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| 8-K - 8-K - First Bancorp, Inc /ME/ | a8-kearnings14q4.htm |
Exhibit 99.1
The First Bancorp Reports Record Net Income for 2014
DAMARISCOTTA, ME, January 21, 2015 – The First Bancorp (Nasdaq: FNLC), today announced unaudited results for the year ended December 31, 2014. Net income was $14.7 million, up $1.7 million or 13.5% from 2013, and earnings per common share on a fully diluted basis of $1.37 were up $0.17 or 14.2% from 2013. The Company also announced unaudited results for the quarter ended December 31, 2014. Net income was $3.4 million, down $76,000 or 2.2% from the fourth quarter of 2013, and earnings per common share on a fully diluted basis of $0.32 were down $0.01 or 3.0% from the fourth quarter of 2013.
“With Daniel R. Daigneault’s retirement on January 2, I am pleased to report that his final year as President and Chief Executive Officer was the best year in the Company’s history,” observed Tony C. McKim, the Company’s new President and Chief Executive Officer, “Net income was up $675,000 or 4.8% from our previous best year in 2008, and with an improved economy, a number of factors came together in 2014 that contributed to our record results: lower credit costs, an improved net interest margin and growth in the loan portfolio.
“The Company’s total assets increased $18.2 million or 1.2% in 2014,” said President McKim. “Loan demand was the healthiest we have seen in several years, with total loans increasing $41.2 million or 4.7%. At the same time the investment portfolio decreased $13.9 million or 2.8%. On the funding side of the balance sheet, low-cost deposits were up $72.2 million or 17.7% from 2013, replacing higher-cost certificates of deposits which decreased $83.6 million or 15.7% from 2013.
“Net interest income on a tax-equivalent basis was up $2.1 million in 2014 over 2013,” President McKim continued. “Higher levels of earning assets were responsible for $1.7 million of the increase and $407,000 resulted from an improved net interest margin. We benefited from a $1.1 million drop in funding costs, and after a prolonged period of margin compression which lasted more than five years, our net interest margin climbed from a recent-year low of 3.05% in 2013 to 3.10% in 2014.
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“Improved credit quality, however, was the greatest contributor to 2014’s increase in earnings,” President McKim commented. “Past-due loans were 1.29% of total loans at December 31, 2014, down significantly from 1.82% of total loans at the end of 2013. Non-performing assets stood at 0.97% of total assets as of December 31, 2014 - the lowest level we have seen since the third quarter of 2008. This is well below the 2.32% peak in non-performing assets at December 31, 2011, and down from 1.44% a year ago.
“Net chargeoffs in 2014 were $2.3 million or 0.26% of average loans on an annualized basis, compared to $5.2 million or 0.60% of average loans in 2013,” President McKim continued. “With significantly lower levels of non-performing assets, past due loans and net chargeoffs, our provision for loan losses in 2014 was $1.2 million - a $3.0 million or 72.6% reduction from the $4.2 million provisioned in 2013. The allowance for loan losses stood at 1.13% of total loans as of December 31, 2014, down from 1.31% at December 31, 2013 and well below the peak of 1.79% in 2011."
“Our operating ratios were indicative of our strong performance in 2014,” commented F. Stephen Ward, the Company’s Chief Financial Officer. “At 56.86%, the efficiency ratio remains well below the Bank’s UBPR peer group average which stood at 66.28% as of September 30, 2014. Our return on average assets was 0.99% in 2014 compared to 0.90% in 2013, and our return on average tangible common equity was 11.57% compared to 10.66% for the same periods, respectively.
“The First Bancorp’s price per share was $18.09 at December 31, 2014, up $0.67 or 3.85% from December 31, 2013,” Mr. Ward noted. “When dividends are added, our total return in 2014 was 10.24%. This outperformed the Dow Jones Industrial Average with a total return of 10.04% for the year and underperformed the S&P 500 which had a total return of 13.68% for the year. Our stock significantly outperformed the banking industry in 2014, as measured by the KBW Regional Bank and Nasdaq Bank indices, which had total returns of 2.43% and 4.92%, respectively. We also outperformed the Russell 2000 index in 2014, in which we are included, which had a total return of 4.90%.”
“The Board of Directors increased the quarterly dividend in the second quarter to 21 cents per share, resulting in total dividends for the year of 83 cents per share, an increase of 4.5 cents over 2013,” President McKim commented. “Increasing the dividend in 2014 was consistent with the Company’s overall performance during the year, including the improved credit quality and other
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key metrics. Our generous dividend continues to be one of the major reasons people invest in our stock and we have an annualized dividend yield of 4.59% based on the year-end closing price of $18.09 per share.
“As I take the helm at the beginning of 2015, I feel The First Bancorp is in excellent condition after 21 years under former President Daigneault’s leadership,” President McKim concluded, “We had several challenging years during the Great Recession, and now that we are past this difficult period, I feel the Company is positioned well for this year and beyond. We have an excellent franchise along the coast of Maine, a highly experienced and capable management team, and dedicated employees who are focused on delivering a consistently superior level of service to our customers. With all of these positives, I am confident we can continue to deliver strong results for our shareholders over the next several years.”
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The First Bancorp | ||||||
Consolidated Balance Sheets (Unaudited) | ||||||
In thousands of dollars except common stock data | December 31, 2014 | December 31, 2013 | ||||
Assets | ||||||
Cash and due from banks | $ | 13,057 | $ | 16,570 | ||
Interest-bearing deposits in other banks | 3,559 | 2,562 | ||||
Securities available for sale | 185,261 | 305,824 | ||||
Securities to be held to maturity | 275,919 | 169,277 | ||||
Restricted equity securities, at cost | 13,912 | 13,912 | ||||
Loans held for sale | — | 83 | ||||
Loans | 917,564 | 876,367 | ||||
Less allowance for loan losses | 10,344 | 11,514 | ||||
Net loans | 907,220 | 864,853 | ||||
Accrued interest receivable | 4,748 | 5,038 | ||||
Premises and equipment | 22,619 | 23,616 | ||||
Other real estate owned | 3,785 | 4,807 | ||||
Goodwill | 29,805 | 29,805 | ||||
Other assets | 22,246 | 27,616 | ||||
Total assets | $ | 1,482,131 | $ | 1,463,963 | ||
Liabilities | ||||||
Demand deposits | $ | 113,133 | $ | 106,125 | ||
NOW deposits | 199,977 | 151,322 | ||||
Money market deposits | 98,607 | 86,730 | ||||
Savings deposits | 165,601 | 149,103 | ||||
Certificates of deposit | 184,471 | 210,321 | ||||
Certificates $100,000 to $250,000 | 221,892 | 278,674 | ||||
Certificates $250,000 and over | 41,138 | 42,124 | ||||
Total deposits | 1,024,819 | 1,024,399 | ||||
Borrowed funds | 279,916 | 279,125 | ||||
Other liabilities | 15,842 | 14,341 | ||||
Total Liabilities | 1,320,577 | 1,317,865 | ||||
Shareholders' equity | ||||||
Common stock | 107 | 106 | ||||
Additional paid-in capital | 59,282 | 58,395 | ||||
Retained earnings | 99,816 | 94,000 | ||||
Net unrealized gain/(loss) on securities available-for-sale | 2,522 | (6,591 | ) | |||
Net unrealized loss on securities transferred from available for sale to held to maturity | (48 | ) | — | |||
Net unrealized gain/(loss) on postretirement benefit costs | (125 | ) | 188 | |||
Total shareholders' equity | 161,554 | 146,098 | ||||
Total liabilities & shareholders' equity | $ | 1,482,131 | $ | 1,463,963 | ||
Common Stock | ||||||
Number of shares authorized | 18,000,000 | 18,000,000 | ||||
Number of shares issued and outstanding | 10,724,359 | 10,671,192 | ||||
Book value per common share | $ | 15.06 | $ | 13.69 | ||
Tangible book value per common share | $ | 12.25 | $ | 10.83 | ||
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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 | 12/31/2014 | 12/31/2013 | 12/31/2014 | 12/31/2013 | ||||||||
Interest income | ||||||||||||
Interest and fees on loans | $ | 35,102 | $ | 34,897 | $ | 8,982 | $ | 8,657 | ||||
Interest on deposits with other banks | 5 | 8 | 1 | 2 | ||||||||
Interest and dividends on investments | 15,915 | 15,031 | 3,807 | 4,108 | ||||||||
Total interest income | 51,022 | 49,936 | 12,790 | 12,767 | ||||||||
Interest expense | ||||||||||||
Interest on deposits | 7,087 | 7,997 | 1,681 | 1,962 | ||||||||
Interest on borrowed funds | 4,338 | 4,499 | 1,062 | 1,144 | ||||||||
Total interest expense | 11,425 | 12,496 | 2,743 | 3,106 | ||||||||
Net interest income | 39,597 | 37,440 | 10,047 | 9,661 | ||||||||
Provision for loan losses | 1,150 | 4,200 | 300 | 700 | ||||||||
Net interest income after provision for loan losses | 38,447 | 33,240 | 9,747 | 8,961 | ||||||||
Non-interest income | ||||||||||||
Investment management and fiduciary income | 2,139 | 1,919 | 520 | 481 | ||||||||
Service charges on deposit accounts | 2,505 | 2,756 | 606 | 657 | ||||||||
Net securities gains | 1,155 | 1,087 | 10 | — | ||||||||
Mortgage origination and servicing income | 979 | 2,080 | 369 | 345 | ||||||||
Other operating income | 4,270 | 4,245 | 1,097 | 1,116 | ||||||||
Total non-interest income | 11,048 | 12,087 | 2,602 | 2,599 | ||||||||
Non-interest expense | ||||||||||||
Salaries and employee benefits | 14,890 | 14,305 | 3,622 | 3,698 | ||||||||
Occupancy expense | 2,215 | 2,050 | 527 | 493 | ||||||||
Furniture and equipment expense | 2,940 | 2,656 | 816 | 664 | ||||||||
FDIC insurance premiums | 1,004 | 1,143 | 240 | 279 | ||||||||
Amortization of identified intangibles | 326 | 326 | 81 | 81 | ||||||||
Other operating expense | 8,845 | 8,457 | 2,589 | 1,904 | ||||||||
Total non-interest expense | 30,220 | 28,937 | 7,875 | 7,119 | ||||||||
Income before income taxes | 19,275 | 16,390 | 4,474 | 4,441 | ||||||||
Applicable income taxes | 4,566 | 3,425 | 1,048 | 939 | ||||||||
Net Income | $ | 14,709 | $ | 12,965 | $ | 3,426 | $ | 3,502 | ||||
Basic earnings per share | $ | 1.38 | $ | 1.20 | $ | 0.32 | $ | 0.33 | ||||
Diluted earnings per share | 1.37 | 1.20 | 0.32 | 0.33 | ||||||||
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The First Bancorp | ||||||||||||
Selected Financial Data (Unaudited) | ||||||||||||
Dollars in thousands, | For the years ended | For the quarters ended | ||||||||||
except for per share amounts | 12/31/2014 | 12/31/2013 | 12/31/2014 | 12/31/2013 | ||||||||
Summary of Operations | ||||||||||||
Interest Income | $ | 51,022 | $ | 49,936 | $ | 12,790 | $ | 12,767 | ||||
Interest Expense | 11,425 | 12,496 | 2,743 | 3,106 | ||||||||
Net Interest Income | 39,597 | 37,440 | 10,047 | 9,661 | ||||||||
Provision for Loan Losses | 1,150 | 4,200 | 300 | 700 | ||||||||
Non-Interest Income | 11,048 | 12,087 | 2,602 | 2,599 | ||||||||
Non-Interest Expense | 30,220 | 28,937 | 7,875 | 7,119 | ||||||||
Net Income | 14,709 | 12,965 | 3,426 | 3,502 | ||||||||
Per Common Share Data | ||||||||||||
Basic Earnings per Share | $ | 1.38 | $ | 1.20 | $ | 0.32 | $ | 0.33 | ||||
Diluted Earnings per Share | 1.37 | 1.20 | 0.32 | 0.33 | ||||||||
Cash Dividends Declared | 0.830 | 0.785 | 0.210 | 0.200 | ||||||||
Book Value per Common Share | 15.06 | 13.69 | 15.06 | 13.69 | ||||||||
Tangible Book Value per Common Share | 12.25 | 10.83 | 12.25 | 10.83 | ||||||||
Market Value | 18.09 | 17.42 | 18.09 | 17.42 | ||||||||
Financial Ratios | ||||||||||||
Return on Average Equity (a) | 9.34 | % | 8.72 | % | 8.39 | % | 9.33 | % | ||||
Return on Average Tangible Common Equity (a) | 11.57 | % | 10.66 | % | 10.32 | % | 11.76 | % | ||||
Return on Average Assets (a) | 0.99 | % | 0.90 | % | 0.92 | % | 0.95 | % | ||||
Average Equity to Average Assets | 10.63 | % | 10.62 | % | 10.93 | % | 10.19 | % | ||||
Average Tangible Equity to Average Assets | 8.58 | % | 8.49 | % | 8.88 | % | 8.09 | % | ||||
Net Interest Margin Tax-Equivalent (a) | 3.10 | % | 3.05 | % | 3.09 | % | 3.07 | % | ||||
Dividend Payout Ratio | 60.14 | % | 65.42 | % | 65.63 | % | 60.61 | % | ||||
Allowance for Loan Losses/Total Loans | 1.13 | % | 1.31 | % | 1.13 | % | 1.31 | % | ||||
Non-Performing Loans to Total Loans | 1.15 | % | 1.86 | % | 1.15 | % | 1.86 | % | ||||
Non-Performing Assets to Total Assets | 0.97 | % | 1.44 | % | 0.97 | % | 1.44 | % | ||||
Efficiency Ratio | 56.86 | % | 55.44 | % | 58.36 | % | 53.79 | % | ||||
At Period End | ||||||||||||
Total Assets | $ | 1,482,131 | $ | 1,463,963 | $ | 1,482,131 | $ | 1,463,963 | ||||
Total Loans | 917,564 | 876,367 | 917,564 | 876,367 | ||||||||
Total Investment Securities | 475,092 | 489,013 | 475,092 | 489,013 | ||||||||
Total Deposits | 1,024,819 | 1,024,399 | 1,024,819 | 1,024,399 | ||||||||
Total Shareholders' Equity | 161,554 | 146,098 | 161,554 | 146,098 | ||||||||
(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 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.
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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 2014 and 2013.
For the years ended | For the quarters ended | |||||||||||
In thousands of dollars | 12/31/2014 | 12/31/2013 | 12/31/2014 | 12/31/2013 | ||||||||
Net interest income as presented | $ | 39,597 | $ | 37,440 | $ | 10,047 | $ | 9,661 | ||||
Effect of tax-exempt income | 3,475 | 3,573 | 807 | 926 | ||||||||
Net interest income, tax equivalent | $ | 43,072 | $ | 41,013 | $ | 10,854 | $ | 10,587 | ||||
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 | 12/31/2014 | 12/31/2013 | 12/31/2014 | 12/31/2013 | ||||||||
Non-interest expense, as presented | $ | 30,220 | $ | 28,937 | $ | 7,875 | $ | 7,119 | ||||
Net interest income, as presented | 39,597 | 37,440 | 10,047 | 9,661 | ||||||||
Effect of tax-exempt income | 3,475 | 3,573 | 807 | 926 | ||||||||
Non-interest income, as presented | 11,048 | 12,087 | 2,602 | 2,599 | ||||||||
Effect of non-interest tax-exempt income | 185 | 182 | 49 | 48 | ||||||||
Net securities gains | (1,155 | ) | (1,087 | ) | (10 | ) | — | |||||
Adjusted net interest income plus non-interest income | $ | 53,150 | $ | 52,195 | $ | 13,495 | $ | 13,234 | ||||
Non-GAAP efficiency ratio | 56.86 | % | 55.44 | % | 58.36 | % | 53.79 | % | ||||
GAAP efficiency ratio | 59.67 | % | 58.43 | % | 62.26 | % | 58.07 | % | ||||
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
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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 | 12/31/14 | 12/31/13 | 12/31/14 | 12/31/13 | ||||||||
Average shareholders' equity as presented | $ | 157,465 | $ | 152,722 | $ | 162,067 | $ | 148,842 | ||||
Less preferred stock | — | (4,020 | ) | — | — | |||||||
Less intangible assets | (30,338 | ) | (30,664 | ) | (30,338 | ) | (30,664 | ) | ||||
Tangible average shareholders' equity | $ | 127,127 | $ | 118,038 | $ | 131,729 | $ | 118,178 | ||||
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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