Exhibit 99.2

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of NewAlliance Bancshares, Inc.

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, consolidated statements of changes in stockholders’ equity and consolidated statements of cash flows present fairly, in all material respects, the financial position of NewAlliance Bancshares, Inc. and its subsidiaries at December 31, 2010 and 2009, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2010 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2010, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on these financial statements and on the Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for their split-dollar life insurance arrangements and defined benefit and other postretirement plans in 2008 upon the adoption of new accounting pronouncements.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Management’s assessment and our audit of NewAlliance Bancshares, Inc.’s internal control over financial reporting also included controls over the preparation of financial statements in accordance with the instructions to the Consolidated Financial Statements for Bank Holding Companies (Form FR Y-9C) to comply with the reporting requirements of Section 112 of the Federal Deposit Insurance Corporation Improvement Act (FDICIA). A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

PricewaterhouseCoopers LLP
Hartford, Connecticut
February 28, 2011

NewAlliance Bancshares, Inc.
Consolidated Balance Sheets

		December 31,				December 31,
(In thousands, except per share data)		2010				2009
Assets
Cash and due from banks		$	108,538			$	96,927
Short term investments			25,000				50,000
Cash and cash equivalents			133,538				146,927
Investment securities available for sale, at fair value (note 4)			2,551,883				2,327,855
Investment securities held to maturity (note 4)			275,872				240,766
Loans held for sale (includes $41,207 and $12,908 measured at fair value at December 31, 2010 and 2009, respectively)			43,290				14,659
Loans, net (note 5)			5,035,993				4,709,582
Federal Home Loan Bank of Boston stock			120,821				120,821
Premises and equipment, net (note 6)			59,731				57,083
Cash surrender value of bank owned life insurance			136,668				140,153
Goodwill (note 7)			527,167				527,167
Identifiable intangible assets (note 7)			27,548				35,359
Other assets (note 8)			115,337				113,941
Total assets		$	9,027,848			$	8,434,313
Liabilities
Deposits (note 9)
Non-interest bearing		$	617,039			$	534,180
Savings, interest-bearing checking and money market			3,107,845				3,008,416
Time			1,514,491				1,481,446
Total deposits			5,239,375				5,024,042
Borrowings (note 10)			2,242,579				1,889,928
Other liabilities			86,922				85,390
Total liabilities			7,568,876				6,999,360
Commitments and contingencies (note 14)
Stockholders’ Equity
Preferred stock, $0.01 par value; authorized 38,000 shares; none issued			—				—
Common stock, $0.01 par value; authorized 190,000 shares; issued 121,503 shares at December 31, 2010 and 121,486 shares at December 31, 2009			1,215				1,215
Additional paid-in capital			1,245,953				1,245,489
Unallocated common stock held by ESOP			(85,063	)			(88,721	)
Unearned restricted stock compensation			(3,169	)			(12,389	)
Treasury stock, at cost (16,543 shares at December 31, 2010 and 15,435 shares at December 31, 2009)			(224,873	)			(211,582	)
Retained earnings			517,091				486,974
Accumulated other comprehensive income (note 18)			7,818				13,967
Total stockholders’ equity			1,458,972				1,434,953
Total liabilities and stockholders’ equity		$	9,027,848			$	8,434,313

See accompanying notes to consolidated financial statements.

NewAlliance Bancshares, Inc.
Consolidated Statements of Income

		Year Ended December 31,
(In thousands, except per share data)		2010				2009				2008
Interest and dividend income
Residential real estate loans		$	119,135			$	131,119			$	138,005
Commercial real estate loans			75,128				70,735				74,159
Commercial business loans			25,893				22,019				27,819
Consumer loans			31,553				34,207				38,984
Investment securities			98,945				113,332				114,471
Federal funds sold and other short-term investments			158				387				1,209
Federal Home Loan Bank of Boston stock			—				—				4,526
Total interest and dividend income			350,812				371,799				399,173
Interest expense
Deposits			50,608				80,681				104,672
Borrowings			65,917				87,911				104,385
Total interest expense			116,525				168,592				209,057
Net interest income before provision for loan losses			234,287				203,207				190,116
Provision for loan losses			17,000				18,000				13,400
Net interest income after provision for loan losses			217,287				185,207				176,716
Non-interest income
Depositor service charges			28,159				27,351				27,180
Loan and servicing income			2,348				819				968
Trust fees			6,311				5,790				6,351
Investment management, brokerage & insurance fees			5,639				6,723				7,893
Bank owned life insurance			5,934				3,548				4,937
Other-than-temporary impairment losses on securities			(30	)			(4,263	)			(2,681	)
Less: Portion of loss recognized in other comprehensive income			(1,150	)			2,866				—
Net impairment loss on securities recognized in earnings			(1,180	)			(1,397	)			(2,681	)
Net gain on securities			2,339				7,314				4,524
Net securities gain			1,159				5,917				1,843
Mortgage origination activity and loan sale income			3,702				5,586				1,551
Net gain (loss) on limited partnerships			3,979				(575	)			(30	)
Other			3,930				4,087				5,203
Total non-interest income			61,161				59,246				55,896
Non-interest expense
Salaries and employee benefits (notes 11 & 12)			95,642				89,646				91,687
Occupancy			17,632				18,202				18,091
Furniture and fixtures			5,872				5,808				6,550
Outside services			18,810				20,098				19,314
Advertising, public relations, and sponsorships			6,015				5,664				6,152
Amortization of identifiable intangible assets			7,811				8,501				9,456
Merger related charges			12,325				84				185
FDIC insurance premiums			7,620				10,479				721
Other			15,282				13,731				14,413
Total non-interest expense			187,009				172,213				166,569
Income before income taxes			91,439				72,240				66,043
Income tax provision (note 13)			33,471				25,797				20,747
Net income		$	57,968			$	46,443			$	45,296
Basic earnings per share (note 19)		$	0.59			$	0.47			$	0.45
Diluted earnings per share (note 19)			0.59				0.47				0.45
Weighted-average shares outstanding (note 19)
Basic			98,515				99,163				99,587
Diluted			98,784				99,176				99,707
Dividends per share		$	0.28			$	0.28			$	0.275

See accompanying notes to consolidated financial statements.

NewAlliance Bancshares, Inc.
Consolidated Statements of Changes in Stockholders’ Equity

														Unallocated																Accumulated
		Common				Par Value				Additional				Common																Other				Total
For the Years Ended December 31, 2008, 2009 and 2010		Shares				Common				Paid-in				Stock Held				Unearned				Treasury				Retained				Comprehensive				Stockholders’
(In thousands, except per share data)		Outstanding				Stock				Capital				by ESOP				Compensation				Stock				Earnings				Income (Loss)				Equity
Balance December 31, 2007			108,852			$	1,215			$	1,242,100			$	(96,039	)		$	(25,466	)		$	(178,401	)		$	451,729			$	11,969			$	1,407,107
Dividends declared ($0.275 per share)																											(27,859	)							(27,859	)
Allocation of ESOP shares, net of tax											(260	)			3,659																				3,399
Treasury shares acquired (note 17)			(1,793	)																			(22,027	)											(22,027	)
Restricted stock expense																			6,992																6,992
Stock option expense											4,247																								4,247
Book (over) tax benefit of stock-based compensation											(408	)																							(408	)
Adoption of new split dollar life insurance accounting pronouncement, net of tax																											(1,062	)							(1,062	)
Adjustment to apply retirement benefits guidance for the changing pension plan measurement date, net of tax																											(524	)			5				(519	)
Comprehensive income:
Net income																											45,296								45,296
Other comprehensive loss, net of tax (note 18)																															(33,950	)			(33,950	)
Total comprehensive income																																			11,346
Balance December 31, 2008			107,059			$	1,215			$	1,245,679			$	(92,380	)		$	(18,474	)		$	(200,428	)		$	467,580			$	(21,976	)		$	1,381,216
Dividends declared ($0.280 per share)																											(28,099	)							(28,099	)
Allocation of ESOP shares, net of tax											(463	)			3,659																				3,196
Treasury shares acquired (note 17)			(1,008	)																			(11,154	)											(11,154	)
Restricted stock expense																			6,085																6,085
Stock option expense											357																								357
Book (over) tax benefit of stock-based compensation											(84	)																							(84	)
Cumulative effect of new OTTI accounting guidance, net of $0.6 million tax effect (note 18)																											1,050				(1,050	)			—
Comprehensive income:
Net income																											46,443								46,443
Other comprehensive income, net of tax (note 18)																															36,993				36,993
Total comprehensive income																																			83,436
Balance December 31, 2009			106,051			$	1,215			$	1,245,489			$	(88,721	)		$	(12,389	)		$	(211,582	)		$	486,974			$	13,967			$	1,434,953
Dividends declared ($0.280 per share)																											(27,851	)							(27,851	)
Allocation of ESOP shares, net of tax											(358	)			3,658																				3,300
Treasury shares acquired (note 17)			(1,194	)																			(14,516	)											(14,516	)
Treasury stock issued for restricted stock awards under the LTCP			86																(1,225	)			1,225												—
Restricted stock expense																			10,445																10,445
Stock option expense											576																								576
Exercise of stock options			17								246																								246
Comprehensive income:
Net income																											57,968								57,968
Other comprehensive loss, net of tax (note 18)																															(6,149	)			(6,149	)
Total comprehensive income																																			51,819
Balance December 31, 2010			104,960			$	1,215			$	1,245,953			$	(85,063	)		$	(3,169	)		$	(224,873	)		$	517,091			$	7,818			$	1,458,972

See accompanying notes to consolidated financial statements

NewAlliance Bancshares, Inc.
Consolidated Statements of Cash Flows

		Year Ended December 31,
(In thousands)		2010				2009				2008
Cash flows from operating activities
Net income		$	57,968			$	46,443			$	45,296
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses			17,000				18,000				13,400
Loss on sale of other real estate owned			245				182				61
Restricted stock compensation expense			10,445				6,085				6,992
Stock option compensation expense			576				357				4,247
ESOP expense			3,300				3,196				3,399
Amortization of identifiable intangible assets			7,811				8,501				9,456
Net amortization/accretion of fair market adjustments from net assets acquired			(1,493	)			(2,873	)			(4,185	)
Net amortization/accretion of investment securities			11,870				6,138				(1,506	)
Deferred income tax (benefit) expense			(4,611	)			(3,588	)			549
Depreciation and amortization			6,455				6,388				6,926
Net gain on sale of securities			(2,339	)			(7,314	)			(4,524	)
Impairment losses on securities			1,180				1,397				2,681
Mortgage origination activity and loan sale income			(3,702	)			(5,586	)			(1,551	)
Proceeds from sales of loans held for sale			337,790				483,364				93,580
Loans originated for sale			(362,719	)			(487,076	)			(97,865	)
(Gain) loss on sale of premises and equipment			(3	)			11				1
(Gain) loss on limited partnerships			(3,979	)			575				30
Increase in cash surrender value of bank owned life insurance			(3,303	)			(3,548	)			(4,937	)
Decrease (increase) in other assets			12,045				(22,143	)			(13,639	)
Increase in other liabilities			1,532				2,801				7,971
Net cash provided by operating activities			86,068				51,310				66,382
Cash flows from investing activities
Purchase of Federal Home Loan Bank Stock			—				—				(7,060	)
Purchase of securities available for sale			(1,196,688	)			(1,146,873	)			(708,638	)
Purchase of securities held to maturity			(150,662	)			(22,931	)			(83,139	)
Proceeds from maturity, sales, calls and principal reductions of securities available for sale			951,984				787,404				856,113
Proceeds from maturity, calls and principal reductions of securities held to maturity			115,022				92,618				64,647
Proceeds from sales of fixed assets			53				32				659
Net (increase) decrease in loans held for investment			(348,011	)			179,546				(241,810	)
Proceeds from sales of other real estate owned			4,064				3,059				1,239
Proceeds from bank owned life insurance			6,788				263				127
Purchase of premises and equipment			(9,071	)			(4,012	)			(4,987	)
Net cash used in investing activities			(626,521	)			(110,894	)			(122,849	)
Cash flows from financing activities
Net increase in customer deposit balances			215,292				576,510				74,051
Net increase (decrease) in short-term borrowings			264,534				(72,434	)			(7,615	)
Proceeds from long-term borrowings			817,100				172,000				538,000
Repayments of long-term borrowings			(727,741	)			(583,359	)			(505,423	)
Shares issued for stock option exercise			246				—				—
Book (over)/under tax benefit of stock-based compensation			—				(84	)			(408	)
Acquisition of treasury shares			(14,516	)			(11,154	)			(22,027	)
Dividends declared			(27,851	)			(28,099	)			(27,859	)
Net cash provided by financing activities			527,064				53,380				48,719
Net decrease in cash and cash equivalents			(13,389	)			(6,204	)			(7,748	)
Cash and cash equivalents, beginning of period			146,927				153,131				160,879
Cash and cash equivalents, end of period		$	133,538			$	146,927			$	153,131
Supplemental information
Cash paid for
Interest on deposits and borrowings		$	118,023			$	171,180			$	211,092
Income taxes paid, net			34,124				28,299				24,885
Noncash transactions
Loans transferred to other real estate owned			4,810				5,641				3,082

See accompanying notes to consolidated financial statements.

1. Summary of Significant Accounting Policies

Financial Statement Presentation

The consolidated financial statements of NewAlliance Bancshares, Inc. (the “Company”) have been prepared in conformity with accounting principles generally accepted in the United States of America. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. All significant intercompany transactions and balances have been eliminated in consolidation. Amounts in prior period financial statements are reclassified whenever necessary to conform to the current year presentation.

The preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. Actual results could differ from those estimates.

Material estimates that are particularly susceptible to significant near-term change relate to the determination of the allowance for loan losses, the obligation and expense for pension and other postretirement benefits, and estimates used to evaluate asset impairment including investment securities, income tax contingencies and deferred tax assets and liabilities and the recoverability of goodwill and other intangible assets.

Management has determined that no subsequent events have occurred following the balance sheet date of December 31, 2010, which require recognition or disclosure in the financial statements.

Cash and Cash Equivalents

For purposes of reporting cash flows, cash and cash equivalents include cash on hand and due from banks and short-term investments with original maturities of three months or less. At December 31, 2010, included in the balance of cash and due from banks were cash on hand of $108.5 million, which includes required reserves in the form of deposits with the Federal Reserve Bank (“FRB”) of approximately $36.7 million. Short-term investments included money market funds of $25.0 million at December 31, 2010.

Investment Securities

Marketable equity and debt securities are classified as either trading, available for sale, or held to maturity (applies only to debt securities). Management determines the appropriate classifications of securities at the time of purchase. At December 31, 2010 and 2009, the Company had no debt or equity securities classified as trading. Held to maturity securities are debt securities for which the Company has the ability and intent to hold until maturity. All other securities not included in held to maturity are classified as available for sale. Held to maturity securities are recorded at amortized cost, adjusted for the amortization or accretion of premiums or discounts. Available for sale securities are recorded at fair value. Unrealized gains and losses, net of the related tax effect, on available for sale securities are excluded from earnings and are reported in accumulated other comprehensive income, a separate component of equity, until realized. Further information relating to the fair value of securities can be found within Note 4 of the Notes to Consolidated Financial Statements.

Premiums and discounts on debt securities are amortized or accreted into interest income over the term of the securities using the level yield method. In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“FASB ASC”) 320 — Debt and Equity Securities, a decline in market value of a debt security below amortized cost that is deemed other than temporary is charged to earnings for the credit related other than temporary impairment (“OTTI”) resulting in the establishment of a new cost basis for the security, while the non-credit related OTTI is recognized in other comprehensive income (“OCI”) if there is no intent to sell or will not be required to sell the security. If an equity security is deemed other-than-temporarily impaired, the full impairment is considered to be credit-related and a charge to earnings would be recorded. Gains and losses on sales of securities are recognized at the time of sale on a specific identification basis and are recorded in other non-interest income as net gain or loss on securities.

Federal Home Loan Bank of Boston stock

As a member of the Federal Home Loan Bank of Boston, (“FHLB Boston”), the Bank is required to hold a certain amount of FHLB Boston stock. This stock is considered to be a non-marketable equity security reported at cost. The level of stock purchases is determined by the Bank’s advances outstanding and the amount of residential mortgage assets on the Bank’s balance sheet. The shares can only be purchased and sold between the FHLB Boston and the Company at a par value of $100 per share.

Loans Held for Sale

The Company currently sells the majority of originated fixed rate residential real estate loans with terms of 15 years and over. Mortgage loans held for sale are carried at fair value. Fair value is estimated using quoted loan market prices provided by government-sponsored entities of Federal National Mortgage Association (“FNMA”) and Federal Home Loan Mortgage Corporation (“FHLMC”). Further information regarding the fair value measurement of mortgage loans held for sale can be found in Note 15 of the Notes to Consolidated Financial Statements. Residential loans are sold by the Company without recourse. The Company currently sells these loans servicing released.

The Company is also involved in the Small Business Administration (“SBA”) loan secondary market. The Company currently sells the guaranteed portion of SBA loans that meet certain criteria and retains the unguaranteed portion and the right to service the sold portion of the loan in its portfolio. Such loans are included in loans held for sale on the balance sheet upon origination. SBA loans held for sale are valued at the lower of cost (less principal payments received and net of deferred fees and costs) or estimated fair value. Fair value is estimated using quoted market prices from a secondary market broker. All other loan originations are classified as loans not held for resale.

Loans Receivable

Loans are stated at their principal amounts outstanding, net of deferred loan fees and costs and fair value adjustments for loans acquired.

The Company’s loan portfolio segments are residential, commercial real estate, commercial construction, commercial and industrial, commercial finance and consumer loans. Commercial construction includes classes for commercial real estate construction and residential development. The consumer segment consists of classes for home equity loans and equity lines of credit and other consumer loans.

Certain direct loan origination fees and costs and fair value adjustments to acquired loans are recognized over the lives of the related loans as an adjustment of interest using the level yield method. When loans are prepaid, sold or participated out, the unamortized portion is recognized as income or expense at that time.

The policy for determining past due or delinquency status for all loan portfolio segments is based on the number of days past due or the contractual terms of the loan.

Interest on loans is credited to income as earned based on the rate applied to principal amounts outstanding. Loans are placed on nonaccrual status when timely collection of principal or interest in accordance with contractual terms is in question. The Company’s policy is to discontinue the accrual of interest on all loan segments when principal or interest payments become 90 days delinquent or sooner if management concludes that circumstances indicate borrowers may be unable to meet contractual principal or interest payments.

The Company performs a quarterly analysis of impaired loans for the commercial loan segments to include those loans risk rated substandard or worse, whose balance is $250,000 or greater. Additionally, the Company analyzes all residential and consumer loans for possible impairment when it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement.

If a residential or consumer loan is in non-accrual or is considered to be impaired, cash payments are applied first to interest income and then as a reduction of principal as specified in the contractual agreement, unless the collection of the remaining principal amount due is considered doubtful. However, if the residential or consumer loan has also been written down the payments are instead applied to principal until the remaining principal amount due is expected to be collected.

For the commercial portfolio segments, if a loan is in non-accrual cash payments are applied first to interest income and then as a reduction of principal as specified in the contractual agreement, unless the collection of the remaining principal amount due is considered doubtful. However, if the loan is considered impaired then interest payments are applied to principal until the remaining principal amount due is expected to be collected.

For residential, consumer and commercial loans if the collection of the remaining principal amount due is considered doubtful, then cash payments received would be applied first solely to principal until the remaining principal amount due is expected to be collected and then as a recovery of any charge-off, if applicable, followed by recording interest income. If ultimately collected, such interest for all loan segments is credited to income when received. Loans are removed from nonaccrual status when they become current as to principal and interest and when, in the opinion of management concern no longer exists as to the collectability of principal and interest.

Allowance for Loan Losses

The adequacy of the allowance for loan losses is regularly evaluated by management. Factors considered in evaluating the adequacy of the allowance include previous loss experience, current economic conditions and their effect on borrowers, the performance of individual loans in relation to contract terms, and other pertinent factors. The provision for loan losses charged to expense is based upon management’s judgment of the amount necessary to maintain the allowance at a level adequate to absorb probable losses inherent in the loan portfolio. Loan losses are charged against the allowance when management believes the collectability of the principal balance outstanding is unlikely. The Bank evaluates the allowance for loan loss requirements through separate analyses of its impaired and non-impaired loans.

Impaired loans are analyzed in accordance with impairment guidance within FASB ASC 310 - Receivables, for which there is a specific allocation of the allowance for loans losses. A loan is considered to be impaired when it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. When the measurement of the impaired loan is less than the recorded investment in the loan, the impairment is recorded through a valuation allowance. Further information relating to impaired loans for which there is an allowance for loan loss allocation can be found in Note 5 of the Notes to Consolidated Financial Statement.

The balance of the portfolio, the non-impaired loans, are analyzed under the guidelines of FASB ASC 450 — Contingencies, using a measurement of estimated credit losses based on historical loss rates adjusted for qualitative and environmental factors. The qualitative and environmental factors include but are not limited to 1) estimated embedded losses in non-performing loans and criticized loans not impaired 2) estimated losses in high risk residential mortgages and home equity loans and lines of credit 3) increased portfolio delinquencies 4) changes in risk ratings and 5) macro economic conditions, including unemployment, consumer confidence, and current real estate market conditions.

Residential loans and consumer loans, which primarily consist of home equity loans and lines of credit are first reviewed for impairment based on current information and events. The analysis to measure impairment is based on the loans observable market price, or the fair value of the collateral less costs to sell. A reserve is created if the measure of the impaired loan is less than the recorded investment in the loan. The Bank then considers other qualitative and environmental factors, including but not limited to the levels and trends in delinquencies, levels and trends in charge-offs and recoveries, trends in volume and terms of loans, current economic and market conditions, changes in underwriting and historical loss rates. Charge-offs against the allowance for loan losses are taken on loans when the Bank determines that the collection of the full loan balance is unlikely.

Commercial real estate, commercial construction and commercial business and commercial finance loans are first reviewed for impairment based on current information and events. The analysis to measure impairment will use one of the following; the present value of expected future cash flows, the loans observable market price, or the fair value of the collateral less costs to sell. A reserve is created if the measure of the impaired loans is less than the recorded investment in the loans. The Bank then considers other qualitative and environmental factors, including but not limited to levels and trends in delinquencies, levels and trends in charge-offs and recoveries, trends in volume and terms of loans, current economic and market conditions, changes in underwriting, levels of criticized and classified assets and risk ratings, internal and external portfolio reviews and historical loss rates. Charge-offs against the allowance for loan losses are taken on loans when the Bank determines that the collection of the full loan balance is unlikely.

While management uses the best available information to recognize losses on loans, future additions to the allowance for loan losses may be necessary based on changes in economic conditions. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Bank’s allowance for loan losses. Such agencies may require the Bank to recognize additions to the allowance based on their judgments about information available to them at the time of their examinations.

The allowance is an estimate, and ultimate losses may vary from management’s estimate. Changes in the estimate are recorded in the results of operations in the period in which they become known, along with provisions for estimated losses incurred during that period. There have been no changes in accounting policies or methodology related to the allowance calculation from the prior period.

Loan Servicing Rights

The Company capitalizes servicing rights for loans sold based on the relative fair value which is allocated between the servicing rights and the loans (without servicing rights).

The cost basis of loan servicing rights is amortized on a level yield basis over the period of estimated net servicing revenue and such amortization is included in the consolidated statement of income as a reduction of loan servicing fee income. Servicing rights are evaluated for impairment by comparing their aggregate carrying amount to their fair value. The fair value of loan servicing rights is estimated using a present value cash flow model. The most important assumptions used in the valuation model are the anticipated rate of loan prepayments and discount rates. All assumptions are based on standards used by market participants. An independent appraisal of the fair value of the Company’s loan servicing rights is obtained as necessary, but at least annually and is used by management to evaluate the reasonableness of the fair value estimates. For interim quarters, management analyzes the current variables and assesses the need for an independent appraisal. Impairment is recognized as an adjustment to loan and servicing income.

Premises and Equipment

Premises and equipment are carried at cost less accumulated depreciation and amortization. Depreciation and amortization are computed on the straight-line method using the estimated lives of the assets. Estimated lives are 5 to 40 years for building and improvements and 3 to 10 years for furniture, fixtures and equipment. Amortization of leasehold improvements is calculated on a straight-line basis over the terms of the related leases or the life of the asset, whichever is shorter. The cost of maintenance and repairs is charged to expense as incurred, whereas significant renovations are capitalized.

Bank Owned Life Insurance

Bank owned life insurance (“BOLI”) represents life insurance on certain employees who have consented to allow the Bank to be the beneficiary of those policies. BOLI is recorded as an asset at cash surrender value. Increases in the cash value of the policies, as well as insurance proceeds received, are recorded in other non-interest income and are not subject to income tax. Management reviews the financial strength of the insurance carriers on a quarterly basis and BOLI with any individual carrier is limited to 15% of capital plus reserves.

Goodwill and Identifiable Intangible Assets

The assets (including identifiable intangible assets) and liabilities acquired in a business combination are recorded at fair value at the date of acquisition. Goodwill is recognized for the excess of the acquisition cost over the fair values of the net assets acquired and is not subsequently amortized. Identifiable intangible assets are subsequently amortized on a straight-line or accelerated basis, over their estimated lives. Management assesses the recoverability of goodwill at least on an annual basis and all intangible assets whenever events or changes in circumstances indicate that their carrying value may not be recoverable. If carrying amount exceeds fair value an impairment charge is recorded to income.

Income Taxes

The Company files a consolidated federal tax return and various combined and separate Company state tax returns. The Company uses the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are established for the temporary differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities. Deferred tax assets are also recognized for available tax carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to be in effect when temporary differences and carryforwards are realized or settled.

The deferred tax asset is subject to reduction by a valuation allowance in certain circumstances. This valuation allowance is recognized if, based on an analysis of available evidence, management determines that it is more likely than not that some portion or all of the deferred tax asset will not be realized. The valuation allowance is subject to ongoing adjustment based on changes in circumstances that affect management’s judgment about the realization of the deferred tax asset. Adjustments to increase or decrease the valuation allowance are charged or credited, respectively, to income tax expense or in certain limited circumstances to equity.

Income tax expense includes the amount of taxes payable for the current year, and the deferred tax benefit or expense for the period. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income tax expense in the period that includes the enactment date.

The Company is required to make a determination of an inventory of tax positions (federal and state) for which the sustainability of the position, based upon the technical merits, is uncertain. The Company regularly evaluates all tax positions taken and the likelihood of those positions being sustained. If management is highly confident that the position will be allowed and there is a greater than 50% likelihood that the full amount of the tax position will be ultimately realized, the company recognizes the full benefit associated with the tax position. Additionally, interest and penalties related to uncertain tax positions are included as a component of income tax expense.

Trust Assets

The Bank had approximately $1.03 billion of assets under management at December 31, 2010 and 2009 in a fiduciary or agency capacity for customers. These assets are not included in the accompanying consolidated financial statements since they are not owned by the Bank. Trust income primarily consists of management fees based on the assets under management.

Pension and Other Postretirement Benefit Plans

The Company has a noncontributory pension plan covering substantially all employees who meet certain age and length of service requirements and who were employed by the Company prior to January 1, 2008. Pension costs related to this plan are based upon actuarial computations of current and future benefits for employees based on years of service and the employee’s highest career earnings over a five-year consecutive period. Costs are charged to non-interest expense and are funded in accordance with requirements of the Employee Retirement Income Security Act and the Pension Protection Act of 2006. Contributions are intended to provide not only for benefits attributed to service to date, but also for those expected to be earned in the future.

In addition to the qualified plan, the Company has supplemental retirement plans for certain key officers. These plans, which are nonqualified, were designed to offset the impact of changes in the pension plan that limit benefits for highly compensated employees under qualified pension plans.

The Company also accrues costs related to postretirement healthcare and life insurance benefits, which recognizes costs over the employee’s period of active employment.

The discount rate is set for the retirement plans by reference to high quality long-term fixed income instrument yields. The discount rates were determined by applying the estimated cash flows of the Company’s retirement plans to the Citigroup Pension Liability Yield Curve. The Moody’s Aa long-term corporate bond index was also reviewed as a benchmark. The expected long-term rate of return on the assets held in our defined pension plan is based on market and economic conditions, the Plan’s asset allocation and other factors.

Based on our review of rates at December 31, 2010, separate discount rates were chosen for each type of benefit plan for the measurement of benefit obligations to better represent the actual plans. Discount rates as of December 31, 2010 were 5.35% for the defined benefit plan, 4.85% for the postretirement plan and 5.25% for the supplemental executive retirement benefit plan. As of December 31, 2009, the discount rates were 5.85% for the defined benefit plan, 5.50% for the postretirement plan and 5.75% for the supplemental executive retirement benefit plan. The expected long-term rate of return on the pension plan assets was 7.50% and 7.75% for December 31, 2010 and 2009, respectively. Under the provisions in FASB ASC 715, Compensation — Retirement Benefits, changes in the fair value of plan assets and the benefit obligation are recognized, net of tax, as an adjustment to other comprehensive income.

Stock-Based Compensation

The Company accounts for stock option and restricted stock awards in accordance with FASB ASC 718, Compensation — Stock Compensation. Pursuant to this guidance, the fair value of stock option and restricted stock awards, measured at grant date, is amortized to compensation expense on a straight-line basis over the vesting period.

Repurchase Agreements

Repurchase agreements are accounted for as secured borrowings since the Company maintains effective control over the transferred securities and the transfer meets the other criteria for such accounting. Securities are sold to a counterparty with an agreement to repurchase the same or substantially the same security at a specified price and date. The Company has repurchase agreements with commercial or municipal customers that are offered as a business banking service. Customer repurchase agreements are for a term of one day and are backed by the purchasers’ interest in certain U.S. Treasury Notes or other U.S. Government securities. The Company also has a single dealer repurchase agreement that was initiated as a means to manage the Company’s interest rate risk. The dealer repurchase agreement was issued for a term of five years and matures in 2012. The dealer repurchase agreement is collateralized by U.S. Government mortgage-backed securities. Obligations to repurchase securities sold are reflected as a liability in the Consolidated Balance Sheets. The Company does not record transactions of repurchase agreements as sales. The securities underlying the repurchase agreements remain in the available-for-sale investment securities portfolio.

Merger Related Charges

The Company accounts for acquisitions in accordance with FASB ASC 805, Business Combinations. Costs that do not meet the conditions for inclusion in the allocation of acquisition cost, costs for contemplated acquisitions and recurring costs related to prior acquisitions are expensed as incurred and are reported in non-interest expense as Merger Related Charges. These charges consist primarily of consulting, legal, system conversion, printing and advertising costs associated with acquired companies, acquisition targets and potential acquisition targets. Additionally, merger related charges in 2010 include costs associated with the impending acquisition of the Company by First Niagara Financial Group, Inc. (“First Niagara”), primarily consisting of legal, investment banking and compensation expenses.

Related Party Transactions

Directors and executive officers of the Company and its subsidiaries and their associates have been customers of and have had transactions with the Company, and management expects that such persons will continue to have such transactions in the future. See Note 5 of the Notes to Consolidated Financial Statements for further information with respect to loans to related parties.

Comprehensive Income

The purpose of reporting comprehensive income is to report a measure of all changes in an entity that result from recognized transactions and other economic events of the period other than transactions with owners in their capacity as owners. Comprehensive income includes net income and certain changes in capital that are not recognized in the statement of income (such as changes in net unrealized gains and losses on securities available for sale). The Company has reported comprehensive income for the years ended December 31, 2010, 2009 and 2008 in the Consolidated Statement of Changes in Stockholders’ Equity. The components of comprehensive income are presented in Note 18 of the Notes to Consolidated Financial Statements.

Segment Reporting

The Company’s only business segment is Community Banking. During the years ended 2010, 2009 and 2008 this segment represented all the revenues and income of the consolidated group and therefore, is the only reported segment as defined by FASB ASC 820, Segment Reporting.

Earnings Per Share

Basic earnings per share (“EPS”) excludes dilution and is calculated by dividing net income available to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted EPS is computed in a manner similar to that of basic EPS except that the weighted-average number of common shares outstanding is increased to include the number of incremental common shares (computed using the treasury stock method) that would have been outstanding if all potentially dilutive common shares (such as stock options and unvested restricted stock) were issued during the period. Unallocated common shares held by the Employee Stock Ownership Plan (“ESOP”) are not included in the weighted-average number of common shares outstanding for either basic or diluted earnings per share calculations.

Earnings per share for the years ended December 31, 2010, 2009 and 2008, can be found in Note 19 of the Notes to Consolidated Financial Statements.

2. Agreement and Plan of Merger

On August 18, 2010, the Company entered into a merger agreement whereby First Niagara will acquire the Company in a stock and cash transaction valued at $1.5 billion. If the merger agreement is approved and the merger is subsequently completed, NewAlliance will become a direct, wholly owned subsidiary of First Niagara. The shares of NewAlliance common stock owned by each NewAlliance stockholder will be converted, at the election of such stockholder, but subject to certain agreed adjustment, election and allocations procedures, into the right to receive one of the following:

	•		for each NewAlliance share owned by such stockholder, $14.28 in cash, without interest (the “Cash Consideration”);
	•		for each NewAlliance share owned by such stockholder, 1.10 shares of First Niagara common stock (the “Stock Consideration”); or
	•		a combination of the Cash Consideration and the Stock Consideration.

As a result of the elective option, the acquisition consideration each Company shareholder elects to receive may be adjusted as necessary so that 86% of NewAlliance common stock will be converted to First Niagara common stock.

As a result of the merger, NewAlliance stockholders who receive Stock Consideration will become stockholders of First Niagara.

The Merger Agreement has been unanimously approved by the board of directors of each of the Company and First Niagara. The merger was approved by the Company’s shareholders at a special meeting of shareholders held on December 20, 2010. Subject to regulatory approvals and other customary closing conditions, the parties anticipate completing the merger early in the second quarter of 2011.

First Niagara is a Delaware corporation that provides a wide range of retail and commercial banking as well as other financial services. As of December 31, 2010, First Niagara had approximately $21.1 billion of assets, $13.1 billion in deposits and 257 branch locations across Upstate New York and Pennsylvania.

3. Changes in Accounting Principles and Effects of New Accounting Pronouncements

Receivables (Topic 310)

In January 2011, the FASB issued Accounting Standards Update (“ASU”) No. 2011-01, Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20. The amendments in this update temporarily delay the effective date of disclosures about troubled debt restructurings in ASU 2010-20, Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses. The effective date for the troubled debt restructuring disclosures will be aligned with the effective date for new guidance for determining what constitutes a troubled debt restructuring. Currently, that guidance is anticipated to be effective for interim and annual periods ending after June 15, 2011. The adoption of ASU No. 2011-01 will not have a material impact on the financial statements as it impacts disclosures only.

In July 2010, the FASB issued ASU No. 2010-20, Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses. The statement is intended to improve the transparency of financial reporting by requiring enhanced disclosures about a bank’s allowance for loan losses and the credit quality of its financing receivables (generally defined as loans and leases). The primary goal of the disclosure requirements is to provide more information about the credit risk in a bank’s portfolio of loans and how that risk is analyzed and assessed in arriving at the allowance for loan loss. The guidance is effective for public entities for annual and interim reporting periods ending on or after December 15, 2010. The adoption of ASU No. 2010-06 on December 31, 2010 did not have a material impact on the financial statements as it only impacted disclosures.

Business Combinations (Topic 805)

In December 2010, the FASB issued ASU 2010-29, Disclosure of Supplementary Pro Forma Information for Business Combinations. The objective of this update is to address diversity in practice about the interpretation of the pro forma revenue and earnings disclosure requirements for business combinations. The amendments in this update specify that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting only. This update also expands supplemental pro forma disclosures under Topic 805. These amendments are effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. The adoption of ASU No. 2010-29 will not have an impact on the financial statements as it affects disclosures only and will apply prospectively to future business combinations.

Intangibles — Goodwill and Other (Topic 350)

In December 2010, the FASB issued ASU 2010-28, When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts. The objective of this update is to address questions about entities with reporting units with zero or negative carrying amounts because some entities concluded that Step 1 of the test is passed in those circumstances because the fair value of their reporting unit will generally be greater than zero. The amendments in this update modify Step 1 of the goodwill impairment test for reporting with zero or negative carrying amounts. The amendments in this update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2010. The Company’s reporting unit for goodwill impairment testing is greater than zero, therefore, ASU No. 2010-28 will not apply and there will be no impact on the financial statements.

Fair Value Measurements and Disclosures (Topic 820)

In February 2010, the FASB issued ASU No. 2010-06, Improving Disclosures about Fair Value Measurements. The amendment to Topic 820, Fair Value Measurements and Disclosures, requires additional disclosures about fair value measurements including transfer in and out of Levels 1 and 2 and higher levels of disaggregation for the different types of financial instruments. For the reconciliation of Level 3 fair values measurements, information about purchases, sales, issuances and settlements should be presented separately. The guidance was effective for annual and interim reporting periods beginning after December 15, 2009, except for the disclosure of information about sales, issuances and settlements on a gross basis for assets and liabilities classified as level 3, which is effective for reporting periods beginning after December 15, 2010. The adoption of ASU No. 2010-06 on January 1, 2010 did not have a material impact on the financial statements as it impacts disclosures only.

Investments — Debt and Equity Securities (Topic 320)

In April 2009, the FASB issued new guidance on the Recognition and Presentation of Other-Than-Temporary Impairments (FASB ASC 320-10), which amends FASB ASC 320, Investments — Debt and Equity Securities, to make the other-than-temporary impairment (“OTTI”) guidance more operational and to improve the presentation of other-than-temporary impairments in the financial statements. This guidance replaced the existing requirement that the entity’s management assert it has both the intent and ability to hold an impaired debt security until recovery with a requirement that management assert it does not have the intent to sell the security, and it is more likely than not it will not have to sell the security before recovery of its cost basis. When an other-than-temporary impairment exists under this stated assertion, the amount of impairment related to the credit loss component would be recognized in earnings while the remaining amount would be recognized in other comprehensive income. This guidance provides increased disclosure about the credit and noncredit components of impaired debt securities that are not expected to be sold and also requires increased and more frequent disclosures regarding expected cash flows, credit losses, and an aging of securities with unrealized losses. Although this amendment does not result in a change in the carrying amount of debt securities, it does require that the portion of an other-than-temporary impairment not related to a credit loss for a held-to-maturity security be recognized in a new category of other comprehensive income and be amortized over the remaining life of the debt security as an increase in the carrying value of the security. This new guidance does not amend existing recognition and measurement guidance for other-than-temporary impairments of equity securities. This guidance was effective for interim and annual periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. The Company did not elect early application and the adoption resulted in a $1.0 million cumulative effect adjustment, net of taxes, to increase retained earnings and decrease accumulated other comprehensive income as of April 1, 2009 for the non-credit component of debt securities for which an other-than-temporary impairment was previously recognized. Refer to Note 4 of the Notes to Consolidated Financial Statements for further information on the Company’s adoption of this guidance.

Transfers of Financial Assets (Topic 860)

In December 2009, the FASB issued ASU No. 2009-16 codifying the new guidance issued in June 2009 regarding the Transfer of Financial Assets. This guidance requires entities to provide more information about sales of securitized financial assets and similar transactions, particularly if the seller retains some risk in the assets. The guidance eliminates the concept of a qualifying special-purpose entity, changes the requirements for the derecognition of financial assets, and enhances the disclosure requirements for sellers of the assets. This guidance was effective for the fiscal year beginning after November 15, 2009. The adoption of ASU No. 2009-16 on January 1, 2010 did not have a material impact on the financial statements.

Consolidation (Topic 810)

In December 2009, the FASB issued ASU No. 2009-17 codifying the new guidance issued in June 2009 regarding Consolidations. The guidance requires an enterprise to perform an analysis to determine whether the enterprise’s variable interest or interests give it a controlling financial interest in a variable interest entity (which would result in the enterprise being deemed the primary beneficiary of that entity and, therefore, obligated to consolidate the variable interest entity in its financial statements); to require ongoing reassessments of whether an enterprise is the primary beneficiary of a variable interest entity; to revise guidance for determining whether an entity is a variable interest entity; and to require enhanced disclosures that will provide more transparent information about an enterprise’s involvement with a variable interest entity. The guidance was effective for interim periods as of the beginning of the first annual reporting period beginning after November 15, 2009. The adoption of ASU No. 2009-17 on January 1, 2010 did not have a material impact on the financial statements.

Subsequent Events (Topic 855)

In February 2010, the FASB issued ASU 2010-09 for amendments to certain recognition and disclosure requirements. Among other things, this guidance retracts, for public entities, the requirement to disclose the date through which subsequent events have been evaluated and whether that date is the date the financial statements were issued or were available to be issued. The portion of the ASU that addresses the disclosure of the date through which subsequent events have been evaluated, and that impacts the Company, was effective upon issuance.

4. Investment Securities

The amortized cost, gross unrealized gains, gross unrealized losses and estimated fair values of investment securities at December 31, 2010 and 2009 are as follows:

		December 31, 2010																December 31, 2009
						Gross				Gross												Gross				Gross
		Amortized				unrealized				unrealized				Fair				Amortized				unrealized				unrealized				Fair
(In thousands)		cost				gains				losses				value				cost				gains				losses				value
Available for sale
U.S. Treasury obligations		$	—			$	—			$	—			$	—			$	597			$	—			$	—			$	597
U.S. Government sponsored enterprise obligations			476,552				4,620				(3,270	)			477,902				198,692				1,621				(583	)			199,730
Corporate obligations			8,098				587				—				8,685				8,139				378				—				8,517
Other bonds and obligations			15,141				139				(1,616	)			13,664				14,625				127				(1,518	)			13,234
Auction rate certificates			—				—				—				—				27,550				—				(2,755	)			24,795
Marketable equity securities			8,096				45				—				8,141				8,567				216				—				8,783
Trust preferred equity securities			47,609				23				(12,311	)			35,321				48,754				—				(15,458	)			33,296
Private label residential mortgage-backed securities			19,634				8				(1,184	)			18,458				23,871				—				(3,015	)			20,856
Residential mortgage-backed securities			1,941,276				58,559				(10,123	)			1,989,712				1,951,297				68,393				(1,643	)			2,018,047
Total available for sale			2,516,406				63,981				(28,504	)			2,551,883				2,282,092				70,735				(24,972	)			2,327,855
Held to maturity
Residential mortgage-backed securities			267,482				9,191				(48	)			276,625				230,596				11,360				—				241,956
Other bonds			8,390				256				—				8,646				10,170				243				(38	)			10,375
Total held to maturity			275,872				9,447				(48	)			285,271				240,766				11,603				(38	)			252,331
Total securities		$	2,792,278			$	73,428			$	(28,552	)		$	2,837,154			$	2,522,858			$	82,338			$	(25,010	)		$	2,580,186

The securities portfolio is reviewed on a monthly basis for the presence of other-than-temporary impairment (“OTTI”). In accordance with OTTI guidance issued by the FASB in 2009, credit related OTTI for debt securities is recognized in earnings while non-credit related OTTI is recognized in other comprehensive income (“OCI”) if there is no intent to sell or will not be required to sell the security. If an equity security is deemed other-than-temporarily impaired, the full impairment is considered to be credit-related and a charge to earnings would be recorded.

During the three months ended December 31, 2010, September 30, 2010 and June 30, 2010, a pooled trust preferred security, which had a previous credit related impairment charge during 2009, was deemed to have additional credit related OTTI loss in the amounts of $250,000, $378,000 and $552,000, respectively. These credit related impairments were based on further declines in expected cash flows and were reclassified from other comprehensive income as they were previously recognized as non-credit related. Management utilizes nine cash flow scenarios received quarterly from the underwriter to analyze this security for potential OTTI. The nine scenarios cover various default rates, recovery rates and prepayment options over different time periods. Two of the nine cash flow analyses continue to indicate impairment over the life of the security, the driver of which is the recovery rate, modeled at 0%. Past history of the security indicates that there have not been any recoveries to date from securities that have defaulted. Based on these factors, management recorded a credit related impairment totaling $1.2 million during 2010. The credit impairments represent the average loss of the two negative cash flow analyses at each period. At December 31, 2010, the pooled trust preferred security had an amortized cost and fair value of approximately $247,000 and $221,000, respectively. There is no intent to sell nor is it more likely than not that the Company will be required to sell this security.

The following tables present the fair value of investments with continuous unrealized losses for less than one year and those that have been in a continuous loss position for more than one year as of December 31, 2010 and December 31, 2009. Of the securities summarized, 64 issues have unrealized losses for less than twelve months and 30 have unrealized losses for twelve months or more at December 31, 2010. This compares to a total of 72 issues that had an unrealized loss at December 31, 2009, of which 28 were in a continuous loss position for less than one year and 44 had unrealized losses for more than one year.

		December 31, 2010
		Less Than One Year								More Than One Year								Total
		Fair				Unrealized				Fair				Unrealized				Fair				Unrealized
(In thousands)		value				losses				value				losses				value				losses
U. S. Government sponsored enterprise obligations		$	145,594			$	3,264			$	1,513			$	6			$	147,107			$	3,270
Corporate obligations			—				—				—				—				—				—
Other bonds and obligations			3,520				215				6,675				1,401				10,195				1,616
Auction rate certificates			—				—				—				—				—				—
Marketable equity securities			—				—				—				—				—				—
Trust preferred equity securities			—				—				32,798				12,311				32,798				12,311
Private label residential mortgage-backed securities			629				56				16,279				1,128				16,908				1,184
Residential mortgage-backed securities			455,243				10,171				—				—				455,243				10,171
Total securities with unrealized losses		$	604,986			$	13,706			$	57,265			$	14,846			$	662,251			$	28,552

		December 31, 2009
		Less Than One Year								More Than One Year								Total
		Fair				Unrealized				Fair				Unrealized				Fair				Unrealized
(In thousands)		value				losses				value				losses				value				losses
U. S. Government sponsored enterprise obligations		$	83,108			$	542			$	3,774			$	41			$	86,882			$	583
Corporate obligations			—				—				—				—				—				—
Other bonds and obligations			7,500				1,556				—				—				7,500				1,556
Auction rate certificates			—				—				24,795				2,755				24,795				2,755
Marketable equity securities			—				—				—				—				—				—
Trust preferred equity securities			249				1,160				33,047				14,298				33,296				15,458
Private label residential mortgage-backed securities			—				—				20,856				3,015				20,856				3,015
Residential mortgage-backed securities			246,600				1,643				—				—				246,600				1,643
Total securities with unrealized losses		$	337,457			$	4,901			$	82,472			$	20,109			$	419,929			$	25,010

Management believes that no individual unrealized loss as of December 31, 2010 represents an other-than-temporary impairment, based on its detailed monthly review of the securities portfolio. Among other things, the other-than-temporary impairment review of the investment securities portfolio focuses on the combined factors of percentage and length of time by which an issue is below book value as well as consideration of issuer specific (present value of cash flows expected to be collected, issuer rating changes and trends, credit worthiness and review of underlying collateral), broad market details and the Company’s intent to sell the security or if it is more likely than not that the Company will be required to sell the debt security before recovering its cost. The Company also considers whether the depreciation is due to interest rates or credit risk. The following paragraphs outline the Company’s position related to unrealized losses in its investment securities portfolio at December 31, 2010.

The unrealized losses reported on residential mortgage-backed securities relate to securities issued by FNMA and FHLMC due to changes in market interest rates since the date purchased. The unrealized loss on private label residential mortgage-backed securities is primarily concentrated in one BBB rated private-label mortgage-backed security which is substantially paid down, well seasoned and of an earlier vintage that has not been significantly affected by high delinquency levels or vulnerable to lower collateral coverage as seen in later issued pools. Widening in non-agency mortgage spreads since the date purchased is the primary factor for the unrealized losses reported on private label residential mortgage-backed securities. None of the securities are backed by subprime mortgage loans and none have suffered losses. Other than the BBB rated security, there is one security rated AA and the remaining securities are AAA rated. Management reviewed the above factors and issuer specific data and concluded that the private-label mortgage-backed securities are not other-than-temporarily impaired.

The unrealized loss on other bonds and obligations primarily relates to a position in an adjustable rate mortgage mutual fund. During 2009, the Company recorded an OTTI loss of $816,000 on this adjustable rate mortgage mutual fund due to a decrease in the credit quality of the security coupled with a loss recognized by the fund. As of December 31, 2010, the investment carries a market value to book value ratio of 82.66%, a weighted average underlying investment credit rating of AAA and it continues to pay normal monthly dividends. There is no intent to sell nor is it more likely than not that the Company will be required to sell this security and management has therefore concluded that the fund experienced no further OTTI in the twelve months ended December 31, 2010.

Trust preferred securities include two pooled trust preferreds with an amortized cost of $4.9 million, one of which is rated BB and the other is rated CC at December 31, 2010. During 2009, the Company recorded a credit related impairment of $581,000 on the CC rated pooled trust preferred security based on a cash flow analysis and subsequent credit related impairments of $1.2 million during the twelve months ended December 31, 2010 as discussed above. The remaining $42.7 million of trust preferred securities are comprised of twelve “individual names” issues with the following ratings: $15.6 million rated A to A-, $25.6 million rated BBB- to BBB+ and $1.5 million rated BB. The unrealized losses reported for trust preferred securities relate to the financial and liquidity stresses in the fixed income markets and in the banking sector and are not reflective of individual stresses in the individual company names. The ratings on all of the issues with the exception of the CC rated pooled security have improved or remained the same since December 31, 2009. Additionally, there have not been any disruptions in the cash flows of these securities and all are currently paying the contractual principal and interest payments. A detailed review of the two pooled trust preferreds and the “individual names” trust preferred equity securities was completed by management. This review included an analysis of collateral reports, cash flows, stress default levels and financial ratios of the underlying issuers. Management reviewed the above factors and issuer specific data and concluded that after the OTTI loss recorded on the CC rated pooled trust preferred security, these securities are not other-than-temporarily impaired.

The Company has no intent to sell nor is it more likely than not that the Company will be required to sell any of the securities contained in the table during the period of time necessary to recover the unrealized losses, which may be until maturity.

The following table presents the changes in the credit loss component of the amortized cost of debt securities available for sale that have been written down for other-than-temporary impairment loss and recognized in earnings. The credit loss component represents the difference between the present value of expected future cash flows and the amortized cost basis of the security prior to considering credit losses.

		Twelve Months Ended				Twelve Months Ended
		December 31,				December 31,
(In thousands)		2010				2009
Balance, beginning of period		$	1,397			$	—
Additions:
Initial credit impairments which were not previously recognized as a component of earnings			—				1,207
Subsequent credit impairments			1,180				190
Reductions:
Securities sold			—				—
Balance, end of period		$	2,577			$	1,397

As of December 31, 2010, the amortized cost and fair values of debt securities and short-term obligations, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

		Available for Sale								Held to Maturity
(In thousands)		Amortized cost				Fair value				Amortized cost				Fair value
December 31, 2010
Due in one year or less		$	27,727			$	26,528			$	2,205			$	2,236
Due after one year through five years			96,927				99,476				5,185				5,410
Due after five years through ten years			372,678				371,794				—				—
Due after ten years			50,068				37,775				1,000				1,000
Mortgage-backed securities			1,960,910				2,008,170				267,482				276,625
Total debt securities		$	2,508,310			$	2,543,743			$	275,872			$	285,271

Securities with a fair value of approximately $944.5 and $673.8 million at December 31, 2010 and 2009, respectively, were pledged to secure public deposits, repurchase agreements and FHLB borrowings.

Proceeds from sales of available for sale securities for the years ending December 31, 2010, 2009 and 2008 were $55.0 million, $169.5 million and $286.3 million, respectively. The following is a summary of realized gains and losses on sales of securities available for sale during the periods presented:

		Debt Securities												Equity Securities
		Year Ended December 31,												Year Ended December 31,
(In thousands)		2010				2009				2008				2010				2009				2008
Realized gains		$	2,139			$	7,367			$	5,814			$	200			$	—			$	27
Realized losses			—				(53	)			(20	)			—				—				(1,297	)

5. Loans

The composition of the Company’s loan portfolio, by segment, was as follows:

		December 31,
(In thousands)		2010				2009
Residential real estate		$	2,535,060			$	2,396,303
Commercial real estate			1,250,992				1,100,880
Commercial construction			110,486				132,370
Commercial and industrial			396,760				409,312
Commercial finance			113,739				1,899
Consumer			684,179				721,281
Total loans			5,091,216				4,762,045
Allowance for loan losses			(55,223	)			(52,463	)
Total loans, net		$	5,035,993			$	4,709,582

As of December 31, 2010 and 2009, the Company’s residential real estate loan portfolio segment and the majority of the consumer loan portfolio segment, which consists of home equity loans and equity lines of credit are collateralized by one-to-four family homes and condominiums, the majority of which are located in Connecticut and Massachusetts. The commercial real estate loan and commercial construction portfolio segments are collateralized primarily by multi-family, commercial and industrial properties located predominately in Connecticut and Massachusetts. A variety of different assets, including accounts receivable, inventory and property, plant and equipment, collateralize the majority of the commercial and industrial and commercial finance loan portfolio segments. The Company does not originate or directly invest in subprime loans.

Loan Delinquencies

The following table provides an age analysis of delinquent loans for the periods presented. Loans that are 90 days or more past due are on nonaccrual status. The Company does not have any loans that are delinquent 90 days or more and still accruing interest.

		At December 31, 2010
		30-59 Days Past				60-89 Days Past				90 days or more
(Dollars in thousands)		Due				Due				Past due				Total Past Due				Principal Balance
Residential real estate (one-to-four-family)		$	7,559			$	5,660			$	46,633			$	59,852			$	2,535,060
Commercial real estate			743				893				18,803				20,439				1,250,992
Commercial construction
Commercial real estate construction			—				—				—				—				86,863
Residential development			—				—				2,398				2,398				23,623
Total commercial construction loans			—				—				2,398				2,398				110,486
Commercial and industrial			1,921				192				4,158				6,271				396,760
Commercial finance			—				—				—				—				113,739
Consumer
Home equity loans and home equity lines			1,448				500				2,846				4,794				672,337
Other consumer			182				126				45				353				11,842
Total consumer			1,630				626				2,891				5,147				684,179
Total		$	11,853			$	7,371			$	74,883			$	94,107			$	5,091,216