WEST SPRINGFIELD, Mass., April 18 /PRNewswire-FirstCall/ -- United Financial Bancorp, Inc. (the "Company") , the holding company for United Bank (the "Bank"), reported net income of $2.0 million, or $0.12 per diluted share, for the first quarter of 2008 compared to net income of $834,000, or $0.05 per diluted share, for the corresponding period in 2007. The Company's improved results were largely due to a significant increase in net interest income, driven by net interest margin expansion and growth in average earning assets largely funded by net cash proceeds of $82.7 million from the Company's December 2007 second-step stock offering. The quarterly operating performance was also favorably impacted by an increase in fee income from deposit and wealth management accounts and a lower provision for loan losses, partially offset by expansion in non-interest expenses. The Company also announced a quarterly cash dividend of $0.07 per share, payable on May 27, 2008 to shareholders of record as of May 13, 2008.
Total assets increased $74.0 million, or 6.9%, to $1.2 billion at March 31, 2008 from $1.1 billion at year end 2007 reflecting growth of $70.1 million, or 34.8%, in securities available for sale. The significant increase in securities available for sale was due to the implementation of a strategy to deploy excess capital and liquidity resulting from the aforementioned stock offering. During the quarter, management purchased agency mortgage-backed securities with predictable cash flows and an average spread to treasury securities in excess of 200 basis points. Balance sheet expansion was funded by an increase of $36.8 million, or 5.1%, in total deposits and an increase of $25.3 million, or 6.8%, in Federal Home Loan Bank advances.
"I am very pleased with the financial results for our first quarter as a fully public company," commented Richard B. Collins, President and Chief Executive Officer. "Although we continue to operate in a challenging banking and economic environment, we have benefited from significant improvement in net interest margin, steady asset quality and growth in average loans, core deposits and fee income. As a result of our improved performance, we are rewarding our shareholders by increasing our quarterly dividend payment to $0.07 per share."
Financial Highlights: -- At March 31, 2008, outstanding loan balances totaled $825.0 million, essentially flat in comparison to the prior year end as a result of payoffs of several large credits and sluggish loan activity. Origination volume moderated in the first quarter of 2008, reflecting a slowdown in the real estate market, weaker demand for all loan types and a very competitive lending environment. -- Non-performing assets totaled $3.7 million, or 0.32% of total assets, at March 31, 2008 compared to $2.7 million, or 0.25% of total assets, at December 31, 2007. The increase of $1.0 million in non-performing assets was mainly attributable to two residential loans with outstanding balances totaling $886,000 which became more than 90 days delinquent in March 2008. Management believes that these loans are adequately secured. The Company has not historically originated loans to sub-prime borrowers and approximately 96% of its investment portfolio consists of mortgage-backed and debt securities issued by government sponsored enterprises. -- At March 31, 2008, the ratio of the allowance for loan losses to total loans was 0.93% and the ratio of the allowance for loan losses to non- performing loans was 285.41%. For the three months ended March 31, 2008, net charge-offs totaled $252,000, or 0.12% of average loans outstanding on an annualized basis. -- Total deposits increased $36.8 million, or 5.1%, to $755.5 million at March 31, 2008 compared to $718.7 million at December 31, 2007 mainly due to competitive products and pricing, superior customer service, targeted promotional activities and our new East Longmeadow branch, which opened in January 2008. Core deposit balances grew $25.3 million, or 6.8%, to $396.3 million at March 31, 2008 from $371.0 million at December 31, 2007. -- Net interest income increased $2.1 million, or 29.8%, to $9.0 million for the first quarter of 2008 from the same period in 2007 as a result of net interest margin expansion and growth in earning assets. Net interest margin increased 58 basis points to 3.40% due to the use of net proceeds from the Company's second-step stock offering completed in December 2007 to fund asset growth as well as a significant decrease in the cost of deposits as a result of the 300 basis points reduction in the federal funds rate from 5.25% at September 1, 2007 to 2.25% at March 31, 2008. Average earning assets expanded $76.9 million, or 7.8%, to $1.1 billion, mainly due to loan growth and purchases of mortgage-backed securities. -- Non-interest income expanded $121,000, or 8.7%, to $1.5 million for the three months ended March 31, 2008 due to increases of $39,000, or 3.8%, in fee income from deposit accounts and $29,000, or 24.0%, in wealth management revenue. These results also include a $49,000 gain in the first quarter of 2008 from VISA Inc.'s redemption of its Class B stock as part of its initial public offering. Prior to its IPO, VISA Inc. issued these shares to its members in a reorganization based upon transaction volume. -- Non-interest expenses grew $529,000, or 8.0%, to $7.2 million for the first three months of 2008, mainly attributable to increases of $203,000, or 5.3%, in salaries and benefits, $54,000, or 13.9%, in professional services, $77,000, or 12.0%, in data processing expenses and $36,000, or 11.2%, in marketing expenses. The increase in salaries and benefits reflect staffing costs for our new East Longmeadow branch, new employees hired to support and facilitate the growth of the Company, a higher cash incentive accrual associated with improved financial performance and annual wage adjustments.
United Financial Bancorp, Inc. is a publicly owned corporation and the holding company for United Bank, a federally chartered savings 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 14 branch offices located throughout Western Massachusetts. Through its Wealth Management 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 http://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.
For More Information Contact: Mark A. Roberts Executive Vice President & CFO (413) 787-1700 UNITED FINANCIAL BANCORP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CONDITION (Dollars in thousands, except par value amounts) March 31, December 31, March 31, Assets 2008 2007 2007 (unaudited) (audited) (unaudited) Cash and cash equivalents $15,784 $14,254 $42,044 Securities available for sale, at fair value 271,377 201,257 171,474 Securities held to maturity, at amortized cost 3,630 3,632 3,913 Federal Home Loan Bank of Boston stock, at cost 10,257 10,257 9,885 Short-term investments 1,043 1,030 - Loans: Residential mortgages 343,480 339,470 325,948 Commercial mortgages 213,322 214,776 197,514 Construction loans 41,002 42,059 48,748 Commercial loans 81,385 81,562 67,723 Home equity loans 115,931 116,241 116,350 Consumer loans 29,867 30,587 29,681 Total loans 824,987 824,695 785,964 Net deferred loan costs and fees 2,171 2,136 1,367 Allowance for loan losses (7,646) (7,714) (7,426) Loans, net 819,512 819,117 779,905 Other real estate owned 1,030 880 - Premises and equipment, net 10,579 10,600 10,673 Bank-owned life insurance 6,733 6,652 6,473 Other assets 13,352 11,602 9,331 Total assets $1,153,297 $1,079,281 $1,033,698 Liabilities and Stockholders' Equity Deposits: Demand $108,819 $102,010 $102,513 NOW 34,159 35,207 38,227 Savings 75,469 65,711 68,006 Money market 177,879 168,107 177,173 Certificates of deposit 359,198 347,647 331,020 Total deposits 755,524 718,682 716,939 Federal Home Loan Bank of Boston advances 141,409 107,997 162,171 Repurchase agreements 9,686 13,864 8,825 Escrow funds held for borrowers 1,514 1,356 1,537 Due to broker 8,410 - - Capitalized lease obligation 1,880 1,890 1,919 Accrued expenses and other liabilities 6,462 9,372 3,822 Total liabilities 924,885 853,161 895,213 Stockholders' Equity: Preferred stock, par value $0.01 per share, authorized 50,000,000 shares at March 31, 2008 and December 31, 2007 and 5,000,000 shares at March 31, 2007; none issued - - - Common stock, par value $0.01 per share; shares authorized 100,000,000 at March 31, 2008 and at December 31, 2007 and 60,000,000 at March 31, 2007; shares issued and outstanding: 17,763,747 at March 31, 2008 and at December 31, 2007; shares issued: 17,205,995 at March 31, 2007 178 178 172 Additional paid-in capital 166,289 165,920 76,197 Retained earnings 74,005 73,026 70,798 Unearned compensation (12,659) (12,835) (5,661) Accumulated other comprehensive gain (loss), net of taxes 599 (169) (1,508) Treasury stock, at cost (109,861 shares at March 31, 2007) - - (1,513) Total stockholders' equity 228,412 226,120 138,485 Total liabilities and stockholders' equity $1,153,297 $1,079,281 $1,033,698 UNITED FINANCIAL BANCORP, INC. AND SUBSIDIARY CONSOLIDATED INCOME STATEMENTS (Amounts in thousands, except per share amounts) Three Months Ended March 31, 2008 2007 (unaudited) Interest and dividend income: Loans $12,547 $11,955 Investments 2,618 1,982 Other interest-earning assets 241 375 Total interest and dividend income 15,406 14,312 Interest expense: Deposits 4,973 5,181 Borrowings 1,402 2,175 Total interest expense 6,375 7,356 Net interest income before provision for loan losses 9,031 6,956 Provision for loan losses 184 284 Net interest income after provision for loan losses 8,847 6,672 Non-interest income: Net gain on sales of securities 8 14 Fee income on depositors' accounts 1,077 1,038 Wealth management income 150 121 Other income 284 225 Total non-interest income 1,519 1,398 Non-interest expense: Salaries and benefits 4,041 3,838 Occupancy expenses 509 491 Marketing expenses 358 322 Data processing expenses 719 642 Professional fees 443 389 Other expenses 1,106 965 Total non-interest expense 7,176 6,647 Income before income taxes 3,190 1,423 Income tax expense 1,224 589 Net income $1,966 $834 Earnings per share: Basic $0.12 $0.05 Diluted $0.12 $0.05 Weighted average shares outstanding: Basic 16,231 16,938 Diluted 16,271 16,999 UNITED FINANCIAL BANCORP, INC. AND SUBSIDIARY SELECTED DATA AND RATIOS (unaudited) (Dollars in thousands, except per share amounts) At or For The Quarters Ended Mar. 31 Dec. 31 Sept. 30 Jun. 30 Mar. 31 2008 2007 2007 2007 2007 Operating Results: Net interest income $9,031 $7,823 $7,253 $7,135 $6,956 Loan loss provision 184 385 436 320 284 Non-interest income 1,519 1,490 1,412 1,435 1,398 Non-interest expenses 7,176 6,686 6,131 6,575 6,647 Net income 1,966 1,274 1,291 978 834 Performance Ratios (annualized): Return on average assets 0.72% 0.48% 0.50% 0.38% 0.33% Return on average equity 3.46% 3.02% 3.69% 2.82% 2.41% Net interest margin 3.40% 3.02% 2.91% 2.90% 2.82% Non-interest income to average total assets 0.55% 0.56% 0.55% 0.56% 0.55% Non-interest expense to average total assets 2.62% 2.50% 2.38% 2.58% 2.62% Efficiency ratio (excludes gains/losses on sales of securities and loans) 68.07% 70.99% 69.63% 76.34% 79.70% Per Share Data: Diluted earnings per share $0.12 $0.08 $0.08 $0.06 $0.05 Book value per share $12.86 $12.73 $8.28 $8.12 $8.10 Market price at period end (1) $11.08 $11.10 $12.06 $13.59 $14.27 Risk Profile Non-performing assets as a percent of total assets 0.32% 0.25% 0.18% 0.29% 0.13% Non-performing loans as a percent of total loans, gross 0.32% 0.22% 0.12% 0.37% 0.17% Allowance for loan losses as a percent of total loans, gross 0.93% 0.94% 0.93% 0.96% 0.94% Allowance for loan losses as a percent of non-performing loans 285.41% 432.16% 755.16% 259.79% 570.35% Equity as a percentage of assets 19.81% 20.95% 13.28% 13.55% 13.40% Average Balances Loans $828,302 $820,164 $812,756 $797,751 $776,301 Securities 211,880 193,099 168,498 166,163 180,491 Total interest- earning assets 1,061,978 1,036,253 998,336 985,519 985,112 Total assets 1,095,866 1,069,060 1,032,225 1,018,509 1,016,369 Deposits 730,094 721,634 720,330 715,173 691,532 FHLBB advances 116,519 157,819 156,150 149,853 170,727 Capital 227,413 168,910 139,820 138,896 138,296 Average Yields/Rates (annualized) Loans 6.06% 6.24% 6.26% 6.19% 6.16% Securities 4.94% 4.87% 4.79% 4.46% 4.39% Total interest-earning assets 5.80% 5.96% 6.00% 5.89% 5.81% Savings accounts 0.98% 1.05% 0.90% 0.91% 0.86% Money market/NOW accounts 2.03% 2.71% 2.81% 2.76% 2.69% Certificates of deposit 4.24% 4.66% 4.70% 4.58% 4.50% FHLBB advances 4.47% 4.82% 4.90% 4.75% 4.74% Total interest-bearing liabilities 3.37% 3.87% 3.92% 3.79% 3.77% (1) Prices at September 30, June 30, and March 31, 2007 have been adjusted by the second step exchange ratio of 1.04079.
