First Connecticut Bancorp, Inc. Reports Third Quarter 2015 Earnings of $0.28 Earnings Per Share

FARMINGTON, Conn., Oct. 21, 2015 (GLOBE NEWSWIRE) — First Connecticut Bancorp, Inc. (the “Company”) (NASDAQ:FBNK), the holding company for Farmington Bank (the “Bank”), reported net income of $4.2 million, or $0.28 diluted earnings per share for the quarter ended September 30, 2015 compared to net income of $2.5 million, or $0.17 diluted earnings per share for the quarter ended September 30, 2014.

Net income on a core earnings basis was $3.9 million, or $0.25 diluted core earnings per share for the quarter ended September 30, 2015 compared to $2.5 million, or $0.17 diluted core earnings per share for the quarter ended September 30, 2014.  Core earnings exclude non-recurring items. 

“The impact of our organic growth strategy and commitment to improve earnings and consequently grow tangible book value and earnings per share is evident in our results this quarter” stated John J. Patrick Jr., First Connecticut Bancorp’s Chairman, President and CEO.

“We opened our 23rd branch office in West Springfield, MA on October 6, 2015 and anticipate opening our 24th branch office in East Longmeadow, MA in November.  We have received regulatory approval to open two additional branch offices in Manchester, CT and Vernon, CT in the first half of 2016.”

Financial Highlights

  • Net interest income increased $573,000 to $17.7 million in the third quarter of 2015 compared to the linked quarter and increased $1.7 million or 11% compared to the third quarter of 2014.
  • Net gain on loans sold increased $581,000 to $993,000 in the third quarter of 2015 compared to the linked quarter primarily due to selling $83.2 million of fixed rate residential portfolio loans to reposition the balance sheet and maintain our asset sensitive interest rate position.
  • Strong organic loan growth continued during the quarter as total loans increased $50.4 million to $2.3 billion at September 30, 2015 and increased $287.6 million or 14% from a year ago.  Loan growth during the quarter was primarily driven by an $82.0 million increase in the commercial loan portfolio offset by a $31.5 million decrease in the residential loan portfolio.
  • Overall deposits increased $95.3 million to $2.0 billion in the third quarter of 2015 compared to the linked quarter and increased $245.4 million or 14% from a year ago. 
  • Checking accounts grew by 3.0% or 1,432 net new accounts in the third quarter of 2015 and by 11.8% or 5,182 net new accounts from a year ago.
  • Core noninterest expense to average assets was 2.26% in the third quarter of 2015 compared to 2.39% in the linked quarter and 2.46% in the third quarter of 2014.
  • Tangible book value per share is $15.30 compared to $15.01 on a linked quarter basis and $14.56 at September 30, 2014.
  • Asset quality decreased slightly compared to the linked quarter due to one commercial loan relationship but improved year over year.  Loan delinquencies 30 days and greater represented 0.67% of total loans at September 30, 2015 compared to 0.58% at June 30, 2015 and 0.78% at September 30, 2014.  Non-accrual loans represented 0.71% of total loans compared to 0.57% of total loans on a linked quarter basis and 0.76% of total loans at September 30, 2014. 
  • The allowance for loan losses represented 0.86% of total loans at September 30, 2015 and June 30, 2015 and 0.91% at September 30, 2014. 
  • The Company paid a cash dividend of $0.06 per share on September 14, 2015, an increase of $0.01 compared to the linked quarter.

Third quarter 2015 compared with second quarter 2015

Net interest income

  • Net interest income increased $573,000 to $17.7 million in the third quarter of 2015 compared to the linked quarter due primarily to a $117.8 million increase in the average net loan balance offset by a $357,000 increase in interest expense.
  • Net interest margin decreased 7 basis points to 2.79% in the third quarter of 2015 compared to 2.86% in the linked quarter due to a 5 basis point decrease in the loan yield and a 2 basis point increase in the cost of interest-bearing liabilities.  The decrease in the loan yield was primarily due to lower yields on new loans originated as a result of a low interest rate environment during the quarter. 
  • The cost of interest-bearing liabilities increased 2 basis points to 66 basis points in the third quarter of 2015 compared to 64 basis points in the linked quarter primarily due to money market and certificate of deposit promotions.

Provision for loan losses

  • Provision for loan losses was $386,000 for the third quarter of 2015 compared to $663,000 for the linked quarter.
  • Net charge-offs (recoveries) in the quarter were ($43,000) or (0.01%) to average loans (annualized) compared to $314,000 or 0.06% to average loans (annualized) in the linked quarter.
  • The allowance for loan losses represented 0.86% of total loans at September 30, 2015 and June 30, 2015. 

Noninterest income

  • Total noninterest income decreased $833,000 to $3.2 million in the third quarter of 2015 compared to the linked quarter primarily due to no gain on sale of investments during the quarter, a $219,000 decrease in other noninterest income offset by a $581,000 increase in net gain on loans sold.
  • Gain on sale of investments was $1.3 million in the second quarter of 2015 due to the sale of a trust preferred security.
  • Net gain on loans sold increased $581,000 primarily due to selling $83.2 million of fixed rate residential portfolio loans to reposition the balance sheet and maintain our asset sensitive interest rate position.
  • Other income decreased $219,000 to $309,000 in the third quarter of 2015 compared to $528,000 in the linked quarter primarily due to a $95,000 decrease in swap fees and a decrease in mortgage banking derivatives income.

Noninterest expense

  • Noninterest expense decreased $879,000 in the third quarter of 2015 to $14.7 million compared to the linked quarter primarily due to a $970,000 decrease in other operating expenses offset by a $267,000 increase in salaries and employee benefits.  Noninterest expense on a core basis remained flat at $15.3 million in the third quarter of 2015 compared to the linked quarter.  
  • Other operating expenses decreased $970,000 on a linked quarter basis primarily due to a $557,000 gain on foreclosed real estate in the third quarter and $258,000 in non-recurring stock compensation costs in the second quarter related to the retirement of two directors and a $149,000 loss on a credit sharing arrangement on a sold loan incurred in the second quarter.

Income tax expense

  • Income tax expense was $1.6 million in the third quarter of 2015 compared to $1.4 million in the linked quarter.  The increase in income tax expense in the third quarter was primarily due to an $896,000 increase in income before taxes.

Third quarter 2015 compared with third quarter 2014

Net interest income

  • Net interest income increased $1.7 million to $17.7 million in the third quarter of 2015 compared to the prior year quarter primarily due to a $362.3 million increase in the average net loan balance offset by an $879,000 increase in interest expense.
  • Net interest margin decreased to 2.79% in the third quarter of 2015 compared to 2.91% in the third quarter of 2014 primarily due to a 5 basis point decrease in the yield on interest-earning assets and a 7 basis point increase in the cost of interest-bearing liabilities.
  • The yield on interest-earning assets decreased to 3.31% in the third quarter of 2015 compared to 3.36% in the prior year quarter primarily due to a 12 basis point decrease in the yield on average loans offset by increases in the investments yields.
  • The cost of interest-bearing liabilities increased to 66 basis points in the third quarter of 2015 compared to 59 basis points in the prior year quarter primarily due to certificate of deposit promotions and entering the brokered deposit market.

Provision for loan losses

  • Provision for loan losses was $386,000 for the third quarter of 2015 compared to $1.0 million for the prior year quarter.
  • Net charge-offs (recoveries) in the quarter were ($43,000) or (0.01%) to average loans (annualized) compared to $397,000 or 0.08% to average loans (annualized) in the prior year quarter.
  • The allowance for loan losses represented 0.86% of total loans at September 30, 2015 compared to 0.91% at September 30, 2014. 

Noninterest income

  • Total noninterest income increased $463,000 to $3.2 million in the third quarter of 2015 compared to the prior year quarter primarily due to a $360,000 increase in net gain on loans sold, a $77,000 increase in fees for customer services and a $65,000 increase in bank owned life insurance income.

Noninterest expense

  • Noninterest expense on a core basis increased $1.1 million in the third quarter of 2015 compared to the prior year quarter primarily due to a $709,000 increase in salaries and employee benefits and a $295,000 increase in other operating expenses.
  • Salaries and employee benefits increased $709,000 primarily due to costs associated with our expansion into western Massachusetts, growth driven staff increases in our compliance areas and a general increase to maintain the Bank’s growth.
  • Other operating expenses increased $295,000 due to a general increase in other costs to support the Bank’s operations.

Income tax expense

  • Income tax expense was $1.6 million in the third quarter of 2015 compared to $997,000 in the prior year quarter.  The increase in income tax expense in the third quarter was primarily due to a $2.3 million increase in income before taxes.

September 30, 2015 compared to September 30, 2014

Financial Condition

  • Total assets increased $312.8 million or 13% at September 30, 2015 to $2.7 billion compared to $2.4 billion at September 30, 2014, largely reflecting an increase in loans.
  • Our investment portfolio totaled $196.9 million at September 30, 2015 compared to $207.1 million at September 30, 2014, a decrease of $10.3 million.
  • Net loans increased $286.5 million at September 30, 2015 to $2.3 billion compared to $2.0 billion at September 30, 2014 due to our continued focus on commercial and residential lending.
  • Deposits increased $245.4 million at September 30, 2015 to $2.0 billion compared to $1.7 billion at September 30, 2014 primarily due to increases in municipal deposits, demand deposits and time deposits accounts as we continue to develop and grow relationships in the geographical areas we serve.  We entered the brokered deposit market during the second quarter of 2015 with balances totaling $55.5 million at September 30, 2015.
  • Federal Home Loan Bank of Boston advances increased $68.9 million to $373.6 million at September 30, 2015 compared to $304.7 million at September 30, 2014.  Advances were used to support loan and securities growth during the quarter.

Asset Quality

  • Asset quality decreased slightly compared to the linked quarter due to one commercial loan relationship totaling $3.5 million at September 30, 2015 was 30 days delinquent and on nonaccrual due to a Chapter 11 Bankruptcy filing.
  • At September 30, 2015, the allowance for loan losses represented 0.86% of total loans and 120.05% of non-accrual loans, compared to 0.86% of total loans and 150.94% of non-accrual loans at June 30, 2015 and 0.91% of total loans and 119.91% of non-accrual loans at September 30, 2014.
  • Loan delinquencies 30 days and greater represented to 0.67% of total loans at September 30, 2015 compared to 0.58% of total loans at June 30, 2015 and 0.78% of total loans at September 30, 2014.
  • Non-accrual loans represented 0.71% of total loans at September 30, 2015 compared to 0.57% of total loans at June 30, 2015 and 0.76% of total loans at September 30, 2014.
  • Net charge-offs (recoveries) in the quarter were ($43,000) or (0.01%) to average loans (annualized) compared to $314,000 or 0.06% to average loans (annualized) in the linked quarter and $397,000 or 0.08% 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 12.72% at September 30, 2015. 
  • Tangible book value per share was $15.30 compared to $15.01 on a linked quarter basis and $14.56 at September 30, 2014.
  • During the third quarter of 2015, the Company repurchased 7,589 shares of common stock at an average price per share of $15.76 at a total cost of $120,000.  Repurchased shares are held as treasury stock and will be available for general corporate purposes.  The Company has 772,745 shares remaining to repurchase at September 30, 2015 from prior regulatory approval.
  • At September 30, 2015, the Company continued to have adequate liquidity including significant unused borrowing capacity at the Federal Home Loan Bank of Boston and the Federal Reserve Bank, as well as access to funding through brokered deposits.

About First Connecticut Bancorp, Inc.

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

Conference Call

First Connecticut will host a conference call on Thursday, October 22, 2015 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 tabular form 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)   2015       2015       2015       2014       2014      
Selected Financial Condition Data:                      
                       
Total assets $   2,708,454     $   2,626,217     $   2,549,074     $   2,485,360     $   2,395,674      
Cash and cash equivalents      47,447         42,992         44,847         42,863         43,914      
Securities held-to-maturity, at amortized cost     25,486         34,366         21,006         16,224         12,439      
Securities available-for-sale, at fair value     171,390         143,799         173,829         188,041         194,706      
Federal Home Loan Bank of Boston stock, at cost     23,038         21,496         19,785         19,785         17,724      
Loans, net     2,318,257         2,268,385         2,186,937         2,119,917         2,031,780      
Deposits     1,973,355         1,878,040         1,887,954         1,733,041         1,727,994      
Federal Home Loan Bank of Boston advances     373,600         400,700         308,700         401,700         304,700      
Total stockholders’ equity     243,195         239,082         237,709         234,563         233,646      
Allowance for loan losses     20,010         19,581         19,232         18,960         18,556      
Non-accrual loans     16,668         12,973         14,086         15,468         15,475      
Impaired loans     42,662         39,975         42,130         43,452         39,579      
Loan delinquencies 30 days and greater     15,598         13,244         14,193         16,079         15,922      
                       
Selected Operating Data:                      
                       
Interest income $   21,094     $   20,164     $   19,532     $   19,412     $   18,528      
Interest expense     3,422         3,065         3,157         3,017         2,543      
  Net interest income     17,672         17,099         16,375         16,395         15,985      
  Provision for loan losses     386         663         615         632         1,041      
Net interest income after provision for loan losses     17,286         16,436         15,760         15,763         14,944      
Noninterest income     3,241         4,074         2,664         2,498         2,778      
Noninterest expense     14,718         15,597         14,937         14,615         14,219      
Income before income taxes     5,809         4,913         3,487         3,646         3,503      
Income tax expense     1,594         1,441         976         499         997      
                       
Net income $   4,215     $   3,472     $   2,511     $   3,147     $   2,506      
                       
Performance Ratios (annualized):                      
                       
Return on average assets   0.62 %     0.54 %     0.40 %     0.52 %     0.43 %    
Return on average equity   6.92 %     5.77 %     4.24 %     5.31 %     4.27 %    
Net interest rate spread (1)    2.65 %     2.72 %     2.68 %     2.68 %     2.78 %    
Net interest rate margin (2)    2.79 %     2.86 %     2.83 %     2.83 %     2.91 %    
Non-interest expense to average assets (3)    2.26 %     2.39 %     2.34 %     2.39 %     2.46 %    
Efficiency ratio (4)   73.04 %     77.13 %     78.35 %     77.70 %     75.78 %    
Average interest-earning assets to average                      
  interest-bearing liabilities   126.44 %     126.98 %     125.86 %     127.89 %     128.17 %    
Loans to deposits   118.49 %     121.83 %     116.86 %     123.42 %     118.65 %    
                       
Asset Quality Ratios:                      
                       
Allowance for loan losses as a percent of total loans   0.86 %     0.86 %     0.87 %     0.89 %     0.91 %    
Allowance for loan losses as a percent of                      
  non-accrual loans   120.05 %     150.94 %     136.53 %     122.58 %     119.91 %    
Net charge-offs (recoveries) to average loans (annualized)   (0.01 %)     0.06 %     0.06 %     0.04 %     0.08 %    
Non-accrual loans as a percent of total loans   0.71 %     0.57 %     0.64 %     0.72 %     0.76 %    
Non-accrual loans as a percent of total assets   0.62 %     0.49 %     0.55 %     0.62 %     0.65 %    
Loan delinquencies 30 days and greater as a                      
  percent of total loans   0.67 %     0.58 %     0.64 %     0.75 %     0.78 %    
                       
Per Share Related Data:                      
                       
Basic earnings per share $   0.28     $   0.23     $   0.17     $   0.21     $   0.17      
Diluted earnings per share $   0.28     $   0.23     $   0.17     $   0.21     $   0.17      
Dividends declared per share $   0.06     $   0.05     $   0.05     $   0.05     $   0.05      
Tangible book value (5) $   15.30     $   15.01     $   14.82     $   14.64     $   14.56      
Common stock shares outstanding     15,893,263         15,922,888       16,035,005       16,026,319       16,043,031      
Weighted-average basic shares outstanding     14,632,951       14,694,472       14,722,112       14,695,490       14,613,115      
Weighted-average diluted shares outstanding     14,887,461       14,839,454       14,850,597       14,836,032       14,710,880      
                       
                       
(1) Represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.        
                       
(2) Represents tax-equivalent net interest income as a percent of average interest-earning assets.                
                       
(3) Represents core noninterest expense annualized divided by average assets.  See “Reconciliation of Non-GAAP Financial Measures” table.        
                       
(4) Represents core noninterest expense divided by the sum of core net interest income and core noninterest income.             
  See “Reconciliation of Non-GAAP Financial Measures” table.                      
                       
(5) Represents ending stockholders’ equity less goodwill and intangible assets (excluding mortgage servicing rights) divided by ending common shares outstanding.    
  The Company does not have goodwill and intangible assets for any of the periods presented.  See “Reconciliation of Non-GAAP Financial Measures” table.    
                       

 

First Connecticut Bancorp, Inc.
Selected Financial Data (Unaudited)
 
                       
  At or for the Three Months Ended    
  September 30,   June 30,   March 31,   December 31,   September 30,    
(Dollars in thousands)   2015       2015       2015       2014       2014      
Capital Ratios:                      
                       
Equity to total assets at end of period   8.98 %     9.10 %     9.33 %     9.44 %     9.75 %    
Average equity to average assets   9.00 %     9.36 %     9.45 %     9.71 %     10.13 %    
Total Capital (to Risk Weighted Assets)   12.72 % *   13.11 %     13.44 %     13.73 %     14.12 %    
Tier I Capital (to Risk Weighted Assets)   11.76 % *   12.12 %     12.44 %     12.70 %     13.07 %    
Common Equity Tier I Capital    11.76 % *   12.12 %     12.44 %   n/a   n/a    
Tier I Leverage Capital (to Average Assets)   9.24 % *   9.57 %     9.72 %     9.86 %     10.25 %    
Total equity to total average assets   8.98 %     9.29 %     9.48 %     9.61 %     10.09 %    
                       
* Estimated                      
                       
Loans and Allowance for Loan Losses:                      
                       
Real estate                      
  Residential $   851,784     $   888,376     $   850,819     $   827,005     $   789,166      
  Commercial     862,367         817,955         769,712         765,066         717,399      
  Construction     29,244         42,858         53,913         57,371         80,242      
Installment     3,007         3,103         3,114         3,356         3,524      
Commercial     410,704         359,537         352,085         309,708         289,708      
Collateral     1,632         1,551         1,676         1,733         1,826      
Home equity line of credit     174,579         169,507         169,969         169,768         163,608      
Revolving credit     96         77         80         99         97      
Resort     807         837         880         929         1,019      
  Total loans   2,334,220       2,283,801       2,202,248       2,135,035       2,046,589      
 Net deferred loan costs      4,047         4,165         3,921         3,842         3,747      
  Loans     2,338,267         2,287,966         2,206,169         2,138,877         2,050,336      
 Allowance for loan losses      (20,010 )       (19,581 )       (19,232 )       (18,960 )       (18,556 )    
  Loans, net $   2,318,257     $   2,268,385     $   2,186,937     $   2,119,917     $   2,031,780      
                       
Deposits:                      
                       
Noninterest-bearing demand deposits $   359,757     $   377,092     $   337,211     $   330,524     $   323,499      
Interest-bearing                      
  NOW accounts     527,128         425,789         499,130         355,412       454,650      
  Money market     440,249         430,558         462,532         470,991       417,498      
  Savings accounts     211,170         220,154         214,083         210,892       200,501      
  Time deposits     435,051         424,447         374,998         365,222       331,846      
Total interest-bearing deposits     1,613,598         1,500,948         1,550,743         1,402,517         1,404,495      
  Total deposits $   1,973,355     $   1,878,040     $   1,887,954     $   1,733,041     $   1,727,994      
                       

   
First Connecticut Bancorp, Inc.
Consolidated Statements of Condition (Unaudited)
 
                 
                         
              September 30,   June 30,   September 30,  
                2015       2015       2014    
(Dollars in thousands)            
Assets                  
Cash and due from banks $   33,564     $   35,595     $   41,159    
Interest bearing deposits with other institutions     13,883       7,397       2,755    
    Total cash and cash equivalents   47,447       42,992       43,914    
Securities held-to-maturity, at amortized cost   25,486       34,366       12,439    
Securities available-for-sale, at fair value   171,390       143,799       194,706    
Loans held for sale   8,416       7,550       5,533    
Loans (1)       2,338,267       2,287,966       2,050,336    
  Allowance for loan losses   (20,010 )     (19,581 )     (18,556 )  
    Loans, net   2,318,257       2,268,385       2,031,780    
Premises and equipment, net   17,870       17,964       19,384    
Federal Home Loan Bank of Boston stock, at cost   23,038       21,496       17,724    
Accrued income receivable   6,305       6,425       5,331    
Bank-owned life insurance   50,633       50,283       39,403    
Deferred income taxes   15,935       16,450       14,529    
Prepaid expenses and other assets   23,677       16,507       10,931    
          Total assets $   2,708,454     $   2,626,217     $   2,395,674    
                         
Liabilities and Stockholders’ Equity            
Deposits                
  Interest-bearing $   1,613,598     $   1,500,948     $   1,404,495    
  Noninterest-bearing   359,757       377,092       323,499    
                1,973,355       1,878,040       1,727,994    
Federal Home Loan Bank of Boston advances   373,600       400,700       304,700    
Repurchase agreement borrowings   10,500       10,500       21,000    
Repurchase liabilities   58,084       56,041       73,855    
Accrued expenses and other liabilities   49,720       41,854       34,479    
          Total liabilities   2,465,259       2,387,135       2,162,028    
                         
Stockholders’ Equity            
  Common stock   181       181       181    
  Additional paid-in-capital   181,195       180,764       177,937    
  Unallocated common stock held by ESOP   (11,893 )     (12,160 )     (12,949 )  
  Treasury stock, at cost   (30,411 )     (30,389 )     (28,585 )  
  Retained earnings   111,274       108,014       101,089    
  Accumulated other comprehensive loss   (7,151 )     (7,328 )     (4,027 )  
          Total stockholders’ equity   243,195       239,082       233,646    
          Total liabilities and stockholders’ equity $   2,708,454     $   2,626,217     $   2,395,674    
                         
(1) Loans include net deferred fees and unamortized premiums of $4.0 million, $4.2 million and $3.7 million at September 30, 2015,   
    June 30, 2015 and September 30, 2014, 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)   2015       2015       2014       2015       2014    
Interest income                    
Interest and fees on loans                    
  Mortgage   $   15,861     $   15,331     $   14,490     $   46,250     $   41,793    
  Other       4,594       4,264       3,608       12,853       10,389    
Interest and dividends on investments                    
  United States Government and agency obligations   401       385       258       1,109       665    
  Other bonds   13       35       57       66       196    
  Corporate stocks   217       145       109       493       307    
Other interest income   8       4       6       19       12    
          Total interest income   21,094       20,164       18,528       60,790       53,362    
Interest expense                    
Deposits       2,412       2,140       1,845       6,761       5,250    
Interest on borrowed funds   890       804       479       2,445       1,166    
Interest on repo borrowings   96       92       182       351       538    
Interest on repurchase liabilities   24       29       37       87       109    
          Total interest expense   3,422       3,065       2,543       9,644       7,063    
          Net interest income   17,672       17,099       15,985       51,146       46,299    
Provision for loan losses   386       663       1,041       1,664       1,956    
          Net interest income                    
            after provision for loan losses   17,286       16,436       14,944       49,482       44,343    
Noninterest income                    
Fees for customer services   1,536       1,500       1,459       4,409       3,967    
Gain on sale of investments         1,250             1,523          
Net gain on loans sold   993       412       633       1,925       1,072    
Brokerage and insurance fee income   54       60       47       163       140    
Bank owned life insurance income   349       324       284       946       847    
Other         309       528       355       1,013       580    
          Total noninterest income   3,241       4,074       2,778       9,979       6,606    
Noninterest expense                    
Salaries and employee benefits   9,302       9,035       8,593       27,127       25,519    
Occupancy expense   1,219       1,272       1,271       3,858       3,829    
Furniture and equipment expense   1,034       1,077       1,093       3,147       3,217    
FDIC assessment   413       402       361       1,227       1,010    
Marketing     443       534       332       1,386       1,219    
Other operating expenses   2,307         3,277         2,569       8,507         7,639    
          Total noninterest expense   14,718       15,597       14,219       45,252       42,433    
          Income before income taxes   5,809       4,913       3,503       14,209       8,516    
Income tax expense   1,594       1,441       997       4,011       2,328    
          Net income $   4,215     $   3,472     $   2,506     $   10,198     $   6,188    
                                 
Earnings per share:                     
  Basic     $   0.28     $   0.23     $   0.17     $   0.68     $   0.41    
  Diluted         0.28         0.23         0.17         0.67         0.41    
Weighted average shares outstanding:                    
  Basic         14,632,951         14,694,472         14,613,115        14,706,908        14,677,650    
  Diluted         14,887,461         14,839,454         14,710,880        14,883,362        14,778,961    
                                 

 

First Connecticut Bancorp, Inc.
Consolidated Average Balances, Yields and Rates (Unaudited)
       
                               
                               
  For The Three Months Ended        
  September 30, 2015   June 30, 2015   September 30, 2014        
  Average Balance Interest and Dividends (1) Yield/Cost   Average Balance Interest and Dividends (1) Yield/Cost   Average Balance Interest and Dividends (1) Yield/Cost        
(Dollars in thousands)                              
Interest-earning assets:                              
Loans $   2,359,293   $   20,937     3.52 %   $   2,241,447   $   19,949     3.57 %   $   1,997,010   $   18,303     3.64 %        
Securities      191,530       465     0.96 %       178,780       478     1.07 %       189,208       369     0.77 %        
Federal Home Loan Bank of Boston stock     22,883       166     2.88 %       20,310       86     1.70 %       17,724       55     1.23 %        
Federal funds and other earning assets      11,089       8     0.29 %       10,032       5     0.20 %       4,918       6     0.48 %        
Total interest-earning assets      2,584,795       21,576     3.31 %       2,450,569       20,518     3.36 %       2,208,860       18,733     3.36 %        
Noninterest-earning assets      122,438             121,820             106,705              
Total assets  $   2,707,233         $   2,572,389         $   2,315,565              
                               
Interest-bearing liabilities:                              
NOW accounts $   486,798   $   357     0.29 %   $   454,532   $   310     0.27 %   $   436,303   $   313     0.28 %        
Money market     437,000       867     0.79 %       435,749       798     0.73 %       406,293       748     0.73 %        
Savings accounts      210,978       58     0.11 %       217,651       57     0.11 %       199,505       57     0.11 %        
Certificates of deposit      430,152       1,130     1.04 %       392,941       975     1.00 %       330,497       727     0.87 %        
Total interest-bearing deposits      1,564,928       2,412     0.61 %       1,500,873       2,140     0.57 %       1,372,598       1,845     0.53 %        
Federal Home Loan Bank of Boston Advances     411,236       890     0.86 %       366,460       804     0.88 %       270,250       479     0.70 %        
Repurchase agreement borrowings     10,500       96     3.63 %       10,500       92     3.51 %       21,000       182     3.44 %        
Repurchase liabilities      57,644       24     0.17 %       52,043       29     0.22 %       59,624       37     0.25 %        
Total interest-bearing liabilities      2,044,308       3,422     0.66 %       1,929,876       3,065     0.64 %       1,723,472       2,543     0.59 %        
Noninterest-bearing deposits     368,200             348,857             321,008              
Other noninterest-bearing liabilities      51,089             52,831             36,481              
Total liabilities      2,463,597             2,331,564             2,080,961              
Stockholders’ equity     243,636             240,825             234,604              
Total liabilities and stockholders’ equity $   2,707,233         $   2,572,389         $   2,315,565                  
                               
Tax-equivalent net interest income   $   18,154         $   17,453         $   16,190            
Less: tax-equivalent adjustment       (482 )           (354 )           (205 )          
Net interest income   $   17,672         $   17,099         $   15,985            
                               
Net interest rate spread (2)        2.65 %         2.72 %         2.78 %        
Net interest-earning assets (3)  $   540,487         $   520,693         $   485,388              
Net interest margin (4)        2.79 %         2.86 %         2.91 %        
Average interest-earning assets to average interest-bearing liabilities                               
  126.44 %     126.98 %     128.16 %        
                               
(1) On a fully-tax equivalent basis.                              
(2) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost             
  of average interest-bearing liabilities.                              
(3) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.                  
(4) Net interest margin represents tax-equivalent net interest income divided by average total interest-earning assets.                
                               

     
First Connecticut Bancorp, Inc.
Consolidated Average Balances, Yields and Rates (Unaudited)
   
                   
                   
  For The Nine Months Ended September 30,    
    2015       2014      
  Average
Balance
Interest and
Dividends (1)
Yield/
Cost
  Average
Balance
Interest and
Dividends (1)
Yield/
Cost
   
(Dollars in thousands)                  
Interest-earning assets:                  
Loans $   2,256,907   $   60,259     3.57 %   $   1,914,846   $   52,742     3.68 %    
Securities      188,781       1,337     0.95 %       172,482       1,026     0.80 %    
Federal Home Loan Bank of Boston stock     21,004       331     2.11 %       15,218       142     1.25 %    
Federal funds and other earning assets      11,166       19     0.23 %       3,913       12     0.41 %    
Total interest-earning assets      2,477,858       61,946     3.34 %       2,106,459     53,922     3.42 %    
Noninterest-earning assets      118,969             105,511          
Total assets  $   2,596,827         $   2,211,970          
                   
Interest-bearing liabilities:                  
NOW accounts $   463,878   $   988     0.28 %   $   374,084   $   695     0.25 %    
Money market     450,985       2,635     0.78 %       410,066       2,186     0.71 %    
Savings accounts      212,427       172     0.11 %       198,978       154     0.10 %    
Certificates of deposit      397,094       2,966     1.00 %       334,037       2,215     0.89 %    
Total interest-bearing deposits      1,524,384       6,761     0.59 %       1,317,165     5,250     0.53 %    
Federal Home Loan Bank of Boston Advances     361,094       2,445     0.91 %       237,576       1,166     0.66 %    
Repurchase agreement borrowings     13,346       351     3.52 %       21,000       538     3.43 %    
Repurchase liabilities      56,061       87     0.21 %       57,984       109     0.25 %    
Total interest-bearing liabilities      1,954,885       9,644     0.66 %       1,633,725     7,063     0.58 %    
Noninterest-bearing deposits     349,444             308,112          
Other noninterest-bearing liabilities      52,000             36,664          
Total liabilities      2,356,329             1,978,501          
Stockholders’ equity     240,498             233,469          
Total liabilities and stockholders’ equity $   2,596,827         $   2,211,970          
                   
Tax-equivalent net interest income   $   52,302         $   46,859        
Less: tax-equivalent adjustment       (1,156 )           (560 )      
Net interest income   $   51,146         $   46,299        
                   
Net interest rate spread (2)        2.68 %         2.84 %    
Net interest-earning assets (3)  $   522,973         $   472,734          
Net interest margin (4)        2.82 %         2.97 %    
Average interest-earning assets to average interest-bearing liabilities                   
  126.75 %     128.94 %    
                   
(1) On a fully-tax equivalent basis.                  
(2) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost   
  of average interest-bearing liabilities.                  
(3) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.      
(4) Net interest margin represents tax-equivalent net interest income divided by average total interest-earning assets.    
                   

   
First Connecticut Bancorp, Inc.
Reconciliation of Non-GAAP Financial Measures (Unaudited)
 
                       
The table below presents a reconciliation of non-GAAP financial measures with financial measures defined by GAAP for the three months ended September 30, 2015, June 30, 2015, March 31, 2015, December 31, 2014 and September 30, 2014.  The Company believes the use of these non-GAAP financial measures provides additional clarity in assessing the results of the Company.   
                       
    At or for the Three Months Ended  
    September 30,   June 30,   March 31,   December 31,   September 30,  
(Dollars in thousands, except per share data)   2015       2015       2015       2014       2014    
Net Income $   4,215     $   3,472     $   2,511     $   3,147     $   2,506    
  Adjustments:                    
  Plus: Accelerated vesting of stock compensation         258       140                
  Plus: Employee severance               93                
  Less: Prepayment penalty fees         (35 )                    
  Less: Non-recurring payment related to a loan participation                     (250 )        
  Less: Gain on sale of foreclosed real estate   (557 )                          
  Less: Net gain on sales of investments         (1,250 )     (273 )              
Total core adjustments before taxes   (557 )     (1,027 )     (40 )     (250 )        
  Tax benefit on core adjustments   195       359       14       88          
  Tax rate adjustment (1)                     (441 )        
Total core adjustments after taxes   (362 )     (668 )     (26 )     (603 )        
Total core net income $   3,853     $   2,804     $   2,485     $   2,544     $   2,506    
                       
                       
Total net interest income $   17,672     $   17,099     $   16,375     $   16,395     $   15,985    
  Less: Prepayment penalty fees         (35 )                    
  Less: Non-recurring payment related to a loan participation                     (250 )        
Total core net interest income $   17,672     $   17,064     $   16,375     $   16,145     $   15,985    
                       
Total noninterest income $   3,241     $   4,074     $   2,664     $   2,498     $   2,778    
  Less: Net gain on sales of investments         (1,250 )     (273 )              
Total core noninterest income $   3,241     $   2,824     $   2,391     $   2,498     $   2,778    
                       
Total noninterest expense $   14,718     $   15,597     $   14,937     $   14,615     $   14,219    
  Less: Accelerated vesting of stock compensation           (258 )     (140 )              
  Less: Employee severances               (93 )              
  Less: Gain on sale of foreclosed real estate     557                            
Total core noninterest expense $   15,275     $   15,339     $   14,704     $   14,615     $   14,219    
                       
Core earnings per common share, diluted $   0.25     $   0.19     $   0.16     $   0.17     $   0.17    
                       
Core return on average assets (annualized)   0.57 %     0.44 %     0.40 %     0.42 %     0.43 %  
Core return on average equity (annualized)   6.33 %     4.66 %     4.19 %     4.29 %     4.27 %  
Core non-interest expense to average assets (annualized)   2.26 %     2.43 %     2.34 %     2.39 %     2.46 %  
Efficiency ratio (2)    73.04 %     77.13 %     78.35 %     78.39 %     75.78 %  
                       
Tangible book value (3)  $   15.30     $   15.01     $   14.82     $   14.64     $   14.56    
                       
                       
(1) Represents the tax benefit derived from adjusting the tax rate on the Company’s deferred tax assets from 34% to 35%.  The Company’s taxable income placed it in   
    the 35% corporate tax bracket.                    
                       
(2) Represents core noninterest expense divided by the sum of core net interest income and core noninterest income.           
                       
(3) 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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