<PAGE> 1

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                                  ------------

                                    FORM 10-Q
(Mark One)

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

For the quarterly period ended June 30, 2004

                                       OR

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

For the transition period from ______________ to _____________

                         Commission file number: 0-50876
                                                 -------


                     NAUGATUCK VALLEY FINANCIAL CORPORATION
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

             UNITED STATES                           TO BE APPLIED FOR
-----------------------------------------   ------------------------------------
   (State or other jurisdiction of          (I.R.S. Employer Identification No.)
   incorporation or organization)


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)


Indicate  by check  mark  whether  the  registrant:  (1) has filed  all  reports
required to be filed by Section 13 or 15 (d) of the  Securities  Exchange Act of
1934 during the preceding 12 months (or such shorter  period that the registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days.
Yes                        No         X
    -------------------      --------------------

         Indicate by check mark whether the registrant is an  accelerated  filer
(as defined in Rule 12b-2 of the Exchange Act).
Yes                        No         X
    -------------------      --------------------

         As of  September  20,  2004,  there were no shares of the  registrant's
common stock outstanding.

<PAGE> 2


                     NAUGATUCK VALLEY FINANCIAL CORPORATION

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>

PART I.  FINANCIAL INFORMATION                                                                           PAGE NO.
         <S>                                                                                               <C>
         Item 1.  Financial Statements (Unaudited)

                  Consolidated Statements of Financial Condition at June 30, 2004 and
                  December 31, 2003..............................................................           3

                  Consolidated Statements of Income for the three and six months ended
                  June 30, 2004 and 2003.........................................................           4

                  Consolidated Statements of Cash Flows for the six months ended
                  June 30, 2004 and 2003.........................................................           5

                  Notes to Unaudited Consolidated Financial Statements..........................            6

         Item 2.  Management's Discussion and Analysis of Financial Condition and Results
                  of Operations..................................................................           8

                  Liquidity and Capital Resources................................................          12

         Item 3.  Quantitative and Qualitative Disclosures About Market Risk.....................          13

         Item 4.  Controls and Procedures........................................................          13


PART II.  OTHER INFORMATION

         Item 1.  Legal Proceedings..............................................................          14

         Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds....................          14

         Item 3.  Defaults Upon Senior Securities................................................          14

         Item 4.  Submission of Matters to a Vote of Security Holders............................          14

         Item 5.  Other Information..............................................................          14

         Item 6.  Exhibits and Reports on Form 8-K...............................................          14
</TABLE>

SIGNATURES

EXHIBITS


<PAGE> 3


ITEM 1. FINANCIAL STATEMENTS.

         Naugatuck Valley Financial Corporation (the "Company") has not yet been
organized  and will be formed  upon  completion  of the mutual  holding  company
reorganization  of  Naugatuck  Valley  Savings  and  Loan  (the  "Bank").  After
completion  of  the  reorganization,  the  Company  will  become  the  federally
chartered  mid-tier  stock  holding  company of the Bank and will own all of the
Bank's  capital  stock.  The Company is not currently an operating  company and,
therefore,  the  information  presented  in this  report is for the Bank and its
subsidiary.





                                       2


<PAGE> 4
NAUGATUCK VALLEY SAVINGS AND LOAN
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(IN THOUSANDS)
<TABLE>
<CAPTION>

---------------------------------------------------------------------------------------------
                                                               June 30,       December 31,
                                                                 2004             2003
--------------------------------------------------------------------------  -----------------

                                                               (UNAUDITED)       (AUDITED)
<S>                                                             <C>             <C>
ASSETS
Cash and due from depository institutions                       $   5,967       $   4,752
Investment in federal funds                                         6,492           5,023
Investment securities                                              35,759          38,727
Loans receivable, net                                             189,833         180,378
Other assets                                                       15,602          15,076
                                                                ---------       ---------
        TOTAL ASSETS                                            $ 253,653       $ 243,956
                                                                ---------       ---------

LIABILITIES AND CAPITAL ACCOUNTS
Liabilities
  Deposits                                                      $ 198,923       $ 183,455
  Advances from Federal Home Loan Bank of Boston                   28,631          34,990
  Other liabilities                                                 4,522           4,294
                                                                ---------       ---------
        Total liabilities                                         232,076         222,739
                                                                ---------       ---------

Commitments and contingencies

Capital accounts
  Retained earnings                                                21,725          20,947
  Accumulated other comprehensive income                             (148)            270
                                                                ---------       ---------
        Total capital                                              21,577          21,217
                                                                ---------       ---------
TOTAL LIABILITIES AND CAPITAL ACCOUNTS                          $ 253,653       $ 243,956
-----------------------------------------------------------------------------------------------
</TABLE>


                                       3
<PAGE> 5
NAUGATUCK VALLEY SAVINGS AND LOAN
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS)

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
                                                          Six Months Ended         Three Months Ended
                                                              June 30,                  June 30,
                                                       ------------------------  ------------------------
                                                          2004         2003         2004         2003
---------------------------------------------------------------------------------------------------------
                                                                           (UNAUDITED)
<S>                                                       <C>          <C>          <C>          <C>
INTEREST AND DIVIDEND INCOME
Interest on loans                                         $ 5,407      $ 5,646      $ 2,712      $ 2,769
Interest and dividends on investments and deposits            676          771          345          392
                                                         --------     --------     --------      -------
        Total interest income                               6,083        6,417        3,057        3,161
                                                         --------     --------     --------      -------

INTEREST EXPENSE
Interest on deposits                                        1,132        1,561          562          742
Interest on borrowed funds                                    720          701          354          348
                                                         --------     --------     --------      -------
        Total interest expense                              1,852        2,262          916        1,090
                                                         --------     --------     --------      -------

NET INTEREST INCOME                                         4,231        4,155        2,141        2,071

PROVISION FOR LOAN LOSSES                                      --           45           --           --
                                                         --------     --------     --------      -------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES         4,231        4,110        2,141        2,071
                                                         --------     --------     --------      -------

NONINTEREST INCOME
Loan fees and service charges                                 427          432          216          211
Income from bank owned life insurance                          97           44           49           44
Gain on sale of mortgages                                       5           67           --           50
Gain on sale of investments                                    24            6           --            6
Income from investment advisory services, net                  57           --           26           --
Other income                                                   29           41           15           22
                                                         --------     --------     --------      -------
        Total noninterest income                              639          590          306          333
                                                         --------     --------     --------      -------

NONINTEREST EXPENSE
Compensation, taxes and benefits                            2,202        1,866        1,080          981
Office occupancy                                              558          540          275          270
Computer processing                                           270          246          124          131
Federal insurance premiums                                     14           14            7            7
(Gain) loss on foreclosed real estate, net                    (37)          (2)          (5)          (6)
Other expenses                                                737          667          384          298
                                                         --------     --------     --------      -------
        Total noninterest expense                           3,744        3,331        1,865        1,681
                                                         --------     --------     --------      -------

INCOME BEFORE PROVISION FOR INCOME TAXES                    1,126        1,369          582          723

PROVISION FOR INCOME TAXES                                    348          448          182          231
                                                         --------     --------     --------      -------
        NET INCOME                                        $   778      $   921      $   400      $   492
---------------------------------------------------------------------------------------------------------
</TABLE>
                                       4

<PAGE> 6

NAUGATUCK VALLEY SAVINGS AND LOAN
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
                                                                                     Six Months Ended
                                                                                          June 30,
                                                                            -----------------------------
                                                                                    2004            2003
---------------------------------------------------------------------------------------------------------
                                                                                        (UNAUDITED)
<S>                                                                               <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                                                        $    778        $    921
Adjustments to reconcile net income to cash
   provided by operating activities:
      Provision for loan losses                                                         --              45
      Depreciation and amortization expense                                            336             326
      Provision for deferred taxes                                                      (1)             --
      Net gain on sale of real estate owned                                            (44)            (14)
      Gain on sale of mortgages                                                         (5)            (67)
      Loans originated for sale                                                     (1,927)         (5,959)
      Proceeds from the sale of loans                                                1,932           6,026
      Gain on sale of investments                                                      (24)             (6)
      Decrease (increase) in accrued income receivable                                  41             (16)
      Increase (decrease) in deferred loan fees                                         55             (53)
      Increase in bank owned life insurance asset                                      (97)            (44)
      Decrease (increase) in other assets                                             (241)            161
      (Decrease) increase in other liabilities                                          (4)            177
                                                                                  ---------        --------
                            NET CASH PROVIDED BY OPERATING ACTIVITIES                  799           1,497
                                                                                  ---------        --------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities of available-for-sale securities                           13,459           8,693
Proceeds from maturities of held-to-maturity securities                                 --             100
Purchase of available-for-sale securities                                           (7,552)        (12,309)
Purchase of held-to-maturity securities                                             (3,610)           (291)
Loan originations net of principal payments                                         (9,510)            (32)
Proceeds from the sale of foreclosed real estate                                       181              43
Purchase of property and equipment                                                    (425)           (452)
Purchase of bank owned life insurance asset                                             --          (3,600)
                                                                                  ---------        --------
                            NET CASH USED BY INVESTING ACTIVITIES                   (7,457)         (7,848)
                                                                                  ---------        --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in time deposits                                                           (429)          1,675
Net change in other deposit accounts                                                15,897          11,031
Advances from Federal Home Loan Bank                                                   650           3,403
Repayment of Advances from Federal Home Loan Bank                                   (7,009)         (7,212)
Net change in mortgagors' escrow accounts                                              233             190
                                                                                  ---------        --------
                            NET CASH PROVIDED BY FINANCING ACTIVITIES                9,342           9,087
                                                                                  ---------        --------

Increase in cash and cash equivalents                                                2,684           2,736
Cash and cash equivalents at beginning of period                                     9,775          18,158
                                                                                  ---------        --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                        $ 12,459        $ 20,894
-----------------------------------------------------------------------------------------------------------
Cash paid during the period for:
      Interest                                                                    $  1,834        $  2,248
      Income taxes                                                                     297             375

</TABLE>
                                       5

<PAGE> 7


NOTE 1 - BASIS OF PRESENTATION

The  accompanying   condensed  consolidated  interim  financial  statements  are
unaudited  and include the accounts of the Bank,  and those of Naugatuck  Valley
Mortgage Servicing Corporation,  its wholly-owned  subsidiary.  The consolidated
financial statements have been prepared in accordance with accounting principles
generally  accepted in the United States of America (GAAP) for interim financial
information and with the instructions to SEC Form 10-Q. Accordingly, they do not
include  all  the  information  and  footnotes  required  by GAAP  for  complete
financial  statements.  All significant  intercompany  accounts and transactions
have been eliminated in the consolidation.  These financial  statements reflect,
in the  opinion  of  Management,  all  adjustments,  consisting  of only  normal
recurring adjustments, necessary for a fair presentation of the Bank's financial
position  and the results of its  operations  and its cash flows for the periods
presented.  Operating  results  for the six months  ended June 30,  2004 are not
necessarily  indicative  of the results that may be expected for the year ending
December 31, 2004. These financial statements should be read in conjunction with
the  financial  statements  and  notes  thereto  included  in  the  Bank's  2003
Consolidated   Financial  Statements  included  in  the  Company's  Registration
Statement on Form S-1, as amended.

The year-end  condensed  balance  sheet data was derived from audited  financial
statements, but does not include all disclosures required by GAAP.

NOTE 2 - COMPREHENSIVE INCOME

Statement  of  Financial  Accounting  Standards  ("SFAS")  No.  130,  "Reporting
Comprehensive  Income,"  establishes  standards for disclosure of  comprehensive
income,  which  includes  net income and any  changes in equity  from  non-owner
sources  that are not recorded in the income  statement  (such as changes in the
net unrealized  gain (loss) on  available-for-sale  securities).  The purpose of
reporting  comprehensive  income is to report a measure of all changes in equity
that result from recognized transactions and other economic events of the period
other than transactions with owners in their capacity as owners.  The Bank's one
source of other  comprehensive  income is the net unrealized  gain (loss) on its
available-for-sale securities.

<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------------------
                                                   Six Months Ended          Three Months Ended
                                                       June 30,                   June 30,
                                              -------------------------  ------------------------
(IN THOUSANDS)                                     2004          2003         2004         2003
-------------------------------------------------------------------------------------------------
<S>                                              <C>         <C>            <C>           <C>
Net income                                       $  778      $   921        $ 400         $ 492

Net unrealized (loss) gain on
securities available for sale
during the period                                  (418)         208         (479)          292
                                                 -------     -------       -------       -------
      TOTAL COMPREHENSIVE INCOME                 $  360      $ 1,129        $ (79)        $ 784
------------------------------------------------------------------------------------------------
</TABLE>

NOTE 3 - MUTUAL HOLDING COMPANY REORGANIZATION AND MINORITY STOCK ISSUANCE

On May 17,  2004,  and as amended and  restated on June 15,  2004,  the Board of
Directors of the Bank unanimously  adopted a Plan of Reorganization and Minority
Stock  Issuance  (the  "Plan  of  Reorganization").  Pursuant  to  the  Plan  of
Reorganization, which was approved by the Bank's depositors at a special meeting
of depositors  held on September 16, 2004, the Bank will: (i) convert to a stock
savings  bank as the  successor  to the Bank in its current  mutual  form;  (ii)
organize the Company as a federally chartered  corporation that will own 100% of
the common stock of the Stock Bank; and (iii) organize a Mutual Holding  Company
as a federally  chartered  mutual holding  company that will own at least 51% of
the common stock of the Company so long as the Mutual Holding Company remains in
existence.  The Stock Bank will succeed to the business  and  operations  of the
Bank in its mutual  form and the  Company  will sell a minority  interest in its
common stock in a public stock offering.

Following  the  completion  of  the  reorganization,   all  depositors  who  had
membership  or  liquidation  rights with respect to the Bank as of the effective
date of the reorganization will continue to have such rights solely with respect
to the Mutual Holding Company so long as they continue to hold deposit  accounts
with the Bank.  In  addition,  all

                                       6

<PAGE> 8



persons who become depositors of the Bank subsequent to the reorganization  will
have such membership and  liquidation  rights with respect to the Mutual Holding
Company.

The Company plans to offer to the public shares of common stock  representing  a
minority  ownership  of the  estimated  pro  forma  market  value of the Bank as
determined by an independent appraisal. The Mutual Holding Company will maintain
the majority  ownership of the Company.  Cost  incurred in  connection  with the
offering will be recorded as a reduction of the proceeds  from the offering.  If
the  transaction is not  consummated,  all costs incurred in connection with the
transaction  will be  expensed.  At  June  30,  2004,  reorganization  costs  of
approximately $316,000 had been included in other assets.


NOTE 4 - CRITICAL ACCOUNTING POLICIES

The Bank  considers  accounting  policies  involving  significant  judgments and
assumptions  by management  that have,  or could have, a material  impact on the
carrying  value  of  certain  assets  or on  income  to be  critical  accounting
policies.  The Bank considers the following to be critical accounting  policies:
allowance for loan losses and deferred income taxes.

ALLOWANCE  FOR LOAN LOSSES.  Determining  the amount of the  allowance  for loan
losses  necessarily  involves a high degree of judgment.  Management reviews the
level of the allowance on a quarterly  basis, at a minimum,  and establishes the
provision  for loan  losses  based  on the  composition  of the loan  portfolio,
delinquency  levels,  loss experience,  economic  conditions,  and other factors
related to the collectibility of the loan portfolio.

Although  the  Bank  believes  that it uses the best  information  available  to
establish the allowance for loan losses,  future  additions to the allowance may
be necessary  based on estimates  that are  susceptible to change as a result of
changes  in  economic  conditions  and  other  factors.   The  Bank  engages  an
independent  review of its commercial  loan  portfolio  annually and adjusts its
loan  ratings  based  upon this  review.  In  addition,  the  Bank's  regulatory
authorities  as an  integral  part of their  examination  process,  periodically
review the Bank's allowance for loan losses.  Such agencies may require the Bank
to  recognize  adjustments  to  the  allowance  based  on  its  judgments  about
information available to it at the time of its examination.

DEFERRED  INCOME  TAXES.  The Bank  uses  the  asset  and  liability  method  of
accounting  for  income  taxes.  Under  this  method,  deferred  tax  assets and
liabilities  are  recognized  for the future tax  consequences  attributable  to
differences  between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. If current available information
raises  doubt as to the  realization  of the  deferred  tax assets,  a valuation
allowance is established. Deferred tax assets and liabilities are measured using
enacted  tax rates  expected  to apply to  taxable  income in the years in which
those temporary  differences  are expected to be recovered or settled.  The Bank
exercises   significant   judgment  in  evaluating  the  amount  and  timing  of
recognition of the resulting tax liabilities and assets,  including  projections
of future taxable income. These judgments and estimates are reviewed continually
as regulatory and business factors change.

                                       7


<PAGE> 9


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS.

This  discussion  should be read in  conjunction  with the  Bank's  Consolidated
Financial  Statements  for the year ended  December  31,  2003  included  in the
Company's Registration Statement on Form S-1, as amended.

FORWARD-LOOKING STATEMENTS

This report  contains  forward-looking  statements that are based on assumptions
and may describe future plans,  strategies and  expectations of the Bank.  These
forward-looking  statements  are  generally  identified  by  use  of  the  words
"believe," "expect," "intend,"  "anticipate,"  "estimate,"  "project" or similar
expressions.  The  Bank's  ability to  predict  results or the actual  effect of
future plans or strategies is inherently  uncertain.  Factors which could have a
material  adverse  effect  on the  operations  of the Bank and its  subsidiaries
include,  but are not  limited  to,  changes in  interest  rates,  national  and
regional economic conditions,  legislative and regulatory changes,  monetary and
fiscal policies of the U.S. government,  including policies of the U.S. Treasury
and the  Federal  Reserve  Board,  the quality  and  composition  of the loan or
investment  portfolios,  demand for loan products,  deposit flows,  competition,
demand for financial  services in the Bank's market area, changes in real estate
market  values in the Bank's  market  area,  and changes in relevant  accounting
principles and guidelines. These risks and uncertainties should be considered in
evaluating forward-looking statements and undue reliance should not be placed on
such  statements.  Except as required by applicable law or regulation,  the Bank
does not  undertake,  and  specifically  disclaims  any  obligation,  to release
publicly  the result of any  revisions  that may be made to any  forward-looking
statements to reflect events or  circumstances  after the date of the statements
or to reflect the occurrence of anticipated or unanticipated events.


COMPARISON OF FINANCIAL CONDITION AT DECEMBER 31, 2003 AND JUNE 30, 2004

Total assets  increased by $9.7 million during the period from December 31, 2003
to June 30, 2004,  primarily  due to an increase in loans of $9.5  million.  The
increase  in loans  primarily  reflects  an  increase  in our  multi-family  and
commercial loans of $6.0 million,  or 21.8%, due in large part to an increase in
subdivision  lending  and  individual  builder  lending  and an  increase in our
consumer loans of $4.2 million, or 20.0%, due to promotions of home equity lines
of credit and second mortgage loans.  These increases were partially offset by a
decrease in our one- to four-family loans of $694,000,  or 0.5%, due to the sale
of one group of loans in 2004.  The increase in the loan portfolio was funded by
an  increase  in deposits  of $15.5  million  partially  offset by a decrease in
borrowings of $6.4 million.  Deposits  increased  primarily due to the continued
growth  of our new  Derby  branch,  which  opened in  February  2003,  increased
advertising and competitive  interest rates.  Capital increased by $360,000,  or
1.7%,  from $21.2 million at December 31, 2003 to $21.6 million at June 30, 2004
as a  result  of  net  income  offset  by a  decrease  in  unrealized  gains  on
available-for-sale securities.

COMPARISON OF OPERATING RESULTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2004
AND 2003

GENERAL.  Net income decreased  $92,000 or 18.7% for the three months ended June
30, 2004 as compared to the three months ended June 30, 2003,  primarily  due to
an  increase  in  noninterest  expense  and a decrease  in  noninterest  income,
partially offset by an increase in net interest income.

Net income decreased $143,000,  or 15.5%, for the six months ended June 30, 2004
as compared to the six months ended June 30, 2003,  primarily due to an increase
in noninterest  expense partially offset by increases in net interest income and
in noninterest income.

NET INTEREST  INCOME.  Net interest income increased  $70,000,  or 3.4%, to $2.1
million for the three months ended June 30, 2004. Net interest income  increased
$76,000,  or 1.8%,  to $4.2 million for the six months ended June 30, 2004.  The
primary  reason for the increase in net  interest  income for both the three and
six month  periods  was the  decrease  in  interest  expense.  Interest  expense
decreased  in both periods as we were able to lower rates on all  categories  of
deposit  accounts in 2004 and as  maturing  certificates  of deposit  renewed at
lower rates. We also experienced an increase in lower rate core deposit accounts
as a result of promotion of low-cost or no-cost checking accounts for businesses
and consumers, which decreased our cost of funds.

                                       8

<PAGE> 10

The following  table  summarizes  changes in interest income and expense for the
three and six months ended June 30, 2004 and 2003.
<TABLE>
<CAPTION>

                                             THREE MONTHS                            SIX MONTHS
                                              ENDED JUNE,                          ENDED JUNE 30,
                                       ------------------------              --------------------------
                                            2004        2003       % CHANGE        2004         2003       % CHANGE
                                       -----------  -----------  ----------- -------------  -----------  ------------
                                                                    (DOLLARS IN THOUSANDS)
<S>                                     <C>         <C>             <C>         <C>         <C>            <C>
INTEREST INCOME:
   Loans.............................   $   2,712   $   2,769        (2.06)%    $  5,407    $   5,646        (4.23)%
   Fed Funds sold....................          13          27       (51.85)           24           46       (47.83)
   Investment securities.............         325         353        (7.93)          635          700        (9.29)
   Federal Home Loan Bank stock......           7          12       (41.67)           17           25       (32.00)
                                        ----------  ----------                  ---------   ----------
      Total interest income..........       3,057       3,161        (3.29)        6,083        6,417        (5.20)

INTEREST EXPENSE:
   Certificate accounts..............         439         606       (27.56)          892        1,262       (29.32)
   Regular savings accounts..........          49          57       (14.04)           96          130       (26.15)
   Checking and NOW accounts.........          10          20       (50.00)           25           48       (47.92)
   Money market savings accounts.....          64          59         8.47           119          121        (1.65)
                                        ----------  ----------                  ---------   ----------
      Total interest-bearing deposits         562         742       (24.26)        1,132        1,561       (27.48)
   FHLB advances.....................         354         348         1.72           720          701         2.71
                                        ----------  ----------                  ---------   ----------
      Total interest expense.........         916       1,090       (15.96)        1,852        2,262       (18.13)
                                        ----------  ----------                  ---------   ----------
      Net interest income............   $   2,141   $   2,071         3.38      $  4,231    $   4,155         1.83
                                        ==========  ==========                  =========   ==========
</TABLE>

The following table summarizes average balances and average yields and costs for
the three and six months ended June 30, 2004 and 2003.

<TABLE>
<CAPTION>

                                            THREE MONTHS ENDED JUNE 30,            SIX MONTHS ENDED JUNE 30,
                                      -----------------------------------------------------------------------------
                                              2004               2003               2004                2003
                                      ------------------ ------------------- ------------------  ------------------
                                        AVERAGE   YIELD/   AVERAGE   YIELD/   AVERAGE   YIELD/   AVERAGE    YIELD/
                                        BALANCE    COST    BALANCE    COST    BALANCE    COST     BALANCE    COST
                                      ---------- ------- ---------- -------- --------- --------  --------- --------
                                                                 (DOLLARS IN THOUSANDS)
<S>                                    <C>        <C>     <C>        <C>      <C>        <C>    <C>          <C>
INTEREST-EARNING ASSETS:
   Loans.............................  $184,350   5.88%   $166,626    6.65%  $182,574    5.92%  $167,315     6.75%
   Fed Funds sold....................     5,539   0.94       9,403    1.15      5,277    0.91      8,266     1.11
   Investment securities.............    36,130   3.60      37,863    3.73     34,099    3.72     35,696     3.92
   Federal Home Loan Bank stock......     1,779   1.57       1,561    3.07      1,768    1.92      1,561     3.20
                                       --------           --------           --------           --------
     Total interest-earning assets...  $227,798   5.37    $215,453    5.87   $223,718    5.44   $212,838     6.03
                                       ========           ========           ========           ========
INTEREST-BEARING LIABILITIES:
   Certificate accounts..............  $ 85,737   2.05%   $ 91,260    2.66%  $ 85,950    2.08%  $ 90,686     2.78%
   Regular savings accounts..........    45,229   0.43      41,228    0.55     43,704    0.44     39,811     0.65
   Checking and NOW accounts.........    36,275   0.11      30,408    0.26     33,968    0.15     29,216     0.33
   Money market savings accounts.....    27,043   0.95      20,579    1.15     25,949    0.92     19,764     1.22
                                       --------           --------           --------           --------
      Total interest-bearing deposits   194,284   1.16     183,475    1.62    189,571    1.19    179,477     1.74
   FHLB advances.....................    29,467   4.81      27,717    5.02     30,051    4.79     27,651     5.07
                                       --------           --------           ---------          --------
      Total interest-bearing
          liabilities................  $223,751   1.64    $211,192    2.06   $219,622    1.69   $207,128     2.18
                                       ========           ========           ========           ========
</TABLE>


Interest and dividend income decreased  $104,000,  or 3.3%, for the three months
ended  June  30,  2004  as a  result  of a  decrease  in the  average  yield  on
interest-earning  assets to 5.37% from 5.87% partially  offset by an increase in
the average  balance of  interest-earning  assets to $227.8  million from $215.5
million.  Interest and dividend income decreased $334,000,  or 5.2%, for the six
months  ended June 30, 2004 as a result of a decrease  in the  average  yield on
interest-earning  assets to 5.44% from 6.03% partially  offset by an increase in
the average  balance of  interest-earning  assets to $223.7  million from $212.8
million.  Interest on loans decreased during the three and six months ended June
30, 2004 due to the decrease in the average yield on loans  partially  offset by
the  increase in the average  balance of those  assets.  Interest on  securities
decreased  during  the  three  and six  months  ended  June 30,  2004 due to the
decrease  in the average  yield on  securities  and the  decrease in the average
balance of those assets. During the three and six months ended June 30, 2004, we
originated  loans at lower  interest  rates and our securities had lower average
yields due to the prevailing low interest rate environment.

Net interest income  decreased  $174,000,  or 16.0%,  for the three months ended
June 30, 2004 as a result of a decrease in the average yield on interest-bearing
liabilities to 1.64% from 2.06%  partially  offset by an increase in the

                                       9

<PAGE> 11


average  balance  of  interest-earning  assets to  $223.8  million  from  $211.2
million. Interest expense decreased $410,000, or 18.1%, for the six months ended
June 30, 2004 as a result of a decrease in the average yield on interest-bearing
liabilities to 1.69% from 2.18%  partially  offset by an increase in the average
balance of interest-earning  assets to $219.6 million from $207.1 million. Rates
paid on  interest-bearing  liabilities  decreased  during both the three and six
months ended June 30, 2004 due to a decline in market interest rates.

PROVISION FOR LOAN LOSSES.  The following  table  summarizes the activity in the
allowance  for loan losses and  provision  for loan losses for the three and six
months ended June 30, 2004 and 2003.

<TABLE>
<CAPTION>

                                                                  THREE MONTHS                  SIX MONTHS
                                                                 ENDED JUNE 30,               ENDED JUNE 30,
                                                           --------------------------------------------------------
                                                               2004          2003           2004          2003
                                                           ------------  ------------   ------------  -------------
                                                                             (DOLLARS IN THOUSANDS)
<S>                                                           <C>            <C>           <C>            <C>
Allowance at beginning of period.........................     $1,811         $2,006        $1,810         $1,994
Provision for loan losses................................         --             --            --             45
Charge-offs..............................................       (20)          (213)          (20)          (264)
Recoveries...............................................         34              2            35             20
                                                              ------         ------        ------         ------
Net charge-offs..........................................         14          (211)            15          (244)
                                                              ------         ------        ------         ------
Allowance at end of period...............................     $1,825         $1,795        $1,825         $1,795
                                                              ======         ======        ======         ======
</TABLE>


We did not record a provision  for loan losses for either the three or six month
period  ended June 30,  2004.  The lack of  provision  in 2004  reflected  lower
charge-offs and decreased non-performing assets. The charge-offs during the 2003
periods  are due to a one time  charge to write down to market  value  loans for
which we had previously established specific allowance.

The  following  table  provides  information  with respect to our  nonperforming
assets at the dates indicated.  We did not have any troubled debt restructurings
or any accruing loans past due 90 days or more at the dates presented.

<TABLE>
<CAPTION>


                                                             AT JUNE 30,       AT DECEMBER 31,
                                                                2004                2003              % CHANGE
                                                          ------------------  ------------------ -------------------
                                                                           (DOLLARS IN THOUSANDS)
<S>                                                            <C>               <C>                  <C>
Nonaccrual loans.........................................      $918              $  906                 1.32%
Real estate owned........................................        71                 208               (65.87)
                                                               ----              ------              -------
   Total nonperforming assets............................      $989              $1,114               (11.22)
                                                               ====              ======              =======
Total nonperforming loans to total loans.................      0.48%               0.50%               (4.00)
Total nonperforming loans to total assets................      0.36%               0.37%               (2.70)
Total non performing assets to total assets..............      0.39%               0.46%              (15.22)
</TABLE>


                                       10

<PAGE> 12

NONINTEREST  INCOME.  The following table summarizes  noninterest income for the
three and six months ended June 30, 2004 and 2003.

<TABLE>
<CAPTION>

                                                       THREE MONTHS                      SIX MONTHS
                                                      ENDED JUNE 30,                   ENDED JUNE 30,
                                                   -------------------              ----------------------
                                                     2004       2003     % CHANGE      2004       2003      % CHANGE
                                                   -------    --------  ----------  ---------   ----------  ----------
                                                                          (DOLLARS IN THOUSANDS)
<S>                                                  <C>        <C>      <C>           <C>        <C>        <C>
Loan fees and service charges...................     $216       $211        2.37%      $427       $432        (1.16)%
Income from bank owned life insurance...........       49         44       11.36         97         44       120.45
Gain on sale of mortgages.......................       --         50     (100.00)         5         67       (92.54)
Gain on sale of investments.....................       --          6     (100.00)        24          6       300.00
Income from investment advisory services, net...       26         --         N/A         57         --          N/A
Other income....................................       15         22      (31.82)        29         41       (29.27)
                                                     ----       ----                   ----       ----
   Total........................................     $306       $333       (8.11)      $639       $590         8.31
                                                     ====       ====                   ====       ====
</TABLE>


Noninterest  income  decreased  during  the three  months  ended  June 30,  2004
primarily as a result of the lack of gain on sale of mortgages because our asset
sensitive  interest  rate  sensitivity  position  allowed us to hold  fixed-rate
mortgage loans in portfolio. The lack of gain on sale of mortgages was partially
offset by income from  investment  advisory  services.  In the third  quarter of
2003,  we began  offering  investment  advisory  services  through a third party
registered  broker-dealer.  Noninterest  income  increased during the six months
ended June 30, 2004  primarily  as a result of income from  investment  advisory
services  and income from bank owned life  insurance.  During 2003 we  purchased
life insurance policies, from which we derive income, on certain key executives.

NONINTEREST EXPENSE. The following table summarizes  noninterest expense for the
three and six months ended June 30, 2004 and 2003.

<TABLE>
<CAPTION>

                                                  THREE MONTHS                            SIX MONTHS
                                                 ENDED JUNE 30,                         ENDED JUNE 30,
                                              -------------------                  ----------------------
                                                2004       2003      % CHANGE        2004         2003     % CHANGE
                                              -------    --------    -----------   ---------   ----------  ----------
                                                                      (DOLLARS IN THOUSANDS)
<S>                                            <C>         <C>         <C>          <C>         <C>        <C>
Compensation, taxes and benefits.........      $1,080      $  981        10.09%     $2,202      $1,866        18.01%
Office occupancy.........................         275         270         1.85         558         540         3.33
Computer processing......................         124         131       (5.34)         270         246         9.76
Federal insurance premiums...............           7           7          --           14          14           --
(Gain) loss on foreclosed real estate,
     net.................................          (5)         (6)     (16.67)         (37)         (2)    1,750.00
Other expenses...........................         384         298       28.86          737         667        10.49
                                               ------      ------                   ------      ------
   Total.................................      $1,865      $1,681       10.95       $3,744      $3,331        12.40
                                               ======      ======                   ======      ======
</TABLE>


Noninterest  expense  increased  in both the three and six months ended June 30,
2004  primarily as a result of an increase in  compensation,  taxes and benefits
due to an increase in  employees,  the  resulting  payroll  taxes and  increased
pension expense.  The increase in employees is primarily a result of the opening
of our Derby branch office in February  2003.  Other  expenses  increased due to
increases in  advertising,  fees for an  asset/liability  management  consulting
agreement,  fees for a new  outsourced  internal  audit  function  and  expenses
relating to our charter conversion.

INCOME TAXES. The provision for income taxes decreased in both the three and six
month  periods  ended  June 30,  2004 due to a decrease  in  taxable  income and
decreases in the  effective  tax rates.  The  effective tax rates were 31.2% and
30.9% for the three and six month  periods ended June 30, 2004 compared to 32.0%
and 32.7% for the three and six month periods ended June 30, 2003. The decreases
in the  effective tax rates for both 2004 periods are the result of increases in
tax exempt bank owned life insurance income.


                                       11


<PAGE> 13


LIQUIDITY AND CAPITAL RESOURCES

Liquidity  is the  ability  to meet  current  and  future  short-term  financial
obligations.  Our  primary  sources of funds  consist of deposit  inflows,  loan
repayments and  maturities and sales of investment  securities and advances from
the  Federal  Home  Loan  Bank  of  Boston.   While   maturities  and  scheduled
amortization of loans and securities are predictable  sources of funds,  deposit
flows and mortgage prepayments are greatly influenced by general interest rates,
economic conditions and competition.

Each quarter we project liquidity availability and demands on this liquidity for
the next 90 days.  We regularly  adjust our  investments  in liquid assets based
upon our assessment of (1) expected loan demand, (2) expected deposit flows, (3)
yields  available  on  interest-earning  deposits  and  securities,  and (4) the
objectives of our asset/liability  management program.  Excess liquid assets are
invested generally in  interest-earning  deposits,  Federal funds and short- and
intermediate-term U.S. Government agency obligations.

Our most  liquid  assets  are cash and  cash  equivalents  and  interest-bearing
deposits. The levels of these assets depend on our operating, financing, lending
and investing activities during any given period. At June 30, 2004 cash and cash
equivalents  totaled  $12.5  million,  including  Federal funds of $6.5 million.
Securities classified as available-for-sale, which provide additional sources of
liquidity,  totaled $30.5 million at June 30, 2004. At June 30, 2004, we had the
ability to borrow a total of $93.3  million  from the Federal  Home Loan Bank of
Boston,  of which  $28.6  million  was  outstanding.  At June 30,  2004,  we had
arranged  overnight  lines of credit of $2.5  million with the Federal Home Loan
Bank of Boston. We had no overnight  advances  outstanding with the Federal Home
Loan  Bank of Boston on these  dates.  In  addition,  at June 30,  2004,  we had
ability to borrow $2.0 million  from a  correspondent  bank.  We had no advances
outstanding on this line on these dates.

At June 30,  2004,  we had $14.2  million in unused  line  availability  on home
equity lines of credit,  $13.1  million in  unadvanced  commercial  lines,  $5.3
million in  mortgage  commitments,  $1.0  million in  commercial  mortgage  loan
commitments,  $2.5 million in unadvanced construction mortgage commitments, $1.4
million  in  letters  of  credit,  and  $71,000  in  overdraft  line  of  credit
availability.  Certificates  of deposit  due  within  one year of June 30,  2004
totaled $50.6 million, or 25% of total deposits. If these deposits do not remain
with us, we will be required  to seek other  sources of funds,  including  other
certificates of deposit and lines of credit. Depending on market conditions,  we
may be required to pay higher rates on such deposits or other borrowings than we
currently pay on the  certificates of deposit due on or before June 30, 2005. We
believe,  however,  based on past experience,  that a significant portion of our
certificates  of deposit will remain with us. We have the ability to attract and
retain deposits by adjusting the interest rates offered.

Historically,  we have  remained  highly  liquid,  with our  liquidity  position
increasing substantially over the past two fiscal years. We are not aware of any
trends and/or demands, commitments, events or uncertainties that could result in
a material  decrease in liquidity.  We expect that all of our  liquidity  needs,
including  the  contractual  commitments  set  forth  in the  table  below,  the
estimated  costs of our branch  expansion plans and increases in loan demand can
be met by our currently  available  liquid  assets and cash flows.  In the event
loan demand were to increase at a pace greater than expected,  or any unforeseen
demand or commitment were to occur, we would access our borrowing  capacity with
the Federal  Home Loan Bank of Boston.  We expect that our  currently  available
liquid  assets and our  ability  to borrow  from the  Federal  Home Loan Bank of
Boston would be sufficient  to satisfy our liquidity  needs without any material
adverse effect on our liquidity.

We  are  not  aware  of  any  trends  and/or  demands,  commitments,  events  or
uncertainties  that could result in a material  increase in liquidity other than
the  capital  received in this  offering.  The capital  from the  offering  will
significantly  increase our  liquidity  and capital  resources.  Over time,  the
initial level of liquidity will be reduced as net proceeds from the offering are
used  for  general  corporate   purposes,   including  the  funding  of  lending
activities.  Our financial  condition and results of operations will be enhanced
by  the  capital  from  the   reorganization,   resulting   in   increased   net
interest-earning  assets and net income.  However,  the large increase in equity
resulting  from the capital  raised in the  offering  will,  initially,  have an
adverse impact on our return on equity.

Our primary  investing  activities are the origination of loans and the purchase
of  securities.  For the six months  ended  June 30,  2004 we  originated  $33.9
million  of loans and  purchased  $11.2  million of  securities.  During the six
months  ended June 30,  2004,  these  activities  were funded  primarily  by the
proceeds from maturities of  available-for-sale

                                       12

<PAGE> 14


securities  of $13.5  million,  an increase  of  deposits  of $15.5  million and
proceeds from the sale of loans of $1.9 million.

Historically,  our investment portfolio has been funded by excess liquidity when
deposit inflows exceed loan demand.  When we have not had such excess liquidity,
we have not borrowed from the Federal Home Loan Bank of Boston to supplement our
investment portfolio.

Financing  activities  consist  primarily of activity in deposit accounts and in
Federal Home Loan Bank advances. We experienced a net increase in total deposits
of $15.5  million  for the six months  ended June 30,  2004.  Deposit  flows are
affected by the overall level of interest rates, the interest rates and products
offered by us and our local  competitors and other factors.  We generally manage
the pricing of our  deposits to be  competitive  and to  increase  core  deposit
relationships.  Occasionally,  we offer  promotional  rates on  certain  deposit
products in order to attract deposits. We experienced a decrease in Federal Home
Loan Bank  advances of $6.4 million for the six months ended June 30, 2004.  The
increases  in deposit  accounts  and Federal  Home Loan Bank  advances,  if any,
primarily fund our investing and lending activities.

At June 30, 2004, we were subject to the regulatory capital  requirements of the
Federal Deposit Insurance  Corporation,  including a risk-based capital measure.
The  risk-based  capital  guidelines  include both a definition of capital and a
framework for calculating risk-weighted assets by assigning balance sheet assets
and  off-balance  sheet items to broad risk  categories.  At June 30,  2004,  we
exceeded all of our regulatory  capital  requirements.  We are considered  "well
capitalized" under regulatory guidelines.  After the reorganization,  we will be
subject  to  the  regulatory  capital  requirements  of  the  Office  of  Thrift
Supervision.

OFF-BALANCE SHEET ARRANGEMENTS

In the normal course of  operations,  the Bank engages in a variety of financial
transactions that, in accordance with generally accepted accounting  principles,
are not recorded in our financial  statements.  These transactions  involve,  to
varying  degrees,  elements of credit,  interest rate, and liquidity  risk. Such
transactions  are used primarily to manage  customers'  requests for funding and
take the  form of loan  commitments,  unused  lines of  credit,  amounts  due on
construction  loans,  amounts due on  commercial  loans,  commercial  letters of
credit and commitments to sell loans.

For the six months ended June 30, 2004 and the year ended  December 31, 2003, we
did not engage in any off-balance-sheet transactions reasonably likely to have a
material effect on our financial condition, results of operations or cash flows.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

For a discussion of the Bank's asset and liability  management  policies as well
as the  potential  impact of interest  rate changes upon the market value of the
Bank's portfolio equity,  see "Management's  Discussion and Analysis and Results
of Operations - Market Risk Analysis" in the Company's Registration Statement on
Form S-1,  as  amended.  The main  components  of  market  risk for the Bank are
interest rate risk and liquidity  risk. The Bank manages  interest rate risk and
liquidity  risk through an  Asset/Liability  Committee  comprised of one outside
Director and senior  management.  The  committee  monitors  compliance  with the
Bank's  Asset/Liability  Policy which provides  guidelines to analyze and manage
gap,  which is the  difference  between  the amount of assets and the amounts of
liabilities  which  mature  or  reprice  during  specific  time  frames.   Model
simulation is used to measure earnings  volatility under both rising and falling
rate scenarios. The Bank's interest rate risk and liquidity position at June 30,
2004 has not significantly changed from year end 2003.

ITEM 4. CONTROLS AND PROCEDURES.

The Company's  management,  including the Company's  principal executive officer
and  principal  financial  officer,  have  evaluated  the  effectiveness  of the
Company's  "disclosure controls and procedures," as such term is defined in Rule
13a-15(e)  promulgated  under the  Securities  Exchange Act of 1934, as amended,
(the  "Exchange  Act").  Based upon their  evaluation,  the principal  executive
officer and principal  financial  officer  concluded  that, as of the end of the
period covered by this report, the Company's  disclosure controls and procedures
were effective for the purpose


                                       13

<PAGE> 15

of ensuring  that the  information  required to be disclosed in the reports that
the Company  files or submits  under the  Exchange Act with the  Securities  and
Exchange  Commission  (the "SEC") (1) is  recorded,  processed,  summarized  and
reported within the time periods specified in the SEC's rules and forms, and (2)
is  accumulated  and  communicated  to the Company's  management,  including its
principal executive and principal  financial  officers,  as appropriate to allow
timely decisions regarding required disclosure.

PART II - OTHER INFORMATION

ITEM 1. - LEGAL PROCEEDINGS.

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

ITEM 2. - UNREGISTERED SALES OF EQUITY IN SECURITIES AND USE OF PROCEEDS.
          Not applicable.

ITEM 3. - DEFAULTS UPON SENIOR SECURITIES. Not applicable

ITEM 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Not applicable

ITEM 5. - OTHER INFORMATION.  Not applicable

ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K

      A.  EXHIBITS -

            3.1  - Charter  of Naugatuck Valley Financial Corporation (1)

            3.2  - Bylaws of Naugatuck Valley Financial Corporation (1)

            4.0  - Form of Stock Certificate of Naugatuck Valley Financial
                   Corporation (1)

            31.1 - Rule 13a-14(a)/15d-14(a) Certification.

            31.2 - Rule 13a-14(a)/15d-14(a) Certification.

            32 -   Section 1350 Certifications.
--------------------
(1)  Incorporated   herein  by  reference  to  the  Exhibits  to  the  Company's
Registration  Statement  on Form S-1,  as amended,  initially  filed on June 18,
2004.


      B. REPORTS ON FORM 8-K - None.


                                       14


<PAGE> 16



                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

Naugatuck Valley Financial Corporation (in organization)


Date: September 27, 2004              by:  /s/ John C. Roman
      ------------------                   -------------------------------------
                                           John C. Roman
                                           President and Chief Executive Officer


Date: September 27, 2004              by:  /s/ Lee R. Schlesinger
      ------------------                   -------------------------------------
                                           Lee R. Schlesinger
                                           Vice President and Treasurer




                                       15