FIRST BANCORP SOUTHERN PINES, N.C., Jan. 29, 2015 /PRNewswire/ -- First Bancorp (NASDAQ - FBNC), the parent company of First Bank, announced today net income available to common shareholders of $6.9 million, or $0.34 per diluted common share, for the three months ended December 31, 2014, an increase of 25.9% compared to the $5.5 million, or $0.27 per diluted common share, recorded in the fourth quarter of 2013. For the year ended December 31, 2014, the Company recorded net income available to common shareholders of $24.1 million, or $1.19 per diluted common share, an increase of 21.8% compared to the $19.8 million, or $0.98 per diluted common share, for the year ended December 31, 2013. The higher earnings in both periods were primarily the result of lower provisions for loan losses.
Net Interest Income and Net Interest Margin
Net interest income for the fourth quarter of 2014 amounted to $30.9 million, a 12.3% decrease from the $35.3 million recorded in the fourth quarter of 2013. Net interest income for the year ended December 31, 2014 amounted to $131.6 million, a 3.6% decrease from the $136.5 million recorded in 2013.
The Company's net interest margin (tax-equivalent net interest income divided by average earning assets) in the fourth quarter of 2014 was 4.25% compared to 5.04% for the fourth quarter of 2013. For the year ended December 31, 2014, the Company's net interest margin was 4.58% compared to 4.92% in 2013. The lower margins realized in 2014 were primarily due to lower amounts of discount accretion on loans purchased in failed-bank acquisitions and lower average asset yields - see additional discussion below. As shown in the accompanying tables, loan discount accretion amounted to $2.2 million in the fourth quarter of 2014, compared to $5.6 million in the fourth quarter of 2013. For 2014 as a whole, loan discount accretion amounted to $16.0 million compared to $20.2 million for 2013.
Excluding the effects of discount accretion on purchased loans, the Company's net interest margin amounted to 3.96% for the fourth quarter of 2014 compared to 4.25% for the fourth quarter of 2013. The lower margins realized in 2014 were due primarily to lower loan yields and a higher mix of the Company's earning assets being maintained in highly liquid accounts that earn relatively little interest. See the Financial Summary for a table that presents the impact of loan discount accretion, as well as other purchase accounting adjustments affecting net interest income. Also see the Financial Summary for a reconciliation of the Company's net interest margin to the net interest margin excluding loan discount accretion, and other information regarding this ratio.
The Company's cost of funds has steadily declined from 0.33% in the fourth quarter of 2013 to 0.27% in the fourth quarter of 2014, which has had a positive impact on the Company's net interest margin.
Provision for Loan Losses and Asset Quality
The Company recorded total provisions for loan losses of $1.5 million in the fourth quarter of 2014 compared to $8.9 million for the fourth quarter of 2013. For the year ended December 31, 2014, the Company recorded total provisions for loan losses of $10.2 million compared to $30.6 million for 2013. As discussed below, lower provisions in 2014 were recorded for both the non-covered and covered loan portfolios - see explanation of the terms "non-covered" and "covered" in the section below entitled "Note Regarding Components of Earnings."
The provision for loan losses on non-covered loans amounted to $1.3 million in the fourth quarter of 2014 compared to $5.0 million in the fourth quarter of 2013. For 2014 as a whole, the provision for loan losses on non-covered loans amounted to $7.1 million compared to $18.3 million for 2013. The lower provisions recorded in 2014 were primarily a result of stable asset quality trends.
The provision for loan losses on covered loans amounted to $0.2 million in the fourth quarter of 2014 compared to $3.9 million in the fourth quarter of 2013. For the year ended December 31, 2014, the provision for loan losses on covered loans amounted to $3.1 million compared to $12.4 million for 2013. The decreases in 2014 have been primarily due to lower levels of covered nonperforming loans during the period and stabilization in the underlying collateral values of nonperforming loans.
Total non-covered nonperforming assets amounted to $95.3 million at December 31, 2014 (3.09% of total non-covered assets) compared to $82.0 million at December 31, 2013 (2.78% of total non-covered assets). The increase in 2014 was due to the Company transferring $14.8 million in nonperforming assets from covered status to non-covered status on July 1, 2014 upon the scheduled expiration of a loss sharing agreement with the FDIC associated with those assets.
Total covered nonperforming assets have declined in the past year, amounting to $18.7 million at December 31, 2014 compared to $70.6 million at December 31, 2013. Over the past twelve months, the Company has resolved a significant amount of covered loans and has experienced strong property sales along the North Carolina coast, which is where most of the Company's covered assets are located. Also, as discussed in the preceding paragraph, on July 1, 2014 the Company transferred $14.8 million in nonperforming assets from covered status to non-covered status upon the expiration of a loss sharing agreement.
Noninterest Income
Total noninterest income for the three months ended December 31, 2014 was $4.5 million compared to $6.3 million for the comparable period of 2013. For the year ended December 31, 2014, noninterest income amounted to $14.4 million compared to $23.5 million for 2013.
Core noninterest income for the fourth quarter of 2014 was $7.4 million, an increase of 5.7% over the $7.0 million reported for the third quarter of 2013. For the year ended December 31, 2014, core noninterest income amounted to $30.5 million, an 8.0% increase from the $28.2 million recorded in 2013. Core noninterest income includes i) service charges on deposit accounts, ii) other service charges, commissions, and fees, iii) fees from presold mortgages, iv) commissions from financial product sales, and v) bank-owned life insurance income.
The primary factors that resulted in the increases in core noninterest income in 2014 were higher service charges on deposit accounts, higher debit and credit card interchange fees and higher commissions earned from financial product sales. Service charges on deposit accounts increased primarily as a result of the December 2013 introduction of a new deposit product line-up that altered the fee structure of many accounts. The increases in debit and credit card interchange fees are due to growth in the number and usage of debit and credit cards. The increases in commissions earned from financial product sales is due to increased sales volume as a result of increased emphasis on this division, including the hiring of additional personnel over recent years.
Noncore components of noninterest income resulted in net losses of $2.9 million in the fourth quarter of 2014 compared to net losses of $0.7 million in the fourth quarter of 2013. For the years ended December 31, 2014 and 2013, the Company recorded net losses of $16.1 million and $4.7 million, respectively, related to the noncore components of noninterest income. The largest variances related to foreclosed property gains/losses and indemnification asset income (expense) - see discussion below.
The Company experienced losses on non-covered foreclosed properties of $0.5 million for the three months ended December 31, 2014 compared to $0.4 million in the fourth quarter of 2013. For the full year of 2014, the Company recorded losses on non-covered foreclosed properties of $1.9 million compared to a gain of $1.3 million in 2013. In 2014, the Company incurred losses on several pieces of real estate that the Company had held for a considerable amount of time that either sold at a loss in 2014 or for which the Company recorded write-downs due to declines in value. In 2013 the Company experienced miscellaneous gains from sales of properties following a stabilization in real estate market values.
Gains on covered foreclosed properties were $0.6 million and $4.1 million for the three months ended December 31, 2014 and 2013, respectively, while losses of $1.9 million and gains of $0.4 million were recorded for the twelve months ended December 31, 2014 and 2013, respectively. Losses on covered foreclosed properties have generally declined over the past several years as a result of stabilization in property values and declining numbers of foreclosed properties held by the Company. The gains realized in 2013 were primarily the result of several sizeable gains related to sales of properties along the North Carolina coast that recovered in value.
Indemnification asset income (expense) is recorded to reflect additional (decreased) amounts expected to be received from the FDIC during the period related to covered assets. The three primary items that result in recording indemnification asset income (expense) are 1) income from loan discount accretion, which results in indemnification expense, 2) provisions for loan losses on covered loans, which result in indemnification income and 3) foreclosed property gains (losses) on covered assets, which also result in indemnification expense (income). In the fourth quarter of 2014, the Company recorded $3.1 million in indemnification asset expense compared to $4.5 million in indemnification asset expense in the fourth quarter of 2013. The variance between the fourth quarter of 2014 and the fourth quarter of 2013 is primarily due to lower indemnification asset expense associated with the lower loan discount accretion income recorded. For the year ended December 31, 2014, indemnification asset expense amounted to $12.8 million compared to indemnification asset expense of $6.8 million for 2013. In 2014, the indemnification asset expense recorded in connection with loan discount accretion was offset to a lesser degree by indemnification asset income associated with provisions for loan losses and foreclosed property losses than was the case in 2013. See additional discussion related to this matter in the section below entitled "Note Regarding Components of Earnings."
During the years ended December 31, 2014 and 2013, the Company realized $0.8 million and $0.5 million in securities gains, respectively.
Noninterest Expenses
Noninterest expenses amounted to $23.0 million in the fourth quarter of 2014 compared to $23.9 million recorded in the fourth quarter of 2013. Noninterest expenses for the year ended December 31, 2014 amounted to $97.3 million compared to $96.6 million recorded in 2013.
In connection with continued cost control and efficiency efforts, the Company's number of full-time equivalent employees declined by 6.6% during 2014. This resulted in a decrease in personnel expense (salaries and employee benefits) in the fourth quarter of 2014 compared to the fourth quarter of 2013. Personnel expense amounted to $13.2 million in the fourth quarter of 2014 compared to $14.3 million in the fourth quarter of 2013. For the years ended December 31, 2014 and 2013, personnel expense amounted to $55.2 million compared to $54.8 million, respectively, an increase of less than 1%.
Included in noninterest expenses for the three and twelve months ended December 31, 2014 were $0.1 million and $1.0 million, respectively, in charges related to the closure and consolidation of nine bank branches.
Balance Sheet and Capital
Total assets at December 31, 2014 amounted to $3.2 billion, a 1.0% increase from a year earlier. Total loans at December 31, 2014 amounted to $2.4 billion, a 2.7% decrease from a year earlier, and total deposits amounted to $2.7 billion at December 31, 2014, a 2.0% decrease from a year earlier.
Investment securities totaled $342.7 million at December 31, 2014 compared to $227.0 million at December 31, 2013. In the fourth quarter of 2014, the Company used a portion of its excess cash balances to purchase approximately $125 million in investment securities. The higher yield earned on those funds improved the Company's net interest income for the quarter.
Non-covered loans amounted to $2.3 billion at December 31, 2014, an increase of $15.7 million from December 31, 2013. The increase was due to the reclassification of $39.7 million in loans from covered status to non-covered status in connection with the July 1, 2014 expiration of a loss sharing agreement. Loan growth has been impacted by a relatively slow economic recovery in many of the Company's market areas, as well as what is expected to be temporary pressures from new internal loan processes designed to enhance loan quality.
The lower amount of deposits at December 31, 2014 compared to December 31, 2013 was primarily due to declines in time deposits, with increases in checking accounts offsetting a large portion of the decline. Time deposits are generally one of the Company's most expensive funding sources, and thus the shift from this category benefited the Company's overall cost of funds.
The Company remains well-capitalized by all regulatory standards, with a Total Risk-Based Capital Ratio at December 31, 2014 of 17.60% compared to the 10.00% minimum to be considered well-capitalized. The Company's tangible common equity to tangible assets ratio was 7.90% at December 31, 2014, an increase of 44 basis points from a year earlier.
Comments of the President and Other Business Matters
Richard H. Moore, President and CEO of First Bancorp, commented on today's report, "I am pleased to report the strong increase in earnings for 2014. For 2015, we will continue to be focused on strategic initiatives that we expect will result in increases in profitability and market share."
The following is a list of business development and other miscellaneous matters affecting the Company:
-- On December 5, 2014, the Company completed the planned closure and
consolidation of nine of its branches. All branches were consolidated
with other First Bank branches near the closing location.
-- On December 16, 2014, the Company announced a quarterly cash dividend of
$0.08 cents per share payable on January 23, 2015 to shareholders of
record on December 31, 2014. This is the same dividend rate as the
Company declared in the fourth quarter of 2013.
-- The Company is currently constructing a new branch facility at 4110
Bradham Drive, Jacksonville, North Carolina. Upon completion, the First
Bank branch located on Western Boulevard will be closed and the accounts
serviced at that branch will be reassigned to the new and improved
branch. This is expected to occur in the second quarter of 2015 and is
subject to regulatory approval.
Note Regarding Components of Earnings
The Company's results of operation are significantly affected by the on-going accounting for two FDIC-assisted failed bank acquisitions. In the discussion above, the term "covered" is used to describe assets included as part of FDIC loss share agreements, which generally result in the FDIC reimbursing the Company for 80% of losses incurred on those assets. The term "non-covered" refers to the Company's legacy assets, which are not included in any type of loss share arrangement.
For covered loans that deteriorate in terms of repayment expectations, the Company records immediate allowances through the provision for loan losses. For covered loans that experience favorable changes in credit quality compared to what was expected at the acquisition date, including loans that payoff, the Company records positive adjustments to interest income over the life of the respective loan - also referred to as loan discount accretion. For covered foreclosed properties that are sold at gains or losses or that are written down to lower values, the Company records the gains/losses within noninterest income.
The adjustments discussed above are recorded within the income statement line items noted without consideration of the FDIC loss share agreements. Because favorable changes in covered assets result in lower expected FDIC claims, and unfavorable changes in covered assets result in higher expected FDIC claims, the FDIC indemnification asset is adjusted to reflect those expectations. The net increase or decrease in the indemnification asset is reflected within noninterest income.
The adjustments noted above can result in volatility within individual income statement line items. Because of the FDIC loss share agreements and the associated indemnification asset, pretax income resulting from amounts recorded as provisions for loan losses on covered loans, discount accretion, and losses from covered foreclosed properties is generally only impacted by 20% of these amounts due to the corresponding adjustments made to the indemnification asset.
First Bancorp is a bank holding company headquartered in Southern Pines, North Carolina with total assets of approximately $3.2 billion. Its principal activity is the ownership and operation of First Bank, a state-chartered community bank that operates 87 branches, with 74 branches operating in North Carolina, 6 branches in South Carolina (Cheraw, Dillon, Florence, and Latta), and 7 branches in Virginia (Abingdon, Blacksburg, Christiansburg, Fort Chiswell, Radford, Salem and Wytheville), where First Bank does business as First Bank of Virginia. First Bank also has loan production offices in Fayetteville, North Carolina, and Greenville, North Carolina. First Bancorp's common stock is traded on the NASDAQ Global Select Market under the symbol "FBNC."
Please visit our website at www.LocalFirstBank.com.
This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995, which statements are inherently subject to risks and uncertainties. Forward-looking statements are statements that include projections, predictions, expectations or beliefs about future events or results or otherwise are not statements of historical fact. Such statements are often characterized by the use of qualifying words (and their derivatives) such as "expect," "believe," "estimate," "plan," "project," "anticipate," or other statements concerning opinions or judgments of the Company and its management about future events. Factors that could influence the accuracy of such forward-looking statements include, but are not limited to, the financial success or changing strategies of the Company's customers, the Company's level of success in integrating acquisitions, actions of government regulators, the level of market interest rates, and general economic conditions. For additional information about the factors that could affect the matters discussed in this paragraph, see the "Risk Factors" section of the Company's most recent annual report on Form 10-K available at www.sec.gov. Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update or revise forward-looking statements. The Company is also not responsible for changes made to the press release by wire services, internet services or other media.
First Bancorp and Subsidiaries
Financial Summary - Page 1
--------------------------
Three Months Ended
December 31,
Percent
($ in
thousands
except
per
share
data -
unaudited) 2014 2013 Change
----------- ---- ---- ------
INCOME STATEMENT
Interest income
---------------
Interest
and fees
on loans $31,160 36,165
Interest
on
investment
securities 1,408 1,309
Other
interest
income 259 116
--- ---
Total
interest
income 32,827 37,590 (12.7%)
------ ------
Interest expense
----------------
Interest
on
deposits 1,602 2,059
Other,
primarily
borrowings 302 255
--- ---
Total
interest
expense 1,904 2,314 (17.7%)
----- -----
Net
interest
income 30,923 35,276 (12.3%)
------ ------
Provision
for
loan
losses
- non-
covered
loans 1,285 4,965 (74.1%)
Provision
for
loan
losses
-
covered
loans 191 3,931 (95.1%)
--- -----
Total
provision
for
loan
losses 1,476 8,896 (83.4%)
----- -----
Net
interest
income
after
provision
for
loan
losses 29,447 26,380 11.6%
------ ------
Noninterest income
------------------
Service
charges
on
deposit
accounts 3,261 3,173
Other
service
charges,
commissions,
and
fees 2,552 2,401
Fees
from
presold
mortgages 522 564
Commissions
from
financial
product
sales 748 563
Bank-
owned
life
insurance
income 355 334
Foreclosed
property
gains
(losses)
- non-
covered (460) (354)
Foreclosed
property
gains
(losses)
-
covered 598 4,105
FDIC
indemnification
asset
income
(expense),
net (3,138) (4,528)
Securities
gains - (28)
Other
gains
(losses) 54 56
--- ---
Total
noninterest
income 4,492 6,286 (28.5%)
----- -----
Noninterest expenses
--------------------
Salaries
expense 11,284 12,039
Employee
benefit
expense 1,939 2,223
Occupancy
and
equipment
expense 2,841 2,910
Intangibles
amortization 195 221
Other
operating
expenses 6,730 6,542
----- -----
Total
noninterest
expenses 22,989 23,935 (4.0%)
------ ------
Income
before
income
taxes 10,950 8,731 25.4%
Income
taxes 3,855 3,053 26.3%
----- -----
Net
income 7,095 5,678 25.0%
Preferred
stock
dividends (217) (217)
Net
income
available
to
common
shareholders $6,878 5,461 25.9%
====== =====
Earnings
per
common
share -
basic $0.35 0.28 25.0%
Earnings
per
common
share -
diluted 0.34 0.27 25.9%
ADDITIONAL INCOME STATEMENT INFORMATION
----------------------------------
Net
interest
income,
as
reported $30,923 35,276
Tax-
equivalent
adjustment
(1) 376 386
--- ---
Net
interest
income,
tax-
equivalent $31,299 35,662 (12.2%)
======= ======
(1) This amount reflects the tax
benefit that the Company
receives related to its tax-
exempt loans and securities,
which carry interest rates
lower than similar taxable
investments due to their tax-
exempt status. This amount has
been computed assuming a 39%
tax rate and is reduced by the
related nondeductible portion
of interest expense.
First Bancorp and Subsidiaries
Financial Summary - Page 2
--------------------------
Twelve Months Ended
December 31, Percent
------------
($ in
thousands
except per
share data
-
unaudited) 2014 2013 Change
----------- ---- ---- ------
INCOME STATEMENT
Interest income
---------------
Interest
and fees
on loans $133,641 141,616
Interest on
investment
securities 5,342 5,309
Other
interest
income 849 586
--- ---
Total
interest
income 139,832 147,511 (5.2%)
------- -------
Interest expense
----------------
Interest on
deposits 7,072 9,960
Other,
primarily
borrowings 1,151 1,025
----- -----
Total
interest
expense 8,223 10,985 (25.1%)
----- ------
Net
interest
income 131,609 136,526 (3.6%)
------- -------
Provision
for loan
losses -
non-
covered
loans 7,087 18,266 (61.2%)
Provision
for loan
losses -
covered
loans 3,108 12,350 (74.8%)
----- ------
Total
provision
for loan
losses 10,195 30,616 (66.7%)
------ ------
Net
interest
income
after
provision
for loan
losses 121,414 105,910 14.6%
------- -------
Noninterest income
------------------
Service
charges on
deposit
accounts 13,706 12,752
Other
service
charges,
commissions,
and fees 10,019 9,318
Fees from
presold
mortgages 2,726 2,907
Commissions
from
financial
product
sales 2,733 2,132
Bank-owned
life
insurance
income 1,311 1,120
Foreclosed
property
gains
(losses) -
non-
covered (1,924) 1,333
Foreclosed
property
gains
(losses) -
covered (1,919) 367
FDIC
indemnification
asset
income
(expense),
net (12,842) (6,824)
Securities
gains 786 532
Other gains
(losses) (228) (148)
---- ----
Total
noninterest
income 14,368 23,489 (38.8%)
------ ------
Noninterest expenses
--------------------
Salaries
expense 46,071 45,120
Employee
benefit
expense 9,086 9,644
Occupancy
and
equipment
expense 11,293 11,487
Intangibles
amortization 777 860
Other
operating
expenses 30,024 29,508
------ ------
Total
noninterest
expenses 97,251 96,619 0.7%
------ ------
Income
before
income
taxes 38,531 32,780 17.5%
Income
taxes 13,535 12,081 12.0%
------ ------
Net income 24,996 20,699 20.8%
Preferred
stock
dividends (868) (895)
Net income
available
to common
shareholders $24,128 19,804 21.8%
======= ======
Earnings
per common
share -
basic $1.22 1.01 20.8%
Earnings
per common
share -
diluted 1.19 0.98 21.4%
ADDITIONAL INCOME STATEMENT INFORMATION
----------------------------------
Net
interest
income, as
reported $131,609 136,526
Tax-
equivalent
adjustment
(1) 1,502 1,511
----- -----
Net
interest
income,
tax-
equivalent $133,111 138,037 (3.6%)
======== =======
(1) This amount reflects the tax
benefit that the Company
receives related to its tax-
exempt loans and securities,
which carry interest rates
lower than similar taxable
investments due to their tax-
exempt status. This amount has
been computed assuming a 39%
tax rate and is reduced by the
related nondeductible portion
of interest expense.
First Bancorp and Subsidiaries
Financial Summary - Page 3
--------------------------
Three Months Ended Twelve Months Ended
December 31, December 31,
------------ ------------
PERFORMANCE
RATIOS
(annualized) 2014 2013 2014 2013
---- ---- ---- ----
Return on
average
assets
(1) 0.85% 0.68% 0.75% 0.62%
Return on
average
common
equity
(2) 8.56% 7.31% 7.73% 6.78%
Net
interest
margin -
tax-
equivalent
(3) 4.25% 5.04% 4.58% 4.92%
Net
charge-
offs to
average
loans -
non-
covered 0.78% 0.74% 0.65% 0.72%
COMMON SHARE DATA
Cash
dividends
declared
- common $0.08 0.08 $0.32 0.32
Stated
book
value -
common 16.08 15.30 16.08 15.30
Tangible
book
value -
common 12.63 11.81 12.63 11.81
Common
shares
outstanding
at end
of
period 19,709,881 19,679,659 19,709,881 19,679,659
Weighted
average
shares
outstanding
- basic 19,706,926 19,679,701 19,699,801 19,675,597
Weighted
average
shares
outstanding
-
diluted 20,440,533 20,409,489 20,434,007 20,404,303
CAPITAL RATIOS
Tangible
equity
to
tangible
assets 10.15% 9.73% 10.15% 9.73%
Tangible
common
equity
to
tangible
assets 7.90% 7.46% 7.90% 7.46%
Tier I
leverage
ratio 11.61% 11.18% 11.61% 11.18%
Tier I
risk-
based
capital
ratio 16.35% 15.53% 16.35% 15.53%
Total
risk-
based
capital
ratio 17.60% 16.79% 17.60% 16.79%
AVERAGE BALANCES ($ in thousands)
Total
assets $3,214,302 3,167,640 $3,219,915 3,208,458
Loans 2,411,117 2,453,186 2,434,331 2,419,679
Earning
assets 2,920,295 2,807,461 2,907,098 2,805,112
Deposits 2,691,076 2,732,721 2,723,758 2,779,032
Interest-
bearing
liabilities 2,235,758 2,308,387 2,294,330 2,380,747
Shareholders'
equity 389,709 367,081 383,055 362,770
(1) Calculated by dividing
annualized net income (loss)
available to common
shareholders by average
assets.
(2) Calculated by dividing
annualized net income (loss)
available to common
shareholders by average common
equity.
(3) See footnote 1 on page 1 of
Financial Summary for
discussion of tax-equivalent
adjustments.
TREND INFORMATION
($ in thousands
except per share
data) For the Three Months Ended
--------------------------
December 31, September 30, June 30, March 31, December 31,
2014 2014 2014 2014 2013
INCOME STATEMENT
---
Net interest
income - tax-
equivalent (1) $31,299 31,721 34,183 35,908 35,662
Taxable
equivalent
adjustment (1) 376 378 375 373 386
Net interest
income 30,923 31,343 33,808 35,535 35,276
Provision for
loan losses -
non-covered 1,285 1,279 1,158 3,365 4,965
Provision for
loan losses -
covered 191 206 2,501 210 3,931
Noninterest
income 4,492 4,608 4,970 298 6,286
Noninterest
expense 22,989 25,931 24,780 23,551 23,935
Income before
income taxes 10,950 8,535 10,339 8,707 8,731
Income tax
expense 3,855 2,956 3,693 3,031 3,053
Net income 7,095 5,579 6,646 5,676 5,678
Preferred stock
dividends (217) (217) (217) (217) (217)
Net income
available to
common
shareholders 6,878 5,362 6,429 5,459 5,461
Earnings per
common share -
basic 0.35 0.27 0.33 0.28 0.28
Earnings per
common share -
diluted 0.34 0.27 0.32 0.27 0.27
See footnote 1 on page 1 of Financial Summary for discussion of tax-equivalent adjustments.
-------------------------------------------------------------------------------------------
First Bancorp and Subsidiaries
Financial Summary - Page 4
--------------------------
One Year
CONSOLIDATED BALANCE SHEETS At Dec. 31, At Sept. 30, At Dec. 31, Change
($ in thousands) 2014 2014 2013
---- ---- ----
Assets
Cash and due from banks $81,068 84,128 83,881 (3.4%)
Interest bearing deposits with banks 172,016 252,386 139,393 23.4%
------- ------- -------
Total cash and cash equivalents 253,084 336,514 223,274 13.4%
------- ------- -------
Investment securities 342,721 213,075 227,036 51.0%
Presold mortgages 6,019 5,761 5,422 11.0%
Loans - non-covered 2,268,580 2,292,841 2,252,885 0.7%
Loans - covered by FDIC loss share agreements 127,594 133,249 210,309 (39.3%)
------- ------- -------
Total loans 2,396,174 2,426,090 2,463,194 (2.7%)
--------- --------- ---------
Allowance for loan losses - non-covered (38,345) (41,564) (44,263) (13.4%)
Allowance for loan losses - covered (2,281) (2,567) (4,242) (46.2%)
------ ------ ------
Total allowance for loan losses (40,626) (44,131) (48,505) (16.2%)
------- ------- -------
Net loans 2,355,548 2,381,959 2,414,689 (2.4%)
--------- --------- ---------
Premises and equipment 75,113 74,871 77,448 (3.0%)
FDIC indemnification asset 22,569 25,328 48,622 (53.6%)
Intangible assets 67,893 68,087 68,669 (1.1%)
Foreclosed real estate - non-covered 9,771 11,705 12,251 (20.2%)
Foreclosed real estate - covered 2,350 3,237 24,497 (90.4%)
Bank-owned life insurance 55,421 44,996 44,040 25.8%
Other assets 27,894 30,078 39,122 (28.7%)
------ ------ ------
Total assets $3,218,383 3,195,611 3,185,070 1.0%
========== ========= =========
Liabilities
Deposits:
Non-interest bearing checking accounts $560,230 540,349 482,650 16.1%
Interest bearing checking accounts 583,903 538,815 557,413 4.8%
Money market accounts 548,255 545,137 547,556 0.1%
Savings accounts 180,317 178,260 169,023 6.7%
Brokered deposits 88,375 99,169 116,087 (23.9%)
Internet time deposits 747 1,967 1,319 (43.4%)
Other time deposits > $100,000 384,127 406,276 451,741 (15.0%)
Other time deposits 349,952 369,039 425,230 (17.7%)
------- ------- -------
Total deposits 2,695,906 2,679,012 2,751,019 (2.0%)
Borrowings 116,394 116,394 46,394 150.9%
Other liabilities 18,384 15,390 15,735 16.8%
------ ------ ------
Total liabilities 2,830,684 2,810,796 2,813,148 0.6%
--------- --------- ---------
Shareholders' equity
Preferred stock 70,787 70,787 70,787 0.0%
Common stock 132,532 132,440 132,099 0.3%
Retained earnings 184,958 179,656 167,136 10.7%
Accumulated other comprehensive income (loss) (578) 1,932 1,900 n/m
---- ----- -----
Total shareholders' equity 387,699 384,815 371,922 4.2%
------- ------- -------
Total liabilities and shareholders' equity $3,218,383 3,195,611 3,185,070 1.0%
========== ========= =========
n/m = not meaningful
First Bancorp and Subsidiaries
Financial Summary - Page 5
--------------------------
For the Three Months Ended
--------------------------
December 31, September 30, June 30, March 31, December 31,
2014 2014 2014 2014 2013
YIELD INFORMATION
---
Yield on loans 5.13% 5.23% 5.65% 5.95% 5.85%
Yield on securities - tax-equivalent (1) 2.95% 3.25% 3.00% 3.19% 2.96%
Yield on other earning assets 0.38% 0.30% 0.33% 0.34% 0.36%
Yield on all interest earning assets 4.51% 4.58% 4.95% 5.44% 5.37%
Rate on interest bearing deposits 0.30% 0.32% 0.33% 0.34% 0.36%
Rate on other interest bearing liabilities 1.03% 1.03% 1.02% 2.14% 2.18%
Rate on all interest bearing liabilities 0.34% 0.35% 0.37% 0.38% 0.40%
Total cost of funds 0.27% 0.28% 0.30% 0.31% 0.33%
Net interest margin - tax-equivalent (2) 4.25% 4.30% 4.65% 5.13% 5.04%
Average prime rate 3.25% 3.25% 3.25% 3.25% 3.25%
(1) See footnote 1 on page 1 of Financial Summary for discussion of tax-equivalent adjustments.
(2) Calculated by dividing annualized tax-equivalent net interest income by average earning assets for the period.
See footnote 1 on page 1 of Financial Summary for discussion of tax-equivalent adjustments.
-------------------------------------------------------------------------------------------
For the Three Months Ended
--------------------------
NET INTEREST INCOME PURCHASE ACCOUNTING ADJUSTMENTS
($ in thousands) December 31, September 30, June 30, March 31, December 31,
2014 2014 2014 2014 2013
--- ---- ---- ---- ---- ----
Interest income - reduced by premium $ - - (49) (49) (49)
amortization on loans
Interest income - increased by accretion
of loan discount (1)
2,173 2,577 4,851 6,408 5,605
Interest expense - reduced by premium
amortization of deposits
- - 4 3 5
--- --- --- --- ---
Impact on net interest income $2,173 2,577 4,806 6,362 5,561
====== ===== ===== ===== =====
(1) Corresponding indemnification asset expense is recorded for approximately 80% of this amount, and therefore the net
effect is that pretax income is positively impacted by 20% of the amounts in this line item.
--------------------------------------------------------------------------------------------
First Bancorp and Subsidiaries
Financial Summary - Page 6
---
Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
2014 2014 2014 2014 2013
ASSET QUALITY DATA ($ in thousands)
---
Non-covered nonperforming assets
--------------------------------
Nonaccrual loans $50,066 53,620 47,533 44,129 41,938
Troubled debt restructurings - accruing 35,493 31,501 27,250 26,335 27,776
Accruing loans > 90 days past due - - - - -
--- --- --- --- ---
Total non-covered nonperforming loans 85,559 85,121 74,783 70,464 69,714
Foreclosed real estate 9,771 11,705 9,346 11,740 12,251
----- ------ ----- ------ ------
Total non-covered nonperforming assets $95,330 96,826 84,129 82,204 81,965
======= ====== ====== ====== ======
Covered nonperforming assets (1)
-------------------------------
Nonaccrual loans $10,508 10,478 20,938 31,986 37,217
Troubled debt restructurings - accruing 5,823 6,273 8,193 7,429 8,909
Accruing loans > 90 days past due - - - - -
--- --- --- --- ---
Total covered nonperforming loans 16,331 16,751 29,131 39,415 46,126
Foreclosed real estate 2,350 3,237 9,934 19,504 24,497
----- ----- ----- ------ ------
Total covered nonperforming assets $18,681 19,988 39,065 58,919 70,623
======= ====== ====== ====== ======
Total nonperforming assets $114,011 116,814 123,194 141,123 152,588
======== ======= ======= ======= =======
Asset Quality Ratios - All Assets
---------------------------------
Net quarterly charge-offs to average loans - annualized 0.82% 0.51% 0.99% 0.65% 1.31%
Nonperforming loans to total loans 4.25% 4.20% 4.27% 4.49% 4.70%
Nonperforming assets to total assets 3.54% 3.66% 3.77% 4.26% 4.79%
Allowance for loan losses to total loans 1.70% 1.82% 1.88% 1.97% 1.97%
Asset Quality Ratios - Based on Non-covered Assets only
-------------------------------------------------------
Net quarterly charge-offs to average non-covered loans - annualized 0.78% 0.60% 0.69% 0.52% 0.74%
Non-covered nonperforming loans to non-covered loans 3.77% 3.71% 3.31% 3.12% 3.09%
Non-covered nonperforming assets to total non-covered assets 3.09% 3.17% 2.73% 2.65% 2.78%
Allowance for loan losses to non-covered loans 1.69% 1.81% 1.86% 1.98% 1.96%
(1) Covered nonperforming assets consist of assets that are included in loss-share agreements with the FDIC.
First Bancorp and Subsidiaries
Financial Summary - Page 7
--------------------------
For the Three Months Ended
--------------------------
NET INTEREST MARGIN, EXCLUDING
LOAN DISCOUNT ACCRETION -
RECONCILIATION
($ in thousands) Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
2014 2014 2014 2014 2013
---- ---- ---- ---- ----
Net interest income, as reported $30,923 31,343 33,808 35,535 35,276
Tax-equivalent adjustment 376 378 375 373 386
--- --- --- --- ---
Net interest income, tax-equivalent (A) $31,299 31,721 34,183 35,908 35,662
======= ====== ====== ====== ======
2,946,586 2,807,461
Average earning assets (B) $2,920,295 2,924,705 2,836,806
========== ========= =========
Tax-equivalent net interest
margin, annualized - as reported -
(A)/(B) 4.25% 4.30% 4.65% 5.13% 5.04%
==== ==== ==== ==== ====
Net interest income, tax-equivalent $31,299 31,721 34,183 35,908 35,662
Loan discount accretion 2,173 2,577 4,851 6,408 5,605
----- ----- ----- ----- -----
Net interest income, tax-equivalent, excluding $29,126 29,144 29,332 29,500
loan discount accretion (A)
30,057
======
$2,920,295 2,924,705 2,946,586 2,836,806
Average earnings assets (B) 2,807,461
=========
Tax-equivalent net interest margin, excluding 3.96% 3.95% 3.99% 4.22% 4.25%
impact of loan discount accretion,
annualized - (A) / (B)
Note: The measure "tax-equivalent net interest margin, excluding impact of loan discount accretion" is a non-GAAP performance measure. Management of the Company believes that it is useful to calculate and present the Company's net interest margin without the impact of loan discount accretion for the reasons explained in the remainder of this paragraph. Loan discount accretion is a non-cash interest income adjustment related to the Company's acquisition of two failed banks and represents the portion of the fair value discount that was initially recorded on the acquired loans that is being recognized into income over the lives of the loans. At December 31, 2014, the Company had a remaining loan discount balance of $20.8 million compared to $39.6 million at December 31, 2013. For the related loans that perform and pay-down over time, the loan discount will also be reduced, with a corresponding increase to interest income. Therefore management of the Company believes it is useful to also present this ratio to reflect the Company's net interest margin excluding this non-cash, temporary loan discount accretion adjustment to aid investors in comparing financial results between periods. The Company cautions that non-GAAP financial measures should be considered in addition to, but not as a substitute for, the Company's reported GAAP results.
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SOURCE First Bancorp
