United Financial Bancorp Reports Fourth Quarter 2009 Results and Declares Dividend of $0.07 Per Share
WEST SPRINGFIELD, Mass., Jan. 28 /PRNewswire-FirstCall/ -- United Financial Bancorp, Inc. (the "Company") (Nasdaq: UBNK), the holding company for United Bank (the "Bank"), reported net income of $1.2 million, or $0.08 per diluted share, for the fourth quarter of 2009 compared to net income of $959,000, or $0.06 per diluted share, for the corresponding period in 2008.
Excluding acquisition related costs totaling $1.4 million ($1.1 million net of tax benefit) net income would have been $2.3 million, or $0.15 per diluted share. Prior period 2008 net income included a non-cash charge of $1.4 million for other-than-temporary-impairment of specific securities. Excluding this charge and the related tax effect of $550,000, net income would have been $1.8 million, or $0.11 per diluted share.
The improved quarterly operating results were due to growth in average interest earning assets and core deposits, expansion in net interest margin and an increase in non-interest income. These items were partially offset by a higher provision for loan losses and an increase in non-interest expense. Growth in quarterly earnings per share was driven by the improvement in earnings as well as the positive impact of stock repurchases. The Company also announced a quarterly cash dividend of $0.07 per share, payable on March 9, 2010 to shareholders of record as of February 16, 2010.
For the year ended December 31, 2009, the Company's net income was $5.8 million, or $0.38 per diluted share, compared to net income of $7.3 million, or $0.44 per diluted share, for the same period in 2008. Excluding the impact of acquisition related expenses totaling $2.9 million ($2.5 million net of tax benefit), and the second quarter special FDIC insurance assessment of $537,000 ($312,000 net of tax benefit), net income would have been $8.6 million, or $0.57 per diluted share in the 2009 period. Excluding a non-cash charge of $1.4 million ($850,000, net of tax benefit) for other-than-temporary-impairment of specific securities, 2008 net income would have been $8.1 million, or $0.50 per diluted share.
On November 30, 2009, the Company acquired CNB Financial Corp. and Commonwealth National Bank at a total cost of $24.8 million. As a result of this transaction, the Company added six branches, $289.3 million in assets, $242.9 million in loans and $195.2 million in deposits to its franchise.
Total assets increased $277.9 million, or 22.0%, to $1.5 billion at December 31, 2009, from $1.3 billion at December 31, 2008 mainly due to the acquisition of Commonwealth National Bank and growth of $40 million in the existing commercial mortgage portfolio. These items were partially offset by sales of mortgage-backed securities totaling $23.9 million and sales of residential mortgages totaling $29.5 million. A portion of the cash flows received from the sales of loans and investment securities was used to pay down Federal Home Loan Bank advances and to fund the repurchase of 1.6 million shares of the Company's common stock at a total cost of $21.5 million.
Total deposits increased $256.3 million, or 32.7%, to $1.0 billion at December 31, 2009 from $782.7 million at December 31, 2008 primarily reflecting the acquisition of $195.2 million of deposits from Commonwealth National Bank and organic growth of $68.8 million, or 16.9%, in core account balances. At December 31, 2009, the Company continued to have considerable liquidity including significant unused borrowing capacity at the Federal Home Loan 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 14.2% at December 31, 2009.
"We are extremely pleased with our acquisition of Commonwealth National Bank," commented Richard B. Collins , President and Chief Executive Officer. "The cultures of our two organizations are quite similar and thus far the transition has been seamless. We look forward to the systems conversion in February and the opportunity to fully deploy our brand of banking in the Worcester area. As a result of this transaction, we expect 2010 earnings accretion to exceed the initial projection of 9%, reflecting growth in the balance sheet and revenue enhancements combined with the previously announced cost savings estimate of 15%." Collins remarked that "despite a difficult economic environment, we produced solid 2009 results and believe that we are well positioned for the future, reflecting our expansion into Worcester County, our healthy balance sheet and a strong capital position."
Financial Highlights:
- Total investment securities decreased $10.2 million, or 3.2%, to $306.5 million at December 31, 2009 from $316.7 million at December 31, 2008 reflecting sales of $23.9 million in mortgage-backed securities and prepayments and normal amortization of the existing mortgage-backed securities portfolio, partially offset by the addition of $32.3 million of investment securities from the Commonwealth National Bank acquisition. At December 31, 2009, approximately 95% of the investment portfolio consisted of mortgage-backed and debt securities issued by government-sponsored enterprises.
- Total loans increased $252.0 million, or 29.0%, to $1.1 billion at December 31, 2009 from $870.3 million at December 31, 2008, mainly due to the acquisition of $242.9 million in loans from Commonwealth National Bank and growth of $40 million, or 16%, in the existing commercial mortgage portfolio and $10 million, or 12%, in the existing commercial and industrial loan portfolio. These items were partially offset by the sale of $29.5 million of lower-coupon, fixed-rate residential mortgages. All other segments of our loan portfolio were affected by slower origination volume and prepayments.
- Non-performing assets totaled $17.9 million, or 1.16% of total assets, at December 31, 2009 compared to $5.8 million, or 0.46% of total assets, at December 31, 2008. The Commonwealth National Bank acquisition added $4.3 million in non-performing assets, including $3.3 million of impaired loans and $1.0 million of other real estate owned. Excluding the impact of the acquisition, the increase of $7.8 million was driven by the addition of five commercial real estate relationships. Two of the five loans are scheduled to be paid off or substantially paid down early in the first quarter of 2010. The remaining three have active workout plans in place and are expected to be resolved in the first half of 2010. Although non-performing assets increased during the period, our loan portfolio has no exposure to sub-prime borrowers.
- At December 31, 2009, the allowance for loan losses to total loans was 0.82% and the allowance for loan losses to total non-performing loans was 56.26%. 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. Excluding the impact of $242.9 million of loans acquired from Commonwealth National Bank and $22.7 million in loans purchased from other financial institutions, the ratio of the allowance for loan losses to total loans would have been 1.07% and the ratio of the allowance for loan losses to non-performing loans would have been 70.44%. For the year ended December 31, 2009, net charge-offs totaled $2.1 million or 0.23% of average loans outstanding.
- Total deposits increased $256.3 million, or 32.7%, to $1.0 billion at December 31, 2009 compared to $782.7 million at December 31, 2008 primarily reflecting the acquisition of $195.2 million of deposits from Commonwealth National Bank and organic growth of $68.8 million, or 16.9%, in core account balances. The strong growth in core account balances was driven by the success of our new Chicopee branch, which opened in July 2009, competitive products and pricing, excellent customer service and targeted promotional activities. At year end, core deposit balances were $560.7 million, or 54% of total deposits.
- Total stockholders' equity declined $2.1 million, or 0.9%, to $225.6 million at December 31, 2009 from $227.7 million at December 31, 2008 due to share repurchases totaling $21.5 million and cash dividends totaling $4.2 million, substantially offset by an increase in total equity of $12.0 million for shares issued in connection with the Commonwealth National Bank acquisition, net income of $5.8 million, stock-based compensation of $3.2 million, and other comprehensive income of $2.4 million.
- Net interest income increased $992,000, or 9.6%, to $11.3 million for the fourth quarter of 2009 from the same period in 2008 as a result of net interest margin expansion and an increase in average interest earning assets. Net interest margin increased 7 basis points to 3.53% for the three months ended December 31, 2009, from the same period in 2008, due to the positive contribution from the Worcester region for the month of December and improved spreads, partially offset by the increased cost to fund share repurchases, growth in excess cash balances held in low yielding Federal Home Loan Bank accounts and the increase in non-performing loans. Total average earning assets increased $91.0 million, or 7.6%, to $1.3 billion for the fourth quarter of 2009 due to the acquisition of Commonwealth National Bank and growth in commercial mortgages and commercial and industrial loans, offset in part by 2009 asset sales.
- Provision for loan losses rose by $616,000, or 167.8%, to $983,000 for the three months ended December 31, 2009 driven by an increase in specific reserves for impaired commercial real estate loans.
- Non-interest income increased by $1.9 million to $2.2 million for the three months ended December 31, 2009. Excluding the $1.4 million impairment charge on securities in the fourth quarter of 2008, non-interest income would have increased by $450,000, largely driven by growth in deposit service charges of $165,000 and BOLI income of $158,000. The increase in deposit service charges was primarily due to growth in accounts and transactions. The increase in income from bank-owned life insurance reflects the purchase of an additional $20.0 million of insurance in November of 2008.
- Non-interest expenses grew $2.4 million, or 29.7%, to $10.6 million for the fourth quarter of 2009 from $8.2 million in the same period last year. Excluding acquisition related costs totaling $1.4 million, total non-interest expenses would have been $9.1 million or 12.1% higher than the same period last year driven in large part by additional compensation, occupancy, marketing and data processing costs incurred to operate the acquired bank and our new Chicopee branch.
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 now operates the six newly acquired branch offices of Commonwealth National Bank 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)
December 31, December 31,
Assets 2009 2008
---- ----
(unaudited) (audited)
Cash and cash equivalents $21,877 $13,572
Short-term investments 1,096 1,071
Investment securities 306,478 316,697
Loans:
Residential mortgages 343,300 356,428
Commercial mortgages 409,680 248,457
Construction loans 48,808 32,082
Commercial loans 159,437 84,919
Home equity loans 137,371 120,724
Consumer loans 23,645 27,666
------ ------
Total loans 1,122,241 870,276
Net deferred loan costs and fees 2,355 2,395
Allowance for loan losses (9,180) (8,250)
------ ------
Loans, net 1,115,416 864,421
Federal Home Loan Bank of Boston stock, at cost 15,365 12,223
Other real estate owned 1,545 998
Deferred tax asset, net 11,242 7,969
Premises and equipment, net 15,935 12,125
Bank-owned life insurance 28,476 27,173
Goodwill 7,844 -
Other assets 15,766 6,885
------ -----
Total assets $1,541,040 $1,263,134
========== ==========
Liabilities and Stockholders' Equity
Deposits:
Demand $154,374 $114,178
NOW 42,262 32,390
Savings 174,270 99,492
Money market 189,763 160,736
Certificates of deposit 478,258 375,867
------- -------
Total deposits 1,038,927 782,663
Federal Home Loan Bank of Boston advances 208,173 208,564
Repurchase agreements 47,303 28,042
Subordinated debentures 5,357 -
Escrow funds held for borrowers 1,977 1,667
Capitalized lease obligations 5,141 3,129
Accrued expenses and other liabilities 8,562 11,355
----- ------
Total liabilities 1,315,440 1,035,420
--------- ---------
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 December 31, 2009 and 17,763,747
at December 31, 2008 187 178
Additional paid-in capital 179,020 164,358
Retained earnings 77,456 75,888
Unearned compensation (11,441) (12,144)
Accumulated other comprehensive income,
net of taxes 5,358 2,931
Treasury stock, at cost (1,868,335 shares at
December 31, 2009 and 261,798 shares at
December 31, 2008) (24,980) (3,497)
------- ------
Total stockholders' equity 225,600 227,714
------- -------
Total liabilities and stockholders'
equity $1,541,040 $1,263,134
========== ==========
UNITED FINANCIAL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED INCOME STATEMENTS
(Amounts in thousands, except per share amounts)
Three Months Ended Years Ended
December 31, December 31,
2009 2008 2009 2008
---- ---- ---- ----
(unaudited) (unaudited) (audited)
Interest and dividend income:
Loans $13,244 $12,498 $49,052 $50,175
Investments 3,361 4,045 13,904 14,109
Other interest-earning assets 6 81 30 530
-- -- -- ---
Total interest and
dividend income 16,611 16,624 62,986 64,814
Interest expense:
Deposits 3,372 4,282 14,295 17,831
Borrowings 1,911 2,006 7,691 7,172
----- ----- ----- -----
Total interest expense 5,283 6,288 21,986 25,003
----- ----- ------ ------
Net interest income before
provision for loan losses 11,328 10,336 41,000 39,811
Provision for loan losses 983 367 2,998 1,846
--- --- ----- -----
Net interest income after
provision for loan losses 10,345 9,969 38,002 37,965
Non-interest income:
Net gain on sales of loans - - 363 -
Net gain on sales of securities 82 15 543 23
Impairment charge on securities (82) (1,377) (82) (1,377)
Fee income on depositors’
accounts 1,351 1,186 4,877 4,638
Wealth management income 223 200 703 799
Income from bank-owned
life insurance 356 198 1,382 357
Other income 315 172 890 780
--- --- --- ---
Total non-interest income 2,245 394 8,676 5,220
----- --- ----- -----
Non-interest expense:
Salaries and benefits 5,050 4,596 18,954 17,359
Occupancy expenses 707 604 2,611 2,327
Marketing expenses 377 339 1,470 1,440
Data processing expenses 920 852 3,438 3,190
Professional fees 430 543 1,359 1,679
Acquisition related expenses 1,432 - 2,863 -
FDIC insurance assessments 233 130 1,546 511
Other expenses 1,431 1,094 4,617 4,184
----- ----- ----- -----
Total non-interest expense 10,580 8,158 36,858 30,690
------ ----- ------ ------
Income before income taxes 2,010 2,205 9,820 12,495
Income tax expense 788 1,246 4,014 5,197
--- ----- ----- -----
Net income $1,222 $959 $5,806 $7,298
====== ==== ====== ======
Earnings per share:
Basic $0.08 $0.06 $0.38 $0.44
Diluted $0.08 $0.06 $0.38 $0.44
Weighted average shares
Outstanding:
Basic 15,182 16,411 15,265 16,445
Diluted 15,189 16,426 15,273 16,445
UNITED FINANCIAL BANCORP, INC. AND SUBSIDIARY
SELECTED DATA AND RATIOS (unaudited)
(Dollars in thousands, except per share amounts)
At or For The Quarters Ended
Dec. 31 Sep. 30 Jun. 30 Mar. 31 Dec. 31
2009 2009 2009 2009 2008
---- ---- ---- ---- ----
Operating Results:
Net interest
income $11,328 $9,974 $9,543 $10,155 $10,336
Loan loss
provision 983 800 675 540 367
Non-interest
income 2,245 1,985 2,595 1,851 394(5)
Non-interest
expense 10,580(1) 8,093(1) 10,030(1) 8,155 8,158
Net income 1,222 1,901 560 2,123 959
Performance Ratios
(annualized):
Return on
average
assets 0.36%(2) 0.61%(2) 0.18%(2) 0.68% 0.31%(6)
Return on
average
equity 2.23%(2) 3.55%(2) 1.03%(2) 3.85% 1.71%(6)
Net interest
margin 3.53% 3.38% 3.27% 3.39% 3.46%
Non-interest
income to
average total
assets 0.67% 0.64% 0.85% 0.59% 0.13%(7)
Non-interest
expense to
average total
assets 3.14%(3) 2.60%(3) 3.27%(3) 2.61% 2.63%
Efficiency
ratio (4) 77.95%(3) 67.67%(3) 87.68%(3) 68.64% 67.47%
Per Share Data:
Diluted
earnings per
share $0.08 $0.13 $0.04 $0.14 $0.06
Tangible book
value per
share $12.93(8) $13.39 $13.15 $13.18 $13.01
Market price
at period end $13.11 $11.58 $13.82 $13.09 $15.14
Risk Profile
Tangible
equity as a
percentage of
tangible
assets 14.20%(8) 17.35% 17.25% 17.50% 18.03%
Net charge-
offs to
average loans
outstanding
(annualized) 0.54% 0.12% 0.20% 0.03% 0.23%
Non-
performing
assets as a
percent of
total assets 1.16% 0.92% 0.48% 0.41% 0.46%
Non-
performing
loans as a
percent of
total loans,
gross 1.45% 1.23% 0.62% 0.50% 0.55%
Allowance for
loan losses
as a percent
of total
loans, gross 0.82%(9) 1.07% 1.03% 1.02% 0.95%
Allowance for
loan losses
as a percent
of non-
performing
loans 56.26%(10) 86.73% 167.99% 201.43% 171.98%
Average Balances
Loans $960,921 $878,683 $860,882 $869,580 $862,814
Securities 289,393 279,442 283,005 313,799 314,251
Total
interest-
earning
assets 1,282,187 1,181,647 1,168,308 1,198,040 1,193,421
Total assets 1,349,727 1,243,906 1,226,210 1,251,225 1,240,215
Deposits 917,022 828,153 803,425 785,313 775,853
FHLBB advances 160,455 155,946 164,955 204,501 213,451
Stockholders'
Equity 219,650 214,300 216,501 220,683 224,785
Average Yields/Rates
(annualized)
Loans 5.51% 5.48% 5.45% 5.54% 5.79%
Securities 4.65% 4.70% 4.79% 4.93% 5.15%
Total
interest-
earning
assets 5.18% 5.19% 5.18% 5.32% 5.57%
Savings
accounts 0.96% 1.08% 1.14% 1.09% 1.30%
Money market/
NOW accounts 0.87% 1.04% 1.21% 1.31% 1.65%
Certificates
of deposit 2.56% 2.79% 2.96% 3.13% 3.38%
FHLBB advances 4.07% 4.22% 4.13% 3.40% 3.52%
Total
interest-
bearing
liabilities 2.14% 2.37% 2.51% 2.54% 2.80%
(1) Includes $1.4 million, $270,000 and $1.2 million in acquisition
related expenses for the quarters ended December, September and June
2009, respectively, and a $538,000 special FDIC insurance assessment
for the quarter ended June 2009.
(2) Exclusive of the $1.1 million (after tax), $270,000 and $1.2 million
in acquisition related expenses for the quarters ended 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 0.69%, 0.70% and 0.66%
and average equity would have been 4.22%, 4.05% and 3.76%,
respectively.
(3) Exclusive of the $1.4 million, $270,000 and $1.2 million in
acquisition related expenses for the quarters ended 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 2.71%, 2.52% and
2.72% and the efficiency ratio would have been 67.40%, 65.42% and
72.83%, respectively.
(4) Excludes gains/losses on sales of securities and loans and
impairment charges on securities.
(5) Includes $1.4 million other-than-temporary impairment ("OTTI") charge
on certain securities in our investment portfolio.
(6) Exclusive of a $1.4 million other-than-temporary impairment charge
and related tax effect of $550,000 on certain investment securities,
the return on average assets and average equity would have been
0.58% and 3.18%, respectively.
(7) Exclusive of the $1.4 million other-than-temporary impairment charge,
non-interest income to average total assets would have been 0.57%.
(8) Excludes the impact of goodwill of $7.8 million.
(9) Exclusive of the $242.9 million in acquired loans and $22.7 million
in loans purchased from other financial institutions, allowance for
loan losses as a percent of total loans, gross would have been
1.07%.
(10) Exclusive of the $3.3 million in nonperforming acquired loans,
allowance for loan losses as a percent of non-performing loans would
have been 70.44%.
For More Information Contact:
Mark A. Roberts
Executive Vice President & CFO
(413) 787-1700
SOURCE United Financial Bancorp, Inc.
RELATED LINKS
http://www.bankatunited.com
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