The First Bancorp Announces Second Quarter Results

Strong Year-Over-Year Net Income Growth, Net Interest Margin Expansion, and Continued Favorable Asset Quality Highlight Second Quarter Performance

The First Bancorp (NASDAQ:FNLC), ("the Company", "we", "us", "our"), parent company of First National Bank, today reported unaudited results for the quarter ended June 30, 2025. Net income for the period was $8.1 million with fully diluted earnings per share of $0.72. The Company also reported unaudited results for six months ended June 30, 2025, with net income for the period of $15.1 million and fully diluted earnings per share of $1.35.

Second Quarter Notable Items:

• Net Income of $8.1 million is the strongest earnings quarter since Q4 2022 and represents:
  • growth of 30.7% from Q2 2024; diluted EPS growth of 30.0%
  • growth of 13.9% from Q1 2025; diluted EPS growth of 13.7%
• Total assets reached $3.20 billion, an increase of $12.1 million in Q2
• Efficiency Ratio improved to 52.39%
• Net Interest Margin of 2.52% is highest since Q1 2023 and is:
  • an increase of 31 basis points from Q2 2024
  • an increase of 4 basis points from Q1 2025
• Ratio of Non-Performing Assets to Total Assets of 0.19%
• Tangible Book Value per share rose to $20.94, up 9.1% from Q2 2024
• Quarterly shareholder dividend increased to $0.37 per share

CEO COMMENTS

"I am pleased to report continued improvement in operating results for the second quarter of 2025, demonstrated by our highest level of quarterly earnings since the fourth quarter of 2022," commented Tony C. McKim, the Company's President and Chief Executive Officer. "Net income of $8.1 million for the quarter is an increase of 30.7% from the second quarter of 2024, and year-to-date through six months, earnings have increased 24.2% from a year ago.

"The primary driver of the Company's improved performance is higher levels of net interest income spurred by earning asset growth and margin expansion. Our net interest margin improved to 2.52% in the second quarter of 2025, a lift of 31 basis points from the 2.21% margin from the same period a year ago, while earning assets have increased $115.5 million.

"Balance sheet expansion was slower in the second quarter and was centered in the loan portfolio," continued Mr. McKim. "New loan production during the quarter totaled $132 million as we continue to be selective in the credits and pricing structures being added to the Bank's balance sheet. Local funding balances were essentially flat in the second quarter, as is typical for the time of year. Asset quality remains favorable, while capital and liquidity positions continue to be solid. Our entire team has been focused on restoring the Company's traditionally strong operating performance, and it is gratifying to witness those efforts coming to fruition."

OPERATING RESULTS Q2 2025 v. Q2 2024 (prior year quarter)

Net income was $8.1 million for the three months ended June 30, 2025, an increase of $1.9 million or 30.7% from the second quarter of 2024. Net interest income was $18.4 million for the three months ended June 30, 2025, an increase of $3.3 million or 22.1% from the second quarter of 2024. Net interest margin improved to 2.52% for the second quarter of 2025, up from 2.21% in the prior year quarter. The 31 basis point lift in margin was the result of a 12 basis point increase in the tax equivalent yield on earning assets coupled with a 20 basis point decrease in the cost of total liabilities. Earning assets averaged a yield of 5.34% for the three months ended June 30, 2025, while total liabilities carried an average cost of 3.28%.

A provision for credit losses of $486,000 was recorded in the second quarter of 2025, compared with a provision of $512,000 in the second quarter of 2024. The current period expense consisted primarily of a $348,000 provision to the allowance for credit losses on loans and a $137,000 increase to the reserve for unfunded commitments, the former driven largely by a slight deterioration in economic forecasts, and the latter centered in a larger pipeline of committed loans as compared to the prior quarter.

Total non-interest income was $4.1 million for the three months ended June 30, 2025, consistent with the second quarter of 2024. Total non-interest expense for the three months ended June 30, 2025, was $12.2 million, an increase of $949,000, or 8.4%, from the second quarter of 2024. The period-to-period change is mostly attributable to employee salaries and benefits, resulting from salary costs, lower deferred salaries, and normalization of incentive compensation accruals. The Company's efficiency ratio for the second quarter of 2025 was 52.39%, improved from 56.35% in the prior year quarter.

OPERATING RESULTS Q2 2025 v. Q1 2025 (linked quarter)

Net income was $8.1 million for the three months ended June 30, 2025, an increase of $1.0 million or 13.9% from the first quarter of 2025. Net interest income of $18.4 million for the three months ended June 30, 2025, was an increase of $610,000 or 3.4% from the linked quarter. The net interest margin of 2.52% in the second quarter of 2025 was an improvement of 4 basis points. Margin improvement was driven by a 6 basis point increase in the tax equivalent yield on earning assets to 5.34%. The total cost of interest bearing liabilities increased slightly to 3.28% for the second quarter.

Total non-interest income of $4.1 million for the three months ended June 30, 2025, was up $127,000 from the linked quarter. The change is centered in a $116,000 increase in Debit Card income, along with modest gains in mortgage banking and wealth management revenue. Total non-interest expense for the three months ended June 30, 2025 was $12.2 million, a decrease of $645,000, or 5.0%, from the linked quarter. The change is mostly attributable to employee salaries and benefits which were elevated in the first quarter by one-time retirement payouts and seasonal payroll tax effects.

LOANS, TOTAL ASSETS & FUNDING

Total assets at June 30, 2025, were $3.20 billion, up $12.1 million in the second quarter and up $114.6 million from a year ago. Earning assets increased $11.0 million during the quarter comprised primarily of an increase in loans of $10.9 million. Earning assets have increased by $115.5 million since June 30, 2024, centered in loan growth of $146.3 million.

Loan balances grew at an annualized rate of 1.85% in the second quarter, the net effect of new loan production, scheduled amortization, and payoffs during the period. Municipal loans grew $7.8 million, multifamily loan balances increased $5.9 million, and commercial and industrial balances increased $1.7 million; commercial real estate balances fell by $11.4 million. The residential mortgage and home equity loan segments also contributed to loan portfolio growth, up $1.1 million and $2.8 million, respectively in the second quarter.

Total deposits at June 30, 2025 were $2.71 billion, down $6.0 million during the period, and up $127.3 million, or 4.9%, from June 30, 2024. Non-maturity deposits followed normal seasonal patterns and were down $15.3 million in the second quarter, while time deposits increased $9.3 million; borrowed funds increased $10.7 million, principally in customer repurchase agreements. Uninsured deposits as of June 30, 2025, were estimated at 17.7% of total deposits, and 73% of uninsured deposits were fully collateralized. Available day-one liquidity was $718 million, sufficient to cover 150% of estimated uninsured deposits.

ASSET QUALITY

Asset quality remains favorable. As of June 30, 2025, the ratio of non-performing assets to total assets was 0.19%, unchanged from March 31, 2025 and up modestly from 0.09% of total assets reported as of June 30, 2024. Similarly, the ratio of non-performing loans to total loans was 0.25% as of June 30, 2025, unchanged from March 31, 2025 and up modestly from 0.11% reported as of June 30, 2024. Past due loans remain low at 0.23% of total loans as of June 30, 2025, down from 0.33% of total loans as of March 31, 2025 and up from 0.15% of total loans as of June 30, 2024.

The Allowance for Credit Losses ("ACL") on loans stood at 1.04% of total loans as of June 30, 2025, as compared to an ACL of 1.05% and 1.10% of total loans as of March 31, 2025, and June 30, 2024, respectively. Net loan charge-offs in the second quarter totaled $633,000 resulting in an annualized year-to-date net charge-off rate of 0.07% of total loans.

CAPITAL

The Company's regulatory capital position remained strong as of June 30, 2025. The Leverage Capital ratio was an estimated 8.47% as of June 30, 2025, as compared to the 8.40% and 8.58% reported as of March 31, 2025, and as of June 30, 2024, respectively, with period-to-period changes attributable primarily to earning asset growth. The estimated Total Risk-Based Capital ratio was 13.33% as of June 30, 2025, as compared to the 13.12% and 13.24% reported as of March 31, 2025, and as of June 30, 2024, respectively. The Company's tangible book value per share was $20.94 as of June 30, 2025, up from $20.44 as of March 31, 2025 and up from $19.20 as of June 30, 2024. An improved unrealized loss position on available-for-sale securities contributed to the Tangible Common Equity ratio increasing to 7.41% as of June 30, 2025, up from 7.25% as of March 31, 2025 and 7.00% as of June 30, 2024.

DIVIDEND

On June 26, 2025, the Company's Board of Directors declared a second quarter dividend of $0.37 per share. The second quarter dividend included an increase of one cent per share from the level paid in each of the preceding four quarters. The dividend was paid on July 18, 2025, to shareholders of record as of July 8, 2025.

ABOUT THE FIRST BANCORP

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 $3.17 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.

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 (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 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 both 2025 and 2024.

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 provision for credit losses on securities 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:

The Company presents certain information based upon tangible common equity instead of total 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. GAAP:

To provide period-to-period comparison of operating results prior to consideration of credit loss provision and income taxes, the non-GAAP measure of PTPP Net Income is presented. The following table provides a reconciliation to Net Income:

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.

Category: Earnings

Source: The First Bancorp

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The First Bancorp

Richard M. Elder, EVP, Chief Financial Officer

207-563-3195

[email protected]