First Bancorp, Inc /ME/

The Company uses funding from the FHLBB, the FRBB and customer repurchase agreements enabling it to grow its balance sheet and its revenues. This funding may also be used to balance seasonal deposit flows or to carry out interest rate risk management strategies, and may be used to replace or supplement other sources of funding, including core deposits and certificates of deposit. During the three months ended March 31, 2025, borrowed funds increased $39.2 million. This change consisted of a $59.9 million increase in short-term FHLBB advances, a $4.3 million increase in customer repurchase agreement balances, and a $25.0 million decrease in long-term advances from the FHLBB. Between March 31, 2024 and March 31, 2025, borrowed funds increased by $30.7 million.

Capital Resources

Shareholders' equity as of March 31, 2025 was $259.7 million, compared to $252.5 million as of December 31, 2024 and $242.6 million as of March 31, 2024. The Company's earnings in the first three months of 2025, net of dividends declared, added $3.0 million to shareholders' equity. The net unrealized loss on AFS securities, net of tax, presented in accordance with FASB ASC Topic 320 "Investments – Debt and Equity Securities" stands at $38.7 million as of March 31, 2025 and was $42.7 million as of December 31, 2024. Additional information about the net unrealized loss on AFS securities was provided in Note 2 of the Consolidated Financial Statements and in the AFS Debit Securities section of Management's Discussion and Analysis of Financial Condition and Results of Operations.

A cash dividend of $0.36 per share was declared in the first quarter of 2025. The dividend payout ratio, which is calculated by dividing dividends declared per share by basic earnings per share, was 56.34% for the first three months of 2025 compared to 63.64% for the same period in 2024. In determining future dividend payout levels, the Board of Directors carefully analyzes capital requirements and earnings retention, as set forth in the Company's Dividend Policy. The ability of the Company to pay cash dividends to its shareholders depends on receipt of dividends from its subsidiary, the Bank. 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 amount available for dividends in 2025 is this year's net income plus $27.9 million.

Financial institution regulators have established guidelines for minimum capital ratios for banks and bank holding companies. The net unrealized gain or loss on AFS securities is generally not included in computing regulatory capital. During the first quarter of 2015, the Company adopted the new Basel III regulatory capital framework as approved by the federal banking agencies. In order to avoid limitations on capital distributions, including dividend payments, the Company must hold a capital conservation buffer of 2.5% above the adequately capitalized risk-based capital ratios. The Company met each of the well-capitalized ratio guidelines at March 31, 2025.

The following tables indicate the capital ratios for the Bank and the Company at March 31, 2025 and December 31, 2024:

The Bank maintains and annually updates a capital plan over a five year horizon. The capital plan was last updated and approved by the Board in July 2024. Based upon reasonable assumptions of growth and operating performance, the base capital plan model projects that the Bank will be well capitalized throughout the five year period. The base model is also stress tested for interest rate risk from increasing and decreasing rates, credit risk in normal, elevated and severe loss scenarios, and combinations of interest rate and credit risk. In each stress scenario, the Bank maintained well capitalized status.