First Bancorp (FBNC) Q4 2017 earnings summary

Executive summary

• 2017 diluted EPS rose 36.8% YoY to $1.82; net income available to common shareholders reached $46.0M, driven primarily by Carolina Bank and Asheville Savings Bank acquisitions.

• Total assets grew 53.5% to $5.5B; loans rose 49.1% to $4.0B and deposits 49.5% to $4.4B, including solid organic loan and deposit growth.

• Asset quality improved, with nonperforming assets at 0.96% of assets and net charge-offs at 0.04% of average loans; management expected continued growth and low 2018 provisions.

Financial highlights

• Net interest income was $164.7M, up 33.5% YoY; noninterest income was $48.9M, up 91.4%, and noninterest expense was $145.2M, up 35.9%.

• Net income was $46.0M versus $27.5M in 2016; diluted EPS increased to $1.82 from $1.33, up 36.8%.

• 2017 income tax expense included a $1.3M benefit from remeasuring deferred tax balances after federal tax reform; personnel expense included $1.1M of one-time employee bonuses.

• Organic loan growth was $228.0M, or 8.4%; organic deposit growth was $195.1M, or 6.6%, excluding acquisition balances.

Outlook and guidance

• 2018 outlook was favorable: continued national and local economic improvement, low unemployment, and tax reform were expected to support activity and earnings.

• Management expected continued loan and deposit growth, supported by expanded markets and recent growth initiatives.

• 2018 effective tax rate was projected at ~21%; net interest margin was expected to remain fairly stable, assuming two rate increases and continued deposit pricing pressure.

• Provision for loan losses was expected to remain low in 2018; $3.3M in net loan recoveries were recorded from Jan. 1 through Feb. 28, 2018.