2014

United Financial Bancorp Reports Third Quarter 2010 Earnings of $2.7 Million, or $0.18 per Diluted Share; Declares Quarterly Dividend of $0.08 per Share

WEST SPRINGFIELD, Mass., Oct. 22 /PRNewswire-FirstCall/ -- United Financial Bancorp, Inc. (the "Company") (Nasdaq: UBNK), the holding company for United Bank (the "Bank"), reported net income of $2.7 million, or $0.18 per diluted share, for the third quarter of 2010 compared to net income of $1.9 million, or $0.13 per diluted share, for the corresponding period in 2009. Excluding expenses totaling $270,000 related to the acquisition of Commonwealth National Bank, net income would have been $2.2 million, or $0.14 per diluted share, for the third quarter of 2009.  For the nine months ended September 30, 2010, net income was $7.4 million, or $0.48 per diluted share, compared to net income of $4.6 million or $0.30 per diluted share, for the same period in 2009.   Excluding acquisition-related expenses of $1.1 million, losses from sales of securities totaling $189,000, impairment charges on securities of $145,000 and the related tax benefit of $446,000, net income would have been $8.4 million, or $0.54 per diluted share, in 2010.  Excluding non-deductible acquisition-related expenses totaling $1.4 million, net income would have been $6.0 million, or $0.39 per diluted share, for the comparable 2009 period.  The Company also announced a quarterly cash dividend of $0.08 per share, payable on December 7, 2010 to shareholders of record as of November 15, 2010.  

"We are pleased with our overall performance, which reflects improvement in net interest margin, growth in average loans and deposits, fee income expansion and a very positive contribution from our Worcester franchise," commented Richard B. Collins, President and Chief Executive Officer.  Mr. Collins further remarked that "we continue to diligently manage our asset quality while also focusing on executing our business plan and maintaining a healthy balance sheet, a substantial capital base and a strong liquidity level."  

Earnings Highlights

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, partially offset by 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.

Net interest income increased $3.2 million, or 32%, to $13.2 million for the third quarter of 2010 as a result of net interest margin expansion and an increase in average interest earning assets.  Net interest margin increased 26 basis points to 3.64% for the three months ended September 30, 2010, from 3.38% for the same period in 2009 due to amortization of certain acquisition accounting adjustments totaling $434,000 and improved spreads.  These items were partially offset by an increased cost to fund stock 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 $266 million, or 23%, to $1.447 billion for the third 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 $50,000, or 6%, to $750,000 for the three months ended September 30, 2010 driven by improvement in credit quality, a decrease in net loan originations and loan sales.

Non-interest income increased by $118,000, or 6%, to $2.1 million for the three months ended September 30, 2010 reflecting growth of $62,000, or 46%, in wealth management income and $38,000, or 3%, in fee income on deposit accounts.  The 2010 results include gains of $212,000 on sales of $21 million in lower coupon fixed rate residential mortgages and losses totaling $189,000 from sales of $3.0 million in substandard municipal securities as well as Fannie Mae and Freddie Mac stock.  

Non-interest expense grew $2.4 million, or 29%, to $10.5 million for the third quarter of 2010 from $8.1 million in the same period last year, in large part reflecting additional costs for the Worcester operations.  Salaries and benefits expense increased $1.5 million, or 32%, mainly reflecting the acquisition, and to a lesser extent, annual wage increases and a larger incentive accrual due to improved operating performance.  Professional fees increased $220,000, or 104%, primarily due to additional costs  associated with our Worcester operations, loan workout activities and third party loan reviews.  

Balance Sheet Activity:

Total assets were $1.545 billion, essentially flat in comparison to prior year end, reflecting declining loan balances offset by an increase in excess cash.

Total loans decreased $23.8 million, or 2%, to $1.098 billion at September 30, 2010 reflecting the impact of weak demand, loan prepayments and normal amortization on the residential real estate, construction and consumer portfolios.  The residential portfolio was also affected by the sale of $21 million in lower coupon, fixed-rate residential mortgages.  These items were offset in part by growth in commercial mortgages, commercial loans and home equity loans.

Total deposits increased $70.7 million, or 7%, to $1.110 billion at September 30, 2010 reflecting growth of $100.8 million, or 18%, in core account balances, partially offset by a decrease of $30.1 million, or 6%, in certificates of deposit.  The strong growth in core account balances was driven by the success of sales and marketing initiatives, particularly in our new Worcester market, competitive products and pricing and excellent customer service.  Core deposit balances were $661.4 million, or 60% of total deposits at September 30, 2010 compared to $560.7 million, or 54.0% at December 31, 2009.

Short-term borrowing decreased $13.4 million, or 18% and long-term debt declined $51.0 million, or 28% mainly due to the use of proceeds from the sales of loans and mortgage-backed securities to pay down FHLB advances.

Credit Quality/Reserve Coverage:

Non-performing assets totaled $12.9 million, or 0.83% of total assets, at September 30, 2010 compared to $17.9 million, or 1.16% of total assets, at December 31, 2009.  The Company's total non-performing assets at December 31, 2009 included a $3.5 million commercial real estate loan, which was restructured during the first quarter of 2010.  This loan is classified as a performing 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.  

Excluding the $219.9 million outstanding balance of loans acquired from Commonwealth National Bank and $21.8 million outstanding balance of loans purchased from other financial institutions, the ratio of the allowance for loan losses to total loans would have been 1.16% at September 30, 2010.  Excluding the $2.4 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 107.49% at September 30, 2010.  For the quarter ended September 30, 2010, net charge-offs totaled $527,000 or 0.19% of average loans outstanding on an annualized basis.  

Capital and Liquidity:

Total equity declined $3.2 million, or 1.4%, to $222 million at September 30, 2010 driven by the repurchase of 668,454 shares of common stock at a total cost of $10.1 million and dividends of $3.4 million, partially offset by net income of $7.4 million, stock based incentive plan expenses of $1.8 million and an increase in net unrealized gains on securities of $641,000.  The Company remains well capitalized with a tangible equity-to-tangible assets ratio of 14.01% at September 30, 2010.  At September 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.

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)






















September 30,


December 31,


September 30,

Assets


2010


2009


2009



(unaudited)


(audited)


(unaudited)








Cash and cash equivalents


$53,622


$21,877


$12,978

Short-term investments


-


1,096


1,091

Investment securities  


303,203


306,478


281,136

Loans held for sale


1,020


-


-








Loans:







Residential mortgages


307,467


343,300


327,765

Commercial mortgages


433,250


409,680


289,196

Construction loans


35,522


48,808


32,903

Commercial loans


161,482


159,437


88,307

Home equity loans


140,382


137,371


123,807

Consumer loans


20,313


23,645


24,831

Total loans


1,098,416


1,122,241


886,809








Net deferred loan costs and fees


2,308


2,355


2,131

Allowance for loan losses


(9,945)


(9,180)


(9,497)

Loans, net


1,090,779


1,115,416


879,443








Federal Home Loan Bank of Boston stock, at cost


15,365


15,365


12,223

Other real estate owned


1,200


1,545


556

Deferred tax asset, net


11,732


11,295


10,026

Premises and equipment, net


15,454


15,935


14,046

Bank-owned life insurance


28,844


28,476


28,143

Goodwill


7,981


7,844


-

Other assets


15,693


15,713


7,831








Total assets


$1,544,893


$1,541,040


$1,247,473








Liabilities and Stockholders' Equity









Deposits:


Demand


$171,022


$154,374


$115,216

NOW


39,361


42,262


31,783

Savings


193,868


174,270


134,784

Money market


257,184


189,763


190,145

Certificates of deposit


448,182


478,258


368,397

Total deposits


1,109,617


1,038,927


840,325








Short-term borrowings


62,127


75,488


28,946

Long-term debt


129,003


179,988


146,526

Subordinated debentures


5,425


5,357


-

Escrow funds held for borrowers


2,025


1,977


2,130

Capitalized lease obligations


5,044


5,141


5,173

Accrued expenses and other liabilities


9,617


8,916


7,939

Total liabilities


1,322,858


1,315,794


1,031,039








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, 2010 and December 31, 2009;    







17,763,747 at September 30, 2009  


187


187


178

Additional paid-in capital


179,731


178,666


166,326

Retained earnings


81,425


77,456


77,609

Unearned compensation


(10,923)


(11,441)


(11,613)

Accumulated other comprehensive income, net of taxes


5,720


5,358


5,394

Treasury stock, at cost (2,536,789 shares at September 30, 2010, 1,868,335







shares at December 31, 2009 and 1,594,302 shares at September 30, 2009)  


(34,105)


(24,980)


(21,460)

Total stockholders' equity


222,035


225,246


216,434








Total liabilities and stockholders' equity


$1,544,893


$1,541,040


$1,247,473



UNITED FINANCIAL BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED INCOME STATEMENTS

(Amounts in thousands, except per share amounts)


















Three Months Ended  


Nine Months Ended  


September 30,


September 30,


2010


2009


2010


2009


(unaudited)


(unaudited)

Interest and dividend income:








Loans

$15,406


$12,036


$46,267


$35,808

Investments

2,972


3,282


9,386


10,543

Other interest-earning assets

17


7


35


24

Total interest and dividend income

18,395


15,325


55,688


46,375









Interest expense:








Deposits

3,501


3,454


10,383


10,923

Borrowings

1,727


1,897


5,355


5,780

Total interest expense

5,228


5,351


15,738


16,703









Net interest income before provision for loan losses

13,167


9,974


39,950


29,672









Provision for loan losses

750


800


1,933


2,015









Net interest income after provision for loan losses

12,417


9,174


38,017


27,657









Non-interest income:








Net gain on sales of loans

212


-


409


363

Net (losses) gains on sales of securities

(189)


-


(189)


461

Impairment charges on securities

-


-


(145)


-

Fee income on depositors’ accounts

1,295


1,257


4,006


3,526

Wealth management income

198


136


503


480

Income from bank-owned life insurance

340


372


1,026


1,026

Other income

247


220


749


575

Total non-interest income

2,103


1,985


6,359


6,431









Non-interest expense:








Salaries and benefits

6,121


4,625


18,167


13,904

Occupancy expenses

830


598


2,557


1,904

Marketing expenses

399


337


1,581


1,093

Data processing expenses

1,023


877


3,049


2,518

Professional fees

431


211


1,330


929

Acquisition related expenses

-


270


1,148


1,431

FDIC insurance assessments

365


83


1,105


1,313

Other expenses

1,287


1,092


4,168


3,186

Total non-interest expense

10,456


8,093


33,105


26,278









Income before income taxes

4,064


3,066


11,271


7,810









Income tax expense

1,387


1,165


3,910


3,226









Net income

$  2,677


$  1,901


$  7,361


$  4,584









Earnings per share:








Basic

$    0.18


$    0.13


$    0.48


$    0.30

Diluted

$    0.18


$    0.13


$    0.48


$    0.30









Weighted average shares outstanding:








Basic

15,132


14,998


15,395


15,293

Diluted

15,224


15,005


15,467


15,303



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



2010


2010


2010


2009


2009













Operating Results:











Net interest income

$      13,167


$      13,287


$      13,496


$    11,328


$      9,974


Loan loss provision

750


450


733


983


800


Non-interest income

2,103


2,219


2,037


2,245


1,985


Non-interest expense

10,456


10,631

(1)

12,018

(1)

10,580

(1)

8,093

(1)

Net income

2,677


2,933


1,751


1,222


1,901













Performance Ratios (annualized):











Return on average assets

0.70%


0.77%


0.46%

(2)

0.36%

(2)

0.61%

(2)

Return on average equity

4.80%


5.24%


3.12%

(2)

2.23%

(2)

3.55%

(2)

Net interest margin

3.64%


3.69%


3.76%


3.53%


3.38%


Non-interest income to average total assets

0.55%


0.58%


0.53%


0.67%


0.64%


Non-interest expense to average total assets

2.73%


2.79%

(3)

3.14%

(3)

3.14%

(3)

2.60%

(3)

Efficiency ratio (4)

68.58%


69.05%

(3)

77.09%

(3)

77.95%

(3)

67.67%

(3)












Per Share Data:











Diluted earnings per share

$          0.18


$          0.19


$          0.11


$        0.08


$        0.13


Tangible book value per share

$        13.24

(5)

$        13.17

(5)

$        12.93

(5)

$      12.93

(5)

$      13.39


Market price at period end

$        13.51


$        13.65


$        13.98


$      13.11


$      11.58













Risk Profile











Tangible equity as a percentage of tangible assets

13.93%

(5)

14.01%

(5)

14.39%

(5)

14.18%

(5)

17.35%


Net charge-offs to average loans outstanding (annualized)

0.19%


0.12%


0.11%


0.54%


0.12%


Non-performing assets as a percent of total assets

0.83%


1.20%


1.22%


1.16%


0.92%


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

1.06%


1.19%


1.49%


1.45%


1.23%


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

0.90%

(6)

0.89%

(6)

0.87%

(6)

0.82%

(6)

1.07%


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

85.30%

(7)

74.58%

(7)

58.38%

(7)

56.36%

(7)

86.73%













Average Balances











Loans

$ 1,091,859


$ 1,100,409


$ 1,112,329


$  960,921


$  878,683


Securities

298,335


294,849


302,916


289,393


279,442


Total interest-earning assets

1,447,147


1,439,677


1,434,256


1,282,187


1,181,647


Total assets

1,533,489


1,526,154


1,529,209


1,349,727


1,243,906


Deposits

1,095,764


1,084,885


1,038,374


917,022


828,153


FHLBB advances

155,987


158,333


202,644


160,455


155,946


Stockholders' Equity

222,995


223,928


224,786


219,650


214,300













Average Yields/Rates (annualized)











Loans

5.64%


5.60%


5.56%


5.51%


5.48%


Securities

3.98%


4.24%


4.35%


4.65%


4.70%


Total interest-earning assets

5.08%


5.15%


5.23%


5.18%


5.19%













Savings accounts

0.86%


0.96%


0.93%


0.96%


1.08%


Money market/NOW accounts

0.86%


0.87%


0.81%


0.87%


1.04%


Certificates of deposit

2.21%


2.14%


2.12%


2.56%


2.79%


FHLBB advances

3.61%


3.57%


3.06%


4.07%


4.22%


Total interest-bearing liabilities

1.85%


1.86%


1.85%


2.14%


2.37%















(1)     Includes acquisition related expenses totaling $169,000, $979,000, $1.4 million and $270,000 for the quarters ended June and March 2010 and December and September 2009, respectively.

(2)     Excluding acquisition related expenses totaling $808,000 (after tax), $1.1 million (after tax) and $270,000 for the quarters ended March 2010 and December and September 2009, respectively, the return on average assets would have been 0.67%, 0.69% and 0.70% and average equity would have been 4.55%, 4.22% and 4.05%, respectively. The total acquisition related expenses for the quarter ended September 2009 was non-deductible.

(3)     Excluding acquisition related expenses totaling $169,000, $979,000, $1.4 million and $270,000 for the quarters ended June and March 2010 and December and September 2009, respectively, non-interest expense to average total assets would have been 2.74%, 2.89%, 2.71% and 2.52% and the efficiency ratio would have been 67.95%, 70.81%, 67.40% and 65.42%, respectively.

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

(5)     Excludes the impact of goodwill of $8.0 million at September 2010, $7.7 million at June and March 2010 and $7.8 million at December 2009.

(6)     Excluding acquired loans of $219.9 million, $228.8 million, $240.5 million and $242.9 million and loans purchased from other financial institutions of $21.8 million,  $22.1 million, $22.4  million and $22.7 million at September, June and March 2010 and December 2009, respectively, allowance for loan losses as a percent of total loans, gross would have been 1.16% for the quarters ended September 2010, 1.15% for the quarters ended June and March 2010 and 1.07% for the quarter ended December 2009.

(7)     Excluding non-performing acquired loans of $2.4 million at September 2010, $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 107.49%, 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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