DAMARISCOTTA, ME, April 19, 2017 – The First Bancorp (Nasdaq: FNLC), parent company of First National Bank, today announced operating results for the three months ended March 31, 2017. Net income was $4.6 million, up $134,000 or 3.0% from the first three months of 2016 and earnings per common share on a fully diluted basis of $0.43 were up $0.01 or 2.4% from the same period in 2016.
“This was the best quarter in the Company’s history,” Tony C. McKim, the Company’s President and Chief Executive Officer observed. “The spread business – what we earn on loans and investments less what we pay for funding – remains our core business, and increased net interest income resulting from strong growth in earning assets continues to drive our performance. In addition, we achieved these record quarterly earnings without relying on securities gains compared to $536,000 of gains in the first quarter of 2016. We maintained the dividend at 23 cents per share in the first quarter and we continue to pay out more than half of our net income to our shareholders in the form of cash dividends.
“We have seen very strong growth on both sides of the balance sheet in the first quarter and over the past year,” noted President McKim. “Earning assets grew $49.2 million in the first three months of 2017 and are $182.7 million higher than a year ago. Total loans have increased $18.2 million or 1.7% year-to-date, and, year-over-year, are up $84.8 million or 8.4%. The investment portfolio is up $27.6 million or 5.1% year-to-date, and year-over-year, the portfolio is up $99.6 million or 21.3%. On the funding side of the balance sheet, low-cost deposits are up $36.4 million or 5.7% since year end and $115.1 million or 20.5% year-over-year. At the same time, First Advisors’ growth in assets under management resulted in investment management income being up 12.1% for the first three months of 2017 compared to the same period last year.
“Net interest income on a tax-equivalent basis for the first three months of 2017 was up $945,000 or 8.2% from the same period in 2016,” President McKim continued, “with all of the increase attributable to growth in earning assets, which fully offset our net interest margin slipping to 3.05% in 2017 versus 3.13% in 2016. Non-interest income for the first three months of 2017 was down $121,000 or 4.1% from the first three months of 2016 due to the lack of gains from sale of securities. This drop was partly offset, however, by a $203,000 or 157.4% increase in mortgage origination income. Non-interest expense for the first three months of 2017 was $498,000 or 6.9% above the same period in 2016, primarily due to higher employee costs and increased FDIC Insurance premiums.
“Our credit quality remains strong,” President McKim noted. “Non-performing assets stood at 0.52% of total assets as of March 31, 2017 – slightly below the 0.53% level of non-performing assets a year ago and up slightly from 0.48% at year end. Past-due loans were 0.96% of total loans at March 31, 2017, down from 1.18% at December 31, 2016 and up from 0.82% a year ago. We provisioned $500,000 for loan losses in the first three months of 2017, up $125,000 from the amount we provisioned in the first three months of 2016. The allowance for loan losses stood at 0.95% of total loans as of March 31, 2017, even with our level at December 31, 2016 and down from 1.02% of total loans at March 31, 2016.”
“The combination of asset growth and strong earnings can be seen in our operating ratios,” observed F. Stephen Ward, the Company’s Chief Financial Officer. “Our return on average assets was 1.07% and our return
on average tangible common equity was 12.92% for the first three months of 2017 compared to 1.15% and 12.80%, respectively, for the first three months of 2016. We continue to outperform the Bank’s UPBR peer group, which had a return on average assets of 1.00% and a return on average tangible common equity of 9.55% as of December 31, 2016. Our ratios placed us in the 71st and 82nd percentiles, respectively, compared to peer. Our efficiency ratio stood at 50.17% for the first three months of 2017 compared to 51.45% for the first three months of 2016 and remains well below the Bank’s UBPR peer group average which stood at 63.70% as of December 31, 2016.
“The First Bancorp’s stock closed at $27.25 price per share on March 31, 2017,” Mr. Ward noted. up from $19.51 a year ago and down from our year-end close at $33.10 per share. With dividends reinvested, our 12-month total return was 45.79%. We outperformed the broad market during this period, as measured by the S&P 500 which had a total return with dividends reinvested of 17.16%, as well the Russell 2000, in which we are included, which had a total return of 26.19%. We also outperformed the banking industry, with total returns year to date of 40.76% for the KBW Regional Bank Index and 42.87% for the Nasdaq Bank Index.”
“The Board of Directors maintained the quarterly dividend at 23 cents per share in the first quarter of 2017,” President McKim commented. “Based on the March 31, 2017 closing price of $27.25 per share, our annualized dividend yield is a respectful 3.38%. In managing our capital, we continue to balance the dividend payout level with retaining sufficient earnings to remain well capitalized and support future asset growth while remaining mindful that the dividend continues to be one of the major reasons people invest in our stock.
“We are off to an excellent start in 2017,” President McKim concluded. “Continued healthy growth on both sides of the balance sheet led to increased net interest income and we produced this record quarter without reliance on securities gains. We have a tremendous team of people at First National Bank and it is their dedication, hard work and customer focus which ultimately generates these record results and contributes to our ongoing success.”
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