United Financial Bancorp : Announces Third Quarter Earnings

HARTFORD, Conn., Oct. 18, 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 September 30, 2019.

The Company reported net income of $12.7 million, or $0.25 per diluted share, for the quarter ended September 30, 2019, compared to a net loss for the quarter ended June 30, 2019 ('linked quarter') of $3.2 million, or $0.06 per diluted share. The net loss for the linked quarter was primarily due to an impairment charge recorded on the Company's investments in D.C. Solar LLCs of $6.3 million (after tax) and the related establishment of an additional tax reserve of $8.7 million during the three months ended June 30, 2019. The Company reported net income of $16.3 million, or $0.32 per diluted share, for the quarter ended September 30, 2018.

On July 15, 2019, United Financial and People's United Financial, Inc. announced the signing of a definitive agreement and plan of merger pursuant to which United Financial will merge with and into People's United Financial, Inc., with People's United Financial, Inc. surviving the merger, in an all stock transaction valued at approximately $759.0 million as of July 15, 2019. Consummation of the merger is expected to be effective on November 1, 2019, subject to receipt of the requisite approval by United Financial's shareholders and satisfaction of other customary closing conditions. A special meeting of United Financial's shareholders to consider and vote upon the approval of the merger and related matters is scheduled to be held on October 22, 2019.

Balance Sheet

Assets totaled $7.18 billion at September 30, 2019, representing a decrease of $155.9 million, or 2.1%, from $7.34 billion at June 30, 2019. At September 30, 2019, total available for sale securities were $823.2 million, representing a decrease of $17.3 million, or 2.1%, from the linked quarter. The overall decrease was primarily due to sales of lower yielding, higher risk weighted securities, offset by purchases of various mortgage-backed securities and corporate bonds. At September 30, 2019, total loans were $5.68 billion, representing a decrease of $79.9 million, or 1.4%, from the linked quarter. Changes to loan balances during the third quarter of 2019 were highlighted by a $74.0 million, or 8.1%, decrease in commercial business loans, a $22.3 million, or 3.9%, decrease in home equity loans, a $7.4 million, or 58.7%, decrease in residential construction loans, a $6.5 million, or 0.3%, decrease in investor non-owner occupied commercial real estate loans, a $5.6 million, or 0.4%, decrease in residential real estate loans and a $2.0 million, or 0.4%, decrease in owner-occupied commercial real estate loans from the linked quarter. Slightly offsetting the decreased loan balances above were a $26.8 million, or 6.1%, increase in other consumer loans and an $11.1 million, or 13.8%, increase in commercial construction loans. Loans held for sale decreased $27.7 million, or 71.4%, from the linked quarter due to a change in pipeline delivery terms. Total cash and cash equivalents decreased $12.3 million, or 10.7%, from the linked quarter as the Company utilized excess cash to pay off maturing Federal Home Loan Bank advances.

Deposits totaled $5.65 billion at September 30, 2019 and decreased by $74.5 million, or 1.3%, from $5.73 billion at June 30, 2019. Decreases in deposit balances during the third quarter of 2019 were primarily due to a $116.2 million, or 6.4%, decrease in certificates of deposit balances, a $20.8 million, or 4.3%, decrease in regular savings accounts and a $5.0 million, or 0.6%, decrease in non-interest bearing checking deposits. Offsetting these decreases was a $48.6 million, or 5.4%, increase in NOW checking account balances and an $18.7 million, or 1.1%, increase in money market account balances in the third quarter.

Total Federal Home Loan Bank advances decreased by $98.2 million, or 15.1%, over the linked quarter as the Company utilized excess cash generated from proceeds from loan and security cash flows 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. and 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.

During the linked quarter, the Company recorded an impairment charge to the investment in the LLCs of $6.3 million (after tax) and an additional tax reserve of $8.7 million to reflect the loss and the associated uncertain tax positions. The net impact to net income for the linked quarter was $15.0 million. There was no additional measurable loss identified during the three months ended September 30, 2019. Given the facts and circumstances that we are aware of at the time of the issuance of this release, the Company does not believe a full loss or total tax benefit reversal to be likely.

Net Interest Income

Net interest income decreased by $604,000, or 1.3%, on a linked quarter basis, to $46.4 million, primarily attributable to a decrease in interest and dividend income of $900,000, or 1.2%, to $72.5 million, being partially offset by a decrease in interest expense of $296,000, or 1.1%, to $26.1 million. Average interest-earning assets decreased by $26.2 million, or 0.4%, on a linked quarter basis, primarily due to a $20.4 million, or 33.8%, decrease in average other earning asset balances, as well as a $3.1 million, or 9.0%, decrease in average FHLB stock and a $2.7 million, or 0.3%, decrease in average investments as a result of sales of lower yielding, higher risk weighted securities.

Interest expense decreased by $296,000, or 1.1%, to $26.1 million during the third quarter of 2019, from $26.4 million in the linked quarter. Average interest-bearing deposit balances increased by $10.2 million, or 0.2%, on a linked quarter basis, primarily driven by a $93.0 million, or 3.7%, increase in average NOW and money market account balances, offset by a $61.3 million, or 3.3%, decrease in average certificates of deposit and a $21.5 million, or 4.3%, decrease in average savings account balances. Average non-interest bearing deposits increased by $14.0 million, or 1.8%, as compared to the linked quarter. Average Federal Home Loan Bank advances decreased by $85.5 million, or 12.3%.

The tax-equivalent net interest margin decreased by 5 basis points to 2.77% in the third quarter of 2019, from 2.82% in the linked period. The decrease in the tax-equivalent net interest margin was driven by a 7 basis point decrease in the yield of interest-earning assets slightly offset by a 1 basis point decrease in the cost of interest-bearing liabilities. The interest-earning asset yield decline was largely driven by a 25 basis point decrease in the yield on commercial business loans, a 12 basis point decrease in the yield on commercial real estate loans and a 6 basis point decrease in the yield on home equity loans. In addition, there was a 37 basis point decrease in the yield on Federal Home Loan Bank Stock and a 15 basis point decrease in the yield on investment securities. These decreases were offset by an 11 basis point increase in the yield on residential real estate loans, an 8 basis point increase in the yield on construction loans, a 5 basis point increase in the yield on other earning assets and a 2 basis point increase in the yield on other consumer loans. The total cost of funds remained unchanged at 1.64% as compared to the linked quarter.

Provision for Loan Losses

The provision for loan losses totaled $2.0 million for the quarter ended September 30, 2019 as compared to $2.5 million for the linked quarter. Net charge-offs for the quarter ended September 30, 2019 totaled $1.5 million, or 0.10%, as a percentage of average loans outstanding, as compared to $1.3 million, or 0.09%, as a percentage of average loans for the quarter ended June 30, 2019. 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 increased by $8.3 million to $9.2 million for the quarter ended September 30, 2019 from $840,000 in the linked quarter. The increase in the third quarter's non-interest income was driven primarily by a $7.7 million decrease in net loss on limited partnership investments as compared to the linked quarter, due mainly to the $7.8 million impairment charge on the D.C. Solar LLC investments recorded in the linked quarter as discussed above. There was no similar impairment recorded during the quarter ended September 30, 2019. Other increases included a $933,000, or 227.6%, increase in income from mortgage banking activities and an increase of $493,000, or 32.4%, in bank-owned life insurance income as compared to the linked quarter. These increases were offset by a decrease of $922,000, or 12.2%, in service charges and fee income primarily resulting from lower swap fee income as compared to the linked quarter.

Non-Interest Expense

Non-interest expense for the quarter ended September 30, 2019 totaled $38.6 million and decreased by $903,000, or 2.3%, from the linked quarter. The decrease in non-interest expense during the quarter was driven by an $832,000, or 108.2%, decrease in FDIC insurance assessment expense due to receipt of FDIC credits, a $378,000, or 1.7%, decrease in salaries and employee benefits expense and a $302,000, or 5.1%, decrease in other non-interest expense. These decreases were offset by a $543,000, or 22.5%, increase in professional fees largely due to legal expenses pertaining to the proposed acquisition by People's United Financial, Inc. as compared to the linked quarter.

Provision for Income Taxes

The provision for income taxes was $2.3 million for the quarter ended September 30, 2019 as compared to $9.2 million in the linked quarter. The effective tax rate was 15.0% at September 30, 2019 as compared to 154.9% at June 30, 2019. The effective tax rate is lower compared to the linked quarter due to the recognition of uncertain tax positions of $8.7 million associated with D.C. Solar LLC investments during the linked quarter as discussed above.

Asset Quality

Asset quality remained strong and stable for the period, with non-performing assets decreasing by $1.3 million to $30.7 million at September 30, 2019 from $32.0 million at June 30, 2019. The ratio of non-performing assets to total assets for the quarter ended September 30, 2019 was 0.43%, as compared to 0.44% in the linked quarter.

Capital

The Company reported Tangible Common Equity ('TCE') of $608.7 million, or 8.4% of average assets, for the quarter ended September 30, 2019. Tangible book value per share increased to $11.90 at September 30, 2019 from $11.71 at June 30, 2019. The increase was primarily driven by the impact of the Company's net income of $12.7 million and 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, offset by the cash dividend payment to shareholders of $0.12 per share during the quarter. Book value per share at September 30, 2019 was $14.27, as compared to $14.09 in the linked quarter.

Dividend

On October 9, 2019, the Board of Directors of United Financial Bancorp, Inc. declared a cash dividend of $0.12 per share to shareholders of record at the close of business on October 21, 2019, payable on October 23, 2019.

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 September 30, 2019, the Company had $7.18 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 the proposed merger with People's United Financial, Inc., 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, delays or difficulties in obtaining the requisite approvals for the merger with People's United Financial, Inc., increased competitive pressures, changes in the interest rate environment, general economic conditions or conditions within the securities markets, and legislative and regulatory changes that could adversely affect the business in which the Company and its subsidiaries are engaged.

United Financial Bancorp, Inc. and Subsidiaries
Consolidated Statements of Net Income
(Unaudited)

		For the Three Months Ended September 30,		For the Nine Months Ended September 30,
		2019		2018		2019		2018
Interest and dividend income:		(In thousands, except share data)
Loans		$	65,255			$	61,061			$	195,669			$	173,799
Securities-taxable interest		5,823			5,822			18,415			17,289
Securities-non-taxable interest		623			2,347			2,361			7,130
Securities-dividends		572			748			1,881			2,121
Interest-bearing deposits		232			213			798			476
Total interest and dividend income		72,505			70,191			219,124			200,815
Interest expense:
Deposits		20,740			15,767			61,235			39,658
Borrowed funds		5,359			5,995			17,536			18,004
Total interest expense		26,099			21,762			78,771			57,662
Net interest income		46,406			48,429			140,353			143,153
Provision for loan losses		2,037			2,007			6,552			6,296
Net interest income after provision for loan losses		44,369			46,422			133,801			136,857
Non-interest income:
Service charges and fees		6,616			6,623			20,339			19,324
Net gain (loss) from sales of securities		107			(58	)		981			120
Income from mortgage banking activities		523			1,486			704			4,061
Bank-owned life insurance income		2,014			1,460			5,481			4,777
Net loss on limited partnership investments		(244	)		(221	)		(8,745	)		(1,771	)
Other income		149			265			225			693
Total non-interest income		9,165			9,555			18,985			27,204
Non-interest expense:
Salaries and employee benefits		21,545			22,643			65,670			65,954
Service bureau fees		2,360			2,209			6,595			6,592
Occupancy and equipment		5,136			4,487			15,787			14,104
Professional fees		2,957			1,013			6,664			3,282
Marketing and promotions		677			1,119			2,317			2,993
FDIC insurance assessments		(63	)		655			1,365			2,129
Core deposit intangible amortization		372			288			1,179			930
Other		5,570			6,529			17,621			18,065
Total non-interest expense		38,554			38,943			117,198			114,049
Income before income taxes		14,980			17,034			35,588			50,012
Provision for income taxes		2,250			726			13,449			2,271
Net income		$	12,730			$	16,308			$	22,139			$	47,741
Net income per share:
Basic		$	0.25			$	0.32			$	0.44			$	0.94
Diluted		$	0.25			$	0.32			$	0.44			$	0.94
Weighted-average shares outstanding:
Basic		50,651,762			50,624,832			50,629,153			50,535,569
Diluted		50,813,908			51,104,776			50,780,547			51,026,105

United Financial Bancorp, Inc. and Subsidiaries
Consolidated Statements of Net Income
(Unaudited)

		For the Three Months Ended
		September 30, 2019		June 30, 2019		March 31, 2019		December 31, 2018		September 30, 2018
Interest and dividend income:		(In thousands, except share data)
Loans		$	65,255			$	65,650			$	64,764			$	63,227			$	61,061
Securities-taxable interest		5,823			6,117			6,475			5,705			5,822
Securities-non-taxable interest		623			644			1,094			2,339			2,347
Securities-dividends		572			653			656			702			748
Interest-bearing deposits		232			341			225			250			213
Total interest and dividend income		72,505			73,405			73,214			72,223			70,191
Interest expense:
Deposits		20,740			20,564			19,931			18,183			15,767
Borrowed funds		5,359			5,831			6,346			5,678			5,995
Total interest expense		26,099			26,395			26,277			23,861			21,762
Net interest income		46,406			47,010			46,937			48,362			48,429
Provision for loan losses		2,037			2,472			2,043			2,618			2,007
Net interest income after provision for loan losses		44,369			44,538			44,894			45,744			46,422
Non-interest income:
Service charges and fees		6,616			7,538			6,185			7,447			6,623
Net gain (loss) from sales of securities		107			137			737			25			(58	)
Income (loss) from mortgage banking activities		523			(410	)		591			698			1,486
Bank-owned life insurance income		2,014			1,521			1,946			1,517			1,460
Net loss on limited partnership investments		(244	)		(7,898	)		(603	)		(405	)		(221	)
Other income (loss)		149			(48	)		124			211			265
Total non-interest income		9,165			840			8,980			9,493			9,555
Non-interest expense:
Salaries and employee benefits		21,545			21,923			22,202			25,341			22,643
Service bureau fees		2,360			2,198			2,037			2,309			2,209
Occupancy and equipment		5,136			5,111			5,540			6,384			4,487
Professional fees		2,957			2,414			1,293			1,136			1,013
Marketing and promotions		677			782			858			1,108			1,119
FDIC insurance assessments		(63	)		769			659			611			655
Core deposit intangible amortization		372			388			420			420			288
Other		5,570			5,872			6,178			6,409			6,529
Total non-interest expense		38,554			39,457			39,187			43,718			38,943
Income before income taxes		14,980			5,921			14,687			11,519			17,034
Provision (benefit) for income taxes		2,250			9,169			2,030			(646	)		726
Net income (loss)		$	12,730			$	(3,248	)		$	12,657			$	12,165			$	16,308
Net income (loss) per share:
Basic		$	0.25			$	(0.06	)		$	0.25			$	0.24			$	0.32
Diluted		$	0.25			$	(0.06	)		$	0.25			$	0.24			$	0.32
Weighted-average shares outstanding:
Basic		50,651,762			50,620,236			50,615,059			50,613,498			50,624,832
Diluted		50,813,908			50,620,236			50,907,092			50,970,000			51,104,776

United Financial Bancorp, Inc. and Subsidiaries
Consolidated Statements of Condition
(Unaudited)

		September 30, 2019		June 30, 2019		March 31, 2019		December 31, 2018		September 30, 2018
ASSETS		(In thousands)
Cash and cash equivalents:
Cash and due from banks		$	66,727			$	67,939			$	50,823			$	36,434			$	48,786
Short-term investments		35,731			46,807			104,350			61,530			29,809
Total cash and cash equivalents		102,458			114,746			155,173			97,964			78,595
Available for sale securities - At fair value		823,247			840,500			848,541			973,347			972,035
Loans held for sale		11,108			38,809			16,172			78,788			86,948
Loans:
Commercial real estate loans:
Owner-occupied		457,601			459,648			439,366			443,398			434,906
Investor non-owner occupied		1,964,650			1,971,103			1,932,137			1,911,070			1,888,848
Construction		91,143			80,063			94,649			87,493			78,235
Total commercial real estate loans		2,513,394			2,510,814			2,466,152			2,441,961			2,401,989
Commercial business loans		836,476			910,473			920,165			886,770			861,030
Consumer loans:
Residential real estate		1,300,676			1,306,208			1,322,423			1,313,373			1,283,126
Home equity		553,349			575,683			583,368			583,454			579,907
Residential construction		5,183			12,542			13,620			20,632			32,750
Other consumer		466,204			439,413			425,854			410,249			369,781
Total consumer loans		2,325,412			2,333,846			2,345,265			2,327,708			2,265,564
Total loans		5,675,282			5,755,133			5,731,582			5,656,439			5,528,583
Net deferred loan costs and premiums		17,002			17,965			17,901			17,786			16,603
Allowance for loan losses		(53,751	)		(53,206	)		(52,041	)		(51,636	)		(49,909	)
Loans receivable - net		5,638,533			5,719,892			5,697,442			5,622,589			5,495,277
Federal Home Loan Bank of Boston stock, at cost		29,421			34,335			37,702			41,407			42,032
Accrued interest receivable		23,930			24,938			25,061			24,823			25,485
Deferred tax asset, net		25,561			27,366			27,600			32,706			31,473
Premises and equipment, net		60,748			62,304			63,863			68,657			67,612
Operating lease right-of-use assets		42,079			43,171			44,377			-			-
Financing lease right-of-use assets		4,177			4,266			4,356			-			-
Goodwill		116,709			116,709			116,727			116,769			115,281
Core deposit intangible asset		4,847			5,219			5,607			6,027			3,561
Cash surrender value of bank-owned life insurance		196,239			195,993			194,496			193,429			181,928
Other assets		100,999			107,707			102,823			100,368			107,271
Total assets		$	7,180,056			$	7,335,955			$	7,339,940			$	7,356,874			$	7,207,498
		September 30, 2019		June 30, 2019		March 31, 2019		December 31, 2018		September 30, 2018
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Non-interest-bearing		$	838,913			$	843,926			$	777,969			$	799,785			$	759,210
Interest-bearing		4,813,137			4,882,622			4,886,283			4,870,814			4,741,153
Total deposits		5,652,050			5,726,548			5,664,252			5,670,599			5,500,363
Mortgagors' and investor escrow accounts		7,498			14,541			11,510			4,685			9,597
Federal Home Loan Bank advances and other borrowings		643,501			741,989			826,668			899,626			926,592
Operating lease liabilities		54,163			55,197			56,265			-			-
Financing lease liabilities		4,450			4,518			4,585			-			-
Accrued expenses and other liabilities		88,112			73,140			52,562			69,446			61,128
Total liabilities		6,449,774			6,615,933			6,615,842			6,644,356			6,497,680
Total stockholders' equity		730,282			720,022			724,098			712,518			709,818
Total liabilities and stockholders' equity		$	7,180,056			$	7,335,955			$	7,339,940			$	7,356,874			$	7,207,498

United Financial Bancorp, Inc. and Subsidiaries
Selected Financial Highlights
(Dollars In Thousands, Except Share Data)
(Unaudited)

	At or For the Three Months Ended
	September 30, 2019		June 30, 2019		March 31, 2019		December 31, 2018		September 30, 2018
Share Data:
Basic net income (loss) per share	$	0.25			$	(0.06	)		$	0.25			$	0.24			$	0.32
Diluted net income (loss) per share	0.25			(0.06	)		0.25			0.24			0.32
Dividends declared per share	0.12			0.12			0.12			0.12			0.12
Tangible book value per share	$	11.90			$	11.71			$	11.78			$	11.54			$	11.55
Key Statistics:
Total revenue	$	55,571			$	47,850			$	55,917			$	57,855			$	57,984
Total non-interest expense	38,554			39,457			39,187			43,718			38,943
Average earning assets	6,680,059			6,706,237			6,783,604			6,708,701			6,671,424
Key Ratios:
Return (loss) on average assets (annualized)	0.70	%		(0.18	%)		0.69	%		0.67	%		0.91	%
Return (loss) on average equity (annualized)	7.05	%		(1.79	%)		7.13	%		6.89	%		9.26	%
Tax-equivalent net interest margin (annualized)	2.77	%		2.82	%		2.81	%		2.90	%		2.92	%
Non-interest expense to average assets (annualized)	2.13	%		2.16	%		2.13	%		2.41	%		2.17	%
Cost of funds (annualized) (1)	1.64	%		1.64	%		1.61	%		1.48	%		1.36	%
Total revenue growth rate	16.14	%		(14.43	%)		(3.35	%)		(0.22	)%		2.55	%
Total revenue growth rate (annualized)	64.54	%		(57.71	%)		(13.40	%)		(0.89	)%		10.21	%
Average earning asset growth rate	(0.39	%)		(1.14	%)		1.12	%		0.56	%		1.31	%
Average earning asset growth rate (annualized)	(1.56	%)		(4.56	%)		4.47	%		2.24	%		5.25	%
Residential Mortgage Production:
Dollar volume (total)	$	62,878			$	46,549			$	31,882			$	128,209			$	143,673
Mortgages originated for purchases	31,241			24,409			21,434			101,266			111,555
Loans sold	68,031			22,352			89,980			108,663			99,372
Income (loss) from mortgage banking activities	523			(410	)		591			698			1,486
Non-performing Assets:
Residential real estate	$	13,015			$	12,893			$	13,742			$	13,217			$	11,949
Home equity	4,890			5,051			4,577			4,735			4,005
Investor-owned commercial real estate	1,928			2,357			739			1,131			1,525
Owner-occupied commercial real estate	1,408			1,989			1,830			2,450			1,202
Construction	-			137			171			199			243
Commercial business	1,660			1,666			1,627			944			985
Other consumer	1,143			657			1,034			1,030			597
Non-accrual loans	24,044			24,750			23,720			23,706			20,506
Troubled debt restructured - non-accruing	5,309			5,820			5,479			6,971			6,706
Total non-performing loans	29,353			30,570			29,199			30,677			27,212
Other real estate owned	1,347			1,455			1,429			1,389			1,808
Total non-performing assets	$	30,700			$	32,025			$	30,628			$	32,066			$	29,020
Non-performing loans to total loans	0.52	%		0.53	%		0.51	%		0.54	%		0.49	%
Non-performing assets to total assets	0.43	%		0.44	%		0.42	%		0.44	%		0.40	%
Allowance for loan losses to non-performing loans	183.12	%		174.05	%		178.23	%		168.32	%		183.41	%
Allowance for loan losses to total loans	0.95	%		0.92	%		0.91	%		0.91	%		0.90	%
Non-GAAP Ratios: (2)
Efficiency ratio	65.33	%		69.99	%		69.67	%		69.18	%		65.61	%
Return (loss) on average tangible common equity (annualized)	8.68	%		(1.94	%)		8.85	%		8.55	%		11.30	%
Pre-provision net revenue to average assets	1.06	%		0.92	%		0.92	%		1.00	%		1.12	%

(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 pages F-11 and F-12.

United Financial Bancorp, Inc. and Subsidiaries
Average Balance Sheets, Interest and Yields/Costs
(Dollars In Thousands)
(Unaudited)

	For the Three Months Ended
	September 30, 2019		September 30, 2018
	Average Balance		Interest and Dividends		Yield/Cost		Average Balance		Interest and Dividends		Yield/Cost
Interest-earning assets:
Residential real estate	$	1,353,068			$	12,939			3.82	%		$	1,375,948			$	12,451			3.65	%
Commercial real estate	2,430,138			27,662			4.45			2,320,375			26,105			4.40
Construction	93,461			1,260			5.27			114,068			1,379			4.73
Commercial business	874,423			10,532			4.71			841,936			9,428			4.38
Home equity	561,172			7,561			5.35			584,706			7,471			5.07
Other consumer	451,562			5,800			5.10			351,892			4,532			5.11
Investment securities	843,963			6,604			3.11			995,405			8,686			3.48
Federal Home Loan Bank stock	32,310			534			6.61			45,016			715			6.35
Other earning assets	39,962			236			2.34			42,078			216			2.04
Total interest-earning assets	6,680,059			73,128			4.32			6,671,424			70,983			4.21
Allowance for loan losses	(53,741	)						(49,823	)
Non-interest-earning assets	629,146							569,471
Total assets	$	7,255,464							$	7,191,072
Interest-bearing liabilities:
NOW and money market	$	2,610,253			$	10,511			1.60	%		$	2,515,660			$	8,461			1.33	%
Savings	482,639			75			0.06			501,700			75			0.06
Certificates of deposit	1,769,455			10,154			2.28			1,691,382			7,231			1.70
Total interest-bearing deposits	4,862,347			20,740			1.69			4,708,742			15,767			1.33
Federal Home Loan Bank advances	608,551			4,074			2.62			844,207			4,591			2.13
Other borrowings	87,707			1,285			5.73			111,760			1,404			4.92
Total interest-bearing liabilities	5,558,605			26,099			1.86			5,664,709			21,762			1.52
Non-interest-bearing deposits	810,523							750,503
Other liabilities	163,994							71,554
Total liabilities	6,533,122							6,486,766
Stockholders' equity	722,342							704,306
Total liabilities and stockholders' equity	$	7,255,464							$	7,191,072
Net interest-earning assets	$	1,121,454							$	1,006,715
Tax-equivalent net interest income			47,029							49,221
Tax-equivalent net interest rate spread (1)					2.46	%						2.69	%
Tax-equivalent net interest margin (2)					2.77	%						2.92	%
Average interest-earning assets to average interest-bearing liabilities					120.18	%						117.77	%
Less tax-equivalent adjustment			623							792
Net interest income			$	46,406							$	48,429

(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
	September 30, 2019		June 30, 2019
	Average Balance		Interest and Dividends		Yield/Cost		Average Balance		Interest and Dividends		Yield/Cost
Interest-earning assets:
Residential real estate	$	1,353,068			$	12,939			3.82	%		$	1,351,571			$	12,520			3.71	%
Commercial real estate	2,430,138			27,662			4.45			2,379,330			27,503			4.57
Construction	93,461			1,260			5.27			105,801			1,387			5.19
Commercial business	874,423			10,532			4.71			916,928			11,487			4.96
Home equity	561,172			7,561			5.35			576,046			7,771			5.41
Other consumer	451,562			5,800			5.10			433,971			5,496			5.08
Investment securities	843,963			6,604			3.11			846,711			6,921			3.26
Federal Home Loan Bank stock	32,310			534			6.61			35,513			620			6.98
Other earning assets	39,962			236			2.34			60,366			344			2.29
Total interest-earning assets	6,680,059			73,128			4.32			6,706,237			74,049			4.39
Allowance for loan losses	(53,741	)						(52,680	)
Non-interest-earning assets	629,146							636,544
Total assets	$	7,255,464							$	7,290,101
Interest-bearing liabilities:
NOW and money market	$	2,610,253			$	10,511			1.60	%		$	2,517,212			$	10,267			1.64	%
Savings	482,639			75			0.06			504,186			81			0.06
Certificates of deposit	1,769,455			10,154			2.28			1,830,763			10,215			2.24
Total interest-bearing deposits	4,862,347			20,740			1.69			4,852,161			20,563			1.70
Federal Home Loan Bank advances	608,551			4,074			2.62			694,082			4,542			2.59
Other borrowings	87,707			1,285			5.73			87,875			1,290			5.81
Total interest-bearing liabilities	5,558,605			26,099			1.86			5,634,118			26,395			1.87
Non-interest-bearing deposits	810,523							796,504
Other liabilities	163,994							134,924
Total liabilities	6,533,122							6,565,546
Stockholders' equity	722,342							724,555
Total liabilities and stockholders' equity	$	7,255,464							$	7,290,101
Net interest-earning assets	$	1,121,454							$	1,072,119
Tax-equivalent net interest income			47,029							47,654
Tax-equivalent net interest rate spread (1)					2.46	%						2.52	%
Tax-equivalent net interest margin (2)					2.77	%						2.82	%
Average interest-earning assets to average interest-bearing liabilities					120.18	%						119.03	%
Less tax-equivalent adjustment			623							644
Net interest income			$	46,406							$	47,010

(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 Nine Months Ended
	September 30, 2019		September 30, 2018
	Average Balance		Interest and Dividends		Yield/Cost		Average Balance		Interest and Dividends		Yield/Cost
Interest-earning assets:
Residential real estate	$	1,361,721			$	38,345			3.75	%		$	1,342,955			$	35,977			3.59	%
Commercial real estate	2,389,734			82,467			4.55			2,303,188			74,522			4.27
Construction	103,422			4,073			5.19			116,144			4,035			4.58
Commercial business	893,211			32,632			4.82			833,612			26,949			4.26
Home equity	573,056			23,206			5.41			583,876			21,056			4.82
Other consumer	434,652			16,470			5.07			324,802			12,394			5.10
Investment securities	885,389			21,344			3.21			1,018,609			26,305			3.44
Federal Home Loan Bank stock	36,069			1,781			6.59			48,513			2,024			5.56
Other earning assets	45,667			808			2.37			36,856			487			1.77
Total interest-earning assets	6,722,921			221,126			4.36			6,608,555			203,749			4.09
Allowance for loan losses	(52,842	)						(48,750	)
Non-interest-earning assets	635,164							559,792
Total assets	$	7,305,243							$	7,119,597
Interest-bearing liabilities:
NOW and money market	$	2,565,190			$	31,089			1.62	%		$	2,307,660			$	19,517			1.13	%
Savings	495,599			230			0.06			510,137			225			0.06
Certificates of deposit	1,807,829			29,916			2.21			1,745,332			19,916			1.53
Total interest-bearing deposits	4,868,618			61,235			1.68			4,563,129			39,658			1.16
Federal Home Loan Bank advances	700,461			13,660			2.57			945,085			13,829			1.93
Other borrowings	88,109			3,876			5.80			113,937			4,175			4.83
Total interest-bearing liabilities	5,657,188			78,771			1.86			5,622,151			57,662			1.37
Non-interest-bearing deposits	784,334								734,253
Other liabilities	144,741								66,491
Total liabilities	6,586,263								6,422,895
Stockholders' equity	718,980								696,702
Total liabilities and stockholders' equity	$	7,305,243								$	7,119,597
Net interest-earning assets	$	1,065,733								$	986,404
Tax-equivalent net interest income			142,355								146,087
Tax-equivalent net interest rate spread (1)					2.50	%						2.72	%
Tax-equivalent net interest margin (2)					2.80	%						2.93	%
Average interest-earning assets to average interest-bearing liabilities					118.84	%						117.54	%
Less tax-equivalent adjustment			2,002							2,934
Net interest income			$	140,353							$	143,153

(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-10 through F-12 in the following press release tables:

	Three Months Ended
	September 30, 2019		June 30, 2019		March 31, 2019		December 31, 2018		September 30, 2018
	(Dollars in thousands)
Net Income (Loss) (GAAP)	$	12,730			$	(3,248	)		$	12,657			$	12,165			$	16,308
Non-GAAP adjustments:
Non-interest income	(638	)		(137	)		(1,158	)		(25	)		58
Non-interest expense	1,932			570			-			2,677			(129	)
Income tax benefit related to tax reform	-			-			-			(1,717	)		-
Related income tax expense (benefit)	(116	)		29			155			(557	)		15
Net adjustment	1,178			462			(1,003	)		378			(56	)
Total net income (loss) (non-GAAP)	$	13,908			$	(2,786	)		$	11,654			$	12,543			$	16,252
Non-interest income (GAAP)	$	9,165			$	840			$	8,980			$	9,493			$	9,555
Non-GAAP adjustments:
Net (gain) loss on sales of securities	(107	)		(137	)		(737	)		(25	)		58
BOLI claim benefit	(531	)		-			(421	)		-			-
Net adjustment	(638	)		(137	)		(1,158	)		(25	)		58
Total non-interest income (non-GAAP)	8,527			703			7,822			9,468			9,613
Total net interest income	46,406			47,010			46,937			48,362			48,429
Total revenue (non-GAAP)	$	54,933			$	47,713			$	54,759			$	57,830			$	58,042
Non-interest expense (GAAP)	$	38,554			$	39,457			$	39,187			$	43,718			$	38,943
Non-GAAP adjustments:
Merger related expense	(1,932	)		(570	)		-			-			-
Lease exit/disposal cost obligation	-			-			-			(466	)		129
Effect of position eliminations	-			-			-			(2,211	)		-
Net adjustment	(1,932	)		(570	)		-			(2,677	)		129
Total non-interest expense (non-GAAP)	$	36,622			$	38,887			$	39,187			$	41,041			$	39,072
Total loans	$	5,675,282			$	5,755,133			$	5,731,582			$	5,656,439			$	5,528,583
Non-covered loans (1)	(585,555	)		(618,176	)		(658,455	)		(675,112	)		(708,621	)
Total covered loans	$	5,089,727			$	5,136,957			$	5,073,127			$	4,981,327			$	4,819,962
Allowance for loan losses	$	53,751			$	53,206			$	52,041			$	51,636			$	49,909
Allowance for loan losses to total loans	0.95	%		0.92	%		0.91	%		0.91	%		0.90	%
Allowance for loan losses to total covered loans	1.06	%		1.04	%		1.03	%		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
	September 30, 2019		June 30, 2019		March 31, 2019		December 31, 2018		September 30, 2018
Efficiency Ratio:
Non-Interest Expense (GAAP)	$	38,554			$	39,457			$	39,187			$	43,718			$	38,943
Non-GAAP adjustments:
Other real estate owned expense	(170	)		(83	)		(105	)		(108	)		(256	)
Merger related expense	(1,932	)		(570	)		-			-			-
Lease exit/disposal cost obligation	-			-			-			(466	)		129
Effect of position eliminations	-			-			-			(2,211	)		-
Non-Interest Expense for Efficiency Ratio (non-GAAP)	$	36,452			$	38,804			$	39,082			$	40,933			$	38,816
Net Interest Income (GAAP)	$	46,406			$	47,010			$	46,937			$	48,362			$	48,429
Non-GAAP adjustments:
Tax-equivalent adjustment for tax-exempt loans and investment securities	623			644			736			938			895
Non-Interest Income (GAAP)	9,165			840			8,980			9,493			9,555
Non-GAAP adjustments:
Net (gain) loss on sales of securities	(107	)		(137	)		(737	)		(25	)		58
Net loss on limited partnership investments	244			7,898			603			405			221
BOLI claim benefit	(531	)		-			(421	)		-			-
Total Revenue for Efficiency Ratio (non-GAAP)	$	55,800			$	56,255			$	56,098			$	59,173			$	59,158
Efficiency Ratio (Non-Interest Expense for Efficiency Ratio (non-GAAP)/Total Revenue for Efficiency Ratio (non-GAAP))	65.33	%		68.98	%		69.67	%		69.18	%		65.61	%
	Three Months Ended
	September 30, 2019		June 30, 2019		March 31, 2019		December 31, 2018		September 30, 2018
Pre-Provision Net Revenue ('PPNR') to Average Assets (Annualized):
Net Interest Income (GAAP)	$	46,406			$	47,010			$	46,937			$	48,362			$	48,429
Non-GAAP adjustments:
Tax-equivalent adjustment for tax-exempt loans and investment securities	623			644			736			938			895
Total tax-equivalent net interest income (A)	$	47,029			$	47,654			$	47,673			$	49,300			$	49,324
Non-Interest Income (GAAP)	9,165			840			8,980			9,493			9,555
Non-GAAP adjustments:
Net (gain) loss on sales of securities	(107	)		(137	)		(737	)		(25	)		58
Net loss on limited partnership investments	244			7,898			603			405			221
BOLI claim benefit	(531	)		-			(421	)		-			-
Non-Interest Income for PPNR (non-GAAP) (B)	$	8,771			$	8,601			$	8,425			$	9,873			$	9,834
Non-Interest Expense (GAAP)	$	38,554			$	39,457			$	39,187			$	43,718			$	38,943
Non-GAAP adjustments:
Merger related expense	(1,932	)		(570	)		-			-			-
Lease exit/disposal cost obligation	-			-			-			(466	)		129
Effect of position eliminations	-			-			-			(2,211	)		-
Non-Interest Expense for PPNR (non-GAAP) (C)	$	36,622			$	38,887			$	39,187			$	41,041			$	39,072
Total PPNR (non-GAAP) (A + B - C) :	$	19,178			$	17,368			$	16,911			$	18,132			$	20,086
Average Assets	7,255,464			7,290,101			7,371,438			7,244,396			7,191,072
PPNR to Average Assets (Annualized)	1.06	%		0.95	%		0.92	%		1.00	%		1.12	%
Return on Average Tangible Common Equity (Annualized):
Net Income (Loss) (GAAP)	$	12,730			$	(3,248	)		$	12,657			$	12,165			$	16,308
Non-GAAP adjustments:
Intangible assets amortization, tax effected at 21%	294			307			332			332			228
Net Income (Loss) excluding intangible assets amortization, tax effected at 21%	$	13,024			$	(2,941	)		$	12,989			$	12,497			$	16,536
Average stockholders' equity (non-GAAP)	$	722,342			$	724,555			$	709,905			$	706,124			$	704,306
Average goodwill & other intangible assets (non-GAAP)	122,132			119,287			122,597			121,614			119,009
Average tangible common stockholders' equity (non-GAAP)	$	600,210			$	605,268			$	587,308			$	584,510			$	585,297
Return (Loss) on Average Tangible Common Equity (non-GAAP)	8.68	%		(1.94	)%		8.85	%		8.55	%		11.30	%

Investor Relations Contact:		Media Relations Contact:
Marliese L. Shaw		Adam J. Jeamel
Executive Vice President, Investor Relations Officer		Regional President, Corporate Communications
United Bank		United Bank
860-291-3622		860-291-3765
[email protected]		[email protected]

Source: United Financial Bancorp, Inc.