First Bancorp Reports Fourth Quarter and Annual Results

FBNC

SOUTHERN PINES, N.C., Jan. 26, 2022 /PRNewswire/ -- First Bancorp (the "Company") (NASDAQ - FBNC), the parent company of First Bank, announced today net income of $10.5 million, or $0.30 per diluted common share, for the three months ended December 31, 2021, a decrease of 63.9% on a per share basis, compared to $23.6 million, or $0.83 per diluted common share, recorded in the fourth quarter of 2020.   For the year ended December 31, 2021, the Company recorded net income of $95.6 million, or $3.19 per diluted common share, compared to $81.5 million, or $2.81 per diluted common share, for the twelve months ended December 31, 2020, an increase of 13.5% in earnings per share.  The primary driver of the reduced earnings for the fourth quarter from the comparable period last year was the charges associated with the acquisition of Select Bancorp, Inc. ("Select"), the parent company of Select Bank & Trust Company ("Select Bank"), including merger expenses totaling $16.2 million and a one-time loan loss provision of $14.1 million to establish an initial allowance for credit losses for non-credit deteriorated Select Bank loans.

On October 15, 2021, the Company acquired Select, the parent company of Select Bank, headquartered in Dunn, North Carolina, which operated through 22 branches in North Carolina, South Carolina and Virginia.  As of the acquisition date, Select had total assets of approximately $1.8 billion, including $1.3 billion in loans and $1.6 billion in deposits. The conversion of Select Bank's core processing and related systems to First Bank's systems is scheduled to occur on March 18, 2022.  Until that time, Select Bank branches will continue to operate under their current name. The financial position and earnings related to this acquisition are included in the Company's financial results for the fourth quarter of 2021.

Richard H. Moore, CEO of the Company, stated, "First Bank delivered another year of significant growth increasing our asset size by $3.2 billion, both organically and through the acquisition of Select Bank.  Excluding forgiveness for Paycheck Protection Program loans and the acquisition of Select Bank, our core legacy loans grew $382.8 million and deposits increased $1.35 billion year over year.  Our Company is well-positioned to continue its strong financial performance into 2022, and we look forward to welcoming our new Select Bank customers and associates more fully as we integrate our systems in March."

2021 Financial Highlights

Net Interest Income and Net Interest Margin

Net interest income for the fourth quarter of 2021 was $73.8 million, a 31.9% increase from the $56.0 million recorded in the fourth quarter of 2020.  Net interest income for the year ended December 31, 2021 was $246.4 million, a 13.0% increase from the $218.1 million recorded for 2020.  The increases in net interest income for the periods presented were primarily due to higher levels of loans and investment securities, the effects of which were partially offset by lower net interest margins.

The Company's net interest margin (a non-GAAP measure calculated by dividing tax-equivalent net interest income by average earning assets) for the fourth quarter of 2021 was 3.13%, which was 25 basis points lower than the 3.38% realized in the fourth quarter of 2020.  For the year ended December 31, 2021, the Company's net interest margin was 3.16% compared to 3.56% for the same period of 2020.  The declines in 2021 were primarily due to the impact of lower interest rates and the lower incremental reinvestment rates realized from funds provided by the Company's high deposit growth.

Driven by high deposit growth and the Select Bank acquisition, average interest-earning assets increased by 27.8% in the year ended December 31, 2021 compared to the prior year.  The funds provided by the in-flow of deposits were primarily used to 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.

Out of a total of $375 million in PPP loans originated by the Company and acquired from Select Bank in 2020 and 2021, the Company had $39.0 million in remaining PPP loans as of December 31, 2021.  Including accelerated amortization arising from forgiveness, the Company recorded $1.7 million in PPP fees in the fourth quarter of 2021 compared to $1.6 million for the fourth quarter of 2020.  For the year ended December 31, 2021, the Company recorded $9.5 million in PPP fees compared to $4.1 million in 2020.  At December 31, 2021, the Company had $2.6 million in remaining deferred PPP loan fees.

The Company recorded loan discount accretion of $2.6 million in the fourth quarter of 2021 compared to $1.5 million in the fourth quarter of 2020.  For the years ended December 31, 2021 and 2020, loan discount accretion amounted to $8.8 million and $6.3 million, respectively, with the 2021 increase being due to payoffs received on several former loss share loans in the second quarter of 2021 and the discount accretion related to loans acquired from Select Bank.  Loan discount accretion had a 11 basis point positive impact on the net interest margin in the fourth quarter of 2021 compared to a 9 basis point impact in the fourth quarter of 2020.  For the years of 2021 and 2020, loan discount accretion had a 11 basis point and 10 basis point impact, respectively, on the net interest margin.

Allowance for Loan Losses, Provisions for Loan Losses and Unfunded Commitments, 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 adoption-date increase of $14.6 million in the Company's allowance for loan losses and an increase of $7.5 million in the Company's allowance 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 a provision for loan losses of $11.0 million for the three months ended December 31, 2021 and $9.6 million for the year ended December 31, 2021, compared to provisions for loan losses of $4.0 million and $35.0 million in the comparable periods of 2020, respectively.  The provision for the fourth quarter of 2021 was primarily related to a one-time provision of $14.1 million for non-credit deteriorated loans acquired from Select Bank, which was partially offset by $3.1 million in reserve release.  The high provisions in 2020 were primarily related to estimated incurred losses associated with the pandemic.  Under the CECL methodology for providing for loan losses, the Company reversed $4.5 million in provision for loan losses during the year ended December 31, 2021 due to improving asset quality and improving economic forecasts, which partially offset the Select-related provision.

During the three months and year ended December 31, 2021, using the CECL methodology, the Company recorded a $2.4 million and $5.4 million in provision for unfunded commitments, respectively.  The provision for unfunded commitments included $3.9 million recorded in the fourth quarter of 2021 upon the acquisition of Select Bank.  The provisions for 2021 were recorded primarily due to increases in construction and land development loan commitments during the year.   The Company's allowance for unfunded commitments at year end of $13.5 million is recorded within the line item "Other liabilities".

Annualized net loan charge-offs to average loans amounted to 0.05% for the fourth quarter of 2021 compared to annualized net loan charge-offs to average loans of 0.07% in the fourth quarter of 2020.  For the year ended December 31, 2021, net charge-offs to average loans amounted to 0.05% compared to 0.09% for 2020.

Total nonperforming assets amounted to $52.6 million at December 31, 2021, or 0.50% of total assets, compared to $47.0 million, or 0.64% of total assets, at December 31, 2020.  Total nonperforming assets increased $11.9 million in the fourth quarter primarily as a result of the acquisition of Select Bank.

Noninterest Income

Total noninterest income for the fourth quarter of 2021 was $15.1 million, a 24.7% decrease from the $20.0 million recorded for the fourth quarter of 2020.  For the years ended December 31, 2021 and 2020, total noninterest income was $73.6 million and $81.3 million, respectively, a decline of 9.5%.  These declines were the result of decreased fees from presold mortgages, the Company's sale of the assets of its property and casualty insurance agency a variety of other factors.

Service charges on deposit accounts amounted to $3.6 million for the fourth quarter of 2021, a 22.2% increase from the $2.9 million recorded in the fourth quarter of 2020.  For the year ended December 31, 2021 and 2020, service charges on deposit accounts amounted to $12.3 million and $11.1 million, respectively, an increase of 11.0%.

Other service charges, commissions and fees amounted to $7.0 million for the fourth quarter of 2021, an increase of 34.9% from the $5.2 million for the fourth quarter of 2020.  For the years ended December 31, 2021 and 2020, other service charges, commissions and fees amounted to $25.5 million and $20.1 million, respectively, an increase of 27.0%.  The increases were primarily due to higher bankcard revenue which totaled $18.6 million and $13.8 million for the years ended December 31, 2021 and 2020, respectively.  The number of credit and debit card transactions have increased significantly since the onset of the pandemic.  Because the Company exceeded $10 billion in total assets at December 31, 2021, it is expected that bankcard revenue will be adversely impacted by the Durbin Amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 limit on debit card interchange fees by approximately $8.5-$9.0 million on an annual basis beginning July 1, 2022.

Fees from presold mortgages amounted to $2.1 million for the fourth quarter of 2021, a decrease of 53.8%, compared to $4.5 million in the fourth quarter of 2020.  For the years ended December 31, 2021 and 2020, fees from presold mortgages amounted to $11.0 million and $14.2 million, respectively, a decline of 22.6%.  Mortgage loan volumes increased significantly beginning in the second quarter of 2020 at the onset of the pandemic primarily due to declines in interest rates. Beginning in the second quarter of 2021, mortgage loan volumes declined due to increases in mortgage interest rates.

Commissions from sales of insurance and financial products amounted to $1.1 million for the fourth quarter of 2021 compared to $2.3 million in the fourth quarter of 2020.  For the years ended December 31, 2021 and 2020, commissions from sales of insurance and financial products amounted to $6.9 million and $8.8 million, respectively.  The declines in 2021 were due to the sale of the assets of the Company's property and casualty insurance agency subsidiary on June 30, 2021.

SBA consulting fees amounted to $1.2 million for the fourth quarter of 2021 compared to $1.9 million for the fourth quarter of 2020.  For the years ended December 31, 2021 and 2020, SBA consulting fees amounted to $7.2 million and $8.6 million, respectively.  In the second quarter of 2020, the Company's SBA subsidiary, SBA Complete, began earning origination and servicing fees related to assisting client banks with PPP loans.  The fees associated with that PPP loan assistance declined significantly in the second half of 2021, as the client banks' PPP loans were forgiven.

SBA loan sale gains amounted to $348,000 for the fourth quarter of 2021 compared to $2.4 million in the fourth quarter of 2020.  For the years ended December 31, 2021 and 2020, SBA loan sale gains amounted to $7.3 million and $8.0 million, respectively.  The lower SBA loan sale gains in the fourth quarter of 2021 were attributable to extended timing for SBA loans to be salable following closing.

The Company realized securities losses of $1.2 million in the year ended December 31, 2021, as compared to securities gains of $8.0 million in the year ended December 31, 2020.

Other gains (losses) amounted to a gain of $1.6 million in the year ended December 31, 2021, primarily due to a $1.7 million gain recorded in the second quarter of 2021 related to the sale of the assets of the Company's insurance subsidiary.

Noninterest Expenses

Noninterest expenses amounted to $62.8 million and $41.9 million in the fourth quarters of 2021 and 2020, respectively, an increase of 49.9%. Noninterest expenses amounted to $184.7 million and $161.3 million for the years ended December 31, 2021 and 2020, respectively, an increase of 14.5%.  The increase in noninterest expenses was primarily due to merger and acquisition expenses of $16.2 million incurred in the fourth quarter of 2021, compared to none in 2020, as well as the increased operating expenses resulting from the Select acquisition.

Income Taxes

The Company's effective tax rates were 17.0% and 21.4% for the fourth quarter of 2021 and 2020, respectively, and were 20.5% and 21.0% for the years ended December 31, 2021 and 2020, respectively. The lower effective tax rate in the fourth quarter of 2021 is related to higher tax-exempt income in that quarter relative to taxable income.

Balance Sheet and Capital

Total assets at December 31, 2021 amounted to $10.5 billion, a 44.2% increase from a year earlier.  The growth was driven by the acquisition of Select Bank and a significant increase in deposits.

Total loans amounted to $6.1 billion at December 31, 2021, an increase of $1.4 billion, or 28.5% from December 31, 2020.  Core legacy loan growth for the year ended December 31, 2021, exclusive of PPP loans and loans acquired from Select Bank, amounted to $382.8 million, a growth rate of 8.6%.  A combination of low interest rates and economic recovery from the pandemic contributed to the Company's 2021 core loan growth.

Total deposits amounted to $9.1 billion at December 31, 2021, an increase of $2.9 billion, or 45.4%, from December 31, 2020.  Core legacy deposit growth for the year ended December 31, 2021, exclusive of deposits acquired from Select Bank, totaled $1.35 billion, a growth rate of 21.5%.  The high core 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.

The Company has deployed excess liquidity into investment securities, which amounted to $3.1 billion at December 31, 2021, an increase of $1.5 billion, or 94.0%, compared to a year earlier.

The Company remains well-capitalized by all regulatory standards, with an estimated Total Risk-Based Capital Ratio at December 31, 2021 of 14.46% compared to 15.37% reported at December 31, 2020.  The Company's tangible common equity to tangible assets ratio was 8.38% at December 31, 2021, a decrease of 70 basis points from a year earlier, with the decline resulting from the acquisition of Select Bank and the high balance sheet growth experienced in 2021.

On December 15, 2021, the Company announced a quarterly cash dividend of $0.20 per share payable on January 25, 2022 to shareholders of record on December 31, 2021.  This dividend rate represents an 11.1% increase over the dividend rate declared in the fourth quarter of 2020.

First Bancorp is a bank holding company headquartered in Southern Pines, North Carolina, with total assets of $10.5  billion. Its principal activity is the ownership and operation of First Bank, a state-chartered community bank that operates 121 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.

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 - Page 1

Three Months Ended December 31,

Percent

($ in thousands except per share data - unaudited)

2021

2020

Change

INCOME STATEMENT

Interest income

Interest and fees on loans

$              64,688

53,099

Interest on investment securities

10,910

5,481

Other interest income

618

743

Total interest income

76,216

59,323

28.5%

Interest expense

Interest on deposits

1,868

2,921

Interest on borrowings

503

396

Total interest expense

2,371

3,317

(28.5)%

Net interest income

73,845

56,006

31.9%

Provision for loan losses

11,011

4,031

173.2%

Provision for unfunded commitments

2,432

n/m

Total provisions for credit losses

13,443

4,031

233.5%

Net interest income after provisions for credit losses

60,402

51,975

16.2%

Noninterest income

Service charges on deposit accounts

3,551

2,905

Other service charges, commissions, and fees

7,034

5,214

Fees from presold mortgage loans

2,061

4,458

Commissions from sales of insurance and financial products

1,093

2,333

SBA consulting fees

1,152

1,922

SBA loan sale gains

348

2,432

Bank-owned life insurance income

940

629

Securities (losses) gains, net

(1,237)

Other gains (losses), net

115

103

Total noninterest income

15,057

19,996

(24.7)%

Noninterest expenses

Salaries expense

24,846

22,098

Employee benefit expense

3,329

3,715

Occupancy and equipment related expense

4,607

3,811

Merger and acquisition expenses

16,180

Intangibles amortization expense

1,094

995

Foreclosed property losses (gains), net

17

263

Other operating expenses

12,716

11,000

Total noninterest expenses

62,789

41,882

49.9%

Income before income taxes

12,670

30,089

(57.9)%

Income tax expense

2,148

6,441

(66.7)%

Net income

$              10,522

23,648

(55.5)%

Earnings per common share - diluted

$                  0.30

0.83

(63.9)%

ADDITIONAL INCOME STATEMENT INFORMATION

Net interest income, as reported

$              73,845

56,006

Tax-equivalent adjustment (1)

707

457

Net interest income, tax-equivalent

$              74,552

56,463

32.0%

(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.

n/m - not meaningful

First Bancorp and Subsidiaries

Financial Summary - Page 2

Twelve Months Ended December 31,

Percent

($ in thousands except per share data - unaudited)

2021

2020

Change

INCOME STATEMENT

Interest income

Interest and fees on loans

$            219,013

213,099

Interest on investment securities

34,478

21,154

Other interest income

2,427

3,431

Total interest income

255,918

237,684

7.7%

Interest expense

Interest on deposits

7,881

16,301

Interest on borrowings

1,642

3,261

Total interest expense

9,523

19,562

(51.3)%

Net interest income

246,395

218,122

13.0%

Provision for loan losses

9,611

35,039

(72.6)%

Provision for unfunded commitments

5,420

n/m

Total provisions for credit losses

15,031

35,039

(57.1)%

Net interest income after provisions for credit losses

231,364

183,083

26.4%

Noninterest income

Service charges on deposit accounts

12,317

11,098

Other service charges, commissions, and fees

25,516

20,097

Fees from presold mortgage loans

10,975

14,183

Commissions from sales of insurance and financial products

6,947

8,848

SBA consulting fees

7,231

8,644

SBA loan sale gains

7,329

7,973

Bank-owned life insurance income

2,885

2,533

Securities (losses) gains, net

(1,237)

8,024

Other gains (losses), net

1,648

(54)

Total noninterest income

73,611

81,346

(9.5)%

Noninterest expenses

Salaries expense

86,815

84,941

Employee benefit expense

16,434

16,027

Occupancy and equipment related expense

16,020

15,563

Merger and acquisition expenses

16,845

Intangibles amortization expense

3,531

3,956

Foreclosed property losses (gains), net

24

547

Other operating expenses

44,987

40,264

Total noninterest expenses

184,656

161,298

14.5%

Income before income taxes

120,319

103,131

16.7%

Income tax expense

24,675

21,654

14.0%

Net income

$              95,644

81,477

17.4%

Earnings per common share - diluted

$                  3.19

2.81

13.5%

ADDITIONAL INCOME STATEMENT INFORMATION

Net interest income, as reported

$            246,395

218,122

Tax-equivalent adjustment (1)

2,243

1,468

Net interest income, tax-equivalent

$            248,638

219,590

13.2%

(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 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 3

Three Months Ended

December 31,

Twelve Months Ended

December 31,

PERFORMANCE RATIOS (annualized)

2021

2020

2021

2020

Return on average assets (1)

0.41 %

1.30 %

1.13 %

1.20 %

Return on average common equity (2)

3.55 %

10.58 %

9.86 %

9.32 %

Net interest margin - tax-equivalent (3)

3.13 %

3.38 %

3.16 %

3.56 %

Net charge-offs to average loans

0.05 %

0.07 %

0.05 %

0.09 %

COMMON SHARE DATA

Cash dividends declared - common

$             0.20

0.18

0.80

0.72

Stated book value - common

34.54

31.26

34.54

31.26

Tangible book value - common (non-GAAP)

23.81

22.35

23.81

22.35

Common shares outstanding at end of period

35,629,177

28,579,335

35,629,177

28,579,335

Weighted average shares outstanding - diluted

34,567,927

28,617,409

30,027,785

28,981,567

CAPITAL RATIOS

Tangible common equity to tangible assets (non-GAAP)

8.38 %

9.08 %

8.38 %

9.08 %

Common equity tier I capital ratio - estimated

12.44 %

13.19 %

12.44 %

13.19 %

Tier I leverage ratio - estimated

9.42 %

9.88 %

9.42 %

9.88 %

Tier I risk-based capital ratio - estimated

13.36 %

14.28 %

13.36 %

14.28 %

Total risk-based capital ratio - estimated

14.46 %

15.37 %

14.46 %

15.37 %

AVERAGE BALANCES ($ in thousands)

Total assets

$  10,191,402

7,240,685

8,495,646

6,765,998

Loans

5,879,373

4,771,446

5,018,391

4,702,743

Earning assets

9,438,263

6,640,732

7,871,319

6,160,100

Deposits

8,878,141

6,232,692

7,401,910

5,644,290

Interest-bearing liabilities

5,641,358

4,085,619

4,736,343

3,897,912

Shareholders' equity

1,177,374

889,481

969,776

874,532

(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 Page 1 of this Financial Summary for discussion of tax-equivalent adjustments.

TREND INFORMATION

($ in thousands except per share data)

For the Three Months Ended

INCOME STATEMENT

Dec. 31, 2021

Sept. 30, 2021

June 30, 2021

Mar. 31, 2021

Dec. 31, 2020

Net interest income - tax-equivalent (1)

$           74,552

59,129

59,276

55,681

56,463

Taxable equivalent adjustment (1)

707

576

517

443

457

Net interest income

73,845

58,553

58,759

55,238

56,006

Provision (reversal) for loan losses

11,011

(1,400)

4,031

Provision for unfunded commitments

2,432

1,049

1,939

Noninterest income

15,057

16,511

21,374

20,669

19,996

Noninterest expense

62,789

40,817

40,985

40,065

41,882

Income before income taxes

12,670

34,598

37,209

35,842

30,089

Income tax expense

2,148

6,955

7,924

7,648

6,441

Net income

10,522

27,643

29,285

28,194

23,648

Earnings per common share - diluted

0.30

0.97

1.03

0.99

0.83

Cash dividends declared per share

0.20

0.20

0.20

0.20

0.18

(1)

See note 1 on Page 1 of this Financial Summary for discussion of tax-equivalent adjustments.

First Bancorp and Subsidiaries

Financial Summary - Page 4

CONSOLIDATED BALANCE SHEETS

($ in thousands - unaudited)

At Dec. 31,

2021

At Sept. 30,

2021

At Dec. 31,

2020

One Year

Change

Assets

Cash and due from banks

$      128,228

80,090

93,724

36.8 %

Interest-bearing deposits with banks

332,934

314,103

273,566

21.7 %

Total cash and cash equivalents

461,162

394,193

367,290

25.6 %

Investment securities

3,144,239

2,672,968

1,620,683

94.0 %

Presold mortgages

19,257

16,746

42,271

(54.4) %

Loans held for sale

61,003

1,518

6,077

903.8 %

Total loans

6,081,715

4,869,841

4,731,315

28.5 %

Allowance for loan losses

(78,789)

(63,628)

(52,388)

50.4 %

Net loans

6,002,926

4,806,213

4,678,927

28.3 %

Premises and equipment

136,092

124,391

120,502

12.9 %

Operating right-of-use lease assets

20,719

16,900

17,514

18.3 %

Intangible assets

382,090

242,079

254,638

50.1 %

Foreclosed real estate

3,071

1,819

2,424

26.7 %

Bank-owned life insurance

165,786

133,919

106,974

55.0 %

Other assets

112,556

78,620

72,451

55.4 %

Total assets

$ 10,508,901

8,489,366

7,289,751

44.2 %

Liabilities

Deposits:

Noninterest-bearing checking accounts

$   3,348,622

2,765,360

2,210,012

51.5 %

Interest-bearing checking accounts

1,593,231

1,446,259

1,172,022

35.9 %

Money market accounts

2,562,283

1,899,172

1,581,364

62.0 %

Savings accounts

708,054

626,616

519,266

36.4 %

Brokered deposits

7,415

7,415

20,222

(63.3) %

Internet time deposits

249

(100.0) %

Other time deposits > $100,000

605,999

475,715

543,894

11.4 %

Other time deposits

299,025

212,228

226,567

32.0 %

Total deposits

9,124,629

7,432,765

6,273,596

45.4 %

Borrowings

67,386

60,764

61,829

9.0 %

Operating lease liabilities

21,192

17,323

17,868

18.6 %

Other liabilities

65,119

48,764

43,037

51.3 %

Total liabilities

9,278,326

7,559,616

6,396,330

45.1 %

Shareholders' equity

Common stock

722,671

398,058

400,582

80.4 %

Retained earnings

532,874

529,474

478,489

11.4 %

Stock in rabbi trust assumed in acquisition

(1,803)

(1,791)

(2,243)

(19.6) %

Rabbi trust obligation

1,803

1,791

2,243

(19.6) %

Accumulated other comprehensive (loss) income

(24,970)

2,218

14,350

(274.0) %

Total shareholders' equity

1,230,575

929,750

893,421

37.7 %

Total liabilities and shareholders' equity

$ 10,508,901

8,489,366

7,289,751

44.2 %

First Bancorp and Subsidiaries

Financial Summary - Page 5

For the Three Months Ended

YIELD INFORMATION

Dec. 31, 2021

Sept. 30, 2021

June 30, 2021

Mar. 31, 2021

Dec. 31, 2020

Yield on loans

4.37 %

4.19 %

4.48 %

4.42 %

4.42 %

Yield on securities

1.45 %

1.46 %

1.45 %

1.47 %

1.62 %

Yield on other earning assets

0.42 %

0.47 %

0.56 %

0.57 %

0.57 %

Yield on all interest-earning assets

3.20 %

3.11 %

3.32 %

3.41 %

3.55 %

Rate on interest bearing deposits

0.13 %

0.14 %

0.18 %

0.23 %

0.29 %

Rate on other interest-bearing liabilities

2.88 %

2.45 %

2.49 %

2.53 %

2.55 %

Rate on all interest-bearing liabilities

0.17 %

0.17 %

0.21 %

0.27 %

0.32 %

Total cost of funds

0.11 %

0.11 %

0.14 %

0.17 %

0.21 %

Net interest margin (1)

3.10 %

3.00 %

3.19 %

3.25 %

3.35 %

Net interest margin - tax-equivalent (2)

3.13 %

3.03 %

3.22 %

3.27 %

3.38 %

Average prime rate

3.25 %

3.25 %

3.25 %

3.25 %

3.25 %

(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 - unaudited)

Dec. 31, 2021

Sept. 30, 2021

June 30, 2021

Mar. 31, 2021

Dec. 31, 2020

Interest income - increased by accretion of loan discount on acquired loans

$           1,912

530

2,913

752

802

Interest income - increased by accretion of loan discount on retained portions of SBA loans

703

697

718

589

737

Interest expense - reduced by premium amortization of deposits

261

8

11

15

19

Interest expense - increased by discount accretion of borrowings

(116)

(45)

(44)

(44)

(45)

Impact on net interest income

$           2,760

1,190

3,598

1,312

1,513

As of / for the Three Months Ended

PAYCHECK PROTECTION PROGRAM (PPP) LOANS

($ in thousands - unaudited)

Dec. 31, 2021

Sept. 30, 2021

June 30, 2021

Mar. 31, 2021

Dec. 31, 2020

PPP loans outstanding

$         38,979

66,876

155,515

241,421

240,687

PPP fee amortization

1,676

2,093

2,696

3,035

1,625

First Bancorp and Subsidiaries

Financial Summary - Page 6

ASSET QUALITY DATA ($ in thousands)

Dec. 31, 2021

Sept. 30, 2021

June 30, 2021

Mar. 31, 2021

Dec. 31, 2020

Nonperforming assets

Nonaccrual loans

$     34,696

31,268

32,993

39,566

35,076

Troubled debt restructurings - accruing

13,866

7,600

8,026

8,601

9,497

Accruing loans > 90 days past due

1,004

Total nonperforming loans

49,566

38,868

41,019

48,167

44,573

Foreclosed real estate

3,071

1,819

826

1,811

2,424

Total nonperforming assets

$     52,637

40,687

41,845

49,978

46,997

Asset Quality Ratios

Net quarterly charge-offs to average loans - annualized

0.05 %

—       %

0.07 %

0.10 %

0.07 %

Nonperforming loans to total loans

0.82 %

0.80 %

0.86 %

1.04 %

0.94 %

Nonperforming assets to total assets

0.50 %

0.48 %

0.51 %

0.65 %

0.64 %

Allowance for loan losses to total loans

1.30 %

1.31 %

1.36 %

1.42 %

1.11 %

Allowance for loan losses to total loans, excluding   PPP loans

1.30 %

1.32 %

1.41 %

1.50 %

1.17 %

First Bancorp and Subsidiaries

Financial Summary - Page 7

For the Three Months Ended

NET INTEREST MARGIN, EXCLUDING LOAN DISCOUNT ACCRETION - RECONCILIATION

($ in thousands)

Dec. 31, 2021

Sept. 30, 2021

June 30, 2021

Mar. 31, 2021

Dec. 31, 2020

Net interest income, as reported

$       73,845

58,553

58,759

55,238

56,006

Tax-equivalent adjustment

707

576

517

443

457

Net interest income, tax-equivalent (A)

$       74,552

59,129

59,276

55,681

56,463

Average earning assets (B)

$  9,438,263

7,735,613

7,386,607

6,898,406

6,640,732

Tax-equivalent net interestmargin, annualized - as reported -  (A)/(B)

3.13 %

3.03 %

3.22 %

3.27 %

3.38 %

Net interest income, tax-equivalent

$       74,552

59,129

59,276

55,681

56,463

Loan discount accretion

2,615

1,227

3,631

1,341

1,539

Net interest income, tax-equivalent, excluding loan discount accretion  (C)

$       71,937

57,902

55,645

54,340

54,924

Average earnings assets  (D)

$  9,438,263

7,735,613

7,386,607

6,898,406

6,640,732

Tax-equivalent net interest margin, excluding impact of loan discount accretion, annualized - (C) / (D)

3.02 %

2.97 %

3.02 %

3.19 %

3.29 %

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 December 31, 2021, the Company had a remaining loan discount balance on acquired loans of $17.2 million compared to $8.9 million at December 31, 2020.  At December 31, 2021, the Company had a remaining loan discount balance on SBA loans of $6.0 million compared to $7.3 million at December 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.

SOURCE First Bancorp