United Financial Bancorp, Inc. Announces Third Quarter Earnings and Quarterly Dividend


HARTFORD, Conn., Oct. 16, 2018 (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 September 30, 2018.

The Company reported net income of $16.3 million, or $0.32 per diluted share, for the quarter ended September 30, 2018, compared to net income for the linked quarter of $15.6 million, or $0.31 per diluted share. The Company reported net income of $15.2 million, or $0.30 per diluted share, for the quarter ended September 30, 2017.

"I want to thank our United Bank employees for their steadfast focus on serving our customers and communities, while also prudently growing revenue, earnings, tangible book value, and core deposits," stated William H.W. Crawford, IV, Chief Executive Officer and President of the Company and the Bank.

Balance Sheet

Assets totaled $7.21 billion at September 30, 2018 and remained relatively flat, decreasing $1.1 million from $7.21 billion at June 30, 2018.  At September 30, 2018, total loans were $5.53 billion, representing an increase of $53.2 million, or 1.0%, from the linked quarter. Changes to loan balances during the third quarter of 2018 were highlighted by a $37.4 million, or 11.2%, increase in other consumer loans, a $31.1 million, or 2.5%, increase in residential real estate loans, a $19.9 million, or 2.4%, increase in commercial business loans, and a $16.6 million, or 4.0%, increase in owner-occupied commercial real estate loans. Slightly offsetting the increased balances were a $39.1 million, or 2.0%, decrease in investor non-owner occupied commercial real estate loans and an $8.7 million, or 1.5%, decrease in home equity loans. Loans held for sale increased $1.5 million, or 1.7%, from the linked quarter. Available-for-sale securities decreased $34.1 million, or 3.4%, as the Company utilized cash flows for improved risk adjusted returns on capital in the loan portfolio. Total cash and cash equivalents decreased $30.6 million, or 28.0%, from the linked quarter as the Company paid down Federal Home Loan Bank of Boston advances at the end of the quarter.

Deposits totaled $5.50 billion at September 30, 2018 and increased by $107.0 million, or 2.0%, from $5.39 billion at June 30, 2018. Increases in deposit balances during the third quarter of 2018 were highlighted by a $157.1 million, or 9.8%, increase in money market account balances and a $2.1 million, or 0.2%, increase in NOW checking account balances. Offsetting these increases were a $21.2 million, or 1.3%, decrease in certificate of deposit balances, a $19.2 million, or 3.8%, decrease in savings deposit balances, and an $11.8 million, or 1.5%, decrease in demand deposit account balances.

Total Federal Home Loan Bank advances decreased by $112.5 million, or 12.2%, over the linked quarter as the Company utilized excess cash from deposit growth to pay off maturing advances.

Net Interest Income

Net interest income increased by $248,000, or 0.5%, on a linked quarter basis, to $48.4 million, primarily attributable to an increase in loan interest income of $3.1 million, or 5.4%, to $61.1 million.  This increase was offset by an increase in interest expense of $2.8 million, or 14.8%, to $21.8 million. Average interest-earning assets increased by $86.5 million, or 1.3%, primarily due to growth in average loan balances, which increased by $102.7 million, or 1.9%. Average loan balance growth was driven by a $37.9 million, or 2.8%, increase in average residential real estate loans, a $29.8 million, or 9.2%, increase in average other consumer loans, a $25.8 million, or 3.2%, increase in average commercial business loans, and a $13.5 million, or 0.6%, increase in average commercial real estate loans.  Slightly offsetting the increases was a $3.4 million, or 0.6%, decrease in average home equity loans.

Interest expense increased by $2.8 million, or 14.8%, to $21.8 million during the third quarter of 2018, from $18.9 million in the linked quarter. Average interest-bearing deposit balances increased by $185.4 million, or 4.1%, primarily driven by a $259.3 million, or 11.5%, increase in average NOW and money market account balances, which was slightly offset by a $16.2 million, or 3.1%, decrease in average savings account balances and a $57.7 million, or 3.3%, decrease in average certificates of deposits. Average non-interest bearing deposits increased by $12.0 million, or 1.6%, as compared to the linked quarter. Average Federal Home Loan Bank of Boston advances decreased by $115.0 million, or 12.0%, 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 municipal and commercial acquisition strategies.

The tax-equivalent net interest margin decreased by five basis points to 2.92% in the third quarter of 2018, from 2.97% in the linked period. The decline in the net interest margin was driven by a 17 basis point increase in the cost of interest-bearing liabilities, which was partially offset by a nine basis point increase in the yield of interest-earning assets.  The interest-earning asset yield improvement was largely driven by a 15 basis point increase in the yield on commercial real estate loans, a 26 basis point increase in the yield on home equity loans, a five basis point increase in the yield on residential real estate loans, and a five basis point increase in the yield on other consumer loans.  The total cost of funds increased by 16 basis points to 1.36% in the third quarter of 2018 driven by a 19 basis point increase in the cost of interest-bearing deposits and a 19 basis point increase in the cost of Federal Home Loan Bank of Boston advances.

Provision for Loan Losses

The provision for loan losses totaled $2.0 million for the quarter ended September 30, 2018 as compared to $2.4 million for the linked quarter. Net charge-offs for the quarter ended September 30, 2018 totaled $1.3 million, or 0.09%, as a percentage of average loans outstanding, as compared to $1.1 million, or 0.08%, as a percentage of average loans for the quarter ended June 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 increased by $1.2 million, or 14.3%, to $9.6 million for the quarter ended September 30, 2018 from $8.4 million in the linked quarter. The increase in the third quarter's non-interest income was driven primarily by an increase in income from mortgage banking activities. Additionally, there were lower losses on limited partnership investments as compared to the linked quarter, which contributed to the overall increase in non-interest income. These increases were offset primarily by a decrease in bank-owned life insurance income, as well as net losses on sales of securities as compared to the linked quarter.

Non-Interest Expense

Non-interest expense for the quarter ended September 30, 2018 totaled $38.9 million and slightly increased by $573,000, or 1.5%, from the linked quarter. The increase in non-interest expense during the quarter was primarily due to increases in salaries and employee benefits and other non-interest expenses. These increases were primarily offset by decreases in occupancy and equipment and professional fees as compared to the linked quarter.

Asset Quality

Asset quality remained strong and stable for the period, with non-performing assets decreasing by $2.3 million to $29.0 million at September 30, 2018 from $31.3 million at June 30, 2018. The ratio of non-performing assets to total assets for the quarter ended September 30, 2018 was 0.40%, as compared to 0.43% in the linked quarter.

Capital

The Company reported Tangible Common Equity ("TCE") of $591.0 million, or 8.2% of average assets, for the quarter ended September 30, 2018. Tangible book value per share increased to $11.55 at September 30, 2018 from $11.40 at June 30, 2018. The increase was primarily driven by the impact of the Company's net income of $16.3 million, partially offset by the cash dividend payment to shareholders of $0.12 per share, as well as increases in accumulated other comprehensive losses as a result of a decrease in the market value of the Company's investment portfolio, as compared to the previous quarter. Book value per share at September 30, 2018 was $13.88, as compared to $13.73 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 October 26, 2018 and payable on November 6, 2018. This dividend equates to a 2.73% annualized yield based on the $17.59 average closing price of the Company’s common stock in the third quarter of 2018. The Company has paid dividends for 50 consecutive quarters.

Investor Conference Call

United Financial Bancorp, Inc. will host a conference call on Wednesday, October 17, 2018 at 10:00 a.m. Eastern Time (ET) to discuss the Company’s third 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 October 31, 2018 by calling 1-877-344-7529 and entering conference number 10124821. 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.

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, business, and consumer banking products and services to customers throughout Connecticut and Massachusetts. United Bank is a financially strong, leading New England bank with more than 50 branches in two states and several commercial and residential loan production offices. United Financial Bancorp, Inc. trades on the NASDAQ Global Select Stock Exchange under the ticker symbol “UBNK.” At September 30, 2018, the Company had $7.21 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
September 30,
 For the Nine Months Ended
September 30,
  2018 2017 2018 2017
Interest and dividend income: (In thousands, except share data)
Loans $61,061  $51,809  $173,799  $147,976 
Securities-taxable interest 5,822  5,604  17,289  16,907 
Securities-non-taxable interest 2,347  2,499  7,130  7,108 
Securities-dividends 748  736  2,121  2,233 
Interest-bearing deposits 213  151  476  303 
Total interest and dividend income 70,191  60,799  200,815  174,527 
Interest expense:        
Deposits 15,767  9,185  39,658  23,607 
Borrowed funds 5,995  4,846  18,004  13,527 
Total interest expense 21,762  14,031  57,662  37,134 
Net interest income 48,429  46,768  143,153  137,393 
Provision for loan losses 2,007  2,566  6,296  7,146 
Net interest income after provision for loan losses 46,422  44,202  136,857  130,247 
Non-interest income:        
Service charges and fees 6,623  6,514  19,324  19,343 
Net (loss) gain from sales of securities (58) 158  120  710 
Income from mortgage banking activities 1,486  1,204  4,061  4,355 
Bank-owned life insurance income 1,460  1,167  4,777  3,523 
Net loss on limited partnership investments (221) (864) (1,771) (1,582)
Other income 265  247  693  635 
Total non-interest income 9,555  8,426  27,204  26,984 
Non-interest expense:        
Salaries and employee benefits 22,643  20,005  65,954  59,309 
Service bureau fees 2,209  2,336  6,592  6,959 
Occupancy and equipment 4,487  3,740  14,104  11,866 
Professional fees 1,013  1,048  3,282  3,309 
Marketing and promotions 1,119  1,087  2,993  3,036 
FDIC insurance assessments 655  780  2,129  2,255 
Core deposit intangible amortization 288  337  930  1,075 
Other 6,529  5,929  18,065  17,704 
Total non-interest expense 38,943  35,262  114,049  105,513 
Income before income taxes 17,034  17,366  50,012  51,718 
Provision for income taxes 726  2,175  2,271  6,601 
Net income $16,308  $15,191  $47,741  $45,117 
         
Net income per share:        
Basic $0.32  $0.30  $0.94  $0.90 
Diluted $0.32  $0.30  $0.94  $0.89 
Weighted-average shares outstanding:        
Basic 50,624,832  50,263,602  50,535,569  50,246,234 
Diluted 51,104,776  50,889,987  51,026,105  50,888,175 

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

  For the Three Months Ended
  September 30,
2018
 June 30,
2018
 March 31,
2018
 December 31,
2017
 September 30,
2017
Interest and dividend income: (In thousands, except share data)
Loans $61,061  $57,958  $54,780  $52,758  $51,809 
Securities-taxable interest 5,822  5,969  5,498  5,643  5,604 
Securities-non-taxable interest 2,347  2,354  2,429  2,571  2,499 
Securities-dividends 748  736  637  669  736 
Interest-bearing deposits 213  113  150  86  151 
Total interest and dividend income 70,191  67,130  63,494  61,727  60,799 
Interest expense:          
Deposits 15,767  12,864  11,027  9,958  9,185 
Borrowed funds 5,995  6,085  5,924  4,920  4,846 
Total interest expense 21,762  18,949  16,951  14,878  14,031 
Net interest income 48,429  48,181  46,543  46,849  46,768 
Provision for loan losses 2,007  2,350  1,939  2,250  2,566 
Net interest income after provision for loan losses 46,422  45,831  44,604  44,599  44,202 
Non-interest income:          
Service charges and fees 6,623  6,542  6,159  6,031  6,514 
Net (loss) gain from sales of securities (58) 62  116  72  158 
Income from mortgage banking activities 1,486  846  1,729  1,184  1,204 
Bank-owned life insurance income 1,460  1,671  1,646  1,939  1,167 
Net loss on limited partnership investments (221) (960) (590) (1,441) (864)
Other income (loss) 265  199  229  (204) 247 
Total non-interest income 9,555  8,360  9,289  7,581  8,426 
Non-interest expense:          
Salaries and employee benefits 22,643  22,113  21,198  20,752  20,005 
Service bureau fees 2,209  2,165  2,218  2,304  2,336 
Occupancy and equipment 4,487  4,668  4,949  5,036  3,740 
Professional fees 1,013  1,105  1,164  996  1,048 
Marketing and promotions 1,119  1,189  685  1,011  1,087 
FDIC insurance assessments 655  735  739  821  780 
Core deposit intangible amortization 288  305  337  336  337 
Other 6,529  6,090  5,446  5,981  5,929 
Total non-interest expense 38,943  38,370  36,736  37,237  35,262 
Income before income taxes 17,034  15,821  17,157  14,943  17,366 
Provision for income taxes 726  175  1,370  5,442  2,175 
Net income $16,308  $15,646  $15,787  $9,501  $15,191 
           
Net income per share:          
Basic $0.32  $0.31  $0.31  $0.19  $0.30 
Diluted $0.32  $0.31  $0.31  $0.19  $0.30 
Weighted-average shares outstanding:          
Basic 50,624,832  50,504,273  50,474,942  50,392,382  50,263,602 
Diluted 51,104,776  50,974,283  50,996,596  51,024,881  50,889,987 

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

  September 30,
2018
 June 30,
2018
 March 31,
2018
 December 31,
2017
 September 30,
2017
ASSETS (In thousands)
Cash and cash equivalents:          
Cash and due from banks $48,786  $62,188  $45,332  $56,661  $59,456 
Short-term investments 29,809  46,987  23,910  32,007  39,061 
Total cash and cash equivalents 78,595  109,175  69,242  88,668  98,517 
Available for sale securities – At fair value 972,035  1,006,135  1,031,277  1,050,787  1,068,055 
Held to maturity securities – At amortized cost       13,598  13,693 
Loans held for sale 86,948  85,458  63,394  114,073  89,419 
Loans:          
Commercial real estate loans:          
Owner-occupied 434,906  418,338  442,938  445,820  442,989 
Investor non-owner occupied 1,888,848  1,927,960  1,842,898  1,854,459  1,777,716 
Construction 78,235  82,883  84,717  78,083  82,688 
Total commercial real estate loans 2,401,989  2,429,181  2,370,553  2,378,362  2,303,393 
Commercial business loans 861,030  841,142  846,182  840,312  821,372 
Consumer loans:          
Residential real estate 1,283,126  1,252,001  1,235,197  1,204,401  1,211,783 
Home equity 579,907  588,638  582,285  583,180  561,814 
Residential construction 32,750  32,063  37,579  40,947  39,460 
Other consumer 369,781  332,402  310,439  292,781  267,921 
Total consumer loans 2,265,564  2,205,104  2,165,500  2,121,309  2,080,978 
Total loans 5,528,583  5,475,427  5,382,235  5,339,983  5,205,743 
Net deferred loan costs and premiums 16,603  15,502  14,724  14,794  15,297 
Allowance for loan losses (49,909) (49,163) (47,915) (47,099) (46,368)
Loans receivable - net 5,495,277  5,441,766  5,349,044  5,307,678  5,174,672 
Federal Home Loan Bank of Boston stock, at cost 42,032  46,734  49,895  50,194  46,758 
Accrued interest receivable 25,485  23,209  22,333  22,332  20,893 
Deferred tax asset, net 31,473  30,190  28,710  25,656  30,999 
Premises and equipment, net 67,612  67,614  67,619  67,508  61,063 
Goodwill 115,281  115,281  115,281  115,281  115,281 
Core deposit intangible asset 3,560  3,849  4,154  4,491  4,827 
Cash surrender value of bank-owned life insurance 181,928  180,490  179,556  148,300  171,300 
Other assets 107,272  98,695  88,169  105,593  81,019 
Total assets $7,207,498  $7,208,596  $7,068,674  $7,114,159  $6,976,496 
           
           
  September 30,
2018
 June 30,
2018
 March 31,
2018
 December 31,
2017
 September 30,
2017
LIABILITIES AND STOCKHOLDERS’ EQUITY          
Liabilities:          
Deposits:          
Non-interest-bearing $759,210  $770,982  $753,575  $778,576  $725,130 
Interest-bearing 4,741,153  4,622,394  4,528,935  4,419,645  4,427,892 
Total deposits 5,500,363  5,393,376  5,282,510  5,198,221  5,153,022 
Mortgagors’ and investor escrow accounts 9,597  14,526  11,096  7,545  9,641 
Federal Home Loan Bank advances and other borrowings 926,592  1,041,896  1,030,735  1,165,054  1,068,814 
Accrued expenses and other liabilities 61,128  56,921  51,333  50,011  54,366 
Total liabilities 6,497,680  6,506,719  6,375,674  6,420,831  6,285,843 
Total stockholders’ equity 709,818  701,877  693,000  693,328  690,653 
Total liabilities and stockholders’ equity $7,207,498  $7,208,596  $7,068,674  $7,114,159  $6,976,496 

United Financial Bancorp, Inc. and Subsidiaries
Selected Financial Highlights
(Dollars In Thousands, Except Share Data)
(Unaudited)

 At or For the Three Months Ended
 September 30,
 2018
 June 30,
 2018
 March 31,
 2018
 December 31,
 2017
 September 30,
 2017
Share Data:         
Basic net income per share$0.32  $0.31  $0.31  $0.19  $0.30 
Diluted net income per share0.32  0.31  0.31  0.19  0.30 
Dividends declared per share0.12  0.12  0.12  0.12  0.12 
Tangible book value per share$11.55  $11.40  $11.25  $11.24  $11.23 
Key Statistics:         
Total revenue$57,984  $56,541  $55,832  $54,430  $55,194 
Total non-interest expense38,943  38,370  36,736  37,327  35,262 
Average earning assets6,671,424  6,584,938  6,568,168  6,480,966  6,423,741 
Key Ratios:         
Return on average assets (annualized)0.91% 0.88% 0.89% 0.54% 0.88%
Return on average equity (annualized)9.26% 9.00% 9.15% 5.50% 8.92%
Tax-equivalent net interest margin (annualized)2.92% 2.97% 2.90% 2.98% 3.00%
Residential Mortgage Production:         
Dollar volume (total)$143,673  $140,409  $94,433  $135,522  $133,462 
Mortgages originated for purchases111,555  110,351  63,193  83,181  97,132 
Loans sold99,372  99,637  99,899  94,738  152,551 
Income from mortgage banking activities1,486  846  1,729  1,184  1,204 
Non-performing Assets:         
Residential real estate$11,949  $11,221  $11,663  $11,824  $11,330 
Home equity4,005  4,607  4,698  4,968  4,206 
Investor-owned commercial real estate1,525  2,400  2,863  1,821  2,957 
Owner-occupied commercial real estate1,202  2,176  2,326  1,664  2,084 
Construction243  250  273  1,398  1,748 
Commercial business985  1,196  1,579  1,477  2,427 
Other consumer597  237  34  35  37 
Non-accrual loans20,506  22,087  23,436  23,187  24,789 
Troubled debt restructured – non-accruing6,706  7,330  8,308  8,475  6,628 
Total non-performing loans27,212  29,417  31,744  31,662  31,417 
Other real estate owned1,808  1,855  1,935  2,154  2,444 
Total non-performing assets$29,020  $31,272  $33,679  $33,816  $33,861 
Non-performing loans to total loans0.49% 0.54% 0.59% 0.59% 0.60%
Non-performing assets to total assets0.40% 0.43% 0.48% 0.48% 0.49%
Allowance for loan losses to non-performing loans183.41% 167.12% 150.94% 148.76% 147.59%
Allowance for loan losses to total loans0.90% 0.90% 0.89% 0.88% 0.89%
Non-GAAP Ratios: (1)         
Non-interest expense to average assets (annualized)2.17% 2.16% 2.08% 2.13% 2.04%
Efficiency ratio (2)65.73% 65.18% 63.97% 63.53% 60.47%
Cost of funds (annualized) (3)1.36% 1.20% 1.07% 0.96% 0.91%
Total revenue growth rate2.55% 1.27% 2.58% (1.38)% (1.71)%
Total revenue growth rate (annualized)10.21% 5.08% 10.30% (5.54)% (6.84)%
Average earning asset growth rate1.31% 0.26% 1.35% 0.89% 1.89%
Average earning asset growth rate (annualized)5.25% 1.02% 5.38% 3.56% 7.54%
Return on average tangible common equity (annualized) (2)11.30% 11.03% 11.25% 6.81% 10.99%
Pre-provision net revenue to average assets (2)1.11% 1.14% 1.15% 1.19% 1.31%

(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 pages below.
(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
 September 30, 2018 September 30, 2017
 Average
Balance
 Interest
and
Dividends
 Yield/Cost Average
Balance
 Interest
and
Dividends
 Yield/Cost
Interest-earning assets:           
Residential real estate$1,375,948  $12,451  3.65% $1,323,262  $11,017  3.33%
Commercial real estate2,320,375  26,105  4.40  2,211,601  23,063  4.08 
Construction114,068  1,379  4.73  122,511  1,301  4.16 
Commercial business841,936  9,428  4.38  791,547  8,163  4.04 
Home equity584,706  7,471  5.07  536,509  5,917  4.38 
Other consumer351,892  4,532  5.11  252,532  3,063  4.81 
Investment securities995,405  8,686  3.48  1,090,559  9,621  3.52 
Federal Home Loan Bank stock45,016  715  6.35  51,722  572  4.43 
Other earning assets42,078  216  2.04  43,498  151  1.38 
Total interest-earning assets6,671,424  70,983  4.21  6,423,741  62,868  3.86 
Allowance for loan losses(49,823)     (46,479)    
Non-interest-earning assets569,471      529,937     
Total assets$7,191,072      $6,907,199     
Interest-bearing liabilities:           
NOW and money market$2,515,660  $8,461  1.33% $2,105,796  $3,992  0.75%
Savings501,700  75  0.06  527,641  77  0.06 
Certificates of deposit1,691,382  7,231  1.70  1,731,658  5,116  1.17 
Total interest-bearing deposits4,708,742  15,767  1.33  4,365,095  9,185  0.83 
Federal Home Loan Bank advances844,207  4,591  2.13  951,760  3,404  1.40 
Other borrowings111,760  1,404  4.92  135,173  1,442  4.18 
Total interest-bearing liabilities5,664,709  21,762  1.52  5,452,028  14,031  1.02 
Non-interest-bearing deposits750,503      702,916     
Other liabilities71,554      70,853     
Total liabilities6,486,766      6,225,797     
Stockholders’ equity704,306      681,402     
Total liabilities and stockholders’ equity$7,191,072      $6,907,199     
Net interest-earning assets$1,006,715      $971,713     
Tax-equivalent net interest income  49,221      48,837   
Tax-equivalent net interest rate spread (1)    2.69%     2.84%
Tax-equivalent net interest margin (2)    2.92%     3.00%
Average interest-earning assets to average interest-bearing liabilities    117.77%     117.82%
Less tax-equivalent adjustment  792      2,069   
Net interest income  $48,429      $46,768   

(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
 September 30, 2018 June 30, 2018
 Average
Balance
 Interest
and
Dividends
 Yield/Cost Average
Balance
 Interest
and
Dividends
 Yield/Cost
Interest-earning assets:           
Residential real estate$1,375,948  $12,451  3.65% $1,338,021  $12,020  3.60%
Commercial real estate2,320,375  26,105  4.40  2,306,896  24,762  4.25 
Construction114,068  1,379  4.73  114,987  1,331  4.58 
Commercial business841,936  9,428  4.38  816,102  9,139  4.43 
Home equity584,706  7,471  5.07  588,080  7,058  4.81 
Other consumer351,892  4,532  5.11  322,103  4,062  5.06 
Investment securities995,405  8,686  3.48  1,019,491  8,998  3.53 
Federal Home Loan Bank stock45,016  715  6.35  49,136  703  5.72 
Other earning assets42,078  216  2.04  30,122  116  1.55 
Total interest-earning assets6,671,424  70,983  4.21  6,584,938  68,189  4.12 
Allowance for loan losses(49,823)     (48,624)    
Non-interest-earning assets569,471      555,407     
Total assets$7,191,072      $7,091,721     
Interest-bearing liabilities:           
NOW and money market$2,515,660  $8,461  1.33% $2,256,323  $6,163  1.10%
Savings501,700  75  0.06  517,910  77  0.06 
Certificates of deposit1,691,382  7,231  1.70  1,749,097  6,624  1.52 
Total interest-bearing deposits4,708,742  15,767  1.33  4,523,330  12,864  1.14 
Federal Home Loan Bank advances844,207  4,591  2.13  959,248  4,692  1.94 
Other borrowings111,760  1,404  4.92  112,112  1,393  4.91 
Total interest-bearing liabilities5,664,709  21,762  1.52  5,594,690  18,949  1.35 
Non-interest-bearing deposits750,503      738,484     
Other liabilities71,554      63,246     
Total liabilities6,486,766      6,396,420     
Stockholders’ equity704,306      695,301     
Total liabilities and stockholders’ equity$7,191,072      $7,091,721     
Net interest-earning assets$1,006,715      $990,248     
Tax-equivalent net interest income  49,221      49,240   
Tax-equivalent net interest rate spread (1)    2.69%     2.77%
Tax-equivalent net interest margin (2)    2.92%     2.97%
Average interest-earning assets to average interest-bearing liabilities    117.77%     117.70%
Less tax-equivalent adjustment  792      1,059   
Net interest income  $48,429      $48,181   

(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 Nine Months Ended
 September 30, 2018 September 30, 2017
 Average
Balance
 Interest
and
Dividends
 Yield/Cost Average
Balance
 Interest
and
Dividends
 Yield/Cost
Interest-earning assets:           
Residential real estate$1,342,955  $35,977  3.59% $1,285,618  $32,079  3.33%
Commercial real estate2,303,188  74,522  4.27  2,155,085  65,626  4.02 
Construction116,144  4,035  4.58  132,158  4,261  4.25 
Commercial business833,612  26,949  4.26  767,738  22,510  3.87 
Home equity583,876  21,056  4.82  533,669  16,876  4.23 
Other consumer324,802  12,394  5.10  231,892  8,581  4.95 
Investment securities1,018,609  26,305  3.44  1,086,574  28,366  3.48 
Federal Home Loan Bank stock48,513  2,024  5.56  53,005  1,630  4.10 
Other earning assets36,856  487  1.77  36,049  303  1.12 
Total interest-earning assets6,608,555  203,749  4.09  6,281,788  180,232  3.80 
Allowance for loan losses(48,750)     (45,008)    
Non-interest-earning assets559,792      521,629     
Total assets$7,119,597      $6,758,409     
Interest-bearing liabilities:           
NOW and money market$2,307,660  $19,517  1.13% $1,960,685  $8,996  0.61%
Savings510,137  225  0.06  532,718  235  0.06 
Certificates of deposit1,745,332  19,916  1.53  1,720,120  14,376  1.12 
Total interest-bearing deposits4,563,129  39,658  1.16  4,213,523  23,607  0.75 
Federal Home Loan Bank advances945,085  13,829  1.93  986,935  9,225  1.23 
Other borrowings113,937  4,175  4.83  138,685  4,302  4.09 
Total interest-bearing liabilities5,622,151  57,662  1.37  5,339,143  37,134  0.93 
Non-interest-bearing deposits734,253      680,786     
Other liabilities66,491      68,499     
Total liabilities6,422,895      6,088,428     
Stockholders’ equity696,702      669,981     
Total liabilities and stockholders’ equity$7,119,597      $6,758,409     
Net interest-earning assets$986,404      $942,645     
Tax-equivalent net interest income  146,087      143,098   
Tax-equivalent net interest rate spread (1)    2.72%     2.87%
Tax-equivalent net interest margin (2)    2.93%     3.02%
Average interest-earning assets to average interest-bearing liabilities    117.54%     117.66%
Less tax-equivalent adjustment  2,934      5,705   
Net interest income  $143,153      $137,393   

(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
 September 30,
 2018
 June 30,
 2018
 March 31,
 2018
 December 31,
2017
 September 30,
 2017
 (Dollars in thousands)
Net Income (GAAP)$16,308  $15,646  $15,787  $9,501  $15,191 
Non-GAAP adjustments:         
Non-interest income58  (271) (342) 745  (158)
Non-interest expense(129) 215    536   
Income tax expense related to tax reform      1,609   
Related income tax (benefit) expense15  (93) 72  2,074  55 
Net adjustment(56) (149) (270) 4,964  (103)
Total net income (non-GAAP)$16,252  $15,497  $15,517  $14,465  $15,088 
          
Non-interest income (GAAP)$9,555  $8,360  $9,289  $7,581  $8,426 
Non-GAAP adjustments:         
Net loss (gain) on sales of securities58  (62) (116) (72) (158)
Limited partnership writedown (1)      1,214   
Loss on sale of premises and equipment      401   
BOLI claim benefit  (209) (226) (798)  
Net adjustment58  (271) (342) 745  (158)
Total non-interest income (non-GAAP)9,613  8,089  8,947  8,326  8,268 
Total net interest income48,429  48,181  46,543  46,849  46,768 
Total revenue (non-GAAP)$58,042  $56,270  $55,490  $55,175  $55,036 
          
Non-interest expense (GAAP)$38,943  $38,370  $36,736  $37,237  $35,262 
Non-GAAP adjustments:         
Lease exit/disposal cost obligation129  (215)   (536)  
Net adjustment129  (215)   (536)  
Total non-interest expense (non-GAAP)$39,072  $38,155  $36,736  $36,701  $35,262 
          
Total loans$5,528,583  $5,475,427  $5,382,235  $5,339,983  $5,205,743 
Non-covered loans (2)(708,621) (729,947) (771,802) (780,776) (739,376)
Total covered loans$4,819,962  $4,745,480  $4,610,433  $4,559,207  $4,466,367 
Allowance for loan losses$49,909  $49,163  $47,915  $47,099  $46,368 
Allowance for loan losses to total loans0.90% 0.90% 0.89% 0.88% 0.89%
Allowance for loan losses to total covered loans1.04% 1.04% 1.04% 1.03% 1.04%

(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
  September 30,
 2018
 June 30,
 2018
 March 31,
 2018
 December 31,
2017
 September 30,
 2017
   
Efficiency Ratio:          
Non-Interest Expense (GAAP) $38,943  $38,370  $36,736  $37,237  $35,262 
Non-GAAP adjustments:          
Other real estate owned expense (256) (163) (167) (157) (211)
Lease exit/disposal cost obligation 129  (215)   (536)  
Non-Interest Expense for Efficiency Ratio (non-GAAP) $38,816  $37,992  $36,569  $36,544  $35,051 
           
Net Interest Income (GAAP) $48,429  $48,181  $46,543  $46,849  $46,768 
Non-GAAP adjustments:          
Tax-equivalent adjustment for tax-exempt loans and investment securities 792  1,059  1,083  2,117  2,069 
           
Non-Interest Income (GAAP) 9,555  8,360  9,289  7,581  8,426 
Non-GAAP adjustments:          
Net loss (gain) on sales of securities 58  (62) (116) (72) (158)
Net loss on limited partnership investments 221  960  590  1,441  864 
Loss on sale of premises and equipment       401   
BOLI claim benefit   (209) (226) (798)  
Total Revenue for Efficiency Ratio (non-GAAP) $59,055  $58,289  $57,163  $57,519  $57,969 
           
Efficiency Ratio (Non-Interest Expense for Efficiency Ratio (non-GAAP)/Total Revenue for Efficiency Ratio (non-GAAP)) 65.73% 65.18% 63.97% 63.53% 60.47%
           
           
  Three Months Ended
  September 30,
 2018
 June 30,
 2018
 March 31,
 2018
 December 31,
2017
 September 30,
 2017
   
Pre-Provision Net Revenue ("PPNR") to Average Assets (Annualized):        
Net Interest income (GAAP) $48,429  $48,181  $46,543  $46,849  $46,768 
Non-GAAP adjustments:          
Tax-equivalent adjustment for tax-exempt loans and investment securities 792  1,059  1,083  2,117  2,069 
Total tax-equivalent net interest income (A) $49,221  $49,240  $47,626  $48,966  $48,837 
           
Non Interest Income (GAAP) 9,555  8,360  9,289  7,581  8,426 
Non-GAAP adjustments:          
Net loss (gain) on sales of securities 58  (62) (116) (72) (158)
Net loss on limited partnership investments 221  960  590  1,441  864 
Loss on sale of premises and equipment       401   
BOLI claim benefit   (209) (226) (798)  
Non-Interest Income for PPNR (non-GAAP) (B) $9,834  $9,049  $9,537  $8,553  $9,132 
           
Non-Interest Expense (GAAP) $38,943  $38,370  $36,736  $37,237  $35,262 
Non-GAAP adjustments:          
Lease exit/disposal cost obligation 129  (215)   (536)  
Non-Interest Expense for PPNR (non-GAAP) (C) $39,072  $38,155  $36,736  $36,701  $35,262 
           
Total PPNR (non-GAAP)  (A + B - C) : $19,983  $20,134  $20,427  $20,818  $22,707 
Average Assets 7,191,072  7,091,721  7,074,721  6,976,682  6,907,199 
PPNR to Average Assets (Annualized) 1.11% 1.14% 1.15% 1.19% 1.31%
           
Return on Average Tangible Common Equity (Annualized):       
Net Income (GAAP) $16,308  $15,646  $15,787  $9,501  $15,191 
Non-GAAP adjustments:          
Intangible assets amortization, tax effected (1) 228  241  266  219  219 
Net Income excluding intangible assets amortization, tax effected (1) $16,536  $15,887  $16,053  $9,720  $15,410 
Average stockholders' equity (non-GAAP) $704,306  $695,301  $690,345  $691,004  $681,402 
Average goodwill & other intangible assets (non-GAAP) 119,009  119,288  119,611  119,962  120,275 
Average tangible common stockholders' equity (non-GAAP) $585,297  $576,013  $570,734  $571,042  $561,127 
Return on Average Tangible Common Equity (non-GAAP) 11.30% 11.03% 11.25% 6.81% 10.99%

(1) Intangible assets amortization is tax effected at 21% for the three months ended September 30, 2018, June 30, 2018 and March 31, 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:
Marliese L. Shaw
Executive Vice President, Investor Relations Officer
United Bank
860-291-3622
MShaw@bankatunited.com
 Media Relations Contact:
Adam J. Jeamel
Regional President, Corporate Communications
United Bank
860-291-3765
AJeamel@bankatunited.com