First Bancorp Reports Third Quarter Results

SOUTHERN PINES, N.C., Oct. 27, 2016 /PRNewswire/ -- First Bancorp FBNC, the parent company of First Bank, announced today net income available to common shareholders of $4.6 million, or $0.23 per diluted common share, for the three months ended September 30, 2016 compared to the $6.9 million, or $0.34 per diluted common share, recorded in the third quarter of 2015. 

For the nine months ended September 30, 2016, the Company recorded net income available to common shareholders of $19.0 million, or $0.93 per diluted common share, compared to the $19.7 million, or $0.97 per diluted common share, for the nine months ended September 30, 2015.  The decreases for the periods in 2016 are primarily due to the Company's termination of its loss share agreements with the FDIC, the impact of which was partially offset by a gain recorded in a branch exchange transaction, as follows: 

  • Effective July 1, 2016, the Company terminated all loss share agreements with the FDIC. The loss share agreements related to two failed bank acquisitions from 2009 and 2011. As a result of the termination of the agreements, the Company recorded indemnification asset expense of $5.7 million during the three months ended September 30, 2016, which primarily relates to the write-off of the remaining indemnification asset associated with the agreements. The Company expects there to be a positive impact on future earnings as a result of the elimination of FDIC indemnification asset expense that we had recorded in most of our recent financial quarters.

  • On July 15, 2016, the Company completed a branch exchange with First Community Bank, headquartered in Bluefield, Virginia. The Company exchanged its seven branches in Virginia for six of First Community Bank's branches, with four locations in Winston-Salem and one each in Mooresville and Huntersville. In the exchange, the Company acquired approximately $152 million in loans and $111 million in deposits, while transferring approximately $151 million in loans and $134 million in deposits to First Community Bank. The Company recorded a gain on this transaction of $1.4 million.

Net Interest Income and Net Interest Margin

Net interest income amounted to $30.4 million for both the third quarter of 2016 and 2015.  Net interest income for the first nine months of 2016 amounted to $92.1 million, a 2.7% increase from the $89.7 million recorded in the comparable period of 2015.  The higher net interest income was primarily due to growth in the Company's loans outstanding.

The Company's net interest margin (tax-equivalent net interest income divided by average earning assets) in the third quarter of 2016 was 3.93% compared to 4.14% for the third quarter of 2015.  For the nine month period ended September 30, 2016, the Company's net interest margin was 4.07% compared to 4.16% for the same period in 2015.  The lower margins in 2016 were primarily due to lower loan yields, which have been impacted by the continued low interest rate environment.  Lower loan discount accretion on purchased loans also contributed to the lower 2016 margins.  Loan discount accretion amounted to $0.8 million in the third quarter of 2016, compared to $1.2 million in the third quarter of 2015.  For the first nine months of 2016, loan discount accretion amounted to $3.6 million compared to $3.9 million for the first nine months of 2015. 

Excluding the effects of discount accretion, the Company's net interest margin was 3.82% for the third quarter of 2016 compared to 3.98% for the third quarter of 2015, with the loan yield for the third quarter of 2016 being 4.39% compared to 4.63% for the third quarter of 2015. 

See the Financial Summary for a table that presents the impact of loan discount accretion on net interest income. Also 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 ratio.  

Provision for Loan Losses and Asset Quality

The Company recorded no provision for loan losses in the third quarter of 2016 compared to a negative provision of $1.4 million in the third quarter of 2015.  For the nine months ended September 30, 2016, the Company recorded a negative provision for loan losses of $23,000 compared to a negative provision of $0.7 million in the same period of 2015.

For periods prior to the third quarter of 2016, the Company's provision for loan losses was disclosed in separate line items between covered loans and non-covered loans, as shown in the attached tables.  Generally the Company had recorded provisions for loan losses on non-covered loans as a result of net charge-offs and loan growth, while significant recoveries in the Company's covered loan portfolios resulted in negative provisions for loan losses.  Upon the termination of the FDIC loss share agreements effective July 1, 2016, all loans are classified as non-covered.

The Company's provision for loan loss levels have been impacted by continued improvement in asset quality. Nonperforming assets amounted to $70.2 million at September 30, 2016, a decrease of 23.4% from the $91.7 million one year earlier.  The Company's nonperforming assets to total assets ratio was 1.98% at September 30, 2016 compared to 2.80% at September 30, 2015.  Annualized net charge-offs as a percentage of average loans for the three and nine months ended September 30, 2016 were 0.06% and 0.15%, respectively, compared to 0.10% and 0.55%, respectively, for the comparable periods of 2015.

Noninterest Income

Total noninterest income was $5.2 million and $3.5 million for the three months ended September 30, 2016 and September 30, 2015, respectively.  For the nine months ended September 30, 2016, noninterest income amounted to $16.1 million compared to $13.0 million for the nine months ended September 30, 2015.

Core noninterest income for the third quarter of 2016 was $9.8 million, an increase of 34.2% from the $7.3 million reported for the third quarter of 2015.  For the first nine months of 2016, core noninterest income amounted to $25.3 million, a 15.5% increase from the $21.9 million recorded in the comparable period of 2015.  Core noninterest income includes i) service charges on deposit accounts, ii) other service charges, commissions, and fees, iii) fees from presold mortgages, iv) commissions from financial product sales, v) SBA consulting fees, vi) SBA loan sale gains and vii) bank-owned life insurance income. 

The increases in core noninterest income are primarily the result of the following initiatives by the Company to increase noninterest income:

  • On January 1, 2016, the Company acquired Bankingport, Inc., an insurance agency located in Sanford, North Carolina, which is primarily responsible for the increases in commissions from financial product sales in the accompanying tables.

  • On May 5, 2016, the Company completed the acquisition of a firm that specializes in providing consulting services for financial institutions across the country related to Small Business Administration ("SBA") loan origination and servicing. The Company recorded $1.9 million in SBA consulting fees from the date of the acquisition through September 30, 2016.

  • In the third quarter of 2016, the Company launched a national SBA lending division. This division offers SBA loans to small business owners throughout the United States. During the third quarter of 2016, this division originated $11.3 million of SBA loans and earned $694,000 from gains on the sales of the guaranteed portions of these loans.

As discussed previously, in the third quarter of 2016, the Company recorded an expense of $5.7 million associated with the termination of its FDIC loss share agreements, which is reflected in the line item "FDIC indemnification asset expense, net" in the accompanying schedules.  Accordingly, all future losses and recoveries associated with the failed bank assets will be borne solely by the Company. 

In the third quarter of 2016, the Company also recorded a net gain of $1.4 million as a result of the branch exchange, which is included in the line item "Other gains (losses)" in the accompanying schedules.

Noninterest Expenses and Tax Expense

Noninterest expenses amounted to $27.7 million in the third quarter of 2016 compared to $24.6 million recorded in the third quarter of 2015.  Noninterest expenses for the nine months ended September 30, 2016 amounted to $78.6 million compared to $72.6 million recorded in the first nine months of 2015.  

Salaries expense increased to $13.4 million in the third quarter of 2016 from the $12.4 million recorded in the third quarter of 2015.  Salaries expense for the nine months ended September 30, 2016 amounted to $37.5 million compared to $35.5 million in 2015.  The primary reason for increases in salaries expense is due to growth initiatives discussed previously.

Merger and acquisition expenses amounted to $0.6 million and $1.3 million, respectively, for the quarter and nine months ended September 30, 2016, compared to none in the comparable periods in 2015.

The Company's effective tax rate increased from approximately 34% in the second quarter of 2016 to approximately 40% in the third quarter of 2016 due to tax matters associated with the branch exchange.

Balance Sheet and Capital

Total assets at September 30, 2016 amounted to $3.5 billion, an 8.1% increase from a year earlier.  Total loans at September 30, 2016 amounted to $2.7 billion, a 6.8% increase from a year earlier, and total deposits amounted to $2.9 billion at September 30, 2016, a 7.5% increase from a year earlier. 

The $170 million increase in the Company's loans at September 30, 2016 compared to a year earlier is primarily related to ongoing internal initiatives to drive loan growth, including the Company's expansion into higher growth markets. 

Total deposits increased $203.1 million at September 30, 2016 compared to September 30, 2015, which was driven by a $194 million increase, or 9.6%, in checking, money market and savings accounts.  Retail time deposits declined by $91 million, or 14.1%, over this same period, while deposits obtained from brokers increased $101 million, or 216%.

The Company remains well-capitalized by all regulatory standards, with a Total Risk-Based Capital Ratio at September 30, 2016 of 13.49% compared to the 10.00% minimum to be considered well-capitalized.  The Company's tangible common equity to tangible assets ratio was 8.03% at September 30, 2016, a decrease of 24 basis points from a year earlier.

Comments of the President and Other Business Matters

Richard H. Moore, President and CEO of First Bancorp, commented on today's report, "Significant achievements that should benefit the future growth and profitability of our company were accomplished this quarter.  The completion of the branch exchange increased our presence in larger North Carolina markets and complements the branches we expect to assume in the pending Carolina Bank Holdings merger.  Although the termination of the FDIC loss share resulted in a charge against earnings this quarter, we anticipate a positive impact on future earnings." 

Mr. Moore also stated, "I am also pleased with the initiatives we undertook to increase our revenue sources, including our acquisitions of an insurance agency and a SBA consulting firm, as well as the launch of our own SBA lending division."

In addition to the business developments previously discussed, the following were noted during the third quarter of 2016:

  • On August 17, 2016, First Bank opened its first full service branch in Charlotte, North Carolina. The branch is located in the Rotunda Building in Southpark. First Bank had opened a loan production office in Charlotte in December 2013.

  • The Company continues to expect the merger agreement announced on June 21, 2016 between the Company and Carolina Bank Holdings, Inc. to be completed during the fourth quarter of 2016 or first quarter of 2017.

  • On September 15, 2016, the Company announced a quarterly cash dividend of $0.08 cents per share payable on October 25, 2016 to shareholders of record on September 30, 2016. This is the same dividend rate as the Company declared in the third quarter of 2015.

Note Regarding Components of Earnings

For the periods presented, the Company's results of operations were significantly affected by the accounting for two FDIC-assisted failed bank acquisitions.  In the discussion above and in the accompanying tables, the term "covered" is used to describe assets that were included in FDIC loss share agreements, while the term "non-covered" refers to the Company's legacy assets, which are not included in any type of loss share arrangement.  As discussed previously, all loss share agreements were terminated in the third quarter of 2016 and thus the entire loan portfolio is now classified as non-covered.  Certain prior period disclosures will continue to present the breakout of the loan portfolio between covered and non-covered. 

Certain covered loans continued to have an unaccreted discount associated with them at the time of transfer to non-covered status.  Such loans that experience favorable changes in credit quality compared to what was expected at the acquisition date, including loans that pay off, will continue to result in positive adjustments to interest income being recorded over the life of the respective loan – also referred to as loan discount accretion. 

For periods prior to July 1, 2016, because favorable changes in covered assets resulted in lower expected FDIC claims, and unfavorable changes in covered assets resulted in higher expected FDIC claims, the FDIC indemnification asset was adjusted to reflect those expectations.  The net increase or decrease in the indemnification asset was reflected within noninterest income, with the net impact being that pretax income was generally only impacted by 20% of the income or expense associated with provisions for loan losses on covered loans, discount accretion, and losses from covered foreclosed properties.

*   *   *

First Bancorp is a bank holding company headquartered in Southern Pines, North Carolina, with total assets of approximately $3.5 billion. Its principal activity is the ownership and operation of First Bank, a state-chartered community bank that operates 88 branches in North Carolina and South Carolina.  First Bank also has loan production offices in the North Carolina cities of Greensboro, Greenville, and Raleigh. 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 statements 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 the press release by wire services, internet services or other media.

ADDITIONAL INFORMATION ABOUT THE PROPOSED TRANSACTION WITH CAROLINA BANK AND WHERE TO FIND IT

This communication includes statements made in respect of the proposed transaction involving First Bancorp and Carolina Bank Holdings, Inc. ("Carolina Bank").  This material is not a solicitation of any vote or approval of Carolina Bank's shareholders and is not a substitute for the proxy statement/prospectus or any other documents which First Bancorp and Carolina Bank may send to their respective shareholders in connection with the proposed merger.  This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities. 

In connection with the proposed transaction, First Bancorp has filed with the SEC a Registration Statement on Form S-4 that includes a preliminary proxy statement of Carolina Bank and a preliminary prospectus of First Bancorp, as well as other relevant documents concerning the proposed transaction.  Investors and security holders are also urged to carefully review and consider each of First Bancorp's and Carolina Bank's public filings with the SEC, including but not limited to their Annual Reports on Form 10-K, their proxy statements, their Current Reports on Form 8-K and their Quarterly Reports on Form 10-Q. Both Carolina Bank and First Bancorp will mail the final definitive joint proxy statement/prospectus to the shareholders of Carolina Bank.  BEFORE MAKING ANY VOTING OR INVESTMENT DECISIONS, INVESTORS AND SHAREHOLDERS OF CAROLINA BANK ARE URGED TO CAREFULLY READ THE ENTIRE REGISTRATION STATEMENT AND PROXY STATEMENT/PROSPECTUS REGARDING THE PROPOSED MERGER WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and security holders may obtain a free copy of the proxy statement/prospectus (when available) and other filings containing information about First Bancorp and Carolina Bank at the SEC's website at www.sec.gov. Investors and security holders may also obtain free copies of the documents filed with the Securities and Exchange Commission by First Bancorp on its website at http://www.localfirstbank.com and by Carolina Bank on its website at http://www.carolinabank.com.

First Bancorp, Carolina Bank and certain of their respective directors and executive officers, under the SEC's rules, may be deemed to be participants in the solicitation of proxies of Carolina Bank's shareholders in connection with the proposed transaction. Information about the directors and executive officers of First Bancorp and their ownership of First Bancorp common stock is set forth in the proxy statement for First Bancorp's 2016 Annual Meeting of Shareholders, as filed with the SEC on Schedule 14A on April 4, 2016. Information about the directors and executive officers of Carolina Bank and their ownership of Carolina Bank's common stock is set forth in the proxy statement for Carolina Bank Holdings, Inc.'s 2016 Annual Meeting of Shareholders, as filed with the SEC on a Schedule 14A on April 5, 2016. Additional information regarding the interests of those participants and other persons who may be deemed participants in the transaction may be obtained by reading the joint proxy statement/prospectus regarding the proposed transaction when it becomes available. Free copies of this document may be obtained as described in the preceding paragraph.

 

First Bancorp and Subsidiaries

Financial Summary – Page 1



Three Months Ended

September 30,

 

Percent

($ in thousands except per share data – unaudited)

2016


2015

Change






INCOME STATEMENT










Interest income





   Interest and fees on loans

$            29,919


29,863


   Interest on investment securities

2,123


2,125


   Other interest income

213


142


      Total interest income

32,255


32,130

0.4%

Interest expense





   Interest on deposits

1,254


1,257


   Interest on borrowings

647


487


      Total interest expense

1,901


1,744

9.0%

        Net interest income

30,354


30,386

(0.1)%

Provision for loan losses – non-covered loans


267


Provision (reversal) for loan losses – covered loans


(1,681)


Total provision (reversal) for loan losses


(1,414)

n/m

Net interest income after provision for loan losses

30,354


31,800

(4.5)%

Noninterest income





   Service charges on deposit accounts

2,710


2,951


   Other service charges, commissions, and fees

2,996


2,778


   Fees from presold mortgages

710


481


   Commissions from financial product sales

969


691


   SBA consulting fees

1,178



   SBA loan sale gains

694



   Bank-owned life insurance income

514


382


   Foreclosed property losses

(266)


(939)


   FDIC indemnification asset expense, net

(5,711)


(2,865)


   Securities losses


(1)


   Other gains

1,363


28


      Total noninterest income

5,157


3,506

47.1%

Noninterest expenses





   Salaries expense

13,430


12,378


   Employee benefit expense

2,608


2,221


   Occupancy and equipment expense

2,909


2,723


   Merger and acquisition expenses

600



   Intangibles amortization

387


181


   Other operating expenses

7,784


7,111


      Total noninterest expenses

27,718


24,614

12.6%

Income before income taxes

7,793


10,692

(27.1)%

Income taxes

3,115


3,687

(15.5)%

Net income

4,678


7,005

(33.2)%






Preferred stock dividends

(58)


(137)







Net income available to common shareholders

$               4,620


6,868

(32.7)%











Earnings per common share – basic

$               0.23


0.35

(34.3)%

Earnings per common share – diluted

0.23


0.34

(32.4)%






ADDITIONAL INCOME STATEMENT INFORMATION





   Net interest income, as reported

$            30,354


30,386


   Tax-equivalent adjustment (1)

534


419


   Net interest income, tax-equivalent

$            30,888


30,805

0.3%





(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 38% 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)

2016


2015

Change






INCOME STATEMENT










Interest income





   Interest and fees on loans

$            90,301


88,257


   Interest on investment securities

6,784


6,068


   Other interest income

612


523


      Total interest income

97,697


94,848

3.0%

Interest expense





   Interest on deposits

3,860


4,055


   Other, primarily borrowings

1,750


1,099


      Total interest expense

5,610


5,154

8.8%

        Net interest income

92,087


89,694

2.7%

Provision for loan losses – non-covered loans

2,109


1,372


Provision (reversal) for loan losses – covered loans

(2,132)


(2,109)


Total provision (reversal) for loan losses

(23)


(737)

n/m

Net interest income after provision for loan losses

92,110


90,431

1.9%

Noninterest income





   Service charges on deposit accounts

7,960


8,724


   Other service charges, commissions, and fees

8,869


8,091


   Fees from presold mortgages

1,491


2,020


   Commissions from financial product sales

2,844


1,917


   SBA consulting fees

1,898



   SBA loan sale gains

694



   Bank-owned life insurance income

1,526


1,136


   Foreclosed property losses

(189)


(1,522)


   FDIC indemnification asset expense, net

(10,255)


(7,085)


   Securities gains (losses)

3


(1)


   Other gains (losses)

1,237


(241)


      Total noninterest income

16,078


13,039

23.3%

Noninterest expenses





   Salaries expense

37,465


35,456


   Employee benefit expense

7,892


6,702


   Occupancy and equipment expense

8,484


8,309


   Merger and acquisition expenses

1,286



   Intangibles amortization

834


541


   Other operating expenses

22,677


21,620


      Total noninterest expenses

78,638


72,628

8.3%

Income before income taxes

29.550


30,842

(4.2)%

Income taxes

10,396


10,605

(2.0)%

Net income

19,154


20,237

(5.4)%






Preferred stock dividends

(175)


(566)







Net income available to common shareholders

$             18,979


19,671

(3.5)%











Earnings per common share – basic

$                 0.95


1.00

(5.0)%

Earnings per common share – diluted

0.93


0.97

(4.1)%






ADDITIONAL INCOME STATEMENT INFORMATION





   Net interest income, as reported

$            92,087


89,694


   Tax-equivalent adjustment (1)

1,510


1,211


   Net interest income, tax-equivalent

$            93,597


90,905

3.0%





(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 38% 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

September 30,


Nine Months Ended

September 30,

PERFORMANCE RATIOS (annualized)

2016

2015


2016

2015

Return on average assets (1)

0.53%

0.84%


0.75%

0.82%

Return on average common equity (2)

5.13%

8.23%


7.23%

8.06%

Net interest margin – tax-equivalent (3)

3.93%

4.14%


4.07%

4.16%

Net charge-offs to average loans

0.06%

0.10%


0.15%

0.55%







COMMON SHARE DATA






Cash dividends declared – common

$         0.08

0.08


$         0.24

0.24

Stated book value – common

17.78

16.80


17.78

16.80

Tangible book value – common

13.80

13.40


13.80

13.40

Common shares outstanding at end of period

20,119,411

19,785,314


20,119,411

19,785,314

Weighted average shares outstanding – basic

20,007,518

19,781,789


19,904,226

19,760,807

Weighted average shares outstanding – diluted

20,785,689

20,512,959


20,697,125

20,491,973







CAPITAL RATIOS






Tangible equity to tangible assets

8.24%

9.48%


8.24%

9.48%

Tangible common equity to tangible assets

8.03%

8.27%


8.03%

8.27%

Common equity tier I capital ratio

10.67%

11.33%


10.67%

11.33%

Tier I leverage ratio

10.22%

11.31%


10.22%

11.31%

Tier I risk-based capital ratio

12.57%

14.76%


12.57%

14.76%

Total risk-based capital ratio

13.49%

16.01%


13.49%

16.01%







AVERAGE BALANCES ($ in thousands)






Total assets

$  3,443,737

3,244,515


$  3,383,253

3,212,785

Loans

2,635,707

2,453,580


2,576,605

2,411,462

Earning assets

3,127,219

2,951,638


3,073,651

2,921,380

Deposits

2,823,255

2,680,671


2,801,517

2,672,431

Interest-bearing liabilities

2,319,008

2,223,025


2,306,226

2,204,691

Shareholders' equity

365,753

369,499


357,941

385,457







(1)  Calculated by dividing annualized net income (loss) available to common shareholders by average assets.

(2)  Calculated by dividing annualized net income (loss) available to common shareholders by average common equity.

(3)  See footnote 1 on page 1 of Financial Summary for discussion of tax-equivalent adjustments.


TREND INFORMATION

($ in thousands except per share data)

For the Three Months Ended

 

INCOME STATEMENT

September 30,
2016

June 30,
2016

March 31,
2016

December 31,
2015

September 30,
2015







Net interest income – tax-equivalent (1)

$    30,888

32,055

30,654

30,476

30,805

Taxable equivalent adjustment (1)

534

517

459

423

419

Net interest income

30,354

31,538

30,195

30,053

30,386

Provision for loan losses – non-covered

489

1,621

636

267

Provision (reversal) for loan losses - covered

(770)

(1,363)

(679)

(1,681)

Noninterest income

5,157

5,919

5,002

5,725

3,506

Noninterest expense

27,718

26,147

24,773

25,503

24,614

Income before income taxes

7,793

11,591

10,166

10,318

10,692

Income tax expense

3,115

3,952

3,329

3,521

3,687

Net income

4,678

7,639

6,837

6,797

7,005

Preferred stock dividends

(58)

(59)

(58)

(37)

(137)

Net income available to common shareholders

4,620

7,580

6,779

6,760

6,868







Earnings per common share – basic

0.23

0.38

0.34

0.34

0.35

Earnings per common share – diluted

0.23

0.37

0.33

0.33

0.34



(1) See footnote 1 on page 1 of 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,

2016


At June 30,
2016


At Dec. 31,

2015


At Sept. 30,

2015


One
Year

Change


Assets











Cash and due from banks

$       64,145


58,956


53,285


52,788


21.5%


Interest bearing deposits with banks

217,188


189,547


213,983


166,001


30.8%


     Total cash and cash equivalents

281,333


248,503


267,268


218,789


28.6%













Investment securities

334,964


361,835


320,224


338,813


(1.1%)


Presold mortgages

4,094


4,104


4,323


3,150


30.0%













Loans – non-covered

2,651,459


2,519,747


2,416,285


2,375,094




Loans – covered (1)

-


78,387


102,641


106,609




     Total loans

2,651,459


2,598,134


2,518,926


2,481,703


6.8%


     Allowance for loan losses

(24,575)


(26,023)


(28,583)


(30,055)


(18.2%)


     Net loans

2,626,884


2,572,111


2,490,343


2,451,648


7.1%













Premises and equipment

76,731


76,991


74,559


74,839


2.5%


FDIC indemnification asset


5,157


8,439


7,649


n/m


Intangible assets

79,995


77,153


67,171


67,351


18.8%


Foreclosed real estate

10,103


10,606


9,994


10,873


(7.1%)


Bank-owned life insurance

73,613


73,098


72,086


56,557


30.2%


Other assets

49,530


36,988


47,658


43,172


14.7%


     Total assets

$   3,537,247


3,466,546


3,362,065


3,272,841


8.1%
























Liabilities











Deposits:











     Non-interest bearing checking accounts

$      749,256


709,887


659,038


635,287


17.9%


     Interest bearing checking accounts

593,065


636,316


626,878


609,908


(2.8%)


     Money market accounts

658,166


638,125


636,692


581,644


13.2%


     Savings accounts

207,494


197,445


186,616


187,607


10.6%


     Brokered deposits

147,406


95,242


76,412


46,692


215.7%


     Other time deposits > $100,000

306,041


319,267


329,819


338,214


(9.5%)


     Other time deposits

249,412


275,738


295,830


308,401


(19.1%)


          Total deposits

2,910,840


2,872,020


2,811,285


2,707,753


7.5%













Borrowings

236,394


206,394


186,394


176,394


34.0%


Other liabilities

25,065


26,518


22,196


17,520


43.1%


     Total liabilities

3,172,299


3,104,932


3,019,875


2,901,667


9.3%













Shareholders' equity











Preferred stock

7,287


7,287


7,287


38,787


(81.2%)


Common stock

139,979


139,832


133,393


133,211


5.1%


Retained earnings

219,233


216,223


205,060


199,886


9.7%


Accumulated other comprehensive loss

(1,551)


(1,728)


(3,550)


(710)


118.5%


     Total shareholders' equity

364,948


361,614


342,190


371,174


(1.7%)


Total liabilities and shareholders' equity

$   3,537,247


3,466,546


3,362,065


3,272,841


8.1%



(1)  All FDIC loss share agreements were terminated effective July 1, 2016 and, accordingly, assets previously covered under those agreements become non-
       covered on that date.

 n/m = not meaningful



 

 

First Bancorp and Subsidiaries

Financial Summary - Page 5






















For the Three Months Ended

 

YIELD INFORMATION

September 30,
2016


June 30,

2016


March 31,
2016


December 31,
2015


September 30,
2015











Yield on loans

4.52%


4.83%


4.70%


4.69%


4.83%

Yield on securities – tax-equivalent (1)

3.05%


3.06%


3.26%


2.99%


2.75%

Yield on other earning assets

0.58%


0.61%


0.54%


0.36%


0.43%

   Yield on all interest earning assets

4.17%


4.45%


4.32%


4.29%


4.38%











Rate on interest bearing deposits

0.24%


0.25%


0.25%


0.24%


0.24%

Rate on other interest bearing liabilities

1.13%


1.20%


1.18%


1.05%


1.09%

   Rate on all interest bearing liabilities

0.33%


0.32%


0.33%


0.31%


0.31%

     Total cost of funds

0.25%


0.25%


0.25%


0.24%


0.24%











        Net interest margin – tax-equivalent (2)

3.93%


4.21%


4.07%


4.05%


4.14%

        Average prime rate

3.50%


3.50%


3.50%


3.29%


3.25%











(1)  See footnote 1 on page 1 of Financial Summary for discussion of tax-equivalent adjustments

(2)  Calculated by dividing annualized tax-equivalent net interest income by average earning assets for the period.  See footnote 1 on page 1 of Financial
       Summary for discussion of tax-equivalent adjustments





For the Three Months Ended

NET INTEREST INCOME PURCHASE
ACCOUNTING ADJUSTMENTS

($ in thousands)

 

September 30,
2016


June 30,
2016


March 31,
2016


December 31,
2015


September 30,
2015











Interest income – increased by accretion of
   loan discount

 

$         822


 

1,676


 

1,055


 

854


 

1,205

     Impact on net interest income

$         822


1,676


1,055


854


1,205






















ASSET QUALITY DATA ($ in thousands)

September 30,
2016


June 30,
2016


March 31,
2016


December 31,
2015


September 30,
2015











Nonperforming assets










Nonaccrual loans

$     32,796


37,975


41,411


47,810


47,720

Troubled debt restructurings - accruing

27,273


29,271


30,514


31,489


33,075

Accruing loans > 90 days past due

-


-


-


-


-

Total nonperforming loans

60,069


67,246


71,925


79,299


80,795

Foreclosed real estate

10,103


10,606


10,336


9,994


10,873

Total nonperforming assets

$     70,172


77,852


82,261


89,293


91,668

Total covered nonperforming assets
   included above (1)

 

$           -


 

8,024


 

10,698


 

12,100


 

$     10,767

 

Asset Quality Ratios










Net quarterly charge-offs to average loans -
annualized

0.06%


0.05%


0.35%


0.23%


0.10%

Nonperforming loans to total loans

2.27%


2.59%


2.83%


3.15%


3.26%

Nonperforming assets to total assets

1.98%


2.25%


2.43%


2.66%


2.80%

Allowance for loan losses to total loans

0.93%


1.00%


1.05%


1.13%


1.21%


(1)  All FDIC loss share agreements were terminated effective July 1, 2016 and, accordingly, assets previously covered under those agreements become non-
       covered on that date

 

 

First Bancorp and Subsidiaries

Financial Summary - Page 6



For the Three Months Ended

NET INTEREST MARGIN, EXCLUDING
LOAN DISCOUNT ACCRETION –
RECONCILIATION    

($ in thousands)

 

September 30,
2016


 

June 30,
2016


 

March 31,
2016


 

December 31,
2015


September 30,
2015











Net interest income, as reported

$       30,354


31,538


30,195


30,053


30,386

Tax-equivalent adjustment

534


517


459


423


419

Net interest income, tax-equivalent (A)

$       30,888


32,055


30,654


30,476


30,805

Average earning assets (B)

$  3,127,219


3,064,959


3,028,775


2,982,356


2,951,638

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

 

3.93%


 

4.21%


 

4.07%


 

4.05%


 

4.14%











Net interest income, tax-equivalent

$       30,888


32,055


30,654


30,476


30,805

Loan discount accretion

822


1,676


1,055


854


1,205

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

$       30,066


30,379


29,599


29,622


29,600

 

Average earnings assets  (B)

$  3,127,219


3,064,959


3,028,775


2,982,356


2,951,638

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

3.82%


3.99%


3.93%


3.94%


3.98%



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 paragraph.  Loan discount accretion is a non-cash interest income adjustment related to the Company's acquisition of loans and represents the portion of the fair value discount that was initially recorded on the acquired loans that is being recognized into income over the lives of the loans.  At September 30, 2016, the Company had a remaining loan discount balance of $13.2 million compared to $16.2 million at September 30, 2015.  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.

 

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/first-bancorp-reports-third-quarter-results-300353089.html

SOURCE First Bancorp

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