First Bancorp Annual Report 2021 Form 10-K (NASDAQ:FBNC) Published: February 26th, 2021 PDF generated by stocklight.com UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 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 Incorporation or Organization) (I.R.S. Employer 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 Securities Registered Pursuant to Section 12(b) of the Act: Title of each class Trading Symbol Name of each exchange on which registered Common Stock, No Par Value FBNC The Nasdaq Global Select Market Securities Registered Pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act of 1933. ☒ Yes ☐ No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934. ☐ Yes ☒ No Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 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. ☒ Yes ☐ No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). ☒ Yes ☐ No Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. ☒ Large Accelerated Filer ☐ Accelerated Filer ☐ Non-Accelerated Filer ☐ Smaller Reporting Company ☐ Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No The aggregate market value of the Common Stock, no par value, held by non-affiliates of the registrant, based on the closing price of the Common Stock as of June 30, 2020 as reported by The NASDAQ Global Select Market, was approximately $711,100,000. The number of shares of the registrant’s Common Stock outstanding on February 26, 2021 was 28,492,779. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Registrant’s Proxy Statement to be filed pursuant to Regulation 14A are incorporated herein by reference into Part III. TABLE OF CONTENTS Page PART I Item 1 Business 4 Item 1A Risk Factors 17 Item 1B Unresolved Staff Comments 27 Item 2 Properties 27 Item 3 Legal Proceedings 27 Item 4 Mine Safety Disclosures 27 PART II Item 5 Market for Registrant’s Common Stock, Related Shareholder Matters, and Issuer Purchases of Equity Securities 27 Item 6 Selected Consolidated Financial Data 29 Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations 29 Item 7A Quantitative and Qualitative Disclosures about Market Risk 59 Item 8 Financial Statements and Supplementary Data: Consolidated Balance Sheets as of December 31, 2020 and 2019 78 Consolidated Statements of Income for each of the years in the three-year period ended December 31, 2200 79 Consolidated Statements of Comprehensive Income for each of the years in the three-year period ended December 31, 2200 80 Consolidated Statements of Shareholders’ Equity for each of the years in the three-year period ended December 31, 2200 81 Consolidated Statements of Cash Flows for each of the years in the three-year period ended December 31, 2200 82 Notes to the Consolidated Financial Statements 83 Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosures 140 Item 9A Controls and Procedures 140 Item 9B Other Information 140 PART III Item 10 Directors, Executive Officers and Corporate Governance 141 Item 11 Executive Compensation 141 Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters 141 Item 13 Certain Relationships and Related Transactions, and Director Independence 141 Item 14 Principal Accountant Fees and Services 141 PART IV Item 15 Exhibits and Financial Statement Schedules 142 Item 16 Form 10-K Summary 144 SIGNATURES 145 * Information called for by Part III (Items 10 through 14) is incorporated herein by reference to the Registrant’s definitive Proxy Statement for the 2021 Annual Meeting of Shareholders to be filed with the Securities and Exchange Commission on or before April 30, 2021. 3 FORWARD-LOOKING STATEMENTS 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 judgments 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 in Item 1A of this report. PART I Item 1. Business General Description First Bancorp (the “Company”) is the fifth largest bank holding company headquartered in North Carolina. At December 31, 2020, the Company had total consolidated assets of $7.3 billion, total loans of $4.7 billion, total deposits of $6.3 billion, and shareholders’ equity of $0.9 billion. Our principal activity is the ownership and operation of First Bank (the “Bank”), a state-chartered bank with its main office in Southern Pines, North Carolina. The Company was incorporated in North Carolina on December 8, 1983, as Montgomery Bancorp, for the purpose of acquiring 100% of the outstanding common stock of the Bank through a stock-for-stock exchange. On December 31, 1986, the Company changed its name to First Bancorp to conform its name to the name of the Bank, which had changed its name from Bank of Montgomery to First Bank in 1985. The Bank was organized in 1934 and began banking operations in 1935 as the Bank of Montgomery, named for the county in which it operated. Until September 2013, the Bank’s main office was in Troy, North Carolina, located in the center of Montgomery County. In September 2013, the Company and the Bank moved their main offices approximately 45 miles to Southern Pines, North Carolina, in Moore County. As of December 31, 2020, we conducted business from 101 branches covering a geographical area from Florence, South Carolina to the south, to Wilmington, North Carolina to the east, to Kill Devil Hills, North Carolina to the northeast, to Mayodan, North Carolina to the north, and to Asheville, North Carolina to the west. Of the Bank’s 101 branches, 95 branches are in North Carolina and six branches are in South Carolina. Ranked by assets, the Bank was the fifth largest bank headquartered in North Carolina as of December 31, 2020 and one of two banks with total assets between $4 billion and $45 billion. As of December 31, 2020, the Bank had four wholly owned subsidiaries, First Bank Insurance Services, Inc. (“First Bank Insurance”), SBA Complete, Inc. (“SBA Complete”), Magnolia Financial, Inc. ("Magnolia Financial"), and First Troy SPE, LLC. First Bank Insurance’s primary business activity is the placement of property and casualty insurance coverage. SBA Complete specializes in providing consulting services for financial institutions across the country related to Small Business Administration (“SBA”) loan origination and servicing. Magnolia Financial is a business financing company that offers accounts receivable financing and factoring, inventory financing, and purchase order financing throughout the southeastern United States. First Troy SPE, LLC, which was organized in December 2009, is a holding entity for certain foreclosed properties. Our principal executive offices are located at 300 SW Broad Street, Southern Pines, North Carolina, 28387, and our telephone number is (910) 246-2500.