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HARTFORD, Conn., April 16, 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 March 31, 2019.
The Company reported net income of $12.7 million, or $0.25 per diluted share, for the quarter ended March 31, 2019, compared to net income for the quarter ended December 31, 2018 ("linked quarter") of $12.2 million, or $0.24 per diluted share. The Company reported net income of $15.8 million, or $0.31 per diluted share, for the quarter ended March 31, 2018.
"Despite the challenging operating environment, the United Financial Bancorp, Inc. team is focused on expanding and winning new client relationships, maintaining strong asset quality and ample capital, and providing superior customer service," stated William H.W. Crawford, IV, Chief Executive Officer and President of the Company and the Bank. "Having a talented and dedicated team of employees to serve the needs of our customers and communities continues to be a strong value proposition of the Company and will protect and enhance franchise value.'
Balance Sheet
Assets totaled $7.34 billion at March 31, 2019, decreasing $16.9 million from $7.36 billion at December 31, 2018. At March 31, 2019, total available for sale securities were $848.5 million, representing a decrease of $124.8 million, or 12.8%, from the linked quarter. The overall decrease was primarily due to sales of lower yielding collateralized mortgage obligations and municipal securities at a gain during the quarter, and a portion of the proceeds were utilized to pay off maturing Federal Home Loan Bank advances. At March 31, 2019, total loans were $5.73 billion, representing an increase of $75.1 million, or 1.3%, from the linked quarter. Changes to loan balances during the first quarter of 2019 were highlighted by a $33.4 million, or 3.8%, increase in commercial business loans, a $21.1 million, or 1.1%, increase in investor non-owner occupied commercial real estate loans, a $15.6 million, or 3.8%, increase in other consumer loans, a $9.1 million, or 0.7%, increase in residential real estate loans and a $7.2 million, or 8.2%, increase in commercial construction loans. Slightly offsetting the increased loan balances above were a $7.0 million, or 34.0%, decrease in residential construction loans and a $4.0 million, or 0.9%, decrease in owner-occupied commercial real estate loans from the linked quarter. Loans held for sale also decreased $62.6 million, or 79.5%, from the linked quarter. Total cash and cash equivalents increased $57.2 million, or 58.4%, from the linked quarter as a result of the aforementioned sale of investment securities.
During the quarter ended March 31, 2019, the Company adopted Accounting Standards Update ("ASU") No. 2016-02 - Leases, requiring on-balance sheet reporting for all operating and financing leases, which resulted in the recording of $46.5 million in operating and financing lease right-of-use assets and a corresponding $46.5 million in operating and financing lease liabilities associated with the implementation of the standard.
Deposits totaled $5.66 billion at March 31, 2019 and decreased by $6.3 million, or 0.1%, from $5.67 billion at December 31, 2018. Decreases in deposit balances during the first quarter of 2019 were primarily due to a $97.4 million, or 5.6%, decrease in money market account balances and a $21.8 million, or 2.7%, decrease in non-interest bearing checking deposits, largely due to seasonal outflows that are typical of commercial DDA accounts in the first quarter. Offsetting these decreases was a $61.0 million, or 7.1%, increase in NOW checking account balances and a $51.8 million, or 2.9%, increase in certificates of deposit balances.
Total Federal Home Loan Bank advances decreased by $60.2 million, or 7.6%, over the linked quarter as the Company utilized proceeds from sales of investment securities to pay off maturing advances as noted above.
Investment in D.C. Solar Tax-Advantaged Funds
The Company continues to monitor developments in its investments in Solar Eclipse Investment Fund X, LLC, Solar Eclipse Investment Fund XV, LLC, and Solar Eclipse Investment Fund XXII, LLC ("LLC investments"), all of which are borrowers of and lessees to D.C. Solar Solutions, Inc., D.C. Solar Distribution, Inc., respectively. In late January and early February, 2019, D.C. Solar Solutions, Inc., D.C. Solar Distribution, Inc. and several affiliated companies filed for Chapter 11 bankruptcy. On March 22, 2019, all cases were converted to cases under Chapter 7 of the Bankruptcy Code. At this time, no measurable loss has been identified, but the Company believes a loss is more likely than not. The Company has provided disclosure in its press release deck as it pertains to the impact on capital if the Company were to recognize a complete loss ($41.7 million) on the LLC investments. Given the facts and circumstances that we are aware of at the time of the filing of this release, the Company does not believe a full loss or total tax benefit recapture to be likely.
Net Interest Income
Net interest income decreased by $1.4 million, or 2.9%, on a linked quarter basis, to $46.9 million, primarily attributable to an increase in interest expense of $2.4 million, or 10.1%, to $26.3 million, offset by an increase in loan interest income of $1.5 million, or 2.4%, to $64.8 million. Average interest-earning assets increased by $74.9 million, or 1.1%, on a linked quarter basis, primarily due to growth in average loan balances, which increased by $88.9 million, or 1.6%. Average loan balance growth was driven by a $56.2 million, or 2.4%, increase in average commercial real estate loans, a $27.8 million, or 7.1%, increase in average other consumer loans and a $27.1 million, or 3.2%, increase in average commercial business loans. Slightly offsetting the increases was a $16.8 million, or 1.2%, decrease in average residential real estate loans, a $3.0 million, or 0.5%, decrease in average home equity loans and a $2.4 million, or 2.1%, decrease in average construction loans.
Interest expense increased by $2.4 million, or 10.1%, to $26.3 million during the first quarter of 2019, from $23.9 million in the linked quarter. Average interest-bearing deposit balances increased by $41.4 million, or 0.9%, on a linked quarter basis, primarily driven by a $64.5 million, or 3.7%, increase in average certificates of deposit, which was slightly offset by a $16.3 million, or 0.6%, decrease in average NOW and money market account balances and a $6.7 million, or 1.3%, decrease in average savings account balances. Average non-interest bearing deposits decreased by $23.7 million, or 3.1%, as compared to the linked quarter. Average Federal Home Loan Bank advances increased by $67.9 million, or 9.3%.
The tax-equivalent net interest margin decreased by nine basis points to 2.81% in the first quarter of 2019, from 2.90% in the linked period. The decline in the tax-equivalent net interest margin was driven by an 18 basis point increase in the cost of interest-bearing liabilities, which was partially offset by a six basis point increase in the yield of interest-earning assets. The interest-earning asset yield improvement was largely driven by a 29 basis point increase in the yield on construction loans, a 20 basis point increase in the yield on commercial real estate loans, a 16 basis point increase in the yield on home equity loans, a three basis point increase in the yield on residential real estate loans, a two basis point increase in the yield on commercial business loans and a one basis point increase in the yield on other consumer loans. Slightly offsetting the increase in loan yields was a 30 basis point decline in the yield of the investment portfolio, largely resulting from the implementation of ASU No. 2017-08 - Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities, which caused lower yields on the Company's tax-exempt municipal bonds. The total cost of funds increased by 13 basis points to 1.61% in the first quarter of 2019 driven by a 16 basis point increase in the cost of interest-bearing deposits and a 22 basis point increase in the cost of Federal Home Loan Bank advances.
Provision for Loan Losses
The provision for loan losses totaled $2.0 million for the quarter ended March 31, 2019 as compared to $2.6 million for the linked quarter. Net charge-offs for the quarter ended March 31, 2019 totaled $1.6 million, or 0.11%, as a percentage of average loans outstanding, as compared to $891,000, or 0.06%, as a percentage of average loans for the quarter ended December 31, 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 by $513,000, or 5.4%, to $9.0 million for the quarter ended March 31, 2019 from $9.5 million in the linked quarter. The decrease in the first quarter's non-interest income was driven primarily by a $1.3 million, or 17.0%, decrease in service charges and fee income resulting from lower swap fee income and non-sufficient fund fees as compared to the linked quarter, offset by an increase of $712,000 in net gain from sales of securities and an increase of $429,000, or 28.3%, in bank-owned life insurance income as compared to the linked quarter.
Non-Interest Expense
Non-interest expense for the quarter ended March 31, 2019 totaled $39.2 million and decreased by $4.5 million, or 10.4%, from the linked quarter. The decrease in non-interest expense during the quarter was primarily due to decreases in salaries and employee benefits, occupancy and equipment, and service bureau fees. These decreases were slightly offset by an increase in professional fees as compared to the linked quarter.
The primary driver of the decrease in non-interest expense was a $3.1 million, or 12.4%, decrease in salaries and employee benefits expense as compared to the linked quarter. This decrease was largely due to a $2.2 million severance expense (pre-tax) that was recorded in the quarter ended December 31, 2018 as a result of the Company's shift in its mortgage banking strategy, which reduced staffing in our mortgage division, as well as decreases in commissions and incentives and other benefits as compared to the linked quarter. Other notable decreases include an $844,000, or 13.2%, decrease in occupancy and equipment and a $272,000, or 11.8%, decrease in service bureau fees during the quarter ended March 31, 2019.
Asset Quality
Asset quality remained strong and stable for the period, with non-performing assets decreasing by $1.4 million to $30.6 million at March 31, 2019 from $32.1 million at December 31, 2018. The ratio of non-performing assets to total assets for the quarter ended March 31, 2019 was 0.42%, as compared to 0.44% in the linked quarter.
Capital
The Company reported Tangible Common Equity ("TCE") of $601.8 million, or 8.2% of average assets, for the quarter ended March 31, 2019. Tangible book value per share increased to $11.78 at March 31, 2019 from $11.54 at December 31, 2018. The increase was primarily driven by an increase in accumulated other comprehensive income as a result of an increase in the market value of the Company's investment portfolio as compared to the previous quarter as well as the impact of the Company's net income of $12.7 million, offset by the cash dividend payment to shareholders of $0.12 per share and the impact of the adoption of ASU No. 2017-08 during the quarter, which resulted in a $10.2 million cumulative effect adjustment to beginning retained earnings. Book value per share at March 31, 2019 was $14.17, as compared to $13.94 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 April 26, 2019 and payable on May 8, 2019. This dividend equates to a 3.17% annualized yield based on the $15.12 average closing price of the Company's common stock in the first quarter of 2019. The Company has paid dividends for 52 consecutive quarters.
Investor Conference Call
United Financial Bancorp, Inc. will host a conference call on Wednesday, April 17, 2019 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 1, 2019 by calling 1-877-344-7529 and entering conference number 10130129. 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, 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 March 31, 2019, the Company had $7.34 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 contains certain forward-looking statements about the Company. Forward-looking statements include statements regarding anticipated future events, such as the anticipated effect of the Company's LLC investments, 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 the outcome of the D.C. Solar bankruptcy, 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 March 31,
2019 2018
Interest and dividend income: (In thousands, except share data)
Loans $ 64,764 $ 54,780
Securities-taxable interest 6,475 5,498
Securities-non-taxable interest 1,094 2,429
Securities-dividends 656 637
Interest-bearing deposits 225 150
Total interest and dividend income 73,214 63,494
Interest expense:
Deposits 19,931 11,027
Borrowed funds 6,346 5,924
Total interest expense 26,277 16,951
Net interest income 46,937 46,543
Provision for loan losses 2,043 1,939
Net interest income after provision for loan losses 44,894 44,604
Non-interest income:
Service charges and fees 6,185 6,159
Net gain from sales of securities 737 116
Income from mortgage banking activities 591 1,729
Bank-owned life insurance income 1,946 1,646
Net loss on limited partnership investments (603 ) (590 )
Other income 124 229
Total non-interest income 8,980 9,289
Non-interest expense:
Salaries and employee benefits 22,202 21,198
Service bureau fees 2,037 2,218
Occupancy and equipment 5,540 4,949
Professional fees 1,293 1,164
Marketing and promotions 858 685
FDIC insurance assessments 659 739
Core deposit intangible amortization 420 337
Other 6,178 5,446
Total non-interest expense 39,187 36,736
Income before income taxes 14,687 17,157
Provision for income taxes 2,030 1,370
Net income $ 12,657 $ 15,787
Net income per share:
Basic $ 0.25 $ 0.31
Diluted $ 0.25 $ 0.31
Weighted-average shares outstanding:
Basic 50,615,059 50,474,942
Diluted 50,907,092 50,996,596
United Financial Bancorp, Inc. and Subsidiaries
Consolidated Statements of Net Income
(Unaudited)
For the Three Months Ended
March 31,
2019 December 31,
2018 September 30,
2018 June 30,
2018 March 31,
2018
Interest and dividend income: (In thousands, except share data)
Loans $ 64,764 $ 63,227 $ 61,061 $ 57,958 $ 54,780
Securities-taxable interest 6,475 5,705 5,822 5,969 5,498
Securities-non-taxable interest 1,094 2,339 2,347 2,354 2,429
Securities-dividends 656 702 748 736 637
Interest-bearing deposits 225 250 213 113 150
Total interest and dividend income 73,214 72,223 70,191 67,130 63,494
Interest expense:
Deposits 19,931 18,183 15,767 12,864 11,027
Borrowed funds 6,346 5,678 5,995 6,085 5,924
Total interest expense 26,277 23,861 21,762 18,949 16,951
Net interest income 46,937 48,362 48,429 48,181 46,543
Provision for loan losses 2,043 2,618 2,007 2,350 1,939
Net interest income after provision for loan losses 44,894 45,744 46,422 45,831 44,604
Non-interest income:
Service charges and fees 6,185 7,447 6,623 6,542 6,159
Net gain (loss) from sales of securities 737 25 (58 ) 62 116
Income from mortgage banking activities 591 698 1,486 846 1,729
Bank-owned life insurance income 1,946 1,517 1,460 1,671 1,646
Net loss on limited partnership investments (603 ) (405 ) (221 ) (960 ) (590 )
Other income 124 211 265 199 229
Total non-interest income 8,980 9,493 9,555 8,360 9,289
Non-interest expense:
Salaries and employee benefits 22,202 25,341 22,643 22,113 21,198
Service bureau fees 2,037 2,309 2,209 2,165 2,218
Occupancy and equipment 5,540 6,384 4,487 4,668 4,949
Professional fees 1,293 1,136 1,013 1,105 1,164
Marketing and promotions 858 1,108 1,119 1,189 685
FDIC insurance assessments 659 611 655 735 739
Core deposit intangible amortization 420 420 288 305 337
Other 6,178 6,409 6,529 6,090 5,446
Total non-interest expense 39,187 43,718 38,943 38,370 36,736
Income before income taxes 14,687 11,519 17,034 15,821 17,157
Provision (benefit) for income taxes 2,030 (646 ) 726 175 1,370
Net income $ 12,657 $ 12,165 $ 16,308 $ 15,646 $ 15,787
Net income per share:
Basic $ 0.25 $ 0.24 $ 0.32 $ 0.31 $ 0.31
Diluted $ 0.25 $ 0.24 $ 0.32 $ 0.31 $ 0.31
Weighted-average shares outstanding:
Basic 50,615,059 50,613,498 50,624,832 50,504,273 50,474,942
Diluted 50,907,092 50,970,000 51,104,776 50,974,283 50,996,596
United Financial Bancorp, Inc. and Subsidiaries
Consolidated Statements of Condition
(Unaudited)
March 31,
2019 December 31,
2018 September 30,
2018 June 30,
2018 March 31,
2018
ASSETS (In thousands)
Cash and cash equivalents:
Cash and due from banks $ 50,823 $ 36,434 $ 48,786 $ 62,188 $ 45,332
Short-term investments 104,350 61,530 29,809 46,987 23,910
Total cash and cash equivalents 155,173 97,964 78,595 109,175 69,242
Available for sale securities – At fair value 848,541 973,347 972,035 1,006,135 1,031,277
Loans held for sale 16,172 78,788 86,948 85,458 63,394
Loans:
Commercial real estate loans:
Owner-occupied 439,366 443,398 434,906 418,338 442,938
Investor non-owner occupied 1,932,137 1,911,070 1,888,848 1,927,960 1,842,898
Construction 94,649 87,493 78,235 82,883 84,717
Total commercial real estate loans 2,466,152 2,441,961 2,401,989 2,429,181 2,370,553
Commercial business loans 920,165 886,770 861,030 841,142 846,182
Consumer loans:
Residential real estate 1,322,423 1,313,373 1,283,126 1,252,001 1,235,197
Home equity 583,368 583,454 579,907 588,638 582,285
Residential construction 13,620 20,632 32,750 32,063 37,579
Other consumer 425,854 410,249 369,781 332,402 310,439
Total consumer loans 2,345,265 2,327,708 2,265,564 2,205,104 2,165,500
Total loans 5,731,582 5,656,439 5,528,583 5,475,427 5,382,235
Net deferred loan costs and premiums 17,901 17,786 16,603 15,502 14,724
Allowance for loan losses (52,041 ) (51,636 ) (49,909 ) (49,163 ) (47,915 )
Loans receivable - net 5,697,442 5,622,589 5,495,277 5,441,766 5,349,044
Federal Home Loan Bank of Boston stock, at cost 37,702 41,407 42,032 46,734 49,895
Accrued interest receivable 25,061 24,823 25,485 23,209 22,333
Deferred tax asset, net 27,600 32,706 31,473 30,190 28,710
Premises and equipment, net 63,863 68,657 67,612 67,614 67,619
Operating lease right-of-use assets 44,377 — — — —
Financing lease right-of-use assets 4,356 — — — —
Goodwill 116,727 116,769 115,281 115,281 115,281
Core deposit intangible asset 5,607 6,027 3,561 3,849 4,154
Cash surrender value of bank-owned life insurance 194,496 193,429 181,928 180,490 179,556
Other assets 102,823 100,368 107,271 98,695 88,169
Total assets $ 7,339,940 $ 7,356,874 $ 7,207,498 $ 7,208,596 $ 7,068,674
March 31,
2019 December 31,
2018 September 30,
2018 June 30,
2018 March 31,
2018
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Non-interest-bearing $ 777,969 $ 799,785 $ 759,210 $ 770,982 $ 753,575
Interest-bearing 4,886,283 4,870,814 4,741,153 4,622,394 4,528,935
Total deposits 5,664,252 5,670,599 5,500,363 5,393,376 5,282,510
Mortgagors' and investor escrow accounts 11,510 4,685 9,597 14,526 11,096
Federal Home Loan Bank advances and other borrowings 826,668 899,626 926,592 1,041,896 1,030,735
Operating lease liabilities 56,265 — — — —
Financing lease liabilities 4,585 — — — —
Accrued expenses and other liabilities 52,562 69,446 61,128 56,921 51,333
Total liabilities 6,615,842 6,644,356 6,497,680 6,506,719 6,375,674
Total stockholders' equity 724,098 712,518 709,818 701,877 693,000
Total liabilities and stockholders' equity $ 7,339,940 $ 7,356,874 $ 7,207,498 $ 7,208,596 $ 7,068,674
United Financial Bancorp, Inc. and Subsidiaries
Selected Financial Highlights
(Dollars In Thousands, Except Share Data)
(Unaudited)
At or For the Three Months Ended
March 31,
2019 December 31,
2018 September 30,
2018 June 30,
2018 March 31,
2018
Share Data:
Basic net income per share $ 0.25 $ 0.24 $ 0.32 $ 0.31 $ 0.31
Diluted net income per share 0.25 0.24 0.32 0.31 0.31
Dividends declared per share 0.12 0.12 0.12 0.12 0.12
Tangible book value per share $ 11.78 $ 11.54 $ 11.55 $ 11.40 $ 11.25
Key Statistics:
Total revenue $ 55,917 $ 57,855 $ 57,984 $ 56,541 $ 55,832
Total non-interest expense 39,187 43,718 38,943 38,370 36,736
Average earning assets 6,783,604 6,708,701 6,671,424 6,584,938 6,568,168
Key Ratios:
Return on average assets (annualized) 0.69 % 0.67 % 0.91 % 0.88 % 0.89 %
Return on average equity (annualized) 7.13 % 6.89 % 9.26 % 9.00 % 9.15 %
Tax-equivalent net interest margin (annualized) 2.81 % 2.90 % 2.92 % 2.97 % 2.90 %
Non-interest expense to average assets (annualized) 2.13 % 2.41 % 2.17 % 2.16 % 2.08 %
Cost of funds (annualized) (1) 1.61 % 1.48 % 1.36 % 1.20 % 1.07 %
Total revenue growth rate (3.35 )% (0.22 )% 2.55 % 1.27 % 2.58 %
Total revenue growth rate (annualized) (13.40 )% (0.89 )% 10.21 % 5.08 % 10.30 %
Average earning asset growth rate 1.12 % 0.56 % 1.31 % 0.26 % 1.35 %
Average earning asset growth rate (annualized) 4.47 % 2.24 % 5.25 % 1.02 % 5.38 %
Residential Mortgage Production:
Dollar volume (total) $ 31,882 $ 128,209 $ 143,673 $ 140,409 $ 94,433
Mortgages originated for purchases 21,434 101,266 111,555 110,351 63,193
Loans sold 89,980 108,663 99,372 99,637 99,899
Income from mortgage banking activities 591 698 1,486 846 1,729
Non-performing Assets:
Residential real estate $ 13,742 $ 13,217 $ 11,949 $ 11,221 $ 11,663
Home equity 4,577 4,735 4,005 4,607 4,698
Investor-owned commercial real estate 739 1,131 1,525 2,400 2,863
Owner-occupied commercial real estate 1,830 2,450 1,202 2,176 2,326
Construction 171 199 243 250 273
Commercial business 1,627 944 985 1,196 1,579
Other consumer 1,034 1,030 597 237 34
Non-accrual loans 23,720 23,706 20,506 22,087 23,436
Troubled debt restructured – non-accruing 5,479 6,971 6,706 7,330 8,308
Total non-performing loans 29,199 30,677 27,212 29,417 31,744
Other real estate owned 1,429 1,389 1,808 1,855 1,935
Total non-performing assets $ 30,628 $ 32,066 $ 29,020 $ 31,272 $ 33,679
Non-performing loans to total loans 0.51 % 0.54 % 0.49 % 0.54 % 0.59 %
Non-performing assets to total assets 0.42 % 0.44 % 0.40 % 0.43 % 0.48 %
Allowance for loan losses to non-performing loans 178.23 % 168.32 % 183.41 % 167.12 % 150.94 %
Allowance for loan losses to total loans 0.91 % 0.91 % 0.90 % 0.90 % 0.89 %
Non-GAAP Ratios: (2)
Efficiency ratio 69.67 % 69.18 % 65.61 % 65.18 % 63.97 %
Return on average tangible common equity (annualized) 8.85 % 8.55 % 11.30 % 11.03 % 11.25 %
Pre-provision net revenue to average assets 0.92 % 1.00 % 1.12 % 1.14 % 1.15 %
(1) The cost of funds ratio represents interest incurred on liabilities as a percentage of average non-interest bearing deposits and interest-bearing liabilities.
(2) 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. Calculations of these non-GAAP metrics are provided after the reconciliations of non-GAAP financial measures and appear on page F-9 through page F-11.
United Financial Bancorp, Inc. and Subsidiaries
Average Balance Sheets, Interest and Yields/Costs
(Dollars In Thousands)
(Unaudited)
For the Three Months Ended
March 31, 2019 March 31, 2018
Average
Balance Interest
and
Dividends Yield/Cost Average
Balance Interest
and
Dividends Yield/Cost
Interest-earning assets:
Residential real estate $ 1,380,829 $ 12,886 3.73 % $ 1,314,219 $ 11,506 3.51 %
Commercial real estate 2,358,955 27,302 4.63 2,281,868 23,656 4.15
Construction 111,198 1,426 5.13 119,435 1,325 4.44
Commercial business 888,436 10,612 4.78 842,809 8,382 3.98
Home equity 582,180 7,874 5.48 578,776 6,528 4.57
Other consumer 418,053 5,174 5.02 299,839 3,800 5.14
Investment securities 966,841 7,819 3.23 1,041,849 8,624 3.31
Federal Home Loan Bank stock 40,475 628 6.21 51,458 606 4.71
Other earning assets 36,637 229 2.53 37,915 150 1.61
Total interest-earning assets 6,783,604 73,950 4.37 6,568,168 64,577 3.94
Allowance for loan losses (52,089 ) (47,780 )
Non-interest-earning assets 639,923 554,333
Total assets $ 7,371,438 $ 7,074,721
Interest-bearing liabilities:
NOW and money market $ 2,567,634 $ 10,309 1.63 % $ 2,146,945 $ 4,892 0.92 %
Savings 500,167 75 0.06 510,904 73 0.06
Certificates of deposit 1,823,867 9,547 2.12 1,796,675 6,062 1.37
Total interest-bearing deposits 4,891,668 19,931 1.65 4,454,524 11,027 1.00
Federal Home Loan Bank advances 800,862 5,045 2.52 1,033,884 4,545 1.76
Other borrowings 88,757 1,301 5.86 118,008 1,379 4.67
Total interest-bearing liabilities 5,781,287 26,277 1.84 5,606,416 16,951 1.22
Non-interest-bearing deposits 745,259 713,364
Other liabilities 134,987 64,596
Total liabilities 6,661,533 6,384,376
Stockholders' equity 709,905 690,345
Total liabilities and stockholders' equity $ 7,371,438 $ 7,074,721
Net interest-earning assets $ 1,002,317 $ 961,752
Tax-equivalent net interest income 47,673 47,626
Tax-equivalent net interest rate spread (1) 2.53 % 2.72 %
Tax-equivalent net interest margin (2) 2.81 % 2.90 %
Average interest-earning assets to average interest-bearing liabilities 117.34 % 117.15 %
Less tax-equivalent adjustment 736 1,083
Net interest income $ 46,937 $ 46,543
(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
March 31, 2019 December 31, 2018
Average
Balance Interest
and
Dividends Yield/Cost Average
Balance Interest
and
Dividends Yield/Cost
Interest-earning assets:
Residential real estate $ 1,380,829 $ 12,886 3.73 % $ 1,397,669 $ 12,929 3.70 %
Commercial real estate 2,358,955 27,302 4.63 2,302,741 26,085 4.43
Construction 111,198 1,426 5.13 113,617 1,405 4.84
Commercial business 888,436 10,612 4.78 861,311 10,481 4.76
Home equity 582,180 7,874 5.48 585,178 7,848 5.32
Other consumer 418,053 5,174 5.02 390,237 4,931 5.01
Investment securities 966,841 7,819 3.23 967,881 8,564 3.53
Federal Home Loan Bank stock 40,475 628 6.21 40,428 665 6.58
Other earning assets 36,637 229 2.53 49,639 253 2.02
Total interest-earning assets 6,783,604 73,950 4.37 6,708,701 73,161 4.31
Allowance for loan losses (52,089 ) (50,754 )
Non-interest-earning assets 639,923 586,449
Total assets $ 7,371,438 $ 7,244,396
Interest-bearing liabilities:
NOW and money market $ 2,567,634 $ 10,309 1.63 % $ 2,583,982 $ 9,641 1.48 %
Savings 500,167 75 0.06 506,880 76 0.06
Certificates of deposit 1,823,867 9,547 2.12 1,759,382 8,466 1.91
Total interest-bearing deposits 4,891,668 19,931 1.65 4,850,244 18,183 1.49
Federal Home Loan Bank advances 800,862 5,045 2.52 732,995 4,307 2.30
Other borrowings 88,757 1,301 5.86 107,365 1,371 5.00
Total interest-bearing liabilities 5,781,287 26,277 1.84 5,690,604 23,861 1.66
Non-interest-bearing deposits 745,259 768,916
Other liabilities 134,987 78,752
Total liabilities 6,661,533 6,538,272
Stockholders' equity 709,905 706,124
Total liabilities and stockholders' equity $ 7,371,438 $ 7,244,396
Net interest-earning assets $ 1,002,317 $ 1,018,097
Tax-equivalent net interest income 47,673 49,300
Tax-equivalent net interest rate spread (1) 2.53 % 2.65 %
Tax-equivalent net interest margin (2) 2.81 % 2.90 %
Average interest-earning assets to average interest-bearing liabilities 117.34 % 117.89 %
Less tax-equivalent adjustment 736 938
Net interest income $ 46,937 $ 48,362
(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-9 through F-11 in the following press release tables:
Three Months Ended
March 31,
2019 December 31,
2018 September 30,
2018 June 30,
2018 March 31,
2018
(Dollars in thousands)
Net Income (GAAP) $ 12,657 $ 12,165 $ 16,308 $ 15,646 $ 15,787
Non-GAAP adjustments:
Non-interest income (1,158 ) (25 ) 58 (271 ) (342 )
Non-interest expense — 2,677 (129 ) 215 —
Income tax benefit related to tax reform — (1,717 ) — — —
Related income tax (benefit) expense 155 (557 ) 15 (93 ) 72
Net adjustment (1,003 ) 378 (56 ) (149 ) (270 )
Total net income (non-GAAP) $ 11,654 $ 12,543 $ 16,252 $ 15,497 $ 15,517
Non-interest income (GAAP) $ 8,980 $ 9,493 $ 9,555 $ 8,360 $ 9,289
Non-GAAP adjustments:
Net loss (gain) on sales of securities (737 ) (25 ) 58 (62 ) (116 )
BOLI claim benefit (421 ) — — (209 ) (226 )
Net adjustment (1,158 ) (25 ) 58 (271 ) (342 )
Total non-interest income (non-GAAP) 7,822 9,468 9,613 8,089 8,947
Total net interest income 46,937 48,362 48,429 48,181 46,543
Total revenue (non-GAAP) $ 54,759 $ 57,830 $ 58,042 $ 56,270 $ 55,490
Non-interest expense (GAAP) $ 39,187 $ 43,718 $ 38,943 $ 38,370 $ 36,736
Non-GAAP adjustments:
Lease exit/disposal cost obligation — (466 ) 129 (215 ) —
Effect of position eliminations — (2,211 ) — — —
Net adjustment — (2,677 ) 129 (215 ) —
Total non-interest expense (non-GAAP) $ 39,187 $ 41,041 $ 39,072 $ 38,155 $ 36,736
Total loans $ 5,731,582 $ 5,656,439 $ 5,528,583 $ 5,475,427 $ 5,382,235
Non-covered loans (1) (658,455 ) (675,112 ) (708,621 ) (729,947 ) (771,802 )
Total covered loans $ 5,073,127 $ 4,981,327 $ 4,819,962 $ 4,745,480 $ 4,610,433
Allowance for loan losses $ 52,041 $ 51,636 $ 49,909 $ 49,163 $ 47,915
Allowance for loan losses to total loans 0.91 % 0.91 % 0.90 % 0.90 % 0.89 %
Allowance for loan losses to total covered loans 1.03 % 1.04 % 1.04 % 1.04 % 1.04 %
(1) 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
March 31,
2019 December 31,
2018 September 30,
2018 June 30,
2018 March 31,
2018
Efficiency Ratio:
Non-Interest Expense (GAAP) $ 39,187 $ 43,718 $ 38,943 $ 38,370 $ 36,736
Non-GAAP adjustments:
Other real estate owned expense (105 ) (108 ) (256 ) (163 ) (167 )
Lease exit/disposal cost obligation — (466 ) 129 (215 ) —
Effect of position eliminations — (2,211 ) — — —
Non-Interest Expense for Efficiency Ratio (non-GAAP) $ 39,082 $ 40,933 $ 38,816 $ 37,992 $ 36,569
Net Interest Income (GAAP) $ 46,937 $ 48,362 $ 48,429 $ 48,181 $ 46,543
Non-GAAP adjustments:
Tax-equivalent adjustment for tax-exempt loans and investment securities 736 938 895 1,059 1,083
Non-Interest Income (GAAP) 8,980 9,493 9,555 8,360 9,289
Non-GAAP adjustments:
Net (gain) loss on sales of securities (737 ) (25 ) 58 (62 ) (116 )
Net loss on limited partnership investments 603 405 221 960 590
BOLI claim benefit (421 ) — — (209 ) (226 )
Total Revenue for Efficiency Ratio (non-GAAP) $ 56,098 $ 59,173 $ 59,158 $ 58,289 $ 57,163
Efficiency Ratio (Non-Interest Expense for Efficiency Ratio (non-GAAP)/Total Revenue for Efficiency Ratio (non-GAAP)) 69.67 % 69.18 % 65.61 % 65.18 % 63.97 %
Three Months Ended
March 31,
2019 December 31,
2018 September 30,
2018 June 30,
2018 March 31,
2018
Pre-Provision Net Revenue ("PPNR") to Average Assets (Annualized):
Net Interest income (GAAP) $ 46,937 $ 48,362 $ 48,429 $ 48,181 $ 46,543
Non-GAAP adjustments:
Tax-equivalent adjustment for tax-exempt loans and investment securities 736 938 895 1,059 1,083
Total tax-equivalent net interest income (A) $ 47,673 $ 49,300 $ 49,324 $ 49,240 $ 47,626
Non-Interest Income (GAAP) 8,980 9,493 9,555 8,360 9,289
Non-GAAP adjustments:
Net (gain) loss on sales of securities (737 ) (25 ) 58 (62 ) (116 )
Net loss on limited partnership investments 603 405 221 960 590
BOLI claim benefit (421 ) — — (209 ) (226 )
Non-Interest Income for PPNR (non-GAAP) (B) $ 8,425 $ 9,873 $ 9,834 $ 9,049 $ 9,537
Non-Interest Expense (GAAP) $ 39,187 $ 43,718 $ 38,943 $ 38,370 $ 36,736
Non-GAAP adjustments:
Lease exit/disposal cost obligation — (466 ) 129 (215 ) —
Effect of position eliminations — (2,211 ) — — —
Non-Interest Expense for PPNR (non-GAAP) (C) $ 39,187 $ 41,041 $ 39,072 $ 38,155 $ 36,736
Total PPNR (non-GAAP) (A + B - C) : $ 16,911 $ 18,132 $ 20,086 $ 20,134 $ 20,427
Average Assets 7,371,438 7,244,396 7,191,072 7,091,721 7,074,721
PPNR to Average Assets (Annualized) 0.92 % 1.00 % 1.12 % 1.14 % 1.15 %
Return on Average Tangible Common Equity (Annualized):
Net Income (GAAP) $ 12,657 $ 12,165 $ 16,308 $ 15,646 $ 15,787
Non-GAAP adjustments:
Intangible assets amortization, tax effected at 21% 332 332 228 241 266
Net Income excluding intangible assets amortization, tax effected at 21% $ 12,989 $ 12,497 $ 16,536 $ 15,887 $ 16,053
Average stockholders' equity (non-GAAP) $ 709,905 $ 706,124 $ 704,306 $ 695,301 $ 690,345
Average goodwill & other intangible assets (non-GAAP) 122,597 121,614 119,009 119,288 119,611
Average tangible common stockholders' equity (non-GAAP) $ 587,308 $ 584,510 $ 585,297 $ 576,013 $ 570,734
Return on Average Tangible Common Equity (non-GAAP) 8.85 % 8.55 % 11.30 % 11.03 % 11.25 %
Investor Relations Contact:
Marliese L. Shaw
Executive Vice President, Investor Relations Officer
United Bank
860-291-3622
Media Relations Contact:
Adam J. Jeamel
Corporate Communications
United Bank
860-291-3765
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