PR Newswire
SOUTHERN PINES, N.C., Jan. 24, 2023
SOUTHERN PINES, N.C., Jan. 24, 2023 /PRNewswire/ -- First Bancorp (the "Company") (NASDAQ - FBNC), the parent company of First Bank, announced today net income of $38.4 million, or $1.08 per diluted common share, for the three months ended December 31, 2022, compared to $37.9 million, or $1.06 per diluted common share for the three months ended September 30, 2022 ("linked quarter") and $10.5 million, or $0.30 per diluted common share, recorded in the fourth quarter of 2021. For the twelve months ended December 31, 2022, the Company recorded net income of $146.9 million, or $4.12 per diluted common share, compared to $95.6 million, or $3.19 per diluted common share for the twelve months ended December 31, 2021.
On June 21, 2022, the Company announced that it had reached an agreement to acquire GrandSouth Bancorporation ("GrandSouth"), headquartered in Greenville, South Carolina, in an all-stock transaction. The transaction closed on January 1, 2023, adding eight branches throughout South Carolina and approximately $1.2 billion in total assets, $1.0 billion in loans, and $1.0 billion in deposits to the Company's balance sheet as of the acquisition date.
Richard H. Moore, CEO and Chairman of the Company, stated, "First Bancorp had another strong year of continued growth as we earned nearly $147 million in net income, grew loans close to 10%, and improved our credit quality metrics over the course of the year. I am proud of our employees for their commitment to the communities we serve and for their continued focus on our customers, shareholders, and each other during our acquisition of GrandSouth and our October 2021 acquisition of Select Bancorp ("Select"). We welcomed our new GrandSouth customers officially as of January 1, 2023 and look forward to system conversion in March 2023."
2022 Financial Highlights
The following discussions and comparisons to the prior year financial periods presented are impacted by the Company's acquisition of Select completed in the fourth quarter of 2021 which contributed $1.3 billion in loans and $1.6 billion in deposits as of the acquisition date.
Net Interest Income and Net Interest Margin
Net interest income for the fourth quarter of 2022 was $84.4 million, a 14.3% increase from the $73.8 million recorded in the fourth quarter of 2021 and a decrease of $1.0 million or 1.1%, from the linked quarter. The increase in net interest income from the prior year period was due in large part to higher earning assets year-over-year and the higher net interest margin ("NIM") throughout 2022 as compared to 2021. Average interest-earning assets for the fourth quarter of 2022 increased 7.7% from the comparable period of the prior year, with strong loan growth as the primary driver for the increase.
The Company's tax-equivalent NIM (calculated by dividing tax-equivalent net interest income by average earning assets) for the twelve months ended December 31, 2022 was 3.28%, compared to 3.16% for the prior year. The NIM increase was driven by the rising market interest rates as the Federal Reserve's monetary policies resulted in a 425 basis point rise in short-term rates between March and December 2022.
The decrease in net interest income in the fourth quarter of 2022 as compared to the third quarter of 2022 was related primarily to an increase in total interest expense of $5.8 million. While the Company's total cost of funds ("COF") remained low at 0.36% for the quarter ended December 31, 2022, COF increased 24 basis points from the linked quarter contributing to the higher interest expense. During the fourth quarter of 2022, the Company experienced some pressure to reprice deposits, primarily money market accounts, and utilized more wholesale funding sources, both of which contributed to the increase in cost of funds.
Allowance for Credit Losses, Provisions for Credit Losses, and Asset Quality
For the three months ended December 31, 2022, the Company recorded $4.0 million in provision for loan losses. This is compared to $5.1 million provision for loan losses for the linked quarter and a provision of $11.0 million for the fourth quarter of 2021. Fluctuations each period are based on the acquisition of Select in the fourth quarter of 2021, loan growth during each period, changes in the levels of nonperforming loans, economic forecasts impacting loss drivers, and other assumptions and inputs to the Company's CECL model.
Also during the fourth quarter of 2022, the Company recorded $1.0 million in provision for unfunded commitments, compared to a $0.3 million provision for unfunded commitments for the linked quarter and a provision of $2.4 million for the fourth quarter of 2021. Changes each period are related to fluctuations in the level of available credit lines and updated loss drivers. The reserve for unfunded commitments totaled $13.3 million at December 31, 2022 and is included in the line item "Other Liabilities".
Asset quality remained strong with annualized net loan recoveries of (0.02)% for the fourth quarter of 2022 and net charge-offs of 0.01% for the year ended December 31, 2022. Total NPAs amounted to $38.3 million at December 31, 2022, or 0.36% of total assets, down from $40.7 million, 0.39% of total assets, at the end of the linked quarter, and $52.6 million, or 0.50% of total assets, at December 31, 2021.
Noninterest Income
Total noninterest income for the fourth quarter of 2022 was $14.6 million, a 3.3% decrease from the $15.1 million recorded for the fourth quarter of 2021 and a 13.9% decrease from the linked quarter. The primary factors driving fluctuations among the periods presented were as follows:
Noninterest Expenses
Noninterest expenses amounted to $45.7 million for the fourth quarter of 2022, compared to $48.7 million for the linked quarter and $62.8 million for the fourth quarter of 2021. The 27.3% decrease in noninterest expenses from the prior year period was driven by lower merger and acquisition expenses as compared to the fourth quarter of 2021. All other expenses remained essentially the same for the year-over-year quarter comparison other than an increase of employee benefit expenses driven by the fluctuations in the timing and volume of claims paid under the Company's self-insured health insurance plan. The increase in noninterest expenses, exclusive of merger expenses, of 13.3% year-over-year for the twelve months ended December 31, 2022 was driven by higher operating expenses, including additional locations and personnel, resulting from the Select acquisition which occurred in the fourth quarter of 2021.
Balance Sheet and Capital
Total assets at December 31, 2022 were $10.6 billion, an increase of 1.1% from the prior year end with growth in loans offset by reductions in other assets throughout the year.
Total investment securities decreased $288.0 million from December 31, 2021 to total $2.9 billion at December 31, 2022, as the Company is strategically redeploying the cash flows from investments to fund loan growth. Also contributing to the decline year-over-year was the higher level of unrealized losses on available for sale securities which amounted to $444.1 million at December 31, 2022, down $22.7 million from the linked quarter.
Total loans amounted to $6.7 billion at December 31, 2022, an increase of $583.4 million, or 9.6%, from December 31, 2021, due to organic loan growth throughout 2022. Organic net loan growth for the fourth quarter of 2022 amounted to $139.9 million, an annualized growth rate of 8.6%.
Total deposits amounted to $9.2 billion at December 31, 2022, an increase of $102.9 million, or 1.1%, from December 31, 2021. While deposits increased for the year to date period, the fourth quarter of 2022 realized a decline in total deposits of $1.7 million as market rates for deposits became more competitive and customer behaviors shifted from activity experienced during the pandemic.
The Company remains well-capitalized by all regulatory standards, with an estimated Total Risk-Based Capital Ratio at December 31, 2022 of 14.73% compared to 14.67% reported at December 31, 2021. The Company's tangible common equity ("TCE") to tangible assets ratio was 6.39% at December 31, 2022, an increase from 5.98% for the linked quarter and a decrease of 199 basis points from a year earlier. Fluctuations in the TCE ratio were driven by the changes in the unrealized loss on available for sale securities included in equity.
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First Bancorp is a bank holding company headquartered in Southern Pines, North Carolina, with total assets of approximately $11.8 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."
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Please visit our website at www.LocalFirstBank.com.
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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 | |||||||
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CONSOLIDATED INCOME STATEMENT | |||||||
| Three Months Ended | | Twelve Months Ended | ||||
($ in thousands except per share data - unaudited) | December 31, | September 30, | December 31, | | December 31, | December 31, | |
Interest income | | | | | | | |
Interest and fees on loans | $ 76,509 | 72,239 | 64,688 | | $ 278,027 | 219,013 | |
Interest on investment securities | 14,611 | 14,565 | 10,910 | | 57,923 | 34,478 | |
Other interest income | 1,991 | 1,486 | 618 | | 5,007 | 2,427 | |
Total interest income | 93,111 | 88,290 | 76,216 | | 340,957 | 255,918 | |
Interest expense | | | | | | | |
Interest on deposits | 6,145 | 1,848 | 1,868 | | 11,349 | 7,881 | |
Interest on borrowings | 2,594 | 1,108 | 503 | | 4,754 | 1,642 | |
Total interest expense | 8,739 | 2,956 | 2,371 | | 16,103 | 9,523 | |
Net interest income | 84,372 | 85,334 | 73,845 | | 324,854 | 246,395 | |
Provision for loan losses | 4,000 | 5,100 | 11,011 | | 12,600 | 9,611 | |
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