United Financial Bancorp, Inc. ( UBNK - Snapshot Report ) has watched earnings estimates and shares advance of late, following solid quarterly results and the acquisition of New England Bancshares, Inc. In addition, this Zacks #1 Rank (Strong Buy) stock pays a regular quarterly dividend that yields a solid 2.6%.

With rising earnings estimates, strong growth potential, reasonable valuation and a decent dividend yield, United Financial Bancorp looks like a solid pick for investors seeking both growth and income.

Impressive Third Quarter Earnings

On October 19, United Financial Bancorp reported third quarter net earnings per share of 22 cents, topping the Zacks Consensus Estimate by 4.8% and last year’s earnings by 10.0%. The upsurge was primarily aided by growth in revenue, partially offset by an increase in total non-interest expenses.

Net interest income climbed 1.5% year over year to $13.6 million, primarily due to a rise in average interest-earning assets. Non-interest income rose 4.2% to $2.5 million. Yet, net interest margin contracted five basis points on a year-over-year basis (bps) to 3.51%, due to lower yields on loans and investments. The company's non-interest expenses increased 1.8% to $11.2 million.

Credit quality continued to improve at United Financial Bancorp. Net charge-offs as a percentage of average loans outstanding (annualized) decreased 14 basis points year over year to 0.09%. Net charge-offs as a percentage of average loans outstanding (annualized) declined 24 basis points to 0.61%.

New England Bancshares Acquisition Completed

In mid-November, United Financial Bancorp completed the acquisition of New England Bancshares, Inc, the holding company for New England Bank.

The acquisition expands United Financial Bancorp's footprints into Hartford, Tolland, New Haven and Litchfield Counties in Connecticut, where New England Bank was operating through 15 banking offices and 2 administrative offices.

Upward Earnings Estimate Revisions

The Zacks Consensus Estimate for 2012 is up by 2.4% to 84 cents over the past 60 days, as 4 of 5 estimates were revised higher. The Zacks Consensus Estimate for 2013 has advanced 6.9% to $1.08, as all 5 estimates moved upward.

The Zacks Consensus Estimate for 2012 reflects year-over-year growth of about 13.0%, while the expected growth rate for 2013 is 28.7%.

Dividend Payment

United Financial Bancorp is one of the few banks that maintained its dividend payment throughout the financial crisis. Moreover, the company announced a dividend hike of 11.0% in July 2012.

Currently, the company pays a quarterly dividend of 10 cents per share, representing a yield of 2.6%.

Valuation Looks Reasonable

Shares of United Financial Bancorp currently trade at 18.4x 12-month forward earnings, a 19.5% premium to the peer group average of 15.4x. Its price to book ratio of 1.0 is at a 9% discount to the industry median of 1.1.

The stock has been trading above its 200 and 50 days moving averages since November 19, exhibiting a steady growth trend.

Headquartered in West Springfield, Massachusetts, United Financial Bancorp, operating as the holding company for United Bank, provides various banking products and services. The company was founded in 1882 and conducts business through 39 branch offices throughout Massachusetts and Connecticut along with loan production offices in Beverly, Massachusetts and Glastonbury, Connecticut. The company has a market cap of about $323.4 million. Banner Corporation (BANR) is another Zacks #1 Rank (Strong Buy) in the same industry.

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