United Financial Bancorp Reports Fourth Quarter 2011 Earnings of $3.0 Million, or $0.20 Per Diluted Share; Announces Quarterly Dividend of $0.09 Per Share

WEST SPRINGFIELD, Mass., Jan. 23, 2012/PRNewswire/ -- United Financial Bancorp, Inc. (the "Company") $3.0 million, or $0.20per diluted share, for the fourth quarter of 2011 compared to net income of $2.7 million, or $0.18per diluted share, for the corresponding period in 2010.  For the year ended December 31, 2011, net income was $11.2 million, or $0.74per diluted share, compared to net income of $10.0 millionor $0.65per diluted share, for the same period in 2010. Excluding acquisition-related expenses of $1.1 million($819,000net of tax benefit), net income would have been $10.9 million, or $0.70per diluted share, in 2010.  The Company also announced a quarterly cash dividend of $0.09per share, payable on March 2, 2012to shareholders of record as of February 9, 2012.

Financial Highlights:

• Diluted earnings per share increased 11% from the fourth quarter of 2010.
• Return on average assets increased 5 basis points to 0.74% in the fourth quarter of 2011 from the fourth quarter of 2010.
• Return on average equity increased 44 basis points to 5.24% in the fourth quarter of 2011 from the fourth quarter of 2010.
• Total loans increased 4% to $1.122 billionat year end 2011 reflecting solid growth in the residential mortgages (6%), commercial mortgages (5%) and commercial (7%) portfolios.
• Total deposits increased 8% to $1.230 billionat December 31, 2011as a result of 19% growth in core account balances, partially offset by a decrease of 9% in certificates of deposits. 
• The non-performing loans to total loans ratio improved to 0.75% at December 31, 2011from 0.88% from prior year end.
• Tangible book value per share increased 5% during the year to $13.90at December 31, 2011.
• The Company repurchased 103,503 shares at an average price of $15.17per share during the fourth quarter of 2011 and 426,299 shares at an average cost of $14.96for 2011.  At December 31, 2011the Company has approximately 330,000 shares remaining to be purchased under its current plan approved in October 2010.

"We are pleased to report our fourth consecutive year of growth in operating earnings, a trend that has continued despite the challenging economic environment.  Our success has been driven by our focus on profitably expanding our franchise through organic loan and deposit growth and the acquisition of CNB, maintaining excellent asset quality and effectively managing our interest rate, capital and liquidity positions," commented Richard B. Collins, President and Chief Executive Officer.  Mr. Collins further remarked "we believe we are well positioned to continue to deliver improving financial results and reward our shareholders."

Earnings Summary (Q4 2011 compared to Q4 2010)

Net income grew $309,000, or 12%, to $3.0 millionin the fourth quarter of 2011 compared to the same period last year largely due to an increase in net interest income, driven by growth in average earning assets, growth in non-interest income and a lower effective tax rate, offset in part by a higher provision for loan losses.

• Net interest income increased $280,000, or 2%, to $13.2 millionfor the fourth quarter of 2011 as a result of an increase in average interest earning assets, partially offset by net interest margin compression.  Total average earning assets increased $39 million, or 3%, to $1.509 billionfor the fourth quarter of 2011 mainly due to growth in loans and investment securities. The net interest margin declined 2 basis points to 3.51% for the three months ended December 31, 2011.
• The provision for loan losses expanded by $659,000 to $1.0 millionfor the three months ended December 31, 2011driven by an increase in net charge-offs, classified loan reserves and loan growth.
• Non-interest income increased by $213,000, or 9%, to $2.6 millionfor the three months ended December 31, 2011. The growth in non-interest income was primarily due to an increase of $148,000, or 11%, in fee income on depositor's accounts driven by higher ATM and debit card income and an increase of $86,000, or 24%, in bank owned life insurance income reflecting a $10 millionBOLI investment in May 2011.
• Non-interest expense decreased $18,000, or 0.2%, to $10.7 millionfor the fourth quarter of 2011 reflecting lower FDIC assessment and marketing expenses, offset by increases in other expenses, salaries and benefits and professional services.
• Income taxesdecreased $457,000, or 29%, to $1.1 millionfor the three months ended December 31, 2011, primarily due to a lower effective tax rate, partially offset by lower pretax income.  The Company's effective tax rate decreased to 27% for the fourth quarter of 2011 from 37% in the fourth quarter of 2010 largely as a result of tax credits from an investment in a low income housing fund and an increase in tax exempt municipal investment income in 2011.

BalanceSheet Activity:

• Total assets increased $38.9 million, or 2%, during the year to $1.624 billionat December 31, 2011, reflecting an increase in loans and bank owned life insurance partially offset by a lower cash position.
• Cash and cash equivalents decreased $21.6 million, or 26%, to $61.5 millionat December 31, 2011reflecting the use of excess cash to fund loan originations and the purchase of additional bank owned life insurance.
• Total loans increased $47.8 million, or 4%, to $1.122 billionat December 31, 2011reflecting growth in the residential and commercial mortgages, commercial and construction portfolios. The increase in residential loans was due to originations of 10- and 15-year loans as a result of promotional efforts and continued lower market interest rates, partially offset by payments and sales of 30-year fixed rate loan originations.  Commercial mortgage and commercial loan growth was primarily attributable to business development efforts, competitive products and pricing and the establishment of a loan production office in Beverly, Massachusettsduring the second quarter of 2011.  These positive variances were offset in part by declines in consumer and home equity loans.
• Total deposits increased $86.7 million, or 8%, to $1.230 billionat December 31, 2011reflecting growth of $127.6 million, or 19%, in core account balances, partially offset by a decrease of $40.9 million, or 9%, in certificates of deposit.  The strong growth in core account balances was driven by the success of sales and marketing initiatives, competitive products and pricing and excellent customer service. Core deposit balances were $808.2 million, or 66% of total deposits at December 31, 2011compared to $680.7 million, or 60% at December 31, 2010.
• Long-term debtdecreased $46.5 million, or 27%, mainly due to the use of positive cash flows to retire maturing debt.

Credit Quality:

• Non-performing assets totaled $10.5 million, or 0.65% of total assets, at December 31, 2011compared to $11.0 million, or 0.69% of total assets, at December 31, 2010.  The $462,000improvement in the non-performing assets reflects a $1.0 millionreduction in non-performing loans partially offset by an increase of $518,000in other real estate owned.
• At December 31, 2011, the ratio of the allowance for loan losses to total loans was 0.99% compared to 0.93% at December 31, 2010.  Excluding the impact of loans acquired from CNB and other financial institutions totaling $165.1 millionat December 31, 2011and $231.2 millionat December 31, 2010, the ratio of the allowance for loan losses to total loans would have been 1.16% at December 31, 2011and 1.18% at December 31, 2010.  Net charge-offs totaled $2.1 million, or 0.19% of average loans outstanding for the year ended December 31, 2011as compared to net charge-offs of $1.5 million, or 0.13% of average loans outstanding for 2010.  The increase in net charge-offs was primarily due to the resolution of several problem credits within the commercial portfolio.  

Capital and Liquidity:

• The Company remains well capitalized with atangible equity-to-tangible assets ratioof 13.53% at December 31, 2011. During 2011, the Company repurchased 426,299 shares at an average cost of $14.96under the current plan approved in October 2010.
• At December 31, 2011, the Company continued to have considerable liquidity consisting of significant balances at the Federal Reserve, a large amount of marketable loans and investment securities, substantial unused borrowing capacity at the Federal Home Loan Bank and the Federal Reserve Bank and access to funding through the repurchase agreement and brokered deposit markets.

United Financial Bancorp, Inc. is a publicly owned corporation and the holding company for United Bank, a federally chartered bank headquartered at 95 Elm Street, West Springfield, MA, 01090.  The Company's common stock is traded on the NASDAQ Global Select Market under the symbol UBNK.   United Bank provides an array of financial products and services through its 16 branch offices and two express drive-up branches in the Springfieldregion of Western Massachusettsand six branches in the Worcesterregion of Central Massachusetts.  The bank also operates a loan production office located in Beverly, Massachusetts.  Through its Wealth Management Group, the Bank offers 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 .

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.

UNITED FINANCIAL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CONDITION
(Dollars in thousands, except per share amounts)
		December 31,		December 31,
Assets		2011		2010
		(unaudited)		(audited)
Cash and cash equivalents		$61,518		$83,069
Investment securities		337,710		338,327
Loans held for sale		53		-
Loans:
Residential mortgages		314,839		295,721
Commercial mortgages		450,180		427,994
Construction loans		30,271		27,553
Commercial loans		176,086		165,335
Home equity loans		135,518		138,290
Consumer loans		14,985		19,218
Total loans		1,121,879		1,074,111
Net deferred loan costs and fees		2,194		2,073
Allowance for loan losses		(11,132)		(9,987)
Loans, net		1,112,941		1,066,197
Federal Home Loan Bank of Boston stock, at cost		15,365		15,365
Other real estate owned		2,054		1,536
Deferred tax asset, net		14,006		11,029
Premises and equipment, net		16,438		15,565
Bank-owned life insurance		40,688		29,180
Goodwill		8,192		8,192
Other intangible assets		752		975
Other assets		14,035		15,442
Total assets		$1,623,752		$1,584,877
Liabilities and Stockholders' Equity
Deposits:
Demand		$205,902		$175,996
NOW		52,899		40,922
Savings		247,664		203,165
Money market		301,770		260,573
Certificates of deposit		421,740		462,645
Total deposits		1,229,975		1,143,301
Short-term borrowings		17,260		21,029
Long-term debt		126,857		173,307
Subordinated debentures		5,539		5,448
Escrow funds held for borrowers		2,103		1,899
Due to broker		-		3,002
Capitalized lease obligations		4,874		5,011
Accrued expenses and other liabilities		9,783		9,304
Total liabilities		1,396,391		1,362,301
Stockholders' Equity:
Preferred stock, par value $0.01 per share, authorized 50,000,000 shares;
none issued		-		-
Common stock, par value $0.01 per share; authorized 100,000,000 shares;
shares issued: 18,706,933 at December 31, 2011 and December 31, 2010		187		187
Additional paid-in capital		182,475		180,322
Retained earnings		88,977		82,899
Unearned compensation		(10,047)		(10,750)
Accumulated other comprehensive income, net of taxes		6,752		4,858
Treasury stock, at cost (2,994,036 shares at December 31, 2011 and
2,597,827 shares at December 31, 2010)		(40,983)		(34,940)
Total stockholders' equity		227,361		222,576
Total liabilities and stockholders' equity		$1,623,752		$1,584,877

UNITED FINANCIAL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED INCOME STATEMENTS
(Amounts in thousands, except per share amounts)
	Three Months Ended				Years Ended
	December 31,				December 31,
	2011		2010		2011		2010
	(unaudited)				(unaudited)
Interest and dividend income:
Loans	$         14,501		$         15,287		$         58,220		$         61,554
Investments	2,901		2,852		12,728		12,238
Other interest-earning assets	26		31		126		66
Total interest and dividend income	17,428		18,170		71,074		73,858
Interest expense:
Deposits	2,944		3,464		12,449		13,847
Borrowings	1,243		1,745		5,812		7,100
Total interest expense	4,187		5,209		18,261		20,947
Net interest income before provision for loan losses	13,241		12,961		52,813		52,911
Provision for loan losses	1,011		352		3,242		2,285
Net interest income after provision for loan losses	12,230		12,609		49,571		50,626
Non-interest income:
Fee income on depositors' accounts	1,469		1,321		5,554		5,327
Wealth management income	217		251		919		754
Income from bank-owned life insurance	450		364		1,642		1,390
Net gain on sales of loans	150		164		274		573
Net gain (loss) on sales of securities	-		4		1		(185)
Impairment charges on securities	(7)		-		(99)		(145)
Other income	291		253		1,062		1,002
Total non-interest income	2,570		2,357		9,353		8,716
Non-interest expense:
Salaries and benefits	5,957		5,889		24,818		24,056
Occupancy expenses	845		840		3,317		3,397
Marketing expenses	376		510		1,797		2,091
Data processing expenses	1,037		1,050		3,970		4,099
Professional fees	533		482		2,174		1,812
Acquisition related expenses	-		-		-		1,148
FDIC insurance assessments	218		365		1,029		1,470
Low income housing tax credit fund	210		181		837		181
Other expenses	1,542		1,419		6,120		5,587
Total non-interest expense	10,718		10,736		44,062		43,841
Income before income taxes	4,082		4,230		14,862		15,501
Income tax expense	1,102		1,559		3,678		5,469
Net income	$           2,980		$           2,671		$         11,184		$         10,032
Earnings per share:
Basic	$             0.20		$             0.18		$             0.75		$             0.66
Diluted	$             0.20		$             0.18		$             0.74		$             0.65
Weighted average shares outstanding:
Basic	14,726		15,028		14,930		15,303
Diluted	15,022		15,180		15,199		15,395

UNITED FINANCIAL BANCORP, INC. AND SUBSIDIARY
SELECTED DATA AND RATIOS (unaudited)
(Dollars in thousands, except per share amounts)
		At or For The Quarters Ended
		Dec. 31		Sep. 30		Jun. 30		Mar. 31		Dec. 31
		2011		2011		2011		2011		2010
Operating Results:
Net interest income		$      13,241		$      13,399		$      13,382		$      12,791		$      12,961
Loan loss provision		1,011		750		673		808		352
Non-interest income		2,570		2,423		2,211		2,149		2,357
Non-interest expense		10,718		11,001		11,403		10,940		10,736
Net income		2,980		3,085		2,690		2,429		2,671
Performance Ratios (annualized):
Return on average assets		0.74%		0.77%		0.67%		0.62%		0.69%
Return on average equity		5.24%		5.41%		4.76%		4.36%		4.80%
Net interest margin		3.51%		3.56%		3.55%		3.42%		3.53%
Non-interest income to average total assets		0.64%		0.60%		0.55%		0.54%		0.61%
Non-interest expense to average total assets		2.66%		2.74%		2.85%		2.77%		2.76%
Efficiency ratio		68.41%	(1)	69.61%	(1)	73.09%	(1)	73.34%	(1)	70.86%	(1)
Per Share Data:
Diluted earnings per share		$         0.20		$         0.20		$         0.18		$         0.16		$         0.18
Book value per share		$       14.47		$       14.36		$       14.15		$       13.92		$       13.82
Tangible book value per share		$       13.90	(2)	$       13.79	(2)	$       13.58	(2)	$       13.35	(2)	$       13.25	(2)
Market price at period end		$       16.09		$       13.69		$       15.43		$       16.51		$       15.27
Risk Profile
Equity as a percentage of assets		14.00%		14.11%		14.15%		14.01%		14.04%
Tangible equity as a percentage of tangible assets		13.53%	(2)	13.63%	(2)	13.66%	(2)	13.51%	(2)	13.54%	(2)
Net charge-offs to average loans outstanding (annualized)		0.22%		0.23%		0.18%		0.12%		0.11%
Non-performing assets as a percent of total assets		0.65%		0.85%		0.77%		0.62%		0.69%
Non-performing loans as a percent of total loans, gross		0.75%		1.00%		0.86%		0.76%		0.88%
Allowance for loan losses as a percent of total loans, gross		0.99%	(3)	0.96%	(3)	0.96%	(3)	0.95%	(3)	0.93%	(3)
Allowance for loan losses as a percent of non-performing loans		131.68%		96.22%		112.01%		125.20%		105.86%
Average Balances
Loans		$ 1,119,511		$ 1,113,672		$ 1,103,305		$ 1,090,796		$ 1,091,756
Securities		346,939		358,929		356,479		341,804		310,024
Total interest-earning assets		1,509,079		1,503,940		1,509,438		1,493,946		1,470,127
Total assets		1,611,447		1,605,844		1,602,767		1,579,048		1,555,266
Deposits		1,211,957		1,186,530		1,179,166		1,145,296		1,115,775
FHLBB advances		111,762		132,544		138,215		147,880		153,965
Stockholders' Equity		227,678		228,278		226,279		223,067		222,749
Average Yields/Rates (annualized)
Loans		5.18%		5.22%		5.33%		5.31%		5.60%
Securities		3.34%		3.62%		3.80%		3.73%		3.68%
Total interest-earning assets		4.62%		4.73%		4.80%		4.74%		4.94%
Savings accounts		0.69%		0.71%		0.76%		0.77%		0.87%
Money market/NOW accounts		0.62%		0.64%		0.70%		0.71%		0.84%
Certificates of deposit		1.88%		1.91%		1.99%		2.06%		2.16%
FHLBB advances		3.17%		3.26%		3.60%		3.52%		3.62%
Total interest-bearing liabilities		1.43%		1.50%		1.61%		1.68%		1.83%
(1)  Excludes gains/losses on sales of securities and loans and impairment charges on securities.
(2)  Excludes the impact of goodwill and other intangible assets of $8.9 million at December 31, 2011, $9.0 million at September 30, 2011 and $9.2 million at June 30, 2011, March 31, 2011 and December 31, 2010.
(3)  Excluding acquired loans of $146.0 million, $156.2 million, $168.6 million, $178.7 million and $209.8 million and loans purchased from other financial  institutions of $19.1 million, $19.3 million, $20.8 million, $21.1 million and $21.4 million at December 31, 2011, September 30, 2011, June 30, 2011, March 31, 2011 and December 31, 2010,  respectively, allowance for loan losses as a percent of total loans, gross would have been 1.16%, 1.14%, 1.16%, 1.17%, and 1.18% for the quarters ended December 31, 2011, September 30, 2011, June 30, 2011, March 31, 2011 and December 31, 2010, respectively.

For More Information Contact:
Mark A. Roberts
Executive Vice President & CFO
[phone]

SOURCE United Financial Bancorp, Inc.