FIRST BANCORP SOUTHERN PINES, N.C., Oct. 24, 2017 /PRNewswire/ -- First Bancorp (NASDAQ - FBNC), the parent company of First Bank, announced today net income available to common shareholders of $13.1 million, or $0.53 per diluted common share, for the three months ended September 30, 2017, an increase of 130% in earnings per share from the $4.6 million, or $0.23 per diluted common share, recorded in the third quarter of 2016. For the nine months ended September 30, 2017, the Company recorded net income available to common shareholders of $31.8 million, or $1.33 per diluted common share, an increase of 43.0% in earnings per share from the $19.0 million, or $0.93 per diluted common share, for the nine months ended September 30, 2016.
The third quarter of 2016 results were impacted by two non-recurring items that impacted diluted earnings per share negatively by a net of $0.17 - 1) the Company's termination of its loss share agreements with the FDIC, which resulted in the Company recording additional indemnification asset expense of $5.7 million during the three months ended September 30, 2016, and 2) an exchange of branches with another community bank that resulted in a gain of $1.4 million.
Comparisons for the financial periods presented are significantly impacted by the Company's March 3, 2017 acquisition of Carolina Bank Holdings, Inc., the parent company of Carolina Bank, which operated eight branches and three mortgage loan offices, primarily in the Triad region of North Carolina. As of the acquisition date, Carolina Bank had total assets of $682 million, including $497 million in loans and $585 million in deposits.
On October 1, 2017, the Company acquired ASB Bancorp, Inc., the parent company of Asheville Savings Bank, SSB, headquartered in Asheville, North Carolina ("Asheville Savings Bank"), which operated through 13 branches in the Asheville area. As of the acquisition date, Asheville Savings Bank reported total assets of approximately $798 million, including $617 million in loans and $679 million in deposits. Because this transaction closed in the fourth quarter, the financial position and earnings for Asheville Savings Bank are not included in the Company's results for this quarter.
Net Interest Income and Net Interest Margin
Net interest income for the third quarter of 2017 was $41.6 million, a 37.2% increase from the $30.4 million recorded in the third quarter of 2016. Net interest income for the first nine months of 2017 amounted to $115.9 million, a 25.8% increase from the $92.1 million recorded in the comparable period of 2016. The increase in net interest income was primarily due to higher amounts of loans outstanding as a result of internal growth, as well as the acquisition of Carolina Bank.
Also contributing to the increase in net interest income was a higher net interest margin for the period. The Company's net interest margin (tax-equivalent net interest income divided by average earning assets) experienced its fourth consecutive quarter of expansion and amounted to 4.16% for the third quarter of 2017 compared to 3.93% for the third quarter of 2016. For the nine month period ended September 30, 2017, the Company's net interest margin was 4.11% compared to 4.07% for the same period in 2016. Asset yields have increased primarily as a result of three Federal Reserve interest rate increases during the past year. Funding costs have also increased, but to a lesser degree.
The net interest margins for both periods were also impacted by higher amounts of loan discount accretion associated with acquired loan portfolios. The Company recorded loan discount accretion amounting to $1.7 million in the third quarter of 2017, compared to $0.8 million in the third quarter of 2016. For the first nine months of 2017 and 2016, loan discount accretion amounted to $5.1 million and $3.6 million, respectively. The increase in loan discount accretion is primarily due to the loan discounts recorded in the acquisition of Carolina Bank. See the Financial Summary for a table that presents the impact of loan discount accretion on net interest income.
Excluding the effects of loan discount accretion, the Company's net interest margin was 3.99% for the third quarter of 2017, compared to 3.88% for the second quarter of 2017 and 3.82% for the third quarter of 2016. See the Financial Summary for a reconciliation of the Company's net interest margin to the net interest margin excluding loan discount accretion, and other information regarding this ratio.
Provision for Loan Losses and Asset Quality
The Company recorded no provision for loan losses in the third quarters of 2017 or 2016. For the nine months ended September 30, 2017, the Company recorded total provision for loan losses of $0.7 million compared to a total negative provision for loan losses of $23,000 in the same period of 2016.
The Company's provision for loan loss levels have been impacted by continued improvement in asset quality. Nonperforming assets amounted to $53.0 million at September 30, 2017, a decrease of 24.4% from the $70.2 million one year earlier. The Company's nonperforming assets to total assets ratio was 1.16% at September 30, 2017 compared to 1.98% at September 30, 2016. Also, the Company's provision for loan loss levels were impacted by lower net loan charge-offs in 2017. The Company experienced net loan recoveries of $0.1 million for the first nine months of 2017, compared to net loan charge-offs of $2.9 million for the first nine months of 2016. The ratio of annualized net charge-offs to average loans for the nine months ended September 30, 2017 was 0.00%, compared to 0.15% for the same period of 2016.
Noninterest Income
Total noninterest income was $12.4 million and $5.2 million for the three months ended September 30, 2017 and September 30, 2016, respectively. For the nine months ended September 30, 2017, noninterest income amounted to $34.0 million compared to $16.1 million for the same period of 2016.
Core noninterest income for the third quarter of 2017 was $12.8 million, an increase of 31.2% from the $9.8 million reported for the third quarter of 2016. For the first nine months of 2017, core noninterest income amounted to $34.2 million, a 35.4% increase from the $25.3 million recorded in the comparable period of 2016. Core noninterest income includes i) service charges on deposit accounts, ii) other service charges, commissions, and fees, iii) fees from presold mortgage loans, iv) commissions from sales of insurance and financial products, v) SBA consulting fees, vi) SBA loan sale gains, and vii) bank-owned life insurance income.
The primary reason for the increase in core noninterest income in 2017 was the acquisition of Carolina Bank, as well as income derived from the Company's SBA consulting fees and SBA loan sale gains, which began in the second and third quarters of 2016.
Fees from presold mortgage loans increased to $1.8 million for the third quarter of 2017 from $0.7 million in the third quarter of 2016. For the first nine months of 2017, fees from presold mortgage loans increased to $4.1 million from the $1.5 million recorded in the comparable period of 2016. The increases were primarily due to the acquisition of Carolina Bank in March 2017, which had a significant mortgage loan operation.
Commissions from sales of insurance and financial products amounted to $1.4 million in the third quarter of 2017 compared to $1.0 million in the third quarter of 2016. The increase was primarily due to the acquisition of an insurance agency during the third quarter of 2017 - see additional discussion below.
In the three and nine months ended September 30, 2017, the Company recorded no indemnification asset expense compared to $5.7 million and $10.3 million in indemnification asset expense in the three and nine months ended September 30, 2016, respectively. In 2016, indemnification asset expense arose from loss-share agreements with the FDIC associated with two failed banked acquisitions. The loss-share agreements were terminated in September 2016, and thus all indemnification asset income/expense ceased at that time.
Other gains and losses for the 2017 periods presented represent the net effects of miscellaneous gains and losses that are non-routine in nature. In the third quarter of 2016, the Company recorded a net gain of $1.4 million as a result of a branch exchange transaction.
Noninterest Expenses
Noninterest expenses amounted to $34.4 million in the third quarter of 2017 compared to $27.7 million recorded in the third quarter of 2016. Noninterest expenses for the nine months ended September 30, 2017 amounted to $101.5 million compared to $78.6 million in 2016. The majority of the increase in noninterest expenses in 2017 relates to the Company's acquisition of Carolina Bank.
Salaries expense increased to $16.6 million in the third quarter of 2017 from the $13.4 million recorded in the third quarter of 2016. Salaries expense for the first nine months of 2017 amounted to $46.8 million compared to $37.5 million in 2016. The primary reason for the increase in salaries expense in 2017 was the addition of personnel acquired in the Carolina Bank acquisition. Also impacting salaries expense is the continued growth of the Company's SBA consulting firm and SBA lending division.
Employee benefits expense was $3.4 million in the third quarter of 2017 compared to $2.6 million in the third quarter of 2016. For the first nine months of 2017, employee benefits expense amounted to $10.7 million compared to $7.9 million in 2016. This increase in 2017 was primarily due to the acquisition and growth initiatives discussed above.
Merger and acquisition expenses amounted to $1.3 million and $0.6 million for the three months ended September 30, 2017 and 2016, respectively. For the nine months ended September 30, 2017 and 2016, merger and acquisition expenses amounted to $4.8 million and $1.3 million, respectively. Merger and acquisition expenses represent transaction related costs associated primarily with the acquisitions of Carolina Bank and Asheville Savings Bank.
The total noninterest expenses in the third quarter of 2017 were $34.4 million compared to the $35.1 million recorded in the second quarter of 2017. As discussed below, on August 4, 2017, the Company completed the system data conversion of the Carolina Bank customer accounts, which resulted in cost efficiencies realized in the second half of the quarter.
Balance Sheet and Capital
Total assets at September 30, 2017 amounted to $4.6 billion, a 29.8% increase from a year earlier. Total loans at September 30, 2017 amounted to $3.4 billion, a 29.4% increase from a year earlier, and total deposits amounted to $3.7 billion at September 30, 2017, a 25.4% increase from a year earlier.
In addition to the growth realized from the acquisition of Carolina Bank in March 2017, the Company has experienced strong organic loan and deposit growth during 2017. For the first nine months of 2017, organic loan growth (i.e. excluding loan balances assumed from Carolina Bank) amounted to $221.7 million, or 10.9% annualized. For the first nine months of 2017, organic deposit growth amounted to $118.5 million, or 5.4% annualized. The strong growth was a result of ongoing internal initiatives to drive loan and deposit growth, including the Company's recent expansion into higher growth markets. The loan growth noted above has been driven by the recently-entered North Carolina markets of Charlotte, Raleigh, and the Triad.
The Company remains well-capitalized by all regulatory standards, with an estimated Total Risk-Based Capital Ratio at September 30, 2017 of 12.48%, a decline from 13.49% at September 30, 2016, but still in excess of the 10.00% minimum to be considered well-capitalized. The Company's tangible common equity to tangible assets ratio was 7.95% at September 30, 2017, a decrease of eight basis points from a year earlier. The decreases in the capital ratios are primarily due to the acquisition of Carolina Bank.
Comments of the CEO and Other Business Matters
Richard H. Moore, CEO of First Bancorp, commented on today's report, "I am pleased to report another quarter of strong earnings and growth. We continue to see good results from our strategic initiatives. Upon the closing of the acquisition of Asheville Savings Bank on October 1, 2017, First Bank's total assets exceeded $5 billion with over 100 branches and further strengthened our position as the leading community bank in the Carolinas." Mr. Moore continued, "We welcome our new associates, shareholders, and customers of Asheville Savings Bank, and thank you for the privilege to serve you."
The following is a list of business development and other miscellaneous matters affecting the Company:
-- On August 4, 2017, the Company converted the data processing systems of
Carolina Bank to First Bank, and the former Carolina Bank branches now
fully operate under the name "First Bank." As part of this conversion,
the Company consolidated four branches into two branches in
Winston-Salem and consolidated two branches into one branch in Asheboro.
-- On September 1, 2017, the Company completed the acquisition of Bear
Insurance Service, an insurance agency headquartered in Albemarle, North
Carolina, with four locations in Stanly, Cabarrus, and Montgomery
counties. This acquisition provided the Company the opportunity to
enhance its insurance product offerings, as well as complementing its
insurance agency operations in these markets and the surrounding areas.
In 2016, Bear Insurance Service recorded approximately $4 million in
annual insurance commissions.
-- On September 15, 2017, the Company announced a quarterly cash dividend
of $0.08 cents per share payable on October 25, 2017 to shareholders of
record on September 30, 2017. This is the same dividend rate as the
Company declared in the third quarter of 2016.
-- On October 1, 2017, the Company acquired ASB Bancorp, Inc., the parent
company of Asheville Savings Bank, headquartered in Asheville, North
Carolina, which operated through 13 branches in the Asheville area. As
of the acquisition date, Asheville Savings Bank had total assets of $798
million, including $617 million in loans and $679 million in deposits.
In connection with the acquisition, the Company paid a total of $17.9
million in cash and issued 4.9 million shares of First Bancorp common
stock to the shareholders of ASB Bancorp, Inc. The conversion of
Asheville Savings Bank's computer systems to First Bank's systems is
scheduled to occur in March 2018. Until that time, the acquired
branches will continue to operate under the name "Asheville Savings
Bank."
* * *
First Bancorp is a bank holding company headquartered in Southern Pines, North Carolina, with total assets of approximately $5.4 billion. Its principal activity is the ownership and operation of First Bank, a state-chartered community bank that operates 104 branches in North Carolina and South Carolina. First Bank also operates three mortgage loan production offices in the central region of North Carolina. First Bank provides SBA loans to customers through its nationwide network of lenders - for more information on First Bank's SBA lending capabilities, please visit www.firstbanksba.com. First Bancorp's common stock is traded on The NASDAQ Global Select Market under the symbol "FBNC."
Please visit our website at www.LocalFirstBank.com.
This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995, which statements are inherently subject to risks and uncertainties. Forward-looking statements are statements that include projections, predictions, expectations or beliefs about future events or results or otherwise are not statements of historical fact. Such statements are often characterized by the use of qualifying words (and their derivatives) such as "expect," "believe," "estimate," "plan," "project," "anticipate," or other statements concerning opinions or judgments of the Company and its management about future events. Factors that could influence the accuracy of such forward-looking statements include, but are not limited to, the financial success or changing strategies of the Company's customers, the Company's level of success in integrating acquisitions, actions of government regulators, the level of market interest rates, and general economic conditions. For additional information about the factors that could affect the matters discussed in this paragraph, see the "Risk Factors" section of the Company's most recent annual report on Form 10-K available at www.sec.gov. Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update or revise forward-looking statements. The Company is also not responsible for changes made to the press release by wire services, internet services or other media.
First Bancorp and Subsidiaries
Financial Summary - Page 1
==========================
Three Months Ended
September 30, Percent
-------------
($ in thousands
except per share
data - unaudited) 2017 2016 Change
------------------ ---- ---- ------
INCOME STATEMENT
Interest income
---------------
Interest and fees on
loans $41,549 29,919
Interest on
investment
securities 2,403 2,123
Other interest
income 1,059 213
----- ---
Total interest
income 45,011 32,255 39.5%
------ ------
Interest expense
----------------
Interest on deposits 1,910 1,254
Interest on
borrowings 1,462 647
----- ---
Total interest
expense 3,372 1,901 77.4%
----- -----
Net interest income 41,639 30,354 37.2%
Provision (reversal)
for loan losses - - n/m
--- ---
Net interest income
after provision for
loan losses 41,639 30,354 37.2%
------ ------
Noninterest income
------------------
Service charges on
deposit accounts 2,945 2,710
Other service
charges,
commissions, and
fees 3,468 2,996
Fees from presold
mortgage loans 1,842 710
Commissions from
sales of insurance
and financial
products 1,426 969
SBA consulting fees 864 1,178
SBA loan sale gains 1,692 694
Bank-owned life
insurance income 579 514
Foreclosed property
gains (losses), net (216) (266)
FDIC indemnification
asset expense, net - (5,711)
Securities gains
(losses), net - -
Other gains
(losses), net (238) 1,363
---- -----
Total noninterest
income 12,362 5,157 139.7%
------ -----
Noninterest expenses
--------------------
Salaries expense 16,550 13,430
Employee benefit
expense 3,375 2,608
Occupancy and
equipment related
expense 3,509 2,909
Merger and
acquisition
expenses 1,329 600
Intangibles
amortization
expense 902 387
Other operating
expenses 8,719 7,784
----- -----
Total noninterest
expenses 34,384 27,718 24.0%
------ ------
Income before income
taxes 19,617 7,793 151.7%
Income tax expense 6,531 3,115 109.7%
----- -----
Net income 13,086 4,678 179.7%
Preferred stock
dividends - (58)
Net income available
to common
shareholders $13,086 4,620 183.2%
======= =====
Earnings per common
share - basic $0.53 0.23 130.4%
Earnings per common
share - diluted 0.53 0.23 130.4%
ADDITIONAL INCOME STATEMENT INFORMATION
--------------------------------------
Net interest income,
as reported $41,639 30,354
Tax-equivalent
adjustment (1) 702 534
--- ---
Net interest income,
tax-equivalent $42,341 30,888 37.1%
======= ======
(1) This amount reflects the tax
benefit that the Company receives
related to its tax-exempt loans
and securities, which carry
interest rates lower than similar
taxable investments due to their
tax-exempt status. This amount
has been computed assuming a 37%
tax rate and is reduced by the
related nondeductible portion of
interest expense.
n/m - not meaningful
First Bancorp and Subsidiaries
Financial Summary - Page 2
==========================
Nine Months Ended
September 30, Percent
-------------
($ in thousands
except per share
data - unaudited) 2017 2016 Change
------------------ ---- ---- ------
INCOME STATEMENT
Interest income
---------------
Interest and fees
on loans $114,908 90,301
Interest on
investment
securities 7,099 6,784
Other interest
income 2,299 612
----- ---
Total interest
income 124,306 97,697 27.2%
------- ------
Interest expense
----------------
Interest on
deposits 5,044 3,860
Interest on
borrowings 3,411 1,750
----- -----
Total interest
expense 8,455 5,610 50.7%
----- -----
Net interest income 115,851 92,087 25.8%
Provision
(reversal) for
loan losses 723 (23) n/m
--- ---
Net interest income
after provision
for loan losses 115,128 92,110 25.0%
------- ------
Noninterest income
------------------
Service charges on
deposit accounts 8,525 7,960
Other service
charges,
commissions, and
fees 10,195 8,869
Fees from presold
mortgage loans 4,121 1,491
Commissions from
sales of insurance
and financial
products 3,304 2,844
SBA consulting fees 3,174 1,898
SBA loan sale gains 3,241 694
Bank-owned life
insurance income 1,667 1,526
Foreclosed property
gains (losses),
net (439) (189)
FDIC
indemnification
asset expense, net - (10,255)
Securities gains
(losses), net (235) 3
Other gains
(losses), net 493 1,237
--- -----
Total noninterest
income 34,046 16,078 111.8%
------ ------
Noninterest expenses
--------------------
Salaries expense 46,799 37,465
Employee benefit
expense 10,709 7,892
Occupancy and
equipment related
expense 10,258 8,484
Merger and
acquisition
expenses 4,824 1,286
Intangibles
amortization
expense 2,509 834
Other operating
expenses 26,441 22,677
------ ------
Total noninterest
expenses 101,540 78,638 29.1%
------- ------
Income before
income taxes 47,634 29,550 61.2%
Income tax expense 15,839 10,396 52.4%
------ ------
Net income 31,795 19,154 66.0%
Preferred stock
dividends - (175)
Net income
available to
common
shareholders $31,795 18,979 67.5%
======= ======
Earnings per common
share - basic $1.34 0.95 41.1%
Earnings per common
share - diluted 1.33 0.93 43.0%
ADDITIONAL INCOME STATEMENT INFORMATION
--------------------------------------
Net interest
income, as
reported $115,851 92,087
Tax-equivalent
adjustment (1) 1,979 1,510
----- -----
Net interest
income, tax-
equivalent $117,830 93,597 25.9%
======== ======
(1) This amount reflects the tax
benefit that the Company receives
related to its tax-exempt loans
and securities, which carry
interest rates lower than similar
taxable investments due to their
tax-exempt status. This amount
has been computed assuming a 37%
tax rate and is reduced by the
related nondeductible portion of
interest expense
n/m - not meaningful
First Bancorp and Subsidiaries
Financial Summary - Page 3
==========================
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
PERFORMANCE RATIOS (annualized) 2017 2016 2017 2016
---- ----
Return on average assets (1) 1.15% 0.53% 1.00% 0.75%
Return on average common equity (2) 9.98% 5.13% 8.90% 7.23%
Net interest margin - tax-equivalent (3) 4.16% 3.93% 4.11% 4.07%
Net charge-offs (recoveries) to average loans -0.07% 0.06% 0.00% 0.15%
COMMON SHARE DATA
Cash dividends declared - common $0.08 0.08 $0.24 0.24
Stated book value - common 20.73 17.78 20.73 17.78
Tangible book value - common 14.25 13.80 14.25 13.80
Common shares outstanding at end of period 24,723,929 20,119,411 24,723,929 20,119,411
Weighted average shares outstanding - basic 24,607,516 20,007,518 23,728,262 19,904,226
Weighted average shares outstanding - diluted 24,695,295 20,785,689 23,827,011 20,697,125
CAPITAL RATIOS
Tangible common equity to tangible assets 7.95% 8.03% 7.95% 8.03%
Common equity tier I capital ratio - estimated 10.33% 10.67% 10.33% 10.67%
Tier I leverage ratio 9.69% 10.22% 9.69% 10.22%
Tier I risk-based capital ratio - estimated 11.78% 12.57% 11.78% 12.57%
Total risk-based capital ratio - estimated 12.48% 13.49% 12.48% 13.49%
AVERAGE BALANCES ($ in thousands)
Total assets $4,514,409 3,443,737 $4,269,533 3,383,253
Loans 3,404,862 2,635,707 3,211,844 2,576,605
Earning assets 4,040,257 3,127,219 3,836,125 3,073,651
Deposits 3,632,319 2,823,255 3,465,347 2,801,517
Interest-bearing liabilities 2,958,134 2,319,008 2,827,764 2,306,226
Shareholders' equity 520,432 365,753 477,754 357,941
(1) Calculated by dividing annualized
net income available to common
shareholders by average assets.
(2) Calculated by dividing annualized
net income available to common
shareholders by average common
equity.
(3) See footnote 1 on page 1 of
Financial Summary for discussion
of tax-equivalent adjustments.
TREND INFORMATION
($ in thousands except per share data) For the Three Months Ended
--------------------------
Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
2017 2017 2017 2016 2016
INCOME STATEMENT
Net interest income - tax-equivalent (1) $42,341 40,609 34,881 31,837 30,888
Taxable equivalent adjustment (1) 702 693 585 544 534
Net interest income 41,639 39,916 34,296 31,293 30,354
Provision for loan losses - - 723 - -
Noninterest income 12,362 11,875 9,809 9,473 5,157
Noninterest expense 34,384 35,084 32,072 28,183 27,718
Income before income taxes 19,617 16,707 11,310 12,583 7,793
Income tax expense 6,531 5,553 3,755 4,228 3,115
Net income 13,086 11,154 7,555 8,355 4,678
Preferred stock dividends - - - - (58)
Net income available to common shareholders 13,086 11,154 7,555 8,355 4,620
Earnings per common share - basic 0.53 0.45 0.34 0.41 0.23
Earnings per common share - diluted 0.53 0.45 0.34 0.40 0.23
(1) See footnote 1 on page 1 of Financial Summary for discussion of tax-equivalent adjustments.
================================================================================================
First Bancorp and Subsidiaries
Financial Summary - Page 4
==========================
One
Year
CONSOLIDATED BALANCE SHEETS At Sept. 30, At June 30, At Dec. 31, At Sept. 30,
Change
($ in thousands - unaudited) 2017 2017 2016 2016
---- ---- ---- ----
Assets
Cash and due from banks $82,758 80,234 71,645 64,145 29.0%
Interest bearing deposits with banks 326,089 337,326 234,348 217,188 50.1%
------- ------- ------- -------
Total cash and cash equivalents 408,847 417,560 305,993 281,333 45.3%
------- ------- ------- -------
Investment securities 322,080 335,362 329,042 334,964 (3.8%)
Presold mortgages 17,426 13,071 2,116 4,094 325.6%
Total loans 3,429,755 3,375,976 2,710,712 2,651,459 29.4%
Allowance for loan losses (24,593) (24,025) (23,781) (24,575) (0.1%)
------- ------- ------- -------
Net loans 3,405,162 3,351,951 2,686,931 2,626,884 29.6%
--------- --------- --------- ---------
Premises and equipment 95,762 96,605 75,351 76,731 24.8%
Intangible assets 160,301 151,256 79,475 79,995 100.4%
Foreclosed real estate 9,356 11,196 9,532 10,103 (7.4%)
Bank-owned life insurance 88,081 87,501 74,138 73,613 19.7%
Other assets 83,822 64,118 52,284 49,530 69.2%
------ ------ ------ ------
Total assets $4,590,837 4,528,620 3,614,862 3,537,247 29.8%
========== ========= ========= =========
Liabilities
Deposits:
Non-interest bearing checking accounts $1,016,947 990,004 756,003 749,256 35.7%
Interest bearing checking accounts 683,113 728,973 635,431 593,065 15.2%
Money market accounts 793,919 781,086 683,680 658,166 20.6%
Savings accounts 396,192 411,814 209,074 207,494 90.9%
Brokered deposits 215,615 167,669 136,466 147,406 46.3%
Internet time deposits 7,995 9,779 - - n/m
Other time deposits > $100,000 296,006 304,716 287,939 306,041 (3.3%)
Other time deposits 241,454 250,289 238,760 249,412 (3.2%)
------- ------- ------- -------
Total deposits 3,651,241 3,644,330 2,947,353 2,910,840 25.4%
Borrowings 397,215 355,405 271,394 236,394 68.0%
Other liabilities 29,880 28,234 28,014 25,065 19.2%
------ ------ ------ ------
Total liabilities 4,078,336 4,027,969 3,246,761 3,172,299 28.6%
--------- --------- --------- ---------
Shareholders' equity
Preferred stock - - - 7,287 n/m
Common stock 263,493 262,901 147,287 139,979 88.2%
Retained earnings 251,790 240,682 225,921 219,233 14.9%
Stock in rabbi trust assumed in acquisition (3,571) (4,257) - - n/m
Rabbi trust obligation 3,571 4,257 - - n/m
Accumulated other comprehensive loss (2,782) (2,932) (5,107) (1,551) 79.4%
------ ------ ------ ------
Total shareholders' equity 512,501 500,651 368,101 364,948 40.4%
------- ------- ------- -------
Total liabilities and shareholders' equity $4,590,837 4,528,620 3,614,862 3,537,247 29.8%
========== ========= ========= =========
n/m = not meaningful
====================
First Bancorp and Subsidiaries
Financial Summary - Page 5
==========================
For the Three Months Ended
--------------------------
Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
2017 2017 2017 2016 2016
YIELD INFORMATION
Yield on loans 4.84% 4.78% 4.71% 4.60% 4.52%
Yield on securities - tax-equivalent (1) 3.73% 3.55% 3.41% 3.09% 3.05%
Yield on other earning assets 1.38% 0.96% 0.86% 0.53% 0.58%
Yield on all interest earning assets 4.49% 4.38% 4.32% 4.19% 4.17%
Rate on interest bearing deposits 0.29% 0.26% 0.24% 0.24% 0.24%
Rate on other interest bearing liabilities 1.75% 1.54% 1.28% 1.15% 1.13%
Rate on all interest bearing liabilities 0.45% 0.40% 0.34% 0.33% 0.33%
Total cost of funds 0.34% 0.30% 0.26% 0.25% 0.25%
Net interest margin - tax-equivalent (2) 4.16% 4.08% 4.07% 3.94% 3.93%
Average prime rate 4.25% 4.04% 3.79% 3.55% 3.50%
(1) See footnote 1 on page 1 of
Financial Summary for
discussion of tax-equivalent
adjustments.
(2) Calculated by dividing
annualized tax-equivalent net
interest income by average
earning assets for the period.
See footnote 1 on page 1 of
Financial Summary for
discussion of tax-equivalent
adjustments.
=== ==============================
For the Three Months Ended
--------------------------
NET INTEREST INCOME PURCHASE
ACCOUNTING ADJUSTMENTS
Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
($ in thousands) 2017 2017 2017 2016 2016
--------------- ---- ---- ---- ---- ----
Interest income - increased by accretion of loan
discount
$1,745 1,968 1,360 898 822
Interest expense - reduced by premium 85 103 57 38 38
amortization of deposits
Interest expense - increased by discount - -
accretion of borrowings
(43) (29) (9)
Impact on net interest income $1,787 2,042 1,408 936 860
====== ===== ===== === ===
First Bancorp and Subsidiaries
Financial Summary - Page 6
==========================
Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
2017 2017 2017 2016 2016
ASSET QUALITY DATA ($ in thousands)
Nonperforming assets
--------------------
Nonaccrual loans $23,350 22,795 25,684 27,468 32,796
Troubled debt restructurings - accruing 20,330 21,019 21,559 22,138 27,273
Accruing loans > 90 days past due - - - - -
--- --- --- --- ---
Total nonperforming loans 43,680 43,814 47,243 49,606 60,069
Foreclosed real estate 9,356 11,196 12,789 9,532 10,103
----- ------ ------ ----- ------
Total nonperforming assets $53,036 55,010 60,032 59,138 70,172
======= ====== ====== ====== ======
Purchased credit impaired loans not included $15,034 16,846 19,167
above (1)
- -
Asset Quality Ratios
--------------------
Net quarterly charge-offs to average loans - -0.07% -0.06% 0.13% 0.12% 0.06%
annualized
Nonperforming loans to total loans 1.27% 1.30% 1.44% 1.83% 2.27%
Nonperforming assets to total assets 1.16% 1.21% 1.35% 1.64% 1.98%
Allowance for loan losses to total loans 0.72% 0.71% 0.72% 0.88% 0.93%
(1) In the March 3, 2017 acquisition of
Carolina Bank Holdings, Inc., the
Company acquired $19.3 million in
purchased credit impaired loans in
accordance with ASC 310-30
accounting guidance. These loans
are excluded from the
nonperforming loan amounts.
First Bancorp and Subsidiaries
Financial Summary - Page 7
==========================
For the Three Months Ended
--------------------------
NET INTEREST MARGIN, EXCLUDING
LOAN DISCOUNT ACCRETION -
RECONCILIATION
($ in thousands) Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
2017 2017 2017 2016 2016
---- ---- ---- ---- ----
Net interest income, as reported $41,639 39,916 34,296 31,293 30,354
Tax-equivalent adjustment 702 693 585 544 534
--- --- --- --- ---
Net interest income, tax-equivalent (A) $42,341 40,609 34,881 31,837 30,888
======= ====== ====== ====== ======
$4,040,257 3,989,593 3,478,525 3,214,719 3,127,219
Average earning assets (B)
Tax-equivalent net interest
margin, annualized - as reported - (A)/(B)
4.16% 4.08% 4.07% 3.94% 3.93%
==== ==== ==== ==== ====
Net interest income, tax-equivalent $42,341 40,609 34,881 31,837 30,888
Loan discount accretion 1,745 1,968 1,360 898 822
----- ----- ----- --- ---
Net interest income, tax-equivalent, excluding $40,596 38,641 33,521 30,939 30,066
loan discount accretion (A)
$4,040,257 3,989,593 3,478,525 3,214,719 3,127,219
Average earnings assets (B)
Tax-equivalent net interest margin, excluding 3.99% 3.88% 3.91% 3.83% 3.82%
impact of loan discount accretion,
annualized - (A) / (B)
Note: The measure "tax-equivalent net interest margin, excluding impact of loan discount accretion" is a non-GAAP performance measure. Management of the Company believes that it is useful to calculate and present the Company's net interest margin without the impact of loan discount
accretion for the reasons explained in the remainder of this paragraph. Loan discount accretion is a non-cash interest income adjustment related to the Company's acquisition of loans and represents the portion of the fair value discount that was initially recorded on the acquired loans
that is being recognized into income over the lives of the loans. At September 30, 2017, the Company had a remaining loan discount balance of $16.9 million compared to $13.2 million at September 30, 2016. For the related loans that perform and pay-down over time, the loan discount will
also be reduced, with a corresponding increase to interest income. Therefore management of the Company believes it is useful to also present this ratio to reflect the Company's net interest margin excluding this non-cash, temporary loan discount accretion adjustment to aid investors in
comparing financial results between periods. The Company cautions that non-GAAP financial measures should be considered in addition to, but not as a substitute for, the Company's reported GAAP results.
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SOURCE First Bancorp
