First Connecticut Bancorp, Inc. reports third quarter 2016 earnings of $0.25 earnings per share

FARMINGTON, Conn., Oct. 19, 2016 (GLOBE NEWSWIRE) — First Connecticut Bancorp, Inc. (the “Company”) (NASDAQ:FBNK), the holding company for Farmington Bank (the “Bank”), reported net income of $3.8 million, or $0.25 diluted earnings per share for the quarter ended September 30, 2016 compared to net income of $4.2 million, or $0.28 diluted earnings per share for the quarter ended September 30, 2015.

For the quarter ended September 30, 2015, diluted earnings per share were positively affected ($0.03) by a $557,000 gain on the sale of foreclosed real estate.

“Once again this quarter we achieved solid organic growth in deposits, commercial loans and mortgage banking. We continue to build and enhance the franchise, in central Connecticut and western Massachusetts while focusing on growing tangible book value in this historic low interest rate environment,” stated John J. Patrick Jr., First Connecticut Bancorp’s Chairman, President and CEO.

Financial Highlights

  • Core net interest income increased $253,000 to $17.8 million in the third quarter of 2016 compared to the linked quarter and increased $83,000 compared to the third quarter of 2015.  
  • Core net interest rate margin was 2.74% in the third quarter of 2016 compared to 2.81% in the linked quarter and 2.79% in the prior year quarter.
  • Core noninterest expense to average assets was 2.22% in the third quarter of 2016 compared to 2.23% in the linked quarter and 2.26% in the prior year quarter.
  • Organic loan growth remained strong during the third quarter of 2016 as loans increased $52.2 million to $2.5 billion at September 30, 2016 and increased $138.1 million or 6% from a year ago.  Loan growth during the quarter was driven by the commercial and residential loan portfolios.
  • Overall deposits increased $196.4 million to $2.2 billion in the third quarter of 2016 compared to the linked quarter and increased $274.5 million or 14% from a year ago. 
  • Loans to deposits were 110.16% in the third quarter of 2016 compared to 118.17% in the linked quarter and 118.49% in the third quarter of 2015.
  • Tangible book value per share increased to $16.17 for the quarter ended September 30, 2016 compared to $15.95 on a linked quarter basis and $15.30 at September 30, 2015.
  • Checking accounts grew by 3% or 1,624 net new accounts in the third quarter of 2016 and by 12% or 5,815 net new accounts from a year ago.
  • Loan delinquencies 30 days and greater represented 0.74% of total loans at September 30, 2016 compared to 0.50% at June 30, 2016 and 0.67% at September 30, 2015.  Non-accrual loans represented 0.72% of total loans compared to 0.56% of total loans on a linked quarter basis and 0.71% of total loans at September 30, 2015.  The increase in non-accruals and delinquencies is primarily the result of one commercial real estate loan with a current loan to value of 35%.
  • The allowance for loan losses represented 0.86% of total loans at September 30, 2016, June 30, 2016 and at September 30, 2015. 
  • The Company paid a quarterly cash dividend of $0.08 per share during the third quarter, an increase of $0.01 compared to the linked quarter.           

Third quarter 2016 compared with second quarter 2016

Net interest income

  • Core net interest income increased $253,000 to $17.8 million in the third quarter of 2016 compared to the linked quarter primarily due to a $42.6 million increase in the average loans balance.
  • Core net interest margin was 2.74% in the third quarter of 2016 compared to 2.81% in the linked quarter.  The decrease in net margin was primarily due to lower yields on new loans originated and securities and an increase in cost of interest-bearing liabilities.
  • The cost of interest-bearing liabilities increased 2 basis points to 79 basis points in the third quarter of 2016 compared to 77 basis points in the linked quarter.

Provision for loan losses

  • Provision for loan losses was $698,000 for the third quarter of 2016 compared to $801,000 for the linked quarter. 
  • Net charge-offs in the quarter were $155,000 or 0.03% to average loans (annualized) compared to $255,000 or 0.04% to average loans (annualized) in the linked quarter.
  • The allowance for loan losses represented 0.86% of total loans at September 30, 2016 and June 30, 2016. 

Noninterest income

  • Total noninterest income increased $1.1 million to $3.7 million in the third quarter of 2016 compared to the linked quarter primarily due to an $188,000 increase in net gain on loans sold and a $778,000 increase in other noninterest income.
  • Net gain on loans sold increased $188,000 to $939,000 primarily due to an increase in volume.
  • Other income increased $778,000 primarily due to a $91,000 recovery in fair value in mortgage servicing rights compared to a $374,000 mortgage servicing rights impairment during the linked quarter and a $418,000 increase in swap fees offset by a $172,000 impairment on a SBIC fund.
  • Other noninterest income includes swap fees totaling $692,000 compared to $274,000 in the linked quarter.

Noninterest expense

  • Noninterest expense increased $840,000 in the third quarter of 2016 to $15.5 million compared to the linked quarter primarily due to a $138,000 increase in marketing expenses and a $537,000 increase in other operating expenses.
  • Other operating expenses increased $537,000 on a linked quarter basis primarily due to a $436,000 decrease in the provision for off-balance sheet commitments as a result of a change in accounting estimate in the linked quarter.

Income tax expense

  • Income tax expense was $1.5 million in the third quarter of 2016 compared to $1.4 million in the linked quarter.

Third quarter 2016 compared with third quarter 2015

Net interest income

  • Net interest income increased $83,000 to $17.8 million in the third quarter of 2016 compared to the prior year quarter due primarily to a $70.8 million increase in the average loan balance offset by a $628,000 increase in interest expense.  
  • Net interest margin decreased 5 basis points to 2.74% in the third quarter of 2016 compared to 2.79% in the prior year quarter primarily due to an increase in the cost of interest-bearing liabilities.
  • The cost of interest-bearing liabilities increased 13 basis points to 79 basis points in the third quarter of 2016 compared to 66 basis points in the prior year quarter due to money market and certificate of deposit promotions.

Provision for loan losses

  • Provision for loan losses was $698,000 for the third quarter of 2016 compared to $386,000 for the prior year quarter.
  • Net charge-offs (recoveries) in the quarter were $155,000 or 0.03% to average loans (annualized) compared to ($43,000) or (0.01%) to average loans (annualized) in the prior year quarter.
  • The allowance for loan losses represented 0.86% of total loans at September 30, 2016 and 2015. 

Noninterest income

  • Total noninterest income increased $444,000 to $3.7 million in the third quarter of 2016 compared to the prior year quarter primarily due to a $444,000 increase in other noninterest income.
  • Other noninterest income increased $444,000 in the third quarter of 2016 compared to the prior year quarter primarily due to an $180,000 increase in mortgage banking derivatives and a $302,000 increase in swap fees offset by a $141,000 increase in impairment on a SBIC fund.

Noninterest expense

  • Noninterest expense increased $766,000 in the third quarter of 2016 to $15.5 million compared to the prior year quarter primarily due to a $239,000 increase in marketing expenses and a $527,000 increase in other operating expenses.  Noninterest expense on a core basis increased $209,000 compared to the prior year quarter.
  • Other operating expenses increased $527,000 primarily due to a $557,000 gain on foreclosed real estate in the prior year quarter.

Income tax expense

  • Income tax expense was $1.5 million in the third quarter of 2016 compared to $1.6 million in the prior year quarter.

September 30, 2016 compared to September 30, 2015

Financial Condition

  • Total assets increased $123.5 million or 5% at September 30, 2016 to $2.8 billion compared to $2.7 billion at September 30, 2015, largely reflecting an increase in net loans.
  • Our investment portfolio totaled $141.4 million at September 30, 2016 compared to $196.9 million at September 30, 2015, a decrease of $55.4 million due to a reduction in collateral requirements.
  • Net loans increased $136.8 million or 6% at September 30, 2016 to $2.5 billion compared to $2.3 billion at September 30, 2015 due to our continued focus on commercial and residential lending.
  • Deposits increased $274.5 million or 14% to $2.2 billion at September 30, 2016 compared to $2.0 billion at September 30, 2015 primarily due to increases in money markets, demand deposits and certificates of deposit as we continue to develop and grow relationships in the geographical areas we serve.  We had brokered deposit balances totaling $43.2 million and $55.5 million at September 30, 2016 and 2015, respectively.
  • Federal Home Loan Bank of Boston advances decreased $153.0 million to $220.6 million at September 30, 2016 compared to $373.6 million at September 30, 2015.  Advances are used to support loan and securities growth.

Asset Quality

  • At September 30, 2016 the allowance for loan losses represented 0.86% of total loans and 119.26% of non-accrual loans, compared to 0.86% of total loans and 153.22% of non-accrual loans at June 30, 2016 and 0.86% of total loans and 120.05% of non-accrual loans at September 30, 2015.
  • Loan delinquencies 30 days and greater represented 0.74% of total loans at September 30, 2016 compared to 0.50% of total loans at June 30, 2016 and 0.67% of total loans at September 30, 2015.
  • Non-accrual loans represented 0.72% of total loans at September 30, 2016 compared to 0.56% of total loans at June 30, 2016 and 0.71% of total loans at September 30, 2015.
  • Net charge-offs (recoveries) in the quarter were $155,000 or 0.03% to average loans (annualized) compared to $255,000 or 0.04% to average loans (annualized) in the linked quarter and ($43,000) or (0.01%) 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 12.57% at September 30, 2016. 
  • Tangible book value per share is $16.17 compared to $15.95 on a linked quarter basis and $15.30 at September 30, 2015.
  • The Company had 600,945 shares remaining to repurchase at September 30, 2016 from prior regulatory approval. Repurchased shares are held as treasury stock and will be available for general corporate purposes. 
  • At September 30, 2016, the Company continued to have adequate liquidity including significant unused borrowing capacity at the Federal Home Loan Bank of Boston and the Federal Reserve Bank, as well as access to funding through brokered deposits and pre-approved unsecured lines of credit.

About First Connecticut Bancorp, Inc.

First Connecticut Bancorp, Inc. (NASDAQ:FBNK) is a Maryland-chartered stock holding company that wholly owns Farmington Bank. Farmington Bank is a full-service, community bank with 24 branch locations throughout central Connecticut and western Massachusetts, offering commercial and residential lending as well as wealth management services. Established in 1851, Farmington Bank is a diversified consumer and commercial bank with an ongoing commitment to contribute to the betterment of the communities in our region. For more information regarding the Bank’s products and services and for First Connecticut Bancorp, Inc. investor relations information, please visit www.farmingtonbankct.com.

Conference Call

First Connecticut will host a conference call on Thursday, October 20, 2016 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)   2016       2016       2016       2015       2015  
Selected Financial Condition Data:                  
                   
Total assets $ 2,831,960     $ 2,779,224     $ 2,701,614     $ 2,708,546     $ 2,708,454  
Cash and cash equivalents   89,940       66,743       59,166       59,139       47,447  
Securities held-to-maturity, at amortized cost   7,338       7,640       19,964       32,246       25,486  
Securities available-for-sale, at fair value   134,094       149,396       128,681       132,424       171,390  
Federal Home Loan Bank of Boston stock, at cost   15,139       18,240       15,688       21,729       23,038  
Loans, net   2,455,101       2,403,420       2,350,245       2,341,598       2,318,257  
Deposits   2,247,873       2,051,438       2,097,832       1,991,358       1,973,355  
Federal Home Loan Bank of Boston advances   220,600       340,600       259,600       377,600       373,600  
Total stockholders’ equity   255,615       252,242       248,013       245,721       243,195  
Allowance for loan losses   21,263       20,720       20,174       20,198       20,010  
Non-accrual loans   17,829       13,523       13,093       14,913       16,668  
Impaired loans   37,599       38,216       38,588       41,017       42,664  
Loan delinquencies 30 days and greater   18,238       12,206       13,095       14,945       15,598  
                   
Selected Operating Data:                  
                   
Interest income $ 21,805     $ 21,698     $ 21,323     $ 21,094     $ 21,094  
Interest expense   4,050       3,826       3,817       3,731       3,422  
Net interest income   17,755       17,872       17,506       17,363       17,672  
Provision for loan losses   698       801       217       776       386  
Net interest income after provision for loan losses   17,057       17,071       17,289       16,587       17,286  
Noninterest income   3,685       2,617       2,900       3,468       3,241  
Noninterest expense   15,484       14,644       15,277       15,958       14,718  
Income before income taxes   5,258       5,044       4,912       4,097       5,809  
Income tax expense   1,485       1,401       1,299       1,716       1,594  
                   
Net income $ 3,773     $ 3,643     $ 3,613     $ 2,381     $ 4,215  
                   
Performance Ratios (annualized):                  
                   
Return on average assets   0.54 %     0.54 %     0.54 %     0.35 %     0.62 %
Return on average equity   5.89 %     5.77 %     5.82 %     3.86 %     6.92 %
Net interest rate spread (1)   2.56 %     2.70 %     2.65 %     2.61 %     2.65 %
Net interest rate margin (2)   2.74 %     2.87 %     2.82 %     2.76 %     2.79 %
Non-interest expense to average assets (3)   2.22 %     2.23 %     2.27 %     2.37 %     2.26 %
Efficiency ratio (4)   72.53 %     73.52 %     75.19 %     78.19 %     73.04 %
Average interest-earning assets to average                  
interest-bearing liabilities   129.42 %     129.54 %     128.45 %     127.48 %     126.44 %
Loans to deposits   110.16 %     118.17 %     112.99 %     118.60 %     118.49 %
                   
Asset Quality Ratios:                  
                   
Allowance for loan losses as a percent of total loans   0.86 %     0.86 %     0.85 %     0.86 %     0.86 %
Allowance for loan losses as a percent of                  
non-accrual loans   119.26 %     153.22 %     154.08 %     135.44 %     120.05 %
Net charge-offs (recoveries) to average loans (annualized)   0.03 %     0.04 %     0.04 %     0.10 %     (0.01 %)
Non-accrual loans as a percent of total loans   0.72 %     0.56 %     0.55 %     0.63 %     0.71 %
Non-accrual loans as a percent of total assets   0.63 %     0.49 %     0.48 %     0.55 %     0.62 %
Loan delinquencies 30 days and greater as a                  
percent of total loans   0.74 %     0.50 %     0.55 %     0.63 %     0.67 %
                   
Per Share Related Data:                  
                   
Basic earnings per share $ 0.25     $ 0.24     $ 0.24     $ 0.16     $ 0.28  
Diluted earnings per share $ 0.25     $ 0.24     $ 0.24     $ 0.16     $ 0.28  
Dividends declared per share $ 0.08     $ 0.07     $ 0.07     $ 0.06     $ 0.06  
Tangible book value (5) $ 16.17     $ 15.95     $ 15.72     $ 15.47     $ 15.30  
Common stock shares outstanding   15,805,748       15,818,494       15,780,657       15,881,663       15,893,263  
Weighted-average basic shares outstanding   14,823,914       14,765,452       14,720,892       14,785,058       14,632,951  
Weighted-average diluted shares outstanding   15,192,006       15,077,291       15,012,540       15,146,365       14,887,461  
                   
                   
(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)   2016       2016       2016       2015       2015  
Capital Ratios:                  
                   
Equity to total assets at end of period   9.03 %     9.08 %     9.18 %     9.07 %     8.98 %
Average equity to average assets   9.20 %     9.34 %     9.22 %     9.17 %     9.00 %
Total Capital (to Risk Weighted Assets)   12.57 % *   12.63 %     12.88 %     12.88 %     12.72 %
Tier I Capital (to Risk Weighted Assets)   11.62 % *   11.69 %     11.92 %     11.91 %     11.76 %
Common Equity Tier I Capital   11.62 % *   11.69 %     11.92 %     11.91 %     11.76 %
Tier I Leverage Capital (to Average Assets)   9.40 % *   9.55 %     9.44 %     9.39 %     9.24 %
Total equity to total average assets   9.17 %     9.32 %     9.20 %     9.13 %     8.98 %
                   
* Estimated                  
                   
Loans and Allowance for Loan Losses:                  
                   
Real estate                  
Residential $ 864,054     $ 842,427     $ 855,148     $ 849,722     $ 851,784  
Commercial   931,703       922,643       893,477       887,431       862,367  
Construction   50,083       41,466       36,557       30,895       29,244  
Installment   3,211       3,267       3,338       2,970       3,007  
Commercial   449,008       437,046       402,960       409,550       410,704  
Collateral   1,621       1,689       1,668       1,668       1,632  
Home equity line of credit   172,148       171,212       172,325       174,701       174,579  
Revolving credit   82       79       77       91       96  
Resort   512       535       759       784       807  
Total loans   2,472,422       2,420,364       2,366,309       2,357,812       2,334,220  
Net deferred loan costs   3,942       3,776       4,110       3,984       4,047  
Loans   2,476,364       2,424,140       2,370,419       2,361,796       2,338,267  
Allowance for loan losses   (21,263 )     (20,720 )     (20,174 )     (20,198 )     (20,010 )
Loans, net $ 2,455,101     $ 2,403,420     $ 2,350,245     $ 2,341,598     $ 2,318,257  
                   
Deposits:                  
                   
Noninterest-bearing demand deposits $ 419,664     $ 415,562     $ 396,356     $ 401,388     $ 359,757  
Interest-bearing                  
NOW accounts   590,213       429,973       529,267       468,054       527,128  
Money market   536,979       498,847       488,497       460,737       440,249  
Savings accounts   223,848       229,868       223,188       220,389       211,170  
Time deposits   477,169       477,188       460,524       440,790       435,051  
Total interest-bearing deposits   1,828,209       1,635,876       1,701,476       1,589,970       1,613,598  
Total deposits $ 2,247,873     $ 2,051,438     $ 2,097,832     $ 1,991,358     $ 1,973,355  
                   

First Connecticut Bancorp, Inc.
Consolidated Statements of Condition (Unaudited)
                       
              September 30   June 30,   September 30
                2016       2016       2015  
(Dollars in thousands)                      
Assets                      
Cash and due from banks             $ 33,206     $ 37,455     $ 33,564  
Interest bearing deposits with other institutions               56,734       29,288       13,883  
Total cash and cash equivalents               89,940       66,743       47,447  
Securities held-to-maturity, at amortized cost               7,338       7,640       25,486  
Securities available-for-sale, at fair value               134,094       149,396       171,390  
Loans held for sale               5,462       6,912       8,416  
Loans (1)               2,476,364       2,424,140       2,338,267  
Allowance for loan losses               (21,263 )     (20,720 )     (20,010 )
Loans, net               2,455,101       2,403,420       2,318,257  
Premises and equipment, net               18,383       18,917       17,870  
Federal Home Loan Bank of Boston stock, at cost               15,139       18,240       23,038  
Accrued income receivable               6,413       6,736       6,305  
Bank-owned life insurance               51,364       51,029       50,633  
Deferred income taxes               15,136       15,405       15,935  
Prepaid expenses and other assets               33,590       34,786       23,677  
Total assets           $ 2,831,960     $ 2,779,224     $ 2,708,454  
                       
Liabilities and Stockholders’ Equity                      
Deposits                      
Interest-bearing             $ 1,828,209     $ 1,635,876     $ 1,613,598  
Noninterest-bearing               419,664       415,562       359,757  
                2,247,873       2,051,438       1,973,355  
Federal Home Loan Bank of Boston advances               220,600       340,600       373,600  
Repurchase agreement borrowings               10,500       10,500       10,500  
Repurchase liabilities               35,036       63,027       58,084  
Accrued expenses and other liabilities               62,336       61,417       49,720  
Total liabilities             2,576,345       2,526,982       2,465,259  
                       
Stockholders’ Equity                      
Common stock               181       181       181  
Additional paid-in-capital               183,769       183,504       181,195  
Unallocated common stock held by ESOP               (10,833 )     (11,100 )     (11,893 )
Treasury stock, at cost               (31,645 )     (31,868 )     (30,411 )
Retained earnings               120,487       117,980       111,274  
Accumulated other comprehensive loss               (6,344 )     (6,455 )     (7,151 )
Total stockholders’ equity             255,615       252,242       243,195  
Total liabilities and stockholders’ equity           $ 2,831,960     $ 2,779,224     $ 2,708,454  
                       
(1) Loans include net deferred fees and unamortized premiums of $3.9 million, $3.8 million and $4.0 million at September 30, 2016, June 30, 2016 and September 30, 2015, 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)               2016       2016       2015       2016       2015  
Interest income                              
Interest and fees on loans                              
Mortgage             $ 16,134     $ 16,120     $ 15,861     $ 48,161     $ 46,250  
Other               4,983       4,858       4,594       14,555       12,853  
Interest and dividends on investments                              
United States Government and agency obligations               419       448       401       1,285       1,109  
Other bonds               13       14       13       40       66  
Corporate stocks               210       232       217       681       493  
Other interest income               46       26       8       104       19  
Total interest income             21,805       21,698       21,094       64,826       60,790  
Interest expense                              
Deposits               2,975       2,735       2,412       8,446       6,761  
Interest on borrowed funds               955       980       890       2,902       2,445  
Interest on repo borrowings               98       96       96       289       351  
Interest on repurchase liabilities               22       15       24       56       87  
Total interest expense             4,050       3,826       3,422       11,693       9,644  
Net interest income             17,755       17,872       17,672       53,133       51,146  
Provision for loan losses               698       801       386       1,716       1,664  
Net interest income                            
after provision for loan losses               17,057       17,071       17,286       51,417       49,482  
Noninterest income                              
Fees for customer services               1,600       1,530       1,536       4,614       4,409  
Gain on sale of investments                                       1,523  
Net gain on loans sold               939       751       993       2,180       1,925  
Brokerage and insurance fee income               58       54       54       166       163  
Bank owned life insurance income               335       307       349       1,056       946  
Other               753       (25 )     309       1,186       1,013  
Total noninterest income             3,685       2,617       3,241       9,202       9,979  
Noninterest expense                              
Salaries and employee benefits               9,285       9,213       9,302       27,874       27,127  
Occupancy expense               1,271       1,189       1,219       3,679       3,858  
Furniture and equipment expense               1,020       1,018       1,034       3,099       3,147  
FDIC assessment               392       383       413       1,179       1,227  
Marketing               682       544       443       1,647       1,386  
Other operating expenses               2,834       2,297       2,307       7,927       8,507  
Total noninterest expense             15,484       14,644       14,718       45,405       45,252  
Income before income taxes             5,258       5,044       5,809       15,214       14,209  
Income tax expense               1,485       1,401       1,594       4,185       4,011  
Net income           $ 3,773     $ 3,643     $ 4,215     $ 11,029     $ 10,198  
                               
Earnings per share:                              
Basic             $ 0.25     $ 0.24     $ 0.28     $ 0.74     $ 0.68  
Diluted               0.25       0.24       0.28       0.73       0.67  
Weighted average shares outstanding:                              
Basic               14,823,914       14,765,452       14,632,951       14,770,282       14,706,908  
Diluted               15,192,006       15,077,291       14,887,461       15,093,109       14,883,362  
                               

First Connecticut Bancorp, Inc.
Consolidated Average Balances, Yields and Rates (Unaudited)
                       
  For The Three Months Ended
  September 30, 2016   June 30, 2016   September 30, 2015
  Average Balance Interest and Dividends (1) Yield/Cost   Average Balance Interest and Dividends (1) Yield/Cost   Average Balance Interest and Dividends (1) Yield/Cost
(Dollars in thousands)                      
Interest-earning assets:                      
Loans $ 2,430,114   $ 21,650     3.54 %   $ 2,387,538   $ 21,499     3.62 %   $ 2,359,293   $ 20,937     3.52 %
Securities   165,738     481     1.15 %     150,257     515     1.38 %     191,530     465     0.96 %
Federal Home Loan Bank of Boston stock   18,206     161     3.52 %     17,763     179     4.05 %     22,883     166     2.88 %
Federal funds and other earning assets   36,439     46     0.50 %     22,607     26     0.46 %     11,089     8     0.29 %
Total interest-earning assets   2,650,497     22,338     3.35 %     2,578,165     22,219     3.47 %     2,584,795     21,576     3.31 %
Noninterest-earning assets   135,828           127,656           122,438      
Total assets $ 2,786,325         $ 2,705,821         $ 2,707,233      
                       
Interest-bearing liabilities:                      
NOW accounts $ 506,509   $ 385     0.30 %   $ 470,835   $ 336     0.29 %   $ 486,798   $ 357     0.29 %
Money market   525,301     1,085     0.82 %     486,826     930     0.77 %     437,000     867     0.79 %
Savings accounts   221,981     60     0.11 %     226,820     59     0.10 %     210,978     58     0.11 %
Certificates of deposit   481,901     1,445     1.19 %     473,976     1,410     1.20 %     430,152     1,130     1.04 %
Total interest-bearing deposits   1,735,692     2,975     0.68 %     1,658,457     2,735     0.66 %     1,564,928     2,412     0.61 %
Federal Home Loan Bank of Boston Advances   250,459     955     1.52 %     279,601     980     1.41 %     411,236     890     0.86 %
Repurchase agreement borrowings   10,500     98     3.71 %     10,500     96     3.68 %     10,500     96     3.63 %
Repurchase liabilities   51,297     22     0.17 %     41,757     15     0.14 %     57,644     24     0.17 %
Total interest-bearing liabilities   2,047,948     4,050     0.79 %     1,990,315     3,826     0.77 %     2,044,308     3,422     0.66 %
Noninterest-bearing deposits   417,917           404,809           368,200      
Other noninterest-bearing liabilities   64,201           58,085           51,089      
Total liabilities   2,530,066           2,453,209           2,463,597      
Stockholders’ equity   256,259           252,612           243,636      
Total liabilities and stockholders’ equity $ 2,786,325         $ 2,705,821         $ 2,707,233      
                       
Tax-equivalent net interest income   $ 18,288         $ 18,393         $ 18,154    
Less: tax-equivalent adjustment     (533 )         (521 )         (482 )  
Net interest income   $ 17,755         $ 17,872         $ 17,672    
                       
Net interest rate spread (2)       2.56 %         2.70 %         2.65 %
Net interest-earning assets (3) $ 602,549         $ 587,850         $ 540,487      
Net interest margin (4)       2.74 %         2.87 %         2.79 %
Average interest-earning assets to average interest-bearing liabilities                      
  129.42 %     129.54 %     126.44 %
                       
(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,
    2016       2015  
  Average Balance Interest and
Dividends (1)
Yield/Cost   Average Balance Interest and
Dividends (1)
Yield/Cost
(Dollars in thousands)              
Interest-earning assets:              
Loans $ 2,394,991   $ 64,282     3.59 %   $ 2,256,907   $ 60,259     3.57 %
Securities   156,876     1,479     1.26 %     188,781     1,337     0.95 %
Federal Home Loan Bank of Boston stock   18,590     527     3.79 %     21,004     331     2.11 %
Federal funds and other earning assets   28,677     104     0.48 %     11,166     19     0.23 %
Total interest-earning assets   2,599,134     66,392     3.41 %     2,477,858     61,946     3.34 %
Noninterest-earning assets   130,327           118,969      
Total assets $ 2,729,461         $ 2,596,827      
               
Interest-bearing liabilities:              
NOW accounts $ 500,097   $ 1,101     0.29 %   $ 463,878   $ 988     0.28 %
Money market   497,130     3,010     0.80 %     450,985     2,635     0.78 %
Savings accounts   221,635     177     0.11 %     212,427     172     0.11 %
Certificates of deposit   468,979     4,158     1.18 %     397,094     2,966     1.00 %
Total interest-bearing deposits   1,687,841     8,446     0.67 %     1,524,384     6,761     0.59 %
Federal Home Loan Bank of Boston Advances   267,527     2,902     1.45 %     361,094     2,445     0.91 %
Repurchase agreement borrowings   10,500     289     3.66 %     13,346     351     3.52 %
Repurchase liabilities   46,882     56     0.16 %     56,061     87     0.21 %
Total interest-bearing liabilities   2,012,750     11,693     0.78 %     1,954,885     9,644     0.66 %
Noninterest-bearing deposits   404,599           349,444      
Other noninterest-bearing liabilities   59,668           52,000      
Total liabilities   2,477,017           2,356,329      
Stockholders’ equity   252,444           240,498      
Total liabilities and stockholders’ equity $ 2,729,461         $ 2,596,827      
               
Tax-equivalent net interest income   $ 54,699         $ 52,302    
Less: tax-equivalent adjustment     (1,566 )         (1,156 )  
Net interest income   $ 53,133         $ 51,146    
               
Net interest rate spread (2)       2.63 %         2.68 %
Net interest-earning assets (3) $ 586,384         $ 522,973      
Net interest margin (4)       2.81 %         2.82 %
Average interest-earning assets to average interest-bearing liabilities                  
        129.13 %       126.75 %  
           
(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, 2016, June 30, 2016, March 31, 2016, December 31, 2015 and September 30, 2015.  The Company believes the use of these non-GAAP financial measures provides additional clarity in assessing the results of the Company.

                     
    At or for the Three Months Ended
    September 30,   June 30,   March 31,   December 31,   September 30,
(Dollars in thousands, except per share data)   2016       2016       2016       2015       2015  
Net Income $ 3,773     $ 3,643     $ 3,613     $ 2,381     $ 4,215  
  Adjustments:                  
  Plus: Mortgage servicing rights (recovery) impairment   (91 )     374                    
  Less: Prepayment penalty fees         (370 )     (10 )     (43 )      
  Less: Off-balance sheet commitments change in accounting estimate         (423 )                  
  Less: Gain on sale of foreclosed real estate                           (557 )
  Less: Bank-owned life insurance proceeds               (77 )     (379 )      
Total core adjustments before taxes   (91 )     (419 )     (87 )     (422 )     (557 )
  Tax benefit on core adjustments   32       147       4       15       195  
  Deferred tax asset valuation allowance (1)                     768        
Total core adjustments after taxes   (59 )     (272 )     (83 )     361       (362 )
Total core net income $ 3,714     $ 3,371     $ 3,530     $ 2,742     $ 3,853  
                     
                     
Total net interest income $ 17,755     $ 17,872     $ 17,506     $ 17,363     $ 17,672  
  Less: Prepayment penalty fees         (370 )     (10 )     (43 )      
Total core net interest income $ 17,755     $ 17,502     $ 17,496     $ 17,320     $ 17,672  
                     
Total noninterest income $ 3,685     $ 2,617     $ 2,900     $ 3,468     $ 3,241  
  Plus: Mortgage servicing rights (recovery) impairment   (91 )     374                    
  Less: Bank-owned life insurance proceeds               (77 )     (379 )      
Total core noninterest income $ 3,594     $ 2,991     $ 2,823     $ 3,089     $ 3,241  
                     
Total noninterest expense $ 15,484     $ 14,644     $ 15,277     $ 15,958     $ 14,718  
  Plus: Off-balance sheet commitments change in accounting estimate         423                    
  Less: Gain on sale of foreclosed real estate                           557  
Total core noninterest expense $ 15,484     $ 15,067     $ 15,277     $ 15,958     $ 15,275  
                     
Core earnings per common share, diluted $ 0.24     $ 0.22     $ 0.23     $ 0.18     $ 0.25  
                     
Core net interest rate margin (2)    2.74 %     2.81 %     2.82 %     2.76 %     2.79 %
Core return on average assets (annualized)   0.53 %     0.50 %     0.52 %     0.41 %     0.57 %
Core return on average equity (annualized)   5.80 %     5.34 %     5.68 %     4.45 %     6.33 %
Core non-interest expense to average assets (annualized)   2.22 %     2.23 %     2.27 %     2.37 %     2.26 %
Efficiency ratio (3)    72.53 %     73.52 %     75.19 %     78.19 %     73.04 %
                     
Tangible book value (4)  $ 16.17     $ 15.95     $ 15.72     $ 15.47     $ 15.30  
                     
                     
(1) Represents a valuation allowance related to a deferred tax asset associated with the establishment of the Bank’s foundation in 2011.
                     
(2) Represents 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.
                     
CONTACT: Jennifer H. Daukas
Investor Relations Officer 
One Farm Glen Boulevard, Farmington, CT 06032 
P 860-284-6359
F 860-409-3316 
jdaukas@farmingtonbankct.com
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