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The First Bancorp Reports First Quarter Earnings Up 17.1%

^{Published on 2011-04-20 13:30:58 - Market Wire}
 

DAMARISCOTTA, Maine--([ BUSINESS WIRE ])--The First Bancorp (Nasdaq: FNLC), today announced unaudited results for the quarter ended March 31, 2011. Net income was $3.1 million, up $459,000 or 17.1% from the same period in 2010, and earnings per common share on a fully diluted basis of $0.29 were up $0.05 or 20.8% from the same period in 2010. Compared to the previous quarter, net income was up $66,000 or 2.1% and earnings per common share on a fully diluted basis were up $0.01 to $0.29 from $0.28.

"Our core operating ratios remain very good"

aWhile the economic downturn is now in its third year, from our perspective, conditions have stabilizeda observed Daniel R. Daigneault, the Companya™s President & Chief Executive Officer. aAlthough we have not seen any significant improvement in the past several months, we fortunately have not seen any further decline. Our first quarter results were quite good, credit quality has been relatively stable for the past three quarters, and our performance continues to be significantly better than our peer group.

aNet interest income on a tax-equivalent basis for the three months ended March 31, 2011 was up $533,000 or 5.0% over the same period in 2010,a President Daigneault continued. aThis increase was attributable to higher levels of earning assets. There was a small takeaway, however, as a result of our net interest margin slipping from 3.51% in 2010 to 3.40% in 2011: the yield on our assets was down 32 bps year-over-year while our funding cost was down only 22 bps. Non-interest income was $102,000 above the same period in 2010. Mortgage origination income was the primary reason for this increase. Non-interest expense was $206,000 above the same period in 2010. Salaries and employee benefits as well as occupancy costs were the reason for the increase.

aAs noted previously, credit quality has been relatively stable for the past three quarters,a President Daigneault said. aNon-performing loans stood at 2.51% of total loans as of March 31, 2011, up slightly from 2.39% at year end and 2.46% a year ago. Net chargeoffs of $1.4 million were 0.64% of average loans on an annualized basis, down from net chargeoffs of $1.8 million or 0.76% of average loans in the first quarter of 2010. We provisioned $2.1 million for loan losses in the first quarter of 2011, down $300,000 from the first quarter of 2010, and the allowance for loan losses has increased $684,000 since year end. The allowance as a percentage of loans increased to 1.56% during the quarter, up from 1.50% at year end and 1.53% a year ago.a

aTotal assets have increased $37.2 million since year end and $94.5 million during the past year,a observed the Companya™s Chief Financial Officer, F. Stephen Ward. aWhile the loan portfolio increased $7.1 million in the first three months of 2011, it was down $40.3 million from a year ago. We were fortunately able to add to the investment portfolio, which increased $34.8 million in the first quarter and $138.9 million over the past year. Low-cost deposits continue to do well, up $1.2 million in the first quarter and up $27.7 million over the past year.

aWe continue to remain well capitalized, which has been a top priority for the past two years,a Mr. Ward said. aOur total risk-based capital is in excess of 16.0%, well above the well-capitalized threshold of 10.0% set by the FDIC. In the first quarter of 2011 we added nearly $1.0 million to regulatory capital through retained earnings in addition to the $3.7 million added in 2010. Strong capital enables the Company to maintain the dividend at 19.5 cents per share per quarter or 78 cents per share per year. We paid out 67.2% of earnings in the first quarter compared to 81.3% for the same period in 2010, and our dividend yield was 5.11% at March 31, 2011, based on the closing price of $15.25 per share.

aAt quarter end, The First Bancorpa™s shares were trading at a very healthy 1.51 times tangible book value,a Mr. Ward observed. aOur March 31, 2011 closing price of $15.25 per share was down $0.54 or 3.42% from our $15.79 per share closing price on December 31, 2010. This was slightly lower than the NASD Bank Index which was down 0.54% for the quarter, as well as the broader market indices which were in positive territory for the quarter.a

aOur core operating ratios remain very good,a said President Daigneault, aespecially when compared to our peer group. Our return on average tangible common equity was 11.43% for the first quarter of 2011 compared to 11.15% for the comparable period in 2010. This placed us in the top 30% of all banks in our peer group, which had an average return on equity of 3.15% as of December 31, 2010. Our efficiency ratio continues to be an important component in our overall performance, and it improved slightly to 48.28% for the first quarter of 2011 compared to 49.06% for the first quarter of 2010. It also puts us in the top 10% compared to our peer group, which had an average efficiency ratio of 67.23% as of December 31, 2010.

aWhile all of the data presented here supports our view that things have stabilized during the past few quarters, we feel it will still be some time before the economy returns to pre-2008 levels,a President Daigneault concluded. aAsset quality a" as measured by past-due and non-performing loans a" has been relatively stable for the past year. With good earnings we are adding to capital and posting a return on assets and a return on equity well above our peer group, and our financial performance continues to be much stronger than our peers. With solid earnings and by remaining well capitalized, we are able to maintain the dividend at an annual rate of $0.78 per share.a

The First Bancorp, headquartered in Damariscotta, Maine, is the holding company for The First, N.A. Founded in 1864, The First is an independent community bank serving Mid-Coast and Down East Maine with 14 offices in Lincoln, Knox, Hancock and Washington Counties. The Bank provides a full range of consumer and commercial banking products and services. First Advisors, a division of The First, provides investment advisory, private banking and trust services from two offices in Lincoln and Hancock Counties.

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 (aGAAPa). Management uses these anon-GAAPa measures in its analysis of the Companya™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 Companya™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 Companya™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 institutiona™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 Companya™s consolidated financial statements, which have been prepared in accordance with GAAP. A 35.0% tax rate was used in both 2011 and 2010.

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 of between the GAAP and non-GAAP efficiency ratio:

The Company presents certain information based upon average tangible common equity instead of total average shareholdersa™ equity. The difference between these two measures is the Companya™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 Companya™s consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles:

Forward-Looking and Cautionary Statements

Except for the historical information and discussions contained herein, statements contained in this release may constitute aforward-looking statementsa 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 Companya™s filings with the Securities and Exchange Commission.