Strong Net Income Growth, Net Interest Margin Expansion, and Growth in Non-Maturity Deposits Highlight Third 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 September 30, 2025. Net income for the period was $9.1 million with fully diluted earnings per share of $0.81. The Company also reported unaudited results for the nine months ended September 30, 2025, with net income for the period of $24.2 million and fully diluted earnings per share of $2.16.

Third Quarter Notable Items:

• Net Income of $9.1 million represents:
  • growth of 20.0% as compared to Q3 2024; diluted EPS growth of 19.3%
  • growth of 12.6% as compared to Q2 2025; diluted EPS growth of 12.5%
• Net Interest Margin expanded to 2.70% and is:
  • an increase of 38 basis points from Q3 2024
  • an increase of 18 basis points from Q2 2025
• Non-Maturity Deposit growth of $139.5 million
• Efficiency Ratio improved to 50.40%
• Tangible Book Value per share rose to $21.74, up 7.3% from Q3 2024
• Quarterly shareholder dividend of $0.37 per share

CEO COMMENTS

"I am pleased to report strong results for the third quarter of 2025," commented Tony C. McKim, the Company's President and Chief Executive Officer. "Net income of $9.1 million for the quarter is an increase of 20.0% from the third quarter of 2024, and through nine months, earnings have increased 22.6% from a year ago. Our Return on Average Assets for the period was 1.13% and stands at 1.02% year-to-date.

"Earnings growth year-to-date has been driven by expansion of our net interest margin, the pace of which accelerated in the third quarter. Our margin for the third quarter improved to 2.70%, up 18 basis points in the period, attributable to earning asset yield enhancement in the loan portfolio, coupled with reduced funding costs.

"Balance sheet activity was mostly focused on local deposit growth in the third quarter. We saw stronger than expected growth in non-maturity deposits, which were up nearly $140 million during the period. This growth allowed for replacement of higher cost wholesale time deposits and borrowings, a key contributor in lowering overall funding costs," continued Mr. McKim. "Overall asset quality remains favorable, while our capital and liquidity positions continue to be solid."

Concluding, Mr. McKim shared, "We were particularly pleased to recently be recognized as one the Best Places to Work in Maine, an award which speaks to the special culture at The First Bancorp and how that collaborative culture continually helps us achieve our purpose for our customers."

OPERATING RESULTS Q3 2025 v. Q3 2024 (prior year quarter)

Net income was $9.1 million for the three months ended September 30, 2025, an increase of $1.5 million or 20.0% from the third quarter of 2024. Net interest income was $20.1 million for the three months ended September 30, 2025, an increase of $3.7 million or 22.3% from the third quarter of 2024. Net interest margin improved to 2.70% for the third quarter of 2025, up from 2.32% in the prior year quarter. The lift in margin was the result of a 15 basis point increase in the tax equivalent yield on earning assets coupled with a 27 basis point decrease in the cost of total liabilities. Earning assets averaged a yield of 5.43% for the three months ended September 30, 2025, while total liabilities carried an average cost of 3.21%.

Total non-interest income was $4.5 million for the three months ended September 30, 2025, an increase of $353,000, or 8.6% from the third quarter of 2024 centered in Wealth Management revenue, and other operating income. Total non-interest expense for the three months ended September 30, 2025, was $12.8 million, an increase of $754,000, or 6.3%, from the third quarter of 2024. The period-to-period change is largely 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 third quarter of 2025 was 50.40%, improved from 56.37% in the prior year quarter.

OPERATING RESULTS Q3 2025 v. Q2 2025 (linked quarter)

Net income was $9.1 million for the three months ended September 30, 2025, an increase of $1.0 million or 12.6% from the second quarter of 2025. Net interest income of $20.1 million for the three months ended September 30, 2025, was an increase of $1.6 million or 9.0% from the linked quarter. The net interest margin of 2.70% in the third quarter of 2025 was an improvement of 18 basis points driven by a 9 basis point increase in the tax equivalent yield on earning assets and a 7 basis point decrease in funding costs period-to-period.

Total non-interest income of $4.5 million for the three months ended September 30, 2025, was up $346,000 from the linked quarter. The change is centered in a $117,000 increase in Debit Card income and a $233,000 lift in other operating income, principally loan-based derivative fees. Total non-interest expense for the three months ended September 30, 2025 was $12.8 million, an increase of $555,000, or 4.5%, from the linked quarter. The change is mostly attributable to employee salaries and benefits, which included seasonal hiring activity.

LOANS, TOTAL ASSETS & FUNDING

Total assets as of September 30, 2025, were $3.20 billion, down $1.0 million in the third quarter and up $55.9 million from a year ago. Earning assets were essentially flat, down $1.8 million during the quarter comprised primarily of an increase in loans of $4.5 million and a net reduction of overnight funds sold and investments of $6.1 million. Over the past year, earning assets have increased by $58.9 million, centered in loan growth of $91.3 million and net reduction of overnight funds sold and investments of $36.6 million.

Loan balances grew at a modest pace in the third quarter, the net effect of new loan production, scheduled amortization, and payoffs during the period. The residential mortgage and home equity loan segments each contributed to loan portfolio growth, up $7.5 million and $2.7 million, respectively in the third quarter, while municipal loans grew $5.7 million. Commercial real estate balances decreased by $7.5 million, and commercial and industrial balances fell $4.5 million.

Total deposits at September 30, 2025 were $2.74 billion, up $32.2 million during the period. Non-maturity deposits exceeded seasonal growth expectations, increasing $139.5 million in the third quarter. This lift allowed for a reduction in wholesale time deposits and borrowings, with time deposits down $107.3 million and borrowed funds, principally short term FHLB advances, down $43.2 million during the period. Uninsured deposits as of September 30, 2025, were estimated at 19.7% of total deposits, and 68% of uninsured deposits were fully collateralized. Available day-one liquidity was $702 million, sufficient to cover 130% of estimated uninsured deposits.

ASSET QUALITY

Overall asset quality remains favorable. As of September 30, 2025, the ratio of non-performing assets to total assets was 0.30%, compared to 0.19% as of June 30, 2025 and 0.08% as of September 30, 2024. The ratio of non-performing loans to total loans was 0.40% as of September 30, 2025, compared to 0.25% as of June 30, 2025 and 0.11% as of September 30, 2024. Loans past due thirty days or more were 0.69% of total loans as of September 30, 2025.

The Allowance for Credit Losses ("ACL") on loans stood at 1.05% of total loans as of September 30, 2025, in-line with both the linked quarter and prior year quarter. A provision for credit losses of $700,000 was recorded in the third quarter of 2025, focused in a $690,000 provision to the allowance for credit losses on loans. Net loan charge-offs in the third quarter totaled $441,000 resulting in an annualized year-to-date net charge-off rate of 0.07% of total loans.

CAPITAL

The Company’s regulatory capital position was strong as of September 30, 2025. The Leverage Capital ratio increased to an estimated 8.66% as of September 30, 2025, as compared to the 8.48% and 8.53% reported as of June 30, 2025, and as of September 30, 2024, respectively. The estimated Total Risk-Based Capital ratio was 13.60% as of September 30, 2025, as compared to the 13.31% and 13.11% reported as of June 30, 2025, and as of September 30, 2024, respectively. The Company's tangible book value per share was $21.74 as of September 30, 2025, up from $20.94 as of June 30, 2025 and up from $20.27 as of September 30, 2024. An improved unrealized loss position on available-for-sale securities contributed to the Tangible Common Equity ratio increasing to 7.70% as of September 30, 2025, up from 7.41% as of June 30, 2025 and 7.26% as of September 30, 2024.

DIVIDEND

On September 25, 2025, the Company's Board of Directors declared a third quarter dividend of $0.37 per share. The dividend was paid on October 16, 2025, to shareholders of record as of October 6, 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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