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| file | filename |
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| EX-99.1 - EXHIBIT 99.1 - United Financial Bancorp, Inc. | ex-99120160630.htm |
| 8-K - 8-K - United Financial Bancorp, Inc. | a8-k20160630.htm |
Second Quarter 2016 Earnings
NASDAQ Global Select Market: UBNK
Create Your Balance
2 NASDAQ: UBNK
This Presentation contains forward-looking statements that are within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements
are based upon the current beliefs and expectations of our management and are subject to significant risks and uncertainties. These risks and uncertainties
could cause our results to differ materially from those set forth in such forward-looking statements. Forward-looking statements can be identified by the fact
that they do not relate strictly to historical or current facts. Words such as “believes,” “anticipates,” “expects,” “intends,” “plans,” “estimates,” “targeted”
and similar expressions, and future or conditional verbs, such as “will,” “would,” “should,” “could” or “may” are intended to identify forward-looking
statements but are not the only means to identify these statements. Forward-looking statements involve risks and uncertainties. Actual conditions, events or
results may differ materially from those contemplated by a forward-looking statement. Factors that could cause this difference — many of which are beyond
our control — include without limitation the following: Any forward-looking statements made by or on behalf of us in this Presentation speak only as of the
date of this Presentation. We do not undertake to update forward-looking statements to reflect the impact of circumstances or events that arise after the
date the forward-looking statement was made. The reader should; however, consult any further disclosures of a forward-looking nature we may make in
future fi l ings.
With regard to presentations compared to peer institutions, the peer companies include: BHLB, BNCL, BPFH, BRKL, CBU, CUBI, DCOM, EGBN, FCF, FFIC, INDB,
KRNY, NBTB, NWBI, PFS, SASR, STBA, TMP, TRST, WSFS
Data for peers is sourced from SNL Financial LLC.
NON-GAAP FINANCIAL MEASURES
This presentation references non-GAAP financial measures incorporating tangible equity and related measures, and operating earnings excluding non-
recurring costs. These measures are commonly used by investors in evaluating financial condition. GAAP earnings are lower than core earnings primarily due
to non-recurring conversion, balance sheet restructuring and cost cutting initiative related expenses. The efficiency ratio represents the ratio of non-interest
expenses to the sum of net interest income before provision for loan losses and non-interest income, exclusive of net gain (loss) on limited partnership
investments. The pre-provision net revenue to average assets ratio represents the ratio of net interest income, on a fully tax-equivalent basis, fees and other
non-interest income, net of non-credit-related expenses as a percent of total average assets. The pre-provision net revenue to average equity ratio
represents the ratio of net interest income, on a fully tax-equivalent basis, fees and other non-interest income, net of non-credit-related expenses as a
percent of total average equity. Reconciliations are in earnings releases at www.unitedfinancialinc.com.
Forward Looking Statements
3 NASDAQ: UBNK
Corporate Contacts
William H. W. Crawford, IV
Chief Executive Officer
Eric R. Newell, CFA
Executive Vice President, Chief Financial Officer
860-291-3722 or ENewell@bankatunited.com
Investor Information:
Marliese L. Shaw
Executive Vice President, Corporate Secretary/Investor Relations Officer
860-291-3622 or MShaw@bankatunited.com
4 NASDAQ: UBNK
Table of Contents
Page
Key Objectives 5
Second Quarter Income Statement Walk 6
Second Half 2016 Forecast 7
Purchase Accounting 8
Mortgage Banking 9
Commercial Real Estate 10
Indexed Pipelines 11
Appendix 12
5 NASDAQ: UBNK
Four Key Objectives
Objective Progress
Align earning asset growth with organic capital and low
cost core deposit generation to maintain strong capital
and liquidity
(a) average earning asset growth linked quarter totaled
$38.2 million compared to average deposit growth of
$26.9 million; (b) 3.5% annualized 2Q16 DDA growth; (c)
annualized loan growth in 2Q16 of 7%
Re-Mix cash flows into higher yielding risk adjusted
return on assets with lower funding costs relative to
peers.
(a) cost of funds improved by 1 bps linked quarter; (b)
26% annualized growth in OOCRE and C&I loans
Invest in people, systems, and technology to grow
revenue and improve customer experience while
maintaining attractive cost structure.
(a) introduced new electronic based checking product;
(b) 29% increase in new checking account openings
from linked quarter; (c) Operating Non-Interest
Expense/ Average Assets (NIE/AA) at 2.08%
Grow operating revenue, maximize operating earnings,
grow tangible book value, pay dividend. Achieve more
revenue into NII and core fee income.
(a) 7% annualized increase in tangible book value (TBV);
(b) 3.70% dividend yield in second quarter 2016
6 NASDAQ: UBNK
Second Quarter Walk
(Dollars in thousands) GAAP Net Income Operating Net Income
Actual First Quarter 2016 $ 11,894 $ 10,946
Loan Interest Income (2,396 ) (468 )
Fee Income 480 480
Investment Income (37 ) (37 )
Interest Expense 47 54
Net Interest Income (1,906 ) 29
Provision (936 ) (936 )
Net Interest Income after Provision (2,842 ) (907 )
Service Charges and Fees (235 ) (236 )
Security Gains/Losses (1,085 ) —
Mortgage Banking 1,471 1,471
Gains/Losses on Limited Partnerships (568 ) (568 )
Other 222 223
Non-Interest Income (195 ) 890
Salaries and Benefits (2,222 ) (864 )
Marketing (431 ) (431 )
Other 1,735 298
Total Operating Expense (918 ) (997 )
Taxes 1,119 90
Total Change (2,836 ) (924 )
Actual Second Quarter 2016 $ 9,058 $ 10,022
7 NASDAQ: UBNK
Second Half 2016 Forecast
Actual
Q1 2016
Actual
Q2 2016 Second Half 2016
Operating Net Interest Margin 2.95% 2.94% ~ 2.94%
Loan Growth 3.0%* 7.0%* mid single digits
Provision / Average Gross Loans 0.23%* 0.31%* 0.27% - 0.30%*
Non-Interest Income Run Rate $26.9 million* $26.1 million* $24.0 -$27.0 million*
Non-Interest Expense Run Rate $135.1 million* $138.7 million* $130 million*
Effective Tax Rate 13.0% 6.8% 15.0%
*Note: Loan Growth, Provision/Average Gross Loans, Fee Income and
NIE calculations are annualized.
8 NASDAQ: UBNK
Purchase Accounting at June 30, 2016
(Dollars in thousands)
Premium
(Discount)
Weighted
Average Life
Projected Quarter
Net Interest
Income Impact
Projected
2H2016 Impact
Consumer $9,148.4 3.9 $(589.8) $(1,179.5)
Commercial (12,386.0) 3.3 943.9 1,887.8
Residential 6,808.8 3.5 (490.1) (980.3)
Total Interest Income Impact $3,571.2 $(136.0) $(272.0)
Total Purchased Liabilities $2,394.4 $1,441.4
Total Net Interest Income Impact $1,169.4
Note: Loan accretion / amortization projections can fluctuate due to a variety of factors including: changes in borrower cred it quality, loan sales, and prepayment speeds.
9 NASDAQ: UBNK
• Origination
volume increase
in June 30, 2016
quarter by $49.4
MM for a total
Q2 volume of
$173.5 MM in
mortgages.
• A record 65.9% in
30 year FRM,
60.5% of which
was sold into the
Secondary
Market
• Purchase volume
represented
58.1% of total
production in
Q2 2016
Mortgage Banking
10 NASDAQ: UBNK
Commercial Real Estate
Institution Name City State Ticker
CRE / Risk-
Based Capital
3-Year
Delta
Construction /
Risk-Based
Capital
3-Year Delta
United Financial Bancorp, Inc. Glastonbury CT UBNK 294% 52% 28% 4%
People's United Financial, Inc. Bridgeport CT PBCT 268% 20% 27% 8%
Webster Financial Corporation Waterbury CT WBS 149% 27% 17% 5%
Berkshire Hills Bancorp, Inc. Pittsfield MA BHLB 231% 32% 43% 2%
Independent Bank Corp. Rockland MA INDB 299% (27)% 58% 9%
Brookline Bancorp, Inc. Boston MA BRKL 356% 18% 19% (4)%
Century Bancorp, Inc. Medford MA CNBKA 32% (20)% 4% (2)%
Washington Trust Bancorp, Inc. Westerly RI WASH 323% 66% 40% 21%
Meridian Bancorp, Inc. Peabody MA EBSB 445% (56)% 91% (7)%
Camden National Corporation Camden ME CAC 193% 35% 28% 14%
First Connecticut Bancorp, Inc. Farmington CT FBNK 300% 88% 16% (18)%
Enterprise Bancorp, Inc. Lowell MA EBTC 259% 13% 91% 17%
Community Bank System, Inc. De Witt NY CBU 79% (3)% 17% (2)%
NBT Bancorp Inc. Norwich NY NBTB 160% (26)% 28% (3)%
Sterling Bancorp Montebello NY STL 275% (23)% 15% (21)%
High 445% 88% 91% 21%
Low 32% (56)% 4% (21)%
Mean 241% 10% 35% 1%
Median 264% 15% 27% 0%
UBNK Ranking out of 15 (ascending): 6 3 6 7
NOTE: All financial data as of March 31, 2016
CRE includes 1.a.1, 1.a.2, 1.b, 1.d, and 1.e.2 from FFIEC 041
Data is Bank-level; BRKL subsidiaries aggregated
All data sourced from SNL Financial
11 NASDAQ: UBNK
Indexed Pipeline Metrics
Index value 06/30/2015 = 100.0
Index value 06/30/2016 = 73.3
CAGR = (26.7%)
Index value 06/30/2015 = 100
Index value 06/30/2016 = 82
CAGR = (17.7%)
12 NASDAQ: UBNK
APPENDIX
13 NASDAQ: UBNK
Balance Sheet Trends
QoQ YoY
2Q16 vs 1Q16 2Q16 vs 2Q15
Balance Sheet ($ in thousands) 2Q2016 1Q2016 4Q2015 3Q2015 2Q2015 $ Change % Change $ Change % Change
ASSETS
Cash and cash equivalents $ 97,441 $ 87,234 $ 95,176 $ 98,310 $ 84,525 $ 10,207 11.7 % $ 12,916 15.3 %
Securities
1,087,748 1,104,93
2
1,073,734 1,095,10
8
1,076,91
9
(17,184 ) (1.6 ) 10,829 1.0
Loans held for sale 30,558 7,560 10,136 13,511 28,017 22,998 304.2 2,541 9.1
Residential real estate
1,171,300 1,176,35
7
1,179,915 1,190,74
5
1,167,83
0
(5,057 ) (0.4 ) 3,470 0.3
Home equity 460,058 446,515 431,282 335,220 333,983 13,543 3.0 126,075 37.7
Other consumer 211,065 217,725 233,064 5,236 5,206 (6,660 ) (3.1 ) 205,859 3,954.3
Residential construction 49,338 42,205 41,084 33,648 24,306 7,133 16.9 25,032 103.0
Investor non-occupied CRE
1,675,821 1,648,32
1
1,673,248 1,580,84
8
1,458,22
9
27,500 1.7 217,592 14.9
Owner occupied CRE 384,324 376,511 322,084 340,047 305,522 7,813 2.1 78,802 25.8
Commercial business 671,687 614,235 603,332 576,899 634,529 57,452 9.4 37,158 5.9
Commercial construction (ADC) 107,302 128,007 129,922 146,975 142,462 (20,705 ) (16.2 ) (35,160 ) (24.7 )
Loans - net
4,702,337 4,621,98
8
4,587,062 4,185,03
2
4,048,77
0
80,349 1.7 653,567 16.1
Deferred tax asset, net 31,395 32,222 33,094 31,554 31,822 (827 ) (2.6 ) (427 ) (1.3 )
Premises and equipment, net 53,021 53,685 54,779 55,919 57,131 (664 ) (1.2 ) (4,110 ) (7.2 )
Intangible Assets 121,953 122,354 122,787 123,220 123,637 (401 ) (0.3 ) (1,684 ) (1.4 )
Cash surrender value of BOLI 126,734 125,920 125,101 125,186 124,287 814 0.6 2,447 2.0
Other Assets* 163,897 163,349 126,672 115,182 105,582 548 0.3 58,315 55.2
Total Assets
$ 6,415,084
$
6,319,24
4 $ 6,228,541 $
5,843,02
2 $
5,680,69
0
$ 95,840 1.5 % $ 734,394 12.9 %
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities: QoQ YoY
Deposits: 2Q16 vs 1Q16 2Q16 vs 2Q15
Non-interest-bearing $ 673,624 $ 657,144 $ 657,718 $ 622,535 $ 610,279 $ 16,480 2.5 % $ 63,345 10.4 %
Interest-bearing 3,781,717 3,876,90
1
3,779,353 3,640,43
6
3,571,97
2
(95,184 ) (2.5 ) 209,745 5.9
Total Deposits 4,455,341 4,534,04
5
4,437,071 4,262,97
1
4,182,25
1
(78,704 ) (1.7 ) 273,090 6.5
Mortgagors' and investor escrow accounts 14,040 9,696 13,526 8,108 15,168 4,344 44.8 (1,128 ) (7.4 )
FHLB advances and other borrowings 1,222,160 1,073,03
4
1,099,020 893,865 825,963 149,126 13.9 396,197 48.0
Accrued expenses and other liabilities 79,350 69,191 53,403 56,626 45,313 10,159 14.7 34,037 75.1
Total liabilities 5,770,891 5,685,96
6
5,603,020 5,221,57
0
5,068,69
5
84,925 1.5 702,196 13.9
Total stockholders' equity 644,193 633,278 625,521 621,452 611,995 10,915 1.7 32,198 5.3
Total liabilities and stockholders' equity
$ 6,415,084 $ 6,319,24
4
$ 6,228,541 $ 5,843,02
2
$ 5,680,69
0
$ 95,840 1.5 % $ 734,394 12.9 %
*Other assets include FHLBB stock (at cost), accrued interest receivable, in addition to other assets
14 NASDAQ: UBNK
Commercial Banking Overview
• Asset quality remains exceptional through diversification, granularity,
that is accretive to risk adjusted capital
Investor CRE & ADC by Property Type
$1,783 Million
C&I & Owner Occupied CRE by Industry
$1,056 Million
15 NASDAQ: UBNK
Investment Portfolio
Portfolio Stats ($ in millions) 2016Q2 2016Q1
Market Value 1,088 1,105
Yield 2.95 % 2.94 %
Average Rating AA AA
MBS Portfolio 596 613
Total Portfolio Duration (years) 3.0 3.1
Summary of Quarterly Securities
Purchases
2016Q2 2016Q1
Average Yield 2.90 % 2.95 %
Average Rating AA AA
16 NASDAQ: UBNK
Asset Quality
($ in thousands, except percentage data) 2016Q2 2016Q1 2015Q4 2015Q3 2015Q2
Non-accrual loans $ 32,038 $ 29,285 $ 32,191 $ 32,240 $ 30,028
TDR - non-accruing 6,713 7,143 5,611 4,605 5,346
Total non-performing loans 38,751 36,428 37,802 36,845 35,374
OREO 702 659 755 258 227
Total non-performing assets $ 39,453 $ 37,087 $ 38,557 $ 37,103 $ 35,601
NPLs to total loans 0.82 % 0.78 % 0.82 % 0.88 % 0.87 %
NPAs to total assets 0.61 % 0.59 % 0.62 % 0.63 % 0.63 %
Net charge offs $ 1,163 $ 1,075 $ 724 $ 1,276 $ 904
Annualized NCOs to average loans 0.10 % 0.09 % 0.07 % 0.12 % 0.09 %
Allowance for loan losses to non-performing loans 97.96 % 97.45 % 89.64 % 83.68 % 81.57 %
Allowance for loan losses to total loans 0.80 % 0.76 % 0.73 % 0.73 % 0.71 %
Provision for loan losses (annualized)/Average Loans 0.31 % 0.23 % 0.35 % 0.31 % 0.45 %
17 NASDAQ: UBNK
Management Team and Ownership
• William H.W. Crawford, IV owns 532,617 shares of stock and options*
• UBNK management owns 1,278,630 shares of stock and options*
• UBNK and United Bank Directors own 1,109,579 shares of stock and options*
*Note: 401k/ESOP share ownership is as of 12/31/15.
Name Title/Function
Years in
Industry/Years at
United
Prior Experience
William H.W. Crawford, IV Chief Executive Officer 27/5 Wells Fargo Bank, Wachovia Bank,
SouthTrust Bank
Eric R. Newell Chief Financial Officer 12/5 FDIC, Fitch Ratings, Alliance Berstein
Dena M. Hall Chief Marketing Officer 19/11 Woronoco Savings Bank
Craig W. Hurty Chief Human Resources Officer 32/2 Aetna, PacifiCare Health Systems
Mark A. Kucia Chief Credit Officer 28/10 Liberty Bank, Mechanics Bank, BayBank
Brandon C. Lorey Head of Consumer Lending 25/3 H&R Block Bank, Chevy Chase Federal
Savings Bank
David C. Paulson Head of Wholesale Banking 30/2 Santander, Wells Fargo, Wachovia
John J. Smith Chief Information &
Administrative Officer
30/0 CIT Group, NYCE Corporation, Summit
Bank
Elizabeth Wynnick Chief Risk Officer 24/4 NewAlliance Bank, Webster Bank
18 NASDAQ: UBNK
Non-GAAP Reconciliation
Three Months Ended
June 30,
2016
March 31,
2016
December 31,
2015
September 30,
2015
June 30,
2015
Net income $ 9,058 $ 11,894 $ 9,902 $ 13,381 $ 13,332
Adjustments:
Net interest (income) expense 35 (1,900 ) (1,617 ) (4,092 ) (3,512 )
Non-interest (income) expense (367 ) (1,452 ) (519 ) 59 (360 )
Non-interest expense 1,814 1,893 3,586 244 454
Income tax (benefit) expense (518 ) 511 (65 ) 1,326 1,196
Net adjustment 964 (948 ) 1,385 (2,463 ) (2,222 )
Total operating net income $ 10,022 $ 10,946 $ 11,287 $ 10,918 $ 11,110
Total net interest income $ 41,496 $ 43,402 $ 40,693 $ 41,643 $ 40,903
Adjustments:
Impact from purchase accounting fair value marks:
Amortization (accretion) of loan mark 835 (1,094 ) (718 ) (2,787 ) (2,194 )
Accretion of deposit mark 359 359 444 841 845
Accretion of borrowings mark 441 447 455 464 473
Net adjustment 35 (1,900 ) (1,617 ) (4,092 ) (3,512 )
Total operating net interest income $ 41,531 $ 41,502 $ 39,076 $ 37,551 $ 37,391
Total non-interest income $ 6,532 $ 6,727 $ 8,463 $ 7,818 $ 9,371
Adjustments:
Net (loss) gain on sales of securities (367 ) (1,452 ) (300 ) 59 (360 )
BOLI claim benefit — — (219 ) — —
Net adjustment (367 ) (1,452 ) (519 ) 59 (360 )
Total operating non-interest income 6,165 5,275 7,944 7,877 9,011
Total operating net interest income 41,531 41,502 39,076 37,551 37,391
Total operating revenue $ 47,696 $ 46,777 $ 47,020 $ 45,428 $ 46,402
19 NASDAQ: UBNK
Non-GAAP Reconciliation (cont.)
Three Months Ended
June 30,
2016
March 31,
2016
December 31,
2015
September 30,
2015
June 30,
2015
Total non-interest expense $ 34,681 $ 33,763 $ 35,305 $ 31,876 $ 30,357
Adjustments:
Merger related expense — — (1,575 ) — —
Core deposit intangible amortization expense (401 ) (433 ) (433 ) (433 ) (449 )
Loan portfolio acquisition fees — — (1,572 ) — —
Effect of position eliminations (1,403 ) — — — —
Effect of branch lease termination agreement — — — 195 —
Amortization of fixed asset fair value mark (10 ) (6 ) (6 ) (6 ) (5 )
FHLBB prepayment penalties — (1,454 ) — — —
Net adjustment (1,814 ) (1,893 ) (3,586 ) (244 ) (454 )
Total operating expense $ 32,867 $ 31,870 $ 31,719 $ 31,632 $ 29,903
Total loans $ 4,730,895 $ 4,649,876 $ 4,613,931 $ 4,209,618 $ 4,072,067
Non-covered loans (1) (1,259,285 ) (1,334,303 ) (1,448,435 ) (1,255,618 ) (1,356,259 )
Total covered loans $ 3,471,610 $ 3,315,573 $ 3,165,496 $ 2,954,000 $ 2,715,808
Allowance for loan losses $ 37,961 $ 35,500 $ 33,887 $ 30,832 $ 28,856
Allowance for loan losses to total loans 0.80 % 0.76 % 0.73 % 0.73 % 0.71 %
Allowance for loan losses to total covered loans 1.09 % 1.07 % 1.07 % 1.04 % 1.06 %
(1) As required by GAAP, the Company recorded at fair value acquired loans. These loans carry no
allowance for loan losses for the periods reflected above.