**SECURITIES
        AND EXCHANGE COMMISSION**
 **450
        Fifth Street, N.W.**
 **Washington,
        D.C. 20549**
 
 **FORM
        10-K/A**
 **Amendment
        No. 1**
 
 ý
              Annual
                  Report Pursuant to Section 13 or 15(d) of the Securities Exchange
                  Act of
                  1934 For the Fiscal Year Ended December 31,
                  2006
 **OR**
 o
              Transition
                  Report Pursuant to Section 13 or 15(d) of the Securities Exchange
                  Act of
                  1934
 
 For
        the
        transition period from _______________
        to  ______________________
 
 **Commission
        File No. 000-51369**
 
 **United
        Financial Bancorp, Inc.**
 (Exact
        name of registrant as specified in its charter)
 
 **Federal**
              
              **83-0395247**(State
                  or other jurisdiction of
              
              (I.R.S.
                  Employerincorporation
                  or organization)
              
              Identification
                  Number)**95
                  Elm Street, West Springfield, Massachusetts**
              
              **01089**(Address
                  of Principal Executive Offices)
              
              Zip
                  Code
 
 **(413)
        787-1700**
 (Registrant’s
        telephone number)
 
 Securities
        Registered Pursuant to Section 12(b) of the Act:
 
 **Common
                  Stock, par value $0.01 per share**
              **NASDAQ
                  Global  Select Market**(Title
                  of Class)
              Name
                  of exchange on which registered
 
 Securities
        Registered Pursuant to Section 12(g) of the
        Act:    **None**
 
 Indicate
        by check mark whether the
        Registrant (1) has filed all reports required to be filed by Section 13 or
        15(d)
        of the Securities Exchange Act of 1934 during the preceding twelve months
        (or
        for such shorter period that the Registrant was required to file such reports)
        and (2) has been subject to such requirements for the past 90
        days.  YES  ý     NO  o.
 
 Indicate
        by check mark if disclosure of
        delinquent filers pursuant to Item 405 of Regulation S-K is not contained
        herein, and will not be contained, to the best of Registrant’s knowledge, in
        definitive proxy or information statements incorporated by reference in Part
        III
        of this Form 10-K or any amendments to this Form 10-K.  ý.
 
 Indicate
        by check mark whether the
        Registrant is a large accelerated filer, an accelerated filer, or a
        non-accelerated filer. See definition of “accelerated filer” and “large
        accelerated filer” in Rule 12b-2 of the Exchange Act.
 
 Large
                  accelerated filer o
              Accelerated
                  filer  ý
              Non-accelerated
                  filer o
 
 Indicate
        by check mark whether the
        Registrant is a shell company (as defined in Rule 12b-2 of the Exchange
        Act).  YES  o     NO  ý
 
 Indicate
        by check mark if the Registrant is not required to file reports pursuant
        to
        Section 13 or Section 15(d) of the Securities
        Act.  YES  o     NO  ý
 
 Indicate
        by check mark if the Registrant is a well-known seasoned issuer, as defined
        in
        Rule 405 of the Securities Act. YES  o   NO ý
 
 As
        of March 8, 2007, 17,129,379 shares
        of the Registrant’s Common Stock were outstanding.
 
 The
        aggregate market value of the
        voting and non-voting common equity held by non-affiliates of the Registrant,
        computed by reference to the last sale price on June 30, 2006, as reported
        by
        the NASDAQ Global Select Market, was approximately $96.5 million.
 
 DOCUMENTS
        INCORPORATED BY REFERENCE
 
 1.
        Proxy
        Statement for the Annual Meeting of Stockholders dated March 19, 2007 (Part
        III)








1




**EXPLANATORY
        NOTE: REASON FOR AMENDMENT**
  United
        Financial Bancorp, Inc. (the "Company") is filing this amendment to its Annual
        Report on Form 10-K for the year ended December 31, 2006 in order to (i)
        properly evidence that the Company’s independent accountant has signed the
        reports of independent registered public accounting firm, and (ii) revise
        the
        presentation of earnings per common share.  There have been no changes
        to previously reported total net income or stockholders’ equity for any period
        presented.
  The
        Company is revising its earnings per share presentation in this amendment
        as
        follows: (1) as to the 2005 periods, in calculating earnings per share, the
        Company has included the shares issued to United Mutual Holding Company in
        the
        initial public offering, which was completed on July 12, 2005, as having
        been
        issued and outstanding for the entire period and the shares issued to the
        public
        as having been outstanding from the date of issuance; and (2) for 2004 and
        prior
        periods presented, in calculating earnings per share, the Company has included
        the shares issued to United Mutual Holding Company in the initial public
        offering as having been issued and outstanding for 2004 and for each of the
        prior periods presented.






2





**ITEM
                6.**
            **SELECTED
                FINANCIAL DATA**





The
      summary information presented below at or for each of the fiscal years presented
      is derived in part from the consolidated financial statements of United
      Financial Bancorp, Inc. The following information is only a summary, and should
      be read in conjunction with our consolidated financial statements and notes
      included elsewhere in this Annual Report.




**At
                December 31,****2006**
            
            **2005**
            
            **2004**
            
            **2003**
            
            **2002****(In
                thousands)****Selected
                Financial Condition Data:**Total
                assets
            
            $
            1,009,433
            
            $
            906,513
            
            $
            772,008
            
            $
            737,424
            
            $
            623,563Cash
                and cash equivalents
            
            
            25,419
            
            
            15,843
            
            
            23,233
            
            
            16,144
            
            
            38,779Investment
                securities available-for-sale
            
            
            80,963
            
            
            111,763
            
            
            50,650
            
            
            73,191
            
            
            36,617Investment
                securities held-to-maturity
            
            
            3,241
            
            
            3,325
            
            
            2,498
            
            
            2,175
            
            
            737Mortgage-backed
                securities available-for-sale
            
            
            109,274
            
            
            114,702
            
            
            101,679
            
            
            123,774
            
            
            60,889Loans,
                net(1)
            
            
            756,180
            
            
            630,558
            
            
            569,243
            
            
            497,078
            
            
            463,383Deposits
            
            
            685,686
            
            
            653,611
            
            
            613,672
            
            
            594,748
            
            
            533,704FHLB
                advances
            
            
            169,806
            
            
            101,880
            
            
            86,694
            
            
            76,820
            
            
            29,889Repurchase
                agreements
            
            
            10,425
            
            
            8,434
            
            
            4,317
            
            
            4,218
            
            
            1,146Stockholders'
                equity
            
            
            137,711
            
            
            137,005
            
            
            62,255
            
            
            57,050
            
            
            52,612Non-performing
                assets(2)
            
            
            1,850
            
            
            3,319
            
            
            3,784
            
            
            1,865
            
            
            1,036





**Years
                Ended December 31,****2006**
            
            **2005**
            
            **2004**
            
            **2003**
            
            **2002****(In
                thousands)****Selected
                Operating Data:**Interest
                and dividend income
            
            $
            52,202
            
            $
            43,233
            
            $
            36,532
            
            $
            33,776
            
            $
            36,009Interest
                expense
            
            
            24,647
            
            
            16,206
            
            
            12,148
            
            
            11,583
            
            
            14,703Net
                interest income before provision for loan losses
            
            
            27,555
            
            
            27,027
            
            
            24,384
            
            
            22,193
            
            
            21,306Provision
                for loan losses
            
            
            969
            
            
            917
            
            
            983
            
            
            294
            
            
            398Net
                interest income after provision for loan losses
            
            
            26,586
            
            
            26,110
            
            
            23,401
            
            
            21,899
            
            
            20,908Non-interest
                income
            
            
            5,392
            
            
            5,020
            
            
            5,134
            
            
            5,703
            
            
            4,522Non-interest
                expense
            
            
            24,036
            
            
            24,112
            
            
            19,179
            
            
            17,785
            
            
            16,971Income
                before taxes
            
            
            7,942
            
            
            7,018
            
            
            9,356
            
            
            9,817
            
            
            8,459Income
                tax expense
            
            
            3,018
            
            
            2,649
            
            
            3,828
            
            
            3,917
            
            
            3,270Net
                income
            
            $
            4,924
            
            $
            4,369
            ^
            $
            5,528
            
            $
            5,900
            
            $
            5,189Basic
              earnings per share (8)
            
            $
            0.30
            
            $
            0.34
            ^
            $
            0.60
            
            $
            0.64
            
            $
            0.56Diluted
              earnings per share (8)
            
            $
            0.30
            
            $
            0.34
            ^
            $
            0.60
            
            $
            0.64
            
            $
            0.56Number
              of shares outstanding (8)
            
            
            16,467,874
            
            
            12,676,032
            
            
            9,189,722
            
            
            9,189,722
            
            
            9,189,722Basic
            
            
            16,476,933
            
            
            12,676,032
            
            
            9,189,722
            
            
            9,189,722
            
            
            9,189,722Diluted




3





**At
                or For the Years Ended December 31,****2006**
            
            **2005**
            
            **2004**
            
            **2003**
            
            **2002****Selected
                Financial Ratios and Other Data:****Performance
                Ratios****(3)****:**Return
                on average assets
            
            
            0.51
            %
            
            0.51
            %*
            
            0.73
            %
            
            0.86
            %
            
            0.84
            %Return
                on average equity
            
            
            3.59
            %
            
            4.45
            %*
            
            9.25
            %
            
            10.72
            %
            
            10.47
            %Average
                equity to average assets
            
            
            14.35
            %
            
            11.42
            %
            
            7.87
            %
            
            8.07
            %
            
            8.03
            %Equity
                to total assets at end of period(3)
            
            
            13.64
            %
            
            15.11
            %
            
            8.06
            %
            
            7.74
            %
            
            8.44
            %Interest
                rate spread(4)
            
            
            2.23
            %
            
            2.77
            %
            
            3.03
            %
            
            3.12
            %
            
            3.23
            %Net
                interest margin(5)
            
            
            2.97
            %
            
            3.27
            %
            
            3.33
            %
            
            3.41
            %
            
            3.65
            %Average
                interest-earning assets to average interest-bearing
                liabilitites
            
            
            128.10
            %
            
            125.61
            %
            
            118.30
            %
            
            116.42
            %
            
            116.77
            %Total
                non-interest expense to average total assets
            
            
            2.51
            %
            
            2.81
            %*
            
            2.53
            %
            
            2.61
            %
            
            2.75
            %Efficiency
                ratio(6)
            
            
            72.95
            %
            
            75.25
            %*
            
            64.98
            %
            
            63.75
            %
            
            65.71
            %Dividend
                payout ratio
            
            
            5.74
            %
            
            NA
            
            
            NA
            
            
            NA
            
            
            NA**United
                Bank Regulatory Capital Ratios****(3,
                7)****:**Tier
                I (core) capital
            
            
            14.83
            %
            
            17.21
            %
            
            11.67
            %
            
            12.33
            %
            
            12.23
            %Tier
                I (leverage) capital
            
            
            10.82
            %
            
            11.71
            %
            
            8.11
            %
            
            7.76
            %
            
            8.25
            %Total
                capital
            
            
            15.86
            %
            
            18.28
            %
            
            12.76
            %
            
            13.43
            %
            
            13.40
            %**Asset
                Quality Ratios****(3)****:**Non-performing
                assets as a percent of total assets(2)
            
            
            0.18
            %
            
            0.37
            %
            
            0.49
            %
            
            0.25
            %
            
            0.17
            %Non-performing
                loans as a percent of total loans(2)
            
            
            0.17
            %
            
            0.27
            %
            
            0.66
            %
            
            0.36
            %
            
            0.21
            %Allowance
                for loan losses as a percent of total loans
            
            
            0.95
            %
            
            1.00
            %
            
            1.00
            %
            
            1.02
            %
            
            1.05
            %Allowance
                for loan losses as a percent of non-performing
                loans
            
            
            560.40
            %
            
            371.69
            %
            
            151.96
            %
            
            278.97
            %
            
            507.53
            %**Number
                of full service customer facilities**
            
            
            13
            
            
            11
            
            
            11
            
            
            11
            
            
            11





(1)
            The
                allowance for loan losses at December 31, 2006, 2005, 2004, 2003
                and 2002
                was $7.2 million, $6.4 million, $5.8 million, $5.1 million and $4.9
                million, respectively.


(2)
            Non-performing
                assets consist of non-performing loans and foreclosed real estate
                owned
                (“REO”). Non-performing loans consist of non-accrual and accruing loans
                90
                days or more overdue, while REO consists of real estate acquired
                through
                foreclosure and real estate acquired by acceptance of a deed-in-lieu
                of
                foreclosure.


(3)
            Asset
                Quality Ratios and Regulatory Capital Ratios and the “equity to total
                assets” ratio are end of period ratios. With the exception of end of
                period ratios, all ratios are based on average monthly balances during
                the
                indicated periods and are annualized where
                appropriate.


(4)
            The
                interest rate spread represents the difference between weighted-average
                yield on interest-earning assets and the weighted-average cost of
                interest-bearing liabilities.


(5)
            The
                net interest margin represents net interest income as a percent of
                average
                interest-earning assets.


(6)
            The
                efficiency ratio represents non-interest expense divided by the sum
                of net
                interest income and non-interest
                income.


(7)
            Regulatory
                Capital Ratios are reported for the Bank only and do not include
                the
                consolidating effect of United Financial Bancorp,
                Inc. (8)
            The
                Company has previously presented earnings per share data and share
                information for the year during which its shares were outstanding
                for the
                complete period. Earnings per share data and share information for
                the
                each of the years 2002 through 2005 are being presented herein for
                the first time. See Note I of the Notes to Consolidated Financial
                Statements presented elsewhere in this Form 10-K/A for additional
                information concerning this revised
                presentation.


^
            Excluding
                the effect of a $3,591 charitable contribution ($2,199 after taxes)
                to
                fund the newly-formed United Charitable Foundation, net income in
                2005
                would have amounted to $6,568, or $0.52 per
                share.


*
            Exclusive
                of the contribution to the United Charitable Foundation in 2005,
                return on
                average assets, return on average equity, total non- interest expense
                to
                average total assets, and efficiency ratio would have been 0.76%,
                6.70%,
                2.43% and 64.41%, respectively.







4




**ITEM
                8.**
            **FINANCIAL
                STATEMENTS AND SUPPLEMENTAL
                DATA**





INDEX
      TO
      FINANCIAL STATEMENTS





PageReport
                of Independent Registered Public Accounting Firm
            F-1Financial
                StatementsConsolidated
                Balance Sheets
            F-2Consolidated
                Statements of Earnings
            F-3Consolidated
                Statements of Stockholders’ Equityand
                Comprehensive Income
            F-4Consolidated
                Statements of Cash Flows
            F-5Notes
                to Consolidated Financial Statements
            F-6




5




Report
          of Independent Registered Public Accounting Firm
 
 
 Board
          of
          Directors
 United
          Financial Bancorp, Inc.
 
 
 We
          have
          audited the accompanying consolidated balance sheets of United Financial
          Bancorp, Inc. and subsidiary (the “Company”) as of December 31, 2006 and 2005,
          and the related statements of earnings, stockholders’ equity and comprehensive
          income, and cash flows for each of the three years in the period ended
          December
          31, 2006. These financial statements are the responsibility of the Company's
          management. Our responsibility is to express an opinion on these financial
          statements based on our audits.
 
 We
          conducted our audits in accordance with the standards of the Public Company
          Accounting Oversight Board (United States). Those standards require that
          we plan
          and perform the audit to obtain reasonable assurance about whether the
          financial
          statements are free of material misstatement. An audit includes examining,
          on a
          test basis, evidence supporting the amounts and disclosures in the financial
          statements. An audit also includes assessing the accounting principles
          used and
          significant estimates made by management, as well as evaluating the overall
          financial statement presentation. We believe that our audits provide a
          reasonable basis for our opinion.
 
 In
          our
          opinion, the consolidated financial statements referred to above present
          fairly,
          in all material respects, the financial position of United Financial Bancorp,
          Inc. and subsidiary as of December 31, 2006 and 2005, and the results of
          their
          operations and their cash flows for each of the three years in the period
          ended
          December 31, 2006 in conformity with accounting principles generally accepted
          in
          the United States of America.
 
 We
          also
          have audited, in accordance with the standards of the Public Company Accounting
          Oversight Board (United States), the effectiveness of the Company’s internal
          control over financial reporting as of December 31, 2006, based on criteria
          established in *Internal
          Control—Integrated Framework* issued
          by the Committee of Sponsoring Organizations of the Treadway Commission
          (COSO)
          and our report dated March 13, 2007 expressed an unqualified opinion on
          management’s assessment of the effectiveness of the Company’s internal control
          over financial reporting and an unqualified opinion on the effectiveness
          of the
          Company’s internal control over financial reporting.
 
 /s/
          Grant
          Thornton LLP
 Boston,
          Massachusetts
 March
          13,
          2007
 (except
          for Notes I and Q
 as
          to
          which the date is
 June
          14,
          2007)
 
 F-1
  **UNITED
          FINANCIAL BANCORP, INC. AND SUBSIDIARY**
 Consolidated
          Balance Sheets
 December
          31, 2006
          and
          2005
 (Dollars
          in thousands, except per share amounts)
  **December 31,**
                
                **December 31,****2006**
                
                **2005****ASSETS**Cash
                    and due from banks
                
                $
                15,459
                
                $
                15,841Interest-bearing
                    deposits
                
                
                9,960
                
                
                2Total
                    cash and cash equivalents
                
                
                25,419
                
                
                15,843Securities
                    available for sale, at fair value
                
                
                190,237
                
                
                226,465Securities
                    held to maturity, at amortized cost (fair value of $3,227
                    atDecember
                    31, 2006 and $3,298 at December 31, 2005)
                
                
                3,241
                
                
                3,325Loans,
                    net of allowance for loan losses of $7,218 at December 31,
                    2006and
                    $6,382 at December 31, 2005
                
                
                756,180
                
                
                630,558Other
                    real estate owned
                
                
                562
                
                
                1,602Accrued
                    interest receivable
                
                
                4,320
                
                
                3,928Deferred
                    tax asset, net
                
                
                2,851
                
                
                1,245Stock
                    in the Federal Home Loan Bank of Boston
                
                
                9,274
                
                
                6,588Banking
                    premises and equipment, net
                
                
                8,821
                
                
                8,236Bank-owned
                    life insurance
                
                
                6,304
                
                
                6,031Other
                    assets
                
                
                2,224
                
                
                2,692TOTAL
                    ASSETS
                
                $
                1,009,433
                
                $
                906,513**LIABILITIES
                    AND STOCKHOLDERS’ EQUITY**Liabilities:Deposits:Interest-bearing
                
                $
                588,496
                
                $
                560,310Non-interest-bearing
                
                
                97,190
                
                
                93,301Total
                    deposits
                
                
                685,686
                
                
                653,611Federal
                    Home Loan Bank of Boston advances
                
                
                169,806
                
                
                101,880Repurchase
                    agreements
                
                
                10,425
                
                
                8,434Escrow
                    funds held for borrowers
                
                
                1,121
                
                
                1,129Accrued
                    expenses and other liabilities
                
                
                4,684
                
                
                4,454Total
                    liabilities
                
                
                871,722
                
                
                769,508Commitments
                    and contingencies (Note L)
                
                
                -
                
                
                -Stockholders’
                    equity:Preferred
                    stock, par value $0.01 per share, authorized 5,000,000
                    shares;none
                    issued
                
                
                -
                
                
                -Common
                    stock, par value $0.01 per share, authorized 60,000,000
                    shares;17,205,995
                    shares issued at December 31, 2006 and 2005
                
                
                172
                
                
                172Paid-in
                    capital
                
                
                75,520
                
                
                78,446Retained
                    earnings
                
                
                70,406
                
                
                66,944Unearned
                    compensation
                
                
                (5,772
                )
                
                (6,092
                )Treasury
                    stock, at cost (51,445 shares at December 31, 2006)
                
                
                (664
                )
                
                -Accumulated
                    other comprehensive loss, net of taxes
                
                
                (1,951
                )
                
                (2,465
                )Total
                    stockholders’ equity
                
                
                137,711
                
                
                137,005TOTAL
                    LIABILITIES AND STOCKHOLDERS’ EQUITY
                
                $
                1,009,433
                
                $
                906,513
  The
          accompanying notes are an integral part of the consolidated financial
          statements.
 
  **UNITED
          FINANCIAL BANCORP, INC. AND SUBSIDIARY**
 Consolidated
          Statements of Earnings
 For
          the
          years ended December 31, 2006, 2005 and 2004
 (Dollars
          in thousands, except per share amounts)
 
 **2006**
                
                **2005**
                
                **2004**Interest
                    and dividend income:Loans
                
                $
                42,338
                
                $
                34,540
                
                $
                29,682Investments
                
                
                8,843
                
                
                7,970
                
                
                6,582Other
                    interest-earning assets
                
                
                1,021
                
                
                723
                
                
                268Total
                    interest and dividend income
                
                
                52,202
                
                
                43,233
                
                
                36,532Interest
                    expense:Deposits
                
                
                18,695
                
                
                12,300
                
                
                8,995Short-term
                    borrowings
                
                
                3,198
                
                
                1,675
                
                
                373Long-term
                    debt
                
                
                2,754
                
                
                2,231
                
                
                2,780Total
                    interest expense
                
                
                24,647
                
                
                16,206
                
                
                12,148Net
                    interest income before provision for loan losses
                
                
                27,555
                
                
                27,027
                
                
                24,384Provision
                    for loan losses
                
                
                969
                
                
                917
                
                
                983Net
                    interest income after provision for loan losses
                
                
                26,586
                
                
                26,110
                
                
                23,401Non-interest
                    income:Fee
                    income on depositors’ accounts
                
                
                4,190
                
                
                3,744
                
                
                3,683(Loss)
                    gain on sale of securities
                
                
                (222
                )
                
                3
                
                
                122Income
                    from bank-owned life insurance
                
                
                273
                
                
                326
                
                
                332Other
                    income
                
                
                1,151
                
                
                947
                
                
                997Total
                    non-interest income
                
                
                5,392
                
                
                5,020
                
                
                5,134Non-interest
                    expense:Salaries
                    and benefits
                
                
                12,888
                
                
                11,167
                
                
                9,564Occupancy
                    expenses
                
                
                1,792
                
                
                1,494
                
                
                1,453Marketing
                    expenses
                
                
                1,436
                
                
                1,386
                
                
                1,244Data
                    processing expenses
                
                
                2,474
                
                
                2,371
                
                
                2,681Contributions
                    and sponsorships
                
                
                174
                
                
                3,792
                
                
                192Professional
                    fees
                
                
                1,148
                
                
                732
                
                
                336Other
                    expenses
                
                
                4,124
                
                
                3,170
                
                
                3,709Total
                    non-interest expense
                
                
                24,036
                
                
                24,112
                
                
                19,179Income
                    before income taxes
                
                
                7,942
                
                
                7,018
                
                
                9,356Income
                    tax expense
                
                
                3,018
                
                
                2,649
                
                
                3,828NET
                    INCOME
                
                $
                4,924
                
                $
                4,369
                
                $
                5,528Earnings
                    per share:Basic
                
                $
                0.30
                
                $
                0.34
                
                $
                0.60Diluted
                
                $
                0.30
                
                $
                0.34
                
                $
                0.60Weighted
                    average shares outstanding:Basic
                
                
                16,467,874
                
                
                12,676,032
                
                
                9,189,722Diluted
                
                
                16,476,933
                
                
                12,676,032
                
                
                9,189,722
  The
          accompanying notes are an integral part of the consolidated financial
          statements.
  F-3
  **UNITED
          FINANCIAL BANCORP, INC. AND SUBSIDIARY**
 Consolidated
          Statements of Stockholders’ Equity and Comprehensive Income
 December
          31, 2006, 2005 and 2004
 (Dollars
          in thousands)
  **Accumulated****Common**
                
                
                
                
                
                
                
                
                
                
                
                **Other****Shares**
                
                **Common**
                
                **Paid-In**
                
                **Retained**
                
                **Unearned**
                
                **Treasury**
                
                **Comprehensive****Outstanding**
                
                **Stock**
                
                **Capital**
                
                **Earnings**
                
                **Compensation**
                
                **Stock**
                
                **Loss**
                
                **Total**Balances
                    at December 31, 2003
                
                
                -
                
                $
                -
                
                $
                -
                
                $
                57,289
                
                $
                -
                
                $
                -
                
                $
                (239
                )
                $
                57,050Impact
                    of reorganization
                
                
                
                
                
                
                
                
                
                
                
                (150
                )
                
                
                
                
                
                
                
                
                
                
                (150
                )Net
                    income
                
                
                
                
                
                
                
                
                
                
                
                5,528
                
                
                
                
                
                
                
                
                
                
                
                5,528Net
                    unrealized loss on securities available for sale, net of reclassification
                    adjustments and taxes
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (173
                )
                
                (173
                )Total
                    comprehensive income
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                5,355Balances
                    at December 31, 2004
                
                
                -
                
                
                -
                
                
                -
                
                
                62,667
                
                
                -
                
                
                -
                
                
                (412
                )
                
                62,255Net
                    income
                
                
                -
                
                
                -
                
                
                -
                
                
                4,369
                
                
                -
                
                
                -
                
                
                -
                
                
                4,369Net
                    unrealized loss on securities available for sale, net of reclassification
                    adjustments and taxes
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (2,053
                )
                
                (2,053
                )Total
                    comprehensive income
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                2,316Issuance
                    of common stock, net of offering costs of $1,900
                
                
                7,671,973
                
                
                77
                
                
                74,745
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                74,822Issuance
                    of common stock to MHC
                
                
                9,189,922
                
                
                92
                
                
                -
                
                
                (92
                )
                
                -
                
                
                -
                
                
                -
                
                
                -Issuance
                    of common stock to UnitedCharitable
                    Foundation.
                
                
                344,100
                
                
                3
                
                
                3,646
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                3,649Shares
                    purchased for ESOP
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (6,413
                )
                
                -
                
                
                -
                
                
                (6,413
                )ESOP
                    shares committed to be released
                
                
                -
                
                
                -
                
                
                55
                
                
                -
                
                
                321
                
                
                -
                
                
                -
                
                
                376Balances
                    at December 31, 2005
                
                
                17,205,995
                
                
                172
                
                
                78,446
                
                
                66,944
                
                
                (6,092
                )
                
                -
                
                
                (2,465
                )
                
                137,005Net
                    income
                
                
                -
                
                
                -
                
                
                -
                
                
                4,924
                
                
                -
                
                
                -
                
                
                -
                
                
                4,924Net
                    unrealized gain on securities available for sale, net of reclassification
                    adjustments and taxes
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                514
                
                
                514Total
                    comprehensive income
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                5,438Cash
                    dividends declared ($0.20 per share)
                
                
                -
                
                
                -
                
                
                -
                
                
                (1,462
                )
                
                -
                
                
                -
                
                
                -
                
                
                (1,462
                )Treasury
                    stock purchases
                
                
                (341,945
                )
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (4,405
                )
                
                -
                
                
                (4,405
                )Reissuance
                    of treasury shares in connection with restricted stock
                    grants
                
                
                290,500
                
                
                -
                
                
                (3,741
                )
                
                -
                
                
                -
                
                
                3,741
                
                
                -
                
                
                -Stock-based
                    compensation
                
                
                -
                
                
                -
                
                
                728
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                728ESOP
                    shares committed to be released
                
                
                -
                
                
                -
                
                
                87
                
                
                -
                
                
                320
                
                
                -
                
                
                -
                
                
                407Balances
                    at December 31, 2006
                
                
                17,154,550
                
                $
                172
                
                $
                75,520
                
                $
                70,406
                
                $
                (5,772
                )
                $
                (664
                )
                $
                (1,951
                )
                $
                137,711
 
 The
          accompanying notes are an integral part of the consolidated financial
          statements.
  F-4
  **UNITED
          FINANCIAL BANCORP, INC. AND SUBSIDIARY**
 Consolidated
          Statements of Cash Flows
 For
          the
          years ended December 31, 2006, 2005 and 2004
 (Dollars
          in thousands)
  **2006**
                
                **2005**
                
                **2004****Cash
                    flows from operating activities:**Net
                    income
                
                $
                4,924
                
                $
                4,369
                
                $
                5,528Adjustments
                    to reconcile net income to net cash provided by operating
                    activities:Provision
                    for loan losses
                
                
                969
                
                
                917
                
                
                983ESOP
                    expense
                
                
                407
                
                
                376
                
                
                -Stock-based
                    compensation
                
                
                728
                
                
                -
                
                
                -Contribution
                    to United Charitable Foundation
                
                
                -
                
                
                3,649
                
                
                -Amortization
                    of premiums and discounts
                
                
                308
                
                
                670
                
                
                1,062Depreciation
                    and amortization
                
                
                838
                
                
                667
                
                
                647Amortization
                    of intangible assets
                
                
                25
                
                
                -
                
                
                -Provision
                    for other real estate owned
                
                
                -
                
                
                -
                
                
                (21
                )Gain
                    on sales of loans
                
                
                (3
                )
                
                (2
                )
                
                (13
                )Net
                    loss (gain) on sale of property and equipment
                
                
                21
                
                
                (4
                )
                
                (2
                )Net
                    loss (gain) on sale of available for sale securities
                
                
                222
                
                
                (3
                )
                
                (122
                )Income
                    tax provision (benefit)
                
                
                (1,679
                )
                
                978
                
                
                (1
                )Increase
                    in cash surrender value of bank-owned life insurance
                
                
                (273
                )
                
                (326
                )
                
                (332
                )(Increase)
                    decrease in accrued interest receivable
                
                
                (392
                )
                
                (1,065
                )
                
                282Decrease
                    (increase) in other assets
                
                
                475
                
                
                (2,005
                )
                
                678(Decrease)
                    increase in accrued expenses and other liabilities
                
                
                (42
                )
                
                337
                
                
                469Net
                    cash provided by operating activities
                
                
                6,528
                
                
                8,558
                
                
                9,158**Cash
                    flows from investing activities:**Purchases
                    of securities available for sale
                
                
                (47,764
                )
                
                (124,036
                )
                
                (58,142
                )Proceeds
                    from sales of securities available for sale
                
                
                28,896
                
                
                2,597
                
                
                32,985Proceeds
                    from maturities and principal repayments of securities available
                    for
                    sale
                
                
                55,430
                
                
                44,127
                
                
                68,646Purchases
                    of securities held to maturity
                
                
                -
                
                
                (909
                )
                
                (404
                )Proceeds
                    from maturities and principal repayments of securities held to
                    maturity
                
                
                75
                
                
                75
                
                
                77Purchases
                    of Federal Home Loan Bank of Boston stock
                
                
                (2,686
                )
                
                (567
                )
                
                (2,072
                )Refund
                    of Cooperative Central Bank deposit
                
                
                -
                
                
                -
                
                
                1,522Proceeds
                    from sales of other real estate owned
                
                
                1,852
                
                
                -
                
                
                39Net
                    loan originations and principal repayments
                
                
                (127,570
                )
                
                (64,046
                )
                
                (78,428
                )Proceeds
                    from sales of loans
                
                
                170
                
                
                215
                
                
                5,314Purchases
                    of property and equipment
                
                
                (1,372
                )
                
                (1,245
                )
                
                (382
                )Cash
                    paid to acquire Levine Financial Group
                
                
                (100
                )
                
                -
                
                
                -Proceeds
                    from sale of property and equipment
                
                
                -
                
                
                16
                
                
                14Net
                    cash used in investing activities
                
                
                (93,069
                )
                
                (143,773
                )
                
                (30,831
                )**Cash
                    flows from financing activities:**Net
                    increase in deposits
                
                
                32,075
                
                
                39,938
                
                
                18,924Proceeds
                    of Federal Home Loan Bank of Boston advances
                
                
                133,000
                
                
                148,365
                
                
                185,714Repayments
                    of Federal Home Loan Bank of Boston advances
                
                
                (65,074
                )
                
                (133,179
                )
                
                (175,839
                )Net
                    increase in repurchase agreements
                
                
                1,991
                
                
                4,118
                
                
                98Net
                    increase (decrease) in escrow funds held for borrowers
                
                
                (8
                )
                
                174
                
                
                14Treasury
                    stock purchases
                
                
                (4,405
                )
                
                -
                
                
                -Cash
                    dividends paid
                
                
                (1,462
                )
                
                -
                
                
                -Proceeds
                    from stock offering subscriptions
                
                
                -
                
                
                74,822
                
                
                -Acquistion
                    of common stock by ESOP
                
                
                -
                
                
                (6,413
                )
                
                -Impact
                    of reorganization
                
                
                -
                
                
                -
                
                
                (150
                )Net
                    cash provided by financing activities
                
                
                96,117
                
                
                127,825
                
                
                28,761Increase
                    (decrease) in cash and cash equivalents
                
                
                9,576
                
                
                (7,390
                )
                
                7,088Cash
                    and cash equivalents at beginning of year
                
                
                15,843
                
                
                23,233
                
                
                16,145Cash
                    and cash equivalents at end of period
                
                $
                25,419
                
                $
                15,843
                
                $
                23,233**Supplemental
                    Disclosure of Cash Flow Information****:**Cash
                    paid during the period:Interest
                    on deposits and other borrowings
                
                $
                24,353
                
                $
                16,080
                
                $
                12,102Income
                    taxes - net
                
                
                3,882
                
                
                2,786
                
                
                2,635Transfer
                    of loans to other real estate owned
                
                
                562
                
                
                1,602
                
                
                -
 
 The
          accompanying notes are an integral part of the consolidated financial
          statements.
  F-5
  **UNITED
          FINANCIAL BANCORP, INC. AND SUBSIDIARY**
 Notes
          to
          Consolidated Financial Statements
 December
          31, 2005, 2004 and 2003
 (Dollars
          in thousands, except per share amounts)
  **NOTE
          A - REORGANIZATION** **AND
          CHANGE IN CORPORATE FORM**
 
 During
          2004, United Bank received both regulatory and depositor approval to reorganize
          from a state-chartered cooperative bank to a multi-tier federally-chartered
          holding company. As a result, United Financial Bancorp, Inc., a stock holding
          company, was formed to be the parent company of United Bank (the Bank)
          and
          United Mutual Holding Company (MHC), a mutual holding company, was formed
          to be
          the parent company of United Financial Bancorp, Inc. Included in non-interest
          expenses in the accompanying statement of earnings for the year ended December
          31, 2004 are related reorganization expenses of $693.
  In
          December 2004, the Board of Directors of United Mutual Holding Company
          adopted a
          plan pursuant to which United Financial Bancorp, Inc. (the
          Company) intended to sell up to 49% of its common stock to eligible Bank
          depositors and, if necessary, to the general public. The Company’s initial
          public offering concluded on July 12, 2005 after the receipt of regulatory
          approval. The Company raised $74,822 in the offering, selling 7.7 million
          shares
          of common stock at $10 per share. This represented 44.6% of the stock issued.
          In
          addition, 344,100 shares or 2.0% of the shares outstanding were contributed
          to
          the newly formed United Charitable Foundation (“the Foundation”) to further
          support its the Bank’s ongoing commitment to the community. United Mutual
          Holding Company holds the remaining 53.4% of the outstanding shares **.**
 
 The
          Company established the United Charitable Foundation in connection with
          the
          reorganization and funded it with 344,100 shares of the Company’s common stock.
          This contribution resulted in the recognition of expense equal to $3,441
          based
          on the offering price of $10 per share. The Company realized an additional
          tax
          benefit of $208 that was recorded as an increase to stockholders’ equity because
          the basis for the contribution for tax purposes was based on the trading
          price
          of Company stock on its first day of trading.
 
 In
          addition, the Bank’s Board of Directors adopted an Employee Stock Ownership Plan
          (the “ESOP”) which purchased 8%, or 641,300 shares, in the initial public
          offering financed by a loan from the Company. (See Note K)
 
 The
          reorganization to a mutual holding company structure has been accounted
          for as a
          change in corporate form with the historic basis of the Bank’s assets,
          liabilities and equity unchanged as a result. Subsequent to the stock offering,
          the existing liquidation rights of the Bank’s depositors were transferred with
          records to be maintained to ensure such rights receive statutory priority
          in the
          event of a complete mutual-to-stock conversion or in the more unlikely
          event of
          the Bank’s liquidation.
  F-6
  **UNITED
          FINANCIAL BANCORP, INC. AND SUBSIDIARY**
 Notes
          to
          Consolidated Financial Statements
 December
          31, 2006, 2005 and 2004
 (Dollars
          in thousands, except per share amounts)
  **NOTE
          B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**
 
 The
          consolidated financial statements include the accounts of United Financial
          Bancorp, Inc. and its wholly owned subsidiary United Bank (the Bank). UCB
          Securities, Inc. is a subsidiary of the Bank and is engaged in buying,
          selling
          and holding of securities. All significant intercompany accounts and
          transactions have been eliminated in consolidation. These entities are
          collectively referred to herein as “the Company”.
 
 The
          accounting and reporting policies of the Company conform to accounting
          principles generally accepted in the United States of America (“U.S. GAAP”) and
          general practices within the banking industry.
 
 ***Use
          of Estimates***
 
 In
          preparing consolidated financial statements in conformity with accounting
          principles generally accepted in the United States of America, management
          is
          required to make estimates and assumptions that affect the reported amounts
          of
          assets and liabilities and disclosures of contingent assets and liabilities
          as
          of the date of the balance sheet and reported amounts of revenues and expenses
          during the reporting period. Actual results could differ from those estimates.
          Material estimates that are particularly susceptible to significant change
          are
          the determination of the allowance for loan losses and the valuation allowance
          for the deferred tax asset.
 
 The
          following is a description of the Company’s more significant accounting
          policies:
 
 ***Cash
          and Cash Equivalents***
 
 The
          Company classifies cash and due from banks, interest bearing deposits in
          other
          banks and overnight funds sold as cash and cash equivalents as these liquid
          assets have original maturities of 90 days or less.
  F-7
  **UNITED
          FINANCIAL BANCORP, INC. AND SUBSIDIARY**
 Notes
          to
          Consolidated Financial Statements
 December
          31, 2005, 2004 and 2003
 (Dollars
          in thousands, except per share amounts)
  **NOTE
          B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued**
 
 ***Investment
          Securities***
 
 Debt
          securities that the Company has the positive intent and ability to hold
          to
          maturity are classified as held to maturity and reported at amortized cost;
          debt
          and equity securities that are bought and held principally for the purpose
          of
          selling in the near term are classified as trading and reported at fair
          value,
          with unrealized gains and losses included in earnings; and debt and equity
          securities not classified as either held to maturity or trading are classified
          as available for sale and reported at fair value, with unrealized gains
          and
          losses excluded from earnings and reported in accumulated other comprehensive
          income (loss), net of taxes, as a separate component of stockholders’ equity.
          The Company had no securities classified as trading at December 31, 2006
          and
          2005.
 
 Premiums
          and discounts on investment securities are amortized or accreted into income
          on
          the level yield method over the life of the investments. If a decline in
          the
          fair value of an investment security below its cost is judged to be
          other-than-temporary the cost basis of the investment security is written
          down
          to fair value as a new cost basis and the amount of the write-down is included
          in the results of operations. Gains and losses on the sale of investment
          securities are recognized at the time of sale on a specific identification
          basis.
 
 ***Loans***
 
 Real
          estate mortgage loans and other loans are
          stated at their unpaid principal balance net of unearned loan fees and
          costs and
          the allowance for loan losses. The Company does not originate loans for
          the
          purpose of resale.
 
 Interest
          on most loans is included in income as earned based upon interest rates
          applied
          to unpaid principal using the simple interest method. Accrual of interest
          on
          loans is discontinued when in the judgment of management the collectibility
          of
          principal or interest becomes doubtful or when a loan becomes contractually
          past
          due 90 days with respect to principal or interest. The accrual of interest
          on
          some loans, however, may continue even though they are 90 days past due
          if
          management deems it appropriate, provided that the loans are well secured
          and in
          the process of collection. When a loan is placed on nonaccrual status,
          all
          interest previously accrued is reversed against current period interest
          income.
          Interest subsequently received on nonaccrual loans is either applied against
          principal or recorded as income according to management’s judgment as to the
          collectibility of principal. Interest accruals are resumed on such loans
          only
          when they are brought fully current as to principal and interest and when,
          in
          the judgment of management, the loans are estimated to be fully
          collectible.
  F-8
  **UNITED
          FINANCIAL BANCORP, INC. AND SUBSIDIARY**
 Notes
          to
          Consolidated Financial Statements - Continued
 December
          31, 2006, 2005 and 2004
 (Dollars
          in thousands, except per share amounts)
  **NOTE
          B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued**
 
 Loan
          origination and commitment fees and certain direct loan origination costs
          are
          deferred and the net amount is amortized over the contractual term of the
          loan
          as an adjustment of yield.
 
 A
          loan is
          considered impaired when, based on current information and events, it is
          probable that the Company will be unable to collect the scheduled payments
          of
          principal or interest when due according to the contractual terms of the
          loan
          agreement. Factors considered by management in determining impairment include
          payment status, collateral value, and the probability of collecting scheduled
          principal and interest payments when due. Loans that experience insignificant
          payment delays and payment shortfalls generally are not classified as impaired.
          Impairment is measured on a loan-by-loan basis for commercial and construction
          loans by either the present value of expected future cash flows discounted
          at
          the loan’s effective interest rate, the loan’s obtainable market price, or the
          fair value of the collateral if the loan is collateral dependent.
 
 ***Allowance
          for Loan Losses***
 
 The
          allowance for loan losses is maintained at a level determined by management
          to
          be adequate to absorb probable losses based on an evaluation of known and
          inherent losses in the portfolio. The adequacy of the allowance for loan
          losses
          is evaluated on a quarterly basis by management. Factors considered in
          evaluating the adequacy of the allowance include prior loss experience,
          current
          economic conditions and their effect on borrowers, the character and size
          of the
          loan portfolio, trends in nonperforming loans and delinquency rates and
          the
          performance of individual loans in relation to contractual terms. Loan
          losses
          are charged against the allowance when management believes that the
          collectibility of the principal is unlikely and recoveries are credited
          to the
          allowance when received.
 
 Determining
          an appropriate level for the allowance for loan losses necessarily involves
          a
          high degree of judgment. While management uses available information to
          recognize losses on loans, future additions to the allowance may be necessary.
          In addition, various regulatory agencies, as an integral part of their
          examination process, periodically review the allowance for loan losses.
          Such
          agencies may require the Company to recognize additions to the allowance
          based
          on judgments different from those of management.
 
 A
          substantial portion of the Company’s loans are secured by real estate in Western
          Massachusetts. Accordingly, the ultimate collectibility of the Company’s loan
          portfolio is susceptible to changing conditions in this market
          area.
  F-9
  **UNITED
          FINANCIAL BANCORP, INC. AND SUBSIDIARY**
 Notes
          to
          Consolidated Financial Statements
 December
          31, 2006, 2005 and 2004
 (Dollars
          in thousands, except per share amounts)
  **NOTE
          B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued**
 
 ***Other
          intangible assets***
  Statement
          of Financial Accounting Standards (SFAS) No. 142, “Goodwill and Other Intangible
          Assets”, prescribes that other identifiable intangible assets are recorded at
          their estimated fair value and are amortized on a straight-line basis over
          their
          estimated useful lives. These assets are evaluated for impairment if
          circumstances suggest that their value may be impaired.
  ***Business
          segments***
 
 An
          operating segment is a component of a business for which separate financial
          information is available that is evaluated regularly by the chief operating
          decision-maker in deciding how to allocate resources and evaluate performance.
          The Company's operations are limited to financial services provided within
          the
          framework of a community bank, and decisions are based generally on specific
          market areas and or product offerings. Accordingly, based on the financial
          information which is presently evaluated by the Company's chief operating
          decision-maker, the Company operates in a single business segment.
 
 ***Off-balance
          sheet financial instruments***
 
 In
          the
          ordinary course of business, the Company enters into off-balance sheet
          financial
          instruments, consisting primarily of credit related financial instruments.
          These
          financial instruments are recorded in the consolidated financial statements
          when
          they are funded or related fees are incurred or received .
 
 ***Earnings
          Per Share***
 
 Earnings
          per share have been computed in accordance with SFAS No. 128,
“Earnings Per Share.” Basic earnings per share have been calculated by dividing
          net income by weighted average shares outstanding before any dilution and
          adjusted to exclude the weighted average number of unallocated shares held
          by
          the ESOP and unvested restricted stock awards. Diluted earnings per share
          have
          been calculated by dividing net income by weighted average shares outstanding
          after giving effect to the potential dilution that could occur if potential
          common shares were converted into common stock using the treasury stock
          method.
  F-10
  **UNITED
          FINANCIAL BANCORP, INC. AND SUBSIDIARY**
 Notes
          to
          Consolidated Financial Statements
 December
          31, 2006, 2005 and 2004
 (Dollars
          in thousands, except per share amounts)
  **NOTE
          B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued**
 
 ***Other
          Real Estate Owned***
 
 Other
          real estate owned (“OREO”) is comprised of properties acquired through
          foreclosure proceedings or acceptance of a deed in lieu of foreclosure.
          Losses
          arising from the acquisition of such properties are charged against the
          allowance for loan losses. Operating expenses are charged to current period
          operations as incurred. Gains and losses upon disposition are reflected
          in
          income as realized.
 
 Foreclosed
          assets held for sale are recorded at the lower of fair value less estimated
          costs to sell or cost. Subsequent changes in the fair value of the foreclosed
          assets are reflected as a valuation allowance.
 
 ***Banking
          Premises and Equipment***
 
 Banking
          premises and equipment are stated at cost less accumulated depreciation.
          Depreciation is computed for financial reporting purposes on the straight-line
          method over the estimated useful life of each type of asset. Leasehold
          improvements are amortized on the straight-line method over the shorter
          of the
          lease term, including consideration of renewal options, or estimated useful
          life
          of the asset. The cost of maintenance and repairs is charged against income
          as
          incurred. The Company reviews for impairment of long-lived assets whenever
          events or changes in circumstances indicate that the carrying amount of
          an asset
          may not be recoverable.
 
 Asset
          retirement obligations are recognized at fair value when incurred. The
          Company
          recognizes a liability when the obligation is incurred - generally upon
          acquisition, construction, or development and (or) through the normal operation
          of the asset. In
          periods subsequent to initial measurement, the Company recognizes changes
          in the
          liability for an asset retirement obligation resulting from (a) the passage
          of time and (b) revisions to either the timing or the amount of the original
          estimate of undiscounted cash flows.
 
 An
          asset
          retirement obligation is recognized as a liability and measured at fair
          value.
          Because the liability is recorded at its fair value and not it’s ultimate
          settlement amount, increases in the liability’s carrying amount for accretion
          are recognized each period. The accretion expense is classified as an operating
          expense in the income statement. The Company also capitalizes the cost
          associated with its asset retirement obligations as part of the carrying
          amount
          of the associated long-lived assets. As part of the depreciable cost of
          the
          related long-lived assets, capitalized asset retirement costs are depreciated
          over their useful life.
  F-11
  **UNITED
          FINANCIAL BANCORP, INC. AND SUBSIDIARY**
 Notes
          to
          Consolidated Financial Statements
 December
          31, 2006, 2005 and 2004
 (Dollars
          in thousands, except per share amounts)
  **NOTE
          B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued**
 
 ***Pension
          Plan***
 
 The
          Company provides pension benefits for eligible employees through a
          multi-employer defined benefit plan sponsored by the Co-operative Banks
          Employees’ Retirement Association (CBERA). The Company’s policy is to expense
          related pension costs based on assessments by CBERA. The Bank has also
          established a defined contribution plan for eligible employees. The Company
          matches employee contributions up to 5% of an employee’s qualified compensation.
 
 ***Transfers
          of Financial Assets***
  Transfers
          of financial assets are accounted for as sales, when control over the assets
          has
          been surrendered. Control over transferred assets is deemed to be surrendered
          when (1) the assets have been isolated from the Company, (2) the transferee
          obtains the right (free of conditions that constrain it from taking advantage
          of
          that right) to pledge or exchange the transferred assets and (3) the Company
          does not maintain effective control over the transferred assets through
          an
          agreement to repurchase them before their maturity.
 
 ***Income
          Taxes***
 
 The
          Company recognizes income taxes under the asset and liability method. Under
          this
          method, deferred tax assets and liabilities are established for the tax
          consequences attributable to the temporary differences between the financial
          statement carrying amount and the tax basis of the Bank’s assets and liabilities
          and certain tax carryforwards at enacted tax rates.
 
 Deferred
          tax expense (benefit) is the result of changes in deferred tax assets and
          liabilities. A valuation allowance is recorded against deferred tax assets
          when
          management deems a portion of the asset to be more likely than not unrealizable.
          The Company’s valuation allowance is reviewed and adjustments are made to the
          valuation allowance based on management’s judgments relating to the
          realizability of the deferred tax asset. It
          is
          management's belief, that it is more likely than not, that the reversal
          of
          deferred tax liabilities and results of future operations will generate
          sufficient taxable income to realize the deferred tax assets. In addition,
          the
          Company’s net deferred tax asset is supported by recoverable income taxes.
          Therefore, no valuation allowance was necessary at December 31, 2006 or
          2005 for
          deferred tax assets. It should be noted, however, that factors beyond
          management's control, such as the general state of the economy and real
          estate
          values, can affect future levels of taxable income and that no assurance
          can be
          given that sufficient taxable income will be generated to fully absorb
          gross
          deductible temporary differences.
  F-12
  **UNITED
          FINANCIAL BANCORP, INC. AND SUBSIDIARY**
 Notes
          to
          Consolidated Financial Statements
 December
          31, 2006, 2005 and 2004
 (Dollars
          in thousands, except per share amounts)
  **NOTE
          B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued**
 
 ***Stock
          Compensation Plan***
 
 The
          Company adopted SFAS No. 123R, “ Share-Based
          Payment” ,
          on
          January 1, 2006. SFAS 123R requires that the compensation cost associated
          with
          share-based payment transactions, such as stock options and restricted
          stock
          awards, be recognized in the financial statements over the requisite service
          (vesting) **** period.
          During the year ended December 31, 2006, the Company’s shareholders approved a
          stock based incentive plan, which is described in Note J.
 
 ***Comprehensive
          Income***
 
 Accounting
          principles generally require that recognized revenue, expenses, gains and
          losses
          be included in net income. Although certain changes in assets and liabilities,
          such as unrealized gains and losses on available for sale securities, are
          reported as a separate component of stockholders’ equity such items, along with
          net income, are components of comprehensive income. The Company uses the
          specific identification method to determine the cost of a security sold
          and the
          amount reclassified out of accumulated other comprehensive income into
          earnings.
 
 The
          components of other comprehensive income and related tax effects are as
          follows
          for the years ended December 31:
 
 **2006**
                
                **2005**
                
                **2004**Change
                    in unrealized holding gains (losses) on available for sale
                    securities
                
                $
                633
                
                $
                (3,371
                )
                $
                (180
                )Reclassification
                    adjustment for losses (gains) realized in income
                
                
                222
                
                
                (3
                )
                
                (122
                )Net
                    change in unrealized gains (losses)
                
                
                855
                
                
                (3,374
                )
                
                (302
                )Tax
                    effect
                
                
                341
                
                
                1,321
                
                
                129Other
                    comprehensive income (loss)
                
                $
                514
                
                $
                (2,053
                )
                $
                (173
                )
 
 ***Reclassifications***
  Amounts
          reported for prior periods are reclassified as necessary to be consistent
          with
          the current-period presentation.
  F-13
  **UNITED
          FINANCIAL BANCORP, INC. AND SUBSIDIARY**
 Notes
          to
          Consolidated Financial Statements
 December
          31, 2006, 2005 and 2004
 (Dollars
          in thousands, except per share amounts)
 **NOTE
          B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued**
 
 ***Advertising
          and public relations expense***
 
 Advertising,
          promotional and other business development costs are generally expensed
          as
          incurred. External costs incurred in producing media advertising are expensed
          the first time the advertising takes place. External costs relating to
          direct
          mailing costs are expensed in the period in which the direct mailings are
          sent.
 
 ***Recent
          Accounting Developments***
 
 In
          July
          2006, the Financial Accounting Standards Board (“FASB”) released FASB
          Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an
          interpretation of FASB Statement No. 109” (FIN 48). FIN 48 clarifies the
          accounting and reporting for income taxes where interpretation of the tax
          law
          may be uncertain. FIN 48 prescribes a comprehensive model for the financial
          statement recognition, measurement, presentation and disclosure of income
          tax
          uncertainties with respect to positions taken or expected to be taken in
          income
          tax returns. This standard is effective for the Company on January 1, 2007.
          The
          cumulative effect, if any, of applying FIN 48 will be recorded as an adjustment
          to the beginning balance of retained earnings. Management is in the process
          of completing its evaluation of the impact that adoption of FIN 48 may
          have but
          does not expect the adoption will have a material effect on the Company’s results
          of
          operations or financial position.
 
 In
          September 2006, the S ecurities
          and Exchange Commission issued Staff Accounting Bulletin (SAB) 108 “Considering
          the Effects of Prior Year Misstatements when Quantifying Misstatements
          in
          Current Year Financial Statements”. This SAB addresses quantifying the financial
          statement effect of misstatements, specifically, how the effects of prior
          year
          uncorrected errors must be considered in quantifying misstatements in the
          current year financial statements. This SAB is effective for fiscal years
          ending
          after November 15, 2006. The adoption of this SAB had no effect on the
          Company’s financial position, results of operations or cash flows.
 
 In
          September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” . SFAS
          157 defines fair value, establishes a U.S. GAAP framework for measuring
          fair
          value, and expands financial statement disclosures about fair value
          measurements. SFAS No.157 is effective for the Company on January 1, 2008
          and is
          not expected to have a significant impact on its financial
          statements.
  F-14
  **UNITED
          FINANCIAL BANCORP, INC. AND SUBSIDIARY**
 Notes
          to
          Consolidated Financial Statements
 December
          31, 2006, 2005 and 2004
 (Dollars
          in thousands, except per share amounts)
 **NOTE
          B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Concluded**
 
  In
          June 2006, the EITF released Issue 06-05, “Accounting for Purchases of Life
          Insurance-Determining the Amount That Could Be Realized in Accordance with
          FASB
          Technical Bulletin No. 85-4, “Accounting for Purchases of Life Insurance”.
          On September 7, 2006, the EITF concluded that a policyholder should
          consider any additional amounts included in the contractual terms of the
          policy
          in determining the amount that could be realized under the insurance contract.
          Amounts that are recoverable by the policyholder at the discretion of the
          insurance company should be excluded from the amount that could be realized.
          Amounts that are recoverable by the policyholder in periods beyond one
          year from
          the surrender of the policy should be discounted utilizing an appropriate
          rate
          of interest. The effective date of EITF 06-05 is for fiscal years beginning
          after December 15, 2006. Management does not expect the implementation of
          the Interpretation will have a material effect on the Company’s results of
          operations or financial position.
 
 In
          February 2007, the FASB issued Statement of Financial Accounting Standards
          No.
          159, The Fair Value Option for Financial Assets and Financial Liabilities
          ("SFAS
          159"), which provides companies with an option to report selected financial
          assets and liabilities at fair value. The objective of SFAS 159 is to reduce
          both complexity in accounting for financial instruments and the volatility
          in
          earnings caused by measuring related assets and liabilities differently.
          SFAS
          159 establishes presentation and disclosure requirements designed to facilitate
          comparisons between companies that choose different measurement attributes
          for
          similar types of assets and liabilities and to more easily understand the
          effect
          of the company’s choice to use fair value on its earnings. SFAS 159 also
          requires entities to display the fair value of the selected assets and
          liabilities on the face of the balance sheet. SFAS 159 does not eliminate
          disclosure requirements of other accounting standards, including fair value
          measurement disclosures in SFAS 157. This Statement is effective as of
          the
          beginning of an entity’s first fiscal year beginning after November 15, 2007.
          Early adoption is permitted as of the beginning of the previous fiscal
          year
          provided that the entity makes that choice in the first 120 days of that
          fiscal
          year and also elects to apply the provisions of Statement 157. Adoption
          of SFAS
          159 is not expected to have a material impact on the Company’s results of
          operations or financial position.
  F-15
  **UNITED
          FINANCIAL BANCORP, INC. AND SUBSIDIARY**
 Notes
          to
          Consolidated Financial Statements
 December
          31, 2006, 2005 and 2004
 (Dollars
          in thousands, except per share amounts)
 **NOTE
          C - INVESTMENT SECURITIES**
 
 The
          amortized cost and fair values of securities classified as available for
          sale
          and held to maturity are as follows:
 
 **Amortized**
                
                **Unrealized**
                
                **Unrealized**
                
                **Fair****Cost**
                
                **Gain**
                
                **Losses**
                
                **Value****Securities
                    Available for Sale**December
                    31, 2006:Government-sponsored
                    enterprises
                
                $
                78,248
                
                $
                4
                
                $
                (883
                )
                $
                77,369Mortgage-backed
                    securities
                
                
                111,481
                
                
                107
                
                
                (2,314
                )
                
                109,274Corporate
                    bonds
                
                
                3,415
                
                
                14
                
                
                (120
                )
                
                3,309Subtotal
                
                
                193,144
                
                
                125
                
                
                (3,317
                )
                
                189,952Marketable
                    equity securities
                
                
                294
                
                
                -
                
                
                (9
                )
                
                285Total
                
                $
                193,438
                
                $
                125
                
                $
                (3,326
                )
                $
                190,237December
                    31, 2005:Government-sponsored
                    enterprises
                
                $
                99,957
                
                $
                1
                
                $
                (1,397
                )
                $
                98,561Mortgage-backed
                    securities
                
                
                117,259
                
                
                102
                
                
                (2,659
                )
                
                114,702Corporate
                    bonds
                
                
                13,011
                
                
                54
                
                
                (135
                )
                
                12,930Subtotal
                
                
                230,227
                
                
                157
                
                
                (4,191
                )
                
                226,193Marketable
                    equity securities
                
                
                294
                
                
                -
                
                
                (22
                )
                
                272Total
                
                $
                230,521
                
                $
                157
                
                $
                (4,213
                )
                $
                226,465
   **Amortized**
                
                **Unrealized**
                
                **Unrealized**
                
                **Fair****Cost**
                
                **Gain**
                
                **Losses**
                
                **Value****Securities
                    Held to Maturity**December
                    31, 2006:IRB
                
                $
                1,271
                
                $
                -
                
                $
                -
                
                $
                1,271Municipal
                    bonds
                
                
                1,970
                
                
                4
                
                
                (18
                )
                
                1,956Total
                
                $
                3,241
                
                $
                4
                
                $
                (18
                )
                $
                3,227December
                    31, 2005:IRB
                
                $
                1,346
                
                $
                -
                
                $
                -
                
                $
                1,346Municipal
                    bonds
                
                
                1,979
                
                
                -
                
                
                (27
                )
                
                1,952Total
                
                $
                3,325
                
                $
                -
                
                $
                (27
                )
                $
                3,298
 
 The
          Company’s portfolio of mortgage-backed securities, which represent interests in
          pools of **** residential
          mortgage loans, consists solely of securities issued by the Federal Home
          Loan
          Mortgage Corporation (Freddie Mac), the Federal National Mortgage Association
          (Fannie Mae), and the Government National Mortgage Association (Ginnie
          Mae), all
          of which are federal government owned or sponsored agencies.
 
 As
          of
          December 31, 2006, the Bank has pledged securities with an amortized cost
          of
          $16,000 and a fair value of $15,807 to secure treasury, tax and loan deposits
          at
          the Federal Reserve Bank of Boston and to secure customers’ repurchase
          agreements. Additionally, there is a blanket lien on certain securities
          to
          collateralize borrowings from the Federal Home Loan Bank of Boston, as
          discussed
          further in Note G.
  F-16
  **UNITED
          FINANCIAL BANCORP, INC. AND SUBSIDIARY**
 Notes
          to
          Consolidated Financial Statements
 December
          31, 2006, 2005 and 2004
 (Dollars
          in thousands, except per share amounts)
 **NOTE
          C - INVESTMENT SECURITIES -Continued**
 
 Gross
          unrealized losses and fair values at December 31, 2006 and 2005 aggregated
          by investment category and the length of time that individual securities
          have
          been in a continuous unrealized loss position follow:
 
 **Less
                    than 12 months**
                
                **12
                    months or longer**
                
                **Total****Fair**
                
                **Unrealized**
                
                **Fair**
                
                **Unrealized**
                
                **Number of**
                
                **Fair**
                
                **Unrealized****Value**
                
                **Losses**
                
                **Value**
                
                **Losses**
                
                **Securities**
                
                **Value**
                
                **Losses****2006****:****Securities
                    Available for Sale**Government-sponsored
                    enterprises
                
                $
                1,239
                
                $
                (19
                )
                $
                62,182
                
                $
                (864
                )
                
                28
                
                $
                63,421
                
                $
                (883
                )Mortgage-backed
                    securities
                
                
                13,609
                
                
                (117
                )
                
                78,972
                
                
                (2,197
                )
                
                86
                
                
                92,581
                
                
                (2,314
                )Corporate
                    bonds
                
                
                -
                
                
                -
                
                
                1,841
                
                
                (120
                )
                
                4
                
                
                1,841
                
                
                (120
                )Marketable
                    equity securities
                
                
                -
                
                
                -
                
                
                285
                
                
                (9
                )
                
                2
                
                
                285
                
                
                (9
                )Total
                
                $
                14,848
                
                $
                (136
                )
                $
                143,280
                
                $
                (3,190
                )
                
                120
                
                $
                158,128
                
                $
                (3,326
                )**Securities
                    Held to Maturity**Municipal
                    bonds
                
                $
                212
                
                $
                (1
                )
                $
                1,207
                
                $
                (17
                )
                
                7
                
                $
                1,419
                
                $
                (18
                )Total
                
                $
                212
                
                $
                (1
                )
                $
                1,207
                
                $
                (17
                )
                
                7
                
                $
                1,419
                
                $
                (18
                )**2005****:****Securities
                    Available for Sale**Government-sponsored
                    enterprises
                
                $
                69,298
                
                $
                (765
                )
                $
                28,519
                
                $
                (632
                )
                
                50
                
                $
                97,817
                
                $
                (1,397
                )Mortgage-backed
                    securities
                
                
                53,636
                
                
                (976
                )
                
                54,052
                
                
                (1,683
                )
                
                88
                
                
                107,688
                
                
                (2,659
                )Corporate
                    bonds
                
                
                2,078
                
                
                (74
                )
                
                3,803
                
                
                (61
                )
                
                13
                
                
                5,881
                
                
                (135
                )Marketable
                    equity securities
                
                
                100
                
                
                (1
                )
                
                172
                
                
                (21
                )
                
                2
                
                
                272
                
                
                (22
                )Total
                
                $
                125,112
                
                $
                (1,816
                )
                $
                86,546
                
                $
                (2,397
                )
                
                153
                
                $
                211,658
                
                $
                (4,213
                )**Securities
                    Held to Maturity**Municipal
                    bonds
                
                $
                1,365
                
                $
                (12
                )
                $
                587
                
                $
                (15
                )
                
                9
                
                $
                1,952
                
                $
                (27
                )Total
                
                $
                1,365
                
                $
                (12
                )
                $
                587
                
                $
                (15
                )
                
                9
                
                $
                1,952
                
                $
                (27
                )
 
 Management
          has evaluated the securities in the preceding tables and concluded that
          none of
          these securities have experienced impairments that are other-than temporary.
          In
          its evaluation, management considered the types of securities, including
          if the
          securities were U.S. Government issued, and the credit rating on the securities.
          Management believes that the current unrealized loss position is related
          to the
          current interest rate environment. The Company has the ability to hold
          these
          securities until the earlier of maturity or a market price recovery and
          currently has no plans to dispose of any of these securities.
  F-17
  **UNITED
          FINANCIAL BANCORP, INC. AND SUBSIDIARY**
 Notes
          to
          Consolidated Financial Statements
 December
          31, 2006, 2005 and 2004
 (Dollars
          in thousands, except per share amounts)
 **NOTE
          C - INVESTMENT SECURITIES - Concluded**
 
 Realized
          gains and losses and the proceeds from sales of securities available for
          sale
          are as follows for the years ended December 31:
 
 **2006**
                
                **2005**
                
                **2004**Proceeds
                    from sales
                
                $
                28,896
                
                $
                2,597
                
                $
                32,985Gross
                    gains
                
                
                56
                
                
                16
                
                
                122Gross
                    losses
                
                
                (278
                )
                
                (13
                )
                
                -
 
 The
          scheduled maturities of debt securities held to maturity and available
          for sale
          at December 31, 2006, are shown below. Expected maturities may differ from
          contractual maturities because issuers may have the right to call or prepay
          obligations with or without call or prepayment penalties.
 
 **At
                    December 31, 2006****Securities
                    Available for Sale**
                
                **Securities
                    Held to Maturity****Amortized**
                
                **Fair**
                
                **Amortized**
                
                **Fair****Cost**
                
                **Value**
                
                **Cost**
                
                **Value**Due
                    in one year or less
                
                $
                31,698
                
                $
                31,575
                
                $
                201
                
                $
                198Due
                    from one year to five years
                
                
                57,709
                
                
                56,174
                
                
                1,312
                
                
                1,299Due
                    from five years to ten years
                
                
                34,957
                
                
                34,081
                
                
                878
                
                
                880Due
                    after ten years
                
                
                68,780
                
                
                68,122
                
                
                850
                
                
                850$
                193,144
                
                $
                189,952
                
                $
                3,241
                
                $
                3,227
 
 Maturities
          are based on the final contractual payment dates, and do not reflect the
          impact
          of prepayments or early redemptions that may occur. Such
          securities have been classified within the category that represents the
          final
          maturity date.
  F-18
  **UNITED
          FINANCIAL BANCORP, INC. AND SUBSIDIARY**
 Notes
          to
          Consolidated Financial Statements
 December
          31, 2006, 2005 and 2004
 (Dollars
          in thousands, except per share amounts)
 **NOTE
          D - LOANS, NET**
 
 The
          components of loans are as follows at December 31:
 
 **December 31,**
                
                **December 31,****2006**
                
                **2005**One-to-four
                    family residential real estate
                
                $
                319,108
                
                $
                285,236Commercial
                    real estate
                
                
                175,564
                
                
                150,099Construction
                
                
                54,759
                
                
                28,872Home
                    equity loans
                
                
                112,739
                
                
                86,045Commercial
                    and industrial
                
                
                69,762
                
                
                59,591Consumer
                
                
                30,181
                
                
                25,949Total
                    loans
                
                
                762,113
                
                
                635,792Net
                    deferred loan costs and fees
                
                
                1,285
                
                
                1,148Allowance
                    for loan losses
                
                
                (7,218
                )
                
                (6,382
                )Loans,
                    net
                
                $
                756,180
                
                $
                630,558
 
 The
          Company’s lending activities are conducted principally in Western Massachusetts.
          The Bank grants single family and multi-family residential loans, commercial
          real estate loans, commercial loans, and a variety of consumer loans. In
          addition, the Company grants loans for the construction of residential
          homes,
          multi-family properties and commercial real estate properties. Most loans
          granted by the Company are collateralized by real estate. The ability and
          willingness of the single family residential, commercial and consumer borrowers
          to honor their repayment commitments is generally dependent on the level
          of
          overall economic activity within the borrowers’ geographic areas and real estate
          values. The ability and willingness of commercial real estate and construction
          loan borrowers to honor their repayment commitments is generally dependent
          on
          the health of the real estate economic sector in the borrowers’ geographic areas
          and the general economy.
  F-19
  **UNITED
          FINANCIAL BANCORP, INC. AND SUBSIDIARY**
 Notes
          to
          Consolidated Financial Statements
 December
          31, 2006, 2005 and 2004
 (Dollars
          in thousands, except per share amounts)
 **NOTE
          D - LOANS, NET - Continued**
  Nonaccrual
          loans amounted to approximately $1,288 and $1,717 at December
          31, 2006 and 2005 ,
          respectively. Additional interest income of approximately $71, $158 and
          $110
          would have been recorded during the years ended December 31, 2006, 2005
          and
          2004, respectively, if the loans had performed in accordance with their
          original
          terms.
 
 At
          December 31, 200 6
          and
          2005, the recorded investment in impaired loans was $1,288 and $700,
          respectively, all of which were accounted for on a non-accrual basis. An
          allowance for loan losses was established on $1,288 and $700 of the impaired
          loans at December 31, 2006 and 2005, respectively, which allowances
          amounted to $295 and $80 at the respective year-ends. The average balance
          of
          impaired loans was $2,076, $2,145 and $1,395 for the years ended December
          31,
          2006, 2005 and 2004, respectively. Interest income recognized on impaired
          loans
          during 2006, 2005 and 2004 was not significant.
 
 Certain
          officers and directors of the Company and certain corporations and individuals
          related to such persons, incurred indebtedness, in the form of loans, as
          customers. These loans were made on substantially the same terms, including
          interest rates and collateral, as those prevailing at the time or comparable
          transactions with other customers and did not involve more than the normal
          risk
          of collectibility.
 
 The
          following table summarizes the Company’s lending activity with its directors and
          executive officers all of which was conducted with terms consistent with
          those
          offered to unrelated parties:
 
 **2006**
                
                **2005**Beginning
                    balance
                
                $
                1,373
                
                $
                1,359New
                    loans
                
                
                10
                
                
                335Repayments
                
                
                (409
                )
                
                (321
                )Ending
                    balance
                
                $
                974
                
                $
                1,373
 
 The
          Company does not presently originate loans for the purpose of reselling
          them in
          the secondary market but has sold residential mortgage loans from its portfolio.
          Loans serviced by the Company for others totaled $36,900 and $42,400 at
          December 31, 2006 and 2005, respectively. The balances of mortgage
          servicing rights related to such loans were insignificant at December 31,
          2006
          and 2005.
  F-20
  **UNITED
          FINANCIAL BANCORP, INC. AND SUBSIDIARY**
 Notes
          to
          Consolidated Financial Statements
 December
          31, 2006, 2005 and 2004
 (Dollars
          in thousands, except per share amounts)
 **NOTE
          D - LOANS, NET - Concluded**
 
 A
          summary
          of changes in the allowance for loan losses for the years ended December 31
          follows:
 
 **2006**
                
                **2005**
                
                **2004**Balance
                    at beginning of period
                
                $
                6,382
                
                $
                5,750
                
                $
                5,094Provision
                    for loan losses
                
                
                969
                
                
                917
                
                
                983Charge-offs
                
                
                (186
                )
                
                (455
                )
                
                (558
                )Recoveries
                
                
                53
                
                
                170
                
                
                231Balance
                    at end of period
                
                $
                7,218
                
                $
                6,382
                
                $
                5,750
 
 **NOTE
          E - BANKING PREMISES AND EQUIPMENT**
 
 The
          composition of banking premises and equipment is as follows at December
          31:
 
 **Estimated****2006**
                
                **2005**
                
                **Useful Lives**Land
                    and improvements
                
                $
                2,146
                
                $
                2,135Buildings
                    and improvements
                
                
                7,475
                
                
                7,309
                
                
                25
                    - 40 YearsLeasehold
                    improvements
                
                
                1,976
                
                
                1,708Furniture
                    and equipment
                
                
                2,271
                
                
                1,573
                
                
                5
                    Years13,868
                
                
                12,725Less
                    accumulated depreciation and amortization
                
                
                (5,047
                )
                
                (4,489
                )$
                8,821
                
                $
                8,236
 F-21
  **UNITED
          FINANCIAL BANCORP, INC. AND SUBSIDIARY**
 Notes
          to
          Consolidated Financial Statements
 December
          31, 2006, 2005 and 2004
 (Dollars
          in thousands, except per share amounts)
 **NOTE
          E - BANKING PREMISES AND EQUIPMENT- Concluded**
 
 The
          Company leases six of its branches, two ATM facilities and a financial
          services
          office. Rent expense for the years ended December 31, 2006, 2005 and 2004
          amounted to approximately $363, $259 and $231, respectively. The leases,
          which
          are noncancelable, expire at various dates through 2031. Future minimum
          rental
          commitments under the terms of leases are as follows:
 
 **Years
                    ending December 31,**2007
                
                $
                4982008
                
                
                4342009
                
                
                4052010
                
                
                3502011
                
                
                239Thereafter
                
                
                3,224Total
                    minimum lease payments
                
                $
                5,150
 
 
 **NOTE
          F - DEPOSITS**
 
 Deposit
          accounts by type are summarized as follows at December 31:
 
 **2006**
                
                **2005**Demand
                
                $
                97,190
                
                $
                93,301NOW
                
                
                37,523
                
                
                39,922Regular
                    savings
                
                
                65,475
                
                
                87,253Money
                    market
                
                
                164,463
                
                
                154,177Retirement
                
                
                55,368
                
                
                52,694Certificates
                    of deposit
                
                
                265,667
                
                
                226,264$
                685,686
                
                $
                653,611
 F-22
  **UNITED
          FINANCIAL BANCORP, INC. AND SUBSIDIARY**
 Notes
          to
          Consolidated Financial Statements
 December
          31, 2006, 2005 and 2004
 (Dollars
          in thousands, except per share amounts)
 **NOTE
          F - DEPOSITS- Concluded**
 
 Certificates
          of deposit with balances greater than or equal to $100 totaled $103,321
          and
          $90,597 at December
          31, 2006 and 2005 ,
          respectively. The FDIC generally insures deposit amounts up to $100, as
          defined
          in the applicable regulations. The maturity of those certificates as of
          December
          31, 2006 is as follows:
 
 **At****December 31,****2006**Three
                    months or less
                
                $
                34,924Over
                    three months through six months
                
                
                38,264Over
                    six months through one year
                
                
                20,554Over
                    one year to three years
                
                
                6,196Over
                    three years
                
                
                3,383Total
                
                $
                103,321
 
 The
          scheduled maturities of time deposits at December 31, 2006, are as
          follows:
 
 2007
                
                $
                282,0252008
                
                
                17,0892009
                
                
                10,8992010
                
                
                8,7382011
                
                
                763Total
                    time deposits
                
                $
                319,514
 
 Interest
          expense on deposits, classified by type, is as follows:
 
 **2006**
                
                **2005**
                
                **2004**NOW
                
                $
                103
                
                $
                148
                
                $
                90Regular
                    savings
                
                
                638
                
                
                647
                
                
                698Money
                    market
                
                
                5,125
                
                
                3,098
                
                
                1,710Retirement
                
                
                2,087
                
                
                1,900
                
                
                1,354Certificates
                    of deposit
                
                
                10,742
                
                
                6,507
                
                
                5,143Total
                
                $
                18,695
                
                $
                12,300
                
                $
                8,995
 F-23
  **UNITED
          FINANCIAL BANCORP, INC. AND SUBSIDIARY**
 Notes
          to
          Consolidated Financial Statements
 December
          31, 2006, 2005 and 2004
 (Dollars
          in thousands, except per share amounts)
 **NOTE
          G - BORROWINGS**
 
 ***Federal
          Home Loan Bank Advances***
 
 The
          Bank
          is a member of the Federal Home Loan Bank of Boston (“FHLBB”) and as such, it
          was required to invest in stock of the FHLBB, until April 2004, in an amount
          which was the greater of .3% of its total assets, 1% of its outstanding
          home
          loans or 5% of its outstanding advances from the FHLBB. In April 2004,
          the FHLBB
          amended its capital structure at which time the Bank’s FHLBB stock was converted
          to Class B stock. Such stock is redeemable at par value five years after
          filing
          for a redemption or upon termination of membership. The FHLBB may, but
          is not
          obligated to, repurchase Class B stock prior to expiration of the five year
          redemption notice. Under the amended capital structure, the Bank’s stock
          investment requirement is an amount equal to the sum of .35% of certain
          specified assets plus 4.5% of the Bank’s advances and certain other specified
          items.
 
 The
          FHLBB
          is authorized to make advances to its members subject to such regulations
          and
          limitations as its Board of Directors may prescribe. The Bank’s advances are
          secured by its FHLBB stock and a blanket lien on certain qualified collateral,
          primarily one-to four-family first mortgage loans and certain debt securities.
          The Bank’s unused borrowing capacity with the FHLBB, excluding its $12.4 million
          line of credit, was approximately $136,538 at December 31, 2006. At
          December 31, 2006, the Bank had no borrowing against the line of
          credit.
 
 Advances
          outstanding at December 31, 2006, 2005 and 2004 consisted of the following:
 
 **2006**
                
                **2005**
                
                **2004****Weighted**
                
                
                
                **Weighted**
                
                
                
                **Weighted****Amount**
                
                **Average
                    Rate**
                
                **Amount**
                
                **Average
                    Rate**
                
                **Amount**
                
                **Average
                    Rate**Within
                    1 year
                
                $
                65,000
                
                
                5.16
                %
                $
                13,799
                
                
                3.40
                %
                $
                16,000
                
                
                2.35
                %Over
                    1 year to 2 years
                
                
                16,411
                
                
                5.06
                %
                
                10,000
                
                
                4.37
                %
                
                12,000
                
                
                3.23
                %Over
                    2 years to 3 years
                
                
                13,000
                
                
                5.13
                %
                
                19,393
                
                
                4.95
                %
                
                -
                
                
                
                %Over
                    3 years to 4 years
                
                
                16,111
                
                
                3.20
                %
                
                -
                
                
                
                %
                
                -
                
                
                
                %Over
                    4 years to 5 years
                
                
                39,184
                
                
                4.60
                %
                
                20,318
                
                
                3.19
                %
                
                22,247
                
                
                4.87
                %Over
                    5 years
                
                
                20,100
                
                
                4.32
                %
                
                38,370
                
                
                4.02
                %
                
                36,447
                
                
                3.32
                %$
                169,806
                
                
                4.73
                %
                $
                101,880
                
                
                3.98
                %
                $
                86,694
                
                
                3.53
                %
 
 At
          December 31, 2006, advances in the amounts of $30,000 and $5,000 are callable
          at
          the option of the FHLBB during 2007 and 2009, respectively.
  F-24
  **UNITED
          FINANCIAL BANCORP, INC. AND SUBSIDIARY**
 Notes
          to
          Consolidated Financial Statements
 December
          31, 2006, 2005 and 2004
 (Dollars
          in thousands, except per share amounts)
 ***Repurchase
          Agreements***
 
 Securities
          sold under agreements to repurchase are funds borrowed from customers on
          an
          overnight basis that are secured by U.S. Government agency obligations.
          The
          following table summarizes repurchase agreement activity for the years
          indicated:
 
 **December
                    31,****2006**
                
                **2005**
                
                **2004**Balance
                    at year-end
                
                $
                10,425
                
                $
                8,434
                
                $
                4,317Average
                    amount outstanding during year
                
                
                5,546
                
                
                5,572
                
                
                4,064Interest
                    expense incurred during year
                
                
                167
                
                
                90
                
                
                39Maximum
                    amount outstanding at any month-end
                
                
                10,425
                
                
                8,675
                
                
                6,015Average
                    interest rate during the year
                
                
                3.01
                %
                
                1.62
                %
                
                0.96
                %Weighted
                    average interest rate at year-end balances
                
                
                3.38
                %
                
                2.12
                %
                
                1.19
                %
  **NOTE
          H - INCOME TAXES**
  Allocation
          of federal and state income taxes between current and deferred provisions
          is as
          follows:
  Years
                      Ended December 31,2006
                  
                  2005
                  
                  2004Current
                      tax provision:Federal
                  
                  $
                  3,618
                  
                  $
                  1,417
                  
                  $
                  2,970State
                  
                  
                  1,079
                  
                  
                  254
                  
                  
                  8594,697
                  
                  
                  1,671
                  
                  
                  3,829Deferred
                      tax provision (benefit):Federal
                  
                  
                  (1,289
                  )
                  
                  704
                  
                  
                  (1
                  )State
                  
                  
                  (390
                  )
                  
                  274
                  
                  
                  0(1,679
                  )
                  
                  978
                  
                  
                  (1
                  )$
                  3,018
                  
                  $
                  2,649
                  
                  $
                  3,828
  The
            reasons for the differences between the statutory federal income tax
            rate and
            the effective rates are summarized as follows:
 
 Years
                      Ended December 31,2006
                  
                  2005
                  
                  2004Statutory
                      tax rate
                  
                  
                  34.0
                  %
                  
                  34.0
                  %
                  
                  34.0
                  %Increase
                      (decrease) resulting from:State
                      taxes, net of federal tax benefit
                  
                  
                  5.7
                  %
                  
                  5.0
                  %
                  
                  6.1
                  %Other,
                      net
                  
                  
                  (1.7
                  %)
                  
                  (1.2
                  %)
                  
                  0.8
                  %Effective
                      tax rates
                  
                  
                  38.0
                  %
                  
                  39.0
                  %
                  
                  40.9
                  %
 F-25
  **UNITED
          FINANCIAL BANCORP, INC. AND SUBSIDIARY**
 Notes
          to
          Consolidated Financial Statements
 December
          31, 2006, 2005 and 2004
 (Dollars
          in thousands, except per share amounts)
 **NOTE
          H - INCOME TAXES - Continued**
  The
            components of the net deferred tax asset are as follows:
 
 December
                      31,2006
                  
                  2005Deferred
                      tax asset:Federal
                  
                  $
                  4,744
                  
                  $
                  4,769State
                  
                  
                  1,548
                  
                  
                  1,5836,292
                  
                  
                  6,352Deferred
                      tax liability:Federal
                  
                  
                  (2,558
                  )
                  
                  (3,839
                  )State
                  
                  
                  (883
                  )
                  
                  (1,268
                  )(3,441
                  )
                  
                  (5,107
                  )Net
                      deferred tax asset
                  
                  $
                  2,851
                  
                  $
                  1,245
 
 The
            tax
            effects of each type of income and expense item that give rise to deferred
            taxes
            are as follows:
 
 2006
                  
                  2005Cash
                      basis of accounting
                  
                  $
                  29
                  
                  $
                  64Net
                      unrealized loss on securities available for sale
                  
                  
                  426
                  
                  
                  500Depreciation
                  
                  
                  492
                  
                  
                  376Deferred
                      expense
                  
                  
                  (1,044
                  )
                  
                  (858
                  )Allowance
                      for loan loss
                  
                  
                  2,955
                  
                  
                  2,598Employee
                      benefit plans
                  
                  
                  1,337
                  
                  
                  1,304Market
                      value adjustment - loans
                  
                  
                  (2,391
                  )
                  
                  (3,912
                  )Contribution
                      carryover
                  
                  
                  1,048
                  
                  
                  1,510Other
                  
                  
                  (1
                  )
                  
                  (337
                  )Net
                      deferred tax asset
                  
                  $
                  2,851
                  
                  $
                  1,245
 
 A
            summary
            of the change in the net deferred tax asset is as follows:
 
 2006
                  
                  2005Balance
                      at beginning of year
                  
                  $
                  1,245
                  
                  $
                  1,551Deferred
                      tax provision (benefit)
                  
                  
                  1,679
                  
                  
                  (978
                  )Change
                      in unrealized (loss) gain on securities available for sale
                  
                  
                  (73
                  )
                  
                  672Balance
                      at end of year
                  
                  $
                  2,851
                  
                  $
                  1,245
 F-26
 **UNITED
          FINANCIAL BANCORP, INC. AND SUBSIDIARY**
 Notes
          to
          Consolidated Financial Statements
 December
          31, 2006, 2005 and 2004
 (Dollars
          in thousands, except per share amounts)
 **NOTE
              H -** **INCOME
              TAXES - Concluded**
 
 The
          charitable contribution carryforward may be carried forward until 2009
          and is
          limited to 10% of taxable income each year. Based on an assessment of the
          likely
          ranges of taxable income during the carryforward period, management believes
          that it is more likely than not it will fully utilize tax deductions for
          this
          item.
 
 The
          Bank’s base year reserve (as of December 31, 1995) will not be recaptured unless
          the reserve is used for purposes other than for loan losses, such as in
          a
          distribution in liquidation or otherwise. Accordingly, the Bank has not
          recorded
          a deferred tax liability of approximately $2,600 relating to approximately
          $6,200 of cumulative tax deductions generated prior to December 31,
          1995.
 
 **NOTE
              I -** **EARNINGS
              PER SHARE**
 
 Since
          the
          Company’s initial
          public offering (IPO) in July 2005, the Company has presented earnings
          per share
          data for quarterly and annual reporting periods during which its shares
          were
          outstanding for the complete period. This presentation was consistent with
          the
          method used in practice by banking entities which reorganized using the
          mutual
          holding company structure. Pursuant to guidance provided to the Company
          by the
          staff of the Securities and Exchange Commission, the Company is revising
          its
          presentation of earnings per share data for periods prior to its IPO to
          reflect
          shares issued to United Mutual Holding Company in the IPO as outstanding
          for all
          periods presented. Shares issued to the public in the IPO, which was completed
          on July 12, 2005, are presented as outstanding from the time of issuance.
          The
          additional disclosure of earnings per share for those periods prior to
          the IPO
          has no effect on previously reported earnings per share for periods subsequent
          to the IPO. Accordingly, earnings per share for the years ended December
          31,
          2005 and 2004 is being presented for the first time herein, whereas earnings
          per
          share for the year ended December 31, 2006 is unchanged from the amount
          previously presented.
  The
          calculation of earnings per common share and diluted earnings per common
          share
          for the periods ended December 31, 2006, 2005 and 2004 is presented
          below.
  **Years
                      Ended December 31,****2006**
                  
                  
                  **2005
                      (1)**
                  
                  
                  **2004
                      (2)**Net
                      income
                  
                  $
                  4,924
                  
                  
                  $
                  4,369
                  
                  
                  $
                  5,528Weighted
                      average common shares applicable to basic EPS
                  
                  
                  16,467,874
                  
                  
                  
                  12,676,032
                  
                  
                  
                  9,189,722Effect
                      of dilutive potential
                      common shares(3, 4)
                  
                  
                  9,059
                  
                  
                  
                  -
                  
                  
                  
                  -Weighted
                      average common shares applicable to diluted EPS
                  
                  
                  16,476,933
                  
                  
                  
                  12,676,032
                  
                  
                  
                  9,189,722Earnings
                      per share:Basic
                  
                  $
                  0.30
                  
                  
                  $
                  0.34
                  
                  
                  $
                  0.60Diluted
                  
                  $
                  0.30
                  
                  
                  $
                  0.34
                  
                  
                  $
                  0.60
  (1)
                      The Company issued 17,205,995 shares of common stock in its
                      July, 2005
                      initial public offering, including 9,189,722 shares held by
                      United Mutual
                      Holding Company.Earnings
                      per share for the period include the impact of 9,189,722 shares
                      outstanding from January 1 through July 11 and 17,205,995 shares
                      from July
                      12through
                      December 31.(2)
                      Earnings per share for the period reflects 9,189,722 shares
                      held by United
                      Mutual Holding Company in connection with the Company's initial
                      public
                      offering.(3)
                      Options to purchase 756,500 shares were outstanding but not
                      included in
                      the computation of diluted earnings per share for the year
                      ended December
                      31, 2006 becausethey
                      were antidulutive.(4)
                      Includes incremental shares related to stock options and restricted
                      stock.
 **NOTE
              J -** **STOCK-BASED
              INCENTIVE PLAN**
 
 The
          Company’s 2006 Stock-Based Incentive Plan (the “Incentive Plan”) was approved by
          shareholders at the Company’s Annual Meeting held on July 20, 2006. The
          Incentive Plan will remain in effect for a period of ten years and provides
          for
          the issuance of up to 1,180,330 shares of Company common stock pursuant
          to
          grants of incentive and non-statutory stock options,
  F-27
  **UNITED
          FINANCIAL BANCORP, INC. AND SUBSIDIARY**
 Notes
          to
          Consolidated Financial Statements
 December
          31, 2006, 2005 and 2004
 (Dollars
          in thousands, except per share amounts)
 **NOTE
              J -** **STOCK-BASED
              INCENTIVE PLAN - Continued**
 
 stock
          appreciation rights and restricted stock awards, provided that no more
          than
          337,237 shares may be issued as restricted stock awards, and no more than
          843,093 shares may be issued pursuant to the exercise of stock options.
          Employees and outside directors of the Company are eligible to receive
          awards
          under the Incentive Plan. The holders of restricted stock awards also have
          full
          voting rights beginning on the grant date. Upon the occurrence of an event
          constituting a change in control of the Company, as defined in the Incentive
          Plan, all stock options will become fully vested, and all stock awards
          then
          outstanding will vest free of restrictions.
 
 Under
          the
          Incentive Plan, stock options are granted at an exercise price equal to
          the fair
          value of the underlying shares at the date of grant and have a contractual
          life
          of ten years. Stock options vest based on continued service with the Company
          over the five year period following the grant date. Certain employees and
          directors are eligible for accelerated vesting based upon early retirement
          provisions in the plan. The compensation cost related to stock options
          is based
          upon the fair value for each option as of the date of the grant determined
          using
          the Black-Scholes option pricing model. The Black-Scholes model requires
          the
          Company to provide estimates of the expected term, volatility of the underlying
          stock, the stock’s dividend yield and the discount rate. The Company intends to
          use treasury shares to satisfy stock option exercises.
 
 The
          compensation cost related to restricted stock awards is based upon the
          Company’s
          stock price at the grant date. Restricted stock awards vest based upon
          continuous service with the Company over the five year period following
          the
          grant date. Certain employees and directors are eligible for accelerated
          vesting
          based upon early retirement provisions in the plan. During the vesting
          period,
          participants are entitled to dividends for all awards. Dividends on unvested
          stock awards are also recognized as compensation cost.
  F-28
  **UNITED
          FINANCIAL BANCORP, INC. AND SUBSIDIARY**
 Notes
          to
          Consolidated Financial Statements
 December
          31, 2006, 2005 and 2004
 (Dollars
          in thousands, except per share amounts)
 **NOTE
              J -** **STOCK-BASED
              INCENTIVE PLAN - Continued**
 
 A
          combined summary of activity in the Company’s Incentive Plan activity for the
          period ended December 31, 2006 is presented in the following table:
  Stock
                      Awards Outstanding
                  
                  Stock
                      Options OutstandingWeighted-
                  
                  
                  
                  Weighted-Shares
                  
                  
                  
                  Average
                  
                  
                  
                  AverageAvailable
                  
                  Number
                      of
                  
                  Grant
                  
                  Number
                      of
                  
                  Exercisefor
                      Grant
                  
                  Shares
                  
                  Price
                  
                  Shares
                  
                  PriceBalance
                      at December 31, 2005
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -New
                      Incentive Plan
                  
                  
                  1,180,330
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -Granted
                  
                  
                  (1,047,000
                  )
                  
                  290,500
                  
                  
                  12.86
                  
                  
                  756,500
                  
                  
                  12.88Stock
                      options exercised
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -Shares
                      vested
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -Forfeited
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -Cancelled
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -Balance
                      at December 31, 2006
                  
                  
                  133,330
                  
                  
                  290,500
                  
                  $
                  12.86
                  
                  
                  756,500
                  
                  $
                  12.88
  In
          2006,
          the Company granted 756,500 stock options and 290,500 restricted shares
          to
          certain directors and employees. The stock options had a weighted average
          value
          of $3.63 per share, with a total grant date fair value of $2,742. The restricted
          shares had a weighted average value of $12.86 per share, with a total grant
          date
          fair value of $3,735.
 
 The
          Company’s total compensation cost for shared-based payment arrangements was
          $729, including $15 of dividends on unvested stock. The Company also recorded
          a
          tax benefit of $219 in 2006 related to the recognition of the shared-based
          compensation expense. As of December 31, 2006, compensation costs related
          to
          nonvested awards totaling $5,763 million has not been recognized. These
          costs
          will be recognized over an estimated weighted average period of 4.2
          years.
 
 The
          following table presents the assumptions used to compute the fair value
          of
          options using the Black-Scholes option pricing model for stock options
          granted
          during 2006.
 
 Expected
                    term
                
                
                6.50
                    yearsVolatility
                
                
                25.00
                %Expected
                    dividend yield
                
                
                2.00
                %Weighted
                    average risk-free interest rate
                
                
                4.81
                %
 F-29
  **UNITED
          FINANCIAL BANCORP, INC. AND SUBSIDIARY**
 Notes
          to
          Consolidated Financial Statements December 31, 2006, 2005 and 2004
 (Dollars
          in thousands, except per share amounts)
 **NOTE
              J -** **STOCK-BASED
              INCENTIVE PLAN - Concluded**
 
 A
          summary
          of stock options outstanding and exercisable at December 31, 2006 is as
          follows:
 
 Stock
                    OptionsOutstanding
                
                ExercisableTotal
                    number of shares
                
                
                756,500
                
                
                -Weighted
                    average exercise price
                
                $
                12.88
                
                
                -Aggregate
                    intrinsic value
                
                $
                699
                
                
                -Weighted
                    average remaining contractual term
                
                
                9.6
                    years
                
                
                -
 
 **NOTE
              K -** **EMPLOYEE
              BENEFIT PLANS**
 
 ***Retirement
          Plans***
 
 The
          Bank
          provides pension benefits for all of its eligible employees through membership
          in a multi-employer defined benefit plan of the CBERA. The Bank’s contribution
          to the plan was $397, $394 and $397 for the years ended December 31, 2006,
          2005
          and 2004, respectively. Under the plan,
          retirement benefits are based on years of service and the highest average
          compensation. In addition, employees make voluntary contributions to a
          defined
          contribution plan. These contributions are matched by the Bank up to a
          maximum
          of 5% of the employee’s qualified salary and provide retirement benefits to the
          employee in addition to those available under the Bank’s participation in the
          multi-employer defined benefit plan. The contributions matched by the Bank
          were
          $307, $292 and $279 for the years ended December
          31, 2006, 2005 and 2004 ,
          respectively.
 
 In
          November 2006, the Company’s Board of Directors approved a plan to freeze
          benefits under this plan effective in April 2007.
 
 ***Supplemental
          Executive Retirement Plan***
 
 The
          Bank
          has entered into Supplemental Executive Retirement Plan (“SERP”) contracts with
          certain of its current and former officers. The
          estimated amount to be paid under each contract is accrued over the executive’s
          active employment from the time the contract is signed to the date of full
          eligibility. The
          liability associated with these SERP contracts was $1,626 and $1,471 at
          December
          31, 2006 and 2005, respectively, and is included in accrued expenses and
          other
          liabilities in the consolidated balance sheets. The expense for SERP contracts,
          excluding interest, was $162, $156 and $64 for the years ended December 31,
          2006, 2005 and 2004, respectively.
  F-30
  **UNITED
          FINANCIAL BANCORP, INC. AND SUBSIDIARY**
 Notes
          to
          Consolidated Financial Statements
 December
          31, 2006, 2005 and 2004
 (Dollars
          in thousands, except per share amounts)
 **NOTE
              K -** **EMPLOYEE
              BENEFIT PLANS- Continued**
 
 ***Incentive
          Plan***
 
 The
          Company maintains an incentive plan in which employees are eligible to
          participate. The incentive plan provides for awards based on the achievement
          of
          both individual and Company performance goals, subject to approval by the
          Board
          of Directors. Related expense amounted to $547, $832 and $544 for the years
          ended December 31, 2006, 2005 and 2004 respectively.
 
 ***Directors
          Fee Continuation Plan***
 
 The
          Company sponsors a Directors Fee Continuation Plan under which a Director
          will
          annually receive $15 ($24 for former chairpersons) for ten years beginning
          upon
          attaining the normal retirement date. The benefit is reduced for directors
          serving fewer than 15 years. In the event of the participant’s death prior to
          receiving the full benefits of the plan, any unpaid benefits will be paid
          to the
          beneficiary. The Company recognizes expense under this plan on a ratable
          basis
          such that the present value of the liability is fully accrued at each director’s
          normal retirement date. At December 31, 2006 and 2005, the Company’s recorded
          liability for this plan amounted to $868 and $834, respectively, and is
          included in accrued expenses and other liabilities in the consolidated
          balance
          sheets .
          The
          expense associated with this plan was $59, $207, and $56 for the years
          ended
          December 31, 2006, 2005 and 2004, respectively.
 
 ***Employee
          Stock Ownership Plan***
  In
          connection with the Company’s 2005 stock offering, the Company established an
          Employee Stock Ownership Plan (“ESOP”) for the benefit of each employee that has
          reached the age of 21 and has completed at least 1,000 hours of service
          in the
          previous twelve-month period. The Company issued 641,301 shares of common
          stock
          to the ESOP in exchange for a twenty-year note. The loan amount was
          approximately $6,413 and was recorded as "Unearned Compensation" within
          stockholders' equity. The loan bears interest equal to the prime rate in
          effect
          at January 1 st of each
          year and provides for annual payments of principal and interest. In November
          2006, the Board of Directors voted to accelerate its Employee Stock Ownership
          Plan benefit from a twenty (20) year payout to a fifteen (15) year payout
          beginning in 2007 .
  F-31
  **UNITED
          FINANCIAL BANCORP, INC. AND SUBSIDIARY**
 Notes
          to
          Consolidated Financial Statements
 December
          31, 2006, 2005 and 2004
 (Dollars
          in thousands, except per share amounts)
 **NOTE
              K -** **EMPLOYEE
              BENEFIT PLANS- Concluded**
 
 The
          Bank
          has committed to make contributions to the ESOP sufficient to support the
          debt
          service of the loan. The loan is secured by the shares held by First Bankers
          Trust Company (“Trustee”) in a suspense account for allocation among the
          participants as the loan is paid. In connection with the release of shares
          from
          the suspense account, the Company reports compensation expense equal to
          the
          average market price of the shares. Total compensation expense applicable
          to the
          ESOP amounted to $406 and $376 for the years ended December 31, 2006 and
          2005,
          respectively.
  Shares
          held by the ESOP include the following:
 
 **December
                    31,****2006**
                
                **2005**Allocated
                
                
                32,065
                
                
                -Committed
                    to be released
                
                
                32,065
                
                
                32,065Unallocated
                
                
                577,171
                
                
                609,236641,301
                
                
                641,301
 
 Cash
          dividends received on allocated shares are allocated to participants and
          cash
          dividends received on shares held in suspense are used to fund the scheduled
          annual debt payment. The fair value of unallocated shares at December 31,
          2006
          and December 31, 2005 was $7,965 and $7,024, respectively.
 
 **NOTE
              L -** **COMMITMENTS
              AND CONTINGENCIES**
 
 ***Financial
          Instruments With Off-Balance Sheet Risk***
 
 The
          Company is party to financial instruments with off-balance sheet risk in
          the
          normal course of business to meet the financing needs of its customers.
          These
          financial instruments include commitments to originate loans and standby
          letters
          of credit. The
          Company does not record a liability for the fair value of the obligation
          undertaken in issuing standby letters of credit unless it becomes probable
          that
          the Company would have to perform under the guarantee. These instruments
          involve, to varying degrees, elements of credit and interest rate risk
          in excess
          of the amount recognized in the consolidated balance sheets. The contract
          or
          notional amounts of those instruments reflect the extent of involvement
          the
          Company has in particular classes of financial instruments *.*
 
 The
          Company’s exposure to credit loss in the event of nonperformance by the other
          party to the financial instrument for loan commitments and standby letters
          of
          credit is represented by the contractual or notional amounts of those
          instruments. The Company uses the same credit policies in making commitments
          and
          conditional obligations as it does for on-balance sheet
          instruments.
  F-32
  **UNITED
          FINANCIAL BANCORP, INC. AND SUBSIDIARY**
 Notes
          to
          Consolidated Financial Statements
 December
          31, 2006, 2005 and 2004
 (Dollars
          in thousands, except per share amounts)
 **NOTE
              L -** **COMMITMENTS
              AND CONTINGENCIES - Continued**
 
 Financial
          instruments with off-balance sheet risk at December 31, 2006 and 2005,
          are as
          follows:
 
 **2006**
                
                **2005**Unused
                    lines of credit
                
                $
                135,374
                
                $
                114,016Amounts
                    due mortgagors
                
                
                34,742
                
                
                16,833Standby
                    letters of credit
                
                
                879
                
                
                1,383Commitments
                    to originate loans
                
                
                42,551
                
                
                15,831
 
 Included
          in commitments to originate loans at December 31, 2006 and 2005 are fixed
          rate
          commitments in the amount of $15,316 and $9,465 at interest ranges of 5.25%
          to
          9.00% and 5.38% to 7.25%, respectively.
 
 Commitments
          to extend credit are agreements to lend to a customer as long as there
          is no
          violation of any condition established in the contract. Commitments generally
          have fixed expiration dates or other termination clauses and may require
          payment
          of a fee. Since many of the commitments are expected to expire without
          being
          drawn upon, the total commitment amounts do not necessarily represent future
          cash requirements. The Company evaluates each customer’s creditworthiness on a
          case-by-case basis.
 
 The
          amount of collateral obtained, if deemed necessary by the Bank upon extension
          of
          credit, is based on management’s credit evaluation.
 
 Standby
          letters of credit are conditional commitments issued by the Company to
          guarantee
          the performance of a customer to a third party. Those guarantees are primarily
          issued to support public and private borrowing arrangements, including
          commercial paper, bond financing and similar transactions. The credit risk
          involved in issuing letters of credit is essentially the same as that involved
          in extending loan facilities to customers. The Company holds residential
          or
          commercial real estate, accounts receivable, inventory and equipment as
          collateral supporting those commitments for which collateral is deemed
          necessary. The extent of collateral held for those commitments at
          December 31, 2006 and 2005 exceeds 100%.
  F-33
  **UNITED
          FINANCIAL BANCORP, INC. AND SUBSIDIARY**
 Notes
          to
          Consolidated Financial Statements
 December
          31, 2006, 2005 and 2004
 (Dollars
          in thousands, except per share amounts)
 **NOTE
              L** ****** **-** **COMMITMENTS
              AND CONTINGENCIES - Concluded**
  ***Employment
          and change in control agreements***
 
 The
          Company has entered into a three-year employment agreement with its President
          and Chief Executive Officer expiring in 2010. This agreement generally
          provides
          for a base salary and the continuation of certain benefits currently received.
          Annually the Bank may extend the agreement for an additional year. Under
          certain
          specified circumstances, the employment agreement requires certain payments
          to
          be made for certain reasons other than cause, including a “change in control” as
          defined in the agreement. However, such employment may be terminated for
          cause,
          as defined, without incurring any continuing obligations .
 
 The
          Company also entered into three-year change in control agreements with
          certain
          executive officers, none of whom are covered by an employment agreement.
          The
          change in control agreements are renewable on an annual basis and generally
          provide a severance payment and the continuation of certain benefits currently
          received following a “change in control” as defined in the
          agreements. ****
 
 ***Litigation***
 
 The
          Company and its subsidiaries are subject to various legal actions arising
          in the
          normal course of business. At December 31, 2006, the Company was not involved
          in
          any material legal proceedings.
 
 **NOTE
              M -** **FAIR
              VALUE OF FINANCIAL INSTRUMENTS**
 
 The
          Company is required to provide supplemental financial statement disclosures
          of
          the estimated fair value of its financial instruments. Financial instruments
          including cash and cash equivalents, investment and mortgage-backed securities,
          loan, deposits, borrowings and certain off-balance sheet items such as
          loan
          commitments. Other assets significant to the Company, including bank premises
          and equipment, deferred tax assets, as well as core deposit and other intangible
          assets are not considered financial instruments and are excluded from the
          fair
          value disclosures. In addition, the tax ramifications related to the realization
          of unrealized gains and losses can have a significant effect on fair value
          estimates and have not been Considered in the estimates.
  F-34
  **UNITED
          FINANCIAL BANCORP, INC. AND SUBSIDIARY**
 Notes
          to
          Consolidated Financial Statements
 December
          31, 2006, 2005 and 2004
 (Dollars
          in thousands, except per share amounts)
 **NOTE
              M -** **FAIR
              VALUE OF FINANCIAL INSTRUMENTS - Continued**
 
 Fair
          value estimates are made at a specific point in time, based on relevant
          market
          information and information about the financial instrument. These estimates
          do
          not reflect any premium or discount that could result from offering for
          sale at
          one time the Bank’s entire holdings of a particular financial instrument.
          Because a market may not readily exist for a significant portion of the
          Bank’s
          financial instruments, fair value estimates are based on judgments regarding
          future expected loss experience, current economic conditions, risk
          characteristics of various financial instruments, and other factors. These
          estimates are subjective in nature and involve uncertainties and matters
          of
          significant judgment and therefore cannot be determined with precision.
          Changes
          in assumptions could significantly affect the estimates.
 
 The
          following methods and assumptions were used by the Company in estimating
          fair
          values of its financial instruments:
 
 ***Cash
          and Cash Equivalents***
 
 For
          cash
          and short term investments having maturities of 90 days or less, the carrying
          amounts reported in the balance sheets approximate fair values.
 
 ***Investment
          Securities and FHLBB Stock***
 
 The
          fair
          value of securities to be held to maturity and securities available for
          sale is
          estimated based on quoted market prices, where available. If quoted market
          prices are not available, fair values are based on quoted market prices
          of
          comparable instruments. Ownership of Federal Home Loan Bank of Boston stock
          is
          restricted to member banks; therefore, the stock is not traded. The estimated
          fair value of Federal Home Loan Bank of Boston stock is equal to its carrying
          value, which represents the price at which the FHLBB is obligated to redeem
          its
          stock.
 
 ***Loans***
 
 For
          variable-rate residential and commercial loans that reprice frequently
          and which
          have no significant change in credit risk, fair values are based on carrying
          values. The fair values for certain mortgage loans (e.g. one-to-four family
          residential) and other consumer loans are based on quoted market prices
          of
          similar loans sold in conjunction with securitization transactions, adjusted
          for
          differences in loan characteristics.
 
 ***Accrued
          Interest Receivable and Payable***
 
 The
          carrying value of accrued interest receivable on investments and loans
          and
          accrued interest payable on deposits and borrowings, included in other
          liabilities, approximates their fair values.
  F-35
  **UNITED
          FINANCIAL BANCORP, INC. AND SUBSIDIARY**
 Notes
          to
          Consolidated Financial Statements
 December
          31, 2006, 2005 and 2004
 ((Dollars
          in thousands, except per share amounts)
 **NOTE
              M -** **FAIR
              VALUE OF FINANCIAL INSTRUMENTS - Continued**
 
 ***Deposits***
 
 The
          fair
          value of deposits with no stated maturity, such as demand deposits, NOW,
          regular
          savings, and money market deposit accounts, is equal to the amount payable
          on
          demand. The fair value estimates do not include the benefit that results
          from
          the generally lower cost of funding provided by
          the
          deposit liabilities compared to the cost of borrowing funds in the market.
          The
          fair value estimate of time deposits is based on the discounted value of
          contractual cash flows. The discount rate is estimated using the rates
          currently
          offered for deposits of similar remaining maturities.
 
 ***Federal
          Home Loan Bank of Boston Advances***
 
 The
          fair
          value estimate of the borrowings from the Federal Home Loan Bank of Boston
          is
          determined by discounting the anticipated future cash payments by using
          the
          rates currently available to the Bank for debt with similar terms and remaining
          maturities.
 
 ***Repurchase
          Agreements***
 
 Securities
          sold under agreements to repurchase generally mature within one to four
          days
          from transaction date and, accordingly, the fair value of these agreements
          approximates their recorded balance.
 
 ***Off-Balance
          Sheet Instruments***
 
 Fair
          value of off-balance-sheet mortgage lending commitments are based on fees
          currently charged to enter into similar agreements, taking into account
          the
          remaining terms of the agreements and the counterparties’ credit standing. In
          the case of the commitments discussed in Note K, the fair value equals
          the
          carrying amounts which are not significant.
  F-36
  **UNITED
          FINANCIAL BANCORP, INC. AND SUBSIDIARY**
 Notes
          to
          Consolidated Financial Statements
 December
          31, 2006, 2005 and 2004
 (Dollars
          in thousands, except per share amounts)
 **NOTE
              M -** **FAIR
              VALUE OF FINANCIAL INSTRUMENTS - Concluded**
 
 The
          fair
          value of the Company’s financial instruments is as follows at December
          31:
 
 **2006**
                
                **2005****Carrying**
                
                **Estimated**
                
                **Carrying**
                
                **Estimated****Value**
                
                **Fair
                    Value**
                
                **Value**
                
                **Fair
                    Value****Financial
                    Assets:**Cash
                    and cash equivalents
                
                $
                25,419
                
                $
                25,419
                
                $
                15,843
                
                $
                15,843Securities
                    available for sale
                
                
                190,237
                
                
                190,237
                
                
                226,465
                
                
                226,465Securities
                    held to maturity
                
                
                3,241
                
                
                3,227
                
                
                3,325
                
                
                3,298Stock
                    in Federal Home Loan Bank of Boston
                
                
                9,274
                
                
                9,274
                
                
                6,588
                
                
                6,588Net
                    loans
                
                
                756,180
                
                
                733,196
                
                
                630,558
                
                
                630,288Accrued
                    interest receivable
                
                
                4,320
                
                
                4,320
                
                
                3,928
                
                
                3,928**Financial
                    Liabilities:**Deposits
                    (with no stated maturity)
                
                
                366,172
                
                
                366,172
                
                
                375,967
                
                
                375,967Time
                    deposits
                
                
                319,514
                
                
                318,916
                
                
                277,644
                
                
                279,309Federal
                    Home Loan Bank of Boston advances
                
                
                169,806
                
                
                167,051
                
                
                101,880
                
                
                98,946Accrued
                    interest payable
                
                
                695
                
                
                695
                
                
                400
                
                
                400Repurchase
                    agreements
                
                
                10,425
                
                
                10,425
                
                
                8,434
                
                
                8,434
 
 **NOTE
              N -** **STOCKHOLDERS’
              EQUITY**
 
 ***Regulatory
          Capital***
 
 The
          Bank
          is subject to various minimum regulatory capital standards promulgated
          by The
          Office of Thrift Supervision (“OTS”). Failure to meet minimum capital
          requirements can initiate certain mandatory and possibly additional
          discretionary, actions by regulators that, if undertaken, could have a
          direct
          material effect on the Bank’s financial statements. Under capital adequacy
          guidelines and the regulatory framework for prompt corrective action, the
          Bank
          must meet specific capital guidelines that involve quantitative measures
          of the
          Bank’s assets, liabilities, and certain off-balance-sheet items as calculated
          under regulatory accounting practices. The Bank’s capital amounts and
          classification are also subject to qualitative judgments by the regulators
          about
          components, risk weightings, and other factors. United Financial Bancorp,
          Inc is
          not subject to capital guidelines.
 
 The
          minimum capital standards of the OTS generally require the maintenance
          of
          regulatory capital sufficient to meet each of three tests, hereinafter
          described
          as the total risk-based capital requirement, the Tier I risk-based capital
          requirement and the Tier I or leverage capital requirement. The Tier I
          risk-based and Tier I leverage capital requirements provide for minimum
          core
          capital (tangible capital plus certain forms of supervisory goodwill and
          other
          qualifying intangible assets) generally equal to 4.0% of risk-weighted
          assets
          and to 4.0% of adjusted total assets, respectively, except for those banks
          with
          the highest examination rating and acceptable levels of risk. The risk-based
          capital requirement provides for the maintenance of core capital plus general
          loss allowances equal to 8.0% of risk-weighted assets. In computing
          risk-weighted assets, the Bank multiplies the value of each asset on its
          balance
          sheet by a defined risk-weighting factor, e.g., one- to four-family residential
          loans carry a risk-weighted factor of 50%.
  F-37
  **UNITED
          FINANCIAL BANCORP, INC. AND SUBSIDIARY**
 Notes
          to
          Consolidated Financial Statements
 December
          31, 2006, 2005 and 2004
 (Dollars
          in thousands, except per share amounts)
 **NOTE
              N -** **STOCKHOLDERS’
              EQUITY - Concluded**
 
 As
          of
          December 31, 2006, the most recent notification from the OTS categorized
          the
          Bank as well capitalized under the regulatory framework for prompt corrective
          action. To be categorized as adequately capitalized the Bank must maintain
          minimum ratios as set forth in the accompanying table. There are no conditions
          or events since that notification that management believes have changed
          the
          institution’s category.
 
 The
          Bank’s actual capital amounts and ratios, as well as minimum amounts and ratios
          required for capital adequacy are presented below:
  **To
                      Be Well Capitalized****For
                      Capital**
                  
                  **Under
                      Regulatory****Actual**
                  
                  **Adequacy
                      Purposes**
                  
                  **Framework****Amount**
                  
                  **Ratio**
                  
                  **Amount**
                  
                  **Ratio**
                  
                  **Amount**
                  
                  **Ratio****As
                      of December 31, 2006:**Total
                      Capital(to
                      Risk Weighted Assets)
                  
                  $
                  111,045
                  
                  
                  15.9%
                  >
                  $
                  56,000
                  >
                  
                  8.0%
                  >
                  $
                  70,000
                  >
                  
                  10.0%Tier
                      I (Core) Capital(to
                      Risk Weighted Assets)
                  
                  
                  103,827
                  
                  
                  14.8%
                  >
                  
                  28,000
                  >
                  
                  4.0%
                  >
                  
                  42,000
                  >
                  
                  6.0%Tier
                      I Leverage Capital(to
                      Average Total Assets)
                  
                  
                  103,827
                  
                  
                  10.8%
                  >
                  
                  38,380
                  >
                  
                  4.0%
                  >
                  
                  47,975
                  >
                  
                  5.0%**As
                      of December 31, 2005:**Total
                      Capital(to
                      Risk Weighted Assets)
                  
                  $
                  108,500
                  
                  
                  18.3%
                  >
                  $
                  47,475
                  >
                  
                  8.0%
                  >
                  $
                  59,343
                  >
                  
                  10.0%Tier
                      I (Core) Capital(to
                      Risk Weighted Assets)
                  
                  
                  102,117
                  
                  
                  17.2%
                  >
                  
                  23,737
                  >
                  
                  4.0%
                  >
                  
                  35,606
                  >
                  
                  6.0%Tier
                      I Leverage Capital(to
                      Average Total Assets)
                  
                  
                  102,117
                  
                  
                  11.7%
                  >
                  
                  34,873
                  >
                  
                  4.0%
                  >
                  
                  43,591
                  >
                  
                  5.0%
 ***Common
          Stock Repurchase Program***
 
 In
          November 2006, the Board of Directors approved a plan to repurchase up
          to 5%, or
          approximately 858,000 shares, of the Company’s common stock through open market
          purchases or privately negotiated transactions. Stock repurchases under
          the
          program are accounted for as treasury stock, carried at cost, and reflected
          as a
          reduction in stockholders’ equity. As of December 31, 2006, the Company
          repurchased 1,945 shares at a cost of approximately $27 under this
          plan.
  F-38
  **UNITED
          FINANCIAL BANCORP, INC. AND SUBSIDIARY**
 Notes
          to
          Consolidated Financial Statements
 December
          31, 2006, 2005 and 2004
 (Dollars
          in thousands, except per share amounts)
 **NOTE
              O -** **CONDENSED
              FINANCIAL STATEMENTS OF UNITED FINANCIAL BANCORP, INC.**
 The
          following are the condensed financial statements for United Financial Bancorp,
          Inc. (parent company only).
 
 **BALANCE
                    SHEETS****December
                    31,**
                
                **December
                    31,****2006**
                
                **2005****ASSETS**Cash
                    and due from banks
                
                $
                336
                
                $
                14Interest-bearing
                    deposits
                
                
                7,344
                
                
                -Total
                    cash and cash equivalents
                
                
                7,680
                
                
                14Investment
                    in Bank
                
                
                102,278
                
                
                99,816Securities
                    available for sale, at fair value
                
                
                21,441
                
                
                31,186ESOP
                    loan receivable
                
                
                5,891
                
                
                6,049Other
                    assets
                
                
                827
                
                
                113TOTAL
                    ASSETS
                
                $
                138,117
                
                $
                137,178**LIABILITIES
                    AND STOCKHOLDERS’ EQUITY**Other
                    liabilities
                
                $
                406
                
                $
                173Stockholders’
                    equity
                
                
                137,711
                
                
                137,005TOTAL
                    LIABILITIES AND STOCKHOLDERS’ EQUITY
                
                $
                138,117
                
                $
                137,178
 
 **STATEMENTS
                    OF INCOME****Years
                    Ended December 31,****2006**
                
                **2005**
                
                **2004**Income:Investment
                    interest
                
                $
                1,258
                
                $
                617
                
                $
                -ESOP
                    loan interest
                
                
                439
                
                
                189
                
                
                -Loss
                    on sale of securities
                
                
                (9
                )
                
                -
                
                
                -Total
                    income
                
                
                1,688
                
                
                806
                
                
                -Expense:Charitable
                    contribution to Foundation
                
                
                -
                
                
                3,591
                
                
                -Professional
                    services
                
                
                958
                
                
                266
                
                
                -Other
                    expenses
                
                
                31
                
                
                63
                
                
                64Total
                    expense
                
                
                989
                
                
                3,920
                
                
                64Income
                    (loss) before income taxes and equity in undistributedearnings
                    in the Bank
                
                
                699
                
                
                (3,114
                )
                
                (64
                )Income
                    tax expense (benefit)
                
                
                235
                
                
                (894
                )
                
                (26
                )Income
                    (loss) before equity in undistributed earnings of the Bank
                
                
                464
                
                
                (2,220
                )
                
                (38
                )Equity
                    in undistributed earnings of the Bank
                
                
                4,460
                
                
                6,589
                
                
                5,566NET
                    INCOME
                
                $
                4,924
                
                $
                4,369
                
                $
                5,528
 F-39
  **UNITED
          FINANCIAL BANCORP, INC. AND SUBSIDIARY**
 Notes
          to
          Consolidated Financial Statements
 December
          31, 2006, 2005 and 2004
 (Dollars
          in thousands, except per share amounts)
 **NOTE
              P -** **CONDENSED
              FINANCIAL STATEMENTS OF UNITED FINANCIAL BANCORP, INC. -
              Concluded**
 
 **STATEMENTS
                    OF CASH FLOWS****Years
                    Ended December 31,****2006**
                
                **2005**
                
                **2004****Cash
                    flows from operating activities:**Net
                    income
                
                $
                4,924
                
                $
                4,369
                
                $
                5,528Adjustments
                    to reconcile net income to net cash provided by operating
                    activities:Equity
                    in undistributed earnings of the bank
                
                
                (4,460
                )
                
                (6,589
                )
                
                (5,566
                )Net
                    amortization of discounts and premiums
                
                
                (83
                )
                
                (46
                )
                
                -Net
                    loss on sale of available for sale securities
                
                
                9
                
                
                -
                
                
                -Increase
                    in deferred income taxes
                
                
                3
                
                
                255
                
                
                -Charitable
                    contribution to Foundation
                
                
                -
                
                
                3,649
                
                
                -Decrease
                    (increase) in accrued interest receivable
                
                
                57
                
                
                (322
                )
                
                -(Increase) in
                    other assets
                
                
                (717
                )
                
                (182
                )
                
                (26
                )Intercompany
                    payables and other liabilities
                
                
                233
                
                
                107
                
                
                19Net
                    cash (used in) provided by operating activities
                
                
                (34
                )
                
                1,241
                
                
                (45
                )**Cash
                    flows from investing activities:**Purchases
                    of securities available for sale
                
                
                (2,094
                )
                
                (32,963
                )
                
                -Proceeds
                    from sales of securities available for sale
                
                
                4,990
                
                
                -
                
                
                -Proceeds
                    from maturities and principal repayments of securities available
                    for
                    sale
                
                
                6,934
                
                
                1,676
                
                
                -Loan
                    to fund ESOP
                
                
                -
                
                
                (6,413
                )
                
                -Principal
                    payments on ESOP loan
                
                
                158
                
                
                364
                
                
                -Net
                    cash provided by (used in) investing activities
                
                
                9,988
                
                
                (37,336
                )
                
                -**Cash
                  flows from financing activities:**Initial funding
                    by Bank
                
                
                -
                
                
                -
                
                
                150Investment
                    in United Bank
                
                
                3,579
                
                
                (38,818
                )
                
                -Treasury
                    stock purchases
                
                
                (4,405
                )
                
                -
                
                
                -Cash
                    dividends paid
                
                
                (1,462
                )
                
                -
                
                
                -Net
                    proceeds from stock issuance
                
                
                -
                
                
                74,822
                
                
                150Net
                    cash (used in) provided by financing activities
                
                
                (2,288
                )
                
                36,004
                
                
                -Increase
                    (decrease) in cash and cash equivalents
                
                
                7,666
                
                
                (91
                )
                
                105Cash
                    and cash equivalents at beginning of year
                
                
                14
                
                
                105
                
                
                -Cash
                    and cash equivalents at end of year
                
                $
                7,680
                
                $
                14
                
                $
                105
 F-40
  **UNITED
          FINANCIAL BANCORP, INC. AND SUBSIDIARY**
 Notes
          to
          Consolidated Financial Statements - Continued
 December
          31, 2006, 2005 and 2004
 (Dollars
          in thousands, except per share amounts)
 **NOTE
              Q -** **QUARTERLY
              RESULTS OF OPERATIONS (UNAUDITED)**
 
 The
          following table summarizes the operating results on a quarterly basis for
          the
          years ended December 31, 2006 and 2005. As discussed in Note I, the Company
          has
          revised its presentation of earnings per share data to include periods
          prior to
          the IPO. Accordingly, earnings per share data is included herein for each
          of the
          quarterly periods in 2005.
 
 **Three
                    Months Ended****March
                    31**
                
                **June
                    30**
                
                **September
                    30**
                
                **December
                    31****2006****:**Interest
                    income
                
                $
                12,147
                
                $
                12,625
                
                $
                13,494
                
                $
                13,936Interest
                    expense
                
                
                5,239
                
                
                5,860
                
                
                6,550
                
                
                6,998Net
                    interest income
                
                
                6,908
                
                
                6,765
                
                
                6,944
                
                
                6,938Provision
                    for loan losses
                
                
                162
                
                
                300
                
                
                165
                
                
                342Non-interest
                    income
                
                
                1,258
                
                
                1,441
                
                
                1,294
                
                
                1,399Non-interest
                    expense
                
                
                5,776
                
                
                5,836
                
                
                5,579
                
                
                6,845Income
                    before income taxes
                
                
                2,228
                
                
                2,070
                
                
                2,494
                
                
                1,150Income
                    tax expense
                
                
                873
                
                
                780
                
                
                981
                
                
                384Net
                    income
                
                $
                1,355
                
                $
                1,290
                
                $
                1,513
                
                $
                766Basic
                    earnings per share
                
                $
                0.08
                
                $
                0.08
                
                $
                0.09
                
                $
                0.05Diluted
                    earnings per share
                
                $
                0.08
                
                $
                0.08
                
                $
                0.09
                
                $
                0.05**2005****:**Interest
                    income
                
                $
                9,716
                
                $
                10,327
                
                $
                11,456
                
                $
                11,734Interest
                    expense
                
                
                3,369
                
                
                3,819
                
                
                4,249
                
                
                4,769Net
                    interest income
                
                
                6,347
                
                
                6,508
                
                
                7,207
                
                
                6,965Provision
                    for loan losses
                
                
                275
                
                
                275
                
                
                275
                
                
                92Non-interest
                    income
                
                
                1,135
                
                
                1,255
                
                
                1,324
                
                
                1,306Non-interest
                    expense
                
                
                4,937
                
                
                4,826
                
                
                8,623
                
                
                5,726Income
                    (loss) before income taxes
                
                
                2,270
                
                
                2,662
                
                
                (367
                )
                
                2,453Income
                    tax expense (benefit)
                
                
                904
                
                
                1,063
                
                
                (195
                )
                
                877Net
                    income (loss)
                
                $
                1,366
                
                $
                1,599
                
                $
                (172
                )
                $
                1,576Basic
                    earnings (loss) per share
                
                $
                0.15
                
                $
                0.17
                
                $
                (0.01
                )
                $
                0.10Diluted
                    earnings (loss) per share
                
                $
                0.15
                
                $
                0.17
                
                $
                (0.01
                )
                $
                0.10
  During
          the quarter ended December 31, 2006, non-interest expense increased $1.3
          million
          in comparison to the prior quarter mainly due to costs related to compliance
          with Sarbanes-Oxley
          Section 404 and a
          full quarter impact of awards granted in August in connection with the
          Company’s
          2006 Incentive Plan. The fourth quarter 2006 results were also impacted
          by a
          reduction in the Company’s effective tax rate to 33% from 39% in the prior
          quarter. The
          lower
          tax rate was largely due to the reversal of tax reserves which management
          concluded were no longer needed based on an assessment of known
          requirements.


F-41




**ITEM
                  9A.**
              **CONTROLS
                  AND PROCEDURES**
 
 (a)           Evaluation
        of disclosure controls and procedures.
  Under
        the
        supervision and with the participation of our management, including our Chief
        Executive Officer and Chief Financial Officer, we evaluated the effectiveness
        of
        the design and operation of our disclosure controls and procedures (as defined
        in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of
        the
        fiscal year (the “Evaluation Date”). Based upon that evaluation, the Chief
        Executive Officer and Chief Financial Officer concluded that, as of the
        Evaluation Date, our disclosure controls and procedures were effective in
        timely
        alerting them to the material information relating to us (or our consolidated
        subsidiaries) required to be included in our periodic SEC filings.
  (b)
              Management’s
                  annual report on internal control over financial
                  reporting.
  
 Management
        of the Company is responsible for establishing and maintaining adequate internal
        control over financial reporting.
  The
        Company’s internal control over financial reporting is a process designed to
        provide reasonable assurance regarding the reliability of financial reporting
        and the preparation of financial statements for external purposes in accordance
        with accounting principles generally accepted in the United States of America.
        The Company’s internal control over financial reporting includes those policies
        and procedures that (i) pertain to the maintenance of records that, in
        reasonable detail, accurately and fairly reflect the transactions and
        dispositions of the assets of the Company; (ii) provide reasonable
        assurance that transactions are recorded as necessary to permit preparation
        of
        financial statements in accordance with accounting principles generally accepted
        in the United States of America, and that receipts and expenditures of the
        Company are being made only in accordance with authorizations of management
        and
        directors of the Company; and (iii) provide reasonable assurance regarding
        prevention or timely detection of unauthorized acquisition, use, or disposition
        of the Company’s assets that could have a material effect on the financial
        statements.
  Because
        of its inherent limitations, internal control over financial reporting may
        not
        prevent or detect misstatements. Also, projections of any evaluation of
        effectiveness to future periods are subject to the risk that controls may
        become
        inadequate because of changes in conditions, or that the degree of compliance
        with the policies or procedures may deteriorate.
  Management
        assessed the effectiveness of the Company’s internal control over financial
        reporting as of December 31, 2006, based on the framework set forth by the
        Committee of Sponsoring Organizations of the Treadway Commission in *Internal
        Control—Integrated Framework*. Based on that assessment, management
        concluded that, as of December 31, 2006, the Company’s internal control
        over financial reporting is effective based on the criteria established in
        *Internal Control—Integrated Framework*.
  Management’s
        assessment of the effectiveness of the Company’s internal control over financial
        reporting as of December 31, 2006, has been audited by Grant Thornton LLP,
        an independent registered public accounting firm, as stated in their report
        appearing in item (c) below.
 
 
 (c)
              Attestation
                  report


6









Report
      of Independent Registered Public Accounting Firm








Board
      of
      Directors


United
      Financial Bancorp, Inc.




We
        have audited management's
        assessment, included in the accompanying Management’s Annual Report on Internal
        Control Over Financial Reporting, that United Financial Bancorp, Inc. and
        subsidiary (the “Company”) maintained effective internal control over financial
        reporting as of December 31, 2006, based on the criteria established in
*Internal Control- Integrated Framework* issued by the Committee of
        Sponsoring Organizations of the Treadway Commission (COSO). The Company's
        management is responsible for maintaining effective internal control over
        financial reporting and for its assessment of the effectiveness of internal
        control over financial reporting. Our responsibility is to express an opinion
        on
        management's assessment and an opinion on the effectiveness of the Company's
        internal control over financial reporting based on our audit.
 
 We
        conducted our audit in accordance
        with the standards of the Public Company Accounting Oversight Board (United
        States). Those standards require that we plan and perform the audit to obtain
        reasonable assurance about whether effective internal control over financial
        reporting was maintained in all material respects. Our audit included obtaining
        an understanding of internal control over financial reporting, evaluating
        management's assessment, testing and evaluating the design and operating
        effectiveness of internal control, and performing such other procedures as
        we
        considered necessary in the circumstances. We believe that our audit provides
        a
        reasonable basis for our opinion.
 
 A
        company’s internal control over
        financial reporting is a process designed to provide reasonable assurance
        regarding the reliability of financial reporting and the preparation of
        financial statements for external purposes in accordance with generally accepted
        accounting principles. A company's internal control over financial reporting
        includes those policies and procedures that (1) pertain to the maintenance
        of
        records that, in reasonable detail, accurately and fairly reflect the
        transactions and dispositions of the assets of the company; (2) provide
        reasonable assurance that transactions are recorded as necessary to permit
        preparation of financial statements in accordance with generally accepted
        accounting principles, and that receipts and expenditures of the company
        are
        being made only in accordance with authorizations of management and directors
        of
        the company; and (3) provide reasonable assurance regarding prevention or
        timely
        detection of unauthorized acquisition, use, or disposition of the company's
        assets that could have a material effect on the financial
        statements.


7


Because
        of its inherent limitations,
        internal control over financial reporting may not prevent or detect
        misstatements. Also, projections of any evaluation of effectiveness to future
        periods are subject to the risk that controls may become inadequate because
        of
        changes in conditions, or that the degree of compliance with the policies
        or
        procedures may deteriorate.
 
 In
        our opinion, management’s assessment
        that the Company maintained effective internal control over financial reporting
        as of December 31, 2006, is fairly stated, in all material respects, based
        on
        the criteria established in COSO. Also, in our opinion, the Company maintained,
        in all material respects, effective internal control over financial reporting
        as
        of December 31, 2006, based on the criteria established in COSO.
 
 We
        have also audited, in accordance
        with the standards of the Public Company Accounting Oversight Board (United
        States), the consolidated balance sheets of United Financial Bancorp, Inc.
        and
        subsidiary as of December 31, 2006 and 2005, and the related consolidated
        statements of earnings, stockholders’ equity and comprehensive income, and cash
        flows for each of the three years in the period ended December 31, 2006,
        and our
        report dated March 13, 2007, except for Notes I and Q, as to which the date
        is June 14, 2007, expressed an unqualified opinion on those financial
        statements.
 
 
 /s/
        Grant
        Thornton
        LLP
 
 Boston,
        Massachusetts
 March
        13,
        2007







8





(d)
            Changes
                to internal controls




There
      were no significant changes made in our internal controls during the period
      covered by this report or, to our knowledge, in other factors that could
      significantly affect these controls subsequent to the date of their
      evaluation.




**ITEM
        15.              EXHIBITS
        AND FINANCIAL STATEMENT SCHEDULES**
 
 (a)(1)  Financial
        Statements
 
 The
        following documents are filed as
        item 8 of this amended Annual Report on Form 10-K/A.
 
 (A)
              Report
                  of Independent Registered Public Accounting
                  Firm
 
 (B)
              Consolidated
                  Balance Sheets - at December 31, 2006 and
                  2005
 
 (C)
              Consolidated
                  Statements of Earnings - Years ended December 31, 2006, 2005 and
                  2004




(D)
              Consolidated
                  Statements of Stockholders’ Equity and Comprehensive Income - at December
                  31, 2006, 2005 and 2004
 
 (E)
              Consolidated
                  Statements of Cash Flows - Years ended December 31, 2006, 2005
                  and
                  2004
 
 (F)
              Notes
                  to Consolidated Financial
                  Statements.
 
 (a)(2)   
          Financial Statement Schedules
  None.
 
 (b)
              Not
                  applicable
 
 (c)           Not
        applicable
 
 (a)(3)      Exhibits
 
 3.1
                Charter
                    of United Financial Bancorp, Inc.
                    (1)
 3.2
                Resolution
                    and Consent of Sole Stockholder Amending the Charter of United
                    Financial
                    Bancorp, Inc. (1)
 3.3
                Bylaws
                    of United Financial Bancorp, Inc.
                    (2)
 4
                Form
                    of Common Stock Certificate of United Financial Bancorp, Inc.
                    (1)
 10.1
                Form
                    of Employee Stock Ownership Plan
                    (1)
 10.2
                Executive
                    Supplemental Compensation Agreement by and between United Bank
                    and Richard
                    B. Collins (1)
 10.3
                Executive
                    Supplemental Compensation Agreement by and between United Bank
                    and Keith
                    E. Harvey (1)
 10.4
                Executive
                    Supplemental Compensation Agreement by and between United Bank
                    and John J.
                    Patterson (1)
 10.5
                United
                    Bank 2004 and 2005 Incentive Plans
                    (1)
 10.6
                Deferred
                    Income Agreement by and between United Bank and Donald G. Helliwell
                    (1)
 10.7
                Deferred
                    Income Agreement by and between United Bank and Robert W. Bozenhard,
                    Jr.
                    (1)
 10.8
                Deferred
                    Income Agreement by and between United Bank and George W. Jones
                    (1)
 10.9
                Directors
                    Fee Continuation Plan (1)
 10.10
                Form
                    of Employment Agreement by and between United Bank and Richard
                    B. Collins
                    (1)
 10.11
                Form
                    of Change in Control Agreement by and between United Bank and
                    certain
                    executive officers (1)
 10.12
                United
                    Bank 2006 Stock-Based Incentive Plan
                    (3)
 21
                Subsidiaries
                    of Registrant (1)
 23
                Consent
                    of Independent Registered Public Accounting
                    Firm.
 31.1
                Certification
                    of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
                    Act of 2002
 31.2
                Certification
                    of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
                    Act of 2002
 32
                Statement
                    of Chief Executive Officer and Chief Financial Officer pursuant
                    to Section
                    906 of the Sarbanes-Oxley Act of
                    2002
 
 (1)
              Incorporated
                  by reference to the Registration Statement on Form S-1 of United
                  Financial
                  Bancorp, Inc. (file no. 333-123371), originally filed with the
                  Securities
                  and Exchange Commission on March 16,
                  2005.
 (2)
              Incorporated
                  by reference to the Form 10-Q of United Financial Bancorp, Inc.
                  filed with
                  the Securities and Exchange Commission on August 9,
                  2006.
 (3)
              Incorporated
                  by reference to Appendix B of the Registrant’s definitive Proxy Statement
                  for the Company’s 2006 Annual Meeting filed with the Securities and
                  Exchange Commission on June 12,
                  2006.




9





**SIGNATURES**
 
 Pursuant
        to the requirements of Section
        13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly
        caused this report to be signed on its behalf by the undersigned, thereunto
        duly
        authorized.
 
 **UNITED
                  FINANCIAL BANCORP, INC.**Date:    June
                  14, 2007
              By:
              /s/
                  Richard B. CollinsRichard
                  B. CollinsChief
                  Executive Officer, President and Director(Duly
                  Authorized Representative)
 
 Pursuant
        to the requirements of the
        Securities Exchange of 1934, this report has been signed below by the following
        persons on behalf of the Registrant and in the capacities and on the dates
        indicated.
 
 Signatures
                
                Title
                
                Date/s/
                    Richard B. Collins
                  Richard
                    B. Collins
                
                Chief
                    Executive Officer, President and Director, Chairman of the Board
                    (Principal Executive Officer)
                
                June
                    14, 2007/s/
                    Mark A. Roberts
                    Mark
                    A. Roberts
                
                Executive
                    Vice President and Chief Financial Officer (Principal Financial
                    and
                    Accounting Officer)
                
                June
                    14, 2007/s/
                    Michael F. Crowley
                  Michael
                    F. Crowley
                
                Director
                
                June
                    14, 2007/s/
                    Carol Moore Cutting
                  Carol
                    Moore Cutting
                
                Director
                
                June
                    14, 2007/s/
                    Carol A. Leary
                    Carol
                    A. Leary
                
                Director
                
                June
                      14, 2007G.
                  Todd Marchant
                
                DirectorKevin
                    E. Ross
                
                Director/s/
                    Robert A. Stewart, Jr.
                  Robert
                    A. Stewart, Jr.
                
                Director
                
                June
                    14, 2007/s/
                    Thomas H. Themistos
                  Thomas
                    H. Themistos
                
                Director
                
                June
                    14, 2007Michael
                  F. Werenski
                
                Director




10