# EDGAR Filing Document

**Accession Number:** 0000765207
**File Stem:** 0000765207-23-000005
**Filing Date:** 2023-1
**Character Count:** 34804
**Document Hash:** 9951b871c76389b5873777279a54845f
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0000765207-23-000005.hdr.sgml**: 20230118

**ACCESSION NUMBER**: 0000765207-23-000005

**CONFORMED SUBMISSION TYPE**: 8-K

**PUBLIC DOCUMENT COUNT**: 13

**CONFORMED PERIOD OF REPORT**: 20230118

**ITEM INFORMATION**: Results of Operations and Financial Condition

**FILED AS OF DATE**: 20230118

**DATE AS OF CHANGE**: 20230118

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** First Bancorp, Inc /ME/
- **CENTRAL INDEX KEY:** 0000765207
- **STANDARD INDUSTRIAL CLASSIFICATION:** NATIONAL COMMERCIAL BANKS [6021]
- **IRS NUMBER:** 010404322
- **STATE OF INCORPORATION:** ME
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 8-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 000-26589
- **FILM NUMBER:** 23534612

**BUSINESS ADDRESS:**
- **STREET 1:** P.O. BOX 940
- **STREET 2:** MAIN STREET
- **CITY:** DAMARISCOTTA
- **STATE:** ME
- **ZIP:** 04543
- **BUSINESS PHONE:** 2075633195

**MAIL ADDRESS:**
- **STREET 1:** P.O. BOX 940
- **CITY:** DAMARISCOTTA
- **STATE:** ME
- **ZIP:** 04543

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** FIRST NATIONAL LINCOLN CORP /ME/
- **DATE OF NAME CHANGE:** 19920703

?xml version="1.0" ? fnlc-20230118

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

**FORM 8-K** 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of report (Date of earliest event reported): January 18, 2023

**THE FIRST BANCORP, INC.**

(Exact name of Registrant as specified in charter)

Maine

(State or other jurisdiction of incorporation)

0-26589 01-0404322 <br> (Commission file number) (IRS employer identification no.)

Main Street Damariscotta Maine 04543 <br> (Address of principal executive offices) (Zip Code)

(207) 563-3195

(Registrant's telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is

intended to simultaneously satisfy the filing obligations

of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4 (c))

Securities registered pursuit to Section 12(b) of the Exchange Act: None

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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**TABLE OF CONTENTS**

Item 2.02 Results of Operations and Financial Condition&nbsp;&nbsp;&nbsp;&nbsp; Page 1

Item 9.01 Financial Statements and Exhibits.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Page 1

Signatures &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Page 2

Exhibit Index&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Page 3

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Item 2.02 Results of Operations and Financial Condition.

January 18, 2023, the Registrant issued the press release filed herewith as Exhibit 99.1 with information regarding the results of operations and financial condition of the First Bancorp, Inc. for the quarter ended December 31, 2022.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

--------

The following Exhibit is being furnished herewith:

<u>[99.1](fnlc-20230118.htm)</u> Registrant's Press Release dated January 18, 2023

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

THE FIRST BANCORP, INC.

By: /s/ Richard M. Elder

---------------------

Richard M. Elder

Executive Vice President & Chief Financial Officer

January 18, 2023

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Exhibit Index

--------------

Exhibit Number Description of Exhibit

<u>[99.1](a22q4earningsex991.htm)</u> Registrant's Press Release dated January 18, 2023

## Exhibit 99.1

**Exhibit 99.1**

**The First Bancorp Reports Results for 2022**

DAMARISCOTTA, ME--(BUSINESS WIRE)--The First Bancorp (Nasdaq: FNLC), parent company of First National Bank, today announced operating results for the year ended December 31, 2022. Unaudited net income was $39.0 million, an increase of 7.5% from the $36.3 million reported for the year ended December 31, 2021. Net of non-recurring Payroll Protection Program (PPP) revenue, unaudited net income for 2022 was up 14.6% over 2021. Earnings per common share on a fully diluted basis were up $0.23 to $3.53 per share, an increase of 7.0% from the prior year. The Company also announced operating results for the three months ended December 31, 2022. Unaudited net income was $9.2 million, a decrease of 3.7% from the final three months of 2021. Net of non-recurring PPP revenue, unaudited net income for the three months ended December 31, 2022 was up 6.3% from the same period in 2021. Earnings per share on a fully diluted basis for the fourth quarter of 2022 were $0.83, down $0.04 or 4.6% from the fourth quarter of 2021.

"I'm pleased to report that The First Bancorp closed 2022 with record annual earnings of $39.0 million", commented Tony C. McKim, the Company's President and Chief Executive Officer. "Driving our 2022 earnings performance was a 14.9% year-over-year increase in net interest income before loan loss provision which resulted from loan growth of $267.0 million or 16.2% for the year. Our net interest margin for the year was 3.15%, up from 2.95% in 2021. The increase in annual net interest income helped to mitigate a sharp reduction in mortgage banking revenue from the prior year. Operating costs remained largely in check as demonstrated by an efficiency ratio of 45.96% for the year."

Mr. McKim continued, "In the fourth quarter of 2022, the Company had net income of $9.2 million as compared to net income of $9.5 million in the fourth quarter of 2021. On a pre-tax, pre-provision basis (PTPP) (non-GAAP), net income for the fourth quarter of 2022 was $11.6 million compared to $9.6 million in the fourth quarter of 2021, when a reverse provision for loan losses of $2.0 million was recorded. Net interest income before loan loss provision in the fourth quarter of 2022 increased 10.1% from the fourth quarter of 2021, a period which included $1.1 million in interest income attributable to PPP compared to zero in the fourth quarter of 2022. Non-interest income declined $952,000 period-to-period attributable to mortgage banking revenue and recognition of certain one-time gains in the fourth quarter of 2021. Operating expenses for the fourth quarter of 2022 decreased by $1.1 million from the fourth quarter of 2021, the result of one-

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time expenses associated with the sale of loans recorded in the prior year period, and increased compensation costs.

"Reflecting upon the year just concluded, a number of accomplishments stand out. We opened our eighteenth office in Brewer, Maine and look forward to serving that community for many years to come. A new online banking and mobile banking platform was introduced to enhance user experience and engagement. The Bank funded a total of $713 million in new loans in 2022 to benefit businesses and consumers across our footprint. Through donations, sponsorships and volunteerism we continue to support numerous causes and events throughout the State, and we were proud to announce a $300,000 long-term commitment to the Maine Lobsterman's Association. Finally, we were pleased to be honored as a Piper Sandler Companies Sm-All Star for 2022, the only company in New England to be so honored. These accomplishments and many more are made possible by our team of more than 270 bankers whose efforts on behalf of our customers and communities continue to stand out each and every day."

**<u>2022 FINANCIAL HIGHLIGHTS</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Net income increased 7.5% over 2021, setting a new high-mark for annual earnings.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Pre-tax, pre-provision net income (non-GAAP) increased 12.9% compared to 2021.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Total assets increased $212.1 million, ending the year at $2.74 billion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Total loans outstanding at December 31, 2022 were $1.91 billion, up $267.0 million or 16.2%, year-over-year.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Total deposits as of December 31, 2022 totaled $2.38 billion, an increase of $255.6 million or 12.0% year-over-year.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Efficiency Ratio (non-GAAP) was 45.96% for 2022, down from 47.81% in 2021 (the GAAP Efficiency Ratio was 47.19% for the year, down from 49.19% in 2021).

**<u>FINANCIAL CONDITION</u>**

Total assets at December 31, 2022 were $2.74 billion, up $212.1 million from the prior year end. Earning assets increased $190.5 million year-over-year, as loan balances grew $267.0 million, interest-bearing cash balances declined by $63.0 million and investments declined by $13.7 million. Loan portfolio growth in 2022 was led by commercial real estate and construction loans which increased $137.7 million, including $25.5 million in the fourth quarter. Residential mortgage and construction loans increased $81.3 million year-over-year, other commercial loans increased $54.8 million and home equity line of credit balances increased by $2.9 million. Overall loan growth excluding PPP totaled $289.0 million, or 17.8% for the year. PPP loan balances were near zero at year-end 2022.

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Total deposits at December 31, 2022 were $2.38 billion, up $255.6 million or 12.0% from December 31, 2021. Low-cost deposits decreased $31.6 million year-over-year centered in demand and NOW balances. Certificate of deposit balances increased $301.5 million year-over-year, while borrowed funds decreased by $32.9 million.

The Company's capital position remained strong as of December 31, 2022, with an estimated total risk-based capital ratio of 13.65%, and an estimated leverage capital ratio of 9.01%. These measures compare to 14.27% and 8.63% respectively as of December 31, 2021. The Company's tangible book value was $17.93 per share as of December 31, 2022, a decrease from $19.52 a year earlier, and up from $17.13 as of September 30, 2022. The period to period changes are the result of changes in the unrealized loss position on available for sale securities. Removing the effect of these unrealized losses, the adjusted tangible book value (non-GAAP) as of these dates would have been $21.98 as of December 31, 2022, $19.68 as of December 31, 2021, and $21.44 as of September 30, 2022.

**<u>ASSET QUALITY & PROVISION FOR LOAN LOSSES</u>**

Asset quality continues to be strong and stable. As of December 31, 2022, the ratio of non-performing assets to total assets was 0.06%, improved from 0.23% a year earlier. The ratio of non-performing loans to total loans stood at 0.09%, improved from 0.35% at December 31, 2021. Net charge-offs as a percentage of loans were 0.03% as of December 31, 2022, up slightly from 0.02% in 2021 and down from 0.10% in 2020. Past due loans were 0.08% of total loans as of December 31, 2022, down from 0.26% of total loans at December 31, 2021.

The allowance for loan losses stood at 0.87% of total loans as of December 31, 2022, down modestly from 0.94% of total loans at December 31, 2021. Management considers the allowance to be at an appropriate level given the strong asset quality metrics at year-end. As reported in the Company's earnings release for the third quarter of 2022, the Bank has no remaining active COVID-19 related modifications in its loan portfolio.

**<u>OPERATING RESULTS</u>**

Net income for the year ended December 31, 2022 was $39.0 million, up $2.7 million or 7.5% from the year ended December 31, 2021. On a fully diluted earnings per share basis, 2022 earnings were $3.53, up $0.23 or 7.0% from the prior year. The Company's Return on Average Assets for the year ended December 31, 2022 was 1.49% , up slightly from 1.48% for the year ended December 31, 2021. On a PTPP (non-GAAP) basis, 2022 Return on Average Assets was 1.87%, up from 1.78% the prior year. Return on Average Tangible Common Equity was 19.15% for the year ended

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December 31, 2022, up from 17.64% for the year ended December 31, 2021. On a PTPP basis (non-GAAP), Return on Average Tangible Common Equity for 2022 was 24.13%, up from 21.18% in 2021. The Company's Efficiency Ratio (non-GAAP) was 45.96% for the year ended December 31, 2022, improved from 47.81% in 2021. (GAAP Efficiency Ratio was 47.19% for the year ended December 31, 2022, down from 49.19% in 2021.)

Contributing factors to the Company's 2022 annual and fourth quarter results included:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Earning asset growth coupled with a wider balance sheet spread led to a $9.9 million increase in tax-equivalent net interest income year-over-year, an increase of 14.4%. In the fourth quarter of 2022, tax equivalent net interest income was up $1.8 million from the same period in 2021, an increase of 10.0%. The period-to-period increases include net reductions in PPP related interest income of $2.7 million for the year and $1.1 million in the fourth quarter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Net interest margins improved to 3.09% for the quarter ended December 31, 2022 and 3.15% for the year then ended, as compared to 3.00% and 2.95% respectively for the same periods in 2021.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Non-interest income before net securities gains was $16.9 million for the year ended December 31, 2022, down $2.5 million or 12.9% from 2021. The decrease in non-interest income is primarily attributable to a 72.8% reduction in mortgage banking revenue from 2021, as higher interest rates dramatically slowed refinance activity from the elevated levels of the prior two years, and negatively impacted both gain on sale income and mortgage servicing rights valuation. Debit card revenue increased 21.9% year-over-year, while a 1.6% increase in revenues was achieved by First National Wealth Management, the Bank's trust and investment management division, despite adverse market conditions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Non-interest expense for 2022 was $43.9 million, up $1.8 million or 4.2% from 2021. Employee salary and benefit expense increased 10.2% from the prior year, partially the result of increased staffing associated with the Bank's opening of a new branch. Occupancy expense, furniture & equipment expense, and FDIC insurance premiums each had modest dollar increases from 2021. Other operating expenses decreased 9.1% year-to-year attributable to loan sale expenses recognized in the fourth quarter of 2021.

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**<u>DIVIDEND</u>**

On December 15, 2022, the Company's Board of Directors declared a fourth quarter dividend of $0.34 per share. The fourth quarter dividend represents a payout to shareholders of 40.48% of earnings per share for the period, and will be paid on January 20, 2023 to shareholders of record as of January 9, 2023.

**<u>ABOUT THE FIRST BANCORP</u>**

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 $2.71 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.

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| | | |
|:---|:---|:---|
| **The First Bancorp** | **The First Bancorp** | **The First Bancorp** |
| ***<u>Consolidated Balance Sheets (Unaudited)</u>*** | ***<u>Consolidated Balance Sheets (Unaudited)</u>*** | ***<u>Consolidated Balance Sheets (Unaudited)</u>*** |
| *In thousands of dollars, except per share data* | **December 31, 2022** | December 31, 2021 |
| **Assets** |  |  |
| Cash and due from banks | $**22728** | $20634 |
| Interest-bearing deposits in other banks | **3693** | 66678 |
| Securities available for sale | **284509** | 320566 |
| Securities to be held to maturity | **393896** | 370040 |
| Restricted equity securities, at cost | **3883** | 5365 |
| Loans held for sale | **275** | 835 |
| Loans | **1914674** | 1647649 |
| Less allowance for loan losses | **16723** | 15521 |
| Net loans | **1897951** | 1632128 |
| Accrued interest receivable | **9829** | 7544 |
| Premises and equipment | **28277** | 28949 |
| Goodwill | **30646** | 30646 |
| Other assets | **63491** | 43714 |
| **Total assets** | $**2739178** | $2527099 |
| **Liabilities** |  |  |
| Demand deposits | $**318626** | $334945 |
| NOW deposits | **630416** | 655061 |
| Money market deposits | **192632** | 206901 |
| Savings deposits | **369532** | 360185 |
| Certificates of deposit | **489793** | 252568 |
| Certificates $100,000 to $250,000 | **259614** | 258211 |
| Certificates $250,000 and over | **118264** | 55426 |
| Total deposits | **2378877** | 2123297 |
| Borrowed funds | **103483** | 136342 |
| Other liabilities | **27895** | 21803 |
| Total Liabilities | **2510255** | 2281442 |
| **Shareholders' equity** |  |  |
| Common stock | **110** | 110 |
| Additional paid-in capital | **68435** | 66830 |
| Retained earnings | **204343** | 180417 |
| &nbsp;&nbsp;&nbsp;Net unrealized loss on securities available for sale | **(44718)** | (1718) |
| &nbsp;&nbsp;&nbsp;Net unrealized loss on securities transferred from available for sale to held to maturity | **(64)** | (87) |
| &nbsp;&nbsp;&nbsp;Net unrealized gain on cash flow hedging derivative instruments | **544** |  |
| &nbsp;&nbsp;&nbsp;Net unrealized gain on postretirement costs | **273** | 105 |
| Total shareholders' equity | **228923** | 245657 |
| **Total liabilities & shareholders' equity** | $**2739178** | $2527099 |
| **Common Stock** |  |  |
| Number of shares authorized | **18000000** | 18000000 |
| Number of shares issued and outstanding | **11045186** | 10998765 |
| Book value per common share | $**20.73** | $22.33 |
| Tangible book value per common share | $**17.93** | $19.52 |

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| | | | | |
|:---|:---|:---|:---|:---|
| **The First Bancorp** | **The First Bancorp** | **The First Bancorp** | **The First Bancorp** | **The First Bancorp** |
| ***<u>Consolidated Statements of Income (Unaudited)</u>*** | ***<u>Consolidated Statements of Income (Unaudited)</u>*** | ***<u>Consolidated Statements of Income (Unaudited)</u>*** | ***<u>Consolidated Statements of Income (Unaudited)</u>*** | ***<u>Consolidated Statements of Income (Unaudited)</u>*** |
| | **For the year ended December 31,** | **For the year ended December 31,** | **For the quarter ended December 31,** | **For the quarter ended December 31,** |
| *In thousands of dollars, except per share data* | **2022** | 2021 | **2022** | 2021 |
| **Interest income** |  |  |  |  |
| Interest and fees on loans | $**75805** | $62195 | **$22342** | $16331 |
| Interest on deposits with other banks | **315** | 72 | **152** | 27 |
| Interest and dividends on investments | **16915** | 14814 | **4586** | 3641 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total interest income | **93035** | 77081 | **27080** | 19999 |
| **Interest expense** |  |  |  |  |
| Interest on deposits | **15359** | 7314 | **7169** | 1518 |
| Interest on borrowed funds | **1510** | 3464 | **427** | 785 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total interest expense | **16869** | 10778 | **7596** | 2303 |
| Net interest income | **76166** | 66303 | **19484** | 17696 |
| Provision (credit) for loan losses | **1750** | (375) | **450** | (1950) |
| Net interest income after provision (credit) for loan losses | **74416** | 66678 | **19034** | 19646 |
| **Non-interest income** |  |  |  |  |
| Investment management and fiduciary income | **4600** | 4529 | **1087** | 1177 |
| Service charges on deposit accounts | **1825** | 1568 | **467** | 436 |
| Net securities gains | **7** | 23 | **—** | 1 |
| Mortgage origination and servicing income | **1424** | 5236 | **190** | 885 |
| Debit card income | **6348** | 5208 | **1464** | 1333 |
| Other operating income | **2670** | 2819 | **639** | 967 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total non-interest income | **16874** | 19383 | **3847** | 4799 |
| **Non-interest expense** |  |  |  |  |
| Salaries and employee benefits | **23316** | 21152 | **6224** | 5552 |
| Occupancy expense | **3052** | 2841 | **754** | 693 |
| Furniture and equipment expense | **5058** | 4788 | **1318** | 1253 |
| FDIC insurance premiums | **1068** | 824 | **330** | 224 |
| Amortization of identified intangibles | **69** | 69 | **17** | 17 |
| Other operating expense | **11341** | 12474 | **3068** | 5107 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total non-interest expense | **43904** | 42148 | **11711** | 12846 |
| Income before income taxes | **47386** | 43913 | **11170** | 11599 |
| Applicable income taxes | **8396** | 7644 | **1973** | 2053 |
| **Net Income** | $**38990** | $36269 | $**9197** | $9546 |
| Basic earnings per share | $**3.56** | $3.33 | $**0.84** | $0.87 |
| Diluted earnings per share | $**3.53** | $3.30 | $**0.83** | $0.87 |

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| | | | | |
|:---|:---|:---|:---|:---|
| **The First Bancorp** | **The First Bancorp** | **The First Bancorp** | **The First Bancorp** | **The First Bancorp** |
| ***<u>Selected Financial Data (Unaudited)</u>*** | ***<u>Selected Financial Data (Unaudited)</u>*** | ***<u>Selected Financial Data (Unaudited)</u>*** | ***<u>Selected Financial Data (Unaudited)</u>*** | ***<u>Selected Financial Data (Unaudited)</u>*** |
| | **For the year ended December 31,** | **For the year ended December 31,** | **For the quarter ended December 31,** | **For the quarter ended December 31,** |
| *Dollars in thousands, except for per share amounts* | **2022** | 2021 | **2022** | 2021 |
| ***Summary of Operations*** |  |  |  |  |
| Interest Income | $**93035** | $77081 | $**27080** | $19999 |
| Interest Expense | **16869** | 10778 | **7596** | 2303 |
| Net Interest Income | **76166** | 66303 | **19484** | 17696 |
| Provision (credit) for Loan Losses | **1750** | (375) | **450** | (1950) |
| Non-Interest Income | **16874** | 19383 | **3847** | 4799 |
| Non-Interest Expense | **43904** | 42148 | **11711** | 12846 |
| Net Income | **38990** | 36269 | **9197** | 9546 |
| ***Per Common Share Data*** |  |  |  |  |
| Basic Earnings per Share | $**3.56** | $3.33 | $**0.84** | $0.87 |
| Diluted Earnings per Share | **3.53** | 3.30 | **0.83** | 0.87 |
| Cash Dividends Declared | **1.34** | 1.27 | 0.34 | 0.32 |
| Book Value per Common Share | **20.73** | 22.33 | **20.73** | 22.33 |
| Tangible Book Value per Common Share | **17.93** | 19.52 | **17.93** | 19.52 |
| Market Value | **29.94** | 31.40 | **29.94** | 31.40 |
| ***Financial Ratios*** |  |  |  |  |
| Return on Average Equity (a) | **16.63%** | 15.33% | **16.15%** | 15.47% |
| Return on Average Tangible Common Equity (a) | **19.15%** | 17.64% | **18.71%** | 17.71% |
| Return on Average Assets (a) | **1.49%** | 1.48% | **1.34%** | 1.49% |
| Average Equity to Average Assets | **8.94%** | 9.67% | **8.32%** | 9.65% |
| Average Tangible Equity to Average Assets | **7.76%** | 8.41% | **7.18%** | 8.43% |
| Net Interest Margin Tax-Equivalent (a) | **3.15%** | 2.95% | **3.09%** | 3.00% |
| Dividend Payout Ratio | **37.64%** | 38.14% | **40.48%** | 36.78% |
| Allowance for Loan Losses/Total Loans | **0.87%** | 0.94% | **0.87%** | 0.94% |
| Non-Performing Loans to Total Loans | **0.09%** | 0.35% | **0.09%** | 0.35% |
| Non-Performing Assets to Total Assets | **0.06%** | 0.23% | **0.06%** | 0.23% |
| Efficiency Ratio | **45.96%** | 47.81% | **48.83%** | 55.61% |
| ***At Period End*** |  |  |  |  |
| Total Assets | $**2739178** | $2527099 | $**2739178** | $2527099 |
| Total Loans | **1914674** | 1647649 | **1914674** | 1647649 |
| Total Investment Securities | **682288** | 695971 | **682288** | 695971 |
| Total Deposits | **2378877** | 2123297 | **2378877** | 2123297 |
| Total Shareholders' Equity | **228923** | 245657 | **228923** | 245657 |
| *(a) Annualized using a 365-day basis for 2022 and 2021* | *(a) Annualized using a 365-day basis for 2022 and 2021* | *(a) Annualized using a 365-day basis for 2022 and 2021* |  |  |

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**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 2022 and 2021.

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| | | | | |
|:---|:---|:---|:---|:---|
| | **For the years ended** | **For the years ended** | **For the quarters ended** | **For the quarters ended** |
| *In thousands of dollars* | **December 31, 2022** | December 31, 2021 | **December 31, 2022** | December 31, 2021 |
| Net interest income as presented | $**76166** | $66303 | $**19484** | $17696 |
| Effect of tax-exempt income | **2326** | 2325 | **607** | 563 |
| Net interest income, tax equivalent | $**78492** | $68628 | $**20091** | $18259 |

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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:

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| | | | | |
|:---|:---|:---|:---|:---|
| | **For the years ended** | **For the years ended** | **For the quarters ended** | **For the quarters ended** |
| *In thousands of dollars* | **December 31, 2022** | December 31, 2021 | **December 31, 2022** | December 31, 2021 |
| Non-interest expense, as presented | $**43904** | $42148 | $**11711** | $12846 |
| Net interest income, as presented | **76166** | 66303 | **19484** | 17696 |
| Effect of tax-exempt interest income | **2326** | 2325 | **607** | 563 |
| Non-interest income, as presented | **16874** | 19383 | **3847** | 4799 |
| Effect of non-interest tax-exempt income | **170** | 168 | **43** | 44 |
| Net securities gain | **(7)** | (23) | **—** | (1) |
| Adjusted net interest income plus non-interest income | $**95529** | $88156 | $**23981** | $23101 |
| Non-GAAP efficiency ratio | **45.96%** | 47.81% | **48.83%** | 55.61% |
| GAAP efficiency ratio | **47.19%** | 49.19% | **50.20%** | 57.11% |

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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:

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| | | | | |
|:---|:---|:---|:---|:---|
| | **For the years ended** | **For the years ended** | **For the quarters ended** | **For the quarters ended** |
| *In thousands of dollars* | **December 31, 2022** | December 31, 2021 | **December 31, 2022** | December 31, 2021 |
| Average shareholders' equity as presented | $**234521** | $236564 | $**225940** | $244874 |
| Less intangible assets | **(30892)** | (30962) | **(30884)** | (30994) |
| Tangible average shareholders' equity | $**203629** | $205602 | $**195056** | $213880 |

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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:

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| | | | | |
|:---|:---|:---|:---|:---|
| | **For the years ended** | **For the years ended** | **For the quarters ended** | **For the quarters ended** |
| *In thousands of dollars* | **December 31, 2022** | December 31, 2021 | **December 31, 2022** | December 31, 2021 |
| Net Income, as presented | $**38990** | $36269 | $**9197** | $9546 |
| Add: provision (credit) for loan losses | **1750** | (375) | **450** | (1950) |
| Add: income taxes | **8396** | 7644 | **1973** | 2053 |
| Pre-Tax, pre-provision net income | $**49136** | $43538 | $**11620** | $9649 |

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The following table provides a reconciliation of period ending tangible common equity to the Company's consolidated financial statements, adjusted to remove unrealized losses:

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| | | |
|:---|:---|:---|
| | Period Ending | Period Ending |
| *In thousands of dollars except per share data* | **December 31, 2022** | December 31, 2021 |
| Shareholders' Equity | $**228923** | $245657 |
| Intangible Assets | **(30856)** | (30925) |
| Tangible Common Equity | **198067** | 214732 |
| Unrealized Losses on Available for Sale Securities, net of tax | **44718** | 1718 |
| Adjusted Tangible Common Equity | $**242785** | $216450 |
| Adjusted Tangible Book Value Per Share | **$21.98** | $19.68 |

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The following table provides a reconciliation of net income (GAAP) to net income excluding interest income attributable to Payroll Protection Program (PPP) fee recognition:

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| | | | | |
|:---|:---|:---|:---|:---|
| | **For the years ended** | **For the years ended** | **For the quarters ended** | **For the quarters ended** |
| *In thousands of dollars* | **December 31, 2022** | December 31, 2021 | **December 31, 2022** | December 31, 2021 |
| Net Income (GAAP) | $**38990** | $36269 | $**9197** | $9546 |
| Interest Income Attributable to PPP Fee Recognition | **(1252)** | (3950) | **—** | (1142) |
| Change in Income Taxes Attributable to PPP Fee Recognition | **271** | 854 | **—** | 247 |
| Net Income without PPP (non-GAAP) | $**38009** | $33173 | $**9197** | $8651 |

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**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

The First Bancorp

Richard M. Elder, EVP, Chief Financial Officer

207-563-3195

rick.elder@thefirst.com