United Financial Bancorp, Inc. : United Financial Bancorp Reports Fourth Quarter Results; Announces Dividend Of $0.11 Per Share

WEST SPRINGFIELD, Mass., Jan. 23, 2014 /PRNewswire/ -- United Financial Bancorp, Inc. (the "Company") (NASDAQ Global Select Market: UBNK), the holding company for United Bank (the "Bank"), reported net income of $4.0 million, or $0.20 per diluted share, for the fourth quarter of 2013 compared to net loss of $4.7 million, or $0.28 per diluted share, for the corresponding period in 2012. Excluding merger-related expenses of $598,000 ($449,000 net of tax benefit) resulting from the Company's agreement to merge with Rockville Financial, Inc. and gains from sales of securities totaling $277,000 ($164,000 net of tax expense), net income would have been $4.3 million, or $0.21 per diluted share, for the fourth quarter of 2013.  Excluding an ESOP plan termination expense of $4.5 million, merger-related expenses totaling $4.0 million associated with the Company's acquisition of New England Bancshares, Inc., an FHLB advance prepayment fee of $207,000 and a tax benefit of $465,000 related to these one-time items, net income would have been $3.5 million, or $0.20 per diluted share, for the fourth quarter of 2012.

For the year ended December 31, 2013, net income was $17.4 million, or $0.87 per diluted share, compared to net income of $3.6 million, or $0.24 per diluted share, for 2012.  Excluding branch closing costs totaling $987,000 ($584,000 net of tax benefit), merger-related expenses of $879,000 ($718,000 net of tax benefit), net gains from sales of securities totaling $227,000 ($134,000 net of tax expense)  and a $206,000 gain related to an investment in a venture capital fund accounted for on a cash basis ($122,000 net of tax expense), net income would have been $18.4 million, or $0.92 per diluted share, for the year ended December 31, 2013. Excluding merger-related expenses of $5.0 million, the ESOP plan termination expense of $4.5 million, the $207,000 FHLB prepayment penalty, impairment charges on securities of $202,000 and a tax benefit of $660,000 related to these one-time items, net income would have been $12.8 million, or $0.83 per diluted share for the year ended December 31, 2012.

The Company also announced a quarterly cash dividend of $0.11 per share, payable on March 3, 2014 to shareholders of record as of February 7, 2014. Based upon the closing share price of $19.30 as of January 22, 2014 and the annualized dividend of $0.44, the dividend yield on the Company's common stock is 2.28%.

Financial Highlights:

• Total loans increased by $65.8 million, or 4%, to $1.88 billion at December 31, 2013 from $1.82 billion at December 31, 2012, primarily due to growth of $47.9 million, or 6%, in commercial mortgages, $24.7 million, or 6%, in residential mortgages and $10.0 million, or 19%, in construction loans.  These items were partially offset by a $13.1 million, or 4%, decrease in commercial loans.
• Credit quality remained strong, as demonstrated by the non-performing loans to total loans ratio of 0.87% at December 31, 2013 and a net charge-offs to average loans ratio of 0.15% for the year ended December 31, 2013.
• Core deposits increased by $71.7 million, or 6%, to $1.21 billion at December 31, 2013 from $1.14 billion at December 31, 2012. 
• Tangible book value per share was $13.03 at December 31, 2013.  The Company repurchased 489,351 shares of its common stock at an average price of $14.88 per share during 2013.  At December 31, 2013, the Company had approximately 1.2 million shares authorized for future repurchases under current plans.   

"Our integration efforts with Rockville Bank are going quite well.  The registration statement and regulatory applications have both been filed and our teams are working together to ensure a smooth and timely integration later this year.  We are working toward a closing in the second quarter pending regulatory and shareholder approval. I look forward to sharing more news as the merger progresses," commented Richard B. Collins, President and Chief Executive Officer.  

Earnings Summary

• Net interest income increased $3.1 million, or 19%, to $19.4 million for the fourth quarter of 2013 as a result of an increase in average interest-earning assets partially offset by a reduction in the net interest margin. Total average interest-earning assets increased $405.8 million, or 21%, to $2.30 billion for the fourth quarter of 2013 driven by the acquisition of New England Bank in the fourth quarter of 2012 and solid organic loan growth. The net interest margin declined 6 basis points to 3.37% for the three months ended December 31, 2013 compared to the same period last year reflecting a decrease in spreads in response to the competitive interest rate environment.
• Provision for loan losses increased by $436,000, or 63%, to $1.1 million for the three months ended December 31, 2013 mainly due to higher levels of charge-offs and classified loan reserves.
• Non-interest income increased $270,000, or 9%, to $3.2 million for the three months ended December 31, 2013 due to growth in other income, wealth management income and deposit service charges. Other income increased by $162,000, or 56%, reflecting higher loan prepayment penalties and increased credit enhancement fees related to residential loans sold to the Federal Home Loan Bank of Boston. Wealth management income grew by $129,000, or 56%, primarily attributable to growth in assets under management.  Fee income on depositors' accounts increased $95,000, or 6%, driven by a larger deposit base related to the New England Bank acquisition, offset to a large extent by the negative impact of new regulations, including the Durbin Amendment, on debit card fee income.  These items were offset in part by a reduction of $187,000 in gains from loan sales as the company did not sell any loans in the fourth quarter of 2013.
• Non-interest expense decreased $6.3 million, or 28%, to $16.0 million in the fourth quarter of 2013.  Excluding merger-related expenses totaling $598,000 for the fourth quarter of 2013 and $4.0 million for the same period in 2012, as well as the ESOP plan termination expense of $4.5 million recognized in the fourth quarter of 2012,  non-interest expense would have increased by $1.6 million, or 11%, as compared to the same period one year ago primarily reflecting costs to operate, expand and promote our new Connecticut franchise, annual wage increases and higher expenses related to loan workout and collection activities and an increase in tax credit funds expenses.

BalanceSheet Activity:

• Total assets increased $79.5 million, or 3%, to $2.48 billion at December 31, 2013 from $2.40 billion at December 31, 2012 reflecting growth in loans and interest-bearing cash balances.
• Total loans increased $65.8 million, or 4%, to $1.88 billion at December 31, 2013 due to growth in commercial mortgages ($47.9 million), residential mortgages ($24.7 million) and construction loans ($10.0 million) as a result of successful business development efforts and competitive products and pricing.  These items were partially reduced by runoff in the commercial and consumer segments.
• Cash and cash equivalents increased $16.6 million, or 54%, to $47.2 million at December 31, 2013 due to a temporary increase in interest-earning balances held at the Federal Reserve Bank of Boston.
• Total deposits increased $98.3 million, or 5%, to $1.95 billion at December 31, 2013 reflecting growth of $71.7 million, or 6%, in core account balances and an increase of $26.6 million, or 4%, in certificates of deposit.  The growth in core deposit account balances was driven by sales and marketing initiatives, competitive products and pricing and a focus on providing excellent customer service. Core deposit balances were $1.21 billion, or 62% of total deposits, at December 31, 2013.
• Short-term borrowings decreased $17.7 million, or 22%, to $61.6 million at December 31, 2013 and  long term-debt increased by $8.3 million, or 6%, to $142.3 million at December 31, 2013 as the Bank elected to extend the term of certain short-term FHLB advances.

Credit Quality:

• Non-performing assets totaled $18.9 million, or 0.76% of total assets, at December 31, 2013 compared to $17.3 million, or 0.72% of total assets, at December 31, 2012.  The $1.6 million increase in non-performing assets reflects additional loans placed on non-accrual.
• The ratio of the allowance for loan losses to total loans was 0.71% at December 31, 2013 as compared to 0.67% at December 31, 2012.  Excluding the aggregate impact of acquired loans totaling $528.6 million at December 31, 2013 and $664.6 million at December 31, 2012, the ratio of the allowance for loan losses to total loans would have been 0.99% at December 31, 2013 and 1.05% at December 31, 2012.  Net charge-offs totaled $2.8 million, or 0.15% of average loans outstanding for the year ended December 31, 2013, as compared to net charge-offs of $1.1 million, or 0.11% of average loans outstanding for the same period in 2012.    

Capital and Liquidity:

• At December 31, 2013, the Company remained well capitalized with atangible equity-to-tangible assets ratioof 10.58% and an equity-to-assets ratio of 12.20%.
• At December 31, 2013, the Company continued to have considerable liquidity consisting of significant balances at the Federal Reserve Bank of Boston, a large amount of marketable loans and investment securities, substantial unused borrowing capacity at the Federal Home Loan Bank of Boston and the Federal Reserve Bank of Boston and access to funding through the repurchase agreement and brokered deposit markets.

United Financial Bancorp, Inc. is a publicly owned corporation and the holding company for United Bank, a federally chartered 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.   The Company had total consolidated assets of approximately $2.48 billion as of December 31, 2013. United Bank provides an array of financial products and services through its 16 branch offices and two express drive-up branches in the Springfield region of Western Massachusetts; seven branches in the Worcester region of Central Massachusetts; and 12 branches in Connecticut's Hartford, Tolland and New Haven counties.  The Bank also operates loan production offices located in Beverly, Massachusetts and Glastonbury, Connecticut. Through its Wealth Management Group, the Bank offers 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 or on Facebook at facebook.com/bankatunited.

Except for the historical information contained in this press release, the matters discussed 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.

CONFERENCE CALL:

United Financial Bancorp, Inc. will host a conference call at 10:30 a.m. Eastern time on Friday, January 24, 2014 to discuss the results for the quarter and the full year 2013.  Participants should dial-in to the call a few minutes before it begins. 

Audio:
Dial in number: 1-888-317-6016

Replay:
Dial in number: 1-877-344-7529
Conference number: 10039268
A telephone replay of the call will be available one hour after the end of the conference call through February 24, 2014 at 9:00 a.m. EST.

UNITED FINANCIAL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CONDITION (unaudited)
(Dollars in thousands, except per share amounts)
		December 31,		December 31,		Dec. 2013 vs. Dec. 2012
Assets		2013		2012		$ Change		% Change
Cash and cash equivalents		$        47,241		$       30,679		$   16,562		53.98%
Investment securities		375,814		377,308		(1,494)		(0.40)%
Loans held for sale		-		632		(632)		(100.00)%
Loans:
Residential mortgages		466,604		441,874		24,730		5.60%
Commercial mortgages		862,596		814,692		47,904		5.88%
Construction loans		62,811		52,778		10,033		19.01%
Commercial loans		293,094		306,192		(13,098)		(4.28)%
Home equity loans		179,502		179,039		463		0.26%
Consumer loans		17,232		21,501		(4,269)		(19.85)%
Total loans		1,881,839		1,816,076		65,763		3.62%
Net deferred loan costs and fees		2,640		3,414		(774)		(22.67)%
Allowance for loan losses		(13,413)		(12,089)		(1,324)		10.95%
Loans, net		1,871,066		1,807,401		63,665		3.52%
Federal Home Loan Bank of Boston stock, at cost		17,334		18,554		(1,220)		(6.58)%
Other real estate owned		2,451		2,578		(127)		(4.93)%
Deferred tax asset, net		14,961		20,178		(5,217)		(25.85)%
Premises and equipment, net		25,586		25,064		522		2.08%
Bank-owned life insurance		54,583		52,876		1,707		3.23%
Goodwill		40,992		39,852		1,140		2.86%
Other intangible assets		4,037		4,514		(477)		(10.57)%
Other assets		27,778		22,667		5,111		22.55%
Total assets		$    2,481,843		$   2,402,303		$   79,540		3.31%
Liabilities and Stockholders' Equity
Deposits:
Demand		$      342,000		$      307,302		$   34,698		11.29%
NOW		92,696		87,983		4,713		5.36%
Savings		342,605		350,188		(7,583)		(2.17)%
Money market		435,171		395,293		39,878		10.09%
Certificates of deposit		734,012		707,409		26,603		3.76%
Total deposits		1,946,484		1,848,175		98,309		5.32%
Short-term borrowings		61,555		79,229		(17,674)		(22.31)%
Long-term debt		142,252		133,969		8,283		6.18%
Subordinated debentures		5,959		9,630		(3,671)		(38.12)%
Escrow funds held for borrowers		4,856		4,315		541		12.54%
Capitalized lease obligations		4,539		4,711		(172)		(3.65)%
Accrued expenses and other liabilities		13,419		15,085		(1,666)		(11.04)%
Total liabilities		2,179,064		2,095,114		83,950		4.01%
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:
24,266,428 at December 31, 2013 and
December 31, 2012		243		243		-		0.00%
Additional paid-in capital		271,643		272,822		(1,179)		(0.43)%
Retained earnings		96,059		87,153		8,906		10.22%
Accumulated other comprehensive income, net of taxes		(1,091)		5,401		(6,492)		(120.20)%
Treasury stock, at cost (4,486,750 shares at
December 31, 2013 and 4,114,310 shares at
December 31, 2012		(64,075)		(58,430)		(5,645)		9.66%
Total stockholders' equity		302,779		307,189		(4,410)		(1.44)%
Total liabilities and stockholders' equity		$    2,481,843		$   2,402,303		$   79,540		3.31%

UNITED FINANCIAL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF NET INCOME (unaudited)
(Dollars in thousands, except per share amounts)
	Three Months Ended
	December 31,		September 30,		December 31,		Dec. 2013 vs Sep. 2013				Dec. 2013 vs. Dec. 2012
	2013		2013		2012		$ Change		% Change		$ Change		% Change
Interest and dividend income:
Loans	$       20,716		$       20,974		$       17,651		$     (258)		(1.23)%		$   3,065		17.36%
Investments	2,381		2,226		2,373		155		6.96%		8		0.34%
Other interest-earning assets	34		26		107		8		30.77%		(73)		(68.22)%
Total interest and dividend income	23,131		23,226		20,131		(95)		(0.41)%		3,000		14.90%
Interest expense:
Deposits	2,844		2,898		2,671		(54)		(1.86)%		173		6.48%
Borrowings	935		982		1,225		(47)		(4.79)%		(290)		(23.67)%
Total interest expense	3,779		3,880		3,896		(101)		(2.60)%		(117)		(3.00)%
Net interest income before provision for loan losses	19,352		19,346		16,235		6		0.03%		3,117		19.20%
Provision for loan losses	1,125		1,125		689		-		0.00%		436		63.28%
Net interest income after provision for loan losses	18,227		18,221		15,546		6		0.03%		2,681		17.25%
Non-interest income:
Fee income on depositors' accounts	1,628		1,633		1,533		(5)		(0.31)%		95		6.20%
Wealth management income	360		269		231		91		33.83%		129		55.84%
Income from bank-owned life insurance	522		518		501		4		0.77%		21		4.19%
Net gain on sales of loans	-		-		187		-		0.00%		(187)		(100.00)%
Net gain on sales of securities	277		-		227		277		0.00%		50		22.03%
Other income	452		556		290		(104)		(18.71)%		162		55.86%
Total non-interest income	3,239		2,976		2,969		263		8.84%		270		9.09%
Non-interest expense:
Salaries and benefits	8,075		8,109		7,430		(34)		(0.42)%		645		8.68%
Occupancy expenses	1,462		1,362		1,204		100		7.34%		258		21.43%
Marketing expenses	500		426		397		74		17.37%		103		25.94%
Data processing expenses	1,537		1,428		1,460		109		7.63%		77		5.27%
Professional fees	653		587		604		66		11.24%		49		8.11%
ESOP plan termination expense	-		-		4,482		-		0.00%		(4,482)		(100.00)%
Merger related expenses	598		-		3,994		598		0.00%		(3,396)		(85.03)%
FDIC insurance assessments	408		408		335		-		0.00%		73		21.79%
Tax credit funds	389		390		-		(1)		(0.26)%		389		0.00%
Other expenses	2,385		2,126		2,399		259		12.18%		(14)		(0.58)%
Total non-interest expense	16,007		14,836		22,305		1,171		7.89%		(6,298)		(28.24)%
Income before income taxes	5,459		6,361		(3,790)		(902)		(14.18)%		9,249		(244.04)%
Income tax expense	1,454		1,714		942		(260)		(15.17)%		512		54.35%
Net income	$         4,005		$         4,647		$       (4,732)		$     (642)		(13.82)%		$   8,737		(184.64)%
Earnings per share:
Basic	$          0.20		$          0.24		$         (0.28)		$    (0.04)		(16.67)%		$     0.48		(171.43)%
Diluted	$          0.20		$          0.23		$         (0.28)		$    (0.03)		(13.04)%		$     0.48		(171.43)%
Weighted average shares outstanding:
Basic	19,718		19,653		17,191		65		0.33%		2,527		14.70%
Diluted	20,057		19,973		17,191		84		0.42%		2,866		16.67%

UNITED FINANCIAL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF NET INCOME (unaudited)
(Dollars in thousands, except per share amounts)
		Years Ended
		December 31,		December 31,		Dec. 2013 vs. Dec. 2012
		2013		2012		$ Change		% Change
Interest and dividend income:
Loans		$         85,023		$         60,401		$    24,622		40.76%
Investments		9,168		10,544		(1,376)		(13.05)%
Other interest-earning assets		102		226		(124)		(54.87)%
Total interest and dividend income		94,293		71,171		23,122		32.49%

UNITED FINANCIAL BANCORP, INC. AND SUBSIDIARY
SELECTED DATA AND RATIOS (unaudited)
(Dollars in thousands, except per share amounts)
		At or For The Quarters Ended
		Dec. 31		Sep. 30		Jun. 30		Mar. 31		Dec. 31
		2013		2013		2013		2013		2012
Operating Results:
Net interest income (1)		$      19,352		$      19,346		$      19,699		$      20,493		$      16,235
Loan loss provision		1,125		1,125		892		950		689
Non-interest income		3,239		2,976	(2)	3,015	(2)	2,798		2,969
Non-interest expense		16,007	(3)	14,836		16,269	(3)	15,850	(3)	22,305	(3)
Net income (loss)		4,005		4,647		4,049		4,701		(4,732)
Performance Ratios (annualized):
Return (loss) on average assets		0.65%	(4)	0.76%		0.67%	(4)	0.78%	(4)	(0.93)%
Return (loss) on average equity		5.27%	(4)	6.17%		5.32%	(4)	6.13%	(4)	(7.00)%
Net interest margin (1)		3.37%		3.40%		3.53%		3.70%		3.43%
Non-interest income to average total assets		0.52%		0.49%		0.50%		0.47%		0.58%
Non-interest expense to average total assets		2.58%	(5)	2.42%		2.70%	(5)	2.64%	(5)	4.37%	(5)
Efficiency ratio (6)		71.74%	(5)	66.46%		71.96%	(5)	68.22%	(5)	118.71%	(5)
Per Share Data:
Diluted earnings (loss) per share		$          0.20		$          0.23

(1)	Includes amortization of merger accounting adjustments totaling $660,000, $753,000, $1.3 million, $1.8 million and $633,000 for the quarters ended December 31, 2013, September 30, 2013, June 30, 2013, March 31, 2013 and December 31, 2012, respectively.
(2)	Includes gains related to an investment in a venture capital fund, which is accounted for on a cost basis totaling $6,000 and $201,000 for the quarters ended September 30, 2013 and June 30, 2013, respectively.
(3)	Includes branch closing costs totaling $477,000 and $510,000 for the quarters ended June 30, 2013 and March 31, 2013, an ESOP plan termination expense of $4.5 million for the quarter ended December 31, 2012 and merger-related expenses totaling $598,000, $123,000, $158,000 and $4.0 million, respectively, for the quarters ended December 31, 2013, June 30, 2013, March 31, 2013 and December 31, 2012, respectively.
(4)	Exclusive of gains on sale of securities of $164,000 (after tax) for the quarter ended December 31, 2013, branch closing costs totaling $282,000 (after tax) and $302,000 (after tax) for the quarters ended June 30, 2013 and March 31, 2013, merger-related expenses totaling $449,000 (after tax), $117,000 (after tax) and $152,000 (after tax) for the quarters ended December 31, 2013, June 30, 2013 and March 31, 2013, respectively, the return on average assets would have been 0.69%, 0.74% and 0.86% and the return on average equity would have been 5.64%, 5.85% and 6.73%, respectively.
(5)	Excluding the branch closing costs totaling $477,000 and $510,000 for the quarters ended June 30, 2013 and March 31, 2013, respectively, ESOP plan termination expense of $4.5 million and FHLBB prepayment penalties of $207,000 for the quarter ended December 31, 2012 and merger-related expenses totaling $598,000, $123,000, $158,000 and $4.0 million for the quarters ended December 31, 2013, June 30, 2013, March 31, 2013 and December 31, 2012, respectively, non-interest expense to average total assets would have been 2.49%, 2.60%, 2.53% and 2.67% and the efficiency ratio would have been 69.08%, 69.31%, 65.34% and 72.50%, respectively.
(6)	Excludes gains/losses on sales of securities and loans and impairment charges on securities.
(7)	Excludes the impact of goodwill and other intangible assets of $45.0 million at December 31, 2013, $45.2 million at September 30, 2013, $45.0 million at June 30, 2013, $44.0 million at March 31, 2013 and $44.4 million at December 31, 2012.
(8)	Excluding acquired loans of $523.9 million, $544.7 million, $583.6 million, $611.3 million and $659.6 million, and loans purchased from other financial  institutions of $4.6 million, $4.7 million, $4.8 million, $4.9 million and $5.0 million at December 31, 2013, September 30, 2013, June 30, 2013, March 31, 2013 and December 31, 2012, respectively, allowance for loan losses as a percent of total loans, gross would have been 0.99%, 1.02%, 1.03%, 1.04% and 1.05% for the quarters ended December 31, 2013, September 30, 2013, June 30, 2013, March 31, 2013 and December 31, 2012, respectively.
(9)	Excluding acquired non-performing loans of $7.4 million, $2.2 million, $3.4 million, $4.4 million and $7.0 million at December 31, 2013, September 30, 2013, June 30, 2013, March 31, 2013 and December 31, 2012, allowance for loan losses as a percent of total non-performing loans would have been 149.85%, 135.26%, 123.58%, 129.78% and 157.72%, respectively.

For More Information Contact:
Mark A. Roberts
Executive Vice President & CFO
[phone]

SOURCE United Financial Bancorp, Inc.