Subject: ERN
First Bancorp Reports Fourth Quarter and Annual Results
SOUTHERN PINES, N.C., Jan. 22, 2020 /PRNewswire/ -- First Bancorp (NASDAQ - FBNC), the parent company of First Bank, announced today net income of $20.9 million, or $0.71 per diluted common share, for the three months ended December 31, 2019, a decrease of 11.3% in earnings per share from the $23.9 million, or $0.80 per diluted common share, recorded in the fourth quarter of 2018. The decrease was primarily due to an increase in the provision for loan losses recorded for the current period.
For the year ended December 31, 2019, the Company recorded net income of $92.0 million, or $3.10 per diluted common share, an increase of 3.0% in earnings per share from the $89.3 million, or $3.01 per diluted common share, for 2018. The increase was primarily related to higher net interest income associated with the Company's growth.
Net Interest Income and Net Interest Margin
Net interest income for the fourth quarter of 2019 was $54.7 million, a 1.5% increase from the $53.8 million recorded in the fourth quarter of 2018. Net interest income for the year ended December 31, 2019 amounted to $216.2 million, a 4.2% increase from the $207.4 million recorded in 2018. The increases in net interest income for the periods presented were primarily due to growth in interest-earning assets, which have increased by approximately 6% over the past year.
The Company's net interest margin (a non-GAAP measure calculated by dividing tax-equivalent net interest income by average earning assets) for the fourth quarter of 2019 was 3.93%, which was 15 basis points lower than the 4.08% realized in the fourth quarter of 2018. For the year ended December 31, 2019, the Company's net interest margin was 4.00% compared to 4.09% for 2018. The lower margins were primarily due to a combination of lower loan discount accretion and lower asset yields.
The Company recorded loan discount accretion of $1.5 million in the fourth quarter of 2019, compared to $1.8 million in the fourth quarter of 2018. For the years ended December 31, 2019 and 2018, loan discount accretion amounted to $6.0 million and $7.8 million, respectively. The lower loan discount accretion accounted for approximately 3 basis points out of the 15 basis point decline in the net interest margin when comparing the fourth quarter of 2019 to 2018 and for 4 basis points of the 9 basis point decline for 2019. The lower discount accretion was attributable to paydowns in the Company's acquired loan portfolios.
The Company's earning-asset yields, excluding loan discount accretion, decreased by 8 basis points when comparing the fourth quarter of 2019 to the fourth quarter of 2018. Total funding costs increased by 5 basis points over that same period. On a year to date basis, earning-asset yields, excluding loan discount accretion, increased 11 basis points, while total funding costs increased 18 basis points.
In the second half of 2019, the Federal Reserve cut short-term interest rates by 75 basis points. The lower interest rates resulted in a 6 basis point reduction in the yield on interest-earning assets in the fourth quarter of 2019 from the third quarter of 2019 and a three basis point reduction in the total cost of funds. This spread compression resulted in the 2 basis point linked-quarter decrease in net interest margin. In the fourth quarter of 2019, the Company's loan yield was favorably impacted by yield adjustments primarily related to prepayment fees realized on the early payoff of a large loan.
See the Financial Summary for a reconciliation of the Company's net interest margin to its net interest margin excluding loan discount accretion, and other information regarding this percentage.
Provision for Loan Losses and Asset Quality
Total net charge-offs for the fourth quarter of 2019 amounted to $1.0 million, or 0.09% of average loans, compared to net charge-offs of $0.2 million, or 0.02% of average loans, in the fourth quarter of 2018. For the year ended December 31, 2019, the Company experienced net charge-offs of $1.9 million, or 0.04% of average loans, compared to net recoveries of $1.3 million in 2018.
The Company recorded a provision for loan losses of $3.2 million in the fourth quarter of 2019 compared to a provision for loan losses of $0.7 million in the fourth quarter of 2018. For the year ended December 31, 2019, the Company recorded a provision for loan losses of $2.3 million compared to a negative provision for loan losses (reduction of the allowance for loan losses) of $3.6 million in 2018. In the first quarter of 2018, the Company experienced net loan recoveries of $3.7 million, resulting in the negative provision during 2018.
Total nonperforming assets amounted to $37.8 million at December 31, 2019 compared to $43.4 million a year earlier. Within nonperforming assets, nonaccrual loans amounted to $24.9 million at December 31, 2019 compared to $19.7 million at September 30, 2019 and $22.6 million at December 31, 2018.
Noninterest Income
Total noninterest income was $14.6 million and $13.4 million for the three months ended December 31, 2019 and 2018, respectively. For the year ended December 31, 2019, noninterest income amounted to $58.6 million compared to $58.4 million for 2018.
Core noninterest income, a non-GAAP measure, for the fourth quarter of 2019 was $14.5 million, a 7.5% increase from the $13.5 million reported for the fourth quarter of 2018 - see reconciliation of core noninterest income to total noninterest income in the Financial Summary. For the year ended December 31, 2019, core noninterest income amounted to $59.6 million, a 2.4% increase from the $58.2 million reported for 2018.
In 2019, the Company experienced increases in service charges on deposit accounts due to strong deposit growth, "other service charges, commissions, and fees" due to higher interchange income, and "fees from presold mortgages" due to higher mortgage origination activity. Partially offsetting those increases were declines in commissions from sales of insurance and financial products, SBA consulting fees and SBA loan sale gains, which all declined due to lower activity in those lines of business.
Other gains (losses) amounted to a net loss of $0.2 million in calendar year 2019 due to miscellaneous items, whereas in 2018, the Company recorded a net gain of $0.7 million, which included a $0.9 million gain on the sale of a former branch location.
Noninterest Expenses
Noninterest expenses amounted to $39.9 million in the fourth quarter of 2019 compared to $36.7 million recorded in the fourth quarter of 2018, an increase of 8.6%. Noninterest expenses for the year ended December 31, 2019 amounted to $156.3 million compared to $155.9 million in 2018, an increase of 0.2%. The increases in 2019 were primarily due to expenses associated with the Company's growth, which were partially offset by lower FDIC assessment premiums due to credits allocated to the Company by the FDIC and operational efficiencies realized by the Company resulting from the operational conversion of an acquired entity in 2018.
Income Taxes
The Company's effective tax rate for the fourth quarter of 2019 was 20.4% compared to 20.1% in the fourth quarter of 2018. For the year ended December 31, 2019 and 2018, the Company's effective tax rates were 20.8% and 21.3%, respectively.
Balance Sheet and Capital
Total assets at December 31, 2019 amounted to $6.1 billion, a 4.8% increase from a year earlier. Loan growth for the year ended December 31, 2019 amounted to $204.4 million, or 4.8%, and deposit growth amounted to $272.0 million, or 5.8%. Within deposits, the Company's retail deposits (excludes brokered deposits and internet time deposits) grew 9.7% during 2019, with 14.8% growth in noninterest-bearing checking accounts. As a result of the strong retail deposit growth, the Company reduced its level of brokered deposits, which declined by $153.7 million, or 64.1%, from December 31, 2018. Additionally, the Company paid down its borrowings by $106 million, or 26.0%, during 2019.
In order to reduce exposure to the possibility of lower interest rates, the Company invested portions of its interest-bearing cash balances during 2019 into fixed rate investment securities. As a result, from December 31, 2018 to December 31, 2019, interest-bearing cash balances declined by 59.0% and investment securities balances increased by 47.7%.
The Company remains well-capitalized by all regulatory standards, with an estimated Total Risk-Based Capital Ratio at December 31, 2019 of 15.12%, an increase from the 13.97% reported at December 31, 2018. The Company's tangible common equity to tangible assets ratio was 10.20% at December 31, 2019, an increase of 113 basis points from a year earlier.
Comments of the CEO and Other Business Matters
Richard H. Moore, CEO of First Bancorp, commented, "We are pleased with our results for 2019. Profitability was strong, with a return on average assets of 1.53%, and we experienced solid balance sheet growth, especially in retail deposits, which grew nearly 10%. We were also pleased that our strong capital levels provided the opportunity to increase our dividend rate again this year. The dividend rate of 18 cents per share being paid to shareholders this week represents an 80% increase from the rate paid a year ago."
First Bancorp is a bank holding company headquartered in Southern Pines, North Carolina, with total assets of approximately $6.1 billion. Its principal activity is the ownership and operation of First Bank, a state-chartered community bank that operates 101 branches in North Carolina and South Carolina. First Bank Insurance Services is a subsidiary of First Bank and provides insurance products and services to individuals and businesses throughout First Bank's market area. 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.
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 | ||||||||
Three Months Ended December 31, | Percent | |||||||
($ in thousands except per share data - unaudited) | 2019 | 2018 | Change | |||||
INCOME STATEMENT | ||||||||
Interest income | ||||||||
Interest and fees on loans | $ | 56,030 | 54,581 | |||||
Interest on investment securities | 5,209 | 3,453 | ||||||
Other interest income | 1,730 | 3,158 | ||||||
Total interest income | 62,969 | 61,192 | 2.9% | |||||
Interest expense | ||||||||
Interest on deposits | 6,552 | 4,679 | ||||||
Interest on borrowings | 1,761 | 2,667 | ||||||
Total interest expense | 8,313 | 7,346 | 13.2% | |||||
Net interest income | 54,656 | 53,846 | 1.5% | |||||
Total provision (reversal) for loan losses | 3,176 | 693 | 358.3% | |||||
Net interest income after provision for loan losses | 51,480 | 53,153 | (3.1)% | |||||
Noninterest income | ||||||||
Service charges on deposit accounts | 3,427 | 3,084 | ||||||
Other service charges, commissions, and fees | 4,859 | 4,302 | ||||||
Fees from presold mortgage loans | 1,267 | 504 | ||||||
Commissions from sales of insurance and financial products | 2,059 | 2,247 | ||||||
SBA consulting fees | 1,025 | 1,121 | ||||||
SBA loan sale gains | 1,227 | 1,593 | ||||||
Bank-owned life insurance income | 636 | 642 | ||||||
Foreclosed property gains (losses), net | (40) | 14 | ||||||
Securities gains (losses), net | ? | ? | ||||||
Other gains (losses), net | 162 | (88) | ||||||
Total noninterest income | 14,622 | 13,419 | 9.0% | |||||
Noninterest expenses | ||||||||
Salaries expense | 20,599 | 18,462 | ||||||
Employee benefit expense | 3,694 | 4,136 | ||||||
Occupancy and equipment related expense | 4,093 | 4,402 | ||||||
Merger and acquisition expenses | (21) | (1,210) | ||||||
Intangibles amortization expense | 1,121 | 1,398 | ||||||
Other operating expenses | 10,365 | 9,491 | ||||||
Total noninterest expenses | 39,851 | 36,679 | 8.6% | |||||
Income before income taxes | 26,251 | 29,893 | (12.2)% | |||||
Income tax expense | 5,368 | 5,998 | (10.5)% | |||||
Net income | $ | 20,883 | 23,895 | (12.6)% | ||||
Earnings per common share - diluted | $ | 0.71 | 0.80 | (11.3)% | ||||
ADDITIONAL INCOME STATEMENT INFORMATION | ||||||||
Net interest income, as reported | $ | 54,656 | 53,846 | |||||
Tax-equivalent adjustment (1) | 382 | 443 | ||||||
Net interest income, tax-equivalent | $ | 55,038 | 54,289 | 1.4% | ||||
(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. |
First Bancorp and Subsidiaries | ||||||||
Twelve Months Ended December 31, | Percent | |||||||
($ in thousands except per share data - unaudited) | 2019 | 2018 | Change | |||||
INCOME STATEMENT | ||||||||
Interest income | ||||||||
Interest and fees on loans | $ | 220,784 | 208,609 | |||||
Interest on investment securities | 20,888 | 12,120 | ||||||
Other interest income | 8,435 | 10,478 | ||||||
Total interest income | 250,107 | 231,207 | 8.2% | |||||
Interest expense | ||||||||
Interest on deposits | 25,050 | 14,491 | ||||||
Interest on borrowings | 8,853 | 9,286 | ||||||
Total interest expense | 33,903 | 23,777 | 42.6% | |||||
Net interest income | 216,204 | 207,430 | 4.2% | |||||
Total provision (reversal) for loan losses | 2,263 | (3,589) | (163.1)% | |||||
Net interest income after provision for loan losses | 213,941 | 211,019 | 1.4% | |||||
Noninterest income | ||||||||
Service charges on deposit accounts | 12,970 | 12,690 | ||||||
Other service charges, commissions, and fees | 19,481 | 16,488 | ||||||
Fees from presold mortgage loans | 3,944 | 2,735 | ||||||
Commissions from sales of insurance and financial products | 8,495 | 8,731 | ||||||
SBA consulting fees | 3,872 | 4,675 | ||||||
SBA loan sale gains | 8,275 | 10,366 | ||||||
Bank-owned life insurance income | 2,564 | 2,534 | ||||||
Foreclosed property gains (losses), net | (939) | (565) | ||||||
Securities gains (losses), net | 97 | ? | ||||||
Other gains (losses), net | (169) | 723 | ||||||
Total noninterest income | 58,590 | 58,377 | 0.4% | |||||
Noninterest expenses | ||||||||
Salaries expense | 79,129 | 75,077 | ||||||
Employee benefit expense | 16,844 | 16,888 | ||||||
Occupancy and equipment related expense | 16,145 | 16,420 | ||||||
Merger and acquisition expenses | 192 | 2,358 | ||||||
Intangibles amortization expense | 4,858 | 5,917 | ||||||
Other operating expenses | 39,087 | 39,258 | ||||||
Total noninterest expenses | 156,255 | 155,918 | 0.2% | |||||
Income before income taxes | 116,276 | 113,478 | 2.5% | |||||
Income tax expense | 24,230 | 24,189 | 0.2% | |||||
Net income | $ | 92,046 | 89,289 | 3.1% | ||||
Earnings per common share - diluted | $ | 3.10 | 3.01 | 3.0% | ||||
ADDITIONAL INCOME STATEMENT INFORMATION | ||||||||
Net interest income, as reported | $ | 216,204 | 207,430 | |||||
Tax-equivalent adjustment (1) | 1,641 | 1,594 | ||||||
Net interest income, tax-equivalent | $ | 217,845 | 209,024 | 4.2% | ||||
(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 23% tax rate and is reduced by the related nondeductible portion of interest expense. |
First Bancorp and Subsidiaries | |||||||||
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||
PERFORMANCE RATIOS (annualized) | 2019 | 2018 | 2019 | 2018 | |||||
Return on average assets (1) | 1.35 | % | 1.62 | % | 1.53 | % | 1.57 | % | |
Return on average common equity (2) | 9.78 | % | 12.56 | % | 11.32 | % | 12.27 | % | |
Net interest margin - tax-equivalent (3) | 3.93 | % | 4.08 | % | 4.00 | % | 4.09 | % | |
Net charge-offs (recoveries) to average loans | 0.09 | % | 0.02 | % | 0.04 | % | (0.03) | % | |
COMMON SHARE DATA | |||||||||
Cash dividends declared - common | $ | 0.18 | 0.10 | 0.54 | 0.40 | ||||
Stated book value - common | 28.80 | 25.71 | 28.80 | 25.71 | |||||
Tangible book value - common | 20.30 | 17.12 | 20.30 | 17.12 | |||||
Common shares outstanding at end of period | 29,601,264 | 29,724,874 | 29,601,264 | 29,724,874 | |||||
Weighted average shares outstanding - diluted | 29,603,816 | 29,800,342 | 29,720,499 | 29,707,431 | |||||
CAPITAL RATIOS | |||||||||
Tangible common equity to tangible assets | 10.20 | % | 9.07 | % | 10.20 | % | 9.07 | % | |
Common equity tier I capital ratio - estimated | 13.48 | % | 12.28 | % | 13.48 | % | 12.28 | % | |
Tier I leverage ratio - estimated | 11.19 | % | 10.47 | % | 11.19 | % | 10.47 | % | |
Tier I risk-based capital ratio - estimated | 14.63 | % | 13.48 | % | 14.63 | % | 13.48 | % | |
Total risk-based capital ratio - estimated | 15.12 | % | 13.97 | % | 15.12 | % | 13.97 | % | |
AVERAGE BALANCES ($ in thousands) | |||||||||
Total assets | $ | 6,159,232 | 5,840,964 | 6,027,047 | 5,693,760 | ||||
Loans | 4,419,982 | 4,222,417 | 4,346,331 | 4,161,838 | |||||
Earning assets | 5,560,099 | 5,276,311 | 5,447,817 | 5,112,805 | |||||
Deposits | 4,939,182 | 4,624,868 | 4,824,216 | 4,516,811 | |||||
Interest-bearing liabilities | 3,716,248 | 3,697,076 | 3,720,536 | 3,663,077 | |||||
Shareholders' equity | 847,317 | 754,734 | 812,823 | 727,920 | |||||
(1) | Calculated by dividing annualized net income by average assets. |
(2) | Calculated by dividing annualized net income by average common equity. |
(3) | See note 1 on the first page of the Financial Summary for discussion of tax-equivalent adjustments. |
TREND INFORMATION | |||||||||||
($ in thousands except per share data) | For the Three Months Ended | ||||||||||
INCOME STATEMENT | Dec. 31, 2019 | Sept. 30, 2019 | June 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | ||||||
Net interest income - tax-equivalent (1) | $ | 55,038 | 54,191 | 54,832 | 53,785 | 54,289 | |||||
Taxable equivalent adjustment (1) | 382 | 413 | 423 | 424 | 443 | ||||||
Net interest income | 54,656 | 53,778 | 54,409 | 53,361 | 53,846 | ||||||
Provision (reversal) for loan losses | 3,176 | (1,105) | (308) | 500 | 693 | ||||||
Noninterest income | 14,622 | 14,883 | 15,253 | 13,833 | 13,419 | ||||||
Noninterest expense | 39,851 | 38,173 | 39,703 | 38,529 | 36,679 | ||||||
Income before income taxes | 26,251 | 31,593 | 30,267 | 28,165 | 29,893 | ||||||
Income tax expense | 5,368 | 6,574 | 6,408 | 5,880 | 5,998 | ||||||
Net income | 20,883 | 25,019 | 23,859 | 22,285 | 23,895 | ||||||
Earnings per common share - diluted | 0.71 | 0.84 | 0.80 | 0.75 | 0.80 | ||||||
Cash dividends declared per share | 0.18 | 0.12 | 0.12 | 0.12 | 0.10 | ||||||
(1) | See note 1 on the first page of this Financial Summary for discussion of tax-equivalent adjustments. |
First Bancorp and Subsidiaries | ||||||||||||
CONSOLIDATED BALANCE SHEETS ($ in thousands - unaudited) | ||||||||||||
At Dec. 31, 2019 | At Sept. 30, 2019 | At Dec. 31, 2018 | One Year Change | |||||||||
Assets | ||||||||||||
Cash and due from banks | $ | 64,519 | 52,621 | 56,050 | 15.1 | % | ||||||
Interest-bearing deposits with banks | 166,783 | 264,840 | 406,848 | (59.0) | % | |||||||
Total cash and cash equivalents | 231,302 | 317,461 | 462,898 | (50.0) | % | |||||||
Investment securities | 889,877 | 779,489 | 602,588 | 47.7 | % | |||||||
Presold mortgages | 19,712 | 16,269 | 4,279 | 360.7 | % | |||||||
Total loans | 4,453,466 | 4,396,544 | 4,249,064 | 4.8 | % | |||||||
Allowance for loan losses | (21,398) | (19,260) | (21,039) | 1.7 | % | |||||||
Net loans | 4,432,068 | 4,377,284 | 4,228,025 | 4.8 | % | |||||||
Premises and equipment | 134,528 | 136,668 | 119,000 | 13.0 | % | |||||||
Intangible assets | 251,585 | 252,824 | 255,480 | (1.5) | % | |||||||
Foreclosed real estate | 3,873 | 4,589 | 7,440 | (47.9) | % | |||||||
Bank-owned life insurance | 104,441 | 103,806 | 101,878 | 2.5 | % | |||||||
Other assets | 76,253 | 80,521 | 82,528 | (7.6) | % | |||||||
Total assets | $ | 6,143,639 | 6,068,911 | 5,864,116 | 4.8 | % | ||||||
Liabilities | ||||||||||||
Deposits: | ||||||||||||
Noninterest-bearing checking accounts | $ | 1,515,977 | 1,491,494 | 1,320,131 | 14.8 | % | ||||||
Interest-bearing checking accounts | 912,784 | 894,777 | 916,374 | (0.4) | % | |||||||
Money market accounts | 1,173,107 | 1,124,614 | 1,035,523 | 13.3 | % | |||||||
Savings accounts | 424,415 | 418,043 | 432,389 | (1.8) | % | |||||||
Brokered deposits | 86,141 | 127,519 | 239,875 | (64.1) | % | |||||||
Internet time deposits | 698 | 1,445 | 3,428 | (79.6) | % | |||||||
Other time deposits > $100,000 | 563,108 | 557,590 | 447,619 | 25.8 | % | |||||||
Other time deposits | 255,125 | 259,900 | 264,000 | (3.4) | % | |||||||
Total deposits | 4,931,355 | 4,875,382 | 4,659,339 | 5.8 | % | |||||||
Borrowings | 300,671 | 300,656 | 406,609 | (26.1) | % | |||||||
Other liabilities | 59,212 | 57,891 | 33,938 | 74.5 | % | |||||||
Total liabilities | 5,291,238 | 5,233,929 | 5,099,886 | 3.8 | % | |||||||
Shareholders' equity | ||||||||||||
Common stock | 429,514 | 429,136 | 434,453 | (1.1) | % | |||||||
Retained earnings | 417,764 | 402,212 | 341,738 | 22.2 | % | |||||||
Stock in rabbi trust assumed in acquisition | (2,587) | (2,577) | (3,235) | (20.0) | % | |||||||
Rabbi trust obligation | 2,587 | 2,577 | 3,235 | (20.0) | % | |||||||
Accumulated other comprehensive | 5,123 | 3,634 | (11,961) | (142.8) | % | |||||||
Total shareholders' equity | 852,401 | 834,982 | 764,230 | 11.5 | % | |||||||
Total liabilities and shareholders' equity | $ | 6,143,639 | 6,068,911 | 5,864,116 | 4.8 | % | ||||||
First Bancorp and Subsidiaries | ||||||||||
For the Three Months Ended | ||||||||||
YIELD INFORMATION | Dec. 31, | Sept. 30, | June 30, | Mar. 31, | Dec. 31, | |||||
Yield on loans | 5.03 | % | 5.02 | % | 5.16 | % | 5.11 | % | 5.13 | % |
Yield on securities | 2.64 | % | 2.74 | % | 2.81 | % | 2.95 | % | 2.71 | % |
Yield on other earning assets | 1.91 | % | 2.42 | % | 2.51 | % | 2.77 | % | 2.29 | % |
Yield on all interest-earning assets | 4.49 | % | 4.55 | % | 4.67 | % | 4.66 | % | 4.60 | % |
Rate on interest bearing deposits | 0.76 | % | 0.77 | % | 0.75 | % | 0.67 | % | 0.56 | % |
Rate on other interest-bearing liabilities | 2.31 | % | 2.65 | % | 2.83 | % | 2.79 | % | 2.60 | % |
Rate on all interest-bearing liabilities | 0.89 | % | 0.93 | % | 0.93 | % | 0.90 | % | 0.79 | % |
Total cost of funds | 0.63 | % | 0.66 | % | 0.67 | % | 0.66 | % | 0.58 | % |
Net interest margin (1) | 3.90 | % | 3.92 | % | 4.03 | % | 4.03 | % | 4.05 | % |
Net interest margin - tax-equivalent (2) | 3.93 | % | 3.95 | % | 4.06 | % | 4.06 | % | 4.08 | % |
Average prime rate | 4.83 | % | 5.27 | % | 5.50 | % | 5.50 | % | 5.28 | % |
(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. See note 1 on the first page of this |
For the Three Months Ended | |||||||||||||||
NET INTEREST INCOME PURCHASE ($ in thousands) | Dec. 31, | Sept. 30, | June 30, | Mar. 31, | Dec. 31, | ||||||||||
Interest income - increased by accretion of loan | $ | 1,161 | 959 | 1,336 | 1,132 | 1,566 | |||||||||
Interest income - increased by accretion of loan | 340 | 365 | 394 | 287 | 264 | ||||||||||
Interest expense - reduced by premium | 38 | 44 | 50 | 58 | 71 | ||||||||||
Interest expense - increased by discount accretion | (45) | (46) | (45) | (45) | (45) | ||||||||||
Impact on net interest income | $ | 1,494 | 1,322 | 1,735 | 1,432 | 1,856 | |||||||||
First Bancorp and Subsidiaries | |||||||||||||||
ASSET QUALITY DATA ($ in thousands) | Dec. 31, | Sept. 30, | June 30, | Mar. 31, | Dec. 31, | ||||||||||
Nonperforming assets | |||||||||||||||
Nonaccrual loans | $ | 24,866 | 19,720 | 17,375 | 20,684 | 22,575 | |||||||||
Troubled debt restructurings - accruing | 9,053 | 9,566 | 11,890 | 12,457 | 13,418 | ||||||||||
Accruing loans > 90 days past due | ? | ? | ? | ? | ? | ||||||||||
Total nonperforming loans | 33,919 | 29,286 | 29,265 | 33,141 | 35,993 | ||||||||||
Foreclosed real estate | 3,873 | 4,589 | 5,107 | 6,390 | 7,440 | ||||||||||
Total nonperforming assets | $ | 37,792 | 33,875 | 34,372 | 39,531 | 43,433 | |||||||||
Purchased credit impaired loans not included | $ | 12,664 | 13,798 | 14,175 | 15,867 | 17,393 | |||||||||
Asset Quality Ratios | |||||||||||||||
Net quarterly charge-offs (recoveries) to average loans - annualized | 0.09 | % | 0.04 | % | ? | % | 0.04 | % | 0.02 | % | |||||
Nonperforming loans to total loans | 0.76 | % | 0.67 | % | 0.67 | % | 0.77 | % | 0.85 | % | |||||
Nonperforming assets to total assets | 0.62 | % | 0.56 | % | 0.57 | % | 0.65 | % | 0.74 | % | |||||
Allowance for loan losses to total loans | 0.48 | % | 0.44 | % | 0.48 | % | 0.49 | % | 0.50 | % | |||||
(1) | In the March 3, 2017 acquisition of Carolina Bank and the October 1, 2017 acquisition of Asheville Savings Bank, the Company acquired $19.3 million |
First Bancorp and Subsidiaries | |||||||||||||||
For the Three Months Ended | |||||||||||||||
NET INTEREST MARGIN, EXCLUDING ($ in thousands) | Dec. 31, | Sept. 30, | June 30, | Mar. 31, | Dec. 31, | ||||||||||
Net interest income, as reported | $ | 54,656 | 53,778 | 54,409 | 53,361 | 53,846 | |||||||||
Tax-equivalent adjustment | 382 | 413 | 423 | 424 | 443 | ||||||||||
Net interest income, tax-equivalent (A) | $ | 55,038 | 54,191 | 54,832 | 53,785 | 54,289 | |||||||||
Average earning assets (B) | $ | 5,560,099 | 5,440,014 | 5,417,284 | 5,372,766 | 5,276,311 | |||||||||
Tax-equivalent net interest | 3.93 | % | 3.95 | % | 4.06 | % | 4.06 | % | 4.08 | % | |||||
Net interest income, tax-equivalent | $ | 55,038 | 54,191 | 54,832 | 53,785 | 54,289 | |||||||||
Loan discount accretion | 1,501 | 1,324 | 1,730 | 1,419 | 1,830 | ||||||||||
Net interest income, tax-equivalent, excluding | $ | 53,537 | 52,867 | 53,102 | 52,366 | 52,459 | |||||||||
Average earnings assets (B) | $ | 5,560,099 | 5,440,014 | 5,417,284 | 5,372,766 | 5,276,311 | |||||||||
Tax-equivalent net interest margin, excluding | 3.82 | % | 3.86 | % | 3.93 | % | 3.95 | % | 3.94 | % | |||||
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 Note. Loan discount accretion is a non-cash interest income adjustment that is related to 1) the Company's acquisition of loans and represents the portion of the fair value discount that was initially recorded on the acquired loans, and 2) the Company's origination of SBA loans and the subsequent sale of the guaranteed portions of the loans that results in a discount being recorded on the retained portion of the loans. These discounts are recognized into income over the lives of the loans. At December 31, 2019, the Company had a remaining loan discount balance on acquired loans of $12.7 million compared to $17.3 million at December 31, 2018. At December 31, 2019, the Company had a remaining loan discount balance on SBA loans of $7.1 million compared to $5.7 million at December 31, 2018. For the related loans that perform and pay down over time, the loan discount will also be reduced, with a corresponding increase to interest income. Therefore, management of the Company believes it is useful to also present this ratio to reflect the Company's net interest margin excluding this non-cash, temporary loan discount accretion adjustment to aid investors in comparing financial results between periods. The Company cautions that non-GAAP financial measures should be considered in addition to, but not as a substitute for, the Company's reported GAAP results. | |||||||||||||||
For the Three Months Ended | For the Twelve Months Ended | |||||||||||
RECONCILIATION OF CORE NONINTEREST ($ in thousands) | Dec. 31, | Dec.31, | Dec. 31, | Dec. 31, | ||||||||
Noninterest income | ||||||||||||
Service charges on deposit accounts | $ | 3,427 | 3,084 | 12,970 | 12,690 | |||||||
Other service charges, commissions, and fees | 4,859 | 4,302 | 19,481 | 16,488 | ||||||||
Fees from presold mortgage loans | 1,267 | 504 | 3,944 | 2,735 | ||||||||
Commissions from sales of insurance and financial products | 2,059 | 2,247 | 8,495 | 8,731 | ||||||||
SBA consulting fees | 1,025 | 1,121 | 3,872 | 4,675 | ||||||||
SBA loan sale gains | 1,227 | 1,593 | 8,275 | 10,366 | ||||||||
Bank-owned life insurance income | 636 | 642 | 2,564 | 2,534 | ||||||||
Core noninterest income | 14,500 | 13,493 | 59,601 | 58,219 | ||||||||
Foreclosed property gains (losses), net | (40) | 14 | (939) | (565) | ||||||||
Securities gains (losses), net | ? | ? | 97 | ? | ||||||||
Other gains (losses), net | 162 | (88) | (169) | 723 | ||||||||
Total noninterest income | $ | 14,622 | 13,419 | 58,590 | 58,377 | |||||||
SOURCE First Bancorp
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