United Financial Bancorp, Inc. Announces Record Earnings For Fourth Quarter, Quarterly Dividend And Annual Meeting Date

GLASTONBURY, Conn., Jan. 24, 2017 /PRNewswire/ -- 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 December 31, 2016.

The Company reported net income of $14.6 million, or $0.29 per diluted share, for the quarter ended December 31, 2016, compared to net income for the linked quarter of $14.2 million, or $0.28 per diluted share. The Company reported net income of $9.9 million, or $0.20 per diluted share, for the quarter ended December 31, 2015.

"In the fourth quarter of  2016 the United Financial Bancorp, Inc. team delivered record revenue, record earnings per share, and strong loan growth all supported by an attractive cost structure and excellent asset quality," stated William H. W. Crawford, IV, Chief Executive Officer of the Company and the Bank. "I want to thank our employees for their relentless focus on serving the financial needs of our customers."

GAAP net income for the year ended December 31, 2016 was $49.7 million, or $0.99 per diluted share, compared to GAAP net income for the year ended December 31, 2015 of $49.6 million, or $1.00 per diluted share. Non-GAAP net income for the year ended December 31, 2016 was $49.6 million compared to $44.2 million for the year ended December 31, 2015. Non-GAAP net income for the year ended December 31, 2016 was adjusted for purchase accounting impacts, the net gain from sales of securities, bank-owned life insurance ("BOLI") claim benefit and the effect of position eliminations as part of the Company's 2016 reorganization plan. For the year ended December 31, 2015, non-GAAP net income was adjusted for purchase accounting impacts, the net gain from sales of securities, BOLI claim benefit, merger related expenses and fees associated with loan portfolio acquisitions.

Balance Sheet

Total assets at December 31, 2016 increased by $54.7 million to $6.60 billion from $6.54 billion at September 30, 2016. At December 31, 2016, total loans were $4.90 billion, representing an increase of $181.0 million, or 3.8%, from the linked quarter. Changes to loan balances during the fourth quarter of 2016 were highlighted by a $63.9 million, or 9.7%, increase in commercial business loans and a $24.6 million, or 6.3%, increase in owner-occupied commercial real estate loans. Total residential mortgages increased during the fourth quarter of 2016 by $27.1 million and total held for sale loans decreased $20.8 million. Total cash and cash equivalents decreased $123.3 million, or 57.6%, during the linked quarter partially due to the Company funding loan originations.

Deposits totaled $4.71 billion at December 31, 2016 and increased by $15.7 million, or 0.3%, from $4.70 billion at September 30, 2016. Reflective of growth in newly acquired deposit relationships, increases in the fourth quarter of 2016 included a $20.2 million, or 2.9%, increase in non-interest bearing deposits and a $65.6 million, or 15.2%, increase in NOW checking deposits. These increases were offset by a $115.4 million, or 6.2%, decrease in certificates of deposit, some of which migrated to money market deposit accounts that reflected growth of $40.5 million, or 3.4%, during the quarter ended December 31, 2016.

Total Federal Home Loan Bank advances and other borrowings increased by $66.7 million, or 6.1%, at December 31, 2016 from the linked quarter.

Net Interest Income

Net interest income increased by $143,000, or 0.3%, to $43.2 million during the fourth quarter of 2016 from $43.0 million during the linked quarter. Interest income totaled $53.6 million in the fourth quarter of 2016 and increased by $285,000, or 0.5%, in comparison to $53.3 million in the linked quarter. As communicated in the second quarter of 2016, the Company planned to grow assets at a slower pace and as a result, average interest-earning assets increased slightly by $69.4 million, or 1.2%, from the linked quarter. Average loan balances increased by $41.6 million, or 0.9%, from the linked quarter, highlighted by a $26.6 million, or 1.3%, increase in commercial real estate loans and a $1.2 million, or 0.2%, increase in commercial business loans. Average residential mortgage balances decreased by $6.7 million, or 0.6%, during the fourth quarter of 2016. On a non-GAAP basis, net interest income increased by $119,000 to $42.8 million during the fourth quarter of 2016 as compared to the linked quarter.

Interest expense increased by $142,000 to $10.4 million during the fourth quarter of 2016 from $10.3 million in the linked quarter. Average balance increases in the fourth quarter of 2016 included a $135.5 million, or 9.1%, increase in NOW and money market deposits and a $48.2 million, or 2.6%, increase in certificates of deposit. The growth observed in the money market and NOW checking deposits was largely driven by newly acquired deposit relationships.

The GAAP tax equivalent net interest margin for the fourth quarter of 2016 decreased by two basis points to 2.96% compared to 2.98% for the linked quarter. The yield on interest-earning assets decreased by two basis points in the fourth quarter of 2016 to 3.65% as compared to the linked quarter, and the total funding cost increased one basis point to 0.73% in the quarter ending December 31, 2016. The non-GAAP net interest margin, which excludes the impact of purchase accounting adjustments, decreased by two basis points to 2.94% in the fourth quarter of 2016 from 2.96% in the linked quarter.

Provision for Loan Losses

The provision for loan losses decreased by $407,000, or 10.8% to $3.4 million for the quarter ended December 31, 2016 compared to $3.8 million for the linked quarter. The decrease in the provision for the quarter is the result of slowed growth in the covered portfolio. Net charge-offs for the year ending December 31, 2016 totaled $4.5 million, or 0.10% as a percentage of average loans outstanding, as compared to $3.9 million, or 0.10% as a percentage of average loans outstanding, as of the year ending December 31, 2015. 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 economic and credit conditions, the direction of real estate values and delinquency trends.

Non-Interest Income

Total non-interest income increased by $1.0 million, or 13.3%, to $8.9 million for the quarter ended December 31, 2016 from $7.9 million in the linked quarter. The increase in the fourth quarter's non-interest income was driven primarily by a $640,000 increase in mortgage banking activities as compared to the linked quarter. Total non-interest income increased by $473,000 from the comparable quarter in 2015.

Non-Interest Expense

GAAP non-interest expense for the quarter ended December 31, 2016 totaled $33.3 million and increased by $1.1 million, or 3.3%, from the linked quarter, while non-GAAP non-interest expense increased by $1.0 million, or 3.2%. The increase in GAAP non-interest expense during the quarter was mostly due to the $978,000, or 5.3%, increase in salaries and employee benefits expense as compared to the linked quarter. The increase in salaries and employee benefits expense was due to the Company continuing to make investments in hiring experienced information technology personnel, as well as increases in commissions and health insurance expense as compared to the linked quarter. The Company's cost structure continues to be favorable with non-interest expense to average assets reported at 2.05% for the quarter ended December 31, 2016, on an annualized basis. Total non-GAAP non-interest expense increased by $1.1 million from the comparable quarter in 2015.

Asset Quality

Asset quality remained strong and stable. Non-performing assets decreased by $167,000 to $36.0 million at December 31, 2016 from $36.1 million at September 30, 2016. The ratio of non-performing assets to total assets as compared to the linked quarter decreased to 0.54% at December 31, 2016 from 0.55% at September 30, 2016.

Capital

The Company reported Tangible Common Equity ("TCE") of $534.7 million, or 8.24% of average assets, at December 31, 2016. Tangible book value per share decreased to $10.53 at December 31, 2016 from $10.60 at September 30, 2016. The decrease was primarily due to a net contraction in accumulated other comprehensive income as a result of the increase in interest rates during the fourth quarter of 2016 as well as the cash dividend payment to shareholders of $0.12 per share, which reduced shareholders' equity by $6.0 million. These decreases were partially offset by the impact of the Company's net income of $14.6 million, and the change in the value of the Company's derivative strategy. Book value per share at December 31, 2016 was $12.91.

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 February 3, 2017 and payable on February 15, 2017. This dividend equates to a 3.00% annualized yield based on the $16.01 average closing price of the Company's common stock in the fourth quarter of 2016. The Company has paid dividends for 43 consecutive quarters.

Investor Conference Call

United Financial Bancorp, Inc. will host a conference call on Wednesday, January 25, 2017 at 10:00 a.m. Eastern Time (ET) to discuss the Company's fourth quarter results. Those wishing to participate in the call may dial toll-free 1-888-339-0797. A telephone replay of the call will be available through February 8, 2017 by calling 1-877-344-7529 and entering conference number 10098766. 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.

Annual Meeting

The Board of Directors approved May 24, 2017 as the date of the Company's 2017 Annual Meeting of Shareholders (the "Annual Meeting") and set the record date on which the Company's shareholders who will be eligible to vote at the Annual Meeting as the close of business on March 15, 2017.

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 December 31, 2016, the Company had $6.6 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
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 the 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 below in the following press release tables.

SOURCE United Financial Bancorp, Inc.

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