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

FARMINGTON, Conn., July 19, 2017 (GLOBE NEWSWIRE) -- First Connecticut Bancorp, Inc. (NASDAQ:FBNK), the holding company for Farmington Bank, reported a 37% increase in net income to $5.0 million, or $0.32 diluted earnings per share for the quarter ended June 30, 2017 compared to net income of $3.6 million, or $0.24 diluted earnings per share for the quarter ended June 30, 2016.

Net income on a core earnings basis was $5.0 million, or $0.31 diluted core earnings per share for the quarter ended June 30, 2017 compared to $3.4 million, or $0.22 diluted core earnings per share for the quarter ended June 30, 2016. Core earnings exclude non-recurring items.

“I am once again pleased to report strong earnings for the second quarter. Year over year loan and deposit growth remained very strong, while our focus on total quality improvement continues to drive our efficiency ratio lower each quarter. Asset quality remains strong and our balance sheet remains well positioned for the current and projected future interest rate environment,” stated John J. Patrick Jr., First Connecticut Bancorp’s Chairman, President and CEO.

Financial Highlights

  • Net interest income increased $573,000 to $19.8 million in the second quarter of 2017 compared to the linked quarter and increased $2.0 million compared to the second quarter of 2016. Net interest income includes $370,000 in prepayment penalty fees in the second quarter of 2016.
  • Core net interest margin was 2.92% in the second quarter of 2017 compared to 2.92% in the linked quarter and 2.81% in the prior year quarter.
  • Efficiency ratio was 66.31% in the second quarter of 2017 compared to 67.85% in the linked quarter and 73.52% in the prior year quarter.
  • Noninterest expense to average assets was 2.12% in the second quarter of 2017 and in the linked quarter and 2.23% in the prior year quarter.
  • Organic loan growth remained strong during the second quarter of 2017 as loans increased $59.8 million to $2.7 billion at June 30, 2017 primarily due to a $27.7 million increase in commercial real estate and a $10.5 million increase in commercial and industrial loans. Loans increased $242.5 million or 10% from a year ago.
  • Overall deposits decreased $42.8 million to $2.2 billion in the second quarter of 2017 due to municipal deposits seasonality compared to the linked quarter and increased $193.6 million or 9% from a year ago.
  • Loans to deposits were 119% in the second quarter of 2017 compared to 114% in the linked quarter and 118% in the second quarter of 2016.
  • Tangible book value per share increased to $16.86 for the quarter ended June 30, 2017 compared to $16.62 on a linked quarter basis and $15.95 at June 30, 2016.
  • Checking accounts grew by 7% or 3,927 net new accounts from a year ago.
  • Asset quality remained strong as loan delinquencies 30 days and greater represented 0.60% of total loans at June 30, 2017 compared to 0.67% of total loans at March 31, 2017 and 0.50% at June 30, 2016. Non-accrual loans represented 0.60% of total loans at June 30, 2017 compared to 0.61% of total loans on a linked quarter basis and 0.56% of total loans at June 30, 2016.
  • The allowance for loan losses represented 0.83% of total loans at June 30, 2017 and 0.82% of total loans at March 31, 2017 and 0.86% at June 30, 2016.
  • The Company paid a quarterly cash dividend of $0.12 per share during the second quarter, an increase of $0.01 compared to the linked quarter and an increase of $0.05 from a year ago.

Second quarter 2017 compared with first quarter 2017

Net interest income

  • Net interest income increased $573,000 to $19.8 million in the second quarter of 2017 compared to the linked quarter primarily due to a $53.2 million increase in the average loans balance offset by a $331,000 increase in interest expense.
  • Net interest margin was 2.92% in the second quarter of 2017 compared to 2.94% in the linked quarter. Net interest margin, excluding $84,000 prepayment penalty fees, was 2.92% in the linked quarter.
  • The cost of interest-bearing liabilities increased 3 basis points to 79 basis points in the second quarter of 2017 compared to 76 basis points in the linked quarter.

Provision for loan losses

  • Provision for loan losses was $710,000 for the second quarter of 2017 compared to $325,000 for the linked quarter.
  • Net charge-offs in the quarter were $22,000 or 0.00% to average loans (annualized) compared to $505,000 or 0.08% to average loans (annualized) in the linked quarter.
  • The allowance for loan losses represented 0.83% of total loans at June 30, 2017 and 0.82% of total loans at March 31, 2017.

Noninterest income

  • Total noninterest income increased $711,000 to $3.9 million in the second quarter of 2017 compared to the linked quarter primarily due to a $295,000 increase in net gain on loans sold and a $279,000 increase in bank owned life insurance income.
  • Net gain on loans sold increased to $711,000 from $416,000 primarily due to an increase in volume and a higher rate environment.
  • Bank owned life insurance income increased $279,000 primarily due to receiving $271,000 in death benefit proceeds.
  • Other noninterest income includes swap fees totaling $562,000 compared to $711,000 in the linked quarter and an increase in SBIC fund income of $217,000.

Noninterest expense

  • Noninterest expense increased $726,000 in the second quarter of 2017 to $15.9 million compared to the linked quarter primarily due to a $709,000 increase in salaries and employee benefits.
  • Salaries and employee benefits increased $709,000 to $10.0 million primarily due to $343,000 in severance expense and general salary increases which became effective in mid-March.

Income tax expense

  • Income tax expense was $2.1 million in the second quarter of 2017 and $1.8 million in the first quarter of 2017.

Second quarter 2017 compared with second quarter 2016

Net interest income

  • Net interest income increased $2.0 million to $19.8 million in the second quarter of 2017 compared to the prior year quarter due primarily to a $242.0 million increase in the average loan balance and a 3 basis point increase in the loan yield to 3.65% offset by a $467,000 increase in interest expense.
  • Net interest margin was 2.92% in the second quarter of 2017 compared to 2.87% in the prior year quarter. Net interest margin, excluding $370,000 prepayment penalty fees, was 2.81% in the prior year quarter.
  • The cost of interest-bearing liabilities increased 2 basis points to 79 basis points in the second quarter of 2017 compared to 77 basis points in the prior year quarter.

Provision for loan losses

  • Provision for loan losses was $710,000 for the second quarter of 2017 compared to $801,000 for the prior year quarter.
  • Net charge-offs in the quarter were $22,000 or 0.00% to average loans (annualized) compared to $255,000 or 0.04% to average loans (annualized) in the prior year quarter.
  • The allowance for loan losses represented 0.83% of total loans at June 30, 2017 and 0.86% of total loans at June 30, 2016.

Noninterest income

  • Total noninterest income increased $1.3 million to $3.9 million in the second quarter of 2017 compared to the prior year quarter primarily due to a $291,000 increase in bank owned life insurance and a $965,000 increase in other noninterest income.
  • Bank owned life insurance income increased $291,000 primarily due to receiving $271,000 in death benefit proceeds.
  • Other noninterest income increased $965,000 to $940,000 in the second quarter of 2017 compared to the prior year quarter primarily due to a $288,000 increase in swap fees, an $180,000 increase in SBIC fund income and a $374,000 mortgage servicing rights impairment in the prior year quarter.

Noninterest expense

  • Noninterest expense increased $1.2 million in the second quarter of 2017 to $15.9 million compared to the prior year quarter primarily due to an $823,000 increase in salaries and employee benefits, a $164,000 increase in marketing and a $255,000 increase in other operating expenses.
  • Salaries and employee benefits increased $823,000 to $10.0 million primarily due to $343,000 in severance expense and general salary increases which became effective in mid-March.
  • Marketing increased $164,000 primarily due to efforts to increase the Bank’s sales support in central Connecticut and western Massachusetts.
  • Other operating expenses increased $255,000 to $2.6 million primarily due to a $354,000 decrease in the provision for off-balance sheet commitments as a result of a change in accounting estimate in the prior year quarter offset by a $151,000 decrease in directors’ share-based compensation expense due to the 2012 Stock Incentive Plan fully vesting in September 2016.

Income tax expense

  • Income tax expense was $2.1 million in the second quarter of 2017 and $1.4 million in the prior year quarter. Increase in income tax expense was primarily due to a $2.1 million increase in income over the prior year.

June 30, 2017 compared to June 30, 2016

Financial Condition

  • Total assets increased $212.9 million or 8% at June 30, 2017 to $3.0 billion compared to $2.8 billion at June 30, 2016, largely reflecting an increase in net loans.
  • Our investment portfolio totaled $163.1 million at June 30, 2017 compared to $157.0 million at June 30, 2016, an increase of $6.1 million due to an increase in collateral requirements.
  • Net loans increased $241.2 million or 10% at June 30, 2017 to $2.6 billion compared to $2.4 billion at June 30, 2016 due to our continued focus on commercial and residential lending.
  • Deposits increased $193.6 million or 9% to $2.2 billion at June 30, 2017 compared to $2.1 billion at June 30, 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 $351.3 million and $298.9 million at June 30, 2017 and 2016, respectively.
  • Federal Home Loan Bank of Boston advances increased $48.9 million to $389.5 million at June 30, 2017 compared to $340.6 million at June 30, 2016.

Asset Quality

  • At June 30, 2017 the allowance for loan losses represented 0.83% of total loans and 137.54% of non-accrual loans, compared to 0.82% of total loans and 133.63% of non-accrual loans at March 31, 2017 and 0.86% of total loans and 153.22% of non-accrual loans at June 30, 2016.
  • Loan delinquencies 30 days and greater represented 0.60% of total loans at June 30, 2017 compared to 0.67% of total loans at March 31, 2017 and 0.50% of total loans at June 30, 2016.
  • Non-accrual loans represented 0.60% of total loans at June 30, 2017 compared to 0.61% of total loans at March 31, 2017 and 0.56% of total loans at June 30, 2016.
  • Net charge-offs in the quarter were $22,000 or 0.00% to average loans (annualized) compared to $505,000 or 0.08% to average loans (annualized) in the linked quarter and $255,000 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 12.45% at June 30, 2017.
  • Tangible book value per share is $16.86 compared to $16.62 on a linked quarter basis and $15.95 at June 30, 2016.
  • The Company had 600,945 shares remaining to repurchase at June 30, 2017 from prior regulatory approval. Repurchased shares are held as treasury stock and will be available for general corporate purposes.
  • At June 30, 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 Thursday, July 20, 2017 at 10:30am Eastern Time to discuss second quarter results. Those wishing to participate in the call may dial-in to the call at 1-888-336-7151. The Canada dial-in number is 1-855-669-9657 and the international dial-in number is 1-412-902-4177. A webcast of the call will be available on the Investor Relations Section of the Farmington Bank website for an extended period of time.

Forward Looking Statements

In addition to historical information, this earnings release may contain forward-looking statements for purposes of applicable securities laws. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Such forward-looking statements may or may not include words such as “believe,” “expect,” “anticipate,” “estimate,” and “intend” or future or conditional verbs such as “will,” “would,” “should,” “could,” or “may.” Forward-looking statements are subject to numerous assumptions, risks and uncertainties. There are a number of important factors described in documents previously filed by the Company with the Securities and Exchange Commission, and other factors that could cause the Company's actual results to differ materially from those contemplated by such forward-looking statements. The Company undertakes no obligation to publicly release the results of any revisions to those forward-looking statements which may be made to reflect events or circumstances after the date of this release or to reflect the occurrence of unanticipated events.

Non-GAAP Financial Measures

In addition to evaluating the Company’s financial performance in accordance with U.S. generally accepted accounting principles (“GAAP”), management routinely supplements their evaluation with an analysis of certain non-GAAP financial measures, such as core net income, the efficiency ratio and tangible book value per share. A reconciliation to the most directly comparable GAAP financial measure; net income in the case of core net income and the efficiency ratio and stockholders’ equity in the case of tangible book value per share, appears in the accompanying Reconciliation of Non-GAAP Financial Measures table.

We believe that providing certain non-GAAP financial measures provides investors with information useful in understanding our financial performance, our performance trends and financial position. Specifically, we provide measures based on what we believe are our operating earnings on a consistent basis and exclude non-core operating items which affect the GAAP reporting of results of operations. The Company believes that core net income is useful for both investors and management to understand the effects of items that are non-recurring and infrequent in nature. The Company believes that the efficiency ratio, which measures the costs expended to generate a dollar of revenue, is useful in the assessment of financial performance, including non-interest expense control. The Company believes that tangible book value per share is useful to evaluate the relative strength of the Company’s capital position. The Company does not have goodwill and intangible assets for any of the periods presented. As such, tangible book value per common share is equal to book value per common share.

We utilize these measures for internal planning and forecasting purposes. These non-GAAP financial measures should not be considered a substitute for GAAP basis measures and results, and we strongly encourage investors to review our consolidated financial statements in their entirety and not to rely on any single financial measure.

First Connecticut Bancorp, Inc.
Selected Financial Data (Unaudited)
At or for the Three Months Ended
June 30, March 31, December 31, September 30, June 30,
(Dollars in thousands, except per share data) 2017 2017 2016 2016 2016
Selected Financial Condition Data:
Total assets$ 2,992,126 $ 2,904,264 $ 2,837,555 $ 2,831,960 $ 2,779,224
Cash and cash equivalents 46,551 36,427 47,723 89,940 66,743
Securities held-to-maturity, at amortized cost 50,655 50,320 33,061 7,338 7,640
Securities available-for-sale, at fair value 112,443 105,541 103,520 134,094 149,396
Federal Home Loan Bank of Boston stock, at cost 19,583 16,418 16,378 15,139 18,240
Loans, net 2,644,618 2,585,521 2,525,983 2,455,101 2,403,420
Deposits 2,245,004 2,287,852 2,215,090 2,247,873 2,051,438
Federal Home Loan Bank of Boston advances 389,458 282,057 287,057 220,600 340,600
Total stockholders' equity 268,836 264,667 260,176 255,615 252,242
Allowance for loan losses 22,037 21,349 21,529 21,263 20,720
Non-accrual loans 16,022 15,976 17,561 17,829 13,523
Impaired loans 30,007 32,407 34,273 37,599 38,216
Loan delinquencies 30 days and greater 16,059 17,346 17,271 18,238 12,206
Selected Operating Data:
Interest income$ 24,116 $ 23,212 $ 22,160 $ 21,805 $ 21,698
Interest expense 4,293 3,962 4,038 4,050 3,826
Net interest income 19,823 19,250 18,122 17,755 17,872
Provision for loan losses 710 325 616 698 801
Net interest income after provision for loan losses 19,113 18,925 17,506 17,057 17,071
Noninterest income 3,876 3,165 3,536 3,685 2,617
Noninterest expense 15,878 15,152 15,099 15,484 14,644
Income before income taxes 7,111 6,938 5,943 5,258 5,044
Income tax expense 2,109 1,845 1,757 1,485 1,401
Net income$ 5,002 $ 5,093 $ 4,186 $ 3,773 $ 3,643
Performance Ratios (annualized):
Return on average assets 0.68% 0.71% 0.59% 0.54% 0.54%
Return on average equity 7.43% 7.67% 6.43% 5.89% 5.77%
Net interest rate spread (1) 2.74% 2.76% 2.57% 2.56% 2.70%
Net interest rate margin (2) 2.92% 2.94% 2.75% 2.74% 2.87%
Non-interest expense to average assets (3) 2.12% 2.12% 2.13% 2.22% 2.23%
Efficiency ratio (4) 66.31% 67.85% 70.64% 72.53% 73.52%
Average interest-earning assets to average
interest-bearing liabilities 128.46% 129.85% 130.20% 129.42% 129.54%
Loans to deposits 119% 114% 115% 110% 118%
Asset Quality Ratios:
Allowance for loan losses as a percent of total loans 0.83% 0.82% 0.85% 0.86% 0.86%
Allowance for loan losses as a percent of
non-accrual loans 137.54% 133.63% 122.60% 119.26% 153.22%
Net charge-offs (recoveries) to average loans (annualized) 0.00% 0.08% 0.06% 0.03% 0.04%
Non-accrual loans as a percent of total loans 0.60% 0.61% 0.69% 0.72% 0.56%
Non-accrual loans as a percent of total assets 0.54% 0.55% 0.62% 0.63% 0.49%
Loan delinquencies 30 days and greater as a
percent of total loans 0.60% 0.67% 0.68% 0.74% 0.50%
Per Share Related Data:
Basic earnings per share$ 0.33 $ 0.34 $ 0.28 $ 0.25 $ 0.24
Diluted earnings per share$ 0.32 $ 0.32 $ 0.27 $ 0.25 $ 0.24
Dividends declared per share$ 0.12 $ 0.11 $ 0.09 $ 0.08 $ 0.07
Tangible book value (5)$ 16.86 $ 16.62 $ 16.37 $ 16.17 $ 15.95
Common stock shares outstanding 15,942,614 15,923,514 15,897,698 15,805,748 15,818,494
Weighted-average basic shares outstanding 15,107,190 15,068,036 14,973,610 14,823,914 14,765,452
Weighted-average diluted shares outstanding 15,791,112 15,691,338 15,502,481 15,192,006 15,077,291
(1) Represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities on a tax-equivalent basis.
(2) Represents tax-equivalent net interest income as a percent of average interest-earning assets.
(3) Represents core noninterest expense annualized divided by average assets. See "Reconciliation of Non-GAAP Financial Measures" table.
(4) Represents core noninterest expense divided by the sum of core net interest income and core noninterest income.
See "Reconciliation of Non-GAAP Financial Measures" table.
(5) Represents ending stockholders’ equity less goodwill and intangible assets (excluding mortgage servicing rights) divided by ending common shares outstanding.
The Company does not have goodwill and intangible assets for any of the periods presented. See "Reconciliation of Non-GAAP Financial Measures" table.


First Connecticut Bancorp, Inc.
Selected Financial Data (Unaudited)
At or for the Three Months Ended
June 30, March 31, December 31, September 30, June 30,
(Dollars in thousands) 2017 2017 2016 2016 2016
Capital Ratios:
Equity to total assets at end of period 8.98% 9.11% 9.17% 9.03% 9.08%
Average equity to average assets 9.18% 9.28% 9.18% 9.20% 9.34%
Total Capital (to Risk Weighted Assets) 12.45%* 12.67% 12.80% 12.57% 12.63%
Tier I Capital (to Risk Weighted Assets) 11.53%* 11.74% 11.84% 11.62% 11.69%
Common Equity Tier I Capital 11.53%* 11.74% 11.84% 11.62% 11.69%
Tier I Leverage Capital (to Average Assets) 9.36%* 9.45% 9.39% 9.40% 9.55%
Total equity to total average assets 9.17% 9.25% 9.18% 9.17% 9.32%
* Estimated
Loans and Allowance for Loan Losses:
Real estate
Residential$ 962,732 $ 954,764 $ 907,946 $ 864,054 $ 842,427
Commercial 1,020,560 992,861 979,370 931,703 922,643
Construction 74,063 60,694 49,679 50,083 41,466
Commercial 431,243 420,747 430,539 449,008 437,046
Home equity line of credit 168,278 168,157 170,786 172,148 171,212
Other 5,410 5,375 5,348 5,426 5,570
Total loans 2,662,286 2,602,598 2,543,668 2,472,422 2,420,364
Net deferred loan costs 4,369 4,272 3,844 3,942 3,776
Loans 2,666,655 2,606,870 2,547,512 2,476,364 2,424,140
Allowance for loan losses (22,037) (21,349) (21,529) (21,263) (20,720)
Loans, net$ 2,644,618 $ 2,585,521 $ 2,525,983 $ 2,455,101 $ 2,403,420
Deposits:
Noninterest-bearing demand deposits$ 445,049 $ 437,385 $ 441,283 $ 419,664 $ 415,562
Interest-bearing
NOW accounts 547,868 622,844 542,764 590,213 429,973
Money market 522,070 521,759 532,681 536,979 498,847
Savings accounts 241,898 239,743 233,792 223,848 229,868
Time deposits 488,119 466,121 464,570 477,169 477,188
Total interest-bearing deposits 1,799,955 1,850,467 1,773,807 1,828,209 1,635,876
Total deposits$ 2,245,004 $ 2,287,852 $ 2,215,090 $ 2,247,873 $ 2,051,438


First Connecticut Bancorp, Inc.
Consolidated Statements of Condition (Unaudited)
June 30, March 31, June 30,
2017 2017 2016
(Dollars in thousands)
Assets
Cash and due from banks$ 37,308 $ 32,706 $ 37,455
Interest bearing deposits with other institutions 9,243 3,721 29,288
Total cash and cash equivalents 46,551 36,427 66,743
Securities held-to-maturity, at amortized cost 50,655 50,320 7,640
Securities available-for-sale, at fair value 112,443 105,541 149,396
Loans held for sale 2,537 2,464 6,912
Loans (1) 2,666,655 2,606,870 2,424,140
Allowance for loan losses (22,037) (21,349) (20,720)
Loans, net 2,644,618 2,585,521 2,403,420
Premises and equipment, net 17,609 17,903 18,917
Federal Home Loan Bank of Boston stock, at cost 19,583 16,418 18,240
Accrued income receivable 7,939 7,398 6,736
Bank-owned life insurance 56,802 52,044 51,029
Deferred income taxes 13,970 14,790 15,405
Prepaid expenses and other assets 19,419 15,438 34,786
Total assets$ 2,992,126 $ 2,904,264 $ 2,779,224
Liabilities and Stockholders' Equity
Deposits
Interest-bearing$ 1,799,955 $ 1,850,467 $ 1,635,876
Noninterest-bearing 445,049 437,385 415,562
2,245,004 2,287,852 2,051,438
Federal Home Loan Bank of Boston advances 389,458 282,057 340,600
Repurchase agreement borrowings 10,500 10,500 10,500
Repurchase liabilities 36,101 19,526 63,027
Accrued expenses and other liabilities 42,227 39,662 61,417
Total liabilities 2,723,290 2,639,597 2,526,982
Stockholders' Equity
Common stock 181 181 181
Additional paid-in-capital 184,871 184,456 183,504
Unallocated common stock held by ESOP (10,053) (10,309) (11,100)
Treasury stock, at cost (29,770) (30,047) (31,868)
Retained earnings 129,972 126,882 117,980
Accumulated other comprehensive loss (6,365) (6,496) (6,455)
Total stockholders' equity 268,836 264,667 252,242
Total liabilities and stockholders' equity$ 2,992,126 $ 2,904,264 $ 2,779,224
(1) Loans include net deferred fees and unamortized premiums of $4.4 million, $4.3 million and $3.8 million at June 30, 2017, March 31, 2017 and June 30, 2016, respectively.

First Connecticut Bancorp, Inc.
Consolidated Statements of Income (Unaudited)
Three Months Ended Six Months Ended
June 30, March 31, June 30, June 30,
(Dollars in thousands, except per share data) 2017 2017 2016 2017 2016
Interest income
Interest and fees on loans
Mortgage $ 18,056 $ 17,558 $ 16,120 $ 35,614 $ 32,027
Other 5,209 4,947 4,858 10,156 9,572
Interest and dividends on investments
United States Government and agency obligations 598 474 448 1,072 866
Other bonds 7 7 14 14 27
Corporate stocks 216 199 232 415 471
Other interest income 30 27 26 57 58
Total interest income 24,116 23,212 21,698 47,328 43,021
Interest expense
Deposits 3,026 2,911 2,735 5,937 5,471
Interest on borrowed funds 1,164 949 980 2,113 1,947
Interest on repo borrowings 96 95 96 191 191
Interest on repurchase liabilities 7 7 15 14 34
Total interest expense 4,293 3,962 3,826 8,255 7,643
Net interest income 19,823 19,250 17,872 39,073 35,378
Provision for loan losses 710 325 801 1,035 1,018
Net interest income
after provision for loan losses 19,113 18,925 17,071 38,038 34,360
Noninterest income
Fees for customer services 1,572 1,506 1,530 3,078 3,014
Net gain on loans sold 711 416 751 1,127 1,241
Brokerage and insurance fee income 55 50 54 105 108
Bank owned life insurance income 598 319 307 917 721
Other 940 874 (25) 1,814 433
Total noninterest income 3,876 3,165 2,617 7,041 5,517
Noninterest expense
Salaries and employee benefits 10,036 9,327 9,213 19,363 18,589
Occupancy expense 1,187 1,313 1,189 2,500 2,408
Furniture and equipment expense 985 984 1,018 1,969 2,079
FDIC assessment 410 428 383 838 787
Marketing 708 567 544 1,275 965
Other operating expenses 2,552 2,533 2,297 5,085 5,093
Total noninterest expense 15,878 15,152 14,644 31,030 29,921
Income before income taxes 7,111 6,938 5,044 14,049 9,956
Income tax expense 2,109 1,845 1,401 3,954 2,700
Net income$ 5,002 $ 5,093 $ 3,643 $ 10,095 $ 7,256
Earnings per share:
Basic $ 0.33 $ 0.34 $ 0.24 $ 0.67 $ 0.49
Diluted 0.32 0.32 0.24 0.64 0.48
Weighted average shares outstanding:
Basic 15,107,190 15,068,036 14,765,452 15,087,721 14,743,172
Diluted 15,791,112 15,691,338 15,077,291 15,741,500 15,043,555

First Connecticut Bancorp, Inc.
Consolidated Average Balances, Yields and Rates (Unaudited)
For The Three Months Ended
June 30, 2017 March 31, 2017 June 30, 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$ 2,629,493$ 23,900 3.65% $ 2,576,295$ 23,101 3.64% $ 2,387,538$ 21,499 3.62%
Securities 157,230 659 1.68% 142,929 529 1.50% 150,257 515 1.38%
Federal Home Loan Bank of Boston stock 18,056 162 3.60% 16,165 151 3.79% 17,763 179 4.05%
Federal funds and other earning assets 7,715 30 1.56% 6,351 27 1.72% 22,607 26 0.46%
Total interest-earning assets 2,812,494 24,751 3.53% 2,741,740 23,808 3.52% 2,578,165 22,219 3.47%
Noninterest-earning assets 120,308 118,104 127,656
Total assets $ 2,932,802 $ 2,859,844 $ 2,705,821
Interest-bearing liabilities:
NOW accounts$ 595,350$ 574 0.39% $ 602,631$ 528 0.36% $ 470,835$ 336 0.29%
Money market 525,266 979 0.75% 529,409 970 0.74% 486,826 930 0.77%
Savings accounts 242,009 63 0.10% 231,465 61 0.11% 226,820 59 0.10%
Certificates of deposit 471,905 1,410 1.20% 466,852 1,352 1.17% 473,976 1,410 1.20%
Total interest-bearing deposits 1,834,530 3,026 0.66% 1,830,357 2,911 0.64% 1,658,457 2,735 0.66%
Federal Home Loan Bank of Boston Advances 315,665 1,164 1.48% 245,591 949 1.57% 279,601 980 1.41%
Repurchase agreement borrowings 10,500 96 3.67% 10,500 95 3.67% 10,500 96 3.68%
Repurchase liabilities 28,728 7 0.10% 24,984 7 0.11% 41,757 15 0.14%
Total interest-bearing liabilities 2,189,423 4,293 0.79% 2,111,432 3,962 0.76% 1,990,315 3,826 0.77%
Noninterest-bearing deposits 431,336 433,058 404,809
Other noninterest-bearing liabilities 42,857 49,886 58,085
Total liabilities 2,663,616 2,594,376 2,453,209
Stockholders' equity 269,186 265,468 252,612
Total liabilities and stockholders' equity$ 2,932,802 $ 2,859,844 $ 2,705,821
Tax-equivalent net interest income $ 20,458 $ 19,846 $ 18,393
Less: tax-equivalent adjustment (635) (596) (521)
Net interest income $ 19,823 $ 19,250 $ 17,872
Net interest rate spread (2) 2.74% 2.76% 2.70%
Net interest-earning assets (3) $ 623,071 $ 630,308 $ 587,850
Net interest margin (4) 2.92% 2.94% 2.87%
Average interest-earning assets to average interest-bearing liabilities
128.46% 129.85% 129.54%
(1) On a fully-tax equivalent basis.
(2) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities on a tax-equivalent basis.
(3) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(4) Net interest margin represents tax-equivalent net interest income divided by average total interest-earning assets.

First Connecticut Bancorp, Inc.
Consolidated Average Balances, Yields and Rates (Unaudited)
For The Six Months Ended June 30,
2017 2016
Average
Balance
Interest and
Dividends (1)
Yield/
Cost
Average
Balance
Interest and
Dividends (1)
Yield/
Cost
(Dollars in thousands)
Interest-earning assets:
Loans$ 2,603,041$ 47,001 3.64% $ 2,377,236$ 42,631 3.61%
Securities 150,119 1,188 1.60% 152,395 998 1.32%
Federal Home Loan Bank of Boston stock 17,116 313 3.69% 18,783 366 3.92%
Federal funds and other earning assets 7,037 57 1.63% 24,753 58 0.47%
Total interest-earning assets 2,777,313 48,559 3.53% 2,573,167 44,053 3.44%
Noninterest-earning assets 119,211 127,550
Total assets $ 2,896,524 $ 2,700,717
Interest-bearing liabilities:
NOW accounts$ 598,970$ 1,102 0.37% $ 496,856$ 716 0.29%
Money market 527,326 1,949 0.75% 482,890 1,925 0.80%
Savings accounts 236,766 124 0.11% 221,461 117 0.11%
Certificates of deposit 469,393 2,762 1.19% 462,446 2,713 1.18%
Total interest-bearing deposits 1,832,455 5,937 0.65% 1,663,653 5,471 0.66%
Federal Home Loan Bank of Boston Advances 280,822 2,113 1.52% 276,156 1,947 1.42%
Repurchase agreement borrowings 10,500 191 3.67% 10,500 191 3.66%
Repurchase liabilities 26,866 14 0.11% 44,650 34 0.15%
Total interest-bearing liabilities 2,150,643 8,255 0.77% 1,994,959 7,643 0.77%
Noninterest-bearing deposits 432,192 397,868
Other noninterest-bearing liabilities 46,352 57,374
Total liabilities 2,629,187 2,450,201
Stockholders' equity 267,337 250,516
Total liabilities and stockholders' equity$ 2,896,524 $ 2,700,717
Tax-equivalent net interest income $ 40,304 $ 36,410
Less: tax-equivalent adjustment (1,231) (1,032)
Net interest income $ 39,073 $ 35,378
Net interest rate spread (2) 2.76% 2.67%
Net interest-earning assets (3) $ 626,670 $ 578,208
Net interest margin (4) 2.93% 2.85%
Average interest-earning assets to average interest-bearing liabilities
129.14% 128.98%
(1) On a fully-tax equivalent basis.
(2) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities on a tax-equivalent basis.
(3) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(4) Net interest margin represents tax-equivalent net interest income divided by average total interest-earning assets.

First Connecticut Bancorp, Inc.
Consolidated Average Balances, Yields and Rates (Unaudited)
The table below presents a reconciliation of non-GAAP financial measures with financial measures defined by GAAP for the three months ended June 30, 2017, March 31, 2017, December 31, 2016, September 30, 2016 and June 30, 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
June 30, March 31, December 31, September 30, June 30,
(Dollars in thousands, except per share data) 2017 2017 2016 2016 2016
Net Income$ 5,002 $ 5,093 $ 4,186 $ 3,773 $ 3,643
Adjustments:
Plus: Severance expense 343 - - - -
Plus: Mortgage servicing rights (recovery) impairment - - (283) (91) 374
Less: Prepayment penalty fees - (84) - - (370)
Less: Off-balance sheet commitments change in accounting estimate - - - - (423)
Less: Bank-owned life insurance proceeds (271) - - - -
Total core adjustments before taxes 72 (84) (283) (91) (419)
Tax (expense) benefit on core adjustments (120) 29 99 32 147
Deferred tax asset write-off (1) - - 137 - -
Total core adjustments after taxes (48) (55) (47) (59) (272)
Total core net income$ 4,954 $ 5,038 $ 4,139 $ 3,714 $ 3,371
Total net interest income$ 19,823 $ 19,250 $ 18,122 $ 17,755 $ 17,872
Less: Prepayment penalty fees - (84) - - (370)
Total core net interest income$ 19,823 $ 19,166 $ 18,122 $ 17,755 $ 17,502
Total noninterest income$ 3,876 $ 3,165 $ 3,536 $ 3,685 $ 2,617
Plus: Mortgage servicing rights (recovery) impairment - - (283) (91) 374
Less: Bank-owned life insurance proceeds (271) - - - -
Total core noninterest income$ 3,605 $ 3,165 $ 3,253 $ 3,594 $ 2,991
Total noninterest expense$ 15,878 $ 15,152 $ 15,099 $ 15,484 $ 14,644
Plus: Off-balance sheet commitments change in accounting estimate - - - - 423
Less: Severance expense (343) - - - -
Total core noninterest expense$ 15,535 $ 15,152 $ 15,099 $ 15,484 $ 15,067
Core earnings per common share, diluted$ 0.31 $ 0.32 $ 0.27 $ 0.24 $ 0.22
Core net interest rate margin (2) 2.92% 2.92% 2.75% 2.74% 2.81%
Core return on average assets (annualized) 0.68% 0.70% 0.58% 0.53% 0.50%
Core return on average equity (annualized) 7.36% 7.59% 6.36% 5.80% 5.34%
Core non-interest expense to average assets (annualized) 2.12% 2.12% 2.13% 2.22% 2.23%
Efficiency ratio (3) 66.31% 67.85% 70.64% 72.53% 73.52%
Tangible book value (4) $ 16.86 $ 16.62 $ 16.37 $ 16.17 $ 15.95
(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.