FIRST BANCORP SOUTHERN PINES, N.C., Jan. 28, 2016 /PRNewswire/ -- First Bancorp (NASDAQ: FBNC), the parent company of First Bank, announced today net income available to common shareholders of $26.4 million, or $1.30 per diluted common share, for the year ended December 31, 2015, an increase of 9.5% compared to the $24.1 million, or $1.19 per diluted common share, for the year ended December 31, 2014.
For the three months ended December 31, 2015, the Company recorded net income available to common shareholders of $6.8 million, or $0.33 per diluted common share, a decrease of 1.7% compared to the $6.9 million, or $0.34 per diluted common share, recorded in the fourth quarter of 2014.
Highlights for the quarter and year include:
-- Legacy loan growth of $41.2 million for the fourth quarter of 2015,
which represents 6.9% annualized growth. Legacy loan growth for the year
was $147.7 million, an increase of 6.5%.
-- Deposit growth of $103.5 million for the fourth quarter of 2015, which
represents 15.2% annualized growth. Deposit growth for the year amounted
to $115.4 million, an increase of 4.3%.
-- On October 16, 2015, the Company redeemed the remaining $31.5 million of
preferred stock associated with its participation in the Treasury's
Small Business Lending Fund. The Company had previously redeemed $32
million in June 2015.
Net Interest Income and Net Interest Margin
Net interest income for the fourth quarter of 2015 amounted to $30.1 million, a 2.8% decrease from the $30.9 million recorded in the fourth quarter of 2014. Net interest income for the year ended December 31, 2015 amounted to $119.7 million, a 9.0% decrease from the $131.6 million recorded in 2014.
The Company's net interest margin (tax-equivalent net interest income divided by average earning assets) in the fourth quarter of 2015 was 4.05% compared to 4.25% for the fourth quarter of 2014. For the year ended December 31, 2015, the Company's net interest margin was 4.13% compared to 4.58% in 2014. The lower margins in 2015 compared to 2014 were primarily due to lower amounts of discount accretion on loans purchased in failed-bank acquisitions. As shown in the accompanying tables, loan discount accretion amounted to $0.9 million in the fourth quarter of 2015, compared to $2.2 million in the fourth quarter of 2014. For the full year of 2015, loan discount accretion amounted to $4.8 million compared to $16.0 million for 2014. The lower amount of accretion is due to the continued winding down of the unaccreted discount amount that resulted from failed-bank acquisitions in 2009 and 2011.
Excluding the effects of discount accretion on purchased loans, the Company's net interest margin has remained stable, amounting to 3.94% for the fourth quarter of 2015 compared to 3.96% for the fourth quarter of 2014. Higher levels of loans and securities in 2015 substantially offset lower earning asset yields. 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.
The Company's cost of funds declined from 0.27% in the fourth quarter of 2014 to 0.24% in the fourth quarter of 2015, which had a positive impact on the Company's net interest margin.
Provision for Loan Losses and Asset Quality
The Company recorded negative total provisions for loan losses (reduction of the allowance for loan losses) of $43,000 in the fourth quarter of 2015 compared to provisions for loan losses of $1.5 million in the fourth quarter of 2014. For the year ended December 31, 2015, the Company recorded a negative total provision for loan losses of $0.8 million compared to provision for loan losses of $10.2 million for 2014. 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 $0.6 million in the fourth quarter of 2015 compared to $1.3 million in the fourth quarter of 2014. For the full year of 2015, the provision for loan losses on non-covered loans amounted to $2.0 million compared to $7.1 million for 2014. The lower provisions recorded in 2015 were primarily a result of continued favorable credit quality trends and generally improving economic trends.
The Company recorded a negative provision for loan losses on covered loans (reduction of allowance for loan losses) of $0.7 million in the fourth quarter of 2015 compared to a $0.2 million provision for loan losses in the fourth quarter of 2014. For the twelve months ended December 31, 2015, the Company recorded a negative provision for loan losses on covered loans of $2.8 million compared to a $3.1 million provision for loan losses in 2014. The negative provisions in 2015 primarily resulted from lower levels of covered nonperforming loans, declining levels of total covered loans, and net loan recoveries (recoveries, net of charge-offs) of $0.6 million and $2.3 million that were realized during the three and twelve months ended December 31, 2015, respectively.
Total non-covered nonperforming assets declined 19.0% during 2015, amounting to $77.2 million at December 31, 2015 (2.37% of total non-covered assets) compared to $95.3 million at December 31, 2014 (3.09% 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 in 2015, amounting to $12.1 million at December 31, 2015 compared to $18.7 million at December 31, 2014. 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.
Noninterest Income
Total noninterest income was $5.7 million and $4.5 million for the three months ended December 31, 2015 and December 31, 2014, respectively. For the year ended December 31, 2015, noninterest income amounted to $18.8 million compared to $14.4 million for the year ended December 31, 2014.
Core noninterest income amounted to $7.4 million for both of the three month periods ended December 31, 2015 and 2014. For the full year of 2015, core noninterest income amounted to $29.3 million, a 3.8% decrease from the $30.5 million recorded in 2014. 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, and v) bank-owned life insurance income. Service charges on deposit accounts declined from $3.3 million in the fourth quarter of 2014 to $2.9 million in the fourth quarter of 2015. For the full year of 2015, service charges on deposit accounts amounted to $11.6 million, a $2.1 million decrease from the $13.7 million recorded in 2014.
Noncore components of noninterest income resulted in a net decrease to income of $1.7 million in the fourth quarter of 2015 compared to a net decrease to income of $2.9 million in the fourth quarter of 2014. For the year ended December 31, 2015 and 2014, the Company recorded net decreases to income of $10.6 million and $16.1 million, respectively, related to the noncore components of noninterest income. The largest variances in noncore noninterest income related to gains (losses) on covered foreclosed properties and indemnification asset income (expense) - see discussion below.
For both of the three month periods ended December 31, 2015 and 2014, the Company recorded gains on covered foreclosed properties of $0.6 million. For the full year of 2015, the Company recorded gains of $1.0 million compared to losses of $1.9 million in 2014. Losses on covered foreclosed properties have generally declined in recent quarters as a result of significantly lower levels of covered foreclosed properties held by the Company and stabilization in property values.
Indemnification asset income (expense) is recorded to reflect additional (decreased) amounts expected to be received from the FDIC during the period related to covered assets. The three primary items that result in recording indemnification asset income (expense) are 1) income from loan discount accretion, which results in indemnification expense, 2) provisions for loan losses on covered loans, which result in indemnification income and 3) foreclosed property gains (losses) on covered assets, which result in indemnification expense (income). In the fourth quarter of 2015, the Company recorded $1.5 million in indemnification asset expense compared to $3.1 million in indemnification asset expense in the fourth quarter of 2014. For the year ended December 31, 2015, indemnification asset expense amounted to $8.6 million compared to $12.8 million in indemnification asset expense for 2014. The lower amounts of indemnification expense in 2015 are associated with the significantly lower amounts of loan discount accretion income recorded. Generally, when loan discount interest income is recorded, the Company records indemnification asset expense amounting to approximately 80% of the amount of loan discount accretion. See additional discussion related to this matter in the section below entitled "Note Regarding Components of Earnings."
Noninterest Expenses
Noninterest expenses amounted to $25.5 million in the fourth quarter of 2015 compared to $23.0 million recorded in the fourth quarter of 2014. Noninterest expenses for the year ended December 31, 2015 amounted to $98.1 million compared to $97.3 million recorded in 2014.
Salaries expense rose in 2015 as a result of the hiring of additional staff to drive growth, as well as higher incentive compensation expense related to the Company's performance. The line item "Other operating expenses" amounted to $7.9 million for the fourth quarter of 2015 compared $6.7 million in the fourth quarter of 2014. In the fourth quarter of 2014, the Company determined that approximately $1.0 million in collections expenses incurred in prior years associated with covered assets were eligible to be claimed for reimbursement with the FDIC, which resulted in a $1 million reduction in other operating expenses for that quarter.
Balance Sheet and Capital
Total assets at December 31, 2015 amounted to $3.4 billion, a 4.5% increase from a year earlier. Total loans at December 31, 2015 amounted to $2.5 billion, a 5.1% increase from a year earlier, and total deposits amounted to $2.8 billion at December 31, 2015, a 4.3% increase from a year earlier.
Non-covered loans amounted to $2.42 billion at December 31, 2015, an increase of $147.7 million, or 6.5% from December 31, 2014, as a result of ongoing internal initiatives to drive loan growth. Loans covered by FDIC loss share agreements declined 19.6% in 2015 and are expected to continue to decline as those loans continue to pay down.
The increase in total deposits at December 31, 2015 compared to December 31, 2014 was primarily due to increases in checking, money market and savings accounts, which increased in total by $236.5 million, or 12.6%, during 2015. Those increases were partially offset by decreases in time deposits, which declined a total of $121.1 million, or 14.7%, during 2015. Time deposits are generally one of the Company's most expensive funding sources, and thus the shift from this category has reduced the Company's overall cost of funds.
On June 25, 2015, the Company redeemed $32 million (32,000 shares) of the outstanding Non-Cumulative Perpetual Preferred Stock, Series B ("SBLF Stock") that had been issued to the United States Secretary of the Treasury in September 2011 related to the Company's participation in the Small Business Lending Fund. On October 16, 2015, the remaining $31.5 million of SBLF Stock was redeemed, which ended the Company's participation in the Small Business Lending Fund.
The Company remains well-capitalized by all regulatory standards, with a Total Risk-Based Capital Ratio at December 31, 2015 of 14.44% compared to the 10.00% minimum to be considered well-capitalized. The Company's tangible common equity to tangible assets ratio was 8.13% at December 31, 2015, an increase of 23 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, "2015 was an excellent year for First Bancorp. Ongoing growth initiatives helped drive strong loan and deposit growth, while the core net interest margin remained steady and nonperforming assets continued to decline. 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 January 1, 2016, the Company completed the previously announced
acquisition of Bankingport, Inc., an insurance agency based in Sanford,
North Carolina. This acquisition provided the Company the opportunity to
enhance its product offerings, as well as expand its insurance agency
operations into Sanford, a significant banking market for the Company.
-- On December 15, 2015, the Company announced a quarterly cash dividend of
$0.08 per share payable on January 25, 2016 to shareholders of record on
December 31, 2015. This is the same dividend rate as the Company
declared in the fourth quarter of 2014.
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 $3.4 billion. Its principal activity is the ownership and operation of First Bank, a state-chartered community bank that operates 88 branches, with 75 branches operating in North Carolina, 6 branches in South Carolina (Cheraw, Dillon, Florence, and Latta), and 7 branches in Virginia (Abingdon, Blacksburg, Christiansburg, Fort Chiswell, Radford, Salem and Wytheville), where First Bank does business as First Bank of Virginia. First Bank also has loan production offices in Charlotte, North Carolina and Greenville, North Carolina. 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.
First Bancorp and Subsidiaries
Financial Summary - Page 1
==========================
Three Months Ended Percent
December 31,
------------
($ in thousands except per share data - unaudited) 2015 2014 Change
------------------------------------------------- ---- ---- ------
INCOME STATEMENT
Interest income
---------------
Interest and fees on loans $29,615 31,160
Interest on investment securities 2,057 1,408
Other interest income 135 259
--- ---
Total interest income 31,807 32,827 (3.1%)
------ ------
Interest expense
----------------
Interest on deposits 1,264 1,602
Interest on borrowings 490 302
--- ---
Total interest expense 1,754 1,904 (7.9%)
----- -----
Net interest income 30,053 30,923 (2.8%)
------ ------
Provision for loan losses - non-covered loans 636 1,285 (50.5%)
Provision (reversal) for loan losses - covered loans (679) 191 n/m
---- ---
Total provision (reversal) for loan losses (43) 1,476 n/m
--- -----
Net interest income after provision for loan losses 30,096 29,447 2.2%
------ ------
Noninterest income
------------------
Service charges on deposit accounts 2,924 3,261
Other service charges, commissions, and fees 2,815 2,552
Fees from presold mortgages 512 522
Commissions from financial product sales 663 748
Bank-owned life insurance income 529 355
Foreclosed property gains (losses) - non-covered (572) (460)
Foreclosed property gains (losses) - covered 608 598
FDIC indemnification asset income (expense), net (1,530) (3,138)
Securities gains (losses) - -
Other gains (losses) (224) 54
---- ---
Total noninterest income 5,725 4,492 27.4%
----- -----
Noninterest expenses
--------------------
Salaries expense 12,204 11,284
Employee benefit expense 2,432 1,939
Occupancy and equipment expense 2,798 2,841
Intangibles amortization 181 195
Other operating expenses 7,888 6,730
----- -----
Total noninterest expenses 25,503 22,989 10.9%
------ ------
Income before income taxes 10,318 10,950 (5.8%)
Income taxes 3,521 3,855 (8.7%)
----- -----
Net income 6,797 7,095 (4.2%)
Preferred stock dividends (37) (217)
Net income available to common shareholders $6,760 6,878 (1.7%)
====== =====
Earnings per common share - basic $0.34 0.35 (2.9%)
Earnings per common share - diluted 0.33 0.34 (2.9%)
ADDITIONAL INCOME STATEMENT INFORMATION
---------------------------------------
Net interest income, as reported $30,053 30,923
Tax-equivalent adjustment (1) 423 376
--- ---
Net interest income, tax-equivalent $30,476 31,299 (2.6%)
======= ======
(1) This amount reflects the tax
benefit that the Company receives
related to its tax-exempt loans
and securities, which carry
interest rates lower than similar
taxable investments due to their
tax-exempt status. This amount
has been computed assuming a 38%
tax rate and is reduced by the
related nondeductible portion of
interest expense.
n/m = not meaningful
First Bancorp and Subsidiaries
Financial Summary - Page 2
==========================
Twelve Months Ended Percent
December 31,
------------
($ in thousands except per share data - unaudited) 2015 2014 Change
------------------------------------------------- ---- ---- ------
INCOME STATEMENT
Interest income
---------------
Interest and fees on loans $117,872 133,641
Interest on investment securities 8,125 5,342
Other interest income 658 849
--- ---
Total interest income 126,655 139,832 (9.4%)
------- -------
Interest expense
----------------
Interest on deposits 5,319 7,072
Other, primarily borrowings 1,589 1,151
----- -----
Total interest expense 6,908 8,223 (16.0%)
----- -----
Net interest income 119,747 131,609 (9.0%)
------- -------
Provision for loan losses - non-covered loans 2,008 7,087 (71.7%)
Provision (reversal) for loan losses - covered loans (2,788) 3,108 n/m
------ -----
Total provision (reversal) for loan losses (780) 10,195 n/m
---- ------
Net interest income after provision for loan losses 120,527 121,414 (0.7%)
------- -------
Noninterest income
------------------
Service charges on deposit accounts 11,648 13,706
Other service charges, commissions, and fees 10,906 10,019
Fees from presold mortgages 2,532 2,726
Commissions from financial product sales 2,580 2,733
Bank-owned life insurance income 1,665 1,311
Foreclosed property gains (losses) - non-covered (2,504) (1,924)
Foreclosed property gains (losses) - covered 1,018 (1,919)
FDIC indemnification asset income (expense), net (8,615) (12,842)
Securities gains (losses) (1) 786
Other gains (losses) (465) (228)
---- ----
Total noninterest income 18,764 14,368 30.6%
------ ------
Noninterest expenses
--------------------
Salaries expense 47,660 46,071
Employee benefit expense 9,134 9,086
Occupancy and equipment expense 11,107 11,293
Intangibles amortization 722 777
Other operating expenses 29,508 30,024
------ ------
Total noninterest expenses 98,131 97,251 0.9%
------ ------
Income before income taxes 41,160 38,531 6.8%
Income taxes 14,126 13,535 4.4%
------ ------
Net income 27,034 24,996 8.2%
Preferred stock dividends (603) (868)
Net income available to common shareholders $26,431 24,128 9.5%
======= ======
Earnings per common share - basic $1.34 1.22 9.8%
Earnings per common share - diluted 1.30 1.19 9.2%
ADDITIONAL INCOME STATEMENT INFORMATION
---------------------------------------
Net interest income, as reported $119,747 131,609
Tax-equivalent adjustment (1) 1,634 1,502
----- -----
Net interest income, tax-equivalent $121,381 133,111 (8.8%)
======== =======
(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 3
==========================
Three Months Ended Twelve Months Ended
December 31, December 31,
------------ ------------
PERFORMANCE RATIOS
(annualized) 2015 2014 2015 2014
---- ----
Return on average assets
(1) 0.82% 0.85% 0.82% 0.75%
Return on average common
equity (2) 7.96% 8.56% 8.04% 7.73%
Net interest margin -
tax-equivalent (3) 4.05% 4.25% 4.13% 4.58%
Net charge-offs to
average loans - non-
covered 0.33% 0.78% 0.58% 0.65%
COMMON SHARE DATA
Cash dividends declared
- common $0.08 0.08 $0.32 0.32
Stated book value -
common 16.96 16.08 16.96 16.08
Tangible book value -
common 13.56 12.63 13.56 12.63
Common shares
outstanding at end of
period 19,747,509 19,709,881 19,747,509 19,709,881
Weighted average shares
outstanding - basic 19,787,459 19,706,926 19,767,470 19,699,801
Weighted average shares
outstanding - diluted 20,522,125 20,440,533 20,499,727 20,434,007
CAPITAL RATIOS
Tangible equity to
tangible assets 8.35% 10.15% 8.35% 10.15%
Tangible common equity
to tangible assets 8.13% 7.90% 8.13% 7.90%
Tier I leverage ratio 10.38% 11.61% 10.38% 11.61%
Tier I risk-based
capital ratio 13.30% 16.35% 13.30% 16.35%
Total risk-based
capital ratio 14.44% 17.60% 14.44% 17.60%
AVERAGE BALANCES ($ in thousands)
Total assets $3,282,853 $3,214,302 $3,230,302 $3,219,915
Loans 2,504,022 2,411,117 2,434,602 2,434,331
Earning assets 2,982,356 2,920,295 2,936,624 2,907,098
Deposits 2,732,231 2,691,076 2,687,381 2,723,758
Interest-bearing
liabilities 2,258,911 2,235,758 2,218,246 2,294,330
Shareholders' equity 348,777 389,709 376,287 383,055
(1) Calculated by dividing annualized net income (loss) available to common shareholders by average assets.
(2) Calculated by dividing annualized net income (loss) available to common shareholders by average common equity.
(3) See footnote 1 on page 1 of Financial Summary for discussion of tax-equivalent adjustments.
TREND INFORMATION
($ in thousands except per share data) For the Three Months Ended
--------------------------
INCOME STATEMENT December 31, September 30, June 30, March 31, December 31,
2015 2015 2015 2015 2014
---- ---- ---- ---- ----
Net interest income - tax-equivalent (1) $30,476 30,805 30,007 30,093 31,299
Taxable equivalent adjustment (1) 423 419 402 390 376
Net interest income 30,053 30,386 29,605 29,703 30,923
Provision for loan losses - non-covered 636 267 1,001 104 1,285
Provision (reversal) for loan losses - covered (679) (1,681) (160) (268) 191
Noninterest income 5,725 3,506 5,004 4,529 4,492
Noninterest expense 25,503 24,614 24,300 23,714 22,989
Income before income taxes 10,318 10,692 9,468 10,682 10,950
Income tax expense 3,521 3,687 3,224 3,694 3,855
Net income 6,797 7,005 6,244 6,988 7,095
Preferred stock dividends (37) (137) (212) (217) (217)
Net income available to common shareholders 6,760 6,868 6,032 6,771 6,878
Earnings per common share - basic 0.34 0.35 0.30 0.34 0.35
Earnings per common share - diluted 0.33 0.34 0.30 0.33 0.34
See footnote 1 on page 1 of Financial Summary for discussion of tax-equivalent adjustments.
===========================================================================================
First Bancorp and Subsidiaries
Financial Summary - Page 4
==========================
CONSOLIDATED BALANCE SHEETS At Dec. 31, At Sept. 30, At Dec. 31, One
($ in thousands - unaudited) 2015 2015 2014 Year
Change
------
Assets
Cash and due from banks $53,285 52,788 81,068 (34.3%)
Interest bearing deposits with banks 213,983 166,001 172,016 24.4%
------- ------- -------
Total cash and cash equivalents 267,268 218,789 253,084 5.6%
------- ------- -------
Investment securities 320,224 338,813 336,705 (4.9%)
Presold mortgages 4,323 3,150 6,019 (28.2%)
Loans - non-covered 2,416,285 2,375,094 2,268,580 6.5%
Loans - covered by FDIC loss share agreements 102,641 106,609 127,594 (19.6%)
------- ------- -------
Total loans 2,518,926 2,481,703 2,396,174 5.1%
--------- --------- ---------
Allowance for loan losses - non-covered (26,784) (28,155) (38,345) (30.1%)
Allowance for loan losses - covered (1,799) (1,900) (2,281) (21.1%)
------ ------ ------
Total allowance for loan losses (28,583) (30,055) (40,626) (29.6%)
------- ------- -------
Net loans 2,490,343 2,451,648 2,355,548 5.7%
--------- --------- ---------
Premises and equipment 74,559 74,839 75,113 (0.7%)
FDIC indemnification asset 8,439 7,649 22,569 (62.6%)
Intangible assets 67,171 67,351 67,893 (1.1%)
Foreclosed real estate - non-covered 9,188 9,304 9,771 (6.0%)
Foreclosed real estate - covered 806 1,569 2,350 (65.7%)
Bank-owned life insurance 72,086 56,557 55,421 30.1%
Other assets 47,658 43,172 33,910 40.5%
------ ------ ------
Total assets $3,362,065 3,272,841 3,218,383 4.5%
========== ========= =========
Liabilities
Deposits:
Non-interest bearing checking accounts $659,038 635,287 560,230 17.6%
Interest bearing checking accounts 626,878 609,908 583,903 7.4%
Money market accounts 636,692 581,644 548,255 16.1%
Savings accounts 186,616 187,607 180,317 3.5%
Brokered deposits 76,412 46,692 88,375 (13.5%)
Internet time deposits - - 747 (100.0%)
Other time deposits > $100,000 329,819 338,214 384,127 (14.1%)
Other time deposits 295,830 308,401 349,952 (15.5%)
------- ------- -------
Total deposits 2,811,285 2,707,753 2,695,906 4.3%
Borrowings 186,394 176,394 116,394 60.1%
Other liabilities 22,196 17,520 18,384 20.7%
------ ------ ------
Total liabilities 3,019,875 2,901,667 2,830,684 6.7%
--------- --------- ---------
Shareholders' equity
Preferred stock 7,287 38,787 70,787 (89.7%)
Common stock 133,393 133,211 132,532 0.6%
Retained earnings 205,060 199,886 184,958 10.9%
Accumulated other comprehensive income (loss) (3,550) (710) (578) n/m
------ ---- ----
Total shareholders' equity 342,190 371,174 387,699 (11.7%)
------- ------- -------
Total liabilities and shareholders' equity $3,362,065 3,272,841 3,218,383 4.5%
========== ========= =========
n/m = not meaningful
First Bancorp and Subsidiaries
Financial Summary - Page 5
==========================
For the Three Months Ended
--------------------------
YIELD INFORMATION December 31, September 30, June 30, March 31, December 31,
2015 2015 2015 2015 2014
---- ---- ---- ---- ----
Yield on loans 4.69% 4.83% 4.86% 4.99% 5.13%
Yield on securities - tax-equivalent (1) 2.99% 2.75% 2.80% 2.67% 2.95%
Yield on other earning assets 0.36% 0.43% 0.50% 0.43% 0.38%
Yield on all interest earning assets 4.29% 4.38% 4.38% 4.44% 4.51%
Rate on interest bearing deposits 0.24% 0.24% 0.26% 0.28% 0.30%
Rate on other interest bearing liabilities 1.05% 1.09% 1.04% 1.03% 1.03%
Rate on all interest bearing liabilities 0.31% 0.31% 0.30% 0.32% 0.34%
Total cost of funds 0.24% 0.24% 0.24% 0.26% 0.27%
Net interest margin - tax-equivalent (2) 4.05% 4.14% 4.15% 4.19% 4.25%
Average prime rate 3.29% 3.25% 3.25% 3.25% 3.25%
(1) See footnote 1 on page 1 of Financial Summary for discussion of tax-equivalent adjustments.
(2) Calculated by dividing annualized tax-equivalent net interest income by average earning assets for the period. See footnote 1 on page 1 of Financial
Summary for discussion of tax-equivalent adjustments.
=====================================================
For the Three Months Ended
--------------------------
NET INTEREST INCOME PURCHASE December 31, September 30, June 30, March 31, December 31,
ACCOUNTING ADJUSTMENTS 2015 2015 2015 2015 2014
($ in thousands)
---
Interest income - increased by accretion of $854 1,205 1,135 1,557 2,173
loan discount (1)
Impact on net interest income $854 1,205 1,135 1,557 2,173
==== ===== ===== ===== =====
(1) Corresponding indemnification asset expense is recorded for approximately 80% of this amount, and therefore the net effect is that pretax
income is positively impacted by 20% of the amounts in this line item.
First Bancorp and Subsidiaries
Financial Summary - Page 6
==========================
ASSET QUALITY DATA ($ in thousands) Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
2015 2015 2015 2015 2014
---- ---- ---- ---- ----
Non-covered nonperforming assets
--------------------------------
Nonaccrual loans $39,994 42,347 44,123 47,416 50,066
Troubled debt restructurings - accruing 28,011 29,250 32,059 33,997 35,493
Accruing loans > 90 days past due - - - - -
--- --- --- --- ---
Total non-covered nonperforming loans 68,005 71,597 76,182 81,413 85,559
Foreclosed real estate 9,188 9,304 9,954 8,978 9,771
----- ----- ----- ----- -----
Total non-covered nonperforming assets $77,193 80,901 86,136 90,391 95,330
======= ====== ====== ====== ======
Covered nonperforming assets (1)
-------------------------------
Nonaccrual loans $7,816 5,373 7,378 8,596 10,508
Troubled debt restructurings - accruing 3,478 3,825 3,910 3,874 5,823
Accruing loans > 90 days past due - - - - -
--- --- --- --- ---
Total covered nonperforming loans 11,294 9,198 11,288 12,470 16,331
Foreclosed real estate 806 1,569 1,945 2,055 2,350
--- ----- ----- ----- -----
Total covered nonperforming assets $12,100 10,767 13,233 14,525 18,681
======= ====== ====== ====== ======
Total nonperforming assets $89,293 91,668 99,369 104,916 114,011
======= ====== ====== ======= =======
Asset Quality Ratios - All Assets
---------------------------------
Net quarterly charge-offs to average loans - annualized 0.23% 0.10% 0.80% 0.76% 0.82%
Nonperforming loans to total loans 3.15% 3.26% 3.63% 3.92% 4.25%
Nonperforming assets to total assets 2.66% 2.80% 3.09% 3.26% 3.54%
Allowance for loan losses to total loans 1.13% 1.21% 1.33% 1.50% 1.70%
Asset Quality Ratios - Based on Non-covered Assets only
-------------------------------------------------------
Net quarterly charge-offs to average non-covered loans - annualized 0.33% 0.38% 0.81% 0.84% 0.78%
Non-covered nonperforming loans to non-covered loans 2.81% 3.01% 3.31% 3.58% 3.77%
Non-covered nonperforming assets to total non-covered assets 2.37% 2.56% 2.78% 2.92% 3.09%
Allowance for loan losses (non-covered) to non-covered loans 1.11% 1.19% 1.31% 1.48% 1.69%
(1) Covered nonperforming assets consist of assets that are included in loss-share agreements with the FDIC.
First Bancorp and Subsidiaries
Financial Summary - Page 7
==========================
For the Three Months Ended
--------------------------
NET INTEREST MARGIN, EXCLUDING Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
LOAN DISCOUNT ACCRETION - 2015 2015 2015 2015 2014
RECONCILIATION
($ in thousands)
---
Net interest income, as reported $30,053 30,386 29,605 29,703 30,923
Tax-equivalent adjustment 423 419 402 390 376
--- --- --- --- ---
Net interest income, tax-equivalent (A) $30,476 30,805 30,007 30,093 31,299
======= ====== ====== ====== ======
Average earning assets (B) $2,982,356 2,951,638 2,901,770 2,910,732 2,920,295
========== ========= ========= ========= =========
Tax-equivalent net interest 4.05% 4.14% 4.15% 4.19% 4.25%
margin, annualized - as reported - (A)/(B)
Net interest income, tax-equivalent $30,476 30,805 30,007 30,093 31,299
Loan discount accretion 854 1,205 1,135 1,557 2,173
--- ----- ----- ----- -----
Net interest income, tax-equivalent, excluding $29,622 29,600 28,872 28,536 29,126
loan discount accretion (A)
===
Average earnings assets (B) $2,982,356 2,951,638 2,901,770 2,910,732 2,920,295
========== ========= ========= ========= =========
Tax-equivalent net interest margin, excluding 3.94% 3.98% 3.99% 3.98% 3.96%
impact of loan discount accretion,
annualized - (A) / (B)
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 December 31, 2015, the Company had a remaining loan discount balance of $15.3 million compared to $20.8 million at December 31, 2014. 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.
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SOURCE First Bancorp
