Exhibit 99(a)
[FIRST BANCORP LOGO]
News Release
For Immediate Release: For More Information,
April 28, 2005 Contact: James H. Garner
910-576-6171
First Bancorp Reports First Quarter Earnings
TROY, N.C. - First Bancorp (NASDAQ - FBNC), the parent company of First
Bank, announced net income today of $4,716,000, or $0.33 per diluted share, for
the three months ended March 31, 2005 compared to net income of $4,720,000, or
$0.33 per diluted share, for the same three months in 2004. Share amounts for
March 31, 2004 have been adjusted from their originally reported amounts to
reflect the 3-for-2 stock split paid on November 15, 2004. As discussed below,
the Company's 2005 results were negatively impacted by approximately $325,000
($195,000 on an after-tax basis) in incremental expenses associated with
complying with Section 404 of the Sarbanes-Oxley Act of 2002 and a higher
effective tax rate, which negatively impacted net income by approximately
$275,000.
Key performance ratios for the three months ended March 31, 2005 include:
* Return on average assets of 1.16%
* Return on average equity of 12.57%
* Net charge-offs to average loans of 0.07%
* Net interest margin of 4.33%
* Nonperforming assets to total assets at quarter end of 0.40%
* Efficiency ratio of 58.26%
Total assets at March 31, 2005 amounted to $1.69 billion, 12.9% higher than
a year earlier. Total loans at March 31, 2005 amounted to $1.40 billion, an
11.5% increase from a year earlier, and total deposits amounted to $1.45 billion
at March 31, 2005, a 12.3% increase from a year earlier. Approximately $50
million of the year-over-year deposit increase of $158 million relates to
wholesale brokered deposits that the Company gathered in the second half of 2004
in order to help fund high loan growth. The Company experienced solid loan and
deposit growth during the first quarter of 2005, with loans increasing by $28
million, or 8.3% on an annualized basis, and deposits increasing by $60 million,
or 17.3% on an annualized basis. There was no change in the level of the
Company's brokered deposits in the first quarter of 2005.
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 first
quarter of 2005 to the first quarter of 2004. Net interest income for the first
quarter of 2005 amounted to $16.3 million, a 10.2% increase over the $14.8
million recorded in the first quarter of 2004.
The positive impact on net interest income from the increases in loans and
deposits more than offset a slightly lower net interest margin realized in 2005
compared to 2004. The Company's net interest margin (tax-equivalent net interest
income divided by average earning assets) for the first quarter of 2005 was
4.33% compared to 4.37% for the first quarter of 2004. After reaching a recent
low of 4.26% in the second quarter of 2004 largely as a result of declining
interest rates, the Company's net interest margin has risen slightly in each of
the past three quarters, mostly as a result of the rising interest rate
environment during those same periods. The positive impact of the rising
interest rate environment on the Company's net interest margin has been largely
offset by the mix of the Company's deposit growth being more concentrated in the
categories of time deposits and time deposits greater than $100,000, the
Company's highest cost categories of deposits.
The Company's provision for loan losses did not vary significantly in 2005
compared to 2004, amounting to $580,000 in the first quarter of 2005 versus
$570,000 in the first quarter of 2004. The Company's ratio of annualized net
charge-offs to average loans amounted to 7 basis points for each of those three
month periods. Although the Company's nonaccrual loans were 25.6% higher at
March 31, 2005 ($4.2 million) compared to March 31, 2004 ($3.4 million), the
Company's level of internally classified loans, which includes nonaccrual loans,
decreased slightly over that same period. The Company's ratio of nonperforming
assets to total assets of 0.40% at March 31, 2005 continues to compare favorably
to a December 31, 2004 North Carolina state bank average of 0.51%.
Noninterest income amounted to $3,710,000 for the first quarter of 2005, a
2.2% decrease from the first quarter of 2004. The decrease was primarily a
result of a 9.1% decline in service charges on deposit accounts. Service charges
on deposit accounts have decreased primarily as a result of the negative impact
that higher short term interest rates have on the service charges that the
Company earns from its commercial depositors - in the Company's commercial
account service charge rate structure, commercial depositors are given "earnings
credits" (negatively impacting service charges) on their average deposit
balances that are tied to short term interest rates. Also, the Company had
security and other losses of $32,000 in the first quarter of 2005 compared to
gains of $92,000 in the first quarter of 2004, a negative change of $124,000.
Noninterest expenses amounted to $11.7 million in the first quarter of
2005, a 9.4% increase over the $10.7 million in 2004. The increase in
noninterest expenses is primarily attributable to costs related to the Company's
overall growth, as well as annual salary increases. In addition, in the first
quarter of 2005, the Company incurred approximately $325,000, ($195,000 on an
after-tax basis) in incremental external audit and consultant expenses
associated with complying with Section 404 of the Sarbanes-Oxley Act of 2002.
The Company's effective tax rate was 38.8% in the first quarter of 2005
compared to 35.2% for the first quarter of 2004. The increase in the effective
tax rate was a result of the Company changing certain elements of its operating
structure in order to avoid controversy with state taxing authorities, as
previously disclosed in the Company's press release dated January 28, 2005 (and
filed with the Securities and Exchange Commission on Form 8-K on that same
date), which announced earnings for 2004, and in the Company's 2004 Form 10-K
filed with the Securities and Exchange Commission on March 15, 2005. The higher
incremental tax rate negatively impacted the Company's net income by
approximately $275,000. The aforementioned Form 8-K and Form 10-K SEC filings
contain additional information regarding this matter, including the possibility
of tax exposure liability.
James H. Garner, President and CEO of First Bancorp, commented on today's
earnings report, "This was a difficult quarter to achieve earnings growth. The
burden associated with complying with Sarbanes-Oxley and the higher tax rate
negated the positive earnings generated from increases in our loan and deposit
bases. I think it is a real positive that the Company's pretax quarterly income
was 5.7% higher than last year on a reported basis and was 10.2% higher if you
add back to pretax income the $325,000 in incremental costs associated with
complying with Sarbanes-Oxley."
Mr. Garner added, "I would like to invite our friends and shareholders to
our Annual Shareholders Meeting to be held at 3:00 P.M. on May 5, 2005 at the
James H. Garner Conference Center located at 211 Burnette Street in Troy. I
think you will find the meeting to be informative, and I always enjoy meeting
and talking with my fellow shareholders. Also, at this meeting, we will be
bidding a fond farewell to two of our long-time directors who are retiring from
the Board of Directors - Jesse Capel and Frederick Taylor. These two gentlemen
played a large role in making us who we are today. I know you'll want to thank
them for their decades of loyal service to First Bancorp."
Mr. Garner also noted the following corporate developments:
o The Company opened its newest bank branch in Rose Hill, North
Carolina on April 4, 2005. Rose Hill is located in Duplin County,
North Carolina, in close proximity to the Company's existing
branches in Wallace and Kenansville.
o The Company has begun construction of new buildings in north
Asheboro, Anderson Creek and Salisbury that will replace existing
facilities. Also, the Company has begun construction of a new
branch in Thomasville, which will complement the existing branch
in Thomasville.
o On February 22, 2005, the Company announced a quarterly dividend
of 17 cents per share payable on April 25, 2005 to shareholders
of record on March 31, 2005. On a split-adjusted basis, the
current dividend rate is an increase of 6.3% over the dividend
rate paid in the same period of 2004.
o There was no stock repurchase activity during the first quarter
of 2005.
First Bancorp is a bank holding company based in Troy, North Carolina with
total assets of approximately $1.7 billion. Its principal activity is the
ownership and operation of First Bank, a state-chartered community bank that
operates 60 branch offices, with 54 branches operating in a nineteen county
market area in the central piedmont region of North Carolina, 3 branches in
Dillon County, South Carolina, and 3 branches in Virginia (Abingdon, Radford,
and Wytheville), where First Bank does business as First Bank of Virginia. The
Company also has a loan production office in Blacksburg, Virginia. First
Bancorp's common stock is traded on the NASDAQ National Market under the symbol
FBNC.
Please visit our website at www.firstbancorp.com. For additional financial
data, please see the attached Financial Summary.
This press release contains statements that could be deemed forward-looking
statements within the meaning of Section 21E of the Securities Exchange Act of
1934 and the Private Securities Litigation Reform Act of 1995, which statements
are inherently subject to risks and uncertainties. Forward-looking statements
are statements that include projections, predictions, expectations or beliefs
about future events or results or otherwise are not statements of historical
fact. Such statements are often characterized by the use of qualifying words
(and their derivatives) such as "expect," "believe," "estimate," "plan,"
"project," or other statements concerning opinions or judgments of the Company
and its management about future events. Factors that could influence the
accuracy of such forward-looking statements include, but are not limited to, the
financial success or changing strategies of the Company's customers, the
Company's level of success in integrating acquisitions, actions of government
regulators, the level of market interest rates, and general economic conditions.
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First Bancorp and Subsidiaries
Financial Summary
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Three Months Ended
March 31,
($ in thousands except -------------------- Percent
per share data - unaudited) 2005 2004 Change
- --------------------------------------------------------------------------------
INCOME STATEMENT
Interest income
- ---------------
Interest and fees on loans $ 21,359 18,003
Interest on investment securities 1,284 1,295
Other interest income 272 86
-------- ------
Total interest income 22,915 19,384 18.2%
-------- ------
Interest expense
- ----------------
Interest on deposits 5,700 3,953
Interest on borrowings 930 658
-------- ------
Total interest expense 6,630 4,611 43.8%
-------- ------
Net interest income 16,285 14,773 10.2%
Provision for loan losses 580 570 1.8%
-------- ------
Net interest income after provision
for loan losses 15,705 14,203 10.6%
-------- ------
Noninterest income
- ------------------
Service charges on deposit accounts 2,008 2,209
Other service charges, commissions, and fees 1,054 896
Fees from presold mortgages 238 188
Commissions from financial product sales 295 312
Data processing fees 147 96
Securities gains -- 92
Other losses (32) --
-------- ------
Total noninterest income 3,710 3,793 -2.2%
-------- ------
Noninterest expenses
- --------------------
Personnel expense 6,886 6,243
Occupancy and equipment expense 1,434 1,456
Intangibles amortization 73 95
Other operating expenses 3,322 2,919
-------- ------
Total noninterest expenses 11,715 10,713 9.4%
-------- ------
Income before income taxes 7,700 7,283 5.7%
Income taxes 2,984 2,563 16.4%
-------- ------
Net income $ 4,716 4,720 -0.1%
======== =====
Earnings per share - basic (2) $ 0.33 0.33 0.0%
Earnings per share - diluted (2) 0.33 0.33 0.0%
ADDITIONAL INCOME STATEMENT
- ---------------------------
INFORMATION
- -----------
Net interest income, as reported $ 16,285 14,773
Tax-equivalent adjustment (1) 113 123
-------- ------
Net interest income, tax-equivalent $ 16,398 14,896 10.1%
======== ======
- --------------------------------------------------------------------------------
(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.
(2) Share data for March 31, 2004 has been adjusted to reflect the 3-for-2
stock split paid on November 15, 2004.
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First Bancorp and Subsidiaries
Financial Summary - page 2
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Three Months Ended
March 31,
---------------------------- Percent
PERFORMANCE RATIOS (annualized) 2005 2004 Change
--------------------------------------
Return on average assets 1.16% 1.28%
Return on average equity 12.57% 13.09%
Net interest margin - tax equivalent (1) 4.33% 4.37%
Efficiency ratio - tax equivalent (1) (2) 58.26% 57.32%
Net charge-offs to average loans 0.07% 0.07%
Nonperforming assets to total assets (period end) 0.40% 0.33%
SHARE DATA (3)
Cash dividends declared $ 0.17 0.16 6.3%
Stated book value 10.66 10.14 5.1%
Tangible book value 7.17 6.58 9.0%
Common shares outstanding at end of period 14,138,379 14,187,200
Weighted average shares outstanding - basic 14,105,577 14,201,057
Weighted average shares outstanding - diluted 14,363,606 14,474,909
Shareholders' equity to assets 8.94% 9.63%
AVERAGE BALANCES (in thousands)
Total assets $1,650,624 1,482,987 11.3%
Loans 1,383,216 1,236,076 11.9%
Earning assets 1,537,165 1,372,109 12.0%
Deposits 1,414,721 1,260,093 12.3%
Interest-bearing liabilities 1,318,731 1,182,884 11.5%
Shareholders' equity 152,162 145,036 4.9%
- -------------------------------------------------------------------------------------------
(1) See footnote 1 on page 1 of Financial Summary for discussion of
tax-equivalent adjustments.
(2) Calculated by dividing noninterest expense by the sum of tax-equivalent net
interest income plus noninterest income.
(3) Share data for March 31, 2004 has been adjusted to reflect the 3-for-2
stock split paid on November 15, 2004.
TREND INFORMATION
($ in thousands except per share data)
For the Three Months Ended
--------------------------
March 31, Dec. 31, Sept. 30, June 30, March 31, One Year
2005 2004 2004 2004 2004 Change
INCOME STATEMENT ----------- ----------- ------------ ----------- ------------ -----------
Net interest income - tax equivalent (1) $ 16,398 16,233 15,659 14,978 14,896 10.1%
Taxable equivalent adjustment (1) 113 116 118 119 123 -8.1%
Net interest income 16,285 16,117 15,541 14,859 14,773 10.2%
Provision for loan losses 580 825 770 740 570 1.8%
Noninterest income 3,710 3,844 4,296 3,912 3,793 -2.2%
Noninterest expense 11,715 11,271 11,092 10,622 10,713 9.4%
Income before income taxes 7,700 7,865 7,975 7,409 7,283 5.7%
Income taxes 2,984 2,554 2,778 2,523 2,563 16.4%
Net income 4,716 5,311 5,197 4,886 4,720 -0.1%
Earnings per share - basic (2) 0.33 0.38 0.37 0.34 0.33 0.0%
Earnings per share - diluted (2) 0.33 0.37 0.36 0.34 0.33 0.0%
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(1) See footnote 1 on page 1 of Financial Summary for discussion of
tax-equivalent adjustments.
(2) Share data for periods ending prior to November 15, 2004 been adjusted to
reflect the 3-for-2 stock split paid on November 15, 2004.
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First Bancorp and Subsidiaries
Financial Summary - page 3
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March 31, Dec. 31, Sept. 30, June 30, March 31, One Year
2005 2004 2004 2004 2004 Change
PERIOD END BALANCES (in thousands) ----------- ----------- ------------ ----------- ------------ -----------
Assets $1,687,160 $1,638,913 1,610,174 1,558,251 1,494,418 12.9%
Securities 127,951 102,579 106,051 112,974 112,915 13.3%
Loans 1,395,324 1,367,053 1,337,583 1,297,224 1,251,923 11.5%
Allowance for loan losses 15,066 14,717 14,351 14,313 13,917 8.3%
Intangible assets 49,445 49,330 50,199 50,517 50,621 -2.3%
Deposits 1,448,692 1,388,768 1,322,625 1,300,804 1,290,272 12.3%
Borrowings 76,239 92,239 132,239 106,000 51,000 49.5%
Shareholders' equity 150,779 148,478 145,588 143,238 143,929 4.8%
For the Three Months Ended
--------------------------
March 31, Dec. 31, Sept. 30, June 30, March 31, One Year
2005 2004 2004 2004 2004 Change(3)
YIELD INFORMATION ----------- ----------- ------------ ----------- ------------ -----------
Yield on loans 6.26% 6.05% 5.82% 5.74% 5.86% 40 bp
Yield on securities - tax equivalent (1) 4.94% 4.72% 5.15% 4.92% 5.05% -11 bp
Yield on other earning assets 2.80% 2.30% 1.99% 1.55% 1.50% 130 bp
Yield on all interest earning assets 6.08% 5.86% 5.71% 5.60% 5.72% 36 bp
Rate on interest bearing deposits 1.86% 1.65% 1.49% 1.43% 1.43% 43 bp
Rate on other interest bearing liabilities 4.92% 3.87% 3.37% 3.75% 3.70% 122 bp
Rate on all interest bearing liabilities 2.04% 1.80% 1.65% 1.56% 1.57% 47 bp
Interest rate spread - tax equivalent(1) 4.04% 4.06% 4.06% 4.04% 4.15% -11 bp
Net interest margin - tax equivalent(2) 4.33% 4.32% 4.28% 4.26% 4.37% -4 bp
Average prime rate 5.44% 4.94% 4.41% 4.00% 4.00% 144 bp
(1) See footnote 1 on page 1 of Financial Summary for discussion of
tax-equivalent adjustments.
(2) Calculated by dividing annualized tax equivalent net interest income by
average earning assets for the period. See footnote 1 on page 1 of
Financial Summary for discussion of tax-equivalent adjustments.
(3) Expressed in terms of change in basis points from previous year.
March 31, Dec. 31, Sept. 30, June 30, March 31, One Year
2005 2004 2004 2004 2004 Change
ASSET QUALITY DATA ($ in thousands) ----------- ----------- ------------ ----------- ------------ -----------
Nonaccrual loans $ 4,249 3,707 3,637 3,320 3,383 25.6%
Restructured loans 15 17 18 18 20 -25.0%
Accruing loans > 90 days past due - - - - - -
----------- ----------- ------------ ----------- ------------
Total nonperforming loans 4,264 3,724 3,655 3,338 3,403 25.3%
Other real estate 2,401 1,470 1,877 1,857 1,585 51.5%
----------- ----------- ------------ ----------- ------------
Total nonperforming assets $ 6,665 5,194 5,532 5,195 4,988 33.6%
=========== =========== ============ =========== ============
Net charge-offs to average loans - annualized 0.07% 0.14% 0.22% 0.11% 0.07% 0 bp*
Nonperforming loans to total loans 0.31% 0.27% 0.27% 0.26% 0.27% 4 bp*
Nonperforming assets to total assets 0.40% 0.32% 0.34% 0.33% 0.33% 7 bp*
Allowance for loan losses to total loans 1.08% 1.08% 1.07% 1.10% 1.11% -3 bp*
* Expressed in terms of change in basis points from previous year.
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