First Bank Records $3.3 Million Loss in Final Quarter of 2010
First Bancorp, the parent company of First Bank, has announced a net loss of $3.3 million, or 19 cents per diluted common share, for the final quarter of 2010
That compared with net income of $4.3 million, or 25 cents per diluted common share, for the same period in 2009. The net loss reported for the fourth quarter of 2010 was primarily caused by write-downs of foreclosed properties that were assumed in the company's 2009 acquisition of a failed bank, a news release said.
"Considering the economic challenges faced by our market areas in 2010, I am pleased to report net income for the year of close to $6 million," said Jerry L. Ocheltree, president and CEO of First Bancorp. "Our capital remains very strong, with all of our regulatory capital ratios being at least 50 percent higher than the well-capitalized threshold. We are beginning to see signs of economic recovery, and I am optimistic that First Bank is well-positioned to benefit from the recovery."
Earnings were also impacted by higher provisions for loan losses related both to loans acquired in the 2009 failed bank acquisition and to legacy loans.
For the year ended Dec. 31, the company reported net income of $5.9 million, or 35 cents per diluted common share, compared with $56.3 million, or $3.37 per diluted common share, for the previous year.
The 2009 results were impacted by a failed bank acquisition gain recorded in the second quarter of 2009 that amounted to $41.1 million, or $2.46 per diluted common share, on an after-tax basis, the release said.
Net interest income for the fourth quarter of 2010 amounted to $33.6 million, an 8.2 percent increase over the fourth quarter of 2009. This increase was due to a higher net interest margin, which was partially offset by a lower level of earning assets.
Net interest income for the year ended Dec. 31 amounted to $127.4 million, an 18.9 percent increase from 2009. This increase was due to a higher net interest margin, as well as balance sheet growth realized from the June 2009 acquisition of a failed bank.
The company's provision for loan losses amounted to $30.5 million in the fourth quarter of 2010, compared with $6.6 million in the fourth quarter of 2009. The provision for loan losses for the year ended Dec. 31 was $54.6 million, compared with $20.2 million recorded in 2009.
For the fourth quarter and year ended Dec. 31, the company recorded $20.9 million in provision for loan losses related to covered loans that experienced credit quality deterioration.
The credit quality deterioration primarily related to collateral dependent loans for which the company received updated appraisals during the fourth quarter of 2010 that reflected lower valuations, according to the news release.
Total noninterest income was $14.9 million in the fourth quarter of 2010, compared with $6.3 million for the fourth quarter of 2009. Noninterest income for the year ended Dec. 31 amounted to $29.1 million compared with $89.5 million for 2009.
During the three and 12 months ended Dec. 31, the company recorded $22.7 million and $34.5 million, respectively, in write-downs on covered foreclosed properties.
For the three- and 12-month periods ended Dec. 31, service charges on deposits decreased, compared with the same periods in 2009, due primarily to lower insufficient funds fee charges, which declined in the second half of 2010 as result of fewer instances of customers overdrawing their accounts.
This was partially a result of new regulations that took effect in the third quarter of 2010 that limit the company's ability to charge overdraft fees.
Noninterest expenses amounted to $22 million in the fourth quarter of 2010, a 2 percent decrease from the $22.5 million recorded in the same period of 2009. Noninterest expenses for the year ended Dec. 31 amounted to $87 million, a 10.7 percent increase from the $78.6 million recorded in 2009.
Total assets as of Dec. 31 amounted to $3.3 billion, a 7.5 percent decrease from a year earlier.
Total loans as of Dec. 31 amounted to $2.5 billion, a 7.5 percent decrease from a year earlier, and deposits amounted to $2.7 billion as of Dec. 31, a 9.6 percent decrease from last year.
The company continues to experience a general decline in loans, with loans decreasing $199 million, or 7.5 percent, since Dec. 31, 2009, the news release said. Although the company originates and renews a significant amount of loans each month, normal pay downs of loans and loan foreclosures are exceeding new loan growth.
Overall, loan demand remains weak in most of the company's market areas.
The company's deposits declined by $281 million, or 9.6 percent, during 2010. This decrease was primarily associated with time deposits, which are generally the highest cost source of funds for the company.
The company said in the news release that it remains well-capitalized by all regulatory standards, with a total risk-based capital ratio of 16.59 percent, compared with the 10 percent minimum to be considered well-capitalized.
The company continues to maintain $65 million in preferred stock that was issued to the U.S. Treasury in January 2009. The company said it has no immediate plans to redeem this stock.
This capital is being held as insurance against an uncertain economy.
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 now operates 97 branches, with 82 operating in North Carolina, nine in South Carolina and six in Virginia. First Bank also has a loan production office in Blacksburg, Va.
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