2014

United Financial Bancorp Reports Second Quarter 2011 Earnings of $2.7 Million, or $0.18 Per Diluted Share Announces 13% Increase in Quarterly Dividend Payment to $0.09 Per Share

WEST SPRINGFIELD, Mass., July 22, 2011 /PRNewswire/ -- United Financial Bancorp, Inc. (the "Company") (NASDAQ Global Select Market: UBNK), the holding company for United Bank (the "Bank"), reported net income of $2.7 million, or $0.18 per diluted share, for the second quarter of 2011 compared to net income of $2.9 million, or $0.19 per diluted share, for the corresponding period in 2010. For the six months ended June 30, 2011, net income was $5.1 million, or $0.33 per diluted share, compared to net income of $4.7 million or $0.30 per diluted share, for the same period in 2010. The Company also announced a 13% increase in its quarterly cash dividend to $0.09 per share, payable on September 2, 2011 to shareholders of record as of August 12, 2011.  

"We are pleased with our ability to profitably grow our franchise while maintaining excellent asset quality and a strong capital position," commented Richard B. Collins, President and Chief Executive Officer.  "While our performance continues to be affected by a challenging economic environment and a very competitive local market, we remain committed to improving our financial performance and enhancing shareholder value.  As a result of our consistent, stable financial results we are pleased to reward our shareholders with a 13% increase in our quarterly dividend payment."  

Earnings Summary

  • Net interest income increased $95,000, or 1%, to $13.4 million for the second quarter of 2011 driven by higher average interest-earning assets partially reduced by net interest margin compression.  Total average interest-earning assets increased $69.5 million, or 5%, to $1.509 billion as compared to the second quarter of 2010 driven by growth in investment securities and loan balances.  Net interest margin declined 14 basis points to 3.55% for the three months ended June 30, 2011 due to lower amortization of acquisition accounting adjustments ($528,000 in the second quarter of 2011 compared to $706,000 in the second quarter of 2010), the downward re-pricing of certain fixed rate loans and investments as a result of the lower interest rate environment and an increase in funds held in lower-yielding cash equivalents.  These items were partially offset by lower funding costs.  

  • Provision for loan losses increased by $223,000, or 50%, to $673,000 for the three months ended June 30, 2011 primarily as a result of an increase in reserves for classified and impaired loans and growth in net loan originations.

  • Non-interest income remained flat at $2.2 million for the three months ended June 30, 2011. Excluding a security impairment charge of $59,000, non-interest income increased $51,000, or 2%, from the same period one year ago mainly driven by an increase of $53,000, or 16%, in bank owned life insurance income and an increase of $47,000, or 28%, in wealth management income as a result of growth in assets under management and annuity sales.  The results were also impacted by lower gains from sales of loans.    

  • Non-interest expense increased $772,000, or 7%, to $11.4 million for the three months ended June 30, 2011 from $10.6 million in the same period last year.  Excluding acquisition related expenses totaling $169,000 incurred in the second quarter of 2010 in connection with the company's acquisition of CNB Financial Corp. ("CNB"), non-interest expense would have increased $941,000 or 9%.  Salaries and benefits increased $446,000, or 7%, mainly driven by annual wage increases, staffing costs for the new loan production office opened in 2011 and a larger incentive plan accrual due to improved operating performance.  Other expenses increased $484,000, or 34%, primarily as a result of a $198,000 operating loss from an investment in a low income housing tax credit fund, an increase in other real estate owned costs as the 2010 results included a gain from the sale of a property and increases in furniture and equipment depreciation and the writedown of mortgage servicing rights.  These increases were partially offset by an $81,000, or 25%, decrease in FDIC premium expense, which reflects the positive impact of the new assessment calculation that became effective on April 1, 2011.

  • Income taxes decreased $665,000, or 45%, to $827,000 for the three months ended June 30, 2011 from $1.5 million in the same period last year primarily due to a lower effective tax rate.  The effective tax rate decreased from 34% in the second quarter of 2010 to 24% for the second quarter of 2011 largely as a result of tax credits from an investment in a low income housing fund and an increase in tax exempt municipal investment income in 2011.

Balance Sheet Activity

  • Total assets increased $24.8 million, or 2%, to $1.610 billion at June 30, 2011 from year-end reflecting growth in investment securities and loan balances, offset in part by declining cash balances.

  • Investment securities grew $23.4 million, or 7%, to $361.8 million at June 30, 2011 from year-end reflecting the use of excess cash to fund additional purchases of agency mortgage-backed securities.

  • Total loans increased by $29.2 million, or 3%, to $1.103 billion at June 30, 2011 from year-end reflecting an increase in net origination activity in the residential real estate, commercial real estate, commercial and construction portfolios as a result of business development efforts and competitive products and pricing.

  • Cash and cash equivalents decreased $43.6 million, or 53%, to $39.5 million at June 30, 2011 from year-end as excess cash was used to fund investment security purchases and paydown maturing FHLB advances.

  • Total deposits increased $46.0 million, or 4%, to $1.189 billion at June 30, 2011 from year-end reflecting growth of $69.1 million, or 10%, in core account balances, partially offset by a decrease of $23.1 million, or 5%, in certificates of deposit.  The growth in core account balances was driven by strong demand in all categories, particularly demand and savings accounts.  Core deposit balances were $749.8 million, or 63% of total deposits, at June 30, 2011 compared to $680.7 million, or 60% of total deposits, at December 31, 2010.

  • Short-term borrowings and long-term debt decreased $4.3 million and $18.5 million, respectively, during the six months ended June 30, 2011  mainly due to the use of excess cash balances to pay down FHLB advances.

Credit Quality & Reserve Coverage

  • Non-performing assets totaled $12.4 million, or 0.77% of total assets, at June 30, 2011 compared to $11.0 million, or 0.69% of total assets, at December 31, 2010.  The growth of $1.4 million in non-performing assets during the first six months of 2011 was primarily due to an increase in other real estate owned.    

  • At June 30, 2011, the ratio of the allowance for loan losses to total loans was 0.96% compared to 0.93% at December 31, 2010.  Excluding the impact of loans acquired from CNB and other financial institutions totaling $189.3 million at June 30, 2011 and $231.2 million at December 31, 2010, the ratio of the allowance for loan losses to total loans would have been 1.16% at June 30, 2011 and 1.18% at December 31, 2010.  Net charge-offs totaled $828,000, or 0.15% of average loans outstanding (annualized), for the six months ended June 30, 2011 as compared to net charge-offs of $641,000, or 0.12% of average loans outstanding (annualized), for the same period in 2010.  

Capital and Liquidity

The Company remains well capitalized with a tangible equity-to-tangible assets ratio of 13.66% at June 30, 2011.  At June 30, 2011 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 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.  As of June 30, 2011, the Company had total consolidated assets of $1.6 billion.  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.  

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

UNITED FINANCIAL BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CONDITION

(Dollars in thousands, except par value amounts)






















June 30,


December 31,


June 30,

Assets


2011


2010


2010



(unaudited)


(audited)


(unaudited)








Cash and cash equivalents


$39,452


$83,069


$57,878

Investment securities  


361,750


338,327


300,347

Loans held for sale


342


-


725








Loans:







Residential mortgages


314,255


295,721


317,346

Commercial mortgages


437,378


427,994


425,091

Construction loans


28,903


27,553


38,978

Commercial loans


167,884


165,335


152,972

Home equity loans


138,023


138,290


138,268

Consumer loans


16,864


19,218


21,586

Total loans


1,103,307


1,074,111


1,094,241








Net deferred loan costs and fees


2,051


2,073


2,333

Allowance for loan losses


(10,640)


(9,987)


(9,722)

Loans, net


1,094,718


1,066,197


1,086,852








Federal Home Loan Bank of Boston stock, at cost


15,365


15,365


15,365

Other real estate owned


2,858


1,536


2,007

Deferred tax asset, net


11,675


11,029


12,181

Premises and equipment, net


16,257


15,565


15,647

Bank-owned life insurance


39,832


29,180


28,526

Goodwill


8,192


8,192


7,731

Other intangible assets


987


975


1,059

Other assets


18,225


15,442


16,597








Total assets


$1,609,653


$1,584,877


$1,544,915








Liabilities and Stockholders' Equity









Deposits:


Demand


$195,925


$175,996


$166,999

NOW


42,390


40,922


41,149

Savings


238,335


203,165


191,386

Money market


273,115


260,573


249,289

Certificates of deposit


439,505


462,645


458,873

Total deposits


1,189,270


1,143,301


1,107,696








Short-term borrowings


16,702


21,029


15,644

Long-term debt


154,773


173,307


177,397

Subordinated debentures


5,494


5,448


5,402

Escrow funds held for borrowers


1,893


1,899


1,687

Due to broker


-


3,002


-

Capitalized lease obligations


4,943


5,011


5,077

Accrued expenses and other liabilities


8,813


9,304


8,910

Total liabilities


1,381,888


1,362,301


1,321,813








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, 2011, December 31, 2010 and June 30, 2010      


187


187


187

Additional paid-in capital


181,654


180,322


179,065

Retained earnings


85,618


82,899


79,962

Unearned compensation


(10,405)


(10,750)


(11,096)

Accumulated other comprehensive income, net of taxes


5,839


4,858


6,496

Treasury stock, at cost (2,607,458 shares at June 30, 2011,







2,597,827 shares  at December 31, 2010







  and 2,348,307 shares at June 30, 2010)  


(35,128)


(34,940)


(31,512)

Total stockholders' equity


227,765


222,576


223,102








Total liabilities and stockholders' equity


$1,609,653


$1,584,877


$1,544,915



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,


2011


2010


2011


2010


(unaudited)


(unaudited)

Interest and dividend income:








Loans

$14,703


$15,404


$29,190


$30,861

Investments

3,387


3,122


6,578


6,414

Other interest-earning assets

38


10


78


18

Total interest and dividend income

18,128


18,536


35,846


37,293









Interest expense:








Deposits

3,194


3,507


6,491


6,882

Borrowings

1,552


1,742


3,182


3,628

Total interest expense

4,746


5,249


9,673


10,510









Net interest income before provision for loan losses

13,382


13,287


26,173


26,783









Provision for loan losses

673


450


1,481


1,183









Net interest income after provision for loan losses

12,709


12,837


24,692


25,600









Non-interest income:








Net gain on sales of loans

50


109


73


197

Net gains on sales of securities

-


-


1


-

Impairment charges on securities

(59)


-


(59)


(145)

Fee income on depositors’ accounts

1,373


1,340


2,665


2,711

Wealth management income

214


167


454


305

Income from bank-owned life insurance

393


340


724


686

Other income

240


263


502


502

Total non-interest income

2,211


2,219


4,360


4,256









Non-interest expense:








Salaries and benefits

6,414


5,968


12,683


12,046

Occupancy expenses

805


800


1,649


1,727

Marketing expenses

635


622


1,082


1,182

Data processing expenses

984


959


1,972


2,026

Professional fees

407


358


1,068


899

Acquisition related expenses

-


169


-


1,148

FDIC insurance assessments

244


325


574


740

Other expenses

1,914


1,430


3,315


2,881

Total non-interest expense

11,403


10,631


22,343


22,649









Income before income taxes

3,517


4,425


6,709


7,207









Income tax expense

827


1,492


1,590


2,523









Net income

$  2,690


$  2,933


$  5,119


$  4,684









Earnings per share:








Basic

$    0.18


$    0.19


$    0.34


$    0.30

Diluted

$    0.18


$    0.19


$    0.33


$    0.30









Weighted average shares outstanding:








Basic

15,028


15,440


15,022


15,529

Diluted

15,309


15,518


15,285


15,590



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



2011


2011


2010


2010


2010













Operating Results:











Net interest income

$      13,382


$      12,791


$      12,961


$      13,167


$      13,287


Loan loss provision

673


808


352


750


450


Non-interest income

2,211


2,149


2,357


2,103


2,219


Non-interest expense

11,403


10,940


10,736


10,456


10,631


Net income

2,690


2,429


2,671


2,677


2,933













Performance Ratios (annualized):











Return on average assets

0.67%


0.62%


0.69%


0.70%


0.77%


Return on average equity

4.76%


4.36%


4.80%


4.80%


5.24%


Net interest margin

3.55%


3.42%


3.53%


3.64%


3.69%


Non-interest income to average total assets

0.55%


0.54%


0.61%


0.55%


0.58%


Non-interest expense to average total assets

2.85%


2.77%


2.76%


2.73%


2.79%


Efficiency ratio (1)

73.09%


73.34%


70.86%


68.58%


69.05%













Per Share Data:











Diluted earnings per share

$          0.18


$          0.16


$          0.18


$          0.18


$          0.19


Book Value Per Share

$        14.15


$        13.92


$        13.82


$        13.73


$        13.64


Tangible book value per share

$        13.58

(2)

$        13.35

(2)

$        13.25

(2)

$        13.18

(2)

$        13.10

(2)

Market price at period end

$        15.43


$        16.51


$        15.27


$        13.51


$        13.65













Risk Profile











Equity as a percentage of assets

14.15%


14.01%


14.04%


14.37%


14.44%


Tangible equity as a percentage of tangible assets

13.66%

(2)

13.51%

(2)

13.54%

(2)

13.87%

(2)

13.95%

(2)

Net charge-offs to average loans outstanding (annualized)

0.18%


0.12%


0.11%


0.19%


0.12%


Non-performing assets as a percent of total assets

0.77%


0.62%


0.69%


0.83%


1.20%


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

0.86%


0.76%


0.88%


1.06%


1.19%


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

0.96%

(3)

0.95%

(3)

0.93%

(3)

0.90%

(3)

0.89%

(3)

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

112.01%


125.20%


105.86%


85.30%


74.58%













Average Balances











Loans

$ 1,103,305


$ 1,090,796


$ 1,091,756


$ 1,091,859


$ 1,100,409


Securities

356,479


341,804


310,024


298,335


294,849


Total interest-earning assets

1,509,438


1,493,946


1,470,127


1,447,147


1,439,953


Total assets

1,602,767


1,579,048


1,555,266


1,533,489


1,526,154


Deposits

1,179,166


1,145,296


1,115,775


1,095,764


1,084,885


FHLBB advances

138,215


147,880


153,965


155,987


158,333


Stockholders' Equity

226,279


223,067


222,749


222,995


223,928













Average Yields/Rates (annualized)











Loans

5.33%


5.31%


5.60%


5.64%


5.60%


Securities

3.80%


3.73%


3.68%


3.98%


4.24%


Total interest-earning assets

4.80%


4.74%


4.94%


5.08%


5.15%













Savings accounts

0.76%


0.77%


0.87%


0.86%


0.96%


Money market/NOW accounts

0.70%


0.71%


0.84%


0.86%


0.87%


Certificates of deposit

1.99%


2.06%


2.16%


2.21%


2.14%


FHLBB advances

3.60%


3.52%


3.62%


3.61%


3.57%


Total interest-bearing liabilities

1.61%


1.68%


1.83%


1.85%


1.86%













(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 $9.2 million at June 30, 2011, March 31, 2011 and December 31, 2010, $9.0 million at
September 30, 2010 and $8.8 million at June 30, 2010.

(3)  Excluding acquired loans of $168.6 million, $178.7 million, $209.8 million, $219.9 million and $228.8 million and loans purchased from other financial institutions of $20.8 million, $21.1 million, $21.4 million, $21.8 million and $22.1 million at June 30, 2011, March 31, 2011, December 31, 2010, September 30, 2010 and
June 30, 2010, respectively, allowance  for loan losses as a percent of total loans, gross would have been 1.16%, 1.17%, 1.18%, 1.16% and 1.15% for the quarters ended June 30, 2011, March 31, 2011, December 31, 2010, September 30, 2010 and June 30, 2010, respectively.



SOURCE United Financial Bancorp, Inc.



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