Press Release

First Bancorp Reports Second Quarter Results

Company Release - 7/24/2018 4:01 PM ET

SOUTHERN PINES, N.C., July 24, 2018 /PRNewswire/ -- First Bancorp (NASDAQ: FBNC), the parent company of First Bank, announced today net income available to common shareholders of $22.7 million, or $0.77 per diluted common share, for the three months ended June 30, 2018, an increase of 71.1% in earnings per share from the $11.2 million, or $0.45 per diluted common share, recorded in the second quarter of 2017. 

For the six months ended June 30, 2018, the Company recorded net income available to common shareholders of $43.4 million, or $1.46 per diluted common share, an increase of 82.5% in earnings per share from the $18.7 million, or $0.80 per diluted common share, for the six months ended June 30, 2017. 

Comparisons for the financial periods presented were significantly impacted by the Company's acquisitions of Carolina Bank Holdings, Inc. ("Carolina Bank") in March 2017 with total assets of $682 million and ASB Bancorp, Inc. ("Asheville Savings Bank") in October 2017 with $798 million in total assets.  The assets, liabilities and earnings for the acquisitions were recorded beginning on their respective acquisition dates.

Net Interest Income and Net Interest Margin

Net interest income for the second quarter of 2018 was $51.2 million, a 28.3% increase from the $39.9 million recorded in the second quarter of 2017.  Net interest income for the first six months of 2018 amounted to $101.7 million, a 37.1% increase from the $74.2 million recorded in the comparable period of 2017.  The increase in net interest income was primarily due to the acquisitions of Carolina Bank and Asheville Savings Bank, as well as higher amounts of loans outstanding as a result of organic growth.

The Company's net interest margin (tax-equivalent net interest income divided by average earning assets) for the second quarter of 2018 was 4.10% compared to 4.08% for the second quarter of 2017.  For the six month period ended June 30, 2018, the Company's net interest margin was 4.15% compared to 4.08% for the same period in 2017.  Asset yields increased primarily as a result of five Federal Reserve interest rate increases since January 1, 2017.  Funding costs also increased, but to a lesser degree.  Also positively impacting interest income in 2018 was approximately $750,000 in interest recoveries received in the first quarter of the year, which primarily related to the same loans that experienced significant allowance for loan loss recoveries discussed below in "Provisions for Loan Losses and Asset Quality."

The net interest margins for the periods were also impacted by loan discount accretion associated with acquired loan portfolios.  The Company recorded loan discount accretion amounting to $2.3 million in the second quarter of 2018, compared to $2.0 million in the second quarter of 2017.  For the first six months of 2018 and 2017, loan discount accretion amounted to $4.4 million and $3.3 million, respectively.  The increase in loan discount accretion in 2018 was primarily due to the loan discounts recorded in the acquisitions of Carolina Bank and Asheville Savings 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 tax-equivalent net interest margin was 3.92% for the second quarter of 2018, compared to 3.88% for the second quarter of 2017.  The increase was primarily due to higher yields on loans and short-term investments resulting from higher interest rates.  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 percentage. 

Provision for Loan Losses and Asset Quality

The Company recorded a negative provision for loan losses (reduction of the allowance for loan losses) of $0.7 million in the second quarter of 2018, compared to no provision for loan losses in the second quarter of 2017.  For the six months ended June 30, 2018, the Company recorded a total negative provision for loan losses of $4.4 million compared to a total provision for loan losses of $0.7 million in the same period of 2017. 

During the first half of 2018, the Company experienced net loan recoveries of $4.4 million, including full payoffs received on four loans in the first quarter of 2018 that had been previously charged-down by approximately $3.3 million.  The amounts received in excess of the prior charge-downs were recorded as interest income recoveries, and those four loans were primarily responsible for the $750,000 in interest recoveries previously noted.

The Company's provision for loan losses have also been impacted by continued improvement in asset quality.   The Company's nonperforming assets to total assets ratio was 0.90% at June 30, 2018 compared to 1.21% at June 30, 2017.  The ratio of annualized net charge-offs (recoveries) to average loans for the six months ended June 30, 2018 was (0.21%), compared to 0.03% for the same period of 2017.

Noninterest Income

Total noninterest income was $16.1 million and $11.9 million for the three months ended June 30, 2018 and June 30, 2017, respectively.  For the six months ended June 30, 2018, noninterest income amounted to $32.1 million compared to $21.7 million for the same period of 2017.

Core noninterest income for the second quarter of 2018 was $15.3 million, an increase of 31.6% from the $11.6 million reported for the second quarter of 2017.  For the first six months of 2018, core noninterest income amounted to $31.5 million, a 47.2% increase from the $21.4 million recorded in the comparable period of 2017.  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 2018 was an increase in SBA loan sales volume.  During the three and six months ended June 30, 2018, the Company realized $2.6 million and $6.4 million in gains on SBA loan sales, respectively.  In comparison, during the three and six months ended June 30, 2017, the Company realized $0.9 million and $1.5 million in gains on SBA loan sales, respectively.  Also contributing to the increase in core noninterest income in 2018 were the acquisitions of Carolina Bank and Asheville Savings Bank. 

Fees from presold mortgages amounted to $0.8 million and $1.7 million for the three and six month periods ended June 30, 2018, respectively, compared to $1.5 million and $2.3 million for the three and six month periods ended June 30, 2017, respectively.  The declines in 2018 are primarily due to the Company's mortgage loan department originating a higher percentage of loans with construction components that are recorded to the Company's loan portfolio.

Commissions from sales of insurance and financial products amounted to $2.1 million in the second quarter of 2018, compared to $1.0 million in the second quarter of 2017.  For the six months ended June 30, 2018 and 2017, the Company recorded $4.1 million and $1.9 million, respectively, in commissions from sales of insurance and financial products.  The increase was primarily due to the acquisition of an insurance agency during the third quarter of 2017.

The Company recorded other gains of $0.9 million in the second quarter of 2018, which primarily related to a gain on a sale of a previously closed branch building.  In the second quarter of 2017, the Company reported other gains of $0.5 million, which primarily related to the sale of a pool of default judgements to a third-party firm.

Noninterest Expenses

Noninterest expenses amounted to $38.9 million in the second quarter of 2018 compared to $35.1 million recorded in the second quarter of 2017.  Noninterest expenses for the six months ended June 30, 2018 amounted to $82.5 million compared to $67.2 million in 2017.  The increase in noninterest expenses in 2018 related primarily to the Company's acquisitions of Carolina Bank and Asheville Savings Bank. 

Also impacting expenses were other growth initiatives, including continued growth of the Company's SBA consulting firm and SBA lending division, as well as the acquisition of an insurance agency during the third quarter of 2017. 

Merger expenses for the three and six months ended June 30, 2018 include $0.6 million and $1.4 million of expense related to increases in an earn-out liability associated with a prior year acquisition.

Income Taxes

The Company's effective tax rate for the second quarter of 2018 was 22.1% compared to 33.2% in the second quarter of 2017.  For the six months ended June 30, 2018 and 2017, the Company's effective tax rate was 22.1% and 33.2%, respectively.  The lower effective tax rate in 2018 was due to the Tax Cuts and Jobs Act, which was signed into law in December 2017 and reduced the federal tax rate from 35% to 21%. 

Balance Sheet and Capital

Total assets at June 30, 2018 amounted to $5.7 billion, a 26.3% increase from a year earlier.  Total loans at June 30, 2018 amounted to $4.1 billion, a 22.9% increase from a year earlier, and total deposits amounted to $4.6 billion at June 30, 2018, a 25.0% increase from a year earlier.  The significant increases are largely due to the acquisition of Asheville Savings Bank on October 1, 2017.

The Company experienced steady organic loan and deposit growth during the first six months of 2018.  Organic loan growth for the six months ended June 30, 2018 amounted to $107 million, or 5.2% annualized, and organic deposit growth amounted to $146.7 million, or 6.7% annualized during that same period.  This growth was a result of ongoing internal initiatives to enhance loan and deposit growth, including the Company's recent expansion into higher growth markets.  A $41 million deposit received in the first quarter of 2018 that was expected to be transferred outside the Company in the second quarter of 2018 is now expected to be transferred out in the third quarter of 2018.

The Company remains well-capitalized by all regulatory standards, with an estimated Total Risk-Based Capital Ratio at June 30, 2018 of 13.10%, an increase from the 12.61% reported at June 30, 2017.  The Company's tangible common equity to tangible assets ratio was 8.59% at June 30, 2018, an increase of 61 basis points from a year earlier. 

Comments of the CEO and Other Business Matters

Richard H. Moore, CEO of First Bancorp, commented, "We are pleased to report another quarter of strong earnings, as we continue to see good results from our strategic initiatives."

The following includes additional discussion of business development and other miscellaneous matters affecting the Company during the second quarter of 2018:

  • On June 15, 2018, the Company announced a quarterly cash dividend of $0.10 per share payable on July 25, 2018 to shareholders of record on June 30, 2018.  This dividend rate represents a 25% increase over the dividend rate declared in the second quarter of 2017.

*   *   *

First Bancorp is a bank holding company headquartered in Southern Pines, North Carolina, with total assets of approximately $5.7 billion. Its principal activity is the ownership and operation of First Bank, a state-chartered community bank that operates 102 branches in North Carolina and South Carolina.  First Bank also operates two 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 words or phrases 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 this press release by wire services, internet services or other media.

 

First Bancorp and Subsidiaries

Financial Summary – Page 1



Three Months Ended

June 30,

 

Percent

($ in thousands except per share data – unaudited)

2018


2017

Change






INCOME STATEMENT










Interest income





   Interest and fees on loans

$           51,451


39,656


   Interest on investment securities

2,833


2,429


   Other interest income

2,451


742


      Total interest income

56,735


42,827

32.5%

Interest expense





   Interest on deposits

3,233


1,732


   Interest on borrowings

2,270


1,179


      Total interest expense

5,503


2,911

89.0%

        Net interest income

51,232


39,916

28.3%

Provision (reversal) for loan losses

(710)


n/m

Net interest income after provision for loan losses

51,942


39,916

30.1%

Noninterest income





   Service charges on deposit accounts

3,122


2,966


   Other service charges, commissions, and fees

4,913


3,554


   Fees from presold mortgage loans

796


1,511


   Commissions from sales of insurance and financial products

2,119


1,038


   SBA consulting fees

1,126


1,050


   SBA loan sale gains

2,598


927


   Bank-owned life insurance income

628


580


   Foreclosed property gains (losses), net

(99)


(248)


   Securities gains (losses), net



   Other gains (losses), net

908


497


      Total noninterest income

16,111


11,875

35.7%

Noninterest expenses





   Salaries expense

18,446


16,299


   Employee benefit expense

4,084


4,042


   Occupancy and equipment related expense

3,784


3,721


   Merger and acquisition expenses

640


1,122


   Intangibles amortization expense

1,745


1,031


   Other operating expenses

10,174


8,869


      Total noninterest expenses

38,873


35,084

10.8%

Income before income taxes

29,180


16,707

74.7%

Income tax expense

6,450


5,553

16.2%






Net income available to common shareholders

$           22,730


11,154

103.8%











Earnings per common share – basic

$              0.77


0.45

71.1%

Earnings per common share – diluted

0.77


0.45

71.1%






ADDITIONAL INCOME STATEMENT INFORMATION





   Net interest income, as reported

$           51,232


39,916


   Tax-equivalent adjustment (1)

367


693


   Net interest income, tax-equivalent

$           51,599


40,609

27.1%








(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 23% 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



Six Months Ended

June 30,

 

Percent

($ in thousands except per share data – unaudited)

2018


2017

Change






INCOME STATEMENT










Interest income





   Interest and fees on loans

$         101,621


73,359


   Interest on investment securities

5,799


4,696


   Other interest income

4,376


1,240


      Total interest income

111,796


79,295

41.0%

Interest expense





   Interest on deposits

5,906


3,134


   Interest on borrowings

4,151


1,949


      Total interest expense

10,057


5,083

97.9%

        Net interest income

101,739


74,212

37.1%

Total provision (reversal) for loan losses

(4,369)


723

n/m   

Net interest income after provision for loan losses

106,108


73,489

44.4%

Noninterest income





   Service charges on deposit accounts

6,385


5,580


   Other service charges, commissions, and fees

9,510


6,727


   Fees from presold mortgage loans

1,655


2,279


   Commissions from sales of insurance and financial products

4,059


1,878


   SBA consulting fees

2,267


2,310


   SBA loan sale gains

6,400


1,549


   Bank-owned life insurance income

1,251


1,088


   Foreclosed property gains (losses), net

(387)


(223)


   Securities gains (losses), net


(235)


   Other gains (losses), net

912


731


      Total noninterest income

32,052


21,684

47.8%

Noninterest expenses





   Salaries expense

37,844


30,249


   Employee benefit expense

8,691


7,490


   Occupancy and equipment related expense

7,838


6,963


   Merger and acquisition expenses

3,401


3,495


   Intangibles amortization expense

3,417


1,607


   Other operating expenses

21,280


17,352


      Total noninterest expenses

82,471


67,156

22.8%

Income before income taxes

55,689


28,017

98.8%

Income tax expense

12,286


9,308

32.0%

Net income available to common shareholders

$           43,403


18,709

132.0%











Earnings per common share – basic

$               1.47


0.80

83.8%

Earnings per common share – diluted

1.46


0.80

82.5%






ADDITIONAL INCOME STATEMENT INFORMATION





   Net interest income, as reported

$         101,739


74,212


   Tax-equivalent adjustment (1)

723


1,278


   Net interest income, tax-equivalent

$         102,462


75,490

35.7%



(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 23% 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

June 30,

Six Months Ended

June 30,

PERFORMANCE RATIOS (annualized)

2018

2017

2018

2017

Return on average assets (1)

1.61%

1.01%

1.56%

0.91%

Return on average common equity (2)

12.70%

9.01%

12.33%

8.27%

Net interest margin – tax-equivalent (3)

4.10%

4.08%

4.15%

4.08%

Net charge-offs (recoveries) to average loans

(0.07%)

(0.06%)

(0.21%)

0.03%






COMMON SHARE DATA





Cash dividends declared – common

$         0.10

0.08

0.20

0.16

Stated book value – common

24.20

20.29

24.20

20.29

Tangible book value – common

15.79

14.16

15.79

14.16

Common shares outstanding at end of period

29,702,912

24,678,295

29,702,912

24,678,295

Weighted average shares outstanding – basic

29,544,747

24,593,307

29,539,308

23,288,635

Weighted average shares outstanding – diluted

29,632,738

24,671,550

29,630,822

23,368,503






CAPITAL RATIOS





Tangible common equity to tangible assets

8.59%

7.98%

8.59%

7.98%

Common equity tier I capital ratio - estimated

11.35%

10.44%

11.35%

10.44%

Tier I leverage ratio - estimated

10.05%

9.77%

10.05%

9.77%

Tier I risk-based capital ratio - estimated

12.55%

11.91%

12.55%

11.91%

Total risk-based capital ratio - estimated

13.10%

12.61%

13.10%

12.61%






AVERAGE BALANCES ($ in thousands)





Total assets

$  5,671,620

4,448,404

5,610,568

4,147,095

Loans

4,133,689

3,327,391

4,116,592

3,115,335

Earning assets

5,042,904

3,989,593

4,980,266

3,734,059

Deposits

4,512,559

3,610,944

4,458,182

3,381,861

Interest-bearing liabilities

3,671,692

2,944,208

3,650,528

2,762,579

Shareholders' equity

717,975

496,791

709,693

456,415






(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 note 1 on the first page of the Financial Summary for discussion of tax-equivalent adjustments.





TREND INFORMATION


($ in thousands except per share data)

For the Three Months Ended

 

INCOME STATEMENT

June 30, 
2018

Mar. 31, 
2018

Dec. 31, 
2017

Sept. 30, 
2017

June 30, 
2017









Net interest income – tax-equivalent (1)

$    51,599

50,863

49,470

42,341

40,609


Taxable equivalent adjustment (1)

367

356

610

702

693


Net interest income

51,232

50,507

48,860

41,639

39,916


Provision (reversal) for loan losses

(710)

(3,659)


Noninterest income

16,111

15,941

14,862

12,362

11,875


Noninterest expense

38,873

43,598

43,617

34,384

35,084


Income before income taxes

29,180

26,509

20,105

19,617

16,707


Income tax expense

6,450

5,836

5,928

6,531

5,553


Net income

22,730

20,673

14,177

13,086

11,154









Earnings per common share – basic

0.77

0.70

0.48

0.53

0.45


Earnings per common share – diluted

0.77

0.70

0.48

0.53

0.45




(1)

See note 1 on the first page of the Financial Summary for discussion of tax-equivalent adjustments.


 

First Bancorp and Subsidiaries

Financial Summary – Page 4











CONSOLIDATED BALANCE SHEETS

($ in thousands - unaudited)











At June 30,

2018


At Mar. 31,

2018


At Dec. 31,

2017


At June 30,
2017


One Year

Change

Assets










Cash and due from banks

$       97,163


78,217


114,301


80,234


21.1%

Interest bearing deposits with banks

462,972


448,515


375,189


337,326


37.2%

     Total cash and cash equivalents

560,135


526,732


489,490


417,560


34.1%











Investment securities

442,333


453,059


461,773


335,362


31.9%

Presold mortgages

9,311


6,029


12,459


13,071


-28.8%











Total loans

4,149,390


4,113,785


4,042,369


3,375,976


22.9%

Allowance for loan losses

(23,298)


(23,298)


(23,298)


(24,025)


-3.0%

Net loans

4,126,092


4,090,487


4,019,071


3,351,951


23.1%











Premises and equipment

113,774


115,542


116,233


96,605


17.8%

Intangible assets

255,610


255,760


257,507


151,256


69.0%

Foreclosed real estate

8,296


11,307


12,571


11,196


-25.9%

Bank-owned life insurance

100,413


99,786


99,162


87,501


14.8%

Other assets

101,636


82,825


78,771


64,118


58.5%

     Total assets

$  5,717,600


5,641,527


5,547,037


4,528,620


26.3%





















Liabilities










Deposits:










     Non-interest bearing checking accounts

$  1,252,214


1,227,608


1,196,161


990,004


26.5%

     Interest bearing checking accounts

915,666


896,189


884,254


728,973


25.6%

     Money market accounts

1,021,659


1,026,043


982,822


781,086


30.8%

     Savings accounts

440,475


445,405


454,860


411,814


7.0%

     Brokered deposits

238,098


251,043


239,659


167,669


42.0%

     Internet time deposits

6,999


7,248


7,995


9,779


-28.4%

     Other time deposits > $100,000

402,109


357,595


347,862


304,716


32.0%

     Other time deposits

276,401


284,577


293,342


250,289


10.4%

          Total deposits

4,553,621


4,495,708


4,406,955


3,644,330


25.0%











Borrowings

407,076


407,059


407,543


355,405


14.5%

Other liabilities

32,181


33,110


39,560


28,234


14.0%

     Total liabilities

4,992,878


4,935,877


4,854,058


4,027,969


24.0%











Shareholders' equity










Common stock

434,117


433,305


432,794


262,901


65.1%

Retained earnings

301,800


282,038


264,331


240,682


25.4%

Stock in rabbi trust assumed in acquisition

(3,214)


(3,588)


(3,581)


(4,257)


24.5%

Rabbi trust obligation

3,214


3,588


3,581


4,257


-24.5%

Accumulated other comprehensive loss

(11,195)


(9,693)


(4,146)


(2,932)


-281.8%

     Total shareholders' equity

724,722


705,650


692,979


500,651


44.8%

Total liabilities and shareholders' equity

$  5,717,600


5,641,527


5,547,037


4,528,620


26.3%












 

First Bancorp and Subsidiaries

Financial Summary - Page 5




For the Three Months Ended

 

YIELD INFORMATION

June 30,
2018

Mar. 31,
2018

Dec. 31,
2017

Sept. 30,
2017

June 30,
2017









Yield on loans

4.99%

4.96%

4.79%

4.84%

4.78%


Yield on securities

2.47%

2.60%

2.77%

2.89%

2.76%


Yield on other earning assets

2.19%

2.20%

1.23%

1.38%

0.96%


   Yield on all interest earning assets

4.51%

4.54%

4.30%

4.42%

4.31%









Rate on interest bearing deposits

0.40%

0.34%

0.31%

0.29%

0.26%


Rate on other interest bearing liabilities

2.24%

1.87%

1.62%

1.75%

1.54%


   Rate on all interest bearing liabilities

0.60%

0.51%

0.46%

0.45%

0.40%


     Total cost of funds

0.45%

0.38%

0.35%

0.34%

0.30%









        Net interest margin (1)

4.07%

4.17%

3.96%

4.09%

4.01%









        Net interest margin – tax-equivalent (2)

4.10%

4.19%

4.01%

4.16%

4.08%









        Average prime rate

4.80%

4.53%

4.30%

4.25%

4.04%



(1)

Calculated by dividing annualized net interest income by average earning assets for the period.

(2)

Calculated by dividing annualized tax-equivalent net interest income by average earning assets for the period.  See note 1
on the first page of the Financial Summary for discussion of tax-equivalent adjustments.




For the Three Months Ended

NET INTEREST INCOME PURCHASE 
     ACCOUNTING ADJUSTMENTS

          ($ in thousands)

 

June 30,
2018


 

Mar. 31,
2018


 

Dec. 31,
2017


 

Sept. 30,
2017


 

June 30,
2017













Interest income – increased by accretion of loan 
     discount

 

$        2,296


 

2,111


 

2,003


 

1,745


 

1,968


Interest expense – reduced by premium 
     amortization of deposits

101


116


140


85


103


Interest expense – increased by discount 
     accretion of borrowings

 

(45)


 

(45)


 

(46)


 

(43)


 

(29)


     Impact on net interest income

$        2,352


2,182


2,097


1,787


2,042




 

First Bancorp and Subsidiaries

Financial Summary – Page 6












 

ASSET QUALITY DATA ($ in thousands)

June 30,
2018


Mar. 31,
2018


Dec. 31,
2017


Sept. 30,
2017


June 30,
2017













Nonperforming assets











Nonaccrual loans

$     25,494


21,849


20,968


23,350


22,795


Troubled debt restructurings - accruing

17,386


18,495


19,834


20,330


21,019


Accruing loans > 90 days past due

-


-


-


-


-


Total nonperforming loans

42,880


40,344


40,802


43,680


43,814


Foreclosed real estate

8,296


11,307


12,571


9,356


11,196


Total nonperforming assets

$     51,176


51,651


53,373


53,036


55,010


Purchased credit impaired loans not included above (1)

$     20,832


22,147


23,165


15,034


16,846


 

Asset Quality Ratios











Net quarterly charge-offs (recoveries) to average
loans - annualized

(0.07%)


(0.36%)


0.13%


(0.07%)


(0.06%)


Nonperforming loans to total loans

1.03%


0.98%


1.01%


1.27%


1.30%


Nonperforming assets to total assets

0.90%


0.92%


0.96%


1.16%


1.21%


Allowance for loan losses to total loans

0.56%


0.57%


0.58%


0.72%


0.71%


Allowance for loan losses + unaccreted discount to total loans

1.16%


1.20%


1.24%


1.21%


1.24%




(1)

In the March 3, 2017 acquisition of Carolina Bank and the October 1, 2017 acquisition of Asheville Savings Bank, the Company acquired $19.3 million and
$9.9 million, respectively, 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)

 

 

June 30,
2018


 

 

Mar. 31,
2018


 

 

Dec. 31,
2017


 

 

Sept. 30,
2017


 

 

June 30,
2017













Net interest income, as reported

$      51,232


50,507


48,860


41,639


39,916


Tax-equivalent adjustment

367


356


610


702


693


Net interest income, tax-equivalent (A)

$      51,599


50,863


49,470


42,341


40,609


 

Average earning assets (B)

$ 5,042,904


4,917,628


4,899,421


4,040,257


3,989,593


Tax-equivalent net interest      
     margin, annualized – as reported –  (A)/(B)

 

4.10%


 

4.19%


 

4.01%


 

4.16%


 

4.08%













Net interest income, tax-equivalent

$      51,599


50,863


49,470


42,341


40,609


Loan discount accretion

2,296


2,111


2,003


1,745


1,968


Net interest income, tax-equivalent, excluding 
     loan discount accretion  (A)

$      49,303


48,752


47,467


40,596


38,641


 

Average earnings assets  (B)

$ 5,042,904


4,917,628


4,899,421


4,040,257


3,989,593


Tax-equivalent net interest margin, excluding 
     impact of loan discount accretion, 
     annualized – (A) / (B)

3.92%


4.02%


3.84%


3.99%


3.88%



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 note.  Loan discount accretion is a non-cash interest income adjustment that is primarily 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 June 30, 2018, the Company had a remaining loan discount balance of $25.0 million compared to $18.0 million at June 30, 2017.  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.

 

(PRNewsfoto/First Bancorp)

 

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SOURCE First Bancorp