Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - United Financial Bancorp, Inc. | ex-99120171231.htm |
| 8-K - 8-K - United Financial Bancorp, Inc. | a8-k20171231.htm |
Fourth Quarter 2017 Earnings
NASDAQ Global Select Market: UBNK
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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 filings.
NON-GAAP FINANCIAL MEASURES
This Presentation 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. 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
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Corporate Contacts
William H. W. Crawford, IV
Chief Executive Officer and President
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
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Table of Contents
Page
Branch Network 5
Market Opportunities 6
Management Team and Ownership 7
Four Key Objectives 8
Consumer Banking 9
Wholesale Banking 10
Wholesale Banking Overview 11
Shared Services 12
Financial Highlights 13
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Branch Network
· 3rd largest public bank
headquartered in CT
with $7.11 billion in
assets
· 53 Branches located
in Central CT and
Western MA
· #4 market share in
combined Hartford /
Springfield MSA
· $95 million in average
deposits per branch
(6/30/17 Branch level reporting;
Source: FDIC Summary of Deposits
Report)
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Market Opportunities
• United Bank operates in attractive markets with significant wealth and customer base
• New Haven and Fairfield County provide growth opportunities
• The Bank’s main operational markets have significant wealth
Markets Population
Population 35-
54 Average HHI Median Age
Hartford MSA 1,209,666 314,305 99,183 41
Springfield MSA 634,548 150,871 74,794 38
Worcester MSA 941,096 252,449 90,066 40
New Haven County 857,654 222,167 88,804 40
Fairfield County 954,291 261,415 140,792 40
Total 4,597,255 1,201,207 100,236 40
*Total Average Household Income (HHI) weighted by households and Age weighted by population
Main Operational
Markets
Opportunity Markets
NOTE: Data sourced from SNL analysis as of January 2018
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Management Team and Ownership
• William H.W. Crawford, IV owns 531,810 shares of stock and options*
• UBNK management owns 1,287,881 shares of stock and options*
• UBNK Non-Executive Officer Directors own 544,865 shares of stock and options*
*Note: 401k/ESOP share ownership is as of 12/31/16.
Name Title/Function
Years in
Industry/Years at
United
Prior Experience
William H.W. Crawford, IV Chief Executive Officer & President 29/7 Wells Fargo Bank, Wachovia Bank, SouthTrust Bank
Eric R. Newell Chief Financial Officer 14/7 FDIC, Fitch Ratings, Alliance Bernstein
Dena M. Hall Chief Marketing Officer 21/13 Woronoco Savings Bank
Craig W. Hurty Chief Human Resources Officer 34/4 Aetna, PacifiCare Health Systems
Mark A. Kucia Chief Credit Officer 30/12 National Westminster Bank, Liberty Bank, Mechanics Bank, BayBank
Brandon C. Lorey Head of Consumer Banking 27/5 H&R Block Bank, Chevy Chase Federal Savings Bank
David C. Paulson Head of Wholesale Banking 32/4 Santander, Wells Fargo, Wachovia
John J. Smith Chief Information & Administrative Officer 32/2
CIT Group, NYCE Corporation, Summit
Bank
Elizabeth Wynnick Chief Risk Officer 26/6 NewAlliance Bank, Webster Bank
8 NASDAQ: UBNK
Four Key Objectives
Objective Progress
1.
Align earning asset growth with organic capital and low
cost core deposit generation to maintain strong capital
and liquidity
(a) YoY total deposit growth of 10.3% vs. 9.0% for loans
receivable and 7.0% for interest-earning assets; (b) YoY
non-interest bearing deposit growth of 10.0%; (c) YoY
capital growth of 5.7%
2.
Re-Mix cash flows into better yielding risk adjusted
return on assets with lower funding costs relative to
peers.
(a) NIM increased 5bps YoY and decreased 2bps QoQ; (b)
Growth focused on C&I, OOCRE, and Home Equity, which
increased YoY 16.0%, 7.0%, and 8.6%, respectively.
3.
Invest in people, systems, and technology to grow
revenue and improve customer experience while
maintaining attractive cost structure.
(a) Non-Interest Expense/Average Assets (NIE/AA) at
2.12% annualized in 4Q17 with 63.4% efficiency ratio
while making continued strategic investments in
Information Technology and Project Management
4.
Grow operating revenue, maximize operating earnings,
grow tangible book value, pay dividend. Achieve more
revenue into NII and core fee income.
(a) Increased revenue YoY; (b) TBV/share increased 6.7%
YoY; (c) Increased service charges and fees YoY; (d) 4Q17
annualized dividend yield of 2.64%
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Consumer Banking
Diverse products designed to meet the needs of our
consumer customers.
Retail and Small Business Banking team focused on
gaining new customer relationships and deposit growth
• Mortgage Sales team originated $589.2 million of
residential mortgage loans in 2017. Participate in
secondary market sales.
• Consumer Lending team who utilize the branch
network to acquire profitable customer relationships
with growth in Home Equity and lines of credit.
• United Northeast Financial Advisors serving over 50
banking offices with investment services offerings.
Demonstrating strong growth each quarter.
• Internationally experienced LH-finance Marine
division.
($2.12 Bn, or 40% of loans)
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Wholesale Banking
Robust offering of products to support commercial
customer needs and provide competitive advantage.
• Diverse and experienced Commercial Banking team:
Commercial Lending team provides geographic
diversity and multiple areas of C&I industry expertise.
• Cash Management and Municipal Banking team
focused on deposit gathering and growing strategically
important relationships.
• Commercial Real Estate activities largely focused on
growing Owner-Occupied CRE portfolio, while Investor
CRE has remained essentially flat for four quarters.
Regional CRE program provides geographic diversity in
strong markets throughout the Northeast and Mid
Atlantic.
• Business Banking team focused on growing C&I loans
and core deposits.
($3.22 Bn, or 60% of loans)
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Wholesale Banking Overview
• Asset quality remains exceptional through diversification, granularity,
that is accretive to risk adjusted capital
Investor CRE & ADC by Property Type
$1,933 Million
C&I & Owner Occupied CRE by Industry
$1,286 Million
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Shared Services
In addition to a strong and seasoned leadership team, the Company has recruited, retained
and developed deeply talented teams across the organization
· Significant investment in Information Technology resources to provide leadership
for effective strategic and tactical planning in the use of technology. Implementing
the use of leading edge development methodologies and feedback loops.
· Experienced Enterprise Risk and Credit Risk areas that maintain a strong, consistent
culture of risk discipline. Support profitable business results using vigilance, agility,
and expertise.
· Strong recruiting, retention and talent development via Human Resources division.
Focus on defining, attracting, and developing the right mix of critical talent to
support and grow the businesses.
· Deep Finance and Treasury group with talent recruited from a large and diversified
set of institutions. Provide decision support for strategic and operational goals using
key business drivers and parameters that impact future profit and revenue growth.
Experienced and talented Tax team driving profitable tax planning.
13 NASDAQ: UBNK
Financial Highlights
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Fourth Quarter Walk
(Dollars in thousands) GAAP Net Income QTD GAAP Net Income LTM
Actual Beginning Balance $ 15,191 $ 14,550
Loan Income 949 7,298
Investment Income (21 ) 808
Interest Expense (847 ) (4,429 )
Net Interest Income 81 3,677
Provision 316 1,109
Net Interest Income after Provision 397 4,786
Service Charges and Fees (365 ) 216
Security Gains/Losses (86 ) (22 )
Bank-owned Life Insurance Income 772 1,076
Mortgage Banking (20 ) (1,654 )
Gains/Losses on Limited Partnerships (577 ) (736 )
Other (451 ) (470 )
Non-Interest Income (727 ) (1,590 )
Salaries and Benefits (747 ) (1,473 )
Service Bureau Fees (86 ) (302 )
Occupancy Expense (1,296 ) (1,380 )
Professional Fees 52 28
Marketing 76 (233 )
FDIC (41 ) (48 )
Other (51 ) (301 )
Non-Interest Expense (2,093 ) (3,709 )
Taxes (3,267 ) (4,536 )
Total Change (5,690 ) (5,049 )
Actual Ending Balance $ 9,501 $ 9,501
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Tangible Book Value and Dividend Return
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Swap and Mortgage Contribution to Total Revenue
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Forecast
Actual
Q3 2017
Actual
Q4 2017
Actual
FY 2017
Forecast
FY 2018
Forecast
FY 2019
Tax Equivalent Net Interest
Margin 3.00% 2.98% 3.01% 2.98% - 3.02% 3.00% - 3.04%
Loan Growth* 12.0%* 10.3%* 8.9% 9% - 11% 9% - 11%
Provision / Average Gross Loans* 0.20%* 0.17%* 0.18% 0.16% - 0.18% 0.16% - 0.18%
Non-Interest Income $8.1 million $7.3 million $33.4 million $36 - 38 million $38 - 40 million
Non-Interest Expense $34.9 million $37.0 million $141.6 million $156 - 158
million
$163 - 165
million
Non-Interest Expense / Avg Assets 2.02%* 2.12%* 2.08% 2.12% - 2.15% 2.05% - 2.07%
Effective Tax Rate (YTD) 12.8% 18.1% 18.1% 10% 10%
Average Diluted Shares (000) 50,890 51,025 50,923 51,811 52,636
*Note: Loan Growth, Provision/Average Gross Loans are annualized, unless noted.
^ Tax Equivalent NIM forecast assumes no changes to interest rates in forecast period
• Forecast supports high single to double digit earnings growth and attainment of 1.0%
return on assets on a run rate basis in second half of 2019
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NIE/Average Assets/FTE Employees
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Balance Sheet Trends
QoQ YoY
4Q17 vs 3Q17 4Q17 vs 4Q16
Balance Sheet ($ in thousands) 4Q2017 3Q2017 2Q2017 1Q2017 4Q2016 $ Change %
Change
$ Change %
Change
ASSETS
Cash and cash equivalents $ 88,668 $ 98,517 $ 74,851 $ 84,660 $ 90,944 $ (9,849 ) (10.0 )% $ (2,276 ) (2.5 )%
Securities 1,064,385 1,081,748 1,087,176 1,089,666 1,057,449 (17,363 ) (1.6 ) 6,936 0.7
Loans held for sale 114,073 89,419 157,487 87,031 62,517 24,654 27.6 51,556 82.5
Residential real estate 1,204,401 1,211,783 1,172,540 1,167,428 1,156,227 (7,382 ) (0.6 ) 48,174 4.2
Home equity 583,180 561,814 538,130 516,325 536,772 21,366 3.8 46,408 8.6
Other consumer 292,781 267,921 237,708 225,317 209,393 24,860 9.3 83,388 39.8
Residential construction 40,947 39,460 46,117 49,456 53,934 1,487 3.8 (12,987 ) (24.1 )
Investor non-occupied CRE 1,854,459 1,777,716 1,761,940 1,697,414 1,705,319 76,743 4.3 149,140 8.7
Owner occupied CRE 445,820 442,989 429,848 433,358 416,718 2,831 0.6 29,102 7.0
Commercial business 840,312 821,372 792,918 769,153 724,557 18,940 2.3 115,755 16.0
Commercial construction (ADC) 78,083 82,688 74,980 85,533 98,794 (4,605 ) (5.6 ) (20,711 ) (21.0 )
Loans - net 5,307,678 5,174,672 5,024,532 4,913,953 4,870,552 133,006 2.6 437,126 9.0
Deferred tax asset, net 25,656 30,999 27,034 37,040 39,962 (5,343 ) (17.2 ) (14,306 ) (35.8 )
Premises and equipment, net 67,508 61,063 54,480 51,299 51,757 6,445 10.6 15,751 30.4
Intangible Assets 119,772 120,108 120,445 120,798 121,183 (336 ) (0.3 ) (1,411 ) (1.2 )
Cash surrender value of BOLI 148,300 171,300 170,144 169,007 167,823 (23,000 ) (13.4 ) (19,523 ) (11.6 )
Other Assets* 178,119 148,670 160,014 143,166 137,333 29,449 19.8 40,786 29.7
Total Assets $ 7,114,159 $ 6,976,496 $ 6,876,163 $ 6,696,620 $ 6,599,520 $ 137,663 2.0 % $ 514,639 7.8 %
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities: QoQ YoY
Deposits: 4Q17 vs 3Q17 4Q17 vs 4Q16
Non-interest-bearing $ 778,576 $ 725,130 $ 721,917 $ 690,516 $ 708,050 $ 53,446 7.4 % $ 70,526 10.0 %
Interest-bearing 4,419,645 4,427,892 4,271,562 4,099,843 4,003,122 (8,247 ) (0.2 ) 416,523 10.4
Total Deposits 5,198,221 5,153,022 4,993,479 4,790,359 4,711,172 45,199 0.9 487,049 10.3
Mortgagors' and investor escrow accounts 7,545 9,641 15,045 10,925 13,354 (2,096 ) (21.7 ) (5,809 ) (43.5 )
FHLB advances and other borrowing 1,165,054 1,068,814 1,138,817 1,180,053 1,169,619 96,240 9.0 (4,565 ) (0.4 )
Accrued expenses and other liabilities 50,011 54,366 49,358 49,300 49,509 (4,355 ) (8.0 ) 502 1.0
Total liabilities 6,420,831 6,285,843 6,196,699 6,030,637 5,943,654 134,988 2.1 477,177 8.0
Total stockholders' equity 693,328 690,653 679,464 665,983 655,866 2,675 0.4 37,462 5.7
Total liabilities and stockholders' equity $ 7,114,159 $ 6,976,496 $ 6,876,163 $ 6,696,620 $ 6,599,520 $ 137,663 2.0 % $ 514,639 7.8 %
*Other assets include FHLBB stock (at cost), accrued interest receivable, in addition to other assets
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Investment Portfolio
Portfolio Stats ($ in millions) 2017Q4 2017Q3
Average balance $ 1,075 $ 1,091
Yield 3.6 % 3.52 %
Average Rating AA AA
Actual MBS Portfolio $ 550 $ 575
Total Portfolio Duration (years) 3.7 3.6
Summary of Quarterly Securities
Purchases
2017Q4 2017Q3
Average Yield 2.90 % 3.43 %
Average Rating AA+ AA-
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Asset Quality
($ in thousands, except percentage data) 2017Q4 2017Q3 2017Q2 2017Q1 2016Q4
Non-accrual loans $ 23,187 $ 24,789 $ 25,048 $ 26,376 $ 26,759
TDR - non-accruing 8,475 6,628 7,475 8,252 7,304
Total non-performing loans 31,662 31,417 32,523 34,628 34,063
OREO 2,154 2,444 1,770 1,786 1,890
Total non-performing assets $ 33,816 $ 33,861 $ 34,293 $ 36,414 $ 35,953
NPLs to total loans 0.59 % 0.60 % 0.64 % 0.70 % 0.69 %
NPAs to total assets 0.48 % 0.49 % 0.50 % 0.54 % 0.54 %
Net charge offs $ 1,518 $ 1,261 $ 534 $ 1,783 $ 1,641
Annualized NCOs to average loans 0.11 % 0.10 % 0.04 % 0.14 % 0.14 %
Allowance for loan losses to non-performing loans 148.76 % 147.59 % 138.55 % 125.05 % 125.64 %
Allowance for loan losses to total loans 0.88 % 0.89 % 0.89 % 0.88 % 0.87 %
Provision for loan losses (annualized)/Average Loans 0.17 % 0.20 % 0.18 % 0.19 % 0.28 %
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Commercial Real Estate
Institution Name City State Ticker CRE / Risk-
Based Capital
3-Year Ratio
Delta
Construction /
Risk-Based
Capital
3-Year Ratio
Delta
United Financial Bancorp, Inc. Glastonbury CT UBNK 288% 16% 23% (6)%
People's United Financial, Inc. Bridgeport CT PBCT 268% (1)% 18% (10)%
Webster Financial Corporation Waterbury CT WBS 151% 16% 17% (3)%
Berkshire Hills Bancorp, Inc. Pittsfield MA BHLB 248% 40% 39% 3%
Independent Bank Corp. Rockland MA INDB 313% (8)% 58% —%
Brookline Bancorp, Inc. Boston MA BRKL 356% 2% 25% (4)%
Century Bancorp, Inc. Medford MA CNBKA 36% 2% 5% 1%
Washington Trust Bancorp, Inc. Westerly RI WASH 302% 26% 37% 9%
Meridian Bancorp, Inc. Peabody MA EBSB 577% 218% 123% 68%
Camden National Corporation Camden ME CAC 256% 101% 31% 8%
First Connecticut Bancorp, Inc. Farmington CT FBNK 309% 18% 32% (5)%
Enterprise Bancorp, Inc. Lowell MA EBTC 262% (4)% 92% 11%
Community Bank System, Inc. De Witt NY CBU 104% 28% 17% 1%
NBT Bancorp Inc. Norwich NY NBTB 170% 35% 23% (2)%
Sterling Bancorp Montebello NY STL 268% 42% 16% 2%
High 577% 218% 123% 68%
Low 36% (8)% 5% (10)%
Mean 259% 37% 38% 6%
Median 265% 22% 28% 1%
UBNK Ranking out of 15 (ascending): 10 6 6 2
NOTE: All financial data as of September 30, 2017
CRE includes 1.a.1, 1.a.2, 1.b, 1.d, and 1.e.2 from RC-C Part 1 FFIEC 041
Data is Bank-level; BRKL subsidiaries aggregated
Ratio deltas represent change in ratio over 3-year period
All data sourced from S & P Global Market Intelligence
23 NASDAQ: UBNK
Loan and Deposit Composition
Deposit Composition at December 31, 2016 Deposit Composition at December 31, 2017
Total Deposits at 12/31/16: $4.71 billion Total Deposits at 12/31/17: $5.20 billion
Deposit Composition at December 31, 2015
Total Deposits at 12/31/15: $4.44 billion
Loan Composition at December 31, 2015
Loan Composition at December 31, 2016
Loan Composition at December 31, 2017
Total Loans at 12/31/15: $4.61 billion
Total Loans at 12/31/16: $4.90 billion Total Loans at 12/31/17: $5.34 billion
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Diversified Deposit Funding Sources
$4.04 B
$4.44 B
$4.71 B $5.20 B
Non-Interest Bearing CAGR: 9%, Interest Bearing CAGR: 9%
$4.04 B
$4.44 B
$4.71 B $5.20 B
Transaction CAGR: 20%, Non-Transaction CAGR: 5%
Deposit Composition at 12/31/2017 Deposit Composition at 12/31/2016
25 NASDAQ: UBNK
Non-GAAP Reconciliation
Three Months Ended
December 31,
2017
September 30,
2017
June 30,
2017
March 31,
2017
December 31,
2016
Net Income (GAAP) $ 9,501 $ 15,191 $ 16,200 $ 13,726 $ 14,550
Non-GAAP adjustments:
Non-interest income 745 (158 ) (95 ) (465 ) (94 )
Non-interest expense 536 — — — 107
Income tax expense related to tax reform 1,609 — — — —
Related income tax (benefit) expense 2,074 55 33 163 (5 )
Net adjustment 4,964 (103 ) (62 ) (302 ) 8
Total non-GAAP net income $ 14,465 $ 15,088 $ 16,138 $ 13,424 $ 14,558
Net interest income (GAAP) $ 46,849 $ 46,768 $ 46,328 $ 44,297 $ 43,172
Non-interest income (GAAP) $ 7,346 $ 8,073 $ 9,476 $ 8,505 $ 8,936
Non-GAAP adjustments:
Net gain on sales of securities (72 ) (158 ) (95 ) (457 ) (94 )
Limited partnership writedown 1,214 — — — —
Loss on sale of premises and equipment 401 — — — —
BOLI claim benefit (798 ) — — (8 ) —
Net adjustment 745 (158 ) (95 ) (465 ) (94 )
Total non-GAAP non-interest income 8,091 7,915 9,381 8,040 8,842
Total non-GAAP net interest income 46,849 46,768 46,328 44,297 43,172
Total non-GAAP revenue $ 54,940 $ 54,683 $ 55,709 $ 52,337 $ 52,014
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Non-GAAP Reconciliation (cont.)
Three Months Ended
December 31,
2017
September 30,
2017
June 30,
2017
March 31,
2017
December 31,
2016
Non-interest expense (GAAP) $ 37,002 $ 34,909 $ 34,979 $ 34,695 $ 33,293
Non-GAAP adjustments:
Lease exit/disposal cost obligation (536 ) — — — —
Effect of position eliminations — — — — (107 )
Net adjustment (536 ) — — — (107 )
Total non-GAAP non-interest expense $ 36,466 $ 34,909 $ 34,979 $ 34,695 $ 33,186
Total loans $ 5,339,983 $ 5,205,743 $ 5,054,181 $ 4,943,984 $ 4,901,714
Non-covered loans (1) (780,776 ) (739,376 ) (699,938 ) (691,054 ) (744,763 )
Total covered loans $ 4,559,207 $ 4,466,367 $ 4,354,243 $ 4,252,930 $ 4,156,951
Allowance for loan losses $ 47,099 $ 46,368 $ 45,062 $ 43,304 $ 42,798
Allowance for loan losses to total loans 0.88 % 0.89 % 0.89 % 0.88 % 0.87 %
Allowance for loan losses to total covered loans 1.03 % 1.04 % 1.03 % 1.02 % 1.03 %
(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.