The First Bancorp Announces Second Quarter Results

2024 Q2 Results Driven by Loan Growth, Stable Net Interest Margin, and Strong Asset Quality

The First Bancorp (Nasdaq: FNLC), ("the Company", "we", "us", "our"), parent company of First National Bank, today reported unaudited net income of $6.2 million with diluted earnings per share of $0.55 for the quarter ended June 30, 2024. The Company also reported results for the six months ended June 30, 2024. Net income year-to-date in 2024 was $12.2 million, with diluted earnings per share of $1.10.

Second Quarter Notable Items:

Total assets reached $3.08 billion, an increase of $106.8 million in Q2
Pre-tax, pre-provision earnings increased by $1.2 million or 18.1% from Q1
Loan balances grew at an annualized rate of 13.6% to $2.25 billion
Non-Performing Assets to Total Assets of 0.09%, unchanged from Q1
Efficiency Ratio improved by 4.8 percentage points from Q1
Quarterly shareholder dividend increased by $0.01 to $0.36 per share

CEO COMMENTS

"I am pleased to report our operating results for the second quarter," commented Tony C. McKim, the Company's President and Chief Executive Officer. "Net income increased 2.5% from the first quarter of 2024, and diluted earnings per share increased 2.4%. On a pre-tax, pre-provision ("PTPP") basis, second quarter earnings increased $1.2 million, or 18.1%, from the first quarter of 2024 ("linked quarter").

"We continue to responsibly grow our balance sheet while enjoying strong asset quality, capital, and liquidity positions. Asset growth has been focused in the loan portfolio and comes from what has been a long-term formula for success - building relationships and lending to creditworthy borrowers under well-structured terms. Our net interest margin for the quarter was stable, and when combined with earning asset growth, produced a modest rise in linked quarter net interest income."

Mr. McKim concluded, "Rather than retreating from certain activities due to a challenging operating environment, we have continued our commitment to serving customers and supporting communities throughout our footprint. We originated over $200 million in new loan volume in the second quarter resulting in loan portfolio expansion of $73.9 million. As the Bank observes its 160th anniversary in 2024, our team remains totally focused upon serving their customers and communities."

FINANCIAL RESULTS FOR THE QUARTER ENDED JUNE 30, 2024

Net income was $6.2 million, or $0.55 per diluted share, for the three months ended June 30, 2024. On a PTPP basis, earnings for the quarter were $8.0 million. Results for the quarter compare favorably to the linked quarter for which net income was $6.0 million, diluted earnings per share were $0.54, and PTPP earnings were $6.8 million. The drivers of second quarter results are discussed in the following sections:

Net Interest Income

Net interest income was $15.1 million for the three months ended June 30, 2024, an increase of $195,000 or 1.3% from the first quarter of 2024. The increase resulted primarily from an expansion in earning assets during the quarter. Net interest margin stabilized at 2.21% for the second quarter of 2024, down slightly from 2.22% in the first quarter. The average tax equivalent yield on earning assets increased 13 basis points in the second quarter to 5.22%, while the cost of total liabilities also increased 13 basis points to an average of 3.48% for the quarter.

Provision for Credit Losses

A provision for credit losses on loans of $539,000 was recorded in the second quarter of 2024, compared with a provision expense of $99,000 in the first quarter. Loan growth and the modeling effects of slightly less favorable economic projections, partially offset by strong asset quality, drove the period-to-period increase. For the three months ended June 30, 2024 net charge-offs were $53,000 as compared to net recoveries of $79,000 for the three months ended March 31, 2024.

Non-Interest Income

Total non-interest income was $4.2 million for the three months ended June 30, 2024, an increase of $517,000, or 14.2% from the three months ended March 31, 2024. The Bank recorded quarterly revenue gains in all business lines, including a 12.4% increase in Debit Card income, a 6.8% increase in Wealth Management revenue, and an increase of 29.4% in Other Operating Income led by loan-related fees.

Non-Interest Expense

Total non-interest expense for three months ended June 30, 2024 was $11.3 million, a decrease of $511,000, or 4.3%, from the three months ended March 31, 2024. The period-to-period change was concentrated within employee salaries and benefits, resulting largely from early year salary and benefit dynamics and an increase in loan-related salary deferrals. The Company's efficiency ratio for the second quarter was 56.35%, significantly improved from the linked quarter ratio of 61.15%.

Loans, Total Assets & Funding

Total assets at June 30, 2024, were $3.08 billion, up $106.8 million in the second quarter and up $210.1 million from a year ago. Earning assets increased $102.7 million during the quarter comprised primarily of an increase in loans of $73.9 million. Earning assets have increased by $201.2 million since June 30, 2023 centered in loan growth of $186.7 million.

Loan growth in the second quarter was led by commercial credit. Commercial real estate balances increased $33.3 million, commercial and industrial balances increased $8.7 million, and multifamily loan balances increased $4.4 million. Growth was also present in the municipal, residential term, and home equity segments of the portfolio, up $7.4 million, $7.9 million, and $6.4 million, respectively, in the quarter.

Total deposits at June 30, 2024 were $2.58 billion, up $29.1 million during the period, and up $78.2 million, or 3.1%, from June 30, 2023. Time deposits led the quarterly change, increasing $46.3 million while low-cost deposits were collectively down $12.5 million. Borrowings increased $75.8 million during the period to $230.6 million. Uninsured deposits as of June 30, 2024, were estimated at 16% of total deposits, and 75% of uninsured deposits were fully collateralized. Available day-one liquidity was $594 million, sufficient to cover 143% of estimated uninsured deposits.

ASSET QUALITY

Asset quality continues to be very strong. As of June 30, 2024, the ratio of non-performing assets to total assets was 0.09%, unchanged from March 31, 2024, and up modestly from 0.06% as of June 30, 2023. The ratio of non-performing loans to total loans was 0.11% as of June 30, 2024, in range with the 0.12% and 0.08% reported as of March 31, 2024 and June 30, 2023, respectively. Past due loans remain low at 0.15% of total loans as of June 30, 2024, a decrease from 0.18% of total loans as of March 31, 2024 and a slight increase from 0.14% of total loans as of June 30, 2023.

The Allowance for Credit Losses (ACL) on Loans stood at 1.10% of total loans as of June 30, 2024, as compared to an ACL of 1.11% and 1.14% of total loans as of March 31, 2024, and June 30, 2023, respectively. The loan portfolio is well-diversified with Commercial Real Estate exposures comfortably below regulatory guidance limits, and with very limited exposure in sectors frequently mentioned as potential problems, such as office space.

CAPITAL

The Company’s regulatory capital position remained strong as of June 30, 2024. The Leverage Capital ratio was an estimated 8.58% as of June 30, 2024, as compared to the 8.67% and 8.68% reported as of March 31, 2024, and as of June 30, 2023, respectively, with period-to-period changes attributable primarily to earning asset growth. The estimated Total Risk-Based Capital ratio was 13.24% as of June 30, 2024, as compared to the 13.54% and 13.66% reported as of March 31, 2024, and as of June 30, 2023, respectively. The Company's tangible book value per share was $19.20 as of June 30, 2024, up from $19.03 as March 31, 2024 and up from $18.15 as of June 30, 2023. Earning asset growth during the quarter, coupled with a moderately larger unrealized loss position on available-for-sale securities, produced a Tangible Common Equity ratio of 7.00% as of June 30, 2024, as compared to 7.19% as of March 31, 2024 and 7.07% as of June 30, 2023.

DIVIDEND

On June 27, 2024, the Company's Board of Directors declared a second quarter dividend of $0.36 per share. The dividend was paid on July 19, 2024, to shareholders of record as of July 9, 2024.

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 $3.06 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, 2024

December 31, 2023

June 30, 2023

Assets

Cash and due from banks

27,816

31,942

25,077

Interest-bearing deposits in other banks

33,133

3,488

3,978

Securities available-for-sale

273,501

282,053

278,355

Securities held-to-maturity

377,522

385,235

389,987

Restricted equity securities, at cost

7,110

3,385

5,227

Loans

2,247,670

2,129,454

2,060,953

Less allowance for credit losses

24,693

24,030

23,465

Net loans

2,222,977

2,105,424

2,037,488

Accrued interest receivable

17,760

11,894

13,598

Premises and equipment

27,929

28,684

27,808

Other real estate owned

208

—

Goodwill

30,646

30,646

Other assets

66,342

63,947

62,587

Total assets

3,084,944

2,946,698

2,874,815

Liabilities

Demand deposits

270,858

289,104

296,950

NOW deposits

609,878

634,543

615,370

Money market deposits

317,133

305,931

208,262

Savings deposits

268,472

299,837

329,651

Certificates of deposit

728,410

646,818

667,552

Certificates $100,000 to $250,000

219,732

251,192

252,720

Certificates $250,000 and over

163,597

172,237

129,357

Total deposits

2,578,080

2,599,662

2,499,862

Borrowed funds

230,620

69,652

114,481

Other liabilities

31,576

34,305

28,469

Total Liabilities

2,840,276

2,703,619

2,642,812

Shareholders' equity

Common stock

111

111

Additional paid-in capital

70,942

70,071

69,240

Retained earnings

215,999

211,925

205,539

Net unrealized loss on securities available-for-sale

(43,369

)

(39,575

)

(43,781

)

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

(51

)

(56

)

(59

)

Net unrealized gain on cash flow hedging derivative instruments

733

300

680

Net unrealized gain on postretirement costs

303

303

273

Total shareholders' equity

244,668

243,079

232,003

Total liabilities & shareholders' equity

3,084,944

2,946,698

2,874,815

Common Stock

Number of shares authorized

18,000,000

18,000,000

Number of shares issued and outstanding

11,139,639

11,098,057

11,081,800

Book value per common share

21.96

21.90

20.94

Tangible book value per common share

19.20

19.12

18.15

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, 2024

June 30, 2023

June 30, 2024

March 31, 2024

June 30, 2023

Interest income

Interest and fees on loans

62,043

50,531

31,839

30,204

26,406

Interest on deposits with other banks

134

Interest and dividends on investments

9,369

9,478

4,663

4,706

4,729

Total interest income

71,546

60,098

36,558

34,988

31,184

Interest expense

Interest on deposits

38,993

25,392

19,816

19,177

14,475

Interest on borrowed funds

2,598

1,306

1,667

931

784

Total interest expense

41,591

26,698

21,483

20,108

15,259

Net interest income

29,955

33,400

15,075

14,880

15,925

Provision (reduction) for credit losses

)

701

512

(513

)

151

Net interest income after provision for credit losses

29,956

32,699

14,563

15,393

15,774

Non-interest income

Investment management and fiduciary income

2,457

2,355

1,269

1,188

1,209

Service charges on deposit accounts

1,041

934

542

499

497

Mortgage origination and servicing income

319

387

189

130

195

Debit card income

2,519

2,476

1,333

1,186

1,291

Other operating income

1,461

1,287

824

637

678

Total non-interest income

7,797

7,439

4,157

3,640

3,870

Non-interest expense

Salaries and employee benefits

11,642

10,897

5,585

6,057

5,177

Occupancy expense

1,709

1,710

843

866

842

Furniture and equipment expense

2,766

2,606

1,377

1,389

1,303

FDIC insurance premiums

1,126

878

562

564

534

Amortization of identified intangibles

Other operating expense

5,755

5,461

2,877

2,878

2,853

Total non-interest expense

23,011

21,565

11,250

11,761

10,715

Income before income taxes

14,742

18,573

7,470

7,272

8,929

Applicable income taxes

2,550

3,208

1,299

1,251

1,535

Net Income

12,192

15,365

6,171

6,021

7,394

Basic earnings per share

1.104

1.397

0.559

0.546

0.673

Diluted earnings per share

1.095

1.387

0.554

0.541

0.668

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, 2024

June 30, 2023

June 30, 2024

March 31, 2024

June 30, 2023

Summary of Operations

Interest Income

71,546

60,098

36,558

34,988

31,184

Interest Expense

41,591

26,698

21,483

20,108

15,259

Net Interest Income

29,955

33,400

15,075

14,880

15,925

Provision (reduction) for Credit Losses

)

701

512

(513

)

151

Non-Interest Income

7,797

7,439

4,157

3,640

3,870

Non-Interest Expense

23,011

21,565

11,250

11,761

10,715

Net Income

12,192

15,365

6,171

6,021

7,394

Per Common Share Data

Basic Earnings per Share

1.104

1.397

0.559

0.546

0.673

Diluted Earnings per Share

1.095

1.387

0.554

0.541

0.668

Cash Dividends Declared

0.710

0.690

0.360

0.350

Book Value per Common Share

21.96

20.94

21.96

21.80

20.94

Tangible Book Value per Common Share

19.20

18.15

19.20

19.03

18.15

Market Value

24.85

24.34

24.85

24.64

24.34

Financial Ratios

Return on Average Equity1

10.04

13.17

10.16

9.92

12.73

Return on Average Tangible Common Equity1

11.49

15.16

11.63

11.36

14.67

Return on Average Assets1

0.82

1.10

0.82

0.82

1.04

Average Equity to Average Assets

8.18

8.37

8.10

8.26

8.20

Average Tangible Equity to Average Assets

7.15

7.28

7.08

7.22

7.11

Net Interest Margin Tax-Equivalent1

2.21

2.62

2.21

2.22

2.46

Dividend Payout Ratio

64.31

49.29

64.40

63.64

52.24

Allowance for Credit Losses/Total Loans

1.10

1.14

1.10

1.11

1.14

Non-Performing Loans to Total Loans

0.11

0.08

0.11

0.12

0.08

Non-Performing Assets to Total Assets

0.09

0.06

0.09

0.09

0.06

Efficiency Ratio

58.70

51.10

56.35

61.15

52.27

At Period End

Total Assets

3,084,944

2,874,815

3,084,944

2,978,170

2,874,815

Total Loans

2,247,670

2,060,953

2,247,670

2,173,746

2,060,953

Total Investment Securities

658,133

673,569

658,133

659,837

673,569

Total Deposits

2,578,080

2,499,862

2,578,080

2,548,988

2,499,862

Total Shareholders' Equity

244,668

232,003

244,668

242,624

232,003

1Annualized using a 366-day basis for 2024 and a 365-day basis for 2023.

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 2024 and 2023.

For the six months ended

For the quarters ended

In thousands of dollars

June 30, 2024

June 30, 2023

June 30, 2024

March 31, 2024

June 30, 2023

Net interest income as presented

29,955

33,400

15,075

14,880

15,925

Effect of tax-exempt income

1,355

1,280

686

669

661

Net interest income, tax equivalent

31,310

34,680

15,761

15,549

16,586

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 provision for credit losses on securities 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, 2024

June 30, 2023

June 30, 2024

March 31, 2024

June 30, 2023

Non-interest expense, as presented

23,011

21,565

11,250

11,761

10,715

Net interest income, as presented

29,955

33,400

15,075

14,880

15,925

Effect of tax-exempt interest income

1,355

1,280

686

669

661

Non-interest income, as presented

7,797

7,439

4,157

3,640

3,870

Effect of non-interest tax-exempt income

Adjusted net interest income plus non-interest income

39,198

42,205

19,963

19,234

20,499

Non-GAAP efficiency ratio

58.70

51.10

56.35

61.15

52.27

GAAP efficiency ratio

60.95

52.80

58.50

63.50

54.13

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, 2024

June 30, 2023

June 30, 2024

March 31, 2024

June 30, 2023

Average shareholders' equity as presented

244,202

235,242

244,321

244,083

232,991

Less intangible assets

(30,824

)

(30,850

)

(30,827

)

(30,827

)

(30,853

)

Tangible average shareholders' equity

213,378

204,392

213,494

213,256

202,138

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, 2024

June 30, 2023

June 30, 2024

March 31, 2024

June 30, 2023

Net Income, as presented

12,192

15,365

6,171

6,021

7,394

Add: provision (reduction) for credit losses

)

701

512

(513

)

151

Add: income taxes

2,550

3,208

1,299

1,251

1,535

Pre-Tax, pre-provision net income

14,741

19,274

7,982

6,759

9,080

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

View source version on businesswire.com: https://www.businesswire.com/news/home/20240724963296/en/

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

First Bancorp (NASDAQ:FNLC)
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