United Financial Bancorp Reports Solid Financial Results and Announces 11% Increase in Quarterly Dividend to $0.10 Per Share

WEST SPRINGFIELD, Mass., July 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 $2.6 million, or $0.17 per diluted share, for the second quarter of 2012 compared to net income of $2.7 million, or $0.18 per diluted share, for the corresponding period in 2011.  Excluding acquisition related expenses totaling $592,000, net income would have been $3.2 million, or $0.21 per diluted share, for the second quarter of 2012.

For the six months ended June 30, 2012, the Company's net income was $5.4 million, or $0.36 per diluted share, compared to net income of $5.1 million, or $0.33 per diluted share, for the same period in 2011.   Excluding acquisition related expenses of $592,000, net income would have been $6.0 million, or $0.40 per diluted share, for the first six months of 2012.  The Company also announced an 11% increase in its quarterly cash dividend to $0.10 per share, payable on August 30, 2012 to shareholders of record as of August 9, 2012.

Financial Highlights:

  • Excluding acquisition related expenses totaling $592,000, Q2 2012 net income increased 18% from the same period last year and 11% compared to the first quarter of 2012.
  • Excluding acquisition related expenses, diluted earnings per share for the second quarter of 2012 increased 17% compared to the same quarter last year and 11% from Q1 2012.
  • Total loans increased by $40.5 million, or 4%, to $1.162 billion at June 30, 2012 from $1.122 billion at December 31, 2011, primarily due to growth of 6% in commercial mortgages and 10% in commercial business loans.
  • Credit quality remained solid, as demonstrated by the non-performing loans to total loans ratio of 74 basis points at June 30, 2012 and an annualized net charge-offs to average loans ratio of 11 basis points for the second quarter of 2012.
  • Core deposits increased by $36.7 million, or 5%, to $844.9 million at June 30, 2012 from $808.2 million at December 31, 2011. 
  • Tangible book value per share increased 2% to $14.12 at June 30, 2012 from $13.90 at December 31, 2012.  During the first six months of 2012, the Company repurchased 199,400 shares at an average price of $15.88 per share.

"We are pleased with our performance this quarter, which reflects strong growth in commercial loans and core deposits," commented Richard B. Collins, President and Chief Executive Officer.  "We continue to maintain excellent asset quality metrics, which compare favorably to industry averages and those of our peers and a healthy balance sheet with solid capital and liquidity positions.  We remain focused on profitable growth and the expansion of our franchise. As a result of our steady performance, we are pleased to reward our shareholders with an 11% increase in our quarterly dividend payment." 

Earnings Summary (Q2 2012 compared to Q2 2011)

Net income decreased $108,000, or 4%, to $2.6 million for the second quarter of 2012 compared to $2.7 million for the same period last year.  Excluding the impact of acquisition related expenses of $592,000, net income would have increased by $484,000, or 18%, largely due to a decrease in non-interest expense (excluding acquisition related expenses) and growth in non-interest income. These items were offset in part by a decrease in net interest income and an increase in the provision for loan losses. 

  • Net interest income decreased $88,000, or 1%, to $13.3 million for the second quarter of 2012 mainly as a result of contraction in the net interest margin, partially offset by an increase in average interest-earning assets.  The net interest margin decreased by 11 basis points to 3.44% for the three months ended June 30, 2012 reflecting the downward re-pricing of certain fixed-rate loans and investments as a result of the lower interest rate environment, offset in part by reduced funding costs. Total average interest-earning assets increased $37.7 million, or 2%, to $1.547 billion for the second quarter of 2012 driven by loan growth of 4%, partially offset by decreases in investment securities and interest-earning cash balances.
  • Provision for loan losses increased by $77,000, or 11%, to $750,000 for the three months ended June 30, 2012 primarily reflecting strong loan growth.
  • Non-interest income increased by $359,000, or 16%, to $2.6 million for the three months ended June 30, 2012.  Fee income on deposit accounts increased $156,000, or 11%, driven by higher overdraft fees and growth in ATM and debit card income. Net gains from sales of loans increased $112,000 due to an increase in sales of 30-year fixed rate loans and improved pricing. Wealth management income increased $75,000, or 35% reflecting higher fee-based assets under management and transaction based commissions.
  • Non-interest expense increased $65,000, or 1%, to $11.5 million in the second quarter of 2012. Excluding acquisition related costs of $592,000, non-interest expense would have declined by $527,000, or 5%.  Low income housing tax credit fund expense decreased by $197,000 due to a true-up of prior period expenses. Other expenses decreased $180,000, or 10%, reflecting a lower write-down of mortgage servicing rights and decreases in postage and contribution expenses. Marketing expense fell by $134,000, or 21%, due to reduced newspaper advertising and other promotional activities. Salaries and benefits decreased by $128,000, or 2%, mainly attributable to lower stock-based compensation. These items were partially reduced by a $65,000, or 8%, increase in occupancy expense driven by higher building maintenance costs.
  • Income taxes increased $237,000, or 29%, to $1.1 million for the three months ended June 30, 2012 primarily due to increases in pre-tax income and the effective tax rate (excluding the impact of acquisition related expenses).  The Company's effective tax rate (excluding the impact of acquisition related costs) increased to 25% in the second quarter of 2012 from 24% for the same period last year.

Balance Sheet Activity:

  • Total assets increased $29.9 million, or 2%, to $1.654 billion at June 30, 2012 from $1.624 billion at December 31, 2011 reflecting growth in loans and investment securities offset in part by lower cash balances.
  • Total loans increased $40.5 million, or 4%, to $1.162 billion at June 30, 2012 reflecting growth in the commercial mortgages and commercial and industrial portfolios, partially offset by modest run-off in the residential mortgage and consumer loan portfolios. Commercial mortgage and commercial and industrial loan growth was primarily attributable to business development efforts, competitive products and pricing, and the establishment of a loan production office in Beverly, Massachusetts in 2011.  The decrease in residential mortgages was driven by sales of 30-year fixed rate loans and payments, offset to a large extent by originations of 10 and 15-year fixed rate loans.
  • Cash and cash equivalents decreased $19.1 million, or 31%, to $42.4 million at June 30, 2012 mainly driven by the use of excess cash to fund new loans and investment purchases.
  • Total deposits increased $30.6 million, or 2%, to $1.261 billion at June 30, 2012 reflecting growth of $36.7 million, or 5%, in core account balances, partially offset by a decrease of $6.0 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 $844.9 million, or 67% of total deposits at June 30, 2012 compared to $808.2 million, or 66% at December 31, 2011.

Credit Quality:

  • Non-performing assets totaled $11.2 million, or 0.68% of total assets, at June 30, 2012 compared to $10.6 million, or 0.65% of total assets, at December 31, 2011.  The $595,000 increase in non-performing assets reflects additions to other real estate owned and non-accrual loans.
  • At June 30, 2012, the ratio of the allowance for loan losses to total loans was 1.01%, an increase of 2 basis points from year-end 2011. Excluding the impact of acquired loans totaling $132.8 million at June 30, 2012 and $165.1 million at December 31, 2011, the ratio of the allowance for loan losses to total loans would have been 1.14% at June 30, 2012 and 1.16% at December 31, 2011.  Net charge-offs totaled $781,000 or 0.14% of average loans outstanding for the six months ended June 30, 2012 as compared to net charge-offs of $828,000 or 0.15% of average loans outstanding for the same period in 2011.     

Capital and Liquidity:

  • At June 30, 2012, the Company remains well capitalized with a tangible equity-to-tangible assets ratio of 13.33% and an equity-to-assets ratio of 13.80%.
  • At June 30, 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.

Additional Information For Stockholders

In connection with the proposed merger transaction, United Financial Bancorp will file with the Securities and Exchange Commission a Registration Statement on Form S-4 that will include a Proxy Statement of New England Bancshares and a Proxy Statement and Prospectus of United Financial Bancorp, as well as other relevant documents concerning the proposed transaction.  Stockholders are urged to read the Registration Statement and the Proxy Statement/Prospectus regarding the merger when it becomes available and any other relevant documents filed with the Securities and Exchange Commission (the "SEC"), as well as any amendments or supplements to those documents, because they will contain important information.

A free copy of the Proxy Statement/Prospectus, as well as other filings containing information about United Financial Bancorp and New England Bancshares, may be obtained at the SEC's Internet site (http://www.sec.gov).  You will also be able to obtain these documents, free of charge, from United Financial Bancorp at www.bankatunited.com under the tab "Investor Relations" or from New England Bancshares by accessing New England Bancshares' website at www.nebankct.com under the tab "Shareholder Info."

United Financial Bancorp and New England Bancshares and certain of their directors and executive officers may be deemed to be participants in the solicitation of proxies from the stockholders of New England Bancshares in connection with the proposed merger.  Information about the directors and executive officers of United Financial Bancorp is set forth in the proxy statement for United Financial Bancorp's 2012 annual meeting of stockholders, as filed with the SEC on a Schedule 14A on March 14, 2012.  Information about the directors and executive officers of New England Bancshares is set forth in the proxy statement for New England Bancshares' 2011 annual meeting of stockholders, as filed with the SEC on a Schedule 14A on July 1, 2011.  Additional information regarding the interests of those participants and other persons who may be deemed participants in the transaction may be obtained by reading the Proxy Statement/Prospectus regarding the proposed merger when it becomes available.  Free copies of this document may be obtained as described in the preceding paragraph.

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 and has announced the opening of a loan production office to be located in Northern Connecticut. 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)






















June 30,


December 31,


June 30,

Assets


2012


2011


2011



(unaudited)


(audited)


(unaudited)








Cash and cash equivalents


$       42,407


$       61,518


$       39,452

Investment securities  


343,318


337,710


361,750

Loans held for sale


835


53


342








Loans:







Residential mortgages


311,270


314,839


314,255

Commercial mortgages


476,447


450,180


437,378

Construction loans


30,011


30,271


28,903

Commercial loans


193,430


176,086


167,884

Home equity loans


137,658


135,518


138,023

Consumer loans


13,540


14,985


16,864

Total loans


1,162,356


1,121,879


1,103,307








Net deferred loan costs and fees


2,284


2,194


2,051

Allowance for loan losses


(11,751)


(11,132)


(10,640)

Loans, net


1,152,889


1,112,941


1,094,718








Federal Home Loan Bank of Boston stock, at cost 


14,454


15,365


15,365

Other real estate owned


2,397


2,054


2,858

Deferred tax asset, net


14,221


14,006


11,675

Premises and equipment, net 


17,638


16,438


16,257

Bank-owned life insurance


41,469


40,688


39,832

Goodwill


8,192


8,192


8,192

Other intangible assets


741


752


987

Other assets 


15,065


14,035


18,225








Total assets


$   1,653,626


$   1,623,752


$   1,609,653








Liabilities and Stockholders' Equity














Deposits: 







Demand


$      228,495


$      205,902


$      195,925

NOW


62,064


52,899


42,390

Savings


261,586


247,664


238,335

Money market


292,763


301,770


273,115

Certificates of deposit


415,705


421,740


439,505

Total deposits


1,260,613


1,229,975


1,189,270








Short-term borrowings 


17,772


17,260


16,702

Long-term debt


125,025


126,857


154,773

Subordinated debentures


5,585


5,539


5,494

Escrow funds held for borrowers


1,804


2,103


1,893

Capitalized lease obligations


4,794


4,874


4,943

Accrued expenses and other liabilities 


9,904


9,783


8,813

Total liabilities


1,425,497


1,396,391


1,381,888








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, 2012, December 31, 2011 and 

June 30, 2011  


187


187


187

Additional paid-in capital


183,077


182,433


181,654

Retained earnings


91,836


89,019


85,618

Unearned compensation


(9,695)


(10,047)


(10,405)

Accumulated other comprehensive income, net of taxes


6,775


6,752


5,839

Treasury stock, at cost (3,186,409 shares at June 30, 2012, 2,994,036 shares 






at December 31, 2011 and 2,607,458 shares at June 30, 2011)  


(44,051)


(40,983)


(35,128)

Total stockholders' equity


228,129


227,361


227,765








Total liabilities and stockholders' equity


$   1,653,626


$   1,623,752


$   1,609,653

 

UNITED FINANCIAL BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED INCOME STATEMENTS

(Dollars in thousands, except per share amounts)


















Three Months Ended  


Six Months Ended

 June 30, 


 June 30, 


2012


2011


2012


2011


(unaudited)


(unaudited)

Interest and dividend income:








Loans

$     14,181


$     14,703


$     28,256


$     29,190

Investments

2,767


3,387


5,622


6,578

Other interest-earning assets 

51


38


92


78

Total interest and dividend income 

16,999


18,128


33,970


35,846









Interest expense:








Deposits

2,598


3,194


5,351


6,491

Borrowings

1,107


1,552


2,225


3,182

Total interest expense

3,705


4,746


7,576


9,673









Net interest income before provision for loan losses

13,294


13,382


26,394


26,173









Provision for loan losses 

750


673


1,400


1,481









Net interest income after provision for loan losses

12,544


12,709


24,994


24,692









Non-interest income:








Fee income on depositors' accounts

1,529


1,373


2,937


2,665

Wealth management income

289


214


516


454

Income from bank-owned life insurance

436


393


876


724

Net gain on sales of loans

162


50


270


73

Net gain on sales of securities

-


-


-


1

Impairment charges on securities

-


(59)


-


(59)

Other income

154


240


544


502

Total non-interest income

2,570


2,211


5,143


4,360









Non-interest expense:








Salaries and benefits

6,286


6,414


12,728


12,683

Occupancy expenses

870


805


1,744


1,649

Marketing expenses 

501


635


941


1,082

Data processing expenses

1,011


984


2,031


1,972

Professional fees

404


407


910


1,068

Acquisition related expenses

592


-


592


-

FDIC insurance assessments

267


244


536


574

Low income housing tax credit fund

-


197


243


395

Other expenses

1,537


1,717


3,018


2,920

Total non-interest expense 

11,468


11,403


22,743


22,343









Income before income taxes

3,646


3,517


7,394


6,709









Income tax expense

1,064


827


1,963


1,590









Net income     

$      2,582


$      2,690


$      5,431


$      5,119









Earnings per share:








Basic

$        0.18


$        0.18


$        0.37


$        0.34

Diluted

$        0.17


$        0.18


$        0.36


$        0.33









Weighted average shares outstanding:








Basic

14,543


15,028


14,607


15,022

Diluted

14,788


15,309


14,887


15,285

 

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



2012


2012


2011


2011


2011













Operating Results:











Net interest income

$      13,294


$      13,100


$      13,241


$      13,399


$      13,382


Loan loss provision

750


650


1,011


750


673


Non-interest income

2,570


2,573


2,570


2,423


2,211


Non-interest expense

11,468

(1)

11,275


10,718


11,001


11,403


Net income

2,582


2,849


2,980


3,085


2,690













Performance Ratios (annualized):











Return on average assets 

0.62%

(2)

0.70%


0.74%


0.77%


0.67%


Return on average equity

4.53%

(2)

5.00%


5.24%


5.41%


4.76%


Net interest margin

3.44%


3.43%


3.51%


3.56%


3.55%


Non-interest income to average total assets

0.62%


0.63%


0.64%


0.60%


0.55%


Non-interest expense to average total assets

2.78%

(3)

2.77%


2.66%


2.74%


2.85%


Efficiency ratio (4)

73.04%

(3)

72.44%


68.41%


69.61%


73.09%













Per Share Data:











Diluted earnings per share

$         0.17


$         0.19


$         0.20


$         0.20


$         0.18


Book value per share

$       14.70


$       14.57


$       14.47


$       14.36


$       14.15


Tangible book value per share

$       14.12

(5)

$       14.00

(5)

$       13.90

(5)

$       13.79

(5)

$       13.58

(5)

Market price at period end

$       14.38


$       15.82


$       16.09


$       13.69


$       15.43













Risk Profile











Equity as a percentage of assets

13.80%


13.69%


14.00%


14.11%


14.15%


Tangible equity as a percentage of tangible assets

13.33%

(5)

13.22%

(5)

13.53%

(5)

13.63%

(5)

13.66%

(5)

Net charge-offs to average loans outstanding (annualized)

0.11%


0.16%


0.22%


0.23%


0.18%


Non-performing assets as a percent of total assets

0.68%


0.70%


0.65%


0.85%


0.77%


Non-performing loans as a percent of total loans

0.74%


0.79%


0.75%


1.00%


0.86%


Allowance for loan losses as a percent of total loans

1.01%

(6)

0.99%

(6)

0.99%

(6)

0.96%

(6)

0.96%

(6)

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

136.43%


125.65%


131.68%


96.22%


112.01%













Average Balances











Loans

$ 1,151,141


$ 1,133,543


$ 1,119,511


$ 1,113,672


$ 1,103,305


Securities

340,086


338,405


346,939


358,929


356,479


Total interest-earning assets

1,547,132


1,526,015


1,509,079


1,503,940


1,509,438


Total assets

1,652,997


1,628,071


1,611,447


1,605,844


1,602,767


Deposits

1,256,780


1,231,285


1,211,957


1,186,530


1,179,166


FHLBB advances

103,632


105,302


111,762


132,544


138,215


Stockholders' Equity

227,855


227,854


227,678


228,278


226,279













Average Yields/Rates (annualized)











Loans

4.93%


4.97%


5.18%


5.22%


5.33%


Securities

3.25%


3.37%


3.34%


3.62%


3.80%


Total interest-earning assets

4.39%


4.45%


4.62%


4.73%


4.80%













Savings accounts

0.51%


0.58%


0.69%


0.71%


0.76%


Money market/NOW accounts

0.45%


0.55%


0.62%


0.64%


0.70%


Certificates of deposit 

1.78%


1.82%


1.88%


1.91%


1.99%


FHLBB advances

3.16%


3.12%


3.17%


3.26%


3.60%


Total interest-bearing liabilities

1.24%


1.31%


1.43%


1.50%


1.61%













(1)

Includes acquisition related expenses totaling $592,000 for the quarter ended June 30, 2012.

(2)

Exclusive of acquisition related expenses totaling $592,000 for the quarter ended June 30, 2012, the return on average assets would have been 0.77% and the return on average equity would have been 5.57%.

(3)

Excluding acquisition related expenses totaling $592,000 for the quarter ended June 30, 2012, non-interest expense to average total assets would have been 2.63% and the efficiency ratio would have been 69.27%.

(4)

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

(5)

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

(6)

Excluding acquired loans of $126.4 million, $136.4 million, $146.0 million, $156.2 million and $168.6 million, and loans purchased from other financial institutions of $6.4 million, $18.3 million, $19.1 million, $19.3 million and $20.8 million at June 30, 2012, March 31, 2012, December 31, 2011, September 30, 2011 and June 30, 2011, respectively, allowance for loan losses as a percent of total loans, gross would have been 1.14%, 1.15%,1.16%, 1.14% and 1.16% for the quarters ended June 30, 2012, March 31, 2012, December 31, 2011, September 30, 2011 and June 30, 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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