10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

(Amendment No. 1)

x Quarterly Report-  Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2011

OR

o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission File No. 333-171913

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)

(860) 676-4600

(Registrant’s telephone number)

N/A

(Former name or former address, if changed since last report)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such requirements for the past 90 days.    YES   x     NO   o.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    YES   o     NO   x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer” and “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	x	Smaller reporting company	o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    YES  o   NO  x

As of November 14, 2011, there were 17,880,200 shares of First Connecticut Bancorp, Inc. common stock, par value $0.01, outstanding.

EXPLANATORY NOTE:

This Amendment to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2011 is being filed solely to include as exhibits to the report the Interactive Data Files attached as exhibits to this Amendment.  These exhibits were inadvertently omitted from the original filing by the Company’s third-party service provider.  No changes have been made to the Form 10-Q other than the furnishing of the exhibits described above. This amendment does not reflect subsequent events occurring after the original filing date of the Form 10-Q or modify or update in any way disclosures made in the Form 10-Q.

OTHER INFORMATION

Exhibits

The following exhibits are either filed as part of this report or are incorporated herein by reference:

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).

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).

10.1 Phantom Stock Plan of Farmington Bank (filed as Exhibit 10.1 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).

10.5 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).

10.9 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).

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).

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 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.

** These exhibits were previously filed with our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2011 with the Securities and Exchange Commission on November 14, 2011.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	FIRST CONNECTICUT BANCORP, INC.
Date: November 22, 2011	/s/ John J. Patrick
	John J. Patrick, Jr.
	Chairman, President and Chief Executive Officer
Date: November 22, 2011	/s/ Gregory A. White
	Gregory A. White
	Executive Vice President and Chief Financial Officer
Date: November 22, 2011	/s/ Kimberly Rozanski Ruppert
	Kimberly Rozanski Ruppert
	Senior Vice President and Principal Accounting Officer

XML

Earnings Per Share

9 Months Ended

Sep. 30, 2011

Earnings Per Share [Abstract]

Earnings Per Share

2. Earnings Per Share

Basic net (loss) income per common share is calculated by dividing the net income (loss) available to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted net income (loss) per common share is computed in a manner similar to basic net income (loss) per common share except that the weighted-average number of common shares outstanding is increased to include the incremental common shares (as computed using the treasury stock method) that would have been outstanding if all potentially dilutive common stock (i.e. stock options) were issued during the period. The Company had no dilutive or anti-dilutive common shares outstanding during the year. Unallocated common shares held by the ESOP are not included in the weighted-average number of common shares outstanding for purposes of calculating both basic and diluted income (loss) per common share.

Earnings per share data is not presented in these consolidated financial statements prior to June 29, 2011 since shares of common stock were not issued until June 29, 2011; therefore, per share information for prior periods is not meaningful. Pro forma earnings per share are reported in the Consolidated Statements of Operations which assume the shares of the Company issued on June 29, 2011 are outstanding for all periods presented.

The following table sets forth the calculation of basic and diluted earnings per common share for the three months ended September, 2011 and for the period from June 29, 2011 to September 30, 2011:

	For the three months ending September 30, 2011		For the Period from June 29, 2011 to September 30, 2011
(Dollars in thousands, except Per Share data):
Net income (loss)	$	1,043	$	(3,451	)
Weighted-average common shares		17,244,019		17,254,646
Net income (loss) per common share:
Basic and Diluted	$	0.06	$	(0.20	)

XML

Nature of Operations and Basis of Presentation

9 Months Ended

Sep. 30, 2011

Accounting Policies [Abstract]

Nature of Operations and Basis of Presentation

1. Nature of Operations and Basis of Presentation

Organization and Business

On June 29, 2011, the Boards of Directors of Farmington Bank, a Connecticut stock savings bank (the “Bank”), First Connecticut Bancorp, Inc., a Maryland-chartered corporation (the “Company”), First Connecticut Bancorp, Inc., a Connecticut-chartered nonstock corporation and mutual holding company (the “MHC”) and Farmington Holdings, Inc., a Connecticut-chartered corporation (the “Mid-Tier”) completed a Plan of Conversion and Reorganization whereby: (1) the MHC converted from the mutual holding company form of organization to the stock holding company form of organization, (2) the Company sold shares of common stock of the Company in a subscription offering, and (3) the Company contributed shares of Company common stock equal to 4.0% of the shares sold in the subscription offering to the Farmington Bank Community Foundation, Inc. (the “Conversion and Reorganization”). First Connecticut Bancorp, Inc. sold 17,192,500 shares of its common stock to eligible stock holders at $10.00 per share for proceeds of $167.8 million, net of offering costs of $4.1 million. On June 29, 2011, with the completion of the Conversion and Reorganization, First Connecticut Bancorp, Inc. is 100% owned by public shareholders and the MHC and the Mid-Tier ceased to exist.

In connection with the Conversion and Reorganization, the Company established Farmington Bank Community Foundation, Inc., a non-profit charitable organization dedicated to helping the communities the Bank serves. The Foundation was funded with a contribution of 687,700 shares of the Company’s common stock, representing 4% of the outstanding shares. The stock donation resulted in a $6.9 million contribution expense being recorded and an additional $253,000 deferred tax benefit was recognized as the basis of the contribution for tax purposes is equal to the stock’s trading price at the close of the first day of trading which was higher than the initial issuance price used to record the contribution expense.

As part of the reorganization, the Company established an Employee Stock Ownership Plan (“ESOP”) for eligible employees. The Company loaned the ESOP the amount needed to purchase up to 1,430,416 shares or 8.0% of the Company’s common stock issued in the offering. As of September 30, 2011, the ESOP purchased 883,354, shares of common stock at a cost of $9.7 million. The Bank intends to make annual contributions adequate to fund the payment of regular debt service requirements attributable to the indebtedness of the ESOP.

The consolidated financial statements include the accounts of First Connecticut Bancorp, Inc. and its wholly-owned subsidiary, Farmington Bank (formerly known as Farmington Savings Bank), (collectively, the “Company”). Significant inter-company accounts and transactions have been eliminated in consolidation.

First Connecticut Bancorp, Inc.’s only subsidiary is Farmington Bank. Farmington Bank’s main office is located in Farmington, Connecticut. Farmington Bank operates sixteen full service branch offices and four limited services offices in central Connecticut. Farmington Bank’s primary source of income is interest received on loans to customers, which include small and middle market businesses and individuals residing within Farmington Bank’s service area.

Wholly-owned subsidiaries of Farmington Bank include Farmington Savings Loan Servicing, Inc., a passive investment company for Connecticut income tax purposes that was established to service and hold loans collateralized by real property; Village Investments, Inc. which holds the Company’s investment in Infinex Financial Services, a registered broker-dealer; the Village Corp., Limited, a subsidiary that holds certain real estate; 28 Main Street Corp., presently inactive; Village Management Corp., presently inactive and Village Square Holdings, Inc., a subsidiary that holds certain bank premises and other real estate.

Basis of Financial Statement Presentation

The consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. The Company has condensed or omitted certain information and footnote disclosures normally included in the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America pursuant to such rules and regulations. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement have been included. All significant intercompany transactions and balances have been eliminated in consolidation. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 2010 included in the Company’s S-1/A filed on May 16, 2011. The results of operations for the interim periods are not necessarily indicative of the results for the full year.

In preparing the consolidated financial statements, management is required to make extensive use of estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the statement of condition and revenues and expenses for the interim period. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, investment security other-than-temporary impairment judgments and investment security valuation.

Reclassifications

Amounts in prior period consolidated financial statements are reclassified whenever necessary to conform to the current year presentation.

Recent Accounting Pronouncements

ASU No. 2011-02, “Receivables (Topic 310) — A Creditor’s Determination of Whether a Restructuring Is a Troubled Debt Restructuring.” On April 5, 2011, the FASB issued ASU No. 2011-02 to clarify when a loan modification or restructuring is considered a troubled debt restructuring (“TDR”). The changes apply to a lender that modifies a receivable covered by Subtopic 310-40, “Receivables—Troubled Debt Restructurings by Creditors.” In evaluating whether a restructuring constitutes a TDR, a creditor must separately conclude that both of the following exist: (i) the restructuring constitutes a concession and (ii) the debtor is experiencing financial difficulties. A creditor may determine that a debtor is experiencing financial difficulties, even though the debtor is not currently in default, if the creditor determines it is probable that the debtor would default on its payments for any of its debts in the foreseeable future without the loan modification. Lenders who determine that they are making a concession on the terms of the loan to a borrower who is having financial problems should follow the guidance found in ASU No. 2011-02. The Company adopted the provisions of ASU No. 2011-02 retrospectively to all modifications and restructuring activities that have occurred from January 1, 2011. As of September 30, 2011, the Company identified $7.5 million in loans that were newly considered troubled debt restructurings under the provisions of ASU No. 2011-02. The loans did not require an allowance as each was either previously partially charged-off or was adequately secured by collateral. See Note 4 to the Consolidated Financial Statements for the disclosures required by ASU No. 2010-02.

ASU No. 2011-03, “Transfers and Servicing (Topic 860) - Reconsideration of Effective Control for Repurchase Agreements.” In April 2011, the FASB issued ASU No. 2011-03 to clarify the determination of whether an entity may or may not recognize a sale upon transfer of financial assets subject to repurchase agreements. The changes remove from the assessment of effective control: (i) the criterion requiring the transferor to have the ability to repurchase or redeem the financial assets on substantially the agreed terms, even in the event of default by the transferee, and (ii) the collateral maintenance implementation guidance related to that criterion. As a result, it is anticipated that most repurchase agreements will not qualify for derecognition from the transferor’s financial statements. This change is effective for the Company’s interim and annual reporting periods beginning on or after December 15, 2011 and will be applied prospectively to new transactions or modifications of existing transactions after the effective date. The Company is currently evaluating the impact of the adoption of this accounting standards update on its consolidated financial statements and does not expect the application of this guidance will have a material impact as the Company has been accounting for its repurchase agreements as secured financing.

ASU No. 2011-04, “Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurements and Disclosure Requirements in U.S. GAAP and IFRSs.” In May 2011, the FASB issued ASU No. 2011-04 which will supersede most of the accounting guidance currently found in Topic 820 of FASB’s ASC. The amendments will improve comparability of fair value measurements presented and disclosed in financial statements prepared with GAAP and International Financial Reporting Standards (“IFRS”). The amendments also clarify the application of existing fair value measurement requirements. These amendments include (1) the application of the highest and best use and valuation premise concepts, (2) measuring the fair value of an instrument classified in a reporting entity’s shareholders’ equity and (3) disclosing quantitative information about the unobservable inputs used within the Level 3 hierarchy. The guidance is effective for the Company’s interim and annual periods beginning after December 15, 2011 and will be applied prospectively. The Company is currently evaluating the impact of the adoption of this accounting standards update on the Company’s consolidated financial statements and related disclosures.

In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. Under the amendments to Topic 220, an entity has the option to present the total of comprehensive income, the components of net income and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. This update eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. The amendments in this update do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. The amendments in this update should be applied retrospectively. For public entities, the amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. Early adoption is permitted, because compliance with the amendments is already permitted. The amendments do not require any transition disclosures. The Company is currently evaluating the impact of the adoption of this accounting standards update on the Company’s consolidated financial statements and related disclosures.

XML

Consolidated Statements of Condition (USD $) In Thousands	Sep. 30, 2011	Dec. 31, 2010
Assets
Cash and due from banks	$ 37,554	$ 18,608
Federal funds sold	203,000
Cash and cash equivalents	240,554	18,608
Securities held-to-maturity, at amortized cost	3,621	3,672
Securities available-for-sale, at fair value	160,743	163,008
Loans held for sale	778	862
Loans, net	1,211,514	1,157,917
Premises and equipment, net	20,965	21,907
Federal Home Loan Bank of Boston stock, at cost	7,449	7,449
Accrued income receivable	3,837	4,227
Bank-owned life insurance	20,182	19,657
Deferred income taxes	13,858	11,408
Prepaid expenses and other assets	13,075	7,915
Total assets	1,696,576	1,416,630
Deposits
Interest-bearing	1,065,434	958,319
Noninterest-bearing	176,234	150,186
Total Deposits	1,241,668	1,108,505
FHLB advances	63,000	71,000
Repurchase agreement borrowings	21,000	21,000
Mortgagors' escrow accounts	6,568	9,717
Repurchase liabilities	72,278	84,029
Accrued expenses and other liabilities	34,150	27,386
Total liabilities	1,438,664	1,321,637
Commitments and contingencies
Stockholders' Equity
Common stock, $0.01 par value, 30,000,000 shares authorized, 17,880,200 shares issued and outstanding	179
Additional paid-in-capital	174,743
Unallocated common stock held by ESOP	(9,184)
Retained earnings	94,927	97,513
Accumulated other comprehensive loss	(2,753)	(2,520)
Total stockholders' equity	257,912	94,993
Total liabilities and stockholders' equity	$ 1,696,576	$ 1,416,630

XML

Consolidated Statement of Changes in Stockholders' Equity (Parentheticals) (USD $) In Millions	9 Months Ended
	Sep. 30, 2011
Statement Of Stockholders Equity [Abstract]
Expenses related to Issuance of common stock for initial public offering	$ 4.1

XML

Consolidated Statements of Cash Flows (USD $) In Thousands	9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010
Cash flows from operating activities
Net (loss) income	$ (2,586)	$ 5,014
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Provision for allowance for loan losses	900	3,688
Provision for off-balance sheet commitments	34	4
Depreciation and amortization	2,310	2,198
Gain on sale of investments	(89)	(965)
Amortization of ESOP expense	533
Contribution of stock to Farmington Bank Community Foundation, Inc.	6,877
Loans originated for sale	(39,048)	(13,087)
Proceeds from the sale of loans held for sale	38,899	9,978
Net gain on loans sold	(629)	(323)
Loss on sale of foreclosed real estate		48
Accretion and amortization of investment security discounts and premiums, net	(94)	133
Amortization and accretion of loan fees and discounts, net	(106)	(335)
Decrease (increase) in accrued income receivable	390	(27)
Deferred income tax benefit	(2,077)	(661)
Increase in cash surrender value of bank-owned life insurance	(525)	(485)
Increase in prepaid expenses and other assets	(5,156)	(13,259)
Increase in accrued expenses and other liabilities	6,892	2,490
Net cash provided by (used in) operating activities	6,525	(5,589)
Cash flow from investing activities
Maturities of securities held-to-maturity	260
Sales and maturities of securities available-for-sale	304,013	114,835
Purchases of securities held-to-maturity	(209)	(259)
Purchases of securities available-for-sale	(302,080)	(141,708)
Loan originations, net of principal repayments	(53,677)	(102,321)
Proceeds from sale of foreclosed real estate	144	374
Purchases of bank-owned life insurance		(5,007)
Purchases of premises and equipment	(1,368)	(3,596)
Net cash used in investing activities	(52,917)	(137,682)
Cash flows from financing activities
Proceeds from common stock offering, net of offering cost	167,800
Purchase of common stock for ESOP	(9,725)
Net (decrease) increase in borrowings	(8,000)	6,000
Net increase in demand deposits, NOW accounts, savings accounts and money market accounts	175,501	265,637
Net decrease in certificates of deposit	(42,338)	(28,497)
Net (decrease) increase in repurchase liabilities	(11,751)	10,674
Change in mortgagors' escrow accounts	(3,149)	(3,268)
Net cash provided by financing activities	268,338	250,546
Net increase in cash and cash equivalents	221,946	107,275
Cash and cash equivalents at beginning of period	18,608	28,299
Cash and cash equivalents at end of period	240,554	135,574
Supplemental disclosure of cash flow information
Cash paid for interest	8,223	8,604
Cash paid for income taxes	854	2,282
Loans transferred to other real estate owned	$ 148	$ 128

XML

Consolidated Statements of Condition (Parentheticals) (USD $)	Sep. 30, 2011	Dec. 31, 2010
Statement Of Financial Position [Abstract]
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	30,000,000	30,000,000
Common stock, shares issued	17,880,200	17,880,200
Common stock, shares outstanding	17,880,200	17,880,200

XML

Fair Value Measurements

9 Months Ended

Sep. 30, 2011

Fair Value Disclosures [Abstract]

Fair Value Measurements

10. Fair Value Measurements

Fair value estimates are made as of a specific point in time based on the characteristics of the financial instruments and relevant market information. In accordance with FASB ASC 820-10, the fair value estimates are measured within the fair value hierarchy. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under FASB ASC 820-10 are described as follows:

Basis of Fair Value Measurement

● 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).

When available, quoted market prices are used. In other cases, fair values are based on estimates using present value or other valuation techniques. These techniques involve uncertainties and are significantly affected by the assumptions used and judgments made regarding risk characteristics of various financial instruments, discount rates, and estimates of future cash flows, future expected loss experience and other factors. Changes in assumptions could significantly affect these estimates. Derived fair value estimates cannot be substantiated by comparison to independent markets and, in certain cases, could not be realized in an immediate sale of the instrument.

Fair value estimates are based on existing financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not financial instruments. Accordingly, the aggregate fair value amounts presented do not purport to represent the underlying market value of the Company. There are no transfers between levels during the three and nine months ended September 30, 2011 or during the year ended December 31, 2010.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table details the financial instruments carried at fair value on a recurring basis as of September 30, 2011 and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine the fair value:

	September 30, 2011
(Dollars in thousands)	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
U.S. Treasury obligations	$	130,998	$	130,998	$	-	$	-
Government sponsored residential mortgage-backed securities		23,096		-		23,096		-
Corporate debt securities		1,115		-		1,115		-
Trust preferred debt securities		42		-		-		42
Preferred equity securities		1,705		-		1,705		-
Marketable equity securities		353		113		240		-
Mutual funds		3,434		-		3,434		-
Securities available-for-sale		160,743		131,111		29,590		42
Interest rate swap derivative		6,088		-		6,088		-
Total	$	166,831	$	131,111	$	35,678	$	42
Liabilities
Interest rate swap derivative	$	6,088	$	-	$	6,088	$	-
Forward loan sales commitments		8		-		-		8
Derivative loan commitments		66		-		-		66
Total	$	6,162	$	-	$	6,088	$	74

The following table details the financial instruments carried at fair value on a recurring basis as of December 31, 2010 and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine the fair value:

	December 31, 2010
(Dollars in thousands)	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
U.S. Treasury obligations	$	112,975	$	112,975	$	-	$	-
U.S. Goverment agency obligations		11,080		-		11,080		-
Government sponsored residential mortgage-backed securities		32,294		-		32,294		-
Corporate debt securities		1,052		-		1,052		-
Trust preferred debt securities		44		-		-		44
Preferred equity securities		1,860		-		1,860		-
Marketable equity securities		406		116		290		-
Mutual funds		3,297		-		3,297		-
Securities available for sale		163,008		113,091		49,873		44
Interest rate swap derivative		1,771		-		1,771		-
Total	$	164,779	$	113,091	$	51,644	$	44
Liabilities
Interest rate swap derivative	$	1,771	$	-	$	1,771	$	-
Total	$	1,771	$	-	$	1,771	$	-

The following tables present additional information about assets measured at fair value for which the Company has utilized Level 3 inputs.

	Securities Available-for-Sale					Derivative and Forward Loan Sales Commitments, Net
	For the Three Months Ended September 30,					For the Three Months Ended September 30,
	2011			2010		2011		2010
(Dollars in thousands)
Balance at beginning of period	$	44		$	67	$	21	$	-
Transfer into Level 3		-			-		-		-
Accretion		-			-		-		-
Paydowns		(2	)		-		-		-
Total losses (gains) - (realized/unrealized):
Included in earnings		-			-		53		-
Included in other comprehensive income		-			-		-		-
Purchases		-			-		-		-
Sales/Proceeds		-			-		-		-
Balance at the end of period	$	42		$	67	$	74	$	-

	Securities Available-for-Sale						Derivative and Forward Loan Sales Commitments, Net
	For the Nine Months Ended September 30,						For the Nine Months Ended September 30,
		2011			2010			2011		2010
(Dollars in thousands)
Balance at beginning of period	$	44		$	90		$	-	$	-
Transfer into Level 3		-			-			-		-
Accretion		-			-			-		-
Paydowns		(2	)		(23	)		-		-
Total losses - (realized/unrealized):
Included in earnings		-			-			74		-
Included in other comprehensive income		-			-			-		-
Purchases		-			-			-		-
Sales/Proceeds		-			-			-		-
Balance at the end of period	$	42		$	67		$	74	$	-

The following is a description of the valuation methodologies used for instruments measured at fair value:

Securities Available for Sale: Investment securities available for sale are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted prices, if available. If quoted prices are not available, fair values are measured using independent pricing models. Level 1 securities are those traded on active markets for identical securities including U.S. treasury obligations and, marketable equity securities. Level 2 securities include U.S. government agency obligations, government-sponsored residential mortgage-backed securities, corporate debt securities, preferred equity securities and mutual funds. When a market is illiquid or there is a lack of transparency around the inputs to valuation, the respective securities are classified as level 3 and reliance is placed upon internally developed models and management judgment and evaluation for valuation. Level 3 securities include trust preferred debt securities. At September 30, 2011 and December 31, 2010, the Company did not use the pricing service for its Level 3 securities, which consisted of pooled trust preferred debt securities. Therefore, management obtained a price by using a discounted cash flows analysis and a market bid indication.

The Company utilizes a third party, nationally-recognized pricing service (“pricing service”), subject to review by management, to estimate fair value measurements for almost 100% of its investment securities portfolio. The pricing service evaluates each asset class based on relevant market information considering observable data that may include dealer quotes, reported trades, market spreads, cash flows, the U.S. Treasury yield curve, the LIBOR swap yield curve, trade execution data, market prepayment speeds, credit information and the bond’s terms and conditions, among other things. The fair value prices on all investment securities are reviewed for reasonableness by management. Also, management assessed the valuation techniques used by the pricing service based on a review of their pricing methodology to ensure proper hierarchy classifications.

Interest Rate Swap Derivative Receivable and Liability: The Company’s derivative positions are valued using proprietary models that use as their basis readily observable market parameters and are classified within Level 2 of the valuation hierarchy. Such derivatives are basic interest rate swaps that do not have any embedded interest rate caps and floors.

Forward loan sale commitments and derivative loan commitments: Forward loan sale commitments and derivative loan commitments are based on fair values of the underlying mortgage loans and the probability of such commitments being exercised. Significant management judgment and estimation is required in determining these fair value measurements. Derivatives that are valued based upon models with significant unobservable market parameters and that are normally traded less actively or have trade activity that is one way are classified within Level 3 of the valuation hierarchy.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Certain assets and liabilities are measured at fair value on a non-recurring basis in accordance with generally accepted accounting principles. These include assets that are measured at the lower of cost or market that were recognized at fair value below cost at the end of the period as well as assets that are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment.

The following table details the financial instruments carried at fair value on a nonrecurring basis at September 30, 2011 and December 31, 2010 and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine the fair value:

	September 30, 2011
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
(Dollars in thousands)
Mortgage servicing rights	$	-	$	-	$	558
Loans held for sale		-		778		-
Impaired loans		-		-		38,627
Other real estate owned		-		-		242
	December 31, 2010
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
(Dollars in thousands)
Mortgage servicing rights	$	-	$	-	$	457
Loans held for sale		-		862		-
Impaired loans		-		-		25,466
Other real estate owned		-		-		238

The following is a description of the valuation methodologies used for instruments measured at fair value:

Mortgage Servicing Rights: A mortgage servicing right asset represents the amount by which the present value of the estimated future net cash flows to be received from servicing loans are expected to more than adequately compensate the Company for performing the servicing. The fair value of servicing rights is estimated using a present value cash flow model. The most important assumptions used in the valuation model are the anticipated rate of the loan prepayments and discount rates. Adjustments are only recorded when the discounted cash flows derived from the valuation model are less than the carrying value of the asset. As such, measurement at fair value is on a nonrecurring basis. Although some assumptions in determining fair value are based on standards used by market participants, some are based on unobservable inputs and therefore are classified in Level 3 of the valuation hierarchy.

Loans Held for Sale: Loans held for sale are accounted for at the lower of cost or market. The fair value of loans held for sale are based on quoted market prices of similar loans sold in conjunction with securitization transactions, adjusted as required for changes in loan characteristics.

Impaired Loans: Loans are generally not recorded at fair value on a recurring basis. Periodically, the Company records nonrecurring adjustments to the carrying value of loans based on fair value measurements for partial charge-offs of the uncollectible portions of those loans. Nonrecurring adjustments also include certain impairment amounts for collateral-dependent loans calculated in accordance with FASB ASC 310-10 when establishing the allowance for credit losses. Such amounts are generally based on the fair value of the underlying collateral supporting the loan. Collateral is typically valued using appraisals or other indications of value based on recent comparable sales of similar properties or other assumptions. Estimates of fair value based on collateral are generally based on assumptions not observable in the marketplace and therefore such valuations have been classified as Level 3. Any impaired loan for which no specific valuation allowance was necessary at September 30, 2011 is the result of either sufficient cash flow or sufficient collateral coverage, or previous charge off amount that reduced the book value of the loan to an amount equal to or below the fair value of the collateral. Impaired loans are measured based on either collateral values supported by appraisals, observed market prices or where potential losses have been identified and reserved accordingly. Updated appraisals are obtained at least annually for impaired loans $250,000 or greater. Management performs a quarterly review of the valuation of impaired loans and considers the current market and collateral conditions for collateral dependent loans when estimating their fair value for purposes of determining whether an allowance for loan losses is necessary for impaired loans. When assessing the collateral coverage for an impaired loan, management discounts appraisals based upon the age of the appraisal, anticipated selling charges and any other costs needed to prepare the collateral for sale to determine its net realizable value.

Other Real Estate Owned: The Company classifies property acquired through foreclosure or acceptance of deed-in-lieu of foreclosure as other real estate owned in its financial statements. Upon foreclosure, the property securing the loan is written down to fair value less selling costs. The writedown is based upon the difference between the appraised value and the book value. Appraisals are based on observable market data such as comparable sales within the real estate market, however assumptions made in determining comparability are unobservable and therefore these assets are classified as Level 3 within the valuation hierarchy.

XML

Document and Entity Information	9 Months Ended
	Sep. 30, 2011	Nov. 14, 2011
Document and Entity Information [Abstract]
Entity Registrant Name	First Connecticut Bancorp, Inc.
Entity Central Index Key	0001511198
Trading Symbol	fbnk
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		17,880,200
Document Type	10-Q
Document Period End Date	Sep. 30, 2011
Amendment Flag	false
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q3

XML

Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2011

Financial Instrument [Abstract]

Fair Value of Financial Instruments

11. Fair Value of Financial Instruments

FASB ASC 825-10, Fair Value of Financial Instruments, requires disclosure of fair value information about financial instruments, whether or not recognized in the consolidated statements of condition, for which it is practicable to estimate that value. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instrument. FASB ASC 825-10 excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company.

The following methods and assumptions were used by the Company in estimating its fair value disclosure for financial instruments:

Cash and cash equivalents: The carrying amounts reported in the statement of condition for cash and cash equivalents approximate those assets’ fair values.

Investment securities: Fair values for investment securities are based on quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments.

Investment in Federal Home Loan Bank of Boston stock: The fair value of stock in the Federal Home Loan Bank of Boston is assumed to approximate its cost.

Loans: In general, discount rates used to calculate values for loan products were based on the Company’s pricing at the respective year end and included appropriate adjustments for expected credit losses. A higher discount rate was assumed with respect to estimated cash flows associated with nonaccrual loans. Projected loan cash flows were adjusted for estimated credit losses. However, such estimates made by the Company may not be indicative of assumptions and adjustments that a purchaser of the Company’s loans would seek.

Accrued interest: The carrying amount of accrued interest approximates its fair value.

Interest Rate Swap Derivative Receivable: Interest rate swap derivatives not designated as hedges are measured at fair value.

Forward Loan Sale Commitments: Forward loan sale commitments derivatives not designated as hedges are measured at fair value.

Deposits: The fair values disclosed for demand deposits and savings accounts (e.g., interest and noninterest checking and passbook savings) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts). The carrying amounts for variable-rate, fixed-term certificates of deposit approximate their fair values at the reporting date. Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregate expected monthly maturities of time deposits.

Borrowed funds: The fair value for borrowed funds are estimated using discounted cash flow analysis based on the Company’s current incremental borrowing rate for similar types of agreements.

Repurchase liability: Repurchase liabilities represent a short-term customer sweep account product. Because of the short-term nature of these liabilities, the carrying amount approximates its fair value.

Interest Rate Swap Derivative Liability: Interest rate swap derivatives not designated as hedges are measured at fair value.

Derivative Loan Commitments: Interest rate lock commitments not designated as hedges are measured at fair value.

ASC 825-10 defines the fair value of demand deposits as the amount payable on demand and prohibits adjusting fair value for any value derived from retaining those deposits for an expected future period of time. That component is commonly referred to as a deposit base intangible. This intangible asset is neither considered in the above fair value amounts nor is it recorded as an intangible asset in the consolidated statements of condition.

The following table presents a comparison of the carrying value and estimated fair value of the Company’s financial instruments at September 30, 2011 and December 31, 2010:

	September 30, 2011				December 31, 2010
			Estimated				Estimated
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
(Dollars in thousands)
Financial assets
Cash and due from banks	$	37,554	$	37,554	$	18,608	$	18,608
Federal funds sold		203,000		203,000		-		-
Securities held-to-maturity		3,621		3,621		3,672		3,672
Securities available-for-sale		160,743		160,743		163,008		163,008
Loans held for sale		778		778		862		862
Loans		1,225,305		1,249,915		1,176,454		1,179,012
Federal Home Loan Bank stock		7,449		7,449		7,449		7,449
Accrued interest receivable		3,837		3,837		4,227		4,227
Financial liabilities
Deposits
Noninterest-bearing demand deposits		176,234		176,234		150,186		150,186
Savings accounts		144,144		144,144		129,122		129,122
Money market		223,791		223,791		158,232		158,232
Time deposits		411,339		414,372		453,677		456,147
NOW accounts		285,768		285,768		217,151		217,151
Club accounts		392		392		137		137
FHLB advances		63,000		66,026		71,000		72,779
Repurchase agreement borrowings		21,000		22,875		21,000		20,939
Mortgagors’ escrow accounts		6,568		6,568		9,717		9,717
Repurchase liabilities		72,278		72,278		84,029		84,029
On-balance sheet derivative financial instruments
Forward loan sales commitments:
Assets		-		-		-		-
Liabilities		8		8		-		-
Interest rate swap derivative liability:
Assets		6,088		6,088		1,771		1,771
Liabilities		6,088		6,088		1,771		1,771
Derivative loan commitments
Assets		-		-		-		-
Liabilities		66		66		-		-

XML

Consolidated Statements of Operations (USD $) In Thousands, except Share data	3 Months Ended				9 Months Ended
	Sep. 30, 2011		Sep. 30, 2010		Sep. 30, 2011		Sep. 30, 2010
Interest and fees on loans
Mortgage	$ 10,573		$ 10,838		$ 31,716		$ 31,675
Other	3,531		3,619		10,679		10,165
Interest and dividends on investments
United States Government and agency obligations	309		989		1,104		3,358
Other bonds	34		59		140		174
Corporate stocks	68		100		206		296
Other interest income	144		58		219		92
Total interest income	14,659		15,663		44,064		45,760
Interest expense
Deposits	1,886		2,059		5,792		6,160
Interest on borrowed funds	519		555		1,575		1,612
Interest on repo borrowings	182		182		540		540
Interest on repurchase liabilities	85		111		305		295
Total interest expense	2,672		2,907		8,212		8,607
Net interest income	11,987		12,756		35,852		37,153
Provision for allowance for loan losses	300		2,488		900		3,688
Net interest income after provision for loan losses	11,687		10,268		34,952		33,465
Noninterest income
Fees for customer services	852		800		2,499		2,226
Net gain on sales of investments	89		965		89		965
Net gain on loans sold	284		299		629		323
Brokerage and insurance fee income	30		102		164		317
Bank-owned life insurance income	177		187		525		485
Other	296		61		532		369
Total noninterest income	1,728		2,414		4,438		4,685
Noninterest expense
Salaries and employee benefits	7,065		5,656		21,106		16,615
Occupancy expense	1,129		1,017		3,460		3,076
Furniture and equipment expense	1,038		1,116		3,003		2,967
FDIC assessment	56		502		1,126		1,318
Marketing	505		628		1,636		1,799
Contribution to Farmington Bank Community Foundation, Inc.					6,877
Other operating expenses	2,152		1,836		6,325		5,101
Total noninterest expense	11,945		10,755		43,533		30,876
Income (loss) before income taxes	1,470		1,927		(4,143)		7,274
Income tax expense (benefit)	427		533		(1,557)		2,260
Net income (loss)	$ 1,043		$ 1,394		$ (2,586)		$ 5,014
Net income (loss) per share (See Note 2):
Basic and Diluted (1)	$ 0.06	[1]		[1]	$ (0.20)	[1]		[1]
Weighted average shares outstanding:
Basic and Diluted	17,244,019				17,254,646
Pro forma net income (loss) per share (2):
Basic and Diluted	$ 0.06	[2]	$ 0.08	[2]	$ (0.15)	[2]	$ 0.29	[2]

[1] Net loss per share for the nine months ended September 30, 2011 reflects earnings for the period from June 29, 2011, the date the Company completed a Plan of Conversion and Reorganization to September 30, 2011.

[2] Pro forma net income (loss) per share assumes the Company's shares are outstanding for all periods prior to the completion of the Plan of Conversion and Reorganization on June 29, 2011.

XML

Credit Arrangements

9 Months Ended

Sep. 30, 2011

Debt Disclosure [Abstract]

Credit Arrangements

5. Credit Arrangements

The Company has access to a pre-approved line of credit with the Federal Home Loan Bank of Boston (“FHLBB”) for $8.8 million, which was undrawn at September 30, 2011 and December 31, 2010. As of September 30, 2011, the Company’s access to a pre-approved unsecured line of credit with a bank increased to $20.0 million from $10.0 million at December 31, 2010, which was undrawn at September 30, 2011 and December 31, 2010. During 2011, the Company entered into a $3.5 million unsecured line of credit agreement with a bank which expired on October 31, 2011. The Company is currently working with the bank to renew the $3.5 million unsecured line. The Company maintains a balance of $262,500 with the bank to avoid fees associated with the above line. The line was undrawn at September 30, 2011.

During 2010, the Company entered into the Federal Reserve Bank’s discount window loan collateral program that enables the Company to borrow up to $84.6 million on an overnight basis as of September 30, 2011 and was undrawn at September 30, 2011 and December 31, 2010. The funding arrangement was collateralized by $120.1 million in pledged commercial real estate loans as of September 30, 2011.

In accordance with an agreement with the FHLBB, the Company is required to maintain qualified collateral, as defined in the FHLBB Statement of Credit Policy, free and clear of liens, pledges and encumbrances, as collateral for the advances, if any, and the preapproved line of credit. The Company is in compliance with these collateral requirements.

FHLBB advances totaled $63.0 million and $71.0 million at September 30, 2011 and December 31, 2010, respectively. Advances from the FHLBB are collateralized by first mortgage loans with an estimated eligible collateral value of $455.2 million and $439.7 million at September 30, 2011 and December 31, 2010, respectively. The Company is required to acquire and hold shares of capital stock in the FHLBB in an amount at least equal to the sum of 0.35% of the aggregate principal amount of its unpaid residential mortgage loans and similar obligations at the beginning of each year and up to 4.5% of its advances (borrowings) from the FHLBB. The carrying value of FHLBB stock approximates fair value based on the redemption provisions of the stock.

The Bank has a Master Repurchase Agreement borrowing facility with a broker. Borrowings under the Master Repurchase Agreement are secured by the Company’s investments in certain treasury bill securities with a fair value totaling $25.0 million. Outstanding borrowings totaled $21.0 million at September 30, 2011 and December 31, 2010.

The Bank offers overnight repurchase liability agreements to commercial or municipal customers whose excess deposit account balances are swept daily into collateralized repurchase liability accounts. The Bank had repurchase liabilities outstanding of $72.3 million and $84.0 million as of September 30, 2011 and December 31, 2010, respectively. They are secured by the Company’s investment in specific issues of U.S. Treasury obligations, U.S. Government agency obligations and Government sponsored residential mortgage-backed securities with a market value of $96.6 million and $79.0 million as of September 30, 2011 and December 31, 2010, respectively.

XML

Loans and Allowance for Loan Losses

9 Months Ended

Sep. 30, 2011

Receivables [Abstract]

Loans and Allowance for Loan Losses

4. Loans and Allowance for Loan Losses

Loans consisted of the following:

	September 30, 2011			December 31, 2010
(Dollars in thousands)
Real estate
Residential	$	471,816		$	453,557
Commercial		389,166			361,838
Construction		50,622			46,623
Installment		11,290			12,597
Commercial		125,469			112,535
Collateral		2,290			1,941
Home equity line of credit		98,658			81,837
Demand		42			227
Revolving credit		92			84
Resort		75,860			105,215
Total loans		1,225,305			1,176,454
Less:
Allowance for loan losses		(16,094	)		(20,734	)
Net deferred loan costs		2,303			2,197
Loans, net	$	1,211,514		$	1,157,917

A summary of changes in the allowance for loan losses for the three and nine months ended September 30, 2011 and 2010 are as follows:

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
(Dollars in thousands)	2011			2010			2011			2010
Balance at beginning of period	$	15,912		$	16,169		$	20,734		$	16,316
Provision for loan losses		300			2,488			900			3,688
Charge-offs		(122	)		(478	)		(5,561	)		(1,854	)
Recoveries		4			17			21			46
Balance at end of period	$	16,094		$	18,196		$	16,094		$	18,196

Changes in the allowance for loan losses by segments for the three months ended September 30, 2011 are as follows:

	For the Three Months Ended September 30, 2011
	Balance at beginning of period		Charge-offs			Recoveries		Provision for (Reduction) loan losses			Balance at end of period
(Dollars in thousands)
Real estate
Residential	$	3,484	$	-		$	-	$	(350	)	$	3,134
Commercial		6,500		(25	)		-		917			7,392
Construction		602		-			-		55			657
Installment		78		-			-		16			94
Commercial		1,858		(34	)		-		(145	)		1,679
Collateral		-		-			-		-			-
Home equity line of credit		629		(47	)		-		285			867
Demand		1		-			4		(5	)		-
Revolving credit		1		(16	)		-		16			1
Resort		2,260		-			-		(315	)		1,945
Unallocated		499		-			-		(174	)		325
	$	15,912	$	(122	)	$	4	$	300		$	16,094

Changes in the allowance for loan losses by segments for the nine months ended September 30, 2011 are as follows:

	For the Nine Months Ended September 30, 2011
	Balance at beginning of period		Charge-offs			Recoveries		Provision for (Reduction) loan losses			Balance at end of period
(Dollars in thousands)
Real estate
Residential	$	3,056	$	(332	)	$	-	$	410		$	3,134
Commercial		7,726		(25	)		-		(309	)		7,392
Construction		524		-			-		133			657
Installment		115		(5	)		1		(16	)		95
Commercial		1,564		(203	)		10		308			1,679
Collateral		-		-			-		-			-
Home equity line of credit		558		(72	)		-		381			867
Demand		3		-			10		(13	)		-
Revolving credit		-		(44	)		-		44			-
Resort		7,188		(4,880	)		-		(363	)		1,945
Unallocated		-		-			-		325			325
	$	20,734	$	(5,561	)	$	21	$	900		$	16,094

The following table lists the allocation of the allowance by impairment methodology and by loan segment at September 30, 2011 and December 31, 2010:

Loans individually evaluated for impairment:

	September 30, 2011				December 31, 2010
	Total		Reserve Allocation		Total		Reserve Allocation
(Dollars in thousands)
Real estate
Residential	$	11,200	$	485	$	7,001	$	358
Commercial		19,846		1,222		14,211		260
Construction		564		24		897		-
Installment		-		-		-		-
Commercial		7,631		56		2,795		-
Collateral		-		-		-		-
Home equity line of credit		1,328		155		1,228		48
Demand		-		-		-		-
Revolving Credit		-		-		-		-
Resort		-		-		4,880		4,880
Total	$	40,569	$	1,942	$	31,012	$	5,546
Loans collectively evaluated for impairment:
	September 30, 2011				December 31, 2010
	Total		Reserve Allocation		Total		Reserve Allocation
(Dollars in thousands)
Real estate
Residential	$	462,681	$	2,649	$	448,553	$	2,698
Commercial		369,348		6,170		347,625		7,466
Construction		50,019		633		45,715		524
Installment		11,290		94		12,597		115
Commercial		118,215		1,623		110,057		1,564
Collateral		2,290		-		1,941		-
Home equity line of credit		97,330		712		80,609		510
Demand		42		-		227		3
Revolving Credit		92		1		84		-
Resort		75,732		1,945		100,231		2,308
Total	$	1,187,039	$	13,827	$	1,147,639	$	15,188
Unallocated		-		325		-		-
Total	$	1,227,608	$	16,094	$	1,178,651	$	20,734

The following is a summary of loan delinquencies at recorded investment values at September 30, 2011 and December 31, 2010:

	September 30, 2011
	30-59 Days				60-89 Days				> 90 Days								Past Due 90 Days or More and Still Accruing
(Dollars in thousands)	Past Due				Past Due				Past Due				Total
	Number		Amount		Number		Amount		Number		Amount		Number		Amount
Real estate
Residential		9	$	1,547		5	$	1,211		18	$	9,412		32	$	12,170	$	-
Commercial		1		968		1		255		7		5,374		9		6,597		-
Construction		-		-		-		-		1		564		1		564		-
Installment		5		72		2		83		2		65		9		220		-
Commercial		2		315		1		360		10		1,091		13		1,766		-
Collateral		8		110		-		-		-		-		8		110		-
Home equity line of credit		1		124		-		-		4		1,337		5		1,461		-
Demand		-		-		-		-		1		25		1		25		-
Revolving Credit		-		-		-		-		-		-		-		-		-
Resort		-		-		-		-		-		-		-		-		-
Total		26	$	3,136		9	$	1,909		43	$	17,868		78	$	22,913	$	-
	December 31, 2010
	30-59 Days				60-89 Days				> 90 Days								Past Due 90 Days or More and Still Accruing
(Dollars in thousands)	Past Due				Past Due				Past Due				Total
	Number		Amount		Number		Amount		Number		Amount		Number		Amount
Real estate
Residential		6	$	1,273		6	$	4,624		10	$	4,128		22	$	10,025	$	-
Commercial		2		456		2		793		6		3,160		10		4,409		-
Construction		-		-		-		-		2		897		2		897		-
Installment		4		25		-		-		5		98		9		123		-
Commercial		5		456		-		-		10		761		15		1,217		-
Collateral		4		42		-		-		-		-		4		42		-
Home equity line of credit		2		100		1		24		5		1,843		8		1,967		-
Demand		-		-		-		-		1		25		1		25		-
Revolving Credit		-		-		-		-		-		-		-		-		-
Resort		-		-		-		-		-		-		-		-		-
Total		23	$	2,352		9	$	5,441		39	$	10,912		71	$	18,705	$	-

Nonperforming assets consist of non-accruing loans and loans past due more than 90 days and still accruing interest and other real estate owned. Nonperforming assets were:

(Dollars in thousands)	September 30, 2011		December 31, 2010
Nonaccrual loans:
Real estate
Residential	$	9,692	$	5,209
Commercial		5,374		3,693
Construction		564		898
Installment		152		124
Commercial		1,184		862
Collateral		-		-
Home equity line of credit		1,451		2,031
Demand		25		25
Revolving Credit		-		-
Resort		-		4,880
Total nonaccruing loans		18,442		17,722
Loans 90 days past due and still accruing		-		-
Real estate owned		242		238
Total nonperforming assets	$	18,684	$	17,960

The following is a summary of impaired loans at September 30, 2011:

	September 30, 2011
			Unpaid
	Recorded		Principal		Related
(Dollars in thousands)	Investment		Balance		Allowance
Impaired loans without a valuation allowance:
Real estate
Residential	$	5,223	$	5,355	$	-
Commercial		10,538		11,527		-
Construction		-		-		-
Installment		-		-		-
Commercial		6,848		6,846		-
Collateral		-		-		-
Home equity line of credit		329		400		-
Demand		-		-		-
Revolving Credit		-		-		-
Resort		-		-		-
Total		22,938		24,128		-
Impaired loans with a valuation allowance:
Real estate
Residential		5,977		6,290		485
Commercial		9,308		9,308		1,222
Construction		564		810		24
Installment		-		-		-
Commercial		783		930		56
Collateral		-		-		-
Home equity line of credit		999		999		155
Demand		-		-		-
Revolving Credit		-		-		-
Resort		-		-		-
Total		17,631		18,337		1,942
Total impaired loans	$	40,569	$	42,465	$	1,942

The following is a summary of information pertaining to impaired loans at December 31, 2010:

	December 31, 2010
			Unpaid
	Recorded		Principal		Related
(Dollars in thousands)	Investment		Balance		Allowance
Impaired loans without a valuation allowance:
Real estate
Residential	$	2,710	$	2,703	$	-
Commercial		7,974		8,982		-
Construction		897		1,143		-
Installment		-		-		-
Commercial		2,795		2,803		-
Collateral		-		-		-
Home equity line of credit		999		999		-
Demand		-		-		-
Revolving Credit		-		-		-
Resort		-		-		-
Total		15,375		16,630		-
Impaired loans with a valuation allowance:
Real estate
Residential		4,291		4,306		358
Commercial		6,237		6,237		260
Construction		-		-		-
Installment		-		-		-
Commercial		-		-		-
Collateral		-		-		-
Home equity line of credit		229		300		48
Demand		-		-		-
Revolving Credit		-		-		-
Resort		4,880		4,880		4,880
Total		15,637		15,723		5,546
Total impaired loans	$	31,012	$	32,353	$	5,546

Troubled Debt Restructuring

A loan is considered a troubled debt restructuring (“TDR”)when we, for economic or legal reasons related to the borrower’s financial difficulties, grant a concession to the borrower in modifying or renewing the loan that we would not otherwise consider. In connection with troubled debt restructurings, terms may be modified to fit the ability of the borrower to repay in line with their current financial status, which may include a reduction in the interest rate to market rate or below, a change in the term or movement of past due amounts to the back-end of the loan or refinancing. A loan is placed on non-accrual status upon being restructured, even if it was not previously, unless the modified loan was current for the six months prior to its modification and we believe the loan is fully collectable in accordance with its new terms. Our policy to restore a restructured loan to performing status is dependent on the receipt of regular payments, generally for a period of six months and one calendar year-end. All troubled debt restructurings are classified as impaired loans and are reviewed for impairment by management on a regular basis and at calendar year-end reporting period per our policy.

The recorded investment balance of TDRs approximated $30.7 million and $27.0 million at September 30, 2011 and December 31, 2010, respectively. At September 30, 2011 and December 31, 2010, the majority of the Company’s TDRs are on accrual status. TDRs on accrual status were $19.6 million and $16.9 million while TDRs on nonaccrual status were $11.1 million and $10.1 million at September 30, 2011 and December 31, 2010, respectively. At September 30, 2011, 100% of the accruing TDRs have been performing in accordance with the restructured terms. At September 30, 2011 and December 31, 2010, the allowance for loan losses included specific reserves of $1.7 million and $5.5 million related to TDRs, respectively. For the three and nine months ended September 30, 2011, the Bank had no charged offs related to TDRs deemed to be uncollectible. For the three and nine months ended September 30, 2010, the Bank charged off $-0- and $765,000, for the portion of TDRs deemed to be uncollectible, respectively. The amount of additional funds committed to borrowers in TDR status was $196,000 and $6,000 at September 30, 2011 and December 31, 2010, respectively. The Bank in very rare circumstances may provide additional funds committed to borrowers in TDR status.

The following table presents information on loans whose terms had been modified in a troubled debt restructuring at September 30, 2011 and December 31, 2010:

	September 30, 2011
	TDRs on Accrual Status				TDRs on Nonaccrual Status				Total TDRs
(Dollars in thousands)	Number of Loans		Balance of Loans		Number of Loans		Balance of Loans		Number of Loans		Balance of Loans
Real estate
Residential		3	$	1,076		5	$	5,303		8	$	6,379
Commercial		8		13,198		4		4,113		12		17,311
Construction		-		-		1		564		1		564
Installment		-		-		-		-		-		-
Commercial		6		5,299		1		147		7		5,446
Collateral		-		-		-		-		-		-
Home equity line of credit		-		-		1		999		1		999
Demand		-		-		-		-		-		-
Revolving Credit		-		-		-		-		-		-
Resort		-		-		-		-		-		-
Total		17	$	19,573		12	$	11,126		29	$	30,699
	December 31, 2010
	TDRs on Accrual Status				TDRs on Nonaccrual Status				Total
(Dollars in thousands)	Number of Loans		Recorded Investment		Number of Loans		Recorded Investment		Number of Loans		Recorded Investment
Real estate
Residential		5	$	4,449		2	$	697		7	$	5,146
Commercial		5		10,544		3		2,449		8		12,993
Construction		-		-		2		897		2		897
Installment		-		-		-		-		-		-
Commercial		5		1,932		1		146		6		2,078
Collateral		-		-		-		-		-		-
Home equity line of credit		-		-		1		999		1		999
Demand		-		-		-		-		-		-
Revolving Credit		-		-		-		-		-		-
Resort		-		-		1		4,880		1		4,880
Total		15	$	16,925		10	$	10,068		25	$	26,993

The following tables include the recorded investment and number of modifications for modified loans. The Company reports the recorded investment in the loans prior to a modification and also the recorded investment in the loans after the loans were restructured for the three and nine months ended September 30, 2011:

	For the Three Months Ended September 30, 2011						For the Nine Months Ended September 30, 2011
(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)
Real estate
Residential		2	$	3,647	$	3,647		6	$	5,822	$	5,686
Commercial		5		7,057		7,049		5		7,057		7,049
Construction		-		-		-		-		-		-
Installment		-		-		-		-		-		-
Commercial		2		3,659		3,609		5		5,100		4,999
Collateral		-		-		-		-		-		-
Home equity line of credit		-		-		-		-		-		-
Demand		-		-		-		-		-		-
Revolving Credit		-		-		-		-		-		-
Resort		-		-		-		-		-		-
Total		9	$	14,363	$	14,305		16	$	17,979	$	17,734

(1) The period end balances are inclusive of all partial paydowns and charge-offs since the modification date.

TDR loans may be modified by means of extended maturity, below market adjusted interest rates, a combination of rate and maturity, or by other means including covenant modifications, forbearance and /or the concessions.  For the three months ended September 30, 2011, the bank modified four commercial real estate loans totaling $3.7 million and one commercial loan totaling $3.5 million by extending the maturity date, one commercial real estate loan totaling $3.3 million by a combination of rate and maturity and two residential real estate loans totaling $3.6 million and one commercial loan totaling $93,000 by other means including covenant modifications, forbearance and /or other concessions.  For the nine months ended September 30, 2011, the bank modified four commercial real estate loans totaling $3.7 million and two commercial loans totaling $3.7 million by extending the maturity date, one residential real estate loan totaling $124,000 by adjusting interest rate, one commercial real estate loans totaling $3.3 million and two commercial loans totaling $1.2 million by a combination of rate and maturity and five residential real estate loans totaling $5.6 million and one commercial loan totaling $93,000 by other means including covenant modifications, forbearance and/or other concessions.

The following table shows loans modified in a TDR from October 1, 2010 through September 30, 2011 that subsequently defaulted (i.e., 30 days or more past due following a modification) during the three and nine months ended September 30, 2011.

	Loans Modified as a TDR within the Previous Twelve Months that Subsequently Defaulted During the Three Months Ended September 30, 2011				Loans Modified as a TDR within the Previous Twelve Months that Subsequently Defaulted During the Nine Months Ended September 30, 2011
(Dollars in thousands)	Number of Loans		Recorded Investment (1)		Number of Loans		Recorded Investment (1)
Real estate
Residential		-	$	-		2	$	1,649
Commercial		-		-		1		330
Construction		-		-		-		-
Installment		-		-		-		-
Commercial		-		-		-		-
Collateral		-		-		-		-
Home equity line of credit		-		-		-		-
Demand		-		-		-		-
Revolving Credit		-		-		-		-
Resort		-		-		-		-
Total		-	$	-		3	$	1,979

(1) The period end balances are inclusive of all partial paydowns and charge-offs since the modification date. Loans modified in a TDR that were fully paid down, charged-off or foreclosed upon by period end are not reported.

Credit Quality Information

At the time of loan origination, a risk rating based on a nine point grading system is assigned to each commercial-related loan based on the loan officer’s and management’s assessment of the risk associated with each particular loan. This risk assessment is based on an in depth analysis of a variety of factors. More complex loans and larger commitments require that our internal credit risk management department further evaluate the risk rating of the individual loan or relationship, with credit risk management having final determination of the appropriate risk rating. These more complex loans and relationships receive ongoing periodic review to assess the appropriate risk rating on a post-closing basis with changes made to the risk rating as the borrower’s and economic conditions warrant. Our risk rating system is designed to be a dynamic system and we grade loans on a “real time” basis. The Company places considerable emphasis on risk rating accuracy, risk rating justification, and risk rating triggers. Our risk rating process has been enhanced with our recent implementation of industry-based risk rating “cards.” The cards are used by our loan officers and promote risk rating accuracy and consistency on an institution-wide basis. Most loans are reviewed annually as part of a comprehensive portfolio review conducted by management and/or by our independent loan review firm. More frequent reviews of loans rated low pass, special mention, substandard and doubtful are conducted by our credit risk management department. We utilize an independent loan review consulting firm to affirm our rating accuracy and opine on the overall credit quality of our loan portfolio. The examination is designed to provide an evaluation of the portfolio with respect to risk rating profile as well as with regard to the soundness of individual loan files. The individual loan reviews include an analysis of the creditworthiness of obligors, via appropriate key ratios and cash flow analysis and an assessment of collateral protection. The consulting firm conducts two loan reviews per year aiming at a 65.0% or higher commercial and industrial loans and commercial real estate portfolio penetration. Summary findings of all loan reviews performed by the outside consulting firm are reported to our board of directors and senior management upon completion.

The Company utilizes a nine point risk rating scale as follows:

Risk Rating Definitions

Residential and consumer loans are not rated unless they are 45 days or more delinquent, in which case, depending on past-due days, they will be rated 6, 7 or 8.

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.

The following table presents the Company’s loans by risk rating at September 30, 2011 and December 31, 2010:

	September 30, 2011
(Dollars in thousands)	Pass		Special Mention		Substandard		Doubtful		Total
Real estate
Residential	$	458,706	$	2,641	$	10,469	$	-	$	471,816
Commercial		346,243		11,733		31,190		-		389,166
Construction		46,550		582		3,490		-		50,622
Installment		10,980		158		152		-		11,290
Commercial		105,905		3,214		16,350		-		125,469
Collateral		2,282		8		-		-		2,290
Home equity line of credit		96,337		870		1,451		-		98,658
Demand		17		-		25		-		42
Revolving Credit		92		-		-		-		92
Resort		57,037		5,911		12,912		-		75,860
Total Loans	$	1,124,149	$	25,117	$	76,039	$	-	$	1,225,305
	December 31, 2010
(Dollars in thousands)	Pass		Special Mention		Substandard		Doubtful		Total
Real estate
Residential	$	442,255	$	2,025	$	9,277	$	-	$	453,557
Commercial		319,383		13,418		29,037		-		361,838
Construction		38,791		1,611		6,221		-		46,623
Installment		12,452		13		132		-		12,597
Commercial		92,015		5,833		14,687		-		112,535
Collateral		1,933		8		-		-		1,941
Home equity line of credit		79,468		277		2,092		-		81,837
Demand		202		-		25		-		227
Revolving Credit		84		-		-		-		84
Resort		84,981		-		20,234		-		105,215
Total Loans	$	1,071,564	$	23,185	$	81,705	$	-	$	1,176,454

Our senior management places considerable emphasis on the early identification of problem assets, problem-resolution and minimizing loss exposure. Delinquency notices are mailed monthly to all delinquent borrowers, advising them of the amount of their delinquency. When a loan becomes more than 30 days delinquent, we send a letter advising the borrower of the delinquency. Residential and consumer lending borrowers are typically given 30 days to pay the delinquent payments or to contact us to make arrangements to bring the loan current over a longer period of time. Generally, if a residential or consumer lending borrower fails to bring the loan current within 90 days from the original due date or to make arrangements to cure the delinquency over a longer period of time, the matter is referred to legal counsel and foreclosure or other collection proceedings are initiated. We may consider forbearance or a loan restructuring in certain circumstances where a temporary loss of income is the primary cause of the delinquency, and if a reasonable plan is presented by the borrower to cure the delinquency in a reasonable period of time after his or her income resumes. Problem or delinquent borrowers in our commercial real estate, commercial business and resort portfolios are handled on a case-by-case basis, typically by our special assets department. Appropriate problem-resolution and workout strategies are formulated based on the specific facts and circumstances.

Related Party Loans

During the regular course of its business, the Company makes loans to its executive officers, directors and other related parties. These related party loans totaled $539,000 and $831,000 at September 30, 2011 and December 31, 2010, respectively. All related party loans were performing according to their credit terms.

XML

Regulatory Matters

9 Months Ended

Sep. 30, 2011

Regulatory Matters Disclosure [Abstract]

Regulatory Matters

12. Regulatory Matters

Capital guidelines of the Federal Reserve Board and the Federal Deposit Insurance Corporation (“FDIC”) require the Company and the Bank to maintain certain minimum ratios, as set forth below. At September 30, 2011 and December 31, 2010, the Company and the Bank were deemed to be “well capitalized” under the regulations of the Federal Reserve Board and the FDIC, respectively, and in compliance with the applicable capital requirements.

The following table presents the actual capital amounts and ratios for the Company and the Bank:

	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 September 30, 2011 -
Total Capital (to Risk Weighted Assets)	$	197,139		17.43	%	$	90,483		8.00	%		$	113,103		10.00	%
Tier I Capital (to Risk Weighted Assets)		182,992		16.18			45,239		4.00				67,859		6.00
Tier I Capital (to Average Assets)		182,992		10.75			68,090		4.00				85,113		5.00
At December 31, 2010 -
Total Capital (to Risk Weighted Assets)	$	110,772		10.27	%	$	86,309		8.00	%		$	107,886		10.00	%
Tier I Capital (to Risk Weighted Assets)		97,194		9.01			43,155		4.00				64,732		6.00
Tier I Capital (to Average Assets)		97,194		6.47			60,078		4.00				75,097		5.00
First Connecticut Bancorp, Inc.:
At September 30, 2011 -
Total Capital (to Risk Weighted Assets)	$	274,471		24.21	%	$	90,697		8.00	%		$	113,371		10.00	%
Tier I Capital (to Risk Weighted Assets)		260,324		22.96			45,353		4.00				68,029		6.00
Tier I Capital (to Average Assets)		260,324		15.55			66,964		4.00				83,705		5.00
At December 31, 2010 -
Total Capital (to Risk Weighted Assets)	$	110,872		10.28	%	$	86,309		8.00	%		$	107,886		10.00	%
Tier I Capital (to Risk Weighted Assets)		97,294		9.02			43,155		4.00				64,732		6.00
Tier I Capital (to Average Assets)		97,294		6.48			60,097		4.00				75,121		5.00

XML

Derivative Financial Instruments

9 Months Ended

Sep. 30, 2011

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

8. Derivative Financial Instruments

Non-Hedge Accounting Derivatives/Non-designated Hedges:

The Company does not use derivatives for trading or speculative purposes. Interest rate swap derivatives not designated as hedges are offered to certain qualifying commercial customers and to manage the Company’s exposure to interest rate movements but do not meet the strict hedge accounting under FASB ASC 815, “Derivatives and Hedging”.The interest rate swap agreements enable these customers to synthetically fix the interest rate on variable interest rate loans. The customers pay a variable rate and enter into a fixed rate swap agreement with the Company. The credit risk associated with the interest rate swap derivatives executed with these customers is essentially the same as that involved in extending loans and is subject to our normal credit policies. The Company obtains collateral, if needed, based upon its assessment of the customers’ credit quality. Generally, interest rate swap agreements are offered to “pass” rated customers requesting long-term commercial loans or commercial mortgages in amounts of at least $1.0 million. The interest rate swap agreement with our customers is cross-collateralized by the loan collateral. The interest rate swap agreements do not have any embedded interest rate caps or floors.

For every variable interest rate swap agreement entered into with a commercial customer, the Company simultaneously enters into a fixed rate interest rate swap agreement with a correspondent bank, PNC Bank, agreeing to pay a fixed income stream and receive a variable interest rate swap. The Company is required to collateralize the fair value of its derivative liability. As of September 30, 2011, the Company maintained a cash balance of $7.2 million with PNC Bank and pledged a mortgage backed security with a fair value of $222,000 to collateralize our position. The Company’s agreement with PNC Bank will require PNC Bank to collateralize their position at an agreed upon threshold based upon their investor rating at the time should the Company’s liability to them ever become a receivable. As of September 30, 2011, the Company’s agreement would require PNC Bank to secure any outstanding receivable in excess of $10.0 million.

Credit-risk-related Contingent Features

The Company’s agreement with PNC Bank, its derivative counterparty, contains the following provisions:

● 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.

The Company is in compliance with the above provisions as of September 30, 2011.

The Company has established a derivative policy which sets forth the parameters for such transactions (including underwriting guidelines, rate setting process, maximum maturity, approval and documentation requirements), as well as identifies internal controls for the management of risks related to these hedging activities (such as approval of counterparties, limits on counterparty credit risk, maximum loan amounts, and limits to single dealer counterparties).

The interest rate swap derivatives executed with our customers and our counterparty, PNC Bank, are marked to market and are included with prepaid expenses and other assets and accrued expenses and other liabilities on our consolidated statements of condition at fair value. The Company had the following outstanding interest rate swaps that were not designated for hedge accounting:

				September 30, 2011							December 31, 2010
	Consolidated Balance Sheet Location	# of Instruments		Notional Amount		Estimated Fair Values			# of Instruments		Notional Amount		Estimated Fair Values
(Dollars in thousands)
Commercial loan customer interest rate swap position	Other Assets		26	$	81,105	$	6,088			9	$	42,289	$	1,771
Commercial loan customer interest rate swap position	Other Liabilities		-		-		-			10		44,779		(1,497	)
Counterparty interest rate swap position	Other Liabilities		26		81,105		(6,088	)		19		87,068		(274	)

The Company recorded the changes in the fair value of non-hedge accounting derivatives as a component of other noninterest income except for interest received and paid which is reported in interest income in the accompanying consolidated statements of operations as follows:

	Three Months Ended September 30,
	2011								2010
	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	$	525		$	-	$	525		$	396		$	-	$	396
Counterparty interest rate swap position		(525	)		-		(525	)		(396	)		-		(396	)
Total	$	-		$	-	$	-		$	-		$	-	$	-
	Nine Months Ended September 30,
	2011								2010
	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	$	1,601		$	-	$	1,601		$	985		$	-	$	985
Counterparty interest rate swap position		(1,601	)		-		(1,601	)		(985	)		-		(985	)
Total	$	-		$	-	$	-		$	-		$	-	$	-

Mortgage Banking Derivatives

Certain derivative instruments, primarily forward sales of mortgage loans and mortgage-backed securities (“MBS”) are utilized by the Company in its efforts to manage risk of loss associated with its mortgage loan commitments and mortgage loans held for sale. Prior to closing and funding certain single-family residential mortgage loans, an interest-rate lock commitment is generally extended to the borrower. During the period from commitment date to closing date, the Company is subject to the risk that market rates of interest may change. If market rates rise, investors generally will pay less to purchase such loans resulting in a reduction in the gain on sale of the loans or, possibly, a loss. In an effort to mitigate such risk, forward delivery sales commitments, under which the Company agrees to deliver whole mortgage loans to various investors or issue MBS, are established. At September 30, 2011, outstanding rate locks totaled approximately $2.5 million and outstanding commitments to sell residential mortgage loans totaled approximately $2.5 million. Forward sales, which include mandatory forward commitments of approximately $200,000 at September 30, 2011, establish the price to be received upon the sale of the related mortgage loan, thereby mitigating certain interest rate risk. There is, however, still certain execution risk specifically related to the Company’s ability to close and deliver to its investors the mortgage loans it has committed to sell.

XML

Deposits

9 Months Ended

Sep. 30, 2011

Banking and Thrift [Abstract]

Deposits

6. Deposits

Deposits consisted of the following:

	September 30, 2011		December 31, 2010
(Dollars in thousands)
Noninterest-bearing demand deposits	$	176,234	$	150,186
Interest-bearing
NOW accounts		285,768		217,151
Money market		223,791		158,232
Savings accounts		144,144		129,122
Time deposits		411,339		453,677
Club accounts		392		137
Total deposits	$	1,241,668	$	1,108,505

XML

Pension and Other Postretirement Benefit Plans

9 Months Ended

Sep. 30, 2011

Compensation and Retirement Disclosure [Abstract]

Pension and Other Postretirement Benefit Plans

7. Pension and Other Postretirement Benefit Plans

The following tables set forth the components of net periodic pension and benefit costs.

	Pension Benefits						Other Postretirement Benefits
	Three Months Ended September 30,						Three Months Ended September 30,
	2011			2010			2011			2010
(Dollars in thousands)
Service cost	$	173		$	107		$	15		$	13
Interest cost		265			234			34			34
Expected return on plan assets		(270	)		(264	)		-			-
Amortization:
Loss		96			41			-			-
Transition obligation		-			-			-			-
Prior service cost		(32	)		(32	)		(12	)		(12	)
Net periodic benefit cost	$	232		$	86		$	37		$	35
	Pension Benefits						Other Postretirement Benefits
	Nine Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
(Dollars in thousands)
Service cost	$	517		$	391		$	45		$	39
Interest cost		793			746			102			104
Expected return on plan assets		(808	)		(760	)		-			-
Amortization:
Loss		292			173			-			-
Transition obligation		-			-			-			-
Prior service cost		(94	)		(94	)		(36	)		(36	)
Net periodic benefit cost	$	700		$	456		$	111		$	107

The Company has contributed $866,000 as of September 30, 2011 and expects to contribute a total of $1.0 million to the qualified defined benefit plan for the year ended December 31, 2011. Since the supplemental plan and the postretirement benefit plans are unfunded, the expected employer contributions for the year ending December 31, 2011 will be equal to the Company’s estimated future benefit payment liabilities totaling approximately $331,000 less any participant contributions.

As part of the reorganization, the Company established the ESOP to provide eligible employees the opportunity to own Company stock. The Company provided a loan to the Farmington Bank Employee Stock Ownership Plan Trust in the amount needed to purchase up to 1,430,416 shares of the Company’s common stock in the open market subsequent to the initial public offering. The loan bears an interest rate equal to the Wall Street Journal Prime Rate plus one percentage point, adjusted annually, and provides for annual payments of interest and principal over the 15 year term of the loan. At September 30, 2011, the loan had an outstanding balance of $9.7 million and an interest rate of 4.25%. The Bank has committed to make contributions to the ESOP sufficient to support the debt service of the loan. The loan is secured by the unallocated shares purchased. The ESOP compensation expense for the three and nine months ended September 30, 2011 was $522,000 and $533,000, respectively.

Shares held by the ESOP include the following as of September 30, 2011:

Allocated	-
Committed to be released	48,193
Unallocated	835,161
	883,354

The fair value of unallocated ESOP shares was $9.4 million at September 30, 2011.

XML

Financial Instruments with Off-Balance Sheet Risk

9 Months Ended

Sep. 30, 2011

Financial Instruments With Off-Balance Sheet Risk Disclosure [Abstract]

Financial Instruments with Off-Balance Sheet Risk

9. Financial Instruments with Off-Balance Sheet Risk

The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and unused lines of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated statement of condition. The contract amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments.

The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. Financial instruments whose contract amounts represent credit risk are as follows:

	September 30,		December 31,
	2011		2010
(Dollars in thousands)
Approved loan commitments	$	51,683	$	26,409
Approved resort commitments		-		19,000
Unadvanced portion of construction loans		19,222		20,290
Unadvanced portion of resort loans		13,826		23,602
Unused lines for home equity loans		97,611		80,410
Unused revolving lines of credit		362		355
Unused commercial letters of credit		15,752		9,885
Unused commercial lines of credit		92,717		54,048
	$	291,173	$	233,999

Financial instruments with off-balance sheet risk had a valuation allowance of $276,000 and $242,000 as of September 30, 2011 and December 31, 2010, respectively.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained if deemed necessary by the Company upon extension of credit is based on management’s credit evaluation of the counterparty. Collateral held is primarily residential property.

At September 30, 2011 and December 31, 2010, the Company had no off-balance sheet special purpose entities and participated in no securitizations of assets.

XML

Legal Actions

9 Months Ended

Sep. 30, 2011

Loss Contingency [Abstract]

Legal Actions

14. Legal Actions

The Company and its subsidiaries are involved in various legal proceedings which have arisen in the normal course of business. The Company believes there are no pending actions that will have a material adverse effect on the consolidated financial statements.

XML

Consolidated Statement of Changes in Stockholders' Equity (USD $) In Thousands, except Share data	Common Stock	Additional Paid In Capital.	Unallocated Common Shares Held By Esop	Retained Earnings	Accumulated Other Comprehensive (Loss) Income - Unrealized Gain On Securities Available-For-Sale	Accumulated Other Comprehensive (Loss) Income - Related to Employee Benefits Plans, Net Of Tax Effect	Total
Balance at Dec. 31, 2010				$ 97,513	$ 1,111	$ (3,631)	$ 94,993
Balance (in shares) at Dec. 31, 2010
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock for initial public offering, net of expenses of $4.1 million (Note 1)	172	167,628					167,800
Issuance of common stock for initial public offering, net of expenses of $4.1 million (Note 1) ( in shares)	17,192,500
Issuance of common stock to Farmington Bank Community Foundation, Inc. including additional tax benefit due to higher basis for tax purposes	7	7,123					7,130
Issuance of common stock to Farmington Bank Community Foundation, Inc. including additional tax benefit due to higher basis for tax purposes ( in shares)	687,700
Purchase of common stock for Employee Stock Ownership Plan		(8)	(9,717)				(9,725)
ESOP shares committed to be released			533				533
Comprehensive (loss) income:
Net loss				(2,586)			(2,586)
Change in accumulated other comprehensive loss related to employee benefit plans, net of tax effects						107	107
Decrease in unrealized gain on available-for-sale securities, net of tax effects					(340)		(340)
Total comprehensive loss							(2,819)
Balance at Sep. 30, 2011	$ 179	$ 174,743	$ (9,184)	$ 94,927	$ 771	$ (3,524)	$ 257,912
Balance ( in shares) at Sep. 30, 2011	17,880,200

XML

Investment Securities

9 Months Ended

Sep. 30, 2011

Investments, Debt and Equity Securities [Abstract]

Investment Securities

3. Investment Securities

Investment securities are summarized as follows:

	September 30, 2011
			Gross		Gross
	Amortized		Unrealized		Unrealized			Market
(Dollars in thousands)	Cost		Gains		Losses			Value
Available-for-sale
Debt securities:
U.S. Treasury obligations	$	130,998	$	-	$	-		$	130,998
Government sponsored residential mortgage-backed securities		21,687		1,412		(3	)		23,096
Corporate debt securities		1,000		115		-			1,115
Trust preferred debt securities		42		-		-			42
Preferred equity securities		2,100		164		(559	)		1,705
Marketable equity securities		348		11		(6	)		353
Mutual funds		3,399		35		-			3,434
Total securities available-for-sale	$	159,574	$	1,737	$	(568	)	$	160,743
Held-to-maturity
Government sponsored residential mortgage-backed securities	$	9	$	-	$	-		$	9
Municipal debt securities		612		-		-			612
Trust preferred debt security		3,000		-		-			3,000
Total securities held-to-maturity	$	3,621	$	-	$	-		$	3,621
	December 31, 2010
			Gross		Gross
	Amortized		Unrealized		Unrealized			Market
(Dollars in thousands)	Cost		Gains		Losses			Value
Available-for-sale
Debt securities:
U.S. Treasury obligations	$	112,973	$	2	$	-		$	112,975
U.S. Government agency obligations		11,004		76		-			11,080
Government sponsored residential mortgage-backed securities		30,516		1,780		(2	)		32,294
Corporate debt securities		1,000		52		-			1,052
Trust preferred debt securities		44		-		-			44
Preferred equity securities		2,110		43		(293	)		1,860
Marketable equity securities		398		10		(2	)		406
Mutual funds		3,280		17		-			3,297
Total securities available-for-sale	$	161,325	$	1,980	$	(297	)	$	163,008
Held-to-maturity
Government sponsored residential mortgage-backed securities	$	9	$	-	$	-			9
Municipal debt securities		663		-		-			663
Trust preferred debt security		3,000		-		-			3,000
Total securities held-to-maturity	$	3,672	$	-	$	-		$	3,672

The following table summarizes gross unrealized losses and fair value, aggregated by investment category and length of time the investments have been in a continuous unrealized loss position at September 30, 2011 and December 31, 2010:

	Less than 12 Months					12 Months or More					Total
			Gross					Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(Dollars in thousands)	Value		Loss			Value		Loss			Value		Loss
September 30, 2011
Available-for-sale:
Government sponsored residential mortgage-backed securities	$	-	$	-		$	166	$	(3	)	$	166	$	(3	)
Preferred equity securities		87		(13	)		1,454		(546	)		1,541		(559	)
Marketable equity securities		47		(2	)		3		(4	)		50		(6	)
Total	$	134	$	(15	)	$	1,623	$	(553	)	$	1,757	$	(568	)
December 31, 2010
Available-for-sale:
Government sponsored residential mortgage-backed securities	$	-	$	-		$	335	$	(2	)	$	335	$	(2	)
Preferred equity securities		95		(5	)		1,722		(288	)		1,817		(293	)
Marketable equity securities		-		-			5		(2	)		5		(2	)
Total	$	95	$	(5	)	$	2,062	$	(292	)	$	2,157	$	(297	)

Management believes that no individual unrealized loss as of September 30, 2011 represents an other-than-temporary impairment, based on its detailed quarterly review of the securities portfolio. Among other things, the other-than-temporary impairment review of the investment securities portfolio focuses on the combined factors of percentage and length of time an issue is below book value as well as consideration of issuer specific factors (present value of cash flows expected to be collected, issuer rating changes and trends, credit worthiness and review of underlying collateral, if applicable). The Company also considers whether or not it has the intent to sell the security prior to maturity as well as the extent to which the unrealized loss is attributable to changes in interest rates.

The unrealized loss on preferred equity securities in a loss position for 12 months or more relates to one preferred equity security that is rated Baa2 by Moody’s as of September 30, 2011. A detailed review of the preferred equity security was completed by management and procedures included an analysis of their most recent financial statements and management concluded that the preferred equity security is not other-than-temporarily impaired.

The Company has no intent to sell nor is it more likely than not that the Company will be required to sell any of the securities contained in the table during the period of time necessary to recover the unrealized losses, which may be until maturity.

During the three and nine months ended September 30, 2011 and 2010, the Company recorded no other-than-temporary impairment charges.

The Company’s net realized gains totaled $89,000 and $965,000 for the three and nine month periods ended September 30, 2011 and 2010, respectively.

The amortized cost and estimated market value of debt securities at September 30, 2011 by contractual maturity are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or repay obligations with or without call or repayment penalties:

	September 30, 2011
	Available for Sale				Held to Maturity
			Estimated				Estimated
	Amortized		Market		Amortized		Market
	Cost		Value		Cost		Value
(Dollars in thousands)
Due in one year or less	$	130,998	$	130,998	$	612	$	612
Due after one year through five years		-		-		-		-
Due after five years through ten years		1,000		1,115		-		-
Due after ten years		42		42		3,000		3,000
Government sponsored residential mortgage-backed securities		21,687		23,096		9		9
	$	153,727	$	155,251	$	3,621	$	3,621

The Company, as a member of the Federal Home Loan Bank of Boston (FHLBB), owned $7.4 million of FHLBB capital stock at September 30, 2011 and December 31, 2010, which is equal to its FHLBB capital stock requirement.

XML

Other Comprehensive Income

9 Months Ended

Sep. 30, 2011

Equity [Abstract]

Other Comprehensive Income

13. Other Comprehensive Income

The following table represents the components of comprehensive income and other comprehensive income for the three and nine months ended September 30, 2011 and 2010:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
(Dollars in thousands)
Net income (loss)	$	1,043		$	1,394		$	(2,586	)	$	5,014
Other comprehensive (loss) income, before tax
Unrealized gains (losses) on securities:
Unrealized holding losses arising during the period		(632	)		(2,101	)		(603	)		(2,198	)
Less: reclassification adjustment for gains included in net income (loss)		89			965			89			965
Net change in unrealized losses		(543	)		(1,136	)		(514	)		(1,233	)
Change related to employee benefit plans		55			13			162			43
Other comprehensive loss, before tax		(488	)		(1,123	)		(352	)		(1,190	)
Income tax benefit		(165	)		(382	)		(119	)		(405	)
Other comprehensive loss, net of tax		(323	)		(741	)		(233	)		(785	)
Comprehensive income (loss)	$	720		$	653		$	(2,819	)	$	4,229