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| 8-K - 8-K - First Bancorp, Inc /ME/ | a8-kearnings17q3.htm |
Exhibit 99.1
The First Bancorp Reports Record Quarterly Results
DAMARISCOTTA, ME, October 18, 2017 – The First Bancorp (Nasdaq: FNLC), parent company of First National Bank, announced today that net income for the three months ended September 30, 2017 was $5.0 million, up $420,000 or 9.2% from the quarter ended September 30, 2016. Earnings per common share on a fully diluted basis were $0.46, up 9.5% from the same period in 2016. The Company also announced operating results for the nine months ended September 30, 2017. Net income was $14.5 million, up $813,000 or 5.9% from the first nine months of 2016, with earnings per share on a fully diluted basis of $1.34, up 5.5% from the same period in 2016.
The Company’s President and CEO Tony C. McKim remarked “I’m pleased to report that the third quarter of 2017 was the best quarter in the history of The First Bancorp, with net income up $99,000 from the prior record reported for the second quarter of this year.” President McKim further commented that “the primary contributor to our increased earnings continues to be growth in earning assets. The strong growth trend in the loan and investment portfolios that we have experienced over the past several years continued this quarter, leading directly to increased net interest income and, in turn, our record quarterly net income. Shareholders benefited from our earnings strength through the 24 cents per share dividend declared on September 28.” The Company continues to pay out more than half of its net income in the form of cash dividends.
President McKim added “We continued to experience growth on both sides of the balance sheet in the third quarter and over the past year. Total loans increased $49.6 million or 4.6% year-to-date, and are up $92.1 million or 8.9% year-over-year. The investment portfolio is up $13.3 million or 2.5% year-to-date, and since September 30, 2016 the portfolio is up $67.4 million or 13.9%. On the funding side of the balance sheet, low-cost deposits are up $78.2 million or 12.2% since year end, and $46.3 million or 6.9% year-over-year. Total deposits are up $107.1 million or 8.6% year to date, and $176.3 million or 15.0% since September 30, 2016.
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“Net interest income on a tax-equivalent basis for the three months ended September 30, 2017 was up $1.6 million or 14.5% from the same period in 2016,” President McKim continued. “The increase was attributable to a combination of the growth in earning assets described previously and an improvement in our net interest margin to 3.02% for the quarter, up from 2.98% the same period in 2016. Non-interest income for the three months ended September 30, 2017 was up $24,000 from the same period in 2016. Lower year-to-year revenues from service charges on deposit accounts and mortgage banking activities were partially offset by gains in debit card revenue and investment management income from First Advisors, theBank’s trust and investment management division. The Company also took advantage of the favorable interest rate environment to book $468,000 in securities gains in the quarter. Non-interest expense for the third quarter increased $608,000 or 8.2% from the same period in 2016, primarily due to higher employee costs.”
Commenting on the Company’s credit quality, President McKim stated “our metrics remain solid. Non-performing assets stood at 0.94% of total assets as of September 30, 2017, up from the post-recession low of 0.44% reported last quarter. This change is attributable to deterioration in two loan relationships. As a result, we provisioned $750,000 for loan losses in the third quarter of 2017, up $375,000 from the third quarter of 2016. The allowance for loan losses stood at 0.98% of total loans as of September 30, 2017, up from 0.95% at June 30, 2017, and down slightly from the 1.00% of total loans at September 30, 2016. Past-due loans were 0.98% of total loans at September 30, 2017, down from 1.18% at December 31, 2016 and up slightly from 0.95% at September 30, 2016.”
“The Company’s continued strong performance is demonstrated in our operating ratios” commented the Company’s Chief Financial Officer, F. Stephen Ward. “Our return on average assets was 1.09% and our return on average tangible common equity was 13.08% for the three months ended September 30, 2017, and 1.09% and 13.06%, respectively, for the nine months then ended. We continue to outperform the Bank’s UPBR peer group, which had a return on average assets of 1.04% and a return on average common equity of 9.96% as of June 30, 2017. Our ratios placed us in the 63rd and 81st percentiles, respectively, compared to peer. The Company’s efficiency ratio stood at 49.88% for the three months ended September 30, 2017, improved from the 50.25% reported for the same period of 2016, and compares very favorably to the Bank’s UBPR peer group average which stood at 62.63% as of June 30, 2017.”
The First Bancorp’s stock closed at $30.31 per share on September 29, 2017, up from $23.97 a year ago and down from the year-end close at $33.10 per share. With dividends reinvested, the Company’s 12-month total return stands at 31.38%. FNLC outperformed the broad market during
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this period, as measured by the S&P 500 which had a total return with dividends reinvested of 18.60%, as well as the Russell 2000, in which we are included, which had a total return of 20.71%. Compared to industry indices, FNLC outperformed the KBW Regional Bank Index which had a total return of 28.77% while slightly trailing the Nasdaq Bank Index with a total return of 32.98%.
“The Company continues to perform very well three quarters into 2017” President McKim concluded. “Healthy growth on both sides of the balance sheet has led to increased net interest income, producing record earnings again this quarter. I stand proud of the outstanding team of banking professionals we have at First National Bank and First Advisors. Our record results are a direct result of their ongoing effort and customer focus.”
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The First Bancorp | |||||||||
Consolidated Balance Sheets (Unaudited) | |||||||||
In thousands of dollars, except per share data | September 30, 2017 | December 31, 2016 | September 30, 2016 | ||||||
Assets | |||||||||
Cash and due from banks | $ | 22,375 | $ | 17,366 | $ | 23,456 | |||
Interest-bearing deposits in other banks | 584 | 293 | 15,098 | ||||||
Securities available for sale | 298,999 | 300,416 | 282,293 | ||||||
Securities to be held to maturity | 242,679 | 226,828 | 188,770 | ||||||
Restricted equity securities, at cost | 10,798 | 11,930 | 14,048 | ||||||
Loans held for sale | 434 | 782 | 1,228 | ||||||
Loans | 1,121,086 | 1,071,526 | 1,028,992 | ||||||
Less allowance for loan losses | 11,012 | 10,138 | 10,298 | ||||||
Net loans | 1,110,074 | 1,061,388 | 1,018,694 | ||||||
Accrued interest receivable | 5,820 | 5,532 | 5,079 | ||||||
Premises and equipment | 21,731 | 22,202 | 21,779 | ||||||
Other real estate owned | 320 | 375 | 855 | ||||||
Goodwill | 29,805 | 29,805 | 29,805 | ||||||
Other assets | 38,082 | 35,958 | 33,983 | ||||||
Total assets | $ | 1,781,701 | $ | 1,712,875 | $ | 1,635,088 | |||
Liabilities | |||||||||
Demand deposits | $ | 193,089 | $ | 140,482 | $ | 158,476 | |||
NOW deposits | 291,403 | 282,971 | 295,708 | ||||||
Money market deposits | 134,257 | 125,544 | 76,685 | ||||||
Savings deposits | 234,456 | 217,340 | 218,425 | ||||||
Certificates of deposit | 250,865 | 195,115 | 192,424 | ||||||
Certificates $100,000 to $250,000 | 202,722 | 240,904 | 183,991 | ||||||
Certificates $250,000 and over | 43,257 | 40,601 | 48,040 | ||||||
Total deposits | 1,350,049 | 1,242,957 | 1,173,749 | ||||||
Borrowed funds | 234,328 | 278,901 | 268,098 | ||||||
Other liabilities | 17,442 | 18,496 | 17,247 | ||||||
Total Liabilities | 1,601,819 | 1,540,354 | 1,459,094 | ||||||
Shareholders' equity | |||||||||
Common stock | 108 | 108 | 108 | ||||||
Additional paid-in capital | 61,446 | 60,723 | 60,500 | ||||||
Retained earnings | 118,360 | 111,693 | 112,900 | ||||||
Net unrealized gain (loss) on securities available-for-sale | (825 | ) | (935 | ) | 2,708 | ||||
Net unrealized loss on securities transferred from available for sale to held to maturity | (140 | ) | (129 | ) | (124 | ) | |||
Net unrealized gain on cash flow hedging derivative instruments | 1,035 | 1,163 | 58 | ||||||
Net unrealized loss on postretirement benefit costs | (102 | ) | (102 | ) | (156 | ) | |||
Total shareholders' equity | 179,882 | 172,521 | 175,994 | ||||||
Total liabilities & shareholders' equity | $ | 1,781,701 | $ | 1,712,875 | $ | 1,635,088 | |||
Common Stock | |||||||||
Number of shares authorized | 18,000,000 | 18,000,000 | 18,000,000 | ||||||
Number of shares issued and outstanding | 10,824,724 | 10,793,946 | 10,788,329 | ||||||
Book value per common share | $ | 16.62 | $ | 15.98 | $ | 16.31 | |||
Tangible book value per common share | $ | 13.84 | $ | 13.20 | $ | 13.53 | |||
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The First Bancorp | ||||||||||||
Consolidated Statements of Income (Unaudited) | ||||||||||||
For the nine months ended September 30, | For the quarter ended September 30, | |||||||||||
In thousands of dollars, except per share data | 2017 | 2016 | 2017 | 2016 | ||||||||
Interest income | ||||||||||||
Interest and fees on loans | $ | 33,415 | $ | 29,759 | $ | 11,648 | $ | 10,021 | ||||
Interest on deposits with other banks | 46 | 17 | 23 | 9 | ||||||||
Interest and dividends on investments | 11,549 | 10,383 | 3,846 | 3,253 | ||||||||
Total interest income | 45,010 | 40,159 | 15,517 | 13,283 | ||||||||
Interest expense | ||||||||||||
Interest on deposits | 6,769 | 4,382 | 2,473 | 1,538 | ||||||||
Interest on borrowed funds | 3,146 | 3,568 | 1,090 | 1,216 | ||||||||
Total interest expense | 9,915 | 7,950 | 3,563 | 2,754 | ||||||||
Net interest income | 35,095 | 32,209 | 11,954 | 10,529 | ||||||||
Provision for loan losses | 1,750 | 1,125 | 750 | 375 | ||||||||
Net interest income after provision for loan losses | 33,345 | 31,084 | 11,204 | 10,154 | ||||||||
Non-interest income | ||||||||||||
Investment management and fiduciary income | 1,995 | 1,805 | 655 | 591 | ||||||||
Service charges on deposit accounts | 1,562 | 1,711 | 511 | 528 | ||||||||
Net securities gains | 471 | 668 | 468 | 137 | ||||||||
Mortgage origination and servicing income | 1,260 | 1,534 | 499 | 896 | ||||||||
Other operating income | 4,050 | 3,721 | 1,360 | 1,317 | ||||||||
Total non-interest income | 9,338 | 9,439 | 3,493 | 3,469 | ||||||||
Non-interest expense | ||||||||||||
Salaries and employee benefits | 12,110 | 11,136 | 4,267 | 3,931 | ||||||||
Occupancy expense | 1,816 | 1,735 | 589 | 589 | ||||||||
Furniture and equipment expense | 2,702 | 2,416 | 942 | 819 | ||||||||
FDIC insurance premiums | 762 | 631 | 259 | 210 | ||||||||
Amortization of identified intangibles | 32 | 32 | 10 | 10 | ||||||||
Other operating expense | 5,929 | 5,900 | 1,946 | 1,846 | ||||||||
Total non-interest expense | 23,351 | 21,850 | 8,013 | 7,405 | ||||||||
Income before income taxes | 19,332 | 18,673 | 6,684 | 6,218 | ||||||||
Applicable income taxes | 4,830 | 4,984 | 1,702 | 1,656 | ||||||||
Net Income | $ | 14,502 | $ | 13,689 | $ | 4,982 | $ | 4,562 | ||||
Basic earnings per share | $ | 1.35 | $ | 1.28 | $ | 0.46 | $ | 0.43 | ||||
Diluted earnings per share | $ | 1.34 | $ | 1.27 | $ | 0.46 | $ | 0.42 | ||||
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The First Bancorp | ||||||||||||
Selected Financial Data (Unaudited) | ||||||||||||
As of and for the nine months ended September 30, | As of and for the quarters ended September 30, | |||||||||||
Dollars in thousands, except for per share amounts | 2017 | 2016 | 2017 | 2016 | ||||||||
Summary of Operations | ||||||||||||
Interest Income | $ | 45,010 | $ | 40,159 | $ | 15,517 | $ | 13,283 | ||||
Interest Expense | 9,915 | 7,950 | 3,563 | 2,754 | ||||||||
Net Interest Income | 35,095 | 32,209 | 11,954 | 10,529 | ||||||||
Provision for Loan Losses | 1,750 | 1,125 | 750 | 375 | ||||||||
Non-Interest Income | 9,338 | 9,439 | 3,493 | 3,469 | ||||||||
Non-Interest Expense | 23,351 | 21,850 | 8,013 | 7,405 | ||||||||
Net Income | 14,502 | 13,689 | 4,982 | 4,562 | ||||||||
Per Common Share Data | ||||||||||||
Basic Earnings per Share | $ | 1.35 | $ | 1.28 | $ | 0.46 | $ | 0.43 | ||||
Diluted Earnings per Share | 1.34 | 1.27 | 0.46 | 0.42 | ||||||||
Cash Dividends Declared | 0.71 | 0.68 | 0.24 | 0.23 | ||||||||
Book Value per Common Share | 16.62 | 16.31 | 16.62 | 16.31 | ||||||||
Tangible Book Value per Common Share | 13.84 | 13.53 | 13.84 | 13.53 | ||||||||
Market Value | 30.31 | 23.97 | 30.31 | 23.97 | ||||||||
Financial Ratios | ||||||||||||
Return on Average Equity (a) | 10.86 | % | 10.48 | % | 10.91 | % | 10.24 | % | ||||
Return on Average Tangible Common Equity (a) | 13.06 | % | 12.67 | % | 13.08 | % | 12.33 | % | ||||
Return on Average Assets (a) | 1.09 | % | 1.15 | % | 1.09 | % | 1.12 | % | ||||
Average Equity to Average Assets | 10.03 | % | 10.94 | % | 10.02 | % | 10.99 | % | ||||
Average Tangible Equity to Average Assets | 8.35 | % | 9.06 | % | 8.36 | % | 9.12 | % | ||||
Net Interest Margin Tax-Equivalent (a) | 3.03 | % | 3.08 | % | 3.02 | % | 2.98 | % | ||||
Dividend Payout Ratio | 52.59 | % | 53.13 | % | 52.17 | % | 53.49 | % | ||||
Allowance for Loan Losses/Total Loans | 0.98 | % | 1.00 | % | 0.98 | % | 1.00 | % | ||||
Non-Performing Loans to Total Loans | 1.46 | % | 0.69 | % | 1.46 | % | 0.69 | % | ||||
Non-Performing Assets to Total Assets | 0.94 | % | 0.49 | % | 0.94 | % | 0.49 | % | ||||
Efficiency Ratio | 49.51 | % | 50.19 | % | 49.88 | % | 50.25 | % | ||||
At Period End | ||||||||||||
Total Assets | $ | 1,781,701 | $ | 1,635,088 | $ | 1,781,701 | $ | 1,635,088 | ||||
Total Loans | 1,121,086 | 1,028,992 | 1,121,086 | 1,028,992 | ||||||||
Total Investment Securities | 552,476 | 485,111 | 552,476 | 485,111 | ||||||||
Total Deposits | 1,350,049 | 1,173,749 | 1,350,049 | 1,173,749 | ||||||||
Total Shareholders' Equity | 179,882 | 175,994 | 179,882 | 175,994 | ||||||||
(a) Annualized using a 365-day basis for 2017 and a 366-day basis for 2016. | ||||||||||||
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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.
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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 2017 and 2016.
For the nine months ended | For the quarters ended | |||||||||||
In thousands of dollars | September 30, 2017 | September 30, 2016 | September 30, 2017 | September 30, 2016 | ||||||||
Net interest income as presented | $ | 35,095 | $ | 32,209 | $ | 11,954 | $ | 10,529 | ||||
Effect of tax-exempt income | 2,953 | 2,291 | 1,003 | 785 | ||||||||
Net interest income, tax equivalent | $ | 38,048 | $ | 34,500 | $ | 12,957 | $ | 11,314 | ||||
The Company presents its efficiency ratio using non-GAAP information which is most commonly used by financial institutions. 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 nine months ended | For the quarters ended | |||||||||||
In thousands of dollars | September 30, 2017 | September 30, 2016 | September 30, 2017 | September 30, 2016 | ||||||||
Non-interest expense, as presented | $ | 23,351 | $ | 21,850 | $ | 8,013 | $ | 7,405 | ||||
Net interest income, as presented | 35,095 | 32,209 | 11,954 | 10,529 | ||||||||
Effect of tax-exempt income | 2,953 | 2,291 | 1,003 | 785 | ||||||||
Non-interest income, as presented | 9,338 | 9,439 | 3,493 | 3,469 | ||||||||
Effect of non-interest tax-exempt income | 248 | 267 | 83 | 89 | ||||||||
Net securities (gains)/losses | (471 | ) | (668 | ) | (468 | ) | (137 | ) | ||||
Adjusted net interest income plus non-interest income | $ | 47,163 | $ | 43,538 | $ | 16,065 | $ | 14,735 | ||||
Non-GAAP efficiency ratio | 49.51 | % | 50.19 | % | 49.88 | % | 50.25 | % | ||||
GAAP efficiency ratio | 52.55 | % | 52.46 | % | 51.87 | % | 52.90 | % | ||||
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
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common equity to the Company's consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles:
For the nine months ended | For the quarters ended | |||||||||||
In thousands of dollars | September 30, 2017 | September 30, 2016 | September 30, 2017 | September 30, 2016 | ||||||||
Average shareholders' equity as presented | $ | 178,482 | $ | 174,415 | $ | 181,153 | $ | 177,312 | ||||
Less intangible assets | (30,049 | ) | (30,092 | ) | (30,064 | ) | (30,082 | ) | ||||
Tangible average shareholders' equity | $ | 148,433 | $ | 144,323 | $ | 151,089 | $ | 147,230 | ||||
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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