United Financial Bancorp 8-K Results of Operations and Financial Condition

Exhibit 99.1
FOR IMMEDIATE RELEASE	For More Information Contact:
	Mark A. Roberts
	Executive Vice President & CFO
	(413) 787-1700
UNITED FINANCIAL BANCORP REPORTS SECOND QUARTER 2009 RESULTS

WEST SPRINGFIELD, MA—July 17, 2009—United Financial Bancorp, Inc. (the “Company”) (NASDAQ:UBNK), the holding company for United Bank (the “Bank”), reported net income of $560,000, or $0.04 per diluted share, for the second quarter of 2009 compared to net income of $2.0 million, or $0.12 per diluted share, for the corresponding period in 2008.  Current period results include non-deductible expenses totaling $1.2 million related to the acquisition of Commonwealth National Bank and a special FDIC insurance assessment of $538,000 ($312,000 net of taxes).  Excluding these items, net income would have been $2.0 million, or $0.13 per diluted share.  The results for the 2009 period also reflect gains of $461,000 from sales of securities and $238,000 from sales of loans, offset in part by lower net interest income and higher non-interest expenses.  For the six months ended June 30, 2009, the Company’s net income was $2.7 million, or $0.17 per diluted share, compared to net income of $4.0 million or $0.24 per diluted share, for the same period in 2008.   Excluding the acquisition-related expenses and the after-tax impact of the special FDIC insurance assessment, net income would have been $4.2 million, or $0.27 per diluted share. The Company announced a quarterly cash dividend of $0.07 per share, payable on August 28, 2009 to shareholders of record as of August 7, 2009.

Total assets declined $24.5 million, or 1.9%, to $1.24 billion at June 30, 2009, from $1.26 billion at December 31, 2008, mainly due to sales of mortgage-backed securities totaling $23.9 million and sales of residential mortgages totaling $29.5 million, partially offset by $22.7 million growth in commercial mortgages and an increase of $9.5 million in excess cash on deposit at the Federal Home Loan Bank.  As part of our investment strategy, under an accelerated prepayment speed environment, we sold $23.9 million of mortgage-backed securities to realize gains on longer-duration, higher-coupon securities. We also elected to sell $29.5 million of historically lower-coupon, long-term, fixed-rate residential mortgages in accordance with an asset liability management strategy.  A portion of the cash flows received from the sales of loans and investment securities was used to pay down Federal Home Loan Bank advances and to fund the repurchase of 1,262,438 shares of the Company’s common stock at a total cost of $17.0 million.  Total deposits increased $32.9 million, or 4.2%, to $815.5 million at June 30, 2009 from $782.6 million at December 31, 2008 reflecting growth of $50.2 million, or 12.3%, in core account balances, partially offset by runoff in certificates of deposit.

Federal Home Loan Bank advances decreased $47.5 million, or 22.8%, to $161.1 million at June 30, 2009 from $208.6 million at December 31, 2008 largely attributable to the use of proceeds from sales of investment securities and loans to pay down short-term borrowings.  Total shareholders’ equity declined $14.1 million, or 6.2%, to $213.6 million at June 30, 2009 from $227.7 million at December 31, 2008 due to share repurchases totaling $17.0 million, somewhat offset by net income of $2.7 million.  At June 30, 2009, the Company continued to have considerable liquidity including significant unused borrowing capacity at the Federal Home Loan Bank and access to funding through the repurchase agreement and brokered deposit markets.  The Company’s balance sheet is also supported by a strong capital position, with an equity-to-assets ratio of 17.3% at June 30, 2009.

“We recently announced an exciting expansion into the Worcester County market with the pending acquisition of Commonwealth National Bank”, commented Richard B. Collins, President and Chief Executive Officer.  “In connection with the execution of a merger agreement with Commonwealth we incurred costs totaling $1.2 million, which along with the special FDIC assessment, resulted in a decrease in reported earnings.  Given the challenging economic conditions, we continue to be pleased with our overall performance, which reflects our success in attracting and retaining core loan and deposit relationships, effectively managing credit and interest rate risks and maintaining a healthy balance sheet, significant liquidity and a substantial capital base.”

Financial Highlights:

· Total investment securities decreased $35.6 million, or 11.3%, to $281.1 million at June 30, 2009 from $316.7 million at December 31, 2008 reflecting sales of $23.9 million in mortgage-backed securities, and to a lesser extent, prepayments and normal amortization of the mortgage-backed securities portfolio. At June 30, 2009, approximately 95% of the available-for-sale investment portfolio consisted of mortgage-backed and debt securities issued by government-sponsored enterprises.

· Total loans decreased $3.9 million, or 0.4%, to $866.4 million at June 30, 2009 from $870.3 million at December 31, 2008 reflecting the sale of $29.5 million of lower-coupon, fixed-rate residential mortgages, partially offset by $22.7 million, or 9.1% growth in commercial mortgages.  All other segments of our loan portfolio were affected by prepayments and slower origination volume.

· Non-performing assets totaled $6.0 million, or 0.48% of total assets, at June 30, 2009 compared to $5.8 million, or 0.46% of total assets, at December 31, 2008. The portfolio has not been affected by loans to sub-prime borrowers since the Company has not underwritten residential mortgage and other consumer loans targeted to this segment of the market.

· At June 30, 2009, the ratio of the allowance for loan losses to total loans was 1.03% and the ratio of the allowance for loan losses to non-performing loans was 167.9%.  For the six months ended June 30, 2009, net charge-offs totaled $503,000 or 0.12% of average loans outstanding on an annualized basis.

· Total deposits increased $32.9 million, or 4.2%, to $815.5 million at June 30, 2009 compared to $782.6 million at December 31, 2008 reflecting growth in core account balances and lower certificate of deposit balances.  Core deposit balances grew $50.2 million, or 12.3%, to $457.0 million at June 30, 2009 from $406.8 million at December 31, 2008 mainly due to competitive products and pricing, excellent customer service and targeted promotion activities.

· Net interest income decreased $365,000, or 3.7%, to $9.5 million for the second quarter of 2009 from the same period in 2008 as a result of net interest margin contraction, partially offset by growth in average interest-earning assets.  Net interest margin decreased 19 basis points to 3.27% for the three months ended June 30, 2009 from the same period in 2008 reflecting a decrease of 37 basis points in the yield on loans driven by a substantial amount of loan refinancing activity and the lower interest rate environment, an increase in funds held in lower-yielding cash equivalents, the elimination of the FHLB stock dividend beginning with the fourth quarter 2008 payment, and the cost to fund share repurchases for the first six months of 2009.  These items were partially offset by a decrease of 39 basis points in the average rate paid on interest-bearing liabilities.  Average interest-earning assets expanded $21.9 million, or 1.9%, to $1.2 billion, mainly due to loan growth.

· Non-interest income increased $1.0 million, or 64.9%, to $2.6 million for the three months ended June 30, 2009 due to gains on sales of loans and securities totaling $699,000 and increase of $245,000 in income from bank-owned life insurance. The increase in income from bank-owned life insurance reflects the purchase of an additional $20.0 million of insurance in November of 2008.

· Non-interest expenses grew $2.5 million, or 32.8%, to $10.0 million for the second quarter of 2009 from $7.6 million in the same period last year.  Current period expenses include acquisition-related costs totaling $1.2 million and a special FDIC insurance assessment of $538,000. Excluding these items, total non-interest expenses would have been $8.3 million, $781,000 or 10.3% higher than the same period last year.  Salaries and benefits increased $416,000, or 9.9%, reflecting an increase in stock-based compensation as a result of stock options and restricted stock granted in the second quarter of 2008, annual wage increases, and staffing costs related to new branches opened in 2008 and 2009.  Occupancy costs increased $63,000, or 10.9%, primarily due to new branches. In addition to the $538,000 special assessment, the FDIC insurance assessment would have increased $188,000 in connection with higher premiums that became effective in 2009. Other expenses expanded by $236,000 due to the prior year reversal of $92,000 in IRS- related interest, which was accrued in the first quarter of 2008, and an increase of $69,000 in equipment depreciation and maintenance costs.

United Financial Bancorp, Inc. is a publicly owned corporation and the holding company of United Bank, a federally chartered savings bank headquartered at 95 Elm Street, West Springfield, MA 01090.  The Company’s common stock is traded on the NASDAQ Global Select Market under the symbol UBNK.  United Bank provides an array of financial products and services through its 16 full service branch offices and two express drive-up branches located throughout Western Massachusetts.  Through its Wealth Management 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

(Dollars in thousands, except par value amounts)

	June 30,			December 31,			June 30,
Assets	2009			2008			2008
	(unaudited)			(audited)			(unaudited)
Cash and cash equivalents	$	23,101		$	13,572		$	17,118
Short-term investments		1,086			1,071			1,055
Investment securities		281,065			316,697			296,287
Loans:
Residential mortgages		331,855			356,428			357,103
Commercial mortgages		271,186			248,457			232,669
Construction loans		36,260			32,082			37,312
Commercial loans		81,731			84,919			83,918
Home equity loans		120,009			120,724			117,422
Consumer loans		25,381			27,666			29,610
Total loans		866,422			870,276			858,034
Net deferred loan costs and fees		2,158			2,395			2,285
Allowance for loan losses		(8,962	)		(8,250	)		(8,162	)
Loans, net		859,618			864,421			852,157
Federal Home Loan Bank of Boston stock, at cost		12,223			12,223			10,257
Other real estate owned		644			998			630
Premises and equipment, net		14,171			12,125			12,087
Bank-owned life insurance		27,790			27,173			6,945
Other assets		18,968			14,854			17,670
Total assets	$	1,238,666		$	1,263,134		$	1,214,206
Liabilities and Stockholders' Equity
Deposits:
Demand	$	113,699		$	114,178		$	111,815
NOW		35,082			32,390			38,783
Savings		122,182			99,492			88,230
Money market		185,998			160,736			167,115
Certificates of deposit		358,588			375,867			368,764
Total deposits		815,549			782,663			774,707
Federal Home Loan Bank of Boston advances		161,105			208,564			190,389
Repurchase agreements		33,146			28,042			8,963
Escrow funds held for borrowers		1,826			1,667			1,324
Due to broker		-			-			2,829
Capitalized lease obligations		5,204			3,129			3,169
Accrued expenses and other liabilities		8,221			11,355			6,199
Total liabilities		1,025,051			1,035,420	��		987,580
Stockholders' Equity:
Preferred stock, par value $0.01 per share, authorized 50,000,000 shares;
none issued		-			-			-
Common stock, par value $0.01 per share; authorized 100,000,000 shares;
shares issued: 17,763,747 at June 30, 2009, December 31, 2008 and
June 30, 2008		178			178			178
Additional paid-in capital		165,759			164,358			166,171
Retained earnings		76,417			75,888			74,858
Unearned compensation		(11,786	)		(12,144	)		(12,486	)
Accumulated other comprehensive income (loss), net of taxes		3,577			2,931			(2,095	)
Treasury stock, at cost (1,523,838 shares at June 30, 2009 and 261,798
shares at December 31, 2008)		(20,530	)		(3,497	)		-
Total stockholders' equity		213,615			227,714			226,626
Total liabilities and stockholders' equity	$	1,238,666		$	1,263,134		$	1,214,206

UNITED FINANCIAL BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED INCOME STATEMENTS

(Amounts in thousands, except per share amounts)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2009		2008		2009		2008
	(unaudited)				(unaudited)
Interest and dividend income:
Loans	$	11,721	$	12,295	$	23,772	$	24,842
Investments		3,390		3,560		7,261		6,178
Other interest-earning assets		9		118		17		359
Total interest and dividend income		15,120		15,973		31,050		31,379
Interest expense:
Deposits		3,644		4,359		7,469		9,332
Borrowings		1,933		1,706		3,883		3,108
Total interest expense		5,577		6,065		11,352		12,440
Net interest income before provision for loan losses		9,543		9,908		19,698		18,939
Provision for loan losses		675		651		1,215		835
Net interest income after provision for loan losses		8,868		9,257		18,483		18,104
Non-interest income:
Net gain on sales of loans		238		-		363		-
Net gain on sales of securities		461		-		461		8
Fee income on depositors’ accounts		1,162		1,156		2,269		2,233
Wealth management income		212		136		344		286
Income from bank-owned life insurance		340		95		654		145
Other income		182		187		355		421
Total non-interest income		2,595		1,574		4,446		3,093
Non-interest expense:
Salaries and benefits		4,615		4,199		9,279		8,240
Occupancy expenses		641		578		1,306		1,087
Marketing expenses		414		441		756		799
Data processing expenses		797		815		1,641		1,534
Professional fees		295		372		718		815
Merger related expenses		1,161		-		1,161		-
FDIC insurance assessments		890		164		1,230		185
Other expenses		1,217		981		2,094		2,066
Total non-interest expense		10,030		7,550		18,185		14,726
Income before income taxes		1,433		3,281		4,744		6,471
Income tax expense		873		1,272		2,061		2,496
Net income	$	560	$	2,009	$	2,683	$	3,975
Earnings per share:
Basic	$	0.04	$	0.12	$	0.17	$	0.24
Diluted	$	0.04	$	0.12	$	0.17	$	0.24
Weighted average shares outstanding (1):
Basic		15,181		16,482		15,443		16,474
Diluted		15,194		16,526		15,457		16,516

(1) Prior period basic and diluted share data were revised in accordance with the provisions of FSP EITF 03-6-1  "Determining Whether Instruments Issued in Share-Based Payment Transaction are Participating Securities" which require that share-based compensation awards that qualify as participating securities (entitled to receive non-forfeitable dividends) be included in basic EPS using the two-class method.  This revision had no impact on earnings per share as previously reported.

UNITED FINANCIAL BANCORP, INC. AND SUBSIDIARY

SELECTED DATA AND RATIOS (unaudited)

(Dollars in thousands, except per share amounts)

	At or For The Quarters Ended
	Jun. 30			Mar. 31			Dec. 31			Sep. 30			Jun. 30
	2009			2009			2008			2008			2008
Operating Results:
Net interest income	$	9,543		$	10,155		$	10,336		$	10,536		$	9,908
Loan loss provision		675			540			367			644			651
Non-interest income		2,595			1,851			394	(5)		1,733			1,574
Non-interest expenses		10,030	(1)		8,155			8,158			7,806			7,550
Net income		560			2,123			959			2,364			2,009
Performance Ratios (annualized):
Return on average assets		0.18	% (2)		0.68	%		0.31	% (6)		0.77	%		0.68	%
Return on average equity		1.03	% (2)		3.85	%		1.71	% (6)		4.22	%		3.52	%
Net interest margin		3.27	%		3.39	%		3.46	%		3.56	%		3.46	%
Non-interest income to average total assets		0.85	%		0.59	%		0.13	% (7)		0.57	%		0.53	%
Non-interest expense to average total assets		3.27	% (3)		2.61	%		2.63	%		2.55	%		2.55	%
Efficiency ratio (4)		87.68	% (3)		68.64	%		67.47	%		63.62	%		65.76	%
Per Share Data:
Diluted earnings per share	$	0.04		$	0.14		$	0.06		$	0.15		$	0.12
Book value per share	$	13.15		$	13.18		$	13.01		$	12.69		$	12.76
Market price at period end	$	13.82		$	13.09		$	15.14		$	14.85		$	11.17
Risk Profile
Equity as a percentage of assets		17.25	%		17.50	%		18.03	%		18.19	%		18.66	%
Net charge-offs to average loans outstanding		0.20	%		0.03	%		0.23	%		0.19	%		0.06	%
Non-performing assets as a percent of total assets		0.48	%		0.41	%		0.46	%		0.29	%		0.39	%
Non-performing loans as a percent of total loans, gross		0.62	%		0.50	%		0.55	%		0.38	%		0.48	%
Allowance for loan losses as a percent of total loans, gross		1.03	%		1.02	%		0.95	%		0.97	%		0.95	%
Allowance for loan losses as a percent of non-performing loans		167.99	%		201.43	%		171.98	%		254.48	%		197.39	%
Average Balances
Loans	$	860,882		$	869,580		$	862,814		$	865,053		$	845,304
Securities		283,005			313,799			314,251			306,499			288,502
Total interest-earning assets		1,168,308			1,198,040			1,193,421			1,185,244			1,146,397
Total assets		1,226,214			1,251,225			1,240,215			1,225,250			1,183,627
Deposits		803,425			785,313			775,853			765,797			761,990
FHLBB advances		164,955			204,501			213,451			214,005			170,052
Capital		216,503			220,683			224,785			224,015			228,241
Average Yields/Rates (annualized)
Loans		5.45	%		5.54	%		5.79	%		5.93	%		5.82	%
Securities		4.79	%		4.93	%		5.15	%		5.07	%		4.94	%
Total interest-earning assets		5.18	%		5.32	%		5.57	%		5.67	%		5.57	%
Savings accounts		1.14	%		1.09	%		1.30	%		1.29	%		1.14	%
Money market/NOW accounts		1.21	%		1.31	%		1.65	%		1.63	%		1.60	%
Certificates of deposit		2.96	%		3.13	%		3.38	%		3.41	%		3.62	%
FHLBB advances		4.13	%		3.40	%		3.52	%		3.66	%		3.77	%
Total interest-bearing liabilities		2.51	%		2.54	%		2.80	%		2.84	%		2.90	%

(1)     Includes $1.2 million in acquisition related expenses and a $538,000 special FDIC insurance assessment.

(2)     Exclusive of the $1.2 million in acquisition related expenses and a $312,000 (after tax) special FDIC insurance assessment, the return on average

          assets and average equity would have been 0.66% and 3.76%, respectively.

(3)     Exclusive of the $1.2 million in acquisition related expenses and a $538,000 special FDIC insurance assessment, non-interest expense to average

          total assets would have been 2.72% and the efficiency ratio would have been 72.83%.

(4)     Excludes gains/losses on sales of securities and loans and impairment charges on securities.

(5)     Includes $1.4 million other-than-temporary impairment ("OTTI") charge on certain securities in our investment portfolio.

(6)     Exclusive of a $1.4 million other-than-temporary impairment charge and related tax effect of $550,000 on certain investment securities, the return

          on average assets and average equity would have been 0.58% and 3.18%, respectively.

(7)     Exclusive of the $1.4 million other-than-temporary impairment charge, non-interest income to average total assets would have been 0.57%.