First Bancorp, the parent company of First Bank, reported slightly lower second quarter net income and earnings.

The company had net income of $5,278,000, or 32 cents per diluted share. This represents decreases of 2.6 percent and 13.5 percent in net income and diluted earnings per share, respectively, from the $5,419,000, or 37 cents per diluted share reported in the second quarter of 2007.

For the six-month period ended June 30, net income amounted to $10,807,000, or 70 cents per diluted share. This represents an increase in net income of 4.9 percent and a decrease in diluted earnings per share of 1.4 percent from the net income of $10,305,000, or 71 cents per diluted share reported in the first half of 2007.

"On behalf of First Bancorp, we are pleased to report that we have earned $10.8 million thus far in 2008," said Jerry L. Ocheltree, president and CEO of First Bancorp. "First Bank has faithfully served the good folks of our communities since 1935. We have a conservative operating philosophy that was established during the difficult economic times of the 1930s.

"By following that same conservative philosophy, we have been able to be there for our customers in both good times and in challenging times. We continue to be a well-capitalized bank as defined by regulatory standards and foresee nothing that would change that. We deeply appreciate the opportunity we have to serve our communities."

The yearly earnings reflect the impact of the acquisition of Great Pee Dee Bancorp, which had $213 million in total assets as of the transaction date of April 1 and resulted in the issuance of 2,059,091 shares of First Bancorp common stock.

During the second quarter of 2008, loans outstanding increased by $233 million, while deposits increased by $95 million, with the acquisition of Great Pee Dee Bancorp accounting for the majority of the growth. As of April 1, Great Pee Dee Bancorp had $188 million in loans and $148 million in deposits.

Great Pee Dee Bancorp Inc. was the holding company for Sentry Bank & Trust, a three-branch community bank headquartered in Cheraw, S.C., and offices in Cheraw and Florence.

The conversion of Sentry Bank & Trust to First Bank occurred May 16.

Total assets as of June 30 amounted to $2.6 billion, 18.8 percent higher than a year earlier. Total loans as of June 30 amounted to $2.2 billion, a 20.2 percent increase from a year earlier, and total deposits amounted to $2.0 billion, a 12 percent increase from a year earlier.

Growth in loans and deposits was the primary reason for an increase in the company's net interest income when comparing the three and six months of 2008 to the same periods last year.

Net interest income for the second quarter of 2008 amounted to $21.5 million, a 9.3 percent increase over the $19.7 million recorded in the same quarter last year. Net interest income for the six months ended June 30 amounted to $41.3 million, a 7.1 percent increase over the $38.5 million recorded in the same six-month period in 2007.

The company's net interest margin for the second quarter of 2008 was 3.71 percent, a 32 basis point decline from the 4.03 percent margin realized in the second quarter of 2007 and an 8 basis point decline from the 3.79 percent margin realized in the first quarter of 2008. The net interest margin for the first six months of 2008 was 3.75 percent compared to 4 percent for the same six months of 2007.

The company's net interest margin has been negatively impacted by the Federal Reserve lowering interest rates by a total of 325 basis points since September 2007.

Barring no further Federal Reserve interest rate changes, the company expects its net interest margin to stabilize in the third quarter as maturing time deposits reprice at lower interest rates, it said in a news release.

The company's provision for loan losses amounted to $2,059,000 in the second quarter of 2008 compared to $1,322,000 in the second quarter of 2007. The provision for loan losses for the six-month period ended June 30, 2008, was $3,592,000 compared to $2,443,000 recorded in the first half of 2007.

The company has experienced increases in its delinquencies and classified assets consistent with current economic conditions.

The company's allowance for loan losses has increased from $21.3 million as of December 31, 2007, to $26.1 million as June 30, 2008.

Noninterest income amounted to $5.3 million for the second quarter of 2008, a 9.9 percent increase from the $4.9 million recorded in the second quarter of 2007. Noninterest income for the six months ended June 30, 2008, amounted to $10.7 million, an increase of 17.8 percent from the $9.1 million recorded in the first half of 2007.

The increases in noninterest income this year primarily relate to increases in service charges on deposit accounts.

These higher service charges were primarily associated with the company expanding the availability of its customer overdraft protection program in the fourth quarter of 2007 to include debit card purchases and ATM withdrawals.

Previously, the overdraft protection program, in which the company charges a fee for honoring payments on overdrawn accounts, applied only to written checks.

Noninterest expenses amounted to $16.3 million in the second quarter of 2008, a 12.6 percent increase over 2007. Noninterest expenses for the six months ended June 30, 2008, amounted to $31.1 million, an 8.6 percent increase from the $28.6 million recorded in the first six months of 2007. These increases are primarily attributable to the company's growth, including the acquisition of Great Pee Dee.

Also, the company recorded FDIC insurance expense of $262,000 and $507,000 for the three- and six-month periods ended June 30, 2008, respectively, compared to none for the same periods in 2007. That is a result of the FDIC recently beginning to charge for FDIC insurance again to replenish its reserves.