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First Connecticut Bancorp, Inc. Announces Fourth Quarter 2013 Results

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FARMINGTON, Conn., Jan. 30, 2014 (GLOBE NEWSWIRE) -- First Connecticut Bancorp, Inc. (the "Company") (Nasdaq:FBNK), the holding company for Farmington Bank (the "Bank"), reported net interest income of $14.2 million and net income of $1.1 million for the quarter ended December 31, 2013. Diluted earnings per share were $0.07 compared with $0.06 per diluted share for the third quarter of 2013 and $0.19 per diluted share for the fourth quarter of 2012. Earnings per share for the fourth quarter of 2012 included $0.06 related to the freezing of retirement plans.

"We continue to be encouraged that core earnings are building as a direct result of our annual increase in loans of $282 million and $89 million for the quarter. This organic growth coupled with the stabilization of our net interest margin and flat operating expenses resulted in a $0.45 increase in tangible book value per share for the year," stated John J. Patrick Jr., First Connecticut Bancorp's Chairman, President & CEO.

"During the year we completed our strategic exit of the resort financing market, opened two new branch offices and our 22nd branch office in Rocky Hill, CT in January, 2014. The opening of the Rocky Hill branch office completes the Company's strategic de novo branch expansion."

Financial Highlights

  • Net interest income increased $939,000 or 7% to $14.2 million in the fourth quarter of 2013 compared to $13.3 million in the linked quarter.
  • Noninterest expense to average assets was 2.80% in the fourth quarter of 2013 compared to 2.95% in the linked quarter.
  • Strong organic loan growth continued during the quarter as total loans increased $89.3 million or 5% to $1.8 billion at December 31, 2013 and increased $282.3 million or 18% for the year ended December 31, 2013.
  • Strong organic loan originations totaled $185.8 million during the quarter. Compared to prior quarter, the Commercial and Industrial, Commercial Real Estate and Residential Real Estate portfolios increased by $38.9 million, $48.1 million and $18.2 million, respectively.
  • Tangible book value per share grew to $14.08 compared to $13.86 on a linked quarter basis and $13.63 at the quarter ended December 31, 2012.
  • Checking accounts grew by 3.0% or 1,165 net new accounts in the fourth quarter of 2013.
  • Asset quality remained stable as non-accrual loans represented 0.81% of total loans compared to 0.80% of total loans on a linked quarter basis. Loan delinquencies 30 days and greater decreased slightly to 0.85% of total loans at December 31, 2013 compared to 0.87% of total loans at September 30, 2013.
  • The provision for loan losses was $660,000 in the fourth quarter compared to $215,000 in the linked quarter due to continued loan growth, specifically in Commercial Real Estate and Commercial and Industrial portfolios.
  • During the fourth quarter of 2013, we repurchased 48,585 shares of common stock at an average price per share of $14.75 at a total cost of $717,000. Repurchased shares will be held as treasury stock and will be available for general corporate purposes.
  • We paid a cash dividend of $0.03 per share on December 16, 2013. This marks the ninth consecutive quarter we have paid a dividend since First Connecticut Bancorp, Inc. became a public company on June 29, 2011.

Fourth quarter 2013 compared with third quarter 2013

Net interest income

  • Net interest income increased $939,000 to $14.2 million in the fourth quarter of 2013 compared to the linked quarter due primarily to an $118.5 million increase in the average loan balance and despite a 6 basis point decrease in the yield on loans.
  • Yield on average interest earning assets decreased 7 basis points from the linked quarter to 3.43% for the quarter ended December 31, 2013. Net interest margin decreased 2 basis points to 2.92% in the fourth quarter of 2013 compared to the linked quarter.
  • The cost of interest-bearing deposits decreased slightly to 59 basis points for the quarter ended December 31, 2013 compared to 62 basis points on a linked quarter basis.

Provision for loan losses

  • Provision for loan losses was $660,000 for the fourth quarter of 2013 compared to $215,000 for the linked quarter.
  • Net charge-offs in the quarter were $24,000 or 0.01% to average loans (annualized) compared to $42,000 or 0.01% to average loans (annualized) in the linked quarter.
  • The allowance for loan losses represented 1.01% of total loans at December 31, 2013 compared to 1.02% for the linked quarter.

Noninterest income

  • Total noninterest income decreased $60,000 to $2.2 million for the fourth quarter of 2013 compared to the linked quarter primarily due to a $304,000 decrease in gain on sale of investments offset by a $267,000 increase in other income.
  • Other income increased $267,000 primarily due to a $202,000 reduction in the mortgage banking derivatives loss due primarily to a decrease in volume in our secondary market residential lending program in the fourth quarter of 2013 when compared to the linked quarter.

Noninterest expense

  • Noninterest expense increased $275,000 or 2% to $14.4 million in the fourth quarter of 2013 compared to the linked quarter as a result of an increase in salaries and employee benefits, including severance, and increases in other operating expenses to support growth.

Income tax provision

  • Income tax provision was $288,000 in the fourth quarter of 2013 compared to $292,000 in the linked quarter.

Fourth quarter 2013 compared with fourth quarter 2012

Net interest income

  • Net interest income increased $130,000 to $14.2 million compared to $14.1 million in the fourth quarter of 2012. The increase was despite a decrease in interest income on the resort portfolio of $561,000 in the current quarter compared to the fourth quarter of 2012.
  • Net interest margin decreased 45 basis points to 2.92% in the fourth quarter of 2013 compared to 3.37% in the fourth quarter of 2012 primarily due to a lower interest rate environment, lower prepayment penalty fees and a $30.7 million decline in the average balance of the resort portfolio. Excluding resort and prepayment penalty fee income for both quarters, the net interest margin decreased 26 basis points.
  • The cost of interest-bearing deposits declined slightly to 59 basis points in the fourth quarter of 2013 compared to 62 basis points in the fourth quarter of 2012.

Provision for loan losses

  • Provision for loan losses was $660,000 for the fourth quarter of 2013 compared to $315,000 for the prior year quarter.
  • Net charge-offs in the quarter were $24,000 or 0.01% to average loans (annualized) compared to $1.0 million or 0.27% to average loans (annualized) in the prior year quarter.
  • The allowance for loan losses represented 1.01% of total loans at December 31, 2013 compared to 1.12% for the prior year quarter.

Noninterest income

  • Total noninterest income decreased $1.9 million to $2.2 million compared to the prior year quarter primarily due to decreases in net gains on loans sold of $1.4 million, bank owned life insurance of $270,000 and other income of $465,000 offset by a $202,000 increase in fees for customer service.
  • Other income decreased $465,000 due to a $121,000 loss in the mortgage banking derivatives in the fourth quarter of 2013 compared to a $355,000 gain in the prior year quarter. The loss in the fourth quarter of 2013 was due to a decrease in volume in our secondary market residential lending program in the fourth quarter of 2013 when compared to the prior year quarter.

Noninterest expense

  • Noninterest expense, excluding the $1.5 million reduction in pension and other post-retirement benefits expense recognized in the prior year quarter due to the freezing of these plans, decreased $513,000 to $14.4 million in the fourth quarter of 2013 compared to the prior year quarter.
  • Salaries and employee benefits, excluding the pension and other post-retirement benefits recognized in the prior year quarter, decreased $351,000 to $8.7 million compared to the prior year quarter.
  • Marketing expense decreased $219,000 or 37% compared to the prior year quarter primarily due to general expense control initiatives.

Income tax provision

  • Income tax provision was $288,000 in the fourth quarter of 2013 compared to $1.3 million in the prior year quarter.

December 31, 2013 compared to September 30, 2013

Financial condition

  • Total assets increased $117.5 million or 6% at December 31, 2013 to $2.1 billion compared to September 30, 2013 largely reflecting an increase in loans and securities.
  • Our investment portfolio totaled $163.9 million at December 31, 2013 compared to $123.4 million at September 30, 2013, an increase of $40.5 million.
  • Net loans increased $88.5 million at December 31, 2013 to $1.8 billion compared to September 30, 2013 due to our continued focus on commercial and residential lending which, combined, increased $98.0 million, offset by an $8.5 million decrease in resort loans as we completed our planned exit of the resort financing market.
  • Deposits decreased $37.1 million at December 31, 2013 compared to September 30, 2013, due to a $65.6 million seasonal decline in municipal deposits offset by a $30.2 million increase in noninterest bearing customer deposits as we continue to develop and grow relationships in the geographical areas we serve.
  • Federal Home Loan Bank of Boston advances increased $155.0 million to $259.0 million at December 31, 2013 compared to September 30, 2013 to support loan and securities growth.
  • Stockholders' equity increased $4.3 million to $231.8 million at December 31, 2013 compared to September 30, 2013.

Asset Quality

  • At December 31, 2013, the allowance for loan losses represented 1.01% of total loans and 123.74% of non-accrual loans, compared to 1.02% of total loans and 127.30% of non-accrual loans at September 30, 2013.
  • Non-accrual loans represented 0.81% of total loans at December 31, 2013 compared to 0.80% of total loans at September 30, 2013.
  • Loan delinquencies 30 days and greater decreased slightly to 0.85% of total loans at December 31, 2013 compared to 0.87% of total loans at September 30, 2013.

Capital and Liquidity

  • The Company remained well-capitalized with an estimated total capital to risk-weighted asset ratio of 15.48% at December 31, 2013.
  • Tangible book value per share was $14.08 compared to $13.86 on a linked quarter basis and $13.63 from a year ago.
  • At December 31, 2013, 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 22 branch locations throughout central Connecticut. 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.

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
December 31, September 30, June 30, March 31, December 31,
(Dollars in thousands, except per share data) 2013 2013 2013 2013 2012
Selected Financial Condition Data:
Total assets $ 2,109,716 $ 1,992,201 $ 1,845,116 $ 1,799,392 $ 1,822,946
Cash and cash equivalents 38,799 50,323 36,650 34,946 50,641
Held to maturity securities 12,983 3,002 3,003 3,003 3,006
Available for sale securities 150,886 120,382 112,801 108,787 138,241
Federal Home Loan Bank of Boston stock, at cost 13,136 8,383 8,383 8,383 8,939
Loans receivable, net 1,800,987 1,712,507 1,588,080 1,544,687 1,520,170
Deposits 1,513,501 1,550,627 1,452,319 1,376,092 1,330,455
Federal Home Loan Bank of Boston advances 259,000 104,000 51,250 76,000 128,000
Total stockholders' equity 231,797 227,536 231,180 242,869 241,522
Allowance for loan losses 18,314 17,678 17,505 17,332 17,229
Non-accrual loans 14,800 13,887 14,325 13,911 13,782
Impaired loans 39,623 42,587 39,159 39,210 36,857
Selected Operating Data:
Interest income $ 16,697 $ 15,806 $ 15,336 $ 15,047 $ 16,507
Interest expense 2,475 2,523 2,449 2,395 2,415
Net interest income 14,222 13,283 12,887 12,652 14,092
Provision for allowance for loan losses 660 215 256 399 315
Net interest income after provision for loan losses 13,562 13,068 12,631 12,253 13,777
Noninterest income 2,175 2,235 2,974 3,538 4,054
Noninterest expense 14,385 14,110 14,555 14,699 13,411
Income before income taxes 1,352 1,193 1,050 1,092 4,420
Provision for income taxes 288 292 248 279 1,250
Net income $ 1,064 $ 901 $ 802 $ 813 $ 3,170
Performance Ratios (annualized):
Return on average assets 0.21% 0.19% 0.17% 0.18% 0.71%
Return on average equity 1.85% 1.55% 1.36% 1.33% 5.20%
Interest rate spread (1) 2.77% 2.77% 2.83% 2.89% 3.19%
Net interest rate margin (2) 2.92% 2.94% 3.01% 3.07% 3.37%
Non-interest expense to average assets 2.80% 2.95% 3.17% 3.28% 3.01%
Efficiency ratio (3) 88.51% 92.74% 92.09% 88.16% 86.99%
Average interest-earning assets to average interest-bearing liabilities 129.65% 130.77% 132.30% 132.04% 131.80%
Asset Quality Ratios:
Allowance for loan losses as a percent of total loans 1.01% 1.02% 1.09% 1.11% 1.12%
Allowance for loan losses as a percent of non-accrual loans 123.74% 127.30% 122.20% 124.59% 125.01%
Net charge-offs to average loans (annualized) 0.01% 0.01% 0.02% 0.08% 0.27%
Non-accrual loans as a percent of total loans 0.81% 0.80% 0.89% 0.89% 0.90%
Non-accrual loans as a percent of total assets 0.70% 0.70% 0.78% 0.77% 0.76%
Per Share Related Data:
Basic earnings per share $ 0.07 $ 0.06 $ 0.05 $ 0.05 $ 0.19
Diluted earnings per share $ 0.07 $ 0.06 $ 0.05 $ 0.05 $ 0.19
Dividends declared per share $ 0.03 $ 0.03 $ 0.03 $ 0.03 $ 0.03
Tangible book value (4) $ 14.08 $ 13.86 $ 13.79 $ 13.76 $ 13.63
Common stock shares outstanding 16,457,642 16,416,427 16,763,516 17,644,449 17,714,481
(1) Represents the difference between the weighted-average yield on average interest-earning assets and the weighted-average cost of interest-bearing liabilities.
(2) Represents net interest income as a percent of average interest-earning assets.
(3) Represents noninterest expense divided by the sum of net interest income and noninterest income, adjusted for non-recurring items. See "Reconciliation of Non-GAAP Financial Measures" table.
(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. See "Reconciliation of Non-GAAP Financial Measures" table.
First Connecticut Bancorp, Inc.
Selected Financial Data (Unaudited)
At or for the Three Months Ended
December 31, September 30, June 30, March 31, December 31,
(Dollars in thousands) 2013 2013 2013 2013 2012
Capital Ratios:
Equity to total assets at end of period 10.99% 11.42% 12.53% 13.50% 13.25%
Average equity to average assets 11.22% 12.11% 12.83% 13.62% 13.68%
Total capital to risk-weighted assets 15.48%* 16.12% 17.48% 18.61% 18.78%
Tier I capital to risk-weighted assets 14.34%* 14.96% 16.25% 17.37% 17.53%
Tier I capital to total average assets 11.45%* 12.18% 12.92% 13.84% 13.88%
Total equity to total average assets 11.28% 11.88% 12.59% 13.56% 13.56%
* Estimated
Loans and Allowance for Loan Losses:
Real estate
Residential $ 693,046 $ 674,804 $ 625,345 $ 619,741 $ 620,991
Commercial 633,764 585,628 533,072 504,722 473,788
Construction 78,191 90,033 80,198 66,508 64,362
Installment 4,516 4,671 5,384 5,949 6,719
Commercial 252,032 213,103 199,328 200,610 192,210
Collateral 1,600 1,819 1,801 1,945 2,086
Home equity line of credit 151,606 147,026 144,548 143,992 142,543
Demand 85 -- -- -- 25
Revolving credit 94 78 62 73 65
Resort 1,374 9,849 12,425 15,252 31,232
Total loans 1,816,308 1,727,011 1,602,163 1,558,792 1,534,021
Less:
Allowance for loan losses (18,314) (17,678) (17,505) (17,332) (17,229)
Net deferred loan costs 2,993 3,174 3,422 3,227 3,378
Loans, net $ 1,800,987 $ 1,712,507 $ 1,588,080 $ 1,544,687 $ 1,520,170
Deposits:
Noninterest-bearing demand deposits $ 308,459 $ 278,275 $ 275,781 $ 245,912 $ 247,586
Interest-bearing
NOW accounts 285,392 339,350 280,462 234,450 227,205
Money market 387,225 386,682 349,621 352,759 317,030
Savings accounts 193,937 187,040 191,688 186,171 179,290
Time deposits 338,488 359,280 354,767 356,800 359,344
Total interest-bearing deposits 1,205,042 1,272,352 1,176,538 1,130,180 1,082,869
Total deposits $ 1,513,501 $ 1,550,627 $ 1,452,319 $ 1,376,092 $ 1,330,455
First Connecticut Bancorp, Inc.
Consolidated Statements of Condition
December 31, September 30, December 31,
(Dollars in thousands) 2013 2013 2012
Assets
Cash and cash equivalents $ 38,799 $ 50,323 $ 50,641
Securities held-to-maturity, at amortized cost 12,983 3,002 3,006
Securities available-for-sale, at fair value 150,886 120,382 138,241
Loans held for sale 3,186 5,357 9,626
Loans, net 1,800,987 1,712,507 1,520,170
Premises and equipment, net 20,619 21,013 19,967
Federal Home Loan Bank of Boston stock, at cost 13,136 8,383 8,939
Accrued income receivable 4,917 4,579 4,415
Bank-owned life insurance 38,556 38,255 37,449
Deferred income taxes 15,157 16,095 15,682
Prepaid expenses and other assets 10,490 12,305 14,810
Total assets $ 2,109,716 $ 1,992,201 $ 1,822,946
Liabilities and Stockholders' Equity
Deposits
Interest-bearing $ 1,205,042 $ 1,272,352 $ 1,082,869
Noninterest-bearing 308,459 278,275 247,586
1,513,501 1,550,627 1,330,455
Federal Home Loan Bank of Boston advances 259,000 104,000 128,000
Repurchase agreement borrowings 21,000 21,000 21,000
Repurchase liabilities 50,816 50,432 54,187
Accrued expenses and other liabilities 33,602 38,606 47,782
Total liabilities 1,877,919 1,764,665 1,581,424
Commitments and contingencies -- -- --
Stockholders' Equity
Common stock 181 181 181
Additional paid-in-capital 175,612 174,817 172,247
Unallocated common stock held by ESOP (13,747) (14,014) (14,806)
Treasury stock, at cost (22,599) (23,053) (4,860)
Retained earnings 96,592 95,873 94,890
Accumulated other comprehensive loss (4,242) (6,268) (6,130)
Total stockholders' equity 231,797 227,536 241,522
Total liabilities and stockholders' equity $ 2,109,716 $ 1,992,201 $ 1,822,946
First Connecticut Bancorp, Inc.
Consolidated Statements of Income
Three Months Ended For the Years Ended
December 31, September 30, December 31, December 31,
(Dollars in thousands, except per share data) 2013 2013 2012 2013 2012
Interest income
Interest and fees on loans
Mortgage $ 13,007 $ 12,381 $ 12,415 $ 48,728 $ 45,867
Other 3,437 3,199 3,770 13,183 15,445
Interest and dividends on investments
United States Government and agency obligations 134 103 190 478 939
Other bonds 53 59 61 230 266
Corporate stocks 64 62 66 252 275
Other interest income 2 2 5 15 68
Total interest income 16,697 15,806 16,507 62,886 62,860
Interest expense
Deposits 1,845 1,914 1,649 7,291 6,691
Interest on borrowed funds 398 383 511 1,651 1,953
Interest on repo borrowings 181 181 187 713 727
Interest on repurchase liabilities 51 45 68 187 257
Total interest expense 2,475 2,523 2,415 9,842 9,628
Net interest income 14,222 13,283 14,092 53,044 53,232
Provision for allowance for loan losses 660 215 315 1,530 1,380
Net interest income after provision for loan losses 13,562 13,068 13,777 51,514 51,852
Noninterest income
Fees for customer services 1,250 1,230 1,048 4,559 3,714
Net gain on sales of investments -- 304 -- 340 --
Net gain on loans sold 581 625 1,935 4,825 3,151
Brokerage and insurance fee income 40 37 32 150 123
Bank owned life insurance income 301 303 571 1,316 1,537
Other 3 (264) 468 (268) 965
Total noninterest income 2,175 2,235 4,054 10,922 9,490
Noninterest expense
Salaries and employee benefits 8,678 8,571 7,542 34,838 32,828
Occupancy expense 1,181 1,175 1,095 4,722 4,491
Furniture and equipment expense 964 998 1,050 4,079 4,381
FDIC assessment 329 341 342 1,272 1,170
Marketing 368 423 587 1,995 2,455
Other operating expenses 2,865 2,602 2,795 10,843 10,753
Total noninterest expense 14,385 14,110 13,411 57,749 56,078
Income before income taxes 1,352 1,193 4,420 4,687 5,264
Provision for income taxes 288 292 1,250 1,107 1,341
Net income $ 1,064 $ 901 $ 3,170 $ 3,580 $ 3,923
Earnings per share:
Basic $ 0.07 $ 0.06 $ 0.19 $ 0.23 $ 0.24
Diluted 0.07 0.06 0.19 0.23 0.24
Weighted average shares outstanding:
Basic 15,281,296 15,445,082 16,632,586 15,744,574 16,643,566
Diluted 15,347,912 15,445,082 16,632,586 15,761,365 16,643,566
First Connecticut Bancorp, Inc.
Consolidated Average Balances, Yields and Rates (Unaudited)
For The Three Months Ended
December 31, 2013 September 30, 2013 December 31, 2012
Average Balance Interest and Dividends Yield/
Cost
Average Balance Interest and Dividends Yield/
Cost
Average Balance Interest and Dividends Yield/
Cost
(Dollars in thousands)
Interest-earning assets:
Loans, net $ 1,767,468 $ 16,444 3.69% $ 1,648,948 $ 15,580 3.75% $1,504,834 $ 16,185 4.28%
Securities 148,653 243 0.65% 131,602 216 0.65% 139,396 308 0.88%
Federal Home Loan Bank of Boston stock 10,338 8 0.31% 8,383 8 0.38% 8,670 9 0.41%
Federal funds and other earning assets 5,093 2 0.16% 3,288 2 0.24% 10,598 5 0.19%
Total interest-earning assets 1,931,552 16,697 3.43% 1,792,221 15,806 3.50% 1,663,498 16,507 3.95%
Noninterest-earning assets 123,577 122,566 118,273
Total assets $ 2,055,129 $ 1,914,787 $1,781,771
Interest-bearing liabilities:
NOW accounts $ 305,045 $ 172 0.22% $ 303,882 $ 180 0.24% $ 215,266 $ 117 0.22%
Money market 388,503 773 0.79% 371,614 794 0.85% 299,408 487 0.65%
Savings accounts 190,258 78 0.16% 185,732 79 0.17% 178,959 99 0.22%
Certificates of deposit 346,977 822 0.94% 356,994 861 0.96% 358,047 946 1.05%
Total interest-bearing deposits 1,230,783 1,845 0.59% 1,218,222 1,914 0.62% 1,051,680 1,649 0.62%
Advances from the Federal Home Loan Bank 170,000 398 0.93% 74,101 383 2.05% 118,339 511 1.72%
Repurchase agreement borrowings 21,000 181 3.42% 21,000 181 3.42% 21,000 187 3.54%
Repurchase liabilities 68,122 51 0.30% 57,187 45 0.31% 71,115 68 0.38%
Total interest-bearing liabilities 1,489,905 2,475 0.66% 1,370,510 2,523 0.73% 1,262,134 2,415 0.76%
Noninterest-bearing deposits 294,071 272,621 232,286
Other noninterest-bearing liabilities 40,557 39,810 43,663
Total liabilities 1,824,533 1,682,941 1,538,083
Stockholders' equity 230,596 231,846 243,688
Total liabilities and stockholders' equity $ 2,055,129 $ 1,914,787 $1,781,771
Net interest income $ 14,222 $ 13,283 $ 14,092
Net interest rate spread (1) 2.77% 2.77% 3.19%
Net interest-earning assets (2) $ 441,647 $ 421,711 $ 401,364
Net interest margin (3) 2.92% 2.94% 3.37%
Average interest-earning assets to average interest-bearing liabilities 129.64% 130.77% 131.80%
(1) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(2) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(3) Net interest margin represents net interest income divided by average total interest-earning assets.
First Connecticut Bancorp, Inc.
Consolidated Average Balances, Yields and Rates (Unaudited)
For The Years Ended December 31,
2013 2012
Average
Balance
Interest and
Dividends
Yield/
Cost
Average
Balance
Interest and
Dividends
Yield/
Cost
(Dollars in thousands)
Interest-earning assets:
Loans, net $ 1,629,921 $ 61,911 3.80% $ 1,410,822 $ 61,312 4.35%
Securities 130,593 927 0.71% 136,062 1,443 1.06%
Federal Home Loan Bank of Boston stock 8,981 33 0.37% 7,714 37 0.48%
Federal funds and other earning assets 8,398 15 0.18% 33,521 68 0.20%
Total interest-earning assets 1,777,893 62,886 3.54% 1,588,119 62,860 3.96%
Noninterest-earning assets 121,981 117,449
Total assets $ 1,899,874 $ 1,705,568
Interest-bearing liabilities:
NOW accounts $ 277,698 $ 638 0.23% $ 208,161 $ 389 0.19%
Money market 362,914 2,878 0.79% 278,179 2,017 0.73%
Savings accounts 182,952 315 0.17% 171,871 291 0.17%
Certificates of deposit 353,677 3,460 0.98% 367,380 3,994 1.09%
Total interest-bearing deposits 1,177,241 7,291 0.62% 1,025,591 6,691 0.65%
Federal Home Loan Bank of Boston advances 98,486 1,651 1.68% 89,419 1,953 2.18%
Repurchase agreement borrowings 21,000 713 3.40% 21,000 727 3.46%
Repurchase liabilities 56,891 187 0.33% 66,436 257 0.39%
Total interest-bearing liabilities 1,353,618 9,842 0.73% 1,202,446 9,628 0.80%
Noninterest-bearing deposits 266,217 213,697
Other noninterest-bearing liabilities 44,577 41,223
Total liabilities 1,664,411 1,457,366
Stockholders' equity 235,463 248,202
Total liabilities and stockholders' equity $ 1,899,874 $ 1,705,568
Net interest income $ 53,044 $ 53,232
Net interest rate spread (1) 2.81% 3.16%
Net interest-earning assets (2) $ 424,275 $ 385,673
Net interest margin (3) 2.98% 3.35%
Average interest-earning assets to average interest-bearing liabilities
131.34% 132.07%
(1) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(2) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(3) Net interest margin represents net interest income divided by average total interest-earning assets.
First Connecticut Bancorp, Inc.
Reconciliation of Non-GAAP Financial Measures (Unaudited)
The table below presents a reconciliation of non-GAAP financial measures with financial measures defined by GAAP for the three months ended December 31, 2013, September 30, 2013, June 30, 2013, March 31, 2013, and December 31, 2012. The Company believes the use of these non-GAAP financial measures provides additional clarity in assessing the results of the Company.
At or for the Three Months Ended
December 31, September 30, June 30, March 31, December 31,
(Dollars in thousands, except per share data) 2013 2013 2013 2013 2012
Net Income $ 1,064 $ 901 $ 802 $ 813 $ 3,170
Adjustments:
Less: Prepayment penalty fees (144) -- (20) (127) (771)
Less: Net gain on sales of investments -- (304) (36) -- --
Less: Bank-owned life insurance proceeds -- -- -- (108) (249)
Less: Pension prior service cost (1) -- -- -- -- (1,208)
Less: Post retirement service cost (1) -- -- -- -- (279)
Plus: Accelerated vesting of stock compensation (2) -- -- -- 633 --
Total core adjustments before taxes (144) (304) (56) 398 (2,507)
Tax benefit (provision) - 34% rate 49 -- 19 (135) 852
Total core adjustments after taxes (95) (304) (37) 263 (1,655)
Total core net income $ 969 $ 597 $ 765 $ 1,076 $ 1,515
Total net interest income $ 14,222 $ 13,283 $ 12,887 $ 12,652 $ 14,092
Less: Prepayment penalty fees (144) -- (20) (127) (771)
Total core net interest income $ 14,078 $ 13,283 $ 12,867 $ 12,525 $ 13,321
Total noninterest income $ 2,175 $ 2,235 $ 2,974 $ 3,538 $ 4,054
Less: Net gain on sales of investments -- (304) (36) -- --
Less: Bank-owned life insurance proceeds -- -- -- (108) (249)
Total core noninterest income $ 2,175 $ 1,931 $ 2,938 $ 3,430 $ 3,805
Total noninterest expense $ 14,385 $ 14,110 $ 14,555 $ 14,699 $ 13,411
Plus: Pension prior service cost (1) -- -- -- -- 1,208
Plus: Post retirement service cost (1) -- -- -- -- 279
Plus: Loss on sale of non-strategic properties -- -- -- -- --
Less: Accelerated vesting of stock compensation (2) -- -- -- (633) --
Total core noninterest expense $ 14,385 $ 14,110 $ 14,555 $ 14,066 $ 14,898
Core earnings per common share, diluted $ 0.06 $ 0.05 $ 0.05 $ 0.07 $ 0.09
Core return on assets (annualized) 0.19% 0.15% 0.17% 0.24% 0.34%
Core return on equity (annualized) 1.68% 1.21% 1.30% 1.76% 2.45%
Efficiency ratio (3) 88.51% 92.74% 92.09% 88.16% 86.99%
Tangible book value (4) $ 14.08 $ 13.86 $ 13.79 $ 13.76 $ 13.63
(1) Represents recognizing the unrecognized prior service cost as a result of the freeze of the Company's non-contributory defined benefit and other post-retirement plans.
(2) Represents the passing of a key executive in the first quarter of 2013 and 20% vesting of the 2012 Stock Incentive Plan in the third quarter of 2012.
(3) Represents noninterest expense divided by the sum of net interest income and noninterest income, adjusted for non-recurring items.
(4) Represents ending stockholders' equity less goodwill and intangible assets (excluding mortgage servicing rights) divided by ending common shares outstanding. The Company does not have goodwill and intangible assets for any of the periods presented.

CONTACT: Jennifer H. Daukas Investor Relations Officer One Farm Glen Boulevard, Farmington, CT 06032 P 860-284-6359 F 860-409-3316 jdaukas@farmingtonbankct.com

Source:First Connecticut Bancorp, Inc.