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First Connecticut Bancorp, Inc. reports fourth quarter 2017 net income of $497,000 or $0.03 diluted earnings per share

FARMINGTON, Conn., Jan. 24, 2018 (GLOBE NEWSWIRE) -- First Connecticut Bancorp, Inc. (NASDAQ:FBNK), the holding company for Farmington Bank, reported net income of $497,000 or $0.03 diluted earnings per share for the quarter ended December 31, 2017 compared to net income of $4.2 million or $0.27 diluted earnings per share for the quarter ended December 31, 2016. Excluding non-recurring items, the Company reported a 32% increase in core net income to $5.5 million, or $0.34 diluted earnings per share for the quarter ended December 31, 2017 compared to core net income of $4.1 million, or $0.27 diluted earnings per share for the quarter ended December 31, 2016.

Net income for the full year was $16.2 million or $1.02 diluted earnings per share compared to $15.2 million or $1.00 diluted earnings per share in the prior year. Excluding non-recurring items, core net income for the full year was $20.9 million, or $1.32 diluted earnings per share as compared to $14.8 million, or $0.97 diluted earnings per share in the prior year. Core net income excludes non-recurring items.

On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was enacted, which lowered the Company’s federal tax rate from 35% to 21% effective January 1, 2018. As a result of the tax reduction, the Company recorded a reduction in the value of its net deferred tax asset resulting in a charge of $5.0 million to income tax expense for the fourth quarter of 2017. However, the tax rate reduction will increase future earnings. The Tax Act impact on earnings per share for the year 2018 is an estimated $0.24 - $0.25 increase.

“I am once again pleased to report strong core earnings for the fourth quarter of $0.34 per share and $1.32 per share for the year. Since going public in 2011, we have had six consecutive years of earnings per share growth. An increase in core earnings combined with internal operational efficiencies continues to have a positive effect on return on assets, return on equity and our efficiency ratio,” stated John J. Patrick Jr., First Connecticut Bancorp’s Chairman, President and CEO.

“Additionally, we increased our dividend $0.06 or 67% during 2017 as we continue to reward shareholders with a combination of share price appreciation and increased dividend yield.”

Financial Highlights

  • Organic loan growth remained strong during the fourth quarter of 2017 as loans increased $49.5 million to $2.7 billion at December 31, 2017 primarily due to a $34.8 million increase in commercial real estate loans and a $19.7 million increase in residential real estate loans. Loans increased $200.6 million or 8% from a year ago.
  • Overall deposits increased $51.5 million to $2.4 billion in the fourth quarter of 2017 compared to the linked quarter and increased $219.0 million or 10% from a year ago.
  • Loans to deposits ratio was 113% for the quarter ended December 31, 2017 compared to 113% in the linked quarter and 115% in the fourth quarter of 2016.
  • Checking accounts grew by 2% or 864 net new accounts in the fourth quarter of 2017 and 8% or 4,136 net new accounts from a year ago.
  • Net interest income decreased $320,000 to $20.5 million in the fourth quarter of 2017 compared to the linked quarter and increased $2.4 million compared to the fourth quarter of 2016. Core net interest income decreased $191,000 compared to the linked quarter.
  • Net interest margin was 2.91% in the fourth quarter of 2017 compared to 2.95% in the linked quarter and 2.75% in the prior year quarter. Net interest margin, excluding $165,000 prepayment penalty fees, was 2.93% in the linked quarter of 2017.
  • Efficiency ratio was 65.06% in the fourth quarter of 2017 compared to 66.38% in the linked quarter and 70.64% in the prior year quarter.
  • Noninterest expense to average assets was 2.05% in the fourth quarter of 2017 compared to 2.11% in the linked quarter and 2.13% in the prior year quarter.
  • Tangible book value per share was $17.08 for the quarter ended December 31, 2017 compared to $17.12 on a linked quarter basis and $16.37 at December 31, 2016.
  • Asset quality remained strong as loan delinquencies 30 days and greater represented 0.63% of total loans at December 31, 2017 compared to 0.66% of total loans at September 30, 2017 and 0.68% at December 31, 2016. Non-accrual loans represented 0.58% of total loans at December 31, 2017 compared to 0.57% of total loans at September 30, 2017 and 0.69% of total loans at December 31, 2016.
  • The allowance for loan losses represented 0.82% of total loans at December 31, 2017 compared to 0.82% of total loans at September 30, 2017 and 0.85% at December 31, 2016.
  • The Company paid a quarterly cash dividend of $0.15 per share during the fourth quarter, an increase of $0.01 compared to the linked quarter and an increase of $0.06 from a year ago.

Fourth quarter 2017 compared with third quarter 2017

Net interest income

  • Net interest income decreased $320,000 to $20.5 million in the fourth quarter of 2017 compared to the linked quarter primarily due to a 5 basis point increase in interest-bearing liabilities yield to 0.89%.
  • Net interest margin was 2.91% in the third quarter of 2017 compared to 2.95% in the linked quarter. Net interest margin, excluding $165,000 prepayment penalty fees, was 2.93% in the linked quarter.
  • The cost of interest-bearing liabilities increased 5 basis points to 89 basis points in the fourth quarter of 2017 compared to 84 basis points in the linked quarter.

Provision for loan losses

  • Provision for loan losses was $299,000 for the fourth quarter of 2017 compared to $217,000 for the linked quarter.
  • Net charge-offs in the quarter were $53,000 or 0.01% to average loans (annualized) compared to $52,000 or 0.01% to average loans (annualized) in the linked quarter.
  • The allowance for loan losses represented 0.82% of total loans at December 31, 2017 and September 30, 2017.

Noninterest income

  • Total noninterest income decreased $142,000 to $3.2 million in the fourth quarter of 2017 compared to the linked quarter primarily due to a $274,000 decrease in net gain on loans sold offset by a $129,000 increase in other noninterest income.
  • Net gain on loans sold decreased to $598,000 from $872,000 primarily due to a decrease in volume of loans sold.
  • Other noninterest income increased $129,000 to $484,000 primarily due to a $95,000 increase in mortgage banking derivatives. Other noninterest income includes swap fees totaling $242,000 in the fourth quarter of 2017 compared to $251,000 in the linked quarter.

Noninterest expense

  • Noninterest expense decreased $532,000 to $15.4 million in the fourth quarter of 2017 compared to the linked quarter primarily due to a $123,000 decrease in furniture and equipment expenses, a $139,000 decrease in marketing expenses and a $132,000 decrease in other operating expenses.

Income tax expense

Income tax expense was $7.5 million in the fourth quarter of 2017 and $2.4 million in the third quarter of 2017. As a result of the Tax Act, the Company recorded a reduction in the value of its net deferred tax asset resulting in a charge of $5.0 million to income tax expense in the fourth quarter of 2017.

Fourth quarter 2017 compared with fourth quarter 2016

Net interest income

  • Net interest income increased $2.4 million or 13% to $20.5 million in the fourth quarter of 2017 compared to the prior year quarter due primarily to a $216.1 million increase in the average loans balance and a 17 basis point increase in the loans yield to 3.69% offset by a $985,000 increase in interest expense.
  • Net interest margin was 2.91% in the fourth quarter of 2017 compared to 2.75% in the prior year quarter.
  • The cost of interest-bearing liabilities increased 12 basis points to 89 basis points in the fourth quarter of 2017 compared to 77 basis points in the prior year quarter.

Provision for loan losses

  • Provision for loan losses was $299,000 for the fourth quarter of 2017 compared to $616,000 for the prior year quarter.
  • Net charge-offs in the quarter were $53,000 or 0.01% to average loans (annualized) compared to $350,000 or 0.06% to average loans (annualized) in the prior year quarter.
  • The allowance for loan losses represented 0.82% of total loans at December 31, 2017 and 0.85% of total loans at December 31, 2016.

Noninterest income

  • Total noninterest income decreased $378,000 to $3.2 million in the fourth quarter of 2017 compared to the prior year quarter primarily due to a $327,000 decrease in net gain on loans sold and a $182,000 decrease in other noninterest income offset by a $126,000 increase in fees for customer services.

  • Net gain on loans sold decreased to $598,000 from $925,000 primarily due to a decrease in volume of loans sold.

  • Other noninterest income decreased primarily due to a $283,000 recovery in fair value in mortgage servicing rights in the prior year quarter offset by a $99,000 impairment on a SBIC fund in the prior year quarter.

Noninterest expense

  • Noninterest expense increased $288,000 to $15.4 million in the fourth quarter of 2017 compared to the prior year quarter primarily due to a $455,000 increase in salaries and employee benefits expense offset by a $232,000 decrease in other operating expenses.
  • Salaries and employee benefits increased $455,000 to $9.6 million primarily due to general salary increases which became effective in mid-March.
  • Other operating expenses decreased $232,000 to $2.6 million primarily due to a $134,000 reduction in 3rd party services.

Income tax expense

Income tax expense was $7.5 million in the fourth quarter of 2017 compared to $1.8 million in the prior year quarter. As a result of the Tax Act, the Company recorded a reduction in the value of its net deferred tax asset resulting in a charge of $5.0 million to income tax expense in the fourth quarter of 2017. 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.

For the year ended December 31, 2017 compared with the year ended December 31, 2016

Net interest income

  • Net interest income increased $9.2 million or 13% to $80.4 million for the year ended 2017 compared to $71.3 million for the year ended 2016 primarily due to a $234.1 million increase in the average loans balance and an 11 basis point increase in the loans yield to 3.68% offset by a $2.3 million increase in interest expense.
  • Net interest margin was 2.93% for the year ended 2017 compared to 2.80% for the year ended 2016.
  • The total interest-earning assets yield increased 18 basis points to 3.57% for the year ended 2017 compared to 3.39% for the year ended 2016 primarily due to an increase in yield on our loan and securities portfolios.
  • The cost of interest-bearing liabilities increased 4 basis points to 82 basis points for the year ended 2017 compared to 78 basis points for the year ended 2016.

Provision for loan losses

  • Provision for loan losses was $1.6 million for the year ended 2017 compared to $2.3 million for the year ended 2016.
  • Net charge-offs for the year ended 2017 were $632,000 or 0.02% to average loans compared to $1.0 million or 0.04% to average loans for the year ended 2016.
  • The allowance for loan losses represented 0.82% of total loans at December 31, 2017 compared to 0.85% at December 31, 2016.

Noninterest income

  • Total noninterest income increased $761,000 to $13.5 million for the year ended 2017 compared to $12.7 million for the year ended 2016.
  • Fees for customer services increased $252,000 to $6.4 million for the year ended 2017 compared to the year ended 2016 driven by our growth in checking accounts and debit card fees.
  • Net gain on loans sold decreased $508,000 to $2.6 million for the year ended 2017 compared to the year ended 2016 as a result of a decrease in volume of loans sold.
  • Bank owned life insurance income increased $211,000 to $1.6 million for the year ended 2017 compared to the year ended 2016 primarily due to $194,000 more in bank owned life insurance proceeds in 2017 than in the prior year.
  • Other noninterest income increased $801,000 to $2.7 million for the year ended 2017 compared to the year ended 2016 primarily due to a $206,000 increase in swap fee income, a $161,000 increase in loan servicing fees for others and $319,000 SBIC fund impairment in the prior year offset by a $159,000 decrease in mortgage banking derivatives.
  • Other noninterest income includes swap fees totaling $1.8 million compared to $1.6 million in the prior year.

Noninterest expense

  • Noninterest expense increased $1.8 million to $62.3 million for the year ended 2017 compared to $60.5 million for the year ended 2016.
  • Salaries and employee benefits increased $1.6 million to $38.6 million for the year ended 2017 compared to the year ended 2016. The increase is primarily due to general salary increases which became effective in mid-March and $343,000 in severance expense.
  • Marketing increased $400,000 primarily due to efforts to increase the Bank’s sales support in central Connecticut and western Massachusetts.
  • Other operating expenses decreased $325,000 to $10.5 million for the year ended 2017 compared to the prior year primarily due to a $296,000 decrease in directors’ share-based compensation expense as a result of the majority of the 2012 Stock Incentive Plan fully vesting in September 2016.

Income tax expense

  • Income tax expense was $13.9 million for the year ended 2017 compared to $5.9 million for the year ended 2016. As a result of the Tax Act, the Company recorded a reduction in the value of its net deferred tax asset resulting in a charge of $5.0 million to income tax expense in the fourth quarter of 2017. Income tax expense in 2016 included a $137,000 write-off of a deferred tax asset associated with the establishment of the Bank’s foundation in 2011.

December 31, 2017 compared to December 31, 2016

Financial Condition

  • Total assets increased $212.7 million or 8% at December 31, 2017 to $3.0 billion compared to $2.8 billion at December 31, 2016, reflecting a $199.7 million increase in net loans.
  • Our investment portfolio totaled $162.2 million at December 31, 2017 compared to $136.6 million at December 31, 2016, an increase of $25.7 million.
  • Net loans increased $199.7 million or 8% at December 31, 2017 to $2.7 billion compared to $2.5 billion at December 31, 2016 due to our continued focus on commercial and residential lending.
  • Deposits increased $219.0 million or 10% to $2.4 billion at December 31, 2017 compared to $2.2 billion at December 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 $437.1 million and $394.5 million at December 31, 2017 and 2016, respectively.
  • Federal Home Loan Bank of Boston advances decreased $31.6 million to $255.5 million at December 31, 2017 compared to $287.1 million at December 31, 2016.

Asset Quality

  • At December 31, 2017 the allowance for loan losses represented 0.82% of total loans and 142.15% of non-accrual loans, compared to 0.82% of total loans and 145.06% of non-accrual loans at September 30, 2017 and 0.85% of total loans and 122.60% of non-accrual loans at December 31, 2016.
  • Loan delinquencies 30 days and greater represented 0.63% of total loans at December 31, 2017 compared to 0.66% of total loans at September 30, 2017 and 0.68% of total loans at December 31, 2016.
  • Non-accrual loans represented 0.58% of total loans at December 31, 2017 compared to 0.57% of total loans at September 30, 2017 and 0.69% of total loans at December 31, 2016.
  • Net charge-offs in the quarter were $53,000 or 0.01% to average loans (annualized) compared to $52,000 or 0.01% to average loans (annualized) in the linked quarter and $350,000 or 0.06% 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 12.38% at December 31, 2017.
  • Tangible book value per share is $17.08 compared to $17.12 on a linked quarter basis and $16.37 at December 31, 2016.
  • The Company had 600,945 shares remaining to repurchase at December 31, 2017 from prior regulatory approval. Repurchased shares are held as treasury stock and will be available for general corporate purposes.
  • At December 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 Thursday, January 25, 2018 at 10:30am Eastern Time to discuss fourth quarter results. Those wishing to participate in the call may dial-in to the call at 1-888-336-7151. The Canada dial-in number is 1-855-669-9657 and the international dial-in number is 1-412-902-4177. A webcast of the call will be available on the Investor Relations Section of the Farmington Bank website for an extended period of time.

Forward Looking Statements

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

Non-GAAP Financial Measures

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

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

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

First Connecticut Bancorp, Inc.
Selected Financial Data (Unaudited)
At or for the Three Months Ended
December 31, September 30, June 30, March 31, December 31,
(Dollars in thousands, except per share data) 2017 2017 2017 2017 2016
Selected Financial Condition Data:
Total assets$ 3,050,286 $ 3,001,679 $ 2,992,126 $ 2,904,264 $ 2,837,555
Cash and cash equivalents 35,350 44,475 46,551 36,427 47,723
Securities held-to-maturity, at amortized cost 74,985 56,848 50,655 50,320 33,061
Securities available-for-sale, at fair value 87,251 87,299 112,443 105,541 103,520
Federal Home Loan Bank of Boston stock, at cost 15,537 15,954 19,583 16,418 16,378
Loans, net 2,725,633 2,676,411 2,644,618 2,585,521 2,525,983
Deposits 2,434,100 2,382,551 2,245,004 2,287,852 2,215,090
Federal Home Loan Bank of Boston advances 255,458 271,458 389,458 282,057 287,057
Total stockholders' equity 272,459 273,193 268,836 264,667 260,176
Allowance for loan losses 22,448 22,202 22,037 21,349 21,529
Non-accrual loans 15,792 15,305 16,022 15,976 17,561
Impaired loans 30,194 29,924 30,007 32,407 34,273
Loan delinquencies 30 days and greater 17,254 17,808 16,059 17,346 17,271
Selected Operating Data:
Interest income$ 25,551 $ 25,604 $ 24,116 $ 23,212 $ 22,160
Interest expense 5,023 4,756 4,293 3,962 4,038
Net interest income 20,528 20,848 19,823 19,250 18,122
Provision for loan losses 299 217 710 325 616
Net interest income after provision for loan losses 20,229 20,631 19,113 18,925 17,506
Noninterest income 3,158 3,300 3,876 3,165 3,536
Noninterest expense 15,387 15,919 15,878 15,152 15,099
Income before income taxes 8,000 8,012 7,111 6,938 5,943
Income tax expense 7,503 2,415 2,109 1,845 1,757
Net income$ 497 $ 5,597 $ 5,002 $ 5,093 $ 4,186
Performance Ratios (annualized):
Return on average assets 0.07% 0.74% 0.68% 0.71% 0.59%
Core return on average assets 0.73% 0.73% 0.68% 0.70% 0.58%
Return on average equity 0.72% 8.17% 7.43% 7.67% 6.43%
Core return on average equity 7.86% 8.01% 7.36% 7.59% 6.36%
Net interest rate spread (1) 2.71% 2.77% 2.74% 2.76% 2.57%
Net interest rate margin (2) 2.91% 2.95% 2.92% 2.94% 2.75%
Non-interest expense to average assets (3) 2.05% 2.11% 2.12% 2.12% 2.13%
Efficiency ratio (4) 65.06% 66.38% 66.31% 67.85% 70.64%
Average interest-earning assets to average
interest-bearing liabilities 129.44% 128.50% 128.46% 129.85% 130.20%
Loans to deposits 113% 113% 119% 114% 115%
Asset Quality Ratios:
Allowance for loan losses as a percent of total loans 0.82% 0.82% 0.83% 0.82% 0.85%
Allowance for loan losses as a percent of
non-accrual loans 142.15% 145.06% 137.54% 133.63% 122.60%
Net charge-offs (recoveries) to average loans (annualized) 0.01% 0.01% 0.00% 0.08% 0.06%
Non-accrual loans as a percent of total loans 0.58% 0.57% 0.60% 0.61% 0.69%
Non-accrual loans as a percent of total assets 0.52% 0.51% 0.54% 0.55% 0.62%
Loan delinquencies 30 days and greater as a
percent of total loans 0.63% 0.66% 0.60% 0.67% 0.68%
Per Share Related Data:
Basic earnings per share$ 0.03 $ 0.37 $ 0.33 $ 0.34 $ 0.28
Diluted earnings per share$ 0.03 $ 0.35 $ 0.32 $ 0.32 $ 0.27
Dividends declared per share$ 0.15 $ 0.14 $ 0.12 $ 0.11 $ 0.09
Tangible book value (5)$ 17.08 $ 17.12 $ 16.86 $ 16.62 $ 16.37
Common stock shares outstanding 15,952,946 15,952,946 15,942,614 15,923,514 15,897,698
Weighted-average basic shares outstanding 15,174,285 15,143,379 15,107,190 15,068,036 14,973,610
Weighted-average diluted shares outstanding 15,882,690 15,820,659 15,791,112 15,691,338 15,502,481
(1) Represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities on a tax-equivalent basis.
(2) Represents tax-equivalent net interest income as a percent of average interest-earning assets.
(3) Represents core noninterest expense annualized divided by average assets. See "Reconciliation of Non-GAAP Financial Measures" table.
(4) Represents core noninterest expense divided by the sum of core net interest income and core noninterest income.
See "Reconciliation of Non-GAAP Financial Measures" table.
(5) Represents ending stockholders’ equity less goodwill and intangible assets (excluding mortgage servicing rights) divided by ending common shares outstanding.
The Company does not have goodwill and intangible assets for any of the periods presented. See "Reconciliation of Non-GAAP Financial Measures" table.

First Connecticut Bancorp, Inc.
Selected Financial Data (Unaudited)
At or for the Three Months Ended
December 31, September 30, June 30, March 31, December 31,
(Dollars in thousands) 2017 2017 2017 2017 2016
Capital Ratios:
Equity to total assets at end of period 8.93% 9.10% 8.98% 9.11% 9.17%
Average equity to average assets 9.23% 9.10% 9.18% 9.28% 9.18%
Total Capital (to Risk Weighted Assets) 12.38%* 12.50% 12.45% 12.67% 12.80%
Tier I Capital (to Risk Weighted Assets) 11.45%* 11.57% 11.53% 11.74% 11.84%
Common Equity Tier I Capital 11.45%* 11.57% 11.53% 11.74% 11.84%
Tier I Leverage Capital (to Average Assets) 9.23%* 9.23% 9.36% 9.45% 9.39%
Total equity to total average assets 9.05% 9.07% 9.17% 9.25% 9.18%
* Estimated
Loans and Allowance for Loan Losses:
Real estate
Residential$ 989,366 $ 969,679 $ 962,732 $ 954,764 $ 907,946
Commercial 1,063,755 1,028,930 1,020,560 992,861 979,370
Construction 90,059 86,713 74,063 60,694 49,679
Commercial 429,116 436,172 431,243 420,747 430,539
Home equity line of credit 165,070 166,791 168,278 168,157 170,786
Other 5,650 5,733 5,410 5,375 5,348
Total loans 2,743,016 2,694,018 2,662,286 2,602,598 2,543,668
Net deferred loan costs 5,065 4,595 4,369 4,272 3,844
Loans 2,748,081 2,698,613 2,666,655 2,606,870 2,547,512
Allowance for loan losses (22,448) (22,202) (22,037) (21,349) (21,529)
Loans, net$ 2,725,633 $ 2,676,411 $ 2,644,618 $ 2,585,521 $ 2,525,983
Deposits:
Noninterest-bearing demand deposits$ 473,428 $ 437,372 $ 445,049 $ 437,385 $ 441,283
Interest-bearing
NOW accounts 623,135 652,631 547,868 622,844 542,764
Money market 559,297 549,674 522,070 521,759 532,681
Savings accounts 237,380 233,330 241,898 239,743 233,792
Certificates of deposit 540,860 509,544 488,119 466,121 464,570
Total interest-bearing deposits 1,960,672 1,945,179 1,799,955 1,850,467 1,773,807
Total deposits$ 2,434,100 $ 2,382,551 $ 2,245,004 $ 2,287,852 $ 2,215,090

First Connecticut Bancorp, Inc.
Consolidated Statements of Condition (Unaudited)
December 31, September 30, December 31,
2017 2017 2016
(Dollars in thousands)
Assets
Cash and due from banks$ 33,320 $ 35,452 $ 44,086
Interest bearing deposits with other institutions 2,030 9,023 3,637
Total cash and cash equivalents 35,350 44,475 47,723
Securities held-to-maturity, at amortized cost 74,985 56,848 33,061
Securities available-for-sale, at fair value 87,251 87,299 103,520
Loans held for sale 5,295 6,902 3,270
Loans (1) 2,748,081 2,698,613 2,547,512
Allowance for loan losses (22,448) (22,202) (21,529)
Loans, net 2,725,633 2,676,411 2,525,983
Premises and equipment, net 16,845 17,005 18,002
Federal Home Loan Bank of Boston stock, at cost 15,537 15,954 16,378
Accrued income receivable 8,979 8,039 7,432
Bank-owned life insurance 57,511 57,156 51,726
Deferred income taxes 7,662 13,965 14,795
Prepaid expenses and other assets 15,238 17,625 15,665
Total assets$ 3,050,286 $ 3,001,679 $ 2,837,555
Liabilities and Stockholders' Equity
Deposits
Interest-bearing$ 1,960,672 $ 1,945,179 $ 1,773,807
Noninterest-bearing 473,428 437,372 441,283
2,434,100 2,382,551 2,215,090
Federal Home Loan Bank of Boston advances 255,458 271,458 287,057
Repurchase agreement borrowings 10,500 10,500 10,500
Repurchase liabilities 34,496 21,538 18,867
Accrued expenses and other liabilities 43,273 42,439 45,865
Total liabilities 2,777,827 2,728,486 2,577,379
Stockholders' Equity
Common stock 181 181 181
Additional paid-in-capital 185,779 185,319 184,111
Unallocated common stock held by ESOP (9,539) (9,796) (10,567)
Treasury stock, at cost (29,620) (29,620) (30,400)
Retained earnings 131,887 133,337 123,541
Accumulated other comprehensive loss (6,229) (6,228) (6,690)
Total stockholders' equity 272,459 273,193 260,176
Total liabilities and stockholders' equity$ 3,050,286 $ 3,001,679 $ 2,837,555
(1) Loans include net deferred fees and unamortized premiums of $5.1 million, $4.6 million and $3.8 million at December 31, 2017,
September 30, 2017 and December 31, 2016, respectively.

First Connecticut Bancorp, Inc.
Consolidated Statements of Income (Unaudited)
Three Months Ended For The Year Ended
December 31, September 30, December 31, December 31,
(Dollars in thousands, except per share data) 2017 2017 2016 2017 2016
Interest income
Interest and fees on loans
Mortgage $ 19,143 $ 19,165 $ 16,451 $ 73,922 $ 64,612
Other 5,494 5,535 5,058 21,185 19,613
Interest and dividends on investments
United States Government and agency obligations 613 602 335 2,287 1,620
Other bonds 4 6 10 24 50
Corporate stocks 259 242 231 916 912
Other interest income 38 54 75 149 179
Total interest income 25,551 25,604 22,160 98,483 86,986
Interest expense
Deposits 3,888 3,423 3,010 13,248 11,456
Interest on borrowed funds 1,031 1,230 924 4,374 3,826
Interest on repo borrowings 95 95 96 381 385
Interest on repurchase liabilities 9 8 8 31 64
Total interest expense 5,023 4,756 4,038 18,034 15,731
Net interest income 20,528 20,848 18,122 80,449 71,255
Provision for loan losses 299 217 616 1,551 2,332
Net interest income
after provision for loan losses 20,229 20,631 17,506 78,898 68,923
Noninterest income
Fees for customer services 1,663 1,662 1,537 6,403 6,151
Net gain on loans sold 598 872 925 2,597 3,105
Brokerage and insurance fee income 59 54 47 218 213
Bank owned life insurance income 354 357 361 1,628 1,417
Other 484 355 666 2,653 1,852
Total noninterest income 3,158 3,300 3,536 13,499 12,738
Noninterest expense
Salaries and employee benefits 9,564 9,668 9,109 38,595 36,983
Occupancy expense 1,261 1,312 1,211 5,073 4,890
Furniture and equipment expense 931 1,054 983 3,954 4,082
FDIC assessment 436 419 424 1,693 1,603
Marketing 578 717 523 2,570 2,170
Other operating expenses 2,617 2,749 2,849 10,451 10,776
Total noninterest expense 15,387 15,919 15,099 62,336 60,504
Income before income taxes 8,000 8,012 5,943 30,061 21,157
Income tax expense 7,503 2,415 1,757 13,872 5,942
Net income$ 497 $ 5,597 $ 4,186 $ 16,189 $ 15,215
Earnings per share:
Basic $ 0.03 $ 0.37 $ 0.28 $ 1.07 $ 1.02
Diluted 0.03 0.35 0.27 1.02 1.00
Weighted average shares outstanding:
Basic 15,174,285 15,143,379 14,973,610 15,123,568 14,821,391
Diluted 15,882,690 15,820,659 15,502,481 15,797,039 15,196,011

First Connecticut Bancorp, Inc.
Consolidated Average Balances, Yields and Rates (Unaudited)
For The Three Months Ended
December 31, 2017 September 30, 2017 December 31, 2016
Average BalanceInterest 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$ 2,714,017$ 25,272 3.69% $ 2,697,978$ 25,342 3.73% $ 2,497,897$ 22,092 3.52%
Securities 147,768 676 1.81% 159,450 660 1.64% 131,837 402 1.21%
Federal Home Loan Bank of Boston stock 14,860 200 5.34% 18,284 190 4.12% 15,200 174 4.55%
Federal funds and other earning assets 7,833 38 1.92% 10,089 54 2.12% 60,518 75 0.49%
Total interest-earning assets 2,884,478 26,186 3.60% 2,885,801 26,246 3.61% 2,705,452 22,743 3.34%
Noninterest-earning assets 124,537 126,234 128,332
Total assets $ 3,009,015 $ 3,012,035 $ 2,833,784
Interest-bearing liabilities:
NOW accounts$ 624,372$ 916 0.58% $ 644,947$ 832 0.51% $ 552,444$ 443 0.32%
Money market 558,743 1,212 0.86% 519,265 982 0.75% 557,864 1,109 0.79%
Savings accounts 235,058 65 0.11% 233,878 63 0.11% 229,052 64 0.11%
Certificates of deposit 517,252 1,695 1.30% 489,203 1,546 1.25% 471,023 1,394 1.18%
Total interest-bearing deposits 1,935,425 3,888 0.80% 1,887,293 3,423 0.72% 1,810,383 3,010 0.66%
Federal Home Loan Bank of Boston Advances 252,775 1,031 1.62% 320,219 1,230 1.52% 226,766 924 1.62%
Repurchase agreement borrowings 10,500 95 3.59% 10,500 95 3.59% 10,500 96 3.64%
Repurchase liabilities 29,796 9 0.12% 27,695 8 0.11% 30,245 8 0.11%
Total interest-bearing liabilities 2,228,496 5,023 0.89% 2,245,707 4,756 0.84% 2,077,894 4,038 0.77%
Noninterest-bearing deposits 454,278 446,428 434,659
Other noninterest-bearing liabilities 48,593 45,905 61,023
Total liabilities 2,731,367 2,738,040 2,573,576
Stockholders' equity 277,648 273,995 260,208
Total liabilities and stockholders' equity$ 3,009,015 $ 3,012,035 $ 2,833,784
Tax-equivalent net interest income $ 21,163 $ 21,490 $ 18,705
Less: tax-equivalent adjustment (635) (642) (583)
Net interest income $ 20,528 $ 20,848 $ 18,122
Net interest rate spread (2) 2.71% 2.77% 2.57%
Net interest-earning assets (3) $ 655,982 $ 640,094 $ 627,558
Net interest margin (4) 2.91% 2.95% 2.75%
Average interest-earning assets to average interest-bearing liabilities
129.44% 128.50% 130.20%
(1) On a fully-tax equivalent basis.
(2) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost
of average interest-bearing liabilities on a tax-equivalent basis.
(3) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(4) Net interest margin represents tax-equivalent net interest income divided by average total interest-earning assets.

First Connecticut Bancorp, Inc.
Consolidated Average Balances, Yields and Rates (Unaudited)
For The Years Ended December 31,
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$ 2,654,943$ 97,615 3.68% $ 2,420,859$ 86,374 3.57%
Securities 151,878 2,524 1.66% 150,582 1,881 1.25%
Federal Home Loan Bank of Boston stock 16,842 703 4.17% 17,738 701 3.95%
Federal funds and other earning assets 8,006 149 1.86% 36,679 179 0.49%
Total interest-earning assets 2,831,669 100,991 3.57% 2,625,858 89,135 3.39%
Noninterest-earning assets 122,324 129,826
Total assets $ 2,953,993 $ 2,755,684
Interest-bearing liabilities:
NOW accounts$ 616,962$ 2,850 0.46% $ 513,256$ 1,544 0.30%
Money market 533,213 4,143 0.78% 512,396 4,119 0.80%
Savings accounts 235,608 252 0.11% 223,499 241 0.11%
Certificates of deposit 486,449 6,003 1.23% 469,493 5,552 1.18%
Total interest-bearing deposits 1,872,232 13,248 0.71% 1,718,644 11,456 0.67%
Federal Home Loan Bank of Boston Advances 283,683 4,374 1.54% 257,281 3,826 1.49%
Repurchase agreement borrowings 10,500 381 3.63% 10,500 385 3.67%
Repurchase liabilities 27,814 31 0.11% 42,700 64 0.15%
Total interest-bearing liabilities 2,194,229 18,034 0.82% 2,029,125 15,731 0.78%
Noninterest-bearing deposits 441,347 412,155
Other noninterest-bearing liabilities 46,804 60,008
Total liabilities 2,682,380 2,501,288
Stockholders' equity 271,613 254,396
Total liabilities and stockholders' equity$ 2,953,993 $ 2,755,684
Tax-equivalent net interest income $ 82,957 $ 73,404
Less: tax-equivalent adjustment (2,508) (2,149)
Net interest income $ 80,449 $ 71,255
Net interest rate spread (2) 2.75% 2.61%
Net interest-earning assets (3) $ 637,440 $ 596,733
Net interest margin (4) 2.93% 2.80%
Average interest-earning assets to average interest-bearing liabilities
129.05% 129.41%
(1) On a fully-tax equivalent basis.
(2) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost
of average interest-bearing liabilities on a tax-equivalent basis.
(3) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(4) Net interest margin represents tax-equivalent net interest income divided by average total interest-earning assets.

First Connecticut Bancorp, Inc.
Reconciliation of Non-GAAP Financial Measures (Unaudited)
The table below presents a reconciliation of non-GAAP financial measures with financial measures defined by GAAP for the three months ended December 31, 2017, September 30, 2017, June 30, 2017, March 31, 2017 and December 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
December 31, September 30, June 30, March 31, December 31,
(Dollars in thousands, except per share data) 2017 2017 2017 2017 2016
Net Income$ 497 $ 5,597 $ 5,002 $ 5,093 $ 4,186
Adjustments:
Plus: Severance expense - - 343 - -
Plus: Mortgage servicing rights (recovery) impairment - - - - (283)
Less: Prepayment penalty fees (36) (165) - (84) -
Less: Bank-owned life insurance proceeds - - (271) - -
Total core adjustments before taxes (36) (165) 72 (84) (283)
Tax (expense) benefit on core adjustments 13 58 (120) 29 99
Tax rate reduction due to Tax Cuts and Jobs Act 4,981 - - - -
Deferred tax asset write-off (1) - - - - 137
Total core adjustments after taxes 4,958 (107) (48) (55) (47)
Total core net income$ 5,455 $ 5,490 $ 4,954 $ 5,038 $ 4,139
Total net interest income$ 20,528 $ 20,848 $ 19,823 $ 19,250 $ 18,122
Less: Prepayment penalty fees (36) (165) - (84) -
Total core net interest income$ 20,492 $ 20,683 $ 19,823 $ 19,166 $ 18,122
Total noninterest income$ 3,158 $ 3,300 $ 3,876 $ 3,165 $ 3,536
Plus: Mortgage servicing rights (recovery) impairment - - - - (283)
Less: Bank-owned life insurance proceeds - - (271) - -
Total core noninterest income$ 3,158 $ 3,300 $ 3,605 $ 3,165 $ 3,253
Total noninterest expense$ 15,387 $ 15,919 $ 15,878 $ 15,152 $ 15,099
Less: Severance expense - - (343) - -
Total core noninterest expense$ 15,387 $ 15,919 $ 15,535 $ 15,152 $ 15,099
Core earnings per common share, diluted$ 0.34 $ 0.35 $ 0.31 $ 0.32 $ 0.27
Core net interest rate margin (2) 2.91% 2.93% 2.92% 2.92% 2.75%
Core return on average assets (annualized) 0.73% 0.73% 0.68% 0.70% 0.58%
Core return on average equity (annualized) 7.86% 8.01% 7.36% 7.59% 6.36%
Core non-interest expense to average assets (annualized) 2.05% 2.11% 2.12% 2.12% 2.13%
Efficiency ratio (3) 65.06% 66.38% 66.31% 67.85% 70.64%
Tangible book value (4) $ 17.08 $ 17.12 $ 16.86 $ 16.62 $ 16.37
(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.

First Connecticut Bancorp, Inc.
Reconciliation of Non-GAAP Financial Measures (Unaudited)
The table below presents a reconciliation of non-GAAP financial measures with financial measures defined by GAAP for the years ended December 31, 2017 and December 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 Year Ended December 31,
(Dollars in thousands, except per share data) 2017 2016
Net Income$ 16,189 $ 15,215
Adjustments:
Plus: Employee severance 343 -
Less: Prepayment penalty fees (285) (380)
Less: Off-balance sheet commitment change in accounting estimate - (423)
Less: Bank-owned life insurance proceeds (271) (77)
Total core adjustments before taxes (213) (880)
Tax (expense) benefit on core adjustments (20) 282
Deferred tax asset write-off (1) - 137
Tax rate reduction (2) 4,981 -
Total core adjustments after taxes 4,748 (461)
Total core net income$ 20,937 $ 14,754
Total net interest income$ 80,449 $ 71,255
Less: Prepayment penalty fees (285) (380)
Total core net interest income$ 80,164 $ 70,875
Total noninterest income$ 13,499 $ 12,738
Less: Bank-owned life insurance proceeds (271) (77)
Total core noninterest income$ 13,228 $ 12,661
Total noninterest expense$ 62,336 $ 60,504
Plus: Off-balance sheet commitments change in accounting estimate - 423
Less: Employee severances (343) -
Total core noninterest expense$ 61,993 $ 60,927
Core earnings per common share, diluted$ 1.32 $ 0.97
Core net interest rate margin (3) 2.92% 2.78%
Core return on average assets (annualized) 0.71% 0.54%
Core return on average equity (annualized) 7.71% 5.80%
Core non-interest expense to average assets (annualized) 2.10% 2.21%
Efficiency ratio (4) 66.38% 72.94%
Tangible book value (5) $ 17.08 $ 16.37
(1) Represents a write-off of the remaining deferred tax asset associated with the establishment of the Bank’s foundation in 2011.
(2) Represents the reduction in the value of the Company's deferred tax asset as a result of the Tax Cuts and Jobs Act enacted on December 22, 2017,
which lowered the Company's federal tax rate from 35% to 21%.
(3) Represents tax-equivalent core net interest income as a percent of average interest-earning assets.
(4) Represents core noninterest expense divided by the sum of core net interest income and core noninterest income.
(5) Represents ending stockholders’ equity less goodwill and intangible assets (excluding mortgage servicing rights) divided by ending common shares outstanding.
The Company does not have goodwill and intangible assets for any of the periods presented.

CONTACT:

Jennifer H. Daukas
Senior Vice President
Corporate Secretary/Investor Relations Officer
One Farm Glen Boulevard, Farmington, CT 06032
P 860-284-6359 | F 860-409-3316
jdaukas@farmingtonbankct.com
farmingtonbankct.com

Source:First Connecticut Bancorp, Inc.