8-K
First Bancorp /Nc/ (FBNC)
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________
Form 8-K
__________________
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
| Date of Report (Date of earliest event reported): | April 24, 2024 |
|---|
First Bancorp
(Exact Name of Registrant as Specified in its Charter)
| North Carolina | 0-15572 | 56-1421916 | ||||
|---|---|---|---|---|---|---|
| (State or Other Jurisdiction | (Commission | (I.R.S. Employer | ||||
| of Incorporation) | File Number) | Identification Number) | 300 SW Broad Street, | |||
| --- | --- | --- | ||||
| Southern Pines, | NC | 28387 | ||||
| (Address of Principal Executive Offices) | (Zip Code) |
(910) 246-2500
____________________
(Registrant’s telephone number, including area code)
Not Applicable
___________________
(Former Name or Former Address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | | --- | --- || ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | | --- | --- || ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | | --- | --- || ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | | --- | --- |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading symbol Name of each exchange on which registered:
Common Stock, No Par Value FBNC The Nasdaq Global Select Market
First Bancorp
INDEX
| Page | |
|---|---|
| Item 2.02 – Results of Operations and Financial Condition | 3 |
| Item 9.01 – Financial Statements and Exhibits | 3 |
| Signatures | 3 |
| Exhibit 99.1 News Release dated April 24, 2024 | 4 |
Item 2.02 - Results of Operations and Financial Condition
On April 24, 2024, First Bancorp (the “Registrant” or “Company”) issued an earnings release to announce its financial results for the three month period ended March 31, 2024. The earnings release contains forward-looking statements regarding the Company and includes cautionary language identifying important factors that could cause actual results to differ materially from those anticipated. The earnings release is furnished as Exhibit 99.1. Consequently, it is not deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section. Such materials may only be incorporated by reference into another filing under the Exchange Act or Securities Act of 1933 if such subsequent filing specifically references this Form 8-K.
Item 9.01 – Financial Statements and Exhibits
(d) Exhibits
Exhibit 99.1 – News Release issued on April24, 2024
Disclosures About Forward Looking Statements
This news 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. 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.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| First Bancorp | ||
|---|---|---|
| April 24, 2024 | By: | /s/ Richard H. Moore |
| Richard H. Moore | ||
| Chief Executive Officer |
3
Document
News Release
| For Immediate Release: | For More Information, Contact: |
|---|---|
| April 24, 2024 | Hillary Kestler |
| 704-644-4137 |
First Bancorp Reports First Quarter Results
SOUTHERN PINES, N.C. - First Bancorp (the "Company") (NASDAQ - FBNC), the parent company of First Bank, announced today net income of $25.3 million, or $0.61 per diluted common share, for the three months ended March 31, 2024 compared to $29.7 million, or $0.72 per diluted common share, for the three months ended December 31, 2023 ("linked quarter") and $15.2 million, or $0.37 per diluted common share, recorded in the first quarter of 2023.
Richard H. Moore, CEO and Chairman of the Company, stated, "Your company continues to perform well with increases in our liquidity and capital. We believe that our balance sheet composition will continue to improve during the year as we work towards reducing borrowings and high-cost deposits while deploying funds to higher yielding assets. Our credit quality is strong with low levels of nonperforming assets and we have no significant exposure to office or hospitality commercial real estate."
First Quarter 2024 Highlights
•Loans totaled $8.1 billion at March 31, 2024, reflecting a $73.6 million contraction for the quarter, while year-over-year, loans grew $277.5 million.
•Noninterest-bearing demand accounts were 33% of total deposits at March 31, 2024, which is consistent with historical trends. Total deposits increased $271.7 million during the first quarter of 2024 consisting of market deposit growth of $88.3 million and new short-term brokered deposits totaling $183.5 million.
•Total loan yield increased to 5.45%, up 23 basis points from the first quarter of 2023, with accretion on purchased loans contributing 15 basis points to loan yield.
•While deposit and borrowing rates increased during the quarter, total cost of funds remained low at 1.79% for the quarter ended March 31, 2024.
•The on-balance sheet liquidity ratio was 15.5% at March 31, 2024, up from 14.6% for the linked quarter. Available off-balance sheet sources totaled $2.3 billion at March 31, 2024, resulting in a total liquidity ratio of 31.4%.
•Credit quality continued to be strong with a nonperforming assets ("NPA") to total assets ratio of 0.39% as of March 31, 2024.
•Capital remained strong with a total common equity tier 1 ratio of 13.50% (estimated) and a total risk-based capital ratio of 15.85% (estimated) as of March 31, 2024, both increasing from the linked quarter.
Net Interest Income and Net Interest Margin
Net interest income for the first quarter of 2024 was $79.2 million compared to $92.5 million recorded in the first quarter of 2023, a decrease of 14.3%. Net interest income for the first quarter of 2024 decreased 3.9% from
the $82.5 million reported for the linked quarter. The declines in net interest income were driven by increases in cost of funds each period which more than offset the increases in earning assets.
The Company’s tax-equivalent net interest margin ("NIM") (calculated by dividing tax-equivalent net interest income by average earning assets) declined year-over-year with the first quarter of 2024 reporting a tax-equivalent NIM of 2.80% compared to 3.31% for the first quarter of 2023. Increases in rates on liabilities driven by current market rates and competition occurred at a more rapid pace than the increase in yields on assets, which resulted in the reduction in net interest income and NIM as compared to the prior periods. While loan yields rose from 5.22% for the first quarter of 2023 to 5.45% for the first quarter of 2024, the total cost of funds increased from 0.94% for the first quarter of 2023 to 1.79% for the quarter ended March 31, 2024.
| For the Three Months Ended | |||
|---|---|---|---|
| YIELD INFORMATION | March 31, 2024 | December 31, 2023 | March 31, 2023 |
| Yield on loans | 5.45% | 5.39% | 5.22% |
| Yield on securities | 1.79% | 1.76% | 1.78% |
| Yield on other earning assets | 4.30% | 4.49% | 3.47% |
| Yield on total interest-earning assets | 4.43% | 4.38% | 4.16% |
| Rate on interest-bearing deposits | 2.33% | 2.14% | 1.19% |
| Rate on other interest-bearing liabilities | 5.71% | 6.02% | 5.34% |
| Rate on total interest-bearing liabilities | 2.59% | 2.43% | 1.46% |
| Total cost of funds | 1.79% | 1.64% | 0.94% |
| Net interest margin (1) | 2.77% | 2.85% | 3.28% |
| Net interest margin - tax-equivalent (2) | 2.80% | 2.88% | 3.31% |
| Average prime rate | 8.50% | 8.50% | 7.69% |
| (1) Calculated by dividing annualized net interest income by average earning assets for the period. | |||
| (2) Calculated by dividing annualized tax-equivalent net interest income by average earning assets for the period. The tax-equivalent 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 23% tax rate and is reduced by the related nondeductible portion of interest expense. |
Included in interest income for the first quarter of 2024 was total loan discount accretion of $2.9 million compared to $3.6 million for the first quarter of 2023, with the decrease primarily related to the continued amortization of the loan portfolio acquired from GrandSouth Bancorporation ("GrandSouth"). Loan discount accretion had an 10 basis points positive impact on the Company's NIM in the first quarter of 2024 compared to accretion contributing 13 basis points to NIM for the prior year first quarter.
The following table presents the impact to net interest income of the purchase accounting adjustments for each period.
| For the Three Months Ended | ||||
|---|---|---|---|---|
| NET INTEREST INCOME PURCHASE ACCOUNTING ADJUSTMENTS<br><br>($ in thousands) | March 31, 2024 | December 31, 2023 | March 31, 2023 | |
| Interest income - increased by accretion of loan discount on acquired loans | $ | 2,437 | 2,464 | 3,118 |
| Interest income - increased by accretion of loan discount on retained portions of SBA loans | 444 | 459 | 448 | |
| Total interest income impact | 2,881 | 2,923 | 3,566 | |
| Interest expense - increased by discount accretion on deposits | (283) | (495) | (1,019) | |
| Interest expense - increased by discount accretion on borrowings | (189) | (207) | (82) | |
| Total net interest expense impact | (472) | (702) | (1,101) | |
| Total impact on net interest income | $ | 2,409 | 2,221 | 2,465 |
Provision for Credit Losses and Credit Quality
For the three months ended March 31, 2024 and March 31, 2023, the Company recorded $1.2 million and $12.5 million in provision for credit losses, respectively. The provision for the first quarter of 2023 was directly related to the initial provision for non-credit deteriorated loans and unfunded loan commitments acquired from GrandSouth. The provision for the first quarter of 2024 was determined based on updated economic forecasts, which are a key assumption in the CECL model and which indicated a continued deterioration of the commercial real estate index, thus projecting a higher allowance for credit losses balance, partially offset by reductions in loan balances and the lower level of unfunded commitments.
Asset quality remained strong with annualized net loan charge-offs of 0.08% for the first quarter of 2024. Total NPAs remained at a low level at $47.5 million at March 31, 2024, or 0.39% of total assets. This is compared to $31.1 million, or 0.25% of total assets, at March 31, 2023 with the increase year-over-year being attributable primarily to activity from acquired loan portfolios and the SBA loan portfolio. The increase in nonaccrual loans from the linked quarter was primarily related to several SBA loans, all of which carry a guarantee from the SBA for a majority of the balance.
The following table presents the summary of NPAs and asset quality ratios for each period.
| ASSET QUALITY DATA<br><br>($ in thousands) | March 31, 2024 | December 31, 2023 | March 31, 2023 | ||||
|---|---|---|---|---|---|---|---|
| Nonperforming assets | |||||||
| Nonaccrual loans | $ | 35,622 | 32,208 | 28,059 | |||
| Modifications to borrowers in financial distress | 10,999 | 11,719 | 2,224 | ||||
| Total nonperforming loans | 46,621 | 43,927 | 30,283 | ||||
| Foreclosed real estate | 926 | 862 | 789 | ||||
| Total nonperforming assets | $ | 47,547 | 44,789 | 31,072 | |||
| Asset Quality Ratios | |||||||
| Quarterly net charge-offs to average loans - annualized | 0.08 | % | 0.09 | % | 0.09 | % | |
| Nonperforming loans to total loans | 0.58 | % | 0.54 | % | 0.39 | % | |
| Nonperforming assets to total assets | 0.39 | % | 0.37 | % | 0.25 | % | |
| Allowance for credit losses to total loans | 1.36 | % | 1.35 | % | 1.36 | % |
Noninterest Income
Total noninterest income for the first quarter of 2024 was $12.9 million, a 4.4% decrease from the $13.5 million recorded for the first quarter of 2023 and an 11.0% decrease from the linked quarter. The lower noninterest income in the current quarter was primarily driven by a $1.0 million loss on the call of a bond with an
unamortized premium balance. In addition, Other gains net, decreased $0.8 million from the linked quarter due to gains recorded on the disposal of property recorded in the fourth quarter of 2023.
Noninterest Expenses
Noninterest expenses amounted to $59.2 million for the first quarter of 2024 compared to $56.4 million for the linked quarter and $74.2 million for the first quarter of 2023. The $2.8 million, or 5.0%, increase in noninterest expense from the linked quarter was driven by year end adjustments to the Company's pension plan recorded in the fourth quarter of 2023 which resulted in reducing expense in the linked quarter approximately $2.2 million during the period. In addition, bonus accrual reductions were recorded in the fourth quarter of 2023 lowering the total salary expense for the linked quarter.
The primary contributors to the higher noninterest expense in the first quarter of 2023 were merger and acquisition costs of $12.2 million related to the GrandSouth acquisition as well as overlapping expenses which were eliminated upon core processing system conversion in mid-March 2023.
Balance Sheet
Total assets at March 31, 2024 amounted to $12.1 billion, a decrease of $23.3 million, or 0.2%, from the linked quarter and a contraction of $271.6 million, or 2.2%, from a year earlier. The decrease from the linked quarter was primarily related to intentional reductions in investment securities and loan balances, partially offset by higher interest-bearing cash balances.
Quarterly average balances for key balance sheet accounts are presented below.
| For the Three Months Ended | |||||
|---|---|---|---|---|---|
| AVERAGE BALANCES<br><br>($ in thousands) | March 31, 2024 | December 31, 2023 | March 31, 2023 | Change <br>1Q24 vs 1Q23 | |
| Total assets | $ | 12,111,201 | 12,026,195 | 12,042,298 | 0.6% |
| Investment securities, at amortized cost | 3,108,464 | 3,143,756 | 3,321,240 | (6.4)% | |
| Loans | 8,103,387 | 8,087,450 | 7,728,424 | 4.9% | |
| Earning assets | 11,489,796 | 11,477,007 | 11,428,789 | 0.5% | |
| Deposits | 10,078,835 | 10,131,094 | 10,216,908 | (1.4)% | |
| Interest-bearing liabilities | 7,343,934 | 7,204,165 | 6,866,646 | 7.0% | |
| Shareholders’ equity | 1,375,490 | 1,280,812 | 1,273,435 | 8.0% |
Total investment securities were $2.6 billion at March 31, 2024, a decrease of $108.9 million from the linked quarter and a reduction of $216.0 million from March 31, 2023. The Company made no purchases of investment securities during the first quarter of 2024 and continues to utilize cash flows from amortizing investments to fund loan growth and fluctuations in deposits. Total unrealized loss on available for sale investment securities was $418.9 million at March 31, 2024.
Total loans amounted to $8.1 billion at March 31, 2024, a decrease of $73.6 million from the linked quarter and an increase of $277.5 million, or 3.6%, from March 31, 2023. As presented below, our total loan portfolio mix has remained consistent. As of March 31, 2024, there were no notable concentrations in geographies 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 5.7% of the total portfolio at March 31, 2024, with the largest loan being $27.0 million and an average loan outstanding amount of $1.3 million. Non-owner occupied office loans are generally in non-metro markets and the 10 largest loans in this category represent less than 2% of the total loan portfolio.
The following table presents the balance and portfolio percentage by loan category for each period.
| March 31, 2024 | December 31, 2023 | March 31, 2023 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | Amount | Percentage | Amount | Percentage | Amount | Percentage | ||||
| Commercial and industrial | $ | 872,623 | 11 | % | 905,862 | 11 | % | 885,032 | 11 | % |
| Construction, development & other land loans | 904,216 | 11 | % | 992,980 | 12 | % | 1,092,026 | 14 | % | |
| Commercial real estate - owner occupied | 1,238,759 | 15 | % | 1,259,022 | 16 | % | 1,200,744 | 16 | % | |
| Commercial real estate - non-owner occupied | 2,524,221 | 31 | % | 2,528,060 | 31 | % | 2,429,941 | 31 | % | |
| Multi-family real estate | 457,142 | 6 | % | 421,376 | 5 | % | 395,573 | 5 | % | |
| Residential 1-4 family real estate | 1,684,173 | 21 | % | 1,639,469 | 20 | % | 1,386,580 | 18 | % | |
| Home equity loans/lines of credit | 328,466 | 4 | % | 335,068 | 4 | % | 342,287 | 4 | % | |
| Consumer loans | 66,666 | 1 | % | 68,443 | 1 | % | 68,056 | 1 | % | |
| Loans, gross | 8,076,266 | 100 | % | 8,150,280 | 100 | % | 7,800,239 | 100 | % | |
| Unamortized net deferred loan fees | 240 | (178) | (1,276) | |||||||
| Total loans | $ | 8,076,506 | 8,150,102 | 7,798,963 |
Total deposits were $10.3 billion at March 31, 2024, an increase of $271.7 million, or 2.7%, from the linked quarter and a decrease of $69.3 million, or 0.7%, from March 31, 2023. The year-to-date deposit growth is comprised of organic growth from market deposits of $88.3 million combined with additional short-term brokered deposits totaling $183.5 million.
The Company has a diversified and granular deposit base which has remained a stable source of funding with noninterest-bearing deposits comprising 33% of total deposits at March 31, 2024. Our deposit mix has remained consistent historically and has not changed significantly, with the exception of some shift to money market accounts, as presented in the table below.
| March 31, 2024 | December 31, 2023 | March 31, 2023 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | Amount | Percentage | Amount | Percentage | Amount | Percentage | ||||
| Noninterest-bearing checking accounts | $ | 3,362,265 | 33 | % | 3,379,876 | 34 | % | 3,763,637 | 36 | % |
| Interest-bearing checking accounts | 1,401,724 | 13 | % | 1,411,142 | 14 | % | 1,526,333 | 15 | % | |
| Money market accounts | 3,787,323 | 37 | % | 3,653,506 | 36 | % | 3,126,571 | 30 | % | |
| Savings accounts | 584,901 | 6 | % | 608,380 | 6 | % | 705,669 | 7 | % | |
| Other time deposits | 607,359 | 6 | % | 610,887 | 6 | % | 624,444 | 6 | % | |
| Time deposits >$250,000 | 363,687 | 3 | % | 355,209 | 4 | % | 342,447 | 3 | % | |
| Total market deposits | 10,107,259 | 98 | % | 10,019,000 | 100 | % | 10,089,101 | 97 | % | |
| Brokered deposits | 196,052 | 2 | % | 12,599 | — | % | 283,497 | 3 | % | |
| Total deposits | $ | 10,303,311 | 100 | % | 10,031,599 | 100 | % | 10,372,598 | 100 | % |
As of March 31, 2024, the estimated insured deposits totaled $6.4 billion or 61.8% of total deposits. In addition, there were collateralized deposits at that date of $757.0 million such that approximately 69.2% of our total deposits were insured or collateralized at the current quarter end.
Capital
The Company remains well-capitalized by all regulatory standards, with an estimated total risk-based capital ratio at March 31, 2024 of 15.85%, up from the linked quarter ratio of 15.54% and 14.88% reported at March 31, 2023. The increase in risk-based capital ratio is due in part to the shift in the balance sheet with the reduction in loans being more that offset by higher cash balances which carry a lower risk-weighting.
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 7.48% at March 31, 2024, an increase of 6 basis points from the linked quarter and an increase of 88 basis points from March 31, 2023. The increases in TCE for the current quarter and year-over-year were driven by earnings and improvements in the level of unrealized losses on the available for sale investment portfolio for the period. Refer to Appendix B for a reconciliation of common equity to TCE and Appendix D for a calculations of the TCE ratio.
| CAPITAL RATIOS | March 31, 2024 (estimated) | December 31, 2023 | March 31, 2023 |
|---|---|---|---|
| Tangible common equity to tangible assets (non-GAAP) | 7.48% | 7.42% | 6.60% |
| Common equity tier I capital ratio | 13.50% | 13.20% | 12.53% |
| Tier I leverage ratio | 10.99% | 10.91% | 10.28% |
| Tier I risk-based capital ratio | 14.29% | 13.99% | 13.32% |
| Total risk-based capital ratio | 15.85% | 15.54% | 14.88% |
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 or 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 March 31, 2024 was 15.5%. In addition, the Company had approximately $2.3 billion in available lines of credit at that date resulting in a total liquidity ratio of 31.4%.
Subsequent to quarter end, the Company has reduced short-term borrowings from liquidity resulting from increases in core deposits. In addition, we have initiated the sale of select investment securities from the available for sale portfolio in order to restructure the investment portfolio and to generate additional liquidity to pay off wholesale funding and invest into higher earning assets. We anticipate beneficial results to our net interest income upon completion of the strategy.
About First Bancorp
First Bancorp is a bank holding company headquartered in Southern Pines, North Carolina, with total assets of $12.1 billion. Its principal activity is the ownership and operation of First Bank, a state-chartered community bank that operates 118 branches in North Carolina and South Carolina. First Bank also provides SBA loans to customers through its nationwide network of lenders - for more information on First Bank’s SBA lending capabilities, please visit www.firstbanksba.com. 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.
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.
| First Bancorp and Subsidiaries<br>Financial Summary | | --- || CONSOLIDATED INCOME STATEMENT | | | | | | --- | --- | --- | --- | --- | | | For the Three Months Ended | | | | | ($ in thousands, except per share data - unaudited) | March 31, 2024 | | December 31, 2023 | March 31, 2023 | | Interest income | | | | | | Interest and fees on loans | $ | 109,756 | 109,811 | 99,380 | | Interest on investment securities | 13,845 | | 13,978 | 14,546 | | Other interest income | 2,971 | | 2,784 | 3,248 | | Total interest income | 126,572 | | 126,573 | 117,174 | | Interest expense | | | | | | Interest on deposits | 39,135 | | 35,979 | 18,918 | | Interest on borrowings | 8,205 | | 8,110 | 5,770 | | Total interest expense | 47,340 | | 44,089 | 24,688 | | Net interest income | 79,232 | | 82,484 | 92,486 | | Provision for credit losses | 1,200 | | 2,950 | 12,502 | | Net interest income after provision for credit losses | 78,032 | | 79,534 | 79,984 | | Noninterest income | | | | | | Service charges on deposit accounts | 3,868 | | 4,413 | 3,894 | | Other service charges, commissions, and fees | 5,612 | | 4,968 | 5,920 | | Presold mortgage loan fees and gains on sale | 338 | | 325 | 406 | | Commissions from sales of financial products | 1,320 | | 1,577 | 1,306 | | SBA consulting fees | 257 | | 395 | 521 | | SBA loan sale gains | 895 | | 437 | 255 | | Bank-owned life insurance income | 1,164 | | 1,134 | 1,046 | | Securities losses, net | (975) | | — | — | | Other gains, net | 459 | | 1,293 | 188 | | Total noninterest income | 12,938 | | 14,542 | 13,536 | | Noninterest expenses | | | | | | Salaries expense | 27,642 | | 26,985 | 29,321 | | Employee benefit expense | 6,269 | | 6,377 | 6,393 | | Occupancy and equipment related expense | 5,588 | | 5,948 | 5,067 | | Merger and acquisition expenses | — | | 189 | 12,182 | | Intangibles amortization expense | 1,759 | | 1,856 | 2,145 | | Other operating expenses | 17,929 | | 15,031 | 19,067 | | Total noninterest expenses | 59,187 | | 56,386 | 74,175 | | Income before income taxes | 31,783 | | 37,690 | 19,345 | | Income tax expense | 6,511 | | 8,016 | 4,184 | | Net income | $ | 25,272 | 29,674 | 15,161 | | Earnings per common share - diluted | $ | 0.61 | 0.72 | 0.37 | | First Bancorp and Subsidiaries<br>Financial Summary | | --- || CONSOLIDATED BALANCE SHEETS | | | | | --- | --- | --- | --- | | ($ in thousands - unaudited) | At March 31, 2024 | | At December 31, 2023 | At March 31, 2023 | | Assets | | | | | | Cash and due from banks | $ | 87,181 | 100,891 | 102,691 | | Interest-bearing deposits with banks | 266,661 | | 136,964 | 610,691 | | Total cash and cash equivalents | 353,842 | | 237,855 | 713,382 | | Investment securities | 2,614,110 | | 2,723,057 | 2,830,060 | | Presold mortgages and SBA loans held for sale | 6,703 | | 2,667 | 5,884 | | Loans | 8,076,506 | | 8,150,102 | 7,798,963 | | Allowance for credit losses on loans | (110,067) | | (109,853) | (106,396) | | Net loans | 7,966,439 | | 8,040,249 | 7,692,567 | | Premises and equipment | 150,546 | | 150,957 | 152,790 | | Operating right-of-use lease assets | 16,551 | | 17,063 | 18,898 | | Goodwill and other intangible assets | 509,636 | | 511,608 | 518,012 | | Bank-owned life insurance | 185,061 | | 183,897 | 180,730 | | Other assets | 288,709 | | 247,589 | 250,826 | | Total assets | $ | 12,091,597 | 12,114,942 | 12,363,149 | | Liabilities | | | | | | Deposits: | | | | | | Noninterest-bearing checking accounts | $ | 3,362,265 | 3,379,876 | 3,763,637 | | Interest-bearing deposit accounts | 6,941,046 | | 6,651,723 | 6,608,961 | | Total deposits | 10,303,311 | | 10,031,599 | 10,372,598 | | Borrowings | 332,335 | | 630,158 | 606,481 | | Operating lease liabilities | 17,343 | | 17,833 | 19,638 | | Other liabilities | 62,509 | | 62,972 | 64,471 | | Total liabilities | 10,715,498 | | 10,742,562 | 11,063,188 | | Shareholders’ equity | | | | | | Common stock | 965,429 | | 963,990 | 959,422 | | Retained earnings | 732,643 | | 716,420 | 654,573 | | Stock in rabbi trust assumed in acquisition | (1,396) | | (1,385) | (1,608) | | Rabbi trust obligation | 1,396 | | 1,385 | 1,608 | | Accumulated other comprehensive loss | (321,973) | | (308,030) | (314,034) | | Total shareholders’ equity | 1,376,099 | | 1,372,380 | 1,299,961 | | Total liabilities and shareholders’ equity | $ | 12,091,597 | 12,114,942 | 12,363,149 | | First Bancorp and Subsidiaries<br>Financial Summary | | --- |
TREND INFORMATION
| For the Three Months Ended | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| March 31, 2024 | December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | |||||||||||||||
| PERFORMANCE RATIOS (annualized) | |||||||||||||||||||
| Return on average assets (1) | 0.84 | % | 0.98 | % | 0.99 | % | 0.98 | % | 0.51 | % | |||||||||
| Return on average common equity (2) | 7.39 | % | 9.19 | % | 9.10 | % | 8.97 | % | 4.83 | % | |||||||||
| Return on average tangible common equity (3) | 11.76 | % | 15.33 | % | 15.05 | % | 14.79 | % | 8.16 | % | |||||||||
| COMMON SHARE DATA | |||||||||||||||||||
| Cash dividends declared - common | $ | 0.22 | 0.22 | 0.22 | 0.22 | 0.22 | |||||||||||||
| Book value per common share | $ | 33.44 | 33.38 | 30.61 | 31.59 | 31.72 | |||||||||||||
| Tangible book value per share (4) | $ | 21.05 | 20.94 | 18.11 | 19.03 | 19.08 | |||||||||||||
| Common shares outstanding at end of period | 41,156,286 | 41,109,987 | 40,085,498 | 41,082,678 | 40,986,990 | ||||||||||||||
| Weighted average shares outstanding - diluted | 41,249,636 | 41,207,945 | 41,199,058 | 41,129,100 | 41,112,692 | ||||||||||||||
| CAPITAL INFORMATION (estimates for current quarter) | |||||||||||||||||||
| Tangible common equity to tangible assets (5) | 7.48 | % | 7.42 | % | 6.49 | % | 6.79 | % | 6.60 | % | |||||||||
| Common equity tier I capital ratio | 13.50 | % | 13.20 | % | 12.93 | % | 12.75 | % | 12.53 | % | |||||||||
| Total risk-based capital ratio | 15.85 | % | 15.54 | % | 15.26 | % | 15.09 | % | 14.88 | % | |||||||||
| (1) Calculated by dividing annualized net income by average assets. | |||||||||||||||||||
| (2) Calculated by dividing annualized net income by average common equity. | |||||||||||||||||||
| (3) Return on average tangible common equity is a non-GAAP financial measure. See Appendix A for components of the calculation and the reconciliation of average common equity to average TCE. | |||||||||||||||||||
| (4) Tangible book value per share is a non-GAAP financial measure. See Appendix B for a reconciliation of common equity to tangible common equity and Appendix C for the resulting calculation. | |||||||||||||||||||
| (5) Tangible common equity ratio is a non-GAAP financial measure. See Appendix B for a reconciliation of common equity to tangible common equity and Appendix D for the resulting calculation. | For the Three Months Ended | ||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | |||||||||||||
| INCOME STATEMENT<br><br>($ in thousands except per share data) | March 31, 2024 | December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | ||||||||||||||
| Net interest income - tax-equivalent (1) | $ | 79,963 | 83,225 | 85,442 | 87,684 | 93,186 | |||||||||||||
| Taxable equivalent adjustment (1) | 731 | 741 | 740 | 699 | 700 | ||||||||||||||
| Net interest income | 79,232 | 82,484 | 84,702 | 86,985 | 92,486 | ||||||||||||||
| Provision for credit losses | 1,200 | 2,950 | — | 2,361 | 12,502 | ||||||||||||||
| Noninterest income | 12,938 | 14,542 | 15,177 | 14,235 | 13,536 | ||||||||||||||
| Merger and acquisition costs | — | 189 | — | 1,334 | 12,182 | ||||||||||||||
| Other noninterest expense | 59,187 | 56,197 | 62,224 | 60,259 | 61,993 | ||||||||||||||
| Income before income taxes | 31,783 | 37,690 | 37,655 | 37,266 | 19,345 | ||||||||||||||
| Income tax expense | 6,511 | 8,016 | 7,762 | 7,863 | 4,184 | ||||||||||||||
| Net income | 25,272 | 29,674 | 29,893 | 29,403 | 15,161 | ||||||||||||||
| Earnings per common share - diluted | $ | 0.61 | 0.72 | 0.73 | 0.71 | 0.37 | |||||||||||||
| (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 23% tax rate and is reduced by the related nondeductible portion of interest expense. |
APPENDIX A: Calculation of Return on TCE
| For the Three Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | March 31, 2024 | December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | ||||||
| Net Income | $ | 25,272 | 29,674 | 29,893 | 29,403 | 15,161 | |||||
| Average common equity | 1,375,490 | 1,280,812 | 1,303,249 | 1,314,650 | 1,273,435 | ||||||
| Less: Average goodwill and other intangibles | (510,902) | (512,876) | (515,111) | (517,201) | (519,639) | ||||||
| Average tangible common equity | $ | 864,588 | 767,936 | 788,138 | 797,449 | 753,796 | |||||
| Return on average common equity | 7.39 | % | 9.19 | % | 9.10 | % | 8.97 | % | 4.83 | % | |
| Return on average tangible common equity | 11.76 | % | 15.33 | % | 15.05 | % | 14.79 | % | 8.16 | % |
APPENDIX B: Reconciliation of Common Equity to TCE
| For the Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| ($ in thousands) | March 31, 2024 | December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | |
| Total shareholders' common equity | $ | 1,376,099 | 1,372,380 | 1,257,683 | 1,297,642 | 1,299,961 |
| Less: Goodwill and other intangibles | (509,636) | (511,608) | (513,629) | (515,847) | (518,012) | |
| Tangible common equity | $ | 866,463 | 860,772 | 744,054 | 781,795 | 781,949 |
APPENDIX C: Tangible Book Value Per Share
| For the Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| ($ in thousands except per share data) | March 31, 2024 | December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | |
| Tangible common equity (Appendix B) | $ | 866,463 | 860,772 | 744,054 | 781,795 | 781,949 |
| Common shares outstanding | 41,156,286 | 41,109,987 | 41,085,498 | 41,082,678 | 40,986,990 | |
| Tangible book value per common share | $ | 21.05 | 20.94 | 18.11 | 19.03 | 19.08 |
APPENDIX D: TCE Ratio
| For the Three Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | March 31, 2024 | December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | ||||||
| Tangible common equity (Appendix B) | $ | 866,463 | 860,772 | 744,054 | 781,795 | 781,949 | |||||
| Total assets | 12,091,597 | 12,114,942 | 11,977,960 | 12,032,998 | 12,363,149 | ||||||
| Less: Goodwill and other intangibles | (509,636) | (511,608) | (513,629) | (515,847) | (518,012) | ||||||
| Tangible assets ("TA") | $ | 11,581,961 | 11,603,334 | 11,464,331 | 11,517,151 | 11,845,137 | |||||
| TCE to TA ratio | 7.48 | % | 7.42 | % | 6.49 | % | 6.79 | % | 6.60 | % |
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