Attached files
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| 8-K - First Bancorp, Inc /ME/ | thefirstbancorp8k2011q3.htm |
Exhibit 99.1
The First Bancorp Reports Year-to-Date Earnings Up 3.3%
DAMARISCOTTA, ME, October 19 – The First Bancorp (Nasdaq: FNLC), today announced unaudited results for the nine months ended September 30, 2011. Net income was $9.3 million, up $302,000 or 3.3% from the same period in 2010, and earnings per common share on a fully diluted basis of $0.85 were up $0.03 or 3.7% from the same period in 2010.
The Company also announced unaudited results for the quarter ended September 30, 2011. Net income was $3.0 million, down $189,000 or 5.9% from the same period in 2010, and earnings per common share on a fully diluted basis of $0.27 were down $0.02 or 6.9% from the same period in 2010. Compared to the previous quarter, net income was down $188,000 or 5.9% and earnings per common share on a fully diluted basis were down $0.02 or 6.9%.
“Although net income for the third quarter is down slightly from the previous quarter and the third quarter of 2010, The First Bancorp continues to outperform our peer group with solid operating results,” stated Daniel R. Daigneault, the Company’s President & Chief Executive Officer. “At the same time, credit quality remains stable, and our capital ratios well exceed regulatory requirements. For the nine months ended September 30, 2011, net interest income on a tax-equivalent basis was up $996,000 or 3.1% over the same period in 2010. This increase was attributable to average earning assets in the first nine months of 2011 running $80.4 million or 6.4% above the level seen in the first
nine months of 2010. This increase more than offset our net interest margin slipping from 3.39% for the first nine months of 2010 to 3.29% for the first nine months of 2011.
“Non-interest income was $67,000 or 1.0% above the same period in 2010,” President Daigneault continued. “This was attributable to a $229,000 gain on investments as a result of the conversion of a General Motors bond classified as other-than-temporarily-impaired that converted to equity securities. Non-interest expense was $1.3 million or 6.9% above the same period in 2010. Salaries and employee benefits and expenses related to other real estate owned and foreclosure costs were the primary areas with increases.
“I am very pleased to note that in August the Company repaid $12.5 million preferred stock issued by the U.S. Treasury under its Capital Purchase Program (the CPP),” President Daigneault stated. “We received approval for this transaction from the Company’s primary regulator, The Federal Reserve Bank of Boston, as well as the Bank’s primary regulator, the Office of the Comptroller of the Currency. These approvals were based on the Company’s and the Bank’s continued strong capital ratios after the repayment, and almost all of the repayment was made from retained earnings accumulated since the preferred stock was issued in 2009.
“After the repurchase, $12.5 million of CPP preferred stock remains outstanding,” President Daigneault continued. “The warrant issued in conjunction with the CPP Preferred Stock for 225,904 shares of Common Stock at an exercise price of $16.60 per share was unchanged as a result of the repurchase transaction and remains outstanding. As of September 30, 2011, the Company’s estimated leverage capital ratio was 8.01%, and the estimated tier one and tier two risk-based capital ratios were 13.83% and 15.08%, respectively. These are all well above the FDIC minimum requirements of 5.00%, 6.00% and 10.00%, respectively, to be considered “well-capitalized”.
“As I noted above, credit quality has been relatively stable over several quarters,” President Daigneault said. “Net chargeoffs of $3.6 million year-to-date were 0.54% of average loans on an annualized basis, down from net chargeoffs of $5.7 million or 0.81% of average loans for the first nine months of 2010. We have provisioned $5.6 million for loan losses year-to-date, down $700,000 from the amount provisioned for the same period in 2010, and the allowance for loan losses has increased $2.0 million since year-end. The allowance as a percentage of loans increased to 1.76%, up from 1.70% at previous quarter end, 1.50% at year-end and 1.55% a year ago. Non-performing loans stood at 2.42% of total
loans as of September 30, 2011, compared to 2.39% at year-end and 2.36% a year ago.”
“Total assets have increased $33.2 million since year end and $52.4 million during the past year,” observed the Company’s Chief Financial Officer, F. Stephen Ward. “We offset the year-to-date decline in the loan portfolio by adding to the investment portfolio, which has increased $55.9 million in 2011 and $103.1 million over the past year. Low-cost deposits continue to do well – the usual seasonal drop in the winter months was much less in 2011 than in prior years – and they are up $38.3 million year-to-date and $25.6 million over the past year.
“As in past quarters, our core operating ratios remain very good,” said Mr. Ward, “especially when compared to our UBPR peer group. Our return on average tangible common equity stands at 10.94% year to date compared to 12.23% for the comparable period in 2010. This placed us in the top third of all banks in our peer group, which had an average return on equity of 6.97% as of June 30, 2011. Our efficiency ratio continues to be an important component in our overall performance, and was up slightly to 49.30% for first nine months of 2011 compared to 47.68% 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 66.28% as of June 30,
2011.
“At quarter end, The First Bancorp’s shares were trading at 1.13 times tangible book value,” Mr. Ward observed. “Our September 30, 2011 closing price of $12.59 per share was down $3.20 from our $15.79 per share closing price on December 31, 2010, which is in line with other bank stocks, which have recently been out of favor in the market. With dividends reinvested, our total return for the nine months ended September 30, 2011, was -17.16% compared to the NASD Bank Index and the KBW Regional Bank Index with total returns with dividends reinvested of
-24.68% and -25.71% for the same period, respectively. Compared to the broad market, our total return is just slightly below the Russell 2000 at -17.02%, which we are included in, but below the total return for the S&P 500, which was -8.68% year to date.”
“Even with the CPP repayment, we maintained the quarterly dividend of 19.5 cents per share,” President Daigneault said. “As we have stated before, strong capital enables the Company to maintain the dividend at its current level, and we repeatedly hear from shareholders that our dividend yield is one of the primary reasons they own our shares. We paid out 68.8% of earnings in the first nine months of 2011 compared to 71.3% for the same period in 2010, and our dividend yield was 6.20% at September 30, 2011, based on the closing price of $12.59 per share.
“Improved employment numbers and stable real estate prices will ultimately be the path to a stronger and improved economy,” President Daigneault concluded. “We are fortunate that the unemployment rate in Maine at 7.6% remains well below the national unemployment rate at 9.1%. Real estate prices along the Maine coast, however, remain weak, and we feel it will still be some time before they return 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.”
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.
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The First Bancorp
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|||
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Consolidated Balance Sheets (Unaudited)
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|||
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In thousands of dollars, except for per share amounts
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9/30/2011
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12/31/2010
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9/30/2010
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Assets
|
|||
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Cash and due from banks
|
$16,563
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$13,838
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$13,880
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Time deposits in other banks
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100
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100
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-
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|
Securities available for sale
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326,782
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293,229
|
232,075
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Securities to be held to maturity
|
129,699
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107,380
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121,341
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Federal Home Loan Bank and Federal Reserve Bank stock,
at cost
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15,443
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15,443
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15,443
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Loans held for sale
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230
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2,806
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1,031
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Loans
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868,573
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887,596
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918,538
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Less allowance for loan losses
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15,319
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13,316
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14,245
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Net loans
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853,254
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874,280
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904,293
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Accrued interest receivable
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5,018
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5,263
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5,445
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Premises and equipment
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18,872
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18,980
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18,458
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Other real estate owned
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6,310
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4,929
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5,338
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Goodwill
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27,684
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27,684
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27,684
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Other assets
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27,083
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29,870
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29,636
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Total assets
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$1,427,038
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$1,393,802
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$1,374,624
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Liabilities
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Demand deposits
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$88,472
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$74,032
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$80,695
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NOW deposits
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130,522
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119,823
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123,899
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Money market deposits
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77,736
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71,604
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69,119
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Savings deposits
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114,079
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100,870
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102,911
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Certificates of deposit
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231,351
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231,945
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243,977
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Certificates $100,000 to $250,000
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336,147
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338,452
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326,515
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Certificates $250,000 and over
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26,587
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37,792
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39,816
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Total deposits
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1,004,894
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974,518
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986,932
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Borrowed funds
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255,616
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257,330
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222,672
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Other liabilities
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15,990
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12,106
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12,790
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Total Liabilities
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1,276,500
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1,243,954
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1,222,394
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Shareholders' equity
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|||
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Preferred stock
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12,278
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24,705
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24,680
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Common stock
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98
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98
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98
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Additional paid-in capital
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45,706
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45,474
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45,385
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Retained earnings
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84,360
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81,701
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80,843
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Net unrealized gain/(loss) on securities available-for-sale
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8,155
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(2,057)
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1,421
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Net unrealized loss on postretirement benefit costs
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(59)
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(73)
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(197)
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Total shareholders' equity
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150,538
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149,848
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152,230
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Total liabilities & shareholders' equity
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$1,427,038
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$1,393,802
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$1,374,624
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Common Stock
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|||
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Number of shares authorized
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18,000,000
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18,000,000
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18,000,000
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Number of shares issued and outstanding
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9,800,507
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9,773,025
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9,765,631
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Book value per common share
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$14.11
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$12.80
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$13.06
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Tangible book value per common share
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$11.28
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$9.97
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$10.23
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The First Bancorp
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Consolidated Statements of Income (Unaudited)
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||||
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For the nine months ended
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For the quarters ended
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|||
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In thousands of dollars, except for per share amounts
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9/30/2011
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9/30/2010
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9/30/2011
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9/30/2010
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Interest income
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||||
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Interest and fees on loans
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$30,088
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$33,342
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$9,960
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$11,136
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Interest on deposits with other banks
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-
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5
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-
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3
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Interest and dividends on investments
|
12,058
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9,571
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3,938
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3,431
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|
Total interest income
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42,146
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42,918
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13,898
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14,570
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Interest expense
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||||
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Interest on deposits
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7,478
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7,699
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2,397
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2,648
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Interest on borrowed funds
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3,715
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4,988
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1,273
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1,669
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|
Total interest expense
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11,193
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12,687
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3,670
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4,317
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Net interest income
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30,953
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30,231
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10,228
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10,253
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Provision for loan losses
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5,600
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6,300
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1,500
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1,800
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Net interest income after provision for loan losses
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25,353
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23,931
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8,728
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8,453
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Non-interest income
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||||
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Investment management and fiduciary income
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1,140
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1,116
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358
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329
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Service charges on deposit accounts
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2,032
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2,194
|
681
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689
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Net securities gains
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237
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2
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8
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-
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Mortgage origination and servicing income
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845
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906
|
193
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293
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|
Other operating income
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2,337
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2,306
|
840
|
756
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Total non-interest income
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6,591
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6,524
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2,080
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2,067
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Non-interest expense
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||||
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Salaries and employee benefits
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9,255
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8,662
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3,250
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3,109
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Occupancy expense
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1,194
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1,129
|
367
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353
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Furniture and equipment expense
|
1,665
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1,671
|
554
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550
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FDIC insurance premiums
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1,104
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1,428
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298
|
476
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Amortization of identified intangibles
|
212
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213
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71
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71
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Other operating expense
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6,239
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5,302
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2,394
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1,669
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Total non-interest expense
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19,669
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18,405
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6,934
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6,228
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Income before income taxes
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12,275
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12,050
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3,874
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4,292
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Applicable income taxes
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2,934
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3,011
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868
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1,097
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NET INCOME
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$9,341
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$9,039
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$3,006
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$3,195
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Less dividends and amortization of premium on preferred stock
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1,027
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1,011
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353
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337
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Net income available to common
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$8,314
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$8,028
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$2,653
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$2,858
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Basic earnings per share
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$0.85
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$0.82
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$0.27
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$0.29
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Diluted earnings per share
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$0.85
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$0.82
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$0.27
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$0.29
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Selected Financial Data (Unaudited)
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||||
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Dollars in thousands,
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For the nine months ended
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For the quarters ended
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||
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except for per share amounts
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9/30/2011
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9/30/2010
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9/30/2011
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9/30/2010
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Summary of Operations
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||||
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Interest Income
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$42,146
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$42,918
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$13,898
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$14,570
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Interest Expense
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11,193
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12,687
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3,670
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4,317
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Net Interest Income
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30,953
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30,231
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10,228
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10,253
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Provision for Loan Losses
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5,600
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6,300
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1,500
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1,800
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Non-Interest Income
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6,591
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6,524
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2,080
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2,067
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|
Non-Interest Expense
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19,669
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18,405
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6,934
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6,228
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|
Net Income
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9,341
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9,039
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3,006
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3,195
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Per Common Share Data
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||||
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Basic Earnings per Share
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$0.85
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$0.82
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$0.27
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$0.29
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Diluted Earnings per Share
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0.85
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0.82
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0.27
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0.29
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Cash Dividends Declared
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0.585
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0.585
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0.195
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0.195
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Book Value per Common Share
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14.11
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13.06
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14.11
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13.06
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Tangible Book Value per Common Share
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11.28
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10.23
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11.28
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10.23
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Market Value
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12.59
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13.83
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12.59
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13.83
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Financial Ratios
|
||||
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Return on Average Equity (a)
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9.66%
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9.55%
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9.15%
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9.88%
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Return on Average Tangible Common Equity (a)
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10.94%
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12.23%
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10.25%
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12.60%
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|
Return on Average Assets (a)
|
0.87%
|
0.90%
|
0.83%
|
0.93%
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Average Equity to Average Assets
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10.78%
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11.22%
|
10.46%
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11.18%
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Average Tangible Equity to Average Assets
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8.84%
|
9.17%
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8.53%
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9.16%
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Net Interest Margin Tax-Equivalent (a)
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3.29%
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3.39%
|
3.24%
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3.36%
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Dividend Payout Ratio
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68.82%
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71.34%
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72.22%
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67.24%
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Allowance for Loan Losses/Total Loans
|
1.76%
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1.55%
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1.76%
|
1.55%
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|
Non-Performing Loans to Total Loans
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2.42%
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2.36%
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2.42%
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2.36%
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Non-Performing Assets to Total Assets
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1.91%
|
1.97%
|
1.91%
|
1.97%
|
|
Efficiency Ratio
|
49.30%
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47.68%
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53.06%
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48.11%
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At Period End
|
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Total Assets
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$1,427,038
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$1,374,624
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$1,427,038
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$1,374,624
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|
Total Loans
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868,573
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918,538
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868,573
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918,538
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Total Investment Securities
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471,924
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368,859
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471,924
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368,859
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Total Deposits
|
1,004,894
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986,932
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1,004,894
|
986,932
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|
Total Shareholders’ Equity
|
150,538
|
152,230
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150,538
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152,230
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|
(a) Annualized using a 365-day basis
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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 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.
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 2011 and 2010.
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For the nine months ended
|
For the quarters ended
|
|||
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In thousands of dollars
|
9/30/2011
|
9/30/2010
|
9/30/2011
|
9/30/2010
|
|
Net interest income as presented
|
$30,953
|
$30,231
|
$10,228
|
$10,253
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|
Effect of tax-exempt income
|
1,978
|
1,704
|
706
|
577
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|
Net interest income, tax equivalent
|
$32,931
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$31,935
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$10,934
|
$10,830
|
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:
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For the nine months ended
|
For the quarters ended
|
|||
|
In thousands of dollars
|
9/30/2011
|
9/30/2010
|
9/30/2011
|
9/30/2010
|
|
Non-interest expense, as presented
|
$19,669
|
$18,405
|
$6,934
|
$6,228
|
|
Net interest income, as presented
|
30,953
|
30,231
|
10,228
|
10,253
|
|
Effect of tax-exempt income
|
1,978
|
1,704
|
706
|
577
|
|
Non-interest income, as presented
|
6,591
|
6,524
|
2,080
|
2,067
|
|
Effect of non-interest tax-exempt income
|
140
|
141
|
47
|
47
|
|
Net securities gains
|
237
|
2
|
8
|
-
|
|
Adjusted net interest income plus non-interest income
|
$39,899
|
$38,602
|
$13,069
|
$12,944
|
|
Non-GAAP efficiency ratio
|
49.30%
|
47.68%
|
53.06%
|
48.11%
|
|
GAAP efficiency ratio
|
52.39%
|
50.07%
|
56.34%
|
50.55%
|
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 nine months ended
|
For the quarters ended
|
|||
|
9/30/2011
|
9/30/2010
|
9/30/2011
|
9/30/2010
|
|
|
Average shareholders' equity as presented
|
$154,029
|
$151,132
|
$149,916
|
$152,951
|
|
Less preferred stock
|
(24,705)
|
(24,606)
|
(19,591)
|
(24,656)
|
|
Less intangible assets
|
(27,684)
|
(27,684)
|
(27,684)
|
(27,684)
|
|
Tangible average shareholders' equity
|
$101,640
|
$98,842
|
$102,641
|
$100,611
|
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 207.563.3195 ext. 5001.