<PAGE>
===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
March 31, 1997
___________________
Commission File Number 0-15572
FIRST BANCORP
------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
North Carolina 56-1421916
- --------------------------------------- ------------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
341 North Main Street, Troy, North Carolina 27371-0508
- -------------------------------------------------- ------------------------
(Address of Principal Executive Offices) (Zip Code)
(Registrant's telephone number, including area code) (910) 576-6171
------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
[ X ] YES [ ] NO
As of March 31, 1997, 3,016,370 shares of the registrant's Common
Stock, $5 par value, were outstanding. The registrant had no other classes of
securities outstanding.
Transitional Small Business Format [ ] YES [ X ] NO
===============================================================================
<PAGE>
INDEX
FIRST BANCORP AND SUBSIDIARIES
Page
Part I. Financial Information
Item 1 - Financial Statements
CONSOLIDATED BALANCE SHEETS -
March 31, 1997 and 1996
(With Comparative Amounts at December 31, 1996) 3
STATEMENTS OF CONSOLIDATED INCOME -
For the Periods Ended March 31, 1997 and 1996 4
STATEMENTS OF CONSOLIDATED CASH FLOWS -
For the Periods Ended March 31, 1997 and 1996 5
STATEMENTS OF CHANGES IN CONSOLIDATED SHAREHOLDERS' EQUITY -
For the Periods Ended March 31, 1997 and 1996 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7
Item 2 - Management's Discussion and Analysis of Consolidated
Results of Operations and Financial Condition 8
Part II. Other Information
Item 6 - Exhibits and Reports on Form 8-K 15
Signatures 17
<PAGE>
Part I. Financial Information
Item 1 - Financial Statements
Consolidated Balance Sheets
FIRST BANCORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
Mar 31, Dec 31, Mar 31,
($ in thousands--unaudited) 1997 1996 1996
--------- --------- ---------
<S> <C> <C> <C>
ASSETS
Cash & due from banks, noninterest bearing $ 12,243 $ 15,882 $ 12,138
Federal funds sold 15,400 5,025 10,690
--------- --------- ---------
Total cash and cash equivalents 27,643 20,907 22,828
--------- --------- ---------
Securities available for sale (approximate
costs of $54,559, $53,721 and $46,461) 54,296 53,942 46,645
Securities held to maturity (approximate
fair values of $23,537, $22,717 and $19,614) 23,160 22,323 19,088
Presold mortgages in process of settlement 1,391 1,395 1,219
Loans, net of unearned income 225,171 223,032 215,422
Less: Allowance for possible loan losses (4,777) (4,726) (4,733)
--------- --------- ---------
Net loans 220,394 218,306 210,689
--------- --------- ---------
Premises and equipment, net 7,789 7,722 7,939
Accrued interest receivable 2,447 2,412 2,417
Intangible assets 5,459 5,834 6,261
Other 2,626 2,609 3,548
--------- --------- ---------
Total assets $ 345,205 $ 335,450 $ 320,634
========= ========= =========
LIABILITIES
Deposits: Demand $ 43,192 $ 45,002 $ 41,645
Savings, NOW and money market 117,084 107,605 106,062
Time deposits of $100,000 or more 33,011 33,526 29,598
Other time deposits 114,010 111,728 109,108
--------- --------- ---------
Total deposits 307,297 297,861 286,413
Accrued interest on deposits 1,862 1,882 1,803
Other 2,398 2,475 1,580
--------- --------- ---------
Total liabilities 311,557 302,218 289,796
--------- --------- ---------
SHAREHOLDERS' EQUITY
Common stock, $5 par value per share
Authorized: 12,500,000 shares
Issued and outstanding: 3,016,370,
3,016,370 and 3,014,170 shares 15,082 15,082 15,070
Capital surplus 3,831 3,831 3,820
Retained earnings 14,907 14,173 11,825
Unrealized gain (loss) on securities
available for sale, net of income taxes (172) 146 123
--------- --------- ---------
Total shareholders' equity 33,648 33,232 30,838
--------- --------- ---------
Total liabilities and shareholders' equity $ 345,205 $ 335,450 $ 320,634
========= ========= =========
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
Statements Of Consolidated Income
FIRST BANCORP AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
<TABLE>
<CAPTION>
Three Months Ended
($ in thousands except Mar 31,
per share data--unaudited) 1997 1996
--------- ---------
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 5,349 $ 5,121
Interest on investment securities:
Taxable interest income 895 646
Exempt from income taxes 316 275
Other, principally federal funds sold 167 166
--------- ---------
Total interest income 6,727 6,208
--------- ---------
INTEREST EXPENSE
Time deposits of $100,000 or more 462 420
Other time and savings deposits 2,071 2,049
--------- ---------
Total interest expense 2,533 2,469
--------- ---------
NET INTEREST INCOME 4,194 3,739
Provision for possible loan losses 75 75
--------- ---------
NET INTEREST INCOME AFTER PROVISION
FOR POSSIBLE LOAN LOSSES 4,119 3,664
--------- ---------
OTHER INCOME
Service charges on deposit accounts 607 632
Commissions from insurance sales 74 108
Other charges, commissions and fees 262 217
Data processing fees 73 54
--------- ---------
Total other income 1,016 1,011
--------- ---------
OTHER EXPENSES
Salaries 1,516 1,280
Employee benefits 320 327
--------- ---------
Total personnel expense 1,836 1,607
Net occupancy expense 236 236
Equipment related expenses 211 208
Other 1,202 1,116
--------- ---------
Total other expenses 3,485 3,167
--------- ---------
INCOME BEFORE INCOME TAXES 1,650 1,508
Income taxes 524 503
--------- ---------
NET INCOME $ 1,126 $ 1,005
========= =========
PER SHARE AMOUNTS
Net income $ 0.37 $ 0.33
Cash dividends declared 0.13 0.11
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
Statements Of Consolidated Cash Flows
FIRST BANCORP AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended
Mar 31,
($ in thousands--unaudited) 1997 1996
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,126 $ 1,005
Adjustments to reconcile net income to
net cash provided by operations:
Provision for loan losses 75 75
Net security premium amortization/discount accretion (9) (15)
Loan fees and costs deferred net of amortization (1) (21)
Depreciation of premises and equipment 173 185
Amortization of intangible assets 139 141
Realized and unrealized other real estate losses 16 --
Provision for deferred income taxes 2 264
Changes in operating assets and liabilities:
Increase in accrued interest receivable (35) (45)
Decrease (increase) in intangible assets 236 (96)
Decrease (increase) in other assets 196 (124)
Decrease in accrued interest payable (20) (86)
Decrease in other liabilities (137) (339)
--------- ---------
Net cash provided by operating activities 1,761 944
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of securities available for sale (8,623) (10,454)
Purchase of securities held to maturity (1,217) --
Proceeds from maturities/issuer calls of securities
available for sale 7,802 13,329
Proceeds from maturities/issuer calls of securities
held to maturity 373 635
Net increase in loans (2,224) (3,988)
Net purchases of premises and equipment (240) (81)
--------- ---------
Net cash used in investing activities (4,129) (559)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits 9,436 (1,302)
Cash dividends paid (332) (271)
--------- ---------
Net cash provided by (used in) financing activities 9,104 (1,573)
--------- ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 6,736 (1,188)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 20,907 24,016
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 27,643 $ 22,828
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 2,553 $ 2,555
Income taxes 28 --
Non-cash transactions:
Foreclosed loans transferred to other real estate 62 180
Loans to facilitate the sale of other real estate 17 93
Decrease in market value of securities
available for sale (483) (169)
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
Statements Of Changes In Consolidated Shareholders' Equity
FIRST BANCORP AND SUBSIDIARIES
STATEMENTS OF CHANGES IN CONSOLIDATED SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock Share-
(in thousands- ------------------- Capital Retained holders'
-unaudited) Shares Amount Surplus Earnings Other Equity
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
BALANCES,
December 31, 1996 3,016 $ 15,082 $ 3,831 $ 14,173 $ 146 $ 33,232
Net income 1,126 1,126
Cash dividends
declared (392) (392)
Net adjustment
for securities
available for sale (318) (318)
--------- --------- --------- --------- --------- ---------
BALANCES,
March 31, 1997 3,016 $ 15,082 $ 3,831 $ 14,907 $ (172)$ 33,648
========= ========= ========= ========= ========= =========
BALANCES,
December 31, 1995 3,014 $ 15,070 $ 3,820 $ 11,152 $ 235 $ 30,277
Net income 1,005 1,005
Cash dividends
declared (332) (332)
Net adjustment
for securities
available for sale (112) (112)
--------- --------- --------- --------- --------- ---------
BALANCES,
March 31, 1996 3,014 $ 15,070 $ 3,820 $ 11,825 $ 123 $ 30,838
========= ========= ========= ========= ========= =========
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
FIRST BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($ in thousands-
-unaudited) For the Periods Ended March 31, 1997 and 1996
NOTE 1
In the opinion of the Company, the accompanying unaudited consolidated
financial statements contain all adjustments (consisting of only normal
recurring accruals) necessary to present fairly the consolidated financial
position of the Company as of March 31, 1997 and 1996 and the consolidated
results of operations and consolidated cash flows for the periods ended
March 31, 1997 and 1996 and changes in consolidated shareholders' equity
for the period ended March 31, 1997. Reference is made to the notes to
consolidated financial statements for the year ended December 31, 1996 filed
with the Annual Report on Form 10-KSB for a discussion of accounting policies
and other relevant information with respect to the financial statements.
NOTE 2
The results of operations for the periods ended March 31, 1997 and 1996
are not necessarily indicative of the results to be expected for the full
year. Earnings per share were computed by dividing net income by the
weighted average common shares outstanding. Per share data and average
common shares outstanding have been restated for the 2-for-1 stock split paid
September 13, 1996. Common stock equivalents resulting from the Company's
stock option plan were not considered in the earnings per share computation
due to immateriality.
NOTE 3
Certain amounts reported in the period ended March 31, 1996 have been
reclassified to conform with the presentation for March 31, 1997. These
reclassifications had no effect on net income or shareholders' equity for
the periods presented.
NOTE 4
Based on management's evaluation of the loan portfolio, current economic
conditions and other risk factors, the Company's allowance for possible loan
losses was $4,777,000 as of March 31, 1997 compared to $4,726,000 and
$4,733,000 as of December 31, 1996 and March 31, 1996, respectively.
These reserve levels represented 2.12%, 2.12% and 2.20% of total loans as of
March 31, 1997, December 31, 1996 and March 31, 1996, respectively.
Nonperforming assets are defined as nonaccrual loans, loans past due 90 or
more days and still accruing interest, restructured loans and foreclosed,
repossessed and idled properties. For each of the periods presented, the
Company had no loans past due 90 or more days and still accruing interest.
Nonperforming assets are summarized as follows:
<TABLE>
<CAPTION>
Mar 31, Dec 31, Mar 31,
($ in thousands) 1997 1996 1996
--------- --------- ---------
<S> <C> <C> <C>
Nonperforming loans:
Nonaccrual loans $ 1,376 $ 1,836 $ 1,707
Restructured loans 722 703 737
--------- --------- ---------
Total nonperforming loans 2,098 2,539 2,444
Foreclosed, repossessed and idled
properties (included in other assets) 410 572 1,450
--------- --------- ---------
Total nonperforming assets $ 2,508 $ 3,111 $ 3,894
========= ========= =========
Nonperforming loans as a percentage of total loans 0.93% 1.14% 1.13%
Allowance for possible loan losses as a percentage
of nonperforming loans 227.69% 186.14% 193.66%
Nonperforming assets as a percentage of loans and
foreclosed, repossessed and idled properties 1.11% 1.39% 1.80%
Nonperforming assets as a percentage of
total assets 0.73% 0.93% 1.21%
</TABLE>
<PAGE>
Item 2 - Management's Discussion and Analysis of Consolidated
Results of Operations and Financial Condition
RESULTS OF OPERATIONS
Net income for the quarter ended March 31, 1997 increased 12% to
$1,126,000, or $0.37 per share, compared to $1,005,000, or $0.33 per share,
for the first quarter of 1996. The earnings increase was primarily achieved
through higher net interest income that principally resulted from increases
in volumes and yields in the loan and securities portfolios. Earnings per
share for 1996 have been restated to reflect the two-for-one stock split paid
September 13, 1996 to shareholders of record August 30, 1996.
Net interest income is the largest component of earnings, representing
the difference between interest and fees generated from earning assets and the
interest costs of deposits and other funds needed to support those assets.
Net interest income increased by $455,000, or 12.2%, when comparing the first
quarter of 1997 with the first quarter of 1996, primarily because of the
growth in the volumes and yields on earning assets. This growth allowed
earning assets to increase more rapidly than deposits.
Under current conditions, future increases in market interest rates
could have a negative impact on net interest income if portfolio mixes are
held constant and rate-sensitive liabilities reprice upward more rapidly than
rate-sensitive earning assets. The Company is experiencing a slight change
in its loan mix to variable rate loans from fixed rate loans as well as a
shift to savings, NOW and money market deposits from time deposits.
Generally, the Company's goal is to manage portfolio mixes to minimize
changes in net interest income due to changing market interest rates.
The provision for possible loan losses for the first quarter of 1997
remained at $75,000, as it was for the first quarter of 1996, primarily
because the improvement in asset quality essentially offset the modest growth
in loans. Provisions for possible loan losses are based on management's
evaluation of the loan portfolio, as discussed under "Financial Condition"
below.
Noninterest income increased slightly by $5,000, or less than 0.5%, for
the first quarter primarily because growth in data processing and other fees
was substantially offset by lower fees from service charges on deposit
accounts and commissions from sales of credit insurance. The Company sold no
securities in the first quarters of 1997 or 1996.
Noninterest overhead expenses increased by $318,000, or 10.0%, for the
first quarter of 1997, primarily because of expenses associated with opening
branch offices in Seagrove, Lillington and Sanford--three new markets for the
Company. Personnel expenses increased $229,000, or 14.3%, and other
noninterest expenses increased $86,000, or 7.7%.
Income taxes increased $21,000, or 4.2%, for the first quarter, while
the effective tax rates were 31.8% and 33.4% for the quarters ended March 31,
1997 and 1996, respectively. The decrease in the effective tax rate was
partially attributable to higher levels of tax-exempt interest income.
<PAGE>
FINANCIAL CONDITION
The Company's total assets were $345.2 million at March 31, 1997, an
increase of $24.6 million, or 7.7%, from March 31, 1996. Interest-earning
assets increased by 9% compared to March 31, 1996. Investment securities led
the asset growth with an increase of 11.7 million, or 17.8%, while loans, the
primary interest-earning asset, increased by 4.5% during this same period.
Deposits increased $20.9 million, or 7.3% to support the asset growth. The
increases in deposits were primarily in the categories of savings, NOW and
money market deposits. The Company is experiencing a shift in the mix of its
deposits to savings, NOW and money market accounts from time deposits. The
Company's cost of funds has remained relatively low compared to that of its
competitors. The Company does not rely heavily on large deposits of $100,000
or more to fund asset growth and has not traditionally engaged in obtaining
deposits through brokers. Since December 31, 1996, the Company experienced
annualized increases of 18%, 11.6% and 12.7% in earning assets, total assets
and deposits, respectively.
NONPERFORMING ASSETS
Nonperforming assets are defined as nonaccrual loans, loans past due 90
or more days, restructured loans and foreclosed, repossessed and idled
properties. The following table summarizes the Company's nonperforming
assets at the dates indicated.
<TABLE>
<CAPTION>
Mar 31, Dec 31, Mar 31,
($ in thousands) 1997 1996 1996
--------- --------- ---------
<S> <C> <C> <C>
Nonperforming loans:
Nonaccrual loans $ 1,376 $ 1,836 $ 1,707
Restructured loans 722 703 737
--------- --------- ---------
Total nonperforming loans 2,098 2,539 2,444
Foreclosed, repossessed and idled
properties (included in other assets) 410 572 1,450
--------- --------- ---------
Total nonperforming assets $ 2,508 $ 3,111 $ 3,894
========= ========= =========
Nonperforming loans as a percentage of total loans 0.93% 1.14% 1.13%
Allowance for possible loan losses as a percentage
of nonperforming loans 227.69% 186.14% 193.66%
Nonperforming assets as a percentage of loans and
foreclosed, repossessed and idled properties 1.11% 1.39% 1.80%
Nonperforming assets as a percentage of
total assets 0.73% 0.93% 1.21%
</TABLE>
Management has reviewed the collateral for the nonperforming assets,
including nonaccrual loans, and has included this review among the factors
considered in the evaluation of the allowance for possible loan losses
discussed below.
<PAGE>
A loan is placed on nonaccrual status when, in management's judgment,
the collection of interest appears doubtful. Interest on loans that are
classified as nonaccrual is recognized when received. The accrual of
interest is discontinued on all loans that become 90 days past due with
respect to principal or interest. In some cases, where borrowers are
experiencing financial difficulties, loans may be restructured to provide
terms significantly different from the originally contracted terms. If the
nonaccrual loans and restructured loans as of March 31, 1997 and 1996 had
been current in accordance with their original terms and had been outstanding
throughout the three month periods (or since origination or acquisition if held
for part of the three month periods), gross interest income in the amounts of
approximately $35,000 and $43,000 for nonaccrual loans and $17,000 and
$17,000 for restructured loans would have been recorded for the three months
ended March 31, 1997 and 1996, respectively. Interest income on such
loans that was actually collected and included in net income in the three
months ended March 31, 1997 and 1996 amounted to approximately $40,000 and
$10,000 for nonaccrual loans and $14,000 and $13,000 for restructured loans
loans respectively. There have been no material changes in the levels of
impaired loans since December 31, 1996.
Nonperforming loans are defined as nonaccrual loans, loans past due 90
or more days and restructured loans. As of March 31, 1997, December 31, 1996
and March 31, 1996, nonperforming loans were approximately 0.93%, 1.14% and
1.13%, respectively, of the total loans outstanding at such dates.
Nonaccrual loans decreased $331,000, or 19%, to approximately $1,376,000
compared to March 31, 1996 and decreased approximately $460,000, or 25.1%,
since year-end. As of March 31, 1997, the borrower with the largest
aggregate balance of nonaccrual loan(s) owed an aggregate of approximately
$389,000 while the overall average nonaccrual loan balance was approximately
$38,000.
In addition to the nonperforming loan amounts discussed above,
management believes that an estimated $1,000,000-$1,500,000 of loans that
are currently performing in accordance with their contractual terms may
potentially develop problems depending upon the particular financial
situations of the borrowers and economic conditions in general. These loans
were considered in determining the appropriate level of the allowance for
possible loan losses. See "Summary of Loan Loss Experience" below.
Loans classified for regulatory purposes as loss, doubtful, substandard,
or special mention that have not been disclosed in the problem loan amounts
above do not represent or result from trends or uncertainties which
management reasonably expects will materially impact future operating
results, liquidity, or capital resources, or represent material credits about
which management is aware of any information which causes management to have
serious doubts as to the ability of such borrowers to comply with the loan
repayment terms.
As of March 31, 1997, the Company owned foreclosed and repossessed
assets totaling approximately $410,000, which consisted principally of
several parcels of foreclosed real estate. The Company's management has
reviewed recent appraisals of these properties and has concluded that their
fair values, less estimated costs to sell, equal or exceed their respective
carrying values at March 31, 1997.
<PAGE>
SUMMARY OF LOAN LOSS EXPERIENCE
The allowance for possible loan losses is created by direct charges to
operations. Losses on loans are charged against the allowance in the period
in which such loans, in management's opinion, become uncollectible.
Recoveries during the period are credited to this allowance.
The factors that influence management's judgment in determining the
amount charged to operating expense include past loan loss experience,
composition of the loan portfolio, evaluation of possible future losses and
current economic conditions.
The Company's bank subsidiary uses a loan analysis and grading program to
facilitate its evaluation of possible future loan losses and the adequacy of
its allowance for possible loan losses, otherwise referred to as its loan loss
reserve. In this program, a "watch list" is prepared and monitored monthly
by management and is tested quarterly by the bank's Internal Audit Department.
The list includes loans that management identifies as having potential credit
weaknesses in addition to loans past due 90 days or more, nonaccrual loans and
remaining unpaid loans identified during previous examinations.
Based on management's evaluation of the loan portfolio and economic
conditions, a provision for possible loan losses of $75,000 was added to the
allowance for possible loan losses during the first quarters of 1997 and
1996. At March 31, 1997, the allowance stood at $4,777,000, compared to
$4,726,000 at December 31, 1996 and $4,733,000 at March 31, 1996. At
March 31, 1997, the allowance for possible loan losses was approximately 228%
of total nonperforming loans, compared to corresponding percentages of 186%
at December 31, 1996 and 194% at March 31, 1996.
The allowance for possible loan losses was 2.12%, 2.12% and 2.20% of
total loans as of March 31, 1997, December 31, 1996 and March 31, 1996
respectively. Management considers the reserve levels adequate to cover
possible loan losses on the loans outstanding as of each reporting date. It
must be emphasized, however, that the determination of the reserve using the
Company's procedures and methods rests upon various judgments and assumptions
about future economic conditions and other factors affecting loans. No
assurance can be given that the Company will not in any particular period
sustain loan losses that are sizable in relation to the amounts reserved or
that subsequent evaluations of the loan portfolio, in light of conditions and
factors then prevailing, will not require significant changes in the
allowance for possible loan losses or future charges to earnings. In
addition, various regulatory agencies, as an integral part of their
examination process, periodically review the Company's allowances for
possible loan losses and losses on other real estate. Such agencies may
require the Company to recognize additions to the allowances based on their
judgments about information available at the time of such examinations.
<PAGE>
For the periods indicated, the following table summarizes the Company's
balances of loans outstanding, average loans outstanding, changes in the
allowance arising from charge-offs and recoveries by category, and additions
to the allowance that have been charged to expense.
<TABLE>
<CAPTION>
Three Three
Months Year Months
Ended Ended Ended
Mar 31, Dec 31, Mar 31,
($ in thousands) 1997 1996 1996
--------- --------- ---------
<S> <C> <C> <C>
Loans outstanding at period end $ 225,171 $ 223,032 $ 215,422
========= ========= =========
Average loans outstanding during period $ 222,278 $ 217,900 $ 213,709
========= ========= =========
Allowance for possible loan losses at
beginning of period $ 4,726 $ 4,587 $ 4,587
Loans charged off:
Commercial, financial and agricultural -- (209) (45)
Real estate - mortgage (110) (196) (86)
Installment loans to individuals (104) (311) (21)
--------- --------- ---------
Total charge-offs (214) (716) (152)
--------- --------- ---------
Recoveries of loans previously charged off:
Commercial, financial and agricultural 73 114 6
Real estate - mortgage 6 127 62
Installment loans to individuals 78 113 47
Other 33 176 108
--------- --------- ---------
Total recoveries 190 530 223
--------- --------- ---------
Net recoveries (charge-offs) (24) (186) 71
Additions to the allowance charged to expense 75 325 75
--------- --------- ---------
Allowance for possible loan losses at
end of period $ 4,777 $ 4,726 $ 4,733
========= ========= =========
Ratios:
Annualized net charge-offs (recoveries)
to average loans during period 0.04% 0.09% -0.13%
Annualized net charge-offs (recoveries)
to loans at end of period 0.04% 0.08% -0.13%
Allowance for possible loan losses to
average loans during period 2.15% 2.17% 2.21%
Allowance for possible loan losses to
loans at end of period 2.12% 2.12% 2.20%
Annualized net charge-offs (recoveries)
to allowance for possible loan losses 2.01% 3.94% -6.00%
Net charge-offs (recoveries)
to provision for possible loan losses 32.00% 57.23% -94.67%
</TABLE>
Based on the results of the aforementioned loan analysis and grading
program and management's evaluation of the allowance for possible loan losses
at March 31, 1997, there have been no material changes to the allocation
of the allowance for possible loan losses among the various categories of
loans since December 31, 1996.
<PAGE>
LIQUIDITY
The Company's liquidity is determined by its ability to convert assets to
cash or acquire alternative sources of funds to meet the needs of its
customers who are withdrawing or borrowing funds, and to maintain required
reserve levels, pay expenses and operate the Company on an ongoing basis. The
Company's primary liquidity sources are cash and due from banks, federal funds
sold and other short-term investments. In addition, the Company (through its
bank subsidiary) has the ability, on a short-term basis, to purchase federal
funds from other financial institutions. The Company has not traditionally
had to rely on the purchase of federal funds as a source of liquidity. The
Company's management believes its liquidity sources are at an acceptable
level and remain adequate to meet its operating needs.
CAPITAL RESOURCES
The Company is required by its own policies and by applicable federal
regulations to maintain certain capital levels. The Company's ratio of stated
capital to total assets equaled or exceeded 10% as of March 31, 1997
and 1996 and December 31, 1996. In an effort to achieve a measurement of
capital adequacy that is sensitive to the individual risk profiles of
financial institutions, the various financial institution regulators have
minimum capital guidelines that categorize various components of capital and
types of assets and measure capital adequacy in relation to the financial
institution's relative level of those capital components and the level of
risk associated with various types of assets of that financial institution.
The guidelines call for minimum adjusted capital of 8% of risk-adjusted
assets. As of March 31, 1997, the Company's total risk-based capital
ratio was approximately 13.6%.
In addition to the risk-based capital requirements described above, the
Company is subject to a leverage capital requirement, which calls for a
minimum ratio of leverage capital, as defined in the regulations, to quarterly
average total assets of 3-5%. As of March 31, 1997, the Company's
leverage capital ratio was approximately 8.5%.
The Company is not aware of any recommendations of regulatory authorities
or otherwise which, if they were to be implemented, would have a material
effect on its liquidity, capital resources, or operations.
<PAGE>
As of March 31, 1997, December 31, 1996 and March 31, 1996, the
Company was in compliance with all existing capital requirements, as
summarized in the following table:
<TABLE>
<CAPTION>
Mar 31, Dec 31, Mar 31,
($ in thousands) 1997 1996 1996
--------- --------- ---------
<S> <C> <C> <C>
Tier I capital:
Total stated shareholders' equity $ 33,648 $ 33,232 $ 30,838
Less: Intangible assets 5,459 5,834 6,261
Unrealized holding gain (loss)
on securities available for
sale, net of income taxes (172) 146 123
--------- --------- ---------
Total Tier I leverage capital 28,361 27,252 24,454
Tier II capital:
Allowable allowance for loan losses 2,840 2,789 2,713
--------- --------- ---------
Total capital $ 31,201 $ 30,041 $ 27,167
========= ========= =========
Risk-adjusted assets $ 232,497 $ 229,084 $ 223,424
Tier I risk-adjusted assets (includes Tier I
capital adjustments) 227,210 223,104 217,040
Tier II risk-adjusted assets (includes Tiers I
and II capital adjustments) 230,050 225,893 219,753
Quarterly average total assets 339,878 333,337 318,630
Adjusted quarterly average total assets
(includes Tier I capital adjustments) 334,591 327,357 312,246
Risk-based capital ratios:
Tier I capital 12.48% 12.21% 11.27%
Minimum required Tier I capital 4.00% 4.00% 4.00%
Total risk-based capital 13.56% 13.30% 12.36%
Minimum required total risk-based capital 8.00% 8.00% 8.00%
Leverage capital ratios:
Tier I leverage capital ratio 8.48% 8.32% 7.83%
Minimum required Tier I leverage capital 3-5.00% 3-5.00% 3-5.00%
</TABLE>
FORWARD LOOKING STATEMENTS
The foregoing discussion may contain forward looking statements within
the meaning of the Private Securities Litigation Reform Act. The accuracy of
such forward looking statements could be affected by such factors as,
including but not limited to, the financial success or changing strategies
of the Company's customers, actions of government regulators, or general
economic conditions.
<PAGE>
Part II. Other Information
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
The following exhibits are filed with this report or, as noted, are
incorporated by reference. Management contracts, compensatory
plans and arrangements are marked with an asterisk (*).
3.a.i Copy of Articles of Incorporation of the Registrant and amendments
thereto, was filed as Exhibit 3(a) to the Registrant's Registration
Statement Number 33-12692, and is incorporated herein by reference.
3.a.ii Copy of the amendment to Articles of Incorporation- adding a new
Article Nine, filed as exhibit 3(e) to the Company's Annual Report
on Form 10-K for the year ended December 31, 1988, and is
incorporated herein by reference.
3.b.i Copy of the Bylaws of the Registrant and amendments thereto, was
filed as Exhibit 3(b) to the Company's Annual Report on Form 10-KSB
for the year ended December 31, 1994, and is incorporated herein by
reference.
10 Material Contracts
10.a Data processing Agreement dated October 1, 1984 by and between Bank
of Montgomery (First Bank) and Montgomery Data Services, Inc. was
filed as Exhibit 10(k) to the Registrant's Registration Statement
Number 33-12692, and is incorporated herein by reference.
10.b First Bank Salary and Incentive Plan, as amended, was filed as
Exhibit 10(m) to the Registrant's Registration Statement Number
33-12692, and is incorporated herein by reference. (*)
10.c First Bancorp Savings Plus and Profit Sharing Plan (401(k) savings
incentive plan and trust), as amended January 25, 1994 and July 19,
1994, was filed as Exhibit 10(c) to the Company's Annual Report on
Form 10-KSB for the year ended December 31, 1994, and is
incorporated herein by reference. (*)
10.d Directors and Officers Liability Insurance Policy of First Bancorp,
dated July 16, 1991, was filed as Exhibit 10(g) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1991,
and is incorporated herein by reference.
10.e Indemnification Agreement between the Company and its Directors and
Officers was filed as Exhibit 10(t) to the Registrant's Registration
Statement Number 33-12692, and is incorporated herein by reference.
10.f First Bancorp Employees' Pension Plan, as amended on August 16,
1994, was filed as Exhibit 10(g) to the Company's Annual Report on
Form 10-KSB for the year ended December 31, 1994, and is
incorporated herein by reference. (*)
<PAGE>
10.g First Bancorp Senior Management Supplemental Executive Retirement
Plan dated May 31, 1993, was filed as Exhibit 10(k) to the
Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1993, and is incorporated herein by reference. (*)
10.h First Bancorp Senior Management Split-Dollar Life Insurance
Agreements between the Company and the Executive Officers, as
amended on December 22, 1994, was filed as Exhibit 10(i) to the
Company's Annual Report on Form 10-KSB for the year ended
December 31, 1994, and is incorporated herein by reference. (*)
10.i First Bancorp 1994 Stock Option Plan was filed as Exhibit 10(n) to
the Company's Quarterly Report on Form 10-QSB for the quarter ended
March 31, 1994, and is incorporated herein by reference. (*)
10.j Severance Agreement between the Company and James A. Gunter dated
October 12, 1995, was filed as Exhibit 10(m) to the Company's
Annual Report on Form 10-KSB for the year ended December 31, 1995,
and is incorporated herein by reference. (*)
10.k Settlement Agreement dated December 29, 1995 among the Company's
bank subsidiary, First Bank, and Prudential Securities,
Incorporated; Cranford B. Garner, Timothy E. Garner, C.B. Garner
Incorporated and others was filed as Exhibit 10(n) to the Company's
Annual Report on Form 10-KSB for the year ended December 31, 1995,
and is incorporated herein by reference.
10.l Severance Agreement between the Company and Patrick A. Meisky
dated December 29, 1995, was filed as Exhibit 10(o) to the
Company's Annual Report on Form 10-KSB for the year ended
December 31, 1995, and is incorporated herein by reference. (*)
10.m Amendment to the First Bancorp Savings Plus and Profit Sharing Plan
(401(k) savings incentive plan and trust), dated December 17, 1996,
was filed as Exhibit 10(m) to the Company's Annual Report on Form
10-KSB for the year ended December 31, 1996, and is incorporated
herein by reference. (*)
27 Financial Data Schedules pursuant to Article 9 of Regulation S-X.
(b) There were no reports filed on Form 8-K during the quarter ended
March 31, 1997.
<PAGE>
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
May 12, 1997 BY: James H. Garner
------------------- -----------------------------
James H. Garner
President
(Principal Executive Officer),
Treasurer and Director
May 12, 1997 BY: Anna G. Hollers
------------------- -----------------------------
Anna G. Hollers
Executive Vice President
and Secretary
May 12, 1997 BY: Kirby A. Tyndall
------------------- -----------------------------
Kirby A. Tyndall
Senior Vice President
and Chief Financial Officer
<PAGE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<PERIOD-START> JAN-01-1997
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<S> <C>
<CASH> 12,243
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 15,400
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 54,296
<INVESTMENTS-CARRYING> 23,160
<INVESTMENTS-MARKET> 23,537
<LOANS> 225,171
<ALLOWANCE> 4,777
<TOTAL-ASSETS> 345,205
<DEPOSITS> 307,297
<SHORT-TERM> 0
<LIABILITIES-OTHER> 4,260
<LONG-TERM> 0
<COMMON> 15,082
0
0
<OTHER-SE> 18,566
<TOTAL-LIABILITIES-AND-EQUITY> 345,205
<INTEREST-LOAN> 5,349
<INTEREST-INVEST> 1,211
<INTEREST-OTHER> 167
<INTEREST-TOTAL> 6,727
<INTEREST-DEPOSIT> 2,533
<INTEREST-EXPENSE> 2,533
<INTEREST-INCOME-NET> 4,194
<LOAN-LOSSES> 75
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 3,485
<INCOME-PRETAX> 1,650
<INCOME-PRE-EXTRAORDINARY> 1,650
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,126
<EPS-PRIMARY> 0.37
<EPS-DILUTED> 0.37
<YIELD-ACTUAL> 5.62
<LOANS-NON> 1,376
<LOANS-PAST> 0
<LOANS-TROUBLED> 722
<LOANS-PROBLEM> 1,250
<ALLOWANCE-OPEN> 4,726
<CHARGE-OFFS> 214
<RECOVERIES> 190
<ALLOWANCE-CLOSE> 4,777
<ALLOWANCE-DOMESTIC> 4,777
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
