United Financial Bancorp, Inc. Announces Second Quarter Results and Quarterly Dividend

United Financial Bancorp, Inc. ("United Financial" or the "Company") (NASDAQ Global Select Stock Market: “UBNK”), the holding company for United Bank (the "Bank"), announced results for the quarter ended June 30, 2019.

The Company reported a net loss of $3.2 million, or $0.06 per diluted share, for the quarter ended June 30, 2019, compared to net income for the quarter ended March 31, 2019 ("linked quarter") of $12.7 million, or $0.25 per diluted share. The net loss for the current quarter was primarily due to an impairment charge recorded on the Company's investments in D.C. Solar LLCs of $6.3 million (after tax) and the related establishment of an additional tax reserve of $8.7 million during the three months ended June 30, 2019.  The Company reported net income of $15.6 million, or $0.31 per diluted share, for the quarter ended June 30, 2018.

On July 15, 2019, United Financial and People's United Financial, Inc. announced the signing of a definitive agreement and plan of merger pursuant to which United Financial will merge with and into People's United Financial, Inc., with People's United Financial, Inc. surviving the merger, in an all stock transaction valued at approximately $759.0 million as of July 15, 2019. Subject to the satisfaction or waiver of customary closing conditions, including the approval of the merger agreement by United Financial shareholders and the receipt of required regulatory approvals, United Financial and People's United Financial, Inc. expect that the merger will be completed during the fourth quarter of 2019.

Balance Sheet

Assets totaled $7.34 billion at both June 30, 2019 and March 31, 2019. At June 30, 2019, total available for sale securities were $840.5 million, representing a decrease of $8.0 million, or 0.9%, from the linked quarter. The overall decrease was primarily due to sales of lower yielding, higher risk weighted securities, offset by purchases of various mortgage-backed securities and corporate bonds. At June 30, 2019, total loans were $5.76 billion, representing an increase of $23.6 million, or 0.4%, from the linked quarter. Changes to loan balances during the second quarter of 2019 were highlighted by a $39.0 million, or 2.0%, increase in investor non-owner occupied commercial real estate loans, a $20.3 million, or 4.6%, increase in owner-occupied commercial real estate loans and a $13.6 million, or 3.2%, increase in other consumer loans.  Slightly offsetting the increased loan balances above were a $16.2 million, or 1.2%, decrease in residential real estate loans, a $14.6 million, or 15.4%, decrease in commercial construction loans, a $9.7 million, or 1.1%, decrease in commercial business loans, a $7.7 million, or 1.3%, decrease in home equity loans and a $1.1 million, or 7.9%, decrease in residential construction loans from the linked quarter. Loans held for sale increased $22.6 million, or 140.0%, from the linked quarter due to a change in pipeline delivery terms. Total cash and cash equivalents decreased $40.4 million, or 26.1%, from the linked quarter as the Company utilized excess cash to pay off maturing Federal Home Loan Bank advances.

Deposits totaled $5.73 billion at June 30, 2019 and increased by $62.3 million, or 1.1%, from $5.66 billion at March 31, 2019. Increases in deposit balances during the second quarter of 2019 were primarily due to a $66.0 million, or 8.5%, increase in non-interest bearing checking deposits and a $40.6 million, or 2.5%, increase in money market account balances, largely due to seasonal inflows that are typical of commercial DDA accounts in the second quarter. Offsetting these increases was a $22.9 million, or 2.5%, decrease in NOW checking account balances, a $12.4 million, or 2.5%, decrease in regular savings accounts and a $9.3 million, or 0.5%, decrease in certificates of deposit balances.

Total Federal Home Loan Bank advances decreased by $85.2 million, or 11.6%, over the linked quarter as the Company utilized excess cash generated from proceeds from sales of investment securities to pay off maturing advances as noted above.

Investment in D.C. Solar Tax-Advantaged Funds

The Company continues to monitor developments in its investments in Solar Eclipse Investment Fund X, LLC, Solar Eclipse Investment Fund XV, LLC, and Solar Eclipse Investment Fund XXII, LLC ("LLC investments"), all of which are borrowers of and lessees to D.C. Solar Solutions, Inc. and D.C. Solar Distribution, Inc., respectively. In late January and early February, 2019, D.C Solar Solutions, Inc., D.C. Solar Distribution, Inc. and several affiliated companies filed for Chapter 11 bankruptcy. On March 22, 2019, all cases were converted to cases under Chapter 7 of the Bankruptcy Code.

During the three months ended June 30, 2019, the Company recorded an impairment charge to the investment in the LLCs of $6.3 million (after tax) and an additional tax reserve of $8.7 million to reflect the loss and the associated uncertain tax positions.  The net impact to net income for the three months ended June 30, 2019 was $15.0 million.  At this time, no additional measurable loss has been identified, but the Company believes an additional loss is more likely than not. Given the facts and circumstances that we are aware of at the time of the filing of this release, the Company does not believe a full loss or total tax benefit reversal to be likely.

Net Interest Income

Net interest income increased by $73,000, or 0.2%, on a linked quarter basis, to $47.0 million, primarily attributable to an increase in interest and dividend income of $191,000, or 0.3%, to $73.4 million being partially offset by an increase in interest expense of $118,000, or 0.4%, to $26.4 million. Average interest-earning assets decreased by $77.4 million, or 1.1%, on a linked quarter basis, primarily due to a decrease in average investment balances, which decreased by $120.1 million, or 12.4%, as the result of a deleveraging strategy executed at the end of March. This decrease was offset by average loan balance growth, which was driven by a $28.5 million, or 3.2%, increase in average commercial business loans, a $20.4 million, or 0.9%, increase in average commercial real estate loans and a $15.9 million, or 3.8%, increase in average other consumer loans. Slightly offsetting the increases was a $29.3 million, or 2.1%, decrease in average residential real estate loans, a $6.1 million, or 1.1%, decrease in average home equity loans and a $5.4 million, or 4.9%, decrease in average construction loans.

Interest expense increased by $118,000, or 0.4%, to $26.4 million during the second quarter of 2019, from $26.3 million in the linked quarter. Average interest-bearing deposit balances decreased by $39.5 million, or 0.8%, on a linked quarter basis, primarily driven by a $50.4 million, or 2.0%, decrease in average NOW and money market account balances, slightly offset by a $6.9 million, or 0.4%, increase in average certificates of deposit and a $4.0 million, or 0.8%, increase in average savings account balances. Average non-interest bearing deposits increased by $51.2 million, or 6.9%, as compared to the linked quarter. Average Federal Home Loan Bank advances decreased by $106.8 million, or 13.3%.

The tax-equivalent net interest margin increased by 1 basis point to 2.82% in the second quarter of 2019, from 2.81% in the linked period. The increase in the tax-equivalent net interest margin was driven by a 2 basis point increase in the yield of interest-earning assets slightly offset by a 3 basis point increase in the cost of interest-bearing liabilities. The interest-earning asset yield improvement was largely driven by an 18 basis point increase in the yield on commercial business loans, a 6 basis point increase in the yield on construction loans and a 6 basis point increase in the yield on other consumer loans.  These increases were offset by a 7 basis point decrease in the yield on home equity loans, a 6 basis point decrease in the yield on commercial real estate loans and a 2 basis point decrease in the yield on residential real estate loans. In addition, there was a 3 basis point increase in the yield of the investment portfolio. The total cost of funds increased by 3 basis points to 1.64% in the second quarter of 2019 driven by a 5 basis point increase in the cost of interest-bearing deposits and a 7 basis point increase in the cost of Federal Home Loan Bank advances.

Provision for Loan Losses

The provision for loan losses totaled $2.5 million for the quarter ended June 30, 2019 as compared to $2.0 million for the linked quarter. Net charge-offs for the quarter ended June 30, 2019 totaled $1.3 million, or 0.09%, as a percentage of average loans outstanding, as compared to $1.6 million, or 0.11%, as a percentage of average loans for the quarter ended March 31, 2019. Factors considered in the provision for loan losses include, but are not limited to, historical charge-offs, the composition of the portfolio, the current level of non-performing loans and charge-offs, local and national economic and credit conditions, the direction of real estate values and delinquency trends.

Non-Interest Income

Total non-interest income decreased by $8.1 million, or 90.6%, to $840,000 for the quarter ended June 30, 2019 from $9.0 million in the linked quarter. The decrease in the second quarter's non-interest income was driven primarily by a change of $7.3 million in net loss on limited partnership investments as compared to the linked quarter, due mainly to the $7.8 million impairment charge on the D.C. Solar LLC investments discussed above, a $1.0 million, or 169.4%, decrease in income from mortgage banking activities, a decrease of  $600,000, or 81.4%, in net gain from sales of securities and a decrease of $425,000, or 21.8%, in bank-owned life insurance income as compared to the linked quarter.  These decreases were slightly offset by an increase of $1.4 million, or 21.9%, in service charges and fee income primarily resulting from higher swap fee income as compared to the linked quarter.

Non-Interest Expense

Non-interest expense for the quarter ended June 30, 2019 totaled $39.5 million and increased by $270,000, or 0.7%, from the linked quarter. The increase in non-interest expense during the quarter was driven by a $1.1 million, or 86.70%, increase in professional fees largely due to legal expenses pertaining to the proposed acquisition by People's United Financial, Inc. and D.C. Solar, offset by a $279,000, or 1.3%, decrease in salaries and employee benefits expense and a $429,000, or 7.7%, decrease in occupancy and equipment expense as compared to the linked quarter.

Provision for Income TaxesThe provision for income taxes was $9.2 million for the quarter ended June 30, 2019 as compared to $2 million in the linked quarter.  The effective tax rate was 154.9% at June 30, 2019 as compared to 13.8% at March 31, 2019.  The effective tax rate is higher compared to the linked quarter due to the recognition of uncertain tax positions of $8.7 million associated with D.C. Solar as discussed above.

Asset Quality

Asset quality remained strong and stable for the period, with non-performing assets increasing by $1.4 million to $32.0 million at June 30, 2019 from $30.6 million at March 31, 2019. The ratio of non-performing assets to total assets for the quarter ended June 30, 2019 was 0.44%, as compared to 0.42% in the linked quarter.

Capital

The Company reported Tangible Common Equity ("TCE") of $598.1 million, or 8.2% of average assets, for the quarter ended June 30, 2019. Tangible book value per share decreased to $11.71 at June 30, 2019 from $11.78 at March 31, 2019. The decrease was primarily driven by the impact of the Company's net loss of $3.2 million and the cash dividend payment to shareholders of $0.12 per share during the quarter, offset by an increase in accumulated other comprehensive income as a result of an increase in the market value of the Company’s investment portfolio as compared to the previous quarter. Book value per share at June 30, 2019 was $14.09, as compared to $14.17 in the linked quarter.

Dividend

The Board of Directors declared a cash dividend on the Company’s common stock of $0.12 per share to shareholders of record at the close of business on July 26, 2019 and payable on August 7, 2019. This dividend equates to a 3.51% annualized yield based on the $13.68 average closing price of the Company’s common stock in the second quarter of 2019. The Company has paid dividends for 53 consecutive quarters.

About United Financial Bancorp, Inc.

United Financial Bancorp, Inc. is the holding company for United Bank, a full service financial services firm offering a complete line of commercial, small business, wealth management and consumer banking products and services to customers throughout Connecticut, Massachusetts and Rhode Island. United Bank is a financially strong, leading New England bank headquartered in Hartford, Connecticut with more than 50 branches in three states. United Financial Bancorp, Inc. trades on the NASDAQ Global Select Stock Exchange under the ticker symbol “UBNK.” At June 30, 2019, the Company had $7.34 billion in assets.

For more information about United Bank’s services and products call (866) 959-BANK or visit www.bankatunited.com. For more information about United Financial Bancorp, Inc., visit www.unitedfinancialinc.com or download the Company’s free Investor Relations app on your Apple or Android device. To download United Financial Bancorp, Inc.'s investor relations app on your iPhone or on your iPad, which offers access to SEC documents, press releases, videos, audiocasts and more, please visit:https://itunes.apple.com/WebObjects/MZStore.woa/wa/viewSoftware?id=725271098&mt=8or https://play.google.com/store/apps/details?id=com.theirapp.ubnk for your Android mobile device.

Non-GAAP Financial Measures

This document 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. A reconciliation of non-GAAP financial measures to GAAP measures is included on pages F-10 through F-12 in the accompanying financial tables. 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

This press release contains certain forward-looking statements about the Company. Forward-looking statements include statements regarding anticipated future events, such as the anticipated effect of the Company's LLC investments, and can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as “believe,” “expect,” “anticipate,” “estimate,” and “intend” or future or conditional verbs such as “will,” “would,” “should,” “could,” or “may.” Forward-looking statements, by their nature, are subject to risks and uncertainties. Certain factors that could cause actual results to differ materially from expected results include the outcome of the D.C. Solar bankruptcy, increased competitive pressures, changes in the interest rate environment, general economic conditions or conditions within the securities markets, and legislative and regulatory changes that could adversely affect the business in which the Company and its subsidiaries are engaged.

Investor Relations Contact:Marliese L. ShawExecutive Vice President, Investor Relations OfficerUnited [e-mail]	Media Relations Contact:Adam J. JeamelRegional President, Corporate CommunicationsUnited [e-mail]

United Financial Bancorp, Inc. and Subsidiaries
Consolidated Statements of Net Income
(Unaudited)
		For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2019				2018				2019				2018
Interest and dividend income:		(In thousands, except share data)
Loans		$	65,650			$	57,958			$	130,414			$	112,738
Securities-taxable interest		6,117				5,969				12,592				11,467
Securities-non-taxable interest		644				2,354				1,738				4,783
Securities-dividends		653				736				1,309				1,373
Interest-bearing deposits		341				113				566				263
Total interest and dividend income		73,405				67,130				146,619				130,624
Interest expense:
Deposits		20,564				12,864				40,495				23,891
Borrowed funds		5,831				6,085				12,177				12,009
Total interest expense		26,395				18,949				52,672				35,900
Net interest income		47,010				48,181				93,947				94,724
Provision for loan losses		2,472				2,350				4,515				4,289
Net interest income after provision for loan losses		44,538				45,831				89,432				90,435
Non-interest income:
Service charges and fees		7,538				6,542				13,723				12,701
Net gain from sales of securities		137				62				874				178
(Loss) income from mortgage banking activities		(410		)		846				181				2,575
Bank-owned life insurance income		1,521				1,671				3,467				3,317
Net loss on limited partnership investments		(7,898		)		(960		)		(8,501		)		(1,550		)
Other (loss) income		(48		)		199				76				428
Total non-interest income		840				8,360				9,820				17,649
Non-interest expense:
Salaries and employee benefits		21,923				22,113				44,125				43,311
Service bureau fees		2,198				2,165				4,235				4,383
Occupancy and equipment		5,111				4,668				10,651				9,617
Professional fees		2,414				1,105				3,707				2,269
Marketing and promotions		782				1,189				1,640				1,874
FDIC insurance assessments		769				735				1,428				1,474
Core deposit intangible amortization		388				305				808				642
Other		5,872				6,090				12,050				11,536
Total non-interest expense		39,457				38,370				78,644				75,106
Income before income taxes		5,921				15,821				20,608				32,978
Provision for income taxes		9,169				175				11,199				1,545
Net (loss) income		$	(3,248	)		$	15,646			$	9,409			$	31,433
Net (loss) income per share:
Basic		$	(0.06	)		$	0.31			$	0.19			$	0.62
Diluted		$	(0.06	)		$	0.31			$	0.19			$	0.62
Weighted-average shares outstanding:
Basic		50,620,236				50,504,273				50,617,661				50,489,689
Diluted		50,620,236				50,974,283				50,763,678				50,985,520

United Financial Bancorp, Inc. and Subsidiaries
Consolidated Statements of Net Income
(Unaudited)
		For the Three Months Ended
		June 30, 2019				March 31, 2019				December 31, 2018				September 30, 2018				June 30, 2018
Interest and dividend income:		(In thousands, except share data)
Loans		$	65,650			$	64,764			$	63,227			$	61,061			$	57,958
Securities-taxable interest		6,117				6,475				5,705				5,822				5,969
Securities-non-taxable interest		644				1,094				2,339				2,347				2,354
Securities-dividends		653				656				702				748				736
Interest-bearing deposits		341				225				250				213				113
Total interest and dividend income		73,405				73,214				72,223				70,191				67,130
Interest expense:
Deposits		20,564				19,931				18,183				15,767				12,864
Borrowed funds		5,831				6,346				5,678				5,995				6,085
Total interest expense		26,395				26,277				23,861				21,762				18,949
Net interest income		47,010				46,937				48,362				48,429				48,181
Provision for loan losses		2,472				2,043				2,618				2,007				2,350
Net interest income after provision for loan losses		44,538				44,894				45,744				46,422				45,831
Non-interest income:
Service charges and fees		7,538				6,185				7,447				6,623				6,542
Net gain (loss) from sales of securities		137				737				25				(58		)		62
(Loss) income from mortgage banking activities		(410		)		591				698				1,486				846
Bank-owned life insurance income		1,521				1,946				1,517				1,460				1,671
Net loss on limited partnership investments		(7,898		)		(603		)		(405		)		(221		)		(960		)
Other (loss) income		(48		)		124				211				265				199
Total non-interest income		840				8,980				9,493				9,555				8,360
Non-interest expense:
Salaries and employee benefits		21,923				22,202				25,341				22,643				22,113
Service bureau fees		2,198				2,037				2,309				2,209				2,165
Occupancy and equipment		5,111				5,540				6,384				4,487				4,668
Professional fees		2,414				1,293				1,136				1,013				1,105
Marketing and promotions		782				858				1,108				1,119				1,189
FDIC insurance assessments		769				659				611				655				735
Core deposit intangible amortization		388				420				420				288				305
Other		5,872				6,178				6,409				6,529				6,090
Total non-interest expense		39,457				39,187				43,718				38,943				38,370
Income before income taxes		5,921				14,687				11,519				17,034				15,821
Provision (benefit) for income taxes		9,169				2,030				(646		)		726				175
Net (loss) income		$	(3,248	)		$	12,657			$	12,165			$	16,308			$	15,646
Net (loss) income per share:
Basic		$	(0.06	)		$	0.25			$	0.24			$	0.32			$	0.31
Diluted		$	(0.06	)		$	0.25			$	0.24			$	0.32			$	0.31
Weighted-average shares outstanding:
Basic		50,620,236				50,615,059				50,613,498				50,624,832				50,504,273
Diluted		50,620,236				50,907,092				50,970,000				51,104,776				50,974,283

United Financial Bancorp, Inc. and Subsidiaries
Consolidated Statements of Condition
(Unaudited)
		June 30, 2019				March 31, 2019				December 31, 2018				September 30, 2018				June 30, 2018
ASSETS		(In thousands)
Cash and cash equivalents:
Cash and due from banks		$	67,939			$	50,823			$	36,434			$	48,786			$	62,188
Short-term investments		46,807				104,350				61,530				29,809				46,987
Total cash and cash equivalents		114,746				155,173				97,964				78,595				109,175
Available for sale securities – At fair value		840,500				848,541				973,347				972,035				1,006,135
Loans held for sale		38,809				16,172				78,788				86,948				85,458
Loans:
Commercial real estate loans:
Owner-occupied		459,648				439,366				443,398				434,906				418,338
Investor non-owner occupied		1,971,103				1,932,137				1,911,070				1,888,848				1,927,960
Construction		80,063				94,649				87,493				78,235				82,883
Total commercial real estate loans		2,510,814				2,466,152				2,441,961				2,401,989				2,429,181
Commercial business loans		910,473				920,165				886,770				861,030				841,142
Consumer loans:
Residential real estate		1,306,208				1,322,423				1,313,373				1,283,126				1,252,001
Home equity		575,683				583,368				583,454				579,907				588,638
Residential construction		12,542				13,620				20,632				32,750				32,063
Other consumer		439,413				425,854				410,249				369,781				332,402
Total consumer loans		2,333,846				2,345,265				2,327,708				2,265,564				2,205,104
Total loans		5,755,133				5,731,582				5,656,439				5,528,583				5,475,427
Net deferred loan costs and premiums		17,965				17,901				17,786				16,603				15,502
Allowance for loan losses		(53,206		)		(52,041		)		(51,636		)		(49,909		)		(49,163		)
Loans receivable - net		5,719,892				5,697,442				5,622,589				5,495,277				5,441,766
Federal Home Loan Bank of Boston stock, at cost		34,335				37,702				41,407				42,032				46,734
Accrued interest receivable		24,938				25,061				24,823				25,485				23,209
Deferred tax asset, net		27,366				27,600				32,706				31,473				30,190
Premises and equipment, net		62,304				63,863				68,657				67,612				67,614
Operating lease right-of-use assets		43,171				44,377				—				—				—
Financing lease right-of-use assets		4,266				4,356				—				—				—
Goodwill		116,709				116,727				116,769				115,281				115,281
Core deposit intangible asset		5,219				5,607				6,027				3,561				3,849
Cash surrender value of bank-owned life insurance		195,993				194,496				193,429				181,928				180,490
Other assets		107,707				102,823				100,368				107,271				98,695
Total assets		$	7,335,955			$	7,339,940			$	7,356,874			$	7,207,498			$	7,208,596
		June 30, 2019				March 31, 2019				December 31, 2018				September 30, 2018				June 30, 2018
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Deposits:
Non-interest-bearing		$	843,926			$	777,969			$	799,785			$	759,210			$	770,982
Interest-bearing		4,882,622				4,886,283				4,870,814				4,741,153				4,622,394
Total deposits		5,726,548				5,664,252				5,670,599				5,500,363				5,393,376
Mortgagors’ and investor escrow accounts		14,541				11,510				4,685				9,597				14,526
Federal Home Loan Bank advances and other borrowings		741,989				826,668				899,626				926,592				1,041,896
Operating lease liabilities		55,197				56,265				—				—				—
Financing lease liabilities		4,518				4,585				—				—				—
Accrued expenses and other liabilities		73,140				52,562				69,446				61,128				56,921
Total liabilities		6,615,933				6,615,842				6,644,356				6,497,680				6,506,719
Total stockholders’ equity		720,022				724,098				712,518				709,818				701,877
Total liabilities and stockholders’ equity		$	7,335,955			$	7,339,940			$	7,356,874			$	7,207,498			$	7,208,596

United Financial Bancorp, Inc. and Subsidiaries
Selected Financial Highlights
(Dollars In Thousands, Except Share Data)
(Unaudited)
	At or For the Three Months Ended
	June 30,  2019				March 31,  2019				December 31,  2018				September 30,  2018				June 30,  2018
Share Data:
Basic net (loss) income per share	$	(0.06	)		$	0.25			$	0.24			$	0.32			$	0.31
Diluted net (loss) income per share	(0.06		)		0.25				0.24				0.32				0.31
Dividends declared per share	0.12				0.12				0.12				0.12				0.12
Tangible book value per share	$	11.71			$	11.78			$	11.54			$	11.55			$	11.40
Key Statistics:
Total revenue	$	47,850			$	55,917			$	57,855			$	57,984			$	56,541
Total non-interest expense	39,457				39,187				43,718				38,943				38,370
Average earning assets	6,706,237				6,783,604				6,708,701				6,671,424				6,584,938
Key Ratios:
(Loss) return on average assets (annualized)	(0.18		%)		0.69		%		0.67		%		0.91		%		0.88		%
(Loss) return on average equity (annualized)	(1.79		%)		7.13		%		6.89		%		9.26		%		9.00		%
Tax-equivalent net interest margin (annualized)	2.82		%		2.81		%		2.90		%		2.92		%		2.97		%
Non-interest expense to average assets (annualized)	2.16		%		2.13		%		2.41		%		2.17		%		2.16		%
Cost of funds (annualized) (1)	1.64		%		1.61		%		1.48		%		1.36		%		1.20		%
Total revenue growth rate	(14.43		%)		(3.35		%)		(0.22		%)		2.55		%		1.27		%
Total revenue growth rate (annualized)	(57.71		%)		(13.40		%)		(0.89		%)		10.21		%		5.08		%
Average earning asset growth rate	(1.14		%)		1.12		%		0.56		%		1.31		%		0.26		%
Average earning asset growth rate (annualized)	(4.56		%)		4.47		%		2.24		%		5.25		%		1.02		%
Residential Mortgage Production:
Dollar volume (total)	$	46,549			$	31,882			$	128,209			$	143,673			$	140,409
Mortgages originated for purchases	24,409				21,434				101,266				111,555				110,351
Loans sold	22,352				89,980				108,663				99,372				99,637
(Loss) income from mortgage banking activities	(410		)		591				698				1,486				846
Non-performing Assets:
Residential real estate	$	12,893			$	13,742			$	13,217			$	11,949			$	11,221
Home equity	5,051				4,577				4,735				4,005				4,607
Investor-owned commercial real estate	2,357				739				1,131				1,525				2,400
Owner-occupied commercial real estate	1,989				1,830				2,450				1,202				2,176
Construction	137				171				199				243				250
Commercial business	1,666				1,627				944				985				1,196
Other consumer	657				1,034				1,030				597				237
Non-accrual loans	24,750				23,720				23,706				20,506				22,087
Troubled debt restructured – non-accruing	5,820				5,479				6,971				6,706				7,330
Total non-performing loans	30,570				29,199				30,677				27,212				29,417
Other real estate owned	1,455				1,429				1,389				1,808				1,855
Total non-performing assets	$	32,025			$	30,628			$	32,066			$	29,020			$	31,272
Non-performing loans to total loans	0.53		%		0.51		%		0.54		%		0.49		%		0.54		%
Non-performing assets to total assets	0.44		%		0.42		%		0.44		%		0.40		%		0.43		%
Allowance for loan losses to non-performing loans	174.05		%		178.23		%		168.32		%		183.41		%		167.12		%
Allowance for loan losses to total loans	0.92		%		0.91		%		0.91		%		0.90		%		0.90		%
Non-GAAP Ratios: (2)
Efficiency ratio	69.99		%		69.67		%		69.18		%		65.61		%		65.18		%
(Loss) return on average tangible common equity (annualized)	(1.94		%)		8.85		%		8.55		%		11.30		%		11.03		%
Pre-provision net revenue to average assets	0.92		%		0.92		%		1.00		%		1.12		%		1.14		%

(1) The cost of funds ratio represents interest incurred on liabilities as a percentage of average non-interest-bearing deposits and interest-bearing liabilities.(2) Non-GAAP ratios are not financial measurements required by generally accepted accounting principles; however, management believes such information is useful to investors in evaluating Company performance. Calculations of these non-GAAP metrics are provided after the reconciliations of non-GAAP financial measures and appear on pages F-11 and F-12.

United Financial Bancorp, Inc. and Subsidiaries
Average Balance Sheets, Interest and Yields/Costs
(Dollars In Thousands)
(Unaudited)
	For the Three Months Ended
	June 30, 2019											June 30, 2018
	Average Balance				Interest and Dividends				Yield/Cost			Average Balance				Interest and Dividends				Yield/Cost
Interest-earning assets:
Residential real estate	$	1,351,571			$	12,520			3.71	%		$	1,338,021			$	12,020			3.60	%
Commercial real estate	2,379,330				27,503				4.57			2,306,896				24,762				4.25
Construction	105,801				1,387				5.19			114,987				1,331				4.58
Commercial business	916,928				11,487				4.96			816,102				9,139				4.43
Home equity	576,046				7,771				5.41			588,080				7,058				4.81
Other consumer	433,971				5,496				5.08			322,103				4,062				5.06
Investment securities	846,711				6,921				3.26			1,019,491				8,998				3.53
Federal Home Loan Bank stock	35,513				620				6.98			49,136				703				5.72
Other earning assets	60,366				344				2.29			30,122				116				1.55
Total interest-earning assets	6,706,237				74,049				4.39			6,584,938				68,189				4.12
Allowance for loan losses	(52,680		)									(48,624		)
Non-interest-earning assets	636,544											555,407
Total assets	$	7,290,101										$	7,091,721
Interest-bearing liabilities:
NOW and money market	$	2,517,212			$	10,267			1.64	%		$	2,256,323			$	6,163			1.10	%
Savings	504,186				81				0.06			517,910				77				0.06
Certificates of deposit	1,830,763				10,215				2.24			1,749,097				6,624				1.52
Total interest-bearing deposits	4,852,161				20,563				1.70			4,523,330				12,864				1.14
Federal Home Loan Bank advances	694,082				4,542				2.59			959,248				4,692				1.94
Other borrowings	87,875				1,290				5.81			112,112				1,393				4.91
Total interest-bearing liabilities	5,634,118				26,395				1.87			5,594,690				18,949				1.35
Non-interest-bearing deposits	796,504											738,484
Other liabilities	134,924											63,246
Total liabilities	6,565,546											6,396,420
Stockholders’ equity	724,555											695,301
Total liabilities and stockholders’ equity	$	7,290,101										$	7,091,721
Net interest-earning assets	$	1,072,119										$	990,248
Tax-equivalent net interest income					47,654											49,240
Tax-equivalent net interest rate spread (1)									2.52	%										2.77	%
Tax-equivalent net interest margin (2)									2.82	%										2.97	%
Average interest-earning assets to average interest-bearing liabilities									119.03	%										117.70	%
Less tax-equivalent adjustment					644											1,059
Net interest income					$	47,010										$	48,181

(1)  Tax-equivalent net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.(2)  Tax-equivalent net interest rate margin represents tax-equivalent net interest income divided by average interest-earning assets.

United Financial Bancorp, Inc. and Subsidiaries
Average Balance Sheets, Interest and Yields/Costs
(Dollars In Thousands)
(Unaudited)
	For the Three Months Ended
	June 30, 2019											March 31, 2019
	Average Balance				Interest and Dividends				Yield/Cost			Average Balance				Interest and Dividends				Yield/Cost
Interest-earning assets:
Residential real estate	$	1,351,571			$	12,520			3.71	%		$	1,380,829			$	12,886			3.73	%
Commercial real estate	2,379,330				27,503				4.57			2,358,955				27,302				4.63
Construction	105,801				1,387				5.19			111,198				1,426				5.13
Commercial business	916,928				11,487				4.96			888,436				10,612				4.78
Home equity	576,046				7,771				5.41			582,180				7,874				5.48
Other consumer	433,971				5,496				5.08			418,053				5,174				5.02
Investment securities	846,711				6,921				3.26			966,841				7,819				3.23
Federal Home Loan Bank stock	35,513				620				6.98			40,475				628				6.21
Other earning assets	60,366				344				2.29			36,637				229				2.53
Total interest-earning assets	6,706,237				74,049				4.39			6,783,604				73,950				4.37
Allowance for loan losses	(52,680		)									(52,089		)
Non-interest-earning assets	636,544											639,923
Total assets	$	7,290,101										$	7,371,438
Interest-bearing liabilities:
NOW and money market	$	2,517,212			$	10,267			1.64	%		$	2,567,634			$	10,309			1.63	%
Savings	504,186				81				0.06			500,167				75				0.06
Certificates of deposit	1,830,763				10,215				2.24			1,823,867				9,547				2.12
Total interest-bearing deposits	4,852,161				20,563				1.70			4,891,668				19,931				1.65
Federal Home Loan Bank advances	694,082				4,542				2.59			800,862				5,045				2.52
Other borrowings	87,875				1,290				5.81			88,757				1,301				5.86
Total interest-bearing liabilities	5,634,118				26,395				1.87			5,781,287				26,277				1.84
Non-interest-bearing deposits	796,504											745,259
Other liabilities	134,924											134,987
Total liabilities	6,565,546											6,661,533
Stockholders’ equity	724,555											709,905
Total liabilities and stockholders’ equity	$	7,290,101										$	7,371,438
Net interest-earning assets	$	1,072,119										$	1,002,317
Tax-equivalent net interest income					47,654											47,673
Tax-equivalent net interest rate spread (1)									2.52	%										2.53	%
Tax-equivalent net interest margin (2)									2.82	%										2.81	%
Average interest-earning assets to average interest-bearing liabilities									119.03	%										117.34	%
Less tax-equivalent adjustment					644											736
Net interest income					$	47,010										$	46,937

(1)  Tax-equivalent net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.(2)  Tax-equivalent net interest rate margin represents tax-equivalent net interest income divided by average interest-earning assets.

United Financial Bancorp, Inc. and Subsidiaries
Average Balance Sheets, Interest and Yields/Costs
(Dollars In Thousands)
(Unaudited)
	For the Six Months Ended
	June 30, 2019											June 30, 2018
	Average Balance				Interest and Dividends				Yield/Cost			Average Balance				Interest and Dividends				Yield/Cost
Interest-earning assets:
Residential real estate	$	1,366,119			$	25,406			3.72	%		$	1,326,185			$	23,526			3.56	%
Commercial real estate	2,369,199				54,804				4.60			2,294,451				48,419				4.20
Construction	108,484				2,813				5.16			117,199				2,656				4.51
Commercial business	902,761				22,099				4.87			829,382				17,521				4.20
Home equity	579,096				15,645				5.45			583,454				13,585				4.69
Other consumer	426,056				10,670				5.05			311,032				7,862				5.10
Investment securities	906,444				14,740				3.25			1,030,404				17,618				3.42
Federal Home Loan Bank stock	37,980				1,248				6.57			50,291				1,309				5.21
Other earning assets	48,567				573				2.38			34,202				270				1.59
Total interest-earning assets	6,744,706				147,998				4.38			6,576,600				132,766				4.03
Allowance for loan losses	(52,386		)									(48,205		)
Non-interest-earning assets	638,225											554,873
Total assets	$	7,330,545										$	7,083,268
Interest-bearing liabilities:
NOW and money market	$	2,542,284			$	20,577			1.63	%		$	2,201,937			$	11,055			1.01	%
Savings	502,187				156				0.06			514,426				150				0.06
Certificates of deposit	1,827,334				19,762				2.18			1,772,754				12,686				1.44
Total interest-bearing deposits	4,871,805				40,495				1.68			4,489,117				23,891				1.07
Federal Home Loan Bank advances	747,177				9,586				2.55			996,360				9,238				1.84
Other borrowings	88,314				2,591				5.84			115,043				2,771				4.79
Total interest-bearing liabilities	5,707,296				52,672				1.86			5,600,520				35,900				1.29
Non-interest-bearing deposits	771,023											725,993
Other liabilities	134,955											63,919
Total liabilities	6,613,274											6,390,432
Stockholders’ equity	717,271											692,836
Total liabilities and stockholders’ equity	$	7,330,545										$	7,083,268
Net interest-earning assets	$	1,037,410										$	976,080
Tax-equivalent net interest income					95,326											96,866
Tax-equivalent net interest rate spread (1)									2.52	%										2.74	%
Tax-equivalent net interest margin (2)									2.81	%										2.94	%
Average interest-earning assets to average interest-bearing liabilities									118.18	%										117.43	%
Less tax-equivalent adjustment					1,379											2,142
Net interest income					$	93,947										$	94,724

(1)  Tax-equivalent net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.(2)  Tax-equivalent net interest rate margin represents tax-equivalent net interest income divided by average interest-earning assets.

United Financial Bancorp, Inc. and Subsidiaries

Reconciliation of Non-GAAP Financial Measures

(Dollars In Thousands)

(Unaudited)

In addition to evaluating the Company’s results of operations in accordance with GAAP, management periodically supplements this evaluation with an analysis of certain non-GAAP financial measures. These non-GAAP measures are intended to provide the reader with additional perspectives on operating results, financial condition, and performance trends, while facilitating comparisons with the performance of other financial institutions. Non-GAAP financial measures are not a substitute for GAAP measures, rather, they should be read and used in conjunction with the Company’s GAAP financial information.

The efficiency ratio is used as a common measure by banks as a comparable metric to understand the Company’s expense structure relative to its total revenue; in other words, for every dollar of total revenue we recognize, how much of that dollar is expended. In order to improve the comparability of the ratio to our peers, we remove non-core items. To improve transparency, and acknowledging that banks are not consistent in their definition of the efficiency ratio, we include our calculation of this non-GAAP measure.

Pre-provision net revenue is a measure that the Company uses to understand fundamental operating performance before credit related expenses and tax expense. It is often expressed as a ratio relative to average assets which demonstrates the “core” performance and can be viewed as an alternative measure of how efficiently the Company services its asset base.

Return on average tangible common equity is used by management and readers of our financial statements to understand how efficiently the Company is deploying its common equity. Companies that are able to demonstrate more efficient use of common equity are more likely to be viewed favorably by current and prospective investors.

The Company believes that disclosing these non-GAAP metrics is both useful internally and is expected by our investors and analysts in order to understand the overall performance of the Company. Other companies may calculate and define their supplemental data differently. A reconciliation of GAAP financial measures to non-GAAP measures and other performance ratios, as adjusted, are included on pages F-10 through F-12 in the following press release tables:

	Three Months Ended
	June 30,  2019				March 31,  2019				December 31,  2018				September 30,  2018				June 30,  2018
	(Dollars in thousands)
Net (Loss) Income (GAAP)	$	(3,248	)		$	12,657			$	12,165			$	16,308			$	15,646
Non-GAAP adjustments:
Non-interest income	(137		)		(1,158		)		(25		)		58				(271		)
Non-interest expense	—				—				2,677				(129		)		215
Income tax benefit related to tax reform	—				—				(1,717		)		—				—
Related income tax expense (benefit)	29				155				(557		)		15				(93		)
Net adjustment	(108		)		(1,003		)		378				(56		)		(149		)
Total net (loss) income (non-GAAP)	$	(3,356	)		$	11,654			$	12,543			$	16,252			$	15,497
Non-interest income (GAAP)	$	840			$	8,980			$	9,493			$	9,555			$	8,360
Non-GAAP adjustments:
Net (gain) loss on sales of securities	(137		)		(737		)		(25		)		58				(62		)
BOLI claim benefit	—				(421		)		—				—				(209		)
Net adjustment	(137		)		(1,158		)		(25		)		58				(271		)
Total non-interest income (non-GAAP)	703				7,822				9,468				9,613				8,089
Total net interest income	47,010				46,937				48,362				48,429				48,181
Total revenue (non-GAAP)	$	47,713			$	54,759			$	57,830			$	58,042			$	56,270
Non-interest expense (GAAP)	$	39,457			$	39,187			$	43,718			$	38,943			$	38,370
Non-GAAP adjustments:
Lease exit/disposal cost obligation	—				—				(466		)		129				(215		)
Effect of position eliminations	—				—				(2,211		)		—				—
Net adjustment	—				—				(2,677		)		129				(215		)
Total non-interest expense (non-GAAP)	$	39,457			$	39,187			$	41,041			$	39,072			$	38,155
Total loans	$	5,755,133			$	5,731,582			$	5,656,439			$	5,528,583			$	5,475,427
Non-covered loans (1)	(618,176		)		(658,455		)		(675,112		)		(708,621		)		(729,947		)
Total covered loans	$	5,136,957			$	5,073,127			$	4,981,327			$	4,819,962			$	4,745,480
Allowance for loan losses	$	53,206			$	52,041			$	51,636			$	49,909			$	49,163
Allowance for loan losses to total loans	0.92		%		0.91		%		0.91		%		0.90		%		0.90		%
Allowance for loan losses to total covered loans	1.04		%		1.03		%		1.04		%		1.04		%		1.04		%

(1) Represents acquired loans that were recorded at fair value. These loans carry no allowance for loan losses for the periods reflected above.

	Three Months Ended
	June 30,  2019				March 31,  2019				December 31,  2018				September 30,  2018				June 30,  2018
Efficiency Ratio:
Non-Interest Expense (GAAP)	$	39,457			$	39,187			$	43,718			$	38,943			$	38,370
Non-GAAP adjustments:
Other real estate owned expense	(83		)		(105		)		(108		)		(256		)		(163		)
Lease exit/disposal cost obligation	—				—				(466		)		129				(215		)
Effect of position eliminations	—				—				(2,211		)		—				—
Non-Interest Expense for Efficiency Ratio (non-GAAP)	$	39,374			$	39,082			$	40,933			$	38,816			$	37,992
Net Interest Income (GAAP)	$	47,010			$	46,937			$	48,362			$	48,429			$	48,181
Non-GAAP adjustments:
Tax-equivalent adjustment for tax-exempt loans and investment securities	644				736				938				895				1,059
Non-Interest Income (GAAP)	840				8,980				9,493				9,555				8,360
Non-GAAP adjustments:
Net (gain) loss on sales of securities	(137		)		(737		)		(25		)		58				(62		)
Net loss on limited partnership investments	7,898				603				405				221				960
BOLI claim benefit	—				(421		)		—				—				(209		)
Total Revenue for Efficiency Ratio (non-GAAP)	$	56,255			$	56,098			$	59,173			$	59,158			$	58,289
Efficiency Ratio (Non-Interest Expense for Efficiency Ratio (non-GAAP)/Total Revenue for Efficiency Ratio (non-GAAP))	69.99		%		69.67		%		69.18		%		65.61		%		65.18		%
	Three Months Ended
	June 30,  2019				March 31,  2019				December 31,  2018				September 30,  2018				June 30,  2018
Pre-Provision Net Revenue ("PPNR") to Average Assets (Annualized):
Net Interest Income (GAAP)	$	47,010			$	46,937			$	48,362			$	48,429			$	48,181
Non-GAAP adjustments:
Tax-equivalent adjustment for tax-exempt loans and investment securities	644				736				938				895				1,059
Total tax-equivalent net interest income (A)	$	47,654			$	47,673			$	49,300			$	49,324			$	49,240
Non-Interest Income (GAAP)	840				8,980				9,493				9,555				8,360
Non-GAAP adjustments:
Net (gain) loss on sales of securities	(137		)		(737		)		(25		)		58				(62		)
Net loss on limited partnership investments	7,898				603				405				221				960
BOLI claim benefit	—				(421		)		—				—				(209		)
Non-Interest Income for PPNR (non-GAAP) (B)	$	8,601			$	8,425			$	9,873			$	9,834			$	9,049
Non-Interest Expense (GAAP)	$	39,457			$	39,187			$	43,718			$	38,943			$	38,370
Non-GAAP adjustments:
Lease exit/disposal cost obligation	—				—				(466		)		129				(215		)
Effect of position eliminations	—				—				(2,211		)		—				—
Non-Interest Expense for PPNR (non-GAAP) (C)	$	39,457			$	39,187			$	41,041			$	39,072			$	38,155
Total PPNR (non-GAAP)  (A + B - C) :	$	16,798			$	16,911			$	18,132			$	20,086			$	20,134
Average Assets	7,290,101				7,371,438				7,244,396				7,191,072				7,091,721
PPNR to Average Assets (Annualized)	0.92		%		0.92		%		1.00		%		1.12		%		1.14		%
Return on Average Tangible Common Equity (Annualized):
Net (Loss) Income (GAAP)	$	(3,248	)		$	12,657			$	12,165			$	16,308			$	15,646
Non-GAAP adjustments:
Intangible assets amortization, tax effected at 21%	307				332				332				228				241
Net (Loss) Income excluding intangible assets amortization, tax effected at 21%	$	(2,941	)		$	12,989			$	12,497			$	16,536			$	15,887
Average stockholders' equity (non-GAAP)	$	724,555			$	709,905			$	706,124			$	704,306			$	695,301
Average goodwill & other intangible assets (non-GAAP)	119,287				122,597				121,614				119,009				119,288
Average tangible common stockholders' equity (non-GAAP)	$	605,268			$	587,308			$	584,510			$	585,297			$	576,013
(Loss) Return on Average Tangible Common Equity (non-GAAP)	(1.94		)%		8.85		%		8.55		%		11.30		%		11.03		%