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First Connecticut Bancorp, Inc. Reports Fourth Quarter 2015 Earnings of $0.16 Earnings Per Share

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FARMINGTON, Conn., Jan. 27, 2016 (GLOBE NEWSWIRE) -- First Connecticut Bancorp, Inc. (the "Company") (NASDAQ: FBNK), the holding company for Farmington Bank (the "Bank"), reported net income of $2.4 million, or $0.16 diluted earnings per share for the quarter ended December 31, 2015 compared to net income of $3.1 million, or $0.21 diluted earnings per share for the quarter ended December 31, 2014.

Net income on a core earnings basis was $2.7 million or $0.18 diluted core earnings per share for the quarter ended December 31, 2015 compared to $2.5 million, or $0.17 diluted core earnings per share for the quarter ended December 31, 2014.  Core earnings exclude non-recurring items which include a $768,000 valuation allowance in the fourth quarter related to a deferred tax asset associated with the establishment of the Bank's foundation in 2011 offset by $379,000 of bank owned life insurance proceeds. 

"In the fourth quarter we capped off another year of double digit organic loan and core deposit growth. During the year we repositioned and strengthened our balance sheet improving our interest rate risk position.  In addition to growing the balance sheet, we focused on further strengthening our cybersecurity and compliance areas," stated John J. Patrick Jr., First Connecticut Bancorp's Chairman, President and CEO.

"Overall, I am pleased we continued to grow tangible book value to $15.47, an increase of $0.17 for the quarter and $0.83 for the year. Additionally, we opened two branch offices in western Massachusetts and a loan center in Branford, Connecticut during the fourth quarter."

Financial Highlights

  • Strong organic loan growth continued during the quarter as loans increased $23.5 million to $2.4 billion at December 31, 2015 and increased $222.9 million or 10% from a year ago.  Loan growth during the quarter was primarily driven by a $25.6 million increase in the commercial loan portfolio.
  • Net interest income decreased $309,000 to $17.4 million in the fourth quarter of 2015 compared to the linked quarter and increased $968,000 or 6% compared to the fourth quarter of 2014.
  • Net gain on loans sold decreased $426,000 to $567,000 in the fourth quarter of 2015 compared to the linked quarter primarily due to selling $83.2 million of fixed rate residential portfolio loans in the linked quarter to reposition the balance sheet and improve our interest rate risk position.
  • Overall deposits increased $18.0 million to $2.0 billion in the fourth quarter of 2015 compared to the linked quarter and increased $258.3 million or 15% from a year ago. 
  • Checking accounts grew by 3.8% or 1,846 net new accounts in the fourth quarter of 2015 and by 12.8% or 5,786 net new accounts from a year ago.
  • Our loan to deposit ratio improved to 118.6% compared to 123.4% at December 31, 2014.
  • Tangible book value per share is $15.47 compared to $15.30 on a linked quarter basis and $14.64 at December 31, 2014.
  • Asset quality improved as loan delinquencies 30 days and greater represented 0.63% of total loans at December 31, 2015 compared to 0.67% at September 30, 2015 and 0.75% at December 31, 2014.  Non-accrual loans represented 0.63% of total loans compared to 0.71% of total loans on a linked quarter basis and 0.72% of total loans at December 31, 2014. 
  • The allowance for loan losses represented 0.86% of total loans at December 31, 2015 and September 30, 2015 and 0.89% at December 31, 2014. 
  • The Company paid a quarterly cash dividend of $0.06 per share during the fourth quarter and paid a cash dividend of $0.22 per share for the year, an increase of $0.05 compared to the prior year.


Fourth quarter 2015 compared with third quarter 2015

Net interest income

  • Net interest income decreased $309,000 to $17.4 million in the fourth quarter of 2015 compared to the linked quarter due primarily to a $309,000 increase in interest expense related to money market and certificate of deposit promotions and higher average costs of Federal Home Loan Bank of Boston borrowings.
  • Net interest margin decreased 3 basis points to 2.76% in the fourth quarter of 2015 compared to 2.79% in the linked quarter due to a 7 basis point increase in the cost of interest-bearing liabilities offset by 3 basis point increase in the yield on interest-earning assets. 


Provision for loan losses

  • Provision for loan losses was $776,000 for the fourth quarter of 2015 compared to $386,000 for the linked quarter.  The increase in the fourth quarter was primarily due to $293,000 in charge-offs related to one commercial customer who is in bankruptcy.
  • Net charge-offs (recoveries) in the quarter were $588,000 or 0.10% to average loans (annualized) compared to ($43,000) or (0.01%) to average loans (annualized) in the linked quarter.
  • The allowance for loan losses represented 0.86% of total loans at December 31, 2015 and September 30, 2015. 


Noninterest income

  • Total noninterest income increased $227,000 to $3.5 million in the fourth quarter of 2015 compared to the linked quarter primarily due to a $377,000 increase in bank owned life insurance income and a $248,000 increase in other noninterest income offset by a $426,000 decrease in net gain on loans sold.
  • Other income increased $248,000 to $557,000 in the fourth quarter of 2015 compared to $309,000 in the linked quarter primarily due to a $144,000 increase in mortgage banking derivatives income and a $52,000 increase in servicing fees.
  • Net gain on loans sold decreased $426,000 primarily due to selling $83.2 million of fixed rate residential portfolio loans in the linked quarter to reposition the balance sheet and improve our interest rate risk position.


Noninterest expense

  • Noninterest expense increased $1.2 million in the fourth quarter of 2015 to $16.0 million compared to the linked quarter primarily due to a $426,000 increase in salaries and employee benefits, a $416,000 increase in other operating expenses and a $320,000 increase in marketing.
  • Other operating expenses increased $416,000 on a linked quarter basis primarily due to a $557,000 gain on foreclosed real estate in the third quarter.  Excluding the gain on foreclosed real estate, other operating expenses decreased $141,000 in the fourth quarter of 2015 compared to the third quarter.
  • Marketing increased $320,000 on a linked quarter basis primarily due to our expansion into western Massachusetts.


Income tax expense

  • Income tax expense was $1.7 million in the fourth quarter of 2015 compared to $1.6 million in the linked quarter.  The increase in income tax expense in the fourth quarter was primarily due to a $768,000 valuation allowance related to a deferred tax asset associated with the establishment of the Bank's foundation in 2011.


Fourth quarter 2015 compared with fourth quarter 2014

Net interest income

  • Net interest income increased $968,000 to $17.4 million in the fourth quarter of 2015 compared to the prior year quarter due primarily to a $243.3 million increase in the average loan balance offset by a $714,000 increase in interest expense.  Excluding a $250,000 non-recurring payment related to a loan participation in the prior year quarter, core net interest income increased $1.2 million in the fourth quarter of 2015.
  • Net interest margin decreased 7 basis points to 2.76% in the fourth quarter of 2015 compared to 2.83% in the prior year quarter primarily due to an 8 basis point decrease in the yield on average loans balance and a 7 basis point increase in cost of interest-bearing liabilities.  Excluding the non-recurring payment related to a loan participation in the prior year quarter, net interest margin would have been 2.79%.


Provision for loan losses

  • Provision for loan losses was $776,000 for the fourth quarter of 2015 compared to $632,000 for the prior year quarter.
  • Net charge-offs in the quarter were $588,000 or 0.10% to average loans (annualized) compared to $228,000 or 0.04% to average loans (annualized) in the prior year quarter.
  • The allowance for loan losses represented 0.86% of total loans at December 31, 2015 and 0.89% of total loans at December 31, 2014. 


Noninterest income

  • Total noninterest income increased $970,000 to $3.5 million in the fourth quarter of 2015 compared to the prior year quarter primarily due to a $220,000 increase in net gain on loans sold, a $443,000 increase in bank owned life insurance income and a $262,000 increase in other noninterest income.
  • Net gain on loans sold increased $220,000 primarily due to an increase in the volume of loans sold.
  • Other income increased $262,000 to $557,000 in the fourth quarter of 2015 compared to the prior year quarter primarily due to a $152,000 increase in mortgage banking derivatives income and a $69,000 increase in servicing fees.


Noninterest expense

  • Noninterest expense increased $1.3 million in the fourth quarter of 2015 to $16.0 million compared to the prior year quarter primarily due to an $831,000 increase in salaries and employee benefits and a $392,000 increase in marketing.
  • Salaries and employee benefits increased $831,000 primarily due to an increase in staff to support our compliance areas, our expansion into western Massachusetts and to maintain the Bank's growth.
  • Marketing increased $392,000 to $763,000 compared to the prior year quarter primarily due to our expansion into western Massachusetts.


Income tax expense

  • Income tax expense was $1.7 million in the fourth quarter of 2015 compared to $499,000 in the prior year quarter.  The increase in income tax expense in the fourth quarter of 2015 was primarily due to a $768,000 valuation allowance related to a deferred tax asset associated with the establishment of the Bank's foundation in 2011 and $451,000 increase in income before taxes.  The income tax expense in the fourth quarter of 2014 also decreased $441,000 due to adjusting the tax rate on our deferred tax assets from 34% to 35%. 


For the year ended December 31, 2015 compared with the year ended December 31, 2014

Net interest income

  • Net interest income increased $5.8 million or 9% to $68.5 million for the year ended 2015 compared to $62.7 million for the year ended 2014 primarily due to a $317.2 million increase in the average loan balance offset by a $3.3 million increase in interest expense.
  • Net interest margin decreased to 2.81% for the year ended 2015 compared to 2.94% for the year ended 2014.  Excluding the non-recurring payment related to a loan participation, the year ended 2014 interest margin would have been 2.92%.
  • The total interest-earning assets yield decreased 6 basis points to 3.34% for the year ended 2015 compared to 3.40% for the year ended 2014 due to a $317.2 million increase in the average loan balance in a low interest rate environment.
  • The cost of interest-bearing liabilities increased 8 basis points to 68 basis points for the year ended 2015 compared to 60 basis points for the year ended 2014.  The increase was primarily due to money market and certificate of deposit promotions and a 26 basis point increase in the average cost of Federal Home Loan Bank of Boston borrowings.


Provision for loan losses

  • Provision for loan losses was $2.4 million for the year ended 2015 compared to $2.6 million for the year ended 2014. 
  • Net charge-offs for the year ended 2015 were $1.2 million or 0.05% to average loans compared to $1.9 million or 0.10% to average loans for the year ended 2014.
  • The allowance for loan losses represented 0.86% of total loans at December 31, 2015 compared to 0.89% at December 31, 2014. 


Noninterest income

  • Total noninterest income increased $4.3 million to $13.4 million for the year ended 2015 compared to $9.1 million for the year ended 2014.
  • Fees for customer services increased $487,000 to $6.0 million for the year ended 2015 compared to the year ended 2014 driven by our growth in checking accounts and debit card fees.
  • Gain on sale of investments was $1.5 million for the year ended 2015 due to the sale of trust preferred securities.  There was no gain on sale of investments for the year ended 2014.
  • Net gain on loans sold increased $1.1 million to $2.5 million for the year ended 2015 compared to the year ended 2014 as a result of an increase in volume of loans sold.
  • Bank owned life insurance income increased $542,000 to $1.7 million for the year ended 2015 compared to the year ended 2014 primarily due to a $10.0 million purchase of bank owned life insurance and $379,000 in bank owned life insurance proceeds in 2015.
  • Other income increased $695,000 to $1.6 million for the year ended 2015 compared to the year ended 2014 primarily due to a $709,000 increase in swap fee income.


Noninterest expense

  • Noninterest expense increased $4.2 million to $61.2 million for the year ended 2015 compared to $57.0 million for the year ended 2014.
  • Salaries and employee benefits increased $2.4 million to $36.9 million for the year ended 2015 compared to the year ended 2014.  The increase is primarily due to an increase in staff to support our compliance areas, our expansion into western Massachusetts and to maintain the Bank's growth.
  • Marketing increased $559,000 to $2.1 million for the year ended 2015 compared to the prior year primarily due to our expansion into western Massachusetts and an increase in premiums and giveaways to obtain new customers in the geographical areas we serve.
  • Other operating expenses increased $1.0 million to $11.2 million for the year ended 2015 compared to the prior year primarily due to a $246,000 increase in service bureau fees and a general increase in office expenses to support the Bank's growth.


Income tax expense

  • Income tax expense was $5.7 million for the year ended 2015 compared to $2.8 million for the year ended 2014.  The increase in income tax expense for the year ended 2015 was primarily due to a $768,000 valuation allowance related to a deferred tax asset associated with the establishment of the Bank's foundation in 2011 and a $6.1 million increase in income before taxes.  The income tax expense for the year ended 2014 also decreased $441,000 due to adjusting the tax rate on our deferred tax assets from 34% to 35%. 


December 31, 2015 compared to December 31, 2014

Financial Condition

  • Total assets increased $223.2 million or 9% at December 31, 2015 to $2.7 billion compared to $2.5 billion at December 31, 2014, largely reflecting an increase in loan growth.
  • Our investment portfolio totaled $164.7 million at December 31, 2015 compared to $204.3 million at December 31, 2014, a decrease of $39.6 million due to reduction in collateral requirements.
  • Net loans increased $221.7 million or 11% at December 31, 2015 to $2.3 billion compared to $2.1 billion at December 31, 2014 due to our continued focus on commercial and residential lending.
  • Deposits increased $258.3 million to $2.0 billion at December 31, 2015 compared to $1.7 billion at December 31, 2014 primarily due to increases in municipal deposits, demand deposits and certificates of deposit as we continue to develop and grow relationships in the geographical areas we serve.  We entered the brokered deposit market during the second quarter of 2015 with balances totaling $44.3 million at December 31, 2015.
  • Federal Home Loan Bank of Boston advances decreased $24.1 million to $377.6 million at December 31, 2015 compared to $401.7 million at December 31, 2014.  Advances were used to support loan and securities growth during the year.


Asset Quality

  • At December 31, 2015, the allowance for loan losses represented 0.86% of total loans and 135.44% of non-accrual loans, compared to 0.86% of total loans and 120.05% of non-accrual loans at September 30, 2015 and 0.89% of total loans and 122.58% of non-accrual loans at December 31, 2014.
  • Loan delinquencies 30 days and greater represented 0.63% of total loans at December 31, 2015 compared to 0.67% of total loans at September 30, 2015 and 0.75% of total loans at December 31, 2014.
  • Non-accrual loans represented 0.63% of total loans at December 31, 2015 compared to 0.71% of total loans at September 30, 2015 and 0.72% of total loans at December 31, 2014.
  • Net charge-offs (recoveries) in the quarter were $588,000 or 0.10% to average loans (annualized) compared to ($43,000) or (0.01%) to average loans (annualized) in the linked quarter and $228,000 or 0.04% to average loans (annualized) in the prior year quarter.


Capital and Liquidity

  • The Company remained well-capitalized with an estimated total capital to risk-weighted asset ratio of 12.88% at December 31, 2015. 
  • Tangible book value per share was $15.47 compared to $15.30 on a linked quarter basis and $14.64 at December 31, 2014.
  • During the fourth quarter of 2015, the Company repurchased 15,000 shares of common stock at an average price per share of $15.80 at a total cost of $237,000.  Repurchased shares are held as treasury stock and will be available for general corporate purposes.  The Company had 757,745 shares remaining to repurchase at December 31, 2015 from prior regulatory approval.
  • At December 31, 2015, the Company continued to have adequate liquidity including significant unused borrowing capacity at the Federal Home Loan Bank of Boston and the Federal Reserve Bank, as well as access to funding through brokered deposits and pre-approved unsecured lines of credit.


About First Connecticut Bancorp, Inc.

First Connecticut Bancorp, Inc. (NASDAQ: FBNK) is a Maryland-chartered stock holding company that wholly owns Farmington Bank. Farmington Bank is a full-service, community bank with 23 branch locations throughout central Connecticut and western Massachusetts, offering commercial and residential lending as well as wealth management services. Established in 1851, Farmington Bank is a diversified consumer and commercial bank with an ongoing commitment to contribute to the betterment of the communities in our region. For more information regarding the Bank's products and services and for First Connecticut Bancorp, Inc. investor relations information, please visit www.farmingtonbankct.com.

Conference Call

First Connecticut will host a conference call on Thursday, January 28, 2016 at 10:30am Eastern Time to discuss fourth quarter results.  Those wishing to participate in the call may dial-in to the call at 1-888-336-7151.  The Canada dial-in number is 1-855-669-9657 and the international dial-in number is 1-412-902-4177.  A webcast of the call will be available on the Investor Relations Section of the Farmington Bank website for an extended period of time.

Forward Looking Statements

In addition to historical information, this earnings release may contain forward-looking statements for purposes of applicable securities laws. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Such forward-looking statements may or may not include words such as "believe," "expect," "anticipate," "estimate," and "intend" or future or conditional verbs such as "will," "would," "should," "could," or "may." Forward-looking statements are subject to numerous assumptions, risks and uncertainties. There are a number of important factors described in documents previously filed by the Company with the Securities and Exchange Commission, and other factors that could cause the Company's actual results to differ materially from those contemplated by such forward-looking statements. The Company undertakes no obligation to publicly release the results of any revisions to those forward-looking statements which may be made to reflect events or circumstances after the date of this release or to reflect the occurrence of unanticipated events.

Non-GAAP Financial Measures

In addition to evaluating the Company's financial performance in accordance with U.S. generally accepted accounting principles ("GAAP"), management routinely supplements their evaluation with an analysis of certain non-GAAP financial measures, such as core net income, the efficiency ratio and tangible book value per share. A reconciliation to the most directly comparable GAAP financial measure; net income in the case of core net income and the efficiency ratio and stockholders' equity in the case of tangible book value per share, appears in the accompanying Reconciliation of Non-GAAP Financial Measures table.

We believe that providing certain non-GAAP financial measures provides investors with information useful in understanding our financial performance, our performance trends and financial position. Specifically, we provide measures based on what we believe are our operating earnings on a consistent basis and exclude non-core operating items which affect the GAAP reporting of results of operations. The Company believes that core net income is useful for both investors and management to understand the effects of items that are non-recurring and infrequent in nature. The Company believes that the efficiency ratio, which measures the costs expended to generate a dollar of revenue, is useful in the assessment of financial performance, including non-interest expense control. The Company believes that tangible book value per share is useful to evaluate the relative strength of the Company's capital position. The Company does not have goodwill and intangible assets for any of the periods presented. As such, tangible book value per common share is equal to book value per common share.

We utilize these measures for internal planning and forecasting purposes. These non-GAAP financial measures should not be considered a substitute for GAAP basis measures and results, and we strongly encourage investors to review our consolidated financial statements in their entirety and not to rely on any single financial measure.

First Connecticut Bancorp, Inc.
Selected Financial Data (Unaudited)
           
 At or for the Three Months Ended 
 December 31, September 30, June 30, March 31, December 31, 
(Dollars in thousands, except per share data) 2015   2015   2015   2015   2014  
Selected Financial Condition Data:          
           
Total assets$  2,708,546  $  2,708,454  $  2,626,217  $  2,549,074  $  2,485,360  
Cash and cash equivalents    59,139     47,447     42,992     44,847     42,863  
Securities held-to-maturity, at amortized cost   32,246     25,486     34,366     21,006     16,224  
Securities available-for-sale, at fair value   132,424     171,390     143,799     173,829     188,041  
Federal Home Loan Bank of Boston stock, at cost   21,729     23,038     21,496     19,785     19,785  
Loans, net   2,341,598     2,318,257     2,268,385     2,186,937     2,119,917  
Deposits   1,991,358     1,973,355     1,878,040     1,887,954     1,733,041  
Federal Home Loan Bank of Boston advances   377,600     373,600     400,700     308,700     401,700  
Total stockholders' equity   245,721     243,195     239,082     237,709     234,563  
Allowance for loan losses   20,198     20,010     19,581     19,232     18,960  
Non-accrual loans   14,913     16,668     12,973     14,086     15,468  
Impaired loans   41,017     42,664     39,975     42,130     43,452  
Loan delinquencies 30 days and greater   14,945     15,598     13,244     14,193     16,079  
           
Selected Operating Data:          
           
Interest income$  21,094  $  21,094  $  20,164  $  19,532  $  19,412  
Interest expense   3,731     3,422     3,065     3,157     3,017  
Net interest income   17,363     17,672     17,099     16,375     16,395  
Provision for loan losses   776     386     663     615     632  
Net interest income after provision for loan losses   16,587     17,286     16,436     15,760     15,763  
Noninterest income   3,468     3,241     4,074     2,664     2,498  
Noninterest expense   15,958     14,718     15,597     14,937     14,615  
Income before income taxes   4,097     5,809     4,913     3,487     3,646  
Income tax expense   1,716     1,594     1,441     976     499  
           
Net income$  2,381  $  4,215  $  3,472  $  2,511  $  3,147  
           
Performance Ratios (annualized):          
           
Return on average assets 0.35%  0.62%  0.54%  0.40%  0.52% 
Return on average equity 3.86%  6.92%  5.77%  4.24%  5.31% 
Net interest rate spread (1)  2.61%  2.65%  2.72%  2.68%  2.68% 
Net interest rate margin (2)  2.76%  2.79%  2.86%  2.83%  2.83% 
Non-interest expense to average assets (3)  2.37%  2.26%  2.39%  2.34%  2.39% 
Efficiency ratio (4) 78.19%  73.04%  77.13%  78.35%  78.39% 
Average interest-earning assets to average          
  interest-bearing liabilities 127.48%  126.44%  126.98%  126.86%  127.88% 
Loans to deposits 118.60%  118.49%  121.83%  116.86%  123.42% 
           
Asset Quality Ratios:          
           
Allowance for loan losses as a percent of total loans 0.86%  0.86%  0.86%  0.87%  0.89% 
Allowance for loan losses as a percent of          
  non-accrual loans 135.44%  120.05%  150.94%  136.53%  122.58% 
Net charge-offs (recoveries) to average loans (annualized) 0.10%  (0.01%)  0.06%  0.06%  0.04% 
Non-accrual loans as a percent of total loans 0.63%  0.71%  0.57%  0.64%  0.72% 
Non-accrual loans as a percent of total assets 0.55%  0.62%  0.49%  0.55%  0.62% 
Loan delinquencies 30 days and greater as a          
  percent of total loans 0.63%  0.67%  0.58%  0.64%  0.75% 
           
Per Share Related Data:          
           
Basic earnings per share$  0.16  $  0.28  $  0.23  $  0.17  $  0.21  
Diluted earnings per share$  0.16  $  0.28  $  0.23  $  0.17  $  0.21  
Dividends declared per share$  0.06  $  0.06  $  0.05  $  0.05  $  0.05  
Tangible book value (5)$  15.47  $  15.30  $  15.01  $  14.82  $  14.64  
Common stock shares outstanding   15,881,663     15,893,263   15,922,888   16,035,005   16,026,319  
Weighted-average basic shares outstanding   14,785,058   14,632,951   14,694,472   14,722,112   14,695,490  
Weighted-average diluted shares outstanding   15,146,365   14,887,461   14,839,454   14,850,597   14,836,032  
           
           
(1) Represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.   
           
(2) Represents tax-equivalent net interest income as a percent of average interest-earning assets.       
           
(3) Represents core noninterest expense annualized divided by average assets.  See "Reconciliation of Non-GAAP Financial Measures" table.   
           
(4) Represents core noninterest expense divided by the sum of core net interest income and core noninterest income.      
  See "Reconciliation of Non-GAAP Financial Measures" table.          
           
(5) Represents ending stockholders' equity less goodwill and intangible assets (excluding mortgage servicing rights) divided by ending common shares outstanding. 
  The Company does not have goodwill and intangible assets for any of the periods presented.  See "Reconciliation of Non-GAAP Financial Measures" table. 
           

 



First Connecticut Bancorp, Inc.
Selected Financial Data (Unaudited)
           
 At or for the Three Months Ended 
 December 31, September 30, June 30, March 31, December 31, 
(Dollars in thousands) 2015   2015   2015   2015   2014  
Capital Ratios:          
           
Equity to total assets at end of period 9.07%  8.98%  9.10%  9.33%  9.44% 
Average equity to average assets 9.17%  9.00%  9.36%  9.45%  9.71% 
Total Capital (to Risk Weighted Assets) 12.88%* 12.72%  13.11%  13.44%  13.73% 
Tier I Capital (to Risk Weighted Assets) 11.91%* 11.76%  12.12%  12.44%  12.70% 
Common Equity Tier I Capital  11.91%* 11.76%  12.12%  12.44% n/a 
Tier I Leverage Capital (to Average Assets) 9.39%* 9.24%  9.57%  9.72%  9.86% 
Total equity to total average assets 9.13%  8.98%  9.29%  9.48%  9.61% 
           
* Estimated          
           
Loans and Allowance for Loan Losses:          
           
Real estate          
Residential$  849,722  $  851,784  $  888,376  $  850,819  $  827,005  
Commercial   887,431     862,367     817,955     769,712     765,066  
Construction   30,895     29,244     42,858     53,913     57,371  
Installment   2,970     3,007     3,103     3,114     3,356  
Commercial   409,550     410,704     359,537     352,085     309,708  
Collateral   1,668     1,632     1,551     1,676     1,733  
Home equity line of credit   174,701     174,579     169,507     169,969     169,768  
Revolving credit   91     96     77     80     99  
Resort   784     807     837     880     929  
Total loans 2,357,812   2,334,220   2,283,801   2,202,248   2,135,035  
Net deferred loan costs   3,984     4,047     4,165     3,921     3,842  
Loans   2,361,796     2,338,267     2,287,966     2,206,169     2,138,877  
Allowance for loan losses   (20,198)    (20,010)    (19,581)    (19,232)    (18,960) 
Loans, net$  2,341,598  $  2,318,257  $  2,268,385  $  2,186,937  $  2,119,917  
           
Deposits:          
           
Noninterest-bearing demand deposits$  401,388  $  359,757  $  377,092  $  337,211  $  330,524  
Interest-bearing          
NOW accounts   468,054     527,128     425,789     499,130     355,412  
Money market   460,737     440,249     430,558     462,532     470,991  
Savings accounts   220,389     211,170     220,154     214,083     210,892  
Time deposits   440,790     435,051     424,447     374,998     365,222  
Total interest-bearing deposits   1,589,970     1,613,598     1,500,948     1,550,743     1,402,517  
Total deposits$  1,991,358  $  1,973,355  $  1,878,040  $  1,887,954  $  1,733,041  
           





First Connecticut Bancorp, Inc.
Consolidated Statements of Condition (Unaudited)
             
       December 31, September 30, December 31, 
        2015   2015   2014  
(Dollars in thousands)      
Assets         
Cash and due from banks$  45,732  $  33,564  $  35,232  
Interest bearing deposits with other institutions   13,407     13,883   7,631  
  Total cash and cash equivalents 59,139   47,447   42,863  
Securities held-to-maturity, at amortized cost 32,246   25,486   16,224  
Securities available-for-sale, at fair value 132,424   171,390   188,041  
Loans held for sale 9,637   8,416   2,417  
Loans (1)   2,361,796   2,338,267   2,138,877  
 Allowance for loan losses (20,198)  (20,010)  (18,960) 
  Loans, net 2,341,598   2,318,257   2,119,917  
Premises and equipment, net 18,565   17,870   18,873  
Federal Home Loan Bank of Boston stock, at cost 21,729   23,038   19,785  
Accrued income receivable 6,747   6,305   5,777  
Bank-owned life insurance 50,618   50,633   39,686  
Deferred income taxes 15,443   15,935   16,841  
Prepaid expenses and other assets 20,400   23,677   14,936  
     Total assets$  2,708,546  $  2,708,454  $  2,485,360  
             
Liabilities and Stockholders' Equity      
Deposits        
 Interest-bearing$  1,589,970  $  1,613,598  $  1,402,517  
 Noninterest-bearing 401,388   359,757   330,524  
        1,991,358   1,973,355   1,733,041  
Federal Home Loan Bank of Boston advances 377,600   373,600   401,700  
Repurchase agreement borrowings 10,500   10,500   21,000  
Repurchase liabilities 35,769   58,084   48,987  
Accrued expenses and other liabilities 47,598   49,720   46,069  
     Total liabilities 2,462,825   2,465,259   2,250,797  
             
Stockholders' Equity      
 Common stock 181   181   181  
 Additional paid-in-capital 181,997   181,195   178,772  
 Unallocated common stock held by ESOP (11,626)  (11,893)  (12,681) 
 Treasury stock, at cost (30,602)  (30,411)  (28,828) 
 Retained earnings 112,933   111,274   103,630  
 Accumulated other comprehensive loss (7,162)  (7,151)  (6,511) 
     Total stockholders' equity 245,721   243,195   234,563  
     Total liabilities and stockholders' equity$  2,708,546  $  2,708,454  $  2,485,360  
             
(1) Loans include net deferred fees and unamortized premiums of $4.0 million, $4.0 million and $3.8 million at December 31, 2015,  
   September 30, 2015 and December 31, 2014, respectively.      





First Connecticut Bancorp, Inc.
Consolidated Statements of Income (Unaudited)
                 
       Three Months Ended For The Year Ended 
       December 31, September 30, December 31, December 31, 
(Dollars in thousands, except per share data) 2015   2015   2014   2015   2014  
Interest income          
Interest and fees on loans          
 Mortgage $  15,670  $  15,861  $  15,170  $  61,920  $  56,963  
 Other   4,731   4,594   3,770   17,584   14,159  
Interest and dividends on investments          
 United States Government and agency obligations 425   401   284   1,534   949  
 Other bonds 13   13   63   79   259  
 Corporate stocks 248   217   122   741   429  
Other interest income 7   8   3   26   15  
     Total interest income 21,094   21,094   19,412   81,884   72,774  
Interest expense          
Deposits   2,611   2,412   2,119   9,372   7,369  
Interest on borrowed funds 1,004   890   675   3,449   1,841  
Interest on repo borrowings 97   96   181   448   719  
Interest on repurchase liabilities 19   24   42   106   151  
     Total interest expense 3,731   3,422   3,017   13,375   10,080  
     Net interest income 17,363   17,672   16,395   68,509   62,694  
Provision for loan losses 776   386   632   2,440   2,588  
     Net interest income          
      after provision for loan losses 16,587   17,286   15,763   66,069   60,106  
Noninterest income          
Fees for customer services 1,566   1,536   1,521   5,975   5,488  
Gain on sale of investments -   -   -   1,523   -  
Net gain on loans sold 567   993   347   2,492   1,419  
Brokerage and insurance fee income 52   54   52   215   192  
Bank owned life insurance income 726   349   283   1,672   1,130  
Other    557   309   295   1,570   875  
     Total noninterest income 3,468   3,241   2,498   13,447   9,104  
Noninterest expense          
Salaries and employee benefits 9,728   9,302   8,897   36,855   34,416  
Occupancy expense 1,257   1,219   1,251   5,115   5,080  
Furniture and equipment expense 1,057   1,034   1,125   4,204   4,342  
FDIC assessment 430   413   386   1,657   1,396  
Marketing  763   443   371   2,149   1,590  
Other operating expenses 2,723   2,307   2,585   11,230     10,224  
     Total noninterest expense 15,958   14,718   14,615   61,210   57,048  
     Income before income taxes 4,097   5,809   3,646   18,306   12,162  
Income tax expense 1,716   1,594   499   5,727   2,827  
     Net income$  2,381  $  4,215  $  3,147  $  12,579  $  9,335  
                 
Earnings per share:           
 Basic  $  0.16  $  0.28  $  0.21  $  0.84  $  0.62  
 Diluted     0.16     0.28     0.21     0.83     0.62  
Weighted average shares outstanding:          
 Basic     14,785,058     14,632,951   14,695,490    14,726,607    14,682,147  
 Diluted     15,146,365     14,887,461   14,836,032    14,949,654    14,793,346  
                 







First Connecticut Bancorp, Inc.
Consolidated Average Balances, Yields and Rates (Unaudited)
                
 For The Three Months Ended    
 December 31, 2015 September 30, 2015 December 31, 2014    
 Average
Balance
Interest and
Dividends (1)
Yield/
Cost
 Average
Balance
Interest and
Dividends (1)
Yield/
Cost
 Average
Balance
Interest and
Dividends (1)
Yield/
Cost
    
(Dollars in thousands)               
Interest-earning assets:               
Loans$  2,346,218 $  20,916  3.54% $  2,359,293 $  20,937  3.52% $  2,102,879 $  19,199  3.62%    
Securities    185,697    495  1.06%    191,530    465  0.96%    207,534    403  0.77%    
Federal Home Loan Bank of Boston stock   21,729    191  3.49%    22,883    166  2.88%    17,969    66  1.46%    
Federal funds and other earning assets    14,258    7  0.19%    11,089    8  0.29%    8,014    3  0.15%    
Total interest-earning assets    2,567,902    21,609  3.34%    2,584,795    21,576  3.31%    2,336,396    19,671  3.34%    
Noninterest-earning assets    122,500       122,438       105,368       
Total assets $  2,690,402    $  2,707,233    $  2,441,764       
                
Interest-bearing liabilities:               
NOW accounts$  498,658 $  363  0.29% $  486,798 $  357  0.29% $  401,269 $  281  0.28%    
Money market   459,047    957  0.83%    437,000    867  0.79%    451,288    926  0.81%    
Savings accounts    216,219    54  0.10%    210,978    58  0.11%    206,794    51  0.10%    
Certificates of deposit    436,676    1,237  1.12%    430,152    1,130  1.04%    352,100    861  0.97%    
Total interest-bearing deposits    1,610,600    2,611  0.64%    1,564,928    2,412  0.61%    1,411,451    2,119  0.60%    
Federal Home Loan Bank of Boston Advances   343,024    1,004  1.16%    411,236    890  0.86%    328,257    675  0.82%    
Repurchase agreement borrowings   10,500    97  3.67%    10,500    96  3.63%    21,000    181  3.42%    
Repurchase liabilities    50,264    19  0.15%    57,644    24  0.17%    66,305    42  0.25%    
Total interest-bearing liabilities    2,014,388    3,731  0.73%    2,044,308    3,422  0.66%    1,827,013    3,017  0.66%    
Noninterest-bearing deposits   380,041       368,200       336,141       
Other noninterest-bearing liabilities    49,273       51,089       41,602       
Total liabilities    2,443,702       2,463,597       2,204,756       
Stockholders' equity   246,700       243,636       237,008       
Total liabilities and stockholders' equity$  2,690,402    $  2,707,233    $  2,441,764           
                
Tax-equivalent net interest income $  17,878    $  18,154    $  16,654      
Less: tax-equivalent adjustment    (515)      (482)      (259)     
Net interest income $  17,363    $  17,672    $  16,395      
                
Net interest rate spread (2)    2.61%    2.65%    2.68%    
Net interest-earning assets (3) $  553,514    $  540,487    $  509,383       
Net interest margin (4)    2.76%    2.79%    2.83%    
Average interest-earning assets to average interest-bearing liabilities                
 127.48%  126.44%  127.88%    
                
 (1) On a fully-tax equivalent basis.          
 (2) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost       
  of average interest-bearing liabilities.               
 (3) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.         
 (4) Net interest margin represents tax-equivalent net interest income divided by average total interest-earning assets.        
                







First Connecticut Bancorp, Inc.
Consolidated Average Balances, Yields and Rates (Unaudited)
          
 For The Years Ended December 31,  
  2015   2014   
 Average
Balance
Interest and
Dividends (1)
Yield/
Cost
 Average
Balance
Interest and
Dividends (1)
Yield/
Cost
  
(Dollars in thousands)         
Interest-earning assets:         
Loans$  2,279,418 $  81,177  3.56% $  1,962,239 $  71,967  3.67%  
Securities    188,004    1,832  0.97%    181,317    1,429  0.79%  
Federal Home Loan Bank of Boston stock   21,187    522  2.46%    15,911    208  1.31%  
Federal funds and other earning assets    11,947    26  0.22%    4,947    15  0.30%  
Total interest-earning assets    2,500,556    83,557  3.34%    2,164,414    73,619  3.40%  
Noninterest-earning assets    119,857       105,474     
Total assets $  2,620,413    $  2,269,888     
          
Interest-bearing liabilities:         
NOW accounts$  472,644 $  1,351  0.29% $  380,936 $  976  0.26%  
Money market   453,017    3,592  0.79%    420,456    3,112  0.74%  
Savings accounts    213,383    226  0.11%    200,948    205  0.10%  
Certificates of deposit    407,071    4,203  1.03%    338,590    3,076  0.91%  
Total interest-bearing deposits    1,546,115    9,372  0.61%    1,340,930    7,369  0.55%  
Federal Home Loan Bank of Boston Advances   356,539    3,449  0.97%    260,432    1,841  0.71%  
Repurchase agreement borrowings   12,629    448  3.55%    21,000    719  3.42%  
Repurchase liabilities    54,600    106  0.19%    60,082    151  0.25%  
Total interest-bearing liabilities    1,969,883    13,375  0.68%    1,682,444    10,080  0.60%  
Noninterest-bearing deposits   357,156       315,177     
Other noninterest-bearing liabilities    51,312       37,909     
Total liabilities    2,378,351       2,035,530     
Stockholders' equity   242,062       234,358     
Total liabilities and stockholders' equity$  2,620,413    $  2,269,888     
          
Tax-equivalent net interest income $  70,182    $  63,539    
Less: tax-equivalent adjustment    (1,673)      (845)   
Net interest income $  68,509    $  62,694    
          
Net interest rate spread (2)    2.66%    2.80%  
Net interest-earning assets (3) $  530,673    $  481,970     
Net interest margin (4)    2.81%    2.94%  
Average interest-earning assets to average interest-bearing liabilities          
 126.94%   128.65%   
        
(1) On a fully-tax equivalent basis.         
 (2) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost  
  of average interest-bearing liabilities.         
 (3) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.   
 (4) Net interest margin represents tax-equivalent net interest income divided by average total interest-earning assets.  
          





First Connecticut Bancorp, Inc.
Reconciliation of Non-GAAP Financial Measures (Unaudited)
            
The table below presents a reconciliation of non-GAAP financial measures with financial measures defined by GAAP for the three months ended December 31, 2015, September 30, 2015, June 30, 2015, March 31, 2015 and December 31, 2014. The Company believes the use of these non-GAAP financial measures provides additional clarity in assessing the results of the Company.
  At or for the Three Months Ended 
  December 31, September 30, June 30, March 31, December 31, 
(Dollars in thousands, except per share data) 2015   2015   2015   2015   2014  
Net Income$  2,381  $  4,215  $  3,472  $  2,511  $  3,147  
 Adjustments:          
 Plus: Accelerated vesting of stock compensation -   -   258   140   -  
 Plus: Employee severance -   -   -   93   -  
 Less: Prepayment penalty fees (43)  -   (35)  -   -  
 Less: Non-recurring payment related to a loan participation -   -   -   -   (250) 
 Less: Gain on sale of foreclosed real estate -   (557)  -   -   -  
 Less: Bank-owned life insurance proceeds (379)  -   -   -   -  
 Less: Net gain on sales of investments -   -   (1,250)  (273)  -  
Total core adjustments before taxes (422)  (557)  (1,027)  (40)  (250) 
 Tax benefit on core adjustments 15   195   359   14   88  
 Deferred tax asset valuation allowance (1) 768   -   -   -   -  
 Tax rate adjustment (2) -   -   -   -   (441) 
Total core adjustments after taxes 361   (362)  (668)  (26)  (603) 
Total core net income$  2,742  $  3,853  $  2,804  $  2,485  $  2,544  
            
            
Total net interest income$  17,363  $  17,672  $  17,099  $  16,375  $  16,395  
 Less: Prepayment penalty fees (43)  -   (35)  -   -  
 Less: Non-recurring payment related to a loan participation -   -   -   -   (250) 
Total core net interest income$  17,320  $  17,672  $  17,064  $  16,375  $  16,145  
            
Total noninterest income$  3,468  $  3,241  $  4,074  $  2,664  $  2,498  
 Less: Bank-owned life insurance proceeds (379)  -   -   -   -  
 Less: Net gain on sales of investments -   -   (1,250)  (273)  -  
Total core noninterest income$  3,089  $  3,241  $  2,824  $  2,391  $  2,498  
            
Total noninterest expense$  15,958  $  14,718  $  15,597  $  14,937  $  14,615  
 Less: Accelerated vesting of stock compensation -   -   (258)  (140)  -  
 Less: Employee severances -   -   -   (93)  -  
 Less: Gain on sale of foreclosed real estate -   557   -   -   -  
Total core noninterest expense$  15,958  $  15,275  $  15,339  $  14,704  $  14,615  
            
Core earnings per common share, diluted$  0.18  $  0.25  $  0.19  $  0.16  $  0.17  
            
Core return on average assets (annualized) 0.41%  0.57%  0.44%  0.40%  0.42% 
Core return on average equity (annualized) 4.45%  6.33%  4.66%  4.19%  4.29% 
Core non-interest expense to average assets (annualized) 2.37%  2.26%  2.39%  2.34%  2.39% 
Efficiency ratio (3)  78.19%  73.04%  77.13%  78.35%  78.39% 
            
Tangible book value (4) $  15.47  $  15.30  $  15.01  $  14.82  $  14.64  
            
            
(1) Represents a valuation allowance related to a deferred tax asset associated with the establishment of the Bank's foundation in 2011.    
            
(2) Represents the tax benefit derived from adjusting the tax rate on the Company's deferred tax assets from 34% to 35%.  The Company's taxable income placed it in  
   the 35% corporate tax bracket.          
            
(3) Represents core noninterest expense divided by the sum of core net interest income and core noninterest income.      
            
(4) Represents ending stockholders' equity less goodwill and intangible assets (excluding mortgage servicing rights) divided by ending common shares outstanding. 
  The Company does not have goodwill and intangible assets for any of the periods presented.        





First Connecticut Bancorp, Inc.
Reconciliation of Non-GAAP Financial Measures (Unaudited)
       
The table below presents a reconciliation of non-GAAP financial measures with financial measures defined by GAAP for the years ended December 31, 2015 and 2014. The Company believes the use of these non-GAAP financial measures provides additional clarity in assessing the results of the Company.
  At or for the Years Ended December 31,  
(Dollars in thousands, except per share data) 2015   2014   
Net Income$  12,579  $  9,335   
 Adjustments:     
 Plus: Accelerated vesting of stock compensation 398   -   
 Plus: Employee severance 93   -   
 Less: Prepayment penalty fees (78)  (185)  
 Less: Non-recurring payment related to a loan participation -   (250)  
 Less: Gain on sale of foreclosed real estate (557)  -   
 Less: Bank-owned life insurance proceeds (379)  -   
 Less: Net gain on sales of investments (1,523)  -   
Total core adjustments before taxes (2,046)  (435)  
 Tax benefit on core adjustments 583   151   
 Deferred tax asset valuation allowance (1) 768   -   
 Tax rate adjustment (2) -   (441)  
Total core adjustments after taxes (695)  (725)  
Total core net income$  11,884  $  8,610   
       
       
Total net interest income$  68,509  $  62,694   
 Less: Prepayment penalty fees (78)  (185)  
 Less: Non-recurring payment related to a loan participation -   (250)  
Total core net interest income$  68,431  $  62,259   
    .  
Total noninterest income$  13,447  $  9,104   
 Less: Bank-owned life insurance proceeds (379)  -   
 Less: Net gain on sales of investments (1,523)  -   
Total core noninterest income$  11,545  $  9,104   
       
Total noninterest expense$  61,210  $  57,048   
 Less: Accelerated vesting of stock compensation (398)  -   
 Less: Employee severances (93)  -   
 Less: Gain on sale of foreclosed real estate 557   -   
Total core noninterest expense$  61,276  $  57,048   
       
Core earnings per common share, diluted$  0.78  $  0.57   
       
Core return on average assets (annualized) 0.45%  0.38%  
Core return on average equity (annualized) 4.91%  3.67%  
Core non-interest expense to average assets (annualized) 2.34%  2.51%  
Efficiency ratio (3)  76.62%  79.94%  
       
Tangible book value (4) $  15.47  $  15.30   
       
       
       
(1) Represents a valuation allowance related to a deferred tax asset associated with the establishment of the Bank's foundation in 2011. 
       
(2) Represents the tax benefit derived from adjusting the tax rate on the Company's deferred tax assets from 34% to 35%.   
   The Company's taxable income placed it in the 35% corporate tax bracket.     
       
(3) Represents core noninterest expense divided by the sum of core net interest income and core noninterest income.   
       
(4) Represents ending stockholders' equity less goodwill and intangible assets (excluding mortgage servicing rights) divided   
  by ending common shares outstanding.  The Company does not have goodwill and intangible assets for any of the periods presented.  

 

     

 

 

Jennifer H. Daukas Investor Relations Officer One Farm Glen Boulevard, Farmington, CT 06032 P 860-284-6359 F 860-409-3316 jdaukas@farmingtonbankct.com

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