DEF: The First Bancorp Reports Improved Net Interest Margin, Announces 2025 Annual Meeting

The First Bancorp saw margin contraction in the first half of 2024 but experienced improved net interest margin in the second half, leading to better net income performance, and will hold its annual shareholder meeting on April 30, 2025.

Summary

• The First Bancorp faced challenges in the first half of 2024 due to margin contraction but saw improvement in the third and fourth quarters.
• Net income for 2024 was $27.0 million, down 8.4% from $29.5 million in 2023.
• Fully diluted earnings per common share decreased by $0.24 to $2.43 per share, an 8.9% decrease.
• Pre-Tax, Pre-Provision (PTPP) return on Average Assets for 2024 was 1.09%, and PTPP Return on Average Tangible Common Equity was 15.12%.
• Total loans increased by $211.5 million, or 9.9%, while maintaining favorable asset quality.
• Total assets increased by $210.3 million, ending the year at $3.157 billion.
• Total deposits grew to $2.73 billion, an increase of $125.6 million.
• First National Wealth Management's Assets Under Management grew 10% to $727 million.
• The Non-Performing Assets to Total Assets ratio was 0.14%.
• The company has strong liquidity with day one capacity to cover more than 156% of estimated uninsured deposits.
• Tangible book value at year-end was $19.87 per share, up from $19.12 as of December 31, 2023.
• The efficiency ratio remained favorable to peers at 56.66%.
• The company began executing its 2024-2026 strategic plan, which includes over 880 action steps.
• Mike Martin, SVP, Credit Risk Officer, retired in January 2025 after 31 years.
• Sue Norton, EVP, Chief Administrative Officer, retired in February 2025 after 32 years.
• Bill Fernald, a former director, passed away in January 2025.
• The Annual Meeting of Shareholders will be held virtually on April 30, 2025, at 11:00 a.m. Eastern Daylight Time.
• Shareholders of record as of February 20, 2025, are entitled to vote at the Annual Meeting.
• The meeting will include the election of nine director nominees, an advisory vote on executive compensation, and ratification of the audit committee's selection of BDMP Assurance, LLP as independent auditors for 2025.

Sentiment

Score: 6

Explanation: The document presents a mixed sentiment. While there are positive aspects like loan and deposit growth, the decrease in net income and earnings per share tempers the overall outlook. The company's expectation of future improvement provides some optimism.

Positives

• Net interest margin improved in the second half of 2024.
• Strong earning asset growth with a 9.9% increase in total loans.
• Excellent asset quality with a low Non-Performing Assets to Total Assets ratio of 0.14%.
• Strong liquidity with the capacity to cover more than 156% of estimated uninsured deposits.
• Tangible book value increased to $19.87 per share.
• First National Wealth Management's Assets Under Management grew 10% to $727 million.

Negatives

• Net income decreased by 8.4% to $27.0 million in 2024 compared to $29.5 million in 2023.
• Earnings per share decreased by 8.9% to $2.43.
• The company experienced margin contraction in the first half of the year.

Risks

• The banking industry and The First Bancorp faced challenges in the first half of 2024 due to margin contraction.
• The company's net income and earnings per share decreased compared to the previous year.

Future Outlook

The company expects the positive trend of improved net interest margin to continue with further gradual improvement in coming quarters.

Management Comments

• During the third and fourth quarters; however, through the combined effects of new asset pricing, legacy asset repricing, and funding cost stabilization, our net interest margin increased which led to improved net income performance.
• We expect this positive trend to continue with further gradual improvement in coming quarters.
• I continue to be impressed every day by the commitment of our team.
• As I celebrate my 10th Anniversary as the CEO of The First Bancorp, I want, as always, to thank all of you for the faith you continue to show in me to lead your Company.
• I have a wonderful team and Board of Directors, and I certainly could not do this job without them.

Industry Context

The document mentions challenges for the banking industry in the first half of 2024, suggesting broader industry trends affecting financial institutions.

Comparison to Industry Standards

• The efficiency ratio of 56.66% is in the 32nd percentile of the Banks peer group.
• The peer group utilized by the Company consisted of publicly traded non-metropolitan bank holding companies located in New England, New York and Pennsylvania.
• The peer group includes the three comparable banks located in the state of Maine and other banks located in similar non-metropolitan areas in the Northeast.
• The peer group targets approximately 20 institutions ranging from two-thirds to two times the Companys size in terms of assets.
• The overall objective is to position the Company at slightly above the median salary levels of the peer group.
• Performance factors will also be considered should a company in the peer group have performance that varies greatly from that of the group and/or the Company.
• The peer group used for 2024 was as follows: ACNB Corporation, AmeriServ Financial, Inc., Arrow Financial Corporation, Bar Harbor Bankshares, Camden National Corporation, Chemung Financial Corporation, Citizens & Northern Corporation, CNB Financial Corporation, Enterprise Bancorp, Inc., ESSA Bancorp, Inc., Evans Bancorp, Inc., Fidelity D & D Bancorp, HarborOne Bancorp, Inc., Hingham Institution for Savings, Mid Penn Bancorp, Inc., Northeast Bank, Orrstown Financial Services, Inc., Penns Woods Bancorp, Inc., Peoples Financial Services Corp., Western New England Bancorp, Inc.

Management Changes

Related Party Transactions

• The total amount of loans outstanding at December 31, 2024 to the Companys Directors and Executive Officers and their affiliates was $32,182,000, which constituted 1.37% of the Banks total loans outstanding at that date.

Stakeholder Impact

• Shareholders will vote on key proposals at the Annual Meeting.
• Employees are impacted by the strategic plan and succession planning.
• Customers benefit from the bank's strong liquidity and asset quality.

Next Steps

• The company will hold its Annual Meeting of Shareholders on April 30, 2025.
• The company will continue executing its 2024-2026 strategic plan.

Key Dates