The First Bancorp Reports Net Income of $6.3 Million

DAMARISCOTTA, Maine--()--The First Bancorp (Nasdaq: FNLC), parent company of First National Bank, today announced operating results for the three months ended September 30, 2019. Net income was $6.3 million, up $355,000 or 6.0% from the three months ended September 30, 2018. Earnings per common share on a fully diluted basis over the same period were up $0.03 to $0.58 per share, an increase of 5.5% from the prior year. The Company also announced operating results for the nine months ended September 30, 2019. Net income was $18.8 million, up $1.7 million or 9.7% from the first nine months of 2018, with earnings per share on a fully diluted basis of $1.73, up $0.15 or 9.5% from the same period in 2018.

"The First Bancorp posted another quarter of strong earnings with net income of $6.3 million for the three months ended September 30, 2019" commented Tony C. McKim, the Company’s President and Chief Executive Officer. “The primary driver of our earnings continues to be net interest income, which was up $705,000 or 5.4% on a tax equivalent basis from the third quarter of 2018. We also had strong non-interest income growth in the third quarter, up $498,000 or 16.4% from a year ago. Mortgage banking revenue led this increase, up $226,000 or 64.6% from the third quarter of 2018. Operating expenses continue to be controlled as demonstrated by our efficiency ratio of 52.08% for the period, while the Company's asset quality metrics remain solid. I am proud of The First Bancorp's outstanding team of banking professionals who are committed to the communities they serve, and who continue to produce strong operating results for the Company."

THIRD QUARTER 2019 FINANCIAL HIGHLIGHTS

  • Net Income for the third quarter of 2019 increased 6.0% over the third quarter of 2018 to $6.3 million, and was in line with the $6.1 million and $6.4 million posted in the first and second quarters of 2019.
  • Low-cost deposits as of September 30, 2019 were $812.8 million, up $46.8 million, or 6.1% from a year ago.
  • Total earning assets as of September 30, 2019 were $1.94 billion, up $46 million, or 2.4% from September 30, 2018.
  • Efficiency Ratio (non-GAAP) was 52.08% in the third quarter, up from 50.82% in the third quarter of 2018 (the GAAP Efficiency Ratio was 53.94% in the third quarter of 2019, up from 52.77% in the third quarter of 2018).
  • The non-performing assets to total assets ratio at September 30, 2019 was 0.84%, up slightly from 0.83% at June 30, 2019, and up modestly from 0.74% at September 30, 2018.

FINANCIAL CONDITION
Total assets at September 30, 2019 were $2.03 billion, up $34.5 million from the quarter ended June 30, 2019 and up $51.4 million from a year ago. Balances in the investment portfolio were up marginally during the third quarter of 2019 while outstanding loan balances increased $14.3 million. Loan growth was centered in commercial loans and residential real estate loans, up $9.0 million and $5.0 million, respectively, for the period. Year-over-year the investment portfolio is up $63.4 million and outstanding loans are up $19.9 million.

Total deposits at September 30, 2019 were $1.62 billion, up $30.3 million from the quarter ended June 30, 2019, and up $108.4 million, or 7.2%, from September 30, 2018. The company's typical seasonal deposit growth pattern is evident in the balances of low-cost deposits which were up $65.1 million in the third quarter, allowing for the redemption of higher priced brokered certificates of deposit during the period. Year-over-year, low-cost deposits have increased $46.8 million, or 6.1%, a portion of which was attributable to a re-classification of borrowed funds to deposits undertaken in the fourth quarter of 2018. Year-to-date in 2019, low cost deposits have increased $29.2 million, or 3.7%.

The Company’s capital position remained strong as of September 30, 2019, with an estimated total risk-based capital ratio of 15.20%, and an estimated leverage capital ratio of 8.82%, both well in excess of regulatory requirements.

ASSET QUALITY
Asset quality remained stable and solid. Annualized net charge-offs as a percentage of loans were 0.04% as of September 30, 2019, down from 0.08% percent of loans in calendar year 2018, and 0.12% in calendar year 2017. Past due loans were 0.78% of total loans as of September 30, 2019, down from 0.98% of total loans at June 30, 2019, and down from 0.83% a year ago. Non-performing assets as a percentage of total assets were 0.84% as of September 30, 2019, up slightly from 0.83% as of June 30, 2019 and up from 0.74% a year ago. A total of $250,000 was provisioned for loan losses in the third quarter of 2019, down from the $333,000 provisioned in the third quarter of 2018. The allowance for loan losses stood at 0.93% of total loans as of September 30, 2019, in range with the 0.92% and the 0.94% of total loans at June 30, 2019 and September 30, 2018, respectively.

OPERATING RESULTS
Net Income for the three months ended September 30, 2019 was $6.3 million, up $355,000 or 6.0% from the three months ended September 30, 2018. On a fully diluted earnings per share basis, earnings in the third quarter of 2019 were $0.58, up $0.03 or 5.5% from the same period a year ago. Contributing factors to the Company’s third quarter 2019 results included:

  • Non-interest income up $498,000 or 16.4% in the third quarter of 2019 as compared to a year ago; year-over-year income growth was led by the mortgage banking and wealth management lines of business.
  • Earning assets were up $46.0 million from a year ago which resulted in an increase of $705,000, or 5.4%, in tax-equivalent net interest income from the third quarter of 2018.
  • Annualized tax-equivalent net interest margin for the quarter was 2.88%, level with the margin reported in the second quarter of 2019, and up from 2.83% in the third quarter of 2018.
  • Non-interest expense for the period was up $824,000 or 10.0% from the third quarter of 2018. Year-to-year increases in employee expenses, occupancy, and other operating expenses were partially offset by savings in FDIC Insurance premium expense. Other operating expenses in the third quarter of 2019 include a non-recurring write-off of brokered certificate of deposit premium which totaled $229,000.

The Company's Return on Average Assets was 1.24% and Return on Average Tangible Common Equity was 14.01% for the three months ended September 30, 2019, up from 1.21% and down from 15.05%, respectively, from the three months ended September 30, 2018. On a year-to-date basis, Return on Average Assets was 1.26%, up from 1.21% for the nine months ended September 30, 2018, while Return on Average Tangible Common Equity was 14.67%, down marginally from 14.90% a year ago.

DIVIDEND
On September 26, 2019 the Company's Board of Directors declared a third quarter dividend of 30 cents per share. This dividend represents a payout to shareholders of 51.72% of net income for the period, and was paid on October 22, 2019 to shareholders of record as of October 7, 2019.

ABOUT THE FIRST BANCORP
The First Bancorp, the parent company of First National Bank, is based in Damariscotta, Maine. Founded in 1864, First National Bank is a full-service community bank with $2.03 billion in assets. The Bank provides a complete array of commercial and retail banking services through sixteen locations in mid-coast and eastern Maine. First National Wealth Management, a division of the Bank, provides investment management and trust services to individuals, businesses, and municipalities. More information about The First Bancorp, First National Bank and First National Wealth Management may be found at www.thefirst.com.

The First Bancorp

Consolidated Balance Sheets (Unaudited)

 

In thousands of dollars, except per share data

 

September 30, 2019

 

December 31, 2018

 

September 30, 2018

Assets

 

 

 

 

 

 

Cash and due from banks

 

$

21,418

 

 

$

19,134

 

 

$

21,649

 

Interest-bearing deposits in other banks

 

16,714

 

 

12,079

 

 

51,045

 

Securities available for sale

 

326,798

 

 

317,416

 

 

302,187

 

Securities to be held to maturity

 

298,786

 

 

255,663

 

 

257,395

 

Restricted equity securities, at cost

 

8,982

 

 

11,586

 

 

11,586

 

Loans held for sale

 

852

 

 

 

 

1,134

 

Loans

 

1,263,459

 

 

1,238,283

 

 

1,243,558

 

Less allowance for loan losses

 

11,765

 

 

11,232

 

 

11,682

 

Net loans

 

1,251,694

 

 

1,227,051

 

 

1,231,876

 

Accrued interest receivable

 

7,636

 

 

6,660

 

 

7,095

 

Premises and equipment

 

21,232

 

 

22,056

 

 

21,451

 

Other real estate owned

 

279

 

 

584

 

 

584

 

Goodwill

 

29,805

 

 

29,805

 

 

29,805

 

Other assets

 

49,031

 

 

42,536

 

 

46,047

 

Total assets

 

$

2,033,227

 

 

$

1,944,570

 

 

$

1,981,854

 

Liabilities

 

 

 

 

 

 

Demand deposits

 

$

171,623

 

 

$

163,575

 

 

$

170,728

 

NOW deposits

 

400,514

 

 

382,923

 

 

357,834

 

Money market deposits

 

148,689

 

 

152,043

 

 

129,516

 

Savings deposits

 

240,691

 

 

237,135

 

 

237,424

 

Certificates of deposit

 

319,292

 

 

372,464

 

 

389,317

 

Certificates $100,000 to $250,000

 

278,050

 

 

162,185

 

 

168,402

 

Certificates $250,000 and over

 

64,431

 

 

56,760

 

 

61,690

 

Total deposits

 

1,623,290

 

 

1,527,085

 

 

1,514,911

 

Borrowed funds

 

181,417

 

 

210,317

 

 

265,274

 

Other liabilities

 

20,031

 

 

15,626

 

 

17,008

 

Total Liabilities

 

1,824,738

 

 

1,753,028

 

 

1,797,193

 

Shareholders' equity

 

 

 

 

 

 

Common stock

 

109

 

 

109

 

 

109

 

Additional paid-in capital

 

63,602

 

 

62,746

 

 

62,497

 

Retained earnings

 

141,509

 

 

132,460

 

 

129,247

 

Net unrealized gain (loss) on securities available-for-sale

 

3,686

 

 

(5,051

)

 

(9,133

)

Net unrealized loss on securities transferred from available for sale to held to maturity

 

(189

)

 

(197

)

 

(194

)

Net unrealized gain (loss) on cash flow hedging derivative instruments

 

(265

)

 

1,438

 

 

2,282

 

Net unrealized gain (loss) on postretirement benefit costs

 

37

 

 

37

 

 

(147

)

Total shareholders' equity

 

208,489

 

 

191,542

 

 

184,661

 

Total liabilities & shareholders' equity

 

$

2,033,227

 

 

$

1,944,570

 

 

$

1,981,854

 

Common Stock

 

 

 

 

 

 

Number of shares authorized

 

18,000,000

 

 

18,000,000

 

 

18,000,000

 

Number of shares issued and outstanding

 

10,896,331

 

 

10,862,651

 

 

10,857,116

 

Book value per common share

 

$

19.13

 

 

$

17.63

 

 

$

17.01

 

Tangible book value per common share

 

$

16.39

 

 

$

14.87

 

 

$

14.25

 

The First Bancorp

Consolidated Statements of Income (Unaudited)

 

 

 

 

 

 

 

 

 

For the nine months ended
September 30,

 

For the quarter ended
September 30,

In thousands of dollars, except per share data

 

2019

 

2018

 

2019

 

2018

Interest income

 

 

 

 

 

 

 

 

Interest and fees on loans

 

$

44,450

 

 

$

39,164

 

 

$

14,993

 

 

$

13,735

 

Interest on deposits with other banks

 

145

 

 

132

 

 

48

 

 

115

 

Interest and dividends on investments

 

14,399

 

 

12,446

 

 

4,863

 

 

4,236

 

Total interest income

 

58,994

 

 

51,742

 

 

19,904

 

 

18,086

 

Interest expense

 

 

 

 

 

 

 

 

Interest on deposits

 

17,739

 

 

11,131

 

 

5,983

 

 

4,274

 

Interest on borrowed funds

 

2,180

 

 

3,397

 

 

695

 

 

1,276

 

Total interest expense

 

19,919

 

 

14,528

 

 

6,678

 

 

5,550

 

Net interest income

 

39,075

 

 

37,214

 

 

13,226

 

 

12,536

 

Provision for loan losses

 

875

 

 

1,333

 

 

250

 

 

333

 

Net interest income after provision for loan losses

 

38,200

 

 

35,881

 

 

12,976

 

 

12,203

 

Non-interest income

 

 

 

 

 

 

 

 

Investment management and fiduciary income

 

2,459

 

 

2,285

 

 

822

 

 

743

 

Service charges on deposit accounts

 

1,747

 

 

1,624

 

 

577

 

 

527

 

Net securities gains

 

15

 

 

137

 

 

15

 

 

1

 

Mortgage origination and servicing income

 

1,227

 

 

1,042

 

 

576

 

 

350

 

Other operating income

 

4,833

 

 

4,259

 

 

1,542

 

 

1,413

 

Total non-interest income

 

10,281

 

 

9,347

 

 

3,532

 

 

3,034

 

Non-interest expense

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

13,698

 

 

13,230

 

 

4,865

 

 

4,460

 

Occupancy expense

 

1,931

 

 

1,871

 

 

644

 

 

574

 

Furniture and equipment expense

 

2,969

 

 

2,816

 

 

969

 

 

972

 

FDIC insurance premiums

 

439

 

 

950

 

 

 

 

337

 

Amortization of identified intangibles

 

32

 

 

32

 

 

10

 

 

10

 

Other operating expense

 

7,099

 

 

6,072

 

 

2,552

 

 

1,863

 

Total non-interest expense

 

26,168

 

 

24,971

 

 

9,040

 

 

8,216

 

Income before income taxes

 

22,313

 

 

20,257

 

 

7,468

 

 

7,021

 

Applicable income taxes

 

3,474

 

 

3,084

 

 

1,180

 

 

1,088

 

Net Income

 

$

18,839

 

 

$

17,173

 

 

$

6,288

 

 

$

5,933

 

Basic earnings per share

 

$

1.74

 

 

$

1.59

 

 

$

0.58

 

 

$

0.55

 

Diluted earnings per share

 

$

1.73

 

 

$

1.58

 

 

$

0.58

 

 

$

0.55

 

The First Bancorp

Selected Financial Data (Unaudited)

 

 

 

 

 

 

 

 

 

As of and for the nine months
ended September 30,

 

As of and for the quarter
ended September 30,

Dollars in thousands, except for per share amounts

 

2019

 

2018

 

2019

 

2018

 

 

 

 

 

 

 

 

 

Summary of Operations

 

 

 

 

 

 

 

 

Interest Income

 

$

58,994

 

 

$

51,742

 

 

$

19,904

 

 

$

18,086

 

Interest Expense

 

19,919

 

 

14,528

 

 

6,678

 

 

5,550

 

Net Interest Income

 

39,075

 

 

37,214

 

 

13,226

 

 

12,536

 

Provision for Loan Losses

 

875

 

 

1,333

 

 

250

 

 

333

 

Non-Interest Income

 

10,281

 

 

9,347

 

 

3,532

 

 

3,034

 

Non-Interest Expense

 

26,168

 

 

24,971

 

 

9,040

 

 

8,216

 

Net Income

 

18,839

 

 

17,173

 

 

6,288

 

 

5,933

 

Per Common Share Data

 

 

 

 

 

 

 

 

Basic Earnings per Share

 

$

1.74

 

 

$

1.59

 

 

$

0.58

 

 

$

0.55

 

Diluted Earnings per Share

 

1.73

 

 

1.58

 

 

0.58

 

 

0.55

 

Cash Dividends Declared

 

0.89

 

 

0.82

 

 

0.30

 

 

0.29

 

Book Value per Common Share

 

19.13

 

 

17.01

 

 

19.13

 

 

17.01

 

Tangible Book Value per Common Share

 

16.39

 

 

14.25

 

 

16.39

 

 

14.25

 

Market Value

 

27.49

 

 

28.97

 

 

27.49

 

 

28.97

 

Financial Ratios

 

 

 

 

 

 

 

 

Return on Average Equity (a)

 

12.49

%

 

12.47

%

 

11.99

%

 

12.63

%

Return on Average Tangible Common Equity (a)

 

14.67

%

 

14.90

%

 

14.01

%

 

15.05

%

Return on Average Assets (a)

 

1.26

%

 

1.21

%

 

1.24

%

 

1.21

%

Average Equity to Average Assets

 

10.11

%

 

9.72

%

 

10.33

%

 

9.59

%

Average Tangible Equity to Average Assets

 

8.61

%

 

8.14

%

 

8.84

%

 

8.05

%

Net Interest Margin Tax-Equivalent (a)

 

2.90

%

 

2.90

%

 

2.88

%

 

2.83

%

Dividend Payout Ratio

 

51.15

%

 

51.57

%

 

51.72

%

 

52.73

%

Allowance for Loan Losses/Total Loans

 

0.93

%

 

0.94

%

 

0.93

%

 

0.94

%

Non-Performing Loans to Total Loans

 

1.33

%

 

1.14

%

 

1.33

%

 

1.14

%

Non-Performing Assets to Total Assets

 

0.84

%

 

0.74

%

 

0.84

%

 

0.74

%

Efficiency Ratio

 

51.12

%

 

51.86

%

 

52.08

%

 

50.82

%

At Period End

 

 

 

 

 

 

 

 

Total Assets

 

$

2,033,227

 

 

$

1,981,854

 

 

$

2,033,227

 

 

$

1,981,854

 

Total Loans

 

1,263,459

 

 

1,243,558

 

 

1,263,459

 

 

1,243,558

 

Total Investment Securities

 

634,566

 

 

571,168

 

 

634,566

 

 

571,168

 

Total Deposits

 

1,623,290

 

 

1,514,911

 

 

1,623,290

 

 

1,514,911

 

Total Shareholders' Equity

 

208,489

 

 

184,661

 

 

208,489

 

 

184,661

 

(a) Annualized using a 365-day basis for both 2019 and 2018

Use of Non-GAAP Financial Measures
Certain information in this release contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Management uses these “non-GAAP” measures in its analysis of the Company's performance (including for purposes of determining the compensation of certain executive officers and other Company employees) and believes that these non-GAAP financial measures provide a greater understanding of ongoing operations and enhance comparability of results with prior periods and with other financial institutions, as well as demonstrating the effects of significant gains and charges in the current period, in light of the disclosure practices employed by many other publicly-traded financial institutions. The Company believes that a meaningful analysis of its financial performance requires an understanding of the factors underlying that performance. Management believes that investors may use these non-GAAP financial measures to analyze financial performance without the impact of unusual items that may obscure trends in the Company's underlying performance. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

In several places net interest income is calculated on a fully tax-equivalent basis. Specifically included in interest income was tax-exempt interest income from certain investment securities and loans. An amount equal to the tax benefit derived from this tax-exempt income has been added back to the interest income total which, as adjusted, increased net interest income accordingly. Management believes the disclosure of tax-equivalent net interest income information improves the clarity of financial analysis, and is particularly useful to investors in understanding and evaluating the changes and trends in the Company's results of operations. Other financial institutions commonly present net interest income on a tax-equivalent basis. This adjustment is considered helpful in the comparison of one financial institution's net interest income to that of another institution, as each will have a different proportion of tax-exempt interest from its earning assets. Moreover, net interest income is a component of a second financial measure commonly used by financial institutions, net interest margin, which is the ratio of net interest income to average earning assets. For purposes of this measure as well, other financial institutions generally use tax-equivalent net interest income to provide a better basis of comparison from institution to institution. The Company follows these practices.

The following table provides a reconciliation of tax-equivalent financial information to the Company's consolidated financial statements, which have been prepared in accordance with GAAP. A 21.0% tax rate was used in both 2019 and 2018.

 

 

For the nine months ended

 

For the quarters ended

In thousands of dollars

 

September 30,
2019

 

September 30,
2018

 

September 30,
2019

 

September 30,
2018

Net interest income as presented

 

$

39,075

 

 

$

37,214

 

 

$

13,226

 

 

$

12,536

 

Effect of tax-exempt income

 

1,723

 

 

1,603

 

 

572

 

 

557

 

Net interest income, tax equivalent

 

$

40,798

 

 

$

38,817

 

 

$

13,798

 

 

$

13,093

 

The Company presents its efficiency ratio using non-GAAP information which is most commonly used by financial institutions. The GAAP-based efficiency ratio is non-interest expenses divided by net interest income plus non-interest income from the Consolidated Statements of Income. The non-GAAP efficiency ratio excludes securities losses and other-than-temporary impairment charges from non-interest expenses, excludes securities gains from non-interest income, and adds the tax-equivalent adjustment to net interest income. The following table provides a reconciliation between the GAAP and non-GAAP efficiency ratio:

 

 

For the nine months ended

 

For the quarters ended

In thousands of dollars

 

September 30,
2019

 

September 30,
2018

 

September 30,
2019

 

September 30,
2018

Non-interest expense, as presented

 

$

26,168

 

 

$

24,971

 

 

$

9,040

 

 

$

8,216

 

Net interest income, as presented

 

39,075

 

 

37,214

 

 

13,226

 

 

12,536

 

Effect of tax-exempt interest income

 

1,723

 

 

1,603

 

 

572

 

 

557

 

Non-interest income, as presented

 

10,281

 

 

9,347

 

 

3,532

 

 

3,034

 

Effect of non-interest tax-exempt income

 

124

 

 

124

 

 

41

 

 

41

 

Net securities gains

 

(15

)

 

(137

)

 

(15

)

 

(1

)

Adjusted net interest income plus non-interest income

 

$

51,188

 

 

$

48,151

 

 

$

17,356

 

 

$

16,167

 

Non-GAAP efficiency ratio

 

51.12

%

 

51.86

%

 

52.08

%

 

50.82

%

GAAP efficiency ratio

 

53.02

%

 

53.63

%

 

53.94

%

 

52.77

%

The Company presents certain information based upon average tangible common equity instead of total average shareholders' equity. The difference between these two measures is the Company's intangible assets, specifically goodwill from prior acquisitions. Management, banking regulators and many stock analysts use the tangible common equity ratio and the tangible book value per common share in conjunction with more traditional bank capital ratios to compare the capital adequacy of banking organizations with significant amounts of goodwill or other intangible assets, typically stemming from the use of the purchase accounting method in accounting for mergers and acquisitions. The following table provides a reconciliation of average tangible common equity to the Company's consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles:

 

 

For the nine months ended

 

For the quarters ended

In thousands of dollars

 

September 30,
2019

 

September 30,
2018

 

September 30,
2019

 

September 30,
2018

Average shareholders' equity as presented

 

$

201,655

 

 

$

184,132

 

 

$

208,040

 

 

$

186,399

 

Less intangible assets

 

(29,963

)

 

(30,006

)

 

(29,978

)

 

(30,021

)

Tangible average shareholders' equity

 

$

171,692

 

 

$

154,126

 

 

$

178,062

 

 

$

156,378

 

Forward-Looking and Cautionary Statements
Except for the historical information and discussions contained herein, statements contained in this release may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve a number of risks, uncertainties and other factors that could cause actual results and events to differ materially, as discussed in the Company's filings with the Securities and Exchange Commission.

Contacts

The First Bancorp
Richard M. Elder, 207.563.3195
Treasurer & Chief Financial Officer

Contacts

The First Bancorp
Richard M. Elder, 207.563.3195
Treasurer & Chief Financial Officer