The First Bancorp Reports Record Quarterly Income, Up 12.7% Over 2007

DAMARISCOTTA, Maine--(Business Wire)--
The First Bancorp (Nasdaq: FNLC), today announced unaudited
results for the quarter ended June 30, 2008, with net income of $3.6
million, a new record quarter and an increase of $407,000 or 12.7%
from the $3.2 million posted for the second quarter of 2007. Earnings
per share on a fully diluted basis were $0.37, up $0.04 or 12.1% from
the $0.33 reported for the quarter ended June 30, 2007, and even with
the record earnings per share set in the first quarter of 2008.

The Company also announced unaudited results for the first six
months of 2008, with net income of $7.2 million, an increase of $1.0
million or 16.1% from the $6.2 million posted for the same period in
2007. Earnings per share on a fully diluted basis were $0.74 for the
six-month period, up $0.11 or 17.5% from the $0.63 reported for the
first six months of 2007.

"This was another excellent quarter for The First Bancorp and its
banking subsidiary, The First, N.A.," observed President & Chief
Executive Officer Daniel R. Daigneault. "With the cost of funding
dropping faster than the yield on assets, we saw improvement in our
net interest margin, which led to increased net interest income - up
$1.3 million or 17.5% compared to the second quarter of 2007 and up
$125,000 or 1.4% compared to the previous quarter. We have had strong
growth in earning assets year-to-date, with the loan portfolio up
$31.7 million or 3.4% and the investment portfolio up $24.6 million or
11.1%. At the same time, we have had good growth in low-cost deposits,
despite the normal seasonal runoff we see in the first and second
quarters.

"Our excellent earnings performance also enabled us to increase
the provision to the allowance for loan losses," President Daigneault
observed. "During the second quarter we provisioned nearly $1.0
million - $689,000 above the second quarter of 2007 and $439,000 above
the previous quarter. While we have not seen a portfolio-wide
deterioration in credit quality, there was deterioration in one large
relationship. Given that the national economy remains weak and the
ongoing concerns about rising energy costs, however, we felt an
additional provision to the allowance for loan losses to be prudent at
this time.

"At $7.8 million, the allowance for loan losses has increased $1.0
million since December 31, 2007," President Daigneault stated. "This
was the result of the above-noted larger-than-normal provision and net
chargeoffs of only $439,000 for the first six months of 2008 - very
low, in our opinion, at 0.047% of average loans outstanding
year-to-date. The delinquency rate in our loan portfolio and the level
of non-performing assets, although up slightly since the end of 2007,
are still very low in comparison to our historical levels and those of
our peer banks.

"We continue to be conservative in our loan underwriting and
security selection," President Daigneault went on. "Despite an
increasingly competitive landscape, we do not compromise quality, and
while this impacts our growth in the short-term, we feel this will
serve us well in the long-term, with our earnings being less impacted
as a result of credit losses. And to re-emphasize a point we have made
in previous quarters, we have not originated sub-prime mortgages nor
have we invested in securities collateralized by sub-prime loans."

"With strong earnings and only a small growth in operating
expenses, our efficiency ratio has improved substantially in 2008,"
noted F. Stephen Ward, the Company's Treasurer and Chief Financial
Officer. "Due to the competitive forces in our market area, the
composition of our earning assets is weighted to lower-yielding
mortgage loans and our funding mix has a proportionally greater amount
of higher-cost certificates of deposit. As a result, we have
historically had a net interest margin much lower than our peers, so
in order to consistently produce above-peer earnings, we are focused
on controlling expenses and operating efficiently.

"The impact of this is seen in our year-to-date efficiency ratio
of 46.0%," Mr. Ward continued, "compared to 50.8% for the same period
last year and 61.1% for the Bank's peer group as of March 31, 2008.
Non-interest expense year-to-date is $10.9 million, only $271,000 or
2.6% above the first six months in 2007, with the increase coming in
higher employee costs. At the same time, we saw a slight improvement
in non-interest income, which is up $77,000 or 1.7% over the same
period last year.

"During the past month, the capital adequacy of banks has been a
growing concern for many people," Mr. Ward noted. "Banks are required
to meet regulatory ratios of capital to their assets, and to be
considered well-capitalized - the FDIC's highest rating - a bank must
maintain a Tier 2 Risk-Based Capital Ratio equal to or greater than 10
percent, a Tier 1 Risk-Based Capital Ratio equal to or greater than 6
percent, and a Leverage Capital Ratio equal to or greater than 5
percent. As of June 30, 2008, the Bank's actual capital ratios were
10.89%, 9.95% and 6.90%, respectively, comfortably above the level to
be considered 'well-capitalized' by the FDIC.

"While remaining well-capitalized is of obvious importance for The
First Bancorp, at the same time we seek to produce a return on our
capital that is well-above peer," Mr. Ward continued. "This is
measured in return on average tangible equity, which year-to-date for
the Company is 16.76%, up from the 15.41% posted for the first six
months of 2007. Based upon March 31, 2008 data, the Bank's return on
average equity was 17.09%, which placed it in the top 13% of all banks
in its peer group which had an average return of only 9.65%."

"The Company raised its cash dividend again in the second quarter
from $0.185 to $0.19 per share," President Daigneault said, "and we
have now raised our cash dividend for 15 consecutive years and for 51
consecutive quarters. At an annual rate of $0.76 per share, this
results in a dividend yield of 5.57% based on our June 30, 2008
closing price of $13.65 per share - a yield we view as extremely
attractive given the returns available on fixed-income investments in
the current low rate environment.

"The price of our stock has had much more volatility in the past
month," President Daigneault stated. "Although we closed at $13.65 per
share on June 30, 2008, this was significantly lower than our average
closing price of $16.46 for the second quarter, and it was
attributable to our addition to the Russell 2000 and Russell 3000
indices on June 27, 2008, just before quarter end. According to
Nasdaq, companies which are added or deleted to Russell indices often
see very unusual trading patterns in their stock just before and after
this event as a result of speculators looking to take quick profits.
Fortunately, our price has rebounded in the past week, closing last
night at $17.88 per share, just below our 52-week high. While the
recognition of being one of the 3,000 largest publicly traded
companies in the United States is gratifying, we expect there will be
a higher level of volatility in our stock price as a result of being
added to these indices.

"Despite the drop in our stock at quarter end, the performance of
our shares continues to compare very well to our industry," President
Daigneault observed. "Our price per share was down 6.76% in the first
six months of 2008, while the KBW Regional Bank Index was down 29.47%
for the same period. Our stock also fared well compared to the broad
market, as measured by the S&P 500, which declined 12.83%
year-to-date, as well as the Russell 2000 and Russell 3000 indices,
which had a year-to-date decline of 10.04% and 11.63%, respectively.

"As stated previously, this was an excellent quarter for FNLC,"
President Daigneault concluded. "We saw good growth in earning assets,
an improved net interest margin, increased net interest income, and
record net income and earnings per share. Our efficiency ratio has
improved dramatically this year, our credit quality remains good
despite weakness in the national economy, and we are considered
well-capitalized by the FDIC. I view The First Bancorp as a good
investment opportunity, especially for those interested in Maine-based
companies or high-performing community banks."

The First Bancorp, headquartered in Damariscotta, Maine, is the
holding company for The First, N.A. Founded in 1864, The First is an
independent community bank serving Mid-Coast and Down East Maine with
14 offices in Lincoln, Knox, Hancock and Washington Counties. The Bank
provides a full range of consumer and commercial banking products and
services. First Advisors, a division of The First, provides investment
advisory, private banking and trust services from two offices in
Lincoln and Hancock Counties.

Forward-looking and cautionary statements: except for the
historical information and discussions contained herein, statements
contained in this release may constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of
1995. These statements involve a number of risks, uncertainties and
other factors that could cause actual results and events to differ
materially, as discussed in the Company's filings with the Securities
and Exchange Commission.

-0-
*T
The First Bancorp
Consolidated Balance Sheets (Unaudited)
----------------------------------------------------------------------

----------------------------------------------------------------------
December
June 30, 31, June 30,
In thousands of dollars 2008 2007 2007
----------------------------------------------------------------------
Assets
Cash and due from banks $ 19,997 $ 17,254 $ 21,349
Overnight funds sold - - -
Securities available for sale 36,850 40,461 43,009
Securities to be held to maturity
(fair value $206,475 at June 30,
2008, $181,132 at December 31,
2007 and $152,876 at June 30,
2007) 209,528 181,354 157,161
Loans held for sale (fair value
approximates cost) 2,253 1,817 44
Loans 951,814 920,164 877,220
Less: allowance for loan losses 7,800 6,800 6,714
----------------------------------------------------------------------
Net loans 944,014 913,364 870,506
----------------------------------------------------------------------
Accrued interest receivable 7,886 6,585 7,876
Premises and equipment 16,046 16,481 15,615
Other real estate owned 1,558 827 625
Goodwill 27,684 27,684 27,684
Other assets 19,557 17,423 17,405
----------------------------------------------------------------------
Total Assets $ 1,285,373 $ 1,223,250 $ 1,161,274
----------------------------------------------------------------------
Liabilities
Demand deposits $ 62,755 $ 60,637 $ 63,063
NOW deposits 108,543 101,680 101,908
Money market deposits 114,096 124,033 121,352
Savings deposits 87,023 86,611 89,798
Certificates of deposit 339,620 301,364 364,611
Certificates $100,000 and over 130,083 106,955 110,357
----------------------------------------------------------------------
Total deposits 842,120 781,280 851,089
Borrowed funds 317,055 316,719 188,478
Other liabilities 11,440 12,583 11,494
----------------------------------------------------------------------
Total Liabilities 1,170,615 1,110,582 1,051,061
----------------------------------------------------------------------
Shareholders' Equity
Common stock 97 97 98
Additional paid-in capital 44,030 44,762 45,817
Retained earnings 70,996 67,647 64,213
Net unrealized gains (loss) on
securities available-for-sale (100) 436 428
Net unrealized loss on
postretirement benefit costs (265) (274) (343)
----------------------------------------------------------------------
Total Shareholders' Equity 114,758 112,668 110,213
----------------------------------------------------------------------
Total Liabilities &
Shareholders' Equity $ 1,285,373 $ 1,223,250 $ 1,161,274
----------------------------------------------------------------------

----------------------------------------------------------------------
Common Stock
Number of shares authorized 18,000,000 18,000,000 18,000,000
Number of shares issued and
outstanding 9,690,182 9,732,493 9,802,892
Book value per share $ 11.84 $ 11.58 $ 11.24
Tangible book value per share $ 8.99 $ 8.73 $ 8.42
----------------------------------------------------------------------
*T

-0-
*T
The First Bancorp
Consolidated Statements of Income (Unaudited)
----------------------------------------------------------------------

----------------------------------------------------------------------
For the six months For the quarters
ended ended
June 30, June 30,
--------------------- ---------------------
In thousands of dollars 2008 2007 2008 2007
----------------------------------------------------------------------
Interest income
Interest and fees on
loans $ 29,649 $ 29,405 $ 14,357 $ 14,943
Interest on deposits
with other banks - - - -
Interest and
dividends on
investments 6,195 5,045 3,157 2,559
----------------------------------------------------------------------
Total interest income 35,844 34,450 17,514 17,502
----------------------------------------------------------------------
Interest expense
Interest on deposits 12,349 14,868 5,910 7,640
Interest on borrowed
funds 5,736 4,405 2,662 2,250
----------------------------------------------------------------------
Total interest
expense 18,085 19,273 8,572 9,890
----------------------------------------------------------------------
Net interest income 17,759 15,177 8,942 7,612
Provision for loan losses 1,439 550 939 250
----------------------------------------------------------------------
Net interest income after
provision for loan losses 16,320 14,627 8,003 7,362
----------------------------------------------------------------------
Non-interest income
Investment management
and fiduciary income 780 955 390 453
Service charges on
deposit accounts 1,488 1,400 805 741
Net securities gains 28 - - -
Mortgage origination
and servicing income 216 214 123 114
Other operating
income 2,182 2,048 1,200 1,162
----------------------------------------------------------------------
Total non-interest
income 4,694 4,617 2,518 2,470
----------------------------------------------------------------------
Non-interest expense
Salaries and employee
benefits 5,680 5,335 2,755 2,622
Occupancy expense 774 748 363 370
Furniture and
equipment expense 942 969 452 495
Amortization of
identified
intangibles 142 142 71 71
Other operating
expense 3,336 3,409 1,784 1,794
----------------------------------------------------------------------
Total non-interest
expense 10,874 10,603 5,425 5,352
----------------------------------------------------------------------
Income before income taxes 10,140 8,641 5,096 4,480
Applicable income taxes 2,946 2,443 1,493 1,284
----------------------------------------------------------------------
NET INCOME $ 7,194 $ 6,198 $ 3,603 $ 3,196
----------------------------------------------------------------------
Earnings per common share
Basic earnings per share $ 0.74 $ 0.63 $ 0.37 $ 0.33
Diluted earnings per share $ 0.74 $ 0.63 $ 0.37 $ 0.33
Cash dividends declared
per share $ 0.375 $ 0.335 $ 0.190 $ 0.170
Weighted average number of
shares outstanding 9,711,869 9,784,992 9,707,568 9,788,528
Incremental Shares 19,377 27,638 20,298 27,476
----------------------------------------------------------------------
*T

-0-
*T
The First Bancorp
Selected Financial Data (Unaudited)
----------------------------------------------------------------------

----------------------------------------------------------------------
For the six months
ended For the quarters ended
Dollars in thousands, June 30 June 30
--------------------------------------------
except for per share
amounts 2008 2007 2008 2007
----------------------------------------------------------------------

Summary of Operations
Interest Income $ 35,844 $ 34,450 $ 17,514 $ 17,502
Interest Expense 18,085 19,273 8,572 9,890
Net Interest Income 17,759 15,177 8,942 7,612
Provision for Loan Losses 1,439 550 939 250
Non-Interest Income 4,694 4,617 2,518 2,470
Non-Interest Expense 10,874 10,603 5,425 5,352
Net Income 7,194 6,198 3,603 3,196
----------------------------------------------------------------------
Per Common Share Data
Basic Earnings per Share $ 0.74 $ 0.63 $ 0.37 $ 0.33
Diluted Earnings per
Share 0.74 0.63 0.37 0.33
Cash Dividends Declared 0.375 0.335 0.190 0.170
Book Value 11.84 11.24 11.84 11.24
Tangible Book Value 8.99 8.42 8.99 8.42
Market Value 13.65 17.00 13.65 17.00
----------------------------------------------------------------------
Financial Ratios
Return on Average Equity
(a) 12.68% 11.49% 12.63% 11.72%
Return on Average
Tangible Equity (a) 16.76% 15.41% 16.66% 15.70%
Return on Average Assets
(a) 1.16% 1.12% 1.15% 1.13%
Average Equity to Average
Assets 9.17% 9.72% 9.13% 9.67%
Average Tangible Equity
to Average Assets 6.94% 7.25% 6.92% 7.22%
Net Interest Margin Tax-
Equivalent (a) 3.23% 3.12% 3.21% 3.07%
Dividend Payout Ratio 50.68% 53.17% 51.35% 51.52%
Allowance for Loan
Losses/Total Loans 0.82% 0.77% 0.82% 0.77%
Non-Performing Loans to
Total Loans 0.40% 0.24% 0.40% 0.24%
Non-Performing Assets to
Total Assets 0.29% 0.18% 0.29% 0.18%
Efficiency Ratio 45.97% 50.79% 45.02% 50.41%
----------------------------------------------------------------------
At Period End
Total Assets $1,285,373 $1,161,274 $1,285,373 $1,161,274
Total Loans 951,814 877,220 951,814 877,220
Total Investment
Securities 246,378 200,170 246,378 200,170
Total Deposits 842,120 851,089 842,120 851,089
Total Shareholders'
Equity 114,758 110,213 114,758 110,213
----------------------------------------------------------------------
(a) Annualized using a 365-day basis
*T

The First Bancorp
F. Stephen Ward, 207-563-3195 ext. 5001
Treasurer &
Chief Financial Officer

Copyright Business Wire 2008