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Press Release

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

Company Release - 10/18/2017 4:05 PM ET

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

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

Financial Highlights

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

Third quarter 2017 compared with second quarter 2017

Net interest income

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

Provision for loan losses

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

Noninterest income

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

Noninterest expense

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

Income tax expense

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

Third quarter 2017 compared with third quarter 2016

Net interest income

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

Provision for loan losses

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

Noninterest income

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

Noninterest expense

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

Income tax expense

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

September 30, 2017 compared to September 30, 2016

Financial Condition

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

Asset Quality

  • At September 30, 2017 the allowance for loan losses represented 0.82% of total loans and 145.06% of non-accrual loans, compared to 0.83% of total loans and 137.54% of non-accrual loans at June 30, 2017 and 0.86% of total loans and 119.26% of non-accrual loans at September 30, 2016.
  • Loan delinquencies 30 days and greater represented 0.66% of total loans at September 30, 2017 compared to 0.60% of total loans at June 30, 2017 and 0.74% of total loans at September 30, 2016.
  • Non-accrual loans represented 0.57% of total loans at September 30, 2017 compared to 0.60% of total loans at June 30, 2017 and 0.72% of total loans at September 30, 2016.
  • Net charge-offs in the quarter were $52,000 or 0.01% to average loans (annualized) compared to $22,000 or 0.00% to average loans (annualized) in the linked quarter and $155,000 or 0.03% to average loans (annualized) in the prior year quarter.

Capital and Liquidity

  • The Company remained well-capitalized with an estimated total capital to risk-weighted asset ratio of 12.50% at September 30, 2017. 
  • Tangible book value per share is $17.12 compared to $16.86 on a linked quarter basis and $16.17 at September 30, 2016.
  • The Company had 600,945 shares remaining to repurchase at September 30, 2017 from prior regulatory approval. Repurchased shares are held as treasury stock and will be available for general corporate purposes. 
  • At September 30, 2017, the Company continued to have adequate liquidity including significant unused borrowing capacity at the Federal Home Loan Bank of Boston and the Federal Reserve Bank, as well as access to funding through brokered deposits and pre-approved unsecured lines of credit.       

About First Connecticut Bancorp, Inc.

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

Conference Call

First Connecticut will host a conference call on Thursday, October 19, 2017 at 10:30am Eastern Time to discuss third quarter results.  Those wishing to participate in the call may dial-in to the call at 1-888-336-7151. The Canada dial-in number is 1-855-669-9657 and the international dial-in number is 1-412-902-4177.  A webcast of the call will be available on the Investor Relations Section of the Farmington Bank website for an extended period of time.

Forward Looking Statements

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

Non-GAAP Financial Measures

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

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

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

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

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


(1) Represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities on a tax-equivalent basis.
(2)Represents tax-equivalent net interest income as a percent of average interest-earning assets.
(3)Represents core noninterest expense annualized divided by average assets.  See "Reconciliation of Non-GAAP Financial Measures" table.
(4)Represents core noninterest expense divided by the sum of core net interest income and core noninterest income. 
See "Reconciliation of Non-GAAP Financial Measures" table.
(5)Represents ending stockholders’ equity less goodwill and intangible assets (excluding mortgage servicing rights) divided by ending common shares outstanding.
The Company does not have goodwill and intangible assets for any of the periods presented.  See "Reconciliation of Non-GAAP Financial Measures" table.
  


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

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


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

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


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

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


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

            
 For The Three Months Ended
 September 30, 2017 June 30, 2017 September 30, 2016
 Average BalanceInterest and Dividends (1)Yield/
Cost
 Average BalanceInterest and Dividends (1)Yield/Cost Average BalanceInterest and Dividends (1)Yield/
Cost
(Dollars in thousands)           
Interest-earning assets:           
Loans$  2,697,978$  25,342 3.73% $  2,629,493$  23,900 3.65% $  2,430,114$  21,650 3.54%
Securities    159,450   660 1.64%    157,230   659 1.68%    165,738   481 1.15%
Federal Home Loan Bank of Boston stock   18,284   190 4.12%    18,056   162 3.60%    18,206   161 3.52%
Federal funds and other earning assets    10,089   54 2.12%    7,715   30 1.56%    36,439   46 0.50%
Total interest-earning assets    2,885,801   26,246 3.61%    2,812,494   24,751 3.53%    2,650,497   22,338 3.35%
Noninterest-earning assets    126,234      120,308      135,828  
Total assets $  3,012,035   $  2,932,802   $  2,786,325  
            
Interest-bearing liabilities:           
NOW accounts$  644,947$  832 0.51% $  595,350$  574 0.39% $  506,509$  385 0.30%
Money market   519,265   982 0.75%    525,266   979 0.75%    525,301   1,085 0.82%
Savings accounts    233,878   63 0.11%    242,009   63 0.10%    221,981   60 0.11%
Certificates of deposit    489,203   1,546 1.25%    471,905   1,410 1.20%    481,901   1,445 1.19%
Total interest-bearing deposits    1,887,293   3,423 0.72%    1,834,530   3,026 0.66%    1,735,692   2,975 0.68%
Federal Home Loan Bank of Boston Advances   320,219   1,230 1.52%    315,665   1,164 1.48%    250,459   955 1.52%
Repurchase agreement borrowings   10,500   95 3.59%    10,500   96 3.67%    10,500   98 3.71%
Repurchase liabilities    27,695   8 0.11%    28,728   7 0.10%    51,297   22 0.17%
Total interest-bearing liabilities    2,245,707   4,756 0.84%    2,189,423   4,293 0.79%    2,047,948   4,050 0.79%
Noninterest-bearing deposits   446,428      431,336      417,917  
Other noninterest-bearing liabilities    45,905      42,857      64,201  
Total liabilities    2,738,040      2,663,616      2,530,066  
Stockholders' equity   273,995      269,186      256,259  
Total liabilities and stockholders' equity$  3,012,035   $  2,932,802   $  2,786,325  
            
Tax-equivalent net interest income $  21,490    $  20,458    $  18,288  
Less: tax-equivalent adjustment    (642)      (635)      (533) 
Net interest income $  20,848    $  19,823    $  17,755  
            
Net interest rate spread (2)   2.77%   2.74%   2.56%
Net interest-earning assets (3) $  640,094   $  623,071   $  602,549  
Net interest margin (4)   2.95%   2.92%   2.74%
Average interest-earning assets to average interest-bearing liabilities            
 128.50%  128.46%  129.42%
            
(1) On a fully-tax equivalent basis. 
(2) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost 
      of average interest-bearing liabilities on a tax-equivalent basis. 
(3) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities. 
(4) Net interest margin represents tax-equivalent net interest income divided by average total interest-earning assets. 
            


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

        
 For The Nine Months Ended September 30,
  2017   2016 
 Average
Balance
Interest and
  Dividends (1) 
Yield/
Cost
 Average
Balance
Interest and
  Dividends (1) 
Yield/
Cost
(Dollars in thousands)       
Interest-earning assets:       
Loans$  2,635,035 $  72,343 3.67% $  2,394,991 $  64,282 3.59%
Securities    153,263    1,848 1.61%    156,876    1,479 1.26%
Federal Home Loan Bank of Boston stock   17,510    503 3.84%    18,590    527 3.79%
Federal funds and other earning assets    8,066    111 1.84%    28,677    104 0.48%
Total interest-earning assets    2,813,874    74,805 3.55%    2,599,134    66,392 3.41%
Noninterest-earning assets    121,577      130,327  
Total assets $  2,935,451   $  2,729,461  
        
Interest-bearing liabilities:       
NOW accounts$  614,464 $  1,934 0.42% $  500,097 $  1,101 0.29%
Money market   524,610    2,931 0.75%    497,130    3,010 0.80%
Savings accounts    235,793    187 0.11%    221,635    177 0.11%
Certificates of deposit    476,069    4,308 1.21%    468,979    4,158 1.18%
Total interest-bearing deposits    1,850,936    9,360 0.68%    1,687,841    8,446 0.67%
Federal Home Loan Bank of Boston Advances   294,099    3,343 1.52%    267,527    2,902 1.45%
Repurchase agreement borrowings   10,500    286 3.64%    10,500    289 3.66%
Repurchase liabilities    27,146    22 0.11%    46,882    56 0.16%
Total interest-bearing liabilities    2,182,681    13,011 0.80%    2,012,750    11,693 0.78%
Noninterest-bearing deposits   436,990      404,599  
Other noninterest-bearing liabilities    46,200      59,668  
Total liabilities    2,665,871      2,477,017  
Stockholders' equity   269,580      252,444  
Total liabilities and stockholders' equity$  2,935,451   $  2,729,461  
        
Tax-equivalent net interest income  $  61,794     $  54,699  
Less: tax-equivalent adjustment     (1,873)       (1,566) 
Net interest income  $  59,921     $  53,133  
        
Net interest rate spread (2)   2.75%   2.63%
Net interest-earning assets (3) $  631,193   $  586,384  
Net interest margin (4)   2.94%   2.81%
Average interest-earning assets to average interest-bearing liabilities        
  128.92%   129.13%
        
(1) On a fully-tax equivalent basis. 
(2) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost 
      of average interest-bearing liabilities on a tax-equivalent basis. 
(3) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities. 
(4) Net interest margin represents tax-equivalent net interest income divided by average total interest-earning assets.
        


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

The table below presents a reconciliation of non-GAAP financial measures with financial measures defined by GAAP for the three months ended September 30, 2017, June 30, 2017, March 31, 2017, December 31, 2016 and September 30, 2016.  The Company believes the use of these non-GAAP financial measures provides additional clarity in assessing the results of the Company.

            
  At or for the Three Months Ended 
  September 30, June 30, March 31, December 31, September 30, 
(Dollars in thousands, except per share data) 2017   2017   2017   2016   2016  
Net Income$  5,597  $  5,002  $  5,093  $  4,186  $  3,773  
 Adjustments:          
 Plus: Severance expense -   343   -   -   -  
 Plus: Mortgage servicing rights (recovery) impairment -   -   -   (283)  (91) 
 Less: Prepayment penalty fees (165)  -   (84)  -   -  
 Less: Bank-owned life insurance proceeds -   (271)  -   -   -  
Total core adjustments before taxes (165)  72   (84)  (283)  (91) 
 Tax (expense) benefit on core adjustments 58   (120)  29   99   32  
 Deferred tax asset write-off (1) -   -   -   137   -  
Total core adjustments after taxes (107)  (48)  (55)  (47)  (59) 
Total core net income$  5,490  $  4,954  $  5,038  $  4,139  $  3,714  
            
            
Total net interest income$  20,848  $  19,823  $  19,250  $  18,122  $  17,755  
 Less: Prepayment penalty fees (165)  -   (84)  -   -  
Total core net interest income$  20,683  $  19,823  $  19,166  $  18,122  $  17,755  
            
Total noninterest income$  3,300  $  3,876  $  3,165  $  3,536  $  3,685  
 Plus: Mortgage servicing rights (recovery) impairment -   -   -   (283)  (91) 
 Less: Bank-owned life insurance proceeds -   (271)  -   -   -  
Total core noninterest income$  3,300  $  3,605  $  3,165  $  3,253  $  3,594  
            
Total noninterest expense$  15,919  $  15,878  $  15,152  $  15,099  $  15,484  
 Less: Severance expense -   (343)  -   -   -  
Total core noninterest expense$  15,919  $  15,535  $  15,152  $  15,099  $  15,484  
            
Core earnings per common share, diluted$  0.35  $  0.31  $  0.32  $  0.27  $  0.24  
            
Core net interest rate margin (2)  2.93%  2.92%  2.92%  2.75%  2.74% 
Core return on average assets (annualized) 0.73%  0.68%  0.70%  0.58%  0.53% 
Core return on average equity (annualized) 8.01%  7.36%  7.59%  6.36%  5.80% 
Core non-interest expense to average assets (annualized) 2.11%  2.12%  2.12%  2.13%  2.22% 
Efficiency ratio (3)  66.38%  66.31%  67.85%  70.64%  72.53% 
            
Tangible book value (4) $  17.12  $  16.86  $  16.62  $  16.37  $  16.17  


(1) Represents a write-off of the remaining deferred tax asset associated with the establishment of the Bank’s foundation in 2011.
(2)Represents tax-equivalent core net interest income as a percent of average interest-earning assets.
(3)Represents core noninterest expense divided by the sum of core net interest income and core noninterest income. 
(4)Represents ending stockholders’ equity less goodwill and intangible assets (excluding mortgage servicing rights) divided by ending common shares outstanding.
The Company does not have goodwill and intangible assets for any of the periods presented. 

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Source: First Connecticut Bancorp, Inc.