FNLC First Bancorp Inc

2024 Q1 Results Driven by Loan Growth and Strong Asset Quality

FIRST QUARTER 2024 FINANCIAL HIGHLIGHTS

• Total assets were $2.98 billion, an increase of $31.5 million for the period
• Very strong asset quality with a ratio of Non-Performing Assets to Total Assets of 0.09%
• Loan balances grew at an annualized rate of 8.4% to $2.17 billion
• Total deposits decreased $50.7 million to $2.55 billion, in-line with seasonal expectations
• Net Income was $6.0 million
• A quarterly shareholder dividend of $0.35 per share was declared.

The First Bancorp (Nasdaq: FNLC), parent company of First National Bank, today announced operating results for the three months ended March 31, 2024. Unaudited net income for the period was $6.0 million as compared to net income of $8.0 million for the quarter ended March 31, 2023, and net income of $6.7 million for the prior quarter ended December 31, 2023. Diluted earnings per share were $0.54, $0.72 and $0.60 for those same periods, respectively.

CEO COMMENTS

"The first quarter of 2024 was in many ways a continuation of the primary themes and challenges we saw throughout 2023," commented Tony C. McKim, the Company's President and Chief Executive Officer. "We responsibly grew our balance sheet, and enjoyed strong asset quality, capital, and liquidity positions, while higher funding costs negatively impacted our bottom line.

"First National Bank originated $127 million in new loans during the first quarter of 2024, resulting in net growth for the period of $44.3 million. Activity was spread throughout the portfolio, led by commercial real estate, commercial & industrial, and multifamily lending. Loan pipelines remain steady and we continue to see qualified, relationship-oriented opportunities within our footprint. Our lending process is disciplined, focused upon making loans to quality borrowers at interest rates and terms that reflect the current market."

Mr. McKim continued, "Asset quality continues to be excellent. The ratio of non-performing loans to total loans was 0.12% as of March 31, 2024, while the ratio of non-performing assets to total assets was just 0.09%, both measures being very much in line with outcomes over the past year. The level of past due loans was very low, at 0.09% of total loans. Our loan portfolio is well diversified with CRE positions comfortably below regulatory guidance limits, and very limited exposure in sectors frequently mentioned as potential problems, such as office space.

"Our first quarter earnings continue to reflect the challenges brought about by an extended period of yield curve inversion. Intense competition for deposits, both locally and in national markets, again increased our funding costs and further tightened our net interest margin. Net interest income fell 6.1% from the last quarter, leading to a 9.9% decrease in net income period-to-period."

Mr. McKim concluded, "First National Bank will observe its 160th anniversary in 2024. We are proud of our long tradition of serving customers and supporting communities throughout our footprint, and believe we are well positioned to carry on that tradition for many years to come."

FINANCIAL CONDITION

Total assets at March 31, 2024, were $2.98 billion, up $31.5 million in the first quarter and up $166.4 million from a year ago. Earning assets increased $33.1 million during the quarter comprised primarily of an increase in loans of $44.3 million and a decrease in investment balances of $10.8 million. As compared to March 31, 2023, earning assets have increased by $167.6 million centered in loan growth of $190.9 million, and a decrease in investment balances of $24.1 million.

Loan growth in the first quarter was led by commercial credit. Commercial real estate balances increased $19.3 million, multifamily loan balances increased $7.9 million, and commercial and industrial balances increased $6.8 million. Growth was also present in municipal and residential lending, up $3.3 million and $5.7 million, respectively, in the quarter.

Total deposits at March 31, 2024 were $2.55 billion, down $50.7 million during the period, and up $82.3 million or 3.3% from March 31, 2023. The first quarter balance change was in line with management's estimates based on seasonal deposit patterns. Low-cost deposit categories led the quarterly change, collectively down $61.7 million, while Money Market balances grew by $15.9 million. Borrowings increased $85.1 million during the period to $154.8 million, including a $61.9 million increase in FHLB advances, and a $25.0 million advance under the Bank Term Funding Program, both at rates more favorable than other funding alternatives. Uninsured deposits as of March 31, 2024, were estimated at 15% of total deposits, and 82% of uninsured deposits were fully collateralized. Available day-one liquidity was $592 million, sufficient to cover 155% of estimated uninsured deposits.

The Company’s regulatory capital position remained strong as of March 31, 2024, with an estimated total risk-based capital ratio of 13.64%, as compared to the total capital ratios of 13.66% as of December 31, 2023, and 13.72% as of March 31, 2023. The Company's leverage capital ratio was an estimated 8.67% as of March 31, 2024, as compared to the 8.61% and 8.75% reported as of December 31, 2023, and as of March 31, 2023, respectively. The Company's tangible book value per share was $19.03 as of March 31, 2024, down modestly from $19.12 at December 31, 2023, the decrease resulting from an increase in unrealized losses on available-for-sale securities during the period. Similarly, the Tangible Common Equity ratio was 7.19% as of March 31, 2024, down from 7.28% as of December 31, 2023.

ASSET QUALITY & PROVISION FOR CREDIT LOSSES

Asset quality continues to be very strong. As of March 31, 2024, the ratio of non-performing assets to total assets was 0.09%, up slightly from 0.07% as of December 31, 2023, and 0.06% as of March 31, 2023. Recoveries in the first quarter of prior period loan charge-offs outpaced current period charge-offs, resulting in a net addition to the allowance for credit losses on loans. Past due loans remain low at 0.09% of total loans as of March 31, 2024, a decrease from the ratios of 0.18% and 0.10% of total loans as of December 31, 2023 and March 31, 2023, respectively.

A provision for credit losses on loans of $99,000 was recorded in the first quarter of 2024, compared with provision expense of $911,000 in the fourth quarter of 2023 and $550,000 for the first quarter of 2023. The effects of improved economic projections and strong asset quality offset the effects of loan growth and other factors in the first quarter model, resulting in lower provision expense for the current period as compared to the prior periods. The Allowance for Credit Losses (ACL) on Loans stood at 1.11% of total loans as of March 31, 2024, as compared to an ACL of 1.13% and 1.18% of total loans as of December 31, 2023, and March 31, 2023, respectively.

OPERATING RESULTS - First Quarter of 2024 vs. Fourth Quarter of 2023

Net Income for the three months ended March 31, 2024, was $6.0 million, a decrease of $659,000 or 9.9% from the three months ended December 31, 2023. The Company’s Return on Average Assets was 0.82% for the quarter compared to 0.90%. The first quarter 2024 Pre-Tax, Pre-Provision Return on Average Assets was 0.92%, compared to 1.18% in the prior quarter. Return on Average Tangible Common Equity was 11.36% for the period, compared to 13.08%. The Company's Efficiency Ratio (non-GAAP) was 61.15% in the first quarter of 2024, up from 54.08% in the fourth quarter of 2023.

Contributing factors to the Company’s operating results in the three months ended March 31, 2024, included:

• Net interest income was $14.9 million, a decrease of $973,000 or 6.1% from the fourth quarter of 2023.
  • Net interest margin was 2.22%, down from 2.34%
  • The average tax equivalent yield on earning assets increased from 5.02% to 5.09%
  • The average cost of total liabilities increased from 3.17% to 3.35%
• Non-interest income was $3.6 million, a decrease of $467,000 most of which is attributable to debit card program incentives earned in the prior quarter.
• Non-interest expense totaled $11.8 million, an increase of 5.1% focused in employee salaries and benefits.

DIVIDEND

On March 28, 2024, the Company's Board of Directors declared a first quarter dividend of $0.35 per share. The dividend will be paid on April 19, 2024, to shareholders of record as of April 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 $2.95 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

March 31, 2024

December 31, 2023

March 31, 2023

Assets

 

 

 

Cash and due from banks

$

23,875

 

$

31,942

 

$

27,458

 

Interest-bearing deposits in other banks

 

2,911

 

 

3,488

 

 

2,773

 

Securities available-for-sale

 

274,451

 

 

282,053

 

 

288,242

 

Securities held-to-maturity

 

379,453

 

 

385,235

 

 

391,845

 

Restricted equity securities, at cost

 

5,933

 

 

3,385

 

 

3,874

 

Loans

 

2,173,746

 

 

2,129,454

 

 

1,982,847

 

Less allowance for credit losses

 

24,207

 

 

24,030

 

 

23,458

 

Net loans

 

2,149,539

 

 

2,105,424

 

 

1,959,389

 

Accrued interest receivable

 

15,970

 

 

11,894

 

 

12,142

 

Premises and equipment

 

28,435

 

 

28,684

 

 

28,286

 

Goodwill

 

30,646

 

 

30,646

 

 

30,646

 

Other assets

 

66,957

 

 

63,947

 

 

67,165

 

Total assets

$

2,978,170

 

$

2,946,698

 

$

2,811,820

 

Liabilities

 

 

 

Demand deposits

$

262,652

 

$

289,104

 

$

293,123

 

NOW deposits

 

618,554

 

 

634,543

 

 

623,523

 

Money market deposits

 

321,822

 

 

305,931

 

 

194,183

 

Savings deposits

 

280,533

 

 

299,837

 

 

346,205

 

Certificates of deposit

 

655,576

 

 

646,818

 

 

592,052

 

Certificates $100,000 to $250,000

 

244,148

 

 

251,192

 

 

278,151

 

Certificates $250,000 and over

 

165,703

 

 

172,237

 

 

139,464

 

Total deposits

 

2,548,988

 

 

2,599,662

 

 

2,466,701

 

Borrowed funds

 

154,779

 

 

69,652

 

 

83,881

 

Other liabilities

 

31,779

 

 

34,305

 

 

32,777

 

Total Liabilities

 

2,735,546

 

 

2,703,619

 

 

2,583,359

 

Shareholders' equity

 

 

 

Common stock

 

111

 

 

111

 

 

111

 

Additional paid-in capital

 

70,506

 

 

70,071

 

 

68,830

 

Retained earnings

 

213,839

 

 

211,925

 

 

202,036

 

Net unrealized loss on securities available-for-sale

 

(42,816

)

 

(39,575

)

 

(40,537

)

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

 

(54

)

 

(56

)

 

(60

)

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

 

735

 

 

300

 

 

(2,192

)

Net unrealized gain on postretirement costs

 

303

 

 

303

 

 

273

 

Total shareholders' equity

 

242,624

 

 

243,079

 

 

228,461

 

Total liabilities & shareholders' equity

$

2,978,170

 

$

2,946,698

 

$

2,811,820

 

Common Stock

 

 

 

Number of shares authorized

 

18,000,000

 

 

18,000,000

 

 

18,000,000

 

Number of shares issued and outstanding

 

11,130,933

 

 

11,098,057

 

 

11,074,182

 

Book value per common share

$

21.80

 

$

21.90

 

$

20.63

 

Tangible book value per common share

$

19.03

 

$

19.12

 

$

17.84

 

 

The First Bancorp

Consolidated Statements of Income (Unaudited)

 

 

 

 

In thousands of dollars, except per share data

For the quarter ended

March 31, 2024

December 31, 2023

March 31, 2023

Interest income

 

 

 

Interest and fees on loans

$

30,204

 

$

29,414

$

24,125

Interest on deposits with other banks

 

78

 

 

217

 

40

Interest and dividends on investments

 

4,706

 

 

5,191

 

4,749

Total interest income

 

34,988

 

 

34,822

 

28,914

Interest expense

 

 

 

Interest on deposits

 

19,177

 

 

18,620

 

10,917

Interest on borrowed funds

 

931

 

 

349

 

522

Total interest expense

 

20,108

 

 

18,969

 

11,439

Net interest income

 

14,880

 

 

15,853

 

17,475

Provision (reduction) for credit losses

 

(513

)

 

683

 

550

Net interest income after provision for credit losses

 

15,393

 

 

15,170

 

16,925

Non-interest income

 

 

 

Investment management and fiduciary income

 

1,188

 

 

1,139

 

1,146

Service charges on deposit accounts

 

499

 

 

488

 

437

Mortgage origination and servicing income

 

130

 

 

202

 

192

Debit card income

 

1,186

 

 

1,541

 

1,185

Other operating income

 

637

 

 

737

 

609

Total non-interest income

 

3,640

 

 

4,107

 

3,569

Non-interest expense

 

 

 

Salaries and employee benefits

 

6,057

 

 

5,522

 

5,720

Occupancy expense

 

866

 

 

825

 

868

Furniture and equipment expense

 

1,389

 

 

1,382

 

1,303

FDIC insurance premiums

 

564

 

 

533

 

344

Amortization of identified intangibles

 

7

 

 

6

 

7

Other operating expense

 

2,878

 

 

2,919

 

2,608

Total non-interest expense

 

11,761

 

 

11,187

 

10,850

Income before income taxes

 

7,272

 

 

8,091

 

9,644

Applicable income taxes

 

1,251

 

 

1,411

 

1,673

Net Income

$

6,021

 

$

6,680

$

7,971

Basic earnings per share

$

0.55

 

$

0.61

$

0.73

Diluted earnings per share

$

0.54

 

$

0.60

$

0.72

 

 

 

 

The First Bancorp

Selected Financial Data (Unaudited)

 

 

 

 

Dollars in thousands, except for per share amounts

As of and for the quarter ended

March 31, 2024

December 31, 2023

March 31, 2023

 

 

 

 

Summary of Operations

 

 

 

Interest Income

$

34,988

 

$

34,822

 

$

28,914

 

Interest Expense

 

20,108

 

 

18,969

 

 

11,439

 

Net Interest Income

 

14,880

 

 

15,853

 

 

17,475

 

Provision (reduction) for Credit Losses

 

(513

)

 

683

 

 

550

 

Non-Interest Income

 

3,640

 

 

4,107

 

 

3,569

 

Non-Interest Expense

 

11,761

 

 

11,186

 

 

10,850

 

Net Income

 

6,021

 

 

6,680

 

 

7,971

 

Per Common Share Data

 

 

 

Basic Earnings per Share

$

0.55

 

$

0.61

 

$

0.73

 

Diluted Earnings per Share

 

0.54

 

 

0.60

 

 

0.72

 

Cash Dividends Declared

 

0.35

 

 

0.35

 

 

0.34

 

Book Value per Common Share

 

21.80

 

 

21.90

 

 

20.63

 

Tangible Book Value per Common Share

 

19.03

 

 

19.12

 

 

17.84

 

Market Value

 

24.64

 

 

28.22

 

 

25.89

 

Financial Ratios

 

 

 

Return on Average Equity1

 

9.92

%

 

11.35

%

 

13.61

%

Return on Average Tangible Common Equity1

 

11.36

%

 

13.08

%

 

15.64

%

Return on Average Assets1

 

0.82

%

 

0.90

%

 

1.16

%

Average Equity to Average Assets

 

8.26

%

 

7.92

%

 

8.56

%

Average Tangible Equity to Average Assets

 

7.22

%

 

6.87

%

 

7.45

%

Net Interest Margin Tax-Equivalent1

 

2.22

%

 

2.34

%

 

2.78

%

Dividend Payout Ratio

 

63.64

%

 

57.38

%

 

46.58

%

Allowance for Credit Losses/Total Loans

 

1.11

%

 

1.13

%

 

1.18

%

Non-Performing Loans to Total Loans

 

0.12

%

 

0.10

%

 

0.09

%

Non-Performing Assets to Total Assets

 

0.09

%

 

0.07

%

 

0.06

%

Efficiency Ratio

 

61.15

%

 

54.08

%

 

49.98

%

At Period End

 

 

 

Total Assets

$

2,978,170

 

$

2,946,698

 

$

2,811,820

 

Total Loans

 

2,173,746

 

 

2,129,454

 

 

1,982,847

 

Total Investment Securities

 

659,837

 

 

670,673

 

 

683,961

 

Total Deposits

 

2,548,988

 

 

2,599,662

 

 

2,466,701

 

Total Shareholders' Equity

 

242,624

 

 

243,079

 

 

228,461

 

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 quarters ended

In thousands of dollars

March 31, 2024

December 31, 2023

March 31, 2023

Net interest income as presented

$

14,880

$

15,853

$

17,475

Effect of tax-exempt income

 

669

$

679

 

620

Net interest income, tax equivalent

$

15,549

$

16,532

$

18,095

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 quarters ended

In thousands of dollars

March 31, 2024

December 31, 2023

March 31, 2023

Non-interest expense, as presented

$

11,761

 

$

11,187

 

$

10,850

 

Net interest income, as presented

 

14,880

 

 

15,853

 

 

17,475

 

Effect of tax-exempt interest income

 

669

 

 

679

 

 

620

 

Non-interest income, as presented

 

3,640

 

 

4,107

 

 

3,569

 

Effect of non-interest tax-exempt income

 

45

 

 

45

 

 

44

 

Adjusted net interest income plus non-interest income

$

19,234

 

$

20,684

 

$

21,708

 

Non-GAAP efficiency ratio

 

61.15

%

 

54.08

%

 

49.98

%

GAAP efficiency ratio

 

63.50

%

 

56.05

%

 

51.56

%

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 quarters ended

In thousands of dollars

March 31, 2024

December 31, 2023

March 31, 2023

Average shareholders' equity as presented

$

244,083

 

$

233,405

 

$

237,518

 

Less intangible assets

 

(30,827

)

 

(30,853

)

 

(30,853

)

Tangible average shareholders' equity

$

213,256

 

$

202,552

 

$

206,665

 

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 quarters ended

In thousands of dollars

March 31, 2024

December 31, 2023

March 31, 2023

Net Income, as presented

$

6,021

 

$

6,680

$

7,971

Add: provision (reduction) for credit losses

 

(513

)

 

683

 

550

Add: income taxes

 

1,251

 

 

1,411

 

1,673

Pre-Tax, pre-provision net income

$

6,759

 

$

8,774

$

10,194

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/20240417469505/en/

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