TROY, N.C., April 24 /PRNewswire-FirstCall/ -- First Bancorp , the parent company of First Bank, announced net income today of $4,886,000, or $0.34 per diluted share, for the three months ended March 31, 2007. These quarterly earnings represent a 2.1% decrease in net income and a 2.9% decrease in diluted earnings per share from the net income of $4,991,000, or $0.35 per diluted share, reported for the first quarter of 2006. The slightly lower earnings were a result of a lower net interest margin and higher operating expenses, which offset the positive impact of the Company's balance sheet growth.
During the first quarter of 2007, the Company continued to experience strong growth in loans and deposits. Loans outstanding grew by $36 million, or 8.3% on an annualized basis, while deposits grew by $50 million, or 11.9% on an annualized basis.
Total assets at March 31, 2007 amounted to $2.18 billion, 14.1% higher than a year earlier. Total loans at March 31, 2007 amounted to $1.78 billion, a 14.3% increase from a year earlier, and total deposits amounted to $1.75 billion at March 31, 2007, an 11.5% increase from a year earlier.
The growth in loans and deposits was the primary reason for an increase in the Company's net interest income when comparing the first quarter of 2007 to the first quarter of 2006. Net interest income for the first quarter of 2007 amounted to $18.9 million, a 5.7% increase over the $17.9 million recorded in the first quarter of 2006.
The impact of the growth in loans and deposits on the Company's net interest income was partially offset by a decline in the Company's net interest margin (tax-equivalent net interest income divided by average earning assets). The Company's net interest margin in the first quarter of 2007 was 3.97%, a 36 basis point decline from the 4.33% margin realized in the first quarter of 2006. The first quarter of 2007 marked the fifth consecutive quarter that the net interest margin has declined. The compressing margin has been primarily due to deposit rates paid by the Company rising by more than loan and investment yields, which is associated with the flat interest rate yield curve that has prevailed in the marketplace for most of the past year. The Company has also been negatively impacted by customers shifting their funds from low cost deposits to higher cost deposits as rates have risen. Neither of these factors significantly worsened in the first quarter of 2007 compared to the fourth quarter of 2006. Instead, the 8 basis point decrease in the Company's net interest margin in the first quarter of 2007 from the fourth quarter of 2006 was primarily a result of the repricing of time deposits that matured during the quarter that had been originated in periods when interest rates were lower.
The Company's provision for loan losses did not vary significantly between the periods presented, amounting to $1,121,000 in the first quarter of 2007 compared to $1,015,000 in the first quarter of 2006. Factors that played an offsetting role in this comparison were i) lower 2007 loan growth, which generally results in a lower provision for loan losses, and ii) higher 2007 net charge-offs, which generally increases the necessary provision for loan losses. In the first quarter of 2007, net loan growth amounted to $36 million compared to $71 million in the first quarter of 2006. In the first quarter of 2007, the Company recorded $590,000 in net charge-offs compared to $121,000 in the first quarter of 2006. The ratio of annualized net charge-offs to average loans was 0.14% in the first quarter of 2007 compared to 0.03% in the first quarter of 2006. The Company's ratio of nonperforming assets to total assets was 0.38% at March 31, 2007 compared to 0.25% at March 31, 2006.
Noninterest income amounted to $4.2 million for the first quarter of 2007, a 7.1% increase from the first quarter of 2006. There were no unusual items of noninterest income that were significant in either period.
Noninterest expenses amounted to $14.1 million in the first quarter of 2007, an 11.0% increase over 2006. This increase is primarily a result of the Company's overall growth. Additionally, during the first quarter of 2007, the Company incurred $286,000 in expense related to a performance improvement consulting project that was substantially begun and completed during the quarter, which negatively impacted earnings per share by approximately one cent per share. The near absence of this expense in future quarters and efficiencies that are expected to be derived from the project are expected to benefit earnings in the future.
The Company's effective tax rate did not vary significantly, amounting to 37.8% in the first quarter of 2007 compared to 38.1% in the first quarter of 2006.
Jerry L. Ocheltree, President and CEO of First Bancorp, commented on the quarter's results, "Although the banking environment remains difficult, we see many positive things occurring at our company that should benefit our shareholders in the future. We continue to experience strong loan and deposit growth and our February opening of a branch in Ocean Isle Beach, North Carolina represents our fifth branch in the growing southeastern coastal region of the state."
Mr. Ocheltree continued, "Additionally, we expect to open our first uniquely Hispanic branch in June under the trade name "Primer Banco" in Asheboro, North Carolina, and we will soon thereafter convert our existing Candor, North Carolina branch to serve as a dual First Bank/Primer Banco branch. The staff in these branches will be bilingual and the branches will reflect the Hispanic culture. We want to make it easy for everyone to experience First Bank's One-on-One banking philosophy. The name "Primer Banco" means First Bank in Spanish, and all of our customers will be able to visit and transact business with branches of either name."
Mr. Ocheltree added, "I would like to invite our friends and shareholders to our Annual Shareholders Meeting to be held at 3:00 P.M. on May 2, 2007 at the James H. Garner Conference Center located at 211 Burnette Street in Troy. I think you will find the meeting to be informative, and I always enjoy meeting and talking with my fellow shareholders. Also, at this meeting, we will be bidding farewell to Dr. David Bruton and Mr. Edward Taws, who are retiring from the Board of Directors. They were both instrumental in making this company what it is today, and I know you'll want to thank them for all of their years of loyal service."
Mr. Ocheltree concluded, "Immediately following the annual meeting, we will be hosting a retirement reception for Jimmie Garner, our former President who retired at the end of 2006 after 37 years of distinguished service. Please come and thank Jimmie for his tireless dedication to First Bancorp and more importantly for being a faithful friend to his employees, customers and the community."
Mr. Ocheltree also noted the following corporate developments:
-- On February 13, 2007, the Company opened a full-service bank branch in
Ocean Isle located at 113A Causeway Drive.
-- On February 28, 2007, the Company announced a quarterly dividend of 19
cents per share payable on April 25, 2007 to shareholders of record on
March 31, 2007. The current dividend rate is an increase of 5.6% over
the dividend rate paid in the same period of 2006.
-- There was no stock repurchase activity during the first quarter of
2007.
First Bancorp is a bank holding company based in Troy, North Carolina with total assets of approximately $2.2 billion. Its principal activity is the ownership and operation of First Bank, a state-chartered community bank that operates 69 branch offices, with 62 branches operating in a twenty-one county market area in the central piedmont and coastal regions of North Carolina, 3 branches in Dillon County, South Carolina, and 4 branches in southern Virginia (Abingdon, Dublin, Radford, and Wytheville), where First Bank does business as First Bank of Virginia. The Company also has a loan production office in Blacksburg, Virginia. First Bancorp's common stock is traded on the NASDAQ Global Select Market under the symbol FBNC.
Please visit our website at http://www.firstbancorp.com/. For additional financial data, please see the attached Financial Summary.
This press release contains statements that could be deemed 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," 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 report on Form 10-K.
--------------------------------------------------------------------------
First Bancorp and Subsidiaries
Financial Summary
Three Months Ended
($ in thousands except March 31, Percent
------------------
per share data - unaudited) 2007 2006 Change
--------------------------------------------------------------------------
INCOME STATEMENT
Interest income
------------------
Interest and fees on loans $33,211 26,762
Interest on investment
securities 1,672 1,456
Other interest income 653 497
--------- --------
Total interest income 35,536 28,715 23.8%
--------- --------
Interest expense
------------------
Interest on deposits 13,979 9,442
Other, primarily borrowings 2,691 1,420
--------- --------
Total interest expense 16,670 10,862 53.5%
--------- --------
Net interest income 18,866 17,853 5.7%
Provision for loan losses 1,121 1,015 10.4%
--------- --------
Net interest income after
provision for loan losses 17,745 16,838 5.4%
--------- --------
Noninterest income
------------------
Service charges on deposit
accounts 2,177 2,074
Other service charges,
commissions, and fees 1,259 1,205
Fees from presold mortgages 327 267
Commissions from financial
product sales 459 439
Data processing fees 47 36
Securities gains -- --
Other losses (33) (67)
--------- --------
Total noninterest income 4,236 3,954 7.1%
--------- --------
Noninterest expenses
------------------
Personnel expense 8,121 7,566
Occupancy and equipment expense 1,876 1,627
Intangibles amortization 94 61
Other operating expenses 4,039 3,475
--------- --------
Total noninterest expenses 14,130 12,729 11.0%
--------- --------
Income before income taxes 7,851 8,063 (2.6%)
Income taxes 2,965 3,072 (3.5%)
--------- --------
Net income $4,886 4,991 (2.1%)
========= ========
Earnings per share - basic $ 0.34 0.35 (2.9%)
Earnings per share - diluted 0.34 0.35 (2.9%)
ADDITIONAL INCOME STATEMENT INFORMATION
---------------------------------------
Net interest income, as reported $18,866 17,853
Tax-equivalent adjustment (1) 124 126
--------- --------
Net interest income,
tax-equivalent $18,990 17,979 5.6%
========= ========
(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 2
Three Months Ended
March 31, Percent
------------------
PERFORMANCE RATIOS (annualized) 2007 2006 Change
-------------------------------
Return on average assets 0.95% 1.12%
Return on average equity 11.89% 12.78%
Net interest margin - tax
equivalent (1) 3.97% 4.33%
Efficiency ratio - tax
equivalent (1) (2) 60.84% 58.04%
Net charge-offs to average loans 0.14% 0.03%
Nonperforming assets to total
assets (period end) 0.38% 0.25%
SHARE DATA
Cash dividends declared $0.19 0.18 5.6%
Stated book value 11.49 11.12 3.3%
Tangible book value 7.92 7.69 3.0%
Common shares outstanding at end
of period 14,367,868 14,291,060
Weighted average shares
outstanding - basic 14,360,111 14,254,785
Weighted average shares
outstanding - diluted 14,492,159 14,421,639
Shareholders' equity to assets 7.58% 8.33%
AVERAGE BALANCES ($ in thousands)
Total assets $2,080,375 1,803,312 15.4%
Loans 1,756,846 1,516,456 15.9%
Earning assets 1,939,712 1,682,535 15.3%
Deposits 1,712,738 1,525,167 12.3%
Interest-bearing liabilities 1,681,225 1,431,936 17.4%
Shareholders' equity 166,637 158,380 5.2%
(1) See footnote 1 on page 1 of Financial Summary for discussion of tax-
equivalent adjustments.
(2) Calculated by dividing noninterest expense by the sum of tax-
equivalent net interest income plus noninterest income.
--------------------------------------------------------------------------
TREND INFORMATION
($ in thousands except per share data)
For the Three Months Ended
--------------------------
March 31, Dec. 31, Sept. 30, June 30, March 31,
INCOME STATEMENT 2007 2006 2006 (2) 2006 2006
---------- --------- ---------- -------- ----------
Net interest income
- tax equivalent(1)$18,990 19,315 19,174 18,569 17,979
Taxable equivalent
adjustment (1) 124 117 133 125 126
Net interest income 18,866 19,198 19,041 18,444 17,853
Provision for
loan losses 1,121 1,293 1,215 1,400 1,015
Noninterest income 4,236 4,058 2,454 3,844 3,954
Noninterest expense 14,130 13,870 13,535 13,064 12,729
Income before
income taxes 7,851 8,093 6,745 7,824 8,063
Income taxes 2,965 2,949 2,373 3,029 3,072
Net income 4,886 5,144 4,372 4,795 4,991
Earnings per
share - basic 0.34 0.36 0.31 0.34 0.35
Earnings per
share - diluted 0.34 0.36 0.30 0.33 0.35
(1) See footnote 1 on page 1 of Financial Summary for discussion of tax-
equivalent adjustments.
(2) Net income for the three months ended September 30, 2006 was
significantly impacted by the write-off loss of a merchant credit card
account, which reduced noninterest income by $1,670,000. The after-
tax impact was $1.0 million, or $0.07 per diluted share.
--------------------------------------------------------------------------
First Bancorp and Subsidiaries
Financial Summary - page 3
PERIOD END BALANCES
($ in thousands)
March 31, Dec. 31, March 31, One Year
2007 2006 2006 Change
---------- --------- ---------- ----------
Assets $2,177,318 2,136,624 1,907,887 14.1%
Securities 140,241 143,086 125,150 12.1%
Loans 1,776,130 1,740,396 1,553,371 14.3%
Allowance for loan
losses 19,478 18,947 16,610 17.3%
Intangible assets 51,300 51,394 49,131 4.4%
Deposits 1,745,593 1,695,679 1,565,040 11.5%
Borrowings 198,013 210,013 131,739 50.3%
Shareholders' equity 165,102 162,705 158,971 3.9%
--------------------------------------------------------------------------
YIELD INFORMATION For the Three Months Ended
--------------------------
March 31, December 31, September 30, June 30, March 31,
2007 2006 2006 2006 2006
---------- ---------- ---------- -------- ---------
Yield on loans 7.67% 7.64% 7.54% 7.36% 7.16%
Yield on
securities
- tax
equivalent (1) 5.26% 5.11% 5.13% 5.09% 5.06%
Yield on other
earning assets 5.97% 5.82% 5.61% 5.60% 5.12%
Yield on all
interest
earning
assets 7.46% 7.41% 7.32% 7.15% 6.95%
Rate on interest
bearing
deposits 3.78% 3.65% 3.44% 3.18% 2.88%
Rate on other
interest
bearing
liabilities 6.03% 6.19% 6.17% 5.96% 5.54%
Rate on all
interest
bearing
liabilities 4.02% 3.91% 3.72% 3.44% 3.08%
Interest
rate spread
- tax
equiva-
lent(1) 3.44% 3.50% 3.60% 3.71% 3.87%
Net interest
margin - tax
equiva-
lent (2) 3.97% 4.05% 4.12% 4.22% 4.33%
Average
prime
rate 8.25% 8.25% 8.25% 7.90% 7.42%
(1) See footnote 1 on page 1 of Financial Summary for discussion of tax-
equivalent adjustments.
(2) Calculated by dividing annualized tax equivalent net interest income
by average earning assets for the period. See footnote 1 on page 1 of
Financial Summary for discussion of tax-equivalent adjustments.
--------------------------------------------------------------------------
ASSET QUALITY DATA ($ in thousands)
March 31, December 31, September 30, June 30, March 31,
2007 2006 2006 2006 2006
---------- ---------- ---------- -------- ---------
Nonaccrual
loans $ 5,871 6,852 5,170 3,973 3,283
Restructured
loans 8 10 11 12 12
Accruing loans
> 90 days
past due - - - - -
---------- ----------- ---------- -------- ---------
Total
nonperforming
loans 5,879 6,862 5,181 3,985 3,295
Other real
estate 2,351 1,539 1,799 2,024 1,451
---------- ----------- ---------- -------- ---------
Total
nonperforming
assets $ 8,230 8,401 6,980 6,009 4,746
========== =========== ========== ======== =========
Net charge-offs
to average
loans -
annualized 0.14% 0.19% 0.11% 0.09% 0.03%
Nonperforming
loans to
total loans 0.33% 0.39% 0.31% 0.24% 0.21%
Nonperforming
assets to
total assets 0.38% 0.39% 0.34% 0.30% 0.25%
Allowance for
loan losses
to total
loans 1.10% 1.09% 1.09% 1.08% 1.07%