First Bancorp FBNC Q2 2026 earnings

Second Quarter 2026 Highlights

• D-EPS was $1.22 per share for the second quarter of 2026 compared to $1.13 for the linked quarter and $0.93 for the like quarter.
• The net interest margin was 3.71% for the quarter ended June 30, 2026, an expansion of 0.04% from the linked quarter and 0.39% from the like quarter.
• The efficiency ratio for the quarter ended June 30, 2026 was 49.12%, compared to 49.05% for the linked quarter and 53.00% for the like quarter.
• Total assets exceeded $13 billion at June 30, 2026, the highest level in First Bancorp's history.
• Total loans were $9.0 billion at June 30, 2026, representing an increase of $194.9 million, or 8.9% annualized.
• Total loan yield was 5.67%, up 10 basis points from the linked quarter and 14 basis points from the like quarter.
• The yield on securities decreased 3 basis points to 2.71% from 2.74% for the linked quarter.
• Total cost of funds increased 3 basis points to 1.34% for the quarter ended June 30, 2026 from 1.31% for the linked quarter and decreased 14 basis points from the like quarter.
• Average core deposits were $11.0 billion, an increase of $181.0 million for the linked quarter and $268.1 million from the like quarter. Total cost of deposits was 1.31%, an increase of 3 basis points for the linked quarter and a decrease of 12 basis points from the like quarter.
• Noninterest expenses of $62.8 million represented a $2.5 million increase from the linked quarter and a $3.8 million increase from the like quarter. The linked quarter increase was driven by a $2.0 million increase in Total personnel expense.
• Noninterest-bearing demand deposits were $3.6 billion, representing 32% of total deposits at June 30, 2026. During the second quarter of 2026, period end customer deposits grew by 2.6% annualized.
• The loan-to-deposit ratio was 81.1% as of June 30, 2026.
• On July 14, 2026, First Bancorp announced its pending acquisition of First Carolina Bancshares Corporation, scheduled to close in late 2026 or early 2027.

Second Quarter 2026 Results

SOUTHERN PINES, N.C.

• First Bancorp (the "Company") (NASDAQ - FBNC), the parent company of First Bank, reported unaudited second quarter earnings today. The Company reported net income of $50.5 million, or $1.22 diluted earnings per share ("D-EPS"), for the three months ended June 30, 2026 compared to $46.7 million, or $1.13 D-EPS, for the three months ended March 31, 2026 ("linked quarter") and $38.6 million, or $0.93 D-EPS, for the second quarter of 2025 ("like quarter").

On July 14, 2026, the Company announced an agreement to acquire First Carolina Bancshares Corporation ("First Carolina"), and its subsidiary, Carolina Bank & Trust Company ("Carolina Bank") headquartered in Florence, South Carolina, in a 75% stock and 25% cash transaction. This transaction is subject to regulatory approvals and approval of First Carolina's shareholders, and is expected to close in the late fourth quarter of 2026 or early first quarter of 2027. Carolina Bank operates 14 branches throughout the Pee Dee region of South Carolina and had approximately $831 million in total assets, $596 million in loans, and $714 million in deposits at June 30, 2026.

The Company continued to enhance net interest income and net interest margin ("NIM") during the second quarter of 2026. The Company recorded net interest income of $111.3 million for the current quarter, compared to $107.1 million for the linked quarter and $96.7 million for the like quarter. NIM for the second quarter of 2026 expanded to 3.71% from 3.67% for the linked quarter and 3.32% for the like quarter.

Noninterest expenses were $62.8 million for the second quarter of 2026, up from $60.2 million for the linked quarter, and $58.9 million for the like quarter. The efficiency ratio was 49.12% for the quarter ended June 30, 2026 , compared to 49.05% for the linked quarter and 53.00% for the like quarter.

Richard H. Moore, Chairman and CEO of the Company, stated, “First Bancorp continued to build on its positive start to 2026 with strong second quarter financial results driven by continued margin expansion, prudent balance sheet execution, high quality loans and a controlled efficiency ratio. Earnings continue to benefit from the repositioning of lower-yielding assets into higher-yielding opportunities, while our liquidity position, capital levels, and credit quality remain strong. We are pleased with our performance through the first half of the year and remain confident in our ability to sustain positive momentum and deliver continued success in 2026. We are excited about the acquisition of First Carolina which brings talented bankers and will help us accelerate our South Carolina growth expansion."

Net Interest Income and Net Interest Margin

Net interest income for the second quarter of 2026 was $111.3 million, an increase of 3.9% from the linked quarter of $107.1 million and an increase of 15.1% from the like quarter of $96.7 million. The increase in net interest income from the linked and like quarters resulted from additional loan volume and increasing loan yield through originations as well as one additional earning day compared to the linked quarter. The increase from the like quarter also resulted from our focused efforts to manage deposit costs after the rate cuts by the Federal Reserve in 2025.

The Company’s NIM for the second quarter of 2026 was 3.71%, an increase of 4 basis points from the linked quarter and 39 basis points from the like quarter.

The linked quarter expansion of NIM was driven a $114.9 million increase in average loans along with a 10 basis points expansion in loan yield. Additionally, short-term investments contributed an additional $1.5 million from increased balances partially reduced by lower yields. Offsetting these increases, the cost of interest bearing deposits increased 5 basis points on growth of $98.8 million in average balances. Driving these increases, the average balance of money market deposits increased $99.6 million while the cost of those deposits increased 8 basis points.

The like quarter expansion of NIM was driven by growth of $708.9 million in average loans, coupled with a 14 basis point yield increase as well as the cost of interest bearing deposits decreasing 20 basis points. The Company shifted its mix of interest-earning assets to higher yielding assets from the like quarter, with loans increasing from 70.1% of average interest-earning assets to 74.1% in the current quarter, while securities contracted from 25.6% of average interest-earning assets to 22.3% and short-term investments contracted from 4.3% of average interest-bearing assets to 3.7% .

See Appendix H regarding loan purchase discount accretion and its impact on the Company's NIM.

Provision for Credit Losses and Credit Quality

For the three months ended June 30, 2026, March 31, 2026 and June 30, 2025, the Company recorded $1.2 million, $3.1 million and $2.2 million in provision for credit losses, respectively. The provision for the second quarter of 2026 was driven by net charge-offs of $1.0 million. The Allowance for Credit Losses increased $0.2 million to $124.9 million, or 1.39% of loans. Additionally, the $22 thousand provision for unfunded commitments during the quarter was the result of additional unfunded lending commitments.

The Company did not adjust its incremental reserve for potential exposure from Hurricane Helene, maintaining a $1.9 million reserve as of June 30, 2026. The remaining incremental reserve contributed two basis points to the Allowance for Credit Losses at period end.

Asset quality remained strong with annualized net loan charge-offs of 0.04% for the second quarter of 2026. Total nonperforming assets ("NPAs") totaled $44.9 million at June 30, 2026, or 0.34% of total assets, up slightly from 0.32% at March 31, 2026 and 0.28% at June 30, 2025.

Noninterest Income

Total noninterest income for the second quarter of 2026 was $16.0 million, a $0.9 million increase from the linked quarter, primarily related to a $0.7 million increase in Other income, net. The current quarter reflected a 12.2% increase from $14.3 million for the like quarter, primarily related to a $1.0 million increase in Other income net.

Noninterest Expenses

Noninterest expenses amounted to $62.8 million for the second quarter of 2026 compared to $60.2 million for the linked quarter and $58.9 million for the like quarter. The $2.5 million, or 4.2%, increase in noninterest expense from the linked quarter was driven by a $2.0 million increase in Total personnel expenses. The $3.8 million increase from the like quarter was driven by a $3.3 million increase in Total personnel expenses. While noninterest expenses have been increasing, they are the result of the Company's continued growth as the efficiency ratio was 49.12% for the quarter ended June 30, 2026, compared to 49.05% for the linked quarter and 53.00% for the like quarter.

Income Taxes

Income tax expense totaled $12.9 million for the second quarter of 2026 compared to $12.3 million for the linked quarter and $11.3 million for the like quarter, reflecting effective tax rates of 20.3%, 20.9% and 22.6% for the respective periods.

Balance Sheet

Total assets at June 30, 2026 were $13.0 billion, an increase of $93.9 million, or 2.9% annualized, from the linked quarter and $433.4 million, or 3.4%, from a year earlier.

Driven by principal paydowns and maturities, total investment securities decreased to $2.4 billion at June 30, 2026, a $42.2 million decrease from the linked quarter. Total unrealized losses on available for sale investment securities were $204.5 million at June 30, 2026, as compared to $197.7 million at March 31, 2026 and $298.9 million at June 30, 2025.

Total loans were $9.0 billion at June 30, 2026, an increase of $194.9 million, or 8.9% annualized, from March 31, 2026 and an increase of $763.1 million, or 9.3%, from June 30, 2025. Adjusting for the paydown of one larger seasonal loan, loan growth for the current quarter was 10.9% annualized. Please see the below table for total loan portfolio mix. As of June 30, 2026, there were no notable concentrations in geographies within North Carolina or South Carolina or within industries, including in office or hospitality categories, which are included in the "commercial real estate - non-owner occupied" category in the table below. The Company's exposure to non-owner occupied office loans represented approximately 6.2% of the total portfolio at June 30, 2026, with the largest loan being $33.0 million and with an average loan outstanding balance of $1.4 million. Non-owner occupied office loans are generally in non-metro markets and the ten largest loans in this category represent less than 2% of the total loan portfolio.

The following table presents the period end balance and portfolio percentage by loan category.

Total deposits were $11.1 billion at June 30, 2026, an increase of $72.4 million, or 2.6% annualized, from March 31, 2026 and $254.5 million, or 2.3%, from June 30, 2025.

The Company has a diversified and granular deposit base which has remained a stable funding source with noninterest-bearing deposits comprising 32% of total deposits at June 30, 2026. As presented in the table below, our deposit mix has remained relatively consistent.

As of June 30, 2026 and March 31, 2026, estimated insured deposits totaled $6.5 billion, or 58.9%, and $6.5 billion, or 59.0%, of total deposits, respectively. In addition, at June 30, 2026 and March 31, 2026, there were collateralized deposits of $748.7 million and $723.8 million, respectively, such that approximately 65.7% and 65.6%, respectively, of our total deposits were insured or collateralized at those dates.

Capital

The Company maintains capital in excess of well-capitalized regulatory requirements, with an estimated total risk-based capital ratio at June 30, 2026 of 16.06%, down from the linked quarter ratio of 16.12% and from the like quarter ratio of 16.90%.

The Company has elected to exclude accumulated other comprehensive income ("AOCI") related primarily to available for sale securities from common equity tier 1 capital. AOCI is included in the Company’s tangible common equity ("TCE") to tangible assets ratio (a non-GAAP financial measure) which was 9.83% at June 30, 2026, an increase of 20 basis points from the linked quarter and 100 basis points from June 30, 2025. The increase in TCE from the like quarter was driven by improvements in the level of unrealized losses on the available for sale securities portfolio, arising from market value improvements and the 2025 securities loss-earnback transactions. Please refer to Appendix A for a reconciliation of common equity to TCE (a non-GAAP measure) and Appendix C for a calculation of the TCE ratio (a non-GAAP measure).

Liquidity

Liquidity is evaluated as both on-balance sheet (primarily cash and cash-equivalents, unpledged securities and other marketable assets) and off-balance sheet (readily available lines of credit and other funding sources). The Company continues to manage liquidity sources, including unused lines of credit, at levels believed to be adequate to meet its operating needs for the foreseeable future.

The Company's on-balance sheet liquidity ratio (net liquid assets as a percent of net liabilities) at June 30, 2026 was 15.7%. In addition, the Company had approximately $2.4 billion in available lines of credit at that date resulting in a total liquidity ratio of 32.8%.

About First Bancorp

First Bancorp is a bank holding company headquartered in Southern Pines, North Carolina, with total assets of $13.0 billion. Its principal activity is the ownership and operation of First Bank, a state-chartered community bank that operates 113 branches in North Carolina and South Carolina. Since 1935, First Bank has taken a tailored approach to banking, combining best-in-class financial solutions, helpful local expertise, and technology to manage a home or business. First Bank also provides SBA loans to customers through its nationwide network of lenders. Member FDIC, Equal Housing Lender.

Please visit our website at www.LocalFirstBank.com for more information.

First Bancorp's common stock is traded on The NASDAQ Global Select Market under the symbol "FBNC."

Caution about Forward-Looking Statements: This News Release 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 words or phrases 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 risks and uncertainties relating to the level of success in integrating acquisitions, (including the ability to successfully integrate First Carolina into First Bank; to realize the anticipated benefits of the acquisition; deposit attrition, customer loss or other revenue loss following completed acquisitions may be greater than anticipated; and the integration of operations and personnel may require more time and expense); 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 available at www.sec.gov. 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 this press release by wire services, internet services or other media.

Non-GAAP Measures

In this Earnings Release, we present certain measures of our performance that are calculated by methods other than in accordance with generally accepted accounting principles (“GAAP”). Company management uses these non-GAAP measures for purposes of evaluating our performance. Non-GAAP measures exclude or include amounts that are not normally excluded or included in the most directly comparable measure determined in accordance with GAAP. Company management believes an appropriate analysis of the Company's financial performance requires an understanding of the factors underlying such performance. Non-GAAP financial measures should not be viewed as substitutes for the most directly comparable financial measures calculated in accordance with GAAP. Please see the Appendices attached to this Earnings Release for reconciliations of return on tangible common equity, tangible common equity, tangible book value per share, the tangible common equity ratio, adjusted net income and adjusted diluted earnings per share.

(1) Average loans include nonaccruing loans, the effect of which is to lower the average rate shown.

(2) Includes accretion of discount on acquired loans of $1.1 million, $1.1 million and $1.5 million for the three months ended June 30, 2026, March 31, 2026 and June 30, 2025, respectively.

(3) Includes tax-equivalent adjustments to reflect the net tax benefit that we receive related to tax-exempt securities and loans as reduced by the related nondeductible portion of interest expense.

(1) Average loans include nonaccruing loans, the effect of which is to lower the average rate shown.

(2) Includes accretion of discount on acquired loans of $2.1 million and $3.2 million for the six months ended June 30, 2026 and June 30, 2025, respectively.

(3) Includes tax-equivalent adjustments to reflect the net tax benefit that we receive related to tax-exempt securities and loans as reduced by the related nondeductible portion of interest expense.

Reconciliation of non-GAAP measures

APPENDIX A: Reconciliation of Common Equity to Tangible Common Equity ("TCE")

APPENDIX B: Calculation of Tangible Book Value Per Share ("TBVPS")

APPENDIX C: TCE Ratio

APPENDIX D: Calculation of Return on Average Assets ("ROA") and Adjusted ROA

Reconciliation of non-GAAP measures, continued

APPENDIX E: Calculation of Return on Common Equity ("ROCE") and Adjusted ROCE

APPENDIX F: Calculation of Return on TCE ("ROTCE") and Adjusted ROTCE

APPENDIX G: Efficiency Ratio and Adjusted Efficiency Ratio

Supplemental information

APPENDIX H: Loan purchase discount accretion and its impact on the Company's NIM Included in interest income for the second quarter of 2026 was loan purchase accounting discount accretion of $1.1 million compared to $1.1 million for the linked quarter and $1.5 million for the like quarter, with the activity primarily related to the continued repayments/reduction of the loan portfolio acquired from GrandSouth Bancorporation in January of 2023. Loan discount accretion had positive impacts of three basis points, three basis points and four basis points, respectively, on the Company's NIM and NIM-T/E in the second quarter of 2026, the linked quarter and the like quarter.