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What changed in First Bancorp, Inc /ME/'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of First Bancorp, Inc /ME/'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+257 added−263 removedSource: 10-K (2025-03-07) vs 10-K (2024-03-08)

Top changes in First Bancorp, Inc /ME/'s 2024 10-K

257 paragraphs added · 263 removed · 234 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

27 edited+1 added−2 removed119 unchanged
Biggest changeThe banking business in the Bank's Mid-Coast and Eastern Maine market area is subject to modest seasonal fluctuations typically consisting of lower deposits in the winter and spring and higher deposits in the summer and fall. This fluctuation is predictable and has not had a materially adverse effect on the Bank.
Biggest changeRecent investments include areas such as mobile & digital banking, commercial loan origination, and document imaging. The banking business in the Bank's Mid-Coast and Eastern Maine market area is subject to modest seasonal fluctuations typically consisting of lower deposits in the winter and spring and higher deposits in the summer and fall.
Discrimination on the grounds of race, color, religion, sex, sexual orientation, gender identity, age, national origin, physical or mental disability, or other legally protected status is prohibited. This policy of non-discrimination applies to all terms, conditions and privileges of employment including, but not limited to, hiring, employment training, placement, employee development, promotion, transfer, compensation and benefits.
Discrimination on the grounds of race, color, religion, sex, sexual orientation, gender identity, age, national origin, physical or mental disability, veteran status, or other legally protected status is prohibited. This policy of non-discrimination applies to all terms, conditions and privileges of employment including, but not limited to, hiring, employment training, placement, employee development, promotion, transfer, compensation and benefits.
Additionally, the Capital Rules require an institution to establish a capital conservation buffer of CET1 capital in an amount above the minimum risk-based capital requirements for “adequately capitalized” institutions equal to 2.5% of total RWA, resulting in a requirement for the Company and the Bank effectively to maintain CET1, Tier 1 and total capital ratios of 7%, 8.5% and 10.5%, respectively.
Additionally, the Capital Rules require an institution to establish a capital conservation buffer of CET1 capital in an amount above the minimum risk-based capital requirements for “adequately capitalized” institutions equal to 2.5% of total RWAs, resulting in a requirement for the Company and the Bank effectively to maintain CET1, Tier 1 and total capital ratios of 7%, 8.5% and 10.5%, respectively.
We are committed to fostering, cultivating, and preserving a culture of diversity, equity and inclusion, both in our employee base and on our Board of Directors. Valuing diversity and inclusiveness enables us to achieve our corporate mission and creates value for our customers, employees, business partners and shareholders.
We are committed to fostering, cultivating, and preserving a culture of diversity, equity and inclusion, reflective of our market area, both in our employee base and on our Board of Directors. Valuing diversity and inclusiveness enables us to achieve our corporate mission and creates value for our customers, employees, business partners and shareholders.
Under FDICIA and the applicable implementing regulations, an undercapitalized bank will be (i) subject to increased monitoring by its primary federal banking regulator; (ii) required to submit to its primary federal banking regulator an acceptable capital restoration plan (guaranteed, subject to certain limits, by the bank's holding company) within 45 days of The First Bancorp - 2023 Form 10-K - Page 5 being classified as undercapitalized; (iii) subject to strict asset growth limitations; and (iv) required to obtain prior regulatory approval for certain acquisitions, transactions not in the ordinary course of business, and entries into new lines of business.
Under FDICIA and the applicable implementing regulations, an undercapitalized bank will be (i) subject to increased monitoring by its primary federal banking regulator; (ii) required to submit to its primary federal banking regulator an acceptable capital restoration plan (guaranteed, subject to certain limits, by the bank's holding company) within 45 days of being classified as undercapitalized; (iii) subject to strict asset growth limitations; and (iv) required to obtain prior regulatory approval for certain acquisitions, transactions not in the ordinary course of business, and entries into new lines of business.
The statute and its underlying regulations also permit information sharing for counter-terrorist purposes between federal law enforcement agencies and financial institutions, as well as among financial institutions, subject to certain conditions, and require the Federal Reserve Board (and other federal banking regulatory agencies) to evaluate the effectiveness of an applicant in combating money laundering activities when considering applications filed under Section 3 of the BHC Act or under the Bank Merger Act.
The statute and its underlying The First Bancorp - 2024 Form 10-K - Page 7 regulations also permit information sharing for counter-terrorist purposes between federal law enforcement agencies and financial institutions, as well as among financial institutions, subject to certain conditions, and require the Federal Reserve Board (and other federal banking regulatory agencies) to evaluate the effectiveness of an applicant in combating money laundering activities when considering applications filed under Section 3 of the BHC Act or under the Bank Merger Act.
The rule takes a risk based approach, utilizing the CAMELS rating system, which is a supervisory rating system designed to take into account and reflect financial and operational risks that a bank may face, as one component of the assessment calculation along with seven additional metrics including capital adequacy, asset quality, earnings, brokered deposit reliance, and assets growth rate.
The rule takes a risk based approach, utilizing the CAMELS rating system, which is a supervisory rating The First Bancorp - 2024 Form 10-K - Page 6 system designed to take into account and reflect financial and operational risks that a bank may face, as one component of the assessment calculation along with seven additional metrics including capital adequacy, asset quality, earnings, brokered deposit reliance, and assets growth rate.
"Cybersecurity" for a discussion of our cybersecurity risk management and strategy, and oversight of risks from cybersecurity threats. Human Capital At December 31, 2023, the Company had 275 employees and full-time equivalency of 271 employees. Most employees live and work in the State of Maine, with a limited number of employees working remotely outside of Maine.
"Cybersecurity" for a discussion of our cybersecurity risk management and strategy and oversight of risks from cybersecurity threats. Human Capital At December 31, 2024, the Company had 284 employees and full-time equivalency of 282 employees. Most employees live and work in the State of Maine, with a limited number of employees working remotely outside of Maine.
The Brewer office raised the Bank's branch location count to eighteen, and became its second branch in Penobscot County. As of December 31, 2023, the Company's securities consisted of one class of common stock. At that date, there were 11,098,057 shares of common stock outstanding.
The Brewer office raised the Bank's branch location count to eighteen, and became its second branch in Penobscot County. As of December 31, 2024, the Company's securities consisted of one class of common stock. At that date, there were 11,155,528 shares of common stock outstanding.
Core Capital consists primarily of common stockholders' equity, which generally includes common stock, related surplus and retained earnings, certain non-cumulative perpetual preferred stock and related surplus, and minority interests in the equity accounts of consolidated subsidiaries, and The First Bancorp - 2023 Form 10-K - Page 4 (subject to certain limitations) mortgage servicing rights and purchased credit card relationships, less all other intangible assets (primarily goodwill).
Core Capital consists primarily of common stockholders' equity, which generally includes common stock, related surplus and retained earnings, certain non-cumulative perpetual preferred stock and related surplus, and minority interests in the equity accounts of consolidated subsidiaries, and (subject to certain limitations) mortgage servicing rights and purchased credit card relationships, less all other intangible assets (primarily goodwill).
First National Bank : The Bank emphasizes personal service, and its customers are primarily small businesses and individuals to whom the Bank offers a wide variety of services, including deposit accounts and consumer, commercial and mortgage loans.
First National Bank : The Bank emphasizes personal service, and its customers are primarily small businesses and individuals to whom the Bank offers a wide variety of services, including deposit accounts and consumer, commercial and mortgage loans. The Bank continually evolves its processes and adapts to new technologies.
Through the ongoing development of this plan, we not only comply with appropriate government regulations but also strive to make the best personnel decisions for our Company and our communities. Professional Development: Employee development is emphasized and extensive training and development opportunities are provided.
Through the ongoing development of this plan, we not only comply with appropriate government regulations but also strive to make the best personnel decisions for our Company and our communities. The First Bancorp - 2024 Form 10-K - Page 2 Professional Development: Employee development is emphasized and extensive training and development opportunities are provided.
Assessments for established small banks range from 1.5 to 30 basis points, after adjustments. The First Bancorp - 2023 Form 10-K - Page 6 Assessment rates specific to the Bank are calculated quarterly based upon its balance sheet and performance metrics as of the prior quarter end.
Assessments for established small banks range from 1.5 to 30 basis points, after adjustments. Assessment rates specific to the Bank are calculated quarterly based upon its balance sheet and performance metrics as of the prior quarter end.
This is important in local decision-making and allows the Bank to respond to customer questions and concerns on a timely basis and fosters quality customer service. The Bank has worked and will continue to work to position itself to be competitive in its market area.
This is important in local decision-making and allows the Bank to respond to customer questions and concerns on a timely basis and fosters quality customer service. The First Bancorp - 2024 Form 10-K - Page 1 The Bank has worked and will continue to work to position itself to be competitive in its market area.
Opportunities made available to employees may include participation in industry seminars, industry certificate programs, and advanced industry education at regional or national banking schools. The Company has also developed an in- The First Bancorp - 2023 Form 10-K - Page 2 house program targeted to the development of future leaders.
Opportunities made available to employees may include participation in industry seminars, industry certificate programs, and advanced industry education at regional or national banking schools. The Company has also developed an in- house program targeted to the development of future leaders.
On December 31, 2023, the Company's consolidated Total Capital Ratio was 13.66%, its CET1 and Tier 1 ratios were 12.42%, and its Leverage Capital Ratio was 8.61%. Based on the above figures and accompanying discussion, the Company exceeds all regulatory capital requirements and is considered well capitalized.
On December 31, 2024, the Company's consolidated Total Capital Ratio was 13.22%, its CET1 and Tier 1 ratios were 12.04%, and its Leverage Capital Ratio was 8.47%. Based on the above figures and accompanying discussion, the Company exceeds all regulatory capital requirements and is considered well capitalized.
The First Bancorp - 2023 Form 10-K - Page 7 The Bank Secrecy Act: The Bank Secrecy Act (the "BSA") requires all financial institutions, including banks and securities broker-dealers, to, among other things, establish a risk-based system of internal controls reasonably designed to prevent money laundering and the financing of terrorism.
The Bank Secrecy Act: The Bank Secrecy Act (the "BSA") requires all financial institutions, including banks and securities broker-dealers, to, among other things, establish a risk-based system of internal controls reasonably designed to prevent money laundering and the financing of terrorism.
Until corrected, we could be prohibited from The First Bancorp - 2023 Form 10-K - Page 3 engaging in any new activity or acquiring companies engaged in activities that are not closely related to banking under the BHC Act without prior FRB approval.
Until corrected, we could be prohibited from engaging in any new activity or acquiring companies engaged in activities that are not closely related to banking under the BHC Act without prior FRB approval.
A bank's qualifying total capital ("Total Capital") for this purpose may include two components: "Core" (Tier 1) Capital and "Supplementary" (Tier 2) Capital; Tier 1 Capital is further broken down in the Capital Rules to Common Equity Tier 1 (CET1) and Additional Tier 1 Capital (AT1).
A bank's qualifying total capital ("Total Capital") for this purpose may include two The First Bancorp - 2024 Form 10-K - Page 4 components: "Core" (Tier 1) Capital and "Supplementary" (Tier 2) Capital; Tier 1 Capital is further broken down in the Capital Rules to Common Equity Tier 1 ("CET1") and Additional Tier 1 Capital ("AT1").
FDICIA generally prohibits a bank from making capital distributions (including payment of dividends) or paying management fees to controlling stockholders or their affiliates if, after such payment, the bank would be undercapitalized.
FDICIA The First Bancorp - 2024 Form 10-K - Page 5 generally prohibits a bank from making capital distributions (including payment of dividends) or paying management fees to controlling stockholders or their affiliates if, after such payment, the bank would be undercapitalized.
The Bank's ability to make decisions close to the marketplace, Management's commitment to providing quality banking products, the caliber of the The First Bancorp - 2023 Form 10-K - Page 1 professional staff, and the community involvement of the Bank's employees are all factors affecting the Bank's ability to be competitive.
The Bank's ability to make decisions close to the marketplace, Management's commitment to providing quality banking products, the caliber of the professional staff, and the community involvement of the Bank's employees are all factors affecting the Bank's ability to be competitive.
See Item 7 - Management's Discussion and Analysis of Financial Condition The First Bancorp - 2023 Form 10-K - Page 8 and Results of Operations and Item 1A - Risk Factors, regarding the Bank's net interest margin and the effect of interest rate volatility on future earnings.
See Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations and Item 1A - Risk Factors, regarding the Bank's net interest margin and the effect of interest rate volatility on future earnings.
On October 24, 2023 the OCC, the FRB, and the FDIC issued a joint final rule to strengthen and modernize regulations implementing the CRA which had last had major revisions in 1995. The new rule becomes effective on April 1, 2024 with compliance required starting January 1, 2026.
On October 24, 2023 the OCC, the FRB, and the FDIC issued a joint final rule to strengthen and modernize regulations implementing the CRA which had last had major revisions in 1995.
In addition to traditional banking services, the Company provides investment management and private banking services through First National Wealth Management, which is an operating division of the Bank.
This fluctuation is predictable and has not had a materially adverse effect on the Bank. In addition to traditional banking services, the Company provides investment management and private banking services through First National Wealth Management, which is an operating division of the Bank.
The nature of future monetary policies and the effect of such policies on the future business and earnings of the Company and the Bank cannot be predicted.
The policies of the FRB may have a material effect on our business, results of operations and financial condition. The nature of future monetary policies and the effect of such policies on the future business and earnings of the Company and the Bank cannot be predicted.
These methods are used in varying degrees and combinations to directly affect the availability of bank loans and deposits, as well as the interest rates charged on loans and paid on deposits. The policies of the FRB may have a material effect on our business, results of operations and financial condition.
These methods are used in varying The First Bancorp - 2024 Form 10-K - Page 8 degrees and combinations to directly affect the availability of bank loans and deposits, as well as the interest rates charged on loans and paid on deposits.
The Bank has in place a written Affirmative Action program to achieve full utilization of minorities, the handicapped, disabled veterans, Vietnam era veterans, and women at all levels of employment and in all segments of the work force.
This policy also applies to such areas as educational assistance, employee layoff and recall, social and recreational programs, employee facilities and employee termination. The Bank has in place a written Affirmative Action program to achieve full utilization of minorities, individuals with disabilities, and women at all levels of employment and in all segments of the work force.
Removed
The Bank continually evolves its processes and adapts to new technologies, but has not made any material changes in its mode of conducting business during the past five years.
Added
The final rule became effective on April 1, 2024, but has been paused subject to a court ordered injunction, and most provisions of the rule The First Bancorp - 2024 Form 10-K - Page 3 will not become applicable until after January 1, 2026, pending the outcome of litigation on the final rule.
Removed
This policy also applies to such areas as educational assistance, employee layoff and recall, social and recreational programs, employee facilities and employee termination.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeTo date, there has been no material adverse effect on our business or operations due to failure of keeping pace with technological change. We are subject to security, transactional and operational risks relating to the use of technology that could damage our reputation and our business.
Biggest changeWe are subject to security, transactional and operational risks relating to the use of technology that could damage our reputation and our business. We rely heavily on communications and information systems to conduct our business, serving both internal and customer constituencies, and substantial investment has been made in these systems in recent years.
The Company and Bank complied with the fully phased requirements well in advance of the completion date and continued to do so as of December 31, 2023. In July 2023 US bank regulators jointly published proposed rulemaking for Basel III Finalization, also referred to as Basel III Endgame or B3E.
The Company and Bank complied with the fully phased requirements well in advance of the completion date and continued to do so as of December 31, 2024. In July 2023 US bank regulators jointly published proposed rulemaking for Basel III Finalization, also referred to as Basel III Endgame or B3E.
Our common stock price can fluctuate as a result of many factors, some of which are beyond our control, including: • quarterly fluctuations in our operating and financial results; • operating results that vary from the expectations of investors; • changes in expectations as to our future financial performance, including financial estimates; • events negatively impacting the financial services industry which result in a general decline for the industry; The First Bancorp - 2023 Form 10-K - Page 16 • new laws or regulations or new interpretations of existing laws or regulations applicable to our business; • changes in accounting standards, policies, guidance, interpretations or principles; • general domestic economic and market conditions; and • declines in bank stock prices driven by macro-economic concerns.
Our common stock price can fluctuate as a result of many factors, some of which are beyond our control, including: • quarterly fluctuations in our operating and financial results; • operating results that vary from the expectations of investors; • changes in expectations as to our future financial performance, including financial estimates; The First Bancorp - 2024 Form 10-K - Page 16 • events negatively impacting the financial services industry which result in a general decline for the industry; • new laws or regulations or new interpretations of existing laws or regulations applicable to our business; • changes in accounting standards, policies, guidance, interpretations or principles; • general domestic economic and market conditions; and • declines in bank stock prices driven by macro-economic concerns.
Specific examples of matters being evaluated as part of the investment decision or recommendation by certain investors and influencers include the business risks of climate change and the adequacy of companies’ responses to climate change, diversity of a company's The First Bancorp - 2023 Form 10-K - Page 17 management and/or board of directors, community involvement and charitable giving, and the inclusion of ESG factors in the determination of executive compensation.
Specific examples of matters being evaluated as part of the investment decision or recommendation by certain investors and influencers include the business risks of climate The First Bancorp - 2024 Form 10-K - Page 17 change and the adequacy of companies’ responses to climate change, diversity of a company's management and/or board of directors, community involvement and charitable giving, and the inclusion of ESG factors in the determination of executive compensation.
As a result, repayment of these loans may, to a greater extent than residential loans, be subject to adverse conditions in the real estate market or the broader economy. The First Bancorp - 2023 Form 10-K - Page 9 Our Allowance for Credit Losses may be insufficient and require additional provision from earnings.
As a result, repayment of these loans may, to a greater extent than residential loans, be subject to adverse conditions in the real estate market or the broader economy. The First Bancorp - 2024 Form 10-K - Page 9 Our Allowance for Credit Losses may be insufficient and require additional provision from earnings.
Commercial and commercial real estate loans generally carry larger loan balances and can involve a greater degree of financial and credit risk than other loans.
Commercial and commercial real estate loans generally carry larger loan balances and can involve a greater degree of financial and credit risk than other types of loans.
Interest rates are highly sensitive to many factors that are beyond our control, including general economic conditions, demand for loans, securities and deposits, and policies of various governmental and The First Bancorp - 2023 Form 10-K - Page 10 regulatory agencies and, in particular, the Board of Governors of the Federal Reserve System.
Interest rates are highly sensitive to many factors that are beyond our control, including general economic conditions, demand for loans, securities and deposits, and policies of various governmental and The First Bancorp - 2024 Form 10-K - Page 10 regulatory agencies and, in particular, the Board of Governors of the Federal Reserve System.
While the Company is not aware of any such events, remediation of any identified limitations may be ineffective in improving internal controls. The First Bancorp - 2023 Form 10-K - Page 12 We continually encounter technological change that may be difficult (costly) to keep up with.
While the Company is not aware of any such events, remediation of any identified limitations may be ineffective in improving internal controls. The First Bancorp - 2024 Form 10-K - Page 12 We continually encounter technological change that may be difficult (costly) to keep up with.
The First Bancorp - 2023 Form 10-K - Page 14 Banking regulators and other supervisory authorities, investors and other stakeholders have increasingly viewed financial institutions as important in helping to address the risks related to climate change both directly and with respect to their customers.
The First Bancorp - 2024 Form 10-K - Page 14 Banking regulators and other supervisory authorities, investors and other stakeholders have increasingly viewed financial institutions as important in helping to address the risks related to climate change both directly and with respect to their customers.
The First Bancorp - 2023 Form 10-K - Page 15 The Dodd-Frank Act created the Consumer Financial Protection Bureau and tightened capital standards, and continues to result in new laws and regulations that may impact our revenues or increase our costs of operations.
The First Bancorp - 2024 Form 10-K - Page 15 The Dodd-Frank Act created the Consumer Financial Protection Bureau and tightened capital standards, and continues to result in new laws and regulations that may impact our revenues or increase our costs of operations.
The First Bancorp - 2023 Form 10-K - Page 11 Lack of loan demand may adversely impact net interest income. Loan demand in the Bank's market area may be limited during periods of weak economic conditions. This could have the greatest impact on the commercial loan portfolio.
The First Bancorp - 2024 Form 10-K - Page 11 Lack of loan demand may adversely impact net interest income. Loan demand in the Bank's market area may be limited during periods of weak economic conditions. This could have the greatest impact on the commercial loan portfolio.
Since the introduction of EMV or Chip cards, we have had the ability to charge back fraudulent transactions to the acquiring merchant if that merchant does not The First Bancorp - 2023 Form 10-K - Page 13 have an EMV capable terminal.
Since the introduction of EMV The First Bancorp - 2024 Form 10-K - Page 13 or Chip cards, we have had the ability to charge back fraudulent transactions to the acquiring merchant if that merchant does not have an EMV capable terminal.
As a result, banking regulators continue to give greater scrutiny to lenders (such as the Bank) with a high concentration or a high growth rate of commercial real estate loans in their portfolios, and such lenders are expected to implement stricter underwriting criteria, internal controls, risk management policies and portfolio stress testing, as well as higher capital levels and loss allowances.
As a result, banking regulators continue to give greater scrutiny to lenders with a high concentration or a high growth rate of commercial real estate loans in their portfolios, and such lenders are expected to implement stricter underwriting criteria, internal controls, risk management policies and portfolio stress testing, as well as higher capital levels and appropriate loss allowances.
Environmental, social and governance oversight may influence stock price and increase compliance costs. Some investors have begun to consider how corporations, such as the Company, are addressing environmental, social and governance matters, commonly known as "ESG" matters when making investment decisions.
Environmental, social and governance oversight may influence stock price and increase compliance costs. Some investors may consider how corporations, such as the Company, are addressing environmental, social and governance matters, commonly known as "ESG" matters when making investment decisions.
In addition, recently the stock market generally has experienced extreme price and volume fluctuations, and industry factors and general economic and political conditions and events, such as economic slowdowns or recessions, actual or anticipated interest rate changes or credit loss trends, could also cause our stock price to decrease regardless of our operating results.
The stock market over time is has experienced extreme price and volume fluctuations, and industry factors and general economic and political conditions and events, such as economic slowdowns or recessions, actual or anticipated interest rate changes or credit loss trends, could also cause our stock price to decrease regardless of our operating results.
These conditions include short-term and long-term interest rates, inflation, money supply, political issues, geopolitical events such as the ongoing conflicts in Ukraine and the Middle East, legislative and regulatory changes, fluctuations in both debt and equity capital markets, broad trends in industry and finance, unemployment and investor confidence, all of which are beyond our control.
These conditions include short-term and long-term interest rates, inflation, money supply, political issues, geopolitical events, legislative and regulatory changes, fluctuations in both debt and equity capital markets, broad trends in industry and finance, unemployment and investor confidence, all of which are beyond our control.
Implementation of B3E could have unintended consequences on regional and community banks whose total assets are below threshold, such as the Bank, and result in lower returns on equity, require additional capital, limit lending activities, or limit distributions such as dividends.
If implemented in its current form, B3E could have unintended consequences on regional and community banks whose total assets are below threshold, such as the Bank, and result in lower returns on equity, require additional capital, limit lending activities, or limit distributions such as dividends.
Our mortgage-backed bond portfolio may be subject to extension risk as interest rates rise, extending the average life of the bonds. As of December 31, 2023, we had $282.1 million and $385.7 million in available for sale and held to maturity investment securities, respectively.
Our mortgage-backed bond portfolio may be subject to extension risk as interest rates rise, extending the average life of the bonds. As of December 31, 2024, we had $274.7 million and $369.9 million in available for sale and held to maturity investment securities, respectively.
For the year ended December 31, 2023, the average monthly trading volume of our common stock was 294,570 shares, or approximately 2.66% of the average number of our outstanding common shares. Due to the limited trading volume in our common stock, the intraday spread between bid and ask prices of the shares can be quite high.
For the year ended December 31, 2024, the average monthly trading volume of our common stock was 341,788 shares, or approximately 3.07% of the average number of our outstanding common shares. Due to the limited trading volume in our common stock, the intraday spread between bid and ask prices of the shares can be quite high.
Our loan portfolio includes commercial, commercial real estate and commercial construction loans that may have higher risks than other types of loans. Our commercial, commercial real estate, and commercial construction loans at December 31, 2023 and 2022 were $760.3 million and $669.9 million, or 35.8% and 35.0% of total loans, respectively.
Our loan portfolio includes commercial, commercial real estate and commercial construction loans that may have higher risks than other types of loans. Our commercial, commercial real estate, and commercial construction loans at December 31, 2024 and 2023 were $970.9 million and $887.1 million , or 41.5% and 41.7% of total loans, respectively.
From time to time, customers, vendors or other parties may make claims and take legal action against us.
We are subject to claims and litigation that may impact our earnings and/or our reputation. From time to time, customers, vendors or other parties may make claims and take legal action against us.
The proposal significantly alters the regulatory capital regime for US banks, generally increasing required capital levels for banks with $100 billion or more in assets.
The proposal significantly alters the regulatory capital regime for US banks, generally increasing required capital levels for banks with $100 billion or more in assets, however, the proposal is expected to be abandoned or substantially altered by the new executive branch leadership .
In order to attract and retain qualified employees, we must compensate such employees at market levels. Typically, those levels have caused employee compensation to be our greatest expense.
Competition for the best people in most activities in which we are engaged can be intense, and we may not be able to retain or hire the people we want and/or need. In order to attract and retain qualified employees, we must compensate such employees at market levels. Typically, those levels have caused employee compensation to be our greatest expense.
We rely heavily on communications and information systems to conduct our business, serving both internal and customer constituencies, and substantial investment has been made in these systems in recent years. Any failure, interruption or breach in security of these systems could result in failures or disruptions in our customer relationship management, general ledger, deposit, loan, and other systems.
Any failure, interruption or breach in security of these systems could result in failures or disruptions in our customer relationship management, general ledger, deposit, loan, and other systems.
The current employment landscape includes a very low national and local unemployment rate, upward wage pressures, and increased workplace flexibility brought about by remote work options. Competition for the best people in most activities in which we are engaged can be intense, and we may not be able to retain or hire the people we want and/or need.
The current employment landscape includes a low national and local unemployment rate, continued upward wage pressures, and for some positions increased workplace flexibility brought about by remote work options.
In the normal course of business the Bank issues EMV/Chip debit cards to its customers to keep this risk as low as possible. However fraud can still occur online or using fallback transactions, creating potential risk for this type of liability. We are subject to claims and litigation that may impact our earnings and/or our reputation.
In the normal course of business the Bank issues EMV/Chip debit cards to its customers to keep this risk as low as possible. Since most terminals are now EMV compliant, we have added processing rules to reject any transactions presented on our customers' cards with only magnetic stripe (fall back) data.
In response the Federal Reserve enacted a series of interest rate increases and other actions designed to rein in inflation, and in doing so introduced a risk of economic slowdown or recession if interest rates were to rise too high,or remain elevated for too long that continues to the present.
Despite the FOMC reversing course and lowering interest rates in the second half of 2024, risk of sustained economic slowdown or recession remains if interest rates remain elevated for too long, or if inflation is re-kindled necessitating another round of rate increases.
Added
To date, there has been no material adverse effect on our business or operations due to failure of keeping pace with technological change. As a result of recent innovations related to artificial intelligence ("AI"), the Bank has created a task force to analyze current and future use cases for AI to ensure it is used effectively and securely.
Added
In response the Federal Reserve enacted a series of interest rate increases and other actions designed to slow the economy and rein in inflation, which have been largely successful but have yet to reach the stated price change target.
Added
The new administration elected to the lead the executive branch of the federal government could seek to make changes in the regulatory framework which may or may not be beneficial to the Company.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Bank is a member of the Financial Services Information Sharing and Analysis Center (FS-ISAC) and is a participant in the Federal Financial Institutions Examination Council (FFFIEC) Cybersecurity Assessment Tool. Information security training is required for all employees no less than annually.
Biggest changeThe Bank is a member of the Financial Services Information Sharing and Analysis Center ("FS-ISAC") and is a participant in the Federal Financial Institutions Examination Council ("FFFIEC") Cybersecurity Assessment Tool ("CAT"). The Bank has plans to move to a new cybersecurity assessment tool in 2025 as the FFIEC is sunsetting the CAT.
Information security matters are a standing topic for the Management-only Technology Steering Committee (TSC) where membership includes the CIO, CA and other senior level managers, and the Management-Board level Enterprise Risk Management (ERM) Committee where membership includes the CIO, senior level managers, and a represent from the Board.
Information security matters are a standing topic for the Management-only Technology Steering Committee ("TSC") where membership includes the CIO, CA and other senior level managers, and the Management-Board level Enterprise Risk Management ("ERM") Committee where membership includes the CIO, senior level managers, and a representative from the Board.
The Board and Management recognize that cybersecurity matters, including expenditure related threats and the impact of incursions or breaches, may trigger disclosure The First Bancorp - 2023 Form 10-K - Page 18 requirements under SEC rules and regulations, and intend to remain vigilant with respect to the cybersecurity aspects of these obligations.
The Board and Management recognize that cybersecurity matters, including expenditure related threats and the impact of incursions or breaches, may trigger disclosure requirements under SEC rules and regulations, and intend to remain vigilant with respect to the cybersecurity aspects of these obligations.
Information security matters also fall within the scope of periodic examinations by the Bank's primary regulator, the Office of the Comptroller of the Currency (OCC). Included in our mitigation strategy is a comprehensive cybersecurity insurance policy.
Information security matters also fall within the scope of periodic examinations by the Bank's primary regulator, the Office of the Comptroller of the Currency ("OCC"). The First Bancorp - 2024 Form 10-K - Page 18 Included in our mitigation strategy is a comprehensive cybersecurity insurance policy.
To assist with its information security programs, the Company engages with multiple third-party providers and specialists, including firms with personnel credentialed by internationally recognized organizations such as ISC2, the SANS Institute, and ISACA.
Information security training is required for all employees no less than annually. To assist with its information security programs, the Company engages with multiple third-party providers and specialists, including firms with personnel credentialed by internationally recognized organizations such as ISC2, the SANS Institute, and ISACA.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe Company made the following repurchases of its common stock during the year ended December 31, 2023: Month Shares Purchased Average Price Per Share Total shares purchased as part of publicly announced repurchase plans Maximum number of shares that may be purchased under the plans January 2023 8,090 $ 29.41 — — February 2023 — — — — March 2023 — — — — April 2023 — — — — May 2023 555 23.22 — — June 2023 — — — — July 2023 — — — — August 2023 — — — — September 2023 — — — — October 2023 — — — — November 2023 — — — — December 2023 — — — — 8,645 $ 26.32 — — Unregistered Sales of Equity Securities None Securities Authorized for Issuance Under Equity Compensation Plans Please see Item 12.
Biggest changeThe Company made the following repurchases of its common stock during the year ended December 31, 2024: Month Shares Purchased Average Price Per Share Total shares purchased as part of publicly announced repurchase plans Maximum number of shares that may be purchased under the plans January 2024 8,031 $ 26.39 — — February 2024 — — — — March 2024 — — — — April 2024 — — — — May 2024 — — — — June 2024 — — — — July 2024 — — — — August 2024 — — — — September 2024 — — — — October 2024 — — — — November 2024 — — — — December 2024 — — — — 8,031 $ 26.39 — — Unregistered Sales of Equity Securities None Securities Authorized for Issuance Under Equity Compensation Plans Please see Item 12.
The First Bancorp - 2023 Form 10-K - Page 20 Performance Graph Set forth below is a line graph comparing the five-year cumulative total return of $100.00 invested in the Company's common stock ("FNLC"), assuming reinvestment of all cash dividends and retention of all stock dividends, with a comparable amount invested in the Standard & Poor's 500 Index ("S&P 500") and the NASDAQ Combined Bank Index ("NASD Bank").
The First Bancorp - 2024 Form 10-K - Page 20 Performance Graph Set forth below is a line graph comparing the five-year cumulative total return of $100.00 invested in the Company's common stock ("FNLC"), assuming reinvestment of all cash dividends and retention of all stock dividends, with a comparable amount invested in the Standard & Poor's 500 Index ("S&P 500") and the NASDAQ Combined Bank Index ("NASD Bank").
ITEM 5. Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities Market Information and Holders of Record Shares of the Company's common stock trade on NASDAQ under the symbol "FNLC". The last transaction in the Company's stock on NASDAQ during 2023 was on December 31 at $28.22 per share.
ITEM 5. Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities Market Information and Holders of Record Shares of the Company's common stock trade on NASDAQ under the symbol "FNLC". The last transaction in the Company's stock on NASDAQ during 2024 was on December 31 at $27.35 per share.
Dividend Policy The Board declared a quarterly dividend of $0.34 per share on the Company's common stock for the first quarter of the year ended December 31, 2023 and quarterly dividends of $0.35 per share on the Company's common stock for each of the second, third and fourth quarters of the year ended December 31, 2023, resulting in total dividends for the year ended December 31, 2023 of $15.4 million.
Dividend Policy The Board declared a quarterly dividend of $0.35 per share on the Company's common stock for the first quarter of the year ended December 31, 2024 and quarterly dividends of $0.36 per share on the Company's common stock for each of the second, third and fourth quarters of the year ended December 31, 2024, resulting in total dividends for the year ended December 31, 2024 of $15.8 million.
As of February 15, 2024, there were 4,870 stockholders of record of our common stock. There are no warrants outstanding with respect to the Company's common stock and the Company has no securities outstanding which are convertible into common equity.
As of February 20, 2025, there were 2,274 stockholders of record of our common stock. There are no warrants outstanding with respect to the Company's common stock and the Company has no securities outstanding which are convertible into common equity.
The NASD Bank index is a capitalization-weighted index designed to measure the performance of all NASDAQ stocks in the banking sector. 2018 2019 2020 2021 2022 2023 FNLC $100.00 $120.13 $106.24 $137.32 $136.75 $135.95 S&P 500 $100.00 $131.48 $155.66 $200.30 $163.98 $207.05 NASD Bank $100.00 $124.38 $115.05 $164.42 $134.23 $129.62 The First Bancorp - 2023 Form 10-K - Page 21 ITEM 6.
The NASD Bank index is a capitalization-weighted index designed to measure the performance of all NASDAQ stocks in the banking sector. 2019 2020 2021 2022 2023 2024 FNLC $100.00 $88.44 $114.31 $113.83 $113.17 $116.01 S&P 500 $100.00 $118.39 $152.34 $124.72 $157.47 $196.84 NASD Bank $100.00 $92.50 $132.19 $107.92 $104.21 $125.55 The First Bancorp - 2024 Form 10-K - Page 21 ITEM 6.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe First Bancorp - 2023 Form 10-K - Page 35 The following table summarizes the loan portfolio, by class, as of December 31, 2023 and 2022: As of December 31, Dollars in thousands 2023 2022 Commercial Real Estate Owner Occupied $ 314,819 14.8 % $ 256,623 13.4 % Real Estate Non-Owner Occupied 393,636 18.5 % 363,660 19.0 % Construction 88,673 4.2 % 93,907 4.9 % C&I 356,787 16.8 % 319,359 16.7 % Multifamily 93,476 4.4 % 79,057 4.1 % Municipal 51,423 2.4 % 40,619 2.1 % Residential Term 674,855 31.6 % 597,404 31.2 % Construction 32,358 1.5 % 49,907 2.6 % Home Equity Revolving and Term 104,026 4.9 % 93,075 4.9 % Consumer 19,401 0.9 % 21,063 1.1 % Total loans $ 2,129,454 100.0 % $ 1,914,674 100.0 % The following table sets forth certain information regarding the contractual maturities of the Bank's loan portfolio as of December 31, 2023: Dollars in thousands 1 - 5 Years 5 - 10 Years > 10 Years Total Commercial Real Estate Owner Occupied $ 193 $ 22,987 $ 31,430 $ 260,209 $ 314,819 Real Estate Non-Owner Occupied — 21,676 57,923 314,037 393,636 Construction 515 5,507 13,265 69,386 88,673 C&I 1,357 171,296 78,461 105,673 356,787 Multifamily — 1,095 213 92,168 93,476 Municipal 570 11,665 9,860 29,328 51,423 Residential Term 665 7,367 35,154 631,669 674,855 Construction — 1,139 — 31,219 32,358 Home Equity Revolving and Term 1,080 4,622 5,890 92,434 104,026 Consumer 5,643 7,640 2,414 3,704 19,401 Total loans $ 10,023 $ 254,994 $ 234,610 $ 1,629,827 $ 2,129,454 The First Bancorp - 2023 Form 10-K - Page 36 The following table provides a listing of loans, by class, between variable and fixed rates as of December 31, 2023: Fixed-Rate Adjustable-Rate Total Dollars in thousands Amount % of total Amount % of total Amount % of total Commercial Real Estate Owner Occupied $ 23,680 1.1 % $ 291,139 13.7 % $ 314,819 14.8 % Real Estate Non-Owner Occupied 97,872 4.6 % 295,764 13.9 % 393,636 18.5 % Construction 26,375 1.2 % 62,298 3.0 % 88,673 4.2 % C&I 127,025 6.0 % 229,762 10.8 % 356,787 16.8 % Multifamily 677 0.0 % 92,799 4.4 % 93,476 4.4 % Municipal 51,178 2.4 % 245 0.0 % 51,423 2.4 % Residential Term 463,364 21.7 % 211,491 9.9 % 674,855 31.6 % Construction 11,068 0.5 % 21,290 1.0 % 32,358 1.5 % Home Equity Revolving and Term 13,627 0.6 % 90,399 4.3 % 104,026 4.9 % Consumer 13,785 0.6 % 5,616 0.3 % 19,401 0.9 % Total loans $ 828,651 38.7 % $ 1,300,803 61.3 % $ 2,129,454 100.0 % Loan Concentrations As of December 31, 2023, the Bank had two concentrations of loans in two particular industries that exceeded 10% of its total loan portfolio: (1) loans to hotels (except Casino hotels) and motels, totaling $231.5 million, or 10.87% of total loans; and (2) loans to lessors of residential buildings and dwellings, totaling $217.5 million, or 10.21% of total loans.
Biggest changeThe following table summarizes the loan portfolio, by class, as of December 31, 2024 and 2023: As of December 31, Dollars in thousands 2024 2023 Commercial Real Estate Owner Occupied $ 358,588 15.3 % $ 314,819 14.8 % Real Estate Non-Owner Occupied 403,899 17.3 % 390,167 18.3 % Construction 99,717 4.3 % 88,673 4.2 % C&I 365,817 15.6 % 315,026 14.8 % Multifamily 108,732 4.6 % 93,476 4.4 % Agriculture 52,219 2.2 % 45,230 2.1 % Municipal 61,827 2.6 % 51,423 2.4 % Residential Term 710,807 30.4 % 674,855 31.7 % Construction 35,481 1.5 % 32,358 1.5 % Home Equity Revolving and Term 123,063 5.3 % 104,026 4.9 % Consumer 20,790 0.9 % 19,401 0.9 % Total loans $ 2,340,940 100.0 % $ 2,129,454 100.0 % The First Bancorp - 2024 Form 10-K - Page 35 The following table sets forth certain information regarding the contractual maturities of the Bank's loan portfolio as of December 31, 2024: Dollars in thousands 1 - 5 Years 5 - 10 Years > 10 Years Total Commercial Real Estate Owner Occupied $ 305 $ 62,927 $ 34,585 $ 260,771 $ 358,588 Real Estate Non-Owner Occupied — 45,160 48,560 310,179 403,899 Construction — 33,653 3,713 62,351 99,717 C&I 1,101 223,219 56,878 84,619 365,817 Multifamily — 14,022 688 94,022 108,732 Agriculture 14 13,470 11,824 26,911 52,219 Municipal — 26,794 14,512 20,521 61,827 Residential Term — 26,317 31,795 652,695 710,807 Construction 220 5,223 454 29,584 35,481 Home Equity Revolving and Term 774 12,787 6,148 103,354 123,063 Consumer 5,933 7,616 2,102 5,139 20,790 Total loans $ 8,347 $ 471,188 $ 211,259 $ 1,650,146 $ 2,340,940 The following table provides a listing of loans, by class, between variable and fixed rates as of December 31, 2024: Fixed-Rate Adjustable-Rate Total Dollars in thousands Amount % of total Amount % of total Amount % of total Commercial Real Estate Owner Occupied $ 51,553 2.2 % $ 307,035 13.1 % $ 358,588 15.3 % Real Estate Non-Owner Occupied 107,995 4.6 % 295,904 12.7 % 403,899 17.3 % Construction 32,707 1.4 % 67,010 2.9 % 99,717 4.3 % C&I 146,275 6.2 % 219,542 9.4 % 365,817 15.6 % Multifamily 7,935 0.3 % 100,797 4.3 % 108,732 4.6 % Agriculture 8,932 0.4 % 43,287 1.8 % 52,219 2.2 % Municipal 61,604 2.6 % 223 0.0 % 61,827 2.6 % Residential Term 469,574 20.1 % 241,233 10.3 % 710,807 30.4 % Construction 16,455 0.7 % 19,026 0.8 % 35,481 1.5 % Home Equity Revolving and Term 20,700 0.9 % 102,363 4.4 % 123,063 5.3 % Consumer 14,544 0.6 % 6,246 0.3 % 20,790 0.9 % Total loans $ 938,274 40.0 % $ 1,402,666 60.0 % $ 2,340,940 100.0 % Loan Concentrations As of December 31, 2024 and 2023, the Bank had two concentrations of loans in two particular industries that exceeded 10% of its total loan portfolio: (1) loans to lessors of residential buildings and dwellings, totaling $260.7 million, or 11.14%, and $217.5 million, or 10.21%, of total loans, respectively; and (2) loan to hotels (except Casino hotels) and motels, totaling $242.1 million, or 10.34%, and $231.5 million, or 10.87%, of total loans, respectively.
ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The Company was incorporated in the State of Maine on January 15, 1985, and is the parent holding company of Bank. On January 28, 2016, the Board of Directors voted to change the Bank's name to First National Bank from The First, N.A.
ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The Company was incorporated in the State of Maine on January 15, 1985, and is the parent holding company of the Bank. On January 28, 2016, the Board of Directors voted to change the Bank's name to First National Bank from The First, N.A.
Management regularly evaluates the allowance, typically monthly, to determine the appropriate level by taking into consideration factors such as the size and growth trajectory of the portfolio, quality trends as measured by key indicators, prior loan loss experience in major portfolio segments, local and national business and economic conditions, the results of any stress testing undertaken during the period, and Management's estimation of potential losses.
Management regularly evaluates the allowance, typically monthly, to determine the appropriate level by taking into consideration factors such as the size and growth trajectory of the portfolio, quality trends as measured by key indicators, prior loan loss experience in major portfolio segments, local and national business conditions, economic forecasts, the results of any stress testing undertaken during the period, and Management's estimation of potential losses.
The primary factors considered in evaluating whether a loss should be recognized include: (a) the length of time and extent to which the fair value has been less than cost or amortized cost and the expected recovery period of the security, (b) the financial condition, credit rating and future prospects of the issuer, (c) whether the debtor is current on contractually obligated interest and principal payments, (d) the volatility of the securities market price, (e) the intent and ability of the Company to retain the investment for a The First Bancorp - 2023 Form 10-K - Page 33 period of time sufficient to allow for recovery, which may be at maturity, and (f) any other information and observable data considered relevant in determining whether full collection of amounts contractually due will be realized.
The primary factors considered in evaluating whether a loss should be recognized include: (a) the length of time and extent to which the fair value has been less than cost or amortized cost and the expected recovery period of the security, (b) the financial condition, credit rating and future prospects of the issuer, (c) whether the debtor is current on contractually obligated interest and principal payments, (d) the volatility of the securities market price, (e) the intent and ability of the Company to retain the investment for a The First Bancorp - 2024 Form 10-K - Page 33 period of time sufficient to allow for recovery, which may be at maturity, and (f) any other information and observable data considered relevant in determining whether full collection of amounts contractually due will be realized.
Borrowings supplement deposits as a source of liquidity; our borrowings typically consist of customer repurchase agreements and FHLBB advances. The Bank tests its borrowing capacity with the FRBB, the FHLBB and Fed Funds lines with other correspondents no less than annually; each has been tested within the past year.
Borrowings supplement deposits as a source of liquidity; our borrowings typically consist of customer repurchase agreements and FHLBB advances. The Bank tests its borrowing capacity with the FRBB, the FHLBB and Fed Funds lines with other correspondents no less than annually; each has been successfully tested within the past year.
Dollar Forward-Looking Statements This report contains statements that are "forward-looking statements." We may also make written or oral forward-looking statements in other documents we file with the SEC, in our annual reports to shareholders, in press releases and other written materials, and in oral statements made by our officers, directors or employees.
Forward-Looking Statements This report contains statements that are "forward-looking statements." We may also make written or oral forward-looking statements in other documents we file with the SEC, in our annual reports to shareholders, in press releases and other written materials, and in oral statements made by our officers, directors or employees.
Residential mortgage loans comprise two of the classes: residential real estate term and residential real estate construction. The remaining classes are municipal loans, home equity loans, and consumer loans. Further descriptions of each class, and the risk factors associated with each, are included in Note 6 of the accompanying financial statements.
Residential mortgage loans comprise two of the classes: residential real estate term and residential real estate construction. The remaining classes are municipal loans, home equity loans, and consumer loans. Further descriptions of each class, and the risk factors associated with each, are included in Note 5 and Note 6 of the accompanying financial statements.
Government-sponsored enterprises have minimal credit risk, as these agencies enterprises play a vital role in the nation's financial markets. Management believes that the unrealized losses at December 31, 2023 were attributable to changes in current market yields and spreads since the date the underlying securities were purchased, and that 100% of the amounts contractually due will be realized.
Government-sponsored enterprises have minimal credit risk, as these agencies enterprises play a vital role in the nation's financial markets. Management believes that the unrealized losses at December 31, 2024 were attributable to changes in current market yields and spreads since the date the underlying securities were purchased, and that 100% of the amounts contractually due will be realized.
The Company periodically evaluates its investment in FHLBB and FRBB stock for impairment based on, among other factors, the capital adequacy of the Banks and their overall financial condition. No impairment losses have been recorded through December 31, 2023. The Bank will continue to monitor its investment in these restricted equity securities.
The Company periodically evaluates its investment in FHLBB and FRBB stock for impairment based on, among other factors, the capital adequacy of the Banks and their overall financial condition. No impairment losses have been recorded through December 31, 2024. The Bank will continue to monitor its investment in these restricted equity securities.
This cost will be amortized over an average of seven years, adding approximately $172,000 to pre-tax operating costs per year. Goodwill On December 11, 2020, the Bank completed the purchase of a branch at 1B Belmont Avenue in Belfast, Maine, from Bangor Savings Bank ("Bangor Savings").
This cost will be amortized over an average of seven years, adding approximately $87,000 to pre-tax operating costs per year. Goodwill On December 11, 2020, the Bank completed the purchase of a branch at 1B Belmont Avenue in Belfast, Maine, from Bangor Savings Bank ("Bangor Savings").
The Company has the ability and intent to hold these securities until a recovery of their amortized cost, which may be at maturity, and believes that 100% of the amounts contractually due will be realized. The First Bancorp - 2023 Form 10-K - Page 34 AFS Asset-backed securities.
The Company has the ability and intent to hold these securities until a recovery of their amortized cost, which may be at maturity, and believes that 100% of the amounts contractually due will be realized. The First Bancorp - 2024 Form 10-K - Page 34 AFS Asset-backed securities.
The abbreviations and descriptions identified below are used throughout Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations and Item 8 - Financial Statement and Supplementary Data. The following is provided to aid the reader and provide a reference page when reviewing these sections of the Form 10-K.
The abbreviations and descriptions identified below are used throughout Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operation and Item 8 - Financial Statement and Supplementary Data. The following is provided to aid the reader and provide a reference page when reviewing these sections of the Form 10-K.
Comparison of the Years Ended December 31, 2022 and 2021 A discussion of changes in our results of operations during the year ended December 31, 2022 compared to the year ended December 31, 2021 has been omitted from this Annual Report on Form 10-K but may be found in “Item 7.
Comparison of the Years Ended December 31, 2023 and 2022 A discussion of changes in our results of operations during the year ended December 31, 2023 compared to the year ended December 31, 2022 has been omitted from this Annual Report on Form 10-K but may be found in “Item 7.
These risks, uncertainties and other factors may cause the actual results, performance or The First Bancorp - 2023 Form 10-K - Page 22 achievements of the Company to be materially different from the anticipated future results, performance or achievements expressed or implied by the forward-looking statements.
These risks, uncertainties and other factors may cause the actual results, performance or The First Bancorp - 2024 Form 10-K - Page 22 achievements of the Company to be materially different from the anticipated future results, performance or achievements expressed or implied by the forward-looking statements.
The First Bancorp - 2023 Form 10-K - Page 32 The following table sets forth information on the yields and expected maturities of the Company's investment securities as of December 31, 2023. Yields on tax-exempt securities have been computed on a tax-equivalent basis using a tax rate of 21%.
The First Bancorp - 2024 Form 10-K - Page 32 The following table sets forth information on the yields and expected maturities of the Company's investment securities as of December 31, 2024. Yields on tax-exempt securities have been computed on a tax-equivalent basis using a tax rate of 21%.
The following table summarizes AFS debt securities in an unrealized loss position for which an ACL has not been recorded at December 31, 2023. Less than 12 months 12 months or more Total Fair Unrealized Fair Unrealized Fair Unrealized Dollars in thousands Value Losses Value Losses Value Losses U.S.
The following table summarizes AFS debt securities in an unrealized loss position for which an ACL has not been recorded at December 31, 2024. Less than 12 months 12 months or more Total Fair Unrealized Fair Unrealized Fair Unrealized Dollars in thousands Value Losses Value Losses Value Losses U.S.
Testing has indicated that no impairment of goodwill has occurred and the value of goodwill as of December 31, 2023 is unchanged from the prior year. Mortgage Servicing Rights. The valuation of mortgage servicing rights is a critical accounting policy which requires significant estimates and assumptions.
Testing has indicated that no impairment of goodwill has occurred and the value of goodwill as of December 31, 2024 is unchanged from the prior year. Mortgage Servicing Rights. The valuation of mortgage servicing rights is a critical accounting policy which requires significant estimates and assumptions.
Municipal securities are supported by the general taxing authority of the municipality and, in the cases of school districts, are generally supported by state aid. At December 31, 2023, all municipal bond issuers were current on contractually obligated interest and principal payments.
Municipal securities are supported by the general taxing authority of the municipality and, in the cases of school districts, are generally supported by state aid. At December 31, 2024, all municipal bond issuers were current on contractually obligated interest and principal payments.
The evaluation of securities for potential credit losses is a quantitative and qualitative process, which is subject to risks and uncertainties and is intended to determine whether declines in the fair value of investments should be recognized as a charge to the ACL.
The evaluation of securities for potential credit losses is a quantitative and qualitative process, which is subject to risks and uncertainties and is intended to determine whether declines in the fair value of investments should be recognized as a charge to the allowance for credit losses.
The First Bancorp - 2023 Form 10-K - Page 31 The following table sets forth the Company's investment securities at their carrying amounts as of December 31, 2023 and 2022: Dollars in thousands 2023 2022 Securities available for sale U.S.
The First Bancorp - 2024 Form 10-K - Page 31 The following table sets forth the Company's investment securities at their carrying amounts as of December 31, 2024 and 2023: Dollars in thousands 2024 2023 Securities available for sale U.S.
The Company attributes the unrealized losses at December 31, 2023 to changes in prevailing market yields and pricing spreads since the date the underlying securities were purchased, combined with current market liquidity conditions and disruption in the financial markets in general.
The Company attributes the unrealized losses at December 31, 2024 to changes in prevailing market yields and pricing spreads since the date the underlying securities were purchased, combined with current market liquidity conditions and disruption in the financial markets in general.
The following table presents the interest earned on or paid for each major asset and liability category, respectively, for the years ended December 31, 2023 and 2022, as well as the average yield for each major asset and liability category, and the net yield between assets and liabilities.
The following table presents the interest earned on or paid for each major asset and liability category, respectively, for the years ended December 31, 2024 and 2023, as well as the average yield for each major asset and liability category, and the net yield between assets and liabilities.
The most important assumption is the anticipated loan prepayment rate, and increases in prepayment speed and amount result in lower valuations of mortgage servicing rights. The valuation may also include an evaluation for impairment based upon the fair value of the rights, which can vary depending upon current interest rates and prepayment expectations, as compared to amortized cost.
The most important assumption is the anticipated loan prepayment rate, and increases in prepayment speed and amount result in lower valuations of mortgage servicing rights. The valuation also includes an evaluation for impairment based upon the fair value of the rights, which can vary depending upon current interest rates and prepayment expectations, as compared to amortized cost.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 10, 2023, which discussion is incorporated herein by reference, and which is available free of charge on the SECs website at www.sec.gov.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 8, 2024, which discussion is incorporated herein by reference, and which is available free of charge on the SECs website at www.sec.gov.
Treasury and U.S. Government-sponsored agencies & enterprises. As of December 31, 2023, the total unrealized losses on these securities amounted to $6.2 million, compared with $6.9 million at December 31, 2022. All of these securities were credit rated "AAA" or "AA+" by the major credit rating agencies. Management believes that securities issued by the U.S. Treasury and U.S.
Treasury and U.S. Government-sponsored agencies & enterprises. As of December 31, 2024, the total unrealized losses on these securities amounted to $6.2 million, compared with $6.2 million at December 31, 2023. All of these securities were credit rated "AAA" or "AA+" by the major credit rating agencies. Management believes that securities issued by the U.S. Treasury and U.S.
Use of Non-GAAP Financial Measures Certain information in Management's Discussion and Analysis of the Financial Condition and Results of Operations and elsewhere in this Report contains financial information determined by methods other than in accordance with GAAP.
Use of Non-GAAP Financial Measures Certain information in release Management's Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this Report contains financial information determined by methods other than in accordance with GAAP.
The total ACL on loans at December 31, 2023 is considered by Management to be appropriate to address the potential for credit losses inherent in the loan portfolio at that date.
The total ACL on loans at December 31, 2024 is considered by Management to be appropriate to address the potential for credit losses inherent in the loan portfolio at that date.
To be rated "well-capitalized", regulatory requirements call for a minimum leverage capital ratio of 5.00%. Given its capital structure, regulatory Tier 1 capital and Common Equity Tier 1 (CET1) are equal.
To be rated "well-capitalized", regulatory requirements call for a minimum leverage capital ratio of 5.00%. Given its capital structure, regulatory Tier 1 capital and CET1 are equal.
These are loans in which we expect to collect all amounts due, including past-due interest. As of December 31, 2023, loans 90 or more days past due and still accruing interest totaled $429,000, compared to $241,000 at December 31, 2022. Loan Modifications Made to Borrowers Experiencing Financial Difficulty The Company adopted ASU 2022-02 effective January 1, 2023.
These are loans in which we expect to collect all amounts due, including past-due interest. As of December 31, 2024, loans 90 or more days past due and still accruing interest totaled $1.0 million, compared to $429,000 at December 31, 2023. Loan Modifications Made to Borrowers Experiencing Financial Difficulty The Company adopted ASU 2022-02 effective January 1, 2023.
Impairment is determined by stratifying rights by predominant characteristics, such as interest rates and terms. The fair value of mortgage servicing rights as of December 31, 2023 decreased by 151,000 from that of December 31, 2022 primarily due to loan amortization and payoffs outpacing sales of new loans during the year, and no impairment was recognized as of either date.
Impairment is determined by stratifying rights by predominant characteristics, such as interest rates and terms. The fair value of mortgage servicing rights as of December 31, 2024 decreased by $529,000 from that of December 31, 2023 primarily due to loan amortization and payoffs outpacing sales of new loans during the year, and no impairment was recognized as of either date.
The First Bancorp - 2023 Form 10-K - Page 40 ACL for Unfunded Commitments Adoption of CECL resulted in an increase in the Company's ACL for unfunded commitments. Our modeling methodology applies the same class level credit loss factors used in the ACL for loans model to applicable classes of unfunded commitments to determine an appropriate ACL level.
The First Bancorp - 2024 Form 10-K - Page 39 ACL for Unfunded Commitments Adoption of CECL resulted in an increase in the Company's ACL for unfunded commitments. Our modeling methodology applies the same class level credit loss factors used in the ACL for loans model to applicable classes of unfunded commitments to determine an appropriate ACL level.
The remaining unamortized balance of the net unrealized losses for the securities transferred from AFS to HTM was $56,000, net of taxes, at December 31, 2023. This compares to $64,000, net of taxes at December 31, 2022. These securities were transferred as a part of the Company's overall investment and balance sheet strategies.
The remaining unamortized balance of the net unrealized losses for the securities transferred from AFS to HTM was $47,000, net of taxes, at December 31, 2024. This compares to $56,000, net of taxes at December 31, 2023. These securities were transferred as a part of the Company's overall investment and balance sheet strategies.
The Company also has the ability and intent to hold these securities until a recovery of their amortized cost, which may be at maturity. AFS Obligations of state and political subdivisions. As of December 31, 2023, the total unrealized losses on municipal securities amounted to $5.7 million, compared with $7.3 million at December 31, 2022.
The Company also has the ability and intent to hold these securities until a recovery of their amortized cost, which may be at maturity. AFS Obligations of state and political subdivisions. As of December 31, 2024, the total unrealized losses on municipal securities amounted to $6.9 million, compared with $5.7 million at December 31, 2023.
Tax-exempt income is calculated on a tax-equivalent basis, using a 21.0% Federal income tax rate in 2023 and 2022.
Tax-exempt income is calculated on a tax-equivalent basis, using a 21.0% Federal income tax rate in 2024 and 2023.
Tax-exempt income has been calculated on a tax-equivalent basis using a 21% Federal income tax rate in 2023 and 2022.
Tax-exempt income has been calculated on a tax-equivalent basis using a 21% Federal income tax rate in 2024 and 2023.
Advances from the FHLBB are secured with pledged collateral consisting of FHLBB stock, funds on deposit with FHLBB, U.S. Agency notes, mortgage-backed securities, and qualifying first mortgage loans. FRBB Discount Window advances are similarly secured with collateral consisting of FRBB stock, funds on deposit at FRBB, and qualifying commercial, home equity and construction loans.
Advances from the FHLBB are secured with pledged collateral consisting of FHLBB stock, funds on deposit with FHLBB, U.S. Agency notes, mortgage-backed securities, and qualifying first mortgage loans. FRBB Discount Window advances are similarly secured with collateral consisting of FRBB stock, funds on deposit at FRBB, U.S.
Government-sponsored agencies and enterprises carry zero or near-zero credit risk, and that 100% of the amounts contractually due will be collected. AFS Mortgage-backed securities issued by U.S. Government agencies and U.S. Government-sponsored enterprises. As of December 31, 2023, the total unrealized losses on these securities amounted to $38.5 million, compared with $42.4 million at December 31, 2022.
Government-sponsored agencies and enterprises carry zero or near-zero credit risk, and that 100% of the amounts contractually due will be collected. AFS Mortgage-backed securities issued by U.S. Government agencies and U.S. Government-sponsored enterprises. As of December 31, 2024, the total unrealized losses on these securities amounted to $41.0 million, compared with $38.5 million at December 31, 2023.
At December 31, 2023, the Company had CET1 and tier-one risk-based capital ratios of 12.42%, and a tier-two, or total, risk-based capital ratio of 13.66%, versus 12.70% and 13.58%, respectively, at December 31, 2022. To be rated "well-capitalized", regulatory requirements call for minimum CET1, tier-one and tier-two risk-based capital ratios of 6.50%, 8.00% and 10.00%, respectively.
At December 31, 2024, the Company had CET1 and tier-one risk-based capital ratios of 12.04%, and a tier-two, or total, risk-based capital ratio of 13.22%, versus 12.42% and 13.66%, respectively, at December 31, 2023. To be rated "well-capitalized", regulatory requirements call for minimum CET1, tier-one and tier-two risk-based capital ratios of 6.50%, 8.00% and 10.00%, respectively.
The relationships between hedging instruments and hedged items is formally documented, as is the risk management objective(s) and strategy for undertaking various hedge transactions.
The relationships between hedging instruments and hedged items is formally documented, as is the risk management objectives and strategy for undertaking various hedge transactions.
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 Federal income tax rate of 21.0% was used in 2023 and 2022.
The Company follows these practices. The following table provides a reconciliation of tax-equivalent financial information to the Company's consolidated financial statements prepared in accordance with GAAP. A Federal income tax rate of 21.0% was used in 2024 and 2023.
The following table provides a reconciliation of average tangible common shareholders' equity to the Company's consolidated financial statements, which have been prepared in accordance with GAAP: Years ended December 31, Dollars in thousands 2023 2022 Average shareholders' equity as presented $ 234,480 $ 234,521 Less intangible assets (average) (30,843) (30,892) Average tangible common shareholders' equity $ 203,637 $ 203,629 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 of average tangible common shareholders' equity to the Company's consolidated financial statements, which have been prepared in accordance with GAAP: Years ended December 31, Dollars in thousands 2024 2023 Average shareholders' equity as presented $ 249,786 $ 234,480 Less average intangible assets (30,817) (30,843) Average tangible shareholders' common equity $ 218,969 $ 203,637 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.
As a requirement for membership in the FRBB, the Bank must own a minimum required amount of FRBB stock. The Bank uses FRBB for certain correspondent banking services and maintains borrowing capacity at its discount window. The Bank's investment in FRBB stock totaled $1 million at December 31, 2023 and 2022.
The Bank is also a member of the FRBB. As a requirement for membership in the FRBB, the Bank must own a minimum required amount of FRBB stock. The Bank uses FRBB for certain correspondent banking services and maintains borrowing capacity at its discount window. The Bank's investment in FRBB stock totaled $1.0 million at December 31, 2024 and 2023.
AFS securities in a continuous unrealized loss position of twelve months or more amounted to a fair value of $257.7 million as of December 31, 2023, compared with $192.5 million at December 31, 2022. The Company has concluded that these securities are fully collectible and that no charge against the allowance is required.
Securities in a continuous unrealized loss position of twelve months or more amounted to a fair value $234.1 million as of December 31, 2024, compared with $257.7 million at December 31, 2023. The Company has concluded that these securities are fully collectible and that no charge against the allowance is required.
Credit Risk Management and Allowance for Credit Losses on Loans Upon adoption of ASC 326, the CECL standard, in the first quarter of 2023, the Company replaced the incurred loss model that recognized loan losses when it became probable that a credit loss would be incurred, with a requirement to recognize lifetime expected credit losses immediately when a financial asset is originated or purchased.
The First Bancorp - 2024 Form 10-K - Page 36 Credit Risk Management and Allowance for Credit Losses on Loans Upon adoption of ASC 326, the CECL standard, in 2023, the Company replaced the incurred loss model that recognized loan losses when it became probable that a credit loss would be incurred, with a requirement to recognize lifetime expected credit losses immediately when a financial asset is originated or purchased.
Investment Management and Fiduciary Activities As of December 31, 2023, First National Wealth Management, the Bank's trust and investment management division, had assets under management or custody with a market value of $1.254 billion, consisting of 1,249 trust accounts, estate accounts, agency accounts, and self-directed individual retirement accounts.
Investment Management and Fiduciary Activities As of December 31, 2024, First National Wealth Management, the Bank's trust and investment management division, had assets under management or custody with a market value of $1.290 billion, consisting of 1,272 trust accounts, estate accounts, agency accounts, and self-directed individual retirement accounts.
As of December 31, 2023 and 2022, the Bank held a total of $172.2 million and $118.3 million in certificate of deposit accounts with balances in excess of $250,000, respectively. The following table summarizes the time remaining to maturity for these certificates of deposit.
As of December 31, 2024 and 2023, the Bank held a total of $187.1 million and $172.2 million in certificate of deposit accounts with balances in excess of $250,000, respectively. The following table summarizes the time remaining to maturity for these certificates of deposit.
In 2023, residential mortgages had a recovery ratio of 0.003% compared to a loss ratio of 0.011% for the entire loan portfolio. The Company does not have a credit card portfolio or offer dealer consumer loans, which generally carry more risk and potentially higher losses than other types of consumer credit.
In 2024, residential mortgages had a loss ratio of 0.001% compared to a loss ratio of 0.020% for the entire loan portfolio. The Company does not have a credit card portfolio or offer dealer consumer loans, which generally carry more risk and potentially higher losses than other types of consumer credit.
Our lending activities include work with solar farm projects and research laboratories working on climate change issues, we hold several green bonds in the investment portfolio, and our wealth management division works with clients who seek to direct their investments to be compatible with responsible ESG investing objectives.
Our lending activities include work with solar farm projects and The First Bancorp - 2024 Form 10-K - Page 46 research laboratories working on climate change issues, we hold several green bonds in the investment portfolio, and our wealth management division works with clients who seek to direct their investments to be compatible with responsible ESG investing objectives.
Abbreviation Description Abbreviation Description ACL Allowance for credit losses GNMA Government National Mortgage Association AFS Available-for-sale HTM Held-to-maturity ALCO Asset/Liability Committee IAL Individually Analyzed Loans AOCI Accumulated other comprehensive income (loss) IRS Internal Revenue Service ASC Accounting Standards Codification LIBOR London Interbank Offered Rate ASU Accounting Standards Update MPF Mortgage Partnership Finance Program BTFP Bank Term Funding Program OAEM Other assets especially mentioned C&I Commercial and Industrial OCC Office of the Comptroller of the Currency CDs Certificates of deposit OCI Other comprehensive income (loss) CECL Current Expected Credit Loss OIS Overnight Indexed Swap CLLD Construction, land, and land development OREO Other real estate owned EPS Earnings per share POR Period of Redemption FASB Financial Accounting Standards Board PPP Paycheck Protection Program FDIC Federal Deposit Insurance Corporation PSA Public Securities Association FHLB Federal Home Loan Bank SBA Small Business Association FHLBB Federal Home Loan Bank of Boston SEC Securities and Exchange Commission FHLMC Federal Home Loan Mortgage Corporation SOFR Secured Overnight Financing Rate FNMA Federal National Mortgage Association TDR Troubled debt restructuring FOMC Federal Open Market Committee The 2020 Plan The 2020 Equity Incentive Plan FRB Federal Reserve Board The Bank First National Bank FRBB Federal Reserve Bank of Boston The Company The First Bancorp, Inc.
Abbreviation Description Abbreviation Description ACL Allowance for credit losses GDP Gross domestic product AFS Available-for-sale GNMA Government National Mortgage Association ALCO Asset/Liability Committee HTM Held-to-maturity AOCI Accumulated other comprehensive income (loss) IAL Individually Analyzed Loans ASC Accounting Standards Codification IRS Internal Revenue Service ASU Accounting Standards Update MPF Mortgage Partnership Finance Program C&I Commercial and Industrial OAEM Other assets especially mentioned CDs Certificates of deposit OCC Office of the Comptroller of the Currency CECL Current Expected Credit Loss OCI Other comprehensive income (loss) CET1 Common Equity Tier 1 OIS Overnight Indexed Swap CLLD Construction, land, and land development OREO Other real estate owned EPS Earnings per share POR Period of Redemption FASB Financial Accounting Standards Board PSA Public Securities Association FDIC Federal Deposit Insurance Corporation SEC Securities and Exchange Commission FHLB Federal Home Loan Bank SOFR Secured Overnight Financing Rate FHLBB Federal Home Loan Bank of Boston TDR Troubled debt restructuring FHLMC Federal Home Loan Mortgage Corporation The 2020 Plan The 2020 Equity Incentive Plan FNMA Federal National Mortgage Association The Bank First National Bank FOMC Federal Open Market Committee The Company The First Bancorp, Inc.
It is Management's opinion that this is an appropriate level. In addition, the Bank has $168.0 million in borrowing capacity under the FRBB's Borrower in Custody programs, $76.0 million in credit lines with correspondent banks, and $169.0 million in other unencumbered securities available as collateral for borrowing.
It is Management's opinion that this is an appropriate level. In addition, the Bank has $319.0 million in borrowing capacity under the FRBB's Borrower in Custody programs as well as securities available as collateral, $101.0 million in credit lines with correspondent banks, and $151.0 million in other unencumbered securities available as collateral for borrowing.
The subsidiary may pay dividends to its parent out of so much of its net profits as the Bank's directors deem appropriate, subject to the limitation that the total of all dividends declared by the Bank in any calendar year may not exceed the total of its net profits of that year combined with its retained net profits of the preceding two years.
The subsidiary may pay dividends to its parent out of so much of its net profits as the Bank's directors deem appropriate, subject to the limitation that the total of all dividends declared by the Bank in any calendar year may not exceed the total of its net profits of that year combined The First Bancorp - 2024 Form 10-K - Page 44 with its retained net profits of the preceding two years.
The Company defines its primary sources of contingent liquidity as cash & equivalents, unencumbered U.S. Government or Agency bond collateral, available capacity at FHLBB, and available authorized brokered deposit issuance capacity. As of December 31, 2023, the Bank had primary sources of contingent liquidity of $895.0 million or 30.7% of its total assets.
The Company defines its primary sources of contingent liquidity as cash & equivalents, unencumbered U.S. Government or Agency bond collateral, available capacity at FHLBB, and available authorized brokered deposit issuance capacity. As of December 31, 2024, the Bank had primary sources of contingent liquidity of $823.0 million or 26.3% of its total assets.
Utilization assumptions are based upon an independent analysis of the Bank's historical data. The ACL for unfunded commitments is reported on the Company's consolidated balance sheets within other liabilities and totaled $1.3 million as of December 31, 2023.
Utilization assumptions are based upon an independent analysis of the Bank's historical data. The ACL for unfunded commitments is reported on the Company's consolidated balance sheets within other liabilities and totaled $714,000 as of December 31, 2024.
Tax-exempt interest income amounted to $9.9 million for the year ended December 31, 2023, and $8.8 million for the year ended December 31, 2022. The First Bancorp - 2023 Form 10-K - Page 27 The following tables present changes in interest income and expense attributable to changes in interest rates, volume, and rate/volume 1 for interest-earning assets and interest-bearing liabilities.
Tax-exempt interest income amounted to $10.5 million for the year ended December 31, 2024, and $9.9 million for the year ended December 31, 2023. The First Bancorp - 2024 Form 10-K - Page 27 The following table presents changes in interest income and expense attributable to changes in interest rates, volume, and rate/volume 1 for interest-earning assets and interest-bearing liabilities.
As of December 31, 2023 Leverage Common Equity Tier 1 Tier 1 Total Risk-Based Bank 8.43 % 12.37 % 12.37 % 13.62 % Company 8.61 % 12.42 % 12.42 % 13.66 % Adequately capitalized ratio 4.00 % 4.50 % 6.00 % 8.00 % Adequately capitalized ratio plus capital conservation buffer n/a % 7.00 % 8.50 % 10.50 % Well capitalized ratio (Bank only) 5.00 % 6.50 % 8.00 % 10.00 % As of December 31, 2022 Leverage Common Equity Tier 1 Tier 1 Total Risk-Based Bank 8.81 % 12.64 % 12.64 % 13.52 % Company 9.01 % 12.70 % 12.70 % 13.58 % Adequately capitalized ratio 4.00 % 4.50 % 6.00 % 8.00 % Adequately capitalized ratio plus capital conservation buffer n/a % 7.00 % 8.50 % 10.50 % Well capitalized ratio (Bank only) 5.00 % 6.50 % 8.00 % 10.00 % Except as identified in Item 1A, "Risk Factors", Management knows of no present trends, events or uncertainties that will have, or are reasonably likely to have, a material effect on the Company's capital resources, liquidity, or results of operations.
As of December 31, 2024 Leverage Common Equity Tier 1 Tier 1 Total Risk-Based Bank 8.32 % 11.98 % 11.98 % 13.16 % Company 8.47 % 12.04 % 12.04 % 13.22 % Adequately capitalized ratio 4.00 % 4.50 % 6.00 % 8.00 % Adequately capitalized ratio plus capital conservation buffer n/a % 7.00 % 8.50 % 10.50 % Well capitalized ratio (Bank only) 5.00 % 6.50 % 8.00 % 10.00 % As of December 31, 2023 Leverage Common Equity Tier 1 Tier 1 Total Risk-Based Bank 8.43 % 12.37 % 12.37 % 13.62 % Company 8.61 % 12.42 % 12.42 % 13.66 % Adequately capitalized ratio 4.00 % 4.50 % 6.00 % 8.00 % Adequately capitalized ratio plus capital conservation buffer n/a % 7.00 % 8.50 % 10.50 % Well capitalized ratio (Bank only) 5.00 % 6.50 % 8.00 % 10.00 % Except as identified in Item 1A, "Risk Factors", Management knows of no present trends, events or uncertainties that will have, or are reasonably likely to have, a material effect on the Company's capital resources, liquidity, or results of operations.
A specific reserve is allocated to an individual loan when the amount of a probable loss is estimable on the basis of its collateral value, the present value of anticipated future cash flows, or its net realizable value. At December 31, 2023, IALs with specific reserves totaled $919,000 and the amount of such reserves was $264,000.
A specific reserve is allocated to an individual loan when the amount of a probable loss is estimable on the basis of its collateral value, the present value of anticipated future cash flows, or its net realizable value. At December 31, 2024, IALs with specific reserves totaled $1.7 million and the amount of such reserves was $1.0 million.
Nonperforming loans, expressed as a percentage of total loans, totaled 0.10% at December 31, 2023 compared to 0.09% at December 31, 2022.
Nonperforming loans, expressed as a percentage of total loans, totaled 0.18% at December 31, 2024 compared to 0.10% at December 31, 2023.
The weighted average interest rates payable under these agreements were 2.42% per annum as of December 31, 2023, compared to 0.47% per annum as of December 31, 2022.
The weighted average interest rates payable under these agreements were 2.87% per annum as of December 31, 2024, compared to 2.42% per annum as of December 31, 2023.
The ACL-loans ended 2023 at $24.0 million and stood at 1.13% of total loans outstanding, compared to $16.7 million and 0.87% of total loans outstanding at December 31, 2022. A $1.3 million provision for losses was made during the year ended 2023.
The ACL-loans ended 2024 at $24.9 million and stood at 1.06% of total loans outstanding, compared to $24.0 million and 1.13% of total loans outstanding at December 31, 2023. A $1.3 million provision for losses was made during the year ended 2024.
At December 31, 2022, this amount was $56.7 million, or 16.61% of the total AFS securities portfolio. The Company's evaluation of securities for impairment is a quantitative and qualitative process intended to determine whether declines in the fair value of AFS investment securities should be recognized as a charge against the ACL.
At December 31, 2023, this amount was $50.4 million, or 15.18% of the total AFS securities portfolio. The Company's evaluation of securities for impairment is a quantitative and qualitative process intended to determine whether declines in the fair value of AFS investment securities should be recognized as a charge against the ACL.
The provision for credit losses to maintain the allowance was $1.3 million in 2023 compared to $1.8 million in 2022. Net charge offs were $233,000 in 2023 compared to net charge offs of $548,000 in 2022. The ACL as a percentage of outstanding loans was at 1.13% at December 31, 2023 compared to 0.87% at December 31, 2022.
The provision for credit losses to maintain the allowance was $1.3 million in 2024 compared to $1.3 million in 2023. Net charge offs were $463,000 in 2024 compared to net charge offs of $233,000 in 2023. The ACL as a percentage of outstanding loans was at 1.06% at December 31, 2024 compared to 1.13% at December 31, 2023.
The Company subscribes to a widely recognized, independent pricing service and updates carrying values no less frequently than monthly. It also validates the values provided by the pricing service no less frequently than quarterly by measuring against security prices provided by a secondary source.
The Company subscribes to a widely recognized, independent pricing service and updates The First Bancorp - 2024 Form 10-K - Page 23 carrying values no less frequently than monthly. It also validates the values provided by the pricing service no less frequently than quarterly by measuring against security prices provided by a secondary source.
In conjunction with adoption, holdings of AFS securities and HTM securities were evaluated to determine the need to establish an ACL, if any. The total ACL for HTM securities was $434,000 as of December 31, 2023; there was no reserve as of December 31, 2022. Further details are included in Notes 3 and 25 of the accompanying financial statements.
In conjunction with adoption, holdings of AFS securities and HTM securities were evaluated to determine the need to establish an ACL, if any. The total ACL for HTM securities was $196,000 and $434,000 as of December 31, 2024 and 2023, respectively. Further details are included in Note 3 of the accompanying financial statements.
Changes in fair value of a derivative that is effective and that qualifies as a cash flow hedge are recorded in OCI and are reclassified into earnings when the The First Bancorp - 2023 Form 10-K - Page 24 forecasted transaction or related cash flows affect earnings.
Changes in fair value of a derivative that is effective and that qualifies as a cash flow hedge are recorded in OCI and are reclassified into earnings when the forecasted transaction or related cash flows affect earnings.
The Company's non-GAAP efficiency ratio – a benchmark measure of the amount spent to generate a dollar of income – was 52.43% in 2023, compared to 45.96% in 2022.
The Company's non-GAAP efficiency ratio – a benchmark measure of the amount spent to generate a dollar of income – was 56.66% in 2024, compared to 52.43% in 2023.
While Management uses available information to assess possible losses on loans, future additions to the allowance may be necessary based on increases in non-performing loans, changes in economic conditions, growth in loan portfolios, or for other reasons.
While Management uses available information to assess possible losses on loans, future additions to the allowance may be necessary based on increases in non-performing loans, changes in economic conditions or outlook, growth in loan portfolios, or for other reasons. Any future additions to the allowance would be recognized in the period in which they were determined to be necessary.
During 2023, the Company declared cash dividends of $0.34 per share in the first quarter and $0.35 per share in the remaining three quarters, or $1.39 per share for the year.
During 2024, the Company declared cash dividends of $0.35 per share in the first quarter and $0.36 per share in the remaining three quarters, or $1.43 per share for the year.
Net loan charge-offs in 2023 were $233,000 or 0.01% of average loans, down from $548,000 or 0.02% of loans in 2022. Non-performing assets stood at 0.07% of total assets as of December 31, 2023 compared to 0.06% of total assets at December 31, 2022.
Net loan charge-offs in 2024 were $463,000 or 0.02% of average loans, up from $233,000 or 0.01% of loans in 2023. Non-performing assets stood at 0.14% of total assets as of December 31, 2024 compared to 0.07% of total assets at December 31, 2023.
This compares to IALs with specific reserves of $1.8 million at December 31, 2022 and the amount of such reserves was $398,000. Additional detail on IALs may be found in Note 5 of the accompanying financial statements.
This compares to IALs with specific reserves of $919,000 at December 31, 2023 and the amount of such reserves was $264,000. Additional detail on IALs may be found in Note 5 of the accompanying financial statements.
Years ended December 31, Dollars in thousands 2023 2022 Net interest income as presented $ 65,207 $ 76,166 Effect of tax-exempt income 2,644 2,326 Net interest income, tax equivalent $ 67,851 $ 78,492 The Company presents its efficiency ratio using non-GAAP information which is most commonly used by financial institutions.
Years ended December 31, Dollars in thousands 2024 2023 Net interest income as presented $ 63,910 $ 65,207 Effect of tax-exempt income 2,780 2,644 Net interest income, tax equivalent $ 66,690 $ 67,851 The Company presents its efficiency ratio using non-GAAP information which is most commonly used by financial institutions.
Our non-GAAP efficiency ratio continues to be an important component in our overall performance and stood at 52.43% in 2023. Dividends paid to shareholders totaled $1.39 per share, representing 51.87% of basic earnings per share for the year.
Our non-GAAP efficiency ratio continues to be an important component in our overall performance and stood at 56.66% in 2024. Dividends paid to shareholders totaled $1.43 per share, representing 58.44% of basic earnings per share for the year.
Net Income Net income for 2023 was $29.5 million, down 24.3% or $9.5 million from net income of $39.0 million that was posted in 2022. Earnings per share on a fully diluted basis for 2023 were $2.66, down $0.87 or 24.6% from the $3.53 reported for the year ended December 31, 2022.
Net Income Net income for 2024 was $27.0 million, down 8.4% or $2.5 million from net income of $29.5 million that was posted in 2023. Earnings per share on a fully diluted basis for 2024 were $2.43, down $0.24 or 8.9% from the $2.66 reported for the year ended December 31, 2023.
The Bank also carries $125,000 in goodwill for a de minimis transaction in 2001. Effect of Future Interest Rates on Post-retirement Benefit Liabilities In evaluating the Company's post-retirement benefit liabilities, Management believes changes in discount rates which have occurred pursuant to Federal legislation will not have a significant impact on the Company's future operating results or financial condition.
Effect of Future Interest Rates on Post-retirement Benefit Liabilities In evaluating the Company's post-retirement benefit liabilities, Management believes changes in discount rates which have occurred pursuant to Federal legislation will not have a significant impact on the Company's future operating results or financial condition.
This compares to December 31, 2022, when 1,233 accounts with a market value of $1.179 billion were under management or custody.
This compares to December 31, 2023, when 1,249 accounts with a market value of $1.254 billion were under management or custody.
Past due loans were 0.18% of total loans as of December 31, 2023, a modest increase from 0.08% of total loans at December 31, 2022.The allowance as a percentage of loans outstanding stood at 1.13% in 2023, up from 0.87% at December 31, 2022.
Past due loans were 0.40% of total loans as of December 31, 2024, a modest increase from 0.18% of total loans at December 31, 2023. The allowance as a percentage of loans outstanding stood at 1.06% in 2024, down from 1.13% at December 31, 2023.
The dividend payout ratio, which is calculated by dividing dividends declared per share by basic earnings per share, was 51.87% for the year ended December 31, 2023 compared to 37.64% for the year ended December 31, 2022.
The dividend payout ratio, which is calculated by dividing dividends declared per share by diluted earnings per share, was 58.44% for the year ended December 31, 2024 compared to 51.87% for the year ended December 31, 2023.
The amount available for dividends in 2024 is this year's net income plus $41.5 million. In 2023, 61,516 shares were issued via employee stock programs, the dividend reinvestment plan, and restricted stock grants. The Company received consideration totaling $817,000. The following table summarizes the Company's 2023 stock issuances.
The amount available for dividends in 2025 is this year's net income plus $27.9 million. In 2024, 67,302 shares were issued via employee stock programs, the dividend reinvestment plan, and restricted stock grants. The Company received consideration totaling $867,000. The following table summarizes the Company's 2024 stock issuances.
Past-due loans were 0.18% of total loans as of December 31, 2023, a modest increase from 0.08% of total loans as of December 31, 2022. Income Taxes Income taxes on operating earnings were $6.2 million for the year ended December 31, 2023, down $2.2 million from 2022.
Past-due loans were 0.40% of total loans as of December 31, 2024, a modest increase from 0.18% of total loans as of December 31, 2023. Income Taxes Income taxes on operating earnings were $5.5 million for the year ended December 31, 2024, down $645,000 from 2023.
The following table shows the distribution of nonperforming loans by class as of December 31, 2023 and 2022: As of December 31, Dollars in thousands 2023 2022 Commercial Real Estate Owner Occupied $ — $ 193 Real Estate Non-Owner Occupied — — Construction 29 23 C&I 538 663 Multifamily — — Municipal — — Residential Term 1,315 572 Construction — — Home Equity Revolving and Term 296 304 Consumer — — Total non-performing loans $ 2,178 $ 1,755 Allowance for credit losses as a percentage of nonperforming loans 1103.3 % 952.9 % The First Bancorp - 2023 Form 10-K - Page 41 The amounts shown for total nonperforming loans do not include loans 90 or more days past due and still accruing interest.
The following table shows the distribution of nonperforming loans by class as of December 31, 2024 and 2023: As of December 31, Dollars in thousands 2024 2023 Commercial Real Estate Owner Occupied $ 553 $ — Real Estate Non-Owner Occupied 61 — Construction 18 29 C&I 1,695 538 Multifamily — — Agriculture 31 — Municipal — — Residential Term 1,599 1,315 Construction — — Home Equity Revolving and Term 291 296 Consumer — — Total non-performing loans $ 4,248 $ 2,178 Allowance for credit losses on loans as a percentage of nonperforming loans 585.5 % 1103.3 % The First Bancorp - 2024 Form 10-K - Page 40 The amounts shown for total nonperforming loans do not include loans 90 or more days past due and still accruing interest.
The First Bancorp - 2023 Form 10-K - Page 30 Assets and Asset Quality Total assets of $2.947 billion at December 31, 2023 increased 7.6% or $207.5 million from $2.739 billion at December 31, 2022. The investment portfolio, including restricted equity securities decreased $11.6 million or 1.7% over December 31, 2022, and the loan portfolio increased $214.8 million or 11.2%.
The First Bancorp - 2024 Form 10-K - Page 30 Assets and Asset Quality Total assets of $3.157 billion at December 31, 2024 increased 7.1% or $210.3 million from $2.947 billion at December 31, 2023. The investment portfolio, including restricted equity securities decreased $19.1 million or 2.8% over December 31, 2023, and the loan portfolio increased $211.5 million or 9.9%.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe First Bancorp - 2023 Form 10-K - Page 47 The Company's summarized static gap, as of December 31, 2023, is presented in the following table: 0-90 90-365 1-5 5+ Dollars in thousands Days Days Years Years Investment securities at amortized cost (HTM) and fair value (AFS) $ 45,511 $ 33,919 $ 166,852 $ 421,006 Restricted equity securities, at cost 2,349 — — 1,037 Loans 490,588 260,597 1,051,823 326,445 Other interest-earning assets — 26,681 — — Non-rate-sensitive assets 20,589 — — 99,301 Total assets 559,037 321,197 1,218,675 847,789 Interest-bearing deposits 711,279 489,004 458,212 703,147 Borrowed funds 20,000 76 — — Non-rate-sensitive liabilities and equity — — — 562,421 Total liabilities and equity 731,279 489,080 458,212 1,265,568 Period gap $ (172,242) $ (167,883) $ 760,463 $ (417,779) Percent of total assets (5.85) % (5.70) % 25.81 % (14.18) % Cumulative gap (current) $ (172,242) $ (340,125) $ 420,338 $ 2,559 Percent of total assets (5.85) % (11.54) % 14.26 % 0.09 % The earnings simulation model forecasts capture the impact of changing interest rates on one-year and two-year net interest income.
Biggest changeThe Company's summarized static gap, as of December 31, 2024, is presented in the following table: 0-90 90-365 1-5 5+ Dollars in thousands Days Days Years Years Investment securities at amortized cost (HTM) and fair value (AFS) $ 30,810 $ 35,742 $ 153,891 $ 423,941 Restricted equity securities, at cost 6,166 — — 1,037 Loans 635,843 389,735 1,029,632 285,730 Other interest-earning assets — — — 32,414 Non-rate-sensitive assets 31,680 — — 100,389 Total assets 704,499 425,477 1,183,523 843,511 Interest-bearing deposits 1,111,104 428,310 472,326 472,551 Borrowed funds 60,000 35,000 — — Non-rate-sensitive liabilities and equity — — — 577,719 Total liabilities and equity 1,171,104 463,310 472,326 1,050,270 Period gap $ (466,605) $ (37,833) $ 711,197 $ (206,759) Percent of total assets (14.80) % (1.20) % 22.56 % (6.55) % Cumulative gap (current) $ (466,605) $ (504,438) $ 206,759 $ — Percent of total assets (14.80) % (15.98) % 6.55 % — % The earnings simulation model forecasts capture the impact of changing interest rates on one-year and two-year net interest income.
The Company's most recent simulation model calculates projected impact on net interest income in scenarios where short-term interest rates gradually decrease by two percentage points, gradually decrease by one percentage point, and where short- term rates gradually increase by two percentage points.
The Company's most recent simulation model calculates projected impact on net interest income in scenarios where short-term interest rates gradually decrease by two percentage points, gradually decreases by one percentage point, and where short- term rates gradually increase by two percentage points.
As of December 31, 2023, the Company was using interest rate swaps for interest rate risk management. See Notes 14 and 19 of the accompanying financial statements for additional discussion of derivative usage. The Company engages an independent consultant to periodically review its interest rate risk position, as well as the effectiveness of simulation modeling and reasonableness of assumptions used.
As of December 31, 2024, the Company was using interest rate swaps for interest rate risk management. See Notes 14 and 19 of the accompanying financial statements for additional discussion of derivative usage. The Company engages an independent consultant to periodically review its interest rate risk position, as well as the effectiveness of simulation modeling and reasonableness of assumptions used.
It does so by comparing the differences in the repricing characteristics of assets and liabilities. A gap is defined as the difference between the principal amount of assets and liabilities which reprice within a specified time period. The cumulative one-year gap, at December 31, 2023, was (11.54)% of total assets, compared to (5.60)% of total assets at December 31, 2022.
It does so by comparing the differences in the repricing characteristics of assets and liabilities. A gap is defined as the difference between the principal amount of assets and liabilities which reprice within a specified time period. The cumulative one-year gap, at December 31, 2024, was (15.98)% of total assets, compared to (11.54)% of total assets at December 31, 2023.
A summary of the Bank's interest rate risk simulation modeling, as of December 31, 2023 and 2022 is presented in the following table: Changes in Net Interest Income 2023 2022 Year 1 Projected changes if rates decrease by 1.0% 2.0% 0.2% Projected changes if rates decrease by 2.0% 3.7% 0.0% Projected change if rates increase by 2.0% (6.0)% (3.8)% Year 2 Projected changes if rates decrease by 1.0% 20.8% 6.8% Projected changes if rates decrease by 2.0% 23.8% 5.7% Projected change if rates increase by 2.0% 0.7% (3.4)% The First Bancorp - 2023 Form 10-K - Page 48 This dynamic simulation model includes assumptions about how the balance sheet is likely to evolve through time and in different interest rate environments.
A summary of the Bank's interest rate risk simulation modeling, as of December 31, 2024 and 2023 is presented in the following table: Changes in Net Interest Income 2024 2023 Year 1 Projected changes if rates decrease by 1.0% 1.7% 2.0% Projected changes if rates decrease by 2.0% 2.8% 3.7% Projected change if rates increase by 2.0% (4.2)% (6.0)% Year 2 Projected changes if rates decrease by 1.0% 17.8% 20.8% Projected changes if rates decrease by 2.0% 19.1% 23.8% Projected change if rates increase by 2.0% 2.6% 0.7% This dynamic simulation model includes assumptions about how the balance sheet is likely to evolve through time and in different interest rate environments.
In year two, and assuming no additional movement in rates, the model forecasts that net interest income would be higher than that earned in the first year of a stable rate environment by 23.8% in the two percentage point falling-rate scenario, and higher by 20.8% in the one percentage point falling rate scenario; net interest income would be higher than that earned in a stable rate environment by 0.7% in a two percentage point rising rate scenario, when compared to the year-one base scenario.
In year two, and assuming no additional movement in rates, the model forecasts that net interest income would be higher than that earned in the first year of a stable rate environment by 19.1% in the two percentage point falling-rate scenario, and higher by 17.8% in the one percentage point falling rate scenario; net interest income would be higher than that earned in a stable rate environment by 2.6% in a two percentage point rising rate scenario, when compared to the year-one base scenario.
The Company's modeling as of December 31, 2023 projects net interest income would increase by approximately 3.7% if short-term rates affected by FOMC actions fall gradually by two percentage points over the next year, and would increase by approximately 2.0% if short term rates gradually fall by one percentage point over the next year; net interest income would decrease by approximately 6.0% if rates rise gradually by two percentage points over the next year.
The Company's modeling as of December 31, 2024 projects net interest The First Bancorp - 2024 Form 10-K - Page 47 income would increase by approximately 2.8% if short-term rates affected by FOMC actions fall gradually by two percentage points over the next year, and would increase by approximately 1.7% if short term rates gradually fall by one percentage point over the next year; net interest income would decrease by approximately 4.2% if rates rise gradually by two percentage points over the next year.
As of December 31, 2023, there were no significant differences between the views of the independent consultant and Management regarding the Company's interest rate risk exposure. Management expects interest rates will remain flat or decrease in the next year and believes that the current level of interest rate risk is acceptable.
As of December 31, 2024, there were no significant differences between the views of the independent consultant and Management regarding the Company's interest rate risk exposure. Management expects interest rates will increase in the next year and believes that the current level of interest rate risk is acceptable. The First Bancorp - 2024 Form 10-K - Page 48
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The First Bancorp - 2023 Form 10-K - Page 49

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