SOUTHERN PINES, N.C., April 23, 2025 /PRNewswire/ -- First Bancorp (the "Company") (NASDAQ - FBNC), the parent company of First Bank, reported unaudited first quarter earnings today.  The Company announced net income of $36.4 million, or $0.88 diluted earnings per share ("D-EPS"), for the three months ended March 31, 2025 compared to $3.6 million, or $0.08 D-EPS, for the three months ended December 31, 2024 ("linked quarter") and $25.3 million, or $0.61 D-EPS, for the first quarter of 2024 ("like quarter").

The Company continued its efforts to enhance net interest income and net interest margin. The Company recorded net interest income of $92.9 million for the first quarter of 2025, compared to $88.8 million for the linked quarter and $79.3 million for the like quarter. Tax equivalent net interest margin ("NIM-T/E") for the first quarter of 2025 expanded to 3.27% from 3.08% for the linked quarter and 2.80% for the like quarter. 

First Bancorp also continued to maintain expense control with noninterest expenses contracting to $57.9 million for the first quarter of 2025, down from $58.3 million for the linked quarter and $59.2 million for the like quarter. 

The results for the first quarter of 2025 include a $2.0 million reduction to the potential impacts to the allowance for credit losses from Hurricane Helene ($1.5 million after-taxes or $0.04 per diluted share).  In addition, the results for the fourth quarter 2024 included a securities loss of $36.8 million ($28.2 million after-taxes, or $0.68 per diluted share), from the securities loss-earnback transaction that included the sale of $283.8 million of available-for-sale securities bearing 1.62%. The reconciliations from net income and D-EPS to adjusted net income and adjusted D-EPS (both non-GAAP measures) for the first quarter of 2025 and the fourth quarter of 2024 are presented in Appendix E.

Richard H. Moore, CEO and Chairman of the Company, stated "Our Company had a strong quarter highlighted by the execution of our succession plan elevating Adam Currie to Chief Executive Officer of First Bank. Our ability to enhance net interest income and margin as well as maintain prudent expense management bodes well for the future.  We remain focused on maintaining credit quality and managing our balance sheet while continuing to provide excellent service to our customers. Our solid liquidity and excess capital will provide us strategic flexibility in the days ahead."

First Quarter 2025 Highlights

• NIM-T/E increased 19 basis points to 3.27% for the first quarter of 2025, up from 3.08% for the linked quarter and 2.80% in the like quarter.  The Federal Reserve rate reductions in September, November and December continue to benefit our NIM-T/E.
• Total loan yield expanded to 5.52%, up 5 basis points from the linked quarter and 7 basis points from the like quarter.  Total cost of funds contracted 11 basis points to 1.51% for the quarter ended March 31, 2025 from 1.62% for the linked quarter and from 1.79% from the like quarter.
• The yield on securities increased 32 basis points to 2.28% for the quarter ended March 31, 2025 from 1.96% for the linked quarter.   The increased yield on the new purchases from the securities loss-earnback transaction benefited less than half of the fourth quarter. 
• Average deposits were $10.6 billion for the first quarter of 2025, an increase of $14.5 million from the linked quarter, with $106.9 million of growth in average interest bearing checking and money market accounts partially offset by a decline of $52.6 million in average noninterest bearing deposits.  Total cost of deposits was 1.46%, a decrease of 11 basis points from 1.57% for the linked quarter and  10 basis points from 1.56% for the like quarter.  The Company continues to maintain a low level of wholesale funding with average borrowings of $92.0 million for the quarter ended March 31, 2025.
• We continue to focus on expense management.  Noninterest expenses of $57.9 million represented a reduction of $0.4 million from the linked quarter and $1.3 million from the like quarter.  The linked quarter decrease was driven by a $0.7 million decrease in Bankcard expenses, and a $0.4 million decrease in Total personnel expense, with smaller decreases and increases in other expense categories. Full time equivalent employees decreased by 18 from 1,371 at December 31, 2024 to 1,353 at March 31, 2025.
• D-EPS was $0.88 per share for the first quarter of 2025 compared to $0.08 for the linked quarter and $0.61 per share for the like quarter.  Adjusted D-EPS for the first quarter of 2025 was $0.84, up from the linked quarter's adjusted D-EPS of $0.76 and the like quarter's D-EPS of $0.61. See Appendix E for the components of these calculations.
• Net income was $36.4 million for the first quarter of 2025.  Adjusted net income increased to $34.9 million for the three months ended March 31, 2025 from adjusted net income of $31.7 million for the linked quarter and net income of $25.3 million for the like quarter. See Appendix E for the components of these calculations.
• We continued to maintain excess capital at March 31, 2025 with a linked quarter increase of 18 basis points in common equity tier 1 ratio to 14.53% (estimated) and a similar 16 basis points linked quarter increase in total risk-based capital ratio to 16.79% (estimated).  Both of these measures remain well above regulatory minimums or targets. During the first quarter of 2025, the Company repurchased 24,849 shares of common stock for a total cost of $1.0 million.
• Credit quality remained strong with a nonperforming assets ("NPA") to total assets ratio of 0.27% as of March 31, 2025, a decrease of 3 basis point from the linked quarter.  During the first quarter of 2025, the Company recorded net charge offs of $3.3 million, an annualized 0.17% of average loans. 
• Loan growth continued during the quarter, with loans totaling $8.1 billion at March 31, 2025, reflecting growth of $8.4 million, or 0.42%, for the quarter and growth of $26.5 million, or 0.33%, from March 31, 2024.
• Noninterest-bearing demand accounts were $3.5 billion, representing 32% of total deposits at March 31, 2025.  During the first quarter of 2025, customer deposits grew $214.1 million with increases of $109.2 million in noninterest bearing deposits and $101.1 million in money market accounts.
• The on-balance sheet liquidity ratio was 19.8% at March 31, 2025, an increase from 17.6% for the linked quarter.  Available off-balance sheet sources totaled $2.4 billion at March 31, 2025, resulting in a total liquidity ratio of 36.4%. 

Net Interest Income and Net Interest Margin

Net interest income for the first quarter of 2025 was $92.9 million, an increase of 4.5% from the linked quarter of $88.8 million and 17.2% from the like quarter of $79.3 million.  The increase in net interest income from the linked and like quarters was primarily driven by our focused efforts to manage deposit costs while increasing loan yields after the rate cuts by the Federal Reserve in the second half of 2024 along with the increased securities yield resulting from the loss-earnback transaction in the fourth quarter of 2024.

The Company's NIM-T/E for the first quarter of 2025 was 3.27%, an increase of 19 basis points from the linked quarter and 47 basis points from the like quarter.  Within interest-earning assets, the loss-earnback transaction in the securities portfolio during the fourth quarter of 2024 resulted in an increase of 32 basis points as compared to the linked quarter. In addition, loan yields increased 5 basis points to 5.52%. Following the three rate cuts by the Federal Reserve between September and December, the rate on interest-bearing deposits fell 17 basis points during the quarter ended March 31, 2025.  The like quarter expansion of NIM-T/E was driven by the same three factors described above resulting in an increase of 50 basis points in securities yield,  an increase of 7 basis points in loan yields, and a decrease of 19 basis points in the rate on interest-bearing deposits.

See Appendix F regarding loan purchase discount accretion and its impact on the Company's NIM-T/E.

Provision for Credit Losses and Credit Quality

For the three months ended March 31, 2025 and March 31, 2024, the Company recorded $1.1 million and $1.2 million in provision for credit losses, respectively. The provision for the first quarter of 2025 was driven by loan growth of $8.4 million and net charge-offs of $3.3 million partially offset by the $2.0 million reduction in reserves for potential credit exposure from Hurricane Helene as well as a reduction in the level of unfunded commitment reserves.  Net charge-offs for the first quarter of 2025 included $1.3 million related to the sale of a lending relationship as the result of an accelerated resolution.  The March economic forecasts, which are a key driver in the Company's CECL model, are relatively consistent with the prior quarter.

Within the portions of Western North and South Carolina that were significantly impacted by Hurricane Helene starting late in the third quarter of 2024, the Company identified borrowers that were potentially impacted by the storm and subsequent economic impacts which represented approximately $722 million of loans outstanding as of March 31, 2025.    Based upon its continuing evaluation of these potential impacts, the Company adjusted the incremental reserve for potential exposure from Hurricane Helene to $11.0 million as of March 31, 2025, a decrease of $2.0 million from December 31, 2024.  The remaining incremental reserve contributes 14 basis points to the Allowance for Credit Losses at period end.

Asset quality remained strong with annualized net loan charge-offs of 0.17% for the first quarter of 2025.  Total NPAs remained at a low level at $33.9 million at March 31, 2025, or 0.27% of total assets, down slightly from  0.30% at both December 31, 2024 and March 31, 2024.  

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

Noninterest Income

Noninterest income totaled $12.9 million during the first quarter of 2025, an increase from the negative $23.2 million recorded for the linked quarter which reflected the inclusion of the $36.8 million securities loss.  Excluding the loss on securities in the linked quarter, noninterest income decreased $0.7 million, or 5.4%,  primarily from seasonal decreases in service charges and gains on mortgages. As compared to the like quarter, noninterest income was substantially unchanged.

Noninterest Expenses

Noninterest expenses amounted to $57.9 million for the first quarter of 2025 compared to $58.3 million for the linked quarter and $59.2 million for the like quarter.  The $0.4 million, or 0.7%, decrease in noninterest expense from the linked quarter was driven by a $0.4 million decrease in total personnel expense, as the Company continues to actively manage headcount.

The $1.3 million decrease from the like quarter was driven by focused efforts to reduce controllable expenses including technology, operating and labor costs.  Other operating expenses decreased $1.0 million and Occupancy and equipment related expenses decreased $0.9 million.  For that same period, despite the fact that base salaries declined slightly, Salaries, incentives and commissions expense increased $1.0 million primarily driven by higher incentives and commissions from improved operating results in 2025.  

Income Taxes

Income tax expense totaled $10.4 million for the first quarter of 2025 compared to $3.3 million for the linked quarter and $6.5 million for the like quarter. These equated to effective tax rates of 22.2%, 48.4% and 20.5% for the respective periods.  As previously disclosed, the effective tax rate for the linked quarter was impacted by lower pretax income as well as the inclusion of $2.4 million of incremental state tax-related expense related to a variety of factors.

Balance Sheet

Total assets at March 31, 2025 amounted to $12.4 billion, an increase of $288.6 million, or 9.63% annualized, from the linked quarter and an increase of $344.6 million, or 2.85%, from a year earlier.  The increase from the prior periods was primarily related to deposit growth that generated investable funds which were deployed in loans and amounts due from banks, including the Federal Reserve.

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

Primarily the result of decreased unrealized losses on the available for sale securities portfolio, total investment securities increased to $2.6 billion at  March 31, 2025, reflecting a $19.7 million increase from the linked quarter.  Total unrealized loss on available for sale investment securities was $321.2 million at March 31, 2025, as compared to $368.1 million at December 31, 2024 and $418.9 million at March 31, 2024.  During the fourth quarter of 2024, as part of the loss-earnback transaction in the securities portfolio, $283.8 million of securities with a weighted average yield of 1.62% were sold at a loss of $36.8 million and $494.9 million of securities were purchased, with a weighted average yield of 5.21%.

Total loans amounted to $8.1 billion at March 31, 2025, an increase of $8.4 million, or 0.4%, from  December 31, 2024 and an increase of $26.5 million, or 0.3%, from March 31, 2024.  Please see below table for  total loan portfolio mix.  As of March 31, 2025, there were no notable concentrations in geographies within North Carolina and South Carolina or industries, including in office or hospitality categories, which are included in the "commercial real estate - non-owner occupied" category in the table below.  The Company's exposure to non-owner occupied office loans represented approximately 6.0% of the total portfolio at March 31, 2025, with the largest loan being $26.3 million and with an average loan outstanding balance of $1.3 million.  Non-owner occupied office loans are generally in non-metro markets and the ten largest loans in this category represent less than 2% of the total loan portfolio.

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

Total deposits were $10.7 billion at March 31, 2025, an increase of $214.1 million, or 8.2%, from  December 31, 2024 and an increase of $441.3 million, or 4.3%, from March 31, 2024.

The Company has a diversified and granular deposit base which has remained a stable funding source with noninterest-bearing deposits comprising 32% of total deposits at March 31, 2025.  As presented in the table below, our deposit mix has remained relatively consistent, with the exception of increased growth in money market accounts, partially offset by a decline in time deposits.

As of March 31, 2025 and December 31, 2024, estimated insured deposits totaled $6.5 billion, or 60.2%, and $6.4 billion, or 61.0%, respectively, of total deposits.  In addition, at March 31, 2025 and December 31, 2024, there were collateralized deposits of $725.9 million and $690.5 million, respectively, such that approximately 66.9% and 67.6%, respectively, of our total deposits were insured or collateralized at those dates.

Capital

The Company maintains capital in excess of well-capitalized regulatory requirements, with an estimated total risk-based capital ratio at March 31, 2025 of 16.79%, up from  the linked quarter ratio of 16.63% and the like quarter ratio of 15.85%.   The increases during the first quarter of 2025 in risk-based capital ratios was driven by earnings in excess of capital uses for dividends and share repurchases during the quarter.

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 (a non-GAAP financial measure) which was 8.55% at March 31, 2025, an increase of 33 basis points from the linked quarter and 93 basis points from March 31, 2024.  The first quarter increase in TCE was driven by earnings and improvements in the level of unrealized losses on the available for sale securities portfolio during the quarter. Refer to Appendix B for a reconciliation of common equity to TCE (a non-GAAP measure) and Appendix D for a calculation of the TCE ratio (a non-GAAP meansure).

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 and 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 March 31, 2025 was 19.8%.  In addition, the Company had approximately $2.4 billion in available lines of credit at that date resulting in a total liquidity ratio of 36.4%. 

About First Bancorp

First Bancorp is a bank holding company headquartered in Southern Pines, North Carolina, with total assets of $12.4 billion. Its principal activity is the ownership and operation of First Bank, a state-chartered community bank that operates 113 branches in North Carolina and South Carolina.  Since 1935, First Bank has taken a tailored approach to banking, combining best-in-class financial solutions, helpful local expertise, and technology to manage a home or business.  First Bank also provides SBA loans to customers through its nationwide network of lenders. Member FDIC, Equal Housing Lender.

Please visit our website at www.LocalFirstBank.com for more information.

First Bancorp's common stock is traded on The NASDAQ Global Select Market under the symbol "FBNC."

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.

Non-GAAP Measures

In this Earnings Release, we present certain measures of our performance that are calculated by methods other than in accordance with generally accepted accounting principles ("GAAP").  Company management uses these non-GAAP measures for purposes of evaluating our performance. Non-GAAP measures exclude or include amounts that are not normally excluded or included in the most directly comparable measure determined in accordance with GAAP. Company management believes an appropriate analysis of the Company's financial performance requires an understanding of the factors underlying such performance.  Non-GAAP financial measures should not be viewed as substitutes for the most directly comparable financial measures calculated in accordance with GAAP. Please see the Appendices attached to this Earnings Release for reconciliations of return on tangible common equity, tangible common equity, tangible book value per share, the tangible common equity ratio, adjusted net income and adjusted D-EPS. 

 

 

 

 

 

 

 

 

 

 

Supplemental information
APPENDIX F: Loan purchase discount accretion and its impact on the Company's NIM-T/E

Included in interest income for the first quarter of 2025 was loan purchase accounting discount accretion of $1.8 million compared to $2.2 million for the linked quarter and $2.4 million for the like quarter, with the activity related to the continued repayments/reduction of the loan portfolio acquired from GrandSouth Bancorporation in January of 2023. Loan discount accretion had positive impacts of 5 basis points, 6 basis points and 11 basis points, respectively, on the Company's NIM-T/E in the first quarter of 2025, the linked quarter and the like quarter. 

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

 

 

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