SOUTHERN PINES, N.C.,
July 26, 2016 /PRNewswire/ -- First
Bancorp (NASDAQ: FBNC), the parent company of First Bank, announced
today net income available to common shareholders of $7.6 million, or $0.37 per diluted common share, for the three
months ended June 30, 2016, an
increase of 25.7% compared to the $6.0
million, or $0.30 per diluted
common share, recorded in the second quarter of 2015.
For the six months ended June 30,
2016, the Company recorded net income available to common
shareholders of $14.4 million, or
$0.70 per diluted common share, an
increase of 12.2% compared to the $12.8
million, or $0.63 per common
share, for the six months ended June
30, 2015. The higher earnings were primarily related
to increased interest income resulting from loan growth and lower
provisions for loan losses.
Net Interest Income and Net Interest Margin
Net interest income for the second quarter of 2016 amounted to
$31.5 million, a 6.5% increase from
the $29.6 million recorded in the
second quarter of 2015. Net interest income for the first six
months of 2016 amounted to $61.7
million, a 4.1% increase from the $59.3 million recorded in the comparable period
of 2015. The increases were primarily due to growth in the
Company's loans outstanding and higher yields realized on
investment securities.
The Company's net interest margin (tax-equivalent net interest
income divided by average earning assets) in the second quarter of
2016 was 4.21% compared to 4.15% for the second quarter of
2015. The higher margin was primarily due to higher amounts
of discount accretion on loans purchased in failed-bank
acquisitions – see additional discussion below. Additionally,
in the second quarter of 2016, the Company realized $332,000 in previously foregone interest related
to the pay off of two loans that had been on nonaccrual
basis. For the six month period ended June 30, 2016, the Company's net interest margin
was 4.14% compared to 4.17% for the same period in 2015. The
lower margin was primarily due to lower loan yields, which have
been impacted by the continued low interest rate environment.
As shown in the accompanying tables, loan discount accretion
amounted to $1.7 million in the
second quarter of 2016, compared to $1.1
million in the second quarter of 2015. For both the
first six months of 2016 and 2015, loan discount accretion amounted
to $2.7 million.
Excluding the effects of discount accretion on purchased loans,
the Company's net interest margin has remained stable, amounting to
3.99% for both the second quarters of 2016 and 2015. While
the Company's net interest margin has experienced compression due
to lower loan yields, the compression was offset during the quarter
by higher yields on investment securities and the aforementioned
realization of previously foregone interest income. See the
Financial Summary for a table that presents the impact of loan
discount accretion that affects 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 a total negative provision for loan losses
(reduction of the allowance for loan losses) of $0.3 million in the second quarter of 2016
compared to a total provision for loan losses of $0.8 million in the second quarter of 2015.
For the six months ended June 30,
2016, the Company recorded a total negative provision for
loan losses of $23,000 compared to a
total provision for loan losses of $0.7
million in the same period of 2015. As discussed
below, the Company records provisions for loan losses related to
both non-covered and covered loan portfolios – see explanation of
the terms "non-covered" and "covered" in the section below entitled
"Note Regarding Components of Earnings."
The provision for loan losses on non-covered loans amounted to
$0.5 million in the second quarter of
2016 compared to $1.0 million in the
second quarter of 2015. The lower provision in 2016 primarily
resulted from improved asset quality, including lower net loan
charge-offs and a decline in nonperforming assets. For the
first six months of 2016, the provision for loan losses on
non-covered loans amounted to $2.1
million compared to $1.1
million for the same period of 2015. In 2015, a
prolonged period of stable and improving loan quality trends
resulted in a minimal amount of provision for loan losses that was
needed to adjust the Company's allowance for loan losses to the
appropriate amount.
The Company recorded a negative provision for loan losses on
covered loans (reduction of allowance for loan losses) of
$0.8 million in the second quarter of
2016 compared to a $0.2 million
negative provision for loan losses in the second quarter of
2015. For the six months ended June
30, 2016, the Company recorded a negative provision for loan
losses on covered loans of $2.1
million compared to a $0.4
million negative provision for loan losses in the comparable
period of 2015. The increase in the negative provisions
in 2016 resulted primarily from higher net loan recoveries
(recoveries, net of charge-offs) realized during the period.
Total non-covered nonperforming assets amounted to $69.8 million at June 30,
2016 (2.06% of total non-covered assets), which includes the
impact of the April 1, 2016 transfer
of $4.0 million in nonperforming
assets from covered status to non-covered status upon the scheduled
expiration of a loss share agreement with the FDIC associated with
those assets. Total non-covered nonperforming assets amounted
to $77.2 million at December 31, 2015 (2.37% of total non-covered
assets), and $86.1 million at
June 30, 2015 (2.78% of total
non-covered assets). The decline in non-covered nonperforming
assets is primarily due to on-going resolution of nonperforming
assets and improving credit quality.
Total covered nonperforming assets also declined over the past
year, amounting to $8.0 million at
June 30, 2016, $12.1 million at December
31, 2015, and $13.2 million at
June 30, 2015. Over the past
twelve months, the Company has resolved a significant amount of
covered loans and has experienced strong property sales along the
North Carolina coast, which is
where most of the Company's covered assets are located. Also, as
discussed in the preceding paragraph, on April 1, 2016, the Company transferred
$4.0 million in nonperforming assets
from covered status to non-covered status upon the expiration of a
loss share agreement.
Noninterest Income
Total noninterest income was $5.9
million and $5.0 million for
the three months ended June 30, 2016
and June 30, 2015,
respectively. For the six months ended June 30, 3016, noninterest income amounted to
$10.9 million compared to
$9.5 million for the six months ended
June 30, 2015.
Core noninterest income for the second quarter of 2016 was
$8.2 million, an increase of 10.1%
from the $7.4 million reported for
the second quarter of 2015. For the first six months of 2016,
core noninterest income amounted to $15.5
million, a 6.2% increase from the $14.6 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, and vi) bank-owned
life insurance income. The primary reason for the increase in
core noninterest income was the addition of SBA consulting fees
during the second quarter of 2016. On May 5, 2016, the Company completed the
acquisition of a firm that specializes in consulting with financial
institutions across the country related to Small Business
Administration ("SBA") loan origination and servicing. The
Company recorded $0.7 million in SBA
consulting fees from the date of the acquisition through
June 30, 2016.
In 2016, the Company has also experienced an increase in
commissions from financial product sales, which includes property
and casualty insurance commissions. Property and casualty
insurance commissions have increased due to the Company's
January 1, 2016 acquisition of
Bankingport, Inc., an insurance agency located in Sanford, North Carolina.
Fees from presold mortgages declined to $0.4 million for the second quarter of 2016 from
$0.7 million in the second quarter of
2015. For the first half of 2016, fees from presold mortgages
declined to $0.8 million from the
$1.5 million recorded in the
comparable period of 2015. These declines were due to fewer
mortgage loan originations.
Noncore components of noninterest income resulted in a net
decrease to income of $2.3 million in
the second quarter of 2016 compared to a net decrease to income of
$2.4 million in the second quarter of
2015. For the six months ended June 30, 2016 and 2015, the Company recorded net
decreases to income of $4.6 million
and $5.1 million, respectively,
related to noncore components of noninterest income.
Noninterest Expenses
Noninterest expenses amounted to $26.1
million in the second quarter of 2016 compared to
$24.3 million recorded in the second
quarter of 2015. Noninterest expenses for the six months
ended June 30, 2016 amounted to
$50.9 million compared to
$48.0 million recorded in the first
half of 2015.
Salaries expense increased to $12.6
million in the second quarter of 2016 from the $11.6 million recorded in the second quarter of
2015. Salaries expense for the first half of 2016 amounted to
$24.0 million compared to
$23.1 million in 2015. The
primary reason for increases in salaries expense is due to the
aforementioned 2016 acquisitions of an insurance agency and an SBA
consulting firm.
Employee benefits expense was $2.6
million in the second quarter of 2016 compared to
$2.3 million in the second quarter of
2015. For the first six months of 2016, employee benefits
expense amounted to $5.3 million
compared to $4.5 million for the same
period of 2015. The increases were primarily the result of a
$0.1 million and a $0.5 million increase in employee health
insurance expense during the three and six months ended
June 30, 2016. The Company is
self-insured for health care expense and has experienced
unfavorable claim levels in 2016. Another factor impacting
the increases is the acquisitions discussed above.
Merger and acquisition expenses amounted to $0.5 million and $0.7
million for the three and six months ended June 30, 2016, respectively, compared to none in
the comparable periods in 2015.
Balance Sheet and Capital
Total assets at June 30, 2016
amounted to $3.5 billion, a 7.9%
increase from a year earlier. Total loans at June 30, 2016 amounted to $2.6 billion, a 7.7% increase from a year
earlier, and total deposits amounted to $2.9
billion at June 30, 2016, an
8.3% increase from a year earlier.
Non-covered loans increased to $2.52
billion at June 30, 2016,
reflecting growth of $220.8 million,
or 9.6% from June 30, 2015, as a
result of ongoing internal initiatives to drive loan growth.
Included in this increase is the reclassification of $17.7 million in loans from covered status to
non-covered status in connection with the April 1, 2016 expiration of a loss share
agreement. Loans covered by FDIC loss share agreements
declined 31.1% over the past year and are expected to continue to
decline as those loans continue to pay down.
The increase in total deposits at June
30, 2016 compared to June 30,
2015 was primarily due to increases in checking, money
market and savings accounts, which increased in total by
$252.1 million, or 13.1%, over the
past year. Those increases were partially offset by net
decreases in time deposits, which declined a total of $33.2 million, or 4.6%, over the past year.
Time deposits are generally one of the Company's most expensive
funding sources, and thus the shift from this category benefitted
the Company's overall cost of funds.
The Company remains well-capitalized by all regulatory
standards, with a Total Risk-Based Capital Ratio at June 30, 2016 of 14.10% compared to the 10.00%
minimum to be considered well-capitalized. The Company's
tangible common equity to tangible assets ratio was 8.18% at
June 30, 2016, a decrease of six
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, "Today's
earnings report reflects another strong quarter for our
company. We experienced good growth in earnings, loans, and
deposits, and asset quality trends are favorable. Our 2016
acquisitions of an insurance agency and a loan consulting firm are
expected to diversify our sources of revenue, and our recently
completed branch exchange and the pending acquisition of Carolina
Bank Holdings continue our expansion into larger markets."
Mr. Moore continued, "We thank our customers for the opportunity to
be of service."
The following is a list of business development and other
miscellaneous matters affecting the Company:
- On July 15, 2016, the Company
completed the exchange of its seven First Bank branches located in
Virginia to First Community Bank
in return for six of that bank's branches located in North Carolina. Four of the six branches
acquired were in Winston-Salem,
with the other two branches being in the Charlotte-metro markets of Mooresville and Huntersville.
- On June 21, 2016, the Company
announced that it had reached an agreement to acquire Carolina Bank
Holdings, Inc. headquartered in Greensboro, North Carolina. The merger
consideration is a combination of cash and stock, with each share
of Carolina Bank Holdings stock being exchanged for either
$20.00 in cash or 1.002 shares of
First Bancorp stock, subject to the total consideration being 75%
stock / 25% cash. This transaction is subject to regulatory
approval and is expected to be completed during the fourth quarter
of 2016 or first quarter of 2017.
- On June 15, 2016, the Company
announced a quarterly cash dividend of $0.08
cents per share payable on July 25,
2016 to shareholders of record on June 30, 2016. This is the same dividend rate as
the Company declared in the second quarter of 2015.
Note Regarding Components of Earnings
The Company's results of operations are significantly affected
by the on-going accounting for two FDIC-assisted failed bank
acquisitions. In the discussion above, the term "covered" is
used to describe assets included as part of FDIC loss share
agreements, which generally result in the FDIC reimbursing the
Company for 80% of losses incurred on those assets. The term
"non-covered" refers to the Company's legacy assets, which are not
included in any type of loss share arrangement.
For covered loans that deteriorate in terms of repayment
expectations, the Company records immediate allowances through the
provision for loan losses. For covered loans that experience
favorable changes in credit quality compared to what was expected
at the acquisition date, including loans that pay off, the Company
records positive adjustments to interest income over the life of
the respective loan – also referred to as loan discount
accretion. For covered foreclosed properties that are sold at
gains or losses or that are written down to lower values, the
Company records the gains/losses within noninterest income.
The adjustments discussed above are recorded within the income
statement line items noted without consideration of the FDIC loss
share agreements. Because favorable changes in covered assets
result in lower expected FDIC claims, and unfavorable changes in
covered assets result in higher expected FDIC claims, the FDIC
indemnification asset is adjusted to reflect those
expectations. The net increase or decrease in the
indemnification asset is reflected within noninterest income.
The adjustments noted above can result in volatility within
individual income statement line items. Because of the FDIC
loss share agreements and the associated indemnification asset,
pretax income resulting from amounts recorded as provisions for
loan losses on covered loans, discount accretion, and losses from
covered foreclosed properties is generally only impacted by 20% of
these amounts due to the corresponding adjustments made to the
indemnification asset.
* * *
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 87 branches in North
Carolina and South
Carolina. First Bank also has loan production offices
in the North Carolina cities of
Charlotte, 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
intends to file with the SEC a Registration Statement on Form S-4
that will include a proxy statement of Carolina Bank and a 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 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
June 30,
|
|
Percent
|
($ in thousands
except per share data – unaudited)
|
2016
|
|
2015
|
|
Change
|
|
|
|
|
|
|
INCOME
STATEMENT
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
|
|
|
Interest
and fees on loans
|
$
|
30,809
|
|
28,953
|
|
|
Interest
on investment securities
|
2,393
|
|
2,121
|
|
|
Other
interest income
|
177
|
|
186
|
|
|
Total interest
income
|
33,379
|
|
31,260
|
|
6.8%
|
Interest
expense
|
|
|
|
|
|
Interest
on deposits
|
1,286
|
|
1,340
|
|
|
Interest
on borrowings
|
555
|
|
315
|
|
|
Total interest
expense
|
1,841
|
|
1,655
|
|
11.2%
|
Net
interest income
|
31,538
|
|
29,605
|
|
6.5%
|
Provision for loan
losses – non-covered loans
|
489
|
|
1,001
|
|
|
Provision (reversal)
for loan losses – covered loans
|
(770)
|
|
(160)
|
|
|
Total provision
(reversal) for loan losses
|
(281)
|
|
841
|
|
n/m
|
Net interest income
after provision for loan losses
|
31,819
|
|
28,764
|
|
10.6%
|
Noninterest
income
|
|
|
|
|
|
Service
charges on deposit accounts
|
2,565
|
|
2,881
|
|
|
Other
service charges, commissions, and fees
|
3,043
|
|
2,771
|
|
|
Fees
from presold mortgages
|
410
|
|
731
|
|
|
Commissions from financial product sales
|
937
|
|
665
|
|
|
SBA
consulting fees
|
720
|
|
−
|
|
|
Bank-owned life insurance income
|
504
|
|
383
|
|
|
Foreclosed property gains (losses) – non-covered
|
(556)
|
|
(580)
|
|
|
Foreclosed property gains (losses) – covered
|
423
|
|
254
|
|
|
FDIC
indemnification asset income (expense), net
|
(2,178)
|
|
(1,828)
|
|
|
Securities gains (losses)
|
−
|
|
−
|
|
|
Other
gains (losses)
|
51
|
|
(273)
|
|
|
Total noninterest
income
|
5,919
|
|
5,004
|
|
18.3%
|
Noninterest
expenses
|
|
|
|
|
|
Salaries
expense
|
12,560
|
|
11,581
|
|
|
Employee
benefit expense
|
2,578
|
|
2,298
|
|
|
Occupancy and equipment expense
|
2,762
|
|
2,761
|
|
|
Merger
and acquisition expenses
|
485
|
|
−
|
|
|
Intangibles amortization
|
261
|
|
180
|
|
|
Other
operating expenses
|
7,501
|
|
7,480
|
|
|
Total noninterest
expenses
|
26,147
|
|
24,300
|
|
7.6%
|
Income before income
taxes
|
11,591
|
|
9,468
|
|
22.4%
|
Income
taxes
|
3,952
|
|
3,224
|
|
22.6%
|
Net income
|
7,639
|
|
6,244
|
|
22.3%
|
|
|
|
|
|
|
Preferred stock
dividends
|
(59)
|
|
(212)
|
|
|
|
|
|
|
|
|
Net income available
to common shareholders
|
$
|
7,580
|
|
6,032
|
|
25.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common
share – basic
|
$
|
0.38
|
|
0.30
|
|
26.7%
|
Earnings per common
share – diluted
|
0.37
|
|
0.30
|
|
23.3%
|
|
|
|
|
|
|
ADDITIONAL INCOME
STATEMENT INFORMATION
|
|
|
|
|
|
Net
interest income, as reported
|
$
|
31,538
|
|
29,605
|
|
|
Tax-equivalent adjustment (1)
|
517
|
|
402
|
|
|
Net
interest income, tax-equivalent
|
$
|
32,055
|
|
30,007
|
|
6.8%
|
|
(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
|
|
|
Six Months
Ended
June 30,
|
|
Percent
|
($ in thousands
except per share data – unaudited)
|
2016
|
|
2015
|
|
Change
|
|
|
|
|
|
|
INCOME
STATEMENT
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
|
|
|
Interest
and fees on loans
|
$
|
60,382
|
|
58,394
|
|
|
Interest
on investment securities
|
4,661
|
|
3,943
|
|
|
Other
interest income
|
399
|
|
381
|
|
|
Total interest
income
|
65,442
|
|
62,718
|
|
4.3%
|
Interest
expense
|
|
|
|
|
|
Interest
on deposits
|
2,606
|
|
2,798
|
|
|
Other,
primarily borrowings
|
1,103
|
|
612
|
|
|
Total interest
expense
|
3,709
|
|
3,410
|
|
8.8%
|
Net
interest income
|
61,733
|
|
59,308
|
|
4.1%
|
Provision for loan
losses – non-covered loans
|
2,109
|
|
1,105
|
|
90.9%
|
Provision (reversal)
for loan losses – covered loans
|
(2,132)
|
|
(428)
|
|
n/m
|
Total provision
(reversal) for loan losses
|
(23)
|
|
677
|
|
n/m
|
Net interest income
after provision for loan losses
|
61,756
|
|
58,631
|
|
5.3%
|
Noninterest
income
|
|
|
|
|
|
Service
charges on deposit accounts
|
5,250
|
|
5,773
|
|
|
Other
service charges, commissions, and fees
|
5,873
|
|
5,313
|
|
|
Fees
from presold mortgages
|
781
|
|
1,539
|
|
|
Commissions from financial product sales
|
1,875
|
|
1,226
|
|
|
SBA
Consulting Fees
|
720
|
|
−
|
|
|
Bank-owned life insurance income
|
1,012
|
|
754
|
|
|
Foreclosed property gains (losses) – non-covered
|
(793)
|
|
(1,075)
|
|
|
Foreclosed property gains (losses) – covered
|
870
|
|
492
|
|
|
FDIC
indemnification asset income (expense), net
|
(4,544)
|
|
(4,220)
|
|
|
Securities gains
|
3
|
|
−
|
|
|
Other
gains (losses)
|
(126)
|
|
(269)
|
|
|
Total noninterest
income
|
10,921
|
|
9,533
|
|
14.6%
|
Noninterest
expenses
|
|
|
|
|
|
Salaries
expense
|
24,035
|
|
23,078
|
|
|
Employee
benefit expense
|
5,284
|
|
4,481
|
|
|
Occupancy and equipment expense
|
5,575
|
|
5,586
|
|
|
Merger
and acquisition expenses
|
686
|
|
−
|
|
|
Intangibles amortization
|
447
|
|
360
|
|
|
Other
operating expenses
|
14,893
|
|
14,509
|
|
|
Total noninterest
expenses
|
50,920
|
|
48,014
|
|
6.1%
|
Income before income
taxes
|
21,757
|
|
20,150
|
|
8.0%
|
Income
taxes
|
7,281
|
|
6,918
|
|
5.2%
|
Net income
|
14,476
|
|
13,232
|
|
9.4%
|
|
|
|
|
|
|
Preferred stock
dividends
|
(117)
|
|
(429)
|
|
|
|
|
|
|
|
|
Net income available
to common shareholders
|
$
|
14,359
|
|
12,803
|
|
12.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common
share – basic
|
$
|
0.72
|
|
0.65
|
|
10.8%
|
Earnings per common
share – diluted
|
0.70
|
|
0.63
|
|
11.1%
|
|
|
|
|
|
|
ADDITIONAL INCOME
STATEMENT INFORMATION
|
|
|
|
|
|
Net
interest income, as reported
|
$
|
61,733
|
|
59,308
|
|
|
Tax-equivalent adjustment (1)
|
976
|
|
792
|
|
|
Net
interest income, tax-equivalent
|
$
|
62,709
|
|
60,100
|
|
4.3%
|
|
(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 3
|
|
Three Months
Ended
June 30,
|
|
Six Months
Ended
June 30,
|
PERFORMANCE
RATIOS (annualized)
|
2016
|
2015
|
|
2016
|
2015
|
Return on average
assets (1)
|
0.90%
|
0.76%
|
|
0.86%
|
0.81%
|
Return on average
common equity (2)
|
8.68%
|
7.42%
|
|
8.33%
|
7.98%
|
Net interest margin –
tax-equivalent (3)
|
4.21%
|
4.15%
|
|
4.14%
|
4.17%
|
Net charge-offs to
average loans – non-covered
|
0.18%
|
0.81%
|
|
0.35%
|
0.83%
|
|
|
|
|
|
|
COMMON SHARE
DATA
|
|
|
|
|
|
Cash dividends
declared – common
|
$
|
0.08
|
0.08
|
|
$
|
0.16
|
0.16
|
Stated book value –
common
|
17.64
|
16.51
|
|
17.64
|
16.51
|
Tangible book value –
common
|
13.80
|
13.10
|
|
13.80
|
13.10
|
Common shares
outstanding at end of period
|
20,087,942
|
19,780,017
|
|
20,087,942
|
19,780,017
|
Weighted average
shares outstanding – basic
|
19,921,413
|
19,778,640
|
|
19,852,580
|
19,750,316
|
Weighted average
shares outstanding – diluted
|
20,693,644
|
20,508,955
|
|
20,627,012
|
20,481,466
|
|
|
|
|
|
|
CAPITAL
RATIOS
|
|
|
|
|
|
Tangible equity to
tangible assets
|
8.39%
|
9.47%
|
|
8.39%
|
9.47%
|
Tangible common
equity to tangible assets
|
8.18%
|
8.24%
|
|
8.18%
|
8.24%
|
Common equity tier I
capital ratio
|
11.09%
|
11.44%
|
|
11.09%
|
11.44%
|
Tier I leverage
ratio
|
10.38%
|
11.29%
|
|
10.38%
|
11.29%
|
Tier I risk-based
capital ratio
|
13.08%
|
14.97%
|
|
13.08%
|
14.97%
|
Total risk-based
capital ratio
|
14.10%
|
16.23%
|
|
14.10%
|
16.23%
|
|
|
|
|
|
|
AVERAGE
BALANCES ($ in thousands)
|
|
|
|
|
|
Total
assets
|
$
|
3,373,476
|
3,199,270
|
|
$
|
3,352,984
|
3,196,920
|
Loans
|
2,565,791
|
2,389,735
|
|
2,547,054
|
2,390,403
|
Earning
assets
|
3,064,959
|
2,901,770
|
|
3,046,867
|
2,906,251
|
Deposits
|
2,805,905
|
2,667,649
|
|
2,790,648
|
2,668,311
|
Interest-bearing
liabilities
|
2,296,225
|
2,180,746
|
|
2,299,835
|
2,195,524
|
Shareholders'
equity
|
358,586
|
394,699
|
|
354,035
|
393,436
|
|
|
|
|
|
|
(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
|
June 30,
2016
|
March 31,
2016
|
December 31,
2015
|
September 30,
2015
|
June 30,
2015
|
|
|
|
|
|
|
Net interest income –
tax-equivalent
(1)
|
$
|
32,055
|
30,654
|
30,476
|
30,805
|
30,007
|
Taxable equivalent
adjustment (1)
|
517
|
459
|
423
|
419
|
402
|
Net interest
income
|
31,538
|
30,195
|
30,053
|
30,386
|
29,605
|
Provision for loan
losses – non-covered
|
489
|
1,621
|
636
|
267
|
1,001
|
Provision (reversal)
for loan losses – covered
|
(770)
|
(1,363)
|
(679)
|
(1,681)
|
(160)
|
Noninterest
income
|
5,919
|
5,002
|
5,725
|
3,506
|
5,004
|
Noninterest
expense
|
26,147
|
24,773
|
25,503
|
24,614
|
24,300
|
Income before income
taxes
|
11,591
|
10,166
|
10,318
|
10,692
|
9,468
|
Income tax
expense
|
3,952
|
3,329
|
3,521
|
3,687
|
3,224
|
Net income
|
7,639
|
6,837
|
6,797
|
7,005
|
6,244
|
Preferred stock
dividends
|
(59)
|
(58)
|
(37)
|
(137)
|
(212)
|
Net income available
to common shareholders
|
7,580
|
6,779
|
6,760
|
6,868
|
6,032
|
|
|
|
|
|
|
Earnings per common
share – basic
|
0.38
|
0.34
|
0.34
|
0.35
|
0.30
|
Earnings per common
share – diluted
|
0.37
|
0.33
|
0.33
|
0.34
|
0.30
|
|
|
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 June 30,
2016
|
|
At March 31,
2016
|
|
At Dec.
31, 2015
|
|
At June
30, 2015
|
|
One
Year
Change
|
Assets
|
|
|
|
|
|
|
|
|
|
Cash and due from
banks
|
$
|
58,956
|
|
52,393
|
|
53,285
|
|
75,151
|
|
(21.5%)
|
Interest bearing
deposits with banks
|
189,547
|
|
149,201
|
|
213,983
|
|
103,241
|
|
83.6%
|
Total cash and cash
equivalents
|
248,503
|
|
201,594
|
|
267,268
|
|
178,392
|
|
39.3%
|
|
|
|
|
|
|
|
|
|
|
Investment
securities
|
361,835
|
|
395,625
|
|
320,224
|
|
379,695
|
|
(4.7%)
|
Presold
mortgages
|
4,104
|
|
3,102
|
|
4,323
|
|
4,934
|
|
(16.8%)
|
|
|
|
|
|
|
|
|
|
|
Loans –
non-covered
|
2,519,747
|
|
2,439,830
|
|
2,416,285
|
|
2,298,955
|
|
9.6%
|
Loans – covered by
FDIC loss share agreements
|
78,387
|
|
99,523
|
|
102,641
|
|
113,824
|
|
(31.1%)
|
Total loans
|
2,598,134
|
|
2,539,353
|
|
2,518,926
|
|
2,412,779
|
|
7.7%
|
Allowance for loan
losses – non-covered
|
(24,949)
|
|
(25,249)
|
|
(26,784)
|
|
(30,155)
|
|
(17.3%)
|
Allowance for loan
losses – covered
|
(1,074)
|
|
(1,399)
|
|
(1,799)
|
|
(1,935)
|
|
(44.5%)
|
Total allowance for loan
losses
|
(26,023)
|
|
(26,648)
|
|
(28,583)
|
|
(32,090)
|
|
(18.9%)
|
Net loans
|
2,572,111
|
|
2,512,705
|
|
2,490,343
|
|
2,380,689
|
|
8.0%
|
|
|
|
|
|
|
|
|
|
|
Premises and
equipment
|
76,991
|
|
75,268
|
|
74,559
|
|
75,087
|
|
2.5%
|
FDIC indemnification
asset
|
5,157
|
|
6,704
|
|
8,439
|
|
11,982
|
|
(57.0%)
|
Intangible
assets
|
77,153
|
|
69,361
|
|
67,171
|
|
67,532
|
|
14.2%
|
Foreclosed real
estate – non-covered
|
10,221
|
|
8,767
|
|
9,188
|
|
9,954
|
|
2.7%
|
Foreclosed real
estate – covered
|
385
|
|
1,569
|
|
806
|
|
1,945
|
|
(80.2%)
|
Bank-owned life
insurance
|
73,098
|
|
72,594
|
|
72,086
|
|
56,175
|
|
30.1%
|
Other
assets
|
36,988
|
|
35,677
|
|
47,658
|
|
45,134
|
|
(18.0%)
|
Total assets
|
$
|
3,466,546
|
|
3,382,966
|
|
3,362,065
|
|
3,211,519
|
|
7.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
Deposits:
|
|
|
|
|
|
|
|
|
|
Non-interest bearing
checking accounts
|
$
|
709,887
|
|
679,228
|
|
659,038
|
|
614,619
|
|
15.5%
|
Interest bearing checking
accounts
|
636,316
|
|
607,617
|
|
626,878
|
|
553,918
|
|
14.9%
|
Money market
accounts
|
638,125
|
|
665,291
|
|
636,692
|
|
576,360
|
|
10.7%
|
Savings accounts
|
197,445
|
|
194,573
|
|
186,616
|
|
184,786
|
|
6.9%
|
Brokered deposits
|
95,242
|
|
71,128
|
|
76,412
|
|
58,534
|
|
62.7%
|
Other time deposits >
$100,000
|
319,267
|
|
322,607
|
|
329,819
|
|
342,024
|
|
(6.7%)
|
Other time
deposits
|
275,738
|
|
286,377
|
|
295,830
|
|
322,886
|
|
(14.6%)
|
Total deposits
|
2,872,020
|
|
2,826,821
|
|
2,811,285
|
|
2,653,127
|
|
8.3%
|
|
|
|
|
|
|
|
|
|
|
Borrowings
|
206,394
|
|
186,394
|
|
186,394
|
|
176,394
|
|
17.0%
|
Other
liabilities
|
26,518
|
|
19,919
|
|
22,196
|
|
16,609
|
|
59.7%
|
Total liabilities
|
3,104,932
|
|
3,033,134
|
|
3,019,875
|
|
2,846,130
|
|
9.1%
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity
|
|
|
|
|
|
|
|
|
|
Preferred
stock
|
7,287
|
|
7,287
|
|
7,287
|
|
38,787
|
|
(81.2%)
|
Common
stock
|
139,832
|
|
135,318
|
|
133,393
|
|
133,061
|
|
5.1%
|
Retained
earnings
|
216,223
|
|
210,250
|
|
205,060
|
|
194,600
|
|
11.1%
|
Accumulated other
comprehensive income (loss)
|
(1,728)
|
|
(3,023)
|
|
(3,550)
|
|
(1,059)
|
|
63.2%
|
Total shareholders'
equity
|
361,614
|
|
349,832
|
|
342,190
|
|
365,389
|
|
(1.0%)
|
Total liabilities and
shareholders' equity
|
$
|
3,466,546
|
|
3,382,966
|
|
3,362,065
|
|
3,211,519
|
|
7.9%
|
|
|
|
|
n/m = not
meaningful
|
First Bancorp and
Subsidiaries
Financial Summary
- Page 5
|
|
For the Three Months
Ended
|
YIELD
INFORMATION
|
June 30,
2016
|
March 31,
2016
|
December 31,
2015
|
September 30,
2015
|
June 30,
2015
|
|
|
|
|
|
|
Yield on
loans
|
4.83%
|
4.70%
|
4.69%
|
4.83%
|
4.86%
|
Yield on securities –
tax-equivalent (1)
|
3.06%
|
3.26%
|
2.99%
|
2.75%
|
2.80%
|
Yield on other
earning assets
|
0.61%
|
0.54%
|
0.36%
|
0.43%
|
0.50%
|
Yield on
all interest earning assets
|
4.45%
|
4.32%
|
4.29%
|
4.38%
|
4.38%
|
|
|
|
|
|
|
Rate on interest
bearing deposits
|
0.25%
|
0.25%
|
0.24%
|
0.24%
|
0.26%
|
Rate on other
interest bearing liabilities
|
1.20%
|
1.18%
|
1.05%
|
1.09%
|
1.04%
|
Rate on
all interest bearing liabilities
|
0.32%
|
0.33%
|
0.31%
|
0.31%
|
0.30%
|
Total cost of
funds
|
0.25%
|
0.25%
|
0.24%
|
0.24%
|
0.24%
|
|
|
|
|
|
|
Net
interest margin – tax-equivalent (2)
|
4.21%
|
4.07%
|
4.05%
|
4.14%
|
4.15%
|
Average
prime rate
|
3.50%
|
3.50%
|
3.29%
|
3.25%
|
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)
|
June 30,
2016
|
|
March 31,
2016
|
|
December 31,
2015
|
|
September 30,
2015
|
|
June 30,
2015
|
|
|
|
|
|
|
|
|
|
|
Interest income –
increased by accretion of
loan discount
(1)
|
$
|
1,676
|
|
1,055
|
|
854
|
|
1,205
|
|
1,135
|
Impact on net interest
income
|
$
|
1,676
|
|
1,055
|
|
854
|
|
1,205
|
|
1,135
|
|
(1)
Corresponding indemnification asset expense is recorded for
approximately 80% of this amount, and therefore the net effect is
that pretax
income is positively
impacted by 20% of the amounts in this line item.
|
|
First Bancorp and
Subsidiaries
Financial Summary
- Page 6
|
|
|
|
|
|
|
|
|
|
|
ASSET QUALITY
DATA ($ in thousands)
|
June 30,
2016
|
|
March 31,
2016
|
|
Dec. 31,
2015
|
|
Sept. 30,
2015
|
|
June 30,
2015
|
|
|
|
|
|
|
|
|
|
|
Non-covered
nonperforming assets
|
|
|
|
|
|
|
|
|
|
Nonaccrual
loans
|
$
|
33,781
|
|
35,741
|
|
39,994
|
|
42,347
|
|
44,123
|
Troubled debt
restructurings - accruing
|
25,826
|
|
27,055
|
|
28,011
|
|
29,250
|
|
32,059
|
Accruing loans > 90
days past due
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Total non-covered
nonperforming loans
|
59,607
|
|
62,796
|
|
68,005
|
|
71,597
|
|
76,182
|
Foreclosed real
estate
|
10,221
|
|
8,767
|
|
9,188
|
|
9,304
|
|
9,954
|
Total non-covered
nonperforming assets
|
$
|
69,828
|
|
71,563
|
|
77,193
|
|
80,901
|
|
86,136
|
|
|
|
|
|
|
|
|
|
|
Covered
nonperforming assets (1)
|
|
|
|
|
|
|
|
|
|
Nonaccrual
loans
|
$
|
4,194
|
|
5,670
|
|
7,816
|
|
5,373
|
|
7,378
|
Troubled debt
restructurings - accruing
|
3,445
|
|
3,459
|
|
3,478
|
|
3,825
|
|
3,910
|
Accruing loans > 90
days past due
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Total covered nonperforming
loans
|
7,639
|
|
9,129
|
|
11,294
|
|
9,198
|
|
11,288
|
Foreclosed real
estate
|
385
|
|
1,569
|
|
806
|
|
1,569
|
|
1,945
|
Total covered
nonperforming assets
|
$
|
8,024
|
|
10,698
|
|
12,100
|
|
10,767
|
|
13,233
|
|
|
|
|
|
|
|
|
|
|
Total nonperforming
assets
|
$
|
77,852
|
|
82,261
|
|
89,293
|
|
91,668
|
|
99,369
|
Asset Quality
Ratios – All Assets
|
|
|
|
|
|
|
|
|
|
Net quarterly
charge-offs to average loans - annualized
|
0.05%
|
|
0.35%
|
|
0.23%
|
|
0.10%
|
|
0.80%
|
Nonperforming loans
to total loans
|
2.59%
|
|
2.83%
|
|
3.15%
|
|
3.26%
|
|
3.63%
|
Nonperforming assets
to total assets
|
2.25%
|
|
2.43%
|
|
2.66%
|
|
2.80%
|
|
3.09%
|
Allowance for loan
losses to total loans
|
1.00%
|
|
1.05%
|
|
1.13%
|
|
1.21%
|
|
1.33%
|
|
|
|
|
|
|
|
|
|
|
Asset Quality
Ratios – Based on Non-covered Assets only
|
|
|
|
|
|
|
|
|
|
Net quarterly
charge-offs to average non-covered loans - annualized
|
0.18%
|
|
0.52%
|
|
0.33%
|
|
0.38%
|
|
0.81%
|
Non-covered
nonperforming loans to non-covered loans
|
2.37%
|
|
2.57%
|
|
2.81%
|
|
3.01%
|
|
3.31%
|
Non-covered
nonperforming assets to total non-covered assets
|
2.06%
|
|
2.18%
|
|
2.37%
|
|
2.56%
|
|
2.78%
|
Allowance for loan
losses (non-covered) to non-covered loans
|
0.99%
|
|
1.03%
|
|
1.11%
|
|
1.19%
|
|
1.31%
|
|
(1) Covered
nonperforming assets consist of assets that are included in
loss-share agreements with the FDIC.
|
|
First Bancorp and
Subsidiaries
Financial Summary
- Page 7
|
|
For the Three Months
Ended
|
NET INTEREST
MARGIN, EXCLUDING
LOAN DISCOUNT ACCRETION –
RECONCILIATION
($ in
thousands)
|
June 30,
2016
|
|
March 31,
2016
|
|
Dec. 31,
2015
|
|
Sept. 30,
2015
|
|
June 30,
2015
|
|
|
|
|
|
|
|
|
|
|
Net interest income,
as reported
|
$
|
31,538
|
|
30,195
|
|
30,053
|
|
30,386
|
|
29,605
|
Tax-equivalent
adjustment
|
517
|
|
459
|
|
423
|
|
419
|
|
402
|
|
|
|
|
|
|
|
|
|
|
Net interest income,
tax-equivalent (A)
|
$
|
32,055
|
|
30,654
|
|
30,476
|
|
30,805
|
|
30,007
|
Average earning
assets (B)
|
$
|
3,064,959
|
|
3,028,775
|
|
2,982,356
|
|
2,951,638
|
|
2,901,770
|
Tax-equivalent net
interest
margin, annualized – as reported
– (A)/(B)
|
4.21%
|
|
4.07%
|
|
4.05%
|
|
4.14%
|
|
4.15%
|
|
|
|
|
|
|
|
|
|
|
Net interest income,
tax-equivalent
|
$
|
32,055
|
|
30,654
|
|
30,476
|
|
30,805
|
|
30,007
|
Loan discount
accretion
|
1,676
|
|
1,055
|
|
854
|
|
1,205
|
|
1,135
|
Net interest income,
tax-equivalent, excluding
loan discount
accretion (A)
|
$
|
30,379
|
|
29,599
|
|
29,622
|
|
29,600
|
|
28,872
|
Average earnings
assets (B)
|
$
|
3,064,959
|
|
3,028,775
|
|
2,982,356
|
|
2,951,638
|
|
2,901,770
|
Tax-equivalent net
interest margin, excluding
impact of loan discount
accretion,
annualized – (A) / (B)
|
3.99%
|
|
3.93%
|
|
3.94%
|
|
3.98%
|
|
3.99%
|
|
|
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
two failed banks 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
June 30, 2016, the Company had a remaining loan discount balance of
$12.4 million compared to $17.6 million at June 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-second-quarter-results-300304345.html
SOURCE First Bancorp