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The First Bancorp Reports Year-to-Date Earnings Up 8.4%

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^{Published in Business and Finance on Wednesday, July 20th 2011 at 13:56 GMT by Market Wire}  

DAMARISCOTTA, Maine--([ BUSINESS WIRE ])--The First Bancorp (Nasdaq: FNLC), today announced unaudited results for the six months ended June 30, 2011. Net income was $6.3 million, up $492,000 or 8.4% from the same period in 2010, and earnings per common share on a fully diluted basis of $0.58 were up $0.05 or 9.4% from the same period in 2010.

"Relatively stable conditions continued in the second quarter of 2011, as was seen in the prior quarter, with strong operating results, continued stability in credit quality, and performance that continues to be significantly better than our peer group"

The Company also announced unaudited results for the quarter ended June 30, 2011. Net income was $3.2 million, up $33,000 or 1.0% from the same period in 2010, and earnings per common share on a fully diluted basis of $0.29 were even with the same period in 2010. Compared to the previous quarter, net income was up $50,000 or 1.6% and earnings per common share on a fully diluted basis were even with the $0.29 posted for the period.

aRelatively stable conditions continued in the second quarter of 2011, as was seen in the prior quarter, with strong operating results, continued stability in credit quality, and performance that continues to be significantly better than our peer group,a stated Daniel R. Daigneault, the Companya�s President & Chief Executive Officer. aFor the six months ended June 30, 2011, net interest income on a tax-equivalent basis was up $895,000 or 4.2% over the same period in 2010, all attributable to increased volume. Our net interest margin slipped from 3.41% in 2010 to 3.31% in 2011 as overall interest rates have continued to decrease and remain at historically low levels. Our loans and investment securities repriced downward at a quicker pace than our ability to reduce our funding costs: asset income was down 0.38% year-over-year while our funding cost was down only 0.24%.

aNon-interest income was $54,000 above the same period in 2010,a President Daigneault continued, awith many categories contributing to these results. We also recorded a $229,000 gain on investments as a result of portfolio realignment to reduce interest rate risk and the conversion of a General Motors bond classified as other-than-temporarily-impaired that converted to equity securities. Non-interest expense was $561,000 above the same period in 2010. Salaries and employee benefits as well as occupancy costs were the primary areas with increases.

aOn a positive note, credit quality has been relatively stable over several quarters,a President Daigneault noted. aNet chargeoffs of $2.4 million year-to-date were 0.54% of average loans on an annualized basis, down from net chargeoffs of $4.0 million or 0.86% of average loans for the first six months of 2010. Non-performing loans stood at 2.49% of total loans as of June 30, 2011, compared to 2.39% at year-end and 2.53% a year ago. We provisioned $4.1 million for loan losses in the first half of 2011, down $400,000 from the amount provisioned in the first half of 2010, and the allowance has increased $1.7 million since year-end. The allowance as a percentage of loans increased to 1.70%, up from 1.56% at previous quarter end, 1.50% at year-end and 1.52% a year ago.a

aTotal assets have increased $23.9 million since year end and $91.4 million during the past year,a observed the Companya�s Chief Financial Officer, F. Stephen Ward. aWhile the loan portfolio was down just slightly in the first six months of 2011, it was down $45.1 million from a year ago. We offset this drop by adding to the investment portfolio, which has increased $26.6 million in 2011 and $148.1 million over the past year. Low-cost deposits continue to do well a"the usual seasonal drop in the winter months was much less in 2011 than in prior years a" and they are up $1.1 million year-to-date and $25.1 million over the past year.

aOur core operating ratios remain very good,a said Mr. Ward, aespecially when compared to our UBPR peer group. Our return on average tangible common equity stands at 11.26% year to date compared to 10.64% 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 10.35% as of March 31, 2011. Our efficiency ratio continues to be an important component in our overall performance, and was virtually unchanged at 47.47% for the first six months of 2011 compared to 47.46% for same period in 2010. It also puts us in the top 10% compared to our peer group, which had an average efficiency ratio of 66.52% as of March 31, 2011.

aAt quarter end, The First Bancorpa�s shares were trading at a healthy 1.40 times tangible book value,a Mr. Ward observed. aOur June 30, 2011 closing price of $14.86 per share was down $0.93 from our $15.79 per share closing price on December 31, 2010. With dividends reinvested, our total return for the six months ended June 30, 2011, was -3.42%. This compares to the NASD Bank Index and the KBW Regional Bank Index with total returns with dividends reinvested of -3.85% and -2.64% for the same period, respectively.a

aRemaining well capitalized continues to be a top priority for The First Bancorp,a President Daigneault said. aOur total risk-based capital continues to exceed 16.0%, well above the well-capitalized threshold of 10.0% set by the FDIC. In the first half of 2011 we added $2.1 million to regulatory capital through retained earnings in addition to the $3.7 million added in 2010. As we have stated before, 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 half of 2011 compared to 73.6% for the same period in 2010, and our dividend yield was 5.25% at June 30, 2011, based on the closing price of $14.86 per share.

aImproved employment numbers will ultimately be the path to a stronger and improved economy,a President Daigneault concluded. aAlthough the unemployment rate in Maine, at 7.7%, is still well below the national unemployment rate at 9.2%, we feel it will be some time before the economy returns to pre-2008 levels. In the meantime, our focus will be to maintain stable asset quality, strong capital ratios, a return on assets and a return on equity well above our peer group, and 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.

Additional Information

For more information, please contact F. Stephen Ward, The First Bancorpa�s Treasurer & Chief Financial Officer, at 207.563.3195 ext. 5001.