SOUTHERN PINES, N.C.,
April 28, 2020 /PRNewswire/
-- First Bancorp (NASDAQ - FBNC), the parent company of First
Bank, announced today net income of $18.2
million, or $0.62 per diluted
common share, for the three months ended March 31, 2020, a decrease of 17.3% in earnings
per share from the $22.3 million, or
$0.75 per diluted common share,
recorded in the first quarter of 2019.
The decrease in earnings was primarily due an increase in the
provision for loan losses, which amounted to $5.6 million for the three months ended
March 31, 2020 compared to
$0.5 million in the first quarter of
2019. The 2020 amount reflects approximately $4.3 million in provision related to
COVID-19. As permitted by the Coronavirus Aid, Relief, and
Economic Security (CARES) Act, the Company elected to defer the
implementation of the Current Expected Credit Loss (CECL)
methodology. Accordingly, the Company's provision for loan
losses for the first quarter of 2020 is based on the limited
information available and the conditions that existed at
March 31, 2020 related to COVID-19,
according to the pre-CECL incurred loss methodology for determining
loan losses.
Additional COVID-19 Related Impact
The impact of COVID-19 is evolving rapidly and its future
effects are uncertain at this time. The actual impact will
depend on many factors beyond our Company's control. However,
the Company is taking every step to protect the health and safety
of its employees and customers and to work with its customers
experiencing economic hardship resulting from the pandemic.
The Company has the majority of non-branch personnel working
remotely. Branch lobbies are currently closed, but the
Company is servicing clients smoothly through its on-line banking
capabilities, drive through facilities and ATMs, or by
appointment.
The Company remains active in reaching out to customers and has
taken many measures to provide relief and support where reasonably
possible. Subsequent to quarter end and through April 23, 2020, the Company approved 1,995 loans
totaling $208 million to small
businesses through the SBA's Paycheck Protection Program. The
Company also initiated an option for borrowers in good-standing to
defer interest payments on their loans for 90 days. As of
April 23, 2020, the Company had
deferred loan payments on 1,062 loans totaling $506 million.
The Company will continue to provide fast and flexible responses
to the quickly changing circumstances and is confident it will
navigate successfully through these trying times.
Net Interest Income and Net Interest Margin
Net interest income for the first quarter of 2020 was
$54.8 million, a 2.6% increase from
the $53.4 million recorded in the
first quarter of 2019. The increase in net interest income
was primarily due to growth in interest-earning assets, which have
increased by approximately 4% over the past year, but was
partially offset by a lower net interest margin.
The Company's net interest margin (a non-GAAP measure calculated
by dividing tax-equivalent net interest income by average earning
assets) for the first quarter of 2020 was 3.96%, which was 10 basis
points lower than the 4.06% realized in the first quarter of
2019. The lower margin was primarily due to the impact of
lower interest rates. Since August
2019, the Federal Reserve Board has decreased interest rates
by 225 basis points, which resulted in asset yields declining by 20
basis points from the first quarter of 2019, while the Company's
cost of funds declined by 10 basis points.
In comparing the first quarter of 2020 to the fourth quarter of
2019, asset yields declined by 3 basis points while the cost of
funds declined by 7 basis points, which resulted in the Company's
net interest margin increasing by three basis points, from
3.93% in the fourth quarter of 2019 to 3.96% in the first quarter
of 2020. In each of these quarters, the Company recorded prepayment
fees and interest recoveries that positively impacted the net
interest margin by 4-5 basis points.
Provision for Loan Losses and Asset Quality
As previously noted, the Company deferred implementation of CECL
and recorded a provision for loan losses of $5.6 million in the first quarter of 2020
compared to a provision for loan losses of $0.5 million in the first quarter of 2019.
The 2020 amount reflects approximately $4.3
million in provision related to COVID-19 and was based on
the limited information available and the conditions that existed
at March 31, 2020 related to
COVID-19, according to the pre-CECL incurred loss methodology for
determining loan losses.
In determining the COVID-19 related provision, the Company
reviewed deferrals that had been requested from borrowers and also
reviewed the industries most at risk from the immediate impact of
the shutdown. In this analysis, the Company identified
approximately $553 million of loans
to the following industries: hotels, restaurants, retail
stores, travel accommodations, child care facilities, arts and
entertainment, barber shops and beauty salons, car and boat
dealers, and mini-storage facilities, as well as all credit
cards. Existing risk grades were adjusted downwards for each
of the loans in these industries and historical loss rates were
applied.
The Company is prepared for CECL implementation but elected to
defer its effective date, as permitted by the CARES Act, because of
the challenges associated with developing a reliable forecast of
losses that may result from the unprecedented COVID-19
pandemic. The Company continues to update its CECL model,
which is significantly impacted by forecasted economic
conditions. The Company subscribes to Moody's for economic
forecasts for use in its CECL model. Using the Moody's
"Baseline" scenario as of April 1,
2020, which reflected early estimates of the impact of
COVID-19 on economic statistics, the Company would have likely
recorded approximately a $20 million
provision for loan losses for the first quarter of 2020 compared to
the $5.6 million reported.
Using the Moody's "Baseline" scenario that was released on
April 17, 2020 and which reflected
updated estimates of the impact of COVID-19 on economic statistics,
the Company would have likely recorded approximately a $43 million provision for loan losses in the
first quarter of 2020. These estimated amounts exclude the
initial January 1, 2020 adjustment to
the allowance for loan losses and shareholders' equity upon the
initial adoption of CECL of approximately $22 million.
Total net charge-offs for the first quarter of 2020 amounted to
$2.5 million, or 0.22% of average
loans, compared to net charge-offs of $0.4
million, or 0.04% of average loans, in the first quarter of
2019. Approximately $1.7
million of the first quarter charge-offs had been previously
specifically reserved for at December
31, 2019. Total nonperforming assets amounted to
$38.3 million at March 31, 2020 compared to $39.5 million a year earlier.
Noninterest Income
Total noninterest income was $13.7
million and $14.1 million for
the three months ended March 31, 2020
and 2019, respectively.
The line item "Other service charges, commissions, and fees"
includes $0.5 million of impairment
of the Company's SBA servicing asset due to the lower fair value of
that asset resulting from market conditions at March 31, 2020. Fees from presold mortgages
amounted to $1.8 million for the
first quarter of 2020 compared to $0.5
million in the first quarter of 2019, with the increase
being primarily due to lower interest rates that resulted in
increases in mortgage loan volume.
SBA loan sale gains amounted to $0.6
million for the first quarter of 2020 compared to
$2.1 million in the first quarter of
2019. The Company had intended to sell an additional
$18.4 million of SBA loans in the
first quarter of 2020, however sales scheduled to occur in late
March did not occur due to market conditions. Accordingly,
the Company has reflected those loans as "held for sale" in the
accompanying Balance Sheet.
Noninterest Expenses
Noninterest expenses amounted to $40.1
million in the first quarter of 2020 compared to
$38.8 million recorded in the first
quarter of 2019, an increase of 3.4%.
Income Taxes
The Company's effective tax rate was 20.3% for the first quarter
of 2020, compared to 20.9% in the first quarter of 2019.
Balance Sheet and Capital
Total assets at March 31, 2020
amounted to $6.4 billion, a 5.4%
increase from a year earlier. Loan growth for the three
months ended March 31, 2020 amounted
to $99.2 million, or 9.0% annualized,
and deposit growth amounted to $113.6
million, or 9.3% annualized.
The Company remains well-capitalized by all regulatory
standards, with an estimated Total Risk-Based Capital Ratio at
March 31, 2020 of 14.30%, an increase
from the 14.21% reported at March 31,
2019. The Company's tangible common equity to tangible assets
ratio was 10.00% at March 31, 2020,
an increase of 79 basis points from a year earlier.
Comments of the CEO and Other Business Matters
Richard H. Moore, CEO of First
Bancorp, commented, "Our immediate focus is providing excellent
service for our customers during the current pandemic and our team
has done an outstanding job. I am proud of our hard working
associates who have gone above and beyond. I am also pleased
that the Company has a strong balance sheet and solid profitability
that positions us well during this unprecedented pandemic and
beyond. We wish our customers and communities well during
these extraordinary times."
The following is additional discussion of business development
and other miscellaneous matters affecting the Company during the
first quarter of 2020:
- On March 13, 2020, the Company
announced a quarterly cash dividend of $0.18 per share payable on April 24, 2020 to shareholders of record on
March 31, 2020. This dividend rate
represents a 50% increase over the dividend rate declared in the
first quarter of 2019.
- During the first quarter of 2020, the Company repurchased
576,406 shares of its common stock valued at $20 million, at an average stock price of
$34.70 per share. The Company
suspended share repurchases in March
2020 for the foreseeable future.
First Bancorp is a bank holding company headquartered in
Southern Pines, North Carolina,
with total assets of approximately $6.4
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
March 31,
|
Percent
|
($ in thousands
except per share data - unaudited)
|
2020
|
|
2019
|
Change
|
INCOME
STATEMENT
|
|
|
|
|
Interest
income
|
|
|
|
|
Interest
and fees on loans
|
$
|
55,297
|
|
|
53,960
|
|
|
Interest
on investment securities
|
5,638
|
|
|
5,074
|
|
|
Other
interest income
|
1,098
|
|
|
2,701
|
|
|
Total interest
income
|
62,033
|
|
|
61,735
|
|
0.5%
|
Interest
expense
|
|
|
|
|
Interest
on deposits
|
5,773
|
|
|
5,577
|
|
|
Interest
on borrowings
|
1,501
|
|
|
2,797
|
|
|
Total interest
expense
|
7,274
|
|
|
8,374
|
|
(13.1)%
|
Net
interest income
|
54,759
|
|
|
53,361
|
|
2.6%
|
Total provision for
loan losses
|
5,590
|
|
|
500
|
|
1,018.0%
|
Net interest income
after provision for loan losses
|
49,169
|
|
|
52,861
|
|
(7.0)%
|
Noninterest
income
|
|
|
|
|
Service
charges on deposit accounts
|
3,337
|
|
|
2,945
|
|
|
Other
service charges, commissions, and fees
|
4,069
|
|
|
4,506
|
|
|
Fees
from presold mortgage loans
|
1,841
|
|
|
545
|
|
|
Commissions from sales of insurance and financial
products
|
2,068
|
|
|
2,029
|
|
|
SBA
consulting fees
|
1,027
|
|
|
1,263
|
|
|
SBA loan
sale gains
|
647
|
|
|
2,062
|
|
|
Bank-owned life insurance income
|
642
|
|
|
646
|
|
|
Other
gains (losses), net
|
74
|
|
|
82
|
|
|
Total noninterest
income
|
13,705
|
|
|
14,078
|
|
(2.6)%
|
Noninterest
expenses
|
|
|
|
|
Salaries
expense
|
20,110
|
|
|
18,965
|
|
|
Employee
benefit expense
|
4,547
|
|
|
4,588
|
|
|
Occupancy and equipment related expense
|
4,103
|
|
|
4,123
|
|
|
Merger
and acquisition expenses
|
—
|
|
|
110
|
|
|
Intangibles amortization expense
|
1,055
|
|
|
1,332
|
|
|
Foreclosed property gains (losses), net
|
159
|
|
|
245
|
|
|
Other
operating expenses
|
10,102
|
|
|
9,411
|
|
|
Total noninterest
expenses
|
40,076
|
|
|
38,774
|
|
3.4%
|
Income before income
taxes
|
22,798
|
|
|
28,165
|
|
(19.1)%
|
Income tax
expense
|
4,618
|
|
|
5,880
|
|
(21.5)%
|
Net income
|
$
|
18,180
|
|
|
22,285
|
|
(18.4)%
|
|
|
|
|
|
Earnings per common
share - diluted
|
$
|
0.62
|
|
|
0.75
|
|
(17.3)%
|
|
|
|
|
|
ADDITIONAL INCOME
STATEMENT INFORMATION
|
|
|
|
|
Net
interest income, as reported
|
$
|
54,759
|
|
|
53,361
|
|
|
Tax-equivalent adjustment (1)
|
334
|
|
|
424
|
|
|
Net
interest income, tax-equivalent
|
$
|
55,093
|
|
|
53,785
|
|
2.4%
|
|
|
(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
|
|
|
Three Months
Ended
March 31,
|
PERFORMANCE
RATIOS (annualized)
|
2020
|
2019
|
Return on average
assets (1)
|
1.18
|
%
|
1.52
|
%
|
Return on average
common equity (2)
|
8.52
|
%
|
11.66
|
%
|
Net interest margin -
tax-equivalent (3)
|
3.96
|
%
|
4.06
|
%
|
Net charge-offs to
average loans
|
0.22
|
%
|
0.04
|
%
|
|
|
|
COMMON SHARE
DATA
|
|
|
Cash dividends
declared - common
|
$
|
0.18
|
|
0.12
|
|
Stated book value -
common
|
29.69
|
|
26.50
|
|
Tangible book value -
common
|
21.09
|
|
17.94
|
|
Common shares
outstanding at end of period
|
29,040,827
|
|
29,746,455
|
|
Weighted average
shares outstanding - diluted
|
29,399,114
|
|
29,743,395
|
|
|
|
|
CAPITAL
RATIOS
|
|
|
Tangible common
equity to tangible assets
|
10.00
|
%
|
9.21
|
%
|
Common equity tier I
capital ratio - estimated
|
12.68
|
%
|
12.51
|
%
|
Tier I leverage ratio
- estimated
|
11.05
|
%
|
10.68
|
%
|
Tier I risk-based
capital ratio - estimated
|
13.77
|
%
|
13.72
|
%
|
Total risk-based
capital ratio - estimated
|
14.30
|
%
|
14.21
|
%
|
|
|
|
AVERAGE
BALANCES ($ in thousands)
|
|
|
Total
assets
|
$
|
6,183,098
|
|
5,945,049
|
|
Loans
|
4,512,893
|
|
4,280,272
|
|
Earning
assets
|
5,595,734
|
|
5,372,766
|
|
Deposits
|
4,950,199
|
|
4,704,231
|
|
Interest-bearing
liabilities
|
3,739,467
|
|
3,773,714
|
|
Shareholders'
equity
|
858,592
|
|
775,059
|
|
|
|
|
(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
|
Mar. 31,
2020
|
December 31,
2019
|
Sept. 30,
2019
|
June 30,
2019
|
Mar. 31,
2019
|
|
|
|
|
|
|
Net interest income -
tax-equivalent (1)
|
$
|
55,093
|
|
55,038
|
|
54,191
|
|
54,832
|
|
53,785
|
|
Taxable equivalent
adjustment (1)
|
334
|
|
382
|
|
413
|
|
423
|
|
424
|
|
Net interest
income
|
54,759
|
|
54,656
|
|
53,778
|
|
54,409
|
|
53,361
|
|
Provision (reversal)
for loan losses
|
5,590
|
|
3,176
|
|
(1,105)
|
|
(308)
|
|
500
|
|
Noninterest
income
|
13,705
|
|
14,662
|
|
15,156
|
|
15,634
|
|
14,078
|
|
Noninterest
expense
|
40,076
|
|
39,891
|
|
38,446
|
|
40,084
|
|
38,774
|
|
Income before income
taxes
|
22,798
|
|
26,251
|
|
31,593
|
|
30,267
|
|
28,165
|
|
Income tax
expense
|
4,618
|
|
5,368
|
|
6,574
|
|
6,408
|
|
5,880
|
|
Net income
|
18,180
|
|
20,883
|
|
25,019
|
|
23,859
|
|
22,285
|
|
|
|
|
|
|
|
Earnings per common
share - diluted
|
0.62
|
|
0.71
|
|
0.84
|
|
0.80
|
|
0.75
|
|
|
|
|
|
|
|
Cash dividends
declared per share
|
0.18
|
|
0.18
|
|
0.12
|
|
0.12
|
|
0.12
|
|
(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 3
|
|
CONSOLIDATED
BALANCE SHEETS
($ in thousands -
unaudited)
|
|
|
|
|
|
|
|
|
At Mar. 31,
2020
|
|
At Dec. 31,
2019
|
|
At Mar. 31,
2019
|
|
One Year
Change
|
Assets
|
|
|
|
|
|
|
|
Cash and due from
banks
|
$
|
93,666
|
|
|
64,519
|
|
|
80,620
|
|
|
16.2
|
%
|
Interest-bearing
deposits with banks
|
282,683
|
|
|
166,783
|
|
|
366,187
|
|
|
(22.8)
|
%
|
Total cash and cash
equivalents
|
376,349
|
|
|
231,302
|
|
|
446,807
|
|
|
(15.8)
|
%
|
|
|
|
|
|
|
|
|
Investment
securities
|
867,773
|
|
|
889,877
|
|
|
730,512
|
|
|
18.8
|
%
|
Presold
mortgages
|
14,861
|
|
|
19,712
|
|
|
3,318
|
|
|
347.9
|
%
|
SBA loans held for
sale
|
18,449
|
|
|
—
|
|
|
—
|
|
|
n/m
|
|
|
|
|
|
|
|
|
Total
loans
|
4,552,708
|
|
|
4,453,466
|
|
|
4,303,787
|
|
|
5.8
|
%
|
Allowance for loan
losses
|
(24,498)
|
|
|
(21,398)
|
|
|
(21,095)
|
|
|
16.1
|
%
|
Net loans
|
4,528,210
|
|
|
4,432,068
|
|
|
4,282,692
|
|
|
5.7
|
%
|
|
|
|
|
|
|
|
|
Premises and
equipment
|
113,669
|
|
|
114,859
|
|
|
118,740
|
|
|
(4.3)
|
%
|
Operating
right-of-use lease assets
|
19,347
|
|
|
19,669
|
|
|
18,985
|
|
|
1.9
|
%
|
Intangible
assets
|
249,829
|
|
|
251,585
|
|
|
254,449
|
|
|
(1.8)
|
%
|
Foreclosed real
estate
|
3,487
|
|
|
3,873
|
|
|
6,390
|
|
|
(45.4)
|
%
|
Bank-owned life
insurance
|
105,083
|
|
|
104,441
|
|
|
102,524
|
|
|
2.5
|
%
|
Other
assets
|
79,001
|
|
|
76,253
|
|
|
85,831
|
|
|
(8.0)
|
%
|
Total assets
|
$
|
6,376,058
|
|
|
6,143,639
|
|
|
6,050,248
|
|
|
5.4
|
%
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
Deposits:
|
|
|
|
|
|
|
|
Noninterest-bearing checking
accounts
|
$
|
1,580,849
|
|
|
1,515,977
|
|
|
1,390,516
|
|
|
13.7
|
%
|
Interest-bearing checking
accounts
|
922,985
|
|
|
912,784
|
|
|
922,254
|
|
|
0.1
|
%
|
Money market
accounts
|
1,224,414
|
|
|
1,173,107
|
|
|
1,079,002
|
|
|
13.5
|
%
|
Savings accounts
|
431,377
|
|
|
424,415
|
|
|
417,812
|
|
|
3.2
|
%
|
Brokered deposits
|
85,642
|
|
|
86,141
|
|
|
216,616
|
|
|
(60.5)
|
%
|
Internet time
deposits
|
698
|
|
|
698
|
|
|
3,428
|
|
|
(79.6)
|
%
|
Other time deposits >
$100,000
|
553,422
|
|
|
563,108
|
|
|
506,148
|
|
|
9.3
|
%
|
Other time
deposits
|
245,601
|
|
|
255,125
|
|
|
261,462
|
|
|
(6.1)
|
%
|
Total deposits
|
5,044,988
|
|
|
4,931,355
|
|
|
4,797,238
|
|
|
5.2
|
%
|
|
|
|
|
|
|
|
|
Borrowings
|
402,185
|
|
|
300,671
|
|
|
406,125
|
|
|
(1.0)
|
%
|
Operating lease
liabilities
|
19,578
|
|
|
19,855
|
|
|
18,976
|
|
|
3.2
|
%
|
Other
liabilities
|
47,109
|
|
|
39,357
|
|
|
39,770
|
|
|
18.5
|
%
|
Total liabilities
|
5,513,860
|
|
|
5,291,238
|
|
|
5,262,109
|
|
|
4.8
|
%
|
|
|
|
|
|
|
|
|
Shareholders'
equity
|
|
|
|
|
|
|
|
Common
stock
|
410,236
|
|
|
429,514
|
|
|
434,948
|
|
|
(5.7)
|
%
|
Retained
earnings
|
430,709
|
|
|
417,764
|
|
|
360,455
|
|
|
19.5
|
%
|
Stock in rabbi trust
assumed in acquisition
|
(2,602)
|
|
|
(2,587)
|
|
|
(3,245)
|
|
|
(19.8)
|
%
|
Rabbi trust
obligation
|
2,602
|
|
|
2,587
|
|
|
3,245
|
|
|
(19.8)
|
%
|
Accumulated other
comprehensive income (loss)
|
21,253
|
|
|
5,123
|
|
|
(7,264)
|
|
|
(392.6)
|
%
|
Total shareholders'
equity
|
862,198
|
|
|
852,401
|
|
|
788,139
|
|
|
9.4
|
%
|
Total liabilities and
shareholders' equity
|
$
|
6,376,058
|
|
|
6,143,639
|
|
|
6,050,248
|
|
|
5.4
|
%
|
First Bancorp and
Subsidiaries
|
Financial Summary
- Page 4
|
|
|
For the Three Months
Ended
|
YIELD
INFORMATION
|
March 31,
2020
|
December 31,
2019
|
Sept. 30,
2019
|
June 30,
2019
|
Mar. 31,
2019
|
|
|
|
|
|
|
Yield on
loans
|
4.93
|
%
|
5.03
|
%
|
5.02
|
%
|
5.16
|
%
|
5.11
|
%
|
Yield on
securities
|
2.65
|
%
|
2.64
|
%
|
2.74
|
%
|
2.81
|
%
|
2.95
|
%
|
Yield on other
earning assets
|
1.95
|
%
|
1.91
|
%
|
2.42
|
%
|
2.51
|
%
|
2.77
|
%
|
Yield on
all interest-earning assets
|
4.46
|
%
|
4.49
|
%
|
4.55
|
%
|
4.67
|
%
|
4.66
|
%
|
|
|
|
|
|
|
Rate on interest
bearing deposits
|
0.68
|
%
|
0.76
|
%
|
0.77
|
%
|
0.75
|
%
|
0.67
|
%
|
Rate on other
interest-bearing liabilities
|
1.91
|
%
|
2.31
|
%
|
2.65
|
%
|
2.83
|
%
|
2.79
|
%
|
Rate on
all interest-bearing liabilities
|
0.78
|
%
|
0.89
|
%
|
0.93
|
%
|
0.93
|
%
|
0.90
|
%
|
Total cost of
funds
|
0.56
|
%
|
0.63
|
%
|
0.66
|
%
|
0.67
|
%
|
0.66
|
%
|
|
|
|
|
|
|
Net
interest margin (1)
|
3.94
|
%
|
3.90
|
%
|
3.92
|
%
|
4.03
|
%
|
4.03
|
%
|
|
|
|
|
|
|
Net
interest margin - tax-equivalent (2)
|
3.96
|
%
|
3.93
|
%
|
3.95
|
%
|
4.06
|
%
|
4.06
|
%
|
|
|
|
|
|
|
Average
prime rate
|
4.42
|
%
|
4.83
|
%
|
5.27
|
%
|
5.50
|
%
|
5.50
|
%
|
|
|
|
|
|
|
(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)
|
March 31,
2020
|
|
December 31,
2019
|
|
Sept. 30,
2019
|
|
June 30,
2019
|
|
Mar. 31,
2019
|
|
|
|
|
|
|
|
|
|
|
Interest income -
increased by accretion of loan
discount on acquired loans
|
$
|
1,241
|
|
|
1,161
|
|
|
959
|
|
|
1,336
|
|
|
1,132
|
|
Interest income -
increased by accretion of loan
discount on retained portions of SBA loans
|
600
|
|
|
340
|
|
|
365
|
|
|
394
|
|
|
287
|
|
Interest expense -
reduced by premium
amortization of deposits
|
31
|
|
|
38
|
|
|
44
|
|
|
50
|
|
|
58
|
|
Interest expense -
increased by discount accretion
of borrowings
|
(45)
|
|
|
(45)
|
|
|
(46)
|
|
|
(45)
|
|
|
(45)
|
|
Impact on net interest
income
|
$
|
1,827
|
|
|
1,494
|
|
|
1,322
|
|
|
1,735
|
|
|
1,432
|
|
First Bancorp and
Subsidiaries
|
Financial Summary
- Page 5
|
|
ASSET QUALITY
DATA ($ in thousands)
|
March 31,
2020
|
|
December 31,
2019
|
|
Sept. 30,
2019
|
|
June 30,
2019
|
|
Mar. 31,
2019
|
|
|
|
|
|
|
|
|
|
|
Nonperforming
assets
|
|
|
|
|
|
|
|
|
|
Nonaccrual
loans
|
$
|
25,066
|
|
|
24,866
|
|
|
19,720
|
|
|
17,375
|
|
|
20,684
|
|
Troubled debt
restructurings - accruing
|
9,747
|
|
|
9,053
|
|
|
9,566
|
|
|
11,890
|
|
|
12,457
|
|
Accruing loans >
90 days past due
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total nonperforming
loans
|
34,813
|
|
|
33,919
|
|
|
29,286
|
|
|
29,265
|
|
|
33,141
|
|
Foreclosed real
estate
|
3,487
|
|
|
3,873
|
|
|
4,589
|
|
|
5,107
|
|
|
6,390
|
|
Total nonperforming
assets
|
$
|
38,300
|
|
|
37,792
|
|
|
33,875
|
|
|
34,372
|
|
|
39,531
|
|
Purchased credit
impaired loans not included
above (1)
|
$
|
9,839
|
|
|
12,664
|
|
|
13,798
|
|
|
14,175
|
|
|
15,867
|
|
Asset Quality
Ratios
|
|
|
|
|
|
|
|
|
|
Net quarterly
charge-offs to average loans -
annualized
|
0.22
|
%
|
|
0.09
|
%
|
|
0.04
|
%
|
|
—
|
%
|
|
0.04
|
%
|
Nonperforming loans
to total loans
|
0.76
|
%
|
|
0.76
|
%
|
|
0.67
|
%
|
|
0.67
|
%
|
|
0.77
|
%
|
Nonperforming assets
to total assets
|
0.60
|
%
|
|
0.62
|
%
|
|
0.56
|
%
|
|
0.57
|
%
|
|
0.65
|
%
|
Allowance for loan
losses to total loans
|
0.54
|
%
|
|
0.48
|
%
|
|
0.44
|
%
|
|
0.48
|
%
|
|
0.49
|
%
|
(1)
|
In the March 3, 2017
acquisition of Carolina Bank and the October 1, 2017 acquisition of
Asheville Savings Bank, the Company acquired $19.3 million and $9.9
million, respectively, in purchased credit impaired loans in
accordance with ASC 310-30 accounting guidance. These loans
are excluded from the nonperforming loan amounts.
|
First Bancorp and
Subsidiaries
|
Financial Summary
- Page 6
|
|
|
For the Three Months
Ended
|
NET INTEREST
MARGIN, EXCLUDING
LOAN DISCOUNT ACCRETION -
RECONCILIATION
($ in
thousands)
|
March 31,
2020
|
|
December 31,
2019
|
|
Sept. 30,
2019
|
|
June 30,
2019
|
|
Mar. 31,
2019
|
|
|
|
|
|
|
|
|
|
|
Net interest income,
as reported
|
$
|
54,759
|
|
|
54,656
|
|
|
53,778
|
|
|
54,409
|
|
|
53,361
|
|
Tax-equivalent
adjustment
|
334
|
|
|
382
|
|
|
413
|
|
|
423
|
|
|
424
|
|
Net interest income,
tax-equivalent (A)
|
$
|
55,093
|
|
|
55,038
|
|
|
54,191
|
|
|
54,832
|
|
|
53,785
|
|
Average earning
assets (B)
|
$
|
5,595,734
|
|
|
5,560,099
|
|
|
5,440,014
|
|
|
5,417,284
|
|
|
5,372,766
|
|
Tax-equivalent net
interest
margin, annualized - as reported - (A)/(B)
|
3.96
|
%
|
|
3.93
|
%
|
|
3.95
|
%
|
|
4.06
|
%
|
|
4.06
|
%
|
|
|
|
|
|
|
|
|
|
|
Net interest income,
tax-equivalent
|
$
|
55,093
|
|
|
55,038
|
|
|
54,191
|
|
|
54,832
|
|
|
53,785
|
|
Loan discount
accretion
|
1,841
|
|
|
1,501
|
|
|
1,324
|
|
|
1,730
|
|
|
1,419
|
|
Net interest income,
tax-equivalent, excluding
loan discount accretion (A)
|
$
|
53,252
|
|
|
53,537
|
|
|
52,867
|
|
|
53,102
|
|
|
52,366
|
|
Average earnings
assets (B)
|
$
|
5,595,734
|
|
|
5,560,099
|
|
|
5,440,014
|
|
|
5,417,284
|
|
|
5,372,766
|
|
Tax-equivalent net
interest margin, excluding
impact of loan discount accretion, annualized -
(A) / (B)
|
3.83
|
%
|
|
3.82
|
%
|
|
3.86
|
%
|
|
3.93
|
%
|
|
3.95
|
%
|
|
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 March
31, 2020, the Company had a remaining loan discount balance on
acquired loans of $11.5 million compared to $16.1 million at March
31, 2019. At March 31, 2020, the Company had a remaining loan
discount balance on SBA loans of $6.8 million compared to $6.2
million at March 31, 2019. 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.
|
View original
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SOURCE First Bancorp