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United Financial Bancorp, Inc. Announces Second Quarter Results and Quarterly Dividend

By GlobeNewswire,  July 16, 2019, 04:17:00 PM EDT


HARTFORD, Conn., July 16, 2019 (GLOBE NEWSWIRE) -- United Financial Bancorp, Inc. ("United Financial" or the "Company") (NASDAQ Global Select Stock Market: "UBNK"), the holding company for United Bank (the "Bank"), announced results for the quarter ended June 30, 2019.

The Company reported a net loss of $3.2 million, or $0.06 per diluted share, for the quarter ended June 30, 2019, compared to net income for the quarter ended March 31, 2019 ("linked quarter") of $12.7 million, or $0.25 per diluted share. The net loss for the current quarter was primarily due to an impairment charge recorded on the Company's investments in D.C. Solar LLCs of $6.3 million (after tax) and the related establishment of an additional tax reserve of $8.7 million during the three months ended June 30, 2019.  The Company reported net income of $15.6 million, or $0.31 per diluted share, for the quarter ended June 30, 2018.

On July 15, 2019, United Financial and People's United Financial, Inc. announced the signing of a definitive agreement and plan of merger pursuant to which United Financial will merge with and into People's United Financial, Inc., with People's United Financial, Inc. surviving the merger, in an all stock transaction valued at approximately $759.0 million as of July 15, 2019. Subject to the satisfaction or waiver of customary closing conditions, including the approval of the merger agreement by United Financial shareholders and the receipt of required regulatory approvals, United Financial and People's United Financial, Inc. expect that the merger will be completed during the fourth quarter of 2019.

Balance Sheet

Assets totaled $7.34 billion at both June 30, 2019 and March 31, 2019. At June 30, 2019, total available for sale securities were $840.5 million, representing a decrease of $8.0 million, or 0.9%, from the linked quarter. The overall decrease was primarily due to sales of lower yielding, higher risk weighted securities, offset by purchases of various mortgage-backed securities and corporate bonds. At June 30, 2019, total loans were $5.76 billion, representing an increase of $23.6 million, or 0.4%, from the linked quarter. Changes to loan balances during the second quarter of 2019 were highlighted by a $39.0 million, or 2.0%, increase in investor non-owner occupied commercial real estate loans, a $20.3 million, or 4.6%, increase in owner-occupied commercial real estate loans and a $13.6 million, or 3.2%, increase in other consumer loans.  Slightly offsetting the increased loan balances above were a $16.2 million, or 1.2%, decrease in residential real estate loans, a $14.6 million, or 15.4%, decrease in commercial construction loans, a $9.7 million, or 1.1%, decrease in commercial business loans, a $7.7 million, or 1.3%, decrease in home equity loans and a $1.1 million, or 7.9%, decrease in residential construction loans from the linked quarter. Loans held for sale increased $22.6 million, or 140.0%, from the linked quarter due to a change in pipeline delivery terms. Total cash and cash equivalents decreased $40.4 million, or 26.1%, from the linked quarter as the Company utilized excess cash to pay off maturing Federal Home Loan Bank advances.

Deposits totaled $5.73 billion at June 30, 2019 and increased by $62.3 million, or 1.1%, from $5.66 billion at March 31, 2019. Increases in deposit balances during the second quarter of 2019 were primarily due to a $66.0 million, or 8.5%, increase in non-interest bearing checking deposits and a $40.6 million, or 2.5%, increase in money market account balances, largely due to seasonal inflows that are typical of commercial DDA accounts in the second quarter. Offsetting these increases was a $22.9 million, or 2.5%, decrease in NOW checking account balances, a $12.4 million, or 2.5%, decrease in regular savings accounts and a $9.3 million, or 0.5%, decrease in certificates of deposit balances.

Total Federal Home Loan Bank advances decreased by $85.2 million, or 11.6%, over the linked quarter as the Company utilized excess cash generated from proceeds from sales of investment securities to pay off maturing advances as noted above.

Investment in D.C. Solar Tax-Advantaged Funds

The Company continues to monitor developments in its investments in Solar Eclipse Investment Fund X, LLC, Solar Eclipse Investment Fund XV, LLC, and Solar Eclipse Investment Fund XXII, LLC ("LLC investments"), all of which are borrowers of and lessees to D.C. Solar Solutions, Inc. and D.C. Solar Distribution, Inc., respectively. In late January and early February, 2019, D.C Solar Solutions, Inc., D.C. Solar Distribution, Inc. and several affiliated companies filed for Chapter 11 bankruptcy. On March 22, 2019, all cases were converted to cases under Chapter 7 of the Bankruptcy Code.

During the three months ended June 30, 2019, the Company recorded an impairment charge to the investment in the LLCs of $6.3 million (after tax) and an additional tax reserve of $8.7 million to reflect the loss and the associated uncertain tax positions.  The net impact to net income for the three months ended June 30, 2019 was $15.0 million.  At this time, no additional measurable loss has been identified, but the Company believes an additional loss is more likely than not. Given the facts and circumstances that we are aware of at the time of the filing of this release, the Company does not believe a full loss or total tax benefit reversal to be likely.

Net Interest Income

Net interest income increased by $73,000, or 0.2%, on a linked quarter basis, to $47.0 million, primarily attributable to an increase in interest and dividend income of $191,000, or 0.3%, to $73.4 million being partially offset by an increase in interest expense of $118,000, or 0.4%, to $26.4 million. Average interest-earning assets decreased by $77.4 million, or 1.1%, on a linked quarter basis, primarily due to a decrease in average investment balances, which decreased by $120.1 million, or 12.4%, as the result of a deleveraging strategy executed at the end of March. This decrease was offset by average loan balance growth, which was driven by a $28.5 million, or 3.2%, increase in average commercial business loans, a $20.4 million, or 0.9%, increase in average commercial real estate loans and a $15.9 million, or 3.8%, increase in average other consumer loans. Slightly offsetting the increases was a $29.3 million, or 2.1%, decrease in average residential real estate loans, a $6.1 million, or 1.1%, decrease in average home equity loans and a $5.4 million, or 4.9%, decrease in average construction loans.

Interest expense increased by $118,000, or 0.4%, to $26.4 million during the second quarter of 2019, from $26.3 million in the linked quarter. Average interest-bearing deposit balances decreased by $39.5 million, or 0.8%, on a linked quarter basis, primarily driven by a $50.4 million, or 2.0%, decrease in average NOW and money market account balances, slightly offset by a $6.9 million, or 0.4%, increase in average certificates of deposit and a $4.0 million, or 0.8%, increase in average savings account balances. Average non-interest bearing deposits increased by $51.2 million, or 6.9%, as compared to the linked quarter. Average Federal Home Loan Bank advances decreased by $106.8 million, or 13.3%.

The tax-equivalent net interest margin increased by 1 basis point to 2.82% in the second quarter of 2019, from 2.81% in the linked period. The increase in the tax-equivalent net interest margin was driven by a 2 basis point increase in the yield of interest-earning assets slightly offset by a 3 basis point increase in the cost of interest-bearing liabilities. The interest-earning asset yield improvement was largely driven by an 18 basis point increase in the yield on commercial business loans, a 6 basis point increase in the yield on construction loans and a 6 basis point increase in the yield on other consumer loans.  These increases were offset by a 7 basis point decrease in the yield on home equity loans, a 6 basis point decrease in the yield on commercial real estate loans and a 2 basis point decrease in the yield on residential real estate loans. In addition, there was a 3 basis point increase in the yield of the investment portfolio. The total cost of funds increased by 3 basis points to 1.64% in the second quarter of 2019 driven by a 5 basis point increase in the cost of interest-bearing deposits and a 7 basis point increase in the cost of Federal Home Loan Bank advances.

Provision for Loan Losses

The provision for loan losses totaled $2.5 million for the quarter ended June 30, 2019 as compared to $2.0 million for the linked quarter. Net charge-offs for the quarter ended June 30, 2019 totaled $1.3 million, or 0.09%, as a percentage of average loans outstanding, as compared to $1.6 million, or 0.11%, as a percentage of average loans for the quarter ended March 31, 2019. Factors considered in the provision for loan losses include, but are not limited to, historical charge-offs, the composition of the portfolio, the current level of non-performing loans and charge-offs, local and national economic and credit conditions, the direction of real estate values and delinquency trends.

Non-Interest Income

Total non-interest income decreased by $8.1 million, or 90.6%, to $840,000 for the quarter ended June 30, 2019 from $9.0 million in the linked quarter. The decrease in the second quarter's non-interest income was driven primarily by a change of $7.3 million in net loss on limited partnership investments as compared to the linked quarter, due mainly to the $7.8 million impairment charge on the D.C. Solar LLC investments discussed above, a $1.0 million, or 169.4%, decrease in income from mortgage banking activities, a decrease of  $600,000, or 81.4%, in net gain from sales of securities and a decrease of $425,000, or 21.8%, in bank-owned life insurance income as compared to the linked quarter.  These decreases were slightly offset by an increase of $1.4 million, or 21.9%, in service charges and fee income primarily resulting from higher swap fee income as compared to the linked quarter.

Non-Interest Expense

Non-interest expense for the quarter ended June 30, 2019 totaled $39.5 million and increased by $270,000, or 0.7%, from the linked quarter. The increase in non-interest expense during the quarter was driven by a $1.1 million, or 86.70%, increase in professional fees largely due to legal expenses pertaining to the proposed acquisition by People's United Financial, Inc. and D.C. Solar, offset by a $279,000, or 1.3%, decrease in salaries and employee benefits expense and a $429,000, or 7.7%, decrease in occupancy and equipment expense as compared to the linked quarter.

Provision for Income Taxes

The provision for income taxes was $9.2 million for the quarter ended June 30, 2019 as compared to $2 million in the linked quarter.  The effective tax rate was 154.9% at June 30, 2019 as compared to 13.8% at March 31, 2019.  The effective tax rate is higher compared to the linked quarter due to the recognition of uncertain tax positions of $8.7 million associated with D.C. Solar as discussed above.

Asset Quality

Asset quality remained strong and stable for the period, with non-performing assets increasing by $1.4 million to $32.0 million at June 30, 2019 from $30.6 million at March 31, 2019. The ratio of non-performing assets to total assets for the quarter ended June 30, 2019 was 0.44%, as compared to 0.42% in the linked quarter.

Capital

The Company reported Tangible Common Equity ("TCE") of $598.1 million, or 8.2% of average assets, for the quarter ended June 30, 2019. Tangible book value per share decreased to $11.71 at June 30, 2019 from $11.78 at March 31, 2019. The decrease was primarily driven by the impact of the Company's net loss of $3.2 million and the cash dividend payment to shareholders of $0.12 per share during the quarter, offset by an increase in accumulated other comprehensive income as a result of an increase in the market value of the Company's investment portfolio as compared to the previous quarter. Book value per share at June 30, 2019 was $14.09, as compared to $14.17 in the linked quarter.

Dividend

The Board of Directors declared a cash dividend on the Company's common stock of $0.12 per share to shareholders of record at the close of business on July 26, 2019 and payable on August 7, 2019. This dividend equates to a 3.51% annualized yield based on the $13.68 average closing price of the Company's common stock in the second quarter of 2019. The Company has paid dividends for 53 consecutive quarters.

About United Financial Bancorp, Inc.

United Financial Bancorp, Inc. is the holding company for United Bank, a full service financial services firm offering a complete line of commercial, small business, wealth management and consumer banking products and services to customers throughout Connecticut, Massachusetts and Rhode Island. United Bank is a financially strong, leading New England bank headquartered in Hartford, Connecticut with more than 50 branches in three states. United Financial Bancorp, Inc. trades on the NASDAQ Global Select Stock Exchange under the ticker symbol "UBNK." At June 30, 2019, the Company had $7.34 billion in assets.

For more information about United Bank's services and products call (866) 959-BANK or visit www.bankatunited.com. For more information about United Financial Bancorp, Inc., visit www.unitedfinancialinc.com or download the Company's free Investor Relations app on your Apple or Android device. To download United Financial Bancorp, Inc.'s investor relations app on your iPhone or on your iPad, which offers access to SEC documents, press releases, videos, audiocasts and more, please visit:

https://itunes.apple.com/WebObjects/MZStore.woa/wa/viewSoftware?id=725271098&mt=8

or https://play.google.com/store/apps/details?id=com.theirapp.ubnk for your Android mobile device.

Non-GAAP Financial Measures

This document contains certain non-GAAP financial measures in addition to results presented in accordance with Generally Accepted Accounting Principles ("GAAP"). These non-GAAP measures provide supplemental perspectives on operating results, performance trends, and financial condition. They are not a substitute for GAAP measures; they should be read and used in conjunction with the Company's GAAP financial information. A reconciliation of non-GAAP financial measures to GAAP measures is included on pages F-10 through F-12 in the accompanying financial tables. These non-GAAP financial measures provide information for investors to effectively analyze financial trends of our business activities, and to enhance comparability with peers across the financial services sector.

Forward Looking Statements

This press release contains certain forward-looking statements about the Company. Forward-looking statements include statements regarding anticipated future events, such as the anticipated effect of the Company's LLC investments, and can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as "believe," "expect," "anticipate," "estimate," and "intend" or future or conditional verbs such as "will," "would," "should," "could," or "may." Forward-looking statements, by their nature, are subject to risks and uncertainties. Certain factors that could cause actual results to differ materially from expected results include the outcome of the D.C. Solar bankruptcy, increased competitive pressures, changes in the interest rate environment, general economic conditions or conditions within the securities markets, and legislative and regulatory changes that could adversely affect the business in which the Company and its subsidiaries are engaged.

   
Investor Relations Contact:

Marliese L. Shaw

Executive Vice President, Investor Relations Officer

United Bank

860-291-3622

MShaw@bankatunited.com 
Media Relations Contact:

Adam J. Jeamel

Regional President, Corporate Communications

United Bank

860-291-3765

AJeamel@bankatunited.com 



 
 
United Financial Bancorp, Inc. and Subsidiaries
Consolidated Statements of Net Income
(Unaudited)
 
    For the Three Months Ended

June 30,
  For the Six Months Ended

June 30,
    2019   2018   2019   2018
Interest and dividend income:   (In thousands, except share data)
Loans   $ 65,650     $ 57,958     $ 130,414     $ 112,738  
Securities-taxable interest   6,117     5,969     12,592     11,467  
Securities-non-taxable interest   644     2,354     1,738     4,783  
Securities-dividends   653     736     1,309     1,373  
Interest-bearing deposits   341     113     566     263  
Total interest and dividend income   73,405     67,130     146,619     130,624  
Interest expense:                
Deposits   20,564     12,864     40,495     23,891  
Borrowed funds   5,831     6,085     12,177     12,009  
Total interest expense   26,395     18,949     52,672     35,900  
Net interest income   47,010     48,181     93,947     94,724  
Provision for loan losses   2,472     2,350     4,515     4,289  
Net interest income after provision for loan losses   44,538     45,831     89,432     90,435  
Non-interest income:                
Service charges and fees   7,538     6,542     13,723     12,701  
Net gain from sales of securities   137     62     874     178  
(Loss) income from mortgage banking activities   (410 )   846     181     2,575  
Bank-owned life insurance income   1,521     1,671     3,467     3,317  
Net loss on limited partnership investments   (7,898 )   (960 )   (8,501 )   (1,550 )
Other (loss) income   (48 )   199     76     428  
Total non-interest income   840     8,360     9,820     17,649  
Non-interest expense:                
Salaries and employee benefits   21,923     22,113     44,125     43,311  
Service bureau fees   2,198     2,165     4,235     4,383  
Occupancy and equipment   5,111     4,668     10,651     9,617  
Professional fees   2,414     1,105     3,707     2,269  
Marketing and promotions   782     1,189     1,640     1,874  
FDIC insurance assessments   769     735     1,428     1,474  
Core deposit intangible amortization   388     305     808     642  
Other   5,872     6,090     12,050     11,536  
Total non-interest expense   39,457     38,370     78,644     75,106  
Income before income taxes   5,921     15,821     20,608     32,978  
Provision for income taxes   9,169     175     11,199     1,545  
Net (loss) income   $ (3,248 )   $ 15,646     $ 9,409     $ 31,433  
                 
Net (loss) income per share:                
Basic   $ (0.06 )   $ 0.31     $ 0.19     $ 0.62  
Diluted   $ (0.06 )   $ 0.31     $ 0.19     $ 0.62  
Weighted-average shares outstanding:                
Basic   50,620,236     50,504,273     50,617,661     50,489,689  
Diluted   50,620,236     50,974,283     50,763,678     50,985,520  
                         
                         



United Financial Bancorp, Inc. and Subsidiaries
Consolidated Statements of Net Income
(Unaudited)
 
    For the Three Months Ended
    June 30,

2019
  March 31,

2019
  December 31,

2018
  September 30,

2018
  June 30,

2018
Interest and dividend income:   (In thousands, except share data)
Loans   $ 65,650     $ 64,764     $ 63,227     $ 61,061     $ 57,958  
Securities-taxable interest   6,117     6,475     5,705     5,822     5,969  
Securities-non-taxable interest   644     1,094     2,339     2,347     2,354  
Securities-dividends   653     656     702     748     736  
Interest-bearing deposits   341     225     250     213     113  
Total interest and dividend income   73,405     73,214     72,223     70,191     67,130  
Interest expense:                    
Deposits   20,564     19,931     18,183     15,767     12,864  
Borrowed funds   5,831     6,346     5,678     5,995     6,085  
Total interest expense   26,395     26,277     23,861     21,762     18,949  
Net interest income   47,010     46,937     48,362     48,429     48,181  
Provision for loan losses   2,472     2,043     2,618     2,007     2,350  
Net interest income after provision for loan losses   44,538     44,894     45,744     46,422     45,831  
Non-interest income:                    
Service charges and fees   7,538     6,185     7,447     6,623     6,542  
Net gain (loss) from sales of securities   137     737     25     (58 )   62  
(Loss) income from mortgage banking activities   (410 )   591     698     1,486     846  
Bank-owned life insurance income   1,521     1,946     1,517     1,460     1,671  
Net loss on limited partnership investments   (7,898 )   (603 )   (405 )   (221 )   (960 )
Other (loss) income   (48 )   124     211     265     199  
Total non-interest income   840     8,980     9,493     9,555     8,360  
Non-interest expense:                    
Salaries and employee benefits   21,923     22,202     25,341     22,643     22,113  
Service bureau fees   2,198     2,037     2,309     2,209     2,165  
Occupancy and equipment   5,111     5,540     6,384     4,487     4,668  
Professional fees   2,414     1,293     1,136     1,013     1,105  
Marketing and promotions   782     858     1,108     1,119     1,189  
FDIC insurance assessments   769     659     611     655     735  
Core deposit intangible amortization   388     420     420     288     305  
Other   5,872     6,178     6,409     6,529     6,090  
Total non-interest expense   39,457     39,187     43,718     38,943     38,370  
Income before income taxes   5,921     14,687     11,519     17,034     15,821  
Provision (benefit) for income taxes   9,169     2,030     (646 )   726     175  
Net (loss) income   $ (3,248 )   $ 12,657     $ 12,165     $ 16,308     $ 15,646  
                     
Net (loss) income per share:                    
Basic   $ (0.06 )   $ 0.25     $ 0.24     $ 0.32     $ 0.31  
Diluted   $ (0.06 )   $ 0.25     $ 0.24     $ 0.32     $ 0.31  
Weighted-average shares outstanding:                    
Basic   50,620,236     50,615,059     50,613,498     50,624,832     50,504,273  
Diluted   50,620,236     50,907,092     50,970,000     51,104,776     50,974,283  
                               
                               



United Financial Bancorp, Inc. and Subsidiaries
Consolidated Statements of Condition
(Unaudited)
 
    June 30,

2019
  March 31,

2019
  December 31,

2018
  September 30,

2018
  June 30,

2018
ASSETS   (In thousands)
Cash and cash equivalents:                    
Cash and due from banks   $ 67,939     $ 50,823     $ 36,434     $ 48,786     $ 62,188  
Short-term investments   46,807     104,350     61,530     29,809     46,987  
Total cash and cash equivalents   114,746     155,173     97,964     78,595     109,175  
Available for sale securities - At fair value   840,500     848,541     973,347     972,035     1,006,135  
Loans held for sale   38,809     16,172     78,788     86,948     85,458  
Loans:                    
Commercial real estate loans:                    
Owner-occupied   459,648     439,366     443,398     434,906     418,338  
Investor non-owner occupied   1,971,103     1,932,137     1,911,070     1,888,848     1,927,960  
Construction   80,063     94,649     87,493     78,235     82,883  
Total commercial real estate loans   2,510,814     2,466,152     2,441,961     2,401,989     2,429,181  
Commercial business loans   910,473     920,165     886,770     861,030     841,142  
Consumer loans:                    
Residential real estate   1,306,208     1,322,423     1,313,373     1,283,126     1,252,001  
Home equity   575,683     583,368     583,454     579,907     588,638  
Residential construction   12,542     13,620     20,632     32,750     32,063  
Other consumer   439,413     425,854     410,249     369,781     332,402  
Total consumer loans   2,333,846     2,345,265     2,327,708     2,265,564     2,205,104  
Total loans   5,755,133     5,731,582     5,656,439     5,528,583     5,475,427  
Net deferred loan costs and premiums   17,965     17,901     17,786     16,603     15,502  
Allowance for loan losses   (53,206 )   (52,041 )   (51,636 )   (49,909 )   (49,163 )
Loans receivable - net   5,719,892     5,697,442     5,622,589     5,495,277     5,441,766  
Federal Home Loan Bank of Boston stock, at cost   34,335     37,702     41,407     42,032     46,734  
Accrued interest receivable   24,938     25,061     24,823     25,485     23,209  
Deferred tax asset, net   27,366     27,600     32,706     31,473     30,190  
Premises and equipment, net   62,304     63,863     68,657     67,612     67,614  
Operating lease right-of-use assets   43,171     44,377              
Financing lease right-of-use assets   4,266     4,356              
Goodwill   116,709     116,727     116,769     115,281     115,281  
Core deposit intangible asset   5,219     5,607     6,027     3,561     3,849  
Cash surrender value of bank-owned life insurance   195,993     194,496     193,429     181,928     180,490  
Other assets   107,707     102,823     100,368     107,271     98,695  
Total assets   $ 7,335,955     $ 7,339,940     $ 7,356,874     $ 7,207,498     $ 7,208,596  
                     
                     
    June 30,

2019
  March 31,

2019
  December 31,

2018
  September 30,

2018
  June 30,

2018
LIABILITIES AND STOCKHOLDERS' EQUITY                    
Liabilities:                    
Deposits:                    
Non-interest-bearing   $ 843,926     $ 777,969     $ 799,785     $ 759,210     $ 770,982  
Interest-bearing   4,882,622     4,886,283     4,870,814     4,741,153     4,622,394  
Total deposits   5,726,548     5,664,252     5,670,599     5,500,363     5,393,376  
Mortgagors' and investor escrow accounts   14,541     11,510     4,685     9,597     14,526  
Federal Home Loan Bank advances and other borrowings   741,989     826,668     899,626     926,592     1,041,896  
Operating lease liabilities   55,197     56,265              
Financing lease liabilities   4,518     4,585              
Accrued expenses and other liabilities   73,140     52,562     69,446     61,128     56,921  
Total liabilities   6,615,933     6,615,842     6,644,356     6,497,680     6,506,719  
Total stockholders' equity   720,022     724,098     712,518     709,818     701,877  
Total liabilities and stockholders' equity   $ 7,335,955     $ 7,339,940     $ 7,356,874     $ 7,207,498     $ 7,208,596  
                                         
                                         



United Financial Bancorp, Inc. and Subsidiaries
Selected Financial Highlights
(Dollars In Thousands, Except Share Data)
(Unaudited)
 
  At or For the Three Months Ended
  June 30,

 2019
  March 31,

 2019
  December 31,

 2018
  September 30,

 2018
  June 30,

 2018
Share Data:                  
Basic net (loss) income per share $ (0.06 )   $ 0.25     $ 0.24     $ 0.32     $ 0.31  
Diluted net (loss) income per share (0.06 )   0.25     0.24     0.32     0.31  
Dividends declared per share 0.12     0.12     0.12     0.12     0.12  
Tangible book value per share $ 11.71     $ 11.78     $ 11.54     $ 11.55     $ 11.40  
Key Statistics:                  
Total revenue $ 47,850     $ 55,917     $ 57,855     $ 57,984     $ 56,541  
Total non-interest expense 39,457     39,187     43,718     38,943     38,370  
Average earning assets 6,706,237     6,783,604     6,708,701     6,671,424     6,584,938  
Key Ratios:                  
(Loss) return on average assets (annualized) (0.18 %)   0.69 %   0.67 %   0.91 %   0.88 %
(Loss) return on average equity (annualized) (1.79 %)   7.13 %   6.89 %   9.26 %   9.00 %
Tax-equivalent net interest margin (annualized) 2.82 %   2.81 %   2.90 %   2.92 %   2.97 %
Non-interest expense to average assets (annualized) 2.16 %   2.13 %   2.41 %   2.17 %   2.16 %
Cost of funds (annualized) (1) 1.64 %   1.61 %   1.48 %   1.36 %   1.20 %
Total revenue growth rate (14.43 %)   (3.35 %)   (0.22 %)   2.55 %   1.27 %
Total revenue growth rate (annualized) (57.71 %)   (13.40 %)   (0.89 %)   10.21 %   5.08 %
Average earning asset growth rate (1.14 %)   1.12 %   0.56 %   1.31 %   0.26 %
Average earning asset growth rate (annualized) (4.56 %)   4.47 %   2.24 %   5.25 %   1.02 %
Residential Mortgage Production:                  
Dollar volume (total) $ 46,549     $ 31,882     $ 128,209     $ 143,673     $ 140,409  
Mortgages originated for purchases 24,409     21,434     101,266     111,555     110,351  
Loans sold 22,352     89,980     108,663     99,372     99,637  
(Loss) income from mortgage banking activities (410 )   591     698     1,486     846  
Non-performing Assets:                  
Residential real estate $ 12,893     $ 13,742     $ 13,217     $ 11,949     $ 11,221  
Home equity 5,051     4,577     4,735     4,005     4,607  
Investor-owned commercial real estate 2,357     739     1,131     1,525     2,400  
Owner-occupied commercial real estate 1,989     1,830     2,450     1,202     2,176  
Construction 137     171     199     243     250  
Commercial business 1,666     1,627     944     985     1,196  
Other consumer 657     1,034     1,030     597     237  
Non-accrual loans 24,750     23,720     23,706     20,506     22,087  
Troubled debt restructured - non-accruing 5,820     5,479     6,971     6,706     7,330  
Total non-performing loans 30,570     29,199     30,677     27,212     29,417  
Other real estate owned 1,455     1,429     1,389     1,808     1,855  
Total non-performing assets $ 32,025     $ 30,628     $ 32,066     $ 29,020     $ 31,272  
Non-performing loans to total loans 0.53 %   0.51 %   0.54 %   0.49 %   0.54 %
Non-performing assets to total assets 0.44 %   0.42 %   0.44 %   0.40 %   0.43 %
Allowance for loan losses to non-performing loans 174.05 %   178.23 %   168.32 %   183.41 %   167.12 %
Allowance for loan losses to total loans 0.92 %   0.91 %   0.91 %   0.90 %   0.90 %
Non-GAAP Ratios: (2)                  
Efficiency ratio 69.99 %   69.67 %   69.18 %   65.61 %   65.18 %
(Loss) return on average tangible common equity (annualized) (1.94 %)   8.85 %   8.55 %   11.30 %   11.03 %
Pre-provision net revenue to average assets 0.92 %   0.92 %   1.00 %   1.12 %   1.14 %

(1) The cost of funds ratio represents interest incurred on liabilities as a percentage of average non-interest-bearing deposits and interest-bearing liabilities.

(2) Non-GAAP ratios are not financial measurements required by generally accepted accounting principles; however, management believes such information is useful to investors in evaluating Company performance. Calculations of these non-GAAP metrics are provided after the reconciliations of non-GAAP financial measures and appear on pages F-11 and F-12.

 
 
United Financial Bancorp, Inc. and Subsidiaries
Average Balance Sheets, Interest and Yields/Costs
(Dollars In Thousands)
(Unaudited)
 
  For the Three Months Ended
  June 30, 2019   June 30, 2018
  Average

Balance
  Interest

and

Dividends
  Yield/Cost   Average

Balance
  Interest

and

Dividends
  Yield/Cost
Interest-earning assets:                      
Residential real estate $ 1,351,571     $ 12,520     3.71 %   $ 1,338,021     $ 12,020     3.60 %
Commercial real estate 2,379,330     27,503     4.57     2,306,896     24,762     4.25  
Construction 105,801     1,387     5.19     114,987     1,331     4.58  
Commercial business 916,928     11,487     4.96     816,102     9,139     4.43  
Home equity 576,046     7,771     5.41     588,080     7,058     4.81  
Other consumer 433,971     5,496     5.08     322,103     4,062     5.06  
Investment securities 846,711     6,921     3.26     1,019,491     8,998     3.53  
Federal Home Loan Bank stock 35,513     620     6.98     49,136     703     5.72  
Other earning assets 60,366     344     2.29     30,122     116     1.55  
Total interest-earning assets 6,706,237     74,049     4.39     6,584,938     68,189     4.12  
Allowance for loan losses (52,680 )           (48,624 )        
Non-interest-earning assets 636,544             555,407          
Total assets $ 7,290,101             $ 7,091,721          
Interest-bearing liabilities:                      
NOW and money market $ 2,517,212     $ 10,267     1.64 %   $ 2,256,323     $ 6,163     1.10 %
Savings 504,186     81     0.06     517,910     77     0.06  
Certificates of deposit 1,830,763     10,215     2.24     1,749,097     6,624     1.52  
Total interest-bearing deposits 4,852,161     20,563     1.70     4,523,330     12,864     1.14  
Federal Home Loan Bank advances 694,082     4,542     2.59     959,248     4,692     1.94  
Other borrowings 87,875     1,290     5.81     112,112     1,393     4.91  
Total interest-bearing liabilities 5,634,118     26,395     1.87     5,594,690     18,949     1.35  
Non-interest-bearing deposits 796,504             738,484          
Other liabilities 134,924             63,246          
Total liabilities 6,565,546             6,396,420          
Stockholders' equity 724,555             695,301          
Total liabilities and stockholders' equity $ 7,290,101             $ 7,091,721          
Net interest-earning assets $ 1,072,119             $ 990,248          
Tax-equivalent net interest income     47,654             49,240      
Tax-equivalent net interest rate spread (1)         2.52 %           2.77 %
Tax-equivalent net interest margin (2)         2.82 %           2.97 %
Average interest-earning assets to average interest-bearing liabilities         119.03 %           117.70 %
Less tax-equivalent adjustment     644             1,059      
Net interest income     $ 47,010             $ 48,181      

(1)  Tax-equivalent net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.

(2)  Tax-equivalent net interest rate margin represents tax-equivalent net interest income divided by average interest-earning assets.

 
 
United Financial Bancorp, Inc. and Subsidiaries
Average Balance Sheets, Interest and Yields/Costs
(Dollars In Thousands)
(Unaudited)
 
  For the Three Months Ended
  June 30, 2019   March 31, 2019
  Average

Balance
  Interest

and

Dividends
  Yield/Cost   Average

Balance
  Interest

and

Dividends
  Yield/Cost
Interest-earning assets:                      
Residential real estate $ 1,351,571     $ 12,520     3.71 %   $ 1,380,829     $ 12,886     3.73 %
Commercial real estate 2,379,330     27,503     4.57     2,358,955     27,302     4.63  
Construction 105,801     1,387     5.19     111,198     1,426     5.13  
Commercial business 916,928     11,487     4.96     888,436     10,612     4.78  
Home equity 576,046     7,771     5.41     582,180     7,874     5.48  
Other consumer 433,971     5,496     5.08     418,053     5,174     5.02  
Investment securities 846,711     6,921     3.26     966,841     7,819     3.23  
Federal Home Loan Bank stock 35,513     620     6.98     40,475     628     6.21  
Other earning assets 60,366     344     2.29     36,637     229     2.53  
Total interest-earning assets 6,706,237     74,049     4.39     6,783,604     73,950     4.37  
Allowance for loan losses (52,680 )           (52,089 )        
Non-interest-earning assets 636,544             639,923          
Total assets $ 7,290,101             $ 7,371,438          
Interest-bearing liabilities:                      
NOW and money market $ 2,517,212     $ 10,267     1.64 %   $ 2,567,634     $ 10,309     1.63 %
Savings 504,186     81     0.06     500,167     75     0.06  
Certificates of deposit 1,830,763     10,215     2.24     1,823,867     9,547     2.12  
Total interest-bearing deposits 4,852,161     20,563     1.70     4,891,668     19,931     1.65  
Federal Home Loan Bank advances 694,082     4,542     2.59     800,862     5,045     2.52  
Other borrowings 87,875     1,290     5.81     88,757     1,301     5.86  
Total interest-bearing liabilities 5,634,118     26,395     1.87     5,781,287     26,277     1.84  
Non-interest-bearing deposits 796,504             745,259          
Other liabilities 134,924             134,987          
Total liabilities 6,565,546             6,661,533          
Stockholders' equity 724,555             709,905          
Total liabilities and stockholders' equity $ 7,290,101             $ 7,371,438          
Net interest-earning assets $ 1,072,119             $ 1,002,317          
Tax-equivalent net interest income     47,654             47,673      
Tax-equivalent net interest rate spread (1)         2.52 %           2.53 %
Tax-equivalent net interest margin (2)         2.82 %           2.81 %
Average interest-earning assets to average interest-bearing liabilities         119.03 %           117.34 %
Less tax-equivalent adjustment     644             736      
Net interest income     $ 47,010             $ 46,937      

(1)  Tax-equivalent net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.

(2)  Tax-equivalent net interest rate margin represents tax-equivalent net interest income divided by average interest-earning assets.

 
 
United Financial Bancorp, Inc. and Subsidiaries
Average Balance Sheets, Interest and Yields/Costs
(Dollars In Thousands)
(Unaudited)
 
  For the Six Months Ended
  June 30, 2019   June 30, 2018
  Average

Balance
  Interest

and

Dividends
  Yield/Cost   Average

Balance
  Interest

and

Dividends
  Yield/Cost
Interest-earning assets:                      
Residential real estate $ 1,366,119     $ 25,406     3.72 %   $ 1,326,185     $ 23,526     3.56 %
Commercial real estate 2,369,199     54,804     4.60     2,294,451     48,419     4.20  
Construction 108,484     2,813     5.16     117,199     2,656     4.51  
Commercial business 902,761     22,099     4.87     829,382     17,521     4.20  
Home equity 579,096     15,645     5.45     583,454     13,585     4.69  
Other consumer 426,056     10,670     5.05     311,032     7,862     5.10  
Investment securities 906,444     14,740     3.25     1,030,404     17,618     3.42  
Federal Home Loan Bank stock 37,980     1,248     6.57     50,291     1,309     5.21  
Other earning assets 48,567     573     2.38     34,202     270     1.59  
Total interest-earning assets 6,744,706     147,998     4.38     6,576,600     132,766     4.03  
Allowance for loan losses (52,386 )           (48,205 )        
Non-interest-earning assets 638,225             554,873          
Total assets $ 7,330,545             $ 7,083,268          
Interest-bearing liabilities:                      
NOW and money market $ 2,542,284     $ 20,577     1.63 %   $ 2,201,937     $ 11,055     1.01 %
Savings 502,187     156     0.06     514,426     150     0.06  
Certificates of deposit 1,827,334     19,762     2.18     1,772,754     12,686     1.44  
Total interest-bearing deposits 4,871,805     40,495     1.68     4,489,117     23,891     1.07  
Federal Home Loan Bank advances 747,177     9,586     2.55     996,360     9,238     1.84  
Other borrowings 88,314     2,591     5.84     115,043     2,771     4.79  
Total interest-bearing liabilities 5,707,296     52,672     1.86     5,600,520     35,900     1.29  
Non-interest-bearing deposits 771,023             725,993          
Other liabilities 134,955             63,919          
Total liabilities 6,613,274             6,390,432          
Stockholders' equity 717,271             692,836          
Total liabilities and stockholders' equity $ 7,330,545             $ 7,083,268          
Net interest-earning assets $ 1,037,410             $ 976,080          
Tax-equivalent net interest income     95,326             96,866      
Tax-equivalent net interest rate spread (1)         2.52 %           2.74 %
Tax-equivalent net interest margin (2)         2.81 %           2.94 %
Average interest-earning assets to average interest-bearing liabilities         118.18 %           117.43 %
Less tax-equivalent adjustment     1,379             2,142      
Net interest income     $ 93,947             $ 94,724      

(1)  Tax-equivalent net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.

(2)  Tax-equivalent net interest rate margin represents tax-equivalent net interest income divided by average interest-earning assets.

 
 
United Financial Bancorp, Inc. and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
(Dollars In Thousands)
(Unaudited)

In addition to evaluating the Company's results of operations in accordance with GAAP, management periodically supplements this evaluation with an analysis of certain non-GAAP financial measures. These non-GAAP measures are intended to provide the reader with additional perspectives on operating results, financial condition, and performance trends, while facilitating comparisons with the performance of other financial institutions. Non-GAAP financial measures are not a substitute for GAAP measures, rather, they should be read and used in conjunction with the Company's GAAP financial information.

The efficiency ratio is used as a common measure by banks as a comparable metric to understand the Company's expense structure relative to its total revenue; in other words, for every dollar of total revenue we recognize, how much of that dollar is expended. In order to improve the comparability of the ratio to our peers, we remove non-core items. To improve transparency, and acknowledging that banks are not consistent in their definition of the efficiency ratio, we include our calculation of this non-GAAP measure.

Pre-provision net revenue is a measure that the Company uses to understand fundamental operating performance before credit related expenses and tax expense. It is often expressed as a ratio relative to average assets which demonstrates the "core" performance and can be viewed as an alternative measure of how efficiently the Company services its asset base.

Return on average tangible common equity is used by management and readers of our financial statements to understand how efficiently the Company is deploying its common equity. Companies that are able to demonstrate more efficient use of common equity are more likely to be viewed favorably by current and prospective investors.

The Company believes that disclosing these non-GAAP metrics is both useful internally and is expected by our investors and analysts in order to understand the overall performance of the Company. Other companies may calculate and define their supplemental data differently. A reconciliation of GAAP financial measures to non-GAAP measures and other performance ratios, as adjusted, are included on pages F-10 through F-12 in the following press release tables:

   
  Three Months Ended
  June 30,

 2019
  March 31,

 2019
  December 31,

 2018
  September 30,

 2018
  June 30,

 2018
                                       
  (Dollars in thousands)
Net (Loss) Income (GAAP) $ (3,248 )   $ 12,657     $ 12,165     $ 16,308     $ 15,646  
Non-GAAP adjustments:                  
Non-interest income (137 )   (1,158 )   (25 )   58     (271 )
Non-interest expense         2,677     (129 )   215  
Income tax benefit related to tax reform         (1,717 )        
Related income tax expense (benefit) 29     155     (557 )   15     (93 )
Net adjustment (108 )   (1,003 )   378     (56 )   (149 )
Total net (loss) income (non-GAAP) $ (3,356 )   $ 11,654     $ 12,543     $ 16,252     $ 15,497  
                   
Non-interest income (GAAP) $ 840     $ 8,980     $ 9,493     $ 9,555     $ 8,360  
Non-GAAP adjustments:                  
Net (gain) loss on sales of securities (137 )   (737 )   (25 )   58     (62 )
BOLI claim benefit     (421 )           (209 )
Net adjustment (137 )   (1,158 )   (25 )   58     (271 )
Total non-interest income (non-GAAP) 703     7,822     9,468     9,613     8,089  
Total net interest income 47,010     46,937     48,362     48,429     48,181  
Total revenue (non-GAAP) $ 47,713     $ 54,759     $ 57,830     $ 58,042     $ 56,270  
                   
Non-interest expense (GAAP) $ 39,457     $ 39,187     $ 43,718     $ 38,943     $ 38,370  
Non-GAAP adjustments:                  
Lease exit/disposal cost obligation         (466 )   129     (215 )
Effect of position eliminations         (2,211 )        
Net adjustment         (2,677 )   129     (215 )
Total non-interest expense (non-GAAP) $ 39,457     $ 39,187     $ 41,041     $ 39,072     $ 38,155  
                   
Total loans $ 5,755,133     $ 5,731,582     $ 5,656,439     $ 5,528,583     $ 5,475,427  
Non-covered loans (1) (618,176 )   (658,455 )   (675,112 )   (708,621 )   (729,947 )
Total covered loans $ 5,136,957     $ 5,073,127     $ 4,981,327     $ 4,819,962     $ 4,745,480  
Allowance for loan losses $ 53,206     $ 52,041     $ 51,636     $ 49,909     $ 49,163  
Allowance for loan losses to total loans 0.92 %   0.91 %   0.91 %   0.90 %   0.90 %
Allowance for loan losses to total covered loans 1.04 %   1.03 %   1.04 %   1.04 %   1.04 %

(1) Represents acquired loans that were recorded at fair value. These loans carry no allowance for loan losses for the periods reflected above.

                   
                   
  Three Months Ended
  June 30,

 2019
  March 31,

 2019
  December 31,

 2018
  September 30,

 2018
  June 30,

 2018
                                       
Efficiency Ratio:                  
Non-Interest Expense (GAAP) $ 39,457     $ 39,187     $ 43,718     $ 38,943     $ 38,370  
Non-GAAP adjustments:                  
Other real estate owned expense (83 )   (105 )   (108 )   (256 )   (163 )
Lease exit/disposal cost obligation         (466 )   129     (215 )
Effect of position eliminations         (2,211 )        
Non-Interest Expense for Efficiency Ratio (non-GAAP) $ 39,374     $ 39,082     $ 40,933     $ 38,816     $ 37,992  
                   
Net Interest Income (GAAP) $ 47,010     $ 46,937     $ 48,362     $ 48,429     $ 48,181  
Non-GAAP adjustments:                  
Tax-equivalent adjustment for tax-exempt loans and investment securities 644     736     938     895     1,059  
                   
Non-Interest Income (GAAP) 840     8,980     9,493     9,555     8,360  
Non-GAAP adjustments:                  
Net (gain) loss on sales of securities (137 )   (737 )   (25 )   58     (62 )
Net loss on limited partnership investments 7,898     603     405     221     960  
BOLI claim benefit     (421 )           (209 )
Total Revenue for Efficiency Ratio (non-GAAP) $ 56,255     $ 56,098     $ 59,173     $ 59,158     $ 58,289  
                   
Efficiency Ratio (Non-Interest Expense for Efficiency Ratio (non-GAAP)/Total Revenue for Efficiency Ratio (non-GAAP)) 69.99 %   69.67 %   69.18 %   65.61 %   65.18 %
                   
                   
  Three Months Ended
  June 30,

 2019
  March 31,

 2019
  December 31,

 2018
  September 30,

 2018
  June 30,

 2018
                                       
Pre-Provision Net Revenue ("PPNR") to Average Assets (Annualized):        
Net Interest Income (GAAP) $ 47,010     $ 46,937     $ 48,362     $ 48,429     $ 48,181  
Non-GAAP adjustments:                  
Tax-equivalent adjustment for tax-exempt loans and investment securities 644     736     938     895     1,059  
Total tax-equivalent net interest income (A) $ 47,654     $ 47,673     $ 49,300     $ 49,324     $ 49,240  
                   
Non-Interest Income (GAAP) 840     8,980     9,493     9,555     8,360  
Non-GAAP adjustments:                  
Net (gain) loss on sales of securities (137 )   (737 )   (25 )   58     (62 )
Net loss on limited partnership investments 7,898     603     405     221     960  
BOLI claim benefit     (421 )           (209 )
Non-Interest Income for PPNR (non-GAAP) (B) $ 8,601     $ 8,425     $ 9,873     $ 9,834     $ 9,049  
                   
Non-Interest Expense (GAAP) $ 39,457     $ 39,187     $ 43,718     $ 38,943     $ 38,370  
Non-GAAP adjustments:                  
Lease exit/disposal cost obligation         (466 )   129     (215 )
Effect of position eliminations         (2,211 )        
Non-Interest Expense for PPNR (non-GAAP) (C) $ 39,457     $ 39,187     $ 41,041     $ 39,072     $ 38,155  
                   
Total PPNR (non-GAAP)  (A + B - C) : $ 16,798     $ 16,911     $ 18,132     $ 20,086     $ 20,134  
Average Assets 7,290,101     7,371,438     7,244,396     7,191,072     7,091,721  
PPNR to Average Assets (Annualized) 0.92 %   0.92 %   1.00 %   1.12 %   1.14 %
                   
Return on Average Tangible Common Equity (Annualized):        
Net (Loss) Income (GAAP) $ (3,248 )   $ 12,657     $ 12,165     $ 16,308     $ 15,646  
Non-GAAP adjustments:                  
Intangible assets amortization, tax effected at 21% 307     332     332     228     241  
Net (Loss) Income excluding intangible assets amortization, tax effected at 21% $ (2,941 )   $ 12,989     $ 12,497     $ 16,536     $ 15,887  
Average stockholders' equity (non-GAAP) $ 724,555     $ 709,905     $ 706,124     $ 704,306     $ 695,301  
Average goodwill & other intangible assets (non-GAAP) 119,287     122,597     121,614     119,009     119,288  
Average tangible common stockholders' equity (non-GAAP) $ 605,268     $ 587,308     $ 584,510     $ 585,297     $ 576,013  
(Loss) Return on Average Tangible Common Equity (non-GAAP) (1.94 )%   8.85 %   8.55 %   11.30 %   11.03 %

Source: United Financial Bancorp, Inc.

This article appears in: News Headlines

Referenced Stocks: UBNK










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