Filed by: First Bancorp
Pursuant to Rule 425 under the Securities Act of 1933
Subject Company: First Bancorp
Commission File No. 0-15572
The following communications contain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995. References
made in the following, in particular, statements regarding:
- future financial and operating results
- the proposed First Bancorp/First Savings Bancorp, Inc. merger
- timing and benefits of the proposed First Bancorp/First Savings
Bancorp, Inc. merger
are based on management's current expectations or beliefs and are subject to a
number of factors and uncertainties that could cause actual results to differ
materially from those described in the forward-looking statements. In
particular, the following factors, among others, could cause actual results to
differ materially from those described in the forward-looking statements: (1)
expected cost savings from the merger not materializing within the expected time
frame; (2) revenues following the merger not meeting expectations; (3)
competitive pressures among financial institutions increasing significantly; (4)
costs or difficulties related to the integration of the businesses of First
Bancorp and First Savings Bancorp, Inc. being greater than anticipated; (5)
general economic conditions being less favorable than anticipated; (6)
legislation or regulatory changes adversely affecting the business in which the
combined company will be engaged; and (7) the timing of the completion of the
transactions.
For a detailed discussion of these and other cautionary statements,
please refer to the Company's filings with the Securities and Exchange
Commission, especially in the "Forward-Looking Statements" section of the
Management's Discussion and Analysis section of the Company's Form 10-K for the
fiscal year ended December 31, 1998.
* * * * * * * * * * * * *
THE FOLLOWING IS THE PRESS RELEASE DISSEMINATED BY FIRST BANCORP ON DECEMBER 16,
1999 AND FILED BY FIRST BANCORP ON DECEMBER 21, 1999 ON A FORM 8-K WITH THE SEC.
First Bancorp and First Savings Bancorp Agree to Merge
Troy, North Carolina - First Bancorp (NASDAQ - FBNC), the parent company of
First Bank, a commercial bank with 34 branches and assets of approximately $535
million, and First Savings Bancorp, Inc. (NASDAQ - SOPN), the parent company of
First Savings Bank of Moore County, a savings bank headquartered in Southern
Pines, NC with six branches and assets of $325 million, jointly announce today
the signing of a definitive merger agreement. The terms of the transaction
provide for First Bancorp to exchange 1.2468 shares of its common stock for each
share of First Savings Bancorp's stock. This transaction is expected to qualify
as a tax-free exchange.
<PAGE>
The combined entity will have the number one market share in Moore County and
will be tenth in the state in terms of deposit size. Moore County is one of the
state's fastest growing and most attractive markets in the state. Southern Pines
and Pinehurst, site of the 1999 US Open Golf Championship, are two of its
prominent towns, and the county is also known for its excellent health care
system.
Jimmie Garner, President and CEO of First Bancorp, states, "We are delighted to
be joining forces with such a fine company. In leveraging First Savings'
mortgage loan expertise with our commercial banking experience, the combined
entity will be a formidable financial institution that will have a great
presence in the Sandhills area of North Carolina, one of the best regions in the
state. I am also excited to have the opportunity to work with Bill Samuels,
Chairman of First Savings Bancorp, and John Burns, President. Their years of
experience and commitment to quality service set them apart in this competitive
industry."
Mr. Garner noted that Mr. Samuels will be joining First Bancorp as Vice-Chairman
of the Board of Directors, while Mr. Burns will join five other First Savings
Bancorp directors on the First Bancorp Board of Directors, as well as assume an
Executive Vice President position with the company as the Moore County Regional
Executive.
Bill Samuels and John Burns spoke on behalf of First Savings Bancorp, "We are
extremely pleased to be joining an institution like First Bancorp that shares
our beliefs in providing the very best in customer service. With the additional
products that we will be able to offer our existing customers, and the expertise
that we can leverage throughout the First Bank network, the future is bright for
our combined company."
Jimmie Garner added, "This merger combines two institutions with long-standing
traditions. First Bank's origins date back to 1935 and First Savings Bank of
Moore County was chartered in 1922. We will ensure that everything we do going
forward is consistent with our historical frameworks, the most fundamental of
which is to provide community banking services in a warm and friendly manner."
Jimmie Garner also noted, "Upon the closing of the merger, the anticipated
dividend rate of the combined entity would be a blend of the rates currently
paid by First Bancorp and First Savings Bancorp, and is currently expected to be
an annualized rate of 76 cents per share. This represents a 68% increase from
the current level of 45.3 cents paid by First Bancorp."
Bill Samuels stated, "With the high growth rates First Bancorp has experienced
in the past several years, we are excited about the potential for future growth
that the capital First Savings Bancorp is contributing makes possible," he said.
"At the same time, the projected dividend yield to shareholders will still be
among the highest in the state among banks," Mr. Samuels added.
The transaction is expected to be consummated in the second quarter of 2000 and
will result in a company with over $860 million in assets in a 14 county region
primarily across the central piedmont region of North Carolina. The transaction
is expected to qualify for pooling-of-interest accounting and is subject to
regulatory and shareholder approvals.
<PAGE>
This news release contains forward-looking statements, including estimates of
future operating results and other forward-looking financial information for
First Bancorp and First Savings Bancorp, Inc. These estimates constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. As such, the estimates involve significant risks
and uncertainties. Actual results may differ materially due to such factors as:
(1) expected cost savings from the merger not materializing within the expected
time frame; (2) revenues following the merger not meeting expectations; (3)
competitive pressures among financial institutions increasing significantly; (4)
costs or difficulties related to the integration of the businesses of First
Bancorp and First Savings Bancorp, Inc. being greater than anticipated; (5)
general economic conditions being less favorable than anticipated; (6)
legislation or regulatory changes adversely affecting the business in which the
combined company will be engaged; and (7) the timing of the completion of the
transactions.
See attached Information Sheet for additional information.
Contacts: First Bancorp - James H. Garner - (910) 576-6171
First Savings Bancorp - John F. Burns - (910) 692-6222
<PAGE>
First Bancorp-First Savings Bancorp
Information Sheet
Type of Transaction - Stock-for-stock tax-free pooling-of-interests
Expected Closing Date - Second quarter of 2000
Exchange Ratio - 1.2468 shares of First Bancorp stock for each share of First
Savings Bancorp stock
Expected Dividend Rate - $0.76 per year
Asset Size - First Bancorp - $535 million as of September 30, 1999
First Savings Bancorp - $324 million as of September 30,
1999
Net income - First Bancorp - $6.3 million for the 12 months ended
September 30, 1999
First Savings Bancorp - $5.2 million for the 12 months ended
September 30, 1999
Branches - First Bancorp - 34
Troy (3) Albemarle (2) Candor
Southern Pines Angier Denton
Pinehurst (2) Archdale High Point
Aberdeen Asheboro (2) Kannapolis
Seven Lakes Bennett Laurel Hill
Biscoe Laurinburg Richfield
Lillington Robbins
Locust Rockingham
Maxton Sanford (2)
Pinebluff Seagrove
Polkton Vass
First Savings Bancorp - 6
Southern Pines (3)
Pinehurst
Carthage
Seven Lakes
Between the two companies, three branch consolidations are
projected in connection with the merger.
<PAGE>
Combined
Organization - First Bancorp, headquarters - Troy, NC
7 directors of First Savings Bancorp to join the existing 11
directors of First Bancorp
Jack D. Briggs - Chairman of the Board Directors
William E. Samuels - Vice-Chairman of the Board of Directors
James H. Garner - President and CEO
John F. Burns. - Executive VP, Regional Executive -
Moore County
* * * * * * * * * * * * *
Investors and security holders are advised to read the joint proxy
statement/prospectus regarding the merger referenced in the foregoing
information when it becomes available, because it will contain important
information. The joint proxy statement/prospectus will be filed with the
Securities and Exchange Commission by First Bancorp. Investors and security
holders may obtain a free copy of the joint proxy statement/prospectus (when
available) and other documents filed by First Bancorp at the Commission's web
site at www.sec.gov. The joint proxy statement/prospectus and other relevant
documents may also be obtained from First Bancorp by directing such request to
First Bancorp, 341 North Main Street, Troy, North Carolina 27371-0508,
Attention: Anna G. Hollers, telephone: (910) 576-6171.
* * * * * * * * * * * * *
THE FOLLOWING IS THE PRESS RELEASE DISSEMINATED BY FIRST BANCORP ON JANUARY 18,
2000.
High Growth Drives First Bancorp's 18.1% Increase in Quarterly Earnings
TROY, N.C. - First Bancorp (NASDAQ - FBNC), the parent company of First Bank,
announced fourth quarter earnings today of $1,777,000, an 18.1% increase over
the $1,505,000 earned in the fourth quarter of 1998. Earnings per share on a
diluted basis increased 18.8% to $0.38 per share for the fourth quarter of 1999
from the $0.32 reported for the fourth quarter of 1998. Net income for the year
ended December 31, 1999 amounted to $6,619,000, a 16.5% increase over the
$5,683,000 reported for 1998. Diluted earnings per share for 1999 amounted to
$1.43, a 17.2% increase from the $1.22 reported for 1998. Both the quarterly and
annual earnings are records for the Company.
The Company said the higher earnings are primarily a result of the significant
growth that the Company has experienced. Since January 1, 1998, the Company's
loans have grown 49% and deposits have increased by 33%.
The growth in loans and deposits has resulted in increases in both net interest
income and noninterest income. Net interest income increased by $744,000, or
13.6%, in the fourth quarter of 1999 compared to the fourth quarter of 1998,
while net interest income for the year ended December 31, 1999 increased
$2,496,000, or 11.9%, compared to 1998. Noninterest income increased 4.2% in the
fourth quarter of 1999 compared to the same quarter of 1998 and increased 10.0%
during the year ended December 31, 1999 compared to 1998. A lower effective tax
rate realized as a result of tax preferred investments made in 1999 also
enhanced the Company's net income.
<PAGE>
"The earnings we are reporting represent our fourth straight year of record
earnings," stated President and CEO Jimmie Garner. "I am especially pleased with
the strong growth we have been able to achieve, while maintaining very sound
asset quality ratios and a net interest margin that continues to exceed our
peers," added Mr. Garner.
"We were also pleased that it was business as usual for First Bancorp as we
began the new millennium. As expected, First Bancorp's systems made a smooth
transition to January 1, 2000. I would especially like to thank David Grigg, the
president of our data processing subsidiary, for the excellent job he did in
leading our Year 2000 readiness effort," stated Mr. Garner.
Mr. Garner also commented on First Bancorp's pending acquisition of First
Savings Bancorp, Inc., a savings institution with six branch offices in Moore
County and total assets of $330 million. "I continue to look forward to and am
excited about the pending merger with First Savings. We are currently in process
of preparing the necessary filings to effectuate the transaction," stated Mr.
Garner. "We expect the consummation of the merger to occur in the second quarter
of this year."
The transaction with First Savings Bancorp, Inc. was announced in a joint press
release on December 16, 1999. Interested parties can obtain a copy of the press
release by contacting First Bancorp at the number noted below.
Share data has been adjusted to reflect the 3-for-2 stock split that was paid on
September 13, 1999 to shareholders of record as of August 30, 1999.
First Bancorp is a bank holding company based in Troy, North Carolina. Its
principal activity is the ownership and operation of First Bank, a
state-chartered bank that operates 34 branch offices in a fourteen county market
area centered in Troy. First Bancorp's common stock is traded on the NASDAQ
National Market under the symbol FBNC. Broker contacts for market makers of
First Bancorp's common stock include J.C. Bradford & Co. (Clay Young at
1-800-830-6071), Legg Mason (Paul Newton at 1-800-628-5770), Scott &
Stringfellow, Inc. (Jeff O'Quinn at 1-800-763-1893, or Alan Tilley at
1-800-476-1824), Trident Securities (Sadler Stukes at 1-800-340-6321), and
Wachovia Securities, Inc. (Kel Normann at 1-800-929-1019).
Please visit our website at www.firstbancorp.com. For additional financial data,
please see the attached Financial Summary. For additional information, please
contact: Mr. James H. Garner
President & Chief Executive Officer
Telephone: (910) 576-6171
This press release contains 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 judgments 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.
<PAGE>
<TABLE>
<CAPTION>
===============================================================================================================================
First Bancorp and Subsidiaries
Financial Summary
===============================================================================================================================
Three Months Ended Twelve Months Ended
December 31, December 31,
($ in thousands except per share data - ------------------------ Percent -------------------------- Percent
unaudited) 1999 1998 Change 1999 1998 Change
- ----------------------------------------------- ------------ ------------ ------------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT
Interest income
Interest and fees on loans $ 9,173 7,934 $ 34,120 30,186
Interest on investment securities 1,038 986 4,161 3,933
Other interest income 473 333 1,013 1,225
-------- ----- -------- ------
Total interest income 10,684 9,253 15.5% 39,294 35,344 11.2%
-------- ----- -------- ------
Interest expense
Interest on deposits 4,070 3,743 15,187 14,213
Interest on short-term borrowings 397 37 623 143
-------- ----- -------- ------
Total interest expense 4,467 3,780 18.2% 15,810 14,356 10.1%
-------- ----- -------- ------
Net interest income 6,217 5,473 13.6% 23,484 20,988 11.9%
Provision for loan losses 245 250 -2.0% 910 990 -8.1%
-------- ----- -------- ------
Net interest income after provision
for loan losses 5,972 5,223 14.3% 22,574 19,998 12.9%
-------- ----- -------- ------
Noninterest income
Service charges on deposit accounts 732 683 2,835 2,595
Fees from presold mortgages 112 172 622 537
Commissions from insurance sales 57 60 264 240
Other service charges, commissions, and fees 330 269 1,311 1,028
Data processing fees 16 5 50 5
Securities gains - 32 20 29
Loan sale gains 9 14 34 227
Other gains (losses) 5 (25) (15) (5)
-------- ----- -------- ------
Total noninterest income 1,261 1,210 4.2% 5,121 4,656 10.0%
-------- ----- -------- ------
Noninterest expenses
Personnel expense 2,424 2,190 9,746 8,690
Occupancy and equipment expense 615 511 2,298 1,935
Other operating expenses 1,589 1,398 5,772 5,287
-------- ----- -------- ------
Total noninterest expenses 4,628 4,099 12.9% 17,816 15,912 12.0%
-------- ----- -------- ------
Income before income taxes 2,605 2,334 11.6% 9,879 8,742 13.0%
Income taxes 828 829 -0.1% 3,260 3,059 6.6%
-------- ----- -------- ------
Net income $ 1,777 1,505 18.1% $ 6,619 5,683 16.5%
======== ===== ======== ======
ADDITIONAL INCOME STATEMENT INFORMATION
Noncash expenses - pretax
Goodwill amortization $ 159 163 $ 636 655
Premises and equipment depreciation 292 207 967 761
-------- ----- -------- ------
Total noncash expenses, pretax $ 451 370 21.9% $ 1,603 1,416 13.2%
======== ===== ======== ======
Tax equivalent net interest income
Net interest income, as recorded $ 6,217 5,473 $ 23,484 20,988
Tax equivalent adjustment 130 160 574 661
-------- ----- -------- ------
Tax equivalent net interest income $ 6,347 5,633 12.7% $ 24,058 21,649 11.1%
======== ===== ======== ======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
===============================================================================================================================
First Bancorp and Subsidiaries
Financial Summary - page 2
===============================================================================================================================
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------------ Percent -------------------------- Percent
SHARE DATA (1) 1999 1998 Change 1999 1998 Change
- ----------------------------------------------- ------------ ------------ ------------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Earnings per share - basic $ 0.39 0.33 18.2% $ 1.46 1.25 16.8%
Earnings per share - diluted 0.38 0.32 18.8% 1.43 1.22 17.2%
Cash dividends declared 0.11333 0.10 13.3% 0.45333 0.40 13.3%
Stated book value 9.65 8.94 7.9%
Tangible book value 8.50 7.65 11.1%
Common shares outstanding at end of period 4,551,641 4,531,905
Weighted average shares outstanding - basic 4,538,137 4,532,204 4,528,132 4,531,092
Weighted average shares outstanding - diluted 4,646,756 4,646,690 4,632,233 4,657,746
SELECTED RATIOS
Return on average assets 1.28% 1.26% 1.29% 1.28%
Return on average equity 16.04% 14.74% 15.56% 14.59%
Net interest margin - tax equivalent (2) 4.88% 5.03% 5.01% 5.24%
Efficiency ratio - tax equivalent 60.83% 59.90% 61.06% 60.49%
Shareholders' equity to assets 7.85% 8.23%
Tier I risk-based capital 9.66% 9.63%
Total risk based capital 10.78% 10.75%
Tier I leverage capital 7.30% 7.37%
</TABLE>
(1) Share data has been adjusted to reflect the 3-for-2 stock split paid on
September 13, 1999.
(2) This ratio was impacted by the Company's Y2K liquidity contingency planning
that was implemented in the fourth quarter of 1999. The Company estimates
that excluding the effects of the excess liquidity called for by the plan
that the tax equivalent net interest margin would have been 5.08% for the
fourth quarter of 1999 and 5.06% for the year.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREND INFORMATION
($ in thousands except share data)
For the Three Months Ended
---------------------------------------------------------------------------
Dec. 31, Sept. 30, June 30, March 31, Dec. 31, One Year
INCOME STATEMENT 1999 1999 1999 1999 1998 Change
-------- --------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net interest income - tax equivalent $ 6,347 6,221 5,892 5,598 5,633 12.7%
Taxable equivalent adjustment 130 143 149 152 160 -18.8%
Net interest income 6,217 6,078 5,743 5,446 5,473 13.6%
Provision for loan losses 245 205 260 200 250 -2.0%
Core noninterest income 1,247 1,239 1,293 1,303 1,189 4.9%
Non-core noninterest income, net (1) 14 3 17 5 21 -33.3%
Noninterest expense 4,628 4,606 4,307 4,275 4,099 12.9%
Income before income taxes 2,605 2,509 2,486 2,279 2,334 11.6%
Income taxes 828 771 858 803 829 -0.1%
Net income 1,777 1,738 1,628 1,476 1,505 18.1%
Earnings per share - basic (2) 0.39 0.38 0.36 0.33 0.33 18.2%
Earnings per share - diluted (2) 0.38 0.37 0.35 0.32 0.32 18.8%
</TABLE>
(1) Includes gains and losses from securities sales, loan sales, fixed assets,
other real estate and other nonrecurring items.
(2) Share data has been adjusted to reflect the 3-for-2 stock split paid on
September 13, 1999.
<PAGE>
<TABLE>
<CAPTION>
===============================================================================================================================
First Bancorp and Subsidiaries
Financial Summary - page 3
===============================================================================================================================
Dec. 31, Sept. 30, June 30, March 31, Dec. 31, One Year
PERIOD END BALANCES 1999 1999 1999 1999 1998 Change
-------- --------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Assets $ 559,447 535,149 526,287 505,862 491,838 13.7%
Securities 71,808 71,463 73,100 77,380 77,280 -7.1%
Loans 419,163 400,574 387,755 368,511 358,334 17.0%
Allowance for loan losses 6,078 5,988 5,822 5,671 5,504 10.4%
Intangible assets 5,261 5,366 5,525 5,684 5,843 -10.0%
Deposits 480,023 456,085 451,356 439,466 440,266 9.0%
Short-term borrowings 30,000 30,000 28,000 20,000 6,000 400.0%
Shareholders' equity 43,942 42,880 41,728 41,036 40,494 8.5%
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
For the Three Months Ended
----------------------------------------------------------------------------
Dec. 31, Sept. 30, June 30, March 31, Dec. 31, One Year
YIELD INFORMATION 1999 1999 1999 1999 1998 Change (2)
-------- --------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Yield on loans 8.93% 8.83% 8.74% 8.81% 8.98% -5 bp
Yield on securities - tax equivalent 6.34% 6.38% 6.30% 6.31% 6.69% -35 bp
Yield on other earning assets 5.38% 5.71% 5.21% 5.07% 5.06% 32 bp
Yield on all interest earning assets 8.32% 8.37% 8.25% 8.26% 8.40% -8 bp
Rate on interest bearing deposits 3.91% 3.76% 3.80% 3.90% 4.02% -11 bp
Rate on other interest bearing liabilities 5.71% 5.44% 5.12% 4.63% 5.49% 22 bp
Rate on all interest bearing liabilities 4.02% 3.80% 3.81% 3.91% 4.03% -1 bp
Interest rate spread - tax equivalent 4.30% 4.57% 4.44% 4.35% 4.37% -7 bp
Net interest margin - tax equivalent 4.88% 5.16% 5.04% 4.97% 5.03% -15 bp
(1) (3)
Average prime rate 8.37% 8.10% 7.75% 7.75% 7.93% 44 bp
</TABLE>
(1) Calculated by dividing annualized tax equivalent net interest income by
average earning assets for the period.
(2) Expressed in terms of change in basis points from previous year.
(3) This ratio was impacted by the Company's Y2K liquidity contingency planning
that was implemented in the fourth quarter of 1999. The Company estimates
that excluding the effects of the excess liquidity called for by the plan
that the tax equivalent net interest margin for the fourth quarter of 1999
would have been 5.08%.
<TABLE>
<CAPTION>
Dec. 31, Sept. 30, June 30, March 31, Dec. 31, One Year
1999 1999 1999 1999 1998 Change
-------- --------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
ASSET QUALITY DATA
Nonaccrual loans $ 595 535 621 596 601 -1.0%
Restructured loans 257 260 254 258 248 3.6%
-------- ----- ----- ----- -----
Total nonperforming loans 852 795 875 854 849 0.4%
Other real estate 906 855 546 525 505 79.4%
-------- ----- ----- ----- -----
Total nonperforming assets $ 1,758 1,650 1,421 1,379 1,354 29.8%
======== ===== ===== ===== =====
Net charge-offs to average loans - annualized 0.15% 0.04% 0.11% 0.04% 0.16% -1 bp*
Nonperforming loans to total loans 0.20% 0.20% 0.23% 0.23% 0.24% -4 bp*
Nonperforming assets to total assets 0.31% 0.31% 0.27% 0.27% 0.28% 3 bp*
Allowance for loan losses to total loans 1.45% 1.49% 1.50% 1.54% 1.54% -9 bp*
</TABLE>
* Expressed in terms of change in basis points from previous year.
* * * * * * * * * * * * *
Investors and security holders are advised to read the joint proxy
statement/prospectus regarding the merger referenced in the foregoing
information when it becomes available, because it will contain important
information. The joint proxy statement/prospectus will be filed with the
Securities and Exchange Commission by First Bancorp. Investors and security
holders may obtain a free copy of the joint proxy statement/prospectus (when
available) and other documents filed by First Bancorp at the Commission's web
site at www.sec.gov. The joint proxy statement/prospectus and other relevant
documents may also be obtained from First Bancorp by directing such request to
First Bancorp, 341 North Main Street, Troy, North Carolina 27371-0508,
Attention: Anna G. Hollers, telephone: (910) 576-6171.
* * * * * * * * * * * * *
<PAGE>
THE FOLLOWING IS A QUARTERLY SHAREHOLDER REPORT THAT WAS MAILED ON JANUARY 24,
2000 TO ALL FIRST BANCORP SHAREHOLDERS, AND OTHER PARTIES ON THE COMPANY'S
INVESTOR RELATIONS MAILING LIST.
PRESIDENT'S MESSAGE
Dear Shareholders and Friends,
During the fourth quarter of 1999, First Bancorp achieved three significant
milestones. In the past three months your company has (1) achieved record
earnings, (2) smoothly transitioned into "Y2K", and, (3) most significantly,
reached an agreement to acquire First Savings Bancorp, Inc., the parent company
of First Savings Bank of Moore County.
First, I am pleased to be able to report to you record quarterly and annual
earnings for the periods ended December 31, 1999. Please note that all share
data has been adjusted to reflect the 3-for-2 stock split paid on September 13,
1999 to shareholders of record as of August 30, 1999.
Net income for the three months ended December 31, 1999 was $1,777,000, an
18.1% increase over the $1,505,000 reported for the same three months of 1998.
These earnings amount to diluted earnings per share of $0.38 for the fourth
quarter of 1999, an 18.8% increase over the diluted earnings per share of $0.32
reported in the fourth quarter of 1998. Earnings for the year ended December 31,
1999 amounted to $6,619,000, a 16.5% increase over the $5,683,000 earned in
1998. The 1999 net income amounts to diluted earnings per share of $1.43, a
17.2% increase over the $1.22 earned in 1998.
The increases in net income continue to be driven by the effects of the
significant growth in the company's loan and deposit bases. Since January 1,
1998, First Bancorp's loans have grown 49% and deposits have increased by 33%.
These increases in loans and deposits have resulted in increases in the amount
of net interest income earned by the Company and have also resulted in
additional opportunities to earn noninterest income. Net interest income
increased by $744,000, or 13.6%, in the fourth quarter of 1999 compared to the
fourth quarter of 1998, while net interest income for the year ended December
31, 1999 increased $2,496,000, or 11.9%, compared to 1998. Noninterest income
increased 4.2% in the fourth quarter of 1999 compared to the same quarter of
1998 and increased 10.0% during the year ended December 31, 1999 compared to
1998. A lower effective tax rate realized as a result of tax preferred
investments made in 1999 also enhanced the Company's net income.
The second milestone I mentioned above was the smooth transition that First
Bancorp made into "Y2K." First Bancorp spent a significant amount of resources,
the most significant being time, to plan, prepare, and test for Y2K readiness.
While we fully expected the success we had in entering the new millennium, it
was satisfying to get the issue behind us. I want to thank David Grigg, the
president of our data processing subsidiary Montgomery Data Services, for the
excellent job he did in leading First Bancorp's Year 2000 readiness effort, and
all of our staff for their supporting role.
The third and most important milestone that I noted earlier was the
announcement of the agreement to acquire First Savings Bancorp, Inc. First
Savings Bancorp, Inc. is the holding company for First Savings Bank of Moore
County, a savings institution with $330 million in assets and six branch
offices. I have admired this fine institution and their people for many years,
and the combination with them is a natural strategic fit. Upon consummation of
the merger, which is expected to occur in the second quarter of 2000, First Bank
will have the number one market share in Moore County, one of the fastest
growing and most attractive areas in the state. This merger will also provide
<PAGE>
First Bancorp with the additional capital necessary to continue a high growth
strategy. I hope you are as excited as I am about the bright future for the
combined entity.
Your Board of Directors declared a quarterly dividend of 11.333 cents per
share payable on January 25, 2000 to shareholders of record as of December 31,
1999. On a split adjusted basis, the 11.333 cents per share is equivalent to the
previous dividend rate of 17 cents per share and is 13.3% higher than the
dividend paid a year ago. The dividend payment is being distributed at the same
time as this quarterly report. To enroll in our dividend reinvestment plan,
which offers a convenient way to reinvest your dividends in shares of First
Bancorp common stock without paying brokerage commissions, please call our
transfer agent, Registrar and Transfer Company, at 1-800-368-5948, or Investor
Relations at First Bancorp at 1-800-548-9377.
Your support of our company as a customer of our products and services
helps us to achieve our financial success. We welcome your comments and
suggestions.
Sincerely,
James H. Garner
President and Chief Executive Officer
<PAGE>
<TABLE>
<CAPTION>
===============================================================================================================================
First Bancorp and Subsidiaries
Financial Summary
===============================================================================================================================
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------------ --------------------------
($ in thousands except per share data - Percent Percent
unaudited) 1999 1998 Change 1999 1998 Change
- ----------------------------------------------- ------------ ------------ ------------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net interest income, taxable equivalent basis $ 6,347 5,633 12.7% $ 24,058 21,649 11.1%
Taxable equivalent adjustment 130 160 -18.8% 574 661 -13.2%
Net interest income 6,217 5,473 13.6% 23,484 20,988 11.9%
Provision for loan losses 245 250 -2.0% 910 990 -8.1%
Core noninterest income 1,247 1,189 4.9% 5,082 4,405 15.4%
Non-core noninterest income, net (1) 14 21 -33.3% 39 251 -84.5%
Noninterest expense 4,628 4,099 12.9% 17,816 15,912 12.0%
Income taxes 828 829 -0.1% 3,260 3,059 6.6%
Net income 1,777 1,505 18.1% 6,619 5,683 16.5%
- ----------------------------------------------- ------------ ------------ ------------- ------------ ------------- ------------
PER SHARE DATA
Earnings per share - basic $ 0.39 0.33 18.2% $ 1.46 1.25 16.8%
Earnings per share - diluted 0.38 0.32 18.8% 1.43 1.22 17.2%
Cash dividends declared 0.11333 0.10 13.3% 0.45333 0.40 13.3%
Stated book value 9.65 8.94 7.9%
Tangible book value 8.50 7.65 11.1%
Common shares outstanding at end of period 4,551,641 4,531,905
Weighted average shares outstanding - basic 4,538,137 4,532,204 4,528,132 4,531,092
Weighted average shares outstanding - diluted 4,646,756 4,646,690 4,632,233 4,657,746
- ----------------------------------------------- ------------ ------------ ------------- ------------ ------------- ------------
PERIOD END BALANCES
Assets $ 559,447 491,838 13.7%
Securities 71,808 77,280 -7.1%
Loans 419,163 358,334 17.0%
Allowance for loan losses 6,078 5,504 10.4%
Intangible assets 5,261 5,843 -10.0%
Deposits 480,023 440,266 9.0%
Shareholders' equity 43,942 40,494 8.5%
- ----------------------------------------------- ------------ ------------ ------------- ------------ ------------- ------------
AVERAGE DAILY BALANCES
Assets $ 550,078 475,698 15.6% $ 512,557 443,214 15.6%
Loans 407,545 350,443 16.3% 386,365 325,477 18.7%
Earning assets 515,478 444,553 16.0% 480,111 412,858 16.3%
Deposits 472,490 427,212 10.6% 453,641 396,987 14.3%
Shareholders' equity 43,965 40,497 8.6% 42,525 38,946 9.2%
- ----------------------------------------------- ------------ ------------ ------------- ------------ ------------- ------------
RATIOS
Return on average assets 1.28% 1.26% 1.29% 1.28%
Return on average equity 16.04% 14.74% 15.56% 14.59%
Net interest margin - tax equivalent (2) 4.88% 5.03% 5.01% 5.24%
Efficiency ratio - tax equivalent 60.83% 59.90% 61.06% 60.49%
Shareholders' equity to assets 7.85% 8.23%
- ----------------------------------------------- ------------ ------------ ------------- ------------ ------------- ------------
ASSET QUALITY RATIOS
Net charge-offs to average loans - annualized 0.15% 0.16% 0.09% 0.08%
Nonperforming loans to total loans 0.20% 0.24%
Nonperforming assets to total assets 0.31% 0.28%
- ----------------------------------------------- ------------ ------------ ------------- ------------ ------------- ------------
</TABLE>
(1) Non-core noninterest income includes gains and losses from securities sales,
loan sales, fixed assets, other real estate and other nonrecurring items.
(2) This ratio was impacted by the Company's Y2K liquidity contingency planning
that was implemented in the fourth quarter of 1999. The Company estimates
that excluding the effects of the excess liquidity called for by the plan
that the tax equivalent net interest margin for the fourth quarter of 1999
would have been 5.08% and 5.06% for the year.
================================================================================
<PAGE>
<TABLE>
<CAPTION>
First Bancorp and Subsidiaries
Consolidated Balance Sheets
December 31, December 31,
($ in thousands-unaudited) 1999 1998
--------- ---------
<S> <C> <C>
ASSETS
Cash & due from banks, noninterest-bearing $ 23,055 22,073
Due from banks, interest-bearing 15,231 8,398
Federal funds sold 12,280 8,295
--------- ---------
Total cash and cash equivalents 50,566 38,766
--------- ---------
Securities available for sale (costs of $56,231 in 1999,
and $58,740 in 1998) 54,290 58,800
Securities held to maturity (fair values of $17,366 in 1999,
and $19,223 in 1998) 17,518 18,480
Presold mortgages in process of settlement 1,121 2,619
Loans 419,163 358,334
Less: Allowance for loan losses (6,078) (5,504)
--------- ---------
Net loans 413,085 352,830
--------- ---------
Premises and equipment 10,063 9,091
Accrued interest receivable 3,373 2,789
Intangible assets 5,261 5,843
Other 4,170 2,620
--------- ---------
Total assets $ 559,447 491,838
========= =========
LIABILITIES
Deposits:
Demand - noninterest-bearing $ 60,566 62,479
Savings, NOW, and money market 164,307 160,428
Time deposits of $100,000 or more 81,831 60,720
Other time deposits 173,319 156,639
--------- ---------
Total deposits 480,023 440,266
Short-term borrowings 30,000 6,000
Accrued interest payable 3,457 3,080
Other liabilities 2,025 1,998
--------- ---------
Total liabilities 515,505 451,344
--------- ---------
SHAREHOLDERS' EQUITY
Common stock, No par value per share
Issued and outstanding: 4,551,641 shares in 1999,
and 4,531,905 shares in 1998 19,075 18,970
Retained earnings 26,051 21,487
Accumulated other comprehensive income (loss) (1,184) 37
--------- ---------
Total shareholders' equity 43,942 40,494
--------- ---------
Total liabilities and shareholders' equity $ 559,447 491,838
========= =========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
First Bancorp and Subsidiaries
Consolidated Statements of Income
Three Months Ended Twelve Months Ended
December 31, December 31,
----------------------------------- -----------------------------------
($ in thousands, except share data-unaudited) 1999 1998 1999 1998
----------------- ---------------- ----------------- ----------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 9,173 7,934 34,120 30,186
Interest on investment securities:
Taxable interest income 824 739 3,271 2,898
Tax-exempt interest income 214 247 890 1,035
Other, principally overnight investments 473 333 1,013 1,225
--------- --------- --------- ---------
Total interest income 10,684 9,253 39,294 35,344
--------- --------- --------- ---------
INTEREST EXPENSE
Savings, NOW and money market 832 812 3,202 3,305
Time deposits of $100,000 or more 1,077 827 3,755 3,063
Other time deposits 2,161 2,104 8,230 7,845
Short-term borrowings 397 37 623 143
--------- --------- --------- ---------
Total interest expense 4,467 3,780 15,810 14,356
--------- --------- --------- ---------
Net interest income 6,217 5,473 23,484 20,988
Provision for loan losses 245 250 910 990
--------- --------- --------- ---------
Net interest income after provision
for loan losses 5,972 5,223 22,574 19,998
--------- --------- --------- ---------
NONINTEREST INCOME
Service charges on deposit accounts 732 683 2,835 2,595
Fees from presold mortgages 112 172 622 537
Commissions from insurance sales 57 60 264 240
Other service charges, commissions and fees 330 269 1,311 1,028
Data processing fees 16 5 50 5
Securities gains - 32 20 29
Loan sale gains 9 14 34 227
Other gains (losses) 5 (25) (15) (5)
--------- --------- --------- ---------
Total noninterest income 1,261 1,210 5,121 4,656
--------- --------- --------- ---------
NONINTEREST EXPENSES
Salaries 2,015 1,818 7,909 7,127
Employee benefits 409 372 1,837 1,563
--------- --------- --------- ---------
Total personnel expense 2,424 2,190 9,746 8,690
Net occupancy expense 282 259 1,165 1,017
Equipment related expenses 333 252 1,133 918
Other operating expenses 1,589 1,398 5,772 5,287
--------- --------- --------- ---------
Total noninterest expenses 4,628 4,099 17,816 15,912
--------- --------- --------- ---------
Income before income taxes 2,605 2,334 9,879 8,742
Income taxes 828 829 3,260 3,059
--------- --------- --------- ---------
NET INCOME $ 1,777 1,505 6,619 5,683
========= ========= ========= =========
Earnings per share:
Basic $ 0.39 0.33 1.46 1.25
Diluted 0.38 0.32 1.43 1.22
Weighted average common shares outstanding:
Basic 4,538,137 4,532,204 4,528,132 4,531,092
Diluted 4,646,756 4,646,690 4,632,233 4,657,746
</TABLE>
See notes to consolidated financial statements.
<PAGE>
First Bancorp And Subsidiaries
Notes To Consolidated Financial Statements
For the Periods Ended December 31, 1999 and 1998
(unaudited)
- --------------------------------------------------------------------------------
NOTE 1
The accompanying unaudited consolidated balance sheets and income statements
were prepared on a consistent basis with those contained in the Company's 1998
Annual Report on Form 10-K. Reference is made to the most recent Annual Report
on Form 10-K filed with the SEC for a full set of financial statements, as well
as a discussion of accounting policies and other relevant information with
respect to the financial statements. Reference is also made to the Company's
quarterly reporting contained on Form 10-Q filed with the SEC within 45 days
after each quarter end.
NOTE 2
The results of operations for the periods ended December 31, 1999 and 1998 are
not necessarily indicative of the results to be expected for the full year.
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. Share
data, including earnings per share, have been adjusted to reflect the 3-for-2
stock split that was paid on September 13, 1999 to shareholders of record as of
August 30, 1999.
NOTE 3
Certain amounts reported in the period ended December 31, 1998 have been
reclassified to conform with the presentation for December 31, 1999. 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
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>
December 31, December 31,
($ in thousands) 1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C>
Nonperforming loans:
Nonaccrual loans $ 595 601
Restructured loans 257 248
------ ------
Total nonperforming loans 852 849
Other real estate 906 505
------ ------
Total nonperforming assets $1,758 1,354
====== ======
Nonperforming loans to total loans 0.20% 0.24%
Nonperforming assets as a percentage of
loans and other real estate 0.42% 0.38%
Nonperforming assets to total assets 0.31% 0.28%
Allowance for loan losses to total loans 1.45% 1.54%
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
First Bancorp and Subsidiaries
Trend Information
($ in thousands except share data)
For the Three Months Ended
--------------------------
Dec. 31, Sept. 30, June 30, March 31, Dec. 31, One Year
INCOME STATEMENT 1999 1999 1999 1999 1998 Change
----------- ----------- ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Net interest income - tax equivalent $ 6,347 6,221 5,892 5,598 5,633 12.7%
Taxable equivalent adjustment 130 143 149 152 160 -18.8%
Net interest income 6,217 6,078 5,743 5,446 5,473 13.6%
Provision for loan losses 245 205 260 200 250 -2.0%
Core noninterest income 1,247 1,239 1,293 1,303 1,189 4.9%
Non-core noninterest income, net (1) 14 3 17 5 21 -33.3%
Noninterest expense 4,628 4,606 4,307 4,275 4,099 12.9%
Income before income taxes 2,605 2,509 2,486 2,279 2,334 11.6%
Income taxes 828 771 858 803 829 -0.1%
Net income 1,777 1,738 1,628 1,476 1,505 18.1%
Earnings per share - basic (2) 0.39 0.38 0.36 0.33 0.33 18.2%
Earnings per share - diluted (2) 0.38 0.37 0.35 0.32 0.32 18.8%
</TABLE>
(1) Includes gains and losses from securities sales, loan sales, fixed assets,
other real estate and other nonrecurring items.
(2) Share data has been adjusted to reflect the 3-for-2 stock split paid on
September 13, 1999.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Dec. 31, Sept. 30, June 30, March 31, Dec. 31, One Year
PERIOD END BALANCES 1999 1999 1999 1999 1998 Change
- ---------------------------------------------- ----------- ----------- ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Assets $ 559,447 535,149 526,287 505,862 491,838 13.7%
Securities 71,808 71,463 73,100 77,380 77,280 -7.1%
Loans 419,163 400,574 387,755 368,511 358,334 17.0%
Allowance for loan losses 6,078 5,988 5,822 5,671 5,504 10.4%
Intangible assets 5,261 5,366 5,525 5,684 5,843 -10.0%
Deposits 480,023 456,085 451,356 439,466 440,266 9.0%
Short-term borrowings 30,000 30,000 28,000 20,000 6,000 400.0%
Shareholders' equity 43,942 42,880 41,728 41,036 40,494 8.5%
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
For the Three Months Ended
--------------------------
Dec. 31, Sept. 30, June 30, March 31, Dec. 31, One Year
YIELD INFORMATION 1999 1999 1999 1999 1998 Change (2)
----------- ----------- ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Yield on loans 8.93% 8.83% 8.74% 8.81% 8.98% -5 bp
Yield on securities - tax equivalent 6.34% 6.38% 6.30% 6.31% 6.69% -35 bp
Yield on other earning assets 5.38% 5.71% 5.21% 5.07% 5.06% 32 bp
Yield on all interest earning assets 8.32% 8.37% 8.25% 8.26% 8.40% -8 bp
Rate on interest bearing deposits 3.91% 3.76% 3.80% 3.90% 4.02% -11 bp
Rate on other interest bearing liabilities 5.71% 5.44% 5.12% 4.63% 5.49% 22 bp
Rate on all interest bearing liabilities 4.02% 3.80% 3.81% 3.91% 4.03% -1 bp
Interest rate spread - tax equivalent 4.30% 4.57% 4.44% 4.35% 4.37% -7 bp
Net interest margin - tax equivalent 4.88% 5.16% 5.04% 4.97% 5.03% -15 bp
(1) (3)
Average prime rate 8.37% 8.10% 7.75% 7.75% 7.93% 44 bp
</TABLE>
(1) Calculated by dividing annualized tax equivalent net interest income by
average earning assets for the period.
(2) Expressed in terms of change in basis points from previous year.
(3) This ratio was impacted by the Company's Y2K liquidity contingency planning
that was implemented in the fourth quarter of 1999. The Company estimates
that excluding the effects of the excess liquidity called for by the plan
that the tax equivalent net interest margin for the fourth quarter of 1999
would have been 5.08%.
- --------------------------------------------------------------------------------
<PAGE>
First Bancorp and Subsidiaries
Corporate Information
Board of Directors
Jack D. Briggs, Chairman
David L. Burns
Jesse S. Capel
James H. Garner
George R. Perkins, Jr.
G. T. Rabe, Jr.
Edward T. Taws, Jr.
Frederick H. Taylor
Goldie H. Wallace
A. Jordan Washburn
John C. Willis
Emeritus - D. C. Deaton, Jr.
John L. Frye, Sr.
Jack L. Harper
John J. Russell
John C. Wallace
Executive Officers
James H. Garner, President and Chief Executive
Officer
Anna G. Hollers, Executive Vice President and
Secretary
Teresa C. Nixon, Executive Vice President of Loan
Administration and Compliance
David G. Grigg, President of Montgomery Data
Services, Inc.
Jerry M. Arnold, Senior Vice President of Operations
Eric P. Credle, Senior Vice President and Chief
Financial Officer
Lee C. McLaurin, Senior Vice President and Controller
Corporate Office
341 North Main Street
Troy, NC 27371-0508
Telephone: 910-576-6171
Fax: 910-576-1070
<PAGE>
For Additional Information Contact
Anna G. Hollers
Investor Relations
Telephone: 800-548-9377
NASDAQ Symbol: FBNC
Traded on the NASDAQ National Market System
Market Makers in First Bancorp Stock
(Broker Contacts listed in parenthesis)
J.C. Bradford & Co. (Clay Young at 1-800-830-6071)
Legg Mason (Paul Newton at 1-800-628-5770)
Scott & Stringfellow (Jeff O'Quinn at 1-800-763-1893 or
Alan Tilley at 1-800-476-1824)
Trident Securities (Sadler Stukes at 1-800-340-6321)
Wachovia Securities (Kel Normann at 1-800-929-1019)
Dividend Reinvestment Plan
Registered holders of First Bancorp common stock are
eligible to participate in the Company's Dividend
Reinvestment Plan, a convenient and economical way to
purchase additional shares of First Bancorp common stock
without payment of brokerage commissions. For an
information folder and authorization form or to receive
additional information please contact:
First Bancorp Investor Relations
Attention: Anna Hollers
Post Office Box 508
Troy, NC 27371-0508
Telephone: 800-548-9377
or
Registrar and Transfer Company
Telephone: 800-368-5948
Stock Transfer Agent
Registrar and Transfer Company
10 Commerce Drive
Cranford, NJ 07016
Telephone: 800-368-5948
Please visit our website at www.firstbancorp.com
