EX-99.1 2 ex99-1.htm EX-99.1
FOR IMMEDIATE RELEASE
For More Information Contact:
 
Mark A. Roberts 
 
Executive VP & CFO
 
(413) 787-1700

UNITED FINANCIAL BANCORP, INC. ANNOUNCES THIRD QUARTER EARNINGS AND DECLARES QUARTERLY CASH DIVIDEND

WEST SPRINGFIELD, MA—October 20, 2006—United Financial Bancorp, Inc. (the “Company”) (NASDAQ:UBNK), the holding company for United Bank (the “Bank”), reported net income of $1.5 million, or $0.09 per diluted share, for the third quarter of 2006 compared to a loss of $173,000 for the same period in 2005. The Company earned $4.2 million, or $0.25 per diluted share, for the nine months ended September 30, 2006 compared to $2.8 million for the 2005 period. Earnings per share data is not applicable to the 2005 periods since the Company’s initial public offering was consummated in July 2005. The 2006 results were largely influenced by growth in average earning assets, net interest margin contraction and an increase in non-interest expenses. The net loss in the third quarter of 2005 included the impact of a $3.6 million contribution to establish the United Charitable Foundation and the related tax benefit of $1.4 million.

The Company also announced a quarterly cash dividend of $0.05 per share payable on November 21, 2006 to shareholders of record as of November 7, 2006. After giving effect to the waiver of receipt of dividends paid on shares owned by United Mutual Holding Company, the Company’s mutual holding company, the dividend payout ratio will be approximately 26% of the third quarter 2006 earnings.

"Despite a challenging interest rate environment, a very competitive local market and loan and deposit pricing pressures, we were able to report solid third quarter results,” commented Richard B. Collins, President and Chief Executive Officer. “During the quarter we continued to implement strategies to grow our market share, improve our financial performance and enhance shareholder value.”
 
Financial Highlights Include:
 
 
·
Gross loans increased $96.4 million, or 15.1%, to $732.2 million at September 30, 2006 compared to $635.8 million at December 31, 2005. Loan growth was solid in all


categories reflecting a sound local economy, a stable real estate market and successful business development efforts.

 
·
Asset quality remained strong, with the ratio of non-performing loans to total loans equal to 0.27% at September 30, 2006 and December 31, 2005.

 
·
At September 30, 2006, the allowance for loan losses to total loans was 0.94% and the allowance for loan losses to non-performing loans was 342%.
 
 
·
Total deposits increased $39.0 million, or 6.0%, to $692.6 million at September 30, 2006 compared to $653.6 at December 31, 2005. Deposit growth was concentrated in transaction accounts (4.7%), money market accounts (6.7%) and certificates of deposit (14.4%).

 
·
Net interest income declined $266,000, or 3.7%, to $6.9 million for the three months ended September 30, 2006 compared to $7.2 million for the same period last year. Net interest margin contracted 23 basis points to 2.96% for the third quarter of 2006 in large part due to the flat to inverted yield curve, increasingly competitive pricing conditions for loans and deposits, a shift in deposit demand towards higher-yielding money market and time deposit accounts and the impact of increased short-term market interest rates on the cost to fund earning assets. The impact of net interest margin compression was lessened by an increase of $68.2 million, or 7.8%, in average earning assets mainly due to strong loan growth.

 
·
Total non-interest income for the third quarter of 2006 included a loss of $218,000 from sales of lower-yielding available for sale securities. Exclusive of this loss, non-interest income expanded $188,000, or 14.2%, compared to the same period last year reflecting strong growth in fee income.

 
·
Exclusive of the $3.6 million contribution to fund the United Charitable Foundation in the third quarter of 2005, non-interest expenses increased $545,000, or 10.8% to $5.6 million for the three months ended September 30, 2006. This increase is primarily attributable to costs associated with a new branch opened in 2006, expanded marketing efforts, a larger loan and deposit account base, new employees hired to support and facilitate the growth of the Company, the Company’s Employee Stock Ownership and Stock Based Incentive Plans and annual wage adjustments.



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. United Bank provides an array of financial products and services through its 12 branch offices located throughout Western Massachusetts. Through its Financial Services Group and its partnership with NFP Securities, Inc., the Bank is able to offer access to a wide range of investment and insurance products and services, as well as financial, estate and retirement strategies and products. For more information regarding the Bank’s products and services and for United Financial Bancorp, Inc. investor relations information, please visit www.bankatunited.com.

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




UNITED FINANCIAL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CONDITION (unaudited)
(Dollars in thousands, except per share amounts)
               
               
               
   
September 30,
  
December 31,
  
September 30,
  
Assets
  
2006
 
2005
 
2005
 
               
Cash and cash equivalents
  
$
20,134
  
$
15,843
  
$
22,822
  
Securities available for sale, at fair value
   
196,127
   
226,465
   
232,479
 
Securities to be held to maturity, at amortized cost (fair value:
                    
$3,274 at September 30, 2006, $3,298 at December 31, 2005
                    
and $3,371 at September 30, 2005)
    
3,293
   
3,325
   
3,378
 
Federal Home Loan Bank of Boston stock, at cost
   
8,740
   
6,588
   
6,588
 
                     
Loans:
                    
Residential mortgages
    
306,796
   
285,236
   
277,127
 
Commercial mortgages
    
171,136
   
150,099
   
140,927
 
Construction loans
    
46,970
   
28,872
   
33,239
 
Commercial loans
    
67,495
   
59,591
   
57,005
 
Home equity loans
    
109,154
   
86,045
   
84,082
 
Consumer loans
    
30,620
   
25,949
   
23,345
 
Total loans
    
732,171
   
635,792
   
615,725
 
                     
Net deferred loan costs and fees
    
1,274
   
1,148
   
1,075
 
Allowance for loan losses
    
(6,880
)
  
(6,382
)
  
(6,470
)
Loans, net
    
726,565
   
630,558
   
610,330
 
                     
Other real estate owned
    
562
   
1,602
   
-
 
Premises and equipment, net
   
8,556
   
8,236
   
8,165
 
Bank-owned life insurance
    
6,259
   
6,031
   
5,948
 
Other assets
   
10,458
   
7,865
   
8,396
 
                     
Total assets
  
$
980,694
  
$
906,513
  
$
898,106
  
                     
Liabilities and Stockholders' Equity
                    
                     
Deposits:
                   
Demand
  
$
97,341
  
$
93,301
  
$
95,082
  
NOW
    
42,103
   
39,922
   
43,062
 
Savings
    
69,523
   
87,253
   
92,264
 
Money market
    
164,519
   
154,177
   
145,601
 
Certificates of deposit
    
319,135
   
278,958
   
272,223
 
Total deposits
    
692,621
   
653,611
   
648,232
 
                     
Federal Home Loan Bank of Boston advances
    
137,412
   
101,880
   
103,492
 
Repurchase agreements
    
5,920
   
8,434
   
5,019
 
Escrow funds held for borrowers
    
1,324
   
1,129
   
1,149
 
Accrued expenses and other liabilities
   
7,093
   
4,454
   
4,388
 
Total liabilities
    
844,370
   
769,508
   
762,280
 
                     
Stockholders' Equity:
                    
Preferred stock ($.01 par value; 5,000,000 shares
                    
authorized; no shares issued and outstanding)
    
-
   
-
   
-
 
Common stock ($.01 par value; 60,000,000 shares authorized;
                    
shares issued and outstanding: 17,153,995 at September 30, 2006;
                    
17,205,995 at December 31, 2005 and September 30, 2005)
    
172
   
172
   
172
 
Additional paid-in capital
    
78,491
   
78,446
   
78,409
 
Retained earnings
    
70,073
   
66,944
   
65,367
 
Unearned compensation
    
(9,459
)
  
(6,092
)
  
(6,252
)
Accumulated other comprehensive loss
    
(2,284
)
  
(2,465
)
  
(1,870
)
Treasury stock, at cost (52,000 shares at September 30, 2006)
    
(669
)
  
-
   
-
 
Total stockholders' equity
    
136,324
   
137,005
   
135,826
 
                     
Total liabilities and stockholders' equity
  
$
980,694
  
$
906,513
  
$
898,106
  
UNITED FINANCIAL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED INCOME STATEMENTS (unaudited)
(Amounts in thousands, except per share amounts)
                   
                   
   
Three Months Ended
 
Nine Months Ended
 
   
September 30,
  
September 30,
  
   
2006
  
2005
  
2006
  
2005
  
Interest and dividend income:
                          
Loans
  
$
11,043
  
$
8,868
  
$
30,719
  
$
25,268
  
Investments
    
2,195
   
2,266
   
6,761
   
5,653
 
Other interest-earning assets
   
256
   
323
   
786
   
579
 
Total interest and dividend income
   
13,494
   
11,457
   
38,266
   
31,500
 
                           
Interest expense:
                          
Deposits
    
4,885
   
3,171
   
13,590
   
8,653
 
Borrowings
    
1,665
   
1,076
   
4,059
   
2,784
 
Total interest expense
    
6,550
   
4,247
   
17,649
   
11,437
 
                           
Net interest income before provision for loan losses
    
6,944
   
7,210
   
20,617
   
20,063
 
                           
Provision for loan losses
   
165
   
275
   
627
   
825
 
                           
Net interest income after provision for loan losses
    
6,779
   
6,935
   
19,990
   
19,238
 
                           
Non-interest income:
                          
(Gain) loss on sales of available for sale securities
    
(218
)
  
3
   
(218
)
  
3
 
Fee income on depositors’ accounts
    
1,146
   
1,006
   
3,128
   
2,751
 
Income from bank-owned life insurance
    
73
   
81
   
227
   
243
 
Other income
    
293
   
234
   
856
   
717
 
Total non-interest income
    
1,294
   
1,324
   
3,993
   
3,714
 
                           
Non-interest expense:
                          
Salaries and benefits
    
3,014
   
2,895
   
9,173
   
8,129
 
Occupancy expenses
    
455
   
349
   
1,268
   
1,088
 
Marketing expenses
   
329
   
239
   
1,093
   
919
 
Data processing expenses
    
622
   
571
   
1,813
   
1,800
 
Contributions and sponsorships
    
16
   
3,636
   
133
   
3,746
 
Professional fees
    
223
   
189
   
702
   
407
 
Other expenses
    
920
   
746
   
3,010
   
2,298
 
Total non-interest expense
   
5,579
   
8,625
   
17,192
   
18,387
 
                           
Income (loss) before income taxes
    
2,494
   
(366
)
  
6,791
   
4,565
 
                           
Income tax expense (benefit)
    
981
   
(193
)
  
2,633
   
1,772
 
                           
NET INCOME (LOSS)
  
$
1,513
  
$
(173
)
$
4,158
  
$
2,793
  
                           
Earnings per share:
                          
Basic
  
$
0.09
    
NA
 
$
0.25
    
NA
 
Diluted
  
$
0.09
    
NA
 
$
0.25
    
NA
 
                           
Weighted average shares outstanding:
                          
Basic
    
16,382
   
NA
   
16,529
   
NA
 
Diluted
    
16,396
   
NA
   
16,534
   
NA
 
                           
                           
NA - Not applicable
                          
UNITED FINANCIAL BANCORP, INC. AND SUBSIDIARY
SELECTED DATA AND RATIOS (unaudited)
(Dollars in thousands, except per share amounts)
                       
                       
   
At or For The Quarters Ended
  
                       
   
Sep. 30
  
Jun. 30
  
Mar. 31
  
Dec. 31
  
Sep. 30
  
   
2006
 
2006
 
2006
  
2005
  
2005 (1)
  
                       
Operating Results:
                                
Net interest income
  
$
6,944
  
$
6,765
  
$
6,908
  
$
6,964
  
$
7,207
  
Loan loss provision
    
165
   
300
   
162
   
92
   
275
 
Non-interest income
    
1,294
   
1,441
   
1,258
   
1,306
   
1,327
 
Non-interest expenses
    
5,580
   
5,836
   
5,776
   
5,725
   
8,625
 
Net income
    
1,513
   
1,290
   
1,355
   
1,576
   
(172
)
                                 
Performance Ratios (annualized):
                                
Return on average assets
    
0.62
%
  
0.55
%
  
0.59
%
  
0.70
%
  
-0.08
%
Return on average equity
    
4.44
%
  
3.75
%
  
3.93
%
  
4.62
%
  
-0.54
%
Net interest margin
    
2.96
%
  
2.96
%
  
3.10
%
  
3.19
%
  
3.34
%
Non-interest income to average total assets
    
0.53
%
  
0.61
%
  
0.55
%
  
0.58
%
  
0.58
%
Non-interest expense to average total assets
    
2.30
%
  
2.47
%
  
2.51
%
  
2.53
%
  
3.79
%
Efficiency ratio
    
65.99
%
  
71.12
%
  
70.73
%
  
69.23
%
  
101.07
%
                                 
Per Share Data:
                                
Diluted earnings per share
  
$
0.09
  
$
0.08
  
$
0.08
  
$
0.10
    
NA
 
Book value per share (2)
  
$
7.95
  
$
8.00
  
$
7.98
  
$
7.96
  
$
7.89
  
Market price at period end
  
$
12.93
  
$
13.31
  
$
12.03
  
$
11.53
  
$
11.11
  
                                 
Risk Profile
                                
Non-performing assets as a percent of total assets
    
0.26
%
  
0.28
%
  
0.18
%
  
0.37
%
  
0.29
%
Non-performing loans as a percent of total loans, gross
    
0.27
%
  
0.33
%
  
0.26
%
  
0.27
%
  
0.43
%
Allowance for loan losses as a percent of total loans, gross
    
0.94
%
  
0.98
%
  
1.02
%
  
1.00
%
  
1.05
%
Allowance for loan losses as a percent of non-performing loans
    
341.78
%
  
294.82
%
  
390.18
%
  
371.91
%
  
246.29
%
Equity as a percentage of assets
    
13.90
%
  
14.31
%
  
14.49
%
  
15.11
%
  
15.12
%
                                 
Average Balances
                                
Loans
  
$
714,917
  
$
669,408
  
$
640,832
  
$
626,556
  
$
606,046
  
Securities
    
211,101
   
220,844
   
227,373
   
232,469
   
234,722
 
Total assets
    
969,962
   
945,262
   
921,155
   
903,971
   
909,731
 
Deposits
    
683,616
   
686,703
   
658,530
   
653,497
   
643,912
 
FHLB advances
    
134,833
   
111,316
   
112,641
   
102,010
   
103,722
 
Capital
    
136,279
   
137,640
   
137,768
   
136,415
   
127,974
 
                                 
Average Yields/Rates (annualized)
                                
Loans
    
6.18
%
  
6.02
%
  
5.99
%
  
5.92
%
  
5.85
%
Securities
    
4.16
%
  
4.10
%
  
4.06
%
  
3.99
%
  
3.86
%
Total interest earning assets
    
5.74
%
  
5.52
%
  
5.46
%
  
5.37
%
  
5.26
%
                                 
Savings accounts
    
0.84
%
  
0.83
%
  
0.82
%
  
0.84
%
  
0.69
%
Money market/NOW accounts
    
2.64
%
  
2.61
%
  
2.45
%
  
2.20
%
  
1.90
%
Certificates of deposit
   
4.27
%
  
4.07
%
  
3.71
%
  
3.43
%
  
3.12
%
FHLB advances
    
4.69
%
  
4.03
%
  
3.97
%
  
4.15
%
  
3.91
%
Total interest-bearing liabilities
    
3.56
%
  
3.30
%
  
3.05
%
  
2.83
%
  
2.56
%
                                 
(1) Includes contribution of $3.6 million to fund United Charitable Foundation and the related tax benefit of $1.4 million, where applicable.
(2) Based upon 17,153,995 shares outstanding at September 30, 2006 and 17,205,995 shares outstanding for all other periods presented.
                                 
NA - Not applicable