Competitive pricing in the third quarter continued to slow loan growth at the parent company of Hartford-based United Bank, which also has a strong presence in Western Massachusetts.

The company’s total loan volume reached roughly $5.53 billion, an increase of about $300 million year-over-year and up more than $50 million from the linked quarter.

But those numbers fell short of expectations for investors and United executives.

“Obviously we are showing lower loan growth than what we normally have been and used to in the third quarter,” United CFO Eric Newell said on a recent earnings call. “Loan pricing is generally well below our hurdle rates for our aspirational ROA (return on assets) and ROE (return on equity).”

Newell said the bank has, however, taken a more defensive approach to pricing in order to defend against loss of net interest income, which was $48.4 million, a little bit higher than what it has been in previous quarters.

The net interest margin at the end of the quarter was 2.92 percent, down eight basis points year-over-year and five basis points from the linked quarter.

A lot of the pressure on the margin, noted one investor on the earnings call, seems to have come from the funding side.

The bank did grow total deposits in the quarter to $5.5 billion, an increase of nearly $350 million year-over-year. However, the third quarter is typically where municipal deposits do come back for the bank, and while they did indeed flood in again, United had to play defensive when it came to pricing.

“Our municipal deposits have much higher betas than our other sleeves so therefore if you look at the composition of the deposit system how municipal contributed in the quarter, you are seeing a higher cost there and that’s one of the reasons why you saw an increase in the cost of funds linked period,” Newell said.

In general, the cost of interest-bearing funds in the third quarter of this year was 50 basis points higher than at this same time in 2017.

Overall, the parent company of United Bank reported net income of $16.3 million, or $0.32 per diluted share, for the third quarter, compared to net income of $15.2 million, or $0.30 per diluted share, for the third quarter of 2017.

United Bank’s Growth Fails to Meet Expectations

by Bram Berkowitz time to read: 1 min