COURTESY / FIRST NATIONAL BANK
Tony McKim
January 26, 2024
First National Bank parent reports 24% earnings drop for last year
COURTESY / FIRST BANCORP
First National Bank has 18 branches in Maine.
Damariscotta-based First Bancorp (Nasdaq: FNLC) reported a net income decrease during 2023 of $9.5 million, or 24.3%, compared with 2022.
The decrease was due mostly to a $10.4 million fall in net interest income that came from from higher funding costs, according to a news release.
Unaudited net income was $29.5 million for 2023, while the company reported net income of $39 million for the year ended Dec. 31, 2022. Earnings per common share on a fully diluted basis were down 87 cents to $2.66 per share, a decrease of 24.6% from the prior year.
First Bancorp is the parent company of First National Bank, which has 18 branches in Maine, from Wiscasset to Calais and inland to Bangor.
Tony McKim, the company’s president and CEO, noted in Wednesday’s results announcement that the new results came after a record year in 2022.
“Primary drivers of our 2023 earnings performance were a 14.4% year-over-year decrease in net interest income before loan loss provision, and controlled operating expenses,” McKim continued. “The change in net interest income was the result of significantly increased funding costs, partially offset by loan growth.”
The net interest margin was 2.49% for the year, compared to 3.15% in 2022. Operating costs were tightly controlled, with a small decrease in total expenses from the prior year.
First Bancorp also announced operating results for the three months ended Dec. 31, 2023. Unaudited net income was $6.7 million, a decrease of 27.4% from the final three months of 2022. Earnings per share on a fully diluted basis for the fourth quarter of 2023 were 60 cents, down 23 cents or 27.7% from the fourth quarter of 2022.
"Results for the fourth quarter of 2023 were on trend with the year as a whole,” said McKim. “The company recorded net income of $6.7 million as compared to net income of $7.5 million in the third quarter of 2023.”
Net interest income before loan loss provision in the fourth quarter of $15.9 million was in line with the $16 million earned in the third quarter. Non-interest income increased $260,000 period-to-period attributable to debit card revenue. Operating expenses for the fourth quarter of 2023 increased modestly from the third quarter, up $180,000 or 1.6%.
“The year just concluded presented a number of challenges for the banking industry and The First Bancorp,” said McKim. “The cycle of interest rate increases begun by the Federal Reserve in 2022 and sustained in 2023, coupled with concerns around the failures of several large regional banks this past spring, combined to materially increase the Bank's cost of funds which directly impacted our bottom line.”
He continued, “Despite this challenging environment, we continued to support businesses and communities across our footprint by extending over $575 million in new loans, adding to and enhancing our digital banking capabilities, and providing best in class service to our growing customer base.”
Total assets for First Bancorp increased $207.5 million, ending the year at $2.95 billion.
Total loans grew to $2.13 billion, an increase of $214.8 million or 11.2%, year-over-year. Loan portfolio growth in 2023 was led by commercial real estate and construction loans which increased $82.9 million, including $27.7 million in the fourth quarter. Residential mortgage and construction loans increased $59.9 million year-over-year, other commercial loans increased $37.4 million and home equity line of credit balances increased by $11.0 million.
Total deposits grew to $2.6 billion, an increase of $220.8 million or 9.3% year-over-year.
A quarterly shareholder dividend of 35 cents a share was declared.
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