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| 8-K - 8-K - First Bancorp, Inc /ME/ | a8-kearnings15q2.htm |
Exhibit 99.1
The First Bancorp Reports Strong Second Quarter
DAMARISCOTTA, ME, July 22, 2015 – The First Bancorp (Nasdaq: FNLC), today announced unaudited results for the quarter ended June 30, 2015. Net income was $4.1 million, up $327,000 or 8.7% from the second quarter of 2014 and earnings per common share on a fully diluted basis of $0.38 were up $0.03 or 8.6% from the second quarter of 2014. The Company also announced unaudited results for the six months ended June 30, 2015. Net income was $8.2 million, up $1.1 million or 15.0% from the same period in 2014 and earnings per common share on a fully diluted basis of $0.77 were up $0.10 or 14.9% from the same period in 2014.
“This was another excellent quarter for The First Bancorp,” Tony C. McKim, the Company’s President and Chief Executive Officer observed, “and these are the best results we have ever posted for the first half of a year. The combination of strong loan growth and continued improvement in credit quality are the principal drivers of our performance in 2015. In addition, the Board of Directors voted to increase the quarterly dividend by one cent in June to 22 cents per share.
“Total loans have increased $45.5 million or 5.0% year to date, and year over year, total loans are up $71.2 million or 8.0%,” noted President McKim. “Loan demand this year is the most robust we have seen since 2007, the beginning of the great recession. While the majority of loan growth was in commercial loans - typically some of our highest yielding assets - we also saw modest growth in municipal loans and home equity lines of credit.
“In early January interest rates dropped to levels not seen since 2012,” President McKim noted. “These conditions provided an excellent opportunity to sell investment securities and book gains. As a result of these actions, we ended the first quarter with the balance in our investment portfolio $42.4 million lower than at year end 2014. As interest rates moved back up in May and June, we were able to add back to the investment portfolio and as of June 30, 2015, the portfolio was up $1.9 million from year end. With good growth in the investment and loan portfolios, total assets were up $71.2 million from year end and $94.5 million from the end of the first quarter. On the funding side of the balance sheet, low-cost deposits were up $88.5 million or 20.7% year-over-year, and our funding mix remains strong, with wholesale funding at 33.0% as of June 30, 2015.
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“The other driver of our performance, credit quality, continues on the path of significant improvement that we have seen for the past several quarters” President McKim continued. “Non-performing assets stood at 0.72% of total assets as of June 30, 2015 - the lowest level since the second quarter of 2008. This is well below the 1.16% we saw in non-performing assets a year ago, and down from 0.97% at year end. Past-due loans were 1.14% of total loans at June 30, 2015, a significant drop from 1.29% of total loans at the end of 2014.
“Our provision for loan losses was $900,000 for the first six months of 2015,” President McKim said, “a $400,000 increase from the $500,000 we provisioned in the first six months of 2014. In early 2014 we had a large recovery, however, which significantly reduced the amount provisioned in the first half of 2014. The allowance for loan losses stood at 1.03% of total loans as of June 30, 2015, down from 1.13% at December 31, 2014 and from 1.31% a year ago. At the same time, other credit-related costs - including expenses for collections, foreclosure and foreclosed properties - were $295,000 for the first six months of 2015 compared to $502,000 for the first six months of 2014.”
“With the decrease in other credit-related costs and lower employee costs, non-interest expense for the first six months of 2015 was $298,000 below the first six months of 2014,” noted F. Stephen Ward, the Company’s Chief Financial Officer. “At the same time, noninterest income was up $1.7 million or 35.5% as a result of $1.4 million of securities gains booked in the first quarter of 2015 and healthy mortgage and servicing income. Net interest income on a tax-equivalent basis for the first six months of 2015 was down $34,000 compared to the first six months of 2014. A $5,000 bump from slightly higher levels of earning assets partly offset a $39,000 decrease as a result of our net interest margin dropping to 3.08% for the first six months of 2015 compared to 3.11% for the same period in 2014.
“The loan growth, improvement in credit quality and first quarter securities gains can be seen in our operating ratios,” Mr. Ward continued. “Our return on average assets was 1.12% for the first six months of 2015 compared to 0.98% for the first six months of 2014, and our return on average tangible common equity was 12.35% compared to 11.71% for the same periods, respectively. At 53.71% for the first six months of 2015, the efficiency ratio dropped nearly 2.00% from the same period in 2014 and remains well below the Bank’s UBPR peer group average which stood at 66.42% as of March 31, 2015.
“The First Bancorp’s price per share was $19.44 at June 30, 2015, up $1.35 from December 31, 2014 and with a total return with dividends reinvested of 8.75% for the first six months of 2015,” Mr. Ward noted. “This was well ahead of the broad market, as measured by the S&P 500 with a total
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return of 1.23% for the period, and the Russell 2000, with a total return of 4.76%. We slightly underperformed the banking industry, with total returns for the period of 11.77% for the KBW Regional Bank Index and 8.84% for the Nasdaq Bank Index.”
“The Board of Directors raised the dividend by one cent in the second quarter to 22 cents per share per quarter,” President McKim commented. "We continue to pay out more than half of our earnings in dividends and based on the June 30, 2015 closing price of $19.44 per share, our annualized dividend yield was a very healthy 4.53%. Our generous dividend continues to be one of the major reasons people invest in our stock, and increasing our dividend is consistent with the overall performance we have seen over the past two years.
“I am extremely pleased with the strong operating results we have posted for the first half of 2015,” President McKim concluded. “The Maine coast economy continues to strengthen, and the impact of that can be seen directly in the loan growth we have posted. At the same time, our Bangor office which opened in early 2013, is doing very well and is ahead of expectations. The combination of good loan growth and lower credit costs enable us to continue to share our operating results with our shareholders in the form of higher cash dividends.”
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The First Bancorp | |||||||||
Consolidated Balance Sheets (Unaudited) | |||||||||
In thousands of dollars, except per share data | June 30, 2015 | December 31, 2014 | June 30, 2014 | ||||||
Assets | |||||||||
Cash and due from banks | $ | 16,481 | $ | 13,057 | $ | 20,416 | |||
Interest-bearing deposits in other banks | 24,565 | 3,559 | 272 | ||||||
Securities available for sale | 213,814 | 185,261 | 303,880 | ||||||
Securities to be held to maturity | 249,250 | 275,919 | 198,135 | ||||||
Restricted equity securities, at cost | 13,912 | 13,912 | 13,912 | ||||||
Loans held for sale | — | — | 272 | ||||||
Loans | 963,109 | 917,564 | 891,864 | ||||||
Less allowance for loan losses | 9,908 | 10,344 | 11,644 | ||||||
Net loans | 953,201 | 907,220 | 880,220 | ||||||
Accrued interest receivable | 6,180 | 4,748 | 6,247 | ||||||
Premises and equipment | 21,946 | 22,619 | 21,933 | ||||||
Other real estate owned | 2,192 | 3,785 | 4,863 | ||||||
Goodwill | 29,805 | 29,805 | 29,805 | ||||||
Other assets | 21,994 | 22,246 | 24,125 | ||||||
Total assets | $ | 1,553,340 | $ | 1,482,131 | $ | 1,504,080 | |||
Liabilities | |||||||||
Demand deposits | $ | 107,244 | $ | 113,133 | $ | 99,210 | |||
NOW deposits | 221,964 | 199,977 | 174,680 | ||||||
Money market deposits | 102,219 | 98,607 | 92,060 | ||||||
Savings deposits | 186,777 | 165,601 | 153,602 | ||||||
Certificates of deposit | 161,518 | 184,471 | 220,360 | ||||||
Certificates $100,000 to $250,000 | 278,429 | 221,892 | 253,185 | ||||||
Certificates $250,000 and over | 38,172 | 41,138 | 40,339 | ||||||
Total deposits | 1,096,323 | 1,024,819 | 1,033,436 | ||||||
Borrowed funds | 278,013 | 279,916 | 298,520 | ||||||
Other liabilities | 15,195 | 15,842 | 14,675 | ||||||
Total Liabilities | 1,389,531 | 1,320,577 | 1,346,631 | ||||||
Shareholders' equity | |||||||||
Common stock | 107 | 107 | 107 | ||||||
Additional paid-in capital | 59,475 | 59,282 | 58,823 | ||||||
Retained earnings | 103,448 | 99,816 | 96,785 | ||||||
Net unrealized gain on securities available-for-sale | 988 | 2,522 | 1,546 | ||||||
Net unrealized loss on transferred securities | (84 | ) | (48 | ) | — | ||||
Net unrealized gain/(loss) on postretirement benefit costs | (125 | ) | (125 | ) | 188 | ||||
Total shareholders' equity | 163,809 | 161,554 | 157,449 | ||||||
Total liabilities & shareholders' equity | $ | 1,553,340 | $ | 1,482,131 | $ | 1,504,080 | |||
Common Stock | |||||||||
Number of shares authorized | 18,000,000 | 18,000,000 | 18,000,000 | ||||||
Number of shares issued and outstanding | 10,741,228 | 10,724,359 | 10,710,673 | ||||||
Book value per common share | $ | 15.25 | $ | 15.06 | $ | 14.70 | |||
Tangible book value per common share | $ | 12.45 | $ | 12.25 | $ | 11.87 | |||
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The First Bancorp | ||||||||||||
Consolidated Statements of Income (Unaudited) | ||||||||||||
For the six months ended June 30, | For the quarters ended June 30, | |||||||||||
In thousands of dollars, except per share data | 2015 | 2014 | 2015 | 2014 | ||||||||
Interest income | ||||||||||||
Interest and fees on loans | $ | 18,012 | $ | 17,220 | $ | 9,157 | $ | 8,642 | ||||
Interest on deposits with other banks | 13 | 3 | 8 | 1 | ||||||||
Interest and dividends on investments | 6,914 | 8,140 | 3,409 | 4,097 | ||||||||
Total interest income | 24,939 | 25,363 | 12,574 | 12,740 | ||||||||
Interest expense | ||||||||||||
Interest on deposits | 2,759 | 3,629 | 1,316 | 1,804 | ||||||||
Interest on borrowed funds | 2,400 | 2,188 | 1,180 | 1,101 | ||||||||
Total interest expense | 5,159 | 5,817 | 2,496 | 2,905 | ||||||||
Net interest income | 19,780 | 19,546 | 10,078 | 9,835 | ||||||||
Provision for loan losses | 900 | 500 | 400 | 100 | ||||||||
Net interest income after provision for loan losses | 18,880 | 19,046 | 9,678 | 9,735 | ||||||||
Non-interest income | ||||||||||||
Investment management and fiduciary income | 1,158 | 1,102 | 617 | 585 | ||||||||
Service charges on deposit accounts | 1,237 | 1,301 | 658 | 682 | ||||||||
Net securities gains | 1,395 | 40 | — | 4 | ||||||||
Mortgage origination and servicing income | 705 | 354 | 508 | 160 | ||||||||
Other operating income | 1,997 | 1,993 | 1,051 | 1,027 | ||||||||
Total non-interest income | 6,492 | 4,790 | 2,834 | 2,458 | ||||||||
Non-interest expense | ||||||||||||
Salaries and employee benefits | 7,160 | 7,220 | 3,440 | 3,523 | ||||||||
Occupancy expense | 1,216 | 1,171 | 571 | 559 | ||||||||
Furniture and equipment expense | 1,552 | 1,372 | 782 | 675 | ||||||||
FDIC insurance premiums | 446 | 519 | 216 | 254 | ||||||||
Amortization of identified intangibles | 36 | 163 | 11 | 81 | ||||||||
Other operating expense | 3,835 | 4,098 | 1,960 | 2,199 | ||||||||
Total non-interest expense | 14,245 | 14,543 | 6,980 | 7,291 | ||||||||
Income before income taxes | 11,127 | 9,293 | 5,532 | 4,902 | ||||||||
Applicable income taxes | 2,878 | 2,118 | 1,458 | 1,155 | ||||||||
Net Income | $ | 8,249 | $ | 7,175 | $ | 4,074 | $ | 3,747 | ||||
Basic earnings per share | $ | 0.77 | $ | 0.67 | $ | 0.38 | $ | 0.35 | ||||
Diluted earnings per share | $ | 0.77 | $ | 0.67 | $ | 0.38 | $ | 0.35 | ||||
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The First Bancorp | ||||||||||||
Selected Financial Data (Unaudited) | ||||||||||||
As of and for the six months ended June 30, | As of and for the quarters ended June 30, | |||||||||||
Dollars in thousands, except for per share amounts | 2015 | 2014 | 2015 | 2014 | ||||||||
Summary of Operations | ||||||||||||
Interest Income | $ | 24,939 | $ | 25,363 | $ | 12,574 | $ | 12,740 | ||||
Interest Expense | 5,159 | 5,817 | 2,496 | 2,905 | ||||||||
Net Interest Income | 19,780 | 19,546 | 10,078 | 9,835 | ||||||||
Provision for Loan Losses | 900 | 500 | 400 | 100 | ||||||||
Non-Interest Income | 6,492 | 4,790 | 2,834 | 2,458 | ||||||||
Non-Interest Expense | 14,245 | 14,543 | 6,980 | 7,291 | ||||||||
Net Income | 8,249 | 7,175 | 4,074 | 3,747 | ||||||||
Per Common Share Data | ||||||||||||
Basic Earnings per Share | $ | 0.77 | $ | 0.67 | $ | 0.38 | $ | 0.35 | ||||
Diluted Earnings per Share | 0.77 | 0.67 | 0.38 | 0.35 | ||||||||
Cash Dividends Declared | 0.430 | 0.410 | 0.220 | 0.210 | ||||||||
Book Value per Common Share | 15.25 | 14.70 | 15.25 | 14.70 | ||||||||
Tangible Book Value per Common Share | 12.45 | 11.87 | 12.45 | 11.87 | ||||||||
Market Value | 19.44 | 17.46 | 19.44 | 17.46 | ||||||||
Financial Ratios | ||||||||||||
Return on Average Equity (a) | 10.09 | % | 9.40 | % | 9.87 | % | 9.59 | % | ||||
Return on Average Tangible Common Equity (a) | 12.35 | % | 11.71 | % | 12.07 | % | 11.90 | % | ||||
Return on Average Assets (a) | 1.12 | % | 0.98 | % | 1.09 | % | 1.01 | % | ||||
Average Equity to Average Assets | 11.13 | % | 10.43 | % | 11.00 | % | 10.58 | % | ||||
Average Tangible Equity to Average Assets | 9.09 | % | 8.37 | % | 9.00 | % | 8.53 | % | ||||
Net Interest Margin Tax-Equivalent (a) | 3.08 | % | 3.11 | % | 3.07 | % | 3.10 | % | ||||
Dividend Payout Ratio | 55.84 | % | 61.19 | % | 57.89 | % | 60.00 | % | ||||
Allowance for Loan Losses/Total Loans | 1.03 | % | 1.31 | % | 1.03 | % | 1.31 | % | ||||
Non-Performing Loans to Total Loans | 0.93 | % | 1.42 | % | 0.93 | % | 1.42 | % | ||||
Non-Performing Assets to Total Assets | 0.72 | % | 1.16 | % | 0.72 | % | 1.16 | % | ||||
Efficiency Ratio | 53.71 | % | 55.48 | % | 50.83 | % | 55.08 | % | ||||
At Period End | ||||||||||||
Total Assets | $ | 1,553,340 | $ | 1,504,080 | $ | 1,553,340 | $ | 1,504,080 | ||||
Total Loans | 963,109 | 891,864 | 963,109 | 891,864 | ||||||||
Total Investment Securities | 476,976 | 515,927 | 476,976 | 515,927 | ||||||||
Total Deposits | 1,096,323 | 1,033,436 | 1,096,323 | 1,033,436 | ||||||||
Total Shareholders' Equity | 163,809 | 157,449 | 163,809 | 157,449 | ||||||||
(a) Annualized using a 365-day basis for both years | ||||||||||||
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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, 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 35.0% tax rate was used in both 2015 and 2014.
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For the six months ended | For the quarters ended | |||||||||||
In thousands of dollars | June 30, 2015 | June 30, 2014 | June 30, 2015 | June 30, 2014 | ||||||||
Net interest income as presented | $ | 19,780 | $ | 19,546 | $ | 10,078 | $ | 9,835 | ||||
Effect of tax-exempt income | 1,557 | 1,826 | 774 | 903 | ||||||||
Net interest income, tax equivalent | $ | 21,337 | $ | 21,372 | $ | 10,852 | $ | 10,738 | ||||
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 six months ended | For the quarters ended | |||||||||||
In thousands of dollars | June 30, 2015 | June 30, 2014 | June 30, 2015 | June 30, 2014 | ||||||||
Non-interest expense, as presented | $ | 14,245 | $ | 14,543 | $ | 6,980 | $ | 7,291 | ||||
Net interest income, as presented | 19,780 | 19,546 | 10,078 | 9,835 | ||||||||
Effect of tax-exempt income | 1,557 | 1,826 | 774 | 903 | ||||||||
Non-interest income, as presented | 6,492 | 4,790 | 2,834 | 2,458 | ||||||||
Effect of non-interest tax-exempt income | 90 | 91 | 45 | 45 | ||||||||
Net securities gains | (1,395 | ) | (40 | ) | — | (4 | ) | |||||
Adjusted net interest income plus non-interest income | $ | 26,524 | $ | 26,213 | $ | 13,731 | $ | 13,237 | ||||
Non-GAAP efficiency ratio | 53.71 | % | 55.48 | % | 50.83 | % | 55.08 | % | ||||
GAAP efficiency ratio | 54.22 | % | 59.76 | % | 54.06 | % | 59.31 | % | ||||
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:
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For the six months ended | For the quarters ended | |||||||||||
In thousands of dollars | June 30, 2015 | June 30, 2014 | June 30, 2015 | June 30, 2014 | ||||||||
Average shareholders' equity as presented | $ | 164,837 | $ | 153,988 | $ | 165,527 | $ | 156,724 | ||||
Less preferred stock | — | — | — | — | ||||||||
Less intangible assets | (30,143 | ) | (30,420 | ) | (30,151 | ) | (30,379 | ) | ||||
Tangible average shareholders' equity | $ | 134,694 | $ | 123,568 | $ | 135,376 | $ | 126,345 | ||||
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.
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