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First Connecticut Bancorp, Inc. Announces Second Quarter 2013 Results

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FARMINGTON, Conn., July 29, 2013 (GLOBE NEWSWIRE) -- First Connecticut Bancorp, Inc. (the "Company") (Nasdaq:FBNK), the holding company for Farmington Bank (the "Bank"), reported net income of $937,000 or $0.06 per diluted share for the quarter ended June 30, 2013 compared to net income of $831,000 or $0.05 per diluted share for the quarter ended June 30, 2012.

"I continue to be pleased with our strategic focus to grow organically in our respective markets. During the quarter we completed our first 10% share buyback and announced a second 10% share buyback. We achieved solid organic loan and deposit growth during a quarter where we successfully completed a full systems conversion and prepared to open our 21st branch, in East Hartford, CT, which opened in July" stated John J. Patrick Jr., First Connecticut Bancorp's Chairman, President & CEO.

"Our earnings reflect our positive growth momentum, as net interest income increased 2.2% compared to the linked quarter, resulting in net earnings of $0.06 cents per diluted share."

Financial Highlights

  • Strong organic loan originations totaled approximately $122.0 million during the quarter resulting in a $43.6 million increase in total net loans. Loan growth was primarily driven by increases in the Commercial Real Estate, Commercial Construction and Residential loan segments.
  • Net interest income increased to $12.9 million in the second quarter of 2013 compared to $12.7 million in the linked quarter.
  • Resort loans decreased $2.8 million to $12.4 million in the second quarter of 2013 compared to the linked quarter and decreased $52.3 million compared to the same period in the prior year as we continue to successfully execute our planned exit of the resort financing market.
  • Net interest margin decreased 5 basis points to 3.02% in the second quarter of 2013 compared to the linked quarter.
  • Net gain on residential loans sold was $1.7 million for the second quarter of 2013 based on $62.7 million in loans sold compared to a net gain of $2.0 million on $61.8 million in loans sold during the linked quarter.
  • Overall deposits increased $76.2 million or 6% in the second quarter of 2013 compared to the linked quarter.
  • Checking accounts grew by 4% or 1,289 net new accounts in the second quarter of 2013.
  • Asset quality remained stable as non-accrual loans remained flat at 0.89% of total loans compared to the linked quarter basis. Net charge-offs totaled $83,000 for the quarter ended June 30, 2013 and $296,000 for the quarter ended March 31, 2013, a decrease of $213,000. Loan delinquencies 30 days and greater remained flat at $15.2 million on a linked quarter basis.
  • Our tangible book value grew to $13.80 compared to $13.76 on a linked quarter basis and $13.88 at the quarter ended June 30, 2012.
  • On June 21, 2013, we received regulatory approval to repurchase up to 1,676,452 shares, or 10% of our current outstanding common stock. Repurchased shares will be held as treasury stock and will be available for general corporate purposes
  • We paid a cash dividend of $0.03 per share on June 20, 2013. This marks the seventh consecutive quarter we have paid a dividend since First Connecticut Bancorp, Inc. became a public company on June 29, 2011.

Second quarter 2013 compared with first quarter 2013

Net interest income

  • Net interest income increased $280,000 to $12.9 million in the second quarter of 2013 compared to the linked quarter due primarily to new loans originated during the quarter in the commercial and residential portfolios.
  • Yield on average interest earning assets decreased 6 basis points from the linked quarter to 3.60% for the quarter ended June 30, 2013.
  • The cost of interest-bearing deposits remained stable at 63 basis points compared to 62 basis points on a linked quarter basis.

Provision for loan losses

  • Provision for loan losses was $256,000 for the quarter compared to $399,000 for the linked quarter and net charge-offs in the quarter were $83,000 or 0.02% to average loans (annualized) compared to $296,000 or 0.08% to average loans (annualized) in the linked quarter.

Noninterest income

  • Total noninterest income decreased $414,000 to $3.1 million compared to the linked quarter primarily due to decreases in net gains on loans sold of $291,000, bank-owned life insurance income of $106,000 and other income of $177,000, partially offset by an increase in fees for customer services of $115,000 compared to the linked quarter.

Noninterest expense

  • Noninterest expense decreased $144,000 to $14.6 million in the second quarter of 2013 compared to the linked quarter. Excluding one-time costs in the linked quarter, total core noninterest expense increased $489,000 compared to the linked quarter.
  • Salaries and employee benefits on a core basis increased $154,000 compared to the linked quarter primarily due to an increase in incentive compensation and other salary related costs to support our strategic growth.
  • Other operating expenses increased $332,000 or 13%, primarily due to an $84,000 loss on the sale of OREO property, $82,000 in system conversion costs and various other operating costs.

Second quarter 2013 compared with second quarter 2012

Net interest income

  • Net interest income increased to $12.9 million compared to $12.8 million in the second quarter of 2012.
  • Net interest margin decreased 30 basis points in the second quarter of 2013 compared to 3.32% in the second quarter of 2012 primarily due to a historic low rate environment and a $52.3 million decline in the resort loan portfolio. Excluding resort income for both periods, the net interest margin decreased 19 basis points.
  • The cost of interest-bearing deposits remained relatively stable at 63 basis points compared to 65 basis points on a quarter over quarter basis.

Provision for loan losses

  • Provision for loan losses was $256,000 for the quarter compared to $520,000 for the second quarter of 2012. The decrease in the provision was primarily due to improvements in the overall asset quality of our loan portfolio.
  • Net charge-offs for the quarter were $83,000 or 0.02% to average loans (annualized) compared to $320,000 or 0.09% to average loans (annualized) in the second quarter of 2012.

Noninterest income

  • Total noninterest income increased $1.1 million to $3.1 million compared to the second quarter of 2012 primarily due to increases in net gains on loans sold of $1.3 million and fees for customer services of $197,000, partially offset with a $386,000 decrease in other income.
  • Other income decreased $386,000 primarily due to a $103,000 write down on loans held for sale, a $154,000 decrease in mortgage banking derivatives and a $111,000 increase in amortization of mortgage servicing rights.

Noninterest expense

  • Noninterest expense increased $1.4 million to $14.6 million in the second quarter of 2013 compared to the second quarter of 2012.
  • Salaries and employee benefits increased $936,000 compared to the second quarter of 2012 primarily due to $454,000 in stock compensation expense related to the 2012 Stock Incentive Plan implemented in September 2012 and increases in compensation and other salary related costs to support our strategic growth.
  • Other operating expenses increased $597,000 compared to the second quarter of 2012 primarily due to $227,000 in directors' stock compensation expense related to the 2012 Stock Incentive Plan implemented in September 2012, an $84,000 loss on the sale of OREO property, $82,000 in system conversion costs and various other operating costs.

Financial condition

  • Total assets increased $45.9 million or 3% at June 30, 2013 to $1.8 billion compared to March 31, 2013 largely reflecting an increase in loans.
  • Our investment portfolio totaled $115.8 million at June 30, 2013 compared to $111.8 million at March 31, 2013, an increase of $4.0 million.
  • Net loans increased $43.6 million at June 30, 2013 to $1.6 billion compared to March 31, 2013 due to our continued focus on commercial and residential lending which, combined, increased $46.9 million, offset by a $2.8 million decrease in resort loans as we continue our planned exit of the resort financing market.
  • Deposits increased $76.2 million at June 30, 2013 compared to March 31, 2013, primarily due to continued growth in checking accounts, municipal deposits and a recent branch opening.
  • Federal Home Loan Bank of Boston advances decreased $24.8 million to $51.3 million, primarily due to a decrease in overnight borrowings at June 30, 2013 compared to March 31, 2013.
  • Repurchase liabilities increased $6.9 million to $50.3 million at June 30, 2013 primarily due to fluctuations in cash flows in business checking customers using our repurchase agreement product where excess funds are swept daily into a collateralized account.
  • Stockholders' equity decreased $11.6 million to $231.3 million compared to March 31, 2013 primarily due to the $12.8 million repurchase of common stock at an average stock price of $14.49 completing our first stock buyback during the quarter.

Asset Quality

  • Impaired loans remained stable at $39.2 million at June 30, 2013 and March 31, 2013.
  • Non-accrual loans increased to $14.3 million at June 30, 2013 compared to $13.9 million at March 31, 2013 and remained flat at 0.89% of total loans.
  • At June 30, 2013, the allowance for loan losses represented 1.09% of total loans and 122.20% of non-accrual loans, compared to 1.11% of total loans and 124.59% of non-accrual loans at March 31, 2013.
  • Loan delinquencies 30 days and greater remained flat at $15.2 million at June 30, 2013 compared to March 31, 2013.

Capital and Liquidity

  • The Company remained well-capitalized with an estimated total capital to risk-weighted asset ratio of 17.48% at June 30, 2013.
  • Our tangible book value was $13.80 compared to $13.76 on a linked quarter basis and $13.88 from a year ago.
  • At June 30, 2013, 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.

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 21 branch locations throughout central Connecticut. 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.

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 results presented in accordance with GAAP, this press release contains certain non-GAAP financial measures. A reconciliation of net income and other performance ratios, as adjusted, is included in the accompanying reconciliation of Non-GAAP 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. We utilize these measures for internal planning and forecasting purposes. These non-GAAP 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) 2013 2013 2012 2012 2012
Selected Financial Condition Data:
Total assets $ 1,845,251 $ 1,799,392 $ 1,822,946 $ 1,756,133 $ 1,687,431
Cash and cash equivalents 36,650 34,946 50,641 33,021 36,727
Held to maturity securities 3,003 3,003 3,006 3,007 3,007
Available for sale securities 112,801 108,787 138,241 125,614 130,146
Federal Home Loan Bank of Boston stock, at cost 8,383 8,383 8,939 8,056 7,137
Loans receivable, net 1,588,275 1,544,687 1,520,170 1,485,275 1,415,732
Deposits 1,452,319 1,376,092 1,330,455 1,257,987 1,218,743
Federal Home Loan Bank of Boston advances 51,250 76,000 128,000 125,200 91,000
Total stockholders' equity 231,315 242,869 241,522 242,199 248,105
Allowance for loan losses 17,505 17,332 17,229 17,920 17,927
Non-accrual loans 14,325 13,911 13,782 13,240 13,478
Impaired loans 39,159 39,210 36,857 37,863 39,521
Selected Operating Data:
Interest income $ 15,381 $ 15,047 $ 16,507 $ 15,780 $ 15,146
Interest expense 2,449 2,395 2,415 2,393 2,347
Net Interest Income 12,932 12,652 14,092 13,387 12,799
Provision for allowance for loan losses 256 399 315 215 520
Net interest income after provision for loan losses 12,676 12,253 13,777 13,172 12,279
Noninterest income 3,124 3,538 4,054 2,145 1,978
Noninterest expense 14,555 14,699 13,411 16,905 13,133
Income (loss) before income taxes 1,245 1,092 4,420 (1,588) 1,124
Provision (benefit) for income taxes 308 279 1,250 (519) 293
Net income (loss) $ 937 $ 813 $ 3,170 $ (1,069) $ 831
Performance Ratios (annualized):
Return on average assets 0.20% 0.18% 0.77% -0.25% 0.20%
Return average equity 1.59% 1.33% 5.62% -1.74% 1.32%
Interest rate spread (1) 2.84% 2.89% 3.19% 3.09% 3.12%
Net interest rate margin (2) 3.02% 3.07% 3.37% 3.28% 3.32%
Non-interest expense to average assets 3.17% 3.28% 3.01% 3.89% 3.16%
Efficiency ratio (3) 90.65% 90.71% 73.91% 108.84% 88.87%
Average interest-earning assets to average interest-bearing liabilities 132.30% 132.04% 131.80% 131.75% 131.86%
Asset Quality Ratios:
Allowance for loan losses as a percent of total loans 1.09% 1.11% 1.12% 1.19% 1.25%
Allowance for loan losses as a percent of non-accrual loans 122.20% 124.59% 125.01% 135.35% 133.01%
Net charge-offs to average loans (annualized) 0.02% 0.08% 0.27% 0.06% 0.09%
Non-accrual loans as a percent of total loans 0.89% 0.89% 0.90% 0.88% 0.94%
Non-accrual loans as a percent of total assets 0.78% 0.77% 0.76% 0.75% 0.80%
Per Share Related Data:
Basic earnings (loss) per share $ 0.06 $ 0.05 $ 0.19 $ (0.07) $ 0.05
Diluted earnings (loss) per share $ 0.06 $ 0.05 $ 0.19 $ (0.07) $ 0.05
Dividends declared per share $ 0.03 $ 0.03 $ 0.03 $ 0.03 $ 0.03
Tangible book value $ 13.80 $ 13.76 $ 13.63 $ 13.47 $ 13.88
Common stock shares outstanding 16,763,516 17,644,449 17,714,481 17,986,596 17,880,200
(1) Represents the difference between the weighted-average yield on average interest-earning assets and the weighted-average cost of the interest-bearing liabilities.
(2) Represents net interest income as a percent of average interest-earning assets.
(3) Represents noninterest expense divided by the sum of net interest income and noninterest income.
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) 2013 2013 2012 2012 2012
Capital Ratios:
Equity to total assets at end of period 12.54% 13.50% 13.25% 13.79% 14.70%
Average equity to average assets 12.83% 13.62% 13.68% 14.19% 15.09%
Total capital to risk-weighted assets 17.48% * 18.61% 18.78% 19.15% 20.43%
Tier I capital to risk-weighted assets 16.26% * 17.37% 17.53% 17.90% 19.18%
Tier I capital to total average assets 12.93% * 13.84% 13.88% 14.24% 15.21%
Total equity to total average assets 12.60% 13.56% 13.56% 13.95% 14.90%
* Estimated
Loans and Allowance for Loan Losses:
Real estate
Residential $ 625,345 $ 619,741 $ 620,991 $ 605,794 $ 576,228
Commercial 533,072 504,722 473,788 448,684 423,939
Construction 80,198 66,508 64,362 54,909 48,084
Installment 5,384 5,949 6,719 7,372 8,121
Commercial 199,328 200,610 192,210 196,813 180,653
Collateral 1,801 1,945 2,086 2,161 2,165
Home equity line of credit 144,548 143,992 142,543 134,314 126,377
Demand -- -- 25 25 25
Revolving credit 62 73 65 86 89
Resort 12,425 15,252 31,232 49,760 64,755
Total loans 1,602,163 1,558,792 1,534,021 1,499,918 1,430,436
Less:
Allowance for loan losses (17,505) (17,332) (17,229) (17,920) (17,927)
Net deferred loan costs 3,617 3,227 3,378 3,277 3,223
Loans, net $ 1,588,275 $ 1,544,687 $ 1,520,170 $ 1,485,275 $ 1,415,732
Deposits:
Noninterest-bearing demand deposits $ 275,781 $ 245,912 $ 247,586 $ 221,464 $ 223,820
Interest-bearing
NOW accounts 280,462 234,450 227,205 220,490 181,464
Money market 349,621 352,759 317,030 285,540 272,287
Savings accounts 191,688 186,171 179,290 171,516 178,378
Time deposits 354,767 356,800 359,344 358,977 362,794
Total interest-bearing deposits 1,176,538 1,130,180 1,082,869 1,036,523 994,923
Total deposits $ 1,452,319 $ 1,376,092 $ 1,330,455 $ 1,257,987 $ 1,218,743
First Connecticut Bancorp, Inc.
Consolidated Statements of Condition
June 30, March 31, December 31,
(Dollars in thousands) 2013 2013 2012
Assets
Cash and cash equivalents $ 36,650 $ 34,946 $ 50,641
Securities held-to-maturity, at amortized cost 3,003 3,003 3,006
Securities available-for-sale, at fair value 112,801 108,787 138,241
Loans held for sale 4,801 6,601 9,626
Loans, net 1,588,275 1,544,687 1,520,170
Premises and equipment, net 20,767 20,764 19,967
Federal Home Loan Bank of Boston stock, at cost 8,383 8,383 8,939
Accrued income receivable 4,403 4,346 4,415
Bank-owned life insurance 37,952 37,649 37,449
Deferred income taxes 15,918 15,810 15,682
Prepaid expenses and other assets 12,298 14,416 14,810
Total assets $ 1,845,251 $ 1,799,392 $ 1,822,946
Liabilities and Stockholders' Equity
Deposits
Interest-bearing $ 1,176,538 $ 1,130,180 $ 1,082,869
Noninterest-bearing 275,781 245,912 247,586
1,452,319 1,376,092 1,330,455
Federal Home Loan Bank of Boston advances 51,250 76,000 128,000
Repurchase agreement borrowings 21,000 21,000 21,000
Repurchase liabilities 50,262 43,353 54,187
Accrued expenses and other liabilities 39,105 40,078 47,782
Total liabilities 1,613,936 1,556,523 1,581,424
Commitments and contingencies -- -- --
Stockholders' Equity
Common stock 181 181 181
Additional paid-in-capital 174,342 173,584 172,247
Unallocated common stock held by ESOP (14,281) (14,545) (14,806)
Treasury stock, at cost (18,524) (5,713) (4,860)
Retained earnings 95,605 95,172 94,890
Accumulated other comprehensive loss (6,008) (5,810) (6,130)
Total stockholders' equity 231,315 242,869 241,522
Total liabilities and stockholders' equity $ 1,845,251 $ 1,799,392 $ 1,822,946
First Connecticut Bancorp, Inc.
Consolidated Statements of Income
Three Months Ended Six Months Ended
June 30, March 31, June 30, June 30,
(Dollars in thousands, except per share data) 2013 2013 2012 2013 2012
Interest income
Interest and fees on loans
Mortgage $ 11,917 $ 11,468 $ 10,882 $ 23,385 $ 21,992
Other 3,233 3,314 3,859 6,547 7,748
Interest and dividends on investments
United States Government and agency obligations 102 139 249 241 515
Other bonds 59 59 60 118 118
Corporate stocks 64 62 70 126 140
Other interest income 6 5 26 11 60
Total interest income 15,381 15,047 15,146 30,428 30,573
Interest expense
Deposits 1,827 1,705 1,643 3,532 3,398
Interest on borrowed funds 401 469 462 870 943
Interest on repo borrowings 180 171 181 351 361
Interest on repurchase liabilities 41 50 61 91 118
Total interest expense 2,449 2,395 2,347 4,844 4,820
Net interest income 12,932 12,652 12,799 25,584 25,753
Provision for allowance for loan losses 256 399 520 655 850
Net interest income after provision for loan losses 12,676 12,253 12,279 24,929 24,903
Noninterest income
Fees for customer services 1,097 982 900 2,079 1,716
Net gain on sales of investments 36 -- -- 36 --
Net gain on loans sold 1,739 2,030 431 3,769 529
Brokerage and insurance fee income 41 32 32 73 57
Bank owned life insurance income 303 409 321 712 640
Other (92) 85 294 (7) 349
Total noninterest income 3,124 3,538 1,978 6,662 3,291
Noninterest expense
Salaries and employee benefits 8,555 9,034 7,619 17,589 15,043
Occupancy expense 1,126 1,240 1,098 2,366 2,288
Furniture and equipment expense 1,099 1,018 1,112 2,117 2,211
FDIC assessment 311 291 294 602 573
Marketing 610 594 753 1,204 1,359
Other operating expenses 2,854 2,522 2,257 5,376 4,288
Total noninterest expense 14,555 14,699 13,133 29,254 25,762
Income before income taxes 1,245 1,092 1,124 2,337 2,432
Provision for income taxes 308 279 293 587 610
Net income $ 937 $ 813 $ 831 $ 1,750 $ 1,822
Earnings per share:
Basic and Diluted $ 0.06 $ 0.05 $ 0.05 $ 0.11 $ 0.11
Weighted average shares outstanding:
Basic and Diluted 15,774,385 16,476,277 16,686,810 16,122,208 16,735,892
First Connecticut Bancorp, Inc.
Consolidated Average Balances, Yields and Rates (Unaudited)
For The Three Months Ended
June 30, 2013 March 31, 2013 June 30, 2012
Average Balance Interest and Dividends Yield/Cost Average Balance Interest and Dividends Yield/Cost Average Balance Interest and Dividends Yield/Cost
(Dollars in thousands)
Interest-earning assets:
Loans, net $ 1,577,565 $ 15,150 3.85% $ 1,522,812 $ 14,782 3.94% $ 1,360,401 $ 14,741 4.35%
Securities 115,280 216 0.75% 126,585 252 0.81% 131,069 370 1.13%
Federal Home Loan Bank of Boston stock 8,383 9 0.43% 8,809 8 0.37% 7,137 9 0.51%
Federal funds and other earning assets 14,317 6 0.17% 11,015 5 0.18% 48,049 26 0.22%
Total interest-earning assets 1,715,545 15,381 3.60% 1,669,221 15,047 3.66% 1,546,656 15,146 3.93%
Noninterest-earning assets 120,623 121,634 117,726
Total assets $ 1,836,168 $ 1,790,855 $ 1,664,382
Interest-bearing liabilities:
NOW accounts $ 266,905 $ 151 0.23% $ 233,891 $ 135 0.23% $ 204,611 $ 83 0.16%
Money market 354,914 725 0.82% 336,400 586 0.71% 270,157 488 0.72%
Savings accounts 184,307 73 0.16% 180,440 85 0.19% 174,321 64 0.15%
Certificates of deposit 354,381 878 0.99% 356,422 899 1.02% 368,006 1,008 1.10%
Total interest-bearing deposits 1,160,507 1,827 0.63% 1,107,153 1,705 0.62% 1,017,095 1,643 0.65%
Advances from the Federal Home Loan Bank 68,660 401 2.34% 80,468 469 2.36% 62,869 462 2.95%
Repurchase agreement borrowings 21,000 180 3.44% 21,000 171 3.30% 21,000 181 3.46%
Repurchase liabilities 46,539 41 0.35% 55,573 50 0.36% 63,166 61 0.39%
Total interest-bearing liabilities 1,296,706 2,449 0.76% 1,264,194 2,395 0.77% 1,164,130 2,347 0.81%
Noninterest-bearing deposits 257,670 240,105 210,874
Other noninterest-bearing liabilities 46,292 42,651 38,273
Total liabilities 1,600,668 1,546,950 1,413,277
Stockholders' equity 235,500 243,905 251,105
Total liabilities and stockholders' equity $ 1,836,168 $ 1,790,855 $ 1,664,382
Net interest income $ 12,932 $ 12,652 $ 12,799
Net interest rate spread (1) 2.84% 2.89% 3.12%
Net interest-earning assets (2) $ 418,839 $ 405,027 $ 382,526
Net interest margin (3) 3.02% 3.07% 3.32%
Average interest-earning assets to average interest-bearing liabilities 132.30% 132.04% 132.86%
(1) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(2) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(3) Net interest margin represents 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,
2013 2012
Average Balance Interest and Dividends Yield/Cost Average Balance Interest and Dividends Yield/Cost
(Dollars in thousands)
Interest-earning assets:
Loans, net $ 1,550,340 29,932 3.89% $ 1,338,093 29,740 4.46%
Securities 120,901 468 0.78% 131,695 755 1.15%
Federal Home Loan Bank of Boston stock 8,595 17 0.40% 7,253 18 0.50%
Federal funds and other earning assets 12,675 11 0.18% 57,381 60 0.21%
Total interest-earning assets 1,692,511 30,428 3.63% 1,534,422 30,573 4.00%
Noninterest-earning assets 120,870 117,171
Total assets $ 1,813,381 $ 1,651,593
Interest-bearing liabilities:
NOW accounts $ 250,489 286 0.23% $ 204,771 172 0.17%
Money market 345,486 1,311 0.77% 266,238 1,032 0.78%
Savings accounts 177,825 158 0.18% 167,973 125 0.15%
Certificates of deposit 355,396 1,777 1.01% 374,996 2,069 1.11%
Total interest-bearing deposits 1,129,196 3,532 0.63% 1,013,978 3,398 0.67%
Federal Home Loan Bank of Boston advances 74,531 870 2.35% 62,955 943 3.00%
Repurchase agreement borrowings 21,000 351 3.37% 21,000 361 3.45%
Repurchase liabilities 51,031 91 0.36% 60,617 118 0.39%
Total interest-bearing liabilities 1,275,758 4,844 0.77% 1,158,550 4,820 0.83%
Noninterest-bearing deposits 248,804 203,033
Other noninterest-bearing liabilities 49,041 38,603
Total liabilities 1,573,603 1,400,186
Stockholders' equity 239,778 251,407
Total liabilities and stockholders' equity $ 1,813,381 $ 1,651,593
Net interest income 25,584 25,753
Net interest rate spread (1) 2.86% 3.17%
Net interest-earning assets (2) $ 416,753 $ 375,872
Net interest margin (3) 3.05% 3.37%
Average interest-earning assets to average interest-bearing liabilities 132.67% 132.44%
(1) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(2) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(3) Net interest margin represents net interest income divided by average total interest-earning assets.
First Connecticut Bancorp, Inc.
Reconciliation of Non-GAAP Financial Measures (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) 2013 2013 2012 2012 2012
Net Income (loss) $ 937 $ 813 $ 3,170 $ (1,069) $ 831
Adjustments:
Less: Prepayment penalty fees (20) (127) (771) (11) --
Less: Bank-owned life insurance proceeds -- (108) (249) -- --
Less: Pension prior service cost (1) -- -- (1,208) -- --
Less: Post retirement service cost (1) -- -- (279) -- --
Plus: Accelerated vesting of stock compensation (2) -- 633 -- 3,047 --
Total core adjustments before taxes (20) 398 (2,507) 3,036 --
Tax benefit (provision) - 34% rate 7 (135) 852 (1,032) --
Total core adjustments after taxes (13) 263 (1,655) 2,004 --
Total core net income (loss) $ 924 $ 1,076 $ 1,515 $ 935 $ 831
Total net interest income $ 12,932 $ 12,652 $ 14,092 $ 13,387 $ 12,799
Less: Prepayment penalty fees (20) (127) (771) (11) --
Total core net interest income $ 12,912 $ 12,525 $ 13,321 $ 13,376 $ 12,799
Total noninterest income $ 3,124 $ 3,538 $ 4,054 $ 2,145 $ 1,978
Less: Bank-owned life insurance proceeds -- (108) (249) -- --
Total core noninterest income $ 3,124 $ 3,430 $ 3,805 $ 2,145 $ 1,978
Total noninterest expense $ 14,555 $ 14,699 $ 13,411 $ 16,905 $ 13,133
Plus: Pension prior service cost (1) -- -- 1,208 -- --
Plus: Post retirement service cost (1) -- -- 279 -- --
Plus: Loss on sale of non-strategic properties -- -- -- 394 --
Less: Accelerated vesting of stock compensation (2) -- (633) -- (3,047) --
Total core noninterest expense $ 14,555 $ 14,066 $ 14,898 $ 14,252 $ 13,133
Core earnings per common share, diluted $ 0.06 $ 0.07 $ 0.09 $ 0.06 $ 0.05
Core return on assets (annualized) 0.20% 0.24% 0.34% 0.22% 0.20%
Core return on equity (annualized) 1.57% 1.76% 2.45% 1.52% 1.32%
Efficiency ratio (3) 90.76% 87.97% 87.03% 91.82% 89.03%
(1) Represents recognizing the unrecognized prior service cost as a result of the freeze of the Company's non-contributory defined benefit and other post-retirement plans.
(2) Represents the passing of a key executive in the first quarter of 2013 and 20% vesting of the 2012 Stock Incentive Plan in the third quarter of 2012.
(3) Represents core noninterest expense divided by the sum of core net interest income and core noninterest income.

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 farmingtonbankct.com

Source:First Connecticut Bancorp, Inc.