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

HARTFORD, Conn., April 17, 2018 (GLOBE NEWSWIRE) -- United Financial Bancorp, Inc. ("United Financial" or the "Company") (NASDAQ:UBNK), the holding company for United Bank (the "Bank"), announced results for the quarter ended March 31, 2018.

The Company reported net income of $15.8 million, or $0.31 per diluted share, for the quarter ended March 31, 2018, compared to net income for the linked quarter of $9.5 million, or $0.19 per diluted share. The Company reported net income of $13.7 million, or $0.27 per diluted share, for the quarter ended March 31, 2017.

"I am pleased to report 15% year-over-year earnings per diluted share ("EPS") growth, along with 10% growth in total deposits, and 9% growth in non-interest bearing deposits, total tangible book value plus dividend returns, and loans year-over-year. Asset quality, capital, and liquidity remain strong and stable," stated William H.W. Crawford, IV, Chief Executive Officer and President of the Company and the Bank. "I would like to thank our United Bank teammates and directors for their continued steadfast focus on servicing our customers and communities."

Balance Sheet

Assets totaled $7.07 billion at March 31, 2018 and decreased $45.5 million, or 0.6%, from $7.11 billion at December 31, 2017. At March 31, 2018, total loans were $5.38 billion, representing an increase of $42.3 million, or 0.8%, from the linked quarter. Changes to loan balances during the first quarter of 2018 were highlighted by a $30.8 million, or 2.6%, increase in residential real estate loans, a $17.7 million, or 6.0%, increase in other consumer loans, a $6.6 million, or 8.5%, increase in commercial construction loans, and a $5.9 million, or 0.7%, increase in commercial business loans. The Company observed an $11.6 million, or 0.6%, decrease in investor non-owner occupied commercial real estate loans, and a $2.9 million, or 0.6%, decrease in owner-occupied commercial real estate loans, which were attributable to higher payoffs in the existing loan portfolio. Loans held for sale decreased $50.7 million, or 44.4%, from the linked quarter, as the Company delivered a significant level of loans held for sale to third party investors during the first quarter of 2018. Total cash and cash equivalents decreased $19.4 million, or 21.9%, from the linked quarter.

Deposits totaled $5.28 billion at March 31, 2018 and increased by $84.3 million, or 1.6%, from $5.20 billion at December 31, 2017. Increases in deposit balances during the first quarter of 2018 were highlighted by a $72.1 million, or 5.4%, increase in money market account balances, a $23.9 million, or 3.0%, increase in NOW checking balances, and a $9.5 million, or 1.9%, increase in savings account balances. Offsetting these increases was a $25.0 million, or 3.2%, decline in non-interest bearing checking deposits, largely due to seasonal outflows that are typical of commercial DDA accounts in the first quarter.

Total Federal Home Loan Bank advances declined by $132.5 million, or 12.7%, over the linked quarter as advance maturities were primarily repaid with deposit growth.

Net Interest Income

Net interest income decreased slightly by $306,000, or 0.7%, on a linked quarter basis, to $46.5 million, primarily attributable to an increase in interest expense of $2.1 million, or 13.9%, to $17.0 million, which was partially offset by an increase in interest income of $1.8 million, or 2.9%, to $63.5 million.  Average interest-earning assets increased by $87.2 million, or 1.3%, primarily due to growth in average loan balances, which increased by $108.6 million, or 2.0%.  Average loan balance growth was driven by a $47.0 million, or 2.1%, increase in average commercial real estate loans, a $29.4 million, or 3.6%, increase in average commercial business loans, a $21.4 million, or 7.7%, increase in average other consumer loans, and a $9.8 million, or 1.7%, increase in average home equity loans. Average residential real estate loan balances increased slightly by $3.9 million, or 0.3%, as the Company continues to actively sell loan originations in the secondary market.

Interest expense increased by $2.1 million, or 13.9%, to $17.0 million during the first quarter of 2018, from $14.9 million in the linked quarter. Average interest-bearing deposit balances increased by $46.3 million, or 1.1%, primarily driven by a $21.8 million, or 1.0%, increase in average NOW and money market deposit balances, and a $31.7 million, or 1.8%, increase in average certificates of deposit balances. Slightly offsetting the aforementioned increases was a $7.1 million, or 1.4%, decrease in average savings account balances. The overall growth observed in average deposit balances was largely driven by continued success in new account acquisition strategies.

The tax equivalent net interest margin decreased by eight basis points to 2.90% in the first quarter from the linked period. Due to tax reform in late December 2017, the tax equivalency impact was unfavorable by six basis points as compared to the linked period. Also contributing to the decline was an increase of 15 basis points in the cost of interest-bearing liabilities to 1.22%, partially offset by a five basis point increase in the yield on interest-earning assets to 3.94%. The interest-earning asset yield improvement was largely driven by an 11 basis point increase in the yield on commercial real estate loans, a 13 basis point increase in the yield on commercial business loans, an 18 basis point increase in the yield on home equity loans, and a 43 basis point increase in the other consumer loan yield. Offsetting the improvement in the loan yield was a 29 basis point decline in the yield of the investment portfolio, which was largely driven by the negative impact that tax reform has on the yield on tax-exempt municipal bonds, and, to a lesser extent, increased amortization in collateralized loan obligations. The total cost of funds increased by 11 basis points to 1.07% in the first quarter driven by a ten basis point increase in the cost of interest-bearing deposits and a 31 basis point increase in the cost of Federal Home Loan Bank of Boston advances.

Provision for Loan Losses

The provision for loan losses totaled $1.9 million for the quarter ended March 31, 2018 as compared to $2.3 million for the linked quarter. Net charge-offs for the quarter ended March 31, 2018 totaled $1.1 million, or 0.08%, as a percentage of average loans outstanding, as compared to $1.5 million, or 0.11% as a percentage of average loans for the quarter ended December 31, 2017. 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 increased by $1.7 million, or 22.5%, to $9.3 million for the quarter ended March 31, 2018 from $7.6 million in the linked quarter. The increase in the first quarter's non-interest income was driven primarily by increases in income from mortgage banking activities, other income, and service charges and fees. These increases were offset by a decrease in bank-owned life insurance income, due to lower death benefits received relative to the prior quarter. Additionally, there were lower losses on limited partnership investments as compared to the linked quarter, which contributed to the overall increase in non-interest income.

Non-Interest Expense

Non-interest expense for the quarter ended March 31, 2018 totaled $36.7 million and decreased by $501,000, or 1.3%, from the linked quarter. The decrease in non-interest expense during the quarter was primarily due to decreases in marketing and promotions, other non-interest expenses, and occupancy and equipment.  These decreases were partially offset by increases in salaries and employee benefits, and to a lesser extent, professional fees, as compared to the linked quarter.

Asset Quality

Asset quality remained strong and stable for the period, with non-performing assets decreasing slightly by $137,000 to $33.7 million at March 31, 2018 from $33.8 million at December 31, 2017. The ratio of non-performing assets to total assets for the quarters ended March 31, 2018 and December 31, 2017 remained unchanged at 0.48%.

Capital

The Company reported Tangible Common Equity ("TCE") of $573.6 million, or 8.1% of average assets, for the quarter ended March 31, 2018. Tangible book value per share increased to $11.25 at March 31, 2018 from $11.24 at December 31, 2017. The increase was primarily driven by the impact of the Company's net income of $15.8 million, partially offset by the cash dividend payment to shareholders of $0.12 per share, as well as a decrease in accumulated other comprehensive income as a result of a decrease in the market value of the Company's investment portfolio, as compared to the previous quarter. Book value per share at March 31, 2018 was $13.59.

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 27, 2018 and payable on May 9, 2018. This dividend equates to a 2.90% annualized yield based on the $16.58 average closing price of the Company’s common stock in the first quarter of 2018. The Company has paid dividends for 48 consecutive quarters.

Investor Conference Call

United Financial Bancorp, Inc. will host a conference call on Wednesday, April 18, 2018 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 2, 2018 by calling 1-877-344-7529 and entering conference number 10118840. 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, business, and consumer banking products and services to customers throughout Connecticut and Massachusetts. United Bank is a financially strong, leading New England bank with more than 50 branches in two states and several commercial and residential loan production offices. United Financial Bancorp, Inc. trades on the NASDAQ Global Select Stock Exchange under the ticker symbol “UBNK.” At March 31, 2018, the Company had $7.07 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 may contain certain forward-looking statements about the Company. Forward-looking statements include statements regarding anticipated future events 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 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
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United Financial Bancorp, Inc. and Subsidiaries
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United Financial Bancorp, Inc. and Subsidiaries
Selected Financial Highlights
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United Financial Bancorp, Inc. and Subsidiaries
Average Balance Sheets, Interest and Yields/Costs
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United Financial Bancorp, Inc. and Subsidiaries
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United Financial Bancorp, Inc. and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
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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: