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