FNLC First Bancorp Inc.

Risks

• We are subject to credit risk and may incur losses if loans are not repaid.
• Our loan portfolio includes commercial, commercial real estate and commercial construction loans that may have higher risks than other types of loans.
• Our allowance for loan losses may be insufficient and require additional provision from earnings.
• The Maine foreclosure process can be lengthy and add additional losses for the Bank.
• Our level of troubled debt restructured ("TDR") remains elevated.
• Changes in interest rates could adversely affect our net interest income and profitability.
• The value of our investment portfolio may be negatively affected by changes in interest rates and disruptions in securities markets.
• Illiquidity could impair our ability to fund operations and jeopardize our financial condition.
• Loss of lower-cost funding sources could lead to margin compression and decrease net interest income.
• The soundness of other financial institutions could adversely affect us.
• Lack of loan demand may adversely impact net interest income.
• A decline in real estate values in our primary market area could adversely impact results of operations and financial condition.
• Our investment management activities are dependent on the value of investment securities which may lead to revenue fluctuations.
• We are dependent upon the services of our management team, and if we are unable to retain the services of our management team, our business may suffer.
• Our internal control systems are inherently limited and may fail or be circumvented.
• We continually encounter technological change that may be difficult (costly) to keep up with.
• We are subject to security, transactional and operational risks relating to the use of technology that could damage our reputation and our business.
• We are subject to claims and litigation that may impact our earnings and/or our reputation.
• Damage to our reputation could significantly harm our businesses.
• Our recent results may not be indicative of our future results.
• Our business has been and may continue to be adversely affected by conditions in the financial markets and economic conditions generally and by increased regulation.
• Economic risks are not limited to the United States.
• We operate in a highly regulated environment and may be adversely affected by changes in law and regulations.
• The Dodd-Frank Act created a new Consumer Financial Protection Bureau and tightened capital standards, and will continue to result in new laws and regulations that are expected to increase our costs of operations.
• Significant competition in the financial services industry may impact our results.
• There may not be a robust trading market for our common stock.
• The price of our common stock may fluctuate.
• The inability to receive dividends from the Bank would negatively affect our ability to pay dividends to shareholders.
• If we do not manage our capital position strategically, our return on equity could be lower compared to our competitors as a result of our high level of capital.
• We may issue additional equity securities or engage in other transactions which dilute our book value or affect the priority of the common stock, which may adversely affect the market price of our common stock.
• Potential acquisitions may disrupt our business and dilute shareholder value.