United Financial Bancorp Reports Third Quarter 2011 Earnings of $3.1 Million, or $0.20 Per Diluted Share Announces Quarterly Dividend Payment of $0.09 Per Share

WEST SPRINGFIELD, Mass., Oct. 21, 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 $3.1 million, or $0.20 per diluted share, for the third quarter of 2011 compared to net income of $2.7 million, or $0.18 per diluted share, for the corresponding period in 2010.  For the nine months ended September 30, 2011, net income was $8.2 million, or $0.54 per diluted share, compared to net income of $7.4 million, or $0.48 per diluted share, for the same period in 2010. The Company also announced a quarterly cash dividend of $0.09 per share, payable on December 6, 2011 to shareholders of record as of November 14, 2011.  

"Despite a challenging economic environment, a very competitive local market and loan pricing pressures, we are able to report solid third quarter results," commented Richard B. Collins, President and Chief Executive Officer. "During the quarter we continued to implement strategies to grow our market share, improve our financial performance and enhance shareholder value."

Earnings Summary

  • Net interest income increased $232,000, or 2%, to $13.4 million for the third quarter of 2011 driven by growth in average interest-earning assets, offset in part by net interest margin compression.  Total average interest-earning assets increased $56.8 million, or 4%, to $1.504 billion reflecting growth in investment securities and loan balances.  Net interest margin declined 8 basis points to 3.56% for the three months ended September 30, 2011 compared to the previous year reflecting the downward re-pricing of certain fixed rate loans and investments as a result of the lower interest rate environment.  The lower yield on earning assets was partially offset by lower funding costs.

  • Non-interest income increased $320,000, or 15%, to $2.4 million for the three months ended September 30, 2011.  Excluding a $33,000 impairment charge on a security in 2011 and an $189,000 loss on sales of securities in 2010, non-interest income would have increased $164,000, or 7%, compared to the same period last year.  The growth in non-interest income was primarily due to an increase of $128,000, or 38%, in bank owned life insurance income reflecting the purchase of additional insurance in May 2011 and an increase of $125,000, or 10%, in fee income on depositor's accounts driven by higher ATM and debit card fees. These positive results were partially reduced by lower gains from sales of loans.    

  • Non-interest expense increased $545,000, or 5%, to $11.0 million for the three months ended September 30, 2011 from $10.5 million in the same period last year.  Other expenses increased $371,000, or 29%, primarily as a result of higher levels of other real estate owned costs and write-downs of mortgage servicing rights. Non-interest expenses for the third quarter of 2011 also include write-downs of an investment in a low-income housing tax credit fund totaling $232,000. Professional services costs increased $142,000, or 33%, mainly due to higher legal expenses incurred in connection with litigation, which was settled favorably during the third quarter of 2011. Salaries and benefits increased $57,000, or 1%, primarily due to annual wage increases and staffing costs related to the new loan production office opened in 2011, offset to a large extent by lower stock-based compensation expense as a result of the full vesting of August 2006 awards and an increase in deferred origination expenses related to higher loan origination volume. These items were partially offset by a $128,000, or 35%, 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 $401,000, or 29%, to $986,000 for the three months ended September 30, 2011 from $1.4 million in the same period last year primarily due to a lower effective tax rate.  The Company's effective tax rate decreased from 34% in the third quarter of 2010 to 24% for the third 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 $21.7 million, or 1%, to $1.607 billion at September 30, 2011 from December 31, 2010 reflecting growth in loans, investment securities and bank-owned life insurance, offset in part by declining cash balances.

  • Investment securities grew $16.6 million, or 5%, to $354.9 million at September 30, 2011 due to the use of excess cash to fund additional purchases of agency mortgage-backed securities.

  • Total loans increased by $44.6 million, or 4%, to $1.119 billion at September 30, 2011 as a result of an increase in net origination activity in the residential real estate, commercial real estate and commercial portfolios reflecting business development efforts, competitive products and pricing and the establishment of a loan production office in Beverly, Massachusetts during the second quarter of 2011.

  • Cash and cash equivalents decreased $54.3 million, or 65%, to $28.7 million at September 30, 2011 as excess cash was used to fund investment security purchases and pay down maturing FHLB advances.

  • Total deposits increased $56.3 million, or 5%, to $1.2 billion at September 30, 2011 reflecting growth of $88.4 million, or 13%, in core account balances, offset in part by a decrease of $32.1 million, or 7%, in certificates of deposit.  Core deposit balances were $769.0 million, or 64% of total deposits, at September 30, 2011 compared to $680.7 million, or 60% of total deposits, at December 31, 2010.

  • Long-term debt decreased $40.2 million, or 23% to $133.2 million at September 30, 2011 mainly due to the use of excess cash balances to retire maturing FHLB advances.

Credit Quality & Reserve Coverage

  • Non-performing assets totaled $13.7 million, or 0.85% of total assets, at September 30, 2011 compared to $11.0 million, or 0.69% of total assets, at December 31, 2010.  The increase of $2.7 million in non-performing assets was due to several new non-accrual loans and other real estate owned properties.    

  • At September 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 $175.5 million at September 30, 2011 and $231.2 million at December 31, 2010, the ratio of the allowance for loan losses to total loans would have been 1.14% at September 30, 2011 and 1.18% at December 31, 2010.  Net charge-offs totaled $1.5 million, or 0.18% of average loans outstanding (annualized), for the nine months ended September 30, 2011 as compared to net charge-offs of $1.2 million, or 0.14% 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 13.63% at September 30, 2011.  During the third quarter of 2011, the Company repurchased 309,800 shares at an average cost of $14.93 under the current plan approved in October, 2010.

  • At September 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 September 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.  

UNITED FINANCIAL BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CONDITION

(Dollars in thousands, except per share amounts)






















September 30,


December 31,


September 30,

Assets


2011


2010


2010



(unaudited)


(audited)


(unaudited)








Cash and cash equivalents


$28,749


$83,069


$53,622

Investment securities  


354,892


338,327


303,203

Loans held for sale


522


-


1,020








Loans:







Residential mortgages


319,157


295,721


307,467

Commercial mortgages


440,521


427,994


433,250

Construction loans


28,928


27,553


35,522

Commercial loans


176,188


165,335


161,482

Home equity loans


138,060


138,290


140,382

Consumer loans


15,887


19,218


20,313

Total loans


1,118,741


1,074,111


1,098,416








Net deferred loan costs and fees


2,133


2,073


2,308

Allowance for loan losses


(10,741)


(9,987)


(9,945)

Loans, net


1,110,133


1,066,197


1,090,779








Federal Home Loan Bank of Boston stock, at cost


15,365


15,365


15,365

Other real estate owned


2,490


1,536


1,200

Deferred tax asset, net


9,579


11,029


11,732

Premises and equipment, net


16,488


15,565


15,454

Bank-owned life insurance


40,264


29,180


28,844

Goodwill


8,192


8,192


7,981

Other intangible assets


805


975


987

Other assets


19,079


15,442


14,706








Total assets


$1,606,558


$1,584,877


$1,544,893








Liabilities and Stockholders' Equity











Deposits:




Demand


$191,829


$175,996


$171,022

NOW


44,544


40,922


39,361

Savings


243,125


203,165


193,868

Money market


289,545


260,573


257,184

Certificates of deposit


430,523


462,645


448,182

Total deposits


1,199,566


1,143,301


1,109,617








Short-term borrowings


24,632


21,029


15,993

Long-term debt


133,157


173,307


175,137

Subordinated debentures


5,516


5,448


5,425

Escrow funds held for borrowers


2,221


1,899


2,025

Due to broker


700


3,002


-

Capitalized lease obligations


4,909


5,011


5,044

Accrued expenses and other liabilities


9,101


9,304


9,617

Total liabilities


1,379,802


1,362,301


1,322,858








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, 2011, December 31, 2010 and September 30, 2010  


187


187


187

Additional paid-in capital


182,122


180,322


179,731

Retained earnings


87,358


82,899


81,425

Unearned compensation


(10,233)


(10,750)


(10,923)

Accumulated other comprehensive income, net of taxes


7,076


4,858


5,720

Treasury stock, at cost (2,916,427 shares at September 30, 2011,







2,597,827 shares at December 31, 2010







and 2,536,789 shares at September 30, 2010)  


(39,754)


(34,940)


(34,105)

Total stockholders' equity


226,756


222,576


222,035








Total liabilities and stockholders' equity


$1,606,558


$1,584,877


$1,544,893



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,


2011


2010


2011


2010


(unaudited)


(unaudited)

Interest and dividend income:








Loans

$14,529


$15,406


$43,719


$46,267

Investments

3,249


2,972


9,827


9,386

Other interest-earning assets

22


17


100


35

Total interest and dividend income

17,800


18,395


53,646


55,688









Interest expense:








Deposits

3,014


3,501


9,505


10,383

Borrowings

1,387


1,727


4,569


5,355

Total interest expense

4,401


5,228


14,074


15,738









Net interest income before provision for loan losses

13,399


13,167


39,572


39,950









Provision for loan losses

750


750


2,231


1,933









Net interest income after provision for loan losses

12,649


12,417


37,341


38,017









Non-interest income:








Fee income on depositors’ accounts

1,420


1,295


4,085


4,006

Wealth management income

248


198


702


503

Income from bank-owned life insurance

468


340


1,192


1,026

Net gain on sales of loans

51


212


124


409

Net gain (loss) on sales of securities

-


(189)


1


(189)

Impairment charges on securities

(33)


-


(92)


(145)

Other income

269


247


771


749

Total non-interest income

2,423


2,103


6,783


6,359









Non-interest expense:








Salaries and benefits

6,178


6,121


18,861


18,167

Occupancy expenses

823


830


2,472


2,557

Marketing expenses

339


399


1,421


1,581

Data processing expenses

961


1,023


2,933


3,049

Professional fees

573


431


1,641


1,330

Acquisition related expenses

-


-


-


1,148

FDIC insurance assessments

237


365


811


1,105

Low income housing tax credit fund

232


-


627


-

Other expenses

1,658


1,287


4,578


4,168

Total non-interest expense

11,001


10,456


33,344


33,105









Income before income taxes

4,071


4,064


10,780


11,271









Income tax expense

986


1,387


2,576


3,910









Net income

$  3,085


$  2,677


$  8,204


$  7,361









Earnings per share:








Basic

$    0.21


$    0.18


$    0.55


$    0.48

Diluted

$    0.20


$    0.18


$    0.54


$    0.48









Weighted average shares outstanding:








Basic

14,952


15,132


14,998


15,395

Diluted

15,207


15,224


15,258


15,467



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



2011


2011


2011


2010


2010













Operating Results:











Net interest income

$      13,399


$      13,382


$      12,791


$      12,961


$      13,167


Loan loss provision

750


673


808


352


750


Non-interest income

2,423


2,211


2,149


2,357


2,103


Non-interest expense

11,001


11,403


10,940


10,736


10,456


Net income

3,085


2,690


2,429


2,671


2,677













Performance Ratios (annualized):











Return on average assets

0.77%


0.67%


0.62%


0.69%


0.70%


Return on average equity

5.41%


4.76%


4.36%


4.80%


4.80%


Net interest margin

3.56%


3.55%


3.42%


3.53%


3.64%


Non-interest income to average total assets

0.60%


0.55%


0.54%


0.61%


0.55%


Non-interest expense to average total assets

2.74%


2.85%


2.77%


2.76%


2.73%


Efficiency ratio

69.61%

(1)

73.09%

(1)

73.34%

(1)

70.86%

(1)

68.58%

(1)












Per Share Data:











Diluted earnings per share

$          0.20


$          0.18


$          0.16


$          0.18


$          0.18


Book Value Per Share

$        14.36


$        14.15


$        13.92


$        13.82


$        13.73


Tangible book value per share

$        13.79

(2)

$        13.58

(2)

$        13.35

(2)

$        13.25

(2)

$        13.18

(2)

Market price at period end

$        13.69


$        15.43


$        16.51


$        15.27


$        13.51













Risk Profile











Equity as a percentage of assets

14.11%


14.15%


14.01%


14.04%


14.37%


Tangible equity as a percentage of tangible assets

13.63%

(2)

13.66%

(2)

13.51%

(2)

13.54%

(2)

13.87%

(2)

Net charge-offs to average loans outstanding (annualized)

0.23%


0.18%


0.12%


0.11%


0.19%


Non-performing assets as a percent of total assets

0.85%


0.77%


0.62%


0.69%


0.83%


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

1.00%


0.86%


0.76%


0.88%


1.06%


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

0.96%

(3)

0.96%

(3)

0.95%

(3)

0.93%

(3)

0.90%

(3)

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

96.22%


112.01%


125.20%


105.86%


85.30%













Average Balances











Loans

$ 1,113,672


$ 1,103,305


$ 1,090,796


$ 1,091,756


$ 1,091,859


Securities

358,929


356,479


341,804


310,024


298,335


Total interest-earning assets

1,503,940


1,509,438


1,493,946


1,470,127


1,447,147


Total assets

1,605,844


1,602,767


1,579,048


1,555,266


1,533,489


Deposits

1,186,530


1,179,166


1,145,296


1,115,775


1,095,764


FHLBB advances

132,544


138,215


147,880


153,965


155,987


Stockholders' Equity

228,278


226,279


223,067


222,749


222,995













Average Yields/Rates (annualized)











Loans

5.22%


5.33%


5.31%


5.60%


5.64%


Securities

3.62%


3.80%


3.73%


3.68%


3.98%


Total interest-earning assets

4.73%


4.80%


4.74%


4.94%


5.08%













Savings accounts

0.71%


0.76%


0.77%


0.87%


0.86%


Money market/NOW accounts

0.64%


0.70%


0.71%


0.84%


0.86%


Certificates of deposit

1.91%


1.99%


2.06%


2.16%


2.21%


FHLBB advances

3.26%


3.60%


3.52%


3.62%


3.61%


Total interest-bearing liabilities

1.50%


1.61%


1.68%


1.83%


1.85%















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


(3)  Excluding acquired loans of $156.2 million, $168.6 million, $178.7 million, $209.8 million and $219.9 million and loans purchased from other financial  institutions of $19.3 million, $20.8 million, $21.1 million, $21.4 million and $21.8 million at September 30, 2011, June 30, 2011, March 31, 2011, December 31, 2010, and September 30, 2010,  respectively, allowance for loan losses as a percent of total loans, gross would have been 1.14%, 1.16%, 1.17%, 1.18%, and 1.16% for the quarters ended September 30, 2011, June 30, 2011, March 31, 2011, December 31, 2010 and September 30, 2010, respectively.    



For More Information Contact:

Mark A. Roberts
Executive Vice President & CFO
(413) 787-1700

SOURCE United Financial Bancorp, Inc.



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