SOUTHERN PINES, N.C., Oct. 27, 2016 /PRNewswire/ -- First
Bancorp (NASDAQ: 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