First Bancorp Reports Second Quarter Results

01 Aug, 2011, 16:48 ET from First Bancorp

TROY, N.C., Aug. 1, 2011 /PRNewswire/ --  First Bancorp (NASDAQ: FBNC), the parent company of First Bank, announced today net income available to common shareholders of $2.7 million, or $0.16 per diluted common share, for the three months ended June 30, 2011, compared to $2.9 million, or $0.17 per diluted common share, recorded in the second quarter of 2010.  For the six months ended June 30, 2011, net income available to common shareholders amounted to $8.0 million, or $0.48 per diluted common share, compared to $6.3 million, or $0.38 per diluted common share, for the six months ended June 30, 2010.

In the first quarter of 2011, the Company realized a $10.2 million bargain purchase gain related to the acquisition of The Bank of Asheville in Asheville, North Carolina.  This gain resulted from the difference between the purchase price and the acquisition-date fair values of the acquired assets and liabilities.  The after-tax impact of this gain was $6.2 million, or $0.37 per diluted common share.  The Bank of Asheville was closed by regulatory authorities on January 19, 2011, and First Bank entered into a loss share purchase and assumption agreement with the FDIC to acquire substantially all of its assets and liabilities.  The Bank of Asheville operated through five branches in Asheville, North Carolina, and had total assets of $198 million, including $161 million in loans and $192 million in deposits.

Note Regarding Components of Earnings

In addition to the gain related to The Bank of Asheville acquisition, the Company's results of operation are significantly affected by the on-going accounting for the two FDIC-assisted failed bank acquisitions that the Company has completed.  In the discussion below, 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.

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 discount accretion. For 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% due to the corresponding adjustments made to the indemnification asset.

Net Interest Income and Net Interest Margin

Net interest income for the second quarter of 2011 amounted to $34.5 million, a 9.3% increase from the $31.5 million recorded in the second quarter of 2010.  Net interest income for the six months ended June 30, 2011 amounted to $66.8 million, a 6.5% increase from the $62.7 million recorded in the comparable period of 2010.  The increases in net interest income have been due to higher net interest margins realized, which were partially offset by lower levels of average earning assets.

The Company's net interest margin (tax-equivalent net interest income divided by average earnings assets) in the second quarter of 2011 was 4.92%, a 57 basis point increase compared to the 4.35% margin realized in the second quarter of 2010.  For the six month period ended June 30, 2011, the Company's net interest margin was 4.77% compared to 4.25% for the same period in 2010.  The higher margins are primarily related to larger amounts of discount accretion on loans purchased in failed bank acquisitions, as well as lower overall funding costs. The Company's cost of funds has steadily declined from 1.11% in the second quarter of 2010 to 0.82% in the second quarter of 2011.  See page 5 of the Financial Summary for a table that presents the impact of the purchase accounting adjustments, including discount accretion on purchased loans.  As previously discussed the amount of discount accretion is offset by a corresponding 80% reduction in indemnification asset income, and therefore the positive impact of the discount accretion on the Company's pretax income is equal to 20% of the amount of the discount accretion.

Provision for Loan Losses and Asset Quality

The Company's provisions for loan losses remain at elevated levels, primarily due to high unemployment rates and declining property values in its market area that negatively impact collateral dependent real estate loans.  The Company's provision for loan losses for non-covered loans amounted to $7.6 million in the second quarter of 2011 compared to $8.0 million in the second quarter of 2010.  For the six months ended June 30, 2011 the provision for loan losses for non-covered loans was $15.2 million compared to $15.6 million for the comparable period of 2010.  

The Company's provisions for loan losses for covered loans amounted to $3.3 million and $7.1 million for the three and six months ended June 30, 2011, whereas the Company did not record any provisions for loan losses for covered loans in the first six months of 2010.  As previously discussed, the provision for loan losses related to covered loans is offset by an 80% increase to the FDIC indemnification asset, which increases noninterest income.

Nonperforming asset levels have remained fairly stable over each of the past three quarter ends.  Non-covered nonperforming assets were $116-$120 million over that period, or approximately 4.3% of total non-covered assets.  Covered nonperforming assets have amounted to $164-$169 million over that same period, with the balances at June 30, 2011 and March 31, 2011 being impacted by the nonperforming assets assumed in The Bank of Asheville acquisition.  The Company's outlook for nonperforming assets is consistent with the recent trend, with the Company not expecting material improvement, nor deterioration, in the near future.

Noninterest Income

Total noninterest income was $5.1 million in the second quarter of 2011 compared to $4.5 million for the second quarter of 2010.  For the six months ended June 30, 2011 and 2010, the Company recorded noninterest income of $19.3 million and $10.2 million, respectively.  The significant increase in noninterest income for the six month period comparison is primarily attributable to the aforementioned bargain purchase gain recorded in the first quarter of 2011.

Within noninterest income, service charges on deposits declined for the first six months of 2011 compared to the same period in 2010, amounting to $6.6 million in 2011 and $7.1 million in 2010.  This decline was primarily attributable to lower overdraft fees, which began declining in the second half of 2010 as a result of fewer instances of customers overdrawing their accounts.  This was partially a result of new regulations that took effect in the third quarter of 2010 that limit the Company's ability to charge overdraft fees.  For the second quarter of 2011, service charges on deposit accounts increased to $3.7 million from the $3.6 million recorded in the second quarter of 2010.  This increase was primarily attributable to new fees on deposit accounts that took effect April 1, 2011. In July 2011, in response to additional regulatory guidance, the Company implemented changes to its overdraft policies that are expected to reduce overdraft fees by approximately $75,000 to $100,000 per month.

Other service charges, commissions and fees amounted to $1.7 million in the second quarter of 2011 compared to $1.4 million in the second quarter of 2010.  For the six months ended June 30, 2011, this line item totaled $3.3 million compared to $2.8 million in the comparable period of 2010.  The increases in 2011 are primarily attributable to increased debit card usage by the Company's customers. The Company earns a small fee each time its customers make a debit card transaction. Because the Company has less than $10 billion in assets, it is exempt from recently announced regulatory rules limiting this income.

The Company continues to experience losses and write-downs on its foreclosed properties due to declining property values in its market area.  For the second quarter of 2011, these losses amounted to $2.6 million for covered properties compared to $5.5 million in the second quarter of 2010.  For the first six months of 2011, losses on covered properties amounted to $7.5 million compared to $5.5 million for the same period in 2010.  

Losses on non-covered foreclosed properties amounted to $0.3 million for the second quarter of 2011 compared to $0.1 million in 2010. For the six months ended June 30, 2011, losses on non-covered foreclosed properties amounted to $1.6 million compared to $0.1 million for the same period in 2010.

As previously discussed, indemnification asset income is recorded to reflect additional amounts expected to be received from the FDIC due to covered loan and foreclosed property losses arising during the period.  For the second quarter of 2011, indemnification asset income totaled $1.8 million compared to $4.4 million the second quarter of 2010.  For the six months ended June 30, 2011, indemnification asset income amounted to $6.9 million compared to $4.4 million for the same period of 2010

Noninterest Expenses

Noninterest expenses amounted to $22.9 million in the second quarter of 2011, a 4.4% increase over the $22.0 million recorded in the same period of 2010.  Noninterest expenses for the six months ended June 30, 2011 amounted to $48.0 million, an 8.4% increase from the $44.2 million recorded in the first six months of 2010.

Personnel expense has increased in 2011 due to employees joining the Company in The Bank of Asheville acquisition, as well as higher employee medical expense due to higher claims.  Also, the Company has progressively built its infrastructure to manage increased compliance burdens, collection activities and overall growth of the Company.

Merger expenses associated with The Bank of Asheville acquisition amounted to $243,000 and $594,000 for the three and six months ended June 30, 2011.

For the second quarter of 2011, the Company recorded $7.1 million in other operating expenses, a decline from the $7.6 million recorded in the second quarter of 2010.  This decline was primarily attributable to a decrease in FDIC insurance expense resulting from a change in the methodology that the FDIC uses to assess insurance premiums that was effective on April 1, 2011.

Balance Sheet and Capital

Total assets at June 30, 2011 amounted to $3.3 billion, a 0.5% increase from a year earlier.  Total loans at June 30, 2011 amounted to $2.4 billion, a 4.4% decrease from a year earlier, and total deposits amounted to $2.7 billion at June 30, 2011, a 1.7% decrease from a year earlier.  

Excluding acquisition growth, the Company continues to experience general declines in loans and deposits, which began with the onset of the recession.  Although the Company originates and renews a significant amount of loans each month, normal paydowns of loans and loan foreclosures have been exceeding new loan growth.  Overall, loan demand remains weak in most of the Company's market areas.  The declining loan balances have provided the Company with the liquidity to lessen its reliance on high cost deposits, which has improved funding costs.

The Company remains well-capitalized by all regulatory standards, with a Total Risk-Based Capital Ratio of 17.00% compared to the 10.00% minimum to be considered well-capitalized.  The Company's tangible common equity to tangible assets ratio was 6.65% at June 30, 2011, an increase of 9 basis points from a year earlier.

The Company continues to maintain $65 million in preferred stock that was issued to the US Treasury in January 2009 under the Capital Purchase Program (TARP).  The Company has applied to participate in the Treasury's Small Business Lending Fund (SBLF), which would result in the repayment of its TARP funding by the simultaneous issuance of a similar amount of preferred stock under the terms of the SBLF.  Participation in the SBLF could result in the dividend rate on the preferred stock being reduced from the current 5% to as low as 1%, depending on our success in meeting certain loan growth targets.  Based on current loan levels, the Company would continue to pay at the 5% rate.  If approved, the switch to the SBLF is expected to occur in the third quarter of 2011.

Comments of the President and Other Business Matters

Jerry L. Ocheltree, President and CEO of First Bancorp, commented on today's report, "I am pleased to report another profitable quarter for the Company. Many of our underlying fundamentals are positive as well, including a strong net interest margin, high capital levels, and low overhead expense. I am especially pleased with our profitability in light of the elevated provisions for loan losses that we continue to record in response to the impact of the weak economy.  We are in a great position to achieve high levels of profit when the economy improves.  The Company's strength also allows us to pursue future growth opportunities."

Mr. Ocheltree noted the following other corporate developments:

  • The Company successfully completed the conversion of The Bank of Asheville's computer systems to First Bank on May 27, 2011.
  • The Company expects to file for regulatory approval to open a branch in Salem, Virginia.  This would represent the Company's seventh branch in southwestern Virginia.
  • The Company was recently recognized in the publication Business North Carolina as the bank having the fourth highest amount of net income in the state in 2010.
  • On May 26, 2011, the Company announced a quarterly cash dividend of $0.08 per share payable on July 25, 2011 to shareholders of record on June 30, 2011. This is the same dividend rate as the Company declared in the second quarter of 2010.

First Bancorp is a bank holding company headquartered in Troy, 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 now operates 97 branches, with 82 branches operating in North Carolina, 9 branches in South Carolina (Cheraw, Dillon, Florence, Latta, Jefferson, and Little River), and 6 branches in Virginia (Abingdon, Christiansburg, Dublin, Fort Chiswell, Radford, and Wytheville), where First Bank does business as First Bank of Virginia. First Bank also has a loan production office in Blacksburg, Virginia. First Bancorp's common stock is traded on the NASDAQ Global Select Market under the symbol "FBNC."

Please visit our website at www.FirstBancorp.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.

First Bancorp and Subsidiaries

Financial Summary

Three Months Ended

June 30,

Percent

($ in thousands except per share data - unaudited)

2011

2010

Change

INCOME STATEMENT

Interest income

  Interest and fees on loans

$           38,464

37,609

  Interest on investment securities

1,962

1,988

  Other interest income

103

121

     Total interest income

40,529

39,718

2.0%

Interest expense

  Interest on deposits

5,531

7,671

  Other, primarily borrowings

518

511

     Total interest expense

6,049

8,182

(26.1%)

       Net interest income

34,480

31,536

9.3%

Provision for loan losses – non-covered loans

7,607

8,003

(4.9%)

Provision for loan losses – covered loans

3,327

n/m

Total provision for loan losses

10,934

8,003

36.6%

Net interest income after provision for loan losses

23,546

23,533

0.1%

Noninterest income

  Service charges on deposit accounts

3,655

3,593

  Other service charges, commissions, and fees

1,709

1,378

  Fees from presold mortgages

346

440

  Commissions from financial product sales

409

340

  Foreclosed property losses and write-downs – covered

(2,583)

(5,495)

  Foreclosed property losses and write-downs – non-covered

(271)

(96)

  Indemnification asset income, net

1,826

4,396

  Securities gains

60

15

  Other gains (losses)

(37)

(34)

     Total noninterest income

5,114

4,537

12.7%

Noninterest expenses

  Personnel expense

12,648

11,324

  Occupancy and equipment expense

2,708

2,815

  Intangibles amortization

226

220

  Merger expenses

243

  Other operating expenses

7,088

7,598

     Total noninterest expenses

22,913

21,957

4.4%

Income before income taxes

5,747

6,113

(6.0%)

Income taxes

2,021

2,172

(7.0%)

Net income

3,726

3,941

(5.5%)

Preferred stock dividends and accretion

(1,041)

(1,026)

Net income available to common shareholders

$              2,685

2,915

(7.9%)

Earnings per common share – basic

$               0.16

0.17

(5.9%)

Earnings per common share – diluted

0.16

0.17

(5.9%)

ADDITIONAL INCOME STATEMENT INFORMATION

  Net interest income, as reported

$            34,480

31,536

  Tax-equivalent adjustment (1)

388

331

  Net interest income, tax-equivalent

$            34,868

31,867

9.4%

(1) This amount reflects the tax benefit that the Company receives related to its tax-

exempt loans and securities, which carry interest rates lower than similar taxable

investments due to their tax-exempt status.  This amount has been computed assuming a

39% tax rate and is reduced by the related nondeductible portion of interest expense.

First Bancorp and Subsidiaries

Financial Summary - Page 2

Six Months Ended

June 30,

Percent

($ in thousands except per share data - unaudited)

2011

2010

Change

INCOME STATEMENT

Interest income

  Interest and fees on loans

$       75,271

75,827

  Interest on investment securities

3,894

3,872

  Other interest income

193

328

     Total interest income

79,358

80,027

(0.8%)

Interest expense

  Interest on deposits

11,534

16,231

  Other, primarily borrowings

1,030

1,083

     Total interest expense

12,564

17,314

(27.4%)

       Net interest income

66,794

62,713

6.5%

Provision for loan losses – non-covered

15,177

15,626

(2.9%)

Provision for loan losses – covered

7,100

n/m

Total provision for loan losses

22,277

15,626

42.6%

Net interest income after provision for loan losses

44,517

47,087

(5.5%)

Noninterest income

  Service charges on deposit accounts

6,609

7,058

  Other service charges, commissions, and fees

3,315

2,755

  Fees from presold mortgages

641

812

  Commissions from financial product sales

764

762

  Gain from acquisition

10,196

  Foreclosed property losses and write-downs – covered

(7,517)

(5,495)

  Foreclosed property losses and write-downs – non-covered

(1,624)

(51)

  Indemnification asset income, net

6,866

4,396

  Securities gains

74

24

  Other gains (losses)

(17)

(30)

     Total noninterest income

19,307

10,231

88.7%

Noninterest expenses

  Personnel expense

25,561

22,424

  Occupancy and equipment expense

5,442

5,842

  Intangibles amortization

450

435

  Merger expenses

594

  Other operating expenses

15,909

15,536

     Total noninterest expenses

47,956

44,237

8.4%

Income before income taxes

15,868

13,081

21.3%

Income taxes

5,767

4,702

22.6%

Net income

$       10,101

8,379

20.6%

Preferred stock dividends and accretion

(2,083)

(2,053)

Net income available to common shareholders

$        8,018

6,326

26.7%

Earnings per share - basic

$         0.48

0.38

26.3%

Earnings per share - diluted

0.48

0.38

26.3%

ADDITIONAL INCOME STATEMENT INFORMATION

  Net interest income, as reported

$    66,794

62,713

  Tax-equivalent adjustment (1)

773

626

  Net interest income, tax-equivalent

$    67,567

63,339

6.7%

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

First Bancorp and Subsidiaries

Financial Summary - Page 3

Three Months Ended

June 30,

Six Months Ended

June 30,

PERFORMANCE RATIOS (annualized)

2011

2010

2011

2010

Return on average assets (1)

0.32%

0.35%

0.48%

0.38%

Return on average common equity (2)

3.74%

4.11%

5.63%

4.51%

Net interest margin – tax-equivalent (3)

4.92%

4.35%

4.77%

4.25%

Net charge-offs to average loans – non-covered

1.75%

1.05%

1.87%

1.03%

COMMON SHARE DATA

Cash dividends declared – common

$         0.08

0.08

$         0.16

0.16

Stated book value – common

17.04

16.92

17.04

16.92

Tangible book value – common

12.88

12.70

12.88

12.70

Common shares outstanding at end of period

16,862,536

16,770,119

16,862,536

16,770,119

Weighted average shares outstanding – basic

16,841,289

16,751,962

16,827,615

16,742,240

Weighted average shares outstanding – diluted

16,868,571

16,784,126

16,855,027

16,772,969

CAPITAL RATIOS

Tangible equity to tangible assets

8.64%

8.56%

8.64%

8.56%

Tangible common equity to tangible assets

6.65%

6.56%

6.65%

6.56%

Tier I leverage ratio

10.17%

10.04%

10.17%

10.04%

Tier I risk-based capital ratio

15.74%

15.17%

15.74%

15.17%

Total risk-based capital ratio

17.00%

16.43%

17.00%

16.43%

AVERAGE BALANCES ($ in thousands)

Total assets

$ 3,327,238

3,316,971

$ 3,336,964

3,378,754

Loans

2,471,915

2,575,926

2,486,963

2,601,782

Earning assets

2,842,817

2,939,478

2,857,429

3,002,306

Deposits

2,785,998

2,818,581

2,788,624

2,864,562

Interest-bearing liabilities

2,617,122

2,664,399

2,627,799

2,731,974

Shareholders' equity

352,619

349,330

352,285

347,928

(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

June 30,  

2011

March 31,

2011

December 31,

2010

September 30,

2010

June 30,

2010

Net interest income – tax-equivalent (1)

$     34,868

32,699

33,931

31,401

31,867

Taxable equivalent adjustment (1)

388

385

361

330

331

Net interest income

34,480

32,314

33,570

31,071

31,536

Provision for loan losses – non-covered

7,607

7,570

9,629

8,391

8,003

Provision for loan losses – covered

3,327

3,773

20,916

Noninterest income

5,114

14,193

14,918

3,957

4,537

Noninterest expense

22,913

25,043

22,008

20,711

21,957

Income (loss) before income taxes

5,747

10,121

(4,065)

5,926

6,113

Income tax expense (benefit)

2,021

3,746

(1,820)

2,078

2,172

Net income (loss)

3,726

6,375

(2,245)

3,848

3,941

Preferred stock dividends and accretion

1,041

1,042

1,027

1,027

1,026

Net income (loss) available to common shareholders

2,685

5,333

(3,272)

2,821

2,915

Earnings (loss) per common share – basic

0.16

0.32

(0.19)

0.17

0.17

Earnings (loss) per common share – diluted

0.16

0.32

(0.19)

0.17

0.17

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

First Bancorp and Subsidiaries

Financial Summary - Page 4

CONSOLIDATED BALANCE SHEETS

($ in thousands)

At June 30,

2011

At March 31,

2011

At Dec. 31,

2010

At June 30,

2010

One Year

Change

Assets

Cash and due from banks

$         73,676

59,985

56,821

59,944

22.9%

Interest bearing deposits with banks

164,571

197,035

155,181

153,630

7.1%

    Total cash and cash equivalents

238,247

257,020

212,002

213,574

11.6%

Investment securities

229,437

249,815

235,200

210,629

8.9%

Presold mortgages

2,466

2,696

3,962

3,123

-21.0%

Loans – non-covered

2,040,714

2,045,998

2,083,004

2,099,099

-2.8%

Loans – covered by FDIC loss share agreements

401,726

440,212

371,128

455,477

-11.8%

    Total loans

2,442,440

2,486,210

2,454,132

2,554,576

-4.4%

Allowance for loan losses – non-covered

(34,465)

(35,773)

(38,275)

(42,215)

-18.4%

Allowance for loan losses – covered

(5,540)

(7,002)

(11,155)

−    

n/m

    Total allowance for loan losses

(40,005)

(42,775)

(49,430)

(42,215)

-5.2%

    Net loans

2,402,435

2,443,435

2,404,702

2,512,361

-4.4%

Premises and equipment

68,898

67,879

67,741

54,026

27.5%

FDIC indemnification asset

142,894

140,937

123,719

118,072

21.0%

Intangible assets

70,184

70,410

70,358

70,797

-0.9%

Other real estate owned – non-covered

31,849

26,961

21,081

14,690

116.8%

Other real estate owned – covered

102,883

95,868

94,891

80,074

28.5%

Other assets

44,456

47,442

45,276

40,996

8.4%

    Total assets

$    3,333,749

3,402,463

3,278,932

3,318,342

0.5%

Liabilities

Deposits:

    Non-interest bearing demand

$       323,223

332,168

292,759

293,555

10.1%

    NOW accounts

371,693

349,677

292,623

356,626

4.2%

    Money market accounts

497,112

513,553

498,312

494,979

0.4%

    Savings accounts

145,576

161,869

153,325

157,343

-7.5%

    Brokered deposits

175,161

194,178

143,554

91,195

92.1%

    Internet time deposits

40,677

51,075

46,801

54,535

-25.4%

    Other time deposits > $100,000

567,722

593,625

602,371

668,044

-15.0%

    Other time deposits

626,254

648,296

622,768

678,611

-7.7%

         Total deposits

2,747,418

2,844,441

2,652,513

2,794,888

-1.7%

Repurchase agreements

68,608

72,951

54,460

61,766

11.1%

Borrowings

138,796

108,833

196,870

76,579

81.2%

Other liabilities

26,629

26,848

30,486

36,371

-26.8%

    Total liabilities

2,981,451

3,053,073

2,934,329

2,969,604

0.4%

Shareholders' equity

Preferred stock

65,000

65,000

65,000

65,000

0.0%

Discount on preferred stock

(2,474)

(2,703)

(2,932)

(3,361)

-26.4%

Common stock

100,549

99,989

99,615

98,973

1.6%

Common stock warrants

4,592

4,592

4,592

4,592

0.0%

Retained earnings

188,737

187,401

183,413

186,552

1.2%

Accumulated other comprehensive income

(4,106)

(4,889)

(5,085)

(3,018)

-36.1%

    Total shareholders' equity

352,298

349,390

344,603

348,738

1.0%

Total liabilities and shareholders' equity

$    3,333,749

3,402,463

3,278,932

3,318,342

0.5%

First Bancorp and Subsidiaries

Financial Summary- Page 5

For the Three Months Ended

YIELD INFORMATION

June 30,  

2011

March 31,

2011

December 31,

2010

September 30,

2010

June 30,

2010

Yield on loans

6.24%

5.97%

6.16%

5.79%

5.86%

Yield on securities – tax-equivalent (1)

3.90%

3.87%

4.00%

4.26%

4.38%

Yield on other earning assets

0.32%

0.29%

0.41%

0.32%

0.32%

  Yield on all interest earning assets

5.77%

5.54%

5.75%

5.36%

5.46%

Rate on interest bearing deposits

0.91%

0.99%

1.06%

1.16%

1.22%

Rate on other interest bearing liabilities

1.25%

1.24%

1.30%

1.52%

1.54%

  Rate on all interest bearing liabilities

0.93%

1.00%

1.07%

1.17%

1.23%

    Total cost of funds

0.82%

0.89%

0.96%

1.06%

1.11%

       Net interest margin – tax-equivalent (2)

4.92%

4.62%

4.79%

4.30%

4.35%

       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

June 30,

 2011

March 31,

2011

December 31,

2010

September 30,

2010

June 30,

2010

Positive (negative) impact on net interest income

Interest income – reduced by premium amortization on loans

$          (116)

(105)

         (49)

         (49)

         (49)

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

4,014

2,515

3,233

1,231

1,659

Interest expense – reduced by premium amortization of deposits

130

53

296

731

Interest expense – reduced by premium amortization of borrowings

37

37

37

72

116

    Impact on net interest income

$         4,065

2,500

3,221

1,550

2,457

(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 6

ASSET QUALITY DATA ($ in thousands)

June 30,

2011

March 31,

2011

Dec. 31,

2010

Sept. 30,

2010

June 30,

2010

Non-covered nonperforming assets

Nonaccrual loans

$     71,570

69,250

62,326

80,318

73,152

Restructured loans

16,893

19,843

33,677

20,447

20,392

Accruing loans > 90 days past due

    Total non-covered nonperforming loans

88,463

89,093

96,003

100,765

93,544

Other real estate

31,849

26,961

21,081

17,475

14,690

Total non-covered nonperforming assets

$   120,312

116,054

117,084

118,240

108,234

Covered nonperforming assets (1)

Nonaccrual loans (2)

$    37,057

56,862

58,466

75,116

98,669

Restructured loans

24,325

16,238

14,359

4,160

8,450

Accruing loans > 90 days past due

    Total covered nonperforming loans

61,382

73,100

72,825

79,276

107,119

Other real estate

102,883

95,868

94,891

101,389

80,074

Total covered nonperforming assets

$  164,265

168,968

167,716

180,665

187,193

    Total nonperforming assets

$  284,577

285,022

284,800

298,905

295,427

Asset Quality Ratios – All Assets

Net charge-offs to average loans - annualized

2.22%

2.92%

4.17%

0.88%

0.85%

Nonperforming loans to total loans

6.14%

6.52%

6.88%

7.17%

7.86%

Nonperforming assets to total assets

8.54%

8.38%

8.69%

8.90%

8.90%

Allowance for loan losses to total loans

1.64%

1.72%

2.01%

1.79%

1.65%

Asset Quality Ratios – Based on Non-covered Assets only

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

1.75%

1.97%

3.10%

1.06%

1.04%

Non-covered nonperforming loans to non-covered loans

4.33%

4.35%

4.61%

4.81%

4.46%

Non-covered nonperforming assets to total non-covered assets

4.25%

4.05%

4.16%

4.16%

3.89%

Allowance for loan losses to non-covered loans

1.69%

1.75%

1.84%

2.15%

2.01%

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

(2)  At June 30, 2011, the contractual balance of the nonaccrual loans covered by the FDIC loss share agreements was $69.4 million.

SOURCE First Bancorp



RELATED LINKS

http://www.firstbancorp.com