·

Total loans increased $52.2 million, or 6.8%, to $814.3 million at September 30, 2007 compared to $762.1 million at December 31, 2006.  Loan growth was concentrated in the commercial real estate (16.4%), commercial and industrial (14.9%), home equity (5.3%) and residential real estate  (5.3%) portfolios.  During the period, construction loans declined 20.4% as several credits converted to fixed-rate commercial mortgages or were paid-in-full.  Origination activity was strong during the first nine months of 2007, reflecting a steady local economy, a relatively stable real estate market, a comparatively low interest rate environment and competitive products and pricing.

·

The ratio of non-performing loans to total loans decreased from 0.17% at December 31, 2006 to 0.12% at September 30, 2007.  Non-performing assets totaled $1.9 million, or 0.18% of total assets, at September 30, 2007 and December 31, 2006.

·

At September 30, 2007, the ratio of the allowance for loan losses to total loans was 0.93% and the ratio of allowance for loan losses to non-performing loans was 755.16%.  Net charge-offs totaled $646,000, or 0.11% of average loans outstanding on an annualized basis, for the nine months ended September 30, 2007.

·

Total deposits increased $37.4 million, or 5.5%, to $723.1 million at September 30, 2007 compared to $685.7 million at December 31, 2006 mainly due to the introduction of new products and services, competitive pricing, targeted promotional activities and the December 2006 opening of our second branch in Westfield, Massachusetts.  Savings account balances declined $2.1 million, or 3.2%, for the nine months ended September 30, 2007 as customers continued to transfer balances to higher-yielding money market and certificate of deposit accounts.  Core deposit balances expanded $8.2 million, or 2.2%, to $374.4 million at September 30, 2007 from $366.2 million at December 31, 2006.

·

Net interest income increased $309,000, or 4.4%, to $7.3 million for the three months ended September 30, 2007 from $6.9 million for the same period last year reflecting growth in earning assets, partially offset by net interest margin compression.  Average earning assets expanded $58.7 million, or 6.3%, mainly due to strong loan growth, partially offset by lower average balances of securities available for sale.  Net interest margin contracted 5 basis points to 2.91% for the third quarter of 2007 compared to the same period in 2006 mainly due to the flat to inverted yield curve, increasingly competitive pricing conditions for loans and deposits and a shift in deposit demand towards higher-yielding money market and time deposit accounts.

·

Non-interest income expanded $118,000, or 9.1%, to $1.4 million for the three months ended September 30, 2007 reflecting growth of $75,000, or 60.0%, in wealth management revenue and a significant decrease in losses on sales of investment securities.  The losses on sales of securities in the third quarter of 2007 were largely the result of a write-down of a corporate bond which was subsequently sold in the fourth quarter of 2007.  For the three months ended September 30, 2006 the Company recognized losses from a restructuring transaction.

·

Non-interest expense increased $552,000, or 9.9%, to $6.1 million for the three months ended September 30, 2007 largely attributable to an increase in stock-based compensation, additional staff, occupancy and other operating costs related to the new Westfield branch opened in the fourth quarter of 2006, and expanded data processing expenses associated with a larger number of loan and deposit accounts.  Stock-based compensation expense increased $239,000 due to restricted stock and stock options awarded in the third and fourth quarters of 2006.

UNITED FINANCIAL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CONDITION (unaudited)
(Dollars in thousands, except par value amounts)
		September 30,				December 31,				September 30,
Assets		2007				2006				2006
Cash and cash equivalents		$	28,491			$	25,419			$	20,134
Securities available for sale, at fair value			183,862				190,237				196,127
Securities held to maturity, at amortized cost			3,684				3,241				3,293
Federal Home Loan Bank of Boston stock, at cost			9,885				9,274				8,740
Time deposits and other short-term investments			1,017				-				-
Loans:
Residential mortgages			336,064				319,108				306,796
Commercial mortgages			204,325				175,564				171,136
Construction loans			43,614				54,759				46,970
Commercial loans			80,140				69,762				67,495
Home equity loans			118,712				112,739				109,154
Consumer loans			31,451				30,181				30,619
Total loans			814,306				762,113				732,170
Net deferred loan costs and fees			1,418				1,285				1,274
Allowance for loan losses			(7,612	)			(7,218	)			(6,880	)
Loans, net			808,112				756,180				726,564
Other real estate owned			880				562				562
Premises and equipment, net			10,564				8,821				8,556
Bank-owned life insurance			6,595				6,304				6,259
Other assets			10,856				9,395				10,459
Total assets		$	1,063,946			$	1,009,433			$	980,694
Liabilities and Stockholders' Equity
Deposits:
Demand		$	104,411			$	97,190			$	97,341
NOW			36,884				37,523				42,103
Savings			63,361				65,475				69,523
Money market			169,788				165,984				164,519
Certificates of deposit			348,674				319,514				319,135
Total deposits			723,118				685,686				692,621
Federal Home Loan Bank of Boston advances			183,852				169,806				137,412
Repurchase agreements			7,519				10,425				5,920
Escrow funds held for borrowers			1,410				1,121				1,324
Capitalized lease obligation			1,900				-				-
Accrued expenses and other liabilities			4,899				4,684				7,093
Total liabilities			922,698				871,722				844,370
Stockholders' Equity:
Preferred stock ($0.01 par value; 5,000,000 shares authorized;
no shares issued and outstanding)			-				-				-
Common stock ($0.01 par value; 60,000,000 shares authorized;
17,205,995 shares issued at September 30, 2007, December 31, 2006
and September 30, 2006)			172				172				172
Additional paid-in capital			77,127				75,520				74,949
Retained earnings			72,190				70,406				70,007
Unearned compensation			(5,439	)			(5,772	)			(5,851	)
Accumulated other comprehensive loss			(888	)			(1,951	)			(2,284	)
Treasury stock, at cost (137,835 shares at September 30, 2007, 51,445
shares at December 31, 2006 and 52,000 shares at September 30, 2006)			(1,914	)			(664	)			(669	)
Total stockholders' equity			141,248				137,711				136,324
Total liabilities and stockholders' equity		$	1,063,946			$	1,009,433			$	980,694

 

UNITED FINANCIAL BANCORP, INC. AND SUBSIDIARY
SELECTED DATA AND RATIOS (unaudited)
(Dollars in thousands, except per share amounts)
		At or For The Quarters Ended
		Sept. 30				Jun. 30				Mar. 31				Dec. 31				Sept. 30
		2007				2007				2007				2006				2006
Operating Results:
Net interest income		$	7,253			$	7,135			$	6,956			$	6,938			$	6,944
Loan loss provision			436				320				284				342				165
Non-interest income			1,412				1,435				1,398				1,399				1,294
Non-interest expenses			6,131				6,575				6,647				6,845				5,579
Net income			1,291				978				834				766				1,513
Performance Ratios (annualized):
Return on average assets			0.50	%			0.38	%			0.33	%			0.31	%			0.62	%
Return on average equity			3.69	%			2.82	%			2.41	%			2.23	%			4.44	%
Net interest margin			2.91	%			2.90	%			2.82	%			2.89	%			2.96	%
Non-interest income to average total assets			0.55	%			0.56	%			0.55	%			0.57	%			0.53	%
Non-interest expense to average total assets			2.38	%			2.58	%			2.62	%			2.77	%			2.30	%
Efficiency ratio (excl gains/losses on sales of securities and loans)			69.63	%			76.34	%			79.70	%			82.10	%			67.72	%
Per Share Data:
Diluted earnings per share		$	0.08			$	0.06			$	0.05			$	0.05			$	0.09
Book value per share		$	8.28			$	8.12			$	8.10			$	8.03			$	7.95
Market price at period end		$	12.55			$	14.14			$	14.85			$	13.80			$	12.93
Risk Profile
Non-performing assets as a percent of total assets			0.18	%			0.29	%			0.13	%			0.18	%			0.26	%
Non-performing loans as a percent of total loans, gross			0.12	%			0.37	%			0.17	%			0.17	%			0.27	%
Allowance for loan losses as a percent of total loans, gross			0.93	%			0.96	%			0.94	%			0.95	%			0.94	%
Allowance for loan losses as a percent of non-performing loans			755.16	%			259.79	%			570.35	%			560.40	%			341.78	%
Equity as a percentage of assets			13.28	%			13.55	%			13.40	%			13.65	%			13.90	%
Average Balances
Loans		$	812,756			$	797,751			$	776,301			$	746,256			$	714,917
Securities			168,498				166,163				180,491				194,786				211,101
Total interest-earning assets			998,336				985,519				985,112				959,649				939,590
Total assets			1,032,225				1,018,509				1,016,369				988,944				969,962
Deposits			720,330				715,173				691,532				688,103				687,398
FHLB advances			156,150				149,853				170,727				150,301				134,833
Capital			139,820				138,896				138,296				137,222				136,279
Average Yields/Rates (annualized)
Loans			6.26	%			6.19	%			6.16	%			6.23	%			6.18	%
Securities			4.79	%			4.46	%			4.39	%			4.28	%			4.16	%
Total interest-earning assets			6.00	%			5.89	%			5.81	%			5.81	%			5.74	%
Savings accounts			0.90	%			0.91	%			0.86	%			0.84	%			0.84	%
Money market/NOW accounts			2.81	%			2.76	%			2.69	%			2.69	%			2.64	%
Certificates of deposit			4.70	%			4.58	%			4.50	%			4.48	%			4.27	%
FHLBB advances			4.90	%			4.75	%			4.74	%			4.79	%			4.69	%
Total interest-bearing liabilities			3.92	%			3.79	%			3.77	%			3.72	%			3.56	%