter and $5.6 million from the same quarter a year ago.

Non-interest expense for the quarter ended June 30, 2008 decreased $920,000 to $41.3 million from $42.2 million for the quarter ended March 31, 2008. Excluding a severance charge in the first quarter of 2008, the increase on a linked quarter basis would have been $224,000, or less than one percent. Compared to the prior year period, non-interest expense increased by approximately $382,000, or less than one percent.

Asset quality remained a strength at NewAlliance as of June 30, 2008 and the Company’s asset quality ratios have been significantly better than many standard industry comparisons.

“We are seeing more stress in the markets we serve due to the slowdown in the economy, rising costs of food and energy, and increases in unemployment. However, NewAlliance continues to benefit from the overall quality of our loan portfolio, which reflects our strong underwriting standards and the strength of our borrowers” said Ms. Patterson.

Net charge-offs increased to $1.3 million from both the prior year period and on a linked quarter basis. When combined with the growth in the portfolio and an increase in nonperforming loans to $26.2 million the Company recorded a $3.7 million provision during the quarter bringing the allowance to $47.8 million. The increase in nonperforming loans is primarily related to two construction loan relationships with residential home developers for condominium projects. “Given the continued upheaval in the economy, charge-offs may continue in future periods, however, we expect the costs to be manageable as we continue to produce solid operating results,” said Don Chaffee, Chief Credit Officer.

“The continued challenge of producing quality loans and deposit growth remains in this uncertain environment and commands our full attention. We remain focused on business growth initiatives, deepening our current customer relationships and acquiring new customers to continue our revenue momentum. Our business model and prudent approach to risk management and asset quality will enable us to successfully manage during this stressed period in the economic cycle,” commented Ms. Patterson.

At June 30, 2008, NewAlliance Bancshares, the parent company of NewAlliance Bank, had $8.26 billion in assets and operated 89 banking offices in Connecticut and Massachusetts and a Tier 1 leverage capital ratio at June 30, 2008 of 11.2%, over double the “well capitalized” benchmark of 5.0%.

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 second quarter earnings at 2:00 p.m. Eastern Time on Wednesday, July 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 4:00 p.m. on July 30 through August 13, 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 420257.

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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