First Bancorp Reports Third Quarter Results

SOUTHERN PINES, N.C., Oct. 23, 2019 /PRNewswire/ -- First Bancorp (NASDAQ - FBNC), the parent company of First Bank, announced today net income of $25.0 million, or $0.84 per diluted common share, for the three months ended September 30, 2019, an increase of 13.5% in earnings per share from the $22.0 million, or $0.74 per diluted common share, recorded in the third quarter of 2018.

For the nine months ended September 30, 2019, the Company recorded net income of $71.2 million, or $2.39 per diluted common share, an increase of 8.1% in earnings per share from the $65.4 million, or $2.21 per diluted common share, for the nine months ended September 30, 2018.

Net Interest Income and Net Interest Margin

Net interest income for the third quarter of 2019 was $53.8 million, a 3.7% increase from the $51.8 million recorded in the third quarter of 2018.  Net interest income for the first nine months of 2019 amounted to $161.5 million, a 5.2% increase from the $153.6 million recorded in the comparable period of 2018.  The increases in net interest income for the periods presented were primarily due to growth in interest-earning assets, which have increased by approximately 6%-7% over the past year.

The Company's net interest margin (tax-equivalent net interest income divided by average earning assets) for the third quarter of 2019 was 3.95%, which was 8 basis points lower than the 4.03% realized in the third quarter of 2018.  For the nine month period ended September 30, 2019, the Company's net interest margin was 4.02% compared to 4.09% for the same period in 2018.  The lower margins were due to a combination of lower loan discount accretion and funding costs that rose by more than asset yields.

The Company recorded loan discount accretion of $1.3 million in the third quarter of 2019, compared to $1.6 million in the third quarter of 2018.  For the nine months ended September 30, 2019 and 2018, loan discount accretion amounted to $4.5 million and $6.0 million, respectively.  The lower loan discount accretion accounted for approximately 3 basis points out of the 8 basis point decline in the net interest margin when comparing the third quarter of 2019 to 2018 and for 5 basis points of the 7 basis point decline on a year to date basis.  The lower discount accretion was attributable to paydowns in the Company's acquired loan portfolios.

The Company's earning-asset yields, excluding loan discount accretion, increased by 8 basis points when comparing the third quarter of 2019 to the third quarter of 2018.  Total funding costs increased by 15 basis points over that same period.  On a year to date basis, earning-asset yields, excluding loan discount accretion, increased 17 basis points while total funding costs increased 22 basis points.

In the third quarter of 2019, the Federal Reserve cut short-term interest rates by 50 basis points.  The lower interest rates resulted in a 12 basis point reduction in the yield on interest-earning assets in the third quarter of 2019 from the second quarter of 2019 (9 basis points excluding loan discount accretion) and a one basis point reduction in the total cost of funds.  This spread compression resulted in the 11 basis point linked-quarter decrease in net interest margin (7 basis points excluding loan discount accretion).

See the Financial Summary for a reconciliation of the Company's net interest margin to its net interest margin excluding loan discount accretion, and other information regarding this percentage.

Provision for Loan Losses and Asset Quality

The Company recorded a negative provision for loan losses of $1.1 million (reduction of the allowance for loan losses) in the third quarter of 2019 compared to a provision for loan losses of $0.1 million in the third quarter of 2018.  For the nine months ended September 30, 2019, the Company recorded a negative provision for loan losses of $0.9 million compared to a negative provision for loan losses of $4.3 million in the same period of 2018.  In the first quarter of 2018, the Company experienced net loan recoveries of $3.7 million, resulting in the negative provision during 2018.  The Company's provision for loan losses has remained at low levels 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 nine months ended September 30, 2019 was 0.03%, compared to (0.05%) for the same period of 2018.   The Company's nonperforming assets to total assets ratio was 0.56% at September 30, 2019 compared to 0.72% at September 30, 2018.

Noninterest Income

Total noninterest income was $15.6 million and $15.2 million for the three months ended September 30, 2019 and 2018, respectively.  For the nine months ended September 30, 2019, noninterest income amounted to $46.2 million compared to $46.9 million for the same period of 2018.

Core noninterest income, a non-GAAP measure, for the third quarter of 2019 was $15.9 million, a 2.9% increase from the $15.5 million reported for the third quarter of 2018 - see reconciliation of core noninterest income to total noninterest income in the Financial Summary.  The Company experienced strong increases in "Other service charges, commissions, and fees," due to higher debit card and credit card interchange fees associated with increased usage, and "Fees from Presold Mortgages," as a result of higher mortgage loan originations.  Offsetting those increases was lower SBA consulting fee income and lower SBA loan sale gains, which both declined due to lower origination activity.

Core noninterest income for the nine months ended September 30, 2019 was $47.3 million, a 1.5% increase from the $46.6 million reported for the first nine months of 2018.  Higher "Other service charges, commissions and fees" were substantially offset by lower SBA consulting fee income and lower gains on sales of SBA loans.

Other gains (losses) amounted to a loss of $0.3 million in the first nine months of 2019 due to miscellaneous items, whereas in the first nine months of 2018, the Company recorded a net gain of $0.8 million, which included a $0.9 million gain on the sale of a former branch location.

Noninterest Expenses

Noninterest expenses amounted to $38.9 million in the third quarter of 2019, a 0.3% decrease from the $39.0 million recorded in the third quarter of 2018.  Noninterest expenses for the nine months ended September 30, 2019 amounted to $118.6 million compared to $121.2 million in 2018, a decrease of 2.1%.

As a result of FDIC assessment credits allocated to the Company, the Company recorded no FDIC insurance expense in the third quarter of 2019 and reversed a $400,000 accrual from the second quarter of 2019.  The Company expects its remaining credits to result in no insurance expense in the fourth quarter of 2019 and to cover approximately one month of expense in the first quarter of 2020.

Merger and acquisition expenses declined by $3.4 million in the nine months ended September 30, 2019 compared to the same period in 2018.

Income Taxes

The Company's effective tax rate for the third quarter of 2019 was 20.8% compared to 21.2% in the third quarter of 2018.  For the nine months ended September 30, 2019 and 2018, the Company's effective tax rates were 21.0% and 21.8%, 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 September 30, 2019 amounted to $6.1 billion, a 6.3% increase from a year earlier.  Total loans at September 30, 2019 amounted to $4.4 billion, a 4.9% increase from a year earlier, and total deposits amounted to $4.9 billion at September 30, 2019, a 7.7% increase from a year earlier.

Annualized loan growth for the first nine months of 2019 was 4.6%.  Annualized deposit growth for the first nine months of 2019 was 6.2%.  Within deposits, the Company's retail deposits (excludes brokered deposits and internet time deposits) grew at an annualized rate of 9.9% for the first nine months of 2019.  As a result of the strong retail deposit growth, the Company has been able reduce to its level of brokered deposits, which have declined by $128 million, or 50.1%, since September 30, 2018.  Additionally, the Company has paid down its borrowings by $106 million, or 26.0%, over that same time period.

In late 2018 and early 2019, in order to reduce exposure to the possibility of lower interest rates, the Company invested a portion of its interest-bearing cash balances into fixed rate investment securities.  As a result, from September 30, 2018 to September 30, 2019, interest-bearing cash balances have declined by 42.5% and investment securities balances have increased by 70.2%.

The Company remains well-capitalized by all regulatory standards, with an estimated Total Risk-Based Capital Ratio at September 30, 2019 of 14.78%, an increase from the 13.68% reported at September 30, 2018.  The Company's tangible common equity to tangible assets ratio was 10.01% at September 30, 2019, an increase of 106 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 1.65%.  The current interest rate environment is a challenge for banks, but our net interest margin has held up well.  Deposit growth remains strong, and we also saw an increase in loan origination activity during the quarter."

The following is additional discussion of business development and other miscellaneous matters affecting the Company during the third quarter of 2019:

  • On September 13, 2019, the Company announced a quarterly cash dividend of $0.12 per share payable on October 25, 2019 to shareholders of record on September 30, 2019. This dividend rate represents a 20% increase over the dividend rate declared in the third quarter of 2018.
  • During the third quarter of 2019, the Company repurchased 99,625 shares of the Company's common stock at an average price of $34.89, which totaled $3.5 million. For the first nine months of 2019, the Company repurchased 281,593 shares at an average cost of $35.48 for a total of $10 million. The Company has $15 million of remaining repurchase authority and, depending on market conditions, may continue share repurchases up to that limit during the last quarter of 2019.

*   *   *

First Bancorp is a bank holding company headquartered in Southern Pines, North Carolina, with total assets of approximately $6.1 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

September 30,



Percent



($ in thousands except per share data - unaudited)

2019



2018



Change



INCOME STATEMENT













Interest income













   Interest and fees on loans

$

55,142



52,407







   Interest on investment securities

5,342



2,868







   Other interest income

1,898



2,944







      Total interest income

62,382



58,219



7.2%



Interest expense













   Interest on deposits

6,597



3,906







   Interest on borrowings

2,007



2,468







      Total interest expense

8,604



6,374



35.0%



        Net interest income

53,778



51,845



3.7%



Total provision (reversal) for loan losses

(1,105)



87



n/m



Net interest income after provision for loan losses

54,883



51,758



6.0%



Noninterest income













   Service charges on deposit accounts

3,388



3,221







   Other service charges, commissions, and fees

5,814



4,942







   Fees from presold mortgage loans

1,275



576







   Commissions from sales of insurance and financial products

2,203



2,425







   SBA consulting fees

663



1,287







   SBA loan sale gains

1,917



2,373







   Bank-owned life insurance income

651



641







   Foreclosed property gains (losses), net

(273)



(192)







   Securities gains (losses), net

97









   Other gains (losses), net

(105)



(101)







      Total noninterest income

15,630



15,172



3.0%



Noninterest expenses













   Salaries expense

19,833



18,771







   Employee benefit expense

4,144



4,061







   Occupancy and equipment related expense

4,017



4,180







   Merger and acquisition expenses



167







   Intangibles amortization expense

1,163



1,452







   Other operating expenses

9,763



10,403







      Total noninterest expenses

38,920



39,034



(0.3)%



Income before income taxes

31,593



27,896



13.3%



Income tax expense

6,574



5,905



11.3%



Net income

$

25,019



21,991



13.8%

















Earnings per common share - diluted

$

0.84



0.74



13.5%

















ADDITIONAL INCOME STATEMENT INFORMATION













   Net interest income, as reported

$

53,778



51,845







   Tax-equivalent adjustment (1)

413



428







   Net interest income, tax-equivalent

$

54,191



52,273



3.7%













(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











Nine Months Ended

September 30,



Percent

($ in thousands except per share data - unaudited)

2019



2018



Change

INCOME STATEMENT











Interest income











   Interest and fees on loans

$

164,754



154,028





   Interest on investment securities

15,679



8,667





   Other interest income

6,705



7,320





      Total interest income

187,138



170,015



10.1%

Interest expense









   Interest on deposits

18,498



9,812





   Interest on borrowings

7,092



6,619





      Total interest expense

25,590



16,431



55.7%

        Net interest income

161,548



153,584



5.2%

Total provision (reversal) for loan losses

(913)



(4,282)



(78.7)%

Net interest income after provision for loan losses

162,461



157,866



2.9%

Noninterest income









   Service charges on deposit accounts

9,543



9,606





   Other service charges, commissions, and fees

16,848



14,101





   Fees from presold mortgage loans

2,677



2,231





   Commissions from sales of insurance and financial products

6,436



6,484





   SBA consulting fees

2,847



3,554





   SBA loan sale gains

7,048



8,773





   Bank-owned life insurance income

1,928



1,892





   Foreclosed property gains (losses), net

(899)



(579)





   Securities gains (losses), net

97







   Other gains (losses), net

(331)



811





      Total noninterest income

46,194



46,873



(1.4)%

Noninterest expenses











   Salaries expense

58,530



56,615





   Employee benefit expense

13,150



12,752





   Occupancy and equipment related expense

12,052



12,018





   Merger and acquisition expenses

213



3,568





   Intangibles amortization expense

3,737



4,518





   Other operating expenses

30,948



31,683





      Total noninterest expenses

118,630



121,154



(2.1)%

Income before income taxes

90,025



83,585



7.7%

Income tax expense

18,862



18,191



3.7%

Net income

$

71,163



65,394



8.8%













Earnings per common share - diluted

$

2.39



2.21



8.1%













ADDITIONAL INCOME STATEMENT INFORMATION











   Net interest income, as reported

$

161,548



153,584





   Tax-equivalent adjustment (1)

1,260



1,151





   Net interest income, tax-equivalent

$

162,808



154,735



5.2%









(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.

 

 

First Bancorp and Subsidiaries

Financial Summary - Page 3









Three Months Ended

September 30,

Nine Months Ended

September 30,

PERFORMANCE RATIOS (annualized)

2019

2018

2019

2018

Return on average assets (1)

1.65

%

1.53

%

1.59

%

1.55

%

Return on average common equity (2)

12.00

%

11.83

%

11.87

%

12.16

%

Net interest margin - tax-equivalent (3)

3.95

%

4.03

%

4.02

%

4.09

%

Net charge-offs (recoveries) to average loans

0.04

%

0.27

%

0.03

%

(0.05)

%











COMMON SHARE DATA









Cash dividends declared - common

$

0.12



0.10



0.36



0.30



Stated book value - common

28.20



24.99



28.20



24.99



Tangible book value - common

19.66



16.43



19.66



16.43



Common shares outstanding at end of period

29,604,830



29,729,285



29,604,830



29,729,285



Weighted average shares outstanding - diluted

29,684,105



29,621,130



29,759,459



29,639,126













CAPITAL RATIOS









Tangible common equity to tangible assets

10.01

%

8.95

%

10.01

%

8.95

%

Common equity tier I capital ratio - estimated

13.12

%

11.97

%

13.12

%

11.97

%

Tier I leverage ratio - estimated

11.12

%

10.34

%

11.12

%

10.34

%

Tier I risk-based capital ratio - estimated

14.33

%

13.18

%

14.33

%

13.18

%

Total risk-based capital ratio - estimated

14.78

%

13.68

%

14.78

%

13.68

%











AVERAGE BALANCES ($ in thousands)









Total assets

$

6,021,979



5,712,940



5,986,641



5,644,692



Loans

4,354,477



4,191,751



4,322,078



4,141,645



Earning assets

5,440,014



5,143,420



5,410,546



5,057,811



Deposits

4,838,574



4,526,012



4,784,935



4,480,792



Interest-bearing liabilities

3,678,530



3,654,176



3,722,536



3,651,744



Shareholders' equity

826,914



737,560



801,228



718,982

















(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

Sept. 30, 2019

June 30, 2019

Mar. 31,  2019

Dec. 31,  2018

Sept. 30,  2018













Net interest income - tax-equivalent (1)

$

54,191



54,832



53,785



54,289



52,273



Taxable equivalent adjustment (1)

413



423



424



443



428



Net interest income

53,778



54,409



53,361



53,846



51,845



Provision (reversal) for loan losses

(1,105)



(308)



500



693



87



Noninterest income

15,630



15,989



14,575



14,114



15,173



Noninterest expense

38,920



40,439



39,271



37,374



39,035



Income before income taxes

31,593



30,267



28,165



29,893



27,896



Income tax expense

6,574



6,408



5,880



5,998



5,905



Net income

25,019



23,859



22,285



23,895



21,991















Earnings per common share - diluted

0.84



0.80



0.75



0.80



0.74















Cash dividends declared per share

0.12



0.12



0.12



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 Sept. 30,

2019



At June 30,

2019



At Dec. 31,

2018



At Sept. 30,

2018



One Year

Change

Assets



















Cash and due from banks

$

52,621



52,679



56,050



50,209



4.8

%

Interest-bearing deposits with banks

264,840



286,781



406,848



460,520



(42.5)

%

     Total cash and cash equivalents

317,461



339,460



462,898



510,729



(37.8)

%





















Investment securities

779,489



771,021



602,588



457,887



70.2

%

Presold mortgages

16,269



6,222



4,279



6,111



166.2

%





















Total loans

4,396,544



4,339,497



4,249,064



4,190,628



4.9

%

Allowance for loan losses

(19,260)



(20,789)



(21,039)



(20,546)



(6.3)

%

Net loans

4,377,284



4,318,708



4,228,025



4,170,082



5.0

%





















Premises and equipment

136,668



136,901



119,000



116,618



17.2

%

Intangible assets

252,824



253,769



255,480



254,737



(0.8)

%

Foreclosed real estate

4,589



5,107



7,440



6,140



(25.3)

%

Bank-owned life insurance

103,806



103,154



101,878



101,055



2.7

%

Other assets

80,521



77,697



82,528



88,271



(8.8)

%

     Total assets

$

6,068,911



6,012,039



5,864,116



5,711,630



6.3

%





















Liabilities



















Deposits:



















     Noninterest-bearing checking accounts

$

1,491,494



1,441,064



1,320,131



1,280,408



16.5

%

     Interest-bearing checking accounts

894,777



931,945



916,374



870,487



2.8

%

     Money market accounts

1,124,614



1,104,052



1,035,523



1,007,177



11.7

%

     Savings accounts

418,043



413,065



432,389



432,335



(3.3)

%

     Brokered deposits

127,519



150,888



239,875



255,415



(50.1)

%

     Internet time deposits

1,445



1,445



3,428



3,924



(63.2)

%

     Other time deposits > $100,000

557,590



538,401



447,619



409,742



36.1

%

     Other time deposits

259,900



262,194



264,000



268,885



(3.3)

%

          Total deposits

4,875,382



4,843,054



4,659,339



4,528,373



7.7

%





















Borrowings

300,656



301,140



406,609



406,593



(26.1)

%

Other liabilities

57,891



52,676



33,938



33,588



72.4

%

     Total liabilities

5,233,929



5,196,870



5,099,886



4,968,554



5.3

%





















Shareholders' equity



















Common stock

429,136



432,533



434,453



434,227



(1.2)

%

Retained earnings

402,212



380,748



341,738



320,822



25.4

%

Stock in rabbi trust assumed in acquisition

(2,577)



(3,625)



(3,235)



(3,224)



(20.1)

%

Rabbi trust obligation

2,577



3,625



3,235



3,224



(20.1)

%

Accumulated other comprehensive

income (loss)

3,634



1,888



(11,961)



(11,973)



(130.4)

%

     Total shareholders' equity

834,982



815,169



764,230



743,076



12.4

%

Total liabilities and shareholders' equity

$

6,068,911



6,012,039



5,864,116



5,711,630



6.3

%





















 

 

First Bancorp and Subsidiaries

Financial Summary - Page 5







For the Three Months Ended

YIELD INFORMATION

Sept. 30, 2019

June 30, 2019

Mar. 31, 2019

Dec. 31, 2018

Sept. 30, 2018













Yield on loans

5.02

%

5.16

%

5.11

%

5.13

%

4.96

%

Yield on securities

2.74

%

2.81

%

2.95

%

2.71

%

2.52

%

Yield on other earning assets

2.42

%

2.51

%

2.77

%

2.29

%

2.33

%

   Yield on all interest-earning assets

4.55

%

4.67

%

4.66

%

4.60

%

4.49

%













Rate on interest bearing deposits

0.77

%

0.75

%

0.67

%

0.56

%

0.48

%

Rate on other interest-bearing liabilities

2.65

%

2.83

%

2.79

%

2.60

%

2.41

%

   Rate on all interest-bearing liabilities

0.93

%

0.93

%

0.90

%

0.79

%

0.69

%

     Total cost of funds

0.66

%

0.67

%

0.66

%

0.58

%

0.51

%













        Net interest margin (1)

3.92

%

4.03

%

4.03

%

4.05

%

4.00

%













        Net interest margin - tax-equivalent (2)

3.95

%

4.06

%

4.06

%

4.08

%

4.03

%













        Average prime rate

5.27

%

5.50

%

5.50

%

5.28

%

5.01

%













(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 Financial Summary for discussion of tax-equivalent adjustments.











For the Three Months Ended

NET INTEREST INCOME PURCHASE ACCOUNTING ADJUSTMENTS

($ in thousands)

Sept. 30,

2019



June 30,

2019



Mar. 31,

2019



Dec. 31,

2018



Sept. 30,

2018





















Interest income - increased by accretion of loan discount on acquired loans

$

959



1,336



1,132



1,566



1,365

Interest income - increased by accretion of loan discount on retained portions of SBA loans

365



394



287



264



210

Interest expense - reduced by premium amortization of deposits

44



50



58



71



84

Interest expense - increased by discount accretion of borrowings

(46)



(45)



(45)



(45)



(46)

     Impact on net interest income

$

1,322



1,735



1,432



1,856



1,613

 

 

First Bancorp and Subsidiaries

Financial Summary - Page 6



ASSET QUALITY DATA ($ in thousands)

Sept. 30,

2019



June 30,

2019



Mar. 31,

2019



Dec. 31,

2018



Sept. 30,

2018





















Nonperforming assets



















Nonaccrual loans

$

19,720





17,375





20,684





22,575





18,231



Troubled debt restructurings - accruing

9,566





11,890





12,457





13,418





16,657



Accruing loans > 90 days past due



















Total nonperforming loans

29,286





29,265





33,141





35,993





34,888



Foreclosed real estate

4,589





5,107





6,390





7,440





6,140



Total nonperforming assets

$

33,875





34,372





39,531





43,433





41,028



Purchased credit impaired loans not included above (1)

$

13,798





14,175





15,867





17,393





20,189



Asset Quality Ratios



















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

0.04

%



%



0.04

%



0.02

%



0.27

%

Nonperforming loans to total loans

0.67

%



0.67

%



0.77

%



0.85

%



0.83

%

Nonperforming assets to total assets

0.56

%



0.57

%



0.65

%



0.74

%



0.72

%

Allowance for loan losses to total loans

0.44

%



0.48

%



0.49

%



0.5

%



0.49

%



(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,

2019



June 30,

2019



Mar. 31,

2019



Dec. 31,

2018



Sept. 30,

2018





















Net interest income, as reported

$

53,778





54,409





53,361





53,846





51,845



Tax-equivalent adjustment

413





423





424





443





428



Net interest income, tax-equivalent (A)

$

54,191





54,832





53,785





54,289





52,273



Average earning assets (B)

$

5,440,014





5,417,284





5,372,766





5,276,311





5,143,449



Tax-equivalent net interest

margin, annualized - as reported -  (A)/(B)

3.95

%



4.06

%



4.06

%



4.08

%



4.03

%





















Net interest income, tax-equivalent

$

54,191





54,832





53,785





54,289





52,273



Loan discount accretion

1,324





1,730





1,419





1,830





1,575



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

$

52,867





53,102





52,366





52,459





50,698



Average earnings assets  (B)

$

5,440,014





5,417,284





5,372,766





5,276,311





5,143,449



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

3.86

%



3.93

%



3.95

%



3.94

%



3.91

%



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 September 30, 2019, the Company had a remaining loan discount balance on acquired loans of $13.8 million compared to $18.9 million at September 30, 2018.  At September 30, 2019, the Company had a remaining loan discount balance on SBA loans of $7.2 million compared to $5.4 million at September 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.





For the Three Months Ended



For the Nine Months Ended

RECONCILIATION OF CORE NONINTEREST INCOME TO TOTAL NONINTEREST INCOME

($ in thousands)

Sept. 30,

2019



Sept. 30,

2018



Sept. 30,

2019



Sept. 30,

2018

Noninterest income















   Service charges on deposit accounts

$

3,388



3,221



9,543



9,606

   Other service charges, commissions, and fees

5,814



4,942



16,848



14,101

   Fees from presold mortgage loans

1,275



576



2,677



2,231

   Commissions from sales of insurance and financial products

2,203



2,425



6,436



6,484

   SBA consulting fees

663



1,287



2,847



3,554

   SBA loan sale gains

1,917



2,373



7,048



8,773

   Bank-owned life insurance income

651



641



1,928



1,892

         Core noninterest income

15,911



15,465



47,327



46,641

   Foreclosed property gains (losses), net

(273)



(192)



(899)



(579)

   Securities gains (losses), net

97





97



   Other gains (losses), net

(105)



(101)



(331)



811

         Total noninterest income

$

15,630



15,172



46,194



46,873

 

(PRNewsfoto/First Bancorp)

 

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/first-bancorp-reports-third-quarter-results-300944282.html

SOURCE First Bancorp

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