United Financial Bancorp, Inc. Announces Record Annual Earnings of $59.9 Million; $1.17 Earnings Per Share

HARTFORD, Conn., Jan. 22, 2019 (GLOBE NEWSWIRE) — 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, 2018.

The Company reported net income of $12.2 million, or $0.24 per diluted share, for the quarter ended December 31, 2018, compared to net income for the linked quarter of $16.3 million, or $0.32 per diluted share. The Company reported net income of $9.5 million, or $0.19 per diluted share, for the quarter ended December 31, 2017. Net income for the year ended December 31, 2018 was $59.9 million, or $1.17 per diluted share, compared to net income of $54.6 million, or $1.07 per diluted share, for the year ended December 31, 2017.

“In the fourth quarter of 2018, United Financial Bancorp, Inc. delivered annualized linked quarter loan growth of 9% and deposit growth of 12%, while maintaining pristine asset quality and a strong balance sheet,” stated William H.W. Crawford, IV, Chief Executive Officer and President of the Company and the Bank. “I would like to thank our United employees for their continued steadfast focus on serving the needs of our customers and communities.”

Balance Sheet

Assets totaled $7.36 billion at December 31, 2018, increasing $149.4 million from $7.21 billion at September 30, 2018.  At December 31, 2018, total loans were $5.66 billion, representing an increase of $127.9 million, or 2.3%, from the linked quarter. Changes to loan balances during the fourth quarter of 2018 were highlighted by a $40.5 million, or 10.9%, increase in other consumer loans, a $30.2 million, or 2.4%, increase in residential real estate loans, a $25.7 million, or 3.0%, increase in commercial business loans, a $22.2 million, or 1.2%, increase in investor non-owner occupied commercial real estate loans, a $9.3 million, or 11.8%, increase in commercial construction loans, and an $8.5 million, or 2.0%, increase in owner-occupied commercial real estate loans. Slightly offsetting the increased loan balances above was a $12.1 million, or 37.0%, decrease in residential construction loans from the linked quarter. Loans held for sale also decreased $8.2 million, or 9.4%, from the linked quarter. Total cash and cash equivalents increased $19.4 million, or 24.6%, from the linked quarter.

Deposits totaled $5.67 billion at December 31, 2018 and increased by $170.2 million, or 3.1%, from $5.50 billion at September 30, 2018. The increase in deposits was positively impacted by the Webster Bank deposit acquisition of $109.4 million that occurred in the beginning of October 2018. Increases in deposit balances during the fourth quarter of 2018 were highlighted by a $121.2 million, or 7.3%, increase in certificates of deposit balances, a $40.6 million, or 5.3%, increase in demand deposit balances, a $17.1 million, or 3.6%, increase in savings deposit balances, and an $11.8 million, or 1.4%, increase in NOW checking account balances. Slightly offsetting these increases was a $20.5 million, or 1.2%, decrease in money market account balances. The growth in the certificate of deposit account balances was attributable to the success of two retail pricing campaigns executed during the fourth quarter.

Total Federal Home Loan Bank advances decreased by $15.7 million, or 1.9%, over the linked quarter as the Company utilized excess cash from deposit growth to pay off maturing advances.

Net Interest Income

Net interest income decreased by $67,000, or 0.1%, on a linked quarter basis, to $48.4 million, primarily attributable to an increase in loan interest income of $2.2 million, or 3.5%, to $63.2 million, offset by an increase in interest expense of $2.1 million, or 9.6%, to $23.9 million. Average interest-earning assets increased by $37.3 million, or 0.6%, on a linked quarter basis, primarily due to growth in average loan balances, which increased by $61.8 million, or 1.1%. Average loan balance growth was driven by a $38.3 million, or 10.9%, increase in average other consumer loans, a $21.7 million, or 1.6%, increase in average residential real estate loans, and a $19.4 million, or 2.3%, increase in average commercial business loans. Slightly offsetting the increases was a $17.6 million, or 0.8%, decrease in average commercial real estate loans.

Interest expense increased by $2.1 million, or 9.6%, to $23.9 million during the fourth quarter of 2018, from $21.8 million in the linked quarter. Average interest-bearing deposit balances increased by $141.5 million, or 3.0%, on a linked quarter basis, primarily driven by a $68.3 million, or 2.7%, increase in average NOW and money market account balances, a $68.0 million, or 4.0%, increase in average certificates of deposits, and a $5.2 million, or 1.0%, increase in average savings account balances. Average non-interest bearing deposits increased by $18.4 million, or 2.5%, as compared to the linked quarter. Average Federal Home Loan Bank of Boston advances decreased by $111.2 million, or 13.2%, as the Company used funds obtained through deposit growth to pay down the maturing advances. The overall growth observed in average account balances is attributable to the continued success of the Company’s retail deposit acquisition strategies.

The tax-equivalent net interest margin decreased by two basis points to 2.90% in the fourth quarter of 2018, from 2.92% in the linked period. The decline in the net interest margin was driven by a 14 basis point increase in the cost of interest-bearing liabilities, which was partially offset by a ten basis point increase in the yield of interest-earning assets. The interest-earning asset yield improvement was largely driven by a 33 basis point increase in the yield on commercial business loans, a 25 basis point increase in the yield on home equity loans, an eight basis point increase in the yield on residential real estate loans, and a three basis point increase in the yield on commercial real estate loans. The total cost of funds increased by 12 basis points to 1.48% in the fourth quarter of 2018 driven by a 16 basis point increase in the cost of interest-bearing deposits and a 17 basis point increase in the cost of Federal Home Loan Bank of Boston advances.

Provision for Loan Losses

The provision for loan losses totaled $2.6 million for the quarter ended December 31, 2018 as compared to $2.0 million for the linked quarter. Net charge-offs for the quarter ended December 31, 2018 totaled $891,000, or 0.06%, as a percentage of average loans outstanding, as compared to $1.3 million, or 0.09%, as a percentage of average loans for the quarter ended September 30, 2018. 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 decreased slightly by $62,000, or 0.6%, to $9.5 million for the quarter ended December 31, 2018 from $9.6 million in the linked quarter. The decrease in the fourth quarter’s non-interest income was driven primarily by decreases in income from mortgage banking activities and other income. Additionally, there were higher losses on limited partnership investments as compared to the linked quarter, which contributed to the overall decrease in non-interest income. These decreases were offset primarily by an increase in service charges and fees, as well as bank-owned life insurance income.

Non-Interest Expense

Non-interest expense for the quarter ended December 31, 2018 totaled $43.7 million and increased by $4.8 million, or 12.3%, from the linked quarter. The increase in non-interest expense during the quarter was primarily due to increases in salaries and employee benefits, occupancy and equipment, and the core deposit intangible amortization. These increases were primarily offset by decreases in other expenses and FDIC insurance assessment expenses as compared to the linked quarter.

The primary driver of the increase in non-interest expense occurred late in the quarter as the Company shifted its mortgage banking strategy to reflect our customers’ preference to conduct business with us over the internet and through our direct sales channel. Consequently, we reduced staffing in our mortgage division, resulting in a $2.2 million severance expense (pre-tax) in the quarter ending December 31, 2018. Other notable increases in the quarter included a change in Company policy related to the carryover of unused vacation days by employees year-over-year, resulting in the Company recording $439,000 of additional expense. The Company also recorded lease impairment expense of $466,000 as a result of branch consolidation. Additionally, the Webster Bank branch acquisition also closed in the fourth quarter, resulting in $371,000 of other expenses related to this transaction.

Asset Quality

Asset quality remained strong and stable for the period, with non-performing assets increasing by $3.0 million to $32.1 million at December 31, 2018 from $29.0 million at September 30, 2018. The ratio of non-performing assets to total assets for the quarter ended December 31, 2018 was 0.44%, as compared to 0.40% in the linked quarter.

Capital

The Company reported Tangible Common Equity (“TCE”) of $589.7 million, or 8.1% of average assets, for the quarter ended December 31, 2018. Tangible book value per share decreased slightly to $11.54 at December 31, 2018 from $11.55 at September 30, 2018. The decrease was primarily driven by the cash dividend payment to shareholders of $0.12 per share, an increase in intangibles associated with the Webster Bank branch acquisition, and the continued repurchase of Company stock during the quarter, which was slightly offset by the Company’s net income of $12.2 million. Book value per share at December 31, 2018 was $13.94, as compared to $13.88 in the linked quarter.

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 1, 2019 and payable on February 13, 2019. This dividend equates to a 3.04% annualized yield based on the $15.78 average closing price of the Company’s common stock in the fourth quarter of 2018. The Company has paid dividends for 51 consecutive quarters.

Investor Conference Call

United Financial Bancorp, Inc. will host a conference call on Wednesday, January 23, 2019 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 1-800-544-8281. A telephone replay of the call will be available through February 6, 2019 by calling 1-877-344-7529 and entering conference number 10127439. 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 13, 2019 as the date of the Company’s 2019 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 4, 2019.

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, small business, wealth management and consumer banking products and services to customers throughout Connecticut, Massachusetts and Rhode Island. United Bank is a financially strong, leading New England bank headquartered in Hartford, Connecticut with more than 50 branches in three states. United Financial Bancorp, Inc. trades on the NASDAQ Global Select Stock Exchange under the ticker symbol “UBNK.” At December 31, 2018, the Company had $7.36 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
Consolidated Statements of Net Income
(Unaudited)

    For the Three Months Ended
December 31,
  For the Year Ended
December 31,
    2018   2017   2018   2017
Interest and dividend income:   (In thousands, except share data)
Loans   $ 63,227     $ 52,758     $ 237,026     $ 200,734  
Securities-taxable interest   5,705     5,643     22,994     22,550  
Securities-non-taxable interest   2,339     2,571     9,469     9,679  
Securities-dividends   702     669     2,823     2,902  
Interest-bearing deposits   250     86     726     389  
Total interest and dividend income   72,223     61,727     273,038     236,254  
Interest expense:                
Deposits   18,183     9,958     57,841     33,565  
Borrowed funds   5,678     4,920     23,682     18,447  
Total interest expense   23,861     14,878     81,523     52,012  
Net interest income   48,362     46,849     191,515     184,242  
Provision for loan losses   2,618     2,250     8,914     9,396  
Net interest income after provision for loan losses   45,744     44,599     182,601     174,846  
Non-interest income:                
Service charges and fees   7,447     6,031     26,771     25,374  
Net gain from sales of securities   25     72     145     782  
Income from mortgage banking activities   698     1,184     4,759     5,539  
Bank-owned life insurance income   1,517     1,939     6,294     5,462  
Net loss on limited partnership investments   (405 )   (1,441 )   (2,176 )   (3,023 )
Other income (loss)   211     (204 )   904     431  
Total non-interest income   9,493     7,581     36,697     34,565  
Non-interest expense:                
Salaries and employee benefits   25,341     20,752     91,295     80,061  
Service bureau fees   2,309     2,304     8,901     9,263  
Occupancy and equipment   6,384     5,036     20,488     16,902  
Professional fees   1,136     996     4,418     4,305  
Marketing and promotions   1,108     1,011     4,101     4,047  
FDIC insurance assessments   611     821     2,740     3,076  
Core deposit intangible amortization   420     336     1,350     1,411  
Other   6,409     5,981     24,474     23,685  
Total non-interest expense   43,718     37,237     157,767     142,750  
Income before income taxes   11,519     14,943     61,531     66,661  
Provision (benefit) for income taxes   (646 )   5,442     1,625     12,043  
Net income   $ 12,165     $ 9,501     $ 59,906     $ 54,618  
                 
Net income per share:                
Basic   $ 0.24     $ 0.19     $ 1.18     $ 1.09  
Diluted   $ 0.24     $ 0.19     $ 1.17     $ 1.07  
Weighted-average shares outstanding:                
Basic   50,613,498     50,392,382     50,555,212     50,283,071  
Diluted   50,970,000     51,024,881     51,012,239     50,922,652  

United Financial Bancorp, Inc. and Subsidiaries
Consolidated Statements of Net Income
(Unaudited)

    For the Three Months Ended
    December 31,
2018
  September 30,
2018
  June 30,
2018
  March 31,
2018
  December 31,
2017
Interest and dividend income:   (In thousands, except share data)
Loans   $ 63,227     $ 61,061     $ 57,958     $ 54,780     $ 52,758  
Securities-taxable interest   5,705     5,822     5,969     5,498     5,643  
Securities-non-taxable interest   2,339     2,347     2,354     2,429     2,571  
Securities-dividends   702     748     736     637     669  
Interest-bearing deposits   250     213     113     150     86  
Total interest and dividend income   72,223     70,191     67,130     63,494     61,727  
Interest expense:                    
Deposits   18,183     15,767     12,864     11,027     9,958  
Borrowed funds   5,678     5,995     6,085     5,924     4,920  
Total interest expense   23,861     21,762     18,949     16,951     14,878  
Net interest income   48,362     48,429     48,181     46,543     46,849  
Provision for loan losses   2,618     2,007     2,350     1,939     2,250  
Net interest income after provision for loan losses   45,744     46,422     45,831     44,604     44,599  
Non-interest income:                    
Service charges and fees   7,447     6,623     6,542     6,159     6,031  
Net gain (loss) from sales of securities   25     (58 )   62     116     72  
Income from mortgage banking activities   698     1,486     846     1,729     1,184  
Bank-owned life insurance income   1,517     1,460     1,671     1,646     1,939  
Net loss on limited partnership investments   (405 )   (221 )   (960 )   (590 )   (1,441 )
Other income (loss)   211     265     199     229     (204 )
Total non-interest income   9,493     9,555     8,360     9,289     7,581  
Non-interest expense:                    
Salaries and employee benefits   25,341     22,643     22,113     21,198     20,752  
Service bureau fees   2,309     2,209     2,165     2,218     2,304  
Occupancy and equipment   6,384     4,487     4,668     4,949     5,036  
Professional fees   1,136     1,013     1,105     1,164     996  
Marketing and promotions   1,108     1,119     1,189     685     1,011  
FDIC insurance assessments   611     655     735     739     821  
Core deposit intangible amortization   420     288     305     337     336  
Other   6,409     6,529     6,090     5,446     5,981  
Total non-interest expense   43,718     38,943     38,370     36,736     37,237  
Income before income taxes   11,519     17,034     15,821     17,157     14,943  
Provision (benefit) for income taxes   (646 )   726     175     1,370     5,442  
Net income   $ 12,165     $ 16,308     $ 15,646     $ 15,787     $ 9,501  
                     
Net income per share:                    
Basic   $ 0.24     $ 0.32     $ 0.31     $ 0.31     $ 0.19  
Diluted   $ 0.24     $ 0.32     $ 0.31     $ 0.31     $ 0.19  
Weighted-average shares outstanding:                    
Basic   50,613,498     50,624,832     50,504,273     50,474,942     50,392,382  
Diluted   50,970,000     51,104,776     50,974,283     50,996,596     51,024,881  

United Financial Bancorp, Inc. and Subsidiaries
Consolidated Statements of Condition
(Unaudited)

    December 31,
2018
  September 30,
2018
  June 30,
2018
  March 31,
2018
  December 31,
2017
ASSETS   (In thousands)
Cash and cash equivalents:                    
Cash and due from banks   $ 36,434     $ 48,786     $ 62,188     $ 45,332     $ 56,661  
Short-term investments   61,530     29,809     46,987     23,910     32,007  
Total cash and cash equivalents   97,964     78,595     109,175     69,242     88,668  
Available for sale securities – At fair value   973,347     972,035     1,006,135     1,031,277     1,050,787  
Held to maturity securities – At amortized cost                   13,598  
Loans held for sale   78,788     86,948     85,458     63,394     114,073  
Loans:                    
Commercial real estate loans:                    
Owner-occupied   443,398     434,906     418,338     442,938     445,820  
Investor non-owner occupied   1,911,070     1,888,848     1,927,960     1,842,898     1,854,459  
Construction   87,493     78,235     82,883     84,717     78,083  
Total commercial real estate loans   2,441,961     2,401,989     2,429,181     2,370,553     2,378,362  
Commercial business loans   886,770     861,030     841,142     846,182     840,312  
Consumer loans:                    
Residential real estate   1,313,373     1,283,126     1,252,001     1,235,197     1,204,401  
Home equity   583,454     579,907     588,638     582,285     583,180  
Residential construction   20,632     32,750     32,063     37,579     40,947  
Other consumer   410,249     369,781     332,402     310,439     292,781  
Total consumer loans   2,327,708     2,265,564     2,205,104     2,165,500     2,121,309  
Total loans   5,656,439     5,528,583     5,475,427     5,382,235     5,339,983  
Net deferred loan costs and premiums   17,786     16,603     15,502     14,724     14,794  
Allowance for loan losses   (51,636 )   (49,909 )   (49,163 )   (47,915 )   (47,099 )
Loans receivable – net   5,622,589     5,495,277     5,441,766     5,349,044     5,307,678  
Federal Home Loan Bank of Boston stock, at cost   41,407     42,032     46,734     49,895     50,194  
Accrued interest receivable   24,823     25,485     23,209     22,333     22,332  
Deferred tax asset, net   32,706     31,473     30,190     28,710     25,656  
Premises and equipment, net   68,657     67,612     67,614     67,619     67,508  
Goodwill   116,769     115,281     115,281     115,281     115,281  
Core deposit intangible asset   6,027     3,561     3,849     4,154     4,491  
Cash surrender value of bank-owned life insurance   193,429     181,928     180,490     179,556     148,300  
Other assets   100,368     107,271     98,695     88,169     105,593  
Total assets   $ 7,356,874     $ 7,207,498     $ 7,208,596     $ 7,068,674     $ 7,114,159  
                     
    December 31,
2018
  September 30,
2018
  June 30,
2018
  March 31,
2018
  December 31,
2017
LIABILITIES AND STOCKHOLDERS’ EQUITY                    
Liabilities:                    
Deposits:                    
Non-interest-bearing   $ 799,785     $ 759,210     $ 770,982     $ 753,575     $ 778,576  
Interest-bearing   4,870,814     4,741,153     4,622,394     4,528,935     4,419,645  
Total deposits   5,670,599     5,500,363     5,393,376     5,282,510     5,198,221  
Mortgagors’ and investor escrow accounts   4,685     9,597     14,526     11,096     7,545  
Federal Home Loan Bank advances and other borrowings   899,626     926,592     1,041,896     1,030,735     1,165,054  
Accrued expenses and other liabilities   69,446     61,128     56,921     51,333     50,011  
Total liabilities   6,644,356     6,497,680     6,506,719     6,375,674     6,420,831  
Total stockholders’ equity   712,518     709,818     701,877     693,000     693,328  
Total liabilities and stockholders’ equity   $ 7,356,874     $ 7,207,498     $ 7,208,596     $ 7,068,674     $ 7,114,159  


United Financial Bancorp, Inc. and Subsidiaries

Selected Financial Highlights
(Dollars In Thousands, Except Share Data)
(Unaudited)

  At or For the Three Months Ended
  December 31,
 2018
  September 30,
 2018
  June 30,
 2018
  March 31,
 2018
  December 31,
 2017
Share Data:                  
Basic net income per share $ 0.24     $ 0.32     $ 0.31     $ 0.31     $ 0.19  
Diluted net income per share 0.24     0.32     0.31     0.31     0.19  
Dividends declared per share 0.12     0.12     0.12     0.12     0.12  
Tangible book value per share $ 11.54     $ 11.55     $ 11.40     $ 11.25     $ 11.24  
Key Statistics:                  
Total revenue $ 57,855     $ 57,984     $ 56,541     $ 55,832     $ 54,430  
Total non-interest expense 43,718     38,943     38,370     36,736     37,327  
Average earning assets 6,708,701     6,671,424     6,584,938     6,568,168     6,480,966  
Key Ratios:                  
Return on average assets (annualized) 0.67 %   0.91 %   0.88 %   0.89 %   0.54 %
Return on average equity (annualized) 6.89 %   9.26 %   9.00 %   9.15 %   5.50 %
Tax-equivalent net interest margin (annualized) 2.90 %   2.92 %   2.97 %   2.90 %   2.98 %
Residential Mortgage Production:                  
Dollar volume (total) $ 128,209     $ 143,673     $ 140,409     $ 94,433     $ 135,522  
Mortgages originated for purchases 101,266     111,555     110,351     63,193     83,181  
Loans sold 108,663     99,372     99,637     99,899     94,738  
Income from mortgage banking activities 698     1,486     846     1,729     1,184  
Non-performing Assets:                  
Residential real estate $ 13,217     $ 11,949     $ 11,221     $ 11,663     $ 11,824  
Home equity 4,735     4,005     4,607     4,698     4,968  
Investor-owned commercial real estate 1,131     1,525     2,400     2,863     1,821  
Owner-occupied commercial real estate 2,450     1,202     2,176     2,326     1,664  
Construction 199     243     250     273     1,398  
Commercial business 944     985     1,196     1,579     1,477  
Other consumer 1,030     597     237     34     35  
Non-accrual loans 23,706     20,506     22,087     23,436     23,187  
Troubled debt restructured – non-accruing 6,971     6,706     7,330     8,308     8,475  
Total non-performing loans 30,677     27,212     29,417     31,744     31,662  
Other real estate owned 1,389     1,808     1,855     1,935     2,154  
Total non-performing assets $ 32,066     $ 29,020     $ 31,272     $ 33,679     $ 33,816  
Non-performing loans to total loans 0.54 %   0.49 %   0.54 %   0.59 %   0.59 %
Non-performing assets to total assets 0.44 %   0.40 %   0.43 %   0.48 %   0.48 %
Allowance for loan losses to non-performing loans 168.32 %   183.41 %   167.12 %   150.94 %   148.76 %
Allowance for loan losses to total loans 0.91 %   0.90 %   0.90 %   0.89 %   0.88 %
Non-GAAP Ratios: (1)                  
Non-interest expense to average assets (annualized) 2.41 %   2.17 %   2.16 %   2.08 %   2.13 %
Efficiency ratio (2) 69.18 %   65.61 %   65.18 %   63.97 %   63.53 %
Cost of funds (annualized) (3) 1.48 %   1.36 %   1.20 %   1.07 %   0.96 %
Total revenue growth rate (0.22 )%   2.55 %   1.27 %   2.58 %   (1.38 )%
Total revenue growth rate (annualized) (0.89 )%   10.21 %   5.08 %   10.30 %   (5.54 )%
Average earning asset growth rate 0.56 %   1.31 %   0.26 %   1.35 %   0.89 %
Average earning asset growth rate (annualized) 2.24 %   5.25 %   1.02 %   5.38 %   3.56 %
Return on average tangible common equity (annualized) (2) 8.55 %   11.30 %   11.03 %   11.25 %   6.81 %
Pre-provision net revenue to average assets (2) 1.00 %   1.12 %   1.14 %   1.15 %   1.19 %

(1)     Non-GAAP ratios are not financial measurements required by generally accepted accounting principles; however, management believes such information is useful to investors in evaluating Company performance.
(2)     Calculations of these non-GAAP metrics are provided after the reconciliations of non-GAAP financial measures and appear on page F-10 through page F-12.
(3)     The cost of funds ratio represents interest incurred on liabilities as a percentage of average non-interest bearing deposits and interest-bearing liabilities.


United Financial Bancorp, Inc. and Subsidiaries

Average Balance Sheets, Interest and Yields/Costs
(Dollars In Thousands)
(Unaudited)

  For the Three Months Ended
  December 31, 2018   December 31, 2017
  Average
Balance
  Interest
and
Dividends
  Yield/Cost   Average
Balance
  Interest
and
Dividends
  Yield/Cost
Interest-earning assets:                      
Residential real estate $ 1,397,669     $ 12,929     3.70 %   $ 1,310,352     $ 11,343     3.47 %
Commercial real estate 2,302,741     26,085     4.43     2,234,878     23,089     4.04  
Construction 113,617     1,405     4.84     122,151     1,453     4.66  
Commercial business 861,311     10,481     4.76     813,457     7,994     3.85  
Home equity 585,178     7,848     5.32     569,021     6,293     4.39  
Other consumer 390,237     4,931     5.01     278,465     3,309     4.71  
Investment securities 967,881     8,564     3.53     1,074,840     9,713     3.60  
Federal Home Loan Bank stock 40,428     665     6.58     47,964     564     4.71  
Other earning assets 49,639     253     2.02     29,838     86     1.15  
Total interest-earning assets 6,708,701     73,161     4.31     6,480,966     63,844     3.89  
Allowance for loan losses (50,754 )           (46,880 )        
Non-interest-earning assets 586,449             542,596          
Total assets $ 7,244,396             $ 6,976,682          
Interest-bearing liabilities:                      
NOW and money market $ 2,583,982     $ 9,641     1.48 %   $ 2,125,177     $ 4,286     0.80 %
Savings 506,880     76     0.06     517,993     77     0.06  
Certificates of deposit 1,759,382     8,466     1.91     1,765,007     5,595     1.26  
Total interest-bearing deposits 4,850,244     18,183     1.49     4,408,177     9,958     0.90  
Federal Home Loan Bank advances 732,995     4,307     2.30     954,159     3,538     1.45  
Other borrowings 107,365     1,371     5.00     117,578     1,382     4.60  
Total interest-bearing liabilities 5,690,604     23,861     1.66     5,479,914     14,878     1.07  
Non-interest-bearing deposits 768,916             740,007          
Other liabilities 78,752             65,757          
Total liabilities 6,538,272             6,285,678          
Stockholders’ equity 706,124             691,004          
Total liabilities and stockholders’ equity $ 7,244,396             $ 6,976,682          
Net interest-earning assets $ 1,018,097             $ 1,001,052          
Tax-equivalent net interest income     49,300             48,966      
Tax-equivalent net interest rate spread (1)         2.65 %           2.82 %
Tax-equivalent net interest margin (2)         2.90 %           2.98 %
Average interest-earning assets to average interest-bearing liabilities         117.89 %           118.27 %
Less tax-equivalent adjustment     938             2,117      
Net interest income     $ 48,362             $ 46,849      

(1)     Tax-equivalent net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(2)     Tax-equivalent net interest rate margin represents tax-equivalent net interest income divided by average interest-earning assets.


United Financial Bancorp, Inc. and Subsidiaries

Average Balance Sheets, Interest and Yields/Costs
(Dollars In Thousands)
(Unaudited)

  For the Three Months Ended
  December 31, 2018   September 30, 2018
  Average
Balance
  Interest
and
Dividends
  Yield/Cost   Average
Balance
  Interest
and
Dividends
  Yield/Cost
Interest-earning assets:                      
Residential real estate $ 1,397,669     $ 12,929     3.70 %   $ 1,375,948     $ 12,451     3.62 %
Commercial real estate 2,302,741     26,085     4.43     2,320,375     26,105     4.40  
Construction 113,617     1,405     4.84     114,068     1,379     4.73  
Commercial business 861,311     10,481     4.76     841,936     9,531     4.43  
Home equity 585,178     7,848     5.32     584,706     7,471     5.07  
Other consumer 390,237     4,931     5.01     351,892     4,532     5.11  
Investment securities 967,881     8,564     3.53     995,405     8,686     3.48  
Federal Home Loan Bank stock 40,428     665     6.58     45,016     715     6.35  
Other earning assets 49,639     253     2.02     42,078     216     2.04  
Total interest-earning assets 6,708,701     73,161     4.31     6,671,424     71,086     4.21  
Allowance for loan losses (50,754 )           (49,823 )        
Non-interest-earning assets 586,449             569,471          
Total assets $ 7,244,396             $ 7,191,072          
Interest-bearing liabilities:                      
NOW and money market $ 2,583,982     $ 9,641     1.48 %   $ 2,515,660     $ 8,461     1.33 %
Savings 506,880     76     0.06     501,700     75     0.06  
Certificates of deposit 1,759,382     8,466     1.91     1,691,382     7,231     1.70  
Total interest-bearing deposits 4,850,244     18,183     1.49     4,708,742     15,767     1.33  
Federal Home Loan Bank advances 732,995     4,307     2.30     844,207     4,591     2.13  
Other borrowings 107,365     1,371     5.00     111,760     1,404     4.92  
Total interest-bearing liabilities 5,690,604     23,861     1.66     5,664,709     21,762     1.52  
Non-interest-bearing deposits 768,916             750,503          
Other liabilities 78,752             71,554          
Total liabilities 6,538,272             6,486,766          
Stockholders’ equity 706,124             704,306          
Total liabilities and stockholders’ equity $ 7,244,396             $ 7,191,072          
Net interest-earning assets $ 1,018,097             $ 1,006,715          
Tax-equivalent net interest income     49,300             49,324      
Tax-equivalent net interest rate spread (1)         2.65 %           2.69 %
Tax-equivalent net interest margin (2)         2.90 %           2.92 %
Average interest-earning assets to average interest-bearing liabilities         117.89 %           117.77 %
Less tax-equivalent adjustment     938             895      
Net interest income     $ 48,362             $ 48,429      

(1)     Tax-equivalent net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(2)     Tax-equivalent net interest rate margin represents tax-equivalent net interest income divided by average interest-earning assets.


United Financial Bancorp, Inc. and Subsidiaries

Average Balance Sheets, Interest and Yields/Costs
(Dollars In Thousands)
(Unaudited)

  For the Years Ended
  December 31, 2018   December 31, 2017
  Average
Balance
  Interest
and
Dividends
  Yield/Cost   Average
Balance
  Interest
and
Dividends
  Yield/Cost
Interest-earning assets:                      
Residential real estate $ 1,356,746     $ 48,905     3.60 %   $ 1,291,852     $ 43,422     3.36 %
Commercial real estate 2,303,075     100,608     4.31     2,175,197     88,716     4.02  
Construction 115,507     5,440     4.65     129,636     5,714     4.35  
Commercial business 840,594     37,533     4.40     779,262     30,504     3.86  
Home equity 584,204     28,903     4.95     542,579     23,168     4.27  
Other consumer 341,295     17,326     5.08     243,631     11,890     4.88  
Investment securities 1,005,823     34,869     3.46     1,083,616     38,078     3.51  
Federal Home Loan Bank stock 46,475     2,689     5.78     51,735     2,195     4.24  
Other earning assets 40,078     740     1.85     34,484     389     1.13  
Total interest-earning assets 6,633,797     277,013     4.15     6,331,992     244,076     3.83  
Allowance for loan losses (49,255 )           (45,480 )        
Non-interest-earning assets 566,511             526,914          
Total assets $ 7,151,053             $ 6,813,426          
Interest-bearing liabilities:                      
NOW and money market $ 2,377,309     $ 29,157     1.23 %   $ 2,002,146     $ 13,282     0.66 %
Savings 509,316     301     0.06     529,006     312     0.06  
Certificates of deposit 1,748,873     28,383     1.62     1,731,434     19,971     1.15  
Total interest-bearing deposits 4,635,498     57,841     1.25     4,262,586     33,565     0.79  
Federal Home Loan Bank advances 891,626     18,135     2.01     978,673     12,763     1.29  
Other borrowings 112,280     5,547     4.87     133,364     5,684     4.20  
Total interest-bearing liabilities 5,639,404     81,523     1.44     5,374,623     52,012     0.96  
Non-interest-bearing deposits 742,990             695,713          
Other liabilities 69,582             67,810          
Total liabilities 6,451,976             6,138,146          
Stockholders’ equity 699,077             675,280          
Total liabilities and stockholders’ equity $ 7,151,053             $ 6,813,426          
Net interest-earning assets $ 994,393             $ 957,369          
Tax-equivalent net interest income     195,490             192,064      
Tax-equivalent net interest rate spread (1)         2.71 %           2.87 %
Tax-equivalent net interest margin (2)         2.92 %           3.01 %
Average interest-earning assets to average interest-bearing liabilities         117.63 %           117.81 %
Less tax-equivalent adjustment     3,975             7,822      
Net interest income     $ 191,515             $ 184,242      

(1)     Tax-equivalent net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(2)     Tax-equivalent net interest rate margin represents tax-equivalent net interest income divided by average interest-earning assets.


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 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-10 through F-12 in the following press release tables:

       
  Three Months Ended   Years Ended
  December 31,
 2018
  September 30,
 2018
  June 30,
 2018
  March 31,
 2018
  December 31,
2017
  December 31,
 2018
  December 31,
2017
  (Dollars in thousands)      
Net Income (GAAP) $ 12,165     $ 16,308     $ 15,646     $ 15,787     $ 9,501     $ 59,906     $ 54,618  
Non-GAAP adjustments:                          
Non-interest income (25 )   58     (271 )   (342 )   745     (580 )   27  
Non-interest expense 2,677     (129 )   215         536     2,763     536  
Income tax (benefit) expense related to tax reform (1,717 )               1,609     (1,717 )   1,609  
Related income tax (benefit) expense (557 )   15     (93 )   72     2,074     (563 )   2,325  
Net adjustment 378     (56 )   (149 )   (270 )   4,964     (97 )   4,497  
Total net income (non-GAAP) $ 12,543     $ 16,252     $ 15,497     $ 15,517     $ 14,465     $ 59,809     $ 59,115  
                           
Non-interest income (GAAP) $ 9,493     $ 9,555     $ 8,360     $ 9,289     $ 7,581     $ 36,697     $ 34,565  
Non-GAAP adjustments:                          
Net loss (gain) on sales of securities (25 )   58     (62 )   (116 )   (72 )   (145 )   (782 )
Limited partnership writedown (1)                 1,214         1,214  
Loss on sale of premises and equipment                 401         401  
BOLI claim benefit         (209 )   (226 )   (798 )   (435 )   (806 )
Net adjustment (25 )   58     (271 )   (342 )   745     (580 )   27  
Total non-interest income (non-GAAP) 9,468     9,613     8,089     8,947     8,326     36,117     34,592  
Total net interest income 48,362     48,429     48,181     46,543     46,849     191,515     184,242  
Total revenue (non-GAAP) $ 57,830     $ 58,042     $ 56,270     $ 55,490     $ 55,175     $ 227,632     $ 218,834  
                           
Non-interest expense (GAAP) $ 43,718     $ 38,943     $ 38,370     $ 36,736     $ 37,237     $ 157,767     $ 142,750  
Non-GAAP adjustments:                          
Lease exit/disposal cost obligation (466 )   129     (215 )       (536 )   (552 )   (536 )
Effect of position eliminations (2,211 )                   (2,211 )    
Net adjustment (2,677 )   129     (215 )       (536 )   (2,763 )   (536 )
Total non-interest expense (non-GAAP) $ 41,041     $ 39,072     $ 38,155     $ 36,736     $ 36,701     $ 155,004     $ 142,214  
                           
Total loans $ 5,656,439     $ 5,528,583     $ 5,475,427     $ 5,382,235     $ 5,339,983     $ 5,656,439     $ 5,339,983  
Non-covered loans (2) (675,112 )   (708,621 )   (729,947 )   (771,802 )   (780,776 )   (675,112 )   (780,776 )
Total covered loans $ 4,981,327     $ 4,819,962     $ 4,745,480     $ 4,610,433     $ 4,559,207     $ 4,981,327     $ 4,559,207  
Allowance for loan losses $ 51,636     $ 49,909     $ 49,163     $ 47,915     $ 47,099     $ 51,636     $ 47,099  
Allowance for loan losses to total loans 0.91 %   0.90 %   0.90 %   0.89 %   0.88 %   0.91 %   0.88 %
Allowance for loan losses to total covered loans 1.04 %   1.04 %   1.04 %   1.04 %   1.03 %   1.04 %   1.03 %

(1)     Represents limited partnership writedowns related to the reduction of the Company’s tax rate in December 2017.
(2)     Represents acquired loans that were recorded at fair value. These loans carry no allowance for loan losses for the periods reflected above.
       

    Three Months Ended   Years Ended
    December 31,
 2018
  September 30,
 2018
  June 30,
 2018
  March 31,
 2018
  December 31,
2017
  December 31,
 2018
  December 31,
2017
     
Efficiency Ratio:                            
Non-Interest Expense (GAAP)   $ 43,718     $ 38,943     $ 38,370     $ 36,736     $ 37,237     $ 157,767     $ 142,750  
Non-GAAP adjustments:                            
Other real estate owned expense   (108 )   (256 )   (163 )   (167 )   (157 )   (694 )   (764 )
Lease exit/disposal cost obligation   (466 )   129     (215 )       (536 )   (552 )   (536 )
Effect of position eliminations   (2,211 )                   (2,211 )    
Non-Interest Expense for Efficiency Ratio (non-GAAP)   $ 40,933     $ 38,816     $ 37,992     $ 36,569     $ 36,544     $ 154,310     $ 141,450  
                             
Net Interest Income (GAAP)   $ 48,362     $ 48,429     $ 48,181     $ 46,543     $ 46,849     $ 191,515     $ 184,242  
Non-GAAP adjustments:                            
Tax-equivalent adjustment for tax-exempt loans and investment securities   938     895     1,059     1,083     2,117     3,975     7,822  
                             
Non-Interest Income (GAAP)   9,493     9,555     8,360     9,289     7,581     36,697     34,565  
Non-GAAP adjustments:                            
Net (gain) loss on sales of securities   (25 )   58     (62 )   (116 )   (72 )   (145 )   (782 )
Net loss on limited partnership investments   405     221     960     590     1,441     2,176     3,023  
Loss on sale of premises and equipment                   401         401  
BOLI claim benefit           (209 )   (226 )   (798 )   (435 )   (806 )
Total Revenue for Efficiency Ratio (non-GAAP)   $ 59,173     $ 59,158     $ 58,289     $ 57,163     $ 57,519     $ 233,783     $ 228,465  
                             
Efficiency Ratio (Non-Interest Expense for Efficiency Ratio (non-GAAP)/Total Revenue for Efficiency Ratio (non-GAAP))   69.18 %   65.61 %   65.18 %   63.97 %   63.53 %   66.01 %   61.91 %
                             
    Three Months Ended   Years Ended
    December 31,
 2018
  September 30,
 2018
  June 30,
 2018
  March 31,
 2018
  December 31,
2017
  December 31,
 2018
  December 31,
2017
     
Pre-Provision Net Revenue (“PPNR”) to Average Assets (Annualized):                
Net Interest income (GAAP)   $ 48,362     $ 48,429     $ 48,181     $ 46,543     $ 46,849     $ 191,515     $ 184,242  
Non-GAAP adjustments:                            
Tax-equivalent adjustment for tax-exempt loans and investment securities   938     895     1,059     1,083     2,117     3,975     7,822  
Total tax-equivalent net interest income (A)   $ 49,300     $ 49,324     $ 49,240     $ 47,626     $ 48,966     $ 195,490     $ 192,064  
                             
Non Interest Income (GAAP)   9,493     9,555     8,360     9,289     7,581     36,697     34,565  
Non-GAAP adjustments:                            
Net (gain) loss on sales of securities   (25 )   58     (62 )   (116 )   (72 )   (145 )   (782 )
Net loss on limited partnership investments   405     221     960     590     1,441     2,176     3,023  
Loss on sale of premises and equipment                   401         401  
BOLI claim benefit           (209 )   (226 )   (798 )   (435 )   (806 )
Non-Interest Income for PPNR (non-GAAP) (B)   $ 9,873     $ 9,834     $ 9,049     $ 9,537     $ 8,553     $ 38,293     $ 36,401  
                             
Non-Interest Expense (GAAP)   $ 43,718     $ 38,943     $ 38,370     $ 36,736     $ 37,237     $ 157,767     $ 142,750  
Non-GAAP adjustments:                            
Lease exit/disposal cost obligation   (466 )   129     (215 )       (536 )   (552 )   (536 )
Effect of position eliminations   (2,211 )                   (2,211 )    
Non-Interest Expense for PPNR (non-GAAP) (C)   $ 41,041     $ 39,072     $ 38,155     $ 36,736     $ 36,701     $ 155,004     $ 142,214  
                             
Total PPNR (non-GAAP)  (A + B – C) :   $ 18,132     $ 20,086     $ 20,134     $ 20,427     $ 20,818     $ 78,779     $ 86,251  
Average Assets   7,244,396     7,191,072     7,091,721     7,074,721     6,976,682     7,151,053     6,813,426  
PPNR to Average Assets (Annualized)   1.00 %   1.12 %   1.14 %   1.15 %   1.19 %   1.10 %   1.27 %
                             
Return on Average Tangible Common Equity (Annualized):                
Net Income (GAAP)   $ 12,165     $ 16,308     $ 15,646     $ 15,787     $ 9,501     $ 59,906     $ 54,618  
Non-GAAP adjustments:                            
Intangible assets amortization, tax effected (1)   332     228     241     266     219     1,067     917  
Net Income excluding intangible assets amortization, tax effected (1)   $ 12,497     $ 16,536     $ 15,887     $ 16,053     $ 9,720     $ 60,973     $ 55,535  
Average stockholders’ equity (non-GAAP)   $ 706,124     $ 704,306     $ 695,301     $ 690,345     $ 691,004     $ 699,077     $ 675,280  
Average goodwill & other intangible assets (non-GAAP)   121,614     119,009     119,288     119,611     119,962     119,883     120,465  
Average tangible common stockholders’ equity (non-GAAP)   $ 584,510     $ 585,297     $ 576,013     $ 570,734     $ 571,042     $ 579,194     $ 554,815  
Return on Average Tangible Common Equity (non-GAAP)   8.55 %   11.30 %   11.03 %   11.25 %   6.81 %   10.53 %   10.01 %

(1)     Intangible assets amortization is tax effected at 21% for quarters and year ended 2018, and at 35% for all prior periods due to the Tax Cuts and Jobs Act of 2017 that was signed into law in December 2017, lowering the corporate federal tax rate from 35% to 21%.

               
Investor Relations Contact:             Media Relations Contact:
Marliese L. Shaw             Adam J. Jeamel
Executive Vice President, Investor Relations Officer             Regional President, Corporate Communications
United Bank             United Bank
860-291-3622             860-291-3765
[email protected]             [email protected]