Press Release

First Bancorp Reports Third Quarter Results

Company Release - 10/23/2018 4:01 PM ET

SOUTHERN PINES, N.C., Oct. 23, 2018 /PRNewswire/ -- First Bancorp (NASDAQ – FBNC), the parent company of First Bank, announced today net income available to common shareholders of $22.0 million, or $0.74 per diluted common share, for the three months ended September 30, 2018, an increase of 39.6% in earnings per share from the $13.1 million, or $0.53 per diluted common share, recorded in the third quarter of 2017. 

For the nine months ended September 30, 2018, the Company recorded net income available to common shareholders of $65.4 million, or $2.21 per diluted common share, an increase of 66.2% in earnings per share from the $31.8 million, or $1.33 per diluted common share, for the nine months ended September 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 third quarter of 2018 was $51.8 million, a 24.5% increase from the $41.6 million recorded in the third quarter of 2017.  Net interest income for the first nine months of 2018 amounted to $153.6 million, a 32.6% increase from the $115.9 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 third quarter of 2018 was 4.06% compared to 4.16% for the third quarter of 2017.  For the nine month period ended September 30, 2018, the Company's net interest margin was 4.12% compared to 4.11% for the same period in 2017.  Although asset yields increased primarily as a result of several Federal Reserve interest rate increases since January 1, 2017, the Company has also experienced higher funding costs, particularly on the interest rates paid on its borrowings, as these are highly correlated to short-term interest rates set by the Federal Reserve.  Interest income for the nine months ended September 30, 2018 was positively impacted by approximately $0.8 million in interest recoveries received in the first quarter, 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 $1.6 million in the third quarter of 2018, compared to $1.7 million in the third quarter of 2017.  For the first nine months of 2018 and 2017, loan discount accretion amounted to $6.0 million and $5.1 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 3.94% for the third quarter of 2018, compared to 3.99% for the third quarter of 2017.  The decrease was primarily due to funding costs that exceeded increases in asset yields, as discussed above.  The net interest margin excluding loan discount accretion of 3.94% in the third quarter of 2018 was a 2 basis point increase from 3.92% in the second quarter of 2018.  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 provision for loan losses of $0.1 million in the third quarter of 2018, compared to no provision for loan losses in the third quarter of 2017.  For the nine months ended September 30, 2018, the Company recorded a total negative provision for loan losses of $4.3 million (reduction of the allowance for loan losses) compared to a total provision for loan losses of $0.7 million in the same period of 2017.  The Company's provisions for loan losses have been favorably impacted by continued improvement in asset quality, including low charge-offs and declining levels of nonperforming assets.  

Total net charge-offs for the third quarter of 2018 amounted to $2.8 million in comparison to net recoveries of $0.6 million in the third quarter of 2017.  During the third quarter of 2018, the Company completed a loan sale of approximately $5.2 million in smaller balance nonperforming loans that resulted in charge-offs of $2.2 million.

For the first nine months of 2018, the Company experienced net loan recoveries of $1.5 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 $0.8 million in interest recoveries previously noted.  For the comparable period of 2017, net loan recoveries amounted to $0.1 million.

The Company's nonperforming assets to total assets ratio was 0.72% at September 30, 2018 compared to 1.16% at September 30, 2017.  The ratio of annualized net charge-offs (recoveries) to average loans for the nine months ended September 30, 2018 was (0.05%), compared to 0.00% for the same period of 2017.

The Company continues to assess loans that may have been impacted by Hurricane Florence and Hurricane Michael.  To date, the Company believes that any losses will not require a significant provision for loan losses.

Noninterest Income

Total noninterest income was $15.4 million and $12.4 million for the three months ended September 30, 2018 and September 30, 2017, respectively.  For the nine months ended September 30, 2018, noninterest income amounted to $47.4 million compared to $34.0 million for the same period of 2017.

Core noninterest income for the third quarter of 2018 was $15.7 million, an increase of 22.3% from the $12.8 million reported for the third quarter of 2017.  For the first nine months of 2018, core noninterest income amounted to $47.2 million, a 37.9% increase from the $34.2 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 acquisitions of Carolina Bank and Asheville Savings Bank were significant contributors to the higher core noninterest income in 2018.

Another significant contributor to the increases in core noninterest income was increased origination and sales of SBA loans.  During the three and nine months ended September 30, 2018, the Company realized $2.4 million and $8.8 million in gains on SBA loan sales, respectively.  In comparison, during the three and nine months ended September 30, 2017, the Company realized $1.7 million and $3.2 million in gains on SBA loan sales, respectively. 

Fees from presold mortgages amounted to $0.6 million and $2.2 million for the three and nine month periods ended September 30, 2018, respectively, compared to $1.8 million and $4.1 million for the three and nine month periods ended September 30, 2017, respectively.  The declines in 2018 were primarily due to the Company's mortgage loan department originating a higher percentage of loans with construction components that are held in the Company's loan portfolio and not sold, as well as employee turnover.

Commissions from sales of insurance and financial products amounted to $2.4 million in the third quarter of 2018, compared to $1.4 million in the third quarter of 2017.  For the nine months ended September 30, 2018 and 2017, the Company recorded $6.5 million and $3.3 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.

Noninterest Expenses

Noninterest expenses amounted to $39.2 million in the third quarter of 2018 compared to $34.4 million recorded in the third quarter of 2017.  Noninterest expenses for the nine months ended September 30, 2018 amounted to $121.7 million compared to $101.5 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. 

Income Taxes

The Company's effective tax rate for the third quarter of 2018 was 21.2% compared to 33.3% in the third quarter of 2017.  For the nine months ended September 30, 2018 and 2017, the Company's effective tax rates were 21.8% and 33.3%, 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 corporate tax rate from 35% to 21%. 

Balance Sheet and Capital

Total assets at September 30, 2018 amounted to $5.7 billion, a 24.4% increase from a year earlier.  Total loans at September 30, 2018 amounted to $4.2 billion, a 22.2% increase from a year earlier, and total deposits amounted to $4.5 billion at September 30, 2018, a 24.0% increase from a year earlier.  The significant increases were largely due to the acquisition of Asheville Savings Bank on October 1, 2017.

The Company experienced steady loan and deposit growth during the first nine months of 2018, all of which was organic.  Loan growth for the nine months ended September 30, 2018 amounted to $148 million, or 4.9% annualized, and deposit growth amounted to $121.4 million, or 3.7% 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.  As anticipated, a $41 million deposit received in the first quarter of 2018 was transferred outside the Company in the third quarter of 2018.

The Company remains well-capitalized by all regulatory standards, with an estimated Total Risk-Based Capital Ratio at September 30, 2018 of 13.48%, an increase from the 12.44% reported at September 30, 2017.  The Company's tangible common equity to tangible assets ratio was 8.95% at September 30, 2018, an increase of 100 basis points from a year earlier. 

Comments of the CEO and Other Business Matters

Richard H. Moore, CEO of First Bancorp, commented, "While our markets experienced a general business slowdown as a result of the hurricanes, we are pleased to have nevertheless achieved another strong quarter."

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

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

September 30,

Percent

($ in thousands except per share data – unaudited)

2018


2017

Change






INCOME STATEMENT










Interest income





   Interest and fees on loans

$        52,407


41,549


   Interest on investment securities

2,868


2,048


   Other interest income

2,944


1,414


      Total interest income

58,219


45,011

29.3%

Interest expense





   Interest on deposits

3,906


1,910


   Interest on borrowings

2,468


1,462


      Total interest expense

6,374


3,372

89.0%

        Net interest income

51,845


41,639

24.5%

Provision (reversal) for loan losses

87


      n/m

Net interest income after provision for loan losses

51,758


41,639

24.3%

Noninterest income





   Service charges on deposit accounts

3,221


2,945


   Other service charges, commissions, and fees

5,146


3,468


   Fees from presold mortgage loans

576


1,842


   Commissions from sales of insurance and financial products

2,425


1,426


   SBA consulting fees

1,287


864


   SBA loan sale gains

2,373


1,692


   Bank-owned life insurance income

641


579


   Foreclosed property gains (losses), net

(192)


(216)


   Securities gains (losses), net



   Other gains (losses), net

(101)


(238)


      Total noninterest income

15,376


12,362

24.4%

Noninterest expenses





   Salaries expense

18,771


16,550


   Employee benefit expense

4,061


3,606


   Occupancy and equipment related expense

4,180


3,509


   Merger and acquisition expenses

167


1,329


   Intangibles amortization expense

1,656


902


   Other operating expenses

10,403


8,488


      Total noninterest expenses

39,238


34,384

14.1%

Income before income taxes

27,896


19,617

42.2%

Income tax expense

5,905


6,531

(9.6%)






Net income available to common shareholders

$          21,991


13,086

68.0%











Earnings per common share – basic

$               0.74


0.53

39.6%

Earnings per common share – diluted

0.74


0.53

39.6%






ADDITIONAL INCOME STATEMENT INFORMATION





   Net interest income, as reported

$           51,845


41,639


   Tax-equivalent adjustment (1)

428


702


   Net interest income, tax-equivalent

$           52,273


42,341

23.5%














(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


Nine Months Ended

September 30,

Percent

($ in thousands except per share data – unaudited)

2018


2017

Change






INCOME STATEMENT










Interest income





   Interest and fees on loans

$         154,028


114,908


   Interest on investment securities

8,667


6,183


   Other interest income

7,320


3,215


      Total interest income

170,015


124,306

36.8%

Interest expense





   Interest on deposits

9,812


5,044


   Interest on borrowings

6,619


3,411


      Total interest expense

16,431


8,455

94.3%

        Net interest income

153,584


115,851

32.6%

Total provision (reversal) for loan losses

(4,282)


723

n/m   

Net interest income after provision for loan losses

157,866


115,128

37.1%

Noninterest income





   Service charges on deposit accounts

9,606


8,525


   Other service charges, commissions, and fees

14,656


10,195


   Fees from presold mortgage loans

2,231


4,121


   Commissions from sales of insurance and financial products

6,484


3,304


   SBA consulting fees

3,554


3,174


   SBA loan sale gains

8,773


3,241


   Bank-owned life insurance income

1,892


1,667


   Foreclosed property gains (losses), net

(579)


(439)


   Securities gains (losses), net


(235)


   Other gains (losses), net

811


493


      Total noninterest income

47,428


34,046

39.3%

Noninterest expenses





   Salaries expense

56,615


46,799


   Employee benefit expense

12,752


11,402


   Occupancy and equipment related expense

12,018


10,258


   Merger and acquisition expenses

3,568


4,824


   Intangibles amortization expense

5,073


2,509


   Other operating expenses

31,683


25,748


      Total noninterest expenses

121,709


101,540

19.9%

Income before income taxes

83,585


47,634

75.5%

Income tax expense

18,191


15,839

14.8%

Net income available to common shareholders

$           65,394


31,795

105.7%











Earnings per common share – basic

$               2.21


1.34

64.9%

Earnings per common share – diluted

2.21


1.33

66.2%






ADDITIONAL INCOME STATEMENT INFORMATION





   Net interest income, as reported

$         153,584


115,851


   Tax-equivalent adjustment (1)

1,151


1,979


   Net interest income, tax-equivalent

$         154,735


117,830

31.3%









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

 

n/m - not meaningful

 

 

First Bancorp and Subsidiaries
Financial Summary – Page 3


Three Months Ended

September 30,

Nine Months Ended

September 30,

PERFORMANCE RATIOS (annualized)

2018

2017

2018

2017

Return on average assets (1)

1.53%

1.15%

1.55%

1.00%

Return on average common equity (2)

11.83%

9.98%

12.16%

8.90%

Net interest margin – tax-equivalent (3)

4.06%

4.16%

4.12%

4.11%

Net charge-offs (recoveries) to average loans

0.27%

(0.07%)

(0.05%)

0.00%






COMMON SHARE DATA





Cash dividends declared – common

$         0.10

0.08

0.30

0.24

Stated book value – common

24.99

20.73

24.99

20.73

Tangible book value – common

16.43

14.25

16.43

14.25

Common shares outstanding at end of period

29,729,285

24,723,929

29,729,285

24,723,929

Weighted average shares outstanding – basic

29,530,203

24,607,516

29,536,273

23,728,262

Weighted average shares outstanding – diluted

29,621,130

24,695,295

29,639,126

23,827,011






CAPITAL RATIOS





Tangible common equity to tangible assets

8.95%

7.95%

8.95%

7.95%

Common equity tier I capital ratio - estimated

11.79%

10.30%

11.79%

10.30%

Tier I leverage ratio - estimated

10.36%

9.72%

10.36%

9.72%

Tier I risk-based capital ratio - estimated

12.99%

11.74%

12.99%

11.74%

Total risk-based capital ratio - estimated

13.48%

12.44%

13.48%

12.44%






AVERAGE BALANCES ($ in thousands)





Total assets

$  5,712,940

4,514,409

5,644,692

4,269,533

Loans

4,191,751

3,404,862

4,141,645

3,211,844

Earning assets

5,105,981

4,040,257

5,022,171

3,836,125

Deposits

4,526,012

3,632,319

4,480,792

3,465,347

Interest-bearing liabilities

3,654,176

2,958,134

3,651,744

2,827,764

Shareholders' equity

737,560

520,432

718,982

477,754






(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

Sept. 30,  2018

June 30,  2018

Mar. 31,  2018

Dec. 31,  2017

Sept. 30,  2017









Net interest income – tax-equivalent (1)

$   52,273

51,599

50,863

49,470

42,341


Taxable equivalent adjustment (1)

428

367

356

610

702


Net interest income

51,845

51,232

50,507

48,860

41,639


Provision (reversal) for loan losses

87

(710)

(3,659)


Noninterest income

15,376

16,111

15,941

14,862

12,362


Noninterest expense

39,238

38,873

43,598

43,617

34,384


Income before income taxes

27,896

29,180

26,509

20,105

19,617


Income tax expense

5,905

6,450

5,836

5,928

6,531


Net income

21,991

22,730

20,673

14,177

13,086









Earnings per common share – basic

0.74

0.77

0.70

0.48

0.53


Earnings per common share – diluted

0.74

0.77

0.70

0.48

0.53









(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 Sept. 30,

2018


At June 30,

2018


At Dec. 31,

2017


At Sept. 30,
2017


One Year

Change

Assets










Cash and due from banks

$    50,209


97,163


114,301


82,758


(39.3%)

Interest bearing deposits with banks

460,520


462,972


375,189


326,089


41.2%

     Total cash and cash equivalents

510,729


560,135


489,490


408,847


24.9%











Investment securities

457,887


442,333


461,773


322,080


42.2%

Presold mortgages

6,111


9,311


12,459


17,426


(64.9%)











Total loans

4,190,628


4,149,390


4,042,369


3,429,755


22.2%

Allowance for loan losses

(20,546)


(23,298)


(23,298)


(24,593)


(16.5%)

Net loans

4,170,082


4,126,092


4,019,071


3,405,162


22.5%











Premises and equipment

116,618


113,774


116,233


95,762


21.8%

Intangible assets

254,737


255,610


257,507


160,301


58.9%

Foreclosed real estate

6,140


8,296


12,571


9,356


(34.4%)

Bank-owned life insurance

101,055


100,413


99,162


88,081


14.7%

Other assets

88,271


101,636


78,771


84,132


4.9%

     Total assets

$ 5,711,630


5,717,600


5,547,037


4,591,147


24.4%





















Liabilities










Deposits:










     Noninterest bearing checking accounts

$ 1,280,408


1,252,214


1,196,161


1,016,947


25.9%

     Interest bearing checking accounts

870,487


915,666


884,254


683,113


27.4%

     Money market accounts

1,007,177


1,021,659


982,822


793,919


26.9%

     Savings accounts

432,335


440,475


454,860


396,192


9.1%

     Brokered deposits

255,415


238,098


239,659


215,615


18.5%

     Internet time deposits

3,924


6,999


7,995


7,995


(50.9%)

     Other time deposits > $100,000

409,742


402,109


347,862


296,006


38.4%

     Other time deposits

268,885


276,401


293,342


241,454


11.4%

          Total deposits

4,528,373


4,553,621


4,406,955


3,651,241


24.0%











Borrowings

406,593


407,076


407,543


397,525


2.3%

Other liabilities

33,588


32,181


39,560


29,880


12.4%

     Total liabilities

4,968,554


4,992,878


4,854,058


4,078,646


21.8%











Shareholders' equity










Common stock

434,227


434,117


432,794


263,493


64.8%

Retained earnings

320,822


301,800


264,331


251,790


27.4%

Stock in rabbi trust assumed in acquisition

(3,224)


(3,214)


(3,581)


(3,571)


9.7%

Rabbi trust obligation

3,224


3,214


3,581


3,571


(9.7%)

Accumulated other comprehensive loss

(11,973)


(11,195)


(4,146)


(2,782)


(330.4%)

     Total shareholders' equity

743,076


724,722


692,979


512,501


45.0%

Total liabilities and shareholders' equity

$ 5,711,630


5,717,600


5,547,037


4,591,147


24.4%






















 

 


First Bancorp and Subsidiaries
Financial Summary - Page 5


For the Three Months Ended

YIELD INFORMATION

Sept. 30,
2018

June 30,
2018

Mar. 31,
2018

Dec. 31,
2017

Sept. 30,
2017









Yield on loans

4.96%

4.99%

4.96%

4.79%

4.84%


Yield on securities

2.52%

2.47%

2.60%

2.43%

2.46%


Yield on other earning assets

2.52%

2.19%

2.20%

1.55%

1.84%


   Yield on all interest earning assets

4.52%

4.51%

4.54%

4.30%

4.42%









Rate on interest bearing deposits

0.48%

0.40%

0.34%

0.31%

0.29%


Rate on other interest bearing liabilities

2.41%

2.24%

1.87%

1.62%

1.75%


   Rate on all interest bearing liabilities

0.69%

0.60%

0.51%

0.46%

0.45%


     Total cost of funds

0.51%

0.45%

0.38%

0.35%

0.34%









        Net interest margin (1)

4.03%

4.07%

4.17%

3.96%

4.09%









        Net interest margin – tax-equivalent (2)

4.06%

4.10%

4.19%

4.01%

4.16%









        Average prime rate

5.01%

4.80%

4.53%

4.30%

4.25%



















(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)

Sept. 30,
2018


June 30,
2018


Mar. 31,
2018


Dec. 31,
2017


Sept. 30,
2017













Interest income – increased by accretion of loan 
     discount

$        1,575


2,296


2,111


2,003


1,745


Interest expense – reduced by premium 
     amortization of deposits

84


101


116


140


85


Interest expense – increased by discount 
     accretion of borrowings

(46)


(45)


(45)


(46)


(43)


   Impact on net interest income

$        1,613


2,352


2,182


2,097


1,787














 

 

First Bancorp and Subsidiaries
Financial Summary – Page 6

ASSET QUALITY DATA ($ in thousands)

Sept. 30,
2018


June 30,
2018


Mar. 31,
2018


Dec. 31,
2017


Sept. 30,
2017













Nonperforming assets











Nonaccrual loans

$    18,231


25,494


21,849


20,968


23,350


Troubled debt restructurings - accruing

16,657


17,386


18,495


19,834


20,330


Accruing loans > 90 days past due

-


-


-


-


-


Total nonperforming loans

34,888


42,880


40,344


40,802


43,680


Foreclosed real estate

6,140


8,296


11,307


12,571


9,356


Total nonperforming assets

$    41,028


51,176


51,651


53,373


53,036


Purchased credit impaired loans not included
above (1)

$    20,189


20,832


22,147


23,165


15,034



Asset Quality Ratios











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

0.27%


(0.07%)


(0.36%)


0.13%


(0.07%)


Nonperforming loans to total loans

0.83%


1.03%


0.98%


1.01%


1.27%


Nonperforming assets to total assets

0.72%


0.90%


0.92%


0.96%


1.16%


Allowance for loan losses to total loans

0.49%


0.56%


0.57%


0.58%


0.72%


Allowance for loan losses + unaccreted discount
to total loans

1.07%


1.16%


1.20%


1.24%


1.21%













(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)

Sept. 30,
2018


June 30,
2018


Mar. 31,
2018


Dec. 31,
2017


Sept. 30,
2017













Net interest income, as reported

$    51,845


51,232


50,507


48,860


41,639


Tax-equivalent adjustment

428


367


356


610


702


Net interest income, tax-equivalent (A)

$    52,273


51,599


50,863


49,470


42,341



Average earning assets (B)

$ 5,105,981


5,042,904


4,917,628


4,899,421


4,040,257


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

4.06%


4.10%


4.19%


4.01%


4.16%













Net interest income, tax-equivalent

$      52,273


51,599


50,863


49,470


42,341


Loan discount accretion

1,575


2,296


2,111


2,003


1,745


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

$      50,698


49,303


48,752


47,467


40,596



Average earnings assets  (B)

$ 5,105,981


5,042,904


4,917,628


4,899,421


4,040,257


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

3.94%


3.92%


4.02%


3.84%


3.99%


 

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 September 30, 2018, the Company had a remaining loan discount balance of $24.3 million compared to $16.9 million at September 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