Exhibit 99.1
[FIRST BANCORP LOGO]
News Release
For Immediate Release: For More Information,
July 27, 2005 Contact: James H. Garner
910-576-6171
First Bancorp Reports Second Quarter Earnings
TROY, N.C. - First Bancorp (NASDAQ - FBNC), the parent company of First
Bank, announced net income today of $4,652,000, or $0.32 per diluted share, for
the three months ended June 30, 2005. The 2005 earnings represent a 4.8%
decrease in net income and 5.9% decrease in diluted earnings per share compared
to the earnings of $4,886,000, or $0.34 per diluted share, reported for the
second quarter of 2004. Share amounts for June 30, 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 second quarter of 2005
results were negatively impacted by several items of noninterest expense that
were not incurred in the comparable period of 2004 totaling approximately
$500,000 ($320,000 on an after-tax basis) and a higher effective tax rate, which
negatively impacted net income by approximately $370,000.
Key performance ratios for the three months ended June 30, 2005 include:
* Return on average assets of 1.09%
* Return on average equity of 12.07%
* Net charge-offs to average loans of 0.08%
* Net interest margin of 4.31%
* Nonperforming assets to total assets at quarter end of 0.36%
* Efficiency ratio of 58.86%
Net income for the six months ended June 30, 2005 was $9,368,000, or $0.65
per diluted share, a 3.0% decrease in diluted earnings per share from the net
income of $9,606,000, or $0.67 per diluted share, reported for the six months
ended June 30, 2004. As discussed below, the Company's results for the six
months ended June 30, 2005 were negatively impacted by several components of
noninterest expense that were not incurred in the comparable period of 2004
totaling approximately $825,000 ($515,000 on an after-tax basis) and a higher
effective tax rate, which negatively impacted net income by approximately
$645,000.
Total assets at June 30, 2005 amounted to $1.74 billion, 11.6% higher than
a year earlier. Total loans at June 30, 2005 amounted to $1.43 billion, a 9.9%
increase from a year earlier, and total deposits amounted to $1.47 billion at
June 30, 2005, a 13.1% increase from a year earlier.
The growth in loans and deposits was the primary reason for the increases
in the Company's net interest income when comparing the three and six month
periods in 2005 to the comparable periods of 2004. Net interest income for the
second quarter of 2005 amounted to $17.0 million, a 14.5% increase over the
$14.9 million recorded in the second quarter of 2004. Net interest income for
the six months ended June 30, 2005 amounted to $33.3 million, a 12.4% increase
over the $29.6 million recorded in the same six month period in 2004.
The Company's net interest margins (tax-equivalent net interest income
divided by average earning assets) realized for the three and six month periods
ended June 30, 2005 were slightly higher than the net interest margins realized
for the comparable periods in 2004. The Company's net interest margin for the
second quarter of 2005 was 4.31% compared to 4.26% for the second quarter of
2004. The Company's net interest margin for the first six months of 2005 was
4.32% compared to 4.31% for the same six months of 2004. 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 provision for loan losses amounted to $845,000 in the second quarter
of 2005 compared to $740,000 in the second quarter of 2004, and the provision
for loan losses for the first six months of 2005 was $1,425,000 compared to
$1,310,000 for the first six months of 2004. The Company's ratio of annualized
net charge-offs to average loans was 8 basis points for each of the three and
six month periods ended June 30, 2005, compared to 11 basis points and 9 basis
points for the same three and six month periods in 2004, respectively. The
Company's level of nonperforming assets to total assets was 0.36% at June 30,
2005 compared to 0.33% a year earlier.
Noninterest income amounted to $3,712,000 for the second quarter of 2005,
a 5.1% decrease from $3,912,000 recorded in the second quarter of 2004.
Noninterest income for the six months ended June 30, 2005 amounted to
$7,422,000, a decrease of 3.7% from the $7,705,000 recorded in the first half of
2004. The decreases for both periods in 2005 compared to 2004 were primarily a
result of lower 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.
Noninterest expenses amounted to $12.3 million in the second quarter of
2005, a 15.4% increase over the $10.6 million in 2004. Noninterest expenses for
the six months ended June 30, 2005 amounted to $24.0 million, a 12.2% increase
from the $21.3 million recorded in the first six months of 2004. The increase in
noninterest expenses is primarily attributable to costs associated with the
Company's overall growth in loans, deposits and branch network. Additionally, in
the second quarter of 2005, the Company incurred expenses totaling $500,000
($320,000 after-tax) that were not incurred in the second quarter of 2004
relating to the following items: immediately vested post-retirement benefits
granted to the Company's CEO totaling $196,000, external Sarbanes-Oxley costs
related to the 2004 certification of $181,000, and public relation expenses of
$123,000 associated with the Company's sponsorship of the 2005 U.S. Open Golf
Tournament that was held in the Company's largest market - Moore County, North
Carolina. Also impacting year to date results through June 30, 2005 were
external Sarbanes-Oxley costs of $325,000 ($195,000 after-tax) recorded in the
first quarter of 2005.
The Company's effective tax rate for the three and six months ended June
30, 2005 was approximately 39% for both periods, whereas for the comparable
periods of 2004 the Company's effective tax rate was approximately 34%-35%. The
higher effective tax rates in 2005 compared to 2004 are a result of the Company
changing certain elements of its operating structure in order to potentially
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 $370,000 for the
second quarter of 2005 and $645,000 for the six months ended June 30, 2005. The
aforementioned Form 8-K and Form 10-K SEC filings contain additional information
regarding this matter, including the possibility of state tax liability
exposure. The Company has been recently notified by the North Carolina
Department of Revenue that it intends to examine the Company's tax returns for
the past three years.
James H. Garner, President and CEO of First Bancorp, commented on today's
earnings report, "Because several items of expense make this a difficult quarter
to analyze from an earnings perspective, I have focused on the core metrics of
our business, which I am pleased with. We continue to experience good loan and
deposit growth, our net interest margin is stable, and our asset quality remains
sound. These are all things that I expect bode well for the future."
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 recently completed the construction of new
branches in Anderson Creek and Salisbury that will replace
existing facilities in those towns. The new Anderson Creek
facility is located across the street from its current
location and is expected to open on August 1. The new
Salisbury facility is on the same lot as the branch facility
located at the corner of Jake Alexander Boulevard and Old
Concord Road and is expected to open on August 8.
o The Company has begun construction of new buildings in north
Asheboro and Sanford 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 and is expected to open in the fourth quarter of
2005.
o The ground breaking for the construction of a new building in
Mayodan is scheduled for August 3. The new building will be
located on the same lot as the current facility and is
expected to be completed in the spring of 2006.
o The Company has received regulatory approval to relocate its
current branch in Angier and expects to start construction of
a new building in the third quarter of 2005.
o On May 24, 2005, the Company announced a quarterly dividend of
17 cents per share payable on July 25, 2005 to shareholders of
record on June 30, 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 six
months 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
June 30,
-------------------- Percent
($ in thousands except per share data - unaudited) 2005 2004 Change
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INCOME STATEMENT
Interest income
- ---------------
Interest and fees on loans $ 22,732 18,192
Interest on investment securities 1,528 1,269
Other interest income 447 104
-------- ------
Total interest income 24,707 19,565 26.3%
-------- ------
Interest expense
- ----------------
Interest on deposits 6,690 4,045
Other, primarily borrowings 1,010 661
-------- ------
Total interest expense 7,700 4,706 63.6%
-------- ------
Net interest income 17,007 14,859 14.5%
Provision for loan losses 845 740 14.2%
-------- ------
Net interest income after provision
for loan losses 16,162 14,119 14.5%
-------- ------
Noninterest income
- ------------------
Service charges on deposit accounts 2,145 2,345
Other service charges, commissions, and fees 935 794
Fees from presold mortgages 285 290
Commissions from financial product sales 314 365
Data processing fees 58 104
Securities gains 2 96
Other gains (losses) (27) (82)
-------- ------
Total noninterest income 3,712 3,912 -5.1%
-------- ------
Noninterest expenses
- --------------------
Personnel expense 7,184 6,294
Occupancy and equipment expense 1,491 1,408
Intangibles amortization 73 94
Other operating expenses 3,512 2,826
-------- ------
Total noninterest expenses 12,260 10,622 15.4%
-------- ------
Income before income taxes 7,614 7,409 2.8%
Income taxes 2,962 2,523 17.4%
-------- ------
Net income $ 4,652 4,886 -4.8%
======== ======
Earnings per share - basic $ 0.33 0.34 -2.9%
Earnings per share - diluted 0.32 0.34 -5.9%
ADDITIONAL INCOME STATEMENT INFORMATION
- ---------------------------------------
Net interest income, as reported $ 17,007 14,859
Tax-equivalent adjustment (1) 111 119
-------- ------
Net interest income, tax-equivalent $ 17,118 14,978 14.3%
======== ======
- -------------------------------------------------------------------------------------
(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.
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First Bancorp and Subsidiaries
Financial Summary - Page 2
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Six Months Ended
June 30,
-------------------- Percent
($ in thousands except per share data - unaudited) 2005 2004 Change
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INCOME STATEMENT
Interest income
- ---------------
Interest and fees on loans $ 44,091 36,195
Interest on investment securities 2,812 2,564
Other interest income 719 190
-------- ------
Total interest income 47,622 38,949 22.3%
-------- ------
Interest expense
- ----------------
Interest on deposits 12,390 7,998
Other, primarily borrowings 1,940 1,319
-------- ------
Total interest expense 14,330 9,317 53.8%
-------- ------
Net interest income 33,292 29,632 12.4%
Provision for loan losses 1,425 1,310 8.8%
-------- ------
Net interest income after provision
for loan losses 31,867 28,322 12.5%
-------- ------
Noninterest income
- ------------------
Service charges on deposit accounts 4,153 4,554
Other service charges, commissions, and fees 1,989 1,690
Fees from presold mortgages 523 478
Commissions from financial product sales 609 677
Data processing fees 205 200
Securities gains 2 188
Other gains (losses) (59) (82)
-------- ------
Total noninterest income 7,422 7,705 -3.7%
-------- ------
Noninterest expenses
- --------------------
Personnel expense 14,070 12,537
Occupancy and equipment expense 2,925 2,864
Intangibles amortization 146 189
Other operating expenses 6,834 5,745
-------- ------
Total noninterest expenses 23,975 21,335 12.4%
-------- ------
Income before income taxes 15,314 14,692 4.2%
Income taxes 5,946 5,086 16.9%
-------- ------
Net income $ 9,368 9,606 -2.5%
======== ======
Earnings per share - basic $ 0.66 0.68 -2.9%
Earnings per share - diluted 0.65 0.67 -3.0%
ADDITIONAL INCOME STATEMENT INFORMATION
- ---------------------------------------
Net interest income, as reported $ 33,292 29,632
Tax-equivalent adjustment (1) 224 242
-------- ------
Net interest income, tax-equivalent $ 33,516 29,874 12.2%
======== ======
- -------------------------------------------------------------------------------------
(1) See footnote 1 on page 1 of Financial Summary for discussion of
tax-equivalent adjustments.
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First Bancorp and Subsidiaries
Financial Summary - Page 3
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Three Months Ended Six Months Ended
June 30, June 30,
-------------------------------- ---------------------------------
PERFORMANCE RATIOS (annualized) 2005 2004 2005 2004
=====================================================================
Return on average assets 1.09% 1.29% 1.13% 1.28%
Return on average equity 12.07% 13.48% 12.32% 13.29%
Net interest margin - tax equivalent (1) 4.31% 4.26% 4.32% 4.31%
Efficiency ratio - tax equivalent (1) (2) 58.86% 56.23% 58.56% 56.77%
Net charge-offs to average loans 0.08% 0.11% 0.08% 0.09%
Nonperforming assets tototal assets (period end) 0.36% 0.33% 0.36% 0.33%
SHARE DATA (3)
Cash dividends declared $ 0.17 $ 0.16 $ 0.34 $ 0.32
Stated book value 10.88 10.13 10.88 10.13
Tangible book value 7.40 6.56 7.40 6.56
Common shares outstanding at end of period 14,170,722 14,137,326 14,170,722 14,137,326
Weighted average shares outstanding - basic 14,159,117 14,176,085 14,132,347 14,188,571
Weighted average shares outstanding - diluted 14,345,013 14,410,014 14,354,852 14,442,660
Shareholders' equity to assets 8.87% 9.19% 8.87% 9.19%
AVERAGE BALANCES (in thousands)
Total assets $ 1,707,112 $ 1,524,169 $ 1,678,868 $ 1,503,578
Loans 1,409,118 1,273,672 1,396,167 1,254,874
Earning assets 1,592,845 1,414,095 1,565,005 1,393,102
Deposits 1,466,893 1,300,263 1,440,807 1,280,178
Interest-bearing liabilities 1,361,365 1,211,314 1,340,048 1,197,099
Shareholders' equity 154,540 145,776 153,351 145,406
- ------------------------------------------------------------------------------------------------------------------------
(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 June 30, 2004 has been adjusted to reflect the 3-for-2 stock split paid on November 15, 2004.
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TREND INFORMATION
($ in thousands except per share data)
For the Three Months Ended
--------------------------
June 30, March 31, Dec. 31, Sept. 30, June 30,
INCOME STATEMENT 2005 2005 2004 2004 2004
------- ------ ------ ------ ------
Net interest income - tax equivalent (1) $17,118 16,398 16,233 15,659 14,978
Taxable equivalent adjustment (1) 111 113 116 118 119
Net interest income 17,007 16,285 16,117 15,541 14,859
Provision for loan losses 845 580 825 770 740
Noninterest income 3,712 3,710 3,844 4,296 3,912
Noninterest expense 12,260 11,715 11,271 11,092 10,622
Income before income taxes 7,614 7,700 7,865 7,975 7,409
Income taxes 2,962 2,984 2,554 2,778 2,523
Net income 4,652 4,716 5,311 5,197 4,886
Earnings per share - basic (2) 0.33 0.33 0.38 0.37 0.34
Earnings per share - diluted (2) 0.32 0.33 0.37 0.36 0.34
- -------------------------------------------------------------------------------------------------------------------
(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 4
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June 30, March 31, Dec. 31, June 30, One Year
PERIOD END BALANCES (in thousands) 2005 2005 2004 2004 Change
---------- --------- --------- --------- --------
Assets $1,738,597 1,687,160 1,638,913 1,558,251 11.6%
Securities 132,536 127,951 102,579 112,974 17.3%
Loans 1,425,856 1,395,324 1,367,053 1,297,224 9.9%
Allowance for loan losses 15,622 15,066 14,717 14,313 9.1%
Intangible assets 49,373 49,445 49,330 50,517 -2.3%
Deposits 1,470,880 1,448,692 1,388,768 1,300,804 13.1%
Borrowings 101,239 76,239 92,239 106,000 -4.5%
Shareholders' equity 154,202 150,779 148,478 143,238 7.7%
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For the Three Months Ended
--------------------------
June 30, March 31, Dec. 31, Sept. 30, June 30,
YIELD INFORMATION 2005 2005 2004 2004 2004
-------- --------- -------- --------- --------
Yield on loans 6.47% 6.26% 6.05% 5.82% 5.74%
Yield on securities - tax equivalent (1) 5.06% 4.94% 4.72% 5.15% 4.92%
Yield on other earning assets 3.33% 2.80% 2.30% 1.99% 1.55%
Yield on all interest earning assets 6.25% 6.08% 5.86% 5.71% 5.60%
Rate on interest bearing deposits 2.09% 1.86% 1.65% 1.49% 1.43%
Rate on other interest bearing liabilities 5.27% 4.92% 3.87% 3.37% 3.75%
Rate on all interest bearing liabilities 2.27% 2.04% 1.80% 1.65% 1.56%
Interest rate spread - tax equivalent (1) 3.98% 4.04% 4.06% 4.06% 4.04%
Net interest margin - tax equivalent (2) 4.31% 4.33% 4.32% 4.28% 4.26%
Average prime rate 5.91% 5.44% 4.94% 4.41% 4.00%
- ------------------------------------------------------------------------------------------------------------------
(1) See footnote 1 on page 1 of Financial Summary for discussion of tax-equivalent adjustments.
(2) Calculated by dividing annualized tax equivalent net interest income by average earning assets for
the period. See footnote 1 on page 1 of Financial Summary for discussion of tax-equivalent adjustments.
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June 30, March 31, Dec. 31, Sept. 30, June 30,
ASSET QUALITY DATA ($ in thousands) 2005 2005 2004 2004 2004
-------- --------- -------- --------- --------
Nonaccrual loans $3,806 4,249 3,707 3,637 3,320
Restructured loans 15 15 17 18 18
Accruing loans > 90 days past due - - - - -
------ ----- ----- ----- -----
Total nonperforming loans 3,821 4,264 3,724 3,655 3,338
Other real estate 2,520 2,401 1,470 1,877 1,857
------ ----- ----- ----- -----
Total nonperforming assets $6,341 6,665 5,194 5,532 5,195
====== ===== ===== ===== =====
Net charge-offs to average loans - annualized 0.08% 0.07% 0.14% 0.22% 0.11%
Nonperforming loans to total loans 0.27% 0.31% 0.27% 0.27% 0.26%
Nonperforming assets to total assets 0.36% 0.40% 0.32% 0.34% 0.33%
Allowance for loan losses to total loans 1.10% 1.08% 1.08% 1.07% 1.10%
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