2024 Q2 Results Driven by Loan Growth, Stable
Net Interest Margin, and Strong Asset Quality
The First Bancorp (Nasdaq: FNLC), ("the Company", "we", "us",
"our"), parent company of First National Bank, today reported
unaudited net income of $6.2 million with diluted earnings per
share of $0.55 for the quarter ended June 30, 2024. The Company
also reported results for the six months ended June 30, 2024. Net
income year-to-date in 2024 was $12.2 million, with diluted
earnings per share of $1.10.
Second Quarter Notable Items:
- Total assets reached $3.08 billion, an increase of $106.8
million in Q2
- Pre-tax, pre-provision earnings increased by $1.2 million or
18.1% from Q1
- Loan balances grew at an annualized rate of 13.6% to $2.25
billion
- Non-Performing Assets to Total Assets of 0.09%, unchanged from
Q1
- Efficiency Ratio improved by 4.8 percentage points from Q1
- Quarterly shareholder dividend increased by $0.01 to $0.36 per
share
CEO COMMENTS
"I am pleased to report our operating results for the second
quarter," commented Tony C. McKim, the Company's President and
Chief Executive Officer. "Net income increased 2.5% from the first
quarter of 2024, and diluted earnings per share increased 2.4%. On
a pre-tax, pre-provision ("PTPP") basis, second quarter earnings
increased $1.2 million, or 18.1%, from the first quarter of 2024
("linked quarter").
"We continue to responsibly grow our balance sheet while
enjoying strong asset quality, capital, and liquidity positions.
Asset growth has been focused in the loan portfolio and comes from
what has been a long-term formula for success - building
relationships and lending to creditworthy borrowers under
well-structured terms. Our net interest margin for the quarter was
stable, and when combined with earning asset growth, produced a
modest rise in linked quarter net interest income."
Mr. McKim concluded, "Rather than retreating from certain
activities due to a challenging operating environment, we have
continued our commitment to serving customers and supporting
communities throughout our footprint. We originated over $200
million in new loan volume in the second quarter resulting in loan
portfolio expansion of $73.9 million. As the Bank observes its
160th anniversary in 2024, our team remains totally focused upon
serving their customers and communities."
FINANCIAL RESULTS FOR THE QUARTER ENDED
JUNE 30, 2024
Net income was $6.2 million, or $0.55 per diluted share, for the
three months ended June 30, 2024. On a PTPP basis, earnings for the
quarter were $8.0 million. Results for the quarter compare
favorably to the linked quarter for which net income was $6.0
million, diluted earnings per share were $0.54, and PTPP earnings
were $6.8 million. The drivers of second quarter results are
discussed in the following sections:
Net Interest Income
Net interest income was $15.1 million for the three months ended
June 30, 2024, an increase of $195,000 or 1.3% from the first
quarter of 2024. The increase resulted primarily from an expansion
in earning assets during the quarter. Net interest margin
stabilized at 2.21% for the second quarter of 2024, down slightly
from 2.22% in the first quarter. The average tax equivalent yield
on earning assets increased 13 basis points in the second quarter
to 5.22%, while the cost of total liabilities also increased 13
basis points to an average of 3.48% for the quarter.
Provision for Credit Losses
A provision for credit losses on loans of $539,000 was recorded
in the second quarter of 2024, compared with a provision expense of
$99,000 in the first quarter. Loan growth and the modeling effects
of slightly less favorable economic projections, partially offset
by strong asset quality, drove the period-to-period increase. For
the three months ended June 30, 2024 net charge-offs were $53,000
as compared to net recoveries of $79,000 for the three months ended
March 31, 2024.
Non-Interest Income
Total non-interest income was $4.2 million for the three months
ended June 30, 2024, an increase of $517,000, or 14.2% from the
three months ended March 31, 2024. The Bank recorded quarterly
revenue gains in all business lines, including a 12.4% increase in
Debit Card income, a 6.8% increase in Wealth Management revenue,
and an increase of 29.4% in Other Operating Income led by
loan-related fees.
Non-Interest Expense
Total non-interest expense for three months ended June 30, 2024
was $11.3 million, a decrease of $511,000, or 4.3%, from the three
months ended March 31, 2024. The period-to-period change was
concentrated within employee salaries and benefits, resulting
largely from early year salary and benefit dynamics and an increase
in loan-related salary deferrals. The Company's efficiency ratio
for the second quarter was 56.35%, significantly improved from the
linked quarter ratio of 61.15%.
Loans, Total Assets & Funding
Total assets at June 30, 2024, were $3.08 billion, up $106.8
million in the second quarter and up $210.1 million from a year
ago. Earning assets increased $102.7 million during the quarter
comprised primarily of an increase in loans of $73.9 million.
Earning assets have increased by $201.2 million since June 30, 2023
centered in loan growth of $186.7 million.
Loan growth in the second quarter was led by commercial credit.
Commercial real estate balances increased $33.3 million, commercial
and industrial balances increased $8.7 million, and multifamily
loan balances increased $4.4 million. Growth was also present in
the municipal, residential term, and home equity segments of the
portfolio, up $7.4 million, $7.9 million, and $6.4 million,
respectively, in the quarter.
Total deposits at June 30, 2024 were $2.58 billion, up $29.1
million during the period, and up $78.2 million, or 3.1%, from June
30, 2023. Time deposits led the quarterly change, increasing $46.3
million while low-cost deposits were collectively down $12.5
million. Borrowings increased $75.8 million during the period to
$230.6 million. Uninsured deposits as of June 30, 2024, were
estimated at 16% of total deposits, and 75% of uninsured deposits
were fully collateralized. Available day-one liquidity was $594
million, sufficient to cover 143% of estimated uninsured
deposits.
ASSET QUALITY
Asset quality continues to be very strong. As of June 30, 2024,
the ratio of non-performing assets to total assets was 0.09%,
unchanged from March 31, 2024, and up modestly from 0.06% as of
June 30, 2023. The ratio of non-performing loans to total loans was
0.11% as of June 30, 2024, in range with the 0.12% and 0.08%
reported as of March 31, 2024 and June 30, 2023, respectively. Past
due loans remain low at 0.15% of total loans as of June 30, 2024, a
decrease from 0.18% of total loans as of March 31, 2024 and a
slight increase from 0.14% of total loans as of June 30, 2023.
The Allowance for Credit Losses (ACL) on Loans stood at 1.10% of
total loans as of June 30, 2024, as compared to an ACL of 1.11% and
1.14% of total loans as of March 31, 2024, and June 30, 2023,
respectively. The loan portfolio is well-diversified with
Commercial Real Estate exposures comfortably below regulatory
guidance limits, and with very limited exposure in sectors
frequently mentioned as potential problems, such as office
space.
CAPITAL
The Company’s regulatory capital position remained strong as of
June 30, 2024. The Leverage Capital ratio was an estimated 8.58% as
of June 30, 2024, as compared to the 8.67% and 8.68% reported as of
March 31, 2024, and as of June 30, 2023, respectively, with
period-to-period changes attributable primarily to earning asset
growth. The estimated Total Risk-Based Capital ratio was 13.24% as
of June 30, 2024, as compared to the 13.54% and 13.66% reported as
of March 31, 2024, and as of June 30, 2023, respectively. The
Company's tangible book value per share was $19.20 as of June 30,
2024, up from $19.03 as March 31, 2024 and up from $18.15 as of
June 30, 2023. Earning asset growth during the quarter, coupled
with a moderately larger unrealized loss position on
available-for-sale securities, produced a Tangible Common Equity
ratio of 7.00% as of June 30, 2024, as compared to 7.19% as of
March 31, 2024 and 7.07% as of June 30, 2023.
DIVIDEND
On June 27, 2024, the Company's Board of Directors declared a
second quarter dividend of $0.36 per share. The dividend was paid
on July 19, 2024, to shareholders of record as of July 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 $3.06 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, 2024
December 31, 2023
June 30, 2023
Assets
Cash and due from banks
$
27,816
$
31,942
$
25,077
Interest-bearing deposits in other
banks
33,133
3,488
3,978
Securities available-for-sale
273,501
282,053
278,355
Securities held-to-maturity
377,522
385,235
389,987
Restricted equity securities, at cost
7,110
3,385
5,227
Loans
2,247,670
2,129,454
2,060,953
Less allowance for credit losses
24,693
24,030
23,465
Net loans
2,222,977
2,105,424
2,037,488
Accrued interest receivable
17,760
11,894
13,598
Premises and equipment
27,929
28,684
27,808
Other real estate owned
208
—
64
Goodwill
30,646
30,646
30,646
Other assets
66,342
63,947
62,587
Total assets
$
3,084,944
$
2,946,698
$
2,874,815
Liabilities
Demand deposits
$
270,858
$
289,104
$
296,950
NOW deposits
609,878
634,543
615,370
Money market deposits
317,133
305,931
208,262
Savings deposits
268,472
299,837
329,651
Certificates of deposit
728,410
646,818
667,552
Certificates $100,000 to $250,000
219,732
251,192
252,720
Certificates $250,000 and over
163,597
172,237
129,357
Total deposits
2,578,080
2,599,662
2,499,862
Borrowed funds
230,620
69,652
114,481
Other liabilities
31,576
34,305
28,469
Total Liabilities
2,840,276
2,703,619
2,642,812
Shareholders' equity
Common stock
111
111
111
Additional paid-in capital
70,942
70,071
69,240
Retained earnings
215,999
211,925
205,539
Net unrealized loss on securities
available-for-sale
(43,369
)
(39,575
)
(43,781
)
Net unrealized loss on securities
transferred from available-for-sale to held-to-maturity
(51
)
(56
)
(59
)
Net unrealized gain on cash flow hedging
derivative instruments
733
300
680
Net unrealized gain on postretirement
costs
303
303
273
Total shareholders' equity
244,668
243,079
232,003
Total liabilities & shareholders'
equity
$
3,084,944
$
2,946,698
$
2,874,815
Common Stock
Number of shares authorized
18,000,000
18,000,000
18,000,000
Number of shares issued and
outstanding
11,139,639
11,098,057
11,081,800
Book value per common share
$
21.96
$
21.90
$
20.94
Tangible book value per common share
$
19.20
$
19.12
$
18.15
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, 2024
June 30, 2023
June 30, 2024
March 31, 2024
June 30, 2023
Interest income
Interest and fees on loans
$
62,043
$
50,531
$
31,839
$
30,204
$
26,406
Interest on deposits with other banks
134
89
56
78
49
Interest and dividends on investments
9,369
9,478
4,663
4,706
4,729
Total interest income
71,546
60,098
36,558
34,988
31,184
Interest expense
Interest on deposits
38,993
25,392
19,816
19,177
14,475
Interest on borrowed funds
2,598
1,306
1,667
931
784
Total interest expense
41,591
26,698
21,483
20,108
15,259
Net interest income
29,955
33,400
15,075
14,880
15,925
Provision (reduction) for credit
losses
(1
)
701
512
(513
)
151
Net interest income after provision for
credit losses
29,956
32,699
14,563
15,393
15,774
Non-interest income
Investment management and fiduciary
income
2,457
2,355
1,269
1,188
1,209
Service charges on deposit accounts
1,041
934
542
499
497
Mortgage origination and servicing
income
319
387
189
130
195
Debit card income
2,519
2,476
1,333
1,186
1,291
Other operating income
1,461
1,287
824
637
678
Total non-interest income
7,797
7,439
4,157
3,640
3,870
Non-interest expense
Salaries and employee benefits
11,642
10,897
5,585
6,057
5,177
Occupancy expense
1,709
1,710
843
866
842
Furniture and equipment expense
2,766
2,606
1,377
1,389
1,303
FDIC insurance premiums
1,126
878
562
564
534
Amortization of identified intangibles
13
13
6
7
6
Other operating expense
5,755
5,461
2,877
2,878
2,853
Total non-interest expense
23,011
21,565
11,250
11,761
10,715
Income before income taxes
14,742
18,573
7,470
7,272
8,929
Applicable income taxes
2,550
3,208
1,299
1,251
1,535
Net Income
$
12,192
$
15,365
$
6,171
$
6,021
$
7,394
Basic earnings per share
$
1.104
$
1.397
$
0.559
$
0.546
$
0.673
Diluted earnings per share
$
1.095
$
1.387
$
0.554
$
0.541
$
0.668
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, 2024
June 30, 2023
June 30, 2024
March 31, 2024
June 30, 2023
Summary of Operations
Interest Income
$
71,546
$
60,098
$
36,558
$
34,988
$
31,184
Interest Expense
41,591
26,698
21,483
20,108
15,259
Net Interest Income
29,955
33,400
15,075
14,880
15,925
Provision (reduction) for Credit
Losses
(1
)
701
512
(513
)
151
Non-Interest Income
7,797
7,439
4,157
3,640
3,870
Non-Interest Expense
23,011
21,565
11,250
11,761
10,715
Net Income
12,192
15,365
6,171
6,021
7,394
Per Common Share Data
Basic Earnings per Share
$
1.104
$
1.397
$
0.559
$
0.546
$
0.673
Diluted Earnings per Share
1.095
1.387
0.554
0.541
0.668
Cash Dividends Declared
0.710
0.690
0.360
0.350
0.350
Book Value per Common Share
21.96
20.94
21.96
21.80
20.94
Tangible Book Value per Common Share
19.20
18.15
19.20
19.03
18.15
Market Value
24.85
24.34
24.85
24.64
24.34
Financial Ratios
Return on Average Equity1
10.04
%
13.17
%
10.16
%
9.92
%
12.73
%
Return on Average Tangible Common
Equity1
11.49
%
15.16
%
11.63
%
11.36
%
14.67
%
Return on Average Assets1
0.82
%
1.10
%
0.82
%
0.82
%
1.04
%
Average Equity to Average Assets
8.18
%
8.37
%
8.10
%
8.26
%
8.20
%
Average Tangible Equity to Average
Assets
7.15
%
7.28
%
7.08
%
7.22
%
7.11
%
Net Interest Margin Tax-Equivalent1
2.21
%
2.62
%
2.21
%
2.22
%
2.46
%
Dividend Payout Ratio
64.31
%
49.29
%
64.40
%
63.64
%
52.24
%
Allowance for Credit Losses/Total
Loans
1.10
%
1.14
%
1.10
%
1.11
%
1.14
%
Non-Performing Loans to Total Loans
0.11
%
0.08
%
0.11
%
0.12
%
0.08
%
Non-Performing Assets to Total Assets
0.09
%
0.06
%
0.09
%
0.09
%
0.06
%
Efficiency Ratio
58.70
%
51.10
%
56.35
%
61.15
%
52.27
%
At Period End
Total Assets
$
3,084,944
$
2,874,815
$
3,084,944
$
2,978,170
$
2,874,815
Total Loans
2,247,670
2,060,953
2,247,670
2,173,746
2,060,953
Total Investment Securities
658,133
673,569
658,133
659,837
673,569
Total Deposits
2,578,080
2,499,862
2,578,080
2,548,988
2,499,862
Total Shareholders' Equity
244,668
232,003
244,668
242,624
232,003
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 six months
ended
For the quarters ended
In thousands of dollars
June 30, 2024
June 30, 2023
June 30, 2024
March 31, 2024
June 30, 2023
Net interest income as presented
$
29,955
$
33,400
$
15,075
$
14,880
$
15,925
Effect of tax-exempt income
1,355
1,280
686
$
669
661
Net interest income, tax equivalent
$
31,310
$
34,680
$
15,761
$
15,549
$
16,586
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 provision for credit losses on securities
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, 2024
June 30, 2023
June 30, 2024
March 31, 2024
June 30, 2023
Non-interest expense, as presented
$
23,011
$
21,565
$
11,250
$
11,761
$
10,715
Net interest income, as presented
29,955
33,400
15,075
14,880
15,925
Effect of tax-exempt interest income
1,355
1,280
686
669
661
Non-interest income, as presented
7,797
7,439
4,157
3,640
3,870
Effect of non-interest tax-exempt
income
91
86
45
45
43
Adjusted net interest income plus
non-interest income
$
39,198
$
42,205
$
19,963
$
19,234
$
20,499
Non-GAAP efficiency ratio
58.70
%
51.10
%
56.35
%
61.15
%
52.27
%
GAAP efficiency ratio
60.95
%
52.80
%
58.50
%
63.50
%
54.13
%
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, 2024
June 30, 2023
June 30, 2024
March 31, 2024
June 30, 2023
Average shareholders' equity as
presented
$
244,202
$
235,242
$
244,321
$
244,083
$
232,991
Less intangible assets
(30,824
)
(30,850
)
(30,827
)
(30,827
)
(30,853
)
Tangible average shareholders' equity
$
213,378
$
204,392
$
213,494
$
213,256
$
202,138
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, 2024
June 30, 2023
June 30, 2024
March 31, 2024
June 30, 2023
Net Income, as presented
$
12,192
$
15,365
$
6,171
$
6,021
$
7,394
Add: provision (reduction) for credit
losses
(1
)
701
512
(513
)
151
Add: income taxes
2,550
3,208
1,299
1,251
1,535
Pre-Tax, pre-provision net income
$
14,741
$
19,274
$
7,982
$
6,759
$
9,080
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/20240724963296/en/
The First Bancorp Richard M. Elder, EVP, Chief Financial Officer
207-563-3195 rick.elder@thefirst.com
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