UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB
(Mark One)

[X]      QUARTERLY  REPORT  PURSUANT  TO SECTION  13 OR 15(d) OF THE  SECURITIES
         EXCHANGE ACT OF 1934

                For the quarterly period ended December 31, 2007

                                       or

[_]      TRANSITION  REPORT  PURSUANT  TO SECTION 13 OR 15(d) OF THE  SECURITIES
         EXCHANGE ACT OF 1934

For the transition period from __________________ to _________________

                         Commission File Number 0-51589

                          NEW ENGLAND BANCSHARES, INC.
--------------------------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)

Maryland                                                              04-3693643
--------------------------------------------------------------------------------
(State or other jurisdiction of                                 (I.R.S. Employer
incorporation or organization)                               Identification No.)

855 Enfield Street, Enfield, Connecticut                                   06082
--------------------------------------------------------------------------------
(Address of principal executive offices)                              (Zip Code)

                                 (860) 253-5200
--------------------------------------------------------------------------------
                           (Issuer's telephone number)

                                 Not Applicable
--------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report)

         Check whether the issuer (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days.
Yes [X] No [_]

         Indicate by check mark whether the  registrant  is a shell  company (as
defined in Rule 12b-2 of the Exchange Act). Yes [_] No [X]

         The Issuer had 6,131,667  shares of common  stock,  par value $0.01 per
share, outstanding as of February 12, 2007.

         Transitional  Small Business  Disclosure Format (Check one):
Yes [_] No [X]

<PAGE>

                          NEW ENGLAND BANCSHARES, INC.
                                   FORM 10-QSB

                                      INDEX

                                                                            Page
                                                                            ----
PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

         Condensed Consolidated Balance Sheets at December 31, 2007
         and March 31, 2007 (Unaudited)......................................  1

         Condensed Consolidated Statements of Income for the
         Three and Nine Months Ended December 31, 2007 and 2006 (Unaudited)..  2

         Condensed Consolidated Statements of Cash Flows for the
         Nine Months Ended December 31, 2007 and 2006 (Unaudited)............  3

         Notes to Condensed Consolidated Financial Statements (Unaudited)....  5

Item 2.  Management's Discussion and Analysis or Plan of Operation...........  9

Item 3. Controls and Procedures.............................................. 17

PART II: OTHER INFORMATION

Item 1.  Legal Proceedings................................................... 18
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds......... 18
Item 3.  Defaults Upon Senior Securities..................................... 18
Item 4.  Submission of Matters to a Vote of Security Holders................. 18
Item 5.  Other Information................................................... 18
Item 6.  Exhibits ........................................................... 18

SIGNATURES .................................................................. 19


<PAGE>
<TABLE>
<CAPTION>

                                           Part I. FINANCIAL INFORMATION

Item 1. Financial Statements.
        --------------------

                                   NEW ENGLAND BANCSHARES, INC. AND SUBSIDIARIES
                                       Condensed Consolidated Balance Sheets
                                                    (Unaudited)
                                              (Dollars in thousands)
                                                                                     December 31,     March 31,
ASSETS                                                                                  2007             2007
------                                                                               ------------    ------------
<S>                                                                                         <C>            <C>
Cash and due from banks ..........................................................   $     10,002    $      4,400
Interest-bearing demand deposits with other banks ................................            595              43
Federal funds sold ...............................................................          2,383          13,610
Money market mutual funds ........................................................          4,204             587
                                                                                     ------------    ------------
      Total cash and cash equivalents.............................................         17,174          18,640
Interest-bearing time deposits with other banks ..................................            890           1,877
Investments in available-for-sale securities, at fair value ......................         75,126          49,469
Federal Home Loan Bank stock, at cost ............................................          3,356           1,979
Loans, net of allowance for loan losses of $3,960 as of December 31, 2007 and
   $1,875 as of March 31, 2007 ...................................................        372,594         198,447
Premises and equipment, net ......................................................          6,862           4,244
Accrued interest receivable ......................................................          2,326           1,323
Deferred income taxes, net .......................................................          1,247           1,132
Cash surrender value of life insurance ...........................................          4,307           4,218
Identifiable intangible assets ...................................................          2,805             599
Goodwill .........................................................................         14,622           1,090
Other assets .....................................................................          1,589           1,140
                                                                                     ------------    ------------
      Total assets ...............................................................   $    502,908    $    284,158
                                                                                     ============    ============

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Deposits:
     Noninterest-bearing .........................................................   $     37,932    $     16,075
     Interest-bearing ............................................................        322,023         165,600
                                                                                     ------------    ------------
         Total deposits ..........................................................        359,955         181,675
Advanced payments by borrowers for taxes and insurance ...........................          1,504             796
Borrowed funds ...................................................................         59,115          33,587
Securities sold under agreements to repurchase ...................................         10,431           9,177
Other liabilities ................................................................          3,034           1,657
                                                                                     ------------    ------------
      Total liabilities ..........................................................        434,039         226,892
                                                                                     ------------    ------------

Stockholders' Equity:
   Preferred stock, par value $.01 per share: 1,000,000 shares authorized;
       none issued ...............................................................             --              --
   Common stock, par value $.01 per share: 19,000,000 shares authorized;
      6,421,152 shares issued and 6,137,967 outstanding, and 5,346,583 shares
      issued and outstanding at March 31, 2007 ...................................             64              53
    Paid-in capital ..............................................................         56,358          42,742
   Retained earnings .............................................................         18,706          18,521
   Accumulated other comprehensive income (loss) .................................              5            (358)
   Treasury stock, 251,413 shares at December 31, 2007 and none at March 31, 2007.         (2,989)             --
   Unearned ESOP shares, 283,185 shares at December 31, 2007 and 317,063 at
      March 31, 2007 .............................................................         (2,428)         (2,666)
   Unearned shares, stock-based incentive plan, 83,989 shares at December 31,
      2007 and 95,786 shares at March 31, 2007 ...................................           (847)         (1,026)
                                                                                     ------------    ------------
      Total stockholders' equity .................................................         68,869          57,266
                                                                                     ------------    ------------
      Total liabilities and stockholders' equity .................................   $    502,908    $    284,158
                                                                                     ============    ============

         The accompanying notes are an integral part of these condensed consolidated financial statements.

                                                        1
</TABLE>
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<TABLE>
<CAPTION>

                                    NEW ENGLAND BANCSHARES, INC. AND SUBSIDIARIES
                                     Condensed Consolidated Statements of Income

                                                     (Unaudited)
                                      (In thousands, except per share amounts)

                                                                          Three Months Ended      Nine Months Ended
                                                                              December 31,           December 31,
                                                                              ------------           ------------
                                                                            2007       2006       2007        2006
                                                                          --------   --------   --------    --------
<S>                                                                            <C>        <C>        <C>         <C>
Interest and dividend income:
    Interest on loans .................................................   $  6,333   $  3,095   $ 15,333    $  8,294
    Interest and dividends on securities:
       Taxable ........................................................        821        586      2,081       1,667
       Tax-exempt .....................................................        123        106        326         301
    Dividends on Federal Home Loan Bank stock .........................         44         24        119          64
    Interest on federal funds sold, interest-bearing deposits and
       dividends on money market mutual funds .........................        175        120        722         865
                                                                          --------   --------   --------    --------
       Total interest and dividend income .............................      7,496      3,931     18,581      11,191
                                                                          --------   --------   --------    --------

Interest expense:
    Interest on deposits ..............................................      2,917      1,104      6,843       3,005
    Interest on advanced payments by borrowers for
          taxes and insurance .........................................          4          3          9           9
    Interest on Borrowed funds ........................................        659        334      1,525         838
    Interest on securities sold under agreements to repurchase ........         70         97        310         274
                                                                          --------   --------   --------    --------
       Total interest expense .........................................      3,650      1,538      8,687       4,126
                                                                          --------   --------   --------    --------
       Net interest and dividend income ...............................      3,846      2,393      9,894       7,065
Provision for loan losses .............................................         38         60        208         182
                                                                          --------   --------   --------    --------
       Net interest and dividend income after provision for loan losses      3,808      2,333      9,686       6,883
                                                                          --------   --------   --------    --------

Noninterest income:
    Service charges on deposit accounts ...............................        264        130        642         390
    Gain (loss) on sales and calls of investments, net ................         17          8       (201)         33
    Increase in cash surrender value of life insurance policies .......         41         34        114         108
    Other income ......................................................        112         75        281         142
                                                                          --------   --------   --------    --------
       Total noninterest income .......................................        434        247        836         673
                                                                          --------   --------   --------    --------
Noninterest expense:
    Salaries and employee benefits ....................................      1,948      1,276      5,055       3,678
    Occupancy and equipment expense ...................................        750        398      1,890       1,239
    Advertising and promotion .........................................         67         40        143         120
    Professional fees .................................................        129         81        366         298
    Data processing expense ...........................................        117         84        319         251
    Stationery and supplies ...........................................         50         31        116          83
    Amortization of identifiable intangible assets ....................        134         22        253          67
    Other expense .....................................................        429        259      1,134         694
                                                                          --------   --------   --------    --------
       Total noninterest expense ......................................      3,624      2,191      9,276       6,430
                                                                          --------   --------   --------    --------
       Income before income taxes .....................................        618        389      1,246       1,126
Income taxes ..........................................................        223        125        555         352
                                                                          --------   --------   --------    --------
       Net income .....................................................   $    395   $    264   $    691    $    774
                                                                          ========   ========   ========    ========

 Earnings per share:
          Basic .......................................................   $   0.07   $   0.05   $   0.12    $   0.16
          Diluted .....................................................       0.07   $   0.05       0.12    $   0.15
 Dividends per share ..................................................       0.03   $   0.03       0.09    $   0.09


         The accompanying notes are an integral part of these condensed consolidated financial statements.


                                                         2
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                           NEW ENGLAND BANCSHARES, INC. AND SUBSIDIARIES
                          Condensed Consolidated Statements of Cash Flows
                                            (Unaudited)
                                           (In thousands)

                                                                               Nine Months Ended
                                                                                  December 31,
                                                                                2007        2006
                                                                              --------    --------
<S>                                                                                <C>         <C>
Cash flows from operating activities:
      Net income ..........................................................   $    691    $    774
      Adjustments to reconcile net income to net cash provided by
        operating activities:
            Net accretion of fair value adjustments .......................        (90)        (67)
            Amortization of securities, net ...............................        (33)         21
            Loss (gain) on sales and calls of investments, net ............        201         (33)
            Provision for loan losses .....................................        208         182
            Change in deferred loan origination fees ......................       (139)       (146)
            Depreciation and amortization .................................        562         384
            Amortization of trust preferred ...............................         31
            Loss on disposal of equipment .................................         --           2
            Increase in accrued interest receivable .......................       (167)       (364)
            Deferred income tax benefit ...................................       (240)       (114)
            Increase in cash surrender value of life insurance policies....       (114)       (108)
            Decrease in prepaid expenses and other assets .................        475          83
            Amortization of identifiable intangible assets ................        253          67
            Increase in accrued expenses and other liabilities ............          8         315
            ESOP shares released ..........................................        417         138
            Compensation cost for stock option plan .......................        164         400
            Compensation cost for stock-based incentive plan ..............        179         128
                                                                              --------    --------

      Net cash provided by operating activities ...........................      2,406       1,662
                                                                              --------    --------

Cash flows from investing activities:
            Purchases of available-for-sale securities ....................    (32,819)    (16,782)
            Proceeds from sales of available-for-sale securities ..........     14,226       7,706
            Proceeds from maturities of available-for-sale securities .....     16,068       3,971
            Cash acquired from First Valley Bancorp, Inc., net of
                cash paid of $12,417 ......................................      6,590
            Purchases of Federal Home Loan Bank stock .....................       (775)       (551)
            Loan originations and principal collections, net ..............    (33,325)    (37,615)
            Purchases of loans ............................................     (2,610)    (13,952)
            Sales of loans ................................................      2,762       5,434
            Proceeds from maturities of interest-bearing time
                deposits with other banks .................................        987          --
            Cash received from life insurance policy ......................         30       2,049
            Investments in life insurance policies ........................         (5)         (7)
            Capital expenditures - premises and equipment .................       (229)       (322)
                                                                              --------    --------

            Net cash used in investing activities .........................    (29,100)    (50,069)
                                                                              --------    --------

Cash flows from financing activities:
            Net increase (decrease) in demand, NOW,
                money market and savings accounts .........................      3,170       1,537
            Net increase in time deposits .................................      6,778       2,938
            Net decrease in advanced payments by borrowers for taxes and
                insurance .................................................        516         283
            Proceeds from Federal Home Loan Bank long-term advances .......     22,824      17,879
            Principal payments on Federal Home Loan Bank long-term advances     (5,849)     (6,177)
            Net increase in securities sold under agreement to repurchase .      1,254       2,505
            Exercise of stock options .....................................         40          --
            Purchase of stock for stock-based plans .......................         --      (1,020)
            Payments of cash dividends on common stock ....................       (506)       (449)
            Purchase of treasury stock ....................................     (2,989)         --
                                                                              --------    --------

Net cash provided by financing activities .................................     25,238      17,496
                                                                              --------    --------

Net increase (decrease) in cash and cash equivalents ......................     (1,456)    (30,911)
Cash and cash equivalents at beginning of period ..........................     18,640      38,656
                                                                              --------    --------
Cash and cash equivalents at end of period ................................   $ 17,184    $  7,745
                                                                              ========    ========

 The accompanying notes are an integral part of these condensed consolidated financial statements.

                                                 3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>


                      NEW ENGLAND BANCSHARES, INC. AND SUBSIDIARIES
                     Condensed Consolidated Statements of Cash Flows
                                       (Unaudited)
                                     (In thousands)

<S>                                                                       <C>        <C>
Supplemental disclosures:
            Interest paid ........................................   $  8,673   $  4,070
            Income taxes paid ....................................        730        158

Acquisition of First Valley Bancorp:
  Assets acquired
            Cash and cash equivalents ............................   $ 19,013   $     --
            Investments in available-for-sale securities .........     22,648         --
            Federal Home Loan Bank stock, at cost ................        602         --
            Loans, net of allowance for loan losses ..............    141,041         --
            Premises and equipment, net ..........................      2,946         --
            Accrued interest receivable ..........................        836         --
            Deferred income taxes, net ...........................        105         --
            Other assets .........................................        928         --
            Identifiable intangible assets .......................      2,459         --
                                                                     --------   --------
  Total assets acquired ..........................................         --    190,578

  Liabilities assumed
            Deposits .............................................    168,370         --
            Advanced payments by borrowers for taxes and insurance        192         --
            Borrowed funds .......................................      8,513         --
            Other liabilities ....................................      1,369         --
                                                                     --------   --------
  Total liabilities assumed ......................................    178,444         --
                                                                     --------   --------

Net assets acquired ..............................................     12,134         --

Acquisition costs ................................................     25,666         --
                                                                     --------   --------

Goodwill .........................................................   $ 13,532   $     --






       The accompanying notes are an integral part of these condensed consolidated
                                  financial statements.

                                           4
</TABLE>
<PAGE>

                          NEW ENGLAND BANCSHARES, INC.
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)


NOTE 1 - Organization

         New  England  Bancshares,   Inc.  New  England  Bancshares,  Inc.  (the
"Company") is a Maryland  corporation which was organized in December 2005 to be
the holding company parent of Enfield Federal Savings and Loan  Association (the
"Association"   or  "Enfield   Federal"),   following  the   completion  of  the
"second-step"  mutual-to-stock conversion of Enfield Mutual Holding Company. The
principal  assets of the  Company  are its  investments  in Enfield  Federal and
Valley Bank. As a part of the second-step conversion, the Company sold 3,075,855
shares  resulting in net proceeds of $27.2  million,  of which $12.2 million was
retained as capital by the Company and $15.0 million was infused as capital into
the Association. Shareholders of the Company immediately prior to the completion
of the  second-step  conversion  received 2.3683 shares for each share of common
stock they held in the Company,  resulting  in an  additional  1,311,863  shares
being issued.

         The  second-step  conversion was accounted for as a change in corporate
form  with no  subsequent  change  in the  historical  carrying  amounts  of the
Company's assets and liabilities. Consolidated stockholders' equity increased by
the net cash  proceeds  from the offering.  All  references in the  consolidated
financial  statements  and notes thereto to share data  (including the number of
shares and per share  amounts)  have been  adjusted  to reflect  the  additional
shares outstanding as a result of the offering and the share exchange.

         On July 12, 2007 the  Company  acquired  First  Valley  Bancorp,  Inc.,
Bristol,  Connecticut.  First Valley Bancorp was the holding  company for Valley
Bank, Bristol, Connecticut. Under the terms of the transaction,  shareholders of
First Valley Bancorp received 0.8907 shares of Company common stock and $9.00 in
cash  for each  share  of  First  Valley  Bancorp  common  stock  for a total of
1,068,885  shares and $10.8  million.  In addition,  the Company  incurred  cash
payments  for deal  expenses,  payout of stock  options  and  employee  expenses
totaling $1.6 million, creating $13.5 million of goodwill.

         Enfield  Federal  Savings  and  Loan   Association.   The  Association,
incorporated in 1916, is a federally chartered savings association headquartered
in Enfield,  Connecticut. The Association is engaged principally in the business
of attracting  deposits from the general  public and  investing  those  deposits
primarily in  residential  and  commercial  real estate  loans,  and to a lesser
extent,  in consumer,  construction,  commercial  and small business  loans.  At
December 31, 2007, the Association operated from eight locations in Connecticut.

         Valley  Bank.  Valley Bank is a state  chartered  commercial  bank that
commenced  operations on November 15, 1999.  The Bank is engaged  principally in
the business of attracting  deposits from the general public and investing those
deposits in small business,  commercial real estate, residential real estate and
consumer  loans.  At December 31, 2007, the Bank operated from four locations in
Connecticut.

                                       5
<PAGE>

NOTE 2 - Basis of Presentation

         The accompanying  unaudited condensed consolidated financial statements
have been prepared in accordance with accounting  principles  generally accepted
in the  United  States of  America  for  interim  financial  statements  and the
instructions  to  Form  10-QSB,  and  accordingly  do  not  include  all  of the
information and footnotes required by accounting  principles  generally accepted
in the United  States of  America  for  complete  financial  statements.  In the
opinion  of  management,   the  accompanying  unaudited  consolidated  financial
statements  reflect  all  adjustments  necessary,   consisting  of  only  normal
recurring  accruals,  to  present  fairly  the  financial  position,  results of
operations and cash flows of the Company for the periods presented. In preparing
the interim financial  statements,  management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities as of the
date of the balance  sheet and  revenues  and  expenses  for the period.  Actual
results could differ significantly from those estimates.  The interim results of
operations  are  not  necessarily  indicative  of the  operating  results  to be
expected for the year ending March 31, 2008 or any other interim period.

         While management  believes that the disclosures  presented are adequate
so as not to  make  the  information  misleading,  it is  suggested  that  these
condensed  consolidated  financial  statements be read in  conjunction  with the
financial  statements and notes included in New England  Bancshares' Form 10-KSB
for the year ended March 31, 2007.

         The  condensed  consolidated  balance  sheet as of March  31,  2007 was
derived from the audited financial  statements of New England Bancshares,  Inc.,
but does not  include all the  disclosures  required  by  accounting  principles
generally accepted in the United States of America.

NOTE 3 - Earnings Per Share (EPS)

         Basic  EPS  is  computed  by  dividing   income   available  to  common
stockholders by the weighted-average number of common shares outstanding for the
period.  Diluted  EPS  reflects  the  potential  dilution  that  could  occur if
securities or other  contracts to issue common stock were exercised or converted
into common  stock or resulted in the  issuance of common stock that then shared
in the earnings of the entity. The Company had 123,563  anti-dilutive shares for
the three and nine months  ended  December  31,  2007 and 108,563  anti-dilutive
shares for the nine months ended December 31, 2006 (there were no  anti-dilutive
shares for the three months ended December 31, 2006).  Anti-dilutive  shares are
stock  options  with   weighted-average   exercise   prices  in  excess  of  the
weighted-average  market value for the same period.  Unallocated  common  shares
held by the Association's  employee stock ownership plan are not included in the
weighted-average number of common shares outstanding for purposes of calculating
both basic and diluted EPS.

                                       6
<PAGE>

                                         Quarter Ended    Nine Months Ended
                                          December 31,       December 31,
                                         ---------------   ---------------
(In thousands, except per share data)     2007     2006     2007     2006
                                         ------   ------   ------   ------
Net income                               $  395   $  264   $  691   $  774
Weighted average common shares
  outstanding for computation of basic
  EPS                                     5,888    4,934    5,567    4,952
Effect of dilutive stock options and
  stock awards                              166      209      167      170
                                         ------   ------   ------   ------

Weighted average common shares for
  computation of diluted EPS              6,054    5,143    5,734    5,122
                                         ------   ------   ------   ------
Earnings per share:
  Basic                                  $ 0.07   $ 0.05   $ 0.12   $ 0.16
  Diluted                                $ 0.07   $ 0.05   $ 0.12   $ 0.15
----------------------------------------------------------------------------

NOTE 4 - Recent Accounting Pronouncements

         In February 2006, the FASB issued SFAS No. 155, "Accounting for Certain
Hybrid  Instruments"  ("SFAS 155"),  which permits,  but does not require,  fair
value accounting for any hybrid  financial  instrument that contains an embedded
derivative that would otherwise require bifurcation in accordance with SFAS 133.
The  statement  also  subjects  beneficial  interests  issued by  securitization
vehicles to the  requirements of SFAS No. 133. The statement was effective as of
April 1, 2007.  The  adoption of SFAS 155 did not have a material  impact on the
Company's financial condition and results of operations.

         In March 2006, the FASB issued SFAS No. 156,  "Accounting for Servicing
of Financial Assets - an amendment of FASB Statement No. 140" ("SFAS 156"). SFAS
No. 156 requires an entity to recognize a servicing asset or servicing liability
each time it undertakes  an obligation to service a financial  asset by entering
into a servicing contract in specific  situations.  Additionally,  the servicing
asset or servicing liability shall be initially measured at fair value; however,
an  entity  may elect the  "amortization  method"  or "fair  value  method"  for
subsequent  balance  sheet  reporting  periods.  SFAS 156 is  effective as of an
entity's first fiscal year beginning after September 15, 2006. Early adoption is
permitted as of the  beginning of an entity's  fiscal year,  provided the entity
has not yet issued financial statements, including interim financial statements,
for any period of that fiscal year.  Adoption of this  statement  did not have a
material impact on its financial condition, results of operations or cash flows.

         In June 2006 the FASB issued  Interpretation  No. 48,  "Accounting  for
Uncertainty  in Income Taxes - an  interpretation  of FASB  Statement 109" ("FIN
48"). FIN 48 prescribes a recognition  threshold and  measurement  attribute for
the financial statement  recognition and measurement of a tax position taken, or
expected to be taken,  in a tax return and provides  guidance on  derecognition,
classification,   interest  and  penalties,   accounting  in  interim   periods,
disclosure and transition.  FIN 48 is effective for fiscal years beginning after
December 15, 2006. The adoption of FIN 48 did not have a material  impact on the
Company's financial statements.

         In  September   2006,  the  FASB  issued  SFAS  No.  157,  "Fair  Value
Measurements" ("SFAS 157"). SFAS 157 defines fair value, establishes a framework
for measuring fair value under generally accepted  accounting  principles (GAAP)
and enhances  disclosures  about fair value  measurements.  SFAS 157 retains the
exchange  price notion and clarifies  that the exchange  price is the price that
would be received  for an asset or paid to transfer a liability  (an exit price)
in an orderly  transaction  between market participants on the measurement date.
SFAS 157 is effective for the Company's  consolidated  financial  statements for
the year beginning on April 1, 2008, with earlier adoption

                                       7
<PAGE>

permitted.  Adoption  of this  statement  did not have a material  impact on its
financial condition and results of operations.

         In September 2006, the FASB issued SFAS No. 158, "Employer's Accounting
for Defined  Benefit  Pension and other  Postretirement  Plans - an amendment of
FASB Statements No 87, 88, 106 and 132(R)" ("SFAS 158"). SFAS 158 requires:  (1)
the  recognition of an asset or liability for the  over-funded  or  under-funded
status of a defined  benefit plan; (2) the  recognition  of actuarial  gains and
losses and prior service costs and credits in other  comprehensive  income;  (3)
measurement of plan assets and benefit  obligations as of the employer's balance
sheet date, rather than at interim  measurement dates as currently allowed;  and
(4) disclosure of additional  information  concerning actuarial gains and losses
and prior service costs and credits  recognized in other  comprehensive  income.
This  statement is effective for financial  statements  with fiscal years ending
after  December 15,  2006.  Adoption of this  Statement  did not have a material
impact on the Company's financial position, result of operations or cash flows.

         In  September  2006,  the FASB  ratified the  consensus  reached by the
Emerging  Issues Task Force ("EITF") on Issue No. 06-4  "Accounting for Deferred
Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life
Insurance  Arrangements"  ("EITF Issue 06-4"). EITF 06-4 requires companies with
an endorsement  split-dollar life insurance arrangement to recognize a liability
for future  postretirement  benefits.  The  effective  date is for fiscal  years
beginning after December 15, 2007, with earlier application permitted. Companies
should  recognize the effects of applying this issue through either (a) a change
in  accounting  principle  through a cumulative  effect  adjustment  to retained
earnings  or  (b)  a  change  in  accounting  principle  through   retrospective
application to all periods.  The Company is currently evaluating and has not yet
determined  the  impact  the new  EITF  is  expected  to  have on its  financial
position, results of operations or cash flows

         In February  2007,  the FASB issued SFAS No. 159 "The Fair Value Option
for Financial  Assets and Financial  Liabilities  including an amendment of FASB
Statement No. 115" ("SFAS 159").  SFAS 159 permits entities to choose to measure
many  financial  instruments  and certain other items at fair value that are not
currently  required to be measured at fair value.  The  objective  is to improve
financial  reporting  by providing  entities  with the  opportunity  to mitigate
volatility  in  reported   earnings  caused  by  measuring  related  assets  and
liabilities  differently  without  having  to  apply  complex  hedge  accounting
provisions.   This  statement  also  establishes   presentation  and  disclosure
requirements  designed to facilitate  comparisons  between  entities that choose
different  measurement  attributes for similar types of assets and  liabilities.
The new  standard is effective at the  beginning  of the  Company's  fiscal year
beginning  April  1,  2008,  and  early  adoption  may  be  elected  in  certain
circumstances.  The Company is currently  evaluating  and has not yet determined
the impact the new  standard  is  expected  to have on its  financial  position,
results of operations or cash flow.

NOTE 5 - Stock-Based Incentive Plan

         At December 31, 2007,  the Company  maintained a stock-based  incentive
plan and an equity incentive plan. The Company currently  accounts for the plans
under the  recognition  and  measurement  principles  of  Statement of Financial
Accounting  Standards  (SFAS) No. 123,  (amended  2004),  "Share-Based  Payment"
("SFAS  123R").  SFAS 123R required the Company to recognize the cost  resulting
from  all  share-based  payment  transactions  in  the  consolidated   financial
statements as of the beginning of the first annual  reporting  period that began
after  December 15, 2005.  For the nine months ended December 31, 2007 and 2006,
compensation  cost for the Company's  stock plans was measured at the grant date
based on the value of the  award and was  recognized  over the  service  period,
which was the  vesting  period.  The  compensation  cost  that has been  charged
against  income in the nine  months  ended  December  31,  2007 and 2006 for the
granting  of  stock   options   under  the  plans  was  $164,000  and  $138,000,
respectively.  During the nine  months  ended  December  31,  2007,  the Company
granted 15,000 options.


                                       8
<PAGE>

         The  compensation  cost that has been  charged  against  income for the
granting of  restricted  stock  awards  under the plan for the nine months ended
December 31, 2007 and 2006 was $180,000 and $128,000, respectively.

Item 2.  Management's Discussion and Analysis or Plan of Operation.
         ---------------------------------------------------------

         The following analysis discusses changes in the financial condition and
results of  operations  at and for the three and nine months ended  December 31,
2007 and 2006,  and should be read in conjunction  with the Company's  Condensed
Consolidated  Financial  Statements and the notes thereto,  appearing in Part I,
Item 1 of this document.

Forward-Looking Statements

         This report  contains  certain  forward-looking  statements  within the
meaning of Section 27A of the  Securities  Act of 1933, as amended,  and Section
21E of the Securities Exchange Act of 1934, as amended. The Company intends such
forward-looking  statements  to be covered  by the safe  harbor  provisions  for
forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995,  and is including  this statement for purposes of these safe harbor
provisions.  Forward-looking statements,  which are based on certain assumptions
and describe  future plans,  strategies  and  expectations  of the Company,  are
generally  identified  by  use  of  the  words  "believe,"  "expect,"  "intend,"
"anticipate,"  "estimate,"  "project"  or  similar  expressions.  The  Company's
ability to predict results or the actual effect of future plans or strategies is
inherently  uncertain.  Factors that could have a material adverse effect on the
operations of the Company and its subsidiaries  include, but are not limited to,
changes  in:  interest  rates,  general  economic  conditions,  legislation  and
regulations,  monetary  and fiscal  policies of the U.S.  government,  including
policies of the U.S.  Treasury  and the Federal  Reserve  Board,  the quality or
composition  of the loan or  investment  portfolios,  demand for loan  products,
deposit  flows,  competition,  demand for  financial  services in the  Company's
market area, accounting principles and guidelines,  and our ability to recognize
enhancements related to our acquisition within expected time frames. These risks
and uncertainties should be considered in evaluating  forward-looking statements
and undue reliance should not be placed on such statements.  Further information
concerning the Company and its business, including additional factors that could
materially affect the Company's  financial results, is included in the Company's
Annual  Report on Form 10-KSB for the year ended March 31,  2007,  under Item 1,
Description  of  Business  - Risk  Factors"  and  our  other  filings  with  the
Securities and Exchange Commission.

         Except as required by applicable law and  regulation,  the Company does
not undertake - and specifically  disclaims any obligation - to publicly release
the result of any revisions that may be made to any  forward-looking  statements
to  reflect  events or  circumstances  after the date of such  statements  or to
reflect the occurrence of anticipated or unanticipated events.


                                       9
<PAGE>

    Comparison of Financial Condition at December 31, 2007 and March 31, 2007

Assets

         Total assets were $502.9  million at December 31, 2007,  an increase of
$218.8  million  compared to $284.2  million at March 31, 2007.  The increase in
total assets was primarily the result of the acquisition of First Valley Bancorp
and the  subsequent  loan growth in each of the bank  subsidiaries.  Compared to
March 31, 2007 assets increased due to a $174.1 million increase in net loans, a
$25.6 million increase in  available-for-sale  investments,  and a $15.7 million
increase in goodwill and identifiable  intangible assets,  partially offset by a
$1.5  million  decrease  in cash and cash  equivalents.  At December  31,  2007,
commercial loans comprise 55.6% of the total loan portfolio compared to 37.9% at
March 31, 2007.

         Through the acquisition of First Valley Bancorp,  the Company  acquired
$190.6  million  of assets,  including  $141.0 of net  loans,  $22.6  million of
available-for-sale  securities,  and $16.0  million of  intangible  assets;  and
$178.4  million of  liabilities,  including  $168.4 million of deposits and $8.5
million of borrowings.

Allowance for Loan Losses

         Management  determines the adequacy of the allowance for loan losses on
a regular basis. The determination is based upon management's  assessment of the
credit quality and composition of the loan portfolio,  previous loss experience,
current economic conditions and their effect on borrowers and the market area in
general,  and the performance of individual  credits in relation to the contract
terms.

         The Company's  methodology  for assessing  the  appropriateness  of the
allowance for loan losses consists of specific allowances for identified problem
loans and a general valuation  allowance on the remainder of the loan portfolio.
Although we determine  the amount of each element of the  allowance  separately,
the entire allowance for loan losses is available for the entire portfolio.

         Provisions  for loan  losses are charges to earnings to bring the total
allowance  for loan losses to a level  considered  by  management as adequate to
provide  for  estimated  loan losses  based on  management's  evaluation  of the
collectibility of the loan portfolio.  While management  believes that, based on
information  currently  available,  the  Company's  allowance for loan losses is
sufficient  to cover  losses  inherent in its loan  portfolio  at this time,  no
assurances  can be given that the  Company's  level of allowance for loan losses
will be sufficient  to cover actual loan losses  incurred by the Company or that
future  adjustments  to the  allowance  for loan losses will not be necessary if
economic and other conditions differ  substantially  from the economic and other
conditions  used by  management  to determine the current level of the allowance
for loan losses. In addition,  regulators as an integral part of its examination
process,  periodically  reviews the Company's  allowance for loan losses and may
require the Company to provide  additions to the allowance  based upon judgments
different from management.

                                       10
<PAGE>

         The table below  indicates the  relationship  between the allowance for
loan  losses,  total  loans  outstanding  and  nonperforming  loans at the dates
indicated.

                                        December 31, 2007     March 31, 2007
                                        -----------------     --------------
                                              (Dollars in thousands)
         Allowance for loan losses          $  3,960             $  1,875
         Gross loans outstanding             376,554              200,322
         Nonaccrual loans                        819                  824
         Allowance/Loans outstanding            1.05%                0.94%
         Allowance/Nonperforming loans        483.52%              227.55%

         The  $819,000  balance of  non-accrual  loans at December  31, 2007 was
comprised of six loans totaling from Enfield  Federal;  there were no nonaccrual
loans from Valley Bank. The six nonaccrual loans at December 31, 2007 were three
residential  loans and three consumer loans.  The $824,000 balance of nonaccrual
loans at March 31, 2007 was comprised of six loans from Enfield Federal.

 Past due and Nonperforming Loans

         The following table sets forth information regarding past due loans:

                                       December 31, 2007      March 31, 2007
                                       -----------------      --------------
                                                   (In thousands)
Past due 30 days through 89 days            $ 4,654               $3,415
Past due 90 days or more                        631                   --

         The $4.7  million  balance of loans 30 days through 89 days past due at
December 31, 2007 was  comprised  of $3.0 million from Enfield  Federal and $1.6
million  from  Valley  Bank.  The  $631,000 of loans past due 90 days or more at
December 31, 2007 is from Enfield Federal. The $3.4 million balance at March 31,
2007 was comprised entirely of loans from Enfield Federal.

Liabilities

         Total liabilities were $434.0 million at December 31, 2007, an increase
of $207.1 million  compared to $226.9 million at March 31, 2007. The increase in
total  liabilities  was caused  primarily by a $178.3 million  increase in total
deposits, a $25.5 million increase in borrowed funds, a $1.3 million increase in
securities sold under  agreements to repurchase,  and a $1.4 million increase in
other  liabilities.  At December  31, 2007,  deposits  are  comprised of savings
accounts  totaling $55.4 million,  money market deposit accounts  totaling $56.2
million,  demand  accounts  totaling $50.1 million,  and certificate of deposits
totaling  $198.2  million.  Since March 31, 2005, the Company has  experienced a
shift in deposits as customers with generally  lower-yielding  savings  accounts
invest  those funds in  generally  higher-yielding  money  market  accounts  and
certificates of deposit.

Stockholders' Equity

         Total stockholders'  equity increased $11.6 million to $68.9 million at
December 31, 2007 from $57.3 million at March 31, 2007.  The increase was caused
by $13.2 million in stock issued in  conjunction  with the First Valley  Bancorp
merger,  net income of $691,000,  a $179,000  decrease in unearned shares due to
the  vesting of  restricted  shares,  stock  option  expense,  net of

                                       11
<PAGE>

taxes, of $149,000,  and a $363,000 decrease in accumulated other  comprehensive
loss,  partially offset by $3.0 million purchases of treasury stock and $660,000
of dividends declared.

Comparison of Operating Results for the Three Months Ended December 31, 2007 and
2006

General

         The Company's  results of operations  depend  primarily on net interest
and dividend income,  which is the difference  between the interest and dividend
income earned on its interest-earning assets, such as loans and securities,  and
the interest expense on its interest-bearing  liabilities,  such as deposits and
borrowings.  The Company also generates noninterest income,  primarily from fees
and  service  charges.  Gains on  sales  of  securities  and  increases  in cash
surrender value of life insurance policies are additional sources of noninterest
income.  The  Company's  noninterest  expense  primarily  consists  of  employee
compensation  and benefits,  occupancy and equipment  expense,  advertising  and
promotion, data processing, professional fees and other operating expense.

Net Income

         For the three months ended December 31, 2007, the Company  reported net
income of  $395,000,  an increase  of $131,000  compared to the year ago period.
Basic and diluted  earnings  per share for the quarter  ended  December 31, 2007
were each $0.07,  compared to $0.05 for the quarter ended December 31, 2006. The
increase  in net income was due  primarily  to a $1.5  million  increase  in net
interest and dividend income, a $187,000 increase in noninterest  income,  and a
$22,000  decrease in the provision for loan losses,  partially  offset by a $1.4
million increase in noninterest expense and a $98,000 increase in income taxes.

Net Interest and Dividend Income

         Net interest and  dividend  income for the three months ended  December
31, 2007 totaled  $3.8  million  compared to $2.4 million for the same period in
2006. This  represented an increase of $1.4 million or 60.7%.  The change in net
interest and dividend  income was primarily due to a $200.8 million  increase in
average  interest-earning  assets, partially offset by a $187.9 million increase
in average interest-bearing  liabilities. The net interest margin decreased from
3.79% for the quarter  ended  December  31, 2006 to 3.40% for the quarter  ended
December 31, 2007.  The interest rate spread also  decreased  from 3.08% for the
quarter ended December 31, 2006 to 2.81% for the current year period.

         Interest and dividend  income amounted to $7.5 million and $3.9 million
for the three months ended  December  31, 2007 and 2006,  respectively.  Average
interest-earning  assets were $456.5  million for the quarter ended December 31,
2007, an increase of $200.8  million,  or 78.5%,  compared to $255.7 million for
the quarter ended  December 31, 2006.  The increase in average  interest-earning
assets resulted primarily from the acquisition of First Valley Bancorp and asset
growth of the consolidated entity. The yield earned on average  interest-earning
assets  increased  to 6.57% for the three  months  ended  December 31, 2007 from
6.18%  for the  three  months  ended  December  31,  2006 due  primarily  to the
acquisition of higher-yielding loans.

         Interest expense for the quarter was $3.6 million,  an increase of $2.1
million,  or 137.3%,  from the $1.5  million  reported in the same  quarter last
year.  Average  interest-bearing  liabilities  grew  $187.9  million  during the
quarter ended December 31, 2007 from $197.1 million to $385.0 million  primarily
due to the  acquisition  of First  Valley  Bancorp.  The  average  rate  paid on

                                       12
<PAGE>

interest-bearing  liabilities  increased to 3.76% for the quarter ended December
31, 2007 from 3.10% for the year ago period,  due  primarily  to the increase in
the Federal Home Loan Bank  advances and  securities  sold under  agreements  to
repurchase,  which carry higher rates than  deposits.  In addition,  the average
rate paid on certificates of deposit  increased from 3.92% for the quarter ended
December  31,  2006 to 4.52% for the current  year  quarter as  competition  has
increased for this type of deposit.

Provision for Loan Losses

         The provision for loan losses for the quarters  ended December 31, 2007
and 2006 was $38,000 and $60,000,  respectively.  The additions to the allowance
for loan losses  reflected  continued  growth in the loan  portfolio,  partially
offset by continued strong asset quality.

Noninterest Income

         For the  quarter  ended  December  31,  2007,  noninterest  income  was
$434,000  compared to $247,000 in the same  quarter a year ago.  The increase in
noninterest  income was  primarily  due to an  increase  of  $134,000 in service
charges on deposit accounts,  primarily due to the inclusion of Valley Bank, and
a $37,000  increase in other  income.  The  increase in other  income was due to
$48,000 of investment  services  income and $13,000 of income on sold loans from
the Company's new subsidiary, Valley Bank.

Noninterest Expense

         Noninterest  expense for the quarter  ended  December 31, 2007 was $3.6
million, an increase of $1.4 million, or 65.4%, from $2.2 million in the quarter
ended  December 31, 2006.  Salaries and employee  benefits  increased  $672,000,
occupancy and equipment expenses increased $352,000, professional fees increased
$48,000,  amortization of identifiable  intangible assets increased $112,000 and
other noninterest expense increased $170,000,  all of which was due primarily to
the acquisition of First Valley Bancorp.

Provision for Income Taxes

         The income tax provision  for the quarter  ended  December 31, 2007 was
$223,000  compared to $125,000 for the quarter  ended  December  31,  2006.  The
effective tax rate  increased from 32.1% for the quarter ended December 31, 2006
to 36.1% for the current year  quarter.  The increase in the  effective tax rate
was caused primarily by the decrease in tax-exempt  income,  and the increase of
tax-exempt expenses.

Comparison of Operating  Results for the Nine Months Ended December 31, 2007 and
2006

Net Income

         For the nine months ended December 31, 2007,  the Company  reported net
income of $691,000, a decrease of $83,000 compared to the year ago period. Basic
and diluted  earnings per share for the nine months ended December 31, 2007 were
each $0.12,  and for the nine months ended December 31, 2006 were each $0.16 and
$0.15,  respectively.  The  decrease in net income was due  primarily  to a $2.8
million  increase  in  noninterest  expense,  a $203,000  increase in income tax
expense,  and a $26,000  increase in the  provision  for loan losses,  partially
offset by a $2.8 million  increase in net  interest  and  dividend  income and a
$163,000 increase in noninterest income.

                                       13
<PAGE>

Net Interest and Dividend Income

         Net interest and dividend income for the nine months ended December 31,
2007 totaled $9.9 million  compared to $7.1 million for the same period in 2006.
This  represented  an  increase  of $2.8  million  or 40.0%.  The  change in net
interest and dividend  income was primarily due to a $128.8 million  increase in
average  interest-earning  assets, partially offset by a $121.6 million increase
in average interest-bearing  liabilities. The net interest margin decreased from
3.84% for the nine months  ended  December 31, 2006 to 3.53% for the nine months
ended December 31, 2007,  and the interest rate spread  decreased from 3.17% for
the nine months ended December 31, 2006 to 2.89% for the current year period.

         Interest  and  dividend  income  amounted  to $18.6  million  and $11.2
million  for the nine months  ended  December  31, 2007 and 2006,  respectively.
Average  interest-earning  assets were $378.6  million for the nine months ended
December 31, 2007, an increase of $128.8 million,  or 51.6%,  compared to $249.8
million for the nine months ended  December  31,  2006.  The increase in average
interest-earning assets resulted primarily from the growth in the loan portfolio
and  investments,  due primarily to the First Valley  Bancorp  acquisition.  The
yield earned on average  interest-earning assets increased to 6.57% for the nine
months ended December 31, 2007 from 6.03% for the nine months ended December 31,
2006 due primarily to the acquisition of higher-yielding loans from First Valley
Bancorp.

         Interest  expense for the nine months ended  December 31, 2007 was $8.7
million,  an increase of $4.6 million, or 110.5%, from the $4.1 million reported
in the same nine months last year.  Average  interest-bearing  liabilities  grew
$121.7  million  during the nine  months  ended  December  31,  2007 from $191.7
million to $313.4 million due to the  acquisition of First Valley  Bancorp.  The
average  rate paid on  interest-bearing  liabilities  increased to 3.68% for the
nine months  ended  December  31,  2007 from 2.86% for the year ago period,  due
primarily to the increase in Federal Home Loan Bank advances and securities sold
under  agreements  to  repurchase,  which carry higher rates than  deposits.  In
addition,  the average rate paid on certificates of deposit increased from 3.64%
for the nine months  ended  December 31, 2006 to 4.50% for the current year nine
months as competition has increased for this type of deposit.

Provision for Loan Losses

         The  provision  for loan losses for the nine months ended  December 31,
2007 and 2006 was  $208,000 and  $182,000,  respectively.  The  additions to the
allowance  for loan losses  reflected  continued  growth in the loan  portfolio,
partially offset by continued strong asset quality as reflected in the increased
allowance to nonperforming loans ratio.

Noninterest Income

         For the nine months ended  December 31,  2007,  noninterest  income was
$836,000  compared to $673,000 in the same nine months a year ago.  The increase
in  noninterest  income  was  primarily  due to a $252,000  increase  in service
charges on  deposit  accounts  and an  increase  of  $139,000  in other  income,
partially  offset by a net loss on sales and calls of securities of $201,000 for
the nine months ended December 31, 2007, compared to a $33,000 gain in the prior
year period.

                                       14
<PAGE>

Noninterest Expense

         Noninterest  expense for the nine months  ended  December  31, 2007 was
$9.3 million,  an increase of $2.8 million,  or 44.3%,  from $6.4 million in the
nine months ended December 31, 2006.  Salaries and employee  benefits  increased
$1.4  million,   occupancy  and  equipment  expenses  increased  $651,000,  data
processing  expense increased $68,000,  amortization of identifiable  intangible
assets increased $186,000 and other noninterest expense increased $440,000,  all
of which was due primarily to the acquisition of First Valley Bancorp.

Provision for Income Taxes

         The income tax  provision  for the nine months ended  December 31, 2007
was $555,000  compared to $352,000 for the nine months ended  December 31, 2006.
The effective tax rate  increased  from 31.3% for the nine months ended December
31,  2006 to 44.5%  for the  current  year  nine  months.  The  increase  in the
effective tax rate was caused  primarily by the $199,000  capital loss, which is
included in the loss on sale of investments,  which is not tax deductible in the
current period.

Liquidity and Capital Resources

         The term liquidity refers to the ability of the Company to meet current
and  future  short-term  financial  obligations.  The  Company  further  defines
liquidity  as the  ability  to  generate  adequate  amounts of cash to fund loan
originations,  deposit withdrawals and operating expenses.  Liquidity management
is both a daily and long-term function of business management. The Association's
and  Valley  Bank's  primary  sources  of  liquidity  are  deposits,   scheduled
amortization and prepayments of loan principal and mortgage-related  securities,
funds provided by operations and borrowings. The Association and Valley Bank can
borrow  funds from the Federal  Home Loan Bank based on eligible  collateral  of
loans and securities. The Association and Valley Bank had Federal Home Loan Bank
borrowings  as of December  31,  2007 of $55.2  million  with  unused  borrowing
capacity of $41.5 million.

         The Company's primary investing activities are the origination of loans
and the purchase of mortgage and investment  securities.  During the nine months
ended December 31, 2007 and 2006, the Company originated loans, net of principal
paydowns  of  approximately  $33.3  million  and  $17.3  million,  respectively.
Purchases of investment  securities  totaled $32.8 million and $11.7 million for
the nine months ended December 31, 2007 and 2006, respectively.

         Loan  repayment  and maturing  investment  securities  are a relatively
predictable  source  of  funds.  However,  deposit  flows,  calls of  investment
securities and prepayments of loans and mortgage-backed  securities are strongly
influenced  by  interest  rates,  general  and  local  economic  conditions  and
competition in the marketplace.  These factors reduce the  predictability of the
timing of these sources of funds. Total deposits were $360.0 million at December
31, 2007, a $178.3 million increase from the $181.7 million balance at March 31,
2007.  Deposits assumed in conjunction with the merger with First Valley Bancorp
comprised $168.4 million of the increase.

         At  December  31,  2007,  the Company had  outstanding  commitments  to
originate $23.2 million of loans, and available home equity and unadvanced lines
of credit and construction  loans of approximately  $37.9 million.  In addition,
the Company had $1.8 million of commercial letters of credit.  Management of the
Association and Valley Bank  anticipate that they will have sufficient  funds to
meet its current loan commitments.  Retail  certificates of deposit scheduled to
mature in one year or less at December 31, 2007 totaled $162.7 million, or 45.2%
of total deposits. The Company relies on competitive rates, customer service and
long-standing  relationships  with  customers to retain  deposits.  Based on the

                                       15
<PAGE>

Company's  experience with deposit retention and current  retention  strategies,
management  believes  that,  although it is not possible to predict future terms
and conditions upon renewal, a significant  portion of such deposits will remain
with the Company.

         Enfield  Federal  Savings  was  "well   capitalized"  under  regulatory
guidelines at December 31, 2007 and exceeded each of the  applicable  regulatory
capital requirements at such date. The table below presents the capital required
as a percentage of total and risk  weighted  assets and the  percentage  and the
total amount of capital maintained at December 31, 2007.

 (dollars in thousands)
                                Required             Enfield Federal
                                --------             ---------------
 Tier 1 Capital                     4%               $25,010   8.87%
 Total Risk-Based Capital           8%               $27,025  14.89%
 Tier 1 Risk-Based Capital          4%               $25,010  13.78%

         Valley  Bank was "well  capitalized"  under  regulatory  guidelines  at
December  31,  2007  and  exceeded  each of the  applicable  regulatory  capital
requirements  at such date. The table below  presents the capital  required as a
percentage of total and risk weighted  assets and the  percentage  and the total
amount of capital maintained at December 31, 2007.

 (dollars in thousands)
                                 Required              Valley Bank
                                 --------            ---------------
 Tier 1 Capital                     4%               $23,923  11.56%
 Total Risk-Based Capital           8%               $25,856  14.52%
 Tier 1 Risk-Based Capital          4%               $23,923  14.52%


         Management  is not aware of any known trends,  events or  uncertainties
that  will  have or are  reasonably  likely  to have a  material  effect  on the
Company's,  Enfield  Federal  Savings' or Valley  Bank's  liquidity,  capital or
operations, nor is management aware of any current recommendations by regulatory
authorities  which,  if  implemented,  would  have  a  material  effect  on  the
Company's,  Enfield  Federal  Savings' or Valley  Bank's  liquidity,  capital or
operations.

Off-Balance Sheet Arrangements

         In addition to the normal course of  operations,  the  Association  and
Valley Bank engage in a variety of financial  transactions  that,  in accordance
with generally accepted accounting principals, are not recorded in our financial
statements.  These transactions involve, to varying degrees, elements of credit,
interest rate and liquidity risk. Such transactions are used primarily to manage
customers' requests for funding and take the form of loan commitments,  lines of
credit and letters of credit.

         For the nine months ended  December 31, 2007,  neither the  Association
nor Valley Bank engaged in off-balance sheet  transactions  reasonably likely to
have a material effect on our financial condition, results of operations or cash
flows.

Item 3.  Controls and Procedures.
         -----------------------

         The Company's  management,  including the Company's principal executive
officer and principal financial officer, have evaluated the effectiveness of the
Company's  "disclosure controls and procedures," as such term is defined in Rule
13a-15(e)  promulgated  under the  Securities  Exchange Act of 1934, as amended,

                                       16
<PAGE>

(the  "Exchange  Act").  Based upon their  evaluation,  the principal  executive
officer and principal  financial  officer  concluded  that, as of the end of the
period covered by this report, the Company's  disclosure controls and procedures
were effective for the purpose of ensuring that the  information  required to be
disclosed  in the reports that the Company  files or submits  under the Exchange
Act with the  Securities  and Exchange  Commission  (the "SEC") (1) is recorded,
processed,  summarized  and reported  within the time  periods  specified in the
SEC's rules and forms,  and (2) is accumulated and communicated to the Company's
management,  including its principal  executive officer and principal  financial
officer, as appropriate to allow timely decisions regarding required disclosure.

         There have been no  changes  in the  Company's  internal  control  over
financial  reporting  identified in connection  with the evaluation  required by
Rule 13a-15 that  occurred  during the  Company's  last fiscal  quarter that has
materially  affected or is reasonably likely to materially affect, the Company's
internal control over financial reporting.



                                       17
<PAGE>

                           PART II. OTHER INFORMATION

Item 1.  Legal Proceedings.
         -----------------

         The Company is not involved in any pending legal proceedings other than
routine legal  proceedings  occurring in the ordinary  course of business.  Such
routine legal  proceedings,  in the aggregate,  are believed by management to be
immaterial to the Company's financial condition or results of operations.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.
         -----------------------------------------------------------

         The  Company  repurchased  250,000  shares of its  common  stock in the
quarter ended December 31, 2007 as follows:

                                                                      Average
For the three months ended                          Total shares      price paid
December 31, 2007                                   repurchased       per share
--------------------------------------------------------------------------------

October                                                     ---         $   ---
November                                                250,000           11.89
December                                                    ---             ---
--------------------------------------------------------------------------------
Total                                                   250,000         $ 11.89
--------------------------------------------------------------------------------

Item 3.  Defaults Upon Senior Securities.
         -------------------------------

         None.

Item 4.  Submission of Matters to a Vote of Security Holders.
         ---------------------------------------------------

         None.

Item 5.  Other Information.
         -----------------

         None.

Item 6.  Exhibits.
         --------

         3.1     Articles of Incorporation of New England Bancshares, Inc. (1)
         3.2     Bylaws of New England Bancshares, Inc. ((2))
         4.1     Specimen stock certificate of New England Bancshares, Inc.((2))
         31.1    Rule 13a-14(a)/15d-14(a) Certification of Chief Executive
                 Officer
         31.2    Rule 13a-14(a)/15d-14(a) Certification of Chief Financial
                 Officer
         32.1    Section 1350 Certification of Chief Executive Officer
         32.2    Section 1350 Certification of Chief Financial Officer

         -----------------------------
         (1)     Incorporated   by   reference   into  this  document  from  the
                 Registration  Statement  on Form SB-2 (No. 333-128277) as filed
                 on September 13, 2005.

         ((2))   Incorporated  by reference  into this document from Exhibit 3.1
                 to the  Form 8-K as filed  with  the  Securities  and  Exchange
                 Commission on October 11, 2007.

                                       18
<PAGE>

                                   SIGNATURES

         In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


                                  NEW ENGLAND BANCSHARES, INC.


Dated: February 13, 2007          By:   /s/ Scott D. Nogles
       -----------------                ----------------------------------------
                                        Scott D. Nogles
                                        Chief Financial Officer


Dated: February 13, 2007          By:   /s/ David J. O'Connor
       -----------------                ----------------------------------------
                                        David J. O'Connor
                                        Chief Executive Officer


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