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First Bancorp Reports Operating Results (10-Q)

May 11, 2009 | About:

First Bancorp (FBNC) filed Quarterly Report for the period ended 2009-03-31.

First Bancorp is a one-bank holding company. The principal activity of the Company is the ownership and operation of First Bank. They also own and operate two nonbank subsidiaries Montgomery Data Services Inc. and First Bancorp Financial Services Inc. First Bancorp has a market cap of $210.4 million; its shares were traded at around $12.66 with a P/E ratio of 10.7 and P/S ratio of 1.2. The dividend yield of First Bancorp stocks is 2.5%. First Bancorp had an annual average earning growth of 8.4% over the past 5 years.

Highlight of Business Operations:

The second component of the allowance model is an estimate of losses for all loans not considered to be impaired loans. First, loans that we have risk graded as having more than “standard” risk but not considered to be impaired are segregated between those relationships with outstanding balances exceeding $500,000 and those that are less than that amount. For those loan relationships with outstanding balances exceeding $500,000, we review the attributes of each individual loan and assign any necessary loss reserve based on various factors including payment history, borrower strength, collateral value, and guarantor strength. For loan relationships less than $500,000, we assign estimated loss percentages generally accepted in the banking industry. Loans that we have classified as having normal credit risk are segregated by loan type, and estimated loss percentages are assigned to each loan type, based on the historical losses, current economic conditions, and operational conditions specific to each loan type.

Net income available to common shareholders for the first quarter of 2009 amounted to $3,140,000 compared to $5,529,000 reported in the first quarter of 2008. Earnings per diluted common share were $0.19 in the first quarter of 2009 compared to $0.38 in the first quarter of 2008. The lower quarterly earnings were caused primarily by higher loan losses that are largely attributable to the recessionary economy. We also recorded preferred stock dividends and accretion related to our issuance of preferred stock to the U.S. Treasury, which reduced net income available to common shareholders and earnings per diluted common share.

Noninterest expenses amounted to $15.9 million in the first quarter of 2009, a 9.2% increase over 2008. A majority of this increase is attributable to our growth, including the April 1, 2008 acquisition of Great Pee Dee. Additionally, we recorded FDIC insurance expense of $756,000 in the first quarter of 2009 compared to $245,000 in the first quarter of 2008 as a result of the FDIC increasing its premium rates in order to replenish its reserves. We also recorded pension expense amounting to $897,000 in the first quarter of 2009 compared to $606,000 in the first quarter of 2008. Our pension expense increased in 2009 primarily as a result of investment losses experienced by the pension plan s assets in 2008.

Total assets at March 31, 2009 amounted to $2.7 billion, 13.1% higher than a year earlier. Total loans at March 31, 2009 amounted to $2.2 billion, a 13.1% increase from a year earlier, and total deposits amounted to $2.1 billion at March 31, 2009, an 11.3% increase from a year earlier. Approximately two-thirds of the balance sheet growth relates to the April 1, 2008 acquisition of Great Pee Dee.

During the first quarter of 2009, we experienced a $24 million decrease in loans outstanding and a $64 million increase in deposits. The decline in loans was due primarily to lower loan demand in this recessionary economy. We are actively seeking to make new loans in order to offset normal principal reductions, as well as to grow our customer base. During the first quarter of 2009, we originated approximately $95 million in new loans (excluding renewals) but received principal paydowns from existing loans that more than offset this new growth. Deposit growth was strong in the first quarter due to an internal emphasis to grow deposits.

Net interest income is the largest component of earnings, representing the difference between interest and fees generated from earning assets and the interest costs of deposits and other funds needed to support those assets. Net interest income for the three month period ended March 31, 2009 amounted to $22,110,000, an increase of $2,346,000, or 11.9% from the $19,764,000 recorded in the first quarter of 2008. Net interest income on a tax-equivalent basis for the three month period ended March 31, 2009 amounted to $22,273,000, an increase of $2,345,000, or 11.8% from the $19,928,000 recorded in the first quarter of 2008. We believe that analysis of net interest income on a tax-equivalent basis is useful and appropriate because it allows a comparison of net interest income amounts in different periods without taking into account the different mix of taxable versus non-taxable investments that may have existed during those periods.

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