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First Connecticut Bancorp, Inc. reports fourth quarter 2017 net income of $497,000 or $0.03 diluted earnings per share

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FARMINGTON, Conn., Jan. 24, 2018 (GLOBE NEWSWIRE) -- First Connecticut Bancorp, Inc. (NASDAQ:FBNK), the holding company for Farmington Bank, reported net income of $497,000 or $0.03 diluted earnings per share for the quarter ended December 31, 2017 compared to net income of $4.2 million or $0.27 diluted earnings per share for the quarter ended December 31, 2016.  Excluding non-recurring items, the Company reported a 32% increase in core net income to $5.5 million, or $0.34 diluted earnings per share for the quarter ended December 31, 2017 compared to core net income of $4.1 million, or $0.27 diluted earnings per share for the quarter ended December 31, 2016.

Net income for the full year was $16.2 million or $1.02 diluted earnings per share compared to $15.2 million or $1.00 diluted earnings per share in the prior year.  Excluding non-recurring items, core net income for the full year was $20.9 million, or $1.32 diluted earnings per share as compared to $14.8 million, or $0.97 diluted earnings per share in the prior year. Core net income excludes non-recurring items.

On December 22, 2017, the Tax Cuts and Jobs Act (the "Tax Act") was enacted, which lowered the Company's federal tax rate from 35% to 21% effective January 1, 2018.  As a result of the tax reduction, the Company recorded a reduction in the value of its net deferred tax asset resulting in a charge of $5.0 million to income tax expense for the fourth quarter of 2017.  However, the tax rate reduction will increase future earnings.  The Tax Act impact on earnings per share for the year 2018 is an estimated $0.24 - $0.25 increase.

"I am once again pleased to report strong core earnings for the fourth quarter of $0.34 per share and $1.32 per share for the year. Since going public in 2011, we have had six consecutive years of earnings per share growth.  An increase in core earnings combined with internal operational efficiencies continues to have a positive effect on return on assets, return on equity and our efficiency ratio," stated John J. Patrick Jr., First Connecticut Bancorp's Chairman, President and CEO.

"Additionally, we increased our dividend $0.06 or 67% during 2017 as we continue to reward shareholders with a combination of share price appreciation and increased dividend yield."

Financial Highlights

  • Organic loan growth remained strong during the fourth quarter of 2017 as loans increased $49.5 million to $2.7 billion at December 31, 2017 primarily due to a $34.8 million increase in commercial real estate loans and a $19.7 million increase in residential real estate loans.  Loans increased $200.6 million or 8% from a year ago.
  • Overall deposits increased $51.5 million to $2.4 billion in the fourth quarter of 2017 compared to the linked quarter and increased $219.0 million or 10% from a year ago.
  • Loans to deposits ratio was 113% for the quarter ended December 31, 2017 compared to 113% in the linked quarter and 115% in the fourth quarter of 2016.
  • Checking accounts grew by 2% or 864 net new accounts in the fourth quarter of 2017 and 8% or 4,136 net new accounts from a year ago.
  • Net interest income decreased $320,000 to $20.5 million in the fourth quarter of 2017 compared to the linked quarter and increased $2.4 million compared to the fourth quarter of 2016.  Core net interest income decreased $191,000 compared to the linked quarter.
  • Net interest margin was 2.91% in the fourth quarter of 2017 compared to 2.95% in the linked quarter and 2.75% in the prior year quarter. Net interest margin, excluding $165,000 prepayment penalty fees, was 2.93% in the linked quarter of 2017.
  • Efficiency ratio was 65.06% in the fourth quarter of 2017 compared to 66.38% in the linked quarter and 70.64% in the prior year quarter.
  • Noninterest expense to average assets was 2.05% in the fourth quarter of 2017 compared to 2.11% in the linked quarter and 2.13% in the prior year quarter.
  • Tangible book value per share was $17.08 for the quarter ended December 31, 2017 compared to $17.12 on a linked quarter basis and $16.37 at December 31, 2016.
  • Asset quality remained strong as loan delinquencies 30 days and greater represented 0.63% of total loans at December 31, 2017 compared to 0.66% of total loans at September 30, 2017 and 0.68% at December 31, 2016.  Non-accrual loans represented 0.58% of total loans at December 31, 2017 compared to 0.57% of total loans at September 30, 2017 and 0.69% of total loans at December 31, 2016. 
  • The allowance for loan losses represented 0.82% of total loans at December 31, 2017 compared to 0.82% of total loans at September 30, 2017 and 0.85% at December 31, 2016.  
  • The Company paid a quarterly cash dividend of $0.15 per share during the fourth quarter, an increase of $0.01 compared to the linked quarter and an increase of $0.06 from a year ago.

Fourth quarter 2017 compared with third quarter 2017

Net interest income

  • Net interest income decreased $320,000 to $20.5 million in the fourth quarter of 2017 compared to the linked quarter primarily due to a 5 basis point increase in interest-bearing liabilities yield to 0.89%.
  • Net interest margin was 2.91% in the third quarter of 2017 compared to 2.95% in the linked quarter. Net interest margin, excluding $165,000 prepayment penalty fees, was 2.93% in the linked quarter.
  • The cost of interest-bearing liabilities increased 5 basis points to 89 basis points in the fourth quarter of 2017 compared to 84 basis points in the linked quarter.

Provision for loan losses

  • Provision for loan losses was $299,000 for the fourth quarter of 2017 compared to $217,000 for the linked quarter. 
  • Net charge-offs in the quarter were $53,000 or 0.01% to average loans (annualized) compared to $52,000 or 0.01% to average loans (annualized) in the linked quarter.
  • The allowance for loan losses represented 0.82% of total loans at December 31, 2017 and September 30, 2017. 

Noninterest income

  • Total noninterest income decreased $142,000 to $3.2 million in the fourth quarter of 2017 compared to the linked quarter primarily due to a $274,000 decrease in net gain on loans sold offset by a $129,000 increase in other noninterest income.
  • Net gain on loans sold decreased to $598,000 from $872,000 primarily due to a decrease in volume of loans sold.
  • Other noninterest income increased $129,000 to $484,000 primarily due to a $95,000 increase in mortgage banking derivatives.  Other noninterest income includes swap fees totaling $242,000 in the fourth quarter of 2017 compared to $251,000 in the linked quarter.

Noninterest expense

  • Noninterest expense decreased $532,000 to $15.4 million in the fourth quarter of 2017 compared to the linked quarter primarily due to a $123,000 decrease in furniture and equipment expenses, a $139,000 decrease in marketing expenses and a $132,000 decrease in other operating expenses.

Income tax expense

Income tax expense was $7.5 million in the fourth quarter of 2017 and $2.4 million in the third quarter of 2017.  As a result of the Tax Act, the Company recorded a reduction in the value of its net deferred tax asset resulting in a charge of $5.0 million to income tax expense in the fourth quarter of 2017.

Fourth quarter 2017 compared with fourth quarter 2016

Net interest income

  • Net interest income increased $2.4 million or 13% to $20.5 million in the fourth quarter of 2017 compared to the prior year quarter due primarily to a $216.1 million increase in the average loans balance and a 17 basis point increase in the loans yield to 3.69% offset by a $985,000 increase in interest expense.  
  • Net interest margin was 2.91% in the fourth quarter of 2017 compared to 2.75% in the prior year quarter.
  • The cost of interest-bearing liabilities increased 12 basis points to 89 basis points in the fourth quarter of 2017 compared to 77 basis points in the prior year quarter.

Provision for loan losses

  • Provision for loan losses was $299,000 for the fourth quarter of 2017 compared to $616,000 for the prior year quarter.
  • Net charge-offs in the quarter were $53,000 or 0.01% to average loans (annualized) compared to $350,000 or 0.06% to average loans (annualized) in the prior year quarter.
  • The allowance for loan losses represented 0.82% of total loans at December 31, 2017 and 0.85% of total loans at December 31, 2016.

Noninterest income

  • Total noninterest income decreased $378,000 to $3.2 million in the fourth quarter of 2017 compared to the prior year quarter primarily due to a $327,000 decrease in net gain on loans sold and a $182,000 decrease in other noninterest income offset by a $126,000 increase in fees for customer services.

  • Net gain on loans sold decreased to $598,000 from $925,000 primarily due to a decrease in volume of loans sold.

  • Other noninterest income decreased primarily due to a $283,000 recovery in fair value in mortgage servicing rights in the prior year quarter offset by a $99,000 impairment on a SBIC fund in the prior year quarter.

Noninterest expense

  • Noninterest expense increased $288,000 to $15.4 million in the fourth quarter of 2017 compared to the prior year quarter primarily due to a $455,000 increase in salaries and employee benefits expense offset by a $232,000 decrease in other operating expenses.
  • Salaries and employee benefits increased $455,000 to $9.6 million primarily due to general salary increases which became effective in mid-March.
  • Other operating expenses decreased $232,000 to $2.6 million primarily due to a $134,000 reduction in 3rd party services.

Income tax expense

Income tax expense was $7.5 million in the fourth quarter of 2017 compared to $1.8 million in the prior year quarter. As a result of the Tax Act, the Company recorded a reduction in the value of its net deferred tax asset resulting in a charge of $5.0 million to income tax expense in the fourth quarter of 2017.  Income tax expense in the fourth quarter of 2016 included a $137,000 write-off of a deferred tax asset associated with the establishment of the Bank's foundation in 2011.

For the year ended December 31, 2017 compared with the year ended December 31, 2016

Net interest income

  • Net interest income increased $9.2 million or 13% to $80.4 million for the year ended 2017 compared to $71.3 million for the year ended 2016 primarily due to a $234.1 million increase in the average loans balance and an 11 basis point increase in the loans yield to 3.68% offset by a $2.3 million increase in interest expense. 
  • Net interest margin was 2.93% for the year ended 2017 compared to 2.80% for the year ended 2016.
  • The total interest-earning assets yield increased 18 basis points to 3.57% for the year ended 2017 compared to 3.39% for the year ended 2016 primarily due to an increase in yield on our loan and securities portfolios.
  • The cost of interest-bearing liabilities increased 4 basis points to 82 basis points for the year ended 2017 compared to 78 basis points for the year ended 2016.

Provision for loan losses

  • Provision for loan losses was $1.6 million for the year ended 2017 compared to $2.3 million for the year ended 2016. 
  • Net charge-offs for the year ended 2017 were $632,000 or 0.02% to average loans compared to $1.0 million or 0.04% to average loans for the year ended 2016.
  • The allowance for loan losses represented 0.82% of total loans at December 31, 2017 compared to 0.85% at December 31, 2016. 

Noninterest income

  • Total noninterest income increased $761,000 to $13.5 million for the year ended 2017 compared to $12.7 million for the year ended 2016.
  • Fees for customer services increased $252,000 to $6.4 million for the year ended 2017 compared to the year ended 2016 driven by our growth in checking accounts and debit card fees.
  • Net gain on loans sold decreased $508,000 to $2.6 million for the year ended 2017 compared to the year ended 2016 as a result of a decrease in volume of loans sold.
  • Bank owned life insurance income increased $211,000 to $1.6 million for the year ended 2017 compared to the year ended 2016 primarily due to $194,000 more in bank owned life insurance proceeds in 2017 than in the prior year.
  • Other noninterest income increased $801,000 to $2.7 million for the year ended 2017 compared to the year ended 2016 primarily due to a $206,000 increase in swap fee income, a $161,000 increase in loan servicing fees for others and $319,000 SBIC fund impairment in the prior year offset by a $159,000 decrease in mortgage banking derivatives.
  • Other noninterest income includes swap fees totaling $1.8 million compared to $1.6 million in the prior year.

Noninterest expense

  • Noninterest expense increased $1.8 million to $62.3 million for the year ended 2017 compared to $60.5 million for the year ended 2016.
  • Salaries and employee benefits increased $1.6 million to $38.6 million for the year ended 2017 compared to the year ended 2016.  The increase is primarily due to general salary increases which became effective in mid-March and $343,000 in severance expense.
  • Marketing increased $400,000 primarily due to efforts to increase the Bank's sales support in central Connecticut and western Massachusetts.
  • Other operating expenses decreased $325,000 to $10.5 million for the year ended 2017 compared to the prior year primarily due to a $296,000 decrease in directors' share-based compensation expense as a result of the majority of the 2012 Stock Incentive Plan fully vesting in September 2016.

Income tax expense

  • Income tax expense was $13.9 million for the year ended 2017 compared to $5.9 million for the year ended 2016.  As a result of the Tax Act, the Company recorded a reduction in the value of its net deferred tax asset resulting in a charge of $5.0 million to income tax expense in the fourth quarter of 2017. Income tax expense in 2016 included a $137,000 write-off of a deferred tax asset associated with the establishment of the Bank's foundation in 2011. 

December 31, 2017 compared to December 31, 2016

Financial Condition

  • Total assets increased $212.7 million or 8% at December 31, 2017 to $3.0 billion compared to $2.8 billion at December 31, 2016, reflecting a $199.7 million increase in net loans.
  • Our investment portfolio totaled $162.2 million at December 31, 2017 compared to $136.6 million at December 31, 2016, an increase of $25.7 million.
  • Net loans increased $199.7 million or 8% at December 31, 2017 to $2.7 billion compared to $2.5 billion at December 31, 2016 due to our continued focus on commercial and residential lending.
  • Deposits increased $219.0 million or 10% to $2.4 billion at December 31, 2017 compared to $2.2 billion at December 31, 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 $437.1 million and $394.5 million at December 31, 2017 and 2016, respectively. 
  • Federal Home Loan Bank of Boston advances decreased $31.6 million to $255.5 million at December 31, 2017 compared to $287.1 million at December 31, 2016. 

Asset Quality

  • At December 31, 2017 the allowance for loan losses represented 0.82% of total loans and 142.15% of non-accrual loans, compared to 0.82% of total loans and 145.06% of non-accrual loans at September 30, 2017 and 0.85% of total loans and 122.60% of non-accrual loans at December 31, 2016.
  • Loan delinquencies 30 days and greater represented 0.63% of total loans at December 31, 2017 compared to 0.66% of total loans at September 30, 2017 and 0.68% of total loans at December 31, 2016.
  • Non-accrual loans represented 0.58% of total loans at December 31, 2017 compared to 0.57% of total loans at September 30, 2017 and 0.69% of total loans at December 31, 2016.
  • Net charge-offs in the quarter were $53,000 or 0.01% to average loans (annualized) compared to $52,000 or 0.01% to average loans (annualized) in the linked quarter and $350,000 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 12.38% at December 31, 2017. 
  • Tangible book value per share is $17.08 compared to $17.12 on a linked quarter basis and $16.37 at December 31, 2016.
  • The Company had 600,945 shares remaining to repurchase at December 31, 2017 from prior regulatory approval. Repurchased shares are held as treasury stock and will be available for general corporate purposes. 
  • At December 31, 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, January 25, 2018 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)   2017       2017       2017       2017       2016    
Selected Financial Condition Data:                    
                     
Total assets $   3,050,286     $   3,001,679     $   2,992,126     $   2,904,264     $   2,837,555    
Cash and cash equivalents      35,350         44,475         46,551         36,427         47,723    
Securities held-to-maturity, at amortized cost     74,985         56,848         50,655         50,320         33,061    
Securities available-for-sale, at fair value     87,251         87,299         112,443         105,541         103,520    
Federal Home Loan Bank of Boston stock, at cost     15,537         15,954         19,583         16,418         16,378    
Loans, net     2,725,633         2,676,411         2,644,618         2,585,521         2,525,983    
Deposits     2,434,100         2,382,551         2,245,004         2,287,852         2,215,090    
Federal Home Loan Bank of Boston advances     255,458         271,458         389,458         282,057         287,057    
Total stockholders' equity     272,459         273,193         268,836         264,667         260,176    
Allowance for loan losses     22,448         22,202         22,037         21,349         21,529    
Non-accrual loans     15,792         15,305         16,022         15,976         17,561    
Impaired loans     30,194         29,924         30,007         32,407         34,273    
Loan delinquencies 30 days and greater     17,254         17,808         16,059         17,346         17,271    
                     
Selected Operating Data:                    
                     
Interest income $   25,551     $   25,604     $   24,116     $   23,212     $   22,160    
Interest expense     5,023         4,756         4,293         3,962         4,038    
  Net interest income     20,528         20,848         19,823         19,250         18,122    
  Provision for loan losses     299         217         710         325         616    
Net interest income after provision for loan losses     20,229         20,631         19,113         18,925         17,506    
Noninterest income     3,158         3,300         3,876         3,165         3,536    
Noninterest expense     15,387         15,919         15,878         15,152         15,099    
Income before income taxes     8,000         8,012         7,111         6,938         5,943    
Income tax expense     7,503         2,415         2,109         1,845         1,757    
                     
Net income $   497     $   5,597     $   5,002     $   5,093     $   4,186    
                     
Performance Ratios (annualized):                    
                     
Return on average assets   0.07 %     0.74 %     0.68 %     0.71 %     0.59 %  
Core return on average assets   0.73 %     0.73 %     0.68 %     0.70 %     0.58 %  
Return on average equity   0.72 %     8.17 %     7.43 %     7.67 %     6.43 %  
Core return on average equity   7.86 %     8.01 %     7.36 %     7.59 %     6.36 %  
Net interest rate spread (1)    2.71 %     2.77 %     2.74 %     2.76 %     2.57 %  
Net interest rate margin (2)    2.91 %     2.95 %     2.92 %     2.94 %     2.75 %  
Non-interest expense to average assets (3)    2.05 %     2.11 %     2.12 %     2.12 %     2.13 %  
Efficiency ratio (4)   65.06 %     66.38 %     66.31 %     67.85 %     70.64 %  
Average interest-earning assets to average                    
  interest-bearing liabilities   129.44 %     128.50 %     128.46 %     129.85 %     130.20 %  
Loans to deposits   113 %     113 %     119 %     114 %     115 %  
                     
Asset Quality Ratios:                    
                     
Allowance for loan losses as a percent of total loans   0.82 %     0.82 %     0.83 %     0.82 %     0.85 %  
Allowance for loan losses as a percent of                    
  non-accrual loans   142.15 %     145.06 %     137.54 %     133.63 %     122.60 %  
Net charge-offs (recoveries) to average loans (annualized)   0.01 %     0.01 %     0.00 %     0.08 %     0.06 %  
Non-accrual loans as a percent of total loans   0.58 %     0.57 %     0.60 %     0.61 %     0.69 %  
Non-accrual loans as a percent of total assets   0.52 %     0.51 %     0.54 %     0.55 %     0.62 %  
Loan delinquencies 30 days and greater as a                    
  percent of total loans   0.63 %     0.66 %     0.60 %     0.67 %     0.68 %  
                     
Per Share Related Data:                    
                     
Basic earnings per share $   0.03     $   0.37     $   0.33     $   0.34     $   0.28    
Diluted earnings per share $   0.03     $   0.35     $   0.32     $   0.32     $   0.27    
Dividends declared per share $   0.15     $   0.14     $   0.12     $   0.11     $   0.09    
Tangible book value (5) $   17.08     $   17.12     $   16.86     $   16.62     $   16.37    
Common stock shares outstanding     15,952,946         15,952,946         15,942,614         15,923,514         15,897,698    
Weighted-average basic shares outstanding     15,174,285         15,143,379         15,107,190         15,068,036         14,973,610    
Weighted-average diluted shares outstanding     15,882,690         15,820,659         15,791,112         15,691,338         15,502,481    
                     
                     
(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  
  December 31,   September 30,   June 30,   March 31,   December 31,  
(Dollars in thousands)   2017       2017       2017       2017       2016    
Capital Ratios:                    
                     
Equity to total assets at end of period   8.93 %     9.10 %     8.98 %     9.11 %     9.17 %  
Average equity to average assets   9.23 %     9.10 %     9.18 %     9.28 %     9.18 %  
Total Capital (to Risk Weighted Assets)   12.38 % *   12.50 %     12.45 %     12.67 %     12.80 %  
Tier I Capital (to Risk Weighted Assets)   11.45 % *   11.57 %     11.53 %     11.74 %     11.84 %  
Common Equity Tier I Capital    11.45 % *   11.57 %     11.53 %     11.74 %     11.84 %  
Tier I Leverage Capital (to Average Assets)   9.23 % *   9.23 %     9.36 %     9.45 %     9.39 %  
Total equity to total average assets   9.05 %     9.07 %     9.17 %     9.25 %     9.18 %  
                     
* Estimated                    
                     
Loans and Allowance for Loan Losses:                    
                     
Real estate                    
  Residential $   989,366     $   969,679     $   962,732     $   954,764     $   907,946    
  Commercial     1,063,755         1,028,930         1,020,560         992,861         979,370    
  Construction     90,059         86,713         74,063         60,694         49,679    
Commercial     429,116         436,172         431,243         420,747         430,539    
Home equity line of credit     165,070         166,791         168,278         168,157         170,786    
Other     5,650         5,733         5,410         5,375         5,348    
  Total loans   2,743,016       2,694,018       2,662,286       2,602,598       2,543,668    
 Net deferred loan costs    5,065         4,595         4,369         4,272         3,844    
  Loans   2,748,081         2,698,613         2,666,655         2,606,870         2,547,512    
 Allowance for loan losses    (22,448 )       (22,202 )       (22,037 )       (21,349 )       (21,529 )  
  Loans, net $   2,725,633     $   2,676,411     $   2,644,618     $   2,585,521     $   2,525,983    
                     
Deposits:                    
                     
Noninterest-bearing demand deposits $   473,428     $   437,372     $   445,049     $   437,385     $   441,283    
Interest-bearing                    
  NOW accounts   623,135       652,631         547,868         622,844         542,764    
  Money market   559,297       549,674         522,070         521,759         532,681    
  Savings accounts   237,380       233,330         241,898         239,743         233,792    
  Certificates of deposit   540,860       509,544         488,119         466,121         464,570    
Total interest-bearing deposits     1,960,672         1,945,179         1,799,955         1,850,467         1,773,807    
  Total deposits $   2,434,100     $   2,382,551     $   2,245,004     $   2,287,852     $   2,215,090    
                     
                     

 

First Connecticut Bancorp, Inc.
Consolidated Statements of Condition (Unaudited)
                       
              December 31,   September 30,   December 31,
                2017       2017       2016  
(Dollars in thousands)          
Assets                
Cash and due from banks $   33,320     $   35,452     $   44,086  
Interest bearing deposits with other institutions   2,030       9,023         3,637  
    Total cash and cash equivalents   35,350       44,475       47,723  
Securities held-to-maturity, at amortized cost   74,985       56,848       33,061  
Securities available-for-sale, at fair value   87,251       87,299       103,520  
Loans held for sale   5,295       6,902       3,270  
Loans (1)       2,748,081       2,698,613       2,547,512  
  Allowance for loan losses   (22,448 )     (22,202 )     (21,529 )
    Loans, net   2,725,633       2,676,411       2,525,983  
Premises and equipment, net   16,845       17,005       18,002  
Federal Home Loan Bank of Boston stock, at cost   15,537       15,954       16,378  
Accrued income receivable   8,979       8,039       7,432  
Bank-owned life insurance   57,511       57,156       51,726  
Deferred income taxes   7,662       13,965       14,795  
Prepaid expenses and other assets   15,238       17,625       15,665  
          Total assets $   3,050,286     $   3,001,679     $   2,837,555  
                       
Liabilities and Stockholders' Equity          
Deposits              
  Interest-bearing $   1,960,672     $   1,945,179     $   1,773,807  
  Noninterest-bearing   473,428       437,372       441,283  
                2,434,100       2,382,551       2,215,090  
Federal Home Loan Bank of Boston advances   255,458       271,458       287,057  
Repurchase agreement borrowings   10,500       10,500       10,500  
Repurchase liabilities   34,496       21,538       18,867  
Accrued expenses and other liabilities   43,273       42,439       45,865  
          Total liabilities   2,777,827       2,728,486       2,577,379  
                       
Stockholders' Equity          
  Common stock   181       181       181  
  Additional paid-in-capital   185,779       185,319       184,111  
  Unallocated common stock held by ESOP   (9,539 )     (9,796 )     (10,567 )
  Treasury stock, at cost   (29,620 )     (29,620 )     (30,400 )
  Retained earnings   131,887       133,337       123,541  
  Accumulated other comprehensive loss   (6,229 )     (6,228 )     (6,690 )
          Total stockholders' equity   272,459       273,193       260,176  
          Total liabilities and stockholders' equity $   3,050,286     $   3,001,679     $   2,837,555  
                       
(1) Loans include net deferred fees and unamortized premiums of $5.1 million, $4.6 million and $3.8 million at December 31, 2017, 
  September 30, 2017 and December 31, 2016, 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)  2017    2017    2016    2017    2016  
Interest income                    
Interest and fees on loans                    
  Mortgage   $   19,143   $   19,165   $   16,451   $   73,922   $   64,612  
  Other       5,494     5,535     5,058     21,185     19,613  
Interest and dividends on investments                    
  United States Government and agency obligations   613     602     335     2,287     1,620  
  Other bonds   4     6     10     24     50  
  Corporate stocks   259     242     231     916     912  
Other interest income   38     54     75     149     179  
          Total interest income   25,551     25,604     22,160     98,483     86,986  
Interest expense                    
Deposits       3,888     3,423     3,010     13,248     11,456  
Interest on borrowed funds   1,031     1,230     924     4,374     3,826  
Interest on repo borrowings   95     95     96     381     385  
Interest on repurchase liabilities   9     8     8     31     64  
          Total interest expense   5,023     4,756     4,038     18,034     15,731  
          Net interest income   20,528     20,848     18,122     80,449     71,255  
Provision for loan losses   299     217     616     1,551     2,332  
          Net interest income                    
            after provision for loan losses   20,229     20,631     17,506     78,898     68,923  
Noninterest income                    
Fees for customer services   1,663     1,662     1,537     6,403     6,151  
Net gain on loans sold   598     872     925     2,597     3,105  
Brokerage and insurance fee income   59     54     47     218     213  
Bank owned life insurance income   354     357     361     1,628     1,417  
Other         484     355     666     2,653     1,852  
          Total noninterest income   3,158     3,300     3,536     13,499     12,738  
Noninterest expense                    
Salaries and employee benefits   9,564     9,668     9,109     38,595     36,983  
Occupancy expense   1,261     1,312     1,211     5,073     4,890  
Furniture and equipment expense   931     1,054     983     3,954     4,082  
FDIC assessment   436     419     424     1,693     1,603  
Marketing     578     717     523     2,570     2,170  
Other operating expenses   2,617     2,749     2,849     10,451     10,776  
          Total noninterest expense   15,387     15,919     15,099     62,336     60,504  
          Income before income taxes   8,000     8,012     5,943     30,061     21,157  
Income tax expense   7,503     2,415     1,757     13,872     5,942  
          Net income $   497   $   5,597   $   4,186   $   16,189   $   15,215  
                                 
Earnings per share:                     
  Basic     $   0.03   $   0.37   $   0.28   $   1.07   $   1.02  
  Diluted         0.03       0.35       0.27       1.02       1.00  
Weighted average shares outstanding:                    
  Basic         15,174,285       15,143,379       14,973,610      15,123,568      14,821,391  
  Diluted         15,882,690       15,820,659       15,502,481      15,797,039      15,196,011  
                                 
                                 

 

First Connecticut Bancorp, Inc.
Consolidated Average Balances, Yields and Rates (Unaudited)
                       
  For The Three Months Ended
  December 31, 2017   September 30, 2017   December 31, 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 $   2,714,017 $   25,272   3.69 %   $   2,697,978 $   25,342   3.73 %   $   2,497,897 $   22,092   3.52 %
Securities      147,768     676   1.81 %       159,450     660   1.64 %       131,837     402   1.21 %
Federal Home Loan Bank of Boston stock     14,860     200   5.34 %       18,284     190   4.12 %       15,200     174   4.55 %
Federal funds and other earning assets      7,833     38   1.92 %       10,089     54   2.12 %       60,518     75   0.49 %
Total interest-earning assets      2,884,478     26,186   3.60 %       2,885,801     26,246   3.61 %       2,705,452     22,743   3.34 %
Noninterest-earning assets      124,537           126,234           128,332    
Total assets  $   3,009,015       $   3,012,035       $   2,833,784    
                       
Interest-bearing liabilities:                      
NOW accounts $   624,372 $   916   0.58 %   $   644,947 $   832   0.51 %   $   552,444 $   443   0.32 %
Money market     558,743     1,212   0.86 %       519,265     982   0.75 %       557,864     1,109   0.79 %
Savings accounts      235,058     65   0.11 %       233,878     63   0.11 %       229,052     64   0.11 %
Certificates of deposit      517,252     1,695   1.30 %       489,203     1,546   1.25 %       471,023     1,394   1.18 %
Total interest-bearing deposits      1,935,425     3,888   0.80 %       1,887,293     3,423   0.72 %       1,810,383     3,010   0.66 %
Federal Home Loan Bank of Boston Advances     252,775     1,031   1.62 %       320,219     1,230   1.52 %       226,766     924   1.62 %
Repurchase agreement borrowings     10,500     95   3.59 %       10,500     95   3.59 %       10,500     96   3.64 %
Repurchase liabilities      29,796     9   0.12 %       27,695     8   0.11 %       30,245     8   0.11 %
Total interest-bearing liabilities      2,228,496     5,023   0.89 %       2,245,707     4,756   0.84 %       2,077,894     4,038   0.77 %
Noninterest-bearing deposits     454,278           446,428           434,659    
Other noninterest-bearing liabilities      48,593           45,905           61,023    
Total liabilities      2,731,367           2,738,040           2,573,576    
Stockholders' equity     277,648           273,995           260,208    
Total liabilities and stockholders' equity $   3,009,015       $   3,012,035       $   2,833,784    
                       
Tax-equivalent net interest income   $   21,163         $   21,490         $   18,705    
Less: tax-equivalent adjustment       (635 )           (642 )           (583 )  
Net interest income   $   20,528         $   20,848         $   18,122    
                       
Net interest rate spread (2)      2.71 %       2.77 %       2.57 %
Net interest-earning assets (3)  $   655,982       $   640,094       $   627,558    
Net interest margin (4)      2.91 %       2.95 %       2.75 %
Average interest-earning assets to average interest-bearing liabilities                       
  129.44 %     128.50 %     130.20 %
                       
(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 Years Ended December 31,    
    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 $   2,654,943 $   97,615   3.68 %   $   2,420,859 $   86,374   3.57 %    
Securities      151,878     2,524   1.66 %       150,582     1,881   1.25 %    
Federal Home Loan Bank of Boston stock     16,842     703   4.17 %       17,738     701   3.95 %    
Federal funds and other earning assets      8,006     149   1.86 %       36,679     179   0.49 %    
Total interest-earning assets      2,831,669     100,991   3.57 %       2,625,858     89,135   3.39 %    
Noninterest-earning assets      122,324           129,826        
Total assets  $   2,953,993       $   2,755,684        
                   
Interest-bearing liabilities:                  
NOW accounts $   616,962 $   2,850   0.46 %   $   513,256 $   1,544   0.30 %    
Money market     533,213     4,143   0.78 %       512,396     4,119   0.80 %    
Savings accounts      235,608     252   0.11 %       223,499     241   0.11 %    
Certificates of deposit      486,449     6,003   1.23 %       469,493     5,552   1.18 %    
Total interest-bearing deposits      1,872,232     13,248   0.71 %       1,718,644     11,456   0.67 %    
Federal Home Loan Bank of Boston Advances     283,683     4,374   1.54 %       257,281     3,826   1.49 %    
Repurchase agreement borrowings     10,500     381   3.63 %       10,500     385   3.67 %    
Repurchase liabilities      27,814     31   0.11 %       42,700     64   0.15 %    
Total interest-bearing liabilities      2,194,229     18,034   0.82 %       2,029,125     15,731   0.78 %    
Noninterest-bearing deposits     441,347           412,155        
Other noninterest-bearing liabilities      46,804           60,008        
Total liabilities      2,682,380           2,501,288        
Stockholders' equity     271,613           254,396        
Total liabilities and stockholders' equity $   2,953,993       $   2,755,684        
                   
Tax-equivalent net interest income   $   82,957         $   73,404        
Less: tax-equivalent adjustment       (2,508 )           (2,149 )      
Net interest income   $   80,449         $   71,255        
                   
Net interest rate spread (2)      2.75 %       2.61 %    
Net interest-earning assets (3)  $   637,440       $   596,733        
Net interest margin (4)      2.93 %       2.80 %    
Average interest-earning assets to average interest-bearing liabilities                   
  129.05 %     129.41 %    
                   
(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 December 31, 2017, September 30, 2017, June 30, 2017, March 31, 2017 and December 31, 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  
    December 31,   September 30,   June 30,   March 31,   December 31,  
(Dollars in thousands, except per share data)   2017       2017       2017       2017       2016    
Net Income $   497     $   5,597     $   5,002     $   5,093     $   4,186    
  Adjustments:                    
  Plus: Severance expense   -       -       343       -       -    
  Plus: Mortgage servicing rights (recovery) impairment   -       -       -       -       (283 )  
  Less: Prepayment penalty fees   (36 )     (165 )     -       (84 )     -    
  Less: Bank-owned life insurance proceeds   -       -       (271 )     -       -    
Total core adjustments before taxes   (36 )     (165 )     72       (84 )     (283 )  
  Tax (expense) benefit on core adjustments   13       58       (120 )     29       99    
  Tax rate reduction due to Tax Cuts and Jobs Act   4,981       -       -       -       -    
  Deferred tax asset write-off (1)   -       -       -       -       137    
Total core adjustments after taxes   4,958       (107 )     (48 )     (55 )     (47 )  
Total core net income $   5,455     $   5,490     $   4,954     $   5,038     $   4,139    
                       
                       
Total net interest income $   20,528     $   20,848     $   19,823     $   19,250     $   18,122    
  Less: Prepayment penalty fees   (36 )     (165 )     -       (84 )     -    
Total core net interest income $   20,492     $   20,683     $   19,823     $   19,166     $   18,122    
                       
Total noninterest income $   3,158     $   3,300     $   3,876     $   3,165     $   3,536    
  Plus: Mortgage servicing rights (recovery) impairment   -       -       -       -       (283 )  
  Less: Bank-owned life insurance proceeds   -       -       (271 )     -       -    
Total core noninterest income $   3,158     $   3,300     $   3,605     $   3,165     $   3,253    
                       
Total noninterest expense $   15,387     $   15,919     $   15,878     $   15,152     $   15,099    
  Less: Severance expense   -       -       (343 )     -       -    
Total core noninterest expense $   15,387     $   15,919     $   15,535     $   15,152     $   15,099    
                       
Core earnings per common share, diluted $   0.34     $   0.35     $   0.31     $   0.32     $   0.27    
                       
Core net interest rate margin (2)    2.91 %     2.93 %     2.92 %     2.92 %     2.75 %  
Core return on average assets (annualized)   0.73 %     0.73 %     0.68 %     0.70 %     0.58 %  
Core return on average equity (annualized)   7.86 %     8.01 %     7.36 %     7.59 %     6.36 %  
Core non-interest expense to average assets (annualized)   2.05 %     2.11 %     2.12 %     2.12 %     2.13 %  
Efficiency ratio (3)    65.06 %     66.38 %     66.31 %     67.85 %     70.64 %  
                       
Tangible book value (4)  $   17.08     $   17.12     $   16.86     $   16.62     $   16.37    
                       
(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.                   
                   

 

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, 2017 and December 31, 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 Year Ended December 31,        
(Dollars in thousands, except per share data)   2017       2016          
Net Income $   16,189     $   15,215          
  Adjustments:              
  Plus: Employee severance   343       -          
  Less: Prepayment penalty fees   (285 )     (380 )        
  Less:  Off-balance sheet commitment change in accounting estimate   -       (423 )        
  Less: Bank-owned life insurance proceeds   (271 )     (77 )        
Total core adjustments before taxes   (213 )     (880 )        
  Tax (expense) benefit on core adjustments   (20 )     282          
  Deferred tax asset write-off (1)   -       137          
  Tax rate reduction (2)   4,981       -          
Total core adjustments after taxes   4,748       (461 )        
Total core net income $   20,937     $   14,754          
                 
                 
Total net interest income $   80,449     $   71,255          
  Less: Prepayment penalty fees   (285 )     (380 )        
Total core net interest income $   80,164     $   70,875          
                 
Total noninterest income $   13,499     $   12,738          
  Less: Bank-owned life insurance proceeds   (271 )     (77 )        
Total core noninterest income $   13,228     $   12,661          
                 
Total noninterest expense $   62,336     $   60,504          
  Plus: Off-balance sheet commitments change in accounting estimate   -       423          
  Less: Employee severances   (343 )     -          
Total core noninterest expense $   61,993     $   60,927          
                 
Core earnings per common share, diluted $   1.32     $   0.97          
                 
Core net interest rate margin (3)    2.92 %     2.78 %        
Core return on average assets (annualized)   0.71 %     0.54 %        
Core return on average equity (annualized)   7.71 %     5.80 %        
Core non-interest expense to average assets (annualized)   2.10 %     2.21 %        
Efficiency ratio (4)    66.38 %     72.94 %        
                 
Tangible book value (5)  $   17.08     $   16.37          
                 
(1) Represents a write-off of the remaining deferred tax asset associated with the establishment of the Bank's foundation in 2011.        
                 
(2) Represents the reduction in the value of the Company's deferred tax asset as a result of the Tax Cuts and Jobs Act enacted on December 22, 2017,     
  which lowered the Company's federal tax rate from 35% to 21%.              
                 
(3) Represents tax-equivalent core net interest income as a percent of average interest-earning assets.            
                 
(4) Represents core noninterest expense divided by the sum of core net interest income and core noninterest income.         
                 
(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.             
             

CONTACT:

Jennifer H. Daukas
Senior Vice President
Corporate Secretary/Investor Relations Officer
One Farm Glen Boulevard, Farmington, CT  06032
P 860-284-6359 | F 860-409-3316
jdaukas@farmingtonbankct.com
farmingtonbankct.com

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