TROY, N.C., April 29 /PRNewswire-FirstCall/ -- First Bancorp (Nasdaq: FBNC), the parent company of First Bank, announced today first quarter net income available to common shareholders of $3,140,000 compared to $5,529,000 reported in the first quarter of 2008. Earnings per diluted common share were $0.19 in the first quarter of 2009 compared to $0.38 in the first quarter of 2008. The lower quarterly earnings were caused primarily by higher loan losses that are largely attributable to the recessionary economy. The Company also recorded preferred stock dividends and accretion related to its issuance of preferred stock to the U.S. Treasury, which reduced earnings per diluted common share.
Net Interest Income and Net Interest Margin
Net interest income for the first quarter of 2009 amounted to $22.1 million, an 11.9% increase over the first quarter of 2008. The higher net interest income resulted from growth in loans and deposits and was partially offset by a lower net interest margin.
The Company's net interest margin (tax-equivalent net interest income divided by average earnings assets) in the first quarter of 2009 was 3.68%, an 11 basis point decline from the 3.79% margin realized in the first quarter of 2008 and a two basis point decline from the 3.70% margin realized in the fourth quarter of 2008. The Company's net interest margin has been negatively impacted by the Federal Reserve lowering interest rates throughout 2008. When interest rates are lowered, the Company's net interest margin declines, at least temporarily, as most of the Company's adjustable rate loans reprice downward immediately, while rates on the Company's customer time deposits are fixed, and thus do not adjust downward until they mature. Assuming a flat interest rate environment for the remainder of 2009, the Company expects its net interest margin to gradually increase as it renews maturing time deposits at lower interest rates.
In the first quarter of 2009, the Company recorded purchase accounting adjustments related to an April 2008 acquisition that increased net interest income by $267,000. Similar adjustments are expected to amount to only $67,000 per quarter for the remainder of 2009.
Provision for Loan Losses and Asset Quality
Although the Company has no subprime loan exposure, the current economic environment has resulted in an increase in the Company's loan losses and classified assets, which has led to a higher provision for loan losses. The Company's provision for loan losses amounted to $4,485,000 in the first quarter of 2009 compared to $1,533,000 in the first quarter of 2008. The Company's ratio of annualized net charge-offs to average loans was 0.34% for the first quarter of 2009 compared to 0.18% in the first quarter of 2008. The Company's nonaccrual loans to total loans ratio was 1.61% at March 31, 2009 compared to 0.46% at March 31, 2008.
Although the Company's asset quality ratios discussed above reflect unfavorable trends, they compare favorably to those typical of the Company's peers based on public information available. The table below shows how the Company's ratios compare to data reported by the Federal Reserve for all bank holding companies with between $1 billion and $3 billion in assets at December 31, 2008 (the most recent information available):
First Bancorp Peer Average
------------- ------------
Nonaccrual loans as percent of total
loans at December 31, 2008 1.20% 2.20%
Net charge-offs to average loans for
2008 0.24% 0.66%
Noninterest Income
Noninterest income amounted to $4.7 million for the first quarter of 2009, an 8.6% decrease from the first quarter of 2008. The decrease was caused primarily by a nonrecurring gain of $306,000 recorded in the first quarter of 2008 related to the VISA initial public offering that occurred in March 2008, which is included in "Other gains" in the accompanying table. The Company was a member/owner of VISA and received a portion of VISA's offering proceeds.
The $4.7 million in noninterest income recorded in the first quarter of 2009 was a decrease from $5.0 million recorded in the fourth quarter of 2008. This decline was caused primarily by a lower level of service charges on deposits accounts. Nonsufficient fund charges to overdrawn customers declined by $0.4 million as a result of a lower occurrence of overdrawn accounts.
Noninterest Expenses
Noninterest expenses amounted to $15.9 million in the first quarter of 2009, a 9.2% increase over 2008. A majority of this increase is attributable to the Company's growth, including the April 1, 2008 acquisition of Great Pee Dee Bancorp. Additionally, the Company recorded FDIC insurance expense of $756,000 in the first quarter of 2009 compared to $240,000 in the first quarter of 2008 as a result of the FDIC increasing its premium rates in order to replenish its reserves. The Company also recorded pension expense amounting to $897,000 in the first quarter of 2009 compared to $606,000 in the first quarter of 2008. The Company's pension expense increased in 2009 primarily as a result of investment losses experienced by the pension plan's assets in 2008. Partially offsetting the expense increases was a $1.0 million reduction in bonus accruals as a result of the Company suspending its annual incentive plan program due to the current earnings environment.
The $15.9 million in noninterest expense recorded in the first quarter of 2009 was a decrease from $16.1 million recorded in the fourth quarter of 2008. Within the line item "personnel expense," salaries expense decreased by $0.6 million, while employee benefits increased by approximately the same amount. The decrease in salaries expense was primarily a result of the Company freezing salaries and suspending its annual incentive plan program, while the primary reason for the increase in employee benefits relates to the higher pension plan expense.
The Company's effective tax rate was approximately 37% for each of the three month periods ended March 31, 2009 and 2008.
Preferred Stock Dividends and Accretion
On January 9, 2009, the Company completed the sale of $65 million of preferred stock to the U.S. Treasury Department under the Capital Purchase Program. The preferred stock issued to the Treasury pays dividends at a rate of 5% for the first five years and 9% thereafter. As part of the program, the Company also issued warrants that give the Treasury the option for the next ten years to purchase a total of 616,038 shares of First Bancorp common stock at an exercise price of $15.82. (For further information regarding the Capital Purchase Program, see the Company's 2008 Annual Report on Form 10-K.)
In the first quarter of 2009, the Company accrued preferred stock dividends of $740,000 and recorded $201,000 in accretion of the discount that was recorded upon the issuance of the preferred stock.
Balance Sheet Growth
Total assets at March 31, 2009 amounted to $2.7 billion, 13.1% higher than a year earlier. Total loans at March 31, 2009 amounted to $2.2 billion, a 13.1% increase from a year earlier, and total deposits amounted to $2.1 billion at March 31, 2009, an 11.3% increase from a year earlier. Approximately two-thirds of the balance sheet growth relates to the April 1, 2008 acquisition of Great Pee Dee.
During the first quarter of 2009, the Company experienced a $24 million decrease in loans outstanding and a $64 million increase in deposits. The decline in loans was due primarily to lower loan demand in this recessionary economy. The Company is actively seeking to make new loans in order to offset normal principal reductions, as well as to grow its customer base. During the first quarter of 2009, the Company originated approximately $96 million in new loans (excluding renewals) but received principal paydowns from existing loans that more than offset this new growth. Deposit growth was strong in the first quarter due to an internal emphasis to grow deposits, with the Company also benefiting from a "flight to quality" to sound banks like First Bank.
Comments of the President and Other Business Matters
Jerry L. Ocheltree, President and CEO of First Bancorp, commented on the quarter's results, "While our earnings were negatively impacted by a higher provision for loan losses, we continue to be a profitable and sound institution. I am encouraged by underlying trends that position us well for the future. The spreads we have been realizing on new and renewing loans and deposits have been steadily improving, which should enhance the net interest margin expansion we anticipate over the remainder of 2009. Also, the high growth in deposits we have achieved recently further strengthens the value of our franchise by providing a relatively low cost funding source for the future."
Mr. Ocheltree noted the following corporate developments:
-- On March 23, 2009, the Company opened a second branch in Florence, South
Carolina located at 2107 West Evans Street.
-- On March 6, 2009, the Company announced a quarterly cash dividend of 8
cents per share payable on April 24, 2009 to shareholders of record on
March 31, 2009. The prior quarterly dividend rate was $0.19 per share.
The dividend rate was reduced in order to conserve capital in light of
the current economic conditions.
-- On January 9, 2009, the Company completed the sale of $65 million of
preferred stock to the U.S. Treasury Department under the
Treasury's Capital Purchase Program. The preferred stock issued
to the Treasury will pay a dividend of 5% for the first five years and
9% thereafter. As part of the program, the Treasury also received
warrants that give the Treasury the option for the next ten years to
purchase a total of 616,308 shares of First Bancorp common stock at an
exercise price of $15.82.
-- On January 2, 2009, the Company consolidated its "Primer
Banco" branch located in Asheboro with an existing Asheboro First
Bank branch located at 2005 North Fayetteville Street.
-- There has been no stock repurchase activity during 2009.
First Bancorp is a bank holding company headquartered in Troy, North Carolina with total assets of approximately $2.7 billion. Its principal activity is the ownership and operation of First Bank, a state-chartered community bank that operates 75 branches, with 63 branches operating in a 21-county market area in the central piedmont and coastal regions of North Carolina, 7 branches in South Carolina (Cheraw, Dillon, Florence, and Latta), 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. For additional financial data, please see the attached Financial Summary.
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 March 31,
per share data - ----------------------- Percent
unaudited) 2009 2008 Change
---------------------- ---- ---- -------
INCOME STATEMENT
Interest income
---------------
Interest and fees on
loans $32,552 33,939
Interest on investment
securities 1,932 1,925
Other interest income 39 443
------ ------
Total interest income 34,523 36,307 -4.9%
------ ------
Interest expense
----------------
Interest on deposits 11,425 14,400
Other, primarily
borrowings 988 2,143
------ ------
Total interest expense 12,413 16,543 -25.0%
------ ------
Net interest income 22,110 19,764 11.9%
Provision for loan
losses 4,485 1,533 192.6%
------ ------
Net interest income
after provision
for loan losses 17,625 18,231 -3.3%
------ ------
Noninterest income
------------------
Service charges on
deposit accounts 2,974 3,076
Other service charges,
commissions, and fees 1,121 1,187
Fees from presold
mortgages 159 198
Commissions from
financial product
sales 494 399
Data processing fees 29 50
Securities gains
(losses) (63) -
Other gains 32 285
------ ------
Total noninterest
income 4,746 5,195 -8.6%
------ ------
Noninterest expenses
--------------------
Personnel expense 8,826 8,554
Occupancy and equipment
expense 2,069 1,987
Intangibles
amortization 98 79
Other operating
expenses 4,944 3,971
------ ------
Total noninterest
expenses 15,937 14,591 9.2%
------ ------
Income before income
taxes 6,434 8,835 -27.2%
Income taxes 2,353 3,306 -28.8%
------ ------
Net income 4,081 5,529 -26.2%
Preferred stock
dividends and
accretion 941 -
------ ------
Net income available to
common shareholders $3,140 5,529 -43.2%
====== ======
Earnings per common
share - basic $0.19 0.38 -50.0%
Earnings per common
share - diluted 0.19 0.38 -50.0%
ADDITIONAL INCOME STATEMENT INFORMATION
---------------------------------------
Net interest income, as
reported $22,110 19,764
Tax-equivalent
adjustment (1) 163 164
------- ------
Net interest income,
tax-equivalent $22,273 19,928 11.8%
======= ======
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(1) This amount reflects the tax benefit that the Company receives
related to its tax-exempt loans and securities, which carry interest
rates lower than similar taxable investments due to their tax exempt
status. This amount has been computed assuming a 39% tax rate and is
reduced by the related nondeductible portion of interest expense.
==============================
First Bancorp and Subsidiaries
Financial Summary - page 2
==============================
Three Months Ended
March 31,
---------------- Percent
PERFORMANCE RATIOS (annualized) 2009 2008 Change
---- ---- -------
Return on average assets (1) 0.49% 0.99%
Return on average common equity (2) 5.60% 12.45%
Net interest margin - tax equivalent (3) 3.68% 3.79%
Efficiency ratio - tax equivalent (3)(4) 58.98% 58.08%
Net charge-offs to average loans 0.34% 0.18%
Nonperforming assets to total assets
(period end) 1.66% 0.51%
COMMON SHARE DATA
Cash dividends declared - common $0.08 0.19 -57.9%
Stated book value - common 13.53 12.37 9.4%
Tangible book value - common 9.46 8.83 7.1%
Common shares outstanding at end of
period 16,620,896 14,387,599
Weighted average common shares
outstanding - basic 16,608,625 14,380,599
Weighted average common shares
outstanding - diluted 16,617,732 14,446,357
CAPITAL RATIOS
Tangible equity to tangible assets 8.30% 5.45%
Tangible common equity to tangible
assets 5.99% 5.45%
Tier I leverage ratio 10.71% 7.95%
Tier I risk-based capital ratio 12.89% 9.10%
Total risk-based capital ratio 14.15% 10.24%
AVERAGE BALANCES ($in thousands)
Total assets $2,616,890 2,254,422 16.1%
Loans 2,202,782 1,915,328 15.0%
Earning assets 2,452,479 2,113,394 16.0%
Deposits 2,106,424 1,858,237 13.4%
Interest-bearing liabilities 2,080,757 1,827,163 13.9%
Shareholders' equity 282,515 178,597 58.2%
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(1) Calculated by dividing annualized net income available to common
shareholders by average assets.
(2) Calculated by dividing annualized net income available to common
shareholders by common equity
(3) See footnote 1 on page 1 of Financial Summary for discussion of tax-
equivalent adjustments.
(4) Calculated by dividing noninterest expense by the sum of tax-
equivalent net interest income plus noninterest income.
=========================================================================
TREND INFORMATION
($ in thousands except per share data)
For the Three Months Ended
--------------------------
March December September June March
31, 31, 30, 30, 31,
INCOME STATEMENT 2009 2008 2008 2008 2008
---- ---- ---- ---- ----
Net interest income - tax
equivalent (1) $22,273 22,675 22,950 21,664 19,928
Taxable equivalent
adjustment (1) 163 166 165 163 164
Net interest income 22,110 22,509 22,785 21,501 19,764
Provision for loan losses 4,485 3,437 2,851 2,059 1,533
Noninterest income 4,746 4,952 5,360 5,150 5,195
Noninterest expense 15,937 16,067 15,396 16,157 14,591
Income before income taxes 6,434 7,957 9,898 8,435 8,835
Income taxes 2,353 2,956 3,701 3,157 3,306
Net income 4,081 5,001 6,197 5,278 5,529
Preferred stock dividends and
accretion 941 ? ? ? ?
Net income available to common
shareholders 3,140 5,001 6,197 5,278 5,529
Earnings per common share -
basic 0.19 0.30 0.38 0.32 0.38
Earnings per common share -
diluted 0.19 0.30 0.37 0.32 0.38
--------------------------------------------------------------------
(1) See footnote 1 on page 1 of Financial Summary for discussion of
tax-equivalent adjustments.
==============================
First Bancorp and Subsidiaries
Financial Summary - page 3
==============================
March December March
PERIOD END BALANCES ($in 31, 31, 31, One Year
thousands) 2009 2008 2008 Change
---- ---- ---- ------
Assets $2,691,550 2,750,567 2,380,134 13.1%
Securities 184,193 187,183 153,018 20.4%
Loans 2,187,466 2,211,315 1,933,855 13.1%
Allowance for loan losses 31,912 29,256 21,992 45.1%
Intangible assets 67,682 67,780 50,941 32.9%
Deposits 2,139,119 2,074,791 1,921,443 11.3%
Borrowings 182,159 367,275 212,394 -14.2%
Shareholders' equity 285,442 219,868 177,981 60.4%
-----------------------------------------------------------------------
For the Three Months Ended
--------------------------
March December September June March
31, 31, 30, 30, 31,
YIELD INFORMATION 2009 2008 2008 2008 2008
---- ---- ---- ---- ----
Yield on loans 5.99% 6.22% 6.44% 6.53% 7.13%
Yield on securities - tax
equivalent (1) 4.80% 4.63% 4.89% 5.39% 5.71%
Yield on other
earning assets 0.22% 0.74% 2.18% 2.72% 3.49%
Yield on all interest earning
assets 5.74% 6.00% 6.26% 6.38% 6.94%
Rate on interest bearing
deposits 2.47% 2.72% 2.84% 3.10% 3.56%
Rate on other interest
bearing liabilities 1.97% 2.22% 2.92% 3.05% 4.35%
Rate on all interest bearing
liabilities 2.42% 2.64% 2.85% 3.09% 3.64%
Interest rate spread - tax
equivalent (1) 3.32% 3.36% 3.41% 3.29% 3.30%
Net interest margin - tax
equivalent (2) 3.68% 3.70% 3.79% 3.71% 3.79%
Average prime rate 3.25% 4.06% 5.00% 5.08% 6.22%
--------------------------------------------------------------------
(1) See footnote 1 on page 1 of Financial Summary for discussion of
tax-equivalent adjustments.
(2) Calculated by dividing annualized tax equivalent net interest
income by average earning assets for the period. See footnote 1 on
page 1 of Financial Summary for discussion of tax-equivalent
adjustments.
-------------------------------------------------------------------------
March December September June March
31, 31, 30, 30, 31,
ASSET QUALITY DATA 2009 2008 2008 2008 2008
($ in thousands) ---- ---- ---- ---- ----
Nonaccrual loans $35,296 26,600 19,558 17,588 8,799
Restructured loans 3,995 3,995 3,995 3,995 5
Accruing loans > 90 days past
due - - - - -
----- ----- ----- ----- -----
Total nonperforming loans 39,291 30,595 23,553 21,583 8,804
Other real estate 5,428 4,832 4,565 2,934 3,289
----- ----- ----- ----- -----
Total nonperforming assets $44,719 35,427 28,118 24,517 12,093
======= ====== ====== ====== ======
Net charge-offs to average
loans - annualized 0.34% 0.38% 0.18% 0.22% 0.18%
Nonperforming loans to total
loans 1.80% 1.38% 1.06% 1.00% 0.46%
Nonperforming assets to total
assets 1.66% 1.29% 1.04% 0.94% 0.51%
Allowance for loan losses to
total loans 1.46% 1.32% 1.26% 1.20% 1.14%
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SOURCE First Bancorp
For further information: Jerry L. Ocheltree of First Bancorp, +1-910-576-6171
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