Branch Locations Bethel

Our strength is our future 24 Grassy Plain Street

203.830.4230

79 Stony Hill Road

203.798.7232

Bridgewater

29 Main Street South

860.210.4124

Brookfield

200 Federal Road

203.775.5219

828 Federal Road

203.740.4436

226 Main Street*

203.830.4200

158 Main Street

203.830.6935

100 Mill Plain Road

203.830.4220

71 Newtown Road

203.830.6955

126 North Street

203.830.4210

Kent

15 Kent Green Blvd

860.927.3529

New Fairfield

24 Route 39

203.746.7913

New Milford

164 Danbury Road

860.355.1842

41 East Street

860.210.2670

Newtown

1-A Commerce Road

203.426.4414

Ridgefield

100 Danbury Road

203.431.5948

Sharon

5 Gay Street

860.364.5555

Southbury

406 Main Street South

203.264.2002

Danbury

2007 Annual Report

* Main Office

Member

FDIC

1-866-872-1866 unionsavings.com

EQUAL HOUSING

LENDER

growing needs of our customers. An ongoing focus on electronic banking brought enhancements to the internet banking channel, an upgrade to our website, and the installation of flat-panel screens that enable us to better communicate with customers in our offices. This focus will continue in 2008, as we upgrade the capabilities of USBonline for consumers and businesses. 2008 will also bring upgrades to a number of our branches, including

A letter from the President

construction of a new facility on North Street in Danbury. A second ongoing area of focus is our commitment to outstanding customer service. We believe that delivering

Dear Customers and Friends,

‘above and beyond service’ is a key goal for any customer interaction with Union Savings Bank. And thanks to the efforts

I am pleased to report that 2007 was another successful

of everyone, especially our human resource management

year for Union Savings Bank, as we achieved net income of

team who helps find and retain stellar employees, we

$8.5 million. I share this news with great pride as I reflect on

achieve this goal on a daily basis.

the commitment shown by our employees, trustees and corporators who helped make it possible. The difficult times that our industry saw in 2007 tested the true strength of all financial institutions. For many banks, last year was marked by substantial declines in income due to inappropriate investing and lending. As a result, these banks have had to reduce staff and redefine operating strategies. For Union Savings Bank the story is quite different; we are strong and well poised for continued success in the future thanks to consistent earnings and a strong capital position.

I am especially proud that we achieved our deposit goals within an extremely volatile rate environment, while remaining sensitive to our customers’ need for competitive deposit rates. Our conservative lending philosophy means we do not participate in sub-prime mortgage lending, but rather take pride in the fact that we work with each individual customer to help them purchase a home that they can afford. We take that same philosophy into the business environment, where our commercial lenders work with local businesses to meet their financial needs with sound advice and flexible products.

It all starts with our business approach. Our progressive attitude towards serving our customers, combined with governance by a conservative operating philosophy, means decisions are not driven by short-term gains that forsake long-term growth and stability. Instead, we continually seek opportunities to build the kind of performance and value

We are strong and

that earns the trust of our customers, our communities and

well poised for

our employees.

continued success

In 2007 we invested in our branches, our people and

in the future.

technology as part of an effort to meet the changing and

We bring not only financial strength but community

This philosophy of giving back to the community, combined with financial strength and support, is vital to the world we live in and is what defines us as a mutual bank.

commitment to

As we welcome the future with all the exciting innovations

everything we do

it may bring, I would also like to take this opportunity to

and every decision

welcome the newest member of our Board of Trustees,

we make.

Lucie Voves. Lucie brings proven leadership expertise to the board from her years spent starting and growing her business, Church Hill Classics. She also brings a strong understanding of community support from her involvement

Helping customers manage their finances in today’s dynamic

with several non-profit organizations. We look forward to

economic environment keeps us focused on products that

Lucie’s contributions of insight and experience to everything

meet this challenge. In 2007, we added Health Savings

we do as both a bank and a steward to our communities.

Accounts (HSA) to help individuals with private health insurance better manage the rising costs of medical care. We also significantly increased the number of Remote Deposit installations as a way for companies to complete transactions with our bank without ever leaving their office. To help make the overly complex world we live in a bit more manageable we launched 1-2-3 Checking, streamlined checking products that simplify the selection of a checking

As Union Savings Bank’s 2007 performance illustrates, our solid position in the highly competitive and ever changing financial services market highlights the soundness of our approach in all that we do. It reflects the dedication of our hard-working employees. It reminds us that our strength is a continual benefit to our customers and communities. I am grateful for all that we have achieved and I am confident about what the future holds for Union Savings Bank.

product while offering value-added benefits. Sincerely, I am especially proud to say that as the largest mutual bank in the region, we bring not only financial strength but community commitment to everything we do and every decision we make. Not being shareholder owned means that

John C. Kline President & CEO

we are able to weather market instabilities and fluctuations better than most. And rather than dividends paid out to investors, a substantial portion of our earnings are redistributed right back into our community, to non-profit organizations that help improve the quality of life in western Connecticut. This sense of mutual commitment that began with our founding 142 years ago is also exemplified by our employees who continually donate their time and energy to non-profit programs and organizations throughout the region. I cannot thank them enough for their tireless contributions.

Executive Management: Standing, back row (L-R): Gary E. Lemme, Marie T. O'Neill, Paul F. Larsen, David A. Birkins, Mary-Pat Cottrell. Sitting, front row (L-R): Francis G. Dattalo, Jay C. Lent, John C. Kline, Lynne A. Beardsley.

Community Strength

Our dedication to the communities we support is more than just a philosophy. It is an integral part of our mission at Union Savings Bank. In 2007, we helped over 500 community-based non-profit organizations in western Connecticut continue their great work with over $600,000 in charitable donations. In addition, The Union Savings Bank Foundation distributed grants totaling $134,000 to 16 non-profit organizations that provide programs for adult education and skills training, youth education, pre-school

Giving back to

enrichment, housing repair for the elderly, counseling

our communities

support and more.

is one of the Our employees also shared in that commitment by

most important

donating over 1,000 hours of time during weekends and

forms of

off-hours, volunteering for local civic organizations, organizing community events, serving on boards of

reinvestment

local non-profit organizations and raising funds for

we provide.

local charities. Giving back to our communities is one of the most important forms of reinvestment we provide as a mutual bank. It is part of a philosophy we strongly believe in. And the payment we receive in return is

Union Savings Bank Donations (In thousands)

an incredible sense of pride knowing that we have helped improve the quality of life for people in western

$614

$672

$658

2004

2005

$716

$734

2006

2007

Connecticut.

2003

Union Savings Bank Foundation and Bank Contributions

Financial Statements

Financial Trends Assets

Statement of Condition

(In millions)

December 31, 2007 (Unaudited) (Dollars in Thousands)

$1,461

Assets

$1,588

$1,627

2005

2006

$1,722

$1,284

Cash and due from banks

$ 47,024

Securities available for sale, at fair value

129,869

Securities held to maturity (fair value $139,702)

140,521

Federal Home Loan Bank stock

21,236

Loans, net

2003

2004

2007

1,308,108

Premises and equipment

23,185

Other assets

52,406

Total Assets

$ 1,722,349

Net Loans (In millions) $1,133

$1,223

$1,308

$980 $848

Liabilities and Capital Deposits

$ 1,034,495

Repurchase agreements

119,549

Federal Home Loan Bank advances

383,032

Other liabilities Capital Total Liabilities and Capital

2003

2004

2005

2006

2007

26,027 159,246 $ 1,722,349

Deposits (In millions) $940

$983

$1,006

$1,034

$894

2003

2004

2005

2006

2007

$144

$153

$159

2005

2006

2007

Statement of Income Year Ended December 31, 2007 (Unaudited) (Dollars in Thousands)

Interest and dividend income

$ 93,152

Interest expense

50,476

Net interest and dividend income

42,676

Noninterest income

8,098

Capital

Noninterest expense

38,854

(In millions)

Income before income taxes

11,920 $122

Provision for income taxes Net Income

$131

3,469 $ 8,451 2003

2004

Products & Services

Certificates of Deposit, Savings & Money Market Accounts A wide range of savings plans makes your dollar work harder while being protected by the security of FDIC insurance. Choose a CD for terms beginning at 91 days with a minimum opening deposit of $1,000.

1 2 3

CHECKING

Union Savings Bank knows how busy life can be. 1-2-3 Checking helps make managing it easier with three great choices.1 is free. 2 earns you interest. And 3 gives you interest plus all the benefits of Generations Gold® - an exclusive membership discount rewards program. Electronic options like USBonline Internet Banking and our Visa® Check Card give you round-theclock access to your accounts plus the ability to pay bills online, get cash and pay for purchases where Visa® is accepted.

HSA – Health Savings Account Our HSA can help you manage the costs associated with health care and private health insurance. Plus there are tax-saving benefits. Complete information and answers to the most common questions about HSAs can be found at unionsavings.com.

Investment Management & Trust Services* We can help you deal with financial matters related to critical life issues including education, retirement, job change, divorce, the death of a spouse or an inheritance.

Alternate Investments* You’ll find a wide selection of superior mutual funds, annuities and professionally managed or self-directed Individual Retirement Accounts. These financial products and services are offered exclusively through Raymond James Financial Services, Inc., member NASD/SIPC, an independent broker/dealer. *Not FDIC Insured Not Bank Guaranteed May Lose Value

Mortgage Loans & Home Equity Lines of Credit Get competitive rates and flexible terms from one of western Connecticut’s leading mortgage lenders. Plus, we offer the convenience of automatic payments right from your checking account.

Consumer Loans All of our consumer loans offer attractive rates and flexible terms, with a fast approval process.

Business Loans and Services You'll find a full range of business banking services including commercial and small business loans, cash management and more. Plus, benefit from local bankers who know your community and take the time to understand the needs of local businesses.

Remote Deposit Manage deposits for your business from the convenience of your business with remote deposit. It enables you to electronically deposit checks without taking time away from work.

Get account information, transfer funds between accounts, find current interest rates, branch locations and hours. Call: (203) 796-7854 or (800) 860-6670.

Go online any time to check account balances, transfer funds, pay bills and review transaction activity. Available for consumers and businesses. To try it, log on to unionsavings.com and click on USBonline. Then click on Personal Banking Online Demo or Business Banking Online Demo.

Trustees*

Corporators

Chairman of the Board of Trustees

Fred L. Baker, Esq.

William M. Lavelle

Thomas A. Frizzell Attorney, Partner, Talarico, Frizzell & Olivo

James J. Blansfield

Richard J. Lipton, M.D.

Richard B. Blessey

Mark A. Malkin, C.P.A.

Vice Chairman of the Board of Trustees

Alan T. Boyce

Michael Marcus

Richard E. Steiner President, Steiner, Inc.

Eugene P. Buccini

Andrew J. Montanari, Jr.

Abner Burgos-Rodriguez

Mark X. Paladino

Ray P. Boa Owner, A & J Construction Company

Emile Buzaid

Sal Pandolfi

Anthony E. Caraluzzi, Jr.

Cheryl D. Reedy

Arnold E. Finaldi, Jr. Vice President, Rose and Kiernan, Inc.

Maureen Casey Gernert

Eugene A. Reelick

Linda Clark

John R. Reese, Esq.

Thomas R. Green Funeral Director, Green Funeral Home, Inc.

David M. Coelho

Agostinho J. Ribeiro, Esq.

William J. Coffey, Jr.

John H. Ryan

Jeff M. Levine Owner, Levine Automotive

Geoffrey Dent

M. Jeffers Ryer

Kevin L. Dumas, C.P.A.

Paul P. Scalzo

John M. Murphy, M.D. CEO, Associated Neurologists, P.C.

Joseph A. Equale, C.P.A.

Richard E. Steiner

Mary Ann D. Frede

Dennis K. Stone

David S. Hawley

Patsy A. Stroble

Jose F. Henriquez, M.D.

Michael R. Sturdevant

Alice G. Hyman

Luis Tomas

Michael A. Kallas

Lewis J. Wallace, Jr.

Kevin J. Kelleher

William H. Webb, Jr.

Kevin A. Kennedy

Arthur C. Weinshank, Esq.

James E. Kick

Roy D. Young

Stephen G. Rosentel, C.P.A. President, Leahy’s Fuels, Inc. Cynthia Stevens President, Cynthia Stevens Associates Donald T. Studley, C.P.A. Partner, Studley, White and Associates, P.C. Jack T. Tyransky, C.P.A. Partner, Allen & Tyransky Lucie H. Voves President, Church Hill Classics

*Trustees are also Corporators

Officers

Chairman of the Board

Treasurer

Thomas A. Frizzell

Deborah L. Fish

Vice Chairman of the Board Richard E. Steiner

Assistant Vice Presidents Donna M. Barra-Cytron

Donna J. Lillis

Bonnie E. Blackman

Susan B. Magersuppe

Madeline S. Bunt

Kathleen A. McDonough

Jay C. Lent

Awilda L. Caisse

Christina Michael

Senior Vice President & CFO

Jim R. Cavanaugh

Sharon A. Miller

David A. Birkins

Sharon E. Cipolla

Ericka C. Nitsche

Senior Vice President & Corp. Secretary

Olya L. Conterez

Maida G. Olson

Lynne A. Beardsley

Darlene L. Dodson

Mark J. Pragano

Elizabeth B. Durkin

Gerald Platania

President & CEO John C. Kline

Executive Vice President & COO

Senior Vice Presidents

Richard E. Fink

Robert T. Ramsey

Mary-Pat Cottrell

William J. McNamara

Olendina B. Francisco Pereira

Renee A. Russell

Margaret L. Condon

Joseph F. Morrissey

Teresa A. Garrison

Ivan K. Shiffman

Francis G. Dattalo

Marie T. O'Neill

Rachel Gharis-Goldberg

Daniel C. Silva

Douglas W. Fuller

Agnes M. Pace

Carol A. Giannico

Pamela C. Slater

Paul F. Larsen

David B. Rowley

Anthony Gnolfo

Cheryl A.Tibor

Gary E. Lemme

Brian R. Skarda

Lynn W. Humeston

Margaret T. Velthuizen

Peter J. Leone

John Taylor

Sally A. Kile

Seamus M. Walsh

Scott L. Kozek

Diana Wellman

Judith A. LaBella

Jennifer L. Zinzi

Brian J. McGuigan

Vice Presidents

Marlene F. Lamendola

Sue A. Blasavage

Jill V. Morton

Gianni Cordazzo

Ellen L. Palmer

Officers

Christopher J. Daigle

Ronald F. Pekrul

Paulette A. Ellison

Jason M. Ginsberg

Nancy M. Dugbartey

Deborah L. Roche

Karen J. Farrenkopf

Hilda M. Henriques

Mary Kay Duus

James B. Rusiecki, Jr.

Silas Avila Jr.

Sharon J. Jakus

Eric R. Erdtmann

Douglas P. Schmeltz

Sherry L. Auclaire

Ada McMahon

Annette Field

Scott W. Senete

Stacy A. Ashby

Rayhana Moghal

Shawn L. Gregory

Georgina M. Sherman

Roberta D. Bryson

M. Ruth Polk

Susan J. Grobnagger

David M. Steck

Kerry M. Coelho

Jo-Ann M. Robling

Belinda D. Ireland

Elissa T. Terzo

Rebecca H. Corna

Andrew C. Seitz

Wayne J. Leiss

Michael W. Troiano

Maria D. Costa

Gregory S. Slomba

Theresa Marek-Oldham

Geraldine J. Turkington

Amy M. Czupkowski

Loretta E. Vallely

Michele R. Martin

William H. Valenti

Allison D. Downs

Jennifer L. Wehner