United Financial Bancorp, Inc. Announces Record Quarterly Earnings in Third Quarter and Quarterly Dividend

GLASTONBURY, Conn., Oct. 18, 2016 /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 September 30, 2016.

The Company had net income of $14.2 million, or $0.28 per diluted share, for the quarter ended September 30, 2016, compared to net income for the linked quarter of $9.1 million, or $0.18 per diluted share. Adjusted operating net income (Non-GAAP) for the third quarter of  2016 was $14.1 million, or $0.28 per diluted share, compared to $10.0 million, or $0.20 per diluted share for the linked quarter. Adjusted operating net income for the second and third quarters of  2016 was adjusted primarily for purchase accounting impacts and the net gain from sales of securities. Additionally, in the second quarter of 2016, adjusted operating net income reflected the effect of position eliminations as part of the Company's announced reorganization plan. The Company reported net income of $13.4 million, or $0.27 per diluted share, for the quarter ended September 30, 2015.

"I am pleased to report that in the third quarter of 2016, United Financial Bancorp, Inc. delivered record quarterly earnings of $0.28 per share, in addition to a 2% linked quarter increase in tangible book value. Tangible book value increased to $10.60 at September 30, 2016 from $10.39 in the linked quarter after paying our shareholders a $0.12 per share dividend, or a 3.56% annualized dividend yield. These results were driven by improved revenue growth, disciplined expense management and excellent asset quality," stated William H. W.  Crawford, IV, Chief Executive Officer of the Company and the Bank. "I want to thank our United Bank teammates for their relentless focus on serving the financial needs of our customers and our communities."

Balance Sheet

Total assets at September 30, 2016 increased by $129.8 million to $6.54 billion from $6.42 billion at June 30, 2016. At September 30, 2016, total loans were $4.72 billion, representing a decrease of $10.2 million or 0.2%, from the linked quarter. Changes to loan balances during the third quarter of 2016 were highlighted by a $19.3 million, or 4.2%, increase in home equity loans and a $7.8 million, or 2.0%, increase in owner-occupied commercial real estate loans, partially offset by an $11.0 million, or 1.6%, decrease in commercial business loans. Total residential mortgages declined during the third quarter of 2016 by $42.2 million; while  total held for sale loans increased $52.8 million reflecting the Company's long-term strategy to reduce on-balance sheet exposure to residential mortgage loans.

Deposits totaled $4.70 billion at September 30, 2016 and increased by $240.1 million, or 5.4%, from $4.46 billion at June 30, 2016. Reflective of the Company's strategy to focus on low cost core deposit growth, increases in the third quarter of 2016 included a $14.2 million, or 2.1%, increase in non-interest bearing deposits and a $16.5 million, or 4.0%, increase in NOW checking deposits. The increase in money market deposits was in large part due to the return in the third quarter of the prior quarter seasonal outflows of municipal deposits in addition to new and increased balances in other areas of business. 

Total Federal Home Loan Bank advances and other borrowings declined by $119.3 million at September 30, 2016 from the linked quarter.

Net Interest Income

Net interest income increased by $1.5 million to $43.0 million during the third quarter of 2016 from $41.5 million during the linked quarter. Interest income totaled $53.3 million in the third quarter of 2016 and increased by $1.7 million, or 3.3%, in comparison to $51.6 million in the linked quarter. Interest expense increased by $182,000 to $10.3 million during the third quarter of 2016 from $10.1 million in the linked quarter. As communicated in the prior quarter, the Company planned to grow assets at a slower pace and as a result, average interest-earning assets increased slightly by $97.2 million, or 1.7%, from the linked quarter, while on an operating basis, net interest income increased by $1.1 million to $42.6 million during the third quarter of 2016 as compared to the linked quarter. The Company has reported growth in operating net interest income for the past six consecutive quarters.

The GAAP tax equivalent net interest margin for the third quarter of 2016 increased by four basis points to 2.98% compared to 2.94% for the linked quarter. The yield on interest-earning assets increased by four basis points in the third quarter of 2016 to 3.67% as compared to the linked quarter, and the total funding cost was unchanged at 0.72% in the quarter ending September 30, 2016 as compared to the linked quarter. The operating net interest margin, which excludes the impact of purchase accounting adjustments, increased by two basis points to 2.96% in the third quarter of 2016 from 2.94% in the linked quarter.

Provision for Loan Losses

The provision for loan losses increased by $142,000, or 3.9% to $3.8 million for the quarter ended September 30, 2016 compared to $3.6 million for the linked quarter due to covered loan portfolio growth.  Net charge-offs for the third quarter of 2016 decreased by $516,000 to $647,000, or 0.05% annualized as a percentage of average loans outstanding, from $1.2 million, or 0.10% annualized as a percentage of average loans outstanding in the linked quarter. 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 $1.4 million, or 20.8%, to $7.9 million for the quarter ended September 30, 2016 from $6.5 million in the linked quarter. Adjusted operating non-interest income, which excludes the impact of gains on the sales of securities, increased by $1.6 million to $7.8 million, or 26.1%, for the third quarter of 2016. The increase in the third quarter's non-interest income was driven by an increase from core banking fees, commercial account analysis revenue and revenue growth in the Company's financial advisory line of business. Total non-interest income was flat from the comparable quarter in 2015.

Non-Interest Expense

Non-interest expense for the quarter ended September 30, 2016 totaled $32.2 million and decreased by $2.4 million, or 7.0%, from the linked quarter, while adjusted operating non-interest expense decreased by $1.1 million, or 3.3%. The main driver in the decline in non-interest expense during the quarter was the $1.7 million, or 8.6%, decrease in salaries and employee benefits expense as compared to the linked quarter due primarily to a $1.4 million decrease in salaries expense as a result of the Company's second quarter of 2016 reorganization plan execution. The Company's cost structure continues to be favorable with non-interest expense as a percentage of average assets reported at 2.00% and adjusted operating non-interest expense as a percentage of average assets reported at 1.98% for the quarter ended September 30, 2016, both on an annualized basis.  Total adjusted operating non-interest expense was flat from the comparable quarter in 2015.

Asset Quality

Asset quality remained strong and stable. Non-performing assets decreased by $3.6 million to $36.1 million at September 30, 2016 from $39.7 million at June 30, 2016. The ratio of non-performing assets to total assets as compared to the linked quarter decreased to 0.55% at September 30, 2016 from 0.62% at June 30, 2016.

Capital

The Company reported Tangible Common Equity ("TCE") of $534.7 million, or 8.31% of average assets, at September 30, 2016. Tangible book value per share increased to $10.60 at September 30, 2016 from $10.39 at June 30, 2016, primarily due to the impact of the Company's net income of $14.2 million, partially offset by the cash dividend payment to shareholders of $0.12 per share, which reduced shareholders' equity by $6.0 million. Book value per share at September 30, 2016 was $13.00.

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 October 28, 2016 and payable on November 9, 2016. This dividend equates to a 3.56% annualized yield based on the $13.48 average closing price of the Company's common stock in the third quarter of 2016. The Company has paid dividends for 42 consecutive quarters.

Investor Conference Call

United Financial Bancorp, Inc. will host a conference call on Wednesday, October 19, 2016 at 10:00 a.m. Eastern Time (ET) to discuss the Company's third 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 November 2, 2016 by calling 1-877-344-7529 and entering conference number 10094001. 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 September 30, 2016, the Company had $6.5 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.

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.