United Financial Bancorp, Inc. Announces Record Earnings Per Share For Second Quarter And Quarterly Dividend

GLASTONBURY, Conn., July 18, 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 June 30, 2017.

The Company reported net income of $16.2 million, or $0.32 per diluted share, for the quarter ended June 30, 2017, compared to net income for the linked quarter of $13.7 million, or $0.27 per diluted share. The Company reported net income of $9.1 million, or $0.18 per diluted share, for the quarter ended June 30, 2016.

"I am pleased to announce that United Financial Bancorp, Inc. delivered record earnings of $0.32 per diluted share in the second quarter of 2017 driven by record revenue, expense control and continued excellent asset quality. For the last four consecutive quarters, the Company has averaged a Return on Average Assets (ROA) of 0.89%, a Return on Average Equity (ROE) of 8.94%, and a Return on Average Tangible Common Equity (ROTCE) of 11.15%. Tangible book value increased 9.7% annualized from the linked quarter after paying our 2.83% annualized dividend yield," stated William H.W. Crawford, IV, Chief Executive Officer of the Company and the Bank. "I would like to thank our United Bank team for the continued steadfast focus on serving the needs of our customers and communities."

Balance Sheet

Assets totaled $6.88 billion at June 30, 2017 and increased $179.5 million, or 2.7%, from $6.70 billion at March 31, 2017. At June 30, 2017, total loans were $5.05 billion, representing an increase of $110.2 million, or 2.2%, from the linked quarter. Changes to loan balances during the second quarter of 2017 were highlighted by a $64.5 million, or 3.8%, increase in investor non-owner occupied commercial real estate loans, a $23.8 million, or 3.1%, increase in commercial business loans, and a $21.8 million, or 4.2%, increase in home equity loans. Total residential mortgages increased during the second quarter of 2017 by $5.1 million, or 0.4%. Total cash and cash equivalents decreased $9.8 million, or 11.6%, from the linked quarter, while the available-for-sale securities portfolio remained relatively flat, with a slight decrease of $2.3 million, or 0.2%.

Deposits totaled $4.99 billion at June 30, 2017 and increased by $203.1 million, or 4.2%, from $4.79 billion at March 31, 2017. In the second quarter of 2017, NOW checking deposits increased by $96.5 million, or 17.9%, from the linked quarter, while non-interest bearing checking deposits increased by $31.4 million, or 4.5%; the increases are reflective of success in new account acquisition strategies deployed throughout the first half of 2017. The Company experienced an increase of $99.7 million, or 6.0%, in certificates of deposit as compared to the linked quarter. These increases were offset by a $25.7 million, or 1.9%, decrease in money market accounts, which is typically experienced in the second quarter due to seasonal withdrawals in municipal deposit accounts.

Total Federal Home Loan Bank advances decreased by $18.7 million, or 1.9%, over the linked quarter, while other borrowings decreased by $22.5 million, or 13.2%, due to a decrease in the use of reverse repurchase borrowings.

Net Interest Income

Income growth in the second quarter of 2017, as compared to the linked quarter, was highlighted by an increase in net interest income of  $2.0 million, or 4.6%, to $46.3 million, primarily attributable to an increase in interest income of $3.4 million, or  6.2%, to $58.6 million.  Average interest-earning assets increased by $191.5 million, or 3.1%, primarily due to growth in average loan balances which increased by $187.1 million, or 3.8%.  Average loan balance growth was driven by a $62.5 million, or 5.1%, increase in average residential mortgage loans, including residential mortgage loans held for sale, a $55.5 million, or 2.6%, increase in average commercial real estate loans, and a $50.1 million, or 6.9%, increase in average commercial business loans.

Interest expense increased by $1.4 million to $12.2 million during the second quarter of 2017 from $10.9 million in the linked quarter. Average balance shifts in the second quarter of 2017 included an $86.5 million, or 4.7%, increase in average NOW and money market deposits and a $13.2 million, or 2.5%, increase in average savings deposits. The growth observed in average deposit balances was largely driven by new account acquisition strategies developed in the first and second quarters of 2017.

The non-GAAP tax equivalent net interest margin for the second quarter of 2017 increased by three basis points to 3.04%, reflective of the modestly asset sensitive position of the balance sheet to changes in interest rates. The yield on interest-earning assets increased by nine basis points in the second quarter of 2017 to 3.82% and the cost of total interest-bearing liabilities increased by seven basis points to 0.91%.  The interest-earning asset yield improvement was largely driven by a six basis point increase in the yield on commercial real estate loans, which represents 34.2% of the Company's interest-earning assets, a 19 basis point increase in the average commercial business loan yield, and a 21 basis point increase in the average home equity loan yield. The increase in the loan portfolio yield was driven by increases in the 1-month LIBOR and Prime rate indices.  The total funding cost increased by seven basis points to 0.81% in the second quarter driven by a seven basis point increase in the cost of interest-bearing liabilities. The cost of interest bearing deposits increased five basis points, which represent 78.0% of costing liabilities, while the cost of borrowings increased eight basis points.

Provision for Loan Losses

The provision for loan losses remained constant at $2.3 million for the quarters ended June 30, 2017 and March 31, 2017.  The provision level reflects lower net charge-offs and slower migration of the purchased performing loans to the covered portfolio. Net charge-offs for the quarter ending June 30, 2017 totaled $534,000, or 0.04%, as a percentage of average loans outstanding, as compared to $1.8 million, or 0.14% as a percentage of average loans for the quarter ended March 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 economic and credit conditions, the direction of real estate values and delinquency trends.

Non-Interest Income

Total non-interest income increased by $971,000, or 11.4%, to $9.5 million for the quarter ended June 30, 2017 from $8.5 million in the linked quarter. The increase in the second quarter's non-interest income was driven primarily by an increase in service charges and fees and mortgage banking activities as compared to the linked quarter. This was partially offset by higher losses on limited partnership investments, as well as a decrease in net gains from security sales.

Non-Interest Expense

Non-interest expense for the quarter ended June 30, 2017 totaled $35.0 million and increased by $284,000, or 0.8%, from the linked quarter. The increase in non-interest expense during the quarter was primarily due to an increase in marketing and promotions and other expenses, partially offset by a decrease in occupancy and equipment and professional fees as compared to the linked quarter.

Asset Quality

Asset quality remained strong and stable for the period, with non-performing assets decreasing by $2.1 million to $34.3 million at June 30, 2017 from $36.4 million at March 31, 2017. The ratio of non-performing assets to total assets for the quarter ended June 30, 2017 was 0.50%, as compared to 0.54% in the linked quarter.

Capital

The Company reported Tangible Common Equity ("TCE") of $559.0 million, or 8.2% of average assets, at June 30, 2017. Tangible book value per share increased to $11.01 at June 30, 2017 from $10.75 at March 31, 2017. The increase was primarily driven by the impact of the Company's net income of $16.2 million and improvement in accumulated other comprehensive income of $2.2 million resulting from an increase in the market value of the Company's investment portfolio, partially offset by the cash dividend payment to shareholders of $0.12 per share, which reduced stockholders' equity by $6.1 million. Book value per share at June 30, 2017 was $13.38.

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 28, 2017 and payable on August 9, 2017. This dividend equates to a 2.83% annualized yield based on the $16.98 average closing price of the Company's common stock in the second quarter of 2017. The Company has paid dividends for 45 consecutive quarters.

Investor Conference Call

United Financial Bancorp, Inc. will host a conference call on Wednesday, July 19, 2017 at 10:00 a.m. Eastern Time (ET) to discuss the Company's second 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 August 2, 2017 by calling 1-877-344-7529 and entering conference number 10109852. 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 June 30, 2017, the Company had $6.88 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 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.