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FIRST BANCORP /NC/

FBNC
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Business Summary

First Bancorp /NC/ is a bank holding company headquartered in Southern Pines, North Carolina, whose principal activity is the ownership and operation of First Bank, a state-chartered bank. The Company is the fourth largest commercial bank holding company headquartered in North Carolina. As of December 31, 2025, the Company had total consolidated assets of $12.7 billion , total loans of $8.7 billion , total deposits of $10.7 billion , and shareholders’ equity of $1.7 billion . The Company operates primarily within North Carolina and South Carolina, and the economic conditions of these areas could have a material impact on the Company. The Bank had 113 branches as of December 31, 2025, with 100 branch offices located across North Carolina and 13 branches in South Carolina. The Company experiences strong competition in all aspects of its businesses from national banks, super-regional banks, smaller community banks, non-traditional internet-based banks, insurance companies, mortgage companies, credit unions, and other financial intermediaries. The Company attempts to compete by emphasizing customer service, responsiveness, local decision making, and establishing relationships with its customers.

The Company's primary competitors are not individually named in the filing, but the filing describes competition from national banks, super-regional banks, smaller community banks, non-traditional internet-based banks, insurance companies and agencies, mortgage companies, credit card issuers, leasing companies, finance companies, credit unions, money market mutual funds, brokerage firms, and other securities firms. The Company's stated competitive advantages include emphasizing customer service, responsiveness, local decision making, and establishing relationships with customers. The Company is the fourth largest commercial bank holding company headquartered in North Carolina . The Company's market share or relative standing is not otherwise quantified in the filing.

The Company generates revenue primarily through net interest income, which is the difference between interest earned on interest-earning assets (primarily loans and investment securities) and interest expense incurred on interest-bearing liabilities (primarily deposits and borrowed funds). Net interest income is the Company's largest source of revenue. The Company also generates noninterest income from service charges on deposit accounts, bankcard interchange income, commissions from sales of financial products, SBA loan sale gains, bank-owned life insurance income, and other fees. The Company provides a full range of banking activities to business entities and individuals, including commercial and consumer banking services, mortgage lending, SBA lending, accounts receivable financing, and investment advisory services. The Company's primary customer segments are individuals and small- to medium-sized businesses. The Company does not believe that the loss of a single customer or group of customers would have a material adverse impact on the Bank.

The Company's loan portfolio is diversified and includes commercial business loans, commercial and residential real estate construction and mortgage loans, revolving lines of credit, letters of credit, and loans for personal uses. As of December 31, 2025, the largest component of the loan portfolio was non-owner occupied commercial real estate loans at $2,843,555,000 , representing 33% of total loans, followed by residential 1-4 family real estate at $1,736,453,000 (20%), and owner-occupied commercial real estate at $1,353,912,000 (15%). The Company also has a portfolio of SBA loans, and through its subsidiary Magnolia Financial, provides accounts receivable financing and factoring, inventory financing, and purchase order financing. The Company also provides used car floor-plan financing through its CarBucks division. In 2025, the Company established a loan participation initiative to engage with regional and national commercial borrowers. The securities portfolio is designed to maximize income from funds not needed to meet loan demand and consists of U.S. government bonds, GSEs, mortgage-backed securities, state and municipal obligations, and corporate bonds. As of December 31, 2025, total securities were $2,561,655,000 , with $2,048,556,000 classified as available for sale and $513,099,000 as held to maturity. The Company offers a full range of deposit accounts, including noninterest-bearing and interest-bearing checking, savings, money market accounts, and time deposits. Noninterest-bearing deposits accounted for 32% of total deposits at December 31, 2025 . The Company also offers credit cards, debit cards, letters of credit, safe deposit box rentals, electronic funds transfer services, internet banking, mobile banking, cash management, and through FB Wealth Management Services, non-FDIC insured investment and insurance products.

The Company's investment activities are governed by a policy designed to maximize income from funds not needed to meet loan demand. The Company may invest in U.S. government bonds, GSEs, mortgage-backed securities, collateralized mortgage obligations, commercial mortgage-backed securities, state and municipal obligations, public housing authority bonds, and corporate bonds. Investments must be 'investment-grade' as determined by a nationally recognized investment rating service. The Company also offers various ancillary services, including the placement of property and casualty insurance through a contractual relationship, and non-FDIC insured investment and insurance products through FB Wealth Management Services. The Company's deposit services include membership in the CDARS and ICS programs, which give customers the ability to obtain FDIC insurance on deposits of up to $50 million. The Company also utilizes brokered deposits to manage interest rate risk and acquire specific maturities.

During the year ended December 31, 2025, the Company sold $536,300,000 of securities with a weighted average yield of 1.66% at a loss of $71,627,000 and purchased $585,100,000 of securities with a weighted average yield of 4.35% . The Company redeemed $18,000,000 of subordinated debentures during the year. The Company repurchased 24,849 shares of its common stock during the year ended December 31, 2025. As of December 31, 2025, the Company had remaining authorization to purchase up to $39,000,000 of outstanding stock under the program. The Company also realized a pretax gain of $4,600,000 upon the sale of an office building during the fourth quarter. In January 2023, the Company acquired GrandSouth, a community bank headquartered in Greenville, South Carolina with $1.2 billion in total assets, $1.0 billion in loans, and $1.1 billion in deposits, which operated from eight branches located throughout South Carolina.

Net income for the year ended December 31, 2025 was $111,048,000 , or $2.68 diluted EPS, compared to net income of $76,215,000 , or $1.84 diluted EPS, for the year ended December 31, 2024. Return on average assets was 0.89% for 2025, as compared to 0.63% for the prior year. Return on average common equity was 7.16% for 2025, as compared to 5.38% for the prior year. Net interest income for 2025 increased $66,000,000 , or 19.9% , to $398,247,000 . The net interest margin was 3.40% for 2025, an increase of 51 basis points from the prior year. Total assets at December 31, 2025 were $12.7 billion , a 4.3% increase from a year earlier. Total loans outstanding expanded by $0.6 billion , or 7.8% , during the year. The nonperforming assets to total assets ratio was 0.30% as of December 31, 2025, consistent with December 31, 2024. Net charge offs as a percentage of average loans were 0.10% for 2025, as compared to 0.07% for the prior year.

Business Outlook

The Company's growth strategy includes evaluating merger and acquisition opportunities with other financial institutions and financial services companies. The Company seeks merger and acquisition partners that are culturally similar, have experienced management, and possess either significant market presence or have potential for improved profitability. The acquisition of GrandSouth in January 2023 accomplished the Company's strategic initiative to expand its presence in South Carolina, specifically in the high-growth markets of Greenville, Charleston, and Columbia. The Company also established a loan participation initiative in 2025 to engage with regional and national commercial borrowers within the Bank's footprint and nearby jurisdictions, though the total of loan participations as of December 31, 2025 was nominal.

The Company's growth strategy also includes organic expansion through its branch network. As of December 31, 2025, the Company conducted business from 113 branches , with 100 branch offices located across North Carolina and 13 branches in South Carolina. The Company's branch footprint includes larger North Carolina cities including Charlotte, Raleigh, Greensboro/Winston-Salem/High Point, Asheville, and Wilmington, and larger South Carolina cities including Greenville, Columbia, and Charleston. The Company continues to focus on shifting more loans to variable rates; as of December 31, 2025, the percentages of variable rate loans and fixed rate loans as compared to total performing loans were 29% and 71% , respectively, compared to 23% variable and 77% fixed at December 31, 2024.

The Company's net interest margin expanded 51 basis points to 3.40% in 2025 from 2.89% in 2024. The total cost of deposits peaked in the third quarter of 2024, then declined 44 basis points to 1.32% for the fourth quarter of 2025. The Company's effective tax rate was 20.4% for 2025, which was lower than the prior year as the result of net discrete tax benefits, primarily arising from state taxes, including the continued North Carolina graduated tax rate reductions. The Company continues to actively manage interest rate risk through the addition of variable rate assets and the pricing of interest bearing deposits.

The Company had 1,332 full-time and 42 part-time associates as of December 31, 2025, all of whom are employed by the Bank. The Company's human capital management strategy focuses on attracting, developing, and retaining top quality talent. The Company launched its Leadership Development Program in 2020, which consists of three development tracks. In 2025, the Company's 401(k) plan matched 100% of each employee’s elective deferral amount, up to 6% of their compensation. The Company actively managed headcount and continued to apply additional expense controls in 2024 and 2025.

The Company's capital allocation priorities are not explicitly detailed in the filing, but the filing notes that the Board has authorized the repurchase of up to $40,000,000 in shares of the Company's common stock beginning in January 2024. As of December 31, 2025, the Company had remaining authorization to purchase up to $39,000,000 of outstanding stock under the program. On January 27, 2026, the Board reauthorized the repurchase of up to $40,000,000 in shares of the Company's common stock through January 27, 2027. For the first quarter in 2025, the Company declared a cash dividend of $0.22 . For each quarter thereafter in 2025, the Company declared a cash dividend of $0.23 per common share. The Company's capital expenditures are not quantified in the filing.

The Company faces structural headwinds from changes and instability in economic conditions, geopolitical matters, and financial markets, including a possible recession. The local economic conditions of the Carolinas and the specific markets in which the Company operates have a significant impact on demand for its products and services, as well as the ability of its customers to repay loans. The Company also faces headwinds from interest rate risk, as net interest income is the most significant component of its earnings and changes in interest rates can negatively impact net interest income. As of December 31, 2025, the target range for the federal funds rate was 3.50% to 3.75% , and the FOMC has indicated an expectation of one 25 basis point rate cut during 2026. The Company also faces headwinds from competition, as it experiences strong competition in all aspects of its businesses from both bank and non-bank competitors, many of which have substantially greater resources.

The Company faces constraints from extensive regulation by federal and state regulatory agencies, including the Federal Reserve and the North Carolina Commissioner of Banks. The Company and the Bank are subject to extensive regulation under federal and state laws, and changes in statutes, regulations, and policies could have a material adverse impact on the business and operations. Since the Company's total assets exceed $10.0 billion, it is subject to heightened supervision and regulation. The Company also faces constraints from the potential for credit losses, as lending activities involve substantial credit risk and the Company's allowance for credit losses may not be adequate to cover actual losses. The Company's allowance for credit losses on loans was $123,581,000 as of December 31, 2025.

Risk Factors

The Company faces significant credit risk as lending activities involve substantial risk of loan defaults, and the allowance for credit losses may not be adequate to cover actual losses. The Company's allowance for credit losses on loans was $123,581,000 as of December 31, 2025, and under a 'downside' macroeconomic scenario, the modeled allowance results would increase by approximately $32,000,000 . The Company is subject to interest rate risk, as net interest income is the most significant component of earnings and changes in interest rates can negatively impact net interest income. As of December 31, 2025, a hypothetical immediate parallel increase of 400 basis points in interest rates would result in a 6.3% increase in net interest income over 12 months, while a decrease of 400 basis points would result in a 7.6% decrease. The Company faces liquidity risk, as a significant portion of deposits may exceed FDIC insurance limits; estimated uninsured deposits totaled approximately $4,300,000,000 as of December 31, 2025. The Company is subject to extensive regulation, and failure to comply could result in restrictions on activities. The Company also faces risks from potential or completed acquisitions, including the risk that goodwill recorded in connection with acquisitions could become impaired; at December 31, 2025, goodwill totaled $478,750,000 .

Management Priorities

Management's message emphasizes the Company's 2025 financial highlights, including return on average assets of 0.89% , return on average common equity of 7.16% , and net income of $111,048,000 or $2.68 diluted EPS. Management highlights that net interest income increased $66,000,000 , or 19.9% , driven by increased interest income and lower interest expense, and that the net interest margin expanded 51 basis points to 3.40% . Management notes that credit quality continued to be strong with the nonperforming assets to total assets ratio at 0.30% and net charge offs as a percentage of average loans at 0.10% . Management also highlights that capital remained strong with a total CET1 ratio of 14.10% and total risk-based capital ratio of 16.12% . Management states that the Company has grown organically as well as through strategic acquisitions. Management's strategic priorities include maintaining conservative lending policies and procedures, actively managing headcount and expenses, and continuing to focus on shifting more loans to variable rates. Management also emphasizes the importance of the Company's human capital, stating that associates are considered the primary competitive advantage.

View Source Annual Report on SEC.gov ↗

References

  1. [1] Item 1, Business — General Description
  2. [2] Item 1, Business — General Description
  3. [3] Item 1, Business — General Description
  4. [4] Item 1, Business — General Description
  5. [5] Item 7, MD&A — Overview and 2025 Highlights
  6. [6] Item 1, Business — General Description
  7. [7] Item 7, MD&A — Loan Portfolio Composition
  8. [8] Item 7, MD&A — Loan Portfolio Composition
  9. [9] Item 7, MD&A — Loan Portfolio Composition
  10. [10] Item 7, MD&A — Securities Portfolio Composition
  11. [11] Item 7, MD&A — Securities Portfolio Composition
  12. [12] Item 7, MD&A — Securities Portfolio Composition
  13. [13] Item 7, MD&A — Deposit Composition
  14. [14] Item 7, MD&A — Securities
  15. [15] Item 7, MD&A — Securities
  16. [16] Item 7, MD&A — Noninterest Income
  17. [17] Item 7, MD&A — Securities
  18. [18] Item 7, MD&A — Securities
  19. [19] Item 7, MD&A — Borrowings
  20. [20] Item 5, Market for Registrant’s Common Stock — Issuer Purchases of Equity Securities
  21. [21] Item 5, Market for Registrant’s Common Stock — Issuer Purchases of Equity Securities
  22. [22] Item 7, MD&A — Noninterest Income
  23. [23] Item 1, Business — Acquisitions
  24. [24] Item 1, Business — Acquisitions
  25. [25] Item 1, Business — Acquisitions
  26. [26] Item 1, Business — Acquisitions
  27. [27] Item 8, Consolidated Statements of Income
  28. [28] Item 8, Consolidated Statements of Income
  29. [29] Item 8, Consolidated Statements of Income
  30. [30] Item 8, Consolidated Statements of Income
  31. [31] Item 7, MD&A — 2025 Financial Highlights
  32. [32] Item 7, MD&A — 2025 Financial Highlights
  33. [33] Item 7, MD&A — 2025 Financial Highlights
  34. [34] Item 7, MD&A — 2025 Financial Highlights
  35. [35] Item 7, MD&A — Net Interest Income
  36. [36] Item 7, MD&A — Net Interest Income
  37. [37] Item 7, MD&A — Net Interest Income
  38. [38] Item 7, MD&A — Net Interest Income
  39. [39] Item 7, MD&A — Net Interest Income
  40. [40] Item 7, MD&A — 2025 Financial Highlights
  41. [41] Item 7, MD&A — 2025 Financial Highlights
  42. [42] Item 7, MD&A — 2025 Financial Highlights
  43. [43] Item 7, MD&A — 2025 Financial Highlights
  44. [44] Item 7, MD&A — 2025 Financial Highlights
  45. [45] Item 7, MD&A — 2025 Financial Highlights
  46. [46] Item 7, MD&A — 2025 Financial Highlights
  47. [47] Item 7, MD&A — Overview and 2025 Highlights
  48. [48] Item 7, MD&A — Loan Maturities
  49. [49] Item 7, MD&A — Loan Maturities
  50. [50] Item 7, MD&A — Loan Maturities
  51. [51] Item 7, MD&A — Loan Maturities
  52. [52] Item 7, MD&A — Net Interest Income
  53. [53] Item 7, MD&A — Net Interest Income
  54. [54] Item 7, MD&A — Net Interest Income
  55. [55] Item 7, MD&A — Net Interest Income
  56. [56] Item 7, MD&A — Net Interest Income
  57. [57] Item 7, MD&A — Income Taxes
  58. [58] Item 1, Business — Human Capital Resources
  59. [59] Item 1, Business — Human Capital Resources
  60. [60] Item 1, Business — Human Capital Resources
  61. [61] Item 5, Market for Registrant’s Common Stock — Issuer Purchases of Equity Securities
  62. [62] Item 5, Market for Registrant’s Common Stock — Issuer Purchases of Equity Securities
  63. [63] Item 5, Market for Registrant’s Common Stock — Issuer Purchases of Equity Securities
  64. [64] Item 5, Market for Registrant’s Common Stock
  65. [65] Item 5, Market for Registrant’s Common Stock
  66. [66] Item 1A, Risk Factors
  67. [67] Item 8, Consolidated Balance Sheets
  68. [68] Item 8, Consolidated Balance Sheets
  69. [69] Item 7, MD&A — Critical Accounting Estimates
  70. [70] Item 7A, Quantitative and Qualitative Disclosures About Market Risk — Earnings Simulation Analysis
  71. [71] Item 7A, Quantitative and Qualitative Disclosures About Market Risk — Earnings Simulation Analysis
  72. [72] Item 7, MD&A — Deposits
  73. [73] Item 7, MD&A — Critical Accounting Estimates
  74. [74] Item 7, MD&A — 2025 Financial Highlights
  75. [75] Item 7, MD&A — 2025 Financial Highlights
  76. [76] Item 7, MD&A — 2025 Financial Highlights
  77. [77] Item 7, MD&A — 2025 Financial Highlights
  78. [78] Item 7, MD&A — Net Interest Income
  79. [79] Item 7, MD&A — Net Interest Income
  80. [80] Item 7, MD&A — Net Interest Income
  81. [81] Item 7, MD&A — Net Interest Income
  82. [82] Item 7, MD&A — 2025 Financial Highlights
  83. [83] Item 7, MD&A — 2025 Financial Highlights
  84. [84] Item 7, MD&A — 2025 Financial Highlights
  85. [85] Item 7, MD&A — 2025 Financial Highlights
  86. [86] Item 8, Consolidated Statements of Income
  87. [87] Item 8, Consolidated Statements of Income
  88. [88] Item 8, Consolidated Statements of Income
  89. [89] Item 8, Consolidated Statements of Income
  90. [90] Item 8, Consolidated Statements of Income
  91. [91] Item 8, Consolidated Statements of Income
  92. [92] Item 8, Consolidated Statements of Income
  93. [93] Item 8, Consolidated Statements of Income
  94. [94] Item 8, Consolidated Statements of Income
  95. [95] Item 8, Consolidated Statements of Income
  96. [96] Item 8, Consolidated Statements of Income
  97. [97] Item 8, Consolidated Statements of Income
  98. [98] Item 8, Consolidated Statements of Income
  99. [99] Item 8, Consolidated Statements of Income
  100. [100] Item 8, Consolidated Statements of Income
  101. [101] Item 8, Consolidated Statements of Income
  102. [102] Item 8, Consolidated Statements of Income
  103. [103] Item 8, Consolidated Statements of Income
  104. [104] Item 7, MD&A — Income Taxes
  105. [105] Item 7, MD&A — Income Taxes
  106. [106] Item 8, Consolidated Balance Sheets
  107. [107] Item 8, Consolidated Balance Sheets
  108. [108] Item 8, Consolidated Balance Sheets
  109. [109] Item 8, Consolidated Balance Sheets
  110. [110] Item 8, Consolidated Balance Sheets
  111. [111] Item 8, Consolidated Balance Sheets
  112. [112] Item 8, Consolidated Balance Sheets
  113. [113] Item 8, Consolidated Balance Sheets
  114. [114] Item 8, Consolidated Balance Sheets
  115. [115] Item 8, Consolidated Balance Sheets
  116. [116] Item 7, MD&A — Selected Financial Information
  117. [117] Item 7, MD&A — Selected Financial Information
  118. [118] Item 7, MD&A — Selected Financial Information
  119. [119] Item 7, MD&A — Selected Financial Information
  120. [120] Item 7, MD&A — Selected Financial Information
  121. [121] Item 7, MD&A — Selected Financial Information
  122. [122] Item 7, MD&A — Risk-Based and Leverage Capital Ratios
  123. [123] Item 7, MD&A — Risk-Based and Leverage Capital Ratios
  124. [124] Item 7, MD&A — Risk-Based and Leverage Capital Ratios
  125. [125] Item 7, MD&A — Risk-Based and Leverage Capital Ratios
  126. [126] Item 7, MD&A — Risk-Based and Leverage Capital Ratios
  127. [127] Item 7, MD&A — Risk-Based and Leverage Capital Ratios
  128. [128] Item 7, MD&A — Capital Resources and Shareholders’ Equity
  129. [129] Item 7, MD&A — Capital Resources and Shareholders’ Equity
  130. [130] Item 7, MD&A — 2025 Financial Highlights
  131. [131] Item 7, MD&A — 2025 Financial Highlights
  132. [132] Item 7, MD&A — Provision for Credit Losses
  133. [133] Item 7, MD&A — Noninterest Income

Analysis on 6/21/2026