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The First Bancorp Reports Record Results for 2019

The First Bancorp (Nasdaq: FNLC), parent company of First National Bank, today announced operating results for the year ended December 31, 2019. Unaudited net income was $25.5 million, up $2.0 million or 8.5% from the $23.5 million reported for the year ended December 31, 2018. Earnings per common share on a fully diluted basis were up $0.17 to $2.34 per share, an increase of 7.8% from the prior year. The Company also announced operating results for the three months ended December 31, 2019. Unaudited net income was $6.7 million, up $323,000 or 5.1% from the final three months of 2018, with earnings per share on a fully diluted basis for the quarter up $0.02 to $0.61, an increase of 3.4% from the same period in 2018.

"I’m pleased to announce that The First Bancorp ended the decade with a sixth consecutive year of record earnings, and closed out 2019 with a record quarter" remarked Tony C. McKim, the Company’s President and Chief Executive Officer. "Our earnings strength continues to be keyed off earning asset growth, and was supplemented nicely in 2019 by growth in non-interest income. Earning assets were up $125.2 million or 6.7% for the year leading to a $2.3 million, or 4.5% increase in net interest income. Non-interest income was up $1.6 million or 12.6% from 2018, led by a 22.0% increase in mortgage banking revenue. Non-interest expenses were controlled, with an increase of 5.1% from 2018. Based upon the strength of the Company’s earnings, we declared a dividend of 30 cents per share in the fourth quarter, representing a payout to our shareholders of 48.39% of net income for the period."

2019 FINANCIAL HIGHLIGHTS

  • Total Assets exceeded $2 billion for the first time, ending the year at $2.07 billion
  • Net Income for the year increased 8.5% over 2018.
  • Total loans outstanding at December 31, 2019 were $1.30 billion, up $58.8 million or 4.7%, year-over-year.
  • Low Cost deposits as of December 31, 2019 totaled $799 million, an increase of $15.9 million or 2.0% year-over-year.
  • Efficiency Ratio (non-GAAP) was 51.04% for 2019, down from 51.50% in 2018 (the GAAP Efficiency Ratio was 52.75% for the year, down from 53.28% in 2018).
  • The ratio of non-performing assets to total assets at December 31, 2019 was 0.82%, up marginally from 0.79% at December 31, 2018.

FINANCIAL CONDITION

Total assets at December 31, 2019 were $2.07 billion, up $124.2 million from the prior year end. Growth was entirely in earning assets which increased $125.2 million year-over-year, including loan growth of $58.8 million and investment portfolio growth of $66.4 million. Loan growth was centered in the commercial loan portfolio, which was up $52.7 million or 9.1% for the year, including $22.4 million of growth in the fourth quarter. Residential mortgage loans increased $23.3 million, or 5.0% for the year while decreases were experienced in the municipal loan and home equity line of credit portfolios.

Total deposits at December 31, 2019 were $1.65 billion, up $123.4 million or 8.1% from December 31, 2018. Low-cost deposits increased $15.9 million year-over-year, and certificates of deposit increased $98.6 million. Deposit growth allowed for a $25.4 million year-over-year reduction in borrowed funds.

The Company’s capital position remained strong as of December 31, 2019, with an estimated total risk-based capital ratio of 15.03%, and an estimated leverage capital ratio of 8.88%. These measures compare favorably to 15.24% and 8.60% respectively as of December 31, 2018, and are well in excess of regulatory requirements.

ASSET QUALITY & PROVISION FOR LOAN LOSSES

Asset quality is stable and solid. As of December 31, 2019, non-performing assets as a percentage of total assets were 0.82%, up marginally from 0.79% a year earlier. Past due loans were 1.16% of total loans at December 31, 2019, up marginally from 1.08% of total loans at December 31, 2018. Net charge-offs as a percentage of loans were 0.07% as of December 31, 2019, down from 0.08% in 2018 and 0.12% in 2017.

The provision for loan losses totaled $375,000 in the fourth quarter of 2019, compared with $167,000 for the same period in 2018. For the year ended December 31, 2019 the provision for loan losses totaled $1.25 million, compared with $1.5 million in 2018. The Company's organic loan portfolio growth, as well as the positive historical charge-off statistics and generally stable economic and market conditions for the last several years, were key factors in the quantitative and qualitative modeling used by management to determine the provision expense required to maintain an adequate allowance for loan losses. The allowance for loan losses stood at 0.90% of total loans as of December 31, 2019, down slightly from the 0.91% of total loans at December 31, 2018.

OPERATING RESULTS

Net Income for the year ended December 31, 2019 was $25.5 million, up $2.0 million or 8.5% from the year ended December 31, 2018. On a fully diluted earnings per share basis, 2019 earnings were $2.34, up $0.17 or 7.8% from the prior year. The Company’s Return on Average Assets of 1.27% for the year ended December 31, 2019 was up from 1.23% for the year ended December 31, 2018. Return on Average Tangible Common Equity was 14.66% and 15.18% respectively for the same periods, reflecting a higher level of capital being held.

For the three months ended December 31, 2019, net income was $6.7 million, an increase of $323,000, or 5.1% from the same period in 2018. Fully diluted earnings per share for the fourth quarter of 2019 were $0.61, up $0.02, or 3.4% from the fourth quarter of 2018.

Contributing factors to the Company’s 2019 annual and fourth quarter results included:

  • Earning asset growth led to a $2.4 million increase in tax-equivalent net interest income year-over-year, an increase of 4.6%. In the fourth quarter of 2019 tax equivalent net interest income was up $443,000 from the same period in 2018, an increase of 3.3%. Net interest margins have remained reasonably stable at 2.87% for the quarter ended December 31, 2019 and 2.89% for the year then ended. as compared to 2.92% and 2.91% respectively for the same periods in 2018.
  • Non-interest income net of securities gains was $14.0 million for the year ended December 31, 2019, up $1.5 million or 12.1% from 2018. Mortgage banking revenue growth of 22.0% year-to-year, growth of 9.5% year-to-year at First National Wealth Management, the bank’s trust and investment management division, and new revenue sources including loan swap fees contributed to the increase.
  • Non-interest expense for 2019 was up $1.7 million or 5.1% from 2018. The year-to-year change was centered in employee expenses which increased 4.3% from the prior year. The Company benefited from FDIC insurance premium credits which helped reduce the bank's FDIC premium expense by $787,000 year-to-year.

DIVIDEND & STOCK PERFORMANCE

On December 19, 2019 the Company’s Board of Directors declared a dividend for the fourth quarter of $0.30 per share, payable on January 17, 2020 to shareholders of record as of January 7, 2020. The company’s stock closed at $30.23 per share on December 31, 2019, up from $26.30 at the prior year-end. With dividends re-invested, shares of The First Bancorp provided shareholders with a total annualized return of 20.13% for the year ended December 31, 2019, and 103.04% over the five years then ended. The Company’s total return compares well to the broad market over the same periods as measured by the S&P 500 with returns of 31.48%, and 73.80% respectively, and the Russell 2000, in which we are included, with total returns of 25.49%, and 48.36% respectively. The First Bancorp’s stock performance also compares well to the banking industry over these same time horizons as measured by the KBW Regional Bank Index with total returns of 23.86%, and 53.43% respectively, and the NASDAQ Bank Index with total returns of 24.38% and 65.11% respectively over the same time periods.

The First Bancorp

Consolidated Balance Sheets (Unaudited)

 

In thousands of dollars except common stock data

December 31, 2019

December 31, 2018

Assets

 

 

Cash and due from banks

$

14,433

 

$

19,134

 

Interest-bearing deposits in other banks

11,310

 

12,079

 

Securities available for sale

360,520

 

317,416

 

Securities to be held to maturity

281,606

 

255,663

 

Restricted equity securities, at cost

8,982

 

11,586

 

Loans held for sale

154

 

 

Loans

1,297,075

 

1,238,283

 

Less allowance for loan losses

11,639

 

11,232

 

Net loans

1,285,436

 

1,227,051

 

Accrued interest receivable

7,167

 

6,660

 

Premises and equipment

21,305

 

22,056

 

Other real estate owned

279

 

584

 

Goodwill

29,805

 

29,805

 

Other assets

47,799

 

42,536

 

Total assets

$

2,068,796

 

$

1,944,570

 

Liabilities

 

 

Demand deposits

$

169,777

 

$

163,575

 

NOW deposits

393,569

 

382,923

 

Money market deposits

161,000

 

152,043

 

Savings deposits

236,141

 

237,135

 

Certificates of deposit

277,225

 

372,464

 

Certificates $100,000 to $250,000

345,241

 

162,185

 

Certificates $250,000 and over

67,513

 

56,760

 

Total deposits

1,650,466

 

1,527,085

 

Borrowed funds

184,955

 

210,317

 

Other liabilities

20,867

 

15,626

 

Total Liabilities

1,856,288

 

1,753,028

 

Shareholders' equity

 

 

Common stock

109

 

109

 

Additional paid-in capital

63,964

 

62,746

 

Retained earnings

144,839

 

132,460

 

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

3,657

 

(5,051

)

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

(182

)

(197

)

Net unrealized gain on cash flow hedging derivative instruments

97

 

1,438

 

Net unrealized gain on postretirement benefit costs

24

 

37

 

Total shareholders' equity

212,508

 

191,542

 

Total liabilities & shareholders' equity

$

2,068,796

 

$

1,944,570

 

Common Stock

 

 

Number of shares authorized

18,000,000

 

18,000,000

 

Number of shares issued and outstanding

10,899,210

 

10,862,651

 

Book value per common share

$

19.50

 

$

17.63

 

Tangible book value per common share

$

16.75

 

$

14.87

 

The First Bancorp

Consolidated Statements of Income (Unaudited)

 

 

 

 

For the year ended
December 31,

For the quarter ended
December 31,

In thousands of dollars, except per share data

2019

2018

2019

2018

Interest income

 

 

 

 

Interest and fees on loans

$

59,239

 

$

53,548

 

14,789

 

14,384

 

Interest on deposits with other banks

188

 

242

 

43

 

110

 

Interest and dividends on investments

19,224

 

16,753

 

4,825

 

4,307

 

Total interest income

78,651

 

70,543

 

19,657

 

18,801

 

Interest expense

 

 

 

 

Interest on deposits

23,268

 

15,970

 

5,529

 

4,839

 

Interest on borrowed funds

2,890

 

4,364

 

710

 

967

 

Total interest expense

26,158

 

20,334

 

6,239

 

5,806

 

Net interest income

52,493

 

50,209

 

13,418

 

12,995

 

Provision for loan losses

1,250

 

1,500

 

375

 

167

 

Net interest income after provision for loan losses

51,243

 

48,709

 

13,043

 

12,828

 

Non-interest income

 

 

 

 

Investment management and fiduciary income

3,318

 

3,030

 

859

 

745

 

Service charges on deposit accounts

2,330

 

2,194

 

583

 

570

 

Net securities gains

224

 

137

 

209

 

 

Mortgage origination and servicing income

1,909

 

1,565

 

682

 

523

 

Other operating income

6,408

 

5,674

 

1,575

 

1,415

 

Total non-interest income

14,189

 

12,600

 

3,908

 

3,253

 

Non-interest expense

 

 

 

 

Salaries and employee benefits

18,396

 

17,641

 

4,698

 

4,411

 

Occupancy expense

2,558

 

2,435

 

627

 

564

 

Furniture and equipment expense

3,990

 

3,924

 

1,021

 

1,108

 

FDIC insurance premiums

439

 

1,226

 

 

276

 

Amortization of identified intangibles

43

 

43

 

11

 

11

 

Other operating expense

9,746

 

8,198

 

2,647

 

2,126

 

Total non-interest expense

35,172

 

33,467

 

9,004

 

8,496

 

Income before income taxes

30,260

 

27,842

 

7,947

 

7,585

 

Applicable income taxes

4,735

 

4,306

 

1,261

 

1,222

 

Net Income

$

25,525

 

$

23,536

 

$

6,686

 

$

6,363

 

Basic earnings per share

$

2.36

 

$

2.18

 

$

0.62

 

$

0.59

 

Diluted earnings per share

2.34

 

2.17

 

0.61

 

0.59

 

The First Bancorp

Selected Financial Data (Unaudited)

 

 

 

Dollars in thousands,

For the year ended
December 31,

For the quarter ended
December 31,

except for per share amounts

2019

2018

2019

2018

 

 

 

 

 

Summary of Operations

 

 

 

 

Interest Income

$

78,651

 

$

70,543

 

$

19,657

 

$

18,801

 

Interest Expense

26,158

 

20,334

 

6,239

 

5,806

 

Net Interest Income

52,493

 

50,209

 

13,418

 

12,995

 

Provision for Loan Losses

1,250

 

1,500

 

375

 

167

 

Non-Interest Income

14,189

 

12,600

 

3,908

 

3,253

 

Non-Interest Expense

35,172

 

33,467

 

9,004

 

8,496

 

Net Income

25,525

 

23,536

 

6,686

 

6,363

 

Per Common Share Data

 

 

 

 

Basic Earnings per Share

$

2.36

 

$

2.18

 

$

0.62

 

$

0.59

 

Diluted Earnings per Share

2.34

 

2.17

 

0.61

 

0.59

 

Cash Dividends Declared

1.19

 

1.11

 

0.30

 

0.29

 

Book Value per Common Share

19.50

 

17.63

 

19.50

 

17.63

 

Tangible Book Value per Common Share

16.75

 

14.87

 

16.75

 

14.87

 

Market Value

30.23

 

26.30

 

30.23

 

26.30

 

Financial Ratios

 

 

 

 

Return on Average Equity (a)

12.51

%

12.72

%

12.55

%

13.44

%

Return on Average Tangible Common Equity (a)

14.66

%

15.18

%

14.63

%

16.00

%

Return on Average Assets (a)

1.27

%

1.23

%

1.30

%

1.29

%

Average Equity to Average Assets

10.17

%

9.70

%

10.34

%

9.63

%

Average Tangible Equity to Average Assets

8.68

%

8.13

%

8.88

%

8.09

%

Net Interest Margin Tax-Equivalent (a)

2.89

%

2.91

%

2.87

%

2.92

%

Dividend Payout Ratio

50.42

%

50.92

%

48.39

%

49.15

%

Allowance for Loan Losses/Total Loans

0.90

%

0.91

%

0.90

%

0.91

%

Non-Performing Loans to Total Loans

1.28

%

1.19

%

1.28

%

1.19

%

Non-Performing Assets to Total Assets

0.82

%

0.79

%

0.82

%

0.79

%

Efficiency Ratio

51.04

%

51.50

%

50.79

%

50.46

%

At Period End

 

 

 

 

Total Assets

$

2,068,796

 

$

1,944,570

 

$

2,068,796

 

$

1,944,570

 

Total Loans

1,297,075

 

1,238,283

 

1,297,075

 

1,238,283

 

Total Investment Securities

651,108

 

584,665

 

651,108

 

584,665

 

Total Deposits

1,650,466

 

1,527,085

 

1,650,466

 

1,527,085

 

Total Shareholders' Equity

212,508

 

191,542

 

212,508

 

191,542

 

(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 and believes that these non-GAAP financial measures provide a greater understanding of ongoing operations and enhance comparability of results with prior periods as well as demonstrating the effects of significant gains and charges in the current period. 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 adjustments 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 year ended
December 31,

For the quarter ended
December 31,

In thousands of dollars

2019

2018

2019

2018

Net interest income as presented

$

52,493

 

$

50,209

 

$

13,418

 

$

12,995

 

Effect of tax-exempt income

2,295

 

2,156

 

573

 

553

 

Net interest income, tax equivalent

$

54,788

 

$

52,365

 

$

13,991

 

$

13,548

 

The Company presents its efficiency ratio using non-GAAP information. The GAAP-based efficiency ratio is noninterest expenses divided by net interest income plus noninterest income from the Consolidated Statements of Income. The non-GAAP efficiency ratio excludes securities losses and other-than-temporary impairment charges from noninterest expenses, excludes securities gains from noninterest 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 year ended
December 31,

For the quarter ended
December 31,

In thousands of dollars

2019

2018

2019

2018

Non-interest expense, as presented

$

35,172

 

$

33,467

 

$

9,004

 

$

8,496

 

Net interest income, as presented

52,493

 

50,209

 

13,418

 

12,995

 

Effect of tax-exempt income

2,295

 

2,156

 

573

 

553

 

Non-interest income, as presented

14,189

 

12,600

 

3,908

 

3,253

 

Effect of non-interest tax-exempt income

163

 

162

 

38

 

38

 

Net securities gains

(224

)

(137

)

(209

)

 

Adjusted net interest income plus non-interest income

$

68,916

 

$

64,990

 

$

17,728

 

$

16,839

 

Non-GAAP efficiency ratio

51.04

%

51.50

%

50.79

%

50.46

%

GAAP efficiency ratio

52.75

%

53.28

%

51.97

%

52.29

%

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 preferred stock and 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 year ended
December 31,

For the quarter ended
December 31,

In thousands of dollars

2019

2018

2019

2018

Average shareholders' equity as presented

$

204,092

 

$

185,049

 

$

211,321

 

$

187,766

 

Less intangible assets

(29,957

)

(30,001

)

(29,978

)

(29,978

)

Tangible average shareholders' equity

$

174,135

 

$

155,048

 

$

181,343

 

$

157,788

 

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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20200122005796/en/

Contacts

The First Bancorp
Richard M. Elder, 207.563.3195
Treasurer & Chief Financial Officer