TROY, N.C., July 29 /PRNewswire-FirstCall/ -- First Bancorp (Nasdaq:
FBNC), the parent company of First Bank, reports second quarter net income of
$5,278,000, or $0.32 per diluted share. This represents decreases of 2.6% and
13.5% in net income and diluted earnings per share, respectively, from the
$5,419,000, or $0.37 per diluted share, reported in the second quarter of
2007. For the six month period ended June 30, 2008, net income amounted to
$10,807,000, or $0.70 per diluted share. This represents an increase in net
income of 4.9% and a decrease in diluted earnings per share of 1.4% from the
net income of $10,305,000, or $0.71 per diluted share, reported in the first
half of 2007. The 2008 earnings reflect the impact of the acquisition of
Great Pee Dee Bancorp, which had $213 million in total assets as of the
acquisition date of April 1, 2008, and resulted in the issuance of 2,059,091
shares of First Bancorp common stock.
Balance Sheet Growth
--------------------
During the second quarter of 2008, loans outstanding increased by $233
million while deposits increased by $95 million, with the acquisition of Great
Pee Dee Bancorp accounting for the majority of the growth. As of the April 1,
2008 acquisition, Great Pee Dee Bancorp had $188 million in loans and $148
million in deposits. Internal loan growth (excluding Great Pee Dee) was $45
million, or 9.3% on an annualized basis, while internal deposits declined by
$53 million, or 11.0% on an annualized basis. The decrease in deposits during
the quarter was concentrated in the Company's time deposit categories, as the
Company elected not to match competitor interest rates for many renewing time
deposits.
Total assets at June 30, 2008 amounted to $2.6 billion, 18.8% higher than
a year earlier. Total loans at June 30, 2008 amounted to $2.2 billion, a
20.2% increase from a year earlier, and total deposits amounted to $2.0
billion at June 30, 2008, a 12.0% increase from a year earlier.
Net Interest Income and Net Interest Margin
-------------------------------------------
Growth in loans and deposits was the primary reason for an increase in the
Company's net interest income when comparing the three and six months of 2008
to comparable periods in 2007. Net interest income for the second quarter of
2008 amounted to $21.5 million, a 9.3% increase over the $19.7 million
recorded in the second quarter of 2007. Net interest income for the six
months ended June 30, 2008 amounted to $41.3 million, a 7.1% increase over the
$38.5 million recorded in the same six month period in 2007.
During the second quarter of 2008, the Company recorded non-cash net
interest income purchase accounting adjustments related to the Great Pee Dee
acquisition totaling $366,000, which increased net interest income. These
adjustments were primarily related to recording the Great Pee Dee time deposit
portfolio at fair market value. This adjustment to time deposits was $1.1
million and is being amortized to reduce interest expense over a total of
eleven months, or $100,000 per month, until March 2009.
The impact of the growth in loans and deposits on the Company's net
interest income was partially offset by a decline in the Company's net
interest margin (tax-equivalent net interest income divided by average earning
assets). The Company's net interest margin for the second quarter of 2008 was
3.71%, a 32 basis point decline from the 4.03% margin realized in the second
quarter of 2007 and an 8 basis point decline from the 3.79% margin realized in
the first quarter of 2008. The Company's net interest margin for the first
six months of 2008 was 3.75% compared to 4.00% for the same six months of
2007. The Company's net interest margin has been negatively impacted by the
Federal Reserve lowering interest rates by a total of 325 basis points since
September 2007. 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 no further Federal Reserve interest rate changes, the Company expects
its net interest margin to stabilize in the third quarter as maturing time
deposits reprice at lower interest rates.
Provision for Loan Losses and Asset Quality
-------------------------------------------
The Company's provision for loan losses amounted to $2,059,000 in the
second quarter of 2008 compared to $1,322,000 in the second quarter of 2007.
The provision for loan losses for the six month period ended June 30, 2008 was
$3,592,000 compared to $2,443,000 recorded in the first half of 2007. The
higher 2008 amounts were due to higher loan growth and negative trends in
asset quality.
The Company's internal loan growth (excluding Great Pee Dee) in the second
quarter of 2008 was $45 million compared to $26 million in the comparable
quarter of 2007. For the six months ended June 30, 2008, the Company's
internal loan growth was $85 million, compared to $62 million in the first
half of 2007.
Although the Company has no subprime exposure, the Company has experienced
increases in its delinquencies and classified assets consistent with current
economic conditions. At June 30, 2008, the Company's nonperforming assets
were $20.5 million compared to $12.1 million at March 31, 2008 and $8.3
million at June 30, 2007. The acquisition of Great Pee Dee accounted for $6.1
million of the $8.4 million increase in nonperforming assets from March 31,
2008. The $6.1 million in nonperforming assets associated with Great Pee Dee
is net of $4.7 million in direct write-downs of impaired loan balances that
the Company recorded in accordance with applicable accounting requirements.
The Company's nonperforming assets to total assets ratio was 0.78% at June
30, 2008 compared to 0.51% at March 31, 2008 and 0.38% at June 30, 2007.
Although the Company's level of nonperforming assets has increased over the
past twelve months, it remains more favorable than that of the Company's peers
based on public information available. According to Federal Reserve data, the
ratio of nonperforming assets to total assets for all bank holding companies
with between $1 billion and $3 billion in assets at March 31, 2008 (the most
recent information available) was 1.26% compared to the Company's ratio of
0.51% as of that same date.
During 2008, the Company's allowance for loan losses has increased from
$21.3 million at December 31, 2007 to $26.1 million at June 30, 2008. The
change in the allowance for loan losses was due to $3.6 million in provisions
for loan losses recorded in 2008, net charge-offs of $1.6 million, and $2.8
million that the Company recorded for the non-impaired loans associated with
the Great Pee Dee acquisition.
Noninterest Income
------------------
Noninterest income amounted to $5.3 million for the second quarter of
2008, a 9.9% increase from the $4.9 million recorded in the second quarter of
2007. Noninterest income for the six months ended June 30, 2008 amounted to
$10.7 million, an increase of 17.8% from the $9.1 million recorded in the
first half of 2007. The increases in noninterest income in 2008 primarily
relate to increases in service charges on deposit accounts. These higher
service charges were primarily associated with the Company expanding the
availability of its customer overdraft protection program in the fourth
quarter of 2007 to include debit card purchases and ATM withdrawals.
Previously the overdraft protection program, in which the Company charges a
fee for honoring payments on overdrawn accounts, only applied to written
checks.
The Company realized securities losses of $16,000 for each of the three
and six month periods ended June 30, 2008 compared to gains of $487,000 for
each of the comparable periods in 2007.
The Company recorded 'other gains' of $257,000 for the six months ended
June 30, 2008, which relates primarily to a gain of $306,000 related to the
VISA initial public offering that occurred in March 2008.
Noninterest Expenses
--------------------
Noninterest expenses amounted to $16.3 million in the second quarter of
2008, a 12.6% increase over 2007. Noninterest expenses for the six months
ended June 30, 2008 amounted to $31.1 million, an 8.6% increase from the $28.6
million recorded in the first six months of 2007. These increases are
primarily attributable to the Company's growth, including the April 1, 2008
acquisition of Great Pee Dee. Additionally, the Company recorded FDIC
insurance expense of $262,000 and $507,000 for the three and six month periods
ended June 30, 2008, respectively, compared to none for the same periods in
2007, as a result of the FDIC recently beginning to charge for FDIC insurance
again in order to replenish its reserves.
The Company's effective tax rate was 37%-38% for each of the three and six
month periods ended June 30, 2008 and 2007.
Comments of the President and Other Business Matters
----------------------------------------------------
Jerry L. Ocheltree, President and CEO of First Bancorp, commented on the
quarter's results, 'On behalf of First Bancorp, we are pleased to report that
we have earned $10.8 million thus far in 2008. First Bank has faithfully
served the good folks of our communities since 1935. We have a conservative
operating philosophy that was established during the difficult economic times
of the 1930's. By following that same conservative philosophy, we have been
able to be there for our customers in both good times and in challenging
times. We continue to be a 'well-capitalized' bank as defined by regulatory
standards and foresee nothing that would change that. We deeply appreciate
the opportunity we have to serve our communities.'
Mr. Ocheltree also spoke about the recent acquisition of Great Pee Dee
Bancorp, and Sentry Bank & Trust, its bank subsidiary, 'I would again like to
welcome the customers of Sentry Bank & Trust to the First Bank family. We are
so pleased to be able to call you a customer of First Bank, and we look
forward to continuing to earn your business by providing the best in community
banking.'
Mr. Ocheltree noted the following corporate developments:
-- On April 1, 2008, the Company announced the completion of the merger
acquisition of Great Pee Dee Bancorp, Inc. Great Pee Dee was the
holding company for Sentry Bank & Trust, a three-branch community bank
headquartered in Cheraw, South Carolina, with offices in Cheraw and
Florence, South Carolina. As of March 31, 2008 Great Pee Dee had total
assets of $213 million, total loans of $188 million, and total deposits
of $148 million. The conversion of Sentry Bank & Trust to First Bank
occurred on May 16, 2008.
-- On June 2, 2008, the Company announced a quarterly cash dividend of 19
cents per share payable on July 25, 2008 to shareholders of record on
June 30, 2008. This is the same dividend rate the Company paid in the
comparable quarter in 2007.
-- There has been no stock repurchase activity during 2008.
First Bancorp is a bank holding company headquartered in Troy, North
Carolina with total assets of approximately $2.6 billion. Its principal
activity is the ownership and operation of First Bank, a state-chartered
community bank that operates 74 branches, with 63 branches operating in a
21-county market area in the central piedmont and coastal regions of North
Carolina, 6 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,' 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
June 30,
------------------------
($ in thousands except per share Percent
data - unaudited) 2008 2007 Change
-------------------------------------------------------------------------
INCOME STATEMENT
Interest income
---------------
Interest and fees on loans $34,814 34,492
Interest on investment
securities 2,043 1,742
Other interest income 276 683
-------- --------
Total interest income 37,133 36,917 0.6%
-------- --------
Interest expense
----------------
Interest on deposits 13,810 14,738
Other, primarily borrowings 1,822 2,501
-------- --------
Total interest expense 15,632 17,239 (9.3%)
-------- --------
Net interest income 21,501 19,678 9.3%
Provision for loan losses 2,059 1,322 55.7%
-------- --------
Net interest income after
provision for loan losses 19,442 18,356 5.9%
-------- --------
Noninterest income
------------------
Service charges on deposit
accounts 3,462 2,300
Other service charges,
commissions, and fees 1,255 1,266
Fees from presold mortgages 260 292
Commissions from financial
product sales 356 344
Data processing fees 48 53
Securities gains (losses) (16) 487
Other gains (losses) (28) 115
-------- --------
Total noninterest income 5,337 4,857 9.9%
-------- --------
Noninterest expenses
--------------------
Personnel expense 9,129 8,519
Occupancy and equipment
expense 2,064 1,861
Intangibles amortization 123 94
Other operating expenses 5,028 4,036
-------- --------
Total noninterest expenses 16,344 14,510 12.6%
-------- --------
Income before income taxes 8,435 8,703 (3.1%)
Income taxes 3,157 3,284 (3.9%)
-------- --------
Net income $5,278 5,419 (2.6%)
======== ========
Earnings per share - basic $0.32 0.38 (15.8%)
Earnings per share - diluted 0.32 0.37 (13.5%)
ADDITIONAL INCOME STATEMENT INFORMATION
---------------------------------------
Net interest income, as
reported $21,501 19,678
Tax-equivalent adjustment (1) 163 140
-------- --------
Net interest income,
tax-equivalent $21,664 19,818 9.3%
======== ========
--------------------------------------------------------------------------
(1) This amount reflects the tax benefit that the Company receives related
to its tax-exempt loans and securities, which carry interest rates
lower than similar taxable investments due to their tax exempt status.
This amount has been computed assuming a 39% tax rate and is reduced
by the related nondeductible portion of interest expense.
--------------------------------------------------------------------------
First Bancorp and Subsidiaries
Financial Summary - Page 2
--------------------------------------------------------------------------
Six Months Ended
June 30,
------------------------
($ in thousands except per share Percent
data - unaudited) 2008 2007 Change
-------------------------------------------------------------------------
INCOME STATEMENT
Interest income
---------------
Interest and fees on loans $68,753 67,703
Interest on investment
securities 3,968 3,414
Other interest income 719 1,336
-------- --------
Total interest income 73,440 72,453 1.4%
-------- --------
Interest expense
----------------
Interest on deposits 28,210 28,717
Other, primarily borrowings 3,965 5,192
-------- --------
Total interest expense 32,175 33,909 (5.1%)
-------- --------
Net interest income 41,265 38,544 7.1%
Provision for loan losses 3,592 2,443 47.0%
-------- --------
Net interest income after
provision for loan losses 37,673 36,101 4.4%
-------- --------
Noninterest income
------------------
Service charges on deposit
accounts 6,538 4,477
Other service charges,
commissions, and fees 2,622 2,525
Fees from presold mortgages 458 619
Commissions from financial
product sales 755 803
Data processing fees 98 100
Securities gains (losses) (16) 487
Other gains 257 82
-------- --------
Total noninterest income 10,712 9,093 17.8%
-------- --------
Noninterest expenses
--------------------
Personnel expense 17,683 16,640
Occupancy and equipment
expense 4,051 3,737
Intangibles amortization 202 188
Other operating expenses 9,179 8,075
-------- --------
Total noninterest expenses 31,115 28,640 8.6%
-------- --------
Income before income taxes 17,270 16,554 4.3%
Income taxes 6,463 6,249 3.4%
-------- --------
Net income $10,807 10,305 4.9%
======== ========
Earnings per share - basic $ 0.70 0.72 (2.8%)
Earnings per share - diluted 0.70 0.71 (1.4%)
ADDITIONAL INCOME STATEMENT INFORMATION
---------------------------------------
Net interest income, as
reported $41,265 38,544
Tax-equivalent adjustment (1) 327 263
-------- --------
Net interest income,
tax-equivalent $41,592 38,807 7.2%
======== ========
-------------------------------------------------------------------------
(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 Six Months Ended
June 30, June 30,
----------------------- ------------------------
2008 2007 2008 2007
--------------------------------------------------
PERFORMANCE RATIOS
(annualized)
Return on average assets 0.85% 1.03% 0.91% 0.99%
Return on average equity 9.75% 12.85% 10.97% 12.38%
Net interest margin - tax
equivalent (1) 3.71% 4.03% 3.75% 4.00%
Efficiency ratio - tax
equivalent (1) (2) 60.53% 58.80% 59.49% 59.79%
Net charge-offs to
average loans 0.15% 0.16% 0.16% 0.15%
Nonperforming assets to
total assets (period
end) 0.78% 0.38% 0.78% 0.38%
SHARE DATA
Cash dividends declared $0.19 0.19 $0.38 0.38
Stated book value 13.14 11.63 13.14 11.63
Tangible book value 9.02 8.08 9.02 8.08
Common shares
outstanding at end
of period 16,488,201 14,392,803 16,488,201 14,392,803
Weighted average
shares outstanding
- basic 16,470,975 14,384,511 15,425,787 14,372,311
Weighted average
shares outstanding
- diluted 16,535,358 14,473,446 15,497,429 14,480,333
CAPITAL RATIOS
Shareholders' equity
to total assets 8.27% 7.59% 8.27% 7.59%
Tangible equity to
tangible assets 5.82% 5.40% 5.82% 5.40%
Tier I leverage ratio 8.14% 8.59% 8.14% 8.59%
Tier I risk-based
capital ratio 9.32% 10.10% 9.32% 10.10%
Total risk-based capital
ratio 10.54% 11.77% 10.54% 11.77%
AVERAGE BALANCES ($ in thousands)
Total assets $ 2,510,491 2,116,527 $ 2,382,457 2,098,451
Loans 2,144,694 1,783,794 2,030,011 1,770,320
Earning assets 2,350,134 1,973,548 2,231,764 1,956,630
Deposits 2,032,901 1,763,210 1,945,569 1,737,974
Interest-bearing
liabilities 2,031,497 1,704,799 1,929,330 1,693,012
Shareholders' equity 217,704 169,169 198,151 167,903
------------------------------------------------------------------------
(1) See footnote 1 on page 1 of Financial Summary for discussion of
tax-equivalent adjustments.
(2) 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
INCOME STATEMENT --------------------------
June 30, March 31, December 31, September 30, June 30,
2008 2008 2007 2007 2007
--------- --------- --------- --------- ---------
Net interest
income - tax
equivalent (1) $21,664 19,928 20,718 20,313 19,818
Taxable equivalent
adjustment (1) 163 164 155 136 140
Net interest
income 21,501 19,764 20,563 20,177 19,678
Provision for
loan losses 2,059 1,533 1,475 1,299 1,322
Noninterest
income 5,337 5,375 5,103 4,277 4,857
Noninterest
expense 16,344 14,771 14,999 13,941 14,510
Income before
income taxes 8,435 8,835 9,192 9,214 8,703
Income taxes 3,157 3,306 3,430 3,471 3,284
Net income 5,278 5,529 5,762 5,743 5,419
Earnings per
share - basic 0.32 0.38 0.40 0.40 0.38
Earnings per
share - diluted 0.32 0.38 0.40 0.40 0.37
=========================================================================
(1) See footnote 1 on page 1 of Financial Summary for discussion of
tax-equivalent adjustments.
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First Bancorp and Subsidiaries
Financial Summary - Page 4
--------------------------------------------------------------------------
June 30, March 31, December 31, June 30, One Year
2008 2008 2007 2007 Change
------------ ----------- ----------- ---------- ---------
PERIOD END
BALANCES
($ in thousands)
Assets $ 2,621,356 2,380,134 2,317,249 2,205,858 18.8%
Securities 172,002 153,018 151,754 147,328 16.7%
Loans 2,166,840 1,933,855 1,894,295 1,802,308 20.2%
Allowance for
loan losses 26,061 21,992 21,324 20,104 29.6%
Intangible
assets 67,995 50,941 51,020 51,206 32.8%
Deposits 2,016,477 1,921,443 1,838,277 1,800,561 12.0%
Borrowings 326,006 212,394 242,394 178,013 83.1%
Shareholders'
equity 216,677 177,981 174,070 167,458 29.4%
==========================================================================
For the Three Months Ended
--------------------------
YIELD INFORMATION
June 30, March 31, December 31, September 30, June 30,
2008 2008 2007 2007 2007
--------- --------- ---------- ---------- ---------
Yield on loans 6.53% 7.13% 7.61% 7.79% 7.76%
Yield on
securities -
tax equivalent (1) 5.39% 5.71% 5.27% 5.07% 5.31%
Yield on other
earning assets 2.72% 3.49% 5.56% 5.66% 5.76%
Yield on all
interest earning
assets 6.38% 6.94% 7.39% 7.54% 7.53%
Rate on interest
bearing deposits 3.10% 3.56% 3.78% 3.89% 3.84%
Rate on other
interest bearing
liabilities 3.05% 4.35% 5.64% 6.16% 6.02%
Rate on all
interest bearing
liabilities 3.09% 3.64% 3.96% 4.10% 4.06%
Interest rate
spread - tax
equivalent (1) 3.29% 3.30% 3.43% 3.44% 3.47%
Net interest
margin - tax
equivalent (2) 3.71% 3.79% 3.98% 4.00% 4.03%
Average prime
rate 5.08% 6.22% 7.53% 8.18% 8.25%
(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.
==========================================================================
ASSET QUALITY DATA June 30, March 31, December 31, September 30, June 30,
($ in thousands) 2008 2008 2007 2007 2007
---------- ---------- ---------- ---------- ---------
Nonaccrual
loans $17,588 8,799 7,807 6,941 6,457
Accruing loans
> 90 days past
due - - - - -
---------- ---------- ---------- --------- ---------
Total
nonperforming
loans 17,588 8,799 7,807 6,941 6,457
Other assets 2,934 3,289 3,042 2,058 1,830
---------- ---------- ---------- ---------- ---------
Total
nonperforming
assets $ 20,522 12,088 10,849 8,999 8,287
========== ========== ========== ========== =========
Net charge-
offs to average
loans -
annualized 0.15% 0.18% 0.17% 0.17% 0.16%
Nonperforming
loans to total
loans 0.81% 0.45% 0.41% 0.38% 0.36%
Nonperforming
assets to total
assets 0.78% 0.51% 0.47% 0.39% 0.38%
Allowance for
loan losses to
total loans 1.20% 1.14% 1.13% 1.12% 1.12%
SOURCE First Bancorp
