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Profits at the parent company of Hartford-based United Bank slowed in the second quarter due to unforeseen expenses, but growth is shaping up solid for the rest of the year.
The company reported second quarter net income of $15.6 million, or $0.31 per diluted share, slightly down from the linked quarter and down about $600,000 from the second quarter of 2017.
Net interest income was about $48.2 million, up about $1.9 million from the second quarter of last year. The margin ended the quarter at 2.97 percent, up seven basis points from the linked quarter, but down seven basis points from this time last year.
“We had more aggressive on-boarding costs for mortgage loan officers and recruitment. … We had some shore-ups to incentive plans due to stronger loan growth and improved loan management performance … and we started to realize an expense associated with annual carryover of paid time off,” Eric Newell, CFO of the company, said on a recent earnings call.
Total assets at the company grew to more than $7.2 billion, up more than $330 million year-over-year. Total deposits reached almost $5.4 billion, up about $400 million year-over-year. Newell said the bank continues to see deposit pressure in all of its markets and that he expects the margin to stay flat for the rest of the year.
Total loans grew to $5.48 billion, up more than $420 million from one year ago, led by solid annual gains in commercial and consumer loans.
“Our pipeline is the largest it has been this year,” said Newell. “C&I is certainly an area we will continue to grow.”
Still, Newell said the bank was continuing to see spread compression on commercial real estate loans, sometimes with rates as low as 140 basis points over the index rate. United will typically let assets they are competing for go at that rate because they do not contribute to the company’s goals for return on assets and return on equity, he said.
The low spreads, according to Newell, are coming from competitors such as insurance companies and larger banks.
The bank also in the quarter purchased six branches with $120 million in deposits from Webster Bank including two branches in Connecticut, three branches in Western Massachusetts and one branch in Rhode Island, the bank’s first branch in the Ocean State. The bank will consolidate three of its branches in Western, Massachusetts into the three it plans to buy from Webster Bank in that area.
The provision for loan loss in the quarter was $2.35 million, up slightly from the second quarter of 2017. The ratio of non-performing assets to total assets for the quarter was 0.43 percent.
