Market Overview

The First Bancorp Reports 11.8% Net Income Increase

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The First Bancorp (NASDAQ:FNLC), parent company of First National Bank,
today announced operating results for the three months ended March 31,
2019. Net income was $6.2 million, up $650,000 or 11.8% from the three
months ended March 31, 2018. Earnings per common share on a fully
diluted basis over the same period were up $0.06 to $0.57 per share, an
increase of 11.8% from the prior year.

"I'm pleased to announce that The First Bancorp is off to a strong start
in 2019," remarked Tony C. McKim, the Company's President and Chief
Executive Officer. "Earning assets grew $45.9 million in the first
quarter and are up $121.4 million from a year ago. This growth produced
a year-over- year increase of 4.2% in tax equivalent net interest income
despite tighter margins. Our non-interest income held pace with a year
ago as increased investment management and service charge revenues
helped to offset declines in securities gains and mortgage banking
revenues. Operating expenses remain controlled as seen in our efficiency
ratio of 50.45% for the quarter. Asset quality continues to trend
positively, with quarter-to-quarter and year-to-year improvements in our
non-performing asset and past due loan ratios. I continue to be proud of
our team of banking professionals who produce these quality results for
The First Bancorp."

FIRST QUARTER 2019 FINANCIAL HIGHLIGHTS

  • Net Income for the first quarter of 2019 increased 11.8% over the
    first quarter of 2018 to $6.2 million.
  • Total loans outstanding at March 31, 2019 were $1.26 billion, up $26.4
    million in the first quarter and $76.6 million, or 6.5%, year over
    year.
  • Low Cost deposits as of March 31, 2019 totaled $756.7 million, down
    $26.9 million since year end, consistent with seasonal patterns.
    Year-over-year, low cost deposits are up $72.0 million, or 10.5%.
  • Efficiency Ratio (non-GAAP) improved to 50.45% in the first quarter,
    down slightly from 50.46% in the fourth quarter of 2018, and down from
    53.75% in the first quarter of 2018 (the GAAP Efficiency Ratio was
    52.35% in the first quarter of 2019, up from 52.29% in the fourth
    quarter of 2018 and, down from 55.20% in the first quarter of 2018).
  • The non-performing assets to total assets ratio at March 31, 2019 was
    0.77%, down from 0.79% at December 31, 2018, and down from 0.83% a
    year ago.

FINANCIAL CONDITION

Total assets at March 31, 2019 were $1.99 billion, up $46.8 million for
the quarter and up $119.5 million from March 31, 2018. First quarter
growth was almost entirely in earning assets which increased $45.9
million for the quarter, and were up $121.4 million from March 31, 2018.

Total deposits at March 31, 2019 were $1.61 billion, up $79.8 million
for the quarter, and up $178.7 million from March 31, 2018. The Company
utilized lower cost brokered certificates of deposits to replace
borrowed funds, accounting for $39.9 million of the quarter to quarter
deposit growth.

The Company's capital position remained strong as of March 31, 2019,
with an estimated total risk-based capital ratio of 15.44%, and an
estimated leverage capital ratio of 8.67%, both well in excess of
regulatory requirements.

ASSET QUALITY

Asset quality is stable and remains solid. Non-performing assets as a
percentage of total assets fell to 0.77% as of March 31, 2019 down from
0.79% at December 31, 2018, and down from 0.83% a year ago. Past due
loans were 0.89% of total loans at March 31, 2019, down from 1.08% of
total loans at December 31, 2018 and down from 1.34% a year ago. A total
of $375,000 was provisioned for loan losses in the first quarter of
2019, down from the $500,000 provisioned in the first quarter of 2018.
The allowance for loan losses stood at 0.91% of total loans as of March
31, 2019 level with December 31, 2018, and down slightly from the 0.92%
of total loans at March 31, 2018. Annualized net charge-offs as a
percentage of loans were 0.037% as of March 31, 2019, down from 0.08%
percent of loans in calendar year 2018, 0.12% in calendar year 2017.

OPERATING RESULTS

Net Income for the three months ended March 31, 2019 was $6.2 million,
up $650,000 or 11.8% from the three months ended March 31, 2018. On a
fully diluted earnings per share basis, earnings in the first quarter of
2019 were $0.57, up $0.06 or 11.8% from the same period a year ago. The
Company's Return on Average Assets of 1.27% and Return on Average
Tangible Common Equity of 15.09% for the three months ended March 31,
2019 were up from 1.21% and 14.69% respectively from the first quarter
of 2018.

Contributing to the Company's first quarter 2019 results were:

  • Earning asset growth led to a $539,000 increase in tax-equivalent net
    interest income from the first quarter of 2018.
  • Annualized tax-equivalent Net Interest Margin for the first quarter of
    2019 was 2.93%, up from a 2.92% margin in the fourth quarter of 2018
    and down from the 3.00% margin of a year ago.
  • Non-interest income net of securities gains was $3.1 million for the
    three months ended March 31, 2019 up nominally from the $3.0 million
    for the same period in 2018. Revenue growth from First National Wealth
    Management and deposit-based charges offset a period to period decline
    in mortgage banking income.
  • Non-interest expense for the period was $8.4 million, down from the
    $8.6 million from the first quarter of 2018 with savings centered in
    employee expenses, and FDIC insurance premiums.

DIVIDEND

The Company's Board of Directors declared a dividend of 29 cents per
share in the first quarter, representing a payout to our shareholders of
50.9% of net income for the period. The first quarter dividend is
payable on April 30, 2019 to shareholders of record as of April 10, 2019.

ABOUT THE FIRST BANCORP

The First Bancorp, the parent company of First National Bank, is based
in Damariscotta, Maine. Founded in 1864, First National Bank is a
full-service community bank with $2.0 billion in assets. The bank
provides a complete array of commercial and retail banking services
through sixteen locations in mid-coast and eastern Maine. First National
Wealth Management, a division of the Bank, provides investment
management and trust services to individuals, businesses, and
municipalities. More information about The First Bancorp, First National
Bank and First National Wealth Management may be found at www.thefirst.com.

 
The First Bancorp

Consolidated Balance Sheets (Unaudited)

 
In thousands of dollars, except per share data     March 31, 2019   December 31, 2018   March 31, 2018
Assets        
Cash and due from banks $ 15,270 $ 19,134 $ 16,559
Interest-bearing deposits in other banks 231 12,079 280
Securities available for sale 325,276 317,416 300,839
Securities to be held to maturity 281,219 255,663 258,690
Restricted equity securities, at cost 8,982 11,586 11,947
Loans held for sale 436 284
Loans 1,264,639 1,238,283 1,188,002
Less allowance for loan losses     11,490     11,232     10,957  
Net loans 1,253,149 1,227,051 1,177,045
Accrued interest receivable 9,307 6,660 7,222
Premises and equipment 21,767 22,056 22,043
Other real estate owned 584 584 1,121
Goodwill 29,805 29,805 29,805
Other assets     45,319     42,536     45,980  
Total assets     $ 1,991,345     $ 1,944,570     $ 1,871,815  
Liabilities
Demand deposits $ 148,500 $ 163,575 $ 137,674
NOW deposits 371,305 382,923 314,587
Money market deposits 137,700 152,043 108,726
Savings deposits 236,894 237,135 232,458
Certificates of deposit 398,689 372,464 347,010
Certificates $100,000 to $250,000 238,429 162,185 240,492
Certificates $250,000 and over     75,358     56,760     47,245  
Total deposits 1,606,875 1,527,085 1,428,192
Borrowed funds 170,419 210,317 244,229
Other liabilities     16,264     15,626     18,022  
Total Liabilities     1,793,558     1,753,028     1,690,443  
Shareholders' equity
Common stock 109 109 108
Additional paid-in capital 63,037 62,746 61,999
Retained earnings 135,364 132,460 123,876
Net unrealized loss on securities available-for-sale (1,539 ) (5,051 ) (6,210 )
Net unrealized loss on securities transferred from available for
sale to held to maturity
(194 ) (197 ) (182 )
Net unrealized gain on cash flow hedging derivative instruments 973 1,438 1,928
Net unrealized gain (loss) on postretirement benefit costs     37     37     (147 )
Total shareholders' equity     197,787     191,542     181,372  
Total liabilities & shareholders' equity     $ 1,991,345     $ 1,944,570     $ 1,871,815  
Common Stock
Number of shares authorized 18,000,000 18,000,000 18,000,000
Number of shares issued and outstanding     10,884,381     10,862,651     10,846,562  
Book value per common share $ 18.17 $ 17.63 $ 16.72
Tangible book value per common share     $ 15.42     $ 14.87     $ 13.95  
 
 
The First Bancorp

Consolidated Statements of Income
(Unaudited)

 
    For the three months ended March 31,
In thousands of dollars, except per share data     2019   2018
Interest income  
Interest and fees on loans $ 14,557 $ 12,391
Interest on deposits with other banks 68 11
Interest and dividends on investments     4,643     4,049
Total interest income     19,268     16,451
Interest expense
Interest on deposits 5,577 3,099
Interest on borrowed funds     792     943
Total interest expense     6,369     4,042
Net interest income 12,899 12,409
Provision for loan losses     375     500
Net interest income after provision for loan losses     12,524     11,909
Non-interest income
Investment management and fiduciary income 773 740
Service charges on deposit accounts 561 527
Net securities gains 136
Mortgage origination and servicing income 296 331
Other operating income     1,514     1,398
Total non-interest income     3,144     3,132
Non-interest expense
Salaries and employee benefits 4,410 4,490
Occupancy expense 652 699
Furniture and equipment expense 975 929
FDIC insurance premiums 208 279
Amortization of identified intangibles 11 11
Other operating expense     2,142     2,171
Total non-interest expense     8,398     8,579
Income before income taxes 7,270 6,462
Applicable income taxes     1,114     956
Net Income     $ 6,156     $ 5,506
Basic earnings per share $ 0.57 $ 0.51
Diluted earnings per share     $ 0.57     $ 0.51
 
 
The First Bancorp

Selected Financial Data (Unaudited)

 
    As of and for the three months ended March 31,
Dollars in thousands, except for per share amounts     2019     2018
   
Summary of Operations
Interest Income $ 19,268 $ 16,451
Interest Expense 6,369 4,042
Net Interest Income 12,899 12,409
Provision for Loan Losses 375 500
Non-Interest Income 3,144 3,132
Non-Interest Expense 8,398 8,579
Net Income     6,156       5,506  
Per Common Share Data
Basic Earnings per Share $ 0.57 $ 0.51
Diluted Earnings per Share 0.57 0.51
Cash Dividends Declared 0.29 0.24
Book Value per Common Share 18.17 16.72
Tangible Book Value per Common Share 15.42 13.95
Market Value     24.92       27.98  
Financial Ratios
Return on Average Equity (a) 12.78 % 12.27 %
Return on Average Tangible Common Equity (a) 15.09 % 14.69 %
Return on Average Assets (a) 1.27 % 1.21 %
Average Equity to Average Assets 9.91 % 9.83 %
Average Tangible Equity to Average Assets 8.39 % 8.21 %
Net Interest Margin Tax-Equivalent (a) 2.93 % 3.00 %
Dividend Payout Ratio 50.88 % 47.06 %
Allowance for Loan Losses/Total Loans 0.91 % 0.92 %
Non-Performing Loans to Total Loans 1.09 % 1.20 %
Non-Performing Assets to Total Assets 0.77 % 0.83 %
Efficiency Ratio     50.45 %     53.75 %
At Period End
Total Assets $ 1,991,345 $ 1,871,815
Total Loans 1,264,639 1,188,002
Total Investment Securities 615,477 574,406
Total Deposits 1,606,875 1,428,192
Total Shareholders' Equity     197,787       181,372  
(a) Annualized using a 365-day basis for both 2019 and 2018
 

Use of Non-GAAP Financial Measures

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

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

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

 
          For the three months ended
In thousands of dollars           March 31, 2019       March 31, 2018
Net interest income as presented $ 12,899       $ 12,409
Effect of tax-exempt income           562         513
Net interest income, tax equivalent           $ 13,461         $ 12,922
 

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 three months ended
In thousands of dollars           March 31, 2019     March 31, 2018
Non-interest expense, as presented           $ 8,398       $ 8,579  
Net interest income, as presented 12,899     12,409
Effect of tax-exempt interest income 562 513
Non-interest income, as presented 3,144 3,132
Effect of non-interest tax-exempt income 41 41
Net securities gains                 (136 )
Adjusted net interest income plus non-interest income           $ 16,646       $ 15,959  
Non-GAAP efficiency ratio           50.45 %     53.75 %
GAAP efficiency ratio           52.35 %     55.20 %
 

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

 
          For the three months ended
In thousands of dollars           March 31, 2019     March 31, 2018
Average shareholders' equity as presented $ 195,405     $ 182,054
Less intangible assets           (29,974 )     (30,017 )
Tangible average shareholders' equity           $ 165,431       $ 152,037  

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.

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