United Financial Bancorp, Inc. Announces Second Quarter Earnings and Quarterly Dividend

HARTFORD, Conn., July 17, 2018 (GLOBE NEWSWIRE) — United Financial Bancorp, Inc. (“United Financial” or the “Company”) (NASDAQ:UBNK), the holding company for United Bank (the “Bank”), announced results for the quarter ended June 30, 2018.

The Company reported net income of $15.6 million, or $0.31 per diluted share, for the quarter ended June 30, 2018, compared to net income for the linked quarter of $15.8 million, or $0.31 per diluted share. The Company reported net income of $16.2 million, or $0.32 per diluted share, for the quarter ended June 30, 2017.

“In the second quarter of 2018, United Financial Bancorp, Inc.’s earnings results reflected solid linked quarter net interest margin expansion and net interest income growth. Our Company continues to grow loans, deposits, particularly checking accounts, and tangible book value while maintaining strong asset quality, capital and liquidity,” stated William H.W. Crawford, IV, Chief Executive Officer and President of the Company and the Bank. “I want to thank our United Bank employees for their steadfast support of our customers and communities.”

Balance Sheet

Assets totaled $7.21 billion at June 30, 2018 and increased $139.9 million, or 2.0%, from $7.07 billion at March 31, 2018. At June 30, 2018, total loans were $5.48 billion, representing an increase of $93.2 million, or 1.7%, from the linked quarter. Changes to loan balances during the second quarter of 2018 were highlighted by an $85.1 million, or 4.6%, increase in investor non-owner occupied commercial real estate loans, a $22.0 million, or 7.1%, increase in other consumer loans, a $16.8 million, or 1.4%, increase in residential real estate loans and a $6.4 million, or 1.1%, increase in home equity loans. Loans held for sale increased $22.1 million, or 34.8%, from the linked quarter, as the Company observed an increase in saleable residential loan volumes during the second quarter of 2018. Total cash and cash equivalents increased $39.9 million, or 57.7%, from the linked quarter.

Deposits totaled $5.39 billion at June 30, 2018 and increased by $110.9 million, or 2.1%, from $5.28 billion at March 31, 2018. Increases in deposit balances during the second quarter of 2018 were highlighted by a $202.0 million, or 14.5%, increase in money market account balances, a $21.2 million, or 2.6%, increase in NOW checking account balances, and a $17.4 million, or 2.3%, increase in demand deposit account balances. Offsetting these increases were a $116.2 million, or 6.5%, decrease in certificate of deposit balances and a $13.5 million, or 2.6%, decrease in savings deposits.

Total Federal Home Loan Bank advances increased by $11.5 million, or 1.3%, over the linked quarter as the Company continued to utilize advances as an asset liability management tool through cash flow hedging strategies.

Net Interest Income

Net interest income increased by $1.6 million, or 3.5%, on a linked quarter basis, to $48.2 million, primarily attributable to an increase in loan interest income of $3.2 million, or 5.8%, to $58.0 million; the increase was offset by an increase in interest expense of $2.0 million, or 11.8%, to $18.9 million. Average interest-earning assets increased by $16.8 million, or 0.3%, primarily due to growth in average loan balances, which increased by $49.2 million, or 0.9%. Average loan balance growth was driven by a $25.0 million, or 1.1%, increase in average commercial real estate loans, a $23.8 million, or 1.8%, increase in average residential real estate loans, a $22.3 million, or 7.4%, increase in other consumer loans, and a $9.3 million, or 1.6%, increase in home equity loans. Average commercial business loan balances decreased by $26.7 million, or 3.2%, as the Company observed increased prepayment speeds in the shared national credit portfolio.

Interest expense increased by $2.0 million, or 11.8%, to $18.9 million during the second quarter of 2018, from $17.0 million in the linked quarter. Average interest-bearing deposit balances increased by $68.8 million, or 1.5%, primarily driven by a $109.4 million, or 5.1%, increase in average NOW and money market account balances, and a $7.0 million, or 1.4%, increase in average savings account balances. Average non-interest bearing demand deposits increased by $25.1 million, or 3.5%, as compared to the linked quarter.  Offsetting the aforementioned increases was a $47.6 million, or 2.6%, decrease in average certificate of deposit balances. The overall growth observed in average account balances is attributable to the continued success of the Company’s municipal and retail acquisition strategies.

The tax equivalent net interest margin increased by seven basis points to 2.97% in the second quarter of 2018, from 2.90% in the linked period. The improvement in the net interest margin was driven by an 18 point increase in the yield on earning assets, which was partially offset by a 13 basis point increase in the cost of interest bearing liabilities. The interest-earning asset yield improvement was largely driven by a ten basis point increase in the yield on commercial real estate loans, a 45 basis point increase in the yield on commercial business loans, a 22 basis point increase in the investment portfolio yield, a nine basis point increase in the yield on residential real estate loans and a 24 basis point increase in the home equity loan yield. The total cost of funds increased by 13 basis points to 1.20% in the second quarter driven by a 14 basis point increase in the cost of interest-bearing deposits and an 18 basis point increase in the cost of Federal Home Loan Bank of Boston advances.

Provision for Loan Losses

The provision for loan losses totaled $2.4 million for the quarter ended June 30, 2018 as compared to $1.9 million for the linked quarter. Net charge-offs totaled $1.1 million, or 0.08%, as a percentage of average loans outstanding for both quarters ended June 30, 2018 and March 31, 2018. Factors considered in the provision for loan losses include, but are not limited to, historical charge-offs, the composition of the portfolio, the current level of non-performing loans and charge-offs, local and national economic and credit conditions, the direction of real estate values and delinquency trends.

Non-Interest Income

Total non-interest income decreased by $929,000, or 10.0%, to $8.4 million for the quarter ended June 30, 2018 from $9.3 million in the linked quarter. The decrease in the second quarter’s non-interest income was driven by decreases in income from mortgage banking activities, net gain on sales of securities and other income. Additionally, there were higher losses on limited partnership investments as compared to the linked quarter, which contributed to the overall decrease in non-interest income. These decreases were offset by increases in both service charges and fees and bank-owned life insurance income.

Non-Interest Expense

Non-interest expense for the quarter ended June 30, 2018 totaled $38.4 million and increased by $1.6 million, or 4.4%, from the linked quarter. The increase in non-interest expense during the quarter was due to increases in salaries and employee benefits, other non-interest expenses, and marketing and promotions. These increases were primarily offset by a decrease in occupancy and equipment as compared to the linked quarter.

Asset Quality

Asset quality remained strong and stable for the period, with non-performing assets decreasing by $2.4 million to $31.3 million at June 30, 2018 from $33.7 million at March 31, 2018. The ratio of non-performing assets to total assets for the quarter ended June 30, 2018 was 0.43%, as compared to 0.48% in the linked quarter.

Capital

The Company reported Tangible Common Equity (“TCE”) of $582.7 million, or 8.2% of average assets, for the quarter ended June 30, 2018. Tangible book value per share increased to $11.40 at June 30, 2018 from $11.25 at March 31, 2018. The increase was primarily driven by the impact of the Company’s net income of $15.6 million, partially offset by the cash dividend payment to shareholders of $0.12 per share, as well as increases in accumulated other comprehensive losses as a result of a decrease in the market value of the Company’s investment portfolio, as compared to the previous quarter. Book value per share at June 30, 2018 was $13.73.

Dividend

The Board of Directors declared a cash dividend on the Company’s common stock of $0.12 per share to shareholders of record at the close of business on July 27, 2018 and payable on August 8, 2018. This dividend equates to a 2.80% annualized yield based on the $17.17 average closing price of the Company’s common stock in the second quarter of 2018. The Company has paid dividends for 49 consecutive quarters.

Investor Conference Call

United Financial Bancorp, Inc. will host a conference call on Wednesday, July 18, 2018 at 10:00 a.m. Eastern Time (ET) to discuss the Company’s second quarter results. Those wishing to participate in the call may dial toll-free 1-800-544-8281. A telephone replay of the call will be available through August 1, 2018 by calling 1-877-344-7529 and entering conference number 10121371. A podcast will be available on the Company’s website for an extended period of time, as well as on the Company’s investor relations app.

Investor Presentation

United Financial Bancorp, Inc. has prepared and furnished a visual slide presentation to accompany the earnings press release and investor conference call. The presentation has been furnished as an exhibit to the SEC Form 8-K, but is not included in this press release. Copies of the presentation may be accessed on the Company’s investor relations website (www.unitedfinancialinc.com) by selecting “News & Market Data,” then “Presentations;” or via the IRapp and selecting “Presentations;” or directly from SEC EDGAR.

About United Financial Bancorp, Inc.

United Financial Bancorp, Inc. is the holding company for United Bank, a full service financial services firm offering a complete line of commercial, business, and consumer banking products and services to customers throughout Connecticut and Massachusetts. United Bank is a financially strong, leading New England bank with more than 50 branches in two states and several commercial and residential loan production offices. United Financial Bancorp, Inc. trades on the NASDAQ Global Select Stock Exchange under the ticker symbol “UBNK.” At June 30, 2018, the Company had $7.21 billion in assets.

For more information about United Bank’s services and products call (866) 959-BANK or visit www.bankatunited.com. For more information about United Financial Bancorp, Inc., visit www.unitedfinancialinc.com or download the Company’s free Investor Relations app on your Apple or Android device. To download United Financial Bancorp, Inc.’s investor relations app on your iPhone or on your iPad, which offers access to SEC documents, press releases, videos, audiocasts and more, please visit: https://itunes.apple.com/WebObjects/MZStore.woa/wa/viewSoftware?id=725271098&mt=8 or https://play.google.com/store/apps/details?id=com.theirapp.ubnk for your Android mobile device.

Non-GAAP Financial Measures

This document contains certain non-GAAP financial measures in addition to results presented in accordance with Generally Accepted Accounting Principles (“GAAP”). These non-GAAP measures provide supplemental perspectives on operating results, performance trends, and financial condition. They are not a substitute for GAAP measures; they should be read and used in conjunction with the Company’s GAAP financial information. A reconciliation of non-GAAP financial measures to GAAP measures is included in the accompanying financial tables below. These non-GAAP financial measures provide information for investors to effectively analyze financial trends of our business activities, and to enhance comparability with peers across the financial services sector.

Forward Looking Statements

This press release may contain certain forward-looking statements about the Company. Forward-looking statements include statements regarding anticipated future events and can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as “believe,” “expect,” “anticipate,” “estimate,” and “intend” or future or conditional verbs such as “will,” “would,” “should,” “could,” or “may.” Forward-looking statements, by their nature, are subject to risks and uncertainties. Certain factors that could cause actual results to differ materially from expected results include increased competitive pressures, changes in the interest rate environment, general economic conditions or conditions within the securities markets, and legislative and regulatory changes that could adversely affect the business in which the Company and its subsidiaries are engaged.

United Financial Bancorp, Inc. and Subsidiaries
Consolidated Statements of Net Income
(Unaudited)
 
    For the Three Months Ended
June 30,
  For the Six Months Ended
June 30,
    2018   2017   2018   2017
                                 
Interest and dividend income:   (In thousands, except share data)
Loans   $ 57,958     $ 49,674     $ 112,738     $ 96,167  
Securities-taxable interest   5,969     5,793     11,467     11,303  
Securities-non-taxable interest   2,354     2,355     4,783     4,609  
Securities-dividends   736     689     1,373     1,497  
Interest-bearing deposits   113     51     263     152  
Total interest and dividend income   67,130     58,562     130,624     113,728  
Interest expense:                
Deposits   12,864     7,603     23,891     14,422  
Borrowed funds   6,085     4,631     12,009     8,681  
Total interest expense   18,949     12,234     35,900     23,103  
Net interest income   48,181     46,328     94,724     90,625  
Provision for loan losses   2,350     2,292     4,289     4,580  
Net interest income after provision for loan losses   45,831     44,036     90,435     86,045  
Non-interest income:                
Service charges and fees   6,542     7,184     12,701     12,829  
Net gain from sales of securities   62     95     178     552  
Income from mortgage banking activities   846     1,830     2,575     3,151  
Bank-owned life insurance income   1,671     1,149     3,317     2,356  
Net loss on limited partnership investments   (960 )   (638 )   (1,550 )   (718 )
Other income   199     206     428     388  
Total non-interest income   8,360     9,826     17,649     18,558  
Non-interest expense:                
Salaries and employee benefits   22,113     19,574     43,311     39,304  
Service bureau fees   2,165     2,293     4,383     4,623  
Occupancy and equipment   4,668     3,657     9,617     8,126  
Professional fees   1,105     952     2,269     2,261  
Marketing and promotions   1,189     1,237     1,874     1,949  
FDIC insurance assessments   735     796     1,474     1,475  
Core deposit intangible amortization   305     353     642     738  
Other   6,090     6,467     11,536     11,775  
Total non-interest expense   38,370     35,329     75,106     70,251  
Income before income taxes   15,821     18,533     32,978     34,352  
Provision for income taxes   175     2,333     1,545     4,426  
Net income   $ 15,646     $ 16,200     $ 31,433     $ 29,926  
                 
Net income per share:                
Basic   $ 0.31     $ 0.32     $ 0.62     $ 0.60  
Diluted   $ 0.31     $ 0.32     $ 0.62     $ 0.59  
Weighted-average shares outstanding:                
Basic   50,504,273     50,217,212     50,489,689     50,237,406  
Diluted   50,974,283     50,839,091     50,985,520     50,887,124  

United Financial Bancorp, Inc. and Subsidiaries
Consolidated Statements of Net Income
(Unaudited)
 
    For the Three Months Ended
    June 30,
2018
  March 31,
2018
  December 31,
2017
  September 30,
2017
  June 30,
2017
                                         
Interest and dividend income:   (In thousands, except share data)
Loans   $ 57,958     $ 54,780     $ 52,758     $ 51,809     $ 49,674  
Securities-taxable interest   5,969     5,498     5,643     5,604     5,793  
Securities-non-taxable interest   2,354     2,429     2,571     2,499     2,355  
Securities-dividends   736     637     669     736     689  
Interest-bearing deposits   113     150     86     151     51  
Total interest and dividend income   67,130     63,494     61,727     60,799     58,562  
Interest expense:                    
Deposits   12,864     11,027     9,958     9,185     7,603  
Borrowed funds   6,085     5,924     4,920     4,846     4,631  
Total interest expense   18,949     16,951     14,878     14,031     12,234  
Net interest income   48,181     46,543     46,849     46,768     46,328  
Provision for loan losses   2,350     1,939     2,250     2,566     2,292  
Net interest income after provision for loan losses   45,831     44,604     44,599     44,202     44,036  
Non-interest income:                    
Service charges and fees   6,542     6,159     6,031     6,514     7,184  
Net gain from sales of securities   62     116     72     158     95  
Income from mortgage banking activities   846     1,729     1,184     1,204     1,830  
Bank-owned life insurance income   1,671     1,646     1,939     1,167     1,149  
Net loss on limited partnership investments   (960 )   (590 )   (1,441 )   (864 )   (638 )
Other income (loss)   199     229     (204 )   247     206  
Total non-interest income   8,360     9,289     7,581     8,426     9,826  
Non-interest expense:                    
Salaries and employee benefits   22,113     21,198     20,752     20,005     19,574  
Service bureau fees   2,165     2,218     2,304     2,336     2,293  
Occupancy and equipment   4,668     4,949     5,036     3,740     3,657  
Professional fees   1,105     1,164     996     1,048     952  
Marketing and promotions   1,189     685     1,011     1,087     1,237  
FDIC insurance assessments   735     739     821     780     796  
Core deposit intangible amortization   305     337     336     337     353  
Other   6,090     5,446     5,981     5,929     6,467  
Total non-interest expense   38,370     36,736     37,237     35,262     35,329  
Income before income taxes   15,821     17,157     14,943     17,366     18,533  
Provision for income taxes   175     1,370     5,442     2,175     2,333  
Net income   $ 15,646     $ 15,787     $ 9,501     $ 15,191     $ 16,200  
                     
Net income per share:                    
Basic   $ 0.31     $ 0.31     $ 0.19     $ 0.30     $ 0.32  
Diluted   $ 0.31     $ 0.31     $ 0.19     $ 0.30     $ 0.32  
Weighted-average shares outstanding:                    
Basic   50,504,273     50,474,942     50,392,382     50,263,602     50,217,212  
Diluted   50,974,283     50,996,596     51,024,881     50,889,987     50,839,091  

United Financial Bancorp, Inc. and Subsidiaries
Consolidated Statements of Condition
(Unaudited)
 
    June 30,
2018
  March 31,
2018
  December 31,
2017
  September 30,
2017
  June 30,
2017
                                         
ASSETS   (In thousands)
Cash and cash equivalents:                    
Cash and due from banks   $ 62,188     $ 45,332     $ 56,661     $ 59,456     $ 57,137  
Short-term investments   46,987     23,910     32,007     39,061     17,714  
Total cash and cash equivalents   109,175     69,242     88,668     98,517     74,851  
Available for sale securities – At fair value   1,006,135     1,031,277     1,050,787     1,068,055     1,073,384  
Held to maturity securities – At amortized cost           13,598     13,693     13,792  
Loans held for sale   85,458     63,394     114,073     89,419     157,487  
Loans:                    
Commercial real estate loans:                    
Owner-occupied   418,338     442,938     445,820     442,989     429,848  
Investor non-owner occupied   1,927,960     1,842,898     1,854,459     1,777,716     1,761,940  
Construction   82,883     84,717     78,083     82,688     74,980  
Total commercial real estate loans   2,429,181     2,370,553     2,378,362     2,303,393     2,266,768  
Commercial business loans   841,142     846,182     840,312     821,372     792,918  
Consumer loans:                    
Residential real estate   1,252,001     1,235,197     1,204,401     1,211,783     1,172,540  
Home equity   588,638     582,285     583,180     561,814     538,130  
Residential construction   32,063     37,579     40,947     39,460     46,117  
Other consumer   332,402     310,439     292,781     267,921     237,708  
Total consumer loans   2,205,104     2,165,500     2,121,309     2,080,978     1,994,495  
Total loans   5,475,427     5,382,235     5,339,983     5,205,743     5,054,181  
Net deferred loan costs and premiums   15,502     14,724     14,794     15,297     15,413  
Allowance for loan losses   (49,163 )   (47,915 )   (47,099 )   (46,368 )   (45,062 )
Loans receivable – net   5,441,766     5,349,044     5,307,678     5,174,672     5,024,532  
Federal Home Loan Bank of Boston stock, at cost   46,734     49,895     50,194     46,758     54,760  
Accrued interest receivable   23,209     22,333     22,332     20,893     19,751  
Deferred tax asset, net   30,190     28,710     25,656     30,999     27,034  
Premises and equipment, net   67,614     67,619     67,508     61,063     54,480  
Goodwill   115,281     115,281     115,281     115,281     115,281  
Core deposit intangible asset   3,849     4,154     4,491     4,827     5,164  
Cash surrender value of bank-owned life insurance   180,490     179,556     148,300     171,300     170,144  
Other assets   98,695     88,169     105,593     81,019     85,503  
Total assets   $ 7,208,596     $ 7,068,674     $ 7,114,159     $ 6,976,496     $ 6,876,163  
                     
                     
    June 30,
2018
  March 31,
2018
  December 31,
2017
  September 30,
2017
  June 30,
2017
LIABILITIES AND STOCKHOLDERS’ EQUITY                    
Liabilities:                    
Deposits:                    
Non-interest-bearing   $ 770,982     $ 753,575     $ 778,576     $ 725,130     $ 721,917  
Interest-bearing   4,622,394     4,528,935     4,419,645     4,427,892     4,271,562  
Total deposits   5,393,376     5,282,510     5,198,221     5,153,022     4,993,479  
Mortgagors’ and investor escrow accounts   14,526     11,096     7,545     9,641     15,045  
Federal Home Loan Bank advances and other borrowings   1,041,896     1,030,735     1,165,054     1,068,814     1,138,817  
Accrued expenses and other liabilities   56,921     51,333     50,011     54,366     49,358  
Total liabilities   6,506,719     6,375,674     6,420,831     6,285,843     6,196,699  
Total stockholders’ equity   701,877     693,000     693,328     690,653     679,464  
Total liabilities and stockholders’ equity   $ 7,208,596     $ 7,068,674     $ 7,114,159     $ 6,976,496     $ 6,876,163  
                                         

United Financial Bancorp, Inc. and Subsidiaries
Selected Financial Highlights
(Dollars In Thousands, Except Share Data)
(Unaudited)
 
  At or For the Three Months Ended
  June 30,
 2018
  March 31,
 2018
  December 31,
 2017
  September 30,
 2017
  June 30,
 2017
Share Data:                  
Basic net income per share $ 0.31     $ 0.31     $ 0.19     $ 0.30     $ 0.32  
Diluted net income per share 0.31     0.31     0.19     0.30     0.32  
Dividends declared per share 0.12     0.12     0.12     0.12     0.12  
Tangible book value per share $ 11.40     $ 11.25     $ 11.24     $ 11.23     $ 11.01  
Key Statistics:                  
Total revenue $ 56,541     $ 55,832     $ 54,430     $ 55,194     $ 56,154  
Total non-interest expense 38,370     36,736     37,327     35,262     35,329  
Average earning assets 6,584,938     6,568,168     6,480,966     6,423,741     6,304,849  
Key Ratios:                  
Return on average assets (annualized) 0.88 %   0.89 %   0.54 %   0.88 %   0.96 %
Return on average equity (annualized) 9.00 %   9.15 %   5.50 %   8.92 %   9.66 %
Tax-equivalent net interest margin (annualized) 2.97 %   2.90 %   2.98 %   3.00 %   3.04 %
Residential Mortgage Production:                  
Dollar volume (total) $ 140,409     $ 94,433     $ 135,522     $ 133,462     $ 186,220  
Mortgages originated for purchases 110,351     63,193     83,181     97,132     129,165  
Loans sold 99,637     99,899     94,738     152,551     61,363  
Income from mortgage banking activities 846     1,729     1,184     1,204     1,830  
Non-performing Assets:                  
Residential real estate $ 11,221     $ 11,663     $ 11,824     $ 11,330     $ 11,190  
Home equity 4,607     4,698     4,968     4,206     5,211  
Investor-owned commercial real estate 2,400     2,863     1,821     2,957     3,512  
Owner-occupied commercial real estate 2,176     2,326     1,664     2,084     2,184  
Construction 250     273     1,398     1,748     287  
Commercial business 1,196     1,579     1,477     2,427     2,624  
Other consumer 237     34     35     37     40  
Non-accrual loans 22,087     23,436     23,187     24,789     25,048  
Troubled debt restructured – non-accruing 7,330     8,308     8,475     6,628     7,475  
Total non-performing loans 29,417     31,744     31,662     31,417     32,523  
Other real estate owned 1,855     1,935     2,154     2,444     1,770  
Total non-performing assets $ 31,272     $ 33,679     $ 33,816     $ 33,861     $ 34,293  
Non-performing loans to total loans 0.54 %   0.59 %   0.59 %   0.60 %   0.64 %
Non-performing assets to total assets 0.43 %   0.48 %   0.48 %   0.49 %   0.50 %
Allowance for loan losses to non-performing loans 167.12 %   150.94 %   148.76 %   147.59 %   138.55 %
Allowance for loan losses to total loans 0.90 %   0.89 %   0.88 %   0.89 %   0.89 %
Non-GAAP Ratios: (1)                  
Non-interest expense to average assets (annualized) 2.16 %   2.08 %   2.13 %   2.04 %   2.08 %
Efficiency ratio (2) 65.18 %   63.97 %   63.53 %   60.47 %   59.75 %
Cost of funds (annualized) (3) 1.20 %   1.07 %   0.96 %   0.91 %   0.81 %
Total revenue growth rate 1.27 %   2.58 %   (1.38 )%   (1.71 )%   5.89 %
Total revenue growth rate (annualized) 5.08 %   10.30 %   (5.54 )%   (6.84 )%   23.57 %
Average earning asset growth rate 0.26 %   1.35 %   0.89 %   1.89 %   3.13 %
Average earning asset growth rate (annualized) 1.02 %   5.38 %   3.56 %   7.54 %   12.53 %
Return on average tangible common equity (annualized) (2) 11.03 %   11.25 %   6.81 %   10.99 %   11.95 %
Pre-provision net revenue to average assets (2) 1.14 %   1.15 %   1.19 %   1.31 %   1.38 %

(1) Non-GAAP ratios are not financial measurements required by generally accepted accounting principles; however, management believes such information is useful to investors in evaluating Company performance.
(2) Calculations of these non-GAAP metrics are provided after the reconciliations of non-GAAP financial measures and appear on page F-10 through page F-12.
(3) The cost of funds ratio represents interest incurred on liabilities as a percentage of average non-interest bearing deposits and interest-bearing liabilities.

 
United Financial Bancorp, Inc. and Subsidiaries
Average Balance Sheets, Interest and Yields/Costs
(Dollars In Thousands)
(Unaudited)
 
  For the Three Months Ended
  June 30, 2018   June 30, 2017
  Average
Balance
  Interest
and
Dividends
  Yield/Cost   Average
Balance
  Interest
and
Dividends
  Yield/Cost
Interest-earning assets:                      
Residential real estate $ 1,338,021     $ 12,020     3.60 %   $ 1,297,558     $ 10,839     3.34 %
Commercial real estate 2,306,896     24,762     4.25     2,153,938     21,837     4.01  
Construction 114,987     1,331     4.58     128,730     1,396     4.29  
Commercial business 816,102     9,139     4.43     780,553     7,628     3.87  
Home equity 588,080     7,058     4.81     541,017     5,737     4.25  
Other consumer 322,103     4,062     5.06     230,419     2,907     5.06  
Investment securities 1,019,491     8,998     3.53     1,099,011     9,577     3.48  
Federal Home Loan Bank stock 49,136     703     5.72     54,151     534     3.95  
Other earning assets 30,122     116     1.55     19,472     50     1.03  
Total interest-earning assets 6,584,938     68,189     4.12     6,304,849     60,505     3.82  
Allowance for loan losses (48,624 )             (44,888 )          
Non-interest-earning assets 555,407               520,375            
Total assets $ 7,091,721               $ 6,780,336            
Interest-bearing liabilities:                          
NOW and money market $ 2,256,323     $ 6,163     1.10 %   $ 1,929,917     $ 2,808     0.58 %
Savings 517,910     77     0.06     541,867     80     0.06  
Certificates of deposit 1,749,097     6,624     1.52     1,715,436     4,715     1.10  
Total interest-bearing deposits 4,523,330     12,864     1.14     4,187,220     7,603     0.73  
Federal Home Loan Bank advances 959,248     4,692     1.94     1,028,835     3,152     1.21  
Other borrowings 112,112     1,393     4.91     154,780     1,479     3.78  
Total interest-bearing liabilities 5,594,690     18,949     1.35     5,370,835     12,234     0.91  
Non-interest-bearing deposits 738,484               670,244            
Other liabilities 63,246               68,731            
Total liabilities 6,396,420               6,109,810            
Stockholders’ equity 695,301               670,526            
Total liabilities and stockholders’ equity $ 7,091,721               $ 6,780,336            
Net interest-earning assets $ 990,248               $ 934,014            
Tax-equivalent net interest income     49,240               48,271        
Tax-equivalent net interest rate spread (1)         2.77 %           2.91 %
Tax-equivalent net interest margin (2)         2.97 %           3.04 %
Average interest-earning assets to average interest-bearing liabilities         117.70 %           117.39 %
Less tax-equivalent adjustment     1,059             1,943      
Net interest income     $ 48,181             $ 46,328      
                               

(1)  Tax-equivalent net interest rate spread represents the difference between yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(2)  Tax-equivalent net interest rate margin represents tax-equivalent net interest income divided by average interest-earning assets.

 
 
United Financial Bancorp, Inc. and Subsidiaries
Average Balance Sheets, Interest and Yields/Costs
(Dollars In Thousands)
(Unaudited)
 
  For the Three Months Ended
  June 30, 2018   March 31, 2018
  Average
Balance
  Interest
and
Dividends
  Yield/Cost   Average
Balance
  Interest
and
Dividends
  Yield/Cost
Interest-earning assets:                      
Residential real estate $ 1,338,021     $ 12,020     3.60 %   $ 1,314,219     $ 11,506     3.51 %
Commercial real estate 2,306,896     24,762     4.25     2,281,868     23,656     4.15  
Construction 114,987     1,331     4.58     119,435     1,325     4.44  
Commercial business 816,102     9,139     4.43     842,809     8,382     3.98  
Home equity 588,080     7,058     4.81     578,776     6,528     4.57  
Other consumer 322,103     4,062     5.06     299,839     3,800     5.14  
Investment securities 1,019,491     8,998     3.53     1,041,849     8,624     3.31  
Federal Home Loan Bank stock 49,136     703     5.72     51,458     606     4.71  
Other earning assets 30,122     116     1.55     37,915     150     1.61  
Total interest-earning assets 6,584,938     68,189     4.12     6,568,168     64,577     3.94  
Allowance for loan losses (48,624 )           (47,780 )        
Non-interest-earning assets 555,407             554,333          
Total assets $ 7,091,721             $ 7,074,721          
Interest-bearing liabilities:                      
NOW and money market $ 2,256,323     $ 6,163     1.10 %   $ 2,146,945     $ 4,892     0.92 %
Savings 517,910     77     0.06     510,904     73     0.06  
Certificates of deposit 1,749,097     6,624     1.52     1,796,675     6,062     1.37  
Total interest-bearing deposits 4,523,330     12,864     1.14     4,454,524     11,027     1.00  
Federal Home Loan Bank advances 959,248     4,692     1.94     1,033,884     4,545     1.76  
Other borrowings 112,112     1,393     4.91     118,008     1,379     4.67  
Total interest-bearing liabilities 5,594,690     18,949     1.35     5,606,416     16,951     1.22  
Non-interest-bearing deposits 738,484             713,364          
Other liabilities 63,246             64,596          
Total liabilities 6,396,420             6,384,376          
Stockholders’ equity 695,301             690,345          
Total liabilities and stockholders’ equity $ 7,091,721             $ 7,074,721          
Net interest-earning assets $ 990,248             $ 961,752          
Tax-equivalent net interest income     49,240             47,626      
Tax-equivalent net interest rate spread (1)         2.77 %           2.72 %
Tax-equivalent net interest margin (2)         2.97 %           2.90 %
Average interest-earning assets to average interest-bearing liabilities         117.70 %           117.15 %
Less tax-equivalent adjustment     1,059             1,083      
Net interest income     $ 48,181             $ 46,543      
                               

(1)  Tax-equivalent net interest rate spread represents the difference between yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(2)  Tax-equivalent net interest rate margin represents tax-equivalent net interest income divided by average interest-earning assets.

 
 
United Financial Bancorp, Inc. and Subsidiaries
Average Balance Sheets, Interest and Yields/Costs
(Dollars In Thousands)
(Unaudited)
  For the Six Months Ended
  June 30, 2018   June 30, 2017
  Average
Balance
  Interest
and
Dividends
  Yield/Cost   Average
Balance
  Interest
and
Dividends
  Yield/Cost
Interest-earning assets:                      
Residential real estate $ 1,326,185     $ 23,526     3.56 %   $ 1,266,484     $ 21,062     3.33 %
Commercial real estate 2,294,451     48,419     4.20     2,126,358     42,563     3.98  
Construction 117,199     2,656     4.51     137,062     2,960     4.29  
Commercial business 829,382     17,521     4.20     755,637     14,347     3.78  
Home equity 583,454     13,585     4.69     532,225     10,959     4.15  
Other consumer 311,032     7,862     5.10     221,401     5,518     5.03  
Investment securities 1,030,404     17,618     3.42     1,084,548     18,745     3.45  
Federal Home Loan Bank stock 50,291     1,309     5.21     53,658     1,058     3.94  
Other earning assets 34,202     270     1.59     32,263     152     0.95  
Total interest-earning assets 6,576,600     132,766     4.03     6,209,636     117,364     3.77  
Allowance for loan losses (48,205 )             (44,260 )          
Non-interest-earning assets 554,873               517,403            
Total assets $ 7,083,268               $ 6,682,779            
Interest-bearing liabilities:                          
NOW and money market $ 2,201,937     $ 11,055     1.01 %   $ 1,886,926     $ 5,004     0.53 %
Savings 514,426     150     0.06     535,299     158     0.06  
Certificates of deposit 1,772,754     12,686     1.44     1,714,256     9,260     1.09  
Total interest-bearing deposits 4,489,117     23,891     1.07     4,136,481     14,422     0.70  
Federal Home Loan Bank advances 996,360     9,238     1.84     1,004,813     5,822     1.15  
Other borrowings 115,043     2,771     4.79     140,470     2,859     4.05  
Total interest-bearing liabilities 5,600,520     35,900     1.29     5,281,764     23,103     0.88  
Non-interest-bearing deposits 725,993               669,537            
Other liabilities 63,919               67,302            
Total liabilities 6,390,432               6,018,603            
Stockholders’ equity 692,836               664,176            
Total liabilities and stockholders’ equity $ 7,083,268               $ 6,682,779            
Net interest-earning assets $ 976,080               $ 927,872            
Tax-equivalent net interest income     96,866               94,261        
Tax-equivalent net interest rate spread (1)         2.74 %           2.89 %
Tax-equivalent net interest margin (2)         2.94 %           3.03 %
Average interest-earning assets to average interest-bearing liabilities         117.43 %           117.57 %
Less tax-equivalent adjustment     2,142             3,636      
Net interest income     $ 94,724             $ 90,625      
                               

(1)  Tax-equivalent net interest rate spread represents the difference between yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(2)  Tax-equivalent net interest rate margin represents tax-equivalent net interest income divided by average interest-earning assets.

United Financial Bancorp, Inc. and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
(Dollars In Thousands)
(Unaudited)

In addition to evaluating the Company’s results of operations in accordance with GAAP, management periodically supplements this evaluation with an analysis of certain non-GAAP financial measures. These non-GAAP measures are intended to provide the reader with additional perspectives on operating results, financial condition, and performance trends, while facilitating comparisons with the performance of other financial institutions. Non-GAAP financial measures are not a substitute for GAAP measures, rather, they should be read and used in conjunction with the Company’s GAAP financial information.

The efficiency ratio is used as a common measure by banks as a comparable metric to understand the Company’s expense structure relative to its total revenue; in other words, for every dollar of total revenue we recognize, how much of that dollar is expended. In order to improve the comparability of the ratio to our peers, we remove non-core items. To improve transparency, and acknowledging that banks are not consistent in their definition of the efficiency ratio, we include our calculation of this non-GAAP measure.

Pre-provision net revenue is a measure that the Company uses to understand fundamental operating performance before credit related expenses and tax expense. It is often expressed as a ratio relative to average assets which demonstrates the “core” performance and can be viewed as an alternative measure of how efficiently the Company services its asset base.

Return on average tangible common equity is used by management and readers of our financial statements to understand how efficiently the Company is deploying its common equity. Companies that are able to demonstrate more efficient use of common equity are more likely to be viewed favorably by current and prospective investors.

The Company believes that disclosing these non-GAAP metrics is both useful internally and is expected by our investors and analysts in order to understand the overall performance of the Company. Other companies may calculate and define their supplemental data differently. A reconciliation of GAAP financial measures to non-GAAP measures and other performance ratios, as adjusted, are included on pages F-10 through F-12 in the following press release tables:

  Three Months Ended
  June 30,
 2018
  March 31,
 2018
  December 31,
2017
  September 30,
 2017
  June 30,
 2017
                                       
  (Dollars in thousands)
Net Income (GAAP) $ 15,646     $ 15,787     $ 9,501     $ 15,191     $ 16,200  
Non-GAAP adjustments:                  
Non-interest income (271 )   (342 )   745     (158 )   (95 )
Non-interest expense 215         536          
Income tax expense related to tax reform         1,609          
Related income tax (benefit) expense (93 )   72     2,074     55     33  
Net adjustment (149 )   (270 )   4,964     (103 )   (62 )
Total net income (non-GAAP) $ 15,497     $ 15,517     $ 14,465     $ 15,088     $ 16,138  
                   
Non-interest income (GAAP) $ 8,360     $ 9,289     $ 7,581     $ 8,426     $ 9,826  
Non-GAAP adjustments:                  
Net gain on sales of securities (62 )   (116 )   (72 )   (158 )   (95 )
Limited partnership writedown (1)         1,214          
Loss on sale of premises and equipment         401          
BOLI claim benefit (209 )   (226 )   (798 )        
Net adjustment (271 )   (342 )   745     (158 )   (95 )
Total non-interest income (non-GAAP) 8,089     8,947     8,326     8,268     9,731  
Total net interest income 48,181     46,543     46,849     46,768     46,328  
Total revenue (non-GAAP) $ 56,270     $ 55,490     $ 55,175     $ 55,036     $ 56,059  
                   
Non-interest expense (GAAP) $ 38,370     $ 36,736     $ 37,237     $ 35,262     $ 35,329  
Non-GAAP adjustments:                  
Lease exit/disposal cost obligation (215 )       (536 )        
Net adjustment (215 )       (536 )        
Total non-interest expense (non-GAAP) $ 38,155     $ 36,736     $ 36,701     $ 35,262     $ 35,329  
                   
Total loans $ 5,475,427     $ 5,382,235     $ 5,339,983     $ 5,205,743     $ 5,054,181  
Non-covered loans (2) (729,947 )   (771,802 )   (780,776 )   (739,376 )   (699,938 )
Total covered loans $ 4,745,480     $ 4,610,433     $ 4,559,207     $ 4,466,367     $ 4,354,243  
Allowance for loan losses $ 49,163     $ 47,915     $ 47,099     $ 46,368     $ 45,062  
Allowance for loan losses to total loans 0.90 %   0.89 %   0.88 %   0.89 %   0.89 %
Allowance for loan losses to total covered loans 1.04 %   1.04 %   1.03 %   1.04 %   1.03 %

(1) Represents limited partnership writedowns related to the reduction of the Company’s tax rate in December 2017.
(2) Represents acquired loans that were recorded at fair value. These loans carry no allowance for loan losses for the periods reflected above.

                     
    Three Months Ended
    June 30,
 2018
  March 31,
 2018
  December 31,
2017
  September 30,
 2017
  June 30,
 2017
                                         
Efficiency Ratio:                    
Non-Interest Expense (GAAP)   $ 38,370     $ 36,736     $ 37,237     $ 35,262     $ 35,329  
Non-GAAP adjustments:                    
Other real estate owned expense   (163 )   (167 )   (157 )   (211 )   (293 )
Lease exit/disposal cost obligation   (215 )       (536 )        
Non-Interest Expense for Efficiency Ratio (non-GAAP)   $ 37,992     $ 36,569     $ 36,544     $ 35,051     $ 35,036  
                     
Net Interest Income (GAAP)   $ 48,181     $ 46,543     $ 46,849     $ 46,768     $ 46,328  
Non-GAAP adjustments:                    
Tax equivalent adjustment for tax-exempt loans and investment securities   1,059     1,083     2,117     2,069     1,943  
                     
Non-Interest Income (GAAP)   8,360     9,289     7,581     8,426     9,826  
Non-GAAP adjustments:                    
Net gain on sales of securities   (62 )   (116 )   (72 )   (158 )   (95 )
Net loss on limited partnership investments   960     590     1,441     864     638  
Loss on sale of premises and equipment           401          
BOLI claim benefit   (209 )   (226 )   (798 )        
Total Revenue for Efficiency Ratio (non-GAAP)   $ 58,289     $ 57,163     $ 57,519     $ 57,969     $ 58,640  
                     
Efficiency Ratio (Non-Interest Expense for Efficiency Ratio (non-GAAP)/Total Revenue for Efficiency Ratio (non-GAAP))   65.18 %   63.97 %   63.53 %   60.47 %   59.75 %
                     
                     
    Three Months Ended
    June 30,
 2018
  March 31,
 2018
  December 31,
2017
  September 30,
 2017
  June 30,
 2017
                                         
Pre-Provision Net Revenue (“PPNR”) to Average Assets (Annualized):                
Net Interest income (GAAP)   $ 48,181     $ 46,543     $ 46,849     $ 46,768     $ 46,328  
Non-GAAP adjustments:                    
Tax equivalent adjustment for tax-exempt loans and investment securities   1,059     1,083     2,117     2,069     1,943  
Total tax equivalent net interest income (A)   $ 49,240     $ 47,626     $ 48,966     $ 48,837     $ 48,271  
                     
Non Interest Income (GAAP)   8,360     9,289     7,581     8,426     9,826  
Non-GAAP adjustments:                    
Net gain on sales of securities   (62 )   (116 )   (72 )   (158 )   (95 )
Net loss on limited partnership investments   960     590     1,441     864     638  
Loss on sale of premises and equipment           401          
BOLI claim benefit   (209 )   (226 )   (798 )        
Non-Interest Income for PPNR (non-GAAP) (B)   $ 9,049     $ 9,537     $ 8,553     $ 9,132     $ 10,369  
                     
Non-Interest Expense (GAAP)   $ 38,370     $ 36,736     $ 37,237     $ 35,262     $ 35,329  
Non-GAAP adjustments:                    
Lease exit/disposal cost obligation   (215 )       (536 )        
Non-Interest Expense for PPNR (non-GAAP) (C)   $ 38,155     $ 36,736     $ 36,701     $ 35,262     $ 35,329  
                     
Total PPNR (non-GAAP)  (A + B – C) :   $ 20,134     $ 20,427     $ 20,818     $ 22,707     $ 23,311  
Average Assets   7,091,721     7,074,721     6,976,682     6,907,199     6,780,336  
PPNR to Average Assets (Annualized)   1.14 %   1.15 %   1.19 %   1.31 %   1.38 %
                     
Return on Average Tangible Common Equity (Annualized):              
Net Income (GAAP)   $ 15,646     $ 15,787     $ 9,501     $ 15,191     $ 16,200  
Non-GAAP adjustments:                    
Intangible Assets amortization, tax effected (1)   241     266     219     219     229  
Net Income excluding intangible assets amortization, tax effected at  (1)   $ 15,887     $ 16,053     $ 9,720     $ 15,410     $ 16,429  
Average stockholders’ equity (non-GAAP)   $ 695,301     $ 690,345     $ 691,004     $ 681,402     $ 670,526  
Average goodwill & other intangible assets (non-GAAP)   119,288     119,611     119,962     120,275     120,631  
Average tangible common stockholders’ equity (non-GAAP)   $ 576,013     $ 570,734     $ 571,042     $ 561,127     $ 549,895  
Return on Average Tangible Common Equity (non-GAAP)   11.03 %   11.25 %   6.81 %   10.99 %   11.95 %

(1) Intangible assets amortization is tax effected at 21% for the three months ended June 30, 2018 and March 31, 2018, and at 35% for all prior periods due to the Tax Cuts and Jobs Act of 2017 that was signed into law in December 2017, lowering the corporate federal tax rate from 35% to 21%.

CONTACT: Investor Relations Contact:
Marliese L. Shaw
Executive Vice President, Investor Relations Officer
United Bank
860-291-3622
MShaw@bankatunited.com

Media Relations Contact:
Adam J. Jeamel
Regional President, Corporate Communications
United Bank
860-291-3765
AJeamel@bankatunited.com

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