First National Bank experienced a decline in net income according to their first quarter report released on Wednesday. The First National Bank is one of many national banks that saw weaker earnings during the recent fiscal period.
The Damariscotta-based community bank experienced a net income of $6 million over the last three months, which is $2 million less than reported for the same time last year. It's also a 10% decrease of $650,000 in net income compared to the previous quarter at the end of 2023.
President and CEO Troy McKim attributes the slide to the raising of the federal funds interest rate by the Federal Reserve to control inflation.
"When that happens, the cost of funding to banks rises considerably," said McKim. "Being a liability sensitive bank at the current moment, we’re in a situation where we experienced margin pressure. But our expenses are pretty well under control and our fee income is steady."
The fiscal report was released on Wednesday by The First Bancorp ($FNLC) which serves as the publicly traded holding company for First National Bank.
"Those loans [will] hit their adjustment period in late 2024 and into [2025] and '26," said McKim. "When we see those assets adjust upward, we’ll be back to a normal income stream and back to a relatively stable margin. I would expect over the next year and a half that we would be back to 2022 [net income] levels."
McKim said the First National Bank currently holds around $3 billion in total assets, and reported $127 million worth of new loans for the first quarter. McKim added that the bank reported $127 million worth of new loans for Q1.
First National Bank serves over 55,000 customers. The First National Bank and Camden National Bank are the only two national chartered banks to be headquartered in Maine.
