Attached files
| file | filename |
|---|---|
| 8-K - 8-K - First Bancorp, Inc /ME/ | a8-kearnings13q4.htm |
Exhibit 99.1
The First Bancorp Reports 2013 Net Income Up 2.2%
DAMARISCOTTA, ME, January 22 – The First Bancorp (Nasdaq: FNLC), today announced unaudited results for the year ended December 31, 2013. Net income was $13.0 million, up $277,000 or 2.2% from 2012 and earnings per common share on a fully diluted basis of $1.20 were down $0.02 or 1.6% from 2012. For the quarter ended December 31, 2013, unaudited net income was $3.5 million, up $273,000 or 8.5% from the same period in 2012, and earnings per common share on a fully diluted basis of $0.33 were up $0.02 or 6.5% from the same period in 2012.
“This was a very busy and a very good year for The First Bancorp, with virtually all of our performance metrics moving in a positive direction,” noted Daniel R. Daigneault, the Company’s President and Chief Executive Officer. “Net income was the best the Company has posted since 2009 and our fourth best year ever. In February we opened our sixteenth office on Exchange Street in Bangor, which gives us the opportunity to enter one of the most important and growing banking markets in the State of Maine. We had a very successful stock offering in the first quarter which enabled us to finish repaying the U.S. Treasury in full for its 2009 investment in the Company under the Capital Purchase Program. Credit quality improved significantly in 2013, with non-performing assets at their lowest level in nearly five years and net chargeoffs down $3.1 million from 2012. And perhaps the most important happening for our shareholders in 2013 was the increase in our dividend in the fourth quarter to $0.20 per share per quarter.
“After five years of declining balances, the loan portfolio grew $7.1 million or 0.8% in 2013 as we began to see economic recovery along the coast of Maine,” President Daigneault commented. “This growth was centered in commercial and municipal loans. At the same time, the investment portfolio increased $39.6 million or 8.8% to $489.0 million, resulting in earning assets increasing $46.7 million or 3.5% in 2013. On the funding side of the balance sheet we saw excellent growth in low-cost deposits, which increased $33.7 million or 9.0% in 2013.
1
“For the year, net interest income on a tax-equivalent basis was down $1.0 million from 2012,” President Daigneault commented, “with a $109,000 increase due to higher levels of earning assets offsetting a $1.1 million decline from margin compression in the first half of the year. Although we have been experiencing margin compression for more than five years due to weakness in the economy and unprecedented low interest rates, the slow decline stabilized in the past two quarters. This is evidenced by a $283,000 increase in net interest income on a tax-equivalent basis in the fourth quarter compared to the same period in 2012, with $235,000 of the gain coming from higher volumes and $48,000 coming from slight margin improvement.
“As noted before, credit quality improved significantly in 2013,” President Daigneault commented. “Non-performing assets stood at 1.44% of total assets as of December 31, 2013 – the lowest level we have seen since early 2009. This is well below the 2.32% peak in non-performing assets at December 31, 2011, and down from 1.89% at the end of the previous year. Net chargeoffs in 2013 were $5.2 million or 0.60% of average loans, compared to $8.3 million or 0.95% of average loans in 2012. Past-due loans ended the year at 1.82%, down from 2.67% at the end of 2012 and at the lowest level seen since 2007. The allowance for loan losses stood at 1.31% of total loans as of December 31, 2013, down from 1.44% at December 31, 2012.”
“We remain very well capitalized,” commented F. Stephen Ward, the Company’s Chief Financial Officer, “with a leverage capital ratio for the Bank of 8.45%, and tier one and tier two risk-based capital ratios of 14.65% and 15.90%, respectively, as of December 31, 2013. During 2013 U.S. banking regulators finalized the new Basel III capital standards, and the Company’s ratios already exceed the new requirements which will be phased in over a multi-year period.
“Our core operating ratios remain healthy,” Mr. Ward said, “with a return on average assets of 0.90% compared to 0.89% in 2012, and a return on average tangible common equity of 10.66% compared to 10.40% in 2012. Although our efficiency ratio increased to 55.44% compared to 51.01% in 2012 due to higher operating expenses attributable to the new Rockland and Bangor offices, it has been dropping through the year as we grow into our new expense base and remains well below our UBPR peer group average at 66.95% as of September 30, 2013.”
“In the fourth quarter the Board of Directors voted to increase the 19.5 cents per share dividend the Company has paid each quarter for the past five years to 20.0 cents per share,” President Daigneault noted. “This increase is made possible by good earnings and strong capital and is consistent with the improved performance metrics we have seen in the past few quarters. Our
2
generous dividend is one of the major reasons people invest in our stock, and in 2013 we had a dividend payout ratio of 65.42% and a dividend yield of 4.54% based on the average daily closing price during the year.
“The First Bancorp’s price per share increased 5.77% or $0.95 in 2013,” said President Daigneault, “and when the annual dividend of $0.785 per share is added, our total return was 10.65% for the year. We feel the price of our shares has done exceptionally well after the common stock offering in the first quarter and although our total return lagged the broad market in industry indices in 2013, at year end we were trading at 1.61 times tangible book value – an excellent valuation for a community bank stock.
“After working through difficult and challenging economic conditions for more than five years, our performance in 2013 suggests there is light at the end of the tunnel,” President Daigneault concluded. “With virtually all metrics moving in the right direction – earnings, credit quality, asset growth, deposit growth, and margin stabilization – we are optimistic as we begin the new year. In 2014, we will keep our focus on increasing earnings, improving credit quality, maintaining strong capital, and continuing to pay a generous dividend to our shareholders.”
3
The First Bancorp | ||||||
Consolidated Balance Sheets (Unaudited) | ||||||
In thousands of dollars | December 31, 2013 | December 31, 2012 | ||||
Assets | ||||||
Cash and due from banks | $ | 16,570 | $ | 14,958 | ||
Interest-bearing deposits in other banks | 2,562 | 1,638 | ||||
Securities available for sale | 305,824 | 291,614 | ||||
Securities to be held to maturity | 169,277 | 143,320 | ||||
Restricted equity securities, at cost | 13,912 | 14,448 | ||||
Loans held for sale | 83 | 1,035 | ||||
Loans | 876,367 | 869,284 | ||||
Less allowance for loan losses | 11,514 | 12,500 | ||||
Net loans | 864,853 | 856,784 | ||||
Accrued interest receivable | 5,038 | 4,912 | ||||
Premises and equipment | 23,616 | 22,988 | ||||
Other real estate owned | 4,807 | 7,593 | ||||
Goodwill | 29,805 | 29,805 | ||||
Other assets | 27,616 | 25,904 | ||||
Total assets | $ | 1,463,963 | $ | 1,414,999 | ||
Liabilities | ||||||
Demand deposits | $ | 106,125 | $ | 90,252 | ||
NOW deposits | 151,322 | 147,309 | ||||
Money market deposits | 86,730 | 80,983 | ||||
Savings deposits | 149,103 | 135,250 | ||||
Certificates of deposit | 210,321 | 199,265 | ||||
Certificates $100,000 to $250,000 | 278,674 | 277,571 | ||||
Certificates $250,000 and over | 42,124 | 28,220 | ||||
Total deposits | 1,024,399 | 958,850 | ||||
Borrowed funds | 279,125 | 282,905 | ||||
Other liabilities | 14,341 | 16,921 | ||||
Total Liabilities | 1,317,865 | 1,258,676 | ||||
Shareholders' equity | ||||||
Preferred stock | — | 12,402 | ||||
Common stock | 106 | 98 | ||||
Additional paid-in capital | 58,395 | 46,314 | ||||
Retained earnings | 94,000 | 89,692 | ||||
Net unrealized gain/(loss) on securities available-for-sale | (6,591 | ) | 7,940 | |||
Net unrealized gain/(loss) on postretirement benefit costs | 188 | (123 | ) | |||
Total shareholders' equity | 146,098 | 156,323 | ||||
Total liabilities & shareholders' equity | $ | 1,463,963 | $ | 1,414,999 | ||
Common Stock | ||||||
Number of shares authorized | 18,000,000 | 18,000,000 | ||||
Number of shares issued and outstanding | 10,671,192 | 9,859,914 | ||||
Book value per common share | $ | 13.69 | $ | 14.60 | ||
Tangible book value per common share | $ | 10.83 | $ | 11.47 | ||
4
The First Bancorp | ||||||||||||
Consolidated Statements of Income and Comprehensive Income (Unaudited) | ||||||||||||
For the years ended | For the quarters ended | |||||||||||
In thousands of dollars, except per share data | 12/31/2013 | 12/31/2012 | 12/31/2013 | 12/31/2012 | ||||||||
Interest income | ||||||||||||
Interest and fees on loans | $ | 34,897 | $ | 37,026 | $ | 8,657 | $ | 9,020 | ||||
Interest on deposits with other banks | 8 | 4 | 2 | 1 | ||||||||
Interest and dividends on investments | 15,031 | 14,795 | 4,108 | 3,673 | ||||||||
Total interest income | 49,936 | 51,825 | 12,767 | 12,694 | ||||||||
Interest expense | ||||||||||||
Interest on deposits | 7,997 | 8,396 | 1,962 | 2,026 | ||||||||
Interest on borrowed funds | 4,499 | 4,542 | 1,144 | 1,175 | ||||||||
Total interest expense | 12,496 | 12,938 | 3,106 | 3,201 | ||||||||
Net interest income | 37,440 | 38,887 | 9,661 | 9,493 | ||||||||
Provision for loan losses | 4,200 | 7,835 | 700 | 1,535 | ||||||||
Net interest income after provision for loan losses | 33,240 | 31,052 | 8,961 | 7,958 | ||||||||
Non-interest income | ||||||||||||
Investment management and fiduciary income | 1,919 | 1,636 | 481 | 406 | ||||||||
Service charges on deposit accounts | 2,756 | 2,671 | 657 | 676 | ||||||||
Net securities gains | 1,087 | 1,968 | — | 1 | ||||||||
Mortgage origination and servicing income | 2,080 | 1,396 | 345 | 542 | ||||||||
Other operating income | 4,245 | 3,607 | 1,116 | 1,097 | ||||||||
Total non-interest income | 12,087 | 11,278 | 2,599 | 2,722 | ||||||||
Non-interest expense | ||||||||||||
Salaries and employee benefits | 14,305 | 12,691 | 3,698 | 3,206 | ||||||||
Occupancy expense | 2,050 | 1,639 | 493 | 392 | ||||||||
Furniture and equipment expense | 2,656 | 2,235 | 664 | 585 | ||||||||
FDIC insurance premiums | 1,143 | 1,212 | 279 | 303 | ||||||||
Acquisition-related costs | — | 251 | — | 251 | ||||||||
Amortization of identified intangibles | 326 | 283 | 81 | 71 | ||||||||
Other operating expense | 8,457 | 7,960 | 1,904 | 1,960 | ||||||||
Total non-interest expense | 28,937 | 26,271 | 7,119 | 6,768 | ||||||||
Income before income taxes | 16,390 | 16,059 | 4,441 | 3,912 | ||||||||
Applicable income taxes | 3,425 | 3,371 | 939 | 683 | ||||||||
Net Income | $ | 12,965 | $ | 12,688 | $ | 3,502 | $ | 3,229 | ||||
Basic earnings per share | $ | 1.20 | $ | 1.22 | $ | 0.33 | $ | 0.31 | ||||
Diluted earnings per share | $ | 1.20 | $ | 1.22 | $ | 0.33 | $ | 0.31 | ||||
5
The First Bancorp | ||||||||||||
Selected Financial Data (Unaudited) | ||||||||||||
Dollars in thousands, | For the years ended | For the quarters ended | ||||||||||
except for per share amounts | 12/31/2013 | 12/31/2012 | 12/31/2013 | 12/31/2012 | ||||||||
Summary of Operations | ||||||||||||
Interest Income | $ | 49,936 | $ | 51,825 | $ | 12,767 | $ | 12,694 | ||||
Interest Expense | 12,496 | 12,938 | 3,106 | 3,201 | ||||||||
Net Interest Income | 37,440 | 38,887 | 9,661 | 9,493 | ||||||||
Provision for Loan Losses | 4,200 | 7,835 | 700 | 1,535 | ||||||||
Non-Interest Income | 12,087 | 11,278 | 2,599 | 2,722 | ||||||||
Non-Interest Expense | 28,937 | 26,271 | 7,119 | 6,768 | ||||||||
Net Income | 12,965 | 12,688 | 3,502 | 3,229 | ||||||||
Per Common Share Data | ||||||||||||
Basic Earnings per Share | $ | 1.20 | $ | 1.22 | $ | 0.33 | $ | 0.31 | ||||
Diluted Earnings per Share | 1.20 | 1.22 | 0.33 | 0.31 | ||||||||
Cash Dividends Declared | 0.785 | 0.780 | 0.200 | 0.195 | ||||||||
Book Value per Common Share | 13.69 | 14.60 | 13.69 | 14.60 | ||||||||
Tangible Book Value per Common Share | 10.83 | 11.47 | 10.83 | 11.47 | ||||||||
Market Value | 17.42 | 16.47 | 17.42 | 16.47 | ||||||||
Financial Ratios | ||||||||||||
Return on Average Equity (a) | 8.72 | % | 8.84 | % | 9.33 | % | 8.80 | % | ||||
Return on Average Tangible Common Equity (a) | 10.66 | % | 10.40 | % | 11.76 | % | 10.25 | % | ||||
Return on Average Assets (a) | 0.90 | % | 0.89 | % | 0.95 | % | 0.90 | % | ||||
Average Equity to Average Assets | 10.62 | % | 10.96 | % | 10.19 | % | 11.14 | % | ||||
Average Tangible Equity to Average Assets | 8.49 | % | 8.96 | % | 8.09 | % | 9.19 | % | ||||
Net Interest Margin Tax-Equivalent (a) | 3.05 | % | 3.14 | % | 3.07 | % | 3.07 | % | ||||
Dividend Payout Ratio | 65.42 | % | 63.93 | % | 60.61 | % | 62.90 | % | ||||
Allowance for Loan Losses/Total Loans | 1.31 | % | 1.44 | % | 1.31 | % | 1.44 | % | ||||
Non-Performing Loans to Total Loans | 1.86 | % | 2.20 | % | 1.86 | % | 2.20 | % | ||||
Non-Performing Assets to Total Assets | 1.44 | % | 1.89 | % | 1.44 | % | 1.89 | % | ||||
Efficiency Ratio | 55.44 | % | 51.01 | % | 53.79 | % | 51.81 | % | ||||
At Period End | ||||||||||||
Total Assets | $ | 1,463,963 | $ | 1,414,999 | $ | 1,463,963 | $ | 1,414,999 | ||||
Total Loans | 876,367 | 869,284 | 876,367 | 869,284 | ||||||||
Total Investment Securities | 489,013 | 449,382 | 489,013 | 449,382 | ||||||||
Total Deposits | 1,024,399 | 958,850 | 1,024,399 | 958,850 | ||||||||
Total Shareholders' Equity | 146,098 | 156,323 | 146,098 | 156,323 | ||||||||
(a) Annualized using a 365-day basis in 2013 and 366-day basis in 2012 | ||||||||||||
6
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.
7
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 35.0% tax rate was used in both 2013 and 2012.
For the years ended | For the quarters ended | |||||||||||
In thousands of dollars | 12/31/2013 | 12/31/2012 | 12/31/2013 | 12/31/2012 | ||||||||
Net interest income as presented | $ | 37,440 | $ | 38,887 | $ | 9,661 | $ | 9,493 | ||||
Effect of tax-exempt income | 3,573 | 3,128 | 926 | 809 | ||||||||
Net interest income, tax equivalent | $ | 41,013 | $ | 42,015 | $ | 10,587 | $ | 10,302 | ||||
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 years ended | For the quarters ended | |||||||||||
In thousands of dollars | 12/31/2013 | 12/31/2012 | 12/31/2013 | 12/31/2012 | ||||||||
Non-interest expense, as presented | $ | 28,937 | $ | 26,271 | $ | 7,119 | $ | 6,768 | ||||
Net interest income, as presented | 37,440 | 38,887 | 9,661 | 9,493 | ||||||||
Effect of tax-exempt income | 3,573 | 3,128 | 926 | 809 | ||||||||
Non-interest income, as presented | 12,087 | 11,278 | 2,599 | 2,722 | ||||||||
Effect of non-interest tax-exempt income | 182 | 177 | 48 | 40 | ||||||||
Net securities gains | (1,087 | ) | (1,968 | ) | — | (1 | ) | |||||
Adjusted net interest income plus non-interest income | $ | 52,195 | $ | 51,502 | $ | 13,234 | $ | 13,063 | ||||
Non-GAAP efficiency ratio | 55.44 | % | 51.01 | % | 53.79 | % | 51.81 | % | ||||
GAAP efficiency ratio | 58.43 | % | 52.37 | % | 58.07 | % | 55.41 | % | ||||
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
8
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 years ended | For the quarters ended | |||||||||||
In thousands of dollars | 2013 | 2012 | 2013 | 2012 | ||||||||
Average shareholders' equity as presented | $ | 152,729 | $ | 155,822 | $ | 148,842 | $ | 158,401 | ||||
Less preferred stock | (4,020 | ) | (12,341 | ) | — | (12,378 | ) | |||||
Less intangible assets | (30,664 | ) | (28,528 | ) | (30,664 | ) | (28,545 | ) | ||||
Tangible average shareholders' equity | $ | 118,045 | $ | 114,953 | $ | 118,178 | $ | 117,478 | ||||
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.
Additional Information
For more information, please contact F. Stephen Ward, The First Bancorp's Treasurer & Chief Financial Officer, at 207.563.3272.
9