Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - United Financial Bancorp, Inc. | ex-99120180331.htm |
| 8-K - 8-K - United Financial Bancorp, Inc. | a8-k20180331.htm |
First Quarter 2018 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 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
Financial Highlights 12
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Branch Network
· 3rd largest public bank
headquartered in CT
with $7.07 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)
6 NASDAQ: UBNK
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
7 NASDAQ: UBNK
Management Team and Ownership
• William H.W. Crawford, IV owns 466,779 shares of stock and options*
• UBNK management owns 1,085,648 shares of stock and options*
• UBNK Non-Executive Officer Directors own 530,932 shares of stock and options*
*Note: 401k/ESOP share ownership is as of 12/31/17.
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
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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. 8.8% for loans
receivable and 7.4% for interest-earning assets; (b) YoY
non-interest bearing deposit growth of 9.1%; (c) Strong
capital position continues to support future growth
2.
Re-Mix cash flows into better yielding risk adjusted
return on assets with lower funding costs relative to
peers.
(a) Growth focused on Home Equity and C&I, which
increased 12.8% and 10.0%, respectively, YoY; (b)
Continued focus on ROE/ROA model to ensure accretive
asset generation
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
2.08% annualized in 1Q18 while making continued
strategic investments in Information Technology and
Project Management that will drive forward operating
leverage
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 5.3% YoY; (b) TBV/share increased
4.7% YoY; (c) Increased total fee income 6.4% YoY; (d)
1Q18 annualized dividend yield of 2.90%; TBV growth of
9.1% inclusive of dividends paid
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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 $94.4 million of
residential mortgage loans in Q1 2018. 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.
($2.17 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)
11 NASDAQ: UBNK
Wholesale Banking Overview
• Asset quality remains exceptional through diversification and granularity
that is accretive to risk adjusted capital
Investor CRE & ADC by Property Type
$1,928 Million
C&I & Owner Occupied CRE by Industry
$1,289 Million
12 NASDAQ: UBNK
Financial Highlights
13 NASDAQ: UBNK
First Quarter Walk
(Dollars in thousands) GAAP Net Income QTD GAAP Net Income LTM
Actual Beginning Balance $ 9,501 $ 13,726
Loan Income 2,022 8,287
Investment Income (255 ) 41
Interest Expense (2,073 ) (6,082 )
Net Interest Income (306 ) 2,246
Provision 311 349
Net Interest Income after Provision 5 2,595
Service Charges and Fees 128 514
Security Gains/Losses 44 (341 )
Bank-owned Life Insurance Income (293 ) 439
Mortgage Banking 545 408
Gains/Losses on Limited Partnerships 851 (510 )
Other 433 47
Non-Interest Income 1,708 557
Salaries and Benefits (446 ) (1,468 )
Service Bureau Fees 86 112
Occupancy Expense 87 (480 )
Professional Fees (168 ) 145
Marketing 326 27
FDIC 82 (60 )
Other 534 (90 )
Non-Interest Expense 501 (1,814 )
Taxes 4,072 723
Total Change 6,286 2,061
Actual Ending Balance $ 15,787 $ 15,787
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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
Q1 2018
Actual
Q4 2017
Forecast
FY 2018
Forecast
FY 2019
Tax Equivalent Net Interest Margin 2.90% 2.98% 2.90% - 2.92% 2.93% - 2.95%
Loan Growth* 3.2%* 10.3%* 7% -9% 6% - 8%
Provision / Average Gross Loans* 0.14%* 0.17%* 0.16% - 0.18% 0.16% - 0.18%
Non-Interest Income $9.3 million $7.6 million $36 - 38 million $38 - 40 million
Non-Interest Expense $36.7 million $37.2 million $149 - 151 million $153 - 155 million
Effective Tax Rate (YTD) 8.0% 18.1% 10% 10%
Average Diluted Shares (000) 50,997 51,025 51,300 52,100
*Note: Loan Growth, Provision/Average Gross Loans are annualized, unless noted.
^ Tax Equivalent NIM forecast assumes no changes to interest rates in forecast period
• Forecast supports high single to double digit earnings growth and attainment of 1.0%
return on assets on a run rate basis in second half of 2019
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NIE/Average Assets/FTE Employees
*NIE/Average Assets calculation is annualized.
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Balance Sheet Trends
QoQ YoY
1Q18 vs 4Q17 1Q18 vs 1Q17
Balance Sheet ($ in thousands) 1Q2018 4Q2017 3Q2017 2Q2017 1Q2017 $ Change %
Change
$ Change %
Change
ASSETS
Cash and cash equivalents $ 69,242 $ 88,668 $ 98,517 $ 74,851 $ 84,660 $ (19,426 ) (21.9 )% $ (15,418 ) (18.2 )%
Securities 1,031,277 1,064,385 1,081,748 1,087,176 1,089,666 (33,108 ) (3.1 ) (58,389 ) (5.4 )
Loans held for sale 63,394 114,073 89,419 157,487 87,031 (50,679 ) (44.4 ) (23,637 ) (27.2 )
Residential real estate 1,235,197 1,204,401 1,211,783 1,172,540 1,167,428 30,796 2.6 67,769 5.8
Home equity 582,285 583,180 561,814 538,130 516,325 (895 ) (0.2 ) 65,960 12.8
Other consumer 310,439 292,781 267,921 237,708 225,317 17,658 6.0 85,122 37.8
Residential construction 37,579 40,947 39,460 46,117 49,456 (3,368 ) (8.2 ) (11,877 ) (24.0 )
Investor non-occupied CRE 1,842,898 1,854,459 1,777,716 1,761,940 1,697,414 (11,561 ) (0.6 ) 145,484 8.6
Owner occupied CRE 442,938 445,820 442,989 429,848 433,358 (2,882 ) (0.6 ) 9,580 2.2
Commercial business 846,182 840,312 821,372 792,918 769,153 5,870 0.7 77,029 10.0
Commercial construction (ADC) 84,717 78,083 82,688 74,980 85,533 6,634 8.5 (816 ) (1.0 )
Loans - net 5,349,044 5,307,678 5,174,672 5,024,532 4,913,953 41,366 0.8 435,091 8.9
Deferred tax asset, net 28,710 25,656 30,999 27,034 37,040 3,054 11.9 (8,330 ) (22.5 )
Premises and equipment, net 67,619 67,508 61,063 54,480 51,299 111 0.2 16,320 31.8
Intangible Assets 119,435 119,772 120,108 120,445 120,798 (337 ) (0.3 ) (1,363 ) (1.1 )
Cash surrender value of BOLI 179,556 148,300 171,300 170,144 169,007 31,256 21.1 10,549 6.2
Other Assets* 160,397 178,119 148,670 160,014 143,166 (17,722 ) (9.9 ) 17,231 12.0
Total Assets $ 7,068,674 $ 7,114,159 $ 6,976,496 $ 6,876,163 $ 6,696,620 $ (45,485 ) (0.6 )% $ 372,054 5.6 %
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities: QoQ YoY
Deposits: 1Q18 vs 4Q17 1Q18 vs 1Q17
Non-interest-bearing $ 753,575 $ 778,576 $ 725,130 $ 721,917 $ 690,516 $ (25,001 ) (3.2 )% $ 63,059 9.1 %
Interest-bearing 4,528,935 4,419,645 4,427,892 4,271,562 4,099,843 109,290 2.5 429,092 10.5
Total Deposits 5,282,510 5,198,221 5,153,022 4,993,479 4,790,359 84,289 1.6 492,151 10.3
Mortgagors' and investor escrow accounts 11,096 7,545 9,641 15,045 10,925 3,551 47.1 171 1.6
FHLB advances and other borrowing 1,030,735 1,165,054 1,068,814 1,138,817 1,180,053 (134,319 ) (11.5 ) (149,318 ) (12.7 )
Accrued expenses and other liabilities 51,333 50,011 54,366 49,358 49,300 1,322 2.6 2,033 4.1
Total liabilities 6,375,674 6,420,831 6,285,843 6,196,699 6,030,637 (45,157 ) (0.7 ) 345,037 5.7
Total stockholders' equity 693,000 693,328 690,653 679,464 665,983 (328 ) — 27,017 4.1
Total liabilities and stockholders' equity $ 7,068,674 $ 7,114,159 $ 6,976,496 $ 6,876,163 $ 6,696,620 $ (45,485 ) (0.6 )% $ 372,054 5.6 %
*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) 2018Q1 2017Q4
Average balance $ 1,042 $ 1,075
Yield 3.31 % 3.6 %
Average Rating AA+ AA
Actual MBS Portfolio $ 593 $ 550
Total Portfolio Duration (years) 3.9 3.7
Summary of Quarterly Securities
Purchases
2018Q1 2017Q4
Average Yield 2.94 % 2.90 %
Average Rating AA+ AA+
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Asset Quality
($ in thousands, except percentage data) 2018Q1 2017Q4 2017Q3 2017Q2 2017Q1
Non-accrual loans $ 23,436 $ 23,187 $ 24,789 $ 25,048 $ 26,376
TDR - non-accruing 8,308 8,475 6,628 7,475 8,252
Total non-performing loans 31,744 31,662 31,417 32,523 34,628
OREO 1,935 2,154 2,444 1,770 1,786
Total non-performing assets $ 33,679 $ 33,816 $ 33,861 $ 34,293 $ 36,414
NPLs to total loans 0.59 % 0.59 % 0.60 % 0.64 % 0.70 %
NPAs to total assets 0.48 % 0.48 % 0.49 % 0.50 % 0.54 %
Net charge offs $ 1,123 $ 1,518 $ 1,261 $ 534 $ 1,783
Annualized NCOs to average loans 0.08 % 0.11 % 0.10 % 0.04 % 0.14 %
Allowance for loan losses to non-performing loans 150.94 % 148.76 % 147.59 % 138.55 % 125.05 %
Allowance for loan losses to total loans 0.89 % 0.88 % 0.89 % 0.89 % 0.88 %
Provision for loan losses (annualized)/Average Loans 0.14 % 0.17 % 0.20 % 0.18 % 0.19 %
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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. Hartford CT UBNK 299% 27% 23% (7)%
People's United Financial, Inc. Bridgeport CT PBCT 264% (6)% 19% (9)%
Webster Financial Corporation Waterbury CT WBS 151% 16% 16% (4)%
Berkshire Hills Bancorp, Inc. Pittsfield MA BHLB 270% 62% 40% 4%
Independent Bank Corp. Rockland MA INDB 316% (5)% 56% (1)%
Brookline Bancorp, Inc. Boston MA BRKL 358% 4% 21% (8)%
Century Bancorp, Inc. Medford MA CNBKA 34% 1% 6% 2%
Washington Trust Bancorp, Inc. Westerly RI WASH 299% 22% 39% 11%
Meridian Bancorp, Inc. Peabody MA EBSB 577% 217% 126% 70%
Camden National Corporation Camden ME CAC 255% 101% 24% 1%
First Connecticut Bancorp, Inc. Farmington CT FBNK 318% 27% 33% (4)%
Enterprise Bancorp, Inc. Lowell MA EBTC 278% 12% 105% 23%
Community Bank System, Inc. De Witt NY CBU 102% 27% 16% —%
NBT Bancorp Inc. Norwich NY NBTB 172% 36% 22% (4)%
Sterling Bancorp Montebello NY STL 280% 53% 9% (4)%
High 577% 217% 126% 70%
Low 34% (6)% 6% (9)%
Mean 263% 41% 38% 5%
Median 274% 25% 23% (1)%
UBNK Ranking out of 15 (ascending): 11 10 8 3
NOTE: All financial data as of December 31, 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
22 NASDAQ: UBNK
Loan and Deposit Composition
Deposit Composition at March 31, 2017 Deposit Composition at March 31, 2018
Total Deposits at 3/31/17: $4.79 billion Total Deposits at 3/31/18: $5.28 billion
Deposit Composition at March 31, 2016
Total Deposits at 03/31/16: $4.53 billion
Loan Composition at March 31, 2016
Loan Composition at March 31, 2017
Loan Composition at March 31, 2018
Total Loans at 3/31/16: $4.65 billion
Total Loans at 3/31/17: $4.94 billion Total Loans at 3/31/18: $5.38 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: 7%, Interest Bearing CAGR: 9%
$4.04 B
$4.44 B
$4.71 B
$5.20 B
Transaction CAGR: 19%, Non-Transaction CAGR: 5%
Deposit Composition at 03/31/2018 Deposit Composition at 03/31/2017
$5.28 B $5.28 B
24 NASDAQ: UBNK
Non-GAAP Reconciliation
Three Months Ended
March 31,
2018
December 31,
2017
September 30,
2017
June 30,
2017
March 31,
2017
Net Income (GAAP) $ 15,787 $ 9,501 $ 15,191 $ 16,200 $ 13,726
Non-GAAP adjustments:
Non-interest income (342 ) 745 (158 ) (95 ) (465 )
Non-interest expense — 536 — — —
Income tax expense related to tax reform — 1,609 — — —
Related income tax (benefit) expense 72 2,074 55 33 163
Net adjustment (270 ) 4,964 (103 ) (62 ) (302 )
Total non-GAAP net income $ 15,517 $ 14,465 $ 15,088 $ 16,138 $ 13,424
Net interest income (GAAP) $ 46,543 $ 46,849 $ 46,768 $ 46,328 $ 44,297
Non-interest income (GAAP) $ 9,289 $ 7,581 $ 8,426 $ 9,826 $ 8,732
Non-GAAP adjustments:
Net gain on sales of securities (116 ) (72 ) (158 ) (95 ) (457 )
Limited partnership writedown — 1,214 — — —
Loss on sale of premises and equipment — 401 — — —
BOLI claim benefit (226 ) (798 ) — — (8 )
Net adjustment (342 ) 745 (158 ) (95 ) (465 )
Total non-GAAP non-interest income 8,947 8,326 8,268 9,731 8,267
Total non-GAAP net interest income 46,543 46,849 46,768 46,328 44,297
Total non-GAAP revenue $ 55,490 $ 55,175 $ 55,036 $ 56,059 $ 52,564
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Non-GAAP Reconciliation (cont.)
Three Months Ended
March 31,
2018
December 31,
2017
September 30,
2017
June 30,
2017
March 31,
2017
Non-interest expense (GAAP) $ 36,736 $ 37,237 $ 35,262 $ 35,329 $ 34,922
Non-GAAP adjustments:
Lease exit/disposal cost obligation — (536 ) — — —
Net adjustment — (536 ) — — —
Total non-GAAP non-interest expense $ 36,736 $ 36,701 $ 35,262 $ 35,329 $ 34,922
Total loans $ 5,382,235 $ 5,339,983 $ 5,205,743 $ 5,054,181 $ 4,943,984
Non-covered loans (1) (771,802 ) (780,776 ) (739,376 ) (699,938 ) (691,054 )
Total covered loans $ 4,610,433 $ 4,559,207 $ 4,466,367 $ 4,354,243 $ 4,252,930
Allowance for loan losses $ 47,915 $ 47,099 $ 46,368 $ 45,062 $ 43,304
Allowance for loan losses to total loans 0.89 % 0.88 % 0.89 % 0.89 % 0.88 %
Allowance for loan losses to total covered loans 1.04 % 1.03 % 1.04 % 1.03 % 1.02 %
(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.