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, 1998
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, 1998, 3,020,370 shares of the registrant's Common Stock,
$5 par value, were outstanding. The registrant had no other classes of
securities outstanding.
Transitional Small Business Format [ ] YES [ X ] NO
EXHIBIT INDEX BEGINS ON PAGE 23
FIRST BANCORP (No 0-15572), FORM 10-Q, March 31, 1998 Page 1 of 23
<PAGE>
INDEX
FIRST BANCORP AND SUBSIDIARIES
Page
Part I. Financial Information
Item 1 - Financial Statements
CONSOLIDATED BALANCE SHEETS -
March 31, 1998 and 1997
(With Comparative Amounts at December 31, 1997) 3
CONSOLIDATED STATEMENTS OF INCOME -
For the Periods Ended March 31, 1998 and 1997 4
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME -
For the Periods Ended March 31, 1998 and 1997 5
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY -
For the Periods Ended March 31, 1998 and 1997 6
CONSOLIDATED STATEMENTS OF CASH FLOWS -
For the Periods Ended March 31, 1998 and 1997 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 8
Item 2 - Management's Discussion and Analysis of Consolidated
Results of Operations and Financial Condition 10
Item 3 - Quantitative and Qualitative Disclosures About Market Risk 18
Part II. Other Information
Item 6 - Exhibits and Reports on Form 8-K 20
Signatures 22
Exhibit Cross Reference Index 23
FIRST BANCORP (No 0-15572), FORM 10-Q, March 31, 1998 Page 2 of 23
<PAGE>
Part I. Financial Information
Item 1 - Financial Statements
<TABLE>
<CAPTION>
First Bancorp and Subsidiaries
Consolidated Balance Sheets
March 31, December 31, March 31,
($ in thousands-unaudited) 1998 1997 1997
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Cash & due from banks, noninterest-bearing $ 15,592 17,664 12,243
Due from banks, interest-bearing 10,004 13,081 --
Federal funds sold 5,811 2,896 15,400
--------- --------- ---------
Total cash and cash equivalents 31,407 33,641 27,643
--------- --------- ---------
Securities available for sale (costs of $44,339,
$49,995, and $54,559) 44,507 50,277 54,296
Securities held to maturity (fair values of $20,619,
$21,512, and $23,537) 20,016 20,856 23,160
Presold mortgages in process of settlement 1,909 1,330 1,391
Loans 309,497 280,513 225,171
Less: Allowance for loan losses (5,008) (4,779) (4,777)
--------- --------- ---------
Net loans 304,489 275,734 220,394
--------- --------- ---------
Premises and equipment 8,752 8,839 7,789
Accrued interest receivable 2,812 2,866 2,447
Intangible assets 6,323 6,487 5,459
Other 2,617 2,639 2,626
--------- --------- ---------
Total assets $ 422,832 402,669 345,205
========= ========= =========
<PAGE>
<CAPTION>
First Bancorp and Subsidiaries
Consolidated Balance Sheets
March 31, December 31, March 31,
($ in thousands-unaudited) 1998 1997 1997
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LIABILITIES
Deposits: Demand - noninterest-bearing $ 53,288 50,921 43,192
Savings, NOW, and money market 137,418 135,805 117,084
Time deposits of $100,000 or more 47,064 40,200 33,011
Other time deposits 142,654 134,298 114,010
--------- --------- ---------
Total deposits 380,424 361,224 307,297
Accrued interest payable 2,412 2,299 1,862
Other liabilities 2,453 2,381 2,398
--------- --------- ---------
Total liabilities 385,289 365,904 311,557
--------- --------- ---------
SHAREHOLDERS' EQUITY
Common stock, $5 par value per share
Authorized: 12,500,000 shares
Issued and outstanding: 3,020,370,
3,020,370, and 3,016,370 shares 15,102 15,102 15,082
Capital surplus 3,861 3,861 3,831
Retained earnings 18,469 17,616 14,907
Accumulated other comprehensive income (loss) 111 186 (172)
--------- --------- ---------
Total shareholders' equity 37,543 36,765 33,648
--------- --------- ---------
Total liabilities and shareholders' equity $ 422,832 402,669 345,205
========= ========= =========
</TABLE>
See notes to consolidated financial statements.
FIRST BANCORP (No 0-15572), FORM 10-Q, March 31, 1998 Page 3 of 23
<PAGE>
<TABLE>
<CAPTION>
First Bancorp and Subsidiaries
Consolidated Statements of Income
Three Months Ended
March 31,
------------------------------
($ in thousands, except per share data-unaudited) 1998 1997
- -----------------------------------------------------------------------------------
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 6,919 5,287
Interest on investment securities:
Taxable interest income 807 895
Tax-exempt interest income 279 316
Other, principally overnight investments 220 180
---------- ----------
Total interest income 8,225 6,678
---------- ----------
INTEREST EXPENSE
Savings, NOW and money market 800 609
Time deposits of $100,000 or more 603 462
Other time deposits 1,832 1,462
---------- ----------
Total interest expense 3,235 2,533
---------- ----------
Net interest income 4,990 4,145
Provision for loan losses 280 75
---------- ----------
Net interest income after provision
for loan losses 4,710 4,070
---------- ----------
NONINTEREST INCOME
Service charges on deposit accounts 610 607
Commissions from insurance sales 59 74
Other service charges, commissions and fees 374 311
Data processing fees -- 73
---------- ----------
Total noninterest income 1,043 1,065
---------- ----------
<PAGE>
<CAPTION>
First Bancorp and Subsidiaries
Consolidated Statements of Income
Three Months Ended
March 31,
------------------------------
($ in thousands, except per share data-unaudited) 1998 1997
- -----------------------------------------------------------------------------------
<S> <C> <C>
NONINTEREST EXPENSES
Salaries 1,725 1,516
Employee benefits 373 320
---------- ----------
Total personnel expense 2,098 1,836
Net occupancy expense 246 236
Equipment related expenses 219 211
Other operating expenses 1,208 1,202
---------- ----------
Total noninterest expenses 3,771 3,485
---------- ----------
Income before income taxes 1,982 1,650
Income taxes 676 524
---------- ----------
NET INCOME $ 1,306 1,126
========== ==========
Weighted average common shares
outstanding - basic 3,020,370 3,016,370
========== ==========
Weighted average common shares 3,108,468 3,082,097
========== ==========
Earnings per share - basic $ 0.43 0.37
Earnings per share - diluted 0.42 0.36
Cash dividends declared per share 0.15 0.13
</TABLE>
See notes to consolidated financial statements.
FIRST BANCORP (No 0-15572), FORM 10-Q, March 31, 1998 Page 4 of 23
<PAGE>
<TABLE>
<CAPTION>
First Bancorp and Subsidiaries
Consolidated Statements of Comprehensive Income
Three Months Ended
March 31,
-------------------------
($ in thousands-unaudited) 1998 1997
- ------------------------------------------------------------------------------------
<S> <C> <C>
Net income $ 1,306 1,126
------- -------
Other comprehensive income (loss):
Unrealized losses on securities
available for sale:
Unrealized holding losses arising during the
period, pretax (115) (483)
Tax benefit (expense) 40 165
------- -------
Other comprehensive income (loss) (75) (318)
------- -------
Comprehensive income $ 1,231 808
======= =======
</TABLE>
See notes to consolidated financial statements.
FIRST BANCORP (No 0-15572), FORM 10-Q, March 31, 1998 Page 5 of 23
<PAGE>
<TABLE>
<CAPTION>
First Bancorp and Subsidiaries
Consolidated Statements of Shareholders' Equity
Accumulated
Common Stock Other Share-
($ in thousands, --------------------- Capital Retained Comprehensive holders'
except per share - unaudited) Shares Amount Surplus Earnings Income Equity
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balances, January 1, 1997 3,016 $ 15,082 3,831 14,173 146 33,232
Net income 1,126 1,126
Cash dividends declared ($0.13 per share) (392) (392)
Other comprehensive income (loss) (318) (318)
----- --------- ----- ------ --- ------
Balances, March 31, 1997 3,016 $ 15,082 3,831 14,907 (172) 33,648
===== ========= ===== ====== === ======
Balances, January 1, 1998 3,020 $ 15,102 3,861 17,616 186 36,765
Net income 1,306 1,306
Cash dividends declared ($0.15 per share) (453) (453)
Other comprehensive income (loss) (75) (75)
----- --------- ----- ------ --- ------
Balances, March 31, 1998 3,020 $ 15,102 3,861 18,469 111 37,543
===== ========= ===== ====== === ======
<CAPTION>
As of As of
March 31, March 31,
1998 1997
--------- ---------
<S> <C> <C>
Supplemental disclosure of components of
Accumulated Other Comprehensive
Income (Loss):
Unrealized gain (loss) on
securities available for sale, pretax $168 (261)
Tax benefit (expense) (57) 89
--------- ---------
Total Accumulated Other
Comprehensive Income (Loss) $ 111 (172)
========= =========
</TABLE>
See notes to consolidated financial statements.
FIRST BANCORP (No 0-15572), FORM 10-Q, March 31, 1998 Page 6 of 23
<PAGE>
<TABLE>
<CAPTION>
First Bancorp and Subsidiaries
Consolidated Statements of Cash Flows
Three Months Ended
March 31,
---------------------------
($ in thousands-unaudited) 1998 1997
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,306 1,126
Adjustments to reconcile net income to
net cash provided by operating activities:
Provision for loan losses 280 75
Net security premium amortization (discount accretion) 14 (9)
Loan fees and costs deferred, net of amortization 9 (1)
Depreciation of premises and equipment 180 173
Amortization of intangible assets 164 139
Realized and unrealized other real estate losses -- 16
Provision for deferred income taxes 20 2
Changes in operating assets and liabilities:
Decrease (increase) in accrued interest receivable 54 (35)
Decrease in intangible pension asset -- 236
Decrease (increase) in other assets (537) 196
Increase (decrease) in accrued interest payable 113 (20)
Increase (decrease) in other liabilities 12 (137)
-------- --------
Net cash provided by operating activities 1,615 1,761
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of securities available for sale (5,314) (8,623)
Purchases of securities held to maturity (3) (1,217)
Proceeds from maturities/issuer calls of securities available for sale 10,960 7,802
Proceeds from maturities/issuer calls of securities held to maturity 838 373
Net increase in loans (29,044) (2,224)
Purchases of premises and equipment (93) (240)
-------- --------
Net cash used in investing activities (22,656) (4,129)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits 19,200 9,436
Cash dividends paid (393) (332)
-------- --------
Net cash provided by financing activities 18,807 9,104
-------- --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (2,234) 6,736
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 33,641 20,907
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 31,407 27,643
======== ========
<PAGE>
<CAPTION>
First Bancorp and Subsidiaries
Consolidated Statements of Cash Flows
Three Months Ended
March 31,
---------------------------
($ in thousands-unaudited) 1998 1997
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 3,122 2,553
Income taxes 204 28
Non-cash transactions:
Foreclosed loans transferred to other real estate -- 62
Loans to facilitate the sale of other real estate -- 17
Decrease in fair value of securities available for sale (115) (483)
</TABLE>
See notes to consolidated financial statements.
FIRST BANCORP (No 0-15572), FORM 10-Q, March 31, 1998 Page 7 of 23
<PAGE>
First Bancorp And Subsidiaries
Notes To Consolidated Financial Statements
(unaudited) For the Periods Ended March 31, 1998 and 1997
- --------------------------------------------------------------------------------
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, 1998 and 1997 and the consolidated results of operations
and consolidated cash flows for the periods ended March 31, 1998 and 1997.
Reference is made to the Annual Report on Form 10-K filed with the SEC for a
discussion of accounting policies and other relevant information with respect to
the consolidated financial statements. The results of operations for the periods
ended March 31, 1998 and 1997 are not necessarily indicative of the results to
be expected for the full year.
NOTE 2
The Company adopted financial accounting standard 128, "Earnings Per Share," as
of December 31, 1997. As required by the standard, all prior year earnings per
share amounts have been restated and computed under the provisions of the new
standard. Basic earnings per share were computed by dividing net income by the
weighted average common shares outstanding. Diluted earnings per share includes
the potentially dilutive effects of the Company's 1994 Stock Option Plan. The
following is a reconciliation of the numerators and denominators used in
computing basic and diluted earnings per share:
<TABLE>
<CAPTION>
For the Three Months Ended March 31,
--------------------------------------------------------------------------------
1998 1997
--------------------------------------------------------------------------------
Income Shares Income Shares
($ in thousands except per (Numer- (Denom- Per Share (Numer- (Denom- Per Share
share amounts) ator) inator) Amount ator) inator) Amount
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Basic EPS
Net income $ 1,306 3,020,370 $0.43 $ 1,126 3,016,370 $0.37
======= =======
Effect of Dilutive Securities
Effect of stock option plan -- 88,098 -- 65,727
------ --------- ------- --------
Diluted EPS
Net income plus assumed
exercises of options $ 1,306 3,108,468 $0.42 $ 1,126 3,082,097 $0.36
------- --------- ======= ------- --------- =======
</TABLE>
<PAGE>
On January 1, 1998, the Company adopted financial accounting standard 130,
"Reporting Comprehensive Income" which establishes standards for reporting and
display of comprehensive income and its components in a full set of financial
statements. Comprehensive income is defined as the change in equity during a
period for non-owner transactions and is divided into net income and other
comprehensive income. Other comprehensive income includes revenues, expenses,
gains, and losses that are excluded from earnings under current accounting
standards. This statement does not change or modify the reporting or display in
the income statement. Comparative financial statements have been presented as
required by the statement.
The Financial Accounting Standards Board has also issued financial accounting
standard number 131, "Disclosures about Segments of an Enterprise and Related
Information". This statement requires management to report selected financial
data and descriptive information about reportable operating segments and is
effective for periods beginning after December 15, 1997. This statement does not
require application in interim financial statements in the initial year of
adoption. The requirements of this standard will be applied in a manner relevant
for the Company beginning with the financial statements for the year ended
December 31, 1998.
FIRST BANCORP (No 0-15572), FORM 10-Q, March 31, 1998 Page 8 of 23
<PAGE>
As of January 1, 1998, the Company also adopted financial accounting standard
132, "Employers Disclosures about Pensions and Other Postretirement Benefits."
This statement standardizes the disclosure requirements of pensions and other
postretirement benefits. This statement does not change any measurement or
recognition provisions, and thus has not and is not expected to materially
impact the Company.
NOTE 3
Certain amounts reported in the period ended March 31, 1997 have been
reclassified to conform with the presentation for March 31, 1998. These
reclassifications had no effect on net income or shareholders' equity for the
periods presented, nor did they materially impact trends in financial
information.
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 $5,008,000 as of March 31, 1998 compared to $4,779,000 and $4,777,000
as of December 31, 1997 and March 31, 1997, respectively. These reserve levels
represented 1.62%, 1.70% and 2.12% of total loans as of March 31, 1998, December
31, 1997 and March 31, 1997, respectively. Nonperforming assets are defined as
nonaccrual loans, loans past due 90 or more days and still accruing interest,
restructured loans and foreclosed, repossessed and idled properties. For each of
the periods presented, the Company had no loans past due 90 or more days and
still accruing interest. Nonperforming assets are summarized as follows:
<TABLE>
<CAPTION>
March 31, December 31, March 31,
($ in thousands) 1998 1997 1997
- ----------------------------------------------- ----------------- --------------- ----------------
<S> <C> <C> <C>
Nonperforming loans:
Nonaccrual loans $ 633 957 1,376
Restructured loans 256 326 294
------ ------ ------
Total nonperforming loans 889 1,283 1,670
Foreclosed, repossessed, and idled
properties (included in other assets) 377 560 410
------ ------ ------
Total nonperforming assets $1,266 1,843 2,080
====== ====== ======
Nonperforming loans to total loans 0.29% 0.46% 0.74%
Allowance for loan losses to
nonperforming loans 563.33% 372.49% 286.05%
Nonperforming assets as a percentage of
loans and foreclosed, repossessed, and
idled properties 0.41% 0.66% 0.92%
Nonperforming assets to total assets 0.30% 0.46% 0.60%
</TABLE>
NOTE 5
Loans are shown on the Consolidated Balance Sheets net of approximately $10,000
of unearned income for each of the periods presented.
FIRST BANCORP (No 0-15572), FORM 10-Q, March 31, 1998 Page 9 of 23
<PAGE>
Item 2 - Management's Discussion and Analysis of Consolidated
Results of Operations and Financial Condition
RESULTS OF OPERATIONS
OVERVIEW
Net income for the first quarter of 1998 totaled $1,306,000, an increase of
16.0% over the $1,126,000 reported for the first quarter of 1997. Basic earnings
per share for the three months ended March 31, 1998 were $0.43 compared to $0.37
reported for the first quarter of 1997, an increase of 16.2%. Earnings per share
on a diluted basis amounted to $0.42 per share for the first quarter of 1998
compared to $0.36 reported for the first quarter of 1997, a 16.7% increase. The
increase in first quarter net income from the prior year is primarily a result
of the 20.4% increase in net interest income. The increase in net interest
income is largely attributable to the loan and deposit growth experienced in the
past year. These additional earnings were partially offset by a higher provision
for loan losses, which was $280,000 for the first three months of 1998 compared
to the $75,000 recorded in the first three months of 1997. The increase in the
provision for loan losses was primarily in response to the significantly higher
loan growth experienced in the first quarter of 1998 ($29 million) compared to
the first quarter of 1997 ($2 million), and not credit quality concerns.
Noninterest income decreased 2.1% and noninterest expenses increased 8.2% when
comparing the first quarter of 1998 to 1997. The decrease in noninterest income
was primarily a result of the loss of a data processing client that occurred in
November 1997. The increase in noninterest expenses is primarily attributable to
growth in the branch network over the prior year.
COMPONENTS OF EARNINGS
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 $845,000, or 20.4%, when comparing the first
quarter of 1998 with the first quarter of 1997, primarily because of growth in
loan and deposit volume. At March 31, 1998, loans had increased 37.4% to
$309,497,000 from $225,171,000 at March 31, 1997, while deposits had increased
by 23.8%, from $307,297,000 at March 31, 1997 to $380,424,000 at March 31, 1998.
The Company's net interest margin was substantially the same during the two
periods - 5.55% for the first quarter of 1998 and 5.56% for the first quarter of
1997. See additional discussion regarding interest rate risk below in Item 3 -
Quantitative and Qualitative Disclosures About Market Risk.
The provision for possible loan losses for the first quarter increased
$205,000 to $280,000 from $75,000 for the first quarter of 1997. The increase in
the provision for loan losses was primarily in response to the significantly
higher loan growth experienced in the first quarter of 1998 ($29 million)
compared to the first quarter of 1997 ($2 million), and not credit quality
concerns. Provisions for possible loan losses are based on management's
evaluation of the loan portfolio, as discussed under "Summary of Loan Loss
Experience" below.
Noninterest income decreased $22,000, or 2.1%, to $1,043,000 in the first
quarter of 1998 from $1,065,000 for the first quarter of 1997. The decrease in
noninterest income was primarily a result of the loss of a data processing
client that occurred in November 1997. This customer provided approximately
$73,000 in gross revenues in the first quarter of 1997. This decline in
noninterest income was largely offset by a $63,000, or 20.3% increase in other
service charges, commissions, and fees. The increase in this category of
noninterest income was primarily a result of an increase in mortgage origination
fees on presold mortgages that was experienced as a result of heavy residential
mortgage loan volume.
FIRST BANCORP (No 0-15572), FORM 10-Q, March 31, 1998 Page 10 of 23
<PAGE>
Noninterest expenses increased by $286,000, or 8.2%, from $3,485,000 to
$3,771,000, for the first quarter of 1998 primarily because of expenses
associated with opening branch offices in Sanford and Polkton since March 1997
and a full quarter of expenses associated with the opening of the Lillington
branch that occurred in March 1997. The personnel expense associated with the
employees of these new branches, along with normal wage increases for
substantially all Company employees that occurred in January 1998, caused total
personnel expense to increase by 14.2%, or $262,000 when comparing the first
quarter of 1998 to the same quarter of 1997.
Income taxes increased $152,000, or 29.0%, for the first quarter of 1998
over the first quarter of 1997. This reflects an effective tax rate of 34.1% for
the first quarter of 1998 compared to 31.8% for the first quarter of 1997. The
increase in the effective tax rate is due to the Company deriving a smaller
percentage of its earnings from tax-exempt securities.
FINANCIAL CONDITION
The Company's total assets were $422.8 million at March 31, 1998, an
increase of $77.6 million, or 22.5%, from the $345.2 million at March 31, 1997.
Interest-earning assets increased by 22.6%, from $319.4 million to $391.7
million, compared to March 31, 1997. Loans, the primary interest-earning asset,
increased by $84.3 million, or 37.4% during this same period. Deposits increased
$73.1 million, or 23.8% to support the asset growth, of which approximately $14
million was acquired in the Company's November 1997 branch purchase in
Lillington. The increases in deposits occurred in all significant categories
with noninterest bearing demand deposits increasing by $10.1 million, or 23.4%,
savings, NOW and money market accounts increasing by $20.3 million, or 17.4%,
time deposits of $100,000 or more increasing by $14.1 million, or 42.6%, and
other time deposits increasing by $28.6 million, or 25.1%. 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 $100,000 or more to fund
asset growth and has not traditionally engaged in obtaining deposits through
brokers. Since December 31, 1997, the Company has experienced increases of 6.2%,
5.0%, and 5.3% in earning assets, total assets and deposits, respectively.
FIRST BANCORP (No 0-15572), FORM 10-Q, March 31, 1998 Page 11 of 23
<PAGE>
NONPERFORMING ASSETS
Nonperforming assets are defined as nonaccrual loans, loans past due 90 or
more days and still accruing interest, restructured loans and foreclosed,
repossessed and idled properties. For each of the periods presented, the Company
had no loans past due 90 or more days and still accruing interest. Nonperforming
assets are summarized as follows:
<TABLE>
<CAPTION>
March 31, December 31, March 31,
($ in thousands) 1998 1997 1997
- ----------------------------------------------- ---------------- ----------------- ---------------
<S> <C> <C> <C>
Nonperforming loans:
Nonaccrual loans $ 633 957 1,376
Restructured loans 256 326 294
------ ------ ------
Total nonperforming loans 889 1,283 1,670
Foreclosed, repossessed, and idled
properties (included in other assets) 377 560 410
------ ------ ------
Total nonperforming assets $1,266 1,843 2,080
====== ====== ======
Nonperforming loans to total loans 0.29% 0.46% 0.74%
Allowance for loan losses to
nonperforming loans 563.33% 372.49% 286.05%
Nonperforming assets as a percentage of
loans and foreclosed, repossessed, and
idled properties 0.41% 0.66% 0.92%
Nonperforming assets to total assets 0.30% 0.46% 0.60%
</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 loan losses discussed below.
A loan is placed on nonaccrual status when, in management's judgment, the
collection of interest appears doubtful. While a loan is on nonaccrual status,
the Company's policy is that all cash receipts are applied to principal. Once
the recorded principal balance has been reduced to zero, future cash receipts
are applied to recoveries of any amounts previously charged off. Further cash
receipts are recorded as interest income to the extent that any interest has
been foregone. 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.
Nonperforming loans are defined as nonaccrual loans and restructured loans.
As of March 31, 1998, December 31, 1997 and March 31, 1997, nonperforming loans
were approximately 0.29%, 0.46%, and 0.74%, respectively, of the total loans
outstanding at such dates. Nonaccrual loans as of March 31, 1998 decreased
$743,000, or 54.0%, from March 31, 1997 to approximately $633,000 and are lower
by approximately $324,000, or 33.9%, since year-end. The decrease in nonaccrual
loans at March 31, 1998 as compared to December 31, 1997 is primarily
attributable to generally improved loan quality, as well as the full payout of a
nonaccrual relationship totaling $230,000 during the period. The decrease in
nonaccrual loans when comparing December 31, 1997 to March 31, 1997 is primarily
attributable to generally improved loan quality, as well as the resolution of
several larger relationships during the period that resulted in partial
charge-offs. As of March 31, 1998, the borrower with the largest nonaccrual loan
owed a balance of $175,000 while the average nonaccrual loan balance was
approximately $17,000. If
FIRST BANCORP (No 0-15572), FORM 10-Q, March 31, 1998 Page 12 of 23
<PAGE>
the nonaccrual loans and restructured loans as of March 31, 1998 and 1997 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 $15,000 and $35,000 for nonaccrual loans and $7,000 and $8,000 for
restructured loans would have been recorded for the three months ended March 31,
1998 and 1997, respectively. Interest income on such loans that was actually
collected and included in net income in the three months ended March 31, 1998
and 1997 amounted to approximately $1,000 and $40,000, respectively, for
nonaccrual loans and $10,000 and $5,000, respectively, for restructured loans.
The FASB has issued SFAS No. 114, "Accounting by Creditors for Impairment of
a Loan," which requires that all creditors value all specifically reviewed loans
for which it is probable that the creditor will be unable to collect all amounts
due according to the terms of the loan agreement at the present value of
expected cash flows, market price of the loan, if available, or value of the
underlying collateral. Expected cash flows are required to be discounted at the
loan's effective interest rate.
The FASB also has issued SFAS No. 118, "Accounting by Creditors for
Impairment of a Loan - Income Recognition and Disclosures," that amends Standard
No. 114 to allow a creditor to use existing methods for recognizing interest
income on an impaired loan and by requiring additional disclosures about how a
creditor recognizes interest income related to impaired loans.
SFAS No.'s 114 and 118 do not apply to large groups of smaller-balance
homogenous loans that are collectively evaluated for impairment. For the
Company, these loans include residential mortgage and consumer installment
loans.
Consistent with SFAS No. 114, management considers loans to be impaired
when, based on current information and events, it is probable the Company will
be unable to collect all amounts due according to the contractual terms of the
loan agreement. Impaired loans are measured using either the discounted expected
cash flows or the value of collateral method. While a loan is considered to be
impaired, the Company's policy is that all cash receipts are applied to
principal. Once the recorded principal balance has been reduced to zero, future
cash receipts are applied to recoveries of any amounts previously charged off.
Further cash receipts are recorded as interest income to the extent that any
interest has been foregone.
At March 31, 1998, December 31, 1997, and March 31, 1997 the recorded
investment in loans that are considered to be impaired under SFAS No. 114 was
$96,000, $398,000, and $908,000, respectively, all of which were on a nonaccrual
basis. The decreases in the level of impaired loans at the respective period
ends is due to the same reasons as the decrease in nonaccrual loans over the
same periods discussed above. The related allowance for loan losses for these
impaired loans as determined in accordance with SFAS No. 114 was $14,000,
$60,000, and $166,000, respectively. There were no impaired loans for which
there was no related allowance determined in accordance with the statement. The
average recorded investments in impaired loans during the three month period
ended March 31, 1998, the year ended December 31, 1997, and the three months
ended March 31, 1997 were approximately $247,000, $654,000, and $1,068,000,
respectively. For the same periods, the Company recognized no interest income on
those impaired loans during the period that they were considered to be impaired.
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
FIRST BANCORP (No 0-15572), FORM 10-Q, March 31, 1998 Page 13 of 23
<PAGE>
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, 1998, December 31, 1997 and March 31, 1997, the Company
owned foreclosed, repossessed, and idled assets totaling approximately $377,000,
$560,000, and $410,000, respectively, which consisted principally of several
parcels of foreclosed real estate. The Company's management reviewed recent
appraisals of these properties and has concluded that their fair values, less
estimated costs to sell, exceed their respective carrying values as of the
periods presented.
SUMMARY OF LOAN LOSS EXPERIENCE
The allowance for 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 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 $280,000 was added to the
allowance for possible loan losses during the first quarter of 1998. This
provision for loan losses made during the first quarter of 1998 was greater than
the $75,000 provision made during the corresponding period of 1997. This
increase was due primarily to the significant loan growth experienced by the
Company and not credit quality concerns. The net increase in loans outstanding
was $29 million in the first quarter of 1998 as compared to a $2 million
increase experienced in the first quarter of 1997. At March 31, 1998, the
allowance stood at $5,008,000, compared to $4,779,000 at December 31, 1997 and
$4,777,000 at March 31, 1997. At March 31, 1998, the allowance for loan losses
was approximately 563% of total nonperforming loans, compared to corresponding
percentages of 372% at December 31, 1997 and 286% at March 31, 1997.
The allowance for loan losses was 1.62%, 1.70% and 2.12% of total loans as
of March 31, 1998, December 31, 1997 and March 31, 1997, respectively.
Management believes the reserve levels are adequate to cover possible loan
losses on the loans outstanding as of each reporting date. It must be
emphasized, however, that the determination of the reserve using the Company's
procedures and methods rests upon various judgments and assumptions about future
economic conditions and other factors affecting loans. No assurance can be given
that the Company will not in any particular period sustain
FIRST BANCORP (No 0-15572), FORM 10-Q, March 31, 1998 Page 14 of 23
<PAGE>
loan losses that are sizable in relation to the amounts reserved or that
subsequent evaluations of the loan portfolio, in light of conditions and factors
then prevailing, will not require significant changes in the allowance for
possible loan losses or future charges to earnings. In addition, various
regulatory agencies, as an integral part of their examination process,
periodically review the Company's allowances for possible loan losses and losses
on other real estate. Such agencies may require the Company to recognize
additions to the allowances based on their judgments about information available
at the time of such examinations.
For the periods indicated, the following table summarizes the Company's balances
of loans outstanding, average loans outstanding, changes in the allowance for
loan losses arising from charge-offs and recoveries by category, and additions
to the allowance for loan losses that have been charged to expense.
<TABLE>
<CAPTION>
Three Months Year Three Months
Ended Ended Ended
March 31, Dec 31, March 31,
($ in thousands) 1998 1997 1997
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Loans outstanding at period end $ 309,497 280,513 225,171
===================================================
Average loans outstanding during period $ 293,838 245,596 222,278
===================================================
Allowance for possible loan losses at
beginning of period $ 4,779 4,726 4,726
Loans charged off:
Commercial, financial and agricultural (15) (61) -
Real estate - mortgage - (449) (110)
Installment loans to individuals (58) (311) (104)
----------------------------------------------------
Total charge-offs (73) (821) (214)
----------------------------------------------------
Recoveries of loans previously charged-off:
Commercial, financial and agricultural 3 89 73
Real estate - mortgage 2 38 6
Installment loans to individuals 17 141 78
Other - 31 33
---------------------------------------------------
Total recoveries 22 299 190
---------------------------------------------------
Net charge-offs (51) (522) (24)
Additions to the allowance charged to expense 280 575 75
---------------------------------------------------
Allowance for possible loan losses at
end of period $ 5,008 4,779 4,777
===================================================
Ratios:
Annualized net charge-offs to average
loans during period 0.07% 0.21% 0.04%
Allowance for loan losses to
loans at end of period 1.62% 1.70% 2.12%
Allowance for loan losses as a multiple
of annualized net charge-offs 24.55x 9.16x 49.76x
Provision for loan losses as a percent
of net charge-offs 549.02% 110.15% 312.5%
Recoveries of loans previously charged-
off as a percent of loans charged-off 30.14% 36.42% 88.79%
</TABLE>
FIRST BANCORP (No 0-15572), FORM 10-Q, March 31, 1998 Page 15 of 23
<PAGE>
Based on the results of the aforementioned loan analysis and grading
program and management's evaluation of the allowance for loan losses at March
31, 1998, there have been no material changes to the allocation of the allowance
for loan losses among the various categories of loans since December 31, 1997.
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 net income from operations, 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 and has an available
line of credit with the Federal Home Loan Bank in place that can provide short
or long term financing. The Company has not traditionally had to rely on these
sources of credit as a source of liquidity. The Company has experienced an
increase in its loan to deposit ratio (81.3% at March 31, 1998 compared to 73.3%
a year ago) as a result of the significant loan growth experience by the
Company. However, 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 exceeded 8% as of March 31, 1998 and 1997, and December
31, 1997. 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, 1998, the Company's total risk-based
capital ratio was 11.41%.
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, 1998, the Company's leverage capital ratio
was 7.76%.
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.
FIRST BANCORP (No 0-15572), FORM 10-Q, March 31, 1998 Page 16 of 23
<PAGE>
As of March 31, 1998, December 31, 1997 and March 31, 1997, the Company
was in compliance with all existing regulatory capital requirements, as
summarized in the following table:
<TABLE>
<CAPTION>
March 31, Dec 31, March 31,
($ in thousands) 1998 1997 1997
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Tier I capital:
Total stated shareholders' equity $ 37,543 36,765 33,648
Less: Intangible assets 6,323 6,487 5,459
Unrealized gain (loss)
on securities available for
sale, net of income taxes 111 186 (172)
---------------------------------------------
Total Tier I leverage capital 31,109 30,092 28,361
Tier II capital:
Allowable allowance for loan losses 3,773 3,466 2,840
---------------------------------------------
Total capital $ 34,882 33,558 31,201
=============================================
Risk-adjusted assets $ 308,257 283,924 232,497
Tier I risk-adjusted assets (includes Tier I
capital adjustments) 301,823 277,251 227,210
Tier II risk adjusted assets (includes Tiers I
and II capital adjustments) 305,596 280,717 230,050
Quarterly average total assets 407,233 386,291 339,878
Adjusted quarterly average total assets
(includes Tier I capital adjustments) 400,799 379,618 334,591
Risk-based capital ratios:
Tier I capital 10.31% 10.85% 12.48%
Minimum required Tier I capital 4.00% 4.00% 4.00%
Total risk-based capital 11.41% 11.95% 13.56%
Minimum required total risk-based capital 8.00% 8.00% 8.00%
Leverage capital ratios:
Tier I leverage capital ratio 7.76% 7.93% 8.48%
Minimum required Tier I leverage capital 3-5.00% 3-5.00% 3-5.00%
</TABLE>
UPDATE ON YEAR 2000
As has been widely reported in the media, many of the world's existing
computer programs use only two digits to identify the year in the date field of
a program. These programs were designed and developed without considering the
impact of the upcoming change in the century and could experience serious
malfunctions when the last two digits of the year change to "00" (Year 2000
Issue). Due to the highly automated and computerized nature of the Company's
transaction processing and operations as a whole, the Company is taking the Year
2000 Issue very seriously. The Company's Technology Committee, which is
comprised of a cross-section of the Company's employees, is leading the
Company's Year 2000 efforts and involving all employees of the Company in
ensuring that the Company is properly prepared for the Year 2000. The Company
uses third-party software vendors for most of its computer programs and
micro-chip related processes. The first phase of the Company's efforts to
address the Year 2000 Issue was to inventory all known Company processes that
could reasonably be expected to be impacted by the Year 2000 Issue and their
related vendors, if applicable. This inventory of processes and vendors included
not only typical computer processes such as the Company's transaction
applications systems, but all known processes that could be impacted by
micro-chip
FIRST BANCORP (No 0-15572), FORM 10-Q, March 31, 1998 Page 17 of 23
<PAGE>
malfunctions. These include but are not limited to the Company's alarm system,
phone system, check ordering process, and ATM network. The Company's second
phase in addressing the Year 2000 Issue was to contact all such vendors and
request documentation regarding their Year 2000 compliance efforts. This phase
is now virtually complete and the Company is currently analyzing the responses.
The next phase for the Company is to implement a comprehensive testing of all
known processes. Initially, processes will be tested on a stand-alone basis and
then the testing will involve multiple interfacing processes.
Testing of the Company's processes has begun and is scheduled to be
substantially complete by the end of 1998. Management plans for any corrective
actions to be implemented to ensure that the Company is fully prepared for the
Year 2000 by the end of the first quarter of 1999. The most significant phase of
testing, the testing of the Company's software applications, is scheduled for
the third quarter of 1998 upon the arrival of software applications upgrades
from the Company's primary software application vendor.
To date the Company has not identified any processes that will require
significant expenditures to address the Year 2000 Issue. The Company's estimate
of the range of total costs to address the Year 2000 Issue continues to be from
$100,000 to $150,000. The majority of these costs are expected to be incurred
and expensed by the Company in 1998.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
INTEREST RATE RISK (INCLUDING QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK)
Net interest income is the Company's most significant component of
earnings. Notwithstanding changes in volumes of loans and deposits, the
Company's level of net interest income is continually at risk due to the effect
that changes in general market interest rate trends have on interest yields
earned and paid with respect to the various categories of earnings assets and
interest-bearing liabilities. It is the Company's policy to maintain portfolios
of earning assets and interest-bearing liabilities with maturities and repricing
opportunities that will afford protection, to the extent practical, against wide
interest rate fluctuations. The Company's exposure to interest rate risk is
analyzed on a regular basis by management using standard GAP reports, maturity
reports, and an asset/liability software model that simulates future levels of
interest income and expense based on current interest rates, expected future
interest rates, and various intervals of "shock" interest rates. Over the years,
the Company has been able to maintain a fairly consistent yield on average
earning assets (net interest margin). Over the past ten years the net interest
margin has not varied by more than 25 basis points in any single year and the
lowest net interest margin realized over that same period is within 60 basis
points of the highest. While the Company can not guarantee similar stability in
the net interest margin in the future, at this time, management does not expect
significant fluctuations. See additional discussion of the Company's net
interest margin in the "Components of Earnings" section above.
As of March 31, 1998, the Company had approximately $78 million more in
interest-bearing liabilities that are subject to interest rate changes within
one year than earning assets. This generally would indicate that net interest
income would experience downward pressure in a rising interest rate environment
and would benefit from a declining interest rate environment. However, this
method of analyzing interest sensitivity only measures the magnitude of the
timing differences and does not address earnings, market value, or management
actions. Also, interest rates on certain types of assets and
FIRST BANCORP (No 0-15572), FORM 10-Q, March 31, 1998 Page 18 of 23
<PAGE>
liabilities may fluctuate in advance of changes in market interest rates, while
interest rates on other types may lag behind changes in market rates. In
addition to the effects of "when" various rate-sensitive products reprice,
market rate changes may not result in uniform changes in rates among all
products. For example, included in interest-bearing liabilities at March 31,
1998 subject to interest rate changes within one year are deposits totaling
$137.4 million comprised of NOW, savings, and certain types of money market
deposits with interest rates set by management. These types of deposits
historically have not repriced coincidentally with or in the same proportion as
general market indicators. Thus, the Company believes that near term net
interest income would not likely experience significant downward pressure from
rising interest rates. Similarly, management would not expect a significant
increase in near term net interest income from falling interest rates. As of
March 31, 1998, approximately 90% of interest-earning assets could be repriced
within five years and substantially all interest-bearing liabilities could be
repriced within five years.
The Company has no market risk sensitive instruments held for trading
purposes, nor does it maintain any foreign currency positions. The expected
maturities and relative fair values of the Company's other than trading market
risk sensitive financial instruments is substantially the same as it was at
December 31, 1997 - see the SEC Form 10-K for the year ended December 31, 1997
for additional information.
FORWARD LOOKING STATEMENTS
The foregoing discussion may contain statements that could be deemed
forward-looking statements within the meaning of Section 21E of the Securities
Exchange Act of 1934 and the Private Securities Litigation Reform Act, which
statements are inherently subject to risks and uncertainties. Forward-looking
statements are statements that include projections, predictions, expectations or
beliefs about future events or results or otherwise are not statements of
historical fact. Such statements are often characterized by the use of
qualifying words (and their derivatives) such as "expect," "believe,"
"estimate," "plan," "project," or other statements concerning opinions or
judgment of the Company and its management about future events. Factors that
could influence the accuracy of such forward-looking statements include, but are
not limited to, the financial success or changing strategies of the Company's
customers, actions of government regulators, the level of market interest rates,
and general economic conditions.
FIRST BANCORP (No 0-15572), FORM 10-Q, March 31, 1998 Page 19 of 23
<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. (*)
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. (*)
FIRST BANCORP (No 0-15572), FORM 10-Q, March 31, 1998 Page 20 of 23
<PAGE>
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 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 by reference. (*)
10.k 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. (*)
27.1 Financial Data Schedules pursuant to Article 9 of Regulation S-X for
the period ended March 31, 1998.
27.2 Financial Data Schedules pursuant to Article 9 of Regulation S-X for
the period ended March 31, 1997 - restated for financial accounting
standard number 128, "Earnings Per Share"
(b) There were no reports filed on Form 8-K during the quarter ended
March 31, 1998.
FIRST BANCORP (No 0-15572), FORM 10-Q, March 31, 1998 Page 21 of 23
<PAGE>
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 13, 1998 BY: /s/James H. Garner
----------------------------
James H. Garner
President
(Principal Executive Officer),
Treasurer and Director
May 13, 1998 BY: /s/Anna G. Hollers
----------------------------
Anna G. Hollers
Executive Vice President
and Secretary
May 13, 1998 BY: /s/Eric P. Credle
----------------------------
Eric P. Credle
Vice President
and Chief Financial Officer
FIRST BANCORP (No 0-15572), FORM 10-Q, March 31, 1998 Page 22 of 23
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT CROSS REFERENCE INDEX
Exhibit Page(s)
- ------- -------
<S> <C> <C>
3.a.i Copy of Articles of Incorporation of the Registrant *
3.a.ii Copy of the amendment to Articles of Incorporation
3.b.i Copy of the Bylaws of the Registrant *
10.a Data processing Agreement by and between Bank of Montgomery (First Bank) and
Montgomery Data Services, Inc. *
10.b First Bank Salary and Incentive Plan, as amended *
10.c First Bancorp Savings Plus and Profit Sharing Plan (401(k) savings incentive plan
and trust), as amended *
10.d Directors and Officers Liability Insurance Policy of First Bancorp *
10.e Indemnification Agreement between the Company and its Directors and Officers *
10.f First Bancorp Employees' Pension Plan *
10.g First Bancorp Senior Management Supplemental Executive Retirement Plan *
10.h First Bancorp Senior Management Split-Dollar Life Insurance Agreements between
the Company and the Executive Officers *
10.i First Bancorp 1994 Stock Option Plan *
10.j Severance Agreement between the Company and Patrick A. Meisky *
10.k Amendment to the First Bancorp Savings Plus and Profit Sharing Plan (401(k)
savings incentive plan and trust) *
27.1 Financial Data Schedules pursuant to Article 9 of Regulation S-X for the three
months ended March 31, 1998
27.2 Financial Data Schedules pursuant to Article 9 of Regulation S-X for the three
months ended March 31, 1997 - restated for financial accounting standard
number 128, "Earnings Per Share"
</TABLE>
* Incorporated herein by reference.
FIRST BANCORP (No 0-15572), FORM 10-Q, March 31, 1998 Page 23 of 23
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 15,592
<INT-BEARING-DEPOSITS> 10,004
<FED-FUNDS-SOLD> 5,811
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 44,507
<INVESTMENTS-CARRYING> 20,016
<INVESTMENTS-MARKET> 20,619
<LOANS> 309,497
<ALLOWANCE> 5,008
<TOTAL-ASSETS> 422,832
<DEPOSITS> 380,424
<SHORT-TERM> 0
<LIABILITIES-OTHER> 4,865
<LONG-TERM> 0
0
0
<COMMON> 15,102
<OTHER-SE> 22,441
<TOTAL-LIABILITIES-AND-EQUITY> 422,832
<INTEREST-LOAN> 6,919
<INTEREST-INVEST> 1,086
<INTEREST-OTHER> 220
<INTEREST-TOTAL> 8,225
<INTEREST-DEPOSIT> 3,235
<INTEREST-EXPENSE> 3,235
<INTEREST-INCOME-NET> 4,990
<LOAN-LOSSES> 280
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 3,771
<INCOME-PRETAX> 1,982
<INCOME-PRE-EXTRAORDINARY> 1,982
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,306
<EPS-PRIMARY> 0.43
<EPS-DILUTED> 0.42
<YIELD-ACTUAL> 5.55
<LOANS-NON> 633
<LOANS-PAST> 0
<LOANS-TROUBLED> 256
<LOANS-PROBLEM> 1,000
<ALLOWANCE-OPEN> 4,779
<CHARGE-OFFS> 73
<RECOVERIES> 22
<ALLOWANCE-CLOSE> 5,008
<ALLOWANCE-DOMESTIC> 5,008
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<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
0
0
<COMMON> 15,082
<OTHER-SE> 18,566
<TOTAL-LIABILITIES-AND-EQUITY> 345,205
<INTEREST-LOAN> 5,287
<INTEREST-INVEST> 1,211
<INTEREST-OTHER> 180
<INTEREST-TOTAL> 6,678
<INTEREST-DEPOSIT> 2,533
<INTEREST-EXPENSE> 2,533
<INTEREST-INCOME-NET> 4,145
<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> 0.36
<YIELD-ACTUAL> 5.56
<LOANS-NON> 1,376
<LOANS-PAST> 0
<LOANS-TROUBLED> 294
<LOANS-PROBLEM> 1,000
<ALLOWANCE-OPEN> 4,726
<CHARGE-OFFS> 214
<RECOVERIES> 190
<ALLOWANCE-CLOSE> 4,777
<ALLOWANCE-DOMESTIC> 4,777
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
