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First Connecticut Bancorp, Inc. reports second quarter 2016 earnings of $0.24 earnings per share

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FARMINGTON, Conn., July 20, 2016 (GLOBE NEWSWIRE) -- First Connecticut Bancorp, Inc. (the "Company") (NASDAQ: FBNK), the holding company for Farmington Bank (the "Bank"), reported net income of $3.6 million, or $0.24 diluted earnings per share for the quarter ended June 30, 2016 compared to net income of $3.5 million, or $0.23 diluted earnings per share for the quarter ended June 30, 2015.

Net income on a core earnings basis was $3.4 million, or $0.22 diluted core earnings per share for the quarter ended June 30, 2016 compared to $2.8 million, or $0.19 diluted core earnings per share for the quarter ended June 30, 2015.  Core earnings exclude non-recurring items. 

"We continue to build our franchise with solid year over year organic loan and deposit growth, while our operating expenses have been relatively flat. We remain focused on building tangible book value which has increased $0.94 year over year. During the quarter, we opened our 24th location in Vernon, CT which is off to a great start and is on target to achieve the same consistent success our other de novo offices have achieved over the past six years," stated John J. Patrick Jr., First Connecticut Bancorp's Chairman, President and CEO.

Financial Highlights

  • Net interest income increased $366,000 to $17.9 million in the second quarter of 2016 compared to the linked quarter and increased $773,000 or 5% compared to the second quarter of 2015.  Net interest income includes $370,000 in prepayment penalty fees in the second quarter of 2016 compared to $35,000 in the prior year quarter.

  • Core net interest rate margin was 2.81% in the second quarter of 2016 compared to 2.82% in the linked quarter and 2.86% in the prior year quarter.

  • Core noninterest expense to average assets was 2.23% in the second quarter of 2016 compared to 2.27% in the linked quarter and 2.39% in the prior year quarter.

  • Strong organic loan growth during the quarter as loans increased $53.7 million to $2.4 billion at June 30, 2016 and increased $136.2 million or 6% from a year ago.  Loan growth during the quarter was primarily driven by a $68.2 million increase in the commercial loan portfolio offset by a $13.8 million decrease in the residential loan portfolio.

  • Overall deposits remained relatively flat at $2.1 billion in the second quarter of 2016 compared to the linked quarter and increased $173.4 million or 9% from a year ago. 

  • Tangible book value per share increased to $15.95 for the quarter ended June 30, 2016 compared to $15.72 on a linked quarter basis and $15.01 at June 30, 2015.

  • Checking accounts grew by 2% or 1,061 net new accounts in the second quarter of 2016 and by 12% or 5,623 net new accounts from a year ago.

  • Net gain on loans sold increased $261,000 to $751,000 in the second quarter of 2016 compared to the linked quarter primarily due to an increase in volume.

  • Asset quality remained strong as loan delinquencies 30 days and greater represented 0.50% of total loans at June 30, 2016 compared to 0.55% at March 31, 2016 and 0.58% at June 30, 2015.  Non-accrual loans represented 0.56% of total loans compared to 0.55% of total loans on a linked quarter basis and 0.57% of total loans at June 30, 2015. 

  • The allowance for loan losses represented 0.86% of total loans at June 30, 2016, 0.85% at March 31, 2016 and 0.86% at June 30, 2015. 

  • The Company paid a quarterly cash dividend of $0.07 per share during the second quarter.

Second quarter 2016 compared with first quarter 2016

Net interest income

  • Net interest income increased $366,000 to $17.9 million in the second quarter of 2016 compared to the linked quarter primarily due to $370,000 in prepayment penalty fees.

  • Net interest margin, excluding the prepayment penalty fees, was 2.81% in the second quarter of 2016 compared to 2.82% in the linked quarter.

  • The cost of interest-bearing liabilities remained flat at 77 basis points for both quarters in 2016.

Provision for loan losses

  • Provision for loan losses was $801,000 for the second quarter of 2016 compared to $217,000 for the linked quarter.  The increase was primarily due to $53.7 million in loan growth during the quarter.

  • Net charge-offs in the quarter were $255,000 or 0.04% to average loans (annualized) compared to $241,000 or 0.04% to average loans (annualized) in the linked quarter.

  • The allowance for loan losses represented 0.86% of total loans at June 30, 2016 compared to 0.85% of total loans at March 31, 2016. 

Noninterest income

  • Total noninterest income decreased $283,000 to $2.6 million in the second quarter of 2016 compared to the linked quarter primarily due to a $483,000 decrease in other noninterest income offset by a $261,000 increase in net gain on loans sold.

  • Other income decreased $483,000 primarily due to a $374,000 mortgage servicing rights impairment due to a decline in interest rates during the quarter and a $70,000 decrease in mortgage banking derivatives.

  • Other income includes swap fees totaling $274,000 compared to $315,000 in the linked quarter.

  • Net gain on loans sold increased $261,000 to $751,000 primarily due to an increase in volume.

Noninterest expense

  • Noninterest expense decreased $633,000 in the second quarter of 2016 to $14.6 million compared to the linked quarter primarily due to a $163,000 decrease in salaries and employee benefits and a $499,000 decrease in other operating expenses.

  • Other operating expenses decreased $499,000 on a linked quarter basis primarily due to a $417,000 decrease in the provision for off-balance sheet commitments as a result of a change in accounting estimate.

Income tax expense

  • Income tax expense was $1.4 million in the second quarter of 2016 compared to $1.3 million in the linked quarter.

Second quarter 2016 compared with second quarter 2015

Net interest income

  • Net interest income increased $773,000 to $17.9 million in the second quarter of 2016 compared to the prior year quarter due primarily to a $146.1 million increase in the average loan balance, a $335,000 increase in prepayment penalty fees offset by a $761,000 increase in interest expense.  

  • Net interest margin, excluding the prepayment fees decreased 5 basis points to 2.81% in the second quarter of 2016 compared to 2.86% in the prior year quarter.  

Provision for loan losses

  • Provision for loan losses was $801,000 for the second quarter of 2016 compared to $663,000 for the prior year quarter.

  • Net charge-offs in the quarter were $255,000 or 0.04% to average loans (annualized) compared to $314,000 or 0.06% to average loans (annualized) in the prior year quarter.

  • The allowance for loan losses represented 0.86% of total loans at June 30, 2016 and 2015. 

Noninterest income

  • Total noninterest income decreased $1.5 million to $2.6 million in the second quarter of 2016 compared to the prior year quarter primarily due to a $1.3 million decrease in gain on sale of investments, $553,000 decrease in other noninterest income offset by a $339,000 increase in net gain on loans sold.

  • There was no gain on sale of investments in the second quarter of 2016 compared to $1.3 million gain on sale of investments in the prior year quarter.

  • Other income decreased $553,000 in the second quarter of 2016 compared to the prior year quarter primarily due to a $374,000 mortgage servicing rights impairment due to a decline in interest rates during the quarter and a $211,000 decrease in swap fees.

Noninterest expense

  • Noninterest expense decreased $953,000 in the second quarter of 2016 to $14.6 million compared to the prior year quarter primarily due to a $980,000 decrease in other operating expenses.

  • Other operating expenses decreased $980,000 primarily due to a $408,000 decrease in the provision for off-balance sheet commitments, in addition to prior year quarter $258,000 in non-recurring stock compensation costs related to two directors retiring in the quarter and a $149,000 loss on a credit sharing arrangement on a sold loan.

Income tax expense

  • Income tax expense was $1.4 million in the second quarters of 2016 and 2015.

June 30, 2016 compared to June 30, 2015

Financial Condition

  • Total assets increased $153.0 million or 6% at June 30, 2016 to $2.8 billion compared to $2.6 billion at June 30, 2015, largely reflecting an increase in net loans.

  • Our investment portfolio totaled $157.0 million at June 30, 2016 compared to $178.2 million at June 30, 2015, a decrease of $21.1 million due to reduction in collateral requirements.

  • Net loans increased $135.0 million or 6% at June 30, 2016 to $2.4 billion compared to $2.3 billion at June 30, 2015 due to our continued focus on commercial and residential lending.

  • Deposits increased $173.4 million to $2.1 billion at June 30, 2016 compared to $1.9 billion at June 30, 2015 primarily due to increases in money markets, demand deposits and certificates of deposit as we continue to develop and grow relationships in the geographical areas we serve.  We had brokered deposit balances totaling $43.2 million and $52.2 million at June 30, 2016 and 2015, respectively.

  • Federal Home Loan Bank of Boston advances decreased $60.1 million to $340.6 million at June 30, 2016 compared to $400.7 million at June 30, 2015.  Advances are used to support loan and securities growth.

Asset Quality

  • At June 30, 2016 the allowance for loan losses represented 0.86% of total loans and 153.22% of non-accrual loans, compared to 0.85% of total loans and 154.08% of non-accrual loans at March 31, 2016 and 0.86% of total loans and 150.94% of non-accrual loans at June 30, 2015.

  • Loan delinquencies 30 days and greater represented 0.50% of total loans at June 30, 2016 compared to 0.55% of total loans at March 31, 2016 and 0.58% of total loans at June 30, 2015.

  • Non-accrual loans represented 0.56% of total loans at June 30, 2016 compared to 0.55% of total loans at March 31, 2016 and 0.57% of total loans at June 30, 2015.

  • Net charge-offs in the quarter were $255,000 or 0.04% to average loans (annualized) compared to $241,000 or 0.04% to average loans (annualized) in the linked quarter and $314,000 or 0.06% 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 12.63% at June 30, 2016. 

  • Tangible book value per share is $15.95 compared to $15.72 on a linked quarter basis and $15.01 at June 30, 2015.

  • During the second quarter of 2016, the Company repurchased 9,700 shares of common stock at an average price per share of $15.90 at a total cost of $154,000.  Repurchased shares are held as treasury stock and will be available for general corporate purposes.  The Company had 600,945 shares remaining to repurchase at June 30, 2016 from prior regulatory approval.

  • At June 30, 2016, 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 24 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, July 21, 2016 at 10:30am Eastern Time to discuss second 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 
 June, March 31, December 31, September 30, June 30, 
(Dollars in thousands, except per share data) 2016   2016   2015   2015   2015  
Selected Financial Condition Data:          
           
Total assets$  2,779,224  $  2,701,614  $  2,708,546  $  2,708,454  $  2,626,217  
Cash and cash equivalents    66,743     59,166     59,139     47,447     42,992  
Securities held-to-maturity, at amortized cost   7,640     19,964     32,246     25,486     34,366  
Securities available-for-sale, at fair value   149,396     128,681     132,424     171,390     143,799  
Federal Home Loan Bank of Boston stock, at cost   18,240     15,688     21,729     23,038     21,496  
Loans, net   2,403,420     2,350,245     2,341,598     2,318,257     2,268,385  
Deposits   2,051,438     2,097,832     1,991,358     1,973,355     1,878,040  
Federal Home Loan Bank of Boston advances   340,600     259,600     377,600     373,600     400,700  
Total stockholders' equity   252,242     248,013     245,721     243,195     239,082  
Allowance for loan losses   20,720     20,174     20,198     20,010     19,581  
Non-accrual loans   13,523     13,093     14,913     16,668     12,973  
Impaired loans   38,216     38,588     41,017     42,664     39,975  
Loan delinquencies 30 days and greater   12,206     13,095     14,945     15,598     13,244  
           
Selected Operating Data:          
           
Interest income$  21,698  $  21,323  $  21,094  $  21,094  $  20,164  
Interest expense   3,826     3,817     3,731     3,422     3,065  
Net interest income   17,872     17,506     17,363     17,672     17,099  
Provision for loan losses   801     217     776     386     663  
Net interest income after provision for loan losses   17,071     17,289     16,587     17,286     16,436  
Noninterest income   2,617     2,900     3,468     3,241     4,074  
Noninterest expense   14,644     15,277     15,958     14,718     15,597  
Income before income taxes   5,044     4,912     4,097     5,809     4,913  
Income tax expense   1,401     1,299     1,716     1,594     1,441  
           
Net income$  3,643  $  3,613  $  2,381  $  4,215  $  3,472  
           
Performance Ratios (annualized):          
           
Return on average assets 0.54%  0.54%  0.35%  0.62%  0.54% 
Return on average equity 5.77%  5.82%  3.86%  6.92%  5.77% 
Net interest rate spread (1)  2.70%  2.65%  2.61%  2.65%  2.72% 
Net interest rate margin (2)  2.87%  2.82%  2.76%  2.79%  2.86% 
Non-interest expense to average assets (3)  2.23%  2.27%  2.37%  2.26%  2.39% 
Efficiency ratio (4) 73.52%  75.19%  78.19%  73.04%  77.13% 
Average interest-earning assets to average          
  interest-bearing liabilities 129.54%  128.45%  127.48%  126.44%  126.98% 
Loans to deposits 118.17%  112.99%  118.60%  118.49%  121.83% 
           
Asset Quality Ratios:          
           
Allowance for loan losses as a percent of total loans 0.86%  0.85%  0.86%  0.86%  0.86% 
Allowance for loan losses as a percent of          
  non-accrual loans 153.22%  154.08%  135.44%  120.05%  150.94% 
Net charge-offs (recoveries) to average loans (annualized) 0.04%  0.04%  0.10%  (0.01%)  0.06% 
Non-accrual loans as a percent of total loans 0.56%  0.55%  0.63%  0.71%  0.57% 
Non-accrual loans as a percent of total assets 0.49%  0.48%  0.55%  0.62%  0.49% 
Loan delinquencies 30 days and greater as a          
  percent of total loans 0.50%  0.55%  0.63%  0.67%  0.58% 
           
Per Share Related Data:          
           
Basic earnings per share$  0.24  $0.24  $  0.16  $  0.28  $  0.23  
Diluted earnings per share$  0.24  $0.24  $  0.16  $  0.28  $  0.23  
Dividends declared per share$  0.07  $0.07  $  0.06  $  0.06  $  0.05  
Tangible book value (5)$  15.95  $15.72  $  15.47  $  15.30  $  15.01  
Common stock shares outstanding   15,818,494     15,780,657     15,881,663     15,893,263   15,922,888  
Weighted-average basic shares outstanding   14,765,452     14,720,892     14,785,058   14,632,951   14,694,472  
Weighted-average diluted shares outstanding   15,077,291     15,012,540     15,146,365   14,887,461   14,839,454  
           
           
(1) Represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities on a tax-equivalent basis. 
           
(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 
 June 30, March 31, December 31, September 30, June 30, 
(Dollars in thousands) 2016   2016   2015   2015   2015  
Capital Ratios:          
           
Equity to total assets at end of period 9.08%  9.18%  9.07%  8.98%  9.10% 
Average equity to average assets 9.34%  9.22%  9.17%  9.00%  9.36% 
Total Capital (to Risk Weighted Assets) 12.63%* 12.88%  12.88%  12.72%  13.11% 
Tier I Capital (to Risk Weighted Assets) 11.69%* 11.92%  11.91%  11.76%  12.12% 
Common Equity Tier I Capital  11.69%* 11.92%  11.91%  11.76%  12.12% 
Tier I Leverage Capital (to Average Assets)   9.55%* 9.44%  9.39%  9.24%  9.57% 
Total equity to total average assets 9.32%  9.20%  9.13%  8.98%  9.29% 
           
* Estimated          
           
Loans and Allowance for Loan Losses:          
           
Real estate          
Residential$  842,427  $  855,148  $  849,722  $  851,784  $  888,376  
Commercial   922,643     893,477     887,431     862,367     817,955  
Construction   41,466     36,557     30,895     29,244     42,858  
Installment   3,267     3,338     2,970     3,007     3,103  
Commercial   437,046     402,960     409,550     410,704     359,537  
Collateral   1,689     1,668     1,668     1,632     1,551  
Home equity line of credit   171,212     172,325     174,701     174,579     169,507  
Revolving credit   79     77     91     96     77  
Resort   535     759     784     807     837  
Total loans 2,420,364   2,366,309   2,357,812   2,334,220   2,283,801  
Net deferred loan costs    3,776     4,110     3,984     4,047     4,165  
Loans   2,424,140     2,370,419     2,361,796     2,338,267     2,287,966  
Allowance for loan losses    (20,720)    (20,174)    (20,198)    (20,010)    (19,581) 
Loans, net$  2,403,420  $  2,350,245  $  2,341,598  $  2,318,257  $  2,268,385  
           
Deposits:          
           
Noninterest-bearing demand deposits$  415,562  $  396,356  $  401,388  $  359,757  $  377,092  
Interest-bearing          
NOW accounts   429,973     529,267     468,054     527,128     425,789  
Money market   498,847     488,497     460,737     440,249     430,558  
Savings accounts   229,868     223,188     220,389     211,170     220,154  
Time deposits   477,188     460,524     440,790     435,051     424,447  
Total interest-bearing deposits   1,635,876     1,701,476     1,589,970     1,613,598     1,500,948  
Total deposits$  2,051,438  $  2,097,832  $  1,991,358  $  1,973,355  $  1,878,040  
           


  
First Connecticut Bancorp, Inc. 
Consolidated Statements of Condition (Unaudited) 
  
       June 30, March 31, June 30, 
        2016   2016   2015  
(Dollars in thousands)      
Assets         
Cash and due from banks$  37,455  $  36,418  $  35,595  
Interest bearing deposits with other institutions   29,288     22,748     7,397  
  Total cash and cash equivalents 66,743   59,166   42,992  
Securities held-to-maturity, at amortized cost 7,640   19,964   34,366  
Securities available-for-sale, at fair value 149,396   128,681   143,799  
Loans held for sale 6,912   6,145   7,550  
Loans (1)   2,424,140   2,370,419   2,287,966  
 Allowance for loan losses (20,720)  (20,174)  (19,581) 
  Loans, net 2,403,420   2,350,245   2,268,385  
Premises and equipment, net 18,917   18,210   17,964  
Federal Home Loan Bank of Boston stock, at cost 18,240   15,688   21,496  
Accrued income receivable 6,736   6,346   6,425  
Bank-owned life insurance 51,029   50,725   50,283  
Deferred income taxes 15,405   15,506   16,450  
Prepaid expenses and other assets 34,786   30,938   16,507  
     Total assets$  2,779,224  $  2,701,614  $  2,626,217  
             
Liabilities and Stockholders' Equity      
Deposits        
 Interest-bearing$  1,635,876  $  1,701,476  $  1,500,948  
 Noninterest-bearing 415,562   396,356   377,092  
        2,051,438   2,097,832   1,878,040  
Federal Home Loan Bank of Boston advances 340,600   259,600   400,700  
Repurchase agreement borrowings 10,500   10,500   10,500  
Repurchase liabilities 63,027   31,118   56,041  
Accrued expenses and other liabilities 61,417   54,551   41,854  
     Total liabilities 2,526,982   2,453,601   2,387,135  
             
Stockholders' Equity      
 Common stock 181   181   181  
 Additional paid-in-capital 183,504   182,747   180,764  
 Unallocated common stock held by ESOP (11,100)  (11,363)  (12,160) 
 Treasury stock, at cost (31,868)  (32,355)  (30,389) 
 Retained earnings 117,980   115,444   108,014  
 Accumulated other comprehensive loss (6,455)  (6,641)  (7,328) 
     Total stockholders' equity 252,242   248,013   239,082  
     Total liabilities and stockholders' equity$  2,779,224  $  2,701,614  $  2,626,217  
             
(1) Loans include net deferred fees and unamortized premiums of $3.8 million, $4.1 million and $4.2 million at June 30, 2016, March 31, 2016 and June 30, 2015, respectively.  
             

 

  
First Connecticut Bancorp, Inc. 
Consolidated Statements of Income (Unaudited) 
  
       Three Months Ended Six Months Ended 
       June 30, March 31, June 30, June 30,  
(Dollars in thousands, except per share data) 2016   2016   2015   2016   2015  
Interest income          
Interest and fees on loans          
   Mortgage $  16,120  $  15,907  $  15,331  $  32,027  $  30,389  
 Other   4,858   4,714   4,264   9,572   8,259  
Interest and dividends on investments          
 United States Government and agency obligations   448   418   385   866   708  
 Other bonds 14   13   35   27   53  
 Corporate stocks 232   239   145   471   276  
Other interest income 26   32   4   58   11  
     Total interest income 21,698   21,323   20,164   43,021   39,696  
Interest expense          
Deposits   2,735   2,736   2,140   5,471   4,349  
Interest on borrowed funds 980   967   804   1,947   1,555  
Interest on repo borrowings 96   95   92   191   255  
Interest on repurchase liabilities 15   19   29   34   63  
     Total interest expense 3,826   3,817   3,065   7,643   6,222  
     Net interest income 17,872   17,506   17,099   35,378   33,474  
Provision for loan losses 801   217   663   1,018   1,278  
     Net interest income          
      after provision for loan losses 17,071   17,289   16,436   34,360   32,196  
Noninterest income          
Fees for customer services 1,530   1,484   1,500   3,014   2,873  
Gain on sale of investments -   -   1,250   -   1,523  
Net gain on loans sold 751   490   412   1,241   932  
Brokerage and insurance fee income 54   54   60   108   109  
Bank owned life insurance income 307   414   324   721   597  
Other    (25)  458   528   433   704  
     Total noninterest income 2,617   2,900   4,074   5,517   6,738  
Noninterest expense          
Salaries and employee benefits 9,213   9,376   9,035   18,589   17,825  
Occupancy expense 1,189   1,219   1,272   2,408   2,639  
Furniture and equipment expense 1,018   1,061   1,077   2,079   2,113  
FDIC assessment 383   404   402   787   814  
Marketing  544   421   534   965   943  
Other operating expenses 2,297   2,796   3,277   5,093   6,200  
     Total noninterest expense 14,644   15,277   15,597   29,921   30,534  
     Income before income taxes 5,044   4,912   4,913   9,956   8,400  
Income tax expense 1,401   1,299   1,441   2,700   2,417  
     Net income$  3,643  $  3,613  $  3,472  $  7,256  $  5,983  
                 
Earnings per share:           
 Basic  $  0.24  $  0.24  $  0.23  $  0.49  $  0.40  
 Diluted     0.24     0.24     0.23     0.48     0.40  
Weighted average shares outstanding:          
 Basic     14,765,452     14,720,892     14,694,472    14,743,172   14,708,215  
 Diluted     15,077,291     15,012,540     14,839,454    15,043,555   14,844,994  
                 

 

  
First Connecticut Bancorp, Inc. 
Consolidated Average Balances, Yields and Rates (Unaudited) 
  
 For The Three Months Ended 
 June 30, 2016 March 31, 2016 June 30, 2015 
 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$  2,387,538 $  21,499  3.62% $  2,366,935 $  21,132  3.59% $  2,241,447 $  19,949  3.57% 
Securities    150,257    515  1.38%    154,534    483  1.26%    178,780    478  1.07% 
Federal Home Loan Bank of Boston stock   17,763    179  4.05%    19,804    187  3.80%    20,310    86  1.70% 
Federal funds and other earning assets    22,607    26  0.46%    27,148    32  0.47%    10,032    5  0.20% 
Total interest-earning assets    2,578,165    22,219  3.47%    2,568,421    21,834  3.42%    2,450,569    20,518  3.36% 
Noninterest-earning assets    127,656       127,192       121,820    
Total assets $  2,705,821    $  2,695,613    $  2,572,389    
             
Interest-bearing liabilities:            
NOW accounts$  470,835 $  336  0.29% $  522,876 $  380  0.29% $  454,532 $  310  0.27% 
Money market   486,826    930  0.77%    478,954    995  0.84%    435,749    798  0.73% 
Savings accounts    226,820    59  0.10%    216,102    58  0.11%    217,651    57  0.11% 
Certificates of deposit    473,976    1,410  1.20%    450,917    1,303  1.16%    392,941    975  1.00% 
Total interest-bearing deposits    1,658,457    2,735  0.66%    1,668,849    2,736  0.66%    1,500,873    2,140  0.57% 
Federal Home Loan Bank of Boston Advances   279,601    980  1.41%    272,610    967  1.43%    366,460    804  0.88% 
Repurchase agreement borrowings   10,500    96  3.68%    10,500    95  3.64%    10,500    92  3.51% 
Repurchase liabilities    41,757    15  0.14%    47,543    19  0.16%    52,043    29  0.22% 
Total interest-bearing liabilities    1,990,315    3,826  0.77%    1,999,502    3,817  0.77%    1,929,876    3,065  0.64% 
Noninterest-bearing deposits   404,809       390,926       348,857    
Other noninterest-bearing liabilities    58,085       56,765       52,831    
Total liabilities    2,453,209       2,447,193       2,331,564    
Stockholders' equity   252,612       248,420       240,825    
Total liabilities and stockholders' equity$  2,705,821    $  2,695,613    $  2,572,389    
             
Tax-equivalent net interest income $  18,393    $  18,017    $  17,453   
Less: tax-equivalent adjustment    (521)      (511)      (354)  
Net interest income $  17,872    $  17,506    $  17,099   
             
Net interest rate spread (2)    2.70%    2.65%    2.72% 
Net interest-earning assets (3) $  587,850    $  568,919    $  520,693    
Net interest margin (4)    2.87%    2.82%    2.86% 
Average interest-earning assets to average interest-bearing liabilities     129.54%        128.45%        126.98%    
             
(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 on a tax-equivalent basis.   
(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 Six Months Ended June 30, 
  2016   2015  
 Average
Balance
Interest and
Dividends (1)
Yield/
Cost
 Average
Balance
Interest and
Dividends (1)
Yield/
Cost
 
(Dollars in thousands)        
Interest-earning assets:        
Loans$  2,377,236 $  42,631  3.61% $  2,204,867 $  39,322  3.60% 
Securities    152,395    998  1.32%    187,385    872  0.94% 
Federal Home Loan Bank of Boston stock   18,783    366  3.92%    20,049    165  1.66% 
Federal funds and other earning assets    24,753    58  0.47%    11,206    11  0.20% 
Total interest-earning assets    2,573,167    44,053  3.44%    2,423,507    40,370  3.36% 
Noninterest-earning assets    127,550       117,203    
Total assets $  2,700,717    $  2,540,710    
         
Interest-bearing liabilities:        
NOW accounts$  496,856 $  716  0.29% $  452,227 $  631  0.28% 
Money market   482,890    1,925  0.80%    458,094    1,768  0.78% 
Savings accounts    221,461    117  0.11%    213,163    114  0.11% 
Certificates of deposit    462,446    2,713  1.18%    380,291    1,836  0.97% 
Total interest-bearing deposits    1,663,653    5,471  0.66%    1,503,775    4,349  0.58% 
Federal Home Loan Bank of Boston Advances   276,156    1,947  1.42%    335,607    1,555  0.93% 
Repurchase agreement borrowings   10,500    191  3.66%    14,793    255  3.48% 
Repurchase liabilities    44,650    34  0.15%    55,257    63  0.23% 
Total interest-bearing liabilities    1,994,959    7,643  0.77%    1,909,432    6,222  0.66% 
Noninterest-bearing deposits   397,868       339,911    
Other noninterest-bearing liabilities    57,374       52,464    
Total liabilities    2,450,201       2,301,807    
Stockholders' equity   250,516       238,903    
Total liabilities and stockholders' equity$  2,700,717    $  2,540,710    
         
Tax-equivalent net interest income $  36,410    $  34,148   
Less: tax-equivalent adjustment    (1,032)      (674)  
Net interest income $  35,378    $  33,474   
         
Net interest rate spread (2)    2.67%    2.70% 
Net interest-earning assets (3) $  578,208    $  514,075    
Net interest margin (4)    2.85%    2.84% 
Average interest-earning assets to average interest-bearing liabilities        128.98%        126.92%    
             
(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 on a tax-equivalent basis. 
(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 June 30, 2016, March 31, 2016, December 31, 2015, September 30, 2015 and June 30, 2015.  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 
  June 30, March 31, December 31, September 30, June 30, 
(Dollars in thousands, except per share data) 2016   2016   2015   2015   2015  
Net Income$  3,643  $  3,613  $  2,381  $  4,215  $  3,472  
 Adjustments:          
 Plus: Accelerated vesting of stock compensation -   -   -   -   258  
 Plus: Mortgage servicing rights impairment 374   -   -   -   -  
 Less: Prepayment penalty fees (370)  (10)  (43)  -   (35) 
 Less: Off-balance sheet commitments change in accounting estimate (423)  -   -   -   -  
 Less: Gain on sale of foreclosed real estate -   -   -   (557)  -  
 Less: Bank-owned life insurance proceeds -   (77)  (379)  -   -  
 Less: Net gain on sales of investments -   -   -   -   (1,250) 
Total core adjustments before taxes (419)  (87)  (422)  (557)  (1,027) 
 Tax benefit on core adjustments 147   4   15   195   359  
 Deferred tax asset valuation allowance (1) -   -   768   -   -  
Total core adjustments after taxes (272)  (83)  361   (362)  (668) 
Total core net income$  3,371  $  3,530  $  2,742  $  3,853  $  2,804  
            
            
Total net interest income$  17,872  $  17,506  $  17,363  $  17,672  $  17,099  
 Less: Prepayment penalty fees (370)  (10)  (43)  -   (35) 
Total core net interest income$  17,502  $  17,496  $  17,320  $  17,672  $  17,064  
            
Total noninterest income$  2,617  $  2,900  $  3,468  $  3,241  $  4,074  
   Plus: Mortgage servicing rights impairment 374   -   -   -   -  
 Less: Bank-owned life insurance proceeds -   (77)  (379)  -   -  
 Less: Net gain on sales of investments -   -   -   -   (1,250) 
Total core noninterest income$  2,991  $  2,823  $  3,089  $  3,241  $  2,824  
            
Total noninterest expense$  14,644  $  15,277  $  15,958  $  14,718  $  15,597  
 Plus: Off-balance sheet commitments change in accounting estimate 423   -   -   -   -  
 Less: Accelerated vesting of stock compensation -   -   -   -   (258) 
 Less: Gain on sale of foreclosed real estate -   -   -   557   -  
Total core noninterest expense$  15,067  $  15,277  $  15,958  $  15,275  $  15,339  
            
Core earnings per common share, diluted$  0.22  $  0.23  $  0.18  $  0.25  $  0.19  
            
Core net interest rate margin (2)  2.81%  2.82%  2.76%  2.79%  2.86% 
Core return on average assets (annualized) 0.50%  0.52%  0.41%  0.57%  0.44% 
Core return on average equity (annualized) 5.34%  5.68%  4.45%  6.33%  4.66% 
Core non-interest expense to average assets (annualized) 2.23%  2.27%  2.37%  2.26%  2.39% 
Efficiency ratio (3)  73.52%  75.19%  78.19%  73.04%  77.13% 
            
Tangible book value (4) $  15.95  $  15.72  $  15.47  $  15.30  $  15.01  
            
            
(1) Represents a valuation allowance related to a deferred tax asset associated with the establishment of the Bank's foundation in 2011.  
            
(2) Represents tax-equivalent core net interest income as a percent of average interest-earning assets.  
            
(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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