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DAMARISCOTTA, ME--(BUSINESS WIRE)--The First Bancorp (Nasdaq: FNLC), parent company of First National Bank, today announced operating results for the year ended December 31, 2022. Unaudited net income was $39.0 million, an increase of 7.5% from the $36.3 million reported for the year ended December 31, 2021. Net of non-recurring Payroll Protection Program (PPP) revenue, unaudited net income for 2022 was up 14.6% over 2021. Earnings per common share on a fully diluted basis were up $0.23 to $3.53 per share, an increase of 7.0% from the prior year. The Company also announced operating results for the three months ended December 31, 2022. Unaudited net income was $9.2 million, a decrease of 3.7% from the final three months of 2021. Net of non-recurring PPP revenue, unaudited net income for the three months ended December 31, 2022 was up 6.3% from the same period in 2021. Earnings per share on a fully diluted basis for the fourth quarter of 2022 were $0.83, down $0.04 or 4.6% from the fourth quarter of 2021.

“I'm pleased to report that The First Bancorp closed 2022 with record annual earnings of $39.0 million", commented Tony C. McKim, the Company’s President and Chief Executive Officer. "Driving our 2022 earnings performance was a 14.9% year-over-year increase in net interest income before loan loss provision which resulted from loan growth of $267.0 million or 16.2% for the year. Our net interest margin for the year was 3.15%, up from 2.95% in 2021. The increase in annual net interest income helped to mitigate a sharp reduction in mortgage banking revenue from the prior year. Operating costs remained largely in check as demonstrated by an efficiency ratio of 45.96% for the year."

Mr. McKim continued, "In the fourth quarter of 2022, the Company had net income of $9.2 million as compared to net income of $9.5 million in the fourth quarter of 2021. On a pre-tax, pre-provision basis (PTPP) (non-GAAP), net income for the fourth quarter of 2022 was $11.6 million compared to $9.6 million in the fourth quarter of 2021, when a reverse provision for loan losses of $2.0 million was recorded. Net interest income before loan loss provision in the fourth quarter of 2022 increased 10.1% from the fourth quarter of 2021, a period which included $1.1 million in interest income attributable to PPP compared to zero in the fourth quarter of 2022. Non-interest income declined $952,000 period-to-period attributable to mortgage banking revenue and recognition of certain one-time gains in the fourth quarter of 2021. Operating expenses for the fourth quarter of 2022 decreased by $1.1 million from the fourth quarter of 2021, the result of one-

"Reflecting upon the year just concluded, a number of accomplishments stand out. We opened our eighteenth office in Brewer, Maine and look forward to serving that community for many years to come. A new online banking and mobile banking platform was introduced to enhance user experience and engagement. The Bank funded a total of $713 million in new loans in 2022 to benefit businesses and consumers across our footprint. Through donations, sponsorships and volunteerism we continue to support numerous causes and events throughout the State, and we were proud to announce a $300,000 long-term commitment to the Maine Lobsterman's Association. Finally, we were pleased to be honored as a Piper Sandler Companies Sm-All Star for 2022, the only company in New England to be so honored. These accomplishments and many more are made possible by our team of more than 270 bankers whose efforts on behalf of our customers and communities continue to stand out each and every day."

Total assets at December 31, 2022 were $2.74 billion, up $212.1 million from the prior year end. Earning assets increased $190.5 million year-over-year, as loan balances grew $267.0 million, interest-bearing cash balances declined by $63.0 million and investments declined by $13.7 million. Loan portfolio growth in 2022 was led by commercial real estate and construction loans which increased $137.7 million, including $25.5 million in the fourth quarter. Residential mortgage and construction loans increased $81.3 million year-over-year, other commercial loans increased $54.8 million and home equity line of credit balances increased by $2.9 million. Overall loan growth excluding PPP totaled $289.0 million, or 17.8% for the year. PPP loan balances were near zero at year-end 2022.

The Company’s capital position remained strong as of December 31, 2022, with an estimated total risk-based capital ratio of 13.65%, and an estimated leverage capital ratio of 9.01%. These measures compare to 14.27% and 8.63% respectively as of December 31, 2021. The Company's tangible book value was $17.93 per share as of December 31, 2022, a decrease from $19.52 a year earlier, and up from $17.13 as of September 30, 2022. The period to period changes are the result of changes in the unrealized loss position on available for sale securities. Removing the effect of these unrealized losses, the adjusted tangible book value (non-GAAP) as of these dates would have been $21.98 as of December 31, 2022, $19.68 as of December 31, 2021, and $21.44 as of September 30, 2022.

Asset quality continues to be strong and stable. As of December 31, 2022, the ratio of non-performing assets to total assets was 0.06%, improved from 0.23% a year earlier. The ratio of non-performing loans to total loans stood at 0.09%, improved from 0.35% at December 31, 2021. Net charge-offs as a percentage of loans were 0.03% as of December 31, 2022, up slightly from 0.02% in 2021 and down from 0.10% in 2020. Past due loans were 0.08% of total loans as of December 31, 2022, down from 0.26% of total loans at December 31, 2021.

The allowance for loan losses stood at 0.87% of total loans as of December 31, 2022, down modestly from 0.94% of total loans at December 31, 2021. Management considers the allowance to be at an appropriate level given the strong asset quality metrics at year-end. As reported in the Company's earnings release for the third quarter of 2022, the Bank has no remaining active COVID-19 related modifications in its loan portfolio.

Net income for the year ended December 31, 2022 was $39.0 million, up $2.7 million or 7.5% from the year ended December 31, 2021. On a fully diluted earnings per share basis, 2022 earnings were $3.53, up $0.23 or 7.0% from the prior year. The Company’s Return on Average Assets for the year ended December 31, 2022 was 1.49% , up slightly from 1.48% for the year ended December 31, 2021. On a PTPP (non-GAAP) basis, 2022 Return on Average Assets was 1.87%, up from 1.78% the prior year. Return on Average Tangible Common Equity was 19.15% for the year ended

December 31, 2022, up from 17.64% for the year ended December 31, 2021. On a PTPP basis (non-GAAP), Return on Average Tangible Common Equity for 2022 was 24.13%, up from 21.18% in 2021. The Company's Efficiency Ratio (non-GAAP) was 45.96% for the year ended December 31, 2022, improved from 47.81% in 2021. (GAAP Efficiency Ratio was 47.19% for the year ended December 31, 2022, down from 49.19% in 2021.)

•Earning asset growth coupled with a wider balance sheet spread led to a $9.9 million increase in tax-equivalent net interest income year-over-year, an increase of 14.4%. In the fourth quarter of 2022, tax equivalent net interest income was up $1.8 million from the same period in 2021, an increase of 10.0%. The period-to-period increases include net reductions in PPP related interest income of $2.7 million for the year and $1.1 million in the fourth quarter.

•Non-interest income before net securities gains was $16.9 million for the year ended December 31, 2022, down $2.5 million or 12.9% from 2021. The decrease in non-interest income is primarily attributable to a 72.8% reduction in mortgage banking revenue from 2021, as higher interest rates dramatically slowed refinance activity from the elevated levels of the prior two years, and negatively impacted both gain on sale income and mortgage servicing rights valuation. Debit card revenue increased 21.9% year-over-year, while a 1.6% increase in revenues was achieved by First National Wealth Management, the Bank’s trust and investment management division, despite adverse market conditions.

•Non-interest expense for 2022 was $43.9 million, up $1.8 million or 4.2% from 2021. Employee salary and benefit expense increased 10.2% from the prior year, partially the result of increased staffing associated with the Bank's opening of a new branch. Occupancy expense, furniture & equipment expense, and FDIC insurance premiums each had modest dollar increases from 2021. Other operating expenses decreased 9.1% year-to-year attributable to loan sale expenses recognized in the fourth quarter of 2021.

The First Bancorp, the parent company of First National Bank, is based in Damariscotta, Maine. Founded in 1864, First National Bank is a full-service community bank with $2.71 billion in assets. The Bank provides a complete array of commercial and retail banking services through eighteen locations in mid-coast and eastern Maine. First National Wealth Management, a division of the Bank, provides investment management and trust services to individuals, businesses, and municipalities. More information about The First Bancorp, First National Bank and First National Wealth Management may be found at www.thefirst.com.


The First Bancorp
Consolidated Balance Sheets (Unaudited)

In thousands of dollars, except per share data	December 31, 2022		December 31, 2021
Assets
Cash and due from banks	$	22,728	$	20,634
Interest-bearing deposits in other banks	3,693		66,678
Securities available for sale	284,509		320,566
Securities to be held to maturity	393,896		370,040
Restricted equity securities, at cost	3,883		5,365
Loans held for sale	275		835
Loans	1,914,674		1,647,649
Less allowance for loan losses	16,723		15,521
Net loans	1,897,951		1,632,128
Accrued interest receivable	9,829		7,544
Premises and equipment	28,277		28,949

Goodwill	30,646		30,646
Other assets	63,491		43,714
Total assets	$	2,739,178	$	2,527,099
Liabilities
Demand deposits	$	318,626	$	334,945
NOW deposits	630,416		655,061
Money market deposits	192,632		206,901
Savings deposits	369,532		360,185
Certificates of deposit	489,793		252,568
Certificates $100,000 to $250,000	259,614		258,211
Certificates $250,000 and over	118,264		55,426
Total deposits	2,378,877		2,123,297
Borrowed funds	103,483		136,342
Other liabilities	27,895		21,803
Total Liabilities	2,510,255		2,281,442
Shareholders' equity

Common stock	110		110
Additional paid-in capital	68,435		66,830
Retained earnings	204,343		180,417
Net unrealized loss on securities available for sale	(44,718)		(1,718)
Net unrealized loss on securities transferred from available for sale to held to maturity	(64)		(87)
Net unrealized gain on cash flow hedging derivative instruments	544		—
Net unrealized gain on postretirement costs	273		105
Total shareholders' equity	228,923		245,657
Total liabilities & shareholders' equity	$	2,739,178	$	2,527,099
Common Stock
Number of shares authorized	18,000,000		18,000,000
Number of shares issued and outstanding	11,045,186		10,998,765
Book value per common share	$	20.73	$	22.33
Tangible book value per common share	$	17.93	$	19.52


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	2022		2021		2022		2021
Interest income
Interest and fees on loans	$	75,805	$	62,195	$22,342		$16,331
Interest on deposits with other banks	315		72		152		27
Interest and dividends on investments	16,915		14,814		4,586		3,641
Total interest income	93,035		77,081		27,080		19,999
Interest expense
Interest on deposits	15,359		7,314		7,169		1,518
Interest on borrowed funds	1,510		3,464		427		785
Total interest expense	16,869		10,778		7,596		2,303
Net interest income	76,166		66,303		19,484		17,696
Provision (credit) for loan losses	1,750		(375)		450		(1,950)
Net interest income after provision (credit) for loan losses	74,416		66,678		19,034		19,646
Non-interest income
Investment management and fiduciary income	4,600		4,529		1,087		1,177
Service charges on deposit accounts	1,825		1,568		467		436
Net securities gains	7		23		—		1
Mortgage origination and servicing income	1,424		5,236		190		885
Debit card income	6,348		5,208		1,464		1,333
Other operating income	2,670		2,819		639		967
Total non-interest income	16,874		19,383		3,847		4,799
Non-interest expense
Salaries and employee benefits	23,316		21,152		6,224		5,552
Occupancy expense	3,052		2,841		754		693
Furniture and equipment expense	5,058		4,788		1,318		1,253
FDIC insurance premiums	1,068		824		330		224

Amortization of identified intangibles	69		69		17		17
Other operating expense	11,341		12,474		3,068		5,107
Total non-interest expense	43,904		42,148		11,711		12,846
Income before income taxes	47,386		43,913		11,170		11,599
Applicable income taxes	8,396		7,644		1,973		2,053
Net Income	$	38,990	$	36,269	$	9,197	$	9,546
Basic earnings per share	$	3.56	$	3.33	$	0.84	$	0.87
Diluted earnings per share	$	3.53	$	3.30	$	0.83	$	0.87


The First Bancorp
Selected Financial Data (Unaudited)

	For the year ended December 31,						For the quarter ended December 31,
Dollars in thousands, except for per share amounts	2022			2021			2022			2021

Summary of Operations
Interest Income	$	93,035		$	77,081		$	27,080		$	19,999
Interest Expense	16,869			10,778			7,596			2,303
Net Interest Income	76,166			66,303			19,484			17,696
Provision (credit) for Loan Losses	1,750			(375)			450			(1,950)
Non-Interest Income	16,874			19,383			3,847			4,799
Non-Interest Expense	43,904			42,148			11,711			12,846
Net Income	38,990			36,269			9,197			9,546
Per Common Share Data
Basic Earnings per Share	$	3.56		$	3.33		$	0.84		$	0.87
Diluted Earnings per Share	3.53			3.30			0.83			0.87
Cash Dividends Declared	1.34			1.27			0.34			0.32
Book Value per Common Share	20.73			22.33			20.73			22.33
Tangible Book Value per Common Share	17.93			19.52			17.93			19.52
Market Value	29.94			31.40			29.94			31.40
Financial Ratios
Return on Average Equity (a)	16.63		%	15.33		%	16.15		%	15.47		%
Return on Average Tangible Common Equity (a)	19.15		%	17.64		%	18.71		%	17.71		%
Return on Average Assets (a)	1.49		%	1.48		%	1.34		%	1.49		%
Average Equity to Average Assets	8.94		%	9.67		%	8.32		%	9.65		%
Average Tangible Equity to Average Assets	7.76		%	8.41		%	7.18		%	8.43		%
Net Interest Margin Tax-Equivalent (a)	3.15		%	2.95		%	3.09		%	3.00		%
Dividend Payout Ratio	37.64		%	38.14		%	40.48		%	36.78		%
Allowance for Loan Losses/Total Loans	0.87		%	0.94		%	0.87		%	0.94		%
Non-Performing Loans to Total Loans	0.09		%	0.35		%	0.09		%	0.35		%
Non-Performing Assets to Total Assets	0.06		%	0.23		%	0.06		%	0.23		%
Efficiency Ratio	45.96		%	47.81		%	48.83		%	55.61		%
At Period End
Total Assets	$	2,739,178		$	2,527,099		$	2,739,178		$	2,527,099
Total Loans	1,914,674			1,647,649			1,914,674			1,647,649
Total Investment Securities	682,288			695,971			682,288			695,971
Total Deposits	2,378,877			2,123,297			2,378,877			2,123,297
Total Shareholders' Equity	228,923			245,657			228,923			245,657
(a) Annualized using a 365-day basis for 2022 and 2021

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 (including for purposes of determining the compensation of certain executive officers and other Company employees) and believes that these non-GAAP financial measures provide a greater understanding of ongoing operations and enhance comparability of results with prior periods and with other financial institutions, as well as demonstrating the effects of significant gains and charges in the current period, in light of the disclosure practices employed by many other publicly-traded financial institutions. 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 Company presents its efficiency ratio using non-GAAP information which is most commonly used by financial institutions. The GAAP-based efficiency ratio is non-interest expenses divided by net interest income plus non-interest income from the Consolidated Statements of Income. The non-GAAP efficiency ratio excludes securities losses and other-than-temporary impairment charges from non-interest expenses, excludes securities gains from non-interest 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	December 31, 2022			December 31, 2021			December 31, 2022			December 31, 2021
Non-interest expense, as presented	$	43,904		$	42,148		$	11,711		$	12,846
Net interest income, as presented	76,166			66,303			19,484			17,696
Effect of tax-exempt interest income	2,326			2,325			607			563
Non-interest income, as presented	16,874			19,383			3,847			4,799
Effect of non-interest tax-exempt income	170			168			43			44
Net securities gain	(7)			(23)			—			(1)
Adjusted net interest income plus non-interest income	$	95,529		$	88,156		$	23,981		$	23,101
Non-GAAP efficiency ratio	45.96		%	47.81		%	48.83		%	55.61		%
GAAP efficiency ratio	47.19		%	49.19		%	50.20		%	57.11		%

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 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:


	Period Ending
In thousands of dollars except per share data	December 31, 2022		December 31, 2021
Shareholders' Equity	$	228,923	$	245,657
Intangible Assets	(30,856)		(30,925)
Tangible Common Equity	198,067		214,732
Unrealized Losses on Available for Sale Securities, net of tax	44,718		1,718
Adjusted Tangible Common Equity	$	242,785	$	216,450
Adjusted Tangible Book Value Per Share	$21.98		$19.68


	For the years ended				For the quarters ended
In thousands of dollars	December 31, 2022		December 31, 2021		December 31, 2022		December 31, 2021
Net Income (GAAP)	$	38,990	$	36,269	$	9,197	$	9,546
Interest Income Attributable to PPP Fee Recognition	(1,252)		(3,950)		—		(1,142)
Change in Income Taxes Attributable to PPP Fee Recognition	271		854		—		247
Net Income without PPP (non-GAAP)	$	38,009	$	33,173	$	9,197	$	8,651

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.


	For the years ended				For the quarters ended
In thousands of dollars	December 31, 2022		December 31, 2021		December 31, 2022		December 31, 2021
Average shareholders' equity as presented	$	234,521	$	236,564	$	225,940	$	244,874

Less intangible assets	(30,892)		(30,962)		(30,884)		(30,994)
Tangible average shareholders' equity	$	203,629	$	205,602	$	195,056	$	213,880