----

----

| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|------------------------------------------------------------------------------------------|

| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 |
|---|----------------------------------------------------------------------------------------------|

|   | NAUGATUCK VALLEY FINANCIAL CORPORATION |   |
|--------|----------------------------------------|--------|

|   | UNITED STATES                                                  |   | 65-1233977                           |   |
|--------|----------------------------------------------------------------|--------|--------------------------------------|--------|
|   | (State or other jurisdiction of incorporation or organization) |   | (I.R.S. Employer Identification No.) |   |

| 333 CHURCH STREET, NAUGATUCK, CONNECTICUT                                                             |   | 06770      |   |
|-------------------------------------------------------------------------------------------------------|--------|------------|--------|
|            (Address of principal executive offices) |   | (Zip Code) |   |

|                                  (203) 720-5000                                 |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (Registrant’s telephone number, including area code)                                                                                                                                                                                                                                                                                                                                                           |

| N/A                                                                                      |
|------------------------------------------------------------------------------------------|
| (Former name, former address and former fiscal year, if changed since last report)  |

| Large Accelerated Filer  o          |   | Accelerated Filer  o         |
|-----------------------------------------------|--------|----------------------------------------|
| Non-accelerated Filer  o            |   | Smaller Reporting Company  x |
| (Do not check if a smaller reporting company) |   |                                   |

----

----

----

NAUGA

|   |                                  |                                                                                          |  Page No. |
|--------|---------------------------------------|-----------------------------------------------------------------------------------------------|----------------|
|   | Item 1.                               | Financial Statements (Unaudited)                                                              |           |
|   |                                  |                                                                                          |           |
|   |                                  | Consolidated Statements of Financial Condition at March 31, 2011 and December 31, 2010   |  3        |
|   |                                  |                                                                                          |           |
|   |                                  | Consolidated Statements of Income for the three months ended March 31, 2011 and 2010     |   4       |
|   |                                  |                                                                                          |           |
|   |                                  | Consolidated Statements of Cash Flows for the three months ended March 31, 2011 and 2010 |   5       |
|   |                                  |                                                                                          |           |
|   |                                  | Notes to Unaudited Consolidated Financial Statements                                          | 6              |
|   |                                  |                                                                                          |           |
|   | Item 2.                               | Management’s Discussion and Analysis of Financial Condition and Results of Operations   | 23             |
|   |                                  |                                                                                          |           |
|   |                                  | Liquidity and Capital Resources                                                               | 28             |
|   |                                  |                                                                                          |           |
|   | Item 3.                               | Quantitative and Qualitative Disclosures About Market Risk                                    | 30             |
|   |                                  |                                                                                          |           |
|   | Item 4.                               | Controls and Procedures                                                                       | 31             |
|   |                                  |                                                                                          |           |
|   | Part II.  Other Information |                                                                                          |
|   |                                  |                                                                                          |           |
|   | Item 1.                               | Legal Proceedings                                                                             | 32             |
|   |                                  |                                                                                          |           |
|   | Item 1A.                              | Risk Factors                                                                                  | 32             |
|   |                                  |                                                                                          |           |
|   | Item 2.                               | Unregistered Sales of Equity Securities and Use of Proceeds                                   | 32             |
|   |                                  |                                                                                          |           |
|   | Item 3.                               | Defaults Upon Senior Securities                                                               | 32             |
|   |                                  |                                                                                          |           |
|   | Item 4.                               | (Removed and Reserved)                                                                        | 32             |
|   |                                  |                                                                                          |           |
|   | Item 5.                               | Other Information                                                                             | 32             |
|   |                                  |                                                                                          |           |
|   | Item 6.                               | Exhibits                                                                                      | 33             |

Signatures

----

Table of Contents

----

Table of Contents

Consolidated 

|                                                           |   | March 31,2011 |    |   | December 31,2010 |   |
|----------------------------------------------------------------|--------|---------------|---------|--------|------------------|--------|
|                                                           |   | (Unaudited)   |    |   |             |   |
| ASSETS                                                         |   |          |    |   |             |   |
| Cash and due from depository institutions                      |   | $             | 6,455   |   |             | $      | 11,686 |   |
| Investment in federal funds                                    |   |          | 1,156   |   |             |   | 2,577 |   |
| Investment securities available-for-sale, at fair value        |   |          | 30,411  |   |             |   | 31,683 |   |
| Investment securities held-to-maturity, at amortized cost      |   |          | 14,819  |   |             |   | 15,334 |   |
| Loans held for sale                                            |   |          | 950     |   |             |   | 81 |   |
| Loans receivable, net                                          |   |          | 476,888 |   |             |   | 473,521 |   |
| Accrued income receivable                                      |   |          | 1,984   |   |             |   | 1,979 |   |
| Foreclosed real estate and repossessed assets, net             |   |          | 528     |   |             |   | 421 |   |
| Premises and equipment, net                                    |   |          | 9,670   |   |             |   | 9,612 |   |
| Bank owned life insurance                                      |   |          | 9,325   |   |             |   | 9,248 |   |
| Federal Home Loan Bank stock, at cost                          |   |          | 6,252   |   |             |   | 6,252 |   |
| Deferred income taxes                                          |   |          | 2,310   |   |             |   | 2,413 |   |
| Other assets                                                   |   |          | 3,391   |   |             |   | 3,446 |   |
|                                                           |   |          |    |   |             |   |   |   |
| Total assets                                                   |   | $             | 564,139 |   |             | $      | 568,253 |   |
|                                                           |   |          |    |   |             |   |   |   |
| LIABILITIES AND STOCKHOLDERS' EQUITY                           |   |          |    |   |             |   |   |   |
| Liabilities                                                    |   |          |    |   |             |   |   |   |
| Deposits                                                       |   | $             | 414,080 |   |             | $      | 405,875 |   |
| Borrowed funds                                                 |   |          | 93,421  |   |             |   | 102,842 |   |
| Mortgagors' escrow accounts                                    |   |          | 2,406   |   |             |   | 4,832 |   |
| Other liabilities                                              |   |          | 1,811   |   |             |   | 2,444 |   |
|                                                           |   |          |    |   |             |   |   |   |
| Total liabilities                                              |   |          | 511,718 |   |             |   | 515,993 |   |
|                                                           |   |          |    |   |             |   |   |   |
| Commitments and contingencies                                  |   |          |    |   |             |   |   |   |
|                                                           |   |          |    |   |             |   |   |   |
| Stockholders' equity                                           |   |          |    |   |             |   |   |   |
| Preferred stock, $.01 par value; 1,000,000 shares authorized;  |   |          |    |   |             |   |   |   |
| no shares issued or outstanding                                |   |          | -       |   |             |   | - |   |
| Common stock, $.01 par value; 25,000,000 shares authorized;    |   |          |    |   |             |   |   |   |
| 7,604,375 shares issued, 7,018,627 shares outstanding at March |   |          |    |   |             |   |   |   |
| 31, 2011 and 7,018,823 shares outstanding at December 31, 2010 |   |          | 76      |   |             |   | 76 |   |
| Paid-in capital                                                |   |          | 33,788  |   |             |   | 33,786 |   |
| Retained earnings                                              |   |          | 26,242  |   |             |   | 25,986 |   |
| Unearned ESOP shares (173,846 shares at March 31, 2011         |   |          |    |   |             |   |   |   |
| and December 31, 2010)                                         |   |          | (1,738  | )      |             |   | (1,738 | ) |
| Unearned stock awards (2,200 shares at March 31, 2011          |   |          |    |   |             |   |   |   |
| and 2,900 shares at December 31, 2010)                         |   |          | (21     | )      |             |   | (29 | ) |
| Treasury stock, at cost 589,071 shares at March 31, 2011       |   |          |    |   |             |   |   |   |
| and 588,875 shares at December 31, 2010)                       |   |          | (6,178  | )      |             |   | (6,176 | ) |
| Accumulated other comprehensive income                         |   |          | 252     |   |             |   | 355 |   |
|                                                           |   |          |    |   |             |   |   |   |
| Total stockholders' equity                                     |   |          | 52,421  |   |             |   | 52,260 |   |
|                                                           |   |          |    |   |             |   |   |   |
| Total liabilities and stockholders' equity                     |   | $             | 564,139 |   |             | $      | 568,253 |   |

----

Table of Contents

Consolidated 

|                                                |   | Three Months EndedMarch 31, |   |
|-----------------------------------------------------|--------|-----------------------------|--------|
|                                                |   | 2011                        |   |   | 2010 |   |
|                                                |   | (Unaudited)                 |   |
| Interest income                                     |   |                        |   |   |   |   |
| Interest on loans                                   |   | $                           | 6,332  |   |   | $ | 6,684 |   |
| Interest and dividends on investments and deposits  |   |                        | 430    |   |   |   | 459 |   |
| Total interest income                               |   |                        | 6,762  |   |   |   | 7,143 |   |
|                                                |   |                        |   |   |   |   |   |   |
| Interest expense                                    |   |                        |   |   |   |   |   |   |
| Interest on deposits                                |   |                        | 1,746  |   |   |   | 1,811 |   |
| Interest on borrowed funds                          |   |                        | 612    |   |   |   | 804 |   |
| Total interest expense                              |   |                        | 2,358  |   |   |   | 2,615 |   |
|                                                |   |                        |   |   |   |   |   |   |
| Net interest income                                 |   |                        | 4,404  |   |   |   | 4,528 |   |
|                                                |   |                        |   |   |   |   |   |   |
| Provision for loan losses                           |   |                        | 438    |   |   |   | 809 |   |
|                                                |   |                        |   |   |   |   |   |   |
| Net interest income after provision for loan losses |   |                        | 3,966  |   |   |   | 3,719 |   |
|                                                |   |                        |   |   |   |   |   |   |
| Noninterest income                                  |   |                        |   |   |   |   |   |   |
| Fees for services related to deposit accounts       |   |                        | 213    |   |   |   | 246 |   |
| Fees for other services                             |   |                        | 174    |   |   |   | 139 |   |
| Net gain on investments                             |   |                        | 147    |   |   |   | 8 |   |
| Mortgage banking income                             |   |                        | 128    |   |   |   | 26 |   |
| Income from bank owned life insurance               |   |                        | 77     |   |   |   | 84 |   |
| Income from investment advisory services, net       |   |                        | 74     |   |   |   | 41 |   |
| Other income                                        |   |                        | 24     |   |   |   | 27 |   |
| Total noninterest income                            |   |                        | 837    |   |   |   | 571 |   |
|                                                |   |                        |   |   |   |   |   |   |
| Noninterest expense                                 |   |                        |   |   |   |   |   |   |
| Compensation, taxes and benefits                    |   |                        | 2,357  |   |   |   | 2,075 |   |
| Office occupancy                                    |   |                        | 607    |   |   |   | 587 |   |
| Computer processing                                 |   |                        | 262    |   |   |   | 229 |   |
| FDIC insurance premiums                             |   |                        | 204    |   |   |   | 162 |   |
| Directors compensation                              |   |                        | 176    |   |   |   | 216 |   |
| Professional fees                                   |   |                        | 138    |   |   |   | 111 |   |
| Advertising                                         |   |                        | 99     |   |   |   | 73 |   |
| Office supplies                                     |   |                        | 47     |   |   |   | 51 |   |
| Loss on foreclosed real estate, net                 |   |                        | 39     |   |   |   | 18 |   |
| Public company expenses                             |   |                        | 18     |   |   |   | 11 |   |
| Costs related to terminated merger                  |   |                        | -      |   |   |   | 66 |   |
| Other expenses                                      |   |                        | 304    |   |   |   | 255 |   |
| Total noninterest expense                           |   |                        | 4,251  |   |   |   | 3,854 |   |
|                                                |   |                        |   |   |   |   |   |   |
| Income before provision                             |   |                        |   |   |   |   |   |   |
| for income taxes                                    |   |                        | 552    |   |   |   | 436 |   |
|                                                |   |                        |   |   |   |   |   |   |
| Provision for income taxes                          |   |                        | 156    |   |   |   | 122 |   |
|                                                |   |                        |   |   |   |   |   |   |
| Net income                                          |   | $                           | 396    |   |   | $ | 314 |   |
|                                                |   |                        |   |   |   |   |   |   |
| Earnings per common share - basic and diluted       |   | $                           | 0.06   |   |   | $ | 0.05 |   |

----

Table of Contents

Consolidated 

|                                                                          |   | Three Months EndedMarch 31, |    |
|-------------------------------------------------------------------------------|--------|-----------------------------|---------|
|                                                                          |   | 2011                        |    |   | 2010 |   |
| Cash flows from operating activities                                          |   | (Unaudited)                 |    |
| Net income                                                                    |   | $                           | 396     |   |   | $ | 314 |   |
| Adjustments to reconcile net income to cash provided by operating activities: |   |                        |    |   |   |   |   |
| Provision for loan losses                                                     |   | 438                         |    |   |   | 809 |   |
| Depreciation and amortization expense                                         |   |                        | 199     |   |   |   | 197 |   |
| Gain on sale of loans held for sale                                           |   |                        | (77     | ) |   |   | - |   |
| Origination of loans held for sale                                            |   |                        | (4,653  | ) |   |   | - |   |
| Proceeds from sale of loans held for sale                                     |   |                        | 3,780   |   |   |   | - |   |
| Net amortization from investments                                             |   |                        | 39      |   |   |   | 8 |   |
| Amortization of intangible assets                                             |   |                        | 8       |   |   |   | 8 |   |
| Deferred income tax provision                                                 |   |                        | 124     |   |   |   | - |   |
| Stock-based compensation                                                      |   |                        | 47      |   |   |   | 169 |   |
| Net gain on investments                                                       |   |                        | (147    | ) |   |   | (8 | ) |
| Net change in:                                                                |   |                        |    |   |   |   |   |   |
| Accrued income receivable                                                     |   |                        | (5      | ) |   |   | 23 |   |
| Deferred loan fees                                                            |   |                        | (30     | ) |   |   | (46 | ) |
| Cash surrender value of life insurance                                        |   |                        | (77     | ) |   |   | (84 | ) |
| Other assets                                                                  |   |                        | 49      |   |   |   | 210 |   |
| Other liabilities                                                             |   |                        | (669    | ) |   |   | (72 | ) |
| Net cash (used) provided by operating activities                              |   |                        | (578    | ) |   |   | 1,528 |   |
| Cash flows from investing activities                                          |   |                        |    |   |   |   |   |   |
| Proceeds from maturities and repayments of available-for-sale securities      |   | 1,131                       |    |   |   | 1,578 |   |
| Proceeds from sale of available-for-sale securities                           |   |                        | 147     |   |   |   | 1,982 |   |
| Proceeds from maturities of held-to-maturity securities                       |   |                        | 492     |   |   |   | 75 |   |
| Purchase of available-for-sale securities                                     |   |                        | -       |   |   |   | (6,204 | ) |
| Loan originations net of principal payments                                   |   |                        | (3,921  | ) |   |   | (8,614 | ) |
| Purchase of property and equipment                                            |   |                        | (259    | ) |   |   | (115 | ) |
| Proceeds from the sale of other real estate owned                             |   |                        | 120     |   |   |   | 140 |   |
| Net cash used by investing activities                                         |   |                        | (2,290  | ) |   |   | (11,158 | ) |
| Cash flows from financing activities                                          |   |                        |    |   |   |   |   |   |
| Net change in time deposits                                                   |   |                        | (2,351  | ) |   |   | 3,065 |   |
| Net change in other deposit accounts                                          |   |                        | 10,556  |   |   |   | 4,081 |   |
| Net change in mortgagors' escrow deposits                                     |   |                        | (2,427  | ) |   |   | (2,268 | ) |
| Advances from Federal Home Loan Bank                                          |   |                        | -       |   |   |   | 3,000 |   |
| Repayment of advances from Federal Home Loan Bank                             |   |                        | (14,882 | ) |   |   | (8,782 | ) |
| Net change in repurchase agreements                                           |   |                        | 5,461   |   |   |   | 7,731 |   |
| Treasury stock acquired                                                       |   |                        | (1      | ) |   |   | (1 | ) |
| Dividends paid to stockholders                                                |   |                        | (140    | ) |   |   | (79 | ) |
| Net cash (used) provided by financing activities                              |   |                        | (3,784  | ) |   |   | 6,747 |   |
| Net change in cash and cash equivalents                                       |   |                        | (6,652  | ) |   |   | (2,883 | ) |
| Cash and cash equivalents at beginning of period                              |   |                        | 14,263  |   |   |   | 12,146 |   |
| Cash and cash equivalents at end of period                                    |   | $                           | 7,611   |   |   | $ | 9,263 |   |
| Cash paid during the period for:                                              |   |                        |    |   |   |   |   |   |
| Interest                                                                      |   | $                           | 2,381   |   |   | $ | 2,607 |   |
| Income taxes                                                                  |   |                        | 1       |   |   |   | 1 |   |
| Non-cash transactions:                                                        |   |                        |    |   |   |   |   |   |
| Transfer of loans to foreclosed assets                                        |   | $                           | 227     |   |   | $ | 120 |   |

----

Table of Contents

Notes 

----

Table of Contents

----

Table of Contents

|                                    |   | Amortized  |   |   | Gross Unrealized |   |   | Fair   |   |
|-----------------------------------------|--------|------------|--------|--------|------------------|--------|--------|--------|--------|
| (In thousands)                          |   | Cost Basis |   |   | Gains            |   |   | Losses |   |   | Value |   |
| Available-for-sale securities:          |   |       |   |   |             |   |   |   |   |   |   |   |
| U.S. government and agency obligations  |   | $          | 1,020  |   |             | $      | 62     |   |   | $ | - |   |   | $ | 1,082 |   |
| Mortgage-backed securities - GSEs       |   |       | 18,115 |   |             |   | 812    |   |   |   | - |   |   |   | 18,927 |   |
| Collateralized mortgage obligations     |   |       | 2,539  |   |             |   | 27     |   |   |   | (63 | ) |   |   | 2,503 |   |
| Total debt securities                   |   |       | 21,674 |   |             |   | 901    |   |   |   | (63 | ) |   |   | 22,512 |   |
| Auction-rate trust preferred securities |   |       | 8,200  |   |             |   | -      |   |   |   | (301 | ) |   |   | 7,899 |   |
|                                    |   |       |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Total available-for-sale securities     |   | $          | 29,874 |   |             | $      | 901    |   |   | $ | (364 | ) |   | $ | 30,411 |   |
|                                    |   |       |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
|                                    |   |       |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
|                                    |   | Amortized  |   |   | Gross Unrealized |   |   | Fair   |   |
| (In thousands)                          |   | Cost Basis |   |   | Gains            |   |   | Losses |   |   | Value |   |
| Held-to-maturity securities:            |   |       |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage-backed securities              |   | $          | 14,819 |   |             | $      | 40     |   |   | $ | (240 | ) |   | $ | 14,619 |   |
|                                    |   |       |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Total held-to-maturity securities       |   | $          | 14,819 |   |             | $      | 40     |   |   | $ | (240 | ) |   | $ | 14,619 |   |

|                                    |   | Amortized  |   |   | Gross Unrealized |   |   | Fair   |   |
|-----------------------------------------|--------|------------|--------|--------|------------------|--------|--------|--------|--------|
| (In thousands)                          |   | Cost Basis |   |   | Gains            |   |   | Losses |   |   | Value |   |
| Available-for-sale securities:          |   |       |   |   |             |   |   |   |   |   |   |   |
| U.S. government and agency obligations  |   | $          | 1,022  |   |             | $      | 65     |   |   | $ | - |   |   | $ | 1,087 |   |
| Mortgage-backed securities - GSEs       |   |       | 19,093 |   |             |   | 867    |   |   |   | - |   |   |   | 19,960 |   |
| Collateralized mortgage obligations     |   |       | 2,706  |   |             |   | 31     |   |   |   | (61 | ) |   |   | 2,676 |   |
| Total debt securities                   |   |       | 22,821 |   |             |   | 963    |   |   |   | (61 | ) |   |   | 23,723 |   |
| Auction-rate trust preferred securities |   |       | 8,200  |   |             |   | -      |   |   |   | (240 | ) |   |   | 7,960 |   |
|                                    |   |       |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Total available-for-sale securities     |   | $          | 31,021 |   |             | $      | 963    |   |   | $ | (301 | ) |   | $ | 31,683 |   |
|                                    |   |       |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
|                                    |   |       |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
|                                    |   | Amortized  |   |   | Gross Unrealized |   |   | Fair   |   |
| (In thousands)                          |   | Cost Basis |   |   | Gains            |   |   | Losses |   |   | Value |   |
| Held-to-maturity securities:            |   |       |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage-backed securities              |   | $          | 15,334 |   |             | $      | 26     |   |   | $ | (256 | ) |   | $ | 15,104 |   |
|                                    |   |       |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Total held-to-maturity securities       |   | $          | 15,334 |   |             | $      | 26     |   |   | $ | (256 | ) |   | $ | 15,104 |   |

----

Table of Contents

|                                         |   | At March 31, 2011                                                              |   |
|----------------------------------------------|--------|--------------------------------------------------------------------------------|--------|
|                                         |   | Securities in Continuous UnrealizedLoss Position Less Than 12 Months           |   |
| (Dollars in thousands)                       |   | Number ofSecurities                                                            |   |   | Market Value |   |   | Unrealized Loss |   |
|                                         |   |                                                                           |   |   |   |   |   |   |   |
| Mortgage backed securities                   |   |                                                                           | 3      |   |   | $ | 9,719 |   |   | $ | (240 | ) |
|                                         |   |                                                                           |   |   |   |   |   |   |   |   |   |   |
| Total securities in unrealized loss position |   |                                                                           | 3      |   |   | $ | 9,719 |   |   | $ | (240 | ) |
|                                         |   |                                                                           |   |   |   |   |   |   |   |   |   |   |
|                                         |   |                                                                           |   |   |   |   |   |   |   |   |   |   |
|                                         |   | Securities in Continuous UnrealizedLoss Position 12 or More Consecutive Months |   |
|                                         |   | Number ofSecurities                                                            |   |   | Market Value |   |   | Unrealized Loss |   |
| (Dollars in thousands)                       |   |                                                                           |   |   |   |   |   |   |   |   |   |   |
| Collateralized mortgage obligations          |   |                                                                           | 1      |   |   | $ | 356 |   |   | $ | (63 | ) |
| Money market preferred stocks                |   |                                                                           | 2      |   |   |   | 2,099 |   |   |   | (301 | ) |
|                                         |   |                                                                           |   |   |   |   |   |   |   |   |   |   |
| Total securities in unrealized loss position |   |                                                                           | 3      |   |   | $ | 2,455 |   |   | $ | (364 | ) |

|                                         |   | At December 31, 2010                                                            |   |
|----------------------------------------------|--------|---------------------------------------------------------------------------------|--------|
|                                         |   | Securities in Continuous UnrealizedLoss Position Less Than 12 Months            |   |
| (Dollars in thousands)                       |   | Number ofSecurities                                                             |   |   | Market Value |   |   | Unrealized Loss |   |
|                                         |   |                                                                            |   |   |   |   |   |   |   |
| Collateralized mortgage obligations          |   |                                                                            | 1      |   |   | $ | 182 |   |   | $ | (3 | ) |
| Mortgage backed securities                   |   |                                                                            | 5      |   |   |   | 14,028 |   |   |   | (256 | ) |
|                                         |   |                                                                            |   |   |   |   |   |   |   |   |   |   |
| Total securities in unrealized loss position |   |                                                                            | 6      |   |   | $ | 14,210 |   |   | $ | (259 | ) |
|                                         |   |                                                                            |   |   |   |   |   |   |   |   |   |   |
|                                         |   |                                                                            |   |   |   |   |   |   |   |   |   |   |
|                                         |   | Securities in Continuous Unrealized Loss Position 12 or More Consecutive Months |   |
|                                         |   | Number of Securities                                                            |   |   | Market Value |   |   | Unrealized Loss |   |
| (Dollars in thousands)                       |   |                                                                            |   |   |   |   |   |   |   |   |   |   |
| Collateralized mortgage obligations          |   |                                                                            | 1      |   |   | $ | 376 |   |   | $ | (58 | ) |
| Money market preferred stocks                |   |                                                                            | 2      |   |   |   | 2,160 |   |   |   | (240 | ) |
|                                         |   |                                                                            |   |   |   |   |   |   |   |   |   |   |
| Total securities in unrealized loss position |   |                                                                            | 3      |   |   | $ | 2,536 |   |   | $ | (298 | ) |

----

Table of Contents

|  (Dollars in thousands)            |   | March 31,2011 |    |   | December 31,2010 |   |
|-----------------------------------------|--------|---------------|---------|--------|------------------|--------|
|                                    |   |          |    |   |             |   |
| Real estate loans:                      |   |          |    |   |             |   |
| One-to-four family                      |   | $             | 217,778 |   |             | $      | 219,286 |   |
| Construction                            |   |          | 27,429  |   |             |   | 30,921 |   |
| Multi-family and commercial real estate |   |          | 168,387 |   |             |   | 160,235 |   |
| Total real estate loans                 |   |          | 413,594 |   |             |   | 410,442 |   |
|                                    |   |          |    |   |             |   |   |   |
| Commercial business loans               |   |          | 36,395  |   |             |   | 34,742 |   |
| Consumer loans:                         |   |          |    |   |             |   |   |   |
| Savings accounts                        |   |          | 938     |   |             |   | 956 |   |
| Personal                                |   |          | 216     |   |             |   | 236 |   |
| Automobile                              |   |          | 168     |   |             |   | 168 |   |
| Home equity                             |   |          | 33,564  |   |             |   | 34,807 |   |
| Total consumer loans                    |   |          | 34,886  |   |             |   | 36,167 |   |
| Totals loans                            |   |          | 484,875 |   |             |   | 481,351 |   |
|                                    |   |          |    |   |             |   |   |   |
| Less:                                   |   |          |    |   |             |   |   |   |
| Allowance for loan losses               |   |          | 6,684   |   |             |   | 6,393 |   |
| Undisbursed construction loans          |   |          | 929     |   |             |   | 1,034 |   |
| Deferred loan origination fees          |   |          | 374     |   |             |   | 403 |   |
| Loans receivable, net                   |   | $             | 476,888 |   |             | $      | 473,521 |   |
|                                    |   |          |    |   |             |   |   |   |
| Weighted average yield                  |   |          | 5.42    | %      |             |   | 5.47 | % |

----

Table of Contents

----

Table of Contents

|  (In thousands)         |   | Three Months EndedMarch 31,2011 |   |   | For the Year EndedDecember 31,2010 |   |
|------------------------------|--------|---------------------------------|--------|--------|------------------------------------|--------|
|                         |   |                            |   |   |                               |   |
| Balance at beginning of year |   | $                               | 6,393  |   |                               | $      | 3,996 |   |
| Provision for loan losses    |   |                            | 438    |   |                               |   | 3,360 |   |
| Charge-offs                  |   |                            | (147   | )      |                               |   | (978 | ) |
| Recoveries                   |   |                            | -      |   |                               |   | 15 |   |
|                         |   |                            |   |   |                               |   |   |   |
| Balance at end of period     |   | $                               | 6,684  |   |                               | $      | 6,393 |   |

|                                                 |   | For the Three Months Ended March 31, 2011 |   |
|------------------------------------------------------|--------|-------------------------------------------|--------|
| (In thousands)                                       |   | One-to-FourFamily                         |   |   | Construction |   |   | CommercialReal Estate |   |   | Commercial |   |   | Consumer |   |   | Total |   |
| Allowance for Loan Losses:                           |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                 |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Beginning Balance                                    |   | $                                         | 1,585  |   |   | $ | 600 |   |   | $ | 2,714 |   |   | $ | 884 |   |   | $ | 610 |   |   | $ | 6,393 |   |
| Charge-offs                                          |   |                                      | (115   | ) |   |   | - |   |   |   | - |   |   |   | (32 | ) |   |   | - |   |   |   | (147 | ) |
| Recoveries                                           |   |                                      | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Provisions                                           |   |                                      | 54     |   |   |   | (45 | ) |   |   | 441 |   |   |   | (110 | ) |   |   | 98 |   |   |   | 438 |   |
| Ending Balance                                       |   | $                                         | 1,524  |   |   | $ | 555 |   |   | $ | 3,155 |   |   | $ | 742 |   |   | $ | 708 |   |   | $ | 6,684 |   |
| Ending Balance individually evaluated for impairment |   | $                                         | 2,489  |   |   | $ | 4,723 |   |   | $ | 2,601 |   |   | $ | 87 |   |   | $ | 372 |   |   | $ | 10,272 |   |
| Ending Balance collectively evaluated for impairment |   | $                                         | -      |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |

----

Table of Contents

|                                                 |   | For the Year Ended December 31, 2010 |   |
|------------------------------------------------------|--------|--------------------------------------|--------|
| (In thousands)                                       |   | One-to-Four Family                   |   |   | Construction |   |   | Commercial Real Estate |   |   | Commercial |   |   | Consumer |   |   | Total |   |
| Allowance for Loan Losses:                           |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                 |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Beginning Balance                                    |   | $                                    | 1,044  |   |   | $ | 632 |   |   | $ | 1,489 |   |   | $ | 481 |   |   | $ | 350 |   |   | $ | 3,996 |   |
| Charge-offs                                          |   |                                 | (27    | ) |   |   | (170 | ) |   |   | - |   |   |   | (754 | ) |   |   | (27 | ) |   |   | (978 | ) |
| Recoveries                                           |   |                                 | -      |   |   |   | - |   |   |   | - |   |   |   | 15 |   |   |   | - |   |   |   | 15 |   |
| Provisions                                           |   |                                 | 568    |   |   |   | 138 |   |   |   | 1,225 |   |   |   | 1,142 |   |   |   | 287 |   |   |   | 3,360 |   |
| Ending Balance                                       |   | $                                    | 1,585  |   |   | $ | 600 |   |   | $ | 2,714 |   |   | $ | 884 |   |   | $ | 610 |   |   | $ | 6,393 |   |
| Ending Balance individually evaluated for impairment |   | $                                    | 2,677  |   |   | $ | 4,059 |   |   | $ | 1,106 |   |   | $ | 1,598 |   |   | $ | 277 |   |   | $ | 9,717 |   |
| Ending Balance collectively evaluated for impairment |   | $                                    | -      |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |

| Commercial Loans - Credit Risk Profile by Internally Assigned Grade: |   |
|---------------------------------------------------------------------------|--------|
|                                                                      |   |   | At March 31, 2011 |   |
| (In thousands)                                                            |   |   | Commercial Loans |   |   | Commercial Real Estate Construction |   |   | Commercial Real Estate |   |
| Grade:                                                                    |   |   |   |   |   |   |   |   |   |   |
|                                                                      | 4      |   |   | $ | 5,828 |   |   | $ | 220 |   |   | $ | 34,143 |   |
|                                                                      | 5      |   |   |   | 25,094 |   |   |   | 9,922 |   |   |   | 105,104 |   |
|                                                                      | 6      |   |   |   | 3,012 |   |   |   | 5,847 |   |   |   | 16,644 |   |
|                                                                      | 7      |   |   |   | 2,374 |   |   |   | 8,977 |   |   |   | 12,496 |   |
|                                                                      | 8      |   |   |   | 87 |   |   |   | - |   |   |   | - |   |
| Total                                                                     |   |   | $ | 36,395 |   |   | $ | 24,966 |   |   | $ | 168,387 |   |

----

Table of Contents

| Consumer Loans - Credit Risk Profile by Internally Assigned Grade: |   |
|--------------------------------------------------------------------|--------|
|                                                               |   | At March 31, 2011 |   |
| (In thousands)                                                     |   | Residential - Prime |   |   | Residential - Subprime |   |
|                                                               |   |   |   |   |   |   |
| Grade:                                                             |   |   |   |   |   |   |
| Pass                                                               |   | $ | 212,870 |   |   | $ | - |   |
| Special Mention                                                    |   |   | 410 |   |   |   | - |   |
| Substandard                                                        |   |   | 3,586 |   |   |   | - |   |
| Doubtful                                                           |   |   | 912 |   |   |   | - |   |
| Total                                                              |   | $ | 217,778 |   |   | $ | - |   |

| Consumer Loans - Credit Risk Profile Based on Payment Activity: |   |
|-----------------------------------------------------------------|--------|
|                                                            |   | At March 31, 2011 |   |
| (In thousands)                                                  |   | Consumer - Other |   |
| Grade:                                                          |   |   |   |
| Performing                                                      |   | $ | 34,374 |   |
| Nonperforming                                                   |   |   | 512 |   |
| Total                                                           |   | $ | 34,886 |   |

----

Table of Contents

|                       |   | Age Analysis of Past Due Financing Receivables As of March 31, 2011 |   |
|----------------------------|--------|---------------------------------------------------------------------|--------|
|                       |   |                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   (In thousands) |   |   31-60 Days Past Due                                          |   |   |   61-90 Days Past Due |   |   |   Greater Than90 Days (Nonaccrual) |   |   |   Total Past Due |   |   |   Current |   |   | Carrying Amount > 90 Days and Accruing |   |   | Considered Current That Have Been Modified in Previous Year |   |
| Commercial                 |   |                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial - other         |   | $                                                                   | 111    |   |   | $ | 121 |   |   | $ | 1,198 |   |   | $ | 1,430 |   |   | $ | 34,965 |   |   | $ | - |   |   | $ | 2,248 |   |
| Commercial RE construction |   |                                                                | 433    |   |   |   | - |   |   |   | 5,892 |   |   |   | 6,325 |   |   |   | 18,641 |   |   |   | - |   |   |   | 5,587 |   |
| Commercial RE              |   |                                                                | 1,510  |   |   |   | - |   |   |   | 5,695 |   |   |   | 7,205 |   |   |   | 161,182 |   |   |   | - |   |   |   | 17,491 |   |
| Consumer                   |   |                                                                |   |   |   |   |   |   |   |   |   |   |   |   | - |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consumer - other           |   |                                                                | 63     |   |   |   | 440 |   |   |   | 512 |   |   |   | 1,015 |   |   |   | 33,871 |   |   |   | - |   |   |   | 298 |   |
| Residential                |   |                                                                |   |   |   |   |   |   |   |   |   |   |   |   | - |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential -prime         |   |                                                                | 1,014  |   |   |   | 393 |   |   |   | 3,843 |   |   |   | 5,250 |   |   |   | 214,991 |   |   |   | - |   |   |   | 976 |   |
| Residential -subprime      |   |                                                                | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Total                      |   | $                                                                   | 3,131  |   |   | $ | 954 |   |   | $ | 17,140 |   |   | $ | 21,225 |   |   | $ | 463,650 |   |   | $ | - |   |   | $ | 26,600 |   |

| Age Analysis of Past Due Financing ReceivablesAs of December 31, 2010 |   |
|-----------------------------------------------------------------------|--------|
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   (In thousands)                                            |   |   31-60 Days Past Due |   |   |   61-90 Days Past Due |   |   |   Greater Than90 Days (Nonaccrual) |   |   |   Total Past Due |   |   |   Current |   |   | Carrying Amount > 90 Days and Accruing |   |   | Considered Current That Have Been Modified in Previous Year |   |
| Commercial                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial - real estate                                              |   | $ | 60 |   |   | $ | 115 |   |   | $ | 1,356 |   |   | $ | 1,531 |   |   | $ | 33,211 |   |   | $ | - |   |   | $ | 2,494 |   |
| Commercial RE construction                                            |   |   | 2,707 |   |   |   | - |   |   |   | 5,151 |   |   |   | 7,858 |   |   |   | 20,284 |   |   |   | - |   |   |   | 4,379 |   |
| Commercial RE                                                         |   |   | 1,686 |   |   |   | 258 |   |   |   | 6,242 |   |   |   | 8,186 |   |   |   | 152,049 |   |   |   | - |   |   |   | 16,525 |   |
| Consumer                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   | - |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consumer - other                                                      |   |   | 470 |   |   |   | 100 |   |   |   | 515 |   |   |   | 1,085 |   |   |   | 35,082 |   |   |   | - |   |   |   | 208 |   |
| Residential                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   | - |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential -prime                                                    |   |   | 1,745 |   |   |   | 18 |   |   |   | 4,624 |   |   |   | 6,387 |   |   |   | 215,678 |   |   |   | - |   |   |   | 1,141 |   |
| Residential -subprime                                                 |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Total                                                                 |   | $ | 6,668 |   |   | $ | 491 |   |   | $ | 17,888 |   |   | $ | 25,047 |   |   | $ | 456,304 |   |   | $ | - |   |   | $ | 24,747 |   |

| Loans on Nonaccrual Status |   |
|----------------------------|--------|
|                       |   | As of |   |
| (In thousands)             |   | March 31, 2011 |   |   | December 31, 2010 |   |
|                       |   |   |   |   |   |   |
| Commercial                 |   | $ | 1,198 |   |   | $ | 1,356 |   |
| Commercial - real estate   |   |   |   |   |   |   |   |   |
| Commercial RE construction |   |   | 5,892 |   |   |   | 5,151 |   |
| Commercial RE              |   |   | 5,695 |   |   |   | 6,242 |   |
| Consumer                   |   |   |   |   |   |   |   |   |
| Consumer - other           |   |   | 512 |   |   |   | 515 |   |
| Residential                |   |   |   |   |   |   |   |   |
| Residential -prime         |   |   | 3,843 |   |   |   | 4,624 |   |
| Residential -subprime      |   |   | - |   |   |   | - |   |
| Total                      |   | $ | 17,140 |   |   | $ | 17,888 |   |

----

Table of Contents

|                                 |   | Impaired LoansFor the Three Months Ended March 31, 2011 |   |
|--------------------------------------|--------|---------------------------------------------------------|--------|
| (In thousands)                       |   | Carrying Amount                                         |   |   | Unpaid Principal Balance |   |   | Associated Allowance |   |   | Average Carrying Amount |   |   | Interest Income Recognized |   |
| With no specific allowance recorded: |   |                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                           |   | $                                                       | 4,209  |   |   | $ | 4,209 |   |   | $ | - |   |   | $ | 4,110 |   |   | $ | - |   |
| Consumer - other                     |   |                                                    | 1,577  |   |   |   | 1,577 |   |   |   | - |   |   |   | 1,458 |   |   |   | 11 |   |
| With an allowance recorded:          |   |                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                           |   |                                                    | 3,202  |   |   |   | 3,202 |   |   |   | 548 |   |   |   | 2,738 |   |   |   | 18 |   |
| Consumer - other                     |   |                                                    | 1,284  |   |   |   | 1,284 |   |   |   | 370 |   |   |   | 1,284 |   |   |   | 8 |   |
| Total:                               |   |                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                           |   |                                                    | 7,411  |   |   |   | 7,411 |   |   |   | 548 |   |   |   | 6,848 |   |   |   | 18 |   |
| Consumer - other                     |   |                                                    | 2,861  |   |   |   | 2,861 |   |   |   | 370 |   |   |   | 2,742 |   |   |   | 19 |   |

|                                 |   | Impaired LoansFor the Year Ended December 31, 2010 |   |
|--------------------------------------|--------|----------------------------------------------------|--------|
|  (In thousands)                 |   | Carrying Amount                                    |   |   | Unpaid Principal Balance |   |   | Associated Allowance |   |   | Average Carrying Amount |   |   | Interest Income Recognized |   |
| With no specific allowance recorded: |   |                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                           |   | $                                                  | 4,011  |   |   | $ | 4,011 |   |   | $ | - |   |   | $ | 3,985 |   |   | $ | 4 |   |
| Consumer - other                     |   |                                               | 1,137  |   |   |   | 1,137 |   |   |   | - |   |   |   | 1,139 |   |   |   | 28 |   |
| With an allowance recorded:          |   |                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                           |   |                                               | 2,752  |   |   |   | 2,752 |   |   |   | 504 |   |   |   | 2,758 |   |   |   | 50 |   |
| Consumer - other                     |   |                                               | 1,816  |   |   |   | 1,816 |   |   |   | 425 |   |   |   | 1,802 |   |   |   | 53 |   |
| Total:                               |   |                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                           |   |                                               | 6,763  |   |   |   | 6,763 |   |   |   | 504 |   |   |   | 6,743 |   |   |   | 54 |   |
| Consumer - other                     |   |                                               | 2,953  |   |   |   | 2,953 |   |   |   | 425 |   |   |   | 2,941 |   |   |   | 81 |   |

----

Table of Contents

|                                        |   | Three Months EndedMarch 31, |      |
|---------------------------------------------|--------|-----------------------------|-----------|
|                                        |   | 2011                        |      |   | 2010 |   |
|                                        |   |                        |      |
| Net income                                  |   | $                           | 396,000   |   |   | $ | 314,000 |   |
|                                        |   |                        |      |   |   |   |   |   |
| Weighted-average common shares outstanding: |   |                        |      |   |   |   |   |   |
| Basic                                       |   |                        | 6,844,958 |   |   |   | 6,829,108 |   |
| Effect of dilutive stock options            |   |                        |      |   |   |   |   |   |
| and restrictive stock awards                |   |                        | -         |   |   |   | - |   |
| Diluted                                     |   |                        | 6,844,958 |   |   |   | 6,829,108 |   |
|                                        |   |                        |      |   |   |   |   |   |
| Net income per common share:                |   |                        |      |   |   |   |   |   |
| Basic                                       |   | $                           | 0.06      |   |   | $ | 0.05 |   |
| Diluted                                     |   | $                           | 0.06      |   |   | $ | 0.05 |   |

----

Table of Contents

|                                                    |   | Three Months EndedMarch 31, |   |
|---------------------------------------------------------|--------|-----------------------------|--------|
|                                                    |   | 2011                        |   |   | 2010 |   |
|                                                    |   | (In thousands)              |   |
|                                                    |   |                        |   |   |   |   |
| Net income                                              |   | $                           | 396    |   |   | $ | 314 |   |
|                                                    |   |                        |   |   |   |   |   |   |
| Other comprehensive income:                             |   |                        |   |   |   |   |   |   |
| Unrealized gain (loss) on securities available-for-sale |   |                        | (125   | ) |   |   | 169 |   |
| Reclassification adjustment for gains (losses)          |   |                        |   |   |   |   |   |   |
| realized in net income                                  |   |                        | -      |   |   |   | (8 | ) |
|                                                    |   |                        |   |   |   |   |   |   |
| Other comprehensive income (loss) before tax effect     |   |                        | (125   | ) |   |   | 161 |   |
|                                                    |   |                        |   |   |   |   |   |   |
| Income tax effect related to items of other             |   |                        |   |   |   |   |   |   |
| comprehensive income                                    |   |                        | (22    | ) |   |   | 59 |   |
|                                                    |   |                        |   |   |   |   |   |   |
| Other comprehensive income (loss) net of tax effect     |   |                        | (103   | ) |   |   | 102 |   |
|                                                    |   |                        |   |   |   |   |   |   |
| Total comprehensive income                              |   | $                           | 293    |   |   | $ | 416 |   |

|                    |   | Grant date   |   |
|-------------------------|--------|--------------|--------|
|                    |   | July 26,2008 |   |   | December 18,2007 |   |   | March 20,2007 |   |   | March 21,2006 |   |   | July 26,2005 |   |
|                    |   |         |   |   |   |   |   |   |   |   |   |   |
| Option awards           |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Awarded                 |   |         | 1,000  |   |   |   | 2,000 |   |   |   | 7,500 |   |   |   | 6,500 |   |   |   | 354,580 |   |
| Exercise price          |   | $            | 11.10  |   |   | $ | 11.10 |   |   | $ | 12.49 |   |   | $ | 11.10 |   |   | $ | 11.10 |   |
| Maximum term in years   |   |         | 10     |   |   |   | 10 |   |   |   | 10 |   |   |   | 10 |   |   |   | 10 |   |
| Restricted stock awards |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Awarded                 |   |         | 1,000  |   |   |   | 3,000 |   |   |   | 2,000 |   |   |   | 1,500 |   |   |   | 139,712 |   |

----

Table of Contents

|  Grant date            |   |    July 26,2008 |   |    December 18,2007 |   |    March 20,2007 |   |    March 21,2006 |   |   July 26,2005 |
|-----------------------------|--------|---------------------------|--------|-------------------------------|--------|----------------------------|--------|----------------------------|--------|---------------------|
|                        |   |                      |   |                          |   |                       |   |                       |   |                |   |   |
| Dividend yield              |   |                      | 2.74   | %                             |   |                       | 2.20   | %                          |   |                | 1.60 | % |   |   | 1.89 | % |   |   | 1.44 | % |
| Expected volatility         |   |                      | 13.40  | %                             |   |                       | 11.00  | %                          |   |                | 10.49 | % |   |   | 11.20 | % |   |   | 11.47 | % |
| Risk-free rate              |   |                      | 3.56   | %                             |   |                       | 3.63   | %                          |   |                | 4.48 | % |   |   | 4.61 | % |   |   | 4.18 | % |
| Expected life in years      |   |                      | 6.5    |                          |   |                       | 6.5    |                       |   |                | 6.5 |   |   |   | 6.5 |   |   |   | 6.5 |   |
|                        |   |                      |   |                          |   |                       |   |                       |   |                |   |   |   |   |   |   |   |   |   |   |
| Weighted average fair value |   |                      |   |                          |   |                       |   |                       |   |                |   |   |   |   |   |   |   |   |   |   |
| of options at grant date    |   | $                         | 1.51   |                          |   | $                          | 1.18   |                       |   | $                   | 2.55 |   |   | $ | 2.25 |   |   | $ | 2.47 |   |

----

Table of Contents

|                                     |   | March 31, 2011       |    |   | December 31, 2010         |   |
|------------------------------------------|--------|----------------------|---------|--------|---------------------------|--------|
| (In thousands)                           |   | Carrying Amount |    |   | Estimated Fair Value |   |   | Carrying Amount |   |   | Estimated Fair Value |   |
|                                     |   |                 |    |   |                      |   |   |   |   |   |   |   |
| Financial Assets                         |   |                 |    |   |                      |   |   |   |   |   |   |   |
| Cash and cash equivalents                |   | $                    | 7,611   |   |                      | $      | 7,611 |   |   | $ | 14,263 |   |   | $ | 14,263 |   |
| Investment securities available for sale |   |                 | 30,411  |   |                      |   | 30,411 |   |   |   | 31,683 |   |   |   | 31,683 |   |
| Investment securities held-to-maturity   |   |                 | 14,819  |   |                      |   | 14,619 |   |   |   | 15,334 |   |   |   | 15,104 |   |
| Loans held for sale                      |   |                 | 950     |   |                      |   | 967 |   |   |   | 81 |   |   |   | 81 |   |
| Loans receivable, net                    |   |                 | 476,888 |   |                      |   | 491,043 |   |   |   | 473,521 |   |   |   | 478,104 |   |
| Accrued income receivable                |   |                 | 1,984   |   |                      |   | 1,984 |   |   |   | 1,979 |   |   |   | 1,979 |   |
| Servicing rights                         |   |                 | 384     |   |                      |   | 460 |   |   |   | 364 |   |   |   | 420 |   |
|                                     |   |                 |    |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Financial Liabilities                    |   |                 |    |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                 |   | $                    | 414,080 |   |                      | $      | 411,026 |   |   | $ | 405,875 |   |   | $ | 403,091 |   |
| Borrowed funds                           |   |                 | 93,421  |   |                      |   | 95,122 |   |   |   | 102,842 |   |   |   | 104,766 |   |
| Mortgagors' escrow accounts              |   |                 | 2,406   |   |                      |   | 2,406 |   |   |   | 4,832 |   |   |   | 4,832 |   |

|   | • |   | Level 1: Valuation is based upon unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. |
|--------|---------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • |   | Level 2: Fair value is calculated using inputs other than quoted market prices that are directly or indirectly observable for the asset or liability. The valuation may rely on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in inactive markets, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatilities, prepayment speeds, credit ratings, etc.) or inputs that are derived principally or corroborated by market data by correlation or other means. |
|--------|---------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • |   | Level 3: Inputs for determining the fair value of the respective assets or liabilities are not observable. Level 3 valuations are reliant upon pricing models and techniques that require significant management judgment or estimation. |
|--------|---------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Table of Contents

----

Table of Contents

|                                                    |   | March 31, 2011Fair Value Measurements |   |
|---------------------------------------------------------|--------|---------------------------------------|--------|
| (In thousands)                                          |   | Level 1                               |   |   | Level 2 |   |   | Level 3 |   |   | Total |   |
|                                                    |   |                                  |   |   |   |   |   |   |   |   |   |   |
| Assets measured at fair value on a recurring basis:     |   |                                  |   |   |   |   |   |   |   |   |   |   |
| Available-for-sale investment securities                |   | $                                     | -      |   |   | $ | 22,512 |   |   | $ | 7,899 |   |   | $ | 30,411 |   |
|                                                    |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Assets measured at fair value on a non-recurring basis: |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Servicing rights                                        |   |                                  | -      |   |   |   | - |   |   |   | 460 |   |   |   | 460 |   |
| Impaired loans                                          |   |                                  | -      |   |   |   | 9,346 |   |   |   | 9 |   |   |   | 9,355 |   |
| Real estate owned and other repossessed assets          |   |                                  | -      |   |   |   | - |   |   |   | 528 |   |   |   | 528 |   |

|  (In thousands)                            |   | For the ThreeMonths EndedMarch 31,2011 |   |   | For the YearEndedDecember 31,2010 |   |
|-------------------------------------------------|--------|----------------------------------------|--------|--------|-----------------------------------|--------|
|                                            |   |                                   |   |   |                              |   |
| Balance at beginning of period                  |   | $                                      | 7,960  |   |                              | $      | 7,880 |   |
| New purchases                                   |   |                                   | -      |   |                              |   | - |   |
| Transfer to (from) level 3                      |   |                                   | -      |   |                              |   | - |   |
| Increase (decrease) in fair value of securities |   |                                   |   |   |                              |   |   |   |
| included in accumulated other                   |   |                                   |   |   |                              |   |   |   |
| comprehensive income                            |   |                                   | (61    | )      |                              |   | 80 |   |
| Impairment charges included in net income       |   |                                   | -      |   |                              |   | - |   |
| Proceeds from sale of level 3 securities        |   |                                   | -      |   |                              |   | - |   |
| Redemptions at par                              |   |                                   | -      |   |                              |   | - |   |
| Balance at end of period                        |   | $                                      | 7,899  |   |                              | $      | 7,960 |   |

----

Table of Contents

Item 

----

Table of Contents

|                            |   | Three MonthsEnded March 31, |   |   |   |   |
|---------------------------------|--------|-----------------------------|--------|--------|--------|--------|
|                            |   | 2011                        |   |   | 2010   |   |   | % Change |   |
|                            |   | (Dollars in thousands)      |   |   |   |   |
| Interest income:                |   |                        |   |   |   |   |   |   |   |
| Loans                           |   | $                           | 6,332  |   |   | $      | 6,684 |   |   |   | (5.27 | )% |
| Fed Funds sold                  |   |                        | -      |   |   |   | 1 |   |   |   | (100.00 | ) |
| Investment securities           |   |                        | 430    |   |   |   | 458 |   |   |   | (6.11 | ) |
| Total interest income           |   |                        | 6,762  |   |   |   | 7,143 |   |   |   | (5.33 | ) |
| Interest expense:               |   |                        |   |   |   |   |   |   |   |   |   |   |
| Certificate accounts            |   |                        | 1,587  |   |   |   | 1,658 |   |   |   | (4.28 | ) |
| Regular savings accounts        |   |                        | 104    |   |   |   | 85 |   |   |   | 22.35 |   |
| Checking and NOW accounts       |   |                        | 11     |   |   |   | 11 |   |   |   | - |   |
| Money market savings accounts   |   |                        | 44     |   |   |   | 57 |   |   |   | (22.81 | ) |
| Total interest-bearing deposits |   |                        | 1,746  |   |   |   | 1,811 |   |   |   | (3.59 | ) |
| FHLB advances                   |   |                        | 589    |   |   |   | 772 |   |   |   | (23.70 | ) |
| Other borrowings                |   |                        | 23     |   |   |   | 32 |   |   |   | (28.13 | ) |
| Total interest expense          |   |                        | 2,358  |   |   |   | 2,615 |   |   |   | (9.83 | ) |
| Net interest income             |   | $                           | 4,404  |   |   | $      | 4,528 |   |   |   | (2.74 | )% |

----

Table of Contents

|                                  |   | Three Months Ended March 31, |
|---------------------------------------|--------|------------------------------|
|                                  |   | 2011                         |   | 2010 |
|                                  |   | Average Balance         |   |   | Yield/Cost |   | Average Balance |   |   | Yield/Cost |
|                                  |   | (Dollars in thousands)       |
|                                  |   |                         |   |   |   |   |   |   |   |   |   |   |
| Interest-earning assets               |   |                         |   |   |   |   |   |   |   |   |   |   |
| Loans                                 |   | $                            | 473,877 |   |   |   | 5.34 |  % |   | $ | 474,976 |   |   |   | 5.63 | % |
| Fed Funds sold                        |   |                         | 2,154 |   |   |   | 0.00 |   |   |   | 4,128 |   |   |   | 0.10 |   |
| Investment securities                 |   |                         | 45,543 |   |   |   | 3.78 |   |   |   | 39,873 |   |   |   | 4.59 |   |
| Federal Home Loan Bank stock          |   |                         | 6,252 |   |   |   | 0.00 |   |   |   | 6,252 |   |   |   | 0.00 |   |
|                                  |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total interest-earning assets         |   | $                            | 527,826 |   |   |   | 5.12 |   |   | $ | 525,229 |   |   |   | 5.44 |   |
|                                  |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities          |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Certificate accounts                  |   | $                            | 238,272 |   |   |   | 2.66 |   |   | $ | 233,657 |   |   |   | 2.84 |   |
| Regular savings accounts & escrow |   |                         | 85,227 |   |   |   | 0.49 |   |   |   | 68,421 |   |   |   | 0.50 |   |
| Checking and NOW accounts             |   |                         | 59,408 |   |   |   | 0.07 |   |   |   | 56,269 |   |   |   | 0.08 |   |
| Money market savings accounts         |   |                         | 26,799 |   |   |   | 0.66 |   |   |   | 25,881 |   |   |   | 0.88 |   |
|                                  |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total interest-bearing deposits       |   |                         | 409,706 |   |   |   | 1.70 |   |   |   | 384,228 |   |   |   | 1.89 |   |
| FHLB advances                         |   |                         | 88,641 |   |   |   | 2.66 |   |   |   | 109,895 |   |   |   | 2.81 |   |
| Other borrowings                      |   |                         | 12,966 |   |   |   | 0.71 |   |   |   | 13,170 |   |   |   | 0.97 |   |
|                                  |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total interest-bearing liabilities    |   | $                            | 511,313 |   |   |   | 1.84 | %  |   | $ | 507,293 |   |   |   | 2.06 | % |

----

Table of Contents

|                             |   | Three MonthsEnded March 31, |   |
|----------------------------------|--------|-----------------------------|--------|
|                             |   | 2011                        |   |   | 2010 |   |
|                             |   | (In thousands)              |   |
| Allowance at beginning of period |   | $                           | 6,393  |   |   | $ | 3,996 |   |
| Provision for loan losses        |   |                        | 438    |   |   |   | 809 |   |
|                             |   |                        |   |   |   |   |   |   |
| Charge-offs                      |   |                        | (147   | ) |   |   | (10 | ) |
| Recoveries                       |   |                        | -      |   |   |   | - |   |
| Net recoveries (charge-offs)     |   |                        | (147   | ) |   |   | (10 | ) |
| Allowance at end of period       |   | $                           | 6,684  |   |   | $ | 4,795 |   |

----

Table of Contents

|                                       |   | At March 31,2011       |   |   | At December 31,2010 |   |   | % Change |   |
|--------------------------------------------|--------|------------------------|--------|--------|---------------------|--------|--------|----------|--------|
|                                       |   | (Dollars in thousands) |   |   |                |   |
| Nonaccrual loans                           |   | $                      | 10,524 |   |                | $      | 11,127 |     |   |   | (5.42 | )% |
| Troubled debt restructurings               |   |                   | 6,616  |   |                |   | 6,761  |     |   |   | (2.14 | ) |
| Real estate owned                          |   |                   | 438    |   |                |   | 331    |     |   |   | 32.33 |   |
| Other repossessed assets                   |   |                   | 90     |   |                |   | 90     |     |   |   | - |   |
| Total nonperforming assets                 |   | $                      | 17,668 |   |                | $      | 18,309 |     |   |   | (3.50 | )% |
|                                       |   |                   |   |   |                |   |   |     |   |   |   |   |
| Total nonperforming loans to total loans   |   |                   | 3.54   | %      |                |   | 3.73   | %        |   |   | (5.09 | )% |
|                                       |   |                   |   |   |                |   |   |     |   |   |   |   |
| Total nonperforming loans to total assets  |   |                   | 3.04   | %      |                |   | 3.15   | %        |   |   | (3.49 | )% |
|                                       |   |                   |   |   |                |   |   |     |   |   |   |   |
| Total nonperforming assets to total assets |   |                   | 3.13   | %      |                |   | 3.22   | %        |   |   | (2.80 | )% |

|                    |   | At March 31,2011 |   |   | At December 31,2010 |   |
|-------------------------|--------|------------------|--------|--------|---------------------|--------|
|                    |   | (In thousands)   |   |
|                    |   |             |   |   |                |   |
| Special mention assets  |   | $                | 29,730 |   |                | $      | 28,593 |   |
| Substandard assets      |   |             | 30,405 |   |                |   | 33,377 |   |
| Doubtful assets         |   |             | 95     |   |                |   | 111 |   |
| Loss assets             |   |             | -      |   |                |   | - |   |
| Total classified assets |   | $                | 60,230 |   |                | $      | 62,081 |   |

|                                          |   | Three MonthsEnded March 31, |   |   |   |   |
|-----------------------------------------------|--------|-----------------------------|--------|--------|--------|--------|
|                                          |   | 2011                        |   |   | 2010   |   |   | % Change |   |
|                                          |   | (Dollars in thousands)      |   |   |   |   |
| Fees for services related to deposit accounts |   | $                           | 213    |   |   | $      | 246 |   |   |   | (13.41 | )% |
| Fees for other services                       |   |                        | 174    |   |   |   | 139 |   |   |   | 25.18 |   |
| Net gain on investments                       |   |                        | 147    |   |   |   | 8 |   |   |   | 1,737.50 |   |
| Mortgage banking income                       |   |                        | 128    |   |   |   | 26 |   |   |   | 392.31 |   |
| Income from bank owned life insurance         |   |                        | 77     |   |   |   | 84 |   |   |   | (8.33 | ) |
| Income from investment advisory services, net |   |                        | 74     |   |   |   | 41 |   |   |   | 80.49 |   |
| Other income                                  |   |                        | 24     |   |   |   | 27 |   |   |   | (11.11 | ) |
| Total                                         |   | $                           | 837    |   |   | $      | 571 |   |   |   | 46.58 | % |

----

Table of Contents

|                                |   | Three MonthsEnded March 31, |   |   |   |   |
|-------------------------------------|--------|-----------------------------|--------|--------|--------|--------|
|                                |   | 2011                        |   |   | 2010   |   |   | % Change |   |
|                                |   | (Dollars in thousands)      |   |   |   |   |
| Compensation, taxes and benefits    |   | $                           | 2,357  |   |   | $      | 2,075 |   |   |   | 13.59 | % |
| Office occupancy                    |   |                        | 607    |   |   |   | 587 |   |   |   | 3.41 |   |
| Computer processing                 |   |                        | 262    |   |   |   | 229 |   |   |   | 14.41 |   |
| FDIC insurance premiums             |   |                        | 204    |   |   |   | 162 |   |   |   | 25.93 |   |
| Directors compensation              |   |                        | 176    |   |   |   | 216 |   |   |   | (18.52 | ) |
| Professional fees                   |   |                        | 138    |   |   |   | 111 |   |   |   | 24.32 |   |
| Advertising                         |   |                        | 99     |   |   |   | 73 |   |   |   | 35.62 |   |
| Office supplies                     |   |                        | 47     |   |   |   | 51 |   |   |   | (7.84 | ) |
| Loss on foreclosed real estate, net |   |                        | 39     |   |   |   | 18 |   |   |   | 116.67 |   |
| Public company expenses             |   |                        | 18     |   |   |   | 11 |   |   |   | 63.64 |   |
| Costs related to terminated merger  |   |                        | -      |   |   |   | 66 |   |   |   | (100.00 | ) |
| Other expenses                      |   |                        | 304    |   |   |   | 255 |   |   |   | 19.22 |   |
| Total                               |   | $                           | 4,251  |   |   | $      | 3,854 |   |   |   | 10.30 | % |

Liquidity 

----

Table of Contents

|  (In thousands)                         |   | March 31,2011 |   |   | December 31,2010 |   |
|----------------------------------------------|--------|---------------|--------|--------|------------------|--------|
| Commitments to extend credit:                |   |          |   |   |             |   |
| Loan commitments                             |   | $             | 11,803 |   |             | $      | 12,233 |   |
| Unused lines of credit                       |   |          | 20,397 |   |             |   | 19,751 |   |
| Amounts due mortgagors on construction loans |   |          | 15,911 |   |             |   | 17,867 |   |
| Amounts due on commercial  loans   |   |          | 22,325 |   |             |   | 19,788 |   |
| Commercial letters of credit                 |   |          | 4,112  |   |             |   | 4,198 |   |

----

Table of Contents

|                                                 |   | OTS Regulation        |   |   | Naugatuck Valley Savings and Loan |   |
|------------------------------------------------------|--------|-----------------------|--------|--------|----------------------------------------|--------|
| (Dollars in thousands)                               |   | AdequatelyCapitalized |   |   | WellCapitalized                        |   |   | Amount |   |   | Ratio |   |
|                                                 |   |                  |   |   |                                   |   |   |   |   |   |   |   |
| Total Risk-Based Capital (to Risk-Weighted Assets)   |   |                  | 8.00   | %      |                                   |   | 10.00 | % |   | $ | 51,345 |   |   |   | 11.88 | % |
|                                                 |   |                  |   |   |                                   |   |   |   |   |   |   |   |   |   |   |   |
| Tier I Risk-Based Capital (to Risk-Weighted Assets)  |   |                  | 4.00   | %      |                                   |   | 6.00 | % |   |   | 45,938 |   |   |   | 10.63 | % |
|                                                 |   |                  |   |   |                                   |   |   |   |   |   |   |   |   |   |   |   |
| Tier I  Capital (to Adjusted Total Assets) |   |                  | 4.00   | %      |                                   |   | 5.00 | % |   |   | 45,938 |   |   |   | 8.17 | % |
|                                                 |   |                  |   |   |                                   |   |   |   |   |   |   |   |   |   |   |   |
| Tangible Equity Capital (to Tangible Assets)         |   |                  | 1.50   | %      |                                   |   | 2.00 | % |   |   | 45,938 |   |   |   | 8.17 | % |

Item 

----

Table of Contents

|                                              |   |   |                   |   |   |                    |   |    | Net Portfolio Value as % of |   |
|---------------------------------------------------|--------|--------|------------------------|--------|--------|-------------------------|--------|---------|-----------------------------|--------|
| Basis Point ("bp")                                |   |   | Net Portfolio Value    |   |   | Present Value of Assets |   |
| Change in Rates                                   |   |   | $ Amount               |   |   | $ Change                |   |    | % Change                    |   |   | NPV Ratio |   |   | Change |   |
|                                              |   |   | (Dollars in thousands) |   |   |                    |   |    |                        |   |
|                                              |   |   |                   |   |   |                    |   |    |                        |   |   |   |   |   |   |   |
| 300bp                                             |   |   | $                      | 40,012 |   |                    | $      | (20,953 | )                           |   |   | (34 | )% |   |   | 7.19 | % |   |   | (3.13 | )% |
| 200                           |   |   |                   | 48,446 |   |                    |   | (12,519 | )                           |   |   | (21 | )% |   |   | 8.51 | % |   |   | (1.81 | )% |
| 100                           |   |   |                   | 56,076 |   |                    |   | (4,889  | )                           |   |   | (8 | )% |   |   | 9.65 | % |   |   | (0.67 | )% |
| 50                  |   |   |                   | 58,988 |   |                    |   | (1,977  | )                           |   |   | (3 | )% |   |   | 10.06 | % |   |   | (0.26 | )% |
| 0         |   |   |                   | 60,965 |   |                    |   | -       |                        |   |   | - |   |   |   | 10.32 | % |   |   | - |   |
| (50)                          |   |   |                   | 61,850 |   |                    |   | 885     |                        |   |   | 1 | % |   |   | 10.42 | % |   |   | 0.10 | % |
| (100)                                   |   |   |                   | 62,552 |   |                    |   | 1,587   |                        |   |   | 3 | % |   |   | 10.50 | % |   |   | 0.18 | % |

Item 

----

Table of Contents

Item 

Item 

Item 

|     |   | For the Three Months Ended March 31, 2011 |   |
|----------|--------|-------------------------------------------|--------|
| Period   |   | Total Numberof SharesPurchased (1)        |   |   | Average PricePaidper Share |   |   | Total Number ofShares Purchased asPart of PubliclyAnnounced Plansor Programs |   |   | Maximum Number of Shares that May Yet Be PurchasedUnder the Plansor Programs |   |
|     |   |                                      |   |   |   |   |   |   |   |   |   |   |
| January  |   |                                      | -      |   |   | $ | - |   |   |   | - |   |   |   | 159,676 |   |
| February |   |                                      | -      |   |   | $ | - |   |   |   | - |   |   |   | 159,676 |   |
| March    |   |                                      | 196    |   |   | $ | 8.16 |   |   |   | - |   |   |   | 159,676 |   |
|     |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total    |   |                                      | 196    |   |   | $ | 8.16 |   |   |   | - |   |   |   | 159,676 |   |
|     |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

Item 

Item 

Item 

----

Table of Contents

Item 

|   | 3.1  | Charter of Naugatuck Valley Financial Corporation (1)                    |
|--------|------|--------------------------------------------------------------------------|
|   | 3.2  | Bylaws of Naugatuck Valley Financial Corporation, as amended (2)         |
|   | 4.1  | Specimen Stock Certificate of Naugatuck Valley Financial Corporation (3) |
|   | 31.1 | Rule 13a-14(a)/15d-14(a) Certification.                                  |
|   | 31.2 | Rule 13a-14(a)/15d-14(a) Certification.                                  |
|   | 32   | Section 1350 Certifications.                                             |

----

Table of Contents

SIGNATURES

|                           | Naugatuck Valley Financial Corporation |                                                    |
|--------------------------------|----------------------------------------|---------------------------------------------------------|
|                           |                                   |                                                    |   |
| Date: May 16, 2011   | By:                                    | /s/ John C. Roman                                       |   |
|                           |                                   | John C. Roman                                           |   |
|                           |                                   | President and Chief Executive Officer                   |   |
|                           |                                   | (principal executive officer)                      |   |
|                           |                                   |                                                    |   |
| Date: May 16, 2011   |  by:          | /s/ Lee R. Schlesinger                                  |   |
|                           |                                   | Lee R. Schlesinger                                 |   |
|                           |                                   | Senior Vice President and Chief Financial Officer  |   |
|                           |                                   | (principal financial officer)                      |   |

----