First Bancorp (FBNC) 8-K First Bancorp Reports Second Quarter Results

News Release

For Immediate Release:	For More Information,
July 24, 2007	Contact:  Jerry L. Ocheltree
	910-576-6171

First Bancorp Reports Second Quarter Results

TROY, N.C. – First Bancorp (NASDAQ - FBNC), the parent company of First Bank, announced net income today of $5,419,000 for the three months ended June 30, 2007, a 13.0% increase over the $4,795,000 reported for the corresponding period of 2006.  Diluted earnings per share for the second quarter of 2007 amounted to $0.37, a 12.1% increase over the $0.33 reported for the second quarter of 2006.

For the six month period ended June 30, 2007, net income amounted to $10,305,000, a 5.3% increase over the $9,786,000 reported for the first half of 2006.  Diluted earnings per share amounted to $0.71 for the first six months of 2007, an increase of 4.4% over the $0.68 reported in the comparable period of 2006.

Total assets at June 30, 2007 amounted to $2.21 billion, 10.7% higher than a year earlier.  Total loans at June 30, 2007 amounted to $1.80 billion, a 10.2% increase from a year earlier, and total deposits amounted to $1.80 billion at June 30, 2007, a 13.2% increase from a year earlier.

The increase in loans and deposits over the past twelve months resulted in an increase in the Company’s net interest income when comparing the three and six month periods of 2007 to comparable periods in 2006.  Net interest income for the second quarter of 2007 amounted to $19.7 million, a 6.7% increase over the $18.4 million recorded in the second quarter of 2006.  Net interest income for the six months ended June 30, 2007 amounted to $38.5 million, a 6.2% increase over the $36.3 million recorded in the same six month period in 2006.

The impact of the growth in loans and deposits on the Company’s net interest income was partially offset by a decline in the Company’s net interest margin (tax-equivalent net interest income divided by average earning assets).  The Company’s net interest margin for the second quarter of 2007 was 4.03% compared to 4.22% for second quarter of 2006.  The Company’s net interest margin for the first six months of 2007 was 4.00% compared to 4.28% for the same six months of 2006.  The lower net interest margins realized in 2007 compared to 2006 were primarily due to deposit rates paid by the Company rising by more than loan and investment yields. This has been caused by 1) the flat interest rate yield curve that has prevailed in the marketplace for most of the past year, 2) customers shifting their funds from low cost deposits to higher cost deposits as rates have risen, and 3) intense competition in the Company’s market area for loans and deposits that has impacted loan and deposit pricing.

Although the Company’s 2007 net interest margins have been lower than in 2006, the second quarter of 2007 net interest margin of 4.03% was 6 basis points higher than the 3.97% net interest margin realized in the first quarter of 2007.  This was primarily due to the repricing of fixed rate loans that matured and renewed at higher interest rates during the quarter and the stabilization of the Company’s funding costs.  The average loan yield

realized by the Company increased by 9 basis points from the first quarter of 2007, while the Company’s average rate paid on interest-bearing liabilities increased by only 4 basis points.  The relatively small increase in the average rate paid on interest-bearing liabilities is primarily due to the short-term nature of the Company’s deposit portfolio coupled with the relatively stable interest rate environment that has prevailed since the last Federal Reserve interest rate increase, which occurred in July 2006.

The Company’s provisions for loan losses did not vary significantly when comparing the three and six months ended June 30, 2007 to the comparable periods of 2006.  The provision for loan losses for the second quarter of 2007 was $1.3 million compared to $1.4 million for the second quarter of 2006.  The provision for loan losses for each of the six month periods ended June 30, 2007 and June 30, 2006 amounted to $2.4 million.  Factors that played an offsetting role in this comparison were i) lower 2007 loan growth, which generally results in a lower provision for loan losses, and ii) higher levels of nonperforming assets and net charge-offs in 2007, which generally increase the necessary provision for loan losses.  Loan growth was $26 million in the second quarter of 2007 compared to $83 million in the second quarter of 2006, while loan growth was $62 million for the first half of 2007 compared to $153 million for the first half of 2006.  The Company’s ratios of annualized net charge-offs to average loans were 16 basis points and 15 basis points for the three and six month periods in 2007, respectively, compared to 9 basis points and 6 basis points for the three and six month periods in 2006, respectively.  The Company’s level of nonperforming assets to total assets was 0.38% at June 30, 2007 compared to 0.30% a year earlier.  The average ratio of nonperforming assets to total assets for all North Carolina banks with more than $1 billion in total assets was 0.48% at March 31, 2007 (the most recent information available).

Noninterest income amounted to $4.9 million in the second quarter of 2007, a 26.4% increase from the $3.8 million recorded in the second quarter of 2006.  Noninterest income for the six months ended June 30, 2007 amounted to $9.1 million, an increase of 16.6% from the $7.8 million recorded in the first half of 2006.  Securities gains were $487,000 in the second quarter of 2007 compared to $205,000 in the second quarter of 2006.  “Other gains (losses)” amounted to a net gain of $115,000 in the second quarter of 2007 compared to a net loss of $311,000 in the second quarter of 2006.  For the six months ended June 30, 2007, “Other gains (losses)” amounted to a net gain of $82,000 compared to a net loss $378,000 in the first half of 2006.  The variances in “Other gains (losses)” in 2007 compared to 2006 relate primarily to a merchant credit card liability that the Company incurred in 2006.  The Company expensed $230,000 in the second quarter of 2006 related to this situation and another $1.67 million in the third quarter of 2006.  During 2007, the Company has determined that its ultimate exposure to this loss is approximately $190,000 less than the original estimated total loss of $1.9 million that had been reserved for in 2006.  Accordingly, the Company reversed $50,000 of this loss during the first quarter of 2007 and the remaining $140,000 in the second quarter of 2007 by recording “other gains” to reduce this liability.

Noninterest expenses amounted to $14.5 million in the second quarter of 2007, an 11.1% increase over the $13.1 million recorded in the comparable period of 2006.  Noninterest expenses for the six months ended June 30, 2007 amounted to $28.6 million, an 11.0% increase from the $25.8 million recorded in the first six months of 2006.  The increases in noninterest expenses were primarily attributable to costs associated with the Company’s overall growth in loans, deposits and branch network.  Expense associated with the Company’s stock option plan amounted to $156,000 and $167,000 for the three and six months ended June 30, 2007, respectively, compared to $244,000 and $291,000 for the three and six months ended June 30, 2006, respectively.

The Company’s effective tax rate was approximately 38%-39% for each of the three and six month periods in 2006 and 2007.

Jerry L. Ocheltree, President and CEO of First Bancorp, commented on the quarter’s results, “I am pleased with today’s earnings report.  We continue to grow our community bank.  This growth is a result of having experienced local bankers who believe in our mission and are working hard to ensure the success of our bank.  I thank our employees for their dedication.  It is also good to see the increase in our net interest margin for this quarter compared to the previous quarter.”

Mr. Ocheltree also noted the following corporate developments:

· On July 12, 2007, the Company announced that it had reached an agreement to acquire Great Pee Dee Bancorp, Inc., the holding company for a community bank headquartered in Cheraw, South Carolina with three branches and total assets of $219 million.  Please see the press release and merger agreement filed with the SEC (www.sec.gov) on July 13, 2007 for additional details.

· On Monday, July 23, 2007 First Bank began a week-long Grand Opening celebration for the bank’s branch relocation in Kannapolis, North Carolina.  The new branch is located at 421 South Main Street.

· On May 22, 2007, the Company announced a quarterly dividend of 19 cents per share payable on July 25, 2007 to shareholders of record on June 30, 2007.  The current dividend rate is an increase of 5.6% over the dividend rate paid in the same period of 2006.

· First Bank has nearly completed the construction of an additional 2,500 square feet of office space at its Lumberton branch located at 2801 North Elm Street.

· First Bank of Virginia has nearly completed the construction of a new bank branch in Radford, Virginia.  The new branch will be located at 1400 Tyler Avenue, which is at the corner of Tyler Avenue and Auburn Avenue.  The existing bank branch in Radford will be relocated to this new facility upon its completion, which is expected to be in September.

· First Bank has entered into a contract to purchase of 1.5 acres of land in Leland, North Carolina at Magnolia Greens.  Construction of a bank branch location at this site is expected to commence in 2008.

· There has been no stock repurchase activity during 2007.

First Bancorp is a bank holding company based in Troy, North Carolina with total assets of approximately $2.2 billion.  Its principal activity is the ownership and operation of First Bank, a state-chartered community bank that operates 69 branch offices, with 62 branches operating in a twenty-one county market area in the central piedmont and coastal regions of North Carolina, 3 branches in Dillon County, South Carolina, and 4 branches in southern Virginia (Abingdon, Dublin, Radford, and Wytheville), where First Bank does business as First Bank of Virginia.  The Company also has a loan production office in Blacksburg, Virginia.  First Bancorp’s common stock is traded on the NASDAQ Global Select Market under the symbol FBNC.

Please visit our website at www.firstbancorp.com.  For additional financial data, please see the attached Financial Summary.

This press release contains statements that could be deemed forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995, which statements are inherently subject to risks and uncertainties.  Forward-looking statements are statements that include projections, predictions, expectations or beliefs about future events or results or otherwise are not statements of historical fact.  Such statements are often characterized by the use of qualifying words (and their derivatives) such as “expect,” “believe,” “estimate,” “plan,” “project,” or other statements concerning opinions or judgments of the Company and its management about future events.  Factors that could influence the accuracy of such forward-looking statements include, but are not limited to, the financial success or changing strategies of the Company’s customers, the Company’s level of success in integrating acquisitions, actions of government regulators, the level of market interest rates, and general economic conditions.  For additional information about the factors that could affect the matters discussed in this paragraph, see the “Risk Factors” section of the Company’s most recent report on Form 10-K.

First Bancorp will file a registration statement, a proxy statement/prospectus and other relevant documents concerning the proposed merger with Great Pee Dee Bancorp, Inc. (“Great Pee Dee”) with the Securities and Exchange Commission (the “SEC”).   Shareholders of Great Pee Dee are urged to read the registration statement and the proxy statement/prospectus when it becomes available and any other relevant documents filed with the SEC, as well as any amendments or supplements to those documents, because they will contain important information.  You will be able to obtain a free copy of the proxy statement/prospectus, as well as other filings containing information about First Bancorp and Great Pee

Dee, at the SEC’s Internet site (http://www.sec.gov).  Copies of the proxy statement/prospectus to be filed by First Bancorp also can be obtained, when available and without charge, by directing a request to First Bancorp, Attention: Anna Hollers, Investor Relations, P.O. Box 508, Troy, North Carolina, 27371, (910) 576-6171.

First Bancorp and its directors and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of Great Pee Dee in connection with the merger.  Information about the directors and executive officers of First Bancorp is set forth in First Bancorp’s most recent proxy statement filed with the SEC and available at the SEC’s Internet site and from First Bancorp at the address set forth in the preceding paragraph.  Additional information regarding the interests of those participants may be obtained by reading the proxy statement/prospectus regarding the proposed transaction when it becomes available.

First Bancorp and Subsidiaries

Financial Summary

	Three Months Ended June 30,					Percent
($ in thousands except per share data - unaudited)	2007		2006			Change
INCOME STATEMENT
Interest income
Interest and fees on loans	$	34,492		29,215
Interest on investment securities		1,742		1,529
Other interest income		683		571
Total interest income		36,917		31,315			17.9	%
Interest expense
Interest on deposits		14,738		10,813
Other, primarily borrowings		2,501		2,058
Total interest expense		17,239		12,871			33.9	%
Net interest income		19,678		18,444			6.7	%
Provision for loan losses		1,322		1,400			(5.6	%)
Net interest income after provision       for loan losses		18,356		17,044			7.7	%
Noninterest income
Service charges on deposit accounts		2,300		2,225
Other service charges, commissions, and fees		1,266		1,119
Fees from presold mortgages		292		244
Commissions from financial product sales		344		325
Data processing fees		53		37
Securities gains		487		205
Other gains (losses)		115		(311	)
Total noninterest income		4,857		3,844			26.4	%
Noninterest expenses
Personnel expense		8,519		7,520
Occupancy and equipment expense		1,861		1,676
Intangibles amortization		94		60
Other operating expenses		4,036		3,808
Total noninterest expenses		14,510		13,064			11.1	%
Income before income taxes		8,703		7,824			11.2	%
Income taxes		3,284		3,029			8.4	%
Net income	$	5,419		4,795			13.0	%
Earnings per share – basic	$	0.38		0.34			11.8	%
Earnings per share – diluted		0.37		0.33			12.1	%
ADDITIONAL INCOME STATEMENT INFORMATION
Net interest income, as reported	$	19,678		18,444
Tax-equivalent adjustment (1)		140		125
Net interest income, tax-equivalent	$	19,818		18,569			6.7	%

(1) This amount reflects the tax benefit that the Company receives related to its tax-exempt loans and securities, which carry interest rates lower than similar taxable investments due to their tax exempt status.  This amount has been computed assuming a 39% tax rate and is reduced by the related nondeductible portion of interest expense.

First Bancorp and Subsidiaries

Financial Summary - Page 2

	Six Months Ended June 30,					Percent
($ in thousands except per share data - unaudited)	2007		2006			Change
INCOME STATEMENT
Interest income
Interest and fees on loans	$	67,703		55,977
Interest on investment securities		3,414		2,985
Other interest income		1,336		1,068
Total interest income		72,453		60,030			20.7	%
Interest expense
Interest on deposits		28,717		20,255
Other, primarily borrowings		5,192		3,478
Total interest expense		33,909		23,733			42.9	%
Net interest income		38,544		36,297			6.2	%
Provision for loan losses		2,443		2,415			1.2	%
Net interest income after provision       for loan losses		36,101		33,882			6.5	%
Noninterest income
Service charges on deposit accounts		4,477		4,299
Other service charges, commissions, and fees		2,525		2,324
Fees from presold mortgages		619		511
Commissions from financial product sales		803		764
Data processing fees		100		73
Securities gains		487		205
Other gains (losses)		82		(378	)
Total noninterest income		9,093		7,798			16.6	%
Noninterest expenses
Personnel expense		16,640		15,086
Occupancy and equipment expense		3,737		3,303
Intangibles amortization		188		121
Other operating expenses		8,075		7,283
Total noninterest expenses		28,640		25,793			11.0	%
Income before income taxes		16,554		15,887			4.2	%
Income taxes		6,249		6,101			2.4	%
Net income	$	10,305		9,786			5.3	%
Earnings per share - basic	$	0.72		0.69			4.3	%
Earnings per share - diluted		0.71		0.68			4.4	%
ADDITIONAL INCOME STATEMENT INFORMATION
Net interest income, as reported	$	38,544		36,297
Tax-equivalent adjustment (1)		263		251
Net interest income, tax-equivalent	$	38,807		36,548			6.2	%

(1)       See footnote 1 on page 1 of Financial Summary for discussion of tax-equivalent adjustments.

First Bancorp and Subsidiaries

Financial Summary - page 3

	Three Months Ended June 30,				Six Months Ended June 30,
PERFORMANCE RATIOS (annualized)	2007		2006		2007		2006
Return on average assets		1.03%		1.02%		0.99%		1.07%
Return on average equity		12.85%		11.83%		12.38%		12.30%
Net interest margin - tax equivalent (1)		4.03%		4.22%		4.00%		4.28%
Efficiency ratio - tax equivalent (1) (2)		58.80%		58.29%		59.79%		58.16%
Net charge-offs to average loans		0.16%		0.09%		0.15%		0.06%
Nonperforming assets to total assets (period end)		0.38%		0.30%		0.38%		0.30%
SHARE DATA
Cash dividends declared	$	0.19		0.18	$	0.38		0.36
Stated book value		11.63		11.20		11.63		11.20
Tangible book value		8.08		7.76		8.08		7.76
Common shares outstanding at end of period		14,392,803		14,279,847		14,392,803		14,279,847
Weighted average shares outstanding - basic		14,384,511		14,296,159		14,372,311		14,275,472
Weighted average shares outstanding - diluted		14,473,446		14,433,830		14,480,333		14,425,500
Shareholders’ equity to assets		7.59%		8.03%		7.59%		8.03%
AVERAGE BALANCES (in thousands)
Total assets	$	2,116,527		1,886,234	$	2,098,451		1,844,773
Loans		1,783,794		1,593,070		1,770,320		1,554,763
Earning assets		1,973,548		1,764,227		1,956,630		1,723,381
Deposits		1,763,210		1,569,781		1,737,974		1,547,474
Interest-bearing liabilities		1,704,799		1,501,670		1,693,012		1,466,803
Shareholders’ equity		169,169		162,526		167,903		160,453

(1)   See footnote 1 on page 1 of Financial Summary for discussion of tax-equivalent adjustments.

(2)   Calculated by dividing noninterest expense by the sum of tax-equivalent net interest income plus noninterest income.

TREND INFORMATION

($ in thousands except per share data)

	For the Three Months Ended
INCOME STATEMENT	June 30, 2007		March 31, 2007		Dec. 31, 2006		Sept. 30, 2006 (2)		June 30, 2006
Net interest income - tax equivalent (1)	$	19,818		18,990		19,315		19,174		18,569
Taxable equivalent adjustment (1)		140		124		117		133		125
Net interest income		19,678		18,866		19,198		19,041		18,444
Provision for loan losses		1,322		1,121		1,293		1,215		1,400
Noninterest income		4,857		4,236		4,058		2,454		3,844
Noninterest expense		14,510		14,130		13,870		13,535		13,064
Income before income taxes		8,703		7,851		8,093		6,745		7,824
Income taxes		3,284		2,965		2,949		2,373		3,029
Net income		5,419		4,886		5,144		4,372		4,795
Earnings per share – basic		0.38		0.34		0.36		0.31		0.34
Earnings per share – diluted		0.37		0.34		0.36		0.30		0.33

(1)   See footnote 1 on page 1 of Financial Summary for discussion of tax-equivalent adjustments.

(2)  Net income for the three months ended September 30, 2006 was significantly impacted by the write-off loss of a merchant credit card account, which reduced noninterest income by $1,670,000.  The after-tax impact was $1.0 million, or $0.07 per diluted share.

First Bancorp and Subsidiaries

Financial Summary - page 4

PERIOD END BALANCES ($ in thousands)	June 30, 2007		March 31, 2007		Dec. 31, 2006		June 30, 2006		One Year Change
Assets	$	2,205,858		2,177,282		2,136,624		1,992,709		10.7	%
Securities		147,328		140,241		143,086		126,154		16.8	%
Loans		1,802,308		1,776,130		1,740,396		1,635,899		10.2	%
Allowance for loan losses		20,104		19,478		18,947		17,642		14.0	%
Intangible assets		51,206		51,300		51,394		49,070		4.4	%
Deposits		1,800,561		1,745,593		1,695,679		1,590,668		13.2	%
Borrowings		178,013		198,013		210,013		195,013		-8.7	%
Shareholders’ equity		167,458		165,159		162,705		159,915		4.7	%

	For the Three Months Ended
YIELD INFORMATION	June 30, 2007			March 31, 2007			Dec. 31, 2006			Sept. 30, 2006			June 30, 2006
Yield on loans		7.76	%		7.67	%		7.64	%		7.54	%		7.36	%
Yield on securities - tax equivalent (1)		5.31	%		5.26	%		5.11	%		5.13	%		5.09	%
Yield on other earning assets		5.76	%		5.97	%		5.82	%		5.61	%		5.60	%
Yield on all interest earning assets		7.53	%		7.46	%		7.41	%		7.32	%		7.15	%
Rate on interest bearing deposits		3.84	%		3.78	%		3.65	%		3.44	%		3.18	%
Rate on other interest bearing liabilities		6.02	%		6.03	%		6.19	%		6.17	%		5.96	%
Rate on all interest bearing liabilities		4.06	%		4.02	%		3.91	%		3.72	%		3.44	%
Interest rate spread - tax equivalent (1)		3.47	%		3.44	%		3.50	%		3.60	%		3.71	%
Net interest margin - tax equivalent (2)		4.03	%		3.97	%		4.05	%		4.12	%		4.22	%
Average prime rate		8.25	%		8.25	%		8.25	%		8.25	%		7.90	%

(1)   See footnote 1 on page 1 of Financial Summary for discussion of tax-equivalent adjustments.

(2)  Calculated by dividing annualized tax equivalent net interest income by average earning assets for the period.  See footnote 1 on page 1 of Financial Summary for discussion of tax-equivalent adjustments.

ASSET QUALITY DATA ($ in thousands)	June 30, 2007		March 31, 2007		Dec. 31, 2006		Sept. 30, 2006		June 30, 2006
Nonaccrual loans	$	6,457		5,871		6,852		5,170		3,973
Restructured loans		7		8		10		11		12
Accruing loans> 90 days past due		-		-		-		-		-
Total nonperforming loans		6,464		5,879		6,862		5,181		3,985
Other assets – primarily other real estate		1,830		2,351		1,539		1,799		2,024
Total nonperforming assets	$	8,294		8,230		8,401		6,980		6,009
Net charge-offs to average loans - annualized		0.16%		0.14%		0.19%		0.11%		0.09%
Nonperforming loans to total loans		0.36%		0.33%		0.39%		0.31%		0.24%
Nonperforming assets to total assets		0.38%		0.38%		0.39%		0.34%		0.30%
Allowance for loan losses to total loans		1.12%		1.10%		1.09%		1.09%		1.08%