Item 2.02 - Results of Operations and Financial Condition
On January 22, 2020, First Bancorp (the "Registrant" or "Company") issued a news
release to announce its financial results for the three and twelve month periods
ended December 31, 2019. The news release is attached hereto as Exhibit 99.1.
The news release includes disclosure of net interest income on a tax-equivalent
basis, which is a non-GAAP performance measure used by management in operating
its business. Management believes that analysis of net interest income on a
tax-equivalent basis is useful and appropriate because it allows a comparison of
net interest income amounts in different periods without taking into account the
different mix of taxable versus non-taxable investments that may have existed
during those periods.
The news release also includes disclosure of tax-equivalent net interest margin,
excluding the impact of loan discount accretion, which is a non-GAAP performance
measure. Management believes that it is useful to calculate and present the net
interest margin without the impact of loan discount accretion, for the reasons
explained in the rest of this paragraph. Loan discount accretion is a non-cash
interest income adjustment that is related to 1) the Company's acquisition of
loans and represents the portion of the fair value discount that was initially
recorded on the acquired loans, and 2) the Company's origination of SBA loans
and the subsequent sale of the guaranteed portions of the loans that results in
a discount being recorded on the retained portion of the loans. These discounts
are recognized into income over the lives of the loans. At December 31, 2019,
the Company had a remaining loan discount balance on acquired loans of $12.7
million compared to $17.3 million at December 31, 2018. At December 31, 2019,
the Company had a remaining loan discount balance on SBA loans of $7.1 million
compared to $5.7 million at December 31, 2018. For the related loans that
perform and pay-down over time, the loan discount will also be reduced, with a
corresponding increase to interest income. Therefore, management of the Company
believes it is useful to also present this ratio to reflect the Company's net
interest margin excluding this non-cash, temporary loan discount accretion
adjustment to aid investors in comparing financial results between periods.
The Registrant cautions that non-GAAP financial measures should be considered in
addition to, but not as a substitute for, the reported GAAP results. A
reconciliation between the non-GAAP financial measures presented and the most
directly comparable financial measure calculated in accordance with GAAP is
included in the news release and financial summary attached hereto as Exhibit
99.1.
Item 8.01 - Other Events
On January 22, 2020, the Registrant issued a news release to announce its
financial results for the three and twelve months ended December 31, 2019. The
news release is attached hereto as Exhibit 99.1.
Item 9.01 - Financial Statements and Exhibits
(d) Exhibits
Exhibit 99.1 - News Release issued on January 22, 2020
Disclosures About Forward Looking Statements
This news release 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. 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 annual
report on Form 10-K. Forward-looking statements speak only as of the date they
are made, and the Company undertakes no obligation to update or revise
forward-looking statements. The Company is also not responsible for changes made
to the press release by wire services, internet services or other media.
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
First Bancorp
January 22, 2020 By: /s/ Richard H. Moore
Richard H. Moore
Chief Executive Officer
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