10-Q 1 form10q-15809_fbnc.htm 10-Q

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2016

 

 

 

Commission File Number 0-15572

 

                              FIRST BANCORP                              

(Exact Name of Registrant as Specified in its Charter)

 

North Carolina   56-1421916
(State or Other Jurisdiction of   (I.R.S. Employer
Incorporation or Organization)   Identification Number)
     
300 SW Broad St., Southern Pines, North Carolina   28387
(Address of Principal Executive Offices)   (Zip Code)
     
(Registrant's telephone number, including area code)   (910)   246-2500

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x YES      o NO

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x YES      o NO

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one)

 

o Large Accelerated Filer       x Accelerated Filer       o Non-Accelerated Filer       o Smaller Reporting Company

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o YES       x NO

 

The number of shares of the registrant's Common Stock outstanding on April 30, 2016 was 19,870,270.

 

 

 

 

INDEX

FIRST BANCORP AND SUBSIDIARIES

 

 

  Page
   
Part I.  Financial Information  
   
Item 1 - Financial Statements  
   
Consolidated Balance Sheets - March 31, 2016 and March 31, 2015 (With Comparative Amounts at December 31, 2015) 4
   
Consolidated Statements of Income - For the Periods Ended March 31, 2016 and 2015 5
   
Consolidated Statements of Comprehensive Income - For the Periods Ended March 31, 2016 and 2015 6
   
Consolidated Statements of Shareholders’ Equity - For the Periods Ended March 31, 2016 and 2015 7
   
Consolidated Statements of Cash Flows - For the Periods Ended March 31, 2016 and 2015 8
   
Notes to Consolidated Financial Statements 9
   
Item 2 – Management’s Discussion and Analysis of Consolidated Results of Operations and Financial Condition 41
   
Item 3 – Quantitative and Qualitative Disclosures About Market Risk 63
   
Item 4 – Controls and Procedures 65
   
Part II.  Other Information  
   
Item 1 – Legal Proceedings 65
   
Item 1A - Risk Factors 65
   
Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds 65
   
Item 6 – Exhibits 66
   
Signatures 68

 

Page 2 

FORWARD-LOOKING STATEMENTS

 

Part I of this report contains 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. Further, forward-looking statements are intended to speak only as of the date made. Such statements are often characterized by the use of qualifying words (and their derivatives) such as “expect,” “believe,” “estimate,” “plan,” “project,” or other statements concerning our opinions or judgment about future events. Our actual results may differ materially from those anticipated in any forward-looking statements, as they will depend on many factors about which we are unsure, including many factors which are beyond our control. Factors that could influence the accuracy of such forward-looking statements include, but are not limited to, the financial success or changing strategies of our customers, our level of success in integrating acquisitions, actions of government regulators, the level of market interest rates, and general economic conditions. For additional information about factors that could affect the matters discussed in this paragraph, see the “Risk Factors” section of our 2015 Annual Report on Form 10-K.

Page 3 

 

Part I. Financial Information

Item 1 - Financial Statements

First Bancorp and Subsidiaries

Consolidated Balance Sheets

 

($ in thousands-unaudited)  March 31,
2016
   December 31,
2015 (audited)
   March 31,
2015
 
ASSETS            
Cash and due from banks, noninterest-bearing  $52,393    53,285    84,208 
Due from banks, interest-bearing   148,734    213,426    159,527 
Federal funds sold   467    557    752 
     Total cash and cash equivalents   201,594    267,268    244,487 
                
Securities available for sale   247,140    165,614    172,319 
Securities held to maturity (fair values of $151,684, $157,146, and $174,756)   148,485    154,610    170,804 
                
Presold mortgages in process of settlement   3,102    4,323    8,273 
                
Loans – non-covered   2,439,830    2,416,285    2,275,570 
Loans – covered by FDIC loss share agreement   99,523    102,641    119,829 
   Total loans   2,539,353    2,518,926    2,395,399 
Allowance for loan losses – non-covered   (25,249)   (26,784)   (33,770)
Allowance for loan losses – covered   (1,399)   (1,799)   (2,226)
   Total allowance for loan losses   (26,648)   (28,583)   (35,996)
   Net loans   2,512,705    2,490,343    2,359,403 
                
Premises and equipment   75,268    74,559    75,573 
Accrued interest receivable   8,986    9,166    8,744 
FDIC indemnification asset   6,704    8,439    18,452 
Goodwill   67,528    65,835    65,835 
Other intangible assets   1,833    1,336    1,877 
Foreclosed real estate – non-covered   8,767    9,188    8,978 
Foreclosed real estate – covered   1,569    806    2,055 
Bank-owned life insurance   72,594    72,086    55,793 
Other assets   26,691    38,492    26,995 
        Total assets  $3,382,966    3,362,065    3,219,588 
                
LIABILITIES               
Deposits:   Noninterest bearing checking accounts  $679,228    659,038    591,283 
Interest bearing checking accounts   607,617    626,878    578,784 
Money market accounts   667,504    639,189    571,124 
Savings accounts   194,573    186,616    183,036 
Time deposits of $100,000 or more   391,317    403,545    433,942 
Other time deposits   286,582    296,019    335,445 
     Total deposits   2,826,821    2,811,285    2,693,614 
Borrowings   186,394    186,394    116,394 
Accrued interest payable   554    585    619 
Other liabilities   19,365    21,611    15,717 
     Total liabilities   3,033,134    3,019,875    2,826,344 
                
Commitments and contingencies               
                
SHAREHOLDERS’ EQUITY               
Preferred stock, no par value per share.  Authorized: 5,000,000 shares               
     Series B issued & outstanding:  None, None, and 63,500 shares           63,500 
     Series C, convertible, issued & outstanding:  728,706, 728,706, and 728,706 shares   7,287    7,287    7,287 
Common stock, no par value per share.  Authorized: 40,000,000 shares               
     Issued & outstanding:  19,865,779, 19,747,509, and 19,740,183 shares   135,318    133,393    132,752 
Retained earnings   210,250    205,060    190,150 
Accumulated other comprehensive income (loss)   (3,023)   (3,550)   (445)
     Total shareholders’ equity   349,832    342,190    393,244 
          Total liabilities and shareholders’ equity  $3,382,966    3,362,065    3,219,588 

 

See accompanying notes to consolidated financial statements.

 

Page 4 

First Bancorp and Subsidiaries

Consolidated Statements of Income

 

($ in thousands, except share data-unaudited)  Three Months Ended
March 31,
 
   2016   2015 
INTEREST INCOME          
Interest and fees on loans  $29,573    29,441 
Interest on investment securities:          
     Taxable interest income   1,823    1,359 
     Tax-exempt interest income   445    463 
Other, principally overnight investments   222    195 
     Total interest income   32,063    31,458 
           
INTEREST EXPENSE          
Savings, checking and money market accounts   394    269 
Time deposits of $100,000 or more   652    847 
Other time deposits   274    342 
Borrowings   548    297 
     Total interest expense   1,868    1,755 
           
Net interest income   30,195    29,703 
Provision for loan losses – non-covered   1,621    104 
Provision (reversal) for loan losses – covered   (1,363)   (268)
Total provision (reversal) for loan losses   258    (164)
Net interest income after provision for loan losses   29,937    29,867 
           
NONINTEREST INCOME          
Service charges on deposit accounts   2,685    2,892 
Other service charges, commissions and fees   2,830    2,542 
Fees from presold mortgage loans   371    808 
Commissions from sales of insurance and financial products   938    561 
Bank-owned life insurance income   508    371 
Foreclosed property gains (losses) – non-covered   (237)   (494)
Foreclosed property gains (losses) – covered   447    237 
FDIC indemnification asset income (expense), net   (2,366)   (2,392)
Securities gains (losses)   3     
Other gains (losses)   (177)   4 
     Total noninterest income   5,002    4,529 
           
NONINTEREST EXPENSES          
Salaries   11,475    11,497 
Employee benefits   2,706    2,183 
   Total personnel expense   14,181    13,680 
Net occupancy expense   1,943    1,869 
Equipment related expenses   870    956 
Intangibles amortization   186    180 
Other operating expenses   7,593    7,029 
     Total noninterest expenses   24,773    23,714 
           
Income before income taxes   10,166    10,682 
Income tax expense   3,329    3,694 
           
Net income   6,837    6,988 
           
Preferred stock dividends   (58)   (217)
           
Net income available to common shareholders  $6,779    6,771 
           
Earnings per common share:          
     Basic  $0.34    0.34 
     Diluted   0.33    0.33 
           
Dividends declared per common share  $0.08    0.08 
           
Weighted average common shares outstanding:          
     Basic   19,783,747    19,721,992 
     Diluted   20,553,858    20,454,614 

 

See accompanying notes to consolidated financial statements.

Page 5 

First Bancorp and Subsidiaries

Consolidated Statements of Comprehensive Income

 

 

   Three Months Ended
March 31,
 
($ in thousands-unaudited)  2016   2015 
         
Net income  $6,837    6,988 
Other comprehensive income (loss):          
   Unrealized gains (losses) on securities available for sale:          
Unrealized holding gains (losses) arising during the period, pretax   817    247 
      Tax (expense) benefit   (319)   (95)
Reclassification to realized (gains) losses   (3)    
       Tax expense (benefit)   1     
Postretirement Plans:          
Amortization of unrecognized net actuarial (gain) loss   51    (31)
       Tax expense (benefit)   (20)   12 
Other comprehensive income (loss)   527    133 
 Comprehensive income  $7,364    7,121 
           

 

See accompanying notes to consolidated financial statements.

Page 6 

 

First Bancorp and Subsidiaries

Consolidated Statements of Shareholders’ Equity

 

 

(In thousands, except per share -
unaudited)

  Preferred   Common Stock   Retained   Accumulated
Other
Comprehensive
   Total
Share-
holders’
 
   Stock   Shares   Amount   Earnings   Income (Loss)   Equity 
                         
                         
Balances, January 1, 2015  $70,787    19,710   $132,532    184,958    (578)   387,699 
                               
Net income                  6,988         6,988 
Cash dividends declared ($0.08 per common share)                  (1,579)        (1,579)
Preferred dividends                  (217)        (217)
Stock-based compensation        30    220              220 
Other comprehensive income (loss)                       133    133 
                               
Balances, March 31, 2015  $70,787    19,740   $132,752    190,150    (445)   393,244 
                               
                               
Balances, January 1, 2016  $7,287    19,748   $133,393    205,060    (3,550)   342,190 
                               
Net income                  6,837         6,837 
Cash dividends declared ($0.08 per common share)                  (1,589)        (1,589)
Preferred dividends                  (58)        (58)
Shares issued pursuant to acquisition        79    1,500              1,500 
Stock option exercises        8    127              127 
Stock-based compensation        31    298              298 
Other comprehensive income (loss)                       527    527 
                               
Balances, March 31, 2016  $7,287    19,866   $135,318    210,250    (3,023)   349,832 

 

See accompanying notes to consolidated financial statements.

 

Page 7 

First Bancorp and Subsidiaries

Consolidated Statements of Cash Flows

 

   Three Months Ended
March 31,
 
($ in thousands-unaudited)  2016   2015 
Cash Flows From Operating Activities          
Net income  $6,837    6,988 
Reconciliation of net income  to net cash provided by operating activities:          
     Provision (reversal) for loan losses   258    (164)
     Net security premium amortization   680    802 
     Purchase accounting accretion and amortization, net   1,036    835 
     Foreclosed property (gains) losses and write-downs, net   (210)   257 
     Gain on securities available for sale   (3)    
     Other losses (gains)   177    (4)
     Decrease (increase) in net deferred loan costs   (385)   163 
     Depreciation of premises and equipment   1,120    1,132 
     Stock-based compensation expense   123    127 
     Amortization of intangible assets   186    180 
     Origination of presold mortgages in process of settlement   (13,988)   (30,651)
     Proceeds from sales of presold mortgages in process of settlement   15,230    28,364 
     Decrease in accrued interest receivable   180    176 
     Decrease (increase) in other assets   11,405    (3,116)
     Decrease in accrued interest payable   (31)   (67)
     Decrease in other liabilities   (2,762)   (1,921)
          Net cash provided by operating activities   19,853    3,101 
           
Cash Flows From Investing Activities          
     Purchases of securities available for sale   (99,896)   (30,535)
     Purchases of securities held to maturity       (1,146)
     Proceeds from maturities/issuer calls of securities available for sale   18,852    16,249 
     Proceeds from maturities/issuer calls of securities held to maturity   5,772    8,459 
     Proceeds from sales of securities available for sale   8     
     Proceeds (purchases) of Federal Reserve and Federal Home Loan Bank stock, net   (138)   145 
     Net increase in loans   (23,170)   (3,869)
     Proceeds (payments) related to FDIC loss share agreements   (356)   2,282 
     Proceeds from sales of foreclosed real estate   1,858    2,403 
     Purchases of premises and equipment   (925)   (1,600)
     Proceeds from sales of premises and equipment   21     
     Net cash paid in acquisition   (1,580)    
          Net cash used by investing activities   (99,554)   (7,612)
           
Cash Flows From Financing Activities          
     Net increase (decrease) in deposits   15,536    (2,292)
     Cash dividends paid – common stock   (1,578)   (1,577)
     Cash dividends paid – preferred stock   (58)   (217)
     Proceeds from stock option exercises   127     
          Net cash provided (used) by financing activities   14,027    (4,086)
           
Decrease in cash and cash equivalents   (65,674)   (8,597)
Cash and cash equivalents, beginning of period   267,268    253,084 
           
Cash and cash equivalents, end of period  $201,594    244,487 
           
Supplemental Disclosures of Cash Flow Information:          
Cash paid (received) during the period for:          
     Interest  $1,899    1,822 
     Income taxes   (4,305)   6,212 
Non-cash transactions:          
     Unrealized gain (loss) on securities available for sale, net of taxes   496    152 
     Foreclosed loans transferred to other real estate   1,990    1,572 

 

See accompanying notes to consolidated financial statements.

 

Page 8 

 

First Bancorp and Subsidiaries

Notes to Consolidated Financial Statements

 

(unaudited) For the Periods Ended March 31, 2016 and 2015  

 

Note 1 - Basis of Presentation

 

In the opinion of the Company, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly the consolidated financial position of the Company as of March 31, 2016 and 2015 and the consolidated results of operations and consolidated cash flows for the periods ended March 31, 2016 and 2015. All such adjustments were of a normal, recurring nature. Reference is made to the 2015 Annual Report on Form 10-K filed with the SEC for a discussion of accounting policies and other relevant information with respect to the financial statements. The results of operations for the periods ended March 31, 2016 and 2015 are not necessarily indicative of the results to be expected for the full year. The Company has evaluated all subsequent events through the date the financial statements were issued.

 

Note 2 – Accounting Policies

 

Note 1 to the 2015 Annual Report on Form 10-K filed with the SEC contains a description of the accounting policies followed by the Company and discussion of recent accounting pronouncements. The following paragraphs update that information as necessary.

 

In June 2014, the FASB issued guidance which clarifies that performance targets associated with stock compensation should be treated as a performance condition and should not be reflected in the grant date fair value of the stock award. The amendments were effective for the Company on January 1, 2016. The Company will apply the guidance to all stock awards granted or modified after January 1, 2016. The Company’s adoption of these amendments did not have a material effect on its financial statements.

 

In January 2015, the FASB issued guidance to eliminate from U.S. GAAP the concept of an extraordinary item, which is an event or transaction that is both (1) unusual in nature and (2) infrequently occurring. Under the new guidance, an entity will no longer (1) segregate an extraordinary item from the results of ordinary operations; (2) separately present an extraordinary item on its income statement, net of tax, after income from continuing operations; or (3) disclose income taxes and earnings-per-share data applicable to an extraordinary item. The amendments were effective for the Company on January 1, 2016, and did not have a material effect on its financial statements.

 

In February 2015, the FASB issued guidance which amends the consolidation requirements and significantly changes the consolidation analysis required under U.S. GAAP. The amendments were expected to result in the deconsolidation of many entities. The amendments were effective for the Company on January 1, 2016. The adoption of these amendments did not have a material effect on the Company’s financial statements.

 

In April 2015, the FASB issued guidance that will require debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. This update affects disclosures related to debt issuance costs but does not affect existing recognition and measurement guidance for these items. The amendments were effective for the Company on January 1, 2016. The Company’s adoption of these amendments did not have a material effect on its financial statements.

 

In April 2015, the FASB issued guidance which provides a practical expedient that permits the Company to measure defined benefit plan assets and obligations using the month-end that is closest to the Company’s fiscal year-end. The amendments were effective for the Company on January 1, 2016. The Company’s adoption of these amendments did not have a material effect on its financial statements.

 

In June 2015, the FASB issued amendments to clarify the Accounting Standards Codification, correct unintended application of guidance, and make minor improvements that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. The amendments were effective upon issuance (June 12, 2015) for amendments that do not have transition guidance. Amendments that were subject to transition guidance were effective for the Company on January 1, 2016. The adoption of this guidance did not have a material effect on the Company’s financial statements.

 

Page 9 

In February 2016, the FASB issued new guidance on accounting for leases, which generally requires all leases to be recognized in the statement of financial position. The provisions of this guidance are effective for reporting periods beginning after December 15, 2018; early adoption is permitted. These provisions are to be applied using a modified retrospective approach. The Company is evaluating the effect that this new guidance will have on our consolidated financial statements, but does not expect it will have a material effect on its financial statements.

 

In March 2016, the FASB amended the Liabilities topic of the Accounting Standards Codification to address the current and potential future diversity in practice related to the derecognition of a prepaid stored-value product liability. The amendments will be effective for financial statements issued for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company will apply the guidance using a modified retrospective transition method by means of a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year in which the guidance is effective to each period presented. The Company does not expect these amendments to have a material effect on its financial statements.

 

In March 2016, the FASB amended the Investments—Equity Method and Joint Ventures topic of the Accounting Standards Codification to eliminate the requirement to retroactively adopt the equity method of accounting. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. The Company will apply the guidance prospectively upon their effective date to increases in the level of ownership interest or degree of influence that result in the adoption of the equity method. The Company does not expect these amendments to have a material effect on its financial statements

 

In March 2016, the FASB amended the Revenue from Contracts with Customers topic of the Accounting Standards Codification to clarify the implementation guidance on principal versus agent considerations and address how an entity should assess whether it is the principal or the agent in contracts that include three or more parties. The amendments will be effective for the Company for reporting periods beginning after December 15, 2017. The Company does not expect these amendments to have a material effect on its financial statements.

 

In March 2016, the FASB issued guidance to simplify several aspects of the accounting for share-based payment award transactions including the income tax consequences, the classification of awards as either equity or liabilities, and the classification on the statement of cash flows. Additionally, the guidance simplifies two areas specific to entities other than public business entities allowing them apply a practical expedient to estimate the expected term for all awards with performance or service conditions that have certain characteristics and also allowing them to make a one-time election to switch from measuring all liability-classified awards at fair value to measuring them at intrinsic value. The amendments will be effective for the Company for annual periods beginning after December 15, 2016 and interim periods within those annual periods. The Company does not expect these amendments to have a material effect on its financial statements.

 

In April 2016, the FASB amended the Revenue from Contracts with Customers topic of the Accounting Standards Codification to clarify the guidance related to identifying performance obligations and licensing. The amendments will be effective for the Company for reporting periods beginning after December 15, 2017. The Company does not expect these amendments to have a material effect on its financial statements.

 

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

 

Note 3 – Reclassifications

 

Certain amounts reported in the period ended March 31, 2015 have been reclassified to conform to the presentation for March 31, 2016. These reclassifications had no effect on net income or shareholders’ equity for the periods presented, nor did they materially impact trends in financial information.

 

Note 4 – Equity-Based Compensation Plans

 

The Company recorded total stock-based compensation expense of $123,000 and $127,000 for the three months ended March 31, 2016 and 2015, respectively. Stock based compensation is reflected as an adjustment to cash flows from operating activities on the Company’s Consolidated Statement of Cash Flows. The Company recognized $48,000 and $50,000 of income tax benefits related to stock based compensation expense in the income statement for the three months ended March 31, 2016 and 2015, respectively.

 

Page 10 

At March 31, 2016, the Company had the following equity-based compensation plans: the First Bancorp 2014 Equity Plan, the First Bancorp 2007 Equity Plan, and the First Bancorp 2004 Stock Option Plan. The Company’s shareholders approved all equity-based compensation plans. The First Bancorp 2014 Equity Plan became effective upon the approval of shareholders on May 8, 2014. As of March 31, 2016, the First Bancorp 2014 Equity Plan was the only plan that had shares available for future grants, and there were 888,381 shares remaining available for grant.

 

The First Bancorp 2014 Equity Plan is intended to serve as a means to attract, retain and motivate key employees and directors and to associate the interests of the plans’ participants with those of the Company and its shareholders. The First Bancorp 2014 Equity Plan allows for both grants of stock options and other types of equity-based compensation, including stock appreciation rights, restricted stock, restricted performance stock, unrestricted stock, and performance units.

 

Recent equity grants to employees have either had performance vesting conditions, service vesting conditions, or both. Compensation expense for these grants is recorded over the various service periods based on the estimated number of equity grants that are probable to vest. No compensation cost is recognized for grants that do not vest and any previously recognized compensation cost will be reversed. The Company issues new shares of common stock when options are exercised.

 

Certain of the Company’s stock option grants contain terms that provide for a graded vesting schedule whereby portions of the award vest in increments over the requisite service period. The Company recognizes compensation expense for awards with graded vesting schedules on a straight-line basis over the requisite service period for each incremental award. Compensation expense is based on the estimated number of stock options and awards that will ultimately vest. Over the past five years, there have only been minimal amounts of forfeitures, and therefore the Company assumes that all awards granted without performance conditions will become vested.

 

As it relates to director equity grants, the Company grants common shares, valued at approximately $16,000 to each non-employee director (currently eight in total) in June of each year. Compensation expense associated with these director grants is recognized on the date of grant since there are no vesting conditions.

 

Based on the Company’s performance in 2013, the Company granted long-term restricted shares of common stock to the chief executive officer on February 11, 2014 with a two-year vesting period. The total compensation expense associated with the grant was $278,200. The Company recorded $23,200 in compensation expense related to this grant during the three months ended March 31, 2015.

 

In 2014, the Company’s Compensation Committee determined that seven of the Company’s senior officers would receive their annual bonus earned under the Company’s annual incentive plan in a mix of 50% cash and 50% stock, with the stock being subject to a three year vesting term. Previously, awards under this plan were paid all in cash. This resulted in the Company granting a total of 14,882 shares of restricted common stock to those officers on February 24, 2015. The total compensation expense associated with this grant was $258,000, which is being recorded over the vesting period. The Company recorded $11,200 and $23,300 in compensation expense during the three months ended March 31, 2016 and 2015, respectively, related to these grants and expects to record $11,200 in compensation expense during each remaining quarter of 2016.

 

In 2015, additional stock grants of 50,736 shares were made to 19 officers of the Company, each with three year vesting schedules. The total value of these grants amounted to $876,000, of which $65,700 and $80,500 was recorded as compensation expense during the first quarters of 2016 and 2015, respectively. Grants were issued based on the closing price of the Company’s common stock on the date of the grant.

 

On February 23, 2016, the Company granted a total of 26,032 shares of restricted common stock to eleven senior officers for the attainment of goals related to the Company’s annual incentive plan in 2015. The total compensation expense with the grant was $484,000, which is being recorded over the three-year vesting period. The Company recorded $43,700 in compensation expense during the three months ended March 31, 2016 related to these grants, and expects to record $43,700 in each remaining quarter of 2016.

 

On March 1, 2016, the Company granted 5,266 shares of restricted common stock to an officer with a three year vesting period. Total compensation expense associated with the grant was $100,000. The Company recorded $3,000 in compensation expense during the three months ended March 31, 2016, and expects to record $8,000 in each remaining quarter of 2016.

 

Page 11 

Under the terms of the predecessor plans and the First Bancorp 2014 Equity Plan, stock options can have a term of no longer than ten years. In a change in control (as defined in the plans), unless the awards remain outstanding or substitute equivalent awards are provided, the awards become immediately vested.

 

At March 31, 2016, there were 109,448 stock options outstanding related to the three First Bancorp plans, with exercise prices ranging from $14.35 to $21.83.

 

The following table presents information regarding the activity for the first three months of 2016 related to the Company’s stock options outstanding:

 

   Options Outstanding 
   Number of
Shares
   Weighted-
Average
Exercise
Price
   Weighted-
Average
Contractual
Term (years)
   Aggregate
Intrinsic
Value
 
                 
Balance at January 1, 2016   117,408   $18.12           
                     
   Granted                  
   Exercised   (7,960)   15.99        $17,263 
   Forfeited                  
   Expired                  
                     
Outstanding at March 31, 2016   109,448   $18.27    1.3   $179,698 
                     
Exercisable at March 31, 2016   109,448   $18.27    1.3   $179,698 

 

During the three months ended March 31, 2016, the Company received $127,000 as a result of stock option exercises and recorded insignificant tax benefits from the exercise of nonqualified options during the period. The Company did not have any stock option exercises during the three months ended March 31, 2015.

 

The following table presents information regarding the activity the first three months of 2016 related to the Company’s outstanding restricted stock:

 

   Long-Term Restricted Stock 
   Number of Units   Weighted-Average
Grant-Date Fair Value
 
         
Nonvested at January 1, 2016   55,329   $17.31 
           
Granted during the period   31,298    18.65 
Vested during the period   (5,219)   17.77 
Forfeited or expired during the period       
           
Nonvested at March 31, 2016   81,408   $17.80 

 

 

Note 5 – Earnings Per Common Share

 

Basic Earnings Per Common Share is calculated by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the period, with nonvested restricted stock excluded from the calculation. Diluted Earnings Per Common Share is computed by assuming the issuance of common shares for all potentially dilutive common shares outstanding during the reporting period. The Company’s potentially dilutive common stock issuances relate to stock option and nonvested restricted stock grants under the Company’s equity-based compensation plans and the Company’s Series C Preferred Stock, which is convertible into common stock on a one-for-one ratio.

 

Page 12 

In computing Diluted Earnings Per Common Share, adjustments are made to the computation of Basic Earnings Per Common shares, as follows. As it relates to stock options, it is assumed that all dilutive stock options are exercised during the reporting period at their respective exercise prices, with the proceeds from the exercises used by the Company to buy back stock in the open market at the average market price in effect during the reporting period. The difference between the number of shares assumed to be exercised and the number of shares bought back is included in the calculation of dilutive securities. As it relates to nonvested restricted stock, proceeds equal to the average amount of compensation cost attributable to future services and not yet recognized in earnings are assumed to be used by the Company to buy back stock in the open market and are deducted from the total number of nonvested restricted stock that is included in the denominator of the calculation. As it relates to the Series C Preferred Stock, it is assumed that the preferred stock was converted to common stock during the reporting period. Dividends on the preferred stock are added back to net income and the shares assumed to be converted are included in the number of shares outstanding.

 

If any of the potentially dilutive common stock issuances have an anti-dilutive effect, the potentially dilutive common stock issuance is disregarded.

 

The following is a reconciliation of the numerators and denominators used in computing Basic and Diluted Earnings Per Common Share:

 

   For the Three Months Ended March 31, 
   2016   2015 

 

($ in thousands except per

   share amounts)

  Income
(Numer-
ator)
   Shares
(Denom-
inator)
   Per Share
Amount
   Income
(Numer-
ator)
   Shares
(Denom-
inator)
   Per Share
Amount
 
                         
Basic EPS                              
Net income available to common shareholders  $6,779    19,783,747   $0.34   $6,771    19,721,992   $0.34 
                               
Effect of Dilutive Securities   58    770,111         58    732,622      
                               
Diluted EPS per common share  $6,837    20,553,858   $0.33   $6,829    20,454,614   $0.33 

 

For the three months ended March 31, 2016 and 2015, there were 50,000 options and 84,000 options, respectively, that were antidilutive because the exercise price exceeded the average market price for the period, and thus are not included in the calculation to determine the effect of dilutive securities.

 

Note 6 – Securities

 

The book values and approximate fair values of investment securities at March 31, 2016 and December 31, 2015 are summarized as follows:

 

   March 31, 2016   December 31, 2015 
   Amortized   Fair   Unrealized   Amortized   Fair   Unrealized 
($ in thousands)  Cost   Value   Gains   (Losses)   Cost   Value   Gains   (Losses) 
                                 
Securities available for sale:                                        
  Government-sponsored enterprise securities  $38,638    38,636    4    (6)   19,000    18,972    1    (29)
  Mortgage-backed securities   174,905    174,579    666    (992)   122,474    121,553    348    (1,269)
  Corporate bonds   33,863    33,798    126    (191)   25,216    24,946        (270)
  Equity securities   83    127    53    (9)   88    143    64    (9)
Total available for sale  $247,489    247,140    849    (1,198)   166,778    165,614    413    (1,577)
                                         
Securities held to maturity:                                        
  Mortgage-backed securities  $98,102    98,030    87    (159)   102,509    101,767        (742)
  State and local governments   50,383    53,654    3,273    (2)   52,101    55,379    3,284    (6)
Total held to maturity  $148,485    151,684    3,360    (161)   154,610    157,146    3,284    (748)

 

All of the Company’s mortgage-backed securities were issued by government-sponsored corporations.

Page 13 

 

The following table presents information regarding securities with unrealized losses at March 31, 2016:

 

($ in thousands)  Securities in an Unrealized
Loss Position for
Less than 12 Months
   Securities in an Unrealized
Loss Position for
More than 12 Months
   Total 
   Fair Value   Unrealized
Losses
   Fair Value   Unrealized
Losses
   Fair Value   Unrealized
Losses
 
  Government-sponsored enterprise securities  $        2,994    6    2,994    6 
  Mortgage-backed securities   117,206    602    25,136    549    142,342    1,151 
  Corporate bonds   13,926    131    940    60    14,866    191 
  Equity securities           17    9    17    9 
  State and local governments   841    2            841    2 
      Total temporarily impaired securities  $131,973    735    29,087    624    161,060    1,359 

 

The following table presents information regarding securities with unrealized losses at December 31, 2015:

 

($ in thousands)  Securities in an Unrealized
Loss Position for
Less than 12 Months
   Securities in an Unrealized
Loss Position for
More than 12 Months
   Total 
   Fair Value   Unrealized
Losses
   Fair Value   Unrealized
Losses
   Fair Value   Unrealized
Losses
 
  Government-sponsored enterprise securities  $5,993    7    2,978    22    8,971    29 
  Mortgage-backed securities   150,853    1,148    27,460    863    178,313    2,011 
  Corporate bonds   24,006    210    940    60    24,946    270 
  Equity securities           17    9    17    9 
  State and local governments   840    6            840    6 
      Total temporarily impaired securities  $181,692    1,371    31,395    954    213,087    2,325 

 

In the above tables, all of the non-equity securities that were in an unrealized loss position at March 31, 2016 and December 31, 2015 are bonds that the Company has determined are in a loss position due primarily to interest rate factors and not credit quality concerns. The Company has evaluated the collectability of each of these bonds and has concluded that there is no other-than-temporary impairment. The Company does not intend to sell these securities, and it is more likely than not that the Company will not be required to sell these securities before recovery of the amortized cost.

 

The Company has also concluded that each of the equity securities in an unrealized loss position at March 31, 2016 and December 31, 2015 was in such a position due to temporary fluctuations in the market prices of the securities. The Company’s policy is to record an impairment charge for any of these equity securities that remains in an unrealized loss position for twelve consecutive months unless the amount is insignificant.

 

The book values and approximate fair values of investment securities at March 31, 2016, by contractual maturity, are summarized in the table below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

 

   Securities Available for Sale   Securities Held to Maturity 
   Amortized   Fair   Amortized   Fair 
($ in thousands)  Cost   Value   Cost   Value 
                 
Debt securities                    
Due within one year  $        1,308    1,340 
Due after one year but within five years   10,639    10,635    12,630    13,253 
Due after five years but within ten years   56,862    56,919    35,268    37,882 
Due after ten years   5,000    4,880    1,177    1,179 
Mortgage-backed securities   174,905    174,579    98,102    98,030 
Total debt securities   247,406    247,013    148,485    151,684 
                     
Equity securities   83    127         
Total securities  $247,489    247,140    148,485    151,684 

 

Page 14 

At March 31, 2016 and December 31, 2015 investment securities with carrying values of $158,504,000 and $141,379,000, respectively, were pledged as collateral for public deposits.

 

In the first quarter of 2016, the Company received proceeds from sales of securities of $8,000 and recorded $3,000 in gains from the sales. The Company recorded no gains or losses on securities during the three month period ended March 31, 2015.

 

The aggregate carrying amount of cost-method investments was $16,031,000 and $5,871,000 at March 31, 2016 and 2015, respectively, which is recorded within the line item “other assets” on the Company’s Consolidated Balance Sheets. These investments are comprised of Federal Home Loan Bank (“FHLB”) stock and Federal Reserve Bank of Richmond (“FRB”) stock. The FHLB stock had a cost and fair value of $8,975,000 and $5,871,000 at March 31, 2016 and 2015, respectively, and serves as part of the collateral for the Company’s line of credit with the FHLB and is also a requirement for membership in the FHLB system. The FRB stock had a cost and fair value of $7,056,000 at March 31, 2016. The Company was required to purchase this stock when it became a member of the Federal Reserve System in the second quarter of 2015. Periodically, both the FHLB and FRB recalculate the Company’s required level of holdings, and the Company either buys more stock or the redeems a portion of the stock at cost. The Company determined that neither stock was impaired at either period end.

 

Note 7 – Loans and Asset Quality Information

 

The loans and foreclosed real estate that were acquired in FDIC-assisted transactions are covered by loss share agreements between the FDIC and the Company’s banking subsidiary, First Bank, which afford First Bank significant loss protection - see Note 2 to the financial statements included in the Company’s 2011 Annual Report on Form 10-K for detailed information regarding these transactions. Because of the loss protection provided by the FDIC, the risk of the loans and foreclosed real estate that are covered by loss share agreements are significantly different from those assets not covered under the loss share agreements. Accordingly, the Company presents separately loans subject to the loss share agreements as “covered loans” in the information below and loans that are not subject to the loss share agreements as “non-covered loans.”

 

On April 1, 2016, one of the Company’s loss share agreements with the FDIC expired. The agreement that expired related to the non-single family assets of The Bank of Asheville, a failed bank acquisition from January 2011. Accordingly, the remaining balances associated with these loans and foreclosed real estate were transferred from the covered portfolio to the non-covered portfolio on April 1, 2016. The Company will bear all future losses on this portfolio of loans and foreclosed real estate. Immediately prior to the transfer to non-covered status, the loans in this portfolio had a carrying value of $17.7 million and the foreclosed real estate in this portfolio had a carrying value of $1.2 million. Of the $17.7 million in loans that lost loss share protection, approximately $2.8 million were on nonaccrual status as of April 1, 2016. Additionally, approximately $0.3 million in allowance for loan losses associated with this portfolio of loans was transferred to the allowance for loan losses for non-covered loans on April 1, 2016.

 

Page 15 

The following is a summary of the major categories of total loans outstanding:

 

($ in thousands)  March 31, 2016   December 31, 2015   March 31, 2015 
   Amount   Percentage   Amount   Percentage   Amount   Percentage 
All  loans (non-covered and covered):                        
                               
Commercial, financial, and agricultural  $228,867    9%   $202,671    8%   $176,013    7% 
Real estate – construction, land development & other land loans   302,052    12%    308,969    12%    285,319    12% 
Real estate – mortgage – residential (1-4 family) first mortgages   757,696    30%    768,559    31%    776,313    33% 
Real estate – mortgage – home equity loans / lines of credit   235,380    9%    232,601    9%    223,679    9% 
Real estate – mortgage – commercial and other   966,937    38%    957,587    38%    885,282    37% 
Installment loans to individuals   47,163    2%    47,666    2%    48,010    2% 
    Subtotal   2,538,095    100%    2,518,053    100%    2,394,616    100% 
Unamortized net deferred loan costs   1,258         873         783      
    Total loans  $2,539,353        $2,518,926        $2,395,399      

 

 

The following is a summary of the major categories of non-covered loans outstanding:

 

($ in thousands)  March 31, 2016   December 31, 2015   March 31, 2015 
   Amount   Percentage   Amount   Percentage   Amount   Percentage 
Non-covered loans:                              
                               
Commercial, financial, and agricultural  $228,124    10%   $201,798    8%   $174,516    8% 
Real estate – construction, land development & other land loans   298,410    12%    305,228    13%    279,780    12% 
Real estate – mortgage – residential (1-4 family) first mortgages   684,085    28%    692,902    29%    690,910    31% 
Real estate – mortgage – home equity loans / lines of credit   225,245    9%    221,995    9%    211,337    9% 
Real estate – mortgage – commercial and other   955,550    39%    945,823    39%    870,234    38% 
Installment loans to individuals   47,158    2%    47,666    2%    48,010    2% 
    Subtotal   2,438,572    100%    2,415,412    100%    2,274,787    100% 
Unamortized net deferred loan costs   1,258         873         783      
    Total non-covered loans  $2,439,830        $2,416,285        $2,275,570      

 

 

The carrying amount of the covered loans at March 31, 2016 consisted of impaired and nonimpaired purchased loans (as determined on the date of acquisition), as follows:

 

 

($ in thousands)

  Impaired
Purchased
Loans –
Carrying
Value
   Impaired
Purchased
Loans –
Unpaid
Principal
Balance
   Nonimpaired
Purchased
Loans –
Carrying
Value
   Nonimpaired
Purchased
Loans -
Unpaid
Principal
Balance
   Total
Covered
Loans –
Carrying
Value
   Total
Covered
Loans –
Unpaid
Principal
Balance
 
Covered loans:                              
Commercial, financial, and agricultural  $        743    748    743    748 
Real estate – construction, land development & other land loans   207    332    3,435    3,384    3,642    3,716 
Real estate – mortgage – residential (1-4 family) first mortgages   80    564    73,531    85,962    73,611    86,526 
Real estate – mortgage – home equity loans / lines of credit   7    14    10,128    11,516    10,135    11,530 
Real estate – mortgage – commercial and other   873    1,973    10,514    11,105    11,387    13,078 
Installment loans to individuals           5    35    5    35 
     Total  $1,167    2,883    98,356    112,750    99,523    115,633 

 

Page 16 

 

The carrying amount of the covered loans at December 31, 2015 consisted of impaired and nonimpaired purchased loans (as determined on the date of the acquisition), as follows:

 

 

 

($ in thousands)

  Impaired
Purchased
Loans –
Carrying
Value
   Impaired
Purchased
Loans –
Unpaid
Principal
Balance
   Nonimpaired
Purchased
Loans –
Carrying
Value
   Nonimpaired
Purchased
Loans -
Unpaid
Principal
Balance
   Total
Covered
Loans –
Carrying
Value
   Total
Covered
Loans –
Unpaid
Principal
Balance
 
Covered loans:                              
Commercial, financial, and agricultural  $        873    886    873    886 
Real estate – construction, land development & other land loans   277    365    3,464    3,457    3,741    3,822 
Real estate – mortgage – residential (1-4 family) first mortgages   102    633    75,555    88,434    75,657    89,067 
Real estate – mortgage – home equity loans / lines of credit   7    14    10,599    12,099    10,606    12,113 
Real estate – mortgage – commercial and other   1,003    3,136    10,761    11,458    11,764    14,594 
     Total  $1,389    4,148    101,252    116,334    102,641    120,482 

 

 

The following table presents information regarding covered purchased nonimpaired loans since December 31, 2014. The amounts include principal only and do not reflect accrued interest as of the date of the acquisition or beyond.

 

($ in thousands)

 

     
Carrying amount of nonimpaired covered loans at December 31, 2014  $125,644 
Principal repayments   (30,238)
Transfers to foreclosed real estate   (1,211)
Net loan (charge-offs) / recoveries   2,306 
Accretion of loan discount   4,751 
Carrying amount of nonimpaired covered loans at December 31, 2015   101,252 
Principal repayments   (3,975)
Transfers to foreclosed real estate   (869)
Net loan (charge-offs) / recoveries   893 
Accretion of loan discount   1,055 
Carrying amount of nonimpaired covered loans at March 31, 2016  $98,356 

 

As reflected in the table above, the Company accreted $1,055,000 of the loan discount on purchased nonimpaired loans into interest income during the first quarter of 2016. As of March 31, 2016, there was remaining loan discount of $12,489,000 related to purchased accruing loans. If these loans continue to be repaid by the borrowers, the Company will accrete the remaining loan discount into interest income over the covered lives of the respective loans. In such circumstances, a corresponding entry to reduce the indemnification asset will be recorded amounting to approximately 80% of the loan discount accretion, which reduces noninterest income. At March 31, 2016, the Company also had $1,546,000 of loan discount related to purchased nonaccruing loans. It is not expected that a significant amount of this discount will be accreted, as it represents estimated losses on these loans.

 

Page 17 

 

The following table presents information regarding all purchased impaired loans since December 31, 2014, the majority of which are covered loans. The Company has applied the cost recovery method to all purchased impaired loans at their respective acquisition dates due to the uncertainty as to the timing of expected cash flows, as reflected in the following table.

 

 

($ in thousands)

 

 

 

Purchased Impaired Loans

  Contractual
Principal
Receivable
   Fair Market
Value
Adjustment –
Write Down
(Nonaccretable
Difference)
   Carrying
Amount
 
Balance at December 31, 2014  $ 5,859   3,262   2,597 
Change due to payments received   (634)   (102)   (532)
Transfer to foreclosed real estate   (431)   (336)   (95)
Other   (3)   (3)    
Balance at December 31, 2015  $4,791    2,821    1,970 
Change due to payments received   (879)   (711)   (168)
Change due to loan charge-off   (394)   (324)   (70)
Balance at March 31, 2016  $3,518    1,786    1,732 

 

Because of the uncertainty of the expected cash flows, the Company is accounting for each purchased impaired loan under the cost recovery method, in which all cash payments are applied to principal. Thus, there is no accretable yield associated with the above loans. During the first quarter of 2016 and 2015, the Company received $69,000 and $0, respectively, in payments that exceeded the initial carrying amount of the purchased impaired loans, which is included in interest income.

 

Nonperforming assets are defined as nonaccrual loans, restructured loans, loans past due 90 or more days and still accruing interest, nonperforming loans held for sale, and foreclosed real estate. Nonperforming assets are summarized as follows:

 

 

ASSET QUALITY DATA ($ in thousands)

  March 31,
2016
   December 31,
2015
   March 31,
2015
 
             
Non-covered nonperforming assets               
Nonaccrual loans  $35,741   $39,994   $47,416 
Restructured loans - accruing   27,055    28,011    33,997 
Accruing loans > 90 days past due            
     Total non-covered nonperforming loans   62,796    68,005    81,413 
Foreclosed real estate   8,767    9,188    8,978 
Total non-covered nonperforming assets  $71,563   $77,193   $90,391 
                
Covered nonperforming assets               
Nonaccrual loans (1)  $5,670   $7,816   $8,596 
Restructured loans - accruing   3,459    3,478    3,874 
Accruing loans > 90 days past due            
     Total covered nonperforming loans   9,129    11,294    12,470 
Foreclosed real estate   1,569    806    2,055 
Total covered nonperforming assets  $10,698   $12,100   $14,525 
                
     Total nonperforming assets  $82,261   $89,293   $104,916 

 

 

(1) At March 31, 2016, December 31, 2015, and March 31, 2015, the contractual balance of the nonaccrual loans covered by FDIC loss share agreements was $9.0 million, $12.3 million, and $14.1 million, respectively.

 

At March 31, 2016, the Company had $2.1 million in residential mortgage loans in process of foreclosure.

Page 18 

The remaining tables in this note present information derived from the Company’s allowance for loan loss model. Relevant accounting guidance requires certain disclosures to be disaggregated based on how the Company develops its allowance for loan losses and manages its credit exposure. This model combines loan types in a different manner than the tables previously presented.

 

The following table presents the Company’s nonaccrual loans as of March 31, 2016.

 

($ in thousands)  Non-covered   Covered   Total 
Commercial, financial, and agricultural:               
Commercial – unsecured  $443    22    465 
Commercial – secured   2,113        2,113 
Secured by inventory and accounts receivable   84        84 
                
Real estate – construction, land development & other land loans   3,950        3,950 
                
Real estate – residential, farmland and multi-family   20,137    3,262    23,399 
                
Real estate – home equity lines of credit   1,821    329    2,150 
                
Real estate – commercial   7,086    2,057    9,143 
                
Consumer   107        107 
  Total  $35,741    5,670    41,411 
                

 

The following table presents the Company’s nonaccrual loans as of December 31, 2015.

 

($ in thousands)  Non-covered   Covered   Total 
Commercial, financial, and agricultural:               
Commercial – unsecured  $391    22    413 
Commercial – secured   2,406        2,406 
Secured by inventory and accounts receivable   83        83 
                
Real estate – construction, land development & other land loans   4,155    52    4,207 
                
Real estate – residential, farmland and multi-family   21,964    5,201    27,165 
                
Real estate – home equity lines of credit   2,431    361    2,792 
                
Real estate – commercial   8,262    2,180    10,442 
                
Consumer   302        302 
  Total  $39,994    7,816    47,810 
                

Page 19 

The following table presents an analysis of the payment status of the Company’s loans as of March 31, 2016.

 

($ in thousands)  30-59
Days Past
Due
   60-89 Days
Past Due
   Nonaccrual
Loans
   Current   Total Loans
Receivable
 
Non-covered loans                         
Commercial, financial, and agricultural:                         
Commercial - unsecured  $3        443    77,581    78,027 
Commercial - secured   579        2,113    113,605    116,297 
Secured by inventory and accounts receivable   19        84    40,083    40,186 
                          
Real estate – construction, land development & other land loans   1,211    118    3,950    275,585    280,864 
                          
Real estate – residential, farmland, and multi-family   9,837    1,824    20,137    810,797    842,595 
                          
Real estate – home equity lines of credit   1,043    76    1,821    212,030    214,970 
                          
Real estate - commercial   1,301    659    7,086    815,813    824,859 
                          
Consumer   226    131    107    40,310    40,774 
  Total non-covered  $14,219    2,808    35,741    2,385,804    2,438,572 
Unamortized net deferred loan costs                       1,258 
           Total non-covered loans                      $2,439,830 
                          
Covered loans  $5,173    5    5,670    88,675    99,523 
                          
                Total loans  $19,392    2,813    41,411    2,474,479    2,539,353 

 

The Company had no non-covered or covered loans that were past due greater than 90 days and accruing interest at March 31, 2016.

 

The following table presents an analysis of the payment status of the Company’s loans as of December 31, 2015.

 

($ in thousands)  30-59
Days Past
Due
   60-89 Days
Past Due
   Nonaccrual
Loans
   Current   Total Loans
Receivable
 
Non-covered loans                         
Commercial, financial, and agricultural:                         
Commercial - unsecured  $632        391    50,878    51,901 
Commercial - secured   344    127    2,406    111,803    114,680 
Secured by inventory and accounts receivable   28        83    38,875    38,986 
                          
Real estate – construction, land development & other land loans   1,499    379    4,155    284,345    290,378 
                          
Real estate – residential, farmland, and multi-family   12,691    3,271    21,964    813,817    851,743 
                          
Real estate – home equity lines of credit   920    96    2,431    207,998    211,445 
                          
Real estate - commercial   5,399    864    8,262    797,855    812,380 
                          
Consumer   273    255    302    43,069    43,899 
  Total non-covered  $21,786    4,992    39,994    2,348,640    2,415,412 
Unamortized net deferred loan costs                       873 
           Total non-covered loans                      $2,416,285 
                          
Covered loans  $3,313    402    7,816    91,110    102,641 
                          
                Total loans  $25,099    5,394    47,810    2,439,750    2,518,926 

 

The Company had no non-covered or covered loans that were past due greater than 90 days and accruing interest at December 31, 2015.

Page 20 

The following table presents the activity in the allowance for loan losses for non-covered loans for the three months ended March 31, 2016.

 

($ in thousands)  Commercial,
Financial,
and
Agricultural
   Real Estate –
Construction,
Land
Development, &
Other Land
Loans
   Real Estate –
Residential,
Farmland,
and Multi-
family
   Real
Estate –
Home
Equity
Lines of
Credit
   Real Estate –
Commercial
and Other
   Consumer   Unallo-
cated
   Total 
                                 
As of and for the three months ended March 31, 2016
                                         
Beginning balance  $4,758    3,410    9,154    2,741    4,987    1,038    696    26,784 
Charge-offs   (533)   (259)   (2,014)   (466)   (166)   (425)       (3,863)
Recoveries   79    85    315    13    96    119        707 
Provisions   612    (229)   1,291    (285)   252    234    (254)   1,621 
Ending balance  $4,916    3,007    8,746    2,003    5,169    966    442    25,249 
                                         
Ending balances as of March 31, 2016:  Allowance for loan losses
                                         
Individually evaluated for impairment  $118    183    1,427        554            2,282 
                                         
Collectively evaluated for impairment  $4,798    2,824    7,319    2,003    4,615    966    442    22,967 
                                         
Loans acquired with deteriorated credit quality  $                             
                                         
Loans receivable as of March 31, 2016:                                        
                                         
Ending balance – total  $234,510    280,864    842,595    214,970    824,859    40,774        2,438,572 
Unamortized net deferred loan costs                                      1,258 
Total non-covered loans                                      2,439,830 
                                         
Ending balances as of March 31, 2016: Loans
                                         
Individually evaluated for impairment  $923    4,393    22,658    13    13,467            41,454 
                                         
Collectively evaluated for impairment  $233,587    276,471    819,937    214,957    810,828    40,774        2,396,554 
                                         
Loans acquired with deteriorated credit quality  $                564            564 

 

Page 21 

 

The following table presents the activity in the allowance for loan losses for non-covered loans for the year ended December 31, 2015.

 

($ in thousands)  Commercial,
Financial,
and
Agricultural
   Real Estate –
Construction,
Land
Development, &
Other Land
Loans
   Real Estate –
Residential,
Farmland,
and Multi-family
   Real
Estate –
Home
Equity
Lines of
Credit
   Real Estate –
Commercial
and Other
   Consumer   Unallo-
cated
   Total 
                                 
As of and for the year ended December 31, 2015
                                         
Beginning balance  $8,391    6,470    9,720    3,731    9,045    841    147    38,345 
Charge-offs   (3,684)   (2,647)   (5,682)   (826)   (2,639)   (1,637)       (17,115)
Recoveries   876    993    321    100    888    368        3,546 
Provisions   (825)   (1,406)   4,795    (264)   (2,307)   1,466    549    2,008 
Ending balance  $4,758    3,410    9,154    2,741    4,987    1,038    696    26,784 
                                         
Ending balances as of December 31, 2015:  Allowance for loan losses
                                         
Individually evaluated for impairment  $190    213    1,478    313    333    160        2,687 
                                         
Collectively evaluated for impairment  $4,568    3,197    7,676    2,428    4,654    878    696    24,097 
                                         
Loans acquired with deteriorated credit quality  $                             
                                         
Loans receivable as of December 31, 2015:
                                         
Ending balance  $205,567    290,378    851,743    211,445    812,380    43,899        2,415,412 
Unamortized net deferred loan costs                                      873 
Total non-covered loans                                      2,416,285 
                                         
Ending balances as of December 31, 2015: Loans
                                         
Individually evaluated for impairment  $907    4,554    23,839    376    14,818    160        44,654 
                                         
Collectively evaluated for impairment  $204,660    285,824    827,904    211,069    796,981    43,739        2,370,177 
                                         
Loans acquired with deteriorated credit quality  $                581            581 

 

Page 22 

The following table presents the activity in the allowance for loan losses for non-covered loans for the three months ended March 31, 2015.

 

($ in thousands)  Commercial,
Financial,
and
Agricultural
   Real Estate –
Construction,
Land
Development, &
Other Land
Loans
   Real Estate –
Residential,
Farmland,
and Multi-
family
   Real
Estate –
Home
Equity
Lines of
Credit
   Real Estate –
Commercial
and Other
   Consumer   Unallo-
cated
   Total 
                                 
As of and for the three months ended March 31, 2015
                                         
Beginning balance  $8,391    6,470    9,720    3,731    9,045    841    147    38,345 
Charge-offs   (944)   (1,256)   (1,569)   (67)   (923)   (601)       (5,360)
Recoveries   88    267    16    17    202    91        681 
Provisions   (1,778)   525    2,659    482    (2,405)   464    157    104 
Ending balance  $5,757    6,006    10,826    4,163    5,919    795    304    33,770