0000765207-19-000002.txt : 20190124 0000765207-19-000002.hdr.sgml : 20190124 20190123174753 ACCESSION NUMBER: 0000765207-19-000002 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20190123 ITEM INFORMATION: Results of Operations and Financial Condition FILED AS OF DATE: 20190124 DATE AS OF CHANGE: 20190123 FILER: COMPANY DATA: COMPANY CONFORMED NAME: First Bancorp, Inc /ME/ CENTRAL INDEX KEY: 0000765207 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 010404322 STATE OF INCORPORATION: ME FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-26589 FILM NUMBER: 19538226 BUSINESS ADDRESS: STREET 1: P.O. BOX 940 STREET 2: MAIN STREET CITY: DAMARISCOTTA STATE: ME ZIP: 04543 BUSINESS PHONE: 2075633195 MAIL ADDRESS: STREET 1: P.O. BOX 940 CITY: DAMARISCOTTA STATE: ME ZIP: 04543 FORMER COMPANY: FORMER CONFORMED NAME: FIRST NATIONAL LINCOLN CORP /ME/ DATE OF NAME CHANGE: 19920703 8-K 1 a8-kearnings18q4.htm 8-K Document





UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549


FORM 8-K


CURRENT REPORT


Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of report (Date of earliest event reported): January 23, 2019



THE FIRST BANCORP, INC.
(Exact name of Registrant as specified in charter)

MAINE
(State or other jurisdiction of incorporation)

0-26589
01-0404322
(Commission file number)
(IRS employer identification no.)


Main Street, Damariscotta, Maine
04543
(Address of principal executive offices)
(Zip Code)


(207) 563-3195
(Registrant's telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is
intended to simultaneously satisfy the filing obligations
of the registrant under any of the following provisions:

[_] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[_] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[_] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4 (c))






TABLE OF CONTENTS

Item 2.02 Results of Operations and Financial Condition
Page 1
Item 9.01 Financial Statements and Exhibits
Page 1
Signatures
Page 2
Exhibit Index
Page 3







Section 2 - Financial Information

Item 2.02 Results of Operations and Financial Condition.

On January 23, 2019, the Registrant issued the press release filed herewith as Exhibit 99.1 with information regarding the results of operations and financial condition of The First Bancorp, Inc. for the year ended December 31, 2018.



Section 9 - Financial Statements and Exhibits

Item 9.01 Financial Statements, Pro Forma Financial Information and Exhibits.

(c) Exhibits.
--------

The following Exhibits are being furnished herewith:

99.1 Registrant's Press Release dated January 23, 2019.



1



SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.



THE FIRST BANCORP, INC.


By: /s/ Richard M. Elder

Richard M. Elder
Executive Vice President & Chief Financial Officer

Dated: January 23, 2019



2



Exhibit Index




Exhibit Number    Description of Exhibit




3

EX-99.1 2 ex991earnings18q4.htm EXHIBIT 99.1 Exhibit
Exhibit 99.1



The First Bancorp Reports Record Results for 2018

DAMARISCOTTA, ME, January 23, 2019 – The First Bancorp (Nasdaq: FNLC), parent company of First National Bank, today announced operating results for the year ended December 31, 2018. Unaudited net income was $23.5 million, up $3.9 million or 20.2% from the $19.6 million reported for the year ended December 31, 2017. Earnings per common share on a fully diluted basis were up $0.36 to $2.17 per share, an increase of 19.9% from the prior year. The Company also announced operating results for the three months ended December 31, 2018. Unaudited net income was $6.4 million, up $1.3 million or 25.1% from the final three months of 2017, with earnings per share on a fully diluted basis for the quarter up $0.12 to $0.59, an increase of 25.5% from the same period in 2017.
“I’m pleased to announce that The First Bancorp produced record earnings in the fourth quarter, culminating a record year” remarked Tony C. McKim, the Company’s President and Chief Executive Officer. “Our record results for the year are linked directly to a $102.5 million or 5.8% increase in earning assets in 2018. This growth led to a 6.1% increase in net interest income, which combined with stable non-interest income and controlled expenses ultimately produced pre-tax income growth of 6.3% for the year. Based upon the strength of the Company’s earnings, we declared a dividend of 29 cents per share in the fourth quarter, representing a payout to our shareholders of 49.15% of net income for the period.”
 2018 FINANCIAL HIGHLIGHTS
Net Income for the year increased 20.2% over 2017.
Low Cost deposits as of December 31, 2018 totaled $784 million, an increase of $87.7 million or 12.6% year-over-year.
Total loans outstanding at December 31, 2018 were $1.24 billion, up $74.1 million or 6.4%, year-over-year.

1


Efficiency Ratio (non-GAAP) stood at 51.50% for 2018, up from 49.72% in 2017 due primarily to a change in the federal income tax rate (the GAAP Efficiency Ratio was 53.28% for the year, up marginally from 52.88% in 2017).
The ratio of non-performing assets to total assets at December 31, 2018 was 0.79%, down from 0.86% at December 31, 2017.
FINANCIAL CONDITION
Total assets at December 31, 2018 were $1.95 billion, up $102.7 million from the prior year end. Nearly all of this growth was in earning assets which increased $102.5 million year over year, including loan growth of $74.1 million and investment portfolio growth of $20.5 million.

Total deposits at December 31, 2018 were $1.53 billion, up $108.2 million or 7.6% from December 31, 2017. Growth was concentrated in low-cost deposits which were up $87.7 million, or 12.6% for the year. Deposit growth allowed for an $18.4 million year-over-year reduction in borrowed funds.

The Company’s capital position remained strong as of December 31, 2018, with an estimated total risk-based capital ratio of 15.55%, and an estimated leverage capital ratio of 8.60%, both well in excess of regulatory requirements.
ASSET QUALITY
Asset quality remains solid and stable. As of December 31, 2018, non-performing assets as a percentage of total assets were 0.79%, down from 0.86% a year earlier. Past due loans were 1.08% of total loans at December 31, 2018, down from 1.60% of total loans at December 31, 2017. A total of $167,000 was provisioned for loan losses in the fourth quarter of 2018, bringing the total for the year to $1.5 million, down from the $250,000 and $2.0 million, respectively, provisioned in 2017. The allowance for loan losses stood at 0.91% of total loans as of December 31, 2018, down slightly from the 0.92% of total loans at December 31, 2017. Net charge-offs as a percentage of loans in 2018 were 0.08% as of December 31, 2018, down from 0.12% in 2017 and 0.13% in 2016.


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OPERATING RESULTS
Net Income for the year ended December 31, 2018 was $23.5 million, up $3.9 million or 20.2% from the year ended December 31, 2017. On a fully diluted earnings per share basis, 2018 earnings were $2.17, up $0.36 or 19.9% from the prior year. The Company’s Return on Average Assets of 1.23% and Return on Average Tangible Common Equity of 15.18% for the year ended December 31, 2018, were up from 1.10% and 13.11% respectively from the year ended December 31, 2017.
For the three months ended December 31, 2018, net income was $6.4 million, an increase of $1.3 million, or 25.1% from the same period in 2017. Fully diluted earnings per share for the fourth quarter of 2018 were $0.59, up $0.12, or 25.5% from the fourth quarter of 2017.
Contributing factors to the Company’s 2018 annual and fourth quarter results included:
Earning asset growth led to a $1.1 million increase in tax-equivalent net interest income year-over-year, despite a decline in the net interest margin from 3.04% to 2.91%. In the fourth quarter of 2018 tax equivalent net interest income was up $359,000 from the same period in 2017. Net interest margin in the fourth quarter of 2018 was 2.92%, down from 3.06% for the same period last year. The quarterly and year-to-date margin declines are due to higher funding costs and a reduced benefit from tax-exempt assets.
Non-interest income net of securities gains was $12.5 million for the year ended December 31, 2018, up $386,000 or 3.2% from 2017. Year-to-year revenue growth of 13.1% at First National Wealth Management, the Bank’s trust and investment management division, and a 5.4% increase in deposit-based charges more than offset a 15.5% decline in mortgage banking income.
Non-interest expense for 2018 was up $1.8 million or 5.7% from 2017 primarily due to increased employee expense incurred to support the Company’s growth.
Continued benefits from the Tax Cuts and Jobs Act of 2017 which reduced the Company’s 2018 income tax expense by $2.3 million from that incurred in 2017.




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STOCK PERFORMANCE
On December 20, 2018 the Company’s Board of Directors declared a dividend for the fourth quarter of $0.29 per share, payable on January 31, 2019 to shareholders of record as of January 12, 2019. The company’s stock closed at $26.30 per share on December 31, 2018, down from $27.23 a year ago. With dividends re-invested, shares of The First Bancorp provided shareholders with a total annualized return of 0.20% for the year ended December 31, 2018, 44.25% for the three years then ended, and 86.32% over the five years then ended. The Company’s total return compares favorably with the broad market over the same periods as measured by the S&P 500 with returns of -4.39%, 30.39% and 54.06% respectively, and the Russell 2000, in which we are included, with total returns of -11.03%, 23.69%, and 26.46% respectively. The First Bancorp’s stock performance also compared favorably to the banking industry over these same time horizons as measured by the KBW Regional Bank Index with total returns of -17.49%, 16.87%, and 28.70%% respectively, and the NASDAQ Bank Index with total returns of -16.17%, 21.96% and 41.23% respectively.















4


The First Bancorp
Consolidated Balance Sheets (Unaudited)
 
In thousands of dollars except common stock data
December 31, 2018
December 31, 2017
Assets
 
 
Cash and due from banks
$
19,134

$
19,207

Interest-bearing deposits in other banks
12,079

860

Securities available for sale
317,416

297,199

Securities to be held to maturity
255,663

256,567

Restricted equity securities, at cost
11,586

10,358

Loans held for sale

386

Loans
1,238,283

1,164,139

Less allowance for loan losses
11,232

10,729

Net loans
1,227,051

1,153,410

Accrued interest receivable
6,660

5,867

Premises and equipment
22,056

22,502

Other real estate owned
584

1,012

Goodwill
29,805

29,805

Other assets
43,556

45,757

Total assets
$
1,945,590

$
1,842,930

Liabilities
 
 
Demand deposits
$
163,575

$
145,332

NOW deposits
382,923

318,043

Money market deposits
152,043

163,898

Savings deposits
237,135

232,605

Certificates of deposit
372,464

284,066

Certificates $100,000 to $250,000
162,185

232,759

Certificates $250,000 and over
56,760

42,176

Total deposits
1,527,085

1,418,879

Borrowed funds
210,317

228,758

Other liabilities
16,646

13,972

Total Liabilities
1,754,048

1,661,609

Shareholders' equity
 
 
Common stock
109

108

Additional paid-in capital
62,746

61,747

Retained earnings
132,460

121,144

Net unrealized loss on securities available-for-sale
(5,051
)
(2,901
)
Net unrealized loss on securities transferred from available for sale to held to maturity
(197
)
(174
)
Net unrealized gain on cash flow hedging derivative instruments
1,438

1,544

Net unrealized gain (loss) on postretirement benefit costs
37

(147
)
Total shareholders' equity
191,542

181,321

Total liabilities & shareholders' equity
$
1,945,590

$
1,842,930

Common Stock
 
 
Number of shares authorized
18,000,000

18,000,000

Number of shares issued and outstanding
10,862,651

10,829,918

Book value per common share
$
17.63

$
16.74

Tangible book value per common share
$
14.87

$
13.97


5


The First Bancorp
Consolidated Statements of Income (Unaudited)
 
 
 
 
For the year ended December 31,
For the quarter ended December 31,
In thousands of dollars, except per share data
2018
2017
2018
2017
Interest income
 
 
 
 
Interest and fees on loans
$
53,548

$
45,373

14,384

11,958

Interest on deposits with other banks
242

52

110

6

Interest and dividends on investments
16,753

15,407

4,307

3,858

     Total interest income
70,543

60,832

18,801

15,822

Interest expense
 
 
 
 
Interest on deposits
15,970

9,479

4,839

2,710

Interest on borrowed funds
4,364

4,050

967

904

     Total interest expense
20,334

13,529

5,806

3,614

Net interest income
50,209

47,303

12,995

12,208

Provision for loan losses
1,500

2,000

167

250

Net interest income after provision for loan losses
48,709

45,303

12,828

11,958

Non-interest income
 
 
 
 
Investment management and fiduciary income
3,030

2,680

745

685

Service charges on deposit accounts
2,194

2,081

570

519

Net securities gains
137

471



Mortgage origination and servicing income
1,565

1,853

523

593

Other operating income
5,674

5,463

1,415

1,413

     Total non-interest income
12,600

12,548

3,253

3,210

Non-interest expense
 
 
 
 
Salaries and employee benefits
17,641

16,601

4,411

4,491

Occupancy expense
2,435

2,400

564

584

Furniture and equipment expense
3,924

3,681

1,108

979

FDIC insurance premiums
1,226

1,008

276

246

Amortization of identified intangibles
43

43

11

11

Other operating expense
8,198

7,918

2,126

1,989

     Total non-interest expense
33,467

31,651

8,496

8,300

Income before income taxes
27,842

26,200

7,585

6,868

Applicable income taxes
4,306

6,612

1,222

1,782

Net Income
$
23,536

$
19,588

$
6,363

$
5,086

Basic earnings per share
$
2.18

$
1.82

$
0.59

$
0.47

Diluted earnings per share
2.17

1.81

0.59

0.47



6


The First Bancorp
Selected Financial Data (Unaudited)
 
 
 
Dollars in thousands,
For the year ended December 31,
For the quarter ended December 31,
except for per share amounts
2018
2017
2018
2017
 
 
 
 
 
Summary of Operations
 
 
 
 
Interest Income
$
70,543

$
60,832

$
18,801

$
15,822

Interest Expense
20,334

13,529

5,806

3,614

Net Interest Income
50,209

47,303

12,995

12,208

Provision for Loan Losses
1,500

2,000

167

250

Non-Interest Income
12,600

12,548

3,253

3,210

Non-Interest Expense
33,467

31,651

8,496

8,300

Net Income
23,536

19,588

6,363

5,086

Per Common Share Data
 
 
 
 
Basic Earnings per Share
$
2.18

$
1.82

$
0.59

$
0.47

Diluted Earnings per Share
2.17

1.81

0.59

0.47

Cash Dividends Declared
1.11

0.95

0.29

0.24

Book Value per Common Share
17.63

16.74

17.63

16.74

Tangible Book Value per Common Share
14.87

13.97

14.87

13.97

Market Value
26.30

27.23

26.30

27.23

Financial Ratios
 
 
 
 
Return on Average Equity (a)
12.72
%
10.91
%
13.44
%
11.06
%
Return on Average Tangible Common Equity (a)
15.18
%
13.11
%
16.00
%
13.25
%
Return on Average Assets (a)
1.23
%
1.10
%
1.29
%
1.11
%
Average Equity to Average Assets
9.70
%
10.04
%
9.63
%
10.05
%
Average Tangible Equity to Average Assets
8.13
%
8.36
%
8.09
%
8.39
%
Net Interest Margin Tax-Equivalent (a)
2.91
%
3.04
%
2.92
%
3.06
%
Dividend Payout Ratio
50.92
%
52.20
%
49.15
%
51.06
%
Allowance for Loan Losses/Total Loans
0.91
%
0.92
%
0.91
%
0.92
%
Non-Performing Loans to Total Loans
1.19
%
1.27
%
1.19
%
1.27
%
Non-Performing Assets to Total Assets
0.79
%
0.86
%
0.79
%
0.86
%
Efficiency Ratio
51.50
%
49.72
%
50.46
%
50.34
%
At Period End
 
 
 
 
Total Assets
$
1,945,590

$
1,842,930

$
1,945,590

$
1,842,930

Total Loans
1,238,283

1,164,139

1,238,283

1,164,139

Total Investment Securities
584,665

564,124

584,665

564,124

Total Deposits
1,527,085

1,418,879

1,527,085

1,418,879

Total Shareholders' Equity
191,542

181,321

191,542

181,321

(a) Annualized using a 365-day basis for both 2018 and 2017





7


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.

8


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 21.0% tax rate was used in 2018 and 35.0% tax rate in 2017.
 
For the year ended December 31,
For the quarter ended December 31,
In thousands of dollars
2018
2017
2018
2017
Net interest income as presented
$
50,209

$
47,303

$
12,995

$
12,208

Effect of tax-exempt income
2,156

3,935

553

981

Net interest income, tax equivalent
$
52,365

$
51,238

$
13,548

$
13,189

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 year ended December 31,
For the quarter ended December 31,
In thousands of dollars
2018
2017
2018
2017
Non-interest expense, as presented
$
33,467

$
31,651

$
8,496

$
8,300

Net interest income, as presented
50,209

47,303

12,995

12,208

Effect of tax-exempt income
2,156

3,935

553

981

Non-interest income, as presented
12,600

12,548

3,253

3,210

Effect of non-interest tax-exempt income
162

338

38

90

Net securities gains
(137
)
(471
)


Adjusted net interest income plus non-interest income
$
64,990

$
63,653

$
16,839

$
16,489

Non-GAAP efficiency ratio
51.50
%
49.72
%
50.46
%
50.34
%
GAAP efficiency ratio
53.28
%
52.88
%
52.29
%
53.83
%

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

9


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:
 
For the year ended December 31,
For the quarter ended December 31,
In thousands of dollars
2018
2017
2018
2017
Average shareholders' equity as presented
$
185,049

$
179,473

$
187,766

$
176,417

  Less intangible assets
(30,001
)
(30,044
)
(29,978
)
(30,064
)
Tangible average shareholders' equity
$
155,048

$
149,429

$
157,788

$
146,353


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 Richard M. Elder, The First Bancorp's Treasurer & Chief Financial Officer, at 207.563.3195.






10