First Bancorp (FBNC) Q2 2017 earnings summary

Executive summary

• Q2 2017 net income available to common shareholders was $11.2 million, or $0.45 diluted EPS, up from $7.6 million and $0.37 a year earlier; growth reflected balance-sheet expansion and favorable earnings trends.

• H1 net income available to common shareholders rose to $18.7 million from $14.4 million; diluted EPS increased to $0.80 from $0.70.

• Carolina Bank acquisition materially affected year-over-year comparisons; organic loan and deposit growth also contributed to expansion.

Financial highlights

• Q2 net interest income was $39.9 million, up 26.6% YoY; H1 was $74.2 million, up 20.2%, primarily reflecting higher loan balances from organic growth and Carolina Bank.

• Q2 noninterest income was $11.9 million versus $5.9 million YoY; H1 was $21.7 million versus $10.9 million, including higher core fees and the absence of 2016 FDIC indemnification expense in 2017.

• Q2 noninterest expense was $35.1 million versus $26.1 million YoY; H1 was $67.2 million versus $50.9 million, with most of the increase tied to Carolina Bank and growth initiatives.

• Total assets were $4.53 billion, loans $3.38 billion and deposits $3.64 billion at June 30, 2017, up 30.6%, 29.9% and 26.9% YoY, respectively.

Outlook and guidance

• Internal loan growth was $167.7 million in H1, or 12.4% annualized; continued portfolio growth was expected for the remainder of 2017.

• Interest-rate modeling assumed one further 2017 rate increase; net interest margin was projected to remain fairly stable for the rest of the year, with cash and securities yields rising, loan yields stable and deposit rates gradually increasing.

• Carolina Bank system conversion was completed August 4, 2017; the ASB Bancorp transaction was expected to close in Q4 2017, subject to regulatory and shareholder approvals.