2014

United Financial Bancorp Reports Second Quarter 2010 Earnings of $2.9 Million, or $0.19 Per Diluted Share, and Announces 14% Increase in Quarterly Dividend Payment to $0.08 Per Share

WEST SPRINGFIELD, Mass., July 16 /PRNewswire-FirstCall/ -- United Financial Bancorp, Inc. (the "Company") (Nasdaq Global Select Market: UBNK), the holding company for United Bank (the "Bank"), reported net income of $2.9 million, or $0.19 per diluted share, for the second quarter of 2010 compared to net income of $560,000, or $0.04 per diluted share, for the corresponding period in 2009. Excluding expenses totaling $1.2 million related to the acquisition of Commonwealth National Bank (non-deductible for income tax purposes), net income would have been $1.7 million, or $0.11 per diluted share, for the second quarter of 2009.  The Company also announced a 14% increase in its quarterly cash dividend to $0.08 per share, payable on August 27, 2010 to shareholders of record as of August 6, 2010.  

The improved quarterly operating results 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 a reduction in the provision for loan losses and growth in fee income.  These items were partially offset by a decrease in gains from sales of loans and securities and an increase in non-interest expense.  The improvement in earnings per share was influenced by growth in earnings and the positive impact of stock repurchases.

For the six months ended June 30, 2010, net income was $4.7 million, or $0.30 per diluted share, compared to net income of $2.7 million or $0.17 per diluted share, for the same period in 2009.  Excluding acquisition-related expenses of $1.1 million and the related tax benefit of $329,000, net income would have been $5.5 million, or $0.35 per diluted share, in 2010.  Excluding non-deductible acquisition-related expenses totaling $1.2 million, net income would have been $3.8 million, or $0.25 per diluted share, for the 2009 period.  

Total assets grew $3.9 million, or 0.3%, to $1.545 billion at June 30, 2010, from $1.541 billion at December 31, 2009 mainly due to an increase of $36.0 million, or 164.6%, in excess cash on deposit at the Federal Home Loan Bank of Boston, partially offset by decreases of $28.0 million, or 2.5%, in total loans and $6.1 million, or 2.0%, in investment securities.  Total deposits increased $68.8 million, or 6.6%, to $1.1 billion at June 30, 2010 from $1.0 billion at December 31, 2009 primarily reflecting growth of $88.2 million, or 15.7%, in core account balances, partially offset by a decrease of $19.4 million, or 4.1%, in certificates of deposit.  Total short-term borrowings and long-term debt declined $43.0 million, or 57.0% and $19.4 million, or 10.8%, respectively, as a result of pay downs of FHLB advances using cash flows from the loan and investment portfolios and increased deposit levels.  At June 30, 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.  The Company's balance sheet is also supported by a strong capital position, with a tangible equity-to-tangible assets ratio of 14.01% at June 30, 2010.

"We are very pleased with our financial results which reflect net interest margin expansion, growth in average loans and deposits, lower provision for loan losses and an increase in fee income," commented Richard B. Collins, President and Chief Executive Officer.  "Our performance is indicative of a positive contribution from our new Worcester market, as well as our focus on profitably growing our franchise, maintaining solid asset quality and improving our operating efficiency.  We believe we are well positioned for this challenging economic environment given our healthy balance sheet, substantial capital base and strong liquidity level."

Financial Highlights:

  • Total loans decreased $28.0 million, or 2.5%, to $1.094 billion at June 30, 2010 from $1.122 billion at December 31, 2009 reflecting the impact of slower origination volume, loan prepayments and normal amortization on the residential real estate, construction and commercial portfolios.  The residential portfolio was also affected by the sale of $14.3 million in lower coupon, fixed-rate residential mortgages.  These items were offset in part by growth in commercial real estate loans.

  • Non-performing assets totaled $18.5 million, or 1.20% of total assets, at June 30, 2010 compared to $17.9 million, or 1.16% of total assets, at December 31, 2009.  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 was returned to accrual status at June 30, 2010 as the customer has been current on the new payments for six months.  Although this loan is performing in accordance with the terms of the restructuring it will continue to be included in non-performing assets.  

  • At June 30, 2010, the allowance for loan losses to total loans was 0.89% and the allowance for loan losses to total non-performing loans was 74.58%.  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 June 30, 2010, the remaining balance of the loan fair value adjustments was $6.0 million, or 2.4% of the total $250.9 million in outstanding purchased loans. Excluding the $228.8 million outstanding balance of loans acquired from Commonwealth National Bank and $22.1 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 93.67%.  For the quarter ended June 30, 2010, net charge-offs totaled $338,000 or 0.12% of average loans outstanding on an annualized basis.  

  • Total deposits increased $68.8 million, or 6.6%, to $1.108 billion at June 30, 2010 compared to $1.039 billion at December 31, 2009 reflecting growth of $88.2 million, or 15.7%, in core account balances, partially offset by a decrease of $19.4 million, or 4.1%, 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 market, competitive products and pricing, excellent customer service and targeted promotional activities.  Core deposit balances were $648.8 million, or 58.6% of total deposits at June 30, 2010 compared to $560.7 million, or 54.0% at December 31, 2009.

  • Total stockholders' equity declined $2.1 million, or 1.0%, to $223.1 million at June 30, 2010 from $225.2 million at December 31, 2009 due to the repurchase of 548,722 shares at a total cost of $7.5 million and cash dividends totaling $2.2 million, partially offset by net income of $4.7 million, a $1.4 million increase in the unrealized gain on securities and stock-based compensation of $1.2 million.

  • Net interest income increased $3.7 million, or 39.2%, to $13.3 million for the second quarter of 2010 from $9.5 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 42 basis points to 3.69% for the three months ended June 30, 2010, from 3.27% for the same period in 2009 due to amortization of certain acquisition accounting adjustments totaling $706,000 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 $271.4 million, or 23.2%, to $1.440 billion for the second 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 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 decreased by $225,000, or 33.3%, to $450,000 for the three months ended June 30, 2010 driven by improvement in credit quality, a decrease in net loan originations and loan sales.

  • Non-interest income decreased by $376,000, or 14.5%, to $2.2 million for the three months ended June 30, 2010, mainly attributable to a decrease in gains on sales of loans and securities of $590,000 or 84.4%, partially offset by growth in deposit service charges of $178,000, or 15.3%.  Fee income on depositors' accounts increased as a result of growth in accounts and transactions.

  • Non-interest expense grew $601,000, or 6.0%, to $10.6 million for the second quarter of 2010 from $10.0 million in the same period last year.  Excluding acquisition related costs of $169,000 in 2010 and $1.2 million in 2009, non-interest expenses would have increased $1.6 million, or 18.0%.  Salaries and benefits increased $1.4 million, or 29.3%, mainly due to costs incurred to support our new Worcester operations and, to a lesser extent, annual wage increases and a larger incentive accrual due to improved operating performance.  Occupancy costs grew $159,000, or 24.8%, principally attributable to expenses incurred to operate our new Worcester facilities.  Marketing expenses increased $208,000, or 50.2%, in connection with advertising and promotional expenses focused on our Worcester market.  Data processing costs increased $162,000, or 20.3%, reflecting expenses for our new Worcester accounts and a larger loan and deposit account base in our Springfield market.  Other expenses increased $213,000, or 17.5%, largely related to additional costs for the Worcester operations.  These items were partially offset by a decrease of $565,000, or 63.5%, in FDIC insurance premiums mainly reflecting a special assessment of $538,000 incurred in 2009.  

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)






















June 30,

December 31,

June 30,

Assets


2010


2009


2009



(unaudited)


(audited)


(unaudited)








Cash and cash equivalents


$57,878


$21,877


$23,101

Short-term investments


-


1,096


1,086

Investment securities  


300,347


306,478


281,065

Loans held for sale


725


-


-








Loans:







Residential mortgages


317,346


343,300


331,855

Commercial mortgages


425,091


409,680


271,186

Construction loans


38,978


48,808


36,260

Commercial loans


152,972


159,437


81,731

Home equity loans


138,268


137,371


120,009

Consumer loans


21,586


23,645


25,381

Total loans


1,094,241


1,122,241


866,422








Net deferred loan costs and fees


2,333


2,355


2,158

Allowance for loan losses


(9,722)


(9,180)


(8,962)

Loans, net


1,086,852


1,115,416


859,618








Federal Home Loan Bank of Boston stock, at cost


15,365


15,365


12,223

Other real estate owned


2,007


1,545


644

Deferred tax asset, net


14,335


11,295


11,376

Premises and equipment, net


15,647


15,935


14,171

Bank-owned life insurance


28,526


28,476


27,790

Goodwill


7,731


7,844


-

Other assets


15,502


15,713


7,592








Total assets


$1,544,915


$1,541,040


$1,238,666








Liabilities and Stockholders' Equity









Deposits:


Demand


$166,999


$154,374


$113,699

NOW


41,149


42,262


35,082

Savings


191,386


174,270


122,182

Money market


249,289


189,763


185,998

Certificates of deposit


458,873


478,258


358,588

Total deposits


1,107,696


1,038,927


815,549








Short-term borrowings


32,479


75,488


44,104

Long-term debt


160,562


179,988


150,147

Subordinated debentures


5,402


5,357


-

Escrow funds held for borrowers


1,687


1,977


1,826

Capitalized lease obligations


5,077


5,141


5,204

Accrued expenses and other liabilities


8,910


8,916


8,221

Total liabilities


1,321,813


1,315,794


1,025,051








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 June 30, 2010 and at December 31, 2009 and 17,763,747 at June 30, 2009  


187


187


178

Additional paid-in capital


179,100


178,666


165,759

Retained earnings


79,962


77,456


76,754

Unearned compensation


(11,131)


(11,441)


(11,786)

Accumulated other comprehensive income, net of taxes


6,496


5,358


3,240

Treasury stock, at cost (2,348,307 shares at June 30, 2010, 1,868,335 shares at December 31, 2009 and 1,523,838 shares at June 30, 2009)  


(31,512)


(24,980)


(20,530)

Total stockholders' equity


223,102


225,246


213,615








Total liabilities and stockholders' equity


$1,544,915


$1,541,040


$1,238,666



UNITED FINANCIAL BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED INCOME STATEMENTS

(Amounts in thousands, except per share amounts)


















Three Months Ended  


Six Months Ended  


June 30,


June 30,


2010


2009


2010


2009


(unaudited)


(unaudited)

Interest and dividend income:








Loans

$       15,404


$       11,721


$       30,861


$       23,772

Investments

3,122


3,390


6,414


7,261

Other interest-earning assets

10


9


18


17

Total interest and dividend income

18,536


15,120


37,293


31,050









Interest expense:








Deposits

3,507


3,644


6,882


7,469

Borrowings

1,742


1,933


3,628


3,883

Total interest expense

5,249


5,577


10,510


11,352









Net interest income before provision for loan losses

13,287


9,543


26,783


19,698









Provision for loan losses

450


675


1,183


1,215









Net interest income after provision for loan losses

12,837


8,868


25,600


18,483









Non-interest income:








Net gain on sales of loans

109


238


197


363

Net gain on sales of securities

-


461


-


461

Impairment charges on securities

-


-


(145)


-

Fee income on depositors’ accounts

1,340


1,162


2,711


2,269

Wealth management income

167


212


305


344

Income from bank-owned life insurance

340


340


686


654

Other income

263


182


502


355

Total non-interest income

2,219


2,595


4,256


4,446









Non-interest expense:








Salaries and benefits

5,968


4,615


12,046


9,279

Occupancy expenses

800


641


1,727


1,306

Marketing expenses

622


414


1,182


756

Data processing expenses

959


797


2,026


1,641

Professional fees

358


295


899


718

Acquisition related expenses

169


1,161


1,148


1,161

FDIC insurance assessments

325


890


740


1,230

Other expenses

1,430


1,217


2,881


2,094

Total non-interest expense

10,631


10,030


22,649


18,185









Income before income taxes

4,425


1,433


7,207


4,744









Income tax expense

1,492


873


2,523


2,061









Net income

$         2,933


$            560


$         4,684


$         2,683









Earnings per share:








Basic

$           0.19


$           0.04


$           0.30


$           0.17

Diluted

$           0.19


$           0.04


$           0.30


$           0.17









Weighted average shares outstanding:








Basic

15,440


15,181


15,529


15,443

Diluted

15,518


15,194


15,590


15,457



UNITED FINANCIAL BANCORP, INC. AND SUBSIDIARY

SELECTED DATA AND RATIOS (unaudited)

(Dollars in thousands, except per share amounts)
























At or For The Quarters Ended














Jun. 30


Mar. 31


Dec. 31


Sep. 30


Jun. 30



2010


2010


2009


2009


2009













Operating Results:











Net interest income

$      13,287


$      13,496


$      11,328


$        9,974


$        9,543


Loan loss provision

450


733


983


800


675


Non-interest income

2,219


2,037


2,245


1,985


2,595


Non-interest expense

10,631

(1)

12,018

(1)

10,580

(1)

8,093

(1)

10,030

(1)

Net income

2,933


1,751


1,222


1,901


560













Performance Ratios (annualized):











Return on average assets

0.77%


0.46%

(2)

0.36%

(2)

0.61%

(2)

0.18%

(2)

Return on average equity

5.24%


3.12%

(2)

2.23%

(2)

3.55%

(2)

1.03%

(2)

Net interest margin

3.69%


3.76%


3.53%


3.38%


3.27%


Non-interest income to average total assets

0.58%


0.53%


0.67%


0.64%


0.85%


Non-interest expense to average total assets

2.79%

(3)

3.14%

(3)

3.14%

(3)

2.60%

(3)

3.27%

(3)

Efficiency ratio (4)

69.05%

(3)

77.09%

(3)

77.95%

(3)

67.67%

(3)

87.68%

(3)












Per Share Data:











Diluted earnings per share

$          0.19


$          0.11


$          0.08


$          0.13


$          0.04


Tangible book value per share

$        13.17

(5)

$        12.93

(5)

$        12.93

(5)

$        13.39


$        13.15


Market price at period end

$        13.65


$        13.98


$        13.11


$        11.58


$        13.82













Risk Profile











Tangible equity as a percentage of tangible assets

14.01%

(5)

14.39%

(5)

14.18%

(5)

17.35%


17.25%


Net charge-offs to average loans outstanding (annualized)

0.12%


0.11%


0.54%


0.12%


0.20%


Non-performing assets as a percent of total assets

1.20%


1.22%


1.16%


0.92%


0.48%


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

1.19%


1.49%


1.45%


1.23%


0.62%


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

0.89%

(6)

0.87%

(6)

0.82%

(6)

1.07%


1.03%


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

74.58%

(7)

58.38%

(7)

56.36%

(7)

86.73%


167.99%













Average Balances











Loans

$ 1,100,409


$ 1,112,329


$    960,921


$    878,683


$    860,882


Securities

294,849


302,916


289,393


279,442


283,005


Total interest-earning assets

1,439,677


1,434,256


1,282,187


1,181,647


1,168,308


Total assets

1,526,154


1,529,209


1,349,727


1,243,906


1,226,210


Deposits

1,084,885


1,038,374


917,022


828,153


803,425


FHLBB advances

158,333


202,644


160,455


155,946


164,955


Stockholders' Equity

223,928


224,786


219,650


214,300


216,501













Average Yields/Rates (annualized)











Loans

5.60%


5.56%


5.51%


5.48%


5.45%


Securities

4.24%


4.35%


4.65%


4.70%


4.79%


Total interest-earning assets

5.15%


5.23%


5.18%


5.19%


5.18%













Savings accounts

0.96%


0.93%


0.96%


1.08%


1.14%


Money market/NOW accounts

0.87%


0.81%


0.87%


1.04%


1.21%


Certificates of deposit

2.14%


2.12%


2.56%


2.79%


2.96%


FHLBB advances

3.57%


3.06%


4.07%


4.22%


4.13%


Total interest-bearing liabilities

1.86%


1.85%


2.14%


2.37%


2.51%













(1)     Includes acquisition related expenses totaling $169,000, $979,000, $1.4 million, $270,000 and $1.2 million for the quarters ended June and 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 $169,000, $979,000, $1.4 million, $270,000 and $1.2 million for the quarters ended June and 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 2.74%, 2.89%, 2.71%, 2.52% and 2.72% and the efficiency ratio would have been 67.95%, 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 at June and March 2010 and $7.8 million at December 2009.

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

(7)     Excluding nonperforming acquired loans of $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 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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