United Financial Bancorp 8-K Announces Increase of 20% In Quarterly Cash Dividend to $0.06 Per Share

FOR IMMEDIATE RELEASE	For More Information Contact:
	Mark A. Roberts
	Executive Vice President & CFO
	(413) 787-1700
UNITED FINANCIAL BANCORP, INC. SURPASSES $1 BILLION IN TOTAL ASSETS; ANNOUNCES INCREASE OF 20% IN QUARTERLY CASH DIVIDEND TO $0.06 PER SHARE

WEST SPRINGFIELD, MA—January 30, 2007—United Financial Bancorp, Inc. (the “Company”) (NASDAQ:UBNK), the holding company for United Bank (the “Bank”), reported net income of $766,000, or $0.05 per diluted share, for the fourth quarter of 2006 compared to net income of $1.6 million, or $0.10 per diluted share, for the same period in 2005. The 2006 results were mainly impacted by net interest margin contraction, an increase in non-interest expenses and growth in average earning assets. For the year ended December 31, 2006, the Company earned $4.9 million, or $0.30 per diluted share, compared to $4.4 million for the 2005 period. Earnings-per-share data were not applicable to the year ended December 31, 2005 since the Company’s initial public offering was consummated in July 2005. The Company also announced a quarterly cash dividend of $0.06 per share payable on February 26, 2007 to shareholders of record as of February 12, 2007.

The Company’s total assets increased $102.4 million, or 11.3%, to $1.0 billion at December 31, 2006 compared to $906.5 million at December 31, 2005, reflecting strong loan growth. The balance sheet expansion was funded by cash flows from the investment securities portfolio, an increase in total deposits and the use of additional advances from the Federal Home Loan Bank.

"We are pleased with the results of our efforts to grow our franchise while maintaining excellent asset quality and a strong capital position,” commented Richard B. Collins, President and Chief Executive Officer. “During 2006, we achieved an important milestone as total assets reached $1 billion, we opened two new branches in Northampton and Westfield Massachusetts and we acquired a financial services business.” Mr. Collins also remarked that “while our performance continues to be affected by a challenging interest rate environment and a very competitive local market, we remain committed to improving our financial performance and enhancing shareholder value.”

Financial Highlights Include:

· Gross loans increased $126.3 million, or 19.9%, to $762.1 million at December 31, 2006 compared to $635.8 million at December 31, 2005. Loan growth was solid in all categories, reflecting a sound local economy, a stable real estate market, a relatively low interest rate environment and successful business development efforts.

· Asset quality remained strong, with the ratio of non-performing loans to total loans improving to 0.17% at December 31, 2006 compared to 0.27% at December 31, 2005.

· At December 31, 2006, the allowance for loan losses to total loans was 0.95% and the allowance for loan losses to non-performing loans was 560%.

· Total deposits increased $32.1 million, or 4.9%, to $685.7 million at December 31, 2006 compared to $653.6 million at December 31, 2005. Deposit growth was concentrated in transaction accounts (+1.1%), money market accounts (+7.7%) and certificates of deposit (+14.5%).

· Net interest income declined $26,000 to $6.9 million for the three months ended December 31, 2006 compared to $7.0 million for the same period last year. Net interest margin contracted 30 basis points to 2.89% for the fourth quarter of 2006 in large part due to the flat to inverted yield curve, increasingly competitive pricing conditions for loans and deposits, a shift in deposit demand towards higher-yielding money market and time deposit accounts and the impact of increased short-term market interest rates on the cost to fund earning assets. The impact of net interest margin compression was lessened by an increase of $85.6 million, or 9.8%, in average earning assets mainly due to strong loan growth.

· Non-interest income expanded $93,000, or 7.1%, to $1.4 million for the fourth quarter of 2006 from $1.3 million for the same period last year reflecting strong growth in fee income.

· Non-interest expenses increased $1.1 million, or 19.5%, to $6.8 million for the three months ended December 31, 2006 from $5.7 million for the comparable period in 2005. The growth in non-interest expenses was primarily attributable to costs associated with Sarbanes Oxley Section 404 compliance, the Company’s Stock Based Incentive Plans,

two new branches opened in 2006, a larger loan and deposit account base, new employees hired to support and facilitate the growth of the Company and annual wage increases.

United Financial Bancorp, Inc. is a publicly owned corporation and the holding company for United Bank, a federally chartered bank headquartered at 95 Elm Street, West Springfield, MA 01090. The Company’s common stock is traded on the NASDAQ Global Select Market under the symbol UBNK. United Bank provides an array of financial products and services through its 13 branch offices located throughout Western Massachusetts. Through its Financial Services Group and its partnership with NFP Securities, Inc., the Bank is able to offer access to a wide range of investment and insurance products and services, as well as financial, estate and retirement strategies and products. For more information regarding the Bank’s products and services and for United Financial Bancorp, Inc. investor relations information, please visit www.bankatunited.com.

Except for the historical information contained in this press release, the matters discussed may be deemed to be forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties, including changes in economic conditions in the Company’s market area, changes in policies by regulatory agencies, fluctuations in interest rates, demand for loans in the Company’s market area, competition, and other risks detailed from time to time in the Company’s SEC reports. Actual strategies and results in future periods may differ materially from those currently expected. These forward-looking statements represent the Company’s judgment as of the date of this release. The Company disclaims, however, any intent or obligation to update these forward-looking statements.

UNITED FINANCIAL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CONDITION (unaudited)
(Dollars in thousands, except per share amounts)
	December 31,
Assets	2006			2005
Cash and cash equivalents	$	25,419		$	15,843
Securities available for sale, at fair value		190,237			226,465
Securities to be held to maturity, at amortized cost (fair value:
$3,227 at December 31, 2006 and $3,298 at December 31, 2005		3,241			3,325
Federal Home Loan Bank of Boston stock, at cost		9,274			6,588
Loans:
Residential mortgages		319,107			285,236
Commercial mortgages		175,564			150,099
Construction loans		54,759			28,872
Commercial loans		69,762			59,591
Home equity loans		112,739			86,045
Consumer loans		30,181			25,949
Total loans		762,112			635,792
Net deferred loan costs and fees		1,286			1,148
Allowance for loan losses		(7,218	)		(6,382	)
Loans, net		756,180			630,558
Other real estate owned		562			1,602
Premises and equipment, net		8,821			8,236
Bank-owned life insurance		6,304			6,031
Other assets		8,885			7,865
Total assets	$	1,008,923		$	906,513
Liabilities and Stockholders' Equity
Deposits:
Demand	$	97,190		$	93,301
NOW		37,523			39,922
Savings		65,475			87,253
Money market		165,984			154,177
Certificates of deposit		319,514			278,958
Total deposits		685,686			653,611
Federal Home Loan Bank of Boston advances		169,806			101,880
Repurchase agreements		10,425			8,434
Escrow funds held for borrowers		1,121			1,129
Accrued expenses and other liabilities		4,174			4,454
Total liabilities		871,212			769,508
Stockholders' Equity:
Preferred stock ($0.01 par value; 5,000,000 shares
authorized; no shares issued and outstanding)		-			-
Common stock ($0.01 par value; 60,000,000 shares authorized; 17,205,995
shares issued at December 31, 2006 and December 31, 2005)		172			172
Additional paid-in capital		75,506			78,446
Retained earnings		70,420			66,944
Unearned compensation		(5,772	)		(6,092	)
Accumulated other comprehensive loss		(1,951	)		(2,465	)
Treasury stock, at cost (51,445 shares at December 31, 2006)		(664	)		-
Total stockholders' equity		137,711			137,005
Total liabilities and stockholders' equity	$	1,008,923		$	906,513

UNITED FINANCIAL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED INCOME STATEMENTS (unaudited)
(Amounts in thousands, except per share amounts)
	Three Months Ended					Years Ended
	December 31,					December 31,
	2006			2005		2006			2005
Interest and dividend income:
Loans	$	11,619		$	9,272	$	42,338		$	34,540
Investments		2,082			2,317		8,843			7,970
Other interest-earning assets		235			144		1,021			723
Total interest and dividend income		13,936			11,733		52,202			43,233
Interest expense:
Deposits		5,106			3,647		18,696			12,300
Borrowings		1,892			1,122		5,951			3,906
Total interest expense		6,998			4,769		24,647			16,206
Net interest income before provision for loan losses		6,938			6,964		27,555			27,027
Provision for loan losses		342			92		969			917
Net interest income after provision for loan losses		6,596			6,872		26,586			26,110
Non-interest income:
(Loss) gain on sales of available for sale securities		(4	)		2		(222	)		3
Fee income on depositors’ accounts		1,062			993		4,190			3,744
Income from bank-owned life insurance		46			83		273			326
Other income		295			228		1,151			947
Total non-interest income		1,399			1,306		5,392			5,020
Non-interest expense:
Salaries and benefits		3,715			3,037		12,888			11,167
Occupancy expenses		524			406		1,792			1,494
Marketing expenses		343			466		1,436			1,386
Data processing expenses		661			571		2,474			2,371
Contributions and sponsorships		41			45		174			3,791
Professional fees		446			325		1,148			732
Other expenses		1,114			875		4,124			3,171
Total non-interest expense		6,844			5,725		24,036			24,112
Income before income taxes		1,151			2,453		7,942			7,018
Income tax expense		385			877		3,018			2,649
Net income	$	766		$	1,576	$	4,924		$	4,369
Earnings per share:
Basic	$	0.05		$	0.10	$	0.30			NA
Diluted	$	0.05		$	0.10	$	0.30			NA
Weighted average shares outstanding:
Basic		16,285			16,589		16,468			NA
Diluted		16,314			16,589		16,476			NA
NA - Not applicable

UNITED FINANCIAL BANCORP, INC. AND SUBSIDIARY
SELECTED DATA AND RATIOS (unaudited)
(Dollars in thousands, except per share amounts)
	At or For The Quarters Ended
	Dec. 31			Sep. 30			Jun. 30			Mar. 31			Dec. 31
	2006			2006			2006			2006			2005
Operating Results:
Net interest income	$	6,938		$	6,944		$	6,765		$	6,908		$	6,964
Loan loss provision		342			165			300			162			92
Non-interest income		1,399			1,294			1,441			1,258			1,306
Non-interest expenses		6,844			5,580			5,836			5,776			5,725
Net income		766			1,513			1,290			1,355			1,576
Performance Ratios (annualized):
Return on average assets		0.31	%		0.62	%		0.55	%		0.59	%		0.70	%
Return on average equity		2.23	%		4.44	%		3.75	%		3.93	%		4.62	%
Net interest margin		2.89	%		2.96	%		2.96	%		3.10	%		3.19	%
Non-interest income to average total assets		0.57	%		0.53	%		0.61	%		0.55	%		0.58	%
Non-interest expense to average total assets		2.77	%		2.30	%		2.47	%		2.51	%		2.53	%
Efficiency ratio		82.09	%		65.99	%		71.12	%		70.73	%		69.23	%
Per Share Data:
Diluted earnings per share	$	0.05		$	0.09		$	0.08		$	0.08		$	0.10
Book value per share	$	8.03		$	7.95		$	8.00		$	7.98		$	7.96
Market price at period end	$	13.80		$	12.93		$	13.31		$	12.03		$	11.53
Risk Profile
Non-performing assets as a percent of total assets		0.18	%		0.26	%		0.28	%		0.18	%		0.37	%
Non-performing loans as a percent of total loans, gross		0.17	%		0.27	%		0.33	%		0.26	%		0.27	%
Allowance for loan losses as a percent of total loans, gross		0.95	%		0.94	%		0.98	%		1.02	%		1.00	%
Allowance for loan losses as a percent of non-performing loans		560.40	%		341.78	%		294.82	%		390.18	%		371.91	%
Equity as a percentage of assets		13.65	%		13.90	%		14.31	%		14.49	%		15.11	%
Average Balances
Loans	$	746,256		$	714,918		$	669,409		$	640,832		$	626,556
Securities		194,786			211,101			220,845			227,373			232,469
Total assets		988,939			969,962			945,262			921,155			903,971
Deposits		688,104			687,397			686,630			658,530			653,493
FHLB advances		150,301			134,833			111,316			112,641			102,010
Capital		137,219			136,279			137,639			137,768			136,415
Average Yields/Rates (annualized)
Loans		6.23	%		6.18	%		6.02	%		5.99	%		5.92	%
Securities		4.28	%		4.16	%		4.10	%		4.06	%		3.99	%
Total interest earning assets		5.81	%		5.74	%		5.52	%		5.46	%		5.37	%
Savings accounts		0.84	%		0.84	%		0.83	%		0.82	%		0.60	%
Money market/NOW accounts		2.69	%		2.64	%		2.61	%		2.45	%		2.31	%
Certificates of deposit		4.48	%		4.27	%		4.07	%		3.71	%		3.43	%
FHLB advances		4.79	%		4.69	%		4.03	%		3.97	%		4.15	%
Total interest-bearing liabilities		3.73	%		3.57	%		3.30	%		3.05	%		2.84	%