The First Bancorp Announces Second Quarter Earnings

DAMARISCOTTA, Maine--()--The First Bancorp (Nasdaq: FNLC), parent company of First National Bank, today announced operating results for the three months ended June 30, 2023. Unaudited net income for the period was $7.4 million representing diluted earnings per share of $0.67. The Company also reported results for the six months ended June 30, 2023. Net income year-to-date in 2023 was $15.4 million, with diluted earnings per share of $1.39. Compared to prior periods, earnings for the second quarter of 2023 were down from the net income of $10.0 million and diluted earnings per share of $0.91 reported in the second quarter of 2022, and down from the net income of $8.0 million and diluted earnings per share of $0.72 reported for the first quarter of 2023. Total assets have increased $135.6 million year-to-date to reach $2.87 billion, supported by total deposits of $2.50 billion, borrowings of $114.5 million and common equity of $232.0 million.

"The First Bancorp and First National Bank continued to successfully execute on multiple fronts in the second quarter," commented Tony C. McKim, the Company's President and Chief Executive Officer. "We again experienced strong loan growth, adding $78.1 million in balances during the quarter, representing an annualized growth rate of 15.4%. Most of this increase was within our commercial loan portfolio, distributed among the commercial real estate, commercial & industrial, and multifamily segments. We remain diligent in loan pricing and were able to grow balances at interest rates that reflect the current market. In addition to commercial loans, we also saw nice increases in municipal, residential mortgage, and home equity loan balances in the second quarter. The pipeline of loans in process remains healthy, positioning the Bank for continued earning asset growth in the second half of the year.

"The loan portfolio is well diversified with levels of commercial real estate exposure well below regulatory guidance, and we are committed to maintaining underwriting standards that are prudent and conservative. Our focus on asset quality continues to be reflected in the Bank's strong metrics. The ratio of non-performing assets to total assets was just 0.06% as of June 30, 2023, unchanged from the preceding quarter, and past due loans remained low at 0.14% of total loans."

Mr. McKim continued, "Following industry disruptions in the first quarter, focus remains on bank deposits and overall funding. I'm pleased to report that our funding remains stable and diverse. Local non-maturity deposit levels were virtually unchanged during the second quarter, and we saw a very modest $4.1 million decrease in local time deposits. Total deposits grew $33.2 million during the period. The Bank's uninsured deposits were approximately 14.1% of total deposits as of June 30, 2023, with 93% of the uninsured total being fully collateralized by investment securities held in the Bank's portfolio. Our liquidity position remains strong, with immediately accessible funding in excess of $500 million as of quarter-end."

Turning to second quarter results, Mr. McKim remarked “Higher funding costs again negatively impacted our bottom line in the second quarter. The impact of an inverted yield curve on short-term rates, coupled with heightened competition for local deposits, resulted in a more than five-fold increase in interest expense in the second quarter of 2023 compared to a year ago. This caused a decrease in our net interest margin from 3.13% in the second quarter of 2022, and from 2.78% in the first quarter of 2023, to 2.46% for the current period, and led to an 8.8% decrease in net interest income for the period as compared to the first quarter of 2023. Non-interest income in the second quarter increased 8.4% from the first quarter, including an 8.9% increase in debit card revenue and a 5.5% increase in wealth management revenue. Operating expenses remain controlled and were flat versus the first quarter. Our teams continue to provide exceptional service to the Bank's growing customer base, to generate strong and diverse loan growth, and to adapt to rapidly shifting depositor preferences."

SECOND QUARTER 2023 FINANCIAL HIGHLIGHTS

  • Net Income of $7.4 million is a decrease of 7.2% from the quarter ended March 31, 2023,
  • Loan balances increased $78.1 million in the second quarter to $2.06 billion.
  • Total deposits were $2.50 billion as of June 30, 2023, an increase of 1.3% from March 31, 2023.
  • Asset quality continues to be very strong as of June 30, 2023 with a ratio of Non-Performing Assets to Total Assets of just 0.06%, unchanged from March 31, 2023.
  • Tangible Book Value per share increased to $18.15 as of June 30, 2023, up $0.31 per share for the period
  • A quarterly shareholder dividend of $0.35 per share was declared, an increase of one cent per share from $0.34 declared and paid in each of the past four quarters.

FINANCIAL CONDITION

Total assets at June 30, 2023, were $2.87 billion, up $63.0 million in the second quarter and up $244.5 million from a year ago. Earning assets increased $69.1 million during the quarter comprised primarily of an increase in loans of $78.1 million. As compared to June 30, 2022, earning assets have increased by $241.1 million centered in loan growth of $272.6 million, a decrease in the carrying value of investments of $12.6 million, and a reduction in interest earning cash balances of $18.9 million.

Loan growth in the second quarter was broad-based, centered in commercial loans which increased by $43.6 million during the period. Owner-occupied commercial real estate balances grew by $16.1 million, non-owner occupied commercial real estate by $11.9 million, commercial & industrial loans by $12.2 million, and multi-family by $12.0 million; commercial construction balances decreased by $8.6 million as a number of projects converted to permanent financing. Residential term loans increased by $38.3 million in the second quarter while residential construction loans decreased by $21.9 million. Municipal loan balances increased by $11.1 million and home equity balances grew $6.1 million during the period.

Total deposits at June 30, 2023 were $2.50 billion, up $33.2 million during the quarter, and up $247.8 million or 11.0% from June 30, 2022. Certificates of deposit increased by $40.0 million in the second quarter, while low-cost deposits decreased by $20.9 million, centered in NOW and Savings account balances, reflecting a depositor shift towards Money Market and CD offerings. Borrowings, principally from the FHLB, increased by $30.6 million. The Bank typically experiences a modest level of local deposit outflow annually in the first and second quarters based upon seasonal factors. Local deposits as of June 30, 2023, were down 1.32% from 2022 year-end, and down 0.26% from the end of the first quarter, both well within a normal range.

The Company’s regulatory capital position remained strong as of June 30, 2023, with an estimated total risk-based capital ratio of 13.87%, an increase from the total capital ratios of 13.72% as of March 31, 2023, and 13.63% as of June 30, 2022. The Company's leverage capital ratio was an estimated 8.68% as of June 30, 2023, as compared to the 8.75% and 8.92% reported as of March 31, 2023, and as of June 30, 2022, respectively. The Company's tangible book value per share, which includes unrealized losses on available for sale securities, was $18.15 as of June 30, 2023, up from $17.84 at March 31, 2023. The Tangible Common Equity ratio was 7.07% as of June 30, 2023, down slightly from 7.11% as of March 31, 2023.

ASSET QUALITY & PROVISION FOR CREDIT LOSSES

Asset quality is very strong. As of June 30, 2023, the ratio of non-performing assets to total assets was 0.06%, unchanged from March 31, 2023, and down from 0.18% at June 30, 2022. Net charge-offs year-to-date in 2023 were an annualized 0.005% of total loans, as compared to 0.03% in 2022 and there are no loans in the process of foreclosure. Past due loans remain low and were 0.14% of total loans as of June 30, 2023, a slight increase from 0.08% of total loans at March 31, 2023, and a slight decrease from 0.18% as of June 30, 2022.

The provision for credit losses totaled $30,000 in the second quarter of 2023 under CECL methodology, compared with $450,000 for the same period in 2022 under the incurred loss method. The effects of improved economic projections and strong asset quality offset the effects of loan growth and other factors in the second quarter model, resulting in a modest provision for the period. The ACL stood at 1.14% of total loans and 1,400% of non-performing loans as of June 30, 2023, as compared to an ACL of 1.18% of total loans and 1,303% of non-performing loans at March 31, 2023, and an allowance for loan losses of 0.91% of total loans and 337% of non-performing loans as of June 30, 2022.

OPERATING RESULTS - Second Quarter of 2023 vs. First Quarter of 2023

Net Income for the three months ended June 30, 2023, was $7.4 million, a decrease of $577,000 or 7.2% from the three months ended March 31, 2023. On a PTPP (non-GAAP) basis, net income for the period was $9.0 million, down $1.2 million or 12.1%. The Company’s Return on Average Assets of 1.04% for the quarter was down from 1.16%; the second quarter 2023 PTPP Return on Average Assets was 1.26%, down from 1.49% in the prior quarter. Return on Average Tangible Common Equity was 14.67% for the period, compared to 15.64%. The Company's Efficiency Ratio (non-GAAP) was 52.89% in the second quarter of 2023, up from 49.98% in the first quarter of 2023.

Contributing factors to the Company’s operating results in the three months ended June 30, 2023, included:

  • Net interest income was $15.9 million, down $1.5 million or 8.8% from the first quarter of 2023.
    • Net interest margin for the second quarter of 2023 was 2.46%, down from 2.78%.
    • The average tax equivalent yield on earning assets increased from 4.54% to 4.72%
    • The average cost of total liabilities increased from 2.09% to 2.66%
  • Non-interest income before securities gains or losses was $3.9 million, an increase of $301,000 or 8.4%. Each primary business line contributing to non-interest income experienced period-to-period gains, led by a $106,000 increase in debit card income. Revenue increased $63,000 or 5.5% from the first quarter of 2023 at First National Wealth Management, the Bank’s trust and investment management division.
  • Non-interest expense for the quarter ended June 30, 2023, was flat at $10.8 million. Employee expenses were down $543,000, while the cost of FDIC insurance increased by $190,000, and other operating expenses increased by $376,000. FDIC expense increased due to a base rate increase impacting all banks and other balance sheet factors; other operating expenses include a $131,000 provision for off balance sheet commitments.

DIVIDEND

On June 29, 2023, the Company's Board of Directors declared a second quarter dividend of $0.35 per share. The second quarter dividend is an increase of one cent per share, and represents a payout to shareholders of 52.2% of earnings per share for the period. The dividend will be paid on July 20, 2023, to shareholders of record as of July 10, 2023.

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 $2.85 billion in assets. The Bank provides a complete array of commercial and retail banking services through eighteen 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

 

June 30, 2023

 

December 31, 2022

 

June 30, 2022

Assets

 

 

 

 

 

 

Cash and due from banks

 

$

25,077

 

 

$

22,728

 

 

$

23,453

 

Interest-bearing deposits in other banks

 

 

3,978

 

 

 

3,693

 

 

 

22,871

 

Securities available-for-sale

 

 

278,355

 

 

 

284,509

 

 

 

301,737

 

Securities held-to-maturity1

 

 

389,987

 

 

 

393,896

 

 

 

379,693

 

Restricted equity securities, at cost

 

 

5,227

 

 

 

3,883

 

 

 

4,720

 

Loans held for sale

 

 

 

 

 

275

 

 

 

689

 

Loans

 

 

2,060,953

 

 

 

1,914,674

 

 

 

1,788,355

 

Less allowance for credit losses

 

 

23,465

 

 

 

16,723

 

 

 

16,201

 

Net loans

 

 

2,037,488

 

 

 

1,897,951

 

 

 

1,772,154

 

Accrued interest receivable

 

 

13,598

 

 

 

9,829

 

 

 

10,262

 

Premises and equipment

 

 

27,808

 

 

 

28,277

 

 

 

29,010

 

Other real estate owned

 

 

64

 

 

 

 

 

 

51

 

Goodwill

 

 

30,646

 

 

 

30,646

 

 

 

30,646

 

Other assets

 

 

62,587

 

 

 

63,491

 

 

 

55,068

 

Total assets

 

$

2,874,815

 

 

$

2,739,178

 

 

$

2,630,354

 

Liabilities

 

 

 

 

 

 

Demand deposits

 

$

296,950

 

 

$

318,626

 

 

$

324,354

 

NOW deposits

 

 

615,370

 

 

 

630,416

 

 

 

640,497

 

Money market deposits

 

 

208,262

 

 

 

192,632

 

 

 

206,313

 

Savings deposits

 

 

329,651

 

 

 

369,532

 

 

 

376,448

 

Certificates of deposit

 

 

667,552

 

 

 

489,793

 

 

 

340,876

 

Certificates $100,000 to $250,000

 

 

252,720

 

 

 

259,614

 

 

 

282,180

 

Certificates $250,000 and over

 

 

129,357

 

 

 

118,264

 

 

 

81,354

 

Total deposits

 

 

2,499,862

 

 

 

2,378,877

 

 

 

2,252,022

 

Borrowed funds

 

 

114,481

 

 

 

103,483

 

 

 

126,588

 

Other liabilities

 

 

28,469

 

 

 

27,895

 

 

 

24,059

 

Total Liabilities

 

 

2,642,812

 

 

 

2,510,255

 

 

 

2,402,669

 

Shareholders' equity

 

 

 

 

 

 

Common stock

 

 

111

 

 

 

110

 

 

 

110

 

Additional paid-in capital

 

 

69,240

 

 

 

68,435

 

 

 

67,627

 

Retained earnings

 

 

205,539

 

 

 

204,343

 

 

 

192,565

 

Net unrealized loss on securities available-for-sale

 

 

(43,781

)

 

 

(44,718

)

 

 

(32,795

)

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

 

 

(59

)

 

 

(64

)

 

 

(73

)

Net unrealized gain on hedging derivative instruments

 

 

680

 

 

 

544

 

 

 

146

 

Net unrealized gain on postretirement costs

 

 

273

 

 

 

273

 

 

 

105

 

Total shareholders' equity

 

 

232,003

 

 

 

228,923

 

 

 

227,685

 

Total liabilities & shareholders' equity

 

$

2,874,815

 

 

$

2,739,178

 

 

$

2,630,354

 

Common Stock

 

 

 

 

 

 

Number of shares authorized

 

 

18,000,000

 

 

 

18,000,000

 

 

 

18,000,000

 

Number of shares issued and outstanding

 

 

11,081,800

 

 

 

11,045,186

 

 

 

11,030,236

 

Book value per common share

 

$

20.94

 

 

$

20.73

 

 

$

20.64

 

Tangible book value per common share

 

$

18.15

 

 

$

17.93

 

 

$

17.84

 

1June 30, 2023 net of allowance for credit losses

The First Bancorp

Consolidated Statements of Income (Unaudited)

In thousands of dollars, except per share data

 

For the six months ended

 

For the quarter ended

 

June 30, 2023

 

June 30, 2022

 

June 30, 2023

 

March 31, 2023

 

June 30, 2022

Interest income

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans

 

$

50,531

 

$

33,899

 

$

26,406

 

$

24,125

 

$

17,286

 

Interest on deposits with other banks

 

 

89

 

 

71

 

 

49

 

 

40

 

 

62

 

Interest and dividends on investments

 

 

9,488

 

 

7,994

 

 

4,739

 

 

4,749

 

 

4,083

 

Total interest income

 

 

60,108

 

 

41,964

 

 

31,194

 

 

28,914

 

 

21,431

 

Interest expense

 

 

 

 

 

 

 

 

 

 

Interest on deposits

 

 

25,392

 

 

4,026

 

 

14,475

 

 

10,917

 

 

2,401

 

Interest on borrowed funds

 

 

1,306

 

 

620

 

 

784

 

 

522

 

 

332

 

Total interest expense

 

 

26,698

 

 

4,646

 

 

15,259

 

 

11,439

 

 

2,733

 

Net interest income

 

 

33,410

 

 

37,318

 

 

15,935

 

 

17,475

 

 

18,698

 

Provision for credit losses

 

 

580

 

 

900

 

 

30

 

 

550

 

 

450

 

Net interest income after provision for credit losses

 

 

32,830

 

 

36,418

 

 

15,905

 

 

16,925

 

 

18,248

 

Non-interest income

 

 

 

 

 

 

 

 

 

 

Investment management and fiduciary income

 

 

2,355

 

 

2,426

 

 

1,209

 

 

1,146

 

 

1,229

 

Service charges on deposit accounts

 

 

934

 

 

904

 

 

497

 

 

437

 

 

467

 

Net securities gains (losses)

 

 

 

 

1

 

 

 

 

 

 

(1

)

Mortgage origination and servicing income

 

 

387

 

 

878

 

 

195

 

 

192

 

 

380

 

Debit card income

 

 

2,476

 

 

2,756

 

 

1,291

 

 

1,185

 

 

1,326

 

Other operating income

 

 

1,287

 

 

1,347

 

 

678

 

 

609

 

 

679

 

Total non-interest income

 

 

7,439

 

 

8,312

 

 

3,870

 

 

3,569

 

 

4,080

 

Non-interest expense

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

10,897

 

 

11,335

 

 

5,177

 

 

5,720

 

 

5,398

 

Occupancy expense

 

 

1,710

 

 

1,578

 

 

842

 

 

868

 

 

749

 

Furniture and equipment expense

 

 

2,606

 

 

2,474

 

 

1,303

 

 

1,303

 

 

1,239

 

FDIC insurance premiums

 

 

878

 

 

440

 

 

534

 

 

344

 

 

222

 

Amortization of identified intangibles

 

 

13

 

 

35

 

 

6

 

 

7

 

 

18

 

Other operating expense

 

 

5,592

 

 

4,960

 

 

2,984

 

 

2,608

 

 

2,546

 

Total non-interest expense

 

 

21,696

 

 

20,822

 

 

10,846

 

 

10,850

 

 

10,172

 

Income before income taxes

 

 

18,573

 

 

23,908

 

 

8,929

 

 

9,644

 

 

12,156

 

Applicable income taxes

 

 

3,208

 

 

4,206

 

 

1,535

 

 

1,673

 

 

2,159

 

Net Income

 

$

15,365

 

$

19,702

 

$

7,394

 

$

7,971

 

$

9,997

 

Basic earnings per share

 

$

1.40

 

$

1.80

 

$

0.67

 

$

0.73

 

$

0.91

 

Diluted earnings per share

 

$

1.39

 

$

1.79

 

$

0.67

 

$

0.72

 

$

0.91

 

The First Bancorp

Selected Financial Data (Unaudited)

Dollars in thousands, except for per share amounts

 

As of and for the six months ended

 

As of and for the quarter ended

 

June 30, 2023

 

June 30, 2022

 

June 30, 2023

 

March 31, 2023

 

June 30, 2022

 

 

 

 

 

 

 

 

 

 

 

Summary of Operations

 

 

 

 

 

 

 

 

 

 

Interest Income

 

$

60,108

 

 

$

41,964

 

 

$

31,194

 

 

$

28,914

 

 

$

21,431

 

Interest Expense

 

 

26,698

 

 

 

4,646

 

 

 

15,259

 

 

 

11,439

 

 

 

2,733

 

Net Interest Income

 

 

33,410

 

 

 

37,318

 

 

 

15,935

 

 

 

17,475

 

 

 

18,698

 

Provision for Credit Losses

 

 

580

 

 

 

900

 

 

 

30

 

 

 

550

 

 

 

450

 

Non-Interest Income

 

 

7,439

 

 

 

8,312

 

 

 

3,870

 

 

 

3,569

 

 

 

4,080

 

Non-Interest Expense

 

 

21,696

 

 

 

20,822

 

 

 

10,846

 

 

 

10,850

 

 

 

10,172

 

Net Income

 

 

15,365

 

 

 

19,702

 

 

 

7,394

 

 

 

7,971

 

 

 

9,997

 

Per Common Share Data

 

 

 

 

 

 

 

 

 

 

Basic Earnings per Share

 

$

1.40

 

 

$

1.80

 

 

$

0.67

 

 

$

0.73

 

 

$

0.91

 

Diluted Earnings per Share

 

 

1.39

 

 

 

1.79

 

 

 

0.67

 

 

 

0.72

 

 

 

0.91

 

Cash Dividends Declared

 

 

0.69

 

 

 

0.66

 

 

 

0.35

 

 

 

0.34

 

 

 

0.34

 

Book Value per Common Share

 

 

20.94

 

 

 

20.64

 

 

 

20.94

 

 

 

20.63

 

 

 

20.64

 

Tangible Book Value per Common Share

 

 

18.15

 

 

 

17.84

 

 

 

18.15

 

 

 

17.84

 

 

 

17.84

 

Market Value

 

 

24.34

 

 

 

30.13

 

 

 

24.34

 

 

 

25.89

 

 

 

30.13

 

Financial Ratios

 

 

 

 

 

 

 

 

 

 

Return on Average Equity1

 

 

13.17

%

 

 

16.61

%

 

 

12.73

%

 

 

13.61

%

 

 

17.29

%

Return on Average Tangible Common Equity1

 

 

15.16

%

 

 

19.07

%

 

 

14.67

%

 

 

15.64

%

 

 

19.94

%

Return on Average Assets1

 

 

1.10

%

 

 

1.55

%

 

 

1.04

%

 

 

1.16

%

 

 

1.54

%

Average Equity to Average Assets

 

 

8.37

%

 

 

9.35

%

 

 

8.20

%

 

 

8.56

%

 

 

8.91

%

Average Tangible Equity to Average Assets

 

 

7.28

%

 

 

8.14

%

 

 

7.11

%

 

 

7.45

%

 

 

7.73

%

Net Interest Margin Tax-Equivalent1

 

 

2.62

%

 

 

3.18

%

 

 

2.46

%

 

 

2.78

%

 

 

3.13

%

Dividend Payout Ratio

 

 

49.29

%

 

 

36.67

%

 

 

52.24

%

 

 

46.58

%

 

 

37.36

%

Allowance for Credit Losses/Total Loans

 

 

1.14

%

 

 

0.91

%

 

 

1.14

%

 

 

1.18

%

 

 

0.91

%

Non-Performing Loans to Total Loans

 

 

0.08

%

 

 

0.27

%

 

 

0.08

%

 

 

0.09

%

 

 

0.27

%

Non-Performing Assets to Total Assets

 

 

0.06

%

 

 

0.18

%

 

 

0.06

%

 

 

0.06

%

 

 

0.18

%

Efficiency Ratio

 

 

51.39

%

 

 

44.45

%

 

 

52.89

%

 

 

49.98

%

 

 

43.49

%

At Period End

 

 

 

 

 

 

 

 

 

 

Total Assets

 

$

2,874,815

 

 

$

2,630,354

 

 

$

2,874,815

 

 

$

2,811,820

 

 

$

2,630,354

 

Total Loans

 

 

2,060,953

 

 

 

1,788,355

 

 

 

2,060,953

 

 

 

1,982,847

 

 

 

1,788,355

 

Total Investment Securities

 

 

673,569

 

 

 

686,150

 

 

 

673,569

 

 

 

683,961

 

 

 

686,150

 

Total Deposits

 

 

2,499,862

 

 

 

2,252,022

 

 

 

2,499,862

 

 

 

2,466,701

 

 

 

2,252,022

 

Total Shareholders' Equity

 

 

232,003

 

 

 

227,685

 

 

 

232,003

 

 

 

228,461

 

 

 

227,685

 

1Annualized using a 365-day basis for both 2023 and 2022.

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 2023 and 2022.

 

 

For the six months ended

 

For the quarters ended

In thousands of dollars

 

June 30, 2023

 

June 30, 2022

 

June 30, 2023

 

March 31, 2023

 

June 30, 2022

Net interest income as presented

 

$

33,410

 

$

37,318

 

$

15,935

 

$

17,475

 

$

18,698

Effect of tax-exempt income

 

 

1,280

 

 

1,127

 

 

661

 

$

620

 

 

570

Net interest income, tax equivalent

 

$

34,690

 

$

38,445

 

$

16,596

 

$

18,095

 

$

19,268

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 six months ended

 

For the quarters ended

In thousands of dollars

 

June 30, 2023

 

June 30, 2022

 

June 30, 2023

 

March 31, 2023

 

June 30, 2022

Non-interest expense, as presented

 

$

21,696

 

 

$

20,822

 

 

$

10,846

 

 

$

10,850

 

 

$

10,172

 

Net interest income, as presented

 

 

33,410

 

 

 

37,318

 

 

 

15,935

 

 

 

17,475

 

 

 

18,698

 

Effect of tax-exempt interest income

 

 

1,280

 

 

 

1,127

 

 

 

661

 

 

 

620

 

 

 

570

 

Non-interest income, as presented

 

 

7,439

 

 

 

8,312

 

 

 

3,870

 

 

 

3,569

 

 

 

4,080

 

Effect of non-interest tax-exempt income

 

 

86

 

 

 

84

 

 

 

43

 

 

 

44

 

 

 

43

 

Net securities (gains) losses

 

 

 

 

 

(1

)

 

 

 

 

 

 

 

 

1

 

Adjusted net interest income plus non-interest income

 

$

42,215

 

 

$

46,840

 

 

$

20,509

 

 

$

21,708

 

 

$

23,392

 

Non-GAAP efficiency ratio

 

 

51.39

%

 

 

44.45

%

 

 

52.89

%

 

 

49.98

%

 

 

43.49

%

GAAP efficiency ratio

 

 

53.11

%

 

 

45.63

%

 

 

54.76

%

 

 

51.56

%

 

 

44.66

%

The Company presents certain information based upon tangible common equity instead of total 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. GAAP:

 

 

For the six months ended

 

For the quarters ended

In thousands of dollars

 

June 30, 2023

 

June 30, 2022

 

June 30, 2023

 

March 31, 2023

 

June 30, 2022

Average shareholders' equity as presented

 

$

235,242

 

 

$

239,267

 

 

$

232,991

 

 

$

237,518

 

 

$

231,980

 

Less intangible assets

 

 

(30,850

)

 

 

(30,910

)

 

 

(30,853

)

 

 

(30,853

)

 

 

(30,919

)

Tangible average shareholders' equity

 

$

204,392

 

 

$

208,357

 

 

$

202,138

 

 

$

206,665

 

 

$

201,061

 

To provide period-to-period comparison of operating results prior to consideration of credit loss provision and income taxes, the non-GAAP measure of PTPP Net Income is presented. The following table provides a reconciliation to Net Income:

 

 

For the six months ended

 

For the quarters ended

In thousands of dollars

 

June 30, 2023

 

June 30, 2022

 

June 30, 2023

 

March 31, 2023

 

June 30, 2022

Net Income, as presented

 

$

15,365

 

$

19,702

 

$

7,394

 

$

7,971

 

$

9,997

Add: provision for credit losses

 

 

580

 

 

900

 

 

30

 

 

550

 

 

450

Add: income taxes

 

 

3,208

 

 

4,206

 

 

1,535

 

 

1,673

 

 

2,159

Pre-Tax, pre-provision net income

 

$

19,153

 

$

24,808

 

$

8,959

 

$

10,194

 

$

12,606

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.

Category: Earnings
Source: The First Bancorp

Contacts

The First Bancorp
Richard M. Elder, EVP, Chief Financial Officer
207-563-3195
rick.elder@thefirst.com

Contacts

The First Bancorp
Richard M. Elder, EVP, Chief Financial Officer
207-563-3195
rick.elder@thefirst.com