EX-99.1 2 ex99-1.htm
FOR IMMEDIATE RELEASE For More Information Contact:
Dena M. Hall
Vice President
(413) 787-1700

UNITED FINANCIAL BANCORP, INC. ANNOUNCES EARNINGS FOR THIRD QUARTER
AND FIRST NINE MONTHS OF 2005

WEST SPRINGFIELD, MA—October 27, 2005—United Financial Bancorp, Inc. (the “Company”) (NASDAQ:UBNK), the holding company for United Bank (the “Bank”), reported a net loss of $173,000 for the quarter ended September 30, 2005. Included in the results was a one-time after-tax expense of $2.2 million which was incurred to establish and fund the new United Charitable Foundation. Excluding this charge for the charitable foundation, net income would have been $2.0 million for the three-month period, compared to $1.7 million for the same three-month period in 2004. Since the Company’s initial public offering of common stock concluded during this quarter, earnings per share data is not being presented as it is not considered meaningful. For the nine months ended September 30, 2005, net income amounted to $2.8 million versus $4.3 million for the nine months ended September 30, 2004.

“We are pleased to report extremely good results, in this our first quarter operating as a public company,” said Richard B. Collins, President and Chief Executive Officer. “Strong loan growth, particularly in the residential mortgage area and a record number of new core deposit accounts and the resultant increases in interest and fee income contributed to the increase in net income in both the three- and nine-month periods, exclusive of the impact of establishing the charitable foundation,” he said.

“We also realized an important milestone with UBNK’s inclusion in the Russell 3000 Index as of September 30, 2005,” Collins said. “Our focus continues to be on increasing market share and meeting the needs of both our shareholders and customers, as we actively investigate opportunities to expand our franchise and our core business lines,” he said.

The Company’s initial public offering concluded on July 11, 2005. The Company raised $74.8 million in the offering, selling 7.5 million shares of common stock at $10 per share. This represented 44.6% of the stock issued. In addition, 344,100 shares or 2.0% of the shares outstanding were contributed to the charitable foundation. United Mutual Holding Company holds the remaining 53.4% of the outstanding shares.

Total assets increased to $898.1 million at September 30, 2005 from $772.0 million at December 31, 2004, an increase of 16.3%. $81.0 million of this growth occurred in the securities portfolios while net loans increased $41.1 million. This growth was funded by an increase in total deposits of $34.6 million, advances from the Federal Home Loan Bank of Boston of $16.8 million and the proceeds of the initial public offering. During the three-month period ended September 30, 2005, total assets decreased $54.6 million as a result of the $58.4 million in refunds issued due to the stock offering being oversubscribed.

Financial Highlights Include:

  • Asset quality remained strong with delinquencies at .53% of total loans and non-performing loans at .29% of total assets at September 30, 2005 compared to .75% and .49%, respectively, at December 31, 2004. At September 30, 2005 the allowance for loan losses amounted to $6.5 million. This represented 1.05% of total loans, the same ratio that existed at the end of the prior quarter.
     
  • Deposits were $648.2 million at September 30, 2005, compared to $613.7 million at December 31, 2004. Growth occurred in both interest and non-interest bearing accounts. Non-interest bearing accounts grew by 10.2% from December 31, 2004 to September 30, 2005.
     
  • Net interest income before provision for loan losses for the three-month period ended September 30, 2005 grew to $7.3 million from $6.3 million for the same period of one year ago. This represented a 15.9% increase, most of which was a result of investment of the stock offering proceeds. For the three-month period ended September 30, 2005, our interest rate spread amounted to 2.7% which was a decrease from the 3.1% result in the same period of 2004. Net interest margin was 3.3% for the three-month period ended September 30, 2005 compared to 3.4% for the same period last year.
     
  • Non-interest income increased $84,000, or 6.7%, to $1.3 million for the three months ended September 30, 2005 compared to the same period last year reflecting modest growth in fee income. For the first nine months of 2005, non-interest income was $3.8 million, compared to $3.6 million for the same period ended September 30, 2004, an increase of 5.3%.
     
  • Non-interest expense increased 88.3% to $8.7 million for the three months ended September 30, 2005 from $4.6 million for the prior year period. For the first nine months of 2005, non-interest expense was $18.6 million, compared to $14.4 million for the same period in 2004, an increase of 29.5%. The increase was primarily due to the contribution to the charitable foundation. Non-interest expense in the nine month period ended September 30, 2004 included expenses of $664,000 related to the conversion of United Bank to a federal charter.
     

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 National Market under the symbol UBNK. United Bank provides an array of financial products and services through its 11 branch offices located throughout Western Massachusetts. Through its Financial Services Group, the Bank offers access to a wide range of investment and insurance products and services, as well as financial, estate and retirement planning. 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.

Attached are consolidated balance sheets, statements of operations and select financial ratios.

UNITED FINANCIAL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CONDITION (unaudited)
(Dollars in thousands)

September 30,
2005
December 31,
2004
ASSETS            
     
Cash and due from banks     $ 18,876   $ 15,772  
Interest bearing deposits       1,327     7,180  
Liquidity and cash funds       2,619     281  
      Total cash and cash equivalents       22,822     23,233  
     
Securities available for sale, at market value       232,479     152,329  
Securities to be held to maturity, at amortized cost (fair value $3,371 in    
   2005 and $2,498 in 2004)       3,378     2,498  
Loans, net of allowance for loan losses of $6,470 in 2005    
   and $5,750 in 2004       610,330     569,243  
Banking premises and equipment, net       8,165     7,671  
Accrued interest receivable       4,035     2,862  
Deferred tax asset       3,285     1,551  
Stock in the Federal Home Loan Bank of Boston       6,588     6,021  
Bank-owned life insurance       5,948     5,705  
Other assets       1,076     895  
     
      TOTAL ASSETS     $ 898,106   $ 772,008  
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
     
Liabilities:    
Deposits:    
  Interest bearing     $ 553,150   $ 527,426  
  Non-interest bearing       95,082     86,246  
      Total deposits       648,232     613,672  
  Federal Home Loan Bank of Boston advances       103,492     86,694  
  Repurchase agreements       5,019     4,317  
  Escrow funds held for borrowers       1,149     954  
  Accrued expenses and other liabilities       4,388     4,116  
      Total liabilities       762,280     709,753  
 
  Commitments and contingencies    
     
Stockholders' equity:    
  Preferred stock, par value $0.01 per share, authorized 5,000,000 shares;    
    none issued       —     —  
  Common stock, par value $0.01 per share, authorized 60,000,000 shares;    
    17,205,995 shares issued in 2005 and 100 shares issued in 2004       172     —  
  Paid-in capital       78,391     —  
  Unearned ESOP shares       (6,252 )   —  
  Retained earnings       65,385     62,667  
  Accumulated other comprehensive loss       (1,870 )   (412 )
      Total stockholders' equity       135,826     62,255  
     
      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY     $ 898,106   $ 772,008  

UNITED FINANCIAL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF EARNINGS (unaudited)
(Dollars in thousands)

Three Months Ended
September 30,
Nine Months Ended
September, 30
2005
2004
2005
2004
Interest and dividend income:                    
  Loans     $ 8,938   $ 7,663   $ 25,462   $ 21,936  
  Investments       2,265     1,607     5,653     5,105  
  Other interest-earning assets       376     66     632     161  
     Total interest and dividend income       11,579     9,336     31,747     27,202  
     
Interest expense:    
  Interest on deposits       3,224     2,205     8,705     6,635  
  Interest on short-term borrowings       463     7     785     161  
  Interest on long-term debt       613     845     1,999     2,129  
     Total interest expense       4,300     3,057     11,489     8,925  
     
     Net interest income before provision for loan losses       7,279     6,279     20,258     18,277  
     
Provision for loan losses       275     113     825     338  
     
     Net interest income after provision for loan losses       7,004     6,166     19,433     17,939  
     
Non-interest income:    
  Fee income on depositors' accounts       1,092     1,015     3,000     2,692  
  Gain on sale of loans       —     1     —     11  
  Net gain on sale of securities       3     5     3     117  
  Income from bank-owned life insurance       81     75     243     225  
  Other income       165     161     522     533  
     Total non-interest income       1,341     1,257     3,768     3,578  
     
Non-interest expense:    
  Salaries and benefits       2,810     2,343     7,911     6,879  
  Occupancy expenses       349     322     1,088     1,170  
  Advertising expenses       239     254     919     873  
  Data processing expenses       658     646     2,049     1,907  
  Contributions and sponsorships       3,699     57     3,746     169  
  Professional fees       189     103     407     246  
  Other expenses       768     902     2,516     3,151  
     Total non-interest expense       8,712     4,627     18,636     14,395  
     
     Income (loss) before income taxes       (367 )   2,796     4,565     7,122  
     
Income tax expense (benefit)       (194 )   1,129     1,772     2,852  
     
     NET INCOME (LOSS)     $ (173 ) $ 1,667     2,793   $ 4,270  

UNITED FINANCIAL BANCORP, INC. AND SUBSIDIARY
SELECTED RATIOS AND YIELDS (unaudited)

(Annualized)

Three months ended
Sep-05 Jun-05 Mar-05 Dec-04 Sep-04
                         
Performance Ratios:    
Return on average assets*       -0.08%     0.77%   0.69%   0.65%   0.87%
Return on average equity*       -0.73%     10.04%   8.67%   8.09%   11.18%
Average equity to average interest-earning assets       10.80%   7.94%   8.30%   8.30%   8.05%
Equity to total assets at end of period       15.12%   6.81%   7.85%   8.06%   7.87%
Average interest-earning assets to average    
   interest-bearing liabilities       127.71%   120.33%   119.27%   119.83%   118.56%
Total non-interest expense to average total assets*       3.83%   2.37%   2.56%   2.48%   2.41%
Efficiency ratio*       101.06%   68.02%   66.40%   62.60%   61.40%
     
Regulatory Capital Ratios:    
Core capital       15.30%   6.90%   8.03%   8.11%   7.87%
Tangible capital       15.30%   6.90%   8.03%   8.11%   7.87%
Risk-based capital       24.97%   12.40%   13.12%   12.76%   12.82%
     
Asset Quality Ratios:    
Non-performing assets as a percent of total assets       0.29%   0.30%   0.57%   0.49%   0.28%
Non-performing loans as a percent of total loans, gross       0.43%   0.48%   0.78%   0.66%   0.38%
Allowance for loan losses as a percent of total loans, gross       1.05%   1.05%   1.07%   1.00%   0.97%
Allowance for loan losses as a percent of non-performing loans       246.29%   216.14%   137.46%   151.96%   253.81%
     
Selected Average Yields/Rates    
Loans       5.82%   5.80%   5.73%   5.54%   5.51%
Securities       4.26%   3.85%   3.97%   3.81%   3.86%
Total interest earning assets       5.32%   5.18%   5.15%   5.12%   5.04%
     
Savings accounts       0.69%   0.63%   0.62%   0.63%   0.64%
Money Market/Now accounts       1.90%   1.54%   1.30%   1.16%   1.02%
Certificates of deposit       3.12%   2.95%   2.76%   2.69%   2.61%
Borrowed funds       3.81%   3.49%   3.42%   3.48%   3.45%
Total interest-bearing liabilities       2.59%   2.31%   2.12%   2.06%   1.96%
     
Interest rate spread       2.73%   2.87%   3.03%   3.06%   3.08%
Net interest margin       3.34%   2.97%   3.37%   3.40%   3.39%

*For the three months ended September 30, 2005, exclusive of the contribution to the United Charitable Foundation, return on average assets, return on average equity, total non-interest expense to average total assets, and efficiency ratio would have been 0.89%, 8.58%, 2.25% and 59.40%, respectively.