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

HARTFORD, Conn., Oct. 17, 2017 (GLOBE NEWSWIRE) -- United Financial Bancorp, Inc. ("United Financial" or the "Company") (NASDAQ:UBNK), the holding company for United Bank (the "Bank"), announced results for the quarter ended September 30, 2017.

The Company reported net income of $15.2 million, or $0.30 per diluted share, for the quarter ended September 30, 2017, compared to net income for the linked quarter of $16.2 million, or $0.32 per diluted share. The Company reported net income of $14.2 million, or $0.28 per diluted share, for the quarter ended September 30, 2016.

"Management remains focused on our Four Key Objectives outlined in April 2016. In the third quarter of 2017, we delivered 7% year-over-year diluted earnings per share ("EPS") growth, 8% annualized linked quarter tangible book value growth, and delivered 40% of net earnings to our shareholders via a cash dividend, all while maintaining strong capital, liquidity, and asset quality. Annualized loan and deposit growth was 12% and 13%, respectively, for the quarter," stated William H.W. Crawford, IV, Chief Executive Officer of the Company and the Bank. "As always, I want to thank our United Bank teammates for their relentless focus on serving our customers and communities."

Balance Sheet

Assets totaled $6.98 billion at September 30, 2017 and increased $100.3 million, or 1.5%, from $6.88 billion at June 30, 2017. At September 30, 2017, total loans were $5.21 billion, representing an increase of $151.6 million, or 3.0%, from the linked quarter. Changes to loan balances during the third quarter of 2017 were highlighted by a $28.5 million, or 3.6%, increase in commercial business loans, a $23.7 million, or 4.4%, increase in home equity loans, and a $13.1 million, or 3.1%, increase in owner-occupied commercial real estate loans. Total residential mortgages increased during the third quarter of 2017 by $39.2 million, or 3.3%. Loans held for sale decreased $68.1 million, or 43.2%, from the linked quarter, as the Company delivered a large portion of the held for sale portfolio to third party investors at the end of the quarter. Total cash and cash equivalents increased $23.7 million, or 31.6%, from the linked quarter, while the available-for-sale securities portfolio remained relatively flat, with a slight decrease of $5.3 million, or 0.5%.

Deposits totaled $5.15 billion at September 30, 2017 and increased by $159.5 million, or 3.2%, from $4.99 billion at June 30, 2017. In the third quarter of 2017, NOW checking deposits increased by $47.2 million, or 7.5%, from the linked quarter, while non-interest bearing checking deposits increased by $3.2 million, or 0.4%. Money market deposits increased by $160.1 million, or 11.8%, from the linked quarter. The increases in NOW and money market deposits are reflective of continued success in sourcing new commercial deposit relationships, coupled with the seasonal return of municipal deposits. These increases were slightly offset by a $34.7 million, or 2.0%, decrease in certificates of deposit.

Total Federal Home Loan Bank advances decreased by $39.7 million, or 4.0%, over the linked quarter, while other borrowings decreased by $30.4 million, or 20.4%, due to a decrease in the use of reverse repurchase borrowings.

Net Interest Income

Income growth in the third quarter of 2017, as compared to the linked quarter, was highlighted by an increase in net interest income of $440,000, or 0.9%, to $46.8 million, primarily attributable to an increase in interest income of $2.2 million, or 3.8%, to $60.8 million. Average interest-earning assets increased by $118.9 million, or 1.9%, primarily due to growth in average loan balances, which increased by $105.7 million, or 2.1%. Average loan balance growth was driven by a $57.7 million, or 2.7%, increase in average commercial real estate loans, a $25.7 million, or 2.0%, increase in average residential real estate loans, inclusive of loans held for sale, and a $11.0 million, or 1.4%, increase in average commercial business loans.

Interest expense increased by $1.8 million to $14.0 million during the third quarter of 2017, from $12.2 million in the linked quarter. Average balance shifts in the third quarter of 2017 included a $175.9 million, or 9.1%, increase in average NOW and money market deposits, and a $16.2 million, or 1.0%, increase in average certificates of deposit. The growth observed in average deposit balances was largely driven by continued success in new account acquisition strategies.

The non-GAAP tax equivalent net interest margin decreased by four basis points to 3.00% in the third quarter from the linked period. The decline was largely driven by duration extension decisions made in the period, resulting in an increase in the cost of interest-bearing liabilities. The interest-earning asset yield improvement was largely driven by a seven basis point increase in the yield on commercial real estate loans, which represents 34.4% of the Company's interest-earning assets, a 13 basis point increase in the average home equity loan yield, and a 17 basis point increase in the average commercial business loan yield. The increase in the loan portfolio yield was further driven by increases in the 1-month LIBOR and Prime rate indices. The total funding cost increased by ten basis points to 0.91% in the third quarter driven by a ten basis point increase in the cost of interest-bearing deposits, which represents 80.1% of costing liabilities, while the cost of Federal Home Loan Bank advances increased 19 basis points.

Provision for Loan Losses

The provision for loan losses remained relatively flat, totaling $2.6 million at September 30, 2017 as compared to $2.3 million for the linked quarter. Net charge-offs for the quarter ended September 30, 2017 totaled $1.3 million, or 0.10%, as a percentage of average loans outstanding, as compared to $534,000, or 0.04% as a percentage of average loans for the quarter ended June 30, 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 decreased by $1.4 million, or 14.8%, to $8.1 million for the quarter ended September 30, 2017 from $9.5 million in the linked quarter. The decrease in the third quarter's non-interest income was driven primarily by a decrease in service charges and fees and mortgage banking activities as compared to the linked quarter. Additionally, there were higher losses on limited partnership investments as compared to the linked quarter.

Non-Interest Expense

Non-interest expense for the quarter ended September 30, 2017 totaled $34.9 million and decreased by $70,000, or 0.2%, from the linked quarter. The decrease in non-interest expense during the quarter was primarily due to a decrease in marketing and promotions and other expenses, partially offset by an increase in salaries and employee benefits, professional fees, and occupancy and equipment expenses as compared to the linked quarter.

Asset Quality

Asset quality remained strong and stable for the period, with non-performing assets decreasing by $432,000 to $33.9 million at September 30, 2017 from $34.3 million at June 30, 2017. The ratio of non-performing assets to total assets for the quarter ended September 30, 2017 was 0.49%, as compared to 0.50% in the linked quarter.

Capital

The Company reported Tangible Common Equity ("TCE") of $570.5 million, or 8.3% of average assets, at September 30, 2017. Tangible book value per share increased to $11.23 at September 30, 2017 from $11.01 at June 30, 2017. The increase was primarily driven by the impact of the Company's net income of $15.2 million, 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 September 30, 2017 was $13.59.

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 27, 2017 and payable on November 8, 2017. This dividend equates to a 2.76% annualized yield based on the $17.38 average closing price of the Company’s common stock in the third quarter of 2017. The Company has paid dividends for 46 consecutive quarters.

Investor Conference Call

United Financial Bancorp, Inc. will host a conference call on Wednesday, October 18, 2017 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 1-800-544-8281. A telephone replay of the call will be available through November 1, 2017 by calling 1-877-344-7529 and entering conference number 10112041. 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, 2017, the Company had $6.98 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.

United Financial Bancorp, Inc. and Subsidiaries
Consolidated Statements of Net Income
(Unaudited)
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
2017 2016 2017 2016
Interest and dividend income: (In thousands, except share data)
Loans $51,809 $45,331 $147,976 $134,359
Securities-taxable interest 5,604 4,808 16,907 14,830
Securities-non-taxable interest 2,499 2,140 7,108 6,201
Securities-dividends 736 990 2,233 2,934
Interest-bearing deposits 151 67 303 207
Total interest and dividend income 60,799 53,336 174,527 158,531
Interest expense:
Deposits 9,185 6,279 23,607 18,927
Borrowed funds 4,846 4,028 13,527 11,677
Total interest expense 14,031 10,307 37,134 30,604
Net interest income 46,768 43,029 137,393 127,927
Provision for loan losses 2,566 3,766 7,146 10,078
Net interest income after provision for loan losses 44,202 39,263 130,247 117,849
Non-interest income:
Service charges and fees 6,161 5,726 18,413 14,679
Net gain from sales of securities 158 48 710 1,867
Income from mortgage banking activities 1,204 2,198 4,355 5,389
Bank-owned life insurance income 1,167 899 3,523 2,531
Net loss on limited partnership investments (864) (850) (1,582) (3,290)
Other income (loss) 247 (132) 635 (28)
Total non-interest income 8,073 7,889 26,054 21,148
Non-interest expense:
Salaries and employee benefits 20,005 18,301 59,309 56,105
Service bureau fees 1,983 1,960 6,029 6,219
Occupancy and equipment 3,740 3,580 11,866 11,330
Professional fees 1,048 1,125 3,309 2,893
Marketing and promotions 1,087 656 3,036 2,271
FDIC insurance assessments 780 819 2,255 2,800
Core deposit intangible amortization 337 385 1,075 1,219
FHLBB prepayment penalties 1,454
Other 5,929 5,410 17,704 16,389
Total non-interest expense 34,909 32,236 104,583 100,680
Income before income taxes 17,366 14,916 51,718 38,317
Provision for income taxes 2,175 757 6,601 3,206
Net income $15,191 $14,159 $45,117 $35,111
Net income per share:
Basic $0.30 $0.28 $0.90 $0.71
Diluted $0.30 $0.28 $0.89 $0.70
Weighted-average shares outstanding:
Basic 50,263,602 49,800,105 50,246,234 49,617,136
Diluted 50,889,987 50,141,175 50,888,175 49,917,049

United Financial Bancorp, Inc. and Subsidiaries
Consolidated Statements of Net Income
(Unaudited)
For the Three Months Ended
September 30,
2017
June 30,
2017
March 31,
2017
December 31,
2016
September 30,
2016
Interest and dividend income: (In thousands, except share data)
Loans $51,809 $49,674 $46,493 $45,460 $45,331
Securities-taxable interest 5,604 5,793 5,510 4,848 4,808
Securities-non-taxable interest 2,499 2,355 2,254 2,191 2,140
Securities-dividends 736 689 808 986 990
Interest-bearing deposits 151 51 101 136 67
Total interest and dividend income 60,799 58,562 55,166 53,621 53,336
Interest expense:
Deposits 9,185 7,603 6,819 6,649 6,279
Borrowed funds 4,846 4,631 4,050 3,800 4,028
Total interest expense 14,031 12,234 10,869 10,449 10,307
Net interest income 46,768 46,328 44,297 43,172 43,029
Provision for loan losses 2,566 2,292 2,288 3,359 3,766
Net interest income after provision for loan losses 44,202 44,036 42,009 39,813 39,263
Non-interest income:
Service charges and fees 6,161 6,834 5,418 5,580 5,726
Net gain from sales of securities 158 95 457 94 48
Income from mortgage banking activities 1,204 1,830 1,321 2,838 2,198
Bank-owned life insurance income 1,167 1,149 1,207 863 899
Net loss on limited partnership investments (864) (638) (80) (705) (850)
Other income (loss) 247 206 182 266 (132)
Total non-interest income 8,073 9,476 8,505 8,936 7,889
Non-interest expense:
Salaries and employee benefits 20,005 19,574 19,730 19,279 18,301
Service bureau fees 1,983 1,943 2,103 1,767 1,960
Occupancy and equipment 3,740 3,657 4,469 3,656 3,580
Professional fees 1,048 952 1,309 1,024 1,125
Marketing and promotions 1,087 1,237 712 778 656
FDIC insurance assessments 780 796 679 773 819
Core deposit intangible amortization 337 353 385 385 385
Other 5,929 6,467 5,308 5,631 5,410
Total non-interest expense 34,909 34,979 34,695 33,293 32,236
Income before income taxes 17,366 18,533 15,819 15,456 14,916
Provision for income taxes 2,175 2,333 2,093 906 757
Net income $15,191 $16,200 $13,726 $14,550 $14,159
Net income per share:
Basic $0.30 $0.32 $0.27 $0.29 $0.28
Diluted $0.30 $0.32 $0.27 $0.29 $0.28
Weighted-average shares outstanding:
Basic 50,263,602 50,217,212 50,257,825 50,070,710 49,800,105
Diluted 50,889,987 50,839,091 50,935,382 50,602,494 50,141,175

United Financial Bancorp, Inc. and Subsidiaries
Consolidated Statements of Condition
(Unaudited)
September 30,
2017
June 30,
2017
March 31,
2017
December 31,
2016
September 30,
2016
ASSETS (In thousands)
Cash and cash equivalents:
Cash and due from banks $59,456 $57,137 $45,279 $47,248 $51,951
Short-term investments 39,061 17,714 39,381 43,696 162,295
Total cash and cash equivalents 98,517 74,851 84,660 90,944 214,246
Available for sale securities – At fair value 1,068,055 1,073,384 1,075,729 1,043,411 1,052,439
Held to maturity securities – At amortized cost 13,693 13,792 13,937 14,038 14,162
Loans held for sale 89,419 157,487 87,031 62,517 83,321
Loans:
Commercial real estate loans:
Owner-occupied 442,989 429,848 433,358 416,718 392,168
Investor non-owner occupied 1,777,716 1,761,940 1,697,414 1,705,319 1,702,701
Construction 82,688 74,980 85,533 98,794 90,380
Total commercial real estate loans 2,303,393 2,266,768 2,216,305 2,220,831 2,185,249
Commercial business loans 821,372 792,918 769,153 724,557 660,676
Consumer loans:
Residential real estate 1,211,783 1,172,540 1,167,428 1,156,227 1,129,079
Home equity 561,814 538,130 516,325 536,772 479,390
Residential construction 39,460 46,117 49,456 53,934 52,476
Other consumer 267,921 237,708 225,317 209,393 213,830
Total consumer loans 2,080,978 1,994,495 1,958,526 1,956,326 1,874,775
Total loans 5,205,743 5,054,181 4,943,984 4,901,714 4,720,700
Net deferred loan costs and premiums 15,297 15,413 13,273 11,636 10,214
Allowance for loan losses (46,368) (45,062) (43,304) (42,798) (41,080)
Loans receivable - net 5,174,672 5,024,532 4,913,953 4,870,552 4,689,834
Federal Home Loan Bank of Boston stock, at cost 46,758 54,760 52,707 53,476 52,847
Accrued interest receivable 20,893 19,751 19,126 18,771 17,888
Deferred tax asset, net 30,999 27,034 37,040 39,962 32,529
Premises and equipment, net 61,063 54,480 51,299 51,757 52,520
Goodwill 115,281 115,281 115,281 115,281 115,281
Core deposit intangible asset 4,827 5,164 5,517 5,902 6,287
Cash surrender value of bank-owned life insurance 171,300 170,144 169,007 167,823 126,948
Other assets 81,019 85,503 71,333 65,086 86,553
Total assets $6,976,496 $6,876,163 $6,696,620 $6,599,520 $6,544,855
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Deposits:
Non-interest-bearing $725,130 $721,917 $690,516 $708,050 $687,865
Interest-bearing 4,427,892 4,271,562 4,099,843 4,003,122 4,007,606
Total deposits 5,153,022 4,993,479 4,790,359 4,711,172 4,695,471
Mortgagors’ and investor escrow accounts 9,641 15,045 10,925 13,354 9,045
Federal Home Loan Bank advances and other borrowings 1,068,814 1,138,817 1,180,053 1,169,619 1,102,882
Accrued expenses and other liabilities 54,366 49,358 49,300 49,509 81,217
Total liabilities 6,285,843 6,196,699 6,030,637 5,943,654 5,888,615
Total stockholders’ equity 690,653 679,464 665,983 655,866 656,240
Total liabilities and stockholders’ equity $6,976,496 $6,876,163 $6,696,620 $6,599,520 $6,544,855

United Financial Bancorp, Inc. and Subsidiaries
Selected Financial Highlights
(Dollars In Thousands, Except Share Data)
(Unaudited)
At or For the Three Months Ended
September 30,
2017
June 30,
2017
March 31,
2017
December 31,
2016
September 30,
2016
Share Data:
Basic net income per share$0.30 $0.32 $0.27 $0.29 $0.28
Diluted net income per share0.30 0.32 0.27 0.29 0.28
Dividends declared per share0.12 0.12 0.12 0.12 0.12
Tangible book value per share$11.23 $11.01 $10.75 $10.53 $10.60
Key Statistics:
Total revenue$54,841 $55,804 $52,802 $52,108 $50,918
Total non-interest expense34,909 34,979 34,695 33,293 32,236
Average earning assets6,423,741 6,304,849 6,113,363 6,054,347 5,984,951
Key Ratios:
Return on average assets (annualized)0.88% 0.96% 0.83% 0.90% 0.88%
Return on average equity (annualized)8.92% 9.66% 8.35% 8.95% 8.80%
Tax-equivalent net interest margin (annualized)3.00% 3.04% 3.01% 2.93% 2.95%
Residential Mortgage Production:
Dollar volume (total)$133,462 $186,220 $134,022 $160,512 $173,473
Mortgages originated for purchases97,132 129,165 77,613 77,549 113,019
Loans sold152,551 61,363 51,826 87,626 99,051
Income from mortgage banking activities1,204 1,830 1,321 2,838 2,198
Non-performing Assets:
Residential real estate$11,330 $11,190 $12,185 $11,357 $11,526
Home equity4,206 5,211 4,307 4,043 3,650
Investor-owned commercial real estate2,957 3,512 3,809 4,016 3,746
Owner-occupied commercial real estate2,084 2,184 2,314 2,642 2,838
Construction1,748 287 1,355 1,701 1,879
Commercial business2,427 2,624 2,369 2,000 2,016
Other consumer37 40 37 1,000 328
Non-accrual loans24,789 25,048 26,376 26,759 25,983
Troubled debt restructured – non-accruing6,628 7,475 8,252 7,304 7,345
Total non-performing loans31,417 32,523 34,628 34,063 33,328
Other real estate owned2,444 1,770 1,786 1,890 2,792
Total non-performing assets$33,861 $34,293 $36,414 $35,953 $36,120
Non-performing loans to total loans0.60% 0.64% 0.70% 0.69% 0.71%
Non-performing assets to total assets0.49% 0.50% 0.54% 0.54% 0.55%
Allowance for loan losses to non-performing loans147.59% 138.55% 125.05% 125.64% 123.26%
Allowance for loan losses to total loans0.89% 0.89% 0.88% 0.87% 0.87%
Non-GAAP Ratios: (1)
Non-interest expense to average assets (annualized)2.02% 2.06% 2.11% 2.05% 2.00%
Efficiency ratio (2)60.22% 59.49% 63.95% 60.79% 60.31%
Cost of funds (annualized) (3)0.91% 0.81% 0.74% 0.73% 0.72%
Total revenue growth rate(1.73)% 5.69% 1.33% 2.34% 6.02%
Total revenue growth rate (annualized)(6.90)% 22.74% 5.33% 9.35% 24.07%
Average earning asset growth rate1.89% 3.13% 0.97% 1.16% 1.65%
Average earning asset growth rate (annualized)7.54% 12.53% 3.90% 4.64% 6.60%
Return on average tangible common equity (annualized) (2)10.99% 11.95% 10.42% 11.19% 11.05%
Pre-provision net revenue to average assets (2)1.31% 1.38% 1.18% 1.31% 1.31%
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
September 30, 2017 September 30, 2016
Average
Balance
Interest
and
Dividends
Yield/Cost Average
Balance
Interest
and
Dividends
Yield/Cost
Interest-earning assets:
Residential real estate$1,323,262 $11,017 3.33% $1,229,384 $10,033 3.26%
Commercial real estate2,211,601 23,063 4.08 2,077,585 19,525 3.68
Construction122,511 1,301 4.16 156,217 1,565 3.92
Commercial business791,547 8,163 4.04 669,595 6,103 3.57
Home equity536,509 5,917 4.38 467,552 6,046 5.15
Other consumer252,532 3,063 4.81 209,255 2,554 4.85
Investment securities1,090,559 9,621 3.52 1,073,007 8,576 3.19
Federal Home Loan Bank stock51,722 572 4.43 56,126 508 3.62
Other earning assets43,498 151 1.38 46,230 67 0.57
Total interest-earning assets6,423,741 62,868 3.86 5,984,951 54,977 3.63
Allowance for loan losses(46,479) (38,916)
Non-interest-earning assets529,937 491,160
Total assets$6,907,199 $6,437,195
Interest-bearing liabilities:
NOW and money market$2,105,796 $3,992 0.75% $1,485,177 $1,501 0.40%
Savings527,641 77 0.06 527,225 77 0.06
Certificates of deposit1,731,658 5,116 1.17 1,821,061 4,701 1.03
Total interest-bearing deposits4,365,095 9,185 0.83 3,833,463 6,279 0.65
Federal Home Loan Bank advances951,760 3,404 1.40 1,085,932 2,657 0.96
Other borrowings135,173 1,442 4.18 119,902 1,371 4.47
Total interest-bearing liabilities5,452,028 14,031 1.02 5,039,297 10,307 0.81
Non-interest-bearing deposits702,916 662,437
Other liabilities70,853 92,195
Total liabilities6,225,797 5,793,929
Stockholders’ equity681,402 643,266
Total liabilities and stockholders’ equity$6,907,199 $6,437,195
Net interest-earning assets$971,713 $945,654
Tax-equivalent net interest income 48,837 44,670
Tax-equivalent net interest rate spread 2.84% 2.82%
Tax-equivalent net interest margin 3.00% 2.95%
Average interest-earning assets to average interest-bearing liabilities 117.82% 118.77%
Less tax-equivalent adjustment 2,069 1,641
Net interest income $46,768 $43,029

United Financial Bancorp, Inc. and Subsidiaries
Average Balance Sheets, Interest and Yields/Costs
(Dollars In Thousands)
(Unaudited)
For the Three Months Ended
September 30, 2017 June 30, 2017
Average
Balance
Interest
and
Dividends
Yield/Cost Average
Balance
Interest
and
Dividends
Yield/Cost
Interest-earning assets:
Residential real estate$1,323,262 $11,017 3.33% $1,297,558 $10,839 3.34%
Commercial real estate2,211,601 23,063 4.08 2,153,938 21,837 4.01
Construction122,511 1,301 4.16 128,730 1,396 4.29
Commercial business791,547 8,163 4.04 780,553 7,628 3.87
Home equity536,509 5,917 4.38 541,017 5,737 4.25
Other consumer252,532 3,063 4.81 230,419 2,907 5.06
Investment securities1,090,559 9,621 3.52 1,099,011 9,577 3.48
Federal Home Loan Bank stock51,722 572 4.43 54,151 534 3.95
Other earning assets43,498 151 1.38 19,472 50 1.03
Total interest-earning assets6,423,741 62,868 3.86 6,304,849 60,505 3.82
Allowance for loan losses(46,479) (44,888)
Non-interest-earning assets529,937 520,375
Total assets$6,907,199 $6,780,336
Interest-bearing liabilities:
NOW and money market$2,105,796 $3,992 0.75% $1,929,917 $2,808 0.58%
Savings527,641 77 0.06 541,867 80 0.06
Certificates of deposit1,731,658 5,116 1.17 1,715,436 4,715 1.10
Total interest-bearing deposits4,365,095 9,185 0.83 4,187,220 7,603 0.73
Federal Home Loan Bank advances951,760 3,404 1.40 1,028,835 3,152 1.21
Other borrowings135,173 1,442 4.18 154,780 1,479 3.78
Total interest-bearing liabilities5,452,028 14,031 1.02 5,370,835 12,234 0.91
Non-interest-bearing deposits702,916 670,244
Other liabilities70,853 68,731
Total liabilities6,225,797 6,109,810
Stockholders’ equity681,402 670,526
Total liabilities and stockholders’ equity$6,907,199 $6,780,336
Net interest-earning assets$971,713 $934,014
Tax-equivalent net interest income 48,837 48,271
Tax-equivalent net interest rate spread 2.84% 2.91%
Tax-equivalent net interest margin 3.00% 3.04%
Average interest-earning assets to average interest-bearing liabilities 117.82% 117.39%
Less tax-equivalent adjustment 2,069 1,943
Net interest income $46,768 $46,328

United Financial Bancorp, Inc. and Subsidiaries
Average Balance Sheets, Interest and Yields/Costs
(Dollars In Thousands)
(Unaudited)
For the Nine Months Ended
September 30, 2017 September 30, 2016
Average
Balance
Interest
and
Dividends
Yield/Cost Average
Balance
Interest
and
Dividends
Yield/Cost
Interest-earning assets:
Residential real estate$1,285,618 $32,079 3.33% $1,211,995 $29,814 3.28%
Commercial real estate2,155,085 65,626 4.02 2,039,087 61,477 3.96
Construction132,158 4,261 4.25 164,039 5,234 4.19
Commercial business767,738 22,510 3.87 638,086 17,766 3.66
Home equity533,669 16,876 4.23 448,371 13,346 3.98
Other consumer231,892 8,581 4.95 218,801 8,201 5.00
Investment securities1,086,574 28,366 3.48 1,083,717 25,942 3.18
Federal Home Loan Bank stock53,005 1,630 4.10 54,842 1,366 3.32
Other earning assets36,049 303 1.12 48,755 207 0.57
Total interest-earning assets6,281,788 180,232 3.80 5,907,693 163,353 3.66
Allowance for loan losses(45,008) (36,775)
Non-interest-earning assets521,629 479,513
Total assets$6,758,409 $6,350,431
Interest-bearing liabilities:
NOW and money market$1,960,685 $8,996 0.61% $1,533,096 $4,950 0.43%
Savings532,718 235 0.06 527,919 229 0.06
Certificates of deposit1,720,120 14,376 1.12 1,784,269 13,748 1.03
Total interest-bearing deposits4,213,523 23,607 0.75 3,845,284 18,927 0.66
Federal Home Loan Bank advances986,935 9,225 1.23 1,009,671 7,507 0.98
Other borrowings138,685 4,302 4.09 130,586 4,170 4.20
Total interest-bearing liabilities5,339,143 37,134 0.93 4,985,541 30,604 0.81
Non-interest-bearing deposits680,786 646,416
Other liabilities68,499 83,543
Total liabilities6,088,428 5,715,500
Stockholders’ equity669,981 634,931
Total liabilities and stockholders’ equity$6,758,409 $6,350,431
Net interest-earning assets$942,645 $922,152
Tax-equivalent net interest income 143,098 132,749
Tax-equivalent net interest rate spread 2.87% 2.85%
Tax-equivalent net interest margin 3.02% 2.97%
Average interest-earning assets to average interest-bearing liabilities 117.66% 118.50%
Less tax-equivalent adjustment 5,705 4,822
Net interest income $137,393 $127,927

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
September 30,
2017
June 30,
2017
March 31,
2017
December 31,
2016
September 30,
2016
(Dollars in thousands)
Net Income (GAAP) $15,191 $16,200 $13,726 $14,550 $14,159
Non-GAAP adjustments:
Non-interest income (158) (95) (465) (94) (118)
Non-interest expense 107 55
Related income tax (benefit) expense 55 33 163 (5) 22
Net adjustment (103) (62) (302) 8 (41)
Total net income (non-GAAP) $15,088 $16,138 $13,424 $14,558 $14,118
Non-interest income (GAAP) $8,073 $9,476 $8,505 $8,936 $7,889
Non-GAAP adjustments:
Net gain on sales of securities (158) (95) (457) (94) (48)
BOLI claim benefit (8) (70)
Net adjustment (158) (95) (465) (94) (118)
Total non-interest income (non-GAAP) 7,915 9,381 8,040 8,842 7,771
Total net interest income 46,768 46,328 44,297 43,172 43,029
Total revenue (non-GAAP) $54,683 $55,709 $52,337 $52,014 $50,800
Non-interest expense (GAAP) $34,909 $34,979 $34,695 $33,293 $32,236
Non-GAAP adjustments:
Effect of position eliminations (107) (55)
Net adjustment (107) (55)
Total non-interest expense (non-GAAP) $34,909 $34,979 $34,695 $33,186 $32,181
Total loans $5,205,743 $5,054,181 $4,943,984 $4,901,714 $4,720,700
Non-covered loans (1) (739,376) (699,938) (691,054) (744,763) (721,763)
Total covered loans $4,466,367 $4,354,243 $4,252,930 $4,156,951 $3,998,937
Allowance for loan losses $46,368 $45,062 $43,304 $42,798 $41,080
Allowance for loan losses to total loans 0.89% 0.89% 0.88% 0.87% 0.87%
Allowance for loan losses to total covered loans 1.04% 1.03% 1.02% 1.03% 1.03%
(1) As required by GAAP, the Company recorded acquired loans at fair value. These loans carry no allowance for loan losses for the periods reflected above.

Three Months Ended
September 30,
2017
June 30,
2017
March 31,
2017
December 31,
2016
September 30,
2016
(Dollars in thousands)
Efficiency Ratio:
Non-Interest Expense (GAAP) $34,909 $34,979 $34,695 $33,293 $32,236
Non-GAAP adjustments:
Other real estate owned expense (211) (305) (91) (100) (40)
Effect of position eliminations (107) (55)
Non-Interest Expense for Efficiency Ratio (non-GAAP) $34,698 $34,674 $34,604 $33,086 $32,141
Net Interest Income (GAAP) $46,768 $46,328 $44,297 $43,172 $43,029
Non-GAAP adjustments:
Tax equivalent adjustment for tax-exempt loans and investment securities 2,069 1,943 1,693 1,712 1,641
Non-Interest Income (GAAP) 8,073 9,476 8,505 8,936 7,889
Non-GAAP adjustments:
Net gain on sales of securities (158) (95) (457) (94) (48)
Net loss on limited partnership investments 864 638 80 705 850
BOLI claim benefit (8) (70)
Total Revenue for Efficiency Ratio (non-GAAP) $57,616 $58,290 $54,110 $54,431 $53,291
Efficiency Ratio (Non-Interest Expense for Efficiency Ratio
(non-GAAP)/Total Revenue for Efficiency Ratio (non-GAAP))
60.22% 59.49% 63.95% 60.79% 60.31%
Pre-Provision Net Revenue ("PPNR") to Average Assets (Annualized):
Net Interest income (GAAP) $46,768 $46,328 $44,297 $43,172 $43,029
Non-GAAP adjustments:
Tax equivalent adjustment for tax-exempt loans and investment securities 2,069 1,943 1,693 1,712 1,641
Total tax equivalent net interest income (A) $48,837 $48,271 $45,990 $44,884 $44,670
Non Interest Income (GAAP) 8,073 9,476 8,505 8,936 7,889
Non-GAAP adjustments:
Net gain on sales of securities (158) (95) (457) (94) (48)
Net loss on limited partnership investments 864 638 80 705 850
BOLI claim benefit (8) (70)
Non-Interest Income for PPNR (non-GAAP) (B) $8,779 $10,019 $8,120 $9,547 $8,621
Non-Interest Expense (GAAP) $34,909 $34,979 $34,695 $33,293 $32,236
Non-GAAP adjustments:
Effect of position eliminations (107) (55)
Non-Interest Expense for PPNR (non-GAAP) (C) $34,909 $34,979 $34,695 $33,186 $32,181
Total PPNR (non-GAAP) (A + B - C) : $22,707 $23,311 $19,415 $21,245 $21,110
Average Assets 6,907,199 6,780,336 6,584,138 6,490,971 6,437,195
PPNR to Average Assets (Annualized) 1.31% 1.38% 1.18% 1.31% 1.31%
Three Months Ended
September 30,
2017
June 30,
2017
March 31,
2017
December 31,
2016
September 30,
2016
(Dollars in thousands)
Return on Average Tangible Common Equity (Annualized):
Net Income (GAAP) $15,191 $16,200 $13,726 $14,550 $14,159
Non-GAAP adjustments:
Intangible Assets amortization, tax effected at 35% 219 229 250 250 250
Net Income excluding intangible assets amortization, tax effected at 35% $15,410 $16,429 $13,976 $14,800 $14,409
Average stockholders' equity (non-GAAP) $681,402 $670,526 $657,755 $650,590 $643,266
Average goodwill & other intangible assets (non-GAAP) 120,275 120,631 121,004 121,383 121,767
Average tangible common stockholders' equity (non-GAAP) $561,127 $549,895 $536,751 $529,207 $521,499
Return on Average Tangible Common Equity (non-GAAP) 10.99% 11.95% 10.42% 11.19% 11.05%

Investor Relations Contact:
Marliese L. Shaw
Executive Vice President, Investor Relations Officer
United Bank
860-291-3622
MShaw@bankatunited.com
Media Relations Contact:
Adam J. Jeamel
Regional President, Corporate Communications
United Bank
860-291-3765
AJeamel@bankatunited.com

Source:United Financial Bancorp, Inc.