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Press Release

United Financial Bancorp, Inc. Announces Record Annual Earnings of $59.9 Million; $1.17 Earnings Per Share

Company Release - 1/22/2019 4:31 PM ET

HARTFORD, Conn., Jan. 22, 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 December 31, 2018.

The Company reported net income of $12.2 million, or $0.24 per diluted share, for the quarter ended December 31, 2018, compared to net income for the linked quarter of $16.3 million, or $0.32 per diluted share. The Company reported net income of $9.5 million, or $0.19 per diluted share, for the quarter ended December 31, 2017. Net income for the year ended December 31, 2018 was $59.9 million, or $1.17 per diluted share, compared to net income of $54.6 million, or $1.07 per diluted share, for the year ended December 31, 2017.

"In the fourth quarter of 2018, United Financial Bancorp, Inc. delivered annualized linked quarter loan growth of 9% and deposit growth of 12%, while maintaining pristine asset quality and a strong balance sheet," stated William H.W. Crawford, IV, Chief Executive Officer and President of the Company and the Bank. "I would like to thank our United employees for their continued steadfast focus on serving the needs of our customers and communities."

Balance Sheet

Assets totaled $7.36 billion at December 31, 2018, increasing $149.4 million from $7.21 billion at September 30, 2018.  At December 31, 2018, total loans were $5.66 billion, representing an increase of $127.9 million, or 2.3%, from the linked quarter. Changes to loan balances during the fourth quarter of 2018 were highlighted by a $40.5 million, or 10.9%, increase in other consumer loans, a $30.2 million, or 2.4%, increase in residential real estate loans, a $25.7 million, or 3.0%, increase in commercial business loans, a $22.2 million, or 1.2%, increase in investor non-owner occupied commercial real estate loans, a $9.3 million, or 11.8%, increase in commercial construction loans, and an $8.5 million, or 2.0%, increase in owner-occupied commercial real estate loans. Slightly offsetting the increased loan balances above was a $12.1 million, or 37.0%, decrease in residential construction loans from the linked quarter. Loans held for sale also decreased $8.2 million, or 9.4%, from the linked quarter. Total cash and cash equivalents increased $19.4 million, or 24.6%, from the linked quarter.

Deposits totaled $5.67 billion at December 31, 2018 and increased by $170.2 million, or 3.1%, from $5.50 billion at September 30, 2018. The increase in deposits was positively impacted by the Webster Bank deposit acquisition of $109.4 million that occurred in the beginning of October 2018. Increases in deposit balances during the fourth quarter of 2018 were highlighted by a $121.2 million, or 7.3%, increase in certificates of deposit balances, a $40.6 million, or 5.3%, increase in demand deposit balances, a $17.1 million, or 3.6%, increase in savings deposit balances, and an $11.8 million, or 1.4%, increase in NOW checking account balances. Slightly offsetting these increases was a $20.5 million, or 1.2%, decrease in money market account balances. The growth in the certificate of deposit account balances was attributable to the success of two retail pricing campaigns executed during the fourth quarter.

Total Federal Home Loan Bank advances decreased by $15.7 million, or 1.9%, over the linked quarter as the Company utilized excess cash from deposit growth to pay off maturing advances.

Net Interest Income

Net interest income decreased by $67,000, or 0.1%, on a linked quarter basis, to $48.4 million, primarily attributable to an increase in loan interest income of $2.2 million, or 3.5%, to $63.2 million, offset by an increase in interest expense of $2.1 million, or 9.6%, to $23.9 million. Average interest-earning assets increased by $37.3 million, or 0.6%, on a linked quarter basis, primarily due to growth in average loan balances, which increased by $61.8 million, or 1.1%. Average loan balance growth was driven by a $38.3 million, or 10.9%, increase in average other consumer loans, a $21.7 million, or 1.6%, increase in average residential real estate loans, and a $19.4 million, or 2.3%, increase in average commercial business loans. Slightly offsetting the increases was a $17.6 million, or 0.8%, decrease in average commercial real estate loans.

Interest expense increased by $2.1 million, or 9.6%, to $23.9 million during the fourth quarter of 2018, from $21.8 million in the linked quarter. Average interest-bearing deposit balances increased by $141.5 million, or 3.0%, on a linked quarter basis, primarily driven by a $68.3 million, or 2.7%, increase in average NOW and money market account balances, a $68.0 million, or 4.0%, increase in average certificates of deposits, and a $5.2 million, or 1.0%, increase in average savings account balances. Average non-interest bearing deposits increased by $18.4 million, or 2.5%, as compared to the linked quarter. Average Federal Home Loan Bank of Boston advances decreased by $111.2 million, or 13.2%, as the Company used funds obtained through deposit growth to pay down the maturing advances. The overall growth observed in average account balances is attributable to the continued success of the Company's retail deposit acquisition strategies.

The tax-equivalent net interest margin decreased by two basis points to 2.90% in the fourth quarter of 2018, from 2.92% in the linked period. The decline in the net interest margin was driven by a 14 basis point increase in the cost of interest-bearing liabilities, which was partially offset by a ten basis point increase in the yield of interest-earning assets. The interest-earning asset yield improvement was largely driven by a 33 basis point increase in the yield on commercial business loans, a 25 basis point increase in the yield on home equity loans, an eight basis point increase in the yield on residential real estate loans, and a three basis point increase in the yield on commercial real estate loans. The total cost of funds increased by 12 basis points to 1.48% in the fourth quarter of 2018 driven by a 16 basis point increase in the cost of interest-bearing deposits and a 17 basis point increase in the cost of Federal Home Loan Bank of Boston advances.

Provision for Loan Losses

The provision for loan losses totaled $2.6 million for the quarter ended December 31, 2018 as compared to $2.0 million for the linked quarter. Net charge-offs for the quarter ended December 31, 2018 totaled $891,000, or 0.06%, 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 September 30, 2018. Factors considered in the provision for loan losses include, but are not limited to, historical charge-offs, the composition of the portfolio, the current level of non-performing loans and charge-offs, local and national economic and credit conditions, the direction of real estate values and delinquency trends.

Non-Interest Income

Total non-interest income decreased slightly by $62,000, or 0.6%, to $9.5 million for the quarter ended December 31, 2018 from $9.6 million in the linked quarter. The decrease in the fourth quarter's non-interest income was driven primarily by decreases in income from mortgage banking activities and other income. Additionally, there were higher losses on limited partnership investments as compared to the linked quarter, which contributed to the overall decrease in non-interest income. These decreases were offset primarily by an increase in service charges and fees, as well as bank-owned life insurance income.

Non-Interest Expense

Non-interest expense for the quarter ended December 31, 2018 totaled $43.7 million and increased by $4.8 million, or 12.3%, from the linked quarter. The increase in non-interest expense during the quarter was primarily due to increases in salaries and employee benefits, occupancy and equipment, and the core deposit intangible amortization. These increases were primarily offset by decreases in other expenses and FDIC insurance assessment expenses as compared to the linked quarter.

The primary driver of the increase in non-interest expense occurred late in the quarter as the Company shifted its mortgage banking strategy to reflect our customers' preference to conduct business with us over the internet and through our direct sales channel. Consequently, we reduced staffing in our mortgage division, resulting in a $2.2 million severance expense (pre-tax) in the quarter ending December 31, 2018. Other notable increases in the quarter included a change in Company policy related to the carryover of unused vacation days by employees year-over-year, resulting in the Company recording $439,000 of additional expense. The Company also recorded lease impairment expense of $466,000 as a result of branch consolidation. Additionally, the Webster Bank branch acquisition also closed in the fourth quarter, resulting in $371,000 of other expenses related to this transaction.

Asset Quality

Asset quality remained strong and stable for the period, with non-performing assets increasing by $3.0 million to $32.1 million at December 31, 2018 from $29.0 million at September 30, 2018. The ratio of non-performing assets to total assets for the quarter ended December 31, 2018 was 0.44%, as compared to 0.40% in the linked quarter.

Capital

The Company reported Tangible Common Equity ("TCE") of $589.7 million, or 8.1% of average assets, for the quarter ended December 31, 2018. Tangible book value per share decreased slightly to $11.54 at December 31, 2018 from $11.55 at September 30, 2018. The decrease was primarily driven by the cash dividend payment to shareholders of $0.12 per share, an increase in intangibles associated with the Webster Bank branch acquisition, and the continued repurchase of Company stock during the quarter, which was slightly offset by the Company's net income of $12.2 million. Book value per share at December 31, 2018 was $13.94, as compared to $13.88 in the linked quarter.

Dividend

The Board of Directors declared a cash dividend on the Company’s common stock of $0.12 per share to shareholders of record at the close of business on February 1, 2019 and payable on February 13, 2019. This dividend equates to a 3.04% annualized yield based on the $15.78 average closing price of the Company’s common stock in the fourth quarter of 2018. The Company has paid dividends for 51 consecutive quarters.

Investor Conference Call

United Financial Bancorp, Inc. will host a conference call on Wednesday, January 23, 2019 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 1-800-544-8281. A telephone replay of the call will be available through February 6, 2019 by calling 1-877-344-7529 and entering conference number 10127439. 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.

Annual Meeting

The Board of Directors approved May 13, 2019 as the date of the Company's 2019 Annual Meeting of Shareholders (the "Annual Meeting") and set the record date on which the Company's shareholders who will be eligible to vote at the Annual Meeting as the close of business on March 4, 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 December 31, 2018, the Company had $7.36 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 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
(Unaudited)

  For the Three Months Ended
December 31,
 For the Year Ended
December 31,
  2018 2017 2018 2017
Interest and dividend income: (In thousands, except share data)
Loans $63,227  $52,758  $237,026  $200,734 
Securities-taxable interest 5,705  5,643  22,994  22,550 
Securities-non-taxable interest 2,339  2,571  9,469  9,679 
Securities-dividends 702  669  2,823  2,902 
Interest-bearing deposits 250  86  726  389 
Total interest and dividend income 72,223  61,727  273,038  236,254 
Interest expense:        
Deposits 18,183  9,958  57,841  33,565 
Borrowed funds 5,678  4,920  23,682  18,447 
Total interest expense 23,861  14,878  81,523  52,012 
Net interest income 48,362  46,849  191,515  184,242 
Provision for loan losses 2,618  2,250  8,914  9,396 
Net interest income after provision for loan losses 45,744  44,599  182,601  174,846 
Non-interest income:        
Service charges and fees 7,447  6,031  26,771  25,374 
Net gain from sales of securities 25  72  145  782 
Income from mortgage banking activities 698  1,184  4,759  5,539 
Bank-owned life insurance income 1,517  1,939  6,294  5,462 
Net loss on limited partnership investments (405) (1,441) (2,176) (3,023)
Other income (loss) 211  (204) 904  431 
Total non-interest income 9,493  7,581  36,697  34,565 
Non-interest expense:        
Salaries and employee benefits 25,341  20,752  91,295  80,061 
Service bureau fees 2,309  2,304  8,901  9,263 
Occupancy and equipment 6,384  5,036  20,488  16,902 
Professional fees 1,136  996  4,418  4,305 
Marketing and promotions 1,108  1,011  4,101  4,047 
FDIC insurance assessments 611  821  2,740  3,076 
Core deposit intangible amortization 420  336  1,350  1,411 
Other 6,409  5,981  24,474  23,685 
Total non-interest expense 43,718  37,237  157,767  142,750 
Income before income taxes 11,519  14,943  61,531  66,661 
Provision (benefit) for income taxes (646) 5,442  1,625  12,043 
Net income $12,165  $9,501  $59,906  $54,618 
         
Net income per share:        
Basic $0.24  $0.19  $1.18  $1.09 
Diluted $0.24  $0.19  $1.17  $1.07 
Weighted-average shares outstanding:        
Basic 50,613,498  50,392,382  50,555,212  50,283,071 
Diluted 50,970,000  51,024,881  51,012,239  50,922,652 


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

  For the Three Months Ended
  December 31,
2018
 September 30,
2018
 June 30,
2018
 March 31,
2018
 December 31,
2017
Interest and dividend income: (In thousands, except share data)
Loans $63,227  $61,061  $57,958  $54,780  $52,758 
Securities-taxable interest 5,705  5,822  5,969  5,498  5,643 
Securities-non-taxable interest 2,339  2,347  2,354  2,429  2,571 
Securities-dividends 702  748  736  637  669 
Interest-bearing deposits 250  213  113  150  86 
Total interest and dividend income 72,223  70,191  67,130  63,494  61,727 
Interest expense:          
Deposits 18,183  15,767  12,864  11,027  9,958 
Borrowed funds 5,678  5,995  6,085  5,924  4,920 
Total interest expense 23,861  21,762  18,949  16,951  14,878 
Net interest income 48,362  48,429  48,181  46,543  46,849 
Provision for loan losses 2,618  2,007  2,350  1,939  2,250 
Net interest income after provision for loan losses 45,744  46,422  45,831  44,604  44,599 
Non-interest income:          
Service charges and fees 7,447  6,623  6,542  6,159  6,031 
Net gain (loss) from sales of securities 25  (58) 62  116  72 
Income from mortgage banking activities 698  1,486  846  1,729  1,184 
Bank-owned life insurance income 1,517  1,460  1,671  1,646  1,939 
Net loss on limited partnership investments (405) (221) (960) (590) (1,441)
Other income (loss) 211  265  199  229  (204)
Total non-interest income 9,493  9,555  8,360  9,289  7,581 
Non-interest expense:          
Salaries and employee benefits 25,341  22,643  22,113  21,198  20,752 
Service bureau fees 2,309  2,209  2,165  2,218  2,304 
Occupancy and equipment 6,384  4,487  4,668  4,949  5,036 
Professional fees 1,136  1,013  1,105  1,164  996 
Marketing and promotions 1,108  1,119  1,189  685  1,011 
FDIC insurance assessments 611  655  735  739  821 
Core deposit intangible amortization 420  288  305  337  336 
Other 6,409  6,529  6,090  5,446  5,981 
Total non-interest expense 43,718  38,943  38,370  36,736  37,237 
Income before income taxes 11,519  17,034  15,821  17,157  14,943 
Provision (benefit) for income taxes (646) 726  175  1,370  5,442 
Net income $12,165  $16,308  $15,646  $15,787  $9,501 
           
Net income per share:          
Basic $0.24  $0.32  $0.31  $0.31  $0.19 
Diluted $0.24  $0.32  $0.31  $0.31  $0.19 
Weighted-average shares outstanding:          
Basic 50,613,498  50,624,832  50,504,273  50,474,942  50,392,382 
Diluted 50,970,000  51,104,776  50,974,283  50,996,596  51,024,881 


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

  December 31,
2018
 September 30,
2018
 June 30,
2018
 March 31,
2018
 December 31,
2017
ASSETS (In thousands)
Cash and cash equivalents:          
Cash and due from banks $36,434  $48,786  $62,188  $45,332  $56,661 
Short-term investments 61,530  29,809  46,987  23,910  32,007 
Total cash and cash equivalents 97,964  78,595  109,175  69,242  88,668 
Available for sale securities – At fair value 973,347  972,035  1,006,135  1,031,277  1,050,787 
Held to maturity securities – At amortized cost         13,598 
Loans held for sale 78,788  86,948  85,458  63,394  114,073 
Loans:          
Commercial real estate loans:          
Owner-occupied 443,398  434,906  418,338  442,938  445,820 
Investor non-owner occupied 1,911,070  1,888,848  1,927,960  1,842,898  1,854,459 
Construction 87,493  78,235  82,883  84,717  78,083 
Total commercial real estate loans 2,441,961  2,401,989  2,429,181  2,370,553  2,378,362 
Commercial business loans 886,770  861,030  841,142  846,182  840,312 
Consumer loans:          
Residential real estate 1,313,373  1,283,126  1,252,001  1,235,197  1,204,401 
Home equity 583,454  579,907  588,638  582,285  583,180 
Residential construction 20,632  32,750  32,063  37,579  40,947 
Other consumer 410,249  369,781  332,402  310,439  292,781 
Total consumer loans 2,327,708  2,265,564  2,205,104  2,165,500  2,121,309 
Total loans 5,656,439  5,528,583  5,475,427  5,382,235  5,339,983 
Net deferred loan costs and premiums 17,786  16,603  15,502  14,724  14,794 
Allowance for loan losses (51,636) (49,909) (49,163) (47,915) (47,099)
Loans receivable - net 5,622,589  5,495,277  5,441,766  5,349,044  5,307,678 
Federal Home Loan Bank of Boston stock, at cost 41,407  42,032  46,734  49,895  50,194 
Accrued interest receivable 24,823  25,485  23,209  22,333  22,332 
Deferred tax asset, net 32,706  31,473  30,190  28,710  25,656 
Premises and equipment, net 68,657  67,612  67,614  67,619  67,508 
Goodwill 116,769  115,281  115,281  115,281  115,281 
Core deposit intangible asset 6,027  3,561  3,849  4,154  4,491 
Cash surrender value of bank-owned life insurance 193,429  181,928  180,490  179,556  148,300 
Other assets 100,368  107,271  98,695  88,169  105,593 
Total assets $7,356,874  $7,207,498  $7,208,596  $7,068,674  $7,114,159 
           
  December 31,
2018
 September 30,
2018
 June 30,
2018
 March 31,
2018
 December 31,
2017
LIABILITIES AND STOCKHOLDERS’ EQUITY          
Liabilities:          
Deposits:          
Non-interest-bearing $799,785  $759,210  $770,982  $753,575  $778,576 
Interest-bearing 4,870,814  4,741,153  4,622,394  4,528,935  4,419,645 
Total deposits 5,670,599  5,500,363  5,393,376  5,282,510  5,198,221 
Mortgagors’ and investor escrow accounts 4,685  9,597  14,526  11,096  7,545 
Federal Home Loan Bank advances and other borrowings 899,626  926,592  1,041,896  1,030,735  1,165,054 
Accrued expenses and other liabilities 69,446  61,128  56,921  51,333  50,011 
Total liabilities 6,644,356  6,497,680  6,506,719  6,375,674  6,420,831 
Total stockholders’ equity 712,518  709,818  701,877  693,000  693,328 
Total liabilities and stockholders’ equity $7,356,874  $7,207,498  $7,208,596  $7,068,674  $7,114,159 


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,
 2018
 September 30,
 2018
 June 30,
 2018
 March 31,
 2018
 December 31,
 2017
Share Data:         
Basic net income per share$0.24  $0.32  $0.31  $0.31  $0.19 
Diluted net income per share0.24  0.32  0.31  0.31  0.19 
Dividends declared per share0.12  0.12  0.12  0.12  0.12 
Tangible book value per share$11.54  $11.55  $11.40  $11.25  $11.24 
Key Statistics:         
Total revenue$57,855  $57,984  $56,541  $55,832  $54,430 
Total non-interest expense43,718  38,943  38,370  36,736  37,327 
Average earning assets6,708,701  6,671,424  6,584,938  6,568,168  6,480,966 
Key Ratios:         
Return on average assets (annualized)0.67% 0.91% 0.88% 0.89% 0.54%
Return on average equity (annualized)6.89% 9.26% 9.00% 9.15% 5.50%
Tax-equivalent net interest margin (annualized)2.90% 2.92% 2.97% 2.90% 2.98%
Residential Mortgage Production:         
Dollar volume (total)$128,209  $143,673  $140,409  $94,433  $135,522 
Mortgages originated for purchases101,266  111,555  110,351  63,193  83,181 
Loans sold108,663  99,372  99,637  99,899  94,738 
Income from mortgage banking activities698  1,486  846  1,729  1,184 
Non-performing Assets:         
Residential real estate$13,217  $11,949  $11,221  $11,663  $11,824 
Home equity4,735  4,005  4,607  4,698  4,968 
Investor-owned commercial real estate1,131  1,525  2,400  2,863  1,821 
Owner-occupied commercial real estate2,450  1,202  2,176  2,326  1,664 
Construction199  243  250  273  1,398 
Commercial business944  985  1,196  1,579  1,477 
Other consumer1,030  597  237  34  35 
Non-accrual loans23,706  20,506  22,087  23,436  23,187 
Troubled debt restructured – non-accruing6,971  6,706  7,330  8,308  8,475 
Total non-performing loans30,677  27,212  29,417  31,744  31,662 
Other real estate owned1,389  1,808  1,855  1,935  2,154 
Total non-performing assets$32,066  $29,020  $31,272  $33,679  $33,816 
Non-performing loans to total loans0.54% 0.49% 0.54% 0.59% 0.59%
Non-performing assets to total assets0.44% 0.40% 0.43% 0.48% 0.48%
Allowance for loan losses to non-performing loans168.32% 183.41% 167.12% 150.94% 148.76%
Allowance for loan losses to total loans0.91% 0.90% 0.90% 0.89% 0.88%
Non-GAAP Ratios: (1)         
Non-interest expense to average assets (annualized)2.41% 2.17% 2.16% 2.08% 2.13%
Efficiency ratio (2)69.18% 65.61% 65.18% 63.97% 63.53%
Cost of funds (annualized) (3)1.48% 1.36% 1.20% 1.07% 0.96%
Total revenue growth rate(0.22)% 2.55% 1.27% 2.58% (1.38)%
Total revenue growth rate (annualized)(0.89)% 10.21% 5.08% 10.30% (5.54)%
Average earning asset growth rate0.56% 1.31% 0.26% 1.35% 0.89%
Average earning asset growth rate (annualized)2.24% 5.25% 1.02% 5.38% 3.56%
Return on average tangible common equity (annualized) (2)8.55% 11.30% 11.03% 11.25% 6.81%
Pre-provision net revenue to average assets (2)1.00% 1.12% 1.14% 1.15% 1.19%


(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)  Calculations of these non-GAAP metrics are provided after the reconciliations of non-GAAP financial measures and appear on page F-10 through page F-12.
(3)  The cost of funds ratio represents interest incurred on liabilities as a percentage of average non-interest bearing deposits and interest-bearing liabilities.


United Financial Bancorp, Inc. and Subsidiaries

Average Balance Sheets, Interest and Yields/Costs
(Dollars In Thousands)
(Unaudited)

 For the Three Months Ended
 December 31, 2018 December 31, 2017
 Average
Balance
 Interest
and
Dividends
 Yield/Cost Average
Balance
 Interest
and
Dividends
 Yield/Cost
Interest-earning assets:           
Residential real estate$1,397,669  $12,929  3.70% $1,310,352  $11,343  3.47%
Commercial real estate2,302,741  26,085  4.43  2,234,878  23,089  4.04 
Construction113,617  1,405  4.84  122,151  1,453  4.66 
Commercial business861,311  10,481  4.76  813,457  7,994  3.85 
Home equity585,178  7,848  5.32  569,021  6,293  4.39 
Other consumer390,237  4,931  5.01  278,465  3,309  4.71 
Investment securities967,881  8,564  3.53  1,074,840  9,713  3.60 
Federal Home Loan Bank stock40,428  665  6.58  47,964  564  4.71 
Other earning assets49,639  253  2.02  29,838  86  1.15 
Total interest-earning assets6,708,701  73,161  4.31  6,480,966  63,844  3.89 
Allowance for loan losses(50,754)     (46,880)    
Non-interest-earning assets586,449      542,596     
Total assets$7,244,396      $6,976,682     
Interest-bearing liabilities:           
NOW and money market$2,583,982  $9,641  1.48% $2,125,177  $4,286  0.80%
Savings506,880  76  0.06  517,993  77  0.06 
Certificates of deposit1,759,382  8,466  1.91  1,765,007  5,595  1.26 
Total interest-bearing deposits4,850,244  18,183  1.49  4,408,177  9,958  0.90 
Federal Home Loan Bank advances732,995  4,307  2.30  954,159  3,538  1.45 
Other borrowings107,365  1,371  5.00  117,578  1,382  4.60 
Total interest-bearing liabilities5,690,604  23,861  1.66  5,479,914  14,878  1.07 
Non-interest-bearing deposits768,916      740,007     
Other liabilities78,752      65,757     
Total liabilities6,538,272      6,285,678     
Stockholders’ equity706,124      691,004     
Total liabilities and stockholders’ equity$7,244,396      $6,976,682     
Net interest-earning assets$1,018,097      $1,001,052     
Tax-equivalent net interest income  49,300      48,966   
Tax-equivalent net interest rate spread (1)    2.65%     2.82%
Tax-equivalent net interest margin (2)    2.90%     2.98%
Average interest-earning assets to average interest-bearing liabilities    117.89%     118.27%
Less tax-equivalent adjustment  938      2,117   
Net interest income  $48,362      $46,849   


(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
 December 31, 2018 September 30, 2018
 Average
Balance
 Interest
and
Dividends
 Yield/Cost Average
Balance
 Interest
and
Dividends
 Yield/Cost
Interest-earning assets:           
Residential real estate$1,397,669  $12,929  3.70% $1,375,948  $12,451  3.62%
Commercial real estate2,302,741  26,085  4.43  2,320,375  26,105  4.40 
Construction113,617  1,405  4.84  114,068  1,379  4.73 
Commercial business861,311  10,481  4.76  841,936  9,531  4.43 
Home equity585,178  7,848  5.32  584,706  7,471  5.07 
Other consumer390,237  4,931  5.01  351,892  4,532  5.11 
Investment securities967,881  8,564  3.53  995,405  8,686  3.48 
Federal Home Loan Bank stock40,428  665  6.58  45,016  715  6.35 
Other earning assets49,639  253  2.02  42,078  216  2.04 
Total interest-earning assets6,708,701  73,161  4.31  6,671,424  71,086  4.21 
Allowance for loan losses(50,754)     (49,823)    
Non-interest-earning assets586,449      569,471     
Total assets$7,244,396      $7,191,072     
Interest-bearing liabilities:           
NOW and money market$2,583,982  $9,641  1.48% $2,515,660  $8,461  1.33%
Savings506,880  76  0.06  501,700  75  0.06 
Certificates of deposit1,759,382  8,466  1.91  1,691,382  7,231  1.70 
Total interest-bearing deposits4,850,244  18,183  1.49  4,708,742  15,767  1.33 
Federal Home Loan Bank advances732,995  4,307  2.30  844,207  4,591  2.13 
Other borrowings107,365  1,371  5.00  111,760  1,404  4.92 
Total interest-bearing liabilities5,690,604  23,861  1.66  5,664,709  21,762  1.52 
Non-interest-bearing deposits768,916      750,503     
Other liabilities78,752      71,554     
Total liabilities6,538,272      6,486,766     
Stockholders’ equity706,124      704,306     
Total liabilities and stockholders’ equity$7,244,396      $7,191,072     
Net interest-earning assets$1,018,097      $1,006,715     
Tax-equivalent net interest income  49,300      49,324   
Tax-equivalent net interest rate spread (1)    2.65%     2.69%
Tax-equivalent net interest margin (2)    2.90%     2.92%
Average interest-earning assets to average interest-bearing liabilities    117.89%     117.77%
Less tax-equivalent adjustment  938      895   
Net interest income  $48,362      $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 Years Ended
 December 31, 2018 December 31, 2017
 Average
Balance
 Interest
and
Dividends
 Yield/Cost Average
Balance
 Interest
and
Dividends
 Yield/Cost
Interest-earning assets:           
Residential real estate$1,356,746  $48,905  3.60% $1,291,852  $43,422  3.36%
Commercial real estate2,303,075  100,608  4.31  2,175,197  88,716  4.02 
Construction115,507  5,440  4.65  129,636  5,714  4.35 
Commercial business840,594  37,533  4.40  779,262  30,504  3.86 
Home equity584,204  28,903  4.95  542,579  23,168  4.27 
Other consumer341,295  17,326  5.08  243,631  11,890  4.88 
Investment securities1,005,823  34,869  3.46  1,083,616  38,078  3.51 
Federal Home Loan Bank stock46,475  2,689  5.78  51,735  2,195  4.24 
Other earning assets40,078  740  1.85  34,484  389  1.13 
Total interest-earning assets6,633,797  277,013  4.15  6,331,992  244,076  3.83 
Allowance for loan losses(49,255)     (45,480)    
Non-interest-earning assets566,511      526,914     
Total assets$7,151,053      $6,813,426     
Interest-bearing liabilities:           
NOW and money market$2,377,309  $29,157  1.23% $2,002,146  $13,282  0.66%
Savings509,316  301  0.06  529,006  312  0.06 
Certificates of deposit1,748,873  28,383  1.62  1,731,434  19,971  1.15 
Total interest-bearing deposits4,635,498  57,841  1.25  4,262,586  33,565  0.79 
Federal Home Loan Bank advances891,626  18,135  2.01  978,673  12,763  1.29 
Other borrowings112,280  5,547  4.87  133,364  5,684  4.20 
Total interest-bearing liabilities5,639,404  81,523  1.44  5,374,623  52,012  0.96 
Non-interest-bearing deposits742,990      695,713     
Other liabilities69,582      67,810     
Total liabilities6,451,976      6,138,146     
Stockholders’ equity699,077      675,280     
Total liabilities and stockholders’ equity$7,151,053      $6,813,426     
Net interest-earning assets$994,393      $957,369     
Tax-equivalent net interest income  195,490      192,064   
Tax-equivalent net interest rate spread (1)    2.71%     2.87%
Tax-equivalent net interest margin (2)    2.92%     3.01%
Average interest-earning assets to average interest-bearing liabilities    117.63%     117.81%
Less tax-equivalent adjustment  3,975      7,822   
Net interest income  $191,515      $184,242   


(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 Years Ended
 December 31,
 2018
 September 30,
 2018
 June 30,
 2018
 March 31,
 2018
 December 31,
2017
 December 31,
 2018
 December 31,
2017
 (Dollars in thousands)   
Net Income (GAAP)$12,165  $16,308  $15,646  $15,787  $9,501  $59,906  $54,618 
Non-GAAP adjustments:             
Non-interest income(25) 58  (271) (342) 745  (580) 27 
Non-interest expense2,677  (129) 215    536  2,763  536 
Income tax (benefit) expense related to tax reform(1,717)       1,609  (1,717) 1,609 
Related income tax (benefit) expense(557) 15  (93) 72  2,074  (563) 2,325 
Net adjustment378  (56) (149) (270) 4,964  (97) 4,497 
Total net income (non-GAAP)$12,543  $16,252  $15,497  $15,517  $14,465  $59,809  $59,115 
              
Non-interest income (GAAP)$9,493  $9,555  $8,360  $9,289  $7,581  $36,697  $34,565 
Non-GAAP adjustments:             
Net loss (gain) on sales of securities(25) 58  (62) (116) (72) (145) (782)
Limited partnership writedown (1)        1,214    1,214 
Loss on sale of premises and equipment        401    401 
BOLI claim benefit    (209) (226) (798) (435) (806)
Net adjustment(25) 58  (271) (342) 745  (580) 27 
Total non-interest income (non-GAAP)9,468  9,613  8,089  8,947  8,326  36,117  34,592 
Total net interest income48,362  48,429  48,181  46,543  46,849  191,515  184,242 
Total revenue (non-GAAP)$57,830  $58,042  $56,270  $55,490  $55,175  $227,632  $218,834 
              
Non-interest expense (GAAP)$43,718  $38,943  $38,370  $36,736  $37,237  $157,767  $142,750 
Non-GAAP adjustments:             
Lease exit/disposal cost obligation(466) 129  (215)   (536) (552) (536)
Effect of position eliminations(2,211)         (2,211)  
Net adjustment(2,677) 129  (215)   (536) (2,763) (536)
Total non-interest expense (non-GAAP)$41,041  $39,072  $38,155  $36,736  $36,701  $155,004  $142,214 
              
Total loans$5,656,439  $5,528,583  $5,475,427  $5,382,235  $5,339,983  $5,656,439  $5,339,983 
Non-covered loans (2)(675,112) (708,621) (729,947) (771,802) (780,776) (675,112) (780,776)
Total covered loans$4,981,327  $4,819,962  $4,745,480  $4,610,433  $4,559,207  $4,981,327  $4,559,207 
Allowance for loan losses$51,636  $49,909  $49,163  $47,915  $47,099  $51,636  $47,099 
Allowance for loan losses to total loans0.91% 0.90% 0.90% 0.89% 0.88% 0.91% 0.88%
Allowance for loan losses to total covered loans1.04% 1.04% 1.04% 1.04% 1.03% 1.04% 1.03%


(1)  Represents limited partnership writedowns related to the reduction of the Company's tax rate in December 2017.
(2)  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 Years Ended
  December 31,
 2018
 September 30,
 2018
 June 30,
 2018
 March 31,
 2018
 December 31,
2017
 December 31,
 2018
 December 31,
2017
   
Efficiency Ratio:              
Non-Interest Expense (GAAP) $43,718  $38,943  $38,370  $36,736  $37,237  $157,767  $142,750 
Non-GAAP adjustments:              
Other real estate owned expense (108) (256) (163) (167) (157) (694) (764)
Lease exit/disposal cost obligation (466) 129  (215)   (536) (552) (536)
Effect of position eliminations (2,211)         (2,211)  
Non-Interest Expense for Efficiency Ratio (non-GAAP) $40,933  $38,816  $37,992  $36,569  $36,544  $154,310  $141,450 
               
Net Interest Income (GAAP) $48,362  $48,429  $48,181  $46,543  $46,849  $191,515  $184,242 
Non-GAAP adjustments:              
Tax-equivalent adjustment for tax-exempt loans and investment securities 938  895  1,059  1,083  2,117  3,975  7,822 
               
Non-Interest Income (GAAP) 9,493  9,555  8,360  9,289  7,581  36,697  34,565 
Non-GAAP adjustments:              
Net (gain) loss on sales of securities (25) 58  (62) (116) (72) (145) (782)
Net loss on limited partnership investments 405  221  960  590  1,441  2,176  3,023 
Loss on sale of premises and equipment         401    401 
BOLI claim benefit     (209) (226) (798) (435) (806)
Total Revenue for Efficiency Ratio (non-GAAP) $59,173  $59,158  $58,289  $57,163  $57,519  $233,783  $228,465 
               
Efficiency Ratio (Non-Interest Expense for Efficiency Ratio (non-GAAP)/Total Revenue for Efficiency Ratio (non-GAAP)) 69.18% 65.61% 65.18% 63.97% 63.53% 66.01% 61.91%
               
  Three Months Ended Years Ended
  December 31,
 2018
 September 30,
 2018
 June 30,
 2018
 March 31,
 2018
 December 31,
2017
 December 31,
 2018
 December 31,
2017
   
Pre-Provision Net Revenue ("PPNR") to Average Assets (Annualized):        
Net Interest income (GAAP) $48,362  $48,429  $48,181  $46,543  $46,849  $191,515  $184,242 
Non-GAAP adjustments:              
Tax-equivalent adjustment for tax-exempt loans and investment securities 938  895  1,059  1,083  2,117  3,975  7,822 
Total tax-equivalent net interest income (A) $49,300  $49,324  $49,240  $47,626  $48,966  $195,490  $192,064 
               
Non Interest Income (GAAP) 9,493  9,555  8,360  9,289  7,581  36,697  34,565 
Non-GAAP adjustments:              
Net (gain) loss on sales of securities (25) 58  (62) (116) (72) (145) (782)
Net loss on limited partnership investments 405  221  960  590  1,441  2,176  3,023 
Loss on sale of premises and equipment         401    401 
BOLI claim benefit     (209) (226) (798) (435) (806)
Non-Interest Income for PPNR (non-GAAP) (B) $9,873  $9,834  $9,049  $9,537  $8,553  $38,293  $36,401 
               
Non-Interest Expense (GAAP) $43,718  $38,943  $38,370  $36,736  $37,237  $157,767  $142,750 
Non-GAAP adjustments:              
Lease exit/disposal cost obligation (466) 129  (215)   (536) (552) (536)
Effect of position eliminations (2,211)         (2,211)  
Non-Interest Expense for PPNR (non-GAAP) (C) $41,041  $39,072  $38,155  $36,736  $36,701  $155,004  $142,214 
               
Total PPNR (non-GAAP)  (A + B - C) : $18,132  $20,086  $20,134  $20,427  $20,818  $78,779  $86,251 
Average Assets 7,244,396  7,191,072  7,091,721  7,074,721  6,976,682  7,151,053  6,813,426 
PPNR to Average Assets (Annualized) 1.00% 1.12% 1.14% 1.15% 1.19% 1.10% 1.27%
               
Return on Average Tangible Common Equity (Annualized):        
Net Income (GAAP) $12,165  $16,308  $15,646  $15,787  $9,501  $59,906  $54,618 
Non-GAAP adjustments:              
Intangible assets amortization, tax effected (1) 332  228  241  266  219  1,067  917 
Net Income excluding intangible assets amortization, tax effected (1) $12,497  $16,536  $15,887  $16,053  $9,720  $60,973  $55,535 
Average stockholders' equity (non-GAAP) $706,124  $704,306  $695,301  $690,345  $691,004  $699,077  $675,280 
Average goodwill & other intangible assets (non-GAAP) 121,614  119,009  119,288  119,611  119,962  119,883  120,465 
Average tangible common stockholders' equity (non-GAAP) $584,510  $585,297  $576,013  $570,734  $571,042  $579,194  $554,815 
Return on Average Tangible Common Equity (non-GAAP) 8.55% 11.30% 11.03% 11.25% 6.81% 10.53% 10.01%


(1)  Intangible assets amortization is tax effected at 21% for quarters and year ended 2018, and at 35% for all prior periods due to the Tax Cuts and Jobs Act of 2017 that was signed into law in December 2017, lowering the corporate federal tax rate from 35% to 21%.


        
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]
        

United Financial Bancorp, Inc.

Source: United Financial Bancorp, Inc.