First Bancorp Reports First Quarter Results

SOUTHERN PINES, N.C., April 30, 2014 /PRNewswire/ -- First Bancorp (NASDAQ: FBNC), the parent company of First Bank, announced today net income available to common shareholders of $5.5 million, or $0.27 per diluted common share, for the three months ended March 31, 2014, compared to net income available to common shareholders of $2.9 million, or $0.14 per diluted common share, recorded in the first quarter of 2013.  The higher earnings were the result of a higher net interest margin, lower provision for loan losses and higher fee income.

Net Interest Income and Net Interest Margin

Net interest income for the first quarter of 2014 amounted to $35.5 million, an 11.3% increase from the $31.9 million recorded in the first quarter of 2013. 

The Company's net interest margin (tax-equivalent net interest income divided by average earning assets) in the first quarter of 2014 was 5.13% compared to 4.69% for the first quarter of 2013.  The 5.13% net interest margin was a nine basis point increase from the 5.04% margin realized in the fourth quarter of 2013.  The higher margins are primarily due to higher amounts of discount accretion on loans purchased in failed-bank acquisitions recognized during the respective periods.  As shown in the accompanying tables, loan discount accretion amounted to $6.4 million in the first quarter of 2014, $5.6 million in the fourth quarter of 2013, and $3.7 million in the first quarter of 2013.

Excluding the effects of discount accretion on purchased loans, the Company's net interest margin has been relatively stable, amounting to 4.22% for the first quarter of 2014, 4.25% for the fourth quarter of 2013, and 4.16% for the first quarter of 2013.  See the Financial Summary for a table that presents the impact of loan discount accretion, as well as other purchase accounting adjustments affecting 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 has steadily declined from 0.45% in the first quarter of 2013 to 0.31% in the first quarter of 2014, which also had a positive impact on the Company's net interest margin.

Provision for Loan Losses and Asset Quality

The Company recorded total provisions for loan losses of $3.6 million in the first quarter of 2014 compared to $11.1 million for the first quarter of 2013, with the provisions related to both non-covered loans and covered loans being lower in 2014 compared to 2013 – 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 $3.4 million in the first quarter of 2014 compared to $5.8 million in the first quarter of 2013.  The lower provision in 2014 was primarily the result of stable overall asset quality and low levels of net charge-offs.

The provision for loan losses on covered loans amounted to $0.2 million in the first quarter of 2014 compared to $5.4 million in the first quarter of 2013.  The decrease was primarily due to lower levels of covered nonperforming loans during the period, stabilization in the underlying collateral values of nonperforming loans, and a $1.9 million recovery that the Company realized in the first quarter of 2014.

Total non-covered nonperforming assets have remained relatively unchanged over the past year, amounting to $82.2 million at March 31, 2014 (2.65% of total non-covered assets), $82.0 million at December 31, 2013 and $83.4 million at March 31, 2013.

Total covered nonperforming assets have steadily declined in the past year, amounting to $58.9 million at March 31, 2014 compared to $70.6 million at December 31, 2013 and $92.0 million at March 31, 2013.  The Company continues to resolve significant amounts of covered loans and to experience 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 for the three months ended March 31, 2014 was $0.3 million compared to $7.1 million for the comparable period of 2013. 

Core noninterest income for the first quarter of 2014 was $7.5 million, an increase of 15.5% over the $6.5 million reported for the first quarter of 2013.  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.  The largest component of the increase in core noninterest income was in the amount of service charges on deposits recorded by the Company. In December 2013, the Company introduced a new deposit product line-up that simplified the Company's product offering and also altered the fee structure of many accounts.  Some customer charges were lowered or eliminated, while other fees were increased, with the most significant change being the elimination of free checking for customers maintaining low account balances, which is the primary cause of the higher service charges in 2014.

Noncore components of noninterest income resulted in net losses of $7.2 million in the first quarter of 2014 compared to net gains of $0.6 million in the first quarter of 2013.  The largest variance related to indemnification asset income (expense) – see discussion below.

Indemnification asset income (expense) is recorded to reflect additional (decreased) amounts expected to be received from the FDIC related to covered assets arising during the period.  The three primary items that result in the recording of indemnification asset income (expense) are 1) loan discount accretion, 2) provisions for loan losses on covered loans and 3) foreclosed property gains (losses) on covered assets.  Income and gains on covered assets generally result in the recording of indemnification asset expense, while losses result in indemnification asset income.  In the first quarter of 2014, the Company recorded $4.9 million in indemnification asset expense compared to $4.9 million in indemnification asset income in the first quarter of 2013.  The variance between the first quarter of 2014 and the first quarter of 2013 is due to higher indemnification asset expense associated with higher loan discount accretion and fewer covered loan and foreclosed property losses that result in indemnification asset income.

See additional discussion related to this matter in the section below entitled "Note Regarding Components of Earnings."

Noninterest Expenses

Noninterest expenses amounted to $23.6 million in the first quarter of 2014 compared to $23.2 million recorded in the first quarter of 2013.  Salaries expense increased in the first quarter of 2014 in comparison to the first quarter of 2013 due to hiring additional employees during 2013 in the Company's credit administration and mortgage banking divisions.  Partially offsetting the increase in salaries expense were lower collection and foreclosed property expenses in 2014, which reflects lower levels of problem assets.

Balance Sheet and Capital

Total assets at March 31, 2014 amounted to $3.3 billion, a 1.0% increase from a year earlier.  Total loans at March 31, 2014 amounted to $2.4 billion, a 2.1% increase from a year earlier, and total deposits amounted to $2.8 billion at March 31, 2014, a 2.5% decrease from a year earlier. 

Total loans increased over the past year, as growth in non-covered loans has exceeded the steady decline in covered loans.  The Company's non-covered loans increased by $124 million at March 31, 2014 compared to a year earlier, representing growth of 5.8%.  The Company continues to see improved loan demand as the local economies in its market areas improve.   

The lower amount of deposits at March 31, 2014 compared to March 31, 2013 was primarily due to declines in retail time deposits (called "other time deposits" and "other time deposits > $100,000" in the accompanying tables), with increases in checking accounts offsetting most of the decline.  Retail time deposits are generally one of the Company's most expensive funding sources, and thus the shift from this category benefited the Company's overall cost of funds.

The Company obtained new borrowings of $90 million in the first quarter of 2014 from a low cost funding source in order to enhance the Company's cash position and in anticipation of future loan growth.

The Company remains well-capitalized by all regulatory standards, with a Total Risk-Based Capital Ratio at March 31, 2014 of 16.83% compared to the 10.00% minimum to be considered well-capitalized.  The Company's tangible common equity to tangible assets ratio was 7.30% at March 31, 2014, an increase of 54 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, "I am pleased that our quarterly earnings were almost double those of the same period in 2013. Revenues are increasing and the improving economy is resulting in lower provisions for loan losses.  I am optimistic that these positive trends will continue."

Mr. Moore continued, "Our annual shareholders meeting will be held on May 8, 2014 at 3:00 at the James H. Garner Center in Troy.  I look forward to meeting shareholders and discussing the events occurring at our Company."

The following is a list of business development and other miscellaneous matters affecting the Company:

  • On January 16, 2014, the Company unveiled its new website, www.LocalFirstBank.com, which has a new look and many new features that make banking with First Bank better than ever.
  • On January 15, 2014, the First Bank branch located in Wallace, North Carolina relocated to a new location at 517 North Norwood Street.  A grand opening celebration was held on January 24, 2014 with the staff welcoming customers to its new and improved facility.
  • On March 21, 2014, the First Bank branch located in West Innes Street in Salisbury, North Carolina was closed.  The accounts at that branch were reassigned to First Bank's branch located at 1525 Jake Alexander Boulevard.
  • On March 14, 2014, the Company announced a quarterly cash dividend of $0.08 cents per share payable on April 25, 2014 to shareholders of record on March 31, 2014.  This is the same dividend rate as the Company declared in the first quarter of 2013.
  • The Company expects to open a full-service branch in Fuquay-Varina, North Carolina, in the second quarter of 2014. The new branch will be located at 125 North Main Street. 
  • The Company is planning to construct a new branch facility at 4110 Bradham Drive, Jacksonville, North Carolina.  Upon completion, the First Bank branch located on Western Boulevard will be closed and the accounts at that branch will be reassigned to the new and improved branch.  This is expected to occur in the first quarter of 2015 and is subject to regulatory approval.

Note Regarding Components of Earnings

The Company's results of operation 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 payoff, 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 $3.3 billion.  Its principal activity is the ownership and operation of First Bank, a state-chartered community bank that operates 95 branches, with 80 branches operating in North Carolina, 7 branches in South Carolina (Cheraw, Dillon, Florence, and Latta), and 8 branches in Virginia (Abingdon, Blacksburg, Christiansburg, Dublin, 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, Fayetteville, 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

March 31,

 

Percent

($ in thousands except per share data – unaudited)

2014


2013

Change






INCOME STATEMENT










Interest income





   Interest and fees on loans

$            36,086


33,551


   Interest on investment securities

1,471


1,384


   Other interest income

119


154


      Total interest income

37,676


35,089

7.4%

Interest expense





   Interest on deposits

1,891


2,912


   Other, primarily borrowings

250


256


      Total interest expense

2,141


3,168

(32.4%)

        Net interest income

35,535


31,921

11.3%

Provision for loan losses – non-covered loans

3,365


5,771

(41.7%)

Provision for loan losses – covered loans

210


5,378

(96.1%)

Total provision for loan losses

3,575


11,149

(67.9%)

Net interest income after provision for loan losses

31,960


20,772

53.9%

Noninterest income





   Service charges on deposit accounts

3,573


2,935


   Other service charges, commissions, and fees

2,367


2,175


   Fees from presold mortgages

607


747


   Commissions from financial product sales

594


399


   Bank-owned life insurance income

327


208


   Foreclosed property gains (losses) – non-covered

(156)


758


   Foreclosed property gains (losses) – covered

(2,117)


(4,616)


   FDIC indemnification asset income (expense), net

(4,916)


4,897


   Other gains (losses)

19


(395)


      Total noninterest income

298


7,108

(95.8%)

Noninterest expenses





   Salaries expense

11,648


10,677


   Employee benefit expense

2,311


2,627


   Occupancy and equipment expense

2,808


2,762


   Intangibles amortization

194


199


   Other operating expenses

6,590


6,959


      Total noninterest expenses

23,551


23,224

1.4%

Income before income taxes

8,707


4,656

87.0%

Income taxes

3,031


1,556

94.8%

Net income

5,676


3,100

83.1%






Preferred stock dividends

(217)


(245)







Net income available to common shareholders

$              5,459


2,855

91.2%











Earnings per common share – basic

$               0.28


0.15

86.7%

Earnings per common share – diluted

0.27


0.14

92.9%






ADDITIONAL INCOME STATEMENT INFORMATION





   Net interest income, as reported

$            35,535


31,921


   Tax-equivalent adjustment (1)

373


372


   Net interest income, tax-equivalent

$            35,908


32,293

11.2%









(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 39% 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)

2014

2013


Return on average assets (1)

0.70%

0.36%


Return on average common equity (2)

7.24%

4.01%


Net interest margin – tax-equivalent (3)

5.13%

4.69%


Net charge-offs to average loans – non-covered

0.52%

0.51%






COMMON SHARE DATA




Cash dividends declared – common

$         0.08

0.08


Stated book value – common

15.50

14.56


Tangible book value – common

12.02

11.04


Common shares outstanding at end of period

19,695,316

19,669,302


Weighted average shares outstanding – basic

19,688,183

19,669,302


Weighted average shares outstanding – diluted

20,424,475

20,409,760






CAPITAL RATIOS




Tangible equity to tangible assets

9.48%

8.96%


Tangible common equity to tangible assets

7.30%

6.76%


Tier I leverage ratio

11.27%

10.55%


Tier I risk-based capital ratio

15.57%

15.56%


Total risk-based capital ratio

16.83%

16.82%






AVERAGE BALANCES ($ in thousands)




Total assets

$ 3,178,848

3,228,463


Loans

2,459,368

2,382,861


Earning assets

2,836,806

2,790,745


Deposits

2,739,194

2,803,245


Interest-bearing liabilities

2,294,138

2,439,895


Shareholders' equity

376,418

359,362






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

(2) Calculated by dividing annualized net income 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

March 31,  2014

December 31, 

 2013

September 30, 

2013

June 30,  2013

March 31,  2013







Net interest income – tax-equivalent (1)

$    35,908

35,662

34,107

35,975

32,293

Taxable equivalent adjustment (1)

373

386

380

373

372

Net interest income

35,535

35,276

33,727

35,602

31,921

Provision for loan losses – non-covered

3,365

4,965

3,487

4,043

5,771

Provision for loan losses – covered

210

3,931

1,493

1,548

5,378

Noninterest income

298

6,286

5,608

4,487

7,108

Noninterest expense

23,551

23,935

23,704

25,756

23,224

Income before income taxes

8,707

8,731

10,651

8,742

4,656

Income tax expense

3,031

3,053

4,318

3,154

1,556

Net income

5,676

5,678

6,333

5,588

3,100

Preferred stock dividends

(217)

(217)

(216)

(217)

(245)

Net income available to common shareholders

5,459

5,461

6,117

5,371

2,855







Earnings per common share – basic

0.28

0.28

0.31

0.27

0.15

Earnings per common share – diluted

0.27

0.27

0.30

0.27

0.14



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

 

First Bancorp and Subsidiaries
Financial Summary – Page 3


 

CONSOLIDATED BALANCE SHEETS

($ in thousands)

 

At Mar. 31,

2014


 

At Dec. 31,

2013


 

At Mar. 31,

2013


One Year

Change

Assets








Cash and due from banks

$      219,779


83,881


73,205


200.2%

Interest bearing deposits with banks

164,310


139,393


243,139


(32.4%)

     Total cash and cash equivalents

384,089


223,274


316,344


21.4%









Investment securities

234,127


227,036


225,863


3.7%

Presold mortgages

4,587


5,422


4,584


0.1%









Loans – non-covered

2,256,726


2,252,885


2,132,683


5.8%

Loans – covered by FDIC loss share agreements

190,551


210,309


263,468


(27.7%)

     Total loans

2,447,277


2,463,194


2,396,151


2.1%

Allowance for loan losses – non-covered

(44,706)


(44,263)


(44,761)


(0.1%)

Allowance for loan losses – covered

(3,421)


(4,242)


(5,028)


(32.0%)

     Total allowance for loan losses

(48,127)


(48,505)


(49,789)


(3.3%)

     Net loans

2,399,150


2,414,689


2,346,362


2.2%









Premises and equipment

76,970


77,448


77,823


(1.1%)

FDIC indemnification asset

35,504


48,622


100,594


(64.7%)

Intangible assets

68,475


68,669


69,330


(1.2%)

Foreclosed real estate – non-covered

11,740


12,251


20,115


(41.6%)

Foreclosed real estate – covered

19,504


24,497


30,156


(35.3%)

Bank-owned life insurance

44,367


44,040


27,193


63.2%

Other assets

36,310


39,122


62,581


(42.0%)

     Total assets

$   3,314,823


3,185,070


3,280,945


1.0%

















Liabilities








Deposits:








     Non-interest bearing checking accounts

$      511,612


482,650


429,202


19.2%

     Interest bearing checking accounts

550,702


557,413


539,270


2.1%

     Money market accounts

553,935


547,556


568,092


(2.5%)

     Savings accounts

177,744


169,023


166,510


6.7%

     Brokered deposits

150,272


116,087


118,117


27.2%

     Internet time deposits

1,967


1,319


7,689


(74.4%)

     Other time deposits > $100,000

436,245


451,741


532,747


(18.1%)

     Other time deposits

404,247


425,230


495,940


(18.5%)

          Total deposits

2,786,724


2,751,019


2,857,567


(2.5%)









Borrowings

136,394


46,394


46,394


194.0%

Other liabilities

15,618


15,735


19,752


(20.3%)

     Total liabilities

2,938,736


2,813,148


2,923,713


0.5%









Shareholders' equity








Preferred stock

70,787


70,787


70,787


0.0%

Common stock

132,215


132,099


131,896


0.2%

Retained earnings

171,021


167,136


154,911


10.4%

Accumulated other comprehensive income (loss)

2,064


1,900


(362)


     n/m

     Total shareholders' equity

376,087


371,922


357,232


5.3%

Total liabilities and shareholders' equity

$   3,314,823


3,185,070


3,280,945


1.0%










n/m = not meaningful

 

First Bancorp and Subsidiaries
Financial Summary - Page 4



For the Three Months Ended

 

YIELD INFORMATION

March 31, 
2014

December 31, 
2013

September 30, 
2013

June 30, 
2013

March 31,
2013







Yield on loans

5.95%

5.85%

5.68%

6.17%

5.71%

Yield on securities – tax-equivalent (1)

3.19%

2.96%

2.81%

2.88%

3.23%

Yield on other earning assets

0.34%

0.36%

0.46%

0.38%

0.33%

   Yield on all interest earning assets

5.44%

5.37%

5.21%

5.52%

5.15%







Rate on interest bearing deposits

0.34%

0.36%

0.40%

0.45%

0.49%

Rate on other interest bearing liabilities

2.14%

2.18%

2.21%

2.21%

2.24%

   Rate on all interest bearing liabilities

0.38%

0.40%

0.44%

0.48%

0.53%

     Total cost of funds

0.31%

0.33%

0.37%

0.41%

0.45%







        Net interest margin – tax-equivalent (2)

5.13%

5.04%

4.84%

5.10%

4.69%

        Average prime rate

3.25%

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
ACCOUNTING ADJUSTMENTS

($ in thousands)


 

March 31,
2014


 

December 31,
2013


 

September 30,
2013


 

June 30,
2013


 

March 31,
2013












Interest income – reduced by premium 
     amortization on loans


$        (49)


(49)


(105)


(116)


(116)

Interest income – increased by accretion of 
     loan discount (1)


 

6,408


 

5,605


 

4,325


 

6,612


 

3,658

Interest expense – reduced by premium 
     amortization of deposits


 

3


 

5


 

7


 

8


 

9

     Impact on net interest income


$       6,362


5,561


4,227


6,504


3,551


(1) Indemnification asset income is reduced by 80% of the amount of the accretion of loan discount, 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 5


 

ASSET QUALITY DATA ($ in thousands)

March 31,
2014


Dec. 31,
2013


Sept. 30,
2013


June 30,
2013


March 31,
2013











Non-covered nonperforming assets










Nonaccrual loans

$      44,129


41,938


40,711


42,338


38,917

Troubled debt restructurings - accruing

26,335


27,776


27,656


21,333


24,378

Accruing loans > 90 days past due

-


-


-


-


-

     Total non-covered nonperforming loans

70,464


69,714


68,367


63,671


63,295

Foreclosed real estate

11,740


12,251


15,098


15,425


20,115

Total non-covered nonperforming assets

$      82,204


81,965


83,465


79,096


83,410











Covered nonperforming assets (1)










Nonaccrual loans

$      31,986


37,217


47,233


50,346


51,221

Troubled debt restructurings - accruing

7,429


8,909


6,537


6,790


10,582

Accruing loans > 90 days past due

-


-


-


-


-

     Total covered nonperforming loans

39,415


46,126


53,770


57,136


61,803

Foreclosed real estate

19,504


24,497


29,193


32,005


30,156

Total covered nonperforming assets

$      58,919


70,623


82,963


89,141


91,959











     Total nonperforming assets

$   141,123


152,588


166,428


168,237


175,369

 

Asset Quality Ratios – All Assets










Net charge-offs to average loans - annualized

0.65%


1.31%


1.33%


0.75%


1.32%

Nonperforming loans to total loans

4.49%


4.70%


5.00%


4.97%


5.22%

Nonperforming assets to total assets

4.26%


4.79%


5.25%


5.18%


5.35%

Allowance for loan losses to total loans

1.97%


1.97%


1.95%


2.09%


2.08%











Asset Quality Ratios – Based on Non-covered Assets only










Net charge-offs to average non-covered loans - annualized

0.52%


0.74%


0.87%


0.74%


0.51%

Non-covered nonperforming loans to non-covered loans

3.12%


3.09%


3.09%


2.91%


2.97%

Non-covered nonperforming assets to total non-covered assets

2.65%


2.78%


2.86%


2.66%


2.79%

Allowance for loan losses to non-covered loans

1.98%


1.96%


1.96%


2.05%


2.10%











___________________________________________________________________________________________________________________

(1)  Covered nonperforming assets consist of assets that are included in loss-share agreements with the FDIC.

 



















 

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,  2014


 

 

Dec. 31,  2013


 

 

Sept. 30, 2013


 

 

June 30, 2013


 

 

March 31, 2013











Net interest income, as reported

$       35,535


35,276


33,727


35,602


31,921

Tax-equivalent adjustment

373


386


380


373


372

Net interest income, tax-equivalent (A)

$       35,908


35,662


34,107


35,975


32,293

 

Average earning assets (B)

 

$  2,836,806


2,807,461


2,795,071


 

2,827,171


 

2,790,745

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

 

5.13%


 

5.04%


 

4.84%


 

5.10%


 

4.69%











Net interest income, tax-equivalent

$       35,908


35,662


34,107


35,975


32,293

Loan discount accretion

6,408


5,605


4,325


6,612


3,658

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

$       29,500


 

30,057


29,782


 

29,363


 

28,635

 

Average earnings assets  (B)

$  2,836,806


 

2,807,461


 

2,795,071


 

2,827,171


 

2,790,745

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

4.22%


4.25%


4.23%


4.17%


4.16%


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 March 31, 2014, the Company had a remaining loan discount balance of $31.2 million compared to $63.7 million at March 31, 2013. 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.

 

SOURCE First Bancorp



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