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United Financial Bancorp, Inc. Announces First Quarter Earnings and Quarterly Dividend

By GlobeNewswire,  April 16, 2019, 04:37:00 PM EDT


HARTFORD, Conn., April 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 March 31, 2019.

The Company reported net income of $12.7 million, or $0.25 per diluted share, for the quarter ended March 31, 2019, compared to net income for the quarter ended December 31, 2018 ("linked quarter") of $12.2 million, or $0.24 per diluted share. The Company reported net income of $15.8 million, or $0.31 per diluted share, for the quarter ended March 31, 2018.

"Despite the challenging operating environment, the United Financial Bancorp, Inc. team is focused on expanding and winning new client relationships, maintaining strong asset quality and ample capital, and providing superior customer service," stated William H.W. Crawford, IV, Chief Executive Officer and President of the Company and the Bank. "Having a talented and dedicated team of employees to serve the needs of our customers and communities continues to be a strong value proposition of the Company and will protect and enhance franchise value."

Balance Sheet

Assets totaled $7.34 billion at March 31, 2019, decreasing $16.9 million from $7.36 billion at December 31, 2018. At March 31, 2019, total available for sale securities were $848.5 million, representing a decrease of $124.8 million, or 12.8%, from the linked quarter. The overall decrease was primarily due to sales of lower yielding collateralized mortgage obligations and municipal securities at a gain during the quarter, and a portion of the proceeds were utilized to pay off maturing Federal Home Loan Bank advances. At March 31, 2019, total loans were $5.73 billion, representing an increase of $75.1 million, or 1.3%, from the linked quarter. Changes to loan balances during the first quarter of 2019 were highlighted by a $33.4 million, or 3.8%, increase in commercial business loans, a $21.1 million, or 1.1%, increase in investor non-owner occupied commercial real estate loans, a $15.6 million, or 3.8%, increase in other consumer loans, a $9.1 million, or 0.7%, increase in residential real estate loans and a $7.2 million, or 8.2%, increase in commercial construction loans.  Slightly offsetting the increased loan balances above were a $7.0 million, or 34.0%, decrease in residential construction loans and a $4.0 million, or 0.9%, decrease in owner-occupied commercial real estate loans from the linked quarter. Loans held for sale also decreased $62.6 million, or 79.5%, from the linked quarter. Total cash and cash equivalents increased $57.2 million, or 58.4%, from the linked quarter as a result of the aforementioned sale of investment securities.

During the quarter ended March 31, 2019, the Company adopted Accounting Standards Update ("ASU") No. 2016-02 - Leases, requiring on-balance sheet reporting for all operating and financing leases, which resulted in the recording of $46.5 million in operating and financing lease right-of-use assets and a corresponding $46.5 million in operating and financing lease liabilities associated with the implementation of the standard.

Deposits totaled $5.66 billion at March 31, 2019 and decreased by $6.3 million, or 0.1%, from $5.67 billion at December 31, 2018. Decreases in deposit balances during the first quarter of 2019 were primarily due to a $97.4 million, or 5.6%, decrease in money market account balances and a $21.8 million, or 2.7%, decrease in non-interest bearing checking deposits, largely due to seasonal outflows that are typical of commercial DDA accounts in the first quarter. Offsetting these decreases was a $61.0 million, or 7.1%, increase in NOW checking account balances and a $51.8 million, or 2.9%, increase in certificates of deposit balances.

Total Federal Home Loan Bank advances decreased by $60.2 million, or 7.6%, over the linked quarter as the Company utilized 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., 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. At this time, no measurable loss has been identified, but the Company believes a loss is more likely than not. The Company has provided disclosure in its press release deck as it pertains to the impact on capital if the Company were to recognize a complete loss ($41.7 million) on the LLC investments. 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 recapture to be likely.

Net Interest Income

Net interest income decreased by $1.4 million, or 2.9%, on a linked quarter basis, to $46.9 million, primarily attributable to an increase in interest expense of $2.4 million, or 10.1%, to $26.3 million, offset by an increase in loan interest income of $1.5 million, or 2.4%, to $64.8 million. Average interest-earning assets increased by $74.9 million, or 1.1%, on a linked quarter basis, primarily due to growth in average loan balances, which increased by $88.9 million, or 1.6%. Average loan balance growth was driven by a $56.2 million, or 2.4%, increase in average commercial real estate loans, a $27.8 million, or 7.1%, increase in average other consumer loans and a $27.1 million, or 3.2%, increase in average commercial business loans. Slightly offsetting the increases was a $16.8 million, or 1.2%, decrease in average residential real estate loans, a $3.0 million, or 0.5%, decrease in average home equity loans and a $2.4 million, or 2.1%, decrease in average construction loans.

Interest expense increased by $2.4 million, or 10.1%, to $26.3 million during the first quarter of 2019, from $23.9 million in the linked quarter. Average interest-bearing deposit balances increased by $41.4 million, or 0.9%, on a linked quarter basis, primarily driven by a $64.5 million, or 3.7%, increase in average certificates of deposit, which was slightly offset by a $16.3 million, or 0.6%, decrease in average NOW and money market account balances and a $6.7 million, or 1.3%, decrease in average savings account balances. Average non-interest bearing deposits decreased by $23.7 million, or 3.1%, as compared to the linked quarter. Average Federal Home Loan Bank advances increased by $67.9 million, or 9.3%.

The tax-equivalent net interest margin decreased by nine basis points to 2.81% in the first quarter of 2019, from 2.90% in the linked period. The decline in the tax-equivalent net interest margin was driven by an 18 basis point increase in the cost of interest-bearing liabilities, which was partially offset by a six basis point increase in the yield of interest-earning assets. The interest-earning asset yield improvement was largely driven by a 29 basis point increase in the yield on construction loans, a 20 basis point increase in the yield on commercial real estate loans, a 16 basis point increase in the yield on home equity loans, a three basis point increase in the yield on residential real estate loans, a two basis point increase in the yield on commercial business loans and a one basis point increase in the yield on other consumer loans. Slightly offsetting the increase in loan yields was a 30 basis point decline in the yield of the investment portfolio, largely resulting from the implementation of ASU No. 2017-08 - Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities, which caused lower yields on the Company's tax-exempt municipal bonds. The total cost of funds increased by 13 basis points to 1.61% in the first quarter of 2019 driven by a 16 basis point increase in the cost of interest-bearing deposits and a 22 basis point increase in the cost of Federal Home Loan Bank advances.

Provision for Loan Losses

The provision for loan losses totaled $2.0 million for the quarter ended March 31, 2019 as compared to $2.6 million for the linked quarter. Net charge-offs for the quarter ended March 31, 2019 totaled $1.6 million, or 0.11%, as a percentage of average loans outstanding, as compared to $891,000, or 0.06%, as a percentage of average loans for the quarter ended December 31, 2018. 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 $513,000, or 5.4%, to $9.0 million for the quarter ended March 31, 2019 from $9.5 million in the linked quarter. The decrease in the first quarter's non-interest income was driven primarily by a $1.3 million, or 17.0%, decrease in service charges and fee income resulting from lower swap fee income and non-sufficient fund fees as compared to the linked quarter, offset by an increase of $712,000 in net gain from sales of securities and an increase of $429,000, or 28.3%, in bank-owned life insurance income as compared to the linked quarter.

Non-Interest Expense

Non-interest expense for the quarter ended March 31, 2019 totaled $39.2 million and decreased by $4.5 million, or 10.4%, from the linked quarter. The decrease in non-interest expense during the quarter was primarily due to decreases in salaries and employee benefits, occupancy and equipment, and service bureau fees. These decreases were slightly offset by an increase in professional fees as compared to the linked quarter.

The primary driver of the decrease in non-interest expense was a $3.1 million, or 12.4%, decrease in salaries and employee benefits expense as compared to the linked quarter.  This decrease was largely due to a $2.2 million severance expense (pre-tax) that was recorded in the quarter ended December 31, 2018 as a result of the Company's shift in its mortgage banking strategy, which reduced staffing in our mortgage division, as well as decreases in commissions and incentives and other benefits as compared to the linked quarter. Other notable decreases include an $844,000, or 13.2%, decrease in occupancy and equipment and a $272,000, or 11.8%, decrease in service bureau fees during the quarter ended March 31, 2019.

Asset Quality

Asset quality remained strong and stable for the period, with non-performing assets decreasing by $1.4 million to $30.6 million at March 31, 2019 from $32.1 million at December 31, 2018. The ratio of non-performing assets to total assets for the quarter ended March 31, 2019 was 0.42%, as compared to 0.44% in the linked quarter.

Capital

The Company reported Tangible Common Equity ("TCE") of $601.8 million, or 8.2% of average assets, for the quarter ended March 31, 2019. Tangible book value per share increased to $11.78 at March 31, 2019 from $11.54 at December 31, 2018. The increase was primarily driven 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 as well as the impact of the Company's net income of $12.7 million, offset by the cash dividend payment to shareholders of $0.12 per share and the impact of the adoption of ASU No. 2017-08 during the quarter, which resulted in a $10.2 million cumulative effect adjustment to beginning retained earnings. Book value per share at March 31, 2019 was $14.17, as compared to $13.94 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 April 26, 2019 and payable on May 8, 2019. This dividend equates to a 3.17% annualized yield based on the $15.12 average closing price of the Company's common stock in the first quarter of 2019. The Company has paid dividends for 52 consecutive quarters.

Investor Conference Call

United Financial Bancorp, Inc. will host a conference call on Wednesday, April 17, 2019 at 10:00 a.m. Eastern Time (ET) to discuss the Company's first quarter results. Those wishing to participate in the call may dial toll-free 1-800-544-8281. A telephone replay of the call will be available through May 1, 2019 by calling 1-877-344-7529 and entering conference number 10130129. A podcast will be available on the Company's website for an extended period of time, as well as on the Company's investor relations app.

Investor Presentation

United Financial Bancorp, Inc. has prepared and furnished a visual slide presentation to accompany the earnings press release and investor conference call. The presentation has been furnished as an exhibit to the SEC Form 8-K, but is not included in this press release. Copies of the presentation may be accessed on the Company's investor relations website (www.unitedfinancialinc.com) by selecting "News & Market Data," then "Presentations;" or via the IRapp and selecting "Presentations;" or directly from SEC EDGAR.

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 March 31, 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 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.



United Financial Bancorp, Inc. and Subsidiaries

Consolidated Statements of Net Income

(Unaudited)

    For the Three Months Ended March 31,
    2019   2018
Interest and dividend income:   (In thousands, except share data)
Loans   $ 64,764     $ 54,780  
Securities-taxable interest   6,475     5,498  
Securities-non-taxable interest   1,094     2,429  
Securities-dividends   656     637  
Interest-bearing deposits   225     150  
Total interest and dividend income   73,214     63,494  
Interest expense:        
Deposits   19,931     11,027  
Borrowed funds   6,346     5,924  
Total interest expense   26,277     16,951  
Net interest income   46,937     46,543  
Provision for loan losses   2,043     1,939  
Net interest income after provision for loan losses   44,894     44,604  
Non-interest income:        
Service charges and fees   6,185     6,159  
Net gain from sales of securities   737     116  
Income from mortgage banking activities   591     1,729  
Bank-owned life insurance income   1,946     1,646  
Net loss on limited partnership investments   (603 )   (590 )
Other income   124     229  
Total non-interest income   8,980     9,289  
Non-interest expense:        
Salaries and employee benefits   22,202     21,198  
Service bureau fees   2,037     2,218  
Occupancy and equipment   5,540     4,949  
Professional fees   1,293     1,164  
Marketing and promotions   858     685  
FDIC insurance assessments   659     739  
Core deposit intangible amortization   420     337  
Other   6,178     5,446  
Total non-interest expense   39,187     36,736  
Income before income taxes   14,687     17,157  
Provision for income taxes   2,030     1,370  
Net income   $ 12,657     $ 15,787  
         
Net income per share:        
Basic   $ 0.25     $ 0.31  
Diluted   $ 0.25     $ 0.31  
Weighted-average shares outstanding:        
Basic   50,615,059     50,474,942  
Diluted   50,907,092     50,996,596  



United Financial Bancorp, Inc. and Subsidiaries

Consolidated Statements of Net Income

(Unaudited)

    For the Three Months Ended
    March 31,

2019
  December 31,

2018
  September 30,

2018
  June 30,

2018
  March 31,

2018
Interest and dividend income:   (In thousands, except share data)
Loans   $ 64,764     $ 63,227     $ 61,061     $ 57,958     $ 54,780  
Securities-taxable interest   6,475     5,705     5,822     5,969     5,498  
Securities-non-taxable interest   1,094     2,339     2,347     2,354     2,429  
Securities-dividends   656     702     748     736     637  
Interest-bearing deposits   225     250     213     113     150  
Total interest and dividend income   73,214     72,223     70,191     67,130     63,494  
Interest expense:                    
Deposits   19,931     18,183     15,767     12,864     11,027  
Borrowed funds   6,346     5,678     5,995     6,085     5,924  
Total interest expense   26,277     23,861     21,762     18,949     16,951  
Net interest income   46,937     48,362     48,429     48,181     46,543  
Provision for loan losses   2,043     2,618     2,007     2,350     1,939  
Net interest income after provision for loan losses   44,894     45,744     46,422     45,831     44,604  
Non-interest income:                    
Service charges and fees   6,185     7,447     6,623     6,542     6,159  
Net gain (loss) from sales of securities   737     25     (58 )   62     116  
Income from mortgage banking activities   591     698     1,486     846     1,729  
Bank-owned life insurance income   1,946     1,517     1,460     1,671     1,646  
Net loss on limited partnership investments   (603 )   (405 )   (221 )   (960 )   (590 )
Other income   124     211     265     199     229  
Total non-interest income   8,980     9,493     9,555     8,360     9,289  
Non-interest expense:                    
Salaries and employee benefits   22,202     25,341     22,643     22,113     21,198  
Service bureau fees   2,037     2,309     2,209     2,165     2,218  
Occupancy and equipment   5,540     6,384     4,487     4,668     4,949  
Professional fees   1,293     1,136     1,013     1,105     1,164  
Marketing and promotions   858     1,108     1,119     1,189     685  
FDIC insurance assessments   659     611     655     735     739  
Core deposit intangible amortization   420     420     288     305     337  
Other   6,178     6,409     6,529     6,090     5,446  
Total non-interest expense   39,187     43,718     38,943     38,370     36,736  
Income before income taxes   14,687     11,519     17,034     15,821     17,157  
Provision (benefit) for income taxes   2,030     (646 )   726     175     1,370  
Net income   $ 12,657     $ 12,165     $ 16,308     $ 15,646     $ 15,787  
                     
Net income per share:                    
Basic   $ 0.25     $ 0.24     $ 0.32     $ 0.31     $ 0.31  
Diluted   $ 0.25     $ 0.24     $ 0.32     $ 0.31     $ 0.31  
Weighted-average shares outstanding:                    
Basic   50,615,059     50,613,498     50,624,832     50,504,273     50,474,942  
Diluted   50,907,092     50,970,000     51,104,776     50,974,283     50,996,596  



United Financial Bancorp, Inc. and Subsidiaries

Consolidated Statements of Condition

(Unaudited)

    March 31,

2019
  December 31,

2018
  September 30,

2018
  June 30,

2018
  March 31,

2018
ASSETS   (In thousands)
Cash and cash equivalents:                    
Cash and due from banks   $ 50,823     $ 36,434     $ 48,786     $ 62,188     $ 45,332  
Short-term investments   104,350     61,530     29,809     46,987     23,910  
Total cash and cash equivalents   155,173     97,964     78,595     109,175     69,242  
Available for sale securities - At fair value   848,541     973,347     972,035     1,006,135     1,031,277  
Loans held for sale   16,172     78,788     86,948     85,458     63,394  
Loans:                    
Commercial real estate loans:                    
Owner-occupied   439,366     443,398     434,906     418,338     442,938  
Investor non-owner occupied   1,932,137     1,911,070     1,888,848     1,927,960     1,842,898  
Construction   94,649     87,493     78,235     82,883     84,717  
Total commercial real estate loans   2,466,152     2,441,961     2,401,989     2,429,181     2,370,553  
Commercial business loans   920,165     886,770     861,030     841,142     846,182  
Consumer loans:                    
Residential real estate   1,322,423     1,313,373     1,283,126     1,252,001     1,235,197  
Home equity   583,368     583,454     579,907     588,638     582,285  
Residential construction   13,620     20,632     32,750     32,063     37,579  
Other consumer   425,854     410,249     369,781     332,402     310,439  
Total consumer loans   2,345,265     2,327,708     2,265,564     2,205,104     2,165,500  
Total loans   5,731,582     5,656,439     5,528,583     5,475,427     5,382,235  
Net deferred loan costs and premiums   17,901     17,786     16,603     15,502     14,724  
Allowance for loan losses   (52,041 )   (51,636 )   (49,909 )   (49,163 )   (47,915 )
Loans receivable - net   5,697,442     5,622,589     5,495,277     5,441,766     5,349,044  
Federal Home Loan Bank of Boston stock, at cost   37,702     41,407     42,032     46,734     49,895  
Accrued interest receivable   25,061     24,823     25,485     23,209     22,333  
Deferred tax asset, net   27,600     32,706     31,473     30,190     28,710  
Premises and equipment, net   63,863     68,657     67,612     67,614     67,619  
Operating lease right-of-use assets   44,377                  
Financing lease right-of-use assets   4,356                  
Goodwill   116,727     116,769     115,281     115,281     115,281  
Core deposit intangible asset   5,607     6,027     3,561     3,849     4,154  
Cash surrender value of bank-owned life insurance   194,496     193,429     181,928     180,490     179,556  
Other assets   102,823     100,368     107,271     98,695     88,169  
Total assets   $ 7,339,940     $ 7,356,874     $ 7,207,498     $ 7,208,596     $ 7,068,674  
                     
                     
                     
                     
                     
                     
    March 31,

2019
  December 31,

2018
  September 30,

2018
  June 30,

2018
  March 31,

2018
LIABILITIES AND STOCKHOLDERS' EQUITY                    
Liabilities:                    
Deposits:                    
Non-interest-bearing   $ 777,969     $ 799,785     $ 759,210     $ 770,982     $ 753,575  
Interest-bearing   4,886,283     4,870,814     4,741,153     4,622,394     4,528,935  
Total deposits   5,664,252     5,670,599     5,500,363     5,393,376     5,282,510  
Mortgagors' and investor escrow accounts   11,510     4,685     9,597     14,526     11,096  
Federal Home Loan Bank advances and other borrowings   826,668     899,626     926,592     1,041,896     1,030,735  
Operating lease liabilities   56,265                  
Financing lease liabilities   4,585                  
Accrued expenses and other liabilities   52,562     69,446     61,128     56,921     51,333  
Total liabilities   6,615,842     6,644,356     6,497,680     6,506,719     6,375,674  
Total stockholders' equity   724,098     712,518     709,818     701,877     693,000  
Total liabilities and stockholders' equity   $ 7,339,940     $ 7,356,874     $ 7,207,498     $ 7,208,596     $ 7,068,674  





United Financial Bancorp, Inc. and Subsidiaries

Selected Financial Highlights

(Dollars In Thousands, Except Share Data)

(Unaudited)

  At or For the Three Months Ended
  March 31,

 2019
  December 31,

 2018
  September 30,

 2018
  June 30,

 2018
  March 31,

 2018
Share Data:                  
Basic net income per share $ 0.25     $ 0.24     $ 0.32     $ 0.31     $ 0.31  
Diluted net income per share 0.25     0.24     0.32     0.31     0.31  
Dividends declared per share 0.12     0.12     0.12     0.12     0.12  
Tangible book value per share $ 11.78     $ 11.54     $ 11.55     $ 11.40     $ 11.25  
Key Statistics:                  
Total revenue $ 55,917     $ 57,855     $ 57,984     $ 56,541     $ 55,832  
Total non-interest expense 39,187     43,718     38,943     38,370     36,736  
Average earning assets 6,783,604     6,708,701     6,671,424     6,584,938     6,568,168  
Key Ratios:                  
Return on average assets (annualized) 0.69 %   0.67 %   0.91 %   0.88 %   0.89 %
Return on average equity (annualized) 7.13 %   6.89 %   9.26 %   9.00 %   9.15 %
Tax-equivalent net interest margin (annualized) 2.81 %   2.90 %   2.92 %   2.97 %   2.90 %
Non-interest expense to average assets (annualized) 2.13 %   2.41 %   2.17 %   2.16 %   2.08 %
Cost of funds (annualized) (1) 1.61 %   1.48 %   1.36 %   1.20 %   1.07 %
Total revenue growth rate (3.35 )%   (0.22 )%   2.55 %   1.27 %   2.58 %
Total revenue growth rate (annualized) (13.40 )%   (0.89 )%   10.21 %   5.08 %   10.30 %
Average earning asset growth rate 1.12 %   0.56 %   1.31 %   0.26 %   1.35 %
Average earning asset growth rate (annualized) 4.47 %   2.24 %   5.25 %   1.02 %   5.38 %
Residential Mortgage Production:                  
Dollar volume (total) $ 31,882     $ 128,209     $ 143,673     $ 140,409     $ 94,433  
Mortgages originated for purchases 21,434     101,266     111,555     110,351     63,193  
Loans sold 89,980     108,663     99,372     99,637     99,899  
Income from mortgage banking activities 591     698     1,486     846     1,729  
Non-performing Assets:                  
Residential real estate $ 13,742     $ 13,217     $ 11,949     $ 11,221     $ 11,663  
Home equity 4,577     4,735     4,005     4,607     4,698  
Investor-owned commercial real estate 739     1,131     1,525     2,400     2,863  
Owner-occupied commercial real estate 1,830     2,450     1,202     2,176     2,326  
Construction 171     199     243     250     273  
Commercial business 1,627     944     985     1,196     1,579  
Other consumer 1,034     1,030     597     237     34  
Non-accrual loans 23,720     23,706     20,506     22,087     23,436  
Troubled debt restructured - non-accruing 5,479     6,971     6,706     7,330     8,308  
Total non-performing loans 29,199     30,677     27,212     29,417     31,744  
Other real estate owned 1,429     1,389     1,808     1,855     1,935  
Total non-performing assets $ 30,628     $ 32,066     $ 29,020     $ 31,272     $ 33,679  
Non-performing loans to total loans 0.51 %   0.54 %   0.49 %   0.54 %   0.59 %
Non-performing assets to total assets 0.42 %   0.44 %   0.40 %   0.43 %   0.48 %
Allowance for loan losses to non-performing loans 178.23 %   168.32 %   183.41 %   167.12 %   150.94 %
Allowance for loan losses to total loans 0.91 %   0.91 %   0.90 %   0.90 %   0.89 %
Non-GAAP Ratios: (2)                  
Efficiency ratio 69.67 %   69.18 %   65.61 %   65.18 %   63.97 %
Return on average tangible common equity (annualized) 8.85 %   8.55 %   11.30 %   11.03 %   11.25 %
Pre-provision net revenue to average assets 0.92 %   1.00 %   1.12 %   1.14 %   1.15 %

(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 page F-9 through page F-11.



United Financial Bancorp, Inc. and Subsidiaries

Average Balance Sheets, Interest and Yields/Costs

(Dollars In Thousands)

(Unaudited)

  For the Three Months Ended
  March 31, 2019   March 31, 2018
  Average

Balance
  Interest

and

Dividends
  Yield/Cost   Average

Balance
  Interest

and

Dividends
  Yield/Cost
Interest-earning assets:                      
Residential real estate $ 1,380,829     $ 12,886     3.73 %   $ 1,314,219     $ 11,506     3.51 %
Commercial real estate 2,358,955     27,302     4.63     2,281,868     23,656     4.15  
Construction 111,198     1,426     5.13     119,435     1,325     4.44  
Commercial business 888,436     10,612     4.78     842,809     8,382     3.98  
Home equity 582,180     7,874     5.48     578,776     6,528     4.57  
Other consumer 418,053     5,174     5.02     299,839     3,800     5.14  
Investment securities 966,841     7,819     3.23     1,041,849     8,624     3.31  
Federal Home Loan Bank stock 40,475     628     6.21     51,458     606     4.71  
Other earning assets 36,637     229     2.53     37,915     150     1.61  
Total interest-earning assets 6,783,604     73,950     4.37     6,568,168     64,577     3.94  
Allowance for loan losses (52,089 )           (47,780 )        
Non-interest-earning assets 639,923             554,333          
Total assets $ 7,371,438             $ 7,074,721          
Interest-bearing liabilities:                      
NOW and money market $ 2,567,634     $ 10,309     1.63 %   $ 2,146,945     $ 4,892     0.92 %
Savings 500,167     75     0.06     510,904     73     0.06  
Certificates of deposit 1,823,867     9,547     2.12     1,796,675     6,062     1.37  
Total interest-bearing deposits 4,891,668     19,931     1.65     4,454,524     11,027     1.00  
Federal Home Loan Bank advances 800,862     5,045     2.52     1,033,884     4,545     1.76  
Other borrowings 88,757     1,301     5.86     118,008     1,379     4.67  
Total interest-bearing liabilities 5,781,287     26,277     1.84     5,606,416     16,951     1.22  
Non-interest-bearing deposits 745,259             713,364          
Other liabilities 134,987             64,596          
Total liabilities 6,661,533             6,384,376          
Stockholders' equity 709,905             690,345          
Total liabilities and stockholders' equity $ 7,371,438             $ 7,074,721          
Net interest-earning assets $ 1,002,317             $ 961,752          
Tax-equivalent net interest income     47,673             47,626      
Tax-equivalent net interest rate spread (1)         2.53 %           2.72 %
Tax-equivalent net interest margin (2)         2.81 %           2.90 %
Average interest-earning assets to average interest-bearing liabilities         117.34 %           117.15 %
Less tax-equivalent adjustment     736             1,083      
Net interest income     $ 46,937             $ 46,543      

(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
  March 31, 2019   December 31, 2018
  Average

Balance
  Interest

and

Dividends
  Yield/Cost   Average

Balance
  Interest

and

Dividends
  Yield/Cost
Interest-earning assets:                      
Residential real estate $ 1,380,829     $ 12,886     3.73 %   $ 1,397,669     $ 12,929     3.70 %
Commercial real estate 2,358,955     27,302     4.63     2,302,741     26,085     4.43  
Construction 111,198     1,426     5.13     113,617     1,405     4.84  
Commercial business 888,436     10,612     4.78     861,311     10,481     4.76  
Home equity 582,180     7,874     5.48     585,178     7,848     5.32  
Other consumer 418,053     5,174     5.02     390,237     4,931     5.01  
Investment securities 966,841     7,819     3.23     967,881     8,564     3.53  
Federal Home Loan Bank stock 40,475     628     6.21     40,428     665     6.58  
Other earning assets 36,637     229     2.53     49,639     253     2.02  
Total interest-earning assets 6,783,604     73,950     4.37     6,708,701     73,161     4.31  
Allowance for loan losses (52,089 )           (50,754 )        
Non-interest-earning assets 639,923             586,449          
Total assets $ 7,371,438             $ 7,244,396          
Interest-bearing liabilities:                      
NOW and money market $ 2,567,634     $ 10,309     1.63 %   $ 2,583,982     $ 9,641     1.48 %
Savings 500,167     75     0.06     506,880     76     0.06  
Certificates of deposit 1,823,867     9,547     2.12     1,759,382     8,466     1.91  
Total interest-bearing deposits 4,891,668     19,931     1.65     4,850,244     18,183     1.49  
Federal Home Loan Bank advances 800,862     5,045     2.52     732,995     4,307     2.30  
Other borrowings 88,757     1,301     5.86     107,365     1,371     5.00  
Total interest-bearing liabilities 5,781,287     26,277     1.84     5,690,604     23,861     1.66  
Non-interest-bearing deposits 745,259             768,916          
Other liabilities 134,987             78,752          
Total liabilities 6,661,533             6,538,272          
Stockholders' equity 709,905             706,124          
Total liabilities and stockholders' equity $ 7,371,438             $ 7,244,396          
Net interest-earning assets $ 1,002,317             $ 1,018,097          
Tax-equivalent net interest income     47,673             49,300      
Tax-equivalent net interest rate spread (1)         2.53 %           2.65 %
Tax-equivalent net interest margin (2)         2.81 %           2.90 %
Average interest-earning assets to average interest-bearing liabilities         117.34 %           117.89 %
Less tax-equivalent adjustment     736             938      
Net interest income     $ 46,937             $ 48,362      

(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-9 through F-11 in the following press release tables:

  Three Months Ended
  March 31,

 2019
  December 31,

 2018
  September 30,

 2018
  June 30,

 2018
  March 31,

 2018
  (Dollars in thousands)
Net Income (GAAP) $ 12,657     $ 12,165     $ 16,308     $ 15,646     $ 15,787  
Non-GAAP adjustments:                  
Non-interest income (1,158 )   (25 )   58     (271 )   (342 )
Non-interest expense     2,677     (129 )   215      
Income tax benefit related to tax reform     (1,717 )            
Related income tax (benefit) expense 155     (557 )   15     (93 )   72  
Net adjustment (1,003 )   378     (56 )   (149 )   (270 )
Total net income (non-GAAP) $ 11,654     $ 12,543     $ 16,252     $ 15,497     $ 15,517  
                   
Non-interest income (GAAP) $ 8,980     $ 9,493     $ 9,555     $ 8,360     $ 9,289  
Non-GAAP adjustments:                  
Net loss (gain) on sales of securities (737 )   (25 )   58     (62 )   (116 )
BOLI claim benefit (421 )           (209 )   (226 )
Net adjustment (1,158 )   (25 )   58     (271 )   (342 )
Total non-interest income (non-GAAP) 7,822     9,468     9,613     8,089     8,947  
Total net interest income 46,937     48,362     48,429     48,181     46,543  
Total revenue (non-GAAP) $ 54,759     $ 57,830     $ 58,042     $ 56,270     $ 55,490  
                   
Non-interest expense (GAAP) $ 39,187     $ 43,718     $ 38,943     $ 38,370     $ 36,736  
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) $ 39,187     $ 41,041     $ 39,072     $ 38,155     $ 36,736  
                   
Total loans $ 5,731,582     $ 5,656,439     $ 5,528,583     $ 5,475,427     $ 5,382,235  
Non-covered loans (1) (658,455 )   (675,112 )   (708,621 )   (729,947 )   (771,802 )
Total covered loans $ 5,073,127     $ 4,981,327     $ 4,819,962     $ 4,745,480     $ 4,610,433  
Allowance for loan losses $ 52,041     $ 51,636     $ 49,909     $ 49,163     $ 47,915  
Allowance for loan losses to total loans 0.91 %   0.91 %   0.90 %   0.90 %   0.89 %
Allowance for loan losses to total covered loans 1.03 %   1.04 %   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
  March 31,

 2019
  December 31,

 2018
  September 30,

 2018
  June 30,

 2018
  March 31,

 2018
   
Efficiency Ratio:                  
Non-Interest Expense (GAAP) $ 39,187     $ 43,718     $ 38,943     $ 38,370     $ 36,736  
Non-GAAP adjustments:                  
Other real estate owned expense (105 )   (108 )   (256 )   (163 )   (167 )
Lease exit/disposal cost obligation     (466 )   129     (215 )    
Effect of position eliminations     (2,211 )            
Non-Interest Expense for Efficiency Ratio (non-GAAP) $ 39,082     $ 40,933     $ 38,816     $ 37,992     $ 36,569  
                   
Net Interest Income (GAAP) $ 46,937     $ 48,362     $ 48,429     $ 48,181     $ 46,543  
Non-GAAP adjustments:                  
Tax-equivalent adjustment for tax-exempt loans and investment securities 736     938     895     1,059     1,083  
                   
Non-Interest Income (GAAP) 8,980     9,493     9,555     8,360     9,289  
Non-GAAP adjustments:                  
Net (gain) loss on sales of securities (737 )   (25 )   58     (62 )   (116 )
Net loss on limited partnership investments 603     405     221     960     590  
BOLI claim benefit (421 )           (209 )   (226 )
Total Revenue for Efficiency Ratio (non-GAAP) $ 56,098     $ 59,173     $ 59,158     $ 58,289     $ 57,163  
                   
Efficiency Ratio (Non-Interest Expense for Efficiency Ratio (non-GAAP)/Total Revenue for Efficiency Ratio (non-GAAP)) 69.67 %   69.18 %   65.61 %   65.18 %   63.97 %
                   
                   
  Three Months Ended
  March 31,

 2019
  December 31,

 2018
  September 30,

 2018
  June 30,

 2018
  March 31,

 2018
   
Pre-Provision Net Revenue ("PPNR") to Average Assets (Annualized):        
Net Interest income (GAAP) $ 46,937     $ 48,362     $ 48,429     $ 48,181     $ 46,543  
Non-GAAP adjustments:                  
Tax-equivalent adjustment for tax-exempt loans and investment securities 736     938     895     1,059     1,083  
Total tax-equivalent net interest income (A) $ 47,673     $ 49,300     $ 49,324     $ 49,240     $ 47,626  
                   
Non-Interest Income (GAAP) 8,980     9,493     9,555     8,360     9,289  
Non-GAAP adjustments:                  
Net (gain) loss on sales of securities (737 )   (25 )   58     (62 )   (116 )
Net loss on limited partnership investments 603     405     221     960     590  
BOLI claim benefit (421 )           (209 )   (226 )
Non-Interest Income for PPNR (non-GAAP) (B) $ 8,425     $ 9,873     $ 9,834     $ 9,049     $ 9,537  
                   
Non-Interest Expense (GAAP) $ 39,187     $ 43,718     $ 38,943     $ 38,370     $ 36,736  
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) $ 39,187     $ 41,041     $ 39,072     $ 38,155     $ 36,736  
                   
Total PPNR (non-GAAP)  (A + B - C) : $ 16,911     $ 18,132     $ 20,086     $ 20,134     $ 20,427  
Average Assets 7,371,438     7,244,396     7,191,072     7,091,721     7,074,721  
PPNR to Average Assets (Annualized) 0.92 %   1.00 %   1.12 %   1.14 %   1.15 %
                   
Return on Average Tangible Common Equity (Annualized):        
Net Income (GAAP) $ 12,657     $ 12,165     $ 16,308     $ 15,646     $ 15,787  
Non-GAAP adjustments:                  
Intangible assets amortization, tax effected at 21% 332     332     228     241     266  
Net Income excluding intangible assets amortization, tax effected at 21% $ 12,989     $ 12,497     $ 16,536     $ 15,887     $ 16,053  
Average stockholders' equity (non-GAAP) $ 709,905     $ 706,124     $ 704,306     $ 695,301     $ 690,345  
Average goodwill & other intangible assets (non-GAAP) 122,597     121,614     119,009     119,288     119,611  
Average tangible common stockholders' equity (non-GAAP) $ 587,308     $ 584,510     $ 585,297     $ 576,013     $ 570,734  
Return on Average Tangible Common Equity (non-GAAP) 8.85 %   8.55 %   11.30 %   11.03 %   11.25 %



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

Corporate Communications

United Bank

860-291-3765

AJeamel@bankatunited.com

 

Source: United Financial Bancorp, Inc.

This article appears in: News Headlines

Referenced Stocks: UBNK










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