United Financial Bancorp Reports Third Quarter 2009 Results
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WEST SPRINGFIELD, Mass., Oct. 16 /PRNewswire-FirstCall/ -- United Financial Bancorp, Inc. (the "Company") (Nasdaq: UBNK), the holding company for United Bank (the "Bank"), reported net income of $1.9 million, or $0.13 per diluted share, for the third quarter of 2009 compared to net income of $2.4 million, or $0.14 per diluted share, for the corresponding period in 2008. Excluding non-deductible expenses totaling $270,000 related to the pending acquisition of Commonwealth National Bank, net income would have been $2.2 million, or $0.14 per diluted share. The results for the 2009 period were also affected by a decrease in net interest income and an increase in provision for loan losses, offset in part by higher non-interest income. For the nine months ended September 30, 2009, the Company's net income was $4.6 million, or $0.30 per diluted share, compared to net income of $6.3 million or $0.39 per diluted share, for the same period in 2008. Excluding non-deductible, acquisition-related expenses of $1.4 million and the $312,000 after-tax impact of the second quarter special FDIC insurance assessment, net income would have been $6.3 million, or $0.41 per diluted share in the 2009 period. The Company announced a quarterly cash dividend of $0.07 per share, payable on December 1, 2009 to shareholders of record as of November 6, 2009.
Total assets declined $15.7 million, or 1.2%, to $1.247 billion at September 30, 2009, from $1.263 billion at December 31, 2008, mainly due to sales of mortgage-backed securities totaling $23.9 million and sales of residential mortgages totaling $29.5 million, partially offset by growth of $40.7 million in commercial mortgages. As part of our investment strategy and in anticipation of accelerated prepayments, we sold $23.9 million of mortgage-backed securities to realize gains on longer-duration, higher-coupon securities. We also elected to sell $29.5 million of recently originated, lower-coupon, long-term, fixed-rate residential mortgages in accordance with our asset liability management strategy. A portion of the cash flows received from the sales of loans and investment securities was used to pay down Federal Home Loan Bank advances and to fund the repurchase of 1,332,902 shares of the Company's common stock at a total cost of $18.0 million. Total deposits increased $57.7 million, or 7.4%, to $840.3 million at September 30, 2009 from $782.7 million at December 31, 2008 reflecting growth of $65.1 million, or 16.0%, in core account balances, partially offset by runoff in certificates of deposit. Federal Home Loan Bank advances decreased $63.2 million, or 30.3%, to $145.3 million at September 30, 2009 from $208.6 million at December 31, 2008 largely attributable to the use of proceeds from sales of investment securities and loans to pay down short-term borrowings. Total shareholders' equity declined $11.3 million, or 5.0%, to $216.4 million at September 30, 2009 from $227.7 million at December 31, 2008 due to share repurchases totaling $18.0 million and cash dividends totaling $3.2 million, somewhat offset by net income of $4.6 million, other comprehensive income of $2.8 million and stock-based compensation of $1.8 million. At September 30, 2009, the Company continued to have considerable liquidity including significant unused borrowing capacity at the Federal Home Loan Bank and access to funding through the repurchase agreement and brokered deposit markets. The Company's balance sheet is also supported by a strong capital position, with an equity-to-assets ratio of 17.3% at September 30, 2009.
"While I am pleased with our overall performance, we continue to be affected by a difficult economic environment and challenging real estate market," commented Richard B. Collins, President and Chief Executive Officer. "As a result, we have experienced higher levels of loan loss provisions and non-performing assets in comparison to prior periods. However, annualized net charge-offs to average loans were a moderate 12 basis points for the first nine months of 2009." Collins remarked that "during these very challenging times, we believe that we are well positioned for the future given our healthy balance sheet, substantial capital base and strong liquidity level. We are looking forward to expanding the markets we serve through our pending acquisition of Commonwealth National Bank in Worcester Massachusetts."
Financial Highlights:
-- Total investment securities decreased $35.6 million, or 11.2%, to $281.1
million at September 30, 2009 from $316.7 million at December 31, 2008
reflecting sales of $23.9 million in mortgage-backed securities, and to
a lesser extent, prepayments and normal amortization of the
mortgage-backed securities portfolio. At September 30, 2009,
approximately 94% of the investment portfolio consisted of
mortgage-backed and debt securities issued by government-sponsored
enterprises.
-- Total loans increased $16.5 million, or 1.9%, to $886.8 million at
September 30, 2009 from $870.3 million at December 31, 2008 mainly due
to growth of $40.7 million, or 16.4%, in commercial mortgages, partially
offset by the sale of $29.5 million of lower-coupon, fixed-rate
residential mortgages. All other segments of our loan portfolio were
affected by slower origination volume and prepayments.
-- Non-performing assets totaled $11.5 million, or 0.92% of total assets,
at September 30, 2009 compared to $5.8 million, or 0.46% of total
assets, at December 31, 2008. The increase in non-performing assets is
largely attributable to a $5.5 million commercial real estate loan
placed on non-accrual status in the third quarter of 2009. This loan is
secured by a multi-tenant, retail center. The Company is actively
working with the borrowers to accomplish a successful restructure of
this loan. Although non-performing assets increased during the period,
our loan portfolio has not been affected by loans to sub-prime borrowers
since we have not historically targeted this segment of the market.
-- At September 30, 2009, the ratio of the allowance for loan losses to
total loans was 1.07% and the ratio of the allowance for loan losses to
non-performing loans was 86.73%. For the nine months ended September
30, 2009, net charge-offs totaled $768,000 or 0.12% of average loans
outstanding on an annualized basis.
-- Total deposits increased $57.7 million, or 7.4%, to $840.3 million at
September 30, 2009 compared to $782.7 million at December 31, 2008
reflecting growth in core account balances and lower certificate of
deposit balances. Core deposit balances grew $65.1 million, or 16.0%,
to $471.9 million at September 30, 2009 from $406.8 million at December
31, 2008 mainly due to competitive products and pricing, attention to
excellence in customer service and targeted promotion activities.
-- Net interest income decreased $562,000, or 5.3%, to $10.0 million for
the third quarter of 2009 from the same period in 2008 as a result of
net interest margin contraction. Net interest margin decreased 18 basis
points to 3.38% for the three months ended September 30, 2009 from the
same period in 2008 reflecting an increase in funds held in
lower-yielding cash equivalents, the elimination of the FHLB stock
dividend beginning with the fourth quarter 2008 payment and the cost to
fund share repurchases. Total average earning assets were $1.2 billion
during the quarter, essentially flat in comparison to the prior year
period.
-- Provision for loan losses increased $156,000, or 24.2%, to $800,000 for
the three months ended September 30, 2009 in connection with higher
levels of non-accrual and classified loans.
-- Non-interest income increased $252,000, or 14.5%, to $2.0 million for
the three months ended September 30, 2009 due to an increase of $358,000
in income from bank-owned life insurance, partially offset by a decrease
of $177,000 in wealth management income. The expansion in income from
bank-owned life insurance reflects the purchase of an additional $20.0
million of insurance in November of 2008. The decline in wealth
management income was driven by the effect of the lower market
valuations on assets under management and lower transaction fees earned
from annuity sales.
-- Non-interest expenses grew $287,000, or 3.7%, to $8.1 million for the
third quarter of 2009 from $7.8 million in the same period last year.
Current period expenses include acquisition-related costs totaling
$270,000. Excluding these items, total non-interest expenses would have
been $7.8 million or 0.2% higher than the same period last year.
United Financial Bancorp, Inc. is a publicly owned corporation and the holding company of United Bank, a federally chartered savings bank headquartered at 95 Elm Street, West Springfield, MA 01090. The Company's common stock is traded on the NASDAQ Global Select Market under the symbol UBNK. United Bank provides an array of financial products and services through its 16 full service branch offices and two express drive-up branches located throughout Western Massachusetts. Through its Wealth Management Group and its partnership with NFP Securities, Inc., the Bank is able to offer access to a wide range of investment and insurance products and services, as well as financial, estate and retirement strategies and products. For more information regarding the Bank's products and services and for United Financial Bancorp, Inc. investor relations information, please visit www.bankatunited.com.
Except for the historical information contained in this press release, the matters discussed in this press release may be deemed to be forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties, including changes in economic conditions in the Company's market area, changes in policies by regulatory agencies, fluctuations in interest rates, demand for loans in the Company's market area, competition, and other risks detailed from time to time in the Company's SEC reports. Actual strategies and results in future periods may differ materially from those currently expected. These forward-looking statements represent the Company's judgment as of the date of this release. The Company disclaims, however, any intent or obligation to update these forward-looking statements.
For More Information Contact:
Mark A. Roberts
Executive Vice President & CFO
(413) 787-1700
UNITED FINANCIAL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CONDITION
(Dollars in thousands, except par value amounts)
September 30, December 31, September 30,
Assets 2009 2008 2008
---- ---- ----
(unaudited) (audited) (unaudited)
Cash and cash equivalents $12,978 $13,572 $13,044
Short-term investments 1,091 1,071 1,063
Investment securities 281,136 316,697 315,664
Loans:
Residential mortgages 327,765 356,428 357,967
Commercial mortgages 289,196 248,457 236,010
Construction loans 32,903 32,082 34,499
Commercial loans 88,307 84,919 84,612
Home equity loans 123,807 120,724 121,166
Consumer loans 24,831 27,666 28,945
------ ------ ------
Total loans 886,809 870,276 863,199
Net deferred loan costs
and fees 2,131 2,395 2,382
Allowance for loan losses (9,497) (8,250) (8,385)
------ ------ ------
Loans, net 879,443 864,421 857,196
Federal Home Loan Bank of
Boston stock, at cost 12,223 12,223 12,223
Other real estate owned 556 998 330
Premises and equipment, net 14,046 12,125 12,323
Bank-owned life insurance 28,143 27,173 6,960
Other assets 17,857 14,854 16,287
------ ------ ------
Total assets $1,247,473 $1,263,134 $1,235,090
========== ========== ==========
Liabilities and Stockholders' Equity
Deposits:
Demand $115,216 $114,178 $107,029
NOW 31,783 32,390 34,965
Savings 134,784 99,492 96,884
Money market 190,145 160,736 159,663
Certificates of deposit 368,397 375,867 362,346
------- ------- -------
Total deposits 840,325 782,663 760,887
Federal Home Loan Bank of
Boston advances 145,342 208,564 226,130
Repurchase agreements 30,130 28,042 11,365
Escrow funds held for borrowers 2,130 1,667 1,809
Capitalized lease obligations 5,173 3,129 3,149
Accrued expenses and other
liabilities 7,939 11,355 7,031
----- ------ -----
Total liabilities 1,031,039 1,035,420 1,010,371
--------- --------- ---------
Stockholders' Equity:
Preferred stock, par value
$0.01 per share, authorized
50,000,000 shares; none
issued - - -
Common stock, par value
$0.01 per share; authorized
100,000,000 shares; shares
issued: 17,763,747 at
September 30, 2009,
December 31, 2008 and
September 30, 2008 178 178 178
Additional paid-in capital 166,326 164,358 163,676
Retained earnings 77,609 75,888 76,070
Unearned compensation (11,613) (12,144) (12,311)
Accumulated other
comprehensive income
(loss), net of taxes 5,394 2,931 (2,226)
Treasury stock, at cost
(1,594,302 shares at
September 30, 2009, 261,798
shares at December 31, 2008
and 56,167 shares at
September 30, 2008) (21,460) (3,497) (668)
------ ----- ---
Total stockholders'
equity 216,434 227,714 224,719
------- ------- -------
Total liabilities
and stockholders'
equity $1,247,473 $1,263,134 $1,235,090
========== ========== ==========
UNITED FINANCIAL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED INCOME STATEMENTS
(Amounts in thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
---- ---- ---- ----
(unaudited) (unaudited)
Interest and dividend
income:
Loans $12,036 $12,835 $35,808 $37,676
Investments 3,282 3,886 10,543 10,064
Other interest-earning
assets 7 90 24 450
--- -- -- ---
Total interest and
dividend income 15,325 16,811 46,375 48,190
Interest expense:
Deposits 3,454 4,217 10,923 13,549
Borrowings 1,897 2,058 5,780 5,166
----- ----- ----- -----
Total interest expense 5,351 6,275 16,703 18,715
----- ----- ------ ------
Net interest income
before provision for
loan losses 9,974 10,536 29,672 29,475
Provision for loan losses 800 644 2,015 1,479
--- --- ----- -----
Net interest income
after provision for
loan losses 9,174 9,892 27,657 27,996
Non-interest income:
Net gain on sales of
loans - - 363 -
Net gain on sales of
securities - - 461 8
Fee income on
depositors' accounts 1,257 1,219 3,526 3,452
Wealth management
income 136 313 480 599
Income from bank-owned
life insurance 372 14 1,026 159
Other income 220 187 575 608
--- --- --- ---
Total non-interest income 1,985 1,733 6,431 4,826
----- ----- ------ ------
Non-interest expense:
Salaries and benefits 4,625 4,523 13,904 12,763
Occupancy expenses 598 636 1,904 1,723
Marketing expenses 337 302 1,093 1,101
Data processing expenses 877 804 2,518 2,338
Professional fees 211 321 929 1,136
Merger related expenses 270 - 1,431 -
FDIC insurance
assessments 83 196 1,313 381
Other expenses 1,092 1,024 3,186 3,090
----- ----- ----- -----
Total non-interest expense 8,093 7,806 26,278 22,532
----- ----- ------ ------
Income before income taxes 3,066 3,819 7,810 10,290
Income tax expense 1,165 1,455 3,226 3,951
----- ----- ----- -----
Net income $1,901 $2,364 $4,584 $6,339
====== ====== ====== ======
Earnings per share:
Basic $0.13 $0.14 $0.30 $0.39
Diluted $0.13 $0.14 $0.30 $0.39
Weighted average shares
outstanding (1):
Basic 14,998 16,384 15,293 16,442
Diluted 15,005 16,385 15,303 16,443
(1) Prior period basic and diluted share data were revised as required by
the Earnings Per Share Topic of FASB ASC and in accordance with the
provisions of "Determining Whether Instruments Issued in Share-Based
Payment Transactions are Participating Securities" which require that
share-based compensation awards that qualify as participating
securities (entitled to receive non-forfeitable dividends) be
included in basic earnings per share using the two-class method. This
revision had no impact on earnings per share as previously reported.
UNITED FINANCIAL BANCORP, INC. AND SUBSIDIARY
SELECTED DATA AND RATIOS (unaudited)
(Dollars in thousands, except per share amounts)
At or For The Quarters Ended
----------------------------
Sep. 30 Jun. 30 Mar. 31 Dec. 31 Sep. 30
2009 2009 2009 2008 2008
---- ---- ---- ---- ----
Operating Results:
Net interest
income $9,974 $9,543 $10,155 $10,336 $10,536
Loan loss
provision 800 675 540 367 644
Non-interest
income 1,985 2,595 1,851 394(5) 1,733
Non-interest
expenses 8,093(1) 10,030(1) 8,155 8,158 7,806
Net income 1,901 560 2,123 959 2,364
Performance Ratios
(annualized):
Return on
average
assets 0.61%(2) 0.18%(2) 0.68% 0.31%(6) 0.77%
Return on
average
equity 3.55%(2) 1.03%(2) 3.85% 1.71%(6) 4.22%
Net interest
margin 3.38% 3.27% 3.39% 3.46% 3.56%
Non-interest
income to
average total
assets 0.64% 0.85% 0.59% 0.13%(7) 0.57%
Non-interest
expense to
average total
assets 2.60%(3) 3.27%(3) 2.61% 2.63% 2.55%
Efficiency
ratio (4) 67.67%(3) 87.68%(3) 68.64% 67.47% 63.62%
Per Share Data:
Diluted earnings
per share $0.13 $0.04 $0.14 $0.06 $0.15
Book value
per share $13.39 $13.15 $13.18 $13.01 $12.69
Market price
at period end $11.58 $13.82 $13.09 $15.14 $14.85
Risk Profile
Equity as a
percentage of
assets 17.35% 17.25% 17.50% 18.03% 18.19%
Net charge-
offs to
average loans
outstanding
(annualized) 0.12% 0.20% 0.03% 0.23% 0.19%
Non-
performing
assets as a
percent of
total assets 0.92% 0.48% 0.41% 0.46% 0.29%
Non-
performing
loans as a
percent of
total loans,
gross 1.23% 0.62% 0.50% 0.55% 0.38%
Allowance for
loan losses
as a percent
of total
loans,
gross 1.07% 1.03% 1.02% 0.95% 0.97%
Allowance for
loan losses
as a percent
of non-
performing
loans 86.73% 167.99% 201.43% 171.98% 254.48%
Average Balances
Loans $878,683 $860,882 $869,580 $862,814 $865,053
Securities 279,442 283,005 313,799 314,251 306,499
Total
interest-
earning
assets 1,181,647 1,168,308 1,198,040 1,193,421 1,185,244
Total assets 1,243,906 1,226,210 1,251,225 1,240,215 1,225,250
Deposits 828,153 803,425 785,313 775,853 765,797
FHLBB advances 155,946 164,955 204,501 213,451 214,005
Stockholders'
Equity 214,300 216,501 220,683 224,785 224,015
Average Yields/Rates
(annualized)
Loans 5.48% 5.45% 5.54% 5.79% 5.93%
Securities 4.70% 4.79% 4.93% 5.15% 5.07%
Total
interest-
earning
assets 5.19% 5.18% 5.32% 5.57% 5.67%
Savings
accounts 1.08% 1.14% 1.09% 1.30% 1.29%
Money market/
NOW accounts 1.04% 1.21% 1.31% 1.65% 1.63%
Certificates
of deposit 2.79% 2.96% 3.13% 3.38% 3.41%
FHLBB advances 4.22% 4.13% 3.40% 3.52% 3.66%
Total
interest-
bearing
liabilities 2.37% 2.51% 2.54% 2.80% 2.84%
(1) Includes $270,000 and $1.2 million in acquisition related expenses
for the quarters ended September and June 2009, respectively and a
$538,000 special FDIC insurance assessment for the quarter ended June
2009.
(2) Exclusive of the $270,000 and $1.2 million in acquisition related
expenses for the quarters ended September and June 2009,
respectively, and a $312,000 (after tax) special FDIC insurance
assessment for the quarter ended June 2009, the return on average
assets would have been 0.70% and 0.66% and average equity would have
been 4.05% and 3.76%, respectively.
(3) Exclusive of the $270,000 and $1.2 million in acquisition related
expenses for the quarters ended September and June 2009,
respectively, and a $538,000 special FDIC insurance assessment for
the quarter ended June 2009, non-interest expense to average total
assets would have been 2.52% and 2.72% and the efficiency ratio would
have been 65.42% and 72.83%, respectively.
(4) Excludes gains/losses on sales of securities and loans and impairment
charges on securities.
(5) Includes $1.4 million other-than-temporary impairment ("OTTI") charge
on certain securities in our investment portfolio.
(6) Exclusive of a $1.4 million other-than-temporary impairment charge
and related tax effect of $550,000 on certain investment securities,
the return on average assets and average equity would have been 0.58%
and 3.18%, respectively.
(7) Exclusive of the $1.4 million other-than-temporary impairment charge,
non-interest income to average total assets would have been 0.57%.
SOURCE United Financial Bancorp, Inc.
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