Business Overview and History
First Bancorp, the parent company of First Bank, has established itself as a prominent community bank serving the Carolinas over the past nine decades. With a history rooted in providing personalized financial services and supporting local communities, First Bancorp has demonstrated resilience and adaptability in the face of an evolving banking landscape.
First Bancorp was incorporated in North Carolina in 1983 with the purpose of acquiring the Bank of Montgomery, which had been in operation since 1935. In 1985, the bank's name was changed to First Bank, and in 2013, the company and the bank moved their headquarters to Southern Pines, North Carolina. Over the years, First Bancorp has grown both organically and through strategic acquisitions, including the 2023 acquisition of GrandSouth Bancorp, which expanded the company's footprint into South Carolina.
The company's growth strategy has included several notable acquisitions. In 2017, First Bancorp acquired Carolina Bank Holdings, Inc. and its subsidiary Carolina Bank, strengthening its presence in North Carolina. In 2020, the company further diversified its offerings by acquiring Magnolia Financial, Inc., a business financing company that provides accounts receivable financing, inventory financing, and purchase order financing throughout the southeastern United States.
First Bancorp faced significant challenges during the 2008 financial crisis, experiencing increased loan defaults and nonperforming assets. However, the company's diligent efforts to manage credit risk and strengthen its balance sheet enabled it to navigate the downturn successfully and emerge as a more robust institution.
The 2023 acquisition of GrandSouth Bancorporation was a particularly significant event, allowing First Bancorp to expand its presence in South Carolina, especially in the high-growth markets of Greenville, Charleston, and Columbia. The successful integration of GrandSouth's operations and customers further solidified First Bancorp's position in the Carolinas.
Today, First Bancorp operates 113 branch locations across North Carolina and South Carolina, serving a diverse customer base of individuals and small-to-medium-sized businesses. The company's principal subsidiary, First Bank, offers a full range of commercial and consumer banking services, including commercial and residential lending, deposit products, and wealth management services. Additionally, the company's subsidiaries, Magnolia Financial and First Troy SPE, LLC, provide specialized financing solutions and real estate management services, respectively.
Financial Performance and Ratios
As of December 31, 2024, First Bancorp reported total assets of $12.1 billion, total loans of $8.1 billion, and total deposits of $10.5 billion. The company's net income for the year ended December 31, 2024, was $76.2 million, with a net interest margin of 2.91% on a tax-equivalent basis.
First Bancorp's financial ratios demonstrate its strong liquidity and solvency position. As of December 31, 2024, the company's total risk-based capital ratio was 16.63%, well above the regulatory well-capitalized threshold of 10.50%. The company's Tier 1 leverage ratio stood at 11.15%, also significantly higher than the well-capitalized requirement of 5.00%. Additionally, First Bancorp's non-performing asset ratio was 0.39% as of the same date, indicating solid asset quality.
The company's operating cash flow for the year ended December 31, 2024, was $174.8 million, with free cash flow of $172.1 million. These strong cash flow metrics provide First Bancorp with the financial flexibility to support its ongoing operations, invest in growth initiatives, and maintain a healthy dividend payout to shareholders.
Financials
First Bancorp's financial performance demonstrates its ability to generate consistent revenue and maintain profitability. The company's diversified revenue streams, including net interest income and non-interest income from various banking services, contribute to its overall financial stability. The steady growth in total assets and loans over the years reflects the company's successful expansion strategy and its ability to capture market share in its target regions.
For the fiscal year 2024, First Bancorp reported revenue of $519.2 million and net income of $76.2 million. The company's operating cash flow for the year was $174.8 million, with free cash flow of $172.1 million. In the most recent quarter (Q4 2024), First Bancorp generated revenue of $70.1 million and net income of $18.3 million. However, the company experienced a year-over-year revenue decline of 3.3% in Q4 2024, primarily due to a $38 million securities loss transaction that occurred during the quarter.
Net interest income for the year 2024 was $332.3 million, down 4.2% from the prior year. This decrease was primarily due to increased interest expense on deposits, partially offset by higher interest income on loans and other earning assets. Noninterest income saw a significant decrease to $17.9 million in 2024 from $57.3 million in 2023, driven by the aforementioned $38 million securities loss. Noninterest expense decreased 7.4% to $235.6 million, largely due to lower merger and acquisition costs.
The company's return on average assets was 0.63% and return on average common equity was 5.38% for 2024, reflecting the impact of the challenging interest rate environment and the securities loss on overall profitability.
Liquidity
First Bancorp maintains a strong liquidity position, which is crucial for a financial institution. The company's high levels of cash and cash equivalents, combined with its investment securities portfolio, provide a solid buffer against potential economic downturns or unexpected financial needs. Additionally, First Bancorp's strong deposit base and access to various funding sources ensure that it can meet its short-term obligations and capitalize on growth opportunities as they arise.
As of December 31, 2024, First Bancorp reported cash and cash equivalents of $507.5 million. The company's debt-to-equity ratio stood at 0.010, indicating a conservative approach to leverage. First Bancorp has access to several credit facilities, including a $1.4 billion FHLB line of credit (of which $802 million was outstanding), a $265 million federal funds line (none outstanding), and a $767.4 million Federal Reserve discount window line (none outstanding). These available credit lines provide additional liquidity support if needed.
Navigating Challenges and Opportunities
First Bancorp has demonstrated its ability to navigate various challenges and capitalize on emerging opportunities. In 2024, the company faced the impact of Hurricane Helene, which significantly affected portions of its footprint in Western North Carolina and the upstate of South Carolina. The company quickly mobilized to support its associates, customers, and communities, allocating an additional $13 million to its allowance for credit losses to address the potential impact on its loan portfolio.
Despite this challenge, First Bancorp continued to execute on its long-term strategic initiatives. In 2024, the company announced the expansion of its executive leadership team, with the appointment of Christian Wilson as Executive Vice President and Chief Operating Officer. This move was aimed at enhancing the company's operational capabilities and strategic execution as it looks to drive future growth.
Furthermore, First Bancorp has shown a commitment to community engagement and corporate citizenship through its "Power of Good" initiative. This program has enabled the company to award over $640,000 in grants to local nonprofit organizations and schools, addressing critical community needs in the areas of affordable housing, food security, education, and health and wellness.
Looking ahead, First Bancorp remains focused on leveraging its strong financial position, experienced management team, and deep community roots to navigate the evolving banking landscape. The company continues to explore strategic acquisition opportunities that align with its growth objectives and enhance its market presence in the Carolinas.
Business Segments and Operations
First Bancorp operates a diversified business model with several key segments:
Lending Activities: The company provides a broad range of commercial and retail lending services, including commercial business loans, commercial and residential real estate construction and mortgage loans, revolving lines of credit, letters of credit, and personal loans. Through its Magnolia Financial subsidiary, First Bancorp offers accounts receivable financing, inventory financing, and purchase order financing. The CarBucks division provides used car floor-plan financing. The loan portfolio is primarily concentrated in the Carolinas, with diversification across various industries and loan types.
Investment Activities: First Bancorp maintains an investment portfolio designed to generate income from funds not needed to meet loan demand. The portfolio includes U.S. government bonds, government-sponsored enterprise securities, mortgage-backed securities, municipal obligations, and a limited amount of corporate bonds. The Chief Investment Officer oversees the investment strategy, which is reviewed by the Asset Liability Committee.
Deposit and Funding Sources: The company offers a full range of deposit accounts and services to retail and commercial customers, including checking, savings, money market, and time deposit accounts. First Bancorp also utilizes brokered deposits and FHLB advances to supplement its funding.
Other Services: In addition to core banking products, First Bancorp provides credit and debit cards, letters of credit, safe deposit boxes, electronic banking, and wealth management services through its FB Wealth Management division.
Human Capital and Culture
First Bancorp considers its associates to be a key competitive advantage and has focused on building an inclusive, rewarding work environment. As of December 31, 2024, the company had 1,340 full-time and 51 part-time employees, the majority of whom are located in North Carolina and South Carolina. The company's human capital strategy emphasizes attracting, developing, and retaining top talent, with a focus on diversity and inclusion.
First Bancorp has demonstrated a commitment to diversity within its workforce. As of the end of 2024, 73% of the company's workforce was female or minority. This diversity extends to leadership positions, with 73% of the officer population and 27% of the executive management team being female or minority. The company has also implemented leadership development programs and comprehensive benefits to support and engage its workforce.
Regulatory Environment
As a bank holding company and state-chartered bank, First Bancorp is subject to extensive regulation and supervision by the Federal Reserve, the North Carolina Commissioner of Banks, and other regulatory authorities. Key areas of oversight include capital adequacy, lending practices, deposit-taking, consumer protection, anti-money laundering, and other operational and compliance requirements. The company's ability to maintain regulatory compliance and effectively manage its risk profile is crucial to its ongoing operations and financial performance.
Industry Trends
First Bancorp operates within the broader banking industry, which has experienced moderate growth with a compound annual growth rate (CAGR) of approximately 4-5% over the past five years. The company's focus on community banking in the Carolinas positions it to capitalize on regional economic trends while navigating the challenges faced by the industry as a whole, such as evolving regulatory requirements, technological advancements, and changing customer preferences.
Conclusion
First Bancorp's nearly century-long history, combined with its proven ability to adapt and succeed in a dynamic industry, positions the company well for the future. With a solid financial foundation, a diversified business model, and a commitment to serving its local communities, First Bancorp is poised to continue its trajectory as a leading community bank in the Carolinas. The company's focus on maintaining a strong liquidity position, managing risk effectively, and fostering a diverse and inclusive workforce provides a strong foundation for navigating future challenges and capitalizing on growth opportunities in its target markets.