DAMARISCOTTA, Maine--(BUSINESS WIRE)-- The First Bancorp (Nasdaq: FNLC), today announced unaudited results for the quarter ended September 30, 2012. Net income was $3.2 million, up $217,000 or 7.2% from the same period in 2011, and earnings per common share on a fully diluted basis of $0.31 were up $0.04 or 14.8% from the same period in 2011. The Company also announced unaudited results for the nine months ended September 30, 2012. Net income was $9.5 million, up $118,000 or 1.3% from the same period in 2011, and earnings per common share on a fully diluted basis of $0.91 were up $0.06 or 7.1% from the same period in 2011.

These are the second-best quarterly earnings we have posted in the past three years, observed Daniel R. Daigneault, the Companys President & Chief Executive Officer. Net income for the third quarter is at the upper end of the $2.9 million to $3.3 million range we have seen over the past ten quarters. Our asset quality remains steady, with non-performing assets at 2.04% of total assets as of September 30, 2012, also at the lower end of the 1.87% to 2.32% range we have seen over the past ten quarters. We still see weaknesses in the economy, however, with continued low interest rates leading to margin compression and, therefore, lower net interest income.

Net interest income on a tax-equivalent basis for the third quarter was $466,000 or 4.3% lower than the same period in 2011, President Daigneault noted, and down $220,000 or 2.1% from the previous quarter. Like most banks in the country, we are seeing continued margin compression in this unprecedented low interest rate environment. Interest income on a tax-equivalent basis has declined $2.7 million in the first nine months of 2012 compared to the first nine months of 2011, while interest expense has declined only $1.5 million for the same periods. This is the result of the Federal Open Market Committees interest rate policies, with QE2 bringing down middle- and longer-term rates while short-term rates have remained near zero.

The year-over-year decline in quarterly net interest income was offset by increased non-interest income which was up $412,000 or 19.8% compared to the third quarter of 2011. This was attributable to strong mortgage origination income resulting from high levels of mortgage refinancing. We also saw an increase in investment management and fiduciary income. Non-interest expense was $339,000 or 4.9% lower than in the same period in 2011, with stable employee costs and lower costs for other real estate owned.

In the most recent New England Economic Snapshot, published by the Federal Reserve Bank of Boston, it was reported that New Englands unemployment rate increased 0.3% in July, ending the month at 7.1% after reaching a post-recession low of 6.8% in May and June, President Daigneault noted. Unemployment rates rose over the month in all New England states with the exception of Rhode Island. Unemployment in Maine, at 6.8%, is lower than the New England and national averages and even with a year ago.

This consistent trend in unemployment matches the consistent range in credit quality noted above that we have seen over the past ten quarters, President Daigneault said. Net loan chargeoffs for the nine months ended September 30, 2012, were $4.6 million or 0.70% of average loans on an annualized basis. This was up $1.0 million from net chargeoffs of $3.6 million or 0.54% of average loans for the first nine months of 2011, and is down from 0.81% of average loans as of June 30, 2012. We provisioned $6.3 million for loan losses in the first nine months of 2012, up $700,000 from the provision in the first nine months of 2011. The allowance for loan losses increased $1.7 million between December 31, 2011 and September 30, 2012, and is 1.69% of loans outstanding compared to 1.50% at year end and 1.76% a year ago. Total past-due loans were 2.27% of total loans as of September 30, 2012, well below 3.07% of total loans as of December 31, 2011, and slightly above 2.20% of total loans as of September 30, 2011.

Total assets have increased $50.4 million or 3.7% year to date and are virtually unchanged from the end of the previous quarter, observed the Companys Chief Financial Officer, F. Stephen Ward. Year-to-date, the loan portfolio has increased $4.9 million or 0.6% while the investment portfolio has increased $44.3 million or 10.4%. On the funding side, low-cost deposits are up $43.2 million or 13.8% year to date, but more importantly, they are running $23.3 million or 7.0% above the same time a year ago. We continue to see an inflow of low-cost deposits as well as a move from CDs to checking and savings accounts due to the low interest rate environment.

We remain very well capitalized, Mr. Ward said, with a leverage capital ratio for the Bank of 8.33%, and tier one and tier two risk-based capital ratios of 14.50% and 15.76% as of September 30, 2012. These are all well above the FDICs well-capitalized requirements. As noted in previous quarters, strong capital ratios and strong earnings enable us to maintain the dividend at $0.195 per share per quarter or $0.78 per share per year. We paid out 64.3% of earnings in the third quarter compared to 68.8% for the same period in 2011, and our dividend yield was 4.44% at September 30, 2012, based on the closing price of $17.55 per share.

The First Bancorps stock closed the quarter at $17.55 per share, up 14.18% or $2.18 per share for the first nine months of 2012, Mr. Ward observed. When the $0.78 per share annual dividend is added, our total return with dividends reinvested was 18.42%. For the same period, the Russell 2000 and Nasdaq Bank Indices (which we are included in), had annualized total returns with dividends reinvested of 14.23% and 18.57%, respectively. The broad market, as measured by the S&P 500 index, had an annualized total return with dividends reinvested of 16.45%.

Our core operating ratios were also consistent with the quarterly results posted over the past ten quarters, said Mr. Ward, Our return on average assets was 0.90% for the quarter while our return on average tangible common equity was 10.25% in the third quarter. Our efficiency ratio is a critical component in our overall performance, and at 50.73% for the third quarter, compares well to our ten-quarter range of 45.86% to 53.06%.

In July we announced plans to purchase a branch at 63 Union Street in Rockland, Maine, as well as a full-service bank building at 145 Exchange Street in Bangor, Maine, President Daigneault said. Regulatory approval has been received for both branches and we expect both transactions to close next week on October 26. The 63 Union Street branch in Rockland will reopen under our name on Monday, October 29, with its customers becoming customers of The First, N.A. It will also enhance our ability to serve our existing Rockland customers from a second location. In Bangor we expect to open a full-service branch in the first quarter of 2013 and see this as an excellent opportunity for us to enter this expanding Northern Maine market.

I continue to be pleased with the consistent results we are posting, President Daigneault concluded. The national and local economies are relatively stable, and while not showing signs of significant improvement, they have not worsened in the past several quarters. Our results compare favorably to our UBPR peer group, and what is most important to many of our shareholders, we continue to maintain our generous cash dividend.

The First Bancorp, headquartered in Damariscotta, Maine, is the holding company for The First, N.A. Founded in 1864, The First is an independent community bank serving Mid-Coast and Down East Maine with 14 offices in Lincoln, Knox, Hancock and Washington Counties. The Bank provides a full range of consumer and commercial banking products and services. First Advisors, a division of The First, provides investment advisory, private banking and trust services from three offices in Lincoln and Hancock Counties.

The First Bancorp
Consolidated Balance Sheets (Unaudited)
In thousands of dollars				9/30/2012		12/31/2011		9/30/2011
Assets
Cash and due from banks				$14,904		$14,115		$16,563
Interest-bearing deposits in other banks				681		-		100
Securities available for sale				299,900		286,202		326,782
Securities to be held to maturity				154,256		122,661		129,699
Federal Home Loan Bank and Federal Reserve Bank stock, at cost				14,448		15,443		15,443
Loans held for sale				-		-		230
Loans				869,871		864,988		868,573
Less allowance for loan losses				14,739		13,000		15,319
Net loans				855,132		851,988		853,254
Accrued interest receivable				5,425		4,835		5,018
Premises and equipment				18,376		18,842		18,872
Other real estate owned				5,471		4,094		6,310
Goodwill				27,684		27,684		27,684
Other assets				27,039		27,003		27,083
Total assets				$1,423,316		$1,372,867		$1,427,038
Liabilities
Demand deposits				$89,500		$75,750		$88,472
NOW deposits				136,472		122,775		130,522
Money market deposits				74,805		79,015		77,736
Savings deposits				130,354		114,617		114,079
Certificates of deposit				210,963		216,836		231,351
Certificates $100,000 to $250,000				247,095		309,841		336,147
Certificates $250,000 and over				55,358		22,499		26,587
Total deposits				944,547		941,333		1,004,894
Borrowed funds				304,749		265,663		255,616
Other liabilities				17,383		15,013		15,990
Total Liabilities				1,266,679		1,222,009		1,276,500
Shareholders' equity
Preferred stock				12,377		12,303		12,278
Common stock				98		98		98
Additional paid-in capital				46,205		45,829		45,706
Retained earnings				88,541		85,314		84,360
Net unrealized gain on securities available-for-sale				9,488		7,401		8,155
Net unrealized loss on postretirement benefit costs				(72)		(87)		(59)
Total shareholders' equity				156,637		150,858		150,538
Total liabilities & shareholders' equity				$1,423,316		$1,372,867		$1,427,038
Common Stock
Number of shares authorized				18,000,000		18,000,000		18,000,000
Number of shares issued and outstanding				9,853,396		9,812,180		9,800,507
Book value per common share				$14.64		$14.12		$14.11
Tangible book value per common share				$11.83		$11.30		$11.28

The First Bancorp
Consolidated Statements of Income and Comprehensive Income (Unaudited)
				For the nine months ended				For the quarters ended
In thousands of dollars, except per share data				9/30/2012		9/30/2011		9/30/2012		9/30/2011
Interest income
Interest and fees on loans				$28,006		$30,088		$9,247		$9,960
Interest on deposits with other banks				3		11		2		7
Interest and dividends on investments				11,122		12,047		3,643		3,931
Total interest income				39,131		42,146		12,892		13,898
Interest expense
Interest on deposits				6,370		7,478		2,073		2,397
Interest on borrowed funds				3,367		3,715		1,149		1,273
Total interest expense				9,737		11,193		3,222		3,670
Net interest income				29,394		30,953		9,670		10,228
Provision for loan losses				6,300		5,600		1,400		1,500
Net interest income after provision for loan losses				23,094		25,353		8,270		8,728
Non-interest income
Investment management and fiduciary income				1,230		1,140		386		358
Service charges on deposit accounts				1,995		2,032		644		681
Net securities gains				1,967		237		-		8
Mortgage origination and servicing income				854		845		550		193
Other operating income				2,510		2,337		912		840
Total non-interest income				8,556		6,591		2,492		2,080
Non-interest expense
Salaries and employee benefits				9,485		9,255		3,283		3,250
Occupancy expense				1,247		1,194		428		367
Furniture and equipment expense				1,650		1,665		527		554
FDIC insurance premiums				909		1,104		303		298
Amortization of identified intangibles				212		212		71		71
Other operating expense				6,000		6,239		1,983		2,394
Total non-interest expense				19,503		19,669		6,595		6,934
Income before income taxes				12,147		12,275		4,167		3,874
Applicable income taxes				2,688		2,934		944		868
Net Income				$9,459		$9,341		$3,223		$3,006
Basic earnings per share				$0.91		$0.85		$0.31		$0.27
Diluted earnings per share				$0.91		$0.85		$0.31		$0.27
Other comprehensive income, net of tax
Net unrealized gain on securities available for sale				2,087		10,212		1,962		5,957
Unrecognized postretirement benefit transition obligation				15		14		5		4
Other comprehensive income				2,102		10,226		1,967		5,961
Comprehensive income				$11,561		$19,567		$5,190		$8,967

The First Bancorp
Selected Financial Data (Unaudited)
Dollars in thousands,				For the nine months ended				For the quarters ended
except for per share amounts				9/30/2012		9/30/2011		9/30/2012		9/30/2011
Summary of Operations
Interest Income				$39,131		$42,146		$12,892		$13,898
Interest Expense				9,737		11,193		3,222		3,670
Net Interest Income				29,394		30,953		9,670		10,228
Provision for Loan Losses				6,300		5,600		1,400		1,500
Non-Interest Income				8,556		6,591		2,492		2,080
Non-Interest Expense				19,503		19,669		6,595		6,934
Net Income				9,459		9,341		3,223		3,006
Per Common Share Data
Basic Earnings per Share				$0.91		$0.85		$0.31		$0.27
Diluted Earnings per Share				0.91		0.85		0.31		0.27
Cash Dividends Declared				0.585		0.585		0.195		0.195
Book Value per Common Share				14.64		14.11		14.64		14.11
Tangible Book Value per Common Share				11.83		11.28		11.83		11.28
Market Value				17.55		12.59		17.55		12.59
Financial Ratios
Return on Average Equity (a)				8.86%		9.66%		8.90%		9.15%
Return on Average Tangible Common Equity (a)				10.36%		10.94%		10.39%		10.25%
Return on Average Assets (a)				0.89%		0.87%		0.90%		0.83%
Average Equity to Average Assets				10.90%		10.67%		11.02%		10.46%
Average Tangible Equity to Average Assets				8.95%		8.74%		9.07%		8.53%
Net Interest Margin Tax-Equivalent (a)				3.16%		3.29%		3.12%		3.24%
Dividend Payout Ratio				64.29%		68.82%		62.90%		72.22%
Allowance for Loan Losses/Total Loans				1.69%		1.76%		1.69%		1.76%
Non-Performing Loans to Total Loans				2.71%		2.42%		2.71%		2.42%
Non-Performing Assets to Total Assets				2.04%		1.91%		2.04%		1.91%
Efficiency Ratio				50.74%		49.89%		50.73%		53.12%
At Period End
Total Assets				$1,423,316		$1,427,038		$1,423,316		$1,427,038
Total Loans				869,871		868,573		869,871		868,573
Total Investment Securities				468,604		471,924		468,604		471,924
Total Deposits				944,547		1,004,894		944,547		1,004,894
Total Shareholders Equity				156,637		150,538		156,637		150,538
(a) Annualized using a 366-day basis in 2012 and 365-day basis in 2011

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 Companys 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 Companys 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 Companys 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 institutions 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 Companys consolidated financial statements, which have been prepared in accordance with GAAP. A 35.0% tax rate was used in both 2012 and 2011.

				For the nine months ended				For the quarters ended
In thousands of dollars				9/30/2012		9/30/2011		9/30/2012		9/30/2011
Net interest income as presented				$29,394		$30,953		$9,670		$10,228
Effect of tax-exempt income				2,318		1,978		792		706
Net interest income, tax equivalent				$31,712		$32,931		$10,462		$10,934

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 of between the GAAP and non-GAAP efficiency ratio:

				For the nine months ended				For the quarters ended
In thousands of dollars				9/30/2012		9/30/2011		9/30/2012		9/30/2011
Non-interest expense, as presented				$19,503		$19,669		$6,595		$6,934
Net securities losses				-		-		-		-
Adjusted non-interest expense				19,503		19,669		6,595		6,934
Net interest income, as presented				29,394		30,953		9,670		10,228
Effect of tax-exempt income				2,318		1,978		792		706
Non-interest income, as presented				8,556		6,591		2,492		2,080
Effect of non-interest tax-exempt income				137		140		46		47
Net securities gains				(1,967)		(237)		-		(8)
Adjusted net interest income plus non-interest income				$38,438		$39,425		$13,000		$13,053
Non-GAAP efficiency ratio				50.74%		49.89%		50.73%		53.12%
GAAP efficiency ratio				51.39%		52.39%		54.23%		56.34%

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 Companys 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 method in accounting for mergers and acquisitions. The following table provides a reconciliation of average tangible common equity to the Companys consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles:

				For the nine months ended				For the quarters ended
In thousands of dollars				9/30/2012		9/30/2011		9/30/2012		9/30/2011
Average shareholders equity as presented				$154,955		$152,513		$156,474		$149,916
Less preferred stock				(12,329)		(22,990)		(12,353)		(19,591)
Less intangible assets				(27,684)		(27,684)		(27,684)		(27,684)
Tangible average shareholders' equity				$114,942		$101,839		$116,437		$102,641

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 Companys filings with the Securities and Exchange Commission.

Additional Information

For more information, please contact F. Stephen Ward, The First Bancorps Treasurer & Chief Financial Officer, at 207.563.3272.

The First Bancorp
F. Stephen Ward, 207-563-3272
Treasurer & Chief Financial Officer

Source: The First Bancorp

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