United Financial Bancorp Reports Fourth Quarter 2010 Earnings of $2.7 Million, or $0.18 Per Diluted Share; Declares Quarterly Dividend of $0.08 Per Share

WEST SPRINGFIELD, Mass., Jan. 24, 2011 /PRNewswire/ -- United Financial Bancorp, Inc. (the "Company") (Nasdaq: UBNK), the holding company for United Bank (the "Bank"), reported net income of $2.7 million, or $0.18 per diluted share, for the fourth quarter of 2010 compared to net income of $1.2 million, or $0.08 per diluted share, for the corresponding period in 2009. Excluding expenses totaling $1.4 million ($1.1 million net of tax benefit) related to the acquisition of Commonwealth National Bank, net income would have been $2.3 million, or $0.15 per diluted share, for the fourth quarter of 2009.  The improved results were largely due to an increase in net interest income, driven by growth in average earning assets, and a lower provision for loan losses.

For the twelve months ended December 31, 2010, net income was $10.0 million, or $0.65 per diluted share, compared to net income of $5.8 million or $0.38 per diluted share, for the same period in 2009. Excluding acquisition-related expenses of $1.1 million ($819,000 net of tax benefit), net income would have been $10.9 million, or $0.70 per diluted share, in 2010.  Excluding acquisition-related expenses totaling $2.9 million ($2.5 million net of tax benefit), net income would have been $8.3 million, or $0.55 per diluted share, for the comparable 2009 period. Full year results improved over last year as a result of growth in net interest income and a lower provision for loan losses, offset in part by an increase in non-interest expense.  The Company also announced a quarterly cash dividend of $0.08 per share, payable on March 8, 2011 to shareholders of record as of February 14, 2011.  

"We are pleased to report improved operating results which reflect the positive impact of our expansion into Worcester County and better credit quality metrics," commented Richard B. Collins, President and Chief Executive Officer.  Mr. Collins further remarked "our performance also demonstrates our continued success in attracting and retaining core loan and deposit relationships.  Moving forward we will continue to focus on profitably growing our franchise while maintaining a strong balance sheet and actively managing the health of our asset portfolio."  

2010 Earnings Summary

Net interest income increased $1.6 million, or 14%, to $13.0 million for the fourth quarter of 2010 as a result of an increase in average interest earning assets.  Net interest margin was 3.53% for the three months ended December 31, 2010, and remained essentially unchanged from the same period in 2009. Total average earning assets increased $188 million, or 15%, to $1.470 billion for the fourth quarter of 2010 due in large part to the acquisition of Commonwealth National Bank in the fourth quarter of 2009, partially offset by loan sales and prepayments and normal amortization of the existing loan and mortgage-backed securities portfolio.

The provision for loan losses decreased by $631,000 or 64%, to $352,000 for the three months ended December 31, 2010 driven by improvement in credit quality, a decrease in net loan originations and loan sales.

Non-interest income increased by $112,000, or 5%, to $2.4 million for the three months ended December 31, 2010 mainly reflecting gains of $164,000 on sales of $6 million in lower coupon fixed rate residential mortgages in the 2010 period.  

Non-interest expense grew $156,000, or 1%, to $10.7 million for the fourth quarter of 2010 from $10.6 million in the same period last year.  Excluding acquisition-related expenses totaling $1.4 million in the fourth quarter of 2009, non-interest expense would have increased $1.6 million, or 17%, in large part reflecting additional costs for the Worcester operations. Salaries and benefits expense increased $839,000, or 17%, mainly reflecting the acquisition, and to a lesser extent, annual wage increases and a larger incentive accrual due to improved operating performance. Occupancy expenses increased $133,000, or 19%, principally attributable to expenses incurred to operate our new Worcester facilities. Marketing expenses increased $133,000, or 35%, in connection with advertising and promotional expenses focused on our Worcester market. FDIC premium expense increased $132,000, or 57%, due to a higher assessment base and rate. Data processing expenses increased $130,000 or 14% mainly reflecting expenses for our new Worcester accounts and a larger loan and deposits account base in our Springfield market. Other expenses increased $169,000, or 12%, as a result of a $188,000 operating loss from our investment in a low income housing tax credit fund.

Balance Sheet Activity:

Total assets increased $43.8 million, or 3%, to $1.585 billion at December 31, 2010 reflecting an increase in excess cash and investment security balances offset partially by declining loan balances.

Cash and cash equivalents increased $61.2 million reflecting excess cash on deposit at the Federal Reserve Bank as a result of declining loan balances and deposit growth.

Total loans decreased $48.1 million, or 4%, to $1.074 billion at December 31, 2010 reflecting the impact of soft demand, loan prepayments and normal amortization on the residential real estate, construction and consumer portfolios.  The residential portfolio was also affected by the sale of $27 million in lower coupon, fixed-rate residential mortgages.  These items were offset in part by growth in commercial mortgages, commercial loans and home equity loans.

Total deposits increased $104.4 million, or 10%, to $1.143 billion at December 31, 2010 reflecting growth of $120.0 million, or 21%, in core account balances, partially offset by a decrease of $15.6 million, or 3%, in certificates of deposit.  The strong growth in core account balances was driven by the success of sales and marketing initiatives, particularly in our new Worcester market, competitive products and pricing and excellent customer service. Core deposit balances were $680.7 million, or 60% of total deposits at December 31, 2010 compared to $560.7 million, or 54% at December 31, 2009.

Short- term borrowings and long-term debt decreased $36.3 million and $24.9 million, respectively, mainly due to the use of cash flows from the loan and investment portfolios to pay down FHLB advances.

Credit Quality:

Non-performing assets totaled $11.0 million, or 0.69% of total assets, at December 31, 2010 compared to $17.9 million, or 1.16% of total assets, at December 31, 2009.  The Company's total non-performing assets at December 31, 2009 included a $3.5 million commercial real estate loan, which was restructured during the first quarter of 2010.  This loan was returned to accrual status at June 30, 2010 as the customer had been current on the new payments for six months and was classified as a performing troubled debt restructure at December 31, 2010.  The large reduction in non-performing assets also reflects paydowns and payoffs of several large commercial credits during 2010.

Capital and Liquidity:

Total equity declined $2.7 million, or 1.2%, to $222.6 million at December 31, 2010 driven by the repurchase of 783,926 shares of common stock at a total cost of $10.6 million and dividends of $4.6 million partially offset by net income of $10.0 million and stock based incentive plan expenses of $2.4 million. The Company remains well capitalized with a tangible equity-to-tangible assets ratio of 13.61% at December 31, 2010.  At December 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 as well as access to funding through the repurchase agreement and brokered deposit markets.

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)














December 31,


December 31,

Assets

2010


2009


(unaudited)


(audited)





Cash and cash equivalents

$83,069


$21,877

Short-term investments

-


1,096

Investment securities  

338,577


306,478





Loans:




Residential mortgages

295,721


343,300

Commercial mortgages

427,994


409,680

Construction loans

27,553


48,808

Commercial loans

165,335


159,437

Home equity loans

138,290


137,371

Consumer loans

19,218


23,645

Total loans

1,074,111


1,122,241





Net deferred loan costs and fees

2,284


2,355

Allowance for loan losses

(9,987)


(9,180)

Loans, net

1,066,408


1,115,416





Federal Home Loan Bank of Boston stock, at cost

15,365


15,365

Other real estate owned

1,536


1,545

Deferred tax asset, net

11,531


11,295

Premises and equipment, net

15,565


15,935

Bank-owned life insurance

29,180


28,476

Goodwill

7,981


7,844

Other assets

15,665


15,713





Total assets

$1,584,877


$1,541,040





Liabilities and Stockholders' Equity






Deposits:


Demand

$175,996


$154,374

NOW

40,922


42,262

Savings

203,165


174,270

Money market

260,573


189,763

Certificates of deposit

462,645


478,258

Total deposits

1,143,301


1,038,927





Short-term borrowings

21,029


57,303

Long-term debt

173,307


198,173

Subordinated debentures

5,448


5,357

Escrow funds held for borrowers

1,899


1,977

Due to broker

3,002


-

Capitalized lease obligations

5,011


5,141

Accrued expenses and other liabilities

9,304


8,916

Total liabilities

1,362,301


1,315,794





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, 2010 and December 31, 2009    

187


187

Additional paid-in capital

180,322


178,666

Retained earnings

82,899


77,456

Unearned compensation

(10,750)


(11,441)

Accumulated other comprehensive income, net of taxes

4,858


5,358

Treasury stock, at cost (2,597,827 shares at December 31, 2010 and 1,868,335




shares at December 31, 2009)  

(34,940)


(24,980)

Total stockholders' equity

222,576


225,246





Total liabilities and stockholders' equity

$1,584,877


$1,541,040



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,


2010


2009


2010


2009


(unaudited)


(unaudited)


(audited)

Interest and dividend income:








Loans

$15,287


$13,244


$      61,554


$  49,052

Investments

2,852


3,361


12,238


13,904

Other interest-earning assets

31


6


66


30

Total interest and dividend income

18,170


16,611


73,858


62,986









Interest expense:








Deposits

3,464


3,372


13,847


14,295

Borrowings

1,745


1,911


7,100


7,691

Total interest expense

5,209


5,283


20,947


21,986









Net interest income before provision for loan losses

12,961


11,328


52,911


41,000









Provision for loan losses

352


983


2,285


2,998









Net interest income after provision for loan losses

12,609


10,345


50,626


38,002









Non-interest income:








Net gain on sales of loans

164


-


573


363

Net gains (losses) on sales of securities

4


82


(185)


543

Impairment charges on securities

-


(82)


(145)


(82)

Fee income on depositors’ accounts

1,321


1,351


5,327


4,877

Wealth management income

251


223


754


703

Income from bank-owned life insurance

364


356


1,390


1,382

Other income

253


315


1,002


890

Total non-interest income

2,357


2,245


8,716


8,676









Non-interest expense:








Salaries and benefits

5,889


5,050


24,056


18,954

Occupancy expenses

840


707


3,397


2,611

Marketing expenses

510


377


2,091


1,470

Data processing expenses

1,050


920


4,099


3,438

Professional fees

482


430


1,812


1,359

Acquisition related expenses

-


1,432


1,148


2,863

FDIC insurance assessments

365


233


1,470


1,546

Other expenses

1,600


1,431


5,768


4,617

Total non-interest expense

10,736


10,580


43,841


36,858









Income before income taxes

4,230


2,010


15,501


9,820









Income tax expense

1,559


788


5,469


4,014









Net income

$  2,671


$  1,222


$      10,032


$    5,806









Earnings per share:








Basic

$    0.18


$    0.08


$          0.66


$      0.38

Diluted

$    0.18


$    0.08


$          0.65


$      0.38









Weighted average shares outstanding:








Basic

15,028


15,182


15,303


15,265

Diluted

15,180


15,189


15,395


15,273



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



2010


2010


2010


2010


2009













Operating Results:











Net interest income

$      12,961


$      13,167


$      13,287


$      13,496


$    11,328


Loan loss provision

352


750


450


733


983


Non-interest income

2,357


2,103


2,219


2,037


2,245


Non-interest expense

10,736


10,456


10,631

(1)

12,018

(1)

10,580

(1)

Net income

2,671


2,677


2,933


1,751


1,222













Performance Ratios (annualized):











Return on average assets

0.69%


0.70%


0.77%


0.46%

(2)

0.36%

(2)

Return on average equity

4.80%


4.80%


5.24%


3.12%

(2)

2.23%

(2)

Net interest margin

3.53%


3.64%


3.69%


3.76%


3.53%


Non-interest income to average total assets

0.61%


0.55%


0.58%


0.53%


0.67%


Non-interest expense to average total assets

2.76%


2.73%


2.79%

(3)

3.14%

(3)

3.14%

(3)

Efficiency ratio (4)

70.86%


68.58%


69.05%

(3)

77.09%

(3)

77.95%

(3)












Per Share Data:











Diluted earnings per share

$          0.18


$          0.18


$          0.19


$          0.11


$        0.08


Book Value Per Share

$        13.82


$        13.73


$        13.64


$        13.39


$      13.38


Tangible book value per share

$        13.30

(5)

$        13.24

(5)

$        13.17

(5)

$        12.93

(5)

$      12.93

(5)

Market price at period end

$        15.27


$        13.51


$        13.65


$        13.98


$      13.11













Risk Profile











Equity as a percentage of assets

14.04%


14.37%


14.44%


14.82%


14.64%


Tangible equity as a percentage of tangible assets

13.61%

(5)

13.93%

(5)

14.01%

(5)

14.39%

(5)

14.18%

(5)

Net charge-offs to average loans outstanding (annualized)

0.11%


0.19%


0.12%


0.11%


0.54%


Non-performing assets as a percent of total assets

0.69%


0.83%


1.20%


1.22%


1.16%


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

0.88%


1.06%


1.19%


1.49%


1.45%


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

0.93%

(6)

0.90%

(6)

0.89%

(6)

0.87%

(6)

0.82%

(6)

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

105.86%

(7)

85.30%

(7)

74.58%

(7)

58.38%

(7)

56.36%

(7)












Average Balances











Loans

$ 1,091,756


$ 1,091,859


$ 1,100,409


$ 1,112,329


$  960,921


Securities

310,024


298,335


294,849


302,916


289,393


Total interest-earning assets

1,470,127


1,447,147


1,439,677


1,434,256


1,282,187


Total assets

1,555,266


1,533,489


1,526,154


1,529,209


1,349,727


Deposits

1,115,775


1,095,764


1,084,885


1,038,374


917,022


FHLBB advances

153,965


155,987


158,333


202,644


160,455


Stockholders' Equity

222,749


222,995


223,928


224,786


219,650













Average Yields/Rates (annualized)











Loans

5.60%


5.64%


5.60%


5.56%


5.51%


Securities

3.68%


3.98%


4.24%


4.35%


4.65%


Total interest-earning assets

4.94%


5.08%


5.15%


5.23%


5.18%













Savings accounts

0.87%


0.86%


0.96%


0.93%


0.96%


Money market/NOW accounts

0.84%


0.86%


0.87%


0.81%


0.87%


Certificates of deposit

2.16%


2.21%


2.14%


2.12%


2.56%


FHLBB advances

3.62%


3.61%


3.57%


3.06%


4.07%


Total interest-bearing liabilities

1.83%


1.85%


1.86%


1.85%


2.14%













(1)     Includes acquisition related expenses totaling $169,000, $979,000 and $1.4 million for the quarters ended June and March 2010 and December 2009, respectively.

(2)     Excluding acquisition related expenses totaling $808,000 (after tax) and $1.1 million (after tax) for the quarters ended March 2010 and December 2009, respectively, the return on average assets would have been 0.67% and 0.69% and average equity would have been 4.55% and 4.22%, respectively.

(3)     Excluding acquisition related expenses totaling $169,000, $979,000 and $1.4 million for the quarters ended June and March 2010 and December 2009, respectively, non-interest expense to average total assets would have been 2.74%, 2.89% and 2.71% and the efficiency ratio would have been 67.95%, 70.81% and 67.40%, respectively.

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

(5)     Excludes the impact of goodwill of $8.0 million at December and September 2010, $7.7 million at June and March 2010 and $7.8 million at December 2009.

(6)     Excluding acquired loans of $209.8 million, $219.9 million, $228.8 million, $240.5 million and $242.9 million and loans purchased from other financial institutions of $21.4 million, $21.8 million, $22.1 million, $22.4  million and $22.7 million at December, September, June and March 2010 and December 2009, respectively, allowance for loan losses as a percent of total loans, gross would have been 1.18% for the quarter ended December 2010, 1.16% for the quarter ended September 2010, 1.15% for the quarters ended June and March 2010 and 1.07% for the quarter ended December 2009.

(7)     Excluding non-performing acquired loans of $163,000 at December 2010, $2.4 million at September 2010, $2.7 million at June and March 2010 and $3.3 million at December 2009, allowance for loan losses as a percent of non-performing loans would have been 107.72%, 107.49%, 93.67%, 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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