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First Connecticut Bancorp, Inc. reports third quarter 2016 earnings of $0.25 earnings per share

FARMINGTON, Conn., Oct. 19, 2016 (GLOBE NEWSWIRE) -- First Connecticut Bancorp, Inc. (the “Company”) (NASDAQ:FBNK), the holding company for Farmington Bank (the “Bank”), reported net income of $3.8 million, or $0.25 diluted earnings per share for the quarter ended September 30, 2016 compared to net income of $4.2 million, or $0.28 diluted earnings per share for the quarter ended September 30, 2015.

For the quarter ended September 30, 2015, diluted earnings per share were positively affected ($0.03) by a $557,000 gain on the sale of foreclosed real estate.

“Once again this quarter we achieved solid organic growth in deposits, commercial loans and mortgage banking. We continue to build and enhance the franchise, in central Connecticut and western Massachusetts while focusing on growing tangible book value in this historic low interest rate environment,” stated John J. Patrick Jr., First Connecticut Bancorp’s Chairman, President and CEO.

Financial Highlights

  • Core net interest income increased $253,000 to $17.8 million in the third quarter of 2016 compared to the linked quarter and increased $83,000 compared to the third quarter of 2015.
  • Core net interest rate margin was 2.74% in the third quarter of 2016 compared to 2.81% in the linked quarter and 2.79% in the prior year quarter.
  • Core noninterest expense to average assets was 2.22% in the third quarter of 2016 compared to 2.23% in the linked quarter and 2.26% in the prior year quarter.
  • Organic loan growth remained strong during the third quarter of 2016 as loans increased $52.2 million to $2.5 billion at September 30, 2016 and increased $138.1 million or 6% from a year ago. Loan growth during the quarter was driven by the commercial and residential loan portfolios.
  • Overall deposits increased $196.4 million to $2.2 billion in the third quarter of 2016 compared to the linked quarter and increased $274.5 million or 14% from a year ago.
  • Loans to deposits were 110.16% in the third quarter of 2016 compared to 118.17% in the linked quarter and 118.49% in the third quarter of 2015.
  • Tangible book value per share increased to $16.17 for the quarter ended September 30, 2016 compared to $15.95 on a linked quarter basis and $15.30 at September 30, 2015.
  • Checking accounts grew by 3% or 1,624 net new accounts in the third quarter of 2016 and by 12% or 5,815 net new accounts from a year ago.
  • Loan delinquencies 30 days and greater represented 0.74% of total loans at September 30, 2016 compared to 0.50% at June 30, 2016 and 0.67% at September 30, 2015. Non-accrual loans represented 0.72% of total loans compared to 0.56% of total loans on a linked quarter basis and 0.71% of total loans at September 30, 2015. The increase in non-accruals and delinquencies is primarily the result of one commercial real estate loan with a current loan to value of 35%.
  • The allowance for loan losses represented 0.86% of total loans at September 30, 2016, June 30, 2016 and at September 30, 2015.
  • The Company paid a quarterly cash dividend of $0.08 per share during the third quarter, an increase of $0.01 compared to the linked quarter.

Third quarter 2016 compared with second quarter 2016

Net interest income

  • Core net interest income increased $253,000 to $17.8 million in the third quarter of 2016 compared to the linked quarter primarily due to a $42.6 million increase in the average loans balance.
  • Core net interest margin was 2.74% in the third quarter of 2016 compared to 2.81% in the linked quarter. The decrease in net margin was primarily due to lower yields on new loans originated and securities and an increase in cost of interest-bearing liabilities.
  • The cost of interest-bearing liabilities increased 2 basis points to 79 basis points in the third quarter of 2016 compared to 77 basis points in the linked quarter.

Provision for loan losses

  • Provision for loan losses was $698,000 for the third quarter of 2016 compared to $801,000 for the linked quarter.
  • Net charge-offs in the quarter were $155,000 or 0.03% to average loans (annualized) compared to $255,000 or 0.04% to average loans (annualized) in the linked quarter.
  • The allowance for loan losses represented 0.86% of total loans at September 30, 2016 and June 30, 2016.

Noninterest income

  • Total noninterest income increased $1.1 million to $3.7 million in the third quarter of 2016 compared to the linked quarter primarily due to an $188,000 increase in net gain on loans sold and a $778,000 increase in other noninterest income.
  • Net gain on loans sold increased $188,000 to $939,000 primarily due to an increase in volume.
  • Other income increased $778,000 primarily due to a $91,000 recovery in fair value in mortgage servicing rights compared to a $374,000 mortgage servicing rights impairment during the linked quarter and a $418,000 increase in swap fees offset by a $172,000 impairment on a SBIC fund.
  • Other noninterest income includes swap fees totaling $692,000 compared to $274,000 in the linked quarter.

Noninterest expense

  • Noninterest expense increased $840,000 in the third quarter of 2016 to $15.5 million compared to the linked quarter primarily due to a $138,000 increase in marketing expenses and a $537,000 increase in other operating expenses.
  • Other operating expenses increased $537,000 on a linked quarter basis primarily due to a $436,000 decrease in the provision for off-balance sheet commitments as a result of a change in accounting estimate in the linked quarter.

Income tax expense

  • Income tax expense was $1.5 million in the third quarter of 2016 compared to $1.4 million in the linked quarter.

Third quarter 2016 compared with third quarter 2015

Net interest income

  • Net interest income increased $83,000 to $17.8 million in the third quarter of 2016 compared to the prior year quarter due primarily to a $70.8 million increase in the average loan balance offset by a $628,000 increase in interest expense.
  • Net interest margin decreased 5 basis points to 2.74% in the third quarter of 2016 compared to 2.79% in the prior year quarter primarily due to an increase in the cost of interest-bearing liabilities.
  • The cost of interest-bearing liabilities increased 13 basis points to 79 basis points in the third quarter of 2016 compared to 66 basis points in the prior year quarter due to money market and certificate of deposit promotions.

Provision for loan losses

  • Provision for loan losses was $698,000 for the third quarter of 2016 compared to $386,000 for the prior year quarter.
  • Net charge-offs (recoveries) in the quarter were $155,000 or 0.03% to average loans (annualized) compared to ($43,000) or (0.01%) to average loans (annualized) in the prior year quarter.
  • The allowance for loan losses represented 0.86% of total loans at September 30, 2016 and 2015.

Noninterest income

  • Total noninterest income increased $444,000 to $3.7 million in the third quarter of 2016 compared to the prior year quarter primarily due to a $444,000 increase in other noninterest income.
  • Other noninterest income increased $444,000 in the third quarter of 2016 compared to the prior year quarter primarily due to an $180,000 increase in mortgage banking derivatives and a $302,000 increase in swap fees offset by a $141,000 increase in impairment on a SBIC fund.

Noninterest expense

  • Noninterest expense increased $766,000 in the third quarter of 2016 to $15.5 million compared to the prior year quarter primarily due to a $239,000 increase in marketing expenses and a $527,000 increase in other operating expenses. Noninterest expense on a core basis increased $209,000 compared to the prior year quarter.
  • Other operating expenses increased $527,000 primarily due to a $557,000 gain on foreclosed real estate in the prior year quarter.

Income tax expense

  • Income tax expense was $1.5 million in the third quarter of 2016 compared to $1.6 million in the prior year quarter.

September 30, 2016 compared to September 30, 2015

Financial Condition

  • Total assets increased $123.5 million or 5% at September 30, 2016 to $2.8 billion compared to $2.7 billion at September 30, 2015, largely reflecting an increase in net loans.
  • Our investment portfolio totaled $141.4 million at September 30, 2016 compared to $196.9 million at September 30, 2015, a decrease of $55.4 million due to a reduction in collateral requirements.
  • Net loans increased $136.8 million or 6% at September 30, 2016 to $2.5 billion compared to $2.3 billion at September 30, 2015 due to our continued focus on commercial and residential lending.
  • Deposits increased $274.5 million or 14% to $2.2 billion at September 30, 2016 compared to $2.0 billion at September 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 $55.5 million at September 30, 2016 and 2015, respectively.
  • Federal Home Loan Bank of Boston advances decreased $153.0 million to $220.6 million at September 30, 2016 compared to $373.6 million at September 30, 2015. Advances are used to support loan and securities growth.

Asset Quality

  • At September 30, 2016 the allowance for loan losses represented 0.86% of total loans and 119.26% of non-accrual loans, compared to 0.86% of total loans and 153.22% of non-accrual loans at June 30, 2016 and 0.86% of total loans and 120.05% of non-accrual loans at September 30, 2015.
  • Loan delinquencies 30 days and greater represented 0.74% of total loans at September 30, 2016 compared to 0.50% of total loans at June 30, 2016 and 0.67% of total loans at September 30, 2015.
  • Non-accrual loans represented 0.72% of total loans at September 30, 2016 compared to 0.56% of total loans at June 30, 2016 and 0.71% of total loans at September 30, 2015.
  • Net charge-offs (recoveries) in the quarter were $155,000 or 0.03% to average loans (annualized) compared to $255,000 or 0.04% to average loans (annualized) in the linked quarter and ($43,000) or (0.01%) 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 12.57% at September 30, 2016.
  • Tangible book value per share is $16.17 compared to $15.95 on a linked quarter basis and $15.30 at September 30, 2015.
  • The Company had 600,945 shares remaining to repurchase at September 30, 2016 from prior regulatory approval. Repurchased shares are held as treasury stock and will be available for general corporate purposes.
  • At September 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, October 20, 2016 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) 2016 2016 2016 2015 2015
Selected Financial Condition Data:
Total assets$2,831,960 $2,779,224 $2,701,614 $2,708,546 $2,708,454
Cash and cash equivalents 89,940 66,743 59,166 59,139 47,447
Securities held-to-maturity, at amortized cost 7,338 7,640 19,964 32,246 25,486
Securities available-for-sale, at fair value 134,094 149,396 128,681 132,424 171,390
Federal Home Loan Bank of Boston stock, at cost 15,139 18,240 15,688 21,729 23,038
Loans, net 2,455,101 2,403,420 2,350,245 2,341,598 2,318,257
Deposits 2,247,873 2,051,438 2,097,832 1,991,358 1,973,355
Federal Home Loan Bank of Boston advances 220,600 340,600 259,600 377,600 373,600
Total stockholders' equity 255,615 252,242 248,013 245,721 243,195
Allowance for loan losses 21,263 20,720 20,174 20,198 20,010
Non-accrual loans 17,829 13,523 13,093 14,913 16,668
Impaired loans 37,599 38,216 38,588 41,017 42,664
Loan delinquencies 30 days and greater 18,238 12,206 13,095 14,945 15,598
Selected Operating Data:
Interest income$21,805 $21,698 $21,323 $21,094 $21,094
Interest expense 4,050 3,826 3,817 3,731 3,422
Net interest income 17,755 17,872 17,506 17,363 17,672
Provision for loan losses 698 801 217 776 386
Net interest income after provision for loan losses 17,057 17,071 17,289 16,587 17,286
Noninterest income 3,685 2,617 2,900 3,468 3,241
Noninterest expense 15,484 14,644 15,277 15,958 14,718
Income before income taxes 5,258 5,044 4,912 4,097 5,809
Income tax expense 1,485 1,401 1,299 1,716 1,594
Net income$3,773 $3,643 $3,613 $2,381 $4,215
Performance Ratios (annualized):
Return on average assets 0.54% 0.54% 0.54% 0.35% 0.62%
Return on average equity 5.89% 5.77% 5.82% 3.86% 6.92%
Net interest rate spread (1) 2.56% 2.70% 2.65% 2.61% 2.65%
Net interest rate margin (2) 2.74% 2.87% 2.82% 2.76% 2.79%
Non-interest expense to average assets (3) 2.22% 2.23% 2.27% 2.37% 2.26%
Efficiency ratio (4) 72.53% 73.52% 75.19% 78.19% 73.04%
Average interest-earning assets to average
interest-bearing liabilities 129.42% 129.54% 128.45% 127.48% 126.44%
Loans to deposits 110.16% 118.17% 112.99% 118.60% 118.49%
Asset Quality Ratios:
Allowance for loan losses as a percent of total loans 0.86% 0.86% 0.85% 0.86% 0.86%
Allowance for loan losses as a percent of
non-accrual loans 119.26% 153.22% 154.08% 135.44% 120.05%
Net charge-offs (recoveries) to average loans (annualized) 0.03% 0.04% 0.04% 0.10% (0.01%)
Non-accrual loans as a percent of total loans 0.72% 0.56% 0.55% 0.63% 0.71%
Non-accrual loans as a percent of total assets 0.63% 0.49% 0.48% 0.55% 0.62%
Loan delinquencies 30 days and greater as a
percent of total loans 0.74% 0.50% 0.55% 0.63% 0.67%
Per Share Related Data:
Basic earnings per share$0.25 $0.24 $0.24 $0.16 $0.28
Diluted earnings per share$0.25 $0.24 $0.24 $0.16 $0.28
Dividends declared per share$0.08 $0.07 $0.07 $0.06 $0.06
Tangible book value (5)$16.17 $15.95 $15.72 $15.47 $15.30
Common stock shares outstanding 15,805,748 15,818,494 15,780,657 15,881,663 15,893,263
Weighted-average basic shares outstanding 14,823,914 14,765,452 14,720,892 14,785,058 14,632,951
Weighted-average diluted shares outstanding 15,192,006 15,077,291 15,012,540 15,146,365 14,887,461
(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) 2016 2016 2016 2015 2015
Capital Ratios:
Equity to total assets at end of period 9.03% 9.08% 9.18% 9.07% 8.98%
Average equity to average assets 9.20% 9.34% 9.22% 9.17% 9.00%
Total Capital (to Risk Weighted Assets) 12.57%* 12.63% 12.88% 12.88% 12.72%
Tier I Capital (to Risk Weighted Assets) 11.62%* 11.69% 11.92% 11.91% 11.76%
Common Equity Tier I Capital 11.62%* 11.69% 11.92% 11.91% 11.76%
Tier I Leverage Capital (to Average Assets) 9.40%* 9.55% 9.44% 9.39% 9.24%
Total equity to total average assets 9.17% 9.32% 9.20% 9.13% 8.98%
* Estimated
Loans and Allowance for Loan Losses:
Real estate
Residential$864,054 $842,427 $855,148 $849,722 $851,784
Commercial 931,703 922,643 893,477 887,431 862,367
Construction 50,083 41,466 36,557 30,895 29,244
Installment 3,211 3,267 3,338 2,970 3,007
Commercial 449,008 437,046 402,960 409,550 410,704
Collateral 1,621 1,689 1,668 1,668 1,632
Home equity line of credit 172,148 171,212 172,325 174,701 174,579
Revolving credit 82 79 77 91 96
Resort 512 535 759 784 807
Total loans 2,472,422 2,420,364 2,366,309 2,357,812 2,334,220
Net deferred loan costs 3,942 3,776 4,110 3,984 4,047
Loans 2,476,364 2,424,140 2,370,419 2,361,796 2,338,267
Allowance for loan losses (21,263) (20,720) (20,174) (20,198) (20,010)
Loans, net$2,455,101 $2,403,420 $2,350,245 $2,341,598 $2,318,257
Deposits:
Noninterest-bearing demand deposits$419,664 $415,562 $396,356 $401,388 $359,757
Interest-bearing
NOW accounts 590,213 429,973 529,267 468,054 527,128
Money market 536,979 498,847 488,497 460,737 440,249
Savings accounts 223,848 229,868 223,188 220,389 211,170
Time deposits 477,169 477,188 460,524 440,790 435,051
Total interest-bearing deposits 1,828,209 1,635,876 1,701,476 1,589,970 1,613,598
Total deposits$2,247,873 $2,051,438 $2,097,832 $1,991,358 $1,973,355


First Connecticut Bancorp, Inc.
Consolidated Statements of Condition (Unaudited)
September 30 June 30, September 30
2016 2016 2015
(Dollars in thousands)
Assets
Cash and due from banks $33,206 $37,455 $33,564
Interest bearing deposits with other institutions 56,734 29,288 13,883
Total cash and cash equivalents 89,940 66,743 47,447
Securities held-to-maturity, at amortized cost 7,338 7,640 25,486
Securities available-for-sale, at fair value 134,094 149,396 171,390
Loans held for sale 5,462 6,912 8,416
Loans (1) 2,476,364 2,424,140 2,338,267
Allowance for loan losses (21,263) (20,720) (20,010)
Loans, net 2,455,101 2,403,420 2,318,257
Premises and equipment, net 18,383 18,917 17,870
Federal Home Loan Bank of Boston stock, at cost 15,139 18,240 23,038
Accrued income receivable 6,413 6,736 6,305
Bank-owned life insurance 51,364 51,029 50,633
Deferred income taxes 15,136 15,405 15,935
Prepaid expenses and other assets 33,590 34,786 23,677
Total assets $2,831,960 $2,779,224 $2,708,454
Liabilities and Stockholders' Equity
Deposits
Interest-bearing $1,828,209 $1,635,876 $1,613,598
Noninterest-bearing 419,664 415,562 359,757
2,247,873 2,051,438 1,973,355
Federal Home Loan Bank of Boston advances 220,600 340,600 373,600
Repurchase agreement borrowings 10,500 10,500 10,500
Repurchase liabilities 35,036 63,027 58,084
Accrued expenses and other liabilities 62,336 61,417 49,720
Total liabilities 2,576,345 2,526,982 2,465,259
Stockholders' Equity
Common stock 181 181 181
Additional paid-in-capital 183,769 183,504 181,195
Unallocated common stock held by ESOP (10,833) (11,100) (11,893)
Treasury stock, at cost (31,645) (31,868) (30,411)
Retained earnings 120,487 117,980 111,274
Accumulated other comprehensive loss (6,344) (6,455) (7,151)
Total stockholders' equity 255,615 252,242 243,195
Total liabilities and stockholders' equity $2,831,960 $2,779,224 $2,708,454
(1) Loans include net deferred fees and unamortized premiums of $3.9 million, $3.8 million and $4.0 million at September 30, 2016, June 30, 2016 and September 30, 2015, 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) 2016 2016 2015 2016 2015
Interest income
Interest and fees on loans
Mortgage $16,134 $16,120 $15,861 $48,161 $46,250
Other 4,983 4,858 4,594 14,555 12,853
Interest and dividends on investments
United States Government and agency obligations 419 448 401 1,285 1,109
Other bonds 13 14 13 40 66
Corporate stocks 210 232 217 681 493
Other interest income 46 26 8 104 19
Total interest income 21,805 21,698 21,094 64,826 60,790
Interest expense
Deposits 2,975 2,735 2,412 8,446 6,761
Interest on borrowed funds 955 980 890 2,902 2,445
Interest on repo borrowings 98 96 96 289 351
Interest on repurchase liabilities 22 15 24 56 87
Total interest expense 4,050 3,826 3,422 11,693 9,644
Net interest income 17,755 17,872 17,672 53,133 51,146
Provision for loan losses 698 801 386 1,716 1,664
Net interest income
after provision for loan losses 17,057 17,071 17,286 51,417 49,482
Noninterest income
Fees for customer services 1,600 1,530 1,536 4,614 4,409
Gain on sale of investments - - - - 1,523
Net gain on loans sold 939 751 993 2,180 1,925
Brokerage and insurance fee income 58 54 54 166 163
Bank owned life insurance income 335 307 349 1,056 946
Other 753 (25) 309 1,186 1,013
Total noninterest income 3,685 2,617 3,241 9,202 9,979
Noninterest expense
Salaries and employee benefits 9,285 9,213 9,302 27,874 27,127
Occupancy expense 1,271 1,189 1,219 3,679 3,858
Furniture and equipment expense 1,020 1,018 1,034 3,099 3,147
FDIC assessment 392 383 413 1,179 1,227
Marketing 682 544 443 1,647 1,386
Other operating expenses 2,834 2,297 2,307 7,927 8,507
Total noninterest expense 15,484 14,644 14,718 45,405 45,252
Income before income taxes 5,258 5,044 5,809 15,214 14,209
Income tax expense 1,485 1,401 1,594 4,185 4,011
Net income $3,773 $3,643 $4,215 $11,029 $10,198
Earnings per share:
Basic $0.25 $0.24 $0.28 $0.74 $0.68
Diluted 0.25 0.24 0.28 0.73 0.67
Weighted average shares outstanding:
Basic 14,823,914 14,765,452 14,632,951 14,770,282 14,706,908
Diluted 15,192,006 15,077,291 14,887,461 15,093,109 14,883,362


First Connecticut Bancorp, Inc.
Consolidated Average Balances, Yields and Rates (Unaudited)
For The Three Months Ended
September 30, 2016 June 30, 2016 September 30, 2015
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$2,430,114 $21,650 3.54% $2,387,538 $21,499 3.62% $2,359,293 $20,937 3.52%
Securities 165,738 481 1.15% 150,257 515 1.38% 191,530 465 0.96%
Federal Home Loan Bank of Boston stock 18,206 161 3.52% 17,763 179 4.05% 22,883 166 2.88%
Federal funds and other earning assets 36,439 46 0.50% 22,607 26 0.46% 11,089 8 0.29%
Total interest-earning assets 2,650,497 22,338 3.35% 2,578,165 22,219 3.47% 2,584,795 21,576 3.31%
Noninterest-earning assets 135,828 127,656 122,438
Total assets$2,786,325 $2,705,821 $2,707,233
Interest-bearing liabilities:
NOW accounts$506,509 $385 0.30% $470,835 $336 0.29% $486,798 $357 0.29%
Money market 525,301 1,085 0.82% 486,826 930 0.77% 437,000 867 0.79%
Savings accounts 221,981 60 0.11% 226,820 59 0.10% 210,978 58 0.11%
Certificates of deposit 481,901 1,445 1.19% 473,976 1,410 1.20% 430,152 1,130 1.04%
Total interest-bearing deposits 1,735,692 2,975 0.68% 1,658,457 2,735 0.66% 1,564,928 2,412 0.61%
Federal Home Loan Bank of Boston Advances 250,459 955 1.52% 279,601 980 1.41% 411,236 890 0.86%
Repurchase agreement borrowings 10,500 98 3.71% 10,500 96 3.68% 10,500 96 3.63%
Repurchase liabilities 51,297 22 0.17% 41,757 15 0.14% 57,644 24 0.17%
Total interest-bearing liabilities 2,047,948 4,050 0.79% 1,990,315 3,826 0.77% 2,044,308 3,422 0.66%
Noninterest-bearing deposits 417,917 404,809 368,200
Other noninterest-bearing liabilities 64,201 58,085 51,089
Total liabilities 2,530,066 2,453,209 2,463,597
Stockholders' equity 256,259 252,612 243,636
Total liabilities and stockholders' equity$2,786,325 $2,705,821 $2,707,233
Tax-equivalent net interest income $18,288 $18,393 $18,154
Less: tax-equivalent adjustment (533) (521) (482)
Net interest income $17,755 $17,872 $17,672
Net interest rate spread (2) 2.56% 2.70% 2.65%
Net interest-earning assets (3)$602,549 $587,850 $540,487
Net interest margin (4) 2.74% 2.87% 2.79%
Average interest-earning assets to average interest-bearing liabilities
129.42% 129.54% 126.44%
(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,
2016 2015
Average BalanceInterest and
Dividends (1)
Yield/Cost Average BalanceInterest and
Dividends (1)
Yield/Cost
(Dollars in thousands)
Interest-earning assets:
Loans$2,394,991 $64,282 3.59% $2,256,907 $60,259 3.57%
Securities 156,876 1,479 1.26% 188,781 1,337 0.95%
Federal Home Loan Bank of Boston stock 18,590 527 3.79% 21,004 331 2.11%
Federal funds and other earning assets 28,677 104 0.48% 11,166 19 0.23%
Total interest-earning assets 2,599,134 66,392 3.41% 2,477,858 61,946 3.34%
Noninterest-earning assets 130,327 118,969
Total assets$2,729,461 $2,596,827
Interest-bearing liabilities:
NOW accounts$500,097 $1,101 0.29% $463,878 $988 0.28%
Money market 497,130 3,010 0.80% 450,985 2,635 0.78%
Savings accounts 221,635 177 0.11% 212,427 172 0.11%
Certificates of deposit 468,979 4,158 1.18% 397,094 2,966 1.00%
Total interest-bearing deposits 1,687,841 8,446 0.67% 1,524,384 6,761 0.59%
Federal Home Loan Bank of Boston Advances 267,527 2,902 1.45% 361,094 2,445 0.91%
Repurchase agreement borrowings 10,500 289 3.66% 13,346 351 3.52%
Repurchase liabilities 46,882 56 0.16% 56,061 87 0.21%
Total interest-bearing liabilities 2,012,750 11,693 0.78% 1,954,885 9,644 0.66%
Noninterest-bearing deposits 404,599 349,444
Other noninterest-bearing liabilities 59,668 52,000
Total liabilities 2,477,017 2,356,329
Stockholders' equity 252,444 240,498
Total liabilities and stockholders' equity$2,729,461 $2,596,827
Tax-equivalent net interest income $54,699 $52,302
Less: tax-equivalent adjustment (1,566) (1,156)
Net interest income $53,133 $51,146
Net interest rate spread (2) 2.63% 2.68%
Net interest-earning assets (3)$586,384 $522,973
Net interest margin (4) 2.81% 2.82%
Average interest-earning assets to average interest-bearing liabilities
129.13% 126.75%
(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, 2016, June 30, 2016, March 31, 2016, December 31, 2015 and September 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
September 30, June 30, March 31, December 31, September 30,
(Dollars in thousands, except per share data) 2016 2016 2016 2015 2015
Net Income$3,773 $3,643 $3,613 $2,381 $4,215
Adjustments:
Plus: Mortgage servicing rights (recovery) impairment (91) 374 - - -
Less: Prepayment penalty fees - (370) (10) (43) -
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) -
Total core adjustments before taxes (91) (419) (87) (422) (557)
Tax benefit on core adjustments 32 147 4 15 195
Deferred tax asset valuation allowance (1) - - - 768 -
Total core adjustments after taxes (59) (272) (83) 361 (362)
Total core net income$3,714 $3,371 $3,530 $2,742 $3,853
Total net interest income$17,755 $17,872 $17,506 $17,363 $17,672
Less: Prepayment penalty fees - (370) (10) (43) -
Total core net interest income$17,755 $17,502 $17,496 $17,320 $17,672
Total noninterest income$3,685 $2,617 $2,900 $3,468 $3,241
Plus: Mortgage servicing rights (recovery) impairment (91) 374 - - -
Less: Bank-owned life insurance proceeds - - (77) (379) -
Total core noninterest income$3,594 $2,991 $2,823 $3,089 $3,241
Total noninterest expense$15,484 $14,644 $15,277 $15,958 $14,718
Plus: Off-balance sheet commitments change in accounting estimate - 423 - - -
Less: Gain on sale of foreclosed real estate - - - - 557
Total core noninterest expense$15,484 $15,067 $15,277 $15,958 $15,275
Core earnings per common share, diluted$0.24 $0.22 $0.23 $0.18 $0.25
Core net interest rate margin (2) 2.74% 2.81% 2.82% 2.76% 2.79%
Core return on average assets (annualized) 0.53% 0.50% 0.52% 0.41% 0.57%
Core return on average equity (annualized) 5.80% 5.34% 5.68% 4.45% 6.33%
Core non-interest expense to average assets (annualized) 2.22% 2.23% 2.27% 2.37% 2.26%
Efficiency ratio (3) 72.53% 73.52% 75.19% 78.19% 73.04%
Tangible book value (4) $16.17 $15.95 $15.72 $15.47 $15.30
(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.