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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
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FORM 8-K
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): DECEMBER 29, 1995
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FIRST BANCORP
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(Exact Name of Registrant as Specified in its Charter)
North Carolina 0-15572 56-1421916
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(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification Number)
341 North Main Street, Troy, North Carolina 27371-0508
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(Address of Principal Executive Offices) (Zip Code)
(Registrant's telephone number, including area code) (910)576-6171
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Not Applicable
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(Former Name or Former Address, if changed since last report)
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INDEX
FIRST BANCORP
Page
Item 5 - Other Events 3
Item 7 - Exhibits 3
Signatures 4
Exhibit 99 (a) News Release dated December 29, 1995 5
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Item 5 - Other Events
(a) On December 29, 1995, the Registrant announced that two unrelated
nonrecurring events will result in fourth quarter charges to earnings. Both
events were related to the Registrant's banking subsidiary, First Bank. The
first event announced was the negotiation of a settlement of litigation
against First Bank, the Company's banking subsidiary, and others, regarding
the previously disclosed allegations that arose in August 1994. The second
event resulted from nonrecurring severance expenses related to recent
changes in two management positions.
On December 29, 1995, First Bancorp concluded the process to settle with all
parties involved in litigation brought by Prudential Securities, Inc.
against one of First Bank's customers and First Bank, arising out of loans
made by Prudential and secured by certificates of deposit issued by First
Bank. First Bank's records indicated that the certificates of deposit were
issued for amounts far less than those shown on the documents held by
Prudential. The First Bank branch manager involved in the issuance of the
certificates of deposit died on August 5, 1994. After significant discovery
and a mediation conference held earlier this month, First Bancorp concluded
that it is in the best interests of its shareholders, customers and
employees to settle the Prudential litigation and other related litigation
at this time and to avoid costly trials. Because First Bancorp's fidelity
bond coverage limit was not sufficient to cover the entire cost of the
settlement, the company will report significant expenses in connection with
resolving the litigation. The settlement will result in a nonrecurring
fourth quarter pre-tax charge of approximately $1,946,000 which equates to
approximately $1,185,000 after-tax, or 79 cents per share. Included in the
pre-tax charge are the out of pocket costs to settle claims in the pre-tax
amount of approximately $1,446,000 and additional provisions for loan losses
of $500,000 which First Bancorp recorded due to charge-offs of loans related
to the litigating parties. Before the settlement-related charge, the
Company had already incurred approximately $789,000 in pre-tax expenses in
1995 for legal services and other expenses incurred in matters related to
the litigation. Of the year-to-date expense, approximately $246,000 was
expensed in the fourth quarter.
First Bancorp also announced it will recognize expenses related to changes
in two management positions that occurred in the fourth quarter. The first
change relates to the previously announced departure of the company's
President and CEO, and the second relates to the departure of the company's
Regional President. The Regional President position was created less than
eighteen months ago and is being eliminated in a restructuring of
management. In connection with these management changes, First Bancorp
entered into severance agreements with the two managers which will result in
a nonrecurring fourth quarter pre-tax charge of approximately $745,000 which
is approximately $454,000 after-tax, or 30 cents per share. One of the
managers was employed under an employment contract which provided for
payment of his salary for a period of five years. The payout of this
contract, negotiated on December 29, 1995, comprised the majority of this
charge.
The news of these two events was released on December 29, 1995, as evidenced
by Exhibit 99(a) to this Form 8-K.
Item 7 - Exhibits
99 Additional Exhibits
(a) News Release dated December 29, 1995
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIRST BANCORP
January 2, 1996 BY: James H. Garner
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James H. Garner
President
(Principal Executive Officer),
Treasurer and Director
January 2, 1996 BY: Anna G. Hollers
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Anna G. Hollers
Executive Vice President
and Secretary
January 2, 1996 BY: Kirby A. Tyndall
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Kirby A. Tyndall
Senior Vice President
and Chief Financial Officer
Exhibit 99 (a)
[First Bancorp logo here]
Friday, December 29, 1995 (FOR IMMEDIATE RELEASE)
TROY, NC - First Bancorp announced today that two unrelated nonrecurring
events will result in fourth quarter charges to earnings. The first event
announced was the negotiation of a settlement of litigation against First
Bank, the Company's banking subsidiary, and others, regarding the previously
disclosed allegations that arose in August 1994. The second event resulted
from nonrecurring severance expenses related to recent changes in two
management positions.
First Bancorp has reached a settlement among all parties involved in
litigation brought by Prudential Securities, Inc. against one of First
Bank's customers and First Bank, arising out of loans made by Prudential and
secured by certificates of deposit issued by First Bank. First Bank's
records indicated that the certificates of deposit were issued for amounts
far less than those shown on the documents held by Prudential. The First
Bank branch manager involved in the issuance of the certificates of deposit
died on August 5, 1994. After significant discovery and a mediation
conference held earlier this month, First Bancorp concluded that it is in
the best interests of its shareholders, customers and employees to settle
the Prudential litigation and other related litigation at this time and to
avoid costly trials. Because First Bancorp's fidelity bond coverage limit
was not sufficient to cover the entire cost of the settlement, the company
will report significant expenses in connection with resolving the
litigation. The settlement will result in a nonrecurring fourth quarter
pre-tax charge of approximately $1,946,000 which equates to approximately
$1,185,000 after-tax, or 79 cents per share. Included in the pre-tax charge
are the out of pocket costs to settle claims in the pre-tax amount of
approximately $1,446,000 and additional provisions for loan losses of
$500,000 which First Bancorp recorded due to charge-offs of loans related to
the litigating parties. Before the settlement-related charge, the Company
had already incurred approximately $789,000 in pre-tax expenses in 1995 for
legal services and other expenses incurred in matters related to the
litigation. Of the year-to-date expense, approximately $246,000 was
expensed in the fourth quarter.
First Bancorp also will recognize expenses related to changes in two
management positions that occurred in the fourth quarter. The first change
relates to the previously announced departure of the company's President and
CEO, and the second relates to the departure of the company's Regional
President. The Regional President position was created less than eighteen
months ago and is being eliminated in a restructuring of management. In
connection with these management changes, First Bancorp entered into
severance agreements with the two managers which will result in a
nonrecurring fourth quarter pre-tax charge of approximately $745,000 which
is approximately $454,000 after-tax, or 30 cents per share. One of the
managers was employed under an employment contract which provided for
payment of his salary for a period of five years. The payout of this
contract, which has been negotiated within the past week, comprises the
majority of this charge.
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First Bancorp President and CEO James H. Garner said, "Although we regret
having to report such expenses to our shareholders, we recognize that the
litigation settlement avoids not only the significant legal costs that a
trial would have required, but also the unavoidable diversion of corporate
attention and internal resources that a trial would have demanded. In
addition, the resolution of both the litigation and severance issues will
remove significant economic burdens that would have impacted earnings in
future years. We are thankful to finally have these matters resolved."
First Bancorp is a bank holding company based in Troy, North Carolina. Its
principal activity is the ownership and operation of First Bank, a
state-chartered bank that operates 32 branch offices in a ten county market
area centered in Troy. First Bancorp stock is traded on the NASDAQ National
Market System under the symbol FBNC.
For additional information, please contact:
Mr. James H. Garner
President & Chief Executive Officer
Telephone: (910) 576-6171
