Form 8-K First Connecticut Bancor For: Jul 22

 

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First Connecticut Bancorp, Inc. reports second quarter 2015 earnings of $0.23 earnings per share

FARMINGTON, Conn., July 22, 2015 – First Connecticut Bancorp, Inc. (the "Company") (NASDAQ: FBNK), the holding company for Farmington Bank (the "Bank"), reported net income of $3.5 million, or $0.23 diluted earnings per share for the quarter ended June 30, 2015 compared to net income of $2.2 million, or $0.14 diluted earnings per share for the quarter ended June 30, 2014.

Net income on a core earnings basis was $2.8 million, or $0.19 diluted core earnings per share for the quarter ended June 30, 2015.  Core earnings exclude non-recurring items.  The significant non-recurring items during the quarter ended June 30, 2015 were a $1.3 million gain on sale of investments related to the sale of a trust preferred security and $258,000 in stock compensation costs related to two directors retiring during the quarter.

"Our positive results reflect the impact of our significant organic growth strategy and ongoing focus on enhancing tangible book value and earnings per share. Over the past several quarters our double digit loan growth has produced a diversified portfolio with flexibility to make future structural changes and one that remains asset sensitive in a changing interest rate environment" stated John J. Patrick Jr., First Connecticut Bancorp's Chairman, President and CEO.

Financial Highlights

·	Net interest income increased $724,000 to $17.1 million in the second quarter of 2015 compared to the linked quarter and increased $1.5 million or 10% compared to the second quarter of 2014.

·	Strong organic loan growth continued during the quarter as total loans increased $81.6 million to $2.3 billion at June 30, 2015 and increased $338.8 million or 17% from a year ago.

·	Overall deposits remained flat at $1.9 billion in the second quarter of 2015 compared to the linked quarter and increased $247.3 million or 15% from a year ago.

·	Checking accounts grew by 3.3% or 1,517 net new accounts in the second quarter of 2015 and by 12.1% or 5,169 net new accounts from a year ago.

·	Noninterest expense to average assets was 2.43% in the second quarter of 2015 compared to 2.38% in the linked quarter and 2.60% in the second quarter of 2014.

·	Tangible book value per share is $15.01 compared to $14.82 on a linked quarter basis and $14.39 at June 30, 2014.

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Asset quality improved as loan delinquencies 30 days and greater decreased to 0.58% of total loans at June 30, 2015 compared to 0.64% at March 31, 2015 and 0.78% at June 30, 2014.  Non-accrual loans represented 0.57% of total loans compared to 0.64% of total loans on a linked quarter basis and 0.75% of total loans at June 30, 2014.

·	The allowance for loan losses represented 0.86% of total loans at June 30, 2015 compared to 0.87% at March 31, 2015 and 0.92% at June 30, 2014.

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·	The Company paid a cash dividend of $0.05 per share on June 11, 2015. This marks the fifteenth consecutive quarter the Company has paid a dividend since it became a public company on June 29, 2011.

Second quarter 2015 compared with first quarter 2015

Net interest income

·	Net interest income increased $724,000 to $17.1 million in the second quarter of 2015 compared to the linked quarter due primarily to a $73.6 million increase in the average net loan balance and a $92,000 decrease in interest expense.

·	Net interest margin increased 3 basis points to 2.86% in the second quarter of 2015 compared to 2.83% in the linked quarter due to a decrease in the cost of interest-bearing liabilities.

·	The cost of interest-bearing liabilities decreased 4 basis points to 64 basis points in the second quarter of 2015 compared to 68 basis points in the linked quarter primarily due to expiring money market promotions.

Provision for loan losses

·	Provision for loan losses was $663,000 for the second quarter of 2015 compared to $615,000 for the linked quarter.

·	Net charge-offs in the quarter were $314,000 or 0.06% to average loans (annualized) compared to $343,000 or 0.06% to average loans (annualized) in the linked quarter.

·	The allowance for loan losses represented 0.86% of total loans at June 30, 2015 compared to 0.87% at March 31, 2015.

Noninterest income

·	Total noninterest income increased $1.4 million to $4.1 million in the second quarter of 2015 compared to the linked quarter primarily due to a $977,000 increase in gain on sale of investments and a $352,000 increase in other noninterest income.

·	Gain on sale of investments was $1.3 million in the second quarter of 2015 due to the sale of a trust preferred security.

·	Other income increased $352,000 to $528,000 in the second quarter of 2015 compared to the linked quarter primarily due to a $485,000 increase in swap fees offset by a decrease in mortgage banking derivatives income.

Noninterest expense

·	Noninterest expense increased $660,000 in the second quarter of 2015 to $15.6 million compared to the linked quarter primarily due to a $245,000 increase in salaries and employee benefits and other operating expenses.

·	Other operating expenses increased $354,000 primarily due to $258,000 in non-recurring stock compensation costs related to two directors retiring during the quarter and a $149,000 loss on a credit sharing arrangement on a sold loan.

Income tax expense

·	Income tax expense was $1.4 million in the second quarter of 2015 compared to $976,000 in the linked quarter.  The increase in income tax expense in the second quarter was primarily due to a $1.4 million increase in income before taxes.

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Second quarter 2015 compared with second quarter 2014

Net interest income

·	Net interest income increased $1.5 million to $17.1 million in the second quarter of 2015 compared to the prior year quarter primarily due to a $333.5 million increase in the average net loan balance offset by a $775,000 increase in interest expense.

·	Net interest margin decreased to 2.86% in the second quarter of 2015 compared to 3.02% in the second quarter of 2014 primarily due to a 14 basis point decrease in the yield on loans and a 7 basis point increase in the cost of interest-bearing liabilities.

·	The cost of interest-bearing liabilities increased to 64 basis points in the second quarter of 2015 compared to 57 basis points in the prior year quarter primarily due to certificate of deposit promotions and entering the brokered deposit market.

Provision for loan losses

·	Provision for loan losses was $663,000 for the second quarter of 2015 compared to $410,000 for the prior year quarter.

·	Net charge-offs in the quarter were $314,000 or 0.06% to average loans (annualized) compared to $129,000 or 0.03% to average loans (annualized) in the prior year quarter.

·	The allowance for loan losses represented 0.86% of total loans at June 30, 2015 compared to 0.92% at June 30, 2014.

Noninterest income

·	Total noninterest income increased $2.0 million to $4.1 million in the second quarter of 2015 compared to the prior year quarter due to an $183,000 increase in fees for customer services, a $1.3 million gain on sale of investments and a $485,000 increase in swap fees.

Noninterest expense

·	Noninterest expense increased $1.3 million in the second quarter of 2015 to $15.6 million compared to the prior year quarter primarily due to an increase in salaries and employee benefits and other operating expenses.

·	Salaries and employee benefits increased $397,000 primarily due to costs associated with our expansion into western Massachusetts and growth driven staff increases in our compliance areas.

·	Other operating expenses increased $806,000 primarily due to $258,000 in non-recurring stock compensation costs related to two directors retiring during the quarter, $149,000 loss on a credit sharing arrangement on a sold loan and a general increase in other costs to support the Bank's operations.

Income tax expense

·	Income tax expense was $1.4 million in the second quarter of 2015 compared to $776,000 in the prior year quarter.  The increase in income tax expense in the second quarter was primarily due to a $1.9 million increase in income before taxes.

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June 30, 2015 compared to June 30, 2014

Financial Condition

·	Total assets increased $358.5 million or 16% at June 30, 2015 to $2.6 billion compared to $2.3 billion at June 30, 2014, largely reflecting an increase in loans.

·	Our investment portfolio totaled $178.2 million at June 30, 2015 compared to $173.5 million at June 30, 2014, an increase of $4.7 million.

·	Net loans increased $337.9 million at June 30, 2015 to $2.3 billion compared to $1.9 billion at June 30, 2014 due to our continued focus on commercial and residential lending.

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Deposits increased $247.3 million at June 30, 2015 to $1.9 billion compared to $1.6 billion at June 30, 2014 primarily due to increases in municipal deposits, demand deposits and time deposits accounts as we continue to develop and grow relationships in the geographical areas we serve.  We entered the brokered deposit market during the quarter with balances totaling $52.2 million at June 30, 2015.

·	Federal Home Loan Bank of Boston advances increased $109.7 million to $400.7 million at June 30, 2015 compared to $291.0 million at June 30, 2014.  Advances were used to support loan and securities growth.

Asset Quality

·	At June 30, 2015, the allowance for loan losses represented 0.86% of total loans and 150.94% of non-accrual loans, compared to 0.92% of total loans and 122.25% of non-accrual loans at June 30, 2014.

·	Loan delinquencies 30 days and greater decreased to 0.58% of total loans at June 30, 2015 compared to 0.78% of total loans at June 30, 2014.

·	Non-accrual loans represented 0.57% of total loans at June 30, 2015 compared to 0.75% of total loans at June 30, 2014.

·	Net charge-offs in the quarter were $314,000 or 0.06% to average loans (annualized) compared to $129,000 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 13.11% at June 30, 2015.

·	Tangible book value per share was $15.01 compared to $14.82 on a linked quarter basis and $14.39 at June 30, 2014.

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During the second quarter of 2015, the Company repurchased 115,117 shares of common stock at an average price per share of $14.81 at a total cost of $1.7 million.  Repurchased shares are held as treasury stock and will be available for general corporate purposes.  The Company has 780,334 shares remaining to repurchase at June 30, 2015 from prior regulatory approval.

·	At June 30, 2015, 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.

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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 22 branch locations throughout central Connecticut, offering commercial and residential lending as well as wealth management services in Connecticut and western Massachusetts. Established in 1851, Farmington Bank is a diversified consumer and commercial bank with an ongoing commitment to contribute to the betterment of the communities in our region. For more information regarding the Bank's products and services and for First Connecticut Bancorp, Inc. investor relations information, please visit www.farmingtonbankct.com.

Conference Call

First Connecticut will host a conference call on Thursday, July 23, 2015 at 11:00am Eastern Time to discuss second quarter results.  Those wishing to participate in the call may dial-in to the call at 1-888-336-7151.  The Canada dial-in number is 1-855-669-9657 and the international dial-in number is 1-412-902-4177.  A webcast of the call will be available on the Investor Relations Section of the Farmington Bank website for an extended period of time.

Forward Looking Statements

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

Non-GAAP Financial Measures

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

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