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
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230719570784/en/
The First Bancorp Richard M. Elder, EVP, Chief Financial Officer
207-563-3195 rick.elder@thefirst.com
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