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First Connecticut Bancorp, Inc. reports third quarter 2017 earnings of $0.35 diluted earnings per share

FARMINGTON, Conn., Oct. 18, 2017 (GLOBE NEWSWIRE) -- First Connecticut Bancorp, Inc. (NASDAQ:FBNK), the holding company for Farmington Bank, reported a 48% increase in net income to $5.6 million, or $0.35 diluted earnings per share for the quarter ended September 30, 2017 compared to net income of $3.8 million, or $0.25 diluted earnings per share for the quarter ended September 30, 2016.

“I am pleased that we continue to report strong earnings driven by organic loan and deposit growth coupled with expense management and pristine asset quality. The results are reflective of our disciplined strategic approach to growing market share and building franchise value,” stated John J. Patrick Jr., First Connecticut Bancorp’s Chairman, President and CEO.

Financial Highlights

  • Net interest income increased $1.0 million to $20.8 million in the third quarter of 2017 compared to the linked quarter and increased $3.1 million compared to the third quarter of 2016.
  • Net interest margin was 2.95% in the third quarter of 2017 compared to 2.92% in the linked quarter and 2.74% in the prior year quarter. Net interest margin, excluding $165,000 prepayment penalty fees, was 2.93% in the third quarter of 2017.
  • Efficiency ratio was 66.38% in the third quarter of 2017 compared to 66.31% in the linked quarter and 72.53% in the prior year quarter.
  • Noninterest expense to average assets was 2.11% in the third quarter of 2017 compared to 2.12% in the linked quarter and 2.22% in the prior year quarter.
  • Organic loan growth remained strong during the third quarter of 2017 as loans increased $32.0 million to $2.7 billion at September 30, 2017 primarily due to a $21.0 million increase in commercial real estate loans and a $6.9 million increase in residential real estate loans. Loans increased $222.2 million or 9% from a year ago.
  • Overall deposits increased $137.5 million to $2.4 billion in the third quarter of 2017 compared to the linked quarter and increased $134.7 million or 6% from a year ago.
  • Loans to deposits ratio was 113% for the quarter ended September 30, 2017 compared to 119% in the linked quarter and 110% in the third quarter of 2016.
  • Tangible book value per share increased to $17.12 for the quarter ended September 30, 2017 compared to $16.86 on a linked quarter basis and $16.17 at September 30, 2016.
  • Checking accounts grew by 2% or 1,235 net new accounts in the third quarter of 2017 and 6% or 3,538 net new accounts from a year ago.
  • Asset quality remained strong as loan delinquencies 30 days and greater represented 0.66% of total loans at September 30, 2017 compared to 0.60% of total loans at June 30, 2017 and 0.74% at September 30, 2016. Non-accrual loans represented 0.57% of total loans at September 30, 2017 compared to 0.60% of total loans at June 30, 2017 and 0.72% of total loans at September 30, 2016.
  • The allowance for loan losses represented 0.82% of total loans at September 30, 2017 compared to 0.83% of total loans at June 30, 2017 and 0.86% at September 30, 2016.
  • The Company paid a quarterly cash dividend of $0.14 per share during the third quarter, an increase of $0.02 compared to the linked quarter and an increase of $0.06 from a year ago.

Third quarter 2017 compared with second quarter 2017

Net interest income

  • Net interest income increased $1.0 million to $20.8 million in the third quarter of 2017 compared to the linked quarter primarily due to a $68.5 million increase in the average loans balance and an 8 basis point increase in the loans yield to 3.73% offset by a $463,000 increase in interest expense.
  • Net interest margin was 2.95% in the third quarter of 2017 compared to 2.92% in the linked quarter. Net interest margin, excluding $165,000 prepayment penalty fees, was 2.93% in the third quarter.
  • The cost of interest-bearing liabilities increased 5 basis points to 84 basis points in the third quarter of 2017 compared to 79 basis points in the linked quarter.

Provision for loan losses

  • Provision for loan losses was $217,000 for the third quarter of 2017 compared to $710,000 for the linked quarter.
  • Net charge-offs in the quarter were $52,000 or 0.01% to average loans (annualized) compared to $22,000 or 0.00% to average loans (annualized) in the linked quarter.
  • The allowance for loan losses represented 0.82% of total loans at September 30, 2017 and 0.83% of total loans at June 30, 2017.

Noninterest income

  • Total noninterest income decreased $576,000 to $3.3 million in the third quarter of 2017 compared to the linked quarter primarily due to a $241,000 decrease in bank-owned life insurance income and a $585,000 decrease in other noninterest income offset by a $161,000 increase in net gain on loans sold.
  • Net gain on loans sold increased to $872,000 from $711,000 primarily due to an increase in volume.
  • Bank-owned life insurance income decreased $241,000 primarily due to receiving $271,000 in death benefit proceeds in the linked quarter.
  • Other noninterest income decreased primarily due to swap fees totaling $251,000 compared to $562,000 in the linked quarter and a decrease in SBIC fund income of $229,000.

Noninterest expense

  • Noninterest expense increased $41,000 in the third quarter of 2017 to $15.9 million compared to the linked quarter primarily due to a $125,000 increase in occupancy expenses and a $197,000 increase in other operating expenses offset by a $368,000 decrease in salaries and employee benefits.
  • Salaries and employee benefits decreased $368,000 to $9.7 million in the third quarter primarily due to $343,000 in severance expense in the linked quarter.

Income tax expense

  • Income tax expense was $2.4 million in the third quarter of 2017 and $2.1 million in the second quarter of 2017.

Third quarter 2017 compared with third quarter 2016

Net interest income

  • Net interest income increased $3.1 million to $20.8 million in the third quarter of 2017 compared to the prior year quarter due primarily to a $267.9 million increase in the average loans balance and a 19 basis point increase in the loans yield to 3.73% offset by a $706,000 increase in interest expense.
  • Net interest margin was 2.95% in the third quarter of 2017 compared to 2.74% in the prior year quarter. Net interest margin, excluding $165,000 prepayment penalty fees, was 2.93% in the third quarter of 2017.
  • The cost of interest-bearing liabilities increased 5 basis points to 84 basis points in the third quarter of 2017 compared to 79 basis points in the prior year quarter.

Provision for loan losses

  • Provision for loan losses was $217,000 for the third quarter of 2017 compared to $698,000 for the prior year quarter.
  • Net charge-offs in the quarter were $52,000 or 0.01% to average loans (annualized) compared to $155,000 or 0.03% to average loans (annualized) in the prior year quarter.
  • The allowance for loan losses represented 0.82% of total loans at September 30, 2017 and 0.86% of total loans at September 30, 2016.

Noninterest income

  • Total noninterest income decreased $385,000 to $3.3 million in the third quarter of 2017 compared to the prior year quarter primarily due a $398,000 decrease in other noninterest income.
  • Other noninterest income decreased primarily due to a decrease in swap fees totaling $251,000 compared to $692,000 the prior year quarter and a $184,000 decrease in banking derivatives offset by a $172,000 impairment on a SBIC fund in the prior year quarter.

Noninterest expense

  • Noninterest expense increased $435,000 in the third quarter of 2017 to $15.9 million compared to the prior year quarter primarily due to a $383,000 increase in salaries and employee benefits expense.

Income tax expense

  • Income tax expense was $2.4 million in the third quarter of 2017 and $1.5 million in the prior year quarter. Increase in income tax expense was primarily due to a $2.8 million increase in income over the prior year.

September 30, 2017 compared to September 30, 2016

Financial Condition

  • Total assets increased $169.7 million or 6% at September 30, 2017 to $3.0 billion compared to $2.8 billion at September 30, 2016, reflecting a $221.3 million increase in net loans offset by a $45.5 million decrease in cash and cash equivalents.
  • Our investment portfolio totaled $144.1 million at September 30, 2017 compared to $141.4 million at September 30, 2016, an increase of $2.7 million.
  • Net loans increased $221.3 million or 9% at September 30, 2017 to $2.7 billion compared to $2.5 billion at September 30, 2016 due to our continued focus on commercial and residential lending.
  • Deposits increased $134.7 million or 6% to $2.4 billion at September 30, 2017 compared to $2.2 billion at September 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 $451.8 million and $459.3 million at September 30, 2017 and 2016, respectively.
  • Federal Home Loan Bank of Boston advances increased $50.9 million to $271.5 million at September 30, 2017 compared to $220.6 million at September 30, 2016.

Asset Quality

  • At September 30, 2017 the allowance for loan losses represented 0.82% of total loans and 145.06% of non-accrual loans, compared to 0.83% of total loans and 137.54% of non-accrual loans at June 30, 2017 and 0.86% of total loans and 119.26% of non-accrual loans at September 30, 2016.
  • Loan delinquencies 30 days and greater represented 0.66% of total loans at September 30, 2017 compared to 0.60% of total loans at June 30, 2017 and 0.74% of total loans at September 30, 2016.
  • Non-accrual loans represented 0.57% of total loans at September 30, 2017 compared to 0.60% of total loans at June 30, 2017 and 0.72% of total loans at September 30, 2016.
  • Net charge-offs in the quarter were $52,000 or 0.01% to average loans (annualized) compared to $22,000 or 0.00% to average loans (annualized) in the linked quarter and $155,000 or 0.03% 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 12.50% at September 30, 2017.
  • Tangible book value per share is $17.12 compared to $16.86 on a linked quarter basis and $16.17 at September 30, 2016.
  • The Company had 600,945 shares remaining to repurchase at September 30, 2017 from prior regulatory approval. Repurchased shares are held as treasury stock and will be available for general corporate purposes.
  • At September 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, October 19, 2017 at 10:30am Eastern Time to discuss third quarter results. Those wishing to participate in the call may dial-in to the call at 1-888-336-7151. The Canada dial-in number is 1-855-669-9657 and the international dial-in number is 1-412-902-4177. A webcast of the call will be available on the Investor Relations Section of the Farmington Bank website for an extended period of time.

Forward Looking Statements

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

Non-GAAP Financial Measures

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

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

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

First Connecticut Bancorp, Inc.
Selected Financial Data (Unaudited)

At or for the Three Months Ended
September 30, June 30, March 31, December 31, September 30,
(Dollars in thousands, except per share data) 2017 2017 2017 2016 2016
Selected Financial Condition Data:
Total assets$ 3,001,679 $ 2,992,126 $ 2,904,264 $ 2,837,555 $ 2,831,960
Cash and cash equivalents 44,475 46,551 36,427 47,723 89,940
Securities held-to-maturity, at amortized cost 56,848 50,655 50,320 33,061 7,338
Securities available-for-sale, at fair value 87,299 112,443 105,541 103,520 134,094
Federal Home Loan Bank of Boston stock, at cost 15,954 19,583 16,418 16,378 15,139
Loans, net 2,676,411 2,644,618 2,585,521 2,525,983 2,455,101
Deposits 2,382,551 2,245,004 2,287,852 2,215,090 2,247,873
Federal Home Loan Bank of Boston advances 271,458 389,458 282,057 287,057 220,600
Total stockholders' equity 273,193 268,836 264,667 260,176 255,615
Allowance for loan losses 22,202 22,037 21,349 21,529 21,263
Non-accrual loans 15,305 16,022 15,976 17,561 17,829
Impaired loans 29,924 30,007 32,407 34,273 37,599
Loan delinquencies 30 days and greater 17,808 16,059 17,346 17,271 18,238
Selected Operating Data:
Interest income$ 25,604 $ 24,116 $ 23,212 $ 22,160 $ 21,805
Interest expense 4,756 4,293 3,962 4,038 4,050
Net interest income 20,848 19,823 19,250 18,122 17,755
Provision for loan losses 217 710 325 616 698
Net interest income after provision for loan losses 20,631 19,113 18,925 17,506 17,057
Noninterest income 3,300 3,876 3,165 3,536 3,685
Noninterest expense 15,919 15,878 15,152 15,099 15,484
Income before income taxes 8,012 7,111 6,938 5,943 5,258
Income tax expense 2,415 2,109 1,845 1,757 1,485
Net income$ 5,597 $ 5,002 $ 5,093 $ 4,186 $ 3,773
Performance Ratios (annualized):
Return on average assets 0.74% 0.68% 0.71% 0.59% 0.54%
Return on average equity 8.17% 7.43% 7.67% 6.43% 5.89%
Net interest rate spread (1) 2.77% 2.74% 2.76% 2.57% 2.56%
Net interest rate margin (2) 2.95% 2.92% 2.94% 2.75% 2.74%
Non-interest expense to average assets (3) 2.11% 2.12% 2.12% 2.13% 2.22%
Efficiency ratio (4) 66.38% 66.31% 67.85% 70.64% 72.53%
Average interest-earning assets to average
interest-bearing liabilities 128.50% 128.46% 129.85% 130.20% 129.42%
Loans to deposits 113% 119% 114% 115% 110%
Asset Quality Ratios:
Allowance for loan losses as a percent of total loans 0.82% 0.83% 0.82% 0.85% 0.86%
Allowance for loan losses as a percent of
non-accrual loans 145.06% 137.54% 133.63% 122.60% 119.26%
Net charge-offs (recoveries) to average loans (annualized) 0.01% 0.00% 0.08% 0.06% 0.03%
Non-accrual loans as a percent of total loans 0.57% 0.60% 0.61% 0.69% 0.72%
Non-accrual loans as a percent of total assets 0.51% 0.54% 0.55% 0.62% 0.63%
Loan delinquencies 30 days and greater as a
percent of total loans 0.66% 0.60% 0.67% 0.68% 0.74%
Per Share Related Data:
Basic earnings per share$ 0.37 $ 0.33 $ 0.34 $ 0.28 $ 0.25
Diluted earnings per share$ 0.35 $ 0.32 $ 0.32 $ 0.27 $ 0.25
Dividends declared per share$ 0.14 $ 0.12 $ 0.11 $ 0.09 $ 0.08
Tangible book value (5)$ 17.12 $ 16.86 $ 16.62 $ 16.37 $ 16.17
Common stock shares outstanding 15,952,946 15,942,614 15,923,514 15,897,698 15,805,748
Weighted-average basic shares outstanding 15,143,379 15,107,190 15,068,036 14,973,610 14,823,914
Weighted-average diluted shares outstanding 15,820,659 15,791,112 15,691,338 15,502,481 15,192,006


(1) Represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities on a tax-equivalent basis.
(2)Represents tax-equivalent net interest income as a percent of average interest-earning assets.
(3)Represents core noninterest expense annualized divided by average assets. See "Reconciliation of Non-GAAP Financial Measures" table.
(4)Represents core noninterest expense divided by the sum of core net interest income and core noninterest income.
See "Reconciliation of Non-GAAP Financial Measures" table.
(5)Represents ending stockholders’ equity less goodwill and intangible assets (excluding mortgage servicing rights) divided by ending common shares outstanding.
The Company does not have goodwill and intangible assets for any of the periods presented. See "Reconciliation of Non-GAAP Financial Measures" table.


First Connecticut Bancorp, Inc.
Selected Financial Data (Unaudited)

At or for the Three Months Ended
September 30, June 30, March 31, December 31, September 30,
(Dollars in thousands) 2017 2017 2017 2016 2016
Capital Ratios:
Equity to total assets at end of period 9.10% 8.98% 9.11% 9.17% 9.03%
Average equity to average assets 9.10% 9.18% 9.28% 9.18% 9.20%
Total Capital (to Risk Weighted Assets) 12.50%* 12.45% 12.67% 12.80% 12.57%
Tier I Capital (to Risk Weighted Assets) 11.57%* 11.53% 11.74% 11.84% 11.62%
Common Equity Tier I Capital 11.57%* 11.53% 11.74% 11.84% 11.62%
Tier I Leverage Capital (to Average Assets) 9.25%* 9.36% 9.45% 9.39% 9.40%
Total equity to total average assets 9.07% 9.17% 9.25% 9.18% 9.17%
* Estimated
Loans and Allowance for Loan Losses:
Real estate
Residential$ 969,679 $ 962,732 $ 954,764 $ 907,946 $ 864,054
Commercial 1,028,930 1,020,560 992,861 979,370 931,703
Construction 86,713 74,063 60,694 49,679 50,083
Commercial 436,172 431,243 420,747 430,539 449,008
Home equity line of credit 166,791 168,278 168,157 170,786 172,148
Other 5,733 5,410 5,375 5,348 5,426
Total loans 2,694,018 2,662,286 2,602,598 2,543,668 2,472,422
Net deferred loan costs 4,595 4,369 4,272 3,844 3,942
Loans 2,698,613 2,666,655 2,606,870 2,547,512 2,476,364
Allowance for loan losses (22,202) (22,037) (21,349) (21,529) (21,263)
Loans, net$ 2,676,411 $ 2,644,618 $ 2,585,521 $ 2,525,983 $ 2,455,101
Deposits:
Noninterest-bearing demand deposits$ 437,372 $ 445,049 $ 437,385 $ 441,283 $ 419,664
Interest-bearing
NOW accounts 652,631 547,868 622,844 542,764 590,213
Money market 549,674 522,070 521,759 532,681 536,979
Savings accounts 233,330 241,898 239,743 233,792 223,848
Time deposits 509,544 488,119 466,121 464,570 477,169
Total interest-bearing deposits 1,945,179 1,799,955 1,850,467 1,773,807 1,828,209
Total deposits$ 2,382,551 $ 2,245,004 $ 2,287,852 $ 2,215,090 $ 2,247,873


First Connecticut Bancorp, Inc.
Consolidated Statements of Condition (Unaudited)

September 30, June 30, September 30,
2017 2017 2016
(Dollars in thousands)
Assets
Cash and due from banks$ 35,452 $ 37,308 $ 33,206
Interest bearing deposits with other institutions 9,023 9,243 56,734
Total cash and cash equivalents 44,475 46,551 89,940
Securities held-to-maturity, at amortized cost 56,848 50,655 7,338
Securities available-for-sale, at fair value 87,299 112,443 134,094
Loans held for sale 6,902 2,537 5,462
Loans (1) 2,698,613 2,666,655 2,476,364
Allowance for loan losses (22,202) (22,037) (21,263)
Loans, net 2,676,411 2,644,618 2,455,101
Premises and equipment, net 17,005 17,609 18,383
Federal Home Loan Bank of Boston stock, at cost 15,954 19,583 15,139
Accrued income receivable 8,039 7,939 6,413
Bank-owned life insurance 57,156 56,802 51,364
Deferred income taxes 13,965 13,970 15,136
Prepaid expenses and other assets 17,625 19,419 33,590
Total assets$ 3,001,679 $ 2,992,126 $ 2,831,960
Liabilities and Stockholders' Equity
Deposits
Interest-bearing$ 1,945,179 $ 1,799,955 $ 1,828,209
Noninterest-bearing 437,372 445,049 419,664
2,382,551 2,245,004 2,247,873
Federal Home Loan Bank of Boston advances 271,458 389,458 220,600
Repurchase agreement borrowings 10,500 10,500 10,500
Repurchase liabilities 21,538 36,101 35,036
Accrued expenses and other liabilities 42,439 42,227 62,336
Total liabilities 2,728,486 2,723,290 2,576,345
Stockholders' Equity
Common stock 181 181 181
Additional paid-in-capital 185,319 184,871 183,769
Unallocated common stock held by ESOP (9,796) (10,053) (10,833)
Treasury stock, at cost (29,620) (29,770) (31,645)
Retained earnings 133,337 129,972 120,487
Accumulated other comprehensive loss (6,228) (6,365) (6,344)
Total stockholders' equity 273,193 268,836 255,615
Total liabilities and stockholders' equity$ 3,001,679 $ 2,992,126 $ 2,831,960
(1) Loans include net deferred fees and unamortized premiums of $4.6 million, $4.4 million and $3.9 million at September 30, 2017,
June 30, 2017 and September 30, 2016, respectively.


First Connecticut Bancorp, Inc.
Consolidated Statements of Income (Unaudited)

Three Months Ended Nine Months Ended
September 30, June 30, September 30, September 30,
(Dollars in thousands, except per share data) 2017 2017 2016 2017 2016
Interest income
Interest and fees on loans
Mortgage $ 19,165 $ 18,056 $ 16,134 $ 54,779 $ 48,161
Other 5,535 5,209 4,983 15,691 14,555
Interest and dividends on investments
United States Government and agency obligations 602 598 419 1,674 1,285
Other bonds 6 7 13 20 40
Corporate stocks 242 216 210 657 681
Other interest income 54 30 46 111 104
Total interest income 25,604 24,116 21,805 72,932 64,826
Interest expense
Deposits 3,423 3,026 2,975 9,360 8,446
Interest on borrowed funds 1,230 1,164 955 3,343 2,902
Interest on repo borrowings 95 96 98 286 289
Interest on repurchase liabilities 8 7 22 22 56
Total interest expense 4,756 4,293 4,050 13,011 11,693
Net interest income 20,848 19,823 17,755 59,921 53,133
Provision for loan losses 217 710 698 1,252 1,716
Net interest income
after provision for loan losses 20,631 19,113 17,057 58,669 51,417
Noninterest income
Fees for customer services 1,662 1,572 1,600 4,740 4,614
Net gain on loans sold 872 711 939 1,999 2,180
Brokerage and insurance fee income 54 55 58 159 166
Bank owned life insurance income 357 598 335 1,274 1,056
Other 355 940 753 2,169 1,186
Total noninterest income 3,300 3,876 3,685 10,341 9,202
Noninterest expense
Salaries and employee benefits 9,668 10,036 9,285 29,031 27,874
Occupancy expense 1,312 1,187 1,271 3,812 3,679
Furniture and equipment expense 1,054 985 1,020 3,023 3,099
FDIC assessment 419 410 392 1,257 1,179
Marketing 717 708 682 1,992 1,647
Other operating expenses 2,749 2,552 2,834 7,834 7,927
Total noninterest expense 15,919 15,878 15,484 46,949 45,405
Income before income taxes 8,012 7,111 5,258 22,061 15,214
Income tax expense 2,415 2,109 1,485 6,369 4,185
Net income$ 5,597 $ 5,002 $ 3,773 $ 15,692 $ 11,029
Earnings per share:
Basic $ 0.37 $ 0.33 $ 0.25 $ 1.04 $ 0.74
Diluted 0.35 0.32 0.25 0.99 0.73
Weighted average shares outstanding:
Basic 15,143,379 15,107,190 14,823,914 15,106,478 14,770,282
Diluted 15,820,659 15,791,112 15,192,006 15,768,177 15,093,109


First Connecticut Bancorp, Inc.
Consolidated Average Balances, Yields and Rates (Unaudited)

For The Three Months Ended
September 30, 2017 June 30, 2017 September 30, 2016
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$ 2,697,978$ 25,342 3.73% $ 2,629,493$ 23,900 3.65% $ 2,430,114$ 21,650 3.54%
Securities 159,450 660 1.64% 157,230 659 1.68% 165,738 481 1.15%
Federal Home Loan Bank of Boston stock 18,284 190 4.12% 18,056 162 3.60% 18,206 161 3.52%
Federal funds and other earning assets 10,089 54 2.12% 7,715 30 1.56% 36,439 46 0.50%
Total interest-earning assets 2,885,801 26,246 3.61% 2,812,494 24,751 3.53% 2,650,497 22,338 3.35%
Noninterest-earning assets 126,234 120,308 135,828
Total assets $ 3,012,035 $ 2,932,802 $ 2,786,325
Interest-bearing liabilities:
NOW accounts$ 644,947$ 832 0.51% $ 595,350$ 574 0.39% $ 506,509$ 385 0.30%
Money market 519,265 982 0.75% 525,266 979 0.75% 525,301 1,085 0.82%
Savings accounts 233,878 63 0.11% 242,009 63 0.10% 221,981 60 0.11%
Certificates of deposit 489,203 1,546 1.25% 471,905 1,410 1.20% 481,901 1,445 1.19%
Total interest-bearing deposits 1,887,293 3,423 0.72% 1,834,530 3,026 0.66% 1,735,692 2,975 0.68%
Federal Home Loan Bank of Boston Advances 320,219 1,230 1.52% 315,665 1,164 1.48% 250,459 955 1.52%
Repurchase agreement borrowings 10,500 95 3.59% 10,500 96 3.67% 10,500 98 3.71%
Repurchase liabilities 27,695 8 0.11% 28,728 7 0.10% 51,297 22 0.17%
Total interest-bearing liabilities 2,245,707 4,756 0.84% 2,189,423 4,293 0.79% 2,047,948 4,050 0.79%
Noninterest-bearing deposits 446,428 431,336 417,917
Other noninterest-bearing liabilities 45,905 42,857 64,201
Total liabilities 2,738,040 2,663,616 2,530,066
Stockholders' equity 273,995 269,186 256,259
Total liabilities and stockholders' equity$ 3,012,035 $ 2,932,802 $ 2,786,325
Tax-equivalent net interest income $ 21,490 $ 20,458 $ 18,288
Less: tax-equivalent adjustment (642) (635) (533)
Net interest income $ 20,848 $ 19,823 $ 17,755
Net interest rate spread (2) 2.77% 2.74% 2.56%
Net interest-earning assets (3) $ 640,094 $ 623,071 $ 602,549
Net interest margin (4) 2.95% 2.92% 2.74%
Average interest-earning assets to average interest-bearing liabilities
128.50% 128.46% 129.42%
(1) On a fully-tax equivalent basis.
(2) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost
of average interest-bearing liabilities on a tax-equivalent basis.
(3) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(4) Net interest margin represents tax-equivalent net interest income divided by average total interest-earning assets.


First Connecticut Bancorp, Inc.
Consolidated Average Balances, Yields and Rates (Unaudited)

For The Nine Months Ended September 30,
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$ 2,635,035 $ 72,343 3.67% $ 2,394,991 $ 64,282 3.59%
Securities 153,263 1,848 1.61% 156,876 1,479 1.26%
Federal Home Loan Bank of Boston stock 17,510 503 3.84% 18,590 527 3.79%
Federal funds and other earning assets 8,066 111 1.84% 28,677 104 0.48%
Total interest-earning assets 2,813,874 74,805 3.55% 2,599,134 66,392 3.41%
Noninterest-earning assets 121,577 130,327
Total assets $ 2,935,451 $ 2,729,461
Interest-bearing liabilities:
NOW accounts$ 614,464 $ 1,934 0.42% $ 500,097 $ 1,101 0.29%
Money market 524,610 2,931 0.75% 497,130 3,010 0.80%
Savings accounts 235,793 187 0.11% 221,635 177 0.11%
Certificates of deposit 476,069 4,308 1.21% 468,979 4,158 1.18%
Total interest-bearing deposits 1,850,936 9,360 0.68% 1,687,841 8,446 0.67%
Federal Home Loan Bank of Boston Advances 294,099 3,343 1.52% 267,527 2,902 1.45%
Repurchase agreement borrowings 10,500 286 3.64% 10,500 289 3.66%
Repurchase liabilities 27,146 22 0.11% 46,882 56 0.16%
Total interest-bearing liabilities 2,182,681 13,011 0.80% 2,012,750 11,693 0.78%
Noninterest-bearing deposits 436,990 404,599
Other noninterest-bearing liabilities 46,200 59,668
Total liabilities 2,665,871 2,477,017
Stockholders' equity 269,580 252,444
Total liabilities and stockholders' equity$ 2,935,451 $ 2,729,461
Tax-equivalent net interest income $ 61,794 $ 54,699
Less: tax-equivalent adjustment (1,873) (1,566)
Net interest income $ 59,921 $ 53,133
Net interest rate spread (2) 2.75% 2.63%
Net interest-earning assets (3) $ 631,193 $ 586,384
Net interest margin (4) 2.94% 2.81%
Average interest-earning assets to average interest-bearing liabilities
128.92% 129.13%
(1) On a fully-tax equivalent basis.
(2) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost
of average interest-bearing liabilities on a tax-equivalent basis.
(3) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(4) Net interest margin represents tax-equivalent net interest income divided by average total interest-earning assets.


First Connecticut Bancorp, Inc.
Reconciliation of Non-GAAP Financial Measures (Unaudited)

The table below presents a reconciliation of non-GAAP financial measures with financial measures defined by GAAP for the three months ended September 30, 2017, June 30, 2017, March 31, 2017, December 31, 2016 and September 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
September 30, June 30, March 31, December 31, September 30,
(Dollars in thousands, except per share data) 2017 2017 2017 2016 2016
Net Income$ 5,597 $ 5,002 $ 5,093 $ 4,186 $ 3,773
Adjustments:
Plus: Severance expense - 343 - - -
Plus: Mortgage servicing rights (recovery) impairment - - - (283) (91)
Less: Prepayment penalty fees (165) - (84) - -
Less: Bank-owned life insurance proceeds - (271) - - -
Total core adjustments before taxes (165) 72 (84) (283) (91)
Tax (expense) benefit on core adjustments 58 (120) 29 99 32
Deferred tax asset write-off (1) - - - 137 -
Total core adjustments after taxes (107) (48) (55) (47) (59)
Total core net income$ 5,490 $ 4,954 $ 5,038 $ 4,139 $ 3,714
Total net interest income$ 20,848 $ 19,823 $ 19,250 $ 18,122 $ 17,755
Less: Prepayment penalty fees (165) - (84) - -
Total core net interest income$ 20,683 $ 19,823 $ 19,166 $ 18,122 $ 17,755
Total noninterest income$ 3,300 $ 3,876 $ 3,165 $ 3,536 $ 3,685
Plus: Mortgage servicing rights (recovery) impairment - - - (283) (91)
Less: Bank-owned life insurance proceeds - (271) - - -
Total core noninterest income$ 3,300 $ 3,605 $ 3,165 $ 3,253 $ 3,594
Total noninterest expense$ 15,919 $ 15,878 $ 15,152 $ 15,099 $ 15,484
Less: Severance expense - (343) - - -
Total core noninterest expense$ 15,919 $ 15,535 $ 15,152 $ 15,099 $ 15,484
Core earnings per common share, diluted$ 0.35 $ 0.31 $ 0.32 $ 0.27 $ 0.24
Core net interest rate margin (2) 2.93% 2.92% 2.92% 2.75% 2.74%
Core return on average assets (annualized) 0.73% 0.68% 0.70% 0.58% 0.53%
Core return on average equity (annualized) 8.01% 7.36% 7.59% 6.36% 5.80%
Core non-interest expense to average assets (annualized) 2.11% 2.12% 2.12% 2.13% 2.22%
Efficiency ratio (3) 66.38% 66.31% 67.85% 70.64% 72.53%
Tangible book value (4) $ 17.12 $ 16.86 $ 16.62 $ 16.37 $ 16.17


(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.

Source:First Connecticut Bancorp, Inc.