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| 8-K - 8-K - First Bancorp, Inc /ME/ | a8-kearnings16q1.htm |
Exhibit 99.1
The First Bancorp Reports Record Quarterly Results
DAMARISCOTTA, ME, April 20, 2016 – The First Bancorp (Nasdaq: FNLC), the parent company of First National Bank, today announced operating results for the quarter ended March 31, 2016. Net income was $4.5 million, up $328,000 or 7.9% from the first quarter of 2015 and earnings per common share on a fully diluted basis of $0.42 were up $0.03 or 7.7% from the same period in 2015.
“This was the best quarter in the Company’s history,” Tony C. McKim, the Company’s President and Chief Executive Officer observed, “with net income $315,000 above the record set in the third quarter of 2015. It was also the third quarter in the past five quarters which set a new net income record. The combination of higher net interest income driven by loan growth and lower operating costs is the key driver of our strong performance in 2016. We maintained the quarterly dividend at 22 cents per share and we continue to pay out more than half of our net income to our shareholders in the form of cash dividends.
“Total assets are up $9.9 million year to date and $115.9 million from a year ago,” noted President McKim. “Total loans increased $16.3 million or 1.6% year to date, and year over year, total loans are up $65.8 million or 7.0%. The loan portfolio topped the $1.0 billion mark at quarter end, the first time we have been above this record volume. Loan demand remains healthy, with the majority of loan growth being seen in commercial loans and with modest growth in other loan categories. The investment portfolio is down $10.1 million from year end as a result of securities sales in the first quarter. On the funding side of the balance sheet, low-cost deposits are up $94.7 million or 20.3% year over year but down $17.1 million since year end - in line with our normal seasonal fluctuation.
“Net interest income on a tax equivalent basis for the first three months of 2016 was up $1.0 million from the same period in 2015,” President McKim continued, “with $805,000 of this increase attributable to growth in earning assets, specifically in the loan portfolio, and $186,000 is attributable to an improved net interest margin which is 3.13% in 2016 versus 3.10% in 2015. Non-interest income for the first three months of 2016 was down $694,000 or 19.0% from the first three months of 2015 due to a lower level of gains from sale of securities. The good news, however, is that
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non-interest expense for the first three months of 2016 was $65,000 or 0.9% below the same period in 2015, led by lower employee costs and occupancy expense.
“Our credit quality metrics continue to improve in 2016,” President McKim said. “Non-performing assets stood at 0.53% of total assets as of March 31, 2016 - the lowest level since the second quarter of 2008. This is well below the 0.91% we saw in non-performing assets a year ago, and down from 0.57% at year end. Past-due loans were 0.82% of total loans at March 31, 2016, a significant drop from 1.27% a year ago. We provisioned $375,000 for loan losses in the first three months of 2016, a $125,000 decrease from the $500,000 we provisioned in the first three months of 2015. The allowance for loan losses stood at 1.02% of total loans as of March 31, 2016, up from 1.00% at December 31, 2015 and down from 1.09% a year ago.”
“All of these positive factors can be seen in our operating ratios,” observed F. Stephen Ward, the Company’s Chief Financial Officer. “Our return on average assets was 1.15% for the first three months of 2016, slightly below the 1.16% return for the first three months of 2015, and our return on average tangible common equity was 12.80% compared to 12.63% for the same periods, respectively. At 51.45% for the first three months of 2016 compared to 56.79% for the first three months of 2015, our efficiency ratio remains well below the Bank’s UBPR peer group average which stood at 65.23% as of December 31, 2015.
“The First Bancorp’s price per share was $19.51 at March 31, 2016, down $0.96 from December 31, 2015 and with dividends reinvested our total return for the first three months of 2016 was -3.69%,” Mr. Ward noted. We outperformed the banking industry, however, with total returns in the first quarter of -4.72% for the KBW Regional Bank Index and -5.98% for the Nasdaq Bank Index.”
“The Board of Directors kept the dividend at 22 cents per share in the first quarter of 2016,” President McKim commented. “Based on the March 31, 2016 closing price of $19.51 per share, our annualized dividend yield is a very healthy 4.51%. The dividend continues to be one of the major reasons people invest in our stock and strong operating results enable us to maintain our generous dividend payout, or increase it as we did in the second quarter of 2015. At the same time, we are retaining sufficient earnings to remain well capitalized and support future asset growth.
“The economy of coastal Maine definitely continues to improve,” President McKim concluded, “and we are seeing this in stronger loan demand and improved credit quality. It is important to remember, however, that we live and work in a global economy and we must remain mindful of the potential impact that economic weaknesses in other parts of the world can have on the state of Maine. After coming off a record year in 2015, I am pleased with the very strong operating results we posted in
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the first quarter of 2016. What I am most proud of, though, is the tremendous team of people we have built and how each and every employee contributes to our ongoing success.”
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The First Bancorp | |||||||||
Consolidated Balance Sheets (Unaudited) | |||||||||
In thousands of dollars, except per share data | March 31, 2016 | December 31, 2015 | March 31, 2015 | ||||||
Assets | |||||||||
Cash and due from banks | $ | 14,533 | $ | 14,299 | $ | 13,855 | |||
Interest-bearing deposits in other banks | 6,372 | 4,013 | 336 | ||||||
Securities available for sale | 216,725 | 223,039 | 156,317 | ||||||
Securities to be held to maturity | 236,611 | 240,023 | 262,455 | ||||||
Restricted equity securities, at cost | 13,875 | 14,257 | 13,912 | ||||||
Loans held for sale | 224 | 349 | — | ||||||
Loans | 1,004,942 | 988,638 | 939,169 | ||||||
Less allowance for loan losses | 10,219 | 9,916 | 10,196 | ||||||
Net loans | 994,723 | 978,722 | 928,973 | ||||||
Accrued interest receivable | 6,271 | 4,912 | 5,724 | ||||||
Premises and equipment | 21,392 | 21,816 | 22,270 | ||||||
Other real estate owned | 1,592 | 1,532 | 2,899 | ||||||
Goodwill | 29,805 | 29,805 | 29,805 | ||||||
Other assets | 32,558 | 32,043 | 22,286 | ||||||
Total assets | $ | 1,574,681 | $ | 1,564,810 | $ | 1,458,832 | |||
Liabilities | |||||||||
Demand deposits | $ | 116,756 | $ | 130,566 | $ | 100,939 | |||
NOW deposits | 240,112 | 242,638 | 199,099 | ||||||
Money market deposits | 74,643 | 92,994 | 101,292 | ||||||
Savings deposits | 205,218 | 206,009 | 167,338 | ||||||
Certificates of deposit | 197,006 | 158,529 | 137,166 | ||||||
Certificates $100,000 to $250,000 | 226,644 | 175,077 | 210,657 | ||||||
Certificates $250,000 and over | 49,062 | 37,376 | 50,334 | ||||||
Total deposits | 1,109,441 | 1,043,189 | 966,825 | ||||||
Borrowed funds | 276,531 | 337,457 | 312,576 | ||||||
Other liabilities | 17,165 | 16,666 | 15,915 | ||||||
Total Liabilities | 1,403,137 | 1,397,312 | 1,295,316 | ||||||
Shareholders' equity | |||||||||
Common stock | 108 | 108 | 107 | ||||||
Additional paid-in capital | 60,064 | 59,862 | 59,286 | ||||||
Retained earnings | 108,677 | 106,673 | 101,736 | ||||||
Net unrealized gain on securities available-for-sale | 2,974 | 1,123 | 2,579 | ||||||
Net unrealized loss on transferred securities | (123 | ) | (112 | ) | (67 | ) | |||
Net unrealized loss on postretirement benefit costs | (156 | ) | (156 | ) | (125 | ) | |||
Total shareholders' equity | 171,544 | 167,498 | 163,516 | ||||||
Total liabilities & shareholders' equity | $ | 1,574,681 | $ | 1,564,810 | $ | 1,458,832 | |||
Common Stock | |||||||||
Number of shares authorized | 18,000,000 | 18,000,000 | 18,000,000 | ||||||
Number of shares issued and outstanding | 10,775,307 | 10,753,855 | 10,734,419 | ||||||
Book value per common share | $ | 15.92 | $ | 15.58 | $ | 15.23 | |||
Tangible book value per common share | $ | 13.13 | $ | 12.78 | $ | 12.43 | |||
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The First Bancorp | ||||||
Consolidated Statements of Income (Unaudited) | ||||||
For the three months ended March 31, | ||||||
In thousands of dollars, except per share data | 2016 | 2015 | ||||
Interest income | ||||||
Interest and fees on loans | $ | 9,734 | $ | 8,855 | ||
Interest on deposits with other banks | 3 | 5 | ||||
Interest and dividends on investments | 3,539 | 3,505 | ||||
Total interest income | 13,276 | 12,365 | ||||
Interest expense | ||||||
Interest on deposits | 1,353 | 1,443 | ||||
Interest on borrowed funds | 1,194 | 1,220 | ||||
Total interest expense | 2,547 | 2,663 | ||||
Net interest income | 10,729 | 9,702 | ||||
Provision for loan losses | 375 | 500 | ||||
Net interest income after provision for loan losses | 10,354 | 9,202 | ||||
Non-interest income | ||||||
Investment management and fiduciary income | 563 | 541 | ||||
Service charges on deposit accounts | 574 | 579 | ||||
Net securities gains | 536 | 1,395 | ||||
Mortgage origination and servicing income | 129 | 197 | ||||
Other operating income | 1,162 | 946 | ||||
Total non-interest income | 2,964 | 3,658 | ||||
Non-interest expense | ||||||
Salaries and employee benefits | 3,598 | 3,720 | ||||
Occupancy expense | 578 | 645 | ||||
Furniture and equipment expense | 796 | 770 | ||||
FDIC insurance premiums | 214 | 230 | ||||
Amortization of identified intangibles | 11 | 25 | ||||
Other operating expense | 2,003 | 1,875 | ||||
Total non-interest expense | 7,200 | 7,265 | ||||
Income before income taxes | 6,118 | 5,595 | ||||
Applicable income taxes | 1,615 | 1,420 | ||||
Net Income | $ | 4,503 | $ | 4,175 | ||
Basic earnings per share | $ | 0.42 | $ | 0.39 | ||
Diluted earnings per share | $ | 0.42 | $ | 0.39 | ||
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The First Bancorp | ||||||
Selected Financial Data (Unaudited) | ||||||
As of and for the three months ended March 31, | ||||||
Dollars in thousands, except for per share amounts | 2016 | 2015 | ||||
Summary of Operations | ||||||
Interest Income | $ | 13,276 | $ | 12,365 | ||
Interest Expense | 2,547 | 2,663 | ||||
Net Interest Income | 10,729 | 9,702 | ||||
Provision for Loan Losses | 375 | 500 | ||||
Non-Interest Income | 2,964 | 3,658 | ||||
Non-Interest Expense | 7,200 | 7,265 | ||||
Net Income | 4,503 | 4,175 | ||||
Per Common Share Data | ||||||
Basic Earnings per Share | $ | 0.42 | $ | 0.39 | ||
Diluted Earnings per Share | 0.42 | 0.39 | ||||
Cash Dividends Declared | 0.220 | 0.210 | ||||
Book Value per Common Share | 15.92 | 15.23 | ||||
Tangible Book Value per Common Share | 13.13 | 12.43 | ||||
Market Value | 19.51 | 17.45 | ||||
Financial Ratios | ||||||
Return on Average Equity (a) | 10.56 | % | 10.32 | % | ||
Return on Average Tangible Common Equity (a) | 12.80 | % | 12.63 | % | ||
Return on Average Assets (a) | 1.15 | % | 1.16 | % | ||
Average Equity to Average Assets | 10.92 | % | 11.26 | % | ||
Average Tangible Equity to Average Assets | 9.00 | % | 9.19 | % | ||
Net Interest Margin Tax-Equivalent (a) | 3.13 | % | 3.10 | % | ||
Dividend Payout Ratio | 52.38 | % | 53.85 | % | ||
Allowance for Loan Losses/Total Loans | 1.02 | % | 1.09 | % | ||
Non-Performing Loans to Total Loans | 0.67 | % | 1.10 | % | ||
Non-Performing Assets to Total Assets | 0.53 | % | 0.91 | % | ||
Efficiency Ratio | 51.45 | % | 56.79 | % | ||
At Period End | ||||||
Total Assets | $ | 1,574,681 | $ | 1,458,832 | ||
Total Loans | 1,004,942 | 939,169 | ||||
Total Investment Securities | 467,211 | 432,684 | ||||
Total Deposits | 1,109,441 | 966,825 | ||||
Total Shareholders' Equity | 171,544 | 163,516 | ||||
(a) Annualized using a 366-day basis for 2016 and a 365-day basis for 2015. | ||||||
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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 2016 and 2015.
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For the three months ended | ||||||
In thousands of dollars | March 31, 2016 | March 31, 2015 | ||||
Net interest income as presented | $ | 10,729 | $ | 9,702 | ||
Effect of tax-exempt income | 748 | 784 | ||||
Net interest income, tax equivalent | $ | 11,477 | $ | 10,486 | ||
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 three months ended | ||||||
In thousands of dollars | March 31, 2016 | March 31, 2015 | ||||
Non-interest expense, as presented | $ | 7,200 | $ | 7,265 | ||
Net interest income, as presented | 10,729 | 9,702 | ||||
Effect of tax-exempt income | 748 | 784 | ||||
Non-interest income, as presented | 2,964 | 3,658 | ||||
Effect of non-interest tax-exempt income | 89 | 45 | ||||
Net securities gains | (536 | ) | (1,395 | ) | ||
Adjusted net interest income plus non-interest income | $ | 13,994 | $ | 12,794 | ||
Non-GAAP efficiency ratio | 51.45 | % | 56.79 | % | ||
GAAP efficiency ratio | 52.58 | % | 54.38 | % | ||
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 three months ended | ||||||
In thousands of dollars | March 31, 2016 | March 31, 2015 | ||||
Average shareholders' equity as presented | $ | 171,554 | $ | 164,142 | ||
Less intangible assets | (30,103 | ) | (30,151 | ) | ||
Tangible average shareholders' equity | $ | 141,451 | $ | 133,991 | ||
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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