United Financial Bancorp Reports Second Quarter Results

WEST SPRINGFIELD, Mass., July 18, 2013 /PRNewswire/ -- United Financial Bancorp, Inc. (the "Company") (NASDAQ Global Select Market: UBNK), the holding company for United Bank (the "Bank"), reported net income of $4.0 million, or $0.20 per diluted share, for the second quarter of 2013 compared to net income of $2.6 million, or $0.17 per diluted share, for the corresponding period in 2012.  Excluding branch closing costs totaling $477,000 ($282,000 net of tax benefit), acquisition related expenses of $123,000 ($118,000 net of tax benefit) resulting from the Company's acquisition of New England Bancshares, Inc. in November 2012, and a $200,000 gain related to an investment in a venture capital fund which is accounted for on a cost basis ($119,000 net of tax expense), net income would have been $4.3 million, or $0.22 per diluted share, for the second quarter of 2013. Excluding acquisition related expenses totaling $592,000 (no tax impact), net income would have been $3.2 million, or $0.21 per diluted share, for the second quarter of 2012.

For the six months ended June 30, 2013, net income was $8.8 million, or $0.43 per diluted share, compared to net income of $5.4 million, or $0.36 per diluted share, for the same period in 2012.  Excluding branch closing costs totaling $987,000 ($584,000 net of tax benefit), acquisition related expenses of $281,000 ($270,000 net of tax benefit) resulting from the Company's acquisition of New England Bancshares, Inc. and a $200,000 gain related to a cost basis investment ($119,000 net of tax expense), net income would have been $9.5 million, or $0.47 per diluted share, for the six months ended June 30, 2013.  Excluding acquisition related expenses of $592,000 (no tax impact), net income would have been $6.0 million, or $0.40 per diluted share, for the first six months of 2012. 

The Company also announced a quarterly cash dividend of $0.11 per share, payable on August 29, 2013 to shareholders of record as of August 8, 2013. Based upon the closing share price of $15.92 as of July 17, 2013 and the annualized dividend of $0.44, the dividend yield on the Company's common stock is 2.76%.

Financial Highlights:

• Total loans increased by $44.4 million, or 2%, to $1.86 billion at June 30, 2013 from $1.82 billion at December 31, 2012, primarily due to growth of $41.2 million or 4% in the commercial portfolios (commercial, commercial real estate and construction).
• Credit quality remained solid, as demonstrated by the non-performing loans to total loans ratio of 75 basis points at June 30, 2013 and an annualized net charge-offs to average loans ratio of 9 basis points for the six months ended June 30, 2013.
• Core deposits increased by $50.2 million, or 4%, to $1.19 billion at June 30, 2013 from $1.14 billion at December 31, 2012. 
• Tangible book value per share was $13.00 at June 30, 2013.  During the first six months of 2013, the Company repurchased 533,064 shares at an average price of $14.86 per share. At June 30, 2013, the Company had approximately 253,000 shares remaining to be purchased under its current plan approved in October, 2012. 

"We are pleased with our performance this quarter, which reflects continued loan and core deposit growth," commented Richard B. Collins, President and Chief Executive Officer.  "Our asset quality metrics are excellent and compare favorably to industry averages and those of our peers.  Our balance sheet is healthy with solid capital and liquidity positions and we continue our focus on profitably growing our franchise."

Earnings Summary

• Net interest income increased $6.4 million, or 48%, to $19.7 million for the second quarter of 2013 as a result of an increase in average interest-earning assets and net interest margin expansion.  Total average interest-earning assets increased $683.2 million, or 44%, to $2.23 billion for the second quarter of 2013 driven by the acquisition of New England Bank and organic loan growth. The net interest margin increased by 9 basis points to 3.53% for the three months ended June 30, 2013 reflecting an increase of $990,000 in the net accretion of acquisition accounting adjustments, offset in part by a decrease in spreads in response to the challenging interest rate environment.
• Provision for loan losses increased by $142,000, or 19%, to $892,000 for the three months ended June 30, 2013 primarily attributable to an increase in general reserves associated with stronger commercial loan origination activity and an increase in impaired loan reserves.
• Non-interest income increased by $445,000, or 17%, to $3.0 million for the three months ended June 30, 2013 due to growth in other income, bank-owned life insurance income and deposit services charges.  Other income increased by $400,000 to $554,000 reflecting a $200,000 gain related to a cost basis investment, higher loan prepayment penalties and late charges and increased credit enhancement fees related to loans sold to the FHLBB.  Fee income on depositors' accounts increased $68,000, or 4%, driven by a larger deposit base related to the New England Bank's acquisition, offset to a large extent by the negative impact of new regulations, including the Durbin Amendment, on debit card fee income.  
• Non-interest expense increased $4.8 million, or 42%, to $16.3 million in the second quarter of 2013.  Excluding branch closing costs of $477,000 and acquisition related costs of $123,000, non-interest expense would have increased by $4.8 million, or 44% to $15.7 million primarily reflecting costs to operate, expand and promote our new Connecticut franchise, a new loan production office opened in Glastonbury, Connecticut during the second quarter of 2012, a new branch established in Northborough, Massachusetts during the fourth quarter of 2012, annual wage increases and increased expenses related to loan workout and collection activities.
• Income taxesincreased $440,000, or 41%, to $1.5 million for the three months ended June 30, 2013 primarily due to an increase in pre-tax income.  

BalanceSheet Activity:

• Total assets increased $46.0 million, or 2%, to $2.45 billion at June 30, 2013 from $2.40 billion at December 31, 2012 reflecting growth in loans and cash balances offset in part by a decrease in the investment securities portfolio.
• Total loans increased $44.4 million, or 2%, to $1.86 billion at June 30, 2013 due to growth in commercial mortgages ($29.1 million), construction loans ($14.0 million), and residential mortgages ($6.5 million) as a result of successful business development efforts and competitive products and pricing.  These items were partially reduced by modest runoff in the consumer and commercial segments.
• Total investment securities decreased $17.8 million, or 5%, to $359.5 million at June 30, 2013 as cash flows from existing bonds were used to fund loan originations.
• Total deposits increased $76.9 million, or 4%, to $1.93 billion at June 30, 2013 reflecting growth of $50.2 million, or 4%, in core account balances and an increase of $26.7 million, or 4%, in certificates of deposit.  The growth in core deposit account balances was driven by sales and marketing initiatives, competitive products and pricing, attention to excellence in customer service and targeted promotional activities.  Core deposit balances were $1.19 billion, or 62% of total deposits, at June 30, 2013 compared to $1.14 billion, or 62%, at December 31, 2012.

Credit Quality:

• Non-performing assets totaled $15.8 million, or 0.65% of total assets, at June 30, 2013 compared to $17.3 million, or 0.72% of total assets, at December 31, 2012.  The $1.5 million decrease in non-performing assets reflects sales of OREO properties and successful loan workout activities.
• The ratio of the allowance for loan losses to total loans was 0.70% at June 30, 2013 as compared to 0.67% at December 31, 2012.  Excluding the aggregate impact of acquired loans totaling $588.4 million at June 30, 2013 and $664.6 million at December 31, 2012, the ratio of the allowance for loan losses to total loans would have been 1.03% at June 30, 2013 and 1.05% at December 31, 2012.  Net charge-offs totaled $861,000 or 0.09% of average loans outstanding for the six months ended June 30, 2013 as compared to net charge-offs of $781,000 or 0.14% of average loans outstanding for the same period in 2012.     

Capital and Liquidity:

• At June 30, 2013, the Company remained well capitalized with atangible equity-to-tangible assets ratioof 10.62% and an equity-to-assets ratio of 12.27%.
• At June 30, 2013, the Company continued to have considerable liquidity consisting of significant balances at the Federal Reserve Bank of Boston, a large amount of marketable loans and investment securities, substantial unused borrowing capacity at the Federal Home Loan Bank of Boston and the Federal Reserve Bank of Boston and access to funding through a repurchase agreement and brokered deposit markets.

United Financial Bancorp, Inc. is a publicly owned corporation and the holding company for United Bank, a federally chartered bank headquartered at 95 Elm Street, West Springfield, MA, 01090.  The Company's common stock is traded on the NASDAQ Global Select Market under the symbol UBNK.   The Company had total consolidated assets of approximately $2.45 billion as of June 30, 2013. United Bank provides an array of financial products and services through its 16 branch offices and two express drive-up branches in the Springfield region of Western Massachusetts; seven branches in the Worcester region of Central Massachusetts; and 12 branches in Connecticut'sHartford, Tolland and New Haven counties.  The Bank also operates loan production offices located in Beverly, Massachusetts and Glastonbury, Connecticut. Through its Wealth Management Group, the Bank offers access to a wide range of investment and insurance products and services, as well as financial, estate and retirement strategies and products.  For more information regarding the Bank's products and services and for United Financial Bancorp, Inc. investor relations information please visit www.bankatunited.com or on Facebook at facebook.com/bankatunited.

Except for the historical information contained in this press release, the matters discussed may be deemed to be forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties, including changes in economic conditions in the Company's market area, changes in policies by regulatory agencies, fluctuations in interest rates, demand for loans in the Company's market area, competition, and other risks detailed from time to time in the Company's SEC reports.  Actual strategies and results in future periods may differ materially from those currently expected.   These forward-looking statements represent the Company's judgment as of the date of this release.  The Company disclaims, however, any intent or obligation to update these forward-looking statements.

CONFERENCE CALL:

United Financial Bancorp, Inc. will host a conference call at 10:00 a.m. Eastern time on Friday, July 19, 2013 to discuss the results for the quarter.  Participants should dial-in to the call a few minutes before it begins. 

Audio:

Dial in number: 1-888-317-6016

Replay:

Dial in number: 1-877-344-7529

Conference number: 10030753

A telephone replay of the call will be available one hour after the end of the conference call through August 20, 2013 at 9:00 a.m. EDT.

For More Information Contact:
Mark A. Roberts
Executive Vice President & CFO
(413) 787-1700

SOURCE United Financial Bancorp, Inc.