First Bank Reports Third Quarter Loss
First Bancorp, the parent company of First Bank, has reported a net loss for common shareholders of $4700,000, or 4 cents per diluted common share, for the quarter ending Sept. 30.
That compares with net income available to common shareholders of $2.8 million, or 17 cents per diluted common share, for the same period in 2010. The results for the quarter ending Sept. 30 were negatively impacted by $2.3 million of accelerated accretion of the discount remaining on the preferred stock that was redeemed during the quarter, a news release said.
This stock was originally issued to the U.S. Treasury in January 2009 as part of the program known as TARP. When this preferred stock was redeemed, the remaining discount that was recorded upon the issuance of the stock, which had been on a five-year accretion schedule, was immediately accreted as a reduction to net income available to common shareholders.
For the nine months ending Sept. 30, net income to common shareholders amounted to $7.3 million, or 43 cents per diluted common share, compared with $9.1 million, or 54 cents per diluted common share, for the same nine-month period in 2010.
"During the third quarter, we saw some positive developments, including a decrease in nonperforming assets and growth in our legacy loan portfolio," said Jerry L. Ocheltree, president and CEO of First Bancorp. "We are hopeful that this continues. First Bancorp remains very strong financially, and we are doing everything we can to improve this economy by lending to qualified borrowers. In addition, we continue to provide free checking account options and free debit cards to our customers, which I know are appreciated."
Operating results for the nine-month period were impacted by a $10.2 million bargain purchase gain related to the acquisition of the Bank of Asheville. This gain resulted from the difference between the purchase price and the fair values of the acquired assets and liabilities, the company said in the release. The after-tax impact of this gain was $6.2 million, or 37 cents per diluted common share.
The Bank of Asheville was closed by regulatory authorities Jan. 19, and First Bank entered into a loss share purchase and assumption agreement with the FDIC to purchase substantially all of its assets and liabilities.
At the time First Bank assumed its operations, the Bank of Asheville operated through five branches in Asheville, and had total assets of $198 million, including $161 million in loans and $192 million in deposits.
Net interest income for the third quarter amounted to $33.5 million, a 7.8 percent increase from the $31.1 million recorded in the same quarter of 2010. Net interest income for the nine months ending Sept. 30 amounted to $100.3 million, a 6.9 percent increase from the $93.8 million recorded in the comparable period of 2010.
The company's net interest margin in the third quarter was 4.79 percent, compared with 4.3 percent in the same three-month period last year.
For the nine-month period ending Sept. 30, the net interest margin was 4.77 percent, compared with 4.27 percent for the same period in 2010.
The company's provisions for loan losses remain at elevated levels, primarily because of high unemployment rates and declining property values in its market area that negatively impact collateral dependent real estate loans.
The company's provision for loan losses for noncovered loans amounted to $6.4 million in the third quarter, compared with $8.4 million in the third quarter of 2010. For the nine months ending Sept. 30, the provision for loan losses for noncovered loans was $21.6 million, compared with $24 million for the comparable period last year.
The provision for loan losses for covered loans amounted to $2.7 million and $9.8 million for the three- and nine-month periods ending Sept. 30.
Total noninterest income was $3.5 million in the third quarter, compared with $4 million for the same period last year. For the nine months ending Sept. 30, the company recorded noninterest income of $22.8 million, compared with $14.2 million last year.
Within noninterest income, service charges on deposits declined for the first nine months of 2011 compared with the same period last year, amounting to $10 million this year, compared with $10.4 million in 2010.
This was primarily attributable to lower overdraft fees, which began declining in the second half of 2010 partially as a result of new regulations that took effect in the third quarter of 2010 that limit the company's ability to charge overdraft fees, the release said.
Other service charges, commissions and fees amounted to $1.7 million in the third quarter, compared with $1.3 million in the third quarter of 2010. For the nine months ending Sept. 30, this line item totaled $5 million, compared with $4.1 million last year.
The increases this year are primarily attributable to increased debit card usage by the company's customers, the news release said. The company earns a small fee each time its customers make a debit card transaction. Because the company has less than $10 billion in assets, it is exempt from recently announced regulatory rules limiting this income.
Noninterest expenses amounted to $24 million in the third quarter, a 15.7 percent increase over the $20.7 million recorded in the same period of 2010. Noninterest expenses for the nine months ending Sept. 30, amounted to $71.9 million, a 10.7 percent increase from the $64.9 million recorded in the first nine months of 2010.
Total assets as of Sept. 30 amounted to $3.3 billion, a 1.7percent decrease from a year earlier. Total loans as of Sept. 30 amounted to $2.4 billion, a 3.1 percent decrease from a year earlier, and total deposits amounted to $2.7 billion, a 0.8 percent decrease from a year earlier.
Since the onset of the recession, the company has generally experienced declines in loans and deposits. The company said in the release that it is actively pursuing lending opportunities to improve its asset yields, as well as to potentially decrease the dividend rate on its preferred stock.
The company remains well-capitalized by all regulatory standards, the release said.
Ocheltree also noted the following other corporate developments:
n On Oct. 24, the company reached an agreement to purchase 11 coastal branches from Waccamaw Bank, headquartered in Whiteville, with $180 million in deposits and $98 million in performing loans.
This transaction is subject to regulatory approval and is expected to be completed in the first quarter of 2012.
n On Aug. 25, the company announced a quarterly cash dividend of 8 cents per share, the same rate declared in the third quarter of 2010.
First Bancorp is a bank holding company headquartered in Troy. Its principal activity is the ownership and operation of First Bank, a state-chartered community bank that operates 97 branches, with 82 branches operating in North Carolina, nine in South Carolina and six in Virginia.
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