UNITED
STATES SECURITIES AND EXCHANGE COMMISSION


WASHINGTON,
D.C.  20549


________________________





FORM
10-Q





(Mark One)





ý             Quarterly
report pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934





For
the quarterly period ended March 31, 2009





OR





o             Transition
report pursuant to section 13 or 15(d) of the Securities Exchange Act of
1934





For
the transition period from ______________ to _____________





Commission
File Number 000-52947





United Financial Bancorp,
Inc.


(Exact
name of registrant as specified in its charter)





Maryland
              74-3242562(State
      or other jurisdiction of
              (I.R.S.
      Employerincorporation
      or organization)
              Identification
      Number)





95 Elm Street, West
Springfield, Massachusetts 01089


(Address
of principal executive offices)





Registrant's
telephone number, including area code: (413)
787-1700





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 for such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.   Yes x   No
 ̈.





Indicate
by check mark whether the Registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post such files).   Yes  ̈   No
 ̈.





Indicate
by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
definition of “accelerated filer”, “large accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):





Large
      accelerated filer  ̈
            Accelerated
      filer x
            Non-accelerated
      filer  ̈
            Smaller
      reporting company  ̈





Indicate
by check mark whether the Registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).   Yes  ̈   No
x.





Indicate
the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date:




Common
stock, $0.01 par value


16,435,070
shares outstanding as of May 4, 2009








United
Financial Bancorp, Inc.





INDEXPagePART I. FINANCIAL INFORMATIONItem 1
              Consolidated Financial Statements
    (unaudited)Consolidated Statements of ConditionMarch 31, 2009 and December 31, 2008
              1Consolidated Statements of EarningsThree Months Ended March 31, 2009 and 2008
              2Consolidated Statements of Stockholders’ Equity and
      Comprehensive IncomeThree Months Ended March 31, 2009 and 2008
              3Consolidated Statements of Cash FlowsThree Months Ended March 31, 2009 and 2008
              4Notes to Unaudited Consolidated Financial
      Statements
              5Item 2
              Management's Discussion and Analysis of Financial
      Conditionand Results of Operations
              15Item 3
              Quantitative and Qualitative Disclosures About Market
      Risk
              28Item 4
              Controls and Procedures
              28PART II. OTHER INFORMATIONItem 1
              Legal Proceedings
              28Item 1A
              Risk Factors
              28Item 2
              Unregistered Sales of Equity Securities and Use of
      Proceeds
              29Item 3
              Defaults Upon Senior Securities
              29Item 4.
              Submission of Matters to a Vote of Security
      Holders
              29Item 5.
              Other Information
              29Item 6
              Exhibits
              30SIGNATURES
              31








Exhibit 31.1
            Certification
      of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002
            32Exhibit 31.2
            Certification
      of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002
            33Exhibit 32.1
            Statement
      of Chief Executive Officer Furnished Pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002
            34Exhibit 32.2
            Statement
      of Chief Financial Officer Furnished Pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002
            35









Index


PART
I.                      FINANCIAL
INFORMATION


ITEM
1.                      Consolidated
Financial Statements





UNITED FINANCIAL BANCORP, INC. AND SUBSIDIARY


CONSOLIDATED
STATEMENTS OF CONDITION


(Dollars
in thousands, except share and per share amounts)





March
      31,
                                
                                
                                December
      31,2009
                                
                                
                                2008(unaudited)ASSETSCash
      and due from banks
                                
                                $
                                10,703
                                
                                
                                $
                                10,356Interest-bearing
      deposits
                                
                                
                                1,161
                                
                                
                                
                                3,216Total
      cash and cash equivalents
                                
                                
                                11,864
                                
                                
                                
                                13,572Short-term
      investments
                                
                                
                                1,079
                                
                                
                                
                                1,071Securities
      available for sale, at fair value
                                
                                
                                303,691
                                
                                
                                
                                313,506Securities
      held to maturity, at amortized cost  (fair value of $5,323
      atMarch
      31, 2009 and $3,238 at December 31, 2008)
                                
                                
                                5,233
                                
                                
                                
                                3,191Loans
      held for sale
                                
                                
                                2,710
                                
                                
                                
                                -Loans,
      net of allowance for loan losses of  $8,728 at March 31,
      2009and
      $8,250 at December 31, 2008
                                
                                
                                852,183
                                
                                
                                
                                864,421Other
      real estate owned
                                
                                
                                739
                                
                                
                                
                                998Accrued
      interest receivable
                                
                                
                                4,575
                                
                                
                                
                                4,706Deferred
      tax asset, net
                                
                                
                                6,632
                                
                                
                                
                                7,969Stock
      in the Federal Home Loan Bank of Boston
                                
                                
                                12,223
                                
                                
                                
                                12,223Banking
      premises and equipment, net
                                
                                
                                12,012
                                
                                
                                
                                12,125Bank-owned
      life insurance
                                
                                
                                27,468
                                
                                
                                
                                27,173Other
      assets
                                
                                
                                2,785
                                
                                
                                
                                2,179TOTAL
      ASSETS
                                
                                $
                                1,243,194
                                
                                
                                $
                                1,263,134LIABILITIES
      AND STOCKHOLDERS’ EQUITYLiabilities:Deposits:Interest-bearing
                                
                                $
                                682,880
                                
                                
                                $
                                668,485Non-interest-bearing
                                
                                
                                112,441
                                
                                
                                
                                114,178Total
      deposits
                                
                                
                                795,321
                                
                                
                                
                                782,663Federal
      Home Loan Bank of Boston advances
                                
                                
                                186,847
                                
                                
                                
                                208,564Repurchase
      agreements
                                
                                
                                30,464
                                
                                
                                
                                28,042Escrow
      funds held for borrowers
                                
                                
                                2,152
                                
                                
                                
                                1,667Capitalized
      lease obligations
                                
                                
                                3,109
                                
                                
                                
                                3,129Accrued
      expenses and other liabilities
                                
                                
                                7,788
                                
                                
                                
                                11,355Total
      liabilities
                                
                                
                                1,025,681
                                
                                
                                
                                1,035,420Stockholders’
      equity:Preferred
      stock, par value $0.01 per share, authorized 50,000,000
      shares;none
      issued
                                
                                
                                -
                                
                                
                                
                                -Common
      stock, par value $0.01 per share, authorized 100,000,000
      shares;17,763,747
      shares issued at March 31, 2009 and December 31, 2008
                                
                                
                                178
                                
                                
                                
                                178Paid-in
      capital
                                
                                
                                165,046
                                
                                
                                
                                164,358Retained
      earnings
                                
                                
                                76,920
                                
                                
                                
                                75,888Unearned
      compensation
                                
                                
                                (11,958
                                )
                                
                                
                                (12,144
                                )Treasury
      stock, at cost (1,262,377 shares at March 31, 2009 and
    261,798shares
      at December 31, 2008)
                                
                                
                                (17,121
                                )
                                
                                
                                (3,497
                                )Accumulated
      other comprehensive income, net of taxes
                                
                                
                                4,448
                                
                                
                                
                                2,931Total
      stockholders’ equity
                                
                                
                                217,513
                                
                                
                                
                                227,714TOTAL
      LIABILITIES AND STOCKHOLDERS’ EQUITY
                                
                                $
                                1,243,194
                                
                                
                                $
                                1,263,134





See notes
to unaudited consolidated financial statements


1
 Index





UNITED
FINANCIAL BANCORP, INC. AND SUBSIDIARY


CONSOLIDATED
STATEMENTS OF EARNINGS (unaudited)


(Dollars
in thousands, except share and per share amounts)





Three
      Months EndedMarch
      31,2009
                          
                          
                          2008Interest
      and dividend income:Loans
                          
                          $
                          12,051
                          
                          
                          $
                          12,547Investments
                          
                          
                          3,871
                          
                          
                          
                          2,618Other
      interest-earning assets
                          
                          
                          8
                          
                          
                          
                          241Total
      interest and dividend income
                          
                          
                          15,930
                          
                          
                          
                          15,406Interest
      expense:Deposits
                          
                          
                          3,825
                          
                          
                          
                          4,973Borrowings
                          
                          
                          1,950
                          
                          
                          
                          1,402Total
      interest expense
                          
                          
                          5,775
                          
                          
                          
                          6,375Net
      interest income before provision for loan losses
                          
                          
                          10,155
                          
                          
                          
                          9,031Provision
      for loan losses
                          
                          
                          540
                          
                          
                          
                          184Net
      interest income after provision for loan losses
                          
                          
                          9,615
                          
                          
                          
                          8,847Non-interest
      income:Fee
      income on depositors’ accounts
                          
                          
                          1,107
                          
                          
                          
                          1,077Net
      gain on sale of loans
                          
                          
                          125
                          
                          
                          
                          -Net
      gain on sale of securities
                          
                          
                          -
                          
                          
                          
                          8Wealth
      management income
                          
                          
                          132
                          
                          
                          
                          150Income
      from bank-owned life insurance
                          
                          
                          314
                          
                          
                          
                          50Other
      income
                          
                          
                          173
                          
                          
                          
                          234Total
      non-interest income
                          
                          
                          1,851
                          
                          
                          
                          1,519Non-interest
      expense:Salaries
      and benefits
                          
                          
                          4,664
                          
                          
                          
                          4,041Occupancy
      expenses
                          
                          
                          665
                          
                          
                          
                          509Marketing
      expenses
                          
                          
                          342
                          
                          
                          
                          358Data
      processing expenses
                          
                          
                          844
                          
                          
                          
                          719Professional
      fees
                          
                          
                          423
                          
                          
                          
                          443FDIC
      insurance assessment
                          
                          
                          340
                          
                          
                          
                          21Other
      expenses
                          
                          
                          877
                          
                          
                          
                          1,085Total
      non-interest expense
                          
                          
                          8,155
                          
                          
                          
                          7,176Income
      before income taxes
                          
                          
                          3,311
                          
                          
                          
                          3,190Income
      tax expense
                          
                          
                          1,188
                          
                          
                          
                          1,224Net
      income
                          
                          $
                          2,123
                          
                          
                          $
                          1,966Earnings
      per share:Basic
                          
                          $
                          0.14
                          
                          
                          $
                          0.12Diluted
                          
                          $
                          0.14
                          
                          
                          $
                          0.12Weighted
      average shares outstanding:Basic
                          
                          
                          15,220,014
                          
                          
                          
                          16,230,847Diluted
                          
                          
                          15,366,790
                          
                          
                          
                          16,271,404





See notes to unaudited consolidated
financial statements.


2
 Index





UNITED
FINANCIAL BANCORP, INC. AND SUBSIDIARY


CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ EQUITY AND


COMPREHENSIVE
INCOME (unaudited)


FOR THE
THREE MONTHS ENDED MARCH 31, 2009 and 2008


(Dollars
in thousands, except per share amounts)


AccumulatedCommon
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        OtherShares
                        
                        
                        Common
                        
                        
                        Paid-In
                        
                        
                        Retained
                        
                        
                        Unearned
                        
                        
                        Treasury
                        
                        
                        ComprehensiveOutstanding
                        
                        
                        Stock
                        
                        
                        Capital
                        
                        
                        Earnings
                        
                        
                        Compensation
                        
                        
                        Stock
                        
                        
                        Income
      (Loss)
                        
                        
                        TotalBalances
      at December 31, 2007
                        
                        
                        17,763,747
                        
                        
                        $
                        178
                        
                        
                        $
                        165,920
                        
                        
                        $
                        73,026
                        
                        
                        $
                        (12,835
                        )
                        
                        $
                        -
                        
                        
                        $
                        (169
                        )
                        
                        $
                        226,120Net
      income
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        1,966
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        1,966Other
      comprehensive income
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        768
                        
                        
                        
                        768Total
      comprehensive income
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        2,734Net
      costs from issuance of common stockpursuant
      to second-step conversion
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (26
                        )
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (26
                        )Cash
      dividends paid ($0.06 per share)
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (987
                        )
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (987
                        )Stock-based
      compensation
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        375
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        375ESOP
      shares committed to be released
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        20
                        
                        
                        
                        -
                        
                        
                        
                        176
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        196Balances
      at March 31, 2008
                        
                        
                        17,763,747
                        
                        
                        $
                        178
                        
                        
                        $
                        166,289
                        
                        
                        $
                        74,005
                        
                        
                        $
                        (12,659
                        )
                        
                        $
                        -
                        
                        
                        $
                        599
                        
                        
                        $
                        228,412Balances
      at December 31, 2008
                        
                        
                        17,501,949
                        
                        
                        $
                        178
                        
                        
                        $
                        164,358
                        
                        
                        $
                        75,888
                        
                        
                        $
                        (12,144
                        )
                        
                        $
                        (3,497
                        )
                        
                        $
                        2,931
                        
                        
                        $
                        227,714Net
      income
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        2,123
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        2,123Other
      comprehensive income
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        1,517
                        
                        
                        
                        1,517Total
      comprehensive income
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        3,640Cash
      dividends paid ($0.07 per share)
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (1,091
                        )
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (1,091
                        )Treasury
      stock purchases
                        
                        
                        (1,000,579
                        )
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        (13,624
                        )
                        
                        
                        
                        
                        
                        
                        (13,624
                        )Stock-based
      compensation
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        621
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        621ESOP
      shares committed to be released
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        67
                        
                        
                        
                        -
                        
                        
                        
                        186
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        253Balances
      at March 31, 2009
                        
                        
                        16,501,370
                        
                        
                        $
                        178
                        
                        
                        $
                        165,046
                        
                        
                        $
                        76,920
                        
                        
                        $
                        (11,958
                        )
                        
                        $
                        (17,121
                        )
                        
                        $
                        4,448
                        
                        
                        $
                        217,513


The
components of other comprehensive income and related tax effects are as
follows:





Three
      Months Ended March 31,2009
                    
                    
                    2008Change
      in unrealized holding gains on available-for-sale
    securities
                    
                    $
                    2,461
                    
                    
                    $
                    1,225Reclassification
      adjustment for gains realized in income
                    
                    
                    -
                    
                    
                    
                    (8
                    )Net
      change in unrealized gains
                    
                    
                    2,461
                    
                    
                    
                    1,217Tax
      effect
                    
                    
                    944
                    
                    
                    
                    449Other
      comprehensive income
                    
                    $
                    1,517
                    
                    
                    $
                    768





See notes to unaudited consolidated
financial statements.


3
 Index


UNITED
FINANCIAL BANCORP, INC. AND SUBSIDIARY


CONSOLIDATED
STATEMENTS OF CASH FLOWS (unaudited)


FOR THE
THREE MONTHS ENDED MARCH 31, 2009 and 2008


(Dollars
in thousands)





2009
                                    
                                    
                                    2008Cash
      flows from operating activities:Net
      income
                                    
                                    $
                                    2,123
                                    
                                    
                                    $
                                    1,966Adjustments
      to reconcile net income to net cash used in operating
      activities:Provision
      for loan losses
                                    
                                    
                                    540
                                    
                                    
                                    
                                    184ESOP
      expense
                                    
                                    
                                    253
                                    
                                    
                                    
                                    196Stock-based
      compensation
                                    
                                    
                                    621
                                    
                                    
                                    
                                    375Amortization
      of premiums and discounts
                                    
                                    
                                    93
                                    
                                    
                                    
                                    32Depreciation
      and amortization
                                    
                                    
                                    250
                                    
                                    
                                    
                                    194Amortization
      of intangible assets
                                    
                                    
                                    6
                                    
                                    
                                    
                                    8Net
      loss on sale of other real estate owned
                                    
                                    
                                    7
                                    
                                    
                                    
                                    -Net
      gain on sale of securities
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (8
                                    )Net
      gain on sale of loans
                                    
                                    
                                    (125
                                    )
                                    
                                    
                                    -Increase
      in cash surrender value of bank-owned life insurance
                                    
                                    
                                    (295
                                    )
                                    
                                    
                                    (81
                                    )Decrease
      (increase) in accrued interest receivable
                                    
                                    
                                    131
                                    
                                    
                                    
                                    (103
                                    )Increase
      in other assets
                                    
                                    
                                    (218
                                    )
                                    
                                    
                                    (2,104
                                    )Decrease
      in accrued expenses and other liabilities
                                    
                                    
                                    (3,896
                                    )
                                    
                                    
                                    (2,887
                                    )Net
      cash used in operating activities
                                    
                                    
                                    (510
                                    )
                                    
                                    
                                    (2,228
                                    )Cash
      flows from investing activities:Purchases
      of securities available for sale
                                    
                                    
                                    (4,599
                                    )
                                    
                                    
                                    (116,039
                                    )Proceeds
      from sales of securities available for sale
                                    
                                    
                                    -
                                    
                                    
                                    
                                    26,434Proceeds
      from maturities, calls and principal repayments of securities available
      for sale
                                    
                                    
                                    16,782
                                    
                                    
                                    
                                    29,090Purchases
      of securities held to maturity
                                    
                                    
                                    (2,043
                                    )
                                    
                                    
                                    -Investment
      in short term time deposits
                                    
                                    
                                    (8
                                    )
                                    
                                    
                                    (13
                                    )Proceeds
      from sales of other real estate owned
                                    
                                    
                                    268
                                    
                                    
                                    
                                    -Net
      loan originations and principal repayments
                                    
                                    
                                    (1,830
                                    )
                                    
                                    
                                    (729
                                    )Proceeds
      from sales of loans
                                    
                                    
                                    10,927
                                    
                                    
                                    
                                    -Purchases
      of property and equipment
                                    
                                    
                                    (134
                                    )
                                    
                                    
                                    (170
                                    )Cash
      paid to acquire Levine Financial Group
                                    
                                    
                                    (92
                                    )
                                    
                                    
                                    -Net
      cash provided by (used in) investing activities
                                    
                                    
                                    19,271
                                    
                                    
                                    
                                    (61,427
                                    )Cash
      flows from financing activities:Net
      increase in deposits
                                    
                                    
                                    12,658
                                    
                                    
                                    
                                    36,842Net
      (decrease) increase in short-term borrowings from Federal Home Loan Bank
      of Boston
                                    
                                    
                                    (19,000
                                    )
                                    
                                    
                                    11,145Proceeds
      of Federal Home Loan Bank of Boston long-term advances
                                    
                                    
                                    -
                                    
                                    
                                    
                                    25,000Repayments
      of Federal Home Loan Bank of Boston long-term advances
                                    
                                    
                                    (2,717
                                    )
                                    
                                    
                                    (2,733
                                    )Net
      increase (decrease) in repurchase agreements
                                    
                                    
                                    2,422
                                    
                                    
                                    
                                    (4,178
                                    )Net
      increase in escrow funds held for borrowers
                                    
                                    
                                    485
                                    
                                    
                                    
                                    158Treasury
      stock purchases
                                    
                                    
                                    (13,163
                                    )
                                    
                                    
                                    -Cash
      dividends paid
                                    
                                    
                                    (1,091
                                    )
                                    
                                    
                                    (987
                                    )Costs
      from issuance of common stock pursuant to second-step
      conversion
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (26
                                    )Payments
      on capitalized lease obligations
                                    
                                    
                                    (63
                                    )
                                    
                                    
                                    (36
                                    )Net
      cash (used in) provided by financing activities
                                    
                                    
                                    (20,469
                                    )
                                    
                                    
                                    65,185(Decrease)
      increase in cash and cash equivalents
                                    
                                    
                                    (1,708
                                    )
                                    
                                    
                                    1,530Cash
      and cash equivalents at beginning of period
                                    
                                    
                                    13,572
                                    
                                    
                                    
                                    14,254Cash
      and cash equivalents at end of  period
                                    
                                    $
                                    11,864
                                    
                                    
                                    $
                                    15,784Supplemental Disclosure of Cash Flow
      Information:Cash
      paid during the period:Interest
      on deposits, borrowings and other interest bearing
    liabilities
                                    
                                    $
                                    5,741
                                    
                                    
                                    $
                                    6,349Income
      taxes – net
                                    
                                    
                                    4,600
                                    
                                    
                                    
                                    5,801Non-cash
      items:Transfer
      of loans to other real estate owned
                                    
                                    
                                    -
                                    
                                    
                                    
                                    150Trade
      date accounting for securities purchased
                                    
                                    
                                    -
                                    
                                    
                                    
                                    8,410Trade
      date accounting for treasury stock purchases
                                    
                                    
                                    461
                                    
                                    
                                    
                                    -




See notes to unaudited consolidated
financial statements.


4
 Index


UNITED
FINANCIAL BANCORP, INC. AND SUBSIDIARY


NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


MARCH
31, 2009


Dollars
in Thousands (except per share amounts)







NOTE
A – BASIS OF PRESENTATION





The
consolidated financial statements include the accounts of United Financial
Bancorp, Inc. and its wholly owned subsidiary, United Bank. The consolidated
financial statements also include the accounts of United Bank’s wholly owned
subsidiary, UCB Securities, Inc., which is engaged in buying, selling and
holding investment securities. These entities are collectively referred to
herein as “the Company.” All significant intercompany accounts and transactions
have been eliminated in consolidation.





The
accompanying financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America
(“GAAP”) and with general practices within the banking industry. In the opinion
of management, the accompanying unaudited interim consolidated financial
statements reflect all adjustments, consisting of normal recurring adjustments,
which are necessary for the fair presentation of the Company’s financial
condition as of March 31, 2009 and the results of operations for the three
months ended March 31, 2009 and 2008. The interim results of operations
presented herein are not necessarily indicative of the results to be expected
for the entire year. These financial statements should be read in conjunction
with the consolidated financial statements and the notes thereto for the year
ended December 31, 2008 included in the Company’s Annual Report on Form 10-K,
which was filed by the Company with the Securities and Exchange Commission on
March 13, 2009.





Amounts
reported for prior periods are reclassified as necessary to conform to the
current period presentation.





NOTE
B – RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS





In
February 2008, the Financial Accounting Standards Board(“FASB”) issued FASB Staff Position (“FSP”) 157-2, “Effective Date of
FASB Statement No. 157,” which permits a one-year deferral in applying the
measurement provisions of Statement of Financial Accounting Standard (“SFAS”)
No. 157 to non-financial assets and non-financial liabilities
(non-financial items) that are not recognized or disclosed at fair value in an
entity’s financial statements on a recurring basis (at least annually).
Therefore, if the change in fair value of a non-financial item is not required
to be recognized or disclosed in the financial statements on an annual basis or
more frequently, the effective date of application of SFAS No. 157 to that
item is deferred until fiscal years beginning after November 15, 2008. The
adoption of FSP 157-2 on January 1, 2009, had no material effect on the
Company’s Consolidated Financial Statements.





In April
2009, the FASB issued FSP 157-4 “Determining Fair Value When the Volume and
Level of Activity for the Asset or Liability Have Significantly Decreased and
Identifying Transactions That Are Not Orderly (“FSP FAS 157-4”),” which provides
additional guidance for estimating fair value in accordance with SFAS No. 157,
“Fair Value Measurements”, when the volume and level of activity for the asset
or liability have significantly decreased. This FSP also includes guidance on
identifying circumstances that indicate a transaction is not
orderly.  This FSP emphasizes that even if there has been a
significant decrease in the volume and level of activity for the asset or
liability and regardless of the valuation technique(s) used, the objective of a
fair value measurement remains the same. Fair value is the price that would be
received to sell an asset or paid to transfer a liability in an orderly
transaction (that is, not a forced liquidation or distressed sale) between
market participants at the measurement date under current market conditions. FSP
FAS 157-4 is effective for interim periods ending after June 15, 2009, with
early adoption permitted for periods ending after March 15, 2009.  The
Company will adopt FSP FAS 157-4 in the second quarter of 2009 and is currently
evaluating the impact, if any, it will have on its Consolidated Financial
Statements.


5
 Index


In April
2009, the FASB issued FSP FAS 115-2 and FAS 124-2 “Recognition and Presentation
of Other-Than-Temporary Impairments (“FSP FAS 115-2”),” in which the objective
of an other-than-temporary impairment analysis under existing U.S. GAAP is to
determine whether the holder of an investment in a debt or equity security for
which changes in fair value are not regularly recognized in earnings (such as
securities classified as held-to-maturity or available-for-sale) should
recognize a loss in earnings when the investment is impaired. An investment is
impaired if the fair value of the investment is less than its amortized cost
basis.  This FSP amends the other-than-temporary impairment guidance
in U.S. GAAP for debt securities to make the guidance more operational and to
improve the presentation and disclosure of other-than-temporary impairments on
debt and equity securities in the financial statements. This FSP does not amend
existing recognition and measurement guidance related to other-than-temporary
impairments of equity securities.  FSP FAS 115-2 is effective for
interim periods ending after June 15, 2009, with early adoption permitted for
periods ending after March 15, 2009. The Company will adopt FSP FAS 115-2 in the
second quarter of 2009 and is currently evaluating the impact, if any, it will
have on its Consolidated Financial Statements.





In April
2009, the FASB issued FSP FAS 107-1 and APB 28-1 “Interim Disclosures about Fair
Value of Financial Instruments (“FSP FAS 107”),” which amends SFAS No. 107,
“Disclosures about Fair Value of Financial Instruments,” to require disclosures
about fair value of financial instruments for interim reporting periods of
publicly traded companies as well as in annual financial statements. This FSP
also amends APB Opinion No. 28, “Interim Financial Reporting,” to require those
disclosures in summarized financial information at interim reporting periods and
is effective for interim periods ending after June 15, 2009, with early adoption
permitted for periods ending after March 15, 2009. The Company will adopt FSP
FAS 107-1 in the second quarter of 2009 and is currently evaluating the impact,
if any, it will have on its Consolidated Financial Statements.





NOTE
C – CRITICAL ACCOUNTING POLICIES





Critical
accounting policies are those that involve significant judgments and assumptions
by management and that have, or could have, a material impact on our income or
the carrying value of our assets.  Our critical accounting policies
are those related to our allowance for loan losses and the evaluation of the
investment portfolio for other-than-temporary impairment (“OTTI”).





Allowance for
Loan Losses.The allowance for loan
losses is the amount estimated by management as necessary to cover credit losses
inherent in the loan portfolio at the balance sheet date.  The
allowance is established through the provision for loan losses which is charged
against income.  The methodology for determining the allowance for
loan losses is considered a critical accounting policy by management due to the
high degree of judgment involved, the subjectivity of the assumptions utilized
and the potential for changes in the economic environment that could result in
adjustments to the amount of the recorded allowance for loan
losses.





As a
substantial amount of our loan portfolio is collateralized by real estate,
appraisals of the underlying value of property securing loans and discounted
cash flow valuations of properties are critical in determining the amount of the
allowance required for specific loans.  Assumptions for appraisals and
discounted cash flow valuations are instrumental in determining the value of
properties.  Overly optimistic assumptions or negative changes to
assumptions could significantly affect the valuation of a property securing a
loan and the related allowance determined.  The assumptions supporting
such appraisals and discounted cash flow valuations are reviewed by management
to determine that the resulting values reasonably reflect amounts realizable on
the related loans.


6
 Index





Management
performs a quarterly evaluation of the adequacy of the allowance for loan
losses.  We consider a variety of factors in establishing this
estimate including, but not limited to, current economic conditions, delinquency
statistics, geographic and industry concentrations, the adequacy of the
underlying collateral, the financial strength of the borrower, results of
internal loan reviews and other relevant factors.  This evaluation is
inherently subjective as it requires material estimates by management that may
be susceptible to significant change based on changes in economic and real
estate market conditions.





The
allowance has a specific and general component. The specific component relates
to loans that are delinquent or otherwise identified as potential problem loans
through the application of our loan review process and our loan grading system.
All such loans are evaluated individually, with principal consideration given to
the value of the collateral securing the loans. Specific allowances are
established as required by this analysis. The general component is determined by
segregating the remaining loans by type of loan, credit grade and payment
history.  We also analyze historical loss experience, delinquency
trends, general economic conditions and geographic and industry
concentrations.  This analysis establishes factors that are applied to
the loan groups to determine the amount of the general component of the
allowance for loan losses.





Actual
loan losses may be significantly more than the allowances we have established
which could have a material negative effect on our financial results in future
periods.





Evaluation of the
Investment Portfolio for Other-Than-Temporary Impairment.The
evaluation of the investment portfolio for other-than-temporary impairment is
also a critical accounting estimate.  In evaluating the investment
portfolio for other-than-temporary impairment, management considers the issuer’s
credit rating, credit outlook, payment status and financial condition, the
length of time the security has been in a loss position, the size of the loss
position and other meaningful information.  If a decline in the fair
value of an investment security below its cost is judged to be
other-than-temporary the cost basis of the investment security is written down
to fair value as a new cost basis and the amount of the write-down is included
in the results of operations.  A number of factors or combinations of
factors could cause us to conclude in one or more future reporting periods that
an unrealized loss that exists with respect to these securities constitutes an
impairment that is other than temporary. These factors include, but are not
limited to, failure to make scheduled principal and/or interest payments, an
increase in the severity of the unrealized loss on a particular security, an
increase in the continuous duration of the unrealized loss without an
improvement in value or changes in market conditions and/or industry or issuer
specific factors that would render us unable to forecast a full recovery in
value.


7
 Index





NOTE
D – EARNINGS PER SHARE





Earnings
per share have been computed in accordance with SFAS No. 128,
“Earnings Per Share.” Basic earnings per share have been calculated by
dividing net income by weighted average shares outstanding before any dilution
and are adjusted to exclude the weighted average number of unallocated shares
held by the ESOP and unvested restricted stock awards. Diluted earnings per
share have been calculated by dividing net income by weighted average shares
outstanding after giving effect to the potential dilution that could occur if
potential common shares were converted into common stock using the treasury
stock method.





The
calculation of basic and diluted earnings per common share for the periods
indicated is presented below.





Three
      Months EndedMarch
      31,2009
                                          
                                          
                                          2008Net
      income
                                          
                                          $
                                          2,123
                                          
                                          
                                          $
                                          1,966Weighted
      average common shares applicable tobasic EPS
                                          
                                          
                                          15,220,014
                                          
                                          
                                          
                                          16,230,847Effect of dilutive potential
      common shares(1, 2)
                                          
                                          
                                          146,776
                                          
                                          
                                          
                                          40,557Weighted
      average common shares applicable todiluted EPS
                                          
                                          
                                          15,366,790
                                          
                                          
                                          
                                          16,271,404Earnings
      per share:Basic
                                          
                                          $
                                          0.14
                                          
                                          
                                          $
                                          0.12Diluted
                                          
                                          $
                                          0.14
                                          
                                          
                                          $
                                          0.12(1)  
       For the three months ended March 31, 2009 and March 31, 2008,
      options to purchase 1,295,863 and 785,275 shares,
      respectively, were outstanding but not included in the computation of
      earnings per share because they were
  antidilutive.(2)  
       Includes incremental shares related to stock options and restricted
      stock.




8
 Index





NOTE
E – INVESTMENT SECURITIES





The
amortized cost and fair value of securities classified as available for sale and
held to maturity are as follows:




Amortized
                                            
                                            
                                            UnrealizedCost
                                            
                                            
                                            Gain
                                            
                                            
                                            Losses
                                            
                                            
                                            Fair
      ValueSecurities Available for
    SaleMarch
      31, 2009:Debt
      Securities:Government-sponsored
      enterprises
                                            
                                            $
                                            444
                                            
                                            
                                            $
                                            -
                                            
                                            
                                            $
                                            (2
                                            )
                                            
                                            $
                                            442Mortgage-backed
      securities
                                            
                                            
                                            282,574
                                            
                                            
                                            
                                            9,376
                                            
                                            
                                            
                                            (67
                                            )
                                            
                                            
                                            291,883Municipal
      bonds
                                            
                                            
                                            10,504
                                            
                                            
                                            
                                            98
                                            
                                            
                                            
                                            (246
                                            )
                                            
                                            
                                            10,356Corporate
      bonds
                                            
                                            
                                            1,536
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            (526
                                            )
                                            
                                            
                                            1,010Total
      securities available for sale
                                            
                                            $
                                            295,058
                                            
                                            
                                            $
                                            9,474
                                            
                                            
                                            $
                                            (841
                                            )
                                            
                                            $
                                            303,691December
      31, 2008:Debt
      Securities:Government-sponsored
      enterprises
                                            
                                            $
                                            467
                                            
                                            
                                            $
                                            -
                                            
                                            
                                            $
                                            (2
                                            )
                                            
                                            $
                                            465Mortgage-backed
      securities
                                            
                                            
                                            294,824
                                            
                                            
                                            
                                            6,601
                                            
                                            
                                            
                                            (314
                                            )
                                            
                                            
                                            301,111Municipal
      bonds
                                            
                                            
                                            10,504
                                            
                                            
                                            
                                            83
                                            
                                            
                                            
                                            (195
                                            )
                                            
                                            
                                            10,392Corporate
      bonds
                                            
                                            
                                            1,538
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            1,538Total
      securities available for sale
                                            
                                            $
                                            307,333
                                            
                                            
                                            $
                                            6,684
                                            
                                            
                                            $
                                            (511
                                            )
                                            
                                            $
                                            313,506
  Amortized
                                              
                                              
                                              UnrealizedCost
                                              
                                              
                                              Gain
                                              
                                              
                                              Losses
                                              
                                              
                                              Fair
      ValueSecurities Held to MaturityMarch
      31, 2009:Mortgage-backed
      securities
                                              
                                              $
                                              2,043
                                              
                                              
                                              $
                                              31
                                              
                                              
                                              $
                                              -
                                              
                                              
                                              $
                                              2,074IRB
                                              
                                              
                                              1,122
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              1,122Municipal
      bonds
                                              
                                              
                                              2,068
                                              
                                              
                                              
                                              59
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              2,127Total
                                              
                                              $
                                              5,233
                                              
                                              
                                              $
                                              90
                                              
                                              
                                              $
                                              -
                                              
                                              
                                              $
                                              5,323December
      31, 2008:IRB
                                              
                                              $
                                              1,122
                                              
                                              
                                              $
                                              -
                                              
                                              
                                              $
                                              -
                                              
                                              
                                              $
                                              1,122Municipal
      bonds
                                              
                                              
                                              2,069
                                              
                                              
                                              
                                              49
                                              
                                              
                                              
                                              (2
                                              )
                                              
                                              
                                              2,116Total
                                              
                                              $
                                              3,191
                                              
                                              
                                              $
                                              49
                                              
                                              
                                              $
                                              (2
                                              )
                                              
                                              $
                                              3,238




The
Company’s portfolio of mortgage-backed securities, which represent interests in
pools ofresidential mortgage
loans, consists solely of securities issued by the Federal Home Loan Mortgage
Corporation (Freddie Mac), the Federal National Mortgage Association (Fannie
Mae), and the Government National Mortgage Association (Ginnie Mae), all of
which are federal government owned or sponsored enterprises.





Management
has determined that no declines in the fair value of its securities portfolio
are deemed to be other-than temporary for the first quarter of 2009. In its
evaluation, management considered the types of securities, including if the
securities were U.S. Government issued, the credit rating on the securities,
credit outlook, payment status and financial condition, the length of time the
bond has been in a loss position, the size of the loss position and other
meaningful information. The Company has the ability to hold these securities
until the earlier of maturity or a market price recovery and currently has no
plans to dispose of any of these securities.





9
 Index


At March
31, 2009, the Company’s available for sale municipal bond portfolio had a net
unrealized loss of $148,000, or 1.4% of amortized cost.  Management
believes that these unrealized losses are primarily due to the current credit
and liquidity crises, which have led to a significant widening in spreads.
Management believes that these market conditions will not affect the expected
cash flows of the issuer. All of the Company’s municipal bonds are rated upper
medium grade or higher by one of the rating agencies, with the exception of two
securities, and continue to perform in accordance with contractual
terms.  Although conditions in the insurance market have deteriorated,
management also considers the underlying guarantee of its municipal bonds based
upon the insurer’s rating and current financial condition.  Because
the Company has the ability and intent to hold these securities to the
forecasted maturity or recovery date and expects to collect all amounts due
according to the contractual terms, no additional declines since December 31,
2008 were deemed to be other than temporary.





The
Company’s variable rate trust preferred securities portfolio has an unrealized
loss of $526,000, equal to 34.2% of amortized cost, at March 31, 2009. The
Company holds two securities issued by large national banks, both of which have
investment-grade credit ratings, and have received investments from the U.S.
Treasury’s Troubled Asset Relief Program Capital Purchase Program. The Company
also holds a pooled trust preferred security with an investment-grade credit
rating. The pool is well diversified geographically and the largest single
issuer within the pool represents less than 4% of total holdings. The Company
owns the AA tranche, which maintains significant coverage for principal defaults
and temporary interest shortfalls. Because the Company has the ability and
intent to hold these securities to the forecasted maturity or recovery date and
expects to collect all amounts due according to the contractual terms, no
additional declines since December 31, 2008 are deemed to be other than
temporary.





NOTE
F – LOANS





The
components of loans held for investment were as follows at March 31, 2009 and
December 31, 2008:




March
      31,
                        
                        
                        December
      31,2009
                        
                        
                        2008Residential
      mortgages
                        
                        $
                        346,590
                        
                        
                        $
                        356,428Commercial
      real estate
                        
                        
                        256,248
                        
                        
                        
                        248,457Construction
                        
                        
                        27,905
                        
                        
                        
                        32,082Home
      equity
                        
                        
                        119,024
                        
                        
                        
                        120,724Commercial
      and industrial
                        
                        
                        82,674
                        
                        
                        
                        84,919Automobile
                        
                        
                        16,204
                        
                        
                        
                        17,332Consumer
                        
                        
                        10,034
                        
                        
                        
                        10,334Total
      loans
                        
                        
                        858,679
                        
                        
                        
                        870,276Net
      deferred loan costs and fees
                        
                        
                        2,232
                        
                        
                        
                        2,395Allowance
      for loan losses
                        
                        
                        (8,728
                        )
                        
                        
                        (8,250
                        )Loans,
      net
                        
                        $
                        852,183
                        
                        
                        $
                        864,421


10
 Index


NOTE
G – NON-PERFORMING ASSETS





The table
below sets forth the amounts and categories of non-performing assets at March
31, 2009 and December 31, 2008:




March
      31,
                        
                        
                        December
      31,2009
                        
                        
                        2008Non-accrual
      loans:Residential
      mortgages
                        
                        $
                        952
                        
                        
                        $
                        1,244Commercial
      mortgages
                        
                        
                        2,083
                        
                        
                        
                        2,544Construction
                        
                        
                        634
                        
                        
                        
                        444Home
      equity
                        
                        
                        3
                        
                        
                        
                        -Commercial
      and industrial
                        
                        
                        521
                        
                        
                        
                        425Other
      consumer
                        
                        
                        140
                        
                        
                        
                        140Total
      non-accrual loans
                        
                        
                        4,333
                        
                        
                        
                        4,797Other
      real estate owned
                        
                        
                        739
                        
                        
                        
                        998Total
      non-performing assets
                        
                        $
                        5,072
                        
                        
                        $
                        5,795Ratios:Total
      non-performing loans to total loans
                        
                        
                        0.50
                        %
                        
                        
                        0.55
                        %Total
      non-performing assets to total assets
                        
                        
                        0.41
                        %
                        
                        
                        0.46
                        %





NOTE
H – ALLOWANCE FOR LOAN LOSSES





A summary
of the activity in the allowance for loan losses is as follows:





For
      the Three Months Ended March 31,2009
                            
                            
                            2008Balance
      at beginning of period
                            
                            $
                            8,250
                            
                            
                            $
                            7,714Provision
      for loan losses
                            
                            
                            540
                            
                            
                            
                            184Charge-offs:Commercial
      mortgages
                            
                            
                            -
                            
                            
                            
                            (6
                            )Construction
                            
                            
                            (65
                            )
                            
                            
                            (90
                            )Home
      equity
                            
                            
                            -
                            
                            
                            
                            (42
                            )Commercial
      and industrial
                            
                            
                            (39
                            )
                            
                            
                            (114
                            )Automobile
                            
                            
                            (5
                            )
                            
                            
                            -Other
      consumer
                            
                            
                            (1
                            )
                            
                            
                            (1
                            )Total
      charge-offs
                            
                            
                            (110
                            )
                            
                            
                            (253
                            )Recoveries:Commercial
      and industrial
                            
                            
                            47
                            
                            
                            
                            -Automobile
                            
                            
                            1
                            
                            
                            
                            1Total
      recoveries
                            
                            
                            48
                            
                            
                            
                            1Net
      charge-offs
                            
                            
                            (62
                            )
                            
                            
                            (252
                            )Balance
      at end of period
                            
                            $
                            8,728
                            
                            
                            $
                            7,646Ratios:Net
      charge-offs to average loansoutstanding
      (annualized)
                            
                            
                            0.03
                            %
                            
                            
                            0.12
                            %Allowance
      for loan losses to non-performingloans
      at end of period
                            
                            
                            201.43
                            %
                            
                            
                            285.41
                            %Allowance
      for loan losses to totalloans
      at end of period
                            
                            
                            1.01
                            %
                            
                            
                            0.93
                            %




11
 Index







NOTE
I – COMMITMENTS





Financial
instruments with off-balance sheet risk at March 31, 2009 and December 31, 2008
were as follows:




March
      31,
                        
                        
                        December
      31,2009
                        
                        
                        2008Unused
      lines of credit
                        
                        $
                        159,003
                        
                        
                        $
                        155,448Amounts
      due mortgagors
                        
                        
                        23,209
                        
                        
                        
                        14,479Standby
      letters of credit
                        
                        
                        1,082
                        
                        
                        
                        1,156Commitments
      to originate loans
                        
                        
                        14,386
                        
                        
                        
                        10,458




The
Company has a commitment to invest up to $1.0 million in a venture capital fund.
As of March 31, 2009 the Company has contributed $150,000 to the
fund.





NOTE
J – DEPOSITS





Deposit accounts, by type, are
summarized as follows atMarch 31, 2009and December 31,
2008:





March
      31,
                        
                        
                        December
      31,2009
                        
                        
                        2008Demand
                        
                        $
                        112,441
                        
                        
                        $
                        114,178NOW
                        
                        
                        33,990
                        
                        
                        
                        32,390Savings
                        
                        
                        114,341
                        
                        
                        
                        99,492Money
      market
                        
                        
                        173,717
                        
                        
                        
                        160,736Certificates
      of deposit
                        
                        
                        360,832
                        
                        
                        
                        375,867$
                        795,321
                        
                        
                        $
                        782,663




NOTE
K – CONTINGENCIES




The
Company is a defendant in certain claims and legal actions arising in the
ordinary course of business. In the opinion of management, after consultation
with legal counsel, the ultimate disposition of these matters is not expected to
have a material adverse effect on the Company’s Consolidated Financial
Statements.





NOTE
L - FAIR VALUES OF ASSETS AND LIABILITIES





In
accordance with SFAS 157, the Company groups its financial assets and financial
liabilities measured at fair value in three levels, based on the markets in
which the assets and liabilities are traded and the reliability of the
assumptions used to determine fair value, as follows:




Level 1 –
Valuations for assets and liabilities traded in active exchange markets, such as
the New York Stock Exchange. Level 1 also includes U.S. Treasury, other U.S.
government and government-sponsored enterprises and agency mortgage-backed
securities that are traded by dealers or brokers in active
markets.  Valuations are obtained from readily available pricing
sources for market transactions involving identical assets or
liabilities.







12
 Index





Level 2 –
Valuations for assets and liabilities traded in less active dealer or broker
markets. Valuations are obtained from third party pricing services for identical
or comparable assets or liabilities.




Level 3 –
Valuations for assets and liabilities that are derived from other valuation
methodologies, including option pricing models, discounted cash flow models and
similar techniques, and not based on market exchange, dealer, or broker-traded
transactions.  Level 3 valuations incorporate certain assumptions and
projections in determining the fair value assigned to such assets and
liabilities.




Assets
measured at fair value on a recurring basis, are summarized below:




TotalLevel
      1
                              
                              
                              Level
      2
                              
                              
                              Level
      3
                              
                              
                              Fair
      ValueAt March 31, 2009Securities
      available for sale
                              
                              $
                              442
                              
                              
                              $
                              301,947
                              
                              
                              $
                              1,302
                              
                              
                              $
                              303,691Mortgage
      servicing rights
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              184
                              
                              
                              
                              184Total
                              
                              $
                              442
                              
                              
                              $
                              301,947
                              
                              
                              $
                              1,486
                              
                              
                              $
                              303,875At December 31, 2008Securities
      available for sale
                              
                              $
                              465
                              
                              
                              $
                              311,209
                              
                              
                              $
                              1,832
                              
                              
                              $
                              313,506Mortgage
      servicing rights
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              124
                              
                              
                              
                              124Total
                              
                              $
                              465
                              
                              
                              $
                              311,209
                              
                              
                              $
                              1,956
                              
                              
                              $
                              313,630




The
Company had no liabilities measured at fair value on a recurring basis at March
31, 2009.




The table
below presents the changes in Level 3 assets measured at fair value on a
recurring basis for the three months ended March 31, 2009.




Balance
      at December 31, 2008
                      
                      $
                      1,956Total
      realized/unrealized losses included in net income
                      
                      
                      (13
                      )Change
      in unrealized loss
                      
                      
                      (530
                      )Purchases,
      sales, issuances and settlements
                      
                      
                      73Transfers
      in and out of Level 3
                      
                      
                      -Balance
      at March 31, 2009
                      
                      $
                      1,486




The fair
value of a financial instrument is the amount at which the instrument could be
exchanged in a current transaction between willing parties, other than in a
forced or liquidation sale. If a quoted market price is available for an
instrument, the fair value to be disclosed for that instrument is the product of
the number of trading units of the instrument times that market
price.


13
 Index





Also, the
Company may be required, from time to time, to measure at fair value certain
other financial and non-financial assets on a nonrecurring basis in accordance
with GAAP. These adjustments to fair value usually result from application of
lower-of-cost-or-fair value accounting or write-downs of individual assets. The
following table summarizes the fair value hierarchy used to determine the
adjustment and the carrying value of the related individual asset for the three
months ended March 31, 2009.




Three
      Months EndedMarch
      31, 2009At
      March 31, 2009
                      
                      
                      
                      
                      
                      TotalLevel
      1
                      
                      
                      Level
      2
                      
                      
                      Level
      3
                      
                      
                      Gains/(Losses)Assets:Loans
                      
                      $
                      -
                      
                      
                      $
                      4,333
                      
                      
                      $
                      -
                      
                      
                      $
                      (213
                      )Other
      real estate owned
                      
                      
                      -
                      
                      
                      
                      739
                      
                      
                      
                      -
                      
                      
                      
                      (7
                      )Other
      assets
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      1,370
                      
                      
                      
                      -Total
      assets
                      
                      $
                      -
                      
                      
                      $
                      5,072
                      
                      
                      $
                      1,370
                      
                      
                      $
                      (220
                      )




The
amount of loans represents the carrying value and related write-down and
valuation allowance of impaired loans for which adjustments are based on the
estimated fair value of the underlying collateral. The other real estate owned
amount represents the carrying value for which adjustments are also based on the
estimated fair value of the property. Other assets consist of equity securities
accounted for at cost which approximates fair value.





NOTE
M – PENSION AND POSTRETIREMENT BENEFIT PLANS





The
Company maintains a Senior Executive Retirement Plan and a Director Retirement
Plan. These plans had no assets at March 31, 2009 and 2008. The following table
presents the components of the net periodic benefit cost:




For
      the Three Months Ended March 31,2009
                                        
                                        
                                        2008Director
                                        
                                        
                                        
                                        
                                        
                                        DirectorRetirement
                                        
                                        
                                        
                                        
                                        
                                        RetirementSERP
                                        
                                        
                                        Plan
                                        
                                        
                                        SERP
                                        
                                        
                                        PlanPeriodic
      benefit cost:Service
      cost
                                        
                                        $
                                        69
                                        
                                        
                                        $
                                        15
                                        
                                        
                                        $
                                        76
                                        
                                        
                                        $
                                        14Interest
      cost
                                        
                                        
                                        35
                                        
                                        
                                        
                                        9
                                        
                                        
                                        
                                        34
                                        
                                        
                                        
                                        8Total
      pension cost
                                        
                                        
                                        104
                                        
                                        
                                        
                                        24
                                        
                                        
                                        
                                        110
                                        
                                        
                                        
                                        22Prior
      service cost amortization
                                        
                                        
                                        19
                                        
                                        
                                        
                                        9
                                        
                                        
                                        
                                        19
                                        
                                        
                                        
                                        9Net
      loss amortization
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        6
                                        
                                        
                                        
                                        -Net
      periodic benefit cost
                                        
                                        $
                                        123
                                        
                                        
                                        $
                                        33
                                        
                                        
                                        $
                                        135
                                        
                                        
                                        $
                                        31




Benefits
expected to be paid over the next five years as presented in the 2008 10K have
not changed. As these Plans are not funded, the Company does not expect to
contribute assets to these plans in 2009.





NOTE
N – SUBSEQUENT EVENT




On April
16, 2009, the Board of Directors declared a cash dividend of $0.07 per
share.  The dividend is payable on June 1, 2009 to stockholders of
record as of May 8, 2009.





14
 Index





ITEM
2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations





Forward-Looking
Statements





From time
to time, the Company may publish forward-looking statements relating to such
matters as anticipated financial performance, business prospects, technological
developments, new products, and similar matters.  The Private
Securities Litigation Reform Act of 1995 provides a safe harbor for
forward-looking statements provided that the Company notes that a variety of
factors could cause the Company’s actual results to differ materially from the
anticipated results expressed in the Company’s forward-looking statements.
Factors that may cause actual results to differ materially from those projected
in the forward-looking statements include, but are not limited to, general
economic conditions that are less favorable than expected, changes in market
interest rates that result in reduced interest margins, risks in the loan
portfolio, including prepayments that are greater than expected, the enactment
of legislation or regulatory changes that have a less than favorable impact on
the business of the Company, and significant increases in competitive pressures.
Forward-looking statements speak only as of the date they are made and the
Company does not undertake to update forward-looking statements to reflect
circumstances or events that occur after the date of the forward-looking
statements or to reflect the occurrence of unanticipated events. Accordingly,
past results and trends should not be used by investors to anticipate future
results or trends.





Comparison
of Financial Condition at March 31, 2009 and December 31, 2008




Total
assets decreased $19.9 million, or 1.6%, to $1.24 billion at March 31, 2009 from
$1.26 billion at December 31, 2008 due to decreases in securities available for
sale and loans. Securities available for sale decreased $9.8 million, or 3.1%,
to $303.7 million at March 31, 2009 from $313.5 million at December 31, 2008,
mainly due to principal repayments of existing securities.  Total
loans decreased $8.9 million, or 1.0%, to $861.4 million at March 31,
2009 from $870.3 million at December 31, 2008, due to prepayment and
refinancing activity, slower origination volume and the impact of the sales of
$10.8 million of lower-coupon, fixed-rate residential mortgages during the
quarter. The cash flows received from the investment and loan portfolios were
used to pay down Federal Home Loan Bank advances and to fund the repurchase of
the Company’s common stock.




Total deposits increased
$12.7 million, or 1.6%, to $795.3 million at March 31, 2009 compared to $782.7
million at December 31, 2008 mainly due to growth in core account balances,
partially offset by runoff in certificates of deposit. Core deposit balances
grew $27.7 million, or 6.8%, to $434.5 million at March 31, 2009 from $406.8
million at December 31, 2008 reflecting competitive products and pricing,
excellent customer service, and targeted promotional activities. The increase in
core deposits were partially offset by a decrease in certificates of deposit of
$15.0 million, or 4.0%, to $360.8 at March 31, 2009 compared to $375.9 million
at December 31, 2008.  Federal Home Loan Bank advances were reduced by
$21.7 million, or 10.4%, to $186.8 million at March 31, 2009 from $208.6 million
at December 31, 2008 reflecting pay downs of overnight borrowings utilizing cash
flows from the investment and loan portfolios.





Total
stockholders’ equity decreased $10.2 million, or 4.5%, to $217.5 million at
March 31, 2009 from $227.7 million at December 31, 2008 as a result of
repurchases of our common stock totaling $13.6 million and cash dividend
payments amounting to $1.1 million. These decreases were partially offset by net
income of $2.1 million for the three months ended March 31, 2009, an increase of
$1.5 million in net unrealized gains on securities available for sale,
stock-based compensation expense totaling $621,000 and ESOP compensation expense
of $253,000.





15
 Index


Credit
Quality





The
Company actively manages credit risk through its underwriting practices and
collection operations and it does not offer nor has it historically offered
residential mortgage loans to subprime or Alt-A borrowers. Non-performing assets
totaled $5.1 million, or 0.41% of total assets, at March 31, 2009 compared
to $5.8 million, or 0.46% of total assets, at December 31, 2008.





Delinquent Loans.The following table sets forth our loan delinquencies by type and by
amount at the dates indicated.




Loans
      Delinquent For60
      - 89 Days
                                                                                        
                                                                                        
                                                                                        90
      Days and Over
                                                                                        
                                                                                        
                                                                                        TotalNumber
                                                                                        
                                                                                        
                                                                                        Amount
                                                                                        
                                                                                        
                                                                                        Number
                                                                                        
                                                                                        
                                                                                        Amount
                                                                                        
                                                                                        
                                                                                        Number
                                                                                        
                                                                                        
                                                                                        Amount(Dollars
      in thousands)At March 31, 2009Residential
      mortgages
                                                                                        
                                                                                        
                                                                                        4
                                                                                        
                                                                                        
                                                                                        $
                                                                                        1,009
                                                                                        
                                                                                        
                                                                                        
                                                                                        6
                                                                                        
                                                                                        
                                                                                        $
                                                                                        952
                                                                                        
                                                                                        
                                                                                        
                                                                                        10
                                                                                        
                                                                                        
                                                                                        $
                                                                                        1,961Commercial
      mortgages
                                                                                        
                                                                                        
                                                                                        7
                                                                                        
                                                                                        
                                                                                        
                                                                                        1,763
                                                                                        
                                                                                        
                                                                                        
                                                                                        10
                                                                                        
                                                                                        
                                                                                        
                                                                                        2,083
                                                                                        
                                                                                        
                                                                                        
                                                                                        17
                                                                                        
                                                                                        
                                                                                        
                                                                                        3,846Construction
                                                                                        
                                                                                        
                                                                                        2
                                                                                        
                                                                                        
                                                                                        
                                                                                        168
                                                                                        
                                                                                        
                                                                                        
                                                                                        4
                                                                                        
                                                                                        
                                                                                        
                                                                                        634
                                                                                        
                                                                                        
                                                                                        
                                                                                        6
                                                                                        
                                                                                        
                                                                                        
                                                                                        802Home
      equity
                                                                                        
                                                                                        
                                                                                        3
                                                                                        
                                                                                        
                                                                                        
                                                                                        137
                                                                                        
                                                                                        
                                                                                        
                                                                                        1
                                                                                        
                                                                                        
                                                                                        
                                                                                        3
                                                                                        
                                                                                        
                                                                                        
                                                                                        4
                                                                                        
                                                                                        
                                                                                        
                                                                                        140Commercial
      and industrial
                                                                                        
                                                                                        
                                                                                        7
                                                                                        
                                                                                        
                                                                                        
                                                                                        278
                                                                                        
                                                                                        
                                                                                        
                                                                                        18
                                                                                        
                                                                                        
                                                                                        
                                                                                        521
                                                                                        
                                                                                        
                                                                                        
                                                                                        25
                                                                                        
                                                                                        
                                                                                        
                                                                                        799Automobile
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -Other
      consumer
                                                                                        
                                                                                        
                                                                                        1
                                                                                        
                                                                                        
                                                                                        
                                                                                        40
                                                                                        
                                                                                        
                                                                                        
                                                                                        2
                                                                                        
                                                                                        
                                                                                        
                                                                                        140
                                                                                        
                                                                                        
                                                                                        
                                                                                        3
                                                                                        
                                                                                        
                                                                                        
                                                                                        180Total
                                                                                        
                                                                                        
                                                                                        24
                                                                                        
                                                                                        
                                                                                        $
                                                                                        3,395
                                                                                        
                                                                                        
                                                                                        
                                                                                        41
                                                                                        
                                                                                        
                                                                                        $
                                                                                        4,333
                                                                                        
                                                                                        
                                                                                        
                                                                                        65
                                                                                        
                                                                                        
                                                                                        $
                                                                                        7,728At December 31, 2008Residential
      mortgages
                                                                                        
                                                                                        
                                                                                        7
                                                                                        
                                                                                        
                                                                                        $
                                                                                        939
                                                                                        
                                                                                        
                                                                                        
                                                                                        7
                                                                                        
                                                                                        
                                                                                        $
                                                                                        1,244
                                                                                        
                                                                                        
                                                                                        
                                                                                        14
                                                                                        
                                                                                        
                                                                                        $
                                                                                        2,183Commercial
      mortgages
                                                                                        
                                                                                        
                                                                                        3
                                                                                        
                                                                                        
                                                                                        
                                                                                        772
                                                                                        
                                                                                        
                                                                                        
                                                                                        8
                                                                                        
                                                                                        
                                                                                        
                                                                                        2,544
                                                                                        
                                                                                        
                                                                                        
                                                                                        11
                                                                                        
                                                                                        
                                                                                        
                                                                                        3,316Construction
                                                                                        
                                                                                        
                                                                                        1
                                                                                        
                                                                                        
                                                                                        
                                                                                        140
                                                                                        
                                                                                        
                                                                                        
                                                                                        3
                                                                                        
                                                                                        
                                                                                        
                                                                                        444
                                                                                        
                                                                                        
                                                                                        
                                                                                        4
                                                                                        
                                                                                        
                                                                                        
                                                                                        584Home
      equity
                                                                                        
                                                                                        
                                                                                        2
                                                                                        
                                                                                        
                                                                                        
                                                                                        126
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        2
                                                                                        
                                                                                        
                                                                                        
                                                                                        126Commercial
      and industrial
                                                                                        
                                                                                        
                                                                                        5
                                                                                        
                                                                                        
                                                                                        
                                                                                        242
                                                                                        
                                                                                        
                                                                                        
                                                                                        15
                                                                                        
                                                                                        
                                                                                        
                                                                                        425
                                                                                        
                                                                                        
                                                                                        
                                                                                        20
                                                                                        
                                                                                        
                                                                                        
                                                                                        667Automobile
                                                                                        
                                                                                        
                                                                                        1
                                                                                        
                                                                                        
                                                                                        
                                                                                        8
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        1
                                                                                        
                                                                                        
                                                                                        
                                                                                        8Other
      consumer
                                                                                        
                                                                                        
                                                                                        1
                                                                                        
                                                                                        
                                                                                        
                                                                                        2
                                                                                        
                                                                                        
                                                                                        
                                                                                        2
                                                                                        
                                                                                        
                                                                                        
                                                                                        140
                                                                                        
                                                                                        
                                                                                        
                                                                                        3
                                                                                        
                                                                                        
                                                                                        
                                                                                        142Total
                                                                                        
                                                                                        
                                                                                        20
                                                                                        
                                                                                        
                                                                                        $
                                                                                        2,229
                                                                                        
                                                                                        
                                                                                        
                                                                                        35
                                                                                        
                                                                                        
                                                                                        $
                                                                                        4,797
                                                                                        
                                                                                        
                                                                                        
                                                                                        55
                                                                                        
                                                                                        
                                                                                        $
                                                                                        7,026





Classified
Assets.The following table shows the aggregate amount of our
classified assets at the date indicated for both loans and foreclosed assets.
The total amount of loans in the table below at March 31, 2009 includes twelve
relationships which represent 65% of the classified asset total.




At
      March 31,
                                
                                
                                At
      December 31,2009
                                
                                
                                2008(In
      thousands)Residential Real Estate(1):Special
      mention
                                
                                $
                                374
                                
                                
                                $
                                379Substandard
                                
                                
                                1,632
                                (2)
                                
                                
                                1,552All Other Loans(3):Special
      mention
                                
                                
                                24,826
                                
                                
                                
                                17,984Substandard
                                
                                
                                23,914
                                
                                
                                
                                22,975Doubtful
                                
                                
                                293
                                
                                
                                
                                894Loss
                                
                                
                                -
                                
                                
                                
                                -Foreclosed
      Assets:Other
      real estate owned
                                
                                
                                739
                                
                                
                                
                                998Total
      classified assets
                                
                                $
                                51,778
                                
                                
                                $
                                44,782(1) Includes
      one-to-four family loans and home equity loans and lines of
      credit.(2) Includes
      ten residential relationships, four of which are in foreclosure or
      liquidation proceedings.(3) Includes
      $11.2 million of construction loans for one- to-four family or condominium
      construction.




16
 Index







Comparison
of Operating Results for the Three Months Ended March 31, 2009 and
2008





Overview




Our
results of operations depend primarily on our net interest income. Net interest
income is the difference between the interest income earned on interest-earning
assets, consisting primarily of loans, investment securities and other
interest-earning assets, and the interest paid on interest-bearing liabilities,
consisting primarily of deposits and Federal Home Loan Bank
advances.





Our
results of operations also are affected by provisions for loan losses,
non-interest income and non-interest expense. Non-interest income consists
primarily of deposit account fees, wealth management fees, increases in the cash
surrender value of bank-owned life insurance and miscellaneous other income.
Non-interest expense consists primarily of compensation and employee benefits,
data processing, occupancy, marketing and public relations, professional
services, FDIC insurance assessment, postage, printing, office supplies, and
other operating expenses. Our results of operations also may be affected
significantly by general and local economic and competitive conditions, changes
in market interest rates, governmental policies and actions of regulatory
authorities.





Net
Income.The Company’s net income was $2.1 million, or $0.14
per diluted share, for the first quarter of 2009 compared to net income of $2.0
million, or $0.12 per diluted share, for the same period in 2008.  The
Company’s improved results were largely due to a significant increase in net
interest income, driven by growth in average earning assets, and an expansion in
non-interest income, mainly attributable to net gains realized from loan sales
and an increase in income from bank-owned life insurance.  The
quarterly operating performance was also affected by higher provisions for loan
losses and an increase in non-interest expenses.




17
 Index


Average balances
and yields.  The following table sets forth average balance
sheets, average yields and costs, and certain other information for the periods
indicated. No tax-equivalent yield adjustments were made, as the effect thereof
was not material. All average balances are daily average balances. Non-accrual
loans were included in the computation of average balances, but have been
reflected in the table as loans carrying a zero yield.




Three
      Months Ended March 31,2009
                                                                                        
                                                                                        
                                                                                        2008Interest
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        InterestAverage
                                                                                        
                                                                                        
                                                                                        and
                                                                                        
                                                                                        
                                                                                        Yield/
                                                                                        
                                                                                        
                                                                                        Average
                                                                                        
                                                                                        
                                                                                        and
                                                                                        
                                                                                        
                                                                                        Yield/Balance
                                                                                        
                                                                                        
                                                                                        Dividends
                                                                                        
                                                                                        
                                                                                        Cost
                                                                                        
                                                                                        
                                                                                        Balance
                                                                                        
                                                                                        
                                                                                        Dividends
                                                                                        
                                                                                        
                                                                                        Cost(Dollars
      in thousands)Interest-earning
      assets:Loans:Residential
      real estate
                                                                                        
                                                                                        $
                                                                                        355,060
                                                                                        
                                                                                        
                                                                                        $
                                                                                        4,943
                                                                                        
                                                                                        
                                                                                        
                                                                                        5.57
                                                                                        %
                                                                                        
                                                                                        $
                                                                                        348,753
                                                                                        
                                                                                        
                                                                                        $
                                                                                        4,921
                                                                                        
                                                                                        
                                                                                        
                                                                                        5.64
                                                                                        %Commercial
      real estate
                                                                                        
                                                                                        
                                                                                        282,593
                                                                                        
                                                                                        
                                                                                        
                                                                                        4,187
                                                                                        
                                                                                        
                                                                                        
                                                                                        5.93
                                                                                        %
                                                                                        
                                                                                        
                                                                                        248,963
                                                                                        
                                                                                        
                                                                                        
                                                                                        4,021
                                                                                        
                                                                                        
                                                                                        
                                                                                        6.46
                                                                                        %Home
      equity
                                                                                        
                                                                                        
                                                                                        121,371
                                                                                        
                                                                                        
                                                                                        
                                                                                        1,418
                                                                                        
                                                                                        
                                                                                        
                                                                                        4.67
                                                                                        %
                                                                                        
                                                                                        
                                                                                        117,254
                                                                                        
                                                                                        
                                                                                        
                                                                                        1,794
                                                                                        
                                                                                        
                                                                                        
                                                                                        6.12
                                                                                        %Commercial
      and industrial
                                                                                        
                                                                                        
                                                                                        82,804
                                                                                        
                                                                                        
                                                                                        
                                                                                        1,113
                                                                                        
                                                                                        
                                                                                        
                                                                                        5.38
                                                                                        %
                                                                                        
                                                                                        
                                                                                        82,382
                                                                                        
                                                                                        
                                                                                        
                                                                                        1,389
                                                                                        
                                                                                        
                                                                                        
                                                                                        6.74
                                                                                        %Consumer
      and other
                                                                                        
                                                                                        
                                                                                        27,752
                                                                                        
                                                                                        
                                                                                        
                                                                                        390
                                                                                        
                                                                                        
                                                                                        
                                                                                        5.62
                                                                                        %
                                                                                        
                                                                                        
                                                                                        30,950
                                                                                        
                                                                                        
                                                                                        
                                                                                        422
                                                                                        
                                                                                        
                                                                                        
                                                                                        5.45
                                                                                        %Total
      loans
                                                                                        
                                                                                        
                                                                                        869,580
                                                                                        
                                                                                        
                                                                                        
                                                                                        12,051
                                                                                        
                                                                                        
                                                                                        
                                                                                        5.54
                                                                                        %
                                                                                        
                                                                                        
                                                                                        828,302
                                                                                        
                                                                                        
                                                                                        
                                                                                        12,547
                                                                                        
                                                                                        
                                                                                        
                                                                                        6.06
                                                                                        %Investment
      securities
                                                                                        
                                                                                        
                                                                                        313,799
                                                                                        
                                                                                        
                                                                                        
                                                                                        3,871
                                                                                        
                                                                                        
                                                                                        
                                                                                        4.93
                                                                                        %
                                                                                        
                                                                                        
                                                                                        211,880
                                                                                        
                                                                                        
                                                                                        
                                                                                        2,618
                                                                                        
                                                                                        
                                                                                        
                                                                                        4.94
                                                                                        %Other
      interest-earning assets
                                                                                        
                                                                                        
                                                                                        14,661
                                                                                        
                                                                                        
                                                                                        
                                                                                        8
                                                                                        
                                                                                        
                                                                                        
                                                                                        0.22
                                                                                        %
                                                                                        
                                                                                        
                                                                                        21,796
                                                                                        
                                                                                        
                                                                                        
                                                                                        241
                                                                                        
                                                                                        
                                                                                        
                                                                                        4.42
                                                                                        %Total
      interest-earning assets
                                                                                        
                                                                                        
                                                                                        1,198,040
                                                                                        
                                                                                        
                                                                                        
                                                                                        15,930
                                                                                        
                                                                                        
                                                                                        
                                                                                        5.32
                                                                                        %
                                                                                        
                                                                                        
                                                                                        1,061,978
                                                                                        
                                                                                        
                                                                                        
                                                                                        15,406
                                                                                        
                                                                                        
                                                                                        
                                                                                        5.80
                                                                                        %Noninterest-earning
      assets(4)
                                                                                        
                                                                                        
                                                                                        53,185
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        33,888Total
      assets
                                                                                        
                                                                                        $
                                                                                        1,251,225
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        $
                                                                                        1,095,866Interest-bearing
      liabilities:Savings
      accounts
                                                                                        
                                                                                        $
                                                                                        105,664
                                                                                        
                                                                                        
                                                                                        
                                                                                        288
                                                                                        
                                                                                        
                                                                                        
                                                                                        1.09
                                                                                        %
                                                                                        
                                                                                        $
                                                                                        67,550
                                                                                        
                                                                                        
                                                                                        
                                                                                        166
                                                                                        
                                                                                        
                                                                                        
                                                                                        0.98
                                                                                        %Money
      market accounts
                                                                                        
                                                                                        
                                                                                        171,175
                                                                                        
                                                                                        
                                                                                        
                                                                                        626
                                                                                        
                                                                                        
                                                                                        
                                                                                        1.46
                                                                                        %
                                                                                        
                                                                                        
                                                                                        174,802
                                                                                        
                                                                                        
                                                                                        
                                                                                        1,009
                                                                                        
                                                                                        
                                                                                        
                                                                                        2.31
                                                                                        %NOW
      accounts
                                                                                        
                                                                                        
                                                                                        30,344
                                                                                        
                                                                                        
                                                                                        
                                                                                        35
                                                                                        
                                                                                        
                                                                                        
                                                                                        0.46
                                                                                        %
                                                                                        
                                                                                        
                                                                                        31,926
                                                                                        
                                                                                        
                                                                                        
                                                                                        41
                                                                                        
                                                                                        
                                                                                        
                                                                                        0.51
                                                                                        %Certificates
      of deposit
                                                                                        
                                                                                        
                                                                                        367,031
                                                                                        
                                                                                        
                                                                                        
                                                                                        2,876
                                                                                        
                                                                                        
                                                                                        
                                                                                        3.13
                                                                                        %
                                                                                        
                                                                                        
                                                                                        354,031
                                                                                        
                                                                                        
                                                                                        
                                                                                        3,757
                                                                                        
                                                                                        
                                                                                        
                                                                                        4.24
                                                                                        %Total
      interest-bearing deposits
                                                                                        
                                                                                        
                                                                                        674,214
                                                                                        
                                                                                        
                                                                                        
                                                                                        3,825
                                                                                        
                                                                                        
                                                                                        
                                                                                        2.27
                                                                                        %
                                                                                        
                                                                                        
                                                                                        628,309
                                                                                        
                                                                                        
                                                                                        
                                                                                        4,973
                                                                                        
                                                                                        
                                                                                        
                                                                                        3.17
                                                                                        %FHLB
      advances
                                                                                        
                                                                                        
                                                                                        204,501
                                                                                        
                                                                                        
                                                                                        
                                                                                        1,737
                                                                                        
                                                                                        
                                                                                        
                                                                                        3.40
                                                                                        %
                                                                                        
                                                                                        
                                                                                        116,519
                                                                                        
                                                                                        
                                                                                        
                                                                                        1,301
                                                                                        
                                                                                        
                                                                                        
                                                                                        4.47
                                                                                        %Other
      interest-bearing liabilities
                                                                                        
                                                                                        
                                                                                        31,780
                                                                                        
                                                                                        
                                                                                        
                                                                                        213
                                                                                        
                                                                                        
                                                                                        
                                                                                        2.68
                                                                                        %
                                                                                        
                                                                                        
                                                                                        11,592
                                                                                        
                                                                                        
                                                                                        
                                                                                        101
                                                                                        
                                                                                        
                                                                                        
                                                                                        3.49
                                                                                        %Total
      interest-bearing liabilities
                                                                                        
                                                                                        
                                                                                        910,495
                                                                                        
                                                                                        
                                                                                        
                                                                                        5,775
                                                                                        
                                                                                        
                                                                                        
                                                                                        2.54
                                                                                        %
                                                                                        
                                                                                        
                                                                                        756,420
                                                                                        
                                                                                        
                                                                                        
                                                                                        6,375
                                                                                        
                                                                                        
                                                                                        
                                                                                        3.37
                                                                                        %Demand
      deposits
                                                                                        
                                                                                        
                                                                                        111,099
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        101,785Other
      noninterest-bearing liabilities
                                                                                        
                                                                                        
                                                                                        8,948
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        10,248Total
      liabilities
                                                                                        
                                                                                        
                                                                                        1,030,542
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        868,453Stockholders'
      equity
                                                                                        
                                                                                        
                                                                                        220,683
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        227,413Total
      liabilities and stockholders' equity
                                                                                        
                                                                                        $
                                                                                        1,251,225
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        $
                                                                                        1,095,866Net
      interest income
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        $
                                                                                        10,155
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        $
                                                                                        9,031Interest
      rate spread(1)
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        2.78
                                                                                        %
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        2.43
                                                                                        %Net
      interest-earning assets(2)
                                                                                        
                                                                                        $
                                                                                        287,545
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        $
                                                                                        305,558Net
      interest margin(3)
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        3.39
                                                                                        %
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        3.40
                                                                                        %Average
      interest-earning assets toaverage
      interest-bearing liabilities
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        131.58
                                                                                        %
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        140.40
                                                                                        %




(1)
            Net
      interest rate spread represents the difference between the yield on
      average interest-earning assets and the cost of average
      interest-bearing   liabilities.


(2)
            Net
      interest-earning assets represents total interest-earning assets less
      total interest-bearing liabilities.


(3)
            Net
      interest margin represents annualized net interest income divided by
      average total interest-earning
assets.


(4)
            Includes
      bank-owned life insurance, the income on which is classified as
      non-interest income.








18
 Index





Rate/Volume
Analysis.  The following table presents the effects of changing
rates and volumes on our net interest income for the periods indicated. The rate
column shows the effects attributable to changes in rate (changes in rate
multiplied by prior volume). The volume column shows the effects attributable to
changes in volume (changes in volume multiplied by prior rate). The net column
represents the sum of the prior columns. For purposes of this table, changes
attributable to both rate and volume, which cannot be segregated, have been
allocated proportionately, based on the changes due to rate and the changes due
to volume.




Three
      Months Ended March 31,2009
      vs. 2008Increase
      (Decrease) Due toVolume
                                                      
                                                      
                                                      Rate
                                                      
                                                      
                                                      Net(In
      thousands)Interest-earning
      assets:Loans:Residential
      real estate
                                                      
                                                      $
                                                      88
                                                      
                                                      
                                                      $
                                                      (66
                                                      )
                                                      
                                                      $
                                                      22Commercial
      real estate
                                                      
                                                      
                                                      515
                                                      
                                                      
                                                      
                                                      (349
                                                      )
                                                      
                                                      
                                                      166Home
      equity
                                                      
                                                      
                                                      61
                                                      
                                                      
                                                      
                                                      (437
                                                      )
                                                      
                                                      
                                                      (376
                                                      )Commercial
      and industrial
                                                      
                                                      
                                                      7
                                                      
                                                      
                                                      
                                                      (283
                                                      )
                                                      
                                                      
                                                      (276
                                                      )Consumer
      and other
                                                      
                                                      
                                                      (45
                                                      )
                                                      
                                                      
                                                      13
                                                      
                                                      
                                                      
                                                      (32
                                                      )Total
      loans
                                                      
                                                      
                                                      626
                                                      
                                                      
                                                      
                                                      (1,122
                                                      )
                                                      
                                                      
                                                      (496
                                                      )Investment
      securities
                                                      
                                                      
                                                      1,257
                                                      
                                                      
                                                      
                                                      (4
                                                      )
                                                      
                                                      
                                                      1,253Other
      interest-earning assets
                                                      
                                                      
                                                      (60
                                                      )
                                                      
                                                      
                                                      (173
                                                      )
                                                      
                                                      
                                                      (233
                                                      )Total
      interest-earning assets
                                                      
                                                      
                                                      1,823
                                                      
                                                      
                                                      
                                                      (1,299
                                                      )
                                                      
                                                      
                                                      524Interest-bearing
      liabilities:Savings
      accounts
                                                      
                                                      
                                                      102
                                                      
                                                      
                                                      
                                                      20
                                                      
                                                      
                                                      
                                                      122Money
      market accounts
                                                      
                                                      
                                                      (21
                                                      )
                                                      
                                                      
                                                      (362
                                                      )
                                                      
                                                      
                                                      (383
                                                      )NOW
      accounts
                                                      
                                                      
                                                      (2
                                                      )
                                                      
                                                      
                                                      (4
                                                      )
                                                      
                                                      
                                                      (6
                                                      )Certificates
      of deposit
                                                      
                                                      
                                                      134
                                                      
                                                      
                                                      
                                                      (1,015
                                                      )
                                                      
                                                      
                                                      (881
                                                      )Total
      interest-bearing deposits
                                                      
                                                      
                                                      213
                                                      
                                                      
                                                      
                                                      (1,361
                                                      )
                                                      
                                                      
                                                      (1,148
                                                      )FHLB
      advances
                                                      
                                                      
                                                      804
                                                      
                                                      
                                                      
                                                      (368
                                                      )
                                                      
                                                      
                                                      436Other
      interest-bearing liabilities
                                                      
                                                      
                                                      140
                                                      
                                                      
                                                      
                                                      (28
                                                      )
                                                      
                                                      
                                                      112Total
      interest-bearing liabilities
                                                      
                                                      
                                                      1,157
                                                      
                                                      
                                                      
                                                      (1,757
                                                      )
                                                      
                                                      
                                                      (600
                                                      )Change
      in net interest income
                                                      
                                                      $
                                                      666
                                                      
                                                      
                                                      $
                                                      458
                                                      
                                                      
                                                      $
                                                      1,124




Net Interest
Income Before Provision for Loan Losses.Net interest income
before provision for loan losses increased $1.1 million, or 12.4%, to $10.2
million for the three months ended March 31, 2009 from the same period in 2008
as a result of growth in average earning assets. Average earning assets expanded
$136.1 million, or 12.8%, to $1.2 billion, mainly due to loan growth and
purchases of mortgage-backed securities. Net interest margin decreased 1
basis point to 3.39% for the three-month period ended March 31, 2009 compared to
3.40% for the same period in 2008.


19
 Index







Interest
Income.  Interest income increased $524,000, or 3.4%, to $15.9
million for the three months ended March 31, 2009 from $15.4 million for the
prior year period, reflecting an increase in total average interest-earning
asset balances, partially offset by a lower yield on average interest-earning
assets. Total average interest-earning asset balances increased $136.1 million,
or 12.8%, to $1.2 billion for the three months ended March 31, 2009 mainly due
to purchases of mortgage-backed securities and loan growth. Total average
investment securities increased by $101.9 million, or 48.1%, to $313.8 million
due to the purchases of mortgage-backed securities, partially offset by
maturities, calls, sales and principal repayments of existing
securities.  Total average loans increased $41.3 million, or 5.0%, to
$869.6 million for the first quarter of 2009 as a result of origination
activity, partially offset by scheduled amortization, prepayments of existing
loans and residential real estate loan sales during the first quarter of 2009.
The yield on average interest-earning assets decreased by 48 basis points to
5.32% for the first quarter of 2009 in connection with the lower interest rate
environment. The decrease in market rates contributed to the downward repricing
of a portion of the Company’s existing assets and to lower rates for new assets.
Since a significant amount of the Company’s average interest-earning assets are
fixed rate and the impact of Federal Reserve Board actions was less pronounced
on the long end of the yield curve, the effect of the decrease in market rates
was primarily limited to home equity, commercial loans and commercial real
estate loans due to the significant number of loans tied to the prime rate or a
shorter-term index. The lower yield on earning assets was also due to the
suspension of the Federal Home Loan Bank of Boston stock dividend for the first
quarter of 2009 and most likely the remainder of the year. In the comparible
2008 period, we received $153,000 in stock dividends from the Federal Home Loan
Bank of Boston




Interest
Expense.Interest expense decreased $600,000, or 9.41%, to
$5.8 million for the three months ended March 31, 2009 from $6.4 million for the
prior year period reflecting a decrease in the average rate paid on
interest-bearing liabilities, partially offset by an increase in average
interest-bearing liabilities. The average rate paid on interest-bearing
liabilities declined 83 basis points to 2.54% for the three months ended March
31, 2009 reflecting the repricing of money market and certificate of deposit
balances in response to interest rate cuts initiated by the Federal Reserve
Board. The Company also benefitted from the impact of lower market interest
rates on the cost of FHLB advances and other interest-bearing
liabilities.  Average interest-bearing liabilities increased $154.1
million, or 20.4%, to $910.5 million for the three months ended March 31, 2009
from $756.4 million for the prior year period reflecting growth in
interest-bearing deposits, FHLB advances and other interest-bearing liabilities.
Total average interest-bearing deposits increased $45.9 million, or 7.3%, to
$674.2 million for the first quarter of 2009 as compared to $628.3 million for
the three months ended March 31, 2008, mainly attributable to an increase in
savings account and certificate of deposit balances. Total average FHLB advances
increased $88.0 million, or 75.5%, to $204.5 million to fund asset growth and to
take advantage of the lower interest rates. Total other interest-bearing
liabilities increased $20.2 million, or 174.2%, to $31.8 million reflecting the
use of longer-term repurchase agreements to support balance sheet expansion and
lengthen the duration of borrowings at attractive rates.




Provision for
Loan Losses.The provision for loan losses increased $356,000 to $540,000
for the three months ended March 31, 2009 as compared to $184,000 for the same
period in 2008 mainly resulting from an increase in reserves for non-performing
and classified loans. The allowance for loan losses is based on management’s
estimate of the probable losses inherent in the portfolio, considering the
impact of certain factors. Among the factors management may consider are prior
loss experience, current economic conditions and their effect on borrowers, the
character and size of the portfolio, trends in nonperforming loans and
delinquency rates and the performance of individual loans in relation to
contractual terms. The provision for loan losses reflects adjustments to the
allowance based on management’s review of the loan portfolio in light of those
conditions. The allowance for loan losses was $8.7 million, or 1.01%, of loans
outstanding at March 31, 2009.




20
 Index







Non-interest
Income.  Non-interest income increased $332,000, or 21.9%, to
$1.9 million for the three months ended March 31, 2009 from $1.5 million
for the comparable period in 2008 due to an increase of $264,000 in income from
bank-owned life insurance reflecting the purchase of an additional $20 million
of cash surrender value life insurance in November of 2008 and net gains of
$125,000 realized from loan sales.




Non-interest
Expense.  Non-interest expense increased $979,000, or 13.6%, to
$8.2 million for the three months ended March 31, 2009 from $7.2 million
for the prior year period. Total salaries and benefits increased $623,000, or
15.4%, mainly due to staffing costs for new branches opened in 2008, new
employees hired to support and facilitate the growth of the Company, a higher
cash incentive accrual associated with improved financial performance, an
increase in stock-based compensation as a result of stock options and restricted
stock granted in the second quarter of 2008 and annual wage increases. Occupancy
costs expanded $156,000, or 30.6%, mainly due to new branches opened in 2008.
Data processing expenses increased $125,000, or 17.4%, as a result of
growth in the total number of loan and deposit accounts serviced, new branches
opened in 2008 and costs for the branch imaging process introduced in all
branches beginning in 2008. The Federal Deposit Insurance Corporation insurance
assessment increased $319,000 in connection with a higher quarterly insurance
premium. Since June 2007, the Company’s insurance premiums have been
substantially reduced by a special one-time credit, which was exhausted in June
2008. The
Federal Deposit Insurance Corporation issued an interim final rule that would
impose a special assessment on all insured deposits as of June 30, 2009, which
would be collected on September 30, 2009.Other expenses decreased
$208,000 of which $168,000 was due to interest accrued in the first quarter of
2008 related to proposed IRS adjustments associated with an examination of the
Company’s 2005 and 2006 tax returns.




Income Tax
Expense.Income tax expense
decreased $36,000 to $1.2 million for three months ended March 31, 2009 from the
comparable 2008 period as a result of a decrease in the effective tax rate
partially offset by higher pretax income. The effective tax rate declined to
35.9% in the first quarter of 2009 compared to 38.4% for the same period in 2008
primarily attributable to an increase of $264,000 in non-taxable income from
bank-owned life insurance.









21
 Index


Market
Risk, Liquidity and Capital Resources





Market
Risk





The
majority of our assets and liabilities are monetary in nature. Consequently, our
most significant form of market risk is interest rate risk (“IRR”). Our assets,
consisting primarily of mortgage loans, have longer maturities than our
liabilities, consisting primarily of deposits. As a result, a principal part of
our business strategy is to manage IRR and reduce the exposure of our net
interest income (“NII”) to changes in market interest rates. Accordingly, our
Board of Directors has established an Asset/Liability Management Committee which
is responsible for evaluating the IRR inherent in our assets and liabilities,
for determining the level of risk that is appropriate given our business
strategy, operating environment, capital, liquidity and performance objectives,
and for managing this risk consistent with the guidelines approved by the Board
of Directors.  With the assistance of an IRR management consultant,
the committee monitors the level of IRR on a regular basis and meets at least on
a quarterly basis to review our asset/liability policies and IRR
position.





We have
sought to manage our IRR in order to minimize the exposure of our earnings and
capital to changes in interest rates. As part of our ongoing asset-liability
management, we currently use the following strategies to manage our IRR:
(i) using alternative funding sources, such as advances from the Federal
Home Loan Bank of Boston, to “match fund” certain longer-term one- to
four-family residential mortgage loans; (ii) continued emphasis on
increasing core deposits; (iii) offering adjustable rate and shorter-term
home equity loans, commercial real estate loans, construction loans and
commercial and industrial loans; (iv) offering a variety of consumer loans,
which typically have shorter-terms and (v ) investing in mortgage-backed
securities with variable rates or fixed rates with shorter durations. Reducing
the average maturity of our interest-earning assets by increasing our
investments in shorter-term loans and securities, as well as loans and
securities with variable rates of interest, helps to better match the maturities
and interest rates of our assets and liabilities, thereby reducing the exposure
of our NII to changes in market interest rates.





Net
interest income at-risk measures the risk of a decline in earnings due to
potential short-term and long term changes in interest rates. The table below
represents an analysis of our IRR as measured by the estimated changes in NII,
resulting from an instantaneous and sustained parallel shift in the yield curve
of +200 basis points at March 31, 2009 and December 31, 2008.Due
to the historically low level of interest rates, a model reflecting a downward
shift in the yield curve is not relevant and was not produced at the dates
indicated.




Net
      Interest Income At-RiskEstimated
      Increase (Decrease)
                        
                        Estimated
      Increase (Decrease)Change
      in Interest Rates
                        
                        in
      NII
                        
                        in
      NII(Basis
      Points)
                        
                        (March
      31, 2009)
                        
                        (December
      31, 2008)-100
                        
                        NA
                        
                        NAStable
                        
                        0.0%
                        
                        0.0%+200
                        
                        0.8%
                        
                        (3.3)%




The
preceding income simulation analysis does not represent a forecast of NII and
should not be relied upon as being indicative of expected operating results.
These hypothetical estimates are based upon numerous assumptions, which are
subject to change, including: the nature and timing of interest rate levels
including the yield curve shape, prepayments on loans and securities, deposit
decay rates, pricing decisions on loans and deposits, reinvestment/replacement
of asset and liability cash flows, and others. Also, as market conditions vary
prepayment/refinancing levels likely deviating from those assumed, the varying
impact of interest rate changes on caps and floors embedded in adjustable rate
loans, early withdrawal of deposits, changes in product preferences, and other
internal/external variables.


22
 Index





Net Portfolio
Value Simulation Analysis.  The Office of
Thrift Supervision requires the computation of amounts by which the net present
value of an institution’s cash flow from assets, liabilities and off balance
sheet items (the institution’s net portfolio value or “NPV”) would change in the
event of a range of assumed changes in market interest rates. The Office of
Thrift Supervision provides all institutions that file a Consolidated
Maturity/Rate Schedule as a part of their quarterly Thrift Financial Report an
interest rate sensitivity report of net portfolio value. The Office of Thrift
Supervision simulation model uses a discounted cash flow analysis and an
option-based pricing approach to measuring the interest rate sensitivity of net
portfolio value. Historically, the Office of Thrift Supervision model estimated
the economic value of each type of asset, liability and off-balance sheet
contract under the assumption that the United States Treasury yield curve
increases or decreases instantaneously by 100 to 300 basis points in 100 basis
point increments. However, given the current low level of market interest rates,
we did not prepare a net portfolio value calculation for any interest rate
decreases. A basis point equals one-hundredth of one percent, and 200 basis
points equals two percent. An increase in interest rates from 3% to 5% would
mean, for example, a 200 basis point increase in the “Change in Interest Rates”
column below. The Office of Thrift Supervision provides us the results of the
interest rate sensitivity model, which is based on information we provide to the
Office of Thrift Supervision to estimate the sensitivity of our net portfolio
value.





The
tables below set forth, at the dates indicated, the estimated changes in our net
portfolio value that would result from the designated instantaneous changes in
the United States Treasury yield curve. Computations of prospective effects of
hypothetical interest rate changes are based on numerous assumptions, including
relative levels of market interest rates, loan prepayments and deposit decay,
and should not be relied upon as indicative of actual results. This data is for
United Bank and its subsidiary only and does not include any yield curve changes
in the assets of United Financial Bancorp, Inc.




March
      31, 2009NPV
      as a Percentage of PresentValue
      of Assets  (3)Estimated
      Increase (Decrease) inChange
      in
                      
                      
                      
                      NPV
                      
                      
                      
                      IncreaseInterest
      Rates
                      
                      Estimated
                      
                      
                      
                      
                      
                      
                      
                      (Decrease)(basis
      points) (1)
                      
                      NPV  (2)
                      
                      Amount
                      
                      Percent
                      
                      NPV
      Ratio (4)
                      
                      (basis
      points)(Dollars
      in thousands)+300
                      
                      $    130,665
                      
                      $      (51,254)
                      
                      (28)%
                      
                      11.24%
                      
                      (316)+200
                      
                      155,006
                      
                      (26,914)
                      
                      (15)
                      
                      12.90
                      
                      (150)+100
                      
                      172,318
                      
                      (9,602)
                      
                      (5)
                      
                      13.95
                      
                      (45)0
                      
                      181,920
                      
                      
                      
                      
                      
                      14.40




23
 Index


December
      31, 2008NPV
      as a Percentage of PresentValue
      of Assets  (3)Estimated
      Increase (Decrease) inChange
      in
                                  
                                  
                                  
                                  NPV
                                  
                                  
                                  
                                  IncreaseInterest
      Rates
                                  
                                  Estimated
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  (Decrease)(basis
      points) (1)
                                  
                                  NPV  (2)
                                  
                                  Amount
                                  
                                  Percent
                                  
                                  NPV
      Ratio (4)
                                  
                                  (basis
      points)(Dollars
      in thousands)+300
                                  
                                  $    122,901
                                  
                                  $      (66,712)
                                  
                                  (35)%
                                  
                                  10.52%
                                  
                                  (424)+200
                                  
                                  147,220
                                  
                                  (42,393)
                                  
                                  (22)
                                  
                                  12.19
                                  
                                  (257)+100
                                  
                                  170,707
                                  
                                  (18,906)
                                  
                                  (10)
                                  
                                  13.68
                                  
                                  (108)0
                                  
                                  189,613
                                  
                                  
                                  
                                  
                                  
                                  14.76(1)
                                  Assumes
      an instantaneous uniform change in interest rates at all
      maturities.(2)
                                  NPV
      is the discounted present value of expected cash flows from assets,
      liabilities and off-balance sheet contracts.(3)
                                  Present
      value of assets represents the discounted present value of incoming cash
      flows on interest-earning assets.(4)
                                  NPV
      ratio represents NPV divided by the present value of
    assets.


The
tables above indicate that at March 31, 2009 and December 31, 2008, in the event
of a 300 basis point increase in interest rates, we would experience a 28% and
35%, respectively, decrease in net portfolio value. We did not prepare a net
portfolio value calculation for interest rate decreases at the dates indicated
due to the historically low interest rate environment.





Certain
shortcomings are inherent in the methodology used in the above interest rate
risk measurement. Modeling changes in net portfolio value require making certain
assumptions that may or may not reflect the manner in which actual yields and
costs respond to changes in market interest rates. In this regard, the net
portfolio value table presented assumes that the composition of our
interest-sensitive assets and liabilities existing at the beginning of a period
remains constant over the period being measured and assumes that a particular
change in interest rates is reflected uniformly across the yield curve
regardless of the duration or repricing of specific assets and liabilities.
Accordingly, although the net portfolio value table provides an indication of
our interest rate risk exposure at a particular point in time, such measurements
are not intended to and do not provide a precise forecast of the effect of
changes in market interest rates on our net interest income and will differ from
actual results.





Liquidity




Liquidity
is the ability to meet current and future financial obligations of a short-term
nature. Our primary sources of funds consist of deposit inflows, advances from
the Federal Home Loan Bank of Boston, loan and mortgage-backed securities
repayments and maturities and sales of loans and other investment securities.
While maturities and scheduled amortization of loans and securities are
predictable sources of funds, deposit flows and mortgage prepayments are greatly
influenced by market interest rates, economic conditions and competition. Our
Asset/Liability Management Committee is responsible for establishing and
monitoring our liquidity targets and strategies in order to ensure that
sufficient liquidity exists for meeting the borrowing needs of our customers as
well as unanticipated contingencies. We seek to maintain a liquidity ratio of
10% or greater. At March 31, 2009 our liquidity ratio was 34.40%, compared to
35.02% at December 31, 2008.




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 generally invested
in interest-earning deposits and short- and intermediate-term
securities.




24
 Index




Our most liquid assets are cash and
cash equivalents. The levels of these assets are dependent on our operating,
financing, lending and investing activities during any given period. At March
31, 2009, cash and cash equivalents totaled $11.9 million. Securities classified
as available-for-sale, which provide additional sources of liquidity, totaled
$303.7 million at March 31, 2009. In addition, at March 31, 2009, we had the
ability to borrow a total of approximately $463.8 million from the Federal Home
Loan Bank of Boston. On that date, we had $186.8 million in advances
outstanding.





Our cash
flows are derived from operating activities, investing activities and financing
activities as reported in our Consolidated Statements of Cash Flows included in
our Consolidated Financial Statements.





At March
31, 2009, we had $14.4 million in loan commitments outstanding. In addition to
commitments to originate loans, we had $159.0 million in unused lines of credit
to borrowers and $23.2 million to be disbursed under existing construction loan
commitments. Certificates of deposit due within one year of March 31, 2009
totaled $249.5 million, or 31.4% 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 Federal Home Loan Bank advances. 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 March 31, 2010. 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.





Our
primary investing activities are the origination of loans and the purchase of
securities.  For the three months ended March 31, 2009, we originated
$60.0 million of loans and purchased $6.6 million of securities. In the
comparable 2008 period, we originated $59.9 million of loans and purchased
$124.4 million of securities.





Financing
activities consist primarily of activity in deposit accounts and Federal Home
Loan Bank advances. We experienced a net increase in total deposits of $12.7
million and $36.8 million for the three months ended March 31, 2009 and 2008,
respectively. 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.





Liquidity
management is both a daily and long-term function of business management. If we
require funds beyond our ability to generate them internally, borrowing
agreements exist with the Federal Home Loan Bank, which provides an additional
source of funds. Federal Home Loan Bank advances decreased by $21.7 million
during the three months ended March 31, 2009 reflecting the use of cash flows
received from the loan and investment portfolios to pay down short term Federal
Home Loan Bank advances. For the same period in 2008, Federal Home Loan Bank
advances increased $33.4 million. Federal Home Loan Bank advances have primarily
been used to fund loan demand and to purchase securities. We have also used
Federal Home Loan Bank advances to “match-fund” certain longer-term one- to
four-family residential mortgage loans and commercial real estate loans. The
Bank’s unused borrowing capacity with the FHLBB, excluding its $12.4 million
line of credit, was approximately $264.0 at March 31, 2009 and $282.1 at
December 31, 2008. At March 31, 2009 and December 31, 2008, the Bank had no
borrowing against the line of credit. We also have access to funding through the
repurchase agreement and brokered CD markets and have received approval from the
Federal Reserve Bank to access its discount window. The Bank and the Company
also applied for and received approval from the FDIC to issue guaranteed debt
through the Temporary Liquidity Guarantee Program (“TLGP”). The FDIC has created
this program to strengthen confidence and encourage liquidity in the banking
system by guaranteeing newly issued senior unsecured debt of banks, thrifts, and
certain holding companies, and by providing full FDIC insurance coverage of
non-interest bearing deposit transaction accounts, regardless of dollar
amount.


25
 Index





Off-Balance
Sheet Arrangements and Aggregate Contractual Obligations





Commitments





As a
financial services provider, we routinely are a party to various financial
instruments with off-balance-sheet risks, such as commitments to extend credit,
standby letters of credit and unused lines of credit. While these contractual
obligations represent our future cash requirements, a significant portion of
commitments to extend credit may expire without being drawn upon. Such
commitments are subject to the same credit policies and approval process
accorded to loans made by us. We consider commitments to extend credit in
determining our allowance for loan losses.





Contractual
Obligations





In the
ordinary course of our operations, we enter into certain contractual
obligations. Such obligations include operating leases for premises and
equipment. The following table summarizes our significant fixed and determinable
contractual obligations and other funding needs by payment date at March 31,
2009. The payment amounts represent those amounts due to the recipient and do
not include any unamortized premiums or discounts or other similar carrying
amount adjustments.





Payments
      Due by Period (in thousands)Less
      Than
                                      
                                      
                                      One
      to Three
                                      
                                      
                                      Three
      to Five
                                      
                                      
                                      More
      thanOne
      Year
                                      
                                      
                                      Years
                                      
                                      
                                      Years
                                      
                                      
                                      Five
      Years
                                      
                                      
                                      TotalContractual Obligations:Certificates
      of deposit
                                      
                                      $
                                      249,514
                                      
                                      
                                      $
                                      85,702
                                      
                                      
                                      $
                                      25,616
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      360,832Federal
      Home Loan Bank advances
                                      
                                      
                                      36,000
                                      
                                      
                                      
                                      73,214
                                      
                                      
                                      
                                      49,084
                                      
                                      
                                      
                                      28,549
                                      
                                      
                                      
                                      186,847Repurchase
      agreements
                                      
                                      
                                      10,464
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      20,000
                                      
                                      
                                      
                                      30,464Standby
      letters of credit
                                      
                                      
                                      1,082
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      1,082Operating
      leases
                                      
                                      
                                      596
                                      
                                      
                                      
                                      936
                                      
                                      
                                      
                                      711
                                      
                                      
                                      
                                      2,834
                                      
                                      
                                      
                                      5,077Capitalized
      leases
                                      
                                      
                                      252
                                      
                                      
                                      
                                      504
                                      
                                      
                                      
                                      503
                                      
                                      
                                      
                                      3,948
                                      
                                      
                                      
                                      5,207Future
      benefits to be paid underretirement
      plans
                                      
                                      
                                      198
                                      
                                      
                                      
                                      3,064
                                      
                                      
                                      
                                      1,037
                                      
                                      
                                      
                                      760
                                      
                                      
                                      
                                      5,059Total
                                      
                                      $
                                      298,106
                                      
                                      
                                      $
                                      163,420
                                      
                                      
                                      $
                                      76,951
                                      
                                      
                                      $
                                      56,091
                                      
                                      
                                      $
                                      594,568Commitments:Commitments
      to extend credit
                                      
                                      $
                                      197,680
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      197,680Commitment
      to invest in venturecapital
      fund
                                      
                                      
                                      850
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      850Total
                                      
                                      $
                                      198,530
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      198,530





26
 Index


Capital
Resources




United
Bank is subject to various regulatory capital requirements, 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 March 31, 2009, the Bank exceeded all regulatory capital
requirements. United Bank is considered “well capitalized” under regulatory
requirements.




To
      Be Well CapitalizedFor
      Capital
                    
                    Under
      RegulatoryActual
                    
                    Adequacy
      Purposes
                    
                    FrameworkAs
      of March 31, 2009:Total
      risk-based capital
                    
                    19.72%
                    
                    8.00%
                    
                    10.00%Tier
      1 risk-based capital
                    
                    18.68%
                    
                    4.00%
                    
                    6.00%Tier
      1 (core) capital
                    
                    12.80%
                    
                    4.00%
                    
                    5.00%Tangible
      equity
                    
                    12.80%
                    
                    1.50%
                    
                    N/AAs
      of December 31, 2008:Total
      risk-based capital
                    
                    18.71%
                    
                    8.00%
                    
                    10.00%Tier
      1 risk-based capital
                    
                    17.76%
                    
                    4.00%
                    
                    6.00%Tier
      1 (core) capital
                    
                    12.31%
                    
                    4.00%
                    
                    5.00%Tangible
      equity
                    
                    12.31%
                    
                    1.50%
                    
                    N/A




27
 Index







ITEM
3.  Quantitative and Qualitative Disclosures About
Market Risk





The
information required by this item is included above in Item 2, Management’s
Discussion and Analysis of Financial Condition and Results of Operations, under
the caption “Market Risk, Liquidity and Capital Resources.”






ITEM
4.  Controls and Procedures





Under the
supervision and with the participation of the Company’s management, including
the Company’s Chief Executive Officer and Chief Financial Officer, the Company
has evaluated the effectiveness of the design and operation of its disclosure
controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under
the Exchange Act) as of the end of the period covered by this report. Based upon
that evaluation, the Chief Executive Officer and Chief Financial Officer
concluded that, as of the end of the period covered by this report, the
Company’s disclosure controls and procedures were effective to ensure that
information required to be disclosed in the reports that the Company files or
submits under the Exchange Act is recorded, processed, summarized and reported,
within the time periods specified in the SEC’s rules and forms and in a timely
manner alerting them to material information relating to the Company (or its
consolidated subsidiary) required to be filed in its periodic SEC
filings.





No change
in our internal controls over financial reporting (as defined in Rules 13a-15(f)
and 15d-15(f) under the Securities Exchange Act of 1934) occurred during the
most recent fiscal quarter that has materially affected, or is reasonably likely
to materially affect, our internal control over financial
reporting.  In the ordinary course of business, we routinely enhance
our internal controls and procedures for financial reporting by either upgrading
our current systems or implementing new systems. Changes have been made and will
be made to our internal controls and procedures for financial reporting as a
result of these efforts.







PART
II.  OTHER INFORMATION






ITEM
1.    Legal Proceedings





At March
31, 2009, the Company was not involved in any legal proceedings, the outcome of
which would be material to the Company’s Consolidated Financial
Statements.





ITEM
1A.  Risk Factors





As of
March 31, 2009, there have been no material changes to the risk factors set
forth in our Annual Report on Form 10-K for the year ended December 31,
2008.








28
 Index


ITEM
2.   Unregistered Sales of Equity Securities and
Use of Proceeds





(a)
No unregistered securities were sold by the Company during the quarter ended
March 31, 2009.





(b)
Not applicable





(c)
The following table provides certain information with regard to shares
repurchased by the Company in the first quarter of 2009.




(c)
                      
                      
                      (d)Total
      Number of
                      
                      
                      Maximum
      NumberShares
                      
                      
                      (or
      Approximate(a)
                      
                      
                      (b)
                      
                      
                      (or
      Units)
                      
                      
                      Dollar
      Value) ofTotal
      Number
                      
                      
                      Average
      Price
                      
                      
                      Purchased
      as Part
                      
                      
                      Shares
      (or Units) thatof
      Shares
                      
                      
                      Paid
      Per
                      
                      
                      of
      Publicly
                      
                      
                      May
      Yet Be(or
      Units)
                      
                      
                      Share
                      
                      
                      Announced
      Plans
                      
                      
                      Purchased
      Under thePeriod
                      
                      Purchased
                      
                      
                      (or
      Unit)
                      
                      
                      or
      Programs
                      
                      
                      Plans
      or ProgramsJanuary
      1 - 31, 2009
                      
                      
                      679,100
                      
                      
                      $
                      14.05
                      
                      
                      
                      679,100
                      
                      
                      
                      79February
      1 - 28, 2009
                      
                      
                      22,779
                      
                      
                      
                      12.91
                      
                      
                      
                      22,779
                      
                      
                      
                      818,438March
      1 - 31, 2009
                      
                      
                      298,700
                      
                      
                      
                      12.69
                      
                      
                      
                      298,700
                      
                      
                      
                      519,738Total
                      
                      
                      1,000,579
                      
                      
                      $
                      13.62
                      
                      
                      
                      1,000,579





ITEM
3.  Defaults Upon Senior Securities





Not
applicable.





ITEM
4.  Submission of Matters toa Vote of Security
Holders





Not
applicable.





ITEM
5.  Other Information





Not
applicable.


29
 Index





ITEM
6.  Exhibits.




3.1
            Articles
      of Incorporation of United Financial Bancorp, Inc. (1)3.2
            Amended
      and Restated Bylaws of United Financial Bancorp, Inc.
  (2)4
            Form
      of Common Stock Certificate of United Financial Bancorp, Inc.
      (1)10.1
            Form
      of Employee Stock Ownership Plan (3)10.2
            Employment
      Agreement by and between United Bank and Richard B. Collins
      (4)10.3
            Change
      in Control Agreement by and between United Bank and Keith E. Harvey
      (4)10.4
            Change
      in Control Agreement by and between United Bank and J. Jeffrey Sullivan
      (4)10.5
            Change
      in Control Agreement by and between United Bank and Mark A. Roberts
      (4)10.6
            United
      Bank 2007 Supplemental Retirement Plan for Senior Executives
      (4)10.7
            Split
      Dollar Life Insurance Agreement by and between United Bank and Richard B.
      Collins (5)10.8
            Split
      Dollar Life Insurance Agreement by and between United Bank and Keith E.
      Harvey (5)10.9
            Split
      Dollar Life Insurance Agreement by and between United Bank and John J.
      Patterson (5)10.10
            United
      Bank 2006 Stock-Based Incentive Plan (6)10.11
            United
      Bank 2009 Annual Incentive Plan10.12
            United
      Bank 2007 Director Retirement Plan (7)10.13
            Directors
      Fee Continuation Plan (3)10.14
            Deferred
      Income Agreement by and between United Bank and Donald G. Helliwell
      (3)10.15
            Deferred
      Income Agreement by and between United Bank and Robert W. Bozenhard, Jr.
      (3)10.16
            Deferred
      Income Agreement by and between United Bank and George W. Jones
      (3)10.17
            United
      Financial Bancorp, Inc. 2008 Equity Incentive Plan (8)11
            Statement
      Regarding Computation of Per Share Earnings (refer to Note D of Part
      I,Item
      1- Consolidated Financial Statements21
            Subsidiaries
      of Registrant (1)31.1
            Certification
      of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act of 200231.2
            Certification
      of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act of 200232.1
            Certification
      of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
      Act of 200232.2
            Certification
      of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
      Act of 2002(1)
            Incorporated
      by reference to the Registration Statement on Form S-1 of United Financial
      Bancorp, Inc. (File No. 333-144245), originally filed with the Securities
      and Exchange Commission on June 29, 2007.(2)
            Incorporated
      by reference to the Form 10-K of United Financial Bancorp, Inc. filed with
      the Securities and Exchange Commission on March 13,
  2009.(3)
            Incorporated
      by reference to the Registration Statement on Form S-1 of United Financial
      Bancorp, Inc. (File No. 333-123371), originally filed with the
      Securities and Exchange Commission on March 16,
  2005.(4)
            Incorporated
      by reference to the Form 8-K of United Financial Bancorp, Inc. filed with
      the Securities and Exchange Commission on November 29,
    2007.(5)
            Incorporated
      by reference to the Form 8-K of United Financial Bancorp, Inc. filed with
      the Securities and Exchange Commission on January 2,
  2008.(6)
            Incorporated
      by reference to Appendix B to the proxy statement for the 2006 Annual
      Meeting of Stockholders of United Financial Bancorp, Inc. (File No.
      000-51369), filed by United Financial Bancorp, Inc. under the Securities
      Exchange Act of 1934, on June 12, 2006.(7)
            Incorporated
      by reference to the Form 8-K of United Financial Bancorp, Inc. filed with
      the Securities and Exchange Commission on November 21,
    2007.(8)
            Incorporated
      by reference to Appendix A of the Company's Definitive Proxy Statement for
      the Annual Meeting of Stockholders (File No. 000-52947), as filed with the
      SEC on April 29, 2008.





30
 Index








SIGNATURES





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








United
      Financial Bancorp, Inc.Date:
      May
      8, 2009
                By:
                /s/ Richard B. CollinsRichard
      B. CollinsChairman,
      President and Chief Executive OfficerDate:
      May
      8, 2009
                By:
                /s/ Mark A. RobertsMark
      A. RobertsExecutive
      Vice President and Chief Financial
Officer







31