×

First Connecticut Bancorp, Inc. reports second quarter 2016 earnings of $0.24 earnings per share

FARMINGTON, Conn., July 20, 2016 (GLOBE NEWSWIRE) -- First Connecticut Bancorp, Inc. (the “Company”) (NASDAQ:FBNK), the holding company for Farmington Bank (the “Bank”), reported net income of $3.6 million, or $0.24 diluted earnings per share for the quarter ended June 30, 2016 compared to net income of $3.5 million, or $0.23 diluted earnings per share for the quarter ended June 30, 2015.

Net income on a core earnings basis was $3.4 million, or $0.22 diluted core earnings per share for the quarter ended June 30, 2016 compared to $2.8 million, or $0.19 diluted core earnings per share for the quarter ended June 30, 2015. Core earnings exclude non-recurring items.

“We continue to build our franchise with solid year over year organic loan and deposit growth, while our operating expenses have been relatively flat. We remain focused on building tangible book value which has increased $0.94 year over year. During the quarter, we opened our 24th location in Vernon, CT which is off to a great start and is on target to achieve the same consistent success our other de novo offices have achieved over the past six years,” stated John J. Patrick Jr., First Connecticut Bancorp’s Chairman, President and CEO.

Financial Highlights

  • Net interest income increased $366,000 to $17.9 million in the second quarter of 2016 compared to the linked quarter and increased $773,000 or 5% compared to the second quarter of 2015. Net interest income includes $370,000 in prepayment penalty fees in the second quarter of 2016 compared to $35,000 in the prior year quarter.

  • Core net interest rate margin was 2.81% in the second quarter of 2016 compared to 2.82% in the linked quarter and 2.86% in the prior year quarter.

  • Core noninterest expense to average assets was 2.23% in the second quarter of 2016 compared to 2.27% in the linked quarter and 2.39% in the prior year quarter.

  • Strong organic loan growth during the quarter as loans increased $53.7 million to $2.4 billion at June 30, 2016 and increased $136.2 million or 6% from a year ago. Loan growth during the quarter was primarily driven by a $68.2 million increase in the commercial loan portfolio offset by a $13.8 million decrease in the residential loan portfolio.

  • Overall deposits remained relatively flat at $2.1 billion in the second quarter of 2016 compared to the linked quarter and increased $173.4 million or 9% from a year ago.

  • Tangible book value per share increased to $15.95 for the quarter ended June 30, 2016 compared to $15.72 on a linked quarter basis and $15.01 at June 30, 2015.

  • Checking accounts grew by 2% or 1,061 net new accounts in the second quarter of 2016 and by 12% or 5,623 net new accounts from a year ago.

  • Net gain on loans sold increased $261,000 to $751,000 in the second quarter of 2016 compared to the linked quarter primarily due to an increase in volume.

  • Asset quality remained strong as loan delinquencies 30 days and greater represented 0.50% of total loans at June 30, 2016 compared to 0.55% at March 31, 2016 and 0.58% at June 30, 2015. Non-accrual loans represented 0.56% of total loans compared to 0.55% of total loans on a linked quarter basis and 0.57% of total loans at June 30, 2015.

  • The allowance for loan losses represented 0.86% of total loans at June 30, 2016, 0.85% at March 31, 2016 and 0.86% at June 30, 2015.

  • The Company paid a quarterly cash dividend of $0.07 per share during the second quarter.

Second quarter 2016 compared with first quarter 2016

Net interest income

  • Net interest income increased $366,000 to $17.9 million in the second quarter of 2016 compared to the linked quarter primarily due to $370,000 in prepayment penalty fees.

  • Net interest margin, excluding the prepayment penalty fees, was 2.81% in the second quarter of 2016 compared to 2.82% in the linked quarter.

  • The cost of interest-bearing liabilities remained flat at 77 basis points for both quarters in 2016.

Provision for loan losses

  • Provision for loan losses was $801,000 for the second quarter of 2016 compared to $217,000 for the linked quarter. The increase was primarily due to $53.7 million in loan growth during the quarter.

  • Net charge-offs in the quarter were $255,000 or 0.04% to average loans (annualized) compared to $241,000 or 0.04% to average loans (annualized) in the linked quarter.

  • The allowance for loan losses represented 0.86% of total loans at June 30, 2016 compared to 0.85% of total loans at March 31, 2016.

Noninterest income

  • Total noninterest income decreased $283,000 to $2.6 million in the second quarter of 2016 compared to the linked quarter primarily due to a $483,000 decrease in other noninterest income offset by a $261,000 increase in net gain on loans sold.

  • Other income decreased $483,000 primarily due to a $374,000 mortgage servicing rights impairment due to a decline in interest rates during the quarter and a $70,000 decrease in mortgage banking derivatives.

  • Other income includes swap fees totaling $274,000 compared to $315,000 in the linked quarter.

  • Net gain on loans sold increased $261,000 to $751,000 primarily due to an increase in volume.

Noninterest expense

  • Noninterest expense decreased $633,000 in the second quarter of 2016 to $14.6 million compared to the linked quarter primarily due to a $163,000 decrease in salaries and employee benefits and a $499,000 decrease in other operating expenses.

  • Other operating expenses decreased $499,000 on a linked quarter basis primarily due to a $417,000 decrease in the provision for off-balance sheet commitments as a result of a change in accounting estimate.

Income tax expense

  • Income tax expense was $1.4 million in the second quarter of 2016 compared to $1.3 million in the linked quarter.

Second quarter 2016 compared with second quarter 2015

Net interest income

  • Net interest income increased $773,000 to $17.9 million in the second quarter of 2016 compared to the prior year quarter due primarily to a $146.1 million increase in the average loan balance, a $335,000 increase in prepayment penalty fees offset by a $761,000 increase in interest expense.

  • Net interest margin, excluding the prepayment fees decreased 5 basis points to 2.81% in the second quarter of 2016 compared to 2.86% in the prior year quarter.

Provision for loan losses

  • Provision for loan losses was $801,000 for the second quarter of 2016 compared to $663,000 for the prior year quarter.

  • Net charge-offs in the quarter were $255,000 or 0.04% to average loans (annualized) compared to $314,000 or 0.06% to average loans (annualized) in the prior year quarter.

  • The allowance for loan losses represented 0.86% of total loans at June 30, 2016 and 2015.

Noninterest income

  • Total noninterest income decreased $1.5 million to $2.6 million in the second quarter of 2016 compared to the prior year quarter primarily due to a $1.3 million decrease in gain on sale of investments, $553,000 decrease in other noninterest income offset by a $339,000 increase in net gain on loans sold.

  • There was no gain on sale of investments in the second quarter of 2016 compared to $1.3 million gain on sale of investments in the prior year quarter.

  • Other income decreased $553,000 in the second quarter of 2016 compared to the prior year quarter primarily due to a $374,000 mortgage servicing rights impairment due to a decline in interest rates during the quarter and a $211,000 decrease in swap fees.

Noninterest expense

  • Noninterest expense decreased $953,000 in the second quarter of 2016 to $14.6 million compared to the prior year quarter primarily due to a $980,000 decrease in other operating expenses.

  • Other operating expenses decreased $980,000 primarily due to a $408,000 decrease in the provision for off-balance sheet commitments, in addition to prior year quarter $258,000 in non-recurring stock compensation costs related to two directors retiring in the quarter and a $149,000 loss on a credit sharing arrangement on a sold loan.

Income tax expense

  • Income tax expense was $1.4 million in the second quarters of 2016 and 2015.

June 30, 2016 compared to June 30, 2015

Financial Condition

  • Total assets increased $153.0 million or 6% at June 30, 2016 to $2.8 billion compared to $2.6 billion at June 30, 2015, largely reflecting an increase in net loans.

  • Our investment portfolio totaled $157.0 million at June 30, 2016 compared to $178.2 million at June 30, 2015, a decrease of $21.1 million due to reduction in collateral requirements.

  • Net loans increased $135.0 million or 6% at June 30, 2016 to $2.4 billion compared to $2.3 billion at June 30, 2015 due to our continued focus on commercial and residential lending.

  • Deposits increased $173.4 million to $2.1 billion at June 30, 2016 compared to $1.9 billion at June 30, 2015 primarily due to increases in money markets, demand deposits and certificates of deposit as we continue to develop and grow relationships in the geographical areas we serve. We had brokered deposit balances totaling $43.2 million and $52.2 million at June 30, 2016 and 2015, respectively.

  • Federal Home Loan Bank of Boston advances decreased $60.1 million to $340.6 million at June 30, 2016 compared to $400.7 million at June 30, 2015. Advances are used to support loan and securities growth.

Asset Quality

  • At June 30, 2016 the allowance for loan losses represented 0.86% of total loans and 153.22% of non-accrual loans, compared to 0.85% of total loans and 154.08% of non-accrual loans at March 31, 2016 and 0.86% of total loans and 150.94% of non-accrual loans at June 30, 2015.

  • Loan delinquencies 30 days and greater represented 0.50% of total loans at June 30, 2016 compared to 0.55% of total loans at March 31, 2016 and 0.58% of total loans at June 30, 2015.

  • Non-accrual loans represented 0.56% of total loans at June 30, 2016 compared to 0.55% of total loans at March 31, 2016 and 0.57% of total loans at June 30, 2015.

  • Net charge-offs in the quarter were $255,000 or 0.04% to average loans (annualized) compared to $241,000 or 0.04% to average loans (annualized) in the linked quarter and $314,000 or 0.06% 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 12.63% at June 30, 2016.

  • Tangible book value per share is $15.95 compared to $15.72 on a linked quarter basis and $15.01 at June 30, 2015.

  • During the second quarter of 2016, the Company repurchased 9,700 shares of common stock at an average price per share of $15.90 at a total cost of $154,000. Repurchased shares are held as treasury stock and will be available for general corporate purposes. The Company had 600,945 shares remaining to repurchase at June 30, 2016 from prior regulatory approval.

  • At June 30, 2016, the Company continued to have adequate liquidity including significant unused borrowing capacity at the Federal Home Loan Bank of Boston and the Federal Reserve Bank, as well as access to funding through brokered deposits and pre-approved unsecured lines of credit.

About First Connecticut Bancorp, Inc.

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

Conference Call

First Connecticut will host a conference call on Thursday, July 21, 2016 at 10:30am Eastern Time to discuss second 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
June, March 31, December 31, September 30, June 30,
(Dollars in thousands, except per share data) 2016 2016 2015 2015 2015
Selected Financial Condition Data:
Total assets$ 2,779,224 $ 2,701,614 $ 2,708,546 $ 2,708,454 $ 2,626,217
Cash and cash equivalents 66,743 59,166 59,139 47,447 42,992
Securities held-to-maturity, at amortized cost 7,640 19,964 32,246 25,486 34,366
Securities available-for-sale, at fair value 149,396 128,681 132,424 171,390 143,799
Federal Home Loan Bank of Boston stock, at cost 18,240 15,688 21,729 23,038 21,496
Loans, net 2,403,420 2,350,245 2,341,598 2,318,257 2,268,385
Deposits 2,051,438 2,097,832 1,991,358 1,973,355 1,878,040
Federal Home Loan Bank of Boston advances 340,600 259,600 377,600 373,600 400,700
Total stockholders' equity 252,242 248,013 245,721 243,195 239,082
Allowance for loan losses 20,720 20,174 20,198 20,010 19,581
Non-accrual loans 13,523 13,093 14,913 16,668 12,973
Impaired loans 38,216 38,588 41,017 42,664 39,975
Loan delinquencies 30 days and greater 12,206 13,095 14,945 15,598 13,244
Selected Operating Data:
Interest income$ 21,698 $ 21,323 $ 21,094 $ 21,094 $ 20,164
Interest expense 3,826 3,817 3,731 3,422 3,065
Net interest income 17,872 17,506 17,363 17,672 17,099
Provision for loan losses 801 217 776 386 663
Net interest income after provision for loan losses 17,071 17,289 16,587 17,286 16,436
Noninterest income 2,617 2,900 3,468 3,241 4,074
Noninterest expense 14,644 15,277 15,958 14,718 15,597
Income before income taxes 5,044 4,912 4,097 5,809 4,913
Income tax expense 1,401 1,299 1,716 1,594 1,441
Net income$ 3,643 $ 3,613 $ 2,381 $ 4,215 $ 3,472
Performance Ratios (annualized):
Return on average assets 0.54% 0.54% 0.35% 0.62% 0.54%
Return on average equity 5.77% 5.82% 3.86% 6.92% 5.77%
Net interest rate spread (1) 2.70% 2.65% 2.61% 2.65% 2.72%
Net interest rate margin (2) 2.87% 2.82% 2.76% 2.79% 2.86%
Non-interest expense to average assets (3) 2.23% 2.27% 2.37% 2.26% 2.39%
Efficiency ratio (4) 73.52% 75.19% 78.19% 73.04% 77.13%
Average interest-earning assets to average
interest-bearing liabilities 129.54% 128.45% 127.48% 126.44% 126.98%
Loans to deposits 118.17% 112.99% 118.60% 118.49% 121.83%
Asset Quality Ratios:
Allowance for loan losses as a percent of total loans 0.86% 0.85% 0.86% 0.86% 0.86%
Allowance for loan losses as a percent of
non-accrual loans 153.22% 154.08% 135.44% 120.05% 150.94%
Net charge-offs (recoveries) to average loans (annualized) 0.04% 0.04% 0.10% (0.01%) 0.06%
Non-accrual loans as a percent of total loans 0.56% 0.55% 0.63% 0.71% 0.57%
Non-accrual loans as a percent of total assets 0.49% 0.48% 0.55% 0.62% 0.49%
Loan delinquencies 30 days and greater as a
percent of total loans 0.50% 0.55% 0.63% 0.67% 0.58%
Per Share Related Data:
Basic earnings per share$ 0.24 $0.24 $ 0.16 $ 0.28 $ 0.23
Diluted earnings per share$ 0.24 $0.24 $ 0.16 $ 0.28 $ 0.23
Dividends declared per share$ 0.07 $0.07 $ 0.06 $ 0.06 $ 0.05
Tangible book value (5)$ 15.95 $15.72 $ 15.47 $ 15.30 $ 15.01
Common stock shares outstanding 15,818,494 15,780,657 15,881,663 15,893,263 15,922,888
Weighted-average basic shares outstanding 14,765,452 14,720,892 14,785,058 14,632,951 14,694,472
Weighted-average diluted shares outstanding 15,077,291 15,012,540 15,146,365 14,887,461 14,839,454
(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
June 30, March 31, December 31, September 30, June 30,
(Dollars in thousands) 2016 2016 2015 2015 2015
Capital Ratios:
Equity to total assets at end of period 9.08% 9.18% 9.07% 8.98% 9.10%
Average equity to average assets 9.34% 9.22% 9.17% 9.00% 9.36%
Total Capital (to Risk Weighted Assets) 12.63%* 12.88% 12.88% 12.72% 13.11%
Tier I Capital (to Risk Weighted Assets) 11.69%* 11.92% 11.91% 11.76% 12.12%
Common Equity Tier I Capital 11.69%* 11.92% 11.91% 11.76% 12.12%
Tier I Leverage Capital (to Average Assets) 9.55%* 9.44% 9.39% 9.24% 9.57%
Total equity to total average assets 9.32% 9.20% 9.13% 8.98% 9.29%
* Estimated
Loans and Allowance for Loan Losses:
Real estate
Residential$ 842,427 $ 855,148 $ 849,722 $ 851,784 $ 888,376
Commercial 922,643 893,477 887,431 862,367 817,955
Construction 41,466 36,557 30,895 29,244 42,858
Installment 3,267 3,338 2,970 3,007 3,103
Commercial 437,046 402,960 409,550 410,704 359,537
Collateral 1,689 1,668 1,668 1,632 1,551
Home equity line of credit 171,212 172,325 174,701 174,579 169,507
Revolving credit 79 77 91 96 77
Resort 535 759 784 807 837
Total loans 2,420,364 2,366,309 2,357,812 2,334,220 2,283,801
Net deferred loan costs 3,776 4,110 3,984 4,047 4,165
Loans 2,424,140 2,370,419 2,361,796 2,338,267 2,287,966
Allowance for loan losses (20,720) (20,174) (20,198) (20,010) (19,581)
Loans, net$ 2,403,420 $ 2,350,245 $ 2,341,598 $ 2,318,257 $ 2,268,385
Deposits:
Noninterest-bearing demand deposits$ 415,562 $ 396,356 $ 401,388 $ 359,757 $ 377,092
Interest-bearing
NOW accounts 429,973 529,267 468,054 527,128 425,789
Money market 498,847 488,497 460,737 440,249 430,558
Savings accounts 229,868 223,188 220,389 211,170 220,154
Time deposits 477,188 460,524 440,790 435,051 424,447
Total interest-bearing deposits 1,635,876 1,701,476 1,589,970 1,613,598 1,500,948
Total deposits$ 2,051,438 $ 2,097,832 $ 1,991,358 $ 1,973,355 $ 1,878,040


First Connecticut Bancorp, Inc.
Consolidated Statements of Condition (Unaudited)
June 30, March 31, June 30,
2016 2016 2015
(Dollars in thousands)
Assets
Cash and due from banks$ 37,455 $ 36,418 $ 35,595
Interest bearing deposits with other institutions 29,288 22,748 7,397
Total cash and cash equivalents 66,743 59,166 42,992
Securities held-to-maturity, at amortized cost 7,640 19,964 34,366
Securities available-for-sale, at fair value 149,396 128,681 143,799
Loans held for sale 6,912 6,145 7,550
Loans (1) 2,424,140 2,370,419 2,287,966
Allowance for loan losses (20,720) (20,174) (19,581)
Loans, net 2,403,420 2,350,245 2,268,385
Premises and equipment, net 18,917 18,210 17,964
Federal Home Loan Bank of Boston stock, at cost 18,240 15,688 21,496
Accrued income receivable 6,736 6,346 6,425
Bank-owned life insurance 51,029 50,725 50,283
Deferred income taxes 15,405 15,506 16,450
Prepaid expenses and other assets 34,786 30,938 16,507
Total assets$ 2,779,224 $ 2,701,614 $ 2,626,217
Liabilities and Stockholders' Equity
Deposits
Interest-bearing$ 1,635,876 $ 1,701,476 $ 1,500,948
Noninterest-bearing 415,562 396,356 377,092
2,051,438 2,097,832 1,878,040
Federal Home Loan Bank of Boston advances 340,600 259,600 400,700
Repurchase agreement borrowings 10,500 10,500 10,500
Repurchase liabilities 63,027 31,118 56,041
Accrued expenses and other liabilities 61,417 54,551 41,854
Total liabilities 2,526,982 2,453,601 2,387,135
Stockholders' Equity
Common stock 181 181 181
Additional paid-in-capital 183,504 182,747 180,764
Unallocated common stock held by ESOP (11,100) (11,363) (12,160)
Treasury stock, at cost (31,868) (32,355) (30,389)
Retained earnings 117,980 115,444 108,014
Accumulated other comprehensive loss (6,455) (6,641) (7,328)
Total stockholders' equity 252,242 248,013 239,082
Total liabilities and stockholders' equity$ 2,779,224 $ 2,701,614 $ 2,626,217
(1) Loans include net deferred fees and unamortized premiums of $3.8 million, $4.1 million and $4.2 million at June 30, 2016, March 31, 2016 and June 30, 2015, 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) 2016 2016 2015 2016 2015
Interest income
Interest and fees on loans
Mortgage $ 16,120 $ 15,907 $ 15,331 $ 32,027 $ 30,389
Other 4,858 4,714 4,264 9,572 8,259
Interest and dividends on investments
United States Government and agency obligations 448 418 385 866 708
Other bonds 14 13 35 27 53
Corporate stocks 232 239 145 471 276
Other interest income 26 32 4 58 11
Total interest income 21,698 21,323 20,164 43,021 39,696
Interest expense
Deposits 2,735 2,736 2,140 5,471 4,349
Interest on borrowed funds 980 967 804 1,947 1,555
Interest on repo borrowings 96 95 92 191 255
Interest on repurchase liabilities 15 19 29 34 63
Total interest expense 3,826 3,817 3,065 7,643 6,222
Net interest income 17,872 17,506 17,099 35,378 33,474
Provision for loan losses 801 217 663 1,018 1,278
Net interest income
after provision for loan losses 17,071 17,289 16,436 34,360 32,196
Noninterest income
Fees for customer services 1,530 1,484 1,500 3,014 2,873
Gain on sale of investments - - 1,250 - 1,523
Net gain on loans sold 751 490 412 1,241 932
Brokerage and insurance fee income 54 54 60 108 109
Bank owned life insurance income 307 414 324 721 597
Other (25) 458 528 433 704
Total noninterest income 2,617 2,900 4,074 5,517 6,738
Noninterest expense
Salaries and employee benefits 9,213 9,376 9,035 18,589 17,825
Occupancy expense 1,189 1,219 1,272 2,408 2,639
Furniture and equipment expense 1,018 1,061 1,077 2,079 2,113
FDIC assessment 383 404 402 787 814
Marketing 544 421 534 965 943
Other operating expenses 2,297 2,796 3,277 5,093 6,200
Total noninterest expense 14,644 15,277 15,597 29,921 30,534
Income before income taxes 5,044 4,912 4,913 9,956 8,400
Income tax expense 1,401 1,299 1,441 2,700 2,417
Net income$ 3,643 $ 3,613 $ 3,472 $ 7,256 $ 5,983
Earnings per share:
Basic $ 0.24 $ 0.24 $ 0.23 $ 0.49 $ 0.40
Diluted 0.24 0.24 0.23 0.48 0.40
Weighted average shares outstanding:
Basic 14,765,452 14,720,892 14,694,472 14,743,172 14,708,215
Diluted 15,077,291 15,012,540 14,839,454 15,043,555 14,844,994

First Connecticut Bancorp, Inc.
Consolidated Average Balances, Yields and Rates (Unaudited)
For The Three Months Ended
June 30, 2016 March 31, 2016 June 30, 2015
Average
Balance
Interest and
Dividends (1)
Yield/
Cost
Average
Balance
Interest and
Dividends (1)
Yield/
Cost
Average
Balance
Interest and
Dividends (1)
Yield/
Cost
(Dollars in thousands)
Interest-earning assets:
Loans$ 2,387,538 $ 21,499 3.62% $ 2,366,935 $ 21,132 3.59% $ 2,241,447 $ 19,949 3.57%
Securities 150,257 515 1.38% 154,534 483 1.26% 178,780 478 1.07%
Federal Home Loan Bank of Boston stock 17,763 179 4.05% 19,804 187 3.80% 20,310 86 1.70%
Federal funds and other earning assets 22,607 26 0.46% 27,148 32 0.47% 10,032 5 0.20%
Total interest-earning assets 2,578,165 22,219 3.47% 2,568,421 21,834 3.42% 2,450,569 20,518 3.36%
Noninterest-earning assets 127,656 127,192 121,820
Total assets $ 2,705,821 $ 2,695,613 $ 2,572,389
Interest-bearing liabilities:
NOW accounts$ 470,835 $ 336 0.29% $ 522,876 $ 380 0.29% $ 454,532 $ 310 0.27%
Money market 486,826 930 0.77% 478,954 995 0.84% 435,749 798 0.73%
Savings accounts 226,820 59 0.10% 216,102 58 0.11% 217,651 57 0.11%
Certificates of deposit 473,976 1,410 1.20% 450,917 1,303 1.16% 392,941 975 1.00%
Total interest-bearing deposits 1,658,457 2,735 0.66% 1,668,849 2,736 0.66% 1,500,873 2,140 0.57%
Federal Home Loan Bank of Boston Advances 279,601 980 1.41% 272,610 967 1.43% 366,460 804 0.88%
Repurchase agreement borrowings 10,500 96 3.68% 10,500 95 3.64% 10,500 92 3.51%
Repurchase liabilities 41,757 15 0.14% 47,543 19 0.16% 52,043 29 0.22%
Total interest-bearing liabilities 1,990,315 3,826 0.77% 1,999,502 3,817 0.77% 1,929,876 3,065 0.64%
Noninterest-bearing deposits 404,809 390,926 348,857
Other noninterest-bearing liabilities 58,085 56,765 52,831
Total liabilities 2,453,209 2,447,193 2,331,564
Stockholders' equity 252,612 248,420 240,825
Total liabilities and stockholders' equity$ 2,705,821 $ 2,695,613 $ 2,572,389
Tax-equivalent net interest income $ 18,393 $ 18,017 $ 17,453
Less: tax-equivalent adjustment (521) (511) (354)
Net interest income $ 17,872 $ 17,506 $ 17,099
Net interest rate spread (2) 2.70% 2.65% 2.72%
Net interest-earning assets (3) $ 587,850 $ 568,919 $ 520,693
Net interest margin (4) 2.87% 2.82% 2.86%
Average interest-earning assets to average interest-bearing liabilities 129.54% 128.45% 126.98%
(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 Six Months Ended June 30,
2016 2015
Average
Balance
Interest and
Dividends (1)
Yield/
Cost
Average
Balance
Interest and
Dividends (1)
Yield/
Cost
(Dollars in thousands)
Interest-earning assets:
Loans$ 2,377,236 $ 42,631 3.61% $ 2,204,867 $ 39,322 3.60%
Securities 152,395 998 1.32% 187,385 872 0.94%
Federal Home Loan Bank of Boston stock 18,783 366 3.92% 20,049 165 1.66%
Federal funds and other earning assets 24,753 58 0.47% 11,206 11 0.20%
Total interest-earning assets 2,573,167 44,053 3.44% 2,423,507 40,370 3.36%
Noninterest-earning assets 127,550 117,203
Total assets $ 2,700,717 $ 2,540,710
Interest-bearing liabilities:
NOW accounts$ 496,856 $ 716 0.29% $ 452,227 $ 631 0.28%
Money market 482,890 1,925 0.80% 458,094 1,768 0.78%
Savings accounts 221,461 117 0.11% 213,163 114 0.11%
Certificates of deposit 462,446 2,713 1.18% 380,291 1,836 0.97%
Total interest-bearing deposits 1,663,653 5,471 0.66% 1,503,775 4,349 0.58%
Federal Home Loan Bank of Boston Advances 276,156 1,947 1.42% 335,607 1,555 0.93%
Repurchase agreement borrowings 10,500 191 3.66% 14,793 255 3.48%
Repurchase liabilities 44,650 34 0.15% 55,257 63 0.23%
Total interest-bearing liabilities 1,994,959 7,643 0.77% 1,909,432 6,222 0.66%
Noninterest-bearing deposits 397,868 339,911
Other noninterest-bearing liabilities 57,374 52,464
Total liabilities 2,450,201 2,301,807
Stockholders' equity 250,516 238,903
Total liabilities and stockholders' equity$ 2,700,717 $ 2,540,710
Tax-equivalent net interest income $ 36,410 $ 34,148
Less: tax-equivalent adjustment (1,032) (674)
Net interest income $ 35,378 $ 33,474
Net interest rate spread (2) 2.67% 2.70%
Net interest-earning assets (3) $ 578,208 $ 514,075
Net interest margin (4) 2.85% 2.84%
Average interest-earning assets to average interest-bearing liabilities 128.98% 126.92%
(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 June 30, 2016, March 31, 2016, December 31, 2015, September 30, 2015 and June 30, 2015. The Company believes the use of these non-GAAP financial measures provides additional clarity in assessing the results of the Company.

At or for the Three Months Ended
June 30, March 31, December 31, September 30, June 30,
(Dollars in thousands, except per share data) 2016 2016 2015 2015 2015
Net Income$ 3,643 $ 3,613 $ 2,381 $ 4,215 $ 3,472
Adjustments:
Plus: Accelerated vesting of stock compensation - - - - 258
Plus: Mortgage servicing rights impairment 374 - - - -
Less: Prepayment penalty fees (370) (10) (43) - (35)
Less: Off-balance sheet commitments change in accounting estimate (423) - - - -
Less: Gain on sale of foreclosed real estate - - - (557) -
Less: Bank-owned life insurance proceeds - (77) (379) - -
Less: Net gain on sales of investments - - - - (1,250)
Total core adjustments before taxes (419) (87) (422) (557) (1,027)
Tax benefit on core adjustments 147 4 15 195 359
Deferred tax asset valuation allowance (1) - - 768 - -
Total core adjustments after taxes (272) (83) 361 (362) (668)
Total core net income$ 3,371 $ 3,530 $ 2,742 $ 3,853 $ 2,804
Total net interest income$ 17,872 $ 17,506 $ 17,363 $ 17,672 $ 17,099
Less: Prepayment penalty fees (370) (10) (43) - (35)
Total core net interest income$ 17,502 $ 17,496 $ 17,320 $ 17,672 $ 17,064
Total noninterest income$ 2,617 $ 2,900 $ 3,468 $ 3,241 $ 4,074
Plus: Mortgage servicing rights impairment 374 - - - -
Less: Bank-owned life insurance proceeds - (77) (379) - -
Less: Net gain on sales of investments - - - - (1,250)
Total core noninterest income$ 2,991 $ 2,823 $ 3,089 $ 3,241 $ 2,824
Total noninterest expense$ 14,644 $ 15,277 $ 15,958 $ 14,718 $ 15,597
Plus: Off-balance sheet commitments change in accounting estimate 423 - - - -
Less: Accelerated vesting of stock compensation - - - - (258)
Less: Gain on sale of foreclosed real estate - - - 557 -
Total core noninterest expense$ 15,067 $ 15,277 $ 15,958 $ 15,275 $ 15,339
Core earnings per common share, diluted$ 0.22 $ 0.23 $ 0.18 $ 0.25 $ 0.19
Core net interest rate margin (2) 2.81% 2.82% 2.76% 2.79% 2.86%
Core return on average assets (annualized) 0.50% 0.52% 0.41% 0.57% 0.44%
Core return on average equity (annualized) 5.34% 5.68% 4.45% 6.33% 4.66%
Core non-interest expense to average assets (annualized) 2.23% 2.27% 2.37% 2.26% 2.39%
Efficiency ratio (3) 73.52% 75.19% 78.19% 73.04% 77.13%
Tangible book value (4) $ 15.95 $ 15.72 $ 15.47 $ 15.30 $ 15.01
(1) Represents a valuation allowance related to a deferred tax asset associated with the establishment of the Bank’s foundation in 2011.
(2) Represents tax-equivalent core net interest income as a percent of average interest-earning assets.
(3) Represents core noninterest expense divided by the sum of core net interest income and core noninterest income.
(4) Represents ending stockholders’ equity less goodwill and intangible assets (excluding mortgage servicing rights) divided by ending common shares outstanding. The Company does not have goodwill and intangible assets for any of the periods presented.


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.