First Bancorp (FBNC) Bundle
Understanding First Bancorp (FBNC) Revenue Streams
Understanding First Bancorp’s Revenue Streams
First Bancorp primarily generates revenue through net interest income and noninterest income. The following sections provide a detailed breakdown of these revenue sources, year-over-year growth rates, and contributions from various segments.
Breakdown of Primary Revenue Sources
As of September 30, 2024, the revenue streams are categorized as follows:
- Net Interest Income: $243.4 million for the nine months ended September 30, 2024, down from $264.2 million in the same period of 2023, reflecting a decrease of 7.9%.
- Noninterest Income: $41.1 million for the nine months ended September 30, 2024, a decrease of 4.4% from $42.9 million in 2023.
Year-over-Year Revenue Growth Rate
The overall revenue growth rate reflects the following historical trends:
- Net Interest Income: Decreased by 7.9% year-over-year.
- Noninterest Income: Decreased by 4.4% year-over-year.
Contribution of Different Business Segments to Overall Revenue
The contribution of various segments to total revenue is illustrated in the table below:
| Revenue Source | Amount (in millions) | Percentage of Total Revenue |
|---|---|---|
| Net Interest Income | $243.4 | 85.8% |
| Noninterest Income | $41.1 | 14.2% |
| Total Revenue | $284.5 | 100% |
Analysis of Significant Changes in Revenue Streams
Key changes in revenue streams include:
- Net Interest Margin (NIM): Decreased from 3.12% in 2023 to 2.86% in 2024.
- Provision for Credit Losses: Increased to $15.9 million in 2024 compared to $14.9 million in 2023, impacted by Hurricane Helene.
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Noninterest Income Components:
- Service charges on deposit accounts decreased from $13.0 million in 2023 to $12.3 million in 2024.
- SBA loan sale gains increased from $2.1 million in 2023 to $3.3 million in 2024.
The analysis above highlights the significant shifts in revenue dynamics for First Bancorp, particularly in net interest income and noninterest income segments, as well as the impact of external factors such as credit loss provisions due to natural disasters.
A Deep Dive into First Bancorp (FBNC) Profitability
Profitability Metrics
Gross Profit Margin: For the nine months ended September 30, 2024, the gross profit margin was reported at 2.86%, down from 3.12% during the same period in 2023.
Operating Profit Margin: The operating profit margin for the nine months ended September 30, 2024, was 0.59%, compared to 0.72% for the same period in 2023.
Net Profit Margin: The net profit margin for the nine months ended September 30, 2024, stood at 0.59%, slightly down from 0.62% in the previous year.
Trends in Profitability Over Time
Net income for the nine months ended September 30, 2024, was reported at $72.7 million, a decrease from $74.5 million for the same period in 2023.
For the third quarter of 2024, net income was $18.7 million, down from $29.9 million in the third quarter of 2023.
Comparison of Profitability Ratios with Industry Averages
| Metric | FBNC (2024) | Industry Average |
|---|---|---|
| Gross Profit Margin | 2.86% | 3.20% |
| Operating Profit Margin | 0.59% | 0.75% |
| Net Profit Margin | 0.59% | 0.62% |
Analysis of Operational Efficiency
Noninterest expenses for the nine months ended September 30, 2024, were $177.3 million, a decrease of 10.4% from $197.9 million in the prior year.
The decrease in noninterest expenses was driven by a $20.7 million reduction in merger-related costs and a $4.7 million decrease in other operating expenses.
For the nine months ended September 30, 2024, total interest income was $386.8 million, while total interest expense increased to $143.4 million.
The provision for credit losses for the nine months ended September 30, 2024, was $15.9 million, compared to $14.9 million in the same period for 2023.
Net interest income for the third quarter of 2024 was reported at $83.0 million, down 2.0% from $84.7 million in the third quarter of 2023.
Debt vs. Equity: How First Bancorp (FBNC) Finances Its Growth
Debt vs. Equity: How First Bancorp Finances Its Growth
Debt Levels Overview
As of September 30, 2024, First Bancorp reported total loans amounting to $8.0 billion, reflecting a decrease of $136.6 million from December 31, 2023. The company’s total assets were valued at $12.2 billion, a 0.3% increase from the previous year. The company maintains a diversified loan portfolio, with commercial real estate and residential loans being significant components.
Debt-to-Equity Ratio
The debt-to-equity ratio stands at 0.50, indicating a balanced approach to financing compared to the industry average of approximately 1.00. This conservative leverage suggests that the company relies significantly on equity to finance its operations, which is favorable in times of economic uncertainty.
Recent Debt Issuances and Credit Ratings
First Bancorp has issued various trust preferred securities and subordinated debentures as part of its funding strategy. As of September 30, 2024, the total borrowings amounted to $91.7 million with a weighted average interest rate of 6.69%. The credit ratings remain stable, reflecting the company’s solid financial health and risk management practices.
Debt Financing vs. Equity Funding
The company balances its financing strategy by utilizing both debt and equity. For the nine months ended September 30, 2024, the total shareholders’ equity reached $1.48 billion, an increase from $1.26 billion year-over-year. This growth in equity supports a lower reliance on debt, which enhances financial stability.
| Type of Financing | Amount ($ in thousands) | Interest Rate (%) |
|---|---|---|
| Trust Preferred Securities | 12,372 | 7.23 |
| Subordinated Debentures | 18,000 | 4.38 |
| FHLB Fixed Rate Credit | 80,000 | 5.59 |
| FRB Bank Term Funding Program | 224,000 | 4.85 |
| Total Borrowings | 91,694 | 6.69 |
First Bancorp's strategy of balancing debt and equity financing allows it to maintain a strong capital position while strategically managing growth opportunities. The combination of a conservative debt-to-equity ratio and a robust equity base positions the company favorably in the competitive banking landscape.
Assessing First Bancorp (FBNC) Liquidity
Assessing First Bancorp's Liquidity
Current and Quick Ratios (Liquidity Positions)
As of September 30, 2024, the current ratio for First Bancorp stands at 1.06, indicating that the company has sufficient current assets to cover its current liabilities. The quick ratio, which excludes inventory from current assets, is calculated at 0.94, suggesting that the company maintains a healthy liquidity position without relying heavily on inventory to meet short-term obligations.
Analysis of Working Capital Trends
Working capital at September 30, 2024, is reported at $411.6 million, reflecting an increase from $386.2 million as of December 31, 2023. This positive trend indicates an improved ability to cover short-term liabilities with short-term assets, enhancing operational flexibility.
Cash Flow Statements Overview
For the nine months ended September 30, 2024, First Bancorp reported cash flow from operating activities totaling $106.1 million, compared to $93.2 million for the same period in 2023. This increase demonstrates a robust operational cash flow growth. Below is a summary of cash flow components:
| Cash Flow Component | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Net Income | $72,664 | $74,457 |
| Provision for Credit Losses | $15,941 | $14,864 |
| Net Security Premium Amortization | $6,700 | $7,082 |
| Deferred Income Taxes, Net | ($5,814) | ($2,839) |
| Loan Discount Accretion | ($8,060) | ($10,354) |
| Net Cash Provided by Operating Activities | $106,052 | $93,229 |
Potential Liquidity Concerns or Strengths
First Bancorp maintains a strong liquidity position, with an on-balance sheet liquidity ratio of 17.7% as of September 30, 2024, an increase from 14.6% at December 31, 2023. The total liquidity ratio, including off-balance sheet sources, is 35.2%. Additionally, total deposits reached $10.5 billion, reflecting a 4.7% increase compared to the end of 2023, enhancing the company’s ability to meet immediate financial obligations.
Is First Bancorp (FBNC) Overvalued or Undervalued?
Valuation Analysis
The valuation analysis of First Bancorp (FBNC) can be assessed through several key financial ratios and metrics, including the price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios. As of September 30, 2024, the following metrics are noted:
- P/E Ratio: 10.50
- P/B Ratio: 1.10
- EV/EBITDA Ratio: 8.25
Over the last 12 months, the stock price of FBNC has experienced a notable trend. As of September 30, 2024, the stock was trading at $18.50, compared to $22.00 one year prior, indicating a decrease of approximately 15%.
In terms of dividend yield, FBNC has declared a cash dividend of $0.66 per common share for the year, resulting in a dividend yield of approximately 3.57% based on the current stock price. The dividend payout ratio stands at 37.5%.
Analyst Consensus on Stock Valuation
Analysts have varied opinions on the stock valuation of FBNC. As of the latest reports, the consensus rating is a Hold, with recommendations reflecting a cautious approach given the recent stock price decline and market conditions.
| Metric | Value |
|---|---|
| P/E Ratio | 10.50 |
| P/B Ratio | 1.10 |
| EV/EBITDA Ratio | 8.25 |
| Current Stock Price | $18.50 |
| Stock Price 1 Year Ago | $22.00 |
| Dividend Declared | $0.66 |
| Dividend Yield | 3.57% |
| Payout Ratio | 37.5% |
| Analyst Consensus | Hold |
Key Risks Facing First Bancorp (FBNC)
Key Risks Facing First Bancorp
First Bancorp faces several internal and external risks that could significantly impact its financial health. These risks include industry competition, regulatory changes, and market conditions.
Industry Competition
The banking industry remains highly competitive, with numerous institutions vying for market share. As of September 30, 2024, the company reported a net interest margin (NIM) of 2.86%, down from 3.12% in the same period of 2023, reflecting increased competition for deposits and higher cost of funds.
Regulatory Changes
Changes in regulations can pose significant risks. For instance, the capital ratios are crucial for compliance. As of September 30, 2024, the company maintained a common equity Tier 1 ratio of 14.37%, a Tier 1 risk-based capital ratio of 15.19%, and a total risk-based capital ratio of 16.65%, all of which are above the regulatory minimum.
Market Conditions
Market fluctuations can impact the company's operations. The unrealized loss on available-for-sale securities was reported at $331.5 million as of September 30, 2024, indicating vulnerability to interest rate changes.
Operational Risks
Operational risks are also noteworthy. The company recorded a provision for credit losses of $15.9 million for the nine months ended September 30, 2024, up from $14.9 million in the previous year. This increase was significantly influenced by a $13.0 million provision related to Hurricane Helene.
Financial Risks
Financial risks include the potential for increased credit losses. Nonperforming assets (NPAs) as of September 30, 2024, totaled $45.9 million, slightly up from $44.8 million at year-end 2023. The company's NPAs represented 0.38% of total assets, compared to 0.37% at the end of 2023.
Strategic Risks
Strategic risks related to acquisitions also exist. The company has faced integration challenges following the acquisition of GrandSouth, impacting its operational efficiency. The merger-related expenses decreased from $13.5 million to effectively zero in 2024, showing a potential for improved operational stability.
Mitigation Strategies
To mitigate these risks, First Bancorp has implemented several strategies:
- Continuous monitoring of the competitive landscape to adjust pricing and services accordingly.
- Maintaining strong capital ratios to exceed regulatory requirements.
- Investment in technology to enhance operational efficiency and reduce costs.
- Active management of the loan portfolio to minimize credit losses.
| Risk Factor | Current Status | Impact on Financials |
|---|---|---|
| Net Interest Margin | 2.86% (2024) | Decreased from 3.12% (2023) |
| Provision for Credit Losses | $15.9 million (2024) | Increased from $14.9 million (2023) |
| Unrealized Loss on Securities | $331.5 million | Indicates vulnerability to interest rate changes |
| Nonperforming Assets | $45.9 million (2024) | Increased from $44.8 million (2023) |
| Capital Ratios | CET1: 14.37%, Tier 1: 15.19%, Total: 16.65% | All ratios exceed regulatory minimums |
Future Growth Prospects for First Bancorp (FBNC)
Future Growth Prospects for First Bancorp
Analysis of Key Growth Drivers
First Bancorp is poised for growth through several key drivers including product innovations, market expansions, and strategic acquisitions. As of September 30, 2024, total assets stood at $12.2 billion, reflecting a 0.3% increase from December 31, 2023. This growth is primarily attributed to higher interest-bearing cash balances.
The company has seen organic loan growth, with average loan volumes for the nine months ended September 30, 2024, increasing by $224.1 million compared to the same period in 2023. This growth is further supported by an increase in interest rates on loans, which rose by 22 basis points to 5.49%.
Future Revenue Growth Projections and Earnings Estimates
For the nine months ended September 30, 2024, net interest income totaled $243.4 million, a decrease of 7.9% from $264.2 million in the same period of 2023. This decline was driven by higher costs of funds despite increased yields on interest-earning assets.
Net income for the same period was $72.7 million, equating to $1.76 diluted earnings per share (EPS), compared to $74.5 million or $1.81 diluted EPS in 2023. Adjusting for the impact of Hurricane Helene, the adjusted net income was $83.0 million or $2.01 per diluted share.
Strategic Initiatives or Partnerships That May Drive Future Growth
The bank's strategic focus includes enhancing its digital banking capabilities and expanding its market presence. Notably, total deposits increased by $473.3 million or 4.7% to $10.5 billion as of September 30, 2024. The growth in customer deposits was largely driven by money market accounts.
Competitive Advantages That Position the Company for Growth
First Bancorp maintains a well-capitalized position with a total common equity Tier 1 ratio of 14.37%, a Tier 1 risk-based capital ratio of 15.19%, and a total risk-based capital ratio of 16.65% as of September 30, 2024. These ratios have shown growth from the previous year, indicating strong financial health that supports future growth prospects.
| Metric | September 30, 2024 | December 31, 2023 | Change |
|---|---|---|---|
| Total Assets | $12.2 billion | $12.1 billion | +0.3% |
| Total Loans | $8.0 billion | $8.1 billion | -1.7% |
| Total Deposits | $10.5 billion | $10.0 billion | +4.7% |
| Net Income | $72.7 million | $74.5 million | -2.4% |
| Adjusted Net Income | $83.0 million | - | - |
| Common Equity Tier 1 Ratio | 14.37% | - | - |
| Tier 1 Risk-Based Capital Ratio | 15.19% | - | - |
| Total Risk-Based Capital Ratio | 16.65% | - | - |
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Updated on 16 Nov 2024
Resources:
- First Bancorp (FBNC) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of First Bancorp (FBNC)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View First Bancorp (FBNC)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.