United Financial Bancorp 8-K United Financial Bancorp, Inc. Announces Third Quarter Earnings and Declares Quarterly Cash Dividend

FOR IMMEDIATE RELEASE	For More Information Contact:
	Mark A. Roberts
	Executive VP & CFO
	(413) 787-1700

UNITED FINANCIAL BANCORP, INC. ANNOUNCES THIRD QUARTER EARNINGS AND DECLARES QUARTERLY CASH DIVIDEND

WEST SPRINGFIELD, MA—October 20, 2006—United Financial Bancorp, Inc. (the “Company”) (NASDAQ:UBNK), the holding company for United Bank (the “Bank”), reported net income of $1.5 million, or $0.09 per diluted share, for the third quarter of 2006 compared to a loss of $173,000 for the same period in 2005. The Company earned $4.2 million, or $0.25 per diluted share, for the nine months ended September 30, 2006 compared to $2.8 million for the 2005 period. Earnings per share data is not applicable to the 2005 periods since the Company’s initial public offering was consummated in July 2005. The 2006 results were largely influenced by growth in average earning assets, net interest margin contraction and an increase in non-interest expenses. The net loss in the third quarter of 2005 included the impact of a $3.6 million contribution to establish the United Charitable Foundation and the related tax benefit of $1.4 million.

The Company also announced a quarterly cash dividend of $0.05 per share payable on November 21, 2006 to shareholders of record as of November 7, 2006. After giving effect to the waiver of receipt of dividends paid on shares owned by United Mutual Holding Company, the Company’s mutual holding company, the dividend payout ratio will be approximately 26% of the third quarter 2006 earnings.

"Despite a challenging interest rate environment, a very competitive local market and loan and deposit pricing pressures, we were able to report solid third quarter results,” commented Richard B. Collins, President and Chief Executive Officer. “During the quarter we continued to implement strategies to grow our market share, improve our financial performance and enhance shareholder value.”

Financial Highlights Include:

· Gross loans increased $96.4 million, or 15.1%, to $732.2 million at September 30, 2006 compared to $635.8 million at December 31, 2005. Loan growth was solid in all

categories reflecting a sound local economy, a stable real estate market and successful business development efforts.

· Asset quality remained strong, with the ratio of non-performing loans to total loans equal to 0.27% at September 30, 2006 and December 31, 2005.

· At September 30, 2006, the allowance for loan losses to total loans was 0.94% and the allowance for loan losses to non-performing loans was 342%.

· Total deposits increased $39.0 million, or 6.0%, to $692.6 million at September 30, 2006 compared to $653.6 at December 31, 2005. Deposit growth was concentrated in transaction accounts (4.7%), money market accounts (6.7%) and certificates of deposit (14.4%).

· Net interest income declined $266,000, or 3.7%, to $6.9 million for the three months ended September 30, 2006 compared to $7.2 million for the same period last year. Net interest margin contracted 23 basis points to 2.96% for the third quarter of 2006 in large part due to the flat to inverted yield curve, increasingly competitive pricing conditions for loans and deposits, a shift in deposit demand towards higher-yielding money market and time deposit accounts and the impact of increased short-term market interest rates on the cost to fund earning assets. The impact of net interest margin compression was lessened by an increase of $68.2 million, or 7.8%, in average earning assets mainly due to strong loan growth.

· Total non-interest income for the third quarter of 2006 included a loss of $218,000 from sales of lower-yielding available for sale securities. Exclusive of this loss, non-interest income expanded $188,000, or 14.2%, compared to the same period last year reflecting strong growth in fee income.

· Exclusive of the $3.6 million contribution to fund the United Charitable Foundation in the third quarter of 2005, non-interest expenses increased $545,000, or 10.8% to $5.6 million for the three months ended September 30, 2006. This increase is primarily attributable to costs associated with a new branch opened in 2006, expanded marketing efforts, a larger loan and deposit account base, new employees hired to support and facilitate the growth of the Company, the Company’s Employee Stock Ownership and Stock Based Incentive Plans and annual wage adjustments.

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 12 branch offices located throughout Western Massachusetts. Through its Financial Services Group and its partnership with NFP Securities, Inc., the Bank is able to offer 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 www.bankatunited.com.

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 (unaudited)
(Dollars in thousands, except per share amounts)
	September 30,			December 31,			September 30,
Assets	2006			2005			2005
Cash and cash equivalents	$	20,134		$	15,843		$	22,822
Securities available for sale, at fair value		196,127			226,465			232,479
Securities to be held to maturity, at amortized cost (fair value:
$3,274 at September 30, 2006, $3,298 at December 31, 2005
and $3,371 at September 30, 2005)		3,293			3,325			3,378
Federal Home Loan Bank of Boston stock, at cost		8,740			6,588			6,588
Loans:
Residential mortgages		306,796			285,236			277,127
Commercial mortgages		171,136			150,099			140,927
Construction loans		46,970			28,872			33,239
Commercial loans		67,495			59,591			57,005
Home equity loans		109,154			86,045			84,082
Consumer loans		30,620			25,949			23,345
Total loans		732,171			635,792			615,725
Net deferred loan costs and fees		1,274			1,148			1,075
Allowance for loan losses		(6,880	)		(6,382	)		(6,470	)
Loans, net		726,565			630,558			610,330
Other real estate owned		562			1,602			-
Premises and equipment, net		8,556			8,236			8,165
Bank-owned life insurance		6,259			6,031			5,948
Other assets		10,458			7,865			8,396
Total assets	$	980,694		$	906,513		$	898,106
Liabilities and Stockholders' Equity
Deposits:
Demand	$	97,341		$	93,301		$	95,082
NOW		42,103			39,922			43,062
Savings		69,523			87,253			92,264
Money market		164,519			154,177			145,601
Certificates of deposit		319,135			278,958			272,223
Total deposits		692,621			653,611			648,232
Federal Home Loan Bank of Boston advances		137,412			101,880			103,492
Repurchase agreements		5,920			8,434			5,019
Escrow funds held for borrowers		1,324			1,129			1,149
Accrued expenses and other liabilities		7,093			4,454			4,388
Total liabilities		844,370			769,508			762,280
Stockholders' Equity:
Preferred stock ($.01 par value; 5,000,000 shares
authorized; no shares issued and outstanding)		-			-			-
Common stock ($.01 par value; 60,000,000 shares authorized;
shares issued and outstanding: 17,153,995 at September 30, 2006;
17,205,995 at December 31, 2005 and September 30, 2005)		172			172			172
Additional paid-in capital		78,491			78,446			78,409
Retained earnings		70,073			66,944			65,367
Unearned compensation		(9,459	)		(6,092	)		(6,252	)
Accumulated other comprehensive loss		(2,284	)		(2,465	)		(1,870	)
Treasury stock, at cost (52,000 shares at September 30, 2006)		(669	)		-			-
Total stockholders' equity		136,324			137,005			135,826
Total liabilities and stockholders' equity	$	980,694		$	906,513		$	898,106

UNITED FINANCIAL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED INCOME STATEMENTS (unaudited)
(Amounts in thousands, except per share amounts)
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2006			2005			2006			2005
Interest and dividend income:
Loans	$	11,043		$	8,868		$	30,719		$	25,268
Investments		2,195			2,266			6,761			5,653
Other interest-earning assets		256			323			786			579
Total interest and dividend income		13,494			11,457			38,266			31,500
Interest expense:
Deposits		4,885			3,171			13,590			8,653
Borrowings		1,665			1,076			4,059			2,784
Total interest expense		6,550			4,247			17,649			11,437
Net interest income before provision for loan losses		6,944			7,210			20,617			20,063
Provision for loan losses		165			275			627			825
Net interest income after provision for loan losses		6,779			6,935			19,990			19,238
Non-interest income:
(Gain) loss on sales of available for sale securities		(218	)		3			(218	)		3
Fee income on depositors’ accounts		1,146			1,006			3,128			2,751
Income from bank-owned life insurance		73			81			227			243
Other income		293			234			856			717
Total non-interest income		1,294			1,324			3,993			3,714
Non-interest expense:
Salaries and benefits		3,014			2,895			9,173			8,129
Occupancy expenses		455			349			1,268			1,088
Marketing expenses		329			239			1,093			919
Data processing expenses		622			571			1,813			1,800
Contributions and sponsorships		16			3,636			133			3,746
Professional fees		223			189			702			407
Other expenses		920			746			3,010			2,298
Total non-interest expense		5,579			8,625			17,192			18,387
Income (loss) before income taxes		2,494			(366	)		6,791			4,565
Income tax expense (benefit)		981			(193	)		2,633			1,772
NET INCOME (LOSS)	$	1,513		$	(173	)	$	4,158		$	2,793
Earnings per share:
Basic	$	0.09			NA		$	0.25			NA
Diluted	$	0.09			NA		$	0.25			NA
Weighted average shares outstanding:
Basic		16,382			NA			16,529			NA
Diluted		16,396			NA			16,534			NA
NA - Not applicable

UNITED FINANCIAL BANCORP, INC. AND SUBSIDIARY
SELECTED DATA AND RATIOS (unaudited)
(Dollars in thousands, except per share amounts)
	At or For The Quarters Ended
	Sep. 30			Jun. 30			Mar. 31			Dec. 31			Sep. 30
	2006			2006			2006			2005			2005 (1)
Operating Results:
Net interest income	$	6,944		$	6,765		$	6,908		$	6,964		$	7,207
Loan loss provision		165			300			162			92			275
Non-interest income		1,294			1,441			1,258			1,306			1,327
Non-interest expenses		5,580			5,836			5,776			5,725			8,625
Net income		1,513			1,290			1,355			1,576			(172	)
Performance Ratios (annualized):
Return on average assets		0.62	%		0.55	%		0.59	%		0.70	%		-0.08	%
Return on average equity		4.44	%		3.75	%		3.93	%		4.62	%		-0.54	%
Net interest margin		2.96	%		2.96	%		3.10	%		3.19	%		3.34	%
Non-interest income to average total assets		0.53	%		0.61	%		0.55	%		0.58	%		0.58	%
Non-interest expense to average total assets		2.30	%		2.47	%		2.51	%		2.53	%		3.79	%
Efficiency ratio		65.99	%		71.12	%		70.73	%		69.23	%		101.07	%
Per Share Data:
Diluted earnings per share	$	0.09		$	0.08		$	0.08		$	0.10			NA
Book value per share (2)	$	7.95		$	8.00		$	7.98		$	7.96		$	7.89
Market price at period end	$	12.93		$	13.31		$	12.03		$	11.53		$	11.11
Risk Profile
Non-performing assets as a percent of total assets		0.26	%		0.28	%		0.18	%		0.37	%		0.29	%
Non-performing loans as a percent of total loans, gross		0.27	%		0.33	%		0.26	%		0.27	%		0.43	%
Allowance for loan losses as a percent of total loans, gross		0.94	%		0.98	%		1.02	%		1.00	%		1.05	%
Allowance for loan losses as a percent of non-performing loans		341.78	%		294.82	%		390.18	%		371.91	%		246.29	%
Equity as a percentage of assets		13.90	%		14.31	%		14.49	%		15.11	%		15.12	%
Average Balances
Loans	$	714,917		$	669,408		$	640,832		$	626,556		$	606,046
Securities		211,101			220,844			227,373			232,469			234,722
Total assets		969,962			945,262			921,155			903,971			909,731
Deposits		683,616			686,703			658,530			653,497			643,912
FHLB advances		134,833			111,316			112,641			102,010			103,722
Capital		136,279			137,640			137,768			136,415			127,974
Average Yields/Rates (annualized)
Loans		6.18	%		6.02	%		5.99	%		5.92	%		5.85	%
Securities		4.16	%		4.10	%		4.06	%		3.99	%		3.86	%
Total interest earning assets		5.74	%		5.52	%		5.46	%		5.37	%		5.26	%
Savings accounts		0.84	%		0.83	%		0.82	%		0.84	%		0.69	%
Money market/NOW accounts		2.64	%		2.61	%		2.45	%		2.20	%		1.90	%
Certificates of deposit		4.27	%		4.07	%		3.71	%		3.43	%		3.12	%
FHLB advances		4.69	%		4.03	%		3.97	%		4.15	%		3.91	%
Total interest-bearing liabilities		3.56	%		3.30	%		3.05	%		2.83	%		2.56	%
(1) Includes contribution of $3.6 million to fund United Charitable Foundation and the related tax benefit of $1.4 million, where applicable.
(2) Based upon 17,153,995 shares outstanding at September 30, 2006 and 17,205,995 shares outstanding for all other periods presented.
NA - Not applicable