First Bancorp (FBNC) Q4 2016 earnings summary

Executive summary

• 2016 net income available to common shareholders rose 3.4% to $27.3 million; diluted EPS increased 2.3% to $1.33, supported by loan growth and new income initiatives.

• Assets grew 7.5% to $3.6 billion; loans increased 7.6% to $2.7 billion and deposits rose 4.8% to $2.9 billion.

Financial highlights

• Net interest income was $123.4 million, up 3.0% YoY; net income was $27.5 million, up 1.8%, and income before taxes rose 2.4% to $42.1 million.

• Noninterest income increased 36.2% to $25.6 million; noninterest expense rose 8.9% to $106.8 million, primarily reflecting acquisitions and market expansion.

• Excluding non-core items, core noninterest income rose 19.3% to $35.0 million, led by SBA consulting fees and loan-sale gains.

• Retail time deposits declined $99 million, while checking, money market and savings deposits increased $175 million; brokered deposits rose $60 million to $136.5 million.

Outlook and guidance

• 2017 outlook called for continued loan and deposit growth, alongside likely further net interest margin compression and pressure on loan yields.

• Provision for loan losses was expected to increase from 2016 levels, reflecting ongoing charge-offs and anticipated loan growth.

• Loan discount accretion was expected to decline as purchased-loan portfolios wind down; absent a new indemnification asset, no further FDIC indemnification expense was expected.

• Interest-rate modeling assuming one or two 2017 rate increases projected additional margin compression, with loan yields stable to down and deposit-rate pressure increasing.