Log in
Log in
Or log in with
GoogleGoogle
Twitter Twitter
Facebook Facebook
Apple Apple     
Sign up
Or log in with
GoogleGoogle
Twitter Twitter
Facebook Facebook
Apple Apple     
  1. Homepage
  2. Equities
  3. United States
  4. Nasdaq
  5. First Bancorp
  6. News
  7. Summary
    FBNC   US3189101062

FIRST BANCORP

(FBNC)
  Report
Delayed Nasdaq  -  04:00 2022-09-23 pm EDT
38.22 USD   +0.26%
09/21First Bancorp Keeps Quarterly Dividend at $0.34 per Share, Payable Oct. 21 to Shareholders as of Oct. 5
MT
09/19SECTOR UPDATE : Financial Stocks Finding Late Support in Monday Markets
MT
09/19SECTOR UPDATE : Financial Stocks Posting Modest Gains Monday
MT
SummaryQuotesChartsNewsRatingsCalendarCompanyFinancialsConsensusRevisionsFunds 
SummaryMost relevantAll NewsAnalyst Reco.Other languagesPress ReleasesOfficial PublicationsSector newsMarketScreener Strategies

FIRST BANCORP /NC/ Management's Discussion and Analysis of Consolidated Results of Operations and Financial Condition (form 10-Q)

08/05/2022 | 03:31pm EDT

Overview and Highlights at and for Three Months Ended June 30, 2022


We earned net income of $36.6 million, or $1.03 diluted EPS, during the three
months ended June 30, 2022 compared to net income of $29.3 million, or $1.03
diluted EPS, for the three months ended June 30, 2021.

On October 15, 2021 we acquired Select Bancorp, Inc. ("Select") which was
headquartered in Dunn, North Carolina and which contributed total assets of $1.8
billion, total loans of $1.3 billion, and total deposits of $1.6 billion as of
the acquisition date. As such, comparisons for the financial periods presented
are impacted by our acquisition of Select.

The main drivers to the increase in net income are presented below. Refer also to additional discussion in the Results of Operations section following.


•Net interest income for the second quarter of 2022 was $78.3 million, a 33.2%
increase from the $58.8 million recorded in the second quarter of 2021. The
increase in net interest income from the prior year period was driven by higher
earning assets related to both the Select acquisition and organic growth, offset
somewhat by a reduction in net interest margin ("NIM").

•For the three months ended June 30, 2022, we did not record any provision for
credit losses based primarily on updated economic forecasts, improving trends,
and CECL model assumptions.

•Noninterest income declined $4.1 million, or 19.2%, for the three months ended
June 30, 2022 from the prior year period primarily due to a $2.2 million
decrease in gains on SBA loan sales, a $1.8 million decrease in mortgage banking
income related to lower levels of activity, a $1.5 million decrease in SBA
consulting fees due to lower PPP-related revenues, and a $1.3 million decrease
in commissions on sales of financial and insurance products due to the sale of
substantially all of the assets of our property and casualty insurance agency
subsidiary in June 2021. Reductions in noninterest income were substantially
offset by higher levels of transactions and number of accounts generating
service charge income and bankcard revenue.

•Noninterest expense increased $8.4 million, or 20.5%, for the quarter ended
June 30, 2022, as compared to the prior year period driven by higher operating
expenses resulting from the Select acquisition.

•Income tax expense increased $1.6 million relative to the higher pre-tax
income. The effective tax rates were 20.7% and 21.3% for the second quarter of
2022 and 2021, respectively. The lower effective tax rate in the second quarter
of 2022 was related to higher tax exempt income in that quarter relative to
taxable income.

Total assets at June 30, 2022 amounted to $10.6 billion, a 0.5% increase from
December 31, 2021. The primary balance sheet changes are presented below. Refer
also to additional discussion in the Financial Condition section following.

•Total loans amounted to $6.2 billion at June 30, 2022, an increase of $161.5 million, or 2.7%, from year end, due primarily to organic growth partially offset by reductions in PPP loans during the second quarter of 2022.


•Total investment securities decreased $65.2 million from December 31, 2021 to a
total of $3.1 billion at June 30, 2022, as cash flows were utilized to fund loan
growth.

•Total deposits amounted to $9.4 billion at June 30, 2022, an increase of $235.1
million, or 2.6%, from December 31, 2021. The high core deposit growth
experienced since the onset of the pandemic has started to slow in 2022 and the
current growth is primarily attributable to our ongoing growth and retention
initiatives.

•We remain well-capitalized by all regulatory standards with a total common equity Tier 1 ratio of 12.90% and total risk-based capital ratio of 15.01%.


                                                                         Page 39
--------------------------------------------------------------------------------

Index


•Accumulated other comprehensive loss increased $224.4 million related to higher
unrealized losses on available for sale securities due to increased market rates
experienced in the second quarter of 2022.

Overview and Highlights for Six Months Ended June 30, 2022


Total net income of $70.6 million, or $1.98 diluted EPS, was reported during the
six months ended June 30, 2022 compared to net income of $57.5 million, or $2.02
diluted EPS, for the six months ended June 30, 2021. As noted above, the
acquisition of Select was completed in the fourth quarter of 2021 impacting the
comparisons with the prior year period. The main drivers to the increase in net
income are presented below. Refer also to additional discussion in the Results
of Operations section following.

•Net interest income for the six months ended June 30, 2022 was $155.1 million,
a 36.1% increase from the $114.0 million recorded in the six months ended June
30, 2021. The increase in net interest income from the prior year period was
driven by higher earning assets related to both the Select acquisition and
organic growth, offset somewhat by a reduction in NIM.

•For the six months ended June 30, 2022, we recorded a provision for credit
losses of $3.5 million based on CECL model assumption updates including updated
loss driver analyses normally performed in the first quarter of the year. A
reversal of the provision for unfunded commitments of $1.5 million was recorded
related to fluctuations in the levels and mix of outstanding loans commitments.
No provision for credit losses and a $1.9 million provision for unfunded
commitments was required in the comparable period of 2021.

•Noninterest income declined $5.5 million, or 13.1%, from the prior year period
primarily due to a $5.2 million decrease in mortgage banking income related to
lower levels of activity, a $3.5 million decrease in SBA consulting fees due to
lower PPP-related revenues, and a $2.6 million decrease in commissions on sales
of financial and insurance products due to the sale of substantially all of the
assets of our property and casualty insurance agency subsidiary in June 2021.
Reductions in noninterest income were substantially offset by higher levels of
transactions and number of accounts generating service charge income and
bankcard revenue.

•Noninterest expense increased $19.8 million, or 24.4%, for the six months ended
June 30, 2022 as compared to the same period in the prior year. Included in the
six months ended June 30, 2022 was $4.2 million in merger and acquisition
expenses primarily related to computer system conversion costs. The balance of
the increase in noninterest expenses was driven by higher operating expenses
resulting from the Select acquisition.

•Income tax expense increased $2.7 million relative to the higher pre-tax
income. The effective tax rates were 20.6% and 21.3% for the six months ended
June 30, 2022 and 2021, respectively. The lower effective tax rate for the six
months ended June 30, 2022 was related to higher tax exempt income in that
quarter relative to taxable income.

Impact of COVID-19


Our market areas and local economies continue to show signs of recovery from the
impact of the COVID-19 pandemic, However, the current pandemic is ongoing and
dynamic in nature, and there are many related uncertainties, including, among
other things, its severity and new variants that have and may continue to arise;
its ultimate duration and infection spikes that may occur; its impact on our
customers, employees and vendors; its impact on the financial services and
banking industry; actions that may be taken by governmental authorities and
other third parties in response to the COVID-19 pandemic; and its ongoing impact
on the economy as a whole.

We have not realized significant negative impact on our loan portfolio or asset
quality and all COVID-19 deferral status loans returned to regular payment
schedules in 2021. While the economic pressures and uncertainties arising from
the COVID-19 pandemic have resulted in, and may continue to result in, specific
changes in consumer and business spending and borrowing habits, we have seen
improvements in many industries in which we have loan exposure including
retail/strip shopping centers, hotels/lodging, restaurants, entertainment, and
commercial real estate.




                                                                         Page 40
--------------------------------------------------------------------------------

Index

Critical Accounting Policies and Estimates


The accounting principles we follow and our methods of applying these principles
conform with GAAP and with general practices followed by the banking industry.
Certain of these principles involve a significant amount of judgment and may
involve the use of estimates based on our best assumptions at the time of the
estimation. We have identified the accounting policies discussed below as being
more sensitive in terms of judgments and estimates taking into account their
overall potential impact to our consolidated financial statements.

Allowance for Credit Losses on Loans and Unfunded Commitments


The allowance for credit losses ("ACL") represents management's current estimate
of credit losses for the remaining estimated life of financial instruments. We
perform periodic and systematic detailed reviews of the loan portfolio to
identify trends and to assess the overall collectability of the portfolio. We
believe the accounting estimate related to the ACL is a "critical accounting
estimate" as: (1) changes in it can materially affect the provision for credit
losses and net income; (2) it requires management to predict borrowers'
likelihood or capacity to repay, including evaluation of inherently uncertain
future economic conditions; (3) the value of underlying collateral must be
estimated on collateral-dependent loans; (4) prepayment activity must be
projected to estimate the life of loans that often are shorter than contractual
terms; and (5) it requires estimation of a reasonable and supportable forecast
period for credit losses. Accordingly, this is a highly subjective process and
requires significant judgment since it is difficult to evaluate current and
future economic conditions in relation to an overall credit cycle and estimate
the timing and extent of loss events that are expected to occur prior to end of
a loan's estimated life.

Our ACL is assessed at each balance sheet date and adjustments are recorded in
the provision for credit losses. The ACL is estimated based on loan level
characteristics using historical loss rates, a reasonable and supportable
economic forecast, and assumptions of probability of default and loss given
default. Loan balances considered uncollectible are charged-off against the ACL.
There are many factors affecting the ACL, some of which are quantitative, while
others require qualitative judgment. Although management believes its process
for determining the ACL adequately considers all the potential factors that
could potentially result in credit losses, the process includes subjective
elements and is susceptible to significant change. To the extent actual outcomes
differ from management estimates, additional provision for credit losses could
be required that could adversely affect our earnings or financial position in
future periods.

Purchased credit deteriorated ("PCD") loans represent assets that are acquired
with evidence of more than insignificant credit quality deterioration since
origination as of the acquisition date. At acquisition, an allowance on PCD
assets is booked directly to the ACL. Any subsequent changes in the ACL on PCD
assets is recorded through the provision for credit losses.

We believe that the ACL is adequate to absorb the expected life of loan credit
losses on the portfolio of loans as of the balance sheet date. Actual losses
incurred may differ materially from our estimates.

We estimate expected credit losses on unfunded commitments to extend credit over
the contractual period in which we are exposed to credit risk on the underlying
commitments, unless the obligation is unconditionally cancellable. The allowance
for off-balance sheet credit exposures, which is included in "Other liabilities"
on the Consolidated Balance Sheets, is adjusted for as an increase or decrease
to the provision for unfunded commitments. The estimate includes consideration
of the likelihood that funding will occur and an estimate of expected credit
losses on commitments expected to be funded over its estimated life. The
methodology is based on a loss rate approach that starts with the probability of
funding based on historical experience. Similar to methodology discussed above
related to the loans receivable portfolio, adjustments are made to the
historical losses for current conditions and reasonable and supportable
forecast.

Goodwill and Other Intangible Assets


We believe that the accounting for goodwill and other intangible assets also
involves a higher degree of judgment than most other significant accounting
policies. Accounting Standards Codification 350-10 establishes standards for the
amortization of acquired intangible assets, generally over the estimated useful
life of the related assets, and impairment assessment of goodwill. At June 30,
2022, we had core deposit and other intangibles of $15.4 million subject to
amortization and $364.3 million of goodwill, which is not subject to
amortization.

Goodwill arising from business combinations represents the excess of the purchase price over the sum of the estimated fair values of the tangible and identifiable intangible assets acquired less the estimated fair value of the


                                                                         Page 41
--------------------------------------------------------------------------------

Index


liabilities assumed. Goodwill has an indefinite useful life and is evaluated for
impairment annually or more frequently if events and circumstances indicate that
the asset might be impaired. An impairment loss is recognized to the extent that
the carrying amount exceeds the asset's fair value. At each reporting date
between annual goodwill impairment tests, we consider potential indicators of
impairment. During 2022 there were no triggers warranting interim impairment
assessments and for the 2021 annual assessment, we concluded that it was more
likely than not that the fair value exceeded its carrying value.

The primary identifiable intangible asset we typically record in connection with
a whole bank or bank branch acquisition is the value of the core deposit
intangibles which represent the estimated value of the long-term deposit
relationships acquired in the transaction. Determining the amount of
identifiable intangible assets and their average lives involves multiple
assumptions and estimates and is typically determined by performing a discounted
cash flow analysis, which involves a combination of any or all of the following
assumptions: customer attrition/runoff, alternative funding costs, deposit
servicing costs, and discount rates. The core deposit intangibles are amortized
over the estimated useful lives of the deposit accounts based on a method that
we believe reasonably approximates the anticipated benefit stream from this
intangible. The estimated useful lives are periodically reviewed for
reasonableness and have generally been estimated to have a life ranging from
seven to ten years, with an accelerated rate of amortization. We review
identifiable intangible assets for impairment whenever events or changes in
circumstances indicate that the carrying value may not be recoverable. Our
policy is that an impairment loss is recognized, equal to the difference between
the asset's carrying amount and its fair value, if the sum of the expected
undiscounted future cash flows is less than the carrying amount of the asset.
Estimating future cash flows involves the use of multiple estimates and
assumptions, such as those listed above.

Current Accounting Matters

See Note 2 to the Consolidated Financial Statements for information about recently announced or adopted accounting standards.




                                                                         Page 42
--------------------------------------------------------------------------------
  Index

RESULTS OF OPERATIONS

Net Interest Income

Net interest income is our largest source of revenue and is the difference
between the interest earned on interest-earning assets (generally loans and
investment securities) and the interest expense incurred in connection with
interest-bearing liabilities (generally deposits and borrowed funds). Changes in
the net interest income are the result of changes in volume and the net interest
spread which affects NIM. Volume refers to the average dollar levels of
interest-earning assets and interest-bearing liabilities. Net interest spread
refers to the difference between the average yield on interest-earning assets
and the average cost of interest-bearing liabilities. NIM refers to net interest
income divided by average interest-earning assets and is influenced by the level
and relative mix of interest-earning assets and interest-bearing liabilities.
Net interest income is also influenced by external factors such as local
economic conditions, competition for loans and deposits, and market interest
rates.

Net interest income for the three months ended June 30, 2022 amounted to $78.3
million, an increase of $19.5 million, or 33.2%, from the $58.8 million recorded
in the second quarter of 2021. Net interest income on a tax-equivalent basis for
the three months ended June 30, 2022 amounted to $78.9 million, an increase of
$19.7 million, or 33.2%, from the $59.3 million recorded in the second quarter
of 2021. For internal purposes, we evaluate our NIM on a tax-equivalent basis by
adding the tax benefit realized from tax-exempt loans and securities to reported
interest income then dividing by total average earning assets. We believe that
analysis of NIM on a tax-equivalent basis is useful and appropriate because it
allows a comparison of net interest in different periods without taking into
account the different mix of taxable versus non-taxable loans and investments
that may have existed during those periods.

The following table presents an analysis of net interest income for the three months ended June 30, 2022 and 2021.


                                                                         Page 43
--------------------------------------------------------------------------------

Index

Average Balances and Net Interest Income Analysis

For the Three Months Ended June 30,

                                                                   2022                                                        2021
($ in thousands)                                                                      Interest                                                    Interest
                                              Average              Average             Earned             Average              Average             Earned
                                              Volume                 Rate              or Paid             Volume                Rate              or Paid
Assets
Loans (1) (2)                             $  6,149,174                 4.24  %       $ 65,077          $ 4,679,119                 4.48  %       $ 52,295
Taxable securities                           3,137,383                 1.71  %         13,385            2,157,475                 1.45  %          7,789
Non-taxable securities                         299,982                 1.48  %          1,104              131,692                 1.45  %            

474

Short-term investments, primarily              363,119                 0.97  %            881              418,321                 0.56  %            

581

interest-bearing cash
Total interest-earning assets                9,949,658                 3.24  %         80,447            7,386,607                 3.32  %         61,139

Cash and due from banks                        125,545                                                      85,742
Premises and equipment                         135,553                                                     123,172
Other assets                                   305,992                                                     370,260
Total assets                              $ 10,516,748                                                 $ 7,965,781

Liabilities
Interest-bearing checking                 $  1,541,768                 0.05  %       $    210          $ 1,278,969                 0.07  %       $    225
Money market deposits                        2,567,138                 0.11  %            731            1,776,344                 0.18  %            799
Savings deposits                               745,496                 0.06  %            106              582,081                 0.08  %            112
Time deposits >$100,000                        525,028                 0.29  %            378              526,706                 0.52  %            681
Other time deposits                            293,421                 0.22  %            160              218,463                 0.33  %            182
Total interest-bearing deposits              5,672,851                 0.11  %          1,585            4,382,563                 0.18  %          1,999
Borrowings                                      67,418                 3.52  %            592               61,312                 2.49  %            381
Total interest-bearing liabilities           5,740,269                 0.15  %          2,177            4,443,875                 0.21  %          

2,380


Noninterest-bearing checking                 3,664,764                                                   2,568,960
Other liabilities                               20,638                                                      58,968
Shareholders' equity                         1,091,077                                                     893,978
Total liabilities and
shareholders' equity                      $ 10,516,748                                                 $ 7,965,781

Net yield on interest-earning assets and
net interest income                                                    3.16  %       $ 78,270                                      3.19  %       $ 

58,759

Net yield on interest-earning assets and
net interest income - tax-equivalent (3)                               3.18  %       $ 78,939                                      3.22  %       $ 59,276

Interest rate spread                                                   3.09  %                                                     3.11  %

Average prime rate                                                     3.94  %                                                     3.25  %


(1)  Average loans include nonaccruing loans, the effect of which is to lower
the average rate shown. Interest earned includes recognized net loan fees,
including late fees, prepayment fees, and deferred loan fee amortization
(including deferred PPP fees), in the amounts of $1.3 million, and $2.2 million
for three months ended June 30, 2022 and 2021, respectively.
(2) Includes accretion of discount on acquired and SBA loans of $2.3 million and
$3.6 million for three months ended June 30, 2022 and 2021, respectively.
(3)  Includes tax-equivalent adjustments of $669,000 and $517,000 for three
months ended June 30, 2022 and 2021, respectively, to reflect the tax benefit
that we receive related to tax-exempt securities and tax-exempt loans, which
carry interest rates lower than similar taxable investments/loans due to their
tax exempt status. This amount has been computed assuming a 23% tax rate and is
reduced by the related nondeductible portion of interest expense.




                                                                         Page 44
--------------------------------------------------------------------------------

Index

Overall, as demonstrated in the table above, net interest income grew
$19.5 million for the three months ended June 30, 2022 from the comparable
period of the prior year. Higher earning asset volumes, from both organic growth
and the Select acquisition, drove the increase. Lower rates on interest-bearing
liabilities contributed to higher net interest income while lower yields on
interest-earning assets partially offset the increases.

•Average loan volumes for the three months ended June 30, 2022 were $1.5 billion
higher than the same period in 2021. Higher volumes were partially offset by
lower interest rates on loans related to loans originated during the low market
rate environment during 2021, resulting in an increase in loan interest income
of $12.8 million.

•Higher average volume of $1.1 billion on total securities resulted in an
increase of $6.2 million in interest income for the three months ended June 30,
2022 when compared to the same period in 2021. Also contributing to the increase
in interest income was the higher yields on the portfolio as reinvestment rates
increased between the periods.

•Lower interest rates paid on deposits drove a $0.4 million decrease in deposit
interest expense for the three months ended June 30, 2022 compared to the same
period in 2021. Reductions in rates on deposits more than offset the $1.3
billion increase in average volume for total interest-bearing deposits.

•The reduction in NIM was in large part the result of general low market rate
environment through most of 2021 and the shift of earning asset mix to lower
yielding investment securities from loans as excess liquidity was deployed to
securities.


Net interest income for the six months ended June 30, 2022 amounted to $155.1
million, an increase of $41.2 million, or 36.1%, from the $114.0 million
recorded in the six months ended June 30, 2021. Net interest income on a
tax-equivalent basis for the six months ended June 30, 2022 amounted to $156.5
million, an increase of $41.6 million, or 36.2%, from the $115.0 million
recorded in the six months ended June 30, 2021. For internal purposes, we
evaluate our NIM on a tax-equivalent basis by adding the tax benefit realized
from tax-exempt loans and securities to reported interest income then dividing
by total average earning assets. We believe that analysis of NIM on a
tax-equivalent basis is useful and appropriate because it allows a comparison of
net interest in different periods without taking into account the different mix
of taxable versus non-taxable loans and investments that may have existed during
those periods.

The following table presents an analysis of net interest income for the six months ended June 30, 2022 and 2021.


                                                                         Page 45
--------------------------------------------------------------------------------

Index

Average Balances and Net Interest Income Analysis

                                                                                For the Six Months Ended June 30,
                                                               2022                                                          2021
                                                                                   Interest                                                      Interest
                                          Average              Average              Earned             Average               Average              Earned
($ in thousands)                          Volume                 Rate              or Paid              Volume                Rate               or Paid
Assets
Loans (1) (2)                         $  6,100,246                 4.27  %       $ 129,279          $ 4,681,604                  4.45  %       $ 103,368
Taxable securities                       3,066,772                 1.75  %          26,595            1,906,549                  1.45  %          13,702
Non-taxable securities                     294,257                 1.47  %           2,152               99,622                  1.62  %            

797

Short-term investments, primarily          420,671                 0.73  %           1,530              456,066                  0.57  %          

1,281

interest-bearing cash
Total interest-earning assets            9,881,946                 3.26  %       $ 159,556            7,143,841                  3.36  %         119,148

Cash and due from banks                    120,691                                                       83,486
Premises and equipment                     135,768                                                      122,485
Other assets                               401,660                                                      373,472
Total assets                          $ 10,540,065                                                  $ 7,723,284

Liabilities

Interest bearing checking             $  1,558,950                 0.06  %       $     434          $ 1,241,662                  0.08  %       $     491
Money market deposits                    2,586,527                 0.12  %           1,584            1,713,714                  0.20  %           1,717
Savings deposits                           733,769                 0.06  %             214              560,550                  0.09  %             242
Time deposits >$100,000                    553,346                 0.29  %             808              540,865                  0.57  %           1,539
Other time deposits                        295,981                 0.22  %             316              221,239                  0.36  %             398
Total interest-bearing deposits          5,728,573                 0.12  %           3,356            4,278,030                  0.21  %           4,387
Borrowings                                  67,400                 3.15  %           1,052               61,356                  2.51  %             764
Total interest-bearing liabilities       5,795,973                 0.15  %           4,408            4,339,386                  0.24  %          

5,151


Noninterest bearing checking             3,550,741                                                    2,436,138
Other liabilities                           43,098                                                       57,895
Shareholders' equity                     1,150,253                                                      889,865
Total liabilities and
shareholders' equity                  $ 10,540,065                                                  $ 7,723,284

Net yield on interest-earning assets
and net interest income                                            3.17  %       $ 155,148                                       3.22  %       $ 

113,997

Net yield on interest-earning assets
and net interest income -
tax-equivalent (3)                                                 3.19  %       $ 156,514                                       3.24  %       $ 114,956

Interest rate spread                                               3.11  %                                                       3.12  %

Average prime rate                                                 3.62  %                                                       3.25  %


(1)  Average loans include nonaccruing loans, the effect of which is to lower
the average rate shown. Interest earned includes recognized net loan fees,
including late fees, prepayment fees, and deferred loan fee amortization
(including deferred PPP fees), in the amounts of $2.6 million, and $5.6 million
for six months ended June 30, 2022 and 2021, respectively.
(2) Includes accretion of discount on acquired and SBA loans of $4.6 million and
$5.0 million for six months ended June 30, 2022 and 2021, respectively.
(3)  Includes tax-equivalent adjustments of $1.4 million and $1.0 million for
six months ended June 30, 2022 and 2021, respectively, to reflect the tax
benefit that we receive related to tax-exempt securities and tax-exempt loans,
which carry interest rates lower than similar taxable investments/loans due to
their tax exempt status. This amount has been computed assuming a 23% tax rate
and is reduced by the related nondeductible portion of interest expense




                                                                         Page 46
--------------------------------------------------------------------------------

Index


Overall, as demonstrated in the table above, net interest income grew
$41.2 million for the six months ended June 30, 2022 from the comparable period
of the prior year. Higher earning asset volumes, from both organic growth and
the Select acquisition, and lower rates on interest-bearing liabilities, which
were partially offset by lower yields on interest-earning assets, drove the
increase.

•Average loan volumes for the six months ended June 30, 2022 were $1.4 billion
higher than the same period in 2021. Higher volumes were partially offset by
lower interest rates on loans related to the low market rate environment
experienced during 2021, resulting in an increase in loan interest income of
$25.9 million.

•Higher average volume of $1.4 billion on total securities resulted in an
increase of $14.2 million in interest income for the six months ended June 30,
2022 when compared to the same period in 2021. Also contributing to the increase
in interest income was the higher yields on the taxable portfolio as
reinvestment rates increased between the periods.

•Lower interest rates paid on deposits drove a $1.0 million decrease in deposit
interest expense for the six months ended June 30, 2022 compared to the same
period in 2021. Reductions in rates on deposits more than offset the $1.5
billion increase in average volume for total interest-bearing deposits.

•The reduction in NIM was in large part a result of a general low market rate
environment through most of 2021 and the shift of earning asset mix to lower
yielding investment securities from loans as excess liquidity was deployed to
securities.


Our NIM for all periods benefited from net accretion income, primarily associated with purchase accounting premiums/discounts associated with acquisitions. Presented in the table below is the amount of accretion which increased net interest income in each time period presented.


                                            Three Months Ended June 30,                        Six Months Ended June 30,
($ in thousands)                             2022                  2021                    2022                          2021
Interest income - increased by
accretion of loan discount on acquired
loans                                  $       1,545                 2,913                  3,216                         3,665
Interest income - increased by
accretion of loan discount on retained
SBA loans                                        730                   718                  1,397                         1,307
Total interest income impact                   2,275                 3,631                  4,613                         4,972
Interest expense - reduced by premium
amortization of deposits                         168                    11                    402                            27
Interest expense - increased by
discount accretion of borrowings                 (53)                  (44)                  (126)                          (88)
Total net interest expense impact                115                   (33)                   276                           (61)
Total impact on net interest income    $       2,390                 3,598                  4,889                         4,911


The decrease in loan discount accretion on purchased loans for both the three
months and the six months ended June 30, 2022 as compared to the same periods in
the prior year is related to accelerated accretion recorded in 2021 on the
payoffs of five former failed-bank loans. Generally the level of loan discount
accretion will decline each year due to the natural paydowns in acquired loan
portfolios. At June 30, 2022 and 2021, unaccreted loan discount on purchased
loans amounted to $14.0 million and $5.3 million, respectively.

In addition to the loan discount accretion recorded on acquired loans, we record
accretion on the discounts associated with the retained unguaranteed portions of
SBA loans sold in the secondary market. The level of SBA loan discount accretion
will vary relative to fluctuations in the SBA loan portfolio. At June 30, 2022
and 2021, unaccreted loan discount on SBA loans amounted to $5.4 million and
$7.0 million, respectively.

Amortization of net deferred loan fees also impacts interest income. During the
six months ended June 30, 2022, we amortized net deferred PPP fees of
$2.3 million as interest income compared to $5.7 million for the six months
ended June 30, 2021. At June 30, 2022, we had $284,000 in remaining deferred PPP
origination fees that will be recognized over the lives of the loans, with
accelerated amortization expected to result from the loan forgiveness process.

                                                                         Page 47
--------------------------------------------------------------------------------

Index

Provision for Credit Losses and Provision for Unfunded Commitments


The provisions for credit losses represents our current estimate of life of loan
credit losses in the loan portfolio and unfunded loan commitments. Our estimate
of credit losses is determined using a complex model that relies on reasonable
and supportable forecasts and historical loss information to determine the
balance of the ACL and resulting provision for credit losses. The provision for
unfunded commitments represents expected losses on unfunded loan commitments
that are expected to result in outstanding loan balances. The allowance for
unfunded commitments is included in "Other liabilities" in the Consolidated
Balance Sheets.

The amount of provision recorded in each period was the amount required such
that the total ACL reflected the appropriate balance as determined under CECL.
No provision for credit losses was recorded for the three months ended June 30,
2022 based on improving trends, and $3.5 million was recorded for the six months
ended June 30, 2022 based on updated economic forecasts and updated loss driver
analyses normally performed in the first quarter of the year. Also based on the
CECL model results and improving asset quality trends, no provision was required
for the three and six months ended June 30, 2021. No provision for unfunded
commitments was recorded for the three months ended June 30, 2022, and a
reversal provision of $1.5 million was recorded for the six months ended June
30, 2022, related primarily to the fluctuations in the levels and mix of
outstanding loan commitments. There was $1.9 million provision for unfunded
commitments for the three and six months ended June 30, 2021.

Additional discussion of our asset quality and credit metrics, which impact our provision for credit losses, is provided in the "Nonperforming Assets" and "Allowance for Credit Losses and Loan Loss Experience" sections following.

Noninterest Income


Our noninterest income amounted to $17.3 million and $21.4 million for the three
months ended June 30, 2022 and 2021, respectively, and $36.5 million and $42.0
million for the six months ended June 30, 2022 and 2021, respectively. Included
in noninterest income was nonrecurring amounts totaling $1.6 million and $1.5
million in other gains for the three months ended June 30, 2022 and 2021,
respectively, and $3.2 million and $ 1.5 million in other gains for the six
months ended June 30, 2022 and 2021, respectively. The following table presents
the primary components of noninterest income.

                                               For the Three Months Ended June 30,                     For the Six Months Ended June 30,
($ in thousands)                                   2022                    2021                     2022                               2021
Service charges on deposit accounts          $        3,700                  2,824                   7,241                              5,557
Other service charges and fees -
bankcard interchange income, net                      4,812                  4,409                   9,523                              7,933
Other service charges and fees - other                3,070                  2,087                   5,364                              4,085
Fees from presold mortgage loans                        454                  2,274                   1,575                              6,818
Commissions from sales of insurance
and financial products                                1,151                  2,466                   2,096                              4,656
SBA consulting fees                                     704                  2,187                   1,484                              4,951
SBA loan sale gains                                     841                  2,996                   4,102                              5,326
Bank-owned life insurance ("BOLI")
income                                                  942                    614                   1,918                              1,234
Other gains, net                                      1,590                  1,517                   3,212                              1,483
Noninterest income                           $       17,264                 21,374                  36,515                             42,043


Service charges on deposit accounts increased $0.9 million, or 31%, for the
three months ended June 30, 2022 as compared to the three months ended June 30,
2021, and increased $1.7 million for the six months ended June 30, 2022 compared
to the six months ended June 30, 2021. The increase was driven by the higher
number of new customers and transaction accounts generating fees from both
organic growth and the Select acquisition.

Other service charges and fees - bankcard interchange income, net represents
interchange income from debit and credit card transactions, net of associated
interchange expense, and increased $0.4 million, or 9%, for the three months
ended June 30, 2022 as compared to the prior year period, and increased
$1.6 million for the six months ended June 30, 2022 compared to the prior year
period. The growth in card usage by our customers is related to the higher
volume of outstanding cards giving rise to increased transaction volume as well
as customer payment preferences. Because the Company exceeded $10 billion in
total assets at December 31, 2021, it is expected that bankcard revenue will be
adversely impacted by the Durbin Amendment to the Dodd-Frank Wall Street Reform
and Consumer Protection Act of 2010 limit on debit card interchange fees
beginning July 1, 2022.

                                                                         Page 48
--------------------------------------------------------------------------------

Index


Other service charges and fees - other includes items such as SBA guarantee
servicing fees and related servicing rights amortization, ATM charges, wire
transfer fees, safety deposit box rentals, fees from sales of personalized
checks, and check cashing fees. The increase in this line item for the three
months ended June 30, 2022 compared to the three months ended June 30, 2021 of
$1.0 million, or 47%, and the increase of $1.3 million for the six months ended
June 30, 2022 compared to the prior year period, was primarily due to growth in
the number of accounts and related transaction activity, as well as the Bank's
deposit base increases.

Fees from presold mortgage loans amounted to $0.5 million for the three months
ended June 30, 2022, a decline of $1.8 million, or 80%, from the same time
period in 2021, and a $5.2 million decrease for the six months ended June 30,
2022 compared to the prior year period. The decrease was due to the general
increase in market interest rates and related decline in home mortgage
refinancings and new originations during 2022 as compared to the prior year.

Commissions from sales of insurance and financial products for the three months
ended June 30, 2022 decreased $1.3 million from the same period in 2021, and
decreased $2.6 million for the six months ended June 30, 2022 compared to the
prior year period. The decreases were due to the sale of the majority of the
assets of our property and casualty insurance subsidiary in June 2021.

SBA consulting fees decreased for the three months ended June 30, 2022, compared
to the same period in 2021 by $1.5 million, or 68%, which was directly related
to the wind-down of the PPP loan program and lower related revenues earned in
the current period. SBA consulting services decreased $3.5 million for the six
months ended June 30, 2022 compared to the prior year period.

SBA loan sale gains decreased $2.2 million, or 72%, for the three months ended
June 30, 2022 compared to the three months ended June 30, 2021 relating to the
timing of sales and the volume of originated loans available to be sold in each
period. SBA loan sale gains decreased $1.2 million for the six months ended June
30, 2022 compared to the prior year period.

Other gains, net for the three months and six months ended June 30, 2022 are
primarily related to death benefits realized on BOLI policies. Other gains, net
for the comparable periods of 2021 are primarily related to the sale of the the
majority of the assets of our property and casualty insurance subsidiary in June
2021.

Noninterest Expenses

Noninterest expenses totaled $49.4 million and $41.0 million for the three
months ended June 30, 2022 and 2021, respectively, and $100.9 million and $81.1
million for the six months ended June 30, 2022 and 2021, respectively. Included
in noninterest expense was nonrecurring merger and acquisition costs totaling
$0.7 million and $0.4 million for the three months ended June 30, 2022 and 2021,
respectively. Merger and acquisition costs totaled $4.2 million and $0.4 million
for the six months ended June 30, 2022 and 2021, respectively. The following
table presents the primary components of noninterest expense.

                                                                         Page 49
--------------------------------------------------------------------------------
  Index

                                       For the Three Months Ended June 30,                       For the Six Months Ended June 30,
($ in thousands)                           2022                    2021                      2022                                 2021
Salaries                            $        23,799                  21,187                   47,253                              41,318
Employee benefits                             6,310                   4,084                   11,888                               8,658
Total personnel expense                      30,109                  25,271                   59,141                              49,976
Occupancy expense                             3,122                   2,668                    6,506                               5,572
Equipment related expenses                    1,514                   1,053                    2,818                               2,098
Merger and acquisition expenses                 737                     411                    4,221                                 411
Amortization of intangible assets               953                     845                    1,970                               1,742
Credit card rewards and other
expenses                                        970                   1,116                    2,213                               2,192
Telephone and data lines                        855                     740                    1,790                               1,490
Software costs                                1,288                   1,502                    2,862                               2,709
Data processing expense                       1,920                   1,357                    4,022                               2,699
Advertising and marketing expense               884                     620                    1,795                               1,230
Foreclosed property gains, net                 (292)                   (173)                    (372)                                (16)
Non-credit losses                               488                     276                    1,090                                 461
Other operating expenses                      6,850                   5,299                   12,807                              10,486
Total                               $        49,398                  40,985                  100,863                              81,050


In general, the increase in noninterest expenses was driven by higher operating
expenses from personnel, locations, number of accounts, and higher level of
activity resulting from the Select acquisition completed in the fourth quarter
of 2021. Merger and acquisition expenses amounted to $4.2 million for the six
months ended June 30, 2022 and primarily related to core system conversion costs
incurred in the Select acquisition.

Total personnel expense increased $4.8 million, or 19%, for the three months
ended June 30, 2022 as compared to the three months ended June 30, 2021. Total
personnel expense increased $9.2 million for the six months ended June 30, 2022
compared to the prior year period. The increase for each period was a direct
result of the incremental increase in the number of associates from the Select
acquisition, combined with regular annual salary increases. Also contributing to
the increases were higher insurance claims and costs in the 2022 compared to the
prior year.

Income Taxes

We recorded income tax expense of $9.6 million for the three months ended June
30, 2022 and $7.9 million for the three months ended June 30, 2021. Our
effective tax rates declined to 20.7% from 21.3% for the three months ended
June 30, 2022 and 2021, respectively. The lower effective tax rate in the second
quarter of 2022 was related to higher tax-exempt income in that quarter relative
to taxable income.

We recorded income tax expense of $18.2 million and $15.6 million for the six
months ended June 30, 2022 and 2021, respectively. Our effective tax rates
declined to 20.6% from 21.3% for the six months ended June 30, 2022 and 2021,
respectively. The lower effective tax rate for the six months ended June 30,
2022 was related to higher tax-exempt income in the time period relative to
taxable income.

FINANCIAL CONDITION


Total assets at June 30, 2022 amounted to $10.6 billion, a 0.5% increase from
December 31, 2021. Total loans at June 30, 2022 amounted to $6.2 billion, a 2.7%
increase from December 31, 2021, and total deposits amounted to $9.4 billion, a
2.6% increase from December 31, 2021.

For the six months ended June 30, 2022, loans increased $161.5 million, or 2.7%,
related primarily to core growth partially offset by forgiveness of PPP loans.
We experienced organic growth in most of our loan categories, with commercial
real estate and 1-4 family first mortgage categories experiencing the largest
growth. The mix of our loan portfolio remained substantially the same at
June 30, 2022 compared to December 31, 2021. The majority of our real estate
loans were personal and commercial loans where real estate provides additional
security for the

                                                                         Page 50
--------------------------------------------------------------------------------

Index

loan. Note 4 to the consolidated financial statements presents additional detailed information regarding our mix of loans.


For the six months ended June 30, 2022, we continued to experience growth in our
deposit base, with total deposits increasing by $235.1 million, or 2.6%, from
December 31, 2021. Deposit growth was primarily in transaction accounts
(checking and money market products), which we believe to be related to our
ongoing deposit growth initiatives, as well as stimulus funds and changes in
customer behaviors remaining from the pandemic. We routinely engage in
activities designed to grow and retain deposits, such as (1) emphasizing
relationship banking to new and existing customers, where borrowers are
encouraged and normally expected to maintain deposit accounts with us, (2)
pricing deposits at rate levels that will attract and/or retain deposits, and
(3) continually working to identify and introduce new products that will attract
customers or enhance our appeal as a primary provider of financial services.

Nonperforming Assets

Nonperforming assets include nonaccrual loans, TDRs, loans past due 90 or more days and still accruing interest, and foreclosed real estate. Nonperforming assets are summarized as follows:



$ in thousands                                                 June 30, 2022            December 31, 2021
Nonperforming assets
Nonaccrual loans                                              $      28,715                        34,696
TDRs - accruing                                                      11,771                        13,866
Accruing loans >90 days past due                                          -                         1,004
Total nonperforming loans                                            40,486                        49,566
Foreclosed real estate                                                  658                         3,071
Total nonperforming assets                                    $      41,144                        52,637

Asset Quality Ratios
Nonaccrual loans to total loans                                        0.46  %                       0.57  %
Nonperforming loans to total loans                                     0.65  %                       0.82  %

Nonperforming assets to total loans and foreclosed properties

                                                             0.66  %                       0.87  %
Nonperforming assets to total assets                                   0.39  %                       0.50  %
Allowance for credit losses to nonaccrual loans                      202.99  %                     158.96  %




As shown in the table above, nonperforming assets decreased from December 31,
2021 to June 30, 2022, with improvements noted in all categories. At June 30,
2022, total nonaccrual loans amounted to $28.7 million, compared to $34.7
million at December 31, 2021. "Real estate-mortgage-commercial and other" is the
largest category of nonaccrual loans, at $11.9 million, or 42%, of total
nonaccrual loans, followed by "Commercial, financial, and agricultural" at $11.4
million, or 40%, of total nonaccrual loans. Included in those categories are
nonaccrual SBA loans totaling $15.8 million at June 30, 2022, or 55%, of total
nonaccrual loans, that have $6.2 million in guarantees from the SBA.

TDRs are accruing loans for which we have granted concessions to the borrower as
a result of the borrower's financial difficulties. At June 30, 2022, total
accruing TDRs amounted to $11.8 million, compared to $13.9 million at
December 31, 2021, with the decrease being attributed to three large commercial
TDRs paying off during the period.

As reflected in Note 4 to the financial statements, total classified loans declined 11.1% to $49.8 million at June 30, 2022 compared to $56.0 million at December 31, 2021. Special mention loans decreased from $43.1 million at December 31, 2021 to $36.2 million at June 30, 2022. The majority of the improvements were in the commercial real estate and 1-4 family mortgage categories.


Total foreclosed real estate amounted to $0.7 million at June 30, 2022 and $3.1
million at December 31, 2021. Our foreclosed property balances have generally
been decreasing as a result of sales activity during the periods and favorable
overall asset quality. During the six months ended June 30, 2022, we recorded
sales of six foreclosed

                                                                         Page 51
--------------------------------------------------------------------------------

Index


properties partially offset by the addition of one foreclosed property. We
believe that the fair values of foreclosed real estate, less estimated costs to
sell, equal or exceed their respective carrying values at the dates presented.
The following table presents the detail of all of our foreclosed real estate at
each period end.

($ in thousands)                     At June 30, 2022       At December 31, 2021
Vacant land and farmland            $             103                 104
1-4 family residential properties                 555               1,231
Commercial real estate                              -               1,736
Total foreclosed real estate        $             658               3,071


Allowance for Credit Losses and Loan Loss Experience


Our ACL is based on the total amount of loan losses that are expected over the
remaining life of the loan portfolio. Our estimate of credit losses on loans is
determined using a complex model that relies on reasonable and supportable
forecasts and historical loss information to determine the balance of the ACL
and resulting provision for credit losses. The ACL is measured on a collective
pool basis when similar risk characteristics exist based primarily on discounted
cash flows computed for each loan in a pool based on its individual
characteristics. When we determine that foreclosure is probable or when the
borrower is experiencing financial difficulty and repayment is expected to be
provided substantially through the operation or sale of the collateral, expected
credit losses are based on the fair value of the collateral at the reporting
date, adjusted for selling costs as appropriate. We have reviewed the collateral
for our nonperforming assets, including nonaccrual loans, and have included this
review among the factors considered in the evaluation of the ACL.

We have no foreign loans and few agricultural loans, and do not engage in
significant lease financing or highly leveraged transactions. Commercial loans
are diversified among a variety of industries. The majority of our real estate
loans are primarily personal and commercial loans where real estate provides
additional security for the loan. Collateral for virtually all of these loans is
located within our principal market area.

For the six months ended June 30, 2022, we recorded a provision for credit
losses of $3.5 million based on our CECL model assumption updates and the
recalibration of the model to include the historical loss rates from the Select
acquired portfolio. A reversal of the provision for unfunded commitments of $1.5
million was recorded for that period related to fluctuations in the levels and
mix of outstanding loans commitments. For the comparable period of 2021, based
on our loan portfolio mix and economic forecast updates, no provision for credit
losses and a $1.9 million provision for unfunded commitments were required.

For the periods indicated, the following table summarizes our balances of loans
outstanding, average loans outstanding, ACL, charge-offs and recoveries, and key
ratios.

                                                                         Page 52
--------------------------------------------------------------------------------

Index

Loan Ratios, Loss and Recovery Experience

                                                                                   Twelve Months
                                                       Six Months Ended         Ended December 31,           Six Months Ended
($ in thousands)                                        June 30, 2022                  2021                   June 30, 2021
Loans outstanding at end of period                    $   6,243,170                     6,081,715                  4,782,064
Average amount of loans outstanding                       6,100,246                     5,018,391                  4,681,604
Allowance for credit losses, at period end                   82,181                        78,789                     65,022

Total charge-offs                                            (2,803)                       (7,602)                    (4,448)
Total recoveries                                              2,695                         4,922                      2,507
Net charge-offs                                       $        (108)                       (2,680)                    (1,941)

Ratios:
Net charge-offs as a percent of average loans
(annualized)                                                   0.00    %                     0.05  %                    0.08  %

Allowance for credit losses as a percent of loans at end of period

                                                  1.32    %                     1.30  %                    1.36  %
Recoveries of loans previously charged-off as a
percent of loans charged-off                                  96.15    %                    64.75  %                   56.36  %



In addition to the ACL on loans, we maintain an allowance for lending-related
commitments such as unfunded loan commitments. We estimate expected credit
losses associated with these commitments over the contractual period in which we
are exposed to credit risk via a contractual obligation to extend credit, unless
that obligation is unconditionally cancellable. The allowance for
lending-related commitments on off-balance sheet credit exposures is adjusted as
a provision for unfunded commitments expense. The estimate includes
consideration of the likelihood that funding will occur and an estimate of
expected credit losses on commitments expected to be funded over its estimated
life. The allowance for unfunded commitments of $12.0 million and $13.5 million
at June 30, 2022 and December 31, 2021, respectively, is classified on the
balance sheet within "Other liabilities". We recorded a reversal provision for
credit losses on unfunded commitments of $1.5 million during the six months
ended June 30, 2022 primarily relating to the fluctuations in the levels and mix
of outstanding loan commitments.

We believe the ACL is adequate at each period end presented. It must be
emphasized, however, that the determination of the allowances using our
procedures and methods rests upon various judgments and assumptions about
economic conditions and other factors affecting loans. No assurance can be given
that we will not in any particular period sustain loan losses that are sizable
in relation to the amounts reserved or that subsequent evaluations of the loan
portfolio, in light of conditions and factors then prevailing, will not require
significant changes in the ACL or future charges to earnings. See "Critical
Accounting Policies - Allowance for Credit Losses on Loans and Unfunded
Commitments" in Note 1 to the 2021 Annual Report on Form 10-K filed with the SEC
for more information.

In addition, various regulatory agencies, as an integral part of their
examination process, periodically review our ACL and value of other real estate.
Such agencies may require us to recognize adjustments to the allowance or the
carrying value of other real estate based on their judgments about information
available at the time of their examinations.

Liquidity, Commitments, and Contingencies


Our liquidity is determined by our ability to convert assets to cash or acquire
alternative sources of funds to meet the needs of our customers who are
withdrawing or borrowing funds, and to maintain required reserve levels, pay
expenses and operate the Company on an ongoing basis. Our primary liquidity
sources are net income from operations, cash and due from banks, federal funds
sold and other short-term investments. Our securities portfolio is comprised
almost entirely of readily marketable securities, which could also be sold to
provide cash. Since the beginning of the COVID-19 pandemic in early 2020, we
have seen our liquidity levels increase, with increases in deposits account
balances leading to higher cash and investment securities levels.

In addition to internally generated liquidity sources, we have the ability to
obtain borrowings under: 1) an approximately $858 million line of credit with
the FHLB (of which $1.9 million and $2.0 million were outstanding at June 30,
2022 and December 31, 2021, respectively); 2) a $150 million federal funds line
with a correspondent bank

                                                                         Page 53
--------------------------------------------------------------------------------

Index


(of which none was outstanding at June 30, 2022 or December 31, 2021); and 3) an
approximately $169 million line of credit through the Federal Reserve Bank of
Richmond's discount window (of which none was outstanding at June 30, 2022 or
December 31, 2021). Unused and available lines of credit amounted to $1.2
billion at June 30, 2022.

Our overall liquidity is essentially the same as at December 31, 2021 with our
liquid assets (cash and securities) as a percentage of our total deposits and
borrowings at 30.5% at June 30, 2022. We believe our liquidity sources,
including unused lines of credit, are at an acceptable level and remain adequate
to meet our operating needs in the foreseeable future.

The amount and timing of our contractual obligations and commercial commitments
has not changed materially since December 31, 2021, detail of which is presented
in the Contractual Obligations and Other Commercial Commitments table of our
2021 Annual Report on Form 10-K. In addition, we are not involved in any legal
proceedings that, in our opinion, could have a material effect on our
consolidated financial position.

Off-Balance Sheet Arrangements and Derivative Financial Instruments


Off-balance sheet arrangements include transactions, agreements, or other
contractual arrangements pursuant to which we have obligations or provide
guarantees on behalf of an unconsolidated entity. We have no off-balance sheet
arrangements of this kind other than letters of credit and repayment guarantees
associated with our trust preferred securities.

Derivative financial instruments include futures, forwards, interest rate swaps,
options contracts, and other financial instruments with similar characteristics.
We have not engaged in significant derivative activities through June 30, 2022,
and have no current plans to do so.


Capital Resources


The Company is regulated by the FRB and is subject to the securities
registration and public reporting regulations of the SEC. Our banking
subsidiary, First Bank, is also regulated by the FRB and the North Carolina
Office of the Commissioner of Banks. We must comply with regulatory capital
requirements established by the FRB. Failure to meet minimum capital
requirements can initiate certain mandatory, and possibly additional
discretionary, actions by regulators that, if undertaken, could have a direct
material effect on our financial statements. We are not aware of any
recommendations of regulatory authorities or otherwise which, if they were to be
implemented, would have a material effect on our liquidity, capital resources,
or operations.

Under Basel III standards and capital adequacy guidelines and the regulatory
framework for prompt corrective action, we must meet specific capital guidelines
that involve quantitative measures of our assets, liabilities, and certain
off-balance sheet items as calculated under regulatory accounting practices. Our
capital amounts and classification are also subject to qualitative judgments by
the regulators about components, risk weightings, and other factors.

The capital standards require us to maintain minimum ratios of "Common Equity
Tier 1" capital to total risk-weighted assets, "Tier 1" capital to total
risk-weighted assets, and total capital to risk-weighted assets of 4.50%, 6.00%
and 8.00%, respectively. Common Equity Tier 1 capital is comprised of common
stock and related surplus, plus retained earnings, and is reduced by goodwill
and other intangible assets, net of associated deferred tax liabilities. Tier 1
capital is comprised of Common Equity Tier 1 capital plus Additional Tier 1
Capital, which includes non-cumulative perpetual preferred stock and trust
preferred securities. Total capital is comprised of Tier 1 capital plus certain
adjustments, the largest of which is our ACL. Risk-weighted assets refer to our
on- and off-balance sheet exposures, adjusted for their related risk levels
using formulas set forth in FRB regulations.

In addition to the risk-based capital requirements described above, we are
subject to a leverage capital requirement, which calls for a minimum ratio of
Tier 1 capital (as defined above) to quarterly average total assets of 3.00% to
5.00%, depending upon the institution's composite ratings as determined by its
regulators. The FRB has not advised us of any requirement specifically
applicable to us.

At June 30, 2022, our capital ratios exceeded the regulatory minimum ratios discussed above. The following table presents the capital ratios for the Company and the regulatory minimums discussed above for the periods indicated.


                                                                         Page 54
--------------------------------------------------------------------------------

Index


                                                                   June 30, 2022           December 31, 2021
Risk-based capital ratios:
Common equity Tier 1 to Tier 1 risk weighted assets                        12.90  %                  12.53  %
Minimum required Common Equity Tier 1 capital                               7.00  %                   7.00  %

Tier I capital to Tier 1 risk weighted assets                              13.76  %                  13.42  %
Minimum required Tier 1 capital                                             8.50  %                   8.50  %

Total risk-based capital to Tier II risk weighted assets                   15.01  %                  14.67  %
Minimum required total risk-based capital                                  10.50  %                  10.50  %

Leverage capital ratio:
Tier 1 capital to quarterly average total assets                            9.95  %                   9.39  %
Minimum required Tier 1 leverage capital                                    4.00  %                   4.00  %


First Bank is also subject to capital requirements that do not vary materially
from the Company's capital ratios presented above. At June 30, 2022, First Bank
exceeded the minimum ratios established by the regulatory authorities.

© Edgar Online, source Glimpses

All news about FIRST BANCORP
09/21First Bancorp Keeps Quarterly Dividend at $0.34 per Share, Payable Oct. 21 to Sharehold..
MT
09/19SECTOR UPDATE : Financial Stocks Finding Late Support in Monday Markets
MT
09/19SECTOR UPDATE : Financial Stocks Posting Modest Gains Monday
MT
09/15First Bancorp Keeps Quarterly Dividend at $0.22 a Share, Payable Oct. 25 to Shareholder..
MT
09/15FIRST BANCORP /NC/ : Other Events (form 8-K)
AQ
09/15First Bancorp Announces Cash Dividend
PR
09/15First Bancorp Declares Cash Dividend, Payable on October 25, 2022
CI
09/15Republic First Bancorp Starts Strategic Review; Shares Soar
MT
09/15Republic First Bancorp Starts Strategic Review; Shares Rise
MT
08/24First bank launches book club to bring authors, books to children
PR
More news
Analyst Recommendations on FIRST BANCORP
More recommendations