Exhibit 99(a)
First Bancorp Reports Increase in Quarterly Earnings
TROY, N.C., Oct. 21 /PRNewswire-FirstCall/ -- First Bancorp
(Nasdaq: FBNC), the parent company of First Bank, announced today net income
for the third quarter of 2004 of $5,197,000, or $0.54 per diluted share. The
2004 earnings represent a 1.9% increase in diluted earnings per share over the
earnings of $5,056,000, or $0.53 per diluted share, reported for the third
quarter of 2003. The third quarter of 2004 included $451,000 in gains from
sales of securities and properties compared to $131,000 in similar gains
realized in the third quarter of 2003.
Key performance ratios for the third quarter of 2004 include:
* Return on average assets of 1.32%
* Return on average equity of 14.18%
* Net charge-offs to average loans of 0.22%
* Net interest margin of 4.28%
* Nonperforming assets to total assets at quarter end of 0.34%
* Efficiency ratio of 55.59%
Net income for the nine months ended September 30, 2004 amounted to
$14,803,000, or $1.54 per diluted share, a 1.3% increase in diluted earnings
per share over the net income of $14,560,000, or $1.52 per diluted share,
reported for the nine months ended September 30, 2003. Earnings for the nine
months ended September 30, 2004 include $557,000 in gains from sales of
securities and properties compared to $169,000 in similar gains realized in
the first nine months of 2003.
Total assets at September 30, 2004 amounted to $1.61 billion, 18.6% higher
than a year earlier. Total loans at September 30, 2004 amounted to
$1.34 billion, a 17.0% increase from a year earlier, and total deposits
amounted to $1.32 billion at September 30, 2004, a 15.6% increase from a year
earlier. The Company's acquisition of four RBC Centura Bank branches on
October 27, 2003 contributed to the year-over-year increases. As of the
acquisition date, the four RBC Centura Bank branches had $25 million in loans
and $102 million in deposits.
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
nine month periods in 2004 to the comparable periods in 2003. Net interest
income for the third quarter of 2004 amounted to $15.5 million, a 10.7%
increase over the $14.0 million recorded in the third quarter of 2003. Net
interest income for the nine months ended September 30, 2004 amounted to
$45.2 million, a 10.0% increase over the $41.1 million recorded in the same
nine month period in 2003.
The positive impact on net interest income from the increases in loans and
deposits more than offset lower net interest margins realized in 2004 compared
to 2003. The Company's net interest margin (tax-equivalent net interest
income divided by average earning assets) for the third quarter of 2004 was
4.28% compared to 4.52% for the third quarter of 2003. The Company's net
interest margin for the nine months ended September 30, 2004 was 4.30% versus
4.54% for the comparable period in 2003. The Company's net interest margin
has been negatively impacted by the thirteen interest rate cuts initiated by
the Federal Reserve from 2001 to 2003 and the Company's shift toward
originating more adjustable rate loans compared to fixed rate loans to protect
the Company from anticipated increases in interest rates. Since June 30,
2004, the Federal Reserve has increased interest rates by 75 basis points,
which is largely responsible for the Company's net interest margin increasing
from 4.26% in the second quarter of 2004 to 4.28% in the third quarter of
2004.
Partially offsetting the increases in net interest income were higher
amounts of provisions for loan losses recorded by the Company in 2004. The
provision for loan losses in the third quarter of 2004 was $770,000 compared
to $695,000 in the third quarter of 2003, and the provision for loan losses
for the first nine months of 2004 was $2,080,000 compared to $1,755,000
recorded in the same period of 2003. The higher provisions for loan losses
were primarily a result of higher credit risk associated with higher loan
growth. Net internal loan growth for the third quarter of 2004 was
$40 million compared to $35 million for the third quarter of 2003. Net
internal loan growth for the first nine months of 2004 was $119 million
compared to $97 million for the same nine months of 2003.
Except for fees from presold mortgages, most components of noninterest
income and noninterest expense increased in 2004 as a result of the Company's
overall growth. Fees from presold mortgages have decreased significantly in
2004 as a result of a decline in mortgage refinancing activity caused by
higher mortgage interest rates. Fees from presold mortgages decreased from
$565,000 in the third quarter of 2003 to $220,000 in the third quarter of
2004, and from $1,918,000 for the nine months ended September 30, 2003 to
$698,000 for the same nine months in 2004.
The Company realized securities gains of $100,000 and $288,000 for the
three and nine months ended September 30, 2004, respectively, compared to
securities gains of $82,000 in the three and nine months ended September 30,
2003. Also, during the third quarter of 2004, the Company sold a former bank
branch building for a gain of approximately $351,000, which is classified
within "other gains, net" in the accompanying income statement. Other gains,
net, totaled $351,000 and $269,000 for the three and nine months ended
September 30, 2004, respectively, compared to similar gains of $49,000 and
$87,000 realized in the three and nine months ended September 30, 2003,
respectively.
The Company's asset quality ratios have remained sound in 2004. For the
three and nine months ended September 30, 2004, net charge-offs as a
percentage of average loans amounted to 22 basis points (annualized) and
14 basis points, respectively, compared to 8 basis points (annualized) and
9 basis points for each of the comparable periods in 2003. During the third
quarter of 2004, the Company's largest nonaccrual loan relationship was
reduced to zero through a combination of payments received, property
foreclosures, and charge-offs. The balance of the nonaccruing loan at
June 30, 2004 was $640,000. During the third quarter of 2004, the Company
received payments of $42,000, foreclosed on property with a value of $100,000,
and the remaining balance of $498,000 was charged-off. Of the amount charged-
off, $430,000 had been reserved specifically for this relationship in prior
periods, and thus this charge-off did not significantly impact the Company's
provision for loan losses in the third quarter of 2004. The balance of the
Company's nonaccrual loans increased slightly from the second quarter of 2004
to the third quarter of 2004 ($3.3 million to $3.6 million) as a result of
several smaller relationships that were placed on nonaccrual during the
quarter, which more than offset the impact of the resolution of the large
nonaccrual relationship. The Company's ratio of nonperforming assets to total
assets of 0.34% continues to compare favorably to a June 30, 2004 North
Carolina state bank average of 0.52%.
James H. Garner, President and CEO of First Bancorp, commented on today's
earnings report, "I am pleased with our strong all-around performance. We
continue to achieve good growth, while maintaining sound asset quality and
achieving high returns on average assets and equity. Also, I am pleased to
see that the Company's net interest margin experienced its first quarterly
increase after declining for five consecutive quarters. The improved margin
was aided by higher interest rates, which the Federal Reserve initiated in
response to an improved economy. I believe that an improving economy will
provide growth opportunities for the Company and that higher interest rates
will allow the Company's net interest margin to normalize."
Mr. Garner continued, "I am also excited about our bank's recent
announcement that we will be offering internet banking to our customers
beginning in December of this year. We have carefully studied this technology
and have purchased state-of-the-art internet software that I believe our
customers will find convenient and easy to use. We're calling this product
"One-on-One Online" and expect it to contribute to our Company's growth."
Mr. Garner also noted the following corporate developments:
- On September 29, 2004, the Company announced a three-for-two stock
split payable on November 15, 2004 to shareholders of record as of
October 29, 2004. Shareholders should retain their existing
certificates and no certificates should be tendered to First Bancorp or
the transfer agent in connection with the split. New certificates for
the additional shares will be mailed to shareholders shortly after the
payable date.
- On August 25, 2004, the Company announced a quarterly dividend increase
to 25 cents per share (from 24 cents per share) payable on October 25,
2004 to shareholders of record on September 30, 2004.
- On July 30, 2004, the Company announced that its Board of Directors had
approved the repurchase of an additional 250,000 shares of the
Company's common stock. During the third quarter of 2004, the Company
completed a share repurchase authorization for 200,000 shares that was
announced on April 23, 2003.
- On October 12, 2004, the Company relocated its First Bank of Virginia
branch in Wytheville, Virginia to a newly constructed building located
at 150 Virginia Avenue in the Commonwealth Shopping Center. In light
of the significant growth experienced in the Company's Wytheville
branch, this new facility will allow the bank to better serve its loyal
and growing customer base. The construction of the new building
complements the recent significant investments that the Company has
made in Virginia. In January, the Company opened an office in
Abingdon, Virginia, and in July the Company opened an office in
Radford, Virginia.
- As noted above, the Company will begin offering internet banking, with
bill-pay and cash management features, to customers in December 2004.
- The Company has plans to open new bank branches in the towns of Rose
Hill and Thomasville, both in North Carolina. Rose Hill is located in
Duplin County, North Carolina, in close proximity to the Company's
existing branches in Wallace and Kenansville. The planned branch in
Thomasville, Davidson County, will complement the Company's existing
branch in that town.
- During the third quarter of 2004, the Company repurchased 78,035
shares of its common stock at an average price of $32.50 per share.
Year to date, the Company has repurchased 192,277 shares of its common
stock at an average price of $32.31 per share.
First Bancorp is a bank holding company based in Troy, North Carolina with
total assets of approximately $1.6 billion. Its principal activity is the
ownership and operation of First Bank, a state-chartered community bank that
operates 59 branch offices, with 53 branches operating in a nineteen county
market area in the central piedmont region of North Carolina, 3 branches in
Dillon County, South Carolina, and 3 branches in Virginia (Abingdon, Radford,
and Wytheville), where First Bank does business as First Bank of Virginia.
First Bancorp's common stock is traded on the NASDAQ National Market under the
symbol FBNC.
Please visit our website at http://www.firstbancorp.com. For additional
financial data, please see the attached Financial Summary.
This press release contains statements that could be deemed forward-
looking statements within the meaning of Section 21E of the Securities
Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995,
which statements are inherently subject to risks and uncertainties. Forward-
looking statements are statements that include projections, predictions,
expectations or beliefs about future events or results or otherwise are not
statements of historical fact. Such statements are often characterized by the
use of qualifying words (and their derivatives) such as "expect," "believe,"
"estimate," "plan," "project," or other statements concerning opinions or
judgments of the Company and its management about future events. Factors that
could influence the accuracy of such forward-looking statements include, but
are not limited to, the financial success or changing strategies of the
Company's customers, the Company's level of success in integrating
acquisitions, actions of government regulators, the level of market interest
rates, and general economic conditions.
First Bancorp and Subsidiaries
Financial Summary
($ in thousands Three Months Ended Nine Months Ended
except per share September 30, Percent September 30, Percent
data - unaudited) 2004 2003 Change 2004 2003 Change
INCOME STATEMENT
Interest income
---------------
Interest and
fees on loans $19,321 17,296 $55,516 51,554
Interest on
investment
securities 1,290 1,053 3,854 3,288
Other interest
income 123 123 313 651
-------- -------- --------- --------
Total interest
income 20,734 18,472 12.2% 59,683 55,493 7.6%
-------- -------- --------- --------
Interest expense
----------------
Interest on
deposits 4,277 4,018 12,275 13,130
Interest on
borrowings 916 413 2,235 1,306
-------- -------- --------- --------
Total interest
expense 5,193 4,431 17.2% 14,510 14,436 0.5%
-------- -------- --------- --------
Net interest
income 15,541 14,041 10.7% 45,173 41,057 10.0%
Provision for
loan losses 770 695 10.8% 2,080 1,755 18.5%
-------- -------- --------- --------
Net interest
income after
provision for
loan losses 14,771 13,346 10.7% 43,093 39,302 9.6%
-------- -------- --------- --------
Noninterest income
------------------
Service charges
on deposit
accounts 2,325 1,988 6,879 5,776
Other service
charges,
commissions,
and fees 809 667 2,499 2,076
Fees from
presold mortgages 220 565 698 1,918
Commissions from
financial product
sales 387 361 1,083 956
Data processing
fees 104 90 304 242
Securities gains 100 82 288 82
Other gains, net 351 49 269 87
-------- -------- --------- --------
Total
noninterest
income 4,296 3,802 13.0% 12,020 11,137 7.9%
-------- -------- --------- --------
Noninterest expenses
--------------------
Personnel
expense 6,524 5,561 19,061 16,283
Occupancy and
equipment
expense 1,421 1,231 4,285 3,658
Intangibles
amortization 95 46 284 137
Other operating
expenses 3,052 2,435 8,816 7,795
-------- -------- --------- --------
Total
noninterest
expenses 11,092 9,273 19.6% 32,446 27,873 16.4%
-------- -------- --------- --------
Income before
income taxes 7,975 7,875 1.3% 22,667 22,566 0.4%
Income taxes 2,778 2,819 -1.5% 7,864 8,006 -1.8%
-------- -------- --------- --------
Net income $5,197 5,056 2.8% $14,803 14,560 1.7%
======== ======== ========= ========
Earnings per
share - basic $ 0.55 0.54 1.9% $ 1.57 1.55 1.3%
Earnings per
share - diluted 0.54 0.53 1.9% 1.54 1.52 1.3%
ADDITIONAL INCOME STATEMENT INFORMATION
---------------------------------------
Net interest
income,
as reported $15,541 14,041 $45,173 41,057
Tax-equivalent
adjustment (1) 118 119 360 393
-------- -------- --------- --------
Net interest
income,
tax-equivalent $15,659 14,160 10.6% $45,533 41,450 9.9%
======== ======== ========= ========
(1) This amount reflects the tax benefit that the Company receives
related 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 35% tax rate and is
reduced by the related nondeductible portion of interest expense.
Three Months Ended Nine Months Ended
September 30, Percent September 30, Percent
2004 2003 Change 2004 2003 Change
PERFORMANCE RATIOS
(annualized)
Return on
average assets 1.32% 1.50% 1.30% 1.49%
Return on average
equity 14.18% 14.57% 13.59% 14.33%
Net interest
margin - tax
equivalent (1) 4.28% 4.52% 4.30% 4.54%
Efficiency
ratio - tax
equivalent
(1)(2) 55.59% 51.63% 56.38% 53.00%
Net charge-offs
to average loans 0.22% 0.08% 0.14% 0.09%
Nonperforming
assets to total
assets
(period end) 0.34% 0.39% 0.34% 0.39%
SHARE DATA
Cash dividends
declared $0.25 0.24 4.2% $0.73 0.70 4.3%
Stated book
value 15.54 14.70 5.7% 15.54 14.70 5.7%
Tangible book
value 10.18 10.80 -5.7% 10.18 10.80 -5.7%
Common shares
outstanding at
end of period 9,370,091 9,394,301 9,370,091 9,394,301
Weighted average
shares
outstanding
- basic 9,408,326 9,378,865 9,442,140 9,376,581
Weighted average
shares
outstanding
- diluted 9,557,240 9,560,585 9,604,723 9,555,610
Shareholders'
equity to assets 9.04% 10.17% 9.04% 10.17%
AVERAGE BALANCES
(in thousands)
Total assets $1,563,548 1,334,177 17.2% $1,524,394 1,309,421 16.4%
Loans 1,320,391 1,127,947 17.1% 1,276,713 1,088,553 17.3%
Earning assets 1,453,879 1,243,195 16.9% 1,414,187 1,219,360 16.0%
Deposits 1,301,703 1,146,683 13.5% 1,287,353 1,130,775 13.8%
Interest-bearing
liabilities 1,249,440 1,057,358 18.2% 1,215,372 1,042,336 16.6%
Shareholders'
equity 145,757 137,655 5.9% 145,523 135,848 7.1%
(1) See footnote 1 on page 1 of Financial Summary for discussion of
tax-equivalent adjustments.
(2) Calculated by dividing noninterest expense by the sum of
tax-equivalent net interest income plus noninterest income.
TREND INFORMATION
($ in thousands except per share data)
For the Three Months Ended
--------------------------
Sept. 30, June 30, March 31, Dec. 31, Sept. 30, One Year
2004 2004 2004 2003 2003 Change
INCOME STATEMENT
Net interest
income - tax
equivalent (1) $15,659 14,978 14,896 14,828 14,160 10.6%
Taxable
equivalent
adjustment (1) 118 119 123 125 119 -0.8%
Net interest
income 15,541 14,859 14,773 14,703 14,041 10.7%
Provision for
loan losses 770 740 570 925 695 10.8%
Noninterest
income 4,296 3,912 3,812 3,781 3,802 13.0%
Noninterest
expense 11,092 10,622 10,732 10,091 9,273 19.6%
Income before
income taxes 7,975 7,409 7,283 7,468 7,875 1.3%
Income taxes 2,778 2,523 2,563 2,611 2,819 -1.5%
Net income 5,197 4,886 4,720 4,857 5,056 2.8%
Earnings per
share - basic 0.55 0.52 0.50 0.52 0.54 1.9%
Earnings per
share - diluted 0.54 0.51 0.49 0.51 0.53 1.9%
(1) See footnote 1 on page 1 of Financial Summary for discussion of tax-
equivalent adjustments.
PERIOD END BALANCES (in thousands)
Sept. 30, June 30, March 31, Dec. 31, Sept. 30, One Year
2004 2004 2004 2003 2003 Change
Assets $1,610,174 $1,558,251 1,494,418 1,475,769 1,357,222 18.6%
Securities 106,051 112,974 112,915 117,661 103,825 2.1%
Loans 1,337,583 1,297,224 1,251,923 1,218,895 1,142,900 17.0%
Allowance
for loan
losses 14,351 14,313 13,917 13,569 12,700 13.0%
Intangible
assets 50,199 50,517 50,621 50,701 36,623 37.1%
Deposits 1,322,625 1,300,804 1,290,272 1,249,364 1,143,798 15.6%
Borrowings 132,239 106,000 51,000 76,000 66,000 100.4%
Shareholders'
equity 145,588 143,238 143,929 141,856 138,088 5.4%
YIELD INFORMATION
For the Three Months Ended
-------------------------- One
Sept. 30, June 30, March 31, Dec. 31, Sept. 30, Year
2004 2004 2004 2003 2003 Change(3)
Yield on
loans 5.82% 5.74% 5.86% 5.93% 6.08% -26 bp
Yield on
securities
- tax
equivalent (1) 5.15% 4.92% 5.05% 5.07% 5.06% 9 bp
Yield on
other earning
assets 1.99% 1.55% 1.50% 1.92% 2.10% -11 bp
Yield on all
interest
earning
assets 5.71% 5.60% 5.72% 5.78% 5.93% -22 bp
Rate on
interest
bearing
deposits 1.49% 1.43% 1.43% 1.47% 1.57% -8 bp
Rate on other
interest bearing
liabilities 3.37% 3.75% 3.70% 3.24% 3.86% -49 bp
Rate on all
interest bearing
liabilities 1.65% 1.56% 1.57% 1.56% 1.66% -1 bp
Interest rate
spread - tax
equivalent(1) 4.06% 4.04% 4.15% 4.22% 4.27% -21 bp
Net interest
margin - tax
equivalent(2) 4.28% 4.26% 4.37% 4.44% 4.52% -24 bp
Average prime
rate 4.41% 4.00% 4.00% 4.00% 4.00% 41 bp
(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.
(3) Expressed in terms of change in basis points from previous year.
ASSET QUALITY DATA
Sept. 30, June 30, March 31, Dec. 31, Sept. 30, One Year
(in thousands) 2004 2004 2004 2003 2003 Change
Nonaccrual
loans $3,637 3,320 3,383 4,274 4,343 -16.3%
Restructured
loans 18 18 20 21 21 -14.3%
Accruing
loans > 90 days
past due - - - - - -
------ ------ ------ ------ ------
Total
nonperforming
loans 3,655 3,338 3,403 4,295 4,364 -16.2%
Other real
estate 1,877 1,857 1,585 1,398 929 102.0%
------ ------ ------ ------ ------
Total
nonperforming
assets $5,532 5,195 4,988 5,693 5,293 4.5%
====== ====== ====== ====== ======
Net charge-offs
to average loans
- annualized 0.22% 0.11% 0.07% 0.13% 0.08% 14 bp*
Nonperforming
loans to
total loans 0.27% 0.26% 0.27% 0.35% 0.38% -11 bp*
Nonperforming
assets to
total assets 0.34% 0.33% 0.33% 0.39% 0.39% -5 bp*
Allowance for
loan losses to
total loans 1.07% 1.10% 1.11% 1.11% 1.11% -4 bp*
* Expressed in terms of change in basis points from previous year.
SOURCE First Bancorp
-0- 10/21/2004
/CONTACT: James H. Garner of First Bancorp, +1-910-576-6171/
/Web site: http://www.firstbancorp.com /
(FBNC)
CO: First Bancorp; First Bank
ST: North Carolina, Virginia
IN: FIN
SU: ERN