SOUTHERN PINES, N.C., July 24, 2019 /PRNewswire/ -- First Bancorp FBNC, the parent company of First Bank, announced today net income of $23.9 million, or $0.80 per diluted common share, for the three months ended June 30, 2019, an increase of 3.9% in earnings per share from the $22.7 million, or $0.77 per diluted common share, recorded in the second quarter of 2018.
For the six months ended June 30, 2019, the Company recorded net income of $46.1 million, or $1.55 per diluted common share, an increase of 6.2% in earnings per share from the $43.4 million, or $1.46 per diluted common share, for the six months ended June 30, 2018.
Net Interest Income and Net Interest Margin
Net interest income for the second quarter of 2019 was $54.4 million, a 6.2% increase from the $51.2 million recorded in the second quarter of 2018. Net interest income for the first six months of 2019 amounted to $107.8 million, a 5.9% increase from the $101.7 million recorded in the comparable period of 2018. The increase in net interest income was due to growth in interest-earning assets.
The Company's net interest margin (tax-equivalent net interest income divided by average earning assets) for the second quarter of 2019 was 4.06%, which was unchanged from the first quarter of 2019, and was one basis point lower than the 4.07% realized in the second quarter of 2018. For the six month period ended June 30, 2019, the Company's net interest margin was 4.06% compared to 4.12% for the same period in 2018. The decreases in the net interest margins realized in 2019 were primarily due to lower loan discount accretion.
The Company recorded loan discount accretion of $1.7 million in the second quarter of 2019, compared to $2.3 million in the second quarter of 2018. For the six months ended June 30, 2019 and 2018, loan discount accretion amounted to $3.1 million and $4.4 million, respectively. Loan discount accretion had a 13 basis point impact on the net interest margin in the second quarter of 2019 compared to an 18 basis point impact in the second quarter of 2018. For the first six months of 2019 and 2018, loan discount accretion had a 12 basis point impact and an 18 basis point impact, respectively, on the net interest margin for the periods. The lower discount accretion in 2019 was attributable to paydowns in the Company's acquired loan portfolios.
Excluding the effects of loan discount accretion, the Company's tax-equivalent net interest margin was 3.93% for the second quarter of 2019, 3.95% for the first quarter of 2019, and 3.89% in the second quarter of 2018. Excluding the effects of loan discount accretion, the Company's tax-equivalent net interest margin was 3.94% for both six month periods ended June 30, 2019 and 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.
Over the past year, the impact on the net interest margin of interest-bearing liability costs that have risen by more than earning asset yields has been substantially offset by earnings realized from the 15.1% growth in noninterest-bearing deposits, which has resulted in total funding costs increasing by approximately the same amount as the increase in earning asset yields.
Provision for Loan Losses and Asset Quality
The Company recorded a negative provision for loan losses of $0.3 million (reduction of the allowance for loan losses) in the second quarter of 2019 compared to a negative provision for loan losses of $0.7 million in the second quarter of 2018. For the six months ended June 30, 2019, the Company recorded a provision for loan losses of $0.2 million compared to a negative provision for loan losses of $4.4 million in the same period of 2018. In the first quarter of 2018, the Company experienced net loan recoveries of $3.7 million, which drove the negative provision during the period. The Company's provision for loan losses has remained at a low level over the past several years as a result of strong asset quality, including low loan charge-offs.
The ratio of annualized net charge-offs (recoveries) to average loans for the six months ended June 30, 2019 was 0.02%, compared to (0.21%) for the same period of 2018. The Company's nonperforming assets to total assets ratio was 0.57% at June 30, 2019 compared to 0.90% at June 30, 2018.
Noninterest Income
Total noninterest income was $16.0 million and $15.9 million for the three months ended June 30, 2019 and June 30, 2018, respectively. For the six months ended June 30, 2019, noninterest income amounted to $30.6 million compared to $31.7 million for the same period of 2018.
Core noninterest income for the second quarter of 2019 was $16.7 million, a 10.7% increase from the $15.1 million reported for the first quarter of 2018 – see reconciliation of core noninterest income to total noninterest income in the Financial Summary. Increases were experienced in most categories of income, with "Other service charges, commissions, and fees" increasing by $1.1 million, or 23.8%, primarily due to higher debit card and credit card interchange fees associated with increased usage.
Core noninterest income for the six months ended June 30, 2019 was $31.4 million, a 0.8% increase from the $31.2 million reported for the first half 2018. Higher "Other service charges, commissions and fees" were substantially offset by lower fees/gains on sales of mortgage loans and SBA loans.
Other gains (losses) amounted to a loss of $0.3 million in the second quarter of 2019 due to miscellaneous items, whereas in the second quarter of 2018, the Company recorded a $0.9 million gain on the sale of a former branch location.
Noninterest Expenses
Noninterest expenses amounted to $40.4 million in the second quarter of 2019, a 4.7% increase over the $38.6 million recorded in the second quarter of 2018. Noninterest expenses for the six months ended June 30, 2019 amounted to $79.7 million compared to $82.1 million in 2018, a decrease of 2.9%.
Merger and acquisition expenses declined by $0.5 million in the second quarter of 2019 compared to the second quarter of 2018, and declined by $3.2 million in the six months ended June 30, 2019 compared to the same period in 2018.
Income Taxes
The Company's effective tax rate for the second quarter of 2019 was 21.2% compared to 22.1% in the second quarter of 2018. For the six months ended June 30, 2019 and 2018, the Company's effective tax rates were 21.0% and 22.1%, respectively. The lower 2019 effective tax rates were primarily due to a decrease in the North Carolina corporate income tax rate from 3.0% to 2.5%, which became effective January 1, 2019.
Balance Sheet and Capital
Total assets at June 30, 2019 amounted to $6.0 billion, a 5.1% increase from a year earlier. Total loans at June 30, 2019 amounted to $4.3 billion, a 4.6% increase from a year earlier, and total deposits amounted to $4.8 billion at June 30, 2019, a 6.4% increase from a year earlier.
Annualized loan growth for the first half of 2019 was 4.3%. Annualized deposit growth for the first half of 2019 was 8.0%. Within deposits, the Company's retail deposits (excludes brokered deposits and internet time deposits) grew at an annualized rate of 12.5% for the first six months of 2019. As a result of the strong retail deposit growth, the Company has lowered its level of brokered deposits, which have declined by $87 million, or 36.6%, since June 30, 2018. Additionally, the Company has paid down its borrowings by $106 million, or 26.0%, over that same time period.
Over the past twelve months in order to reduce exposure to the possibility of lower interest rates, the Company has invested a portion of its interest-bearing cash balances into fixed rate investment securities. As a result, from June 30, 2018 to June 30, 2019, interest-bearing cash balances have declined by 38% and investment securities balances have increased by 74%.
The Company remains well-capitalized by all regulatory standards, with an estimated Total Risk-Based Capital Ratio at June 30, 2019 of 14.55%, an increase from the 13.17% reported at June 30, 2018. The Company's tangible common equity to tangible assets ratio was 9.75% at June 30, 2019, an increase of 116 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 results for the quarter, which resulted in a return on average assets of 1.60%. We are also very pleased with our recent recognition by Forbes as being one of the best banks in North Carolina. We extend a special thank you to our customers for your business and your support."
The following is additional discussion of business development and other miscellaneous matters affecting the Company during the second quarter of 2019:
- On June 14, 2019, the Company announced a quarterly cash dividend of $0.12 per share payable on July 25, 2019 to shareholders of record on June 30, 2019. This dividend rate represents a 20% increase over the dividend rate declared in the second quarter of 2018.
- During the second quarter of 2019, the Company repurchased 182,000 shares of the Company's common stock at an average price of $35.82, which totaled $6.5 million. The Company has $25 million of total repurchase authority and depending on market conditions, may continue share repurchases up to that limit during the remainder of 2019.
First Bancorp is a bank holding company headquartered in Southern Pines, North Carolina, with total assets of approximately $6.0 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 June 30, |
Percent | ||||
($ in thousands except per share data – unaudited) | 2019 | 2018 | Change | ||
INCOME STATEMENT | |||||
Interest income | |||||
Interest and fees on loans | $ 55,652 | 51,451 | |||
Interest on investment securities | 5,264 | 2,833 | |||
Other interest income | 2,106 | 2,451 | |||
Total interest income | 63,022 | 56,735 | 11.1% | ||
Interest expense | |||||
Interest on deposits | 6,324 | 3,233 | |||
Interest on borrowings | 2,289 | 2,270 | |||
Total interest expense | 8,613 | 5,503 | 56.5% | ||
Net interest income | 54,409 | 51,232 | 6.2% | ||
Total provision (reversal) for loan losses | (308) | (710) | n/m | ||
Net interest income after provision for loan losses | 54,717 | 51,942 | 5.3% | ||
Noninterest income | |||||
Service charges on deposit accounts | 3,210 | 3,122 | |||
Other service charges, commissions, and fees | 5,786 | 4,674 | |||
Fees from presold mortgage loans | 857 | 796 | |||
Commissions from sales of insurance and financial products | 2,204 | 2,119 | |||
SBA consulting fees | 921 | 1,126 | |||
SBA loan sale gains | 3,069 | 2,598 | |||
Bank-owned life insurance income | 631 | 628 | |||
Foreclosed property gains (losses), net | (381) | (99) | |||
Securities gains (losses), net | − | − | |||
Other gains (losses), net | (308) | 908 | |||
Total noninterest income | 15,989 | 15,872 | 0.7% | ||
Noninterest expenses | |||||
Salaries expense | 19,732 | 18,446 | |||
Employee benefit expense | 4,418 | 4,084 | |||
Occupancy and equipment related expense | 3,912 | 3,784 | |||
Merger and acquisition expenses | 103 | 640 | |||
Intangibles amortization expense | 1,242 | 1,506 | |||
Other operating expenses | 11,032 | 10,174 | |||
Total noninterest expenses | 40,439 | 38,634 | 4.7% | ||
Income before income taxes | 30,267 | 29,180 | 3.7% | ||
Income tax expense | 6,408 | 6,450 | (0.7%) | ||
Net income | $ 23,859 | 22,730 | 5.0% | ||
Earnings per common share – diluted | $ 0.80 | 0.77 | 3.9% | ||
ADDITIONAL INCOME STATEMENT INFORMATION | |||||
Net interest income, as reported | $ 54,409 | 51,232 | |||
Tax-equivalent adjustment (1) | 423 | 367 | |||
Net interest income, tax-equivalent | $ 54,832 | 51,599 | 6.3% | ||
(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) | 2019 | 2018 | Change | ||
INCOME STATEMENT | |||||
Interest income | |||||
Interest and fees on loans | $ 109,612 | 101,621 | |||
Interest on investment securities | 10,338 | 5,799 | |||
Other interest income | 4,807 | 4,376 | |||
Total interest income | 124,757 | 111,796 | 11.6% | ||
Interest expense | |||||
Interest on deposits | 11,901 | 5,906 | |||
Interest on borrowings | 5,086 | 4,151 | |||
Total interest expense | 16,897 | 10,057 | 68.9% | ||
Net interest income | 107,770 | 101,739 | 5.9% | ||
Total provision (reversal) for loan losses | 192 | (4,369) | n/m | ||
Net interest income after provision for loan losses | 107,578 | 106,108 | 1.4% | ||
Noninterest income | |||||
Service charges on deposit accounts | 6,155 | 6,385 | |||
Other service charges, commissions, and fees | 11,034 | 9,159 | |||
Fees from presold mortgage loans | 1,402 | 1,655 | |||
Commissions from sales of insurance and financial products | 4,233 | 4,059 | |||
SBA consulting fees | 2,184 | 2,267 | |||
SBA loan sale gains | 5,131 | 6,400 | |||
Bank-owned life insurance income | 1,277 | 1,251 | |||
Foreclosed property gains (losses), net | (626) | (387) | |||
Securities gains (losses), net | − | − | |||
Other gains (losses), net | (226) | 912 | |||
Total noninterest income | 30,564 | 31,701 | (3.6%) | ||
Noninterest expenses | |||||
Salaries expense | 38,697 | 37,844 | |||
Employee benefit expense | 9,006 | 8,691 | |||
Occupancy and equipment related expense | 8,035 | 7,838 | |||
Merger and acquisition expenses | 213 | 3,401 | |||
Intangibles amortization expense | 2,574 | 3,066 | |||
Other operating expenses | 21,185 | 21,280 | |||
Total noninterest expenses | 79,710 | 82,120 | (2.9%) | ||
Income before income taxes | 58,432 | 55,689 | 4.9% | ||
Income tax expense | 12,288 | 12,286 | 0.0% | ||
Net income | $ 46,144 | 43,403 | 6.3% | ||
Earnings per common share – diluted | $ 1.55 | 1.46 | 6.2% | ||
ADDITIONAL INCOME STATEMENT INFORMATION | |||||
Net interest income, as reported | $ 107,770 | 101,739 | |||
Tax-equivalent adjustment (1) | 847 | 723 | |||
Net interest income, tax-equivalent | $ 108,617 | 102,462 | 6.0% | ||
(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) | 2019 | 2018 | 2019 | 2018 |
Return on average assets (1) | 1.60% | 1.61% | 1.56% | 1.56% |
Return on average common equity (2) | 11.93% | 12.70% | 11.80% | 12.33% |
Net interest margin – tax-equivalent (3) | 4.06% | 4.07% | 4.06% | 4.12% |
Net charge-offs (recoveries) to average loans | 0.00% | (0.07%) | 0.02% | (0.21%) |
COMMON SHARE DATA | ||||
Cash dividends declared – common | $ 0.12 | 0.10 | 0.24 | 0.20 |
Stated book value – common | 27.43 | 24.20 | 27.43 | 24.20 |
Tangible book value – common | 18.89 | 15.79 | 18.89 | 15.79 |
Common shares outstanding at end of period | 29,717,223 | 29,702,912 | 29,717,223 | 29,702,912 |
Weighted average shares outstanding – diluted | 29,796,941 | 29,632,738 | 29,808,859 | 29,630,822 |
CAPITAL RATIOS | ||||
Tangible common equity to tangible assets | 9.75% | 8.59% | 9.75% | 8.59% |
Common equity tier I capital ratio - estimated | 12.90% | 11.40% | 12.90% | 11.40% |
Tier I leverage ratio – estimated | 10.92% | 10.05% | 10.92% | 10.05% |
Tier I risk-based capital ratio - estimated | 14.07% | 12.61% | 14.07% | 12.61% |
Total risk-based capital ratio - estimated | 14.55% | 13.17% | 14.55% | 13.17% |
AVERAGE BALANCES ($ in thousands) | ||||
Total assets | $ 5,994,595 | 5,671,620 | 5,969,822 | 5,610,568 |
Loans | 4,329,866 | 4,133,689 | 4,305,069 | 4,116,592 |
Earning assets | 5,417,284 | 5,080,372 | 5,395,025 | 5,014,992 |
Deposits | 4,810,029 | 4,512,559 | 4,757,130 | 4,458,182 |
Interest-bearing liabilities | 3,716,092 | 3,671,692 | 3,744,903 | 3,650,528 |
Shareholders' equity | 802,131 | 717,975 | 788,595 | 709,693 |
(1) | Calculated by dividing annualized net income by average assets. |
(2) | Calculated by dividing annualized net income 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, | Mar. 31, | Dec. 31, | Sept. 30, | June 30, | |
Net interest income – tax-equivalent (1) | $ 54,832 | 53,785 | 54,289 | 52,273 | 51,599 | |
Taxable equivalent adjustment (1) | 423 | 424 | 443 | 428 | 367 | |
Net interest income | 54,409 | 53,361 | 53,846 | 51,845 | 51,232 | |
Provision (reversal) for loan losses | (308) | 500 | 693 | 87 | (710) | |
Noninterest income | 15,989 | 14,575 | 14,114 | 15,173 | 15,872 | |
Noninterest expense | 40,439 | 39,271 | 37,374 | 39,035 | 38,634 | |
Income before income taxes | 30,267 | 28,165 | 29,893 | 27,896 | 29,180 | |
Income tax expense | 6,408 | 5,880 | 5,998 | 5,905 | 6,450 | |
Net income | 23,859 | 22,285 | 23,895 | 21,991 | 22,730 | |
Earnings per common share – diluted | 0.80 | 0.75 | 0.80 | 0.74 | 0.77 | |
Cash dividends declared per share | 0.12 | 0.12 | 0.10 | 0.10 | 0.10 | |
(1) See note 1 on the first page of this 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, 2019 | At Mar. 31, 2019 | At Dec. 31, 2018 | At June 30, 2018 | One Year Change | ||||||
Assets | ||||||||||
Cash and due from banks | $ 52,679 | 80,620 | 56,050 | 97,163 | (45.8%) | |||||
Interest-bearing deposits with banks | 286,781 | 366,187 | 406,848 | 462,972 | (38.1%) | |||||
Total cash and cash equivalents | 339,460 | 446,807 | 462,898 | 560,135 | (39.4%) | |||||
Investment securities | 771,021 | 730,512 | 602,588 | 442,333 | 74.3% | |||||
Presold mortgages | 6,222 | 3,318 | 4,279 | 9,311 | (33.2%) | |||||
Total loans | 4,339,497 | 4,303,787 | 4,249,064 | 4,149,390 | 4.6% | |||||
Allowance for loan losses | (20,789) | (21,095) | (21,039) | (23,298) | (10.8%) | |||||
Net loans | 4,318,708 | 4,282,692 | 4,228,025 | 4,126,092 | 4.7% | |||||
Premises and equipment | 136,901 | 137,725 | 119,000 | 113,774 | 20.3% | |||||
Intangible assets | 253,769 | 254,449 | 255,480 | 255,610 | (0.7%) | |||||
Foreclosed real estate | 5,107 | 6,390 | 7,440 | 8,296 | (38.4%) | |||||
Bank-owned life insurance | 103,154 | 102,524 | 101,878 | 100,413 | 2.7% | |||||
Other assets | 77,697 | 85,831 | 82,528 | 101,636 | (23.6%) | |||||
Total assets | $ 6,012,039 | 6,050,248 | 5,864,116 | 5,717,600 | 5.1% | |||||
Liabilities | ||||||||||
Deposits: | ||||||||||
Noninterest-bearing checking accounts | $ 1,441,064 | 1,390,516 | 1,320,131 | 1,252,214 | 15.1% | |||||
Interest-bearing checking accounts | 931,945 | 922,254 | 916,374 | 915,666 | 1.8% | |||||
Money market accounts | 1,104,052 | 1,079,002 | 1,035,523 | 1,021,659 | 8.1% | |||||
Savings accounts | 413,065 | 417,812 | 432,389 | 440,475 | (6.2%) | |||||
Brokered deposits | 150,888 | 216,616 | 239,875 | 238,098 | (36.6%) | |||||
Internet time deposits | 1,445 | 3,428 | 3,428 | 6,999 | (79.4%) | |||||
Other time deposits > $100,000 | 538,401 | 506,148 | 447,619 | 402,109 | 33.9% | |||||
Other time deposits | 262,194 | 261,462 | 264,000 | 276,401 | (5.1%) | |||||
Total deposits | 4,843,054 | 4,797,238 | 4,659,339 | 4,553,621 | 6.4% | |||||
Borrowings | 301,140 | 406,125 | 406,609 | 407,076 | (26.0%) | |||||
Other liabilities | 52,676 | 58,746 | 33,938 | 32,181 | 63.7% | |||||
Total liabilities | 5,196,870 | 5,262,109 | 5,099,886 | 4,992,878 | 4.1% | |||||
Shareholders' equity | ||||||||||
Common stock | 432,533 | 434,948 | 434,453 | 434,117 | (0.4%) | |||||
Retained earnings | 380,748 | 360,455 | 341,738 | 301,800 | 26.2% | |||||
Stock in rabbi trust assumed in acquisition | (3,625) | (3,245) | (3,235) | (3,214) | (12.8%) | |||||
Rabbi trust obligation | 3,625 | 3,245 | 3,235 | 3,214 | 12.8% | |||||
Accumulated other comprehensive income (loss) |
1,888 |
(7,264) |
(11,961) |
(11,195) |
n/m | |||||
Total shareholders' equity | 815,169 | 788,139 | 764,230 | 724,722 | 12.5% | |||||
Total liabilities and shareholders' equity | $ 6,012,039 | 6,050,248 | 5,864,116 | 5,717,600 | 5.1% | |||||
First Bancorp and Subsidiaries Financial Summary – Page 5 | |||||||||||
For the Three Months Ended | |||||||||||
YIELD INFORMATION | June 30, | Mar. 31, | Dec. 31, | Sept. 30, | June 30, 2018 | ||||||
Yield on loans | 5.16% | 5.11% | 5.13% | 4.96% | 4.99% | ||||||
Yield on securities | 2.81% | 2.95% | 2.71% | 2.52% | 2.47% | ||||||
Yield on other earning assets | 2.51% | 2.77% | 2.29% | 2.33% | 2.02% | ||||||
Yield on all interest-earning assets | 4.67% | 4.66% | 4.60% | 4.49% | 4.48% | ||||||
Rate on interest bearing deposits | 0.75% | 0.67% | 0.56% | 0.48% | 0.40% | ||||||
Rate on other interest-bearing liabilities | 2.83% | 2.79% | 2.60% | 2.41% | 2.24% | ||||||
Rate on all interest-bearing liabilities | 0.93% | 0.90% | 0.79% | 0.69% | 0.60% | ||||||
Total cost of funds | 0.67% | 0.66% | 0.58% | 0.51% | 0.45% | ||||||
Net interest margin (1) | 4.03% | 4.03% | 4.05% | 4.00% | 4.04% | ||||||
Net interest margin – tax-equivalent (2) | 4.06% | 4.06% | 4.08% | 4.03% | 4.07% | ||||||
Average prime rate | 5.50% | 5.50% | 5.28% | 5.01% | 4.80% | ||||||
(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 this | |||||||||||
For the Three Months Ended | |||||||||||
NET INTEREST INCOME PURCHASE ($ in thousands) |
June 30, |
Mar. 31, |
Dec. 31, |
Sept. 30, |
June 30, | ||||||
Interest income – increased by accretion of loan |
$ 1,336 |
1,132 |
1,566 |
1,365 |
2,064 | ||||||
Interest income – increased by accretion of loan | 394 | 287 | 264 | 210 | 232 | ||||||
Interest expense – reduced by premium | 50 | 58 | 71 | 84 | 101 | ||||||
Interest expense – increased by discount | (45) | (45) | (45) | (46) | (45) | ||||||
Impact on net interest income | $ 1,735 | 1,432 | 1,856 | 1,613 | 2,352 | ||||||
First Bancorp and Subsidiaries Financial Summary – Page 6 | ||||||||||
ASSET QUALITY DATA ($ in thousands) | June 30, | Mar. 31, | Dec. 31, | Sept. 30, | June 30, | |||||
Nonperforming assets | ||||||||||
Nonaccrual loans | $ 17,375 | 20,684 | 22,575 | 18,231 | 25,494 | |||||
Troubled debt restructurings - accruing | 11,890 | 12,457 | 13,418 | 16,657 | 17,386 | |||||
Accruing loans > 90 days past due | - | - | - | - | - | |||||
Total nonperforming loans | 29,265 | 33,141 | 35,993 | 34,888 | 42,880 | |||||
Foreclosed real estate | 5,107 | 6,390 | 7,440 | 6,140 | 8,296 | |||||
Total nonperforming assets | $ 34,372 | 39,531 | 43,433 | 41,028 | 51,176 | |||||
Purchased credit impaired loans not included | $ 14,175 | 15,867 | 17,393 | 20,189 | 20,832 | |||||
Asset Quality Ratios | ||||||||||
Net quarterly charge-offs (recoveries) to average | 0.00% | 0.04% | 0.02% | 0.27% | (0.07%) | |||||
Nonperforming loans to total loans | 0.67% | 0.77% | 0.85% | 0.83% | 1.03% | |||||
Nonperforming assets to total assets | 0.57% | 0.65% | 0.74% | 0.72% | 0.90% | |||||
Allowance for loan losses to total loans | 0.48% | 0.49% | 0.50% | 0.49% | 0.56% | |||||
Allowance for loan losses + unaccreted discount | 0.82% | 0.86% | 0.90% | 0.94% | 1.05% | |||||
(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 $9.9 million, respectively, in purchased credit impaired loans in accordance with ASC 310-30 accounting guidance. These loans are excluded from the nonperforming loan amounts. | ||||||||||
First Bancorp and Subsidiaries Financial Summary - Page 7 | ||||||||||
For the Three Months Ended | ||||||||||
NET INTEREST MARGIN, EXCLUDING ($ in thousands) |
June 30, |
Mar. 31, |
Dec. 31, |
Sept. 30, |
June 30, | |||||
Net interest income, as reported | $ 54,409 | 53,361 | 53,846 | 51,845 | 51,232 | |||||
Tax-equivalent adjustment | 423 | 424 | 443 | 428 | 367 | |||||
Net interest income, tax-equivalent (A) | $ 54,832 | 53,785 | 54,289 | 52,273 | 51,599 | |||||
Average earning assets (B) | $ 5,417,284 | 5,372,766 | 5,276,311 | 5,143,449 | 5,080,372 | |||||
Tax-equivalent net interest |
4.06% |
4.06% |
4.08% |
4.03% |
4.07% | |||||
Net interest income, tax-equivalent | $ 54,832 | 53,785 | 54,289 | 52,273 | 51,599 | |||||
Loan discount accretion | 1,730 | 1,419 | 1,830 | 1,575 | 2,296 | |||||
Net interest income, tax-equivalent, excluding | $ 53,102 | 52,366 | 52,459 | 50,698 | 49,303 | |||||
Average earnings assets (B) | $ 5,417,284 | 5,372,766 | 5,276,311 | 5,143,449 | 5,080,372 | |||||
Tax-equivalent net interest margin, excluding | 3.93% | 3.95% | 3.94% | 3.91% | 3.89% | |||||
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 related to 1) the Company's acquisition of loans and represents the portion of the fair value discount that was initially recorded on the acquired loans, and 2) the Company's origination of SBA loans and the subsequent sale of the guaranteed portions of the loans that results in a discount being recorded on the retained portion of the loans. These discounts are recognized into income over the lives of the loans. At June 30, 2019, the Company had a remaining loan discount balance on acquired loans of $14.8 million compared to $20.3 million at June 30, 2018. At June 30, 2019, the Company had a remaining loan discount balance on SBA loans of $6.9 million compared to $4.7 million at June 30, 2018. For the related loans that perform and pay-down over time, the loan discount will also be reduced, with a corresponding increase to interest income. Therefore, management of the Company believes it is useful to also present this ratio to reflect the Company's net interest margin excluding this non-cash, temporary loan discount accretion adjustment to aid investors in comparing financial results between periods. The Company cautions that non-GAAP financial measures should be considered in addition to, but not as a substitute for, the Company's reported GAAP results. | ||||||||||
Reconciliation of Core Noninterest Income to Total Noninterest Income ($ in thousands) | Three Months | Three Months | Six Months | Six Months | ||||||
Noninterest income | ||||||||||
Service charges on deposit accounts | $ 3,210 | 3,122 | 6,155 | 6,385 | ||||||
Other service charges, commissions, and fees | 5,786 | 4,674 | 11,034 | 9,159 | ||||||
Fees from presold mortgage loans | 857 | 796 | 1,402 | 1,655 | ||||||
Commissions from sales of insurance and financial products | 2,204 | 2,119 | 4,233 | 4,059 | ||||||
SBA consulting fees | 921 | 1,126 | 2,184 | 2,267 | ||||||
SBA loan sale gains | 3,069 | 2,598 | 5,131 | 6,400 | ||||||
Bank-owned life insurance income | 631 | 628 | 1,277 | 1,251 | ||||||
Core noninterest Income | 16,678 | 15,063 | 31,416 | 31,176 | ||||||
Foreclosed property gains (losses), net | (381) | (99) | (626) | (387) | ||||||
Securities gains (losses), net | − | − | − | − | ||||||
Other gains (losses), net | (308) | 908 | (226) | 912 | ||||||
Total noninterest income | $ 15,989 | 15,872 | 30,564 | 31,701 | ||||||
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SOURCE First Bancorp
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