United Financial Bancorp Reports Solid First Quarter 2013 Earnings; Announces 10% Increase In Quarterly Dividend To $0.11 Per Share

WEST SPRINGFIELD, Mass., April 18, 2013 /PRNewswire/ -- United Financial Bancorp, Inc. (the "Company") (NASDAQ Global Select Market: UBNK), the holding company for United Bank (the "Bank"), reported net income of $4.7 million, or $0.23 per diluted share, for the first quarter of 2013 compared to net income of $2.8 million, or $0.19 per diluted share, for the corresponding period in 2012. Excluding branch closing costs totaling $510,000 ($302,000 net of tax benefit) and acquisition related expenses of $158,000 ($152,000 net of tax benefit) resulting from the Company's acquisition of New England Bancshares, Inc. in November 2012, net income would have been $5.2 million, or $0.25 per diluted share, for the first quarter of 2013.

The Company also announced that its Board of Directors approved a 10% increase in its quarterly cash dividend to $0.11 per share, payable on May 31, 2013 to shareholders of record as of May 9, 2013.  Based upon the closing share price of $14.55 as of April 17, 2013 and the new annualized dividend of $0.44, the dividend yield on the Company's common stock is 3.02%.

Financial Highlights:

  • Excluding the impact of branch closing costs totaling $510,000 ($302,000 net of tax benefit) and acquisition related expenses of $158,000 ($152,000 net of tax benefit), diluted earnings per share would have increased 32% compared to the first quarter of 2012.
  • Total loans increased $23.3 million, or 1.3%, to $1.84 billion at March 31, 2013.
  • Total core deposits increased $21.7 million, or 1.9%, during the first quarter of 2013 to $1.16 billion.
  • Credit quality remained very strong, as demonstrated by a non-performing loans to total loans ratio of 77 basis points at March 31, 2013 and an annualized net charge-offs to average loans ratio of 7 basis points in the first quarter of 2013.
  • Tangible book value per share was $13.16 at March 31, 2013. During the first quarter of 2013, the Company repurchased 204,400 shares at an average price of $14.91 per share. At March 31, 2013, the Company had approximately 537,288 shares remaining to be purchased under its current plan approved in October 2012. 

"We are pleased to report solid first quarter earnings, which reflect the positive impact of the New England Bancshares acquisition, organic growth in loans and core deposits, excellent asset quality and a strong balance sheet.  As a result of our improved results and confidence in our future performance, we are excited to reward our shareholders with a 10% increase in the quarterly dividend payment," commented Richard B. Collins, President and Chief Executive Officer. "Since our successful systems integration last fall, we have focused our efforts in Connecticut on further developing relationships with existing customers and driving new customer traffic into the former New England Bank branches.  At the same time, we continue to be aggressive in our account acquisition efforts in the Worcester and Springfield regions."

Earnings Summary

  • Net interest income increased $7.4 million, or 56%, to $20.5 million for the first quarter of 2013 as a result of an increase in average interest-earning assets and net interest margin expansion.  Total average interest-earning assets increased $691.8 million, or 45%, to $2.22 billion for the first quarter of 2013 driven by the acquisition of New England Bank and organic loan growth. The net interest margin increased by 27 basis points to 3.70% for the three months ended March 31, 2013 due in large part to a $1.4 million increase in the net accretion of acquisition accounting adjustments.
  • Provision for loan losses increased $300,000, or 46%, to $950,000 for the three months ended March 31, 2013 reflecting a higher level of impaired loan reserves as well as an increase in commercial loan originations.
  • Non-interest income increased $225,000, or 9%, to $2.8 million for the three months ended March 31, 2013 due to growth in deposit services charges, bank-owned life insurance income and other income in connection with the New England Bank acquisition.
  • Non-interest expense totaled $15.9 million in first quarter of 2013 compared to $11.3 million for the corresponding period last year.  Excluding branch closing costs of $510,000 and acquisition-related expenses totaling $158,000, non-interest expenses would have increased $3.9 million, or 35%, to $15.2 million mainly due to additional costs incurred to operate our new Connecticut franchise.
  • Income tax expense was $1.8 million for the first quarter of 2013, $891,000 higher than the same period last year, driven by an increase in pre-tax income, and to a lesser extent, a higher effective tax rate.

Balance Sheet Activity:

  • Total assets increased $26.9 million, or 1%, to $2.43 billion at March 31, 2013 from $2.40 billion at December 31, 2012 primarily reflecting growth in loans and cash balances, offset in part by a decrease in the investment securities porfolio.
  • Total loans increased $23.3 million, or 1%, to $1.84 billion at March 31, 2013 due to growth in construction loans ($11.0 million), commercial mortgages ($10.0 million) and commercial and industrial loans ($7.3 million) as a result of successful business development efforts as well as competitive products and pricing.  These items were partially reduced by runoff in the consumer segments.
  • Total investment securities decreased $18.3 million, or 5%, to $359.0 million at March 31, 2013 as cash flows from existing bonds were used to fund loan originations.
  • Total deposits increased $46.4 million, or 3%, to $1.89 billion at March 31, 2013 reflecting growth of $21.7 million, or 2%, in core account balances and an increase of $24.7 million, or 3%, in certificates of deposit.  Core deposit balances were $1.16 billion, or 61% of total deposits, at March 31, 2013 compared to $1.14 billion, or 62% of total deposits, at December 31, 2012.
  • Total subordinated debentures decreased $4.0 million, or 41%, to $5.7 million at March 31, 2013 as a result of the full redemption of callable debt instruments previously issued by New England Bancshares, Inc.

Credit Quality:

  • Non-performing assets totaled $15.7 million, or 0.64% of total assets, at March 31, 2013 compared to $17.3 million, or 0.72% of total assets, at December 31, 2012.  The $1.6 million decrease was due to sales of several OREO properties totaling $1.2 million and successful loan workout activities.
  • The ratio of the allowance for loan losses to total loans was 0.69% at March 31, 2013.  Excluding the aggregate impact of loans acquired from Commonwealth National Bank in 2009 and New England Bank in 2012 totaling $616.2 million at March 31, 2013 and $664.6 million at December 31, 2012, the ratio of the allowance for loan losses to total loans would have been 1.04% at March 31, 2013 and 1.05% at December 31, 2012.  Net charge-offs totaled $343,000, or 0.07% of average loans outstanding (annualized) for the quarter ended March 31, 2013 as compared to net charge-offs of $457,000, or 0.16% of average loans outstanding (annualized) for the quarter ended March 31, 2012.

Capital and Liquidity:

  • At March 31, 2013, the Company was well capitalized with a tangible equity-to-tangible assets ratio of 11.00% and an equity-to-assets ratio of 12.61%.
  • At March 31, 2013, 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.

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.   The Company had total consolidated assets of approximately $2.4 billion as of March 31, 2013. 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; seven branches in the Worcester region of Central Massachusetts; and 15 branches in Connecticut's Hartford, Tolland, New Haven and Litchfield counties.  The Bank also operates loan production offices located in Beverly, Massachusetts and Glastonbury, 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.

CONFERENCE CALL:

United Financial Bancorp, Inc. will host a conference call at 10:00 a.m. Eastern time on Friday, April 19, 2013 to discuss the results for the quarter.  Participants should dial-in to the call a few minutes before it begins. 

Audio:
Dial in number: 1-888-317-6016

Replay:
Dial in number: 1-877-344-7529
Conference number: 10027468
A telephone replay of the call will be available one hour after the end of the conference call through May 20, 2013 at 9:00 a.m. EDT.

 

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 per share amounts)























March 31,


December 31,


March 31,

Assets


2013


2012


2012



(unaudited)


(audited)


(unaudited)








Cash and cash equivalents


$ 56,312


$ 30,679


$ 75,548

Investment securities


359,004


377,308


340,712

Loans held for sale


953


632


685








Loans:







Residential mortgages


440,638


441,874


312,065

Commercial mortgages


824,701


814,692


467,022

Construction loans


63,797


52,778


30,191

Commercial loans


313,478


306,192


181,512

Home equity loans


176,124


179,039


134,368

Consumer loans


20,593


21,501


14,186

Total loans


1,839,331


1,816,076


1,139,344








Net deferred loan costs and fees


3,520


3,414


2,255

Allowance for loan losses


(12,696)


(12,089)


(11,325)

Loans, net


1,830,155


1,807,401


1,130,274








Federal Home Loan Bank of Boston stock, at cost


17,334


18,554


14,454

Other real estate owned


1,411


2,578


2,442

Deferred tax asset, net


19,726


20,178


14,368

Premises and equipment, net


25,058


25,064


17,333

Bank-owned life insurance


53,305


52,876


41,084

Goodwill


39,585


39,852


8,192

Other intangible assets


4,387


4,514


712

Other assets


21,971


22,667


14,394








Total assets


$ 2,429,201


$ 2,402,303


$ 1,660,198








Liabilities and Stockholders' Equity














Deposits:







Demand


$ 313,755


$ 307,302


$ 208,553

NOW


82,338


87,983


58,078

Savings


351,935


350,188


263,076

Money market


414,452


395,293


311,684

Certificates of deposit


732,138


707,409


417,238

Total deposits


1,894,618


1,848,175


1,258,629








Short-term borrowings


66,663


79,229


23,561

Long-term debt


134,697


133,969


126,704

Subordinated debentures


5,653


9,630


5,562

Escrow funds held for borrowers


3,327


4,315


2,250

Capitalized lease obligations


4,669


4,711


4,837

Accrued expenses and other liabilities


13,219


15,085


11,407

Total liabilities


2,122,846


2,095,114


1,432,950








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: 24,266,428 at March 31, 2013 and December 31, 2012 and






18,706,933 at March 31, 2012


243


243


187

Additional paid-in capital


273,278


272,822


182,671

Retained earnings


89,845


87,153


90,553

Unearned compensation


-


-


(9,874)

Accumulated other comprehensive income, net of taxes


4,549


5,401


6,549

Treasury stock, at cost (4,324,279 shares at March 31, 2013, 4,114,310 shares






at December 31, 2012 and 3,108,811 shares at March 31, 2012)


(61,560)


(58,430)


(42,838)

Total stockholders' equity


306,355


307,189


227,248








Total liabilities and stockholders' equity


$ 2,429,201


$ 2,402,303


$ 1,660,198








 

 

UNITED FINANCIAL BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED INCOME STATEMENTS

(Dollars in thousands, except per share amounts)










Three Months Ended  

  March 31, 


2013


2012


(unaudited)

Interest and dividend income:




Loans

$     22,056


$     14,075

Investments

2,313


2,855

Other interest-earning assets 

18


41

Total interest and dividend income 

24,387


16,971





Interest expense:




Deposits

2,803


2,753

Borrowings

1,091


1,118

Total interest expense

3,894


3,871





Net interest income before provision for loan losses

20,493


13,100





Provision for loan losses 

950


650





Net interest income after provision for loan losses

19,543


12,450





Non-interest income:




Fee income on depositors' accounts

1,499


1,408

Wealth management income

211


227

Income from bank-owned life insurance

513


440

Net gain on sales of loans

106


108

Net loss on sales of securities

(50)


-

Other income

519


390

Total non-interest income

2,798


2,573





Non-interest expense:




Salaries and benefits

8,479


6,442

Occupancy expenses

1,628


874

Marketing expenses 

538


440

Data processing expenses

1,207


1,020

Professional fees

678


506

Acquisition related expenses

158


-

Branch closing expenses

510


-

FDIC insurance assessments

298


269

Low income housing tax credit fund

175


243

Other expenses

2,179


1,481

Total non-interest expense 

15,850


11,275





Income before income taxes

6,491


3,748





Income tax expense

1,790


899





Net income

$      4,701


$      2,849





Earnings per share:




Basic

$        0.23


$        0.19

Diluted

$        0.23


$        0.19





Weighted average shares outstanding:




Basic

20,036


14,671

Diluted

20,289


14,987

 

UNITED FINANCIAL BANCORP, INC. AND SUBSIDIARY

SELECTED DATA AND RATIOS (unaudited)

(Dollars in thousands, except per share amounts)

























At or For The Quarters Ended














Mar. 31


Dec. 31


Sep. 30


Jun. 30


Mar. 31



2013


2012


2012


2012


2012












Operating Results:










Net interest income (1)

$      20,493


$      16,235


$      13,550


$      13,294


$      13,100

Loan loss provision

950


689


1,050


750


650

Non-interest income

2,798


2,969


2,511

(2)

2,570


2,573

Non-interest expense

15,850

(3)

22,305

(3)

11,192

(3)

11,468

(3)

11,275

Net income (loss) 

4,701


(4,732)


2,929


2,582


2,849












Performance Ratios (annualized):










Return (loss) on average assets 

0.78%

(4)

(0.93)%


0.71%

(4)

0.62%

(4)

0.70%

Return (loss) on average equity

6.13%

(4)

(7.00)%


5.10%

(4)

4.53%

(4)

5.00%

Net interest margin (1)

3.70%


3.43%


3.51%


3.44%


3.43%

Non-interest income to average total assets

0.47%


0.58%


0.61%

(5)

0.62%


0.63%

Non-interest expense to average total assets

2.64%

(6)

4.37%

(6)

2.71%

(6)

2.78%

(6)

2.77%

Efficiency ratio (7)

68.22%

(6)

118.71%

(6)

69.74%

(6)

73.04%

(6)

72.44%












Per Share Data:










Diluted earnings (loss) per share

$         0.23


$       (0.28)


$         0.20


$         0.17


$         0.19

Book value per share

$       15.36


$       15.24


$       14.88


$       14.70


$       14.57

Tangible book value per share (8)

$       13.16


$       13.04


$       14.31


$       14.12


$       14.00

Market price at period end

$       15.20


$       15.72


$       14.47


$       14.38


$       15.82












Risk Profile










Equity as a percentage of assets

12.61%


12.79%


13.67%


13.80%


13.69%

Tangible equity as a percentage of tangible assets (8)

11.00%


11.15%


13.21%


13.33%


13.22%

Net charge-offs to average loans outstanding (annualized)

0.07%


0.30%


0.09%


0.11%


0.16%

Non-performing assets as a percent of total assets

0.64%


0.72%


0.61%


0.68%


0.70%

Non-performing loans as a percent of total loans

0.77%


0.81%


0.73%


0.74%


0.79%

Allowance for loan losses as a percent of total loans (9)

0.69%


0.67%


1.03%


1.01%


0.99%

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

89.41%

(10)

82.20%

(10)

140.49%


136.43%


125.65%












Average Balances










Loans

$ 1,830,620


$ 1,519,877


$ 1,178,802


$ 1,151,141


$ 1,133,543

Securities

365,237


350,572


338,352


340,086


338,405

Total interest-earning assets

2,217,842


1,893,447


1,543,779


1,547,132


1,526,015

Total assets

2,397,027


2,043,983


1,650,148


1,652,997


1,628,071

Deposits

1,854,974


1,571,613


1,254,148


1,256,780


1,231,285

FHLBB advances

136,627


122,331


103,915


103,632


105,302

Stockholders' equity

306,553


270,564


229,614


227,855


227,854












Average Yields/Rates (annualized)










Loans

4.82%


4.65%


4.92%


4.93%


4.97%

Securities

2.53%


2.71%


3.01%


3.25%


3.37%

Total interest-earning assets

4.40%


4.25%


4.42%


4.39%


4.45%












Savings accounts

0.38%


0.44%


0.45%


0.51%


0.58%

Money market/NOW accounts

0.40%


0.42%


0.41%


0.45%


0.55%

Certificates of deposit 

1.11%


1.35%


1.74%


1.78%


1.82%

FHLBB advances

2.32%


3.03%


3.04%


3.16%


3.12%

Total interest-bearing liabilities

0.88%


1.05%


1.20%


1.24%


1.31%












(1)

Includes amortization of acquisition accounting adjustments totaling $1.8 million, $633,000, $715,000, $319,000 and $371,000 for the quarters ending March 31, 2013, December 31, 2012, September 30, 2012, June 30, 2012 and March 31, 2012, respectively.


(2)

Includes a $202,000 other-than-temporary impairment ("OTTI") charge on securities for the quarter ended September 30, 2012. 

(3)

Includes branch closing costs totaling $510,000 for the quarter ended March 31, 2013, an ESOP plan termination expense of $4.5 million for the quarter ended December 31, 2012 and acquisition-related expenses totaling $158,000, $4.0 million, $366,000 and $592,000 for the quarters ended March 31, 2013, December 31, 2012, September 30, 2012 and June 30, 2012, respectively. 



(4)

Exclusive of branch closing costs totaling $302,000 (after tax) for the quarter ended March 31, 2013, acquisition-related expenses totaling $254,000 (after tax) and $592,000 for the quarters ended September 30, 2012 and June 30, 2012, respectively, and a $119,000 (after tax) other-than-temporary impairment charge for the quarter ended September 30, 2012, the return on average assets would have been 0.86%, 0.80% and 0.77% and the return on average equity would have been 6.73%, 5.75% and 5.57%, respectively.




(5)

Exclusive of the $202,000 other-than-temporary impairment charge, non-interest income to average total assets would have been 0.66% for the quarter ended September 30, 2012.


(6)

Excluding the branch closing costs totaling $510,000 for the quarter ended March 31, 2013, ESOP plan termination expense of $4.5 million and FHLBB prepayment penalties of $207,000 for the quarter ended December 31, 2012 and acquisition-related expenses totaling $158,000, $4.0 million, $366,000 and $592,000 for the quarters ended March 31, 2013, December 31, 2012, September 30, 2012 and June 30, 2012, non-interest expense to average total assets would have been 2.53%, 2.67%, 2.62% and 2.63% and the efficiency ratio would have been 65.34%, 72.50%, 67.46% and 69.27%, respectively.  




(7)

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

(8)

Excludes the impact of goodwill and other intangible assets of $44.0 million at March 31, 2013, $44.4 million at December 31, 2012 and $8.9 million at September 30, 2012, June 30, 2012 and March 31, 2012.


(9)

Excluding acquired loans of $611.3 million, $659.6 million, $118.6 million, $126.4 million and $136.4 million, and loans purchased from other financial  institutions of $4.9 million, $5.0 million, $6.3 million, $6.4 million and $18.3 million at March 31, 2013, December 31, 2012, September 30, 2012, June 30, 2012 and March 31, 2012, respectively, allowance for loan losses as a percent of total loans, gross would have been 1.04%, 1.05%, 1.15%, 1.14% and 1.15% for the quarters ended March 31, 2013, December 31, 2012, September 30, 2012, June 30, 2012 and March 31, 2012, respectively. 




(10)

Excluding acquired non-performing loans of $4.4 million and $7.0 million at March 31, 2013 and December 31, 2012, allowance for loan losses as a percent of total non-performing loans would have been 129.78% and 157.72%, respectively. 













 

SOURCE United Financial Bancorp, Inc.



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