First Bancorp Reports Third Quarter Results

Third Quarter 2025 Highlights

• Diluted earnings per share ("D-EPS") was $0.49 per share for the third quarter of 2025 compared to $0.93 for the linked quarter and $0.45 for the like quarter.
• Excluding the impact of the $27.9 million securities loss, adjusted D-EPS was $1.01 per share for the third quarter of 2025.
• We accelerated loan growth in the third quarter, resulting in total loans of $8.4 billion at September 30, 2025, representing an increase of $193.6 million, or 9.3% annualized.
• Total loan yield expanded to 5.69%, up 16 basis point from the linked quarter and 18 basis points from the like quarter. Total cost of funds increased 3 basis points to 1.51% for the quarter ended September 30, 2025 from 1.48% for the linked quarter and contracted from 1.81% for the like quarter.
• The yield on securities increased 14 basis points to 2.55% for the quarter ended September 30, 2025 from 2.41% for the linked quarter. We executed a securities loss-earnback transaction during July, in which we sold $194.3 million of securities and we purchased $167.4 million of securities with a weighted average yield of 4.83%. The increased yield on the new purchases was included for over half of the third quarter.
• Average core deposits were $10.8 billion for the third quarter of 2025, an increase of $108.1 million from the linked quarter, with $28.4 million of growth in noninterest bearing deposits and $151.8 million of growth in average money market accounts, partially offset by a decline of $37.8 million in average time deposits. Total cost of deposits was 1.46%, an increase of 3 basis points from 1.43% for the linked quarter and a decrease of 30 basis points from the like quarter at 1.76%.
• We continue to focus on expense management. Noninterest expenses of $60.2 million represented a $1.2 million increase from the linked quarter and $0.4 million from the like quarter. The linked quarter increase was driven by a $1.6 million increase in Total personnel expense.
• During the quarter, the Company released $4.0 million of loan loss provision related to Hurricane Helene.
• Noninterest-bearing demand deposits were $3.6 billion, representing 33% of total deposits at September 30, 2025. During the third quarter of 2025, customer deposits grew $55.7 million.
• The on-balance sheet liquidity ratio was 18.2% at September 30, 2025, down slightly from 20.0% for the linked quarter. Available off-balance sheet sources totaled $2.5 billion at September 30, 2025.

SOUTHERN PINES, N.C., Oct. 22, 2025 /PRNewswire/ -- First Bancorp (the "Company") (NASDAQ - FBNC), the parent company of First Bank, reported unaudited third quarter earnings today.  The Company announced net income of $20.4 million, or $0.49 D-EPS, for the three months ended September 30, 2025 compared to $38.6 million, or $0.93 D-EPS, for the three months ended June 30, 2025 ("linked quarter") and $18.7 million, or $0.45 D-EPS, for the third quarter of 2024 ("like quarter").   For the nine months ended September 30, 2025, the Company recorded net income of $95.3 million, or $2.30 per diluted common share, compared to $72.7 million, or $1.76 per diluted common share, for the nine months ended September 30, 2024.

Adjusting for the securities loss-earnback transaction completed in July, adjusted net income was $41.8 million, or $1.01 adjusted D-EPS, for the third quarter of 2025. For the nine months ended September 30, 2025, adjusted net income was $116.8 million, or $2.82 adjusted D-EPS.

The Company continued to enhance net interest income and net interest margin ("NIM") during the third quarter of 2025. The Company recorded net interest income of $102.5 million for the third quarter of 2025, compared to $96.7 million for the linked quarter and $83.0 million for the like quarter. NIM for the third quarter of 2025 expanded to 3.46% from 3.32% for the linked quarter and 2.88% for the like quarter. 

First Bancorp also continued to maintain expense control with noninterest expenses of $60.2 million for the third quarter of 2025, up slightly from $59.0 million for the linked quarter and $59.9 million for the like quarter.  For the nine months ended September 30, 2025, the Company recorded noninterest expense of $177.1 million, down from  $177.3 million, for the nine months ended September 30, 2024.

The results for the third quarter 2025 include a securities loss of $27.9 million ($21.4 million after-taxes, or negative $0.52 per diluted share) from the securities loss-earnback transaction that included the sale of $194.3 million of available-for-sale securities yielding of 1.63%. The reconciliations from net income and D-EPS to adjusted net income and adjusted D-EPS (both non-GAAP measures) for the third quarter of 2025 are presented in Appendix D.

The results for the third quarter of 2025 also include a $4.0 million reduction to the potential impacts to the allowance for credit losses from Hurricane Helene ($3.1 million after-taxes or $0.07 per diluted share).The reconciliations from net income and per share impact for the third quarter of 2025 are presented in Appendix H.

Richard H. Moore, Chairman and CEO of the Company, stated "First Bancorp continues to improve financial results in 2025 with substantial margin expansion of 14 basis points and continued expense discipline.  We grew loans over 9% annualized in the quarter and benefited from the increases in asset yields as assets originated in the COVID-era historic low interest rate environment continue to mature or reprice.  Our liquidity position, capital levels and credit quality remain strong.  We are very pleased with the Bank's performance through three quarters."

Net Interest Income and Net Interest Margin

Net interest income for the third quarter of 2025 was $102.5 million, an increase of 6.0% from the linked quarter of $96.7 million and 23.4% from the like quarter of $83.0 million.  The increase in net interest income from the linked and like quarters was primarily driven by our focused efforts to manage deposit costs after the rate cuts by the Federal Reserve, while increasing loan yields through originations as well as increased securities yields resulting from the securities loss-earnback transactions executed in the fourth quarter of 2024 and the third quarter of 2025.

The Company's NIM for the third quarter of 2025 was 3.46%, an increase of 14 basis points from the linked quarter and 58 basis points from the like quarter.  Within interest-earning assets, loan yields increased 16 basis points to 5.69%. Also, we executed a securities loss-earnback transaction including the purchase of $167.4 million of securities with a weighted average yield of 4.83% that contributed to the 14 basis point increase in the yield on securities as compared to the linked quarter.  During the quarter ended September 30, 2025, the cost of interest-bearing deposits increased 4 basis points from the linked quarter and fell 41 basis points from the like quarter, attributable to the three rate cuts by the Federal Reserve between September and December 2024 and the one rate cut in September 2025.  The like quarter expansion of NIM was driven by the same factors described above resulting in an increase of 84 basis points in securities yield,  an increase of 18 basis points in loan yields, and a decrease of 41 basis points in the cost of interest-bearing deposits.

See Appendix I regarding loan purchase discount accretion and its impact on the Company's NIM.

Provision for Credit Losses and Credit Quality

For the three months ended September 30, 2025, June 30, 2025 and September 30, 2024, the Company recorded $3.4 million, $2.2 million and $14.2 million in provision for credit losses, respectively. The provision for the third quarter of 2025 was driven by net charge-offs of $3.0 million, reserves related to loan growth of $193.6 million, increased reserves from somewhat deteriorating macro-economic projections, partially offset by the $4.0 million reduction in reserves for potential credit exposure from Hurricane Helene.  The net effect of these factors was a $0.4 million increase in the allowance for credit losses to $120.9 million, or 1.44% of loans.  Additionally, the $0.1 million provision for unfunded commitments during the quarter was the result of an increase in the level of available unfunded lending commitments.  Macro-economic forecasts are a key driver in the Company's CECL model and some of the September data reflected declines from the prior quarter which increased reserves.  The provision for the third quarter of 2024 was driven by an incremental provision of $13.0 million related to potential loan exposure from Hurricane Helene.

Within the portions of Western North and South Carolina that were significantly impacted by Hurricane Helene starting late in the third quarter of 2024, the Company identified borrowers that were potentially impacted by the storm and subsequent economic impacts which represented approximately $674 million of loans outstanding as of September 30, 2025.    Based upon its continuing evaluation of these potential impacts, the Company adjusted the incremental reserve for potential exposure from Hurricane Helene to $3.5 million as of September 30, 2025.  The remaining incremental reserve contributes 5 basis points to the Allowance for Credit Losses at period end.  The results for the third quarter of 2025 included a $4.0 million reduction to the potential impacts to the allowance for credit losses from Hurricane Helene.

Asset quality remained strong with annualized net loan charge-offs of 0.14% for the third quarter of 2025.  Total nonperforming assets ("NPAs") remained at a low level at $39.0 million at September 30, 2025, or 0.31% of total assets, up slightly from  0.28% at June 30, 2025 and 0.29% at September 30, 2024.  

The following table presents the summary of NPAs and asset quality ratios for each period.

Noninterest Income

Total noninterest income for the third quarter of 2025 was negative $12.9 million, reflecting the inclusion of the $27.9 million loss on securities.  Excluding the loss on securities, noninterest income totaled $15.0 million during the third quarter of 2025, a 4.8% increase from the $14.3 million recorded in the linked quarter and a 10.7% increase from the $13.6 million recorded for the like quarter.  As compared to the linked quarter, noninterest income, excluding the loss on securities, was higher primarily due to a $0.7 million increase in gain on sale of the guaranteed portion of SBA loans.

Noninterest Expenses

Noninterest expenses amounted to $60.2 million for the third quarter of 2025 compared to $59.0 million for the linked quarter and $59.9 million for the like quarter.  The $1.2 million, or 2.1%, increase in noninterest expense from the linked quarter was driven by a $1.6 million increase in total personnel expenses arising from increased salaries and wages expense and incentives. The $0.4 million increase from the like quarter was driven by a $0.4 million increase in total personnel expenses and a $0.3 million increase in Occupancy and equipment related expenses, partially offset by a $0.2 million decline in Intangibles amortization expense.

Income Taxes

Income tax expense totaled $5.6 million for the third quarter of 2025 compared to $11.3 million for the linked quarter and $3.9 million for the like quarter. These equated to effective tax rates of 21.6%, 22.6% and 17.2% for the respective periods. 

Balance Sheet

Total assets at September 30, 2025 were $12.8 billion, an increase of $142.0 million, or 4.5% annualized, from the linked quarter and an increase of $596.8 million, or 4.9%, from a year earlier.  The increase from the linked quarter was primarily driven by loan growth and an increase in our available for sale securities portfolio.

Key period end balance sheet components are presented below.

Driven by decreased unrealized losses on the available for sale securities portfolio, total investment securities increased to $2.7 billion at  September 30, 2025, reflecting a $19.2 million increase from the linked quarter.  Total unrealized losses on available for sale investment securities was $251.8 million at September 30, 2025, as compared to $298.9 million at June 30, 2025 and $331.5 million at September 30, 2024.  As part of the July securities loss-earnback transaction in the securities portfolio, $194.3 million of securities were sold at a loss of $27.9 million and $167.4 million of securities were purchased, with a weighted average yield of 4.83%.

Total loans amounted to $8.4 billion at September 30, 2025, an increase of $193.6 million, or 9.3% annualized, from  June 30, 2025 and an increase of $405.7 million, or 5.1%, from September 30, 2024.  Please see below table for total loan portfolio mix.  As of September 30, 2025, there were no notable concentrations in geographies within North Carolina and South Carolina or industries, including in office or hospitality categories, which are included in the "commercial real estate - non-owner occupied" category in the table below.  The Company's exposure to non-owner occupied office loans represented approximately 6.2% of the total portfolio at September 30, 2025, with the largest loan being $33.0 million and with an average loan outstanding balance of $1.4 million.  Non-owner occupied office loans are generally in non-metro markets and the ten largest loans in this category represent less than 2% of the total loan portfolio.

The following table presents the period end balance and portfolio percentage by loan category.

Total deposits were $10.9 billion at September 30, 2025, an increase of $50.8 million, or 1.9% annualized, from  June 30, 2025 and an increase of $376.2 million, or 3.6%, from September 30, 2024.

The Company has a diversified and granular deposit base which has remained a stable funding source with noninterest-bearing deposits comprising 33% of total deposits at September 30, 2025.  As presented in the table below, our deposit mix has remained relatively consistent.

As of September 30, 2025 and June 30, 2025, estimated insured deposits totaled $6.5 billion, or 59.7% of total deposits.  In addition, at September 30, 2025 and June 30, 2025, there were collateralized deposits of $682.7 million and $707.0 million, respectively, such that approximately 66.0% and 66.3%, respectively, of our total deposits were insured or collateralized at those dates.

Capital

The Company maintains capital in excess of well-capitalized regulatory requirements, with an estimated total risk-based capital ratio at September 30, 2025 of 16.58%, down from  the linked quarter ratio of 16.90% and from the like quarter ratio of 16.65%.   The decrease during the third quarter of 2025 in risk-based capital ratios was driven by the $193.6 million of loan growth during the quarter, which carries a higher risk weight than short term investments.

The Company has elected to exclude accumulated other comprehensive income ("AOCI") related primarily to available for sale securities from common equity tier 1 capital.  AOCI is included in the Company's tangible common equity ("TCE") to tangible assets ratio (a non-GAAP financial measure) which was 9.12% at September 30, 2025, an increase of 29 basis points from the linked quarter and 65 basis points from September 30, 2024.  The third quarter increase in TCE was driven by improvements in the level of unrealized losses on the available for sale securities portfolio during the quarter, partially a result of the securities loss-earnback transaction along with market improvements. Please refer to Appendix A for a reconciliation of common equity to TCE (a non-GAAP measure) and Appendix C for a calculation of the TCE ratio (a non-GAAP measure).

Liquidity

Liquidity is evaluated as both on-balance sheet (primarily cash and cash-equivalents, unpledged securities and other marketable assets) and off-balance sheet (readily available lines of credit and other funding sources).  The Company continues to manage liquidity sources, including unused lines of credit, at levels believed to be adequate to meet its operating needs for the foreseeable future. 

The Company's on-balance sheet liquidity ratio (net liquid assets as a percent of net liabilities) at September 30, 2025 was 18.2%.  In addition, the Company had approximately $2.5 billion in available lines of credit at that date resulting in a total liquidity ratio of 35.3%. 

About First Bancorp

First Bancorp is a bank holding company headquartered in Southern Pines, North Carolina, with total assets of $12.8 billion. Its principal activity is the ownership and operation of First Bank, a state-chartered community bank that operates 113 branches in North Carolina and South Carolina.  Since 1935, First Bank has taken a tailored approach to banking, combining best-in-class financial solutions, helpful local expertise, and technology to manage a home or business.  First Bank also provides SBA loans to customers through its nationwide network of lenders. Member FDIC, Equal Housing Lender.

Please visit our website at www.LocalFirstBank.com for more information.

First Bancorp's common stock is traded on The NASDAQ Global Select Market under the symbol "FBNC."

Caution about Forward-Looking Statements: 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 words or phrases 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 this press release by wire services, internet services or other media.

Non-GAAP Measures

In this Earnings Release, we present certain measures of our performance that are calculated by methods other than in accordance with generally accepted accounting principles ("GAAP").  Company management uses these non-GAAP measures for purposes of evaluating our performance. Non-GAAP measures exclude or include amounts that are not normally excluded or included in the most directly comparable measure determined in accordance with GAAP. Company management believes an appropriate analysis of the Company's financial performance requires an understanding of the factors underlying such performance.  Non-GAAP financial measures should not be viewed as substitutes for the most directly comparable financial measures calculated in accordance with GAAP. Please see the Appendices attached to this Earnings Release for reconciliations of return on tangible common equity, tangible common equity, tangible book value per share, the tangible common equity ratio, adjusted net income and adjusted D-EPS. 

Supplemental information
APPENDIX I: Loan purchase discount accretion and its impact on the Company's NIM

Included in interest income for the third quarter of 2025 was loan purchase accounting discount accretion of $1.6 million compared to $1.5 million for the linked quarter and $2.0 million for the like quarter, with the activity primarily related to the continued repayments/reduction of the loan portfolio acquired from GrandSouth Bancorporation in January of 2023. Loan discount accretion had positive impacts of 4 basis points, 4 basis points and 6 basis points, respectively, on the Company's NIM and NIM-T/E in the third quarter of 2025, the linked quarter and the like quarter. 

The following table presents the impact to net interest income of the purchase accounting adjustments for each period.

SOURCE First Bancorp