EX-99.1 2 ex99-1.htm PRESS RELEASE DATED FEBRUARY 2, 2006

FOR IMMEDIATE RELEASE
For More Information Contact:
 
Dena M. Hall
 
Vice President
 
(413) 787-1700


UNITED FINANCIAL BANCORP, INC. ANNOUNCES EARNINGS FOR FOURTH
QUARTER AND TWELVE MONTHS OF 2005


WEST SPRINGFIELD, MA—February 2, 2006—United Financial Bancorp, Inc. (the “Company”) (NASDAQ:UBNK), the holding company for United Bank (the “Bank”), reported net income of $1.6 million or $0.10 per basic and diluted share for the quarter ended December 31, 2005 compared to $1.3 million for the quarter ended December 31, 2004. For the full year 2005, the Company reported net income of $4.4 million compared to $5.5 million for the prior year. Excluding the effect of a $3.6 million charitable contribution ($2.2 million after taxes) to fund the newly-formed United Charitable Foundation, net income in 2005 would have amounted to $6.6 million, or 19.0% greater than 2004.

The Company recently announced an initial quarterly cash dividend of $.05 per share to shareholders of record as of February 13, 2006. The dividend will be paid on February 27, 2006. This is the first cash dividend for the Company since the completion of its minority stock offering on July 12, 2005. United Mutual Holding Company has filed a notice with the Office of Thrift Supervision of its intent to waive the receipt of dividends paid on the shares it owns of the Company. After giving effect to the anticipated waiver, the dividend payout ratio will be approximately 24% of the fourth quarter 2005 earnings.

“We are very pleased with our performance in 2005 and with our ability to provide our shareholders with their first quarterly dividend payment later this month,” said Richard B. Collins, President and Chief Executive Officer. “Our continued emphasis on originating high quality loans and solid deposit growth together with an increase in net interest income, primarily as a result of the investment of our stock offering proceeds, contributed to our success this year. With the stock offering completed, we have turned our energy toward the execution of our strategic plan and the growth of our franchise. In the year ahead, we will continue to focus on growth in core deposits by furthering our efforts to expand into new markets,” he said.

 
 
 

Total assets increased to $906.5 million at December 31, 2005 from $772.0 million at December 31, 2004, an increase of 17.4%. Of this growth, $75.0 million was invested in the securities portfolio while net loans increased $61.3 million. Growth was funded by an increase in total deposits of $39.9 million, advances from the Federal Home Loan Bank of Boston of $15.2 million and the proceeds of the initial public offering. During the three-month period ended December 31, 2005, total assets increased $8.4 million, which reflected a $20.2 million increase in net loans coupled with a $6.1 million decrease in securities and a $7.0 million decrease in cash and cash equivalents.

Financial Highlights Include:
 
·
Growth in net loans in 2005 consisted of a $39.1 million increase in residential mortgages, a $16.2 million increase in commercial loans and a $6.6 million increase in consumer loans.

 
·
Asset quality remained strong with delinquencies at .51% of total loans and non-performing assets at .37% of total assets at December 31, 2005 compared to .75% and .49%, respectively, at December 31, 2004. At December 31, 2005 the allowance for loan losses amounted to $6.4 million or 1.00% of total loans.

 
·
Deposits were $653.6 million at December 31, 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 8.2% from December 31, 2004 to December 31, 2005.

 
·
Net interest income before provision for loan losses for the three-month period ended December 31, 2005 grew to $7.0 million from $6.3 million for the same period of one year ago. This represented a 10.4% increase, most of which was a result of investment of the stock offering proceeds. For the three-month period ended December 31, 2005, the interest rate spread amounted to 2.54%, which was a decrease from the 3.06% result in the same period of 2004. Net interest margin was 3.19% for the three-month period ended December 31, 2005 compared to 3.40% for the same period last year. The decline in the net interest margin and net interest rate spread reflects the faster rise in the cost of interest bearing liabilities as compared to the yield on interest earning assets. This circumstance was primarily the result of the flattening of the yield curve which occurred in 2005.

 
 
 


 
·
Non-interest income increased $41,000, or 3.0%, for the three months ended December 31, 2005 compared to the same period last year, reflecting modest growth in fee income. For the year ended December 31, 2005, non-interest income was $5.4 million, compared to $5.1 million for the same period ended December 31, 2004, an increase of 4.4%.

 
·
Non-interest expense increased 21.6% to $5.8 million for the three months ended December 31, 2005 from $4.8 million for the prior year period. For the year ended December 31, 2005, non-interest expense was $24.5 million, compared to $19.2 million for the same period in 2004, an increase of 27.5%. The increase included a $3.6 million contribution to fund the new United Charitable Foundation. Non-interest expense in the year ended December 31, 2004 included expenses of $664,000 related to the conversion of United Bank to a federal charter. Excluding these non-recurring items, non-interest expense would have increased 12.6%, due primarily to increases in salaries and benefits.

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)

 
   
December 31,
  
December 31,
  
   
2005
  
2004
  
ASSETS
              
               
Cash and due from banks
  
$
15,841
  
$
15,772
  
Interest bearing deposits
    
2
   
7,180
  
Liquidity and cash funds
    
—
   
281
  
Total cash and cash equivalents
    
15,843
    
23,233
  
               
Securities available for sale, at market value
    
226,465
    
152,329
  
Securities to be held to maturity, at amortized cost (fair value $3,298 in 2005 and $2,498 in 2004)
    
3,325
   
2,498
  
Loans, net of allowance for loan losses of $6,382 in 2005 and $5,750 in 2004
    
630,558
    
569,243
  
Foreclosed real estate
    
1,602
    
—
  
Banking premises and equipment, net
    
8,236
    
7,671
  
Accrued interest receivable
    
3,928
    
2,862
  
Deferred tax asset
    
1,245
   
1,551
  
Stock in the Federal Home Loan Bank of Boston
    
6,588
   
6,021
  
Bank-owned life insurance
    
6,031
   
5,705
  
Other assets
    
2,692
   
895
  
               
TOTAL ASSETS
  
$
906,513
  
$
772,008
  
               
LIABILITIES AND STOCKHOLDERS’ EQUITY
              
               
Liabilities:
              
Deposits:
              
Interest bearing
  
$
560,310
  
$
527,426
  
Non-interest bearing
    
93,301
    
86,246
  
Total deposits
    
653,611
    
613,672
  
Federal Home Loan Bank of Boston advances
    
101,880
    
86,694
  
Repurchase agreements
    
8,434
   
4,317
  
Escrow funds held for borrowers
    
1,129
    
954
  
Accrued expenses and other liabilities
    
4,454
    
4,116
  
Total liabilities
    
769,508
    
709,753
  
               
               
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
    
78,446
    
—
  
Unearned ESOP shares
    
(6,092
)
  
—
  
Retained earnings
    
66,944
    
62,667
  
Accumulated other comprehensive loss, net of taxes
    
(2,465
)
  
(412
)
Total stockholders’ equity
    
137,005
   
62,255
  
               
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
  
$
906,513
  
$
772,008
  


 
 
 

UNITED FINANCIAL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF EARNINGS (unaudited)
(Dollars in thousands, except per share data)
 
 
           
   
Three Months Ended December 31,
  
Twelve Months Ended December 31,
  
   
2005
  
2004
  
2005
  
2004
  
Interest and dividend income:
                          
Loans
  
$
9,272
  
$
7,946
  
$
34,540
  
$
29,682
  
Investments
    
2,317
    
1,477
   
7,970
   
6,582
  
Other interest-earning assets
    
144
    
106
   
723
   
268
  
Total interest and dividend income
    
11,733
    
9,529
    
43,233
   
36,532
  
                           
Interest expense:
                          
Interest on deposits
    
3,647
    
2,360
   
12,300
    
8,995
  
Interest on short-term borrowings
    
890
   
211
   
1,675
   
373
  
Interest on long-term debt
    
232
    
651
   
2,231
    
2,780
  
Total interest expense
    
4,769
    
3,222
    
16,206
   
12,148
  
                           
Net interest income before provision for loan losses
    
6,964
   
6,307
   
27,027
   
24,384
  
                           
Provision for loan losses
    
92
   
645
   
917
    
983
  
                           
Net interest income after provision for loan losses
    
6,872
    
5,662
    
26,110
    
23,401
  
                           
Non-interest income:
                          
Fee income on depositors’ accounts
    
1,084
   
991
    
4,084
   
3,683
  
Gain on sale of loans
    
2
    
3
   
2
    
14
  
Net gain on sale of securities
    
—
    
5
   
3
    
122
  
Income from bank-owned life insurance
    
83
    
107
    
326
   
332
  
Other income
   
228
    
250
    
945
   
983
  
Total non-interest income
    
1,397
    
1,356
    
5,360
    
5,134
  
                           
Non-interest expense:
                          
Salaries and benefits
    
2,942
   
2,342
   
10,853
   
9,221
  
Occupancy expenses
    
406
   
284
   
1,494
   
1,453
 
Marketing expenses
    
466
   
371
    
1,386
   
1,244
  
Data processing expenses
    
662
    
773
   
2,711
   
2,681
  
Contributions and sponsorships
    
45
    
23
    
3,791
    
192
  
Professional fees
    
315
   
90
   
722
   
336
  
Other expenses
    
980
    
901
    
3,495
    
4,052
  
Total non-interest expense
    
5,816
    
4,784
   
24,452
    
19,179
 
                           
Income before income taxes
    
2,453
    
2,234
    
7,018
    
9,356
  
                           
Income tax expense
    
877
    
976
    
2,649
    
3,828
  
                           
NET INCOME
  
$
1,576
  
$
1,258
  
$
4,369
  
$
5,528
  
                           
                           
Basic and diluted earnings per share
  
$
.10
    
NA
    
NM
    
NA
  

 

 
 
 
 
UNITED FINANCIAL BANCORP, INC. AND SUBSIDIARY
SELECTED RATIOS AND YIELDS (unaudited)
(Annualized)
 
   
Three Months Ended
  
Twelve Months Ended
  
   
December 31,
  
December 31,
  
   
2005
  
2004
  
2005
  
2004
  
                   
Performance Ratios:
                          
Return on average assets
    
0.70
%
  
0.65
%
  
0.51
%
  
0.73
%
Return on average equity
    
4.62
%
  
8.09
%
  
4.45
%
  
9.25
%
Average equity to average interest-earning assets
    
15.61
%
  
8.30
%
  
11.42
%
  
8.16
%
Equity to total assets at end of period
    
15.14
%
  
8.06
%
  
11.86
%
  
8.06
%
Average interest-earning assets to average
                          
    interest-bearing liabilities
    
129.49
%
  
119.83
%
  
129.86
%
  
118.30
%
Total non-interest expense to average total assets
    
2.57
%
  
2.48
%
  
2.46
%
  
2.53
%
Efficiency ratio
    
69.56
%
  
62.60
%
  
75.50
%
  
65.02
%
                           
                           
Regulatory Capital Ratios:
                          
Core capital
    
15.36
%
  
8.11
%
  
15.36
%
  
8.11
%
Tangible capital
    
15.36
%
  
8.11
%
  
15.36
%
  
8.11
%
Risk-based capital
    
24.60
%
  
12.76
%
  
24.60
%
  
12.76
%
                           
                           
Asset Quality Ratios:
                          
Non-performing assets as a percent of total assets
    
0.37
%
  
0.49
%
  
0.37
%
  
0.49
%
Non-performing loans as a percent of total loans, gross
    
0.27
%
  
0.66
%
  
0.27
%
  
0.66
%
Allowance for loan losses as a percent of total loans, gross
    
1.00
%
  
1.00
%
  
1.00
%
  
1.00
%
Allowance for loan losses as a percent of non-performing loans
    
371.91
%
  
151.96
%
  
371.91
%
  
151.96
%
                           
                           
Selected Average Yields/Rates
                          
Loans
    
5.92
%
  
5.54
%
  
5.98
%
  
5.67
%
Securities
    
3.99
%
  
3.81
%
  
5.08
%
  
4.00
%
Total interest earning assets
    
5.37
%
  
5.12
%
  
5.72
%
  
5.20
%
                           
Savings accounts
    
0.84
%
  
0.63
%
  
0.83
%
  
0.64
%
Money Market/NOW accounts
    
2.20
%
  
1.16
%
  
2.19
%
  
1.20
%
Certificates of deposit
   
3.43
%
  
2.69
%
  
3.56
%
  
2.72
%
Borrowed funds
    
4.03
%
  
3.48
%
  
3.72
%
  
3.45
%
Total interest-bearing liabilities
    
2.83
%
  
2.06
%
  
2.86
%
  
2.05
%
                           
Average interest rate spread
    
2.54
%
  
3.06
%
  
2.86
%
  
3.14
%
Net interest margin
    
3.19
%
  
3.40
%
  
3.52
%
  
3.48
%