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First Connecticut Bancorp, Inc. reports fourth quarter 2016 earnings of $0.27 diluted earnings per share

FARMINGTON, Conn., Jan. 25, 2017 (GLOBE NEWSWIRE) -- First Connecticut Bancorp, Inc. (NASDAQ:FBNK), the holding company for Farmington Bank, reported a 76% increase in net income of $4.2 million, or $0.27 diluted earnings per share for the quarter ended December 31, 2016 compared to net income of $2.4 million, or $0.16 diluted earnings per share for the quarter ended December 31, 2015. Net income for the full year was $15.2 million, or $1.00 diluted earnings per share as compared to $12.6 million, or $0.83 diluted earnings per share in the prior year.

“I am pleased to report annual earnings of $1.00 per share supported by strong fourth quarter results of $0.27 per share. This represents the third consecutive year of double digit earnings per share growth for the Company,” stated John J. Patrick Jr., First Connecticut Bancorp’s Chairman, President and CEO.

“I am also pleased that we continued to grow tangible book value in a meaningful way while remaining diligent with respect to our expenses and process improvement initiatives which will support our future growth.”

Financial Highlights

  • Net interest income increased $367,000 to $18.1 million in the fourth quarter of 2016 compared to the linked quarter and increased $759,000 compared to the fourth quarter of 2015.
  • Net interest rate margin was 2.75% in the fourth quarter of 2016 compared to 2.74% in the linked quarter and 2.76% in the prior year quarter.
  • Core noninterest expense to average assets was 2.13% in the fourth quarter of 2016 compared to 2.22% in the linked quarter and 2.37% in the prior year quarter.
  • Organic loan growth remained strong during the fourth quarter of 2016 as loans increased $71.1 million to $2.5 billion at December 31, 2016 and increased $185.7 million or 8% from a year ago.
  • Overall deposits remained at $2.2 billion in the fourth quarter of 2016 compared to the linked quarter and increased $223.7 million or 11% from a year ago.
  • Loans to deposits were 115% in the fourth quarter of 2016 compared to 110% in the linked quarter and 119% in the fourth quarter of 2015.
  • Tangible book value per share increased to $16.37 for the quarter ended December 31, 2016 compared to $16.17 on a linked quarter basis and $15.47 at December 31, 2015.
  • Checking accounts grew by 8% or 4,235 net new accounts from a year ago.
  • Loan delinquencies 30 days and greater represented 0.68% of total loans at December 31, 2016 compared to 0.74% of total loans at September 30, 2016 and 0.63% at December 31, 2015. Non-accrual loans represented 0.69% of total loans compared to 0.72% of total loans on a linked quarter basis and 0.63% of total loans at December 31, 2015.
  • The allowance for loan losses represented 0.85% of total loans at December 31, 2016 and 0.86% of total loans at September 30, 2016 and at December 31, 2015.
  • The Company paid a quarterly cash dividend of $0.09 per share during the fourth quarter, an increase of $0.01 compared to the linked quarter.

Fourth quarter 2016 compared with third quarter 2016

Net interest income

  • Net interest income increased $367,000 to $18.1 million in the fourth quarter of 2016 compared to the linked quarter primarily due to a $67.8 million increase in the average loans balance.
  • Net interest margin was 2.75% in the fourth quarter of 2016 compared to 2.74% in the linked quarter.
  • The cost of interest-bearing liabilities decreased 2 basis points to 77 basis points in the fourth quarter of 2016 compared to 79 basis points in the linked quarter.

Provision for loan losses

  • Provision for loan losses was $616,000 for the fourth quarter of 2016 compared to $698,000 for the linked quarter.
  • Net charge-offs in the quarter were $350,000 or 0.06% to average loans (annualized) compared to $155,000 or 0.03% to average loans (annualized) in the linked quarter.
  • The allowance for loan losses represented 0.85% of total loans at December 31, 2016 and 0.86% of total loans at September 30, 2016.

Noninterest income

  • Total noninterest income decreased $149,000 to $3.5 million in the fourth quarter of 2016 compared to the linked quarter primarily due to a $63,000 decrease in fees for customer service and an $87,000 decrease in other noninterest income.
  • Other noninterest income decreased $87,000 primarily due to a $413,000 decrease in swap fees and a $206,000 decrease in banking derivatives offset by a $192,000 increase in the recovery in fair value in mortgage servicing rights, a $203,000 increase in the credit valuation of the commercial swap portfolio and a $73,000 decrease in impairment on a SBIC fund.
  • Other noninterest income includes swap fees totaling $279,000 compared to $692,000 in the linked quarter.

Noninterest expense

  • Noninterest expense decreased $385,000 in the fourth quarter of 2016 to $15.1 million compared to the linked quarter primarily due to a $176,000 decrease in salaries and employee benefits and a $159,000 decrease in marketing expenses.
  • Salaries and employee benefits decreased $176,000 to $9.1 million primarily due to a $350,000 decrease in officers’ share-based compensation expense as a result of the majority of the 2012 Stock Incentive Plan fully vesting in September 2016 offset by a general increase in salaries and employee benefits to maintain the Bank’s growth.

Income tax expense

  • Income tax expense was $1.8 million in the fourth quarter of 2016 compared to $1.5 million in the linked quarter. Income tax expense in the fourth quarter of 2016 included a $137,000 write-off of a deferred tax asset associated with the establishment of the Bank’s foundation in 2011.

Fourth quarter 2016 compared with fourth quarter 2015

Net interest income

  • Net interest income increased $759,000 to $18.1 million in the fourth quarter of 2016 compared to the prior year quarter due primarily to a $151.7 million increase in the average loan balance offset by a $307,000 increase in interest expense.
  • Net interest margin was 2.75% in the fourth quarter of 2016 compared to 2.76% in the prior year quarter.
  • The cost of interest-bearing liabilities increased 4 basis points to 77 basis points in the fourth quarter of 2016 compared to 73 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 $616,000 for the fourth quarter of 2016 compared to $776,000 for the prior year quarter.
  • Net charge-offs in the quarter were $350,000 or 0.06% to average loans (annualized) compared to $588,000 or 0.10% to average loans (annualized) in the prior year quarter.
  • The allowance for loan losses represented 0.85% of total loans at December 31, 2016 and 0.86% of total loans at December 31, 2015.

Noninterest income

  • Total noninterest income increased $68,000 to $3.5 million in the fourth quarter of 2016 compared to the prior year quarter.
  • Net gain on loans sold increased $358,000 to $925,000 primarily due to an increase in volume and a lower rate environment.
  • Bank owned life insurance income decreased $365,000 to $361,000 in the fourth quarter of 2016 due to the prior year quarter receiving $379,000 in insurance proceeds.
  • Other noninterest income increased $109,000 in the fourth quarter of 2016 compared to the prior year quarter primarily due to a $283,000 recovery in fair value in mortgage servicing rights offset by a $171,000 decrease in mortgage banking derivatives.

Noninterest expense

  • Noninterest expense decreased $859,000 in the fourth quarter of 2016 to $15.1 million compared to the prior year quarter primarily due to a $619,000 decrease in salaries and employee benefits and $240,000 decrease in marketing expenses.
  • Salaries and employee benefits decreased $619,000 to $9.1 million primarily due to a $478,000 decrease in officers’ share-based compensation expense as a result of the majority of the 2012 Stock Incentive Plan fully vesting in September 2016.
  • Marketing expense decreased $240,000 primarily due to a decrease in marketing expense related to our expansion into western Massachusetts as compared to the prior year quarter.

Income tax expense

  • Income tax expense was $1.8 million in the fourth quarter of 2016 and $1.7 million in the prior year quarter. Income tax expense in the fourth quarter of 2016 included a $137,000 write-off of a deferred tax asset associated with the establishment of the Bank’s foundation in 2011. Income tax expense in the fourth quarter of 2015 included a $771,000 valuation allowance also related to a deferred tax asset associated with the establishment of the Bank’s foundation in 2011. In the fourth quarter of 2016, the valuation allowance established in 2015 of $771,000 was reversed and the related deferred tax asset written-off. This had no impact on income tax expense in 2016.

For the year ended December 31, 2016 compared with the year ended December 31, 2015

Net interest income

  • Net interest income increased $2.7 million or 4% to $71.3 million for the year ended 2016 compared to $68.5 million for the year ended 2015 primarily due to a $141.4 million increase in the average loan balance offset by a $2.4 million increase in interest expense.
  • Net interest margin was 2.80% for the year ended 2016 compared to 2.81% for the year ended 2015.
  • The total interest-earning assets yield increased 5 basis points to 3.39% for the year ended 2016 compared to 3.34% for the year ended 2015 primarily due to an increase in yield on our securities portfolio.
  • The cost of interest-bearing liabilities increased 10 basis points to 78 basis points for the year ended 2016 compared to 68 basis points for the year ended 2015. The increase was primarily due to money market and certificate of deposit promotions and a 52 basis point increase in the average cost of Federal Home Loan Bank of Boston borrowings.

Provision for loan losses

  • Provision for loan losses was $2.3 million for the year ended 2016 compared to $2.4 million for the year ended 2015.
  • Net charge-offs for the year ended 2016 were $1.0 million or 0.04 % to average loans compared to $1.2 million or 0.05% to average loans for the year ended 2015.
  • The allowance for loan losses represented 0.85% of total loans at December 31, 2016 compared to 0.86% at December 31, 2015.

Noninterest income

  • Total noninterest income decreased $709,000 to $12.7 million for the year ended 2016 compared to $13.4 million for the year ended 2015.
  • Fees for customer services increased $176,000 to $6.2 million for the year ended 2016 compared to the year ended 2015 driven by our growth in checking accounts and debit card fees.
  • There was no gain on sale of investments for the year ended 2016. Gain on sale of investments was $1.5 million for the year ended 2015 due to the sale of trust preferred securities.
  • Net gain on loans sold increased $613,000 to $3.1 million for the year ended 2016 compared to the year ended 2015 as a result of an increase in volume of loans sold and a lower rate environment.
  • Bank owned life insurance income decreased $255,000 to $1.4 million for the year ended 2016 compared to the year ended 2015 primarily due to $302,000 more in bank owned life insurance proceeds in 2015 than in the current year.
  • Other noninterest income increased $282,000 to $1.9 million for the year ended 2016 compared to the year ended 2015 primarily due to a $372,000 increase in swap fee income offset by a $78,000 decrease in mortgage banking derivatives.
  • Other noninterest income includes swap fees totaling $1.6 million compared to $1.2 million in the prior year.

Noninterest expense

  • Noninterest expense decreased $706,000 to $60.5 million for the year ended 2016 compared to $61.2 million for the year ended 2015.
  • Salaries and employee benefits increased $128,000 to $37.0 million for the year ended 2016 compared to the year ended 2015. The increase is primarily due to increases in employee benefit related costs offset by a $616,000 decrease in officers’ share-based compensation expense due to the majority of the 2012 Stock Incentive Plan fully vesting in September 2016.
  • Other operating expenses decreased $454,000 to $10.8 million for the year ended 2016 compared to the prior year primarily due to a $707,000 decrease in directors’ share-based compensation expense as a result of the majority of the 2012 Stock Incentive Plan fully vesting in September 2016 and a $436,000 decrease in the provision for off-balance sheet commitments as a result of a change in accounting estimate offset by a $557,000 gain on foreclosed real estate in 2015.

Income tax expense

  • Income tax expense was $5.9 million for the year ended 2016 compared to $5.7 million for the year ended 2015. Income tax expense in 2016 included a $137,000 write-off of a deferred tax asset associated with the establishment of the Bank’s foundation in 2011. Income tax expense in 2015 included a $771,000 valuation allowance also related to a deferred tax asset associated with the establishment of the Bank’s foundation in 2011. In the fourth quarter of 2016, the valuation allowance established in 2015 of $771,000 was reversed and the related deferred tax asset written-off. This had no impact on income tax expense in 2016.

December 31, 2016 compared to December 31, 2015

Financial Condition

  • Total assets increased $129.0 million or 5% at December 31, 2016 to $2.8 billion compared to $2.7 billion at December 31, 2015, largely reflecting an increase in net loans.
  • Our investment portfolio totaled $136.6 million at December 31, 2016 compared to $164.7 million at December 31, 2015, a decrease of $28.1 million due to a reduction in collateral requirements.
  • Net loans increased $184.4 million or 8% at December 31, 2016 to $2.5 billion compared to $2.3 billion at December 31, 2015 due to our continued focus on commercial and residential lending.
  • Deposits increased $223.7 million or 11% to $2.2 billion at December 31, 2016 compared to $2.0 billion at December 31, 2015 primarily due to a $197.0 million increase in retail deposits as we continue to develop and grow relationships in the geographical areas we serve. We had municipal deposit balances totaling $394.5 million and $368.0 million at December 31, 2016 and 2015, respectively.
  • Federal Home Loan Bank of Boston advances decreased $90.5 million to $287.1 million at December 31, 2016 compared to $377.6 million at December 31, 2015.

Asset Quality

  • At December 31, 2016 the allowance for loan losses represented 0.85% of total loans and 122.60% of non-accrual loans, compared to 0.86% of total loans and 119.26% of non-accrual loans at September 30, 2016 and 0.86% of total loans and 135.44% of non-accrual loans at December 31, 2015.
  • Loan delinquencies 30 days and greater represented 0.68% of total loans at December 31, 2016 compared to 0.74% of total loans at September 30, 2016 and 0.63% of total loans at December 31, 2015.
  • Non-accrual loans represented 0.69% of total loans at December 31, 2016 compared to 0.72% of total loans at September 30, 2016 and 0.63% of total loans at December 31, 2015.
  • Net charge-offs in the quarter were $350,000 or 0.06% to average loans (annualized) compared to $155,000 or 0.03% to average loans (annualized) in the linked quarter and $588,000 or 0.10% 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 12.78% at December 31, 2016.
  • Tangible book value per share is $16.37 compared to $16.17 on a linked quarter basis and $15.47 at December 31, 2015.
  • The Company had 600,945 shares remaining to repurchase at December 31, 2016 from prior regulatory approval. Repurchased shares are held as treasury stock and will be available for general corporate purposes.
  • At December 31, 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, January 26, 2017 at 10:30am Eastern Time to discuss fourth 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
December 31, September 30, June 30, March 31, December 31,
(Dollars in thousands, except per share data) 2016 2016 2016 2016 2015
Selected Financial Condition Data:
Total assets$2,837,555 $2,831,960 $2,779,224 $2,701,614 $2,708,546
Cash and cash equivalents 47,723 89,940 66,743 59,166 59,139
Securities held-to-maturity, at amortized cost 33,061 7,338 7,640 19,964 32,246
Securities available-for-sale, at fair value 103,520 134,094 149,396 128,681 132,424
Federal Home Loan Bank of Boston stock, at cost 16,378 15,139 18,240 15,688 21,729
Loans, net 2,525,983 2,455,101 2,403,420 2,350,245 2,341,598
Deposits 2,215,090 2,247,873 2,051,438 2,097,832 1,991,358
Federal Home Loan Bank of Boston advances 287,057 220,600 340,600 259,600 377,600
Total stockholders' equity 260,176 255,615 252,242 248,013 245,721
Allowance for loan losses 21,529 21,263 20,720 20,174 20,198
Non-accrual loans 17,561 17,829 13,523 13,093 14,913
Impaired loans 34,273 37,599 38,216 38,588 41,017
Loan delinquencies 30 days and greater 17,271 18,238 12,206 13,095 14,945
Selected Operating Data:
Interest income$22,160 $21,805 $21,698 $21,323 $21,094
Interest expense 4,038 4,050 3,826 3,817 3,731
Net interest income 18,122 17,755 17,872 17,506 17,363
Provision for loan losses 616 698 801 217 776
Net interest income after provision for loan losses 17,506 17,057 17,071 17,289 16,587
Noninterest income 3,536 3,685 2,617 2,900 3,468
Noninterest expense 15,099 15,484 14,644 15,277 15,958
Income before income taxes 5,943 5,258 5,044 4,912 4,097
Income tax expense 1,757 1,485 1,401 1,299 1,716
Net income$4,186 $3,773 $3,643 $3,613 $2,381
Performance Ratios (annualized):
Return on average assets 0.59% 0.54% 0.54% 0.54% 0.35%
Return on average equity 6.43% 5.89% 5.77% 5.82% 3.86%
Net interest rate spread (1) 2.57% 2.56% 2.70% 2.65% 2.61%
Net interest rate margin (2) 2.75% 2.74% 2.87% 2.82% 2.76%
Non-interest expense to average assets (3) 2.13% 2.22% 2.23% 2.27% 2.37%
Efficiency ratio (4) 70.64% 72.53% 73.52% 75.19% 78.19%
Average interest-earning assets to average
interest-bearing liabilities 130.20% 129.42% 129.54% 128.45% 127.48%
Loans to deposits 115% 110% 118% 113% 119%
Asset Quality Ratios:
Allowance for loan losses as a percent of total loans 0.85% 0.86% 0.86% 0.85% 0.86%
Allowance for loan losses as a percent of
non-accrual loans 122.60% 119.26% 153.22% 154.08% 135.44%
Net charge-offs (recoveries) to average loans (annualized) 0.06% 0.03% 0.04% 0.04% 0.10%
Non-accrual loans as a percent of total loans 0.69% 0.72% 0.56% 0.55% 0.63%
Non-accrual loans as a percent of total assets 0.62% 0.63% 0.49% 0.48% 0.55%
Loan delinquencies 30 days and greater as a
percent of total loans 0.68% 0.74% 0.50% 0.55% 0.63%
Per Share Related Data:
Basic earnings per share$0.28 $0.25 $0.24 $0.24 $0.16
Diluted earnings per share$0.27 $0.25 $0.24 $0.24 $0.16
Dividends declared per share$0.09 $0.08 $0.07 $0.07 $0.06
Tangible book value (5)$16.37 $16.17 $15.95 $15.72 $15.47
Common stock shares outstanding 15,897,698 15,805,748 15,818,494 15,780,657 15,881,663
Weighted-average basic shares outstanding 14,973,610 14,823,914 14,765,452 14,720,892 14,785,058
Weighted-average diluted shares outstanding 15,502,481 15,192,006 15,077,291 15,012,540 15,146,365
(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
December 31, September 30, June 30, March 31, December 31,
(Dollars in thousands) 2016 2016 2016 2016 2015
Capital Ratios:
Equity to total assets at end of period 9.17% 9.03% 9.08% 9.18% 9.07%
Average equity to average assets 9.18% 9.20% 9.34% 9.22% 9.17%
Total Capital (to Risk Weighted Assets) 12.78%* 12.57% 12.63% 12.88% 12.88%
Tier I Capital (to Risk Weighted Assets) 11.82%* 11.62% 11.69% 11.92% 11.91%
Common Equity Tier I Capital 11.82%* 11.62% 11.69% 11.92% 11.91%
Tier I Leverage Capital (to Average Assets) 9.41%* 9.40% 9.55% 9.44% 9.39%
Total equity to total average assets 9.18% 9.17% 9.32% 9.20% 9.13%
* Estimated
Loans and Allowance for Loan Losses:
Real estate
Residential$907,946 $864,054 $842,427 $855,148 $849,722
Commercial 979,370 931,703 922,643 893,477 887,431
Construction 49,679 50,083 41,466 36,557 30,895
Installment 3,174 3,211 3,267 3,338 2,970
Commercial 430,539 449,008 437,046 402,960 409,550
Collateral 1,614 1,621 1,689 1,668 1,668
Home equity line of credit 170,786 172,148 171,212 172,325 174,701
Revolving credit 72 82 79 77 91
Resort 488 512 535 759 784
Total loans 2,543,668 2,472,422 2,420,364 2,366,309 2,357,812
Net deferred loan costs 3,844 3,942 3,776 4,110 3,984
Loans 2,547,512 2,476,364 2,424,140 2,370,419 2,361,796
Allowance for loan losses (21,529) (21,263) (20,720) (20,174) (20,198)
Loans, net$2,525,983 $2,455,101 $2,403,420 $2,350,245 $2,341,598
Deposits:
Noninterest-bearing demand deposits$441,283 $419,664 $415,562 $396,356 $401,388
Interest-bearing
NOW accounts 542,764 590,213 429,973 529,267 468,054
Money market 532,681 536,979 498,847 488,497 460,737
Savings accounts 233,792 223,848 229,868 223,188 220,389
Time deposits 464,570 477,169 477,188 460,524 440,790
Total interest-bearing deposits 1,773,807 1,828,209 1,635,876 1,701,476 1,589,970
Total deposits$2,215,090 $2,247,873 $2,051,438 $2,097,832 $1,991,358


First Connecticut Bancorp, Inc.
Consolidated Statements of Condition (Unaudited)
December 31, September 30, December 31,
2016 2016 2015
(Dollars in thousands)
Cash and due from banks$44,086 $33,206 $45,732
Interest bearing deposits with other institutions 3,637 56,734 13,407
Total cash and cash equivalents 47,723 89,940 59,139
Securities held-to-maturity, at amortized cost 33,061 7,338 32,246
Securities available-for-sale, at fair value 103,520 134,094 132,424
Loans held for sale 3,270 5,462 9,637
Loans (1) 2,547,512 2,476,364 2,361,796
Allowance for loan losses (21,529) (21,263) (20,198)
Loans, net 2,525,983 2,455,101 2,341,598
Premises and equipment, net 18,002 18,383 18,565
Federal Home Loan Bank of Boston stock, at cost 16,378 15,139 21,729
Accrued income receivable 7,432 6,413 6,747
Bank-owned life insurance 51,726 51,364 50,618
Deferred income taxes 14,795 15,136 15,443
Prepaid expenses and other assets 15,665 33,590 20,400
Total assets$2,837,555 $2,831,960 $2,708,546
Liabilities and Stockholders' Equity
Deposits
Interest-bearing$1,773,807 $1,828,209 $1,589,970
Noninterest-bearing 441,283 419,664 401,388
2,215,090 2,247,873 1,991,358
Federal Home Loan Bank of Boston advances 287,057 220,600 377,600
Repurchase agreement borrowings 10,500 10,500 10,500
Repurchase liabilities 18,867 35,036 35,769
Accrued expenses and other liabilities 45,865 62,336 47,598
Total liabilities 2,577,379 2,576,345 2,462,825
Stockholders' Equity
Common stock 181 181 181
Additional paid-in-capital 184,111 183,769 181,997
Unallocated common stock held by ESOP (10,567) (10,833) (11,626)
Treasury stock, at cost (30,400) (31,645) (30,602)
Retained earnings 123,541 120,487 112,933
Accumulated other comprehensive loss (6,690) (6,344) (7,162)
Total stockholders' equity 260,176 255,615 245,721
Total liabilities and stockholders' equity$2,837,555 $2,831,960 $2,708,546
(1) Loans include net deferred fees and unamortized premiums of $3.8 million, $3.9 million and $4.0 million at December 31, 2016, September 30, 2016 and December 31, 2015, respectively.


First Connecticut Bancorp, Inc.
Consolidated Statements of Income (Unaudited)
Three Months Ended For The Year Ended
December 31, September 30, December 31, December 31,
(Dollars in thousands, except per share data) 2016 2016 2015 2016 2015
Interest income
Interest and fees on loans
Mortgage $16,451 $16,134 $15,670 $64,612 $61,920
Other 5,058 4,983 4,731 19,613 17,584
Interest and dividends on investments
United States Government and agency obligations 335 419 425 1,620 1,534
Other bonds 10 13 13 50 79
Corporate stocks 231 210 248 912 741
Other interest income 75 46 7 179 26
Total interest income 22,160 21,805 21,094 86,986 81,884
Interest expense
Deposits 3,010 2,975 2,611 11,456 9,372
Interest on borrowed funds 924 955 1,004 3,826 3,449
Interest on repo borrowings 96 98 97 385 448
Interest on repurchase liabilities 8 22 19 64 106
Total interest expense 4,038 4,050 3,731 15,731 13,375
Net interest income 18,122 17,755 17,363 71,255 68,509
Provision for loan losses 616 698 776 2,332 2,440
Net interest income
after provision for loan losses 17,506 17,057 16,587 68,923 66,069
Noninterest income
Fees for customer services 1,537 1,600 1,566 6,151 5,975
Gain on sale of investments - - - - 1,523
Net gain on loans sold 925 939 567 3,105 2,492
Brokerage and insurance fee income 47 58 52 213 215
Bank owned life insurance income 361 335 726 1,417 1,672
Other 666 753 557 1,852 1,570
Total noninterest income 3,536 3,685 3,468 12,738 13,447
Noninterest expense
Salaries and employee benefits 9,109 9,285 9,728 36,983 36,855
Occupancy expense 1,211 1,271 1,257 4,890 5,115
Furniture and equipment expense 983 1,020 1,057 4,082 4,204
FDIC assessment 424 392 430 1,603 1,657
Marketing 523 682 763 2,170 2,149
Other operating expenses 2,849 2,834 2,723 10,776 11,230
Total noninterest expense 15,099 15,484 15,958 60,504 61,210
Income before income taxes 5,943 5,258 4,097 21,157 18,306
Income tax expense 1,757 1,485 1,716 5,942 5,727
Net income$4,186 $3,773 $2,381 $15,215 $12,579
Earnings per share:
Basic $0.28 $0.25 $0.16 $1.02 $0.84
Diluted 0.27 0.25 0.16 1.00 0.83
Weighted average shares outstanding:
Basic 14,973,610 14,823,914 14,785,058 14,821,391 14,726,607
Diluted 15,502,481 15,192,006 15,146,365 15,196,011 14,949,654


First Connecticut Bancorp, Inc.
Consolidated Average Balances, Yields and Rates (Unaudited)
For The Three Months Ended
December 31, 2016 September 30, 2016 December 31, 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$2,497,897$22,092 3.52% $2,430,114$21,650 3.54% $2,346,218$20,916 3.54%
Securities 131,837 402 1.21% 165,738 481 1.15% 185,697 495 1.06%
Federal Home Loan Bank of Boston stock 15,200 174 4.55% 18,206 161 3.52% 21,729 191 3.49%
Federal funds and other earning assets 60,518 75 0.49% 36,439 46 0.50% 14,258 7 0.19%
Total interest-earning assets 2,705,452 22,743 3.34% 2,650,497 22,338 3.35% 2,567,902 21,609 3.34%
Noninterest-earning assets 128,332 135,828 122,500
Total assets$2,833,784 $2,786,325 $2,690,402
Interest-bearing liabilities:
NOW accounts$552,444$443 0.32% $506,509$385 0.30% $498,658$363 0.29%
Money market 557,864 1,109 0.79% 525,301 1,085 0.82% 459,047 957 0.83%
Savings accounts 229,052 64 0.11% 221,981 60 0.11% 216,219 54 0.10%
Certificates of deposit 471,023 1,394 1.18% 481,901 1,445 1.19% 436,676 1,237 1.12%
Total interest-bearing deposits 1,810,383 3,010 0.66% 1,735,692 2,975 0.68% 1,610,600 2,611 0.64%
Federal Home Loan Bank of Boston Advances 226,766 924 1.62% 250,459 955 1.52% 343,024 1,004 1.16%
Repurchase agreement borrowings 10,500 96 3.64% 10,500 98 3.71% 10,500 97 3.67%
Repurchase liabilities 30,245 8 0.11% 51,297 22 0.17% 50,264 19 0.15%
Total interest-bearing liabilities 2,077,894 4,038 0.77% 2,047,948 4,050 0.79% 2,014,388 3,731 0.73%
Noninterest-bearing deposits 434,659 417,917 380,041
Other noninterest-bearing liabilities 61,023 64,201 49,273
Total liabilities 2,573,576 2,530,066 2,443,702
Stockholders' equity 260,208 256,259 246,700
Total liabilities and stockholders' equity$2,833,784 $2,786,325 $2,690,402
Tax-equivalent net interest income $18,705 $18,288 $17,878
Less: tax-equivalent adjustment (583) (533) (515)
Net interest income $18,122 $17,755 $17,363
Net interest rate spread (2) 2.57% 2.56% 2.61%
Net interest-earning assets (3)$627,558 $602,549 $553,514
Net interest margin (4) 2.75% 2.74% 2.76%
Average interest-earning assets to average interest-bearing liabilities
130.20% 129.42% 127.48%
(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 Years Ended December 31,
2016 2015
Average BalanceInterest and Dividends (1)Yield/Cost Average BalanceInterest and Dividends (1)Yield/Cost
(Dollars in thousands)
Interest-earning assets:
Loans$2,420,859$86,374 3.57% $2,279,418$81,177 3.56%
Securities 150,582 1,881 1.25% 188,004 1,832 0.97%
Federal Home Loan Bank of Boston stock 17,738 701 3.95% 21,187 522 2.46%
Federal funds and other earning assets 36,679 179 0.49% 11,947 26 0.22%
Total interest-earning assets 2,625,858 89,135 3.39% 2,500,556 83,557 3.34%
Noninterest-earning assets 129,826 119,857
Total assets$2,755,684 $2,620,413
Interest-bearing liabilities:
NOW accounts$513,256$1,544 0.30% $472,644$1,351 0.29%
Money market 512,396 4,119 0.87% 453,017 3,592 0.79%
Savings accounts 223,499 241 0.11% 213,383 226 0.11%
Certificates of deposit 469,493 5,552 1.18% 407,071 4,203 1.03%
Total interest-bearing deposits 1,718,644 11,456 0.67% 1,546,115 9,372 0.61%
Federal Home Loan Bank of Boston Advances 257,281 3,826 1.49% 356,539 3,449 0.97%
Repurchase agreement borrowings 10,500 385 3.67% 12,629 448 3.55%
Repurchase liabilities 42,700 64 0.15% 54,600 106 0.19%
Total interest-bearing liabilities 2,029,125 15,731 0.78% 1,969,883 13,375 0.68%
Noninterest-bearing deposits 412,155 357,156
Other noninterest-bearing liabilities 60,008 51,312
Total liabilities 2,501,288 2,378,351
Stockholders' equity 254,396 242,062
Total liabilities and stockholders' equity$2,755,684 $2,620,413
Tax-equivalent net interest income $73,404 $70,182
Less: tax-equivalent adjustment (2,149) (1,673)
Net interest income $71,255 $68,509
Net interest rate spread (2) 2.61% 2.66%
Net interest-earning assets (3)$596,733 $530,673
Net interest margin (4) 2.80% 2.81%
Average interest-earning assets to average interest-bearing liabilities
129.41% 126.94%
(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 December 31, 2016, September 30, 2016, June 30, 2016, March 31, 2016 and December 31, 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
December 31, September 30, June 30, March 31, December 31,
(Dollars in thousands, except per share data) 2016 2016 2016 2016 2015
Net Income$4,186 $3,773 $3,643 $3,613 $2,381
Adjustments:
Plus: Mortgage servicing rights (recovery) impairment (283) (91) 374 - -
Less: Prepayment penalty fees - - (370) (10) (43)
Less: Off-balance sheet commitments change in accounting estimate - - (423) - -
Less: Bank-owned life insurance proceeds - - - (77) (379)
Total core adjustments before taxes (283) (91) (419) (87) (422)
Tax benefit on core adjustments 99 32 147 4 15
Deferred tax asset write-off (1) 137 - - - -
Deferred tax asset valuation allowance (2) - - - - 771
Total core adjustments after taxes (47) (59) (272) (83) 364
Total core net income$4,139 $3,714 $3,371 $3,530 $2,745
Total net interest income$18,122 $17,755 $17,872 $17,506 $17,363
Less: Prepayment penalty fees - - (370) (10) (43)
Total core net interest income$18,122 $17,755 $17,502 $17,496 $17,320
Total noninterest income$3,536 $3,685 $2,617 $2,900 $3,468
Plus: Mortgage servicing rights (recovery) impairment (283) (91) 374 - -
Less: Bank-owned life insurance proceeds - - - (77) (379)
Total core noninterest income$3,253 $3,594 $2,991 $2,823 $3,089
Total noninterest expense$15,099 $15,484 $14,644 $15,277 $15,958
Plus: Off-balance sheet commitments change in accounting estimate - - 423 - -
Total core noninterest expense$15,099 $15,484 $15,067 $15,277 $15,958
Core earnings per common share, diluted$0.27 $0.24 $0.22 $0.23 $0.18
Core net interest rate margin (3) 2.75% 2.74% 2.81% 2.82% 2.76%
Core return on average assets (annualized) 0.58% 0.53% 0.50% 0.52% 0.41%
Core return on average equity (annualized) 6.36% 5.80% 5.34% 5.68% 4.45%
Core non-interest expense to average assets (annualized) 2.13% 2.22% 2.23% 2.27% 2.37%
Efficiency ratio (4) 70.64% 72.53% 73.52% 75.19% 78.19%
Tangible book value (5) $16.37 $16.17 $15.95 $15.72 $15.47
(1) Represents a write-off of the remaining deferred tax asset associated with the establishment of the Bank’s foundation in 2011.
(2) Represents a valuation allowance related to a deferred tax asset associated with the establishment of the Bank’s foundation in 2011.
(3) Represents tax-equivalent core net interest income as a percent of average interest-earning assets.
(4) Represents core noninterest expense divided by the sum of core net interest income and core noninterest income.
(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.


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 years ended December 31, 2016 and 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 Year Ended December 31,
(Dollars in thousands, except per share data) 2016 2015
Net Income$15,215 $12,579
Adjustments:
Plus: Accelerated vesting of stock compensation - 398
Plus: Employee severance - 93
Less: Prepayment penalty fees (380) (78)
Less: Off-balance sheet commitment change in accounting estimate (423)
Less: Bank-owned life insurance proceeds (77) (379)
Less: Gain on sale of foreclosed real estate - (557)
Less: Net gain on sales of investments - (1,523)
Total core adjustments before taxes (880) (2,046)
Tax benefit on core adjustments 282 583
Deferred tax asset write-off (1) 137 -
Deferred tax asset valuation allowance (2) - 771
Total core adjustments after taxes (461) (692)
Total core net income$14,754 $11,887
Total net interest income$71,255 $68,509
Less: Prepayment penalty fees (380) (78)
Total core net interest income$70,875 $68,431
Total noninterest income$12,738 $13,447
Less: Bank-owned life insurance proceeds (77) (379)
Less: Net gain on sales of investments - (1,523)
Total core noninterest income$12,661 $11,545
Total noninterest expense$60,504 $61,210
Plus: Off-balance sheet commitments change in accounting estimate 423 -
Less: Accelerated vesting of stock compensation - (398)
Less: Employee severances - (93)
Less: Gain on sale of foreclosed real estate - 557
Total core noninterest expense$60,927 $61,276
Core earnings per common share, diluted$0.97 $0.78
Core net interest rate margin (3) 2.81% 2.80%
Core return on average assets (annualized) 0.54% 0.45%
Core return on average equity (annualized) 5.80% 4.91%
Core non-interest expense to average assets (annualized) 2.21% 2.34%
Efficiency ratio (4) 72.94% 76.62%
Tangible book value (5) $16.37 $15.47
(1) Represents a write-off of the remaining deferred tax asset associated with the establishment of the Bank’s foundation in 2011.
(2) Represents a valuation allowance related to a deferred tax asset associated with the establishment of the Bank’s foundation in 2011.
(3) Represents tax-equivalent core net interest income as a percent of average interest-earning assets.
(4) Represents core noninterest expense divided by the sum of core net interest income and core noninterest income.
(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.

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.