United Financial Bancorp Reports Solid Third Quarter 2012 Results

WEST SPRINGFIELD, Mass., Oct. 19, 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 $2.9 million, or $0.20 per diluted share, for the third quarter of 2012 compared to net income of $3.1 million, or $0.20 per diluted share, for the corresponding period in 2011.  Excluding acquisition related expenses of $366,000 ($254,000 net of tax benefit) and impairment charges on securities of $202,000 ($119,000 net of tax benefit), net income would have been $3.3 million, or $0.22 per diluted share, for the third quarter of 2012.

For the nine months ended September 30, 2012, the Company's net income was $8.4 million, or $0.56 per diluted share, compared to net income of $8.2 million, or $0.54 per diluted share, for the same period in 2011. Excluding acquisition related expenses of $958,000 ($818,000 net of tax benefit) and impairment charges on securities of $202,000 ($119,000 net of tax benefit), net income would have been $9.3 million, or $0.63 per diluted share, for the nine months of 2012.  The Company also announced a quarterly cash dividend of $0.10 per share, payable on December 3, 2012 to shareholders of record as of November 9, 2012.

Financial Highlights:

  • Excluding acquisition related expenses of $366,000 ($254,000 net of tax benefit) and impairment charges on securities of $202,000 ($119,000 net of tax benefit), diluted EPS for the third quarter increased by 10% compared to the same period last year.
  • Total loans increased by $96.1 million, or 9%, to $1.218 billion at September 30, 2012 from $1.122 billion at December 31, 2011, primarily due to 14% growth in commercial mortgages and commercial business loans.
  • Credit quality remained solid, as demonstrated by the non-performing loans to total loans ratio of 73 basis points at September 30, 2012 and an annualized net charge-offs to average loans ratio of 9 basis points for the third quarter of 2012.
  • Core deposits increased by $53.9 million, or 7%, to $862.1 million at September 30, 2012 from $808.2 million at December 31, 2011. 
  • Tangible book value per share increased 3% to $14.31 at September 30, 2012 from $13.90 at December 31, 2011. Book value per share also increased 3% to $14.88 at September 30, 2012 as compared to $14.47 at December 31, 2011.

"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.  "Our asset quality metrics are excellent and we have a healthy balance sheet with solid capital and liquidity positions. We expect to close our pending acquisition of New England Bancshares, Inc. and New England Bank before year end and believe we are well positioned for the future." 

Earnings Summary (Q3 2012 compared to Q3 2011)

Excluding the impact of acquisition related expenses of $366,000 ($254,000 net of tax benefit) and impairment charges on securities totaling $202,000 ($119,000 net of tax benefit), net income would have been $3.3 million for the third quarter of 2012, $217,000, or 7% above the same period last year.  The improved results are largely due to increased net interest income and non-interest income and a decrease in non-interest expense (excluding acquisition related expenses), offset in part by an increase in the provision for loan losses.

  • Net interest income increased $151,000, or 1%, to $13.6 million for the third quarter of 2012 mainly as a result of an increase in average interest-earning assets, partially offset by a contraction in the net interest margin.  Total average interest-earning assets increased $39.8 million, or 3%, to $1.544 billion for the third quarter of 2012 driven by strong loan growth partially offset by decreases in interest-earning cash balances and investment securities.  The net interest margin decreased by 5 basis points to 3.51% for the three months ended September 30, 2012 reflecting lower yields on loans and investments as a result of the lower interest rate environment, offset in part by reduced funding costs.
  • Provision for loan losses increased $300,000, or 40%, to $1.1 million for the three months ended September 30, 2012 primarily reflecting an increase in general reserves associated with stronger commercial loan origination activity.
  • Non-interest income increased $88,000, or 4%, to $2.5 million for the three months ended September 30, 2012.  Net gains from sales of loans increased $137,000 due to improved pricing on sales of 30-year fixed rate loans, and to a lesser extent, increased sales volume. Other income increased $50,000, or 19%, as a result of higher loan prepayment penalties. Fee income on deposit accounts grew $32,000, or 2%, driven by an increase in debit card income. Wealth management income increased $31,000, or 13%, reflecting higher fee-based assets under management and transaction-based commissions.  These positive items were reduced in part by an increase of $169,000 in impairment charges on securities.
  • Non-interest expense increased $191,000, or 2%, to $11.2 million in the third quarter of 2012. Excluding acquisition related costs of $366,000, non-interest expense would have declined by $175,000, or 2%.  Low income housing tax credit fund expense decreased by $232,000 as a result of a prior period adjustment.  Professional fees fell by $201,000, or 35%, due in large part to legal and consulting costs incurred in 2011 in connection with strategic initiatives.  Other expenses decreased $91,000, or 5%, reflecting a lower write-down of mortgage servicing rights. These items were partially reduced by higher compensation and data processing expenses. Salaries and benefits increased by $197,000, or 3%, mainly due to a new loan production office opened in Glastonbury, Connecticut during the second quarter of 2012, annual salary increases and a higher short-term incentive plan accrual related to improved performance.  Data processing expenses increased $148,000, or 15%, attributable to a larger loan and deposit base as well as increased costs related to software licenses, online banking and debit cards.
  • Income taxes decreased $96,000, or 10%, to $890,000 for the three months ended September 30, 2012 primarily due to a lower effective tax rate and a decrease in pre-tax income.

Balance Sheet Activity:

  • Total assets increased $59.9 million, or 4%, to $1.684 billion at September 30, 2012 from $1.624 billion at December 31, 2011 reflecting strong growth in loans partially offset by lower cash balances.
  • Total loans increased $96.1 million, or 9%, to $1.218 billion at September 30, 2012 from year-end due in large part to strong growth in the commercial mortgages and commercial and industrial portfolios, partially offset by modest run-off in residential mortgages and consumer loans.  The increases of $63.3 million, or 14%, in commercial mortgages and $24.9 million, or 14%, in commercial and industrial loans were primarily attributable to business development efforts, competitive products and pricing, and significant origination activity in the loan production offices.  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 $33.2 million, or 54%, to $28.3 million at September 30, 2012 mainly driven by the use of excess cash to fund new loans.
  • Total deposits increased $45.2 million, or 4%, to $1.275 billion at September 30, 2012 reflecting growth of $53.9 million, or 7%, in core account balances, partially offset by a decrease of $8.7 million, or 2%, in certificates of deposit.  The strong growth in core account balances is mainly due to the success of sales and marketing initiatives, competitive products and pricing and excellent customer service.  Core deposit balances were $862.1 million, or 68% of total deposits at September 30, 2012 compared to $808.2 million, or 66% at December 31, 2011.
  • Long-term debt increased $13.4 million, or 11%, to $140.3 million at September 30, 2012 as new advances were secured to fund loan growth.

Credit Quality:

  • Non-performing assets totaled $10.4 million, or 0.61% of total assets, at September 30, 2012 compared to $10.6 million, or 0.65% of total assets, at December 31, 2011.  The $224,000 decline in non-performing assets reflects a decrease in real estate owned due to sales of properties, offset in part by a slight increase in non-accrual loans.
  • At September 30, 2012, the ratio of the allowance for loan losses to total loans was 1.03%, an increase of 4 basis points from December 31, 2011. Excluding the impact of acquired loans totaling $124.9 million at September 30, 2012 and $165.1 million at December 31, 2011, the ratio of the allowance for loan losses to total loans would have been 1.15% at September 30, 2012 and 1.16% at December 31, 2011.  Net charge-offs totaled $1.1 million, or 0.11%, of average loans outstanding (annualized) for the nine months ended September 30, 2012 as compared to net charge-offs of $ 1.5 million, or 0.18%, of average loans outstanding (annualized) for the same period in 2011.

Capital and Liquidity:

  • At September 30, 2012, the Company remains well capitalized with a tangible equity-to-tangible assets ratio of 13.21% and an equity-to-assets ratio of 13.67%.
  • At September 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.

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 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.

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)






















September 30,


December 31,


September 30,

Assets


2012


2011


2011



(unaudited)


(audited)


(unaudited)








Cash and cash equivalents


$       28,344


$       61,518


$       28,749

Investment securities  


330,311


337,710


354,892

Loans held for sale


-


53


522








Loans:







Residential mortgages


312,600


314,839


319,157

Commercial mortgages


513,524


450,180


440,521

Construction loans


34,724


30,271


28,928

Commercial loans


201,017


176,086


176,188

Home equity loans


143,052


135,518


138,060

Consumer loans


13,090


14,985


15,887

Total loans


1,218,007


1,121,879


1,118,741








Net deferred loan costs and fees


2,445


2,194


2,133

Allowance for loan losses


(12,550)


(11,132)


(10,741)

Loans, net


1,207,902


1,112,941


1,110,133








Federal Home Loan Bank of Boston stock, at cost 


14,454


15,365


15,365

Other real estate owned


1,349


2,054


2,490

Deferred tax asset, net


13,771


14,006


9,579

Premises and equipment, net 


18,145


16,438


16,488

Bank-owned life insurance


41,869


40,688


40,264

Goodwill


8,192


8,192


8,192

Other intangible assets


699


752


805

Other assets 


18,648


14,035


19,079








Total assets


$   1,683,684


$   1,623,752


$   1,606,558








Liabilities and Stockholders' Equity














Deposits: 







Demand


$      234,191


$      205,902


$      191,829

NOW


67,279


52,899


44,544

Savings


264,942


247,664


243,125

Money market


295,674


301,770


289,545

Certificates of deposit


413,074


421,740


430,523

Total deposits


1,275,160


1,229,975


1,199,566








Short-term borrowings 


14,579


17,260


24,632

Long-term debt


140,287


126,857


133,157

Subordinated debentures


5,608


5,539


5,516

Escrow funds held for borrowers


1,892


2,103


2,221

Due to broker


-


-


700

Capitalized lease obligations


4,753


4,874


4,909

Accrued expenses and other liabilities 


11,242


9,783


9,101

Total liabilities


1,453,521


1,396,391


1,379,802








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 September 30, 2012, December 31, 2011 and     






September 30, 2011  


187


187


187

Additional paid-in capital


183,476


182,433


182,122

Retained earnings


93,317


89,019


87,358

Unearned compensation


(9,523)


(10,047)


(10,233)

Accumulated other comprehensive income, net of taxes


7,514


6,752


7,076

Treasury stock, at cost (3,239,112 shares at September 30, 2012, 2,994,036 shares  





at December 31, 2011 and 2,916,427 shares at September 30, 2011)  


(44,808)


(40,983)


(39,754)

Total stockholders' equity


230,163


227,361


226,756








Total liabilities and stockholders' equity


$   1,683,684


$   1,623,752


$   1,606,558








 

 

UNITED FINANCIAL BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED INCOME STATEMENTS

(Dollars in thousands, except per share amounts)


















Three Months Ended  


Nine Months Ended

 September 30, 


 September 30, 


2012


2011


2012


2011


(unaudited)


(unaudited)

Interest and dividend income:








Loans

$     14,494


$     14,529


$     42,750


$     43,719

Investments

2,549


3,249


8,171


9,827

Other interest-earning assets 

27


22


119


100

Total interest and dividend income 

17,070


17,800


51,040


53,646









Interest expense:








Deposits

2,444


3,014


7,795


9,505

Borrowings

1,076


1,387


3,301


4,569

Total interest expense

3,520


4,401


11,096


14,074









Net interest income before provision for loan losses

13,550


13,399


39,944


39,572









Provision for loan losses 

1,050


750


2,450


2,231









Net interest income after provision for loan losses

12,500


12,649


37,494


37,341









Non-interest income:








Fee income on depositors' accounts

1,452


1,420


4,389


4,085

Wealth management income

279


248


795


702

Income from bank-owned life insurance

448


468


1,324


1,192

Net gain on sales of loans

188


51


458


124

Net gain on sales of securities

27


-


27


1

Impairment charges on securities

(202)


(33)


(202)


(92)

Other income

319


269


863


771

Total non-interest income

2,511


2,423


7,654


6,783









Non-interest expense:








Salaries and benefits

6,375


6,178


19,103


18,861

Occupancy expenses

823


823


2,567


2,472

Marketing expenses 

316


339


1,257


1,421

Data processing expenses

1,109


961


3,140


2,933

Professional fees

372


573


1,282


1,641

Acquisition related expenses

366


-


958


-

FDIC insurance assessments

264


237


800


811

Low income housing tax credit fund

-


232


243


627

Other expenses

1,567


1,658


4,585


4,578

Total non-interest expense 

11,192


11,001


33,935


33,344









Income before income taxes

3,819


4,071


11,213


10,780









Income tax expense

890


986


2,853


2,576









Net income

$      2,929


$      3,085


$      8,360


$      8,204









Earnings per share:








Basic

$        0.20


$        0.21


$        0.57


$        0.55

Diluted

$        0.20


$        0.20


$        0.56


$        0.54









Weighted average shares outstanding:








Basic

14,522


14,952


14,578


14,998

Diluted

14,708


15,207


14,828


15,258









 

 

UNITED FINANCIAL BANCORP, INC. AND SUBSIDIARY

SELECTED DATA AND RATIOS (unaudited)

(Dollars in thousands, except per share amounts)



























At or For The Quarters Ended
















Sep. 30


Jun. 30


Mar. 31


Dec. 31


Sep. 30




2012


2012


2012


2011


2011














Operating Results:











Net interest income

$      13,550


$      13,294


$      13,100


$      13,241


$      13,399


Loan loss provision

1,050


750


650


1,011


750


Non-interest income

2,511

(1)

2,570


2,573


2,570


2,423


Non-interest expense

11,192

(2)

11,468

(2)

11,275


10,718


11,001


Net income

2,929


2,582


2,849


2,980


3,085














Performance Ratios (annualized):











Return on average assets 

0.71%

(3)

0.62%

(3)

0.70%


0.74%


0.77%


Return on average equity

5.10%

(3)

4.53%

(3)

5.00%


5.24%


5.41%


Net interest margin

3.51%


3.44%


3.43%


3.51%


3.56%


Non-interest income to average total assets

0.61%

(4)

0.62%


0.63%


0.64%


0.60%


Non-interest expense to average total assets

2.71%

(5)

2.78%

(5)

2.77%


2.66%


2.74%


Efficiency ratio (6)

69.74%

(5)

73.04%

(5)

72.44%


68.41%


69.61%














Per Share Data:











Diluted earnings per share

$         0.20


$         0.17


$         0.19


$         0.20


$         0.20


Book value per share

$       14.88


$       14.70


$       14.57


$       14.47


$       14.36


Tangible book value per share

$       14.31

(7)

$       14.12

(7)

$       14.00

(7)

$       13.90

(7)

$       13.79

(7)

Market price at period end

$       14.47


$       14.38


$       15.82


$       16.09


$       13.69














Risk Profile











Equity as a percentage of assets

13.67%


13.80%


13.69%


14.00%


14.11%


Tangible equity as a percentage of tangible assets

13.21%

(7)

13.33%

(7)

13.22%

(7)

13.53%

(7)

13.63%

(7)

Net charge-offs to average loans outstanding (annualized)

0.09%


0.11%


0.16%


0.22%


0.23%


Non-performing assets as a percent of total assets

0.61%


0.68%


0.70%


0.65%


0.85%


Non-performing loans as a percent of total loans

0.73%


0.74%


0.79%


0.75%


1.00%


Allowance for loan losses as a percent of total loans

1.03%

(8)

1.01%

(8)

0.99%

(8)

0.99%

(8)

0.96%

(8)

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

140.49%


136.43%


125.65%


131.68%


96.22%














Average Balances











Loans

$ 1,178,802


$ 1,151,141


$ 1,133,543


$ 1,119,511


$ 1,113,672


Securities

338,352


340,086


338,405


346,939


358,929


Total interest-earning assets

1,543,779


1,547,132


1,526,015


1,509,079


1,503,940


Total assets

1,650,148


1,652,997


1,628,071


1,611,447


1,605,844


Deposits

1,254,148


1,256,780


1,231,285


1,211,957


1,186,530


FHLBB advances

103,915


103,632


105,302


111,762


132,544


Stockholders' Equity

229,614


227,855


227,854


227,678


228,278














Average Yields/Rates (annualized)











Loans

4.92%


4.93%


4.97%


5.18%


5.22%


Securities

3.01%


3.25%


3.37%


3.34%


3.62%


Total interest-earning assets

4.42%


4.39%


4.45%


4.62%


4.73%














Savings accounts

0.45%


0.51%


0.58%


0.69%


0.71%


Money market/NOW accounts

0.41%


0.45%


0.55%


0.62%


0.64%


Certificates of deposit 

1.74%


1.78%


1.82%


1.88%


1.91%


FHLBB advances

3.04%


3.16%


3.12%


3.17%


3.26%


Total interest-bearing liabilities

1.20%


1.24%


1.31%


1.43%


1.50%














(1)

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


(2)

Includes acquisition related expenses totaling $366,000 and $592,000 for the quarters ended September 30, 2012 and June 30, 2012. 


(3)

Exclusive of 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 0.80% and 0.77% and the return on average equity would have been 5.75% and 5.57%, respectively.




(4)

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.



(5)

Excluding acquisition related expenses totaling $366,000 and $592,000 for the quarters ended September 30, 2012 and  June 30, 2012, non-interest expense to average total assets would have been 2.62% and 2.63% and the efficiency ratio would have been 67.46% and 69.27%, respectively.  



(6)

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


(7)

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



(8)

Excluding acquired loans of $118.6 million, $126.4 million, $136.4 million, $146.0 million and $156.2 million, and loans purchased from other financial  institutions of $6.3 million, $6.4 million, $18.3 million, $19.1 million and $19.3 million at September 30, 2012, June 30, 2012, March 31, 2012, December 31, 2011 and September 30, 2011,  respectively, allowance for loan losses as a percent of total loans, gross would have been 1.15%, 1.14%, 1.15%,1.16% and 1.14% for the quarters ended September 30, 2012, June 30, 2012, March 31, 2012, December 31, 2011 and September 30, 2011, respectively. 





SOURCE United Financial Bancorp, Inc.



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