First Bancorp Reports Fourth Quarter and Annual Results

Rhea-AI Summary

First Bancorp (FBNC) reported net income of $29.7 million for Q4 2023, compared to $38.4 million in Q4 2022. The acquisition of GrandSouth impacted financials, contributing $1.02 billion in loans and $1.05 billion in deposits. Net interest income decreased by 2.2% and net interest margin declined to 2.88%. The Company recorded a $3.4 million provision for loan losses in Q4 2023. Total assets increased to $12.1 billion, representing a 14.0% growth from the previous year.

Positive

• The acquisition of GrandSouth significantly impacted the financials, contributing $1.02 billion in loans and $1.05 billion in deposits.
• Noninterest-bearing demand accounts remained strong at 34% of total deposits at quarter end.
• Credit quality remained strong with a nonperforming assets to total assets ratio of 0.37% as of December 31, 2023.
• Total assets at December 31, 2023 amounted to $12.1 billion, an increase of $137.0 million from the linked quarter and growing 14.0% from a year earlier.

Negative

• Net interest income for the fourth quarter of 2023 was $82.5 million compared to $84.4 million recorded in the fourth quarter of 2022, a decrease of 2.2%.
• The provision for loan losses for the three months ended December 31, 2023 was $3.4 million, compared to $4.0 million for the same period in 2022.
• The fourth quarter of 2023 reported a tax-equivalent NIM of 2.88% compared to 3.32% for the fourth quarter of 2022.

Insights

Financial Analyst

The reported net income of $29.7 million for Q4 2023 by First Bancorp represents a slight sequential decrease from $29.9 million in Q3 2023 and a more substantial year-over-year decline from $38.4 million in Q4 2022. This indicates a tightening of margins, which investors often scrutinize as it may signal challenges in maintaining profitability levels. The annualized growth rate of 6.1% for loans in Q4 is a positive sign of business expansion, but it is essential to juxtapose this with the net interest margin (NIM) compression from 3.32% in Q4 2022 to 2.88% in Q4 2023, which suggests that the cost of funds is rising faster than the yield on assets.

The acquisition of GrandSouth has significantly increased the loan and deposit base, contributing to the company's growth. However, the associated merger expenses and initial loan loss provisions have impacted the net income. It is crucial to monitor how well the integration process unfolds and whether it will lead to improved efficiency and profitability.

Investors should also consider the increase in nonperforming assets (NPA) to total assets ratio from 0.36% to 0.37% year-over-year, which, while still low, could indicate a trend worth monitoring for potential credit quality issues.

Market Research Analyst

First Bancorp's performance in the context of the broader banking sector reflects the impact of a rising rate environment, where the cost of funds has increased substantially. This is evidenced by the rise in the total cost of funds from 0.36% in Q4 2022 to 1.64% in Q4 2023. Such an increase can squeeze margins and is particularly relevant for banks as they navigate the balance between growing loan portfolios and managing interest rate risk.

Despite these challenges, the strong position in noninterest-bearing demand accounts, comprising 34% of total deposits, provides a stable and low-cost source of funds, which is advantageous in any interest rate climate. The consistent capital ratios, with a total common equity tier 1 ratio of 13.20%, suggest financial stability and regulatory compliance, which is reassuring for stakeholders.

The decline in net interest income and the reduced noninterest income highlight the need for banks to innovate and diversify revenue streams, especially in a competitive banking landscape where traditional income sources are under pressure.

Economist

First Bancorp's financial results should be viewed in the context of the macroeconomic environment, characterized by rising interest rates and a potential economic slowdown. The company's net interest margin compression is a direct consequence of these macroeconomic headwinds. While the increase in loan yields is a positive development, it has not kept pace with the rise in deposit and borrowing rates, leading to reduced profitability.

Looking ahead, the bank's strategy to manage risk and seize opportunities in 2024 will be critical, especially in light of the CEO's statement on maintaining and strengthening core banking relationships. As the economy faces uncertainty, banks like First Bancorp that focus on customer relationships and community engagement may be better positioned to weather potential downturns.

Furthermore, the bank's liquidity ratios, both on-balance sheet and off-balance sheet, are robust, indicating preparedness for unforeseen liquidity needs, which is crucial in a volatile economic climate.

SOUTHERN PINES, N.C., Jan. 24, 2024 /PRNewswire/ -- First Bancorp (the "Company") (NASDAQ - FBNC), the parent company of First Bank, announced today net income of $29.7 million, or $0.72 per diluted common share, for the three months ended December 31, 2023 compared to $29.9 million, or $0.73 per diluted common share, for the three months ended September 30, 2023 ("linked quarter") and $38.4 million, or $1.08 per diluted common share, recorded in the fourth quarter of 2022.  For the twelve months ended December 31, 2023, the Company recorded net income of $104.1 million, or $2.53 per diluted common share, compared to $146.9 million, or $4.12 per diluted common share, for the twelve months ended December 31, 2022.

On January 1, 2023, the Company completed its acquisition of GrandSouth Bancorporation ("GrandSouth").  Comparisons for the financial periods presented are impacted by the GrandSouth acquisition which contributed $1.02 billion in loans and $1.05 billion in deposits.  The results for the twelve months ended December 31, 2023 include merger expenses totaling $13.7 million and an initial loan loss provision of $12.2 million for acquired loans.

Richard H. Moore, CEO and Chairman of the Company, stated, "This past year, our Company had great success maintaining and strengthening our core banking relationships with our customers at a time when many banks struggled to do so.  In 2024, we will continue to do what we do best – serve our customers and our communities – all while managing risk and taking advantage of any opportunities that come our way.  I am proud of our steady and solid performance in 2023 and look forward to continued growth in 2024."    

Fourth Quarter 2023 Highlights

• Loans totaled $8.2 billion at December 31, 2023, with growth for the quarter of $123.1 million, an annualized growth rate of 6.1%.
• Noninterest-bearing demand accounts remained strong at 34% of total deposits at quarter end, consistent with the linked quarter end.
• Total loan yield increased to 5.39%, up 77 basis points from the fourth quarter of 2022, with accretion on purchased loans contributing 15 basis points to loan yield.
• While deposit and borrowing rates increased during the quarter, total cost of funds remained low at 1.64% for the quarter ended December 31, 2023.
• The on-balance sheet liquidity ratio was 14.6% at December 31, 2023. Available off-balance sheet sources totaled $2.2 billion at quarter end, resulting in a total liquidity ratio of 30.4%.
• Credit quality continued to be strong with a nonperforming assets ("NPA") to total assets ratio of 0.37% as of December 31, 2023.
• Capital remained strong with a total common equity tier 1 ratio of 13.20% (estimated) and a total risk-based capital ratio of 15.54% (estimated) as of December 31, 2023.

Net Interest Income and Net Interest Margin

Net interest income for the fourth quarter of 2023 was $82.5 million compared to $84.4 million recorded in the fourth quarter of 2022, a decrease of 2.2%.  Net interest income for the fourth quarter decreased 2.6% from the $84.7 million reported for the linked quarter. 

Average interest-earning assets for the fourth quarter of 2023 increased 13.0% from the comparable period of the prior year, with growth primarily in loans resulting from both organic growth and the GrandSouth acquisition. Despite the higher level of earning assets, the market-driven increases in rates on liabilities occurred at a more rapid pace than the increase in yields on assets, which resulted in the reduction in net interest income and net interest margin ("NIM") as compared to the prior periods. 

The Company's tax-equivalent NIM (calculated by dividing tax-equivalent net interest income by average earning assets) declined year-over-year with the fourth quarter of 2023 reporting a tax-equivalent NIM of 2.88% compared to 3.32% for the fourth quarter of 2022.  While loan yields rose from 4.62% for the fourth quarter of 2022 to 5.39% for the fourth quarter of 2023, the total cost of funds increased from 0.36% for the fourth quarter of 2022 to 1.64% for the quarter ended December 31, 2023. 

There has been some deceleration of the pace of increase of the Company's cost of funds, primarily in the rate on interest-bearing deposits which increased 19 basis points as compared to the linked quarter, while the third quarter of 2023 realized a 27 basis point increase as compared to the second quarter of 2023. 

		For the Three Months Ended
YIELD INFORMATION		December 31, 2023		September 30, 2023		December 31, 2022
Yield on loans		5.39 %		5.32 %		4.62 %
Yield on securities		1.76 %		1.75 %		1.74 %
Yield on other earning assets		4.49 %		4.58 %		3.05 %
Yield on total interest-earning assets		4.38 %		4.31 %		3.64 %
Rate on interest-bearing deposits		2.14 %		1.95 %		0.44 %
Rate on other interest-bearing liabilities		6.02 %		5.88 %		4.58 %
Rate on total interest-bearing liabilities		2.43 %		2.20 %		0.60 %
Total cost of funds		1.64 %		1.46 %		0.36 %
Net interest margin (1)		2.85 %		2.95 %		3.29 %
Net interest margin - tax-equivalent (2)		2.88 %		2.97 %		3.32 %
Average prime rate		8.50 %		8.43 %		6.82 %

(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. The tax-equivalent 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.

Included in interest income for the fourth quarter of 2023 was total loan discount accretion of $2.9 million compared to $1.3 million for the fourth quarter of 2022, with the increase being primarily related to the GrandSouth acquisition.  Loan discount accretion had an 10 basis points positive impact on the Company's NIM in the fourth quarter of 2023 compared to accretion contributing 5 basis points to NIM for the prior year quarter. 

The following table presents the impact to net interest income of the purchase accounting adjustments for each period.

		For the Three Months Ended
NET INTEREST INCOME PURCHASE ACCOUNTING ADJUSTMENTS ($ in thousands)		December 31, 2023		September 30, 2023		December 31, 2022
Interest income - increased by accretion of loan discount on acquired loans		$               2,464		2,766		886
Interest income - increased by accretion of loan discount on retained portions of SBA loans		459		437		427
Total interest income impact		2,923		3,203		1,313
Interest expense - (increased) reduced by (discount accretion) premium amortization of deposits		(495)		(709)		70
Interest expense - increased by discount accretion of borrowings		(207)		(215)		(64)
Total net interest expense impact		(702)		(924)		6
Total impact on net interest income		$               2,221		2,279		1,319

Provision for Credit Losses and Credit Quality

For the three months ended December 31, 2023 and December 31, 2022, the Company recorded $3.4 million and $4.0 million in provision for loan losses, respectively.  The provision for the current quarter was driven by continued slow-down in prepayment speed estimates which are a key assumption in the CECL model, combined with loan growth and net charge-offs experienced during the quarter.  In addition, lower loss driver assumptions resulted in some offsetting reductions to the Allowance for Credit Losses reserve estimate. 

During the fourth quarter of 2023, the Company recorded a $0.5 million reversal of the provision for unfunded commitments, compared to a provision for unfunded commitments of $1.0 million for the fourth quarter of 2022. The current quarter's reversal related primarily to a reduction in the amount of available borrowings under lines of credit.  Also contributing was the lower loss driver assumptions noted above.  The reserve for unfunded commitments totaled $11.4 million at December 31, 2023 and is included in the line item "Other Liabilities".

The combination of the above provisions for credit losses and unfunded commitments resulted in an income statement impact of $3.0 million for the fourth quarter of 2023 as compared to $5.0 million for the fourth quarter of 2022.

Asset quality remained strong with annualized net loan charge-offs of 0.09% for the fourth quarter of 2023.  Total NPAs remained at a low level at $44.8 million at December 31, 2023, or 0.37% of total assets.  This is compared to $38.3 million, or 0.36% of total assets, at December 31, 2022 with the increase year-over-year being attributable primarily to activity from acquired loan portfolios and the SBA loan portfolio.  Nonaccrual loans increased $5.3 million from the linked quarter related in large part to one SBA loan which is guaranteed.

The following table presents the summary of NPAs and asset quality ratios for each period.

ASSET QUALITY DATA ($ in thousands)		December 31, 2023		September 30, 2023		December 31, 2022
Nonperforming assets
Nonaccrual loans		$          32,208		26,884		28,514
Modifications to borrowers in financial distress		11,719		10,723		—
Troubled debt restructurings - accruing (1)		—		—		9,121
Total nonperforming loans		43,927		37,607		37,635
Foreclosed real estate		862		1,235		658
Total nonperforming assets		$          44,789		38,842		38,293
Asset Quality Ratios
Quarterly net charge-offs (recoveries) to average loans - annualized		0.09 %		0.11 %		(0.02) %
Nonperforming loans to total loans		0.54 %		0.47 %		0.56 %
Nonperforming assets to total assets		0.37 %		0.32 %		0.36 %
Allowance for credit losses to total loans		1.35 %		1.35 %		1.36 %
(1)  The Company implemented ASU 2022-02 effective January 1, 2023 eliminating TDR accounting.

Noninterest Income

Total noninterest income for the fourth quarter of 2023 was $14.5 million, a 0.1% decrease from the $14.6 million recorded for the fourth quarter of 2022 and a 4.2% decrease from the linked quarter.  The GrandSouth acquisition was a primary factor driving increases from the prior year in Service Charges on Deposit Accounts related to the higher number of customer accounts and activity generating revenue.  The reduction in Other Service Charges, Commissions and Fees from the linked quarter and the prior year quarter was driven by lower net bankcard revenues on reduced incentives received from Mastercard and higher processing fees.

Noninterest Expenses

Noninterest expenses amounted to $56.4 million for the fourth quarter of 2023 compared to $62.2 million for the linked quarter and $45.7 million for the fourth quarter of 2022.  The $5.8 million or 9.4% reduction in noninterest expense from the linked quarter was driven by (1) annual adjustments to the Company's pension and SERP benefit plans which resulted in reducing expense approximately $2.2 million during the period, and (2) reduction in bonus and incentive accruals of $2.6 million related to performance results against goals. 

The 23.5% increase in total noninterest expenses from the prior year period was related in large part to the acquisition of eight GrandSouth branch locations and related branch and support personnel.  This transaction was the primary driver of (1) higher compensation expense which increased from the fourth quarter of 2022 by $3.4 million, or 11.2%; (2) higher occupancy and equipment expense which increased $1.5 million, or 34.2%; and (3) increased intangible amortization of $1.0 million, or 125.0%, related to the core deposit intangibles added with the GrandSouth acquisition.

In addition, other operating expenses increased $4.9 million, or 49.0%, from the fourth quarter of 2022, driven by: (1) approximately $1.6 million in higher data processing and software expense for the additional transactions and account volumes resulting from the GrandSouth transaction, combined with investments in new software systems; and (2) FDIC insurance increases totaling approximately $1.0 million related to the deposits acquired from GrandSouth and the general FDIC rate increase effective January 1, 2023.  The remaining increase between the fourth quarter of 2022 and the fourth quarter of 2023 was primarily related to 2022 year end accrual reductions which resulted in lower expense in the fourth quarter of 2022 totaling approximately $3.6 million.  The fourth quarter of 2023 also include year end adjustments to the Company's pension and SERP benefit plans which resulted in lower expense of approximately $1.6 million as compared the prior year period. 

Balance Sheet

Total assets at December 31, 2023 amounted to $12.1 billion, an increase of $137.0 million from the linked quarter and growing 14.0% from a year earlier.  The increase from the linked quarter was primarily related to higher loan and borrowing balances, somewhat offset by lower deposit balances.  The growth from a year earlier was driven by the acquisition of GrandSouth, combined with organic loan and deposit growth during the period. 

Quarterly average balances for key balance sheet accounts are presented below.

		For the Three Months Ended
AVERAGE BALANCES ($ in thousands)		December 31, 2023		December 31, 2022		Change 4Q23 vs 4Q22
Total assets		$      12,026,195		10,579,187		13.7 %
Investment securities, at amortized cost		3,143,756		3,325,652		(5.5) %
Loans		8,087,450		6,576,415		23.0 %
Earning assets		11,477,007		10,161,108		13.0 %
Deposits		10,131,094		9,275,909		9.2 %
Interest-bearing liabilities		7,204,165		5,779,958		24.6 %
Shareholders' equity		1,280,812		1,003,031		27.7 %

Total investment securities were $2.7 billion at December 31, 2023, an increase of $87.2 million from the linked quarter and a decrease of $133.1 million from December 31, 2022.  The Company made no notable purchases of investment securities during 2023 and continues to utilize cash flows from amortizing investments to fund loan growth and fluctuations in deposits.  The increase in balances experienced from the linked quarter was related to an improvement in the level of unrealized loss on available for sale securities which decreased $120.9 million from the linked quarter and decreased $43.3 million from the prior year end.  Total unrealized loss on available for sale investment securities was $400.7 million at December 31, 2023.  The Company has the intent to hold, and does not expect it will be required to sell, investments with unrealized losses until maturity or recovery of the amortized cost as market conditions change.

Total loans amounted to $8.2 billion at December 31, 2023, an increase of $123.1 million from the linked quarter and $1.5 billion, or 22.3%, from December 31, 2022.  Excluding the GrandSouth acquisition, organic loan growth was $464.9 million for 2023, representing an annualized growth rate of 6.0%. 

As presented below, our total loan portfolio mix has remained consistent.  There were no notable concentrations in geographies or industries, including in office or hospitality categories at year end.  The Company's exposure to non-owner occupied office loans represented approximately 5.6% of the total portfolio at December 31, 2023, with the largest loan being $27.2 million and an average loan outstanding amount of $1.3 million.  Non-owner occupied office loans are generally in non-metro markets and the top 10 loans in this category represent less than 2% of the total loan portfolio.

The following table presents the balance and portfolio percentage by loan category for each period.

		December 31, 2023				September 30, 2023				December 31, 2022
($ in thousands)		Amount		Percentage		Amount		Percentage		Amount		Percentage
Commercial and industrial		$      905,862		11 %		893,910		11 %		641,941		9 %
Construction, development & other land loans		992,980		12 %		1,008,289		13 %		934,176		14 %
Commercial real estate - owner occupied		1,259,022		16 %		1,252,259		16 %		1,036,270		16 %
Commercial real estate - non-owner occupied		2,528,060		31 %		2,509,317		31 %		2,123,811		32 %
Multi-family real estate		421,376		5 %		405,161		5 %		350,180		5 %
Residential 1-4 family real estate		1,639,469		20 %		1,560,140		19 %		1,195,785		18 %
Home equity loans/lines of credit		335,068		4 %		331,108		4 %		323,726		5 %
Consumer loans		68,443		1 %		67,169		1 %		60,659		1 %
Loans, gross		8,150,280		100 %		8,027,353		100 %		6,666,548		100 %
Unamortized net deferred loan fees		(178)				(316)				(1,403)
Total loans		$   8,150,102				8,027,037				6,665,145

Total deposits were $10.0 billion at December 31, 2023, an increase of $804.1 million, or 8.7%, from December 31, 2022. The year-over-year change represents an increase in market deposits of $1.1 billion, resulting primarily from the GrandSouth acquisition, partially offset by intentional declines in brokered deposits of $249.3 million.  Organic market deposits (excluding the acquired deposits and brokered deposits) contracted $203.9 million for the fourth quarter of 2023 and grew $16.8 million since the prior year end, which represents a growth rate of 0.2%. 

The Company has a diversified and granular deposit base which has remained a stable source of funding.  At quarter end, noninterest-bearing deposits accounted for 34% of total deposits, consistent with the linked quarter.  As of December 31, 2023, the estimated insured deposits totaled $6.3 billion or 63.3% of total deposits.  In addition, there were collateralized deposits at that date of $820.9 million such that approximately 71.5% of our total deposits were insured or collateralized at the current quarter end.

Our deposit mix has remained consistent historically and has not changed significantly with the addition of GrandSouth, with the exception of some shift to money market accounts, as presented in the table below.

		December 31, 2023				September 30, 2023				December 31, 2022
($ in thousands)		Amount		Percentage		Amount		Percentage		Amount		Percentage
Noninterest-bearing checking accounts		$   3,379,876		34 %		3,503,050		34 %		3,566,003		39 %
Interest-bearing checking accounts		1,411,142		14 %		1,458,855		14 %		1,514,166		16 %
Money market accounts		3,653,506		36 %		3,635,523		36 %		2,416,146		26 %
Savings accounts		608,380		6 %		638,912		6 %		728,641		8 %
Other time deposits		610,887		6 %		626,870		6 %		464,343		5 %
Time deposits >$250,000		355,209		4 %		359,704		4 %		276,319		3 %
Total market deposits		10,019,000		100 %		10,222,914		100 %		8,965,618		97 %
Brokered deposits		12,599		— %		12,489		— %		261,911		3 %
Total deposits		$ 10,031,599		100 %		10,235,403		100 %		9,227,529		100 %

Capital

The Company remains well-capitalized by all regulatory standards, with an estimated total risk-based capital ratio at December 31, 2023 of 15.54%, up from the linked quarter ratio of 15.26% and 15.09% reported at December 31, 2022. 

The Company has elected to exclude accumulated other comprehensive income ("AOCI") related primarily to available for sale securities from common equity tier 1 capital.  AOCI is included in the Company's tangible common equity ("TCE") to tangible assets ratio which was 7.42% at December 31, 2023, an increase of 93 basis points from the linked quarter and an increase of 103 basis points from the prior year period.  The increases in TCE for the current quarter and year-over-year were driven by the improvement in the AOCI level related to the decrease in the unrealized loss on available for sale securities, as well as earnings for the year.  Refer to Appendix B for a reconciliation of common equity to TCE.

CAPITAL RATIOS		December 31, 2023 (estimated)		September 30, 2023		December 31, 2022
Tangible common equity to tangible assets (non-GAAP)		7.42 %		6.49 %		6.39 %
Common equity tier I capital ratio		13.20 %		12.93 %		13.02 %
Tier I leverage ratio		10.91 %		10.72 %		10.51 %
Tier I risk-based capital ratio		13.99 %		13.71 %		13.83 %
Total risk-based capital ratio		15.54 %		15.26 %		15.09 %

Liquidity

Liquidity is evaluated as both on-balance sheet (primarily cash and cash-equivalents, unpledged securities, and other marketable assets) and off-balance sheet (readily available lines of credit or other funding sources).  The Company continues to manage liquidity sources, including unused lines of credit, at levels believed to be adequate to meet its operating needs for the foreseeable future. 

The Company's on-balance sheet liquidity ratio (net liquid assets as a percent of net liabilities) at December 31, 2023 was 14.6%.  In addition, the Company had approximately $2.2 billion in available lines of credit at that date resulting in a total liquidity ratio of 30.4%.

About First Bancorp

First Bancorp is a bank holding company headquartered in Southern Pines, North Carolina, with total assets of $12.1 billion. Its principal activity is the ownership and operation of First Bank, a state-chartered community bank that operates 118 branches in North Carolina and South Carolina.  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.

Caution about Forward-Looking Statements: 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 Financial Summary
CONSOLIDATED INCOME STATEMENT
		For the Three Months Ended						For the Twelve Months Ended
($ in thousands, except per share data - unaudited)		December 31, 2023		September 30, 2023		December 31, 2022		December 31, 2023		December 31, 2022
Interest income
Interest and fees on loans		$    109,811		106,514		76,509		418,668		278,027
Interest on investment securities		13,978		14,054		14,611		56,761		57,923
Other interest income		2,784		3,283		1,991		13,330		5,007
Total interest income		126,573		123,851		93,111		488,759		340,957
Interest expense
Interest on deposits		35,979		32,641		6,145		114,866		11,349
Interest on borrowings		8,110		6,508		2,594		27,235		4,754
Total interest expense		44,089		39,149		8,739		142,101		16,103
Net interest income		82,484		84,702		84,372		346,658		324,854
Provision for loan losses		3,400		1,200		4,000		19,750		12,600
(Reversal of) provision for unfunded commitments		(450)		(1,200)		1,000		(1,937)		(200)
Total provision for credit losses		2,950		—		5,000		17,813		12,400
Net interest income after provision for credit losses		79,534		84,702		79,372		328,845		312,454
Noninterest income
Service charges on deposit accounts		4,413		4,661		4,116		16,800		15,523
Other service charges, commissions, and fees		4,968		5,450		5,094		22,270		26,294
Fees from presold mortgage loans		325		325		151		1,613		2,102
Commissions from sales of financial products		1,577		1,207		1,708		5,503		5,195
SBA consulting fees		395		478		645		1,803		2,608
SBA loan sale gains		437		1,101		495		2,489		5,076
Bank-owned life insurance income		1,134		1,104		967		4,350		3,847
Other gains, net		1,293		851		1,382		2,662		7,340
Total noninterest income		14,542		15,177		14,558		57,490		67,985
Noninterest expenses
Salaries expense		26,985		29,394		24,652		114,377		96,321
Employee benefit expense		6,377		6,539		5,353		25,474		21,397
Occupancy and equipment related expense		5,948		5,003		4,433		20,990		18,604
Merger and acquisition expenses		189		—		303		13,695		5,072
Intangibles amortization expense		1,856		1,953		825		8,003		3,684
Other operating expenses		15,031		19,335		10,091		71,840		50,142
Total noninterest expenses		56,386		62,224		45,657		254,379		195,220
Income before income taxes		37,690		37,655		48,273		131,956		185,219
Income tax expense		8,016		7,762		9,840		27,825		38,283
Net income		$       29,674		29,893		38,433		104,131		146,936
Earnings per common share - diluted		$           0.72		0.73		1.08		2.53		4.12

 

First Bancorp and Subsidiaries Financial Summary
CONSOLIDATED BALANCE SHEETS
($ in thousands - unaudited)		At December 31, 2023		At September 30, 2023		At December 31, 2022
Assets
Cash and due from banks		$           100,891		95,257		101,133
Interest-bearing deposits with banks		136,964		178,332		169,185
Total cash and cash equivalents		237,855		273,589		270,318
Investment securities		2,723,057		2,635,866		2,856,193
Presold mortgages and SBA loans held for sale		2,667		8,060		1,282
Loans		8,150,102		8,027,037		6,665,145
Allowance for credit losses on loans		(109,853)		(108,198)		(90,967)
Net loans		8,040,249		7,918,839		6,574,178
Premises and equipment		150,957		151,981		134,187
Operating right-of-use lease assets		17,063		17,604		18,733
Goodwill and other intangible assets		511,608		513,629		376,938
Bank-owned life insurance		183,897		182,764		164,592
Other assets		247,589		275,628		228,628
Total assets		$      12,114,942		11,977,960		10,625,049
Liabilities
Deposits:
Noninterest-bearing checking accounts		$        3,379,876		3,503,050		3,566,003
Interest-bearing deposit accounts		6,651,723		6,732,353		5,661,526
Total deposits		10,031,599		10,235,403		9,227,529
Borrowings		630,158		401,843		287,507
Operating lease liabilities		17,833		18,348		19,391
Other liabilities		62,972		64,683		59,026
Total liabilities		10,742,562		10,720,277		9,593,453
Shareholders' equity
Common stock		963,990		962,644		725,153
Retained earnings		716,420		695,791		648,418
Stock in rabbi trust assumed in acquisition		(1,385)		(1,375)		(1,585)
Rabbi trust obligation		1,385		1,375		1,585
Accumulated other comprehensive loss		(308,030)		(400,752)		(341,975)
Total shareholders' equity		1,372,380		1,257,683		1,031,596
Total liabilities and shareholders' equity		$      12,114,942		11,977,960		10,625,049

 

First Bancorp and Subsidiaries Financial Summary
TREND INFORMATION
		For the Three Months Ended
		December 31, 2023		September 30, 2023		June 30, 2023		March 31, 2023		December 31, 2022
PERFORMANCE RATIOS (annualized)
Return on average assets (1)		0.98 %		0.99 %		0.98 %		0.51 %		1.44 %
Return on average common equity (2)		9.19 %		9.10 %		8.97 %		4.83 %		15.20 %
Return on average tangible common equity (3)		15.33 %		15.05 %		14.79 %		8.16 %		20.96 %
COMMON SHARE DATA
Cash dividends declared - common		$          0.22		0.22		0.22		0.22		0.22
Book value per common share		$        33.38		30.61		31.59		31.72		28.89
Tangible book value per share (4)		$        20.94		18.11		19.03		19.08		18.34
Common shares outstanding at end of period		41,109,987		41,085,498		41,082,678		40,986,990		35,704,154
Weighted average shares outstanding - diluted		41,207,945		41,199,058		41,129,100		41,112,692		35,614,972
CAPITAL INFORMATION (estimates for current quarter)
Tangible common equity to tangible assets (5)		7.42 %		6.49 %		6.79 %		6.60 %		6.39 %
Common equity tier I capital ratio		13.20 %		12.93 %		12.75 %		12.53 %		13.02 %
Total risk-based capital ratio		15.54 %		15.26 %		15.09 %		14.88 %		15.09 %

(1)  Calculated by dividing annualized net income by average assets.

(2)  Calculated by dividing annualized net income by average common equity.

(3) Return on average tangible common equity is a non-GAAP financial measure.  See Appendix A for components of the calculation and the reconciliation of average common equity to average TCE.

(4)  Tangible book value per share is a non-GAAP financial measure.  See Appendix B for a reconciliation of common equity to tangible common equity and Appendix C for the resulting calculation.

(5)  Tangible common equity ratio is a non-GAAP financial measure.  See Appendix B for a reconciliation of common equity to tangible common equity and Appendix D for the resulting calculation.

 

		For the Three Months Ended
INCOME STATEMENT ($ in thousands except per share data)		December 31, 2023		September 30, 2023		June 30, 2023		March 31, 2023		December 31, 2022
Net interest income - tax-equivalent (1)		$         83,225		85,442		87,684		93,186		85,094
Taxable equivalent adjustment (1)		741		740		699		700		722
Net interest income		82,484		84,702		86,985		92,486		84,372
Provision for loan losses		3,400		1,200		3,700		11,451		4,000
(Reversal of) provision for unfunded commitments		(450)		(1,200)		(1,339)		1,051		1,000
Noninterest income		14,542		15,177		14,235		13,536		14,558
Merger and acquisition costs		189		—		1,334		12,182		303
Other noninterest expense		56,197		62,224		60,259		61,993		45,354
Income before income taxes		37,690		37,655		37,266		19,345		48,273
Income tax expense		8,016		7,762		7,863		4,184		9,840
Net income		29,674		29,893		29,403		15,161		38,433
Earnings per common share - diluted		$             0.72		0.73		0.71		0.37		1.08

(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.

 

APPENDIX A:  Calculation of Return on TCE
		For the Three Months Ended
($ in thousands)		December 31, 2023		September 30, 2023		June 30, 2023		March 31, 2023		December 31, 2022
Net Income		$      29,674		29,893		29,403		15,161		38,433
Average common equity		1,280,812		1,303,249		1,314,650		1,273,435		1,003,023
Less: Average goodwill and other intangibles		(512,876)		(515,111)		(517,201)		(519,639)		(377,793)
Average tangible common equity		$    767,936		788,138		797,449		753,796		625,230
Return on average common equity		9.19 %		9.10 %		8.97 %		4.83 %		15.20 %
Return on average tangible common equity		15.33 %		15.05 %		14.79 %		8.16 %		24.39 %

 

APPENDIX B:  Reconciliation of Common Equity to TCE
		For the Three Months Ended
($ in thousands)		December 31, 2023		September 30, 2023		June 30, 2023		March 31, 2023		December 31, 2022
Total shareholders' common equity		$   1,372,380		1,257,683		1,297,642		1,299,961		1,031,596
Less: Goodwill and other intangibles		(511,608)		(513,629)		(515,847)		(518,012)		(376,938)
Tangible common equity		$      860,772		744,054		781,795		781,949		654,658

 

APPENDIX C:  Tangible Book Value Per Share
		For the Three Months Ended
($ in thousands except per share data)		December 31, 2023		September 30, 2023		June 30, 2023		March 31, 2023		December 31, 2022
Tangible common equity (Appendix B)		$       860,772		744,054		781,795		781,949		654,658
Common shares outstanding		41,109,987		41,085,498		41,082,678		40,986,990		35,704,154
Tangible book value per common share		$           20.94		18.11		19.03		19.08		18.34

 

APPENDIX D:  TCE Ratio
		For the Three Months Ended
($ in thousands)		December 31, 2023		September 30, 2023		June 30, 2023		March 31, 2023		December 31, 2022
Tangible common equity (Appendix B)		$       860,772		744,054		781,795		781,949		654,658
Total assets		12,114,942		11,977,960		12,032,998		12,363,149		10,625,049
Less: Goodwill and other  intangibles		(511,608)		(513,629)		(515,847)		(518,012)		(376,938)
Tangible assets ("TA")		$  11,603,334		11,464,331		11,517,151		11,845,137		10,248,111
TCE to TA ratio		7.42 %		6.49 %		6.79 %		6.60 %		6.39 %

 

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SOURCE First Bancorp

FAQ

What was the net income reported by First Bancorp for Q4 2023?

First Bancorp reported net income of $29.7 million for Q4 2023.

What was the impact of the GrandSouth acquisition on the financials?

The acquisition of GrandSouth contributed $1.02 billion in loans and $1.05 billion in deposits.

What was the provision for loan losses for Q4 2023?

The provision for loan losses for Q4 2023 was $3.4 million.

What was the nonperforming assets to total assets ratio as of December 31, 2023?

The nonperforming assets to total assets ratio was 0.37% as of December 31, 2023.

What was the total assets at December 31, 2023?

Total assets at December 31, 2023 amounted to $12.1 billion, an increase of $137.0 million from the linked quarter and growing 14.0% from a year earlier.