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The First Bancorp Reports Record Net Income of $6.4 Million

Nachrichtenquelle: Business Wire (engl.)
17.07.2019, 22:15  |  269   |   |   

The First Bancorp (Nasdaq: FNLC), parent company of First National Bank, today announced operating results for the three months ended June 30, 2019. Net income was $6.4 million, up $661,000 or 11.5% from the three months ended June 30, 2018. Earnings per common share on a fully diluted basis over the same period were up $0.06 to $0.59 per share, an increase of 11.3% from the prior year. The Company also announced operating results for the six months ended June 30, 2019. Net income was $12.6 million, up $1.3 million or 11.7% from the first six months of 2018, with earnings per share on a fully diluted basis of $1.15, up $0.11 or 10.6% from the same period in 2018.

“I’m pleased to announce that The First Bancorp set a new earnings mark in the second quarter with net income of $6.4 million” remarked Tony C. McKim, the Company’s President and Chief Executive Officer. “Key factors in our performance continue to be earning asset growth, non-interest income growth and controlled operating expenses. Earning assets are up $80.7 million from a year ago while margins have remained stable, resulting in a year-over-year increase of 5.8% in tax equivalent net interest income. Non-interest income increased 13.3% from the second quarter of 2018, while operating expenses continue to be controlled as demonstrated by our efficiency ratio of 50.80% for the quarter. At the same time, our asset quality metrics remain solid, with annualized net charge-offs at the lowest level since before the financial crisis. I couldn't be prouder of the entire team of banking professionals at The First Bancorp who make these outstanding results possible."

SECOND QUARTER 2019 FINANCIAL HIGHLIGHTS

  • Net Income for the second quarter of 2019 increased 11.5% over the second quarter of 2018 to $6.4 million, and was up 3.9% from the first quarter of 2019.
  • Low-cost deposits as of June 30, 2019 were $747.8 million, up $88.9 million, or 13.5% from a year ago.
  • Total loans outstanding as of June 30, 2019 were $1.25 billion, up $24.7 million, or 2.0% from June 30, 2018.
  • Efficiency Ratio (non-GAAP) improved to 50.80% in the second quarter, down from 51.02% in the second quarter of 2018 (the GAAP Efficiency Ratio was 52.73% in the second quarter of 2019, down from 52.92% in the second quarter of 2018).
  • The non-performing assets to total assets ratio at June 30, 2019 was 0.83%, up modestly from 0.78% at June 30, 2018.

FINANCIAL CONDITION
Total assets at June 30, 2019 were $1.99 billion, up marginally from the quarter ended March 31, 2019 and up $82.9 million from June 30, 2018. Balances in the investment portfolio were up $18.6 million during the quarter while outstanding loan balances were down $15.5 million. Loan balances were impacted by the expected payoff of several large municipal loans, and the refinance of a large commercial real estate loan to a private activity bond, subsequently purchased for the investment portfolio.

Total deposits at June 30, 2019 were $1.59 billion, down $13.9 million from the quarter ended March 31, 2019, and up $176.3 million from June 30, 2018. Over half of the quarter-to- quarter change is attributable to money market deposits which were down $9.5 million, centered in one relationship; low-cost deposits were down $8.9 million due to normal seasonal fluctuations. Year-over-year, low-cost deposits increased $88.9 million, or 13.5%, of which a portion was attributable to a re-classification of borrowed funds to deposits undertaken in the fourth quarter of 2018.

The Company’s capital position remained strong as of June 30, 2019, with an estimated total risk-based capital ratio of 15.07%, and an estimated leverage capital ratio of 8.72%, both well in excess of regulatory requirements.

ASSET QUALITY
Asset quality remained stable and solid. Annualized net charge-offs as a percentage of loans were 0.06% as of June 30, 2019, down from 0.08% percent of loans in calendar year 2018, and 0.12% in calendar year 2017. Past due loans were 0.98% of total loans as of June 30, 2019, up from the 0.89% of total loans at March 31, 2019, and up from 0.61% a year ago. Non-performing assets as a percentage of total assets were 0.83% as of June 30, 2019, up from 0.77% as of March 31, 2019 and up from 0.78% a year ago. Despite the modest period to period increases, past dues and non-performing assets remain low by historical standards. A total of $250,000 was provisioned for loan losses in the second quarter of 2019, down from the $500,000 provisioned in the second quarter of 2018. The allowance for loan losses stood at 0.92% of total loans as of June 30, 2019, in range with the 0.91% and the 0.94% of total loans at March 31, 2019 and June 30, 2018, respectively.

OPERATING RESULTS
Net Income for the three months ended June 30, 2019 was $6.4 million, up $661,000 or 11.5% from the three months ended June 30, 2018. On a fully diluted earnings per share basis, earnings in the second quarter of 2019 were $0.59, up $0.06 or 11.3% from the same period a year ago. Contributing factors to the Company’s second quarter 2019 results included:

  • Non-interest income up $424,000 or 13.3% in the second quarter of 2019 as compared to a year ago; growth was led by loan swap fees and wealth management income.
  • Earning assets up $80.7 million from a year ago which resulted in an increase of $737,000, or 5.8%, in tax-equivalent net interest income from the second quarter of 2018.
  • Annualized tax equivalent net interest margin for the quarter was 2.88%, level with the margin reported in the second quarter of 2018.
  • Non-interest expense for the period up $554,000 or 6.8% from the second quarter of 2018. Year-to-year increases in employee expenses, furniture and equipment expenses and other operating expenses were partially offset by savings in FDIC Insurance premium expense.

The Company's Return on Average Assets was 1.28% and Return on Average Tangible Common Equity was 14.97% for the three months ended June 30, 2019, up from 1.22% and 14.95%, respectively, for the three months ended June 30, 2018.

DIVIDEND
On June 27, 2019 the Company's Board of Directors declared a second quarter dividend of 30 cents per share, an increase of one cent from the 29 cents per share paid in each of the previous four quarters. The second quarter dividend represents a payout to shareholders of 50.85% of net income for the period, and is payable on July 31, 2019 to shareholders of record as of July 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 $1.97 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

June 30,2019

December 31, 2018

June 30, 2018

Assets

 

 

 

Cash and due from banks

$

16,918

 

$

19,134

 

$

21,056

 

Interest-bearing deposits in other banks

917

 

12,079

 

1,616

 

Securities available for sale

322,570

 

317,416

 

302,070

 

Securities to be held to maturity

302,527

 

255,663

 

260,077

 

Restricted equity securities, at cost

8,982

 

11,586

 

12,363

 

Loans held for sale

 

 

481

 

Loans

1,249,132

 

1,238,283

 

1,224,440

 

Less allowance for loan losses

11,471

 

11,232

 

11,472

 

Net loans

1,237,661

 

1,227,051

 

1,212,968

 

Accrued interest receivable

9,966

 

6,660

 

7,723

 

Premises and equipment

21,045

 

22,056

 

21,682

 

Other real estate owned

289

 

584

 

609

 

Goodwill

29,805

 

29,805

 

29,805

 

Other assets

46,153

 

42,536

 

43,511

 

Total assets

$

1,996,833

 

$

1,944,570

 

$

1,913,961

 

Liabilities

 

 

 

Demand deposits

$

147,771

 

$

163,575

 

$

146,964

 

NOW deposits

363,092

 

382,923

 

282,449

 

Money market deposits

128,180

 

152,043

 

100,378

 

Savings deposits

236,915

 

237,135

 

229,464

 

Certificates of deposit

377,806

 

372,464

 

400,680

 

Certificates $100,000 to $250,000

268,296

 

162,185

 

204,311

 

Certificates $250,000 and over

70,896

 

56,760

 

52,400

 

Total deposits

1,592,956

 

1,527,085

 

1,416,646

 

Borrowed funds

181,858

 

210,317

 

297,455

 

Other liabilities

18,209

 

15,626

 

16,556

 

Total Liabilities

1,793,023

 

1,753,028

 

1,730,657

 

Shareholders' equity

 

 

 

Common stock

109

 

109

 

109

 

Additional paid-in capital

63,319

 

62,746

 

62,246

 

Retained earnings

138,493

 

132,460

 

126,464

 

Net unrealized gain (loss) on securities available-for-sale

2,750

 

(5,051

)

(7,245

)

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

(190

)

(197

)

(189

)

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

(708

)

1,438

 

2,066

 

Net unrealized gain (loss) on postretirement benefit costs

37

 

37

 

(147

)

Total shareholders' equity

203,810

 

191,542

 

183,304

 

Total liabilities & shareholders' equity

$

1,996,833

 

$

1,944,570

 

$

1,913,961

 

Common Stock

 

 

 

Number of shares authorized

18,000,000

 

18,000,000

 

18,000,000

 

Number of shares issued and outstanding

10,890,236

 

10,862,651

 

10,851,917

 

Book value per common share

$

18.71

 

$

17.63

 

$

16.89

 

Tangible book value per common share

$

15.96

 

$

14.87

 

$

14.13

 

The First Bancorp

Consolidated Statements of Income (Unaudited)

 

 

 

 

 

For the six months ended
June 30,

For the quarter ended
June 30,

In thousands of dollars, except per share data

2019

2018

2019

2018

Interest income

 

 

 

 

Interest and fees on loans

$

29,457

 

$

25,429

 

$

14,900

 

$

13,038

 

Interest on deposits with other banks

97

 

17

 

29

 

6

 

Interest and dividends on investments

9,536

 

8,210

 

4,893

 

4,161

 

Total interest income

39,090

 

33,656

 

19,822

 

17,205

 

Interest expense

 

 

 

 

Interest on deposits

11,756

 

6,857

 

6,179

 

3,758

 

Interest on borrowed funds

1,485

 

2,121

 

693

 

1,178

 

Total interest expense

13,241

 

8,978

 

6,872

 

4,936

 

Net interest income

25,849

 

24,678

 

12,950

 

12,269

 

Provision for loan losses

625

 

1,000

 

250

 

500

 

Net interest income after provision for loan losses

25,224

 

23,678

 

12,700

 

11,769

 

Non-interest income

 

 

 

 

Investment management and fiduciary income

1,637

 

1,542

 

864

 

802

 

Service charges on deposit accounts

1,170

 

1,097

 

609

 

570

 

Net securities gains

 

136

 

 

 

Mortgage origination and servicing income

651

 

692

 

355

 

361

 

Other operating income

3,291

 

2,846

 

1,777

 

1,448

 

Total non-interest income

6,749

 

6,313

 

3,605

 

3,181

 

Non-interest expense

 

 

 

 

Salaries and employee benefits

8,833

 

8,770

 

4,423

 

4,280

 

Occupancy expense

1,287

 

1,297

 

635

 

598

 

Furniture and equipment expense

2,000

 

1,844

 

1,025

 

915

 

FDIC insurance premiums

439

 

613

 

231

 

334

 

Amortization of identified intangibles

22

 

22

 

11

 

11

 

Other operating expense

4,547

 

4,209

 

2,405

 

2,038

 

Total non-interest expense

17,128

 

16,755

 

8,730

 

8,176

 

Income before income taxes

14,845

 

13,236

 

7,575

 

6,774

 

Applicable income taxes

2,294

 

1,996

 

1,180

 

1,040

 

Net Income

$

12,551

 

$

11,240

 

$

6,395

 

$

5,734

 

Basic earnings per share

$

1.16

 

$

1.04

 

$

0.59

 

$

0.53

 

Diluted earnings per share

$

1.15

 

$

1.04

 

$

0.59

 

$

0.53

 

The First Bancorp

Selected Financial Data (Unaudited)

 

 

 

 

 

As of and for the six months
ended June 30,

As of and for the quarter
ended June 30,

Dollars in thousands, except for per share amounts

2019

2018

2019

2018

 

 

 

 

 

Summary of Operations

 

 

 

 

Interest Income

$

39,090

 

$

33,656

 

$

19,822

 

$

17,205

 

Interest Expense

13,241

 

8,978

 

6,872

 

4,936

 

Net Interest Income

25,849

 

24,678

 

12,950

 

12,269

 

Provision for Loan Losses

625

 

1,000

 

250

 

500

 

Non-Interest Income

6,749

 

6,313

 

3,605

 

3,181

 

Non-Interest Expense

17,128

 

16,755

 

8,730

 

8,176

 

Net Income

12,551

 

11,240

 

6,395

 

5,734

 

Per Common Share Data

 

 

 

 

Basic Earnings per Share

$

1.16

 

$

1.04

 

$

0.59

 

$

0.53

 

Diluted Earnings per Share

1.15

 

1.04

 

0.59

 

0.53

 

Cash Dividends Declared

0.59

 

0.53

 

0.30

 

0.29

 

Book Value per Common Share

18.71

 

16.89

 

18.71

 

16.89

 

Tangible Book Value per Common Share

15.96

 

14.13

 

15.96

 

14.13

 

Market Value

26.85

 

28.22

 

26.85

 

28.22

 

Financial Ratios

 

 

 

 

Return on Average Equity (a)

12.76

%

12.39

%

12.74

%

12.51

%

Return on Average Tangible Common Equity (a)

15.03

%

14.82

%

14.97

%

14.95

%

Return on Average Assets (a)

1.27

%

1.21

%

1.28

%

1.22

%

Average Equity to Average Assets

9.99

%

9.79

%

10.07

%

9.75

%

Average Tangible Equity to Average Assets

8.48

%

8.18

%

8.57

%

8.16

%

Net Interest Margin Tax-Equivalent (a)

2.90

%

2.94

%

2.88

%

2.88

%

Dividend Payout Ratio

50.86

%

50.96

%

50.85

%

54.72

%

Allowance for Loan Losses/Total Loans

0.92

%

0.94

%

0.92

%

0.94

%

Non-Performing Loans to Total Loans

1.23

%

1.17

%

1.23

%

1.17

%

Non-Performing Assets to Total Assets

0.83

%

0.78

%

0.83

%

0.78

%

Efficiency Ratio

50.63

%

52.39

%

50.80

%

51.02

%

At Period End

 

 

 

 

Total Assets

$

1,996,833

 

$

1,913,961

 

$

1,996,833

 

$

1,913,961

 

Total Loans

1,249,132

 

1,224,440

 

1,249,132

 

1,224,440

 

Total Investment Securities

634,079

 

574,510

 

634,079

 

574,510

 

Total Deposits

1,592,956

 

1,416,646

 

1,592,956

 

1,416,646

 

Total Shareholders' Equity

203,810

 

183,304

 

203,810

 

183,304

 

(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 six months ended

For the quarters ended

In thousands of dollars

June 30, 2019

June 30, 2018

June 30, 2019

June 30, 2018

Net interest income as presented

$

25,849

 

$

24,678

 

$

12,950

 

$

12,269

 

Effect of tax-exempt income

1,151

 

1,046

 

589

 

533

 

Net interest income, tax equivalent

$

27,000

 

$

25,724

 

$

13,539

 

$

12,802

 

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, 2019

June 30, 2018

June 30, 2019

June 30, 2018

Non-interest expense, as presented

$

17,128

 

$

16,755

 

$

8,730

 

$

8,176

 

Net interest income, as presented

25,849

 

24,678

 

12,950

 

12,269

 

Effect of tax-exempt interest income

1,151

 

1,046

 

589

 

533

 

Non-interest income, as presented

6,749

 

6,313

 

3,605

 

3,181

 

Effect of non-interest tax-exempt income

83

 

83

 

41

 

41

 

Net securities gains

 

(136

)

 

 

Adjusted net interest income plus non-interest income

$

33,832

 

$

31,984

 

$

17,185

 

$

16,024

 

Non-GAAP efficiency ratio

50.63

%

52.39

%

50.80

%

51.02

%

GAAP efficiency ratio

52.54

%

54.06

%

52.73

%

52.92

%

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 six months ended

For the quarters ended

In thousands of dollars

June 30, 2019

June 30, 2018

June 30, 2019

June 30, 2018

Average shareholders' equity as presented

$

198,406

 

$

182,979

 

$

201,375

 

$

183,898

 

Less intangible assets

(29,968

)

(30,011

)

(29,978

)

(30,021

)

Tangible average shareholders' equity

$

168,438

 

$

152,968

 

$

171,397

 

$

153,877

 

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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