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First Bancorp Reports Fourth Quarter and Annual Earnings


News provided by

First Bancorp

Feb 08, 2010, 09:00 ET

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TROY, N.C., Feb. 8 /PRNewswire-FirstCall/ -- First Bancorp (Nasdaq: FBNC), the parent company of First Bank, announced today fourth quarter net income available to common shareholders of $4.3 million compared to $5.0 million reported in the fourth quarter of 2008.  Earnings per diluted common share were $0.25 in the fourth quarter of 2009 compared to $0.30 in the fourth quarter of 2008.  For the year ended December 31, 2009, the Company reported net income available to common shareholders of $56.3 million compared to $22.0 million reported for 2008.  Earnings per diluted common share were $3.37 for the year ended December 31, 2009 compared to $1.37 for 2008.

Several significant factors affect the comparability of the 2009 and 2008 results, including the following:

  • In the second quarter of 2009, the Company realized a $67.9 million gain related to the acquisition of Cooperative Bank in Wilmington, North Carolina.  This gain resulted from the difference between the purchase price and the acquisition-date fair value of the acquired assets and liabilities.  The after-tax impact of this gain was $41.1 million, or $2.46 per diluted common share.
  • The Company recorded acquisition related expenses related to Cooperative Bank totaling $1,343,000, consisting primarily of professional fees.  The after-tax impact of these expenses was $813,000 (or $0.05 per diluted common share).
  • The Company recorded approximately $1.0 million in preferred stock dividends in each quarter of 2009 related to the January 12, 2009 issuance of preferred stock to the U.S. Treasury.   For the year ended December 31, 2009, total preferred stock dividends of $4.0 million reduced the Company's net income available to common shareholders.
  • FDIC insurance expense amounted to $5.5 million in 2009 compared to $1.2 million in 2008.  The after-tax impact of the increase in this expense was $2.6 million (or $0.16 per diluted common share).  

Update on Cooperative Bank Acquisition

On June 19, 2009, First Bank acquired substantially all of the assets and liabilities of Cooperative Bank, which had been closed earlier that day by regulatory authorities.  Cooperative Bank operated through twenty-one branches in North Carolina and three branches in South Carolina.  In connection with the acquisition, First Bank assumed assets with a book value of $958 million, including $829 million in loans and $706 million in deposits. The loans and foreclosed real estate purchased are covered by a loss share agreement between the FDIC and First Bank which affords First Bank significant loss protection.  Under the loss share agreement, the FDIC covers 80% of loan and foreclosed real estate losses up to $303 million and 95% of losses that exceed that amount.

First Bank received a $123 million discount on the assets acquired and paid no deposit premium, which, after applying initial estimates of purchase accounting fair market value adjustments to the acquired assets and assumed deposits, resulted in an original gain of $53.8 million.  

During the third and fourth quarters of 2009, the Company obtained third-party appraisals for the majority of Cooperative's collateral dependent problem loans.  Overall, the appraised values were higher than the Company's original estimates made as of the acquisition date.  In addition, subsequent to June 19, the Company received payoffs related to certain loans for which losses had been anticipated.   Accordingly, as required by relevant accounting rules, the Company retrospectively adjusted the fair value of the loans acquired for these factors, which resulted in the acquisition gain that was recorded in the second quarter of 2009 increasing by $8.3 million for information determined in the third quarter of 2009 and by an additional $5.8 million for information determined in the fourth quarter of 2009.  Thus, the originally stated second quarter of 2009 gain of $53.8 million has been increased to $67.9 million, all on a retroactive basis.  The Company continues to obtain more information regarding the fair value of the assets acquired.  Fair values are subject to refinement for up to one year after the closing date of the acquisition as information relative to closing date fair values becomes available, and thus the gain could be adjusted again (up or down) in the future during the one year period.

On October 9, 2009, First Bank successfully converted Cooperative's loan and deposit records to First Bank's computer system.  Also on that day, five branches were consolidated in market areas in which First Bank branches were in close proximity with former Cooperative Bank branches.  On December 11, 2009, two additional branches were consolidated with existing First Bank branches.

Balance Sheet and Capital

Total assets at December 31, 2009, including the impact of Cooperative, amounted to $3.5 billion, 28.9% higher than a year earlier.  Total loans at December 31, 2009 amounted to $2.7 billion, a 20.0% increase from a year earlier, and total deposits amounted to $2.9 billion at December 31, 2009, a 41.4% increase from a year earlier.

Excluding the effects of the Cooperative acquisition, the Company experienced a general decline in loans and an increase in deposits during 2009.  Excluding the impact of Cooperative, loans declined approximately 4% in 2009.  The Company continues to originate and renew a significant amount of loans each month, but normal paydowns of loans have exceeded new loan growth.  Excluding the impact of Cooperative, the Company experienced deposit growth of approximately 7% in 2009.  Additionally, the Company has steadily lessened its reliance on brokered deposits and internet deposits since the Cooperative acquisition.  Brokered deposits comprised just 2.6% of total deposits at December 31, 2009, with internet deposits comprising an additional 4.4%.

The combination of lower loans and higher deposits has significantly enhanced the Company's liquidity during 2009 and lessened its reliance on borrowings.  At December 31, 2009, the Company's cash balances exceeded $350 million, a 56% increase from a year earlier, while borrowings declined by approximately $190 million during the year.

The Company remains well-capitalized by all regulatory standards with a Tier I Leverage Ratio of 9.30%, a Tier I Risk-Based Capital Ratio of 13.90% and a Total Risk-Based Capital Ratio of 15.15%.  The Company's tangible common equity to tangible assets ratio was 5.94% at December 31, 2009.  The Company continues to have $65 million in outstanding preferred stock that was issued to the US Treasury in January 2009.  The Company has no immediate plans to redeem this stock in light of the challenging economic conditions.

Net Interest Income and Net Interest Margin

Net interest income for the fourth quarter of 2009 amounted to $31.0 million, a 37.9% increase over the fourth quarter of 2008.  Net interest income for the year ended December 31, 2009 amounted to $86.9 million, a 13.3% increase from 2008.  

The increases in net interest income were primarily due to 1) the higher average balances of loans and deposits previously discussed, and 2) a higher net interest margin.  

The Company's net interest margin (tax-equivalent net interest income divided by average earnings assets) in the fourth quarter of 2009 was 3.92%, a five basis point increase from the 3.87% margin realized in the third quarter of 2009, and a 22 basis point increase from the 3.70% margin realized in the fourth quarter of 2008.  The Company's net interest margin for 2009 was 3.81% compared to 3.74% for 2008.  During 2009, there were no changes in the interest rates set by the Federal Reserve, and the Company was able to reprice at lower rates maturing time deposits that had been originated in periods of higher interest rates.

Provision for Loan Losses and Asset Quality

The current economic environment has resulted in an increase in the Company's loan losses and nonperforming assets, which has led to significantly higher provisions for loan losses.  The Company's provision for loan losses amounted to $6.6 million in the fourth quarter of 2009 compared to $3.4 million in the fourth quarter of 2008.  The provision for loan losses for the year ended December 31, 2009 was $20.2 million compared to $10.0 million recorded in 2008.  

The increases in the provisions for loan losses are solely attributable to the Company's "non-covered" loan portfolio, which excludes loans assumed from Cooperative that are subject to the loss share agreement with the FDIC.  The Company does not expect to record any significant loan loss provisions in the foreseeable future related to the loan portfolio acquired from Cooperative because these loans were written down to estimated fair market value in connection with the recording of the acquisition.

The Company's non-covered nonperforming assets at December 31, 2009 amounted to $92 million at December 31, 2009 compared to $66 million at September 30, 2009 and $35 million at December 31, 2008.  At December 31, 2009, the ratio of non-covered nonperforming assets to total non-covered assets was 3.10% compared to 2.21% at September 30, 2009, and 1.29% at December 31, 2008.  

Within non-covered nonperforming assets, troubled debt restructurings increased from $7 million at September 30, 2009 to $21 million at December 31, 2009.  This increase was a result of the Company working with borrowers experiencing financial difficulties by modifying certain loan terms and was also impacted by the Company's analysis of the Federal Reserve's October 2009 guidance related to real estate loan workouts, which provided clarification of situations involving borrowers that should be reported as troubled debt restructurings.  At December 31, 2009, all of the Company's troubled debt restructurings were performing in accordance with their restructured terms, with none of them being past due.

The Company's ratio of annualized net charge-offs to average non-covered loans was 0.69% for the fourth quarter of 2009 compared to 0.38% in the fourth quarter of 2008.  For the year ended December 31, 2009, the Company's ratio of net charge-offs to average non-covered loans was 0.56% compared to 0.24% for 2008.  

The Company's nonperforming assets that are covered by FDIC loss share agreements have increased from $91 million at June 30, 2009 to $165 million at December 31, 2009.  The Company continues to submit claims to the FDIC on a regular basis and has received total cash reimbursements from the FDIC of approximately $40 million pursuant to the loss-share agreements since the Cooperative acquisition.

Noninterest Income

Total noninterest income was $6.3 million in the fourth quarter of 2009, a 26.1% increase from the $5.0 million recorded in the fourth quarter of 2008, with the increase being attributable to a larger customer base as a result of the Cooperative acquisition and an increase in fees received from presold mortgages.  Mortgage refinance activity has increased due to a favorable interest environment.

Noninterest income for the year ended December 31, 2009 amounted to $89.5 million compared to $21.1 million for 2008.  The primary reason for the increase was the $67.9 million gain realized from the Cooperative acquisition that occurred in June 2009, as discussed above.  

Noninterest Expenses

Noninterest expenses amounted to $22.5 million in the fourth quarter of 2009, a 39.7% increase over the $16.1 million recorded in the same period of 2008.  Noninterest expenses for the year ended December 31, 2009 amounted to $78.6 million, a 25.4% increase from the $62.7 million recorded in 2008.  

Incremental operating expenses associated with the Cooperative acquisition were the primary reason for the increases in 2009.  Additionally, FDIC insurance expense amounted to $1.0 million and $5.5 million for the three and twelve months ended December 31, 2009, compared to $0.3 million and $1.2 million for the comparable periods of 2008, respectively.  Included in the $5.5 million in FDIC insurance expense for the year ended December 31, 2009 is $1.6 million related to a special assessment that was levied by the FDIC on all banks in the second quarter of 2009.

In the fourth quarter of 2009, the Company recorded acquisition related expenses related to Cooperative Bank of $261,000 consisting primarily of professional fees.  The Company recorded $1.3 million in acquisition related expenses for the year ended December 31, 2009.

The Company's effective tax rate was approximately 36%-38% for all periods presented.

Comments of the President and Other Business Matters

Jerry L. Ocheltree, President and CEO of First Bancorp, commented on today's report, "In light of the current economic environment, I am pleased with the solid results we are reporting today.  We continue to remain a profitable and sound institution that is well-positioned for the future.  During the second half of 2009, we successfully integrated the Cooperative acquisition, and I would like to thank all of our employees for their hard work in continuing to take care of their customers during the transition."

Mr. Ocheltree noted the following other corporate developments:

  • On September 14, 2009, the Company reported that it had been recognized for the second year in a row by investment banking firm Sandler O'Neill & Partners, L.P., as one of the top performing small-cap banks in the nation.  New York-based Sandler O'Neill is one of the best-known and most highly regarded investment firms specializing in the commercial banking industry.  Please contact the Company if you would like a copy of this press release.
  • First Bank has elected to continue to participate in the FDIC's Transaction Account Guarantee Program.  Under the program, through June 30, 2010, all non-interest bearing transaction accounts are fully guaranteed by the FDIC for the entire amount in the account.  Coverage under this program is in addition to and separate from the coverage available under the FDIC's general deposit insurance rules.
  • The Company has received regulatory approval to open a full-service bank branch in Christiansburg, Virginia.  Construction of a branch facility has begun and the Company anticipates the opening the branch in the spring of 2010.  This will be the Company's sixth branch in southwestern Virginia.
  • On December 11, 2009, First Bank moved into a newly constructed branch office in Leland, North Carolina that was in close proximity to two existing First Bank branches.  The two existing branches were closed.
  • On December 11, 2009, First Bank closed its bank branch located at Market Commons in Myrtle Beach, South Carolina.  Customer accounts were transferred to First Bank's branch located in Little River, South Carolina.
  • On November 18, 2009, the Company announced a quarterly cash dividend of $0.08 cents per share payable on January 25, 2010 to shareholders of record on December 31, 2009.  This is the same dividend rate as the Company declared in each of the first three quarters of 2009 and is a decrease from the $0.19 rate paid in the comparable quarter in 2008.  The dividend rate was reduced in order to conserve capital in light of current economic conditions.
  • There was no stock repurchase activity during 2009.

First Bancorp is a bank holding company headquartered in Troy, North Carolina with total assets of approximately $3.5 billion.  Its principal activity is the ownership and operation of First Bank, a state-chartered community bank that now operates 91 branches, with 77 branches operating in the central piedmont and coastal regions of North Carolina, 9 branches in South Carolina (Cheraw, Dillon, Florence, Latta, Jefferson, and Little River), and 5 branches in Virginia (Abingdon, 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 statements that could be deemed 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 report on Form 10-K.

    
    
    ------------------------------------------------------------------------
                            First Bancorp and Subsidiaries
                                  Financial Summary
    ------------------------------------------------------------------------
                                                  Three Months Ended
    ($ in thousands except per                       December 31,    Percent
     share data -unaudited)                      2009         2008   Change
    --------------------------                   ----         ----   ------
    
    INCOME STATEMENT
    
    Interest income
    ---------------
       Interest and fees on loans              $40,411       34,569
       Interest on investment
        securities                               1,751        1,983
       Other interest income                       252           81
                                                ------       ------
          Total interest income                 42,414       36,633    15.8%
                                                ------       ------
    Interest expense
    ----------------
       Interest on deposits                     10,700       12,307
       Other, primarily borrowings                 681        1,817
                                                ------       ------
          Total interest expense                11,381       14,124   (19.4%)
                                                ------       ------
            Net interest income                 31,033       22,509    37.9%
    Provision for loan losses                    6,575        3,437    91.3%
                                                ------       ------
    Net interest income after
     provision for loan losses                  24,458       19,072    28.2%
                                                ------       ------
    
    Noninterest income
    ------------------
       Service charges on deposit
        accounts                                 3,819        3,387
       Other service charges,
        commissions, and fees                    1,306        1,030
       Fees from presold mortgages                 658          212
       Commissions from financial
        product sales                              360          378
       Data processing fees                         36           27
       Securities gains                              9           --
       Other gains (losses)                         67          (73)
                                                 -----        -----
          Total noninterest income               6,255        4,961    26.1%
                                                 -----        -----
    Noninterest expenses
    --------------------
       Personnel expense                        11,760        8,856
       Occupancy and equipment
        expense                                  3,143        2,132
       Intangibles amortization                    216          107
       Acquisition expenses                        261           --
       Other operating expenses                  7,078        4,981
                                                ------       ------
          Total noninterest expenses            22,458       16,076    39.7%
                                                ------       ------
    Income before income taxes                   8,255        7,957     3.7%
    Income taxes                                 2,987        2,956     1.0%
                                                ------        -----
    Net income                                  $5,268        5,001     5.3%
    
    Preferred stock dividends and
     accretion                                  (1,014)          --
                                                ------        -----
    
    Net income available to
     common shareholders                        $4,254        5,001   (14.9%)
                                                ======        =====
    
    
    Earnings per common share –
     basic                                       $0.25         0.30   (16.7%)
    Earnings per common share –
     diluted                                      0.25         0.30   (16.7%)
    
    ADDITIONAL INCOME STATEMENT INFORMATION
    ---------------------------------------
    
       Net interest income, as
        reported                               $31,033       22,509
       Tax-equivalent adjustment (1)               247          166
                                               -------       ------
       Net interest income, tax-
        equivalent                             $31,280       22,675    37.9%
                                               =======       ======
    
    (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
    -------------------------------------------------------------------------
    
                                                Twelve Months Ended 
    ($ in thousands except per share                 December 31,     Percent
     data -unaudited)                             2009          2008  Change
    --------------------------------              ----          ----  ------
    
    INCOME STATEMENT
    
    Interest income
    ---------------
       Interest and fees on loans             $148,007      138,878
       Interest on investment securities         7,439        7,973
       Other interest income                       545        1,011
                                               -------      -------
          Total interest income                155,991      147,862     5.5%
                                               -------      -------
    Interest expense
    ----------------
       Interest on deposits                     45,518       53,241
       Other, primarily borrowings               3,377        8,062
                                               -------       ------
          Total interest expense                48,895       61,303   (20.2%)
                                               -------       ------
            Net interest income                107,096       86,559    23.7%
    Provision for loan losses                   20,186        9,880   104.3%
                                               -------       ------
    
    Net interest income after
     provision for loan losses                  86,910       76,679    13.3%
                                               -------       ------
    Noninterest income
    ------------------
       Service charges on deposit
        accounts                                13,854       13,535
       Other service charges,
        commissions, and fees                    4,848        4,842
       Fees from presold mortgages               1,505          869
       Commissions from financial product
        sales                                    1,524        1,552
       Data processing fees                        139          167
       Gain from acquisition                    67,894           --
       Securities gains (losses)                  (104)         (14)
       Other gains (losses)                       (142)         156
                                                ------       ------
          Total noninterest income              89,518       21,107   324.1%
                                                ------       ------
    Noninterest expenses
    --------------------
       Personnel expense                        41,588       35,446
       Occupancy and equipment expense          10,405        8,280
       Intangibles amortization                    630          416
       Acquisition expenses                      1,343           --
       Other operating expenses                 24,585       18,519
                                                ------       ------
          Total noninterest expenses            78,551       62,661    25.4%
                                                ------       ------
    Income before income taxes                  97,877       35,125   178.7%
    Income taxes                                37,618       13,120   186.7%
                                                ------       ------
    Net income                                 $60,259       22,005   173.8%
    
    Preferred stock dividends and
     accretion                                  (3,972)          --
                                                ------       ------
    
    Net income available to common
     shareholders                              $56,287       22,005   155.8%
                                               =======       ======
    
    
    Earnings per common share - basic            $3.38         1.38   144.9%
    Earnings per common share -
     diluted                                      3.37         1.37   146.0%
    
    ADDITIONAL INCOME STATEMENT
     INFORMATION
    ---------------------------
    
       Net interest income, as reported       $107,096       86,559
       Tax-equivalent adjustment (1)               818          658
                                              --------       ------
       Net interest income, tax-
        equivalent                            $107,914       87,217    23.7%
                                              ========       ======
    
    (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      Twelve Months Ended
                                    December 31,            December 31,
                                    ------------            ------------
    PERFORMANCE RATIOS
     (annualized)                 2009        2008        2009        2008
                                  ----        ----        ----        ----
    Return on
     average assets (1)           0.48%       0.76%       1.82%       0.89%
    Return on
     average common
     equity (2)                   6.15%       8.85%      22.55%      10.44%
    Net interest
     margin -tax
     equivalent (3)               3.92%       3.70%       3.81%       3.74%
    Efficiency ratio
     -tax equivalent (3) (4)     59.83%      58.17%      39.79%      57.85%
    Net charge-offs
     to average non-
     covered loans                0.69%       0.38%       0.56%       0.24%
    
    
    COMMON SHARE
     DATA
    Cash dividends
     declared -
     common                      $0.08        0.19       $0.32        0.76
    Stated book
     value -common               16.62       13.27       16.62       13.27
    Tangible book
     value -common               12.37        9.18       12.37        9.18
    Common shares
     outstanding at
     end of period          16,693,157  16,573,826  16,693,157  16,573,826
    Weighted average
     shares
     outstanding -
     basic                  16,685,350  16,555,051  16,648,822  15,980,533
    Weighted average
     shares
     outstanding -
     diluted                16,723,524  16,584,871  16,686,880  16,027,144
    
    CAPITAL RATIOS
    Tangible equity
     to tangible
     assets                       7.81%       5.67%       7.81%       5.67%
    Tangible common
     equity to
     tangible assets              5.94%       5.67%       5.94%       5.67%
    Tier I leverage
     ratio                        9.30%       8.10%       9.30%       8.10%
    Tier I risk-
     based capital
     ratio                       13.90%       9.40%      13.90%       9.40%
    Total risk-
     based capital
     ratio                       15.15%      10.65%      15.15%      10.65%
    
    AVERAGE BALANCES
     ($ in thousands)
    Total assets            $3,520,632   2,602,205  $3,097,137   2,484,296
    Loans                    2,685,090   2,212,119   2,475,045   2,117,028
    Earning assets           3,162,966   2,440,535   2,833,167   2,329,025
    Deposits                 2,913,738   2,031,877   2,549,709   1,985,332
    Interest-bearing
     liabilities             2,859,989   2,126,035   2,497,304   2,019,256
    Shareholders'
     equity                    339,321     224,703     313,173     210,810
    
    (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.
    (4) Calculated by dividing noninterest expense by the sum of 
        tax-equivalent net interest income plus noninterest income. 
     -------------------------------------------------------------------------
    
    
    TREND INFORMATION
    
    ($ in thousands except per
     share data)                    For the Three Months Ended
                                    --------------------------
                         Dec. 31, Sept. 30,  June 30,    March 31,  Dec. 31,
    INCOME STATEMENT       2009      2009      2009        2009       2008
                         -------  --------   -------     --------   -------
    
    Net interest
     income -tax
     equivalent (1)     $31,280    30,731      23,630     22,273    22,675
    Taxable
     equivalent
     adjustment (1)         247       221         187        163       166
    Net interest
     income              31,033    30,510      23,443     22,110    22,509
    Provision for
     loan losses          6,575     5,200       3,926      4,485     3,437
    Noninterest
     income               6,255     5,741      72,776      4,746     4,961
    Noninterest
     expense             22,458    20,953      19,203     15,937    16,076
    Income before
     income taxes         8,255    10,098      73,090      6,434     7,957
    Income taxes          2,987     3,716      28,562      2,353     2,956
    Net income            5,268     6,382      44,528      4,081     5,001
    Preferred stock
     dividends and
     accretion            1,014       995       1,022        941        --
    Net income
     available to
     common
     shareholders         4,254     5,387      43,506      3,140     5,001
    
    Earnings per
     common share –
     basic                 0.25      0.32        2.62       0.19      0.30
    Earnings per
     common share –
     diluted               0.25      0.32        2.61       0.19      0.30
    
    (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             At Dec. 31, At Sept. 30, At Dec. 31,  One Year
    ($ in thousands)                2009        2009        2008       Change
                                ----------   ----------  ----------   --------
                Assets
    Cash and due from
     banks                         $60,071     43,667      88,015      -31.7%
    Interest bearing
     deposits with
     banks                         290,801    240,425     136,765      112.6%
                                   -------    -------     -------
         Total cash and
          cash equivalents         350,872    284,092     224,780       56.1%
                                   -------    -------     -------
    
    Investment
     securities                    214,168    196,607     187,183       14.4%
    Presold mortgages                3,967      8,420         423
    
    Loans – non-
     covered                     2,132,843  2,147,615   2,211,315       -3.5%
    Loans – covered
     by FDIC loss
     share agreement               520,022    578,485          -−        n/m
                                 ---------  ---------   ---------
         Total loans             2,652,865  2,726,100   2,211,315       20.0%
    Allowance for
     loan losses                   (37,343)   (34,444)    (29,256)      27.6%
                                 ---------  ---------   ---------
         Net loans               2,615,522  2,691,656   2,182,059       19.9%
                                 ---------  ---------   ---------
    
    Premises and
     equipment                      54,159     52,868      52,259        3.6%
    FDIC loss share
     receivable                    143,221    187,029          --        n/m
    Intangible assets               70,948     71,165      67,780        4.7%
    Other assets                    92,499     33,657      36,083      156.4%
                                ----------  ---------   ---------
         Total assets           $3,545,356  3,525,494   2,750,567       28.9%
                                ========== ==========   =========
    
    
              Liabilities
    Deposits:
         Non-interest
          bearing demand          $272,422    268,097     229,478       18.7%
         NOW accounts              362,366    264,267     198,775       82.3%
         Money market
          accounts                 496,940    477,092     340,739       45.8%
         Savings accounts          149,338    142,391     125,240       19.2%
         Brokered time
          deposits                  76,332    122,634      78,569       -2.8%
         Internet time
          deposits                 128,024    158,680       5,206        n/m
         Other time
          deposits >
          $100,000                 704,128    706,343     520,198       35.4%
         Other time
          deposits                 743,558    782,136     576,586       29.0%
                                 ---------  ---------   ---------  
              Total deposits     2,933,108  2,921,640   2,074,791       41.4%
    
    Repurchase 
     agreements                     64,058     58,209      61,140        4.8%
    Borrowings                     176,811    176,927     367,275      -51.9%
    Other liabilities               28,996     32,336      27,493        5.5%
                                 ---------  ---------   ---------
         Total liabilities       3,202,973  3,189,112   2,530,699       26.6%
                                 ---------  ---------   ---------
    
             Shareholders'
                 equity
    Preferred stock                 65,000     65,000          --        n/m
    
    Discount on
     preferred stock                (3,789)    (3,990)         --        n/m
    Common stock                    98,099     97,745      96,072        2.1%
    Common stock
     warrants                        4,592      4,592          --        n/m
    Retained earnings              182,908    179,988     131,952       38.6%
    Accumulated other
     comprehensive
     income                         (4,427)    (6,953)     (8,156)      45.7%
                                   -------    -------     -------
         Total
          shareholders'
          equity                   342,383    336,382     219,868       55.7%
                                   -------    -------     -------
    Total liabilities
     and shareholders'
     equity                     $3,545,356  3,525,494   2,750,567       28.9%
                                ==========  =========   =========
    
    
    -------------------------------------------------------------------------
                        First Bancorp and Subsidiaries
                          Financial Summary - page 5
    -------------------------------------------------------------------------
                                         For the Three Months Ended
                                         --------------------------
                           Dec. 31,  Sept. 30,  June 30,  March 31,  Dec. 31,
    YIELD INFORMATION        2009       2009      2009      2009       2008
                           -------   --------   -------   --------   -------
    Yield on
     loans                   5.97%       6.01%     6.00%     5.99%      6.22%
    Yield on securities-
     tax equivalent (1)      3.97%       4.23%     4.46%     4.80%      4.63%
    Yield on other 
     earning assets          0.36%       0.34%     0.26%     0.22%      0.74%
       Yield on all
        interest earning
        assets               5.35%       5.45%     5.65%     5.74%      6.00%
    
    Rate on interest
     bearing deposits        1.61%       1.82%     2.24%     2.47%      2.72%
    Rate on other
     interest bearing
     liabilities             1.17%       1.36%     2.40%     1.97%      2.22%
       Rate on all
        interest bearing
        liabilities          1.58%       1.78%     2.25%     2.42%      2.64%
    
             Interest rate
              spread-tax
              equivalent (1) 3.77%       3.72%     3.40%     3.32%      3.36%
             Net interest
              margin-tax
              equivalent (2) 3.92%       3.87%     3.74%     3.68%      3.70%
    
             Average prime
              rate           3.25%       3.25%     3.25%     3.25%      4.06%
    
    (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. 
    -------------------------------------------------------------------------
    
    
    ASSET QUALITY DATA     Dec. 31,  Sept. 30,  June 30,  March 31,  Dec. 31,
    ($ in thousands)         2009      2009      2009       2009       2008
                           -------   --------   -------   --------   -------
    
    Nonaccrual loans – 
     non-covered           $62,206     51,015   43,210     35,296     26,600
    Nonaccrual loans –
     covered by FDIC loss
     share (1)             117,916    122,308   78,413         --         --
    Restructured loans –
     non-covered            21,283      6,963    3,995      3,995      3,995
    Accruing loans > 90 days
     past due                   –-         –-       -–         –-         -–
                           -------    -------  -------    -------    -------
    
         Total non-
          performing loans 201,405    180,286  125,618     39,291     30,595
    Other real estate – 
     non-covered             8,793      7,549    6,032      5,428      4,832
    Other real estate –
     covered by FDIC loss
     share                  47,430     10,439   12,415         –-         -–
                          --------    -------  -------    -------    -------
         Total non-
          performing 
          assets          $257,628    198,274  144,065     44,719     35,427
                          ========    =======  =======    =======    =======
         Total non-
          performing
          assets – 
          non-covered      $92,282     65,527   53,237     44,719     35,427
                          ========    =======  =======    =======    =======
    
    Asset Quality Ratios – 
     All Assets
    -----------------------
    Net charge-offs to
     average loans -
     annualized               0.54%      0.57%    0.47%      0.34%      0.38%
    Nonperforming loans to
     total loans              7.59%      6.68%    4.58%      1.80%      1.38%
    Nonperforming assets to
     total assets             7.27%      5.63%    4.09%      1.66%      1.29%
    Allowance for loan
     losses to total loans    1.41%      1.28%    1.21%      1.46%      1.32%
    Allowance for loan
     losses to nonperforming
     loans                   18.54%     19.11%   26.42%     81.22%     95.62%
    
    Asset Quality Ratios – 
     Based on Non-covered Assets only
    ----------------------------------
    Net charge-offs to 
     average non-covered 
     loans - annualized       0.69%      0.72%    0.49%      0.34%      0.38%
    Non-covered nonperforming 
     loans to non-covered 
     loans                    3.91%      2.70%    2.17%      1.80%      1.38%
    Non-covered nonperforming 
     assets to total  
     non-covered assets       3.10%      2.21%    1.81%      1.66%      1.29%
    Allowance for loan losses 
     to non-covered loans     1.75%      1.60%    1.53%      1.46%      1.32%
    Allowance for loan losses 
     to non-covered 
     nonperforming loans     44.73%     59.41%   70.30%     81.22%     95.62%
    
    (1) At December 31, 2009, the contractual balance of the nonaccrual
        loans covered by the FDIC loss share agreement was $192.1 million.

SOURCE First Bancorp

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