Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. First Bancorp, Inc /ME/ (765207) 10-Q published on Aug 09, 2018 at 8:51 am
Reporting Period: Jun 29, 2018
providing goods or services to a customer; ASU No. 2016-10, Identifying Performance Obligations and Licensing, which clarifies and simplifies the process for determining whether performance obligations to a customer should be segregated and accounted for individually, and clarifies how the new revenue rules apply to licenses of intellectual property; and ASU No. 2016-12, Narrow-Scope Improvements and Practical Expedients, which clarifies and simplifies the process of assessing collectability of consideration under a contract, presentation of sales taxes, accounting for noncash consideration received, and certain transitional issues. The new standard does not apply to revenue associated with financial instruments, including loans and securities that are accounted for under other U.S. GAAP. The Company has reviewed its various other revenue streams and concluded that the new standard will have minimal impact upon its consolidated financial statements. Adoption of ASU No. 2014-09 was made on January 1, 2018 utilizing the modified retrospective approach.
This was the best quarter in the Company's history, including another quarter of record earnings. Continued growth in earning assets resulted in increased net interest income despite the headwinds of higher funding costs. The Company's fee-based business lines continue to generate year-over-year revenue growth, led by First Advisors, the Bank's trust and investment management division, where revenues are up 15% over the first six months of last year. Based upon the strength of the Company's earnings, the dividend was increased to 29 cents per share in the second quarter, representing a payout to our shareholders of 54.72% of net income for the period.
The strong growth on both sides of the balance sheet experienced in 2017 continued into the first six months of 2018. Total assets have increased $71.0 million or 3.9% year-to-date. The loan portfolio increased $60.3 million or 5.2% in the six months ended June 30, 2018 and $103.8 million or 9.3% from a year ago. The majority of the loan growth has been in commercial and municipal loans, with modest growth in residential term mortgage loans. The investment portfolio has increased $10.4 million year-to-date and increased $12.9 million or 2.3% from a year ago. On the liability side of the balance sheet, low-cost deposits have decreased $37.1 million or 5.3% year-to-date, in-line with our normal seasonal deposit flow pattern. Year-over-year low-cost deposits increased $1.9 million or 0.3%. Local certificates of deposit ("CDs") decreased $2.1 million and wholesale CDs increased $96.3 million year-to-date.
The allowance for loan losses totaled $11.5 million at June 30, 2018, compared to $10.7 million as of December 31, 2017 and $10.6 million as of June 30, 2017. Management's ongoing application of methodologies to establish the allowance include an evaluation of impaired loans for specific reserves. These specific reserves increased $393,000 in the first six months of 2018 from $1.8 million at December 31, 2017 to $2.2 million at June 30, 2018. The specific loans that make up those categories change from period to period. Impairment on those loans, which would be reflected in the allowance for loan losses, might or might not exist, depending on the specific circumstances of each loan. The portion of the reserve based upon homogeneous pools of loans decreased by $403,000 in the first six months of 2018. The portion of the reserve based on qualitative factors declined nominally, or $30,000 in the first six months of 2018 due to a mix of factors. After consideration of the shifts in specific, pooled and qualitative reserves, Management determined that the change in unallocated reserves from $642,000, or 6.0% of the total reserve at December 31, 2017, to $1.4 million, or 12.4% as of June 30, 2018, supported general imprecision related to portfolio growth.
The Bank’s written policies and procedures for foreclosures, along with implementation of same, are subject to annual review by its internal audit provider. The scope of this review includes loans held in portfolio and loans serviced for others. There were no issues requiring management attention in the most recent review. Servicing for others includes loans sold to Freddie Mac, Fannie Mae, and the Federal Home Loan Bank of Boston through its Mortgage Partnership Finance (MPF) program. The Bank follows the published guidelines of each investor. Loans serviced for Freddie Mac and Fannie Mae have been sold without recourse, and the Bank has no liability for these loans in the event of foreclosure. A de minimis volume of has been sold to and serviced for MPF to date. The Bank retains a second loss layer credit enhancement obligation; no losses have been recorded on this credit enhancement obligation since the Bank started selling loans to MPF in 2013.