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First Connecticut Bancorp, Inc. reports first quarter 2017 earnings of $0.32 diluted earnings per share

FARMINGTON, Conn., April 18, 2017 (GLOBE NEWSWIRE) -- First Connecticut Bancorp, Inc. (NASDAQ:FBNK), the holding company for Farmington Bank, reported a 41% increase in net income to $5.1 million, or $0.32 diluted earnings per share for the quarter ended March 31, 2017 compared to net income of $3.6 million, or $0.24 diluted earnings per share for the quarter ended March 31, 2016.

“I am pleased to report record earnings for the first quarter. Our emphasis on expense management and efficiency, coupled with our asset sensitive balance sheet reflect marked improvement in our return on average assets of 0.71%, return on average equity of 7.67% and efficiency ratio of 67.85%, as compared to a year ago. Our business model remains focused on the essential banking services of taking in deposits and making loans in the communities in which we serve. The work being accomplished by our employees in producing operational efficiencies through our quality improvement initiatives is impressive,” stated John J. Patrick Jr., First Connecticut Bancorp’s Chairman, President and CEO.

“I am also pleased that for the third year in a row, we have been named “Best Community Bank”, through a reader’s poll by a large Connecticut based magazine.

Financial Highlights

  • Net interest income increased $1.1 million to $19.3 million in the first quarter of 2017 compared to the linked quarter and increased $1.7 million compared to the first quarter of 2016.
  • Net interest rate margin was 2.94% in the first quarter of 2017 compared to 2.75% in the linked quarter and 2.82% in the prior year quarter.
  • Efficiency ratio was 67.85% in the first quarter of 2017 compared to 70.64% in the linked quarter and 75.19% in the prior year quarter.
  • Noninterest expense to average assets was 2.12% in the first quarter of 2017 compared to 2.13% in the linked quarter and 2.27% in the prior year quarter.
  • Organic loan growth remained strong during the first quarter of 2017 as loans increased $59.4 million to $2.6 billion at March 31, 2017 and increased $236.5 million or 10% from a year ago.
  • Overall deposits increased $72.8 million to $2.3 billion in the first quarter of 2017 compared to the linked quarter and increased $190.0 million or 9% from a year ago.
  • Loans to deposits were 114% in the first quarter of 2017 compared to 115% in the linked quarter and 113% in the first quarter of 2016.
  • Tangible book value per share increased to $16.62 for the quarter ended March 31, 2017 compared to $16.37 on a linked quarter basis and $15.72 at March 31, 2016.
  • Checking accounts grew by 7% or 3,810 net new accounts from a year ago.
  • Loan delinquencies 30 days and greater represented 0.67% of total loans at March 31, 2017 compared to 0.68% of total loans at December 31, 2016 and 0.55% at March 31, 2016. Non-accrual loans represented 0.61% of total loans compared to 0.69% of total loans on a linked quarter basis and 0.55% of total loans at March 31, 2016.
  • The allowance for loan losses represented 0.82% of total loans at March 31, 2017 and 0.85% of total loans at December 31, 2016 and at March 31, 2016.
  • The Company paid a quarterly cash dividend of $0.11 per share during the first quarter, an increase of $0.02 compared to the linked quarter and an increase of $0.04 from a year ago.

First quarter 2017 compared with fourth quarter 2016

Net interest income

  • Net interest income increased $1.1 million to $19.3 million in the first quarter of 2017 compared to the linked quarter primarily due to a $78.4 million increase in the average loans balance and a 12 basis point increase in the loan yield to 3.64%.
  • Net interest margin was 2.94% in the first quarter of 2017 compared to 2.75% in the linked quarter.
  • The cost of interest-bearing liabilities decreased 1 basis point to 76 basis points in the first quarter of 2017 compared to 77 basis points in the linked quarter.

Provision for loan losses

  • Provision for loan losses was $325,000 for the first quarter of 2017 compared to $616,000 for the linked quarter.
  • Net charge-offs in the quarter were $505,000 or 0.08% to average loans (annualized) compared to $350,000 or 0.06% to average loans (annualized) in the linked quarter.
  • The allowance for loan losses represented 0.82% of total loans at March 31, 2017 and 0.85% of total loans at December 31, 2016.

Noninterest income

  • Total noninterest income decreased $371,000 to $3.2 million in the first quarter of 2017 compared to the linked quarter primarily due to a $509,000 decrease in net gain on loans sold offset by a $208,000 increase in other noninterest income.
  • Net gain on loans sold decreased $509,000 to $416,000 primarily due to a decrease in volume and a higher rate environment.
  • Other noninterest income increased $208,000 primarily due to a $432,000 increase in swap fees offset by a $283,000 recovery in fair value in mortgage servicing rights in the fourth quarter of 2016.
  • Other noninterest income includes swap fees totaling $711,000 compared to $279,000 in the linked quarter.

Noninterest expense

  • Noninterest expense increased $53,000 in the first quarter of 2017 to $15.2 million compared to the linked quarter primarily due to a $218,000 increase in salaries and employee benefits, $102,000 increase in occupancy expense offset by a $316,000 decrease in other operating expenses.
  • Other operating expenses decreased $316,000 in the first quarter of 2017 compared to the linked quarter primarily due to decreases of $157,000 in outside services and $97,000 in check and debit card losses.

Income tax expense

  • Income tax expense was $1.8 million in the first quarter of 2017 and in the fourth quarter of 2016. 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.

First quarter 2017 compared with first quarter 2016

Net interest income

  • Net interest income increased $1.7 million to $19.3 million in the first quarter of 2017 compared to the prior year quarter due primarily to a $209.4 million increase in the average loan balance and a 5 basis point increase in the loan yield to 3.64%.
  • Net interest margin was 2.94% in the first quarter of 2017 compared to 2.82% in the prior year quarter.
  • The cost of interest-bearing liabilities decreased 1 basis point to 76 basis points in the first quarter of 2017 compared to 77 basis points in the prior year quarter.

Provision for loan losses

  • Provision for loan losses was $325,000 for the first quarter of 2017 compared to $217,000 for the prior year quarter.
  • Net charge-offs in the quarter were $505,000 or 0.08% to average loans (annualized) compared to $241,000 or 0.04% to average loans (annualized) in the prior year quarter.
  • The allowance for loan losses represented 0.82% of total loans at March 31, 2017 and 0.85% of total loans at March 31, 2016.

Noninterest income

  • Total noninterest income increased $265,000 to $3.2 million in the first quarter of 2017 compared to the prior year quarter primarily due to a $416,000 increase in other noninterest income offset by a $169,000 decrease in net gains on loans sold and bank owned life insurance.
  • Other noninterest income increased $416,000 to $874,000 in the first quarter of 2017 compared to the prior year quarter primarily due to a $396,000 increase in swap fees.

Noninterest expense

  • Noninterest expense decreased $125,000 in the first quarter of 2017 to $15.2 million compared to the prior year quarter primarily due to a $263,000 decrease in other operating expenses offset by a $146,000 increase in marketing expenses.
  • Other operating expenses decreased $263,000 to $2.5 million primarily due to decreases in check and debit card losses and a one-time charge reissuing EMV chip debit cards in the prior year quarter.
  • Marketing expense increased $146,000 primarily due to efforts to increase the Bank’s sales support in central Connecticut and western Massachusetts.

Income tax expense

  • Income tax expense was $1.8 million in the first quarter of 2017 and $1.3 million in the prior year quarter. Increase in income tax expense was primarily due to a $2.0 million increase in income over the prior year.

March 31, 2017 compared to March 31, 2016

Financial Condition

  • Total assets increased $202.7 million or 8% at March 31, 2017 to $2.9 billion compared to $2.7 billion at March 31, 2016, largely reflecting an increase in net loans.
  • Our investment portfolio totaled $155.9 million at March 31, 2017 compared to $148.6 million at March 31, 2016, an increase of $7.2 million due to an increase in collateral requirements.
  • Net loans increased $235.3 million or 10% at March 31, 2017 to $2.6 billion compared to $2.4 billion at March 31, 2016 due to our continued focus on commercial and residential lending.
  • Deposits increased $190.0 million or 9% to $2.3 billion at March 31, 2017 compared to $2.1 billion at March 31, 2016 primarily due to an increase in retail deposits as we continue to develop and grow relationships in the geographical areas we serve. We had municipal deposit balances totaling $451.2 million and $424.8 million at March 31, 2017 and 2016, respectively.
  • Federal Home Loan Bank of Boston advances increased $22.5 million to $282.1 million at March 31, 2017 compared to $259.6 million at March 31, 2016.

Asset Quality

  • At March 31, 2017 the allowance for loan losses represented 0.82% of total loans and 133.63% of non-accrual loans, compared to 0.85% of total loans and 122.60% of non-accrual loans at December 31, 2016 and 0.85% of total loans and 154.08% of non-accrual loans at March 31, 2016.
  • Loan delinquencies 30 days and greater represented 0.67% of total loans at March 31, 2017 compared to 0.68% of total loans at December 31, 2016 and 0.55% of total loans at March 31, 2016.
  • Non-accrual loans represented 0.61% of total loans at March 31, 2017 compared to 0.69% of total loans at December 31, 2016 and 0.55% of total loans at March 31, 2016.
  • Net charge-offs in the quarter were $505,000 or 0.08% to average loans (annualized) compared to $350,000 or 0.06% to average loans (annualized) in the linked quarter and $241,000 or 0.04% 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 12.67% at March 31, 2017.
  • Tangible book value per share is $16.62 compared to $16.37 on a linked quarter basis and $15.72 at March 31, 2016.
  • The Company had 600,945 shares remaining to repurchase at March 31, 2017 from prior regulatory approval. Repurchased shares are held as treasury stock and will be available for general corporate purposes.
  • At March 31, 2017, the Company continued to have adequate liquidity including significant unused borrowing capacity at the Federal Home Loan Bank of Boston and the Federal Reserve Bank, as well as access to funding through brokered deposits and pre-approved unsecured lines of credit.

About First Connecticut Bancorp, Inc.

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

Conference Call

First Connecticut will host a conference call on Wednesday, April 19, 2017 at 10:30am Eastern Time to discuss first 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
March 31, December 31, September 30, June 30, March 31,
(Dollars in thousands, except per share data) 2017 2016 2016 2016 2016
Selected Financial Condition Data:
Total assets$ 2,904,264 $ 2,837,555 $ 2,831,960 $ 2,779,224 $ 2,701,614
Cash and cash equivalents 36,427 47,723 89,940 66,743 59,166
Securities held-to-maturity, at amortized cost 50,320 33,061 7,338 7,640 19,964
Securities available-for-sale, at fair value 105,541 103,520 134,094 149,396 128,681
Federal Home Loan Bank of Boston stock, at cost 16,418 16,378 15,139 18,240 15,688
Loans, net 2,585,521 2,525,983 2,455,101 2,403,420 2,350,245
Deposits 2,287,852 2,215,090 2,247,873 2,051,438 2,097,832
Federal Home Loan Bank of Boston advances 282,057 287,057 220,600 340,600 259,600
Total stockholders' equity 264,667 260,176 255,615 252,242 248,013
Allowance for loan losses 21,349 21,529 21,263 20,720 20,174
Non-accrual loans 15,976 17,561 17,829 13,523 13,093
Impaired loans 32,407 34,273 37,599 38,216 38,588
Loan delinquencies 30 days and greater 17,346 17,271 18,238 12,206 13,095
Selected Operating Data:
Interest income$23,212 $22,160 $21,805 $21,698 $21,323
Interest expense 3,962 4,038 4,050 3,826 3,817
Net interest income 19,250 18,122 17,755 17,872 17,506
Provision for loan losses 325 616 698 801 217
Net interest income after provision for loan losses 18,925 17,506 17,057 17,071 17,289
Noninterest income 3,165 3,536 3,685 2,617 2,900
Noninterest expense 15,152 15,099 15,484 14,644 15,277
Income before income taxes 6,938 5,943 5,258 5,044 4,912
Income tax expense 1,845 1,757 1,485 1,401 1,299
Net income$5,093 $4,186 $3,773 $3,643 $3,613
Performance Ratios (annualized):
Return on average assets 0.71% 0.59% 0.54% 0.54% 0.54%
Return on average equity 7.67% 6.43% 5.89% 5.77% 5.82%
Net interest rate spread (1) 2.76% 2.57% 2.56% 2.70% 2.65%
Net interest rate margin (2) 2.94% 2.75% 2.74% 2.87% 2.82%
Non-interest expense to average assets (3) 2.12% 2.13% 2.22% 2.23% 2.27%
Efficiency ratio (4) 67.85% 70.64% 72.53% 73.52% 75.19%
Average interest-earning assets to average
interest-bearing liabilities 129.85% 130.20% 129.42% 129.54% 128.45%
Loans to deposits 114% 115% 110% 118% 113%
Asset Quality Ratios:
Allowance for loan losses as a percent of total loans 0.82% 0.85% 0.86% 0.86% 0.85%
Allowance for loan losses as a percent of
non-accrual loans 133.63% 122.60% 119.26% 153.22% 154.08%
Net charge-offs (recoveries) to average loans (annualized) 0.08% 0.06% 0.03% 0.04% 0.04%
Non-accrual loans as a percent of total loans 0.61% 0.69% 0.72% 0.56% 0.55%
Non-accrual loans as a percent of total assets 0.55% 0.62% 0.63% 0.49% 0.48%
Loan delinquencies 30 days and greater as a
percent of total loans 0.67% 0.68% 0.74% 0.50% 0.55%
Per Share Related Data:
Basic earnings per share$0.34 $0.28 $0.25 $0.24 $0.24
Diluted earnings per share$0.32 $0.27 $0.25 $0.24 $0.24
Dividends declared per share$0.11 $0.09 $0.08 $0.07 $0.07
Tangible book value (5)$16.62 $16.37 $16.17 $15.95 $15.72
Common stock shares outstanding 15,923,514 15,897,698 15,805,748 15,818,494 15,780,657
Weighted-average basic shares outstanding 15,068,036 14,973,610 14,823,914 14,765,452 14,720,892
Weighted-average diluted shares outstanding 15,691,338 15,502,481 15,192,006 15,077,291 15,012,540
(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
March 31, December 31, September 30, June 30, March 31,
(Dollars in thousands) 2017 2016 2016 2016 2016
Capital Ratios:
Equity to total assets at end of period 9.11% 9.17% 9.03% 9.08% 9.18%
Average equity to average assets 9.28% 9.18% 9.20% 9.34% 9.22%
Total Capital (to Risk Weighted Assets) 12.67%* 12.78% 12.57% 12.63% 12.88%
Tier I Capital (to Risk Weighted Assets) 11.74%* 11.82% 11.62% 11.69% 11.92%
Common Equity Tier I Capital 11.74%* 11.82% 11.62% 11.69% 11.92%
Tier I Leverage Capital (to Average Assets) 9.47%* 9.41% 9.40% 9.55% 9.44%
Total equity to total average assets 9.25% 9.18% 9.17% 9.32% 9.20%
* Estimated
Loans and Allowance for Loan Losses:
Real estate
Residential$954,764 $907,946 $864,054 $842,427 $855,148
Commercial 992,861 979,370 931,703 922,643 893,477
Construction 60,694 49,679 50,083 41,466 36,557
Commercial 420,747 430,539 449,008 437,046 402,960
Home equity line of credit 168,157 170,786 172,148 171,212 172,325
Other 5,375 5,348 5,426 5,570 5,842
Total loans 2,602,598 2,543,668 2,472,422 2,420,364 2,366,309
Net deferred loan costs 4,272 3,844 3,942 3,776 4,110
Loans 2,606,870 2,547,512 2,476,364 2,424,140 2,370,419
Allowance for loan losses (21,349) (21,529) (21,263) (20,720) (20,174)
Loans, net$2,585,521 $2,525,983 $2,455,101 $2,403,420 $2,350,245
Deposits:
Noninterest-bearing demand deposits$437,385 $441,283 $419,664 $415,562 $396,356
Interest-bearing
NOW accounts 622,844 542,764 590,213 429,973 529,267
Money market 521,759 532,681 536,979 498,847 488,497
Savings accounts 239,743 233,792 223,848 229,868 223,188
Time deposits 466,121 464,570 477,169 477,188 460,524
Total interest-bearing deposits 1,850,467 1,773,807 1,828,209 1,635,876 1,701,476
Total deposits$2,287,852 $2,215,090 $2,247,873 $2,051,438 $2,097,832


First Connecticut Bancorp, Inc.
Consolidated Statements of Condition (Unaudited)
March 31, December 31, March 31,
2017 2016 2016
(Dollars in thousands)
Assets
Cash and due from banks$32,706 $44,086 $36,418
Interest bearing deposits with other institutions 3,721 3,637 22,748
Total cash and cash equivalents 36,427 47,723 59,166
Securities held-to-maturity, at amortized cost 50,320 33,061 19,964
Securities available-for-sale, at fair value 105,541 103,520 128,681
Loans held for sale 2,464 3,270 6,145
Loans (1) 2,606,870 2,547,512 2,370,419
Allowance for loan losses (21,349) (21,529) (20,174)
Loans, net 2,585,521 2,525,983 2,350,245
Premises and equipment, net 17,903 18,002 18,210
Federal Home Loan Bank of Boston stock, at cost 16,418 16,378 15,688
Accrued income receivable 7,398 7,432 6,346
Bank-owned life insurance 52,044 51,726 50,725
Deferred income taxes 14,790 14,795 15,506
Prepaid expenses and other assets 15,438 15,665 30,938
Total assets$2,904,264 $2,837,555 $2,701,614
Liabilities and Stockholders' Equity
Deposits
Interest-bearing$1,850,467 $1,773,807 $1,701,476
Noninterest-bearing 437,385 441,283 396,356
2,287,852 2,215,090 2,097,832
Federal Home Loan Bank of Boston advances 282,057 287,057 259,600
Repurchase agreement borrowings 10,500 10,500 10,500
Repurchase liabilities 19,526 18,867 31,118
Accrued expenses and other liabilities 39,662 45,865 54,551
Total liabilities 2,639,597 2,577,379 2,453,601
Stockholders' Equity
Common stock 181 181 181
Additional paid-in-capital 184,456 184,111 182,747
Unallocated common stock held by ESOP (10,309) (10,567) (11,363)
Treasury stock, at cost (30,047) (30,400) (32,355)
Retained earnings 126,882 123,541 115,444
Accumulated other comprehensive loss (6,496) (6,690) (6,641)
Total stockholders' equity 264,667 260,176 248,013
Total liabilities and stockholders' equity$2,904,264 $2,837,555 $2,701,614
(1) Loans include net deferred fees and unamortized premiums of $4.3 million, $3.8 million and $4.1 million at March 31, 2017, December 31, 2016 and March 31, 2016, respectively.

First Connecticut Bancorp, Inc.
Consolidated Statements of Income (Unaudited)​
Three Months Ended
March 31, December 31, March 31,
(Dollars in thousands, except per share data) 2017 2016 2016
Interest income
Interest and fees on loans
Mortgage $17,558 $16,451 $15,907
Other 4,947 5,058 4,714
Interest and dividends on investments
United States Government and agency obligations 474 335 418
Other bonds 7 10 13
Corporate stocks 199 231 239
Other interest income 27 75 32
Total interest income 23,212 22,160 21,323
Interest expense
Deposits 2,911 3,010 2,736
Interest on borrowed funds 949 924 967
Interest on repo borrowings 95 96 95
Interest on repurchase liabilities 7 8 19
Total interest expense 3,962 4,038 3,817
Net interest income 19,250 18,122 17,506
Provision for loan losses 325 616 217
Net interest income
after provision for loan losses 18,925 17,506 17,289
Noninterest income
Fees for customer services 1,506 1,537 1,484
Net gain on loans sold 416 925 490
Brokerage and insurance fee income 50 47 54
Bank owned life insurance income 319 361 414
Other 874 666 458
Total noninterest income 3,165 3,536 2,900
Noninterest expense
Salaries and employee benefits 9,327 9,109 9,376
Occupancy expense 1,313 1,211 1,219
Furniture and equipment expense 984 983 1,061
FDIC assessment 428 424 404
Marketing 567 523 421
Other operating expenses 2,533 2,849 2,796
Total noninterest expense 15,152 15,099 15,277
Income before income taxes 6,938 5,943 4,912
Income tax expense 1,845 1,757 1,299
Net income$5,093 $4,186 $3,613
Earnings per share:
Basic $0.34 $0.28 $0.24
Diluted 0.32 0.27 0.24
Weighted average shares outstanding:
Basic 15,068,036 14,973,610 14,720,892
Diluted 15,691,338 15,502,481 15,012,540

First Connecticut Bancorp, Inc.
Consolidated Average Balances, Yields and Rates (Unaudited)
For The Three Months Ended
March 31, 2017 December 31, 2016 March 31, 2016
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$2,576,295$23,101 3.64% $2,497,897$22,092 3.52% $2,366,935$21,132 3.59%
Securities 142,929 529 1.50% 131,837 402 1.21% 154,534 483 1.26%
Federal Home Loan Bank of Boston stock 16,165 151 3.79% 15,200 174 4.55% 19,804 187 3.80%
Federal funds and other earning assets 6,351 27 1.72% 60,518 75 0.49% 27,148 32 0.47%
Total interest-earning assets 2,741,740 23,808 3.52% 2,705,452 22,743 3.34% 2,568,421 21,834 3.42%
Noninterest-earning assets 118,104 128,332 127,192
Total assets$2,859,844 $2,833,784 $2,695,613
Interest-bearing liabilities:
NOW accounts$602,631$528 0.36% $552,444$443 0.32% $522,876$380 0.29%
Money market 529,409 970 0.74% 557,864 1,109 0.79% 478,954 995 0.84%
Savings accounts 231,465 61 0.11% 229,052 64 0.11% 216,102 58 0.11%
Certificates of deposit 466,852 1,352 1.17% 471,023 1,394 1.18% 450,917 1,303 1.16%
Total interest-bearing deposits 1,830,357 2,911 0.64% 1,810,383 3,010 0.66% 1,668,849 2,736 0.66%
Federal Home Loan Bank of Boston Advances 245,591 949 1.57% 226,766 924 1.62% 272,610 967 1.43%
Repurchase agreement borrowings 10,500 95 3.67% 10,500 96 3.64% 10,500 95 3.64%
Repurchase liabilities 24,984 7 0.11% 30,245 8 0.11% 47,543 19 0.16%
Total interest-bearing liabilities 2,111,432 3,962 0.76% 2,077,894 4,038 0.77% 1,999,502 3,817 0.77%
Noninterest-bearing deposits 433,058 434,659 390,926
Other noninterest-bearing liabilities 49,886 61,023 56,765
Total liabilities 2,594,376 2,573,576 2,447,193
Stockholders' equity 265,468 260,208 248,420
Total liabilities and stockholders' equity$2,859,844 $2,833,784 $2,695,613
Tax-equivalent net interest income $19,846 $18,705 $18,017
Less: tax-equivalent adjustment (596) (583) (511)
Net interest income $19,250 $18,122 $17,506
Net interest rate spread (2) 2.76% 2.57% 2.65%
Net interest-earning assets (3)$630,308 $627,558 $568,919
Net interest margin (4) 2.94% 2.75% 2.82%
Average interest-earning assets to average interest-bearing liabilities
129.85% 130.20% 128.45%
(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 March 31, 2017, December 31, 2016, September 30, 2016, June 30, 2016 and March 31, 2016. The Company believes the use of these non-GAAP financial measures provides additional clarity in assessing the results of the Company.
At or for the Three Months Ended
March 31, December 31, September 30, June 30, March 31,
(Dollars in thousands, except per share data) 2017 2016 2016 2016 2016
Net Income$5,093 $4,186 $3,773 $3,643 $3,613
Adjustments:
Plus: Mortgage servicing rights (recovery) impairment - (283) (91) 374 -
Less: Prepayment penalty fees (84) - - (370) (10)
Less: Off-balance sheet commitments change in accounting estimate - - - (423) -
Less: Bank-owned life insurance proceeds - - - - (77)
Total core adjustments before taxes (84) (283) (91) (419) (87)
Tax benefit on core adjustments 29 99 32 147 4
Deferred tax asset write-off (1) - 137 - - -
Total core adjustments after taxes (55) (47) (59) (272) (83)
Total core net income$5,038 $4,139 $3,714 $3,371 $3,530
Total net interest income$19,250 $18,122 $17,755 $17,872 $17,506
Less: Prepayment penalty fees (84) - - (370) (10)
Total core net interest income$19,166 $18,122 $17,755 $17,502 $17,496
Total noninterest income$3,165 $3,536 $3,685 $2,617 $2,900
Plus: Mortgage servicing rights (recovery) impairment - (283) (91) 374 -
Less: Bank-owned life insurance proceeds - - - - (77)
Total core noninterest income$3,165 $3,253 $3,594 $2,991 $2,823
Total noninterest expense$15,152 $15,099 $15,484 $14,644 $15,277
Plus: Off-balance sheet commitments change in accounting estimate - - - 423 -
Total core noninterest expense$15,152 $15,099 $15,484 $15,067 $15,277
Core earnings per common share, diluted$0.32 $0.27 $0.24 $0.22 $0.23
Core net interest rate margin (2) 2.92% 2.75% 2.74% 2.81% 2.82%
Core return on average assets (annualized) 0.70% 0.58% 0.53% 0.50% 0.52%
Core return on average equity (annualized) 7.59% 6.36% 5.80% 5.34% 5.68%
Core non-interest expense to average assets (annualized) 2.12% 2.13% 2.22% 2.23% 2.27%
Efficiency ratio (3) 67.85% 70.64% 72.53% 73.52% 75.19%
Tangible book value (4) $16.62 $16.37 $16.17 $15.95 $15.72
(1) Represents a write-off of the remaining deferred tax asset associated with the establishment of the Bank’s foundation in 2011.
(2) Represents tax-equivalent core net interest income as a percent of average interest-earning assets.
(3) Represents core noninterest expense divided by the sum of core net interest income and core noninterest income.
(4) Represents ending stockholders’ equity less goodwill and intangible assets (excluding mortgage servicing rights) divided by ending common shares outstanding.
The Company does not have goodwill and intangible assets for any of the periods presented.

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

Source:First Connecticut Bancorp, Inc.