***FORM 10-Q***

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United States  Securities and Exchange Commission  Washington, DC 20549Quarterly  Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934  For the Quarterly Period Ended March 31, 2002  Commission File Number 001-13405 

**ALLIANCE BANCORP OF NEW ENGLAND, INC.**

Incorporated in  the State of DelawareIRS Employer  Identification Number 06-1495617  Address and Telephone:           348  Hartford Turnpike, Vernon, Connecticut 06066, (860) 875-2500 

Securities registered pursuant to Section 12(b) of the Act: Common Stock -- $.01 par value, which is registered on the American Stock Exchange. 

Alliance Bancorp of New England (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 and (2) has beensubject to such filing requirements for the past 90 days. 

As of May 9, 2002,  Alliance Bancorp of New England had 2,349,447 shares of common stock outstanding.  

| **TABLE      OF CONTENTS** | **Page**                                                             |   |
|----------------------------|----------------------------------------------------------------------|--------|
| **Table**                  | **Consolidated      Selected Financial Data**                        | 2      |  |
| **Part      I**            | **Financial      Information**                                       |        |  |
| **Item      1**            | **Financial      Statements**                                        |        |  |
|                            | Consolidated      Balance Sheets                                     | 3      |  |
|                            | Consolidated      Income Statements                                  | 4      |  |
|                            | Consolidated      Statements of Changes in Shareholders’ Equity | 5      |  |
|                            | Consolidated      Statements of Cash Flows                           | 6      |  |
|                            | Notes      to Consolidated Financial Statements                      | 7      |  |
| **Item      2**            | **Management’s      Discussion and Analysis**                   |        |  |
|                            | **of      Financial Condition and Results of Operations**            | 10     |  |
|                            | Special      Note Regarding Forward-Looking Statements               | 10     |  |
| **Item      3**            | **Quantitative      and Qualitative Disclosures About Market Risk**  | 13     |  |
| **Part      II**           | **Other      Information**                                           | 13     |  |
| **Table**                  | **Average      Balance Sheet and Interest Rates**                    | 14     |  |
| **Signatures**             |                                                                      | 15     |  |

1

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     **Alliance  Bancorp of New England, Inc.  Consolidated Selected Financial Data (Unaudited)**

|                                      | ******As      of and for the three months ended March 31,****** |
|-------------------------------------------|-----------------------------------------------------------------|
|                                      | ****                                                            | **2002** |   | **** | **2001** |   |
| **For the      Quarter (in thousands)**   |                                                            |   |   |   |   |   |
| Net interest      income                  | $                                                               | 3,194 |   | $ | 3,091 |   |
| Provision      for loan losses            |                                                            | 172 |   |   | 72 |   |
| Service charges      and other income     |                                                            | 493 |   |   | 312 |   |
| Net gain on      securities               |                                                            | 172 |   |   | 36 |   |
| Non-interest      expense                 |                                                            | 2,467 |   |   | 2,201 |   |
| Net income                                | $                                                               | 850 |   | $ | 827 |   |
|                                           |
| **Per Share**                             |                                                            |   |   |   |   |   |
| Earnings -      basic                     | $                                                               | 0.36 |   | $ | 0.35 |   |
| Earnings -      diluted                   |                                                            | 0.35 |   |   | 0.35 |   |
| Dividends      declared                   |                                                            | 0.07 | 5 |   | 0.07 | 5 |
| Book value                                |                                                            | 9.45 |   |   | 8.37 |   |
| Common stock      price:                  |                                                            |   |   |   |   |   |
| High                                      |                                                            | 14.51 |   |   | 9.38 |   |
| Low                                       |                                                            | 11.75 |   |   | 8.37 |   |
| Close                                     |                                                            | 14.25 |   |   | 9.25 |   |
|                                           |
| **At Quarter      End (in millions)**     |                                                            |   |   |   |   |   |
| Total assets                              | $                                                               | 396.9 |   | $ | 350.5 |   |
| Total loans                               |                                                            | 261.3 |   |   | 240.9 |   |
| Other earning      assets                 |                                                            | 105.7 |   |   | 89.2 |   |
| Deposits                                  |                                                            | 324.2 |   |   | 283.4 |   |
| Borrowings                                |                                                            | 48.5 |   |   | 45.5 |   |
| Shareholders’      equity (a)        |                                                            | 22.1 |   |   | 19.5 |   |
|                                           |
| **Operating      Ratios (in percent)**    |                                                            |   |   |   |   |   |
| Return on      average equity, annualized |                                                            | 15.30 | % |   | 18.36 | % |
| Return on      average assets, annualized |                                                            | 0.90 |   |   | 0.97 |   |
| Net interest      margin, annualized (b)  |                                                            | 3.67 |   |   | 3.95 |   |
| Non performing      assets/assets         |                                                            | 0.45 |   |   | 0.44 |   |
| Equity % total      assets (period end)   |                                                            | 5.57 |   |   | 5.57 |   |
| Dividend payout      ratio                |                                                            | 20.63 |   |   | 21.15 |   |
|                                           |
| **Growth (in      percent)**              |                                                            |   |   |   |   |   |
| Net income      (c)                       |                                                            | 2.8 | % |   | 7.3 | % |
| Regular loans      (d)                    |                                                            | 8.1 |   |   | 18.3 |   |
| Deposits (d)                              |                                                            | 27.5 |   |   | 4.2 |   |
|                                           |

  

| (a)                   |   | Shareholders’      equity includes net accumulated other comprehensive loss, which consists      of unrealized losses on certain investment securities, net of taxes. |
|-----------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b)         |   | Ratio      expressed as fully taxable equivalent.                                                                                                                          |
| (c)         |   | Compared      to same period in the preceding year.                                                                                                                        |
| (d)         |   | Compared      to the prior year-end, annualized.                                                                                                                           |

2

  

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**Alliance  Bancorp of New England, Inc.  Consolidated Balance Sheets (Unaudited)**

| ***(in      thousands, except share data)***                                                            | ******March        31, 2002** |         | **December        31, 2001** |   |
|---------------------------------------------------------------------------------------------------------|-------------------------------|---------|------------------------------|--------|
|                                                                                                         |
| **Assets**                                                                                              |                          |    |                         |   |   |   |
|     Cash      and due from banks                                                    | $                             | 16,848  |                         | $      | 12,723 |   |
|     Short-term      investments                                                     |                          | 18,633  |                         |   | 2,591 |   |
|                                                                                                         |
|        Total      cash and cash equivalents                          |                          | 35,481  |                         |   | 15,314 |   |
|                                                                                                    |                          |    |                         |   |   |   |
|     Securities      available for sale (at fair value)                              |                          | 77,779  |                         |   | 85,973 |   |
|                                                                                                    |                          |    |                         |   |   |   |
|     Securities      held to maturity                                                |                          |    |                         |   |   |   |
|         (fair      value of $9,266 in 2002 and $11,987 in 2001) |                          | 9,287   |                         |   | 12,397 |   |
|                                                                                                    |                          |    |                         |   |   |   |
|     Residential      mortgage loans                                                 |                          | 62,391  |                         |   | 63,037 |   |
|     Commercial      mortgage loans                                                  |                          | 88,179  |                         |   | 87,485 |   |
|     Other      commercial loans                                                     |                          | 41,688  |                         |   | 37,658 |   |
|     Consumer      loans                                                             |                          | 40,409  |                         |   | 39,849 |   |
|     Government      guaranteed loans                                                |                          | 28,624  |                         |   | 29,595 |   |
|                                                                                                         |
|         Total      loans                                        |                          | 261,291 |                         |   | 257,624 |   |
|     Less:      Allowance for loan losses                                            |                          | (3,850  | )                            |   | (3,700 | ) |
|                                                                                                         |
|       Net      loans                                                      |                          | 257,441 |                         |   | 253,924 |   |
|                                                                                                    |                          |    |                         |   |   |   |
|     Premises      and equipment, net                                                |                          | 5,367   |                         |   | 5,458 |   |
|     Accrued      interest income receivable                                         |                          | 2,612   |                         |   | 2,812 |   |
|     Cash      surrender value of life insurance                                     |                          | 4,449   |                         |   | 4,391 |   |
|     Other      assets                                                               |                          | 4,500   |                         |   | 4,296 |   |
|                                                                                                         |
|       Total      assets                                                   | $                             | 396,916 |                         | $      | 384,565 |   |
|                                                                                                         |
|                                                                                                    |                          |    |                         |   |   |   |
| **Liabilities      and Shareholders’ Equity**                                                      |                          |    |                         |   |   |   |
|     Demand      deposits                                                            | $                             | 35,679  |                         | $      | 33,647 |   |
|     NOW      deposits                                                               |                          | 39,678  |                         |   | 36,400 |   |
|     Money      market deposits                                                      |                          | 41,265  |                         |   | 41,223 |   |
|     Savings      deposits                                                           |                          | 72,411  |                         |   | 60,182 |   |
|    Time      deposits                                                                    |                          | 135,178 |                         |   | 131,906 |   |
|                                                                                                         |
|       Total      deposits                                                 |                          | 324,211 |                         |   | 303,358 |   |
|                                                                                                    |                          |    |                         |   |   |   |
|    Borrowings                                                                            |                          | 48,500  |                         |   | 57,069 |   |
|    Other      liabilities                                                                |                          | 2,090   |                         |   | 2,049 |   |
|                                                                                                         |
|       Total      liabilities                                              |                          | 374,801 |                         |   | 362,476 |   |
|                                                                                                    |                          |    |                         |   |   |   |
| Preferred      stock, ($0.01      par value; 100,000 shares                                             |                          |    |                         |   |   |   |
|     authorized,      none issued)                                                   |                          | –  |                         |   | – |   |
| Common stock,      ($0.01      par value; authorized 4,000,000                                          |                          |    |                         |   |   |   |
|     shares;      issued 2,540,846 in 2002 and 2,539,896 in 2001;                    |                          |    |                         |   |   |   |
|     outstanding      2,340,247 in 2002 and 2,339,297 in 2001)                       |                          | 25      |                         |   | 25 |   |
| Additional      paid-in capital                                                                         |                          | 11,586  |                         |   | 11,577 |   |
| Retained earnings                                                                                       |                          | 17,148  |                         |   | 16,473 |   |
| Accumulated      other comprehensive loss, net                                                          |                          | (3,535  | )                            |   | (2,877 | ) |
| Treasury stock      (200,599 shares)                                                                    |                          | (3,109  | )                            |   | (3,109 | ) |
|                                                                                                         |
|     Total      shareholders’ equity                                            |                          | 22,115  |                         |   | 22,089 |   |
|                                                                                                         |
|     Total      liabilities and shareholders’ equity                            | $                             | 396,916 |                         | $      | 384,565 |   |
|                                                                                                         |

*See accompanying notes to consolidated financial statements*

3

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      **Alliance  Bancorp of New England, Inc.  Consolidated Income Statements (Unaudited)**

|                                                                                          | **Three      Months Ended      March 31,****** |
|-----------------------------------------------------------------------------------------------|------------------------------------------------|
|    *(in      thousands, except share data)*                                    |                                           | 2002 |   | 2001 |
|                                                                                               |
|                                                                                          |                                           |   |   |   |
| **Interest      Income**                                                                      |                                           |   |   |   |
|       Loans                                                     | $                                              | 4,520 | $ | 4,835 |
|       Debt      securities                                      |                                           | 1,337 |   | 1,276 |
|       Dividends      on equity securities                       |                                           | 185 |   | 270 |
|       Short-term      investments                               |                                           | 25 |   | 99 |
|                                                                                               |
|          Total      interest and dividend income |                                           | 6,067 |   | 6,480 |
|                                                                                               |
|                                                                                          |                                           |   |   |   |
| **Interest      Expense**                                                                     |                                           |   |   |   |
|       Deposits                                                  |                                           | 2,110 |   | 2,694 |
|       Borrowings                                                |                                           | 763 |   | 695 |
|                                                                                               |
|          Total      interest expense             |                                           | 2,873 |   | 3,389 |
|                                                                                               |
|                                                                                          |                                           |   |   |   |
| **Net Interest      Income**                                                                  |                                           | 3,194 |   | 3,091 |
|                                                                                          |                                           |   |   |   |
| **Provision      For Loan Losses**                                                            |                                           | 172 |   | 72 |
|                                                                                               |
|       Net      interest income after provision for loan losses  |                                           | 3,022 |   | 3,019 |
|                                                                                          |                                           |   |   |   |
| **Non-Interest      Income**                                                                  |                                           |   |   |   |
|       Service      charges and other income                     |                                           | 493 |   | 312 |
|       Net      gain on securities                               |                                           | 172 |   | 36 |
|                                                                                               |
|          Total      non-interest income          |                                           | 665 |   | 348 |
|                                                                                          |                                           |   |   |   |
| **Non-Interest      Expense**                                                                 |                                           |   |   |   |
|       Compensation      and benefits                            |                                           | 1,310 |   | 1,159 |
|       Occupancy                                                 |                                           | 173 |   | 181 |
|       Data      processing services and equipment               |                                           | 308 |   | 276 |
|       Office      and insurance                                 |                                           | 163 |   | 136 |
|       Purchased      services                                   |                                           | 314 |   | 271 |
|       Other                                                     |                                           | 199 |   | 178 |
|                                                                                               |
|          Total      non-interest expense         |                                           | 2,467 |   | 2,201 |
|                                                                                               |
|       Income      before income taxes                           |                                           | 1,220 |   | 1,166 |
|       Income      tax expense                                   |                                           | 370 |   | 339 |
|                                                                                               |
|          **Net      Income**                     | $                                              | 850 | $ | 827 |
|                                                                                               |
|                                                                                          |                                           |   |   |   |
| **Per Share      Data**                                                                       |                                           |   |   |   |
|       Basic      earnings per share                             | $                                              | 0.36 | $ | 0.35 |
|                                                                                               |
|       Diluted      earnings per share                           | $                                              | 0.35 | $ | 0.35 |
|                                                                                               |
|                                                                                          |                                           |   |   |   |
|       Average      basic shares outstanding                     |                                           | 2,339,418 |   | 2,331,100 |
|       Average      additional dilutive shares                   |                                           | 100,031 |   | 45,263 |
|                                                                                               |
|       Average      diluted shares                               |                                           | 2,439,449 |   | 2,376,363 |
|                                                                                               |

*See accompanying notes to consolidated financial statements*

4

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**Alliance  Bancorp of New England, Inc.****Consolidated  Statements of Changes in Shareholders’ Equity (Unaudited)**

|                                                                                                                                                                       |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| *Three      Months ended March 31      (in thousands, except share data)*                                                                                             | **Common      stock** | **Additional      paid-In      capital** | **Retained      earnings** | **** | **** | **Accumulated      other      comprehensive      income (loss)** | **** | **Treasury      Stock** | **** | **Total** |   |
|                                                                                                                                                                       |
| **2001**                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,      December 31, 2000                                                                                                                                       | $ | 25 | $ | 11,516 | $ | 14,198 |   | $ | (4,515 | ) | $ | (3,109 | ) | $ | 18,115 |   |
| Comprehensive      income                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Net      income                                                                                                                         |   |   |   |   |   | 827 |   |   |   |   |   |   |   |   | 827 |   |
|      Unrealized      gains on securities,                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      net      of reclassification adjustment                                                                                                 |   |   |   |   |   |   |   |   | 744 |   |   |   |   |   | 744 |   |
|                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  |
| Comprehensive      income                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1,571 |   |
| Dividends      declared ($0.075 per share)                                                                                                                            |   |   |   |   |   | (175 | ) |   |   |   |   |   |   |   | (175 | ) |
|                                                                                                                                                                       |
| Balance,      March 31, 2001                                                                                                                                          | $ | 25 | $ | 11,516 | $ | 14,850 |   | $ | (3,771 | ) | $ | (3,109 | ) | $ | 19,511 |   |
|                                                                                                                                                                       |
|                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **2002**                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,      December 31, 2001                                                                                                                                       | $ | 25 | $ | 11,577 | $ | 16,473 |   | $ | (2,877 | ) | $ | (3,109 | ) | $ | 22,089 |   |
| Comprehensive      income                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Net      income                                                                                                                         |   |   |   |   |   | 850 |   |   |   |   |   |   |   |   | 850 |   |
|      Unrealized      losses on securities,                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      net      of reclassification adjustment                                                                                                 |   |   |   |   |   |   |   |   | (658 | ) |   |   |   |   | (658 | ) |
|                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  |
| Comprehensive      income                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 192 |   |
| Dividends      declared ($0.075 per share)                                                                                                                            |   |   |   |   |   | (175 | ) |   |   |   |   |   |   |   | (175 | ) |
| Shares      issued (exercise of options)                                                                                                                              |   |   |   | 9 |   |   |   |   |   |   |   |   |   |   | 9 |   |
|                                                                                                                                                                       |
| Balance,      March 31, 2002                                                                                                                                          | $ | 25 | $ | 11,586 | $ | 17,148 |   | $ | (3,535 | ) | $ | (3,109 | ) | $ | 22,115 |   |
|                                                                                                                                                                       |
| Disclosure      of reclassification amount                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| *Three      months ended March 31 (in thousands)*                                                                                                                     |   |   |   |   |   |   | 2002 |   |   |   |   |   | 2001 |   |
|                                                                                                                                                                       |
| Unrealized      holding (losses) gains arising during  the      period, net of income tax (benefit) expense of      $(281) and $410,      respectively |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                  |   |   |   | $ | (545 | ) |   |   |   | $ | 761 |   |
| Less      reclassification adjustment for                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      gains      included in net income, net of income           tax expense of $59      and $9, respectively        |   |   |   |   |   |   | (113 | ) |   |   |   |   | (17 | ) |
|                                                                                                                                                                       |
| Net      unrealized (losses) gains on securities                                                                                                                      |   |   |   |   |   | $ | (658 | ) |   |   |   | $ | 744 |   |
|                                                                                                                                                                       |

*See accompanying notes to consolidated financial statements*

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      **Alliance  Bancorp of New England, Inc.  Consolidated Statements of Cash Flows (Unaudited)**

|                                                                                         | **Three      months ended March 31,** |
|----------------------------------------------------------------------------------------------|---------------------------------------|
| *(in thousands)*                                                                             |                                  | 2002 |   |   | 2001 |   |
|                                                                                              |
| **Operating      Activities:**                                                               |                                  |   |   |   |   |   |
|    Net      income                                                            | $                                     | 850 |   | $ | 827 |   |
|    Adjustments      to reconcile net income to                                |                                  |   |   |   |   |   |
|    net      cash provided by operating activities:                            |                                  |   |   |   |   |   |
|       Provision      for loan losses                           |                                  | 172 |   |   | 72 |   |
|       Depreciation      and amortization                       |                                  | 123 |   |   | 132 |   |
|       Net      gain on securities and other assets             |                                  | (172 | ) |   | (26 | ) |
|       Loans      originated for sale                           |                                  | (6,660 | ) |   | (5,668 | ) |
|       Proceeds      from loans sold                            |                                  | 8,125 |   |   | 6,285 |   |
|       Increase      (decrease) in other liabilities            |                                  | 41 |   |   | (810 | ) |
|       Decrease      in accrued interest income receivable      |                                  | 199 |   |   | 230 |   |
|       Decrease      in other assets                            |                                  | 89 |   |   | 1,398 |   |
|                                                                                              |
|       Net      cash provided by operating activities           |                                  | 2,767 |   |   | 2,440 |   |
|                                                                                         |                                  |   |   |   |   |   |
| **Investing      Activities:**                                                               |                                  |   |   |   |   |   |
|    Securities      available for sale:                                        |                                  |   |   |   |   |   |
|       Proceeds      from repayments and maturities             |                                  | 1,570 |   |   | 33 |   |
|       Proceeds      from sales                                 |                                  | 8,778 |   |   | 2,497 |   |
|       Proceeds      from calls                                 |                                  | 1,000 |   |   | – |   |
|       Purchases      of securities                             |                                  | (3,042 | ) |   | (7,423 | ) |
|    Securities      held to maturity:                                          |                                  |   |   |   |   |   |
|       Proceeds      from amortization and maturities           |                                  | 1,153 |   |   | 695 |   |
|       Proceeds      from calls                                 |                                  | 1,000 |   |   | 1,000 |   |
|    Net      increase in loans (other than held for sale)                      |                                  | (5,154 | ) |   | (13,205 | ) |
|    Purchases      of premises and equipment                                   |                                  | (24 | ) |   | (116 | ) |
|                                                                                              |
|       Net      cash provided by (used in) investing activities |                                  | 5,281 |   |   | (16,519 | ) |
|                                                                                         |                                  |   |   |   |   |   |
| **Financing      Activities:**                                                               |                                  |   |   |   |   |   |
|    Net      increase in interest-bearing deposits                             |                                  | 18,822 |   |   | 3,886 |   |
|    Net      increase (decrease) in demand deposits                            |                                  | 2,032 |   |   | (961 | ) |
|    Principal      repayments of FHLBB advances                                |                                  | (6,469 | ) |   | – |   |
|    Net      decrease in other borrowings                                      |                                  | (2,100 | ) |   | (1,200 | ) |
|    Stock      options exercised                                               |                                  | 9 |   |   | – |   |
|    Cash      dividends paid                                                   |                                  | (175 | ) |   | (175 | ) |
|                                                                                              |
|       Net      cash provided by financing activities           |                                  | 12,119 |   |   | 1,550 |   |
|                                                                                              |
| **Net Change      in Cash and Cash Equivalents**                                             |                                  | 20,167 |   |   | (12,529 | ) |
| Cash and cash      equivalents at beginning of the period                                    |                                  | 15,314 |   |   | 30,187 |   |
|                                                                                              |
| Cash and cash      equivalents at end of the period                                          | $                                     | 35,481 |   | $ | 17,658 |   |
|                                                                                              |
|                                                                                         |                                  |   |   |   |   |   |
| **Supplemental      Information on Cash Payments**                                           |                                  |   |   |   |   |   |
|    Interest                                                                   | $                                     | 2,889 |   | $ | 3,248 |   |
|    Income      taxes                                                          |                                  | 300 |   |   | 500 |   |
|                                                                                         |                                  |   |   |   |   |   |
| **Supplemental      Information on Non-cash Transactions**                                   |                                  |   |   |   |   |   |
|    Securities      transferred to held to maturity                            |                                  | – |   |   | 7,045 |   |
|    Securities      transferred to available for sale                          |                                  | 1,057 |   |   | 11,883 |   |
|                                                                                              |

*See accompanying notes to consolidated financial statements*

6

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**Notes  to Consolidated Financial Statements (unaudited)**

**Note 1. Basis of Presentation and Principles of Business and Consolidation**

***Principles of Business and Consolidation.*** Alliance Bancorp of New England, Inc. (“Alliance”or the “Company”) is a one bank holding company, chartered in Delaware. Alliance owns 100% of the stock of Tolland Bank (the “Bank”), a Connecticut chartered savings bank. Alliance also wholly owns Alliance Capital Trust I (TrustI) and Alliance Capital Trust II (Trust II). These Trusts have issued trust preferred securities which are included in borrowings in the consolidated balance sheets. 

Tolland Bank provides  consumer and commercial banking services from its nine offices located in and  around Tolland County, Connecticut. Retail activities include branch deposit  services, and home mortgage and consumer lending. Commercial activities include  merchant deposit services, business cash management, construction mortgages,  permanent mortgages, and working capital and equipment loans. Through third  party relationships, the Bank also provides investment products, insurance products,  and electronic payment services to retail and commercial customers. The Bank’s  deposits are insured up to applicable limits by the Federal Deposit Insurance  Corporation (“FDIC”). In 2001, the Bank established a new, wholly  owned passive investment company, Tolland Investment Corporation (“TIC”),  chartered in Connecticut to own and service real estate secured loans. Also  as part of this reorganization, the pre-existing passive investment company  was merged into the Bank in 2001. The Bank also wholly owns a Connecticut chartered  corporation named Asset Recovery Systems, Inc. (“ARS”) which is a  foreclosed asset liquidation subsidiary.

The consolidated financial statements include Alliance, the Bank, Trust I, Trust II, TIC, and ARS. All significant intercompany accounts and transactions have been eliminated inconsolidation. The Company and its subsidiaries have no significant transactions with entities in which they hold an investment interest, except for Bankers Bank Northeast (a mutually owned correspondent bank) and the Federal Home Loan Bank ofBoston. 

***Basis of Preparation and Presentation.***The consolidated financial statements have been prepared andpresented in conformity with accounting principles generally accepted in the United States of America. Unless otherwise noted, all dollar amounts presented in the financial statements and note tables are rounded to the nearest thousand dollars,except share data. Certain prior period amounts have been reclassified to conform with current financial statement presentation. The Company uses the accrual method of accounting for all material items of income and expense.

The quarterly financial statements are unaudited. However, in the opinion of Management, all material adjustments, consisting primarily of normal recurring accruals, necessary for a fairpresentation of the financial statements have been included. Operating results for any interim period are not necessarily indicative of results for any other interim period or for the entire year. 

Management’s Discussion and Analysis of Financial Condition and Results of Operations accompany these financial statements. These consolidated interim financial statements and notesshould be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2001. 

***Significant Estimates.***The Company is required to make certain estimates and assumptions in preparingits consolidated financial statements. The most significant estimates are those necessary in determining impaired loans and the allowance for loan losses; other-than-temporary declines in the fair value of securities; fair values in evaluatingimpairment of loans and debt securities and in determining accumulated other comprehensive income (loss); and the deferred tax asset valuation allowance. Factors affecting these estimates include national and local economic conditions, the level andtrend of interest rates, real estate trends and values, securities market trends and values, and financial ratings methodologies. 

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**Note 2. Securities**

|                                                              | **Amortized** | ****     | **Unrealized** | ****   | **Unrealized** | ****   | **Fair** |
|-------------------------------------------------------------------|---------------|----------|----------------|--------|----------------|--------|----------|
| *March      31, 2002 (in thousands)*                              | **Cost**      | ****     | **Gains**      | ****   | **Losses**     | ****   | ****     | **Value** |
|                                                                   |
| **Securities      available for sale**                            |          |     |           |   |           |   |     |   |   |   |   |
| U.S. Government      and agency debt                              | $             | 10,124   |           | $      | 34             |   | $        | (151 | ) | $ | 10,007 |
| U.S. Agency      mortgage-backed debt                             |          | 16,281   |           |   | 43             |   |     | (127 | ) |   | 16,197 |
| Trust preferred                                                   |          | 19,933   |           |   | 297            |   |     | (2,599 | ) |   | 17,631 |
| Other corporate      debt                                         |          | 20,155   |           |   | 104            |   |     | (1,381 | ) |   | 18,878 |
| Marketable      equity                                            |          | 13,361   |           |   | 180            |   |     | (1,055 | ) |   | 12,486 |
| Non-marketable      equity                                        |          | 2,580    |           |   | –         |   |     | – |   |   | 2,580 |
|                                                                   |
|       Total      available for sale | $             | 82,434   |           | $      | 658            |   | $        | (5,313 | ) | $ | 77,779 |
|                                                                   |          |
| **Securities      held to maturity**                              |          |     |           |   |           |   |     |   |   |   |   |
| U.S. Government      and agency debt                              | $             | 1,061    |           | $      | 7              |   | $        | – |   | $ | 1,068 |
| U.S. Agency      mortgage-backed debt                             |          | 1,969    |           |   | 43             |   |     | (10 | ) |   | 2,002 |
| Other mortgage-backed      debt                                   |          | 1,133    |           |   | 13             |   |     | (2 | ) |   | 1,144 |
| Other corporate      debt                                         |          | 5,124    |           |   | 156            |   |     | (228 | ) |   | 5,052 |
|                                                                   |
|       Total      held to maturity   | $             | 9,287    |           | $      | 219            |   | $        | (240 | ) | $ | 9,266 |
|                                                                   |
|                                                              | **Amortized** | ****     | **Unrealized** | ****   | **Unrealized** | ****   | ****     | **Fair** |
| *December      31, 2001 (in thousands)*                           | ****          | **Cost** | ****           | ****   | **Gains**      | ****   | ****     | **Losses** | **** | **** | **Value** |
|                                                                   |
| **Securities      available for sale**                            |          |     |           |   |           |   |     |   |   |   |   |
| U.S. Government      and agency debt                              | $             | 10,149   |           | $      | 55             |   | $        | (99 | ) | $ | 10,105 |
| U.S. Agency      mortgage-backed debt                             |          | 17,876   |           |   | 78             |   |     | (120 | ) |   | 17,834 |
| Trust preferred                                                   |          | 24,526   |           |   | 390            |   |     | (2,464 | ) |   | 22,452 |
| Other corporate      debt                                         |          | 22,047   |           |   | 212            |   |     | (851 | ) |   | 21,408 |
| Marketable      equity                                            |          | 12,387   |           |   | 160            |   |     | (953 | ) |   | 11,594 |
| Non-marketable      equity                                        |          | 2,580    |           |   | –         |   |     | – |   |   | 2,580 |
|                                                                   |
|    Total      available for sale                   | $             | 89,565   |           | $      | 895            |   | $        | (4,487 | ) | $ | 85,973 |
|                                                                   |
| **Securities      held to maturity**                              |          |     |           |   |           |   |     |   |   |   |   |
| U.S. Government      and agency debt                              | $             | 2,063    |           | $      | 46             |   | $        | (2 | ) | $ | 2,107 |
| U.S. Agency      mortgage-backed debt                             |          | 2,747    |           |   | 53             |   |     | – |   |   | 2,800 |
| Other mortgage-backed      debt                                   |          | 1,518    |           |   | 32             |   |     | – |   |   | 1,550 |
| Other corporate      debt                                         |          | 6,069    |           |   | 56             |   |     | (595 | ) |   | 5,530 |
|                                                                   |
|    Total      held to maturity                     | $             | 12,397   |           | $      | 187            |   | $        | (597 | ) | $ | 11,987 |
|                                                                   |

During the most recent quarter, one corporate debt security with an amortized cost of $1.1 million was transferred to available for sale from held to maturity due to evidence of significantdeterioration in the issuer’s credit worthiness. The transfer resulted in an additional unrealized loss of $206 thousand (net of income taxes of $143 thousand) which was recorded as an increase in the accumulated other comprehensive loss.

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**Note 3. Nonperforming Loans**

|                                                                      | ******March      31,      2002** |   | ******December      31,      2001** |
|---------------------------------------------------------------------------|----------------------------------|--------|-------------------------------------|
| *(in      thousands)*                                                     |
|                                                                      |                             |   |                                |   |   |
| Total nonaccruing      loans                                              | $                                | 1,797  |                                | $ | 2,149 |
| Accruing loans      past due 90 days or more                              |                             | – |                                |   | – |
| Impaired loans:                                                           |                             |   |                                |   |   |
|    Valuation      allowance required                       | $                                | 1,346  |                                | $ | 969 |
|    No      valuation allowance required                    |                             | 2,826  |                                |   | 3,238 |
|                                                                           |
|       Total      impaired loans             | $                                | 4,172  |                                | $ | 4,207 |
|    Total      valuation allowance on impaired loans        | $                                | 160    |                                | $ | 129 |
|    Commitments      to lend additional funds               |                             |   |                                |   |   |
|       to      borrowers with impaired loans |                             | – |                                |   | – |

**Note 4. Allowance for Loan Losses**

|                                            | **Three      Months Ended      March 31, 2002** |   | **Three      Months Ended      March 31, 2001** |
|-------------------------------------------------|-------------------------------------------------|--------|-------------------------------------------------|
| *(in      thousands)*                           |                                            |   |                                            |   |   |
|                                                 |
| Balance      at beginning of period             | $                                               | 3,700  |                                            |   | $ | 3,200 |   |
| Charge-offs                                     |                                            | (37    | )                                               |   |   | (214 | ) |
| Recoveries                                      |                                            | 15     |                                            |   |   | 79 |   |
| Provision      for loan losses                  |                                            | 172    |                                            |   |   | 335 |   |
|                                                 |
|    Balance      at end of period | $                                               | 3,850  |                                            |   | $ | 3,400 |   |
|                                                 |

**Note 5. Recent Statements of Accounting Standards**

In July 2001, the Financial Accounting Standards (“SFAS”) No. 142, *Goodwill and Other Intangible Assets,*addresses financial accounting and reporting for acquired goodwill and other intangible assets and supersedes APB Opinion No. 17, *Intangible Assets.* SFAS No. 142 requires that goodwill no longer be amortized to earnings, but instead be reviewed at least annually for impairment.Impairment losses would be charged to earnings when they occur. SFAS No. 142 requires that intangible assets other than goodwill (such as core deposit intangibles) continue to be amortized to expense over their estimated useful lives. Allianceadopted SFAS No. 142 on January 1, 2002. Alliance had intangible assets of $57,000 at December 31, 2001 which it will continue to amortize and, accordingly, its adoption of SFAS No. 142 did not affect the consolidated financial statements. 

SFAS No. 143, *Accounting for Asset Retirement Obligations,*addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. This statement requires that the fair value of a liability for anasset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. SFASNo. 143 is effective for financial statements issued for fiscal years beginning after June 15, 2002. Earlier adoption is permitted. The Company does not expect that the adoption of this statement will have a material impact on its consolidatedfinancial statements. 

SFAS No. 144, *Accounting for the Impairment and Disposal of Long-Lived Assets,*is effective for financial statements issued for fiscal years beginning after December 15, 2001 and interim periods within those fiscal years. The provisions of this statement are to be appliedprospectively. The adoption of this statement did not affect the Company’s consolidated financial statements. 

SFAS No. 145, *Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and TechnicalCorrections* updates, clarifies and simplifies several existing accounting pronouncements. SFAS No. 4 required all gains and losses from extinguishments of debt to be aggregatedand, if material, classified as an extraordinary item, net of related income tax effect. Other provisions of SFAS No. 145 are not pertinent to the Company’s operations. 

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

**Special Note Regarding Forward-Looking Statements**

This report contains certain “forward-looking statements”. These forward-looking statements, which are included in Management’s Discussion and Analysis, describe future plansor strategies and include the Company’s expectations of future financial results. The words “believe,” “expect,” “anticipate,” “estimate,” “project” and similar expressions identifyforward-looking statements. The Company’s ability to predict results or the effect of future plans or strategies or qualitative or quantitative changes based on market risk exposure is inherently uncertain. Factors which could affect actualresults include but are not limited to change in general market interest rates, general economic conditions, legislative/regulatory changes, fluctuations of interest rates, changes in the quality or composition of the Company’s loan andinvestment portfolios, deposit flows, competition, demand for financial services in the Company’s markets, and changes in accounting principles. These factors should be considered in evaluating the forward-looking statements, and undue relianceshould not be placed on such statements. 

**SUMMARY**

Alliance reported 3% earnings growth for the first quarter of 2002. Net income totaled $850 thousand, compared to $827 thousand a year earlier. Quarterly earnings per share were unchangedat $.35 in both periods due to the increase in dilutive shares, reflecting the impact on outstanding options of the 43% increase in the average price of Alliance’s stock.

Alliance announced an eleven-for-ten split of the common stock, to be effected as a 10% stock dividend payable on May 21, 2002 to shareholders of record as of May 7, 2002. Alliance alsoretained the quarterly dividend at 7.5 cents per share also payable on May 21, 2002 to shareholders of record as of May 7, 2002. All share and per share data in this report are based on shares prior to the 10% stock dividend. 

Total assets increased at a 13% annualized rate in the first quarter, reflecting strong deposit and loan growth. The local economy remained healthy and the Company is implementing severalsales and marketing initiatives to take advantage of bank consolidations in its markets. 

First quarter net interest income increased by 3% from the same quarter of last year. The first quarter net interest margin measured 3.67%, compared to 3.95% in the first quarter of lastyear. The margin rebounded from a low of 3.56% in the third quarter of 2001, after declining for the first three quarters of last year as a result of falling interest rates. First quarter service charges and other income grew by 58% from the firstquarter of last year, with increases in all major categories. Gains on the sale of securities increased by $136 thousand. Non-interest expenses grew by 12% over the same period, with increases in most categories generally reflecting the Bank’sgrowth. The loan loss provision increased by $100 thousand. 

Total assets were $397 million at March 31, 2002. Total regular loans increased at an 8% annualized rate and total deposits jumped at a 27% annualized rate during the quarter. Depositgrowth included commercial and municipal deposits, some of which were anticipated to be short term in nature. Nonperforming assets totaled $1.8 million at March 31, 2002, measuring 0.45% of total assets. Net loan chargeoffs measured a negligible..03% of average loans during the quarter. The loan loss allowance measured 214% of nonperforming loans at the end of the quarter. 

Shareholders’ equity totaling $22.1 million at quarter-end measured 5.6% of total assets, which was unchanged from the same time last year. Book value per share was $9.45 atquarter-end. Return on shareholders’ equity measured 15.3% during the first quarter. The Company’s capital remained in excess of all regulatory requirements. 

This discussion and analysis updates, and should be read in conjunction with, Management’s Discussion and Analysis included in the 2001 Annual Report on Form 10-K filed by Alliance onMarch 6, 2002. In the following 

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discussion, income statement comparisons are against the same period of the previous year and balance sheet comparisons are against the previous fiscal year-end, unless otherwisenoted.

**Net Interest Income:** The $103 thousand (3%) growth in net interest income was due to 10% growth in average earningassets, which offset the lower net interest margin. Earning asset growth was recorded in all major categories except for short term investments, which were used to fund other assets.

Net interest income increased at a 7% annualized rate from the fourth quarter of 2001 to the first quarter of 2002. Average earning assets were flat, while the net interest spread increasedby .13% during this interval. The cost of liabilities decreased by .29% due to the time deposit repricings, while the yield on assets decreased by .17% due primarily to prime rate decreases in the fourth quarter of 2001 and sales of investmentsecurities in the most recent quarter.

The net interest margin improved by .04% during the above interval. At the end of 2001, the Company entered into contracts for the purchase of an additional $3 million of bank owned lifeinsurance. This shifted income from net interest income to other non-interest income, reducing the net interest margin by about .05%. Also, the Bank had an additional $2 million in average due from banks and $2 million less in average demand depositbalances in the most recent quarter, which together reduced the margin by about .04%. 

**Provision for Loan Losses:** The provision is made to maintain the allowance for loan losses at a level deemedadequate by management. The provision was $172 thousand, compared to $72 thousand in the same quarter of 2001. During the most recent quarter, the allowance was increased from $3.70 million to $3.85 million due mostly to growth in commercial loansand to an increase in the impairment reserve on one loan.

**Non-Interest Income:** First quarter service charges and other income grew by $181 thousand (58%) from the firstquarter of last year, with increases in all major categories. These increases primarily resulted from higher volume across a range of loan and deposit services, and included $40 thousand of additional income from the above-mentioned life insurancecontracts. Net gains on the sale of securities increased by $136 thousand, primarily due to the sale of two utility common equity securities due to favorable market conditions for these securities.

**Non-Interest Expense and Tax Expense:** Non-interest expense increased by $266 thousand (12%). Expenses increased inmost categories due to the growth of the Bank. The effective tax rate increased to 30% from 29% due to the lower proportionate contribution of tax advantaged investment security income as a result of sales and calls of equity securities.

**Comprehensive Income:** Comprehensive income includes changes (after tax) in the market valuation of investmentsecurities available for sale. Comprehensive income was $192 thousand in the most recent quarter, compared to $1.57 million in the same quarter of last year. The net unrealized loss on securities improved last year due to lower interest rates, whilethe loss increased this year due to higher interest rates and wider market spreads. Please see the following discussion on investment securities.

**FINANCIAL CONDITION**

**Cash and Cash Equivalents:**Total cash and equivalents increased by $20 million during the quarter due to unusuallyhigh commercial and municipal short term deposit activity. Securities sales also contributed to this increase, with proceeds being held in anticipation of higher interest rates for reinvestments later in the year. 

**Investment Securities:**  Total investment securities decreased by $11 million during the quarter primarily  due to sales of $9 million in securities, comprised primarily of longer maturity  debt securities sold in order to reduce the average life of the portfolio. Alliance  purchased $3 million of utility common stocks during the quarter. At March 31,  2002, the total net unrealized loss on available for sale securities (before  tax) measured 6% of amortized cost, compared to 4% at year-end 2001, due primarily  to higher long term rates and to wider market spreads. During the first quarter,  one security with an amortized cost of $1.1 million and an unrealized loss of  $351 thousand, as of March 31, 2002, was transferred from held to maturity to  available for sale due to a decline in the issuer’s credit rating. This  security

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was issued by an insurance company, which reported operating losses, exacerbated by claims related to World Trade Center attacks. At quarter-end, the Company owned seven securities withratings/rankings below investment grade. The total net amortized cost of these securities was $5.6 million, with a net unrealized loss of $2.0 million, unchanged from year-end 2001. The individual unrealized losses ranged from 21 - 53% of amortizedcost, which were judged to be temporary declines in value of debt securities which are expected to continue to perform in accordance with their terms. The fully taxable equivalent yield on investment securities was 6.90% in the first quarter, downfrom 7.29% in the fourth quarter of 2001 due to the sale of higher rate, longer term securities.

**Total Loans:**  Total loans increased by $4 million (6% annualized) during the quarter, with  regular loans increasing at an 8% annualized rate. Total commercial loans increased  at a 15% annualized rate, continuing the strong growth rate recorded last year.  New loan applications slackened during the current quarter as a result of a  rebound in long term interest rates from lows reached in the previous quarter.  Due to further anticipated rate increases, Alliance sold a higher proportion  of residential mortgage originations into the secondary market, and reduced  purchases of government guaranteed loans. The yield on total loans decreased  to 7.09% in the most recent quarter from 7.24% in the last quarter of 2001 due  to the continuing effects of prime rate decreases in the previous quarter and  to ongoing refinancings. Average loans increased at an 8% annualized rate compared  to the prior quarter. 

**Nonperforming Assets:** There were no foreclosed assets at March 31, 2002. Nonaccruing loans totaled $1.8 million,compared to $2.1 million at year-end 2001. Nonperforming assets were 0.45% of total assets at March 31, 2002.

**Allowance for Loan Losses:** The allowance totaled $3.85 million (1.47% of total loans) at March 31, 2002, compared to$3.70 million (1.44% of total loans) at year-end 2001. During the quarter, gross chargeoffs were $37 thousand and gross recoveries were $15 thousand. The allowance measured 214% of nonaccruing loans at quarter-end.

**Deposits and Borrowings:** Total deposits increased by $21 million (27% annualized) during the quarter, with increasesin all categories. Savings account growth was the strongest, providing $12 million of lower cost funds. As noted in the Summary, deposit growth included commercial and municipal activity that was expected to be short term in nature. During thequarter, Alliance promoted longer term time accounts in order to fund loan growth and in anticipation of higher interest rates. Short term borrowings outstanding at year-end 2001 were repaid from deposit funds. The cost of interest bearingliabilities declined to 3.58% during the quarter, from 3.87% in the previous quarter, reflecting the ongoing benefit of time account repricings, together with the benefit of other account repricings resulting from decreases in the Federal Funds ratein the previous quarter. The total average balance of deposits increased by 6% annualized in the current quarter compared to the previous quarter.

**Interest Rate Sensitivity:** The Company estimates that there have been no significant changes in interest ratesensitivity since year-end 2001. Equity at risk is expected to have improved slightly due to the sale of longer maturity investment securities. Alliance expects to be within policy limits for its interest rate risk, as further described in the 2001annual report. The Company’s income is expected to increase in a rising rate environment and to decrease in a decreasing rate environment, primarily due to its portfolio of prime based commercial and consumer loans. With interest rates atcomparatively low levels and a steep current yield curve, the Company generally is cautious toward the acquisition of new long term fixed rate assets in order to control equity at risk in a rising rate environment.

**Liquidity and  Cash Flows:**  The Bank’s primary uses of funds have been the origination of new loans  and the repayment of short term borrowings. The primary sources of funds were  deposit growth and the liquidation of securities available for sale. Due to  the strong deposit growth in the most recent quarter, sources of funds exceeded  uses of funds, and short term investments therefore increased. Borrowings and  time deposits are the primary sources of liquidity for additional balance sheet  growth. Short term investments, securities available for sale, and government  guaranteed loan certificates provide additional sources of liquidity. The Company’s  primarysource  of funds is dividends received from the Bank, and its primary use of funds is  dividends paid to shareholders and to trust preferred security holders.

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**Capital  Resources:**  Shareholders’ equity was flat during the quarter, with the contribution  from comprehensive income offset by dividends declared. Total equity measured  5.6% of assets at quarter-end, which was unchanged from a year ago and decreased  from 5.7% at year-end 2001 due to the asset growth during the quarter. At quarter-end,  both Alliance and Tolland Bank continued to be capitalized in accordance with  the “well capitalized” regulatory classification. Return on shareholders’  equity measured 15.3% during the quarter; excluding accumulated other comprehensive  loss, return on equity measured 13.8%. 

**ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**

See the discussion and analysis of quantitative and qualitative disclosures about market risk provided in the Company’s Annual Report on Form 10-K for the year ended December 31, 2001filed on March 6, 2002. See also the discussion of Interest Rate Sensitivity in Item 2 of this Form 10-Q. 

**PART II OTHER INFORMATION**

| Item      1. | LEGAL      PROCEEDINGSThe Company is not involved in any material legal proceedings      other than ordinary routine litigation incidental to its business.                                                                                                                      |
|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Item      2. | CHANGES      IN SECURITIES AND USE OF PROCEEDSNone.                                                                                                                                                                                                                              |
| Item      3. | DEFAULTS      UPON SENIOR SECURITIESNone.                                                                                                                                                                                                                                        |
| Item      4. | SUBMISSION      OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                                                                                                                                                                                         |
|         | (a)                                                                                                                                                                                                                                                                    | The      Annual Meeting of Shareholders was held on March 27, 2002. |
|         | (b)                                                                                                                                                                                                                                                                    | Proposal      I. The following current directors were re-elected to continue to serve      for three-year terms and until their successors are elected and qualified:      D. Anthony Guglielmo, Douglas J. Moser, Matthew L. Reiser and Joseph H.      Rossi. Each of the persons nominated for director received at least 96.0%      of the votes for his election, representing a majority of the total of 1,913,957      voted or withheld. |
|         | (c)                                                                                                                                                                                                                                                                    | Proposal      II. A total of 1,810,316 shares were voted in favor of Proposal II regarding      the adjournment of the Annual Meeting. 96,861 shares were voted against      and 6,700 shares were abstained. Proposal II would have adjourned the meeting      in the event that there were not sufficient votes to approve Proposal I,      in order to permit further solicitation of proxies. Since Proposal I was      approved, adjournment was not necessary. |
| Item      5. | OTHER      INFORMATIONNone.                                                                                                                                                                                                                                                      |
| Item      6  | EXHIBITS      AND REPORTS ON FORM 8-KReports on Form      8-K filed during the quarter ended March 31, 2002.On February      26, 2002, the Company filed a Form 8-K reporting, under Item 5, the resignation      of William E. Dowty, Jr., one of the Company’s directors. |

  

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**Average  Balance Sheet and Interest Rates – Fully Taxable Equivalent (FTE)**

| ***(dollars        in thousands)***                    | **Average        Balance** |    | **Rate        (FTE Basis)** |   |
|--------------------------------------------------------|----------------------------|---------|-----------------------------|--------|
|                                                        |
| ***Quarters        ended March 31***                   | **2002**                   |    | **2001**                    |   | **2002** |   | **2001** |   |
|                                                        |
| Residential      mortgage loans                        | $                          | 61,820  |                        | $      | 58,982 |   | 7.08 | % | 7.72 | % |
| Commercial      mortgage loans                         |                       | 87,721  |                        |   | 64,543 |   | 7.95 |   | 8.52 |   |
| Other commercial      loans                            |                       | 38,827  |                        |   | 50,927 |   | 6.96 |   | 9.40 |   |
| Consumer loans                                         |                       | 39,894  |                        |   | 35,947 |   | 5.48 |   | 8.02 |   |
| Government      guaranteed loans                       |                       | 29,427  |                        |   | 22,700 |   | 6.55 |   | 7.69 |   |
|                                                        |
|    Total      loans                     |                       | 257,689 |                        |   | 233,099 |   | 7.09 |   | 8.35 |   |
| Securities                                             |                       | 94,080  |                        |   | 85,545 |   | 6.90 |   | 7.81 |   |
| Other earning      assets                              |                       | 6,077   |                        |   | 7,607 |   | 1.94 |   | 6.03 |   |
|                                                        |
|    Total      earning assets            |                       | 357,846 |                        |   | 326,251 |   | 6.92 |   | 8.16 |   |
| Other assets                                           |                       | 25,459  |                        |   | 20,308 |   |   |   |   |   |
|                                                        |
|    Total      assets                    | $                          | 383,305 |                        | $      | 346,559 |   |   |   |   |   |
|                                                        |
|                                                   |                       |    |                        |   |   |   |   |   |   |   |
| NOW deposits                                           | $                          | 35,020  |                        | $      | 29,590 |   | 0.96 | % | 1.78 | % |
| Money market      deposits                             |                       | 42,139  |                        |   | 39,967 |   | 2.26 |   | 4.36 |   |
| Savings deposits                                       |                       | 64,830  |                        |   | 45,502 |   | 1.99 |   | 2.56 |   |
| Time deposits                                          |                       | 132,269 |                        |   | 133,424 |   | 4.52 |   | 5.62 |   |
|                                                        |
|    Total      interest bearing deposits |                       | 274,258 |                        |   | 248,483 |   | 3.12 |   | 4.40 |   |
| Borrowings                                             |                       | 50,839  |                        |   | 45,651 |   | 6.08 |   | 6.17 |   |
|                                                        |
| Interest bearing      liabilities                      |                       | 325,097 |                        |   | 294,134 |   | 3.58 |   | 4.67 |   |
| Other liabilities                                      |                       | 35,674  |                        |   | 34,165 |   |   |   |   |   |
| Shareholders’      equity                         |                       | 22,534  |                        |   | 18,260 |   |   |   |   |   |
|                                                        |
|    Total      liabilities and equity    | $                          | 383,305 |                        | $      | 346,559 |   |   |   |   |   |
|                                                        |
| Net Interest      Spread                               |                       |    |                        |   |   |   | 3.34 | % | 3.49 | % |
| Net Interest      Margin                               |                       |    |                        |   |   |   | 3.67 | % | 3.95 | % |

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**Signatures**

Pursuant to the requirements to Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned,thereunto duly authorized. 

 

|   |              |   | ALLIANCE      BANCORP OF NEW ENGLAND, INC. |
|--------|-------------------|--------|--------------------------------------------|
|   |              |   |                                       |
|   |              |   |                                       |
|   |              |   |                                       |
| Date:  | May      10, 2002 |   | */s/      Joseph H. Rossi*                 |
|   |              |   | Joseph      H. Rossi                       |
|   |              |   | President/CEO                              |
|   |              |   |                                       |
|   |              |   |                                       |
|   |              |   |                                       |
| Date:  | May      10, 2002 |   | */s/      David H. Gonci*                  |
|   |              |   | David      H. Gonci                        |
|   |              |   | Senior      Vice President/CFO             |

15

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