Exhibit
99.1





PRESS
RELEASE













Naugatuck
Valley Financial Corporation Reports 93% Increase in Earnings
 For
the Quarter Ended June 30, 2008
 
 
 Naugatuck, CT, July 21,
2008.  Naugatuck Valley Financial Corporation (the “Company”) (NASDAQ
Global Market: “NVSL”), the parent company of Naugatuck Valley Savings and Loan
(the “Bank”), announced net income of $602,000 for the quarter ended June 30,
2008 versus net income of $312,000 for the quarter ended June 30, 2007, an
increase of $290,000 or 93.0%.  In addition, for the six month period
ended June 30, 2008, the Company announced net income of $1.1 million compared
to net income of $587,000 for the six months ended June 30, 2007, an increase of
$468,000 or 79.7%.  Earnings per share for the quarter and six months
ended June 30, 2008 were $.09 and $.15 respectively, compared to $.04 and $.08
for the quarter and six months ended June 30, 2007.
 
 John C. Roman, President and CEO
commented: “During the second quarter of 2008 we continued to build shareholder
value through growth, expense control and maintenance of strong credit
quality.  We also continued to expand our market with the opening of
our newest branch in the Heritage Village section of Southbury,
CT.”
 
 Net interest income for the quarter
ended June 30, 2008 totaled $3.5 million compared to $2.8 million for the
quarter ended June 30, 2007, an increase of $693,000 or 24.4%.  For
the six month period ended June 30, 2008, net interest income totaled $6.8
million compared to $5.7 million for the six months ended June 30, 2007, an
increase of $1.1 million or 19.3%.  The increase in net interest
income is due to an increase in the average balances of interest earning assets
of 18.0% and 16.2% for the three and six month periods respectively, partially
offset by decreases of 21 basis points and 10 basis points in the average rate
earned on these assets over the same periods.  The increase in
interest earning assets is attributed primarily to an increase in the loan
portfolio.  The average balances in the loan portfolio increased by
20.0% in the three month period, and by 19.0% in the six month
period.  The largest increases were in the commercial mortgage
portfolio followed by the residential mortgage portfolio.  The
increase in interest income was partially offset by an increase in interest
expense.  Interest expense increased by $154,000, or 4.8% in the three
month period and increased by $604,000 or 9.6% in the six month period, due to
an increase in the average balances of deposits and borrowings.  The
average balances of deposits increased by 8.9% and 9.7% and the average balance
of borrowings increased by 67.6% and 50.7% over the three and six month periods
respectively, while the average rates paid on these deposits and borrowings
decreased by 41 basis points and 22 basis points, over the same
periods.  The increases were primarily used to fund increased loan
demand.  The largest increases in deposits were in certificates of
deposit, followed by a smaller increase in money market accounts, partially
offset by decreases in checking accounts and savings accounts.  The
increase in certificates of deposit was due primarily to competitive rate
promotional accounts.
 
 The Bank
recorded a provision for loan losses of $113,000 for the three months ended June
30, 2008 compared to no provision for the three months ended June 30,
2007.  For the six months ended June 30, 2008, the Bank recorded a
provision of $275,000, compared
to $51,000 for the six months ended June 30, 2007.  The increase in
the provisions are due to the increasing size of the loan portfolio, a change in
the mix of the portfolio towards commercial loans which are generally riskier
than one-to-four family loans, and general economic conditions.
 
 
  Non-performing
loans totaled $1.8 million at June 30, 2008 compared to $1.0 million at March
31, 2008.  This increase was primarily due to the transfer of one real
estate development loan in the amount of $880,000 to non-accrual
status.  Management does not anticipate any losses on this loan due to
the value of the real estate securing the loan.
 
 Noninterest
income was $661,000 for the quarter ended June 30, 2008 compared to $606,000 for
the quarter ended June 30, 2007, an increase of 9.1%. For the six months ended
June 30, 2008 noninterest income was $1.3 million compared to $1.1 million for
the period ended June 30, 2007, an increase of 13.9%.  The largest
increases in noninterest income in both periods was in gain on sale of
investments, followed by fees for services related to deposit accounts and
income from investment advisory services. The increases in fee income were as a
result of product growth in these areas.
 
 Noninterest
expense was $3.3 million for the quarter ended June 30, 2008 compared to $3.1
million for the quarter ended June 30, 2007.  For the six months ended
June 30, 2008 non-interest expense was $6.5 million compared to $6.2 million for
the six months ended June 30, 2007.  The increase in both periods was
primarily the result of increases in compensation costs, computer processing
costs, director’s compensation and office occupancy over the 2007
period.  The increases were partially offset by a decrease in
advertising expense.
 
 Total
assets were $505.0 million at June 30, 2008 compared to $462.5 million at
December 31, 2007, an increase of $42.5 million or 9.2%.  Total
liabilities were $456.3 million at June 30, 2008 compared to $412.1 million at
December 31, 2007.  Deposits at June 30, 2008 were $336.9 million, an
increase of $15.5 million or 4.8% over December 31, 2007.  Borrowed
funds increased from $85.1 million at December 31, 2007 to $113.2 million at
June 30, 2008.  The increases in deposits and borrowings were
primarily used to fund growth in loans.
 
 Total
stockholders’ equity was $48.8 million at June 30, 2008 compared to $50.5
million at December 31, 2007, due to net income of $1.1 million for the six
month period, dividends of $300,000 paid to stockholders, stock repurchases of
$2.1 million, a net increase to the unrealized loss on available for sale
securities of $455,000 and $101,000 in capital adjustments related to the
Company’s 2005 Equity Incentive Plan.  At June 30, 2008, the Bank’s
regulatory capital exceeded the levels required to be categorized as “well
capitalized” under applicable regulatory capital guidelines.
 
 Naugatuck
Valley Savings and Loan is headquartered in Naugatuck, Connecticut with nine
other branches in Southwest Connecticut. The Bank is a community-oriented
financial institution dedicated to serving the financial service needs of
consumers and businesses within its market area.
 
 This news release may contain
forward-looking statements, which can be identified by the use of words such as
"believes," "expects," "anticipates," "estimates" or similar
expressions.  Such forward-looking statements and all other statements
that are not historic facts are subject to risks and uncertainties which could
cause actual results to differ
 materially
from those currently anticipated due to a number of factors.  These
factors include, but are not limited to, general economic conditions, changes in
the interest rate environment, legislative or regulatory changes that may
adversely affect our business, changes in accounting policies and practices,
changes in competition and demand for financial services, adverse changes in the
securities markets, changes in deposit flows and changes in the quality or
composition of the Company's loan or investment
portfolios.  Additionally, other risks and uncertainties may be
described in the Company's annual report on Form 10-K, its quarterly reports on
Form 10-Q or its other reports as filed with the Securities and Exchange
Commission which are available through the SEC's website at
www.sec.gov.  Should one or more of these risks materialize, actual
results may vary from those anticipated, estimated or projected. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date of this press release.  Except as may be
required by applicable law or regulation, the Company assumes no obligation to
update any forward-looking statements.
   
 
 SELECTED
      FINANCIAL CONDITION DATAJune
      30,
                
                
                December
      31,2008
                
                
                2007(Unaudited)(In
      thousands)ASSETSCash
      and due from depository institutions
                
                $
                7,605
                
                
                $
                7,873Investment
      in federal funds
                
                
                612
                
                
                
                497Investment
      securities
                
                
                71,017
                
                
                
                66,454Loans
      receivable, net
                
                
                396,002
                
                
                
                359,831Deferred
      income taxes
                
                
                1,566
                
                
                
                1,332Other
      assets
                
                
                28,240
                
                
                
                26,540Total
      assets
                
                $
                505,042
                
                
                $
                462,527LIABILITIES
      AND STOCKHOLDERS' EQUITYLiabilitiesDeposits
                
                $
                336,926
                
                
                $
                321,398Borrowed
      funds
                
                
                113,205
                
                
                
                85,107Other
      liabilities
                
                
                6,137
                
                
                
                5,565Total
      liabilities
                
                
                456,268
                
                
                
                412,070Total
      stockholders' equity
                
                
                48,774
                
                
                
                50,457Total
      liabilities and stockholders' equity
                
                $
                505,042
                
                
                $
                462,527
  SELECTED
      OPERATIONS DATAThree
      Months Ended
              
              
              Six
      Months EndedJune
      30,
              
              
              June
      30,2008
              
              
              2007
              
              
              2008
              
              
              2007(Unaudited)(In
      thousands, except per share data)Total
      interest income
              
              $
              6,877
              
              
              $
              6,030
              
              
              $
              13,724
              
              
              $
              12,013Total
      interest expense
              
              
              3,343
              
              
              
              3,189
              
              
              
              6,889
              
              
              
              6,285Net
      interest income
              
              
              3,534
              
              
              
              2,841
              
              
              
              6,835
              
              
              
              5,728Provision
      for loan losses
              
              
              113
              
              
              
              -
              
              
              
              275
              
              
              
              51Net
      interest income after provision for loan losses
              
              
              3,421
              
              
              
              2,841
              
              
              
              6,560
              
              
              
              5,677Noninterest
      income
              
              
              661
              
              
              
              606
              
              
              
              1,287
              
              
              
              1,130Noninterest
      expense
              
              
              3,257
              
              
              
              3,096
              
              
              
              6,464
              
              
              
              6,159Income
      before provisionfor
      income taxes
              
              
              825
              
              
              
              351
              
              
              
              1,383
              
              
              
              648Provision
      for income taxes
              
              
              223
              
              
              
              39
              
              
              
              328
              
              
              
              61Net
      Income
              
              $
              602
              
              
              $
              312
              
              
              $
              1,055
              
              
              $
              587Earnings
      per common share - basic and diluted
              
              $
              0.09
              
              $
              0.04
              
              
              $
              0.15
              
              $
              0.08









SELECTED
      FINANCIAL RATIOSFor
      the Three MonthsSELECTED
      PERFORMANCE RATIOS: (1)
              
              Ended
      June 30,2008
              
              
              2007(Unaudited)Return
      on average assets
              
              
              0.49
              %
              
              
              0.29
              %Return
      on average equity
              
              
              4.82
              
              
              
              2.44Interest
      rate spread
              
              
              2.90
              
              
              
              2.70Net
      interest margin
              
              
              3.04
              
              
              
              2.89Efficiency
      ratio (2)
              
              77.45
              
              
              
              89.59
  ASSET
      QUALITY RATIOS:
              
              At
      June 30,
              
              At
      December 31,2008
              
              
              2007(Unaudited)(Dollars
      in thousands)Allowance
      for loan losses
              
              $
              2,469
              
              
              $
              2,163Allowance
      for loan losses as a percent of total loans
              
              
              0.62
              %
              
              
              0.60
              %Allowance
      for loan losses as a percent ofnonperforming
      loans
              
              
              137.93
              %
              
              
              222.99
              %Net
      charge-offs to average loansoutstanding
      during the period
              
              
              (0.01
              )
      %
              
              
              -
              %Nonperforming
      loans
              
              $
              1,790
              
              
              $
              970Nonperforming
      loans as a percent of total loans
              
              
              0.45
              %
              
              
              0.27
              %Nonperforming
      assets
              
              $
              1,790
              
              
              $
              970Nonperforming
      assets as a percent of total assets
              
              0.35
              %
              
              
              0.21
              %(1)
      All applicable quarterly ratios reflect annualized
figures.(2)
      Represents non interest expense (less intangible
    amortization)divided
      by the sum of net interest income and noninterest income.
   Contact:
Naugatuck Valley Financial Corporation
 John C.
Roman or Lee R. Schlesinger
 1-203-720-5000