United Financial Bancorp Reports First Quarter 2012 Earnings of $2.8 Million, Or $0.19 Per Diluted Share; Announces Quarterly Dividend of $0.09 Per Share

WEST SPRINGFIELD, Mass., April 20, 2012 /PRNewswire/ -- United Financial Bancorp, Inc. (the "Company") (NASDAQ Global Select Market: UBNK), the holding company for United Bank (the "Bank"), reported net income of $2.8 million, or $0.19 per diluted share, for the first quarter of 2012 compared to net income of $2.4 million, or $0.16 per diluted share, for the corresponding period in 2011.  The Company also announced a quarterly cash dividend of $0.09 per share, payable on June 4, 2012 to shareholders of record as of May 11, 2012.

Financial Highlights:

  • Diluted earnings per share increased 19% compared to the same quarter last year.
  • Net income grew 17% compared to the first quarter of 2011.
  • Total loans increased 2% to $1.139 billion at March 31, 2012 from $1.122 billion at December 31, 2011, primarily due to increases of 4% in commercial mortgages and 3% in commercial business loans.
  • Credit quality remained solid, as demonstrated by the non-performing loans to total loans ratio of 79 basis points at March 31, 2012 and an annualized net charge-offs to average loans ratio of 16 basis points in the first quarter of 2012.
  • Core deposits increased 4% to $841.4 million at March 31, 2012 from $808.2 million at December 31, 2011. 
  • Tangible book value per share was $14.00 at March 31, 2012. During the first quarter of 2012, the Company repurchased 129,200 shares at an average price of $15.90 per share. At March 31, 2012, the Company had approximately 201,000 shares remaining to be purchased under its current plan approved in October 2010. 

"We are pleased with our first quarter performance which reflects strong growth in commercial loans and core deposits, excellent asset quality and a healthy balance sheet. We remain focused on profitably expanding our franchise through organic loan and deposit growth while maintaining excellent asset quality and effectively managing our capital and liquidity positions," commented Richard B. Collins, President and Chief Executive Officer. "We have recently established a loan production office in Connecticut staffed by a seasoned commercial lending professional. We look forward to expanding the United Bank brand into this new market later this spring."

Earnings Summary (Q1 2012 compared to Q1 2011)

Net income increased $420,000, or 17%, to $2.8 million for the first quarter of 2012 compared to $2.4 million for the same period last year largely due to an increase in net interest income, growth in non-interest income and a decrease in provision for loan losses, offset in part by higher non-interest expense. 

  • Net interest income increased $309,000, or 2%, to $13.1 million in the first quarter of 2012 mainly as a result of an increase in average interest earning assets.  Total average earning assets increased $32.1 million, or 2%, to $1.526 billion for the first quarter of 2012 driven by loan growth of 4%. The net interest margin increased by 1 basis point to 3.43% for the three months ended March 31, 2012.
  • Provision for loan losses decreased by $158,000, or 20%, to $650,000 for the three months ended March 31, 2012 driven by reductions in loan loss reserve factors and classified loans. The decrease in loan loss reserve factors is a result of improving asset quality trends and positive changes in the economic conditions.
  • Non-interest income increased by $424,000, or 20%, to $2.6 million for the three months ended March 31, 2012. The growth in non-interest income was primarily due to:
    • an increase of $116,000, or 9%, in fee income on deposit accounts driven by higher overdraft fees and growth in ATM and debit card income;
    • growth of $109,000, or 33%, in bank-owned life insurance (BOLI) income reflecting an additional $10 million BOLI investment in May 2011; and
    • improvement in net gain on sales of loans of $85,000 due to increased volume and pricing.
  • Non-interest expense increased $335,000, or 3%, to $11.3 million for the first quarter of 2012 mainly driven by increases in other expenses and salaries and benefits, partially offset by a decrease in professional fees.  Other expenses increased $278,000, or 23%, reflecting higher depreciation and mortgage servicing rights expenses. The increase in depreciation expenses was due to an adjustment in the first quarter of 2011 related to the Company's acquisition of CNB Financial Corp. in November 2009.  Salaries and benefits increased by $173,000, or 3%, mainly attributable to annual merit increases, additional staffing hired to support and facilitate the Bank's expansion, the opening of a new loan production office in Beverly, MA in the second quarter of 2011 and a higher incentive compensation accrual. These unfavorable variances were partially reduced by a $155,000, or 23%, decrease in professional fees related to lower legal and consulting activities.
  • Income taxes increased $136,000, or 18%, to $899,000 for the three months ended March 31, 2012 primarily due to higher pre-tax income.  The Company's effective tax rate was 24% in both quarters.

Balance Sheet Activity:

  • Total assets increased $36.4 million, or 2%, from 2011 year end to $1.660 billion at March 31, 2012 from $1.624 billion at December 31, 2011 reflecting growth in loans and cash balances.
  • Total loans increased $17.5 million, or 2%, to $1.139 billion at March 31, 2012 reflecting growth in the commercial mortgages and commercial and industrial portfolios, partially offset by modest run-off in the residential mortgage, home equity and consumer loan portfolios. Commercial mortgage and commercial and industrial loan growth was primarily attributable to business development efforts, competitive products and pricing.  The decrease in residential mortgages was driven by sales of 30-year fixed rate loans, offset to a large extent by originations of 10 and 15-year fixed rate loans.
  • Cash and cash equivalents increased $14.0 million, or 23%, to $75.5 million at March 31, 2012 mainly driven by strong deposit growth.
  • Total deposits increased $28.7 million, or 2%, to $1.259 billion at March 31, 2012 reflecting growth of $33.2 million, or 4%, in core account balances, partially offset by a decrease of $4.5 million, or 1%, in certificates of deposit.  The strong growth in core account balances was driven by the success of sales and marketing initiatives, competitive products and pricing and excellent customer service. Core deposit balances were $841.4 million, or 67% of total deposits at March 31, 2012 compared to $808.2 million, or 66% at December 31, 2011.
  • Short-term debt increased $6.3 million, or 37%, mainly due to growth in overnight repurchase agreements.

Credit Quality:

  • Non-performing assets totaled $11.6 million, or 0.70% of total assets, at March 31, 2012 compared to $10.6 million, or 0.65% of total assets, at December 31, 2011.  The $1.0 million increase in non-performing assets is primarily driven by two new non-performing loans and an increase in other real estate owned.
  • At March 31, 2012, the ratio of the allowance for loan losses to total loans was 0.99%, equal to the prior year end level.  Excluding the impact of loans acquired from CNB Financial Corp. and other financial institutions totaling $154.7 million at March 31, 2012 and $165.1 million at December 31, 2011, the ratio of the allowance for loan losses to total loans would have been 1.15% at March 31, 2012 and 1.16% at December 31, 2011.  Net charge-offs totaled $457,000 or 0.16% of average loans outstanding for the quarter ended March 31, 2012 as compared to net charge-offs of $327,000 or 0.12% of average loans outstanding for the first quarter of 2011.  The increase in net charge-offs resulted from write-offs of several small loans which became uncollectible.  

Capital and Liquidity:

  • At March 31, 2012, the Company remains well capitalized with a tangible equity-to-tangible assets ratio of 13.22% and an equity-to-assets ratio of 13.69%.
  • At March 31, 2012, the Company continued to have considerable liquidity consisting of significant balances at the Federal Reserve Bank of Boston, a large amount of marketable loans and investment securities, substantial unused borrowing capacity at the Federal Home Loan Bank of Boston and the Federal Reserve Bank of Boston and access to funding through the repurchase agreement and brokered deposit markets.

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 16 branch offices and two express drive-up branches in the Springfield region of Western Massachusetts and six branches in the Worcester region of Central Massachusetts.  The bank also operates a loan production office located in Beverly, Massachusetts. Through its Wealth Management Group, the Bank offers 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 or on Facebook at facebook.com/bankatunited.

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

(Dollars in thousands, except per share amounts)


















March 31,


December 31,


March 31,

Assets

2012


2011


2011


(unaudited)


(audited)


(unaudited)







Cash and cash equivalents

$75,548


$61,518


$72,539

Investment securities  

340,712


337,710


339,609

Loans held for sale

685


53


583







Loans:






    Residential mortgages

312,065


314,839


317,307

    Commercial mortgages

467,022


450,180


429,949

    Construction loans

30,191


30,271


30,512

    Commercial loans

181,512


176,086


165,607

    Home equity loans

134,368


135,518


135,625

    Consumer loans

14,186


14,985


18,001

        Total loans

1,139,344


1,121,879


1,097,001







    Net deferred loan costs and fees

2,255


2,194


2,043

    Allowance for loan losses

(11,325)


(11,132)


(10,468)

        Loans, net

1,130,274


1,112,941


1,088,576







Federal Home Loan Bank of Boston stock, at cost 

14,454


15,365


15,365

Other real estate owned

2,442


2,054


1,480

Deferred tax asset, net

14,368


14,006


10,821

Premises and equipment, net 

17,333


16,438


15,746

Bank-owned life insurance

41,084


40,688


29,474

Goodwill

8,192


8,192


8,192

Other intangible assets

712


752


1,031

Other assets 

14,394


14,035


16,309







        Total assets

$1,660,198


$1,623,752


$1,599,725







Liabilities and Stockholders' Equity












Deposits: 






    Demand

$208,553


$205,902


$181,208

    NOW

58,078


52,899


42,117

    Savings

263,076


247,664


227,069

    Money market

311,684


301,770


273,536

    Certificates of deposit

417,238


421,740


449,981

        Total deposits

1,258,629


1,229,975


1,173,911







Short-term borrowings 

23,561


17,260


18,900

Long-term debt

126,704


126,857


161,461

Subordinated debentures

5,562


5,539


5,471

Escrow funds held for borrowers

2,250


2,103


2,194

Due to broker

87


-


-

Capitalized lease obligations

4,837


4,874


4,978

Accrued expenses and other liabilities 

11,320


9,783


8,758

        Total liabilities

1,432,950


1,396,391


1,375,673







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, 2012, December 31, 2011 and     






      March 31, 2011  

187


187


187

    Additional paid-in capital

182,671


182,475


180,926

    Retained earnings

90,553


88,977


84,128

    Unearned compensation

(9,874)


(10,047)


(10,578)

    Accumulated other comprehensive income, net of taxes

6,549


6,752


4,512

    Treasury stock, at cost (3,108,811 shares at March 31, 2012, 2,994,036 shares  






      at December 31, 2011 and 2,610,898 shares at March 31, 2011)  

(42,838)


(40,983)


(35,123)

        Total stockholders' equity

227,248


227,361


224,052







        Total liabilities and stockholders' equity

$1,660,198


$1,623,752


$1,599,725













 

UNITED FINANCIAL BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED INCOME STATEMENTS

(Dollars in thousands, except per share amounts)










Three Months Ended

March 31,


2012


2011


(unaudited)

Interest and dividend income:




    Loans

$ 14,075


$ 14,487

    Investments

2,855


3,191

    Other interest-earning assets

41


40

Total interest and dividend income

16,971


17,718





Interest expense:




    Deposits

2,753


3,297

    Borrowings

1,118


1,630

Total interest expense

3,871


4,927





Net interest income before provision for loan losses

13,100


12,791





Provision for loan losses

650


808





Net interest income after provision for loan losses

12,450


11,983





Non-interest income:




    Fee income on depositors' accounts

1,408


1,292

    Wealth management income

227


240

    Income from bank-owned life insurance

440


331

    Net gain on sales of loans

108


23

    Net gain on sales of securities

-


1

    Other income

390


262

Total non-interest income

2,573


2,149





Non-interest expense:




    Salaries and benefits

6,442


6,269

    Occupancy expenses

874


844

    Marketing expenses

440


447

    Data processing expenses

1,020


988

    Professional fees

506


661

    FDIC insurance assessments

269


330

    Low income housing tax credit fund

243


198

    Other expenses

1,481


1,203

Total non-interest expense

11,275


10,940





Income before income taxes

3,748


3,192





Income tax expense

899


763





Net income

$ 2,849


$ 2,429





Earnings per share:




    Basic

$ 0.19


$ 0.16

    Diluted

$ 0.19


$ 0.16





Weighted average shares outstanding:




    Basic

14,671


15,014

    Diluted

14,987


15,259









 

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




2012


2011


2011


2011


2011














Operating Results:











Net interest income

$ 13,100


$ 13,241


$ 13,399


$ 13,382


$ 12,791


Loan loss provision

650


1,011


750


673


808


Non-interest income

2,573


2,570


2,423


2,211


2,149


Non-interest expense

11,275


10,718


11,001


11,403


10,940


Net income

2,849


2,980


3,085


2,690


2,429














Performance Ratios (annualized):











Return on average assets

0.70%


0.74%


0.77%


0.67%


0.62%


Return on average equity

5.00%


5.24%


5.41%


4.76%


4.36%


Net interest margin

3.43%


3.51%


3.56%


3.55%


3.42%


Non-interest income to average total assets

0.63%


0.64%


0.60%


0.55%


0.54%


Non-interest expense to average total assets

2.77%


2.66%


2.74%


2.85%


2.77%


Efficiency ratio

72.44%

(1)

68.41%

(1)

69.61%

(1)

73.09%

(1)

73.34%

(1)













Per Share Data:











Diluted earnings per share

$ 0.19


$ 0.20


$ 0.20


$ 0.18


$ 0.16


Book value per share

$ 14.57


$ 14.47


$ 14.36


$ 14.15


$ 13.92


Tangible book value per share

$ 14.00

(2)

$ 13.90

(2)

$ 13.79

(2)

$ 13.58

(2)

$ 13.35

(2)

Market price at period end

$ 15.82


$ 16.09


$ 13.69


$ 15.43


$ 16.51














Risk Profile











Equity as a percentage of assets

13.69%


14.00%


14.11%


14.15%


14.01%


Tangible equity as a percentage of tangible assets

13.22%

(2)

13.53%

(2)

13.63%

(2)

13.66%

(2)

13.51%

(2)

Net charge-offs to average loans outstanding (annualized)

0.16%


0.22%


0.23%


0.18%


0.12%


Non-performing assets as a percent of total assets

0.70%


0.65%


0.85%


0.77%


0.62%


Non-performing loans as a percent of total loans

0.79%


0.75%


1.00%


0.86%


0.76%


Allowance for loan losses as a percent of total loans

0.99%

(3)

0.99%

(3)

0.96%

(3)

0.96%

(3)

0.95%

(3)

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

125.65%


131.68%


96.22%


112.01%


125.20%














Average Balances











Loans

$ 1,133,543


$ 1,119,511


$ 1,113,672


$ 1,103,305


$ 1,090,796


Securities

338,405


346,939


358,929


356,479


341,804


Total interest-earning assets

1,526,015


1,509,079


1,503,940


1,509,438


1,493,946


Total assets

1,628,071


1,611,447


1,605,844


1,602,767


1,579,048


Deposits

1,231,285


1,211,957


1,186,530


1,179,166


1,145,296


FHLBB advances

105,302


111,762


132,544


138,215


147,880


Stockholders' Equity

227,854


227,678


228,278


226,279


223,067














Average Yields/Rates (annualized)











Loans

4.97%


5.18%


5.22%


5.33%


5.31%


Securities

3.37%


3.34%


3.62%


3.80%


3.73%


Total interest-earning assets

4.45%


4.62%


4.73%


4.80%


4.74%














Savings accounts

0.58%


0.69%


0.71%


0.76%


0.77%


Money market/NOW accounts

0.55%


0.62%


0.64%


0.70%


0.71%


Certificates of deposit

1.82%


1.88%


1.91%


1.99%


2.06%


FHLBB advances

3.12%


3.17%


3.26%


3.60%


3.52%


Total interest-bearing liabilities

1.31%


1.43%


1.50%


1.61%


1.68%














(1)

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


(2)

Excludes the impact of goodwill and other intangible assets of $8.9 million at March 31, 2012 and December 31, 2011, $9.0 million at September 30, 2011 and $9.2 million at June 30, 2011 and March 31, 2011.




(3)

Excluding acquired loans of $136.4 million, $146.0 million, $156.2 million, $168.6 million and $178.7 million and loans purchased from other financial institutions of $18.3 million, $19.1 million, $19.3 million, $20.8 million and $21.1 million at March 31, 2012, December 31, 2011, September 30, 2011, June 30, 2011 and March 31, 2011, respectively, allowance for loan losses as a percent of total loans, gross would have been 1.15%, 1.16%, 1.14%, 1.16%, and 1.17% for the quarters ended March 31, 2012, December 31, 2011, September 30, 2011, June 30, 2011 and March 31, 2011, respectively.




















For More Information Contact:
Mark A. Roberts
Executive Vice President & CFO
(413) 787-1700

SOURCE United Financial Bancorp, Inc.



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