The First Bancorp Reports Fourth Quarter and 2025 Annual Results

Strong Fourth Quarter Results Driven by Net Interest Margin Expansion and Non-Interest Revenue Growth

The First Bancorp (NASDAQ:FNLC), parent company of First National Bank, today announced operating results for the three months and year ended December 31, 2025. Fourth quarter unaudited net income was $10.2 million, an increase of 39.7% from the fourth quarter of 2024. Earnings per share on a fully diluted basis for the fourth quarter of 2025 were $0.91, up $0.25 or 38.9% from the prior year period. For the twelve months ended December 31, 2025 unaudited net income was $34.4 million, an increase of 27.2% from the $27.0 million reported for the twelve months ended December 31, 2024. Earnings per common share on a fully diluted basis were up $0.64 to $3.07 per share, an increase of 26.4% from the prior year.

Fourth Quarter Notable Items:

• Net Interest Margin expanded 13 basis points from 3Q2025 and has increased 41 basis points from 4Q2024
• Non-Interest Income grew 5.8% from 3Q2025 and grew 6.7% from 4Q2024
• Core deposits increased $21.5 million from 3Q2025
• Net Interest Income grew 5.2% from 3Q2025, and grew 20.3% from 4Q2024
• Efficiency Ratio improved to 49.33% for the period
• Tangible book value increased to $22.49 per share, up 3.5% from 3Q2025 and up 13.2% from 4Q2024
• Quarterly shareholder dividend of $0.37 per share

CEO COMMENTS

"The First Bancorp concluded 2025 with robust annual earnings of $34.4 million," commented Tony C. McKim, the Company's President and Chief Executive Officer. "Our performance was driven by a 21.1% increase in annual net interest income, and bolstered by a 6.0% rise in non-interest revenue. Return on Average Assets for 2025 was 1.08%, with a Return on Average Tangible Common Equity of 14.50%. We continued to expand the loan portfolio with total loans increasing $53.2 million, or 2.3% for the year, while maintaining generally favorable asset quality. Local deposit generation has been a focus of business development efforts leading to year-over-year core deposit growth of $77.0 million, fully funding our loan growth and allowing for a reduction in more expensive wholesale funding balances."

Mr. McKim continued, "Results for the fourth quarter of 2025 were strong as evidenced by an annualized Return on Average Assets of 1.26%, and an annualized Return on Average Tangible Common Equity of 16.12%. Net Income of $10.2 million for the period was an increase of 12.0% from the preceding quarter, and was an increase of 39.7% from the fourth quarter of 2024. Earnings growth continues to be driven by improved net interest income, which increased $1.1 million, or 5.2%, in the fourth quarter to $21.1 million. Non-interest income increased $259,000 period-to-period primarily attributable to debit card revenue. Operating expenses for the fourth quarter increased modestly from the third quarter, up $377,000 or 3.0%.

"We are pleased to close out 2025 with a strong earnings quarter and look forward to continued earnings momentum in the new year. The Federal Reserve's aggressive interest rate hiking cycle post-pandemic significantly narrowed our net interest margin in 2023 and 2024, leading to a decline in profitability. With an eye towards the long-term, we have patiently and methodically employed on- and off-balance sheet strategies to recover lost margin and re-build profitability. Through the combined effects of disciplined new asset pricing, legacy asset re-pricing, and funding cost mitigation, our net interest margin has increased in each of the past six quarters. Margin expansion, coupled with non-interest income growth and expense management, has served to restore our earnings performance. The dedication and commitment of our entire team to work through a challenging period for earnings has been admirable."

FINANCIAL RESULTS FOR THE QUARTER ENDED DECEMBER 31, 2025

Net Income was $10.2 million, or $0.91 per diluted share, for the three months ended December 31, 2025. Results compare favorably to the fourth quarter of 2024, with net income up $2.9 million, or 39.7%, and diluted earnings per share up $0.25, or 38.9%. The current quarter also compares favorably to the third quarter of 2025 ("linked quarter") in which net income was $9.1 million and diluted earnings per share were $0.81. Drivers of fourth quarter 2025 results are discussed in the following sections:

Net Interest Income

Net interest income was $21.1 million for the three months ended December 31, 2025, an increase of $1.1 million, or 5.2%, from the third quarter of 2025, and an increase of $3.6 million, or 20.3% from the fourth quarter of 2024. Net interest margin of 2.83% for the fourth quarter was an improvement of 13 basis points from the 2.70% margin earned in the third quarter, and a 41 basis point improvement from the 2.42% margin earned in the fourth quarter of 2024.

Provision For Credit Losses

Total provision for credit losses was $272,000 in the fourth quarter of 2025, compared to provision of $700,000 in the linked quarter. The current period consisted of a $615,000 provision for credit losses on loans, coupled with reverse provisions of $40,000 and $303,000 for credit losses on held to maturity securities and off-balance sheet commitments, respectively.

Non-Interest Income

Total non-interest income was $4.7 million for the three months ended December 31, 2025, up $259,000 from the third quarter. The linked quarter increase was centered in debit card revenue which grew $193,000 and Wealth Management revenue which increased $92,000. As compared to the fourth quarter of 2024, total non-interest income increased $298,000, centered in Wealth Management revenue growth of $159,000, or 12.5%, and an increase in other operating income, principally loan-based derivative fees, of $123,000.

Non-Interest Expense

Non-interest expense totaled $13.1 million for the three months ended December 31, 2025, an increase of $377,000 from the third quarter. As compared to the linked quarter, employee salaries and benefits increased $524,000 while other operating expenses decreased $86,000. The Company's efficiency ratio improved to 49.33% for the fourth quarter of 2025 as compared to 50.40% in the linked quarter and 53.39% a year ago.

Loans, Total Assets & Funding

Total assets at December 31, 2025 were $3.17 billion, up $9.3 million from the prior year end. Earning assets increased $15.7 million year-over-year, as loan balances grew $53.2 million, and investments declined by $22.9 million. Loan portfolio growth in 2025 was led by commercial loans which increased $17.5 million. Within commercial loans, CRE term loan balances increased $25.0 million, C&I loans increased $11.1 million and multifamily loans increased $50.2 million; construction loan balances fell by $64.7 million. Residential mortgage loans increased $28.4 million year-over-year, and home equity loan balances increased by $19.2 million. Overall loan balances fell $4.4 million in the fourth quarter following the payoff of several short-term municipal loans.

Total deposits at December 31, 2025 were $2.66 billion, down $60.5 million or 2.2% from December 31, 2024, and decreased $72.8 million in the fourth quarter. Deposit balance reductions were centered in planned replacement of higher-cost, wholesale time deposits with locally sourced non-maturity deposits and a modest increase in borrowings. Core non-maturity deposits increased $77.0 million for the year centered in money market and NOW account balances, including an increase of $21.5 million in the fourth quarter. Borrowed funds increased $41.5 million year-over-year, principally in Federal Home Loan Bank term advances, and increased $34.9 million in the quarter. Uninsured deposits were an estimated 19.4% of total deposits as of December 31, 2025, and 74% of uninsured deposits were fully collateralized. Available day-one liquidity was in excess of $700 million, sufficient to cover approximately 542% of estimated uninsured, uncollateralized deposits.

ASSET QUALITY

Asset quality remains generally favorable. As of December 31, 2025, the ratio of non-performing assets to total assets was 0.41%, as compared to ratios of 0.14% and 0.30% as of December 31, 2024 and September 30, 2025, respectively. The ratio of non-performing loans to total loans stood at 0.54%, as compared to 0.18% a year ago and 0.40% last quarter. Net charge-offs continued to be low, ending 2025 at 0.07% of total loans, compared to 0.02% in 2024. Past due loans were 0.90% of total loans as of December 31, 2025, compared to 0.40% of total loans at December 31, 2024, and 0.69% at September 30, 2025.

The allowance for credit losses on loans stood at 1.06% of total loans as of December 31, 2025, level with the 1.06% of total loans at December 31, 2024, and up slightly from 1.05% at September 30, 2025. The provision for credit losses on loans was $2.05 million in 2025, including $615,000 in the fourth quarter, as compared to $1.30 million and $1.25 million, respectively in 2024. The fourth quarter provision for credit losses on loans stems mostly from reserves established or increased for individually analyzed credits. Management considers the allowance to be at an appropriate level.

CAPITAL

The Company's capital position was strong as of December 31, 2025, with an estimated total risk-based capital ratio of 13.99%, and an estimated leverage capital ratio of 8.84%. Each compares favorably to 13.22% and 8.47% respectively as of December 31, 2024. The Company's tangible book value was $22.49 per share as of December 31, 2025, an increase from $19.87 a year earlier, and up from $21.74 as of September 30, 2025.

DIVIDEND

On December 18, 2025, the Company's Board of Directors declared a fourth quarter dividend of $0.37 per share. The fourth quarter dividend represents a payout to shareholders of 40.39% of earnings per share for the period and was paid on January 16, 2026 to shareholders of record as of January 6, 2026.

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 $3.14 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 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:

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:

To provide period-to-period comparison of operating results prior to consideration of credit loss provision and income taxes, the non-GAAP measure of Pre-Tax, Pre-Provision 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]