First Bancorp Reports Fourth Quarter and Annual Results

SOUTHERN PINES, N.C., Jan. 22, 2020 /PRNewswire/ -- First Bancorp (NASDAQ - FBNC), the parent company of First Bank, announced today net income of $20.9 million, or $0.71 per diluted common share, for the three months ended December 31, 2019, a decrease of 11.3% in earnings per share from the $23.9 million, or $0.80 per diluted common share, recorded in the fourth quarter of 2018.  The decrease was primarily due to an increase in the provision for loan losses recorded for the current period.

For the year ended December 31, 2019, the Company recorded net income of $92.0 million, or $3.10 per diluted common share, an increase of 3.0% in earnings per share from the $89.3 million, or $3.01 per diluted common share, for 2018.  The increase was primarily related to higher net interest income associated with the Company's growth.

Net Interest Income and Net Interest Margin

Net interest income for the fourth quarter of 2019 was $54.7 million, a 1.5% increase from the $53.8 million recorded in the fourth quarter of 2018.  Net interest income for the year ended December 31, 2019 amounted to $216.2 million, a 4.2% increase from the $207.4 million recorded in 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% over the past year.

The Company's net interest margin (a non-GAAP measure calculated by dividing tax-equivalent net interest income by average earning assets) for the fourth quarter of 2019 was 3.93%, which was 15 basis points lower than the 4.08% realized in the fourth quarter of 2018.  For the year ended December 31, 2019, the Company's net interest margin was 4.00% compared to 4.09% for 2018.  The lower margins were primarily due to a combination of lower loan discount accretion and lower asset yields.

The Company recorded loan discount accretion of $1.5 million in the fourth quarter of 2019, compared to $1.8 million in the fourth quarter of 2018.  For the years ended December 31, 2019 and 2018, loan discount accretion amounted to $6.0 million and $7.8 million, respectively.  The lower loan discount accretion accounted for approximately 3 basis points out of the 15 basis point decline in the net interest margin when comparing the fourth quarter of 2019 to 2018 and for 4 basis points of the 9 basis point decline for 2019.  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, decreased by 8 basis points when comparing the fourth quarter of 2019 to the fourth quarter of 2018.  Total funding costs increased by 5 basis points over that same period.  On a year to date basis, earning-asset yields, excluding loan discount accretion, increased 11 basis points, while total funding costs increased 18 basis points.

In the second half of 2019, the Federal Reserve cut short-term interest rates by 75 basis points.  The lower interest rates resulted in a 6 basis point reduction in the yield on interest-earning assets in the fourth quarter of 2019 from the third quarter of 2019 and a three basis point reduction in the total cost of funds.  This spread compression resulted in the 2 basis point linked-quarter decrease in net interest margin.  In the fourth quarter of 2019, the Company's loan yield was favorably impacted by yield adjustments primarily related to prepayment fees realized on the early payoff of a large loan.

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

Total net charge-offs for the fourth quarter of 2019 amounted to $1.0 million, or 0.09% of average loans, compared to net charge-offs of $0.2 million, or 0.02% of average loans, in the fourth quarter of 2018.  For the year ended December 31, 2019, the Company experienced net charge-offs of $1.9 million, or 0.04% of average loans, compared to net recoveries of $1.3 million in 2018.

The Company recorded a provision for loan losses of $3.2 million in the fourth quarter of 2019 compared to a provision for loan losses of $0.7 million in the fourth quarter of 2018.  For the year ended December 31, 2019, the Company recorded a provision for loan losses of $2.3 million compared to a negative provision for loan losses (reduction of the allowance for loan losses) of $3.6 million in 2018.  In the first quarter of 2018, the Company experienced net loan recoveries of $3.7 million, resulting in the negative provision during 2018.

Total nonperforming assets amounted to $37.8 million at December 31, 2019 compared to $43.4 million a year earlier.  Within nonperforming assets, nonaccrual loans amounted to $24.9 million at December 31, 2019 compared to $19.7 million at September 30, 2019 and $22.6 million at December 31, 2018.

Noninterest Income

Total noninterest income was $14.6 million and $13.4 million for the three months ended December 31, 2019 and 2018, respectively.  For the year ended December 31, 2019, noninterest income amounted to $58.6 million compared to $58.4 million for 2018.

Core noninterest income, a non-GAAP measure, for the fourth quarter of 2019 was $14.5 million, a 7.5% increase from the $13.5 million reported for the fourth quarter of 2018 - see reconciliation of core noninterest income to total noninterest income in the Financial Summary.  For the year ended December 31, 2019, core noninterest income amounted to $59.6 million, a 2.4% increase from the $58.2 million reported for 2018.

In 2019, the Company experienced increases in service charges on deposit accounts due to strong deposit growth, "other service charges, commissions, and fees" due to higher interchange income, and "fees from presold mortgages" due to higher mortgage origination activity.  Partially offsetting those increases were declines in commissions from sales of insurance and financial products, SBA consulting fees and SBA loan sale gains, which all declined due to lower activity in those lines of business.

Other gains (losses) amounted to a net loss of $0.2 million in calendar year 2019 due to miscellaneous items, whereas in 2018, the Company recorded a net gain of $0.7 million, which included a $0.9 million gain on the sale of a former branch location.

Noninterest Expenses

Noninterest expenses amounted to $39.9 million in the fourth quarter of 2019 compared to $36.7 million recorded in the fourth quarter of 2018, an increase of 8.6%.  Noninterest expenses for the year ended December 31, 2019 amounted to $156.3 million compared to $155.9 million in 2018, an increase of 0.2%.  The increases in 2019 were primarily due to expenses associated with the Company's growth, which were partially offset by lower FDIC assessment premiums due to credits allocated to the Company by the FDIC and operational efficiencies realized by the Company resulting from the operational conversion of an acquired entity in 2018.

Income Taxes

The Company's effective tax rate for the fourth quarter of 2019 was 20.4% compared to 20.1% in the fourth quarter of 2018.  For the year ended December 31, 2019 and 2018, the Company's effective tax rates were 20.8% and 21.3%, respectively.

Balance Sheet and Capital

Total assets at December 31, 2019 amounted to $6.1 billion, a 4.8% increase from a year earlier.  Loan growth for the year ended December 31, 2019 amounted to $204.4 million, or 4.8%, and deposit growth amounted to $272.0 million, or 5.8%.  Within deposits, the Company's retail deposits (excludes brokered deposits and internet time deposits) grew 9.7% during 2019, with 14.8% growth in noninterest-bearing checking accounts.  As a result of the strong retail deposit growth, the Company reduced its level of brokered deposits, which declined by $153.7 million, or 64.1%, from December 31, 2018.  Additionally, the Company paid down its borrowings by $106 million, or 26.0%, during 2019.

In order to reduce exposure to the possibility of lower interest rates, the Company invested portions of its interest-bearing cash balances during 2019 into fixed rate investment securities.  As a result, from December 31, 2018 to December 31, 2019, interest-bearing cash balances declined by 59.0% and investment securities balances increased by 47.7%.

The Company remains well-capitalized by all regulatory standards, with an estimated Total Risk-Based Capital Ratio at December 31, 2019 of 15.12%, an increase from the 13.97% reported at December 31, 2018.  The Company's tangible common equity to tangible assets ratio was 10.20% at December 31, 2019, an increase of 113 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 2019.  Profitability was strong, with a return on average assets of 1.53%, and we experienced solid balance sheet growth, especially in retail deposits, which grew nearly 10%.  We were also pleased that our strong capital levels provided the opportunity to increase our dividend rate again this year.  The dividend rate of 18 cents per share being paid to shareholders this week represents an 80% increase from the rate paid a year ago."

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 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)

2019



2018

Change

INCOME STATEMENT









Interest income









   Interest and fees on loans

$

56,030





54,581





   Interest on investment securities

5,209





3,453





   Other interest income

1,730





3,158





      Total interest income

62,969





61,192



2.9%

Interest expense









   Interest on deposits

6,552





4,679





   Interest on borrowings

1,761





2,667





      Total interest expense

8,313





7,346



13.2%

        Net interest income

54,656





53,846



1.5%

Total provision (reversal) for loan losses

3,176





693



358.3%

Net interest income after provision for loan losses

51,480





53,153



(3.1)%

Noninterest income









   Service charges on deposit accounts

3,427





3,084





   Other service charges, commissions, and fees

4,859





4,302





   Fees from presold mortgage loans

1,267





504





   Commissions from sales of insurance and financial products

2,059





2,247





   SBA consulting fees

1,025





1,121





   SBA loan sale gains

1,227





1,593





   Bank-owned life insurance income

636





642





   Foreclosed property gains (losses), net

(40)





14





   Securities gains (losses), net









   Other gains (losses), net

162





(88)





      Total noninterest income

14,622





13,419



9.0%

Noninterest expenses









   Salaries expense

20,599





18,462





   Employee benefit expense

3,694





4,136





   Occupancy and equipment related expense

4,093





4,402





   Merger and acquisition expenses

(21)





(1,210)





   Intangibles amortization expense

1,121





1,398





   Other operating expenses

10,365





9,491





      Total noninterest expenses

39,851





36,679



8.6%

Income before income taxes

26,251





29,893



(12.2)%

Income tax expense

5,368





5,998



(10.5)%

Net income

$

20,883





23,895



(12.6)%











Earnings per common share - diluted

$

0.71





0.80



(11.3)%











ADDITIONAL INCOME STATEMENT INFORMATION









   Net interest income, as reported

$

54,656





53,846





   Tax-equivalent adjustment (1)

382





443





   Net interest income, tax-equivalent

$

55,038





54,289



1.4%







(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 2





Twelve Months Ended

December 31,

Percent

($ in thousands except per share data - unaudited)

2019



2018

Change

INCOME STATEMENT









Interest income









   Interest and fees on loans

$

220,784





208,609





   Interest on investment securities

20,888





12,120





   Other interest income

8,435





10,478





      Total interest income

250,107





231,207



8.2%

Interest expense









   Interest on deposits

25,050





14,491





   Interest on borrowings

8,853





9,286





      Total interest expense

33,903





23,777



42.6%

        Net interest income

216,204





207,430



4.2%

Total provision (reversal) for loan losses

2,263





(3,589)



(163.1)%

Net interest income after provision for loan losses

213,941





211,019



1.4%

Noninterest income









   Service charges on deposit accounts

12,970





12,690





   Other service charges, commissions, and fees

19,481





16,488





   Fees from presold mortgage loans

3,944





2,735





   Commissions from sales of insurance and financial products

8,495





8,731





   SBA consulting fees

3,872





4,675





   SBA loan sale gains

8,275





10,366





   Bank-owned life insurance income

2,564





2,534





   Foreclosed property gains (losses), net

(939)





(565)





   Securities gains (losses), net

97









   Other gains (losses), net

(169)





723





      Total noninterest income

58,590





58,377



0.4%

Noninterest expenses









   Salaries expense

79,129





75,077





   Employee benefit expense

16,844





16,888





   Occupancy and equipment related expense

16,145





16,420





   Merger and acquisition expenses

192





2,358





   Intangibles amortization expense

4,858





5,917





   Other operating expenses

39,087





39,258





      Total noninterest expenses

156,255





155,918



0.2%

Income before income taxes

116,276





113,478



2.5%

Income tax expense

24,230





24,189



0.2%

Net income

$

92,046





89,289



3.1%











Earnings per common share - diluted

$

3.10





3.01



3.0%











ADDITIONAL INCOME STATEMENT INFORMATION









   Net interest income, as reported

$

216,204





207,430





   Tax-equivalent adjustment (1)

1,641





1,594





   Net interest income, tax-equivalent

$

217,845





209,024



4.2%























(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

December 31,

Twelve Months Ended

December 31,

PERFORMANCE RATIOS (annualized)

2019

2018

2019

2018

Return on average assets (1)

1.35

%

1.62

%

1.53

%

1.57

%

Return on average common equity (2)

9.78

%

12.56

%

11.32

%

12.27

%

Net interest margin - tax-equivalent (3)

3.93

%

4.08

%

4.00

%

4.09

%

Net charge-offs (recoveries) to average loans

0.09

%

0.02

%

0.04

%

(0.03)

%











COMMON SHARE DATA









Cash dividends declared - common

$

0.18



0.10



0.54



0.40



Stated book value - common

28.80



25.71



28.80



25.71



Tangible book value - common

20.30



17.12



20.30



17.12



Common shares outstanding at end of period

29,601,264



29,724,874



29,601,264



29,724,874



Weighted average shares outstanding - diluted

29,603,816



29,800,342



29,720,499



29,707,431













CAPITAL RATIOS









Tangible common equity to tangible assets

10.20

%

9.07

%

10.20

%

9.07

%

Common equity tier I capital ratio - estimated

13.48

%

12.28

%

13.48

%

12.28

%

Tier I leverage ratio - estimated

11.19

%

10.47

%

11.19

%

10.47

%

Tier I risk-based capital ratio - estimated

14.63

%

13.48

%

14.63

%

13.48

%

Total risk-based capital ratio - estimated

15.12

%

13.97

%

15.12

%

13.97

%











AVERAGE BALANCES ($ in thousands)









Total assets

$

6,159,232



5,840,964



6,027,047



5,693,760



Loans

4,419,982



4,222,417



4,346,331



4,161,838



Earning assets

5,560,099



5,276,311



5,447,817



5,112,805



Deposits

4,939,182



4,624,868



4,824,216



4,516,811



Interest-bearing liabilities

3,716,248



3,697,076



3,720,536



3,663,077



Shareholders' equity

847,317



754,734



812,823



727,920













(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

Dec. 31,  2019

Sept. 30, 2019

June 30, 2019

Mar. 31,  2019

Dec. 31,  2018













Net interest income - tax-equivalent (1)

$

55,038



54,191



54,832



53,785



54,289



Taxable equivalent adjustment (1)

382



413



423



424



443



Net interest income

54,656



53,778



54,409



53,361



53,846



Provision (reversal) for loan losses

3,176



(1,105)



(308)



500



693



Noninterest income

14,622



14,883



15,253



13,833



13,419



Noninterest expense

39,851



38,173



39,703



38,529



36,679



Income before income taxes

26,251



31,593



30,267



28,165



29,893



Income tax expense

5,368



6,574



6,408



5,880



5,998



Net income

20,883



25,019



23,859



22,285



23,895















Earnings per common share - diluted

0.71



0.84



0.80



0.75



0.80















Cash dividends declared per share

0.18



0.12



0.12



0.12



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 Dec. 31,

2019



At Sept. 30,

2019



At Dec. 31,

2018



One Year

Change

Assets















Cash and due from banks

$

64,519





52,621





56,050





15.1

%

Interest-bearing deposits with banks

166,783





264,840





406,848





(59.0)

%

     Total cash and cash equivalents

231,302





317,461





462,898





(50.0)

%

















Investment securities

889,877





779,489





602,588





47.7

%

Presold mortgages

19,712





16,269





4,279





360.7

%

















Total loans

4,453,466





4,396,544





4,249,064





4.8

%

Allowance for loan losses

(21,398)





(19,260)





(21,039)





1.7

%

Net loans

4,432,068





4,377,284





4,228,025





4.8

%

















Premises and equipment

134,528





136,668





119,000





13.0

%

Intangible assets

251,585





252,824





255,480





(1.5)

%

Foreclosed real estate

3,873





4,589





7,440





(47.9)

%

Bank-owned life insurance

104,441





103,806





101,878





2.5

%

Other assets

76,253





80,521





82,528





(7.6)

%

     Total assets

$

6,143,639





6,068,911





5,864,116





4.8

%

















Liabilities















Deposits:















     Noninterest-bearing checking accounts

$

1,515,977





1,491,494





1,320,131





14.8

%

     Interest-bearing checking accounts

912,784





894,777





916,374





(0.4)

%

     Money market accounts

1,173,107





1,124,614





1,035,523





13.3

%

     Savings accounts

424,415





418,043





432,389





(1.8)

%

     Brokered deposits

86,141





127,519





239,875





(64.1)

%

     Internet time deposits

698





1,445





3,428





(79.6)

%

     Other time deposits > $100,000

563,108





557,590





447,619





25.8

%

     Other time deposits

255,125





259,900





264,000





(3.4)

%

          Total deposits

4,931,355





4,875,382





4,659,339





5.8

%

















Borrowings

300,671





300,656





406,609





(26.1)

%

Other liabilities

59,212





57,891





33,938





74.5

%

     Total liabilities

5,291,238





5,233,929





5,099,886





3.8

%

















Shareholders' equity















Common stock

429,514





429,136





434,453





(1.1)

%

Retained earnings

417,764





402,212





341,738





22.2

%

Stock in rabbi trust assumed in acquisition

(2,587)





(2,577)





(3,235)





(20.0)

%

Rabbi trust obligation

2,587





2,577





3,235





(20.0)

%

Accumulated other comprehensive

     
income (loss)

5,123





3,634





(11,961)





(142.8)

%

     Total shareholders' equity

852,401





834,982





764,230





11.5

%

Total liabilities and shareholders' equity

$

6,143,639





6,068,911





5,864,116





4.8

%

















 

First Bancorp and Subsidiaries

Financial Summary - Page 5





For the Three Months Ended

YIELD INFORMATION

Dec. 31,

2019

Sept. 30,

2019

June 30,

2019

Mar. 31,

2019

Dec. 31,

2018













Yield on loans

5.03

%

5.02

%

5.16

%

5.11

%

5.13

%

Yield on securities

2.64

%

2.74

%

2.81

%

2.95

%

2.71

%

Yield on other earning assets

1.91

%

2.42

%

2.51

%

2.77

%

2.29

%

   Yield on all interest-earning assets

4.49

%

4.55

%

4.67

%

4.66

%

4.60

%













Rate on interest bearing deposits

0.76

%

0.77

%

0.75

%

0.67

%

0.56

%

Rate on other interest-bearing liabilities

2.31

%

2.65

%

2.83

%

2.79

%

2.60

%

   Rate on all interest-bearing liabilities

0.89

%

0.93

%

0.93

%

0.90

%

0.79

%

     Total cost of funds

0.63

%

0.66

%

0.67

%

0.66

%

0.58

%













        Net interest margin (1)

3.90

%

3.92

%

4.03

%

4.03

%

4.05

%













        Net interest margin - tax-equivalent (2)

3.93

%

3.95

%

4.06

%

4.06

%

4.08

%













        Average prime rate

4.83

%

5.27

%

5.50

%

5.50

%

5.28

%













(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)

Dec. 31,

2019



Sept. 30,

2019



June 30,

2019



Mar. 31,

2019



Dec. 31,

2018





















Interest income - increased by accretion of loan

discount on acquired loans

$

1,161





959





1,336





1,132





1,566



Interest income - increased by accretion of loan

discount on retained portions of SBA loans

340





365





394





287





264



Interest expense - reduced by premium

amortization of deposits

38





44





50





58





71



Interest expense - increased by discount accretion

of borrowings

(45)





(46)





(45)





(45)





(45)



     Impact on net interest income

$

1,494





1,322





1,735





1,432





1,856



 

 

 

First Bancorp and Subsidiaries

Financial Summary - Page 6



ASSET QUALITY DATA ($ in thousands)

Dec. 31,

2019



Sept. 30,

2019



June 30,

2019



Mar. 31,

2019



Dec. 31,

2018





















Nonperforming assets



















Nonaccrual loans

$

24,866





19,720





17,375





20,684





22,575



Troubled debt restructurings - accruing

9,053





9,566





11,890





12,457





13,418



Accruing loans > 90 days past due



















Total nonperforming loans

33,919





29,286





29,265





33,141





35,993



Foreclosed real estate

3,873





4,589





5,107





6,390





7,440



Total nonperforming assets

$

37,792





33,875





34,372





39,531





43,433



Purchased credit impaired loans not included

above (1)

$

12,664





13,798





14,175





15,867





17,393



Asset Quality Ratios



















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

0.09

%



0.04

%



%



0.04

%



0.02

%

Nonperforming loans to total loans

0.76

%



0.67

%



0.67

%



0.77

%



0.85

%

Nonperforming assets to total assets

0.62

%



0.56

%



0.57

%



0.65

%



0.74

%

Allowance for loan losses to total loans

0.48

%



0.44

%



0.48

%



0.49

%



0.50

%





(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,

2019



Sept. 30,

2019



June 30,

2019



Mar. 31,

2019



Dec. 31,

2018





















Net interest income, as reported

$

54,656





53,778





54,409





53,361





53,846



Tax-equivalent adjustment

382





413





423





424





443



Net interest income, tax-equivalent (A)

$

55,038





54,191





54,832





53,785





54,289



Average earning assets (B)

$

5,560,099





5,440,014





5,417,284





5,372,766





5,276,311



Tax-equivalent net interest

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

3.93

%



3.95

%



4.06

%



4.06

%



4.08

%





















Net interest income, tax-equivalent

$

55,038





54,191





54,832





53,785





54,289



Loan discount accretion

1,501





1,324





1,730





1,419





1,830



Net interest income, tax-equivalent, excluding

loan discount accretion  (A)

$

53,537





52,867





53,102





52,366





52,459



Average earnings assets  (B)

$

5,560,099





5,440,014





5,417,284





5,372,766





5,276,311



Tax-equivalent net interest margin, excluding

impact of loan discount accretion, annualized -

(A) / (B)

3.82

%



3.86

%



3.93

%



3.95

%



3.94

%



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 December 31, 2019, the Company had a remaining loan discount balance on acquired loans of $12.7 million compared to $17.3 million at December 31, 2018.  At December 31, 2019, the Company had a remaining loan discount balance on SBA loans of $7.1 million compared to $5.7 million at December 31, 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 Twelve Months Ended

RECONCILIATION OF CORE NONINTEREST

INCOME TO TOTAL NONINTEREST INCOME

($ in thousands)

Dec. 31,

2019



Dec.31,

2018



Dec. 31,

2019



Dec. 31,

2018

Noninterest income















   Service charges on deposit accounts

$

3,427





3,084





12,970





12,690



   Other service charges, commissions, and fees

4,859





4,302





19,481





16,488



   Fees from presold mortgage loans

1,267





504





3,944





2,735



   Commissions from sales of insurance and financial products

2,059





2,247





8,495





8,731



   SBA consulting fees

1,025





1,121





3,872





4,675



   SBA loan sale gains

1,227





1,593





8,275





10,366



   Bank-owned life insurance income

636





642





2,564





2,534



         Core noninterest income

14,500





13,493





59,601





58,219



   Foreclosed property gains (losses), net

(40)





14





(939)





(565)



   Securities gains (losses), net









97







   Other gains (losses), net

162





(88)





(169)





723



         Total noninterest income

$

14,622





13,419





58,590





58,377



 

 

Cision View original content:http://www.prnewswire.com/news-releases/first-bancorp-reports-fourth-quarter-and-annual-results-300991719.html

SOURCE First Bancorp

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