More Community Banks to Demutualize and Merge

Despite the cancellation of its merger plans last November, Naugatuck Valley Financial (NVSL) will undertake the second step of its conversion to a fully demutualized, stockholder-owned institution. In other words, the market for the stocks of community banks is getting better, and with the equity from a stock sale, Naugatuck Valley Financial will have enough capital to acquire another Connecticut thrift institution. Let the consolidation begin!

Naugatuck Valley Financial Corporation (NVSL) and Southern Connecticut Bancorp, Inc. (SSE) Mutually Agree to Terminate Merger Agreement

NAUGATUCK and NEW HAVEN, Conn., Nov. 12, 2010 (GLOBE NEWSWIRE) -- Naugatuck Valley Financial Corporation (Nasdaq:NVSL - News) and Southern Connecticut Bancorp, Inc. (NYSE Amex:SSE) announced jointly today that they have mutually agreed to terminate their merger agreement, citing inability to obtain regulatory approval of the proposed transaction.

John C. Roman, Naugatuck Valley Financial's President and Chief Executive Officer, said, "We are disappointed that we are unable to proceed with the proposed transaction. However, market conditions and the regulatory environment have changed significantly since we entered into the merger agreement in February, which has affected how the regulators perceive the financial metrics of the combined institution. Naugatuck Valley Savings and Loan remains a well-capitalized and profitable institution. Our Board of Directors remains dedicated to promoting the best interest of Naugatuck Valley Financial Corporation and its stockholders and other constituencies."

John H. Howland, Southern Connecticut Bancorp's President and Chief Operating Officer, said, "We share in Naugatuck's disappointment because we continue to believe that the proposed merger would have been in the best interests of Southern Connecticut and its stockholders and other constituencies. The Bank of Southern Connecticut remains a well-capitalized institution."