UNITED FINANCIAL BANCORP, INC. GLASTONBURY, Conn., Jan. 26, 2016 /PRNewswire/ -- United Financial Bancorp, Inc. ("United Financial" or the "Company") (NASDAQ Global Select Stock Market: "UBNK"), the holding company for United Bank (the "Bank"), today announced results for the quarter ended December 31, 2015.
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The Company had net income of $9.9 million, or $0.20 per diluted share, for the quarter ended December 31, 2015, compared to net income for the linked quarter of $13.4 million, or $0.27 per diluted share. Operating net income for the fourth quarter of 2015 was $11.3 million (Non-GAAP), or $0.23 per diluted share, compared to $10.9 million, or $0.22 per diluted share for the linked quarter. Operating net income for the fourth quarter was adjusted for purchase accounting benefits, bank owned life insurance proceeds, net gain on sale of securities, separation expenses related to the previously announced departure of our Chief Operating Officer ("COO"), and fees associated with the acquisition of loan portfolios during the quarter. The Company reported net income of $1.4 million, or $0.03 per diluted share, for the quarter ended December 31, 2014.
Late in the fourth quarter of 2015, the Company completed the acquisition of a specialty marine finance portfolio and a 13 person team supporting the origination and underwriting of floor plan loans on select premium global marine manufacturers and resulting retail end loans. The specialty marine portfolio totaled $171.8 million at December 31, 2015. Also late in the quarter, the Company completed two additional consumer portfolio purchases totaling $158.7 million which supports the Company's efforts to geographically diversify credit exposure and shift the composition of the loan portfolio into favorable consumer products with more favorable risk adjusted returns.
Net income for the year ended December 31, 2015 was $49.6 million, or $1.00 per diluted share, and increased from $6.8 million or $0.16 per diluted share for the year ended December 31, 2014. Operating net income of $44.2 million (Non-GAAP), or $0.90 per diluted share for the year ended December 31, 2015 increased from $26.7 million, or $0.62 per diluted share for the year ended December 31, 2014. Adjustments to operating net income from GAAP net income for 2014 are largely related to the merger costs and are itemized in the reconciliation of non-GAAP measures.
"I am pleased to announce the establishment of LH-Finance, a division of United Bank, a specialty marine finance business unit based in Baltimore, Maryland, which will originate and underwrite floor plan loans on premium global marine manufacturers and resulting retail loans," stated William H. W. Crawford, IV, Chief Executive Officer of the Company and the Bank. "In addition to the specialty marine portfolio and team lift out, the Company closed on two consumer portfolios with attractive risk adjusted yields. Our fourth quarter results were impacted by non-recurring expenses associated with the three portfolio purchases and the previously disclosed elimination of the COO position and related severance."
"For 2015, the Company's return on average assets ("ROA") was 0.87%, and return on average equity ("ROE") was 8.08%, resulting from strong commercial loan growth, and consistent mortgage banking activity. Looking forward to 2016, we expect to continue to show improvement of operating pre-tax, pre-provision revenue as it relates to average assets through organic growth and expense management, as well as continuing to shift the overall consumer portfolio composition to more favorable risk adjusted returns," added Mr. Crawford. "At United, people are our competitive advantage and I want to personally thank each one of them for their hard work in making 2015 a great year for the Bank and for their continued support in the communities we serve."
Financial Highlights
-- Achieved record operating net income of $11.3 million for quarter ended
December 31, 2015
-- Commercial loan growth $87 million or 13% annualized; commercial
business loan growth $26 million or 18% annualized
-- DDA growth 32% annualized
-- $326 million of loan portfolio purchases
-- Specialty marine team lift out completed
-- Operating Non-Interest Expense/Average Assets (NIE/AA) of 2.13% for the
quarter (annualized) and 2.17% for full year 2015
Earnings Results
The Company reported quarterly net income of $9.9 million, or $0.20 per diluted share, and ROA of 0.66% in the fourth quarter of 2015. Interest income totaled $49.7 million in the fourth quarter of 2015 and increased by $89,000, or 0.2%, in comparison to the linked quarter. Earning assets grew by $375.5 million, or 7%, during the quarter driven by the aforementioned portfolio purchases late in the quarter, while average interest-earning assets increased by $242.5 million, or 4%, from the linked quarter due primarily to three consecutive quarters of strong commercial loan growth. Compared to the linked quarter, interest expense increased by $1.0 million, or 13%, to $9.0 million for the fourth quarter of 2015. This interest expense increase was driven by the $119.3 million increase in average Federal Home Loan Bank advances and other borrowings, coupled with a 5 basis point increase in the cost of interest-bearing deposits. Interest expense on deposits increased by $480,000, while average interest-bearing deposit balances increased by $50.6 million and average non-interest bearing deposit balances increased by $27.2 million from the linked quarter.
The GAAP tax equivalent net interest margin for the fourth quarter of 2015 decreased by 18 basis points to 3.02% compared to 3.20% for the linked quarter. The yields on interest-earning assets decreased by 13 basis points in the fourth quarter of 2015 to 3.66% as compared to the linked quarter, largely reflective of the reduced benefit of purchase accounting loan accretion. Additionally, the Company continues to experience strong execution of interest rate swaps. The result of these loan-level hedges is that the Company originates more variable rate loans with lower yields; however, greater fee income is recognized at the time of the swap origination. The increase in the interest-bearing cost of funds of six basis points, to 0.77%, was attributable to an increase of 17 basis points in the cost of Federal Home Loan Bank advances driven by the duration extension of wholesale funding, coupled with an increase of five basis points in the cost of interest bearing liabilities. The increase in the cost of interest bearing liabilities was driven by an increase of 12 basis points in the cost of certificates of deposit relating to a reduced purchase accounting benefit, while the cost of NOW and money market balances decreased by three basis points and the cost of savings balances decreased by one basis point. The operating net interest margin, which excludes the impact of purchase accounting adjustments, increased by 1 basis point to 2.90% in the fourth quarter of 2015 from 2.89% in the linked quarter.
The net benefit to interest income in the fourth quarter of 2015 from accretion of purchase accounting adjustments totaled $718,000, a 74% decrease from $2.8 million recognized in the linked quarter. The decline between the two quarters reflects the decreased impact of loan purchase accounting marks. Interest expense benefited from net accretion of discounts totaling $899,000 in the fourth quarter of 2015, a 31% decrease from $1.3 million recognized in the linked quarter. The decrease in the interest expense benefit was due to a notably lower level of maturities related to time deposits in the fourth quarter of 2015 as compared to the linked quarter.
The provision for loan losses increased by 16%, or $528,000, to $3.8 million for the quarter ended December 31, 2015 compared to $3.3 million for the linked quarter due to growth of the covered portfolio for the current period as compared to the linked quarter, primarily from commercial loans. The level of non-covered portfolio expansion results from an increase in the purchased loan portfolios that were recorded at fair market value. Net charge-offs for the fourth quarter of 2015 decreased by $551,000 to $724,000, or 0.06% annualized as a percentage of average loans outstanding, from $1.3 million, or 0.12% annualized as a percentage of average loans outstanding, in the linked quarter. Factors considered in the provision for loan losses include, but are not limited to, historical charge-offs, the composition of the portfolio, the current level of non-performing loans and charge-offs, local economic and credit conditions, the direction of real estate values and delinquency trends.
Total non-interest income increased by $645,000, or 8%, to $8.5 million for the quarter ended December 31, 2015 from $7.8 million in the linked quarter. The most significant factors attributing to the increase in the fourth quarter's non-interest income were the $359,000 increase in gain on sale of securities, and the $605,000 increase in other income driven by a positive adjustment to loan level hedge valuations due to higher long term interest rates, offset by a $323,000 decline in mortgage banking activities income due to expected seasonality of mortgage production in the fourth quarter. The mortgage servicing rights valuation increased by $1.1 million as compared to the linked quarter.
Non-interest income in the fourth quarter of 2015 includes the recognition of a $799,000 loss related to limited partnership investments, and is consistent with the linked quarter. The loss correlates with the utilization of tax benefits and is more than offset in the tax provision for both the fourth quarter of 2015 and the linked quarter.
Non-Interest Expense
Non-interest expense for the quarter ended December 31, 2015 totaled $35.3 million and increased by $3.4 million, or 11%, from the linked quarter. The increase was the result of several non-recurring items including expenses associated with the previously disclosed executive departure, and investment banking fees recognized in the quarter associated with the portfolio purchases. Cumulatively, this added $3.4 million of pre-tax expense in the quarter that the Company considers non-recurring. The Company's cost structure continues to be favorable with non-interest expense as a percentage of average assets reported at 2.25% and operating non-interest expense as a percentage of average assets reported at 2.17% for the full year ended December 31, 2015. Salaries and benefits increased by $314,000 from the linked quarter due to staffing related to the on-boarding of the specialty marine finance unit, investments made in our payment operations area to support cash management and debit card fraud prevention monitoring, investments made in our information security unit and compliance, and producers in our wealth management division. Service bureau fees declined $214,000 due to a decrease in expenses related to issuing EMV chip cards in the linked quarter that were not recurring in the current period. Occupancy and equipment expenses increased $499,000 due in part to lease negotiation termination benefits realized in the linked quarter. Professional fees increased $1.5 million from the linked quarter which includes the aforementioned investment banking fees paid in connection to the loan portfolio purchases. Other expenses declined $393,000 from the linked quarter due to lower debit card fraud losses and lower expenses associated with loan level hedge activity. Excluding the noted expenses pertaining to the executive separation and loan portfolio acquisition totaling $3.4 million, non-interest expense was flat in comparison to the linked quarter.
Business Line Discussions
Commercial Banking
Total commercial loans increased by $84 million, or 13% annualized, during the fourth quarter of 2015. For the quarter ended December 31, 2015, commercial loan activity was comprised of an increase in the commercial real estate portfolio of $74 million, or 4%, and an increase in the commercial business portfolio of $26 million, or 5%, offset by a decrease in the commercial construction portfolio of $17 million, or 12%. Commercial banking profitability was augmented by continued loan level hedging fee income which was $2.3 million and $2.4 million for the quarters ended December 31, 2015 and September 30, 2015, respectively. The Company has been able to successfully meet the customer preference for fixed rate loans in this low interest rate environment while prudently managing interest rate risk and increasing fee income.
In the quarter ending December 31, 2015, total commercial deposits declined $41 million, or 5%, due to expected seasonality in our municipal businesses; however, total transaction accounts, which include demand deposits and NOW accounts, increased $17 million, or 6%. In the year ending December 31, 2015, total commercial deposits grew $94 million, or 14%, of which transaction accounts increased $53 million, or 22%.
Consumer Lending
In the fourth quarter of 2015, the Company produced residential mortgage originations of $146 million, reflecting expected seasonality in the final quarter of the year. In 2015, residential mortgage originations totaled $706 million, an increase of $327 million, or 87%, from $378 million in the prior year. Purchase mortgage activity represented 66% of the production during the fourth quarter of 2015, and 37% of the quarter's production was comprised of adjustable rate mortgages. For the full year of 2015, 58% of the production represented purchase activity and 35% of production was comprised of adjustable rate mortgages. The Company sold residential mortgage loans totaling $119 million during the fourth quarter of 2015, and $404 million during the full year of 2015.
Funding & Deposits
Deposits totaled $4.44 billion at December 31, 2015 and increased by $174 million, or 4%, from $4.26 billion at September 30, 2015, reflecting a $49 million, or 8%, increase in non-interest bearing deposits and a $125 million, or 3% increase in interest bearing deposits. The cost of total interest bearing deposits increased by five basis points to 0.63% in the quarter ending December 31, 2015 from 0.58% in the linked quarter, primarily due to the increased cost of time deposits. Money market account specials expiring and seasonal increases in lower cost municipal money market deposits both drove down the cost of money market accounts during the fourth quarter of 2015, while maturities of acquired time deposits decreased the benefit of purchase accounting in the fourth quarter of 2015 relative to the linked period as well as selected promotional pricing to extend the duration of the time deposit portfolio.
Asset Quality
Non-performing assets increased by $1.5 million to $38.6 million at December 31, 2015 from $37.1 million at September 30, 2015. The ratio of non-performing assets to total assets as compared to the linked quarter remained largely unchanged at 0.62% at December 31, 2015. The allowance for loan losses as a percentage of total covered loans outstanding increased to 1.07% at December 31, 2015 from 1.04% at September 30, 2015. The Company maintains a disciplined approach to asset quality and will not match extremely favorable pricing or underwriting and structure pressures from competitor banks if those considerations do not meet the Company's asset quality and return standards.
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 5, 2016 and payable on February 18, 2016. This dividend equates to a 3.59% annualized yield based on the $13.38 average closing price of the Company's common stock in the fourth quarter of 2015. The Company has paid dividends for 39 consecutive quarters.
Tangible Book Value
Tangible book value per share increased to $10.07 at December 31, 2015 from $10.06 at September 30, 2015, primarily due to the impact of the Company's net income of $9.9 million and awards granted under the 2015 Omnibus Stock Incentive Plan in the fourth quarter. These increases were partially offset by the cash dividend payment to shareholders of $0.12 per share. Book value per share at December 31, 2015 was $12.53.
Capital Management
The Company reported Tangible Common Equity ("TCE") of $503 million, or 8.43% of average assets, at December 31, 2015. The Company obtained approval for and initiated a third buyback plan on October 15, 2014. Under this plan, the Company was authorized to repurchase up to 2,566,283 shares, or 5% of the outstanding shares at the time the plan was approved and had a remaining authorization to purchase an additional 254,394 shares. On January 26, 2016, the Company's Board of Directors approved a fourth share repurchase plan authorizing the Company to repurchase up to 2.5% of outstanding shares, or 1,248,536 shares. In connection with this authorization, the third share repurchase program was suspended and the remaining shares are no longer available for repurchase. The Company did not repurchase any shares during the quarter ended December 31, 2015. The Company anticipates leveraging its capital through organic loan growth.
Investor Conference Call
United Financial Bancorp, Inc. will host a conference call on Wednesday, January 27, 2016 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 1-888-339-0797. A telephone replay of the call will be available through February 11, 2016 by calling 1-877-344-7529 and entering conference number 10078748. 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. On April 30, 2014, United Bank and Rockville Bank completed a transformational merger of equals bringing together two financially strong, well-respected institutions and creating a leading New England bank with more than 50 branches in two states. Through the merger, Rockville Financial, Inc. completed the acquisition of United Financial Bancorp, Inc. The combined Company, known as United Financial Bancorp, Inc. trades on the NASDAQ Global Select Stock Exchange under the ticker symbol "UBNK". At December 31, 2015, the Company had $6.2 billion in assets.
For more information about United Bank's services and products call (866) 959-BANK or visit www.bankatunited.com. For more information about United Financial Bancorp, Inc., visit www.unitedfinancialinc.com or download the Company's free Investor Relations app on your Apple or Android device.
To download United Financial Bancorp, Inc.'s investor relations app on your iPhone or on your iPad, which offers access to SEC documents, press releases, videos, audiocasts and more, please visit: https://itunes.apple.com/WebObjects/MZStore.woa/wa/viewSoftware?id=725271098&mt=8 or https://play.google.com/store/apps/details?id=com.theirapp.ubnk for your Android mobile device.
Forward Looking Statements
This press release may contain certain forward-looking statements about the Company. Forward-looking statements include statements regarding anticipated future events and can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as "believe," "expect," "anticipate," "estimate," and "intend" or future or conditional verbs such as "will," "would," "should," "could," or "may." Forward-looking statements, by their nature, are subject to risks and uncertainties. Certain factors that could cause actual results to differ materially from expected results include increased competitive pressures, changes in the interest rate environment, general economic conditions or conditions within the securities markets, and legislative and regulatory changes that could adversely affect the business in which the Company and its subsidiaries are engaged.
United Financial Bancorp, Inc. and Subsidiaries
Consolidated Statements of Net Income
(In Thousands, Except Share Data)
(Unaudited)
For the Three Months Ended For the Year Ended
December 31, December 31,
------------ ------------
2015 2014 2015 2014
---- ---- ---- ----
Interest and dividend income:
Loans $41,751 $40,682 $165,409 $133,011
Securities-taxable interest 5,092 5,303 20,039 16,367
Securities-non-taxable interest 2,001 1,794 8,354 5,113
Securities-dividends 809 409 2,363 1,302
Interest-bearing deposits 61 21 180 86
--- --- --- ---
Total interest and dividend income 49,714 48,209 196,345 155,879
------ ------ ------- -------
Interest expense:
Deposits 5,799 4,265 21,442 13,559
Borrowed funds 3,222 2,052 10,321 4,448
----- ----- ------ -----
Total interest expense 9,021 6,317 31,763 18,007
----- ----- ------ ------
Net interest income 40,693 41,892 164,582 137,872
Provision for loan losses 3,780 4,333 13,005 9,496
----- ----- ------ -----
Net interest income after provision for loan losses 36,913 37,559 151,577 128,376
------ ------ ------- -------
Non-interest income:
Service charges and fees 5,606 4,330 21,040 13,509
Net gain (loss) from sales of securities 300 (59) 939 1,228
Income from mortgage banking activities 1,934 434 9,552 3,203
Bank-owned life insurance 1,059 897 3,616 3,042
Net loss on limited partnership investments (799) (2,048) (3,136) (4,224)
Other income (loss) 363 (553) 476 (153)
--- ---- --- ----
Total non-interest income 8,463 3,001 32,487 16,605
----- ----- ------ ------
Non-interest expense:
Salaries and employee benefits 17,308 16,758 67,469 59,332
Service bureau fees 1,614 2,304 6,728 8,179
Occupancy and equipment 3,842 5,653 15,442 13,239
Professional fees 3,037 1,297 6,317 3,662
Marketing and promotions 478 1,420 2,321 2,296
FDIC insurance assessments 1,041 818 3,692 2,553
Other real estate owned 35 223 237 792
Core deposit intangible amortization 433 481 1,796 1,283
Merger related expense 1,575 10,136 1,575 36,918
Other 5,942 5,986 22,618 16,178
----- ----- ------ ------
Total non-interest expense 35,305 45,076 128,195 144,432
------ ------ ------- -------
Income (loss) before income taxes 10,071 (4,516) 55,869 549
Provision (benefit) for income taxes 169 (5,937) 6,229 (6,233)
--- ------ ----- ------
Net income $9,902 $1,421 $49,640 $6,782
====== ====== ======= ======
Net income per share:
Basic $0.20 $0.03 $1.01 $0.16
Diluted $0.20 $0.03 $1.00 $0.16
Weighted-average shares outstanding:
Basic 49,160,925 50,329,002 48,912,807 42,829,094
Diluted 49,621,935 51,086,811 49,385,566 43,269,517
United Financial Bancorp, Inc. and Subsidiaries
Consolidated Statements of Net Income
(In Thousands)
(Unaudited)
For the Three Months Ended
--------------------------
December 31, September 30, June 30, March 31, December 31,
2015 2015 2015 2015 2014
---- ---- ---- ---- ----
Interest and dividend income:
Loans $41,751 $41,878 $41,253 $40,527 $40,682
Securities-taxable interest 5,092 4,907 4,771 5,269 5,303
Securities-non-taxable interest 2,001 2,080 2,181 2,092 1,794
Securities-dividends 809 708 472 374 409
Interest-bearing deposits 61 52 34 33 21
--- --- --- --- ---
Total interest and dividend income 49,714 49,625 48,711 48,295 48,209
------ ------ ------ ------ ------
Interest expense:
Deposits 5,799 5,319 5,584 4,740 4,265
Borrowed funds 3,222 2,663 2,224 2,212 2,052
----- ----- ----- ----- -----
Total interest expense 9,021 7,982 7,808 6,952 6,317
----- ----- ----- ----- -----
Net interest income 40,693 41,643 40,903 41,343 41,892
Provision for loan losses 3,780 3,252 4,462 1,511 4,333
----- ----- ----- ----- -----
Net interest income after provision for loan losses 36,913 38,391 36,441 39,832 37,559
------ ------ ------ ------ ------
Non-interest income:
Service charges and fees 5,606 5,960 5,643 3,831 4,330
Net gain (loss) from sales of securities 300 (59) 360 338 (59)
Income from mortgage banking activities 1,934 2,257 2,990 2,371 434
Bank-owned life insurance 1,059 893 830 834 897
Net loss on limited partnership investments (799) (991) (916) (430) (2,048)
Other income (loss) 363 (242) 464 (109) (553)
--- ---- --- ---- ----
Total non-interest income 8,463 7,818 9,371 6,835 3,001
----- ----- ----- ----- -----
Non-interest expense:
Salaries and employee benefits 17,308 16,994 16,595 16,572 16,758
Service bureau fees 1,614 1,828 1,466 1,820 2,304
Occupancy and equipment 3,842 3,343 3,799 4,458 5,653
Professional fees 3,037 1,581 782 917 1,297
Marketing and promotions 478 587 620 636 1,420
FDIC insurance assessments 1,041 750 823 1,078 818
Other real estate owned 35 25 62 115 223
Core deposit intangible amortization 433 433 449 481 481
Merger related expense 1,575 - - - 10,136
Other 5,942 6,335 5,761 4,580 5,986
----- ----- ----- ----- -----
Total non-interest expense 35,305 31,876 30,357 30,657 45,076
------ ------ ------ ------ ------
Income (loss) before income taxes 10,071 14,333 15,455 16,010 (4,516)
Provision (benefit) for income taxes 169 952 2,123 2,985 (5,937)
--- --- ----- ----- ------
Net income $9,902 $13,381 $13,332 $13,025 $1,421
====== ======= ======= ======= ======
United Financial Bancorp, Inc. and Subsidiaries
Consolidated Statements of Condition
(In Thousands)
(Unaudited)
December 31, September 30, June 30, March 31, December 31,
2015 2015 2015 2015 2014
---- ---- ---- ---- ----
ASSETS
Cash and cash equivalents:
Cash and due from banks $47,602 $38,534 $44,482 $43,348 $43,416
Short-term investments 47,574 59,776 40,043 46,013 43,536
------ ------ ------ ------ ------
Total cash and cash equivalents 95,176 98,310 84,525 89,361 86,952
Available for sale securities - At fair value 1,059,169 1,080,393 1,061,927 1,094,229 1,053,011
Held to maturity securities - At amortized cost 14,565 14,715 14,992 15,204 15,368
Loans held for sale 10,136 13,511 28,017 13,002 8,220
Loans receivable, net of allowance for loan losses 4,587,062 4,185,032 4,048,770 3,884,067 3,877,063
Federal Home Loan Bank of Boston stock, at cost 51,196 40,814 37,061 34,006 31,950
Accrued interest receivable 15,740 15,477 14,777 14,958 14,212
Deferred tax asset, net 33,094 31,554 31,822 29,956 33,833
Premises and equipment, net 54,779 55,919 57,131 57,718 57,665
Goodwill 115,281 115,281 115,265 115,232 115,240
Core deposit intangible asset 7,506 7,939 8,372 8,821 9,302
Cash surrender value of bank-owned life insurance 125,101 125,186 124,287 123,456 122,622
Other real estate owned 755 258 227 1,711 2,239
Other assets 58,981 58,633 53,517 49,429 49,132
------ ------ ------ ------ ------
Total assets $6,228,541 $5,843,022 $5,680,690 $5,531,150 $5,476,809
========== ========== ========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Non-interest-bearing $672,008 $622,535 $610,279 $598,157 $602,359
Interest-bearing 3,765,063 3,640,436 3,571,972 3,558,958 3,432,952
--------- --------- --------- --------- ---------
Total deposits 4,437,071 4,262,971 4,182,251 4,157,115 4,035,311
Mortgagors' and investor escrow accounts 13,526 8,108 15,168 8,815 13,004
Federal Home Loan Bank advances and other borrowings 1,099,020 893,865 825,963 707,318 777,314
Accrued expenses and other liabilities 53,403 56,626 45,313 47,779 48,772
------ ------ ------ ------ ------
Total liabilities 5,603,020 5,221,570 5,068,695 4,921,027 4,874,401
Total stockholders' equity 625,521 621,452 611,995 610,123 602,408
------- ------- ------- ------- -------
Total liabilities and stockholders' equity $6,228,541 $5,843,022 $5,680,690 $5,531,150 $5,476,809
========== ========== ========== ========== ==========
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, September 30, June 30, March 31, December 31,
2015 2015 2015 2015 2014
---- ---- ---- ---- ----
Share Data:
Basic net income per share $0.20 $0.27 $0.27 $0.27 $0.03
Diluted net income per share 0.20 0.27 0.27 0.26 0.03
Dividends declared per share 0.12 0.12 0.12 0.10 0.10
Key Statistics:
Total revenue $49,156 $49,461 $50,274 $48,178 $44,893
Total non-interest expense 35,305 31,876 30,357 30,657 45,076
Average earning assets 5,575,297 5,332,758 5,112,581 5,084,717 4,969,225
Key Ratios:
Return on average assets (annualized) 0.66% 0.93% 0.96% 0.95% 0.11%
Return on average equity (annualized) 6.35% 8.68% 8.69% 8.63% 0.90%
Tax-equivalent net interest margin (annualized) 3.02% 3.20% 3.30% 3.37% 3.44%
Residential Mortgage Production:
Dollar volume (total) $146,271 $187,926 $203,433 $168,023 $121,886
Mortgages originated for purchases 95,927 131,609 115,286 64,108 74,171
Loans sold 119,289 123,316 93,972 67,377 39,489
Income from mortgage banking activities 1,934 2,257 2,990 2,371 434
Non-performing Assets:
Residential real estate $13,979 $14,577 $12,377 $12,527 $12,387
Commercial real estate 11,504 11,581 10,989 12,056 10,663
Construction 2,808 1,604 1,334 1,686 611
Commercial business 3,898 4,475 5,315 4,349 4,872
Installment and collateral 2 3 13 13 25
--- --- --- --- ---
Non-accrual loans 32,191 32,240 30,028 30,631 28,558
Troubled debt restructured - non-accruing 5,611 4,605 5,346 5,034 3,800
----- ----- ----- ----- -----
Total non-performing loans 37,802 36,845 35,374 35,665 32,358
Other real estate owned 755 258 227 1,711 2,239
--- --- --- ----- -----
Total non-performing assets $38,557 $37,103 $35,601 $37,376 $34,597
======= ======= ======= ======= =======
Non-performing loans to total loans 0.82% 0.88% 0.87% 0.91% 0.83%
Non-performing assets to total assets 0.62% 0.63% 0.63% 0.68% 0.63%
Allowance for loan losses to non-performing loans 89.64% 83.68% 81.57% 70.93% 76.67%
Allowance for loan losses to total loans 0.73% 0.73% 0.71% 0.65% 0.64%
Non-GAAP Ratios: (1)
Non-interest expense to average assets (annualized) 2.37% 2.22% 2.19% 2.23% 3.35%
Efficiency ratio (2) 62.20% 61.20% 57.36% 60.82% 66.48%
Cost of funds (annualized) (3) 0.68% 0.63% 0.64% 0.57% 0.54%
Total revenue growth rate (0.62)% (1.62)% 4.35% 7.32% (2.97)%
Total revenue growth rate (annualized) (2.47)% (6.47)% 17.40% 29.27% (11.90)%
Average earning asset growth rate 4.55% 4.31% 0.55% 2.32% 3.14%
Average earning asset growth rate (annualized) 18.19% 17.23% 2.19% 9.30% 12.56%
Return on average tangible common equity (annualized) 8.14% 11.08% 11.12% 11.13% 1.37%
Pre-provision net revenue to average assets (4) 0.96% 1.38% 1.56% 1.36% 1.16%
Operating pre-provision net revenue to average assets 1.03% 0.96% 1.19% 1.03% 0.72%
(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) The efficiency ratio represents the
ratio of non-interest expense
before other real estate owned
expense, amortization of
intangibles, and goodwill
impairment as a percent of net
interest income (fully taxable
equivalent) and non-interest
income, excluding gains from
securities transactions, losses on
partnerships and nonrecurring
items.
(3) The cost of funds ratio represents
interest incurred on liabilities as
a percentage of average non-
interest bearing deposits and
interest-bearing liabilities.
(4) The pre-provision net revenue to
average assets ratio represents the
ratio of net interest income, on a
fully tax-equivalent basis, fees
and other non-interest income, as
a percent of average 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, 2015 December 31, 2014
----------------- -----------------
Average Interest Yield/Cost Average Interest Yield/Cost
Balance and Balance and
Dividends Dividends
--------- ---------
Interest-earning assets:
Residential real estate $1,555,950 $12,912 3.32% $1,403,045 $12,296 3.51%
Commercial real estate 1,950,133 20,228 4.12 1,665,230 19,538 4.65
Construction 179,684 1,760 3.89 162,823 2,406 5.86
Commercial business 604,976 6,288 4.12 618,429 6,380 4.09
Installment and collateral 74,131 968 5.22 8,483 62 2.94
Investment securities 1,129,522 9,007 3.19 1,078,162 8,498 3.15
Other earning assets 80,901 61 0.30 33,053 21 0.25
------ --- ---- ------ --- ----
Total interest-earning assets 5,575,297 51,224 3.66 4,969,225 49,201 3.94
Allowance for loan losses (31,968) (23,353)
Non-interest-earning assets 422,145 434,559
------- -------
Total assets $5,965,474 $5,380,431
========== ==========
Interest-bearing liabilities:
NOW and money market $1,533,823 $1,826 0.47% $1,309,691 $1,024 0.31%
Savings 517,219 71 0.05 549,209 100 0.07
Certificates of deposit 1,619,038 3,902 0.96 1,545,452 3,141 0.81
--------- ----- ---- --------- ----- ----
Total interest-bearing deposits 3,670,080 5,799 0.63 3,404,352 4,265 0.50
Federal Home Loan Bank advances 797,484 1,805 0.90 469,194 589 0.50
Other borrowings 163,974 1,417 3.43 205,057 1,463 2.85
------- ----- ---- ------- ----- ----
Total interest-bearing liabilities 4,631,538 9,021 0.77 4,078,603 6,317 0.62
----- ---- ----- ----
Non-interest-bearing deposits 637,481 616,618
Other liabilities 72,902 53,786
------ ------
Total liabilities 5,341,921 4,749,007
Stockholders' equity 623,553 631,424
------- -------
Total liabilities and stockholders' equity $5,965,474 $5,380,431
========== ==========
Net interest-earning assets $943,759 $890,622
======== ========
Tax-equivalent net interest income 42,203 42,884
Tax-equivalent net interest rate spread 2.89% 3.32%
Tax-equivalent net interest margin 3.02% 3.44%
Average interest-earning assets to average interest-bearing liabilities 120.38% 121.84%
Less tax-equivalent adjustment 1,510 992
----- ---
Net interest income $40,693 $41,892
======= =======
United Financial Bancorp, Inc. and Subsidiaries
Average Balance Sheets, Interest and Yields/Costs
(Dollars In Thousands)
(Unaudited)
For the Three Months Ended
--------------------------
December 31, 2015 September 30, 2015
----------------- ------------------
Average Interest Yield/Cost Average Interest Yield/Cost
Balance and Balance and
Dividends Dividends
--------- ---------
Interest-earning assets:
Residential real estate $1,555,950 $12,912 3.32% $1,539,362 $12,931 3.36%
Commercial real estate 1,950,133 20,228 4.12 1,816,122 18,901 4.13
Construction 179,684 1,760 3.89 173,355 1,952 4.47
Commercial business 604,976 6,288 4.12 612,909 8,044 5.21
Installment and collateral 74,131 968 5.22 4,265 50 4.67
Investment securities 1,129,522 9,007 3.19 1,123,005 8,843 3.15
Other earning assets 80,901 61 0.30 63,740 52 0.33
------ --- ---- ------ --- ----
Total interest-earning assets 5,575,297 51,224 3.66 5,332,758 50,773 3.79
Allowance for loan losses (31,968) (29,901)
Non-interest-earning assets 422,145 449,311
------- -------
Total assets $5,965,474 $5,752,168
========== ==========
Interest-bearing liabilities:
NOW and money market $1,533,823 $1,826 0.47% $1,500,449 $1,874 0.50%
Savings 517,219 71 0.05 527,430 82 0.06
Certificates of deposit 1,619,038 3,902 0.96 1,591,618 3,363 0.84
--------- ----- ---- --------- ----- ----
Total interest-bearing deposits 3,670,080 5,799 0.63 3,619,497 5,319 0.58
Federal Home Loan Bank advances 797,484 1,805 0.90 695,208 1,276 0.73
Other borrowings 163,974 1,417 3.43 146,936 1,387 3.75
------- ----- ---- ------- ----- ----
Total interest-bearing liabilities 4,631,538 9,021 0.77 4,461,641 7,982 0.71
----- ---- ----- ----
Non-interest-bearing deposits 637,481 610,253
Other liabilities 72,902 63,620
------ ------
Total liabilities 5,341,921 5,135,514
Stockholders' equity 623,553 616,654
------- -------
Total liabilities and stockholders' equity $5,965,474 $5,752,168
========== ==========
Net interest-earning assets $943,759 $871,117
======== ========
Tax-equivalent net interest income 42,203 42,791
Tax-equivalent net interest rate spread 2.89% 3.08%
Tax-equivalent net interest margin 3.02% 3.20%
Average interest-earning assets to average interest-bearing liabilities 120.38% 119.52%
Less tax-equivalent adjustment 1,510 1,148
----- -----
Net interest income $40,693 $41,643
======= =======
United Financial Bancorp, Inc. and Subsidiaries
Average Balance Sheets, Interest and Yields/Costs
(Dollars In Thousands)
(Unaudited)
For the Year Ended
------------------
December 31, 2015 December 31, 2014
----------------- -----------------
Average Interest Yield/Cost Average Interest Yield/Cost
Balance and Balance and
Dividends Dividends
--------- ---------
Interest-earning assets:
Residential real estate $1,508,370 $50,859 3.37% $1,134,890 $39,537 3.48%
Commercial real estate 1,776,407 77,710 4.37 1,365,059 65,044 4.76
Construction 172,257 7,942 4.61 106,291 7,469 7.03
Commercial business 610,424 29,093 4.77 492,035 20,549 4.18
Installment and collateral 22,599 1,107 4.90 10,147 412 4.06
Investment securities 1,127,144 35,370 3.14 833,402 25,607 3.07
Other earning assets 60,956 181 0.30 35,842 86 0.24
------ --- ---- ------ --- ----
Total interest-earning assets 5,278,157 202,262 3.83 3,977,666 158,704 3.99
Allowance for loan losses (28,483) (21,192)
Non-interest-earning assets 444,518 329,652
------- -------
Total assets $5,694,192 $4,286,126
========== ==========
Interest-bearing liabilities:
NOW and money market $1,470,459 $7,183 0.49% $1,109,625 $3,293 0.30%
Savings 529,659 319 0.06 418,091 437 0.10
Certificates of deposit 1,577,739 13,940 0.88 1,218,782 9,829 0.81
--------- ------ ---- --------- ----- ----
Total interest-bearing deposits 3,577,857 21,442 0.60 2,746,498 13,559 0.49
Federal Home Loan Bank advances 664,665 4,749 0.71 344,218 2,326 0.68
Other borrowings 162,419 5,572 3.43 127,381 2,122 1.67
------- ----- ---- ------- ----- ----
Total interest-bearing liabilities 4,404,941 31,763 0.72 3,218,097 18,007 0.56
------ ---- ------ ----
Non-interest-bearing deposits 605,112 503,398
Other liabilities 69,646 34,482
------ ------
Total liabilities 5,079,699 3,755,977
Stockholders' equity 614,493 530,149
------- -------
Total liabilities and stockholders' equity $5,694,192 $4,286,126
========== ==========
Net interest-earning assets $873,216 $759,569
======== ========
Tax-equivalent net interest income 170,499 140,697
Tax-equivalent net interest rate spread 3.11% 3.43%
Tax-equivalent net interest margin 3.23% 3.54%
Average interest-earning assets to average interest-bearing liabilities 119.82% 123.60%
Less tax-equivalent adjustment 5,917 2,825
----- -----
Net interest income $164,582 $137,872
======== ========
United Financial Bancorp, Inc. and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
(Dollars In Thousands)
(Unaudited)
Three Months Ended Years Ended
-----------
December 31, September 30, June 30, March 31, December 31, December 31, December 31,
2015 2015 2015 2015 2014 2015 2014
---- ---- ---- ---- ---- ---- ----
Net income $9,902 $13,381 $13,332 $13,025 $1,421 $49,640 $6,782
Adjustments:
Net interest income (1,617) (4,092) (3,512) (3,432) (3,421) (12,653) (12,197)
Non-interest income (519) 59 (360) (338) 729 (1,158) (558)
Non-interest expense 3,586 244 454 486 12,513 4,770 40,105
Income tax (benefit)expense (65) 1,326 1,196 1,152 (2,926) 3,609 (7,403)
--- ----- ----- ----- ------ ----- ------
Net adjustment 1,385 (2,463) (2,222) (2,132) 6,895 (5,432) 19,947
----- ------ ------ ------ ----- ------ ------
Total operating net income $11,287 $10,918 $11,110 $10,893 $8,316 $44,208 $26,729
======= ======= ======= ======= ====== ======= =======
Total net interest income $40,693 $41,643 $40,903 $41,343 $41,892 $164,582 $137,872
Adjustments:
Impact from purchase accounting fair value marks:
Accretion of loan mark (718) (2,787) (2,194) (1,871) (1,543) (7,570) (6,665)
Accretion of deposit mark 444 841 845 1,079 1,276 3,209 3,908
Accretion of borrowings mark 455 464 473 482 602 1,874 1,624
--- --- --- --- --- ----- -----
Net adjustment (1,617) (4,092) (3,512) (3,432) (3,421) (12,653) (12,197)
------ ------ ------ ------ ------ ------- -------
Total operating net interest $39,076 $37,551 $37,391 $37,911 $38,471 $151,929 $125,675
income
Total non-interest income $8,464 $7,818 $9,371 $6,835 $3,001 $32,488 $16,605
Adjustments:
Net (gain) loss on sales of securities (300) 59 (360) (338) 59 (939) (1,228)
Loss on fixed assets - branch optimization - - - - 670 - 670
BOLI claim benefit (219) - - - - (219) -
---- --- --- --- --- ---- ---
Net adjustment (519) 59 (360) (338) 729 (1,158) (558)
---- --- ---- ---- --- ------ ----
Total operating non-interest income 7,945 7,877 9,011 6,497 3,730 31,330 16,047
Total operating net interest income 39,076 37,551 37,391 37,911 38,471 151,929 125,675
------ ------ ------ ------ ------ ------- -------
Total operating revenue $47,021 $45,428 $46,402 $44,408 $42,201 $183,259 $141,722
======= ======= ======= ======= ======= ======== ========
Total non-interest expense $35,306 $31,876 $30,357 $30,657 $45,076 $128,196 $144,432
Adjustments:
Merger related expense (1,575) - - - (10,136) (1,575) (36,918)
Core deposit intangible amortization expense (433) (433) (449) (481) (481) (1,796) (1,283)
Loan portfolio acquisition fees (1,572) - - - - (1,572) -
Effect of branch lease termination agreement - 195 - - (1,888) 195 (1,888)
Amortization of fixed asset fair value mark (6) (6) (5) (5) (8) (22) (16)
--- --- --- --- --- --- ---
Net adjustment (3,586) (244) (454) (486) (12,513) (4,770) (40,105)
------ ---- ---- ---- ------- ------ -------
Total operating expense $31,720 $31,632 $29,903 $30,171 $32,563 $123,426 $104,327
======= ======= ======= ======= ======= ======== ========
Total loans $4,613,931 $4,209,618 $4,072,067 $3,904,733 $3,897,866 $4,613,931 $3,897,866
Non-covered loans (1) (1,448,435) (1,255,618) (1,356,259) (1,510,264) (1,658,594) (1,448,435) (1,658,594)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total covered loans $3,165,496 $2,954,000 $2,715,808 $2,394,469 $2,239,272 $3,165,496 $2,239,272
========== ========== ========== ========== ========== ========== ==========
Allowance for loan losses $33,887 $30,832 $28,856 $25,297 $24,809 $33,887 $24,809
Allowance for loan losses to total loans 0.73% 0.73% 0.71% 0.65% 0.64% 0.73% 0.64%
Allowance for loan losses to total covered loans 1.07% 1.04% 1.06% 1.06% 1.11% 1.07% 1.11%
(1) As required by GAAP, the
Company recorded at fair
value the loans acquired in
the legacy United
transaction. These loans
carry no allowance for loan
losses for the periods
reflected above.
United Financial Bancorp, Inc. and Subsidiaries
Selected Interest Income/Expense and Yields/Costs
Reconciliation of Non-GAAP Financial Measures
(Dollars In Thousands)
(Unaudited)
Three Months Ended December 31, 2015
------------------------------------
GAAP Mark to Market Operating
---- -------------- ---------
Interest Yield/Cost Interest Yield/Cost Interest Yield/Cost
and and and
Dividends Dividends Dividends
--------- --------- ---------
Residential real estate $12,912 3.32% $(784) (0.23)% $13,696 3.55%
Commercial real estate 20,228 4.12 867 0.20 19,361 3.92
Construction 1,760 3.89 130 0.34 1,630 3.55
Commercial business 6,288 4.12 591 0.42 5,697 3.70
Installment and collateral 968 5.22 (86) (0.49) 1,054 5.71
Certificates of deposit 3,902 0.96 (444) (0.11) 4,346 1.07
Federal Home Loan Bank advances 1,805 0.90 (467) (0.24) 2,272 1.14
Other borrowings 1,417 3.43 12 0.08 1,405 3.35
Tax-equivalent net interest margin 42,203 3.02 1,617 40,586 2.90
Three Months Ended September 30, 2015
-------------------------------------
GAAP Mark to Market Operating
---- -------------- ---------
Interest Yield/Cost Interest Yield/Cost Interest Yield/Cost
and and and
Dividends Dividends Dividends
--------- --------- ---------
Residential real estate $12,931 3.36% $(729) (0.22)% $13,660 3.58%
Commercial real estate 18,901 4.13 543 0.14 18,358 3.99
Construction 1,952 4.47 371 0.92 1,581 3.55
Commercial business 8,044 5.21 2,606 1.73 5,438 3.48
Installment and collateral 50 4.67 (4) (0.35) 54 5.02
Certificates of deposit 3,363 0.84 (841) (0.21) 4,204 1.05
Federal Home Loan Bank advances 1,276 0.73 (475) (0.28) 1,751 1.01
Other borrowings 1,387 3.75 11 0.09 1,376 3.66
Tax-equivalent net interest margin 42,791 3.20 4,092 38,699 2.89
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SOURCE United Financial Bancorp, Inc.
