2014

United Financial Bancorp Reports First Quarter 2010 Results and Declares Dividend of $0.07 Per Share

WEST SPRINGFIELD, Mass., April 16 /PRNewswire-FirstCall/ -- United Financial Bancorp, Inc. (the "Company") (Nasdaq: UBNK), the holding company for United Bank (the "Bank"), reported net income of $1.8 million, or $0.11 per diluted share, for the first quarter of 2010 compared to net income of $2.1 million, or $0.14 per diluted share, for the corresponding period in 2009. Excluding acquisition related costs totaling $979,000 ($808,000 net of tax benefit) net income would have been $2.6 million, or $0.16 per diluted share, for the first quarter of 2010.  

The improved quarterly operating results (excluding acquisition related expenses) were primarily due to growth in net interest income, driven by net interest margin expansion and an increase in average interest earning assets, as well as an increase in fee income.  These items were partially offset by a higher provision for loan losses, a $145,000 non-cash, non-deductible charge for other-than-temporary-impairment of an investment security and an increase in non-interest expense.  The improvement in earnings per share (excluding acquisition related costs) was influenced by growth in earnings (excluding acquisition related costs) and the positive impact of stock repurchases. The Company also announced a quarterly cash dividend of $0.07 per share, payable on May 27, 2010 to shareholders of record as of May 6, 2010.  

Total assets declined $28.4 million, or 1.8%, to $1.513 billion at March 31, 2010, from $1.541 billion at December 31, 2009 mainly due to decreases of $21.2 million, or 1.9%, in total loans and $9.9 million, or 3.2%, in investment securities.  Total deposits increased $26.3 million, or 2.5%, to $1.065 billion at March 31, 2010 from $1.039 billion at December 31, 2009 primarily reflecting growth of $36.9 million, or 6.6%, in core account balances, partially offset by a decrease of $10.7 million, or 2.2%, in certificates of deposit.  Total borrowings declined $53.3 million, or 20.4%, as a result of paydowns of FHLB advances using cash flows from the loan and investment portfolios and increased deposit levels.  At March 31, 2010, the Company continued to have considerable liquidity including significant unused borrowing capacity at the Federal Home Loan Bank and the Federal Reserve Bank and access to funding through the repurchase agreement and brokered deposit markets.  The Company's balance sheet is also supported by a strong capital position, with a tangible equity-to-tangible assets ratio of 14.39% at March 31, 2010.

"We are extremely pleased to report that the integration of United Bank and Commonwealth National Bank was completed in the first quarter with the successful conversion of all systems.  Beginning in March, we were able to devote our resources to fully deploying our brand of banking in the Worcester area," commented Richard B. Collins, President and Chief Executive Officer.  "Our improved quarterly operating results reflect a positive contribution from our Worcester franchise as well as our success in attracting and retaining loan and core deposit relationships, effectively managing credit and interest rate risks and maintaining a healthy balance sheet, significant liquidity and a substantial capital base."  

Financial Highlights:

  • Total investment securities decreased $9.9 million, or 3.2%, to $296.5 million at March 31, 2010 from $306.5 million at December 31, 2009 reflecting prepayments and normal amortization of the existing mortgage-backed securities portfolio. At March 31, 2010, approximately 91% of the investment portfolio consisted of mortgage-backed and debt securities issued by government-sponsored enterprises.

  • Total loans decreased $21.2 million, or 1.9%, to $1.101 billion at March 31, 2010 from $1.122 billion at December 31, 2009 reflecting the sale of $9.7 million in lower coupon, fixed rate residential mortgages.  The residential real estate and commercial portfolios were also affected by slower origination volume, loan prepayments and normal amortization.  

  • Non-performing assets totaled $18.4 million, or 1.22% of total assets, at March 31, 2010 compared to $17.9 million, or 1.16% of total assets, at December 31, 2009.  The increase of $576,000 in non-performing assets was primarily attributable to an increase of $431,000 in OREO balances.  The Company's total non-performing assets include a $3.5 million commercial real estate loan which was restructured during the first quarter of 2010, is classified as a troubled debt restructure and has been placed on non-accrual status.  Although this loan will be returned to accruing status after the borrower is current on the new payments for a period of six months, it will continue to be included in non-performing assets.  Management expects that several impaired loans with active workout plans will be substantially paid down or paid in full by the end of the second quarter of 2010.  

  • At March 31, 2010, the allowance for loan losses to total loans was 0.87% and the allowance for loan losses to total non-performing loans was 58.38%.  In accordance with generally accepted accounting principles, the Company recorded the loans acquired from Commonwealth National Bank at fair value and recognized the credit mark on loans purchased from other financial institutions as a component of fair value.  At March 31, 2010, the remaining balance of the loan fair value adjustments was $6.4 million, or 2.4% of the total $262.9 million in outstanding purchased loans. Excluding the $240.5 million outstanding balance of loans acquired from Commonwealth National Bank and $22.4 million outstanding balance of loans purchased from other financial institutions, the ratio of the allowance for loan losses to total loans would have been 1.15%.  Excluding the $2.7 million outstanding balance of non-performing loans acquired from Commonwealth National Bank, the ratio of the allowance for loan losses to non-performing loans would have been 69.76%.  For the quarter ended March 31, 2010, net charge-offs totaled $304,000 or 0.11% of average loans outstanding.  

  • Total deposits increased $26.3 million, or 2.5%, to $1.065 billion at March 31, 2010 compared to $1.039 billion at December 31, 2009 reflecting growth of $36.9 million, or 6.6%, in core account balances, partially offset by a decrease of $10.7 million, or 2.2%, in certificates of deposit.  The strong growth in core account balances was driven by the success of sales and marketing initiatives in our new Worcester markets, competitive products and pricing, excellent customer service and targeted promotional activities.  Core deposit balances were $597.6 million, or 56.1% of total deposits at March 31, 2010 compared to $560.7 million, or 54.0% at December 31, 2009.

  • Total stockholders' equity declined $1.0 million, or 0.5%, to $224.2 million at March 31, 2010 from $225.2 million at December 31, 2009 due to 163,386 shares repurchased totaling $2.1 million and cash dividends totaling $1.1 million, partially offset by net income of $1.8 million.

  • Net interest income increased $3.3 million, or 32.9%, to $13.5 million for the first quarter of 2010 from $10.2 million for the same period in 2009 as a result of net interest margin expansion and an increase in average interest earning assets.  Net interest margin increased 37 basis points to 3.76% for the three months ended March 31, 2010, from 3.39% for the same period in 2009 due to amortization of certain acquisition accounting adjustments totaling $732,000 and improved spreads.  These items were partially offset by an increased cost to fund share repurchases, growth in excess cash balances held in low yielding Federal Reserve Bank and Federal Home Loan Bank accounts and an increase in non-performing loans. Total average earning assets increased $236.2 million, or 19.7%, to $1.434 billion for the first quarter of 2010 due in large part to the acquisition of Commonwealth National Bank in the fourth quarter of 2009 and to a lesser extent loan origination activity.  These items were partially offset by 2009 loan and investment security sales as well as prepayments and normal amortization of the existing loan and mortgage-backed securities portfolio.

  • The provision for loan losses rose by $193,000, or 35.7%, to $733,000 for the three months ended March 31, 2010 driven by an increase in specific reserves for impaired commercial real estate loans.

  • Non-interest income increased by $186,000, or 10%, to $2.0 million for the three months ended March 31, 2010, mainly attributable to growth in deposit service charges of $264,000 or 23.8%, partially offset by the other than temporary impairment charge of an investment security of $145,000 and a decrease in gains on sales of loans of $37,000 or 29.6%.  Fee income on depositors' accounts increased as a result of growth in accounts and transactions.

  • Non-interest expense grew $3.9 million, or 47.4%, to $12.0 million for the first quarter of 2010 from $8.2 million in the same period last year.  Excluding acquisition related costs totaling $979,000, total non-interest expense would have been $11.0 million, $2.9 million or 35.4% higher than the same period last year.  Salaries and benefits increased $1.4 million, or 30.3%, mainly due to costs incurred to operate our new Worcester franchise and, to a lesser extent, staffing costs related to our Chicopee branch opened in the second quarter of 2009 and annual wage increases.  Occupancy costs grew $262,000, or 39.4%, principally attributable to expenses incurred to operate our new Worcester facilities, and to a lesser extent, the new Chicopee branch.  Marketing expenses increased $218,000, or 63.7%, in connection with advertising and promotional expenses for our Worcester franchise.  Data processing costs increased $223,000, or 26.4%, reflecting expenses for our new Worcester accounts and a larger loan and deposit account base in our Springfield market.  Other expenses increased $574,000, or 65.5%, largely related to additional costs for the Worcester operations.  

United Financial Bancorp, Inc. is a publicly owned corporation and the holding company of United Bank, a federally chartered savings bank headquartered at 95 Elm Street, West Springfield, MA 01090. United Bank operates 16 full service branch offices and two express drive-up branches located throughout Hampden and Hampshire Counties in Western Massachusetts and six full service branch offices located in Worcester County.   Through its Wealth Management 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 in this press release 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

(Dollars in thousands, except par value amounts)








March 31,


December 31,


March 31,

Assets

2010


2009


2009


(unaudited)


(audited)


(unaudited)







Cash and cash equivalents

$21,667


$21,877


$11,864

Short-term investments

1,100


1,096


1,079

Investment securities  

296,541


306,478


308,924

Loans held for sale

-


-


2,710







Loans:






Residential mortgages

328,140


343,300


346,590

Commercial mortgages

413,118


409,680


256,248

Construction loans

49,082


48,808


27,905

Commercial loans

151,270


159,437


82,674

Home equity loans

136,652


137,371


119,024

Consumer loans

22,825


23,645


26,238

Total loans

1,101,087


1,122,241


858,679







Net deferred loan costs and fees

2,353


2,355


2,232

Allowance for loan losses

(9,610)


(9,180)


(8,728)

Loans, net

1,093,830


1,115,416


852,183







Federal Home Loan Bank of Boston stock, at cost

15,365


15,365


12,223

Other real estate owned

1,976


1,545


739

Deferred tax asset, net

12,650


11,295


6,632

Premises and equipment, net

15,808


15,935


12,012

Bank-owned life insurance

28,793


28,476


27,468

Goodwill

7,717


7,844


-

Other assets

17,217


15,713


7,360







Total assets

$1,512,664


$1,541,040


$1,243,194







Liabilities and Stockholders' Equity








Deposits:


Demand

$161,107


$154,374


$112,441

NOW

39,338


42,262


33,990

Savings

165,946


174,270


114,341

Money market

231,222


189,763


173,717

Certificates of deposit

467,579


478,258


360,832

Total deposits

1,065,192


1,038,927


795,321







Short-term borrowings

33,995


75,488


46,464

Long-term debt

168,203


179,988


170,847

Subordinated debentures

5,380


5,357


-

Escrow funds held for borrowers

2,143


1,977


2,152

Capitalized lease obligations

5,109


5,141


3,109

Accrued expenses and other liabilities

8,429


8,916


7,788

Total liabilities

1,288,451


1,315,794


1,025,681







Stockholders' Equity:






Preferred stock, par value $0.01 per share, authorized 50,000,000 shares; none issued

-


-


-

Common stock, par value $0.01 per share; authorized 100,000,000 shares;  shares issued: 18,706,933 at March 31, 2010 and at December 31, 2009 and 17,763,747 at March 31, 2009  

187


187


178

Additional paid-in capital

178,403


178,666


165,046

Retained earnings

78,117


77,456


76,920

Unearned compensation

(11,268)


(11,441)


(11,958)

Accumulated other comprehensive

income, net of taxes

4,977


5,358


4,448

Treasury stock, at cost (1,962,971 shares at March 31, 2010, 1,868,335 shares at December 31, 2009 and 1,262,377 shares at March 31, 2009)  

(26,203)


(24,980)


(17,121)

Total stockholders' equity

224,213


225,246


217,513







Total liabilities and stockholders' equity

$1,512,664


$1,541,040


$1,243,194



UNITED FINANCIAL BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED INCOME STATEMENTS

(Amounts in thousands, except per share amounts)










Three Months Ended  


March 31,


2010


2009


(unaudited)

Interest and dividend income:




Loans

$15,457


$12,051

Investments

3,292


3,871

Other interest-earning assets

8


8

Total interest and dividend income

18,757


15,930





Interest expense:




Deposits

3,375


3,825

Borrowings

1,886


1,950

Total interest expense

5,261


5,775





Net interest income before provision for loan losses

13,496


10,155





Provision for loan losses

733


540





Net interest income after provision for loan losses

12,763


9,615





Non-interest income:




Net gain on sales of loans

88


125

Impairment charges on securities

(145)


-

Fee income on depositors’ accounts

1,371


1,107

Wealth management income

138


132

Income from bank-owned life insurance

346


314

Other income

239


173

Total non-interest income

2,037


1,851





Non-interest expense:




Salaries and benefits

6,078


4,664

Occupancy expenses

927


665

Marketing expenses

560


342

Data processing expenses

1,067


844

Professional fees

541


423

Acquisition related expenses

979


-

FDIC insurance assessments

415


340

Other expenses

1,451


877

Total non-interest expense

12,018


8,155





Income before income taxes

2,782


3,311





Income tax expense

1,031


1,188





Net income

$  1,751


$  2,123





Earnings per share:




Basic

$    0.11


$    0.14

Diluted

$    0.11


$    0.14





Weighted average shares outstanding (1):




Basic

15,619


15,709

Diluted

15,663


15,722





(1)  Prior period basic and diluted share data were revised as required by the Earnings Per Share Topic of FASB ASC and in accordance  with the provisions of "Determining Whether Instruments Issued in Share-Based Payment Transactions are Participating Securities" which require that share-based compensation awards that qualify as participating securities (entitled to receive non-forfeitable dividends) be included in basic earnings per share using the two-class method. This revision had no impact on earnings per share as previously reported.



UNITED FINANCIAL BANCORP, INC. AND SUBSIDIARY

SELECTED DATA AND RATIOS (unaudited)

(Dollars in thousands, except per share amounts)



At or For The Quarters Ended












Mar. 31


Dec. 31


Sep. 30


Jun. 30


Mar. 31


2010


2009


2009


2009


2009











Operating Results:










Net interest income

$      13,496


$    11,328


$      9,974


$      9,543


$    10,155

Loan loss provision

733


983


800


675


540

Non-interest income

2,037


2,245


1,985


2,595


1,851

Non-interest expense

12,018

(1)

10,580

(1)

8,093

(1)

10,030

(1)

8,155

Net income

1,751


1,222


1,901


560


2,123











Performance Ratios (annualized):










Return on average assets

0.46%

(2)

0.36%

(2)

0.61%

(2)

0.18%

(2)

0.68%

Return on average equity

3.12%

(2)

2.23%

(2)

3.55%

(2)

1.03%

(2)

3.85%

Net interest margin

3.76%


3.53%


3.38%


3.27%


3.39%

Non-interest income to average total assets

0.53%


0.67%


0.64%


0.85%


0.59%

Non-interest expense to average total assets

3.14%

(3)

3.14%

(3)

2.60%

(3)

3.27%

(3)

2.61%

Efficiency ratio (4)

77.09%

(3)

77.95%

(3)

67.67%

(3)

87.68%

(3)

68.64%











Per Share Data:










Diluted earnings per share

$          0.11


$        0.08


$        0.13


$        0.04


$        0.14

Tangible book value per share

$        12.93

(5)

$      12.93

(5)

$      13.39


$      13.15


$      13.18

Market price at period end

$        13.98


$      13.11


$      11.58


$      13.82


$      13.09











Risk Profile










Tangible equity as a percentage of tangible assets

14.39%

(5)

14.18%

(5)

17.35%


17.25%


17.50%

Net charge-offs to average loans outstanding (annualized)

0.11%


0.54%


0.12%


0.20%


0.03%

Non-performing assets as a percent of total assets

1.22%


1.16%


0.92%


0.48%


0.41%

Non-performing loans as a percent of total loans, gross

1.49%


1.45%


1.23%


0.62%


0.50%

Allowance for loan losses as a percent of total loans, gross

0.87%

(6)

0.82%

(6)

1.07%


1.03%


1.02%

Allowance for loan losses as a percent of non-performing loans

58.38%

(7)

56.36%

(7)

86.73%


167.99%


201.43%











Average Balances










Loans

$ 1,112,329


$  960,921


$  878,683


$  860,882


$  869,580

Securities

302,916


289,393


279,442


283,005


313,799

Total interest-earning assets

1,434,256


1,282,187


1,181,647


1,168,308


1,198,040

Total assets

1,529,209


1,349,727


1,243,906


1,226,210


1,251,225

Deposits

1,038,374


917,022


828,153


803,425


785,313

FHLBB advances

202,644


160,455


155,946


164,955


204,501

Stockholders' Equity

224,786


219,650


214,300


216,501


220,683











Average Yields/Rates (annualized)










Loans

5.56%


5.51%


5.48%


5.45%


5.54%

Securities

4.35%


4.65%


4.70%


4.79%


4.93%

Total interest-earning assets

5.23%


5.18%


5.19%


5.18%


5.32%











Savings accounts

0.93%


0.96%


1.08%


1.14%


1.09%

Money market/NOW accounts

0.81%


0.87%


1.04%


1.21%


1.31%

Certificates of deposit

2.12%


2.56%


2.79%


2.96%


3.13%

FHLBB advances

3.06%


4.07%


4.22%


4.13%


3.40%

Total interest-bearing liabilities

1.85%


2.14%


2.37%


2.51%


2.54%











(1)     Includes acquisition related expenses totaling $979,000, $1.4 million, $270,000 and $1.2 million for the quarters ended March 2010 and December,  September and June 2009, respectively, and a $538,000 special FDIC insurance assessment for the quarter ended June 2009.

(2)     Excluding acquisition related expenses totaling $808,000 (after tax), $1.1 million (after tax), $270,000 and $1.2 million for the quarters ended March 2010 and December, September and June 2009, respectively, and a $312,000 (after tax) special FDIC insurance assessment for the quarter ended June 2009, the return on average assets would have been 0.67%, 0.69%, 0.70% and 0.66% and average equity would have been 4.55%, 4.22%, 4.05% and 3.76%, respectively. The total acquisition related expenses for the quarters ended September and June 2009 were non-deductible.

(3)     Excluding acquisition related expenses totaling $979,000, $1.4 million, $270,000 and $1.2 million for the quarters ended March 2010 and December, September and June 2009, respectively, and a $538,000 special FDIC insurance assessment for the quarter ended June 2009, non-interest expense to average total assets would have been 2.89%, 2.71%, 2.52% and 2.72% and the efficiency ratio would have been 70.81%, 67.40%, 65.42% and 72.83%, respectively.

(4)     Excludes gains/losses on sales of securities and loans and impairment charges on securities.

(5)     Excludes the impact of goodwill of $7.7 million and $7.8 million at March 2010 and December 2009, respectively.

(6)     Excluding the $240.5 million and $242.9 million in acquired loans and $22.4 million and $22.7 million in loans purchased from other financial institutions at March 2010 and December 2009, respectively, allowance for loan losses as a percent of total loans, gross would have been 1.15% and 1.07%, respectively.

(7)     Excluding the $2.7 million and $3.3 million in nonperforming acquired loans at March 2010 and December 2009, respectively, allowance for loan losses as a percent of non-performing loans would have been 69.76% and 70.44%, respectively.



For More Information Contact:

Mark A. Roberts

Executive Vice President & CFO

(413) 787-1700



SOURCE United Financial Bancorp, Inc.



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