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| 8-K - 8-K - FIRST BANCORP /NC/ | fbnc-20210427.htm |
News Release
| For Immediate Release: | For More Information, Contact: | ||||||||||
| April 27, 2021 | Elaine Pozarycki | ||||||||||
| 919-834-3090 | |||||||||||
First Bancorp Reports First Quarter Results
SOUTHERN PINES, N.C. - First Bancorp (NASDAQ - FBNC), the parent company of First Bank, announced today net income of $28.2 million, or $0.99 per diluted common share, for the three months ended March 31, 2021, an increase of 59.7% on a per share basis, compared to $18.2 million, or $0.62 per diluted common share, recorded in the first quarter of 2020. The increase in earnings was driven by lower credit costs and higher noninterest income.
The Company continued to experience high balance sheet growth during the first quarter of 2021, with total assets increasing by $447 million, or 24.8% annualized. This growth was driven by a $460 million, or 29.7% annualized, increase in deposits from December 31, 2020.
Net Interest Income and Net Interest Margin
Net interest income for the first quarter of 2021 was $55.2 million, a 0.9% increase from the $54.8 million recorded in the first quarter of 2020. The increase in net interest income was due to higher levels of interest-earning assets and the recognition of PPP loan fees, the effects of which were mostly offset by a lower net interest margin.
The Company’s net interest margin (a non-GAAP measure calculated by dividing tax-equivalent net interest income by average earning assets) for the first quarter of 2021 was 3.27%, which was 69 basis points lower than the 3.96% realized in the first quarter of 2020. The decline was primarily due to the impact of lower interest rates and the lower incremental reinvestment rates realized from funds provided by the high deposit growth.
Driven by high deposit growth, average interest-earning assets increased by 23.3% in the first quarter of 2021 compared to the first quarter of 2020. The funds provided by the in-flow of deposits were used primarily to either purchase investment securities or were held in the Company's account at the Federal Reserve Bank, each of which increased net interest income but negatively impacted the Company's net interest margin. Additionally, in March 2020, the Federal Reserve Bank decreased interest rates by 150 basis points, which negatively impacted the Company's net interest margin beginning in the second quarter of 2020.
In the first quarter of 2021, the Company processed $111 million in PPP loan forgiveness payments related to 2020 originations and also originated approximately $111 million in new PPP loans, which resulted in an unchanged balance of total PPP loans of $241 million from December 31, 2020. Including accelerated amortization of deferred PPP loan fees, the Company recorded a total of $3.0 million in PPP fee-related interest income during the first quarter of 2021, which, when combined with the note rate of 1.00%, resulted in a total yield on PPP loans of 6.16% for the quarter. The Company has $9.0 million in remaining deferred PPP loan fees, of which $3.1 million relates to 2020 originations and $5.9 million relates to 2021 originations.
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Allowance for Loan Losses, Provision for Loan Losses and Asset Quality
On January 1, 2021, the Company adopted the Current Expected Credit Loss (CECL) methodology for estimating credit losses, which resulted in an increase of $14.6 million in the Company's allowance for loan losses and an increase of $7.5 million in the Company's reserve for unfunded commitments. The tax-effected impact of those two items amounted to $17.1 million and was recorded as an adjustment to the Company's retained earnings as of January 1, 2021.
The Company recorded no provision for loan losses in the first quarter of 2021 compared to $5.6 million in the first quarter of 2020. The higher provision in 2020 was primarily related to estimated incurred losses associated with the pandemic that was emerging at the time. Under the CECL methodology for recording expected credit losses adopted at January 1, 2021, which resulted in the increase to the allowance for loan losses noted above, the Company determined that no further adjustment was necessary for the first quarter of 2021.
Total net loan charge-offs for the first quarters of 2021 and 2020 amounted to $1.1 million and $2.5 million, respectively, or 0.10% and 0.22% of average loans on an annualized basis, respectively.
Total nonperforming assets amounted to $50 million at March 31, 2021, or 0.65% of total assets, compared to $38.3 million a year earlier, or 0.60% of total assets. At March 31, 2021, loans on deferral status associated with the pandemic amounted to $5.9 million.
Noninterest Income
Total noninterest income for the first quarter of 2021 was $20.7 million, a 50.8% increase from the $13.7 million recorded for the first quarter of 2020.
Service charges on deposit accounts amounted to $2.7 million for the first quarter of 2021, an 18.1% decrease compared to $3.3 million in the first quarter of 2020. The decline was primarily due to fewer instances of customer overdrafts.
Other service charges, commissions and fees amounted to $5.5 million for the first quarter of 2021, an increase of 35.7% from the $4.1 million for the first quarter of 2020. The increase was primarily due to a $0.9 million increase in bankcard revenue. Additionally, the first quarter of 2020 included a $0.5 million charge related to impairment of the Company's SBA servicing asset.
Fees from presold mortgages amounted to $4.5 million for the first quarter of 2021, an increase of 146.8%, compared to $1.8 million in the first quarter of 2020. The increase in 2021 was primarily due to higher mortgage loan origination volume arising from low mortgage loan interest rates.
SBA consulting fees amounted to $2.8 million for the first quarter, an increase of 169.1%, compared to $1.0 million for the first quarter of 2020. The increase was due to fees earned by the Company's SBA subsidiary, SBA Complete, related to assisting its third-party client banks with the PPP loan program. SBA Complete recorded approximately $1.6 million in PPP-related fees for the three months ended March 31, 2021. At March 31, 2021, SBA Complete had $0.6 million in remaining deferred PPP revenue that will be recorded as income upon completing the forgiveness process for its client banks.
SBA loan sale gains amounted to $2.3 million for the first quarter of 2021 compared to $0.6 million in the first quarter of 2020. The first quarter of 2020 was significantly impacted by temporary pandemic-related market conditions. The first quarter of 2021 was favorably impacted by the SBA increasing the guarantee percentage on most loans from 75% to 90% as part of the economic relief package.
Noninterest Expenses
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Noninterest expenses amounted to $40.1 million in each of the first quarters of 2021 and 2020 with no significant variances in individual line items.
Income Taxes
The Company’s effective tax rate was 21.3% and 20.3% for the three months ended March 31, 2021 and 2020, respectively, with the 2021 increase being due to a higher proportion of fully-taxable income.
Balance Sheet and Capital
Total assets at March 31, 2021 amounted to $7.7 billion, a 21.3% increase from a year earlier. The growth was driven by an increase in deposits.
Total deposits amounted to $6.7 billion at March 31, 2021, an increase of $1.7 billion, or 33.5%, from March 31, 2020. The high deposit growth is believed to be due to a combination of stimulus funds and changes in customer behaviors during the pandemic, as well as ongoing growth initiatives by the Company.
Total loans amounted to $4.6 billion at March 31, 2021, an increase of $71 million, or 1.6% from March 31, 2020. Excluding PPP loans, the Company's level of outstanding loans has been impacted by high mortgage loan refinancing activity, commercial loan payoffs, and soft demand arising from the pandemic.
With high levels of liquidity, the Company reduced its level of borrowings to $61.3 million at March 31, 2021, a decrease of $341 million, or 84.8%, from a year earlier. The Company has also increased its holdings of investment securities to $2.0 billion at March 31, 2021, an increase of $1.2 billion, or 132.8%, compared to a year earlier.
The Company remains well-capitalized by all regulatory standards, with an estimated Total Risk-Based Capital Ratio at March 31, 2021 of 15.58%, an increase from the 14.51% reported at March 31, 2020. The Company’s tangible common equity to tangible assets ratio was 8.33% at March 31, 2021, a decrease of 167 basis points from a year earlier, which was impacted by the high balance sheet growth.
Comments of the CEO and Other Business Matters
Richard H. Moore, CEO of First Bancorp, commented, “We are very pleased with our first quarter performance. We achieved a high level of profitability, and our balance sheet and capital levels remain strong. With signs that the country is emerging from the pandemic, we expect to see an increase in economic activity that should benefit both our Company and our communities." Mr. Moore also stated, "We were also pleased to be able to recently report an 11% increase in our quarterly dividend rate to $0.20 per share."
The following is additional discussion of business development and other miscellaneous matters affecting the Company during the first quarter of 2021:
•On March 15, 2021, the Company announced a quarterly cash dividend of $0.20 per share payable on April 25, 2021 to shareholders of record on March 31, 2021. This dividend rate represents an 11.1% increase over the dividend rate declared in the first quarter of 2020.
•During the first quarter of 2021, the Company repurchased 106,744 shares of its common stock at an average stock price of $37.81, which totaled $4.0 million.
* * *
First Bancorp is a bank holding company headquartered in Southern Pines, North Carolina, with total assets of approximately $7.7 billion. Its principal activity is the ownership and operation of First Bank, a state-chartered community bank
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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.
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| First Bancorp and Subsidiaries Financial Summary - Page 1 | ||
| Three Months Ended March 31, | Percent | ||||||||||||||||
| ($ in thousands except per share data - unaudited) | 2021 | 2020 | Change | ||||||||||||||
| INCOME STATEMENT | |||||||||||||||||
| Interest income | |||||||||||||||||
| Interest and fees on loans | $ | 51,073 | 55,297 | ||||||||||||||
| Interest on investment securities | 6,236 | 5,638 | |||||||||||||||
| Other interest income | 700 | 1,098 | |||||||||||||||
| Total interest income | 58,009 | 62,033 | (6.5)% | ||||||||||||||
| Interest expense | |||||||||||||||||
| Interest on deposits | 2,388 | 5,773 | |||||||||||||||
| Interest on borrowings | 383 | 1,501 | |||||||||||||||
| Total interest expense | 2,771 | 7,274 | (61.9)% | ||||||||||||||
| Net interest income | 55,238 | 54,759 | 0.9% | ||||||||||||||
| Total provision for loan losses | — | 5,590 | (100.0)% | ||||||||||||||
| Net interest income after provision for loan losses | 55,238 | 49,169 | 12.3% | ||||||||||||||
| Noninterest income | |||||||||||||||||
| Service charges on deposit accounts | 2,733 | 3,337 | |||||||||||||||
| Other service charges, commissions, and fees | 5,522 | 4,069 | |||||||||||||||
| Fees from presold mortgage loans | 4,544 | 1,841 | |||||||||||||||
| Commissions from sales of insurance and financial products | 2,190 | 2,068 | |||||||||||||||
| SBA consulting fees | 2,764 | 1,027 | |||||||||||||||
| SBA loan sale gains | 2,330 | 647 | |||||||||||||||
| Bank-owned life insurance income | 620 | 642 | |||||||||||||||
| Other gains (losses), net | (34) | 74 | |||||||||||||||
| Total noninterest income | 20,669 | 13,705 | 50.8% | ||||||||||||||
| Noninterest expenses | |||||||||||||||||
| Salaries expense | 20,131 | 20,110 | |||||||||||||||
| Employee benefit expense | 4,574 | 4,547 | |||||||||||||||
| Occupancy and equipment related expense | 3,949 | 4,103 | |||||||||||||||
| Intangibles amortization expense | 897 | 1,055 | |||||||||||||||
| Foreclosed property losses (gains), net | 157 | 159 | |||||||||||||||
| Other operating expenses | 10,357 | 10,102 | |||||||||||||||
| Total noninterest expenses | 40,065 | 40,076 | —% | ||||||||||||||
| Income before income taxes | 35,842 | 22,798 | 57.2% | ||||||||||||||
| Income tax expense | 7,648 | 4,618 | 65.6% | ||||||||||||||
| Net income | $ | 28,194 | 18,180 | 55.1% | |||||||||||||
| Earnings per common share - diluted | $ | 0.99 | 0.62 | 59.7% | |||||||||||||
| ADDITIONAL INCOME STATEMENT INFORMATION | |||||||||||||||||
| Net interest income, as reported | $ | 55,238 | 54,759 | ||||||||||||||
| Tax-equivalent adjustment (1) | 443 | 334 | |||||||||||||||
| Net interest income, tax-equivalent | $ | 55,681 | 55,093 | 1.1% | |||||||||||||
(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.
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| First Bancorp and Subsidiaries Financial Summary - Page 2 | ||
Three Months Ended March 31, | ||||||||
PERFORMANCE RATIOS (annualized) | 2021 | 2020 | ||||||
| Return on average assets (1) | 1.53 | % | 1.18 | % | ||||
| Return on average common equity (2) | 12.92 | % | 8.52 | % | ||||
| Net interest margin - tax-equivalent (3) | 3.27 | % | 3.96 | % | ||||
| Net (recoveries) charge-offs to average loans | 0.10 | % | 0.22 | % | ||||
| COMMON SHARE DATA | ||||||||
| Cash dividends declared - common | $ | 0.20 | 0.18 | |||||
| Stated book value - common | 30.78 | 29.69 | ||||||
| Tangible book value - common (non-GAAP) | 21.87 | 21.09 | ||||||
| Common shares outstanding at end of period | 28,489,474 | 29,040,827 | ||||||
| Weighted average shares outstanding - diluted | 28,537,853 | 29,399,114 | ||||||
| CAPITAL RATIOS | ||||||||
| Tangible common equity to tangible assets (non-GAAP) | 8.33 | % | 10.00 | % | ||||
| Common equity tier I capital ratio - estimated | 13.25 | % | 12.86 | % | ||||
| Tier I leverage ratio - estimated | 9.60 | % | 11.05 | % | ||||
| Tier I risk-based capital ratio - estimated | 14.33 | % | 13.98 | % | ||||
| Total risk-based capital ratio - estimated | 15.58 | % | 14.51 | % | ||||
AVERAGE BALANCES ($ in thousands) | ||||||||
| Total assets | $ | 7,477,826 | 6,183,098 | |||||
| Loans | 4,684,143 | 4,512,893 | ||||||
| Earning assets | 6,898,406 | 5,595,734 | ||||||
| Deposits | 6,474,115 | 4,950,199 | ||||||
| Interest-bearing liabilities | 4,233,740 | 3,739,467 | ||||||
| Shareholders’ equity | 885,190 | 858,592 | ||||||
(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 | Mar. 31, 2021 | Dec. 31, 2020 | Sept. 30, 2020 | June 30, 2020 | Mar. 31, 2020 | ||||||||||||
| Net interest income - tax-equivalent (1) | $ | 55,681 | 56,463 | 55,080 | 52,954 | 55,093 | |||||||||||
| Taxable equivalent adjustment (1) | 443 | 457 | 347 | 330 | 334 | ||||||||||||
| Net interest income | 55,238 | 56,006 | 54,733 | 52,624 | 54,759 | ||||||||||||
| Provision for loan losses | — | 4,031 | 6,120 | 19,298 | 5,590 | ||||||||||||
| Noninterest income | 20,669 | 19,996 | 21,452 | 26,193 | 13,705 | ||||||||||||
| Noninterest expense | 40,065 | 41,882 | 40,439 | 38,901 | 40,076 | ||||||||||||
| Income before income taxes | 35,842 | 30,089 | 29,626 | 20,618 | 22,798 | ||||||||||||
| Income tax expense | 7,648 | 6,441 | 6,329 | 4,266 | 4,618 | ||||||||||||
| Net income | 28,194 | 23,648 | 23,297 | 16,352 | 18,180 | ||||||||||||
| Earnings per common share - diluted | 0.99 | 0.83 | 0.81 | 0.56 | 0.62 | ||||||||||||
| Cash dividends declared per share | 0.20 | 0.18 | 0.18 | 0.18 | 0.18 | ||||||||||||
(1) See note 1 on the first page of this Financial Summary for discussion of tax-equivalent adjustments.
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| First Bancorp and Subsidiaries Financial Summary - Page 3 | ||
CONSOLIDATED BALANCE SHEETS ($ in thousands - unaudited) | |||||||||||||||||||||||
| At Mar. 31, 2021 | At Dec. 31, 2020 | At Mar. 31, 2020 | One Year Change | ||||||||||||||||||||
| Assets | |||||||||||||||||||||||
| Cash and due from banks | $ | 71,206 | 93,724 | 93,666 | (24.0) | % | |||||||||||||||||
| Interest-bearing deposits with banks | 458,860 | 273,566 | 282,683 | 62.3 | % | ||||||||||||||||||
| Total cash and cash equivalents | 530,066 | 367,290 | 376,349 | 40.8 | % | ||||||||||||||||||
| Investment securities | 2,020,540 | 1,620,683 | 867,773 | 132.8 | % | ||||||||||||||||||
| Presold mortgages | 31,869 | 42,271 | 14,861 | 114.4 | % | ||||||||||||||||||
| SBA loans held for sale | 7,002 | 6,077 | 18,449 | (62.0) | % | ||||||||||||||||||
| Total loans | 4,624,054 | 4,731,315 | 4,552,708 | 1.6 | % | ||||||||||||||||||
| Allowance for loan losses | (65,849) | (52,388) | (24,498) | 168.8 | % | ||||||||||||||||||
| Net loans | 4,558,205 | 4,678,927 | 4,528,210 | 0.7 | % | ||||||||||||||||||
| Premises and equipment | 123,271 | 120,502 | 113,669 | 8.4 | % | ||||||||||||||||||
| Operating right-of-use lease assets | 16,899 | 17,514 | 19,347 | (12.7) | % | ||||||||||||||||||
| Intangible assets | 253,878 | 254,638 | 249,829 | 1.6 | % | ||||||||||||||||||
| Foreclosed real estate | 1,811 | 2,424 | 3,487 | (48.1) | % | ||||||||||||||||||
| Bank-owned life insurance | 107,594 | 106,974 | 105,083 | 2.4 | % | ||||||||||||||||||
| Other assets | 85,259 | 72,451 | 79,001 | 7.9 | % | ||||||||||||||||||
| Total assets | $ | 7,736,394 | 7,289,751 | 6,376,058 | 21.3 | % | |||||||||||||||||
| Liabilities | |||||||||||||||||||||||
| Deposits: | |||||||||||||||||||||||
| Noninterest-bearing checking accounts | $ | 2,430,198 | 2,210,012 | 1,580,849 | 53.7 | % | |||||||||||||||||
| Interest-bearing checking accounts | 1,258,500 | 1,172,022 | 922,985 | 36.4 | % | ||||||||||||||||||
| Money market accounts | 1,721,230 | 1,581,364 | 1,224,414 | 40.6 | % | ||||||||||||||||||
| Savings accounts | 567,715 | 519,266 | 431,377 | 31.6 | % | ||||||||||||||||||
| Brokered deposits | 9,461 | 20,222 | 85,642 | (89.0) | % | ||||||||||||||||||
| Internet time deposits | 249 | 249 | 698 | (64.3) | % | ||||||||||||||||||
| Other time deposits > $100,000 | 525,809 | 543,894 | 553,422 | (5.0) | % | ||||||||||||||||||
| Other time deposits | 220,325 | 226,567 | 245,601 | (10.3) | % | ||||||||||||||||||
| Total deposits | 6,733,487 | 6,273,596 | 5,044,988 | 33.5 | % | ||||||||||||||||||
| Borrowings | 61,342 | 61,829 | 402,185 | (84.7) | % | ||||||||||||||||||
| Operating lease liabilities | 17,354 | 17,868 | 19,578 | (11.4) | % | ||||||||||||||||||
| Other liabilities | 47,358 | 43,037 | 47,109 | 0.5 | % | ||||||||||||||||||
| Total liabilities | 6,859,541 | 6,396,330 | 5,513,860 | 24.4 | % | ||||||||||||||||||
| Shareholders’ equity | |||||||||||||||||||||||
| Common stock | 397,094 | 400,582 | 410,236 | (3.2) | % | ||||||||||||||||||
| Retained earnings | 483,944 | 478,489 | 430,709 | 12.4 | % | ||||||||||||||||||
| Stock in rabbi trust assumed in acquisition | (2,256) | (2,243) | (2,602) | (13.3) | % | ||||||||||||||||||
| Rabbi trust obligation | 2,256 | 2,243 | 2,602 | (13.3) | % | ||||||||||||||||||
| Accumulated other comprehensive income (loss) | (4,185) | 14,350 | 21,253 | (119.7) | % | ||||||||||||||||||
| Total shareholders’ equity | 876,853 | 893,421 | 862,198 | 1.7 | % | ||||||||||||||||||
| Total liabilities and shareholders’ equity | $ | 7,736,394 | 7,289,751 | 6,376,058 | 21.3 | % | |||||||||||||||||
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| First Bancorp and Subsidiaries Financial Summary - Page 4 | ||
| For the Three Months Ended | |||||||||||||||||
| YIELD INFORMATION | Mar. 31, 2021 | Dec. 31, 2020 | Sept. 30, 2020 | June 30, 2020 | Mar. 31, 2020 | ||||||||||||
| Yield on loans | 4.42 | % | 4.42 | % | 4.38 | % | 4.41 | % | 4.93 | % | |||||||
| Yield on securities | 1.47 | % | 1.62 | % | 2.02 | % | 2.49 | % | 2.65 | % | |||||||
| Yield on other earning assets | 0.57 | % | 0.57 | % | 0.64 | % | 0.55 | % | 1.95 | % | |||||||
| Yield on all interest-earning assets | 3.41 | % | 3.55 | % | 3.71 | % | 3.80 | % | 4.46 | % | |||||||
| Rate on interest bearing deposits | 0.23 | % | 0.29 | % | 0.37 | % | 0.46 | % | 0.68 | % | |||||||
| Rate on other interest-bearing liabilities | 2.53 | % | 2.55 | % | 2.06 | % | 1.31 | % | 1.91 | % | |||||||
| Rate on all interest-bearing liabilities | 0.27 | % | 0.32 | % | 0.41 | % | 0.52 | % | 0.78 | % | |||||||
| Total cost of funds | 0.17 | % | 0.21 | % | 0.26 | % | 0.35 | % | 0.56 | % | |||||||
| Net interest margin (1) | 3.25 | % | 3.35 | % | 3.46 | % | 3.47 | % | 3.94 | % | |||||||
| Net interest margin - tax-equivalent (2) | 3.27 | % | 3.38 | % | 3.48 | % | 3.49 | % | 3.96 | % | |||||||
| Average prime rate | 3.25 | % | 3.25 | % | 3.25 | % | 3.25 | % | 4.42 | % | |||||||
(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 Financial Summary for discussion of tax-equivalent adjustments.
______________________________________________________________________________________________________
| For the Three Months Ended | |||||||||||||||||||||||||||||
NET INTEREST INCOME PURCHASE ACCOUNTING ADJUSTMENTS ($ in thousands) | Mar. 31, 2021 | Dec. 31, 2020 | Sept. 30, 2020 | June 30, 2020 | Mar. 31, 2020 | ||||||||||||||||||||||||
| Interest income - increased by accretion of loan discount on acquired loans | $ | 752 | 802 | 972 | 802 | 1,241 | |||||||||||||||||||||||
| Interest income - increased by accretion of loan discount on retained portions of SBA loans | 589 | 737 | 583 | 591 | 600 | ||||||||||||||||||||||||
| Interest expense - reduced by premium amortization of deposits | 15 | 19 | 23 | 26 | 31 | ||||||||||||||||||||||||
| Interest expense - increased by discount accretion of borrowings | (44) | (45) | (45) | (45) | (45) | ||||||||||||||||||||||||
| Impact on net interest income | $ | 1,312 | 1,513 | 1,533 | 1,374 | 1,827 | |||||||||||||||||||||||
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| First Bancorp and Subsidiaries Financial Summary - Page 5 | ||
ASSET QUALITY DATA ($ in thousands) | Mar. 31, 2021 | Dec. 31, 2020 | Sept. 30, 2020 | June 30, 2020 | Mar. 31, 2020 | ||||||||||||||||||||||||
| Nonperforming assets | |||||||||||||||||||||||||||||
| Nonaccrual loans | $ | 39,566 | 35,076 | 31,656 | 34,922 | 25,066 | |||||||||||||||||||||||
| Troubled debt restructurings - accruing | 8,601 | 9,497 | 9,896 | 9,867 | 9,747 | ||||||||||||||||||||||||
| Accruing loans > 90 days past due | — | — | — | — | — | ||||||||||||||||||||||||
| Total nonperforming loans | 48,167 | 44,573 | 41,552 | 44,789 | 34,813 | ||||||||||||||||||||||||
| Foreclosed real estate | 1,811 | 2,424 | 2,741 | 2,987 | 3,487 | ||||||||||||||||||||||||
| Total nonperforming assets | $ | 49,978 | 46,997 | 44,293 | 47,776 | 38,300 | |||||||||||||||||||||||
| Purchased credit deteriorated loans (1) | $ | 8,437 | 8,591 | 9,616 | 9,742 | 9,839 | |||||||||||||||||||||||
| Asset Quality Ratios | |||||||||||||||||||||||||||||
| Net quarterly (recoveries) charge-offs to average loans - annualized | 0.10 | % | 0.07 | % | (0.06) | % | 0.12 | % | 0.22 | % | |||||||||||||||||||
| Nonperforming loans to total loans | 1.04 | % | 0.94 | % | 0.86 | % | 0.94 | % | 0.76 | % | |||||||||||||||||||
| Nonperforming assets to total assets | 0.65 | % | 0.64 | % | 0.63 | % | 0.69 | % | 0.60 | % | |||||||||||||||||||
| Allowance for loan losses to total loans | 1.42 | % | 1.11 | % | 1.02 | % | 0.89 | % | 0.54 | % | |||||||||||||||||||
(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 and $9.9 million, respectively, in purchased credit deteriorated loans in accordance with ASC 310-30 accounting guidance. Prior to the Company's January 1, 2021 adoption of ASC 326 (CECL), these loans were appropriately excluded from the nonperforming loan amounts presented, regardless of nonperforming status. At March 31, 2021, approximately $0.8 million of purchased credit deteriorated loans are included in the nonaccrual loan amount.
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| First Bancorp and Subsidiaries Financial Summary - Page 6 | ||
| For the Three Months Ended | |||||||||||||||||||||||||||||
NET INTEREST MARGIN, EXCLUDING LOAN DISCOUNT ACCRETION - RECONCILIATION ($ in thousands) | Mar. 31, 2021 | Dec. 31, 2020 | Sept. 30, 2020 | June 30, 2020 | Mar. 31, 2020 | ||||||||||||||||||||||||
| Net interest income, as reported | $ | 55,238 | 56,006 | 54,733 | 52,624 | 54,759 | |||||||||||||||||||||||
| Tax-equivalent adjustment | 443 | 457 | 347 | 330 | 334 | ||||||||||||||||||||||||
| Net interest income, tax-equivalent (A) | $ | 55,681 | 56,463 | 55,080 | 52,954 | 55,093 | |||||||||||||||||||||||
| Average earning assets (B) | $ | 6,898,406 | 6,640,732 | 6,294,556 | 6,102,012 | 5,595,734 | |||||||||||||||||||||||
| Tax-equivalent net interest margin, annualized - as reported - (A)/(B) | 3.27 | % | 3.38 | % | 3.48 | % | 3.49 | % | 3.96 | % | |||||||||||||||||||
| Net interest income, tax-equivalent | $ | 55,681 | 56,463 | 55,080 | 52,954 | 55,093 | |||||||||||||||||||||||
| Loan discount accretion | 1,341 | 1,539 | 1,555 | 1,393 | 1,841 | ||||||||||||||||||||||||
| Net interest income, tax-equivalent, excluding loan discount accretion (A) | $ | 54,340 | 54,924 | 53,525 | 51,561 | 53,252 | |||||||||||||||||||||||
| Average earnings assets (B) | $ | 6,898,406 | 6,640,732 | 6,294,556 | 6,102,012 | 5,595,734 | |||||||||||||||||||||||
| Tax-equivalent net interest margin, excluding impact of loan discount accretion, annualized - (A) / (B) | 3.19 | % | 3.29 | % | 3.38 | % | 3.40 | % | 3.83 | % | |||||||||||||||||||
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 March 31, 2021, the Company had a remaining loan discount balance on acquired loans of $8.2 million compared to $11.5 million at March 31, 2020. At March 31, 2021, the Company had a remaining loan discount balance on SBA loans of $7.3 million compared to $6.8 million at March 31, 2020. 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.
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