ex99-1.htm

TROY, N.C. – First Bancorp (NASDAQ - FBNC), the parent company of First Bank, announced today first quarter net income available to common shareholders of $3,140,000 compared to $5,529,000 reported in the first quarter of 2008. Earnings per diluted common share were $0.19 in the first quarter of 2009 compared to $0.38 in the first quarter of 2008. The lower quarterly earnings were caused primarily by higher loan losses that are largely attributable to the recessionary economy. The Company also recorded preferred stock dividends and accretion related to its issuance of preferred stock to the U.S. Treasury, which reduced earnings per diluted common share.

The Company’s net interest margin (tax-equivalent net interest income divided by average earnings assets) in the first quarter of 2009 was 3.68%, an 11 basis point decline from the 3.79% margin realized in the first quarter of 2008 and a two basis point decline from the 3.70% margin realized in the fourth quarter of 2008. The Company’s net interest margin has been negatively impacted by the Federal Reserve lowering interest rates throughout 2008. When interest rates are lowered, the Company’s net interest margin declines, at least temporarily, as most of the Company’s adjustable rate loans reprice downward immediately, while rates on the Company’s customer time deposits are fixed, and thus do not adjust downward until they mature. Assuming a flat interest rate environment for the remainder of 2009, the Company expects its net interest margin to gradually increase as it renews maturing time deposits at lower interest rates.

Although the Company has no subprime loan exposure, the current economic environment has resulted in an increase in the Company’s loan losses and classified assets, which has led to a higher provision for loan losses. The Company’s provision for loan losses amounted to $4,485,000 in the first quarter of 2009 compared to $1,533,000 in the first quarter of 2008. The Company’s ratio of annualized net charge-offs to average loans was

Although the Company’s asset quality ratios discussed above reflect unfavorable trends, they compare favorably to those typical of the Company’s peers based on public information available. The table below shows how the Company’s ratios compare to data reported by the Federal Reserve for all bank holding companies with between $1 billion and $3 billion in assets at December 31, 2008 (the most recent information available):

Noninterest income amounted to $4.7 million for the first quarter of 2009, an 8.6% decrease from the first quarter of 2008. The decrease was caused primarily by a nonrecurring gain of $306,000 recorded in the first quarter of 2008 related to the VISA initial public offering that occurred in March 2008, which is included in “Other gains” in the accompanying table. The Company was a member/owner of VISA and received a portion of VISA’s offering proceeds.

The $4.7 million in noninterest income recorded in the first quarter of 2009 was a decrease from $5.0 million recorded in the fourth quarter of 2008. This decline was caused primarily by a lower level of service charges on deposits accounts. Nonsufficient fund charges to overdrawn customers declined by $0.4 million as a result of a lower occurrence of overdrawn accounts.

Noninterest expenses amounted to $15.9 million in the first quarter of 2009, a 9.2% increase over 2008. A majority of this increase is attributable to the Company’s growth, including the April 1, 2008 acquisition of Great Pee Dee Bancorp. Additionally, the Company recorded FDIC insurance expense of $756,000 in the first quarter of 2009 compared to $240,000 in the first quarter of 2008 as a result of the FDIC increasing its premium rates in order to replenish its reserves. The Company also recorded pension expense amounting to $897,000 in the first quarter of 2009 compared to $606,000 in the first quarter of 2008. The Company’s pension expense increased in 2009 primarily as a result of investment losses experienced by the pension plan’s assets in 2008. Partially offsetting the expense increases was a $1.0 million reduction in bonus accruals as a result of the Company suspending its annual incentive plan program due to the current earnings environment.

The $15.9 million in noninterest expense recorded in the first quarter of 2009 was a decrease from $16.1 million recorded in the fourth quarter of 2008. Within the line item “personnel expense,” salaries expense decreased by $0.6 million, while employee benefits increased by approximately the same amount. The decrease in salaries expense was primarily a result of the Company freezing salaries and suspending its annual incentive plan program, while the primary reason for the increase in employee benefits relates to the higher pension plan expense.

On January 9, 2009, the Company completed the sale of $65 million of preferred stock to the U.S. Treasury Department under the Capital Purchase Program. The preferred stock issued to the Treasury pays dividends at a rate of 5% for the first five years and 9% thereafter. As part of the program, the Company also issued warrants that give the Treasury the option for the next ten years to purchase a total of 616,038 shares of First Bancorp common stock at an exercise price of $15.82. (For further information regarding the Capital Purchase Program, see the Company’s 2008 Annual Report on Form 10-K.)

Total assets at March 31, 2009 amounted to $2.7 billion, 13.1% higher than a year earlier. Total loans at March 31, 2009 amounted to $2.2 billion, a 13.1% increase from a year earlier, and total deposits amounted to $2.1 billion at March 31, 2009, an 11.3% increase from a year earlier. Approximately two-thirds of the balance sheet growth relates to the April 1, 2008 acquisition of Great Pee Dee.

During the first quarter of 2009, the Company experienced a $24 million decrease in loans outstanding and a $64 million increase in deposits. The decline in loans was due primarily to lower loan demand in this recessionary economy. The Company is actively seeking to make new loans in order to offset normal principal reductions, as well as to grow its customer base. During the first quarter of 2009, the Company originated approximately $96 million in new loans (excluding renewals) but received principal paydowns from existing loans that more than offset this new growth. Deposit growth was strong in the first quarter due to an internal emphasis to grow deposits, with the Company also benefiting from a “flight to quality” to sound banks like First Bank.

Jerry L. Ocheltree, President and CEO of First Bancorp, commented on the quarter’s results, “While our earnings were negatively impacted by a higher provision for loan losses, we continue to be a profitable and sound institution. I am encouraged by underlying trends that position us well for the future. The spreads we have been realizing on new and renewing loans and deposits have been steadily improving, which should enhance the net interest margin expansion we anticipate over the remainder of 2009. Also, the high growth in deposits we have achieved recently further strengthens the value of our franchise by providing a relatively low cost funding source for the future.”

On January 9, 2009, the Company completed the sale of $65 million of preferred stock to the U.S. Treasury Department under the Treasury’s Capital Purchase Program. The preferred stock issued to the Treasury will pay a dividend of 5% for the first five years and 9% thereafter. As part of the program, the Treasury also received warrants that give the Treasury the option for the next ten years to purchase a total of 616,308 shares of First Bancorp common stock at an exercise price of $15.82.

First Bancorp is a bank holding company headquartered in Troy, North Carolina with total assets of approximately $2.7 billion. Its principal activity is the ownership and operation of First Bank, a state-chartered community bank that operates 75 branches, with 63 branches operating in a 21-county market area in the central piedmont and coastal regions of North Carolina, 7 branches in South Carolina (Cheraw, Dillon, Florence, and Latta), and 5 branches in Virginia (Abingdon, Dublin, Fort Chiswell, Radford, and Wytheville), where First Bank does business as First Bank of Virginia. First Bank also has a loan production office in Blacksburg, Virginia. First Bancorp’s common stock is traded on the NASDAQ Global Select Market under the symbol “FBNC.”

This press release contains statements that could be deemed forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995, which statements are inherently subject to risks and uncertainties. Forward-looking statements are statements that include projections, predictions, expectations or beliefs about future events or results or otherwise are not statements of historical fact. Such statements are often characterized by the use of qualifying words (and their derivatives) such as “expect,” “believe,” “estimate,” “plan,” “project,” “anticipate,” or other statements concerning opinions or judgments of the Company and its management about future events. Factors that could influence the accuracy of such forward-looking statements include, but are not limited to, the financial success or changing strategies of the Company’s customers, the Company’s level of success in integrating acquisitions, actions of government regulators, the level of market interest rates, and general economic conditions. For additional information about the factors that could affect the matters discussed in this paragraph, see the “Risk Factors” section of the Company’s most recent report on Form 10-K.

	Three Months Ended March 31,					Percent
($ in thousands except per share data - unaudited)	2009			2008		Change

INCOME STATEMENT

Interest income
Interest and fees on loans	$	32,552			33,939
Interest on investment securities		1,932			1,925
Other interest income		39			443
Total interest income		34,523			36,307		-4.9	%
Interest expense
Interest on deposits		11,425			14,400
Other, primarily borrowings		988			2,143
Total interest expense		12,413			16,543		-25.0	%
Net interest income		22,110			19,764		11.9	%
Provision for loan losses		4,485			1,533		192.6	%
Net interest income after provision for loan losses		17,625			18,231		-3.3	%
Noninterest income
Service charges on deposit accounts		2,974			3,076
Other service charges, commissions, and fees		1,121			1,187
Fees from presold mortgages		159			198
Commissions from financial product sales		494			399
Data processing fees		29			50
Securities gains (losses)		(63	)	─
Other gains		32			285
Total noninterest income		4,746			5,195		-8.6	%
Noninterest expenses
Personnel expense		8,826			8,554
Occupancy and equipment expense		2,069			1,987
Intangibles amortization		98			79
Other operating expenses		4,944			3,971
Total noninterest expenses		15,937			14,591		9.2	%
Income before income taxes		6,434			8,835		-27.2	%
Income taxes		2,353			3,306		-28.8	%
Net income		4,081			5,529		-26.2	%

Preferred stock dividends and accretion		941		─

Net income available to common shareholders	$	3,140			5,529		-43.2	%


Earnings per common share – basic	$	0.19			0.38		-50.0	%
Earnings per common share – diluted		0.19			0.38		-50.0	%

ADDITIONAL INCOME STATEMENT INFORMATION

Net interest income, as reported	$	22,110			19,764
Tax-equivalent adjustment (1)		163			164
Net interest income, tax-equivalent	$	22,273			19,928		11.8	%

	Three Months Ended March 31,						Percent
PERFORMANCE RATIOS (annualized)	2009			2008			Change
Return on average assets (1)		0.49	%		0.99	%
Return on average common equity (2)		5.60	%		12.45	%
Net interest margin - tax equivalent (3)		3.68	%		3.79	%
Efficiency ratio - tax equivalent (3) (4)		58.98	%		58.08	%
Net charge-offs to average loans		0.34	%		0.18	%
Nonperforming assets to total assets (period end)		1.66	%		0.51	%

COMMON SHARE DATA
Cash dividends declared - common	$	0.08			0.19			-57.9	%
Stated book value - common		13.53			12.37			9.4	%
Tangible book value - common		9.46			8.83			7.1	%
Common shares outstanding at end of period		16,620,896			14,387,599
Weighted average common shares outstanding - basic		16,608,625			14,380,599
Weighted average common shares outstanding - diluted		16,617,732			14,446,357

CAPITAL RATIOS
Tangible equity to tangible assets		8.30	%		5.45	%
Tangible common equity to tangible assets		5.99	%		5.45	%
Tier I leverage ratio		10.71	%		7.95	%
Tier I risk-based capital ratio		12.89	%		9.10	%
Total risk-based capital ratio		14.15	%		10.24	%

AVERAGE BALANCES ($ in thousands)
Total assets	$	2,616,890			2,254,422			16.1	%
Loans		2,202,782			1,915,328			15.0	%
Earning assets		2,452,479			2,113,394			16.0	%
Deposits		2,106,424			1,858,237			13.4	%
Interest-bearing liabilities		2,080,757			1,827,163			13.9	%
Shareholders’ equity		282,515			178,597			58.2	%

	For the Three Months Ended
INCOME STATEMENT	March 31, 2009		December 31, 2008		September 30, 2008		June 30, 2008		March 31, 2008

Net interest income - tax equivalent (1)	$	22,273		22,675		22,950		21,664		19,928
Taxable equivalent adjustment (1)		163		166		165		163		164
Net interest income		22,110		22,509		22,785		21,501		19,764
Provision for loan losses		4,485		3,437		2,851		2,059		1,533
Noninterest income		4,746		4,952		5,360		5,150		5,195
Noninterest expense		15,937		16,067		15,396		16,157		14,591
Income before income taxes		6,434		7,957		9,898		8,435		8,835
Income taxes		2,353		2,956		3,701		3,157		3,306
Net income		4,081		5,001		6,197		5,278		5,529
Preferred stock dividends and accretion		941		−		−		−		−
Net income available to common shareholders		3,140		5,001		6,197		5,278		5,529

Earnings per common share – basic		0.19		0.30		0.38		0.32		0.38
Earnings per common share – diluted		0.19		0.30		0.37		0.32		0.38

PERIOD END BALANCES ($ in thousands)	March 31, 2009		December 31, 2008		March 31, 2008		One Year Change
Assets	$	2,691,550		2,750,567		2,380,134		13.1	%
Securities		184,193		187,183		153,018		20.4	%
Loans		2,187,466		2,211,315		1,933,855		13.1	%
Allowance for loan losses		31,912		29,256		21,992		45.1	%
Intangible assets		67,682		67,780		50,941		32.9	%
Deposits		2,139,119		2,074,791		1,921,443		11.3	%
Borrowings		182,159		367,275		212,394		-14.2	%
Shareholders’ equity		285,442		219,868		177,981		60.4	%

	For the Three Months Ended
YIELD INFORMATION	March 31, 2009			December 31, 2008			September 30, 2008			June 30, 2008			March 31, 2008

Yield on loans		5.99	%		6.22	%		6.44	%		6.53	%		7.13	%
Yield on securities - tax equivalent (1)		4.80	%		4.63	%		4.89	%		5.39	%		5.71	%
Yield on other earning assets		0.22	%		0.74	%		2.18	%		2.72	%		3.49	%
Yield on all interest earning assets		5.74	%		6.00	%		6.26	%		6.38	%		6.94	%

Rate on interest bearing deposits		2.47	%		2.72	%		2.84	%		3.10	%		3.56	%
Rate on other interest bearing liabilities		1.97	%		2.22	%		2.92	%		3.05	%		4.35	%
Rate on all interest bearing liabilities		2.42	%		2.64	%		2.85	%		3.09	%		3.64	%

Interest rate spread - tax equivalent (1)		3.32	%		3.36	%		3.41	%		3.29	%		3.30	%
Net interest margin - tax equivalent (2)		3.68	%		3.70	%		3.79	%		3.71	%		3.79	%

Average prime rate		3.25	%		4.06	%		5.00	%		5.08	%		6.22	%




ASSET QUALITY DATA ($ in thousands)	March 31, 2009			December 31, 2008			September 30, 2008			June 30, 2008			March 31, 2008

Nonaccrual loans	$	35,296			26,600			19,558			17,588			8,799
Restructured loans		3,995			3,995			3,995			3,995			5
Accruing loans > 90 days past due		-			-			-			-			-
Total nonperforming loans		39,291			30,595			23,553			21,583			8,804
Other real estate		5,428			4,832			4,565			2,934			3,289
Total nonperforming assets	$	44,719			35,427			28,118			24,517			12,093
Net charge-offs to average loans - annualized		0.34	%		0.38	%		0.18	%		0.22	%		0.18	%
Nonperforming loans to total loans		1.80	%		1.38	%		1.06	%		1.00	%		0.46	%
Nonperforming assets to total assets		1.66	%		1.29	%		1.04	%		0.94	%		0.51	%
Allowance for loan losses to total loans		1.46	%		1.32	%		1.26	%		1.20	%		1.14	%

For Immediate Release:	For More Information,
April 29, 2009	Contact: Jerry L. Ocheltree
	910-576-6171

	First Bancorp	Peer Average
Nonaccrual loans as percent of total loans at December 31, 2008	1.20%	2.20%
Net charge-offs to average loans for 2008	0.24%	0.66%