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First Connecticut Bancorp, Inc. reports third quarter 2017 earnings of $0.35 diluted earnings per share

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FARMINGTON, Conn., Oct. 18, 2017 (GLOBE NEWSWIRE) -- First Connecticut Bancorp, Inc. (NASDAQ:FBNK), the holding company for Farmington Bank, reported a 48% increase in net income to $5.6 million, or $0.35 diluted earnings per share for the quarter ended September 30, 2017 compared to net income of $3.8 million, or $0.25 diluted earnings per share for the quarter ended September 30, 2016. 

"I am pleased that we continue to report strong earnings driven by organic loan and deposit growth coupled with expense management and pristine asset quality. The results are reflective of our disciplined strategic approach to growing market share and building franchise value," stated John J. Patrick Jr., First Connecticut Bancorp's Chairman, President and CEO.

Financial Highlights

  • Net interest income increased $1.0 million to $20.8 million in the third quarter of 2017 compared to the linked quarter and increased $3.1 million compared to the third quarter of 2016.
  • Net interest margin was 2.95% in the third quarter of 2017 compared to 2.92% in the linked quarter and 2.74% in the prior year quarter. Net interest margin, excluding $165,000 prepayment penalty fees, was 2.93% in the third quarter of 2017.
  • Efficiency ratio was 66.38% in the third quarter of 2017 compared to 66.31% in the linked quarter and 72.53% in the prior year quarter.
  • Noninterest expense to average assets was 2.11% in the third quarter of 2017 compared to 2.12% in the linked quarter and 2.22% in the prior year quarter.
  • Organic loan growth remained strong during the third quarter of 2017 as loans increased $32.0 million to $2.7 billion at September 30, 2017 primarily due to a $21.0 million increase in commercial real estate loans and a $6.9 million increase in residential real estate loans.  Loans increased $222.2 million or 9% from a year ago. 
  • Overall deposits increased $137.5 million to $2.4 billion in the third quarter of 2017 compared to the linked quarter and increased $134.7 million or 6% from a year ago.
  • Loans to deposits ratio was 113% for the quarter ended September 30, 2017 compared to 119% in the linked quarter and 110% in the third quarter of 2016.
  • Tangible book value per share increased to $17.12 for the quarter ended September 30, 2017 compared to $16.86 on a linked quarter basis and $16.17 at September 30, 2016.
  • Checking accounts grew by 2% or 1,235 net new accounts in the third quarter of 2017 and 6% or 3,538 net new accounts from a year ago.
  • Asset quality remained strong as loan delinquencies 30 days and greater represented 0.66% of total loans at September 30, 2017 compared to 0.60% of total loans at June 30, 2017 and 0.74% at September 30, 2016.  Non-accrual loans represented 0.57% of total loans at September 30, 2017 compared to 0.60% of total loans at June 30, 2017 and 0.72% of total loans at September 30, 2016. 
  • The allowance for loan losses represented 0.82% of total loans at September 30, 2017 compared to 0.83% of total loans at June 30, 2017 and 0.86% at September 30, 2016. 
  • The Company paid a quarterly cash dividend of $0.14 per share during the third quarter, an increase of $0.02 compared to the linked quarter and an increase of $0.06 from a year ago.

Third quarter 2017 compared with second quarter 2017

Net interest income

  • Net interest income increased $1.0 million to $20.8 million in the third quarter of 2017 compared to the linked quarter primarily due to a $68.5 million increase in the average loans balance and an 8 basis point increase in the loans yield to 3.73% offset by a $463,000 increase in interest expense.
  • Net interest margin was 2.95% in the third quarter of 2017 compared to 2.92% in the linked quarter. Net interest margin, excluding $165,000 prepayment penalty fees, was 2.93% in the third quarter.
  • The cost of interest-bearing liabilities increased 5 basis points to 84 basis points in the third quarter of 2017 compared to 79 basis points in the linked quarter.

Provision for loan losses

  • Provision for loan losses was $217,000 for the third quarter of 2017 compared to $710,000 for the linked quarter.
  • Net charge-offs in the quarter were $52,000 or 0.01% to average loans (annualized) compared to $22,000 or 0.00% to average loans (annualized) in the linked quarter.
  • The allowance for loan losses represented 0.82% of total loans at September 30, 2017 and 0.83% of total loans at June 30, 2017. 

Noninterest income

  • Total noninterest income decreased $576,000 to $3.3 million in the third quarter of 2017 compared to the linked quarter primarily due to a $241,000 decrease in bank-owned life insurance income and a $585,000 decrease in other noninterest income offset by a $161,000 increase in net gain on loans sold.
  • Net gain on loans sold increased to $872,000 from $711,000 primarily due to an increase in volume.
  • Bank-owned life insurance income decreased $241,000 primarily due to receiving $271,000 in death benefit proceeds in the linked quarter.
  • Other noninterest income decreased primarily due to swap fees totaling $251,000 compared to $562,000 in the linked quarter and a decrease in SBIC fund income of $229,000.

Noninterest expense

  • Noninterest expense increased $41,000 in the third quarter of 2017 to $15.9 million compared to the linked quarter primarily due to a $125,000 increase in occupancy expenses and a $197,000 increase in other operating expenses offset by a $368,000 decrease in salaries and employee benefits.
  • Salaries and employee benefits decreased $368,000 to $9.7 million in the third quarter primarily due to $343,000 in severance expense in the linked quarter. 

Income tax expense

  • Income tax expense was $2.4 million in the third quarter of 2017 and $2.1 million in the second quarter of 2017.

Third quarter 2017 compared with third quarter 2016

Net interest income

  • Net interest income increased $3.1 million to $20.8 million in the third quarter of 2017 compared to the prior year quarter due primarily to a $267.9 million increase in the average loans balance and a 19 basis point increase in the loans yield to 3.73% offset by a $706,000 increase in interest expense.  
  • Net interest margin was 2.95% in the third quarter of 2017 compared to 2.74% in the prior year quarter.  Net interest margin, excluding $165,000 prepayment penalty fees, was 2.93% in the third quarter of 2017.
  • The cost of interest-bearing liabilities increased 5 basis points to 84 basis points in the third quarter of 2017 compared to 79 basis points in the prior year quarter.

Provision for loan losses

  • Provision for loan losses was $217,000 for the third quarter of 2017 compared to $698,000 for the prior year quarter.
  • Net charge-offs in the quarter were $52,000 or 0.01% to average loans (annualized) compared to $155,000 or 0.03% to average loans (annualized) in the prior year quarter.
  • The allowance for loan losses represented 0.82% of total loans at September 30, 2017 and 0.86% of total loans at September 30, 2016. 

Noninterest income

  • Total noninterest income decreased $385,000 to $3.3 million in the third quarter of 2017 compared to the prior year quarter primarily due a $398,000 decrease in other noninterest income.
  • Other noninterest income decreased primarily due to a decrease in swap fees totaling $251,000 compared to $692,000 the prior year quarter and a $184,000 decrease in banking derivatives offset by a $172,000 impairment on a SBIC fund in the prior year quarter.

Noninterest expense

  • Noninterest expense increased $435,000 in the third quarter of 2017 to $15.9 million compared to the prior year quarter primarily due to a $383,000 increase in salaries and employee benefits expense.

Income tax expense

  • Income tax expense was $2.4 million in the third quarter of 2017 and $1.5 million in the prior year quarter.  Increase in income tax expense was primarily due to a $2.8 million increase in income over the prior year.

September 30, 2017 compared to September 30, 2016

Financial Condition

  • Total assets increased $169.7 million or 6% at September 30, 2017 to $3.0 billion compared to $2.8 billion at September 30, 2016, reflecting a $221.3 million increase in net loans offset by a $45.5 million decrease in cash and cash equivalents.
  • Our investment portfolio totaled $144.1 million at September 30, 2017 compared to $141.4 million at September 30, 2016, an increase of $2.7 million.
  • Net loans increased $221.3 million or 9% at September 30, 2017 to $2.7 billion compared to $2.5 billion at September 30, 2016 due to our continued focus on commercial and residential lending.
  • Deposits increased $134.7 million or 6% to $2.4 billion at September 30, 2017 compared to $2.2 billion at September 30, 2016 primarily due to an increase in retail deposits as we continue to develop and grow relationships in the geographical areas we serve.  We had municipal deposit balances totaling $451.8 million and $459.3 million at September 30, 2017 and 2016, respectively. 
  • Federal Home Loan Bank of Boston advances increased $50.9 million to $271.5 million at September 30, 2017 compared to $220.6 million at September 30, 2016. 

Asset Quality

  • At September 30, 2017 the allowance for loan losses represented 0.82% of total loans and 145.06% of non-accrual loans, compared to 0.83% of total loans and 137.54% of non-accrual loans at June 30, 2017 and 0.86% of total loans and 119.26% of non-accrual loans at September 30, 2016.
  • Loan delinquencies 30 days and greater represented 0.66% of total loans at September 30, 2017 compared to 0.60% of total loans at June 30, 2017 and 0.74% of total loans at September 30, 2016.
  • Non-accrual loans represented 0.57% of total loans at September 30, 2017 compared to 0.60% of total loans at June 30, 2017 and 0.72% of total loans at September 30, 2016.
  • Net charge-offs in the quarter were $52,000 or 0.01% to average loans (annualized) compared to $22,000 or 0.00% to average loans (annualized) in the linked quarter and $155,000 or 0.03% 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 12.50% at September 30, 2017. 
  • Tangible book value per share is $17.12 compared to $16.86 on a linked quarter basis and $16.17 at September 30, 2016.
  • The Company had 600,945 shares remaining to repurchase at September 30, 2017 from prior regulatory approval. Repurchased shares are held as treasury stock and will be available for general corporate purposes. 
  • At September 30, 2017, 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, October 19, 2017 at 10:30am Eastern Time to discuss third 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  
  September 30,   June 30,   March 31,   December  31,   September 30,  
(Dollars in thousands, except per share data)   2017       2017       2017       2016       2016    
Selected Financial Condition Data:                    
                     
Total assets $   3,001,679     $   2,992,126     $   2,904,264     $   2,837,555     $   2,831,960    
Cash and cash equivalents      44,475         46,551         36,427         47,723         89,940    
Securities held-to-maturity, at amortized cost     56,848         50,655         50,320         33,061         7,338    
Securities available-for-sale, at fair value     87,299         112,443         105,541         103,520         134,094    
Federal Home Loan Bank of Boston stock, at cost     15,954         19,583         16,418         16,378         15,139    
Loans, net     2,676,411         2,644,618         2,585,521         2,525,983         2,455,101    
Deposits     2,382,551         2,245,004         2,287,852         2,215,090         2,247,873    
Federal Home Loan Bank of Boston advances     271,458         389,458         282,057         287,057         220,600    
Total stockholders' equity     273,193         268,836         264,667         260,176         255,615    
Allowance for loan losses     22,202         22,037         21,349         21,529         21,263    
Non-accrual loans     15,305         16,022         15,976         17,561         17,829    
Impaired loans     29,924         30,007         32,407         34,273         37,599    
Loan delinquencies 30 days and greater     17,808         16,059         17,346         17,271         18,238    
                     
Selected Operating Data:                    
                     
Interest income $   25,604     $   24,116     $   23,212     $   22,160     $   21,805    
Interest expense     4,756         4,293         3,962         4,038         4,050    
  Net interest income     20,848         19,823         19,250         18,122         17,755    
  Provision for loan losses     217         710         325         616         698    
Net interest income after provision for loan losses     20,631         19,113         18,925         17,506         17,057    
Noninterest income     3,300         3,876         3,165         3,536         3,685    
Noninterest expense     15,919         15,878         15,152         15,099         15,484    
Income before income taxes     8,012         7,111         6,938         5,943         5,258    
Income tax expense     2,415         2,109         1,845         1,757         1,485    
                     
Net income $   5,597     $   5,002     $   5,093     $   4,186     $   3,773    
                     
Performance Ratios (annualized):                    
                     
Return on average assets   0.74 %     0.68 %     0.71 %     0.59 %     0.54 %  
Return on average equity   8.17 %     7.43 %     7.67 %     6.43 %     5.89 %  
Net interest rate spread (1)    2.77 %     2.74 %     2.76 %     2.57 %     2.56 %  
Net interest rate margin (2)    2.95 %     2.92 %     2.94 %     2.75 %     2.74 %  
Non-interest expense to average assets (3)    2.11 %     2.12 %     2.12 %     2.13 %     2.22 %  
Efficiency ratio (4)   66.38 %     66.31 %     67.85 %     70.64 %     72.53 %  
Average interest-earning assets to average                    
  interest-bearing liabilities   128.50 %     128.46 %     129.85 %     130.20 %     129.42 %  
Loans to deposits   113 %     119 %     114 %     115 %     110 %  
                     
Asset Quality Ratios:                    
                     
Allowance for loan losses as a percent of total loans   0.82 %     0.83 %     0.82 %     0.85 %     0.86 %  
Allowance for loan losses as a percent of                    
  non-accrual loans   145.06 %     137.54 %     133.63 %     122.60 %     119.26 %  
Net charge-offs (recoveries) to average loans (annualized)   0.01 %     0.00 %     0.08 %     0.06 %     0.03 %  
Non-accrual loans as a percent of total loans   0.57 %     0.60 %     0.61 %     0.69 %     0.72 %  
Non-accrual loans as a percent of total assets   0.51 %     0.54 %     0.55 %     0.62 %     0.63 %  
Loan delinquencies 30 days and greater as a                    
  percent of total loans   0.66 %     0.60 %     0.67 %     0.68 %     0.74 %  
                     
Per Share Related Data:                    
                     
Basic earnings per share $   0.37     $   0.33     $   0.34     $   0.28     $   0.25    
Diluted earnings per share $   0.35     $   0.32     $   0.32     $   0.27     $   0.25    
Dividends declared per share $   0.14     $   0.12     $   0.11     $   0.09     $   0.08    
Tangible book value (5) $   17.12     $   16.86     $   16.62     $   16.37     $   16.17    
Common stock shares outstanding     15,952,946         15,942,614         15,923,514         15,897,698         15,805,748    
Weighted-average basic shares outstanding     15,143,379         15,107,190         15,068,036         14,973,610         14,823,914    
Weighted-average diluted shares outstanding     15,820,659         15,791,112         15,691,338         15,502,481         15,192,006    


(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  
  September 30,   June 30,   March 31,   December 31,   September 30,  
(Dollars in thousands)   2017       2017       2017       2016       2016    
Capital Ratios:                    
                     
Equity to total assets at end of period   9.10 %     8.98 %     9.11 %     9.17 %     9.03 %  
Average equity to average assets   9.10 %     9.18 %     9.28 %     9.18 %     9.20 %  
Total Capital (to Risk Weighted Assets)   12.50 % *   12.45 %     12.67 %     12.80 %     12.57 %  
Tier I Capital (to Risk Weighted Assets)   11.57 % *   11.53 %     11.74 %     11.84 %     11.62 %  
Common Equity Tier I Capital    11.57 % *   11.53 %     11.74 %     11.84 %     11.62 %  
Tier I Leverage Capital (to Average Assets)   9.25 % *   9.36 %     9.45 %     9.39 %     9.40 %  
Total equity to total average assets   9.07 %     9.17 %     9.25 %     9.18 %     9.17 %  
                     
* Estimated                    
                     
Loans and Allowance for Loan Losses:                    
                     
Real estate                    
  Residential $   969,679     $   962,732     $   954,764     $   907,946     $   864,054    
  Commercial     1,028,930         1,020,560         992,861         979,370         931,703    
  Construction     86,713         74,063         60,694         49,679         50,083    
Commercial     436,172         431,243         420,747         430,539         449,008    
Home equity line of credit     166,791         168,278         168,157         170,786         172,148    
Other     5,733         5,410         5,375         5,348         5,426    
  Total loans   2,694,018       2,662,286       2,602,598       2,543,668       2,472,422    
 Net deferred loan costs    4,595         4,369         4,272         3,844         3,942    
  Loans   2,698,613         2,666,655         2,606,870         2,547,512         2,476,364    
 Allowance for loan losses    (22,202 )       (22,037 )       (21,349 )       (21,529 )       (21,263 )  
  Loans, net $   2,676,411     $   2,644,618     $   2,585,521     $   2,525,983     $   2,455,101    
                     
Deposits:                    
                     
Noninterest-bearing demand deposits $   437,372     $   445,049     $   437,385     $   441,283     $   419,664    
Interest-bearing                    
  NOW accounts   652,631       547,868         622,844         542,764         590,213    
  Money market   549,674       522,070         521,759         532,681         536,979    
  Savings accounts   233,330       241,898         239,743         233,792         223,848    
  Time deposits   509,544       488,119         466,121         464,570         477,169    
Total interest-bearing deposits     1,945,179         1,799,955         1,850,467         1,773,807         1,828,209    
  Total deposits $   2,382,551     $   2,245,004     $   2,287,852     $   2,215,090     $   2,247,873    
                     


First Connecticut Bancorp, Inc.
Consolidated Statements of Condition (Unaudited)

                       
              September 30,   June 30,   September 30,
                2017       2017       2016  
(Dollars in thousands)          
Assets                
Cash and due from banks $   35,452     $   37,308     $   33,206  
Interest bearing deposits with other institutions   9,023       9,243         56,734  
    Total cash and cash equivalents   44,475       46,551       89,940  
Securities held-to-maturity, at amortized cost   56,848       50,655       7,338  
Securities available-for-sale, at fair value   87,299       112,443       134,094  
Loans held for sale   6,902       2,537       5,462  
Loans (1)       2,698,613       2,666,655       2,476,364  
  Allowance for loan losses   (22,202 )     (22,037 )     (21,263 )
    Loans, net   2,676,411       2,644,618       2,455,101  
Premises and equipment, net   17,005       17,609       18,383  
Federal Home Loan Bank of Boston stock, at cost   15,954       19,583       15,139  
Accrued income receivable   8,039       7,939       6,413  
Bank-owned life insurance   57,156       56,802       51,364  
Deferred income taxes   13,965       13,970       15,136  
Prepaid expenses and other assets   17,625       19,419       33,590  
          Total assets $   3,001,679     $   2,992,126     $   2,831,960  
                       
Liabilities and Stockholders' Equity          
Deposits              
  Interest-bearing $   1,945,179     $   1,799,955     $   1,828,209  
  Noninterest-bearing   437,372       445,049       419,664  
                2,382,551       2,245,004       2,247,873  
Federal Home Loan Bank of Boston advances   271,458       389,458       220,600  
Repurchase agreement borrowings   10,500       10,500       10,500  
Repurchase liabilities   21,538       36,101       35,036  
Accrued expenses and other liabilities   42,439       42,227       62,336  
          Total liabilities   2,728,486       2,723,290       2,576,345  
                       
Stockholders' Equity          
  Common stock   181       181       181  
  Additional paid-in-capital   185,319       184,871       183,769  
  Unallocated common stock held by ESOP   (9,796 )     (10,053 )     (10,833 )
  Treasury stock, at cost   (29,620 )     (29,770 )     (31,645 )
  Retained earnings   133,337       129,972       120,487  
  Accumulated other comprehensive loss   (6,228 )     (6,365 )     (6,344 )
          Total stockholders' equity   273,193       268,836       255,615  
          Total liabilities and stockholders' equity $   3,001,679     $   2,992,126     $   2,831,960  
                       
(1) Loans include net deferred fees and unamortized premiums of $4.6 million, $4.4 million and $3.9 million at September 30, 2017, 
    June 30, 2017 and September 30, 2016, respectively.          
                       


First Connecticut Bancorp, Inc.
Consolidated Statements of Income (Unaudited)

                                 
              Three Months Ended   Nine Months Ended  
              September 30,   June 30,   September 30,   September 30,  
(Dollars in thousands, except per share data)   2017     2017     2016     2017     2016  
Interest income                    
Interest and fees on loans                    
  Mortgage   $   19,165   $   18,056   $   16,134   $   54,779   $   48,161  
  Other       5,535     5,209     4,983     15,691     14,555  
Interest and dividends on investments                    
  United States Government and agency obligations   602     598     419     1,674       1,285  
  Other bonds   6     7     13     20       40  
  Corporate stocks   242     216     210     657       681  
Other interest income   54     30     46     111       104  
          Total interest income   25,604     24,116     21,805     72,932     64,826  
Interest expense                    
Deposits       3,423     3,026     2,975     9,360       8,446  
Interest on borrowed funds   1,230     1,164     955     3,343       2,902  
Interest on repo borrowings   95     96     98     286       289  
Interest on repurchase liabilities   8     7     22     22       56  
          Total interest expense   4,756     4,293     4,050     13,011     11,693  
          Net interest income   20,848     19,823     17,755     59,921     53,133  
Provision for loan losses   217     710     698     1,252     1,716  
          Net interest income                    
            after provision for loan losses   20,631     19,113     17,057     58,669     51,417  
Noninterest income                    
Fees for customer services   1,662     1,572     1,600     4,740       4,614  
Net gain on loans sold   872     711     939     1,999       2,180  
Brokerage and insurance fee income   54     55     58     159       166  
Bank owned life insurance income   357     598     335     1,274       1,056  
Other         355     940     753     2,169       1,186  
          Total noninterest income   3,300     3,876     3,685     10,341     9,202  
Noninterest expense                    
Salaries and employee benefits   9,668     10,036     9,285     29,031       27,874  
Occupancy expense   1,312     1,187     1,271     3,812       3,679  
Furniture and equipment expense   1,054     985     1,020     3,023       3,099  
FDIC assessment   419     410     392     1,257       1,179  
Marketing     717     708     682     1,992       1,647  
Other operating expenses   2,749     2,552     2,834     7,834       7,927  
          Total noninterest expense   15,919     15,878     15,484     46,949     45,405  
          Income before income taxes   8,012     7,111     5,258     22,061     15,214  
Income tax expense   2,415     2,109     1,485     6,369       4,185  
          Net income $   5,597   $   5,002   $   3,773   $   15,692   $   11,029  
                                 
Earnings per share:                     
  Basic     $   0.37   $   0.33   $   0.25   $   1.04   $   0.74  
  Diluted         0.35       0.32       0.25       0.99       0.73  
Weighted average shares outstanding:                    
  Basic         15,143,379       15,107,190     14,823,914      15,106,478      14,770,282  
  Diluted         15,820,659       15,791,112     15,192,006      15,768,177      15,093,109  
                                 


First Connecticut Bancorp, Inc.
Consolidated Average Balances, Yields and Rates (Unaudited)

                       
  For The Three Months Ended
  September 30, 2017   June 30, 2017   September 30, 2016
  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 $   2,697,978 $   25,342   3.73 %   $   2,629,493 $   23,900   3.65 %   $   2,430,114 $   21,650   3.54 %
Securities      159,450     660   1.64 %       157,230     659   1.68 %       165,738     481   1.15 %
Federal Home Loan Bank of Boston stock     18,284     190   4.12 %       18,056     162   3.60 %       18,206     161   3.52 %
Federal funds and other earning assets      10,089     54   2.12 %       7,715     30   1.56 %       36,439     46   0.50 %
Total interest-earning assets      2,885,801     26,246   3.61 %       2,812,494     24,751   3.53 %       2,650,497     22,338   3.35 %
Noninterest-earning assets      126,234           120,308           135,828    
Total assets  $   3,012,035       $   2,932,802       $   2,786,325    
                       
Interest-bearing liabilities:                      
NOW accounts $   644,947 $   832   0.51 %   $   595,350 $   574   0.39 %   $   506,509 $   385   0.30 %
Money market     519,265     982   0.75 %       525,266     979   0.75 %       525,301     1,085   0.82 %
Savings accounts      233,878     63   0.11 %       242,009     63   0.10 %       221,981     60   0.11 %
Certificates of deposit      489,203     1,546   1.25 %       471,905     1,410   1.20 %       481,901     1,445   1.19 %
Total interest-bearing deposits      1,887,293     3,423   0.72 %       1,834,530     3,026   0.66 %       1,735,692     2,975   0.68 %
Federal Home Loan Bank of Boston Advances     320,219     1,230   1.52 %       315,665     1,164   1.48 %       250,459     955   1.52 %
Repurchase agreement borrowings     10,500     95   3.59 %       10,500     96   3.67 %       10,500     98   3.71 %
Repurchase liabilities      27,695     8   0.11 %       28,728     7   0.10 %       51,297     22   0.17 %
Total interest-bearing liabilities      2,245,707     4,756   0.84 %       2,189,423     4,293   0.79 %       2,047,948     4,050   0.79 %
Noninterest-bearing deposits     446,428           431,336           417,917    
Other noninterest-bearing liabilities      45,905           42,857           64,201    
Total liabilities      2,738,040           2,663,616           2,530,066    
Stockholders' equity     273,995           269,186           256,259    
Total liabilities and stockholders' equity $   3,012,035       $   2,932,802       $   2,786,325    
                       
Tax-equivalent net interest income   $   21,490         $   20,458         $   18,288    
Less: tax-equivalent adjustment       (642 )           (635 )           (533 )  
Net interest income   $   20,848         $   19,823         $   17,755    
                       
Net interest rate spread (2)      2.77 %       2.74 %       2.56 %
Net interest-earning assets (3)  $   640,094       $   623,071       $   602,549    
Net interest margin (4)      2.95 %       2.92 %       2.74 %
Average interest-earning assets to average interest-bearing liabilities                       
  128.50 %     128.46 %     129.42 %
                       
(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 Nine Months Ended September 30,
    2017       2016  
  Average
Balance
Interest and
  Dividends (1) 
Yield/
Cost
  Average
Balance
Interest and
  Dividends (1) 
Yield/
Cost
(Dollars in thousands)              
Interest-earning assets:              
Loans $   2,635,035   $   72,343   3.67 %   $   2,394,991   $   64,282   3.59 %
Securities      153,263       1,848   1.61 %       156,876       1,479   1.26 %
Federal Home Loan Bank of Boston stock     17,510       503   3.84 %       18,590       527   3.79 %
Federal funds and other earning assets      8,066       111   1.84 %       28,677       104   0.48 %
Total interest-earning assets      2,813,874       74,805   3.55 %       2,599,134       66,392   3.41 %
Noninterest-earning assets      121,577           130,327    
Total assets  $   2,935,451       $   2,729,461    
               
Interest-bearing liabilities:              
NOW accounts $   614,464   $   1,934   0.42 %   $   500,097   $   1,101   0.29 %
Money market     524,610       2,931   0.75 %       497,130       3,010   0.80 %
Savings accounts      235,793       187   0.11 %       221,635       177   0.11 %
Certificates of deposit      476,069       4,308   1.21 %       468,979       4,158   1.18 %
Total interest-bearing deposits      1,850,936       9,360   0.68 %       1,687,841       8,446   0.67 %
Federal Home Loan Bank of Boston Advances     294,099       3,343   1.52 %       267,527       2,902   1.45 %
Repurchase agreement borrowings     10,500       286   3.64 %       10,500       289   3.66 %
Repurchase liabilities      27,146       22   0.11 %       46,882       56   0.16 %
Total interest-bearing liabilities      2,182,681       13,011   0.80 %       2,012,750       11,693   0.78 %
Noninterest-bearing deposits     436,990           404,599    
Other noninterest-bearing liabilities      46,200           59,668    
Total liabilities      2,665,871           2,477,017    
Stockholders' equity     269,580           252,444    
Total liabilities and stockholders' equity $   2,935,451       $   2,729,461    
               
Tax-equivalent net interest income     $   61,794           $   54,699    
Less: tax-equivalent adjustment         (1,873 )             (1,566 )  
Net interest income     $   59,921           $   53,133    
               
Net interest rate spread (2)      2.75 %       2.63 %
Net interest-earning assets (3)  $   631,193       $   586,384    
Net interest margin (4)      2.94 %       2.81 %
Average interest-earning assets to average interest-bearing liabilities               
    128.92 %       129.13 %
               
(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 September 30, 2017, June 30, 2017, March 31, 2017, December 31, 2016 and September 30, 2016.  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  
    September 30,   June 30,   March 31,   December 31,   September 30,  
(Dollars in thousands, except per share data)   2017       2017       2017       2016       2016    
Net Income $   5,597     $   5,002     $   5,093     $   4,186     $   3,773    
  Adjustments:                    
  Plus: Severance expense   -       343       -       -       -    
  Plus: Mortgage servicing rights (recovery) impairment   -       -       -       (283 )     (91 )  
  Less: Prepayment penalty fees   (165 )     -       (84 )     -       -    
  Less: Bank-owned life insurance proceeds   -       (271 )     -       -       -    
Total core adjustments before taxes   (165 )     72       (84 )     (283 )     (91 )  
  Tax (expense) benefit on core adjustments   58       (120 )     29       99       32    
  Deferred tax asset write-off (1)   -       -       -       137       -    
Total core adjustments after taxes   (107 )     (48 )     (55 )     (47 )     (59 )  
Total core net income $   5,490     $   4,954     $   5,038     $   4,139     $   3,714    
                       
                       
Total net interest income $   20,848     $   19,823     $   19,250     $   18,122     $   17,755    
  Less: Prepayment penalty fees   (165 )     -       (84 )     -       -    
Total core net interest income $   20,683     $   19,823     $   19,166     $   18,122     $   17,755    
                       
Total noninterest income $   3,300     $   3,876     $   3,165     $   3,536     $   3,685    
  Plus: Mortgage servicing rights (recovery) impairment   -       -       -       (283 )     (91 )  
  Less: Bank-owned life insurance proceeds   -       (271 )     -       -       -    
Total core noninterest income $   3,300     $   3,605     $   3,165     $   3,253     $   3,594    
                       
Total noninterest expense $   15,919     $   15,878     $   15,152     $   15,099     $   15,484    
  Less: Severance expense   -       (343 )     -       -       -    
Total core noninterest expense $   15,919     $   15,535     $   15,152     $   15,099     $   15,484    
                       
Core earnings per common share, diluted $   0.35     $   0.31     $   0.32     $   0.27     $   0.24    
                       
Core net interest rate margin (2)    2.93 %     2.92 %     2.92 %     2.75 %     2.74 %  
Core return on average assets (annualized)   0.73 %     0.68 %     0.70 %     0.58 %     0.53 %  
Core return on average equity (annualized)   8.01 %     7.36 %     7.59 %     6.36 %     5.80 %  
Core non-interest expense to average assets (annualized)   2.11 %     2.12 %     2.12 %     2.13 %     2.22 %  
Efficiency ratio (3)    66.38 %     66.31 %     67.85 %     70.64 %     72.53 %  
                       
Tangible book value (4)  $   17.12     $   16.86     $   16.62     $   16.37     $   16.17    


(1)  Represents a write-off of the remaining 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. 

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