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

GLASTONBURY, Conn., April 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 March 31, 2017.

The Company reported net income of $13.7 million, or $0.27 per diluted share, for the quarter ended March 31, 2017, compared to net income for the linked quarter of $14.6 million, or $0.29 per diluted share. The Company reported net income of $11.9 million, or $0.24 per diluted share, for the quarter ended March 31, 2016.

"Over the last three consecutive quarters, United Financial Bancorp, Inc. has averaged a Return on Average Assets (ROA) of 0.87% and a Return on Average Tangible Common Equity (ROTCE) of 10.89%, as the Company continues to make progress on its Four Key Objectives communicated in April 2016," stated William H.W. Crawford, IV, Chief Executive Officer of the Company and the Bank. "I want to thank our dedicated employees, executives, and Board of Directors for their relentless focus on making United Bank a better bank for our customers and communities each day."

Balance Sheet

Assets totaled $6.70 billion at March 31, 2017 and increased $97.1 million, or 1.5%, from $6.60 billion at December 31, 2016. At March 31, 2017, total loans were $4.94 billion, representing an increase of $42.3 million, or 0.9%, from the linked quarter. Changes to loan balances during the first quarter of 2017 were highlighted by a $44.6 million, or 6.2%, increase in commercial business loans and a $16.6 million, or 4.0%, increase in owner-occupied commercial real estate loans. Total residential mortgages increased during the first quarter of 2017 by $11.2 million, or 1.0%. Total cash and cash equivalents decreased $6.3 million, or 6.9%, during the linked quarter, while the available for sale securities portfolio increased by $32.3 million, or 3.1%.

Deposits totaled $4.79 billion at March 31, 2017 and increased by $79.2 million, or 1.7%, from $4.71 billion at December 31, 2016. In the first quarter of 2017, money market deposit accounts increased $157.2 million, or 12.9%, and NOW checking deposits increased $39.2 million, or 7.9%, from the linked quarter, reflective of a seasonal increase in municipal deposits and successful new account acquisition. These increases were offset by a $110.1 million, or 6.3%, decrease in certificates of deposit, some of which migrated to money market deposit accounts.

Total Federal Home Loan Bank advances decreased by $37.8 million, or 3.6%, over the linked quarter, while other borrowings increased by $48.2 million, or 39.2%, due to an increase in the use of reverse repurchase borrowings.

Net Interest Income

Net interest income increased by $1.1 million, or 2.6%, to $44.3 million during the first quarter of 2017, from $43.2 million during the linked quarter. Interest income totaled $55.2 million in the first quarter of 2017 and increased by $1.5 million, or 2.9%, in comparison to $53.6 million in the linked quarter. Average interest-earning assets increased slightly by $59.0 million, or 1.0%, from the linked quarter. Average loan balances increased by $93.9 million, or 1.9%, from the linked quarter, highlighted by a $59.6 million, or 8.9%, increase in commercial business loans and a $27.0 million, or 5.4%, increase in home equity loans. Average residential mortgage balances increased by $12.4 million, or 1.0%, during the first quarter of 2017.

Interest expense increased by $420,000 to $10.9 million during the first quarter of 2017 from $10.4 million in the linked quarter. Average balance shifts in the first quarter of 2017 included a $222.6 million, or 13.7%, increase in NOW and money market deposits and a $156.2 million, or 8.4%, decrease in certificates of deposit. The growth observed in the money market and NOW checking deposits was largely driven by seasonal increases in municipal accounts.

The non-GAAP tax equivalent net interest margin for the first quarter of 2017 increased by seven basis points to 3.03% compared to 2.96% for the linked quarter, reflective of the modestly asset sensitive position of the balance sheet to changes in interest rates. The yield on interest-earning assets increased by ten basis points in the first quarter of 2017 to 3.75% as compared to the linked quarter, and the cost of total interest bearing liabilities increased by three basis points to 0.85% in the quarter ending March 31, 2017 as compared to the linked quarter.  The total funding cost increased by one basis point to 0.74% in the quarter ending March 31, 2017. The improvement in the yield on interest-earning assets, as compared to the linked quarter, was largely driven by a six basis point increase in the yield on commercial real estate loans, which represents 34.3% of the Company's interest-earning assets. Further contributing to the linked quarter yield improvement was an eight basis points increase in the average residential loan yield and an 11 basis point increase in the average home equity loan yield.

Provision for Loan Losses

The provision for loan losses decreased by $1.1 million, or 31.9%, to $2.3 million for the quarter ended March 31, 2017 compared to $3.4 million for the linked quarter. The decrease in the provision for the quarter is the result of slowed growth in the covered loan portfolio. Net charge-offs for the quarter ending March 31, 2017 totaled $1.8 million, or 0.14%, as a percentage of average loans outstanding, as compared to $1.6 million, or 0.14% as a percentage of average loans for the quarter ended December 31, 2016. 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 decreased by $431,000, or 4.8%, to $8.5 million for the quarter ended March 31, 2017 from $8.9 million in the linked quarter. The decrease in the first quarter's non-interest income was driven primarily by a $1.5 million decrease in mortgage banking activities as compared to the linked quarter. Total non-interest income increased by $1.8 million from the comparable quarter in 2016.

Non-Interest Expense

Non-interest expense for the quarter ended March 31, 2017 totaled $34.7 million and increased by $1.4 million, or 4.2%, from the linked quarter. The increase in non-interest expense during the quarter was primarily due to the $813,000, or 22.2%, increase in occupancy and equipment expense as compared to the linked quarter, largely driven by weather related expenses. Salaries and employee benefit expense increased by approximately $451,000, or 2.3% over the linked quarter. This increase was mainly due to seasonality of withholding taxes  and lower deferred expenses related to loan originations, and was partially offset by decreases in commissions and incentives and health insurance costs.

Asset Quality

Asset quality remained strong and stable. Non-performing assets increased by $461,000 to $36.4 million at March 31, 2017 from $36.0 million at December 31, 2016. The ratio of non-performing assets to total assets as compared to the linked quarter remained unchanged at 0.54% for March 31, 2017 and December 31, 2016.

Capital

The Company reported Tangible Common Equity ("TCE") of $545.2 million, or 8.3% of average assets, at March 31, 2017. Tangible book value per share increased to $10.75 at March 31, 2017 from $10.53 at December 31, 2016. The increase was primarily driven by the impact of the Company's net income of $13.7 million and improvement in accumulated other comprehensive income as a result of an increase in the market value of the Company's investment portfolio and derivative strategy, partially offset by the cash dividend payment to shareholders of $0.12 per share, which reduced shareholders' equity by $6.1 million. Book value per share at March 31, 2017 was $13.13.

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 28, 2017 and payable on May 10, 2017. This dividend equates to a 2.73% annualized yield based on the $17.58 average closing price of the Company's common stock in the first quarter of 2017. The Company has paid dividends for 44 consecutive quarters.

Investor Conference Call

United Financial Bancorp, Inc. will host a conference call on Wednesday, April 19, 2017 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 3, 2017 by calling 1-877-344-7529 and entering conference number 10104762. 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, 2017, the Company had $6.7 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. 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.