FORM 10-Q |
x | Quarterly Report- Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934 |
o | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
First Connecticut Bancorp, Inc. |
(Exact name of registrant as specified in its charter) |
Maryland | 45-1496206 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | |
One Farm Glen Boulevard, Farmington, CT | 06032 | |
(Address of Principal Executive Offices) | (Zip Code) |
Large accelerated filer | o | Accelerated filer | x | |
Non-accelerated filer | o | Smaller reporting company | o |
First Connecticut Bancorp, Inc.
Page | |||
Part I. Financial Information | |||
Item 1. | Consolidated Financial Statements | ||
Consolidated Statements of Financial Condition at June 30, 2014 (unaudited) and December 31, 2013 | 1 | ||
Consolidated Statements of Income for the three and six months ended June 30, 2014 and 2013 (unaudited) | 2 | ||
Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2014 and 2013 (unaudited) | 3 | ||
Consolidated Statement of Stockholders’ Equity for the six months ended June 30, 2014 (unaudited) | 4 | ||
Consolidated Statements of Cash Flows for the six months ended June 30, 2014 and 2013 (unaudited) | 5 | ||
Notes to Unaudited Consolidated Financial Statements | 6 | ||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 49 | |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 65 | |
Item 4. | Controls and Procedures | 66 | |
Part II. Other Information | |||
Item 1. | Legal Proceedings | 66 | |
Item1A. | Risk Factors | 66 | |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 66 | |
Item 3. | Defaults upon Senior Securities | 66 | |
Item 4. | Mine Safety Disclosure | 67 | |
Item 5. | Other Information | 67 | |
Item 6. | Exhibits | 67 | |
Signatures | 69 | ||
Exhibit 31.1 | |||
Exhibit 31.2 | |||
Exhibit 32.1 | |||
Exhibit 32.2 |
First Connecticut Bancorp, Inc. Consolidated Statements of Financial Condition (Unaudited) |
June 30, | December 31, | |||||||
2014 | 2013 | |||||||
(Dollars in thousands, except share and per share data) | ||||||||
Assets | ||||||||
Cash and cash equivalents | $ | 50,778 | $ | 38,799 | ||||
Securities held-to-maturity, at amortized cost | 12,715 | 12,983 | ||||||
Securities available-for-sale, at fair value | 160,784 | 150,886 | ||||||
Loans held for sale | 4,576 | 3,186 | ||||||
Loans, net | 1,930,502 | 1,800,987 | ||||||
Premises and equipment, net | 20,072 | 20,619 | ||||||
Federal Home Loan Bank of Boston stock, at cost | 17,724 | 13,136 | ||||||
Accrued income receivable | 5,133 | 4,917 | ||||||
Bank-owned life insurance | 39,120 | 38,556 | ||||||
Deferred income taxes | 14,756 | 14,884 | ||||||
Prepaid expenses and other assets | 11,549 | 11,075 | ||||||
Total assets | $ | 2,267,709 | $ | 2,110,028 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Deposits | ||||||||
Interest-bearing | $ | 1,314,863 | $ | 1,205,042 | ||||
Noninterest-bearing | 315,916 | 308,459 | ||||||
1,630,779 | 1,513,501 | |||||||
Federal Home Loan Bank of Boston advances | 291,000 | 259,000 | ||||||
Repurchase agreement borrowings | 21,000 | 21,000 | ||||||
Repurchase liabilities | 55,326 | 50,816 | ||||||
Accrued expenses and other liabilities | 38,335 | 33,502 | ||||||
Total liabilities | 2,036,440 | 1,877,819 | ||||||
Stockholders’ Equity | ||||||||
Common stock, $0.01 par value, 30,000,000 shares authorized; 18,035,335 shares issued and 16,072,637 shares outstanding at June 30, 2014 and 18,035,335 shares issued and 16,457,642 shares outstanding at December 31, 2013 | 181 | 181 | ||||||
Additional paid-in-capital | 177,431 | 175,766 | ||||||
Unallocated common stock held by ESOP | (13,218 | ) | (13,747 | ) | ||||
Treasury stock, at cost (1,962,698 shares at June 30, 2014 and 1,577,693 shares at December 31, 2013) | (28,577 | ) | (22,599 | ) | ||||
Retained earnings | 99,386 | 96,832 | ||||||
Accumulated other comprehensive loss | (3,934 | ) | (4,224 | ) | ||||
Total stockholders’ equity | 231,269 | 232,209 | ||||||
Total liabilities and stockholders’ equity | $ | 2,267,709 | $ | 2,110,028 |
1 |
First Connecticut Bancorp, Inc. Consolidated Statements of Income (Unaudited) |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
(Dollars in thousands, except share and per share data) | ||||||||||||||||
Interest income | ||||||||||||||||
Interest and fees on loans | ||||||||||||||||
Mortgage | $ | 13,875 | $ | 11,872 | $ | 27,303 | $ | 23,340 | ||||||||
Other | 3,573 | 3,233 | 6,781 | 6,547 | ||||||||||||
Interest and dividends on investments | ||||||||||||||||
United States Government and agency obligations | 218 | 102 | 407 | 241 | ||||||||||||
Other bonds | 81 | 59 | 139 | 118 | ||||||||||||
Corporate stocks | 105 | 64 | 198 | 126 | ||||||||||||
Other interest income | 2 | 6 | 6 | 11 | ||||||||||||
Total interest income | 17,854 | 15,336 | 34,834 | 30,383 | ||||||||||||
Interest expense | ||||||||||||||||
Deposits | 1,711 | 1,827 | 3,405 | 3,532 | ||||||||||||
Federal Home Loan Bank of Boston advances | 368 | 401 | 687 | 870 | ||||||||||||
Repurchase agreement borrowings | 179 | 180 | 356 | 351 | ||||||||||||
Repurchase liabilities | 32 | 41 | 72 | 91 | ||||||||||||
Total interest expense | 2,290 | 2,449 | 4,520 | 4,844 | ||||||||||||
Net interest income | 15,564 | 12,887 | 30,314 | 25,539 | ||||||||||||
Provision for loan losses | 410 | 256 | 915 | 655 | ||||||||||||
Net interest income after provision for loan losses | 15,154 | 12,631 | 29,399 | 24,884 | ||||||||||||
Noninterest income | ||||||||||||||||
Fees for customer services | 1,317 | 1,097 | 2,508 | 2,079 | ||||||||||||
Gain on sales of investments | - | 36 | - | 36 | ||||||||||||
Net gain on loans sold | 317 | 1,589 | 439 | 3,619 | ||||||||||||
Brokerage and insurance fee income | 49 | 41 | 93 | 73 | ||||||||||||
Bank owned life insurance income | 281 | 303 | 563 | 712 | ||||||||||||
Other | 102 | (67 | ) | 225 | 128 | |||||||||||
Total noninterest income | 2,066 | 2,999 | 3,828 | 6,647 | ||||||||||||
Noninterest expense | ||||||||||||||||
Salaries and employee benefits | 8,638 | 8,555 | 16,926 | 17,589 | ||||||||||||
Occupancy expense | 1,209 | 1,126 | 2,558 | 2,366 | ||||||||||||
Furniture and equipment expense | 1,106 | 1,099 | 2,124 | 2,117 | ||||||||||||
FDIC assessment | 321 | 311 | 649 | 602 | ||||||||||||
Marketing | 509 | 610 | 887 | 1,204 | ||||||||||||
Other operating expenses | 2,471 | 2,854 | 5,070 | 5,376 | ||||||||||||
Total noninterest expense | 14,254 | 14,555 | 28,214 | 29,254 | ||||||||||||
Income before income taxes | 2,966 | 1,075 | 5,013 | 2,277 | ||||||||||||
Income tax expense | 776 | 256 | 1,331 | 572 | ||||||||||||
Net income | $ | 2,190 | $ | 819 | $ | 3,682 | $ | 1,705 | ||||||||
Net earnings per share (See Note 3): | ||||||||||||||||
Basic | $ | 0.15 | $ | 0.05 | $ | 0.24 | $ | 0.11 | ||||||||
Diluted | 0.14 | 0.05 | 0.24 | 0.11 | ||||||||||||
Dividends per share | 0.04 | 0.03 | 0.07 | 0.06 |
2 |
First Connecticut Bancorp, Inc. Consolidated Statements of Comprehensive Income (Unaudited) |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Net income | $ | 2,190 | $ | 819 | $ | 3,682 | $ | 1,705 | ||||||||
Other comprehensive income (loss), before tax | ||||||||||||||||
Unrealized gains (losses) on securities: | ||||||||||||||||
Unrealized holding gains (losses) arising during the period | 161 | (482 | ) | 297 | (134 | ) | ||||||||||
Less: reclassification adjustment for gains included in net income | - | 36 | - | 36 | ||||||||||||
Net change in unrealized gains (losses) | 161 | (446 | ) | 297 | (98 | ) | ||||||||||
Change related to pension and other postretirement benefit plans | 86 | 148 | 142 | 283 | ||||||||||||
Other comprehensive income (loss), before tax | 247 | (298 | ) | 439 | 185 | |||||||||||
Income tax expense (benefit) | 84 | (101 | ) | 149 | 63 | |||||||||||
Other comprehensive income (loss), net of tax | 163 | (197 | ) | 290 | 122 | |||||||||||
Comprehensive income | $ | 2,353 | $ | 622 | $ | 3,972 | $ | 1,827 |
The accompanying notes are an integral part of these consolidated financial statements.
3 |
First Connecticut Bancorp, Inc. Consolidated Statement of Changes in Stockholders’ Equity (Unaudited) |
Unallocated | Accumulated | |||||||||||||||||||||||||||||||
Common Stock | Additional | Common | Other | Total | ||||||||||||||||||||||||||||
Shares | Paid in | Shares Held | Treasury | Retained | Comprehensive | Stockholders’ | ||||||||||||||||||||||||||
Outstanding | Amount | Capital | by ESOP | Stock | Earnings | Income (Loss) | Equity | |||||||||||||||||||||||||
(Dollars in thousands, except share data) | ||||||||||||||||||||||||||||||||
Balance at December 31, 2013 | 16,457,642 | 181 | 175,766 | (13,747 | ) | (22,599 | ) | 96,832 | (4,224 | ) | 232,209 | |||||||||||||||||||||
ESOP shares released and committed to be released | - | - | 212 | 529 | - | - | - | 741 | ||||||||||||||||||||||||
Cash dividend paid ($0.07 per common share) | - | - | - | - | - | (1,128 | ) | - | (1,128 | ) | ||||||||||||||||||||||
Treasury stock acquired | (385,005 | ) | - | - | - | (5,978 | ) | - | - | (5,978 | ) | |||||||||||||||||||||
Tax benefits from stock-based compensation | - | - | 9 | - | - | - | - | 9 | ||||||||||||||||||||||||
Share based compensation expense | - | - | 1,444 | - | - | - | - | 1,444 | ||||||||||||||||||||||||
Net income | - | - | - | - | - | 3,682 | - | 3,682 | ||||||||||||||||||||||||
Other comprehensive income | - | - | - | - | - | - | 290 | 290 | ||||||||||||||||||||||||
Balance at June 30, 2014 | 16,072,637 | $ | 181 | $ | 177,431 | $ | (13,218 | ) | $ | (28,577 | ) | $ | 99,386 | $ | (3,934 | ) | $ | 231,269 |
4 |
First Connecticut Bancorp, Inc. Consolidated Statements of Cash Flows (Unaudited) |
Six Months Ended June 30, | ||||||||
(Dollars in thousands) | 2014 | 2013 | ||||||
Cash flows from operating activities | ||||||||
Net income | $ | 3,682 | $ | 1,705 | ||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||
Provision for loan losses | 915 | 655 | ||||||
Provision for off-balance sheet commitments | 3 | 25 | ||||||
Depreciation and amortization | 1,578 | 1,465 | ||||||
Provision for foreclosed real estate | (5 | ) | - | |||||
Amortization of ESOP expense | 741 | 678 | ||||||
Share based compensation expense | 1,444 | 2,101 | ||||||
Gain on sale of investments | - | (36 | ) | |||||
Loans originated for sale | (30,308 | ) | (119,819 | ) | ||||
Proceeds from the sale of loans held for sale | 29,357 | 128,160 | ||||||
Gain on fair value adjustment for mortgage banking derivatives | (2 | ) | (4 | ) | ||||
Impairment losses on alternative investments | 41 | 103 | ||||||
(Gain) loss on foreclosed real estate | (2 | ) | 84 | |||||
Loss on sale of premises and equipment | - | 2 | ||||||
Net gain on loans sold | (439 | ) | (3,619 | ) | ||||
Accretion and amortization of investment security discounts and premiums, net | (40 | ) | (37 | ) | ||||
Amortization and accretion of loan fees and discounts, net | (371 | ) | 1,342 | |||||
(Increase) decrease in accrued income receivable | (216 | ) | 12 | |||||
Deferred income tax | (3 | ) | (248 | ) | ||||
Increase in cash surrender value of bank-owned life insurance | (564 | ) | (603 | ) | ||||
(Increase) decrease in prepaid expenses and other assets | (373 | ) | 2,259 | |||||
Increase (decrease) in accrued expenses and other liabilities | 4,855 | (8,391 | ) | |||||
Net cash provided by operating activities | 10,293 | 5,834 | ||||||
Cash flow from investing activities | ||||||||
Maturities of securities held-to-maturity | 5,268 | 3 | ||||||
Maturities, calls and principal payments of securities available-for-sale | 178,511 | 151,469 | ||||||
Purchases of securities held-to-maturity | (5,000 | ) | - | |||||
Purchases of securities available-for-sale | (188,072 | ) | (126,059 | ) | ||||
Loan originations, net of principal repayments | (130,494 | ) | (70,189 | ) | ||||
(Purchases) redemption of Federal Home Loan Bank of Boston stock, net | (4,588 | ) | 556 | �� | ||||
Proceeds from bank-owned life insurance | - | 100 | ||||||
Proceeds from sale of foreclosed real estate | 401 | 233 | ||||||
Purchases of premises and equipment | (1,031 | ) | (2,267 | ) | ||||
Net cash used in investing activities | (145,005 | ) | (46,154 | ) | ||||
Cash flows from financing activities | ||||||||
Increase (decrease) in Federal Home Loan Bank of Boston advances | 32,000 | (76,750 | ) | |||||
Net increase in demand deposits, NOW accounts, savings accounts and money market accounts | 123,137 | 126,441 | ||||||
Net decrease in certificates of deposit | (5,859 | ) | (4,577 | ) | ||||
Net increase (decrease) in repurchase liabilities | 4,510 | (3,925 | ) | |||||
Excess tax benefits from stock-based compensation | 9 | - | ||||||
Cancellation of shares for tax withholding | - | (161 | ) | |||||
Repurchase of common stock | (5,978 | ) | (13,664 | ) | ||||
Cash dividend paid | (1,128 | ) | (1,035 | ) | ||||
Net cash provided by financing activities | 146,691 | 26,329 | ||||||
Net increase (decrease) in cash and cash equivalents | 11,979 | (13,991 | ) | |||||
Cash and cash equivalents at beginning of period | 38,799 | 50,641 | ||||||
Cash and cash equivalents at end of period | $ | 50,778 | $ | 36,650 | ||||
Supplemental disclosure of cash flow information | ||||||||
Cash paid for interest | $ | 4,526 | $ | 4,662 | ||||
Cash paid for income taxes | 2 | 4,282 | ||||||
Loans transferred to other real estate owned | 434 | 282 |
5 |
First Connecticut Bancorp, Inc. Notes to Consolidated Financial Statements (Unaudited) |
1. | Summary of Significant Accounting Policies |
6 |
First Connecticut Bancorp, Inc. Notes to Consolidated Financial Statements (Unaudited) |
7 |
First Connecticut Bancorp, Inc. Notes to Consolidated Financial Statements (Unaudited) |
8 |
First Connecticut Bancorp, Inc. Notes to Consolidated Financial Statements (Unaudited) |
9 |
First Connecticut Bancorp, Inc. Notes to Consolidated Financial Statements (Unaudited) |
10 |
First Connecticut Bancorp, Inc. Notes to Consolidated Financial Statements (Unaudited) |
11 |
First Connecticut Bancorp, Inc. Notes to Consolidated Financial Statements (Unaudited) |
12 |
First Connecticut Bancorp, Inc. |
Notes to Consolidated Financial Statements (Unaudited) |
2. | Restrictions on Cash and Due from Banks |
3. | Earnings Per Share |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
(Dollars in thousands, except per share data): | |||||||||||||||||
Net income | $ | 2,190 | $ | 819 | $ | 3,682 | $ | 1,705 | |||||||||
Less: | Dividends to participating shares | (16 | ) | (16 | ) | (28 | ) | (32 | ) | ||||||||
Income allocated to participating shares | (41 | ) | (10 | ) | (68 | ) | (21 | ) | |||||||||
Net income allocated to common stockholders | $ | 2,133 | $ | 793 | $ | 3,586 | $ | 1,652 | |||||||||
Weighted-average shares outstanding | 18,035,335 | 18,064,539 | 18,035,335 | 18,070,652 | |||||||||||||
Less: | Average unallocated ESOP shares | (1,112,637 | ) | (1,205,641 | ) | (1,124,420 | ) | (1,219,735 | ) | ||||||||
Average treasury stock | (1,920,957 | ) | (1,084,513 | ) | (1,800,137 | ) | (728,709 | ) | |||||||||
Average unvested restricted stock | (400,325 | ) | (533,767 | ) | (400,325 | ) | (534,828 | ) | |||||||||
Weighted-average basic shares outstanding | 14,601,416 | 15,240,618 | 14,710,453 | 15,587,380 | |||||||||||||
Plus: | Average dilutive shares | 106,056 | - | 103,113 | - | ||||||||||||
Weighted-average diluted shares outstanding | 14,707,472 | 15,240,618 | 14,813,566 | 15,587,380 | |||||||||||||
Net earnings per share (1): | |||||||||||||||||
Basic | $ | 0.15 | $ | 0.05 | $ | 0.24 | $ | 0.11 | |||||||||
Diluted | $ | 0.14 | $ | 0.05 | $ | 0.24 | $ | 0.11 |
13 |
First Connecticut Bancorp, Inc. |
Notes to Consolidated Financial Statements (Unaudited) |
4. | Investment Securities |
June 30, 2014 | ||||||||||||||||||||||
Recognized in OCI | Not Recognized in OCI | |||||||||||||||||||||
Gross | Gross | Gross | Gross | |||||||||||||||||||
Amortized | Unrealized | Unrealized | Carrying | Unrealized | Unrealized | Fair | ||||||||||||||||
(Dollars in thousands) | Cost | Gains | Losses | Value | Gains | Losses | Value | |||||||||||||||
Available-for-sale | ||||||||||||||||||||||
Debt securities: | ||||||||||||||||||||||
U.S. Treasury obligations | $ | 103,992 | $ | 2 | $ | (3 | ) | $ | 103,991 | $ | - | $ | - | $ | 103,991 | |||||||
U.S. Government agency obligations | 40,024 | 55 | (15 | ) | 40,064 | - | - | 40,064 | ||||||||||||||
Government sponsored residential mortgage-backed securities | 7,712 | 360 | - | 8,072 | - | - | 8,072 | |||||||||||||||
Corporate debt securities | 2,995 | 114 | - | 3,109 | - | - | 3,109 | |||||||||||||||
Preferred equity securities | 2,100 | 3 | (367 | ) | 1,736 | - | - | 1,736 | ||||||||||||||
Marketable equity securities | 108 | 54 | (2 | ) | 160 | - | - | 160 | ||||||||||||||
Mutual funds | 3,773 | - | (121 | ) | 3,652 | - | - | 3,652 | ||||||||||||||
Total securities available-for-sale | $ | 160,704 | $ | 588 | $ | (508 | ) | $ | 160,784 | $ | - | $ | - | $ | 160,784 | |||||||
Held-to-maturity | ||||||||||||||||||||||
U.S. Government agency obligations | $ | 9,715 | $ | - | $ | - | $ | 9,715 | $ | 185 | $ | - | $ | 9,900 | ||||||||
Government sponsored residential mortgage-backed securities | - | - | - | - | - | - | - | |||||||||||||||
Trust preferred debt security | 3,000 | - | - | 3,000 | - | - | 3,000 | |||||||||||||||
Total securities held-to-maturity | $ | 12,715 | $ | - | $ | - | $ | 12,715 | $ | 185 | $ | - | $ | 12,900 | ||||||||
December 31, 2013 | ||||||||||||||||||||||
Recognized in OCI | Not Recognized in OCI | |||||||||||||||||||||
Gross | Gross | Gross | Gross | |||||||||||||||||||
Amortized | Unrealized | Unrealized | Carrying | Unrealized | Unrealized | Fair | ||||||||||||||||
(Dollars in thousands) | Cost | Gains | Losses | Value | Gains | Losses | Value | |||||||||||||||
Available-for-sale | ||||||||||||||||||||||
Debt securities: | ||||||||||||||||||||||
U.S. Treasury obligations | $ | 126,000 | $ | 3 | $ | (3 | ) | $ | 126,000 | $ | - | $ | - | $ | 126,000 | |||||||
U.S. Government agency obligations | 7,006 | - | (84 | ) | 6,922 | - | - | 6,922 | ||||||||||||||
Government sponsored residential mortgage-backed securities | 9,199 | 417 | - | 9,616 | - | - | 9,616 | |||||||||||||||
Corporate debt securities | 2,982 | 122 | - | 3,104 | - | - | 3,104 | |||||||||||||||
Preferred equity securities | 2,100 | - | (531 | ) | 1,569 | - | - | 1,569 | ||||||||||||||
Marketable equity securities | 108 | 42 | (2 | ) | 148 | - | - | 148 | ||||||||||||||
Mutual funds | 3,710 | - | (183 | ) | 3,527 | - | - | 3,527 | ||||||||||||||
Total securities available-for-sale | $ | 151,105 | $ | 584 | $ | (803 | ) | $ | 150,886 | $ | - | $ | - | $ | 150,886 | |||||||
Held-to-maturity | ||||||||||||||||||||||
U.S. Government agency obligations | $ | 5,000 | $ | - | $ | - | $ | 5,000 | $ | - | $ | (70 | ) | $ | 4,930 | |||||||
Government sponsored residential mortgage-backed securities | 4,983 | - | - | 4,983 | - | (27 | ) | 4,956 | ||||||||||||||
Trust preferred debt security | 3,000 | - | - | 3,000 | - | - | 3,000 | |||||||||||||||
Total securities held-to-maturity | $ | 12,983 | $ | - | $ | - | $ | 12,983 | $ | - | $ | (97 | ) | $ | 12,886 |
14 |
First Connecticut Bancorp, Inc. |
Notes to Consolidated Financial Statements (Unaudited) |
June 30, 2014 | ||||||||||||||||||||||||||||
Less than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||||||
Gross | Gross | Gross | ||||||||||||||||||||||||||
Number of | Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | ||||||||||||||||||||||
(Dollars in thousands) | Securities | Value | Loss | Value | Loss | Value | Loss | |||||||||||||||||||||
Available-for-sale: | ||||||||||||||||||||||||||||
U.S. Treasury obligations | 2 | $ | 21,995 | $ | (3 | ) | $ | - | $ | - | $ | 21,995 | $ | (3 | ) | |||||||||||||
U.S. Government agency obligations | 2 | 14,996 | (15 | ) | - | - | 14,996 | (15 | ) | |||||||||||||||||||
Preferred equity securities | 1 | - | - | 1,633 | (367 | ) | 1,633 | (367 | ) | |||||||||||||||||||
Marketable equity securities | 1 | - | - | 5 | (2 | ) | 5 | (2 | ) | |||||||||||||||||||
Mutual funds | 1 | - | - | 3,653 | (121 | ) | 3,653 | (121 | ) | |||||||||||||||||||
7 | 36,991 | (18 | ) | 5,291 | (490 | ) | 42,282 | (508 | ) | |||||||||||||||||||
December 31, 2013 | ||||||||||||||||||||||||||||
Less than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||||||
Gross | Gross | Gross | ||||||||||||||||||||||||||
Number of | Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | ||||||||||||||||||||||
(Dollars in thousands) | Securities | Value | Loss | Value | Loss | Value | Loss | |||||||||||||||||||||
Available-for-sale: | ||||||||||||||||||||||||||||
U.S. Treasury obligations | 6 | $ | 63,994 | $ | (3 | ) | $ | - | $ | - | $ | 63,994 | $ | (3 | ) | |||||||||||||
U.S. Government agency obligations | 1 | 6,923 | (84 | ) | - | - | 6,923 | (84 | ) | |||||||||||||||||||
Preferred equity securities | 2 | 98 | (2 | ) | 1,471 | (529 | ) | 1,569 | (531 | ) | ||||||||||||||||||
Marketable equity securities | 1 | - | - | 5 | (2 | ) | 5 | (2 | ) | |||||||||||||||||||
Mutual funds | 1 | 3,527 | (183 | ) | - | - | 3,527 | (183 | ) | |||||||||||||||||||
11 | 74,542 | (272 | ) | 1,476 | (531 | ) | 76,018 | (803 | ) | |||||||||||||||||||
Held-to-maturity | ||||||||||||||||||||||||||||
U.S. Government agency obligations | 1 | 4,930 | (70 | ) | - | - | 4,930 | (70 | ) | |||||||||||||||||||
Government sponsored residential mortgage-backed securities | 1 | 4,956 | (27 | ) | - | - | 4,956 | (27 | ) | |||||||||||||||||||
2 | 9,886 | (97 | ) | - | - | 9,886 | (97 | ) | ||||||||||||||||||||
Total investment securities in an unrealized loss position | 13 | $ | 84,428 | $ | (369 | ) | $ | 1,476 | $ | (531 | ) | $ | 85,904 | $ | (900 | ) |
15 |
First Connecticut Bancorp, Inc. |
Notes to Consolidated Financial Statements (Unaudited) |
June 30, 2014 | ||||||||||||||||
Available-for-Sale | Held-to-Maturity | |||||||||||||||
Estimated | Estimated | |||||||||||||||
Amortized | Fair | Amortized | Fair | |||||||||||||
Cost | Value | Cost | Value | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Due in one year or less | $ | 105,987 | $ | 105,992 | $ | - | $ | - | ||||||||
Due after one year through five years | 41,024 | 41,172 | - | - | ||||||||||||
Due after five years through ten years | - | - | - | - | ||||||||||||
Due after ten years | - | - | 3,000 | 3,000 | ||||||||||||
Government sponsored residential mortgage-backed securities | 7,712 | 8,072 | 9,715 | 9,900 | ||||||||||||
$ | 154,723 | $ | 155,236 | $ | 12,715 | $ | 12,900 |
16 |
First Connecticut Bancorp, Inc. |
Notes to Consolidated Financial Statements (Unaudited) |
5. | Loans and Allowance for Loan Losses |
June 30, | December 31, | |||||||
2014 | 2013 | |||||||
(Dollars in thousands) | ||||||||
Real estate: | ||||||||
Residential | $ | 749,124 | $ | 693,046 | ||||
Commercial | 686,299 | 633,764 | ||||||
Construction | 69,047 | 78,191 | ||||||
Installment | 3,850 | 4,516 | ||||||
Commercial | 277,483 | 252,032 | ||||||
Collateral | 1,480 | 1,600 | ||||||
Home equity line of credit | 156,625 | 151,606 | ||||||
Demand | - | 85 | ||||||
Revolving credit | 75 | 94 | ||||||
Resort | 1,068 | 1,374 | ||||||
Total loans | 1,945,051 | 1,816,308 | ||||||
Allowance for loan losses | (17,912 | ) | (18,314 | ) | ||||
Net deferred loan costs | 3,363 | 2,993 | ||||||
Loans, net | $ | 1,930,502 | $ | 1,800,987 |
17 |
First Connecticut Bancorp, Inc. Notes to Consolidated Financial Statements (Unaudited) |
For the Three Months Ended June 30, 2014 | ||||||||||||||||||||
Balance at beginning of period | Charge-offs | Recoveries | Provision for (Reduction) loan losses | Balance at end of period | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Real estate: | ||||||||||||||||||||
Residential | $ | 3,760 | $ | (123 | ) | $ | 1 | $ | (7 | ) | $ | 3,631 | ||||||||
Commercial | 8,601 | - | 1 | 180 | 8,782 | |||||||||||||||
Construction | 927 | - | - | (27 | ) | 900 | ||||||||||||||
Installment | 42 | (3 | ) | - | 2 | 41 | ||||||||||||||
Commercial | 2,847 | (1 | ) | 6 | 237 | 3,089 | ||||||||||||||
Collateral | - | - | - | - | - | |||||||||||||||
Home equity line of credit | 1,453 | - | - | 15 | 1,468 | |||||||||||||||
Demand | - | - | - | - | - | |||||||||||||||
Revolving credit | - | (12 | ) | 2 | 10 | - | ||||||||||||||
Resort | 1 | - | - | - | 1 | |||||||||||||||
Unallocated | - | - | - | - | - | |||||||||||||||
$ | 17,631 | $ | (139 | ) | $ | 10 | $ | 410 | $ | 17,912 | ||||||||||
For the Three Months Ended June 30, 2013 | ||||||||||||||||||||
Balance at beginning of period | Charge-offs | Recoveries | Provision for (Reduction) loan losses | Balance at end of period | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Real estate: | ||||||||||||||||||||
Residential | $ | 3,901 | $ | (81 | ) | $ | - | $ | (92 | ) | $ | 3,728 | ||||||||
Commercial | 7,926 | - | - | 86 | 8,012 | |||||||||||||||
Construction | 847 | - | - | 291 | 1,138 | |||||||||||||||
Installment | 64 | - | - | (7 | ) | 57 | ||||||||||||||
Commercial | 2,990 | - | 4 | 5 | 2,999 | |||||||||||||||
Collateral | - | - | - | - | - | |||||||||||||||
Home equity line of credit | 1,393 | - | - | 8 | 1,401 | |||||||||||||||
Demand | - | - | - | - | - | |||||||||||||||
Revolving credit | - | (12 | ) | 6 | 6 | - | ||||||||||||||
Resort | 211 | - | - | (41 | ) | 170 | ||||||||||||||
Unallocated | - | - | - | - | - | |||||||||||||||
$ | 17,332 | $ | (93 | ) | $ | 10 | $ | 256 | $ | 17,505 |
18 |
First Connecticut Bancorp, Inc. Notes to Consolidated Financial Statements (Unaudited) |
For the Six Months Ended June 30, 2014 | ||||||||||||||||||||
Balance at beginning of period | Charge-offs | Recoveries | Provision for (Reduction) loan losses | Balance at end of period | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Real estate | ||||||||||||||||||||
Residential | $ | 3,647 | $ | (262 | ) | $ | 1 | $ | 245 | $ | 3,631 | |||||||||
Commercial | 8,253 | (93 | ) | 1 | 621 | 8,782 | ||||||||||||||
Construction | 1,152 | - | - | (252 | ) | 900 | ||||||||||||||
Installment | 48 | (3 | ) | - | (4 | ) | 41 | |||||||||||||
Commercial | 3,746 | (955 | ) | 13 | 285 | 3,089 | ||||||||||||||
Collateral | - | - | - | - | - | |||||||||||||||
Home equity line of credit | 1,465 | - | - | 3 | 1,468 | |||||||||||||||
Demand | - | - | - | - | - | |||||||||||||||
Revolving credit | - | (26 | ) | 7 | 19 | - | ||||||||||||||
Resort | 3 | - | - | (2 | ) | 1 | ||||||||||||||
Unallocated | - | - | - | - | - | |||||||||||||||
$ | 18,314 | $ | (1,339 | ) | $ | 22 | $ | 915 | $ | 17,912 | ||||||||||
For the Six Months Ended June 30, 2013 | ||||||||||||||||||||
Balance at beginning of period | Charge-offs | Recoveries | Provision for (Reduction) loan losses | Balance at end of period | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Real estate | ||||||||||||||||||||
Residential | $ | 3,778 | $ | (375 | ) | $ | - | $ | 325 | $ | 3,728 | |||||||||
Commercial | 8,105 | - | - | (93 | ) | 8,012 | ||||||||||||||
Construction | 760 | - | - | 378 | 1,138 | |||||||||||||||
Installment | 77 | - | - | (20 | ) | 57 | ||||||||||||||
Commercial | 2,654 | - | 9 | 336 | 2,999 | |||||||||||||||
Collateral | - | - | - | - | - | |||||||||||||||
Home equity line of credit | 1,377 | - | - | 24 | 1,401 | |||||||||||||||
Demand | - | - | - | - | - | |||||||||||||||
Revolving credit | - | (24 | ) | 11 | 13 | - | ||||||||||||||
Resort | 456 | - | - | (286 | ) | 170 | ||||||||||||||
Unallocated | 22 | - | - | (22 | ) | - | ||||||||||||||
$ | 17,229 | $ | (399 | ) | $ | 20 | $ | 655 | $ | 17,505 |
19 |
First Connecticut Bancorp, Inc. Notes to Consolidated Financial Statements (Unaudited) |
June 30, 2014 | December 31, 2013 | |||||||||||||||
Total | Reserve Allocation | Total | Reserve Allocation | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Loans individually evaluated for impairment: | ||||||||||||||||
Real estate: | ||||||||||||||||
Residential | $ | 12,477 | $ | 374 | $ | 12,225 | $ | 360 | ||||||||
Commercial | 20,848 | 183 | 21,143 | 62 | ||||||||||||
Construction | 187 | - | 187 | - | ||||||||||||
Installment | 223 | 8 | 215 | 9 | ||||||||||||
Commercial | 6,666 | 407 | 4,096 | 1,243 | ||||||||||||
Collateral | - | - | - | - | ||||||||||||
Home equity line of credit | 423 | - | 538 | - | ||||||||||||
Demand | - | - | - | - | ||||||||||||
Revolving Credit | - | - | - | - | ||||||||||||
Resort | 1,068 | 1 | 1,219 | - | ||||||||||||
41,892 | 973 | 39,623 | 1,674 | |||||||||||||
Loans collectively evaluated for impairment: | ||||||||||||||||
Real estate: | ||||||||||||||||
Residential | $ | 740,389 | $ | 3,257 | $ | 683,966 | $ | 3,287 | ||||||||
Commercial | 665,120 | 8,599 | 612,517 | 8,191 | ||||||||||||
Construction | 68,860 | 900 | 78,004 | 1,152 | ||||||||||||
Installment | 3,627 | 33 | 4,301 | 39 | ||||||||||||
Commercial | 270,769 | 2,682 | 247,888 | 2,503 | ||||||||||||
Collateral | 1,480 | - | 1,600 | - | ||||||||||||
Home equity line of credit | 156,202 | 1,468 | 151,068 | 1,465 | ||||||||||||
Demand | - | - | 85 | - | ||||||||||||
Revolving Credit | 75 | - | 94 | - | ||||||||||||
Resort | - | - | 155 | 3 | ||||||||||||
1,906,522 | 16,939 | 1,779,678 | 16,640 | |||||||||||||
Total | $ | 1,948,414 | $ | 17,912 | $ | 1,819,301 | $ | 18,314 |
20 |
First Connecticut Bancorp, Inc. Notes to Consolidated Financial Statements (Unaudited) |
June 30, 2014 | ||||||||||||||||||||||||||||||||||||
30-59 Days | 60-89 Days | > 90 Days | Past Due 90 Days or More | |||||||||||||||||||||||||||||||||
(Dollars in thousands) | Past Due | Past Due | Past Due | Total | and Still | |||||||||||||||||||||||||||||||
Number | Amount | Number | Amount | Number | Amount | Number | Amount | Accruing | ||||||||||||||||||||||||||||
Real estate: | ||||||||||||||||||||||||||||||||||||
Residential | 6 | $ | 1,228 | 6 | $ | 808 | 19 | $ | 8,584 | 31 | $ | 10,620 | $ | - | ||||||||||||||||||||||
Commercial | - | - | - | - | 4 | 2,170 | 4 | 2,170 | - | |||||||||||||||||||||||||||
Construction | - | - | - | - | 1 | 187 | 1 | 187 | - | |||||||||||||||||||||||||||
Installment | 1 | 3 | - | - | 4 | 75 | 5 | 78 | - | |||||||||||||||||||||||||||
Commercial | 3 | 327 | 1 | 38 | 6 | 958 | 10 | 1,323 | - | |||||||||||||||||||||||||||
Collateral | 7 | 57 | - | - | - | - | 7 | 57 | - | |||||||||||||||||||||||||||
Home equity line of credit | 2 | 74 | 1 | 283 | 6 | 459 | 9 | 816 | - | |||||||||||||||||||||||||||
Demand | 1 | 6 | - | - | - | - | 1 | 6 | - | |||||||||||||||||||||||||||
Revolving Credit | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
Resort | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
Total | 20 | $ | 1,695 | 8 | $ | 1,129 | 40 | $ | 12,433 | 68 | $ | 15,257 | $ | - | ||||||||||||||||||||||
December 31, 2013 | ||||||||||||||||||||||||||||||||||||
30-59 Days | 60-89 Days | > 90 Days | Past Due 90 Days or More | |||||||||||||||||||||||||||||||||
(Dollars in thousands) | Past Due | Past Due | Past Due | Total | and Still | |||||||||||||||||||||||||||||||
Number | Amount | Number | Amount | Number | Amount | Number | Amount | Accruing | ||||||||||||||||||||||||||||
Real estate: | ||||||||||||||||||||||||||||||||||||
Residential | 9 | $ | 2,586 | 8 | $ | 1,600 | 20 | $ | 8,518 | 37 | $ | 12,704 | $ | - | ||||||||||||||||||||||
Commercial | 1 | 231 | - | - | 1 | 827 | 2 | 1,058 | - | |||||||||||||||||||||||||||
Construction | - | - | - | - | 1 | 187 | 1 | 187 | - | |||||||||||||||||||||||||||
Installment | - | - | - | - | 2 | 47 | 2 | 47 | - | |||||||||||||||||||||||||||
Commercial | 1 | 5 | - | - | 6 | 584 | 7 | 589 | - | |||||||||||||||||||||||||||
Collateral | 2 | 9 | - | - | - | - | 2 | 9 | - | |||||||||||||||||||||||||||
Home equity line of credit | 1 | 283 | 1 | 183 | 5 | 441 | 7 | 907 | - | |||||||||||||||||||||||||||
Demand | 1 | 10 | - | - | - | - | 1 | 10 | - | |||||||||||||||||||||||||||
Revolving Credit | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
Resort | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
Total | 15 | $ | 3,124 | 9 | $ | 1,783 | 35 | $ | 10,604 | 59 | $ | 15,511 | $ | - |
21 |
First Connecticut Bancorp, Inc. Notes to Consolidated Financial Statements (Unaudited) |
June 30, | December 31, | |||||||
(Dollars in thousands) | 2014 | 2013 | ||||||
Nonaccrual loans: | ||||||||
Real estate: | ||||||||
Residential | $ | 10,266 | $ | 10,599 | ||||
Commercial | 2,170 | 827 | ||||||
Construction | 187 | 187 | ||||||
Installment | 78 | 162 | ||||||
Commercial | 1,327 | 2,285 | ||||||
Collateral | - | - | ||||||
Home equity line of credit | 624 | 740 | ||||||
Demand | - | - | ||||||
Revolving Credit | - | - | ||||||
Resort | - | - | ||||||
Total nonaccruing loans | 14,652 | 14,800 | ||||||
Loans 90 days past due and still accruing | - | - | ||||||
Other real estate owned | 434 | 393 | ||||||
Total nonperforming assets | $ | 15,086 | $ | 15,193 |
22 |
First Connecticut Bancorp, Inc. Notes to Consolidated Financial Statements (Unaudited) |
June 30, 2014 | December 31, 2013 | |||||||||||||||||||||||
Unpaid | Unpaid | |||||||||||||||||||||||
Recorded | Principal | Related | Recorded | Principal | Related | |||||||||||||||||||
(Dollars in thousands) | Investment | Balance | Allowance | Investment | Balance | Allowance | ||||||||||||||||||
Impaired loans without a valuation allowance: | ||||||||||||||||||||||||
Real estate: | ||||||||||||||||||||||||
Residential | $ | 7,399 | $ | 7,942 | $ | - | $ | 6,900 | $ | 7,442 | $ | - | ||||||||||||
Commercial | 15,689 | 18,526 | - | 18,463 | 18,649 | - | ||||||||||||||||||
Construction | 187 | 433 | - | 187 | 433 | - | ||||||||||||||||||
Installment | 195 | 195 | - | 187 | 187 | - | ||||||||||||||||||
Commercial | 3,561 | 3,709 | - | 1,268 | 1,307 | - | ||||||||||||||||||
Collateral | - | - | - | - | - | - | ||||||||||||||||||
Home equity line of credit | 423 | 546 | - | 538 | 658 | - | ||||||||||||||||||
Demand | - | - | - | - | - | - | ||||||||||||||||||
Revolving Credit | - | - | - | - | - | - | ||||||||||||||||||
Resort | - | - | - | - | - | - | ||||||||||||||||||
Total | 27,454 | 31,351 | - | 27,543 | 28,676 | - | ||||||||||||||||||
Impaired loans with a valuation allowance: | ||||||||||||||||||||||||
Real estate: | ||||||||||||||||||||||||
Residential | 5,078 | 5,595 | 374 | 5,325 | 5,804 | 360 | ||||||||||||||||||
Commercial | 5,159 | 2,597 | 183 | 2,680 | 2,679 | 62 | ||||||||||||||||||
Construction | - | - | - | - | - | - | ||||||||||||||||||
Installment | 28 | 28 | 8 | 28 | 28 | 9 | ||||||||||||||||||
Commercial | 3,105 | 4,031 | 407 | 2,828 | 2,888 | 1,243 | ||||||||||||||||||
Collateral | - | - | - | - | - | - | ||||||||||||||||||
Home equity line of credit | - | - | - | - | - | - | ||||||||||||||||||
Demand | - | - | - | - | - | - | ||||||||||||||||||
Revolving Credit | - | - | - | - | - | - | ||||||||||||||||||
Resort | 1,068 | 1,068 | 1 | 1,219 | 1,218 | - | ||||||||||||||||||
Total | 14,438 | 13,319 | 973 | 12,080 | 12,617 | 1,674 | ||||||||||||||||||
Total impaired loans | $ | 41,892 | $ | 44,670 | $ | 973 | $ | 39,623 | $ | 41,293 | $ | 1,674 |
23 |
First Connecticut Bancorp, Inc. Notes to Consolidated Financial Statements (Unaudited) |
Three Months | Six Months | Three Months | Six Months | |||||||||||||||||||||
Ended | Ended | Ended | Ended | |||||||||||||||||||||
June 30, | June 30, | June 30, | June 30, | June 30, | June 30, | |||||||||||||||||||
2014 | 2014 | 2014 | 2013 | 2013 | 2013 | |||||||||||||||||||
Average | Interest | Interest | Average | Interest | Interest | |||||||||||||||||||
Recorded | Income | Income | Recorded | Income | Income | |||||||||||||||||||
(Dollars in thousands) | Investment | Recognized | Recognized | Investment | Recognized | Recognized | ||||||||||||||||||
Impaired loans without a valuation allowance: | ||||||||||||||||||||||||
Real estate: | ||||||||||||||||||||||||
Residential | $ | 6,895 | $ | 20 | $ | 43 | $ | 4,254 | $ | 1 | $ | 1 | ||||||||||||
Commercial | 16,844 | 174 | 429 | 3,762 | 45 | 82 | ||||||||||||||||||
Construction | 140 | - | - | 380 | - | - | ||||||||||||||||||
Installment | 143 | 3 | 7 | - | - | - | ||||||||||||||||||
Commercial | 3,658 | 27 | 84 | 2,988 | 60 | 96 | ||||||||||||||||||
Collateral | - | - | - | - | - | - | ||||||||||||||||||
Home equity line of credit | 470 | - | - | 506 | - | - | ||||||||||||||||||
Demand | - | - | - | - | - | - | ||||||||||||||||||
Revolving Credit | - | - | - | - | - | - | ||||||||||||||||||
Resort | - | - | - | - | - | - | ||||||||||||||||||
Total | 28,150 | 224 | 563 | 11,890 | 106 | 179 | ||||||||||||||||||
Impaired loans with a valuation allowance: | ||||||||||||||||||||||||
Real estate: | ||||||||||||||||||||||||
Residential | 5,275 | 7 | 27 | 6,712 | 24 | 41 | ||||||||||||||||||
Commercial | 4,080 | 15 | 47 | 13,733 | 223 | 470 | ||||||||||||||||||
Construction | 47 | - | - | 377 | - | - | ||||||||||||||||||
Installment | 28 | - | - | 17 | - | - | ||||||||||||||||||
Commercial | 2,717 | 30 | 53 | 3,702 | 23 | 40 | ||||||||||||||||||
Collateral | - | - | - | - | - | - | ||||||||||||||||||
Home equity line of credit | - | - | - | - | - | - | ||||||||||||||||||
Demand | - | - | - | - | - | - | ||||||||||||||||||
Revolving Credit | - | - | - | - | - | - | ||||||||||||||||||
Resort | 1,175 | 8 | 19 | 1,199 | 16 | 29 | ||||||||||||||||||
Total | 13,322 | 60 | 146 | 25,740 | 286 | 580 | ||||||||||||||||||
Total impaired loans | $ | 41,472 | $ | 284 | $ | 709 | $ | 37,630 | $ | 392 | $ | 759 |
There was no interest income recognized on a cash basis method of accounting for the three and six months ended June 30, 2014 and 2013.
24 |
First Connecticut Bancorp, Inc. Notes to Consolidated Financial Statements (Unaudited) |
June 30, 2014 | ||||||||||||||||||||||||
TDRs on Accrual Status | TDRs on Nonaccrual Status | Total TDRs | ||||||||||||||||||||||
(Dollars in thousands) | Number of Loans | Recorded Investment | Number of Loans | Recorded Investment | Number of Loans | Recorded Investment | ||||||||||||||||||
Real estate: | ||||||||||||||||||||||||
Residential | 12 | $ | 2,419 | 9 | $ | 5,618 | 21 | $ | 8,037 | |||||||||||||||
Commercial | 9 | 10,005 | - | - | 9 | 10,005 | ||||||||||||||||||
Construction | - | - | 1 | 187 | 1 | 187 | ||||||||||||||||||
Installment | 4 | 223 | - | - | 4 | 223 | ||||||||||||||||||
Commercial | 9 | 4,475 | 5 | 787 | 14 | 5,262 | ||||||||||||||||||
Collateral | - | - | - | - | - | - | ||||||||||||||||||
Home equity line of credit | - | - | 2 | 197 | 2 | 197 | ||||||||||||||||||
Demand | - | - | - | - | - | - | ||||||||||||||||||
Revolving Credit | - | - | - | - | - | - | ||||||||||||||||||
Resort | 1 | 1,068 | - | - | 1 | 1,068 | ||||||||||||||||||
Total | 35 | $ | 18,190 | 17 | $ | 6,789 | 52 | $ | 24,979 |
December 31, 2013 | ||||||||||||||||||||||||
TDRs on Accrual Status | TDRs on Nonaccrual Status | Total TDRs | ||||||||||||||||||||||
(Dollars in thousands) | Number of Loans | Recorded Investment | Number of Loans | Recorded Investment | Number of Loans | Recorded Investment | ||||||||||||||||||
Real estate: | ||||||||||||||||||||||||
Residential | 6 | $ | 1,814 | 8 | $ | 5,285 | 14 | $ | 7,099 | |||||||||||||||
Commercial | 12 | 11,509 | - | - | 12 | 11,509 | ||||||||||||||||||
Construction | - | - | 1 | 187 | 1 | 187 | ||||||||||||||||||
Installment | 3 | 215 | - | - | 3 | 215 | ||||||||||||||||||
Commercial | 6 | 1,033 | 5 | 1,799 | 11 | 2,832 | ||||||||||||||||||
Collateral | - | - | - | - | - | - | ||||||||||||||||||
Home equity line of credit | - | - | 3 | 307 | 3 | 307 | ||||||||||||||||||
Demand | - | - | - | - | - | - | ||||||||||||||||||
Revolving Credit | - | - | - | - | - | - | ||||||||||||||||||
Resort | 2 | 1,219 | - | - | 2 | 1,219 | ||||||||||||||||||
Total | 29 | $ | 15,790 | 17 | $ | 7,578 | 46 | $ | 23,368 |
25 |
First Connecticut Bancorp, Inc. Notes to Consolidated Financial Statements (Unaudited) |
For the Three Months Ended June 30, 2014 | For the Six Months Ended June 30, 2014 | |||||||||||||||||||||||
(Dollars in thousands) | Number of Modifications | Recorded Investment Prior to Modification | Recorded Investment After Modification (1) | Number of Modifications | Recorded Investment Prior to Modification | Recorded Investment After Modification (1) | ||||||||||||||||||
Trouble Debt Restructurings: | ||||||||||||||||||||||||
Real estate | ||||||||||||||||||||||||
Residential | 2 | $ | 278 | $ | 278 | 9 | $ | 1,463 | $ | 1,450 | ||||||||||||||
Installment | 1 | 17 | 17 | 1 | 17 | 17 | ||||||||||||||||||
Commercial | 2 | 283 | 283 | 4 | 3,763 | 3,759 | ||||||||||||||||||
Total | 5 | $ | 578 | $ | 578 | 14 | $ | 5,243 | $ | 5,226 |
For the Three Months Ended June 30, 2013 | For the Six Months Ended June 30, 2013 | |||||||||||||||||||||||
(Dollars in thousands) | Number of Modifications | Recorded Investment Prior to Modification | Recorded Investment After Modification (1) | Number of Modifications | Recorded Investment Prior to Modification | Recorded Investment After Modification (1) | ||||||||||||||||||
Trouble Debt Restructurings: | ||||||||||||||||||||||||
Real estate | ||||||||||||||||||||||||
Residential | - | $ | - | $ | - | 3 | $ | 588 | $ | 570 | ||||||||||||||
Commercial | 2 | 1,726 | 1,725 | 2 | 1,725 | 1,725 | ||||||||||||||||||
Construction | 1 | 187 | 187 | 1 | 187 | 187 | ||||||||||||||||||
Installment | 1 | 29 | 29 | 2 | 36 | 35 | ||||||||||||||||||
Commercial | 5 | 2,026 | 2,025 | 6 | 5,653 | 5,603 | ||||||||||||||||||
Home equity line of credit | - | - | - | 2 | 244 | 200 | ||||||||||||||||||
Total | 9 | $ | 3,968 | $ | 3,966 | 16 | $ | 8,433 | $ | 8,320 |
(1) The period end balances are inclusive of all partial paydowns and charge-offs since the modification date. TDRs fully paid off, charged-off or foreclosed upon by period end are not included. |
For the Three Months Ended June 30, 2014 | ||||||||||||||||||||||||
(Dollars in thousands) | Number of Modifications | Extended Maturity | Adjusted Interest Rates | Combination of Rate and Maturity | Other | Total | ||||||||||||||||||
Real estate | ||||||||||||||||||||||||
Residential | 2 | $ | - | $ | - | $ | - | $ | 278 | $ | 278 | |||||||||||||
Installment | 1 | - | - | - | 17 | 17 | ||||||||||||||||||
Commercial | 2 | 241 | - | - | 42 | 283 | ||||||||||||||||||
Total | 5 | $ | 241 | $ | - | $ | - | $ | 337 | $ | 578 |
For the Six Months Ended June 30, 2014 | ||||||||||||||||||||||||
(Dollars in thousands) | Number of Modifications | Extended Maturity | Adjusted Interest Rates | Combination of Rate and Maturity | Other | Total | ||||||||||||||||||
Real estate | ||||||||||||||||||||||||
Residential | 9 | $ | - | $ | - | $ | - | $ | 1,450 | $ | 1,450 | |||||||||||||
Installment | 1 | - | - | - | 17 | 17 | ||||||||||||||||||
Commercial | 4 | 2,621 | - | - | 1,138 | 3,759 | ||||||||||||||||||
Total | 14 | $ | 2,621 | $ | - | $ | - | $ | 2,605 | $ | 5,226 |
26 |
First Connecticut Bancorp, Inc. Notes to Consolidated Financial Statements (Unaudited) |
For the Three Months Ended June 30, 2013 | ||||||||||||||||||||||||
(Dollars in thousands) | Number of Modifications | Extended Maturity | Adjusted Interest Rates | Combination of Rate and Maturity | Other | Total | ||||||||||||||||||
Real estate | ||||||||||||||||||||||||
Commercial | 2 | $ | 1,577 | $ | - | $ | - | $ | 148 | $ | 1,725 | |||||||||||||
Construction | 1 | - | - | - | 187 | 187 | ||||||||||||||||||
Installment | 1 | - | - | 29 | - | 29 | ||||||||||||||||||
Commercial | 5 | 1,919 | - | - | 106 | 2,025 | ||||||||||||||||||
Total | 9 | $ | 3,496 | $ | - | $ | 29 | $ | 441 | $ | 3,966 |
For the Six Months Ended June 30, 2013 | ||||||||||||||||||||||||
(Dollars in thousands) | Number of Modifications | Extended Maturity | Adjusted Interest Rates | Combination of Rate and Maturity | Other | Total | ||||||||||||||||||
Real estate | ||||||||||||||||||||||||
Residential | 3 | $ | - | $ | - | $ | 231 | $ | 339 | $ | 570 | |||||||||||||
Commercial | 2 | 1,577 | - | - | 148 | 1,725 | ||||||||||||||||||
Construction | 1 | - | - | - | 187 | 187 | ||||||||||||||||||
Installment | 2 | - | - | 35 | - | 35 | ||||||||||||||||||
Commercial | 6 | 5,497 | - | - | 106 | 5,603 | ||||||||||||||||||
Home equity line of credit | 2 | - | - | 14 | 186 | 200 | ||||||||||||||||||
Total | 16 | $ | 7,074 | $ | - | $ | 280 | $ | 966 | $ | 8,320 |
For the Three Months Ended | For the Six Months Ended | |||||||||||||||
June 30, 2014 | June 30, 2014 | |||||||||||||||
(Dollars in thousands) | Number of Loans | Recorded Investment (1) | Number of Loans | Recorded Investment (1) | ||||||||||||
Real estate | ||||||||||||||||
Residential | 1 | $ | 498 | 2 | $ | 711 | ||||||||||
Commercial | 2 | 454 | 2 | 454 | ||||||||||||
Total | 3 | $ | 952 | 4 | $ | 1,165 |
(1) The period end balances are inclusive of all partial paydowns and charge-offs since the modification date. TDRs fully paid off, charged-off or foreclosed upon by period end are not included. |
There were no loans that defaulted and had been modified as a TDR during the twelve month period preceding the default date during the three and six months ended June 30, 2013.
27 |
First Connecticut Bancorp, Inc. Notes to Consolidated Financial Statements (Unaudited) |
Loans rated 1 – 5: | Commercial loans in these categories are considered “pass” rated loans with low to average risk. |
Loans rated 6: | Residential, Consumer and Commercial loans in this category are considered “special mention.” These loans are starting to show signs of potential weakness and are being closely monitored by management. |
Loans rated 7: | Loans in this category are considered “substandard.” Generally, a loan is considered substandard if it is inadequately protected by the current net worth and paying capacity of the obligors and/or the collateral pledged. There is a distinct possibility that the Company will sustain some loss if the weakness is not corrected. |
Loans rated 8: | Loans in this category are considered “doubtful.” Loans classified as doubtful have all the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, highly questionable and improbable. |
Loans rated 9: | Loans in this category are considered uncollectible (“loss”) and of such little value that their continuance as loans is not warranted. |
28 |
First Connecticut Bancorp, Inc. Notes to Consolidated Financial Statements (Unaudited) |
June 30, 2014 | ||||||||||||||||||||
(Dollars in thousands) | Pass | Special Mention | Substandard | Doubtful | Total | |||||||||||||||
Real estate: | ||||||||||||||||||||
Residential | $ | 736,046 | $ | 1,073 | $ | 12,005 | $ | - | $ | 749,124 | ||||||||||
Commercial | 665,383 | 7,230 | 13,686 | - | 686,299 | |||||||||||||||
Construction | 63,847 | 134 | 5,066 | - | 69,047 | |||||||||||||||
Installment | 3,502 | 47 | 301 | - | 3,850 | |||||||||||||||
Commercial | 263,293 | 2,817 | 10,716 | 657 | 277,483 | |||||||||||||||
Collateral | 1,480 | - | - | - | 1,480 | |||||||||||||||
Home equity line of credit | 154,976 | 861 | 788 | - | 156,625 | |||||||||||||||
Demand | - | - | - | - | - | |||||||||||||||
Revolving Credit | 75 | - | - | - | 75 | |||||||||||||||
Resort | - | - | 1,068 | - | 1,068 | |||||||||||||||
Total Loans | $ | 1,888,602 | $ | 12,162 | $ | 43,630 | $ | 657 | $ | 1,945,051 | ||||||||||
December 31, 2013 | ||||||||||||||||||||
(Dollars in thousands) | Pass | Special Mention | Substandard | Doubtful | Total | |||||||||||||||
Real estate: | ||||||||||||||||||||
Residential | $ | 680,111 | $ | 1,089 | $ | 11,846 | $ | - | $ | 693,046 | ||||||||||
Commercial | 608,289 | 7,023 | 18,452 | - | 633,764 | |||||||||||||||
Construction | 72,022 | - | 6,169 | - | 78,191 | |||||||||||||||
Installment | 4,251 | 50 | 215 | - | 4,516 | |||||||||||||||
Commercial | 237,755 | 970 | 11,659 | 1,648 | 252,032 | |||||||||||||||
Collateral | 1,600 | - | - | - | 1,600 | |||||||||||||||
Home equity line of credit | 149,781 | 719 | 1,106 | - | 151,606 | |||||||||||||||
Demand | 85 | - | - | - | 85 | |||||||||||||||
Revolving Credit | 94 | - | - | - | 94 | |||||||||||||||
Resort | 156 | - | 1,218 | - | 1,374 | |||||||||||||||
Total Loans | $ | 1,754,144 | $ | 9,851 | $ | 50,665 | $ | 1,648 | $ | 1,816,308 |
29 |
First Connecticut Bancorp, Inc. Notes to Consolidated Financial Statements (Unaudited) |
30 |
First Connecticut Bancorp, Inc. Notes to Consolidated Financial Statements (Unaudited) |
6. | Credit Arrangements |
31 |
First Connecticut Bancorp, Inc. Notes to Consolidated Financial Statements (Unaudited) |
7. | Deposits |
June 30, | December 31, | |||||||
2014 | 2013 | |||||||
(Dollars in thousands) | ||||||||
Noninterest-bearing demand deposits | $ | 315,916 | $ | 308,459 | ||||
Interest-bearing | ||||||||
NOW accounts | 377,570 | 285,392 | ||||||
Money market | 401,694 | 387,225 | ||||||
Savings accounts | 202,970 | 193,937 | ||||||
Time deposits | 332,629 | 338,488 | ||||||
Total interest-bearing deposits | 1,314,863 | 1,205,042 | ||||||
Total deposits | $ | 1,630,779 | $ | 1,513,501 |
Time certificates of deposit in denominations of $100,000 or more approximated $154.2 million and $147.7 million at June 30, 2014 and December 31, 2013, respectively.
At June 30, 2014, the scheduled maturities of time deposits were as follows:
(Dollars in thousands) | ||||
Years ending December 31, | ||||
2014 | $ | 165,907 | ||
2015 | 87,817 | |||
2016 | 50,000 | |||
2016 | 16,417 | |||
2017 | 7,861 | |||
Thereafter | 4,627 | |||
Total time deposits | $ | 332,629 |
8. | Pension and Other Postretirement Benefit Plans |
Pension Benefits | Other Postretirement Benefits | |||||||||||||||
Three Months Ended June 30, | Three Months Ended June 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Service cost | $ | - | $ | - | $ | 15 | $ | 26 | ||||||||
Interest cost | 256 | 239 | 37 | 32 | ||||||||||||
Expected return on plan assets | (335 | ) | (283 | ) | - | - | ||||||||||
Amortization: | ||||||||||||||||
Loss | 76 | 140 | 5 | 10 | ||||||||||||
Prior service cost | - | - | (13 | ) | (12 | ) | ||||||||||
Net periodic benefit cost | $ | (3 | ) | $ | 96 | $ | 44 | $ | 56 | |||||||
Pension Benefits | Other Postretirement Benefits | |||||||||||||||
Six Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Service cost | $ | - | $ | - | $ | 30 | $ | 51 | ||||||||
Interest cost | 511 | 476 | 73 | 64 | ||||||||||||
Expected return on plan assets | (670 | ) | (567 | ) | - | - | ||||||||||
Amortization: | ||||||||||||||||
Loss | 153 | 286 | 9 | 21 | ||||||||||||
Prior service cost | - | - | (25 | ) | (25 | ) | ||||||||||
Net periodic benefit cost | $ | (6 | ) | $ | 195 | $ | 87 | $ | 111 |
32 |
First Connecticut Bancorp, Inc. Notes to Consolidated Financial Statements (Unaudited) |
Allocated | 286,083 | |||
Committed to be released | 47,289 | |||
Unallocated | 1,097,044 | |||
1,430,416 |
9. | Stock Incentive Plan |
33 |
First Connecticut Bancorp, Inc. Notes to Consolidated Financial Statements (Unaudited) |
2014 | 2013 | |||||||
Weighted per share average fair value of options granted | $ | 4.27 | $ | 3.99 | ||||
Weighted-average assumptions: | ||||||||
Risk-free interest rate | 1.90 | % | 1.12 | % | ||||
Expected volatility | 30.56 | % | 32.35 | % | ||||
Expected dividend yield | 1.89 | % | 1.67 | % | ||||
Weighted-average dividend yield | 1.09% - 2.51 | % | 0.80% - 2.71 | % | ||||
Expected life of options granted | 6.0 years | 6.0 years |
Number of Stock Options | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Term (in years) | Aggregate Intrinsic Value (in thousands) | |||||||||||||
Outstanding at December 31, 2013 | 1,629,857 | $ | 12.98 | |||||||||||||
Granted | 21,500 | 16.39 | ||||||||||||||
Exercised | - | - | ||||||||||||||
Forfeited | (4,100 | ) | 14.63 | |||||||||||||
Outstanding at June 30, 2014 | 1,647,257 | $ | 13.02 | 8.21 | $ | 4,984 | ||||||||||
Exercisable at June 30, 2014 | 651,250 |
34 |
First Connecticut Bancorp, Inc. Notes to Consolidated Financial Statements (Unaudited) |
Number of Restricted Stock | Weighted-Average Grant Date Fair Value | |||||||
Unvested at December 31, 2013 | 400,325 | $ | 12.95 | |||||
Granted | - | - | ||||||
Vested | - | - | ||||||
Forfeited | - | - | ||||||
Unvested at June 30, 2014 | 400,325 | $ | 12.95 |
10. | Derivative Financial Instruments |
35 |
First Connecticut Bancorp, Inc. Notes to Consolidated Financial Statements (Unaudited) |
● | if the Company defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default on its derivative obligations; |
● | if the Company fails to maintain its status as a well/adequately capitalized institution, then the counterparty could terminate the derivative positions, and the Company would be required to settle its obligations under the agreements; |
● | if the Company fails to maintain a specified minimum leverage ratio, then the Company could be declared in default on its derivative obligations; and |
● | if a specified event or condition occurs that materially changes the Company’s creditworthiness in an adverse manner, it may be required to fully collateralize its obligations under the derivative instrument. |
June 30, 2014 | December 31, 2013 | |||||||||||||||||||||||||
(Dollars in thousands) | Consolidated Balance Sheet Location | # of Instruments | Notional Amount | Estimated Fair Values | # of Instruments | Notional Amount | Estimated Fair Values | |||||||||||||||||||
Commercial loan customer | ||||||||||||||||||||||||||
interest rate swap position | Other Assets | 31 | $ | 94,978 | $ | 4,622 | 22 | $ | 66,635 | $ | 3,238 | |||||||||||||||
Commercial loan customer | ||||||||||||||||||||||||||
interest rate swap position | Other Liabilities | 13 | 50,760 | (4,681 | ) | 22 | 82,535 | (3,294 | ) | |||||||||||||||||
Counterparty interest | ||||||||||||||||||||||||||
rate swap position | Other Liabilities | 44 | 145,738 | 59 | 44 | 149,170 | 56 |
36 |
First Connecticut Bancorp, Inc. Notes to Consolidated Financial Statements (Unaudited) |
For The Three Months Ended June 30, | ||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||
Interest Income Recorded in Interest Income | MTM (Loss) Gain Recorded in Noninterest Income | Net Impact | Interest Income Recorded in Interest Income | MTM (Loss) Gain Recorded in Noninterest Income | Net Impact | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Commercial loan customer interest rate swap position | $ | (860 | ) | $ | 1,048 | $ | 188 | $ | 702 | $ | (3,061 | ) | $ | (2,359 | ) | |||||||||
Counterparty interest rate swap position | 860 | (1,048 | ) | (188 | ) | (702 | ) | 3,061 | 2,359 | |||||||||||||||
Total | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||
For The Six Months Ended June 30, | ||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||
Interest Income Recorded in Interest Income | MTM (Loss) Gain Recorded in Noninterest Income | Net Impact | Interest Income Recorded in Interest Income | MTM (Loss) Gain Recorded in Noninterest Income | Net Impact | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Commercial loan customer interest rate swap position | $ | (1,715 | ) | $ | 1,384 | $ | (331 | ) | $ | 1,378 | $ | (3,975 | ) | $ | (2,597 | ) | ||||||||
Counterparty interest rate swap position | 1,715 | (1,384 | ) | 331 | (1,378 | ) | 3,975 | 2,597 | ||||||||||||||||
Total | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - |
37 |
First Connecticut Bancorp, Inc. Notes to Consolidated Financial Statements (Unaudited) |
Offsetting of Financial Assets and Liabilities
The following table presents the potential effect of rights of setoff associated with the Company’s recognized financial assets and liabilities at June 30, 2014 and December 31, 2013:
June 30, 2014 | ||||||||||||||||||||||||||||
Gross Amounts Not Offset in the Statement of Financial Condition | ||||||||||||||||||||||||||||
Gross Amount of Recognized Assets | Gross Amounts Offset in the Statement of Financial Condition | Net Amounts of Assets Presented in the Statement of Financial Condition | Financial Instruments | Securities Collateral Received | Cash Collateral Received | Net Amount | ||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||
Interest rate swap derivatives | $ | 4,622 | $ | - | $ | 4,622 | $ | - | $ | - | $ | 4,000 | $ | 622 | ||||||||||||||
Total | $ | 4,622 | $ | - | $ | 4,622 | $ | - | $ | - | $ | 4,000 | $ | 622 | ||||||||||||||
June 30, 2014 | ||||||||||||||||||||||||||||
Gross Amounts Not Offset in the Statement of Financial Condition | ||||||||||||||||||||||||||||
Gross Amount of Recognized Liabilities | Gross Amounts Offset in the Statement of Financial Condition | Net Amounts of Liabilities Presented in the Statement of Financial Condition | Financial Instruments | Securities Collateral Pledged | Cash Collateral Pledged | Net Amount | ||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||
Interest rate swap derivatives | $ | 4,681 | $ | - | $ | 4,681 | $ | - | $ | - | $ | 4,000 | $ | 681 | ||||||||||||||
Repurchase agreement | ||||||||||||||||||||||||||||
borrowings | 21,000 | - | 21,000 | - | 21,000 | - | - | |||||||||||||||||||||
Total | $ | 25,681 | $ | - | $ | 25,681 | $ | - | $ | 21,000 | $ | 4,000 | $ | 681 | ||||||||||||||
December 31, 2013 | ||||||||||||||||||||||||||||
Gross Amounts Not Offset in the Statement of Financial Condition | ||||||||||||||||||||||||||||
Gross Amount of Recognized Assets | Gross Amounts Offset in the Statement of Financial Condition | Net Amounts of Assets Presented in the Statement of Financial Condition | Financial Instruments | Securities Collateral Received | Cash Collateral Received | Net Amount | ||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||
Interest rate swap derivatives | $ | 3,238 | $ | - | $ | 3,238 | $ | - | $ | - | $ | 2,000 | $ | 1,238 | ||||||||||||||
Total | $ | 3,238 | $ | - | $ | 3,238 | $ | - | $ | - | $ | 2,000 | $ | 1,238 | ||||||||||||||
December 31, 2013 | ||||||||||||||||||||||||||||
Gross Amounts Not Offset in the Statement of Financial Condition | ||||||||||||||||||||||||||||
Gross Amount of Recognized Liabilities | Gross Amounts Offset in the Statement of Financial Condition | Net Amounts of Liabilities Presented in the Statement of Financial Condition | Financial Instruments | Securities Collateral Pledged | Cash Collateral Pledged | Net Amount | ||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||
Interest rate swap derivatives | $ | 3,294 | $ | - | $ | 3,294 | $ | - | $ | - | $ | 2,000 | $ | 1,294 | ||||||||||||||
Repurchase agreement | ||||||||||||||||||||||||||||
borrowings | 21,000 | - | 21,000 | - | 21,000 | - | - | |||||||||||||||||||||
Total | $ | 24,294 | $ | - | $ | 24,294 | $ | - | $ | 21,000 | $ | 2,000 | $ | 1,294 |
38 |
First Connecticut Bancorp, Inc. Notes to Consolidated Financial Statements (Unaudited) |
11. | Financial Instruments with Off-Balance Sheet Risk |
June 30, | December 31, | |||||||
2014 | 2013 | |||||||
(Dollars in thousands) | ||||||||
Approved loan commitments | $ | 60,065 | $ | 25,667 | ||||
Unadvanced portion of construction loans | 40,317 | 64,599 | ||||||
Unused lines for home equity loans | 174,843 | 163,255 | ||||||
Unused revolving lines of credit | 385 | 354 | ||||||
Unused commercial letters of credit | 3,384 | 3,910 | ||||||
Unused commercial lines of credit | 187,151 | 153,673 | ||||||
$ | 466,145 | $ | 411,458 |
12. | Significant Group Concentrations of Credit Risk |
39 |
First Connecticut Bancorp, Inc. Notes to Consolidated Financial Statements (Unaudited) |
13. | Fair Value Measurements |
● | Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; |
● | Level 2 - Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability; |
● | Level 3 - Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). |
40 |
First Connecticut Bancorp, Inc. Notes to Consolidated Financial Statements (Unaudited) |
41 |
June 30, 2014 | ||||||||||||||||
Quoted Prices in Active Markets for Identical Assets | Significant Observable Inputs | Significant Unobservable Inputs | ||||||||||||||
(Dollars in thousands) | Total | (Level 1) | (Level 2) | (Level 3) | ||||||||||||
Assets | ||||||||||||||||
U.S. Treasury obligations | $ | 103,991 | $ | 103,991 | $ | - | $ | - | ||||||||
U.S. Government agency obligations | 40,064 | 40,064 | - | - | ||||||||||||
Government sponsored residential mortgage-backed securities | 8,072 | - | 8,072 | - | ||||||||||||
Corporate debt securities | 3,109 | - | 3,109 | - | ||||||||||||
Preferred equity securities | 1,736 | - | 1,736 | - | ||||||||||||
Marketable equity securities | 160 | 160 | - | - | ||||||||||||
Mutual funds | 3,652 | - | 3,652 | - | ||||||||||||
Securities available-for-sale | 160,784 | 144,215 | 16,569 | - | ||||||||||||
Interest rate swap derivative | 4,622 | - | 4,622 | - | ||||||||||||
Derivative loan commitments | 149 | - | - | 149 | ||||||||||||
Total | $ | 165,555 | $ | 144,215 | $ | 21,191 | $ | 149 | ||||||||
Liabilities | ||||||||||||||||
Interest rate swap derivative | $ | 4,681 | $ | - | $ | 4,681 | $ | - | ||||||||
Forward loan sales commitments | 99 | - | - | 99 | ||||||||||||
Total | $ | 4,780 | $ | - | $ | 4,681 | $ | 99 | ||||||||
December 31, 2013 | ||||||||||||||||
Quoted Prices in Active Markets for Identical Assets | Significant Observable Inputs | Significant Unobservable Inputs | ||||||||||||||
(Dollars in thousands) | Total | (Level 1) | (Level 2) | (Level 3) | ||||||||||||
Assets | ||||||||||||||||
U.S. Treasury obligations | $ | 126,000 | $ | 126,000 | $ | - | $ | - | ||||||||
U.S. Government agency obligations | 6,922 | 6,922 | - | - | ||||||||||||
Government sponsored residential mortgage-backed securities | 9,616 | - | 9,616 | - | ||||||||||||
Corporate debt securities | 3,104 | - | 3,104 | - | ||||||||||||
Preferred equity securities | 1,569 | - | 1,569 | - | ||||||||||||
Marketable equity securities | 148 | 148 | - | - | ||||||||||||
Mutual funds | 3,527 | - | 3,527 | - | ||||||||||||
Securities available-for-sale | 150,886 | 133,070 | 17,816 | - | ||||||||||||
Interest rate swap derivative | 3,238 | - | 3,238 | - | ||||||||||||
Derivative loan commitments | 36 | - | - | 36 | ||||||||||||
Forward loan sales commitments | 11 | - | 11 | |||||||||||||
Total | $ | 154,171 | $ | 133,070 | $ | 21,054 | $ | 47 | ||||||||
Liabilities | ||||||||||||||||
Interest rate swap derivative | $ | 3,294 | $ | - | $ | 3,294 | $ | - | ||||||||
Total | $ | 3,294 | $ | - | $ | 3,294 | $ | - |
42 |
Derivative and Forward Loan Sales Commitments, Net | ||||||||||||||||
For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Balance, at beginning of period | $ | 96 | $ | 494 | $ | 47 | $ | 488 | ||||||||
Total realized gain: | ||||||||||||||||
Included in earnings | (46 | ) | (3 | ) | 3 | 3 | ||||||||||
Balance, at the end of period | $ | 50 | $ | 491 | $ | 50 | $ | 491 |
June 30, 2014 | |||||||||
Significant | |||||||||
(Dollars in thousands) | Fair Value | Valuation Methodology | Unobservable Inputs | Input | |||||
Derivative and forward loan sales commitments, net | $ | 50 | Adjusted quoted prices in active markets | Embedded servicing value | 1.16% |
December 31, 2013 | |||||||||
Significant | |||||||||
(Dollars in thousands) | Fair Value | Valuation Methodology | Unobservable Inputs | Input | |||||
Derivative and forward loan sales commitments, net | $ | 47 | Adjusted quoted prices in active markets | Embedded servicing value | 1.25% |
June 30, 2014 | December 31, 2013 | |||||||||||||||||||||||
Quoted Prices in | Significant | Significant | Quoted Prices in | Significant | Significant | |||||||||||||||||||
Active Markets for | Observable | Unobservable | Active Markets for | Observable | Unobservable | |||||||||||||||||||
Identical Assets | Inputs | Inputs | Identical Assets | Inputs | Inputs | |||||||||||||||||||
(Level 1) | (Level 2) | (Level 3) | (Level 1) | (Level 2) | (Level 3) | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Impaired loans | $ | - | $ | - | $ | 2,882 | $ | - | $ | - | $ | 5,910 | ||||||||||||
Other real estate owned | - | - | 208 | - | - | 277 | ||||||||||||||||||
Mortgage servicing rights | - | - | - | - | - | 1,970 |
43 |
The following is a description of the valuation methodologies used for instruments measured on a non-recurring basis:
June 30, 2014 | |||||||||||||||
Significant | Weighted Average Inputs | ||||||||||||||
(Dollars in thousands) | Fair Value | Valuation Methodology | Unobservable Inputs | Range of Inputs | |||||||||||
Impaired loans | $ | 2,882 | Appraisals | Discount for dated appraisal | 0% - 20% | 10.0 | % | ||||||||
Discount for costs to sell | 8% - 15% | 11.5 | % | ||||||||||||
Other real estate owned | $ | 208 | Appraisals | Discount for costs to sell | 8% - 10% | 9.0 | % | ||||||||
December 31, 2013 | |||||||||||||||
Significant | Weighted Average Inputs | ||||||||||||||
(Dollars in thousands) | Fair Value | Valuation Methodology | Unobservable Inputs | Range of Inputs | |||||||||||
Mortgage servicing rights | $ | 1,970 | Discounted cash flows | Prepayment speed | 0% - 29% | 9.2 | % | ||||||||
Discount rate | n/a | 7.8 | % | ||||||||||||
Impaired loans | $ | 5,910 | Appraisals | Discount for dated appraisal | 0% - 20% | 10.0 | % | ||||||||
Discount for costs to sell | 8% - 15% | 11.5 | % | ||||||||||||
Other real estate owned | $ | 277 | Appraisals | Discount for costs to sell | 8% - 10% | 9.0 | % |
44 |
45 |
First Connecticut Bancorp, Inc. Notes to Consolidated Financial Statements (Unaudited) |
June 30, 2014 | December 31, 2013 | |||||||||||||||||||
Estimated | Estimated | |||||||||||||||||||
�� | Fair Value | Carrying | Fair | Carrying | Fair | |||||||||||||||
Hierarchy Level | Amount | Value | Amount | Value | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Financial assets | ||||||||||||||||||||
Securities held-to-maturity | Level 2 | $ | 12,715 | $ | 12,900 | $ | 12,983 | $ | 12,886 | |||||||||||
Securities available-for-sale | See previous table | 160,784 | 160,784 | 150,886 | 150,886 | |||||||||||||||
Loans | Level 3 | 1,945,051 | 1,936,984 | 1,816,308 | 1,803,424 | |||||||||||||||
Loans held-for-sale | Level 2 | 4,576 | 4,686 | 3,186 | 3,188 | |||||||||||||||
Mortgage servicing rights | Level 3 | 3,172 | 3,594 | 3,146 | 3,596 | |||||||||||||||
Federal Home Loan Bank of Boston stock | Level 2 | 17,724 | 17,724 | 13,136 | 13,136 | |||||||||||||||
Alternative investments | Level 3 | 2,344 | 2,337 | 2,352 | 2,778 | |||||||||||||||
Interest rate swap derivatives | Level 2 | 4,622 | 4,622 | 3,238 | 3,238 | |||||||||||||||
Forward loan sales commitments | Level 3 | - | - | 36 | 36 | |||||||||||||||
Derivative loan commitments | Level 3 | 149 | 149 | 11 | 11 | |||||||||||||||
Financial liabilities | ||||||||||||||||||||
Deposits other than time deposits | Level 1 | 1,298,150 | 1,298,150 | 1,175,013 | 1,175,013 | |||||||||||||||
Time deposits | Level 2 | 332,629 | 335,327 | 338,488 | 341,395 | |||||||||||||||
Federal Home Loan Bank of Boston advances | Level 2 | 291,000 | 291,486 | 259,000 | 259,765 | |||||||||||||||
Repurchase agreement borrowings | Level 2 | 21,000 | 21,813 | 21,000 | 21,992 | |||||||||||||||
Repurchase liabilities | Level 2 | 55,326 | 55,326 | 50,816 | 50,816 | |||||||||||||||
Interest rate swap derivatives | Level 2 | 4,681 | 4,681 | 3,294 | 3,294 | |||||||||||||||
Forward loan sales commitments | Level 3 | 99 | 99 | - | - |
14. | Regulatory Matters |
46 |
First Connecticut Bancorp, Inc. Notes to Consolidated Financial Statements (Unaudited) |
Actual | Minimum Required for Capital Adequacy Purposes | To Be Well Capitalized Under Prompt Corrective Action | ||||||||||||||||||||||
(Dollars in thousands) | Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||||||||||
Farmington Bank: | ||||||||||||||||||||||||
At June 30, 2014 | ||||||||||||||||||||||||
Total Capital (to Risk Weighted Assets) | $ | 213,297 | 12.29 | % | $ | 138,843 | 8.00 | % | $ | 173,553 | 10.00 | % | ||||||||||||
Tier I Capital (to Risk Weighted Assets) | 194,946 | 11.23 | 69,438 | 4.00 | 104,156 | 6.00 | ||||||||||||||||||
Tier I Capital (to Average Assets) | 194,946 | 8.90 | 87,616 | 4.00 | 109,520 | 5.00 | ||||||||||||||||||
At December 31, 2013 | ||||||||||||||||||||||||
Total Capital (to Risk Weighted Assets) | $ | 209,174 | 12.76 | % | $ | 131,144 | 8.00 | % | $ | 163,929 | 10.00 | % | ||||||||||||
Tier I Capital (to Risk Weighted Assets) | 190,424 | 11.62 | 65,550 | 4.00 | 98,326 | 6.00 | ||||||||||||||||||
Tier I Capital (to Average Assets) | 190,424 | 9.28 | 82,079 | 4.00 | 102,599 | 5.00 | ||||||||||||||||||
First Connecticut Bancorp, Inc.: | ||||||||||||||||||||||||
At June 30, 2014 | ||||||||||||||||||||||||
Total Capital (to Risk Weighted Assets) | $ | 253,117 | 14.56 | % | $ | 139,075 | 8.00 | % | $ | 173,844 | 10.00 | % | ||||||||||||
Tier I Capital (to Risk Weighted Assets) | 234,766 | 13.51 | 69,509 | 4.00 | 104,263 | 6.00 | ||||||||||||||||||
Tier I Capital (to Average Assets) | 234,766 | 10.70 | 87,763 | 4.00 | 109,704 | 5.00 | ||||||||||||||||||
At December 31, 2013 | ||||||||||||||||||||||||
Total Capital (to Risk Weighted Assets) | $ | 254,509 | 15.50 | % | $ | 131,359 | 8.00 | % | $ | 164,199 | 10.00 | % | ||||||||||||
Tier I Capital (to Risk Weighted Assets) | 235,759 | 14.36 | 65,671 | 4.00 | 98,507 | 6.00 | ||||||||||||||||||
Tier I Capital (to Average Assets) | 235,759 | 11.47 | 82,218 | 4.00 | 102,772 | 5.00 |
47 |
First Connecticut Bancorp, Inc. Notes to Consolidated Financial Statements (Unaudited) |
15. | Other Comprehensive Income |
For the Three Months Ended June 30, 2014 | |||||||||||||
Pre Tax Amount | Tax Expense | After Tax Amount | |||||||||||
(Dollars in thousands) | |||||||||||||
Unrealized gains (losses) on available-for-sale securities | $ | 161 | $ | (55 | ) | $ | 106 | ||||||
Less: net security gains reclassified into other noninterest income | - | - | - | ||||||||||
Net change in fair value of securities available-for-sale | 161 | (55 | ) | 106 | |||||||||
Reclassification adjustment for prior service costs and net gain included in net periodic pension costs (1) | 86 | (29 | ) | 57 | |||||||||
Total other comprehensive income (loss) | 247 | (84 | ) | 163 | |||||||||
For the Three Months Ended June 30, 2013 | |||||||||||||
Pre Tax Amount | Tax Expense | After Tax Amount | |||||||||||
(Dollars in thousands) | |||||||||||||
Unrealized (losses) gains on available-for-sale securities | $ | (482 | ) | $ | 164 | $ | (318 | ) | |||||
Less: net security gains (losses) reclassified into other noninterest income | 36 | (12 | ) | 24 | |||||||||
Net change in fair value of securities available-for-sale | (446 | ) | 152 | (294 | ) | ||||||||
Reclassification adjustment for prior service costs and net gain included in net periodic pension costs (1) | 148 | (51 | ) | 97 | |||||||||
Total other comprehensive (loss) income | (298 | ) | 101 | (197 | ) | ||||||||
For the Six Months Ended June 30, 2014 | |||||||||||||
Pre Tax Amount | Tax Expense | After Tax Amount | |||||||||||
(Dollars in thousands) | |||||||||||||
Unrealized gains (losses) on available-for-sale securities | $ | 297 | $ | (101 | ) | $ | 196 | ||||||
Less: net security gains reclassified into other noninterest income | - | - | - | ||||||||||
Net change in fair value of securities available-for-sale | 297 | (101 | ) | 196 | |||||||||
Reclassification adjustment for prior service costs and net gain included in net periodic pension costs (1) | 142 | (48 | ) | 94 | |||||||||
Total other comprehensive income (loss) | 439 | (149 | ) | 290 | |||||||||
For the Six Months Ended June 30, 2013 | |||||||||||||
Pre Tax Amount | Tax Expense | After Tax Amount | |||||||||||
(Dollars in thousands) | |||||||||||||
Unrealized (losses) gains on available-for-sale securities | $ | (134 | ) | $ | 46 | $ | (88 | ) | |||||
Less: net security gains (losses) reclassified into other noninterest income | 36 | (12 | ) | 24 | |||||||||
Net change in fair value of securities available-for-sale | (98 | ) | 34 | (64 | ) | ||||||||
Reclassification adjustment for prior service costs and net gain included in net periodic pension costs (1) | 283 | (97 | ) | 186 | |||||||||
Total other comprehensive income (loss) | 185 | (63 | ) | 122 |
(1) | Amounts are included in salaries and employee benefits in the unaudited Consolidated Statements of Income. |
16. | Legal Actions |
48 |
● | statements of our goals, intentions and expectations; |
● | statements regarding our business plans, prospects, growth and operating strategies; |
● | statements regarding the asset quality of our loan and investment portfolios; and |
● | estimates of our risks and future costs and benefits. |
● | Local, regional and national business or economic conditions may differ from those expected. |
● | The effects of and changes in trade, monetary and fiscal policies and laws, including the U.S. Federal Reserve Board’s interest rate policies, may adversely affect our business. |
● | The ability to increase market share and control expenses may be more difficult than anticipated. |
● | Changes in laws and regulatory requirements (including those concerning taxes, banking, securities and insurance) may adversely affect us or our business. |
● | Changes in accounting policies and practices, as may be adopted by regulatory agencies, the Public Company Accounting Oversight Board or the Financial Accounting Standards Board, may affect expected financial reporting. |
● | Future changes in interest rates may reduce our profits which could have a negative impact on the value of our stock. |
● | We are subject to lending risk and could incur losses in our loan portfolio despite our underwriting practices. Changes in real estate values could also increase our lending risk. |
● | Changes in demand for loan products, financial products and deposit flow could impact our financial performance. |
● | Strong competition within our market area may limit our growth and profitability. |
● | If our allowance for loan losses is not sufficient to cover actual loan losses, our earnings could decrease. |
● | Our stock value may be negatively affected by federal regulations and articles of incorporation provisions restricting takeovers. |
● | Implementation of stock benefit plans will increase our costs, which will reduce our income. |
49 |
● | The Dodd-Frank Act was signed into law on July 21, 2010 and has resulted in dramatic regulatory changes that affects the industry in general, and may impact our competitive position in ways that cannot be predicted at this time. |
● | The Emergency Economic Stabilization Act (“EESA”) of 2008 has and may continue to have a significant impact on the banking industry. |
● | The increased cost of maintaining or the Company’s ability to maintain adequate liquidity and capital, based on the requirements adopted by the Basel Committee on Banking Supervision and U.S. regulators. |
● | Changes to the amount and timing of proposed common stock repurchases. |
● | Computer systems on which we depend could fail or experience a security breach, implementation of new technologies may not be successful; and our ability to anticipate and respond to technological changes can affect our ability to meet customer needs. |
● | We may not manage the risks involved in the foregoing as well as anticipated. |
● | Maintaining a strong capital position in excess of the well-capitalized standards set by our banking regulators to support our current operations and future growth. The FDIC’s requirement for a “well-capitalized” bank is a total risk-based capital ratio of 10.0% or greater. As of June 30, 2014 our total risk-based capital ratio was 14.56%. |
● | Increasing our focus on commercial lending and continuing to expand commercial banking operations. We will continue to focus on commercial lending and the origination of commercial loans using prudent lending standards. We plan to continue to grow our commercial lending portfolio, while enhancing our complementary business products and services. |
● | Continuing to focus on residential and consumer lending in conjunction with our secondary market residential lending program. We offer traditional residential and consumer lending products and plan to continue to build a strong residential and consumer lending program that supports our secondary market residential lending program. Under our expanding secondary market residential lending program, we may sell a portion of our fixed rate residential originations while retaining the loan servicing function and mitigating our interest rate risk. |
● | Maintaining asset quality and prudent lending standards. We will continue to originate all loans utilizing prudent lending standards in an effort to maintain strong asset quality. While our delinquencies and charge-offs have decreased, we continue to diligently manage our collection function to minimize loan losses and non-performing assets. We will continue to employ sound risk management practices as we continue to expand our lending portfolio. |
50 |
● | Expanding our existing products and services and developing new products and services to meet the changing needs of consumers and businesses in our market area. We will continue to evaluate our consumer and business customers’ needs to ensure that we continue to offer relevant, up-to-date products and services. |
● | Continuing to control non-interest expenses. As part of our strategic plan, we have implemented several programs designed to control costs. We monitor our expense ratios and plan to reduce our efficiency ratio by controlling expenses and increasing net interest income and noninterest income. We plan to continue to evaluate and improve the effectiveness of our business processes and our efficiency, utilizing information technology when possible. |
● | Taking advantage of acquisition opportunities that are consistent with our strategic growth plans. We intend to continue to evaluate opportunities to acquire other financial institutions and financial service related businesses in our current market area or contiguous market areas that will enable us to enhance our existing products and services and develop new products and services. We have no specific plans, agreements or understandings with respect to any expansion or acquisition opportunities. |
51 |
52 |
53 |
54 |
55 |
For The Three Months Ended June 30, | ||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||
Average Balance | Interest and Dividends | Yield/Cost | Average Balance | Interest and Dividends | Yield/Cost | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||||
Loans, net | $ | 1,890,132 | $ | 17,448 | 3.70 | % | $ | 1,577,559 | $ | 15,105 | 3.84 | % | ||||||||||||
Securities | 167,250 | 355 | 0.85 | % | 115,280 | 216 | 0.75 | % | ||||||||||||||||
Federal Home Loan Bank of Boston stock | 14,744 | 49 | 1.33 | % | 8,383 | 9 | 0.43 | % | ||||||||||||||||
Federal funds and other earning assets | 3,567 | 2 | 0.22 | % | 14,317 | 6 | 0.17 | % | ||||||||||||||||
Total interest-earning assets | 2,075,693 | 17,854 | 3.45 | % | 1,715,539 | 15,336 | 3.59 | % | ||||||||||||||||
Noninterest-earning assets | 118,056 | 120,888 | ||||||||||||||||||||||
Total assets | $ | 2,193,749 | $ | 1,836,427 | ||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||
NOW accounts | $ | 332,597 | $ | 185 | 0.22 | % | $ | 266,905 | $ | 151 | 0.23 | % | ||||||||||||
Money market | 414,774 | 754 | 0.73 | % | 354,914 | 725 | 0.82 | % | ||||||||||||||||
Savings accounts | 204,217 | 42 | 0.08 | % | 184,307 | 73 | 0.16 | % | ||||||||||||||||
Certificates of deposit | 335,391 | 730 | 0.87 | % | 354,381 | 878 | 0.99 | % | ||||||||||||||||
Total interest-bearing deposits | 1,286,979 | 1,711 | 0.53 | % | 1,160,507 | 1,827 | 0.63 | % | ||||||||||||||||
Federal Home Loan Bank of Boston advances | 259,980 | 368 | 0.57 | % | 68,660 | 401 | 2.34 | % | ||||||||||||||||
Repurchase agreement borrowings | 21,000 | 179 | 3.42 | % | 21,000 | 180 | 3.44 | % | ||||||||||||||||
Repurchase liabilities | 53,159 | 32 | 0.24 | % | 46,539 | 41 | 0.35 | % | ||||||||||||||||
Total interest-bearing liabilities | 1,621,118 | 2,290 | 0.57 | % | 1,296,706 | 2,449 | 0.76 | % | ||||||||||||||||
Noninterest-bearing deposits | 303,473 | 257,670 | ||||||||||||||||||||||
Other noninterest-bearing liabilities | 36,891 | 46,233 | ||||||||||||||||||||||
Total liabilities | 1,961,482 | 1,600,609 | ||||||||||||||||||||||
Stockholders’ equity | 232,267 | 235,818 | ||||||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 2,193,749 | $ | 1,836,427 | ||||||||||||||||||||
Net interest income | $ | 15,564 | $ | 12,887 | ||||||||||||||||||||
Net interest rate spread (1) | 2.88 | % | 2.83 | % | ||||||||||||||||||||
Net interest-earning assets (2) | $ | 454,575 | $ | 418,833 | ||||||||||||||||||||
Net interest margin (3) | 3.01 | % | 3.01 | % | ||||||||||||||||||||
Average interest-earning assets to average interest-bearing liabilities | 128.04 | % | 132.30 | % |
(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. |
56 |
Three Months Ended June 30, | ||||||||||||
2014 vs. 2013 | ||||||||||||
Increase (decrease) due to | ||||||||||||
(Dollars in thousands) | Volume | Rate | Total | |||||||||
Interest-earning assets: | ||||||||||||
Loans, net | $ | 2,869 | $ | (526 | ) | $ | 2,343 | |||||
Investment securities | 111 | 28 | 139 | |||||||||
Federal Home Loan Bank of Boston stock | 11 | 29 | 40 | |||||||||
Federal funds and other interest-earning assets | (7 | ) | 3 | (4 | ) | |||||||
Total interest-earning assets | 2,984 | (466 | ) | 2,518 | ||||||||
Interest-bearing liabilities: | ||||||||||||
NOW accounts | 34 | - | 34 | |||||||||
Money market | 75 | (46 | ) | 29 | ||||||||
Savings accounts | 14 | (45 | ) | (31 | ) | |||||||
Certificates of deposit | (47 | ) | (101 | ) | (148 | ) | ||||||
Total interest-bearing deposits | 76 | (192 | ) | (116 | ) | |||||||
Advances from the Federal Home Loan Bank | (45 | ) | 12 | (33 | ) | |||||||
Repurchase agreement borrowing | - | (1 | ) | (1 | ) | |||||||
Repurchase liabilities | 3 | (12 | ) | (9 | ) | |||||||
Total interest-bearing liabilities | 34 | (193 | ) | (159 | ) | |||||||
Increase (decrease) in net interest income | $ | 2,950 | $ | (273 | ) | $ | 2,677 |
For the Three Months Ended June 30, | ||||||||||||||||
2014 | 2013 | $ Change | % Change | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Net interest income | $ | 15,564 | $ | 12,887 | $ | 2,677 | 20.8 | % | ||||||||
Provision for loan losses | 410 | 256 | 154 | 60.2 | ||||||||||||
Noninterest income | 2,066 | 2,999 | (933 | ) | (31.1 | ) | ||||||||||
Noninterest expense | 14,254 | 14,555 | (301 | ) | (2.1 | ) | ||||||||||
Income before taxes | 2,966 | 1,075 | 1,891 | 175.9 | ||||||||||||
Income tax expense | 776 | 256 | 520 | 203.1 | ||||||||||||
Net income | $ | 2,190 | $ | 819 | $ | 1,371 | 167.4 | % |
57 |
58 |
For the Three Months Ended June 30, | ||||||||||||||||
2014 | 2013 | $ Change | % Change | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Fees for customer services | $ | 1,317 | $ | 1,097 | $ | 220 | 20.1 | % | ||||||||
Net gain on sales of investments | - | 36 | (36 | ) | (100.0 | ) | ||||||||||
Net gain on loans sold | 317 | 1,589 | (1,272 | ) | (80.1 | ) | ||||||||||
Brokerage and insurance fee income | 49 | 41 | 8 | 19.5 | ||||||||||||
Bank owned life insurance income | 281 | 303 | (22 | ) | (7.3 | ) | ||||||||||
Other | 102 | (67 | ) | 169 | 252.2 | |||||||||||
Total noninterest income | $ | 2,066 | $ | 2,999 | $ | (933 | ) | (31.1 | ) % |
For the Three Months Ended June 30, | ||||||||||||||||
2014 | 2013 | $ Change | % Change | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Salaries and employee benefits | $ | 8,638 | $ | 8,555 | $ | 83 | 1.0 | % | ||||||||
Occupancy expense | 1,209 | 1,126 | 83 | 7.4 | ||||||||||||
Furniture and equipment expense | 1,106 | 1,099 | 7 | 0.6 | ||||||||||||
FDIC assessment | 321 | 311 | 10 | 3.2 | ||||||||||||
Marketing | 509 | 610 | (101 | ) | (16.6 | ) | ||||||||||
Other operating expenses | 2,471 | 2,854 | (383 | ) | (13.4 | ) | ||||||||||
Total noninterest expense | $ | 14,254 | $ | 14,555 | $ | (301 | ) | (2.1 | ) % |
59 |
For The Six Months Ended June 30, | ||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||
Average Balance | Interest and Dividends | Yield/Cost | Average Balance | Interest and Dividends | Yield/Cost | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||||
Loans, net | $ | 1,855,044 | $ | 34,084 | 3.71 | % | $ | 1,550,337 | $ | 29,887 | 3.89 | % | ||||||||||||
Securities | 163,975 | 657 | 0.81 | % | 120,783 | 468 | 0.78 | % | ||||||||||||||||
Federal Home Loan Bank of Boston stock | 13,944 | 87 | 1.26 | % | 8,595 | 17 | 0.40 | % | ||||||||||||||||
Federal funds and other earning assets | 3,580 | 6 | 0.34 | % | 12,675 | 11 | 0.18 | % | ||||||||||||||||
Total interest-earning assets | 2,036,543 | 34,834 | 3.45 | % | 1,692,390 | 30,383 | 3.62 | % | ||||||||||||||||
Noninterest-earning assets | 122,770 | 121,227 | ||||||||||||||||||||||
Total assets | $ | 2,159,313 | $ | 1,813,617 | ||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||
NOW accounts | $ | 342,458 | $ | 382 | 0.22 | % | $ | 250,489 | $ | 286 | 0.23 | % | ||||||||||||
Money market | 411,983 | 1,438 | 0.70 | % | 345,486 | 1,311 | 0.77 | % | ||||||||||||||||
Savings accounts | 198,710 | 97 | 0.10 | % | 177,825 | 158 | 0.18 | % | ||||||||||||||||
Certificates of deposit | 335,836 | 1,488 | 0.89 | % | 355,396 | 1,777 | 1.01 | % | ||||||||||||||||
Total interest-bearing deposits | 1,288,987 | 3,405 | 0.53 | % | 1,129,196 | 3,532 | 0.63 | % | ||||||||||||||||
Federal Home Loan Bank of Boston advances | 220,968 | 687 | 0.63 | % | 74,531 | 870 | 2.35 | % | ||||||||||||||||
Repurchase agreement borrowings | 21,000 | 356 | 3.42 | % | 21,000 | 351 | 3.37 | % | ||||||||||||||||
Repurchase liabilities | 57,151 | 72 | 0.25 | % | 51,031 | 91 | 0.36 | % | ||||||||||||||||
Total interest-bearing liabilities | 1,588,106 | 4,520 | 0.57 | % | 1,275,758 | 4,844 | 0.77 | % | ||||||||||||||||
Noninterest-bearing deposits | 301,557 | 248,804 | ||||||||||||||||||||||
Other noninterest-bearing liabilities | 36,758 | 48,979 | ||||||||||||||||||||||
Total liabilities | 1,926,421 | 1,573,541 | ||||||||||||||||||||||
Stockholders’ equity | 232,892 | 240,076 | ||||||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 2,159,313 | $ | 1,813,617 | ||||||||||||||||||||
Net interest income | $ | 30,314 | $ | 25,539 | ||||||||||||||||||||
Net interest rate spread (1) | 2.88 | % | 2.85 | % | ||||||||||||||||||||
Net interest-earning assets (2) | $ | 448,437 | $ | 416,632 | ||||||||||||||||||||
Net interest margin (3) | 3.00 | % | 3.04 | % | ||||||||||||||||||||
Average interest-earning assets to average interest-bearing liabilities | 128.24 | % | 132.66 | % |
(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. |
60 |
Six Months Ended June 30, | ||||||||||||
2014 vs. 2013 | ||||||||||||
Increase (decrease) due to | ||||||||||||
(Dollars in thousands) | Volume | Rate | Total | |||||||||
Interest-earning assets: | ||||||||||||
Loans, net | $ | 5,503 | $ | (1,306 | ) | $ | 4,197 | |||||
Investment securities | 189 | - | 189 | |||||||||
Federal Home Loan Bank of Boston stock | 16 | 54 | 70 | |||||||||
Federal funds and other interest-earning assets | 17 | (22 | ) | (5 | ) | |||||||
Total interest-earning assets | 5,725 | (1,274 | ) | 4,451 | ||||||||
Interest-bearing liabilities: | ||||||||||||
NOW accounts | 96 | - | 96 | |||||||||
Money market | 209 | (82 | ) | 127 | ||||||||
Savings accounts | 36 | (97 | ) | (61 | ) | |||||||
Certificates of deposit | (95 | ) | (194 | ) | (289 | ) | ||||||
Total interest-bearing deposits | 246 | (373 | ) | (127 | ) | |||||||
Advances from the Federal Home Loan Bank | (294 | ) | 111 | (183 | ) | |||||||
Repurchase agreement borrowing | - | 5 | 5 | |||||||||
Repurchase liabilities | 5 | (24 | ) | (19 | ) | |||||||
Total interest-bearing liabilities | (43 | ) | (281 | ) | (324 | ) | ||||||
Increase (decrease) in net interest income | $ | 5,768 | $ | (993 | ) | $ | 4,775 |
For the Six Months Ended June 30, | |||||||||||||||
2014 | 2013 | $ Change | % Change | ||||||||||||
(Dollars in thousands) | |||||||||||||||
Net interest income | $ | 30,314 | $ | 25,539 | $ | 4,775 | 18.7 | % | |||||||
Provision for loan losses | 915 | 655 | 260 | 39.7 | |||||||||||
Noninterest income | 3,828 | 6,647 | (2,819 | ) | (42.4 | ) | |||||||||
Noninterest expense | 28,214 | 29,254 | (1,040 | ) | (3.6 | ) | |||||||||
Income before taxes | 5,013 | 2,277 | 2,736 | 120.2 | |||||||||||
Income tax expense | 1,331 | 572 | 759 | 132.7 | |||||||||||
Net income | $ | 3,682 | $ | 1,705 | $ | 1,977 | 116.0 | % |
61 |
62 |
For the Six Months Ended June 30, | ||||||||||||||||
2014 | 2013 | $ Change | % Change | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Fees for customer services | $ | 2,508 | $ | 2,079 | $ | 429 | 20.6 | % | ||||||||
Net gain on sales of investments | - | 36 | (36 | ) | 100.0 | |||||||||||
Net gain on loans sold | 439 | 3,619 | (3,180 | ) | (87.9 | ) | ||||||||||
Brokerage and insurance fee income | 93 | 73 | 20 | 27.4 | ||||||||||||
Bank owned life insurance income | 563 | 712 | (149 | ) | (20.9 | ) | ||||||||||
Other | 225 | 128 | 97 | 75.8 | ||||||||||||
Total noninterest income | $ | 3,828 | $ | 6,647 | $ | (2,819 | ) | (42.4 | ) % |
For the Six Months Ended June 30, | ||||||||||||||||
2014 | 2013 | $ Change | % Change | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Salaries and employee benefits | $ | 16,926 | $ | 17,589 | $ | (663 | ) | (3.8 | ) % | |||||||
Occupancy expense | 2,558 | 2,366 | 192 | 8.1 | ||||||||||||
Furniture and equipment expense | 2,124 | 2,117 | 7 | 0.3 | ||||||||||||
FDIC assessment | 649 | 602 | 47 | 7.8 | ||||||||||||
Marketing | 887 | 1,204 | (317 | ) | (26.3 | ) | ||||||||||
Other operating expenses | 5,070 | 5,376 | (306 | ) | (5.7 | ) | ||||||||||
Total noninterest expense | $ | 28,214 | $ | 29,254 | $ | (1,040 | ) | (3.6 | ) % |
63 |
64 |
Percentage Increase (Decrease) in Estimated Net Interest Income Over 12 Months | ||||||||
At June 30, 2014 | At December 31, 2013 | |||||||
200 basis point increase | 0.49 | % | 2.38 | % | ||||
300 basis point increase | (2.03 | ) % | 0.79 | % | ||||
400 basis point increase | (6.24 | ) % | (2.03 | ) % | ||||
100 basis point decrease | (5.05 | ) % | (5.22 | ) % |
65 |
Item 4. | Controls and Procedures |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
(a) | Not applicable. |
(b) | Not applicable. |
(c) | During the quarter ending June 30, 2014, the Company made the following repurchases of common stock: |
Period | (a) Total Number of Shares (or Units) Purchased | (b) Average Price Paid per Share (or Unit) | (c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs | (d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs | ||||||||||||
April 1-30, 2014 | 49,937 | $ | 15.55 | 671,116 | 1,005,336 | |||||||||||
May 1-31, 2014 | 81,359 | 15.46 | 752,475 | 923,977 | ||||||||||||
June 1-30, 2014 | - | - | 752,475 | 923,977 |
Item 3. | Defaults Upon Senior Securities |
66 |
3.1 | Amended and Restated Certificate of Incorporation of First Connecticut Bancorp, Inc. (filed as Exhibit 3.1 to the Registration Statement on the Form S-1 filed for the Company on January 28, 2011, as amended, and incorporated herein by reference). |
3.2 | Bylaws of First Connecticut Bancorp, Inc. (filed as Exhibit 3.2 to the Registration Statement on the Form S-1 filed for the Company on January 28, 2011, as amended, and incorporated herein by reference). |
3.2.1 | Amended and Restated Bylaws of First Connecticut Bancorp, Inc. (filed as Exhibit 3.2.1 to the Form 8-K filed for the Company on October 29, 2013, and incorporated herein by reference). |
4.1 | Form of Common Stock Certificate of First Connecticut Bancorp, Inc. (filed as Exhibit 4.1 to the Registration Statement on the Form S-1 filed for the Company on January 28, 2011, as amended, and incorporated herein by reference). |
10.2 | Supplemental Executive Retirement Plan of Farmington Bank (filed as Exhibit 10.2 to the Registration Statement on the Form S-1 filed for the Company on January 28, 2011, as amended, and incorporated herein by reference). |
10.3 | Voluntary Deferred Compensation Plan for Directors and Key Employees (filed as Exhibit 10.3 to the Registration Statement on the Form S-1 filed for the Company on January 28, 2011, as amended, and incorporated herein by reference). |
10.4 | First Amendment to Voluntary Deferred Compensation Plan for Directors and Key Employees (filed as Exhibit 10.4 to the Registration Statement on the Form S-1 filed for the Company on January 28, 2011, as amended, and incorporated herein by reference). |
10.4.1 | Second Amendment to Voluntary Deferred Compensation Plan for Directors and Key Employees (filed as Exhibit 10.4.1 to the Form 10-K for the year ended December 31, 2012 filed on March 18, 2013, and incorporated herein by reference). |
10.5 | Voluntary Deferred Compensation Plan for Key Employees (filed as Exhibit 10.5 to the Registration Statement on the Form S-1 filed for the Company on January 28, 2011, as amended, and incorporated herein by reference). |
10.6 | Life Insurance Premium Reimbursement Agreement between Farmington Bank and John J. Patrick, Jr. (filed as Exhibit 10.6 to the Registration Statement on the Form S-1 filed for the Company on January 28, 2011, as amended, and incorporated herein by reference). |
10.7 | Life Insurance Premium Reimbursement Agreement between Farmington Bank and Gregory A. White (filed as Exhibit 10.7 to the Registration Statement on the Form S-1 filed for the Company on January 28, 2011, as amended, and incorporated herein by reference). |
10.8 | Farmington Savings Bank Defined Benefit Employees’ Pension Plan, as amended (filed as Exhibit 10.8 to the Registration Statement on the Form S-1 filed for the Company on January 28, 2011, as amended, and incorporated herein by reference). |
10.8.1 | Farmington Savings Bank Defined Benefit Employees’ Pension Plan, as amended (filed as Exhibit 10.8.1 to the Form 10-K for the year ended December 31, 2012 filed on March 18, 2013, and incorporated herein by reference). |
10.9 | Annual Incentive Compensation Plan (filed as Exhibit 10.9 to the Registration Statement on the Form S-1 filed for the Company on January 28, 2011, as amended, and incorporated herein by reference). |
67 |
10.9.1 | Amended Annual Incentive Compensation Plan (filed as Exhibit 10.9.1 to the Form 10-K for the year ended December 31, 2013 filed on March 17, 2014, and incorporated herein by reference) |
10.10 | Supplemental Retirement Plan Participation Agreement between John J. Patrick, Jr. and Farmington Bank (filed as Exhibit 10.10 to the Registration Statement on the Form S-1 filed for the Company on January 28, 2011, as amended, and incorporated herein by reference). |
10.11 | Supplemental Retirement Plan Participation Agreement between Michael T. Schweighoffer and Farmington Bank (filed as Exhibit 10.11 to the Registration Statement on the Form S-1 filed for the Company on January 28, 2011, as amended, and incorporated herein by reference). |
10.12 | Supplemental Retirement Plan Participation Agreement between Gregory A. White and Farmington Bank (filed as Exhibit 10.12 to the Registration Statement on the Form S-1 filed for the Company on January 28, 2011, as amended, and incorporated herein by reference). |
10.13 | Employment Agreement among First Connecticut Bancorp, Inc., Farmington Bank and John J. Patrick, Jr. (filed as Exhibit 10.1 Employment Agreement on Form 8-K for the Company on April 24, 2012 and incorporated herein by reference). |
10.13.1 | Employment Agreement First Amendment among First Connecticut Bancorp, Inc., Farmington Bank and John J. Patrick, Jr. (filed as Exhibit 10.13.1 to the current report on the Form 8-K filed for the Company on February 28, 2013, as amended, and incorporated herein by reference). |
10.14 | Life Insurance Premium Reimbursement Agreement between Farmington Bank and Michael T. Schweighoffer (filed as Exhibit 10.14 to the Form 10-Q filed for the Company on May 15, 2012, and incorporated herein by reference). |
10.15 | First Connecticut Bancorp, Inc. 2012 Stock Incentive Plan (Incorporated by reference to Appendix A in the Definitive Proxy Statement on Form 14A filed on June 6, 2012 and amended on July 2, 2012 (File No. 001-35209-12890818 and 12960688). |
21.1 | Subsidiaries of First Connecticut Bancorp, Inc. and Farmington Bank (filed as Exhibit 21.1 to the Registration Statement on the Form S-1 filed for the Company on January 28, 2011, as amended, and incorporated herein by reference). |
31.1 | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, signed by the Company’s Chief Executive Officer. |
31.2 | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, signed by the Company’s Chief Financial Officer. |
32.1 | Written Statement pursuant to 18 U.S.C. § 1350, as created by section 906 of the Sarbanes-Oxley Act of 2002, signed by the Company’s Chief Executive Officer. |
32.2 | Written Statement pursuant to 18 U.S.C. § 1350, as created by section 906 of the Sarbanes-Oxley Act of 2002, signed by the Company’s Chief Financial Officer. |
101 | Interactive data files pursuant to Rule 405 of Regulation S-t: (i) the Consolidated Statements of Financial Condition, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statement of Changes in Stockholders’ Equity, (iv) the Consolidated Statements of Cash Flows, and (iv) Notes to Unaudited Consolidated Financial Statements tagged as blocks of text and in detail.* |
* | As provided in Rule 406T of Regulation S-T, this information is furnished and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Act of 1934. |
68 |
FIRST CONNECTICUT BANCORP, INC. | |
Date: August 8, 2014 | /s/ John J. Patrick, Jr. |
John J. Patrick, Jr. | |
Chairman, President and Chief Executive Officer | |
Date: August 8, 2014 | /s/ Gregory A. White |
Gregory A. White | |
Executive Vice President and Chief Financial Officer | |
Date: August 8, 2014 | /s/ Kimberly Rozanski Ruppert |
Kimberly Rozanski Ruppert | |
Senior Vice President and Principal Accounting Officer |
69 |