News Column

First Bancorp Reports Fourth Quarter and Annual Results

February 14, 2014

By a News Reporter-Staff News Editor at Real Estate Weekly News -- First Bancorp (NASDAQ - FBNC), the parent company of First Bank , announced net income available to common shareholders of $5.5 million , or $0.27 per diluted common share, for the three months ended December 31, 2013 , compared to a net loss of $26.5 million , or ( $1.53 ) per diluted common share, recorded in the fourth quarter of 2012. For the year ended December 31, 2013 , the Company recorded net income available to common shareholders of $19.8 million , or $0.98 per diluted common share, compared to a net loss of $26.2 million , or ( $1.54 ) per diluted common share, for the year ended December 31, 2012 . The fourth quarter and annual earnings for 2012 were significantly impacted by charges associated with a loan sale and foreclosed property write-downs, which are discussed below. Net Interest Income and Net Interest Margin Net interest income for the fourth quarter of 2013 amounted to $35.3 million , a 1.1% decrease from the $35.7 million recorded in the fourth quarter of 2012. Net interest income for the year ended December 31, 2013 amounted to $136.5 million , a 1.0% increase from the $135.2 million recorded in 2012. The Company's net interest margin (tax-equivalent net interest income divided by average earning assets) in the fourth quarter of 2013 was 5.04% compared to 5.01% for the fourth quarter of 2012. For the year ended December 31, 2013 , the Company's net interest margin was 4.92% compared to 4.78% for 2012. The 5.04% margin realized in the fourth quarter of 2013 was a 20 basis point increase from the 4.84% margin realized in the third quarter of 2013. The margin variances were primarily due to discount accretion on loans purchased in failed-bank acquisitions recognized during the respective periods. As shown in the accompanying tables, loan discount accretion amounted to $5.6 million in the fourth quarter of 2013, $4.3 million in the third quarter of 2013, and $6.0 million in the fourth quarter of 2012. Excluding the effects of discount accretion on purchased loans, the Company's net interest margin has been relatively stable, amounting to 4.25% for the fourth quarter of 2013, 4.23% for the third quarter of 2013, and 4.17% in the fourth quarter of 2012. See the Financial Summary for a table that presents the impact of loan discount accretion, as well as other purchase accounting adjustments affecting net interest income. Also see the Financial Summary for a reconciliation of the Company's net interest margin to the net interest margin excluding loan discount accretion, and other information regarding this ratio. The Company's cost of funds has steadily declined from 0.51% in the fourth quarter of 2012 to 0.33% in the fourth quarter of 2013, which also had a positive impact on the Company's net interest margin. Provision for Loan Losses and Asset Quality The Company recorded total provisions for loan losses of $8.9 million in the fourth quarter of 2013 compared to $44.6 million for the fourth quarter of 2012. For the year ended December 31, 2013 , the Company recorded total provisions for loans losses of $30.6 million compared to $79.7 million for 2012. The decrease in 2013 was primarily due to a $33.6 million incremental provision for loan losses recorded in December 2012 in connection with a loan sale that is discussed in the following paragraph. See explanation of the terms "covered" and "non-covered" in the section below entitled "Note Regarding Components of Earnings." In the fourth quarter of 2012, the Company identified a pool of non-covered higher-risk loans that were targeted for sale to a third-party investor. Based on an offer to purchase these loans that was received in December 2012 , the Company wrote the loans down by approximately $38 million in the fourth quarter of 2012 to their estimated liquidation value of approximately $30 million and reclassified them as "loans held for sale." Of the $68 million in loans targeted for sale, approximately $38.2 million had been classified as nonaccrual loans, and $10.5 million had been classified as accruing troubled-debt-restructurings. The sale of substantially all of these loans was completed on January 23, 2013 . The provision for loan losses on non-covered loans amounted to $5.0 million in the fourth quarter of 2013 compared to $40.3 million in the fourth quarter of 2012. For full year of 2013, the provision for loan losses on non-covered loans amounted to $18.3 million compared to $70.0 million for 2012. The higher amounts for 2012 were primarily due to the incremental provision recorded in connection with the loan sale discussed above. The provision for loan losses on covered loans amounted to $3.9 million in the fourth quarter of 2013 compared to $4.3 million in the fourth quarter of 2012. For the year ended December 31, 2013 , the provision for loan losses on covered loans amounted to $12.4 million compared to $9.7 million for 2012. The increases during 2013 were primarily the result of several large credits that deteriorated during the first quarter of 2013 and were placed on nonaccrual status. Total non-covered nonperforming assets amounted to $82.0 million at December 31, 2013 (2.78% of total non-covered assets), which compares to $106.1 million at December 31, 2012 . The decrease in 2013 compared to 2012 was due primarily to the loan sale that was completed in the first quarter of 2013, as discussed above. Within non-covered nonperforming assets, nonaccrual loans increased from $33.0 million at December 31, 2012 to $41.9 million at December 31, 2013 , due primarily to several larger credits that deteriorated during the first and second quarters of 2013. Non-covered foreclosed real estate decreased from $26.3 million at December 31, 2012 to $12.3 million at December 31, 2013 as a result of strong sales activity during 2013, which, as discussed below, was consistent with the Company's strategy to accelerate the disposition of foreclosed properties. Total covered nonperforming assets have steadily declined during the past twelve months, amounting to $70.6 million at December 31, 2013 compared to $96.2 million at December 31, 2012 . Within this category, foreclosed real estate declined from $47.3 million at December 31, 2012 to $24.5 million at December 31, 2013 . The Company is experiencing increased property sales activity, particularly along the North Carolina coast, which is where most of the Company's covered foreclosed properties are located. Covered nonaccrual loans increased from $33.5 million at December 31, 2012 to $37.2 million at December 31, 2013 , due primarily to several large loans that deteriorated during the first quarter of 2013 bringing the total to $51.2 million at the end of the first quarter. Since then, the amount of covered nonaccrual loans has steadily decreased. Keywords for this news article include: Real Estate, First Bancorp . Our reports deliver fact-based news of research and discoveries from around the world. Copyright 2014, NewsRx LLC


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Source: Real Estate Weekly News


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