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Share Name | Share Symbol | Market | Type |
---|---|---|---|
First Bancorp Inc | NASDAQ:FNLC | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
1.41 | 5.04% | 29.265 | 29.13 | 29.41 | 29.265 | 27.92 | 27.92 | 8,076 | 17:01:29 |
2023 Results Driven by Strong Earning Asset Growth, Strong Deposit Growth, and Excellent Credit Quality
2023 FINANCIAL HIGHLIGHTS
The First Bancorp (Nasdaq: FNLC), parent company of First National Bank, today announced operating results for the year ended December 31, 2023. Unaudited net income was $29.5 million, a decrease of 24.3% from the $39.0 million reported for the year ended December 31, 2022. Earnings per common share on a fully diluted basis were down $0.87 to $2.66 per share, a decrease of 24.6% from the prior year. The Company also announced operating results for the three months ended December 31, 2023. Unaudited net income was $6.7 million, a decrease of 27.4% from the final three months of 2022. Earnings per share on a fully diluted basis for the fourth quarter of 2023 were $0.60, down $0.23 or 27.7% from the fourth quarter of 2022.
CEO COMMENTS
“The First Bancorp ended 2023 with annual earnings of $29.5 million," commented Tony C. McKim, the Company’s President and Chief Executive Officer. "While down from a record year in 2022, we were pleased to overcome significant headwinds to earn a Pre-Tax, Pre-Provision (PTPP) (non-GAAP) Return on Average Assets of 1.29% and a PTPP Return on Average Tangible Common Equity of 18.11%. Primary drivers of our 2023 earnings performance were a 14.4% year-over-year decrease in net interest income before loan loss provision, and controlled operating expenses. The change in net interest income was the result of significantly increased funding costs, partially offset by loan growth. Our net interest margin was 2.49% for the year, compared to 3.15% in 2022. Operating costs were tightly controlled, with a small decrease in total expenses from the prior year."
Mr. McKim continued, "Results for the fourth quarter of 2023 were on trend with the year as a whole. The Company recorded net income of $6.7 million as compared to net income of $7.5 million in the third quarter of 2023. PTPP net income in the fourth quarter of 2023 was $8.8 million, level with the third quarter. Net interest income before loan loss provision in the fourth quarter of $15.9 million was in line with the $16.0 million earned in the third quarter. Non-interest income increased $260,000 period-to-period attributable to debit card revenue. Operating expenses for the fourth quarter of 2023 increased modestly from the third quarter, up $180,000 or 1.6%."
"The year just concluded presented a number of challenges for the banking industry and The First Bancorp. The cycle of interest rate increases begun by the Federal Reserve in 2022 and sustained in 2023, coupled with concerns around the failures of several large regional banks this past spring, combined to materially increase the Bank's cost of funds which directly impacted our bottom line. Despite this challenging environment, we continued to support businesses and communities across our footprint by extending over $575 million in new loans, adding to and enhancing our digital banking capabilities, and providing best in class service to our growing customer base. Our employees are engaged in their work and in supporting their communities as demonstrated by the 11,000 hours of volunteer time given by our staff in 2023. "Our Best Days Are Ahead" is a brand phrase we've lived by for a number of years, and I believe it today as much as ever."
FINANCIAL CONDITION
Total assets at December 31, 2023 were $2.95 billion, up $207.5 million from the prior year end. Earning assets increased $203.4 million year-over-year, as loan balances grew $214.8 million, and investments declined by $11.6 million. Loan portfolio growth in 2023 was led by commercial real estate and construction loans which increased $82.9 million, including $27.7 million in the fourth quarter. Residential mortgage and construction loans increased $59.9 million year-over-year, other commercial loans increased $37.4 million and home equity line of credit balances increased by $11.0 million.
Total deposits at December 31, 2023 were $2.60 billion, up $220.8 million or 9.3% from December 31, 2022, and level with balances at September 30, 2023. Core deposits increased $18.2 million centered in money market account balances. Borrowed funds decreased $33.8 million year-to-year. Uninsured deposits were an estimated 15.7% of total deposits, and 83% of uninsured deposits were fully collateralized. Available day-one liquidity was in excess of $625 million at year-end, sufficient to cover approximately 153% of estimated uninsured deposits.
The Company’s capital position remained strong as of December 31, 2023, with an estimated total risk-based capital ratio of 13.66%, and an estimated leverage capital ratio of 8.61%. These measures compare to 13.58% and 9.01% respectively as of December 31, 2022. The Company's tangible book value was $19.12 per share as of December 31, 2023, an increase from $17.93 a year earlier, and up from $17.66 as of September 30, 2023.
ASSET QUALITY & PROVISION FOR LOAN LOSSES
Asset quality continues to be strong and stable. As of December 31, 2023, the ratio of non-performing assets to total assets was 0.07%, consistent with a ratio of 0.06% at December 31, 2022 and down from 0.09% as of September 30, 2023. The ratio of non-performing loans to total loans stood at 0.10%, consistent with 0.09% a year ago and down from 0.12% last quarter. Net charge-offs continued to be very low ending 2023 at 0.01% of total loans, down from 0.03% in 2022 and 0.02% in 2021. Past due loans were 0.18% of total loans as of December 31, 2023, a modest increase from 0.08% of total loans at December 31, 2022, and from 0.10% at September 30, 2023.
The allowance for loan losses stood at 1.13% of total loans as of December 31, 2023, up from 0.87% of total loans at December 31, 2022, and 1.12% at September 30, 2023. The Company adopted ASC 326, the CECL standard, effective January 1, 2023 incurring a $6.3 million retained earnings adjustment in the first quarter. The provision for credit losses on loans was $1.3 million in 2023, including $911,000 in the fourth quarter, as compared to $1.8 million and $450,000, respectively in 2022. Management considers the allowance to be at an appropriate level given the strong asset quality metrics at year-end.
OPERATING RESULTS
Net income for the year ended December 31, 2023 was $29.5 million, down $9.5 million or 24.3% from the year ended December 31, 2022. On a fully diluted earnings per share basis, 2023 earnings were $2.66, down $0.87 or 24.6% from the prior year. The Company’s Return on Average Assets for the year ended December 31, 2023 was 1.03%, down from 1.49% for the year ended December 31, 2022. On a PTPP (non-GAAP) basis, 2023 Return on Average Assets was 1.29%, compared to 1.87% the prior year. Return on Average Tangible Common Equity was 14.50% for the year ended December 31, 2023, down from 19.15% for the year ended December 31, 2022. On a PTPP basis (non-GAAP), Return on Average Tangible Common Equity for 2023 was 18.11%, compared to 24.13% in 2022. The Company's Efficiency Ratio (non-GAAP) was 52.43% for the year ended December 31, 2023, compared to 45.96% in 2022. (GAAP Efficiency Ratio was 54.26% for the year ended December 31, 2023, compared to 47.19% in 2022.)
Contributing factors to the Company’s 2023 annual and fourth quarter results included:
DIVIDEND
On December 21, 2023, the Company's Board of Directors declared a fourth quarter dividend of $0.35 per share. The fourth quarter dividend represents a payout to shareholders of 57.38% of earnings per share for the period and was paid on January 19, 2024 to shareholders of record as of January 8, 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 $2.92 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
December 31, 2023
December 31, 2022
Assets
Cash and due from banks
$
31,942
$
22,728
Interest-bearing deposits in other banks
3,488
3,693
Securities available for sale
282,053
284,509
Securities to be held to maturity1
385,235
393,896
Restricted equity securities, at cost
3,385
3,883
Loans held for sale
—
275
Loans
2,129,454
1,914,674
Less allowance for credit losses
24,030
16,723
Net loans
2,105,424
1,897,951
Accrued interest receivable
11,894
9,829
Premises and equipment
28,684
28,277
Goodwill
30,646
30,646
Other assets
63,947
63,491
Total assets
$
2,946,698
$
2,739,178
Liabilities
Demand deposits
$
289,104
$
318,626
NOW deposits
634,543
630,416
Money market deposits
305,931
192,632
Savings deposits
299,837
369,532
Certificates of deposit
646,818
489,793
Certificates $100,000 to $250,000
251,192
259,614
Certificates $250,000 and over
172,237
118,264
Total deposits
2,599,662
2,378,877
Borrowed funds
69,652
103,483
Other liabilities
34,305
27,895
Total Liabilities
2,703,619
2,510,255
Shareholders' equity
Common stock
111
110
Additional paid-in capital
70,071
68,435
Retained earnings
211,925
204,343
Net unrealized loss on securities available for sale
(39,575
)
(44,718
)
Net unrealized loss on securities transferred from available for sale to held to maturity
(56
)
(64
)
Net unrealized gain on cash flow hedging derivative instruments
300
544
Net unrealized gain on postretirement costs
303
273
Total shareholders' equity
243,079
228,923
Total liabilities & shareholders' equity
$
2,946,698
$
2,739,178
Common Stock
Number of shares authorized
18,000,000
18,000,000
Number of shares issued and outstanding
11,098,057
11,045,186
Book value per common share
$
21.90
$
20.73
Tangible book value per common share
$
19.12
$
17.93
1December 31, 2023 net of allowance for credit losses
The First Bancorp
Consolidated Statements of Income (Unaudited)
For the year ended
For the quarter ended
In thousands of dollars, except per share data
December 31, 2023
December 31, 2022
December 31, 2023
September 30, 2023
December 31, 2022
Interest income
Interest and fees on loans
$
108,274
$
75,805
$
29,414
$
28,329
$
22,342
Interest on deposits with other banks
517
315
217
211
152
Interest and dividends on investments
19,383
16,915
5,191
4,714
4,586
Total interest income
128,174
93,035
34,822
33,254
27,080
Interest expense
Interest on deposits
61,004
15,359
18,620
16,992
7,169
Interest on borrowed funds
1,963
1,510
349
308
427
Total interest expense
62,967
16,869
18,969
17,300
7,596
Net interest income
65,207
76,166
15,853
15,954
19,484
Provision (reduction) for credit losses
1,184
1,750
911
(200
)
450
Net interest income after provision for credit losses
64,023
74,416
15,170
16,154
19,034
Non-interest income
Investment management and fiduciary income
4,654
4,600
1,139
1,160
1,087
Service charges on deposit accounts
1,887
1,825
488
465
467
Net securities gains
—
7
—
—
—
Mortgage origination and servicing income
813
1,424
202
224
190
Debit card income
5,384
6,348
1,541
1,367
1,464
Other operating income
2,699
2,670
737
675
639
Total non-interest income
15,437
16,874
4,107
3,891
3,847
Non-interest expense
Salaries and employee benefits
21,942
23,316
5,522
5,523
6,224
Occupancy expense
3,319
3,052
825
784
754
Furniture and equipment expense
5,391
5,058
1,382
1,403
1,318
FDIC insurance premiums
1,962
1,068
533
551
330
Amortization of identified intangibles
26
69
6
7
17
Other operating expense
11,117
11,341
2,918
2,738
3,068
Total non-interest expense
43,757
43,904
11,186
11,006
11,711
Income before income taxes
35,703
47,386
8,091
9,039
11,170
Applicable income taxes
6,184
8,396
1,411
1,565
1,973
Net Income
$
29,519
$
38,990
$
6,680
$
7,474
$
9,197
Basic earnings per share
$
2.68
$
3.56
$
0.61
$
0.68
$
0.84
Diluted earnings per share
$
2.66
$
3.53
$
0.60
$
0.67
$
0.83
The First Bancorp
Selected Financial Data (Unaudited)
As of and for the year ended
As of and for the quarter ended
Dollars in thousands, except for per share amounts
December 31, 2023
December 31, 2022
December 31, 2023
September 30, 2023
December 31, 2022
Summary of Operations
Interest Income
$
128,174
$
93,035
$
34,822
$
33,254
$
27,080
Interest Expense
62,967
16,869
18,969
17,300
7,596
Net Interest Income
65,207
76,166
15,853
15,954
19,484
Provision (reduction) for Credit Losses
1,184
1,750
683
(200
)
450
Non-Interest Income
15,437
16,874
4,107
3,891
3,847
Non-Interest Expense
43,757
43,904
11,186
11,006
11,711
Net Income
29,519
38,990
6,680
7,474
9,197
Per Common Share Data
Basic Earnings per Share
$
2.68
$
3.56
$
0.61
$
0.68
$
0.84
Diluted Earnings per Share
2.66
3.53
0.60
0.67
0.83
Cash Dividends Declared
1.39
1.34
0.35
0.35
0.34
Book Value per Common Share
21.90
20.73
21.90
20.44
20.73
Tangible Book Value per Common Share
19.12
17.93
19.12
17.66
17.93
Market Value
28.22
29.94
28.22
23.50
29.94
Financial Ratios
Return on Average Equity1
12.59
%
16.63
%
11.35
%
12.67
%
16.15
%
Return on Average Tangible Common Equity1
14.50
%
19.15
%
13.08
%
14.59
%
18.71
%
Return on Average Assets1
1.03
%
1.49
%
0.90
%
1.02
%
1.34
%
Average Equity to Average Assets
8.18
%
8.94
%
7.92
%
8.07
%
8.32
%
Average Tangible Equity to Average Assets
7.10
%
7.76
%
6.87
%
7.01
%
7.18
%
Net Interest Margin Tax-Equivalent1
2.49
%
3.15
%
2.34
%
2.40
%
3.09
%
Dividend Payout Ratio
51.87
%
37.64
%
57.38
%
51.47
%
40.48
%
Allowance for Credit Losses/Total Loans
1.13
%
0.87
%
1.13
%
1.12
%
0.87
%
Non-Performing Loans to Total Loans
0.10
%
0.09
%
0.10
%
0.12
%
0.09
%
Non-Performing Assets to Total Assets
0.07
%
0.06
%
0.07
%
0.09
%
0.06
%
Efficiency Ratio
52.43
%
45.96
%
54.08
%
53.49
%
48.83
%
At Period End
Total Assets
$
2,946,698
$
2,739,178
$
2,946,698
$
2,944,139
$
2,739,178
Total Loans
2,129,454
1,914,674
2,129,454
2,079,860
1,914,674
Total Investment Securities
670,673
682,288
670,673
676,206
682,288
Total Deposits
2,599,662
2,378,877
2,599,662
2,599,937
2,378,877
Total Shareholders' Equity
243,079
228,923
243,079
226,665
228,923
1Annualized using a 365-day basis for 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 years ended
For the quarters ended
In thousands of dollars
December 31, 2023
December 31, 2022
December 31, 2023
September 30, 2023
December 31, 2022
Net interest income as presented
$
65,207
$
76,166
$
15,853
$
15,954
$
19,484
Effect of tax-exempt income
2,644
2,326
679
685
607
Net interest income, tax equivalent
$
67,851
$
78,492
$
16,532
$
16,639
$
20,091
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 years ended
For the quarters ended
In thousands of dollars
December 31, 2023
December 31, 2022
December 31, 2023
September 30, 2023
December 31, 2022
Non-interest expense, as presented
$
43,757
$
43,904
$
11,186
$
11,006
$
11,711
Net interest income, as presented
65,207
76,166
15,853
15,954
19,484
Effect of tax-exempt interest income
2,644
2,326
679
685
607
Non-interest income, as presented
15,437
16,874
4,107
3,891
3,847
Effect of non-interest tax-exempt income
176
170
45
44
43
Net securities gain
—
(7
)
—
—
—
Adjusted net interest income plus non-interest income
$
83,464
$
95,529
$
20,684
$
20,574
$
23,981
Non-GAAP efficiency ratio
52.43
%
45.96
%
54.08
%
53.49
%
48.83
%
GAAP efficiency ratio
54.26
%
47.19
%
56.04
%
55.46
%
50.20
%
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 years ended
For the quarters ended
In thousands of dollars
December 31, 2023
December 31, 2022
December 31, 2023
September 30, 2023
December 31, 2022
Average shareholders' equity as presented
$
234,480
$
234,521
$
233,405
$
234,024
$
225,940
Less intangible assets
(30,843
)
(30,892
)
(30,853
)
(30,853
)
(30,884
)
Tangible average shareholders' equity
$
203,637
$
203,629
$
202,552
$
203,171
$
195,056
To provide period-to-period comparison of operating results prior to consideration of credit loss provision and income taxes, the non-GAAP measure of Pre-Tax, Pre-Provision Net Income is presented. The following table provides a reconciliation to Net Income:
For the years ended
For the quarters ended
In thousands of dollars
December 31, 2023
December 31, 2022
December 31, 2023
September 30, 2023
December 31, 2022
Net Income, as presented
$
29,519
$
38,990
$
6,680
$
7,474
$
9,197
Add: provision (reduction) for credit losses
1,184
1,750
683
(200
)
450
Add: income taxes
6,184
8,396
1,411
1,565
1,973
Pre-Tax, pre-provision net income
$
36,887
$
49,136
$
8,774
$
8,839
$
11,620
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/20240124493638/en/
The First Bancorp Richard M. Elder, EVP, Chief Financial Officer 207-563-3195 rick.elder@thefirst.com
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