First Connecticut Bancorp, Inc. reports second quarter 2018 net income of $6.7 million or $0.42 diluted earnings per share

FARMINGTON, Conn., July 18, 2018 (GLOBE NEWSWIRE) — First Connecticut Bancorp, Inc. (NASDAQ:FBNK), the holding company for Farmington Bank, reported a 35% increase in net income of $6.7 million or $0.42 diluted earnings per share for the quarter ended June 30, 2018 compared to net income of $5.0 million or $0.32 diluted earnings per share for the quarter ended June 30, 2017. 

Net income on a core earnings basis was $7.4 million, or $0.46 diluted core earnings per share for the quarter ended June 30, 2018 compared to $5.0 million, or $0.31 diluted core earnings per share for the quarter ended June 30, 2017.  Core earnings exclude non-recurring items. 

On June 19, 2018, First Connecticut Bancorp, Inc. (“FCB”) announced its entry into a definitive Agreement and Plan of Merger with People’s United Financial, Inc. (“People’s United”), pursuant to which FCB will merge with and into People’s United.  Completion of the transaction is subject to customary closing conditions, including receipt of regulatory approvals and the approval of First Connecticut Bancorp, Inc. shareholders.

“I am pleased to report solid core second quarter earnings for the company. As indicated earnings were impacted by certain one-time charges related to our acquisition by Peoples United Financial, Inc. The Board of Directors and Senior Management have always focused on shareholder value and we believe this acquisition maximized shareholder value at a time when, we believe, the operating paradigm is changing for smaller community banks. I would also like to thank our dedicated employees who executed our strategy, which maximized our results for shareholders” stated John J. Patrick Jr., First Connecticut Bancorp’s Chairman, President and CEO.

Financial Highlights

  • Net interest income increased $1.1 million to $22.0 million in the second quarter of 2018 compared to the linked quarter and increased $2.2 million compared to the second quarter of 2017.
  • Organic loan growth remained strong during the second quarter of 2018 as loans increased $106.6 million to $2.9 billion at June 30, 2018 primarily due to an $81.9 million increase in residential real estate loans.  Loans increased $256.7 million or 10% from a year ago. 
  • Asset quality remained strong as loan delinquencies 30 days and greater represented 0.44% of total loans at June 30, 2018 compared to 0.46% of total loans at March 31, 2018 and 0.60% of total loans at June 30, 2017.  Non-accrual loans represented 0.41% of total loans at June 30, 2018 compared to 0.46% of total loans at March 31, 2018 and 0.60% of total loans at June 30, 2017. 
  • Overall deposits remained flat at $2.4 billion in the second quarter of 2018 compared to the linked quarter and increased $198.8 million or 9% from a year ago.
  • Loans to deposits ratio was 120% for the quarter ended June 30, 2018 compared to 115% in the linked quarter and 119% in the second quarter of 2017.
  • Checking accounts grew by 7% or 4,023 net new accounts from a year ago.
  • Net interest margin was 2.90% in the second quarter of 2018 and in the linked quarter and 2.92% in the prior year quarter.
  • Efficiency ratio was 63.96% in the second quarter of 2018 compared to 67.54% in the linked quarter and 66.31% in the prior year quarter.
  • Noninterest expense to average assets was 2.01% in the second quarter of 2018 compared to 2.10% in the linked quarter and 2.12% in the prior year quarter.
  • Tangible book value per share was $17.60 for the quarter ended June 30, 2018 compared to $17.32 on a linked quarter basis and $16.86 at June 30, 2017.
  • The allowance for loan losses represented 0.78% of total loans at June 30, 2018 compared to 0.80% of total loans at March 31, 2018 and 0.83% at June 30, 2017. 
  • The Company paid a quarterly cash dividend of $0.17 per share during the second quarter, an increase of $0.01 compared to the linked quarter and an increase of $0.05 from a year ago.

Second quarter 2018 compared with first quarter 2018

Net interest income

  • Net interest income increased $1.1 million to $22.0 million in the second quarter of 2018 compared to the linked quarter primarily due to a $106.5 million increase in the average loans balance and a 8 basis point increase in the loan yield to 3.84% offset by a $939,000 increase in interest expense.
  • Net interest margin was 2.90% in both the second quarter of 2018 and in the linked quarter.
  • The cost of interest-bearing liabilities increased 10 basis points to 1.07% in the second quarter of 2018 compared to 0.97% in the linked quarter.

Provision for loan losses

  • Provision for loan losses was $69,000 for the second quarter of 2018 compared to $465,000 for the linked quarter. 
  • Net charge-offs in the quarter were $17,000 or 0.00% to average loans (annualized) compared to $293,000 or 0.04% to average loans (annualized) in the linked quarter.
  • The allowance for loan losses represented 0.78% of total loans at June 30, 2018 and 0.80% of total loans at March 31, 2018. 

Noninterest income

  • Total noninterest income increased $117,000 to $3.3 million in the second quarter of 2018 compared to $3.1 million in the linked quarter.
  • Other noninterest income includes swap fees totaling $574,000 in the second quarter of 2018 compared to $624,000 in the linked quarter.

Noninterest expense

  • Noninterest expense increased $780,000 to $17.0 million in the second quarter of 2018 compared to the linked quarter primarily due to increases in other operating expenses.
  • Other operating expenses increased to $3.9 million primarily due to a $451,000 other real estate owned writedown, a $211,000 software termination buyout fee and $210,000 in acquisition related expenses.

Income tax expense

Income tax expense was $1.4 million in the second quarter of 2018 and in the linked quarter. 

Second quarter 2018 compared with second quarter 2017

Net interest income

  • Net interest income increased $2.2 million or 11% to $22.0 million in the second quarter of 2018 compared to the prior year quarter due primarily to a $249.1 million increase in the average loans balance and a 19 basis point increase in the loans yield to 3.84% offset by a $2.2 million increase in interest expense.  
  • Net interest margin was 2.90% in the second quarter of 2018 compared to 2.92% in the prior year quarter.  The Tax Act negatively affected the net interest margin by 4 basis points on a tax-equivalent basis in the second quarter of 2018. 
  • The cost of interest-bearing liabilities increased 28 basis points to 1.07% in the second quarter of 2018 compared to 0.79% in the prior year quarter.

Provision for loan losses

  • Provision for loan losses was $69,000 for the second quarter of 2018 compared to $710,000 for the prior year quarter.
  • Net charge-offs in the quarter were $17,000 or 0.00% to average loans (annualized) compared to $22,000 or 0.00% to average loans (annualized) in the prior year quarter.
  • The allowance for loan losses represented 0.78% of total loans at June 30, 2018 and 0.83% of total loans at June 30, 2018. 

Noninterest income

  • Total noninterest income was $3.3 million in the second quarter of 2018 compared to $3.9 million in the prior year quarter.
  • Net gain on loans sold decreased to $341,000 from $711,000 primarily due to a decrease in volume of loans sold.
  • Bank owned life insurance income decreased $257,000 primarily due to receiving $271,000 in death benefit proceeds in the prior year quarter.
  • Other noninterest income includes swap fees totaling $574,000 compared to $562,000 in the prior year quarter.

Noninterest expense

  • Noninterest expense increased $1.1 million to $17.0 million in the second quarter of 2018 compared to the prior year quarter primarily due to a $1.1 million increase in other operating expenses.
  • Other operating expenses increased $1.1 million to $3.9 million primarily due to a $451,000 other real estate owned writedown, a $211,000 software termination buyout fee and $210,000 in acquisition related expenses.

Income tax expense

Income tax expense was $1.4 million in the second quarter of 2018 compared to $2.1 million in the prior year quarter. As a result of the Tax Act, the Company’s federal tax rate was lowered from 35% to 21% beginning in the first quarter of 2018.

June 30, 2018 compared to June 30, 2017

Financial Condition

  • Total assets increased $283.7 million or 10% at June 30, 2018 to $3.3 billion compared to $3.0 billion at June 30, 2017, reflecting a $256.1 million increase in net loans.
  • Our investment portfolio totaled $185.0 million at June 30, 2018 compared to $156.2 million at June 30, 2017, an increase of $28.8 million.
  • Net loans increased $256.1 million or 10% at June 30, 2018 to $2.9 billion compared to $2.6 billion at June 30, 2017 due to our continued focus on commercial and residential lending.
  • Deposits increased $198.8 million or 9% to $2.4 billion at June 30, 2018 compared to $2.2 billion at June 30, 2017 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 $354.5 million and $351.3 million at June 30, 2018 and 2017, respectively. 
  • Federal Home Loan Bank of Boston advances increased $68.0 million to $457.5 million at June 30, 2018 compared to $389.5 million at June 30, 2017. 

Asset Quality

  • At June 30, 2018 the allowance for loan losses represented 0.78% of total loans and 190.12% of non-accrual loans, compared to 0.80% of total loans and 175.73% of non-accrual loans at March 31, 2018 and 0.83% of total loans and 137.54% of non-accrual loans at June 30, 2017.
  • Loan delinquencies 30 days and greater represented 0.44% of total loans at June 30, 2018 compared to 0.46% of total loans at March 31, 2018 and 0.60% of total loans at June 30, 2017.
  • Non-accrual loans represented 0.41% of total loans at June 30, 2018 compared to 0.46% of total loans at March 31, 2018 and 0.60% of total loans at June 30, 2017.
  • Net charge-offs in the quarter were $17,000 or 0.00% to average loans (annualized) compared to $293,000 or 0.04% to average loans (annualized) in the linked quarter and $22,000 or 0.00% 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 12.23% at June 30, 2018. 
  • Tangible book value per share is $17.60 compared to $17.32 on a linked quarter basis and $16.86 at June 30, 2017.
  • The Company had 600,945 shares remaining to repurchase at June 30, 2018 from prior regulatory approval. Repurchased shares are held as treasury stock and will be available for general corporate purposes. 
  • At June 30, 2018, 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 25 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.

Additional Information for Stockholders

In connection with the proposed merger, People’s United will file with the Securities and Exchange Commission (“SEC”) a Registration Statement on Form S-4 that will include a Proxy Statement of FCB and a Prospectus of People’s United, as well as other relevant documents concerning the proposed transaction.  This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval.  Stockholders are urged to read the Registration Statement, the Proxy Statement of FCB and Prospectus of People’s United regarding the merger when it becomes available and any other relevant documents filed with the SEC, as well as any amendments or supplements to those documents, because they will contain important information.  A free copy of the Proxy Statement/Prospectus, as well as other filings containing information about FCB and People’s United, may be obtained at the SEC’s Internet site (http://www.sec.gov).  A definitive copy of the Proxy Statement/Prospectus will also be sent to the FCB stockholders seeking any required stockholder approval. You will also be able to obtain these documents, free of charge, from FCB by accessing FCB’s website at www.firstconnecticutbancorp.com under the tab “SEC Filings” and then under the heading “Documents” or from People’s United at www.peoples.com under the tab “Investor Relations” and then under the heading “Financial Information.”  Alternatively, these documents, when available, can be obtained free of charge from FCB upon written request to First Connecticut Bancorp, Inc. Investor Relations, One Farm Glen Boulevard, Farmington, Connecticut 06032, by calling (860) 284-6359, or by sending an email to investor-relations@firstconnecticutbancorp.com, or from People’s United upon written request to People’s United Financial, Inc., 850 Main Street, Bridgeport, Connecticut 06604, Attn: Investor Relations, by calling (203) 338-4581, or by sending an email to andrew.hersom@peoples.com.

FCB and People’s United and certain of their directors and executive officers may be deemed to be participants in the solicitation of proxies from the stockholders of FCB in connection with the proposed merger.  Information about the directors and executive officers of FCB is set forth in the proxy statement for FCB’s 2018 annual meeting of stockholders, as filed with the SEC on a Schedule 14A on March 30, 2018.  Information about the directors and executive officers of People’s United is set forth in the proxy statement for People’s United’s 2018 annual meeting of stockholders, as filed with the SEC on a Schedule 14A on March 7, 2018.  Additional information regarding the interests of those participants and other persons who may be deemed participants in the transaction may be obtained by reading the Proxy Statement/Prospectus regarding the proposed merger when it becomes available.  Free copies of this document may be obtained as described in the preceding paragraph.

Forward Looking Statements

In addition to historical information, this earnings release may contain forward-looking statements for purposes of applicable securities laws. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Such forward-looking statements may or may not include words such as “believe,” “expect,” “anticipate,” “estimate,” and “intend” or future or conditional verbs such as “will,” “would,” “should,” “could” or “may.” Forward-looking statements are subject to numerous assumptions, risks and uncertainties. There are a number of important factors described in documents previously filed by the Company with the Securities and Exchange Commission, and other factors that could cause the Company’s actual results to differ materially from those contemplated by such forward-looking statements. The Company undertakes no obligation to publicly release the results of any revisions to those forward-looking statements which may be made to reflect events or circumstances after the date of this release or to reflect the occurrence of unanticipated events.

Non-GAAP Financial Measures

In addition to evaluating the Company’s financial performance in accordance with U.S. generally accepted accounting principles (“GAAP”), management routinely supplements their evaluation with an analysis of certain non-GAAP financial measures, such as core net income, the efficiency ratio and tangible book value per share. A reconciliation to the most directly comparable GAAP financial measure; net income in the case of core net income and the efficiency ratio and stockholders’ equity in the case of tangible book value per share, appears in the accompanying Reconciliation of Non-GAAP Financial Measures table.

We believe that providing certain non-GAAP financial measures provides investors with information useful in understanding our financial performance, our performance trends and financial position. Specifically, we provide measures based on what we believe are our operating earnings on a consistent basis and exclude non-core operating items which affect the GAAP reporting of results of operations. The Company believes that core net income is useful for both investors and management to understand the effects of items that are non-recurring and infrequent in nature. The Company believes that the efficiency ratio, which measures the costs expended to generate a dollar of revenue, is useful in the assessment of financial performance, including non-interest expense control. The Company believes that tangible book value per share is useful to evaluate the relative strength of the Company’s capital position. The Company does not have goodwill and intangible assets for any of the periods presented. As such, tangible book value per common share is equal to book value per common share.

We utilize these measures for internal planning and forecasting purposes. These non-GAAP financial measures should not be considered a substitute for GAAP basis measures and results, and we strongly encourage investors to review our consolidated financial statements in their entirety and not to rely on any single financial measure.

 

First Connecticut Bancorp, Inc.
Selected Financial Data (Unaudited)

  At or for the Three Months Ended
  June 30,   March 31,   December  31,   September 30,   June 30,
(Dollars in thousands, except per share data)   2018       2018       2017       2017       2017  
Selected Financial Condition Data:                  
                   
Total assets $   3,275,838     $   3,137,645     $   3,055,050     $   3,001,679     $   2,992,126  
Cash and cash equivalents      36,968         26,452         35,350         44,475         46,551  
Debt securities held-to-maturity, at amortized cost     86,981         80,977         74,985         56,848         50,655  
Debt securities available-for-sale, at fair value     98,010         89,107         80,358         80,355         105,503  
Federal Home Loan Bank of Boston stock, at cost     22,195         17,665         15,537         15,954         19,583  
Loans, net     2,900,714         2,794,187         2,725,633         2,676,411         2,644,618  
Deposits     2,443,806         2,443,357         2,434,100         2,382,551         2,245,004  
Federal Home Loan Bank of Boston advances     457,457         355,457         255,458         271,458         389,458  
Total stockholders’ equity     281,864         276,861         272,459         273,193         268,836  
Allowance for loan losses     22,672         22,620         22,448         22,202         22,037  
Non-accrual loans     11,925         12,872         15,792         15,305         16,022  
Non-performing assets (1)     13,638         15,036         15,792         15,305         16,022  
Impaired loans     28,814         28,383         30,194         29,924         30,007  
Loan delinquencies 30 days and greater     12,797         13,036         17,254         17,808         16,059  
                   
Selected Operating Data:                  
                   
Interest income $   28,471     $   26,463     $   25,551     $   25,604     $   24,116  
Interest expense     6,480         5,541         5,023         4,756         4,293  
Net interest income     21,991         20,922         20,528         20,848         19,823  
Provision for loan losses     69         465         299         217         710  
Net interest income after provision for loan losses     21,922         20,457         20,229         20,631         19,113  
Noninterest income     3,262         3,145         3,158         3,300         3,876  
Noninterest expense      17,019         16,239         15,387         15,919         15,878  
Income before income taxes     8,165         7,363         8,000         8,012         7,111  
Income tax expense     1,435         1,352         7,503         2,415         2,109  
Net income $   6,730     $   6,011     $   497     $   5,597     $   5,002  
                   
Performance Ratios (annualized):                  
                   
Return on average assets   0.84 %     0.78 %     0.07 %     0.74 %     0.68 %
Core return on average assets   0.92 %     0.78 %     0.73 %     0.73 %     0.68 %
Return on average equity   9.56 %     8.68 %     0.72 %     8.17 %     7.43 %
Core return on average equity   10.53 %     8.65 %     7.86 %     8.01 %     7.36 %
Net interest rate spread (2)    2.67 %     2.69 %     2.71 %     2.77 %     2.74 %
Net interest rate margin (3)    2.90 %     2.90 %     2.91 %     2.95 %     2.92 %
Non-interest expense to average assets (4)    2.01 %     2.10 %     2.05 %     2.11 %     2.12 %
Efficiency ratio (5)   63.96 %     67.54 %     65.06 %     66.38 %     66.31 %
Average interest-earning assets to average                  
  interest-bearing liabilities   127.48 %     128.49 %     129.44 %     128.50 %     128.46 %
Loans to deposits   120 %     115 %     113 %     113 %     119 %
                   
Asset Quality Ratios:                  
                   
Allowance for loan losses as a percent of total loans   0.78 %     0.80 %     0.82 %     0.82 %     0.83 %
Allowance for loan losses as a percent of                  
  non-accrual loans   190.12 %     175.73 %     142.15 %     145.06 %     137.54 %
Net charge-offs (recoveries) to average loans (annualized)   0.00 %     0.04 %     0.01 %     0.01 %     0.00 %
Non-accrual loans as a percent of total loans   0.41 %     0.46 %     0.58 %     0.57 %     0.60 %
Non-performing assets as a percent of total assets   0.42 %     0.48 %     0.52 %     0.51 %     0.54 %
Loan delinquencies 30 days and greater as a                  
  percent of total loans   0.44 %     0.46 %     0.63 %     0.66 %     0.60 %
                   
Per Share Related Data:                  
                   
Basic earnings per share $   0.44     $   0.39     $   0.03     $   0.37     $   0.33  
Diluted earnings per share $   0.42     $   0.38     $   0.03     $   0.35     $   0.32  
Dividends declared per share $   0.17     $   0.16     $   0.15     $   0.14     $   0.12  
Tangible book value (6) $   17.60     $   17.32     $   17.08     $   17.12     $   16.86  
Common stock shares outstanding     16,012,664         15,984,932         15,952,946         15,952,946         15,942,614  
Weighted-average basic shares outstanding     15,260,635         15,214,839         15,174,285         15,143,379         15,107,190  
Weighted-average diluted shares outstanding     15,942,471         15,900,088         15,882,690         15,820,659         15,791,112  
                   
                   
(1) Consists of non-accruing loans including non-accruing loans identified as troubled debt restructurings, loans past due more than 90 days and still accruing interest and other real estate owned.
(2) 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) Represents tax-equivalent net interest income as a percent of average interest-earning assets. 
(4) Represents core noninterest expense annualized divided by average assets.  See “Reconciliation of Non-GAAP Financial Measures” table. 
(5) 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. 
(6) Represents ending stockholders’ equity less goodwill and intangible assets (excluding mortgage servicing rights) divided by ending common shares outstanding.
The Company does not have goodwill and intangible assets for any of the periods presented.  See “Reconciliation of Non-GAAP Financial Measures” table.
 
 

First Connecticut Bancorp, Inc.
Selected Financial Data (Unaudited)

  At or for the Three Months Ended  
  June 30,   March 31,   December 31,   September 30,   June 30,  
(Dollars in thousands)   2018       2018       2017       2017       2017    
Capital Ratios:                    
                     
Equity to total assets at end of period   8.60 %     8.82 %     8.93 %     9.10 %     8.98 %  
Average equity to average assets   8.76 %     8.96 %     9.23 %     9.10 %     9.18 %  
Total Capital (to Risk Weighted Assets)   12.23 % *   12.38 %     12.38 %     12.50 %     12.45 %  
Tier I Capital (to Risk Weighted Assets)   11.34 % *   11.47 %     11.45 %     11.57 %     11.53 %  
Common Equity Tier I Capital    11.34 % *   11.47 %     11.45 %     11.57 %     11.53 %  
Tier I Leverage Capital (to Average Assets)   8.99 % *   9.17 %     9.23 %     9.23 %     9.36 %  
Total equity to total average assets   8.78 %     8.96 %     9.05 %     9.07 %     9.17 %  
                     
* Estimated                    
                     
Loans and Allowance for Loan Losses:                    
                     
Real estate                    
Residential $   1,141,015     $   1,059,116     $   989,366     $   969,679     $   962,732    
Commercial     1,085,903         1,071,485         1,063,755         1,028,930         1,020,560    
Construction     94,615         98,469         90,059         86,713         74,063    
Commercial     435,034         417,660         429,116         436,172         431,243    
Home equity line of credit     155,853         159,030         165,070         166,791         168,278    
Other     5,039         5,240         5,650         5,733         5,410    
Total loans   2,917,459       2,811,000       2,743,016       2,694,018       2,662,286    
Net deferred loan costs    5,927       5,807         5,065         4,595         4,369    
Loans   2,923,386       2,816,807         2,748,081         2,698,613         2,666,655    
Allowance for loan losses    (22,672 )     (22,620 )       (22,448 )       (22,202 )       (22,037 )  
Loans, net $   2,900,714     $   2,794,187     $   2,725,633     $   2,676,411     $   2,644,618    
                     
Deposits:                    
                     
Noninterest-bearing demand deposits $   478,319     $   443,555     $   473,428     $   437,372     $   445,049    
Interest-bearing                    
NOW accounts   570,952       625,362       623,135         652,631         547,868    
Money market   564,810       587,389       559,297         549,674         522,070    
Savings accounts   250,194       242,377       237,380         233,330         241,898    
Certificates of deposit   579,531       544,674       540,860         509,544         488,119    
Total interest-bearing deposits     1,965,487         1,999,802         1,960,672         1,945,179         1,799,955    
Total deposits $   2,443,806     $   2,443,357     $   2,434,100     $   2,382,551     $   2,245,004    
                     
                     

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

  June 30,   March 31,   June 30,
    2018       2018       2017  
(Dollars in thousands)          
Assets          
Cash and due from banks $   36,028     $   25,385     $   37,308  
Interest bearing deposits with other institutions   940       1,067       9,243  
Total cash and cash equivalents   36,968       26,452       46,551  
Debt securities held-to-maturity, at amortized cost   86,981       80,977       50,655  
Debt securities available-for-sale, at fair value   98,010       89,107       105,503  
Loans held for sale   5,331       5,980       2,537  
Loans (1)   2,923,386       2,816,807       2,666,655  
Allowance for loan losses   (22,672 )     (22,620 )     (22,037 )
Loans, net   2,900,714       2,794,187       2,644,618  
Premises and equipment, net   16,965       17,007       17,609  
Federal Home Loan Bank of Boston stock, at cost   22,195       17,665       19,583  
Accrued income receivable   9,913       9,043       7,939  
Bank-owned life insurance   58,193       57,852       56,802  
Deferred income taxes   7,724       7,763       13,970  
Prepaid expenses and other assets   32,844       31,612       26,359  
           Total assets $   3,275,838     $   3,137,645     $   2,992,126  
           
Liabilities and Stockholders’ Equity          
Deposits          
Interest-bearing $   1,965,487     $   1,999,802     $   1,799,955  
Noninterest-bearing   478,319       443,555       445,049  
    2,443,806       2,443,357       2,245,004  
Federal Home Loan Bank of Boston advances   457,457       355,457       389,458  
Repurchase agreement borrowings               10,500  
Repurchase liabilities   40,374       16,851       36,101  
Accrued expenses and other liabilities   52,337       45,119       42,227  
           Total liabilities   2,993,974       2,860,784       2,723,290  
           
Stockholders’ Equity          
Common stock   181       181       181  
Additional paid-in-capital   186,776       186,269       184,871  
Unallocated common stock held by ESOP   (9,043 )     (9,290 )     (10,053 )
Treasury stock, at cost   (28,802 )     (29,204 )     (29,770 )
Retained earnings   140,228       136,303       129,972  
Accumulated other comprehensive loss   (7,476 )     (7,398 )     (6,365 )
           Total stockholders’ equity   281,864       276,861       268,836  
           Total liabilities and stockholders’ equity $   3,275,838     $   3,137,645     $   2,992,126  
           
(1) Loans include net deferred fees and unamortized premiums of $5.9 million, $5.8 million and $4.4 million at June 30, 2018, March 31, 2018 and June 30, 2017, respectively.
 
 

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

                     
  Three Months Ended   Six Months Ended  
  June 30,   March 31,   June 30,   June 30,  
(Dollars in thousands, except per share data)   2018     2018     2017     2018     2017  
Interest income                    
Interest and fees on loans                    
Mortgage $   21,560   $   19,927   $   18,056   $   41,487   $   35,614  
Other   5,672     5,465     5,209     11,137     10,156  
Interest and dividends on investments                    
United States Government and agency obligations     954       797     598       1,751       1,072  
Other bonds     –        –      7       –        14  
Corporate stocks     258       241     216       499       415  
Other interest income     27       33     30       60       57  
            Total interest income   28,471     26,463     24,116     54,934     47,328  
                     
Interest expense                    
Deposits     4,702       4,339     3,026       9,041       5,937  
Interest on borrowed funds     1,771       1,119     1,164       2,890       2,113  
Interest on repo borrowings     –        74     96       74       191  
Interest on repurchase liabilities     7       9     7       16       14  
           Total interest expense   6,480     5,541     4,293     12,021     8,255  
           Net interest income   21,991     20,922     19,823     42,913     39,073  
Provision for loan losses   69     465     710     534     1,035  
           Net interest income                    
              after provision for loan losses   21,922     20,457     19,113     42,379     38,038  
                     
Noninterest income                    
Fees for customer services     1,718       1,657     1,572       3,375     3,078  
Net gain on loans sold     341       288     711       629       1,127  
Brokerage and insurance fee income     63       58     55       121       105  
Bank owned life insurance income     341       341     598       682       917  
Other     799       801     940       1,600       1,814  
           Total noninterest income   3,262     3,145     3,876     6,407     7,041  
                     
Noninterest expense                    
Salaries and employee benefits (1)     9,704       9,772     9,848       19,476       18,986  
Occupancy expense     1,315       1,329     1,187       2,644       2,500  
Furniture and equipment expense     947       948     985       1,895       1,969  
FDIC assessment     422       424     410       846       838  
Marketing     767       605     708       1,372       1,275  
Other operating expenses (1)     3,864       3,161     2,740       7,025       5,462  
           Total noninterest expense   17,019     16,239     15,878     33,258     31,030  
           Income before income taxes   8,165     7,363     7,111     15,528     14,049  
Income tax expense   1,435     1,352     2,109     2,787     3,954  
           Net income $   6,730   $   6,011   $   5,002   $   12,741   $   10,095  
                     
Earnings per share:                     
Basic $   0.44   $   0.39   $   0.33   $   0.83   $   0.67  
Diluted     0.42       0.38       0.32       0.80       0.64  
Weighted average shares outstanding:                    
Basic     15,260,635       15,214,839       15,107,190      15,237,994      15,087,721  
Diluted     15,942,471       15,900,088       15,791,112      15,921,527      15,741,500  
                     
(1) Prior period presentation reflects a reclassification of certain pension related costs between salaries and employee benefits and other operating expenses in accordance with ASU 2017-07. 
 
 

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

  For The Three Months Ended
  June 30, 2018   March 31, 2018   June 30, 2017
  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 $   2,878,570   $   27,537     3.84 %   $   2,772,063   $   25,692     3.76 %   $   2,629,493   $   23,900     3.65 %
Securities      187,681       1,010     2.16 %       175,912       851     1.96 %       157,230       659     1.68 %
Federal Home Loan Bank of Boston stock     19,566       202     4.14 %       14,986       187     5.06 %       18,056       162     3.60 %
Federal funds and other earning assets      915       27     11.84 %       2,140       33     6.25 %       7,715       30     1.56 %
Total interest-earning assets      3,086,732       28,776     3.74 %       2,965,101       26,763     3.66 %       2,812,494       24,751     3.53 %
Noninterest-earning assets      125,358           126,282           120,308    
Total assets  $   3,212,090       $   3,091,383       $   2,932,802    
                       
Interest-bearing liabilities:                      
NOW accounts $   609,571   $   1,072     0.71 %   $   664,211   $   1,145     0.70 %   $   595,350   $   574     0.39 %
Money market     584,667       1,388     0.95 %       568,362       1,317     0.94 %       525,266       979     0.75 %
Savings accounts      247,015       66     0.11 %       234,660       63     0.11 %       242,009       63     0.10 %
Certificates of deposit      581,263       2,176     1.50 %       538,189       1,814     1.37 %       471,905       1,410     1.20 %
Total interest-bearing deposits      2,022,516       4,702     0.93 %       2,005,422       4,339     0.88 %       1,834,530       3,026     0.66 %
Federal Home Loan Bank of Boston Advances     372,128       1,771     1.91 %       261,580       1,119     1.73 %       315,665       1,164     1.48 %
Repurchase agreement borrowings     –        –      0.00 %       8,467       74     3.54 %       10,500       96     3.67 %
Repurchase liabilities      26,623       7     0.11 %       32,104       9     0.11 %       28,728       7     0.10 %
Total interest-bearing liabilities      2,421,267       6,480     1.07 %       2,307,573       5,541     0.97 %       2,189,423       4,293     0.79 %
Noninterest-bearing deposits     458,686           451,067           431,336    
Other noninterest-bearing liabilities      50,639           55,634           42,857    
Total liabilities      2,930,592           2,814,274           2,663,616    
Stockholders’ equity     281,498           277,109           269,186    
Total liabilities and stockholders’ equity $   3,212,090       $   3,091,383       $   2,932,802    
                       
Tax-equivalent net interest income     $   22,296           $   21,222           $   20,458    
Less: tax-equivalent adjustment         (305 )             (300 )             (635 )  
Net interest income     $   21,991           $   20,922           $   19,823    
                       
Net interest rate spread (2)        2.67 %         2.69 %         2.74 %
Net interest-earning assets (3)  $   665,465       $   657,528       $   623,071    
Net interest margin (4)        2.90 %         2.90 %         2.92 %
Average interest-earning assets to average interest-bearing liabilities                       
        127.48 %           128.49 %           128.46 %  
                       
(1) On a fully-tax equivalent basis calculated using a federal income tax rate of 21% for three months ended June 30, 2018 and March 31, 2018 and 35% for the three months ended June 30, 2017. 
(2) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities on a tax-equivalent basis. 
(3) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities. 
(4) Net interest margin represents tax-equivalent net interest income divided by average total interest-earning assets. 
 
 

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

  For The Six Months Ended June 30,  
    2018       2017    
  Average
Balance
Interest and
Dividends (1)
Yield/
Cost
  Average
Balance
Interest and
Dividends (1)
Yield/
Cost
 
(Dollars in thousands)                
Interest-earning assets:                
Loans $   2,825,611   $   53,229     3.80 %   $   2,603,041   $   47,001     3.64 %  
Securities      181,592       1,861     2.07 %       150,119       1,188     1.60 %  
Federal Home Loan Bank of Boston stock     17,289       389     4.54 %       17,116       313     3.69 %  
Federal funds and other earning assets      1,524       60     7.94 %       7,037       57     1.63 %  
Total interest-earning assets      3,026,016       55,539     3.70 %       2,777,313       48,559     3.53 %  
Noninterest-earning assets      126,054           119,211      
Total assets  $   3,152,070       $   2,896,524      
                 
Interest-bearing liabilities:                
NOW accounts $   636,740   $   2,217     0.70 %   $   598,970   $   1,102     0.37 %  
Money market     576,560       2,705     0.95 %       527,326       1,949     0.75 %  
Savings accounts      240,872       129     0.11 %       236,766       124     0.11 %  
Certificates of deposit      559,845       3,990     1.44 %       469,393       2,762     1.19 %  
Total interest-bearing deposits      2,014,017       9,041     0.91 %       1,832,455       5,937     0.65 %  
Federal Home Loan Bank of Boston Advances     317,159       2,890     1.84 %       280,822       2,113     1.52 %  
Repurchase agreement borrowings     4,210       74     3.54 %       10,500       191     3.67 %  
Repurchase liabilities      29,348       16     0.11 %       26,866       14     0.11 %  
Total interest-bearing liabilities      2,364,734       12,021     1.03 %       2,150,643       8,255     0.77 %  
Noninterest-bearing deposits     454,897           432,192      
Other noninterest-bearing liabilities      53,123           46,352      
Total liabilities      2,872,754           2,629,187      
Stockholders’ equity     279,316           267,337      
Total liabilities and stockholders’ equity $   3,152,070       $   2,896,524      
                 
Tax-equivalent net interest income     $   43,518           $   40,304      
Less: tax-equivalent adjustment         (605 )             (1,231 )    
Net interest income     $   42,913           $   39,073      
                 
Net interest rate spread (2)        2.67 %         2.76 %  
Net interest-earning assets (3)  $   661,282       $   626,670      
Net interest margin (4)        2.90 %         2.93 %  
Average interest-earning assets to average interest-bearing liabilities                 
        127.96 %           129.14 %    
                 
(1) On a fully-tax equivalent basis calculated using a federal income tax rate of 21% for six months ended June 30, 2018 and 35% for the six months ended June 30, 2017.  
(2) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities on a tax-equivalent basis.  
(3) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.   
(4) Net interest margin represents tax-equivalent net interest income divided by average total interest-earning assets.   
   
   

First Connecticut Bancorp, Inc.
Reconciliation of Non-GAAP Financial Measures (Unaudited)

The table below presents a reconciliation of non-GAAP financial measures with financial measures defined by GAAP for the three months ended June 30, 2018, March 31, 2018, December 31, 2017, September 30, 2017 and June 30, 2017.  The Company believes the use of these non-GAAP financial measures provides additional clarity in assessing the results of the Company.

                     
  At or for the Three Months Ended  
  June 30,   March 31,   December 31,   September 30,   June 30,  
(Dollars in thousands, except per share data)   2018       2018       2017       2017       2017    
Net Income $   6,730     $   6,011     $   497     $   5,597     $   5,002    
Adjustments:                    
Plus: Other real estate owned writedown   451                            
Plus: Software termination buyout fee   211                            
Plus: Acquisition related expenses   210                            
Plus: Severance expense                           343    
Less: Prepayment penalty fees   (8 )     (25 )     (36 )     (165 )        
Less: Bank-owned life insurance proceeds                           (271 )  
Total core adjustments before taxes   864       (25 )     (36 )     (165 )     72    
Tax (expense) benefit on core adjustments   (181 )     5       13       58       (120 )  
Tax rate reduction due to Tax Cuts and Jobs Act               4,981                
Total core adjustments after taxes   683       (20 )     4,958       (107 )     (48 )  
Total core net income $   7,413     $   5,991     $   5,455     $   5,490     $   4,954    
                     
Total net interest income $   21,991     $   20,922     $   20,528     $   20,848     $   19,823    
Less: Prepayment penalty fees   (8 )     (25 )     (36 )     (165 )        
Total core net interest income $   21,983     $   20,897     $   20,492     $   20,683     $   19,823    
                     
Total noninterest income $   3,262     $   3,145     $   3,158     $   3,300     $   3,876    
Less: Bank-owned life insurance proceeds                           (271 )  
Total core noninterest income $   3,262     $   3,145     $   3,158     $   3,300     $   3,605    
                     
Total noninterest expense $   17,019     $   16,239     $   15,387     $   15,919     $   15,878    
Less: Other real estate owned writedown     (451 )                          
Less: Software termination buyout fee     (211 )                          
Less: Acquisition related expenses     (210 )                          
Less: Severance expense                           (343 )  
Total core noninterest expense $   16,147     $   16,239     $   15,387     $   15,919     $   15,535    
                     
Core earnings per common share, diluted $   0.46     $   0.38     $   0.34     $   0.35     $   0.31    
                     
Core net interest rate margin (1)    2.90 %     2.90 %     2.91 %     2.93 %     2.92 %  
Core return on average assets (annualized)   0.92 %     0.78 %     0.73 %     0.73 %     0.68 %  
Core return on average equity (annualized)   10.53 %     8.68 %     7.86 %     8.01 %     7.36 %  
Core non-interest expense to average assets (annualized)   2.01 %     2.10 %     2.05 %     2.11 %     2.12 %  
Efficiency ratio (2)    63.96 %     67.54 %     65.06 %     66.38 %     66.31 %  
                     
Tangible book value (3)  $   17.60     $   17.32     $   17.08     $   17.12     $   16.86    
                     
(1) Represents tax-equivalent core net interest income as a percent of average interest-earning assets.   
(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.