Press Release

First Bancorp Reports Fourth Quarter and Annual Results

Company Release - 1/23/2019 4:01 PM ET

SOUTHERN PINES, N.C., Jan. 23, 2019 /PRNewswire/ -- First Bancorp (NASDAQ – FBNC), the parent company of First Bank, announced today net income available to common shareholders of $23.9 million, or $0.80 per diluted common share, for the three months ended December 31, 2018, an increase of 66.7% in earnings per share from the $14.2 million, or $0.48 per diluted common share, recorded in the fourth quarter of 2017. 

For the year ended December 31, 2018, the Company recorded net income available to common shareholders of $89.3 million, or $3.01 per diluted common share, an increase of 65.4% in earnings per share from the $46.0 million, or $1.82 per diluted common share, for 2017. 

Comparisons for certain of the financial periods presented were impacted by the Company's acquisitions of Carolina Bank Holdings, Inc. ("Carolina Bank") on March 3, 2017 with total assets of $682 million and ASB Bancorp, Inc. ("Asheville Savings Bank") on October 1, 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 fourth quarter of 2018 was $53.8 million, a 10.2% increase from the $48.9 million recorded in the fourth quarter of 2017.  Net interest income for the year ended December 31, 2018 amounted to $207.4 million, a 25.9% increase from the $164.7 million recorded in 2017.  The increase in net interest income was due to higher net interest margins realized in 2018 as well growth in interest-earning assets, which for the twelve month period was impacted by assets acquired in the Carolina Bank and Asheville Savings Bank acquisitions.

The Company's net interest margin (tax-equivalent net interest income divided by average earning assets) for the fourth quarter of 2018 was 4.11% compared to 4.01% for the fourth quarter of 2017.  For the year ended December 31, 2018, the Company's net interest margin was 4.12% compared to 4.08% for 2017.  The increases in the net interest margins realized in 2018 were a result of asset yields increasing more than liability costs.  Interest income for the year ended December 31, 2018 was also 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 $1.8 million in the fourth quarter of 2018, compared to $2.0 million in the fourth quarter of 2017.  For the full year of 2018 and 2017, loan discount accretion amounted to $7.8 million and $7.1 million, respectively.  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 3.97% for the fourth quarter of 2018, compared to 3.84% for the fourth quarter of 2017.  The net interest margin excluding loan discount accretion of 3.97% in the fourth quarter of 2018 was a 3 basis point increase from 3.94% in the third 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 $0.7 million in the fourth quarter of 2018 compared to none in the fourth quarter of 2017.  For the year ended December 31, 2018, the Company recorded a total negative provision for loan losses of $3.6 million (reduction of the allowance for loan losses) compared to a total provision for loan losses of $0.7 million in 2017.  The Company's provisions for loan losses remain at low levels as a result of strong asset quality, including low loan charge-offs.   

Total net charge-offs for the fourth quarter of 2018 amounted to $0.2 million compared to net charge-offs of $1.3 million in the fourth quarter of 2017.  For the year ended December 31, 2018, the Company experienced net loan recoveries of $1.3 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.  For 2017, net loan charge-offs amounted to $1.2 million. 

The Company's nonperforming assets to total assets ratio was 0.74% at December 31, 2018 compared to 0.96% at December 31, 2017.  The ratio of annualized net charge-offs (recoveries) to average loans for the year ended December 31, 2018 was (0.03%), compared to 0.04% for 2017.

Noninterest Income

Total noninterest income was $14.4 million and $14.9 million for the three months ended December 31, 2018 and December 31, 2017, respectively.  For the year ended December 31, 2018, noninterest income amounted to $61.8 million compared to $48.9 million for 2017.

Core noninterest income for the fourth quarter of 2018 was $14.5 million, a decrease of 3.9% from the $15.1 million reported for the fourth quarter of 2017.  For 2018, core noninterest income amounted to $61.7 million, a 25.1% increase from the $49.3 million recorded in 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. 

Other service charges, commissions, and fees increased in 2018 compared to 2017, primarily due to a combination of the aforementioned acquisitions and a result of higher debit card and credit card interchange fees associated with increased usage.

During the three and twelve months ended December 31, 2018, the Company realized $1.6 million and $10.4 million in gains on SBA loan sales, respectively.  In comparison, during the three and twelve months ended December 31, 2017, the Company realized $2.2 million and $5.5 million in gains on SBA loan sales, respectively.  The decline in the fourth quarter of 2018 gain was a result of a combination of a lower sales volume and lower premiums realized.  The higher gain realized for calendar year 2018 was a result of a higher sales volume compared to 2017.

Fees from presold mortgages amounted to $0.5 million and $2.7 million for the three and twelve month periods ended December 31, 2018, respectively, compared to $1.6 million and $5.7 million for the three and twelve month periods ended December 31, 2017, respectively.  The declines in 2018 were primarily due to slowdowns in the mortgage industry, as well as employee turnover.

Commissions from sales of insurance and financial products amounted to $2.2 million in the fourth quarter of 2018, compared to $2.0 million in the fourth quarter of 2017.  For the years ended December 31, 2018 and 2017, the Company recorded $8.7 million and $5.3 million, respectively, in commissions from sales of insurance and financial products.  The Company acquired an insurance agency during the third quarter of 2017 that impacts the full year comparison.

Noninterest Expenses

Noninterest expenses amounted to $37.7 million in the fourth quarter of 2018 compared to $43.6 million recorded in the fourth quarter of 2017, with the majority of the decrease in the fourth quarter of 2018 relating to lower merger and acquisition expenses, as discussed below. 

Noninterest expenses for the year ended December 31, 2018 amounted to $159.4 million compared to $145.2 million in 2017.  Most categories of noninterest expense experienced general increases in 2018 due to the Company's growth, primarily from the 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 and acquisition expenses amounted to ($1.2 million) and $2.4 million for the three and twelve months ended December 31, 2018, respectively, compared to $3.2 million and $8.1 million for the three and twelve months ended December 31, 2017, respectively.  The negative $1.2 million in expense recorded in the fourth quarter of 2018 relates to a downward adjustment to an earn-out liability associated with a prior year acquisition resulting from a lower estimated payout, as well as a decline in the Company's stock price during the period.  The earn-out will be paid in shares of Company stock upon the conclusion of the earn-out period in April 2019.

Income Taxes

The Company's effective tax rate for the fourth quarter of 2018 was 20.1% compared to 29.5% in the fourth quarter of 2017.  For the year ended December 31, 2018 and 2017, the Company's effective tax rates were 21.3% and 32.1%, 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 December 31, 2018 amounted to $5.9 billion, a 5.7% increase from a year earlier.  Loan growth for the year ended December 31, 2018 amounted to $207 million, or 5.1%, and deposit growth amounted to $252.4 million, or 5.7%.  For the fourth quarter of 2018, annualized loan growth was 5.6% and annualized deposit growth was 11.6%.  The Company has ongoing internal initiatives to enhance loan and deposit growth, including the Company's relatively recent expansion into higher growth markets such as Charlotte and Raleigh. 

The Company remains well-capitalized by all regulatory standards, with an estimated Total Risk-Based Capital Ratio at December 31, 2018 of 13.89%, an increase from the 12.50% reported at December 31, 2017.  The Company's tangible common equity to tangible assets ratio was 9.10% at December 31, 2018, an increase of 87 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 with our accomplishments for 2018.  During the year, we successfully integrated and achieved efficiencies related to our two acquisitions in 2017, while also increasing market share in our legacy markets.  These achievements helped drive significant increases in most measures of profitability, including the 65% increase in earnings per share."

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

  • On December 14, 2018, the Company announced a quarterly cash dividend of $0.10 per share payable on January 25, 2019 to shareholders of record on December 31, 2018. This dividend rate represents a 25% increase over the dividend rate declared in the fourth quarter of 2017.

  • On December 19, 2018, the Company closed its branch located in Polkton, North Carolina. All deposit and loan accounts were transferred to a nearby branch located in Rockingham, North Carolina.

First Bancorp is a bank holding company headquartered in Southern Pines, North Carolina, with total assets of approximately $5.9 billion. Its principal activity is the ownership and operation of First Bank, a state-chartered community bank that operates 101 branches in North Carolina and South Carolina.  First Bank also operates one loan production office in Raleigh, North Carolina.  First Bank Insurance Services is a subsidiary of First Bank and provides insurance products and services to individuals and businesses throughout First Bank's market area.  First Bank also 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

December 31,

 

Percent

($ in thousands except per share data – unaudited)

2018


2017

Change






INCOME STATEMENT 










Interest income





   Interest and fees on loans

$           54,581


48,830


   Interest on investment securities

3,453


2,501


   Other interest income

3,158


1,745


      Total interest income

61,192


53,076

15.3%

Interest expense





   Interest on deposits

4,679


2,500


   Interest on borrowings

2,667


1,716


      Total interest expense

7,346


4,216

74.2%

        Net interest income

53,846


48,860

10.2%

Provision (reversal) for loan losses

693


n/m

Net interest income after provision for loan losses

53,153


48,860

8.8%

Noninterest income





   Service charges on deposit accounts

3,084


3,337


   Other service charges, commissions, and fees

5,289


4,415


   Fees from presold mortgage loans

504


1,574


   Commissions from sales of insurance and financial products

2,247


1,996


   SBA consulting fees

1,121


850


   SBA loan sale gains

1,593


2,238


   Bank-owned life insurance income

642


654


   Foreclosed property gains (losses), net

14


(92)


   Securities gains (losses), net



   Other gains (losses), net

(88)


(110)


      Total noninterest income

14,406


14,862

(3.1%)

Noninterest expenses





   Salaries expense

18,462


19,987


   Employee benefit expense

4,136


3,911


   Occupancy and equipment related expense

4,402


3,883


   Merger and acquisition expenses

(1,210)


3,249


   Intangibles amortization expense

1,690


1,731


   Other operating expenses

10,186


10,856


      Total noninterest expenses

37,666


43,617

(13.6%)

Income before income taxes

29,893


20,105

48.7%

Income tax expense

5,998


5,928

1.2%






Net income available to common shareholders

$           23,895


14,177

68.5%











Earnings per common share – basic

$              0.81


0.48

68.8%

Earnings per common share – diluted

0.80


0.48

66.7%






ADDITIONAL INCOME STATEMENT INFORMATION





   Net interest income, as reported

$           53,846


48,860


   Tax-equivalent adjustment (1)

443


610


   Net interest income, tax-equivalent

$           54,289


49,470

9.7%














(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 2


Twelve Months Ended

December 31,

 

Percent

($ in thousands except per share data – unaudited)

2018


2017

Change






INCOME STATEMENT 










Interest income





   Interest and fees on loans

$         208,609


163,738


   Interest on investment securities

12,120


8,684


   Other interest income

10,478


4,960


      Total interest income

231,207


177,382

30.3%

Interest expense





   Interest on deposits

14,491


7,544


   Interest on borrowings

9,286


5,127


      Total interest expense

23,777


12,671

87.6%

        Net interest income

207,430


164,711

25.9%

Total provision (reversal) for loan losses

(3,589)


723

n/m   

Net interest income after provision for loan losses

211,019


163,988

28.7%

Noninterest income





   Service charges on deposit accounts

12,690


11,862


   Other service charges, commissions, and fees

19,945


14,610


   Fees from presold mortgage loans

2,735


5,695


   Commissions from sales of insurance and financial products

8,731


5,300


   SBA consulting fees

4,675


4,024


   SBA loan sale gains

10,366


5,479


   Bank-owned life insurance income

2,534


2,321


   Foreclosed property gains (losses), net

(565)


(531)


   Securities gains (losses), net


(235)


   Other gains (losses), net

723


383


      Total noninterest income

61,834


48,908

26.4%

Noninterest expenses





   Salaries expense

75,077


66,786


   Employee benefit expense

16,888


15,313


   Occupancy and equipment related expense

16,420


14,141


   Merger and acquisition expenses

2,358


8,073


   Intangibles amortization expense

6,763


4,240


   Other operating expenses

41,869


36,604


      Total noninterest expenses

159,375


145,157

9.8%

Income before income taxes

113,478


67,739

67.5%

Income tax expense

24,189


21,767

11.1%

Net income available to common shareholders

$           89,289


45,972

94.2%











Earnings per common share – basic

$               3.02


1.82

65.9%

Earnings per common share – diluted

3.01


1.82

65.4%






ADDITIONAL INCOME STATEMENT INFORMATION





   Net interest income, as reported

$         207,430


164,711


   Tax-equivalent adjustment (1)

1,594


2,590


   Net interest income, tax-equivalent

$         209,024


167,301

24.9%









(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

December 31,

Twelve Months Ended

December 31,

PERFORMANCE RATIOS (annualized)

2018

2017

2018

2017

Return on average assets (1)

1.62%

1.01%

1.57%

1.00%

Return on average common equity (2)

12.56%

8.04%

12.27%

8.62%

Net interest margin – tax-equivalent (3)

4.11%

4.01%

4.12%

4.08%

Net charge-offs (recoveries) to average loans

0.02%

0.13%

(0.03%)

0.04%






COMMON SHARE DATA





Cash dividends declared – common

$         0.10

0.08

0.40

0.32

Stated book value – common

25.71

23.38

25.71

23.38

Tangible book value – common

17.18

14.69

17.18

14.69

Common shares outstanding at end of period

29,724,874

29,639,374

29,724,874

29,639,374

Weighted average shares outstanding – basic

29,656,217

29,657,638

29,566,259

25,210,606

Weighted average shares outstanding – diluted

29,800,342

29,749,378

29,707,431

25,291,382






CAPITAL RATIOS





Tangible common equity to tangible assets

9.10%

8.23%

9.10%

8.23%

Common equity tier I capital ratio - estimated

12.21%

10.72%

12.21%

10.72%

Tier I leverage ratio - estimated

10.52%

9.58%

10.52%

9.58%

Tier I risk-based capital ratio - estimated

13.40%

11.94%

13.40%

11.94%

Total risk-based capital ratio - estimated

13.89%

12.50%

13.89%

12.50%






AVERAGE BALANCES ($ in thousands)





Total assets

$  5,840,964

5,554,545

5,693,760

4,590,786

Loans

4,222,417

4,048,224

4,161,838

3,420,939

Earning assets

5,238,827

4,899,421

5,076,335

4,101,949

Deposits

4,624,868

4,390,879

4,516,811

3,696,730

Interest-bearing liabilities

3,697,076

3,618,312

3,663,077

3,025,401

Shareholders' equity

754,734

699,558

727,920

533,205






(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

Dec. 31, 
2018

Sept. 30, 
2018

June 30, 
2018

Mar. 31, 
2018

Dec. 31, 
2017







Net interest income – tax-equivalent (1)

$    54,289

52,273

51,599

50,863

49,470

Taxable equivalent adjustment (1)

443

428

367

356

610

Net interest income

53,846

51,845

51,232

50,507

48,860

Provision (reversal) for loan losses

693

87

(710)

(3,659)

Noninterest income

14,406

15,376

16,111

15,941

14,862

Noninterest expense

37,666

39,238

38,873

43,598

43,617

Income before income taxes

29,893

27,896

29,180

26,509

20,105

Income tax expense

5,998

5,905

6,450

5,836

5,928

Net income

23,895

21,991

22,730

20,673

14,177







Earnings per common share – basic

0.81

0.74

0.77

0.70

0.48

Earnings per common share – diluted

0.80

0.74

0.77

0.70

0.48


(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 Dec. 31,

2018


At Sept. 30,

2018


At Dec. 31,

2017



One Year

Change

Assets









Cash and due from banks

$       56,050


50,209


114,301



(51.0%)

Interest bearing deposits with banks

406,848


460,520


375,189



8.4%

     Total cash and cash equivalents

462,898


510,729


489,490



(5.4%)










Investment securities

602,588


457,887


461,773



30.5%

Presold mortgages

4,279


6,111


12,459



(65.7%)










Total loans

4,249,064


4,190,628


4,042,369



5.1%

Allowance for loan losses

(21,039)


(20,546)


(23,298)



(9.7%)

Net loans

4,228,025


4,170,082


4,019,071



5.2%










Premises and equipment

119,000


116,618


116,233



2.4%

Intangible assets

253,570


254,737


257,507



(1.5%)

Foreclosed real estate

7,440


6,140


12,571



(40.8%)

Bank-owned life insurance

101,878


101,055


99,162



2.7%

Other assets

84,009


88,271


78,771



6.6%

     Total assets

$  5,863,687


5,711,630


5,547,037



5.7%



















Liabilities









Deposits:









     Noninterest bearing checking accounts

$  1,320,131


1,280,408


1,196,161



10.4%

     Interest bearing checking accounts

916,374


870,487


884,254



3.6%

     Money market accounts

1,035,523


1,007,177


982,822



5.4%

     Savings accounts

432,389


432,335


454,860



(4.9%)

     Brokered deposits

239,875


255,415


239,659



0.1%

     Internet time deposits

3,428


3,924


7,995



(57.1%)

     Other time deposits > $100,000

447,619


409,742


347,862



28.7%

     Other time deposits

264,000


268,885


293,342



(10.0%)

          Total deposits

4,659,339


4,528,373


4,406,955



5.7%










Borrowings

406,609


406,593


407,543



(0.2%)

Other liabilities

33,509


33,588


39,560



(15.3%)

     Total liabilities

5,099,457


4,968,554


4,854,058



5.1%










Shareholders' equity









Common stock

434,453


434,227


432,794



0.4%

Retained earnings

341,738


320,822


264,331



29.3%

Stock in rabbi trust assumed in acquisition

(3,235)


(3,224)


(3,581)



9.7%

Rabbi trust obligation

3,235


3,224


3,581



(9.7%)

Accumulated other comprehensive loss

(11,961)


(11,973)


(4,146)



(188.5%)

     Total shareholders' equity

764,230


743,076


692,979



10.3%

Total liabilities and shareholders' equity

$  5,863,687


5,711,630


5,547,037



5.7%


 

First Bancorp and Subsidiaries

Financial Summary - Page 5


For the Three Months Ended

 

YIELD INFORMATION

Dec. 31,
2018

Sept. 30,
2018

June 30,
2018

Mar. 31,
2018

Dec. 31,
2017







Yield on loans

5.13%

4.96%

4.99%

4.96%

4.79%

Yield on securities

2.71%

2.52%

2.47%

2.60%

2.43%

Yield on other earning assets

2.46%

2.52%

2.19%

2.20%

1.55%

   Yield on all interest earning assets

4.63%

4.52%

4.51%

4.54%

4.30%







Rate on interest bearing deposits

0.56%

0.48%

0.40%

0.34%

0.31%

Rate on other interest bearing liabilities

2.60%

2.41%

2.24%

1.87%

1.62%

   Rate on all interest bearing liabilities

0.79%

0.69%

0.60%

0.51%

0.46%

     Total cost of funds

0.58%

0.51%

0.45%

0.38%

0.35%







        Net interest margin (1)

4.08%

4.03%

4.07%

4.17%

3.96%







        Net interest margin – tax-equivalent (2)

4.11%

4.06%

4.10%

4.19%

4.01%







        Average prime rate

5.28%

5.01%

4.80%

4.53%

4.30%


(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)


 

Dec. 31,
2018


 

Sept. 30,
2018


 

June 30,
2018


 

Mar. 31,
2018


 

Dec. 31,
2017












Interest income – increased by accretion of loan 
     discount


$        1,830


1,575


2,296


2,111


2,003

Interest expense – reduced by premium 
     amortization of deposits


71


84


101


116


140

Interest expense – increased by discount 
     accretion of borrowings


(45)


(46)


(45)


(45)


(46)

     Impact on net interest income


$        1,856


1,613


2,352


2,182


2,097



 

First Bancorp and Subsidiaries

Financial Summary – Page 6

 

ASSET QUALITY DATA ($ in thousands)

Dec. 31,
2018


Sept. 30,
2018


June 30,
2018


Mar. 31,
2018


Dec. 31,
2017











Nonperforming assets










Nonaccrual loans

$     22,575


18,231


25,494


21,849


20,968

Troubled debt restructurings - accruing

13,418


16,657


17,386


18,495


19,834

Accruing loans > 90 days past due

-


-


-


-


-

Total nonperforming loans

35,993


34,888


42,880


40,344


40,802

Foreclosed real estate

7,440


6,140


8,296


11,307


12,571

Total nonperforming assets

$     43,433


41,028


51,176


51,651


53,373

Purchased credit impaired loans not included 
     above (1)

$     17,393


20,189


20,832


22,147


23,165

 

Asset Quality Ratios










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

0.02%


0.27%


(0.07%)


(0.36%)


0.13%

Nonperforming loans to total loans

0.85%


0.83%


1.03%


0.98%


1.01%

Nonperforming assets to total assets

0.74%


0.72%


0.90%


0.92%


0.96%

Allowance for loan losses to total loans

0.50%


0.49%


0.56%


0.57%


0.58%

Allowance for loan losses + unaccreted discount
to total loans

1.04%


1.07%


1.16%


1.20%


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)

 

Dec. 31,
2018


 

Sept. 30,
2018


 

June 30,
2018


 

Mar. 31,
2018


 

Dec. 31,
2017











Net interest income, as reported

$      53,846


51,845


51,232


50,507


48,860

Tax-equivalent adjustment

443


428


367


356


610

Net interest income, tax-equivalent (A)

$      54,289


52,273


51,599


50,863


49,470

 

Average earning assets (B)

$ 5,238,827


5,105,981


5,042,904


4,917,628


4,899,421

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

 

4.11%


 

4.06%


 

4.10%


 

4.19%


 

4.01%











Net interest income, tax-equivalent

$      54,289


52,273


51,599


50,863


49,470

Loan discount accretion

1,830


1,575


2,296


2,111


2,003

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

$      52,459


50,698


49,303


48,752


47,467

 

Average earnings assets  (B)

$ 5,238,827


5,105,981


5,042,904


4,917,628


4,899,421

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

3.97%


3.94%


3.92%


4.02%


3.84%


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 December 31, 2018, the Company had a remaining loan discount balance of $23.0 million compared to $26.9 million at December 31, 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