Attached files
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| EX-99.1 - EXHIBIT 99.1 - United Financial Bancorp, Inc. | ex-99120181231.htm |
| 8-K - 8-K - United Financial Bancorp, Inc. | a8-k20181231.htm |
Create Your Balance NASDAQ Global Select Market: UBNK Fourth Quarter 2018 Earnings
Forward Looking Statements 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. NASDAQ: UBNK 2
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 NASDAQ: UBNK 3
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 NASDAQ: UBNK 4
Branch Network 3rd largest public bank headquartered in CT with $7.36 billion in assets 58 branches concentrated in Central CT and Western MA #3 market share in combined Hartford / Springfield MSA $92 million in average deposits per branch (6/30/18 Branch level reporting; Source: FDIC Summary of Deposits Report) NASDAQ: UBNK 5
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 Population Markets Population 35-54 Average HHI Median Age Hartford MSA 1,203,451 308,775 106,628 41 Springfield MSA 631,238 148,559 80,416 38 Main Operational Markets Worcester MSA 939,515 248,407 96,110 40 New Haven County 854,178 218,595 94,662 41 Opportunity Markets Fairfield County 946,784 255,718 140,471 40 Total 4,575,166 1,180,054 105,271 40 *Total Average Household Income (HHI) weighted by households and Age weighted by population NOTE: Data sourced from SNL analysis as of January 2019 NASDAQ: UBNK 6
Management Team and Ownership Years in Industry/ Name Title/Function Years at United Prior Experience Wells Fargo Bank, Wachovia Bank, William H.W. Crawford, IV Chief Executive Officer & President 30/8 SouthTrust Bank Eric R. Newell Chief Financial Officer 15/8 FDIC, Fitch Ratings, Alliance Bernstein Craig W. Hurty Chief Human Resources Officer 35/5 Aetna, PacifiCare Health Systems National Westminster Bank, Liberty Bank, Mark A. Kucia Chief Credit Officer 31/13 Mechanics Bank, BayBank H&R Block Bank, Chevy Chase Federal Brandon C. Lorey Head of Consumer Banking 28/6 Savings Bank David C. Paulson Head of Wholesale Banking 33/5 Santander, Wells Fargo, Wachovia Chief Information & CIT Group, NYCE Corporation, Summit John J. Smith Administrative Officer 33/3 Bank Elizabeth Wynnick Chief Risk Officer 27/7 NewAlliance Bank, Webster Bank • William H.W. Crawford, IV owns 378,690 shares of stock and options* • UBNK management owns 967,231 shares of stock and options* • UBNK Non-Executive Officer Directors own 486,201 shares of stock and options* *Note: 401k/ESOP share ownership is as of 12/31/17. NASDAQ: UBNK 7
Four Key Objectives Objective Progress Align earning asset growth with organic capital and low (a) YoY total deposit growth of 9.1% vs. 5.9% for total 1. cost core deposit generation to maintain strong capital loans; (b) YoY non-interest bearing deposit growth of and liquidity 2.7%; (c) YoY capital growth of 2.8%. Re-Mix cash flows into better yielding risk adjusted 2. return on assets with lower funding costs relative to (a) Continued discipline with RAROC model; (b) peers. Continued focus on C&I, up 5.5% YoY. (a) Restructured mortgage business to provide Invest in people, systems, and technology to grow streamlined customer experience and improve 3. revenue and improve customer experience while efficiency; (b) Forecasting improvement in NIE/AA in maintaining attractive cost structure. 2019 Grow operating revenue, maximize operating earnings, (a) Increased GAAP revenue 6.3% vs. year-ago quarter; 4. grow tangible book value, pay dividend. Achieve more (b) TBV/share increased 2.7% YoY; (c) 4Q18 annualized revenue into NII and core fee income. dividend yield of 3.0%. NASDAQ: UBNK 8
Consumer Banking Diverse products designed to meet the needs of our consumer customers. Consumer Loan Detail as of 12/31/2018 Retail and Small Business Banking team focused on gaining new customer relationships and deposit growth Other • Mortgage Sales team originated $128.2 million of consumer residential mortgage loans in Q4 2018. Participate in 18% secondary market sales. • Consumer Lending team who utilize the branch network to acquire profitable customer relationships Home equity 25% with growth in Home Equity and lines of credit. Residential 56% • United Wealth Management serving over 50 banking Construction 1% offices with investment services offerings. Demonstrating strong growth each quarter. • Internationally experienced LH-finance Marine ($2.33 Bn, or 41% of loans) division. NASDAQ: UBNK 9
Wholesale Banking Robust offering of products to support commercial Commercial Loan Detail as of 12/31/2018 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 C&I 27% focused on deposit gathering and growing strategically important relationships. • Commercial Real Estate activities largely focused on growing Owner-Occupied CRE portfolio, while Investor Investor CRE 57% Owner-Occupied CRE CRE has remained essentially flat for four quarters. 13% Regional CRE program provides geographic diversity in Construction 3% strong markets throughout the Northeast and Mid Atlantic. • Business Banking team focused on growing C&I loans and core deposits. ($3.33 Bn, or 59% of loans) NASDAQ: UBNK 10
Wholesale Banking Overview • Asset quality remains exceptional through diversification, granularity, that is accretive to risk adjusted capital Investor CRE & ADC by Property Type C&I & Owner Occupied CRE by Industry $1,999 Million $1,330 Million NASDAQ: UBNK 11
Financial Highlights NASDAQ: UBNK 12
Fourth Quarter Walk (Dollars in thousands) GAAP Net Income QTD GAAP Net Income LTM Actual Beginning Balance $ 16,308 $ 9,501 Loan Income 2,166 10,469 Investment Income (134) 27 Interest Expense (2,099) (8,983) Net Interest Income (67) 1,513 Provision (611) (368) Net Interest Income after Provision (678) 1,145 Service Charges and Fees 824 1,416 Security Gains/Losses 83 (47) Bank-owned Life Insurance Income 57 (422) Mortgage Banking (788) (486) Gains/Losses on Limited Partnerships (184) 1,036 Other (54) 415 Non-Interest Income (62) 1,912 Salaries and Benefits (2,698) (4,589) Service Bureau Fees (100) (5) Occupancy Expense (1,897) (1,348) Professional Fees (123) (140) Marketing 11 (97) FDIC 44 210 Other (12) (512) Non-Interest Expense (4,775) (6,481) Taxes 1,372 6,088 Total Change (4,143) 2,664 Actual Ending Balance $ 12,165 $ 12,165 NASDAQ: UBNK 13
Tangible Book Value and Dividend Return NASDAQ: UBNK 14
Swap and Mortgage Contribution to Total Revenue NASDAQ: UBNK 15
Forecast Actual Actual Actual Forecast Q3 2018 Q4 2018 FY 2018 FY 2019 Tax Equivalent Net Interest Margin 2.92% 2.90% 2.92% 2.80-2.85%^ Loan Growth 3.9%* 9.3%* 5.9% 5.0-7.0% Provision / Average Gross Loans 0.14%* 0.19%* 0.16% 0.16% - 0.18% Non-Interest Income $9.6 million $9.5 million $36.7 million $36 - 38 million Non-Interest Expense $38.9 million $43.7 million $157.8 million $154 - 156 million Effective Tax Rate (YTD) 4.5% 2.6% 2.6% 10% Average Diluted Shares (000's) 51,105 50,970 51,012 51,200 *Note: Loan Growth, Provision/Average Gross Loans are annualized, unless noted. ^5bp decline effective Jan 1, 2019 related to amortization of municipal securities due to ASU 2017-08 Subtopic 310-20 NASDAQ: UBNK 16
Select Financial Data Q4 2018 Q3 2018 Q2 2018 Q1 2018 Q4 2017 Tangible Common Equity ("TCE") $589.7 million $591.0 million $582.7 million $573.6 million $573.6 million Total Capital to Risk Weighted Assets Ratio^ 12.6% 12.9% 12.8% 12.7% 12.6% Tier 1 to Total Average Assets Ratio^ 8.4% 8.5% 8.5% 8.3% 8.4% Dividend Payout Ratio 50.0% 37.5% 38.7% 38.7% 63.2% Annualized Dividend Yield* 3.0% 2.7% 2.8% 2.9% 2.6% Buy Back Activity (shares) 239,000 N/A N/A 94,900 N/A Buy Back Activity (average stock price) $15.09 N/A N/A $16.35 N/A Remaining Authorization (shares) 834,636 1,073,636 1,073,636 1,073,636 1,168,536 ^Note: Presented as estimates for December 31, 2018 and actual for remaining periods *Note: Dividend yield is calculated using the average closing stock price during the quarter NASDAQ: UBNK 17
NIE/Average Assets/FTE Employees 900 774 770 800 3.5% 718 683 697 700 600 2.5% 2.21% 500 400 331 342 300 1.5% 200 100 0.5% 0 2012Y 2013Y 2014Y 2015Y 2016Y 2017Y 2018Y Period Ending NIE/AA Employees NASDAQ: UBNK 18
Balance Sheet Trends QoQ YoY 4Q18 vs 3Q18 4Q18 vs 4Q17 Balance Sheet ($ in thousands) 4Q2018 3Q2018 2Q2018 1Q2018 4Q2017 $ Change % $ Change % ASSETS Change Change Cash and cash equivalents $ 97,964 $ 78,595 $ 109,175 $ 69,242 $ 88,668 $ 19,369 24.6% $ 9,296 10.5% Securities 973,347 972,035 1,006,135 1,031,277 1,064,385 1,312 0.1 (91,038) (8.6) Loans held for sale 78,788 86,948 85,458 63,394 114,073 (8,160) (9.4) (35,285) (30.9) Residential real estate 1,313,373 1,283,126 1,252,001 1,235,197 1,204,401 30,247 2.4 108,972 9.0 Home equity 583,454 579,907 588,638 582,285 583,180 3,547 0.6 274 — Other consumer 410,249 369,781 332,402 310,439 292,781 40,468 10.9 117,468 40.1 Residential construction 20,632 32,750 32,063 37,579 40,947 (12,118) (37.0) (20,315) (49.6) Investor non-occupied CRE 1,911,070 1,888,848 1,927,960 1,842,898 1,854,459 22,222 1.2 56,611 3.1 Owner occupied CRE 443,398 434,906 418,338 442,938 445,820 8,492 2.0 (2,422) (0.5) Commercial business 886,770 861,030 841,142 846,182 840,312 25,740 3.0 46,458 5.5 Commercial construction (ADC) 87,493 78,235 82,883 84,717 78,083 9,258 11.8 9,410 12.1 Loans - net 5,622,589 5,495,277 5,441,766 5,349,044 5,307,678 127,312 2.3 314,911 5.9 Deferred tax asset, net 32,706 31,473 30,190 28,710 25,656 1,233 3.9 7,050 27.5 Premises and equipment, net 68,657 67,612 67,614 67,619 67,508 1,045 1.5 1,149 1.7 Intangible Assets 122,796 118,842 119,130 119,435 119,772 3,954 3.3 3,024 2.5 Cash surrender value of BOLI 193,429 181,928 180,490 179,556 148,300 11,501 6.3 45,129 30.4 Other Assets* 166,598 174,788 168,638 160,397 178,119 (8,190) (4.7) (11,521) (6.5) Total Assets $7,356,874 $7,207,498 $ 7,208,596 $7,068,674 $ 7,114,159 $ 149,376 2.1% $ 242,715 3.4% LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: QoQ YoY Deposits: 4Q18 vs 3Q18 4Q18 vs 4Q17 Non-interest-bearing $ 799,785 $ 759,210 $ 770,982 $ 753,575 $ 778,576 $ 40,575 5.3% $ 21,209 2.7% Interest-bearing 4,870,814 4,741,153 4,622,394 4,528,935 4,419,645 129,661 2.7 451,169 10.2 Total Deposits 5,670,599 5,500,363 5,393,376 5,282,510 5,198,221 170,236 3.1 472,378 9.1 Mortgagors' and investor escrow accounts 4,685 9,597 14,526 11,096 7,545 (4,912) (51.2) (2,860) (37.9) FHLB advances and other borrowing 899,626 926,592 1,041,896 1,030,735 1,165,054 (26,966) (2.9) (265,428) (22.8) Accrued expenses and other liabilities 69,446 61,128 56,921 51,333 50,011 8,318 13.6 19,435 38.9 Total liabilities 6,644,356 6,497,680 6,506,719 6,375,674 6,420,831 146,676 2.3 223,525 3.5 Total stockholders' equity 712,518 709,818 701,877 693,000 693,328 2,700 0.4 19,190 2.8 Total liabilities and stockholders' equity $7,356,874 $7,207,498 $ 7,208,596 $7,068,674 $ 7,114,159 $ 149,376 2.1% $ 242,715 3.4% *Other assets include FHLBB stock (at cost), accrued interest receivable, in addition to other assets NASDAQ: UBNK 19
Investment Portfolio Portfolio Stats ($ in millions) 2018 Q4 2018 Q3 Investment Portfolio Summary (Total) December 31, 2018 Average balance $ 968 $ 995 Yield 3.53% 3.48% Corp Debt Average Rating AA+ AA+ 9% Actual MBS Portfolio $ 551 $ 554 Agency MBS 21% Agency CMO Total Portfolio Duration (years) 3.8 4.1 17% Summary of Quarterly Securities 2018 Q4 2018 Q3 Purchases Agency CCMO Average Yield 3.58% N/A 15% Average Rating AA- N/A Muni 25% Agency CMBS CLO 3% 10% Total Securities/Assets (%) 25.0 20.1 19.0 18.7 20.0 17.2 17.5 17.0 16.3 16.3 16.0 15.8 15.5 15.0 14.6 14.0 13.5 15.0 13.2 10.0 5.0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 15 15 15 15 16 16 16 16 17 17 17 17 18 18 18 18 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 NASDAQ: UBNK 20
Asset Quality ($ in thousands, except percentage data) 2018Q4 2018Q3 2018Q2 2018Q1 2017Q4 Non-accrual loans $ 23,706 $ 20,506 $ 22,087 $ 23,436 $ 23,187 TDR - non-accruing 6,971 6,706 7,330 8,308 8,475 Total non-performing loans 30,677 27,212 29,417 31,744 31,662 OREO 1,389 1,808 1,855 1,935 2,154 Total non-performing assets $ 32,066 $ 29,020 $ 31,272 $ 33,679 $ 33,816 NPLs to total loans 0.54% 0.49% 0.54% 0.59% 0.59% NPAs to total assets 0.44% 0.40% 0.43% 0.48% 0.48% Net charge offs $ 891 $ 1,261 $ 1,102 $ 1,123 $ 1,518 Annualized NCOs to average loans 0.06% 0.09% 0.08% 0.08% 0.11% Allowance for loan losses to non-performing loans 168.32% 183.41% 167.12% 150.94% 148.76% Allowance for loan losses to total loans 0.91% 0.90% 0.90% 0.89% 0.88% Provision for loan losses (annualized)/Average Loans 0.19% 0.14% 0.17% 0.14% 0.17% NASDAQ: UBNK 21
Commercial Real Estate CRE / Risk- 3-Year Ratio Construction / 3-Year Ratio Institution Name City State Ticker Based Capital Delta Risk-Based Delta Capital United Financial Bancorp, Inc. Hartford CT UBNK 284% (5)% 20% (8)% People's United Financial, Inc. Bridgeport CT PBCT 234% (39)% 20% (10)% Webster Financial Corporation Waterbury CT WBS 158% 9% 13% (7)% Berkshire Hills Bancorp, Inc. Pittsfield MA BHLB 230% 3% 34% (11)% Independent Bank Corp. Rockland MA INDB 286% (21)% 52% (3)% Brookline Bancorp, Inc. Boston MA BRKL 340% 0% 21% (3)% Century Bancorp, Inc. Medford MA CNBKA 29% (3)% 3% (1)% Washington Trust Bancorp, Inc. Westerly RI WASH 292% (15)% 38% (4)% Meridian Bancorp, Inc. Peabody MA EBSB 597% 179% 99% 10% Camden National Corporation Camden ME CAC 251% 89% 24% 3% First Connecticut Bancorp, Inc. Farmington CT FBNK 298% (1)% 30% 17% Enterprise Bancorp, Inc. Lowell MA EBTC 264% (39)% 93% (7)% Community Bank System, Inc. De Witt NY CBU 103% 30% 20% 5% NBT Bancorp Inc. Norwich NY NBTB 173% 16% 25% (3)% Sterling Bancorp Montebello NY STL 275% 1% 8% (8)% High 597% 179% 99% 17% Low 29% (39)% 3% (11)% Mean 252% 15% 34% (1)% Median 257% 1% 25% (3)% UBNK Ranking out of 15 (ascending): 10 5 6 3 NOTE: All financial data as of September 30, 2018 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 NASDAQ: UBNK 22
Loan and Deposit Composition Loan Composition at December 31, 2018 Loan Composition at December 31, 2017 Loan Composition at December 31, 2016 Other Consumer: 7% Other Consumer: 4% Resi Construction: 1% Resi Contruction: 1% OOCRE: 8% Resi Construction: 1% Other Consumer: 5% OOCRE: 8% Home Equity: 11% OOCRE: 8% Home Equity: 10% Home Equity: 11% Investor CRE: Investor CRE: Investor CRE: 35% Residential: 24% Residential: 23% 34% Residential: 23% 35% C&I: 16% C&I: 16% C&I: 15% Comm Construction: Comm Construction: 1% Comm Construction: 1% 2% Total Loans at 12/31/18: $5.66 billion Total Loans at 12/31/17: $5.34 billion Total Loans at 12/31/16: $4.90 billion Deposit Composition at December 31, 2018 Deposit Composition at December 31, 2017 Deposit Composition at December 31, 2016 Demand & Time Demand & Demand & Time NOW: 26% Deposits: 31% NOW: 29% Time NOW: 30% Deposits: 35% Deposits: 37% Regular Savings: 11% Regular Savings: Regular Savings: 9% Money Market: Money Market: 25% 10% Money Market: 26% 31% Total Deposits at 12/31/18: $5.67 billion Total Deposits at 12/31/17: $5.20 billion Total Deposits at 12/31/16: $4.71 billion NASDAQ: UBNK 23
Diversified Deposit Funding Sources Non-Interest Bearing Deposit Growth Trend Transaction Account Growth Trend $5.67 B $5.20 B $5.67 B $5.20 B $4.71 B $4.71 B $4.44 B 799,785 $4.44 B 1,653,574 $4.04B 778,576 $4.04 B 1,573,404 708,050 657,718 1,019,161 1,206,722 602,359 902,460 4,419,645 4,870,814 3,779,353 4,003,122 4,017,025 3,432,952 3,132,851 3,417,910 3,504,450 3,624,817 14 15 16 17 18 14 15 16 17 18 20 20 20 20 20 20 20 20 20 20 Non-Interest Bearing CAGR: 7%, Interest Bearing CAGR: 9% Transaction CAGR: 16%, Non-Transaction CAGR: 6% Interest Bearing Non-Interest Bearing Non-Transaction Accounts Transaction Accounts Deposit Composition at 12/31/2018 Deposit Composition at 12/31/2017 Checking: Checking: 29% 30% Savings: 9% CD: 31% CD: 35% Savings: 10% Retail MMDA: Retail 15% Business MMDA: Business MMDA: 16% 13% MMDA: 12% NASDAQ: UBNK 24
Non-GAAP Reconciliation Three Months Ended December 31, September 30, June 30, March 31, December 31, 2018 2018 2018 2018 2017 Net Income (GAAP) $ 12,165 $ 16,308 $ 15,646 $ 15,787 $ 9,501 Non-GAAP adjustments: Non-interest income (25) 58 (271) (342) 745 Non-interest expense 2,677 (129) 215 — 536 Income tax (benefit) expense related to tax reform (1,717) — — — 1,609 Related income tax (benefit) expense (557) 15 (93) 72 2,074 Net adjustment 378 (56) (149) (270) 4,964 Total non-GAAP net income $ 12,543 $ 16,252 $ 15,497 $ 15,517 $ 14,465 Net interest income (GAAP) $ 48,362 $ 48,429 $ 48,181 $ 46,543 $ 46,849 Non-interest income (GAAP) $ 9,493 $ 9,555 $ 8,360 $ 9,289 $ 7,581 Non-GAAP adjustments: Net (gain) loss on sales of securities (25) 58 (62) (116) (72) Limited partnership writedown (1) — — — — 1,214 Loss on sale of premises and equipment — — — — 401 BOLI claim benefit — — (209) (226) (798) Net adjustment (25) 58 (271) (342) 745 Total non-GAAP non-interest income 9,468 9,613 8,089 8,947 8,326 Total non-GAAP net interest income 48,362 48,429 48,181 46,543 46,849 Total non-GAAP revenue $ 57,830 $ 58,042 $ 56,270 $ 55,490 $ 55,175 NASDAQ: UBNK 25
Non-GAAP Reconciliation (cont.) Three Months Ended December 31, September 30, June 30, March 31, December 31, 2018 2018 2018 2018 2017 Non-interest expense (GAAP) $ 43,718 $ 38,943 $ 38,370 $ 36,736 $ 37,237 Non-GAAP adjustments: Lease exit/disposal cost obligation (466) 129 (215) — (536) Effect of position eliminations (2,211) — — — — Net adjustment (2,677) 129 (215) — (536) Total non-GAAP non-interest expense $ 41,041 $ 39,072 $ 38,155 $ 36,736 $ 36,701 Total loans $ 5,656,439 $ 5,528,583 $ 5,475,427 $ 5,382,235 $ 5,339,983 Non-covered loans (2) (675,112) (708,621) (729,947) (771,802) (780,776) Total covered loans $ 4,981,327 $ 4,819,962 $ 4,745,480 $ 4,610,433 $ 4,559,207 Allowance for loan losses $ 51,636 $ 49,909 $ 49,163 $ 47,915 $ 47,099 Allowance for loan losses to total loans 0.91% 0.90% 0.90% 0.89% 0.88% Allowance for loan losses to total covered loans 1.04% 1.04% 1.04% 1.04% 1.03% (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. NASDAQ: UBNK 26